-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, s7EBcTRbSk8PItQgzw8xRGVGOIfztlEHKRpWQ0GzpsromjeKKOwH9Jxi4vhXgF8u CYMY6koJWni/fIacTo/UzQ== 0000738076-95-000012.txt : 199507030000738076-95-000012.hdr.sgml : 19950703 ACCESSION NUMBER: 0000738076-95-000012 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 1 FILED AS OF DATE: 19950630 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: 3COM CORP CENTRAL INDEX KEY: 0000738076 STANDARD INDUSTRIAL CLASSIFICATION: COMPUTER PERIPHERAL EQUIPMENT, NEC [3577] IRS NUMBER: 942605794 STATE OF INCORPORATION: CA FISCAL YEAR END: 0531 FILING VALUES: FORM TYPE: S-3/A SEC ACT: 1933 Act SEC FILE NUMBER: 033-60497 FILM NUMBER: 95551434 BUSINESS ADDRESS: STREET 1: 5400 BAYFRONT PLZ CITY: SANTA CLARA STATE: CA ZIP: 95052 BUSINESS PHONE: 4087645000 S-3/A 1 As filed with the Securities and Exchange Commission on June 30, 1995. Registration No. 33-60497 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 AMENDMENT NO. 1 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 3Com CORPORATION (Exact name of Registrant as specified in its charter) California 3577 94-2605794 (State or other (Primary Standard Industrial) (I.R.S. Employer jurisdiction of Classification Number) Identification No.) incorporation or organization) 5400 Bayfront Plaza Santa Clara, CA 95052-8145 (408) 764-5000 (Address, including zip code, and telephone number, including area code, of Registrant's principal executive offices) ERIC A. BENHAMOU President and Chief Executive Officer 3Com CORPORATION 5400 Bayfront Plaza Santa Clara, CA 95052-8145 (408) 764-5000 (Name, address, including zip code, and telephone number, including area code, of agent for service) Copies to: BRADLEY J. ROCK, ESQ. MARK D. MICHAEL, ESQ. JOHN W. KUO, ESQ. Vice President, Gray Cary Ware & Freidenrich General Counsel and Secretary A Professional Corporation 3Com Corporation 400 Hamilton Avenue 5400 Bayfront Plaza Palo Alto, CA 94301 Santa Clara, CA 95052-9145 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box: [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: [ X ] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] This Registration Statement shall become effective in accordance with Section 8(a) of the Securities Act of 1933, or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to such Section 8(a), may determine. 483,309 Shares 3COM CORPORATION Common Stock _____________________________________ The 483,309 shares of Common Stock of 3Com Corporation (3Com or the Company) covered by this Prospectus (the Shares) are outstanding shares that may be sold from time to time by or on behalf of certain Shareholders (the Selling Shareholders) of the Company described in this Prospectus under "Selling Shareholders." The Selling Shareholders acquired the Shares from the Company in a private transaction related to the Company's acquisition of all of the outstanding stock of Sonix Communications Limited (Sonix), a company formed and registered in England. The Company has agreed to register the Shares under the Securities Act of 1933, as amended (the Securities Act), and to use its best efforts to cause the registration statement covering the Shares to be declared effective and to remain effective for up to two (2) years following the date of the Acquisition and Exchange Agreement, dated March 22, 1995, by and among 3Com and the Shareholders of Sonix (the Acquisition Agreement). The Company will not receive any of the proceeds from the sale of the Shares by the Selling Shareholders. The Company has been advised by the Selling Shareholders that they may sell all or a portion of the Shares from time to time in the Nasdaq National Market, in negotiated transactions or otherwise, and on terms and at prices then obtainable. The Selling Shareholders and any broker-dealers, agents or underwriters that participate with the Selling Shareholders in the distribution of any of the Shares may be deemed to be "underwriters" within the meaning of the Securities Act, and any commission received by them and any profit on the resale of the Shares purchased by them may be deemed to be underwriting commissions or discounts under the Securities Act. The Company and the Selling Shareholders have agreed to certain indemnification arrangements. See "Plan of Distribution." The Company will bear the cost of preparing and printing the Registration Statement, the Prospectus and any Prospectus Supplements and all filing fees and legal and accounting expenses associated with registration under federal and state securities laws. The Selling Shareholders will pay all other expenses related to the distribution of the Shares. THE SHARES HAVE NOT BEEN REGISTERED FOR SALE UNDER THE SECURITIES LAWS OF ANY STATE OR JURISDICTION AS OF THE DATE OF THIS PROSPECTUS. BROKERS OR DEALERS EFFECTING TRANSACTIONS IN THE SHARES SHOULD CONFIRM THE REGISTRATION OF THE SHARES UNDER THE SECURITIES LAWS OF THE STATES IN WHICH SUCH TRANSACTIONS OCCUR, OR THE EXISTENCE OF ANY EXEMPTIONS FROM SUCH REGISTRATION. The Company's Common Stock is listed on the National Market of the National Association of Securities Dealers, Inc. (the NASD) and is traded under the symbol "COMS". On June 28, 1995, the last sales price of the Company's Common Stock as reported on the NASD Automatic Quotation System was $67. See "Risk Factors" beginning on page 3 hereof for information that should be considered by prospective purchasers of the Shares offered hereby. THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this Prospectus is July __, 1995. AVAILABLE INFORMATION 3Com Corporation (3Com or the Company) is subject to the informational requirements of the Securities Exchange Act of 1934, as amended (the Exchange Act), and in accordance therewith files reports, proxy statements, and other information with the Securities and Exchange Commission (the Commission). Such reports, proxy statements and other information filed by the Company can be inspected and copied at the Commission's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549, as well as at the Regional Offices of the Commission located at 500 West Madison Street, Chicago, Illinois 60621 and 75 Park Place, New York, New York 10007. Copies of such material can be obtained by mail from the Public Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed by the Commission. The Company has also filed a Registration Statement (together with all amendments and exhibits thereto, the Registration Statement) under the Securities Act of 1933, as amended (the Securities Act) with the Commission. This Prospectus does not contain all of the information set forth in the Registration Statement, certain parts of which are omitted in accordance with the rules and regulations of the Commission. For further information, reference is made to the Registration Statement, copies of which may be obtained from the Public Reference Section of the Commission, 450 Fifth Street, N.W., Washington, D.C. 20549, upon payment of the fees prescribed by the Commission. INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE The following documents filed by the Company with the Commission pursuant to the Exchange Act are incorporated herein by reference: (1) the Company's Current Report on Form 8-K as filed on May 16, 1995, as amended, regarding the acquisition of Sonix Communications Limited; (2) the Company's Current Report on Form 8-K filed June 20, 1995 regarding the acquisition of Primary Access Corporation; (3) the Company's Annual Report on Form 10-K for the year ended May 31, 1995 filed June 29, 1995; and (4) the description of the Company's Common Stock contained in the Company's Registration Statement on Form 8-A, as filed with the Commission on September 28, 1984. All documents filed by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Prospectus and prior to the termination of this offering shall be deemed to be incorporated by reference herein and to be a part hereof from the date of filing of such documents. Any statement incorporated by reference herein shall be deemed to be modified or superseded for purposes of this Prospectus to the extent that a statement contained herein or in any other subsequently filed document which also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded shall not be deemed, except as so modified or superseded, to constitute a part of this Prospectus. The Company will provide without charge to each person to whom this Prospectus is delivered, upon written or oral request, a copy of any or all of the foregoing documents incorporated by reference in this Prospectus (other than any exhibits thereto). Requests for such documents should be directed to 3Com Corporation at 5400 Bayfront Plaza, Santa Clara, CA 95052-8145, Attn: General Counsel (phone number 408-764-5000). ----------------- THE COMPANY 3Com designs, develops, manufactures, markets and supports a broad range of ISO 9000-compliant global data networking connectivity solutions for building/campus backbone, wide-area network (WAN) backbone, workgroup, remote office and personal office environments. 3Com offers virtually all the necessary components to build and manage these networking infrastructures, including routers, hubs, remote access servers, switches, adapters and network management for Ethernet, Token Ring, FDDI, ATM and other high-speed data networks. As data networks have grown in size and importance and have become the primary computing environment for many organizations, customers are demanding increased performance, scalability and network access. 3Com's architecture for scaling performance and extending the reach of customers' data networks is called High Performance Scalable Networking (HPSN). HPSN encompasses the full breadth of 3Com's products and provides a blueprint for planning, implementing and managing customers' connectivity systems requirements. With an emphasis on industry standards, interoperability and investment protection, 3Com solutions are designed to reduce the overall cost of network ownership. 3Com's products are marketed worldwide through multiple indirect channels, such as systems integrators, value-added resellers, distributors and original equipment manufacturers, as well as directly to large customers. 3Com maintains sales offices in 30 countries, service and support centers on three continents and manufacturing and distribution centers in the U.S. and Europe. 3Com sells its products to a wide range of customers in a variety of markets, including financial services, education, government, healthcare, manufacturing and technology. 3Com was incorporated in California in June 1979. 3Com's executive offices are located at 5400 Bayfront Plaza, Santa Clara, California 95052-8145; its telephone number at that address is (408) 764-5000. RISK FACTORS In addition to other information contained in this Prospectus or incorporated by reference, the following factors should be considered carefully in evaluating the Company and its business before purchasing the shares of Common Stock offered hereby. New Products and Technological Change. The market for 3Com's products is characterized by rapid technological developments, evolving industry standards, changes in customer requirements, frequent new product introductions and enhancements and short product life cycles. 3Com's success depends in substantial part upon its ability, on a cost-effective and timely basis, to continue to enhance its existing products and to develop and introduce new products that take advantage of technological advances. An unexpected change in one or more of the technologies affecting data networking or in market demand for products based on a particular technology could have a material adverse effect on 3Com's operating results. For instance, a large portion of 3Com's revenues is comprised of sales of products based on Ethernet technology. 3Com's operating results could be adversely affected if there is an unexpected change in demand for products based on such technology or if 3Com does not respond timely and effectively to expected changes. 3Com is engaged in research and development activities in certain emerging LAN and WAN high-speed technologies, such as 100 Mbps Ethernet, ATM and ISDN. There can be no assurance that 3Com will be able to timely and successfully develop new products to address new industry transmission standards and technological changes or to respond to new product announcements by others or that such products will achieve market acceptance. Competition. 3Com experiences and expects substantial additional competition from established and emerging computer, communications, intelligent network wiring and network management companies. The primary competitors for 3Com's products are Bay Networks, Inc., Cabletron Systems, Inc., Cisco Systems, Intel Corporation and Standard Microsystems Corporation. There can be no assurance that 3Com will be able to compete successfully in the future with existing competitors or new competitors. The data networking industry has become increasingly competitive and 3Com's results may be adversely affected by the actions of existing or future competitors. Such actions may include the development or acquisition of new technologies, the introduction of new products, the assertion by third parties of patent or similar intellectual property rights, and the reduction of prices by competitors to gain or retain market share. Industry consolidation or alliances may also affect the competitive environment. In particular, competitive pressures from existing or new competitors who offer lower prices or introduce new products could result in delayed or deferred purchasing decisions by potential customers and price reductions, both of which would adversely affect 3Com's sales and operating margins. The industry in which the Company competes is characterized by declining average selling prices, which the Company anticipates will continue. This trend could adversely impact 3Com's sales and operating margins. 3Com participates in the designing, manufacturing and marketing on-premises equipment. 3Com's competitors typically compete in one or more segments of the on- premises sector of the data networking market. These companies are using their resources and technical expertise to improve and expand their product lines in an effort to gain market share. Several are extending their product offerings beyond a single market segment and pursuing strategies more closely resembling 3Com's global data networking strategy. Product Protection and Intellectual Property. 3Com currently relies upon a combination of patents, copyrights, trademarks and trade secret laws to establish and protect its proprietary rights in its products. 3Com maintains as proprietary the software and other portions of the technology incorporated in its products. 3Com has been issued and has applied for numerous patents in the United States on various aspects of its hardware and software products. There can be no assurance that the steps taken by 3Com to protect its proprietary rights will be adequate to prevent misappropriation of its technology or that 3Com's competitors will not independently develop technologies that are substantially equivalent or superior to 3Com's technology. In addition, the laws of some foreign countries do not protect 3Com's proprietary rights to the same extent as do the laws of the United States. In addition, no assurance can be given that any patents currently held or issued to 3Com in the future will not be challenged, invalidated or circumvented or that the rights granted thereunder will provide competitive advantages. From time to time 3Com receives communications asserting that 3Com's use of trademarks, or that 3Com's products infringe or may infringe the rights of third parties. There can be no assurance that any such claims will not result in protracted and costly litigation; however, based upon general practice in the industry 3Com believes that such matters can ordinarily be resolved without any material impact on its financial position or results of operations. Uncertainties Related to the Integration of Recently Acquired Businesses. The successful integration of companies in the networking industry may be more difficult to accomplish than in other industries. 3Com has recently consummated the acquisition of Primary Access Corporation (Primary Access) and Sonix Communications Limited (Sonix). There can be no assurance that 3Com will be successful in developing products based on Primary Access' or Sonix's technology or engineering expertise, that 3Com will be successful in integrating its own distribution channels with those of Primary Access or Sonix, that 3Com will be successful in penetrating Primary Access' or Sonix's installed customer base, that 3Com will be successful in selling Primary Access' or Sonix's products to its own customer base, that the combined companies will retain their key personnel or that 3Com will realize any of the other anticipated benefits of the acquisitions. Acquisition Strategy. Acquisitions of complementary businesses are an active part of 3Com's overall business strategy. In addition to the Primary Access and Sonix acquisitions, 3Com has recently consummated acquisitions of several other businesses, including NiceCom, Ltd., Synernetics, Inc. and Centrum Communications, Inc. 3Com continually evaluates potential acquisition and investment opportunities. There can be no assurance that products, technologies and businesses of acquired companies will be effectively assimilated into 3Com's business or product offerings. In addition, 3Com may incur significant expenses to complete acquisitions and investments and to support the acquired products, and there can be no assurance that such technologies or businesses will contribute to 3Com's revenues or earnings to any material extent. Further, the challenge of managing the integration of several companies simultaneously is significant, and there can be no assurance that 3Com will be able to successfully manage such integration. Volatility of Stock Price. Based on the trading history of its stock, 3Com believes factors such as announcements of new products by 3Com or its competitors, sales of stock into the market by existing holders, quarterly fluctuations in 3Com's financial results and general conditions in the data networking market have caused and are likely to continue to cause the market price of the 3Com Common Stock to fluctuate substantially. In addition, technology company stocks have experienced extreme price and volume fluctuations that often have been unrelated to the operating performance of such companies. This market volatility may adversely affect the market price of 3Com's Common Stock. Small Backlog and Potential Fluctuations in Quarterly Results. 3Com customers place orders on an as needed basis and 3Com typically ships products within one to four weeks after receipt of an order. Accordingly, 3Com does not maintain a substantial backlog, and most of its revenues in each quarter result from orders booked in that quarter. 3Com establishes its expenditure levels based on its expectations as to future revenues, and if revenue levels were to be below expectations this could cause expenses to be disproportionately high. As a result, a drop in near term demand will significantly affect operating results which may fluctuate for this reason or as a result of a number of other factors, including increased competition, variations in the mix of sales, announcements of new products by 3Com or its competitors and capital spending patterns of 3Com's customers. Dependence Upon Suppliers. Some key components of 3Com's products are currently available only from single sources. The inability of 3Com to obtain certain components could require 3Com to redesign or delay shipment of several of its data networking products. 3Com has sought to establish close relationships with sole-source suppliers and/or to build up inventory of such components; however, there can be no assurance that production will not be interrupted due to the unavailability of components. 3Com believes that its inventory levels of these components, combined with finished components held by 3Com's suppliers, are adequate for its presently forecasted needs. Although 3Com has contractual arrangements with certain of its sole- source suppliers, there can be no assurance that in the future 3Com's suppliers will be able to meet the demand for components in a timely and cost-effective manner. 3Com's operating results and customer relationships could be adversely affected by either an increase in prices for, or an interruption or reduction in supply of, any key components. Certain Charter Provisions. Certain charter provisions and 3Com's shareholder rights plan could have the effect of delaying, deferring or preventing a change in control of 3Com. In addition, 3Com's charter eliminates the personal monetary liability of its directors for breach of their duty of care, and 3Com has entered into agreements with its officers and directors indemnifying them against losses they may incur in legal proceedings resulting from their service to 3Com. Acts of God. 3Com's corporate headquarters and a large portion of its research and development activities and other critical business operations are located near major earthquake faults. Operating results could be materially adversely affected in the event of a major earthquake. Attraction and Retention of Key Employees. Competition for qualified personnel in the computer and communications industries is intense. The future success of 3Com will depend in large part on its ability to attract and retain key employees. Manufacturing Facilities. 3Com is currently increasing its manufacturing capabilities in two locations. While 3Com has significant experience in expanding its manufacturing operations, such expansion may be subject to delay due to labor issues, adverse weather and construction or other unforeseeable delays, which could adversely affect 3Com's operating results and customer relationships. MATERIAL CHANGES Please note the descriptions of recently acquired businesses set forth in the Company's Current Report on Form 8-K as filed on May 16, 1995, as amended, regarding the acquisition of Sonix Communications Limited, the Company's Current Report on Form 8-K as filed on June 20, 1995, regarding the acquisition of Primary Access Corporation, and the Company's Annual Report on Form 10-K for the fiscal year ended May 31, 1995 as filed on June 29, 1995. SELLING SHAREHOLDERS Schroder International Trust Company Limited, as trustee of Schroder UK Venture Fund III Trust; Schroder Venture Managers Inc., as general partner of Schroder UK Venture Fund III LP1; Schroder Venture Managers Inc., as general partner of Schroder UK Venture Fund III LP2; and Greylock Limited Partnership acquired their Shares from the Company in connection with the Company's acquisition of all of the outstanding stock of Sonix Communications Limited (Sonix), a company formed and registered in England. The acquisition was consummated on May 1, 1995. Pursuant to the Acquisition and Exchange Agreement dated March 22, 1995 between the Company and all of the shareholders of Sonix, the Selling Shareholders received the Shares directly from the Company in exchange for the Sonix Ordinary Shares owned and held by them. The following table lists the Selling Shareholders, the number of shares of the Company's Common Stock which each owned or had the right to acquire as of June 20, 1995, the number of shares of the Company's Common Stock which may be sold by each, and the number and (if one percent or more) the percentage of the Company's shares of Common Stock which each will own or have the right to acquire after the offering pursuant to this Registration Statement, assuming the sale of all the shares which may be sold: Shares Shares Percentage Owned Shares to Owned After Owned After Selling Shareholders Before Sale Be Sold Sale Sale Schroder International Trust Company Limited, as trustee of Schroder UK Venture Fund III Trust 130,663 130,663 -- -- Schroder Venture Manager Inc., as general partner of Schroder UK Venture Fund III LP1 127,692 127,692 -- -- Schroder Venture Manager Inc., as general partner of Schroder UK Venture Fund III LP2 63,851 63,851 -- -- Greylock Limited Partnership 161,103 161,103 -- -- PLAN OF DISTRIBUTION The Company has been advised by the Selling Shareholders that they may sell all or a portion of the Shares from time to time on the Nasdaq National Market, or otherwise, at prices and on terms prevailing at the time of sale or at prices related to the then current market price, or in negotiated transactions. The Shares may be sold by one or more of the following methods: (a) a block trade in which the broker or dealer so engaged will attempt to sell the Shares as agent, but may position and resell a portion of the block as principal to facilitate the transaction; (b) purchases by a broker or dealer as principal and resale by such broker or dealer for its own account pursuant to this Prospectus; (c) an over-the-counter distribution in accordance with the rules of the Nasdaq National Market; (d) ordinary brokerage transactions and transactions in which the broker solicits purchasers; and (e) in privately negotiated transactions. The Selling Shareholders have agreed to certain restrictions on trading in 3Com Common Stock that prohibit open market offers or sales (i) beginning fourteen (14) days prior to the end of each fiscal year or quarter of 3Com and ending the date of 3Com's filing of a periodic report on Form 10-K or 10-Q corresponding to such fiscal year or quarter, and (ii) during such other time that 3Com, in its reasonable judgment, determines that there is or may be material undisclosed information or events with respect to 3Com. There is no assurance that any of the Selling Shareholders will offer or sell any or all of the Shares registered hereunder. In effecting sales, brokers or dealers engaged by the Selling Shareholders may arrange for other brokers or dealers to participate. Brokers or dealers will receive commissions or discounts from the Selling Shareholders in amounts to be negotiated prior to the sale. Such brokers or dealers and any other participating brokers or dealers may be deemed to be "underwriters" within the meaning of the Securities Act of 1933, as amended, in connection with such sales. The Company will pay all expenses incident to the offering and sale of the Shares to the public other than any commissions and discounts of underwriters, dealers or agents and any transfer taxes. The Company has agreed to indemnify the Selling Shareholders, and any underwriter and certain control and other persons related to the foregoing persons against certain liabilities, including liabilities under the Securities Act. The Selling Shareholders have agreed to indemnify the Company and certain related persons against certain liabilities, including liabilities under the Securities Act. The Company has agreed with the Selling Shareholders to keep the Registration Statement, of which this Prospectus constitutes a part, effective for up to two (2) years following the date of the Acquisition Agreement. The Company intends to de-register any of the Shares not sold by the Selling Shareholders at the end of such two (2) year period; however, at such time, any unsold shares may be freely tradable subject to compliance with Rule 144 of the Securities Act. USE OF PROCEEDS The Company will not receive any proceeds from the sale of Common Stock by the Selling Shareholders. EXPERTS The supplemental and historical consolidated financial statements of 3Com Corporation as of May 31, 1995 and 1994 and for each of the three years in the period ended May 31, 1995 included and incorporated by reference in this Prospectus have been audited by Deloitte & Touche LLP, as stated in their reports, dated June 28, 1995 (which includes an emphasis paragraph relating to the restatement of the supplemental consolidated financial statements for a pooling of interests subsequent to the date of the historical financial statements) and dated June 14, 1995, which are included and incorporated by reference herein, except for the premerger financial statements of Primary Access Corporation as of October 3, 1993, and for the fifty-three weeks ended October 3, 1993 and the fifty-two weeks ended September 27, 1992 which have been audited by KPMG Peat Marwick LLP, as stated in their report included herein (which financial statements are included in the fiscal 1994 and 1993 supplemental consolidated financial statements of 3Com Corporation) and have been so included and incorporated in reliance upon the respective reports of such firms given upon their authority as experts in accounting and auditing. Both of the foregoing firms are independent auditors. LEGAL MATTERS The legality of the Shares is being passed upon by Gray Cary Ware & Freidenrich, A Professional Corporation, Palo Alto, California. 3Com Corporation Index to Supplemental Consolidated Financial Statements ------------------------------------------------------- Supplemental Financial Statements: Independent Auditors' Report - Deloitte & Touche LLP Independent Auditors' Report - KPMG Peat Marwick LLP Supplemental Consolidated Statements of Operations for the years ended May 31, 1995, 1994 and 1993 Supplemental Consolidated Balance Sheets at May 31, 1995 and 1994 Supplemental Consolidated Statements of Shareholders' Equity for the years ended May 31, 1995, 1994 and 1993 Supplemental Consolidated Statements of Cash Flows for the years ended May 31, 1995, 1994 and 1993 Notes to Supplemental Consolidated Financial Statements Independent Auditors' Report - ---------------------------- To the Shareholders and Board of Directors of 3Com Corporation: We have audited the accompanying supplemental consolidated balance sheets of 3Com Corporation and its subsidiaries as of May 31, 1995 and 1994, and the related supplemental consolidated statements of operations, shareholders' equity, and cash flows for each of the three years in the period ended May 31, 1995. These supplemental financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these supplemental financial statements based on our audits. We did not audit the balance sheet of Primary Access Corporation as of October 3, 1993, or the related statements of operations, stockholders' equity (deficit), and cash flows of Primary Access Corporation for the fifty-three weeks ended October 3, 1993 and the fifty-two weeks ended September 27, 1992, which statements are combined with 3Com Corporation's statements as of May 31, 1994 and for the years ended May 31, 1994 and 1993, and reflect total assets of $12,897,000 , total revenues of $24,052,000 and $13,798,000, respectively, and net income of $4,478,000 and $1,116,000, respectively. Those statements were audited by other auditors whose report, dated November 5, 1993, on those statements has been furnished to us, and our opinion, insofar as it relates to the amounts included for Primary Access Corporation, is based solely on the report of such other auditors. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits and the report of the other auditors provide a reasonable basis for our opinion. The supplemental consolidated financial statements give retroactive effect to the merger of 3Com Corporation and Primary Access Corporation on June 9, 1995, which has been accounted for as a pooling-of-interests as described in Notes 1 and 3 to the supplemental consolidated financial statements. Generally accepted accounting principles proscribe giving effect to a consummated business combination accounted for by the pooling-of-interests method in financial statements that do not include the date of consummation. These financial statements do not extend through the date of consummation, however, they will become the historical consolidated financial statements of 3Com Corporation and subsidiaries after financial statements covering the date of consummation of the business combination are issued. In our opinion, based on our audits and the report of the other auditors, the accompanying supplemental consolidated financial statements present fairly, in all material respects, the financial position of 3Com Corporation and its subsidiaries at May 31, 1995 and 1994, and the results of their operations and their cash flows for each of the three years in the period ended May 31, 1995 in conformity with generally accepted accounting principles applicable after financial statements are issued for a period which includes the date of consummation of the business combination. /s/ Deloitte & Touche LLP - ------------------------- DELOITTE & TOUCHE LLP San Jose, California June 28, 1995 Independent Auditors' Report The Board of Directors and Stockholders Primary Access Corporation: We have audited the balance sheet of Primary Access Corporation (the Company) as of October 3, 1993, and the related statements of operations, stockholders' equity (deficit), and cash flows for the fifty-three weeks ended October 3, 1993 and the fifty-two weeks ended September 27, 1992 (not presented herein). These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Primary Access Corporation as of October 3, 1993, and the related statements of operations, stockholders' equity (deficit), and cash flows for the fifty-three weeks ended October 3, 1993 and the fifty-two weeks ended September 27, 1992, in conformity with generally accepted accounting principles. /s/ KPMG Peat Marwick LLP San Diego, California November 5, 1993 Supplemental Consolidated Statements of Operations - -------------------------------------------------- Years Ended May 31, ---------------------------------------- (In thousands, except per share data) 1995 1994 1993 Sales $1,325,693 $851,047 $630,966 Costs and Expenses: Cost of sales 615,253 415,980 326,985 Sales and marketing 259,458 175,972 139,066 Research and development 133,687 79,327 66,995 General and administrative 54,982 41,865 36,391 Purchased in-process technology 60,796 134,481 - Non-recurring items 5,000 - 1,316 --------- ------- ------- Total 1,129,176 847,625 570,753 --------- ------- ------- Operating income 196,517 3,422 60,213 Gain on sale of investment - 17,746 - Other income-net 3,359 3,313 1,200 --------- ------- ------- Income before income taxes 199,876 24,481 61,413 Income tax provision 73,877 48,697 21,736 ---------- -------- -------- Net income (loss) $ 125,999 $(24,216) $ 39,677 ========== ======== ======== Net income (loss) per common and equivalent share: Primary $ 1.67 $ (0.37) $ 0.61 Fully-diluted $ 1.65 $ (0.37) $ 0.60 Common and equivalent shares used in computing per share amount: Primary 75,531 64,810 65,392 Fully-diluted 76,349 64,810 66,436 See notes to supplemental consolidated financial statements. Supplemental Consolidated Balance Sheets - ---------------------------------------- Years Ended May 31, ---------------------- (Dollars in thousands) 1995 1994 Assets Current Assets: Cash and cash equivalents $149,210 $ 69,768 Temporary cash investments 184,338 63,413 Trade receivables, less allowance for doubtful accounts ($16,221 in 1995 and $10,493 in 1994) 199,939 124,843 Inventories 124,058 73,358 Deferred income taxes 43,922 31,236 Other 21,868 10,277 ------- ------- Total current assets 723,335 372,895 Property and equipment--net 110,449 68,063 Other assets 24,022 16,282 -------- -------- Total $857,806 $457,240 ======== ======== Liabilities and Shareholders' Equity Current Liabilities: Accounts payable $ 92,750 $ 53,155 Accrued and other liabilities 126,124 93,747 Income taxes payable 52,853 19,090 Current portion of long-term obligations 197 590 -------- -------- Total current liabilities 271,924 166,582 Long-term debt 110,000 - Other long-term obligations 1,094 1,229 Shareholders' Equity: Preferred stock, no par value, 3,000,000 shares authorized; none outstanding - - Common stock, no par value, 200,000,000 shares authorized; shares outstanding: 1995--71,532,286; 1994--67,202,269 311,075 231,985 Unamortized restricted stock grants (2,037) (202) Retained earnings 165,735 57,951 Unrealized gain on available-for-sale securities 184 - Accumulated translation adjustments (169) (305) -------- -------- Total shareholders' equity 474,788 289,429 -------- -------- Total $857,806 $457,240 ======== ======== See notes to supplemental consolidated financial statements. Supplemental Consolidated Statements of Shareholders' Equity - ------------------------------------------------------------ Unamortized Restricted Common Stock Stock Grants Unrealized Accumulated ------------ and Notes Retained Gain on Translation Shares Amount Receivables Earnings Securities Adjustments Total ------------------------------------------------------------------------ Balances, June 1, 1992, as previously reported 58,676 $129,063 $ (120) $71,354 $ - $2,128 $202,425 Restatement for pooling of interests-Primary Access 1,092 8,807 (10) (8,969) - (172) ------ -------- ------ ------- ------- ------ -------- As restated 59,768 137,870 (130) 62,385 - 2,128 $202,253 Stock issued 5,869 22,904 22,904 Stock warrants buyback (1,300) (1,300) Repurchase of common stock (1,772) (4,300) (5,340) (9,640) Tax benefit from employee stock transactions 11,955 11,955 Cancellation of restricted stock grants (20) (131) 120 (11) Pro forma tax provision of pooled entity 1,604 1,604 Equity distributions of a pooled entity (5,179) (5,179) Adjustment to conform fiscal year of a pooled entity-Star Tek 2,163 2,163 Accumulated translation adjustments (1,986) (1,986) Repayment of notes receivable 5 5 Net income 39,677 39,677 ------ ------- ----- ------ ------- ------ -------- Balances, May 31, 1993 63,845 166,998 (5) 95,310 - 142 262,445 Stock issued 4,757 22,925 (255) 22,670 Repurchase of common stock (1,400) (3,501) (13,143) (16,644) Tax benefit from employee stock transactions 24,474 24,474 Amortization of restricted stock grants 53 53 Stock options assumed in connection with acquisitions 21,089 21,089 Accumulated translation adjustments (447) (447) Repayment of note receivable 5 5 Net loss (24,216) (24,216) ------ -------- ------ ------- ---- ------ -------- Balances, May 31, 1994 67,202 231,985 (202) 57,951 - (305) 289,429 Stock issued 3,765 33,963 (2,128) 31,835 Repurchase of common stock (785) (2,674) (16,916) (19,590) Tax benefit from employee stock transaction 40,306 40,306 Amortization of restricted stock grants 293 293 Stock options assumed in connection with acquisitions 6,508 6,508 Adjustment to conform pooled entity-Sonix 1,208 844 (2,079) (69) (1,304) Adjustment to conform fiscal year of pooled entity- Primary Access 142 143 780 923 Unrealized gain on available- for-sale securities 184 184 Accumulated translation adjustments 205 205 Net income 125,999 125,999 ------ -------- -------- -------- ---- ----- -------- Balances, May 31, 1995 71,532 $311,075 $(2,037) $165,735 $184 $(169) $474,788 ====== ======== ======== ======== ==== ====== ========
See notes to supplemental consolidated financial statements. Supplemental Consolidated Statements of Cash Flows - -------------------------------------------------- Years Ended May 31, ---------------------------------- (Dollars in thousands) 1995 1994 1993 Cash flows from operations: Net income (loss) $125,999 $(24,216) $ 39,677 Adjustments to reconcile net income (loss) to cash provided by operations: Depreciation and amortization 47,482 30,922 25,361 Gain on sale of investment - (17,746) - Deferred income taxes (24,175) (9,865) (3,523) Purchased in-process technology 60,796 134,481 - Adjustment to conform fiscal year of pooled entity 3,013 - 2,163 Pro forma provision for income taxes - - 1,604 Non-cash restructuring costs (1,100) - (3,346) Changes in assets and liabilities net of effects of acquisitions: Trade receivables (73,067) (33,779) (22,904) Inventories (50,190) 1,019 (20,055) Other current assets (11,045) 6,160 (3,889) Accounts payable 37,556 9,556 11,573 Accrued and other liabilities 39,747 (1,185) 6,902 Income taxes payable 73,821 34,927 17,618 ------- ------- ------ Net cash provided by operations 228,837 130,274 51,181 ------- ------- ------ Cash flows from investment activities: Proceeds from sale of investment - 18,066 - Purchase of property and equipment (77,817) (36,938) (22,534) Purchase of temporary cash investments (183,232) (76,841) (72,962) Proceeds from temporary cash investments 60,585 90,612 40,496 Acquisition of businesses and related purchase-price adjustment (65,832) (98,128) 2,946 Other-net 4,007 (3,020) 907 --------- --------- -------- Net cash used for investment activities (262,289) (106,249) (51,147) --------- --------- -------- Cash flows from financing activities: Sale of stock 28,155 22,670 22,397 Repurchase of common stock (19,590) (16,644) (9,640) Repurchase of stock warrants - - (1,300) Net proceeds from issuance of convertible debt 107,330 - - Notes payable - - 3,326 Repayments of notes payable and capital lease obligations (3,206) (2,287) (750) Equity distributions of pooled entity - - (5,179) Other-net 205 (448) (1,867) ------- ------- ------ Net cash provided by financing activities 112,894 3,291 6,987 ------- ------- ------ Increase in cash and cash equivalents 79,442 27,316 7,021 ------- ------- ------ Cash and cash equivalents at beginning of year 69,768 42,452 35,431 -------- ------- ------- Cash and cash equivalents at end of year $149,210 $69,768 $42,452 ======== ======= ======= Other cash flow information: Interest paid $ 5,526 $ 165 $ 418 Income taxes paid 25,039 22,169 5,910 Non-cash investing and financing activities- Tax benefit on stock option transactions 40,306 24,474 11,955 Stock issued and options assumed in business acquisitions 10,118 21,089 - - ------------------------------------------------------------------------------- In connection with the purchase acquisitions in fiscal 1995 (see Note 3), the Company paid cash, net of cash acquired, of $51.6 million, and recorded non-cash value of stock issued and options assumed of $3.7 million and $6.5 million, respectively. The fair value of assets acquired, excluding the $60.8 million purchased in-process technology charged to operations, was $4.3 million, and liabilities of $2.6 million were assumed. In connection with the acquisition of Centrum in fiscal 1994 (see Note 3), the Company made a final payment in cash of $14.3 million in fiscal 1995. In connection with the acquisitions in fiscal 1994 (see Note 3), the Company paid cash, net of cash acquired, of $98.1 million plus $14.3 million payable in August 1994, and recorded non-cash value of options assumed of $21.1 million. The fair value of assets acquired, excluding the $132.1 million purchased in-process technology charged to operations, was $35.6 million, and liabilities of $11.3 million were assumed. See notes to supplemental consolidated financial statements. Notes to Supplemental Consolidated Financial Statements - ------------------------------------------------------- Note 1: Description of Business and Basis of Presentation Description of Business - ----------------------- Founded in 1979, 3Com Corporation pioneered the data networking industry and is committed to providing customers global access to information. Today, 3Com offers a broad range of ISO 9000-compliant global data networking connectivity solutions which include routers, hubs, remote access servers, switches, adapters and network management for Ethernet, Token Ring, FDDI, ATM and other high-speed data networks. Headquartered in Santa Clara, California, 3Com has worldwide research and development, manufacturing, marketing, sales and support capabilities. Basis of Presentation - --------------------- The supplemental consolidated financial statements of 3Com Corporation and subsidiaries (the Company) have been prepared to give retroactive effect to the merger with Primary Access Corporation on June 9, 1995. Generally accepted accounting principles proscribe giving effect to a consummated business combination accounted for by the pooling-of-interests method in financial statements that do not include the date of consummation. These financial statements do not extend through the date of consummation, however, they will become the historical consolidated financial statements of the Company after financial statements covering the date of consummation of the business combination are issued. Note 2: Significant Accounting Policies Principles of consolidation. The consolidated financial statements include the accounts of 3Com Corporation and its wholly-owned subsidiaries. All significant intercompany balances and transactions are eliminated in consolidation. Cash equivalents are highly liquid debt investments acquired with a maturity of three months or less. Temporary cash investments consist of short-term investments acquired with maturities exceeding three months. Effective June 1, 1994, the Company adopted Statement of Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and Equity Securities." This statement requires the Company to classify debt and equity securities with readily determinable fair values as "held-to-maturity," "available-for-sale" or "trading". Adoption of SFAS 115 did not have a significant effect on the Company's financial position or results of operations. While the Company's intent is to hold debt securities to maturity, the Company has classified all securities held as available-for-sale securities as the sale of such securities may be required prior to maturity to implement management strategies. Such securities are reported at fair value with unrealized gains or losses excluded from earnings and reported as a separate component of shareholders' equity, net of applicable taxes. Prior to the adoption of SFAS 115, all investment securities were carried at amortized cost. Concentration of credit risk and major customer. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of investments and trade receivables. The Company invests in instruments with an investment credit rating of AA and better. The Company also places its investments for safekeeping with high-credit- quality financial institutions. Credit risk with respect to trade receivables is generally diversified due to the large number of entities comprising the Company's customer base and their dispersion across many different industries and geographies. The Company often sells its products through third-party distributors, and, as a result, may maintain individually significant receivable balances with major distributors. The Company believes that its credit evaluation, approval and monitoring processes substantially mitigate potential credit risks. In fiscal 1995, the Company had one customer which accounted for approximately 11 percent of total sales. The Company did not have any customers which individually accounted for more than 10 percent of total sales in fiscal 1994 and 1993, respectively. Inventories are stated at the lower of standard cost (which approximates first-in, first-out cost) or market. Property and equipment is stated at cost. Equipment under capital leases is stated at the lower of fair market value or the present value of the minimum lease payments at the inception of the lease. Purchased technology is included in other assets and is amortized over 2-4 years. Depreciation and amortization are computed over the shorter of the estimated useful lives, lease terms, or terms of license agreements of the respective assets, on a straight-line basis--generally 2-7 years, except for buildings which are at 25 years. Revenue recognition. The Company recognizes revenue and accrues related product return reserves, warranty and royalty expenses upon shipment. At the time of sale, no material vendor or post-contract support obligations remain outstanding, except as provided by separate service agreement, and collection of the resulting receivable is probable. Service and subscription revenue is recognized over the contract term. The Company extends limited product return and price protection rights to certain distributors and resellers. Such rights are generally limited to a certain percentage of sales over a three-month period. Historically, actual amounts recorded for product returns and price protection have not varied significantly from estimated amounts. The Company warrants products for periods which range from 90 days to life depending upon the product. Foreign currency translations. For foreign operations with the local currency as the functional currency, assets and liabilities are translated at year-end exchange rates, and statements of operations are translated at the average exchange rates during the year. Gains or losses resulting from foreign currency translation are accumulated as a separate component of shareholders' equity. For foreign operations with the U.S. dollar as the functional currency, assets and liabilities are translated at the year-end exchange rates except for inventories, prepaid expenses, and property and equipment, which are translated at historical exchange rates. Statements of operations are translated at the average exchange rates during the year except for those expenses related to balance sheet amounts that are translated using historical exchange rates. Gains or losses resulting from foreign currency translation are included in other income - net in the statements of operations and were not significant for any of the years presented. Net income (loss) per common and equivalent share is computed using the weighted average number of common and common equivalent shares outstanding and the dilutive effects of stock options, using the treasury stock method. The effect of the assumed conversion of the 10.25% convertible subordinated notes was antidilutive for the periods presented. Reclassifications. Certain prior year amounts have been reclassified to conform to the current year presentation. Note 3: Business Combinations For the Year Ended May 31, 1995. On October 18, 1994, the Company acquired substantially all the assets and assumed substantially all the liabilities of NiceCom, Ltd. (NiceCom), and assumed all outstanding NiceCom stock options. The purchase price consisted of approximately $53.2 million which was paid using funds from the Company's working capital and the issuance of 93,162 shares of common stock of the Company, with an aggregate value of $3.7 million. In addition, the Company assumed stock options with an associated value of $5.7 million. NiceCom is engaged in the development of asynchronous transfer mode (ATM) switches and an Ethernet-to-ATM solution to provide a migration path from existing Ethernet LANs to ATM networking. On October 14, 1994, the Company acquired all of the outstanding shares and assumed all outstanding stock options of a company engaged in the development of network adapter technology. The purchase price consisted of approximately $2.3 million in cash plus the assumption of stock options with an associated value of approximately $400,000. The purchase price was paid using funds from the Company's working capital. The acquisitions were accounted for as purchases and, accordingly, the acquired assets and liabilities were recorded at their estimated fair market values at the dates of acquisitions. The aggregate purchase price of $61.6 million, plus $2.0 million of costs directly attributable to the completion of the acquisitions, has been allocated to the assets and liabilities acquired. Approximately $60.8 million of the total purchase price represented the value of in-process technology that had not yet reached technological feasibility and had no alternative future use and was charged to the Company's operations in the second quarter of fiscal 1995. On February 28, 1995, the Company acquired AccessWorks Communications, a company involved in developing, manufacturing and marketing Integrated Services Digital Network (ISDN) transmission products. The acquisition was accounted for as a purchase. The purchase price and costs directly attributable to the completion of the acquisition were not significant. The Company's consolidated results of operations include the operating results of the acquired companies from their acquisition dates. Pro forma results of operations of 3Com and the aforementioned acquired companies for the periods prior to the acquisitions are not presented as the amounts would not significantly differ from the Company's historical results. On May 1, 1995, the Company acquired Sonix Communications Limited (Sonix) by issuing approximately 1.2 million shares of common stock for all of the outstanding stock of Sonix. Sonix develops, manufactures and markets a range of networking connectivity solutions using ISDN technology. The acquisition was accounted for as a pooling-of-interests. All financial data of the Company for fiscal 1995 has been restated to include the operating results of Sonix. As the historical operations of Sonix were not significant to any year presented, the Company's financial statements for prior years have not been restated and the financial effect of the prior year's results of operations of Sonix have been accounted for as a $2.1 million charge against retained earnings in fiscal 1995. Subsequent Event. On June 9, 1995, the Company acquired Primary Access Corporation (Primary Access) by issuing approximately 2.3 million shares of common stock for all of the outstanding stock of Primary Access. The Company also assumed and exchanged all options and warrants to purchase Primary Access stock for options and warrants to purchase approximately 500,000 shares of the Company's common stock. Primary Access develops, manufactures and markets integrated network access systems. The acquisition was accounted for as a pooling-of-interests. All financial data of the Company for the periods prior to the acquisition were restated to include the historical financial data of Primary Access. Primary Access maintained its financial records on a 52-53 week fiscal year ending nearest to September 30. The May 31, 1994 restated consolidated balance sheet includes the balance sheet of Primary Access as of October 3, 1993. The restated consolidated statements of operations and cash flows for the years ended May 31, 1994 and 1993 include the Primary Access statements of operations and cash flows for the years ended October 3, 1993 and September 27, 1992, respectively. The results of operations of Primary Access for the eight-month period ended May 31, 1994 reflected revenues of $14.6 million and net income of $780,000, which has been reported as an increase in the Company's fiscal 1995 retained earnings. No significant adjustments were required to conform the accounting policies of the Company and Primary Access. Financial information as of May 31, 1995 and for the year then ended reflects the Company's and Primary Access' operations for that period. The following table shows the effect on the results of operations for the fiscal years in which the combinations of Sonix and Primary Access were effected: (in thousands) Year ended Year ended Year ended May 31, 1995 May 31, 1994 May 31, 1993 - -------------------------------------------------------------------------- Sales: 3Com $1,269,908 $826,995 $617,168 Primary Access 30,382 24,052 13,798 Sonix 25,403 - - Combined $1,325,693 $851,047 $630,966 - -------------------------------------------------------------------------- Net income (loss): 3Com $ 123,450 $(28,694) $ 38,561 Primary Access 293 4,478 1,116 Sonix 2,256 - - Combined $ 125,999 $(24,216) $ 39,677 - -------------------------------------------------------------------------- For the Year Ended May 31, 1994. On January 14, 1994, the Company acquired all of the outstanding shares of Synernetics, Inc. (Synernetics) and assumed all outstanding Synernetics stock options. The purchase price consisted of approximately $104.0 million, plus $3.3 million of stock options. A substantial portion of the purchase price was paid using funds from the Company's working capital. Synernetics is engaged in the development, manufacturing and marketing of LAN switching products. On February 2, 1994, the Company acquired all of the outstanding shares of Centrum Communications, Inc. (Centrum) and assumed all outstanding Centrum stock options. The purchase price consisted of approximately $36.0 million, of which $16.0 million was paid in cash at the time of the acquisition and $14.3 million was paid in cash in August 1994 pursuant to the acquisition agreement. The remainder was associated with the value of the assumed stock options. Centrum is engaged in the development, manufacturing and marketing of remote access products and technology. The acquisitions were accounted for as purchases and, accordingly, the acquired assets and liabilities were recorded at their estimated fair values at the dates of acquisition. The aggregate purchase price of $143.3 million, plus $13.1 million of costs directly attributable to the completion of the acquisitions, has been allocated to the assets and liabilities acquired. Approximately $132.1 million of the total purchase price represented in-process technology that had not yet reached technological feasibility and had no alternative future use and was charged to the Company's operations. The Company's consolidated results of operations include the operating results of the acquired companies since their acquisition dates. For the Year Ended May 31, 1993. On January 29, 1993, the Company acquired Star-Tek, Inc. (Star-Tek) by issuing approximately 3.5 million shares of common stock for all of the outstanding shares of Star-Tek. Star-Tek designs, manufactures and markets a range of Token Ring products focused primarily on the connectivity needs of larger organizations with IBM mainframe, mid-range and Token Ring LAN-based information systems. The acquisition was accounted for by the pooling-of-interests method. Star-Tek maintained its financial records on a fiscal year ending December 31. The results of operations of Star-Tek for the five-month period ended May 31, 1992 reflected net income of $1.6 million and pro-forma tax adjustment of $595,000, the sum of which has been reported as an increase in the Company's fiscal 1993 retained earnings. Note 4: Temporary Cash Investments Available-for-sale securities consist of: May 31, 1995 ------------------------------------------------ Gross Gross Amortized Unrealized Unrealized Estimated (in thousands) Cost Gains Losses Fair Value -------- ------- ------- ---------- State and municipal securities $108,625 $214 $(22) $108,817 Corporate debt securities 49,773 76 - 49,849 U.S. Government and agency securities 25,633 39 - 25,672 -------- ---- ----- -------- Total $184,031 $329 $(22) $184,338 ======== ==== ===== ======== There were no realized gains or losses for the year ended May 31, 1995. The contractual maturity of available-for-sale securities at May 31, 1995 was as follows: Amortized Estimated (in thousands) Cost Fair Value - ------------------------------------------------------------------ Within one year $142,158 $142,312 Over one year to two years 41,873 42,026 -------- -------- Total $184,031 $184,338 ======== ======== Note 5: Inventories Inventories at May 31 consist of: (in thousands) 1995 1994 - ---------------------------------------------------------------- Finished goods $ 73,061 $44,876 Work-in-process 14,035 8,248 Raw materials 36,962 20,234 -------- ------- Total $124,058 $73,358 ======== ======= Note 6: Property and Equipment Property and equipment at May 31 consists of: (in thousands) 1995 1994 - --------------------------------------------------------------- Land $ 1,303 $ 1,303 Building 7,365 7,365 Machinery and equipment 176,088 124,670 Furniture and fixtures 19,564 14,647 Leasehold improvements 16,771 15,477 Construction in progress 15,613 - -------- -------- Total 236,704 163,462 Accumulated depreciation and amortization (126,255) (95,399) -------- -------- Property and equipment - net $110,449 $ 68,063 ======== ======== Note 7: Accrued and Other Liabilities Accrued and other liabilities at May 31 consist of: (in thousands) 1995 1994 - ---------------------------------------------------------------- Accrued payroll and related expenses $ 38,950 $22,048 Accrued product warranty 20,769 14,102 Accrued cooperative advertising 12,015 11,544 Accrued payment to Centrum shareholders - 14,267 Other accrued liabilities 54,390 31,786 -------- ------- Accrued and other liabilities $126,124 $93,747 ======== ======= Note 8: Borrowing Arrangements and Commitments In November 1994, the Company completed a private placement of $110 million aggregate principal amount of convertible subordinated notes under Rule 144A of the Securities Act of 1933. The notes mature in 2001. Interest is payable semi-annually at 10.25% per annum. The notes are convertible at the option of the note holders into the Company's common stock at an initial conversion price of $69.125 per share. Beginning in November 1997, the notes are redeemable at the option of the Company at an initial redemption price of 102.929% of the principal amount. The Company has reserved 1,591,320 shares of common stock for the conversion of these notes. In July 1994, the Company signed a five-year lease for 225,000 square feet of office and manufacturing space to be built on land adjacent to its existing headquarters in Santa Clara. This arrangement provides the Company with an option to purchase the related property during the lease term, and at the end of the lease term the Company is obligated to either purchase the property or arrange for the sale of the property to a third party with a guaranteed residual value of up to $33.5 million to the seller of the property. The Company estimates that it will commence occupancy of portions of the facility in June 1995, with payments on the lease estimated to start in September 1995. Future minimum lease payments are included in the table below. In April 1995, the Company signed an eight-year lease for 80,000 square feet of office and manufacturing space in Boxborough, Massachusetts to consolidate existing facilities in that area. Concurrent with this lease, the Company entered into an agreement pursuant to which the Company has the option to purchase the property in November 1995. Future minimum lease payments are included in the table below. As of May 31, 1995, the Company had approximately $29 million in capital expenditure commitments, primarily associated with the expansion and upgrade of product manufacturing lines and facilities. The Company has a $40 million revolving bank credit agreement which expires on December 31, 1996. Under the agreement, the Company may select among various interest rate options, including borrowing at the bank's prime rate. The agreement requires that the Company maintain certain financial ratios and minimum net worth. At May 31, 1995, all such requirements were met and there were no outstanding borrowings under the agreement. The Company has no restrictions on paying cash dividends on its common stock. 3Com Development Corporation, a wholly-owned subsidiary of 3Com, is a limited partner in a lease/joint venture arrangement to acquire and develop the Company's corporate offices in Santa Clara, which were initially occupied in the first quarter of fiscal 1991. Future minimum lease payments are included in the table below. The Company leases its facilities and certain equipment under operating leases. Leases expire at various dates from 1996 to 2013 and certain facility leases have renewal options with rentals based upon changes in the Consumer Price Index or the fair market rental value of the property. Future operating lease commitments are as follows: (in thousands) - -------------------------------------------------------------- Fiscal year 1996 $20,648 1997 17,975 1998 13,242 1999 12,247 2000 9,919 Thereafter 15,416 ------- Total $89,447 ======= Rent expense was $17.8 million, $14.0 million, and $14.1 million for fiscal 1995, 1994, and 1993, respectively. Note 9: Common Stock The Company's common stock was split two-for-one on September 1, 1994 for shareholders of record on August 16, 1994. All applicable share and per share data in these financial statements have been restated to give effect to this stock split. Shareholder Rights Plan. In September 1989, the Company's Board of Directors approved an amendment and restatement of the stock purchase rights plan and declared a dividend distribution of one common stock purchase right for each outstanding share of its common stock. The Company's Board of Directors approved an amendment and restatement of the rights plan in December 1994. The rights become exercisable based on certain limited conditions related to acquisitions of stock, tender offers and certain business combination transactions of the Company. In the event one of the limited conditions is triggered, each right entitles the registered holder to purchase for $250 a number of shares of 3Com common stock (or any acquiring company) with a fair market value of $500. The rights are redeemable at the Company's option for $.01 per right and expire on December 13, 2004. Stock Option Plans. The Company has stock option plans under which employees and directors may be granted options to purchase common stock. Options are generally granted at not less than the fair market value at grant date, vest over a four-year period, and expire ten years after the grant date. A summary of option transactions under the plans follows: Years ended May 31, (in thousands except price per share) 1995 1994 1993 - ---------------------------------------------------------------- Number of option shares: Granted and assumed 3,660 4,815 4,383 Exercised (3,104) (3,722) (3,659) Cancelled (594) (448) (651) Outstanding at end of year 12,665 12,703 12,058 - ---------------------------------------------------------------- Option price per share: Granted and assumed $0.03-68.25 $0.44-30.88 $0.48-19.69 Exercised 0.44-52.13 0.44-25.88 0.48-17.50 Cancelled 0.73-52.19 0.45-28.19 0.48-17.55 Outstanding at end of year $0.03-68.25 $0.44-30.88 $0.48-19.69 In connection with the fiscal 1995 purchase acquisitions discussed in Note 3, the Company assumed certain outstanding options to purchase common stock of the acquired companies and exchanged them for options to acquire 164,000 shares of the Company's common stock at exercise prices of $0.03 to $3.44 per share. In connection with the acquisition of Primary Access in June 1995, the Company assumed certain outstanding options to purchase common stock of Primary Access and exchanged them for options to acquire 452,000 shares of the Company's common stock at excercise prices of $0.48 to $52.13 per share. The Company also assumed certain outstanding warrants to purchase common stock of Primary Access and exchanged them for warrants to acquire 27,000 shares of the Company's common stock at excercise prices of $4.52 to $9.77 as of May 31, 1995. The warrants expire through 1997. At May 31, 1995, options for 5.3 million shares were exercisable, 4.8 million shares were available for future grants, and 17.4 million shares were reserved for issuance under the stock option plans. Employee Stock Purchase Plan. The Company has an employee stock purchase plan, under which eligible employees may authorize payroll deductions of up to 10 percent of their compensation (as defined) to purchase common stock at a price not less than 85 percent of the lower of the fair market values as of the beginning or the end of the offering period. At May 31, 1995, 629,000 shares of common stock were reserved for issuance under this plan. Restricted Stock Plan. The Company has a restricted stock plan, under which 200,000 shares of common stock were reserved for issuance at no cost to key employees. The shares are issued at the fair market value on the date of the grant. Any compensation expense is recognized as the granted shares vest over a one to four year period. Through May 31, 1995, 57,000 shares of common stock have been issued under this plan. At May 31, 1995, 143,000 shares were reserved for future issuance. Stock Repurchase Program. The Board of Directors has authorized the Company to repurchase up to 15.0 million shares of common stock. Under this authorization, 12.3 million shares have been repurchased and the Company may repurchase up to an additional 2.7 million shares of common stock. Note 10: Foreign Exchange Contracts Intercompany balances and balance sheet exposures. The Company enters into foreign exchange forward contracts to hedge certain balance sheet exposures and intercompany balances against future movements in foreign exchange rates. Gains and losses on the foreign exchange contracts are included in other income - net, which offset foreign exchange gains or losses from revaluation of foreign currency-denominated balance sheet items and intercompany balances. At May 31, 1995 and 1994, the Company had outstanding foreign exchange forward contracts of $16.7 million and $14.6 million, respectively, excluding the foreign exchange contracts related to the Irish manufacturing facility. The contracts require the Company to exchange foreign currencies for U.S. dollars or vice versa, and generally mature in one month. Irish manufacturing facility. The Company has entered into foreign exchange forward contracts to minimize fluctuation in the expected U.S. dollar cost of expanding its Irish manufacturing facility due to movements in the Irish pound to U.S. dollar exchange rate. Gains and losses on the forward contracts, when material, are included in construction in progress. At May 31, 1995, the outstanding foreign exchange contracts related to the construction in Ireland were $10.1 million. The contracts require the Company to exchange U.S. dollars for Irish pounds and have maturities from one to seven months. Note 11: Financial Instruments Fair Value Disclosure The following summary disclosures are made in accordance with the provisions of SFAS No. 107, "Disclosures About Fair Value of Financial Instruments," which requires the disclosure of fair value information about both on- and off-balance sheet financial instruments where it is practicable to estimate the value. Fair value is defined in SFAS No. 107 as the amount at which an instrument could be exchanged in a current transaction between willing parties, other than in a forced or liquidation sale. It is not the Company's intent to enter into such exchanges. Because SFAS No. 107 excludes certain financial instruments and all non- financial instruments from its disclosure requirements, any aggregation of the fair value amounts presented would not represent the underlying value of the Company. May 31, 1995 May 31, 1994 --------------------- --------------------- Carrying Estimated Carrying Estimated (in thousands) Amount Fair Value Amount Fair Value - ------------------------------------------------------------------------------ Assets: Cash and cash equivalents $149,210 $149,210 $69,768 $69,768 Temporary cash investments 184,338 184,338 63,413 63,208 Liabilities: Convertible subordinated notes $110,000 $138,050 $ - $ - Commitments: Foreign exchange contracts $ 26,796 $ 26,782 $14,634 $14,648 The following methods and assumptions were used in estimating the fair values of financial instruments: Cash and cash equivalents. The carrying amounts reported in the balance sheets for cash and cash equivalents approximate their estimated fair values. Temporary cash investments, foreign exchange contracts and convertible subordinated notes. The fair value of temporary cash investments, foreign exchange contracts and convertible subordinated notes are based on quoted market prices. Note 12: License In fiscal 1994, the Company licensed certain in-process wireless technology from Pacific Monolithics, Inc. This technology was still under development and, accordingly, $2.4 million of the $2.5 million cost of obtaining this license represented in-process technology and was charged to operations in fiscal 1994. Note 13: Non-recurring Items Non-recurring items for the year ended May 31, 1995 consists of merger costs of $6.1 million related to the acquisitions of Sonix and Primary Access (see Note 3) offset by a $1.1 million reduction in accrued costs associated with the fiscal 1991 restructuring based on revised estimates of future costs. Non-recurring items for the year ended May 31, 1993 consists of the net cost of a litigation settlement of $3.6 million (see Note 17), and merger costs of $1.0 million related to the acquisition of Star-Tek (see Note 3), offset by a reduction in accrued restructuring costs of $3.3 million based on revised estimates of future costs. Note 14: Other Income - Net Other income - net consists of: (in thousands) 1995 1994 1993 - ----------------------------------------------------------------- Interest income $10,204 $4,033 $3,657 Interest expense (6,874) (164) (419) Other 29 (556) (2,038) ------ ------ ------ Total $3,359 $3,313 $1,200 ====== ====== ====== Note 15: Income Taxes The provision for income taxes consists of: (in thousands) 1995 1994 1993 - ---------------------------------------------------------------- Current: Federal $56,122 $31,880 $13,808 State 19,393 8,208 3,139 Foreign 22,537 16,771 8,293 ------- ------- ------- Total current 98,052 56,859 25,240 ------- ------- ------- Deferred: Federal (17,600) (9,266) (1,658) State (6,885) - - Foreign 310 1,104 (1,846) ------- ------- ------- Total deferred (24,175) (8,162) (3,504) ------- ------- ------- Total $73,877 $48,697 $21,736 ======= ======= ======= The components of the net deferred tax asset consist of: (in thousands) 1995 1994 - ----------------------------------------------------------------- Deferred tax assets: Amortization and depreciation $29,180 $ 4,168 Reserves not recognized for tax purposes 32,324 32,289 Other 15,092 4,505 Valuation allowance (6,845) (8,274) ------- ------- Total deferred tax asset 69,751 32,688 ------- ------- Deferred tax liabilities - Unremitted earnings (12,828) - Net unrealized gain on securities available-for-sale (123) - Other (85) (25) ------- ------- Net deferred tax asset $56,715 $32,663 ======= ======= Valuation allowance relates primarily to expenses, the realization of which is not assured on future state income tax returns. The valuation allowance decreased $1.4 million in fiscal 1995, and increased $926,000 and $1.1 million in 1994 and 1993, respectively. Tax carryforwards of acquired businesses consist of $1.0 million and $800,000 of net operating loss and tax credit carryforwards, respectively, that expire in 2004 through 2008. The provision for income taxes differs from the amount computed by applying the federal statutory income tax rate to income before taxes as follows: 1995 1994 1993 - ---------------------------------------------------------------- Tax computed at federal statutory rate 35.0% 35.0% 34.0% State income taxes, net of federal effect 4.1 3.6 3.4 Foreign sales corporation (0.6) (4.2) (1.2) Tax exempt investment income (0.8) (4.5) (1.5) Benefit of net operating loss carryforwards - (7.4) (0.8) Provision for combined foreign and U.S. taxes on certain foreign income at rates less than U.S. rates (4.1) (6.0) (0.4) Research tax credits (1.5) (6.9) (0.2) Non-deductible purchased in-process technology 3.0 192.7 - Effect of tax law changes - (5.1) - Other 1.9 1.7 2.1 ----- ---- ---- Total 37.0% 198.9% 35.4% ==== ===== ==== Income before income taxes for the years ended 1995, 1994, and 1993 includes income of $131.2 million, $58.2 million and $18.7 million from the Company's foreign subsidiaries. The Company has not provided for federal income taxes on approximately $38.7 million of undistributed earnings of foreign subsidiaries, which the Company intends to reinvest in subsidiary operations indefinitely. If such undistributed earnings were to be remitted, the related tax liability would be approximately $10.7 million. Note 16: Geographic Area Information The Company operates in a single industry segment: the design, manufacture, marketing, and support of data networking systems. The Company's foreign operations consist primarily of central distribution and order administration, manufacturing and research and development facilities in Western Europe, and sales, marketing and customer service activities conducted through sales subsidiaries throughout the world. Sales, operating income and identifiable assets, classified by the major geographic areas in which the Company operates, are as follows: (in thousands) 1995 1994 1993 - ---------------------------------------------------------------- Revenues from unaffiliated customers: United States operations $ 623,153 $423,888 $322,677 Export sales from United States operations 179,225 103,127 69,237 European operations 523,151 324,032 224,891 Other 164 - 14,161 ---------- -------- -------- Total $1,325,693 $851,047 $630,966 ========== ======== ======== Transfers from geographic areas (eliminated in consolidation): United States operations $144,862 $112,418 $101,570 European operations 123,360 52,595 39,920 Other 439 - 23,354 -------- -------- -------- Total $268,661 $165,013 $164,844 ======== ======== ======== Operating income (loss): United States operations $ 79,117 $(55,869) $ 40,393 European operations 141,367 63,306 23,757 Other (2,149) 587 (212) Eliminations (21,818) (4,602) (3,725) -------- -------- -------- Total $196,517 $ 3,422 $ 60,213 ======== ======== ======== Identifiable assets: United States operations $647,072 $345,548 European operations 235,634 123,144 Other 10,009 2,498 Eliminations (34,909) (13,950) -------- -------- Total $857,806 $457,240 ======== ======== Operating income (loss) for the United States operations for the years ended May 31, 1995 and 1994 included charges of approximately $60.8 million and $134.5 million, respectively, for purchased in-process technology resulting from the Company's acquisitions in those years. Transfers between geographic areas are accounted for at prices representative of unaffiliated party transactions. Note 17: Litigation In August 1989, four class action lawsuits were filed in the United States District Court for the Northern District of California naming the Company and certain of its directors and officers as defendants. The suits, which were consolidated into a single action, alleged that defendants misrepresented or failed to disclose material facts about the Company's operations and financial results, which plaintiffs contended artificially inflated the price of the Company's securities during the period December 6, 1988 to August 7, 1989. In April 1993, the Company and plaintiffs reached an agreement to settle the consolidated action in its entirety. Although the Company believes that the claims asserted in the class action were without merit, the Company believed it was in the best interest of its shareholders to settle the case due to the continuing costs of defense, the distraction of management's attention and the uncertainties inherent in any litigation. The principal terms of the agreement called for a settlement of $9.9 million, a substantial portion of which was paid by the Company's insurance carrier. No dealer, salesman or other 483,309 Shares person has been authorized to give any information or to make any representations other than those contained or incorporated 3COM CORPORATION by reference in this Prospectus in connection with the offering described herein, and, if given or made, such information or COMMON STOCK representation must not be relied upon as having been authorized by the Company or by any Underwriter. This Prospectus does not constitute --------------- an offer to sell, or a solicitation of an offer to buy, PROSPECTUS any securities other than the registered securities to which --------------- it relates, or an offer to sell, or a solicitation of an offer to buy, in any jurisdiction in which it is unlawful to make such offer or solicitation. Neither the delivery of this Prospectus nor any sale made hereunder shall, under any circumstances, create an implication that there has been no change in the affairs of the Company since the date hereof or that the information contained herein is correct as of any time subsequent to the date hereof. TABLE OF CONTENTS Available Information Incorporation of Certain Documents by Reference The Company Risk Factors Material Changes Selling Shareholders Plan of Distribution Use of Proceeds Legal Matters Experts PART II INFORMATION NOT REQUIRED IN PROSPECTUS Item 14. Other Expenses of Issuance and Distribution. The following table sets forth the costs and expenses in connection with the sale and distribution of the securities being registered, other than underwriting discounts and commissions. All of the amounts shown are estimates except the Securities and Exchange Commission registration fees and NASD filing fee. To be Paid By The Registrant ---------- SEC Registration Fee $11,083 NASD filing fee 17,500 Accounting fees and expenses 25,000 Transfer agent and registrar fees and expenses -0- Blue Sky fees and expenses (including counsel fees) -0- Legal fees and expenses 7,000 Miscellaneous expenses 1,000 ------- Total $61,583 ======= The Company intends to pay all expenses of registration, issuance and distribution, excluding Underwriter's discounts and commissions, with respect to those shares being sold by the Selling Shareholders. Item 15. Indemnification of Directors and Officers. The Company's Bylaws provide that the Company shall indemnify its directors, officers, employees, and agents to the full extent permitted by the California Corporation Law, including in circumstances in which indemnification is otherwise discretionary under such law. In addition, with the approval of the Board of Directors and the shareholders, the Company has entered into separate indemnification agreements with its directors, officers and certain employees which require the Company, among other things, to indemnify them against certain liabilities which may arise by reason of their status or service (other than liabilities arising from willful misconduct of a culpable nature) and to obtain directors' and officers' insurance, if available on reasonable terms. Item 16. Exhibits. The following exhibits are filed with this Registration Statement: Exhibit Number Exhibit Title - ------ ------------- 5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A Professional Corporation. 23.1 Consent of Deloitte & Touche LLP. 23.2 Consent of KPMG Peat Marwick LLP. 23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation, is included in Exhibit 5.1. 24.1* Power of Attorney is included in the Signature Page contained in Part II of the Registration Statement. * Included with previous filing. Item 17. Undertakings. The undersigned Registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement: (i) To include any prospectus required by section 10(a)(3) of the Securities Act of 1933 (the "Securities Act"); (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement; (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; provided, however, that clauses (1)(i) and (1)(ii) do not apply if the information required to be included in a post-effective amendment by those paragraphs is contained in periodic reports filed by the Registrant pursuant to Section 13 or Section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. The undersigned Registrant hereby undertakes that for purposes of determining any liability under the Securities Act, each filing of the Registrant's annual report pursuant to section 13(a) or section 15(d) of the Securities Exchange Act of 1934 that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers, and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer, or controlling person of the Registrant in the successful defense of any action, suit, or proceeding) is asserted by such director, officer, or controlling person in connection with the securities being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. The undersigned Registrant hereby undertakes that: (1) For the purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of the registration statement as of the time it was declared effective. (2) For the purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Amendment No. 1 to the Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Santa Clara, State of California, on the 30th day of June, 1995. 3COM CORPORATION By: /s/ Christopher B. Paisley ------------------------------ Christopher B. Paisley Vice President, Finance and Chief Financial Officer Pursuant to the requirements of the Securities Act of 1933, this Amendment No. 1 to the Registration Statement on Form S-3 has been signed below on June 30, 1995 by the following persons in the capacities indicated. Signature Title /s/ Eric A. Benhamou* President, Chief Executive Officer, - ----------------------------- and Director (Principal Executive Officer) Eric A. Benhamou /s/ Christopher B. Paisley Vice President, Finance and Chief Financial - ----------------------------- Officer (Principal Financial Officer and Christopher B. Paisley Principal Accounting Officer) /s/ James L. Barksdale* Director - ----------------------------- James L. Barksdale /s/ Gordon A. Campbell* Director - ----------------------------- Gordon A. Campbell - ----------------------------- Director David W. Dorman /s/ Jean-Louis Gassee* Director - ----------------------------- Jean-Louis Gassee /s/ Stephen C. Johnson* Director - ----------------------------- Stephen C. Johnson /s/ Philip C. Kantz* Director - ----------------------------- Philip C. Kantz /s/ William F. Zuendt* Director - ----------------------------- William F. Zuendt *By: /s/ Christopher B. Paisley --------------------------- (Christopher B. Paisley, Attorney-in-Fact) INDEX TO EXHIBITS Exhibit No. - ----------- 5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A Professional Corporation 23.1 Consent of Deloitte & Touche LLP 23.2 Consent of KPMG Peat Marwick LLP 23.3 Consent of Gray Cary Ware & Freidenrich (included in Exhibit 5.1) Exhibit 5.1 June 29, 1995 Securities and Exchange Commission 450 Fifth Street, N.W. Washington, D.C. 20549 Re: 3Com Corporation Registration Statement on Form S-3, filed on June 22, 1995 (Registration No. 33-60497) Gentlemen and Ladies: As legal counsel for 3Com Corporation, a California corporation (the "Company"), we are rendering this opinion in connection with the preparation and filing of a registration statement on Form S-3, filed with the Securities and Exchange Commission on June 22, 1995 and as may be amended (the "Registration Statement"), relating to the registration under the Securities Act of 1933, as amended, of 483,309 shares of Common Stock issued by the Company pursuant to an Acquisition and Exchange Agreement dated March 22, 1995 between the Company and the shareholders of Sonix Communications Limited, a company formed and registered in England. We have examined such instruments, documents and records as we deemed relevant and necessary for the basis of our opinion hereinafter expressed. In such examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals and the conformity to the originals of all documents submitted to us as copies. Based on such examination, we are of the opinion that the 483,309 shares of Common Stock of the Company being registered pursuant to the Registration Statement and to be sold by the selling shareholders are duly authorized shares of Common Stock and are validly issued, fully paid, and nonassessable. We hereby consent to the filing of this opinion as an exhibit to the Registration Statement referred to above and the use of our name wherever it appears in said Registration Statement. Respectfully submitted, /s/ Gray Cary Ware & Freidenrich - -------------------------------- GRAY CARY WARE & FREIDENRICH A Professional Corporation Exhibit 23.1 CONSENT OF DELOITTE & TOUCHE LLP We consent to the use in Amendment No. 1 to Registration Statement No. 33-60497 of 3Com Corporation on Form S-3 of our report dated June 14, 1995, appearing in the Annual Report on Form 10-K of 3Com Corporation for the year ended May 31, 1995, and to the use of our report dated June 28, 1995 (which includes an emphasis paragraph relating to the restatement of the supplemental consolidated financial statements for a pooling of interests subsequent to the date of the historical financial statements), appearing in the Prospectus, which is part of this Registration Statement. We also consent to the reference to us under the heading "Experts" in such Prospectus. /s/ Deloitte & Touche LLP - ------------------------- DELOITTE & TOUCHE LLP San Jose, California June 28, 1995 Exhibit 23.2 CONSENT OF KPMG PEAT MARWICK LLP The Board of Directors Primary Access Corporation: We consent to the use of our report included herein relating to the balance sheet of Primary Access Corporation as of October 3, 1993, and the related statements of operations, stockholders' equity (deficit), and cash flows for the fifty-three weeks ended October 3, 1993 and the fifty-two weeks ended September 27, 1992 (not presented herein), and to the reference to our firm under the heading "Experts" in the Prospectus. /s/ KPMG Peat Marwick LLP San Diego, California June 29, 1995 -----END PRIVACY-ENHANCED MESSAGE-----