<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended January 31, 1996
OR
/ / TRANSACTION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from N/A to N/A
Commission file number 0-1424
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.)
4900 West 78th Street, Minneapolis, MN 55435
---------------------------------------------------
(Address of principal executive offices) (zip code)
(612) 938-8080
---------------------------------------------------
(Registrant's telephone number, including area code)
N/A
- -------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common stock, $.20 par value: 63,152,409 shares as of March 8, 1996
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS - UNAUDITED
(In Thousands)
ASSETS
<TABLE>
<CAPTION>
January 31, October 31,
1996 1995
----------- -----------
<S> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents $225,457 $238,491
Accounts receivable 107,033 107,255
Inventories 105,059 86,559
Prepaid income taxes and other assets 15,061 15,442
-------- --------
Total current assets 452,610 447,747
PROPERTY AND EQUIPMENT, net 86,270 78,686
OTHER ASSETS, principally goodwill 78,278 74,650
-------- --------
$617,158 $601,083
======== ========
LIABILITIES AND STOCKHOLDERS' INVESTMENT
CURRENT LIABILITIES:
Current maturities of long-term debt $410 $410
Accounts payable 24,404 28,820
Accrued liabilities 63,305 59,731
-------- -------
Total current liabilities 88,119 88,961
DEFERRED INCOME TAXES 1,256 1,256
-------- --------
Total liabilities 89,375 90,217
STOCKHOLDERS' INVESTMENT
(62,778 and 62,737 shares outstanding) 527,783 510,866
-------- --------
$617,158 $601,083
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME - UNAUDITED
(In Thousands, Except per Share Amounts)
<TABLE>
<CAPTION>
For the Quarters Ended
January 31,
------------------------------
1996 1995
--------- ----------
<S> <C> <C>
NET SALES $162,591 $121,774
COST OF PRODUCT SOLD 84,681 62,402
-------- --------
GROSS PROFIT 77,910 59,372
-------- --------
Gross profit percentage 47.9% 48.8%
-------- --------
EXPENSES:
Development and product engineering 19,943 13,209
Selling and administration 34,907 29,763
Goodwill amortization 784 784
-------- --------
Total expenses 55,634 43,756
-------- --------
OPERATING INCOME 22,276 15,616
OTHER INCOME (EXPENSE), NET:
Interest 3,552 656
Other (341) 80
-------- --------
INCOME BEFORE INCOME TAXES 25,487 16,352
PROVISION FOR INCOME TAXES 9,174 5,886
-------- --------
NET INCOME $16,313 $10,466
======== ========
AVERAGE COMMON SHARES OUTSTANDING 62,758 55,849
======== ========
EARNINGS PER SHARE $0.26 $0.19
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS - UNAUDITED
(In Thousands)
<TABLE>
<CAPTION>
For the Quarters Ended
January 31,
-----------------------------
1996 1995
-------- --------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $16,313 $10,466
Adjustments to reconcile net income to net cash from
operating activities -
Depreciation and amortization 7,209 5,979
Reduction in deferred compensation 72 107
Decrease in deferred income taxes -- (94)
Other 26 67
Changes in assets and liabilities
Accounts receivable 124 982
Inventories (18,506) (7,617)
Prepaid income taxes and other assets 391 433
Accounts payable (4,369) (1,354)
Accrued liabilities 3,614 (2,946)
-------- --------
Total cash from operating activities 4,874 6,023
-------- --------
INVESTMENT ACTIVITIES:
Property and equipment additions, net (13,942) (5,302)
Long-term investments (4,528) --
-------- --------
Total cash used for investment
activities (18,470) (5,302)
-------- --------
FINANCING ACTIVITIES:
Common stock issued 639 1,143
-------- --------
Total cash from financing activities 639 1,143
-------- --------
EFFECT OF EXCHANGE RATE CHANGES ON CASH (77) 3
-------- --------
INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS (13,034) 1,867
CASH AND CASH EQUIVALENTS, beginning of period 238,491 49,512
-------- --------
CASH AND CASH EQUIVALENTS, end of period $225,457 $51,379
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
SUPPLEMENTAL FINANCIAL INFORMATION - UNAUDITED
(In Thousands, Except Per Share Amounts)
<TABLE>
<CAPTION>
1st 4th 3rd 2nd
Quarter Quarter Quarter Quarter
1996 1995 1995 1995
-------- -------- -------- --------
<S> <C> <C> <C> <C>
NET SALES $162,591 $173,652 $150,454 $140,342
COST OF PRODUCT SOLD 84,681 89,647 78,742 71,303
-------- -------- -------- --------
GROSS PROFIT 77,910 84,005 71,712 69,039
-------- -------- -------- --------
Gross profit percentage 47.9% 48.4% 47.7% 49.2%
-------- -------- -------- --------
EXPENSES:
Development and product engineering 19,943 21,112 16,202 15,937
Selling and administration 34,907 35,959 31,937 32,638
Goodwill amortization 784 783 784 782
Personnel reduction -- -- -- 3,914
-------- -------- -------- --------
Total expenses 55,634 57,854 48,923 53,271
-------- -------- -------- --------
OPERATING INCOME 22,276 26,151 22,789 15,768
OTHER INCOME(EXPENSE), NET:
Interest 3,552 3,671 1,929 547
Other (341) (669) (229) (80)
-------- -------- -------- --------
INCOME BEFORE INCOME TAXES 25,487 29,153 24,489 16,235
PROVISION FOR INCOME TAXES 9,174 10,496 8,815 5,846
-------- -------- -------- --------
NET INCOME $16,313 $18,657 $15,674 $10,389
======== ======== ======== ========
AVERAGE COMMON SHARES
OUTSTANDING 62,758 62,655 59,321 56,094
======== ======== ======== ========
EARNINGS PER SHARE $0.26 $0.30 $0.26 $0.18
======== ======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
ADC TELECOMMUNICATIONS, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS - UNAUDITED
Note 1 Accounting Policies: The information furnished in this report is
unaudited but reflects all adjustments which are necessary, in the opinion of
management, for a fair statement of the results for the interim periods. The
operating results for the three months ended January 31, 1996, are not
necessarily indicative of the operating results to be expected for the full
fiscal year. These statements should be read in conjunction with the Company's
most recent Annual Report on Form 10-K.
Note 2 Inventories: Inventories include material, labor and overhead and
are stated at the lower of first-in, first-out cost or market. Inventories at
January 31, 1996, and October 31, 1995, consisted of (in thousands):
<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Purchased materials and
manufactured products $96,419 $75,694
Work-in-process 8,640 10,865
-------- --------
$105,059 $86,559
======== ========
</TABLE>
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OVERVIEW
The Company offers a broad range of products to address key areas of the
telecommunications network infrastructure. To meet its customers' needs, the
Company offers equipment, services and integrated solutions within the
following general functional product groups: transmission, enterprise
networking and broadband connectivity. The Company's transmission products are
sold primarily to public network providers in the United States and
internationally. The Company's enterprise networking products are sold
primarily to private voice, data and video network providers around the world.
The Company's broadband connectivity products are sold to both public and
private network providers.
Historically, the Company's principal product offerings have generally
consisted of copper-based and fiber-based products designed to address the
needs of its customers for transmission, enterprise networking and connectivity
on traditional telephony networks. With the growth of multimedia applications
and the associated development of enhanced voice, data and video services, the
Company's more recent product offerings and research and development efforts
have increasingly focused on emerging technologies and applications relating to
the broadband telecommunications equipment market. The market for broadband
telecommunications equipment is evolving and rapidly changing. There can be no
assurance that the Company's new or enhanced products will meet with market
acceptance or be profitable.
The Company's operating results may fluctuate significantly from quarter
to quarter due to several factors. The Company'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, the Company's results of operations are subject to seasonal
factors. The Company historically has experienced a stronger demand for its
products in the fourth fiscal quarter, primarily as a result of customer budget
cycles and Company year-end incentives, and has experienced a weaker demand for
its products in the first fiscal quarter, primarily as a result of the number
of holidays in late November, December and early January and a general industry
slowdown during that period. There can be no assurance that these historical
seasonal trends will continue in the future.
7
<PAGE>
RESULTS OF OPERATIONS
The percentage relationships to net sales of certain income and expense
items for the quarters ended January 31, 1996 and 1995 and the percentage
changes in these income and expense items between periods are contained in the
following table:
<TABLE>
<CAPTION>
Percentage
Increase
Percentage of Net Sales (Decrease)
for the Quarters Ended Between
January 31 Periods
----------------------- ----------
1996 1995
-------- --------
<S> <C> <C> <C>
NET SALES 100.0% 100.0% 33.5%
COST OF PRODUCTS SOLD (52.1) (51.2) 35.7
-------- --------
GROSS PROFIT 47.9 48.8 31.2
EXPENSES:
Development and product engineering (12.2) (10.9) 51.0
Selling and administration (21.5) (24.4) 17.3
Goodwill amortization (.5) (.7) -
-------- --------
OPERATING INCOME 13.7 12.8 42.6
OTHER INCOME (EXPENSE), NET:
Interest 2.2 .5 -
Other (.2) .1 -
-------- --------
INCOME BEFORE INCOME TAXES 15.7 13.4 55.9
PROVISION FOR INCOME TAXES (5.7) (4.8) 55.9
-------- --------
NET INCOME 10.0% 8.6% 55.9
======== ========
</TABLE>
8
<PAGE>
Net Sales: Net sales for the quarter ended January 31, 1996 by product
group, compared to the quarter ended January 31, 1995, are as follows:
<TABLE>
<CAPTION>
Quarter Ended January 31, ($ in Thousands)
------------------------------------------
1996 1995
------------------ ------------------
Product Group Net Sales % Net Sales %
- ------------------------- ---------- ----- ---------------
<S> <C> <C> <C> <C>
Transmission $51,427 31.6% $35,418 29.1%
Enterprise Networking 31,606 19.5 31,147 25.6
Broadband Connectivity 79,558 48.9 55,209 45.3
---------- ----- ---------- -----
Total $162,591 100.0% $121,774 100.0%
========== ===== ========== =====
</TABLE>
Net sales for the quarter ended January 31, 1996 were $162.6 million,
reflecting a 33.5% increase over the quarter ended January 31, 1995. The
increase resulted from 45.2% and 44.1% increases in sales of transmission and
broadband connectivity group products, respectively. The Company's increased
sales of transmission products predominately consist of fiber optic systems
sold to public telecommunications network providers.
The Company's increased sales of broadband connectivity products reflect
success in selling these products into expanding global broadband market
applications during the quarter. The Company believes that future sales of
broadband connectivity products will continue to account for a substantial
portion of the Company's revenues, although these products may decline as a
percentage of total net sales primarily due to the ongoing evolution of
technologies in the telecommunications marketplace.
Reflecting increased sales of fiber optic products in both the
transmission and broadband connectivity product groups, net sales of fiber
optic products represented 42.0% and 40.8% of total net sales for the quarters
ended January 31, 1996 and 1995, respectively.
The 1.5% increase in net sales of enterprise networking group products
reflected strong first quarter growth in sales of access equipment which were
partially offset by decreases in sales of Local Area Network (LAN) equipment.
Recognizing changes in the competitive environment for LAN equipment, the
Company realigned its Kentrox and Fibermux subsidiaries into one enterprise
networking group during second quarter 1995 to better address the industry
trend toward integration of LAN and Wide Area Network (WAN) technologies and
products.
9
<PAGE>
Gross Profit: The gross profit percentage for first quarter 1996, 47.9%
of net sales, was lower than the 48.8% gross profit percentage for first
quarter 1995 primarily due to a product sales mix that was heavily weighted
toward sales of newer, lower margin products which address emerging, global
broadband applications. Future gross profit percentages will continue to be
affected by the mix of products the Company sells, the timing of new product
introductions and manufacturing volume, among other factors.
Operating Expenses: Total operating expenses for the quarters ended
January 31, 1996 and 1995 were $55.6 million and $43.8 million, representing
34.2% and 35.9% of net sales, respectively. The increase in absolute dollars
of operating expenses was due primarily to expanded operations associated with
higher revenue levels during the quarter ended January 31, 1996. The decrease
as a percentage of net sales during the quarter reflects the Company's ability
to leverage operating expenses against revenue levels.
Development and product engineering expenses were $19.9 million for the
quarter ended January 31, 1996, representing a 51.0% increase over the quarter
ended January 31, 1995. The increase reflects substantial product development
and introduction efforts in each of the Company's three functional product
groups. The Company believes that, given the rapidly changing technology and
competitive environment in the telecommunications equipment industry, continued
commitment to product development efforts will be required for the Company to
remain competitive. Accordingly, the Company intends to continue to allocate
substantial resources to product development for each of its three functional
product groups. However, the Company recognizes the need to balance the cost
of product development with expense control and remains committed to carefully
managing the rate of increase of such expenses.
Selling and administration expenses were $34.9 million for the quarter
ended January 31, 1996, representing a 17.3% increase over the quarter ended
January 31, 1995. The increase reflects selling activities associated with new
product introductions and additional personnel costs related to expanded
operations.
Other Income (Expense), Net: For the quarters ended January 31, 1996 and
1995, the net interest income (expense) category represented net interest
income on cash balances. (See Liquidity and Capital Resources below for a
discussion of cash levels.)
10
<PAGE>
Income Taxes: The effective income tax rate was 36.0% for the quarters
ended January 31, 1996 and 1995. In addition to the $784,000 of non-deductible
goodwill amortization included in operating expenses each quarter, the rates
reflect the beneficial impact of tax credits.
Net Income: Reflecting all of the matters discussed above, net income was
$16.3 million (or $.26 per share) for the quarter ended January 31, 1996, an
increase of 55.9% over $10.5 million (or $.19 per share) for the quarter ended
January 31, 1995.
LIQUIDITY AND CAPITAL RESOURCES
Cash and cash equivalents, primarily short-term investments in commercial
paper with maturities of less than 90 days, decreased $13.0 million and
increased $1.9 million during the quarters ended January 31, 1996 and 1995,
respectively. The major elements of the 1996 decrease were net income before
depreciation of $23.5 million offset by the $18.5 million increase in inventory
levels (reflecting growth in business), property and equipment additions of
$13.9 million and long-term investments of $4.5 million. The major elements of
the 1995 increase were net income before depreciation of $16.4 million,
partially offset by the $7.6 million increase in inventory levels (reflecting
growth in business) and property and equipment additions of $5.3 million.
The Company may borrow up to $40 million under revolving credit
agreements. Borrowings under these agreements bear interest at floating short-
term market rates, may be repaid any time without penalty and may be converted
to term loans bearing interest principally at the prime rate, payable in annual
installments through December 2000. At January 31, 1996 and October 31, 1995,
the full $40 million of revolving borrowing remained available to the Company,
and it had no long-term debt outstanding.
Management believes that current cash balances, cash generated from
operating activities and borrowings available under revolving credit agreements
will be adequate to fund working capital requirements, capital expenditures
(approximately $20.0 million committed at January 31, 1996) and possible
acquisitions or strategic alliances for 1996. However, the Company may find it
necessary to seek additional sources of financing to support its capital needs,
for additional working capital, potential investments or acquisitions, or
otherwise.
11
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
a. An annual meeting of shareholders was held on February 27, 1996.
b. Proxies for the meeting were solicited pursuant to Regulation 14
under the Securities and Exchange Act of 1934, there was no solicitation in
opposition to the management's nominees for director as listed in the proxy
statement and all such nominees were elected.
c-1. Amendment to the Company's Restated Articles of Incorporation to
increase the number of authorized shares of Common Stock from 100,000,000 to
300,000,0000 was approved (48,034,425 affirmative votes; 10,413,776 negative
votes; 135,626 abstentions and 127,500 broker non-votes).
c-2. The following table shows the vote totals with respect to the
election of the three directors:
For terms expiring in 1999
VOTES AUTHORITY
NAME FOR WITHHELD
--------------- -------------- -------------
James C. Castle, Ph.D. 52,773,833 5,937,494
Donald M. Sullivan 52,790,791 5,920,536
John D. Wunsch 52,789,530 5,921,797
ITEM 5. OTHER INFORMATION
None.
12
<PAGE>
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
4-a Form of certificate for shares of Common Stock of ADC
Telecommunications, Inc.
4-b Restated Articles of Incorporation of ADC
Telecommunications, Inc., as amended (Incorporated by reference
to Exhibit 4-b of the Company's Registration Statement on Form
S-8 dated March 11, 1994, for the Company's 1994 Employee Stock
Purchase Plan)
4-c Composite Restated Bylaws of ADC Telecommunications, Inc.,
as amended (Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1989)
4-d Second Amended and Restated Rights Agreement, amended and
restated as of November 28, 1995, between ADC
Telecommunications, Inc. and Norwest Bank Minnesota, N.A.
(amending and restating the Rights Agreement dated as of
September 23, 1986, as amended and restated as of August 16,
1989), which includes as Exhibit A thereto the form of Right
Certificate (Incorporated by reference to Exhibit 4 to the
Company's Form 8-K dated December 11, 1995)
10-d Access Platform Systems Management Incentive Plan Fiscal
Year 1996
10-e Broadband Connectivity AOFR Management Incentive Plan
Fiscal Year 1996
10-f Broadband Connectivity Copper Management Incentive Plan
Fiscal Year 1996
10-g Broadband Connectivity Fiber Management Incentive Plan
Fiscal Year 1996
10-h Broadband Connectivity Management Incentive Plan Fiscal
Year 1996
10-i Corporate Management Incentive Plan Fiscal Year 1996
10-j Enterprise Networking Group Management Incentive Plan
Fiscal Year 1996
10-k International Management Incentive Plan Fiscal Year 1996
10-l VP of Sales, Enterprise Networking Group Management
Incentive Plan Fiscal Year 1996
13
<PAGE>
10-m Network Services Management Incentive Plan Fiscal Year
1996
10-n Transmission Group Management Incentive Plan Fiscal Year
1996
10-o ADC Video Systems Management Incentive Plan Fiscal Year
1996
10-p Wireless Management Incentive Plan Fiscal Year 1996
10-q VP of Sales, Broadband Connectivity Management Incentive
Plan Fiscal Year 1996
10-r Systems Integration Management Incentive Plan Fiscal Year
1996
10-s VP of Global Customer Service Management Incentive Plan
Fiscal Year 1996
10-t Transmission Group Manufacturing Management Incentive Plan
Fiscal Year 1996
10-u VP of Sales, Transmission Group Management Incentive Plan
Fiscal Year 1996
10-v First Amendment of Lease, dated November 9, 1995, between
ADC Telecommunications, Inc. and Metro International Inc. (for
the Company's facility located at 11311 K-Tel Drive,
Minnetonka, Minnesota)
10-w Extension of Lease, dated December 7, 1995, between ADC
Telecommunications, Inc. and Lutheran Brotherhood (for the
Company's facility located at 5900 Clearwater Drive, Minnetonka
Corporate Center, Minnetonka, Minnesota)
10-x Extension of Lease, dated December 7, 1995, between ADC
Telecommunications, Inc. and Lutheran Brotherhood (for the
Company's facility located at 5950 Clearwater Drive, Minnetonka
Corporate Center, Minnetonka, Minnesota)
27-a Financial Data Schedule
b. Reports on Form 8-K
Report on Form 8-K dated November 28, 1995, describing under Item
5, that the Company amended the Shareholder Rights Plan originally
adopted on September 23, 1986, and previously amended on August 16,
1989
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: March 15, 1996 ADC TELECOMMUNICATIONS, INC.
By: /s/ Robert E. Switz
Robert E. Switz
Vice President, Chief Financial Officer
(Principal Financial Officer,
Duly Authorized Officer)
15
<PAGE>
ADC TELECOMMUNICATIONS, INC.
EXHIBIT INDEX TO FORM 10-Q
FOR THE QUARTER ENDED JANUARY 31, 1996
Exhibit No. Description
----------- -----------
4-a Form of certificate for shares of Common Stock of ADC
Telecommunications, Inc.
4-b Restated Articles of Incorporation of ADC
Telecommunications, Inc., as amended (Incorporated by reference
to Exhibit 4-b of the Company's Registration Statement on Form
S-8 dated March 11, 1994, for the Company's 1994 Employee Stock
Purchase Plan)
4-c Composite Restated Bylaws of ADC Telecommunications, Inc.,
as amended (Incorporated by reference to the Company's Annual
Report on Form 10-K for the fiscal year ended October 31, 1989)
4-d Second Amended and Restated Rights Agreement, amended and
restated as of November 28, 1995, between ADC
Telecommunications, Inc. and Norwest Bank Minnesota, N.A.
(amending and restating the Rights Agreement dated as of
September 23, 1986, as amended and restated as of August 16,
1989), which includes as Exhibit A thereto the form of Right
Certificate (Incorporated by reference to Exhibit 4 to the
Company's Form 8-K dated December 11, 1995)
10-d Access Platform Systems Management Incentive Plan Fiscal
Year 1996
10-e Broadband Connectivity AOFR Management Incentive Plan
Fiscal Year 1996
10-f Broadband Connectivity Copper Management Incentive Plan
Fiscal Year 1996
10-g Broadband Connectivity Fiber Management Incentive Plan
Fiscal Year 1996
10-h Broadband Connectivity Management Incentive Plan Fiscal
Year 1996
10-i Corporate Management Incentive Plan Fiscal Year 1996
10-j Enterprise Networking Group Management Incentive Plan
Fiscal Year 1996
10-k International Management Incentive Plan Fiscal Year 1996
16
<PAGE>
10-l VP of Sales, Enterprise Networking Group Management
Incentive Plan Fiscal Year 1996
10-m Network Services Management Incentive Plan Fiscal Year
1996
10-n Transmission Group Management Incentive Plan Fiscal Year
1996
10-o ADC Video Systems Management Incentive Plan Fiscal Year
1996
10-p Wireless Management Incentive Plan Fiscal Year 1996
10-q VP of Sales, Broadband Connectivity Management Incentive
Plan Fiscal Year 1996
10-r Systems Integration Management Incentive Plan Fiscal Year
1996
10-s VP of Global Customer Service Management Incentive Plan
Fiscal Year 1996
10-t Transmission Group Manufacturing Management Incentive Plan
Fiscal Year 1996
10-u VP of Sales, Transmission Group Management Incentive Plan
Fiscal Year 1996
10-v First Amendment of Lease, dated November 9, 1995, between
ADC Telecommunications, Inc. and Metro International Inc. (for
the Company's facility located at 11311 K-Tel Drive,
Minnetonka, Minnesota)
10-w Extension of Lease, dated December 7, 1995, between ADC
Telecommunications, Inc. and Lutheran Brotherhood (for the
Company's facility located at 5900 Clearwater Drive, Minnetonka
Corporate Center, Minnetonka, Minnesota)
10-x Extension of Lease, dated December 7, 1995, between ADC
Telecommunications, Inc. and Lutheran Brotherhood (for the
Company's facility located at 5950 Clearwater Drive, Minnetonka
Corporate Center, Minnetonka, Minnesota)
27-a Financial Data Schedule
17
<PAGE>
NUMBER COMMON STOCK
_____________ SHARES
__________
ADC TELECOMMUNICATIONS, INC.
INCORPORATED UNDER THE LAWS OF THE STATE OF MINNESOTA
See reverse for certain definitions
CUSIP 000886 10 1
THIS CERTIFIES THAT
___________________________________________________________is the owner of
_______________________________________________________________________________
FULLY PAID AND NON-ASSESSABLE SHARES OF COMMON STOCK, OF THE PAR VALUE OF
$.20 PER SHARE, OF ADC TELECOMMUNICATIONS, INC. transferable on the books of
the Corporation by the holder hereof in person or by duly authorized attorney
upon surrender of this certificate properly endorsed. This certificate is not
valid unless countersigned by the Transfer Agent and Registrar.
WITNESS the facsimile seal of the Corporation and the facsimile
signatures of its duly authorized officers.
[CORPORATE SEAL]
Dated:
/s/ David F. Fisher /s/ William J. Cadogan
SECRETARY CHAIRMAN
COUNTERSIGNED AND REGISTERED:
NORWEST BANK MINNESOTA, N.A.
(MINNEAPOLIS, MINNESOTA) TRANSFER AGENT
AND REGISTRAR
BY
AUTHORIZED SIGNATURE
<PAGE>
This certificate also evidences and entitles the holder hereof to certain
Rights as set forth in a Second Amended and Restated Rights Agreement dated as
of November 28, 1995 between ADC Telecommunications, Inc. (the "Company") and
Norwest Bank Minnesota, N.A. (the "Rights Agent") (the "Rights Agreement"),
the terms of which (including restrictions on the transfer of such Rights) are
hereby incorporated herein by reference and a copy of which is on file at the
principal executive office of the Company. Under certain circumstances, as set
forth in the Rights Agreement, such Rights will be evidenced by separate
certificates and will no longer be evidenced by this certificate. The Company
will mail to the holder of this certificate a copy of the Rights Agreement, as
in effect on the date of mailing, without charge after receipt of a written
request therefor from such holder. Under certain circumstances set forth in
the Rights Agreement, Rights issued to or held by any Person who is, was or
becomes an Acquiring Person or any Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and any subsequent holder of such
Rights, whether currently held by or on behalf of such Person or any subsequent
holder, may become null and void.
The Company will furnish to any shareholder upon request and without charge, a
full statement of the designations, preferences, limitations, and relative
rights of the shares of each class or series authorized to be issued, so far
as they have been determined, and the authority of the board to determine the
relative rights and preferences of subsequent classes or series.
The following abbreviations, when used in the inscription on the face of this
certificate, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common UNIF GIFT MIN ACT ____ Custodian ____
(Cust) (Minor)
TEN ENT - as tenants by the entireties under Uniform Gifts to Minors
Act ______________
JT TEN - as joint tenants with right of (State)
survivorship and not as tenants
in common
Additional abbreviations may also be used though not in the above list.
For value received ______________________ hereby sell, assign and transfer unto
PLEASE INSERT SOCIAL SECURITY OR OTHER IDENTIFYING NUMBER OF ASSIGNEE,
_______________________
_______________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS OF ASSIGNEE
___________________________ Shares of the capital stock represented by the
within Certificate, and do hereby irrevocably constitute and appoint
_________________________________ Attorney to transfer the said stock on the
books of the within-named Corporation with full power of substitution in the
premises.
Dated ______________________
____________________________________
NOTICE THE SIGNATURE TO THIS ASSIGNMENT MUST
CORRESPOND WITH THE NAME AS WRITTEN UPON THE
FACE OF THE CERTIFICATE IN EVERY PARTICULAR
WITHOUT ALTERATION OR ENLARGEMENT OR ANY
CHANGE WHATEVER
SIGNATURE GUARANTEED BY:
<PAGE>
ADC TELECOMMUNICATIONS
ACCESS PLATFORM SYSTEMS
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
ACCESS PLATFORM SYSTEMS
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), Access
Platform Systems Management Incentive Plan - Fiscal Year ("FY") 1996, effective
November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Access Platform
Systems participants are as follows:
Access Platform Systems Revenue
Overall 15%
International 15%
Access Platform Systems Operating Profit (Loss) 40%
Backlog at End of Fiscal Year 10%
* Individual Contribution 20%
----
TOTAL 100%
* The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's and
Division head's approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Overall Access Platform Systems Revenue or Access
Platform Systems Operating Profit (Loss) must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is
designated on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance payout requirements are met.
Goal Weight Achievement
---- ------ -----------
Access Platform Systems Revenue
Overall 15% 100%
International 15% 100%
Access Platform Systems Operating Profit (Loss) 40% 95%
Backlog at End of Fiscal Year 10% 98%
Individual Contribution 20% 100%
-----
Overall Result as % of Target 97.8%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 97.8% (Overall Result as a %
of Target)=$6,455.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
BROADBAND CONNECTIVITY AOFR
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
BROADBAND CONNECTIVITY AOFR
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
Broadband Connectivity AOFR Management Incentive Plan - Fiscal Year ("FY")
1996, effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by the incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payment which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Broadband
Connectivity AOFR participants are as follows :
Broadband Connectivity AOFR Revenue
Overall 15%
International (non-ADC sales outside
the United States) 15%
Broadband Connectivity AOFR Operating Profit 40%
* Broadband Connectivity Customer Service/
Inventory Turn Management 10%
** Individual Contribution 20%
----
TOTAL 100%
* The Broadband Connectivity Customer Service/Inventory Turn Management goal
measures the ability to deliver products to meet customer's request dates
while also effectively managing inventories. Customer service/inventory
turn management is measured by average inventory turns (the cost of goods
sold divided by average inventory cost) and by shipping performance
(relative to meeting customer request dates). A single numerical
representation of customer service/inventory management is derived by
multiplying the average inventory turn by the percentage of customer
request dates met by Broadband Connectivity.
For example, if Broadband Connectivity's average annual inventory turns is
5.0 and the percentage of customer request dates met is 80%, the result is
a customer service/inventory turn management achievement of 4.0.
Average inventory turns 5.0
% of customer request dates met .80
---
Result 4.0
** The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's and
Division head's approval
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning to the fiscal year.
B. The threshold for Overall Broadband Connectivity AOFR Revenue or Broadband
Connectivity AOFR Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payment under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payment under this Plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is designated
on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Target Payout: 15% of base salary earnings
Base Salary Earnings: A$50,000
All minimum performance requirements are met.
Goal Weight Achievement
---- ------ -----------
Broadband Connectivity AOFR Revenue
Overall 15% 90%
International (non-ADC sales outside
the United States) 15% 100%
Broadband Connectivity AOFR Operating Profit 40% 100%
Broadband Connectivity Customer Service/
Inventory Turn Management 10% 110%
Individual Contribution 20% 100%
-----
Overall Result as % of Target 99.5%
Calculation of Payment:
A$50,000(FY Earnings) x 15%(Target Opportunity) x 99.5%(Overall Result as a %
of Target) = A$7,462.50.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon a Promotion/Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro-rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served in the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board or Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
or Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
BROADBAND CONNECTIVITY COPPER
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
BROADBAND CONNECTIVITY COPPER
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
Broadband Connectivity Copper Management Incentive Plan - Fiscal Year ("FY")
1996, effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by the incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payment which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Broadband
Connectivity Copper participants are as follows :
Broadband Connectivity Copper Revenue
Overall 15%
International 15%
Broadband Connectivity Copper Operating Profit 40%
* Broadband Connectivity Customer Service/
Inventory Turn Management 10%
** Individual Contribution 20%
----
TOTAL 100%
* The Broadband Connectivity Customer Service/Inventory Turn Management goal
measures the ability to deliver products to meet customer's request dates
while also effectively managing inventories. Customer service/inventory
turn management is measured by average inventory turns (the cost of goods
sold divided by average inventory cost) and by shipping performance
(relative to meeting customer request dates). A single numerical
representation of customer service/inventory management is derived by
multiplying the average inventory turn by the percentage of customer
request dates met by Broadband Connectivity.
For example, if Broadband Connectivity's average annual inventory turns is
5.0 and the percentage of customer request dates met is 80%, the result is
a customer service/inventory turn management achievement of 4.0.
Average inventory turns 5.0
% of customer request dates met .80
---
Result 4.0
** The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's and
Division head's approval
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning to the fiscal year.
B. The threshold for Overall Broadband Connectivity Copper Revenue or
Broadband Connectivity Copper Operating Profit must be met.
<PAGE.
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payment under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payment under this Plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is designated
on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance requirements are met.
Goal Weight Achievement
---- ------ -----------
Broadband Connectivity Copper Revenue
Overall 15% 90%
International 15% 100%
Broadband Connectivity Copper Operating Profit 40% 100%
Broadband Connectivity Customer Service/Inventory
Turn Management 10% 110%
Individual Contribution 20% 100%
-----
Overall Result as % of Target 99.5%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 99.5% (Overall Result as a %
of Target) = $6,567.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon a Promotion/Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro-rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served in the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board or Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
or Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
BROADBAND CONNECTIVITY FIBER
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
BROADBAND CONNECTIVITY FIBER
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
Broadband Connectivity Fiber Management Incentive Plan - Fiscal Year ("FY")
1996, effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by the incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payment which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Broadband
Connectivity Fiber participants are as follows :
Broadband Connectivity Fiber Revenue
Overall 15%
International 15%
Broadband Connectivity Fiber Operating Profit 40%
* Broadband Connectivity Customer Service/
Inventory Turn Management 10%
** Individual Contribution 20%
----
TOTAL 100%
Note: Fiber products include MSC, AOFR, HFC and BSA.
* The Broadband Connectivity Customer Service/Inventory Turn Management goal
measures the ability to deliver products to meet customer's request dates
while also effectively managing inventories. Customer service/inventory
turn management is measured by average inventory turns (the cost of goods
sold divided by average inventory cost) and by shipping performance
(relative to meeting customer request dates). A single numerical
representation of customer service/inventory management is derived by
multiplying the average inventory turn by the percentage of customer
request dates met by Broadband Connectivity.
For example, if Broadband Connectivity's average annual inventory turns is
5.0 and the percentage of customer request dates met is 80%, the result is
a customer service/inventory turn management achievement of 4.0.
Average inventory turns 5.0
% of customer request dates met .80
---
Result 4.0
** The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's and
Division head's approval
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning to the fiscal year.
B. The threshold for Overall Broadband Connectivity Fiber Revenue or
Broadband Connectivity Fiber Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payment under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payment under this Plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is designated
on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance requirements are met.
Goal Weight Achievement
---- ------ -----------
Broadband Connectivity Fiber Revenue
Overall 15% 90%
International 15% 100%
Broadband Connectivity Fiber Operating Profit40% 100%
Broadband Connectivity Customer Service/Inventory
Turn Management 10% 110%
Individual Contribution 20% 100%
-----
Overall Result as % of Target 99.5%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 99.5% (Overall Result as a %
of Target) = $6,567.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon a Promotion/Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro-rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served in the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board or Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
or Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
BROADBAND CONNECTIVITY
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
BROADBAND CONNECTIVITY
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
Broadband Connectivity Management Incentive Plan - Fiscal Year ("FY") 1996,
effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by the incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payment which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Broadband
Connectivity participants are as follows:
Broadband Connectivity Revenue
Overall 15%
International 15%
Broadband Connectivity Operating Profit 40%
* Broadband Connectivity Customer Service/Inventory
Turn Management 10%
** Individual Contribution 20%
----
TOTAL 100%
* The Broadband Connectivity Customer Service/Inventory Turn Management goal
measures the ability to deliver products to meet customer's request dates
while also effectively managing inventories. Customer service/inventory
turn management is measured by average inventory turns (the cost of goods
sold divided by average inventory cost) and by shipping performance
(relative to meeting customer request dates). A single numerical
representation of customer service/inventory management is derived by
multiplying the average inventory turn by the percentage of customer
request dates met by the Broadband Connectivity Division.
For example, if Broadband Connectivity's average annual inventory turns is
5.0 and the percentage of customer request dates met is 80%, the result is
a customer service/inventory turn management achievement of 4.0.
Average inventory turns 5.0
% of customer request dates met .80
---
Result 4.0
** The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's and
Division head's approval
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning to the fiscal year.
B. The threshold for Overall Broadband Connectivity Revenue or Broadband
Connectivity Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payment under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payment under this Plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is designated
on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance requirements are met.
Goal Weight Achievement
---- ------ -----------
Broadband Connectivity Revenue
Overall 15% 90%
International 15% 100%
Broadband Connectivity Operating Profit 40% 100%
Broadband Connectivity Customer Service/
Inventory Turn Management 10% 110%
Individual Contribution 20% 100%
----
Overall Result as % of Target 99.5%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 99.5% (Overall Result as a %
of Target) = $6,567.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon a Promotion/Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro-rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served in the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board or Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
or Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
CORPORATE
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
CORPORATE
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
Corporate Management Incentive Plan - Fiscal Year ("FY") 1996, effective
November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Corporate
participants are as follows:
Corporate Revenue 30%
Corporate Operating Profit 40%
International Revenue 10%
* Individual Contribution 20%
----
TOTAL 100%
* The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's
and Division head's approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Corporate Revenue or Corporate Operating Profit must be
met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is
designated on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Corporate and individual performance against the established goals.
4. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance payout requirements are met.
Goal Weight Achievement
---- ------ -----------
Corporate Revenue 30% 90%
Corporate Operating Profit 40% 100%
International Revenue 10% 110%
Individual Contribution 20% 100%
----
Overall Result as % of Target 98%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 98% (Overall Result as a %
of Target)=$6,468.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
ENTERPRISE NETWORKING GROUP
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
ENTERPRISE NETWORKING GROUP
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
Enterprise Networking Group Management Incentive Plan - Fiscal Year ("FY")
1996, effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by the incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payment which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Enterprise
Networking Group participants are as follows:
Enterprise Networking Group Revenue
Overall 15%
International 15%
Enterprise Networking Group Operating Profit 40%
Enterprise Networking Group Gross Margin % 10%
* Individual Contribution 20%
---
TOTAL 100%
* The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the attached
"Individual Objectives" form and require your direct manager's and Division
head's approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning to the fiscal year.
B. The threshold for Enterprise Networking Group Overall Revenue or
Enterprise Networking Group Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payment under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payment under this Plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is designated
on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. How individual awards are determined is shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance requirements are met.
Goal Weight Achievement
---- ------ -----------
Enterprise Networking Group Revenue
Overall 15% 100%
International 15% 100%
Enterprise Networking Group Operating Profit 40% 95%
Enterprise Networking Group Gross Margin % 10% 98%
Individual Contribution 20% 100%
-----
Overall Result as % of Target 97.8%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 97.8% (Overall Result as a %
of Target) = $6,455.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job may retain the right to a pro-rata
payment based upon the time served in the eligible position during the fiscal
year.
D. Change Based Upon a Promotion/Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro-rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer To Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served in the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
INTERNATIONAL
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
INTERNATIONAL
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
International Management Incentive Plan - Fiscal Year ("FY") 1996, effective
November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for International
participants are as follows:
International Revenue
Broadband Connectivity 30%
* Transmission Group 30%
Optus Vision 20%
** Individual Contribution 20%
---
TOTAL 100%
* Includes ENG Australia and Systems Integration; excludes Optus Vision.
** The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's
and division head's approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Overall International Revenue (Broadband Connectivity,
Transmission Group and Optus Vision combined) must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is
designated on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. International and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance payout requirements met.
Goal Weight Achievement
---- ------ -----------
International Revenue
Broadband Connectivity 30% 110%
Transmission Group 30% 100%
Optus Revenue 20% 90%
Individual Contribution 20% 100%
----
Overall Result as % of Target 101%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 101% (Overall Result as a %
of Target)=$6,666.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
VP OF SALES, ENTERPRISE NETWORKING GROUP
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
VP OF SALES, ENTERPRISE NETWORKING GROUP
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), VP of
Sales, Enterprise Networking Group Management Incentive Plan - Fiscal Year
("FY") 1996, effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
To qualify for participation under this Plan, the participant must be employed
by ADC as VP of Sales, Enterprise Networking Group. No employee will become a
participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for this Plan are as
follows:
Enterprise Networking Group Revenue
Overall 40%
International 20%
Enterprise Networking Group Operating Profit 20%
* Individual Contribution 20%
----
TOTAL 100%
* The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your Division head's
approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Overall Enterprise Networking Group Revenue or
Enterprise Networking Group Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is
designated on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 20
Target Payout: 45% of base salary earnings
Base Salary Earnings: 140,000
All minimum performance payout requirements are met.
Goal Weight Achievement
---- ------ -----------
Enterprise Networking Group Revenue
Overall 40% 100%
International 20% 110%
Enterprise Networking Group Operating Profit 20% 90%
Individual Contribution 20% 90%
---
Overall Result as % of Target 98%
Calculation of Payment:
$140,000 (FY Earnings) x 45% (Target Opportunity) x 98% (Overall Result as a %
of Target)=$61,740.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
NETWORK SERVICES
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
NETWORK SERVICES
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), Network
Services Management Incentive Plan - Fiscal Year ("FY") 1996, effective
November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by the incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payment which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Network Services
participants are as follows :
Network Services Revenue
Overall 15%
International 15%
Network Services Operating Profit 40%
Number of Major Customers Served
(over $5.0 million in shipments) 10%
* Individual Contribution 20%
---
TOTAL 100%
* The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objectives" form and require your direct manager's
and division head's approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning to the fiscal year.
B. The threshold for Overall Network Services Revenue or Network Services
Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payment under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payment under this Plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is designated
on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance requirements are met.
Goal Weight Achievement
---- ------ -----------
Network Services Revenue
Overall 15% 90%
International 15% 100%
Network Services Operating Profit 40% 100%
Number of Major Customers Served 10% 110%
Individual Contribution 20% 100%
-----
Overall Result as % of Target 99.5%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 99.5% (Overall Result as a %
of Target) = $6,567.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination or Retirement. Subject to the approval
of the Committee, a participant who is involuntarily terminated or transferred
to a non-eligible position because of a job elimination or retires from the
Company may retain the right to a pro-rata payment based upon the time served
in the eligible position during the fiscal year.
D. Change Based Upon a Promotion/Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro-rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs or beneficiary will retain the right to a pro-rata payment based upon the
time the participant served in the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board or Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
or Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
TRANSMISSION GROUP
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
TRANSMISSION GROUP
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
Transmission Group Management Incentive Plan - Fiscal Year ("FY") 1996,
effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights are as follows:
Transmission Group Revenue
Overall 15%
International 15%
Transmission Group Operating Profit 40%
* Individual Contribution 30%
----
TOTAL 100%
* The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the attached
"Individual Objective" form and require your direct manager's or Group
head's approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Overall Transmission Group Revenue or Transmission Group
Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is designated
on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance payout requirements are met.
Goal Weight Achievement
---- ------ -----------
Transmission Group Revenue
Overall 15% 100%
International 15% 100%
Transmission Group Operating Profit 40% 90%
Individual Contribution 30% 100%
----
Overall Result as % of Target 96%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 96% (Overall Result as a %
of Target)=$6,336.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
ADC VIDEO SYSTEMS
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
ADC VIDEO SYSTEMS
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), ADC
Video Systems Management Incentive Plan - Fiscal Year ("FY") 1996, effective
November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for ADC Video Systems
participants are as follows:
ADC Video Systems Revenue
Overall 15%
International 15%
ADC Video Systems Operating Profit 40%
ADC Video Systems Project Milestones (weighted equally) 10%
ISX2/ISA2
HWX
DV6000 Single Channel
* Individual Contribution 20%
----
TOTAL 100%
Note: Above goals include shipments to China.
* The Individual Contribution goal measures your performance against
pre-determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's and
Division head's approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for ADC Video Systems Overall Revenue or ADC Video Systems
Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The Obligation to make Payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is
designated on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance payout requirements are met.
Goal Weight Achievement
---- ------ -----------
ADC Video Systems Revenue
Overall 15% 100%
International 15% 110%
ADC Video Systems Operating Profit 40% 90%
ADC Video Systems Project Milestones 10% 110%
Individual Contribution 20% 100%
-----
Overall Result as % of Target 98.5%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 98.5% (Overall Result as a %
of Target)=$6,501.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
WIRELESS
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
WIRELESS
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), Wireless
Management Incentive Plan - Fiscal Year ("FY") 1996, effective November 1, 1995
through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Wireless
participants are as follows:
Wireless Revenue
Overall 15%
International 15%
Wireless Operating Profit (Loss) 40%
City Sector Revenue 10%
* Individual Contribution 20%
---
TOTAL 100%
* The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's and
Division head's approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Overall Wireless Revenue or Wireless Operating Profit
(Loss) must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is
designated on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance payout requirements are met.
Goal Weight Achievement
---- ------ -----------
Wireless Revenue
Overall 15% 100%
International 15% 100%
Wireless Operating Profit (Loss) 40% 95%
City Sector Revenue 10% 98%
Individual Contribution 20% 100%
----
Overall Result as % of Target 97.8%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 97.8% (Overall Result as a %
of Target)=$6,455.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
VP OF SALES, BROADBAND CONNECTIVITY
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
VP OF SALES, BROADBAND CONNECTIVITY
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), VP of
Sales, Broadband Connectivity Management Incentive Plan - Fiscal Year ("FY")
1996, effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
To qualify for participation under this Plan, the participant must be employed
by ADC as VP of Sales, Broadband Connectivity. No employee will become a
participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for this Plan are as
follows:
Broadband Connectivity Revenue
* Overall 50%
** Canada 10%
Broadband Connectivity Operating Profit 20%
*** Individual Contribution 20%
----
TOTAL 100%
* Includes U.S. Broadband Connectivity, all of Canada; plus NSD and AVS for
Government and Systems Integration; excludes NSD Distribution.
** Includes Broadband Connectivity, Enterprise Networking Group, and
Transmission Group.
*** The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your Division head's
approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Overall Broadband Connectivity Revenue or Broadband
Connectivity Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is
designated on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 21
Target Payout: 45% of base salary earnings
Base Salary Earnings: 150,000
All minimum performance payout requirements are met.
Goal Weight Achievement
---- ------ -----------
Broadband Connectivity Revenue
Overall 50% 100%
Canada 10% 110%
Broadband Connectivity Operating Profit 20% 90%
Individual Contribution 20% 100%
----
Overall Result as % of Target 99%
Calculation of Payment:
$150,000 (FY Earnings) x 45% (Target Opportunity) x 99% (Overall Result as a %
of Target)=$66,825.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
SYSTEMS INTEGRATION
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
SYSTEMS INTEGRATION
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), Systems
Integration Management Incentive Plan - Fiscal Year ("FY") 1996, effective
November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for Systems
Integration participants are as follows:
Systems Integration Revenue 25%
Systems Integration Profit (Loss) 25%
* Sales of New Services to Customers 30%
** Individual Contribution 20%
----
TOTAL 100%
* Includes sales of at least $10,000 of new services to a customer. Maximum
of one point per customer is allowed. Examples include:
Sales of network design to Optus Vision
Sales of network design and strand mapping to NYNEX
Sales of EF&I to Time Warner
Sales of project management to Hong Kong Telephone
** The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's and
Division head's approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Systems Integration Revenue or Systems Integration
Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is
designated on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance payout requirements met.
Goal Weight Achievement
---- ------ -----------
Systems Integration Revenue 25% 100%
Systems Integration Operating Profit (Loss) 25% 90%
Sales of New Services to Customers 30% 110%
Individual Contribution: 20% 100%
------
Overall Result as % of Target 100.5%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 100.5% (Overall Result as a
% of Target)=$6,633.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
VP OF GLOBAL CUSTOMER SERVICE
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
VP OF GLOBAL CUSTOMER SERVICE
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), VP of
Global Customer Service Management Incentive Plan - Fiscal Year ("FY") 1996,
effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
To qualify for participation under this plan, the participant must be employed
by ADC as VP of Global Customer Service. No employee will become a participant
in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. Of the total weight of this plan, 40% comes from Corporate
goals and 60% comes from Systems Integration goals. The FY 1996 goal
categories and weights are as follows:
Corporate
---------
Revenue 30%
Operating Profit 40%
International Revenue 10%
* Individual Contribution 20%
----
TOTAL 100%
(weighted 40% of total award)
Systems Integration
-------------------
Revenue 25%
Operating Profit 25%
** Sales of New Services to Customers 30%
* Individual Contribution 20%
TOTAL 100%
(weighted 60% of total award)
* The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's
approval.
** Includes sales of at least $10,000 of new services to a customer. Maximum
of one point per customer is allowed. Examples include:
Sales of network design to Optus Vision
Sales of network design and strand mapping to NYNEX
Sales of EF&I to Time Warner
Sales of project management to Hong Kong Telephone
<PAGE>
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to assure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Corporate Revenue or Corporate Operating Profit must be
met for any Corporate payout to occur. The threshold for Systems Integration
Revenue or Systems Integration Profit must be met for any Systems Integration
payout to occur.
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is designated
on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Corporate, business unit and individual performance against the
established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 20
Target Payout: 30% of base salary earnings
Base Salary Earnings: 110,000
All minimum performance payout requirements are met.
<PAGE>
Goal - Corporate (Weighted 40%) Weight Achievement
------------------------------- ------ -----------
Revenue
Total 30% 90%
International 10% 110%
Operating Profit 40% 100%
Individual Contribution 20% 100%
----
Overall Result as % of Target 98%
Weighted Overall Result (40% of 98%) 39.2%
Goal - Systems Integration (Weighted 60%) Weight Achievement
----------------------------------------- ------ -----------
Revenue 25% 100%
Operating Profit (Loss) 25% 90%
Sales of New Services to Customers 30% 110%
Individual Contribution 20% 100%
------
Overall Result as % of Target 100.5%
Weighted Overall Result (60% of 100.5%) 60.3%
Calculation of Payment:
$110,000 (FY Earnings) x 30% (Target Opportunity) x 99.5% (Overall Result as a
% of Target)=$32,835.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
TRANSMISSION GROUP MANUFACTURING
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
TRANSMISSION GROUP MANUFACTURING
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"),
Transmission Group Manufacturing Management Incentive Plan - Fiscal Year ("FY")
1996, effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
The Committee will establish rules of eligibility for participation in the Plan
and determine eligibility in accordance with those rules. Participation will
be effective as of the date approved by the Committee and will be communicated
to the participant by an incentive opportunity statement ("Participant Form")
specifying the target incentive level for the position held by the participant.
No employee will become a participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. Of the total weight of this plan, 40% comes from Network
Services Division goals and 40% comes from Access Platform Systems goals. The
FY 1996 goal categories and weights for NSD and APS are as follows:
Network Services Division
-------------------------
Revenue
Overall 7.5%
International 7.5%
Operating Profit 20.0%
Major Customers Served
(over $5.0 million in shipments) 5.0%
-----
Total 40.0%
Access Platform Systems
-----------------------
Revenue
Overall 7.5%
International 7.5%
Operating Profit 20.0%
Backlog at End of Fiscal Year 5.0%
-----
Total 40.0%
* Individual Contribution 20.0%
-----------------------
Total 100%
* The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your direct manager's and
Division Head's approval.
<PAGE>
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to assure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Overall NSD Revenue or NSD Operating Profit must be met
for any NSD payout to occur. The threshold for Overall APS Revenue or APS
Operating Profit must be met for any APS payout to occur. At least one of
these thresholds must be met for any Individual Contribution payout to occur.
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is
designated on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 15
Target Payout: 11% of base salary earnings
Base Salary Earnings: 60,000
All minimum performance payout requirements are met.
<PAGE>
Goal - NSD Weight Achievement
---------- ------ -----------
Revenue
Overall 7.5% 90%
International 7.5% 110%
Operating Profit 20.0% 100%
Major Customers Served 5.0% 100%
-----
Overall Result as % of Target 40.0%
Goal - APS Weight Achievement
---------- ------ -----------
Revenue
Overall 7.5% 100%
International 7.5% 100%
Operating Profit (Loss) 20.0% 90%
Backlog at End of Fiscal Year 5.0% 110%
-----
Overall Result as % of Target 38.5%
Individual Contribution 20.0% 100%
----------------------- ----
Overall Result as % of Target 20.0%
Total Plan Results as % of Target 98.5%
Calculation of Payment:
$60,000 (FY Earnings) x 11% (Target Opportunity) x 98.5% (Overall Result as a %
of Target)=$6,501.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
<PAGE>
ADC TELECOMMUNICATIONS
VP OF SALES, TRANSMISSION GROUP
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
<PAGE>
ADC TELECOMMUNICATIONS
VP OF SALES, TRANSMISSION GROUP
MANAGEMENT INCENTIVE PLAN
FISCAL YEAR 1996
I. PLAN NAME AND EFFECTIVE DATE
The name of this Plan is the ADC Telecommunications, Inc. ("Company"), VP of
Sales, Transmission Group Management Incentive Plan - Fiscal Year ("FY") 1996,
effective November 1, 1995 through October 31, 1996.
II. 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 management
employees to perform an effective leadership role and make a significant
contribution to the Company's established goals.
III. ADMINISTRATION
This Plan will be administered by a Management Incentive Plan Committee
("Committee") appointed and authorized by the Company's Board of Directors.
Subject to the complete and full discretion of the Board of Directors, the
Committee is authorized to make all decisions as required in administration of
the Plan and to exercise its discretion to define, interpret, construe, apply
and make any exceptions to the terms of the Plan.
IV. ELIGIBILITY
To qualify for participation under this Plan, the participant must be employed
by ADC as VP of Sales, Transmission Group. No employee will become a
participant in the Plan after May 1, 1996.
V. TIME OF PAYMENT
Payments which become due under this Plan will be made as soon as
administratively feasible following the close of the Company's fiscal year.
<PAGE>
VI. PLAN GOALS
The Plan reinforces the annual financial goals which support ADC's long-term
strategic plans. The FY 1996 goal categories and weights for this plan are as
follows:
* Transmission Group Domestic Revenue 60%
(NSD, AVS, APS, SI)
Transmission Group Operating Profit 20%
** Individual Contribution 20%
----
TOTAL 100%
* Excludes Network Service Division and ADC Video Systems for Government
Markets.
** The Individual Contribution goal measures your performance against pre-
determined objectives. The objectives are to be documented on the
attached "Individual Objective" form and require your Group head's
approval.
VII. MINIMUM PERFORMANCE PAYOUT REQUIREMENTS
The following minimum performance goals must be met to ensure protection of
shareholder interest before an incentive payout can be generated.
A. Incentive payments will be made only if the Company's consolidated net
profits are in excess of a threshold rate of return on stockholders' equity.
This rate has been established at 10%, after tax, based on stockholders' equity
at the beginning of the fiscal year.
B. The threshold for Transmission Group Domestic Revenue or Transmission
Group Operating Profit must be met.
<PAGE>
VIII. CALCULATION OF PAYMENTS
A. Determination of Achievement Against Goals and Obligation to Make
Payments.
1. The obligation to make payments under the Plan will be determined by
achievement of goals determined by the Board of Directors.
2. The payout opportunity for meeting the threshold goal is 30% of target.
The payout opportunity for meeting the maximum goal is 200% of target. Results
between threshold-target and target-maximum are interpolated.
B. Calculation of individual payments under this plan is a function of:
1. Target incentive opportunity - expressed as a percentage of an
individual's FY 1996 earnings. The target % for each participant is designated
on the "Participant Form."
2. Participant's 1996 fiscal year base salary earnings.
3. Business unit and individual performance against the established goals.
C. Individual award calculations are shown by the following example:
Assume we have a Plan participant with the following facts:
Grade: 21
Target Payout: 45% of base salary earnings
Base Salary Earnings: 150,000
All minimum performance payout requirements are met.
Goal Weight Achievement
---- ------ -----------
Transmission Group Domestic Revenue 60% 100%
Transmission Group Operating Profit 20% 90%
Individual Contribution 20% 100%
----
Overall Result as % of Target 98%
Calculation of Payment:
$150,000 (FY Earnings) x 45% (Target Opportunity) x 98% (Overall Result as a %
of Target)=$66,150.
<PAGE>
IX. EFFECT OF CHANGE IN EMPLOYMENT STATUS
A. Voluntary Resignation. A participant who voluntarily resigns full-time
employment prior to the end of the Fiscal Year will relinquish all right to any
payment under the Plan.
B. Change Based Upon Unsatisfactory Job Performance. A participant who is
involuntarily terminated or transferred to a non-eligible position for reasons
of unsatisfactory job performance will relinquish all right to any payment
under this plan.
C. Change Based Upon Job Elimination. Subject to the approval of the
Committee, a participant who is involuntarily terminated or transferred to a
non-eligible position because of a job elimination may retain the right to a
pro-rata payment based upon the time served in the eligible position during the
fiscal year.
D. Change Based Upon Promotion / Demotion. A current participant who is
promoted or demoted from an incentive eligible position to another incentive
eligible position during the fiscal year will have a pro rata calculation of
payment based upon the time served in each position during FY 1996.
E. Change Based Upon Transfer to Another Position. A current participant who
transfers to another position within the Company that is eligible for
participation in an ADC Management Incentive Plan with different goals during
FY 1996 will have a pro rata calculation of payment based on the goals and
length of time served in the respective positions.
F. Death. If a participant dies during the fiscal year, the participant's
heirs as determined by will or applicable laws of descent and distribution will
have a pro-rata calculation of payment based upon the time the participant
served the eligible position during the fiscal year.
X. AMENDMENT OR TERMINATION OF PLAN
The Board of Directors reserves and retains the right to modify, rescind or
terminate this plan in whole or in part, at its sole discretion, and nothing in
this Plan limits this right in any way or creates any rights in any employee of
future participation in this Plan or any other plan, or constitutes any
guarantee of compensation or employment with ADC. Further, neither the Board
of Directors nor the Company has any obligation under this Plan or otherwise to
adopt this or any other plan in any future fiscal year.
3
<PAGE>
FIRST AMENDMENT OF LEASE
FIRST AMENDMENT OF LEASE (this "Amendment"), dated November 9, 1995,
between METRO INTERNATIONAL INC., an Ontario corporation ("Landlord"), and ADC
TELECOMMUNICATIONS, INC., a Minnesota corporation ("Tenant").
Preliminary Statement
Landlord and Tenant have entered into the Lease, dated March 1, 1986, with
respect to the premises located at 11311 K-Tel Drive, Minnetonka, Minnesota.
The initial term of the Lease expired on July 31, 1991, and Tenant exercised
its renewal option pursuant to letter dated June 5, 1990, extending the term of
the Lease to July 31, 1996.
Landlord and Tenant desire to further extend the term of the Lease, and to
make certain other amendments to the Lease, all as more particularly set forth
in this Amendment.
Therefore, in consideration of the mutual promises in this Amendment, and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, Landlord and Tenant agree as follows:
1. All capitalized terms used but not otherwise defined in this
Amendment shall have the meanings set forth in the Lease.
2. Effective as of August 1, 1996 (the "Effective Date"), the Lease is
hereby amended as follows:
(a) The Term of the Lease shall be extended by five (5) years (the "Second
Renewal Term"), upon all the terms, covenants and conditions set forth in the
Lease (except as otherwise modified by this Amendment), so that the expiration
of the Term shall be July 31, 2001.
(b) Tenant shall pay to Landlord Minimum Rent at the annual rate of Five
Hundred Seventy-Six Thousand One Hundred Eighty and 00/100 Dollars
($576,180.00), payable in lawful money of the United States of America, in
equal monthly installments in the amount of Forty-Eight Thousand Fifteen and
00/100 Dollars ($48,015.00) each, payable in advance on the first day of each
calendar month during the Second Renewal Term without any setoff, offset,
abatement or deduction whatsoever.
(c) Tenant shall have the right, at its option, to renew the Term of the
Lease, for all of the Leased Premises, for a renewal term (the "Third Renewal
Term"), of five (5) years. The Third Renewal Term shall commence on August 1,
2001, and shall terminate on July 31, 2006. Tenant shall exercise the option
described herein by giving Landlord written notice of such election to renew
not later than August 1, 2000, and upon the giving of such notice the Lease
shall thereupon be deemed renewed for the Third Renewal Term with the same
force and effect as if the Third Renewal Term had
<PAGE>
originally been included in the Term of the Lease. Time is of the essence with
respect to Tenant's delivery of such notice to renew.
(d) Tenant shall pay to Landlord Minimum Rent at the annual rate of Six
Hundred Twenty-Three Thousand Seven Hundred and 00/100 Dollars ($623,700.00),
payable in lawful money of the United States of America, in equal monthly
installments in the amount of Fifty-One Thousand Nine Hundred Seventy-Five and
00/00 Dollars ($51,975.00) each, payable in advance on the first day of each
calendar month during the Third Renewal Term without any setoff, offset,
abatement or deduction whatsoever.
(e) The definition of "Term" is amended to include the Initial Term, together
with the Renewal Term, the Second Renewal Term, and the Third Renewal Term.
(f) The definition of "Minimum Rent" is amended to include the annual rent
payable during the Initial Term, the Renewal Term, the Second Renewal Term, and
the Third Renewal Term.
3. Tenant has agreed to accept the Leased Premises "AS IS", "WHERE IS",
in their existing condition and state of repair, and without any representation
or warranty by or on behalf of Landlord, express or implied, including any
representation or warranty as to: (i) MERCHANTABILITY; (ii) TENANTABILITY;
(iii) fitness for Tenant's intended purposes or any other particular purpose;
(iv) the condition or state of repair of the Leased Premises; (v) the absence
or presence of any structural or other defects or deficiencies in the Leased
Premises; or (vi) any other matter or aspect pertaining to the Leased Premises
or the use, potential use, or condition thereof. Tenant hereby expressly
covenants and agrees that Landlord shall, under no circumstances, be liable for
any latent, patent, or other non-structural defects or deficiencies in the
Leased Premises.
4. Landlord and Tenant hereby represent and warrant to the other that it
has dealt with no broker, finder or like agent in connection with this
Amendment. Landlord and Tenant hereby agree to indemnify and hold the other
harmless from and against any and all losses, costs, damages and expenses
(including, without limitation, attorneys' fees and disbursements) incurred by
the indemnified party for any claim of, or liability to, any broker, finder or
like agent who shall claim to have dealt with the indemnifying party in
connection with this Amendment.
5. Written notices, statements or requests to Landlord, permitted or
required in accordance with the Lease, shall be delivered to 155 University
Avenue, Suite 205, Toronto, Ontario MSH 3B7.
6. Tenant acknowledges and agrees that, as of the date hereof, (i)
Tenant has no offsets, claims, counterclaims or defenses of any nature
whatsoever to the performance of its obligations under the Lease (including,
without limitation, its obligation to pay any Rent) and, to the best of
Tenant's knowledge, there is no condition which, with the giving of notice
and/or lapse of time, would constitute the basis of such an offset, claim,
counterclaim or defense, and (ii) Tenant has no claims of any nature whatsoever
against Landlord.
2
<PAGE>
7. All of the terms, covenants and conditions of this Amendment shall be
conditional upon Tenant not being in default under Lease, and upon the Lease
being in full force and effect as of the Effective Date.
8. As modified by this Amendment, all of the terms and conditions of the
Lease are hereby ratified and confirmed in all respects and shall continue to
remain in full force and effect throughout the remainder of the Term of the
Lease.
9. The terms and conditions contained in this Amendment shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
10. This Amendment may not be modified, amended or terminated, and no
provision may be waived, except by an agreement in writing, signed by the party
against whom enforcement of any modification, amendment, termination or waiver
is sought.
11. Tenant shall, simultaneously with the execution and delivery of this
Amendment, deliver a check made payable to Landlord in the amount of Five
Hundred and 00/100 Dollars ($500.00), on account of the legal fees incurred by
Landlord in connection with the preparation of this Amendment.
12. This Amendment may be executed in counterparts, each of which will be
deemed to be an original and all of which will together constitute one
instrument.
THIS AMENDMENT has been executed and delivered by Landlord and Tenant the
day first set forth above.
LANDLORD:
METRO INTERNATIONAL INC., an Ontario corporation
By: /s/ Don Rodney
------------------------------
Name: Don Rodney
Title: Vice President
TENANT:
ADC TELECOMMUNICATIONS, INC., a Minnesota
Corporation
By: /s/ Fred Lawrence
------------------------------
Name: Fred Lawrence
Title: Senior Vice President
3
<PAGE>
EXTENSION OF LEASE
This Indenture, made this 7th day of December, 1995 by and between Lutheran
Brotherhood, a Minnesota corporation (hereinafter called "Landlord") and ADC
Telecommunications, Inc., a Minnesota corporation, (hereinafter called
"Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a certain lease agreement, dated
August 21, 1990, as amended by that certain First Amendment to Lease Agreement
dated October 26, 1990, (hereinafter called the "Lease") under which Landlord
demised to Tenant the premises commonly known as 5900 Clearwater Drive,
Minnetonka Corporate Center (hereinafter, the "Leased Premises"); and
WHEREAS, the initial term of said Lease is scheduled to expire by lapse of time
on August 31, 1996; and
WHEREAS, Landlord and Tenant hereby wish to extend the term of said Lease; and
WHEREAS, Landlord and Tenant have agreed upon the terms and conditions
governing said extension;
NOW, THEREFORE, in consideration of the premises, the payments to be made
hereunder and the covenants and agreements herein undertaken to be kept and
performed, it is agreed as follows:
1. The term of the Lease is hereby extended for a period of five (5) years
commencing on the last day of the initial term of the Lease and expiring on the
31st day of August, 2001, (hereinafter, the "Extension Period") unless the
Lease shall sooner terminate as provided therein.
2. For years 1 (l) through three (3) of the Extension Period, Tenant shall
pay to Landlord, as Base Rent, over and above the other and additional payments
to be made by Tenant for the Leased Premises, the annual sum of Three Hundred
Seventy Eight Thousand, Six Hundred Twelve and No/100 Dollars ($37~,612.00)
payable monthly in advance on the first day of each and every calendar month in
installments of Thirty One Thousand Five Hundred Fifty One and No/100 Dollars
($31,551.00), and for years four (4) through five (5) of the Extension Period,
the annual sum of Four Hundred Sixteen Thousand, Seven Hundred Sixty and No/100
Dollars ($416,760.00) payable monthly in advance on the first day of each and
every calendar month in installments of Thirty Four Thousand Seven Hundred
Thirty and No/l 00 Dollars ($34,730.00) all at the place and in the manner as
provided for within the Lease.
1
<PAGE>
3. It is understood and agreed that Tenant will continue to be responsible
for 100% of the Leased Premises' annual real estate tax and insurance expense
as defined in the Lease and that Tenant will have no further options to extend
the Lease. Except as herein specifically amended, all other terms, covenants
and conditions of the Lease shall remain in full force and effect, and the same
are hereby ratified and confirmed.
IN WITNESS WHEREOF, Landlord and Tenant have executed the within Agreement as
of the day and year first above written.
LANDLORD:
Lutheran Brotherhood
a Minnesota corporation
/s/ Clifford W. Habeck
- ------------------------------------
By: Clifford W. Habeck
Its: AVP
TENANT:
ADC Telecommunications, Inc.
/s/ Robert E. Switz
- ------------------------------------
By: Robert E. Switz
Its: VP and CFO
2
<PAGE>
EXTENSION OF LEASE
This Indenture, made this 7th day of December, 1995 by and between Lutheran
Brotherhood, a Minnesota corporation (hereinafter called "Landlord") and ADC
Telecommunications, Inc., a Minnesota corporation, (hereinafter called
"Tenant").
WITNESSETH:
WHEREAS, Landlord and Tenant entered into a certain lease agreement, dated
October 26, 1990, as amended by that certain First Amendment to Lease Agreement
dated October 26, 1990, (hereinafter called the "Lease") under which Landlord
demised to Tenant the premises commonly known as 5950 Clearwater Drive,
Minnetonka Corporate Center (hereinafter, the "Leased Premises"); and
WHEREAS, the initial term of said Lease is scheduled to expire by lapse of time
on July 31, 1997; and
WHEREAS, Landlord and Tenant hereby wish to extend the term of said Lease; and
WHEREAS, Landlord and Tenant have agreed upon the terms and conditions
governing said extension;
NOW, THEREFORE, in consideration of the premises, the payments to be made
hereunder and the covenants and agreements herein undertaken to be kept and
performed, it is agreed as follows:
1. The term of the Lease is hereby extended for a period of four (4) years
plus one (l) additional month commencing on the last day of the initial term of
the Lease and expiring on the 31st day of August, 2001, (hereinafter, the
Extension Period") unless the Lease shall sooner terminate as provided therein.
2. For years one (l) and two (2) of the Extension Period, Tenant shall pay to
Landlord as Base Rent, for the Leased Premises, the annual sum of Two Hundred
Thirty-Four Thousand Four Hundred Ninety-Eight and No/100 Dollars ($234,498.00)
payable monthly on the 1st day of each and every calendar month in installments
of Nineteen Thousand Five Hundred Forty-One and 50/100 ($19,541.50) and for
years three (3) and four (4) plus the last additional month of the Extension
Period, Tenant shall pay to Landlord, as Base Rent, for the Leased Premises,
the annual sum of Two Hundred Fifty-Eight Thousand One Hundred Twenty and
No/100 Dollars ($258,120.00) payable monthly on the first day of each and every
calendar month in installments of Twenty-One Thousand Five Hundred Ten and
No/100 ($21,510.00). All Base Rent payable is over and above the other and
additional payments to be paid by Tenant to Landlord for the Leased Premises
and shall be paid at the place and in the manner as provided for within the
Lease.
1
<PAGE>
3. It is understood and agreed that Tenant will continue to be responsible
for 100% of the Leased Premises annual real estate tax and insurance expense as
defined in the Lease and that Tenant will have no further options to extend the
Lease. Except as herein specifically amended, all other terms, covenants, and
conditions of the Lease shall remain in full force and effect, and the same are
hereby ratified and confirmed.
IN WITNESS WHEREOF, Landlord and Tenant have executed the within Agreement as
of the day and year first above written.
LANDLORD:
Lutheran Brotherhood
a Minnesota corporation
/s/ Clifford W. Habeck
- ------------------------------------
By: Clifford W. Habeck
Its: AVP
TENANT:
ADC Telecommunications, Inc.
/s/ Robert E. Switz
- ------------------------------------
By: Robert E. Switz
Its: VP and CFO
2
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
financial statements for ADC Telecommunications, Inc. and Subsidiaries, for the
fiscal quarter ended January 31, 1996, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> OCT-31-1996
<PERIOD-END> JAN-31-1996
<CASH> 225,457
<SECURITIES> 0
<RECEIVABLES> 107,033<F1>
<ALLOWANCES> 2,181
<INVENTORY> 105,059<F2>
<CURRENT-ASSETS> 452,610
<PP&E> 205,218
<DEPRECIATION> (118,948)
<TOTAL-ASSETS> 617,058
<CURRENT-LIABILITIES> 88,119
<BONDS> 0
0
0
<COMMON> 12,556
<OTHER-SE> 515,227
<TOTAL-LIABILITY-AND-EQUITY> 617,158
<SALES> 162,591
<TOTAL-REVENUES> 162,591
<CGS> 84,681
<TOTAL-COSTS> 84,681
<OTHER-EXPENSES> 55,634
<LOSS-PROVISION> 157
<INTEREST-EXPENSE> 39
<INCOME-PRETAX> 25,487
<INCOME-TAX> 9,174
<INCOME-CONTINUING> 16,313
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 16,313
<EPS-PRIMARY> 0.26
<EPS-DILUTED> 0.26
<FN>
<F1>Amount is net of allowance for bad debts and returns and allowances.
<F2>Amount is net of obsolescence reserves.
</FN>
</TABLE>
