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):
March 30, 2010

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

EX-99.1

EX-99.2

EX-99.3

ITEM 2.02 Results of Operations and Financial Condition

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.

Financial Results.

          On March 30, 2010, 3Com Corporation, or the Company, (i) issued a press release regarding its financial results for its fiscal quarter ended February 26, 2010 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.

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 this item included.

          Acquiree Expensed Acquisition Costs

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

          Change related to Change in Tax Rates in PRC

          The Company excluded a certain tax liability provision because (1) it represented a cumulative effect (year-to-date) of a higher tax rate in China based on the current tax law and without giving effect to any concessions or new tax status to which we may be entitled and (2) we had deemed it possible that once Chinese tax authorities clarified their position, the provision would be reversed (which in fact later occurred, as described below).

          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 (as described above) 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.

          Impairment of Property and Equipment

          We conducted an impairment review of the carrying value of our Hemel UK property, and took a charge for impairment. This charge is a non-cash charge. We believe that it is unlikely that such an impairment will be a recurring event. Ultimately, this is not a measurement of our ongoing operations, and management does not consider this charge when measuring our business.

          Legal Contingency Accrual

          We accrued for certain contingencies for current litigation, primarily patent litigation involving claims made by entities that own patents but to our knowledge do not conduct commercial operations. From time-to-time we do engage in litigation over our patent portfolio. Ultimately, management believes these contingencies are not useful in measuring our ongoing operations, and accordingly management does not consider this charge when measuring our business.

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

          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

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.

Items Related to our Credit Agreement

          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 attached Exhibit 99.3 contains non-GAAP financial measures which are defined by our H3C credit agreement and used as measures for calculating compliance with certain covenants set forth in the credit agreement.

In evaluating the Company’s compliance under the credit agreement, management uses these non-GAAP financial measures to supplement consolidated financial statements prepared under GAAP. Management believes these non-GAAP measures help the Company determine its compliance with these covenants, although it generally does not use these measures in evaluating business performance. Because these measures are used in calculating our bank covenants, it may be useful to our investors as well.

          Consolidated Adjusted EBITDA

          We adjust our H3C GAAP net income by adjusting for net interest expense and tax provision and the following non-cash items: depreciation and amortization. These items are required adjustments under the credit agreement.

          Consolidated Working Capital

          We adjust our H3C GAAP working capital by adjusting for cash and cash equivalents and the liability representing the current portion of long-term debt, as required by the credit agreement. Excluding these items creates a non-standard definition of working capital.

Items Related to our Pending Merger with Hewlett-Packard Company

          On November 11, 2009, we announced an agreement to be acquired by Hewlett-Packard Company pursuant to a merger agreement executed by the parties (the “Merger”). The parties are currently targeting completion of the merger by the end of April 2010, however the exact timing cannot be predicted.

          The closing of the Merger is subject to the satisfaction or waiver of specified closing conditions, including, without limitation, (i) the adoption of the Merger Agreement by 3Com’s stockholders and (ii) the expiration or termination of waiting periods, and obtaining of requisite approvals or clearances, under specified antitrust and competition laws (including, without limitation in China, the European Union and the United States, among others). On December 22, 2009, the relevant U.S. antitrust authorities granted early termination of the waiting period under the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended. On February 12, 2010, the European Commission cleared the Merger under the EU Merger Regulation. In addition, on January 26, 2010, 3Com’s stockholders adopted the Merger Agreement at a special meeting of stockholders.

ITEM 9.01 Financial Statements and Exhibits

               (d) Exhibits

Exhibit Number	Description
99.1	Text of Press Release, dated March 30, 2010, titled “3Com Reports Results for Third Quarter Fiscal Year 2010”
99.2	Supplemental Financial Information – Fiscal Quarter Ended February 26, 2010
99.3	H3C — Summary Financial Information Provided to Bank Lenders

Safe Harbor

This Current Report on Form 8-K contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include, without limitation, statements regarding the target completion date for our merger with Hewlett-Packard Company and satisfaction of closing conditions precedent to the consummation of the proposed Merger, including the obtaining of antitrust approvals in China. Actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, without limitation, our inability to obtain required regulatory approvals and consummate the transaction and those other factors set forth under Part II Item 1A “Risk Factors” in our Form 10-Q for the quarter ended November 27, 2009. All forward-looking statements included in this document are based on our assessment of information available to us at the time this report is filed. We have no intent, and disclaim any obligation, to update any forward-looking statements.

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: March 30, 2010	By:	/s/ Jay Zager
		Jay Zager
		Executive Vice President, Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Text of Press Release, dated March 30, 2010, titled “3Com Reports Results for Third Quarter Fiscal Year 2010”
99.2	Supplemental Financial Information – Fiscal Quarter Ended February 26, 2010
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	Anastasia Efstratios
508.323.1080	781.782.5873
gene_skayne@3com.com	anastasia_efstratios@lpp.com

3Com Reports Results for Third Quarter Fiscal Year 2010

MARLBOROUGH, MASS.—March 30, 2010—3Com Corporation (Nasdaq: COMS) today reported financial results for its fiscal 2010 third quarter, which ended February 26, 2010. Revenue in the quarter was $345.9 million, compared to revenue of $324.7 million in the corresponding period in fiscal year 2009, a 6.5 percent increase.

          All regions delivered double-digit revenue growth over the same fiscal year 2009 quarter, except China. Total revenue in our China based operations was down 1.3 percent from the same prior year period, primarily the result of a 77.9 percent decline in sales to Huawei, which were $12.4 million in the quarter. China direct sales were $165.9 million in the quarter, a 29.7 percent increase over the corresponding prior year period.

          3Com’s gross margin was 60.4 percent in the third quarter of fiscal year 2010, compared with gross margin of 57.2 percent in third quarter of fiscal year 2009. On a non-GAAP basis, gross margin was 60.5 percent in the third quarter, compared with 57.4 percent in the same prior year period.

          3Com’s operating profit margin was 6.5 percent in the quarter, up from 0.5 percent in the corresponding prior year period. On a non-GAAP basis, operating profit margin was 13.9 percent in the third quarter, compared with 11.3 percent in the third quarter of the prior year.

          Net income in the quarter was $41.4 million, or $0.10 per diluted share, compared with net income of $1.9 million, or $0.00 per diluted share in the third quarter of the prior fiscal year. On a non-GAAP basis, third quarter fiscal year 2010 net income was $67.2 million, or $0.16 per diluted share, compared with net income of $49.1 million, or $0.13 per diluted share, in the corresponding prior year period.

          3Com generated $89.7 million in cash from operations in the quarter. On a year-to-date basis, 3Com generated $224.8 million in cash from operations. 3Com’s cash and equivalents and short term investments balance at February 26, 2010 was $795.0 million.

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

          “We are very pleased with 3Com’s continued strong performance in the quarter,” said Bob Mao, 3Com’s Chief Executive Officer. “We delivered strong sequential and year-over-year revenue growth while improving gross and operating margins, and generating almost ninety million dollars in cash from operations.” Bob continued “I am particularly gratified by our China direct business, which achieved year-over-year growth of almost thirty percent, essentially offsetting the reduced sales to Huawei.”

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 fiscal quarter ended November 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.

Copyright^© 2010 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 Results for Third Quarter Fiscal 2010, p. 3

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

	Three Months Ended									Nine Months Ended
	February 26,			November 27,			February 27,			February 26,			February 27,
	2010			2009			2009			2010			2009
Sales	$	345,880		$	322,164		$	324,707		$	958,546		$	1,021,919
Cost of sales		137,086			128,542			138,878			389,559			446,671
Gross profit		208,794			193,622			185,829			568,987			575,248
Operating expenses (income):
Sales and marketing		100,543			93,754			85,541			279,085			262,943
Research and development		47,997			41,400			45,229			128,365			141,630
General and administrative		21,323			25,786			27,593			68,479			80,699
Amortization of intangibles		16,506			16,755			23,106			50,332			73,330
Patent dispute resolution		—			—			—			—			(70,000	)
Restructuring charges		47			1,552			2,860			2,732			7,361
Operating expenses, net		186,416			179,247			184,329			528,993			495,963
Operating income		22,378			14,375			1,500			39,994			79,285
Interest income (expense), net		683			(1,922	)		(3,333	)		(2,327	)		(5,131	)
Other income, net		19,676			5,920			16,528			37,143			45,298
Income before income taxes		42,737			18,373			14,695			74,810			119,452
Income tax (provision) benefit		(1,346	)		1,619			(12,828	)		(5,966	)		(24,878	)
Net income	$	41,391		$	19,992		$	1,867		$	68,844		$	94,574
Basic income per share	$	0.10		$	0.05		$	0.00		$	0.17		$	0.24
Diluted income per share	$	0.10		$	0.05		$	0.00		$	0.17		$	0.24
Shares used in computing basic per share amounts		396,253			392,688			384,679			392,905			393,868
Shares used in computing diluted per share amounts		411,546			403,501			386,377			403,771			395,232

3Com Reports Results for Third Quarter Fiscal 2010, p. 4

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

	February 26,		May 29,
	2010		2009
ASSETS
Current assets:
Cash and equivalents	$	795,014	$	545,818
Short term investments		—		98,357
Notes receivable		26,688		40,590
Accounts receivable, net		129,998		112,771
Inventories, net		114,972		90,395
Other current assets		48,977		56,982
Total current assets		1,115,649		944,913
Property & equipment, net		36,747		40,012
Goodwill		609,297		609,297
Intangibles, net		148,432		198,624
Deposits and other assets		22,823		22,511
Total assets	$	1,932,948	$	1,815,357
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	74,907	$	68,350
Current portion of long-term debt		48,000		48,000
Accrued liabilities and other		484,388		394,103
Total current liabilities		607,295		510,453
Deferred taxes and long-term obligations		37,218		40,729
Long-term debt		64,000		152,000
Stockholders’ equity		1,224,435		1,112,175
Total liabilities and stockholders’ equity	$	1,932,948	$	1,815,357

3Com Reports Results for Third Quarter Fiscal 2010, p. 5

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

	Three Months Ended									Nine Months Ended
	February 26,			November 27,			February 27,			February 26,			February 27,
	2010			2009			2009			2010			2009
GAAP gross margin		60.4	%		60.1	%		57.2	%		59.4	%		56.3	%
Stock-based compensation expense [b]		0.1	%		0.2	%		0.2	%		0.1	%		0.2	%
Non-GAAP gross margin		60.5	%		60.3	%		57.4	%		59.5	%		56.5	%
GAAP operating income	$	22,378		$	14,375		$	1,500		$	39,994		$	79,285
Restructuring		47			1,552			2,860			2,732			7,361
Amortization of intangible assets		16,506			16,755			23,106			50,332			73,330
Patent dispute resolution [a]		—			—			—			—			(70,000	)
Stock-based compensation expense [b]		6,461			6,233			5,663			17,579			17,743
Acquiree expensed acquisition costs [c]		2,802			4,552			—			7,354			—
TippingPoint special admin costs [d]		—			—			—			—			800
Legal contingency accrual [e]		—			—			2,400			—			2,400
Impairment of property and equipment [f]		—			—			1,150			—			1,150
Non-GAAP operating income	$	48,194		$	43,467		$	36,679		$	117,991		$	112,069
GAAP operating profit margin		6.5	%		4.5	%		0.5	%		4.2	%		7.8	%
Restructuring		0.0	%		0.5	%		0.9	%		0.3	%		0.7	%
Amortization of intangible assets		4.8	%		5.2	%		7.1	%		5.3	%		7.2	%
Patent dispute resolution [a]		—			—			—			—			-6.8	%
Stock-based compensation expense [b]		1.9	%		1.9	%		1.7	%		1.8	%		1.7	%
Acquiree expensed acquisition costs [c]		0.7	%		1.4	%		—			0.7	%		—
TippingPoint special admin costs [d]		—			—			—			—			0.1	%
Legal contingency accrual [e]		—			—			0.7	%		—			0.2	%
Impairment of property and equipment [f]		—			—			0.4	%		—			0.1	%
Non-GAAP operating profit margin		13.9	%		13.5	%		11.3	%		12.3	%		11.0	%
GAAP net income	$	41,391		$	19,992		$	1,867		$	68,844		$	94,574
Restructuring		47			1,552			2,860			2,732			7,361
Amortization of intangibles		16,506			16,755			23,106			50,332			73,330
Patent dispute resolution [a]		—			—			—			—			(70,000	)
Stock-based compensation expense [b]		6,461			6,233			5,663			17,579			17,743
Acquiree expensed acquisition costs [c]		2,802			4,552			—			7,354			—
TippingPoint special admin costs [d]		—			—			—			—			800
Legal contingency accrual [e]		—			—			2,400			—			2,400
Impairment of property and equipment [f]		—			—			1,150			—			1,150
Tax adjustment related to resolution of 2008 tax rate in PRC [g]		—			(10,801	)		—			(10,801	)		—
Charge related to change in tax rates [h]					—			12,083			—			12,083
Non-GAAP net income	$	67,207		$	38,283		$	49,129		$	136,040		$	139,441
GAAP net income per share	$	0.10		$	0.05		$	0.00		$	0.17		$	0.24
Restructuring		0.00			0.00			0.01			0.01			0.02
Amortization of intangibles		0.04			0.04			0.06			0.12			0.19
Patent dispute resolution [a]		—			—			—			—			(0.18	)
Stock-based compensation expense [b]		0.01			0.02			0.02			0.04			0.04
Acquiree expensed acquisition costs [c]		0.01			0.01			—			0.02			—
TippingPoint special admin costs [d]		—			—			—			—			0.00
Legal contingency accrual [e]		—			—			0.01			—			0.01
Impairment of property and equipment [f]		—			—			0.00			—			0.00
Tax adjustment related to resolution of 2008 tax rate in PRC [g]		—			(0.03	)		—			(0.02	)		—
Charge related to change in tax rates [h]		—			—			0.03			—			0.03
Non-GAAP net income per share, diluted	$	0.16		$	0.09		$	0.13		$	0.34		$	0.35
Shares used in computing diluted per share amounts		411,546			403,501			386,377			403,771			395,232

[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						Nine Months Ended
	February 26,		November 27,		February 27,		February 26,		February 27,
	2010		2009		2009		2010		2009
Cost of sales		557		591		596		1,688		1,916
Sales and marketing		2,147		2,081		1,599		5,818		4,970
Research and development		538		423		768		1,437		2,545
General and administrative		3,219		3,138		3,144		8,636		8,756

Note:	$444 thousand of stock-based compensation in the three and nine months ended February 27, 2009 has been recorded to restructuring expense
[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]	Accruals for contingencies relating to patent litigation.
[f]	Impairment charge related to the Company’s land in Hemel. UK.
[g]	We recorded a favorable tax adjustment, reflecting final resolution of our calendar year 2008 tax rate in China.
[h]	These expenses result from a change in the statutory rate used to compute the income tax provision in the PRC.

Note:   Included in the three months ended February 26, 2010 is a $9.9 million tax benefit related to the change of our PRC statutory tax rate from 15% to 10% as our H3C subsidiary was granted Key Software Development Enterprise status for calendar year 2009.

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									Nine Months Ended
	February 26,			November 27,			February 27,			February 26,			February 27,
	2010			2009			2009			2010			2009
Sales	$	345,880		$	322,164		$	324,707		$	958,546		$	1,021,919
Cost of sales		137,086			128,542			138,878			389,559			446,671
Gross profit		208,794			193,622			185,829			568,987			575,248
Operating expenses (income):
Sales and marketing		100,543			93,754			85,541			279,085			262,943
Research and development		47,997			41,400			45,229			128,365			141,630
General and administrative		21,323			25,786			27,593			68,479			80,699
Amortization of intangibles		16,506			16,755			23,106			50,332			73,330
Patent dispute resolution		—			—			—			—			(70,000	)
Restructuring charges		47			1,552			2,860			2,732			7,361
Operating expenses, net		186,416			179,247			184,329			528,993			495,963
Operating income		22,378			14,375			1,500			39,994			79,285
Interest income (expense), net		683			(1,922	)		(3,333	)		(2,327	)		(5,131	)
Other income, net		19,676			5,920			16,528			37,143			45,298
Income before income taxes		42,737			18,373			14,695			74,810			119,452
Income tax (provision) benefit		(1,346	)		1,619			(12,828	)		(5,966	)		(24,878	)
Net income	$	41,391		$	19,992		$	1,867		$	68,844		$	94,574
Basic income per share	$	0.10		$	0.05		$	0.00		$	0.17		$	0.24
Diluted income per share	$	0.10		$	0.05		$	0.00		$	0.17		$	0.24
Shares used in computing basic per share amounts		396,253			392,688			384,679			392,905			393,868
Shares used in computing diluted per share amounts		411,546			403,501			386,377			403,771			395,232

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

	February 26,		May 29,
	2010		2009
ASSETS
Current assets:
Cash and equivalents	$	795,014	$	545,818
Short term investments		—		98,357
Notes receivable		26,688		40,590
Accounts receivable, net		129,998		112,771
Inventories, net		114,972		90,395
Other current assets		48,977		56,982
Total current assets		1,115,649		944,913
Property & equipment, net		36,747		40,012
Goodwill		609,297		609,297
Intangibles, net		148,432		198,624
Deposits and other assets		22,823		22,511
Total assets	$	1,932,948	$	1,815,357
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	74,907	$	68,350
Current portion of long-term debt		48,000		48,000
Accrued liabilities and other		484,388		394,103
Total current liabilities		607,295		510,453
Deferred taxes and long-term obligations		37,218		40,729
Long-term debt		64,000		152,000
Stockholders’ equity		1,224,435		1,112,175
Total liabilities and stockholders’ equity	$	1,932,948	$	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									Nine Months Ended
	February 26,			November 27,			February 27,			February 26,			February 27,
	2010			2009			2009			2010			2009
GAAP gross margin		60.4	%		60.1	%		57.2	%		59.4	%		56.3	%
Stock-based compensation expense [b]		0.1	%		0.2	%		0.2	%		0.1	%		0.2	%
Non-GAAP gross margin		60.5	%		60.3	%		57.4	%		59.5	%		56.5	%
GAAP operating income	$	22,378		$	14,375		$	1,500		$	39,994		$	79,285
Restructuring		47			1,552			2,860			2,732			7,361
Amortization of intangible assets		16,506			16,755			23,106			50,332			73,330
Patent dispute resolution [a]		—			—			—			—			(70,000	)
Stock-based compensation expense [b]		6,461			6,233			5,663			17,579			17,743
Acquiree expensed acquisition costs [c]		2,802			4,552			—			7,354			—
TippingPoint special admin costs [d]		—			—			—			—			800
Legal contingency accrual [e]		—			—			2,400			—			2,400
Impairment of property and equipment [f]		—			—			1,150			—			1,150
Non-GAAP operating income	$	48,194		$	43,467		$	36,679		$	117,991		$	112,069
GAAP operating profit margin		6.5	%		4.5	%		0.5	%		4.2	%		7.8	%
Restructuring		0.0	%		0.5	%		0.9	%		0.3	%		0.7	%
Amortization of intangible assets		4.8	%		5.2	%		7.1	%		5.3	%		7.2	%
Patent dispute resolution [a]		—			—			—			—			-6.8	%
Stock-based compensation expense [b]		1.9	%		1.9	%		1.7	%		1.8	%		1.7	%
Acquiree expensed acquisition costs [c]		0.7	%		1.4	%		—			0.7	%		—
TippingPoint special admin costs [d]		—			—			—			—			0.1	%
Legal contingency accrual [e]		—			—			0.7	%		—			0.2	%
Impairment of property and equipment [f]		—			—			0.4	%		—			0.1	%
Non-GAAP operating profit margin		13.9	%		13.5	%		11.3	%		12.3	%		11.0	%
GAAP net income	$	41,391		$	19,992		$	1,867		$	68,844		$	94,574
Restructuring		47			1,552			2,860			2,732			7,361
Amortization of intangibles		16,506			16,755			23,106			50,332			73,330
Patent dispute resolution [a]		—			—			—			—			(70,000	)
Stock-based compensation expense [b]		6,461			6,233			5,663			17,579			17,743
Acquiree expensed acquisition costs [c]		2,802			4,552			—			7,354			—
TippingPoint special admin costs [d]		—			—			—			—			800
Legal contingency accrual [e]		—			—			2,400			—			2,400
Impairment of property and equipment [f]		—			—			1,150			—			1,150
Tax adjustment related to resolution of 2008 tax rate in PRC [g]		—			(10,801	)		—			(10,801	)		—
Charge related to change in tax rates [h]					—			12,083			—			12,083
Non-GAAP net income	$	67,207		$	38,283		$	49,129		$	136,040		$	139,441
GAAP net income per share	$	0.10		$	0.05		$	0.00		$	0.17		$	0.24
Restructuring		0.00			0.00			0.01			0.01			0.02
Amortization of intangibles		0.04			0.04			0.06			0.12			0.19
Patent dispute resolution [a]		—			—			—			—			(0.18	)
Stock-based compensation expense [b]		0.01			0.02			0.02			0.04			0.04
Acquiree expensed acquisition costs [c]		0.01			0.01			—			0.02			—
TippingPoint special admin costs [d]		—			—			—			—			0.00
Legal contingency accrual [e]		—			—			0.01			—			0.01
Impairment of property and equipment [f]		—			—			0.00			—			0.00
Tax adjustment related to resolution of 2008 tax rate in PRC [g]		—			(0.03	)		—			(0.02	)		—
Charge related to change in tax rates [h]		—			—			0.03			—			0.03
Non-GAAP net income per share, diluted	$	0.16		$	0.09		$	0.13		$	0.34		$	0.35
Shares used in computing diluted per share amounts		411,546			403,501			386,377			403,771			395,232

[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						Nine Months Ended
	February 26,		November 27,		February 27,		February 26,		February 27,
	2010		2009		2009		2010		2009
Cost of sales		557		591		596		1,688		1,916
Sales and marketing		2,147		2,081		1,599		5,818		4,970
Research and development		538		423		768		1,437		2,545
General and administrative		3,219		3,138		3,144		8,636		8,756

Note: $444 thousand of stock-based compensation in the three and nine months ended February 27, 2009 has been recorded to restructuring expense

[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] Accruals for contingencies relating to patent litigation.

[f] Impairment charge related to the Company’s land in Hemel. UK.

[g] We recorded a favorable tax adjustment, reflecting final resolution of our calendar year 2008 tax rate in China.

[h] These expenses result from a change in the statutory rate used to compute the income tax provision in the PRC.

Note:  Included in the three months ended February 26, 2010 is a $9.9 million tax benefit related to the change of our PRC statutory tax rate from 15% tc 10% as our H3C subsidiary was granted Key Software Development Enterprise status for calendar year 2009.

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

Sales by Geography (a)

	Three Months Ended						Nine Months Ended
	February 26,		November 27,		February 27,		February 26,		February 27,
	2010		2009		2009		2010		2009
China	$	187,963	$	168,949	$	183,758	$	503,274	$	544,136
Europe, Middle East and Africa		59,134		52,853		52,982		161,037		181,348
North America		45,839		53,770		43,300		151,278		144,461
Asia Pacific Rim (ex-China)		24,049		22,443		23,850		71,738		81,147
Latin and South America		28,895		24,149		20,817		71,219		70,827
Total Sales	$	345,880	$	322,164	$	324,707	$	958,546	$	1,021,919

(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 based upon the hub locations of OEM partners.

Sales by Product Category

	Three Months Ended						Nine Months Ended
	February 26,		November 27,		February 27,		February 26,		February 27,
	2010		2009		2009		2010		2009
Switches and routers	$	234,433	$	213,550	$	227,583	$	643,194	$	738,343
Other networking equipment		48,521		50,428		41,679		141,344		126,311
Security (b)		48,286		46,049		43,553		135,387		122,682
Services		14,640		12,137		11,892		38,621		34,583
Total Sales	$	345,880	$	322,164	$	324,707	$	958,546	$	1,021,919

(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 February 26, 2010													Nine Months Ended February 26, 2010
							TippingPoint													TippingPoint
							Security													Security
	Networking Business [a]						Business [b]							Networking Business [a]						Business [b]
	China-Based				Central				Eliminations /							Rest of		Central				Eliminations /
	Business		Rest of World		Functions		TippingPoint		Other			Total		China		World		Functions		TippingPoint		Other			Total
Sales	$	187,963	$	123,401	$	—	$	37,868	$	(3,352	)[c]	$	345,880	$	509,273	$	349,862	$	—	$	106,334	$	(6,923	) [c]	$	958,546
Standard margin		133,300		79,033		—		32,076		(557	) [d]		243,852		353,397		215,553		—		89,960		(1,688	) [d]		657,222
Direct sales and marketing expenses		43,109		26,354		—		13,543		2,147	[d]		85,153		117,520		75,663		—		37,325		5,818	[d]		236,326
Segment contribution profit (loss)		90,191		52,679		—		18,533		(2,704	)		158,699		235,877		139,890		—		52,635		(7,506	)		420,896
Research and development expenses		—		—		40,409		7,050		538	[d]		47,997		—		—		107,429		19,499		1,437	[d]		128,365
Segment income		—		—		—		11,483		—					—		—		—		33,136		—
Other operating expenses						61,567		4,183		22,574	[e]		88,324						170,062		13,421		69,054	[e]		252,537
Operating income												$	22,378												$	39,994

	Three Months Ended February 27, 2009													Nine Months Ended February 27, 2009
							TippingPoint													TippingPoint
							Security													Security
	Networking Business [a]						Business [b]							Networking Business [a]						Business [b]
	China-Based				Central				Eliminations /							Rest of		Central				Eliminations /
	Business		Rest of World		Functions		TippingPoint		Other			Total		China		World		Functions		TippingPoint		Other			Total
Sales	$	190,385	$	102,836	$	—	$	33,284	$	(1,798	) [c]	$	324,707	$	565,597	$	368,838	$	—	$	92,499	$	(5,015	) [c]	$	1,021,919
Standard margin		128,160		61,365		—		28,288		(596	) [d]		217,217		375,588		215,479		0		76,962		(1,916	) [d]		666,113
Direct sales and marketing expenses		36,581		23,360		—		10,882		1,371	[d]		72,194		106,694		77,254		—		32,873		4,742	[d]		221,563
Segment contribution profit (loss)		91,579		38,005		—		17,406		(1,967	)		145,023		268,894		138,225		—		44,089		(6,658	)		444,550
Research and development expenses		—		—		37,574		7,103		552	[d]		45,229		—		—		118,603		20,698		2,329	[d]		141,630
Segment income		—		—		—		10,303		—					—		—		—		23,391		—
Other operating expenses (income)						56,146		9,488		32,660	[e]		98,294						177,197		22,641		23,797	[e]		223,635
Operating income												$	1,500												$	79,285

[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 acquisition related costs, patent dispute resolution proceeds, legal contingency accruals, impairment of property and equipment and TippingPoint special admin costs where applicable.

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

	Nine Months Ended
	February 26,			February 27,
	2010			2009
Cash flows from operating activities:
Net income	$	68,844		$	94,574
Adjustments to reconcile income from continuing operations to net cash provided by operating activities:
Depreciation and amortization		66,467			97,156
Loss on property and equipment disposals		288			581
Impairment of property and equipment		—			1,150
Stock-based compensation expense		17,579			18,187
Deferred income taxes		(12,123	)		(7,466	)
Change in assets and liabilities:
Accounts and notes receivable		(3,243	)		(13,560	)
Inventories		(23,319	)		(22,006	)
Other assets		15,667			6,771
Accounts payable		6,247			(20,929	)
Other liabilities		88,393			41,874
Net cash provided by operating activities		224,800			196,332
Cash flows from investing activities:
Proceeds from maturities and sales of investments		98,661			—
Purchase of property and equipment		(11,170	)		(12,778	)
Proceeds from sale of property and equipment		40			223
Net cash provided by (used in) investing activities		87,531			(12,555	)
Cash flows from financing activities:
Issuances of common stock		28,480			3,022
Repurchases of common stock		(4,158	)		(51,383	)
Repayment of long term debt		(88,000	)		(88,000	)
Net cash used in financing activities		(63,678	)		(136,361	)
Effects of exchange rate changes on cash and equivalents		543			8,901
Net change in cash and equivalents during period		249,196			56,317
Cash and equivalents, beginning of period		545,818			503,644
Cash and equivalents, end of period	$	795,014		$	559,961

EX-99.3

EXHIBIT 99.3

H3C Summary Financial Information Provided to Bank Lenders
H3C Holdings Limited
For the Fiscal Years Ended December 31, 2008 and 2009
(Audited; amounts in thousands except percentages)

     Unit: US$K for Amounts

	Items	2008 Actual			2009 Actual
(1)	Sales	$	884,959		$	840,714
(2)	Gross profit	$	524,150		$	518,224
(3)	Gross profit as a percent of sales		59.2	%		61.6	%
(4)	Consolidated Adjusted EBITDA (a)	$	311,372		$	287,436
(5)	Consolidated Adjusted EBITDA as a percent of sales		35.2	%		34.2	%
(6)	Taxes	$	17,419		$	14,311
(7)	Deferred income tax	$	(14,289	)	$	3,656
(8)	Consolidated Net Income (a)	$	164,035		$	191,873
(9)	Net income based on GAAP	$	164,035		$	191,873
(10)	Cash and cash equivalents	$	528,677		$	576,187
(11)	Net property plant and equipment	$	14,264		$	10,092
(12)	Consolidated Working Capital (a)	$	(35,907	)	$	(144,626	)
(13)	Consolidated Capital Expenditures (a)	$	6,779		$	4,511
(14)	Consolidated Capital Expenditures as a percent of sales		0.8	%		0.5	%
(15)	Increase in Consolidated Working Capital	$	(30,753	)	$	(108,719	)
(16)	The result of Consolidated Adjusted EBITDA less Consolidated Working Capital	$	347,279		$	432,063

(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 next page.

Reconciliation of Consolidated Adjusted EBITDA to Net Income based on GAAP:

	FY 2008		FY 2009
Net income based on GAAP	$	164,035	$	191,873
Add:
Minority interest	$	0	$	0
Purchase accounting adjustment	$	0	$	0
Consolidated Net Interest Expense	$	17,534	$	8,232
Provisions for taxes based on income	$	17,419	$	14,311
Total depreciation expense	$	15,640	$	9,096
Total amortization expense	$	97,412	$	61,055
EARP expense due to the change of control	$	0	$	0
Other non-cash items reducing Consolidated Net Income	$	227	$	2,869
Less:
Other non-cash items increasing Consolidated Net Income	$	895	$	0
Consolidated Adjusted EBITDA	$	311,372	$	287,436

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

	FY 2008			FY 2009
Working Capital based on GAAP	$	358,975		$	356,873
Less:
Cash and cash equivalents	$	442,882		$	549,499
Add:
Current portion of long term debt	$	48,000		$	48,000
Consolidated Working Capital	$	(35,907	)	$	(144,626	)

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