SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT PURSUANT TO SECTION 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Year Ended December 31, 2004
Commission file number: 0-1424
A. Full title of the plan and the address of the plan, if different from that of the issuer named below:
ADC Telecommunications, Inc.
Retirement Savings Plan
B. Name of issuer of securities held pursuant to the plan and the address of its principal executive offices:
ADC Telecommunications, Inc.
Minnesota |
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41-0743912 |
(State or other jurisdiction of |
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(I.R.S. Employer |
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13625 Technology Drive |
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55344 |
(Address of principal executive offices) |
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(Zip Code) |
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Issuers telephone number, including area code: (952) 938-8080 |
FINANCIAL STATEMENTS AND SCHEDULE
ADC Retirement Savings Plan
Years Ended December 31, 2004 and 2003
ADC Retirement Savings Plan
Financial Statements and Schedule
Years Ended December 31, 2004 and 2003
Contents
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Financial Statements |
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Schedule H, Line 4i Schedule of Assets (Held at End of Year) |
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Report of Independent Registered Public Accounting Firm
The Plan Administrator and Participants
ADC Retirement Savings Plan
We have audited the accompanying statements of net assets available for benefits of the ADC Retirement Savings Plan as of December 31, 2004 and 2003, and the related statements of changes in net assets available for benefits for the years then ended. These financial statements are the responsibility of the Plans management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the net assets available for benefits of the Plan at December 31, 2004 and 2003, and the changes in its net assets available for benefits for the years then ended, in conformity with U.S. generally accepted accounting principles.
Our audits were performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying supplemental schedule of assets (held at end of year) as of December 31, 2004, is presented for purposes of additional analysis and is not a required part of the financial statements but is supplementary information required by the Department of Labors Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974. This supplemental schedule is the responsibility of the Plans management. The supplemental schedule has been subjected to the auditing procedures applied in our audits of the financial statements and, in our opinion, is fairly stated in all material respects in relation to the financial statements taken as a whole.
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/s/ Ernst & Young LLP |
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Minneapolis, Minnesota |
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June 23, 2005 |
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1
ADC Retirement Savings Plan
Statements of Net Assets Available for Benefits
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December 31 |
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2004 |
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2003 |
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Assets |
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Cash |
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$ |
80,714 |
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$ |
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Investments, at fair value |
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265,245,304 |
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253,336,771 |
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Contributions receivable |
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352,174 |
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265,678,192 |
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253,336,771 |
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Liabilities |
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Overdraft payable |
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8,938 |
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Net assets available for benefits |
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$ |
265,678,192 |
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$ |
253,327,833 |
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See accompanying notes.
2
ADC Retirement Savings Plan
Statements of Changes in Net Assets Available for Benefits
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Year Ended December 31 |
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2004 |
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2003 |
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Net assets available for benefits, beginning of year |
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$ |
253,327,833 |
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$ |
217,309,268 |
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Increases (decreases) during the year: |
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Employee contributions |
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11,485,683 |
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12,450,819 |
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Employee rollover contributions |
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7,479,820 |
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632,412 |
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Total employee contributions |
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18,965,503 |
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13,083,231 |
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Employer contributions |
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4,531,531 |
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6,464,105 |
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Investment income |
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4,610,633 |
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2,122,384 |
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Net realized/unrealized appreciation in fair value of investments |
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12,315,434 |
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53,466,266 |
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Benefit distributions to participants |
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(28,072,742 |
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(39,117,421 |
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Net increase during the year |
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12,350,359 |
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36,018,565 |
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Net assets available for benefits, end of year |
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$ |
265,678,192 |
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$ |
253,327,833 |
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See accompanying notes.
3
ADC Retirement Savings Plan
December 31, 2004
1. Plan Description
General
The ADC Retirement Savings Plan (the Plan) is a defined contribution plan covering substantially all domestic salaried employees of ADC Telecommunications, Inc. (ADC or the Company). The Plan is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA). The following is not a comprehensive description of the Plan and, therefore, does not include all situations and limitations covered by the Plan. Participants should refer to the plan document for more complete information.
Plan Operations
American Express Trust Company (the Trustee) is the trustee and record-keeper of the Plan. ADC Telecommunications, Inc. is the plan sponsor. The Trustee is responsible for holding investment assets of the Plan, executing investment transactions, and making disbursements to participants. All audit, legal, and plan administrative-related expenses are paid by the Company except for investment management fees, which are netted against investment income. During 2004 and 2003, the Company paid $161,023 and $136,600, respectively, in expenses related to the Plan.
Eligibility
Employees in recognized employment, as defined, may contribute to the Plan immediately. Company contributions commence following one year of service, as defined by the Plan.
Contributions and Vesting
Under the provisions of the Plan, participants classified as highly compensated employees may elect to make contributions from 1% to 15% of their pretax earnings, and participants classified as non-highly-compensated employees may elect to make contributions from 1% to 25% of their pretax earnings. The Company matched 100% of an eligible participants contributions up to the first 6% of eligible compensation through the end of March 2003. Effective April 1, 2003, the Company matches 50% of an eligible participants contributions up to the first 6% of eligible compensation.
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The Company may also make performance match contributions. Amounts credited to the accounts of participants for employer or employee contributions are fully vested.
Each participants account is credited with the participants contribution and allocations of (a) the Companys contribution and (b) plan earnings and is charged with an allocation of investment management fees. Allocations are based on participant earnings on account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participants vested account.
Distributions
Those participants whose employment terminates due to retirement, death, disability, or other reasons are entitled to a lump-sum distribution of a benefit equal to the amount credited to their account.
Participant Loans
A participant may obtain a loan generally up to the lesser of one-half of the participants account balance or $50,000. The loan must be repaid with interest at 1% above the prime rate over a maximum of 15 years. Participants repay loans through payroll deductions.
As participant loan repayments are received, they are immediately invested in the investment fund(s) in accordance with that participants investment allocation election.
Plan Termination
Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and terminate the Plan, subject to the provisions set forth in ERISA. In the event of termination, the participants shall receive 100% of their account balances.
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2. Significant Accounting Policies
Basis of Accounting
The accompanying financial statements have been prepared on the accrual basis of accounting.
Valuation of Investments
Investments are recorded at fair value. Common stock and mutual fund values are determined using quoted market prices. Common/collective funds are valued by the trustee based on the values of the underlying investments. The participant loans are valued at their outstanding balances, which approximate fair value. Changes in the fair value of investments between years are included in net realized/unrealized appreciation in fair value of investments in the accompanying statements of changes in net assets available for benefits. Purchases and sales of securities are recorded on a trade-date basis.
Use of Estimates
The preparation of financial statements in accordance with accounting principles generally accepted in the United States requires management to make estimates that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
3. Investments
Upon enrollment in the Plan, a participant may direct employee contributions in any of 13 investment options.
The Plan invests in various investment securities. Investment securities are exposed to various risks, such as interest rate, market, and credit risks. Due to the level of risk associated with certain investment securities, it is at least reasonably possible that changes in the values of investment securities will occur in the near term and that such changes could materially affect the amounts reported in the statements of net assets available for benefits.
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The fair market value of individual investments that represent 5% or more of the Plans net assets as of December 31 is as follows:
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2004 |
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2003 |
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ADC Telecommunications, Inc. common stock |
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$ |
50,040,949 |
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$ |
55,430,063 |
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Franklin Small/Mid Capital Growth Fund |
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40,757,583 |
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38,896,241 |
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American Express Trust Stable Capital II Fund |
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33,847,258 |
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36,891,611 |
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American Century Income and Growth Fund |
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36,345,105 |
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34,815,363 |
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Dodge and Cox Balanced Fund |
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32,667,416 |
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28,050,887 |
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MFS Institutional International Equity Fund |
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24,392,668 |
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20,988,484 |
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During 2004 and 2003, the Plans investments, including investments purchased and sold, as well as held during the year, appreciated (depreciated) in fair value as follows:
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Year Ended December 31 |
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2004 |
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2003 |
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Net realized/unrealized appreciation (depreciation) in fair value of investments: |
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Mutual funds |
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$ |
13,929,137 |
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$ |
30,704,247 |
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Common/collective funds |
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3,339,668 |
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5,904,455 |
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Common stock |
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(4,953,371 |
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16,857,564 |
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$ |
12,315,434 |
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$ |
53,466,266 |
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4. Income Tax Status
The Plan has received a determination letter from the Internal Revenue Service dated March 21, 2002, stating that the Plan is qualified under Section 401(a) of the Internal Revenue Code (the Code) and, therefore, the related trust is exempt from taxation. Subsequent to the issuance of this determination letter, the Plan was amended. Once qualified, the Plan is required to operate in conformity with the Code to maintain its qualification. The plan administrator believes the Plan is being operated in compliance with the applicable requirements of the Code and, therefore, believes that the Plan, as amended, is qualified and the related trust is tax-exempt.
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ADC Retirement Savings Plan
EIN: 41-0743912
Plan #002
Schedule H, Line 4i Schedule of Assets (Held at End of Year)
December 31, 2004
Description of Investment |
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Current |
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ADC Telecommunications, Inc. common stock* |
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$ |
50,040,949 |
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American Express Trust Money Market II* |
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967,543 |
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Franklin Small/Mid Capital Growth Fund |
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40,757,583 |
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American Express Trust Stable Capital II Fund* |
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33,847,258 |
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American Century Income and Growth Fund |
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36,345,105 |
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Dodge and Cox Balanced Fund |
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32,667,416 |
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MFS Institutional International Equity Fund |
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24,392,668 |
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American Express Trust Equity Index Fund I* |
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11,289,963 |
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Dodge and Cox Income Fund |
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6,091,305 |
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Robeco Boston Partners Small Cap Value II Instl |
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7,473,835 |
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BNY Hamilton Small Cap Growth Fund |
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4,781,537 |
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Vanguard Target Retirement Income Fund |
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2,182,273 |
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Vanguard Target Retirement 2015 Fund |
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3,834,378 |
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Vanguard Target Retirement 2035 Fund |
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6,584,082 |
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Loans to participants, 5.00% to 5.25% |
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3,989,409 |
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Total investments |
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$ |
265,245,304 |
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*Party in interest.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, ADC Telecommunications, Inc. has duly caused this annual report to be signed on its behalf by the undersigned hereunto duly authorized.
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ADC Telecommunications, Inc. |
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Retirement Savings Plan |
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(Name of Plan) |
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By: ADC TELECOMMUNICATIONS, INC. |
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Date: June 29, 2005 |
By: |
/s/ Gokul V. Hemmady |
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Name: |
Gokul V. Hemmady |
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Title: |
Vice President
and Chief |
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