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):
September 20, 2007

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 September 20, 2007
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 September 20, 2007, 3Com Corporation (the “Company”) (i) issued a press release regarding its financial results for its fiscal quarter ended August 31, 2007 (“Q1 FY08”) and (ii) posted supplementary financial information concerning the Company’s Q1 FY08 fiscal quarter 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 (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.

     The attached press release and the related conference call contain 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 (“GAAP”).

     More specifically, the Company uses the following non-GAAP financial measures: non-GAAP operating profit/loss, non-GAAP net income/loss, non-GAAP net income/loss per share and non-GAAP gross margin. The Company also uses forward-looking non-GAAP operating profit and EPS measures.

     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.

     The non-GAAP operating loss or income measure used by the Company is defined to exclude the following charges and benefits: restructuring, amortization, in-process research and development, stock-based compensation expense and special items that management believes are unusual and outside of the Company’s on-going operations, such as, for some of the periods presented in the press release, a portion of H3C’s Equity Appreciation Rights Plan, or EARP, bonus triggered by a change in control, and the inventory-related adjustment portion of the purchase accounting effects of the Company’s acquisition of 49% of H3C.

     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.

     Management also 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.

     In addition, the Company has non-recurring in-process research and development expenses which are non-cash and related to acquisitions as opposed to the Company’s core operations.

     Further, stock-based compensation expenses are non-cash charges that relate to restricted stock amortization and stock-based compensation costs associated with acquisitions, as well as additional stock-based compensation expense that represents the fair value of stock-based compensation required pursuant to FAS 123 (R). The expense related to acquisitions is not part of the Company’s normal operating costs and is non-cash. The FAS 123 (R)-related expense is excluded because management believes as a non-cash charge it does not provide a meaningful indicator of the 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.

     The Company has excluded a portion of the EARP payment. When 3Com and Huawei set up their H3C joint venture in China, they contemplated that one of the shareholders could buy out the other on the third anniversary of the joint venture’s formation. In order to incent the employees of H3C to create value in the joint venture, the shareholders implemented the EARP, which had two components. One component was based on EBIT generation. The other was triggered solely upon a change in control whereby one shareholder bought out the other. The payout for this second component was based on a percentage of the increase in value of the joint venture, and would pay out over time after the buy-out. When 3Com purchased the remaining 49% of H3C from Huawei on March 29, 2007, the change in control EARP payment was triggered. The initial payment that is not subject to continued employment is a one-time payment that was triggered by the acquisition and is clearly a one-time item. As management views this as part of the cost of the acquisition, it believes it is not representative of the on-going core operations of the company. Accordingly, management does not measure H3C’s performance during this period with this charge included.

     Finally, the Company has excluded the purchase accounting inventory-related adjustment from the 49% acquisition described above. Similar to IPR&D and amortization described above with respect to acquisitions, these adjustments represent non-cash, one-time items relating to a specific acquisition as opposed to core operations.

     The Company also uses a non-GAAP net income/loss measure. All of the items described above are relevant to why management believes this measure is meaningful. In addition, the following further items, which are special items for the relevant fiscal periods, were excluded, from this measure: gain on sales of assets and gain from insurance settlement. Gains on asset sales are outside of the ordinary course of business and not representative of core operations. Similarly, the insurance settlement related to monies paid under a policy insuring the Hemel property owned by the Company which was destroyed by an oil depot explosion. Accordingly, 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.

     Also, for prior periods when Huawei owned 49% of H3C it is necessary to further adjust the foregoing adjustments that impacted H3C’s financials by a factor of 0.49 in order to provide a meaningful comparison of 3Com’s operations. For this reason, the Company adjusted for Huawei’s portion of the amortization and EARP charges during those prior periods.

     3Com also uses a non-GAAP net income/loss measure on a per share basis. All of the adjustments described above are relevant to this per share measure. 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.

     For its non-GAAP gross margin measure, the Company adjusts for purchase accounting inventory and stock-based compensation charges, each of which is discussed above.

     For the Company’s forward-looking non-GAAP operating profit and EPS measures, 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, however, 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 loss, net loss and loss 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

     On September 20, 2007, as required by its senior secured credit facility the Company made available to its senior secured bank lenders certain summary financial information concerning its H3C division. This financial data is attached hereto as Exhibit 99.3 and is hereby incorporated by reference into this Item 7.01. As described in Exhibit 99.3, the financial data set forth in Exhibit 99.3 differs in certain respects from the H3C segment data published by the Company in its financial press releases.

     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 Securities Exchange Act of 1934, as amended (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 September 20, 2007, titled “3Com Reports First Quarter Fiscal Year 2008 Results.”
99.2	Supplemental Financial Information — Fiscal Quarter Ended August 31, 2007
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: September 20, 2007	By:	/s/ Jay Zager
		Jay Zager
		Executive Vice President and Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Text of Press Release, dated September 20, 2007, titled “3Com Reports First Quarter Fiscal Year 2008 Results.”
99.2	Supplemental Financial Information — Fiscal Quarter Ended August 31, 2007
99.3	H3C — Summary Financial Information Provided to Bank Lenders

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

For more information contact:

Media & Investor Relations
John Vincenzo
508.323.1260
john_vincenzo@3com.com Media Relations
Kevin Flanagan
508.323.1101
kevin_flanagan@3com.com

3COM REPORTS FIRST QUARTER FISCAL YEAR 2008 RESULTS

MARLBOROUGH, MASS. — September 20, 2007 — 3Com Corporation (NASDAQ: COMS) today reported financial results for its fiscal 2008 first quarter, which ended August 31, 2007. Revenue in the quarter was $319.4 million compared to revenue of $300.1 million in the corresponding period in fiscal 2007, a 6.4 percent increase.

     Net loss in the quarter was $18.7 million, or $0.05 per diluted share, compared with a net loss of $14.1 million, or $0.04 per diluted share, in the first quarter of fiscal year 2007. On a non-GAAP basis, net income was $12.2 million, or $0.03 per diluted share, compared with a net loss of $5.2 million, or $0.01 per diluted share, for the first quarter of fiscal year 2007.

     “We had a strong start to our fiscal year, which sets the stage for us to grow our business and ultimately meet our long-term financial and business objectives,” said Edgar Masri, 3Com President and Chief Executive Officer. “Revenue in all three business units showed year-over-year growth, including our traditional data and voice business, which achieved positive growth for the first time in almost two years.

     “We are particularly pleased with the significant improvement in our gross margins and our ability to keep our direct operating costs essentially flat on a year-over-year basis.”

     In the first quarter, 3Com used $59 million of cash, which included the initial payment of $93 million to H3C employees under the Equity Appreciation Rights Plan (EARP), which was triggered by the acquisition of the remaining 49 percent of H3C in 2007.

     Management will host a conference call and Webcast at 5 p.m. EDT, Thursday, September 20, 2007, to discuss quarterly highlights, historical financial results and expectations of future performance. To participate on the call, U.S. and international parties may dial (913) 981-5545. 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 24-hour replay will be available starting at 8:00 p.m. EDT on September 20 by dialing (719) 457-0820, or (888) 203-1112, Confirmation Code: 8436622.

     For additional financial information, please refer to 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. 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 and other risks detailed in the Company’s filings with the SEC, including those discussed in the Company’s annual report filed with the SEC on Form 10-K for the year ended June 1, 2007.

2

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, in-process research and development, stock-based compensation expense and, if applicable in the relevant period, unusual items, such as the change-in-control portion of the EARP, the inventory-related adjustment portion of the purchase accounting effects of the Company’s acquisition of 49% of H3C, the gains on sales of assets and the gain on an insurance settlement. The required reconciliations and other disclosures used for all non-GAAP measures 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 and the related conference call reflect rounded numbers and should be considered approximate values.

About 3Com Corporation

3Com Corporation (NASDAQ: COMS) is a leading provider of secure, converged voice and data networking solutions for enterprises of all sizes.3 Com offers a broad line of innovative products backed by world class sales, service and support, which excel at delivering business value for its customers. 3Com also includes H3C Technologies Co., Limited (H3C), a China-based provider of network infrastructure products. H3C brings high-performance and cost-effective product development and manufacturing and a strong footprint in one of the world’s most dynamic markets. Through its TippingPoint division, 3Com is a leading provider of network-based intrusion prevention systems that deliver in-depth application protection, infrastructure protection, and performance protection. For further information, please visit www.3com.com, or the press site www.3com.com/pressbox.

# # #

Copyright ^© 2007 3Com Corporation. 3Com, the 3Com logo and TippingPoint are registered trademarks of 3Com Corporation. All other company and product names may be trademarks of their respective holders.

3

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

	Three Months Ended
	August 31,			September 1,
	2007			2006
Sales	$	319,434		$	300,144
Cost of sales		170,498			163,715
Gross profit		148,936			136,429
Operating expenses:
Sales and marketing		74,404			77,122
Research and development		52,310			47,793
General and administrative		21,478			20,276
Amortization of intangibles		26,006			12,181
Restructuring charges		425			(75	)
Total operating expenses		174,623			157,297
Operating loss		(25,687	)		(20,868	)
Gain on investments, net		327			2,292
Interest (expense) income, net		(3,567	)		10,090
Other income, net		12,084			4,718
Loss from operations before income taxes and minority interest of consolidated joint venture		(16,843	)		(3,768	)
Income tax provision		(1,811	)		(1,358	)
Minority interest of Huawei in the income of consolidated joint venture (1)		—			(8,942	)
Net loss	$	(18,654	)	$	(14,068	)
Basic and diluted loss per share	$	(0.05	)	$	(0.04	)
Shares used in computing basic and diluted per share amounts		397,041			391,885

⁽¹⁾ Represents Huawei’s 49% interest in the H3C joint venture for the period of minority interest that ended with 3Com’s acquisition of the remaining 49% interest on March 30, 2007.

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

	August 31,		June 1,
	2007		2007
ASSETS
Current assets:
Cash, cash equivalents and short-term investments	$	501,046	$	559,217
Notes receivable		64,883		77,368
Accounts receivable, net		128,679		102,952
Inventories, net		104,735		107,988
Other current assets		48,271		50,157
Total current assets		847,614		897,682
Property & equipment, net		69,250		76,460
Goodwill		767,274		766,444
Intangibles, net		345,232		371,289
Other assets		29,809		39,217
Total assets	$	2,059,179	$	2,151,092
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	106,262	$	110,430
Current portion of long-term debt		94,000		94,000
Accrued liabilities and other		366,723		435,638
Total current liabilities		566,985		640,068
Deferred taxes and long-term obligations		14,542		23,725
Long-term debt		336,000		336,000
Stockholders’ equity		1,141,652		1,151,299
Total liabilities and stockholders’ equity	$	2,059,179	$	2,151,092

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

	Three Months Ended
	August 31,			September 1,
	2007			2006
GAAP net loss	$	(18,654	)	$	(14,068	)
Restructuring		425			(75	)
Amortization of intangible assets		26,006			12,181
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		5,528			—
Stock-based compensation expense [b]		3,863			3,287
Huawei’s 49% minority interest in H3C’s amortization		—			(4,209	)
Gain on sale of asset [c]		(4,930	)		(2,296	)
Non-GAAP net income (loss)	$	12,238		$	(5,180	)
GAAP net loss per share	$	(0.05	)	$	(0.04	)
Restructuring		0.00			(0.00	)
Amortization of intangible assets		0.07			0.03
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		0.01			—
Stock-based compensation expense [b]		0.01			0.01
Huawei’s 49% minority interest in H3C’s amortization		—			(0.01	)
Gain on sale of asset [c]		(0.01	)		—
Non-GAAP net income (loss) per share, basic and diluted	$	0.03		$	(0.01	)
Shares used in computing basic per share amounts		397,041			391,885
Shares used in computing diluted per share amounts		400,543			391,885

[a]	Results from our 49% H3C acquisition transaction.
[b]	Amounts by category disclosed on 3Com web page at www.3com.com/IR.
[c]	These gains relate to a patent sale in Q1 fiscal 2008 and a sale of venture funds in Q1 fiscal 2007.

EX-99.2

Exhibit 99.2

Supplemental Financial Information — Fiscal Quarter Ended August 31, 2007

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

Sales by Geography (a)

	Three Months Ended
	August 31,		June 1,		September 1,
	2007		2007		2006
China	$	146,754	$	141,968	$	134,117
Europe, Middle East and Africa		69,662		66,623		69,534
North America		60,018		61,569		58,423
Asia Pacific Rim (ex-China)		23,382		23,924		22,751
Latin and South America		19,618		16,834		15,319
Total Sales	$	319,434	$	310,918	$	300,144

(a) DVBU and TippingPoint segment sales are included in geographic categories based on the location of the end customer. H3C segment sales included in the geographic categories are based upon the hub locations of OEM partners in the case of OEM sales and the location of end-customers in the case of direct customer sales.

Sales by Product Category

	Three Months Ended
	August 31,		June 1,		September 1,
	2007		2007		2006
Networking	$	261,976	$	252,007	$	244,033
Security		31,483		32,362		25,462
Voice		16,321		16,835		15,949
Services		9,030		9,147		8,351
Connectivity Products		624		567		6,349
Total Sales	$	319,434	$	310,918	$	300,144

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

	Three Months Ended
	August 31,			June 1,			September 1,
	2007			2007			2006
GAAP gross margin		46.6	%		44.5	%		45.5	%
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		1.8	%		0.2	%		0.0	%
Stock-based compensation expense [b]		0.1	%		0.2	%		0.1	%
Non-GAAP gross margin		48.5	%		44.9	%		45.6	%
GAAP operating loss	$	(25,687	)	$	(93,336	)	$	(20,868	)
Restructuring		425			718			(75	)
Amortization of intangible assets		26,006			7,897			12,181
In-process research and development [c]		—			34,053			—
Employee Appreciation Rights Plan (EARP) [d]		—			57,308			—
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		5,528			636			—
Stock-based compensation expense [b]		3,863			4,962			3,287
Non-GAAP operating income (loss)	$	10,135		$	12,238		$	(5,475	)
GAAP net loss	$	(18,654	)	$	(66,224	)	$	(14,068	)
Restructuring		425			718			(75	)
Amortization of intangible assets		26,006			7,897			12,181
In-process research and development [c]		—			34,053			—
Employee Appreciation Rights Plan (EARP) [d]		—			57,308			—
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		5,528			636			—
Stock-based compensation expense [b]		3,863			4,962			3,287
Huawei’s 49% minority interest in H3C’s amortization and EARP charges as shown above		—			(30,256	)		(4,209	)
Gain on sales of assets [e]		(4,930	)		—			(2,296	)
Gain on insurance settlement [f]		—			(3,908	)		—
Non-GAAP net income (loss)	$	12,238		$	5,186		$	(5,180	)
GAAP net loss per share	$	(0.05	)	$	(0.17	)	$	(0.04	)
Restructuring		0.00			0.00			(0.00	)
Amortization of intangible assets		0.07			0.02			0.03
In-process research and development [c]		—			0.09			—
Employee Appreciation Rights Plan (EARP) [d]		—			0.15			—
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		0.01			—			—
Stock-based compensation expense [b]		0.01			0.01			0.01
Huawei’s 49% minority interest in H3C’s amortization and EARP charges as shown above		—			(0.08	)		(0.01	)
Gain on sales of assets [e]		(0.01	)		—			—
Gain on insurance settlement [f]		—			(0.01	)		—
Non-GAAP net income (loss) per share, basic and diluted	$	0.03		$	0.01		$	(0.01	)
Shares used in computing basic per share amounts		397,041			395,988			391,885
Shares used in computing diluted per share amounts		400,543			400,196			391,885

[a]	Results from our 49% H3C acquisition transaction.
[b]	Stock-based compensation expense is included in the following cost and expense categories by period

	Three Months Ended
	August 31,		June 1,		September 1,
	2007		2007		2006
Cost of sales		384		457		319
Sales and marketing		975		1,398		1,237
Research and development		721		848		1,168
General and administrative		1,783		2,259		563

[c]	This charge is related to technology acquired in the 49% H3C acquisition.
[d]	These charges represent the initial portion of the Equity Appreciation Rights Plan for H3C employees triggered by 3Com’s acquisition of the remaining 49% ownership of H3C. They are included in the following cost and expense categories by period

	Three Months Ended
	August 31,		June 1,		September 1,
	2007		2007		2006
Cost of sales		—		5,716		—
Sales and marketing		—		17,727		—
Research and development		—		27,230		—
General and administrative		—		6,635		—

[e]	These gains relate to a patent sale in Q1 fiscal 2008 and a sale of venture funds in Q1 fiscal 2007.
[f]	This gain relates to insurance proceeds from an insurance settlement for our Hemel facility.

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

	Three Months Ended August 31, 2007
			Data Voice									Eliminations /
	H3C		Business Unit			TippingPoint			Corporate			Other			Total
Sales	$	186,928	$	139,576		$	25,468				[a]	$	(32,538	)	$	319,434
Gross profit		94,790		43,542			16,626			(110	)[b]		(5,912	)[c]		148,936
Operating expenses		67,811		48,202			17,179			11,521	[b]		29,910	[d]		174,623
Operating income (loss)		26,979		(4,660	)		(553	)		(11,631	)		(35,822	)		(25,687	)

	Three Months Ended September 1, 2006
			Data Voice									Eliminations /
	H3C		Business Unit			TippingPoint			Corporate			Other			Total
Sales	$	169,968	$	137,068		$	18,755				[a]	$	(25,647	)	$	300,144
Gross profit		80,084		44,544			12,210			(90	)[b]		(319	)[c]		136,429
Operating expenses		59,788		55,620			16,334			10,481	[b]		15,074	[d]		157,297
Operating income (loss)		20,296		(11,076	)		(4,124	)		(10,571	)		(15,393	)		(20,868	)

	Three Months Ended June 1, 2007
			Data Voice									Eliminations /
	H3C		Business Unit			TippingPoint			Corporate			Other			Total
Sales	$	175,727	$	138,421		$	24,662				[a]	$	(27,892	)	$	310,918
Gross profit		85,121		44,119			16,248			(243	)[b]		(6,809	)[c]		138,436
Operating expenses		55,180		47,731			18,734			11,362	[b]		98,765	[d]		231,772
Operating income (loss)		29,941		(3,612	)		(2,486	)		(11,605	)		(105,574	)		(93,336	)

[a]	-	eliminations for inter-company revenue during the respective periods.
[b]	-	represents costs not directly attributable to any operating business segment.
[c]	-	includes stock based compensation in all periods plus purchase accounting inventory related adjustments and EARP as applicable.
[d]	-	includes: stock-based compensation, amortization, and restructuring in all periods, plus in process research and development and EARP as applicable.

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

	Three Month's Ended
	August 31,			September 1,
	2007			2006
Cash flows from operating activities:
Net loss	$	(18,654	)	$	(14,068	)
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities:
Depreciation and amortization		34,666			20,095
Loss (gain) on property and equipment disposals		49			(7,605	)
Minority interest		—			8,942
Stock-based compensation expense		3,863			3,287
Gain on investments, net		(185	)		(2,422	)
Deferred income taxes		(845	)		(3,716	)
Change in assets and liabilities:
Accounts receivable		(13,242	)		(5,838	)
Inventories		4,697			(21,662	)
Other assets		2,945			14,314
Accounts payable		(4,001	)		(6,623	)
Other liabilities		(68,300	)		18,582
Net cash (used in) provided by operating activities		(59,007	)		3,286
Cash flows from investing activities:
Purchase of investments		—			(190,310	)
Proceeds from maturities and sales of investments		442			180,524
Purchase of property and equipment		(5,607	)		(6,012	)
Proceeds from sale of property and equipment		645			33,108
Net cash (used in) provided by investing activities		(4,520	)		17,310
Cash flows from financing activities:
Issuances of common stock		837			2,934
Repurchases of common stock		(183	)		(187	)
Net cash provided by financing activities		654			2,747
Effects of exchange rate changes on cash and equivalents		4,702			737
Net change in cash and equivalents during period		(58,171	)		24,080
Cash and equivalents, beginning of period		559,217			501,097
Cash and equivalents, end of period	$	501,046		$	525,177

EX-99.3

EXHIBIT 99.3

H3C Summary Financial Information Provided to Bank Lenders
H3C Holdings Limited
For the Fiscal Q2-2007 Ending June 30, 2007
(unaudited; amount in thousands)

						Adjusted
		Items		Q2-07			Q2-07			Q1-07
(1	)	Sales	$	184,718		$	184,774		$	177,843
(2	)	Gross Profit	$	88,826		$	94,355		$	79,468
		Gross profit as a percent of sales		48.1	%		51.1	%		44.7	%
(3	)	Consolidated Adjusted EBITDA	$	43,733		$	43,733		$	55,999
		Consolidated Adjusted EBITDA as a percent of sales		23.7	%		23.7	%		31.5	%
(4	)	Taxes	$	223		$	2,675		$	4,689
(5	)	Deferred income tax	$	1,798		$	4,249		$	622
(6	)	Consolidated Net Income	$	(798	)	$	24,645		$	(21,350	)
(7	)	Net Income based on GAAP	$	(798	)	$	24,645		$	(21,350	)
(8	)	Cash, Cash Equivalents and short term investments	$	342,168		$	342,168		$	518,117
(9	)	Net property plant and equipment	$	28,835		$	28,835		$	32,070
(10	)	Consoldiated Working Capital	$	(11,784	)	$	(11,784	)	$	(98,653	)
(11	)	Capital Expenditure	$	2,839		$	2,839		$	2,145
		Capital Expenditure as a percent of sales		1.5	%		1.5	%		1.2	%
(12	)	Increase in Consolidated Working Capital	$	86,870		$	86,870		$	(49,125	)
(13	)	The result of Consoldiated Adjusted EBITDA less Consolidated Working Capital	$	55,517		$	55,517		$	154,652

Remarks:

1) Q2/Q1 sequential growth on sales: 3.9%

2) The Adjusted Q2-07 column indicates the financials after backing out the non-cash purchase accounting entries booked in the quarter that were associated with 3Com’s 49% acquisition transaction as pushed-down by 3Com corporate to H3C Holdings. Major items were a $5.5 million inventory revaluation charge as COGS and a $22.5 million amortization charge on intangible assets.

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

The H3C financial information contained in this document is derived from its consolidated H3C entity financials prepared under US Generally Accepted Accounting Principles and differs from the H3C segment financial information reported by 3Com Corporation in its public filings prepared under US Generally Accepted Accounting Principles in that the externally reported segment information includes adjustments for consolidation of the H3C entity and the parent entities, adjustments for any products still in 3Com inventory and adjustments for purchase accounting impacts maintained at the parent level.