EX-99.1 2 b74691ccexv99w1.htm EX-99.1 TEXT OF PRESS RELEASE, DATED MARCH 19, 2009, TITLED "3COM REPORTS THIRD QUARTER RESULTS FOR FISCAL 2009." exv99w1
Exhibit 99.1
(3COM LOGO)
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 .”
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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.
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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.