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 19, 2009

3COM CORPORATION

(Exact name of registrant as specified in its charter)

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

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

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

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

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

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

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

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

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

TABLE OF CONTENTS

Ex-99.1 Text of Press Release, dated March 19, 2009, titled "3Com Reports Third Quarter Results for Fiscal 2009."

Ex-99.2 Supplemental Financial Information - Fiscal Quarter Ended February 27, 2009

ITEM 2.02 Results of Operations and Financial Condition

Financial Results.

          On March 19, 2009, 3Com Corporation (the “Company”) (i) issued a press release regarding its financial results for its fiscal quarter ended February 27, 2009 and (ii) posted supplementary financial information concerning the Company to the investor relations portion of its web site, www.3Com.com. The full text of the press release is attached hereto as Exhibit 99.1. The supplementary financial material is attached hereto as Exhibit 99.2.

          The information in Item 2.02 of this Form 8-K and the exhibits attached hereto as Exhibit 99.1 and Exhibit 99.2 shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (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 gross 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.

          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 gross margin measure used by the Company is defined to exclude the inventory-related adjustment portion of the purchase accounting effects of the Company’s acquisition of 49% of H3C and stock-based compensation expense, each of which is discussed below under the next section.

          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, 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, fees related to facilitation of a more autonomous

operation for a Company subsidiary, a benefit in the form of an offset to operating expenses for the $70 million Realtek patent dispute resolution, expenses related to the Company’s terminated acquisition by affiliates of Bain Capital, impairment of property and equipment and legal contingency accruals.

          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.

          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. These adjustments represent non-cash, one-time items relating to a specific acquisition as opposed to core operations.

          Fees to Facilitate More Autonomous Operation of Subsidiary

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

          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 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. The Company does not exclude expenses for its ongoing litigation against 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.

          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.

          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 and gain on insurance settlement.

          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.

          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 and non-GAAP profit/loss before taxes measures, which are adjusted to exclude some of the items described above for the reasons discussed above. The last item also includes the following measure:

          Change related to Change in Tax Rates in PRC

          The Company excludes a certain tax liability provision because (1) it represents 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) it is possible that once Chinese tax authorities clarify their position on our tax rate, and similarly situated companies, the provision will be reversed.

          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 9.01 Financial Statements and Exhibits

(d) Exhibits

Exhibit Number	Description
99.1	Text of Press Release, dated March 19, 2009, titled “3Com Reports Third Quarter Results for Fiscal 2009.”
99.2	Supplemental Financial Information – Fiscal Quarter Ended February 27, 2009

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 19, 2009	By:	/s/ Jay Zager
		Jay Zager
		Executive Vice President, Chief Financial Officer

EXHIBIT INDEX

Exhibit Number	Description
99.1	Text of Press Release, dated March 19, 2009, titled “3Com Reports Third Quarter Results for Fiscal 2009.”
99.2	Supplemental Financial Information – Fiscal Quarter Ended February 27, 2009

EX-99.1

Exhibit 99.1

FOR IMMEDIATE RELEASE

For more information contact:

Investor Relations	Media Relations
Gene Skayne	Kevin Flanagan
508.323.1080	508.323.1101
gene_skayne@3com.com	kevin_flanagan@3com.com

3Com Reports Third-Quarter Results for Fiscal 2009

MARLBOROUGH, MASS.—March 19, 2009—3Com Corporation (Nasdaq: COMS) today reported financial results for its fiscal 2009 third quarter, which ended February 27, 2009. Revenue in the quarter was $324.7 million, compared to revenue of $336.4 million in the corresponding period in fiscal 2008, a 3.5 percent decrease.

     Net income in the quarter was $1.9 million, or $0.00 per diluted share, compared with a net loss of $7.8 million, or $(0.02) per share, in the third quarter of fiscal year 2008. On a non-GAAP basis, net income was $49.1 million, or $0.13 per diluted share, compared with net income of $34.2 million, or $0.08 per diluted share for the third quarter of fiscal year 2008.

     Revenue for the first nine months of fiscal year 2009 was $1,021.9 million, compared with $973.6 million for the same period in the prior year, a 5.0 percent increase. Year-to-date net income, on a GAAP basis, was $94.6 million, or $0.24 per diluted share, compared with a net loss of $62.1 million, or $(0.16) per diluted share for the first nine months of the prior year. On a non-GAAP basis, net income was $139.4 million, or $0.35 per diluted share, compared with net income of $59.4 million, or $0.15 per diluted share for the first nine months of fiscal year 2008.

     “I am very pleased with 3Com’s performance in the quarter, especially given the current economic conditions,” said Bob Mao, 3Com CEO. “Our China business remained strong in the quarter. Our TippingPoint segment achieved record revenue. The strength in these two segments, combined with stringent cost management allowed us to offset weakness in other geographies and deliver substantially higher year-over-year profit .”

- more -

3Com Reports Third-Quarter Results for Fiscal 2009, p. 2

     In the third quarter, 3Com generated $100 million in cash from operations. 3Com’s cash and cash equivalents balance at February 27, 2009, was $560.0 million.

     Management will host a conference call and Webcast at 4:30 p.m. EDT, Thursday, March 19, 2009, to discuss the company’s financial results and business outlook. To participate on the call, U.S. and international parties may dial (913) 312-1393. 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 March 20, 2009, by dialing (719) 457-0820 or (888) 203-1112, confirmation code: 6157425. 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.

     Additional financial information is available on 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 quarterly report filed with the SEC on Form 10-Q for the quarter ended November 28, 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, 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 $1.3B global converged network infrastructure supplier that helps customers achieve business success by delivering solutions that provide exceptional value. The Company’s H3C enterprise networking portfolio provides best-in-class performance, efficiency and reliability and delivers unparalleled return on investment. With TippingPoint, 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.

- End -

3Com Reports Third-Quarter Results for Fiscal 2009, p. 3

Copyright ^© 2009 3Com Corporation. 3Com, the 3Com logo, H3C and TippingPoint are registered trademarks of 3Com Corporation or its wholly owned subsidiaries in various countries around the world. All other company and product names may be trademarks of their respective holders.

3Com Reports Third-Quarter Results for Fiscal 2009, p. 4

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

	Three Months Ended						Nine Months Ended
	February 27,			February 29,			February 27,			February 29,
	2009			2008			2009			2008
Sales	$	324,707		$	336,390		$	1,021,919		$	973,625
Cost of sales		138,878			156,716			446,671			492,895
Gross profit		185,829			179,674			575,248			480,730
Operating expenses (income):
Sales and marketing		84,241			82,428			259,143			237,617
Research and development		43,729			50,530			137,330			155,039
General and administrative		30,393			26,268			88,799			78,806
Amortization of intangibles		23,106			25,778			73,330			78,044
Patent dispute resolution		—			—			(70,000	)		—
Restructuring charges		2,860			736			7,361			4,308
Operating expenses, net		184,329			185,740			495,963			553,814
Operating income (loss)		1,500			(6,066	)		79,285			(73,084	)
Interest expense, net		(3,333	)		(2,879	)		(5,131	)		(10,412	)
Other income, net		16,528			10,591			45,298			33,345
Income (loss) from operations before income taxes		14,695			1,646			119,452			(50,151	)
Income tax provision		(12,828	)		(9,486	)		(24,878	)		(11,967	)
Net income (loss)	$	1,867		$	(7,840	)	$	94,574		$	(62,118	)
Basic and diluted income (loss) per share	$	0.00		$	(0.02	)	$	0.24		$	(0.16	)
Shares used in computing basic per share amounts		384,679			400,142			393,868			398,724
Shares used in computing diluted per share amounts		386,377			400,142			395,232			398,724

3Com Reports Third-Quarter Results for Fiscal 2009, p. 5

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

	February 27,		May 31,
	2009		2008
ASSETS
Current assets:
Cash and equivalents	$	559,961	$	503,644
Notes receivable		85,795		65,116
Accounts receivable, net		114,083		116,281
Inventories, net		107,103		90,831
Other current assets		55,881		34,033
Total current assets		922,823		809,905
Property & equipment, net		43,828		54,314
Goodwill		609,297		609,297
Intangibles, net		203,838		278,385
Deposits and other assets		21,941		23,229
Total assets	$	1,801,727	$	1,775,130
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	71,636	$	90,280
Current portion of long-term debt		61,000		48,000
Accrued liabilities and other		415,068		366,181
Total current liabilities		547,704		504,461
Deferred taxes and long-term obligations		40,129		22,367
Long-term debt		152,000		253,000
Stockholders’ equity		1,061,894		995,302
Total liabilities and stockholders’ equity	$	1,801,727	$	1,775,130

3Com Reports Third-Quarter Results for Fiscal 2009, p. 6

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

	Three Months Ended					Nine Months Ended
	February 27,		February 29,			February 27,			February 29,
	2009		2008			2009			2008
GAAP net income (loss)	$	1,867	$	(7,840	)	$	94,574		$	(62,118	)
Restructuring		2,860		736			7,361			4,308
Amortization of intangibles		23,106		25,778			73,330			78,044
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—		57			—			11,176
Patent dispute resolution [b]		—		—			(70,000	)		—
TippingPoint special admin costs [c]		—		—			800			—
Stock-based compensation expense [d]		5,663		5,544			17,743			15,413
Acquiree expensed acquisition costs [e]		—		2,988			—			10,588
Legal contingency accruals [f]		2,400		—			2,400			—
Impairment of property and equipment [g]		1,150		—			1,150			—
Gain on sales of assets [h]		—		(1,225	)		—			(6,155	)
(Gain) loss on insurance settlement [i]		—		2,066			—			2,066
Charge related to change in tax rates [j]		12,083		6,056			12,083			6,056
Non-GAAP net income	$	49,129	$	34,160		$	139,441		$	59,378
GAAP net income (loss) per share	$	0.00	$	(0.02	)	$	0.24		$	(0.15	)
Restructuring		0.01		0.00			0.02			0.01
Amortization of intangibles		0.07		0.06			0.19			0.19
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—		0.00			—			0.03
Patent dispute resolution [b]		—		—			(0.18	)		—
TippingPoint special admin costs [c]		—		—			0.00			—
Stock-based compensation expense [d]		0.01		0.01			0.04			0.04
Acquiree expensed acquisition costs [e]		—		0.01			—			0.03
Legal contingency accruals [f]		0.01		—			0.01			—
Impairment of property and equipment [g]		0.00		—			0.00			—
Gain on sales of assets [h]		—		(0.00	)		—			(0.02	)
(Gain) loss on insurance settlement [i]		—		0.01			—			0.01
Charge related to change in tax rates [j]		0.03		0.01			0.03			0.01
Non-GAAP net income per share, diluted	$	0.13	$	0.08		$	0.35		$	0.15
Shares used in computing diluted per share amounts		386,377		404,502			395,232			403,544

[a]	Results from our 49% H3C acquisition transaction.
[b]	Resolution of Realtek patent dispute.
[c]	Costs incurred in the second quarter to facilitate operation of TippingPoint as a more autonomous business.
[d]	Stock-based compensation expense is included in the following cost and expense categories by period:

	Three Months Ended				Nine Months Ended
	February 27,		February 29,		February 27,		February 29,
	2009		2008		2009		2008
Cost of sales		596		496		1,916		1,403
Sales and marketing		1,599		1,753		4,970		4,146
Research and development		768		1,100		2,545		2,794
General and administrative		3,144		2,195		8,756		7,070

Note: $444 thousand of stock-based compensation in the three and nine months have been recorded to restructuring expense

[e]	These expenses relate to the proposed acquisition of the Company in September 2007, which was terminated in April 2008.
[f]	Accruals for contingencies relating to ongoing patent litigation.
[g]	Impairment charge related to the Company’s land in Hemel. UK.
[h]	The gain relates to a patent sale in fiscal 2008.
[i]	This loss relates to the recording of costs associated with our closed Hemel facility in fiscal 2008.
[j]	These expenses result from a change in the statutory rate used to compute the income tax provision in the PRC.

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 27,			November 28,			February 29,			February 27,			February 29,
	2009			2008			2008			2009			2008
Sales	$	324,707		$	354,562		$	336,390		$	1,021,919		$	973,625
Cost of sales		138,878			154,770			156,716			446,671			492,895
Gross profit		185,829			199,792			179,674			575,248			480,730
Operating expenses (income):
Sales and marketing		84,241			88,620			82,428			259,143			237,617
Research and development		43,729			47,854			50,530			137,330			155,039
General and administrative		30,393			31,352			26,268			88,799			78,806
Amortization of intangibles		23,106			25,060			25,778			73,330			78,044
Patent dispute resolution		—			—			—			(70,000	)		—
Restructuring charges		2,860			2,504			736			7,361			4,308
Operating expenses, net		184,329			195,390			185,740			495,963			553,814
Operating income (loss)		1,500			4,402			(6,066	)		79,285			(73,084	)
Interest expense, net		(3,333	)		(547	)		(2,879	)		(5,131	)		(10,412	)
Other income, net		16,528			15,899			10,591			45,298			33,345
Income (loss) before income taxes		14,695			19,754			1,646			119,452			(50,151	)
Income tax provision		(12,828	)		(6,884	)		(9,486	)		(24,878	)		(11,967	)
Net income (loss)	$	1,867		$	12,870		$	(7,840	)	$	94,574		$	(62,118	)
Basic and diluted income (loss) per share	$	0.00		$	0.03		$	(0.02	)	$	0.24		$	(0.16	)
Shares used in computing basic per share amounts		384,679			394,036			400,142			393,868			398,724
Shares used in computing diluted per share amounts		386,377			395,245			400,142			395,232			398,724

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

	February 27,		May 31,
	2009		2008
ASSETS
Current assets:
Cash and equivalents	$	559,961	$	503,644
Notes receivable		85,795		65,116
Accounts receivable, net		114,083		116,281
Inventories, net		107,103		90,831
Other current assets		55,881		34,033
Total current assets		922,823		809,905
Property & equipment, net		43,828		54,314
Goodwill		609,297		609,297
Intangibles, net		203,838		278,385
Deposits and other assets		21,941		23,229
Total assets	$	1,801,727	$	1,775,130
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	71,636	$	90,280
Current portion of long-term debt		61,000		48,000
Accrued liabilities and other		415,068		366,181
Total current liabilities		547,704		504,461
Deferred taxes and long-term obligations		40,129		22,367
Long-term debt		152,000		253,000
Stockholders’ equity		1,061,894		995,302
Total liabilities and stockholders’ equity	$	1,801,727	$	1,775,130

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

Sales by Geography (a)

	Three Months Ended						Nine Months Ended
	February 27,		November 28,		February 29,		February 27,		February 29,
	2009		2008		2008		2009		2008
China	$	183,758	$	192,851	$	169,864	$	544,136	$	459,725
Europe, Middle East and Africa		52,982		58,989		75,368		181,348		218,239
North America		43,300		49,130		42,871		144,461		155,478
Asia Pacific Rim (ex-China)		23,850		27,188		27,059		81,147		76,306
Latin and South America		20,817		26,404		21,228		70,827		63,877
Total Sales	$	324,707	$	354,562	$	336,390	$	1,021,919	$	973,625

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

Sales by Product Category

	Three Months Ended						Nine Months Ended
	February 27,		November 28,		February 29,		February 27,		February 29,
	2009		2008		2008		2009		2008
Networking	$	259,045	$	288,897	$	280,529	$	830,405	$	799,258
Security (b)		43,553		42,790		30,459		122,682		97,004
Voice		10,217		11,202		15,093		34,249		48,071
Services		11,892		11,673		10,309		34,583		29,292
Total Sales	$	324,707	$	354,562	$	336,390	$	1,021,919	$	973,625

(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									Nine Months Ended
	February 27,			November 28,			February 29,			February 27,			February 29,
	2009			2008			2008			2009			2008
GAAP gross profit		185,829			199,792			179,674			575,248			480,730
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			—			57			—			11,176
Stock-based compensation expense [d]		596			562			496			1,916			1,403
Non-GAAP gross profit		186,425			200,354			180,227			577,164			493,309
GAAP gross margin		57.2	%		56.3	%		53.4	%		56.3	%		49.4	%
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		0.0	%		0.0	%		0.0	%		0.0	%		1.2	%
Stock-based compensation expense [d]		0.2	%		0.2	%		0.2	%		0.2	%		0.1	%
Non-GAAP gross margin		57.4	%		56.5	%		53.6	%		56.5	%		50.7	%
GAAP operating income (loss)	$	1,500		$	4,402		$	(6,066	)	$	79,285		$	(73,084	)
Restructuring		2,860			2,504			736			7,361			4,308
Amortization of intangibles		23,106			25,060			25,778			73,330			78,044
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			—			57			—			11,176
Patent dispute resolution [b]		—			—			—			(70,000	)		—
TippingPoint special admin costs [c]		—			800			—			800			—
Stock-based compensation expense [d]		5,663			5,638			5,544			17,743			15,413
Acquiree expensed acquisition costs [e]		—			—			2,988			—			10,588
Legal contingency accruals [f]		2,400			—			—			2,400			—
Impairment of property and equipment [g]		1,150			—			—			1,150			—
Non-GAAP operating income	$	36,679		$	38,404		$	29,037		$	112,069		$	46,445
GAAP income (loss) before income taxes	$	14,695		$	19,754		$	1,646		$	119,452		$	(50,151	)
Restructuring		2,860			2,504			736			7,361			4,308
Amortization of intangibles		23,106			25,060			25,778			73,330			78,044
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			—			57			—			11,176
Patent dispute resolution [b]		—			—			—			(70,000	)		—
TippingPoint special admin costs [c]		—			800			—			800			—
Stock-based compensation expense [d]		5,663			5,638			5,544			17,743			15,413
Acquiree expensed acquisition costs [e]		—			—			2,988			—			10,588
Legal contingency accruals [f]		2,400			—			—			2,400			—
Impairment of property and equipment [g]		1,150			—			—			1,150			—
Gain on sales of assets [h]		—			—			(1,225	)		—			(6,155	)
(Gain) loss on insurance settlement [i]		—			—			2,066			—			2,066
Non-GAAP income before income taxes	$	49,874		$	53,756		$	37,590		$	152,236		$	65,289
GAAP net income (loss)	$	1,867		$	12,870		$	(7,840	)	$	94,574		$	(62,118	)
Restructuring		2,860			2,504			736			7,361			4,308
Amortization of intangibles		23,106			25,060			25,778			73,330			78,044
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			—			57			—			11,176
Patent dispute resolution [b]		—			—			—			(70,000	)		—
TippingPoint special admin costs [c]		—			800			—			800			—
Stock-based compensation expense [d]		5,663			5,638			5,544			17,743			15,413
Acquiree expensed acquisition costs [e]		—			—			2,988			—			10,588
Legal contingency accruals [f]		2,400			—			—			2,400			—
Impairment of property and equipment [g]		1,150			—			—			1,150			—
Gain on sales of assets [h]		—			—			(1,225	)		—			(6,155	)
(Gain) loss on insurance settlement [i]		—			—			2,066			—			2,066
Charge related to change in tax rates [j]		12,083			—			6,056			12,083			6,056
Non-GAAP net income	$	49,129		$	46,872		$	34,160		$	139,441		$	59,378
GAAP net income (loss) per share	$	0.00		$	0.03		$	(0.02	)	$	0.24		$	(0.15	)
Restructuring		0.01			0.01			0.00			0.02			0.01
Amortization of intangibles		0.07			0.06			0.06			0.19			0.19
Impacts to cost of sales from purchase accounting adjustments to inventory [a]		—			—			0.00			—			0.03
Patent dispute resolution [b]		—			—			—			(0.18	)		—
TippingPoint special admin costs [c]		—			0.00			—			0.00			—
Stock-based compensation expense [d]		0.01			0.02			0.01			0.04			0.04
Acquiree expensed acquisition costs [e]		—			—			0.01			—			0.03
Legal contingency accruals [f]		0.01			—			—			0.01			—
Impairment of property and equipment [g]		0.00			—			—			0.00			—
Gain on sales of assets [h]		—			—			(0.00	)		—			(0.02	)
(Gain) loss on insurance settlement [i]		—			—			0.01			—			0.01
Charge related to change in tax rates [j]		0.03			—			0.01			0.03			0.01
Non-GAAP net income per share, diluted	$	0.13		$	0.12		$	0.08		$	0.35		$	0.15
Shares used in computing diluted per share amounts		386,377			395,245			404,502			395,232			403,544
GAAP sales and marketing expenses	$	84,241		$	88,620		$	82,428		$	259,143		$	237,617
Stock-based compensation expense [d]		(1,371	)		(1,613	)		(1,753	)		(4,742	)		(4,146	)
Non-GAAP sales and marketing expenses	$	82,870		$	87,007		$	80,675		$	254,401		$	233,471
GAAP research and development expenses	$	43,729		$	47,854		$	50,530		$	137,330		$	155,039
Stock-based compensation expense [d]		(552	)		(893	)		(1,100	)		(2,329	)		(2,794	)
Non-GAAP research and development expenses	$	43,177		$	46,961		$	49,430		$	135,001		$	152,245
GAAP general and administrative expenses	$	30,393		$	31,352		$	26,268		$	88,799		$	78,806
TippingPoint special admin costs [c]		—			(800	)		—			(800	)		—
Stock-based compensation expense [d]		(3,144	)		(2,570	)		(2,195	)		(8,756	)		(7,070	)
Acquiree expensed acquisition costs [e]		—			—			(2,988	)		—			(10,588	)
Legal contingency accruals [f]		(2,400	)		—			—			(2,400	)		—
Impairment of property and equipment [g]		(1,150	)		—			—			(1,150	)		—
Non-GAAP general and administrative expense	$	23,699		$	27,982		$	21,085		$	75,693		$	61,148

[a]	Results from our 49% H3C acquisition transaction.
[b]	Resolution of Realtek patent dispute.
[c]	Costs incurred in the second quarter to facilitate operation of TippingPoint as a more autonomous business.
[d]	Stock-based compensation expense is included in the following cost and expense categories by period:

	Three Months Ended						Nine Months Ended
	February 27,		November 28,		February 29,		February 27,		February 29,
	2009		2008		2008		2009		2008
Cost of sales		596		562		496		1,916		1,403
Sales and marketing		1,599		1,613		1,753		4,970		4,146
Research and development		768		893		1,100		2,545		2,794
General and administrative		3,144		2,570		2,195		8,756		7,070

Note: $444 thousand of stock-based compensation in the three and nine months have been recorded to restructuring expense
[e]	These expenses relate to the proposed acquisition of the Company in September 2007, which was terminated in April 2008.
[f]	Accruals for contingencies relating to ongoing patent litigation.
[g]	Impairment charge related to the Company’s land in Hemel. UK.
[h]	The gain relates to a patent sale in fiscal 2008.
[i]	This loss relates to the recording of costs associated with our closed Hemel facility in fiscal 2008.
[j]	These expenses result from a change in the statutory rate used to compute the income tax provision in the PRC.

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

	Three Months Ended February 27, 2009															November 28, 2008																Nine Months Ended February 27, 2009
								TippingPoint															TippingPoint																TippingPoint
								Security Business															Security Business																Security
	Networking Business [a]							[b]								Networking Business (a)							(b)									Networking Business [a]							[b]
	China-Based				Central					Eliminations/						China-Based										Eliminations/										Central					Eliminations/
	Business		Rest of World		Functions			TippingPoint		Other				Total		Business		Rest of World		Support			TippingPoint			Other				Total		China		Rest of World		Functions			TippingPoint		Other				Total
Sales	$	190,385	$	102,836	$	—		$	33,284	$	(1,798	)	[c]	$	324,707	$	199,815	$	125,688	$	—		$	31,016		$	(1,957	)	[c]	$	354,562	$	565,597	$	368,838	$	—		$	92,499	$	(5,015	)	[c]	$	1,021,919
Gross profit		128,160		61,365		(25,326	)		22,226		(596	)	[d]		185,829		131,901		71,861		(24,405	)		20,997			(562	)	[d]		199,792		375,588		215,479		(76,707	)		62,804		(1,916	)	[d]		575,248
Direct sales and marketing expenses		36,581		23,360		—			10,282		1,371		[d]		71,594		36,513		25,742		—			11,218			1,613		[d]		75,086		106,194		77,254		0			30,873		4,742		[d]		219,063
Segment contribution profit (loss)		91,579		38,005		(25,326	)		11,944		(1,967	)			114,235		95,388		46,119		(24,405	)		9,779			(2,175	)			124,706		269,394		138,225		(76,707	)		31,931		(6,658	)			356,185
Other operating expenses		—		—		68,394			11,129		33,212		[e]		112,735		—		—		78,336			10,141			31,827		[e]		120,304		—		—		219,593			31,181		26,126		[e]		276,900
Segment profit		—		—		—			815		—						—		—		—			(362	)		—						—		—		—			750		—
Operating income														$	1,500																4,402														$	79,285

	Three Months Ended February 29, 2008																	November 30, 2007																Nine Months Ended February 29, 2008
								TippingPoint																	TippingPoint																TippingPoint
								Security Business																	Security Business																Security Business
	Networking Business [a]							[b]										Networking Business (a)							(b)									Networking Business [a]							[b]
	China-Based				Central						Eliminations/							China-Based									Eliminations/											Central						Eliminations/
	Business		Rest of World		Functions			TippingPoint			Other				Total			Business		Rest of World		Support			TippingPoint		Other				Total			China		Rest of World		Functions			TippingPoint			Other				Total
Sales	$	179,668	$	134,531	$	—		$	23,639		$	(1,448	)	[c]	$	336,390		$	154,418	$	138,572	$	—		$	25,785	$	(974	)	[c]	$	317,801		$	490,120	$	411,035	$	—		$	74,892		$	(2,422	)	[c]	$	973,625
Gross profit		114,543		77,523		(28,474	)		16,578			(496	)	[d]		179,674			96,175		75,316		(30,793	)		17,536		(6,114	)	[d]		152,120			304,727		228,277		(90,492	)		50,740			(12,522	)	[d]		480,730
Direct sales and marketing expenses		33,000		25,152		—			8,827			1,753		[d]		68,732			30,671		23,544		—			9,756		1,418		[d]		65,389			89,495		71,783		0			27,676			4,146		[d]		193,100
Segment contribution profit (loss)		81,543		52,371		(28,474	)		7,751			(2,249	)			110,942			65,504		51,772		(30,793	)		7,780		(7,532	)			86,731			215,232		156,494		(90,492	)		23,064			(16,668	)			287,630
Other operating expenses		—		—		75,701			8,510			32,797		[e]		117,008			—		—		79,757			7,233		41,072		[e]		128,062			—		—		234,080			23,830			102,804		[e]		360,714
Segment profit		—		—		—			(759	)		—							—		—		—			547		—							—		—		—			(766	)		—
Operating loss															$	(6,066	)															(41,331	)															$	(73,084	)

[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 gross profit less segment direct sales and marketing expenses. Gross profit for these regions is defined as sales less standard costs of sales, such as product costs, and “gross profit” as defined for these segments may be referred to as “standard margin” in our public statements. Also as part of our Networking business we report the central function costs for this business. 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.
[b]	Our TippingPoint Security business segment’s profitability is measured on segment profit. This measure includes all costs except those items described in “Eliminations and Other”.
[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 in all periods and purchase accounting inventory related adjustments as applicable.
[e]	Includes: stock-based compensation, amortization, and restructuring in all periods and patent dispute resolution proceeds, legal contingency accruals, impairment of property and equipment, and Bain transaction costs where applicable.

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

	Nine Months Ended
	February 27,			February 29,
	2009			2008
Cash flows from operating activities:
Net income (loss)	$	94,574		$	(62,118	)
Adjustments to reconcile loss from continuing operations to net cash provided by (used in) operating activities:
Depreciation and amortization		97,156			102,731
Loss on property and equipment disposals		581			2,227
Impairment of property and equipment		1,150			—
Stock-based compensation expense		18,187			15,413
Gain on investments, net		—			(185	)
Deferred income taxes		(7,466	)		(448	)
Change in assets and liabilities:
Accounts and notes receivable		(13,560	)		(59,344	)
Inventories		(22,006	)		22,704
Other assets		6,771			7,733
Accounts payable		(20,929	)		(13,447	)
Other liabilities		41,874			(25,297	)
Net cash provided by (used in) operating activities		196,332			(10,031	)
Cash flows from investing activities:
Proceeds from maturities and sales of investments		—			442
Purchase of property and equipment		(12,778	)		(13,269	)
Proceeds from sale of property and equipment		223			944
Net cash used in investing activities		(12,555	)		(11,883	)
Cash flows from financing activities:
Issuances of common stock		3,022			6,124
Repurchases of common stock		(51,383	)		(2,321	)
Repayment of long term debt		(88,000	)		(94,000	)
Net cash used in financing activities		(136,361	)		(90,197	)
Effects of exchange rate changes on cash and equivalents		8,901			18,924
Net change in cash and equivalents during period		56,317			(93,187	)
Cash and equivalents, beginning of period		503,644			559,217
Cash and equivalents, end of period	$	559,961		$	466,030