8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):
December 23, 2009

3COM CORPORATION

(Exact name of registrant as specified in its charter)

Delaware
(State or other jurisdiction of
incorporation) 0-12867
(Commission
File Number) 94-2605794
(IRS Employer
Identification No.)

350 Campus Drive
Marlborough, Massachusetts
01752
(Address of Principal Executive Offices)
(Zip Code)

Registrant’s telephone number, including area code: (508) 323-1000

(Former name or former address, if changed since last report)

     Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

TABLE OF CONTENTS

	ITEM 2.02 Results of Operations and Financial Condition
	ITEM 7.01 Regulation FD Disclosure
	ITEM 9.01 Financial Statements and Exhibits
SIGNATURE
EXHIBIT INDEX
Ex-99.1 Text of Press Release, dated December 23, 2009
Ex-99.2 Supplemental Financial Information
Ex-99.3 H3C - Summary Financial Information Provided to Bank Lenders

ITEM 2.02 Results of Operations and Financial Condition

Financial Results.

     On December 23, 2009, 3Com Corporation, or the Company, (i) issued a press release regarding its financial results for its fiscal quarter ended November 27, 2009 and (ii) posted supplementary financial information concerning the Company to the investor relations portion of its web site, www.3Com.com. The full text of the press release is attached hereto as Exhibit 99.1. The supplementary financial material is attached hereto as Exhibit 99.2.

     The information in Item 2.02 of this Form 8-K and the exhibits attached hereto as Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

Non-GAAP Financial Measures.

     In evaluating the Company’s performance, management uses certain non-GAAP financial measures to supplement consolidated financial statements prepared under generally accepted accounting principles in the United States, or GAAP.

     More specifically, the Company uses one or more of the following non-GAAP financial measures: non-GAAP gross profit/loss (and margin), non-GAAP operating profit/loss (and margin), non-GAAP net income/loss (and margin), non-GAAP net income/loss per share, non-GAAP research and development, sales and marketing and general and administrative expenses and non-GAAP operating profit/loss before taxes. We also may disclose non-GAAP gross margin and non-GAAP operating profit and margin measures for our Networking and TippingPoint businesses. These measures are adjusted to exclude some or all of the items discussed below. Management believes these supplemental measures contribute to management’s ability, and the ability of the investor and financial analyst community, to compare our businesses to those of our competitors who report similar metrics.

     It should be noted that the non-GAAP operating profit measure used as a metric in several components of our executive compensation is defined to exclude the following charges and benefits: restructuring, amortization, stock-based compensation expense and special items that the Compensation Committee believes are unusual and outside of the Company’s on-going operations. Such measure may be different than our publicly reported non-GAAP operating profit measure discussed in this Form 8-K because the Compensation Committee independently considers the appropriateness of excluding various items for the purposes of measuring executive compensation.

     Discussion. The Company uses these measures in its public statements. Management believes these non-GAAP measures help indicate the Company’s baseline performance before gains, losses or charges that are considered by management to be outside on-going operating results. Accordingly, management uses these non-GAAP measures to gain a better understanding of the Company’s comparative operating performance from period-to-period and as a basis for planning and forecasting future periods. Management believes these non-GAAP measures, when read in conjunction with the Company’s GAAP financials, provide useful information to investors by offering:

• the ability to make more meaningful period-to-period comparisons of the Company’s on-going operating results;

• the ability to better identify trends in the Company’s underlying business and perform related trend analysis;

• a higher degree of transparency for certain expenses (particularly when a specific charge impacts multiple line items);

• a better understanding of how management plans and measures the Company’s underlying business; and

• an easier way to compare the Company’s most recent results of operations against investor and analyst financial models.

     In order to provide meaningful comparisons, the Company believes that it needs to adjust for gains as well as charges that are outside the core operations. Accordingly, certain gains may be excluded.

     The non-GAAP measures used by the Company are defined to exclude one or more of the following items:

     Restructuring

     Management believes the costs related to restructuring activities are not indicative of the Company’s normal operating costs. The restructuring charge consists primarily of severance expense and facility closure costs.

     Amortization of Intangibles

     Management believes that the expense associated with the amortization of acquisition-related intangible assets is appropriate to be excluded because a significant portion of the purchase price for acquisitions may be allocated to intangible assets that have short lives and exclusion of the amortization expense allows comparisons of operating results that are consistent over time for both the Company’s newly acquired and long-held businesses. Also, amortization is a non-cash charge for the periods presented.

     Stock-based Compensation

     Stock-based compensation expenses are non-cash charges that relate to restricted stock and stock option amortization, as well as additional stock-based compensation expense that represents the fair value of stock-based compensation required pursuant to FAS 123 (R). The FAS 123 (R)-related expense is excluded because management believes as a non-cash charge it is not a meaningful indicator of core operating business results. Management manages the business primarily without regard to these non-cash expenses. In addition, because the calculation of these expenses is dependent on factors such as forfeiture rate, volatility of the Company’s stock and a risk-free interest rate, all of which are subject to fluctuation, these charges are expected to be variable over time, and therefore may not provide a meaningful comparison of core operating results among periods. It is useful to note that these factors are generally outside the Company’s control.

     Benefit from Realtek Patent Resolution

     We recorded a benefit in the form of an offset to operating expenses for the payments we received in connection with a patent dispute resolution with Realtek. This is a non-recurring item, and not part of our ordinary course business operations. Accordingly, management determined to adjust our results to exclude this item. Management does not measure our performance with these items included.

     Acquiree Expensed Acquisition Costs

     The Company excludes expenses related to its proposed acquisition by Hewlett-Packard Company. These expenses are one-time charges that are not indicative of core operations as they relate to a one-time specific proposed transaction to acquire the Company.

     Fees to Facilitate More Autonomous Operation of Subsidiary

     The Company also excluded fees related to costs incurred to facilitate a more autonomous operation for a Company subsidiary. These fees are one-time items.

     Favorable Tax Adjustment Related to Resolution of 2008 Tax Rate in PRC

     We recorded a favorable tax adjustment, reflecting final resolution of our calendar year 2008 tax rate in China. The Company excluded this item because it is not related to on-going operations and the Company had previously recorded a provision at a higher tax rate in China based on the current tax law without giving effect to any concessions or new tax status to which we were eventually determined to be entitled.

*********************************************

     Per Share Metrics. The Company believes that it is important to provide per share metrics, in addition to absolute dollar measures, when describing its business, including when presenting non-GAAP measures. To the extent 3Com is in an “income position” on a non-GAAP basis, we use our “diluted” shares (as opposed to our “basic” shares) in order to calculate the non-GAAP per share measures.

     Forward-Looking Measures. For the Company’s forward-looking non-GAAP measures, if any, the Company is unable to provide a quantitative reconciliation because the information is not available without unreasonable effort.

     General. These non-GAAP measures have limitations because they do not include all items of income and expense that impact the Company’s operations. Management compensates for these limitations by also considering the Company’s GAAP results. The non-GAAP financial measures the Company uses are not prepared in accordance with, and should not be considered an alternative to, measurements required by GAAP, such as operating income, net income and income per share, and should not be considered measures of the Company’s liquidity. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. In addition, these non-GAAP financial measures may not be comparable to similar measures reported by other companies.

ITEM 7.01 Regulation FD Disclosure

     As required by its senior secured credit facility the Company made available to its senior secured bank lenders certain summary financial information concerning H3C. This financial data is attached hereto as Exhibit 99.3 and is hereby incorporated by reference into this Item 7.01.

     The information in Item 7.01 of this Form 8-K and the exhibit attached hereto as Exhibit 99.3 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

ITEM 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number		Description
	99.1	Text of Press Release, dated December 23, 2009, titled “3Com Reports Results for Second Quarter Fiscal Year 2010”
	99.2	Supplemental Financial Information — Fiscal Quarter Ended November 27, 2009
	99.3	H3C — Summary Financial Information Provided to Bank Lenders

SIGNATURE

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	3COM CORPORATION
Date: December 23, 2009	By:	/s/ Jay Zager
		Jay Zager
		Executive Vice President, Chief Financial Officer

EXHIBIT INDEX

Exhibit Number		Description
	99.1	Text of Press Release, dated December 23, 2009, titled “3Com Reports Results for Second Quarter Fiscal Year 2010”
	99.2	Supplemental Financial Information — Fiscal Quarter Ended November 27, 2009
	99.3	H3C — Summary Financial Information Provided to Bank Lenders

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

For more information contact:

Investor Relations	Media Relations
Gene Skayne	Frank Tutalo
508.323.1080	781.782.5761
gene_skayne@3com.com	frank_tutalo@lpp.com

3Com Reports Results for Second Quarter Fiscal Year 2010

MARLBOROUGH, MASS.—December 23, 2009—3Com Corporation (Nasdaq: COMS) today reported financial results for its fiscal 2010 second quarter, which ended November 27, 2009. Revenue in the quarter was $322.2 million, compared to revenue of $354.6 million in the corresponding period in fiscal 2009, a 9.1 percent decrease.

     Second quarter revenue increased 10.9 percent sequentially, from $290.5 million in the prior quarter. Revenue grew sequentially across all major sales regions, primarily driven by a solid recovery in the Europe, Middle East and Africa region and in our Latin America business, and continued strong performance in China. Sales to Huawei continued to decline as expected, coming in at $18.2 million, down 35.3 percent sequentially, while China based direct-touch sales reached $151.1 million in the quarter, up 21.9 percent sequentially.

     3Com achieved gross margin in the quarter of 60.1 percent. This compares with gross margin of 57.3 percent in the first quarter of fiscal year 2010, and 56.3 percent in second quarter of fiscal year 2009.

     3Com also achieved GAAP operating profit margin of 4.5 percent in the quarter. Non-GAAP operating profit margin hit a record 13.5 percent in the second quarter, compared with 9.1 percent in the first quarter of fiscal year 2010, and 10.8 percent in the second quarter of the prior year.

     Net income in the quarter was $20.0 million, or $0.05 per diluted share, compared with net income of $12.9 million, or $0.03 per diluted share, in the second quarter of fiscal year 2009. Q2 FY10 results include a favorable tax adjustment of $10.8 million offset in part by transaction costs of approximately $4.6 million relating to the Company’s pending merger with Hewlett-Packard Company. On a non-GAAP basis, net income for the second quarter of fiscal year 2010 was $38.3 million, or $0.09 per diluted share, compared with net income of $46.9 million, or $0.12 per diluted share, for the second quarter of fiscal year 2009.

3Com Reports Results for Second Quarter Fiscal 2010, p. 2

     3Com generated $118.2 million in cash from operations in the quarter. 3Com’s cash and equivalents and short term investments balance at November 27, 2009 was $704.1 million. During the quarter 3Com repaid $88.0 million of its debt, including a voluntary payment of $40.0 million.

     “We are pleased with 3Com’s performance in the quarter,” said Bob Mao, 3Com’s Chief Executive Officer. “We exceeded our guidance for revenue, operating profit, earnings per share, and our cash balance while delivering sequential revenue growth across all our sales regions and achieving record gross and operating margins.”

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.

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 Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
TABLE A

	Three Months Ended									Six Months Ended
	November 27,			August 28,			November 28,			November 27,			November 28,
	2009			2009			2008			2009			2008
Sales	$	322,164		$	290,502		$	354,562		$	612,666		$	697,212
Cost of sales		128,542			123,931			154,770			252,473			307,793
Gross profit		193,622			166,571			199,792			360,193			389,419
Operating expenses (income):
Sales and marketing		93,754			84,788			89,920			178,542			177,402
Research and development		41,400			38,968			49,254			80,368			96,401
General and administrative		25,786			21,370			28,652			47,156			53,106
Amortization of intangibles		16,755			17,071			25,060			33,826			50,224
Patent dispute resolution		—			—			—			—			(70,000	)
Restructuring charges		1,552			1,133			2,504			2,685			4,501
Operating expenses, net		179,247			163,330			195,390			342,577			311,634
Operating income		14,375			3,241			4,402			17,616			77,785
Interest expense, net		(1,922	)		(1,088	)		(547	)		(3,010	)		(1,798	)
Other income, net		5,920			11,547			15,899			17,467			28,770
Income before income taxes		18,373			13,700			19,754			32,073			104,757
Income tax provision		1,619			(6,239	)		(6,884	)		(4,620	)		(12,050	)
Net income	$	19,992		$	7,461		$	12,870		$	27,453		$	92,707
Basic and diluted income per share	$	0.05		$	0.02		$	0.03		$	0.07		$	0.23
Shares used in computing basic per share amounts		392,688			389,774			394,036			391,231			398,462
Shares used in computing diluted per share amounts		403,501			396,266			395,245			399,884			399,658

3Com Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
TABLE B

	November, 27		May 29,
	2009		2009
ASSETS
Current assets:
Cash and equivalents	$	704,079	$	545,818
Short term investments		—		98,357
Notes receivable		35,697		40,590
Accounts receivable, net		110,297		112,771
Inventories, net		94,844		90,395
Other current assets		55,307		56,982
Total current assets		1,000,224		944,913
Property & equipment, net		36,805		40,012
Goodwill		609,297		609,297
Intangibles, net		164,931		198,624
Deposits and other assets		23,761		22,511
Total assets	$	1,835,018	$	1,815,357
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	81,632	$	68,350
Current portion of long-term debt		48,000		48,000
Accrued liabilities and other		427,943		394,103
Total current liabilities		557,575		510,453
Deferred taxes and long-term obligations		40,695		40,729
Long-term debt		64,000		152,000
Stockholders’ equity		1,172,748		1,112,175
Total liabilities and stockholders’ equity	$	1,835,018	$	1,815,357

3Com Corporation
Reconciliation of Non-GAAP Financial Measures
(in thousands, except margin and per-share data)
(unaudited)
TABLE C

	Three Months Ended									Six Months Ended
	November 27,			August 28,			November 28,			November 27,			November 28,
	2009			2009			2008			2009			2008
GAAP operating income	$	14,375		$	3,241		$	4,402		$	17,616		$	77,785
Restructuring		1,552			1,133			2,504			2,685			4,501
Amortization of intangible assets		16,755			17,071			25,060			33,826			50,224
Patent dispute resolution [a]		—			—			—			—			(70,000	)
Acquiree expensed acquisition costs [c]		4,552			—			—			4,552			—
Stock-based compensation expense [b]		6,233			4,885			5,638			11,118			12,080
TippingPoint special admin costs [d]		—			—			800			—			800
Non-GAAP operating income	$	43,467		$	26,330		$	38,404		$	69,797		$	75,390
GAAP operating profit margin		4.5	%		1.1	%		1.2	%		2.9	%		11.2	%
Restructuring		0.5	%		0.4	%		0.7	%		0.4	%		0.6	%
Amortization of intangible assets		5.2	%		5.9	%		7.1	%		5.5	%		7.2	%
Patent dispute resolution [a]		—			—			—			—			-10.0	%
Stock-based compensation expense [b]		1.4	%		—			—			0.8	%		—
Acquiree expensed acquisition costs [c]		1.9	%		1.7	%		1.6	%		1.8	%		1.7	%
TippingPoint special admin costs [d]		—			—			0.2	%		—			0.1	%
Non-GAAP operating profit margin		13.5	%		9.1	%		10.8	%		11.4	%		10.8	%
GAAP net income	$	19,992		$	7,461		$	12,870		$	27,453		$	92,707
Restructuring		1,552			1,133			2,504			2,685			4,501
Amortization of intangibles		16,755			17,071			25,060			33,826			50,224
Patent dispute resolution [a]		—			—			—			—			(70,000	)
Stock-based compensation expense [b]		6,233			4,885			5,638			11,118			12,080
Acquiree expensed acquisition costs [c]		4,552			—			—			4,552			—
TippingPoint special admin costs [d]		—			—			800						800
Tax adjustment related to resolution of 2008 tax rate in PRC [e]		(10,801	)		—			—			(10,801	)		—
Non-GAAP net income	$	38,283		$	30,550		$	46,872		$	68,833		$	90,312
GAAP net income per share	$	0.05		$	0.02		$	0.03		$	0.07		$	0.23
Restructuring		0.00			0.00			0.01			0.01			0.01
Amortization of intangibles		0.04			0.04			0.06			0.08			0.13
Patent dispute resolution [a]		—			—			—			—			(0.17	)
Stock-based compensation expense [b]		0.02			0.02			0.02			0.03			0.03
Acquiree expensed acquisition costs [c]		0.01			—			—			0.01			—
TippingPoint special admin costs [d]		—			—			0.00			—			0.00
Tax adjustment related to resolution of 2008 tax rate in PRC [e]		(0.03	)		—			—			(0.03	)		—
Non-GAAP net income per share, diluted	$	0.09		$	0.08		$	0.12		$	0.17		$	0.23
Shares used in computing diluted per share amounts		403,501			396,266			395,245			399,884			399,658

[a]	Resolution of Realtek patent dispute.
[b]	Stock-based compensation expense is included in the following cost and expense categories by period:

	Three Months Ended						Six Months Ended
	November 27,		August 28,		November 28,		November 27,		November 28,
	2009		2009		2008		2009		2008
Cost of sales		591		540		562		1,131		1,320
Sales and marketing		2,081		1,590		1,613		3,671		3,371
Research and development		423		476		893		899		1,777
General and administrative		3,138		2,279		2,570		5,417		5,612

[c]	These expenses relate to the proposed acquisition of the Company in November 2009.
[d]	Costs incurred in the second quarter of fiscal 2009 to facilitate operation of TippingPoint as a more autonomous business.
[e]	We recorded a favorable tax adjustment, reflecting final resolution of our calendar year 2008 tax rate in China.

EX-99.2

Exhibit 99.2

3Com Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
TABLE A

	Three Months Ended									Six Months Ended
	November 27,			August 28,			November 28,			November 27,			November 28,
	2009			2009			2008			2009			2008
Sales	$	322,164		$	290,502		$	354,562		$	612,666		$	697,212
Cost of sales		128,542			123,931			154,770			252,473			307,793
Gross profit		193,622			166,571			199,792			360,193			389,419
Operating expenses (income):
Sales and marketing		93,754			84,788			89,920			178,542			177,402
Research and development		41,400			38,968			49,254			80,368			96,401
General and administrative		25,786			21,370			28,652			47,156			53,106
Amortization of intangibles		16,755			17,071			25,060			33,826			50,224
Patent dispute resolution		—			—			—			—			(70,000	)
Restructuring charges		1,552			1,133			2,504			2,685			4,501
Operating expenses, net		179,247			163,330			195,390			342,577			311,634
Operating income		14,375			3,241			4,402			17,616			77,785
Interest expense, net		(1,922	)		(1,088	)		(547	)		(3,010	)		(1,798	)
Other income, net		5,920			11,547			15,899			17,467			28,770
Income before income taxes		18,373			13,700			19,754			32,073			104,757
Income tax provision		1,619			(6,239	)		(6,884	)		(4,620	)		(12,050	)
Net income	$	19,992		$	7,461		$	12,870		$	27,453		$	92,707
Basic and diluted income per share	$	0.05		$	0.02		$	0.03		$	0.07		$	0.23
Shares used in computing basic per share amounts		392,688			389,774			394,036			391,231			398,462
Shares used in computing diluted per share amounts		403,501			396,266			395,245			399,884			399,658

3Com Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
TABLE B

	November, 27		May 29,
	2009		2009
ASSETS
Current assets:
Cash and equivalents	$	704,079	$	545,818
Short term investments		—		98,357
Notes receivable		35,697		40,590
Accounts receivable, net		110,297		112,771
Inventories, net		94,844		90,395
Other current assets		55,307		56,982
Total current assets		1,000,224		944,913
Property & equipment, net		36,805		40,012
Goodwill		609,297		609,297
Intangibles, net		164,931		198,624
Deposits and other assets		23,761		22,511
Total assets	$	1,835,018	$	1,815,357
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	81,632	$	68,350
Current portion of long-term debt		48,000		48,000
Accrued liabilities and other		427,943		394,103
Total current liabilities		557,575		510,453
Deferred taxes and long-term obligations		40,695		40,729
Long-term debt		64,000		152,000
Stockholders’ equity		1,172,748		1,112,175
Total liabilities and stockholders’ equity	$	1,835,018	$	1,815,357

3Com Corporation
Reconciliation of Non-GAAP Financial Measures
(in thousands, except margin and per-share data)
(unaudited)
TABLE C

	Three Months Ended									Six Months Ended
	November 27,			August 28,			November 28,			November 27,			November 28,
	2009			2009			2008			2009			2008
GAAP operating income	$	14,375		$	3,241		$	4,402		$	17,616		$	77,785
Restructuring		1,552			1,133			2,504			2,685			4,501
Amortization of intangible assets		16,755			17,071			25,060			33,826			50,224
Patent dispute resolution [a]		—			—			—			—			(70,000	)
Acquiree expensed acquisition costs [c]		4,552			—			—			4,552			—
Stock-based compensation expense [b]		6,233			4,885			5,638			11,118			12,080
TippingPoint special admin costs [d]		—			—			800			—			800
Non-GAAP operating income	$	43,467		$	26,330		$	38,404		$	69,797		$	75,390
GAAP operating profit margin		4.5	%		1.1	%		1.2	%		2.9	%		11.2	%
Restructuring		0.5	%		0.4	%		0.7	%		0.4	%		0.6	%
Amortization of intangible assets		5.2	%		5.9	%		7.1	%		5.5	%		7.2	%
Patent dispute resolution [a]		—			—			—			—			-10.0	%
Stock-based compensation expense [b]		1.4	%		—			—			0.8	%		—
Acquiree expensed acquisition costs [c]		1.9	%		1.7	%		1.6	%		1.9	%		1.7	%
TippingPoint special admin costs [d]		—			—			0.2	%		—			0.1	%
Non-GAAP operating profit margin		13.5	%		9.1	%		10.8	%		11.4	%		10.8	%
GAAP net income	$	19,992		$	7,461		$	12,870		$	27,453		$	92,707
Restructuring		1,552			1,133			2,504			2,685			4,501
Amortization of intangibles		16,755			17,071			25,060			33,826			50,224
Patent dispute resolution [a]		—			—			—			—			(70,000	)
Stock-based compensation expense [b]		6,233			4,885			5,638			11,118			12,080
Acquiree expensed acquisition costs [c]		4,552			—			—			4,552			—
TippingPoint special admin costs [d]		—			—			800						800
Tax adjustment related to resolution of 2008 tax rate in PRC [e]		(10,801	)		—			—			(10,801	)		—
Non-GAAP net income	$	38,283		$	30,550		$	46,872		$	68,833		$	90,312
GAAP net income per share	$	0.05		$	0.02		$	0.03		$	0.07		$	0.23
Restructuring		0.00			0.00			0.01			0.01			0.01
Amortization of intangibles		0.04			0.04			0.06			0.08			0.13
Patent dispute resolution [a]		—			—			—			—			(0.17	)
Stock-based compensation expense [b]		0.02			0.02			0.02			0.03			0.03
Acquiree expensed acquisition costs [c]		0.01			—			—			0.01			—
TippingPoint special admin costs [d]		—			—			0.00			—			0.00
Tax adjustment related to resolution of 2008 tax rate in PRC [e]		(0.03	)		—			—			(0.03	)		—
Non-GAAP net income per share, diluted	$	0.09		$	0.08		$	0.12		$	0.17		$	0.23
Shares used in computing diluted per share amounts		403,501			396,266			395,245			399,884			399,658

[a]	Resolution of Realtek patent dispute.
[b]	Stock-based compensation expense is included in the following cost and expense categories by period:

	Three Months Ended						Six Months Ended
	November 27,		August 28,		November 28,		November 27,		November 28,
	2009		2009		2008		2009		2008
Cost of sales		591		540		562		1,131		1,320
Sales and marketing		2,081		1,590		1,613		3,671		3,371
Research and development		423		476		893		899		1,777
General and administrative		3,138		2,279		2,570		5,417		5,612

[c]	These expenses relate to the proposed acquisition of the Company in November 2009.
[d]	Costs incurred in the second quarter of fiscal 2009 to facilitate operation of TippingPoint as a more autonomous business.
[e]	We recorded a favorable tax adjustment, reflecting final resolution of our calendar year 2008 tax rate in China.

Additional Financial Data
(in thousands)
(unaudited)
TABLE D

Sales by Geography (a)

	Three Months Ended						Six Months Ended
	November 27,		August 28,		November 28,		November 27,		November 28,
	2009		2009		2008		2009		2008
China	$	168,949	$	146,362	$	192,851	$	315,311	$	360,378
North America		53,770		51,669		49,130		105,439		101,161
Europe, Middle East and Africa		52,853		49,050		58,989		101,903		128,366
Asia Pacific Rim (ex-China)		22,443		25,246		27,188		47,689		57,297
Latin and South America		24,149		18,175		26,404		42,324		50,010
Total Sales	$	322,164	$	290,502	$	354,562	$	612,666	$	697,212

(a) All non-OEM sales are reported in geographic categories based on the location of the end customer. Sales to OEM customers are included in the geographic categories are based upon the hub locations of OEM partners.

Sales by Product Category

	Three Months Ended						Six Months Ended
	November 27,		August 28,		November 28,		November 27,		November 28,
	2009		2009		2008		2009		2008
Switches and routers	$	213,550	$	195,211	$	256,584	$	408,761	$	510,760
Other networking equipment		50,428		42,395		43,515		92,823		84,632
Security (b)		46,049		41,052		42,790		87,101		79,129
Services		12,137		11,844		11,673		23,981		22,691
Total Sales	$	322,164	$	290,502	$	354,562	$	612,666	$	697,212

(b) Security products include sales of TippingPoint offerings along with Networking business security offerings.

3Com Corporation
Segment Reporting
(in thousands)
(unaudited)
TABLE E

	Three Months Ended August 28, 2009													Three Months Ended November 27, 2009													Six Months Ended November 27, 2009
							TippingPoint													TippingPoint													TippingPoint
							Security Business													Security Business													Security
	Networking Business [a]						[b]							Networking Business [a]						[b]							Networking Business [a]						Business [b]
	China-Based				Central				Eliminations /					China-Based				Central				Eliminations /									Central				Eliminations /
	Business		Rest of World		Functions		TippingPoint		Other			Total		Business		Rest of World		Functions		TippingPoint		Other			Total		China		Rest of World		Functions		TippingPoint		Other			Total
Sales	$	152,013	$	107,202	$	—	$	32,596	$	(1,309	)[c]	$	290,502	$	169,297	$	119,259	$	—	$	35,870	$	(2,262	)[c]	$	322,164	$	321,310	$	226,461	$	—	$	68,466	$	(3,571	)[c]	$	612,666
Standard margin		104,900		62,995		—		27,772		(540	)[d]		195,127		115,197		73,525		—		30,112		(591	)[d]		218,243		220,097		136,520		—		57,884		(1,131	)[d]		413,370
Direct sales and marketing expenses		35,039		23,327		—		11,028		1,590	[d]		70,984		39,372		25,982		—		12,754		2,081	[d]		80,189		74,411		49,309		—		23,782		3,671	[d]		151,173
Segment contribution profit (loss)		69,861		39,668		—		16,744		(2,130	)		124,143		75,825		47,543		—		17,358		(2,672	)		138,054		145,686		87,211		—		34,102		(4,802	)		262,197
Research and development expenses		—		—		32,177		6,315		476	[d]		38,968		—		—		34,843		6,134		423	[d]		41,400		—		—		67,020		12,449		899	[e]		80,368
Segment income		—		—		—		10,429		—					—		—		—		11,224		—					—		—		—		21,653		—
Other operating expenses						56,047		5,404		20,483	[e]		81,934						52,448		3,834		25,997	[e]		82,279						108,495		9,238		46,480			164,213
Operating income												$	3,241												$	14,375												$	17,616
	Three Months Ended August 29, 2008													Three Months Ended November 28, 2008													Six Months Ended November 28, 2008
							TippingPoint													TippingPoint													TippingPoint
							Security Business													Security Business													Security
	Networking Business [a]						[b]							Networking Business [a]						[b]							Networking Business [a]						Business [b]
	China-Based				Central				Eliminations					China-Based				Central				Eliminations									Central				Eliminations /
	Business		Rest of World		Functions		TippingPoint		/ Other			Total		Business		Rest of World		Functions		TippingPoint		/ Other			Total		China		Rest of World		Functions		TippingPoint		Other			Total
Sales	$	175,397	$	140,314	$	—	$	28,199	$	(1,260	)[c]	$	342,650	$	199,815	$	125,688	$	—	$	31,016	$	(1,957	)[c]	$	354,562	$	375,212	$	266,002	$	—	$	59,215	$	(3,217	)[c]	$	697,212
Standard margin		115,527		82,253		—		23,396		(758	)[d]		220,418		131,901		71,861		—		25,278		(562	)[d]		228,478		247,428		154,114		0		48,674		(1,320	)[d]		448,896
Direct sales and marketing expenses		33,600		28,152		—		10,073		1,758	[d]		73,583		36,513		25,742		—		11,918		1,613	[d]		75,786		70,113		53,894		—		21,991		3,371	[d]		149,369
Segment contribution profit (loss)		81,927		54,101		—		13,323		(2,516	)		146,835		95,388		46,119		—		13,360		(2,175	)		152,692		177,315		100,220		—		26,683		(4,691	)		299,527
Research and development expenses		—		—		39,317		6,946		884	[d]		47,147		—		—		41,712		6,649		893	[d]		49,254		—		—		81,029		13,595		1,777	[e]		96,401
Segment income		—		—		—		6,377		—					—		—		—		6,711		—					—		—		—		13,088		—
Other operating expenses (income)						60,022		6,080		(39,797	) [e]		26,305						61,029		7,073		30,934	[e]		99,036						121,051		13,153		(8,863	)		125,341
Operating income												$	73,383												$	4,402												$	77,785

[a]	Our networking Business consists of two regionally based reporting segments: China-Based Business and Rest of World. We measure profitability in these segments at a segment contribution profit level. Segment contribution profit is defined as standard margin less segment direct sales and marketing expenses. Standard margin for these regions is defined as sales less standard costs of sales, such as product costs. Central function costs include other cost of sales and centralized operating expenses such as supply chain, research and development, indirect sales and marketing support and general and administrative costs that are not allocated to the China-Based Business and Rest of World reporting segments.
[b]	Our TippingPoint Security business segment’s profitability is measured on segment income. This measure includes standard margin less direct sales and marketing expenses and research and development expenses.
[c]	Eliminations for inter-company sales during the respective periods between our networking business segments, on one hand, and our TippingPoint segment on the other hand.
[d]	Includes stock-based compensation.
[e]	Includes: stock-based compensation, amortization, and restructuring in all periods and patent dispute resolution proceeds where applicable.

3Com Corporation
Consolidated Statement of Cash Flows
(In thousands)
(unaudited)
Table F

	Six Months Ended
	November 27,			November 28,
	2009			2008
Cash flows from operating activities:
Net income	$	27,453		$	92,707
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		44,767			65,113
Loss on property and equipment disposals		213			891
Stock-based compensation expense		11,118			12,080
Deferred income taxes		(12,108	)		(2,521	)
Change in assets and liabilities:
Accounts and notes receivable		7,445			(63,970	)
Inventories		(3,316	)		(25,478	)
Other assets		8,002			1,056
Accounts payable		14,494			63
Other liabilities		37,033			16,152
Net cash provided by operating activities		135,101			96,093
Cash flows from investing activities:
Proceeds from maturities and sales of investments		98,661			—
Purchase of property and equipment		(7,414	)		(11,425	)
Proceeds from sale of property and equipment		39			150
Net cash provided by (used in) investing activities		91,286			(11,275	)
Cash flows from financing activities:
Issuances of common stock		21,516			2,848
Repurchases of common stock		(2,242	)		(50,574	)
Repayment of long term debt		(88,000	)		(88,000	)
Net cash provided by (used in) financing activities		(68,726	)		(135,726	)
Effects of exchange rate changes on cash and equivalents		600			8,051
Net change in cash and equivalents during period		158,261			(42,857	)
Cash and equivalents, beginning of period		545,818			503,644
Cash and equivalents, end of period	$	704,079		$	460,787

EX-99.3

EXHIBIT 99.3

H3C Summary Financial Information Provided to Bank Lenders
H3C Holdings Limited
For the Fiscal Quarters Ended September 30, 2009 and 2008
(Unaudited; amounts in thousands except percentages)

	Unit: US$K for Amounts
	Items	9/30/2009			9/30/2008
(1)	Sales	$	211,901		$	245,659
(2)	Gross profit	$	130,209		$	145,003
(3)	Gross profit as a percent of sales		61.4%			59.0%
(4)	Consolidated Adjusted EBITDA (a)	$	66,903		$	95,435
(5)	Consolidated Adjusted EBITDA as a percent of sales		31.6%			38.8%
(6)	Taxes		($2,155	)	$	5,135
(7)	Deferred income tax	$	1,218		$	1,506
(8)	Consolidated Net Income (a)	$	47,148		$	59,724
(9)	Net income based on GAAP	$	47,148		$	59,724
(10)	Cash, cash equivalents and short term investments	$	477,406		$	427,086
(11)	Net property plant and equipment	$	10,315		$	17,019
(12)	Consolidated Working Capital (a)		($116,689	)	$	42,628
(13)	Consolidated Capital Expenditures (a)	$	1,187		$	1,447
(14)	Consolidated Capital Expenditures as a percent of sales		0.6%			0.6%
(15)	(Decrease)Increase in Consolidated Working Capital		($115,274	)	$	10,247
(16)	The result of Consolidated Adjusted EBITDA less Consolidated Working Capital	$	183,592		$	52,807

(a) These are Non-GAAP financial measures. Where the measure differs from its most comparable GAAP measure, a reconciliation to the most comparable GAAP measure has been provided on the (or below) next page.

Reconciliation of Consolidated Adjusted EBITDA to net income based on GAAP:

	9/30/2009			9/30/2008
Net Income based on GAAP	$	47,148		$	59,724
Add:
Consolidated Interest Expense	$	2,058		$	3,868
Provisions for taxes based on income		($2,155	)	$	5,135
Total depreciation expense	$	2,025		$	3,808
Total amortization expense	$	15,716		$	22,843
Other non-cash items reducing net income	$	2,111		$	57
Consolidated Adjusted EBITDA	$	66,903		$	95,435

Reconciliation of Consolidated Working Capital to working capital based on GAAP:

	9/30/2009			9/30/2008
Working capital based on GAAP	$	277,020		$	308,376
Less: Cash and cash equivalents		($441,709	)		($313,748	)
Add: Current portion of long term debt	$	48,000		$	48,000
Consolidated Working Capital		($116,689	)	$	42,628

Defined terms have the definitions ascribed to such terms in the Company’s senior secured credit agreement.