EX-99.2 3 b67846aaexv99w2.htm EX-99.2 SUPPLEMENTAL FINANCIAL INFORMATION exv99w2
 

Exhibit 99.2
3Com Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
                         
    Three Months Ended
    November 30,     August 31,     December 1,  
    2007     2007     2006  
Sales
   $ 317,801     $ 319,434     $ 332,976  
Cost of sales
     165,681       170,498       182,825  
 
                  
 
                        
Gross profit
     152,120       148,936       150,151  
 
                        
Operating expenses:
                        
Sales and marketing
     80,785       74,404       76,188  
Research and development
     52,199       52,310       48,151  
General and administrative
     31,060       21,478       22,341  
Amortization of intangibles
     26,260       26,006       12,221  
Restructuring charges
     3,147       425       630  
 
                  
Total operating expenses
     193,451       174,623       159,531  
 
                  
 
                        
Operating loss
     (41,331 )     (25,687 )     (9,380 )
 
                        
Gain (loss) on investments, net
     1       327       (911 )
Interest (expense) income, net
     (3,966 )     (3,567 )     11,447  
Other income, net
     10,342       12,084       12,616  
 
                  
 
                        
(Loss) income from operations before income taxes and minority interest of consolidated joint venture
     (34,954 )     (16,843 )     13,772  
 
                        
Income tax provision
     (670 )     (1,811 )     (2,315 )
 
                        
Minority interest of Huawei in the loss (income) of consolidated joint venture (1)
     —       —       (14,973 )
 
                  
 
                        
Net loss
   $ (35,624 )   $ (18,654 )   $ (3,516 )
 
                  
 
                        
Basic and diluted loss per share
   $ (0.09 )   $ (0.05 )   $ (0.01 )
 
                  
 
                        
Shares used in computing basic and diluted per share amounts
     398,989       397,041       393,352  
 
(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.

 

 

Additional Financial Data
(in thousands)
(unaudited)
Sales by Geography (a)
                         
    Three Months Ended  
    November 30,     August 31,     December 1,  
    2007     2007     2006  
China
   $ 143,107     $ 146,754     $ 158,276  
Europe, Middle East and Africa
     73,209       69,662       70,933  
North America
     52,589       60,018       55,159  
Asia Pacific Rim (ex-China)
     25,865       23,382       28,312  
Latin and South America
     23,031       19,618       20,296  
 
                  
 
                        
Total Sales
   $ 317,801     $ 319,434     $ 332,976  
 
                  
(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  
    November 30,     August 31,     December 1,  
    2007     2007     2006  
Networking
   $ 255,533     $ 261,976     $ 272,852  
Security
     35,062       31,483       31,582  
Voice
     16,657       16,321       16,549  
Services
     9,953       9,030       8,568  
Connectivity Products
     596       624       3,425  
 
                  
 
                        
Total Sales
   $ 317,801       319,434       332,976  
 
                  

 

 

     
3Com Corporation
Segment Reporting
(in thousands)
(unaudited)
                                                                 
    Three Months Ended November 30, 2007
            Data Voice   Tipping                   Eliminations /            
    H3C   Business Unit   Point   Corporate           Other           Total
Sales
   $ 182,823     $ 139,879     $ 25,785                     $ (30,686 )[a]             $ 317,801  
Gross profit
     100,673       40,125       17,536       (100 ) [b]           (6,114 )[c]           152,120  
Operating expenses
     72,926       49,610       16,989       11,436 [b]               42,490 [d]                193,451  
     
Operating income (loss)
     27,747       (9,485 )     547       (11,536 )             (48,604 )             (41,331 )
     
                                                                 
    Three Months Ended December 1, 2006
            Data Voice   Tipping                   Eliminations /            
    H3C   Business Unit   Point   Corporate           Other           Total
Sales
   $ 190,291     $ 144,268     $ 22,257                   $ (23,840 )[a]              $ 332,976  
Gross profit
     90,715       45,377       15,042       (600 )[b]           (383 )[c]           150,151  
Operating expenses
     61,051       51,884       17,058       10,750 [b]               18,788 [d]                159,531  
     
Operating income (loss)
     29,664       (6,507 )     (2,016 )     (11,350 )             (19,171 )             (9,380 )
     
 
[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 as applicable.
 
[d]  - includes: stock-based compensation, amortization, and restructuring in all periods and deal costs where applicable.

 

 

3Com Corporation
Consolidated Statement of Cash Flows
(in thousands)
(unaudited)
                 
    Six Month’s Ended  
    November 30,     December 1,  
    2007     2006  
Cash flows from operating activities:
                
Net loss
   $ (54,278 )     (17,584 )
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities:
                
Depreciation and amortization
     69,279       39,789  
Loss (gain) on property and equipment disposals
     155       (10,920 )
Minority interest
     —       23,915  
Equity Interest in unconsolidated H3C
     9,868       —  
Stock-based compensation expense
     —       10,237  
Gain on investments, net
     (185 )     (1,801 )
Deferred income taxes
     (1,234 )     (5,907 )
Change in assets and liabilities:
                
Accounts receivable
     (10,418 )     (53,149 )
Inventories
     16,863       3,349  
Other assets
     113       19,925  
Accounts payable
     (14,642 )     (30,897 )
Intercompany — H3C
     —       —  
Other liabilities
     (68,080 )     18,035  
 
            
Net cash provided by (used in) operating activities
     (52,559 )     (5,008 )
 
            
 
                
Cash flows from investing activities:
                
Purchase of investments
     —       (224,999 )
Proceeds from maturities and sales of investments
     442       269,932  
Purchase of property and equipment
     (9,746 )     (16,118 )
Proceeds from sale of property and equipment
     864       33,108  
 
            
Net cash (used in) provided by investing activities
     (8,440 )     61,923  
 
            
 
                
Cash flows from financing activities:
                
Issuances of common stock
     5,656       12,635  
Repurchases of common stock
     (1,322 )     (4,708 )
Payments from Long Term Debt
     (94,000 )     —  
Dividend paid to minority interest shareholder
     —       (40,785 )
 
            
Net cash used in financing activities
     (89,666 )     (32,858 )
 
            
 
                
Effects of exchange rate changes on cash and equivalents
     10,591       4,026  
 
                
Net change in cash and equivalents during period
     (140,074 )     28,083  
Cash and equivalents, beginning of period
     559,217       501,097  
 
            
Cash and equivalents, end of period
   $ 419,143     $ 529,180