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 22, 2008

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 Text of Press Release, dated September 22, 2008

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 22, 2008, 3Com Corporation (the “Company”) (i) issued a press release regarding its financial results for its fiscal quarter ended August 29, 2008 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 (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 contains 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 (and margin), non-GAAP net income/loss (and margin), non-GAAP net income/loss per share and non-GAAP research and development, sales and marketing and general and administrative expenses.

     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 are excluded, as discussed below.

     The non-GAAP operating loss or income (and margin) 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, the inventory-related adjustment portion of the purchase accounting effects of the Company’s acquisition of 49% of H3C, a patent litigation success fee, a VAT recovery dispute, IPO write-off fees, a goodwill impairment charge, a benefit in the form of an offset to operating expenses for the $70 million Realtek patent dispute resolution, and expenses related to the Company’s terminated acquisition by affiliates of Bain Capital.

     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 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-process R&D Expenses

     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.

     Stock-based Compensation

     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.

     Inventory-Related Adjustment from H3C Acquisition

     The Company has excluded the purchase accounting inventory-related adjustment from the 49% acquisition of H3C. 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.

     Patent Litigation Success Fee

     The Company won a recent jury verdict as a plaintiff in a patent litigation case, and is obligated to pay its external counsel certain contingent fees based on the size of the award. This is a one-time, non-recurring cost tied to the success of the case, and not based on hourly rates charged by the law firm. Because it is not part of our core operations or expenses, management has determined it is appropriate to exclude it from our operational results. Management does not measure the performance of the business with this figure included.

     VAT Recovery Dispute

     Value-added tax is not typically charged to a company’s income statement because it is collected by the company on behalf of a governmental agency and remitted to that agency, or paid by the company to a third party and later recovered by the company from the government. In this case, management has deemed it appropriate to exclude a one-time, non-cash charge relating to European VAT tax matters under dispute. We are currently seeking recovery of these amounts as we believe we are entitled to collect them from the European tax authorities, but under applicable accounting regulations have determined we need to take a charge for the amount at this time.

     IPO Fees Write-Off

     The Company excludes external expenses (primarily accounting, auditing and legal) related to the proposed IPO of its TippingPoint division which has been postponed. These expenses are one-time charges that are not indicative of core operations as they relate to a one-time specific transaction to take TippingPoint public that would normally be netted against IPO sales proceeds as opposed to being included in operating expenses.

     Goodwill Impairment Charge

     Our recent stock price decline triggered an accounting impairment review of our goodwill booked for our H3C and TippingPoint acquisitions, resulting in an impairment charge on the goodwill we booked in connection with our 2005 acquisition of TippingPoint. This charge is a one-time, 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.

     Benefit from Realtek Patent Resolution

     We recorded a $70 million benefit in the form of an offset to operating expenses for the payments we received in connection with a one-time patent dispute resolution with Realtek. This is a non-recurring item, and not part of our ordinary course business operations. Accordingly, it is was determined by management to adjust our results to exclude this benefit. Management does not measure our performance with this benefit included.

     Terminated Bain Acquisition Expenses

     The Company excludes external expenses (including bankers’, accounting and legal fees) related to its terminated acquisition by affiliates of Bain Capital. These expenses are one-time charges that are not indicative of core operations as they relate to a one-time specific transaction to take the Company private that did not occur.

     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: gains/losses on sales of assets and investments, gain from insurance settlement, tax reserve release and change in tax status in PRC.

     Gains/Losses on Asset Sales and Investments

     Gains/losses on asset sales and investments are outside of the ordinary course of business and not representative of core operations.

     Gain on Insurance Settlement

     The insurance settlement related to monies paid under a policy insuring our Hemel, UK property which was destroyed by an oil depot explosion are outside the ordinary course of business and are not operational. This was a one-time unusual event. We do not own any other real property.

     Tax Reserve Release

     We recently resolved two tax matters in our favor resulting in a reserve release that provides a benefit to the income statement relating to a booked reserve. Accordingly, we believe an adjustment is appropriate, as this positive impact to our results is not indicative of our ongoing operations.

     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. 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.

     Finally, the Company uses non-GAAP research and development, sales and marketing and general and administrative expenses measures, which are adjusted to exclude some of the items described above for the reasons discussed above.

     For the Company’s forward-looking non-GAAP 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

     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 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 22, 2008, titled “3Com Reports First Quarter Fiscal Year 2009 Results.”
99.2	Supplemental Financial Information – Fiscal Quarter Ended August 29, 2008
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 22, 2008	By:	/s/ Jay Zager
		Jay Zager
		Executive Vice President, Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Text of Press Release, dated September 22, 2008, titled “3Com Reports First Quarter Fiscal Year 2009 Results.”
99.2	Supplemental Financial Information – Fiscal Quarter Ended August 29, 2008
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	Media Relations
John Vincenzo	Kevin Flanagan
508.323.1260	508.323.1101
john_vincenzo@3com.com	kevin_flanagan@3com.com

3COM REPORTS FIRST QUARTER RESULTS FOR FISCAL 2009

MARLBOROUGH, MASS. – September 22, 2008 – 3Com Corporation (NASDAQ: COMS) today reported financial results for its fiscal 2009 first quarter, which ended August 29, 2008. Revenue in the quarter was $342.7 million compared to revenue of $319.4 million in the corresponding period in fiscal 2008, a 7 percent increase.

     Net income in the quarter was $79.8 million, or $0.20 per diluted share, compared with a net loss of $18.7 million, or $0.05 per share, in the first quarter of fiscal year 2008. In the first quarter of fiscal 2009, 3Com recorded a $70.0 million, or $0.17 per diluted share, benefit from the previously disclosed resolution of a patent dispute between the company and Realtek. On a non-GAAP basis, net income was $43.4 million, or $0.11 per diluted share, compared with net income of $12.2 million, or $0.03 per diluted share, for the first quarter of fiscal year 2008.

     “Overall this was an excellent quarter for 3Com as we achieved GAAP profitability,” said Bob Mao, 3Com CEO. “In addition, we delivered our three key objectives in the quarter: solid year-over-year revenue growth, improved profit margins, including record gross margins again, and strong cash generation. These results exceeded our revised guidance for the quarter,

and showed several examples of improved execution of our strategy and the benefit of efficiencies gained from our integration activities. We believe that our strategy offers a compelling value proposition of price-performance leadership to value-conscious enterprise customers.”

     In the first quarter, 3Com generated $39.3 million in cash from operations. 3Com’s cash and cash equivalents balance at August 29, 2008, was $541.4 million.

     Management will host a conference call and Webcast at 5 p.m. EDT, Monday, September 22, 2008, to discuss the company’s financial results and business outlook. To participate on the call, U.S. and international parties may dial 913-312-0681. 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 23, 2008, by dialing (719) 457-0820 or (888) 203-1112, Confirmation Code: 4966065. A replay also will be available over the Internet at 3Com’s Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section. The replay will be available for approximately three weeks after posting.

     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 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 annual report filed with the SEC on Form 10-K for the year ended May 30, 2008.

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 $70 million Realtek benefit and those other 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 (NASDAQ: COMS) is a leading provider of secure, converged voice and data networking solutions for enterprises of all sizes. 3Com offers a broad line of innovative products backed by world class sales, service and support, which excel at delivering business value for its customers. 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 © 2008 3Com Corporation. 3Com, the 3Com logo and TippingPoint are registered trademarks and H3C is a trademark of 3Com Corporation or its wholly owned subsidiaries. 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
	August 29,			August 31,
	2008			2007
Sales	$	342,650		$	319,434
Cost of sales		153,023			170,498
Gross profit		189,627			148,936
Operating expenses (income):
Sales and marketing		86,282			74,404
Research and development		45,747			52,310
General and administrative		27,054			21,478
Amortization of intangibles		25,164			26,006
Realtek patent resolution		(70,000	)		—
Restructuring charges		1,997			425
Total operating expenses (income)		116,244			174,623
Operating income (loss)		73,383			(25,687	)
Interest expense, net		(1,251	)		(3,567	)
Other income, net		12,871			12,411
Income (loss) from operations before income taxes		85,003			(16,843	)
Income tax provision		(5,166	)		(1,811	)
Net income (loss)	$	79,837		$	(18,654	)
Basic and diluted income (loss) per share	$	0.20		$	(0.05	)
Shares used in computing basic per share amounts		402,889			397,041
Shares used in computing diluted per share amounts		404,072			397,041

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

	August 29,		May 30,
	2008		2008
ASSETS
Current assets:
Cash and equivalents	$	541,428	$	503,644
Notes receivable		88,100		65,116
Accounts receivable, net		143,135		116,281
Inventories, net		108,376		90,831
Other current assets		35,584		34,033
Total current assets		916,623		809,905
Property & equipment, net		54,258		54,314
Goodwill		609,297		609,297
Intangibles, net		254,296		278,385
Deposits and other assets		22,727		23,229
Total assets	$	1,857,201	$	1,775,130
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	95,391	$	90,280
Current portion of long-term debt		88,000		48,000
Accrued liabilities and other		341,108		366,181
Total current liabilities		524,499		504,461
Deferred taxes and long-term obligations		30,696		22,367
Long-term debt		213,000		253,000
Stockholders’ equity		1,089,006		995,302
Total liabilities and stockholders’ equity	$	1,857,201	$	1,775,130

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

	Three Months Ended
	August 29,			August 31,
	2008			2007
GAAP operating income (loss)	$	73,383		$	(25,687	)
Restructuring		1,997			425
Amortization of intangible assets		25,164			26,006
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			5,528
Realtek patent resolution [b]		(70,000	)		—
Stock-based compensation expense [c]		6,442			3,863
Non-GAAP operating income	$	36,986		$	10,135
GAAP net income (loss)	$	79,837		$	(18,654	)
Restructuring		1,997			425
Amortization of intangible assets		25,164			26,006
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			5,528
Realtek patent resolution [b]		(70,000	)		—
Stock-based compensation expense [c]		6,442			3,863
Gain on sale of assets [d]		—			(4,930	)
Non-GAAP net income	$	43,440		$	12,238
GAAP net income (loss) per share	$	0.20		$	(0.05	)
Restructuring		0.00			0.00
Amortization of intangible assets		0.06			0.07
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			0.01
Realtek patent resolution [b]		(0.17	)		—
Stock-based compensation expense [c]		0.02			0.01
Gain on sales of assets [d]		—			(0.01	)
Non-GAAP net income per share, diluted	$	0.11		$	0.03
Shares used in computing diluted per share amounts		404,072			400,543

[a] Results from our 49% H3C acquisition transaction.

[b] Realtek resolution of patent dispute.

[c] Stock-based compensation expense is included in the following cost and expense categories by period:

	Three Months Ended
	August 29,		August 31,
	2008		2007
Cost of sales		758		384
Sales and marketing		1,758		975
Research and development		884		721
General and administrative		3,042		1,783

[d] The gain relates to a patent sale in fiscal 2008.

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
	August 29,			May 30,			August 31,
	2008			2008			2007
Sales	$	342,650		$	321,254		$	319,434
Cost of sales		153,023			147,529			170,498
Gross profit		189,627			173,725			148,936
Operating expenses (income):
Sales and marketing		86,282			78,402			74,404
Research and development		45,747			51,614			52,310
General and administrative		27,054			50,310			21,478
Amortization of intangibles		25,164			25,626			26,006
Realtek patent resolution		(70,000	)		—			—
Goodwill impairment		—			157,977			—
Restructuring charges		1,997			193			425
Total operating expenses (income)		116,244			364,122			174,623
Operating income (loss)		73,383			(190,397	)		(25,687	)
Interest expense, net		(1,251	)		(2,675	)		(3,567	)
Other income, net		12,871			11,479			12,411
Income (loss) from operations before income taxes		85,003			(181,593	)		(16,843	)
Income tax (provision) benefit		(5,166	)		14,870			(1,811	)
Net income (loss)	$	79,837		$	(166,723	)	$	(18,654	)
Basic and diluted income (loss) per share	$	0.20		$	(0.41	)	$	(0.05	)
Shares used in computing basic per share amounts		402,889			401,922			397,041
Shares used in computing diluted per share amounts		404,072			401,922			397,041

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

	August 29,		May 30,
	2008		2008
ASSETS
Current assets:
Cash and equivalents	$	541,428	$	503,644
Notes receivable		88,100		65,116
Accounts receivable, net		143,135		116,281
Inventories, net		108,376		90,831
Other current assets		35,584		34,033
Total current assets		916,623		809,905
Property & equipment, net		54,258		54,314
Goodwill		609,297		609,297
Intangibles, net		254,296		278,385
Deposits and other assets		22,727		23,229
Total assets	$	1,857,201	$	1,775,130
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	95,391	$	90,280
Current portion of long-term debt		88,000		48,000
Accrued liabilities and other		341,108		366,181
Total current liabilities		524,499		504,461
Deferred taxes and long-term obligations		30,696		22,367
Long-term debt		213,000		253,000
Stockholders’ equity		1,089,006		995,302
Total liabilities and stockholders’ equity	$	1,857,201	$	1,775,130

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

Sales by Geography (a)

	Three Months Ended
	August 29,		May 30,		August 31,
	2008		2008		2007
China	$	167,527	$	149,773	$	146,754
Europe, Middle East and Africa		69,377		74,100		69,662
North America		52,031		46,727		60,018
Asia Pacific Rim (ex-China)		30,109		30,514		23,382
Latin and South America		23,606		20,140		19,618
Total Sales	$	342,650	$	321,254	$	319,434

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

Sales by Product Category

	Three Months Ended
	August 29,		May 30,		August 31,
	2008		2008		2007
Networking	$	282,007	$	261,185	$	261,976
Security (b)		36,339		36,441		31,483
Voice		12,830		12,625		16,321
Services		11,018		10,291		9,030
Connectivity Products		456		712		624
Total Sales	$	342,650	$	321,254	$	319,434

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

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

	Three Months Ended
	August 29,			May 30,			August 31,
	2008			2008			2007
GAAP operating income (loss)	$	73,383		$	(190,397	)	$	(25,687	)
Restructuring		1,997			193			425
Amortization of intangible assets		25,164			25,626			26,006
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			—			5,528
Realtek patent resolution [b]		(70,000	)		—			—
Patent litigation success fee [c]		—			9,000			—
VAT recovery dispute [d]		—			6,069			—
IPO fees write-off [e]		—			4,864			—
Goodwill impairment [f]		—			157,977			—
Stock-based compensation expense [g]		6,442			9,793			3,863
Acquiree expensed acquisition costs [h]		—			43			—
Non-GAAP operating income	$	36,986		$	23,168		$	10,135
GAAP net income (loss)	$	79,837		$	(166,723	)	$	(18,654	)
Restructuring		1,997			193			425
Amortization of intangible assets		25,164			25,626			26,006
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			—			5,528
Realtek patent resolution [b]		(70,000	)		—			—
Patent litigation success fee [c]		—			9,000			—
VAT recovery dispute [d]		—			6,069			—
IPO fees write-off [e]		—			4,864			—
Goodwill impairment [f]		—			157,977			—
Stock-based compensation expense [g]		6,442			9,793			3,863
Acquiree expensed acquisition costs [h]		—			43			—
Gain on sales of assets [i]		—			—			(4,930	)
Tax reserve release [j]		—			(11,284	)		—
Non-GAAP net income	$	43,440		$	35,558		$	12,238
GAAP net income (loss) per share	$	0.20		$	(0.41	)	$	(0.05	)
Restructuring		0.00			0.00			0.00
Amortization of intangible assets		0.06			0.06			0.07
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			—			0.01
Realtek patent resolution [b]		(0.17	)		—			—
Patent litigation success fee [c]		—			0.02			—
VAT recovery dispute [d]		—			0.02			—
IPO fees write-off [e]		—			0.01			—
Goodwill impairment [f]		—			0.39			—
Stock-based compensation expense [g]		0.02			0.03			0.01
Acquiree expensed acquisition costs [h]		—			0.00			—
Gain on sales of assets [i]		—			—			(0.01	)
Tax reserve release [j]		—			(0.03	)		—
Non-GAAP net income per share, diluted	$	0.11		$	0.09		$	0.03
Shares used in computing diluted per share amounts		404,072			403,322			400,543
GAAP operating income (loss) margin		21.4	%		-59.3	%		-8.0	%
Restructuring		0.6	%		0.1	%		0.1	%
Amortization of intangible assets		7.3	%		8.0	%		8.1	%
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		0.0	%		0.0	%		1.7	%
Realtek patent resolution [b]		-20.4	%		0.0	%		0.0	%
Patent litigation success fee [c]		0.0	%		2.8	%		0.0	%
VAT recovery dispute [d]		0.0	%		1.9	%		0.0	%
IPO fees write-off [e]		0.0	%		1.5	%		0.0	%
Goodwill impairment [f]		0.0	%		49.2	%		0.0	%
Stock-based compensation expense [g]		1.9	%		3.0	%		1.3	%
Acquiree expensed acquisition costs [h]		0.0	%		0.0	%		0.0	%
Non-GAAP operating income margin		10.8	%		7.2	%		3.2	%
GAAP sales and marketing expenses	$	86,282		$	78,402		$	74,404
Stock-based compensation expense [h]		(1,758	)		(1,830	)		(975	)
Non-GAAP sales and marketing expenses	$	84,524		$	76,572		$	73,429
GAAP research and development expenses	$	45,747		$	51,614		$	52,310
Stock-based compensation expense [h]		(884	)		(1,199	)		(721	)
Non-GAAP research and development expenses	$	44,863		$	50,415		$	51,589
GAAP general and administrative expenses	$	27,054		$	50,310		$	21,478
Patent litigation success fee [c]		—			(9,000	)
VAT recovery dispute [d]		—			(6,069	)
IPO fees write-off [e]		—			(4,864	)
Stock-based compensation expense [h]		(3,042	)		(6,033	)		(1,783	)
Acquiree expensed acquisition costs [i]		—			(43	)		—
Non-GAAP general and administrative expense	$	24,012		$	24,301		$	19,695

[a] Results from our 49% H3C acquisition transaction.

[b] Realtek resolution of patent dispute.

[c] Success fee for patent litigation.

[d] Disputed VAT recovery receivable no longer deemed collectible.

[e] Write-off capitalized costs of proposed IPO.

[f] Goodwill impairment related to loss in value of a reporting unit.

[g] Stock-based compensation expense is included in the following cost and expense categories by period:

	Three Months Ended
	August 29,		May 30,		August 31,
	2008		2008		2007
Cost of sales		758		731		384
Sales and marketing		1,758		1,830		975
Research and development		884		1,199		721
General and administrative		3,042		6,033		1,783

[h] These expenses relate to the proposed acquisition of the Company in September 2007, the deal was terminated in April 2008.

[i] The gain relates to patent sales in fiscal 2008 and a patent sale in fiscal 2007.

[j] This gain relates to the release of tax reserves due to settlements with foreign tax authorities.

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

	August 29, 2008
								TippingPoint
								Security Business
	Networking Business (a)							(b)
	China-Based		Rest of World								Eliminations /
	Sales Region		Sales Region		Central Functions			TippingPoint			Other				Total
Sales	$	175,397	$	140,314	$	—		$	28,199		$	(1,260	)	[c]	$	342,650
Gross profit		115,707		81,008		(25,911	)		19,581			(758	)	[d]		189,627
Direct sales and marketing expenses		33,100		28,152		—			9,373			1,758		[d]		72,383
Segment contribution profit (loss)		82,607		52,856		(25,911	)		10,208			(2,516	)			117,244
Other operating expenses		—		—		72,863			9,911			(38,913	)	[e]		43,861
Segment profit	$	—	$	—	$	—		$	297		$	—
Operating income															$	73,383
	August 31, 2007
								TippingPoint
								Security Business
	Networking Business (a)							(b)
	China-Based		Rest of World								Eliminations /
	Sales Region		Sales Region		Central Functions			TippingPoint			Other				Total
Sales	$	156,034	$	137,932	$	—		$	25,468		$	—		[c]	$	319,434
Gross profit		94,009		75,438		(31,225	)		16,626			(5,912	)	[d]		148,936
Direct sales and marketing expenses		25,824		23,087		—			9,093			975		[d]		58,979
Segment contribution profit (loss)		68,185		52,351		(31,225	)		7,533			(6,887	)			89,957
Other operating expenses		—		—		78,622			8,087			28,935		[e]		115,644
Segment profit	$	—	$	—	$	—		$	(554	)	$	—
Operating loss															$	(25,687	)

(a)	-	our Networking business consists of two regionally based reporting segments: China-Based Sales Region and Rest of World Sales Region, as well as Central Functions. We measure profitability in these segments at standard profit and segment contribution profit level. Segment contribution profit is standard profit less segment direct sales and marketing expenses. Also as part of our Networking business we report the Central functions for this business. Central Functions include other cost of sales and centralized operating expenses.
(b)	-	our TippingPoint Security business segment is measured on a profitability basis of segment profit. This measure includes all costs except those items described in “Eliminations and Other”.
[c]	-	eliminations for inter-company revenue during the respective periods.
[d]	-	includes stock based compensation in all periods and purchase accounting inventory related adjustments as applicable.
[e]	-	includes: stock-based compensation, amortization, and restructuring in all periods and Realtek patent dispute resolution where applicable.

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

	Three Month’s Ended
	August 29,			August 31,
	2008			2007
Cash flows from operating activities:
Net income (loss)	$	79,837		$	(18,654	)
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities:
Depreciation and amortization		33,131			34,666
Loss on property and equipment disposals		13			49
Stock-based compensation expense		6,442			3,863
Gain on investments, net		—			(185	)
Deferred income taxes		(3,377	)		(845	)
Change in assets and liabilities:
Accounts receivable		(50,684	)		(17,152	)
Inventories		(18,566	)		4,697
Other assets		(1,483	)		2,945
Accounts payable		6,941			(4,001	)
Other liabilities		(12,940	)		(64,390	)
Net cash provided by (used in) operating activities		39,314			(59,007	)
Cash flows from investing activities:
Proceeds from maturities and sales of investments		—			442
Purchase of property and equipment		(7,598	)		(5,607	)
Proceeds from sale of property and equipment		68			645
Net cash used in investing activities		(7,530	)		(4,520	)
Cash flows from financing activities:
Issuances of common stock		286			837
Repurchases of common stock		(543	)		(183	)
Net cash (used in) provided by financing activities		(257	)		654
Effects of exchange rate changes on cash and equivalents		6,257			4,702
Net change in cash and equivalents during period		37,784			(58,171	)
Cash and equivalents, beginning of period		503,644			559,217
Cash and equivalents, end of period	$	541,428		$	501,046

EX-99.3

EXHIBIT 99.3

H3C Summary Financial Information Provided to Bank Lenders
H3C Holdings Limited
For the Fiscal Q2-2008 Ended June 30, 2008
(Unaudited; amounts in thousands except percentages)

	Q2-08			Q2-07
Items
Sales	$	218,188		$	187,101
Gross Profit	$	129,939		$	108,658
Gross profit as a percent of sales		59.6	%		58.1	%
Consolidated Adjusted EBITDA	$	76,542		$	60,209
Consolidated Adjusted EBITDA as a percent of sales		35.1	%		32.2	%
Taxes	$	3,568		$	(4,398	)
Deferred income tax	$	(899	)	$	(6,416	)
Consolidated Net Income	$	41,989		$	30,444
Net Income based on GAAP	$	41,989		$	30,444
Cash, Cash Equivalents and short term investments	$	443,245		$	404,049
Net property plant and equipment	$	19,993		$	20,761
Consolidated Working Capital	$	32,381		$	(50,136	)
Capital expenditure	$	2,767		$	1,843
Capital Expenditure as a percent of sales		1.3	%		1.0	%
Increase in Consolidated Working Capital	$	82,517		$	(44,981	)
The result of Consolidated Adjusted EBITDA less
Consolidated Working Capital	$	44,161		$	110,345

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