According to the Company’s FORM 10-Q for the quarterly period ended April 29, 2005, on June 6, 2005, the Eighth Circuit Court of Appeals upheld a decision of the United States District Court for the District of Minnesota to dismiss the class action suit.
As disclosed by the Company’s FORM 10-Q for the quarterly period ended July 31, 2004, on March 5, 2003, the Company was served with a shareowner lawsuit brought by Wanda Kinermon that was filed in the United States District Court for the District of Minnesota. The complaint named ADC, its former Chairman and Chief Executive Officer and its Chief Executive Officer and former Chief Financial Officer as defendants. After this lawsuit was served, the Company was named as a defendant in 11 other substantially similar lawsuits. These shareowner lawsuits were consolidated into a single lawsuit, that is captioned In Re ADC Telecommunications, Inc. Securities Litigation. This lawsuit purports to bring suit on behalf of a class of purchasers of the Company’s publicly traded securities from August 17, 2000 to March 28, 2001. The complaint alleged that the Company violated the securities laws by making false and misleading statements about the Company’s financial performance and business prospects during this period. On November 24, 2003, the Company filed a motion to dismiss this lawsuit, and, on May 17, 2004, the court granted the Company’s motion and dismissed the case with prejudice. The plaintiffs have appealed this decision to the Eighth Circuit Court of Appeals and that appeal is pending.
The first complaint filed charges ADC and certain of its officers with violations of federal securities laws. Among other things, plaintiff claims that defendants' material omissions and the dissemination of materially false and misleading statements concerning ADC's financial prospects caused ADC's stock price to become artificially inflated, inflicting damages on investors. ADC is a supplier of broadband-network equipment, software and services that enable communications service providers to deliver high-speed Internet, data, and voice services across the so-called "last mile" connecting providers' offices to end-users homes and businesses. The Complaint alleges that during the Class Period Defendants repeatedly represented that ADC would continue to achieve significant growth and would not be affected by widely known reductions in capital spending on the telecommunications infrastructure by communications service providers. Plaintiff claims that ADC's true financial performance and business prospects were revealed on March 28, 2001, when defendants acknowledged that the Company would lower its fiscal 2001 earnings guidance which defendants had issued only four weeks earlier, cut as many as 4,000 jobs and close facilities in the face of canceled orders and declining revenues caused by the reductions in spending on equipment by telecommunications service providers.