10-K

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended October 31, 2008.

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from              to

Commission File No. 0-1424

ADC Telecommunications, Inc.

(Exact name of registrant as specified in its charter)

Minnesota	41-0743912
(State or other jurisdiction of	(I.R.S. Employer
incorporation or organization)	Identification No.)
13625 Technology Drive	55344-2252
Eden Prairie, Minnesota	(Zip Code)
(Address of principal executive offices)

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

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Each Exchange on Which Registered:
Common Stock, $.20 par value	The NASDAQ Global Select Market
Preferred Stock Purchase Rights

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

     Indicate by checkmark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. þ Yes o No

     Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes þ No

     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. þ Yes o No

     Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o

     Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ  Accelerated filer o  Non-accelerated filer   o
(Do not check if a smaller reporting company) Smaller Reporting Company o 

     Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). o Yes þ No

     The aggregate market value of voting and non-voting stock held by non-affiliates of the registrant based on the last sale price of such stock as reported by The NASDAQ Global Select Market^® on May 2, 2008, was $1,690,345,670.

     The number of shares outstanding of the registrant’s common stock, $0.20 par value, as of December 16, 2008, was 96,446,996.

DOCUMENTS INCORPORATED BY REFERENCE

     A portion of the information required by Part III of this Form 10-K is incorporated by reference from portions of our definitive proxy statement for our 2009 Annual Meeting of Shareowners to be filed with the Securities and Exchange Commission.

(THIS PAGE INTENTIONALLY LEFT BLANK)

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TABLE OF CONTENTS

PART I
	Item 1. BUSINESS
	Item 1A. RISK FACTORS
	Item 1B. UNRESOLVED STAFF COMMENTS
	Item 2. PROPERTIES
	Item 3. LEGAL PROCEEDINGS
	Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
PART II
	Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF            EQUITY SECURITIES
	Item 6. SELECTED FINANCIAL DATA
	Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
	Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
	Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
	Item 9A. CONTROLS AND PROCEDURES
	Item 9B. OTHER INFORMATION
PART III
	Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
	Item 11. EXECUTIVE COMPENSATION
	Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER            MATTERS
	Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
	Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PART IV
	Item 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
SIGNATURES
EXHIBIT INDEX
EX-2.6
EX-10.5
EX-10.6
EX-12.1
EX-21.1
EX-23.1
EX-24.1
EX-31.1
EX-31.2
EX-32

PART I

Item 1. BUSINESS

General

     ADC Telecommunications, Inc. (“ADC,” “we,” “us” or “our”) was incorporated in Minnesota in 1953 as Magnetic Controls Company. We adopted our current name in 1985. Our World Headquarters are located at 13625 Technology Drive in Eden Prairie, Minnesota. Our telephone number is (952) 938-8080.

     We are a leading global provider of broadband communications network infrastructure products and related services. Our products offer comprehensive solutions that enable the delivery of high-speed Internet, data, video and voice communications over wireline, wireless, cable, enterprise and broadcast networks. These products include fiber-optic, copper and coaxial based frames, cabinets, cables, connectors and cards, wireless capacity and coverage solutions, network access devices and other physical infrastructure components.

     Our products and services are deployed primarily by communications service providers and owners and operators of private enterprise networks. Our products are used primarily in the “last mile/kilometer” of communications networks where Internet, data, video and voice traffic are linked from the serving office of a communications service provider to the end-user of communication services. Our products include:

• Global Connectivity Solutions (“Connectivity”) products that facilitate broadband communications network connectivity by providing the physical interconnections between network components and network access points. These products connect wireline, wireless, cable, enterprise and broadcast communication networks over copper (twisted pair), co-axial, fiber optic and wireless media.

• Network Solutions products that help improve coverage and capacity for wireless networks. These products improve signal quality, increase coverage and capacity into expanded geographic areas, and help reduce the capital and operating costs of delivering wireless services. Applications for these products include in-building and outdoor coverage and capacity solutions and remote wireless network solutions.

     We also provide professional services to our customers. These services help our customers plan, deploy and maintain Internet, data, video and voice communication networks. We also assist our customers in integrating broadband communications equipment used in wireline, wireless, cable and enterprise networks. By providing these services, we have additional opportunities to sell our hardware products.

     On December 3, 2007, we completed the acquisition of LGC Wireless, Inc. (“LGC”). LGC primarily is a provider of in-building wireless solutions products. These products increase the quality and capacity of wireless networks by permitting voice and data signals to penetrate building structures and by distributing these signals evenly throughout a building. On January 10, 2008, we completed the acquisition of Shenzhen Century Man Communication Equipment Co., Ltd. and certain affiliated entities (“Century Man”). Century Man is a China based provider of broadband connectivity equipment in China and other Asian countries. Century Man’s products include communication distribution frames and related accessories such as fiber connectors and cabinets.

     The LGC acquisition resulted in a change to our internal management reporting structure as LGC was combined with our legacy wireless business. As a result, in the first quarter of fiscal 2008, we changed our reportable segments to conform to our current management reporting presentation. We have reclassified prior year segment disclosures in this report on Form 10-K to conform to the new segment presentation.

     As a result of these changes, we now have the following three reportable business segments:

• Connectivity

• Network Solutions

• Professional Services

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     Our corporate website address is www.adc.com. In the “Financial Information” category of the Investor Relations section of our website, we make our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to these reports available free of charge as soon as reasonably practicable after these reports are filed with or furnished to the United States Securities and Exchange Commission (the “SEC”). The “Corporate Governance” category of the Investor Relations section of our website also contains copies of our Financial Code of Ethics, our Principles of Corporate Governance, our Global Business Conduct Program, our Articles of Incorporation and Bylaws, Description of Roles of Independent Lead Director and Executive Chairman and the charter of each committee of our Board of Directors. Each of these documents can also be obtained free of charge (except for a reasonable charge for duplicating exhibits to our reports on Forms 10-K, 10-Q or 8-K) in print by any shareowner who requests them from our Investor Relations department. The Investor Relations department’s email address is investor@adc.com and its mail address is: Investor Relations, ADC Telecommunications, Inc., P.O. Box 1101, Minneapolis, Minnesota 55440-1101. Information on our website is not incorporated by reference into this Form 10-K or any other report we file with or furnish to the SEC.

     As used in this report, fiscal 2006, fiscal 2007 and fiscal 2008 refer to our fiscal years ended October 31, 2006, 2007 and 2008, respectively. As used in this report, fiscal 2009 and fiscal 2010 refer to our fiscal years that will end September 30, 2009 and 2010, respectively.

Industry and Marketplace Conditions

     We believe the communications industry is in the midst of a multi-year migration to next-generation networks that can deliver reliable broadband services at low, often flat-rate prices over virtually any medium anytime and anywhere. We believe this evolution particularly will impact the “last mile/kilometer” portion of networks where our products and services primarily are used and where bottlenecks in the high-speed delivery of communications services are most likely to occur.

     We believe there are two key elements driving the migration to next-generation networks:

• First, businesses and consumers worldwide increasingly are becoming dependent on broadband, multi-service communications networks to conduct a wide range of daily communications tasks for business and personal purposes (e.g., emails with large amounts of data, online gaming, video streaming and photo sharing). This demand for additional broadband services 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.

     This evolution to next generation networks impacts our industry significantly. Many of our communications service provider customers have begun to focus their investments into these next generation networks to allow them to differentiate from their competitors by providing more robust services at increasing speeds. These customers believe these network advancements will then attract business and consumer customers and allow them to grow their businesses.

     This next generation network investment from our customers has tended to come in the form of large, multi-year projects and these significant projects have attracted many equipment vendors, including us. We believe that it is important for us to participate in these projects to grow our business. We therefore have focused our strategy around the products that help make these projects successful. These include central office fiber-based equipment, wireless coverage and capacity equipment, and equipment to aid the deployment of fiber-based networks closer to the ultimate customer (i.e., fiber to the node, curb, residence, or business, which we collectively refer to as our “FTTX” products).

     Spending trends on these next generation initiatives in which we participate have not resulted in significant overall spending increases on all categories of network infrastructure equipment. In fact, spending on network infrastructure equipment in total has increased only modestly in recent years as our customers have reallocated their spending towards new initiatives and away from their legacy networks. Prior to the current global economic downturn, industry observers anticipated that in the next few years overall global spending on communications infrastructure equipment would be relatively flat. Over the long-term, we therefore believe our ability to compete in the communications equipment marketplace depends in part on whether we can continue to develop and market effectively next generation network infrastructure products.

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Current Global Macro-Economic Conditions

     We believe the above described long-term trends may be impacted in the more immediate future in a variety of ways because of the current global macro-economic conditions. These impacts are difficult to predict because no one is certain as to the severity of the downturn in conditions, how long it will continue and how it specifically will impact our customers, vendors and competitors. It is likely, however, that our customers will spend more conservatively on network infrastructure equipment during the economic crisis because they likely will face uncertainties regarding the growth of their own businesses. For this reason, we presently believe we will have lower revenues in fiscal 2009 as compared to fiscal 2008. Depending on the severity of the downturn in economic conditions as well as its length, these expectations could fluctuate significantly. We also believe our results of operations may be impacted adversely if the dollar continues to strengthen against other currencies, as approximately 40.8% of our sales during fiscal 2008 were made to countries outside the United States.

     The uncertainty associated with the current macro-economic conditions has led us to take steps to improve our operating cost structure. During the fourth quarter of fiscal 2008, we announced a significant restructuring initiative. The initiative included significant reductions in the workforce of each of our business units, our sales and marketing staff and our general administration and support functions. We also announced our intention to sell our German professional services business and plans to discontinue certain outdoor wireless coverage products. Depending on the severity and length of the downturn in economic conditions and their impact on our business, we may determine it appropriate to take additional similar actions in the future.

Strategy

Market Goals

     Our long-term goal is to be the leading global provider of communications network infrastructure solutions and services. To achieve our goal, we believe we must sell products that support the migration to next generation networks in developed countries, while also serving the growing demand for communication services in developing countries with our network infrastructure solutions.

     This migration primarily is represented in the high growth market segments of fiber-based and wireless communications networks. We believe we can address these market opportunities with our products that include central office fiber, FTTX, wireless capacity/coverage and enterprise network solutions.

     In recent years, we have seen an increase in sales of our central office fiber products and FTTX products to communications service providers. We believe that our legacy copper connectivity products over time will become a significantly lower percentage of our overall sales as service providers build out their fiber networks closer to the end user. Maintaining and growing our position as a leading global provider of central office fiber and FTTX solutions is therefore important to our strategy and long-term success.

     We also believe that service providers and enterprises around the world want to expand the coverage and capacity of wireless networks more efficiently than can be done with current products in the marketplace. This is especially true inside buildings and in outdoor areas where there is often poor wireless service. We believe that over time many customers will look to deploy solutions that rely upon Internet protocol (as opposed to solutions based entirely in radio frequencies) to achieve these aims. The present market for the sale of these coverage and capacity solutions is growing rapidly, but is also highly fragmented.

     In addition to targeting growth in these fiber-based and wireless market segments, we will also seek to expand our presence in growing geographic markets such as China, Latin America, Eastern Europe and Russia, the Middle East and Africa, and India. This is because we expect communications spending rates in developing countries to outpace such rates in more developed parts of the world for the foreseeable future.

Business Priorities

     Given our beliefs about the conditions of the global economy and the marketplace in our industry, we believe we must focus on the following business priorities to advance our market goals:

• Business growth in fiber-based and wireless communications networks, especially in the markets and geographies we consider to be of high strategic importance;

• Improved customer service through realignment and focus within our sales and marketing activities; and

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• Operational excellence that drives low cost industry leadership and provides our customers with superior products and support.

     Business Growth in Areas of High Strategic Importance. We are focused on growing our business in markets and geographies we consider to be of high strategic importance. We will service the high growth market segments within fiber-based and wireless communications networks with central office fiber, FTTX and wireless coverage and capacity product solutions. We will also focus on rapidly growing geographies, such as the developing markets in China, Latin America, Eastern Europe and Russia, the Middle East and Africa, and India. These are the markets and geographies where we expect spending by our customers to increase most significantly in the long-term.

     We currently hold established presences in many of these markets and geographies. As such, we believe growth may come either from our own internal initiatives to expand our product offerings through research and development activities, additional sales, marketing and other operating resources, or from the acquisition of new products, sales channels and operations in such areas.

     There are many recent examples of these internal and acquisition based activities.

     Our internal research and development efforts are focused on those areas where we believe we are most likely to achieve success and on projects that we believe directly advance our strategic aims. This includes a portfolio of projects with varying risk and reward profiles. Internally, we have developed and introduced a number of new products that are designed to help our customers accelerate the deployment of fiber-intensive and wireless broadband networks, serving business, residential and mobile subscribers. These products include RealFlex^tm reduced bend radius rider solutions, OmniReach^tm rapid fiber solutions for multi-dwelling units, FlexWave^tm outdoor wireless coverage and capacity solutions, OmniReach^tm plug-and-play FTTX products, ComproTect^tm gas discharge protection blocks that protect electronics in cabinets from lightening strikes, and FiberGuide^® and RiserGuide^® solutions for central offices and enterprise organizations that organize and protect fiber optic cables.

     We have also expanded our business through acquisitions. For example, we greatly enhanced our wireless coverage and capacity product set through our acquisition of LGC in December 2007. This acquisition also greatly expanded our sales channels for wireless products. Similarly, our acquisition of Century Man in January 2008 provided us with a significantly greater sales channel into China and other developing markets in Asia.

     Several of our largest customers have engaged in consolidation to gain greater scale and broaden their service offerings. These consolidations create companies with greater market power which, in recent years, has placed significant pricing pressure on the products we and other equipment vendors sell. We expect this trend to continue. To better serve these larger customers, we believe it is appropriate for companies within our industry to consolidate in order to gain greater scale and position themselves to offer a wider array of products. We expect to fund potential acquisitions with existing cash resources, the issuance of shares of common or preferred stock, the issuance of debt or equity linked securities or through some combination of these alternatives. We also will continue to evaluate and monitor our existing business and product lines for growth and profitability potential. If we believe it to be necessary, we will deemphasize or divest product lines and businesses that we no longer believe can advance our strategic vision.

     Realignment and Focus Within Sales and Marketing Activities. We also are focused on developing ways to sell more of our current portfolio and our newly developed products to existing customers and to introduce our products to new customers. The cornerstone of these initiatives is our commitment to understand and respond to our customers’ needs.

     To improve our ability to deliver solutions to customers that can integrate multiple product sets, we presently are reorganizing many of our sales and marketing activities around the types of customers that we serve (e.g., carriers, enterprise, original equipment manufacturers, etc.). This differs from a historical alignment of our sales and marketing resources that were more narrowly focused on the product sets that we sell. We believe this new market-based alignment will enable us to better understand and serve the needs of our customers with a broader spectrum of our products and services.

     We also continuously seek to partner with other companies as a means to serve the public and private communication network markets and to offer more complete solutions for our customers’ needs. Many of our connectivity products in particular are conducive to incorporation by other equipment vendors into a systems-level solution. We also believe there are opportunities for us to sell more of our products through indirect sales channels, including systems integrators and value added resellers. We have over 500 value-added reseller partners worldwide. In addition, we are expanding our relationships with distributors such as Anixter and Graybar that make our products more readily available to a wider base of customers worldwide.

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     Operational Excellence and Low Cost Industry Leadership. We remain highly committed to creating a compelling value proposition for our customers. This includes helping our customers maximize their return on investment, evolve their networks and simplify network deployment challenges in providing communications services to end-users. We strive to offer customer-specific solutions, price-competitive products with high functionality and quality, and world-class customer service and support that collectively will better position us to grow our business in a cost-effective manner.

     We also continue to implement initiatives as part of an overall program we call “competitive transformation” in order to improve the efficiency of our operations. Among other actions, this initiative includes:

• 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;

• reducing the number of locations from which we conduct general and administrative support functions; and

• focusing our resources on core operations, and, where appropriate, using third parties to perform non-core processes.

     This program has yielded significant cost savings to our operations throughout the last three fiscal years. These savings help to generate leverage in our operating model and help to offset pricing pressures and unfavorable mixes in product sales that can have negative impacts on our operating results.

     Our ability to implement this strategy and operate our business effectively is subject to numerous uncertainties, the most significant of which are described in Part 1, Item 1A “Risk Factors” in this Form 10-K. We cannot assure you that our efforts will be successful.

Product and Service Offering Groups

     The following table shows the percent of net sales for each of our three reportable segments for the three fiscal years ended October 31, 2008, 2007 and 2006:

Reportable Segment	2008			2007			2006
Connectivity		75.9	%		79.4	%		79.6	%
Network Solutions		11.6			7.7			7.9
Professional Services		12.5			12.9			12.5
Total		100.0	%		100.0	%		100.0	%

     Below we describe the primary products and services offered by each of these segments. See Note 15 to the Consolidated Financial Statements in Item 8 of this Form 10-K for financial information regarding our three business segments as well as information regarding our assets and sales by geographic region.

Connectivity

     Our connectivity devices are used in copper (twisted pair), coaxial, fiber-optic, wireless and broadcast communications networks. These products generally provide the physical interconnections between network components or access points into networks. As of October 31, 2008, these products include:

     DSX and DDF Products. We supply digital signal cross-connect (“DSX”) and digital distribution frame (“DDF”) modules, panels and bays, which are designed to terminate and cross-connect copper channels and gain access to digital channels for Internet, data, video and voice transmission. We offer DSX and DDF products to meet global market needs for both twisted-pair and coaxial cable solutions.

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     FTTX Products. ADC’s OmniReach^tm product family of fiber distribution terminals, fiber access terminals, passive optical splitter modules, wavelength division multiplexer modules, connectors and drop cables provide a flexible architecture that is easily implemented in the deployment of FTTX.

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

     RF Signal Management Products. Our Radio Frequency (“RF”) products are designed to meet the unique performance requirements of video, voice and data transmission over coaxial cable used in today’s cable television networks and telephony carrier networks. Our RFWorx^® product family leads the industry by offering the “plug-and-play” flexibility of combiners, splitters, couplers and forward/reverse amplification modules in a single platform designed for optimum cable management. The RFWorx system provides network design engineers with a wide range of RF signal management tools that are essential in an evolving video, voice and data communications environment.

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

     Modular Fiber-Optic Cable Systems. Our FiberGuide^® system provides a segregated, protected method of storing and managing fiber-optic patch cords and cables within a service provider’s serving office.

     Structured Cabling Products. Our TrueNet^® Structured cabling products are the cables, jacks, plugs, jumpers, frames and panels used to connect desk top systems like personal computers to the network switches and servers in large enterprise campuses, high-rise buildings and data centers. Our TrueNet^® cabling products include various generations of twisted-pair copper cable and apparatus capable of supporting varying bandwidth requirements, as well as multi-mode fiber systems used primarily to interconnect switches, servers and commercial campus locations.

     Broadcast and Entertainment Products. Broadcast and Entertainment products are audio, video, data patching and connectors used to connect and access worldwide broadcast radio and television networks. Our Pro-Patch^® products are recognized as the industry leader in digital broadcast patching. Our ProAx^® triaxial connectors are used by operators of mobile broadcast trucks, DBS satellite and large venue, live broadcasts such as the Olympic games. We have introduced a new line of HDTV products for the digital broadcast industry.

     Other Connectivity Products. A variety of other products, such as patch cords, media converters, splitter products and jacks and plugs, are used by telecommunications service providers and private networks to connect, monitor and test portions of their networks.

Network Solutions

     Our Network Solutions products help improve coverage and capacity for wireless networks. As of October 31, 2008, these products include:

     In-building Wireless Coverage/Capacity Solutions. Our recently acquired LGC family of wireless systems products includes solutions that address a wide range of coverage and capacity challenges for wireless network operators in in-building environments. These solutions include a complete line of indoor products that provide complete coverage for a single building or an entire campus. We sell these solutions directly to the major providers of cellular telephone services, to national and regional carriers, including those in rural markets, enterprise markets and to neutral host facility providers that lease or resell coverage and capacity to the cellular carriers.

     Mobile Network Solutions. Our family of mobile network base station systems provides complete mobile capacity and coverage solutions. These products include base stations, base station controllers and mobile switching centers that are used by cruise ships, on islands and in other remote locations and large enterprises. We also offer our ClearGain^® family of tower-top and ground mounted amplifier products, which are distributed globally for all major air interfaces. These products amplify wireless signals and enhance performance and are sold primarily to wireless carriers.

     Outdoor Wireless Coverage/Capacity Solutions. Our FlexWave^tm family of wireless systems products addresses a wide range of coverage and capacity challenges for wireless network operators in outdoor metro and expanded venue environments. This solution

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includes: (i) applications to address challenging locations such as tunnels, traffic corridors and urban centers, (ii) cellular base station hotels that serve significant segments of a metropolitan area, and (iii) neutral host applications that serve multiple carriers simultaneously. This solution is sold directly to the major providers of cellular telephone services, to the national and regional carriers, including those in rural markets, and to neutral host facility providers that lease or resell coverage and capacity to the cellular carriers.

     Wireline Solutions. Our wireline products (principally Soneplex^® and HiGain^®) enable communications service providers to deliver high capacity voice and data services over copper or optical facilities in the “last mile/kilometer” of communications networks, while integrating functions and capabilities that help reduce the capital and operating costs of delivering such services. The LoopStar^® product family provides our customers with a flexible and economical optical transport platform for both legacy voice and next-generation voice protocols. The LoopStar^® portfolio provides “last mile/kilometer” and inter-office data transport to support a wide array of business service offerings at a variety of different transmission rates.

Professional Services

     Professional Services consist of systems integration services for broadband, multiservice communications over wireline, wireless, cable and enterprise networks. Professional Services are used to plan, deploy and maintain communications networks that deliver Internet, data, video and voice services to consumers and businesses.

     Our Professional Services support both the multi-vendor and multi-service delivery requirements of our customers. These services support customers throughout the technology life-cycle, from network design, build-out, turn-up and testing to ongoing maintenance and training, and are utilized by our customers in creating and maintaining intra-office, inter-office or coast-to-coast networks.

     The provision of such services also allows us to sell more of our hardware products as users of our Professional Services often have unfulfilled product needs related to their services projects.

     We offer these services primarily in North America and recently announced our intention to divest the services business that we operate in Europe. This decision was made because the business in Europe was not seen as strategic to our long-term goals.

Customers

     Our products and services are used by customers in three primary markets:

• the public communications network market worldwide, which includes major telephone companies such as Verizon, AT&T, Sprint, Telefonica, Deutsche Telecom and BellCanada, local telephone companies, long-distance carriers, wireless service providers, cable television operators and broadcasters;

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

• other communications equipment vendors, which incorporate our products into their products and systems that they in turn sell into the above markets.

     Our customer base is relatively concentrated, with our top ten telecommunication customers accounting for 42.5%, 45.5% and 44.0% of our net sales in fiscal 2008, 2007 and 2006, respectively. Our largest customer, Verizon, accounted for 16.5%, 17.8% and 16.0% of our net sales in fiscal 2008, 2007 and 2006, respectively. The merger of AT&T and BellSouth (collectively “AT&T”) during fiscal 2007 created another large customer for us. In fiscal 2008 and fiscal 2007 the combined company accounted for approximately 16.0% and 15.4% of our net sales, respectively.

     Outside the United States, we market our products to communications service providers, owners and operators of private enterprise networks, cable television operators and wireless service providers. Our non-U.S. net sales accounted for approximately 40.8%, 37.0% and 39.1% of our net sales in fiscal 2008, 2007 and 2006, respectively. Our EMEA region (Europe, Middle East and Africa) accounted for the largest percentage of sales outside of North America and represented 20.6%, 19.0% and 22.6% of our net sales in fiscal 2008, 2007 and 2006, respectively.

     Our direct sales force drives and completes the majority of our sales. We maintain sales offices throughout the world. In the United States, our products are sold directly by our sales personnel as well as through value-added resellers, distributors and manufacturers’

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representatives. Outside the United States, our products are sold directly by our field sales personnel and by independent sales representatives and distributors, as well as through other public and private network providers that distribute products. Nearly all of our sales to enterprise networks are conducted through third-party distributors.

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

Research and Development

     Given the constant evolution of technology in our industry, we believe our future success depends, in part, on our ability to develop new products so we can continue to anticipate and meet our customers’ needs. We continually review and evaluate technological changes affecting our industry and invest in applications-based research and development. The focus of our research and development activities will change over time based on customer needs and industry trends as well as our decisions regarding those areas in which we believe we are most likely to achieve success. As part of our long-term strategy, we intend to continue an ongoing program of new product development that combines internal development efforts with acquisitions and strategic alliances relating to new products and technologies from sources outside ADC. Our expenses for internal research and development activities were $83.5 million, $69.6 million and $70.9 million in fiscal 2008, 2007 and 2006, respectively, which represented 5.7%, 5.5% and 5.8% of our total revenues in each of those fiscal years.

     During fiscal 2008, our research and development activities were directed primarily at the following areas:

• fiber connectivity products for FTTX initiatives and central office applications;

• high-performance structured cables, jacks, plugs, jumpers, frames and panels to enable the use of increasingly higher-performance IP network protocols within private networks;

• wireless coverage and capacity solutions that enable our customers to optimize their network coverage.

Competition

     Currently, our primary competitors include:

     For Connectivity products: 3M, CommScope, Corning, Panduit and Tyco.

     For Network Solutions products: Adtran, CommScope, Mobile Access and Powerwave

     For Professional Services: AFL Telecommunications, Alcatel-Lucent, EMBARQ Logistics, Ericsson, Mastec, NEC, and Telamon.

     Competition in the communications equipment industry is intense. This is because we and other equipment vendors are competing for the business of fewer and larger customers as service providers have consolidated significantly over the past several years. As these customers become larger, they have more buying power and are able to negotiate lower pricing. In addition, there are rapid and extensive technological developments within the communications industry that can and have resulted in significant changes to the spending levels and trends of these large customers, which further drives competition among equipment vendors.

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

• our long-term customer relationships;

• our brand recognition and reputation as a financially-sound, long-term supplier to our customers;

• our engineering (research and development), manufacturing, sales and marketing skills;

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• the price, quality and reliability of our products;

• our delivery and service capabilities; and

• our ability to contain costs.

Manufacturing and Suppliers

     We manufacture a variety of products that are fabricated, assembled and tested in facilities around the world. In an effort to reduce costs and improve customer service, we generally attempt to manufacture our products in low cost areas located in the region of the world where they will be deployed. We also utilize several outsourced manufacturing companies to manufacture, assemble and test certain of our products. We estimate that products manufactured by these companies accounted for approximately 20% of our aggregate net sales for the Connectivity and Network Solutions segments of our business in fiscal 2008.

     We purchase raw materials and component parts from many suppliers located around the world through a global sourcing group. Although many of these items are single-sourced, we have not experienced any significant difficulties to date in obtaining adequate quantities. Throughout most of fiscal 2008, there were significant increases in the prices we paid for many raw materials, especially copper and resins. We were able to pass some of these cost increases on to our customers. Our efforts in recent years to reduce operating costs also offset many of the commodity price increases through sourcing initiatives and other operational efficiencies. Following this significant rise in raw materials and commodity costs, the global macro-economic conditions has caused the prices for many commodities to decline in recent months. Circumstances relating to the availability and pricing of materials could change and our ability to mitigate price increases or to take advantage of price decreases in the future will depend upon a variety of factors, such as our purchasing power and the purchasing power of our customers.

     In order to meet the lead time expectations of our customers we and other companies in our industry need to carry significant amounts of inventory of raw materials and finished goods.

Intellectual Property

     We own a portfolio of U.S. and foreign patents relating to our products. These patents, in the aggregate, constitute a valuable asset as they allow us to sell unique products and provide protection from our competitors selling similar products. We do not believe, however, that our business is dependent upon any single patent or any particular group of related patents.

     We registered the initials “ADC” as well as the name “KRONE,” each alone and in conjunction with specific designs, as trademarks in the United States and various foreign countries. U.S. trademark registrations generally are for a term of ten years, and are renewable every ten years as long as the trademark is used in the regular course of trade.

Seasonality

     During fiscal 2008 we announced that beginning with our fiscal year 2009 our fiscal year will end on September 30^th. This change was implemented to better align our financial reporting periods with those of our industry peers. During fiscal 2009 our first three quarters will end on January 30^th, May 1^st and July 31^st, respectively. Our fourth fiscal quarter will then end on September 30, 2009. Thereafter our first three fiscal quarters generally will end near the last day of December, March, June and our fiscal year will end on September 30th.

     Presently, sales in our second quarter that ends near the end of April and our third quarter that ends near the end of July are generally higher than sales in our other two quarters. While the seasonality of our business will remain unchanged on a calendar year basis, we expect this shift in our fiscal year end to impact the quarterly breakdown of our results during the fiscal year beginning in fiscal 2010.

     Presently our first quarter results usually are affected adversely by the holiday season that extends from Thanksgiving through New Year’s day and the preparation of annual capital spending budgets by many of our customers during this time. We do not expect this to change when we change our fiscal year. In addition, presently our fourth quarter sales often are lower than third quarter days because capital spending by our customers begins to decline at the beginning of the fourth quarter of the calendar year (i.e. in October). When we change our fiscal year, this trend may no longer impact our fourth fiscal quarter and instead is likely to impact our first quarter results further.

     The number of sales days for each of our quarters in fiscal 2009 are: 58 days in the first quarter, 65 days in the second quarter, 63 days in the third quarter and, because of our transition to a fiscal year that ends on September 30^th, 42 days in the fourth quarter. The number of sales days for each of our quarters in fiscal 2008 were: 62 days in the first quarter, 65 days in the second quarter, 63 days in the third quarter and 64 days in the fourth quarter.

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Employees

     As of October 31, 2008, we employed approximately 10,600 people worldwide, which is an increase of approximately 1,550 employees since October 31, 2007. The increase primarily represents the addition of employees associated with our acquisitions of LGC and Century Man.

Executive Officers of the Registrant

     Our executive officers are:

		Officer
Name	Office	Since		Age
Robert E. Switz	Chairman, President and Chief Executive Officer		1994		62
James G. Mathews	Vice President, Chief Financial Officer		2005		57
Hilton M. Nicholson	Vice President, President, Network Solutions Business Unit		2006		50
Patrick D. O’Brien	Vice President, President, Global Connectivity Solutions Business Unit		2002		45
Richard B. Parran, Jr	Vice President, President, Professional Services Business Unit		2006		52
Steven G. Nemitz	Vice President and Controller		2007		34
Laura N. Owen	Vice President, Chief Administrative Officer		1999		52
Jeffrey D. Pflaum	Vice President, General Counsel and Secretary		1999		49
Kimberly S. Hartwell	Vice President, Global Go-To-Market		2008		46

     Mr. Switz joined ADC in January 1994 as ADC’s Chief Financial Officer. He served in this capacity until he was appointed as our Chief Executive Officer in August 2003. He was appointed Chairman of our Board of Directors in July 2008. From 1988 to 1994, Mr. Switz was employed by Burr-Brown Corporation, a manufacturer of precision micro-electronics. His last position at Burr-Brown was as Vice President, Chief Financial Officer and Director, Ventures and Systems Business.

     Mr. Mathews joined ADC in 2005 as our Vice President and Controller. He served in this capacity until he was appointed as our Chief Financial Officer in April 2007. From 2000 to 2005 Mr. Mathews served as Vice President-Finance and Chief Accounting Officer for Northwest Airlines which filed for Bankruptcy Reorginazation under Chapter 11 is U.S. Bankruptcy Court in September 2005. Prior to joining Northwest Airlines, Mr. Mathews was Chief Financial and Administrative Officer at CARE-USA, the world’s largest private relief and development agency. Mr. Mathews also held a variety of positions at Delta Air Lines, including service as Delta’s Corporate Controller and Corporate Treasurer.

     Mr. Nicholson joined ADC in July 2002 as President of our IP Cable Business Unit, a position he held until June 2004 when we completed the divestiture of this business. In June 2004, Mr. Nicholson left ADC to work for 3com, a provider of secure and converged networking solutions, where he held the position of Senior Vice President of Product Operations. In March 2006, Mr. Nicholson returned to ADC as Vice President, President, Active Infrastructure Business Unit, which we recently renamed to Network Solutions. He previously was employed by Lucent Technologies from 1995 to 2002. His last position at Lucent Technologies was Vice President and General Manager, Core Switching and Routing Divisions.

     Mr. O’Brien joined ADC in 1993 as a product manager for the company’s DSX products. During the following eight years, he held a variety of positions of increasing responsibility in the product management area, including Vice President and General Manager of copper and fiber connectivity products. Mr. O’Brien served as President of our Copper and Fiber Connectivity Business Unit from October 2002 to May 2004. From May 2004 through August 2004, Mr. O’Brien served as our President and Regional Director of the Americas Region. He was named President of ADC’s Global Connectivity Solutions Business Unit in September 2004. Prior to joining ADC, Mr. O’Brien was employed by Contel Telephone for six years in a network planning capacity.

     Mr. Parran joined ADC in November 1995 and served in our business development group. From November 2001 to November 2005 he held the position of Vice President, Business Development. In November of 2005 Mr. Parran became the interim leader of our Professional Services Business Unit. In March 2006 he was appointed Vice President, President, Professional Services Business Unit. Prior to joining ADC, Mr. Parran served as a general manager of the business services telecommunications business for Paragon Cable and spent 10 years with Centel in positions of increasing responsibility in corporate development and cable and cellular operations roles.

     Mr. Nemitz joined ADC in January 2000 as a financial analyst and rose to the position of principal financial analyst by September 2002. In September 2002, Mr. Nemitz left ADC to work for Zomax Incorporated, a provider of media and supply chain solutions, where he held the position of corporate accounting manager. In September 2003, Mr. Nemitz returned to ADC as a corporate finance manager. He became the finance manager of our Global Connectivity Solutions business unit in October 2004, Americas Region

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Controller in November 2005 and Assistant Corporate Controller in August 2006. Beginning in May 2007, he began service as our Corporate Controller.

     Ms. Owen joined ADC as Vice President, Human Resources in December 1997. In October 2007 she was named Vice President, Chief Administrative Officer. As a part of this role, she continues to oversee our human resources function. Prior to joining ADC, Ms. Owen was employed by Texas Instruments and Raytheon (which purchased the Defense Systems and Electronics Group of Texas Instruments in 1997), manufacturers of high-technology systems and components. From 1995 to 1997, she served as Vice President of Human Resources for the Defense Systems and Electronics Group of Texas Instruments.

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

     Ms. Hartwell joined ADC in July, 2004 as Vice President of Sales, National Accounts and became Vice President, Go-To-Market Americas in 2007. She became Vice President, Global-Go-To-Market in July, 2008. In this role, she leads our sales, marketing, customer service and technical support functions worldwide. Prior to joining ADC, Ms. Hartwell was Vice President of Marquee Accounts at Emerson Electric Corporation, a manufacturer of electrical, electronic and other products for consumer, commercial, communications and industrial markets from June 2003 to June 2004.

Item 1A. RISK FACTORS

     Our business faces many risks. Below we describe some of these risks. Additional risks of which we currently are unaware or believe to be immaterial may also result in events that could negatively impact our business operations. If any of the events or circumstances described in the following risk factors actually occurs, our business, financial condition or results of operations may suffer, and the trading price of our common stock could decline.

Risks Related to Our Business

Our industry is highly competitive, and our product and services sales are subject to significant downward pricing and volume pressure.

     Competition in the broadband network infrastructure equipment and services industry is intense. Overall spending for communications infrastructure products has not increased significantly in recent years and is not expected to increase significantly in the next several years. In fiscal 2009, we expect customer spending to decline due to the current global macro-economic conditions, although we do expect spending on infrastructure equipment for next-generation networks such as FTTX products and wireless coverage and capacity solutions to increase over the longer term. Our continued ability to compete with other manufacturers of communications equipment depends in large part on whether we can continue to develop and effectively market next-generation infrastructure products.

     We believe our ability to compete with other manufacturers of communications equipment products and providers of related services depends primarily on our engineering, manufacturing and marketing skills; the price, quality and reliability of our products; our delivery and service capabilities; and our control of operating expenses.

     We have experienced, and anticipate continuing to experience, greater pricing pressures from our customers as well as our competitors. In part, this pressure exists because our industry currently is characterized by many vendors pursuing relatively few large customers. As a result, our customers have the ability to exert significant pressure on us with respect to product pricing and other contractual terms. In recent years, a number of our large customers have engaged in business combination transactions. Accordingly, we have fewer large-scale customers, and these customers have even greater scale and buying power.

Our sales and operations may be impacted adversely by current global economic conditions.

     For the last several months, financial markets globally have experienced extreme disruption, including, among other things, extreme volatility in security prices, severely diminished liquidity and credit availability, ratings downgrades of certain investments and declining valuations of others. Governments have taken unprecedented actions intended to address extreme market conditions that, among other concerns, include severely restricted credit. Largely as a result of these disruptions in financial markets, most

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analysts believe the global economy has entered a potentially prolonged recession. These economic developments may adversely affect businesses like ours in a number of ways, such as:

• Restricted credit markets may limit the ability of some of our customers and suppliers to obtain financing for significant purchases and operations, including potential significant telecommunications infrastructure projects. If customers are unable to finance operations or infrastructure projects, we may experience a slowdown in demand for our product and services. Further, these conditions could disrupt the availability of raw materials and supplies we use as well as our use of contract manufacturers and other vendors. Our ability to find suitable replacement sources or vendors cannot be assured nor can we be certain the prices and terms associated with retaining such replacements would be favorable to us.

• Demand for the goods and services our customers provide to their clients may slow, and this, in turn, may cause our customers to spend less on the products and services we sell.

• Competition to complete sales among our competitors may heighten and create pressure to sell products and services at lower prices or on terms that are less advantageous than we have experienced historically.

     The severity and length of the present disruptions in the financial markets and the global economy are unknown. There can be no assurance that there will not be a further deterioration in financial markets and in business conditions generally.

Our gross margins may vary over time, and our level of gross margin may not be sustainable.

     Gross margins among our product groups vary and are subject to fluctuation from quarter to quarter. Many of our newer product offerings, such as our FTTX products, typically have lower gross margins than our legacy products. As these new products increasingly account for a larger percentage of our sales, our gross margins are likely to be impacted negatively. This and other factors that may impact our gross margins adversely are numerous and include:

• Changes in customer, geographic, or product mix, including the mix of configurations within each product group;

• Introduction of new products, including products with price-performance advantages;

• Our ability to reduce product costs;

• Increases in material or labor costs;

• Expediting costs incurred to meet customer delivery requirements;

• Excess inventory and inventory carrying charges;

• Obsolescence charges;

• Changes in shipment volume;

• Changes in component pricing;

• Increased price competition;

• Changes in distribution channels;

• Increased warranty cost;

• Liquidated damages costs relating to customer contractual terms; and

• Our ability to manage the impact of foreign currency exchange rate fluctuations.

We are becoming increasingly dependent on specific network expansion projects undertaken by our customers, which are subject to intense competition and result in sales volatility.

     Our business increasingly is focused on the sale of products, including our FTTX products and wireless coverage and capacity solutions, to support customer initiatives to expand broadband and coverage capabilities in their networks. These products increasingly have been deployed by our customers outside their central offices in connection with specific capital projects to increase network capabilities.

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     Because of these project-specific purchases by our customers, the short-term demand for our products can fluctuate significantly and our ability to forecast sales accurately from quarter to quarter has diminished substantially. This fluctuation can be further affected by the long sales cycles necessary to obtain contracts to supply equipment for these projects. These long sales cycles may result in significant effort expended with no resulting sales or sales that are not made in the anticipated quarter.

     In addition, competition among suppliers with respect to these capital projects can be intense, particularly because these projects often utilize new products that were not previously used in customers’ networks. We cannot give any assurance that these capital projects will continue or that our products will be selected for these equipment deployments.

Our cost-reduction initiatives may not result in anticipated savings or more efficient operations.

     Over the past several years, we have implemented, and are continuing to implement, significant cost-reduction measures. These measures have been taken in an effort to improve our levels of profitability. We have incurred significant restructuring and impairment charges in connection with these cost-reduction efforts. If these measures are not fully completed or are not completed in a timely fashion, we may not realize their full potential benefit.

     In addition, the efforts to cut costs may not generate the savings and improvements in our operating margins and profitability we anticipate and such efforts may be disruptive to our operations. For example, cost savings measures may yield unanticipated consequences, such as attrition beyond planned reductions in force or increased difficulties in our day-to-day operations, and may adversely affect employee morale. Although we believe it is necessary to reduce the cost of our operations to improve our performance, these initiatives may preclude us from making potentially significant expenditures that could improve our product offerings and competitiveness over the longer term.

Further consolidation among our customers may result in the loss of some customers and may reduce revenue during the pendency of business combinations and related integration activities.

     We believe consolidation among our customers in the future will continue in order for them to increase market share and achieve greater economies of scale. Consolidation has impacted our business as our customers focus on completing business combinations and integrating their operations. In certain instances, customers integrating large-scale acquisitions have reduced their purchases of network equipment during the integration period. For example, following the merger of SBC Communications with AT&T and the merger of AT&T with BellSouth, the combined companies initially deferred spending on certain network equipment purchases, which resulted in lower product sales by ADC to these companies.

     The impact of significant mergers among our customers on our business is likely to be unclear until sometime after such transactions are completed. After a consolidation occurs, a customer may choose to reduce the number of vendors from which it purchases equipment and may choose one of our competitors as its preferred vendor. There can be no assurance that we will continue to supply equipment to the surviving communications service provider after a business combination is completed.

Our profitability could be impacted negatively if one or more of our key customers substantially reduces orders for our products and/or transitions their purchases towards lower gross margin products.

     Our customer base is relatively concentrated, with our top ten customers accounting for 42.5%, 45.5% and 44.0% of net sales for fiscal 2008, 2007 and 2006, respectively. In addition, our largest customer, Verizon, accounted for 16.5%, 17.8% and 16.0% of our net sales in fiscal 2008, 2007 and 2006, respectively. The merger of AT&T and BellSouth in our fiscal 2007 created another large customer for us. In fiscal 2008 and 2007, this combined company accounted for approximately 16.0% and 15.4% of our sales, respectively.

     If we lose a significant customer for any reason, including consolidation among our major customers, our sales and gross profit will be impacted negatively. Also, in the case of products for which we believe potential revenue growth is the greatest, our sales remain highly concentrated with the major communications service providers. For example, we rely on Verizon for a large percentage of our sales of FTTX products. The loss of sales due to a decrease in orders from a key customer could require us to exit a particular business or product line or record impairment or restructuring charges.

     Gross margins vary among our product groups and a shift in our customers’ purchases toward a product mix (i.e., the amount of each type of product we sell in a particular period) with lower margin products could result in a reduction in our profitability.

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Our Professional Services business is exposed to risks associated with a highly concentrated customer base.

     Most of our Professional Services are provided to customers in the United States. As a result of the merger of SBC Communications with AT&T and the merger of AT&T and BellSouth, our Professional Services business in the United States is heavily dependent upon sales to the combined company resulting from these mergers. If, over the long-term, AT&T reduces the demand for services we provide to it, we may not be successful in finding new customers to replace the lost sales for a period of time. Therefore, sales by our Professional Services business could decline substantially and have an adverse effect on our business and operating results.

Our market is subject to rapid technological change and, to compete effectively, we must continually introduce new products that achieve market acceptance.

     The communications equipment industry is characterized by rapid technological changes, evolving industry standards, changing market conditions and frequent new product and service introductions and enhancements. The introduction of products using new technologies or the adoption of new industry standards can make our existing products, or products under development, obsolete or unmarketable. For example, FTTX product sales initiatives may impact sales of our non-fiber products negatively. In order to remain competitive and increase sales, we will need to adapt to these rapidly changing technologies, enhance our existing products and introduce new products to address the changing demands of our customers.

     We may not predict technological trends or the success of new products in the communications equipment market accurately. New product development often requires long-term forecasting of market trends, development and implementation of new technologies and processes and substantial capital commitments. For example, during fiscal 2006 and fiscal 2007, we invested significant resources in the development and marketing of a new line of automated copper cross-connect products. During the third quarter of fiscal 2007, following a review of the market potential of these products, we curtailed all development and marketing activities relating to this product line. This resulted in inventory and fixed asset write-offs. We do not know whether other new products and services we develop will gain market acceptance or result in profitable sales.

     Many of our competitors have greater engineering and product development resources than we have. Although we expect to continue to invest substantial resources in product development activities, our efforts to achieve and maintain profitability will require us to be selective and focused with our research and development expenditures. If we fail to anticipate or respond in a cost-effective and timely manner to technological developments, changes in industry standards or customer requirements, or if we experience any significant delays in product development or introduction, our business, operating results and financial condition could be affected adversely.

We may not successfully close strategic acquisitions and, if these acquisitions are completed, we may have difficulty integrating the acquired businesses with our existing operations.

     We acquired LGC and Century Man in the first quarter of fiscal 2008. In the future, we intend to acquire other companies and/or product lines that we believe are aligned with our strategic focus. We cannot provide assurances that we will be able to find appropriate candidates for acquisitions, reach agreement to acquire them, have the cash or other resources necessary to acquire them, or obtain requisite shareholder or regulatory approvals needed to close strategic acquisitions. The significant effort and management attention invested in a strategic acquisition may not result in a completed transaction.

     The impact of future acquisitions on our business, operating results and financial condition are not known at this time. In the case of businesses we may acquire in the future, we may have difficulty assimilating these businesses and their products, services, technologies and personnel into our operations. These difficulties could disrupt our ongoing business, distract our management and workforce, increase our expenses and materially adversely affect our operating results and financial condition. Also, we may not be able to retain key management and other critical employees after an acquisition. We may also acquire unanticipated liabilities. In addition to these risks, we may not realize all of the anticipated benefits of these acquisitions.

Access to our existing line of credit requires that we meet several covenants, which could be more challenging in a difficult operating environment. Moreover, if we need to utilize our existing line of credit, our operational flexibility may be impaired. If we seek to secure other financing, we may not be able to obtain it on acceptable terms.

     We currently have a $200.0 million line of credit that has not been utilized. The line of credit contains numerous restrictive covenants and conditions regarding the state of our business that could limit or cease our ability to utilize the line of credit, limit our

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operating flexibility and impair our ability to undertake strategic acquisitions or other transactions, or, if we have drawn funds on the line of credit, accelerate repayment terms on borrowed amounts. Further, if we utilize the line of credit our earnings per share could be diluted.

     Based on current business operations and economic conditions, and expected cash flows from operations, we currently anticipate that our available cash resources (which include existing cash, cash equivalents and our line of credit), will be sufficient to meet our anticipated needs for working capital and capital expenditures to execute our near-term business plan. If our estimates are incorrect and we are unable to generate sufficient cash flows from operations, we may need to utilize our existing line of credit or raise additional funds. In addition, if the cost of one or more of our strategic acquisition opportunities exceeds our existing resources, we may be required to seek additional capital.

     If we determine it is necessary to seek other additional funding for any reason, we may not be able to obtain such funding or, if funding is available, obtain it on acceptable terms.

We have recorded significant impairment charges to reduce the carrying value of certain auction-rate securities we hold, and additional impairment charges with respect to auction-rate securities may occur in the future.

     Credit concerns in the capital markets have all but eliminated our ability to liquidate auction-rate securities that we classify as long-term available-for-sale securities on our balance sheet. These securities represent interests in collateralized debt obligations, a portion of which are collateralized by pools of residential and commercial mortgages, interest-bearing debt obligations, and dividend-yielding preferred stock. Some of the underlying collateral for the auction-rate securities we hold consists of sub-prime mortgages. Starting in the fourth quarter of fiscal 2007, we began recording other-than-temporary impairment charges on these securities. We estimated the fair value of the auction-rate securities with the assistance of a valuation specialist. In fiscal 2008, we recorded other-than-temporary impairment charges of $100.6 million. As such, the estimated fair value and current carrying value of these holdings as of October 31, 2008 was $40.4 million. The estimated fair value of these securities could continue to decrease unless a market develops for them, something we do not anticipate happening in the foreseeable future. As such, the estimated fair value of these securities may further decrease substantially.

We may complete transactions, undertake restructuring initiatives or face other circumstances in the future that will result in restructuring or impairment charges, including, but not limited to, significant goodwill impairment charges.

     From time to time we have undertaken actions that have resulted in restructuring charges. We may take such actions in the future either in response to slowdowns or shifts in market demand for our products and services or in connection with other initiatives to improve our operating efficiency.

     In addition, if the fair value of any of our long-lived assets decreases as a result of an economic slowdown, a downturn in the markets where we sell products and services or a downturn in our financial performance and/or future outlook, we may be required to take an impairment charge on such assets, including goodwill.

     We are required to test goodwill and other intangible assets with indefinite life periods for potential impairment on the same date each year and on an interim basis if there are indicators of a potential impairment. We also are required to evaluate amortizable intangible assets and fixed assets for impairment if there are indicators of a possible impairment. One potential indicator of impairment is the value of our market capitalization compared to our net book value. Significant declines in our market capitalization could require us to record material goodwill and other impairment charges.

     Restructuring and impairment charges could have a negative impact on our results of operations and financial position.

Possible consolidation among our competitors could result in a loss of sales.

     Recently, a number of our competitors have engaged in business combination transactions, and we expect to see continued consolidation among communication equipment vendors. These business combinations may result in our competitors becoming financially stronger and obtaining broader product portfolios than us. As a result, consolidation could increase the resources of our competitors and negatively impact our product sales and our profitability.

Our operating results fluctuate significantly from quarter to quarter.

     Our operating results are difficult to predict and may fluctuate significantly from quarter to quarter. Fluctuations in our quarterly operating results may be caused by many factors, including the following:

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

• the overall level of capital expenditures by our customers;

• work stoppages and other developments affecting the operations of our customers;

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

• the timing of new product and service announcements;

• the availability of products and services;

• market acceptance of new and enhanced versions of our products and services;

• variations in the mix of products and services we sell;

• the location and utilization of our production capacity and employees; and

• the availability and cost of key components of our products.

     Our expense levels are based in part on expectations of future revenues. If revenue levels in a particular quarter are lower than expected, our operating results will be affected adversely.

The regulatory environment in which we and our customers operate is changing.

     Although our business is not subject to significant direct governmental regulation, the communications services provider industry in which our customers operate is subject to significant and changing federal and state regulation in the United States and regulation in other countries.

     The U.S. Telecommunications Act of 1996 (the “Telecommunications Act”) lifted certain restrictions on the ability of communications services providers and other ADC customers to compete with one another. The Telecommunications Act also made other significant changes in the regulation of the telecommunications industry. These changes generally increased our opportunities to provide communications network infrastructure products to providers of Internet, data, video and voice networks. However, some of the changes resulting from the Telecommunications Act have diminished the return on additional investments by our customers in their networks, which has reduced demand for some of our products.

     In a 2003 ruling, the Federal Communications Commission (“FCC”) terminated its “line-sharing” requirements, with the result that major telephone companies are no longer legally required to lease space to resellers of digital subscriber lines. The FCC ruling also allowed telephone companies to maintain sole ownership of newly-built networks that often use our FTTX products. While we believe that the ruling will generally have a positive effect on our business, there can be no assurance that the ruling will result in a long-term material increase in the sales of our products.

     The regulatory environment for communication services providers is also changing in other countries. In many countries, regulators are considering whether service providers should be required to provide access to their networks by competitors. For example, this issue is currently being debated in Germany and Australia. As a result, our FTTX initiatives in these countries have been delayed.

     Additional regulatory changes affecting the communications industry have occurred and are anticipated both in the United States and internationally. For example, a European Union directive relating to the restriction of hazardous substances (“RoHS”) in electrical and electronic equipment and a directive relating to waste electrical and electronic equipment (“WEEE”) have been and are being implemented in EU member states. In addition, a new regulation regarding the registration, authorization and restriction of chemical substances in industrial products (“REACH”) became effective in the EU in 2007. Over time this regulation, among other items, may require us to substitute certain chemicals contained in our products with substances the EU considers less dangerous. Among other things, the RoHS directive restricts the use of certain hazardous substances in the manufacture of electrical and electronic equipment and the WEEE directive requires producers of electrical goods to be responsible for the collection, recycling, treatment and disposal of these goods. In addition, similar laws to RoHS and WEEE were passed in China in February 2006, as well as in South Korea in April 2007. The Chinese law became effective in March 2007. We understand governments in other countries are considering implementing similar laws or regulations. Our inability or failure to comply with the REACH, RoHS and WEEE directives, or similar laws and regulations that have been and may be implemented in other countries, could result in reduced sales of our products,

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substantial product inventory write-offs, reputational damage, monetary penalties and other sanctions. In addition, the costs associated with complying with the REACH, RoHS and WEEE directives, or similar laws and regulations, may be material and adversely affect our business and results of operation.

     New regulatory changes could alter demand for our products. In addition, recently announced or future regulatory changes could come under legal challenge and be altered, which could reverse the effect of such changes and their anticipated impact. Competition in our markets may intensify as the result of changes to existing or new regulations. Accordingly, changes in the regulatory environment could adversely affect our business and results of operations.

Conditions in global markets could affect our operations.

     Our sales outside the United States accounted for approximately 40.8%, 37.0% and 39.1% of our net sales in fiscal 2008, 2007 and 2006, respectively. We expect sales outside the United States to remain a significant percentage of net sales in the future. In addition to sales and distribution activities in numerous countries, we conduct manufacturing or other operations in the following countries: Australia, Austria, Belgium, Brazil, Canada, Chile, China, Czech Republic, France, Germany, Hong Kong, Hungary, India, Indonesia, Italy, Japan, Malaysia, Mexico, New Zealand, Philippines, Puerto Rico, Russia, Singapore, South Africa, South Korea, Spain, Sweden, Thailand, the United Arab Emirates, the United Kingdom, the United States, Venezuela and Vietnam.

     Due to our sales and other operations outside the United States, we are subject to the risks of conducting business globally. These risks include the following:

• local economic and market conditions;

• political and economic instability;

• unexpected changes in or impositions of legislative or regulatory requirements;

• compliance with the Foreign Corrupt Practices Act and various laws in countries in which we are doing business;

• fluctuations in foreign currency exchange rates;

• requirements to consult with or obtain the approval of works councils or other labor organizations to complete business initiatives;

• tariffs and other barriers and restrictions;

• longer payment cycles;

• difficulties in enforcing intellectual property and contract rights;

• greater difficulty in accounts receivable collection;

• potentially adverse taxes and export and import requirements; and

• the burdens of complying with a variety of non-U.S. laws and telecommunications standards.

     Our business is also subject to general geopolitical and environmental risks, such as terrorism, political and economic instability, changes in the costs of key resources such as crude oil, changes in diplomatic or trade relationships, natural disasters and other possible disruptive events such as pandemic illnesses.

     Economic conditions in many of the markets outside the United States in which we do business represent significant risks to us. Instability in our non-U.S. markets, such as the Middle East, Asia and Latin America, could have a negative impact on our sales and business operations in these markets, and we cannot predict whether these unstable conditions will have a material adverse effect on our business and results of operations. The wars in Afghanistan and Iraq and other turmoil in the Middle East and the global war on terror also may have negative effects on our business operations. In addition to the effect of global economic instability on sales to customers outside the United States, sales to United States customers could be negatively impacted by these conditions.

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We are subject to special risks relating to doing business in China.

     Our operations in China are subject to significant political, economic and legal uncertainties. Changes in laws and regulations or their interpretation, or the imposition of confiscatory taxation, restrictions on currency conversion, imports and sources of supply, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on our operations of China. Under its current leadership, the Chinese government has been pursuing economic reform policies that encourage private economic activity and greater economic decentralization. However, there can be no assurance that the government will continue to pursue these policies, especially in the event of a change in leadership, social, political or economic disruption or other circumstances affecting China’s social, political and economic environment.

     Although not permitted under Chinese law, corruption, extortion, bribery, payoffs and other fraudulent practices occur from time to time in China. We must comply with U.S. laws prohibiting corrupt business practices outside the United States. Foreign companies, including some of our competitors, are not subject to these laws. If our competitors in China engage in these practices, we may be at a competitive disadvantage. We maintain a business conduct program to prevent, deter and detect violations of law in the conduct of business throughout the world. We conduct periodic reviews of our business practices in China and train our personnel in China on appropriate ethical and legal business standards. However, a risk remains that our employees will engage in activities that violate laws or our corporate policies. This is particularly true in instances in which new employees we hire or the employees of a company we may acquire may not previously have been accustomed to operating under similar standards. In the event an employee violates applicable laws pertaining to sales practices, accounting standards, facility operations or other business or operational requirements, we may face substantial penalties, and our business in China could be affected adversely.

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

     Our future success depends in part upon our proprietary technology. Although we attempt to protect our proprietary technology through patents, trademarks, copyrights and trade secrets, these protections are limited. Accordingly, we cannot predict whether these protections will be adequate, or whether our competitors will develop similar technology independently, without violating our proprietary rights. Rights that may be granted under any patent application in the future may not provide competitive advantages to us. Intellectual property protection in foreign jurisdictions may be limited or unavailable.

     Many of our competitors have substantially larger portfolios of patents and other intellectual property rights than we do. As competition in the communications network equipment industry has intensified and the functionality of products has continued to overlap, we believe that network equipment manufacturers increasingly are becoming subject to infringement claims. We have received, and expect to continue to receive, notices from third parties (including some of our competitors) claiming that we are infringing their patents or other proprietary rights. We also have asserted patent claims against certain third parties.

     We cannot predict whether we will prevail in any patent litigation brought against us by third-parties, or that we will be able to license any valid and infringed patents on commercially reasonable terms. Unfavorable resolution of such litigation could have a material adverse effect on our business, results of operations or financial condition. In addition, any of these claims, whether with or without merit, could result in costly litigation, divert our management’s time and attention, delay our product shipments or require us to enter into expensive royalty or licensing agreements.

     A third party may not be willing to enter into a royalty or licensing agreement on acceptable terms, if at all. If a claim of product infringement against us is successful and we fail to obtain a license, or develop or license non-infringing technology, our business, operating results and financial condition could be adversely affected.

We are dependent upon our senior management and other critical employees.

     Like all communications technology companies, our success is dependent on the efforts and abilities of our senior management personnel and other critical employees, including those in customer service and product development functions. Our ability to attract, retain and motivate these employees is critical to our success. In addition, because we may acquire one or more businesses in the future, our success will depend, in part, upon our ability to retain and integrate our own personnel with personnel from acquired entities that are necessary to the continued success or the successful integration of the acquired businesses.

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     Our continuing initiatives to streamline operations as well as the challenging business environment in which we operate may cause uncertainty in our employee base about whether they will have future employment with us. This uncertainty may have an adverse effect on our ability to retain and attract key personnel.

Managing our inventory is complex and may include write-downs of excess or obsolete inventory.

     Managing our inventory of components and finished products is complicated by a number of factors, including the need to maintain a significant inventory of components that are not easy to obtain, that must be purchased in bulk to obtain favorable pricing or that require long lead times. These issues may cause us to purchase and maintain significant amounts of inventory. If this inventory is not used as expected based on anticipated production requirements, it may become excess or obsolete. The existence of excess or obsolete inventory can result in sales price reductions and/or inventory write-downs, which could adversely affect our business and results of operations.

Compliance with internal control requirements is expensive and poses certain risks.

     We expect to incur significant continuing costs, including accounting fees and staffing costs, in order to maintain compliance with the internal control requirements of the Sarbanes-Oxley Act of 2002. Expansion of our business, particularly in international geographies, will necessitate ongoing changes to our internal control systems, processes and information systems. In addition, if we complete acquisitions in the future, our ability to integrate operations of the acquired company could impact our compliance with Section 404 of the Sarbanes-Oxley Act. We cannot be certain that as our business changes, our current design for internal control over financial reporting will be sufficient to enable management or our independent registered public accounting firm to determine that our internal controls are effective for any period, or on an ongoing basis.

     In the future, if we fail to complete the annual Section 404 evaluation in a timely manner, or if our independent registered public accounting firm cannot attest in a timely manner to the effectiveness of our internal controls, we could be subject to regulatory scrutiny and a loss of public confidence in our internal controls. In addition, any failure to implement required new or improved controls, or difficulties encountered in their implementation, could harm our operating results or cause us to fail to meet our reporting obligations.

Product defects or the failure of our products to meet specifications could cause us to lose customers and revenue or to incur unexpected expenses.

     If our products do not meet our customers’ performance requirements, our customer relationships may suffer. Also, our products may contain defects or fail to meet product specifications. Any failure or poor performance of our products could result in:

• delayed market acceptance of our products;

• delayed product shipments;

• unexpected expenses and diversion of resources to replace defective products or identify and correct the source of errors;

• damage to our reputation and our customer relationships;

• delayed recognition of sales or reduced sales; and

• product liability claims or other claims for damages that may be caused by any product defects or performance failures.

     Our products are often critical to the performance of communications systems. Many of our supply agreements contain limited warranty provisions. If these contractual limitations are unenforceable in a particular jurisdiction or if we are exposed to product liability claims that are not covered by insurance, a claim could harm our business.

We may encounter difficulties obtaining raw materials and supplies needed to make our products, and the prices of these materials and supplies are subject to fluctuation.

     Our ability to manufacture our products is dependent upon the availability of certain raw materials and supplies. In some instances these materials or supplies may be available from only one or a limited number of sources. The availability of these raw materials and

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supplies is subject to market forces beyond our control. From time to time, there may not be sufficient quantities of raw materials and supplies in the marketplace to meet customer demand for our products. The costs to obtain these raw materials and supplies are subject to price fluctuations, which may be substantial, because of global market demands. Many companies utilize the same raw materials and supplies in the production of their products as we use in our products. Companies with more resources than us may have a competitive advantage in obtaining raw materials and supplies due to greater purchasing power. Some raw materials or supplies may be subject to regulatory actions, which may affect available supplies. Furthermore, due to general economic conditions in the United States and globally, our suppliers may experience financial difficulties, which could result in increased delays, additional costs, or loss of a supplier.

     Reduced supply and higher prices of raw materials and supplies as well as potential delays in obtaining materials or supplies may affect our business, operating results and financial condition adversely. We cannot guarantee that sufficient quantities or quality of raw materials and supplies will be as readily available in the future, that they will be available at acceptable prices, or how the prices at which we sell our products will be impacted by the prices at which we, or any contract manufacturers we utilize, obtain raw materials or supplies. Our ability to pass increases in the prices of raw materials and supplies along to our customers is uncertain. Delays in implementing price increases we are able to make or a failure to achieve market acceptance of future price increases could have a material adverse impact on our results of operations. Further, in an environment of falling commodities prices, we may be unable to sell higher-cost inventory before implementing price decreases, which could have a material adverse impact on our results of operations.

If our manufacturing operations suffer production or shipping delays or if we do not have sufficient manufacturing capabilities, we may experience difficulty in meeting customer demands.

     We internally produce or rely on contract manufacturers to produce a wide range of finished products as well as components used in our finished products at various locations around the world. We also periodically realign our manufacturing capacities among various manufacturing facilities in an effort to improve efficiencies and our competitive position. Disruption of our ability to produce or distribute from any of these facilities due to mechanical failures, fires, electrical outages, shipping interruptions, labor issues, natural disasters or other reasons could adversely impact our ability to produce our products in a cost-effective and timely manner. In addition, there are risks associated with actions we may take to realign manufacturing capacities among facilities such as: potential disruptions in production capacity necessary to meet customer demand; decreases in production quality; disruptions in the availability of raw materials and supplies; delays in the movement of necessary tools and equipment among facilities; and adequate personnel to meet production demands caused by planned production shifts. In the event of any of these disruptions, we could lose sales, suffer increased operating costs and suffer customer relations problems, which may adversely affect our business and results of operations.

     In addition, it is possible from time to time that we may not have sufficient production capacity to meet customer demand whether through our internal facilities or through contract manufacturers we utilize. In such an event we may lose sales opportunities and suffer customer relations problems, which may adversely affect our business and results of operations.

We may encounter litigation that has a material impact on our business.

     We are a party to various lawsuits, proceedings and claims arising in the ordinary course of business or otherwise. Many of these disputes may be resolved without formal litigation. The amount of monetary liability resulting from the ultimate resolution of these matters cannot be determined at this time.

     As of October 31, 2008, we had recorded approximately $10.8 million in loss reserves for certain of these matters. In light of the reserves we have recorded, at this time we believe the ultimate resolution of these lawsuits, proceedings and claims will not have a material adverse impact on our business, results of operations or financial condition. Because of the uncertainty inherent in litigation, it is possible that unfavorable resolutions of these lawsuits, proceedings and claims could exceed the amount currently reserved and could have a material adverse effect on our business, results of operations or financial condition.

We are subject to risks associated with changes in commodity prices, interest rates, security prices, and foreign currency exchange rates.

     We face market risks from changes in certain commodity prices, security prices and interest rates. Market fluctuations could affect our results of operations and financial condition adversely. We may reduce these risks through the use of derivative financial instruments.

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     Additionally, we have exposure to foreign denominated revenues and operating expenses through our operations in various countries. As of October 31, 2008, we mitigated a certain portion of exposure to Mexican peso operating expenses throughout fiscal 2009 by purchasing forward contracts, enabling us to purchase Mexican pesos over the next twelve months at specified rates.

     We also are exposed to foreign currency exchange risk as a result of changes in intercompany balance sheet accounts and other balance sheet items. At October 31, 2008, these balance sheet exposures were mitigated through the use of foreign exchange forward contracts with maturities of approximately one month. The principal currency exposures being mitigated were the Australian dollar, British pound, Chinese renminbi, Czech koruna, euro, Mexican peso, and Singapore dollar.

Our ability to operate our business and report financial results is dependent on maintaining effective information management systems.

     We rely on our information management systems to support critical business operations such as processing sales orders and invoicing, inventory control, purchasing and supply chain management, payroll and human resources, and financial reporting. We periodically implement upgrades to such systems or migrate one or more of our affiliates, facilities or operations from one system to another. In addition, when we acquire other companies we often take actions to migrate their information management systems to the systems we use. If we are unable to adequately maintain these systems to support our developing business requirements or effectively manage any upgrade or migration, we could encounter difficulties that could have a material adverse impact on our business, internal controls over financial reporting, financial results, or our ability to report such results timely and accurately.

Risks Related to Our Common Stock

Our stock price has been volatile historically and may continue to be volatile. The price of our common stock may fluctuate significantly.

     The trading price of our common stock has been and may continue to be subject to wide fluctuations. Our stock price may fluctuate in response to a number of events and factors, such as quarterly variations in operating results, announcements of technological innovations or new products by us or our competitors, changes in financial estimates and recommendations by securities analysts, the operating and stock price performance of other companies that investors may deem comparable to us, and new reports relating to trends in our markets or general economic conditions.

     In addition, the stock market in general, and prices for companies in our industry in particular, have experienced extreme volatility that often has been unrelated to the operating performance of such companies. These broad market and industry fluctuations may adversely affect the price of our common stock, regardless of our operating performance.

     Furthermore, components of the compensation of many of our key employees are dependent on the price of our common stock. Lack of positive performance in our stock price may affect our ability to retain key employees.

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

     Provisions of our articles of incorporation and bylaws, our shareholder rights agreement (also known as a “poison pill”) and Minnesota law may discourage, delay or prevent a merger or acquisition that a shareholder may consider favorable, and could limit the price that investors are willing to pay for our common stock. These provisions include the following:

• advance notice requirements for shareholder proposals;

• authorization for our board of directors to issue preferred stock without shareholder approval;

• authorization for our board of directors to issue preferred stock purchase rights upon a third party’s acquisition of 15% or more of our outstanding shares of common stock; and

• limitations on business combinations with interested shareholders.

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

Item 1B.  UNRESOLVED STAFF COMMENTS

     None.

Item 2.  PROPERTIES

     We own our approximately 500,000 sq. ft. corporate headquarters facility, which is located in Eden Prairie, Minnesota. During 2005, we entered into a lease agreement with Wells Fargo Bank, N.A. to lease approximately 112,000 square feet of this facility. The remaining lease term is approximately seven years.

     In addition to our headquarters facility, our principal facilities as of October 31, 2008, consisted of the following:

• Shakopee, Minnesota — approximately 370,000 sq. ft., owned; general purpose facility used for engineering, manufacturing and general support of our global connectivity products;

• Marietta, Georgia — approximately 86,000 sq. ft., leased; administration and operations facility used for our professional services business;

• Juarez and Delicias, Mexico — approximately 327,000 sq. ft. and 139,000 sq. ft., respectively, owned; manufacturing facilities; and a second facility in Juarez, approximately 69,000 sq. ft., leased; warehouse/manufacturing facility; each facility used for our global connectivity products;

• Berlin, Germany — approximately 377,000 sq. ft., leased; general purpose facility used for engineering, manufacturing and general support of our global connectivity products;

• Sidney, Nebraska — approximately 376,000 sq. ft., owned; manufacturing facility used for our global connectivity products;

• Brno, Czech Republic — approximately 123,000 sq. ft., leased; manufacturing facility used for our global connectivity products;

• Berkeley Vale, Australia — approximately 99,000 sq. ft., owned; general purpose facility for engineering, manufacturing and general support of our global connectivity products;

• Bangalore, India — approximately 88,000 sq. ft., owned; manufacturing facility used for our global connectivity products; and a second site in Bangalore, approximately 69,000 sq. ft., leased; general purpose facilities for engineering, sales, finance, information technology and back-office applications;

• Santa Teresa, New Mexico — approximately 334,000 sq. ft., leased; global warehouse and distribution center facility with approximately 60,000 sq. ft. dedicated to selected finished product assembly operations;

• Shanghai, China — approximately 59,000 sq. ft., leased; manufacturing site used for our global connectivity products; and a second facility in Shanghai, approximately 37,000 sq. ft., leased; facility for engineering, manufacturing and product management; 

• Hangzhou, China — approximately 47,000 sq. ft., leased; manufacturing site used for our global connectivity products; and

• Shenzhen, China — approximately 149,000 sq. ft., leased; and a second facility in Shenzhen, approximately 112,000 sq. ft., leased; both manufacturing sites used for our global connectivity products; an additional facility in Shenzhen, approximately 17,000 sq. ft., leased; used for our Network Solutions group.

     We also own or lease approximately 109 other facilities in the following locations: Australia, Austria, Belgium, Brazil, Canada, Chile, China, France, Germany, Hong Kong, Hungary, India, Indonesia, Italy, Japan, Malaysia, Mexico, New Zealand, Philippines,

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Russia, Singapore, South Africa, South Korea, Spain, Sweden, Thailand, the United Arab Emirates, the United Kingdom, the United States, Venezuela and Vietnam.

     We believe the facilities used in our operations are suitable for their respective uses and are adequate to meet our current needs. On October 31, 2008, we maintained approximately 4.0 million square feet of active space (2.1 million square feet leased and 1.9 million square feet owned), and have irrevocable commitments for an additional 0.4 million square feet of inactive space, totaling approximately 4.4 million square feet of space at locations around the world. In comparison, at the end of fiscal 2007, we had 3.9 million square feet of active space, and irrevocable commitments for 0.5 million square feet of inactive space, totaling approximately 4.4 million square feet of space at locations around the world.

Item 3.  LEGAL PROCEEDINGS

     We are a party to various lawsuits, proceedings and claims arising in the ordinary course of business or otherwise. Many of these disputes may be resolved without formal litigation. The amount of monetary liability resulting from the ultimate resolution of these matters cannot be determined at this time. As of October 31, 2008, we had recorded approximately $10.8 million in loss reserves for certain of these matters. Based on the reserves we have recorded, at this time we believe the ultimate resolution of these lawsuits, proceedings and claims will not have a material adverse impact on our business, results of operations or financial condition. Because of the uncertainty inherent in litigation, however, it is possible that unfavorable resolutions of one or more of these lawsuits, proceedings and claims could exceed the amount currently reserved and could have a material adverse effect on our business, results of operations or financial condition.

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

     None.

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PART II

Item 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

     Our common stock, $0.20 par value, is traded on The NASDAQ Global Select Market under the symbol “ADCT.” The following table sets forth the high and low sales prices of our common stock for each quarter during our fiscal years ended October 31, 2008 and 2007, as reported on that market.

	2008				2007
	High		Low		High		Low
First Quarter	$	19.10	$	12.63	$	16.65	$	13.40
Second Quarter		14.84		11.50		19.21		15.10
Third Quarter		17.45		9.21		21.06		16.35
Fourth Quarter		10.94		4.13		21.00		14.85

     As of December 16, 2008, there were 6,865 holders of record of our common stock. We do not pay cash dividends on our common stock and do not intend to pay cash dividends in the foreseeable future. Further, pursuant to the terms of our line of credit entered into in fiscal 2008, we are prohibited from paying dividends on our common stock in amounts exceeding $25.0 million in the aggregate over the five-year term of the line of credit.

     Issuer Purchases of Equity Securities. The following table details purchases by us of our own securities during the fourth quarter of fiscal 2008.

					Total Number of Shares		Maximum Dollar Value of
	Total Number of				Purchased as Part of		Shares that May Yet Be
	Shares		Average Price Paid		Publicly Announced Plans		Purchased Under the Plans or
Fiscal Month	Purchased		Paid per Share (1)		or Programs		Programs (2)
August 30, 2008 - September 26, 2008		5,025,000	$	9.82		5,025,000	$	100,525,224
September 27, 2008 - - October 31, 2008		1,372,050	$	5.06		1,372,050	$	93,537,210
Total		6,397,050				6,397,050

(1)

Excludes commissions paid to brokers.

(2)

On August 12, 2008, our board of directors approved a share repurchase program for up to $150.0 million. As of October 31, 2008, we had repurchased approximately 6.4 million shares of common stock for approximately $56.5 million, or $8.80 average per share. In early December 2008, we completed this repurchase program at an average price of $7.04 per share, resulting in approximately 21.3 million shares purchased under the program.

Comparative Stock Performance

     The table below compares the cumulative total shareowner return on our common stock for the last five fiscal years with the cumulative total return on the S&P Midcap 400 Index and the S&P 400 Communications Equipment Index. This graph assumes a $100 investment in each of ADC, the S&P Midcap 400 Index and the S&P 400 Communications Equipment Index at the close of trading on October 31, 2003, and also assumes the reinvestment of all dividends.

COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
Among ADC Telecommunications, Inc., The S&P Midcap 400 Index
And The S&P 400 Communications Equipment

*   $100 invested on 10/31/03 in stock & index-including reinvestment of dividends. Fiscal year ending October 31.

Copyright ^© 2008 S&P, a division of The McGraw-Hill Companies Inc. All rights reserved.

	2003		2004		2005		2006		2007		2008
ADC	$	100.00		85.99		97.00		79.54		103.95		35.24
S&P Midcap 400 Index	$	100.00		111.04		130.63		148.18		173.40		110.17
S&P 400 Communications Equipment Index	$	100.00		84.83		84.20		94.77		111.37		63.53

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Item 6. SELECTED FINANCIAL DATA

     The following table presents selected financial data. The data included in the following table has been restated to exclude the assets, liabilities and results of operations of certain businesses that have met the criteria for treatment as discontinued operations. The following summary information should be read in conjunction with the Consolidated Financial Statements and related notes thereto set forth in Item 8 of this Form 10-K.

FIVE-YEAR FINANCIAL SUMMARY
Years ended October 31

	2008			2007		2006			2005		2004
	(In millions, except per share data)
Income Statement Data from Continuing Operations
Net sales	$	1,456.4		$	1,276.7	$	1,231.9		$	1,072.4	$	714.0
Gross profit		489.3			442.6		406.3			417.0		296.2
Research and development expense		83.5			69.6		70.9			70.3		59.1
Selling and administration expense		328.9			287.2		269.6			254.2		202.2
Operating income		61.7			78.0		45.2			82.9		21.6
Income (loss) before income taxes		(38.2	)		126.8		55.6			103.2		31.0
Provision (benefit) for income taxes		6.2			3.3		(37.7	)		7.2		2.0
Income (loss) from continuing operations		(44.4	)		123.5		93.3			96.0		29.0
Earnings (loss) per diluted share from continuing operations		(0.38	)		1.04		0.79			0.80		0.25
Balance Sheet Data
Current assets		1,077.4			1,008.2		942.7			854.8		835.8
Current liabilities		278.0			474.1		263.9			288.8		302.0
Total assets		1,921.0			1,764.8		1,611.4			1,537.2		1,428.1
Long-term notes payable		650.7			200.6		400.0			400.0		400.0
Total long-term obligations		728.8			283.1		474.0			474.5		466.8
Shareowners’ investment		914.2			1,007.6		873.5			773.9		659.3

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

     We are a leading global provider of broadband communications network infrastructure products and related services. Our products and services offer comprehensive solutions that enable the delivery of high-speed Internet, data, video and voice communications over wireline, wireless, cable, enterprise and broadcast networks for our extensive customer base. Our customers include public and private, wireline and wireless communications service providers, private enterprises that operate their own networks, cable television operators, broadcasters, government agencies, system integrators and communications equipment manufacturers and distributors.

     We sell our products and services and report financial results for the following three operating segments:

• Our Connectivity business segment designs, manufactures and sells products that generally provide the physical interconnections between network components or access points into networks. These products are used in copper (twisted pair), coaxial, fiber-optic, wireless and broadband communications networks. This operating segment’s net sales in fiscal 2008 were $1.1 billion, representing 75.9% of our total net sales. Our acquisition of Century Man in fiscal 2008 was integrated into this segment.

• Our Network Solutions business segment designs, manufactures, sells, installs and services products that help improve the coverage and capacity of wireless networks in buildings and remote areas where these networks may not work properly. This operating segment’s net sales in fiscal 2008 were $169.5 million representing 11.6% of our total net sales. Our acquisition of LGC in fiscal 2008 was integrated into this segment.

• Our Professional Services business segment plans, deploys and helps maintain communications networks through the provisioning of integration services for our customers. We also sell many of our products to customers who utilize our professional services. This operating segment’s net sales in fiscal 2008 were $181.7 million, representing 12.5% of our total net sales.

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     We evaluate many financial, operational, and other metrics to evaluate both our financial condition and our financial performance. Below we detail the results of those metrics that we feel are most important in these evaluations:

• Net Sales were approximately $1.5 Billion: Our net sales were approximately $1.5 billion in fiscal 2008, up 14.1% compared to net sales of approximately $1.3 billion in fiscal 2007. Net sales increased 8.9% in our Connectivity business segment. They increased 76.0% in our Network Solutions business segment and they increased 10.7% in our Professional Services business segment.

• Operating Income of $61.7 Million: We generated operating income of $61.7 million in fiscal 2008, compared to operating income of $78.0 million in fiscal 2007. Operating margin was 4.2% of net sales in fiscal 2008, compared to 6.1% of net sales in fiscal 2007.

• Loss from Continuing Operations of ($44.4) Million, or ($0.38) per Share: We incurred a loss from continuing operations of $44.4 million, or ($0.38) per diluted common share, in fiscal 2008, compared to income from continuing operations of $123.5 million, or $1.04 per diluted common share, in fiscal 2007. The loss from continuing operations in fiscal 2008 was primarily due to an impairment charge of $100.6 million related to auction rate securities and restructuring, impairment and other disposal charges of $29.2 million. The restructuring charges were primarily associated with a restructuring of our operations announced during our fourth quarter of fiscal 2008. Fiscal 2007 results included a $57.1 million gain from the sale of an investment, partially offset by a $29.4 million impairment charge related to auction rate securities.

• Operating Cash Flow of $173.9 Million: We generated operating cash flow from continuing operations of $173.9 million in fiscal 2008, compared to $150.4 million in fiscal 2007.

• Cash and Cash Equivalents of $631.4 Million: As of October 31, 2008 our cash and cash equivalents totaled $631.4 million, which represented an increase of $111.2 million compared to $520.2 million as of October 31, 2007.

We accomplished a number of key initiatives in fiscal 2008 and also faced significant challenges relative to our business.

     Accomplishments

• We grew net sales 14.1%, or $179.7 million, in fiscal 2008. Our acquisitions of Century Man and LGC accounted for $127.8 million of our increase in net sales. We believe that our growth rate in fiscal 2008, exclusive of acquisitions, exceeded that of our industry based on data provided publicly by several third parties.

• We continued to experience significant growth in our central office fiber and FTTX product sales in fiscal 2008 as our customers continued to deploy next generation networks. This growth was driven by increases in market share, expansion of our product portfolio, and the overall market growth of this component of the industry.

• During fiscal 2008, we introduced several new products that we believe will help us to address our strategic focus areas of fiber-based and wireless-based networks. For fiber-based networks, these new products include our OmniReach^tm Rapid Fiber System, which allows our service provider customers to efficiently deploy next generation services into multi-dwelling units. For wireless-based networks, these new products include our next generation InterReach Fusion in-building wireless coverage and capacity product and FlexWave^tm Prism, which provides solutions for outdoor coverage and capacity issues.

• Our acquisition of LGC that was completed in December 2007 transformed our wireless business. By acquiring LGC we have become a global leader in the provision of in-building coverage and capacity solutions. LGC contributed net sales of $97.6 million in fiscal 2008.

• Our acquisition of Century Man that was completed in January 2008 provided us with significant sales channels into China and other Southeast Asian nations, as well as low-cost manufacturing capabilities. Century Man is a leading provider of distribution frames in the Chinese marketplace and contributed $30.2 million of net sales in fiscal 2008.

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• We continued to advance our competitive transformation initiative, which we believe has yielded significant cost savings to our operations. The savings generated through this initiative help leverage our operating model and help offset pricing pressures and unfavorable mixes in product sales that can have negative impacts on our operating results.

• We bolstered our liquidity position through the completion of two significant financing transactions. In December 2007 we completed a $450.0 million convertible debt offering. The proceeds of this offering were used in part to repay in full $200.0 million of convertible debt in June 2008. We also put in place a $200.0 million revolving line of credit in April 2008. To date we have not utilized this facility.

• On August 12, 2008 we announced a share buyback program of up to $150.0 million. We completed this program on December 9, 2008. Through this program we acquired 21.3 million shares of our common stock or approximately 18.0% of our outstanding shares.

     Challenges

• The downturn in global macro-economic conditions began to impact our business in late fiscal 2008 as customers began to alter their purchasing plans. The severity of the downturn, its length, and its impact on our customers, vendors, and competitors are all very difficult to predict. Our management team is monitoring the business and market environment very closely, but the impacts of the downturn on our business are uncertain.

• Our customers’ evolution towards next generation networks over the past several years has impacted the mix of products and services that we sell. For example, we have seen a decline in sales of our copper-based products and wireline products. This has been accompanied by an increase in our sales of fiber-based, FTTX, and structured cable products. This mix shift has negatively impacted our gross margins.

• We continue to face significant pricing pressures from our customers. Many of our largest customers have engaged in large scale acquisition transactions that have given them greater purchasing power with vendors such as us. In addition, in developing markets, customers are often unwilling to pay for products with special features that might reduce the customer’s operating costs because the cost of labor in these markets remains low relative to developed markets.

• In October 2008 we implemented a significant restructuring initiative. The initiative included significant reductions in our workforce involving all of our business units, our sales and marketing staff and our general administration and support functions. We also announced our intention to sell our German professional services business and placed this business into discontinued operations. Further, we announced that we were discontinuing certain outdoor wireless coverage products. These actions resulted in a $29.2 million restructuring, impairment and other disposal charges in the fourth quarter of fiscal 2008.

• Like many companies, in fiscal 2008 we faced significant pricing increases for raw materials used to produce our products as well as for transportation costs to move our inventories and products around the world. We were able to pass some of these cost increases along to our customers, but the increased costs did impact our business. Recently the costs for many commodities have been falling and this may result in lower raw material and transportation costs in fiscal 2009.

     In order to continue to improve our financial and operational performance and to address the challenges of our industry, we believe we must focus on the following key priorities:

• We will continue to seek business growth in product areas and geographies we consider to be of high strategic importance. These product areas include fiber for central offices, FTTX products and wireless coverage and capacity solutions. The geographies include developing markets like China and India where we expect spending by our customers to increase most significantly in the long-term.

• We intend to realign and focus our sales and marketing activities to sell more of our current portfolio and new products to existing customers and to introduce our products to new customers. For instance, we are realigning many of our internal

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sales and marketing activities more around the types of customers we serve (e.g., carriers, enterprise, original equipment manufacturers) instead of around the product sets we sell. We are also looking for ways to better leverage our use of indirect sales channels.

• We will continue to focus on offering our customers price competitive solutions with high functionality and quality as well as world-class customer support. We will continue our competitive transformation initiative to increase our operational efficiency, improve our financial performance and to achieve our goal of becoming a cost leader within the industry.

Results of Operations

     The following table shows the percentage change in net sales and expense items from continuing operations for the three fiscal years ended October 31, 2008, 2007, and 2006:

										Percentage
										Increase (Decrease)
										Between Periods
	2008			2007			2006			2008 vs. 2007			2007 vs. 2006
				(In millions)
Net sales	$	1,456.4		$	1,276.7		$	1,231.9			14.1	%		3.6	%
Cost of sales		967.1			834.1			825.6			15.9			1.0
Gross profit		489.3			442.6			406.3			10.6			8.9
Gross margin		33.6	%		34.7	%		33.0	%
Operating expenses:
Research and development		83.5			69.6			70.9			20.0			(1.8	)
Selling and administration		328.9			287.2			269.6			14.5			6.5
Impairment charges		4.1			2.3			1.2			78.3			91.7
Restructuring charges		11.1			5.5			19.4			101.8			(71.6	)
Total operating expenses		427.6			364.6			361.1			17.3			(1.0	)
Operating income		61.7			78.0			45.2			(20.9	)		72.6
Operating margin		4.2	%		6.1	%		3.7	%
Other income (expense), net:
Interest income, net		2.8			17.0			7.0			(83.5	)		142.9
Other, net		(102.7	)		31.8			3.4			(423.0	)		835.3
Income (loss) before income taxes		(38.2	)		126.8			55.6			(130.1	)		128.1
Provision (benefit) for income taxes		6.2			3.3			(37.7	)		87.9			(108.8	)
Income (loss) from continuing operations	$	(44.4	)	$	123.5		$	93.3			(136.0	)%		32.4	%

     The table below sets forth our net sales from continuing operations for fiscal 2008, 2007 and 2006 for each of our three reportable segments described in Item 1 of this Form 10-K.

							Percentage
							Increase (Decrease)
	Net Sales						Between Periods
Reportable Segment	2008		2007		2006		2008 vs. 2007			2007 vs. 2006
			(In millions)
Connectivity	$	1,105.2	$	1,014.9	$	980.2		8.9	%		3.5	%
Network Solutions
Product		145.3		97.7		97.6		48.7			0.1
Service		24.2		—		—		100.0			—
Total Network Solutions		169.5		97.7		97.6		73.5			0.1
Professional Services
Product		49.2		57.6		58.3		(14.6	)		(1.2	)
Service		132.5		106.5		95.8		24.4			11.2
Total Professional Services		181.7		164.1		154.1		10.7			6.5
Total Net Sales	$	1,456.4	$	1,276.7	$	1,231.9		14.3	%		3.6	%

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Net Sales

Fiscal 2008 vs. Fiscal 2007

     Our net sales growth for fiscal 2008 as compared to fiscal 2007 was primarily driven by our acquisitions and the impact of foreign currency fluctuations versus the U.S. dollar. International net sales were 40.8% and 37.0% of our net sales in fiscal 2008 and fiscal 2007, respectively.

     Our Connectivity products’ net sales growth in fiscal 2008 as compared to fiscal 2007 was primarily the result of higher sales of global fiber connectivity solutions as customers worldwide are building and deploying fiber network solutions to increase network speed and capacity, as well as an increase in copper connectivity sales in emerging markets. Fiscal 2008 included sales of $30.2 million as a result of the Century Man acquisition that closed during January 2008.

     Our Network Solutions net sales growth in fiscal 2008 as compared to fiscal 2007 was primarily due to the acquisition of LGC. LGC is a provider of in-building wireless solution products. The favorable impact of LGC was partially offset by decreasing revenues in traditional high-bit-rate digital subscriber line products, as expected, which have experienced a general industry-wide decline in demand over the last several years. This trend is expected to continue as carriers deliver fiber and Internet Protocol services closer to end-user premises. There was also a decrease in outdoor wireless product revenues due to a transition to next generation products and a decrease in demand from a key customer. Fiscal 2008 included sales of $97.6 million as a result of the LGC acquisition that closed during December 2007. Sales of outdoor, in-building and other wireless products are project based and since we have a relatively concentrated customer base, our sales fluctuate based upon how many projects we obtain and the timing of customer implementations of such projects.

     Our Professional Services net sales growth in fiscal 2008 as compared to fiscal 2007 was due to increased demand in the U.S. from a key customer.

Fiscal 2007 vs. Fiscal 2006

     Our net sales growth for fiscal 2007 as compared to fiscal 2006 was driven by growth in sales of our Connectivity products and the impact of foreign currency fluctuations versus the U.S. dollar. International net sales were 37.0% and 39.1% of our net sales in fiscal 2007 and fiscal 2006, respectively.

     Our Connectivity products’ net sales growth in fiscal 2007 as compared to fiscal 2006 was driven primarily by an increase in our global fiber sales as customers migrated their spending towards higher density fiber-based solutions, both in central office and outside plant environments. In addition, structured cable sales increased internationally due to enterprise build-outs and upgrades combined with a favorable impact from currency fluctuations. Copper outside plant sales declined due to lower sales of cabinets in Europe, as the projects involving these products that we participated in during fiscal 2006 were completed.

     Our Network Solutions products’ net sales remained flat in fiscal 2007 compared to fiscal 2006. Net sales of outdoor, in-building and other wireless products increased in fiscal 2007 as compared to fiscal 2006 driven by increased spend levels from a variety of existing customers on our Digivance^® product line, but this was offset by decreases in our wireline product sales.

     Our Professional Services’ net sales increased in fiscal 2007 as compared to fiscal 2006. This increase primarily was due to increased demand for services from a major domestic customer that was expanding its network build programs.

Gross Profit

Fiscal 2008 vs. Fiscal 2007

     Gross profit percentages were 33.6% and 34.7% during fiscal 2008 and fiscal 2007, respectively. Our 2008 gross profit results included a $10.8 million charge associated with the discontinuance of certain outdoor wireless product families and an additional $3.2 million charge due to a change in the estimate made in fiscal 2007 related to the exit of our automated copper cross-connect (“ACX”) product line. Our fiscal 2007 gross profit results included an $8.9 million charge due to the exit activities associated with our ACX product line. Excluding these items, our gross profit decrease mainly was due to higher raw materials and transportation costs, pricing pressure, and negative sales mix, partially offset by cost reductions associated with our competitive transformation initiative. Our future gross margin rate is difficult to predict accurately as the mix of products we sell can vary substantially.

     To improve our gross profit percentages and our income from continuing operations, we have taken and will continue to take steps to gain operational efficiencies and lower our cost structure, mainly through our competitive transformation initiative. We believe

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these steps are necessary if we are to sustain and improve our operating performance given our highly competitive industry. In taking these steps, we may incur significant restructuring and impairment charges that can temporarily increase our expenses. Further, the timing and actual amount of future benefit we may realize from incurring such charges can be difficult to predict and accurately measure.

Fiscal 2007 vs. Fiscal 2006

     Gross profit percentages were 34.7% and 33.0% during fiscal 2007 and fiscal 2006, respectively. The increase in gross profit percentage resulted primarily from our competitive transformation projects, favorable product mix and the impact of foreign currency fluctuations versus the U.S. dollar. This favorable impact was partially offset by $8.9 million of charges related to exit activities associated with our ACX product line.

Operating Expenses

Fiscal 2008 vs. Fiscal 2007

     Total operating expenses for fiscal 2008 and fiscal 2007 represented 29.4% and 28.6% of net sales, respectively. As discussed below, operating expenses include research and development, selling and administration expenses and restructuring and impairment charges.

     Research and development: Research and development expenses for fiscal 2008 and fiscal 2007 represented 5.7% and 5.5% of net sales, respectively. The increase in research and development costs was due to the addition of research and development activities related to our acquisition of LGC. Given the rapidly changing technological and competitive environment in the communications equipment industry, continued commitment to product development efforts will be required for us to remain competitive. Accordingly, we intend to continue to allocate substantial resources, as a percentage of our net sales, to product development. Our internal research and development efforts are focused on those areas where we believe we are most likely to achieve success and on projects that we believe directly advance our strategic aims.

     Selling and administration: Selling and administration expenses for fiscal 2008 and fiscal 2007 represented 22.6% and 22.5% of net sales, respectively. The increase of $41.7 million was primarily due to the selling and administration expenses of our acquired companies, LGC and Century Man, including amortization expense of acquired intangible assets. LGC represented $32.0 million of the increase and Century Man represented $7.1 million of the increase.

     Restructuring and impairment charges: Restructuring charges relate principally to employee severance and facility consolidation costs resulting from the closure of leased facilities and other workforce reductions attributable to our efforts to reduce costs. During fiscal 2008, 2007 and 2006, we identified and accounted for the elimination of approximately 550, 200 and 400 employees, respectively, through reductions in force. In the current year, the restructuring costs were known in October 2008 and thus taken in fiscal 2008, with the notifications and terminations occurring in early fiscal 2009. The costs of these reductions have been and will be funded through cash from operations. These reductions have impacted each of our reportable segments.

     Facility consolidation and lease termination costs represent costs associated with our decision to consolidate and close duplicative or excess manufacturing and office facilities. During fiscal 2008 and 2007, we incurred charges of $0.7 million and $0.8 million, respectively, due to our decision to close unproductive and excess facilities and the continued softening of real estate markets, which resulted in lower sublease income.

     In fiscal 2008, we recorded impairment charges of $4.1 million related primarily to the write-off of certain intangible assets related to the exit of some of our outdoor wireless product lines. In fiscal 2007, we recorded impairment charges of $2.3 million related primarily to internally developed capitalized software costs, the exiting of the ACX product line and a commercial property in Germany formerly used by our services business.

Fiscal 2007 vs. Fiscal 2006

     Total operating expenses for fiscal 2007 and fiscal 2006 represented 28.6% and 29.3% of net sales, respectively. As discussed below, operating expenses include research and development, selling and administration expenses and restructuring and impairment charges.

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     Research and development: Research and development expenses for fiscal 2007 and fiscal 2006 represented 5.5% and 5.8% of net sales, respectively. Research and development expense decreased slightly as we fully realized the impact of facility consolidation activities completed in fiscal 2006.

     Selling and administration: Selling and administration expenses for fiscal 2007 and fiscal 2006 represented 22.5% and 21.9% of net sales, respectively. The increase in selling and administration expenses was primarily due to an increase in incentive compensation expenses and a $10.0 million contribution to the ADC Foundation. The contribution was made from the proceeds of a cash gain from the sale of stock of BigBand Networks, Inc. (“BigBand”) earlier in fiscal 2007. This grant was made to help fund the foundation’s future operations for several years. The increases to selling and administration expense were offset partially by a $5.7 million decrease in employee retention expenses related to our acquisition of Fiber Optic Network Solutions Corp. (“FONS”) that was completed in fiscal 2005. There was no FONS related retention expense in fiscal 2007.

     Restructuring and impairment charges: Restructuring charges related principally to employee severance and facility consolidation costs resulting from the closure of leased facilities and other workforce reduction costs attributable to our competitive transformation initiative. During fiscal 2007 and 2006, we terminated the employment of approximately 200 and 400 employees, respectively, through reductions in force. The costs of these reductions have been and will be funded through cash from operations. These reductions have impacted each of our reportable segments.

     Facility consolidation and lease termination costs represent costs associated with our decision to consolidate and close duplicative or excess manufacturing and office facilities. During fiscal 2007 and 2006, we incurred charges of $0.8 million and $5.0 million, respectively, due to our decision to close unproductive and excess facilities and the continued softening of real estate markets, which resulted in lower sublease income.

     In fiscal 2007, we recorded impairment charges of $2.3 million related primarily to internally developed capitalized software costs, the exiting of the ACX product line and a commercial property in Germany formerly used by our services business. For fiscal 2006, we recorded impairment charges related to facility consolidation of $1.2 million based on estimated market prices.

Other Income (Expense), Net

     Other income (expense), net for fiscal 2008, 2007 and 2006 was ($99.9) million, $48.8 million and $10.4 million, respectively. The following provides details for the respective periods:

	2008			2007			2006
	(In millions)
Interest income on short-term investments	$	31.0		$	33.3		$	22.8
Interest expense on borrowings		(28.2	)		(16.3	)		(15.8	)
Interest income, net		2.8			17.0			7.0
Foreign exchange income (loss)		(1.8	)		5.9			0.5
Gain (loss) on investments		—			57.5			(3.9	)
Impairment loss on available-for-sale securities		(100.6	)		(29.4	)		—
Andrew merger termination proceeds, net		—			—			3.8
KRONE Brazil customs accrual reversal		0.2			0.2			3.0
Loss on sale of fixed assets		(0.5	)		(0.7	)		(0.2	)
Other		—			(1.7	)		0.2
Subtotal		(102.7	)		31.8			3.4
Total other income (expense), net	$	(99.9	)	$	48.8		$	10.4

     During fiscal 2008 and 2007, we recorded impairment charges of $100.6 million and $29.4 million, respectively, to reduce the carrying value of certain auction-rate securities we hold. As of October 31, 2008, we held auction-rate securities with a fair value of $40.4 million and an original par value of $169.8 million. We have determined that these impairment charges are other-than-temporary in nature in accordance with Emerging Issues Task Force (“EITF”) 03-1 and Financial Accounting Standards Board (“FASB”) Staff Positions (“FSP”) Financial Accounting Standards (“FAS”) 115-1 and 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”.

     On January 26, 2007, we entered into an agreement with certain other holders of securities of BigBand to sell our entire interest in BigBand for approximately $58.9 million in gross proceeds. Our interest in BigBand had been carried at a nominal value. A portion of

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our interest was held in the form of a warrant to purchase BigBand shares with an aggregate exercise price of approximately $1.8 million. On February 16, 2007, we exercised our warrant and then immediately completed the sale of our BigBand stock. This transaction resulted in a gain of approximately $57.1 million. This gain did not have a tax provision impact due to a reduction of the valuation allowance attributable to U.S. deferred tax assets utilized to offset the gain.

     On January 10, 2007, we sold our interest in Redback Networks, Inc. (“Redback”) for gross proceeds of $0.9 million, which resulted in a gain of $0.4 million.

     The decrease in net interest income from fiscal 2007 to fiscal 2008 was due to an increase in interest expense from the $450.0 million of 3.5% fixed rate convertible unsecured subordinated notes that were issued in December 2007. The increase in net interest income from fiscal 2006 to fiscal 2007 was due to higher cash balances and higher investment earnings rates.

     For fiscal 2006, interest expense on borrowings includes $1.1 million for interest due on prior year income taxes. In addition, we recorded a $3.0 million reversal of a reserve recorded in purchase accounting in connection with the KRONE acquisition, a $3.9 million loss resulting from the write-off of a non-public equity interest and a $3.8 million net gain in connection with the termination agreement from our unsuccessful attempt to merge with Andrew Corporation.

Acquisitions

     LGC

     On December 3, 2007, we completed the acquisition of LGC, a provider of in-building wireless solution products, headquartered in San Jose, California. These products increase the quality and capacity of wireless networks by permitting voice and data signals to penetrate building structures and by distributing these signals evenly throughout the building. LGC also offers products that permit voice and data signals to reach remote locations. The acquisition was made to enable us to participate in this high growth segment of the industry.

     We acquired all of the outstanding capital stock and warrants of LGC for approximately $146.0 million in cash (net of cash acquired). In order to address potential indemnity claims of ADC, $15.5 million of the purchase price is held in escrow for up to 15 months following the close of the transaction.

     In the first quarter of fiscal 2009, we received $2.7 million in indemnity funds from the former LGC shareholders to satisfy a customer claim obligation.

     We acquired $58.9 million of intangible assets as part of this purchase. We recorded $9.4 million of amortization expense related to these intangibles for the fiscal year ended October 31, 2008. Goodwill of $85.3 million was recorded in this transaction and assigned to our Network Solutions segment. This goodwill is not deductible for tax purposes. The results of LGC, subsequent to December 3, 2007, are included in our consolidated statements of operations.

     Option holders of LGC shares were given the opportunity either to receive a cash payment for their options or exchange their options for options to acquire ADC shares. Certain LGC option holders received $9.1 million in cash payments for their options. The remaining option holders received ADC options with a fair value of $3.5 million as of the close of the acquisition. Approximately $3.0 million of the option value was added to the purchase price of LGC. Approximately $0.5 million of the option value will be recognized over the remaining vesting period.

     Century Man

     On January 10, 2008, we completed the acquisition of Century Man, a leading provider of communication distribution frame solutions, headquartered in Shenzhen, China. The acquisition was made to accelerate our growth potential in the Chinese connectivity market, as well as provide us with additional products designed to meet the needs of customers in developing markets outside of China.

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     We acquired Century Man for $52.3 million in cash (net of cash acquired). The former shareholders of Century Man may be paid up to an additional $15.0 million if, during the three years following closing, certain financial results are achieved by the acquired business. Of the purchase price, $7.5 million is held in escrow for up to 36 months following the close of the transaction. Of the $7.5 million, $7.0 million relates to potential indemnification claims and $0.5 million relates to the disposition of certain buildings.

     We acquired $13.0 million of intangible assets as part of this purchase. We recorded $1.9 million of amortization expense related to these intangibles for the fiscal year ended October 31, 2008. Goodwill of $35.3 million was recorded in this transaction and assigned to our Connectivity segment. This goodwill is not deductible for tax purposes. The results of Century Man, subsequent to January 10, 2008, are included in our consolidated statements of operations.

     The purchase prices for LGC and Century Man were allocated on a preliminary basis using information currently available. The allocation of the purchase prices to the assets and liabilities acquired will be finalized no later than the first quarter of fiscal 2009. This will occur as we obtain more information regarding asset valuations, liabilities assumed and revisions of preliminary estimates of fair values made at the dates of purchase.

     Andrew Corporation

     On May 30, 2006, we entered into a definitive merger agreement with Andrew Corporation for an all-stock merger transaction pursuant to which Andrew would have become a wholly-owned subsidiary of ADC. On August 9, 2006, both parties entered into a definitive agreement to terminate the merger agreement. To effect the mutual termination, Andrew paid us a fee of $10.0 million. The termination agreement further provided for the mutual release of any claims in connection with the merger agreement. During the third quarter of fiscal 2006, we capitalized $3.4 million of merger-related costs, consisting primarily of financial and legal advisory fees and a fairness opinion. In addition, during the fourth quarter of fiscal 2006, we incurred additional expenses of approximately $2.8 million related primarily to financial and legal advisory fees. The total merger related costs of $6.2 million were charged to expense during the fourth quarter in fiscal 2006 and offset by the $10.0 million termination fee, resulting in a net increase in other income of $3.8 million.

Discontinued operations

APS Germany

     During the fourth quarter of fiscal 2008, our Board of Directors approved a plan to divest our EMEA Professional Services business (“APS Germany”). We classified this business as a discontinued operation in the fourth quarter of fiscal 2008. This business was previously included in our Professional Services segment. We expect to close on a sale of APS Germany in fiscal 2009. We expect to receive proceeds in excess of our book value and do not anticipate a significant gain or loss on the sale.

APS France

     During the third quarter of fiscal 2006, our Board of Directors approved a plan to divest APS France. On January 12, 2007, we completed the sale of certain assets of APS France to a subsidiary of Groupe Circet, a French company, for a cash price of $0.1 million. In connection with this transaction, we compensated Groupe Circet for assuming certain facility and vehicle leases. APS France had been included in our Professional Services segment. We classified this business as a discontinued operation in the third quarter of fiscal 2006. We recorded a loss on the sale of the business of $22.6 million during fiscal 2006, which includes a provision for employee severance and $7.0 million related to the write off of the currency translation adjustment. We recorded an additional loss of $4.7 million in fiscal 2007 due to subsequent working capital adjustments and additional expenses related to the finalization of the sale, resulting in a total loss on sale of $27.3 million.

Share-Based Compensation

     On November 1, 2005, we adopted Statements of Financial Accounting Standards (“SFAS”) 123(R), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors. The awards include employee stock options, restricted stock units (including time-based and performance-based vesting) and other forms of stock-based compensation. SFAS 123(R) supersedes Accounting Principles Board (“APB”) 25, which we previously applied, for periods beginning in fiscal 2006.

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     Share-based compensation recognized under SFAS 123(R) for fiscal 2008, 2007 and 2006 was $17.2 million, $10.5 million and $10.0 million, respectively. The share-based compensation expense is calculated on a straight-line basis over the vesting periods of the related share-based awards.

Income Taxes

     Note 10 to the Consolidated Financial Statements in Item 8 of this Form 10-K describes the items which have impacted our effective income tax rate for fiscal 2008, 2007 and 2006.

     In fiscal 2008, we recorded a net income tax provision totaling $6.2 million. This provision is primarily attributable to foreign income taxes and deferred tax liabilities attributable to U.S. tax amortization of purchased goodwill from our acquisition of the KRONE group of companies in fiscal 2003. This provision also includes a $3.4 million charge related to the establishment of additional valuation allowance on our U.S. deferred tax assets.

     In fiscal 2007, we recorded a net income tax provision totaling $3.3 million. This provision is primarily attributable to foreign income taxes and deferred tax liabilities attributable to U.S. tax amortization of purchased goodwill from the acquisition of KRONE. This provision was offset by a $6.0 million tax benefit related to the partial release of the valuation allowance on our U.S. deferred tax assets.

     In fiscal 2006, we recorded a net income tax benefit totaling $37.7 million. This benefit is primarily attributable to the partial release of the valuation allowance on our U.S. deferred tax assets of $49.0 million. This partial release is offset by an income tax provision relating to foreign income taxes and deferred tax liabilities attributable to U.S. tax amortization of purchased goodwill from the acquisition of KRONE.

Income (Loss) from Continuing Operations

     During fiscal 2008 we had a loss from continuing operations of $44.4 million compared to $123.5 million of income in fiscal 2007. The fiscal 2008 results were attributable to a $100.6 million other-than-temporary impairment charge related to our auction-rate securities, slightly lower gross margins, and an increase in restructuring and impairment charges. There was also a $57.1 million gain from the sale of BigBand stock in fiscal 2007 with no comparable gain in fiscal 2008. In fiscal 2007, we recorded a $29.4 million other-than-temporary impairment charge related to auction-rate securities.

     Income from continuing operations increased $30.2 million in fiscal 2007 compared to fiscal 2006. This result was attributable to a 1.7% increase in gross margins, increased sales volumes and the $57.1 million gain from the sale of BigBand stock. This favorable impact was partially offset by increased incentive expenses, a $29.4 million other-than-temporary impairment charge related to our auction-rate securities and an increased provision for income taxes.

Segment Disclosures

     Specific financial information regarding each of our three reportable segments is provided in the following table:

	For the Years Ended
	October 31,
	2008			2007			2006
	(In millions)
Connectivity
Operating income	$	115.5		$	100.7		$	83.6
Depreciation and amortization		60.5			58.9			55.0
Network Solutions
Operating (loss)	$	(39.5	)	$	(10.4	)	$	(13.1	)
Depreciation and amortization		15.9			5.3			5.8
Professional Services
Operating income (loss)	$	0.9		$	5.5		$	(4.7	)
Depreciation and amortization		5.9			3.8			6.5

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Fiscal 2008 vs. Fiscal 2007

     Our Connectivity segment’s operating income increased in fiscal 2008 compared to fiscal 2007 primarily due to increases in sales of our global fiber connectivity solutions and copper connectivity sales in emerging markets. Our Network Solutions segment’s operating loss increased due to declining revenue in outdoor wireless and wireline products. In addition, fiscal 2008 included $9.4 million of amortization expense related to our LGC acquisition with no comparable expense in fiscal 2007. Our Professional Services segment’s operating income decreased due to a changing mix of services provided.

     Depreciation and amortization expense was relatively flat for our Connectivity and Professional Services segments and increased for our Network Solutions segment due to the $9.4 million of amortization expense related to acquired intangibles from LGC.

Fiscal 2007 vs. Fiscal 2006

     Our Connectivity segment’s operating income increased in fiscal 2007 compared to fiscal 2006 primarily due to increases in sales of our global fiber products combined with cost savings achieved through our competitive transformation initiative. Our Network Solutions segment’s operating loss decreased due to higher spend levels from a variety of existing customers. The Network Solutions segment also benefited from our competitive transformation initiative, specifically through increased outsourcing and closure of redundant facilities. Our Professional Services segment’s went from an operating loss in fiscal 2006 to an operating gain in fiscal 2007 as a result of higher revenue in fiscal 2007.

     Depreciation and amortization expense was relatively flat for all segments of our business.

Application of Critical Accounting Policies and Estimates

     The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires us to make judgments, assumptions and estimates that affect the amounts reported in our Consolidated Financial Statements and accompanying notes. Note 1 to the Consolidated Financial Statements in Item 8 of this Form 10-K describes the significant accounting policies and methods used in preparing the Consolidated Financial Statements. We consider the accounting policies described below to be our most critical accounting policies because they are impacted significantly by estimates we make. We base our estimates on historical experience or various assumptions that we believe to be reasonable under the circumstances, and the results form the basis for making judgments about the reported values of assets, liabilities, revenues and expenses. Actual results may differ materially from these estimates.

     Available-for-Sale Securities: We classify both debt securities with maturities of more than three months but less than one year and equity securities in publicly held companies as current available-for-sale securities. Debt securities with maturities greater than one year from the acquisition date are classified as long-term available-for-sale securities. Available-for-sale securities are recorded at fair value, and temporary unrealized holding gains and losses are recorded, net of tax, as a separate component of accumulated other comprehensive income. Unrealized losses are charged against net earnings when a decline in fair value is determined to be other-than-temporary. In accordance with EITF 03-1 and FSP FAS 115-1 and 124-1,“The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” we review several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time a security is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near term prospects of the issuer and, (iv) our intent and ability to hold the security for a period of time sufficient to allow for any anticipated recovery in fair value. Realized gains and losses are accounted for on the specific identification method.

     Auction-rate securities, which comprise substantially all of our available-for-sale securities, include interests in collateralized debt obligations, a portion of which are collateralized by pools of residential and commercial mortgages, interest-bearing corporate debt obligations, and dividend-yielding preferred stock. Liquidity for these auction-rate securities typically is provided by an auction process that resets the applicable interest rate at pre-determined intervals, usually every 7, 28, 35 or 90 days. Because of the short interest rate reset period, we had historically recorded auction-rate securities in current available-for-sale securities. As of October 31, 2008 and 2007, we held auction-rate securities that had experienced a failed reset process and were deemed to have experienced an other-than-temporary decline in fair value. We have classified all auction-rate securities as long-term available-for-sale securities as a result of their failed auctions.

     Due to the failed auction status and lack of liquidity in the market for such securities, the valuation methodology includes certain assumptions that were not supported by prices from observable current market transactions in the same instruments nor were they based on observable market data. With the assistance of the valuation specialist, we estimated the fair value of the auction-rate securities based on the following: (i) the underlying structure of each security; (ii) the present value of future principal and interest

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payments discounted at rates considered to reflect current market conditions; (iii) consideration of the probabilities of default, passing auction, or earning the maximum rate for each period; and (iv) estimates of the recovery rates in the event of defaults for each security. These estimated fair values could change significantly based on future market conditions. In the future, we expect to use the assistance of a valuation specialist to determine the fair value of our auction-rate securities in connection with the preparation of our financial statements for each quarter.

     Inventories: We state our inventories at the lower of first-in, first-out cost or market. In assessing the ultimate realization of inventories, we are required to make judgments as to future demand requirements compared with current or committed inventory levels. Our reserve requirements generally increase as our projected demand requirements decrease due to market conditions, technological and product life cycle changes as well as longer than previously expected usage periods for previously sold equipment. It is possible that significant increases in inventory reserves may be required in the future if there is a decline in market conditions. Alternatively, if we are able to sell previously reserved inventory, we will reverse a portion of the reserves. Changes in inventory reserves are recorded as a component of cost of sales. As of October 31, 2008 and 2007, we had $50.7 million and $41.3 million, respectively, reserved against our inventories, which represents 23.8% and 19.6%, respectively, of total inventory on-hand.

     Restructuring Accrual: During fiscal 2008 and fiscal 2007, we recorded restructuring charges representing the direct costs of exiting leased facilities and employee severance. If such costs constitute an ongoing benefit arrangement that is probable and estimable, accruals are established pursuant to FASB Statement No. 112, “Employers’ Accounting for Postemployment Benefits — An Amendment of FASB Statements No. 5 and 43.” All other restructuring accruals are established pursuant to FASB Statement No. 146, “Accounting for Costs Associated with Exit or Disposal Activities". Restructuring charges represent our best estimate of the associated liability at the date the charges are taken. Significant judgment is required in estimating the restructuring costs of leased facilities. For example, we make certain assumptions with respect to when a facility will be subleased and the amount of income that will be generated from that sublease. Adjustments for changes in assumptions are recorded as a component of operating expenses in the period they become known. Changes in assumptions could have a material effect on our restructuring accrual as well as our consolidated results of operations.

     Revenue Recognition: We recognize revenue, net of discounts, when persuasive evidence of an arrangement exists, delivery has occurred or service has been rendered, the selling price is fixed or determinable and collectibility is reasonably assured in accordance with the guidance in the SEC Staff Accounting Bulletin No. 104, Revenue Recognition.

     As part of the revenue recognition process, we determine whether collection is reasonably assured based on various factors, including an evaluation of whether there has been deterioration in the credit quality of our customers that could result in us being unable to collect or sell the receivables. In situations where it is unclear whether we will be able to sell or collect the receivable, revenue and related costs are deferred. Related costs are recognized when it has been determined that the collection of the receivable is unlikely.

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

     The majority of our revenue comes from product sales. Revenue from product sales is generally recognized upon shipment of the product to the customer in accordance with the terms of the sales agreement. Revenue from services consists of fees for systems requirements, design and analysis, customization and installation services, ongoing system management, enhancements and maintenance. The majority of our service revenue comes from our Professional Services business. For this business, we primarily apply the percentage-of-completion method to arrangements consisting of design, customization and installation. We measure progress towards completion by comparing costs incurred to total planned project costs.

     Some of our customer arrangements include multiple deliverables, such as product sales that include services to be performed after delivery of the product. In such cases, we apply the guidance in EITF 00-21, Revenue Arrangements with Multiple Deliverables. Generally, we account for a deliverable (or a group of deliverables) separately if all of the following criteria have been met (i) the delivered item(s) has stand-alone value to the customer, (ii) there is objective and reliable evidence of the fair value of the undelivered item(s) included in the arrangement, and (iii) we have given the customer a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) or service(s) is probable and substantially in our control.

     When there is objective and reliable evidence of fair value for all units of accounting in an arrangement, we allocate the arrangement consideration to the separate units of accounting based on their relative fair values. In cases where we have objective and

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reliable evidence of fair value for the undelivered items in an arrangement, but no such evidence for the delivered items, we allocate the arrangement consideration using the residual method. If the elements cannot be considered separate units of accounting, or if we cannot determine the fair value of any of the undelivered elements, we defer revenue, if material, until the entire arrangement is delivered or fair value can be determined for all undelivered units of accounting.

     Once we have determined the amount, if any, of arrangement consideration allocable to the undelivered item(s), we apply the applicable revenue recognition policy, as described elsewhere herein, to determine when such amount may be recognized as revenue.

     When an arrangement includes software that is more than incidental to the product being sold, we account for the transaction under the provisions of Statement of Position 97-2, Software Revenue Recognition (“SOP 97-2”). If the arrangement includes non-software elements for which software is essential to the functionality of the element, those elements are also accounted for under SOP 97-2, as prescribed in EITF 03-05, Applicability of AICPA Statement of Position 97-2 to Non-Software Deliverables in an Arrangement Containing More-Than-Incidental Software.

     Warranty: We provide reserves for the estimated cost of warranties at the time revenue is recognized. We estimate the costs of our warranty obligations based on our warranty policy or applicable contractual warranty, our historical experience of known product failure rates, and use of materials and service delivery costs incurred in correcting product failures. In addition, from time to time, specific warranty accruals may be made if unforeseen technical problems arise. Should our actual experience relative to these factors be worse than our estimates, we will be required to record additional warranty reserves. Alternatively, if we provide more reserves than we need, we will reverse a portion of such provisions in future periods. Changes in warranty reserves are recorded as a component of cost of sales. As of October 31, 2008 and 2007, we reserved $8.9 million and $7.7 million, respectively, related to future estimated warranty costs.

     Recoverability of Goodwill and Long-Lived Assets: Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. We perform impairment reviews at the reporting unit level. Our three operating segments; Connectivity, Network Solutions and Professional Services are considered the reporting units. We use a discounted cash flow model based on management’s judgment and assumptions to determine the estimated fair value of each reporting unit. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. Our last annual impairment analysis was performed as of October 31, 2008, which indicated that the estimated fair value of each reporting unit exceeded its corresponding carrying amount, including recorded goodwill. As a result, no impairment existed at that time.

     Our forecasts and estimates were based on assumptions that are consistent with the plans and estimates we are using to manage our business. Changes in these estimates could change our conclusion regarding an impairment of goodwill or other intangible assets and potentially result in a non-cash impairment in a future period. During the latter part of the fourth quarter of fiscal 2008 and continuing into December 2008, there was a significant decline in general economic conditions. A continued decline in general economic conditions, including a sustained decline in our market capitalization relative to our net book value, could materially impact our judgments and assumptions about the fair value of our business. If general economic conditions do not improve we may be required to record a goodwill impairment charge during fiscal 2009.

     We assess the recoverability of long-lived assets, including intangible assets other than goodwill, when indicators of impairment exist. The assessment of the recoverability of long-lived assets reflects management’s assumptions and estimates. Factors that management must estimate when performing impairment tests include sales volume, prices, inflation, discount rates, exchange rates, tax rates and capital spending. Significant management judgment is involved in estimating these factors, and they include inherent uncertainties. Measurement of the recoverability of these assets is dependent upon the accuracy of the assumptions used in making these estimates, as well as how the estimates compare to the eventual future operating performance of the specific reporting unit to which the assets are attributed. All assumptions utilized in the impairment analysis are consistent with management’s internal planning.

     Income Taxes and Deferred Taxes: We currently have significant deferred tax assets (primarily in the United States) as a result of net operating loss carryforwards, tax credit carryforwards and temporary differences between taxable income on our income tax returns and income before income taxes under U.S. generally accepted accounting principles. A deferred tax asset represents future tax benefits to be received when these carryforwards can be applied against future taxable income or when expenses previously reported in our financial statements become deductible for income tax purposes.

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     In the third quarter of fiscal 2002, we recorded a full valuation allowance against our net deferred tax assets because we concluded that it was more likely than not that we would not realize these assets. Our decision was based on the cumulative losses we had incurred to that point as well as the full utilization of our loss carryback potential. From the third quarter of fiscal 2002 to fiscal 2005, we maintained our policy of providing a nearly full valuation allowance against all future tax benefits produced by our operating results. In fiscal 2006, we determined that our recent experience generating U.S. income, along with our projection of future U.S. income, constituted significant positive evidence for partial realization of the U.S. deferred tax assets. Therefore, we recorded a tax benefit of $49.0 million in fiscal 2006 and an additional $6.0 million in fiscal 2007 related to a partial release of valuation allowance on the portion of our U.S. deferred tax assets expected to be realized over the following two-year period. During fiscal 2008, we reestablished a valuation allowance on our U.S. deferred tax assets in the amount of $3.4 million as a result of a reduction in projected future U.S. income from levels projected in fiscal 2007. At one or more future dates, if sufficient positive evidence exists that it is more likely than not that the benefit will be realized with respect to additional deferred tax assets, we will release additional valuation allowance. Also, if there is a reduction in the projection of future U.S. income, we may need to increase the valuation allowance.

     Effective November 1, 2007, we adopted the provisions of FASB Interpretation No. 48 (“FIN 48”), “Accounting for Uncertainty in Income Taxes — an interpretation of FASB Statement No. 109”. In applying FIN 48, we recognize the income tax benefit from an uncertain tax position if, based on the technical merits of the position, it is more likely than not that the tax position will be sustained upon examination by the taxing authorities. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. No tax benefit has been recognized in the financial statements if the more likely than not recognition threshold has not been met. The actual tax benefits ultimately realized may differ from our estimates. In future periods, changes in facts, circumstances, and new information may require us to change the recognition and measurement estimates with regard to individual tax positions. Changes in recognition and measurement estimates are recorded in the financial statements in the period in which the change occurs. FIN 48 also provides guidance on derecognition, classification, interest and penalties, disclosure and transition relating to uncertain income tax positions.

     See Note 10 to the Consolidated Financial Statements in Item 8 of this Form 10-K for further discussion of the accounting treatment for income taxes.

     Share-Based Compensation: We use the Black-Scholes Model for purposes of determining estimated fair value of share-based payment awards on the date of grant under SFAS 123(R). The Black-Scholes Model requires certain assumptions that involve judgment. Because our employee stock options and restricted stock units have characteristics significantly different from those of publicly traded options, and because changes in the input assumptions can materially affect the fair value estimate, the existing models may not provide a reliable single measure of the fair value of our share-based payment awards. Management will continue to assess the assumptions and methodologies used to calculate estimated fair value of share-based compensation. Circumstances may change and additional data may become available over time, which could result in changes to these assumptions and methodologies and thereby materially impact our fair value determination. If factors change and we employ different assumptions in the application of SFAS 123(R) in future periods, the compensation expense that we record under SFAS 123(R) may differ significantly from what we have recorded in the current period. We elected to adopt the alternative transition method provided under SFAS 123(R) for purposes of calculating the pool of excess tax benefits available to absorb tax deficiencies recognized subsequent to the adoption of SFAS 123(R).

Recently Issued Accounting Pronouncements

     In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FAS 133” (“SFAS 161”). SFAS 161 applies to all derivative instruments and non-derivative instruments that are designated and qualify as hedging instruments and related hedged items accounted for under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”). The provisions of SFAS 161 require entities to provide greater transparency through additional disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. We are currently evaluating the effects, if any, that SFAS 161 may have on our financial statements.

     In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations” (“SFAS 141(R)”) and SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”). SFAS 141(R) requires the acquiring entity in a business

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combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values and changes other practices under FAS 141, some of which could have a material impact on how we account for business combinations. SFAS 141(R) also requires additional disclosure of information surrounding a business combination, such that users of the entity’s financial statements can fully understand the nature and financial impact of the business combination. SFAS 160 requires entities to report non-controlling (minority) interests in subsidiaries as equity in the consolidated financial statements. We are required to adopt SFAS 141(R) and SFAS 160 simultaneously in our fiscal year beginning November 1, 2009. The provisions of SFAS 141(R) will only impact us if we are party to a business combination after the pronouncement has been adopted. We are currently evaluating the effects, if any, that SFAS 160 may have on our financial statements.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by allowing entities to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. If we elect to adopt the provisions of SFAS 159, it would be effective in our fiscal year beginning November 1, 2008. We are currently evaluating the impact, if any, that SFAS 159 may have on our financial statements.

     During September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are required to adopt the provisions of SFAS 157 in our fiscal year beginning November 1, 2008. We currently are evaluating the effects, if any, that this pronouncement may have on our consolidated financial statements.

Liquidity and Capital Resources

Liquidity

     Cash and cash equivalents not subject to restrictions were $631.4 million at October 31, 2008, an increase of $111.2 million compared to $520.2 million as of October 31, 2007. This increase is primarily due to the issuance of $450.0 million in convertible notes and the generation of cash from operations of $175.6 million in fiscal 2008, partially offset by the $200.0 million payment of our 2008 convertible notes (described further below under the caption “Financing Activities”) and by payments for our acquisitions of LGC and Century Man (described further below under the caption “Investing Activities”).

     As of October 31, 2008 and October 31, 2007, our available-for-sale securities were:

	October 31,		October 31,
(In millions)	2008		2007
Current available-for-sale securities	$	0.1	$	61.6
Long-term available-for-sale securities		40.4		113.8
Total available-for-sale securities	$	40.5	$	175.4

     Current capital market conditions have significantly reduced our ability to liquidate our remaining auction-rate securities. As of October 31, 2008, we held auction-rate securities with a fair value of $40.4 million and an original par value of $169.8 million, which are classified as long-term. During fiscal 2008 and 2007, we recorded other-than-temporary impairment charges of $100.6 million and $29.4 million, respectively, to reduce the fair value of our holdings in auction-rate securities to $40.4 million. We will not be able to liquidate any of these auction-rate securities until either a future auction is successful or, in the event secondary market sales become available, we decide to sell the securities in a secondary market. A secondary market sale of any of these securities could take a significant amount of time to complete and could potentially result in a further loss. We are pursuing all options for potential recovery of our losses. All of our auction-rate security investments have made their scheduled interest payments based on a par value of $169.8 million at October 31, 2008 with the exception of one investment with a par value of $16.8 million, which has been fully written off. In addition, the interest rates have been set to the maximum rate defined for the issuer.

     Restricted cash balances that are pledged primarily as collateral for letters of credit and lease obligations affect our liquidity. As of October 31, 2008, we had restricted cash of $15.3 million compared to $12.8 million as of October 31, 2007, an increase of

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$2.5 million. Restricted cash is expected to become available to us upon satisfaction of the obligations pursuant to which the letters of credit or guarantees were issued.

Operating Activities

     Net cash provided by operating activities from continuing operations for fiscal 2008 totaled $173.9 million, a $23.5 million increase from the cash provided by operating activities from continuing operations for fiscal 2007. This was due to $245.3 million of non-cash adjustments to reconcile loss from continuing operations to net cash provided by operating activities. This cash inflow was partially offset by a $44.4 million loss from continuing operations, a $6.8 million increase in operating assets and a $20.2 million decrease in operating liabilities. The non-cash adjustments of $245.3 million to reconcile the loss from continuing operations to net cash provided by operating activities includes the $100.6 million impairment loss on available-for-sale securities. Working capital requirements typically will increase or decrease with changes in the level of net sales. In addition, the timing of certain accrued payments will affect the annual cash flow. Any employee incentive payments affect the timing of our operating cash flow as these are accrued throughout the fiscal year but paid during the first quarter of the subsequent fiscal year.

     Net cash provided by operating activities from continuing operations for fiscal 2007 totaled $150.4 million, a $57.1 million increase from the cash provided by operating activities from continuing operations for fiscal 2006. This was due primarily to the increase in income from continuing operations. The cash inflow in fiscal 2007 was due to $123.5 million of income from continuing operations, $51.1 million of non-cash adjustments to reconcile income from continuing operations to net cash provided by operating activities and an $11.3 million increase in operating liabilities. These cash inflows were partially offset by a $35.5 million increase in operating assets. The non-cash adjustments of $51.1 million to reconcile net income from continuing operations to net cash provided by operating activities include the $29.4 million impairment loss on available-for-sale securities and the $57.5 million gain on the sale of our positions in BigBand and Redback.

Investing Activities

     Investing activities from continuing operations used $213.5 million of cash during fiscal 2008. Cash used by investing activities included $146.0 million for the acquisition of LGC, $52.3 million for the acquisition of Century Man, a $4.0 million investment in ip.access, Ltd., a $1.2 million investment in E-Band Communications Corporation and $42.4 million of property, equipment and patent additions. This was partially offset by $35.1 million of net sales of available-for-sale securities.

     Cash provided by investing activities from continuing operations was $222.9 million during fiscal 2007. Cash provided by investing activities included $201.3 million of net sales of available-for-sale securities and $59.8 million of proceeds from the sale of investments, which included BigBand and Redback. These were offset by $30.4 million for property and equipment additions.

     Investing activities from continuing operations used $67.6 million during fiscal 2006. Cash used by investing activities included $58.1 million for net purchases of available-for-sales securities and $33.0 million for property and equipment additions. Cash provided by investing activities consisted primarily of $14.2 million for collections on notes receivable and an $8.0 million decrease in restricted cash.

Financing Activities

     Financing activities provided $163.8 million, $4.8 million and $9.6 million of cash during fiscal 2008, fiscal 2007 and fiscal 2006, respectively. The increase in fiscal 2008 was due to the issuance of $450.0 million of convertible debt discussed in Note 8 to the financial statements, less payments for the financing costs associated with this debt, the $200.0 million payment of our 2008 convertible notes and payments made on LGC and Century Man debt. Fiscal 2008 also included $56.5 million repurchase of 6.4 million shares of common stock under our share repurchase program.

Outstanding Debt and Credit Facility

     As of October 31, 2008, we had outstanding $650.0 million of convertible unsecured subordinated notes, consisting of:

	October 31,		Conversion
(In millions)	2008		Price
Convertible subordinated notes, six-month LIBOR plus 0.375%, due June 15, 2013	$	200.0	$	28.091
Convertible subordinated notes, 3.5% fixed rate, due July 15, 2015		225.0		27.00
Convertible subordinated notes, 3.5% fixed rate, due July 15, 2017		225.0		28.55
Total convertible subordinated notes	$	650.0

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     See Note 8 to the Consolidated Financial Statements in Item 8 of this Form 10-K for more information on these notes.

     From time to time, we may use interest rate swaps to manage interest costs and the risk associated with changing interest rates. We do not enter into interest rate swaps for speculative purposes. On April 29, 2008, we entered into an interest rate swap effective June 15, 2008, for a notional amount of $200.0 million. The interest rate swap hedges the exposure to changes in interest rates of our $200.0 million of convertible unsecured subordinated notes that have a variable interest rate of six-month LIBOR plus 0.375% and a maturity date of June 15, 2013. We have designated the interest rate swap as a cash flow hedge for accounting purposes. The swap is structured so that we receive six-month LIBOR and pay a fixed rate of 4.0% (before the credit spread of 0.375%). The variable portion we receive resets semiannually and both sides of the swap are settled net semiannually based on the $200.0 million notional amount. The swap matures concurrently with the end of the debt obligation. The swap is currently secured by the assets pledged under our revolving credit facility. The fair market value of the swap on October 31, 2008 was a net unrealized loss of $2.8 million, which is recorded as a component of comprehensive income.

     As of October 31, 2008, we also had other outstanding debt of $3.3 million. This is primarily debt we assumed in our acquisitions of LGC and Century Man.

     On April 3, 2008, we entered into a secured five-year revolving credit facility. The credit facility allows us to obtain loans in an aggregate amount of up to $200.0 million and provides an option to increase the credit facility by up to an additional $200.0 million under agreed upon conditions. Depending on the type of loan we elect under the facility, the funds will accrue interest on an annual basis at either (i) a credit spread of up to 1% plus the greater of (a) the prime rate as determined by JP Morgan Chase Bank, N.A., (b) the federal funds effective rate plus ¹/2 of 1% and (c) the LIBOR for a one month interest period plus 1% or (ii) a credit spread of up to 2.0% plus the LIBOR over a one, two, three or six month period. In either case, the credit spread is determined by our then current total leverage ratio. In addition, we agreed to pay a commitment fee, which shall accrue at a rate that, depending on the then current total leverage ratio, may vary between 0.15% and 0.40% on the average daily amount of the available revolving credit facility.

     There are various financial and non-financial covenants that we must comply with in connection with this credit facility. The financial covenants require that during the term of the credit facility we maintain a certain pre-determined maximum total leverage ratio, a maximum senior leverage ratio, and a minimum interest coverage ratio. Compliance with the financial covenants is measured quarterly. Among other things, the non-financial covenants include restrictions on making acquisitions, investments and capital expenditures except as permitted under the credit agreement. As of October 31, 2008, we were in compliance with the covenants under the credit facility. A failure to comply with one or more of the covenants in the line of credit is more likely to occur in the current macro-economic conditions. Any such failure could limit or cease our ability to utilize the line of credit, limit our operating flexibility and impair our ability to undertake strategic acquisitions or other transactions, or, if we have drawn funds, accelerate repayment terms on borrowed amounts.

     On August 12, 2008, our board of directors approved a share repurchase program for up to $150.0 million. We obtained consent from lenders under our revolving credit facility to complete this program. The program provided that share repurchases could commence beginning in September 2008 and continue until the earlier of the completion of $150.0 million in share repurchases or July 31, 2009. As of October 31, 2008, we had repurchased approximately 6.4 million shares of common stock for approximately $56.5 million, or $8.80 average per share.

     In early December 2008, we completed this repurchase program at an average price of $7.04 per share, resulting in approximately 21.3 million shares purchased under the program. These share repurchases represent an 18% reduction in our total shares outstanding as compared to the 118.3 million diluted weighted average common shares outstanding reported in our August 1, 2008 financial statements filed on Form 10-Q.

Working Capital and Liquidity Outlook

     Our main source of liquidity continues to be our unrestricted cash resources, which include existing cash, cash equivalents and our line of credit. We currently expect that our existing cash resources will be sufficient to meet our anticipated needs for working capital and capital expenditures to execute our near-term business plan. This expectation is based on current business operations and economic conditions and assumes we are able to maintain breakeven or positive cash flows from operations.

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     Auction-rate securities account for most of our available-for-sale securities as of October 31, 2008. Because current capital market conditions have significantly reduced our ability to liquidate our auction-rate securities, we do not believe these investments will be liquid in the near future. However, we do not believe we need these investments to be liquid in order to meet the cash needs of our present operating plans. As of October 31, 2008, we held auction-rate securities with a fair value of $40.4 million.

     We also believe that our unrestricted cash resources will enable us to pursue strategic opportunities, including possible product line or business acquisitions. However, if the cost of one or more acquisition opportunities exceeds our existing cash resources, additional sources may be required. We currently have a secured five-year revolving line of credit in an aggregate amount of up to $200.0 million with an option to increase the credit facility by up to an additional $200.0 million under agreed upon conditions. Any plan to raise additional capital may involve an equity-based or equity-linked financing, such as another issuance of convertible debt or the issuance of common stock or preferred stock, which would be dilutive to existing shareowners. If we raise additional funds by issuing debt, we may be subject to restrictive covenants that could limit our operational flexibility and higher interest expense that could dilute earnings per share.

     In addition, our deferred tax assets, which are substantially reserved at this time, should reduce our income tax payable on taxable earnings in future years.

Contractual Obligations and Commercial Commitments

     As of October 31, 2008, the following table summarizes our commitments to make long-term debt and lease payments and certain other contractual obligations:

	Payments Due by Period
			Less						More
			Than		1-3		3-5		Than
Contractual Obligations	Total		1 Year		Years		Years		5 Years		Other
Long-Term Debt Obligations (1)	$	814.1	$	24.2	$	49.6	$	246.0	$	494.3	$	—
Capital Lease Obligations		0.8		0.5		0.3		—		—		—
Operating Lease Obligations		84.8		23.1		32.1		18.5		11.1		—
Purchase Obligations (2)		10.2		10.0		0.2		—		—		—
Other Long-Term Liabilities		11.9		5.6		2.3		—		—		4.0
Pension Obligations		56.4		4.5		9.0		9.3		33.6		—
Total	$	978.2	$	67.9	$	93.5	$	273.8	$	539.0	$	4.0

(1)	Includes interest on our fixed rate debt of 3.5% and interest on our variable rate debt of 4.375%.
(2)	Amounts represent non-cancelable commitments to purchase goods and services, including items such as inventory and information technology support.

Cautionary Statement Regarding Forward Looking Information

The discussion herein, including, but not limited to, Management’s Discussion and Analysis of Financial Condition and Results of Operations as well as the Notes to the Condensed Consolidated Financial Statements, 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 (the “Exchange Rate”). Forward-looking statements represent our expectations or beliefs concerning future events and are subject to certain risks and uncertainties that could cause actual results to differ materially from the forward looking statements. These statements may include, among others, statements regarding future sales, profit percentages, earnings per share and other results of operations; statements about shareholder value; expectations or beliefs regarding the marketplace in which we operate; the prices of raw materials and transportation costs; the sufficiency of our cash balances and cash generated from operating and financing activities for our future liquidity; capital resource needs, and the effect of regulatory changes. These statements could be affected by a variety of factors, such as: demand for equipment by telecommunication service providers and large enterprises; variations in demand for particular products in our portfolio and other factors that can impact our overall margins; our ability to operate our business to achieve, maintain and grow operating profitability; changing regulatory conditions and macroeconomic conditions both in our industry and in local and global markets that can influence the demand for our products and services; fluctuations in the market value of our common stock, that can be caused by many factors outside of our control and could cause us to record an impairment charge on our goodwill in the future if our market capitalization remains below the book value of our assets for a continued time period; consolidation among our customers, competitors or vendors that can disrupt or displace customer

44

relationships; our ability to keep pace with rapid technological change in our industry; our ability to make the proper strategic choices regarding acquisitions or divestitures; our ability to integrate the operations of any acquired business; increased competition within our industry and increased pricing pressure from our customers; our dependence on relatively few customers for a majority of our sales as well as potential sales growth in market segments we believe have the greatest potential; fluctuations in our operating results from quarter-to-quarter, that can be caused by many factors beyond our control; financial problems, work interruptions in operations or other difficulties faced by customers or vendors that can impact our sales, sales collections and ability to procure necessary materials, components and services to operate our business; our ability to protect our intellectual property rights and defend against potential infringement claims; possible limitations on our ability to raise any additional required capital; declines in the fair value and liquidity of auction-rate securities we hold; our ability to attract and retain qualified employees; potential liabilities that can arise if any of our products have design or manufacturing defects; our ability to obtain and the prices of raw materials, components and services; our dependence on contract manufacturers to make certain products; changes in interest rates, foreign currency exchange rates and equity securities prices, all of which will impact our operating results; political, economic and legal uncertainties related to doing business in China; our ability to defend or settle satisfactorily any litigation; and other risks and uncertainties including those identified in the section captioned Risk Factors in Item 1A of this Annual Report on Form 10-K for the year ended October 31, 2008. We disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Item 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     Our major market risk exposures relate to adverse fluctuations in certain commodity prices, interest rates, security prices and foreign currency exchange rates. Market fluctuations could affect our results of operations and financial condition adversely. At times, we attempt to reduce this risk through the use of derivative financial instruments. We do not enter into derivative financial instruments for the purpose of speculation.

     We offer a non-qualified 401(k) excess plan to allow certain executives to defer earnings in excess of the annual individual contribution and compensation limits on 401(k) plans imposed by the U.S. Internal Revenue Code. Under this plan, the salary deferrals and our matching contributions are not placed in a separate fund or trust account. Rather, the deferrals represent our unsecured general obligation to pay the balance owing to the executives upon termination of their employment. In addition, the executives are able to elect to have their account balances indexed to a variety of diversified mutual funds (stock, bond and balanced), as well as to our common stock. Accordingly, our outstanding deferred compensation obligation under this plan is subject to market risk. As of October 31, 2008, our outstanding deferred compensation obligation related to the 401(k) excess plan was $3.2 million, of which approximately $0.2 million was indexed to ADC common stock. Assuming a 20%, 50% or 100% aggregate increase in the value of the investment alternatives to which the account balances may be indexed, our outstanding deferred compensation obligation would increase by $0.6 million, $1.6 million and $3.2 million, respectively, and we would incur an expense of a like amount.

     We also are exposed to market risk from changes in foreign currency exchange rates. Our primary risk is the effect of foreign currency exchange rate fluctuations on the U.S. dollar value of foreign currency denominated operating sales and expenses. Our largest exposure comes from the Mexican peso. The result of a 10% weakening in the U.S. dollar to Mexican peso denominated sales and expenses would be a reduction of operating income of $4.8 million for fiscal 2008. As of October 31, 2008, we mitigated a certain portion of our exposure to Mexican peso operating expenses by purchasing forward contracts, enabling us to purchase Mexican pesos over the next twelve months at specified rates. These forward contracts have been designated as cash flow hedges.

     We also are exposed to foreign currency exchange risk as a result of changes in intercompany balance sheet accounts and other balance sheet items. At October 31, 2008, these balance sheet exposures were mitigated through the use of foreign exchange forward contracts with maturities of approximately one month. The principal currency exposures being mitigated were the Australian dollar, British pound, Chinese renminbi, Czech koruna, euro, Mexican peso, and Singapore dollar.

     See Note 1 to the Consolidated Financial Statements in Item 8 of this Form 10-K for information about our foreign currency exchange-derivative program.

45

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareowners

ADC Telecommunications, Inc.

     We have audited the accompanying consolidated balance sheets of ADC Telecommunications, Inc. and subsidiaries as of October 31, 2008 and 2007, and the related consolidated statements of operations, shareowners’ investment and cash flows for each of the three years in the period ended October 31, 2008. Our audits also included the financial statement schedule listed in the index at Item 15. These financial statements and the schedule are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements and the schedule based on our audits.

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

     In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of ADC Telecommunications, Inc. and subsidiaries at October 31, 2008 and 2007, and the consolidated results of their operations and their cash flows for each of the three years in the period ended October 31, 2008, in conformity with U.S. generally accepted accounting principles. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

     As discussed in Note 10 to the consolidated financial statements, effective November 1, 2007, the Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes — an Interpretation of FASB Statement No. 109.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), ADC Telecommunications, Inc.’s internal control over financial reporting as of October 31, 2008, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated December 18, 2008 expressed an unqualified opinion thereon.

Ernst & Young LLP

Minneapolis, Minnesota

December 18, 2008

46

ADC Telecommunications, Inc. and Subsidiaries

Consolidated Statements of Operations

	For the Years Ended October 31,
	2008			2007			2006
	(In millions, except earnings
	per share)
Net Sales:
Products	$	1,299.7		$	1,170.2		$	1,136.1
Services		156.7			106.5			95.8
Total net sales		1,456.4			1,276.7			1,231.9
Cost of Sales:
Products		836.0			744.1			749.0
Services		131.1			90.0			76.6
Total cost of sales		967.1			834.1			825.6
Gross Profit		489.3			442.6			406.3
Operating Expenses:
Research and development		83.5			69.6			70.9
Selling and administration		328.9			287.2			269.6
Impairment charges		4.1			2.3			1.2
Restructuring charges		11.1			5.5			19.4
Total operating expenses		427.6			364.6			361.1
Operating Income		61.7			78.0			45.2
Other Income (Expense), Net		(99.9	)		48.8			10.4
Income (Loss) Before Income Taxes		(38.2	)		126.8			55.6
Provision (Benefit) For Income Taxes		6.2			3.3			(37.7	)
Income (Loss) From Continuing Operations		(44.4	)		123.5			93.3
Discontinued Operations, Net of Tax:
Income (loss) from discontinued operations		2.5			(12.4	)		(5.6	)
Loss on sale or write-down of discontinued operations, net		—			(4.8	)		(22.6	)
Total discontinued operations, net of tax		2.5			(17.2	)		(28.2	)
Cumulative effect of a change in accounting principle		—			—			0.6
Net Income (Loss)	$	(41.9	)	$	106.3		$	65.7
Weighted Average Common Shares Outstanding (Basic)		117.1			117.4			117.1
Weighted Average Common Shares Outstanding (Diluted)		117.1			131.9			117.4
Basic Income (Loss) Per Share:
Continuing operations	$	(0.38	)	$	1.05		$	0.80
Discontinued operations	$	0.02		$	(0.14	)	$	(0.25	)
Cumulative effect of a change in accounting principle	$	—		$	—		$	0.01
Net income (loss)	$	(0.36	)	$	0.91		$	0.56
Diluted Income (Loss) Per Share:
Continuing operations	$	(0.38	)	$	1.04		$	0.79
Discontinued operations	$	0.02		$	(0.13	)	$	(0.24	)
Cumulative effect of a change in accounting principle	$	—		$	—		$	0.01
Net income (loss)	$	(0.36	)	$	0.91		$	0.56

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

47

ADC Telecommunications, Inc. and Subsidiaries

Consolidated Balance Sheets

	October 31,			October 31,
	2008			2007
	(In millions)
ASSETS
Current Assets:
Cash and cash equivalents	$	631.4		$	520.2
Available-for-sale securities		0.1			61.6
Accounts receivable, net of reserves of $17.3 and $6.6		215.4			173.5
Unbilled revenues		25.2			30.6
Inventories, net of reserves of $50.7 and $41.3		162.7			169.6
Prepaid and other current assets		34.6			31.9
Assets of discontinued operations		8.0			20.8
Total current assets		1,077.4			1,008.2
Property and equipment, net of accumulated depreciation of $407.7 and $394.2		177.1			198.1
Assets held for sale		2.9			0.1
Restricted cash		15.3			12.8
Goodwill		359.3			238.4
Intangibles, net of accumulated amortization of $126.3 and $95.9		161.1			121.9
Long-term available-for-sale securities		40.4			113.8
Other assets		86.3			70.4
Long-term assets of discontinued operations		1.2			1.1
Total assets	$	1,921.0		$	1,764.8
LIABILITIES AND SHAREOWNERS’ INVESTMENT
Current Liabilities:
Current portion of long-term notes payable	$	2.6		$	200.6
Accounts payable		99.1			89.0
Accrued compensation and benefits		78.1			80.3
Other accrued liabilities		71.0			54.7
Income taxes payable		2.4			15.5
Restructuring accrual		16.7			16.9
Liabilities of discontinued operations		8.1			17.1
Total current liabilities		278.0			474.1
Pension obligations and other long-term liabilities		78.1			82.5
Long-term notes payable		650.7			200.6
Total liabilities		1,006.8			757.2
Shareowners’ Investment:
Preferred stock, $0.00 par value; authorized 10.0 shares; none issued or outstanding		—			—
Common stock, $0.20 par value; authorized 342.9 shares; issued and outstanding 111.3 and 117.6 shares		23.5			23.5
Paid-in capital		1,396.3			1,432.3
Accumulated deficit		(491.5	)		(450.9	)
Accumulated other comprehensive income (loss)		(14.1	)		2.7
Total shareowners’ investment		914.2			1,007.6
Total liabilities and shareowners’ investment	$	1,921.0		$	1,764.8

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

48

ADC Telecommunications, Inc. and Subsidiaries

Consolidated Statements of Shareowners’ Investment

															Accumulated
															Other
	Common Stock					Paid-In			Accumulated			Deferred			Comprehensive
	Shares			Amount		Capital			Deficit			Compensation			Income (Loss)			Total
Balance, October 31, 2005		116.5		$	23.3	$	1,397.9		$	(622.9	)	$	1.2		$	(25.6	)	$	773.9
Net income		—			—		—			65.7			—			—			65.7
Other comprehensive income, net of tax:
Translation gain, net of taxes of $0.0		—			—		—			—			—			11.8			11.8
Unrealized gain on securities, net of taxes of $0.0		—			—		—			—			—			0.7			0.7
Minimum pension liability adjustment, net of taxes of $0.0		—			—		—			—			—			2.9			2.9
Total comprehensive income																			81.1
Stock issued for employee incentive plan, net of forfeitures		—			—		—			—			(1.2	)		—			(1.2	)
Exercise of common stock options		0.7			0.2		9.5			—			—			—			9.7
Share-based compensation expense		—			—		10.0			—			—			—			10.0
Balance, October 31, 2006		117.2			23.5		1,417.4			(557.2	)		—			(10.2	)		873.5
Net income		—			—		—			106.3			—			—			106.3
Other comprehensive income, net of tax:
Translation gain, net of taxes of $0.0		—			—		—			—			—			7.8			7.8
Minimum pension liability adjustment, net of taxes of $0.0		—			—		—			—			—			4.9			4.9
Total comprehensive income																			119.0
Adoption of SFAS 158		—			—		—			—			—			0.2			0.2
Exercise of common stock options		0.4			—		4.4			—			—			—			4.4
Share-based compensation expense		—			—		10.5			—			—			—			10.5
Balance, October 31, 2007		117.6			23.5		1,432.3			(450.9	)		—			2.7			1,007.6
Net loss		—			—		—			(41.9	)		—			—			(41.9	)
Other comprehensive income, net of tax:
Translation loss, net of taxes of $0.0		—			—		—			—			—			(21.9	)		(21.9	)
Pension obligation adjustment, net of taxes of $0.0		—			—		—			—			—			7.2			7.2
Unrealized gain on securities, net of taxes of $0.0		—			—		—			—			—			0.5			0.5
Unrealized gain on foreign currency hedge, net of taxes of $0.0		—			—		—			—			—			0.2			0.2
Net change in fair value of interest rate swap, net of taxes of $0.0		—			—		—			—			—			(2.8	)		(2.8	)
Total comprehensive loss																			(58.7	)
LGC options exchanged for ADC options		—			—		3.0			—			—			—			3.0
Adoption of FIN 48		—			—		—			1.4			—			—			1.4
Exercise of common stock options		0.1			—		0.2			—			—			—			0.2
Treasury stock purchase		(6.4	)				(56.5	)		—			—			—			(56.5	)
Share-based compensation expense		—			—		17.2			—			—			—			17.2
Other		—			—		0.1			(0.1	)		—			—			—
Balance, October 31, 2008		111.3		$	23.5	$	1,396.3		$	(491.5	)	$	—		$	(14.1	)	$	914.2

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

49

ADC Telecommunications, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

	For the Years Ended October 31,
	2008			2007			2006
	(In millions)
Operating Activities:
Income (loss) from continuing operations	$	(44.4	)	$	123.5		$	93.3
Adjustments to reconcile income (loss) from continuing operations to net cash provided by operating activities from continuing operations:
Inventory write-offs		25.2			21.1			9.1
Impairments		4.1			2.3			1.2
Write-down of investments		100.6			29.4			3.9
Depreciation and amortization		82.3			68.0			67.3
Provision for bad debt		0.7			(2.0	)		(0.2	)
Provision for warranty expense		1.1			1.1			4.5
Non-cash stock compensation		17.2			10.5			10.0
Change in deferred income taxes		1.5			(6.2	)		(46.9	)
Amortization of deferred financing costs		2.4			1.5			1.5
Gain on sale of investments		—			(57.5	)		—
Loss on sale of property and equipment		0.5			0.7			0.2
Other, net		9.7			(17.8	)		(0.3	)
Changes in operating assets and liabilities, net of acquisitions and divestitures:
Accounts receivable and unbilled revenues (increase)/decrease		2.8			(15.0	)		19.5
Inventories increase		(7.7	)		(19.5	)		(32.3	)
Prepaid and other assets (increase)/decrease		(1.9	)		(1.0	)		2.8
Accounts payable increase/(decrease)		(12.7	)		1.0			16.6
Accrued liabilities increase/(decrease)		(14.7	)		5.2			(60.2	)
Pension liabilities increase		7.2			5.1			3.3
Total cash provided by operating activities from continuing operations		173.9			150.4			93.3
Total cash provided by (used for) operating activities from discontinued operations		1.7			(10.7	)		(6.4	)
Total cash provided by operating activities		175.6			139.7			86.9
Investing Activities:
Acquisitions, net of cash acquired		(198.3	)		(1.6	)		—
Purchase of interest in unconsolidated affiliates		(5.2	)		(8.1	)		—
Divestitures, net of cash disposed		—			0.6			—
Property, equipment and patent additions		(42.4	)		(30.4	)		(33.0	)
Proceeds from disposal of property and equipment		0.3			1.2			1.2
Proceeds from sale/collection of note receivable		—			—			14.2
Proceeds from sales of investments		—			59.8			—
Warrant exercise		—			(1.8	)		—
Decrease (increase) in restricted cash		(3.0	)		1.9			8.0
Purchase of available-for-sale securities		(4.6	)		(1,002.1	)		(577.1	)
Sale of available-for-sale securities		39.7			1,203.4			519.0
Other		—			—			0.1
Total cash provided by (used for) investing activities from continuing operations		(213.5	)		222.9			(67.6	)
Total cash (used for) provided by investing activities from discontinued operations		(0.4	)		1.1			0.6
Total cash provided by (used for) investing activities		(213.9	)		224.0			(67.0	)
Financing Activities:
Debt issuance		451.6			—			—
Payments of financing costs		(10.7	)		—			—
Debt payments		(221.1	)		—			—
Treasury stock purchase		(56.5	)		—			—
Common stock issued		0.5			4.8			9.6
Total cash provided by financing activities		163.8			4.8			9.6
Effect of Exchange Rate Changes on Cash		(14.3	)		9.5			4.5
Increase in Cash and Cash Equivalents		111.2			378.0			34.0
Cash and Cash Equivalents, Beginning of Year		520.2			142.2			108.2
Cash and Cash Equivalents, End of Year	$	631.4		$	520.2		$	142.2

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

50

ADC Telecommunications, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

Note 1:  Summary of Significant Accounting Policies

     Business:  We are a leading global provider of broadband communications network infrastructure products and related services. Our products offer comprehensive solutions that enable the delivery of high-speed Internet, data, video and voice communications over wireline, wireless, cable, enterprise and broadcast networks. These products include fiber-optic, copper and coaxial based frames, cabinets, cables, connectors and cards, wireless capacity and coverage solutions, network access devices and other physical infrastructure components.

     Our products are used primarily in the “last mile/kilometer” of a communications network, which links Internet, data, video and voice traffic from the serving office of the communications service provider to the end-user of the communication services. We also provide professional services that help our customers plan, deploy and maintain Internet, data, video and voice communications networks.

     Our products and services are provided to our customers through three reportable business segments: Connectivity, Network Solutions, and Professional Services.

     Principles of Consolidation:  The consolidated financial statements include the accounts of ADC Telecommunications, Inc., a Minnesota corporation, and all of our majority owned subsidiaries. The principles of FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” and Accounting Research Bulletin No. 51, “Consolidated Financial Statements” are considered when determining whether an entity is subject to consolidation. All significant intercompany transactions and balances have been eliminated in consolidation. In these Notes to Consolidated Financial Statements, these companies collectively are referred to as “ADC,” “we,” “us” or “our.”

     Basis of Presentation:  During the fourth quarter of fiscal 2008, our Board of Directors approved a plan to divest APS Germany. During the fourth quarter of fiscal 2007, our Board of Directors approved a plan to divest G-Connect. During the third quarter of fiscal 2006, our Board of Directors approved a plan to divest APS France. In accordance with SFAS 144, these businesses were classified as discontinued operations for all periods presented.

     Fair Value of Financial Instruments:  At October 31, 2008 and 2007, our financial instruments included cash and cash equivalents, restricted cash, accounts receivable, available-for-sale securities and accounts payable. With the exception of certain available-for-sale securities, the fair values of these financial instruments approximated carrying value because of the nature of these instruments. See Note 6 for a further discussion of fair value of available-for-sale securities. In addition, we have long-term notes payable. We estimate the fair market value of our long-term notes payable to be approximately $350.0 million at October 31, 2008.

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

     Restricted Cash:  Restricted cash consists primarily of collateral for letters of credit and lease obligations, which is expected to become available to us upon satisfaction of the obligations pursuant to which the letters of credit or guarantees were issued.

     Available-for-Sale Securities:  We generally classify both debt securities with maturities of more than three months but less than one year and equity securities in publicly held companies as current available-for-sale securities. Debt securities with maturities greater than one year from the acquisition date are classified as long-term available-for-sale securities. Available-for-sale securities are recorded at fair value, and temporary unrealized holding gains and losses are recorded, net of tax, as a separate component of accumulated other comprehensive income. Unrealized losses are charged against net earnings when a decline in fair value is determined to be other-than-temporary. In accordance with EITF 03-1 and FSP FAS 115-1 and 124-1,”The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments,” we review several factors to determine whether a loss is other-than-temporary. These factors include but are not limited to: (i) the length of time a security is in an unrealized loss position, (ii) the extent to which fair value is less than cost, (iii) the financial condition and near term prospects of the issuer and (iv) our ability to hold

51

the security for a period of time sufficient to allow for any anticipated recovery in fair value. Realized gains and losses are accounted for on the specific identification method.

     Auction-rate securities, which comprise substantially all of our available-for-sale securities, include interests in collateralized debt obligations, a portion of which are collateralized by pools of residential and commercial mortgages, interest-bearing corporate debt obligations, and dividend-yielding preferred stock. Liquidity for these auction-rate securities typically is provided by an auction process that resets the applicable interest rate at pre-determined intervals, usually every 7, 28, 35 or 90 days. Because of the short interest rate reset period, we had historically recorded auction-rate securities in current available-for-sale securities. As of October 31, 2008 and 2007, we held auction-rate securities that had experienced a failed reset process and were deemed to have experienced an other-than-temporary decline in fair value. We have classified all auction-rate securities as long-term available-for-sale securities as a result of their failed auctions and lack of liquidity in the market.

     Due to the failed auction status and lack of liquidity in the market for such securities, the valuation methodology includes certain assumptions that were not supported by prices from observable current market transactions in the same instruments nor were they based on observable market data. With the assistance of the valuation specialist, we estimated the fair value of the auction-rate securities based on the following: (i) the underlying structure of each security; (ii) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; (iii) consideration of the probabilities of default, passing auction, or earning the maximum rate for each period; and (iv) estimates of the recovery rates in the event of defaults for each security. These estimated fair values could change significantly based on future market conditions.

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

     Property and Equipment:  Property and equipment are recorded at cost and depreciated using the straight-line method. Useful lives for property and equipment are 5 to 25 years for buildings, 3 to 5 years for machinery and equipment and 3 to 10 years for furniture and fixtures. Both straight-line and accelerated methods of depreciation are used for income tax purposes.

     Assets Held For Sale: Assets held for sale were $2.9 million and $0.1 million as of October 31, 2008 and 2007, respectively. During fiscal 2008, we received an offer to purchase one of our international office buildings. During October 2008, we determined that the plan of sale criteria in FASB Statement No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets,” had been met, and, as a result, we classified the carrying value of the building as assets held for sale in our consolidated balance sheets. We expect the sale to be completed in fiscal 2009 and the proceeds from the sale to be in excess of the carrying value.

     Investments in Cost Method Investees: Minority investments in other companies are classified as investments in cost method investees. These investments are accounted for under the cost method as we do not have the ability to exercise significant influence over the companies’ operations. Under the cost method, the investments are carried at cost and only adjusted for other-than-temporary declines in fair value and distributions of earnings. We regularly evaluate the recoverability of these investments based on the performance and financial position of the companies. We have not recorded any other-than-temporary impairments of these investments.

     Impairment of Long-Lived Assets:  We record impairment losses on long-lived assets used in operations and finite lived intangible assets when events and circumstances indicate the assets might be impaired and the undiscounted cash flows estimated to be generated by those assets are less than their carrying amounts. The impairment loss is measured by comparing the fair value of the asset to its carrying amount. See Note 16 for details of our impairment charges.

     Goodwill and Other Intangible Assets:  Goodwill is tested for impairment annually, or more frequently if events or changes in circumstances indicate that the asset might be impaired. We perform impairment reviews at a reporting unit level and use a discounted cash flow model based on management’s judgment and assumptions to determine the estimated fair value of each reporting unit. Our three operating segments, Connectivity, Network Solutions and Professional Services are considered the reporting units. An impairment loss generally would be recognized when the carrying amount of the reporting unit’s net assets exceeds the estimated fair value of the reporting unit. Impairment testing as of October 31, 2008, indicated that the estimated fair value of each reporting unit exceeded its corresponding carrying amount, including recorded goodwill and, as such, no impairment existed at that time. Our other intangible assets (consisting primarily of technology, trademarks, customer lists, non-compete agreements, distributor network and patents) are amortized over their useful lives, which are from one to twenty years. See Note 7 for details of our goodwill and intangible assets.

     Our forecasts and estimates were based on assumptions that are consistent with the plans and estimates we are using to manage our business.  Changes in these estimates could change our conclusion regarding an impairment of goodwill or other intangible assets and potentially result in a non-cash impairment in a future period.  During the latter part of the fourth quarter of fiscal 2008 and continuing

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into December 2008, there was a significant decline in general economic conditions. A continued decline in general economic conditions, including a sustained decline in our market capitalization relative to our net book value, could materially impact our judgments and assumptions about the fair value of our business. If general economic conditions do not improve we may be required to record a goodwill impairment charge during fiscal 2009.

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

     Revenue Recognition:  We recognize revenue, net of discounts, when persuasive evidence of an arrangement exists, delivery has occurred or service has been rendered, the selling price is fixed or determinable and collectibility is reasonably assured in accordance with the guidance in the SEC Staff Accounting Bulletin No. 104, Revenue Recognition.

     As part of the revenue recognition process, we determine whether collection is reasonably assured based on various factors, including an evaluation of whether there has been deterioration in the credit quality of our customers that could result in us being unable to collect or sell the receivables. In situations where it is unclear whether we will be able to sell or collect the receivable, revenue and related costs are deferred. Related costs are recognized when it has been determined that the collection of the receivable is unlikely.

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

     The majority of our revenue comes from product sales. Revenue from product sales is generally recognized upon shipment of the product to the customer in accordance with the terms of the sales agreement. Revenue from services consists of fees for systems requirements, design and analysis, customization and installation services, ongoing system management, enhancements and maintenance. The majority of our service revenue comes from our Professional Services business. For this business, we primarily apply the percentage-of-completion method to arrangements consisting of design, customization and installation. We measure progress towards completion by comparing costs incurred to total planned project costs.

     Some of our customer arrangements include multiple deliverables, such as product sales that include services to be performed after delivery of the product. In such cases, we apply the guidance in EITF 00-21, Revenue Arrangements with Multiple Deliverables. Generally, we account for a deliverable (or a group of deliverables) separately if all of the following criteria have been met (i) the delivered item(s) has stand-alone value to the customer, (ii) there is objective and reliable evidence of the fair value of the undelivered item(s) included in the arrangement, and (iii) we have given the customer a general right of return relative to the delivered item(s), delivery or performance of the undelivered item(s) or service(s) is probable and substantially in our control.

     When there is objective and reliable evidence of fair value for all units of accounting in an arrangement, we allocate the arrangement consideration to the separate units of accounting based on their relative fair values. In cases where we have objective and reliable evidence of fair value for the undelivered items in an arrangement, but no such evidence for the delivered items, we allocate the arrangement consideration using the residual method. If the elements cannot be considered separate units of accounting, or if we cannot determine the fair value of any of the undelivered elements, we defer revenue, if material, until the entire arrangement is delivered or fair value can be determined for all undelivered units of accounting.

     Once we have determined the amount, if any, of arrangement consideration allocable to the undelivered item(s), we apply the applicable revenue recognition policy, as described elsewhere herein, to determine when such amount may be recognized as revenue.

     When an arrangement includes software that is more than incidental to the product being sold, we account for the transaction under the provisions of SOP 97-2. If the arrangement includes non-software elements for which software is essential to the functionality of the element, those elements are also accounted for under SOP 97-2, as prescribed in EITF 03-05, Applicability of AICPA Statement of Position 97-2 to Non-Software Deliverables in an Arrangement Containing More-Than-Incidental Software.

     Allowance for Uncollectible Accounts:  We are required to estimate the collectibility of our trade and notes receivable. A considerable amount of judgment is required in assessing the realization of these receivables, including the current creditworthiness of each customer and related aging of past due balances. In order to assess the collectibility of these receivables, we perform ongoing credit evaluations of our customers’ financial condition. Through these evaluations we may become aware of a situation where a customer may not be able to meet its financial obligations due to deterioration of its financial viability, credit ratings or bankruptcy. The reserve requirements are based on the best facts available to us and are re-evaluated and adjusted as additional information is received.

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     Sales Taxes: We present taxes assessed by a governmental authority including sales, use, value added and excise taxes on a net basis and therefore the presentation of these taxes is excluded from our revenues and is shown as a liability on our balance sheet until remitted to the taxing authorities.

     Shipping and Handling Fees: Shipping and handling fees that are collected from our customers in connection with our sales are recorded as revenue. The costs incurred with respect to shipping and handling are recorded as cost of revenues.

     Derivatives: We recognize all derivatives on the consolidated balance sheets at fair value. Derivatives that are not designated as hedges are adjusted to fair value through income. For a derivative designated as a fair value hedge of a recognized asset or liability, the gain or loss is recognized in earnings in the period of change together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. For a derivative designated as a cash flow hedge, or a derivative designated as a fair value hedge of a firm commitment not yet recorded on the balance sheet, the effective portion of the derivative’s gain or loss is initially reported as a component of accumulated other comprehensive earnings and subsequently reclassified into earnings when the forecasted transaction affects earnings. The ineffective portion of the gain or loss associated with all hedges is reported through income immediately. In the statements of operations and cash flows, hedge activities are classified in the same category as the items being hedged. As of October 31, 2008, the fair value of outstanding derivative instruments was recorded as an asset of $0.1 million and a liability of $2.8 million.

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

     The changes in the amount of warranty reserve for the fiscal years ended October 31, 2008, 2007 and 2006 are as follows:

	Balance at				Charged to
	Beginning				Costs and				Balance at
	of Year		Acquisitions		Expenses		Deductions		End of Year
	(In millions)
2008	$	7.7	$	1.9	$	1.1	$	1.8	$	8.9
2007		9.0		—		1.1		2.4		7.7
2006		10.4		—		4.5		5.9		9.0

     Deferred Financing Costs:  Deferred financing costs are capitalized and amortized as interest expense on a basis that approximates the effective interest method over the terms of the related notes.

     Income Taxes and Deferred Taxes:  We utilize the liability method of accounting for income taxes. Deferred tax liabilities or assets are recognized for the expected future tax consequences of temporary differences between the book and tax basis of assets and liabilities. We regularly assess the likelihood that our deferred tax assets will be recovered from future income, and we record a valuation allowance to reduce our deferred tax assets to the amounts we believe to be realizable. We consider projected future income and ongoing tax planning strategies in assessing the amount of the valuation allowance. If we determine we will not realize all or part of our deferred tax assets, an adjustment to the deferred tax asset will be charged to earnings in the period such determination is made. We concluded during the third quarter of fiscal 2002 that a full valuation allowance against our net deferred tax assets was appropriate as a result of our cumulative losses to that point and the full utilization of our loss carryback potential. In fiscal 2006, we determined that our recent experience generating U.S. income, along with our projection of future U.S. income, constituted significant positive evidence for partial realization of the U.S. deferred tax assets. Therefore, we recorded a tax benefit of $49.0 million in fiscal 2006 and an additional $6.0 million in fiscal 2007 related to a partial release of valuation allowance on the portion of our U.S. deferred tax assets expected to be realized over the following two-year period. During fiscal 2008, we re-established a valuation allowance on our U.S. deferred tax assets in the amount of $3.4 million as a result of a reduction in projected future U.S. income from levels projected in fiscal 2007. At one or more future dates, if sufficient positive evidence exists that it is more likely than not that the benefit will be realized with respect to additional deferred tax assets, we will release additional valuation allowance. Also, if there is a reduction in the projection of future U.S. income, we may need to increase the valuation allowance.

     Foreign Currency Translation:  We convert assets and liabilities of foreign operations to their U.S. dollar equivalents at rates in effect at the balance sheet dates, and we record translation adjustments in shareowners’ investment. Income statements of foreign operations are translated from the operations’ functional currency to U.S. dollar equivalents at the exchange rate on the transaction dates or an average rate. Foreign currency exchange transaction gains and losses are reported in other income (expense), net.

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     We also are exposed to market risk from changes in foreign currency exchange rates. Our primary risk is the effect of foreign currency exchange rate fluctuations on the U.S. dollar value of foreign currency denominated operating sales and expenses. Our largest exposure comes from the Mexican peso. As of October 31, 2008, we mitigated a certain portion of our exposure to Mexican peso operating expenses by purchasing forward contracts, enabling us to purchase Mexican pesos over the next twelve months at specified rates. These forward contracts have been designated as cash flow hedges.

     We also are exposed to foreign currency exchange risk as a result of changes in intercompany balance sheet accounts and other balance sheet items. At October 31, 2008, these balance sheet exposures were mitigated through the use of foreign exchange forward contracts with maturities of approximately one month. The principal currency exposures being mitigated were the Australian dollar, British pound, Chinese renminbi, Czech koruna, euro, Mexican peso, and Singapore dollar.

     Our foreign currency forward contracts contain credit risk to the extent that our bank counterparties may be unable to meet the terms of the agreements. We minimize such risk by limiting our counterparties to major financial institutions of high credit quality.

     Use of Estimates:  The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Estimates are used in determining such items as returns and allowances, depreciation and amortization lives and amounts recorded for contingencies and other reserves. Although these estimates are based on our knowledge of current events and actions we may undertake in the future, these estimates ultimately may differ from actual results.

     Comprehensive Income (Loss):  Components of comprehensive income (loss) include net income, foreign currency translation adjustments, unrealized gains (losses) on available-for-sale securities, unrealized gains (losses) on derivative instruments and hedging activities, and adjustments to record minimum pension liability, net of tax. Comprehensive income is presented in the consolidated statements of shareowners’ investment.

     Share-Based Compensation: On November 1, 2005, we adopted SFAS 123(R), which requires the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors. The awards include employee stock options and restricted stock units, based on estimated fair values. SFAS 123(R) supersedes APB 25, which we previously applied, for periods beginning in fiscal 2006.

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

     Off-Balance Sheet Arrangements:  We do not have any significant off-balance sheet arrangements.

     Recently Issued Accounting Pronouncements:  In March 2008, the FASB issued SFAS No. 161, “Disclosures about Derivative Instruments and Hedging Activities, an amendment of FAS 133” (“SFAS 161”). SFAS 161 applies to all derivative instruments and non-derivative instruments that are designated and qualify as hedging instruments and related hedged items accounted for under SFAS No. 133 “Accounting for Derivative Instruments and Hedging Activities” (“SFAS 133”). The provisions of SFAS 161 require entities to provide greater transparency through additional disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under SFAS 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, results of operations and cash flows. SFAS 161 is effective for fiscal years and interim periods beginning after November 15, 2008. We are currently evaluating the effects, if any, that SFAS 161 may have on our financial statements.

     In December 2007, the FASB issued SFAS No. 141(R) “Business Combinations” (“SFAS 141(R)”) and SFAS No. 160, “Non-controlling Interests in Consolidated Financial Statements” (“SFAS 160”). SFAS 141(R) requires the acquiring entity in a business combination to record all assets acquired and liabilities assumed at their respective acquisition-date fair values and changes other practices under FAS 141, some of which could have a material impact on how we account for business combinations. SFAS 141(R) also requires additional disclosure of information surrounding a business combination, such that users of the entity’s financial statements can fully understand the nature and financial impact of the business combination. SFAS 160 requires entities to report non-

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controlling (minority) interests in subsidiaries as equity in the consolidated financial statements. We are required to adopt SFAS 141(R) and SFAS 160 simultaneously in our fiscal year beginning November 1, 2009. The provisions of SFAS 141(R) will only impact us if we are party to a business combination after the pronouncement has been adopted. We are currently evaluating the effects, if any, that SFAS 160 may have on our financial statements.

     In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities — Including an amendment of FASB Statement No. 115” (“SFAS 159”). SFAS 159 permits entities to choose to measure many financial instruments and certain other items at fair value. The objective is to improve financial reporting by allowing entities to mitigate volatility in reported earnings caused by measuring related assets and liabilities differently without having to apply complex hedge accounting provisions. SFAS 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007. If we elect to adopt the provisions of SFAS 159, it would be effective in our fiscal year beginning November 1, 2008. We are currently evaluating the impact, if any, that SFAS 159 may have on our financial statements.

     During September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”), which provides enhanced guidance for using fair value to measure assets and liabilities. The standard applies whenever other standards require (or permit) assets or liabilities to be measured at fair value. The standard does not expand the use of fair value in any new circumstances. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. We are required to adopt the provisions of SFAS 157 in our fiscal year beginning November 1, 2008. We currently are evaluating the effects, if any, that this pronouncement may have on our consolidated financial statements.

Note 2:  Other Financial Statement Data

Other Income (Expense), Net:

	2008			2007			2006
	(In millions)
Interest income on investments	$	31.0		$	33.3		$	22.8
Interest expense on borrowings		(28.2	)		(16.3	)		(15.8	)
Interest income, net		2.8			17.0			7.0
Foreign exchange income (loss)		(1.8	)		5.9			0.5
Gain (loss) on investments		—			57.5			(3.9	)
Impairment loss on available-for-sale securities		(100.6	)		(29.4	)		—
Andrew merger termination proceeds, net		—			—			3.8
KRONE Brazil customs accrual reversal		0.2			0.2			3.0
Loss on sale of fixed assets		(0.5	)		(0.7	)		(0.2	)
Other, net		—			(1.7	)		0.2
Subtotal		(102.7	)		31.8			3.4
Total other income (expense), net	$	(99.9	)	$	48.8		$	10.4

     During fiscal 2008 and 2007, we recorded impairment charges of $100.6 million and $29.4 million, respectively, to reduce the carrying value of certain auction-rate securities we hold. As of October 31, 2008, we held auction-rate securities with a fair value of $40.4 million and an original par value of $169.8 million. We have determined that these impairment charges are other-than-temporary in nature in accordance with EITF 03-1 and FSP FAS 115-1 and 124-1, “The Meaning of Other-Than-Temporary Impairment and Its Application to Certain Investments”. See Note 6 for more detailed information on our investments in auction-rate securities and these impairment charges.

     On January 26, 2007, we entered into an agreement with certain other holders of securities of BigBand to sell our entire interest in BigBand for approximately $58.9 million in gross proceeds. Our interest in BigBand had been carried at a nominal value. A portion of our interest was held in the form of a warrant to purchase BigBand shares with an aggregate exercise price of approximately $1.8 million. On February 16, 2007, we exercised our warrant and then immediately completed the sale of our BigBand stock. This transaction resulted in a gain of approximately $57.1 million. This gain did not have a tax provision impact due to a reduction of the valuation allowance attributable to U.S. deferred tax assets utilized to offset the gain.

     On January 10, 2007, we sold our interest in Redback for gross proceeds of $0.9 million, which resulted in a gain of $0.4 million.

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     The decrease in net interest income from fiscal 2007 to fiscal 2008 was due to an increase in interest expense from the $450.0 million of 3.5% fixed rate convertible unsecured subordinated notes that were issued in December 2007. The increase in net interest income from fiscal 2006 to fiscal 2007 was due to higher cash balances and higher investment earnings rates.

     For fiscal 2006, interest expense on borrowings includes $1.1 million for interest due on prior year income taxes. In addition, we recorded a $3.0 million reversal of a reserve recorded in purchase accounting in connection with the KRONE acquisition, a $3.9 million loss resulting from the write-off of a non-public equity interest and a $3.8 million net gain in connection with the termination agreement from our unsuccessful attempt to merge with Andrew Corporation.

Supplemental Cash Flow Information:

	2008		2007		2006
	(In millions)
Income taxes paid, net of refunds received	$	3.5	$	12.9	$	5.4
Interest paid	$	26.3	$	17.3	$	13.3

Supplemental Schedule of Investing Activities:

	2008			2007			2006
	(In millions)
Acquisitions:
Fair value of assets acquired	$	(279.0	)	$	(6.9	)	$	—
Less: Liabilities assumed		71.9			5.3			—
LGC options exchanged for ADC options		3.0			—			—
Cash acquired		5.8			—			—
Acquisitions, net of cash acquired	$	(198.3	)	$	(1.6	)	$	—
Divestitures:
Proceeds from divestitures	$	—		$	0.6		$	—
Cash disposed		—			—			—
Divestitures, net of cash disposed	$	—		$	0.6		$	—

Consolidated Balance Sheet Information:

	2008			2007
	(In millions)
Inventories:
Manufactured products	$	132.9		$	135.7
Purchased materials		73.1			70.6
Work-in-process		7.4			4.6
Less: Inventory reserve		(50.7	)		(41.3	)
Total inventories, net	$	162.7		$	169.6
Property and Equipment:
Land and buildings	$	134.7		$	143.8
Machinery and equipment		404.6			403.9
Furniture and fixtures		38.9			39.0
Less accumulated depreciation		(407.7	)		(394.2	)
Total		170.5			192.5
Construction-in-process		6.6			5.6
Total property and equipment, net	$	177.1		$	198.1
Other Assets:
Notes receivable, net	$	0.7		$	1.5
Deferred financing costs		10.6			2.4
Deferred tax asset		48.0			50.6
Long-term receivable		4.2			—
Investment in cost method investees		15.1			9.3
Other		7.7			6.6
Total other assets	$	86.3		$	70.4
Other Accrued Liabilities:
Deferred revenue	$	6.4		$	7.7
Warranty reserve		8.9			7.7

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	2008		2007
	(In millions)
Accrued taxes (non-income)		12.8		20.3
Non-trade payables		42.9		18.5
Other		—		0.5
Total other accrued liabilities	$	71.0	$	54.7

     Depreciation expense was $41.2 million, $37.4 million and $36.7 million for fiscal 2008, 2007 and 2006, respectively.

Note 3:  Acquisitions

     LGC

     On December 3, 2007, we completed the acquisition of LGC, a provider of in-building wireless solution products, headquartered in San Jose, California. These products increase the quality and capacity of wireless networks by permitting voice and data signals to penetrate building structures and by distributing these signals evenly throughout the building. LGC also offers products that permit voice and data signals to reach remote locations. The acquisition was made to enable us to participate in this high growth segment of the industry.

     We acquired all of the outstanding capital stock and warrants of LGC for approximately $146.0 million in cash (net of cash acquired). In order to address potential indemnity claims of ADC, $15.5 million of the purchase price is held in escrow for up to 15 months following the close of the transaction.

     In the first quarter of fiscal 2009, we received $2.7 million in indemnity funds from the former LGC shareholders to satisfy a customer claim obligation.

     We acquired $58.9 million of intangible assets as part of this purchase. We recorded $9.4 million of amortization expense related to these intangibles for the fiscal year ended October 31, 2008. Goodwill of $85.3 million was recorded in this transaction and assigned to our Network Solutions segment. This goodwill is not deductible for tax purposes. The results of LGC, subsequent to December 3, 2007, are included in our consolidated statements of operations.

     Option holders of LGC shares were given the opportunity either to receive a cash payment for their options or exchange their options for options to acquire ADC shares. Certain LGC option holders received $9.1 million in cash payments for their options. The remaining option holders received ADC options with a fair value of $3.5 million as of the close of the acquisition. Approximately $3.0 million of the option value was added to the purchase price of LGC. Approximately $0.5 million of the option value will be recognized over the remaining vesting period.

     Century Man

     On January 10, 2008, we completed the acquisition of Century Man, a leading provider of communication distribution frame solutions, headquartered in Shenzhen, China. The acquisition was made to accelerate our growth potential in the Chinese connectivity market, as well as provide us with additional products designed to meet the needs of customers in developing markets outside of China.

     We acquired Century Man for $52.3 million in cash (net of cash acquired). The former shareholders of Century Man may be paid up to an additional $15.0 million if, during the three years following closing, certain financial results are achieved by the acquired business. Of the purchase price, $7.5 million is held in escrow for up to 36 months following the close of the transaction. Of the $7.5 million, $7.0 million relates to potential indemnification claims and $0.5 million relates to the disposition of certain buildings.

     We acquired $13.0 million of intangible assets as part of this purchase. We recorded $1.9 million of amortization expense related to these intangibles for the fiscal year ended October 31, 2008. Goodwill of $35.3 million was recorded in this transaction and assigned to our Connectivity segment. This goodwill is not deductible for tax purposes. The results of Century Man, subsequent to January 10, 2008, are included in our consolidated statements of operations.

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     ANIHA

     During the third quarter of fiscal 2007, we restructured our ownership in the FONS/Nitta joint venture, which was originally acquired through our acquisition of FONS. As a result of the restructuring, we now have a controlling interest in ANIHA, formerly known as the FONS/Nitta joint venture. ANIHA is included in our results of operations as of the third quarter of fiscal 2007 and is not material to our consolidated results.

     KCL

     On April 26, 2007, we completed the acquisition of an additional eleven percent of the outstanding shares in KCL located in India from Karnataka State Electronics Department Corporation Limited for a purchase price of approximately $2.0 million. We now own 62% of the outstanding shares of KCL. Goodwill of $0.5 million was recorded in the transaction. KCL’s results have been and continue to be fully consolidated in our results of operations and are not material to our consolidated results.

     Andrew Corporation

     On May 30, 2006, we entered into a definitive merger agreement with Andrew Corporation for an all-stock merger transaction pursuant to which Andrew would have become a wholly-owned subsidiary of ADC. On August 9, 2006, both parties entered into a definitive agreement to terminate the merger agreement. To effect the mutual termination, Andrew paid us a fee of $10.0 million. The termination agreement further provided for the mutual release of any claims in connection with the merger agreement. During the third quarter of fiscal 2006, we capitalized $3.4 million of merger-related costs, consisting primarily of financial and legal advisory fees and a fairness opinion. In addition, during the fourth quarter of fiscal 2006, we incurred additional expenses of approximately $2.8 million related primarily to financial and legal advisory fees. The total merger related costs of $6.2 million were charged to expense during the fourth quarter in fiscal 2006 and offset by the $10.0 million termination fee, resulting in a net increase in other income of $3.8 million.

     The following table summarizes the allocation of the purchase price to the fair values of the assets acquired and liabilities assumed at the date of each acquisition described above, in accordance with the purchase method of accounting, including adjustments to the purchase prices made through October 31, 2008:

	LGC		Century Man
	December 3, 2007		January 10, 2008
	(In millions)
Current assets	$	47.6	$	33.8
Intangible assets		58.9		13.0
Goodwill		85.3		35.3
Other long-term assets		3.3		1.8
Total assets acquired		195.1		83.9
Current liabilities		42.9		26.6
Long-term liabilities		2.4		—
Total liabilities assumed		45.3		26.6
Net assets acquired		149.8		57.3
LGC options exchanged for ADC options		3.0		—
Less cash acquired		0.8		5.0
Net cash paid	$	146.0	$	52.3

     Unaudited pro forma consolidated results of continuing operations, as though the acquisitions of LGC and Century Man had taken place at the beginning of fiscal 2008, 2007 and 2006 are as follows:

	2008			2007		2006
	(In millions, except per share data)
Net sales	$	1,480.9		$	1,412.3	$	1,308.3
Income (loss) from continuing operations (1)	$	(41.6	)	$	119.6	$	92.8
Net income (loss)	$	(40.0	)	$	102.4	$	65.0
Income (loss) per share from continuing operations — basic	$	(0.36	)	$	1.02	$	0.79
Income (loss) per share from continuing operations — diluted	$	(0.36	)	$	0.98	$	0.79
Net income (loss) per share — basic	$	(0.34	)	$	0.87	$	0.56
Net income (loss) per share — diluted	$	(0.34	)	$	0.85	$	0.55

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(1) Includes restructuring and impairment charges of $15.2 million, $7.8 million and $20.6 million for fiscal 2008, 2007 and 2006, respectively, for the ADC stand-alone business.

     The unaudited pro forma results of operations are for comparative purposes only and do not necessarily reflect the results that would have occurred had the acquisitions occurred at the beginning of the periods presented or the results that may occur in the future.

     The purchase prices for LGC and Century Man were allocated on a preliminary basis using information currently available. The allocation of the purchase prices to the assets and liabilities acquired will be finalized no later than the first quarter of fiscal 2009. This will occur as we obtain more information regarding asset valuations, liabilities assumed and revisions of preliminary estimates of fair values made at the dates of purchase.

Note 4:  Discontinued Operations

     The financial results of the businesses described below are reported separately as discontinued operations for all periods presented in accordance with SFAS 144.

APS Germany

     During the fourth quarter of fiscal 2008, our Board of Directors approved a plan to divest APS Germany. We classified this business as a discontinued operation in the fourth quarter of fiscal 2008. This business was previously included in our Professional Services segment. We expect to close on a sale of APS Germany in fiscal 2009. We expect to receive proceeds in excess of our book value and do not anticipate a significant gain or loss on the sale.

ADC Telecommunications Israel Ltd. (G-Connect)

     During the fourth quarter of fiscal 2007, our Board of Directors approved a plan to divest G-Connect. On November 15, 2007, we completed the sale of G-Connect to Toshira Investments Limited Partnership, an Israeli company, in exchange for the assumption of certain debts of G-Connect and nominal cash consideration. G-Connect had been included in our Network Solutions segment. We classified this business as a discontinued operation in the fourth quarter of fiscal 2007. We recorded a loss on the sale of the business of $0.1 million during fiscal 2007.

APS France

     During the third quarter of fiscal 2006, our Board of Directors approved a plan to divest APS France. On January 12, 2007, we completed the sale of certain assets of APS France to a subsidiary of Groupe Circet, a French company, for a cash price of $0.1 million. In connection with this transaction, we compensated Groupe Circet for assuming certain facility and vehicle leases. APS France had been included in our Professional Services segment. We classified this business as a discontinued operation in the third quarter of fiscal 2006. We recorded a loss on the sale of the business of $22.6 million during fiscal 2006, which includes a provision for employee severance and $7.0 million related to the write off of the currency translation adjustment. We recorded an additional loss of $4.7 million in fiscal 2007 due to subsequent working capital adjustments and additional expenses related to the finalization of the sale, resulting in a total loss on sale of $27.3 million.

Singl.e View

     During the third quarter of fiscal 2004, we entered into an agreement to sell the business related to our Singl.eView product line to Intec for a cash purchase price of $74.5 million. The price was subject to adjustments under the sale agreement. The transaction closed on August 27, 2004. This business had been included in our Professional Services segment. We classified this business as a discontinued operation in the third quarter of fiscal 2004. During fiscal 2007, we recorded a $1.2 million income tax benefit for this business related to the resolution of an income tax contingency.

     The following represents the financial results of APS Germany, G-Connect, APS France and Singl.e View businesses included in discontinued operations:

	2008		2007			2006
	(In millions)
Net sales	$	37.2	$	54.0		$	86.2
Income (loss) from discontinued operations, net	$	2.5	$	(12.4	)	$	(5.6	)
Gain (loss) on sale or write-down of discontinued operations, net		—		(4.8	)		(22.6	)
Total from discontinued operations	$	2.5	$	(17.2	)	$	(28.2	)

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Note 5:  Net Income (Loss) from Continuing Operations Per Share

     The following table presents a reconciliation of the numerators and denominators of basic and diluted income (loss) per share from continuing operations:

	2008			2007		2006
	(In millions, except per share data)
Numerator:
Net income (loss) from continuing operations	$	(44.4	)	$	123.5	$	93.3
Interest expense for convertible notes		—			13.7		—
	$	(44.4	)	$	137.2	$	93.3
Denominator:
Weighted average common shares outstanding — basic		117.1			117.4		117.1
Convertible bonds converted to common stock		—			14.2		—
Employee options and other		—			0.3		0.3
Weighted average common shares outstanding — diluted		117.1			131.9		117.4
Basic income (loss) per share from continuing operations	$	(0.38	)	$	1.05	$	0.80
Diluted income (loss) per share from continuing operations	$	(0.38	)	$	1.04	$	0.79

     Excluded from the dilutive securities described above are employee stock options to acquire 6.8 million, 5.9 million and 5.1 million shares as of fiscal 2008, 2007 and 2006, respectively. These exclusions are made if the exercise prices of these options are greater than the average market price of the common stock for the period, or if we have net losses, both of which have an anti-dilutive effect.

     We are required to use the “if-converted” method for computing diluted earnings per share with respect to the shares reserved for issuance upon conversion of the notes (described in detail below and in Note 8). Under this method, we add back the interest expense and the amortization of financing expenses on the convertible notes to net income and then divide this amount by our total outstanding shares, including those shares reserved for issuance upon conversion of the notes. During fiscal 2008, 2007 and 2006, our convertible debt consists of the following:

	Convertible Shares		Conversion
(In millions)	(In millions)		Price
$200 convertible subordinated notes, 1.0% fixed rate, paid June 2008		7.1	$	28.091
$200 convertible subordinated notes, 6-month LIBOR plus 0.375%, due June 15, 2013		7.1		28.091
$225 convertible subordinated notes, 3.5% fixed rate, due July 15, 2015		8.3		27.00
$225 convertible subordinated notes, 3.5% fixed rate, due July 15, 2017		7.9		28.55
Total		23.3

     The 2008 notes, 2013 notes, 2015 notes and 2017 notes are evaluated separately for dilution effects by adding back the appropriate interest expense and the amortization of financing expenses from each and dividing by our total shares, including all 7.1 million, 7.1 million, 8.3 million and 7.9 million shares, respectively, that could be issued upon conversion of each of these notes. The analysis for each period includes proportional shares and interest for notes that were issued or paid in the period. Based upon these calculations, all shares reserved for issuance upon conversion of our convertible notes were excluded for fiscal 2008 and fiscal 2006 because of their anti-dilutive effect. However, the shares related to the 2008 notes and 2013 notes were included for fiscal 2007.

Note 6:  Investments

     As of October 31, 2008 and 2007, our available-for-sale securities consisted of the following:

							Other-Than-
							Temporary
	Cost		Unrealized		Unrealized		Impairment			Fair
	Basis		Gain		Loss		Loss			Value
	(In millions)
Fiscal 2008
Equity securities	$	0.1	$	—	$	—	$	—		$	0.1
Auction-rate securities		169.8		0.6		—		(100.6	)		40.4	(1)
Total available-for-sale securities	$	169.9	$	0.6	$	—	$	(100.6	)	$	40.5
Fiscal 2007
U.S. Treasury and other U.S. government agencies	$	8.8	$	—	$	—	$	—		$	8.8

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										Other-Than-
										Temporary
	Cost			Unrealized			Unrealized			Impairment			Fair
	Basis		Gain			Loss			Loss				Value
	(In millions)
Corporate bonds		3.0			—			—			—			3.0
Auction-rate securities		193.0			—			—			(29.4	)		163.6
Total available-for-sale securities	$	204.8		$	—		$	—		$	(29.4	)	$	175.4

(1) Net of cumulative losses of $130.0 million

     Current capital market conditions have significantly reduced our ability to liquidate our remaining auction-rate securities. As of October 31, 2008, we held auction-rate securities with a fair value of $40.4 million and an original par value of $169.8 million, which are classified as long-term. During fiscal 2008 and 2007, we recorded other-than-temporary impairment charges of $100.6 million and $29.4 million, respectively, to reduce the fair value of our holdings in auction-rate securities to $40.4 million. We will not be able to liquidate any of these auction-rate securities until either a future auction is successful or, in the event secondary market sales become available, we decide to sell the securities in a secondary market. A secondary market sale of any of these securities could take a significant amount of time to complete and could potentially result in a further loss. All of our auction-rate security investments have made their scheduled interest payments based on a par value of $169.8 million at October 31, 2008, with the exception of one investment with a par value of $16.8 million, which has been fully written off. In addition, the interest rates have been set to the maximum rate defined for the issuer.

     Due to the failed auction status and lack of liquidity in the market for such securities, the valuation methodology includes certain assumptions that were not supported by prices from observable current market transactions in the same instruments nor were they based on observable market data. With the assistance of the valuation specialist, we estimated the fair value of the auction-rate securities based on the following: (1) the underlying structure of each security; (2) the present value of future principal and interest payments discounted at rates considered to reflect current market conditions; (3) consideration of the probabilities of default, passing auction, or earning the maximum rate for each period; and (4) estimates of the recovery rates in the event of defaults for each security. These estimated fair values could change significantly based on future market conditions.

     During fiscal 2008, we paid $4.0 million and $1.2 million for additional investments in ip.access, Ltd. and E-Band Communications Corporation, respectively. During fiscal 2007, we paid $8.1 million for the purchase of a non-controlling interest in ip.access, Ltd. During fiscal 2006, we recorded a $3.9 million loss resulting from the write-off of a non-public equity interest. These investments were accounted for under the cost method and are included in the other assets line item of the balance sheet.

Note 7:  Goodwill and Intangible Assets

     During fiscal 2008, we recorded $85.3 million of goodwill in connection with our acquisition of LGC and $35.3 million of goodwill in connection with our acquisition of Century Man. During fiscal 2007, we recorded $0.5 million of goodwill in connection with our acquisition of an additional eleven percent of the outstanding shares in our majority-owned Indian based subsidiary KCL.

     The changes in the carrying amount of goodwill for the fiscal years ended October 31, 2008 and 2007 are as follows:

				Network
	Connectivity			Solutions		Total
	(In millions)
Balance as of October 31, 2006	$	238.5		$	—	$	238.5
Goodwill acquired during the year		0.5			—		0.5
Other		(0.6	)		—		(0.6	)
Balance as of October 31, 2007		238.4			—		238.4
Goodwill acquired during the year		35.3			85.3		120.6
Cumulative translation adjustment		1.4			—		1.4
Other		(1.1	)		—		(1.1	)
Balance as of October 31, 2008	$	274.0		$	85.3	$	359.3

     It is our practice to assess goodwill for impairment annually under the requirements of SFAS No. 142, “Goodwill and Other Intangible Assets,” or when impairment indicators arise. Our last annual impairment analysis was performed as of October 31, 2008, which indicated that the estimated fair value of each reporting unit exceeded its corresponding carrying amount, including recorded goodwill. As a result, no impairment existed at that time.

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     Our forecasts and estimates were based on assumptions that are consistent with the plans and estimates we are using to manage our business.  Changes in these estimates could change our conclusion regarding an impairment of goodwill or other intangible assets and potentially result in a non-cash impairment in a future period.  During the latter part of the fourth quarter of fiscal 2008 and continuing into December 2008, there was a significant decline in general economic conditions. A continued decline in general economic conditions, including a sustained decline in our market capitalization relative to our net book value, could materially impact our judgments and assumptions about the fair value of our business. If general economic conditions do not improve we may be required to record a goodwill impairment charge during fiscal 2009.

     In connection with the acquisition of LGC, we recorded intangible assets of $58.9 million related to customer relationships and technology. In connection with the acquisition of Century Man, we recorded intangible assets of $13.0 million related to customer relationships, technology and non-compete agreements.

     The following table represents intangible assets by category and accumulated amortization as of October 31, 2008 and 2007:

	Gross						Estimated
	Carrying		Accumulated				Life Range
2008	Amounts		Amortization		Net		(In Years)
	(In millions)
Technology	$	100.7	$	45.3	$	55.4			5-7
Trade name/trademarks		27.6		7.5		20.1			2-20
Distributor network		10.1		4.5		5.6			10
Customer list		63.8		24.7		39.1			2-7
Patents		44.1		18.5		25.6			3-7
Non-compete agreements		13.0		8.4		4.6			2-5
Other		28.1		17.4		10.7			1-14
Total	$	287.4	$	126.3	$	161.1			7	(1)
	Gross							Estimated
	Carrying		Accumulated				Life Range
2007	Amounts		Amortization		Net		(In Years)
	(In millions)
Technology	$	54.0	$	29.9	$	24.1			5-7
Trade name/trademarks		26.2		5.5		20.7			5-20
Distributor network		10.1		3.5		6.6			10
Customer list		41.8		16.3		25.5			2
Patents		46.0		21.5		24.5			3-7
Non-compete agreements		13.6		6.8		6.8			2-5
Other		26.1		12.4		13.7			1-13
Total	$	217.8	$	95.9	$	121.9			8	(1)

(1) Weighted average life.

     In connection with our plan to discontinue certain outdoor wireless coverage products, we recorded an intangible asset write-off of $3.4 million in the fourth quarter of fiscal 2008 related to patents and non-compete agreements. Amortization expense was $41.2 million, $29.3 million and $30.4 million for fiscal 2008, 2007 and 2006, respectively. Included in amortization expense is $34.4 million, $24.0 million and $26.0 million of acquired intangible amortization for fiscal 2008, 2007 and 2006, respectively. The estimated amortization expense for identified intangible assets is as follows for the periods indicated:

	(In millions)
2009	$	38.1
2010		32.0
2011		24.4
2012		21.7
2013		16.7
Thereafter		28.2
Total	$	161.1

     The purchase prices for LGC and Century Man were allocated on a preliminary basis using information currently available. The allocation of the purchase prices to the assets and liabilities acquired will be finalized no later than the first quarter of fiscal 2009. This

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will occur as we obtain more information regarding asset valuations, liabilities assumed and revisions of preliminary estimates of fair values made at the dates of purchase.

Note 8:  Notes Payable

     Long-term debt and capital lease obligations for the fiscal years ended October 31, 2008, 2007 and 2006 consist of the following:

(In millions)	October 31, 2008		October 31, 2007		October 31, 2006
Convertible subordinated notes, 1.0% fixed rate, due June 15, 2008	$	—	$	200.0	$	200.0
Convertible subordinated notes, six-month LIBOR plus 0.375%, due June 15, 2013		200.0		200.0		200.0
Convertible subordinated notes, 3.5% fixed rate, due July 15, 2015		225.0		—		—
Convertible subordinated notes, 3.5% fixed rate, due July 15, 2017		225.0		—		—
Total convertible subordinated notes		650.0		400.0		400.0
Note, 1.5% fixed rate, due July 10, 2012		0.6		0.7		—
Note, variable rate, renews monthly		0.5		0.5		—
LGC capital leases, various due dates		0.7		—		—
Century Man notes, variable rate, various due dates		1.5		—		—
Total debt		653.3		401.2		400.0
Less: Current portion of long-term debt		2.6		200.6		—
Long-term debt and capital lease obligations	$	650.7	$	200.6	$	400.0

     On December 26, 2007, we issued $450.0 million of 3.5% fixed rate convertible unsecured subordinated notes. The notes were issued in two tranches of $225.0 million each. The first tranche matures on July 15, 2015 (“2015 notes”), and the second tranche matures on July 15, 2017 (“2017 notes”). The notes are convertible into shares of common stock of ADC, based on, in the case of the 2015 notes, an initial base conversion rate of 37.0336 shares of common stock per $1,000 principal amount and, in the case of the 2017 notes, an initial base conversion rate of 35.0318 shares of common stock per $1,000 principal amount, in each case subject to adjustment in certain circumstances. This represents an initial base conversion price of approximately $27.00 per share in the case of the 2015 notes and approximately $28.55 per share in the case of the 2017 notes, representing a 75% and 85% conversion premium, respectively, based on the closing price of $15.43 per share of ADC’s common stock on December 19, 2007. In addition, if at the time of conversion the applicable stock price of ADC’s common stock exceeds the base conversion price, the conversion rate will be increased. The amount of the increase will be measured by a formula. The formula first calculates a fraction. The numerator of the fraction is the applicable stock price of ADC’s common stock at the time of conversion less the initial base conversion price per share (i.e., approximately $27.00 in the case of the 2015 notes and approximately $28.55 in the case of the 2017 notes). The denominator of the fraction is the applicable stock price of ADC’s common stock at the time of conversion. This fraction is then multiplied by an incremental share factor which is 27.7752 shares of common stock per $1,000 principal amount of 2015 notes and 29.7770 shares of common stock per $1,000 principal amount of 2017 notes. The notes of each series are subordinated to existing and future senior indebtedness of ADC.

     On June 4, 2003, we issued $400.0 million of convertible unsecured subordinated notes in two separate transactions. In the first transaction, we issued $200.0 million of 1.0% fixed rate convertible unsecured subordinated notes that matured on June 15, 2008. We paid the $200.0 million fixed rate notes in June 2008. In the second transaction, we issued $200.0 million of convertible unsecured subordinated notes that have a variable interest rate and mature on June 15, 2013. The interest rate for the variable rate notes is equal to 6-month LIBOR plus 0.375%. The holders of the variable rate notes may convert all or some of their notes into shares of our common stock at any time prior to maturity at a conversion price of $28.091 per share. We may redeem any or all of the variable rate notes at any time on or after June 23, 2008. A fixed interest rate swap was entered into for the variable rate note.

     From time to time, we may use interest rate swaps to manage interest costs and the risk associated with changing interest rates. We do not enter into interest rate swaps for speculative purposes. On April 29, 2008, we entered into an interest rate swap effective June 15, 2008, for a notional amount of $200.0 million. The interest rate swap hedges the exposure to changes in interest rates of our $200.0 million of convertible unsecured subordinated notes that have a variable interest rate of six-month LIBOR plus 0.375% and a maturity date of June 15, 2013. We have designated the interest rate swap as a cash flow hedge for accounting purposes. The swap is structured so that we receive six-month LIBOR and pay a fixed rate of 4.0% (before the credit spread of 0.375%). The variable portion we receive resets semiannually and both sides of the swap are settled net semiannually based on the $200.0 million notional amount. The swap matures concurrently with the end of the debt obligation. The swap is currently secured by the assets pledged under our revolving credit facility. The fair market value of the swap on October 31, 2008 was a net unrealized loss of $2.8 million, which is recorded as a component of comprehensive income.

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     As a result of our acquisitions of LGC and Century Man during the first quarter of fiscal 2008, we assumed $17.1 million and $4.4 million, respectively, of debt. During fiscal 2008, Century Man acquired additional debt of $1.7 million. This additional debt is denominated in Chinese renminbi. During fiscal 2008, we repaid $16.4 million of the debt owed by LGC and $4.6 million of the debt owed by Century Man.

     On April 3, 2008, we entered into a secured five-year revolving credit facility. The credit facility allows us to obtain loans in an aggregate amount of up to $200.0 million and provides an option to increase the credit facility by up to an additional $200.0 million under agreed upon conditions. Depending on the type of loan we elect under the facility, the funds will accrue interest on an annual basis at either (i) a credit spread of up to 1% plus the greater of (a) the prime rate as determined by JP Morgan Chase Bank, N.A., (b) the federal funds effective rate plus ¹/2 of 1% and (c) the LIBOR for a one month interest period plus 1% or (ii) a credit spread of up to 2.0% plus the LIBOR over a one, two, three or six month period. In either case, the credit spread is determined by our then current total leverage ratio. In addition, we agreed to pay a commitment fee, which shall accrue at a rate that, depending on the then current total leverage ratio, may vary between 0.15% and 0.40% on the average daily amount of the available revolving credit facility..

     Three of our domestic subsidiaries (the “guarantors”) have guaranteed our obligations under the credit facility. Subject to certain customary exceptions, we also granted a security interest in our personal property, the personal property of the guarantors, and the capital stock of the guarantors and two foreign subsidiaries.

     There are various financial and non-financial covenants that we must comply with in connection with this credit facility. The financial covenants require that during the term of the credit facility we maintain a certain pre-determined maximum total leverage ratio, a maximum senior leverage ratio, and a minimum interest coverage ratio. Compliance with the financial covenants is measured quarterly. Among other things, the non-financial covenants include restrictions on making acquisitions, investments and capital expenditures except as permitted under the credit agreement. As of October 31, 2008, we were in compliance with the covenants under the credit facility.

     Concurrent with the issuance of our variable rate notes (due June 2013), we purchased ten-year call options on our common stock to reduce the potential dilution from conversion of the notes. Under the terms of these call options, which become exercisable upon conversion of the notes, we have the right to purchase from the counterparty at a purchase price of $28.091 per share the aggregate number of shares that we are obligated to issue upon conversion of the variable rate notes, which is a maximum of 7.1 million shares. We also have the option to settle the call options with the counterparty through a net share settlement or cash settlement, either of which would be based on the extent to which the then-current market price of our common stock exceeds $28.091 per share. The cost of the call options was partially offset by the sale of warrants to acquire shares of our common stock with a term of ten years to the same counterparty with whom we entered into the call options. The warrants are exercisable for an aggregate of 7.1 million shares at an exercise price of $36.96 per share. The warrants become exercisable upon conversion of the notes, and may be settled, at our option, either through a net share settlement or a net cash settlement, either of which would be based on the extent to which the then-current market price of our common stock exceeds $36.96 per share. The net effect of the call options and the warrants is either to reduce the potential dilution from the conversion of the notes (if we elect net share settlement) or to increase the net cash proceeds of the offering (if we elect net cash settlement) if the notes are converted at a time when the current market price of our common stock is greater than $28.091 per share.

Note 9:  Common Stock Repurchase Plan and Shareowner Rights Plan

     On August 12, 2008, our board of directors approved a share repurchase program for up to $150.0 million. We obtained consent from lenders under our revolving credit facility to complete this program. The program provided that share repurchases could commence beginning in September 2008 and continue until the earlier of the completion of $150.0 million in share repurchases or July 31, 2009. As of October 31, 2008, we had repurchased approximately 6.4 million shares of common stock for approximately $56.5 million, or $8.80 average per share.

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

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Note 10:  Income Taxes

     The components of the income (loss) from continuing operations before income taxes are:

	2008			2007			2006
	(In millions)
United States	$	(26.6	)	$	144.5		$	77.1
Foreign		(11.6	)		(17.7	)		(21.5	)
Total income (loss) before income taxes	$	(38.2	)	$	126.8		$	55.6

     We recorded an income tax provision (benefit) for discontinued operations, primarily related to the resolution of income tax contingencies of ($0.4) million, ($1.2) million and ($0.6) million during fiscal 2008, 2007 and 2006, respectively. During fiscal 2006, there is no net tax impact relating to the cumulative effect of change in accounting principle due to a full valuation allowance at the beginning of fiscal 2006.

     The components of the provision (benefit) for income taxes from continuing operations are:

	2008			2007			2006
	(In millions)
Current taxes:
Federal	$	(0.4	)	$	0.3		$	3.4
Foreign		2.4			8.3			5.8
State		0.6			0.5			0.4
		2.6			9.1			9.6
Deferred taxes:
Federal		4.4			(5.0	)		(46.7	)
Foreign		(0.8	)		(0.8	)		(0.6	)
State		—			—			—
		3.6			(5.8	)		(47.3	)
Total (benefit) provision	$	6.2		$	3.3		$	(37.7	)
As follows, the effective income tax rate differs from the federal statutory rate from continuing operations:
	2008			2007			2006
Federal statutory rate		35	%		35	%		35	%
Change in deferred tax asset valuation allowance		(59	)		(24	)		(131	)
State income taxes, net		—			1			1
Foreign income taxes		13			(11	)		24
Other, net		(5	)		2			3
Effective income tax rate		(16	)%		3	%		(68	)%

     The following was the composition of deferred tax assets (liabilities) as of October 31, 2008 and 2007:

	2008		2007
	(In millions)
Current deferred tax assets:
Asset valuation reserves	$	17.6	$	9.8
Accrued liabilities		28.3		20.8
Net operating loss and tax credit carryover		7.0		6.0
Subtotal		52.9		36.6
Non-current deferred tax assets:
Intangible assets		188.4		212.4
Depreciation		15.8		14.9
Net operating loss and tax credit carryover		541.4		545.1
Capital loss carryover		212.4		212.8
Investments and other		63.0		20.9
Subtotal		1,021.0		1,006.1
Total deferred tax assets		1,073.9		1,042.7

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	2008			2007
	(In millions)
Current deferred tax liabilities:
Accrued liabilities		(3.6	)		(4.1	)
Subtotal		(3.6	)		(4.1	)
Non-current deferred tax liabilities:
Intangible assets		(45.7	)		(34.0	)
Investments and other		(9.2	)		(8.3	)
Subtotal		(54.9	)		(42.3	)
Total deferred tax liabilities		(58.5	)		(46.4	)
Net deferred tax assets		1,015.4			996.3
Deferred tax asset valuation allowance		(965.1	)		(944.5	)
Net deferred tax asset	$	50.3		$	51.8

     During the third quarter of fiscal 2002, we concluded that a full valuation allowance against our net deferred tax assets was appropriate. A deferred tax asset represents future tax benefits to be received when certain expenses and losses previously recognized in the financial statements become deductible under applicable income tax laws. Thus, realization of a deferred tax asset is dependent on future taxable income against which these deductions can be applied. SFAS No. 109, “Accounting for Income Taxes,” requires that a valuation allowance be established when it is more likely than not that all or a portion of deferred tax assets will not be realized. A review of all available positive and negative evidence needs to be considered, including a company’s performance, the market environment in which the company operates, the utilization of past tax credits, length of carryback and carryforward periods, and existing contracts or sales backlog that will result in future profits. As a result of the cumulative losses we incurred in prior years, we previously concluded that a nearly full valuation allowance should be recorded. In fiscal 2006, we determined that our recent experience generating U.S. income, along with our projection of future U.S. income, constituted significant positive evidence for partial realization of our U.S. deferred tax assets. Therefore, we recorded a tax benefit of $49.0 million in fiscal 2006 and an additional $6.0 million in fiscal 2007 related to a partial release of valuation allowance on the portion of our U.S. deferred tax assets expected to be realized over the following two-year period. During fiscal 2008, we reestablished a valuation allowance on our U.S. deferred tax assets in the amount of $3.4 million as a result of a reduction in projected future U.S. income from levels projected in fiscal 2007. At one or more future dates, if sufficient positive evidence exists that it is more likely than not that the benefit will be realized with respect to additional deferred tax assets, we will release additional valuation allowance. Also, if there is a reduction in the projection of future U.S. income, we may need to increase the valuation allowance.

     The U.S. Internal Revenue Service has completed its examination of our federal income tax returns for all years prior to fiscal 2003. In addition, we are subject to examinations in several states and foreign jurisdictions.

     At October 31, 2008, the following carryforwards were available to offset future income: Federal and state net operating loss carryforwards were approximately $1,126.8 million and $65.7 million, respectively. Most of the federal net operating loss carryforwards expire between fiscal 2019 and fiscal 2026, and the state operating loss carryforwards expire between fiscal 2009 and fiscal 2030. Federal capital loss carryforwards were approximately $590.0 million, most of which expire in fiscal 2009. Federal and state credit carryforwards were approximately $46.0 and $17.5 million, respectively, and expire between fiscal 2009 and fiscal 2027. Foreign net operating loss carryforwards were approximately $147.6 million, of which $47.7 million are expected either to expire or not be utilized.

     Deferred federal income taxes are not provided on the undistributed cumulative earnings of foreign subsidiaries because such earnings are considered to be invested permanently in those operations. At October 31, 2008, such earnings were approximately $40.0 million. The amount of unrecognized deferred tax liability on such earnings was approximately $5.8 million.

     In connection with our acquisition of LGC during fiscal 2008, we recorded $18.6 million of deferred tax assets and a valuation allowance of $18.6 million. In connection with our acquisition of Century Man during fiscal 2008, we recorded $0.4 million of income tax receivables and $1.6 million of deferred tax liabilities.

     As of October 31, 2008, the valuation allowance on deferred tax assets recorded in connection with our acquisitions was $37.9 million. Any reversal of this valuation allowance in future years will reduce the goodwill recorded in such acquisitions.

     During fiscal 2008, our valuation allowance increased from $944.5 million to $965.1 million. The increase is comprised of $20.7 million related to continuing operations, $18.6 million recorded in connection with our acquisition of LGC and ($18.7) million related to shareholders’ investment and other items.

     During fiscal 2007, our valuation allowance decreased from $974.1 million to $944.5 million. The decrease is comprised of ($43.4) million related to continuing operations and $13.8 million related to shareholders’ investment and other items.

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     During fiscal 2006, our valuation allowance decreased from $1,039.9 million to $974.1 million. The decrease is comprised of ($68.1) million related to continuing operations and $2.3 million related to other items.

  FIN 48, Uncertain Tax Positions

     Effective November 1, 2007, we adopted the provisions of FIN 48, which provides new accounting criteria for recording the impact of potential tax return adjustments resulting from future examinations by the taxing authorities relating to uncertain tax positions taken in those returns.

     The cumulative effect of adopting FIN 48 has been recorded as follows:

	(In millions)
Increase in retained earnings	$	1.4
Decrease in goodwill in connection with the KRONE acquisition		0.9
Decrease in cumulative translation adjustment		1.5
Increase in net deferred income tax assets		5.8
Increase in liabilities for unrecognized income tax benefits		5.0

     A reconciliation of the beginning and ending amount of unrecognized tax benefits (excluding interest and penalties) is as follows:

	(In millions)
Balance at November 1, 2007	$	34.8
Increases due to tax positions related to the current year		2.8
Increases due to tax position of prior years		0.1
Impact of changes in exchange rates		(2.2	)
Reductions due to tax positions of prior years		(0.3	)
Settlements with tax authorities		(1.1	)
Reductions due to the lapse of the applicable statute of limitations		(6.5	)
Balance at October 31, 2008	$	27.6

     The total amount of unrecognized tax benefits at October 31, 2008, which, if recognized, would impact the effective tax rate is $10.4 million. At October 31, 2008, we have accrued $2.4 million for interest and penalties related to unrecognized income tax benefits. Interest and penalties related to unrecognized income tax benefits are recorded in income tax expense.

     It is reasonably possible that a reduction in the range of $5.0 million to $10.0 million of unrecognized tax benefits may occur in the next twelve months as a result of resolutions of worldwide tax disputes.

     We file income tax returns at the federal and state levels and in various foreign jurisdictions. A summary of the tax years where the statute of limitations is open for examination by the taxing authorities is presented below:

Major Jurisdictions	Open Tax Years
Australia		2004-2008
Germany		2002-2008
Hong Kong		2002-2008
United Kingdom		2007-2008
United States		2005-2008

Note 11:  Employee Benefit Plans

     Retirement Savings Plans:  Employees in the United States and in many other countries are eligible to participate in defined contribution retirement plans. In the United States, we make matching contributions to the ADC Telecommunications, Inc. Retirement Savings Plan (“ADC RSP”). We match the first 6% an employee contributes to the plan at a rate of 50 cents for each dollar of

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employee contributions. In addition, depending on financial performance for the fiscal year, we may make a discretionary contribution of up to 120% of the employee’s salary deferral on the first 6% of eligible compensation. Employees are fully vested in all contributions at the time the contributions are made. The amounts charged to earnings for the ADC RSP were $4.5 million, $6.1 million and $5.4 million during fiscal 2008, 2007 and 2006, respectively. Based on participant investment elections, the trustee for the ADC RSP invests a portion of our cash contributions in ADC common stock. The inclusion of this investment in the ADC RSP is monitored by an independent fiduciary agent we have retained. In addition, other retirement savings plans exist in other of our global (non-U.S.) locations, which are aligned with local custom and practice. The amounts charged to earnings related to our global (non-U.S.) retirement savings plans were $6.0 million, $6.5 million and $6.0 million during fiscal 2008, 2007 and 2006, respectively.

     Pension Benefits:  With our acquisition of KRONE, we assumed certain pension obligations of KRONE related to its German workforce. The KRONE pension plan is an unfunded general obligation of our German subsidiary (which is a common arrangement for German pension plans) and, as part of the acquisition, we recorded a liability of $62.8 million for this obligation as of October 31, 2004. As of October 31, 2008, we had a liability of $56.4 million for this obligation. We use a measurement date of October 31 for the plan. The plan was closed to employees hired after 1994. Accordingly, only employees and retirees hired before 1995 are covered by the plan. Pension payments will be made to eligible individuals upon reaching eligible retirement age, and the cash payments are expected to equal approximately the net periodic benefit cost.

     On October 31, 2007, we adopted SFAS No. 158, “Employers’ Accounting for Defined Benefit Pension and Other Postretirement Plans, an amendment of FASB Statements No. 87, 88, 106 and 132(R)”, (“SFAS 158”) which requires that we recognize the funded status of our defined benefit and other postretirement benefit plans in our balance sheet, with changes in the funded status recognized through comprehensive income, net of tax, in the year in which they occur. The requirement to measure plan assets and benefit obligations as of the date of the fiscal year-end balance sheet is consistent with our current accounting treatment. Additional minimum pension liabilities and related intangible assets are no longer recognized according to SFAS 158. The provisions of SFAS 158 require prospective application; thus, prior periods presented are not retroactively adjusted.

     The following provides reconciliations of benefit obligations, plan assets and funded status of the KRONE pension plan:

	October 31,
	2008			2007
	(In millions)
Change in benefit obligation
Beginning balance	$	71.3		$	69.2
Service cost		0.1			0.2
Interest cost		3.8			3.2
Actuarial gain		(8.3	)		(6.0	)
Foreign currency exchange rate changes		(6.0	)		8.6
Benefit payments		(4.5	)		(3.9	)
Ending balance	$	56.4		$	71.3
Funded status of the plan
Plan assets at fair value less than benefit obligation	$	(56.4	)	$	(71.3	)
Amounts recognized in the Consolidated Balance Sheet
Liabilities
Current liability	$	(3.7	)	$	(3.0	)
Other long-term liability		(52.7	)		(68.3	)
Total liabilities	$	(56.4	)	$	(71.3	)
Accumulated other comprehensive (income) loss, pre-tax
Net (gain) loss	$	(7.1	)	$	(0.8	)
Total accumulated other comprehensive income	$	(7.1	)	$	(0.8	)

     The following table details the incremental impact of adopting SFAS 158 as of October 31, 2007:

	Before					After
	Application					Application
	of SFAS 158		Adjustments			of SFAS 158
	(In millions)
Liability for pension benefits	$	71.5	$	(0.2	)	$	71.3
Total liabilities	$	757.4	$	(0.2	)	$	757.2
Accumulated other comprehensive income (loss), net of tax	$	2.5	$	0.2		$	2.7
Total shareowners’ investment	$	1,007.4	$	0.2		$	1,007.6

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     There was an unrecognized net actuarial loss of $0.2 million that had not previously been recognized in net periodic benefit cost and is included in accumulated other comprehensive income for the year ended October 31, 2007 as a result of implementing SFAS 158.

     Net periodic pension cost for fiscal 2008, 2007 and 2006 includes the following components:

	2008		2007		2006
	(In millions)
Service cost	$	0.1	$	0.2	$	0.2
Interest cost		3.8		3.2		2.9
Net periodic pension cost	$	3.9	$	3.4	$	3.1

     The following assumptions were used to determine the plan’s benefit obligations as of the end of the plan year and the plan’s net periodic pension cost:

	October 31,
	2008			2007			2006
Weighted average assumptions used to determine benefit obligations
Discount rate		6.25	%		5.25	%		4.50	%
Compensation rate increase		2.50	%		2.50	%		2.50	%
Weighted average assumptions used to determine net cost for the years ended
Discount rate		5.25	%		4.50	%		4.25	%
Compensation rate increase		2.50	%		2.50	%		2.50	%

     Since the plan is an unfunded general obligation, we do not expect to contribute to the plan except to make the below described benefit payments.

     Expected future employee benefit plan payments:

	(In millions)
2009	$	4.5
2010		4.5
2011		4.5
2012		4.6
2013		4.7
Five Years Thereafter	$	24.2

Note 12:  Share-Based Compensation

     Share-based compensation recognized under SFAS 123(R) for fiscal 2008, 2007 and 2006 was $17.2 million, $10.5 million and $10.0 million, respectively. The share-based compensation expense is calculated on a straight-line basis over the vesting periods of the related share-based awards.

     During December 2007, we adopted the 2008 Global Stock Incentive Plan (the “2008 Stock Plan”). Upon shareowner approval in March 2008, the 2008 Stock Plan replaced the previous Global Stock Incentive Plan as amended and restated in December 2006, as well as all other previous share-based compensation plans. However, existing awards under those plans will continue to vest in accordance with the original vesting schedule and will expire at the end of their original term.

     As of October 31, 2008, a total of 10.8 million shares of ADC common stock were available for stock awards under our 2008 Stock Plan. This total included shares of ADC common stock available for issuance as stock options, restricted stock units (including time-based and performance-based vesting) and other forms of stock-based compensation. Shares issued as stock options each reduce the number of shares available to award by one share, while restricted stock units each reduce the number of shares available to award by 1.74 shares. All stock options granted under the 2008 Stock Plan were made at fair market value. Stock options granted under the 2008 Stock Plan generally vest over a four-year period.

     During fiscal 2008, 2007 and 2006, we granted 318,164, 305,485 and 324,885 restricted stock units, respectively, subject to a three-year cliff-vesting period and earnings per share performance threshold. Subject to certain conditions, the performance threshold requires that our aggregate diluted pre-tax earnings per share throughout the three fiscal years reach a targeted amount. For purposes of SFAS 123(R), expense for these restricted stock units are recognized on a straight-line basis from the grant date only if we believe

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we will achieve the performance threshold. We recorded $6.4 million and $0.7 million of compensation expense during fiscal 2008 and 2007, respectively, related to grants that we believe will achieve the performance threshold. The increase in compensation expense during fiscal 2008 results from our belief that the performance thresholds will be achieved for certain awards. We did not record any compensation expense during fiscal 2006 related to such grants.

     The following schedule summarizes activity in our share-based compensation plans:

				Stock Options			Restricted
	Stock			Weighted Average			Stock
	Options			Exercise Price			Units
	(In millions)						(In millions)
Outstanding at October 31, 2005		6.8		$	28.95			0.4
Granted		1.0			23.83			0.4
Exercised		(0.6	)		(16.60	)		—
Restrictions lapsed		—			—			(0.1	)
Canceled		(0.6	)		(31.06	)		(0.1	)
Outstanding at October 31, 2006		6.6			29.08			0.6
Granted		1.4			14.90			0.8
Exercised		(0.4	)		(15.84	)		—
Restrictions lapsed		—			—			(0.1	)
Canceled		(0.9	)		(36.07	)		(0.2	)
Outstanding at October 31, 2007		6.7			25.46			1.1
Granted		0.9			13.46			0.8
Exercised		(0.1	)		(3.73	)		—
Restrictions lapsed		—			—			—
Canceled		(0.7	)		(31.62	)		(0.1	)
Outstanding at October 31, 2008		6.8		$	23.64			1.8
Exercisable at October 31, 2008		4.8		$	26.29			—

     As of October 31, 2008, there were options to purchase 1.3 million shares of ADC common stock that had not yet vested and were expected to vest in future periods at a weighted average exercise price of $17.44. The following table contains details regarding our outstanding stock options as of October 31, 2008:

			Weighted Average						Weighted
			Remaining		Weighted Average				Average
Range of Exercise	Number		Contractual Life		Exercise Price of		Number		Exercise Price of
Prices Between	Outstanding		(In Years)		Options Outstanding		Exercisable		Options Exercisable
$ 2.54  - 14.42		286,929		5.18	$	7.83		243,004	$	7.34
14.59  - 14.59		1,029,105		5.07		14.59		266,709		14.59
14.63  - 15.82		752,062		4.20		15.73		688,724		15.77
16.03  - 17.76		1,058,564		5.63		17.37		431,005		16.95
17.92  - 18.76		758,034		5.84		18.72		558,925		18.73
19.11  - 20.44		991,653		3.50		20.05		982,503		20.06
20.79  - 23.91		694,335		6.75		23.80		375,240		23.75
24.01  - 37.94		814,376		3.32		31.10		795,000		31.23
42.77  - 286.56		422,242		1.32		87.10		422,242		87.10
293.56  - 293.56		2,614		1.69		293.56		2,614		293.56
		6,809,914		4.65	$	23.64		4,765,966	$	26.29

     For purposes of determining estimated fair value under SFAS 123(R), we have computed the estimated fair values of stock options using the Black-Scholes Model. The weighted average estimated fair value of employee stock options granted was $8.81, $7.21, and $12.67 per share for fiscal 2008, 2007 and 2006, respectively. These values were calculated using the Black-Scholes Model with the following weighted average assumptions:

	2008			2007			2006
Expected volatility		44.05	%		52.51	%		57.70	%
Risk free interest rate		2.98	%		4.45	%		4.34	%
Expected dividends		—			—			—
Expected term (in years)		4.7			4.6			4.9

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     We based our estimate of expected volatility for awards granted in fiscal 2008 on monthly historical trading data of our common stock for a period equivalent to the expected life of the award. Our risk-free interest rate assumption is based on implied yields of U.S. Treasury zero-coupon bonds having a remaining term equal to the expected term of the employee stock awards. We estimated the expected term consistent with historical exercise and cancellation activity of our previous share-based grants with a ten-year contractual term. We do not anticipate declaring dividends in the foreseeable future. Forfeitures were estimated based on historical experience. If factors change and we employ different assumptions in the application of SFAS 123(R) in future periods, the compensation expense that we record under SFAS 123(R) may differ significantly from what we have recorded in the current period.

     As of October 31, 2008, we have approximately $17.7 million of total compensation cost related to non-vested awards not yet recognized. We expect to recognize these costs over a weighted average period of 2.1 years.

Note 13:  Accumulated Other Comprehensive Income (Loss)

     Accumulated other comprehensive income (loss) has no impact on our net income (loss) but is reflected in our balance sheet through adjustments to shareowners’ investment. Accumulated other comprehensive income (loss) derives from foreign currency translation adjustments, unrealized gains (losses) and related adjustments on available-for-sale securities, hedging activities and adjustments to reflect our minimum pension liability. We specifically identify the amount of unrealized gain (loss) recognized in other comprehensive income for each available-for-sale (“AFS”) security. When an AFS security is sold or impaired, we remove the security’s cumulative unrealized gain (loss), net of tax, from accumulated other comprehensive loss. The components of accumulated other comprehensive loss are:

	Derivative			Foreign			Unrealized
	Instruments			Currency			Gain (Loss)
	and Hedging			Translation			On Investments,			Pension
	Activities			Adjustment			net			Adjustment			Total
	(In millions)
Balance, October 31, 2005	$	—		$	(17.7	)	$	(0.7	)	$	(7.2	)	$	(25.6	)
Translation gain		—			11.8			—			—			11.8
Minimum pension liability adjustment		—			—			—			2.9			2.9
Unrealized gain on securities		—			—			0.7			—			0.7
Balance, October 31, 2006		—			(5.9	)		—			(4.3	)		(10.2	)
Translation gain		—			7.8			—			—			7.8
Minimum pension liability adjustment		—			—			—			4.9			4.9
Adoption of SFAS 158		—			—			—			0.2			0.2
Balance, October 31, 2007		—			1.9			—			0.8			2.7
Translation loss		—			(21.9	)		—			—			(21.9	)
Pension obligation adjustment		—			0.9			—			6.3			7.2
Net change in fair value of interest rate swap		(2.8	)		—			—			—			(2.8	)
Unrealized gain on foreign currency hedge		0.2			—			—			—			0.2
Unrealized gain on securities		—			—			0.5			—			0.5
Balance, October 31, 2008	$	(2.6	)	$	(19.1	)	$	0.5		$	7.1		$	(14.1	)

     There is no net tax impact for the components of other comprehensive income (loss) due to the valuation allowance.

Note 14:  Commitments and Contingencies

     Letters of Credit:  As of October 31, 2008, we had $12.3 million of outstanding letters of credit. These outstanding commitments are fully collateralized by restricted cash.

     Operating Leases:  Portions of our operations are conducted using leased equipment and facilities. These leases are non-cancelable and renewable, with expiration dates ranging through the year 2015. The rental expense included in the accompanying consolidated statements of operations was $25.5 million, $25.3 million and $17.3 million for fiscal 2008, 2007 and 2006, respectively.

     The following is a schedule of future minimum rental payments required under non-cancelable operating leases as of October 31, 2008:

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	(In millions)
2009	$	23.1
2010		19.2
2011		12.9
2012		10.4
2013		8.1
Thereafter		11.1
Total	$	84.8

     The aggregate amount of future minimum rentals to be received under non-cancelable subleases as of October 31, 2008 is $19.6 million.

     Legal Contingencies:  We are a party to various lawsuits, proceedings and claims arising in the ordinary course of business or otherwise. Many of these disputes may be resolved without formal litigation. The amount of monetary liability resulting from the ultimate resolution of these matters cannot be determined at this time. As of October 31, 2008, we had recorded approximately $10.8 million in loss reserves for certain of these matters. In light of the reserves we have recorded, at this time we believe the ultimate resolution of these lawsuits, proceedings and claims will not have a material adverse impact on our business, results of operations or financial condition. Because of the uncertainty inherent in litigation, however, it is possible that unfavorable resolutions of one or more of these lawsuits, proceedings and claims could exceed the amount currently reserved and could have a material adverse effect on our business, results of operations or financial condition.

     Purchase Obligations:  At October 31, 2008, we had non-cancelable commitments to purchase goods and services valued at $10.2 million, including items such as inventory and information technology support.

     Other Contingencies:  As a result of the divestitures discussed in Note 4, we may incur charges related to obligations retained based on the sale agreements, primarily related to income tax contingencies or working capital adjustments. At this time, none of those obligations are probable or estimable.

     Change of Control:  Our Board of Directors has approved the extension of certain employee benefits, including salary continuation to key employees, in the event of a change of control of ADC.

Note 15:  Segment and Geographic Information

  Segment Information

     During the first quarter of fiscal 2008, we completed the acquisition of LGC, which resulted in a change to our internal management reporting structure. A new business unit was created by combining our legacy wireless and wireline businesses with the newly acquired LGC business to form Network Solutions. As a result of this change, we have changed our reportable segments to conform to our current management reporting presentation. We have reclassified prior year segment disclosures to conform to the new segment presentation.

     ADC is organized into operating segments based on product grouping. The reportable segments are determined in accordance with how our executive managers develop and execute our global strategies to drive growth and profitability. These strategies include product positioning, research and development programs, cost management, capacity and capital investments for each of the reportable segments. Segment performance is evaluated on several factors, including operating income. Segment operating income excludes restructuring and impairment charges, interest income or expense, other income or expense and provision for income taxes. Assets are not allocated to the segments.

     Our three reportable business segments are:

• Connectivity

• Network Solutions

• Professional Services

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     Our Connectivity products connect wireline, wireless, cable, enterprise and broadcast communications networks over copper (twisted pair), coaxial, fiber-optic and wireless media. These products provide the physical interconnections between network components and access points into networks.

     Our Network Solutions products help improve coverage and capacity for wireless networks and broadband access for wireline networks. These products improve signal quality, increase coverage and capacity into expanded geographic areas, enhance the delivery and capacity of networks, and help reduce the capital and operating costs of delivering wireline and wireless services. Applications for these products include in-building solutions, outdoor coverage solutions, mobile network solutions and wireline solutions.

     Our Professional Services business provides integration services for broadband and multiservice communications over wireline, wireless, cable and enterprise networks. Our Professional Services business unit helps customers plan, deploy and maintain communications networks that deliver Internet, data, video and voice services.

     Other than in the U.S., no single country has property and equipment sufficiently material to disclose. Our largest customer, Verizon, accounted for 16.5%, 17.8% and 16.0% of our sales in fiscal 2008, 2007 and 2006, respectively. Revenue from Verizon is included in each of the three reportable segments. The merger of AT&T and BellSouth in our fiscal 2007 created another large customer for us. In fiscal 2008 and 2007 this combined company accounted for approximately 16.0% and 15.4% of our sales, respectively.

     The following table sets forth certain financial information for each of our above described reportable segments:

											Restructuring,
			Network			Professional					Impairment and		GAAP
	Connectivity		Solutions			Services			Consolidated		Other Charges		Consolidated
						(In millions)
2008
External net sales:
Products	$	1,105.2	$	145.3		$	49.2		$	1,299.7	$	—	$	1,299.7
Services		—		24.2			132.5			156.7		—		156.7
Total external net sales	$	1,105.2	$	169.5		$	181.7		$	1,456.4	$	—	$	1,456.4
Depreciation and amortization	$	60.5	$	15.9		$	5.9		$	82.3	$	—	$	82.3
Operating income (loss)	$	115.5	$	(39.5	)	$	0.9		$	76.9	$	15.2	$	61.7
2007
External net sales:
Products	$	1,014.9	$	97.7		$	57.6		$	1,170.2	$	—	$	1,170.2
Services		—		—			106.5			106.5		—		106.5
Total external net sales	$	1,014.9	$	97.7		$	164.1		$	1,276.7	$	—	$	1,276.7
Depreciation and amortization	$	58.9	$	5.3		$	3.8		$	68.0	$	—	$	68.0
Operating income (loss)	$	100.7	$	(10.4	)	$	5.5		$	95.8	$	17.8	$	78.0
2006
External net sales:
Products	$	980.2	$	97.6		$	58.3		$	1,136.1	$	—	$	1,136.1
Services		—		—			95.8			95.8		—		95.8
Total external net sales	$	980.2	$	97.6		$	154.1		$	1,231.9	$	—	$	1,231.9
Depreciation and amortization	$	55.0	$	5.8		$	6.5		$	67.3	$	—	$	67.3
Operating income (loss)	$	83.6	$	(13.1	)	$	(4.7	)	$	65.8	$	20.6	$	45.2

     The fiscal 2007 restructuring, impairment and other column includes the $10.0 million contribution to the ADC Foundation.

Geographic Information

     The following table sets forth certain geographic information concerning our U.S. and foreign sales and ownership of property and equipment:

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Geographic Sales Information	2008		2007		2006
	(In millions)
Inside the United States	$	862.8	$	803.8	$	750.5
Outside the United States:
Asia Pacific (Australia, China, Hong Kong, India, Japan, Korea, New Zealand, Southeast Asia and Taiwan)		187.3		135.4		109.1
EMEA (Africa, Europe (Excluding Germany) and Middle East)		248.8		192.3		183.0
Germany(1)		51.5		50.2		95.6
Americas (Canada, Central and South America)		106.0		95.0		93.7
Total sales	$	1,456.4	$	1,276.7	$	1,231.9
Property and Equipment, Net:
Inside the United States	$	113.4	$	121.3
Outside the United States		63.7		76.8
Total property and equipment, net	$	177.1	$	198.1

(1) Due to the significance of its sales, Germany is broken out for geographic purposes. Other than in the U.S., no single country has property and equipment sufficiently material to disclose.

Note 16:  Impairment, Restructuring, and Other Disposal Charges

     During fiscal 2008, 2007 and 2006, we continued our plan to improve operating performance by restructuring and streamlining our operations. As a result, we incurred restructuring charges associated with workforce reductions, consolidation of excess facilities, and the exiting of various product lines. The impairment and restructuring charges resulting from our actions, by category of expenditures, adjusted to exclude those activities specifically related to discontinued operations, are as follows for fiscal 2008, 2007 and 2006, respectively:

	2008		2007		2006
	(In millions)
Impairments:
Fixed asset write-downs	$	0.7	$	2.3	$	1.2
Patents/intangibles		3.4		—		—
Total impairment charges		4.1		2.3		1.2
Restructuring charges:
Employee severance		10.4		4.7		14.4
Facilities consolidation and lease termination		0.7		0.8		5.0
Total restructuring charges		11.1		5.5		19.4
Other disposal charges: Inventory write-offs		14.0		8.9		—
Total impairment, restructuring and other disposal charges	$	29.2	$	16.7	$	20.6

     Impairment Charges:  We evaluate our long-lived assets for impairment in accordance with SFAS 144.  In fiscal 2008, we recorded impairment charges of $4.1 million primarily to write-off certain intangible assets related to the exit of some of our outdoor wireless product lines in our Network Solutions segment. In fiscal 2007, we recorded impairment charges of $2.3 million related primarily to internally developed capitalized software costs, the exiting of the ACX product line, and the Muggelheim facility, a commercial property in Germany formerly used by our services business. In fiscal 2006, we recorded impairment charges of $1.2 million based on estimated market prices.

     Prior to the fourth quarter of 2007, we had designated our Muggelheim facility in Germany as assets held for sale. During the fourth quarter of fiscal 2007, we concluded that this asset no longer met the criteria for classification as assets held for sale. We further concluded that there was no readily available market for this property. As a result of these conclusions, the Muggelheim facility was reclassified to held and used. We recorded an impairment of $1.0 million to reduce the book value of this facility to zero.

     Restructuring Charges:  Restructuring charges relate principally to employee severance and facility consolidation costs resulting from the closure of leased facilities and other workforce reductions attributable to our efforts to reduce costs. During fiscal 2008, 2007 and 2006, we identified and accounted for the elimination of approximately 550, 200 and 400 employees, respectively, through reductions in force. In the current year, the restructuring costs were known in October 2008 and thus taken in fiscal 2008, with the notifications and terminations occurring in early fiscal 2009. The costs of these reductions have been and will be funded through cash from operations. These reductions have impacted each of our reportable segments.

     Facility consolidation and lease termination costs represent costs associated with our decision to consolidate and close duplicative or excess manufacturing and office facilities. During fiscal 2008, 2007 and 2006, we incurred charges of $0.7 million, $0.8 million

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and $5.0 million, respectively, due to our decision to close unproductive and excess facilities and the continued softening of real estate markets, which resulted in lower sublease income.

     Other Disposal Charges:  In fiscal 2008 and fiscal 2007, we recorded $14.0 million and $8.9 million, respectively, for the write-off of obsolete inventory associated with exit activities. The inventory write-offs in fiscal 2008 consisted of $10.8 million related to our decision to exit several outdoor wireless and wireline product lines and $3.2 million due to a change in the estimate made in fiscal 2007 related to the ACX product line. The inventory write-offs in fiscal 2007 consisted of $8.9 million related to our decision to exit the ACX product line. All inventory charges were recorded as cost of goods sold.

     The following table provides detail on the activity described above and our remaining restructuring accrual balance by category as of October 31, 2008 and 2007:

	Accrual		Continuing				Accrual
	October 31,		Operations		Cash		October 31,
Type of Charge	2007		Net Additions		Charges		2008
	(In millions)
Employee severance costs	$	5.1	$	10.4	$	6.9	$	8.6
Facilities consolidation		11.8		0.7		4.4		8.1
Total	$	16.9	$	11.1	$	11.3	$	16.7
	Accrual		Continuing				Accrual
	October 31,		Operations		Cash		October 31,
Type of Charge	2006		Net Additions		Charges		2007
	(In millions)
Employee severance costs	$	12.5	$	4.7	$	12.1	$	5.1
Facilities consolidation		15.3		0.8		4.3		11.8
Total	$	27.8	$	5.5	$	16.4	$	16.9

     We expect that substantially all but $1.1 million of the remaining $8.6 million of cash expenditures relating to employee severance costs incurred through October 31, 2008 will be paid by the end of fiscal 2009. The remaining $1.1 million is expected to be paid by the end of fiscal 2011. Of the $8.1 million to be paid for the consolidation of facilities, we expect that approximately $1.4 million will be paid from unrestricted cash by the end of fiscal 2009, and that the balance will be paid from unrestricted cash over the respective lease terms of the facilities through 2015.

Note 17:  Quarterly Financial Data (Unaudited)

	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter			Total
	(In millions, except earnings per share)
2008
Net Sales	$	329.1		$	393.2		$	381.8		$	352.3		$	1,456.4
Cost of Sales		208.7			251.7			251.2			255.5			967.1
Gross Profit		120.4			141.5			130.6			96.8			489.3
Operating Expenses:
Research and development		19.5			21.8			21.7			20.5			83.5
Selling and administration		81.7			84.9			83.0			79.3			328.9
Impairment charges		—			—			—			4.1			4.1
Restructuring charges		1.2			1.0			0.1			8.8			11.1
Total operating expenses		102.4			107.7			104.8			112.7			427.6
Operating Income (Loss)		18.0			33.8			25.8			(15.9	)		61.7
Other Income (Expense), Net		(44.9	)		(15.9	)		(9.5	)		(29.6	)		(99.9	)
Income (Loss) Before Income Taxes		(26.9	)		17.9			16.3			(45.5	)		(38.2	)
Provision (Benefit) for Income Taxes		1.5			1.9			2.9			(0.1	)		6.2
Income (Loss) From Continuing Operations		(28.4	)		16.0			13.4			(45.4	)		(44.4	)
Discontinued Operations, Net of Tax		1.1			0.3			1.7			(0.6	)		2.5
Net Income (Loss)	$	(27.3	)	$	16.3		$	15.1		$	(46.0	)	$	(41.9	)
Average Common Shares Outstanding — Basic		117.6			117.7			117.7			115.4			117.1
Average Common Shares Outstanding — Diluted		117.6			118.2			118.3			115.4			117.1
Basic Income (Loss) Per Share:

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	First			Second		Third		Fourth
	Quarter			Quarter		Quarter		Quarter			Total
	(In millions, except earnings per share)
Continuing operations	$	(0.24	)	$	0.14	$	0.11	$	(0.39	)	$	(0.38	)
Discontinued operations	$	0.01		$	—	$	0.02	$	(0.01	)	$	0.02
Net Income (Loss)	$	(0.23	)	$	0.14	$	0.13	$	(0.40	)	$	(0.36	)
Diluted Income (Loss) Per Share:
Continuing operations	$	(0.24	)	$	0.14	$	0.11	$	(0.39	)	$	(0.38	)
Discontinued operations	$	0.01		$	—	$	0.02	$	(0.01	)	$	0.02
Net Income (Loss)	$	(0.23	)	$	0.14	$	0.13	$	(0.40	)	$	(0.36	)
Net Sales Outside the United States	$	131.0		$	157.5	$	165.0	$	140.1		$	593.6

	First			Second			Third			Fourth
	Quarter			Quarter			Quarter			Quarter			Total
	(In millions, except earnings per share)
2007
Net Sales	$	283.6		$	337.9		$	334.9		$	320.3		$	1,276.7
Cost of Sales		188.8			217.2			221.2			206.9			834.1
Gross Profit		94.8			120.7			113.7			113.4			442.6
Operating Expenses:
Research and development		16.8			17.7			17.6			17.5			69.6
Selling and administration		69.2			67.9			67.8			82.3			287.2
Impairment charges		—			0.1			1.5			0.7			2.3
Restructuring charges		0.6			(2.1	)		5.6			1.4			5.5
Total operating expenses		86.6			83.6			92.5			101.9			364.6
Operating Income		8.2			37.1			21.2			11.5			78.0
Other Income (Expense), Net		3.6			61.6			5.2			(21.6	)		48.8
Income (Loss) Before Income Taxes		11.8			98.7			26.4			(10.1	)		126.8
Provision (Benefit) for Income Taxes		1.1			2.7			2.0			(2.5	)		3.3
Income (Loss) From Continuing Operations		10.7			96.0			24.4			(7.6	)		123.5
Discontinued Operations, Net of Tax		(7.1	)		(3.9	)		(7.8	)		1.6			(17.2	)
Net Income (Loss)	$	3.6		$	92.1		$	16.6		$	(6.0	)	$	106.3
Average Common Shares Outstanding — Basic		117.2			117.3			117.4			117.5			117.4
Average Common Shares Outstanding — Diluted		117.3			131.8			117.8			117.5			131.9
Basic Income (Loss) Per Share:
Continuing operations	$	0.09		$	0.82		$	0.21		$	(0.07	)	$	1.05
Discontinued operations	$	(0.06	)	$	(0.03	)	$	(0.07	)	$	0.02		$	(0.14	)
Net Income (Loss)	$	0.03		$	0.79		$	0.14		$	(0.05	)	$	0.91
Diluted Income (Loss) Per Share:
Continuing operations	$	0.09		$	0.75		$	0.21		$	(0.07	)	$	1.04
Discontinued operations	$	(0.06	)	$	(0.03	)	$	(0.07	)	$	0.02		$	(0.13	)
Net Income (Loss)	$	0.03		$	0.72		$	0.14		$	(0.05	)	$	0.91
Net Sales Outside the United States	$	111.1		$	112.2		$	119.7		$	129.9		$	472.9

 Fiscal Year

     Our first three quarters end on the Friday nearest to the end of January, April and July, respectively, and our fiscal year ends on October 31.

     On July 22, 2008, our Board of Directors approved a change in our fiscal year end from October 31st to September 30th commencing with our fiscal year 2009. This will result in our fiscal year 2009 being shortened from 12 months to 11 months and ending on September 30th.

     We presently intend to file our annual report on Form 10-K for our fiscal year 2009 as our transition report. Accordingly, we will continue to file quarterly reports on Form 10-Q on our present quarterly reporting cycle that corresponds to an October 31st fiscal year end through our third quarter of fiscal year 2009 ending July 31, 2009. We will then use our Annual Report on Form 10-K for fiscal 2009 to transition to a quarterly reporting cycle that corresponds to a September 30th fiscal year end. Therefore, for financial reporting purposes our fourth quarter of fiscal 2009 will be shortened from the quarterly period ending October 31st to an approximate two month period ending September 30th.

77

 Discontinued Operations

     During the fourth quarter of fiscal 2008, our Board of Directors approved a plan to divest APS Germany. During the fourth quarter of fiscal 2007, our Board of Directors approved a plan to divest G-Connect. During the third quarter of fiscal 2006, our Board of Directors approved a plan to divest APS France. In accordance with SFAS 144, all periods presented have been restated to reflect the treatment of APS Germany, G-Connect and APS France as discontinued operations.

Note 18: Subsequent Events

     For the year ended October 31, 2008, we repurchased approximately 6.4 million shares of common stock for approximately $56.5 million, or $8.80 average per share, under the authorized stock repurchase plan.

     In fiscal 2009, we repurchased approximately 14.9 million shares of common stock for approximately $94.1 million, including commissions, or $6.29 average per share, under the authorized stock repurchase plan.

78

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

     None.

Item 9A.   CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

     Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”)). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this report, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

     During the last quarter of fiscal 2008, there was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Management’s Annual Report on Internal Control Over Financial Reporting

     Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) of the Exchange Act. Under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting as of October 31, 2008. In conducting its evaluation, our management used the criteria set forth by the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on that evaluation, management believes our internal control over financial reporting was effective as of October 31, 2008. This evaluation did not include the internal controls related to the LGC and Century Man acquisitions, which were completed during fiscal 2008. Total assets and sales for these acquisitions represent 14.5% and 8.8%, respectively, of the related consolidated financial statement amounts as of and for the year ended December 31, 2008 (see Note 3).

     Our internal control over financial reporting as of October 31, 2008 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in their below included report.

79

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareowners
ADC Telecommunications, Inc.

     We have audited ADC Telecommunications, Inc.’s internal control over financial reporting as of October 31, 2008, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria). ADC Telecommunications, Inc.’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the company’s internal control over financial reporting based on our audit.

     We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

     A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

     Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

     As indicated in the accompanying Management’s Annual Report on Internal Control Over Financial Reporting , management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of LGC Wireless, Inc. and Century Man Communication, both of which are included in the October 31, 2008 consolidated financial statements of ADC Telecommunications, Inc. and subsidiaries and together constituted 15% and 23% of total and net assets, respectively, as of October 31, 2008 and 9% and 32% of revenues and net loss, respectively, for the year then ended. Our audit of internal control over financial reporting of ADC Telecommunications, Inc. also did not include an evaluation of the internal control over financial reporting of LGC Wireless, Inc. and Century Man Communication.

     In our opinion, ADC Telecommunications, Inc. maintained, in all material respects, effective internal control over financial reporting as of October 31, 2008, based on the COSO criteria.

     We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheets of ADC Telecommunications, Inc. and subsidiaries as of October 31, 2008 and 2007, and the related consolidated statements of operations, shareowners’ investment and cash flows for each of the three years in the period ended October 31, 2008, and our report dated December 18, 2008 expressed an unqualified opinion thereon.

Ernst & Young LLP

Minneapolis, Minnesota
December 18, 2008

80

Item 9B.  OTHER INFORMATION

     None.

81

PART III

Item 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

     The disclosure under Part I of Item 1 of this Form 10-K entitled “Executive Officers of the Registrant” is incorporated by reference into this Item 10.

     The sections entitled “Proposal 1 — Election of Directors,” “Standing Committees,” “Nominations” and “Section 16(a) Beneficial Ownership Reporting Compliance” in our definitive Proxy Statement for our 2009 Annual Meeting of Shareowners, which will be filed with the SEC (the “Proxy Statement”), are incorporated in this Form 10-K by reference.

     We have adopted a financial code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer and all other ADC employees. This financial code of ethics, which is one of several policies within our Code of Business Conduct, is posted on our website. The Internet address for our website is www.adc.com, and the financial code of ethics may be found at www.adc.com/investorrelations/corporategovernance.

     We will satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver from, a provision of this code of ethics by posting such information on our website at the address and location specified above.

Item 11. EXECUTIVE COMPENSATION

     The sections of the Proxy Statement entitled “Director Compensation” and “Executive Compensation” are incorporated in this Form 10-K by reference.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

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

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

     The sections of the Proxy Statement entitled “Related Party Transaction Policies and Procedures” and “Governance Principles and Code of Ethics” are incorporated in this Form 10-K by reference.

Item 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES

     The sections of the Proxy Statement entitled “Principal Accountant Fees and Services” and “Policy on Audit Committee Pre-Approval of Audit and Permissible Non-Audit Services of our Independent Registered Public Accounting Firm” are incorporated in this Form 10-K by reference.

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PART IV

Item 15.  EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

Listing of Financial Statements

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

     Report of Independent Registered Public Accounting Firm

     Consolidated Statements of Operations for the years ended October 31, 2008, 2007 and 2006

     Consolidated Balance Sheets as of October 31, 2008 and 2007

     Consolidated Statements of Shareowners’ Investment for the years ended October 31, 2008, 2007 and 2006

     Consolidated Statements of Cash Flows for the years ended October 31, 2008, 2007 and 2006

     Notes to Consolidated Financial Statements

     Five-Year Selected Consolidated Financial Data for the years ended October 31, 2004 through October 31, 2008, is located in Item 6 of this Form 10-K

Listing of Financial Statement Schedules

     The following schedules are filed with this report and can be found starting on page 85 of this form 10-K:

     Schedule II — Valuation of Qualifying Accounts and Reserves

     Schedules not included have been omitted because they are not applicable or because the required information is included in the consolidated financial statements or notes thereto.

Listing of Exhibits

     See Exhibit Index on page 86 for a description of the documents that are filed as Exhibits to this report on Form 10-K or incorporated by reference herein. We will furnish a copy of any Exhibit to a security holder upon request.

83

SIGNATURES

     Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

ADC TELECOMMUNICATIONS, INC.
By:	/s/ Robert E. Switz
	Robert E. Switz
	Chairman, President and Chief Executive Officer

Dated: December 19, 2008

     Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/  Robert E. Switz	Chairman, President and	Dated: December 19, 2008
Robert E. Switz	Chief Executive Officer (principal executive officer)
/s/  James G. Mathews	Vice President and	Dated: December 19, 2008
James G. Mathews	Chief Financial Officer (principal financial officer)
/s/  Steven G. Nemitz	Vice President and Controller	Dated: December 19, 2008
Steven G. Nemitz	(principal accounting officer)
J. Kevin Gilligan*	Lead Director
John A. Blanchard III *	Director
John J. Boyle III *	Director
Mickey P. Foret *	Director
Lois M. Martin*	Director
Krish A. Prabhu, PhD*	Director
John E. Rehfeld*	Director
David A. Roberts*	Director
William R. Spivey*	Director
Larry W. Wangberg*	Director
John D. Wunsch*	Director

*By:	/s/  James G. Mathews James G. Mathews	Dated: December 19, 2008
	Attorney-in-Fact

84

ADC TELECOMMUNICATIONS

SCHEDULE II — VALUATION OF QUALIFYING ACCOUNTS AND RESERVES

	Balance at				Charged to
	Beginning				Costs and					Balance at
	of Year		Acquisition		Expenses			Deductions		End of Year
	(In millions)
Fiscal 2008
Allowance for doubtful accounts & notes receivable	$	6.6	$	10.2	$	0.7		$	0.2	$	17.3
Inventory reserve		41.3		—		25.2			15.8		50.7
Warranty accrual		7.7		1.9		1.1			1.8		8.9
Fiscal 2007
Allowance for doubtful accounts & notes receivable	$	10.1	$	—	$	(2.0	)	$	1.5	$	6.6
Inventory reserve		35.1		—		21.1			14.9		41.3
Warranty accrual		9.0		—		1.1			2.4		7.7
Fiscal 2006
Allowance for doubtful accounts & notes receivable	$	19.7	$	—	$	(0.2	)	$	9.4	$	10.1
Inventory reserve		35.6		—		9.1			9.6		35.1
Warranty accrual		10.4		—		4.5			5.9		9.0

85

EXHIBIT INDEX

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

Exhibit
Number	Description
2.1	Share Purchase Agreement, dated March 25, 2004 among ADC Telecommunications, Inc., KRONE International Holding, Inc., KRONE Digital Communications Inc., GenTek Holding Corporation and GenTek Inc. (Incorporated by reference to Exhibit 2.1 to ADC’s Current Report on Form 8-K dated June 2, 2004.)
2.2	First Amendment to Share Purchase Agreement, dated May 18, 2004 among ADC Telecommunications, Inc., KRONE International Holding, Inc., KRONE Digital Communications Inc., GenTek Holding Corporation and GenTek Inc. (Incorporated by reference to Exhibit 2.2 to ADC’s Current Report on Form 8-K dated June 2, 2004.)
2.3	Agreement and Plan of Merger, dated July 21, 2005, by and among ADC Telecommunications, Inc., Falcon Venture Corp., Fiber Optic Network Solutions Corp., and Michael J. Noonan. (Incorporated by reference to Exhibit 2.1 to ADC’s Current Report on Form 8-K dated July 21, 2005.)
2.4	First Amendment to Agreement and Plan of Merger, dated August 16, 2005, by and among ADC Telecommunications, Inc., Falcon Venture Corp., Fiber Optic Network Solutions Corp., and Michael J. Noonan. (Incorporated by reference to Exhibit 2.1 to ADC’s Current Report on Form 8-K dated August 16, 2005.)
2.5	Agreement and Plan of Merger dated October 21, 2007 by and among ADC Telecommunications, Inc., Hazeltine Merger Sub, Inc. and LGC Wireless, Inc. (Incorporated by reference to Exhibit 2.1 to ADC’s Current Report on Form 8-K dated October 21, 2007.)
2.6*	Share Purchase Agreement dated November 12, 2007 between ADC Telecommunications (China) Limited, ADC Telecommunications, Inc., Frontvision Investment Limited, and the shareholders of Frontvision Investment Limited, as amended.
3.1	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 December 9, 2008 (incorporated by reference to Exhibit 3.1 of ADC’s Current Report on Form 8-K filed on December 12, 2008).
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.)
4.3	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.)
4.4	Rights Agreement, as amended and restated as of May 9, 2007, between ADC Telecommunications, Inc. and Computershare Investor Services, LLC, as Rights Agent (which includes as Exhibit A, the Form of Certificate of Designation, Preferences and Right of Series A Junior Participating Preferred Stock, as Exhibit B, the Form of Right Certificate, and as Exhibit C, the Summary of Rights to Purchase Preferred Shares). (Incorporated by reference to Exhibit 4-b to ADC’s Form 8-A/A filed on May 11, 2007.
4.5	Indenture between ADC Telecommunications, Inc. and U.S. Bank National Association, as trustee, dated as of December 26, 2007 (including Form of Convertible Subordinated Note due 2015). (Incorporated by reference to Exhibit 4.1 to ADC’s Current Report on Form 8-K dated December 19, 2007.)
4.6	Indenture between ADC Telecommunications, Inc. and U.S. Bank National Association, as trustee, dated as of December 26, 2007 (including Form of Convertible Subordinated Note due 2017). (Incorporated by reference to Exhibit 4.2 to ADC’s Current Report on Form 8-K dated December 19, 2007.)
10.1†	ADC Telecommunications, Inc. Global Stock Incentive Plan, amended and restated as of December 12, 2006. (Incorporated by reference to Exhibit 10-a of ADC’s Annual Report on Form 10-K for the year ended October 31, 2007.)
10.2†	ADC Telecommunications, Inc. 2008 Global Stock Incentive Plan. (Incorporated by reference to Exhibit 10.2 of ADC’s Quarterly Report on Form 10-Q for the quarter ended May 2, 2008.)

86

Exhibit
Number	Description
10.3†	ADC Telecommunications, Inc. Management Incentive Plan for Fiscal Year 2007. (Incorporated by reference to Exhibit 10-d to ADC’s Annual Report on Form 10-K/A dated March 13, 2007.)
10.4†	ADC Telecommunications, Inc. Management Incentive Plan for Fiscal Year 2008. (Incorporated by reference to Exhibit 10-d of ADC’s Annual Report on Form 10-K for the year ended October 31, 2007.)
10.5†*	ADC Telecommunications, Inc. Management Incentive Plan for Fiscal Year 2009.
10.6†*	ADC Telecommunications, Inc. Executive Management Incentive Plan for Fiscal Year 2009.
10.7†	ADC Telecommunications, Inc. Executive Change in Control Severance Pay Plan (2007 Restatement). (Incorporated by reference to Exhibit 10-a to ADC’s Current Report on Form 8-K dated September 30, 2007.)
10.8†	ADC Telecommunications, Inc. Change in Control Severance Pay Plan (2007 Restatement). (Incorporated by reference to Exhibit 10-d to ADC’s Current Report on Form 8-K dated September 30, 2007.)
10.9†	ADC Telecommunications, Inc. 2001 Special Stock Option Plan. (Incorporated by reference to Exhibit 10-c to ADC’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2002.)
10.10†	ADC Telecommunications, Inc. Special Incentive Plan, effective November 1, 2002 and amended October 24, 2006. (Incorporated by reference to Exhibit 10-k to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 2002 and to ADC’s Current Report on Form 8-K dated October 30, 2006.)
10.11†	ADC Telecommunications, Inc. Deferred Compensation Plan (1989 Restatement), as amended and restated effective as of November 1, 1989. (Incorporated by reference to Exhibit 10-aa to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10.12†	Second Amendment to ADC Telecommunications, Inc. Deferred Compensation Plan (1989 Restatement), effective as of March 12, 1996. (Incorporated by reference to Exhibit 10-b to ADC’s Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)
10.13†	Third Amendment to ADC Telecommunications, Inc. Deferred Compensation Plan (1989 Restatement), effective as of December 9, 2003. (Incorporated by reference to Exhibit 10-d to ADC’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2004.)
10.14†	ADC Telecommunications, Inc. Pension Excess Plan (1989 Restatement), as amended and restated effective as of January 1, 1989. (Incorporated by reference to Exhibit 10-bb to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 1996.)
10.15†	Second Amendment to ADC Telecommunications, Inc. Pension Excess Plan (1989 Restatement), effective as of March 12, 1996. (Incorporated by reference to Exhibit 10-a to ADC’s Quarterly Report on Form 10-Q for the quarter ended April 30, 1997.)
10.16†	ADC Telecommunications, Inc. 401(k) Excess Plan (2007 Restatement). (Incorporated by reference to Exhibit 10-b to ADC’s Current Report on Form 8-K dated September 30, 2007.)
10.17†	Compensation Plan for Non-employee directors of ADC Telecommunications, Inc. (2007 Restatement). (Incorporated by reference to Exhibit 10-c to ADC’s Current Report on Form 8-K dated September 30, 2007.)
10.18†	Executive Employment Agreement dated as of August 13, 2003, between ADC Telecommunications, Inc., and Robert E. Switz. (Incorporated by reference to Exhibit 10-e to ADC’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2003.)
10.19†	ADC Telecommunications, Inc. Executive Stock Ownership Policy for Section 16 Officers, effective as of January 1, 2004, and amended as of May 10, 2005. (Incorporated by reference to Exhibit 10-b to ADC’s Quarterly Report on Form 10-Q for the quarter ended July 29, 2005.)
10.20†	Summary of Executive Perquisite Allowances. (Incorporated by reference to Exhibit 10-cc to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 2003.)
10.21†	Form of ADC Telecommunications, Inc. Nonqualified Stock Option Agreement provided to certain officers and key management employees of ADC with respect to option grants made under the ADC Telecommunications, Inc. 2001 Special Stock Option Plan on November 1, 2001 (the form of incentive stock option agreement contains the same material terms). (Incorporated by reference to Exhibit 10-f to ADC’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2002.)
10.22†	Form of Restricted Stock Unit Award Agreement provided to non-employee directors with respect to restricted stock unit grants made under the ADC Telecommunications Inc. Global Stock Incentive Plan. (Incorporated by reference to Exhibit 10-b to ADC’s Current Report on Form 8-K dated February 1, 2005.)
10.23†	Form of ADC Telecommunications, Inc. Restricted Stock Unit Award Agreement provided to non-employee directors with respect to restricted stock unit grants made under the Compensation Plan for Non-Employee Directors of ADC Telecommunications, Inc., restated as of January 1, 2004. (Incorporated by reference to Exhibit 10-c to ADC’s Current Report on Form 8-K dated February 1, 2005.)

87

Exhibit
Number	Description
10.24†	Form of ADC Telecommunications, Inc. Restricted Stock Unit Award Agreement provided to employees with respect to restricted stock unit grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan prior to ADC’s fiscal 2006. (Incorporated by reference to Exhibit 10-d to ADC’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2004.)
10.25†	Form of ADC Telecommunications, Inc. Incentive Stock Option Agreement provided to employees with respect to option grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan prior to December 18, 2006. (Incorporated by reference to Exhibit 10-d to ADC’s Current Report on Form 8-K dated February 1, 2005.)
10.26†	Form of ADC Telecommunications, Inc. Non-qualified Stock Option Agreement provided to employees with respect to option grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan prior to December 18, 2006. (Incorporated by reference to Exhibit 10-e to ADC’s Current Report on Form 8-K dated February 1, 2005.)
10.27†	Form of ADC Telecommunications, Inc. Non-qualified Stock Option Agreement provided to non-employee directors with respect to option grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan prior to December 18, 2006. (Incorporated by reference to Exhibit 10-f to ADC’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2004.)
10.28†	Form of ADC Telecommunications, Inc. Non-qualified Stock Option Agreement provided to non-employee directors with respect to option grants made under the Compensation Plan for Non-Employee Directors prior to December 18, 2006. (Incorporated by reference to Exhibit 10-g to ADC’s Quarterly Report on Form 10-Q for the quarter ended July 31, 2004.)
10.29†	Form of ADC Telecommunications, Inc. Restricted Stock Unit Award Agreement provided to employees with respect to restricted stock unit grants made under the ADC Telecommunications Inc. Global Stock Incentive Plan prior to December 18, 2006. (Incorporated by reference to Exhibit 10-gg to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 2005.)
10.30†	Form of ADC Telecommunications, Inc. Three-Year Performance Based Restricted Stock Unit Award Agreement provided to employees with respect to restricted stock unit grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan beginning December 18, 2006. (Incorporated by reference to Exhibit 10-x to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 2006.)
10.31†	Form of ADC Telecommunications, Inc. Three-Year Time Based Restricted Stock Unit Award Agreement provided to employees with respect to restricted stock unit grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan beginning December 18, 2006. (Incorporated by reference to Exhibit 10-y to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 2006.)
10.32†	Form of ADC Telecommunications, Inc. Three-Year Restricted Stock Unit CEO Award Agreement effective December 18, 2006 granted to Robert E. Switz under the ADC Telecommunications, Inc. Global Stock Incentive Plan. (Incorporated by reference to Exhibit 10-z to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 2006.)
10.33†	Form of ADC Telecommunications, Inc. Incentive Stock Option Agreement provided to employees with respect to option grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan beginning December 18, 2006. (Incorporated by reference to Exhibit 10-ee to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 2006.)
10.34†	Form of ADC Telecommunications, Inc. Non-qualified Stock Option Agreement provided to employees with respect to option grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan beginning December 18, 2006. (Incorporated by reference to Exhibit 10-ff to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 2006.)
10.35†	Form of ADC Telecommunications, Inc. Non-qualified Stock Option Agreement provided to non-employee directors with respect to option grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan beginning December 18, 2006. (Incorporated by reference to Exhibit 10-ii to ADC’s Annual Report on Form 10-K for the fiscal year ended October 31, 2006.)
10.36†	Form of ADC Telecommunications, Inc. Incentive Stock Option Agreement provided to employees with respect to option grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan beginning December 17, 2007. (Incorporated by reference to Exhibit 10.2 of ADC’s Quarterly Report on Form 10-Q for the quarter ended February 1, 2008.)
10.37†	Form of ADC Telecommunications, Inc. Non-qualified Stock Option Agreement provided to employees with respect to option grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan beginning December 17, 2007. (Incorporated by reference to Exhibit 10.3 of ADC’s Quarterly Report on Form 10-Q for the quarter ended February 1, 2008.)
10.38†	Form of ADC Telecommunications, Inc. Three-Year Time Based Restricted Stock Unit Award Agreement provided to employees with respect to restricted stock unit grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan beginning December 17, 2007. (Incorporated by reference to Exhibit 10.4 of ADC’s Quarterly Report on Form 10-Q for the quarter ended February 1, 2008.)

88

Exhibit
Number	Description
10.39†	Form of ADC Telecommunications, Inc. Three-Year Performance Based Restricted Stock Unit Award Agreement provided to employees with respect to restricted stock unit grants made under the ADC Telecommunications, Inc. Global Stock Incentive Plan beginning December 17, 2007. (Incorporated by reference to Exhibit 10.5 of ADC’s Quarterly Report on Form 10-Q for the quarter ended February 1, 2008.)
10.40†	Form of Restricted Stock Unit Award Agreement provided to non-employee directors with respect to restricted stock unit grants made under the ADC Telecommunications Inc. 2008 Global Stock Incentive Plan beginning March 7, 2008. (Incorporated by reference to Exhibit 10.6 of ADC’s Quarterly Report on Form 10-Q for the quarter ended February 1, 2008.)
10.41	Credit Agreement between ADC Telecommunications, Inc., certain institutional lenders, Wachovia Bank, N.A. as documentation agent, RBS Citizens, National Association as syndication agent, JPMorgan Chase Bank, N.A. as administrative agent, and J.P. Morgan Securities, Inc. as sole bookrunner and sole lead arranger dated April 3, 2008. (Incorporated by reference to Exhibit 10.1 of ADC’s Current Report on Form 8-K filed April 9, 2008.)
12.1*	Computation of Ratio of Earnings to Fixed Charges.
21.1*	Subsidiaries of ADC Telecommunications, Inc.
23.1*	Consent of Ernst & Young LLP.
24.1*	Power of Attorney.
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.

† Management contract or compensation plan or arrangement required to be filed as an exhibit to this Form 10-K.

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

89

EX-2.6

Exhibit 2.6

SHARE PURCHASE AGREEMENT

among

ADC TELECOMMUNICATIONS (CHINA) LIMITED
(Buyer)

ADC TELECOMMUNICATIONS, INC

and

FRONTVISION INVESTMENT LIMITED
(Seller)

THE INDIVIDUALS LISTED
ON THE SIGNATURE PAGES HERETO
(Collectively, Guarantors)

relating to the purchase and sale of shares of

COMMUNICATION EXPERT INTERNATIONAL INVESTMENTS LIMITED

Dated as of November 12, 2007

TABLE OF CONTENTS

ARTICLE 1 TERMS OF THE TRANSACTION	8
1.1 Sale and Purchase of Shares	8
1.2 Purchase Price	9
1.3 Earn Out	10
1.4 Equity Purchase Price Adjustment	11
1.5 Exchange Rate Risk Management	11
ARTICLE 2 CLOSING	12
2.1 Closing	12
2.2 Buyer’s Closing Conditions	12
2.3 Seller’s Closing Conditions	15
2.4 Seller’s Deliverables	15
2.5 Buyer’s Deliverables	16
ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLER	16
3.1 Authorization and Good Standing; Organization	17
3.2 Affiliates and Subsidiaries	17
3.3 Non-Contravention; Legal and Tax Compliance	17
3.4 Governmental Authorizations	18
3.5 Capitalization; Ownership	18
3.6 Environmental, Health and Safety Matters	20
3.7 Business Scope	20
3.8 No Legal Action	20
3.9 No Insolvency	20
3.10 Status of Proprietary Assets	20
3.11 Related Transactions	23
3.12 Conduct of Business of the Company and the Transferred Subsidiaries	24
3.13 Property Title	25
3.14 Condition and Sufficiency of Assets	25
3.15 Accounts Receivable	25
3.16 Inventory	26
3.17 Employment and Labor Union	26
3.18 Minute Books	26
3.19 Contracts; No Defaults	26
3.20 Financial Statements; Material Facts	28
3.21 Current Operation	29
3.22 Business Relationships	29
3.23 No Undisclosed Liabilities	29
3.24 Product Safety and Compliance with Specifications	29
3.25 Product Warranty	30
3.26 Guaranties	30
3.27 Trade Allowance	30
3.28 Tax	30
3.29 Insurance	32
3.30 Anti-Terrorism Laws	32
3.31 Powers of Attorney	32
3.32 Compliance with Anti-Boycott Laws	33
ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER	33

1

4.1 Corporate Organization	33
4.2 No Violations; Consents	33
4.3 Authorization; Execution and Delivery	33
ARTICLE 5 ADDITIONAL COVENANTS	33
5.1 Operation of the Businesses of the Company and the Transferred Subsidiaries	33
5.2 Regulatory Cooperation	35
5.3 Confidentiality	35
5.4 Non-Interference	36
5.5 Covenant Not to Compete	36
5.6 Compliance with Laws	36
5.7 Consent	36
5.8 Transfer Taxes	37
5.9 Excluded Properties	37
5.10 Tax Matters	38
5.11 Notice to Buyer of Certain Circumstances	39
5.12 Reasonable Efforts	40
5.13 Further Assurances	40
5.14 Release of Bonded Equipment	40
5.15 Environmental Approvals and Permits	40
ARTICLE 6 INDEMNIFICATION	41
6.1 Survival of Representations and Warranties	41
6.2 Indemnity	41
6.3 Procedures	42
6.4 Determination of Damages	43
6.5 Remedies	44
6.6 Conditions and Limitations	44
6.7 Consultation with Seller and Guarantors	45
ARTICLE 7 TERMINATION	45
7.1 Grounds for Termination	45
7.2 Procedure and Effect of Termination	46
ARTICLE 8 GOVERNING LAW AND DISPUTE RESOLUTION	46
8.1 Governing Law	46
8.2 Dispute Resolution	46
ARTICLE 9 MISCELLANEOUS	47
9.1 Notices	47
9.2 Amendment and Waivers	48
9.3 Severability	48
9.4 Entire Agreement	48
9.5 Waiver	48
9.6 Governing Language	48
9.7 Counterparts	48
9.8 Additional Definitions and Rules of Interpretation	48
9.9 Assignment	51
9.10 Guarantee	51

2

LIST OF SCHEDULES & EXHIBITS

Schedule 1	List of Guarantors’ Proportionate Interests
Schedule 1.2(c)(i)	VAT Certification
Schedule 2	List of Subsidiaries
Schedule 2.2(h)	Site Documentation
Schedule 3	Key Employees Signing Employment Contracts
Schedule 3.1(d)	Organizational Documents
Schedule 3.12(b)	Permitted Liens
Schedule 3.17(b)	List of Core Employees
Schedule 3.5(f)	Individuals Whose Knowledge is Imputed
Schedule 4	Disclosure Schedule
Schedule 5.5	Restricted Business
Schedule 9.8(p)	ESOP Beneficiaries
Exhibit 1.2(a)(2)	Escrow Agreement
Exhibit 1.3(a)	Earn Out Formula
Exhibit 1.5	Certification of Base Rate
Exhibit 2.2(k)	Employment Agreement
Exhibit 2.4(c)	Resolutions of the Members of the Company
Exhibit 2.4(d)	Certificate of Seller and Guarantors
Exhibit 2.3(p)	Deed of Indemnity
Exhibit 3.5(g)	Form of Acknowledgement and Undertaking of ESOP Beneficiaries

3

INDEX OF DEFINED TERMS

Defined Term	Section
2008 CAGR	Exhibit 1.3(a)
2009 CAGR	Exhibit 1.3(a)
2010 CAGR	Exhibit 1.3(a)
2008 Earn-Out Payment	Exhibit 1.3(a)
2009 Earn-Out Payment	Exhibit 1.3(a)
2010 Earn-Out Payment	Exhibit 1.3(a)
Accountant’s Adjustment Determination	§ 1.4(d)
Accounts Receivable	§ 3.15
Actual RMB Amount	§ 1.5(b)(ii)
ADC Sales	Exhibit 1.3(a)
Adjustment Certificate	§ 1.4(b)
Affiliate	§ 9.8(a)
Agreement	Recitals
Anti-Bribery Laws	§ 5.6(a)
Anti-Terrorism Laws	§ 3.30
Arbitration Notice	§8.2(b)
Base Rate	§1.5
Baseline Sales	Exhibit 1.3(a)
Big Four	Schedule 1.2(c)(i)
Business Day	§ 9.8(b)
Buyer	Recitals
Buyer Indemnities	§ 6.2(a)
BVI	Recitals
CAGR	Exhibit 1.3(a)
Cash Payment	§ 1.2(a)(i)
Century Man Sales	Exhibit 1.3(a)
China (or PRC)	Recitals
Claim Notice	§ 6.3(a)
Closing	§ 2.1
Closing Balance Sheet	§ 1.4(a)
Closing Date	§ 2.1
CM Equipment	Recitals
CM Hong Kong	§ 2.2(i)
CM Machinery	Recitals
CM Wireless	§ 2.2(i)
Company	Recitals
Company Proprietary Assets	§ 3.10(a)
Company Software	§ 3.10(j)
Confidential Information	§ 5.3
Connectivity Products	Exhibit 1.3(a)
Contract	§ 3.3(b)
Damage	§ 6.2(a)
Damages	§ 6.2(a)
Disclosure Schedule	Article 3
Disposed	§ 1.2(a) (iii)
Disposition	§ 1.2(a) (iii)
Disposition Claims	§ 1.2(a) (iii)
Disposition Costs	§ 1.2(a) (iii)

4

Defined Term	Section
Earn Out	§ 1.3(a)
Earn Out Hold Back Amount	§ 1.3(d)
Earn Out Formula	§ 1.3(a)
Earn Out Period	Exhibit 1.3(a)
Effective Date	Recitals
Employment Agreements	Recitals
Enumerated Claims	§ 9.8(m)
Environmental, Health and Safety Requirements	§ 3.6(a)
Equity Purchase Price	§ 1.2(a)
Escrow Agent	§ 1.2(a)(ii)
Escrow Agreement	§ 1.2(a)(ii)
Escrow Amount	§ 1.2(a)(ii)
ESOP Beneficiaries	§9.8(p)
Exchange Rate Risk	§1.5
Excluded Properties	§ 5.9
Excluded Properties Escrow Amount	§ 1.2(a)(iii)
Exchange Rate Shortfall	§ 1.5(b)(iii)
Financial Statements	§ 3.20
Fraud Claims	§ 6.1
Governmental Authorization	§ 3.3(a)
Governmental Entity	§ 3.3(a)
Gross Margin Percentage	Exhibit 1.3(a)
Guarantors	Recitals
HKIAC	§ 8.2(a)
Hong Kong	§ 8.2(a)
Hypothetical RMB Amount	§ 1.5(b)(i)
IFRS	§3.20
Include	§ 9.8(c)
Indemnified Party	§ 6.3(a)
Indemnifying Party	§ 6.3(a)
Key Employees	Recitals
Knowledge	§ 3.5(f)
Law	§9.8(o)
Laws	§9.8(o)
Legal Requirement	§ 3.3(a)
Lien	§ 1.1
Loan Guarantee Claim	§6.6(e)
Material Adverse Effect	§ 2.2(a)
Net Working Capital	§ 1.4(b)
Net Working Capital Adjustment	§ 1.4(b)
Notice Period	§ 6.3(b)
Order	§ 9.8(d)
Organizational Documents	§ 3.1(d)
Parties	Recitals
Party	Recitals
Person	§ 9.8(e)
Permitted Liens	§ 3.12(b)
Pre-Closing VAT	§ 5.10(h)
Proportionate Interest	Recitals
Proprietary Assets	§ 3.10(a)

5

Defined Term	Section
Publicly Available Software	§ 3.10(j)
RMB	§9.8(n)
Registered Capital	§ 9.8(f)
Restricted Business	§ 5.5
Retained Seller Claims	§ 2.2(l)
Seller	Recitals
September 30th Audited Statements	§ 2.2(r)
Shares	§ 1.1
Shortfall	§ 1.2(a) (iii)
Straddle Period Tax Return	§ 5.10(i)
Subsidiaries	Recitals
Tax	§ 3.28
Tax Benefit	§ 6.4
Tax Claims	§ 3.28
Tax Returns	§ 3.28
Taxes	§ 3.28
Transfer Taxes	§ 5.8(a)
Transferred Subsidiaries	Recitals
VAT	Schedule 1.2(c)(i)
VAT Penalties	§ 5.10(h)

6

Share Purchase Agreement

     This Share Purchase Agreement (this “Agreement”) is dated as of 12 November, 2007 (the “Effective Date”) by and between:

     (a) ADC Telecommunications (China) Limited, a duly established, registered and validly existing private company limited by shares in good standing under the Laws of the Hong Kong Special Administrative Region of the PRC (the “Buyer”) and

          ADC Telecommunications, Inc., a Minnesota corporation having its principal place of business at 13625 Technology Drive Eden Prairie, Minnesota 55344 (USA) (“ADC”), of the one part;

     and

     (b) Frontvision Investment Limited, a duly established, registered and validly existing company in good standing under the Laws of the British Virgin Islands (the “Seller”) and

          the individuals listed on the signature page hereto (the “Guarantors”), of the other part.

The Buyer, ADC, the Seller and each of the Guarantors are sometimes hereinafter referred to collectively as the “Parties” or individually as a “Party.”

RECITALS

(A)	Communication Expert International Investments Limited (the “Company”) is a company with limited liability existing in the British Virgin Islands (the “BVI”) under the BVI International Business Companies Act, 2004 with its registered office at Offshore Incorporations Limited, P.O. Box 957, Road Town, Tortola, BVI.
(B)	The Seller is the sole shareholder of the Company, as of the date hereof.
(C)	All subsidiaries of the Company are listed on Schedule 2 hereto (“Subsidiaries”). Among the Subsidiaries, Shenzhen Century Man Communication Equipment Co., Ltd. (“CM Equipment”) and Shenzhen Century Man Machinery Manufacturing Co., Ltd. (“CM Machinery”), both established in the People’s Republic of China (“China” or “PRC”), are hereinafter referred to as the “Transferred Subsidiaries”; and
(D)	Simultaneously with the execution and delivery of this Agreement, the Transferred Subsidiaries and certain key employees of the Company listed on Schedule 3 hereto (the “Key Employees”) shall enter into employment agreements, with the parties set forth therein, that will be effective upon the Closing (the “Employment Agreements”).
(E)	The Guarantors constitute all of the shareholders of the Seller, as of the date hereof, each of whom holds the percentage of outstanding and issued shares (“Proportionate Interest”) of the Seller set forth in Schedule 1 hereto. Each of the Guarantors shall benefit from the transactions contemplated by this Agreement, acknowledges the receipt of good and valuable consideration for being a Party to this Agreement and therefore has agreed jointly and severally to guarantee the performance of the obligations of the Seller hereunder upon the terms and conditions of this Agreement.
(F)	ADC is the sole shareholder of the Buyer, as of the date hereof. ADC has agreed to guarantee the performance of the obligations of the Buyer hereunder upon the terms and conditions of this Agreement.

7

     The Seller has agreed to sell and the Buyer has agreed to purchase all of the issued shares of the Company upon the terms and subject to the conditions hereinafter set forth.

ARTICLE 1 TERMS OF THE TRANSACTION

1.1	Sale and Purchase of Shares.
	On the terms and subject to the conditions of this Agreement, the Seller shall, on the Closing Date, sell, transfer, and assign to the Buyer all rights, title, and interest in and to all issued shares of the Company held by the Seller (the “Shares”), free from all liens, claims, charges, restrictions, encumbrances, security interests, options or other third party rights of any kind whatsoever (“Liens”). The Buyer shall not be obliged to complete the purchase of any of the Shares unless the purchase of all of the Shares is completed simultaneously.
1.2	Purchase Price.
(a)	The Buyer shall, on the terms and subject to the conditions set forth in this Agreement, pay to the Seller fifty-five million US Dollars (US$55,000,000) (the “Equity Purchase Price”) for the Shares, as follows:

(i) at the Closing, the Buyer shall pay the Seller Forty Seven Million Five Hundred Thousand United States Dollars (US$47,500,000) (the “Cash Payment”) ;

(ii) the Buyer shall withhold Seven Million United States Dollars (US$7,000,000) (the “Escrow Amount”). At the Closing, the Buyer shall pay the Escrow Amount to the Hong Kong office of JP Morgan, or to the Hong Kong office of another bank or trust company mutually acceptable to the Buyer and the Seller (the “Escrow Agent”) to hold and distribute pursuant to an escrow agreement substantially in the form of Exhibit 1.2(a)(2) hereto, but subject to such revisions as may be required by the Escrow Agent that are reasonably acceptable to the Parties (the “Escrow Agreement”). The Escrow Amount shall be held by the Escrow Agent and released to the Seller according to the terms and conditions of Section 1.2(c) below; and

(iii) the Buyer shall withhold Five Hundred Thousand United States Dollars (US$500,000) above and beyond the Escrow Amount related to the pending disposition of the Excluded Properties (as such term is defined in Section 5.9) (the “Excluded Properties Escrow Amount”). At the Closing, the Buyer shall pay the Excluded Properties Escrow Amount to the Escrow Agent to hold and distribute pursuant to Section 1.2(a)(iii) and the Escrow Agreement. The Excluded Properties Escrow Amount shall be held by the Escrow Agent until the earlier of either (A) such time as the Excluded Properties are sold, assigned or transferred (“Disposed”, with each such transaction being a “Disposition”) in accordance with the terms of this Agreement or (B) two (2) years from the Closing Date. For each Disposition, detailed records shall be maintained by the Seller, the Company and the Transferred Subsidiaries, as the case may be, reflecting (i) all taxes, fees, costs and expenses of every kind whatsoever incurred from and after the Closing related to the continued ownership and maintenance of each of the Excluded Properties until the time of each respective Disposition, together with (ii) any and all taxes, fees, costs and expenses associated with the Disposition paid from and after the Closing to the extent the same relate to any time period prior to the Closing and are not reflected in the Closing Balance Sheet and included in the calculation of Net Working Capital as of the Closing Date, and (iii) any amounts which, but for their inclusion within the scope of this Section 1.2(a)(iii) would be considered indemnifiable as an Enumerated Claim pursuant to the items listed in Section 9.8(m)(i). (the portion of the sum of all such taxes, fees, costs and expenses exceeding One Hundred Thousand United States Dollars (US$100,000) being “Disposition Costs”). The Parties agree that all gross proceeds derived from each Disposition shall be first paid to the Transferred Subsidiary that has the interest in the Excluded Property subject to such Disposition. If all of the Excluded Properties have been Disposed in accordance with this Agreement within two (2) years from the Closing Date and the Excluded Properties Escrow

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	Amount is greater than the Disposition Costs, then, within ten (10) Business Days after the date all gross proceeds from all Dispositions have been received by the relevant Transferred Subsidiaries, (a) the Escrow Agent shall distribute to the Seller the difference between the Excluded Properties Escrow Amount and the Disposition Costs; and (b) the Buyer shall pay to the Seller the gross proceeds of all Dispositions. If all of the Excluded Properties have been Disposed in accordance with this Agreement within two (2) years from the Closing Date, but the Excluded Properties Escrow Amount is less than the Disposition Costs, then (a) within ten (10) Business Days after the date all gross proceeds from all Dispositions have been received by the relevant Transferred Subsidiaries the Escrow Agent shall distribute the entire Excluded Properties Escrow Amount to the Buyer, and either (b) (1) if the gross proceeds of all Dispositions, taken in the aggregate, are greater than the difference between the Disposition Costs and the Excluded Properties Escrow Amount (the “Shortfall”), then within ten (10) Business Days after the date all gross proceeds from all Dispositions have been received by the relevant Transferred Subsidiaries, the Buyer shall pay to the Seller the difference between the gross proceeds of all Dispositions and the Shortfall; or (2) if the gross proceeds of all Dispositions, taken in the aggregate, are less than the Shortfall, then within ten (10) Business Days after the date all gross proceeds from all Dispositions have been received by the relevant Transferred Subsidiaries the Seller shall remit to the Buyer the difference between the Shortfall and the gross proceeds of all Dispositions, taken in the aggregate (it being agreed that if payment is not timely received, the Buyer shall be entitled to withhold an amount equal to any such payment owed by the Seller from the Escrow Amount). If, at the end of the two year period commencing on the Closing Date, all of the Excluded Properties have not been Disposed, the Escrow Agent shall release the entire Excluded Properties Escrow Amount to the Buyer and the Seller shall not be entitled to any gross proceeds derived from any Disposition; provided however, Seller shall reimburse Buyer for any Disposition Costs incurred or paid prior to the date two (2) years after the Closing date which exceed the Excluded Properties Escrow amount (“Disposition Claims”).
	Further, beginning on the date which is two years after the Closing Date, the Buyer shall be solely responsible for any further Disposition Costs thereafter incurred in connection with the Excluded Properties.
(b)	The Cash Payments required by this Section 1.2 shall be made by wire transfer of immediately available funds to the bank accounts designated by the Seller and the Escrow Agent in a written notice delivered to the Buyer at least three (3) Business Days before the Closing Date.
(c)	Subject to the other terms and conditions of this Agreement, the Escrow Amount shall be released to the Seller according to the following terms and conditions, provided however, that the amounts to be released are subject to holdback for any Enumerated Claims and other claims for compensation of Damages pursuant to Article 6 that are outstanding at the time any portion of the Escrow Amount is scheduled to be released; it being understood that such holdback shall be immediately released to the Seller to the extent Seller is found to be not liable for the aforementioned claims:
	(i) if at any time prior to the one year anniversary of the Closing Date the Seller presents to the Buyer the written confirmation and certification specified in Schedule 1.2(c)(i) of PRC value added tax (“VAT”) payment by the Transferred Subsidiaries, then the amount of Two Million Eight Hundred Thousand United States Dollars (US$2,800,000) shall be released from the Escrow Amount to the Seller within ten (10) Business Days;
	(ii) within ten (10) Business Days following the first anniversary of the Closing Date, the amount of Three Million Five Hundred Thousand United States Dollars (US$3,500,000) less any amount released from the Escrow Amount pursuant to subsection 1.2(c)(i); and
	(iii) within ten (10) Business Days of the second anniversary of the Closing Date, all of the remaining Escrow Amount (including all interest, dividends and other earnings thereon) .
1.3	Earn Out.

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(a) The Buyer shall pay to the Seller additional consideration of up to Fifteen Million United States Dollars (US$15,000,000) (the “Earn Out”), payable over a three (3) year period, determined solely in accordance with the formula as set forth on Exhibit 1.3(a) (the “Earn Out Formula”).

(b) The Earn Out calculation shall be made solely in accordance with the Earn Out Formula and shall be based on the consolidated final annual financial statements of the Transferred Subsidiaries examined and verified by a member firm of the Big Four mutually agreed by the Buyer and the Seller.

(c) Prior to March 31^st of each of 2009, 2010 and 2011, the Buyer shall pay to the Seller the amount of the Earn Out payment due for the previous calendar year, if any, as determined solely in accordance with the Earn Out Formula, to the bank account designated by the Seller.

(d) The Buyer shall have the right to withhold up to Three Million United States Dollars (US$3,000,000) in the aggregate (“Earn Out Holdback Amount”) from Earn Out payments that are or become due to the Seller, for any Enumerated Claims or other claims for compensation of Damages pursuant to Article 6 that are outstanding at the time any Earn Out payment is scheduled to be paid; it being understood that the Earn Out Holdback Amount shall be immediately released to the Seller to the extent Seller is found to be not liable for the aforementioned claims.

(e) Except for the Earn Out Holdback Amount, the Earn Out payments that may become due to the Seller (e.g. up to US$12 million) shall not be subject to any reduction or holdback of any kind whatsoever.

1.4	Equity Purchase Price Adjustment.
	The Equity Purchase Price shall be subject to adjustment as follows:

(a) After the Closing, the Buyer will prepare an unaudited consolidated balance sheet of the Company and the Transferred Subsidiaries as of the Closing Date (the “Closing Balance Sheet”). The Closing Balance Sheet will be prepared in accordance with IFRS applied on a consistent basis.

(b) The Buyer will prepare an adjustment certificate (the “Adjustment Certificate”) setting forth the calculation, in detail reasonably satisfactory to the Seller, of Net Working Capital as of the Closing Date minus the Target Working Capital (the “Net Working Capital Adjustment”). “Net Working Capital” means current assets of the Company and the Transferred Subsidiaries, minus current liabilities of the Company and the Transferred Subsidiaries. “Target Working Capital” means RMB 87,423,482.

(c) The Buyer will deliver the Closing Balance Sheet, together with the Adjustment Certificate, to the Seller as soon as reasonably practical but in any event within forty-five (45) days after the Closing Date.

(d) The Closing Balance Sheet and the Adjustment Certificate will be considered final and binding unless the Seller objects in writing thereto within forty-five (45) days after delivery of the Adjustment Certificate. During such period, the Seller and its appropriate professional advisors shall, upon reasonable prior notice, have reasonable access during normal business hours to the books and records of the Company and the Transferred Subsidiaries and the work papers and back-up materials of the Buyer pertaining to the Closing Balance Sheet and the Adjustment Certificate. If the Seller makes an objection within the aforementioned time limit to the Adjustment Certificate (which objection must include the Seller’s calculation of Net Working Capital as of the Closing Date), the Seller and the Buyer shall use good faith efforts to settle such dispute and reach a written agreement with respect to such dispute. If the Seller and the Buyer are unable to enter into a settlement within thirty (30) days after delivery of the Seller’s written objection under this Section 1.4(d), then the Seller and the Buyer shall select an independent accounting firm of recognized international standing (or, if the Seller and the

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Buyer cannot agree upon a selection, they shall select such accounting firm by lot from among the member accounting firms of the Big Four) that shall be instructed jointly by the Seller and Buyer to resolve such dispute as promptly as possible. The Seller and the Buyer will cooperate with the independent accounting firm and, subject to customary confidentiality and indemnity agreements, provide the independent accounting firm with access to such books, records, personnel and responsibilities of each of the Parties and the Company as it shall reasonably request, and such other information as such firm may reasonably request in order to render its determination. A decision by the independent accounting firm as to the resolution of such dispute shall be conclusive and binding upon the Parties for purposes of this Agreement (the “Accountant’s Adjustment Determination”). The Accountant’s Adjustment Determination shall be (i) in writing, (ii) made in accordance withIFRS, but shall not assign a value to any item greater than the greatest value for such item claimed by either Party or less than the smallest value for such item claimed by either Party, and (iii) non-appealable and incontestable by the Seller or Buyer and not subject to collateral attack for any reason except for fraud or manifest mathematical error. The fees and costs of the independent accounting firm incurred in the resolution of any items in dispute shall be reasonably determined by the independent accounting firm and set forth in the Accountant’s Adjustment Determination, and shall be allocated between and paid by Buyer, on the one hand, and the Seller, on the other hand, in inverse proportion to the extent they prevailed on the items in dispute.

(e) If the amount of the Net Working Capital Adjustment is positive, no adjustment to the Equity Purchase Price will be made with respect to Net Working Capital. If the amount of the Net Working Capital Adjustment is negative, the Seller shall pay to the Buyer by wire transfer of immediately available funds to the account designated in writing by the Buyer an amount equal to the absolute value of the Net Working Capital Adjustment within ten (10) Business Days after the final determination of such amount pursuant to Section 1.4(d).

1.5 Exchange Rate Risk Management

The Parties recognize and agree that the Seller’s acceptance of the terms and conditions of this Agreement assumes that the RMB value of any payments made to the Seller of Earn Out, Escrow Amount and Excluded Properties Escrow Amount (but not of Cash Payments) will reflect the RMB Exchange Rate in effect on the Effective Date (the “Base Rate”). The Parties hereby agree to jointly certify and confirm the Base Rate by completing and executing a certificate in the form attached hereto as Exhibit 1.5 and agree further to the allocation of duties and responsibilities to manage the risk of fluctuations in the RMB Exchange Rate from and after the Effective Date until such time as all payments of Earn Out, Escrow Amount and Excluded Properties Escrow Amount are made to the Seller (“Exchange Rate Risk”) as set forth in this Section 1.5.

(a) The Exchange Rate Risk in connection with the Cash Payments shall be born by the Seller and the Buyer shall be free to make the Cash Payments without regard to any Exchange Rate Shortfall.

(b) The Exchange Rate Risk with respect to any Earn Out payments, or funds released from the Escrow Amount or the Excluded Properties Escrow Amount, to the Seller shall be born by the Buyer as follows:

(i) in respect of any subject payment, the Buyer shall first calculate the RMB equivalent (“Hypothetical RMB Amount”) of such payment, determined by applying the Base Rate;

(ii) the Buyer shall then calculate the RMB equivalent of the subject payment by applying the RMB Exchange Rate in effect on the actual payment date (the “Actual RMB Amount”); and

(iii) in the event the difference between the Hypothetical RMB Amount minus the Actual RMB Amount on the date of the subject payment is positive (an “Exchange Rate Shortfall”), then the Buyer shall, within five (5) Business Days, make a supplemental payment in United

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	States Dollars to the payee in an amount sufficient to reduce the Exchange Rate Shortfall as of the subject payment date to zero.
(c)	Except as expressly provided herein, any payment to be made under or in connection with this Agreement may be made without regard to the prevailing RMB Exchange Rate, with all Exchange Rate Risk to be born by the payee.

(d) For purposes of this Agreement, the “RMB Exchange Rate” shall be the middle United States Dollar : RMB exchange rate published by the People’s Bank of China and in effect on the Business Day on or as of which (as the case may be) such rate is determined. In the event the date as of which the RMB Exchange Rate is to be determined does not fall on a Business Day, then the RMB Exchange Rate in effect on the next following Business Day shall apply.

ARTICLE 2 CLOSING

2.1	Closing.
	Subject to satisfaction or waiver, as the case may be, of the closing conditions set forth in Sections 2.2 and 2.3 below, the Parties shall deliver and exchange the documents set forth in Sections 2.4 and 2.5 below and the Buyer shall pay the Equity Purchase Price to the Seller as provided in Section 1.2 (the “Closing”). The Closing shall take place on the fifth (5th) Business Day following satisfaction, performance or waiver of all of the conditions set forth in Sections 2.2 and 2.3 (the “Closing Date”), but in any event no later than sixty (60) days following the Effective Date of this Agreement at the Hong Kong office of O’Melveny & Myers, LLP, or on such other date or at such other place as the Parties may agree to in writing. The Parties further endeavor to use commercially reasonable efforts to effect the Closing prior to December 31, 2007; provided however, the Parties recognize and agree that in view of United States Winter holiday schedules, it will not be feasible to effect closing from December 18 through December 31, 2007. Accordingly, the Parties acknowledge and agree that in the event all of the conditions set forth in Sections 2.2 and 2.3 are not satisfied, performed or waived on or before December 13, 2007, the Closing Date shall be deferred to the first mutually feasible Business Day in January 2008, but in any event prior to January 12, 2008. Notwithstanding the second sentence of this Section 2.1, in the event the aforesaid conditions are satisfied, performed or waived on any of December 11 through 13 inclusive, Buyer agrees to effect Closing on December 17, 2007.
2.2	Buyer’s Closing Conditions.
	The obligation of the Buyer to complete the transactions contemplated by this Agreement is subject to the fulfillment, at or before the Closing, of all of the following conditions, any of which may be waived in writing by the Buyer:
(a)	The representations and warranties made by the Seller in this Agreement shall be true and correct as to the date hereof, and must be accurate as of the Closing Date as if made again on and as of the Closing Date as though the Closing Date had been substituted for the date of this Agreement throughout such representations and warranties except that any representations and warranties that are made as of a specified date shall be true and correct as of such specified date and except where the failure to be so true and correct would not have in the aggregate a Material Adverse Effect (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein and without taking into account any discoveries, events or occurrences arising on or after the date hereof). For purposes of this Agreement, Material Adverse Effect means (i) any material adverse effect on the consummation of the transactions contemplated by this Agreement or (ii) any change, effect, event, occurrence or state of facts or affairs that has had or is reasonably likely to have a material adverse effect on the assets, business, financial condition, operations, or results of operations of the Company and/or the Transferred Subsidiaries taken as a whole except: (A) effects or changes (including general economic and political conditions) that do not (1) have a materially disproportionate effect on such entity and (2) generally affect the industry in which such entity operates or the location where such entity

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	operates; and (B) any change or effect that results from any action taken at the request of the Buyer made following the Effective Date which is outside the obligations of Seller and/or the Guarantors under this Agreement.
(b)	All of the covenants and obligations that the Seller is required to perform or to comply with pursuant to this Agreement at or prior to the Closing Date shall have been duly performed and complied with in all material respects by the Seller.
(c)	Each document required to be executed and delivered pursuant to Section 2.4 must have been executed and delivered in accordance therewith, in form and substance reasonably satisfactory to the Buyer.
(d)	There shall have been no bona fide claim (in the reasonable judgment of the Buyer) threatened or made to the Seller, any of the Guarantors, the Company or the Transferred Subsidiaries which has not been waived, withdrawn or otherwise resolved, to Buyer’s reasonable satisfaction, by any Person, except for any of the individuals listed in Part B of Schedule 9.8(p), asserting that such Person (i) is the holder or the owner of, or has the right to acquire or to obtain ownership of any of the Shares (or other equity-based interest) of the Company, any registered capital or equity-based interest of a Transferred Subsidiary or of any rights related to any of the Excluded Properties; or (ii) is entitled to all or any portion of the Equity Purchase Price payable by the Buyer to the Seller.
(e)	Since the date hereof there shall not have occurred any condition, circumstance, event or occurrence that, individually or in the aggregate, has resulted or is reasonably likely to result in a Material Adverse Effect.
(f)	There shall not be at the Closing any Order of any Governmental Entity, or any Legal Requirement, that (a) prohibits the consummation of the transactions contemplated by this Agreement or (b) subjects the Buyer to any substantial penalty upon the consummation of the transactions contemplated by this Agreement. There shall be no action, suit, or other proceeding brought by any Governmental Entity, or other person that is pending and seeks to prohibit the purchase of the Shares or the consummation of the transactions contemplated by this Agreement.
(g)	All necessary approvals from the Company’s Board of Directors shall have been obtained, including resolutions approving the transfer of the Shares from the Seller to the Buyer and consummation of all transactions contemplated by this Agreement.
(h)	The Seller and/or the Transferred Subsidiaries shall have caused the documents listed in Schedule 2.2 (h) to have been issued or provided, in form and substance reasonably satisfactory to the Buyer, in connection with their respective leased premises including without limitation the premises located at: (1) Floor 1-6, Building B, 5th District, the Hong Hua Ling Industrial Zone, Shenzhen; (2) Dormitory A, Building No. 5, 5th District, the Hong Hua Ling Industrial Zone, Shenzhen; (3) Factory Building No.4-8, the Tong Fu Yu Industrial Park, Shenzhen; and (4) the 3rd and 4th floors of the Dormitory No.7-6, the Tong Fu Yu Industrial Park, Shenzhen.
(i)	Neither the Company nor any of the Transferred Subsidiaries shall own any legal or beneficial equity interest in Century Man Communication (Hong Kong) Limited (“CM Hong Kong”) or Shenzhen Century Man Wireless Communication Equipment Co., Ltd. (“CM Wireless”), nor shall any of the Company or the Transferred Subsidiaries be responsible in any way for any of the liabilities in respect of, or in relation to the transfer, of CM Hong Kong or CM Wireless, and the Seller shall have provided the Buyer with written evidence in form and substance reasonably satisfactory to the Buyer to such effect.
(j)	CM Hong Kong and CM Wireless shall have paid and discharged in full all payables owed to and loans from the Company and the Transferred Subsidiaries, including without limitation the receivables related to the operation of the Transferred Subsidiaries. Neither the Company or the Transferred Subsidiaries shall have any liabilities of any kind whatsoever owed to CM Hong Kong or CM Wireless and the Seller shall have provided a written acknowledgment from each of CM Hong Kong and CM Wireless in form and substance reasonably satisfactory to the Buyer to this effect.

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(k)	The Company, CM Equipment or CM Machinery, as the case may be, and the Key Employees listed on Schedule 3 hereto shall have entered into the Employment Agreements substantially in the forms set forth on Exhibit 2.2(k).
(l)	Other than with respect to those legitimate, duly evidenced claims for reimbursement of business expenses advanced by the Guarantors for the benefit of the Company and/or the Transferred Subsidiaries, not exceeding Thirty Thousand United States Dollars (US$30,000) in the aggregate (“Retained Seller Claims”), the Guarantors shall have irrevocably waived and released any actual and potential debts, loans and claims against the Company and the Transferred Subsidiaries incurred on or before the Closing. The Guarantors covenant and agree that they shall bear all PRC Taxes (if any) payable by either the Company or either of the Transferred Subsidiaries in respect of the debts so waived.
(m)	The creditors of the Seller, the Guarantors, the Company and the Transferred Subsidiaries shall have issued all necessary consents, in form and substance reasonably satisfactory to the Buyer, that such creditors have consented to this Agreement and all of the transactions herein contemplated, to the extent such consents are required for the consummation of the transactions contemplated hereunder or where consummation of the transactions contemplated hereunder would afford a creditor a material right it would not have but for the consummation of the transactions contemplated hereunder without such consent or waiver.
(n)	The Seller and the Guarantors have completed all the foreign exchange registrations as required by PRC Legal Requirements, including without limitation the so-called “SAFE Circular 75” in connection with the transfer of the Shares from the Guarantors to the Seller.
(o)	All consents, permits, licenses, authorizations, formal notices from or to, orders and approvals of, and filings and registrations with any Governmental Entity which are required by Law for the execution, delivery and/or the performance of this Agreement, shall have been obtained or made prior to the Closing and shall be in full force and effect, and any applicable waiting periods under applicable Legal Requirements shall have expired or terminated without any conditions with respect to the transactions contemplated by this Agreement having been imposed by any Governmental Entity, except to the extent such filing and registrations relate to obligations under this Agreement clearly intended to be performed after the Closing.
(p)	Mr. LIU Zhi, a Guarantor hereunder, shall have duly executed and delivered to Buyer and ADC a Deed of Indemnification, substantially in the form attached hereto as Exhibit 2.3(p), pursuant to which he shall indemnify, defend and hold harmless Buyer, upon written notice by Buyer, on a dollar-for-dollar basis, and without regard to the terms and conditions of Section 6 hereunder, from and against any and all claims and Damages of any kind asserted by any of the ESOP Beneficiaries arising from or related in manner to their claim to any interest whatsoever in the Shares or consideration to be paid for the Shares hereunder.
(q)	At least five (5) business days prior to the closing, Buyer shall have received a true and correct copy, stamped “DRAFT”, of the original, current and complete Company Share Register, with Buyer’s name entered thereon as the sole shareholder of the Company.
(r)	Buyer shall have received consolidated audited financial statements for the Company and the Transferred Subsidiaries, as of September 30, 2007, prepared according to IFRS and audited by Deloitte Touche Tohmatsu (the “September 30th Audited Statements”), that are materially consistent with the financial statements referenced in Section 3.20 hereof also prepared as of September 30, 2007. Buyer hereby agrees that it shall pay for the costs of said audit and that if Buyer refuses to complete the Closing because the September 30th Audited Statements are not materially consistent with the financial statements referenced in Section 3.20 also prepared as of September 30, 2007 Buyer shall pay to Seller the sum of US$300,000.
(s)	All existing trademark license agreements or similar authorizations in any form whereby CM Equipment authorizes CM Wireless to use any of its trademarks shall have been terminated and a transitional trademark license agreement shall have been duly executed and delivered between CM Wireless and CM Equipment in a form designated by Buyer, pursuant to which CM Wireless shall have a non-exclusive and non-transferable license to use certain CM Equipment trademarks, consisting of the CENTURY MAN name and logo, according to the terms thereof until June 30, 2008.

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2.3	Seller’s Closing Conditions.
	The obligation of the Seller to complete the transactions contemplated by this Agreement is subject to the fulfillment, at or before the Closing, of all of the following conditions, any of which may be waived in writing by the Seller:
(a)	The representations and warranties made by the Buyer in this Agreement shall be true and correct as to the date hereof, and must be accurate as of the Closing Date as if made again on and as of the Closing Date as though the Closing Date had been substituted for the date of this Agreement throughout such representations and warranties except that any representations and warranties that are made as of a specified date shall be true and correct as of such specified date and except where the failure to be so true and correct would not have in the aggregate a Material Adverse Effect (without giving effect to any limitation as to “materiality” or “Material Adverse Effect” set forth therein and without taking into account any discoveries, events or occurrences arising on or after the date hereof). For purposes of this Section 2.3 (a) only, the definition of Material Adverse Effect set forth in Section 2.2 (a) shall be read to exclude sub-part (ii) of such definition.
(b)	All of the covenants and obligations that the Buyer is required to perform or to comply with pursuant to this Agreement at or prior to the Closing Date shall have been duly performed and complied with in all material respects by the Buyer.
(c)	Each document required to be executed and delivered pursuant to Section 2.5 shall have been executed and delivered in accordance therewith, in form and substance reasonably satisfactory to the Seller.
(d)	There shall not be at the Closing any Order of any Governmental Entity, or any Legal Requirement, that (a) prohibits the consummation of the transactions contemplated by this Agreement or (b) subjects the Seller to any substantial penalty upon the consummation of the transactions contemplated by this Agreement. There shall be no action, suit, or other proceeding brought by any Governmental Entity or other person that is pending and seeks to prohibit the purchase of the Shares or the consummation of the transactions contemplated by this Agreement.
(e)	All necessary approvals from the Buyer’s and ADC’s Board of Directors shall have been obtained, including resolutions approving the purchase of the Shares from the Seller and consummation of all transactions contemplated by this Agreement.
2.4	Seller’s Deliverables.
	In addition to the satisfaction of the conditions set forth in Section 2.2, at the Closing the Seller shall also deliver or cause to be delivered to the Buyer:
(a)	the original of the Employment Agreements duly executed, simultaneously with the execution of this Agreement, by each of the Key Employees identified in Schedule 3;
(b)	all government approvals necessary for the purchase of the Shares contemplated by this Agreement, including without limitation evidence that the Guarantors (and any other party required to do so under applicable Legal Requirements) have completed the amendment registration pursuant to SAFE Circular 75 in connection with the transfer of the Shares from the Guarantors to the Seller.
(c)	the duly executed resolutions of the members of the Company approving the transfer of the Shares from the Seller to the Buyer and consummation of the transactions contemplated by this Agreement substantially in the form attached hereto as Exhibit 2.4 (c), ;
(d)	a written certification by the Seller consistent with Section 2.2(a) above in the form attached hereto as Exhibit 2.4(d);
(e)	a share transfer form duly executed by the Seller transferring the Shares to the Buyer, together with all the outstanding share certificates of the Company (with the Buyer to assume responsibility of delivering the original share transfer form and the outstanding share certificates to the Company’s registered agent);

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(f)	the original, current and complete Company Share Register, with Buyer’s name entered thereon as the sole shareholder of the Company, to be delivered to Buyer simultaneously upon Seller’s receipt of written confirmation by the payor bank of Buyer’s irrevocable wire transfer of immediately available cash funds in the amount of the Cash Payment to the bank account designated in writing by Seller for this purpose.
(g)	written resignations of all current directors of the Company;
(h)	current and complete copies of all Company books (if any) and records, including, without limitation, the register of shareholders, the register of directors, the register of charges and the Company Minute Book;
(i)	a “certificate of incumbency” from the Company’s registered agent setting forth the names of all Company directors and shareholders as of the time immediately before Closing, according to the records of the registered agent;
(j)	confirmation that the “client of record” (as such term is commonly understood by registered agents handling company affairs in the BVI) for the Company has advised the Company’s registered agent to take instructions from the Buyer on a going forward basis after the Closing;
(k)	all such documents as are necessary (including without limitation duly completed, signed and sealed application forms, board resolutions, powers of attorney and such other documents as are required by the relevant Shenzhen Administration of Industry and Commerce) for the Buyer or its representative to apply for or report for the record (as the case may be) replacement of the legal representative, directors and officers, and procure issuance of an amended business license reflecting such changes as required by the Buyer in respect of each of the Transferred Subsidiaries;
(l)	a written certification acknowledging receipt by Seller of the Cash Payment required pursuant to Section 1.2(a) (i);
(m)	the originally executed acknowledgements and undertakings in the form set forth in Exhibit 3.5(g) of all ESOP Beneficiaries set forth on Part A of Schedule 9.8(p).
2.5	Buyer’s Deliverables.
	In addition to the satisfaction of the conditions set forth in Section 2.3, at the Closing the Buyer shall also deliver or cause to be delivered to the Seller:
(a)	the Equity Purchase Price due at the Closing as provided by Section 1.2;
(b)	a written certification by the Buyer consistent with Section 2.3(a) above, that the Buyer is not aware of any fact or circumstance that makes any representations or warranties herein untrue;
(c)	An officer or director certified copy of the board resolution of each of the Buyer and ADC approving this Agreement and the transactions contemplated hereby; and
(d)	a written certification acknowledging receipt by Buyer of (i) the Company Share certificates (ii) a share transfer form duly executed by the Seller transferring the Shares to the Buyer; and (iii) the original Company Share Register.

ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE SELLER

The disclosures made by the Seller to the Buyer hereunder, appearing on Schedule 4 hereto (“Disclosure Schedule”) shall make reference and correspond to the Sections contained in this Article 3. Each item so disclosed in the Disclosure Schedule shall constitute an exception to the representations and warranties to which it makes reference and shall be deemed to be disclosed with respect to each section of the Disclosure Schedule to which it relates and/or representation and warranty herein given, without the necessity of repetitive disclosure or cross-reference, so long as such item is fairly described with reasonable particularity and detail and it is reasonably apparent that such description is applicable

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to another schedule contained in the Disclosure Schedule. Except as otherwise set forth in the Disclosure Schedule attached hereto as Schedule 4, the Seller and the Guarantors hereby jointly and severally represent and warrant to the Buyer that the following statements in this Article 3 are all true and correct.

3.1	Authorization and Good Standing; Organization.
(a)	The Seller and each of the Guarantors have all requisite legal power, capacity and authority to execute and deliver this Agreement and to carry out and perform their respective obligations hereunder. This Agreement when executed and delivered by the Seller and each Guarantor shall constitute a valid and binding obligation of each of them, enforceable in accordance with its terms.
(b)	The Company is a company with limited liability, validly existing, duly qualified and properly licensed in the BVI under the BVI International Business Companies Act, 2004; and each of the Transferred Subsidiaries is a limited liability company validly existing, duly registered and established and properly licensed in the PRC in accordance with the Laws of the PRC.
(c)	The Company and the Transferred Subsidiaries have all requisite organizational and regulatory power and authority (including all licenses, approvals, permits, registrations and certifications from all Governmental Entities) to own, lease and operate such entity’s properties and to carry on such entity’s business as now being conducted in each jurisdiction in which business is conducted or property is owned, leased or operated by such entity (or the nature of such entity’s business makes such qualification or licensing necessary), except for such failures that, individually or in the aggregate, would not be reasonably likely to result in a Material Adverse Effect.
(d)	The Seller previously has delivered to the Buyer true, correct and complete copies of the documents evidencing the legal existence and organization of the Company and each of the Transferred Subsidiaries listed in Schedule 3.1(d) (collectively, the “Organizational Documents”) as in effect on the date of this Agreement, and have made available to the Buyer current and complete minute books containing all minutes and material actions of the board of directors and shareholders with respect to the Company and each of the Transferred Subsidiaries for the three year period ending as at the date of this Agreement, and the Disclosure Schedule contains a list describing all material actions of the board made orally         , and all Organizational Documents and other documents herein specified or referenced are accurate and complete in all material respects.
3.2	Affiliates and Subsidiaries.
	Schedule 2 hereto contains a list of all subsidiaries of the Company, which constitute all of the organizations in which the Company, directly or indirectly, owns or otherwise controls any outstanding voting securities, other voting interests, other equity interests or any rights to acquire any of the aforementioned securities or interests.
3.3	Non-Contravention; Legal and Tax Compliance.
(a)	Each of the Company and each of the Transferred Subsidiaries possesses each approval, consent, license, permit, waiver or other authorization necessary from any government entity entitled to exercise any administrative, executive, judicial, legislative, police, regulatory or taxing authority or power of any nature over it (“Governmental Entity”) or pursuant to any Order, Law, regulation, decree, permit or license that is applicable to it, to the ownership or use of any of the Shares (or registered capital equity interest, as the case may be), or to the operation of its business (“Legal Requirement”) that is required to be held by such entity for its operation or business (“Governmental Authorization”). Each Governmental Authorization is valid and in full force and effect and will continue to be valid and in full force and effect as each Governmental Authorization so states on its face, as of and after the Closing. A true and complete list of all material Governmental Authorizations is set forth in the Disclosure Schedule.
(b)	Neither the execution, delivery, and performance of this Agreement nor the consummation of the transactions contemplated hereby will: (i) conflict with or result in any breach of any

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	provision of the Organizational Documents; (ii) require the Company or any of the Transferred Subsidiaries to obtain or make any Consents, Filings, or Notices of or with any Governmental Entity; (iii) violate, conflict with, or result in the breach of any of the terms of, accelerate, result in a modification of the effect of, constitute an impermissible assignment or change of control under, or cause the termination of or give any other contracting party the right to terminate, or constitute a default (or give rise to any right of termination, cancellation, or acceleration) under, or create a penalty under any provision of any material note, bond, Contract, agreement, or other instrument to which the Company or any of the Transferred Subsidiaries is a party or is subject; (iv) violate any Order or Legal Requirement applicable to the Company or any of the Transferred Subsidiaries or any of their respective assets; or (v) result in the creation of any Lien on any assets of the Company or any of the Transferred Subsidiaries. For purposes of this Agreement, “Contract” means any agreement, contract, obligation, promise, commitment or undertaking (whether written or oral and whether express or implied) that is legally binding.
(c)	The execution, delivery, and performance of this Agreement by the Seller and each Guarantor will not constitute a default under any agreement or instrument to which the Seller or a Guarantor is a party or is bound, or result in a breach of any Order to which the Seller or a Guarantor is a party or is bound.
(d)	The Seller, the Company and each of the Transferred Subsidiaries are, and at all times have been, in compliance with each Legal Requirement in all material respects. Each of the Guarantors is, and at all times has been, in compliance with each Legal Requirement to which it is subject in connection with its obligations under this Agreement and the transactions herein contemplated to which it is a party.
(e)	No event has occurred or circumstance exists that (with or without notice or lapse of time) (i) may constitute or result in a material violation by the Seller, the Guarantors, the Company or any of the Transferred Subsidiaries of, or a failure on the part of the Seller, the Guarantors, or the Company or any of the Transferred Subsidiaries to comply with, any Legal Requirement to which it is subject in all material respects or (ii) may give rise to any material obligation on the part of the Seller the Company or any of the Transferred Subsidiaries to undertake, or to bear all or any portion of the cost of, any remedial action of any nature.
(f)	Neither the Company nor any of the Transferred Subsidiaries has received any notice or other communication (whether oral or written) from any Governmental Entity or any other Person regarding (i) any actual, alleged, or potential material violation of, or failure to comply with, any Legal Requirement relating to the Company or any of the Transferred Subsidiaries or (ii) any actual, alleged, or potential material obligation on the part of the Seller, the Company or any of the Transferred Subsidiaries to undertake, or to bear all or any portion of the cost of, any remedial action of any nature relating to its business or employees.
(g)	In connection with the procurement, negotiation, execution and delivery of this Agreement (i) no illegal (under all applicable Law) or improper benefit has been promised or given, whether directly or indirectly, to any government official by the Seller, any Guarantor, the Company or the Transferred Subsidiaries, and (ii) the Seller, the Guarantors, the Company and the Transferred Subsidiaries have otherwise acted in material compliance with all applicable Laws.
3.4	Governmental Authorizations.
(a)	Each of the Company and the Transferred Subsidiaries is, and at all times has been, in compliance with all of the terms and requirements of each Governmental Authorization in all material respects.
(b)	No event has occurred or circumstance exists that may (with or without notice or lapse of time) (i) constitute or result directly or indirectly in a violation of or a failure to comply with any material term or requirement of any Governmental Authorization or Legal Requirement or (ii) result directly or indirectly in the revocation, withdrawal, suspension, cancellation or termination of, or any material modification to, any Governmental Authorization currently applicable to the Company or the Transferred Subsidiaries.
3.5	Capitalization; Ownership.

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(a)	The Shares are, as of the time immediately prior to the Closing, all of the fully paid and non-assessable issued shares of the Company and, other than as listed with respect to ESOP Beneficiaries as set forth on Schedule 9.8(p), represent the only legal and beneficial ownership interests in the Company or actual or contingent rights to acquire an interest in the Company. The Proportionate Interests accurately reflect the proportionate interests in and ownership and control of the Seller by each of the Guarantors, and, other than as listed with respect to ESOP Beneficiaries as set forth on Schedule 9.8(p), there are no other legal or beneficial ownership interests in the Seller or actual or contingent rights to acquire an interest in the Seller. The Seller is the sole shareholder of the Company, and the Company owns one hundred per cent (100%) of the Registered Capital of each of the Transferred Subsidiaries.
(b)	The Shares have been duly authorized and validly issued and were not issued in violation of any preemptive rights.
(c)	The Company has no outstanding or authorized options, warrants, purchase rights, subscription rights, conversion rights, exchange rights, or other Contracts or commitments that would require the Company to issue, sell, or otherwise cause to become outstanding any ownership interests in, or any securities convertible into or exchangeable or exercisable for any ownership interests in, the Company, other than pursuant to this Agreement and the Organizational Documents.
(d)	The Shares are not subject to any voting trust, shareholder agreement or other similar Contract, including any Contract restricting or otherwise relating to voting, dividend rights, or disposition of the Shares, other than pursuant to this Agreement and the Organizational Documents.
(e)	The Seller has valid, legal title of and owns the Shares of the Company free and clear of all Liens imposed by or of any third party as of the Closing Date. When the Shares are transferred to the Buyer, the transfer of the Shares will be in compliance with all applicable Laws, with all legal and beneficial title to the Shares vesting completely in the Buyer.
(f)	The Company has valid, legal title of and owns the Transferred Subsidiaries’ equity, free and clear of all Liens imposed by or on behalf of any third party. The respective equity interests of each of the Transferred Subsidiaries are validly issued, fully paid, and non-assessable, and all such equity interests are owned directly and entirely by the Company. There are no existing options, warrants, calls, rights, or Contracts or arrangements of any character to which the Company or any of the Transferred Subsidiaries is a party requiring, and there are no securities of any of the Transferred Subsidiaries outstanding that upon conversion or exchange would require, the issuance of any equity interests in any of the Transferred Subsidiaries or other securities convertible into, exchangeable for, or evidencing the right to subscribe for or purchase any equity interests in any of the Transferred Subsidiaries. Neither the Company, any of the Transferred Subsidiaries, or, to the Seller’s Knowledge, any other person is a party to any voting trust or other Contract or arrangement with respect to the voting, redemption, sale, transfer, or other disposition of the ownership interests in any of the Transferred Subsidiaries. For purposes of this Agreement, “Knowledge” means (i) the actual knowledge of a natural person or a director or any executive officer of an entity or any of their Affiliates, as such knowledge has been obtained in the normal conduct of the business and (ii) such knowledge as a reasonably prudent Person in such position should have obtained upon the exercise of reasonable diligence. Knowledge of the Seller, the Guarantors, the Company, or the Transferred Subsidiaries, when referred to in this Agreement, means the Knowledge of the individuals listed and/or referred to in Schedule 3.5 (f) (i.e., specified officers and managers of the Seller, the Company and the Transferred Subsidiaries and their immediate subordinates in the Seller, the Company or the Transferred Subsidiaries, and certain other key employee as the case may be).
(g)	With respect to the ESOP Beneficiaries: (i) Schedule 9.8(p) contains a true, correct and complete list of the ESOP Beneficiaries and their ultimate beneficial ownership interests in the Shares; (ii) except as set forth on Schedule 9.8(p) no ESOP Beneficiary has any legal or equitable claims in connection with the Shares (or other legal and beneficial ownership interests in the Company or actual or contingent rights to acquire an interest in the Company) or any consideration to be paid for the same whatsoever except against Mr. LIU Zhi, a Guarantor hereunder, (iii) apart from the ESOP Beneficiaries there are no individuals or entities with any beneficial rights or interests in or to the Shares (or other legal or beneficial ownership interests

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	in the Company or actual or contingent rights to acquire an interest in the Company), or to the Knowledge of the Seller and the Guarantors potential claims of any kind based thereon or deriving therefrom; (iv) each ESOP Beneficiary specified in Schedule 9.8(p) Part A has duly executed and delivered an acknowledgement and undertaking confirming their beneficial interest in the Shares and other matters, substantially in the form set forth in Exhibit 3.5(g).
3.6	Environmental, Health and Safety Matters.
(a)	Each of the Company and the Transferred Subsidiaries has complied with and is in compliance in all material respects with all Legal Requirements and all Contractual obligations concerning public health and safety, worker health and safety, occupational disease, and pollution or protection of the environment (collectively, “Environmental, Health and Safety Requirements”). To the Knowledge of the Seller and the Guarantors, no facts, events or conditions relating to the past or present facilities, properties, business or operations of the Company or the Transferred Subsidiaries will prevent, hinder or limit continued compliance with Environmental, Health and Safety Requirements, give rise to any material investigatory, remedial or corrective obligations pursuant to Environmental, Health and Safety Requirements, or give rise to any other material liability whatsoever (whether accrued, absolute, contingent, unliquidated or otherwise) pursuant to any applicable Environmental, Health and Safety Requirements.
(b)	Neither the Company nor any of the Transferred Subsidiaries has received any written notice, report or other information regarding any actual or alleged violation of Environmental, Health and Safety Requirements.
(c)	To the Knowledge of the Seller, none of the following exists at any property or facility owned or operated by the Company or any of the Transferred Subsidiaries: (i) asbestos-containing material in any form or condition, (ii) materials or equipment containing polychlorinated biphenyls or (iii) landfills, surface impoundments or disposal areas.
3.7	Business Scope.
	The scope of business of each of the Company and the Transferred Subsidiaries and each of their respective business operations fully comply with all applicable Laws.
3.8	No Legal Action.
	There is no action, suit, proceeding, claim, arbitration or investigation pending or, to the Knowledge of the Seller, threatened against the Company or any of the Transferred Subsidiaries, or any of their respective activities, properties or assets, or against any officer, director or employee of any of such entities (in connection with such officer’s, director’s or employee’s relationship with, or actions taken on behalf of, the Company or any of the Transferred Subsidiaries). There is no pending or, to the Knowledge of the Seller, threatened claim or litigation against the Company or any of the Transferred Subsidiaries (a) contesting its right to produce, manufacture, market, sell, use or offer any products, process, methods, substance, component or other material or service presently produced, manufactured, marketed, sold, used or offered or planned to be produced, manufactured, marketed, sold, used or offered by the Company or any of the Transferred Subsidiaries; or (b) involving any Proprietary Assets (as described in Section 3.10).
3.9	No Insolvency.
	No Order has been made and no resolution has been passed for the winding up of the Company or any of the Transferred Subsidiaries and none of the Company or any of the Transferred Subsidiaries is insolvent or unable to pay its debts as they become due.
3.10	Status of Proprietary Assets.
(a)	Each of the Company and the Transferred Subsidiaries has full title and ownership of, or is duly licensed or otherwise authorized to use, all Proprietary Assets (as defined below) necessary and

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sufficient to carry on its business as now conducted and, to the Knowledge of the Seller and the Guarantors, as proposed to be conducted except for the sale or other distribution of any product of ADC or any subsidiary thereof (“Company Proprietary Assets”). The Company and each of the Transferred Subsidiaries and the Seller have taken all commercially reasonable steps necessary to establish, maintain and protect the ownership of the Company Proprietary Assets that are owned by the Company or each of the Transferred Subsidiaries or that the Company or any of the Transferred Subsidiaries has the right to own. To the Seller’s Knowledge, it is not necessary and will not be necessary for the Company or any of the Transferred Subsidiaries to utilize any Proprietary Assets of the Seller or any employees, contractors, consultants, or other agents of the Seller, Company, or any of the Transferred Subsidiaries made prior to their employment or engagement by any of such entities, except for Proprietary Assets that have been assigned to or are otherwise owned by the Company or any of the Transferred Subsidiaries. To the Knowledge of the Seller and the Guarantors, it is not necessary and will not be necessary for the Company or any of the Transferred Subsidiaries to utilize any Proprietary Assets of the Seller or any former employees, contractors, consultants, or other agents of the Seller, Company, or any of the Transferred Subsidiaries made prior to or after their employment or engagement by any of such entities, except for Proprietary Assets that have been assigned to or are otherwise owned by the Company or any of the Transferred Subsidiaries. For purposes of this Agreement, the “Proprietary Assets” shall include without limitation any inventions, patents, patent applications, trademarks, service marks, trade names, copyrights, trade secrets, confidential and proprietary information, designs and proprietary rights.

(b)

None of the Company or any of the Transferred Subsidiaries has granted to any third party any options, licenses, interests, encumbrances, releases, waivers, or agreements of any kind relating to any Proprietary Asset of the Company or any of the Transferred Subsidiaries. None of the Company or any of the Transferred Subsidiaries is obligated to pay any royalties or other payments to third parties with respect to the marketing, sale, distribution, manufacture, license or use of any product or service of the Company or any Transferred Subsidiary, any Company Proprietary Asset, or any other property or rights.

(c) Each item of the Company Proprietary Assets owned by each of the Company or the Transferred Subsidiaries or that the Company or any of the Transferred Subsidiaries is licensed or otherwise authorized to use immediately prior to the Closing is available for use by the Company or any of the Transferred Subsidiaries on identical terms and conditions immediately subsequent to the Closing. Each of the Company and the Transferred Subsidiaries has taken all commercially reasonable actions to maintain and protect each item of the Company Proprietary Assets that it owns or has the right or option to own and will continue to maintain and protect all of such Proprietary Assets prior to Closing so as not to materially adversely affect the validity or enforceability thereof. None of the Company or any of the Transferred Subsidiaries is in breach of any material term or has failed to satisfy any material condition of any license, agreement, or other authorization by which the Company or Transferred Subsidiaries is licensed or otherwise authorized to use any item of Company Proprietary Assets.

(d) None of the Company or any of the Transferred Subsidiaries has interfered with, infringed upon, misappropriated, or otherwise come into conflict with any Proprietary Assets rights of third parties, and no product or service of the Company or any of the Transferred Subsidiaries has interfered with, infringed upon, misappropriated, or otherwise came into conflict with, any Proprietary Assets rights of third parties. To the Knowledge of the Seller, the Company, and the Transferred Subsidiaries and their respective directors, officers, and employees with responsibility for Proprietary Assets matters: (i) none of the Company or any of the Transferred Subsidiaries will interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any Proprietary Assets rights of third parties as a result of the continued operation of its business as presently conducted or as presently proposed to be conducted except for the sale or other distribution of any product of ADC or any subsidiary thereof; (ii) no product or service of the Company or any of the Transferred Subsidiaries will interfere with, infringe upon, misappropriate, or otherwise come into conflict with, any Proprietary Assets rights of third parties; and (iii) there are no facts that indicate a likelihood of any of the foregoing. None of the

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	Company or any of the Transferred Subsidiaries’ respective directors, officers, or employees with responsibility for Proprietary Assets matters have ever received any charge, complaint, claim, demand or notice alleging any such interference, infringement, misappropriation or violation (including any claim that the Company or any of the Transferred Subsidiaries should or must license or refrain from using any Proprietary Assets rights of any third party). To the Knowledge of the Seller, the Company, and the Transferred Subsidiaries and such party’s directors, officers, and employees with responsibility for Proprietary Assets matters, no third party has interfered with, infringed upon, misappropriated or otherwise come into conflict with any Proprietary Assets rights of the Company and any of the Transferred Subsidiaries. None of the Company or any of the Transferred Subsidiaries has ever agreed to or is otherwise obligated to indemnify or defend any third party for or against any interference, infringement, misappropriation or other conflict with respect to any product or service thereof or any item of Company Proprietary Asset.
(e)	The Disclosure Schedule identifies each patent, patent application, trademark registration, and trademark application owned by the Company or the Transferred Subsidiaries. The Disclosure Schedule also identifies each material unregistered trademark, service mark, trade name, corporate name or Internet domain name used by the Company or the Transferred Subsidiaries in connection with any of its businesses and any Company Software (as defined below) owned by the Company or any of the Transferred Subsidiaries. With respect to each item of such Proprietary Assets identified in the Disclosure Schedule in connection with this Section 3.10(e):
	(i) the Company and/or the Transferred Subsidiaries, as the case may be, owns and possesses all right, title, and interest in and to the item, free and clear of any Lien, license or other restriction or limitation regarding use or disclosure;
	(ii) the item is not subject to any outstanding injunction, judgment, order, decree, ruling or charge;
	(iii) no action, suit, proceeding, hearing, investigation, charge, complaint, claim or demand is pending or, to the Knowledge of the Seller, the Company, or such Transferred Subsidiaries or any of its directors, officers, and employees with responsibility for Proprietary Assets matters, is threatened that challenges the legality, validity, enforceability, use or ownership of the item, and to the Knowledge of the Seller, the Company, or such Transferred Subsidiaries or any of its directors, officers, and employees with responsibility for Proprietary Assets matters, there are no grounds for the same; and
	(iv) no loss or expiration of the item is pending or reasonably foreseeable, or to the Knowledge of the Seller and the Guarantors, threatened, except for patents expiring at the end of their statutory terms and not as a result of any act or omission by the Company or any of the Transferred Subsidiaries, including without limitation, a failure by the Company or any of the Transferred Subsidiaries to pay any required maintenance fees.
(f)	The Disclosure Schedule identifies any Company Software that is not owned by the Company or any of the Transferred Subsidiaries.
(g)	Each person who is or was an employee or independent contractor of the Company or any of the Transferred Subsidiaries and who is or was involved in the creation or development of any product or service thereof or was provided access to confidential or proprietary information of the Company or any of the Transferred Subsidiaries has entered into a written agreement with the Company or any of the Transferred Subsidiaries pursuant to which such person, inter alia, assigned to the Company or any of the Transferred Subsidiaries all intellectual property rights in any work performed by such person and agreed to maintain the confidentiality of all such proprietary and confidential information and trade secrets, each such agreement is in full force and effect and a form of each such agreement is listed on the Disclosure Schedule and ownership of and title to all such intellectual property rights has in fact vested unconditionally in the Company and/or one or both of the Transferred Subsidiaries.
(h)	None of the Company or any of the Transferred Subsidiaries is a party to any agreement or arrangement, or is subject to any law, rule, or regulation, under which any governmental entity

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	had or has acquired rights or has the right or ability to do so in the future, with respect to any product or service of the Company or the Transferred Subsidiaries or any Proprietary Assets of the Company or the Transferred Subsidiaries.
(i)	None of the Company or any Transferred Subsidiaries, nor, any employee or owner thereof, nor, to the Knowledge of the Seller and the Guarantors, any independent contractor, consultant, or agent thereof, is a member, affiliate or participant of or in any standards or certification body, industry or governmental consortium, or trade group. None of the Company or any Transferred Subsidiaries, nor any employee, independent contractor, consultant, agent, or owner thereof, (i) has granted or is obligated to grant any right, title or interest in or to any of the Proprietary Assets or any product or service of the Company or Transferred Subsidiaries (including without limitation any obligation to license on a royalty-free or reasonable-and-non-discriminatory basis) pursuant to any agreement, by-law, understanding, or requirement of any standards or certification body, industry or governmental consortium, or trade group; or (ii) has submitted to any standards or certification body, industry or governmental consortium, or trade group any declaration, assurance, disclaimer, proposal, or other statement relating to any of the Proprietary Assets of the Company or Transferred Subsidiaries.
(j)	No rights in the Company Software have been transferred to any third party except to customers of the Company or any of the Transferred Subsidiaries to whom it has licensed such Company Software in object code form in the ordinary course of business on a non-exclusive basis without the right to sublicense or make derivative works. The Company or Transferred Subsidiaries, as the case may be, has the right to use all software development tools, library functions, compilers, and other third party software that are required to operate, modify, distribute, or support the Company Software. None of the Company or any the Transferred Subsidiaries has provided, escrowed, or otherwise disclosed the source code for any Company Software to any third party nor is it under any obligation to do so. None of the Company or any of the Transferred Subsidiaries has (1) incorporated any Publicly Available Software in whole or in part into any part of Company Software in manner that subjects or purports to subject the Company Software, in whole or in part, to all or part of the license obligations of any Publicly Available Software or grants, or purports to grant, to any third party, any rights or immunities under the Proprietary Assets of the Company or any of the Transferred Subsidiaries; or (2) used Publicly Available Software in whole or in part in the development of any part of the Company Software in a manner that subjects or purports to subject the Company Software, in whole or in part, to all or part of the license obligations of any Publicly Available Software or grants, or purports to grant, to any third party, any rights or immunities under the Proprietary Assets of the Company or any of the Transferred Subsidiaries; or (3) distributed Company Software in conjunction with or for use with any Publicly Available Software in a manner that subjects or purports to subject the Company Software, in whole or in part, to all or part of the license obligations of any Publicly Available Software or grants, or purports to grant, to any third party, any rights or immunities under the Proprietary Assets of the Company or any of the Transferred Subsidiaries. For purposes of this Agreement, “Company Software” means software included in or used with any product or service of the Company or any Transferred Subsidiaries or that is otherwise distributed by the Company or any Transferred Subsidiaries. For the purposes of this Agreement “Publicly Available Software” means each of: (a) any software that contains, or is derived in any manner (in whole or in part) from, any software that is distributed as free software, open source software or similar licensing or distribution models; and (b) any software that requires as a condition of use, modification and/or distribution of such software that such software or other software incorporated into, derived from or distributed with such software (i) be disclosed or distributed in source code form, (ii) be licensed for the purpose of making derivative works, or (iii) be redistributable at no charge.
3.11	Related Transactions.
	No employee, officer, or director of the Company or any of the Seller Transferred Subsidiaries, nor any of the Seller, or Guarantors (or any member of any Guarantor’s immediate family) is, directly or indirectly, indebted to the Company or any of the Transferred Subsidiaries, nor are the Company or any of the Transferred Subsidiaries indebted, directly or indirectly (or

23

	committed to make loans or extend or guarantee credit) to any such parties, nor does any other individual or entity have a right to recover any claims as a direct or indirect successor, assignee, heir or holder in due course of a debt or debt instrument originally created by the Company or any Transferred Subsidiary in favor of the Seller or any Guarantor.
3.12	Conduct of Business of the Company and the Transferred Subsidiaries.
	Since December 31, 2006 the Company and each of the Transferred Subsidiaries have conducted their respective businesses only in the ordinary course of business and, in all material respects, consistent with past practice. Since December 31, 2006 there has not occurred any act, occurrence or transaction which has resulted or would be reasonably likely to result in a Material Adverse Effect or which may constitute a breach of the provisions of Article 5 of this Agreement had the date of any such act, occurrence or transaction occurred following the date hereof. Without limiting the generality of the forgoing and, in each instance excluding the transactions contemplated by this Agreement, since December 31, 2006, neither the Company nor any of the Transferred Subsidiaries has:
(a)	created, incurred, assumed, or guaranteed any indebtedness or become subject to any material liabilities, or guaranteed payment or performance of any debt or obligation of a third party, other than liabilities incurred in the ordinary course of business;
(b)	subjected any of its material assets to any Liens, except for (i) Liens for taxes not yet delinquent, (ii) Liens imposed by Law and incurred in the ordinary course of business for obligations not yet due to carriers, warehousemen, laborers, materialmen and the like and (iii) Liens listed on Schedule 3.12(b) (“Permitted Liens”);
(c)	sold, assigned, licensed or transferred any material assets, other than in the ordinary course of business;
(d)	suffered any material theft, damage, destruction or loss to any property or properties owned by it, whether or not covered by insurance, or forgiven or canceled any material claims, or waived any right of material value;
(e)	increased in any material respect its total number of employees or the compensation, bonuses, or benefits payable or to become payable to any directors, officers, employees, agents, or representatives, except as required under any existing employment agreement or as required by Law;
(f)	suffered any material work stoppage;
(g)	changed in any material respect any of its accounting principles or the methods of applying such principles;
(h)	entered into any agreement with any of the Guarantors or the Seller, or any partner, member, owner, or affiliate of the Seller nor any member of any Guarantor’s immediate family;
(i)	made any material change in the manner and timing of payment of trade and other payables nor accelerated the collection of accounts receivable in the ordinary course of business;
(j)	amended its Organizational Documents;
(k)	declared or paid any dividend or distribution with respect to the Shares or the registered capital equity interest of any of the Transferred Subsidiaries;
(l)	made any capital expenditures in excess of RMB 757,080 or made any commitment therefore of RMB 757,080 individually or RMB 1,892,700 in the aggregate (or of the foreign currency equivalents thereof);

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(m)	authorized for issuance, issued, sold, pledged or delivered any equity interests or any securities convertible into or exchangeable or exercisable for other equity interests, or redeemed, purchased, or otherwise acquired any other equity interests;
(n)	merged or consolidated with any Person or entered into any partnership, joint venture, association, or other business organization;
(o)	materially changed or altered any of the terms of outstanding receivables or accelerated the collection of receivables;
(p)	disclosed any proprietary confidential information other than pursuant to a non-disclosure agreement entered into in the ordinary course of business;
(q)	sold, transferred or licensed any intellectual property rights of any nature other than licenses granted in the ordinary course of business on commercial terms and on a non-exclusive basis in conjunction with the sale of product in the ordinary course of business;
(r)	waived any rights of material value or suffered any extraordinary losses;
(s)	made any charitable contributions or pledges in excess of RMB 7,570 in the aggregate;
(t)	factored any receivables, entered into any Contracts that might restrict the ability of their respective businesses to operate freely post-Closing (including, but not limited to, non-competition agreements, exclusive dealing arrangements or the like), made any investments in equity or debt instruments of third parties, nor, to the Knowledge of the Seller and the Guarantors, become the subject of any investigation or claim; or
(u)	other than this Agreement, entered into any agreement or commitment to do any of the foregoing.
3.13	Property Title.
	All properties and assets owned by the Company and each of the Transferred Subsidiaries are free and clear of any mortgages, Liens, encumbrances and security interests, except for Permitted Liens. With respect to the properties leased by the Company or any of the Transferred Subsidiaries, the Company and each of the Transferred Subsidiaries is in material compliance with such leases. The Company and each of the Transferred Subsidiaries owns or leases all properties and assets necessary to conduct such party’s business and operations as presently conducted and as proposed to be conducted by the Buyer.
3.14	Condition and Sufficiency of Assets.
	All buildings, structures, fixtures, building systems, tooling and equipment, and all other assets of the Company and each of the Transferred Subsidiaries, are in reasonable condition and repair (ordinary wear and tear excepted) and sufficient for the operation of the Company’s and each of the Transferred Subsidiaries’ respective businesses as presently conducted and as reasonably can be contemplated in the foreseeable future.
3.15	Accounts Receivable.
	All accounts receivable of the Company and the Transferred Subsidiaries that are reflected on the Financial Statements (as such term is defined in Section 3.20) or on the accounting records of the Company and the Transferred Subsidiaries as of the Closing Date (collectively, the “Accounts Receivable”) represent valid obligations arising from sales actually made or services actually performed in the ordinary course of business of the Company or the Transferred Subsidiaries. All reserves for Accounts Receivable have been established in

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	accordance with mainland Chinese GAAP and reflect the Seller’s good faith estimate of the Accounts Receivable reasonably determined to be at risk.
3.16	Inventory.
	All inventory of the Company and each of the Transferred Subsidiaries, whether or not reflected in the Financial Statements, consists of a quality and quantity usable and salable in the ordinary course of business. Excess and/or obsolete inventory have been appropriately reserved for on the Financial Statements. All inventory is supported by relevant, valid VAT invoices in respect of the input VAT paid in accordance with all applicable VAT rules and regulations.
3.17	Employment and Labor Union.
(a)	None of the Company or any of the Transferred Subsidiaries is bound by or subject to any Contract, commitment or arrangement with any labor union, and, no labor union has requested, sought or attempted to represent any employees, representatives or agents of the Company or any of the Transferred Subsidiaries. There is no strike or other labor dispute pending or, to the Knowledge of the Seller or Guarantors, threatened involving the Company or any of the Transferred Subsidiaries nor are any of such entities aware of any labor organization activity involving its employees. To the Knowledge of the Seller or Guarantors, no employee of the Company, or the Transferred Subsidiaries, is in material violation of any Legal Requirement, or any material term of any employment Contract, or other Contract relating to the relationship of any such employee with the Company or any of the Transferred Subsidiaries or any other party because of the nature of the business conducted or to be conducted by the Company and each of the Transferred Subsidiaries.
(b)	Neither the Seller, any of the Guarantors the Company nor any of the Transferred Subsidiaries is aware that any officer or such core employee listed on Schedule 3.17(b) , or any group of core employees, intends to terminate their employment with the Company or any of the Transferred Subsidiaries, nor does any such entity intend to terminate the employment of any such employees.
(c)	With regard to employment and staff or labor management, the Company and each of the Transferred Subsidiaries has complied in all material respects with all applicable Legal Requirements, including without limitation, Laws pertaining to overtime compensation, minimum wage, welfare funds, social benefits, union or workers’ activity funding, medical benefits, insurance, retirement benefits, housing funds or pensions.
(d)	None of the Company or any of the Transferred Subsidiaries is a party to or bound by any Contract of any nature to employ, hire (either directly or through a labor service agency such as FESCO or CIIC or labor outsourcing service), retain, compensate, pay or provide benefits to any Person that has not been provided to the Buyer in the due diligence materials in writing, other than such Contracts with respect to low-level clerical, janitorial or other support staff performing fungible functions.
(e)	Neither the Company nor any Transferred Subsidiary has any material labor relations problem pending or, to the Knowledge of the Seller or Guarantors, threatened.
3.18	Minute Books.
	The minute books of the Company and each of the Transferred Subsidiaries contain complete summaries of all meetings of directors and shareholders for the three year period ending as at the date of this Agreement and the Disclosure Schedule contains a list describing all material actions of the board made orally, and the transactions referred to in such minutes are accurately described in all material respects.
3.19	Contracts; No Defaults.
	Neither the Company nor any of the Transferred Subsidiaries is a party to any Contracts (i) other than Contracts entered into in the ordinary course of business, (ii) having a term in excess of six (6) months; (iii) involving payments in excess of RMB two hundred thousand (RMB

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200,000); or (iv) involving terms or conditions that are other than commercially reasonable and at arms length. Neither the Company nor any of the Transferred Subsidiaries is in default in the performance, observance or fulfillment of any of the obligations, covenants, undertakings or conditions contained in any agreement or instrument to which it is a party which may have a Material Adverse Effect on the condition, financial or other, of such entity. The Seller has provided to the Buyer in the due diligence materials all material Contracts, including, but not limited to, all Contracts containing any restrictive covenants, non-compete or exclusive dealing provisions, product tie-in requirements, “most favored nation” or similar preferential pricing clauses, or any other restrictions on business practices of the Company or either of the Transferred Subsidiaries.

(a)

Neither the Company nor any Transferred Subsidiary is a party to or bound by any of the following:

(i) any Contract that involves remaining performance of services or delivery of goods or materials by or to the Company or any of the Transferred Subsidiaries of an amount or value in excess of RMB 200,000;

(ii) any Contract that was not entered into in the ordinary course of business and that involves expenditures or receipts of the Company or any of the Transferred Subsidiaries in excess of RMB 200,000;

(iii) any lease, rental or occupancy agreement, license, installment and conditional sale agreement, or other Contract affecting the ownership of, leasing of, title to, use of, or any leasehold or other interest in, any real or personal property which has not been disclosed to the Buyer (except agreements relating to personal property having remaining payments of less than RMB 200,000 per agreement and except for any Loans);

(iv) any undisclosed licensing or royalty agreement with respect to patents, trademarks, copyrights, or other intellectual property (including software);

(v) any collective bargaining agreement or other Contract to or with any labor union or other employee representative of a group of employees;

(vi) any joint venture, partnership, or other Contract (however named) involving a sharing of profits, losses, costs, or liabilities by the Company or any of the Transferred Subsidiaries with any other Person (other than commission and other similar agreements that involve expenditures of less than RMB 100,000 per year);

(vii) any Contract containing covenants that in any way purport to restrict the business activities of the Company or any of the Transferred Subsidiaries or limit the freedom of the Company or any of the Transferred Subsidiaries to engage in any line of business, freely purchase from any source or to compete with any Person (including without limitation Contracts containing restrictive covenants, non-competition or exclusive dealing obligations, product tie-in requirements, “most favored nation” clauses, pricing restrictions or any other restrictions on business practices);

(viii) any Contract providing for payments to or by any Person based on sales, purchases, or profits, other than direct payments for goods (other than commission and other similar agreements that involve expenditures of less than RMB 100,000 per year);

(ix) any Contract for capital expenditures in excess of RMB 757,080;

(x) any warranty, guaranty, or other similar undertaking with respect to contractual performance extended by the Company other than in the ordinary course of business;

(xi) any note, bond or other instrument evidencing indebtedness of the Company for borrowed money;

(xii) any mortgage, security agreement or other instrument creating or relating to an encumbrance on assets of the Company or the Transferred Subsidiaries;

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	(xiii) any undisclosed Contract with the Seller, any of the Guarantors, or any Affiliate of Company, either of the Transferred Subsidiaries or the Seller;
	(xiv) any employment, agency, representative, distribution or consulting Contracts that are not on standard forms of the Company or the Transferred Subsidiaries, as applicable; or
	(xv) any Contract terminable on a change of control or on failure to satisfy any financial performance standards set forth in such Contract.
(b)	The Seller has made available to the Buyer true and complete copies of each of the written Contracts to which the Company or any of the Transferred Subsidiaries is a party and has provided to the Buyer a written summary of all oral Contracts (if any) to which the Company or any of the Transferred Subsidiaries is a party.
(c)	Each Contract to which the Company or any of the Transferred Subsidiaries is a party is in full force and effect and is valid and enforceable in accordance with its terms, subject to the effects of bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium and other similar Laws relating to or affecting creditors’ rights generally. To the Knowledge of the Seller and each of the Guarantors, no other Person that has or had any obligation or liability under any Contract to which the Company or any of the Transferred Subsidiaries is a party is in default under the terms of such Contract. Each of the Company and the Transferred Subsidiaries has performed, in all material respects, all obligations under all Contracts to which it is a party and neither the Seller nor any of the Guarantors has any Knowledge of any actual or anticipatory breach by the Company, the Transferred Subsidiaries or any counterparty to any Contract.
(d)	To the Knowledge of the Seller and each of the Guarantors, no event has occurred or circumstance exists that (with or without notice or lapse of time) may contravene, conflict with, or result in a material violation or breach of, or give the Company, a Transferred Subsidiary or other Person the right to declare a default or exercise any remedy under, or to accelerate the maturity or performance of, limit the scope of, or benefits under, or to cancel, terminate, or modify, any Contract required to be disclosed pursuant to Section 3.19(a); and
(e)	Neither the Company nor any of the Transferred Subsidiaries is a party to any Contract required to be disclosed pursuant to Section 3.19(a) that cannot be reasonably expected to be timely performed without expenditure of time or funds versus what would normally be expected in the ordinary course of business for such Contract, or that requires such party to refund any payments received for work not yet performed.
3.20	Financial Statements; Material Facts.
	In connection with the transactions contemplated by this Agreement, the Seller has provided, or has caused the Company and each of the Transferred Subsidiaries to furnish to the Buyer and has included in Schedule 3.20 of the Disclosure Schedule, true, accurate and complete copies of (i) the bank account records of the Company for the year ended December 31, 2006 and the period commencing on January 1, 2007 and ended on September 30, 2007, respectively; (ii) the unaudited balance sheets (including the shareholders’ equity), statements of income, and cash flows of each of the Transferred Subsidiaries for the year ended December 31, 2006; (iii) the unaudited balance sheets (including the shareholders’ equity), statements of income, and cash flows of each of the Transferred Subsidiaries for the period commencing January 1, 2007 and ended on September 30, 2007 (collectively, the “Financial Statements”).  The Financial Statements are based upon the information contained in the books and records of the Company (in their current state) and the Transferred Subsidiaries and, in the aggregate, fairly present in all material respects the financial condition as of the dates thereof and the results of operations for the periods referred to therein of the Company and/or the Transferred Subsidiaries, as applicable.  The Financial Statements (excluding the bank account records of the Company) have been prepared in accordance with International Financial Reporting Standards (“IFRS”), consistently applied and reflect all adjustments necessary to a fair statement of the results for in the interim periods presented.  Neither the Seller, any of the Guarantors nor the Company nor any of the Transferred Subsidiaries are aware of any information, fact or circumstance which

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	has or would have a Material Adverse Effect which has not been fully and accurately disclosed in writing to the Buyer
3.21	Current Operation.
	Neither the Seller, any of the Guarantors nor the Company nor any of the Transferred Subsidiaries are aware of any existing fact or circumstance that may have a Material Adverse Effect on the ability of the Company or any of the Transferred Subsidiaries to conduct its business as presently conducted or as proposed to be conducted by the Buyer.
3.22	Business Relationships.
(a)	There are no unresolved disputes outstanding with any of the customers, vendors or employees of the Company or any of the Transferred Subsidiaries and no sales manager or more senior management personnel of the Company or any Transferred Subsidiary has any Knowledge that a significant customer or vendor has refused to continue to do business with such entity or has stated its intention to the Company or any Transferred Subsidiary not to continue to do business with such entity or to reduce the amount of such business since December 31, 2006. Since December 31, 2006, there has not been any shortage, unavailability or material price increase of any raw materials necessary to manufacture any of the products sold by the Company or any of the Transferred Subsidiaries and there is no current shortage or unavailability that may lead to any such shortage.
(b)	Since December 31, 2006, there has been no termination of any major independent distributor, wholesaler, sales representative, or agent relationship of the Company or any of the Transferred Subsidiaries, nor does any sales manager or more senior management personnel of the Company or any Transferred Subsidiary have Knowledge that any current independent distributor, wholesaler, sales representative or agent indicated any intention to terminate or change the terms of its relationship with the Company or any of the Transferred Subsidiaries.
3.23	No Undisclosed Liabilities.
	Except as expressly accounted for in the Financial Statements or, to the extent arising prior to the Closing Date in the ordinary course of business as permitted under Section 5.1 (in either case, none of such liabilities being a material uninsured liability for breach of Contract, breach of warranty, tort, infringement, claim or lawsuit), neither the Company nor any of the Transferred Subsidiaries has any liabilities or obligations of any nature whatsoever, fixed or contingent, known or unknown, currently due or payable in the future.
3.24	Product Safety and Compliance with Specifications.
(a)	There has been no pattern of defects in the design, construction, manufacture, installation or compliance with specifications of, or any basis for any liability relating to, any product made, manufactured, constructed, distributed, sold, leased or installed by the Company or any of the Transferred Subsidiaries or their employees or agents, that may adversely affect the performance or quality of such product. Each product has been designed, constructed, manufactured, packaged, installed and labeled in material compliance with all regulatory, engineering, industrial and other codes applicable thereto, and neither the Seller, any of the Guarantors nor the Company nor any of the Transferred Subsidiaries have received notice of any alleged noncompliance with any such code. No product manufactured by the Company or any of the Transferred Subsidiaries contains any asbestos or asbestos-containing materials.
(b)	Neither the Company nor any of the Transferred Subsidiaries have been required to file, or has filed, a notification or other report to a Governmental Entity concerning actual or potential hazards with respect to any product manufactured or sold by either the Company or any of the Transferred Subsidiaries.
(c)	The products of the Company and the Transferred Subsidiaries comply with all applicable provincial, state and local Laws, regulations, Orders, and mandatory or generally-accepted

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	industry standards, requirements and certifications in all material respects. Without limiting the foregoing, the products of the Company and Transferred Subsidiaries meet all applicable requirements and standards of the PRC Measures for the Control of Pollution from Electronic Information Products effective March 1, 2007, and any other Legal Requirements as may be in effect as of Closing.
3.25	Product Warranty.
	Except as expressly reserved for in the Financial Statements, each product manufactured, sold, leased or delivered by the Company or any of the Transferred Subsidiaries has been in conformity with all applicable Contractual commitments and all express and implied warranties in all material respects, and neither the Company nor any of the Transferred Subsidiaries has any material liability or material contingent liability for replacement or repair thereof or other damages in connection therewith. No product manufactured, sold, leased or delivered by the Company or any of the Transferred Subsidiaries is subject to any guaranty, warranty or other indemnity beyond the applicable standard terms and conditions of sale or lease. The Seller has delivered to the Buyer true, correct and complete copies of the standard terms and conditions of sale or lease for the Company and each of the Transferred Subsidiaries (containing applicable guaranty, warranty and indemnity provisions).
3.26	Guaranties.
	Neither the Company nor any of the Transferred Subsidiaries is a guarantor or is otherwise liable for any liability or obligation (including indebtedness) of any other Person.
3.27	Trade Allowance.
	Neither the Company nor any of the Transferred Subsidiaries has in effect any trade allowance, billback, rebate, discount, sale or return or similar program with its customers.
3.28	Tax.
	For purposes of this Agreement, the following definitions shall apply:
	“Tax” or “Taxes” means all tax imposed by any Governmental Entity in the BVI, the PRC, the Hong Kong Special Administrative Region of the People’s Republic of China or elsewhere, including national, provincial, local, or foreign taxes and other taxes on income, estimated income, alternative or add-on minimum, gross receipts, profits, withholding (e.g. employees’ individual income taxes), business, license, occupation, stamp, premium, value added, consumption, utility, franchise, service, personal and real property (including special assessments or charges), sales, use, transfer, gains, excise, severance, environmental, unclaimed property, employment, unemployment, payroll, withholding, disability, social security, minimum tax, capital stock, registration, or any other tax, custom duty, ad valorem levy, governmental fee, or other like assessment or charge of any kind, together with any interest or any penalty, addition to tax, or additional amount, whether disputed or not, and including any liability for the Taxes of any person as a transferee, successor, or agent, by Contract, or otherwise.
	“Tax Claims” means any and all liabilities, damages, losses, costs, penalties, fines and reasonable expenses (including reasonable attorneys’ fees and expenses and costs to investigate) arising in connection with Taxes or failure to timely file true, correct and accurate Tax Returns, together with any assertion, claim, warning, notice, assessment, whether oral or written, made or issued by any Governmental Entity with any responsibility for or jurisdiction over any Taxes, or an employee or duly appointed agent of such Governmental Entity, which could, if proven correct or not complied with, result in Damages for failure to timely and correctly pay the subject Taxes and/or timely file, true, correct and accurate Tax Returns, but excluding any of the foregoing which pertains to Disposition Costs pursuant to Section 1.2(a)(iii).

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	“Tax Returns” means all returns, forms, computations, declarations, elections and claims for refund relating to any Taxes, including any schedules or attachments thereto and any amendments thereof.
	The Seller represents and warrants to the Buyer, as follows:
(a)	all Tax Returns required to be filed on or before the Closing Date by, or with respect to, the Company and the Transferred Subsidiaries have been duly and timely filed (taking into account any extensions);
(b)	the information included in the Tax Returns filed by or with respect to the Company and the Transferred Subsidiaries is complete and accurate in all material respects;
(c)	all Taxes due and payable on or before the Closing Date by the Company and the Transferred Subsidiaries have been timely paid;
(d)	no Taxes are due in any jurisdiction in which Tax Returns have not been filed;
(e)	there are no pending Tax Claims, or, to the Knowledge of the Seller or any of the Guarantors, threatened with respect to the Company or any of the Transferred Subsidiaries in respect of any material amount of Taxes;
(f)	to the Knowledge of the Seller and each of the Guarantors, no notice or claim has been made by a Governmental Entity in a jurisdiction where the Company or any of the Transferred Subsidiaries does not file a particular Tax Return that it is or may be subject to that particular Tax in that jurisdiction;
(g)	there are no liens for Taxes upon the assets of the Company or any of the Transferred Subsidiaries;
(h)	no request has been made for an extension of time within which to file Tax Returns with respect to the Company or any of the Transferred Subsidiaries, for which Tax Returns have not yet been filed;
(i)	there has been no extension or waiver of the statute of limitations period applicable to any Tax of the Company or any of the Transferred Subsidiaries, which period (after giving effect to such extension or waiver) has not yet expired;
(j)	the balance sheet included in the June 30, 2007 Financial Statements reflects an adequate reserve for all material Taxes for which the Company and the Transferred Subsidiaries may be liable for all taxable periods and portions thereof through the date thereof;
(k)	the Company and each of the Transferred Subsidiaries has withheld and paid all Taxes required to have been withheld and paid by such entity under all applicable Legal Requirements;
(l)	the Company and each of the Transferred Subsidiaries have filed or caused to be filed all Tax Returns that are or were required to be filed by them pursuant to applicable Legal Requirements. The Seller has delivered to the Buyer complete copies thereof, and of all examination reports and statements of deficiency filed or received by either the Seller or the Company or any of the Transferred Subsidiaries for all taxable periods from and including 2004 to present, and the Disclosure Schedule contains a complete and accurate list of, all such tax filings filed since its establishment. The Company and each of the Transferred Subsidiaries have properly prepared and timely filed all Tax Returns that they have been required to file (taking into account any extensions). All Tax Returns are correct and complete in all material respects;

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(m)	except for withholding liabilities, neither the Company nor the Transferred Subsidiaries have any liability for Taxes of any other person (other than the Company or the Transferred Subsidiaries) as a transferee, successor, or agent, by Contract, or otherwise;
(n)	neither the Company nor any of the Transferred Subsidiaries has ever been a party to or bound by any Tax-indemnity, Tax-allocation, or Tax-sharing agreement;
(o)	the Company and each of the Transferred Subsidiaries is duly and properly registered in each and every country and territory where required by applicable Legal Requirements for VAT and any other equivalent local or regional Taxes for which registration is required by applicable Legal Requirements; and
(p)	the Company and each of the Transferred Subsidiaries is, and has at all times been, resident for purposes of Taxes, or has carried on business, only in its respective place of incorporation or formation.
3.29	Insurance.
(a)	The Seller has provided to the Buyer in the due diligence materials true and complete copies of all policies of insurance to which the Company and each of the Transferred Subsidiaries are or were parties to at any time within three (3) years preceding the date of this Agreement.
(b)	Each of the Company and the Transferred Subsidiaries has at all times maintained insurance relating to its business and covering property, fire, casualty, liability, life and all other forms of insurance (a) in full force and effect; (b) sufficient for compliance, in all material respects, with all requirements of applicable Law and of any Contract to which the Company or such of the Transferred Subsidiaries is subject; (c) insuring against risks of the kind customarily insured against and in amounts customarily carried by similarly-sized businesses operating in its industry in China; and (d) providing commercially reasonable insurance coverage for the activities of the Company and the Transferred Subsidiaries. All premiums due with respect to the insurance policies covering all periods through the Closing Date have been paid, all such policies remain in full force in effect and no act, omission, event or change of circumstance has occurred that may invalidate in whole or in part any such insurance policies.
3.30	Anti-Terrorism Laws.
	The Seller and each of the Guarantors hereby certifies, represents and warrants to the Buyer that (A) neither the Company nor any of the Transferred Subsidiaries is on the List of Specially Designated Persons maintained by the Office of Foreign Assets Control of the U.S. Department of Treasury; and; (B) none of the Seller, the Guarantors, the Company or either of the Transferred Subsidiaries is otherwise in violation of any of the Anti-Terrorism Laws. For purposes of this Agreement, “Anti-Terrorism Laws” means Executive Order 13224 issued by the President of the United States; the Global Terrorism Sanctions Regulations (31 C.F.R. Part 594); the Terrorism Sanctions Regulations (31 C.F.R. Part 595); the Terrorism List Governments Sanctions Regulations (31 C.F.R. Part 596); the Foreign Terrorist Organizations Sanctions Regulations (31 C.F.R. Part 597); and the Foreign Narcotics Kingpin Sanctions Regulations (31 C.F.R. Part 598). The Seller shall immediately notify the Buyer in writing if the Seller or any of the Guarantors has Knowledge of any violation or pending violation of any of the Anti-Terrorism Laws by the Seller, the Guarantors, the Company or either of the Transferred Subsidiaries. Any misrepresentation of the above by the Seller or the Guarantors, or any violation of the Anti-Terrorism Laws by the Company or either of the Transferred Subsidiaries shall be sufficient cause for immediate termination of this Agreement and any other agreement or arrangement between the Seller and the Guarantors, and Buyer and ADC.
3.31	Powers of Attorney.
	Section 3.33 of the Disclosure Schedule sets forth a list of all powers of attorney granted or entered into by the Company or any of its subsidiaries that are still in effect.

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3.32	Compliance with Anti-Boycott Laws.
(a)	The Company and each of the Transferred Subsidiaries is and at all times has been in compliance with all applicable Legal Requirements relating to applicable export control and trade embargoes. No product sold or service provided by such party during the last five (5) years has been, directly or indirectly, sold to or performed on behalf of Cuba, Iraq, Iran, Libya or North Korea.
(b)	If any of the following Legal Requirements had been applicable to the Company and/or the Transferred Subsidiaries prior to the Closing, neither the Company nor the Transferred Subsidiaries would have violated any anti-boycott prohibitions contained in 50 U.S.C. sect. 2401 et seq. or taken any action that can be penalized under Section 999 of the U.S. Code. During the last five (5) years, neither the Company nor the Transferred Subsidiaries have been a party to, or a beneficiary under or performed any service or sold any product to customers in Bahrain, Iraq, Jordan, Kuwait, Lebanon, Libya, Oman, Quatar, Saudi Arabia, Sudan, Syria, United Arab Emirates or the Republic of Yemen.

ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER

The Buyer and ADC jointly and severally represent and warrant to the Seller as follows:

4.1	Corporate Organization.
	The Buyer is a duly established, registered and validly existing private company limited by shares in good standing under the Laws of the Hong Kong Special Administrative Region of the PRC.
4.2	No Violations; Consents.
	The execution, delivery and performance of this Agreement and the other documents delivered hereunder and transactions contemplated herein and therein will not violate, contravene or conflict with, permit the acceleration, cancellation or termination of any right or obligation under, result in a breach of or constitute a default under (with or without the giving of notice or the lapse of time or both), (a) the Buyer’s Articles of Incorporation or any note, mortgage, Contract, instrument, judgment or instrument, to which Buyer is a party or by which any of its properties or assets is bound or (b) any Law, rule or regulation to which the Buyer is a party or by which any of its properties or assets is bound, except as would not reasonably be expected to materially adversely affect Buyer’s ability to consummate the transactions contemplated herein.
4.3	Authorization; Execution and Delivery.
	The Buyer has full corporate power and authority to execute and deliver this Agreement and to perform its obligations hereunder. The execution and delivery of this Agreement and the consummation by it of the transactions contemplated herein have been duly authorized by all necessary corporate action on the part of the Buyer. This Agreement constitutes the legal, valid and binding obligation of Buyer enforceable against the Buyer in accordance with its terms except as the enforceability hereof may be limited by bankruptcy, insolvency, moratorium or similar Laws affecting the enforcement creditors’ rights generally and by general principles of equity.

ARTICLE 5 ADDITIONAL COVENANTS

The Guarantors and the Seller, jointly and severally, undertake to perform each of the following covenants and undertakings:

5.1 Operation of the Businesses of the Company and the Transferred Subsidiaries.

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	Except as otherwise contemplated by this Agreement or with the prior written consent of the Buyer, from and after the execution of this Agreement until the Closing Date, the Seller shall cause the Company and each of the Transferred Subsidiaries to:
(a)	operate its business in the ordinary course;
(b)	operate its business in compliance with all applicable Laws in all material respects;
(c)	use all commercially reasonable efforts to maintain and preserve in a manner compliant with Legal Requirements and existing relationships with employees, customers, distributors, suppliers, other vendors, and government agencies;
(d)	not increase in any material respect its total number of employees or grant any bonus to any employee or implement any material increase in the rates of salaries or compensation of any employees, directors, officers, representatives or agents or, except in the ordinary course of business consistent with past practice or as required by Law, otherwise enter into or amend any employment agreement for any employee or other agreement for any director, officer, representative or agent;
(e)	not institute any material increase in, amend, adopt or terminate any employee benefit plan with respect to employees, except as may be required to comply with applicable Law or pay any benefit not required by any plan or arrangement in effect on the date hereof;
(f)	other than in connection with the purchase of the Shares and other transactions contemplated in this Agreement, not amend the governing documents thereof or enter into any merger, consolidation, restructuring, recapitalization, reorganization or share exchange agreement or adopt resolutions providing therefor;
(g)	not sell, pledge, license, dispose of or encumber any material assets (except for sales of assets in the ordinary course of business and in a manner consistent with past practices, dispositions of obsolete or worthless assets, or of the Excluded Assets;
(h)	other than in connection with the purchase of the Shares, not (i) issue, sell, or authorize the issuance or sale of any shares, registered capital or other equity ownership or right to acquire any shares, registered capital or other equity interest; (ii) make preparations for any initial public offering or private placement of equity or debt securities, (iii) repurchase, redeem or otherwise acquire any securities of any party; or (iv) adopt a plan of complete or partial liquidation or resolutions providing for or authorizing a liquidation or dissolution of any of them;
(i)	not take any action (with the exception of actions required by applicable Law) to change any accounting policies or procedures (including procedures with respect to revenue recognition, payments of accounts payable and collection of accounts receivable) or the method of applying any such policies or procedures;
(j)	not pay, discharge or satisfy any claims or liabilities (absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction of liabilities in the ordinary course of business, but in any event not exceeding RMB 75,708 in the aggregate;
(k)	not declare or pay any dividend or distribution with respect to the Shares or the registered capital equity interest of either of the Company or any of the Transferred Subsidiaries;
(l)	not write up the value of any inventory or of any other assets or write off or write down the value of any assets, except for assets no longer used in the business operations or held for sale or disposition, or otherwise to the minimum extent necessary to comply with mainland Chinese GAAP;

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(m)	not create or assume any debt or other obligation for the payment of money, except for accounts payable incurred in the ordinary course of business or guarantee payment or performance of any debt or obligation of any third party;
(n)	not grant any license or sublicense of any rights under or with respect to any intellectual property, except in the ordinary course of business;
(o)	not enter into or amend any lease of real property (other than the Lease Agreement), except any renewals of existing leases in the ordinary course of business;
(p)	not enter into any leases for any material items of personal property (other than standard office equipment leased in the ordinary course of business);
(q)	not make any capital expenditures in excess of RMB 757,080 or make any commitment therefore of RMB 757,080 individually or RMB 1,892,700 in the aggregate (or of the foreign currency equivalents thereof);
(r)	not delay payment of any amounts payable in the ordinary course of business, nor accelerate the collection of accounts receivable in the ordinary course of business or otherwise compromise any receivable via a factoring arrangement or otherwise;
(s)	not subject any of its material assets to any Liens, except for Permitted Liens;
(t)	not forgive or cancel any material claims or waive any right of material value;
(u)	not enter into any agreement with any of the Seller, or any partner, member, owner or affiliate of the Seller;
(v)	not enter into any partnership, joint venture, association or other business organization; and
(w)	not to enter into any agreement to do any of the actions prohibited in the foregoing clauses (c) through (v).
5.2	Regulatory Cooperation.
	The Seller and each Guarantor will cooperate with the Buyer promptly and in good faith to obtain all necessary consents and approvals required from Governmental Entities and private third parties (including the registered agent of the Company) necessary to enable the Buyer to duly complete such applicable approval and registration process relating to the purchase of the Shares and other transactions contemplated herein and to operate the business of the Company and each of the Transferred Subsidiaries without material disruption, as contemplated hereby and in accordance with applicable Law.
5.3	Confidentiality.
	The Seller and each Guarantor agrees to use its best efforts to keep confidential all information related to the business of the Company and each of the Transferred Subsidiaries or provided to it by the Buyer that is not in the public domain (“Confidential Information”) for a period of five (5) years after the execution of this Agreement, or any other shorter period to the extent permitted by the applicable Laws provided that the Seller and each Guarantor may disclose such Confidential Information (i) to the extent as required by applicable Law, provided the Seller shall promptly notify the Buyer to allow the Buyer to seek a protective order or take other action to limit the disclosure; or (ii) to a third party as necessary to the performance of its obligations in connection herewith so long as such third party is bound by a confidentiality obligation coterminous with Seller’s and each Guarantor’s confidentiality obligations hereunder.

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5.4	Non-Interference.
	The Seller and each Guarantor shall use its commercially reasonable efforts to maintain, and shall not directly or indirectly, take any action to discourage intentionally any licensor, customer, supplier, distributor, agent, employee or other business associate of the Company or the Transferred Subsidiaries from maintaining the same business relationships with the Company or the Transferred Subsidiaries after the Closing as it maintained with the Company or the Transferred Subsidiaries before the Closing.
5.5	Covenant Not to Compete.
	For a period of five (5) years from the date of Closing, unless otherwise expressly provided for herein, neither the Seller nor any of the Guarantors may directly or indirectly engage, except as an employee of a Transferred Subsidiary and within the scope of employment and acting for the sole benefit of the Transferred Subsidiary and the Company, in any business which involves the product categories and related services described in Schedule 5.5 (the “Restricted Business”), including without limitation (a) design, development, utilizing, manufacturing, marketing, sales or distribution of any products within the scope of the Restricted Business; (b) soliciting business from customers related to the Restricted Business; (c) doing business with companies manufacturing or trading involving Restricted Business or diverting any business related to the Restricted Business; (d) soliciting for employment or employing any employees employed in a Restricted Business.
5.6	Compliance with Laws.
(a)	The Seller, each Guarantor understands and acknowledges that the Laws of various jurisdictions applicable to the Company, the Transferred Subsidiaries, and/or the Seller and the Guarantors impose obligations on the conduct of business by their respective anti-bribery Laws, rules, regulations and decrees (collectively, the “Anti-Bribery Laws”). More particularly, the Parties understand, agree and acknowledge that the Seller and the Guarantors shall cause the Company and the Transferred Subsidiaries to comply with all such Anti-Bribery Laws.
(b)	The Seller and each of the Guarantors covenants and agrees that Seller and each of the Guarantors will and will cause all officers, Directors, employees, partners and agents of the Company and each of the Transferred Subsidiaries to obtain, or to cause the Company and each of the Transferred Subsidiaries to obtain, all necessary approvals, permits and licenses required in order to complete the transactions contemplated hereby (if any) as provided herein in strict compliance with all Anti-Bribery Laws.
(c)	The Seller and each of the Guarantors further understands, covenants and agrees that any Confidential Information disclosed and/or the technology licensed by the Buyer in furtherance hereof may be subject to export and re-export restrictions imposed under United States Laws and regulations pertaining to the export and re-export of goods, services and technology (including, but not limited to, United States Export Administration Regulations administered by the U.S. Department of Commerce and trade and economic sanctions programs administered by the United States Department of Treasury). The Seller and each of the Guarantors shall, and shall cause the Company and each of the Transferred Subsidiaries to, comply with all such restrictions and shall provide the Buyer with the assurances and official documents that the Buyer may periodically request to verify compliance with the foregoing in accordance with the standards referenced or set forth in Section 5.13 hereof.
5.7	Consent.
	The Seller and each of the Guarantors hereby consents to voting or causing directors to vote for the transactions and matters contemplated herein at the various respective board meetings of the Seller, the Company and each of the Transferred Subsidiaries.

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5.8	Transfer Taxes.
(a)	The Buyer on the one hand, and the Seller, on the other hand, shall each pay one-half of all sales, use, value-added, business, goods and services, transfer, documentary, conveyance, or similar Taxes or expenses and all recording fees that may be imposed as a result of the sale and transfer of the Shares under this Agreement (including any stamp, duty, or other Tax chargeable in respect of any instrument transferring property, together with any and all fines, penalties, interest, and additions to Tax with respect thereto) (“Transfer Taxes”), and the Seller and the Buyer shall cooperate in a timely manner in making all filings, returns, reports, and forms as may be required to comply with the provisions of Laws related to Transfer Taxes. The Seller and the Buyer agree that, upon request, they shall use their reasonable best efforts to obtain any certificates or other documents from any Governmental Entity or any other persons as may be necessary or helpful to mitigate, reduce, or eliminate any Transfer Taxes that may otherwise be imposed with respect to the transactions contemplated by this Agreement.
(b)	For the avoidance of doubt, the Seller and the Buyer shall each be responsible for their own income tax liabilities arising from or associate with the purchase and sale of the Shares and other transactions contemplated in this Agreement, and the Seller shall be responsible for its own income taxes arising out of or related to any Earn Out payments.
5.9	Excluded Properties.
	Beginning immediately after the Closing, the Seller and Guarantors shall cooperate fully and promptly with, the Buyer and its advisors to take all actions necessary, in accordance with applicable Law, to cause that neither the Company nor either of the Transferred Subsidiaries owns any of the properties set forth immediately below (the “Excluded Properties”), all to the reasonable satisfaction of Buyer:

(1) Land in the Lan Tian Development Zone, Fujian Province.

Location:	Lan Tian Development Zone, Zhangzhou City, Fujian Province
Area:	1,367.45 sq. m.
Nature:	Granted land
Term:	The expiration date of land use rights is on August 15, 2048
Land Use Rights Certificate#:	Zhang Guo Yong (2007 Lan Zi) No. 007

(2) Building in the Lan Tian Development Zone, Fujian Province.

Location:	Kai Fang Avenue, the Lan Tian Industrial Development Zone, Long Wen District, Zhangzhou City, Fujian Province
Total Construction Area:	1604.75 sq. m.
Nature:	privately-owned property
Property Ownership Certificate#:	Zhang Fang Quan Zheng Long Zi No. 02090104

(3) Land in the Shenzhen Hi-Tech Park, Nan Shan District.

Location:	No. 2 Road, the Hi-Tech Park, Nan Shan District.
Area:	5000.1 sq. m
Nature:	Granted land
Term:	Fifty (50) years (from July 24, 2006 to July 23, 2056)
Land plot number:	T401-0102
Land Use Rights Certificate#:	Shen Fang Di Zi No. 4000301764

In the course of performing their undertakings contained in this Section 5.9, Seller and Guarantors shall regularly consult with Buyer, promptly notify Buyer of any significant developments and generally keep Buyer apprised of their process.

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5.10	Tax Matters
(a)	[Intentionally Omitted]
(b)	[Intentionally Omitted]
(c)	After the Closing Date, the Buyer shall be responsible for the preparation and filing of all Tax Returns pertaining to the Company and the Transferred Subsidiaries. For a period of up to fifteen (15) business days but, unless otherwise required by applicable law, not less than five (5) business days, Buyer shall permit the Seller to review and comment on any such Tax Returns prior to filing and shall consider in good faith any revisions as may be reasonably requested by Seller to the extent such revisions are relevant to pre-Closing Tax periods. To the extent requested by the Buyer, the Seller shall, and shall cause their respective Affiliates, if any, to, cooperate in the preparation of all Tax Returns to the extent that the Seller, or its Affiliates (as relevant), has Knowledge or information relevant thereto unavailable to the Buyer or its respective auditors or tax advisers and shall provide, or cause to be provided, to the Buyer any records or other information within the Seller’s possession or control requested by the Buyer in connection therewith as well as access to, and the cooperation of, the auditors and tax advisors , if any, of the Seller. The Seller and the Buyer shall give prompt notice to each other of any proposed adjustment to Taxes relating to any Tax Return that includes liabilities for Taxes attributable to any period on or prior to the Closing within the Knowledge of the Buyer, the Seller, their respective Affiliates (as relevant), or their respective auditors or tax advisers. Each Party shall cooperate with the other in connection with any Tax investigation, audit, or other proceeding to the extent that the Buyer, the Seller, their respective affiliates (as relevant) or their respective auditors or tax advisers has Knowledge or information relevant thereto unavailable to the other party or its respective auditors or tax advisers; provided, however, that on or before the Closing Date, the Seller shall not permit any Lien to be created or to continue upon any property or assets of the Company or any of the Transferred Subsidiaries except for Permitted Liens. A Party shall be reimbursed for reasonable out-of-pocket expenses incurred in taking any action requested by the other party or parties under this Section 5.10.
(d)	The Buyer and the Seller shall retain or cause to be retained all Tax Returns and all books and records within their respective possession attributable to Taxes of the Company or any of its Transferred Subsidiaries for any periods prior to the Closing Date until sixty (60) days after the expiration of the applicable statute of limitations for the Tax in question (and, to the extent notified by the Buyer or the Seller, any waiver or extension thereof) of the respective Tax Returns, and abide by all record retention agreements entered into with any Governmental Entity.
(e)	Without prejudice to the terms and conditions of sub-Section 1.2(a)(iii), any and all taxes (including, without limitation, Taxes, transfer taxes, income taxes, property taxes, value added taxes, deed taxes, stamp duties, business taxes, land appreciation taxes or the like), registration fees, documentation fees or any other charge, assessment or impost pursuant to any Legal Requirements in connection with the ownership, transfer or other disposition of the Excluded Properties whether incurred before or after the Closing Date shall be the responsibility of and shall be borne jointly and severally by the Seller and Guarantors and, to the extent not already reflected in an adjustment to the Equity Purchase Price pursuant to Article 1.4, may be deducted from the Escrow Amount described in Section 1.2(a)(2) (together with any taxes assessable on Transferred Subsidiaries, if the payment by the Seller is deemed to give rise to taxable income to the Transferred Subsidiaries) when incurred by the Transferred Subsidiaries, on presentation to the Escrow Agent of a certificate in form and according to other requirements specified in the escrow agreement appearing at Exhibit 1.2(a)(2), without need for following indemnity claims procedures pursuant to Article 6; provided that the Buyer shall provide documentation in Buyer’s possession to Seller regarding such Tax matter(s) as Seller may reasonably request.
(f)	[Intentionally Omitted]

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(g)

Each Guarantor understands, acknowledges and agrees that it is their individual responsibility, and each respective Guarantor hereby covenants, agrees and undertakes, as required by Law to report each such Guarantor’s taxable income and to pay timely all applicable income taxes to the relevant tax authority(s) related to or arising out of the transactions contemplated by this Agreement whether occurring on, prior to or after the Closing.

(h)

As follows, the Parties shall respectively assume responsibility for liability for VAT arising from pre-Closing transactions of the Transferred Subsidiaries (“Pre-Closing VAT”) and any penalties and fines imposed by the relevant Governmental Authorities arising from failure to report and pay such Pre-Closing VAT in a timely manner (“VAT Penalties”):

(i)	to the extent that both Pre-Closing VAT — assessable revenue and corresponding Pre-Closing VAT are duly accrued in the Closing Balance Sheet, Buyer shall assume responsibility for payment of the subject Pre-Closing VAT;
(ii)	to the extent that applicable VAT Penalties are duly accrued in the Closing Balance Sheet and correspond to Pre-Closing VAT – assessable revenue and corresponding Pre-Closing VAT that are also duly accrued in the Closing Balance Sheet, Buyer shall assume responsibility for payment of such VAT Penalties;
(iii)	to the extent that applicable VAT Penalties are not duly accrued in the Closing Balance Sheet and correspond to Pre-Closing VAT – assessable revenue and corresponding Pre-Closing VAT that are duly accrued in the Closing Balance Sheet, Seller and the Guarantors shall bear responsibility for the subject VAT Penalties.
(iv)	to the extent that Pre-Closing VAT — assessable revenue is duly accrued but the corresponding Pre-Closing VAT liability is not duly accrued on the Closing Balance Sheet, Seller and the Guarantors shall bear responsibility for the subject Pre-Closing VAT and any corresponding VAT Penalties; and
(v)	to the extent that neither Pre-Closing VAT – assessable revenue nor corresponding Pre-Closing VAT is duly accrued in the Closing Balance Sheet, Buyer shall assume responsibility for payment of the subject Pre-Closing VAT and Seller and Guarantors shall bear responsibility for any corresponding VAT Penalties.

With respect to this Section 5.10(h), for the avoidance of doubt, VAT Penalties, Pre-Closing VAT – assessable revenue and Pre-Closing VAT shall be deemed to be duly accrued on the Closing Balance Sheet only if the same are also included in the calculation that is final and binding on the Parties of Net Working Capital as of the Closing Date. Further, Seller shall in no event be responsible for any Pre-Closing VAT that is duly accrued on the Closing Balance Sheet but for which payment is not due until after the Closing. For the sake of clarity, all claims for Pre-Closing VAT and VAT Penalties shall be subject to the indemnity claims procedures of Article 6.

(i)	In the case of any Taxes subject to a Straddle Period Tax Return, the portion of Taxes attributable to the Company or any Transferred Subsidiaries for any period prior to the Closing will be computed by using a closing of the books method as if such taxable period ended on the Closing Date. A “Straddle Period Tax Return” is a Tax Return pertaining to a period of time beginning prior to the Closing Date and ending after the Closing Date.
5.11	Notice to Buyer of Certain Circumstances.
	The Seller and Guarantors shall promptly notify the Buyer, if the Seller or any Guarantor obtains Knowledge as to the matters set forth in clauses (i), (ii) and (iii) below, the occurrence, or failure to occur, of any event, which occurrence or failure to occur would be likely to cause

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	(i) any representation or warranty contained in this Agreement to be untrue or inaccurate in any material respect at any time from the date hereof to the Closing, (ii) any material failure of the Seller, the Guarantors, the Company, or of either of the Transferred Subsidiaries, or any officer, director, employee or agent thereof, to comply with or satisfy any covenant, condition or agreement to be completed with or satisfied by it under this Agreement, or (iii) the institution of any claim, suit, action or proceeding arising out of or related to the transactions contemplated hereby; provided, however, that no such notification shall affect the representations or warranties or the conditions or obligations hereunder.
5.12	Reasonable Efforts.
	The Parties will, and hereby undertake to, use all commercially reasonable efforts to take such steps as are necessary or appropriate to satisfy the conditions to Closing set forth in Section 2.2 and Section 2.3 and to otherwise effect the transactions contemplated in this Agreement in a timely manner.
5.13	Further Assurances
	In order to more fully assure each other of the benefits contemplated under this Agreement, the Seller, each of the Guarantors, the Buyer and ADC agree to execute and provide to the other Party, both before and after the Closing, such instruments, confirmations of fact, records, certificates, and other documents and things as may be reasonably requested by the other Party to carry out the purposes of this Agreement.
5.14	Release of Bonded Equipment
	The Seller shall procure that the Transferred Subsidiaries will duly and legally obtain and provide to the Buyer documentation from the relevant China Customs (and any other relevant authorities) reasonably satisfactory to the Buyer evidencing that the Transferred Subsidiaries have paid all necessary import duties, VAT and any other Taxes in relation to the two punching machines (model # Finn-Power X5-25) and such machines are no longer bonded equipment under the supervision of the relevant China Customs (and/or in relation to any approval from any Governmental Entity for VAT exemption on the transfer of such used fixed assets).
5.15	Environmental Approvals and Permits
	The Seller shall:
	(a) procure that the Transferred Subsidiaries obtain the following approvals and certificates or achieve the following steps in accordance with applicable PRC Law for the Transferred Subsidiaries in form and substance reasonably satisfactory to the Buyer:
	(1) entering into an industrial waste disposal contract signed by CM Machinery with a licensed industrial waste disposal institute covering all the hazardous waste generated by CM Machinery;
	(2) the environmental protection check and acceptance approval for CM Machinery; and
	(3) a Pollutant Discharge Permit for CM Machinery during its formal operation term.
(b)	by lawful and legitimate means exercise best commercial efforts to ensure that no action is taken by any Government Entity, and neither CM Equipment nor its business is in any way adversely affected in any way by the failure of CM Equipment to obtain the approvals and/or permits specified in sub-part (a)(2) and (a)(3) above.

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ARTICLE 6 INDEMNIFICATION

6.1	Survival of Representations and Warranties.
	The representations and warranties of the Parties contained herein will each survive the Closing for a period of two (2) years, except that the representations and warranties contained in Sections 3.1 (Authorization and Good Standing; Organization), 3.5 (Capitalization; Ownership), 3.7 (Business Scope), 3.13 (Property Title) and 3.28 (Tax) as well as the ability of the Parties to assert claims based on actual or constructive fraud or intentional misrepresentation (“Fraud Claims”) will each survive the Closing for any applicable statute of limitation. The ability of the Buyer Indemnitees to assert claims based on any Enumerated Claim shall also survive the Closing for any applicable statute of limitation. The expiration of the survival periods of the representations and warranties, Fraud Claims and Enumerated Claims provided herein will not affect the rights of a Party in respect of any claim made by such Party in a writing sent to the other Party before such expiration of the applicable survival period.
6.2	Indemnity.
(a)	The Seller and the Guarantors shall, jointly and severally, indemnify, defend and hold the Buyer and its Affiliates, the Company, the Transferred Subsidiaries, and each of their respective officers, directors, shareholders and employees (collectively, “Buyer Indemnitees”) harmless from and against any and all liabilities, damages, losses, costs, penalties, fines and reasonable expenses (including reasonable attorneys’ fees and expenses and costs to investigate) (each, a “Damage” and collectively, “Damages”) arising out of or resulting from:
	(i) any breach of any representation or warranty (facts alleged by a third party that, if true, would constitute a breach), agreement or covenant made by the Seller or any Guarantor in this Agreement or any statement, document, exhibit or certification furnished by the Seller or any Guarantor pursuant to the terms of this Agreement, or the nonperformance of any covenant or obligation to be performed by the Seller (or which the Seller was to cause to be performed) or any Guarantor pursuant to this Agreement;
	(ii) any liability relating to or arising out of any claims against the Company, any Transferred Subsidiary or the Seller by any Person having owned any equity interest in either (i) any of the Subsidiaries or (ii) the Company prior to the Closing;
	(iii) other than Retained Seller Claims (as defined in Section 2.2(l)), any claims made by third parties on the basis that they are assignees, successors, heirs or beneficiaries of actual and potential debts, loans and claims against the Company or any Transferred Subsidiary by the Seller or any of the Guarantors incurred on or before the Closing, together with all PRC Taxes paid or payable by either the Company or either of the Transferred Subsidiaries arising from the waiver or release of such debts;
	(iv) any failure by the Seller or any Guarantor to fulfill any of such Party’s obligations, undertakings or commitments under this Agreement, which failure causes the Buyer to incur any Damages;
	(v) any actions, suits, proceedings, demands, judgments, costs, legal fees and other reasonable expenses incident or related to any of the foregoing;
	(vi) any Enumerated Claims; and
	(vii) any Loan Guarantee Claim, subject to the provisions of Section 6.6(e).
(b)	The Buyer and ADC shall, jointly and severally, indemnify, defend and hold harmless the Seller and the Guarantors and each of their respective officers, directors, shareholders and employees from and against any and all Damages arising out of or resulting from:
	(i) any untruth, inaccuracy or breach of any representation or warranty (facts alleged by a third party that, if true, would constitute a breach), agreement or covenant made in this Agreement by Buyer or in any statement, document, exhibit or certification furnished by the

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Buyer pursuant hereto, or the nonperformance of any covenant or obligation to be performed by Buyer (or which Buyer was to cause to be performed) pursuant to this Agreement (determined for purposes of this Article 6 without regard to any qualifications as to materiality);

(ii) any failure by the Buyer to fulfill any of its obligations, undertakings or commitments under this Agreement, which failure causes the Seller to incur any Damages;

(iii) any actions, suits, proceedings, demands, judgments, costs, legal fees and other expenses incident to any of the foregoing; and

(iv) subject to the Section 1.2(a)(iii) (relating to the Excluded Properties) and the obligations of Seller and the Guarantors under Section 5.10(h), Taxes of the Company and the Transferred Subsidiaries arising from transactions and business conducted during all taxable periods beginning after the Closing Date and the portion beginning after the Closing Date for any Straddle Period Tax Return, Buyer’s portion of Transfer Taxes, if any, as provided in Section 5.8, and Pre-Closing VAT and VAT Penalties which are the responsibility of Buyer pursuant to Section 5.10(h).

6.3	Procedures.
(a)	If the Seller or the Guarantors, or the Buyer or ADC shall have incurred any Damages for which such Party wishes to seek indemnity under this Article 6 (the “Indemnified Party”), then such Indemnified Party will notify the other Party in writing (the “Indemnifying Party”), within sixty (60) days from the date either such Party (or in the case of a Party which is an entity, a responsible officer) has Knowledge of the subject Damage, specifying in reasonable detail the nature of such Damages and the amount or the estimated amount thereof to the extent then known (which estimate will not be conclusive of the final amount of such Damages) (the “Claim Notice”); provided, however, that any delay or failure to notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may have to the Indemnified Party under this Article 6 unless, and only to the extent that, such delay or failure to notify prejudices the Indemnifying Party hereunder or increases its indemnity obligations hereunder.
(b)	If the Indemnified Party has a claim against the Indemnifying Party directly that does not involve a claim by a third party asserted against or sought to be collected from the Indemnified Party, the Indemnified Party shall give the Indemnifying Party reasonable access during normal business hours to the books, records and assets of the Indemnified Party which evidence or support such claim or the act, omission or occurrence giving rise to such claim. If the Indemnifying Party does not notify in writing the Indemnified Party within sixty (60) days from the date on which the Claim Notice is duly given (the “Notice Period”) disputing such claim, then the Indemnifying Party will be liable for the amount of any Damages that may arise therefrom or be related thereto. If the Indemnifying Party notifies in writing the Indemnified Party within the Notice Period, the Indemnifying Party and the Indemnified Party shall proceed to negotiate a resolution of such dispute and, if not resolved through negotiations, such dispute shall be resolved according to Section 8.2.
(c)	If the Indemnified Party has a claim against the Indemnifying Party that involves a claim or demand being asserted against or sought to be collected from the Indemnified Party by a third party that if prosecuted successfully would be a matter for which such Indemnified Party is entitled to indemnification under this Article 6, then the claims for indemnification by the Indemnified Party will be asserted and resolved as follows:

(i) The Indemnified Party will send a Claim Notice with respect to such claim to the Indemnifying Party as promptly as practicable following the receipt by the Indemnified Party of such claim or demand; provided, however, that the failure to notify the Indemnifying Party will not relieve the Indemnifying Party from any liability it may have to the Indemnified Party under this Article 6 unless, and only to the extent that, such failure to notify prejudices the Indemnifying Party hereunder or increases its indemnity obligations.

(ii) The Indemnifying Party will notify the Indemnified Party within the Notice Period (A) whether or not the Indemnifying Party disputes its liability to the Indemnified Party hereunder

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with respect to such claim or demand and (B) whether or not the Indemnifying Party desires, at its sole cost and expense, to defend the Indemnified Party against such claim or demand. If the Indemnifying Party does not notify the Indemnified Party in writing within the Notice Period that the Indemnifying Party disputes its liability to the Indemnified Party, then the Indemnified Party may undertake the defense, compromise and settlement of such claim or demand in any manner which the Indemnified Party deems is reasonable with counsel of its own choosing. Unless the Indemnifying Party has failed to fulfill its obligations under this Article 6, no admission of liability or settlement by the Indemnified Party of a third party claim or demand will be made without the prior written consent of the Indemnifying Party, which consent will not be unreasonably withheld, conditioned or delayed.

(iii) If the Indemnifying Party notifies the Indemnified Party within the Notice Period that the Indemnifying Party desires to defend the Indemnified Party against such claim or demand, then, except as provided below, the Indemnifying Party shall have the right to defend (at its sole cost and expense) the Indemnified Party by appropriate proceedings and utilizing legal counsel reasonably acceptable to the Indemnified Party, will use commercially reasonable efforts to settle or prosecute such proceedings to a final conclusion in such a manner as to avoid any risk of the Indemnified Party becoming subject to any injunctive or other equitable order for relief or to liability for any other matter, and will control the conduct of such defense; provided, however, that the Indemnifying Party will not be entitled to assume the defense of any such proceeding unless the Indemnifying Party has accepted and assumed in writing the Indemnifying Party’s obligation to indemnify the Indemnified Party with respect to Damages arising from or relating to such proceeding, and that the Indemnifying Party will not, without the prior written consent of the Indemnified Party (which consent will not be unreasonably withheld, conditioned or delayed), consent to the entry of any judgment against the Indemnified Party or enter into any settlement or compromise that does not include, as an unconditional term thereof, the giving by the claimant or plaintiff to the Indemnified Party of a release (in form and substance reasonably satisfactory to the Indemnifying Party) from all liability in respect of such claim or litigation. Furthermore, the Indemnifying Party will not be entitled to assume the defense of any proceeding if the claim seeks any relief other than money damages, including any type of injunctive or other equitable relief. If the Indemnifying Party assumes the defense, the Indemnifying Party shall not be liable to the Indemnified Party for any legal or other expenses subsequently incurred by the Indemnified Party in connection with the defense thereof provided that if the defendants in any such claim or demand include both the Indemnifying Party and the Indemnified Party, and the Indemnified Party will have reasonably concluded that there may be legal defenses or rights available to the Indemnified Party that are different from, in actual or potential conflict with, or additional to those available to the Indemnifying Party, then the Indemnified Party will have the right to select one law firm to act at the Indemnifying Party’s expense as separate counsel on behalf of the Indemnified Party. In addition, if the Indemnified Party desires to participate in, but not control, any defense or settlement, it may do so at its sole cost and expense, including, but not limited to, by having one or more of its representatives present at any and all meetings and participating in any and all communications (whether oral or written) with any Governmental Entity or other third party in relation to any such claim or demand. Prior to undertaking the defense of any claim or demand, the Indemnifying Party’s selection of legal counsel and/or tax advisors assisting it with the defense of any such claim or demand shall first be approved by the Indemnified Party, which approval shall not be unreasonably withheld, conditioned or delayed.

(iv) Before the Indemnifying Party settles any claim or demand the defense of which it has assumed control, the Indemnifying Party will obtain the Indemnified Party’s approval, confirmed in writing in accordance with the notice provisions hereof, which approval will not be unreasonably withheld or delayed.

6.4	Determination of Damages
	Indemnification payments under this Section 6 shall be paid by the Indemnifying Party without reduction for any Tax Benefits available to the Indemnified Party. However, to the extent that the Indemnified Party recognizes Tax Benefits as a result of any Damages, the Indemnified

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	Party shall pay the amount of such Tax Benefits to the Indemnifying Party as such Tax Benefits are actually recognized by the Indemnified Party; provided, however, that no payment shall be made for any Tax Benefits not so recognized by December 31, 2010. For this purpose, the Indemnified Party shall be deemed to recognize a tax benefit (“Tax Benefit”) with respect to a taxable year if, and to the extent that, the Indemnified Party’s cumulative current liability for Taxes through the end of such taxable year, calculated by taking into account any Tax items attributable to the Damages for all taxable years, is less than  the Indemnified Party’s actual cumulative current liability for Taxes through the end of such taxable year, calculated by not taking into account any Tax items attributable to the Damages for all taxable years.
6.5	Remedies
	The indemnification provided in this Section 6 shall be the sole and exclusive post-Closing remedy available to any Party for Damages arising from misrepresentations (other than Fraud Claims) or breaches of representations and warranties contained in this Agreement. Each Party hereto shall take all reasonable steps pursuant to applicable Law to mitigate its claims for Damages under this Section 6 after becoming aware of any event which could reasonably be expected to give rise to any Damages. None of the Parties hereto shall be liable under this Section 6 for any consequential or punitive damages (other than consequential or punitive damages payable to a third party).
6.6	Conditions and Limitations
	Notwithstanding any other provisions in this Section 6, the recovery by the Buyer from the Indemnifying Party for any Damages under this Section 6 shall be subject to the following conditions and limitations:
(a)	With respect to claims under this Section 6 for misrepresentations or breaches of representations and warranties, the Indemnified Party shall not be entitled to recover from the Indemnifying Parties unless and until the total amount of all Damages indemnifiable hereunder exceeds One Hundred Thousand United States Dollars (US$100,000), provided that when such amount is exceeded, the Indemnifying Parties shall be liable for all amount including the first US$100,000. Notwithstanding the preceding sentence, the Enumerated Claims shall not be subject to the conditions and limitations set forth in this Section 6.6(a).
(b)	The Indemnifying Parties’ total liability for any Damages under this Section 6 for misrepresentations or breaches of representations and warranties and for Enumerated Claims shall not exceed Seven Million United States Dollars (US$7,000,000), provided however, there shall be no limitation on the amount of recovery for Damages arising from or in connection with

     (i) misrepresentations or breaches, in whole or in part, of any the following representations and warranties:

                         3.1 (Authorization and Good Standing)

                         3.5 (Capitalization; Ownership)

                         3.7 (Business Scope)

                         3.13 (Property Title); or

     (ii) Disposition Claims.

(c)

The Indemnifying Party shall not be liable for any Damages unless a Claim Notice has been sent by the Indemnified Party prior to the expiration of the applicable survival period relevant to such claim set forth in Section 6.1; provided however, each applicable survival period shall, subject to the relevant statutes of limitation under applicable Law, be deemed extended in the event the sixty (60) day period specified in Section 6.3(a) began to run prior to the expiration of the applicable survival period.

(d)

The Indemnifying Party shall not be liable for any Damages under this Section 6 or for Enumerated Claims to the extent such Damages (i) represent liabilities that have been accrued

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	and included in the calculation that is final and binding on the Parties of Net Working Capital as of the Closing Date, (ii) arise solely out of changes after the Closing in Legal Requirements or interpretations or applications thereof (it being agreed that any changes in the prevalence of enforcement of a Legal Requirement shall not be deemed to be a change in the application of a Legal Requirement); or (iii) are duplicative of Damages that have previously been recovered hereunder.
(e)	In the event the Company or any of the Transferred Subsidiaries incurs any liability whatsoever in connection with that certain Guarantee Contract dated March 7, 2007 entered into by and between CM Equipment and Shenzhen Development Bank, Shenzhen Jiangsu Tower Sub-branch, whereby CM Equipment has provided a guarantee by way of assuming joint and several liability for a loan of RMB3 Million made by Shenzhen Development Bank, Shenzhen Jiangsu Tower Sub-branch, to CM Wireless (a “Loan Guarantee Claim”), the Seller and Guarantors shall jointly and severally indemnify, defend and hold harmless Buyer, ADC and the Transferred Subsidiaries therefrom according to the terms and conditions of this Section 6, provided, however, notwithstanding any other provision of this Agreement, the amount of Damages in respect of Loan Guaranty Claims shall not:
	(i) be subject to the conditions and limitations set forth in Section 6.6(a) hereof;
	(ii) be subject to the total liability limit of US$7,000,000 set forth in Section 6.6(b) hereof; and
	(iii) be considered when determining whether or not the total liability limit of US$7,000,000 set forth in Section 6.6(b) is available to pay Damages in respect of claims subject to such limit.
6.7	Consultation With Seller and Guarantors
	If following the Closing the Buyer in its good faith judgment believes it is appropriate to approach, or to cause the Company or any Transferred Subsidiary to approach, any relevant Government Authority to disclose or consult on matters which may become the subject of a Claim hereunder, then the Buyer shall provide Seller with at least ten (10) business days’ prior written notice, unless otherwise required by applicable law, of its intention to do so, and if requested in writing by Seller, shall consult with Seller during such notice period regarding Buyer’s intention to make such an approach.. Following such consultation period the Buyer may in its discretion then approach such Governmental Authority and shall provide Seller with prompt notice should Buyer make such an approach. This Section 6.7 shall not otherwise prejudice the rights of the parties under this Article 6.
ARTICLE 7 TERMINATION
7.1	Grounds for Termination.
	This Agreement and the transactions contemplated hereby may be terminated at any time before the Closing:
(a)	by mutual written agreement of the Buyer and the Seller;
(b)	by the Seller, if the Buyer has breached any representation, warranty, covenant, or agreement contained in this Agreement in any material respect, which breach (i) would give rise to the failure of a condition set forth in Section 2.3, (ii) has not been cured within thirty (30) days of the receipt by the Buyer of a written notice from the Seller setting out details of the breach and requiring it to be remedied and (iii) has not been waived by the Seller;

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(c) by the Buyer, if the Seller has breached any representation, warranty, covenant, or agreement contained in this Agreement in any material respect, which breach (i) would give rise to the failure of a condition set forth in Section 2.2, (ii) has not been cured within thirty (30) days of the receipt by the Seller of a written notice from the Buyer setting out details of the breach and requiring it to be remedied and (iii) has not been waived by the Buyer;

(d) by the Seller if the Closing Date shall not have occurred on or before sixty (60) days following the Effective Date hereof for any reason other than the failure of the Seller to perform its obligations hereunder in any material respect or the breach by the Seller of its representations or warranties contained in this Agreement in any material respect;

(e) by the Buyer if the Closing Date shall not have occurred on or before sixty (60) days following the Effective Date hereof for any reason other than the failure of the Buyer to perform its obligations hereunder in any material respect or a breach by the Buyer of its representations or warranties contained in this Agreement in any material respect;

(f) by the Buyer if, after the date hereof, there shall have been a Material Adverse Effect or if, after the date hereof, an event shall have occurred which, so far as reasonably can be foreseen, would result in a Material Adverse Effect; except to the extent that the Seller, the Company and the Transferred Subsidiaries are capable of taking action to cure the Material Adverse Effect of such change or such event and the Seller, the Company and the Transferred Subsidiaries have taken such action (to the reasonable satisfaction of the Buyer) within thirty (30) days following the earlier to occur of the Company’s discovery of such change or event and receipt by the Company of a written notice from the Buyer that such a change or such an event has occurred.

7.2 Procedure and Effect of Termination.

(a) Upon termination of this Agreement under Section 7.1, written notice thereof shall forthwith be given to the other Party or Parties, and this Agreement (other than the provisions of Section 5.3 and Articles 8 and 9, which shall survive termination hereof) shall terminate without further action by any of the Parties.

(b) If this Agreement is terminated as provided herein, no Party shall have any liability or further obligation to any other Party to this Agreement, except with respect to Section 5.3 and Articles 8 and 9 and except to the extent the termination is the result of a willful breach by the Party of a representation, warranty, or covenant contained in this Agreement, in which case the non-breaching Party may pursue any legal or equitable remedies to which it may be entitled.

ARTICLE 8 GOVERNING LAW AND DISPUTE RESOLUTION

8.1	Governing Law.
	This Agreement shall be governed by and interpreted according to the Laws of Hong Kong, without regard to its rules regarding conflict of Laws.
8.2	Dispute Resolution.

(a) All disputes, controversies or differences arising out of or related to this Agreement that are not settled by mutual agreement through friendly consultations within sixty (60) days from the date that written notice shall have been delivered by any Party to the Agreement identifying such dispute shall be exclusively and finally settled by arbitration. Said arbitration shall be conducted in the Hong Kong Special Administrative Region of the PRC (“Hong Kong”) under the auspices of the Hong Kong International Arbitration Centre (“HKIAC”) under the UNCITRAL Arbitration Rules in force at the date of this Agreement in accordance with the HKIAC Procedures for the Administration of International Arbitration, except as such rules may be modified by this Section 8.2.

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(b) The arbitration shall be conducted by a tribunal of three arbitrators, none of whom may be a national of the country of incorporation or citizenship of any Party hereto, appointed in accordance with the following procedures. Each Party hereto shall choose one (1) arbitrator each within thirty (30) days of being served with a notice of commencement of arbitral proceedings (“Arbitration Notice”), and such arbitrators shall agree upon a third arbitrator within sixty (60) days after being served with an Arbitration Notice. If the two initial arbitrators fail to come to an agreement in respect of the nomination of the third arbitrator within such time frame, the third arbitrator shall, at the request of either party, be nominated by the Secretary General of the HKIAC in accordance with the HKIAC’s procedures for arbitration in force on the date hereof. The arbitral proceedings shall be conducted in the English language and shall be kept strictly confidential. While the arbitral proceedings are pending, neither party nor their attorneys and representatives shall engage in any ex-parte communications with the arbitrators.

(c) The arbitrators are authorized to reach a ruling and make an award which may be for money damages and/or may enjoin or proscribe specific actions by the Parties, provide such award shall be consistent with the provisions of this Agreement. The decision of the arbitration tribunal shall be rendered by majority vote of the arbitrators and shall be final and binding upon the parties and may be enforced in any court of competent jurisdiction, and no party shall seek redress against the other in any court or tribunal, except solely for the purpose of obtaining execution of the arbitral award or of obtaining a judgment consistent with the award. The arbitrators shall be guided by the terms and conditions of this Agreement which shall be binding upon them. Each party shall bear its own costs (including the cost of its party-appointed arbitrator, and one half of the third arbitrators fees and expenses) and expenses of the arbitration, including attorneys’ fees and expert witness fees, if any, but subject to the following sub-section (d) in the event of injunctions or other equitable relief; provided that, the losing Party in any arbitration shall be responsible for paying the HKIAC arbitration filing fees, costs and expenses.

(d) The Parties recognize and agree that in the event of breaches or threatened breaches of certain Section 5.3 (Confidentiality), Section 5.4 (Non-Interference) and Section 5.5 (Covenant Not to Compete), the non-breaching Party will be harmed, or is likely to be harmed, to such an extent that monetary damages alone would be an inadequate remedy. In the event of such breaches or threatened breaches the non-breaching Party, in addition to permanent injunctive relief, is entitled to a preliminary injunction or other appropriate interim equitable relief restraining such breach, without showing or proving any actual damage, or posting security, together with recovery of reasonable attorney’s fees and other costs incurred in obtaining said equitable relief, until such time as a final and binding determination is made by the arbitrators. When issuing an award for equitable relief hereunder, the arbitrators shall articulate their findings which form a basis for the award in writing in sufficient detail to support granting of equitable relief by any court in which the prevailing Party seeks to enter and enforce such award. The foregoing equitable remedies are in addition to, and not in lieu of, all other remedies or rights that Parties might otherwise have by virtue of any breach of this Agreement by any other Party.

ARTICLE 9 MISCELLANEOUS

9.1	Notices.
	All notices and other communications provided for or permitted hereunder shall be made in writing by hand-delivery, internationally recognized courier by air service or facsimile transmission:
	If to the Buyer:
	If to the Seller:

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	with copies to:
	All such notices and communications shall be deemed to have been duly given: When delivered by hand, if personally delivered; if delivered by courier, three (3) Business Days after being dispatched; and, if sent by facsimile transmission, when receipt confirmed. Any of the above address may be changed by notice given in accordance with this Section 9.1.
9.2	Amendment and Waivers.
	This Agreement may be amended, waived or modified only with the prior, written consent of each of the Parties hereto.
9.3	Severability.
	Any provision of this Agreement which may be deemed invalid, illegal or unenforceable in any jurisdiction as a result of any final and binding dispute resolution proceeding provided for herein shall, or otherwise declared by a court of competent jurisdiction to be invalid, illegal or unenforceable, as to that jurisdiction, be ineffective only to the extent of such invalidity, illegality or unenforceability, without affecting in any way the remaining provisions hereof in such jurisdiction or rendering that or any other provision of this Agreement invalid, illegal or unenforceable in any other jurisdiction; provided however, that no such ineffectiveness shall be recognized hereunder if it would effect a material change in the construction or interpretation of this Agreement to the detriment of any Party.
9.4	Entire Agreement.
	This Agreement together with all Schedules, Exhibits and other agreements attached hereto or referred herein contain the entire understanding of the Parties with respect to the subject matter hereof. There are no terms, conditions, restrictions, agreements, promises, warranties, covenants or undertakings other than those expressly set forth in such documents with respect to the subject matter of this Agreement. This Agreement together with all Schedules, Exhibits and other agreements attached hereto or referred herein supersedes all prior agreements and understandings, both written and oral, among the Parties with respect to the subject matter hereof.
9.5	Waiver.
	To the extent permitted by the applicable Law, failure or delay on the part of any Party hereto to exercise a right, power or privilege under this Agreement and the appendices hereto shall not operate as a waiver thereof; nor shall any single or partial exercise of a right, power or privilege preclude any other future exercise thereof.
9.6	Governing Language.
	This Agreement shall be executed in English and Chinese language versions, each of which shall have equal validity. However, in the event of any inconsistency between the two, the English language version shall govern and control (except that if there is any inconsistency between the English language version and the Chinese language version of the Disclosure Schedule the Chinese language version shall prevail).
9.7	Counterparts.
	This Agreement will be executed in four (4) originals in both Chinese and English. Each Party shall be provided two (2) fully executed originals hereof, respectively.
9.8	Additional Definitions and Rules of Interpretation.

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	As used in this Agreement:
(a)	“Affiliates” means with respect to any Parties of this Agreement, any other person or entity that, directly or indirectly through one or more intermediaries, controls or is controlled by, or is under common control with, such Party. “[c]ontrol” (including the term “controlled by” and “under common control with”) with respect to the relationship between or among two or more Persons, means the possession, directly or indirectly, of the power to direct or cause the direction of the affairs or management of a Person, whether through the ownership of voting securities, by contract or otherwise, including the ownership, directly or indirectly, of securities having the power to elect a majority of the board of directors or similar body governing the affairs of such Person.
(b)	“Business Day” means any day other than a Saturday, Sunday or a day on which banks are required or authorized by Law to be closed in Shenzhen, China, Hong Kong, or the State of New York, USA.
(c)	“include,” “includes” and “including” each mean “including without limitation”.
(d)	“Order” means any award, decision, injunction, judgment, order, decree, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Entity or by any arbitrator, either in connection with a specific proceeding or action and/or binding on one or more specific parties, or of general application.
(e)	“Person” means an individual, a partnership, a limited liability company, a joint venture, a corporation, a trust or other legal entity, an unincorporated organization or a government or any department or agency thereof.
(f)	“Registered Capital” means the term as defined under PRC Laws, which generally refer to equity capitalization of a company.
(g)	All references to Legal Requirements are deemed to refer to such Legal Requirements as amended from time to time or as superseded by comparable Legal Requirements.
(h)	References herein to Articles, Sections, Schedules and Exhibits are to articles, sections, schedules and exhibits in and to this Agreement unless the context requires otherwise, and the Schedules and Exhibits to this Agreement shall be deemed to form part of this Agreement.
(i)	References to statutory provisions shall be construed as references to those provisions as amended to re-enacted or as their applications modified by other provisions (whether before or after the date hereof) from time to time and shall include any provisions of which they are re-enactments (whether with or without modification).
(j)	The expressions “the Seller” and “the Buyer” shall, where the context permits, include their respective successors, personal representatives and permitted assigns.
(k)	The headings are inserted for convenience only and shall not affect the construction of this Agreement.
(l)	Unless the context requires otherwise, words importing the singular include the plural and vice versa and words importing a gender include every gender.
(m)	“Enumerated Claims” means:

(i) with respect to Taxes of the Company and/or the Transferred Subsidiaries:

(a) Taxes for all taxable periods ending on or before the Closing date and the portion through the end of the Closing Date for any Straddle Period Tax Return, except to the extent (i) such Taxes are accrued as a Tax liability and reflected in the calculation that is final and binding on the Parties of Net Working Capital as of the Closing Date (which for avoidance of doubt is subject to the Accountant’s Adjustment Determination, if any), or (ii) result from any act, transaction, omission or election of Buyer or transferees thereof made or occurring after the Closing Date other than (A) the filing of any Tax Return in a manner consistent with past practice or consistent with applicable

49

law, (B) any reasonable settlement of a Tax audit or proceeding, (C) any actions required by applicable law or contemplated by this Agreement (including but not limited to actions undertaken in connection with Section 6.7 hereof), or (D) actions made in the ordinary course of business;

(b) the Seller’s portion of Transfer Taxes, if any, as provided in Section 5.8; and

(c) Pre-Closing VAT and VAT Penalties which are the responsibility of Seller and the Guarantors pursuant to Section 5.10(h);

(ii) costs of remediation, compliance, fines, penalties or costs of procurement of alternate supply or services in the event of shut down or suspension of operations imposed by Order of a competent Government Authority arising from (A) failure to perform covenants set forth in Section 5.15 (a) relating to environmental permits and approvals, and (B) failure of CM Equipment to obtain the approvals and/or permits referenced in Section 5.15(a) regardless of performance or non-performance of the covenants contained in Section 5.15(b);

(iii) costs of remediation, compliance, fines, penalties or costs of procurement of alternate supply or services in the event of seizure imposed by Order of a competent Government Authority arising from failure to perform covenants set forth in Section 5.14, relating to release of customs supervision and payment of customs duties and VAT on certain equipment; and

(iv) costs of remediation, compliance, fines or penalties arising in connection with failure to comply with Legal Requirements or Orders in respect of employees before the Closing in any of the following categories:

(A) mandatory social welfare contributions for the benefit of employees;

(B) contributions to the common housing fund;

(C) worker health and safety;

(D) overtime pay, maximum work hours and vacations; and

(E) labor union fees.

(v) all costs and expenses, including without limitation, costs of remediation, compliance, fines, penalties, increase in costs of procurement of alternate supply of products during any periods of disrupted operations, increased storage costs for inventory or supplies as well as costs associated with having to complete a move to a new location(s), increased logistics costs, costs of acquisition of alternate comparable leased premises and costs of any increase in rent over current rent, arising due to or flowing from (a) the fact that the buildings in which the Transferred Subsidiaries’ operations are located, and the dormitories in which its employees are housed, have been constructed on land in respect of which “granted” land use rights (as such term is understood under applicable Law) have not been obtained, or (ii) the failure to obtain any inspection, fire, health, safety, planning, acceptance, completion permits or license required to be obtained by owner or lessor of leased industrial premises pursuant to applicable Legal Requirements; provided however, that Buyer shall only be entitled to assert Enumerated Claims falling within the scope of this sub-part 9.8(m)(v) in respect of events occurring within two (2) years following the Closing Date.

(vi) any Claims based on, or arising or derived from any assertion of an ESOP Beneficiary or its successors or assigns of a right to receive any portion of the consideration to be paid for the Shares hereunder, or of any other right or interest, direct or indirect, legal or beneficial, in the Company or the Transferred Subsidiaries.

(n) “RMB” means Renminbi, the lawful currency of the People’s Republic of China (for purposes of this Agreement, excluding Hong Kong, Taiwan and Macao).

(o) “Law” or “Laws” means laws, legislation, administrative regulations, formal judicial interpretations of the Supreme People’s Court of the PRC and government decrees and circulars

50

	with force of law that have been formally promulgated or published and are of general application within the geographical scope of their jurisdiction.
(p)	“ESOP Beneficiaries” means those current or former employees of any of the Subsidiaries or the Company holding or claiming a beneficial interest of any kind in any of the Shares, to the extent their shareholdings in the Company are not reflected in Schedule 1, including without limitation those individuals listed in Schedule 9.8(p) who have a beneficial interest in the Shares held by Mr. LIU, Zhi, a Guarantor hereunder.
(q)	References to a statute or statutes of limitation hereunder shall be construed as meaning such statute or statutes as they may be tolled pursuant to applicable law.
9.9	Assignment
	This Agreement shall not be assignable, in whole or in part, by either Party without the written consent of the other Party, except that the Buyer may, without the consent of the Seller, assign or delegate all or any portion of its rights and obligations under this Agreement to any Affiliate 100% owned by the Buyer, or directly or indirectly, 100% owned by ADC. Any such party to which any right or obligation has been assigned or delegated shall be deemed to be the “Buyer” for purposes of such rights or obligations of this Agreement; provided however, any subsequent assignment prior to Closing may only be made to a party that is 100% owned, directly or indirectly, by ADC. Any attempted assignment or delegation in contravention hereof shall be null and void.
9.10	Guarantee
(a)	Without prejudice to any of the liabilities, obligations, representations, warranties and covenants made, given or undertaken primarily by each of the Guarantors as a party to this Agreement, each Guarantor further joins in this Agreement for the purpose of guaranteeing and does hereby irrevocably, absolutely and unconditionally guarantee the timely payment and performance of all of Seller’s liabilities, obligations and covenants under and for breach by Seller of the provisions of this Agreement and all of the documents and certificates to be delivered by Seller to Buyer pursuant to this Agreement. In that regard, each Guarantor hereby waives notice of default and all other notices, demand, presentment, notice of dishonor, any defense of impairment of recourse or impairment of collateral, any defense arising out of any compromise release settlement or discharge of the guaranteed obligations, the Seller, or any other guarantor or surety, and any and all other defenses to the obligations of each Guarantor hereunder. Each Guarantor understands and agrees that the Buyer may look first to each Guarantor for the payment or the performance of the liabilities, obligations and covenants under this Agreement, without first looking to and pursuing its remedies against Seller, this being a guarantee of payment and performance and not merely of collection. The validity of this guarantee shall not be impaired by any event whatsoever, including, but not limited to, the merger, consolidation, dissolution, cessation of business or liquidation of Seller, if Seller is a business entity; the financial decline or bankruptcy of Seller; Buyer’s compromise or settlement with or without release of any other party liable for such payment and performance; Buyer’s failure to file suit against Seller (regardless of whether Seller is becoming insolvent, is believed to be about to leave the state or any other circumstance); Buyer’s failure to give any Guarantor notice of default by Seller; the unenforceability of the guaranteed obligations against Seller due to bankruptcy discharge, or the application of any insolvency, moratorium or receivership Law; the extension, modification or amendment of this Agreement; Buyer’s failure to exercise diligence in collection; or the termination of any relationship of any Guarantor with Seller or Seller’s change of name or use of any name other than the name used to identify Seller. Each Guarantor agrees to pay all costs of collection, including, without limitation, arbitration costs and reasonable attorney’s fees that Seller may incur in enforcing the terms of this guarantee against Guarantor.
(b)	Without prejudice to any of the liabilities, obligations, representations, warranties and covenants made, given or undertaken primarily by ADC as a party to this Agreement, ADC

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hereby assumes the obligations of a guarantor in respect of the obligations of Buyer hereunder, as though ADC were the sole Guarantor for purposes of Section 9.10(a) hereof, and Buyer were the Seller for purposes of Section 9.10(a) hereof.

(c) The Parties hereby affirm that Guarantors’ agreement to provide the guarantee set forth in this Section 9.10 was a material inducement for the Buyer agreeing to enter into this Agreement, and upon such basis and at the request of the Guarantors, the Buyer has executed this Agreement.

[THIS SPACE INTENTIONALLY LEFT BLANK; SIGNATURE PAGE FOLLOWS]

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IN WITNESS whereof the Parties have set their hands hereto as of the 12^th day of November 2007.

Buyer: ADC TELECOMMUNICATIONS (CHINA) LIMITED

By:
Title:
Signature:
	ADC TELECOMMUNICATIONS, INC
By:
Title:
Signature:
Seller:	FRONTVISION INVESTMENT LIMITED
By:
Title:
Signature:
Guarantor A:
Signature:
Guarantor B:
Signature:
Guarantor C:
Signature:
Guarantor D:
Signature:
Guarantor E:
Signature:
Guarantor F:
Signature:

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Guarantor G:

Signature:

Guarantor H:

Signature:

Guarantor I:

Signature:

Guarantor J:

Signature:

Guarantor K:

Signature:

Guarantor L:

Signature:

Guarantor M:

Signature:

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EX-10.5

Exhibit 10.5

MANAGEMENT INCENTIVE PLAN DOCUMENT
Fiscal Year 2009

Plan Name and Effective Date

The name of this Plan is the ADC Telecommunications, Inc. Management Incentive Plan. The Plan is effective from November 1, 2008 through September 30, 2009.

Purpose

The purpose of the Plan is to provide, with full regard to the protection of shareholder’s investments, a direct financial incentive for eligible managers to make a significant contribution to ADC’s established annual goals.

Eligibility

Eligibility for Fiscal Year 2009 is limited to full or part-time regular employees in the U.S. and in such other countries where ADC has specifically notified employees of eligibility for participation in the Plan. Eligibility for participation in this Plan is limited to such employees who hold executive officer and certain management positions reporting to the Chief Executive Officer. The CEO does not participate in the Plan. In order to be eligible, an employee cannot participate in any other ADC incentive plan, except as approved by the Compensation Committee of the Board of Directors, and must be employed in an eligible position on or before August 1, 2009.

The MIP is intended to encourage and reward both excellence of performance and employee retention. Accordingly, a participant must be an employee of ADC on the day of payment of incentive, in addition to satisfying all other eligibility requirements as outlined in the Plan, to be eligible to receive an incentive award.

Timing of Payment

Payments that become due under this Plan are made as soon as administratively feasible following the close of ADC’s fiscal year, but within seventy-five days of that event, generally in December. All payments are subject to appropriate withholdings.

Plan Goals

The Plan reinforces the key goals that support ADC’s long-term strategic plans. The key factors in ADC’s FY09 corporate success are Pro Forma Operating Income and Net Sales. These factors are the same for ADC’s operating units: Global Connectivity Solutions (GCS), Network Solutions, and ADC Professional Services (APS). Accounting methodology changes and extraordinary events such as acquisitions, divestitures, etc. may dictate corresponding goal modifications during the plan year. Additionally, a portion of each participant’s MIP is based upon individual contribution.

Following is a description of the Plan’s financial components:

Plan Goal	Definition
Pro Forma Operating Income	Net Sales less all relevant expenses incurred to produce the products or deliver services. Expenses include direct material and labor costs as well as regional and Business Unit costs, including engineering, sales & marketing expenses, and

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Plan Goal	Definition
	corporate overhead costs. Pro Forma Operating Income does not include interest income, interest expense, income tax or other non-operating income. It also excludes restructuring and other one-time expenses that are not reflective of the ongoing business.
	Corporate overhead costs not directly attributable to the Business Unit are assessed as a shared service charge set at a fixed percentage of Revenue. ADC-level Pro Forma Operating Income will reflect absorption of ALL corporate expenses including variances above or below the level of the shared service charge.
Net Sales	The amount ADC can recognize in accordance with Generally Accepted Accounting Principles (GAAP) for goods shipped or services provided to third-party customers, net of returns received and discounts.

NOTE: For the Business Units, Net Sales, and Pro-Forma Operating Income are measured on Plan foreign exchange rates.

Goal Weightings

Executives participating in the Plan will have the following business/corporate weightings:

	75% of Total Award
	Business				Net Sales
	Weight	OI Metric			Metric
BU Leader	50% BU		55	%		20	%
	50% ADC		55	%		20	%
Corporate Function Leader	100% ADC		55	%		20	%

For purposes of this Plan, Global Connectivity Solutions, Network Solutions and APS will be treated as separate Business Units.

Individual Performance

Each participant will have twenty-five percent (25%) of their target MIP award tied to one (1) to three (3) individual goals mutually agreed upon by the participant and the CEO. Achievement of the agreed-upon goals yields a 100% award payout. The individual performance component does not have a performance gate, it is based on the employee’s percent of achievement.

An additional overachievement award may be made as recommended by the CEO at his sole discretion to the Compensation Committee. The maximum individual performance award is 50% of the participant’s total target MIP award.

Modifications may be made to individual goals before August 1, 2009. Any changes made to individual goals require documentation and approval of the CEO, Chief Financial Officer and Chief Administrative Officer. Undocumented modifications of individual plans will not be honored for award payment.

Performance Gates

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To ensure protection of shareholder interest, no payment will be provided as the result of any ADC-wide financial performance factor unless ADC achieves its threshold Pro-Forma Operating Income for the year. Similarly, no payment will be provided as the result of any Business Unit financial performance factor unless the Business Unit achieves its threshold Pro-Forma Operating Income.

Calculation of Payment

Prior to making any payment under this Plan, the Board of Directors must determine that the claimed Business Performance levels have been achieved. The Board of Directors has complete authority and discretion to determine whether performance levels have been achieved, including without limitation the authority and discretion to properly calculate Pro-Forma Operating Income. The size of an incentive award will be based on three factors:

1.	Target Incentive Opportunity — Determined on the basis of the ADC salary grade associated with an individual’s job and country of work. It is expressed as a percentage of an individual’s FY 2009 Eligible Base Salary earnings.
2.	FY2009 Eligible Base Salary — This is the amount paid to the participant during the fiscal year in Base Salary.
3.	Business Performance in comparison with the established goals.

The maximum award attributable to each performance factor is 200% of its target. The maximum total individual award is 200% of the target payout. This maximum includes any additional overachievement MIP award provided for exceptional individual performance. Specific financial goals have been established for 0%, 100%, and 200% of target. Results between these specific points are interpolated for each goal.

Following is an example of a hypothetical award calculation.

Assume a GCS Plan participant with the following facts, where the ADC performance gate has been met:

Assumptions:

Eligible Earnings:	$	250,000
MIP Target %:		50	%
BU:	GCS Global
Individual Performance Score:		90	%

	Grade 19 &
	Above			Financial			Combined
	Financial			Component			Component			Actual
Measures	Weights			Weights			Weights*			Performance**			Result***
Financial - 75%
ADC:
OI		50	%		55	%		27.5	%		107.00	%		29.43	%
Revenue					20	%		10.0	%		102.00	%		10.20	%
GCS Global:
OI		50	%		55	%		27.5	%		110.00	%		30.25	%
Revenue					20	%		10.0	%		108.00	%		10.80	%
Individual - 25%
Personal Goals								25.0	%		90.00	%		22.50	%
	Total Component Weights:							100.0	%
							Composite Score:							103.18	%

		MIP Target		Composite
Eligible Earnings		%		Score		Payout
$250,000	X	50%	X	103.18%	=	$128,975.00

*	Combined Component Weights = Financial Weights x Financial Component Weights (see graph below)
**	Actual Performance is rounded to the nearest hundreth of one percent
***	Result = Actual Performance x Combined Component Weights. Final result is rounded to the nearest hundredth of one %

Page 3

Effect of Change in Employment Status

Termination of Employment. If employment with ADC is terminated for any reason other than death, disability, as a result of a reduction in force implemented by the Company or as a result of an employment separation event where the participant receives notice of opportunity to participate in an ADC severance plan, and if the Employment Termination Date occurs prior to the date the payout is made, a participant will not receive an award under the Plan. For purposes of this Plan, the “Employment Termination Date” is the date that the participant ceases to be an employee of ADC (as determined by the company). In the case of termination of employment by ADC, the Employment Termination Date shall be determined without regard to whether such termination is with or without cause or with or without reasonable notice. For the purposes of this Plan, if employment with ADC is involuntarily terminated as a result of the participant’s death or disability, as a result of a reduction in force implemented by the Company or as a result of an employment separation event where the participant receives notice of opportunity to participate in an ADC severance plan, the employee may be entitled to receive a prorated payment. To be eligible, the employee must have been employed by the Company for at least 3 full calendar months during FY09 and involuntarily terminated as described above. In such cases, the prorated payment, if any, will be subject to the achievement of the applicable Business Performance criteria for the plan year and may not be adjusted for individual performance. Such prorated payment will be payable following the end of the fiscal year in accordance with the Company’s incentive plan payment practices.

Transfer, Promotion or Demotion to another position with a different ADC incentive plan, Target Incentive Opportunity or business goals. A participant who is transferred, is promoted or demoted to another position with a different plan, target incentive opportunity or business goals will receive a prorated calculation of payment based upon the amount of eligible earnings paid under each position. For example, a participant transferring from Network Solutions to GCS on June 10th would receive payment

Page 4

under the Network Solutions plan for eligible earnings paid during the period of November 1 — June 9 and payment under the GCS plan for eligible earnings paid during June 10 – September 30.

Administration

The Management Incentive Plan is authorized by the Compensation Committee of the Company’s Board of Directors, which will administer the Plan. The Compensation Committee of the Board of Directors is authorized under its charter to make all decisions as required in administration of the Plan and to exercise its discretion to define, interpret, construe, apply, approve, administer, withdraw and make any exceptions to the terms of the Plan.

Right to Modify

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

Governing Law

The Plan is made and shall be construed in accordance with the laws of the State of Minnesota, U.S.A. without regard to conflicts of law principles thereof, or those of any other state of the U.S.A. or of any other country, province or city.

Severability

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

Assignment

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

Entire Understanding

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

No Acquired Rights or Entitlements/Plan Amendment or Termination

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

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EX-10.6

Exhibit 10.6

ADC TELECOMMUNICATIONS, INC.
2008 EXECUTIVE MANAGEMENT INCENTIVE PLAN

Section 1. Establishment; Purpose

     (a) Establishment. On October 21, 2008, the Compensation Committee of the Board of Directors of ADC Telecommunications, Inc., a Minnesota corporation (the “Company”), approved an incentive plan for executive officers as described herein, which plan shall be known as the “ADC Telecommunications, Inc. Executive Management Incentive Plan” (the “Plan”). This Plan is established pursuant to the terms of the ADC Telecommunications, Inc. 2008 Global Stock Incentive Plan, which was approved by shareowners of the Company on March 6, 2008. Any awards granted under this Plan and the material terms of the Plan shall be consistent with the terms and conditions of the 2008 Global Stock Incentive Plan.

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

Section 2. Administration

     (a) Composition of the Committee. The Plan shall be administered by the Compensation Committee of the Company’s Board of Directors (the “Committee”). To the extent required by Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), the Committee administering the Plan shall be composed solely of two or more “outside directors” within the meaning of Section 162(m) of the Code.

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

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

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

     (ii) The maximum bonus which may be paid to any Participant pursuant to any Annual Cash Bonus Award with respect to any fiscal year shall not exceed the lesser of 300% of a Participant’s base salary for that fiscal year or $4,000,000.

     (iii) For an Annual Cash Bonus Award, the Committee shall, not later than 90 days after the beginning of each fiscal year:

(A)	designate all Participants for such fiscal year; and
(B)	establish the objective performance factors for each Participant for that fiscal year on the basis of one or more of the business criteria set forth herein.

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

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

Section 3. Eligibility and Participation

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

2

     (b) Participation. The Committee shall determine the employees eligible to be granted an annual cash bonus award (an “Annual Cash Bonus Award”), the amount or range (subject to the limits set forth in the Plan) of the potential bonus to be paid pursuant to each Annual Cash Bonus Award, the time or times when Annual Cash Bonus Awards will be made, and all other terms and conditions of each Annual Cash Bonus Award. The provisions of the Annual Cash Bonus Awards need not be the same with respect to different Participants. The Committee’s decision to approve an Annual Cash Bonus Award to an executive officer in any year shall not require the Committee to approve a similar Annual Cash Bonus Award or any Annual Cash Bonus Award at all to that executive officer or any other executive officer or person at any future date. The Company and the Committee shall not have any obligation for uniformity of treatment of any person, including, but not limited to, Participants and their legal representatives and beneficiaries and employees of the Company or of any Affiliate of the Company.

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

Section 4. Payment of Annual Cash Bonus Awards

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

     (b) Payment of Annual Cash Bonus Awards. Payment of any bonuses pursuant to Annual Cash Bonus Awards shall be made solely in cash and may be made, subject to any deferred compensation election which may be permitted pursuant to any plan maintained by the Company, at such times, with such restrictions and conditions as the Committee, in its sole discretion, may determine at the time of grant of the Annual Cash Bonus Awards.

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

Section 5. Termination of Employment

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

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

3

Section 6. Nontransferability

     An Annual Cash Bonus Award is only transferable in accordance with the 2008 Global Stock Incentive Plan.

Section 7. Taxes

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

Section 8. Amendment and Termination

     (a) Term of Plan. Unless the Plan shall have been discontinued or terminated as provided in Section 8(b) hereof, no Annual Cash Bonus Awards shall be granted under the Plan after March 5, 2018. No Annual Cash Bonus Awards may be granted after such termination, but termination of the Plan shall not alter or impair any rights or obligations under any Annual Cash Bonus Award theretofore granted (including the payment of such Annual Cash Bonus Award within the time period permitted by the Code, as the same may be amended from time to time), without the consent of the Participant or holder or beneficiary thereof.

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

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

Section 9. Miscellaneous

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

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

4

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

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

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EX-12.1

Exhibit 12.1

ADC Telecommunications
Ratio of Earnings to Fixed Charges
Instructions to Paragraph 503(d) — SEC Handbook
(in millions)

				Fiscal Year Ended October 31
	2008			2007			2006			2005			2004
Earnings
Income (loss) before income taxes	$	(38.2	)	$	126.8		$	55.6		$	103.2		$	31.0
ADD
+ Adjustment for minority interests in consolidated subsidiaries	$	(0.7	)		1.5			1.1			0.9			0.3
+ Income or loss from equity investees	$	—			(0.1	)		(0.5	)		—			—
+ Fixed Charges	$	31.3			19.8			18.6			13.5			13.1
+ Distributed income of equity investees	$	—			—			—			—			—
+ ADC’s share of pre-tax losses of equity investees for which charges arising from guarantees are included in fixed charges	$	—			—			—			—			—
Sub-total		(7.6	)		148.0			74.8			117.6			44.4
SUBTRACT
- Interest Capitalized	$	—			—			—			—			—
- Preference security dividend requirements of consolidated subsidiaries	$	—			—			—			—			—
- Minority interest in pre-tax income of subsidiaries that have not incurred fixed charges	$	0.7			(1.5	)		(1.1	)		(0.9	)		—
Sub-total		0.7			(1.5	)		(1.1	)		(0.9	)		—
Total Earnings	$	(6.9	)	$	146.5		$	73.7		$	116.7		$	44.4
Fixed Charges
Interest Expensed	$	26.0		$	14.8		$	14.3		$	9.7		$	7.2
Interest Capitalized		—			—			—			—			—
Amortized premiums, discounts & capitalized expenses related to indebtedness		2.2			1.5			1.5			1.5			1.6
Interest Within Rental Expense		3.1			3.5			2.8			2.3			4.3
Preference Security Dividend Requirements		—			—			—			—			—
Total Fixed Charges	$	31.3		$	19.8		$	18.6		$	13.5		$	13.1
Ratio of Earnings to Fixed Charges		(0.2	)		7.4			4.0			8.6			3.4
Deficiency of Earnings to Fixed Charges

EX-21.1

Exhibit 21.1

ADC Telecommunications, Inc.
Subsidiaries
12/17/2008

Name	Jurisdiction
ADC (India) Communications & Infotech Private Limited	India
ADC Beteiligungsgesellschaft mbH	Germany
ADC Communications (Australia) PTY Limited	Australia
ADC Communications (NZ) Ltd.	New Zealand
ADC Communications (SEA) Pte. Ltd.	Singapore
ADC Communications (Shanghai) Company Ltd.	People’s Republic of China
ADC Communications (Thailand) Ltd.	Thailand
ADC Communications (UK) Holding Ltd.	United Kingdom
ADC Communications (UK) Ltd.	United Kingdom
ADC Communications Hong Kong Limited	Hong Kong
ADC Connectivity Solutions LLC	Minnesota
ADC Czech Republic, s.r.o.	Czech Republic
ADC DSL Systems, Inc.	Delaware
ADC EMEA Holding GmbH	Germany
ADC Europe N.V.	Belgium
ADC Global Holdings, Inc.	Minnesota
ADC GmbH	Germany
ADC Holding, Inc.	Delaware
ADC Incorporated	Colorado
ADC Informationssysteme GmbH	Germany
ADC International Holding Company	Minnesota
ADC International Holding, Inc.	Delaware
ADC International OUS, Inc.	Minnesota
ADC Italia S.r.l	Italy

Name	Jurisdiction
ADC Manufacturing Services PTY Limited	Australia
ADC Metrica Ireland Limited	Ireland
ADC OUS Holdings, LLC	Delaware
ADC Optical Systems, Inc.	Delaware
ADC Puerto Rico, Inc.	Puerto Rico
ADC Services GmbH	Germany
ADC Soluciones de Conectividad, S.A.	Spain
ADC Systems Integration France SAS	France
ADC Telecom Canada Inc.	Canada
ADC Telecommunicacoes Industria e Comercio Ltda.	Brazil
ADC Telecommunications (Africa) (Proprietary) Limited	South Africa
ADC Telecommunications (China) Limited	People’s Republic of China
ADC Telecommunications (Scotland) Limited	Scotland
ADC Telecommunications (Shanghai) Distribution Co., Ltd.	People’s Republic of China
ADC Telecommunications Australia Pty. Limited	Australia
ADC Telecommunications Equipment (Shanghai) Co., Ltd.	People’s Republic of China
ADC Telecommunications India Private Limited	India
ADC Telecommunications Netherlands B.V.	Netherlands
ADC Telecommunications Sales, Inc.	Minnesota
ADC Telecommunications Singapore Pte Limited	Singapore
ADC Telecomunicaciones Venezuela, S.A.	Venezuela
ADC Telecomunicacoes do Brasil Ltda.	Brazil
ADC Wireless Solutions LLC	Minnesota
ADC de Delicias, S. de R.L. de C.V.	Mexico
ADC de Juarez, S. de R.L. de C.V.	Mexico
ADC de Mexico S.A. de C.V.	Mexico
Codenoll Technology Corporation	Delaware
ANIHA Telecommunications Products Co., Ltd.	People’s Republic of China

Name	Jurisdiction
ADC Chile Ltda.	Chile
KRONE Communications Ltd.	India
KRONE Comunicaciones S.A. de C.V.	Mexico
KRONE Hellas Telecommunication S.A., Greece	Greece
Nihon ADC Kabushiki Kaisha	Japan
PT KRONE Indonesia	Indonesia
Princeton Optics, Inc.	New Jersey
LGC Wireless, Inc.	Delaware
LGC Wireless Telecomunicacoes Ltda.	Brazil
LGC Wireless Limited	United Kingdom
LGC Wireless B.V.	Netherlands
LGC Communication (Shenzhen) Ltd.	People’s Republic of China
LGC Wireless (Macau) Limited	Macau
LGC Wireless (M) SDN. BHD.	Malaysia
PT. LGC Wireless Indonesia	Indonesia
ADC (Hong Kong) Holding Co., Limited	Hong Kong
Communication Expert International Investments Limited	British Virgin Islands
Shenzhen Century Man Communication Equipment Co,. Ltd.	People’s Republic of China
Shenzhen Century Man Machinery Co. Ltd.	People’s Republic of China

EX-23.1

Exhibit 23.1

Consent of Independent Registered Public Accounting Firm

We consent to the incorporation by reference in Registration Statement File Nos. 33-52635, 33-58409, 333-25569, 333-80945, 333-32416, 333-56806, 333-83498, 333-83420, 33-58407, 333-61488, 333-61490, 333-83418, 333-88669, 333-40354, 333-56356, 333-108245, 333-108247, 333-147002, 333-148137, 333-148176, and 333-150214, of ADC Telecommunications, Inc. of our reports dated December 18, 2008, with respect to the consolidated financial statements and schedule of ADC Telecommunications, Inc. and subsidiaries, and the effectiveness of internal control over financial reporting of ADC Telecommunications, Inc., included in this Annual Report (Form 10-K) for the year ended October 31, 2008.

/s/ Ernst & Young

Minneapolis, Minnesota
December 18, 2008

EX-24.1

Exhibit 24.1

POWER OF ATTORNEY

KNOW ALL BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints each of Robert E. Switz and James G. Mathews, with full power to each to act without the other, his or her true and lawful attorney-in-fact and agent with full power of substitution, for him or her and in his or her name, place and stead, in any and all capacities, to sign the Annual Report on Form 10-K of ADC Telecommunications, Inc. (the “Company”) for the Company’s fiscal year ended October 31, 2008, and any or all amendments to said Annual Report, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, and to file the same with such other authorities as necessary, granting unto each such attorney-in-fact and agent full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he or she might or could do in person, hereby ratifying and confirming all that each such attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.

     IN WITNESS WHEREOF, this Power of Attorney has been signed by the following persons as of December 19, 2008.

Signature	Title
/s/ Robert E. Switz Robert E. Switz	President, Chief Executive Officer and Chairman  (principal executive officer)
/s/ James G. Mathews James G. Mathews	Vice President, Chief Financial Officer (principal financial officer)
/s/ Steven G. Nemitz Steven G. Nemitz	Vice President, Controller (principal accounting officer)
/s/ John A. Blanchard, III John A. Blanchard, III	Director
/s/ John J. Boyle, III John J. Boyle, III	Director
/s/ Mickey P. Foret Mickey P. Foret	Director
/s/ J. Kevin Gilligan J. Kevin Gilligan	Independent Lead Director
/s/ Lois M. Martin Lois M. Martin	Director

Signature	Title
/s/ Krish A. Prabhu, Ph.D. Krish A. Prabhu, Ph.D.	Director
/s/ John E. Rehfeld John E. Rehfeld	Director
/s/ David A. Roberts David A. Roberts	Director
/s/ William R. Spivey, Ph.D. William R. Spivey, Ph.D.	Director
/s/ Larry W. Wangberg Larry W. Wangberg	Director
/s/ John D. Wunsch John D. Wunsch	Director

EX-31.1

Exhibit 31.1

I, Robert E. Switz, certify that:

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

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

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

4.      The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 19, 2008

     /s/ Robert E. Switz  

Robert E. Switz 

Chairman, President and Chief Executive Officer 

EX-31.2

Exhibit 31.2

I, James G. Mathews, certify that:

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

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

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

4.      The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.      The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: December 19, 2008

     /s/ James G. Mathews  

James G. Mathews 

Vice President and Chief Financial Officer 

EX-32

Exhibit 32

Certifications Furnished Pursuant to 18 U.S.C. 1350,
as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

Robert E. Switz and James G. Mathews, the Chief Executive Officer and Chief Financial Officer, respectively, of ADC Telecommunications, Inc., hereby certify that:

1.	The annual report on form 10-K of ADC Telecommunications, Inc. for the year ended October 31, 2008, as filed with the Securities and Exchange Commission on the date hereof, fully complies with the requirements of sections 13(a) and 15(d) of the Securities Exchange Act of 1934; and
2.	The information contained in the above-mentioned report fairly presents, in all material respects, the financial condition and results of operations of ADC Telecommunications, Inc.

   /s/ Robert E. Switz  

Robert E. Switz 

December 19, 2008 

   /s/ James G. Mathews  

James G. Mathews 

December 19, 2008