<PAGE>
PROSPECTUS
ADC TELECOMMUNICATIONS, INC.
----------
715,431 Shares
of
Common Stock
($.20 par value)
----------
This Prospectus relates to an aggregate of 715,431 shares (the "Shares")
of Common Stock, par value $.20 per share (the "Common Stock"), of ADC
Telecommunications, Inc., a Minnesota corporation ("ADC" or the "Company"),
that may be sold from time to time by the shareholders named herein (the
"Selling Shareholders"). See "Selling Shareholders." The Company will not
receive any proceeds from the sale of the Shares. The Company has agreed to
pay the expenses of registration of the Shares, including certain legal and
accounting fees.
Any or all of the Shares may be offered from time to time in transactions
on the Nasdaq National Market, in brokerage transactions at prevailing market
prices or in transactions at negotiated prices. See "Plan of Distribution."
The Shares offered hereby have not been registered under the blue sky or
securities laws of any jurisdiction, and any broker or dealer should assure the
existence of an exemption from registration or effectuate such registration in
connection with the offer and sale of the Shares.
The Common Stock is traded on the Nasdaq National Market under the symbol
"ADCT." On June 26, 1996, the last reported sale price of the Common Stock as
reported on the Nasdaq National Market was $41.00 per share.
----------
For information concerning certain risks related to this offering,
see "Risk Factors" beginning on page 3 of this Prospectus.
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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR
HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE
SECURITIES COMMISSION PASSED UPON THE ACCURACY OR
ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
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No person has been authorized to give any information or to make any
representations other than those contained in this Prospectus in connection
with the offer contained herein, and, if given or made, such information or
representations must not be relied upon as having been authorized by the
Company. This Prospectus does not constitute an offer to sell, or a
solicitation of an offer to buy, any securities offered hereby in any
jurisdiction in which it is not lawful or to any person to whom it is not
lawful to make any such offer or solicitation. Neither the delivery of this
Prospectus nor any sale made hereunder shall, under any circumstances, create
any implication that information herein is correct as of any time subsequent to
the date hereof.
The date of this Prospectus is August 30, 1996.
<PAGE>
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company can be inspected and
copied at the public reference facilities of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 7 World Trade Center, Suite 1300, New York, New York 10048 and CitiCorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Copies
of such materials can be obtained from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed
rates. In addition, the Common Stock of the Company is listed on the Nasdaq
National Market, and reports, proxy statements and other information concerning
the Company can also be inspected at the offices of the National Association of
Securities Dealers, 1735 K. Street N.W., Washington, D.C. 20006. This
Prospectus does not contain all the information set forth in the Registration
Statement and exhibits thereto which the Company has filed with the Commission
under the Securities Act of 1933, as amended (the "Securities Act"), and to
which reference is hereby made.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents of the Company which have been filed with the
Commission are hereby incorporated by reference in this Prospectus:
(a) the Annual Report on Form 10-K for the year ended October 31, 1995;
(b) the Quarterly Report on Form 10-Q for the quarter ended January 31,
1996;
(c) the Quarterly Report on Form 10-Q for the quarter ended April 30,
1996;
(d) the Current Report on Form 8-K dated July 1, 1996; and
(e) the description of ADC's Common Stock and Common Stock Purchase
Rights contained in the Company's Registration Statement filed
pursuant to Section 12 of the Exchange Act and any amendment or
report filed for the purpose of updating any such description.
All documents filed by the Company pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior
to the termination of the offering of the Common Stock shall be deemed to be
incorporated by reference into this Prospectus and to be a part hereof from the
respective dates of filing of such documents. Any statement contained herein
or in a document all or part of which is incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus to the extent that a statement contained herein
or in any subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to any person to whom this
Prospectus is delivered, upon the written or oral request of such person, a
copy of any or all of the foregoing documents incorporated herein by reference
(other than certain exhibits to such documents). Requests for such copies
should be directed to David F. Fisher, Esq., Vice President, General Counsel
and Corporate Secretary, ADC Telecommunications, Inc., 4900 W. 78th Street,
Minneapolis, Minnesota 55435, telephone number (612) 938-8080.
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<PAGE>
RISK FACTORS
The following risk factors should be considered carefully in addition to
the other information contained in or incorporated by reference into this
Prospectus before purchasing the Common Stock offered hereby. This Prospectus,
including the information incorporated herein by reference, contains forward-
looking statements within the meaning of Section 27A of the Securities Act of
1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements represent the Company's expectations or beliefs concerning future
events, including the following: any statements regarding future sales and
gross profit percentages, any statements regarding the continuation of
historical trends, any statements regarding the sufficiency of the Company's
cash balances and cash generated from operating and financing activities for
the Company's future liquidity and capital resource needs. The Company
cautions that these statements are further qualified by important factors that
could cause actual results to differ materially from those projected in the
forward-looking statements as a result, in part, of the risk factors set forth
below. In connection with the forward-looking statements which appear in this
Prospectus, including the information incorporated herein by reference,
prospective purchasers of ADC Common Stock offered hereby should carefully
review the factors set forth below.
Rapid Technological Change and Importance of New Products
The telecommunications equipment industry is characterized by rapid
technological change, evolving industry standards, changing market conditions
and frequent new product introductions and enhancements. The introduction of
products embodying new technologies or the emergence of new industry standards
can render existing products or products under development obsolete or
unmarketable. ADC's ability to anticipate changes in technology and industry
standards and successfully to develop and introduce new products on a timely
basis will be a significant factor in ADC's ability to grow and remain
competitive. New product development often requires long-term forecasting of
market trends, development and implementation of new technologies and processes
and a substantial capital commitment. In particular, ADC has recently invested
substantial resources toward the development of new products such as its
Homeworx -TM- product utilizing hybrid fiber coax technology. ADC is engaging in
extensive field testing and evaluation of its Homeworx -TM- system for video and
telephony applications, and has shipped the Homeworx -TM- system for video
applications to customers for initial deployment. In addition, ADC is
currently deploying the Homeworx -TM- system for telephony applications to a
limited number of customers for field trial. Development and customer
acceptance of new products is inherently uncertain, and there can be no
assurance that ADC will successfully complete the commercialization of the
Homeworx-TM- system for telephony applications or other new products on a timely
basis or that such products will be commercially successful. Any failure by
ADC to anticipate or respond on a cost-effective and timely basis to
technological developments, changes in industry standards or customer
requirements, or any significant delays in product development or introduction,
could have a material adverse effect on ADC's business, operating results and
financial condition.
Uncertain Market for Broadband Network Products
Over the past several years, ADC's principal product offerings have
generally consisted of copper-based and fiber-based products designed to
address the needs of its customers for connectivity, transmission and
networking applications on traditional telephony networks. However, with the
growth of multimedia and the associated development of enhanced voice, video
and data transmission technologies, ADC's recent product offerings and research
and development efforts have been increasingly focused on addressing the
broadband telecommunications equipment market through the use of new or
different technologies. The market for broadband telecommunications products
is emerging and rapidly changing. ADC's future growth is dependent in part on
its ability to successfully develop and commercially introduce new products in
each of its product groups addressing this market, as well as the growth in
this market. The growth in the market for such broadband telecommunications
products is dependent on a number of factors, including the amount of capital
expenditures by public network providers, regulatory and legal developments and
end-user demand for integrated voice, video, data and other network services.
There can be no assurance that the market for broadband telecommunications
products will develop rapidly. In addition, to the extent this market
develops, there can be no assurance that ADC's products will meet with market
acceptance or be profitable.
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<PAGE>
Competition
Competition in the telecommunications equipment industry is intense, and
ADC believes that competition may increase substantially with the deployment of
broadband networks and the recent regulatory changes. See "Changing Regulatory
Environment." Many of ADC's foreign and domestic competitors have more
extensive engineering, manufacturing, marketing, financial and personnel
resources than those of ADC. ADC believes its success in competing with other
manufacturers of telecommunications products depends primarily on its
engineering, manufacturing and marketing skills, the price, quality and
reliability of its products, and its delivery and service capabilities. While
the market for ADC's products has not historically been characterized by
significant price competition, ADC anticipates increasing pricing pressures
from current and future competitors in certain of the markets for its products.
In addition, ADC believes that technological change, the increasing addition of
data, video and other services to networks, continuing regulatory change and
industry consolidation or new entrants will continue to cause rapid evolution
in the competitive environment of the telecommunications equipment market, the
full scope and nature of which is difficult to predict at this time. Increased
competition could result in price reductions, reduced margins and loss of
market share by ADC. There can be no assurance that ADC will be able to
compete successfully with its existing or new competitors or that competitive
pressures faced by ADC will not materially and adversely affect its business,
operating results and financial condition.
Fluctuations in Operating Results
ADC's operating results may fluctuate significantly from quarter to
quarter due to several factors, including, without limitation, the volume and
timing of orders from, and shipments to, major customers, the timing of new
product announcements and the availability of product by ADC or its
competitors, overall level of capital expenditures by public network providers,
market acceptance of new and enhanced versions of ADC's products, variations in
the mix of products ADC sells or its sales channels, and the availability and
cost of key components. In addition, ADC is experiencing growth through
acquisition and expansion, and its recent results of operations may not be
indicative of results to be achieved in future periods. ADC's expense levels
are based in part on expectations of future revenues. If revenue levels in a
particular period do not meet expectations, operating results will be adversely
affected. In addition, ADC's results of operations are subject to seasonal
factors. ADC historically has experienced a stronger demand for its products
in the fourth fiscal quarter, primarily as a result of ADC year-end incentives
and customer budget cycles, and has experienced a weaker demand for its
products in the first fiscal quarter, primarily as a result of the number of
holidays in late November, December and early January and a general industry
slowdown during that period. There can be no assurance that these historical
seasonal trends will continue in the future.
Changing Regulatory Environment
The telecommunications industry is subject to regulation in the United
States and other countries. ADC's business is dependent upon the continued
growth of the telecommunications industry in the United States and
internationally. Federal and state regulatory agencies regulate most of ADC's
domestic customers. On January 3, 1996, the U.S. Congress passed the
Telecommunications Act of 1996 (the "Telecommunications Act"). The President
of the United States signed the Telecommunications Act into law on February 8,
1996. The Telecommunications Act will lift certain restrictions on the ability
of companies, including Regional Bell Operating Companies ("RBOCs") and other
customers of ADC, to compete with one another and will generally reduce the
regulation of the telecommunications industry. While ADC believes that the
deregulation of the telecommunications industry may increase ADC's
opportunities to provide solutions for its customers' voice, data and video
needs, the effect on the market for ADC's products is difficult to predict at
this time, and there can be no assurance that competition in ADC's product
market will not intensify as a result of such deregulation. Changes in current
or future laws or regulations, in the United States or elsewhere, could
materially and adversely affect ADC's business.
International Operations
Export sales accounted for 16.1%, 15.0% and 18.2% of ADC's net sales in
fiscal 1993, 1994, and 1995, respectively, and ADC expects that export sales
may increase as a percentage of net sales in the future. In addition, ADC owns
or subcontracts manufacturing operations located in Mexico, Australia and
China. Due to its
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<PAGE>
export sales and its international manufacturing operations, ADC is subject to
the risks of conducting business internationally, including unexpected changes
in, or impositions of, legislative or regulatory requirements, fluctuations in
the U.S. dollar that could materially and adversely affect U.S. dollar revenues
or operating expenses, tariffs and other barriers and restrictions, potentially
longer payment cycles, greater difficulty in accounts receivable collection,
potentially adverse taxes, and the burdens of complying with a variety of
foreign laws and telecommunications standards. ADC also is subject to general
geopolitical risks, such as political and economic instability and changes in
diplomatic and trade relationships, in connection with its international
operations. There can be no assurance that such factors will not materially
and adversely affect ADC's operations in the future or require ADC to modify
significantly its current business practices. In addition, the laws of certain
foreign countries may not protect ADC's proprietary technology to the same
extent as do the laws of the United States.
Dependence on Proprietary Technology
ADC's future success depends in part upon its proprietary technology.
Although ADC attempts to protect its proprietary technology through patents,
copyrights and trade secrets, it also believes that its future success will
depend upon product development, technological expertise and distribution
channels. There can be no assurance that ADC will be able to protect its
technology, or that competitors will not be able to develop similar technology
independently. ADC has received and may in the future receive from third
parties, including some of its competitors, notices claiming that it is
infringing third-party patents or other proprietary rights. There can be no
assurance that ADC would prevail in any litigation over third-party claims, or
that it would be able to license any valid and infringed patents on
commercially reasonable terms. Furthermore, litigation, regardless of its
outcome, could result in substantial cost to and diversion of effort by ADC.
Any litigation or successful infringement claims by third parties could
materially and adversely affect ADC's business, operating results and financial
condition.
Volatility of Stock Price
Based on the trading history of its stock, ADC believes factors such as
announcements of new products by ADC or its competitors, quarterly fluctuations
in ADC's financial results, customer contract awards, developments in
telecommunications regulation and general conditions in the telecommunications
equipment industry have caused and are likely to continue to cause the market
price of ADC's Common Stock to fluctuate substantially. In addition,
telecommunications equipment company stocks have experienced significant price
and volume fluctuations that often have been unrelated to the operating
performance of such companies. This market volatility may adversely affect the
market price of ADC's Common Stock.
ADC TELECOMMUNICATIONS, INC.
General
ADC designs, manufactures and markets transmission, enterprise networking
and connectivity products for use in broadband global markets. ADC's wide
range of products employ fiber, hybrid fiber coax, wireless and traditional
copper-based technologies. ADC's customers include: public network providers,
which consist of all seven of the RBOCs, other telephone companies, long
distance carriers, wireless service providers, the major cable TV operators and
other domestic public network providers; private and governmental network
providers (such as various large business customers and governmental agencies);
and international network operators. ADC also sells indirectly to these
customers through the major telecommunications original equipment manufacturers
("OEMs"). ADC's products enable these network providers to build and upgrade
their networks to support increasing user demand for voice, data and video
services.
ADC seeks to capitalize on opportunities in the evolving global
telecommunications market by providing equipment, services and integrated
solutions for its customers' voice, data and video needs. Key components of
ADC's strategy include: (i) focusing on broadband (1,544 Mbps or higher)
network opportunities, (ii) providing end-to-end network solutions, (iii)
leveraging technological capabilities across product groups, (iv) expanding
international presence and (v) pursuing strategic alliances and acquisitions.
ADC offers a broad line of telecommunications equipment that provides customers
with solutions for key network needs from the central
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<PAGE>
office, through the local loop, into the customer premises and across the
enterprise network. ADC seeks to leverage its substantial expertise in fiber
optics, broadband, video and wireless technologies across its product groups in
order to develop new product architectures and network management tools for its
customers' evolving voice, data and video network needs in a variety of
applications.
ADC's products can be categorized into three general product groups:
transmission, enterprise networking and broadband connectivity. These product
groups accounted for 31%, 22% and 47%, respectively, of ADC's net sales for the
year ended October 31, 1995. ADC's emphasis on fiber optic products is
demonstrated by ADC's increasing net sales of fiber optic products over each of
the last three years.
ADC sells its products to customers in three primary markets: (i) the
United States public telecommunications network market, which consists of all
seven of the RBOCs, other telephone companies, long distance carriers, wireless
service providers, the major cable TV operators and other domestic public
network providers; (ii) the private and governmental voice, data and video
network market in the United States, such as various large business customers
and governmental agencies that own and operate their own voice, data and video
networks for internal use; and (iii) the international public and private
network market. A majority of ADC's sales are made by a direct sales force,
and ADC maintains sales offices throughout the United States and also maintains
offices in Canada, Europe, the Pacific Rim, Australia and Central and South
America. The public network providers, private and governmental network
providers and international sales accounted for 58%, 24% and 18%, respectively,
of ADC's net sales for the year ended October 31, 1995; 57%, 28% and 15%,
respectively, of ADC's net sales for the year ended October 31, 1994; and 56%,
28% and 16%, respectively, of ADC's net sales for the year ended October 31,
1993.
ADC was incorporated under the laws of the State of Minnesota in 1953.
ADC's principal offices are located at 12501 Whitewater Drive, Minnetonka,
Minnesota 55343, and its telephone number at that location is (612) 938-8080.
Recent Developments
On April 26, 1996, ADC completed the acquisition of Skyline Technology,
Inc. ("Skyline") for a cash purchase price of approximately $12 million, which
was paid at closing, and an additional amount (not to exceed an additional $20
million) based upon Skyline's financial performance following closing, which
will be payable over a three-year period commencing November 1, 1996, subject
to the achievement of certain performance goals. Skyline is a California-based
company that designs and manufactures ISDN/Frame Relay access products with
routing capabilities.
On May 31, 1996, ADC completed the acquisition of Metrica Systems
("Metrica") for approximately $34.5 million, paid in shares of ADC Common
Stock. Metrica, based in London, England, is a software design firm
specializing in network management tools that allow operators to balance a high
level of customer service with capacity utilization. The Metrica acquisition
will be accounted for using the pooling of interests method.
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<PAGE>
SELLING SHAREHOLDERS
The following table sets forth certain information as to the maximum
number of Shares that may be sold by each of the Selling Shareholders pursuant
to this Prospectus.
<TABLE>
<CAPTION>
Number of
Shares Owned Number of
Prior to the Shares Offered
Name Offering Hereby
<S> <C> <C>
J. Michael Berman 130,839 130,839
Michael S. Cole 106,252 106,252
Roger M. McPeek 106,252 106,252
David J. Heaps 28,334 28,334
Peter G.B. Jones 106,252 106,252
Mark Farmer 70,835 70,835
Simon F. Dakin 7,083 7,083
Martin Osborne 7,083 7,083
J. Michael Berman and
Katherine P. Berman,
as Trustees of the
Berman Life Trust 124,167 124,167
J. Michael Berman and
Katherine P. Berman,
as Trustees of the
Berman Family Trust 28,334 28,334
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Totals 715,431 715,431
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</TABLE>
The Selling Shareholders are the sole former shareholders of Metrica. The
Selling Shareholders acquired the Shares in connection with ADC's acquisition
of Metrica on May 31, 1996. Pursuant to the Metrica acquisition, ADC purchased
all of the issued and outstanding shares of common stock of Metrica in exchange
for the Shares.
PLAN OF DISTRIBUTION
The Shares will be offered and sold by the Selling Shareholders for their
own accounts. The Company will not receive any proceeds from the sale of the
Shares pursuant to this Prospectus. The Company has agreed to pay the expenses
of registration of the Shares, including a certain amount of legal and
accounting fees.
The Selling Shareholders may offer and sell the Shares from time to time
in transactions on the Nasdaq National Market, in brokerage transactions at
prevailing market prices or in transactions at negotiated prices. Sales may be
made to or through brokers or dealers who may receive compensation in the form
of discounts, concessions or commissions from the Selling Shareholders or the
purchasers of Shares for whom such brokers or dealers may act as agent or to
whom they may sell as principal, or both. As of the date of this Prospectus,
the Company is not aware of any agreement, arrangement or understanding between
any broker or dealer and the Selling Shareholders.
The Selling Shareholders and any brokers or dealers acting in connection
with the sale of the Shares hereunder may be deemed to be "underwriters" within
the meaning of Section 2(11) of the Securities Act, and any commissions
received by them and any profit realized by them on the resale of Shares as
principals may be deemed underwriting compensation under the Securities Act.
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<PAGE>
EXPERTS
The consolidated financial statements incorporated by reference in this
Prospectus and elsewhere in the Registration Statement have been audited by
Arthur Andersen LLP, independent public accountants, as indicated in their
report with respect thereto, and incorporated herein by reference in reliance
upon the authority of such firm as experts in accounting and auditing in giving
said reports.
LEGAL MATTERS
The validity of the Shares offered hereby has been passed upon for the
Company by Dorsey & Whitney LLP, 220 South Sixth Street, Minneapolis, Minnesota
55402.
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<PAGE>
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No dealer, salesperson or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus, and, if given or made, such information or representations must not
be relied upon as having been authorized by the Company, any Selling
Shareholder or any other person. This Prospectus does not constitute an offer
to sell or a solicitation of an offer to buy to any person in any jurisdiction
in which such offer or solicitation would be unlawful or to any person to whom
it is unlawful. Neither the delivery of this Prospectus nor any offer or sale
made hereunder shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company or that the information
contained herein is correct as of any time subsequent to the date hereof.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
Page
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<S> <C>
Available Information 2
Incorporation of Certain Documents By
Reference 2
Risk Factors 3
ADC Telecommunications, Inc. 5
Selling Shareholders 7
Plan of Distribution 7
Experts 8
Legal Matters 8
</TABLE>
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715,431 Shares
ADC
TELECOMMUNICATIONS, INC.
Common Stock
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PROSPECTUS
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August 30, 1996
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