EX-99.1 2 b761673cexv99w1.htm EX-99.1 TEXT OF PRESS RELEASE, DATED JULY 9, 2009 exv99w1
Exhibit 99.1
(3COM LOGO)
FOR IMMEDIATE RELEASE
For more information contact:
     
Investor Relations
   Media Relations
Gene Skayne
   Kevin Flanagan
508.323.1080
   508.323.1101
gene_skayne@3com.com
   kevin_flanagan@3com.com
3Com Reports Fourth-Quarter and Full-Year Results for Fiscal 2009
MARLBOROUGH, MASS.—July 9, 2009—3Com Corporation (Nasdaq: COMS) today reported financial results for its fiscal 2009 fourth quarter and full fiscal year 2009, which ended May 29, 2009. Revenue in the quarter was $295.1 million, compared to revenue of $321.3 million in the corresponding period in fiscal 2008, an 8.2 percent decrease.
     Net income in the quarter was $20.2 million, or $0.05 per diluted share, compared with a net loss of $166.7 million, or $(0.41) per share, in the fourth quarter of fiscal year 2008. Fiscal year 2008 fourth-quarter results included a $158.0 million goodwill impairment charge. On a non-GAAP basis, net income for the fourth quarter of fiscal year 2009 was $37.2 million, or $0.10 per diluted share, compared with net income of $35.6 million, or $0.09 per diluted share, for the fourth quarter of fiscal year 2008.
     Revenue for the full fiscal year 2009 was $1,317.0 million, compared with $1,294.9 million in the prior year, a 1.7 percent increase. Fiscal year 2009 net income, on a GAAP basis, was $114.7 million, or $0.29 per diluted share, compared with a net loss of $228.8 million, or $(0.57) per share, for the prior fiscal year. On a non-GAAP basis, net income for fiscal year 2009 was $176.7 million, or $0.45 per diluted share, compared with net income of $94.9 million, or $0.23 per diluted share, for fiscal year 2008.
     3Com generated $84.1 million in cash from operations in the fourth quarter and $280.5 million for the year. 3Com’s cash and short-term investment balance at May 29, 2009 was $644.2 million.
     “I am very pleased with 3Com’s performance in the fourth quarter as well as the full fiscal year 2009,” said Bob Mao, 3Com’s chief executive officer. “We had a very good year, delivering on all three of our key goals: revenue growth, operating margin improvement and positive cash generation from operations. We have a clear, articulated strategy that we are successfully implementing.”
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3Com Reports Fourth-Quarter and Full-Year Results for Fiscal 2009, p. 2
     Management will host a conference call and Webcast at 8:30 a.m. EDT, Thursday, July 9, 2009, to discuss the company’s financial results and business outlook. To participate on the call, U.S. and international parties may dial (913) 312-1476. Alternatively, interested parties may listen to the live broadcast of the call over the Internet at 3Com’s Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section.
     For those unable to participate on the live call, a replay will be available starting at 12:30 p.m. EDT on July 9, 2009, by dialing (719) 457-0820 or (888) 203-1112, Confirmation Code: 4556311. A replay will also be available over the Internet at 3Com’s Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section. The replay will be available for approximately three weeks after posting.
     Additional financial information is available on the Investor Relations section of our Web site.
Safe Harbor
This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our business objectives and goals. These statements are neither promises nor guarantees, but involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including, without limitation, risks relating to: our ability to grow profitably, expand outside of China, maintain and expand in China, improve expense controls while making investments to grow and other risks detailed in the Company’s filings with the SEC, including those discussed in the Company’s quarterly report filed with the SEC on Form 10-Q for the quarter ended February 27, 2009.
3Com Corporation does not intend, and disclaims any obligation, to update any forward-looking information contained in this release or with respect to the announcements described herein.
The non-GAAP measures used by the Company exclude restructuring, amortization, stock-based compensation expense and, if applicable in the relevant period, unusual items, such as those items detailed in the tables attached to this press release. The required reconciliations and other disclosures for all non-GAAP measures used by the Company are set forth later in this press release, in the Current Report on Form 8-K furnished to the SEC on the date hereof and/or in the investor relations section of our Web site, www.3com.com.
References to the financial information included in this news release reflect rounded numbers and should be considered approximate values.
About 3Com Corporation
3Com Corporation is a $1.3 billion global enterprise networking solutions provider that sets a new price/performance standard for customers. 3Com has three global brands—H3C, 3Com, and TippingPoint—that offer high-performance networking and security solutions to enterprises large and small. The H3C enterprise networking portfolio—a market leader in China—includes products that span from the data center to the edge of the network, while TippingPoint network-based intrusion prevention systems and network access control solutions deliver in-depth, no-compromise application, infrastructure and performance protection.
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Copyright© 2009 3Com Corporation. 3Com, the 3Com logo, H3C and TippingPoint are registered trademarks of 3Com Corporation or its wholly owned subsidiaries in various countries around the world. All other company and product names may be trademarks of their respective holders.

 

 

3Com Reports Fourth-Quarter and Full-Year Results for Fiscal 2009, p. 3
3Com Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
TABLE A
                                 
    Three Months Ended     Twelve Months Ended  
    May 29,     May 30,     May 29,     May 30,  
    2009     2008     2009     2008  
Sales
   $ 295,059     $ 321,254     $ 1,316,978     $ 1,294,879  
Cost of sales
     118,843       147,529       565,514       640,424  
 
                        
 
                                
Gross profit
     176,216       173,725       751,464       654,455  
 
                                
Operating expenses (income):
                                
Sales and marketing
     79,258       78,402       338,401       316,019  
Research and development
     42,649       51,614       179,979       206,653  
General and administrative
     25,101       50,310       113,900       129,116  
Amortization of intangibles
     21,683       25,626       95,013       103,670  
Patent dispute resolution and patent sale
     (15,200 )     —       (85,200 )     —  
Goodwill impairment
     —       157,977       —       157,977  
Restructuring charges
     1,318       193       8,679       4,501  
 
                        
Operating expenses, net
     154,809       364,122       650,772       917,936  
 
                        
 
                                
Operating income (loss)
     21,407       (190,397 )     100,692       (263,481 )
 
                                
Interest expense, net
     (432 )     (2,675 )     (5,563 )     (13,087 )
Other income, net
     6,902       11,479       52,200       44,824  
 
                        
 
                                
Income (loss) from operations before income taxes
     27,877       (181,593 )     147,329       (231,744 )
 
                                
Income tax (provision) benefit
     (7,726 )     14,870       (32,604 )     2,903  
 
                                
Net income (loss)
   $ 20,151     $ (166,723 )   $ 114,725     $ (228,841 )
 
                        
 
                                
Basic and diluted income (loss) per share
   $ 0.05     $ (0.41 )   $ 0.29     $ (0.57 )
 
                        
 
                                
Shares used in computing basic per share amounts
     386,763       401,922       392,092       399,524  
 
                                
Shares used in computing diluted per share amounts
     391,135       401,922       394,207       399,524  

 

 

3Com Reports Fourth-Quarter and Full-Year Results for Fiscal 2009, p. 4
3Com Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
TABLE B
                 
    May 29,     May 30,  
    2009     2008  
ASSETS
                
 
                
Current assets:
                
Cash and equivalents
   $ 545,818     $ 503,644  
Short term investments
     98,357       —  
Notes receivable
     40,590       65,116  
Accounts receivable, net
     112,771       116,281  
Inventories, net
     90,395       90,831  
Other current assets
     56,982       34,033  
 
            
 
                
Total current assets
     944,913       809,905  
 
                
Property & equipment, net
     40,012       54,314  
Goodwill
     609,297       609,297  
Intangibles, net
     198,624       278,385  
Deposits and other assets
     22,511       23,229  
 
            
 
                
Total assets
   $ 1,815,357     $ 1,775,130  
 
            
 
                
LIABILITIES AND STOCKHOLDERS’ EQUITY
                
 
                
Current liabilities:
                
Accounts payable
   $ 68,350     $ 90,280  
Current portion of long-term debt
     48,000       48,000  
Accrued liabilities and other
     394,103       366,181  
 
            
 
                
Total current liabilities
     510,453       504,461  
 
                
Deferred taxes and long-term obligations
     40,729       22,367  
Long-term debt
     152,000       253,000  
Stockholders’ equity
     1,112,175       995,302  
 
            
 
                
Total liabilities and stockholders’ equity
   $ 1,815,357     $ 1,775,130  
 
            

 

 

3Com Reports Fourth-Quarter and Full-Year Results for Fiscal 2009, p. 5
3Com Corporation
Reconciliation of Non-GAAP Measures
(in thousands, except margin and per-share data)
(unaudited)
TABLE C
                                 
    Three Months Ended     Twelve Months Ended  
    May 29,     May 30,     May 29,     May 30,  
    2009     2008     2009     2008  
GAAP net income (loss)
   $ 20,151     $ (166,723 )   $ 114,725     $ (228,841 )
Restructuring
     1,318       193       8,679       4,501  
Amortization of intangibles
     21,683       25,626       95,013       103,670  
Impacts to cost of sales from purchase accounting adjustments to inventory [a]
     —       —       —       11,176  
Patent dispute resolution and patent sale [b]
     (15,200 )     —       (85,200 )     —  
VAT recovery dispute [c]
     —       6,069       —       6,069  
IPO fees write-off [d]
     —       4,864       —       4,864  
Goodwill impairment [e]
     —       157,977       —       157,977  
TippingPoint special admin costs [f]
     —       —       800       —  
Stock-based compensation expense [g]
     11,893       9,793       29,636       25,206  
Acquiree expensed acquisition costs [h]
     —       43       —       10,631  
Legal contingency accruals [i]
     —       —       2,400       —  
Patent litigation success fee (j)
     —       9,000       —       9,000  
Impairment of property and equipment [k]
     —       —       1,150       —  
Hemel land settlement [l]
     (2,600 )     —       (2,600 )     —  
Gain on sales of assets [m]
     —       —       —       (6,155 )
Loss on insurance settlement [n]
     —       —       —       2,066  
Tax reserve release [o]
     —       (11,284 )     —       (11,284 )
Charge related to change in tax rates [p]
     —       —       12,083       6,056  
 
                        
Non-GAAP net income
   $ 37,245     $ 35,558     $ 176,686     $ 94,936  
 
                        
 
                                
GAAP net income (loss) per share
   $ 0.05     $ (0.41 )   $ 0.29     $ (0.57 )
Restructuring
     0.00       0.00       0.02       0.01  
Amortization of intangibles
     0.06       0.06       0.25       0.26  
Impacts to cost of sales from purchase accounting adjustments to inventory [a]
     —       —       —       0.03  
Patent dispute resolution and patent sale [b]
     (0.04 )     —       (0.22 )     —  
VAT recovery dispute [c]
     —       0.02       —       0.02  
IPO fees write-off [d]
     —       0.01       —       0.01  
Goodwill impairment [e]
     —       0.39       —       0.39  
TippingPoint special admin costs [f]
     —       —       0.00       —  
Stock-based compensation expense [g]
     0.04       0.03       0.08       0.06  
Acquiree expensed acquisition costs [h]
     —       0.00       —       0.03  
Legal contingency accruals [i]
     —       —       0.01       —  
Patent litigation success fee (j)
     —       0.02       —       0.02  
Impairment of property and equipment [k]
     —       —       0.00       —  
Hemel land settlement [l]
     (0.01 )     —       (0.01 )     —  
Gain on sales of assets [m]
     —       —       —       (0.02 )
Loss on insurance settlement [n]
     —       —       —       0.01  
Tax reserve release [o]
     —       (0.03 )     —       (0.03 )
Charge related to change in tax rates [p]
     —       —       0.03       0.01  
 
                        
Non-GAAP net income per share, diluted
   $ 0.10     $ 0.09     $ 0.45     $ 0.23  
 
                        
Shares used in computing diluted per share amounts
     391,135       406,139       394,207       404,193  
 
[a]   Results from our 49% H3C acquisition transaction.
 
[b]   Resolution of Realtek patent dispute and net proceeds of patent sale.
 
[c]   Disputed VAT recovery receivable no longer deemed collectible.
 
[d]   Write-off capitalized costs of proposed IPO.
 
[e]   Goodwill impairment related to loss in value of a reporting unit.
 
[f]   Costs incurred in the second quarter to facilitate operation of TippingPoint as a more autonomous business.
 
[g]   Stock-based compensation expense is included in the following cost and expense categories by period:
                                 
    Three Months Ended   Twelve Months Ended
    May 29,   May 30,   May 29,   May 30,
    2009   2008   2009   2008
Cost of sales
     1,112       731       3,028       2,134  
Sales and marketing
     3,645       1,830       8,615       5,976  
Research and development
     1,394       1,199       3,939       3,993  
General and administrative
     5,742       6,033       14,498       13,103  
Note: $444 thousand of stock-based compensation in the twelve months have been recorded to restructuring expense
[h]   These expenses relate to the proposed acquisition of the Company in September 2007, which was terminated in April 2008.
 
[i]   Accruals for contingencies relating to ongoing patent litigation.
 
[j]   The charge relates to the success fee related to the Realtek settlement.
 
[k]   Impairment charge related to the Company’s land in Hemel. UK.
 
[l]   Proceeds from Hemel land settlement from reimbursement of operating costs
 
[m]   The gain relates to a patent sale in fiscal 2008.
 
[n]   This loss relates to the recording of costs associated with our closed Hemel facility in fiscal 2008.
 
[o]   This gain relates to the release of tax reserves due to settlements with foreign tax authorities.
 
[p]   These expenses result from a change in the statutory rate used to compute the income tax provision in the PRC.