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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10- Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended August 28, 2009
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition period from                      to
 Commission File No. 0-12867
 
 3COM CORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    94-2605794(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)350 Campus DriveMarlborough, Massachusetts
    
    01752(Address of principal executive offices)
    
    (Zip Code)
 508) 323-1000
 N/A
 þ o
 o o
  Large accelerated filer þAccelerated filer oNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



3COM CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED AUGUST 28, 2009
TABLE OF CONTENTS
 PagePART I.
    
    FINANCIAL INFORMATION
    
    
    1Item 1.
    
    Financial Statements
    
    
    1Condensed Consolidated Statements of Operations (unaudited)Three Months Ended August 31, 2009 and 2008
    
    
    1Condensed Consolidated Balance Sheets (unaudited)August 31 and May 31, 2009


    
    
    2Condensed Consolidated Statements of Cash Flows (unaudited)Three Months Ended August 31, 2009 and 2008
    
    
    3Notes to Condensed Consolidated Financial Statements (unaudited)
    
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    19Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    32Item 4.
    
    Controls and Procedures
    
    
    32PART II.
    
    OTHER INFORMATION
    
    
    32Item 1.
    
    Legal Proceedings
    
    
    32Item 1A.
    
    Risk Factors
    
    
    33Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 6.
    
    Exhibits
    
    
    45SIGNATURES
    
    
    
    
    47EXHIBITS
    
    
    
    
    48EX-10.1 Form of Performance-Based Restricted Stock Unit Agreement - 2003 Stock PlanEX-10.2 3Bonus Plan for Executive Officers (approved July 7, 2009)EX-31.1 Certification of Principal Executive OfficerEX-31.2 Certification of Principal Financial OfficerEX-32.1 Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 
 3COM CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 Three Months EndedAugust 31,(In thousands, except per share data)
    
    2009
    
    
    2008Sales
    
    $
    290,502
    
    
    $
    342,650Cost of sales
    
    
    123,931
    
    
    
    153,023Gross profit
    
    
    166,571
    
    
    
    189,627Operating expenses (income):Sales and marketing
    
    
    84,788
    
    
    
    87,482Research and development
    
    
    38,968
    
    
    
    47,147General and administrative
    
    
    21,370
    
    
    
    24,454Amortization
    
    
    17,071
    
    
    
    25,164Patent dispute resolution
    
    
    
    
    
    
    (70,000
    )Restructuring charges
    
    
    1,133
    
    
    
    1,997Operating expenses, net
    
    
    163,330
    
    
    
    116,244Operating income
    
    
    3,241
    
    
    
    73,383Interest expense, net
    
    
    (1,088
    )
    
    
    (1,251
    )Other income, net
    
    
    11,547
    
    
    
    12,871Income before income taxes
    
    
    13,700
    
    
    
    85,003Income tax provision
    
    
    (6,239
    )
    
    
    (5,166
    )Net income
    
    $
    7,461
    
    
    $
    79,837Basic and diluted net income per share
    
    $
    0.02
    
    
    $
    0.20Shares used in computing per share amounts:Basic
    
    
    389,774
    
    
    
    402,889Diluted
    
    
    396,266
    
    
    
    404,072
  1




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3COM CORPORATION  CONDENSED CONSOLIDATED BALANCE SHEETS
 August  31,
    
    
    May 31,(In thousands)
    
    2009
    
    
    2009ASSETSCurrent assets:Cash and equivalents
    
    $
    625,908
    
    
    $
    545,818Short-term investments
    
    
    39,915
    
    
    
    98,357Notes receivable
    
    
    46,926
    
    
    
    40,590Accounts receivable, less allowance for doubtful accounts of $9,072 and
$9,645 respectively
    
    
    101,536
    
    
    
    112,771Inventories
    
    
    86,232
    
    
    
    90,395Other current assets
    
    
    47,229
    
    
    
    56,982Total current assets
    
    
    947,746
    
    
    
    944,913Property and equipment, less accumulated depreciation and amortization of
$179,616 and $172,717 respectively
    
    
    38,228
    
    
    
    40,012Goodwill
    
    
    609,297
    
    
    
    609,297Intangible assets, net
    
    
    181,578
    
    
    
    198,624Deposits and other assets
    
    
    24,860
    
    
    
    22,511Total assets
    
    $
    1,801,709
    
    
    $
    1,815,357LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    67,928
    
    
    $
    68,350Current portion of long-term debt
    
    
    88,000
    
    
    
    48,000Accrued liabilities and other
    
    
    360,369
    
    
    
    394,103Total current liabilities
    
    
    516,297
    
    
    
    510,453Deferred taxes and long-term obligations
    
    
    41,328
    
    
    
    40,729Long-term debt
    
    
    112,000
    
    
    
    152,000Stockholders equity:Preferred stock, $0.01 par value, 10,000 shares authorized; none outstanding
    
    
    
    
    
    
    Common stock, $0.01 par value, 990,000 shares authorized; shares issued and
outstanding: 391,828 and 389,284 respectively
    
    
    2,348,180
    
    
    
    2,336,961Retained deficit
    
    
    (1,283,061
    )
    
    
    (1,290,522
    )Accumulated other comprehensive income
    
    
    66,965
    
    
    
    65,736Total stockholders equity
    
    
    1,132,084
    
    
    
    1,112,175Total liabilities and stockholders equity
    
    $
    1,801,709
    
    
    $
    1,815,357
  2




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3COM CORPORATION  CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 Three Months EndedAugust 31,(In thousands)
    
    2009
    
    
    2008Cash flows from operating activities:Net income
    
    $
    7,461
    
    
    $
    79,837Adjustments to reconcile net income to cash
provided by operating activities:Depreciation and amortization
    
    
    21,657
    
    
    
    33,131Stock-based compensation expense
    
    
    4,885
    
    
    
    6,442Loss on property and equipment disposals
    
    
    38
    
    
    
    13Deferred income taxes
    
    
    (1,522
    )
    
    
    (3,377
    )Changes in assets and liabilities:Accounts and notes receivable
    
    
    4,948
    
    
    
    (50,684
    )Inventories
    
    
    4,633
    
    
    
    (18,566
    )Other assets
    
    
    7,175
    
    
    
    (1,483
    )Accounts payable
    
    
    (85
    )
    
    
    6,941Other liabilities
    
    
    (32,327
    )
    
    
    (12,940
    )Net cash provided by operating activities
    
    
    16,863
    
    
    
    39,314Cash flows from investing activities:Proceeds from maturities and sales of investments
    
    
    58,699
    
    
    
    Purchases of property and equipment
    
    
    (2,970
    )
    
    
    (7,598
    )Proceeds from sale of property and equipment
    
    
    8
    
    
    
    68Net cash provided by (used in) investing activities
    
    
    55,737
    
    
    
    (7,530
    )Cash flows from financing activities:Issuances of common stock
    
    
    7,631
    
    
    
    286Repurchases of common stock
    
    
    (1,216
    )
    
    
    (543
    )Net cash provided by (used in) financing activities
    
    
    6,415
    
    
    
    (257
    )Effect of exchange rate changes on cash and equivalents
    
    
    1,075
    
    
    
    6,257Net change in cash and equivalents during period
    
    
    80,090
    
    
    
    37,784Cash and equivalents, beginning of period
    
    
    545,818
    
    
    
    503,644Cash and equivalents, end of period
    
    $
    625,908
    
    
    $
    541,428
  3




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3COM CORPORATION
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1. BASIS OF PRESENTATION
    Recently issued accounting pronouncements
   4




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5




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NOTE 2. STOCK-BASED COMPENSATION
    Three Months EndedAugust 31,2009
    
    2008Employee stock options:Volatility
    
    
    57.0
    %
    
    
    48.8
    %Risk-free interest rate
    
    
    2.1
    %
    
    
    3.1
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %Expected life (years)
    
    
    4.1
    
    
    
    4.0Weighted average grant date fair value
    
    $
    1.83
    
    
    $
    1.02Restricted stock awards:Weighted average grant date fair value
    
    
    *
    
    
    $
    2.48Restricted stock units:Weighted average grant date fair value
    
    $
    4.04
    
    
    $
    2.56Employee stock purchase plan:
    
    
    *
    
    
    
    *
 
 *
    
    No grants during the period 6




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Three Months EndedAugust 31,2009
    
    
    2008Cost of sales
    
    $
    540
    
    
    $
    758Sales and marketing
    
    
    1,590
    
    
    
    1,758Research and development
    
    
    476
    
    
    
    884General and administrative
    
    
    2,279
    
    
    
    3,042Stock-based compensation expense before tax
    
    $
    4,885
    
    
    $
    6,442
 Stock Options
 Three Months Ended August 31,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    average
    
    
    Number of
    
    
    averageshares
    
    
    exercise price
    
    
    shares
    
    
    exercise priceOutstanding May 31, 2009 and 2008
    
    
    28,361
    
    
    $
    4.92
    
    
    
    43,925
    
    
    $
    4.98Granted
    
    
    2,419
    
    
    
    4.00
    
    
    
    300
    
    
    
    2.48Exercised
    
    
    (1,916
    )
    
    
    3.98
    
    
    
    (191
    )
    
    
    1.50Forfeited
    
    
    (111
    )
    
    
    4.10
    
    
    
    (1,554
    )
    
    
    4.75Expired
    
    
    (1,802
    )
    
    
    5.54
    
    
    
    (2,174
    )
    
    
    5.99Outstanding August 31, 2009 and 2008
    
    
    26,951
    
    
    $
    4.86
    
    
    
    40,306
    
    
    $
    4.93
    WeightedWeighted
    
    AverageNumber of
    
    average
    
    Remaining
    
    AggregateShares
    
    Grant-Date
    
    Contractual Life
    
    Intrinsic Value(in thousands)
    
    Fair Value
    
    (in years)
    
    (in thousands)Vested and expected to vest at
August 31, 2009
    
    
    23,833
    
    
    $
    5.05
    
    
    
    3.6
    
    
    $
    15,968
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Restricted Stock Awards.
 Three Months Ended August 31,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    average Grant-
    
    
    Number of
    
    
    average Grant-Shares
    
    
    Date Fair
    
    
    Shares
    
    
    Date Fair(unvested)
    
    
    Value
    
    
    (unvested)
    
    
    ValueOutstanding May 31, 2009 and 2008
    
    
    1,459
    
    
    $
    2.94
    
    
    
    3,095
    
    
    $
    3.43Granted
    
    
    
    
    
    
    
    
    
    
    75
    
    
    
    2.48Vested
    
    
    (115
    )
    
    
    4.04
    
    
    
    (305
    )
    
    
    4.19Forfeited
    
    
    (7
    )
    
    
    5.05
    
    
    
    (420
    )
    
    
    3.80Outstanding August 31, 2009 and 2008
    
    
    1,337
    
    
    $
    2.84
    
    
    
    2,445
    
    
    $
    3.24
  Restricted Stock Units.
 Three Months Ended August 31,2009
    
    
    2008Weighted
    
    
    
    
    
    
    WeightedNumber of
    
    
    average Grant-
    
    
    Number of
    
    
    average Grant-Shares
    
    
    Date Fair
    
    
    Shares
    
    
    Date Fair(unvested)
    
    
    Value
    
    
    (unvested)
    
    
    ValueOutstanding May 31, 2009 and 2008
    
    
    6,161
    
    
    $
    2.78
    
    
    
    5,744
    
    
    $
    3.59Granted
    
    
    5,542
    
    
    
    4.04
    
    
    
    1,743
    
    
    
    2.56Vested
    
    
    (933
    )
    
    
    3.01
    
    
    
    (673
    )
    
    
    3.70Forfeited
    
    
    (201
    )
    
    
    3.01
    
    
    
    (326
    )
    
    
    3.54Outstanding August 31, 2009 and 2008
    
    
    10,569
    
    
    $
    3.42
    
    
    
    6,488
    
    
    $
    3.30
  Employee Stock Purchase Plan.
 8




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NOTE 3: FAIR VALUE
 Fair Value Hierarchy
   Level 1 Observable inputs that reflect quoted prices (unadjusted) for identical assets or
liabilities in active markets.
 Level 2 Include other inputs that are directly or indirectly observable in the
marketplace.
 Level 3 Unobservable inputs which are supported by little or no market activity.
  Assets Measured at Fair Value on a Recurring Basis
  Fair Value Measurements at Reporting Date UsingQuoted Pricesin Active
    
    
    SignificantMarkets for
    
    
    Other
    
    
    SignificantIdentical
    
    
    Observable
    
    
    UnobservableInstruments
    
    
    Inputs
    
    
    Inputs
    
    
    Total(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    Balance(In thousands)AssetsCash equivalents:Time deposits and bank deposits
with a maturity less than 3
months
    
    $
    
    
    
    $
    288,382
    
    
    $
    
    
    
    $
    288,382Money market fund deposits
    
    
    245,741
    
    
    
    
    
    
    
    
    
    
    
    245,741China government bonds and bank
bills with a maturity of less
than 3 months
    
    
    91,785
    
    
    
    
    
    
    
    
    
    
    
    91,785Total assets measured at fair value
    
    $
    337,526
    
    
    $
    288,382
    
    
    $
    
    
    
    $
    625,908
  9




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NOTE 4. REALTEK PATENT DISPUTE RESOLUTION
    NOTE 5. RESTRUCTURING CHARGES
   
    
    reduced our workforce;
    
    continued efforts to consolidate and dispose of excess facilities; and
    
    shifting the focus of our direct-touch sales force to accommodate our shift to
the enterprise market
   Fiscal 2010 Actions
  Employee
    
    
    OtherSeparation
    
    
    RestructuringExpense
    
    
    Costs
    
    
    TotalBalance as of May 31, 2009
    
    $
    
    
    
    $
    
    
    
    $
    Provisions
    
    
    1,064
    
    
    
    139
    
    
    
    1,203Payments and non-cash charges
    
    
    (404
    )
    
    
    (139
    )
    
    
    (543
    )Balance as of August 31, 2009
    
    $
    660
    
    
    $
    
    
    
    $
    660
 10




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Fiscal 2007 through 2009 Actions
  Employee
    
    
    Facilities-Separation
    
    
    relatedExpense
    
    
    Charges
    
    
    TotalBalance as of May 31, 2009
    
    $
    1,477
    
    
    $
    47
    
    
    $
    1,524Provisions (benefits)
    
    
    (75
    )
    
    
    5
    
    
    
    (70
    )Payments and non-cash charges
    
    
    (321
    )
    
    
    (8
    )
    
    
    (329
    )Balance as of August 31, 2009
    
    $
    1,081
    
    
    $
    44
    
    
    $
    1,125
   NOTE 6. INCOME TAXES
     NOTE 7. COMPREHENSIVE INCOME
  Three Months EndedAugust 31,2009
    
    
    2008Net income
    
    $
    7,461
    
    
    $
    79,837Other comprehensive income:Change in accumulated translation
adjustments
    
    
    1,229
    
    
    
    7,685Total comprehensive income
    
    $
    8,690
    
    
    $
    87,522
 11




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NOTE 8. NET INCOME PER SHARE
  Three Months Ended August 31,(in thousands except per share data)
    
    2009
    
    
    2008Determination of shares:Weighted average shares outstanding
    
    
    389,774
    
    
    
    402,889Assumed conversion of dilutive stock options
    
    
    3,021
    
    
    
    968Assumed conversion of dilutive restricted stock (awards and units)
    
    
    3,471
    
    
    
    215Diluted weighted average shares outstanding
    
    
    396,266
    
    
    
    404,072Basic earnings per share
    
    $
    0.02
    
    
    $
    0.20Diluted earnings per share
    
    $
    0.02
    
    
    $
    0.20
  NOTE 9. INVENTORIES
  August 31,
    
    
    May 31,2009
    
    
    2009Finished goods
    
    $
    62,533
    
    
    $
    69,860Work-in-process
    
    
    3,686
    
    
    
    3,420Raw materials
    
    
    20,013
    
    
    
    17,115Total
    
    $
    86,232
    
    
    $
    90,395
 NOTE 10. GOODWILL AND INTANGIBLE ASSETS, NET
   August 31, 2009
    
    May 31, 2009Weighted
    
    
    
    
    
    
    
    
    
    
    
    
    
    WeightedAverage
    
    
    
    
    
    
    
    
    
    
    
    
    
    AverageRemaining
    
    
    
    
    
    
    
    
    
    
    
    
    
    RemainingAmortization
    
    
    
    
    
    Accumulated
    
    
    
    
    
    Amortization
    
    
    
    
    
    AccumulatedPeriod
    
    Gross
    
    Amortization
    
    Net
    
    Period
    
    Gross
    
    Amortization
    
    NetExisting technology
    
    
    3.3
    
    
    $
    398,204
    
    
    $
    (286,101
    )
    
    $
    112,103
    
    
    
    3.6
    
    
    $
    398,178
    
    
    $
    (272,460
    )
    
    $
    125,718Trademark
    
    NA
    
    
    55,502
    
    
    
    
    
    
    
    55,502
    
    
    NA
    
    
    55,502
    
    
    
    
    
    
    
    55,502Huawei non-compete
    
    
    0.0
    
    
    
    37,288
    
    
    
    (37,288
    )
    
    
    
    
    
    
    0.0
    
    
    
    37,283
    
    
    
    (37,283
    )
    
    
    OEM agreement
    
    
    0.8
    
    
    
    26,853
    
    
    
    (20,165
    )
    
    
    6,688
    
    
    
    1.0
    
    
    
    23,777
    
    
    
    (14,852
    )
    
    
    8,925Maintenance agreements
    
    
    1.5
    
    
    
    19,000
    
    
    
    (14,516
    )
    
    
    4,484
    
    
    
    1.7
    
    
    
    19,000
    
    
    
    (13,724
    )
    
    
    5,276Other
    
    
    1.8
    
    
    
    22,698
    
    
    
    (19,897
    )
    
    
    2,801
    
    
    
    2.0
    
    
    
    22,697
    
    
    
    (19,494
    )
    
    
    3,203$
    559,545
    
    
    $
    (377,967
    )
    
    $
    181,578
    
    
    
    
    
    
    $
    556,437
    
    
    $
    (357,813
    )
    
    $
    198,624
 12




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NOTE 11. ACCRUED WARRANTY
   Three Months EndedAugust 31,2009
    
    
    2008Accrued warranty, beginning of period
    
    $
    29,587
    
    
    $
    36,897Cost of warranty claims processed during the period
    
    
    (6,280
    )
    
    
    (8,217
    )Provision for warranties related to products sold during the period
    
    
    5,029
    
    
    
    6,771Accrued warranty, end of period
    
    $
    28,336
    
    
    $
    35,451
 NOTE 12. LONG-TERM DEBT
   Leverage Ratio
    
    LIBOR +
    
    Base Rate +>3.0:10
    
    
    2.25
    %
    
    
    1.25
    %≤3.0:1.0 but > 2.0:1.0
    
    
    2.00
    %
    
    
    1.00
    %≤2.0:1.0 but > 1.0:1.0
    
    
    1.75
    %
    
    
    0.75
    %≤1.0:1.0
    
    
    1.50
    %
    
    
    0.50
    %
    13




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Calendar Year
    
    3Com Fiscal Year
    
    Tranche A
    
    Tranche B2009
    
    2010
    
    $
    46,000
    
    
    $
    2,0002010
    
    2011
    
    
    46,000
    
    
    
    2,0002011
    
    2012
    
    
    
    
    
    
    20,0002012
    
    2013
    
    
    
    
    
    
    84,000
   NOTE 13. SEGMENT INFORMATION
    14




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Three Months Ended August 31, 2009TippingPointNetworking Business
    
    
    Security BusinessChina-based
    
    
    Rest of World
    
    
    Central
    
    
    Tipping
    
    
    Eliminations/(in thousands)
    
    sales region
    
    
    Sales Region
    
    
    Functions(a)
    
    
    Point(b)
    
    
    Other
    
    
    TotalSales
    
    $
    152,013
    
    
    $
    107,202
    
    
    $
    
    
    
    $
    32,596
    
    
    $
    (1,309
    )c
    
    $
    290,502Standard margin
    
    
    104,900
    
    
    
    62,995
    
    
    
    
    
    
    
    27,772
    
    
    
    (540
    )d
    
    
    195,127Direct sales & marketing expenses
    
    
    35,039
    
    
    
    23,327
    
    
    
    
    
    
    
    11,028
    
    
    
    1,590
    d
    
    
    70,984Segment contribution profit (loss)
    
    
    69,861
    
    
    
    39,668
    
    
    
    
    
    
    
    16,744
    
    
    
    (2,130
    )
    
    
    124,143Research & development expenses
    
    
    
    
    
    
    
    
    
    
    32,177
    
    
    
    6,315
    
    
    
    476
    d
    
    
    38,968Segment income
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    10,429
    
    
    $
    Other operating expenses
    
    
    
    
    
    
    
    
    
    
    56,047
    
    
    
    5,404
    
    
    
    20,483
    e
    
    
    81,934Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    3,241
 Three Months Ended August 31, 2008TippingPointNetworking Business
    
    
    Security BusinessChina-based
    
    
    Rest of World
    
    
    Central
    
    
    Tipping
    
    
    Eliminations/(in thousands)
    
    sales region
    
    
    Sales Region
    
    
    Functions(a)
    
    
    Point(b)
    
    
    Other
    
    
    TotalSales
    
    $
    175,397
    
    
    $
    140,314
    
    
    $
    
    
    
    $
    28,199
    
    
    $
    (1,260
    )c
    
    $
    342,650Standard margin
    
    
    115,527
    
    
    
    82,253
    
    
    
    
    
    
    
    23,396
    
    
    
    (758
    )d
    
    
    220,418Direct sales & marketing expenses
    
    
    33,600
    
    
    
    28,152
    
    
    
    
    
    
    
    10,073
    
    
    
    1,758
    d
    
    
    73,583Segment contribution profit (loss)
    
    
    81,927
    
    
    
    54,101
    
    
    
    
    
    
    
    13,323
    
    
    
    (2,516
    )
    
    
    146,835Research & development expenses
    
    
    
    
    
    
    
    
    
    
    39,317
    
    
    
    6,946
    
    
    
    884
    d
    
    
    47,147Segment income
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    6,377
    
    
    $
    Other operating expenses (income)
    
    
    
    
    
    
    
    
    
    
    60,022
    
    
    
    6,080
    
    
    
    (39,797
    )e
    
    
    26,305Operating income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    73,383
 
 a 
    

    Included in our Central Function results were depreciation expenses of $4.1 million
and $6.6 million for the three months ended August 31, 2009 and 2008, respectively.b 
    

    Included in our TippingPoint segment profit were depreciation expenses of $1.1 million
and $0.8 million for the three months ended August 31, 2009 and 2008, respectively.c 
    

    Represents eliminations for inter-company revenue between Networking and TippingPoint
during the respective periods.d 
    

    Represents stock-based compensation in all periods.e 
    
    Includes stock based compensation, amortization, and restructuring in all periods plus
proceeds from the Realtek patent dispute resolution in the three months ended August 31, 2008. 15




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August 31,
    
    
    May 31,Identifiable assets (in thousands)
    
    2009
    
    
    2009China-based sales region(1)(2)
    
    $
    1,341,733
    
    
    $
    1,378,059Rest of World sales region(1)
    
    
    1,014,757
    
    
    
    875,788TippingPoint
    
    
    226,462
    
    
    
    228,440Eliminations(3)
    
    
    (781,243
    )
    
    
    (666,930
    )Total
    
    $
    1,801,709
    
    
    $
    1,815,357
 
 (1)
    
    Included in our identifiable assets for both our China-based sales region and Rest of World sales region are Central Function assets. We do not
segregate these assets as the CODM does not review the segment assets in that manner.(2)
    
    Our China-based sales region identifiable assets are the same as those held by our H3C subsidiary.(3)
    
    The eliminations primarily relate to the Rest of World sales region investment in subsidiaries and intercompany transactions. Three Months EndedAugust 31,Total Expenditures for Additions to Property and Equipment (in thousands)
    
    2009
    
    
    2008China-based sales region(1)
    
    $
    1,018
    
    
    $
    2,767Rest of World sales region(1)
    
    
    1,637
    
    
    
    4,004TippingPoint
    
    
    315
    
    
    
    827Total
    
    $
    2,970
    
    
    $
    7,598
 
 (1)
    
    Included in our capital expenditures for both our China-based
sales region and Rest of World sales region are Central Function
expenditures for additions to property and equipment. We do not
segregate these expenditures as the CODM does not review the
segment in that manner.  Three Months Ended August 31,2009
    
    
    2008Switches and routers
    
    $
    195,211
    
    
    
    67.2
    %
    
    $
    254,176
    
    
    
    74.2
    %Other networking equipment
    
    
    42,395
    
    
    
    14.6
    
    
    
    41,117
    
    
    
    12.0Security
    
    
    41,052
    
    
    
    14.1
    
    
    
    36,339
    
    
    
    10.6Services
    
    
    11,844
    
    
    
    4.1
    
    
    
    11,018
    
    
    
    3.2Total
    
    $
    290,502
    
    
    
    100
    %
    
    $
    342,650
    
    
    
    100
    %
 16




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NOTE 14. GEOGRAPHIC INFORMATION
  Three Months Ended August 31,2009
    
    
    2008China
    
    $
    146,362
    
    
    $
    167,527Europe, Middle East and Africa
    
    
    49,050
    
    
    
    69,377North America
    
    
    51,669
    
    
    
    52,031Asia Pacific Rim (excluding-China)
    
    
    25,246
    
    
    
    30,109Latin and South America
    
    
    18,175
    
    
    
    23,606Total
    
    $
    290,502
    
    
    $
    342,650
  NOTE 15. LITIGATION
  In re Initial Public Offering Securities Litigation, Brian Levey vs.
TippingPoint Technologies, Inc., et al.
  17




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NOTE 16. SUBSEQUENT EVENT
   18




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##### Table of Contents



ITEM 2.

    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 INTRODUCTION
  BUSINESS OVERVIEW
 ® ® ®
   
    
    Performance  Bandwidth demands have increased along with the number of users and
applications  IP telephony, videoconferencing, streaming multimedia and others  on
enterprise networks, yet performance requirements never abate. 3Com routers, switches and
security devices provide robust throughput and traffic optimization applications to ensure
high-quality networking even in the most challenging enterprise network environments.
    
    Cost effectiveness  Todays enterprise customers are seeking cost-effective solutions
that optimize the value of their network infrastructure investment. 3Com products are
designed to be cost-effective, competitively priced and energy efficient. 3Coms
single-pane, intuitive network management platform minimizes time spent training IT staff
and network administrators, helping to further reduce overall TCO.
    
    Security  Todays enterprises need to protect themselves from a constantly evolving
spectrum of internal and external threats to ensure the safety of their mission-critical
information. 3Coms pervasive network solutions provide granular oversight, control access,
quarantine malicious programs and files, and restore data.
     19




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##### Table of Contents




    
    Switches and routers;
    
    Other networking equipment;
    
    Security; and
    
    Services.
  Business Environment and Future Trends
     Technology Strategy
  20




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##### Table of Contents



Revenue and Market Share Goals
    
    
    China In China, we have been successful in direct-touch sales to enterprise and
government customers. To maintain a leadership position in China, we intend to increase our
focus on direct-touch sales as well as pursue other distribution channels. We believe that
growing market share in China will be more challenging than in the past given that we
already have a significant enterprise networking market share in China. We also intend to
continue to introduce innovative new product offerings in the China market, such as IP video
surveillance and IP storage, which may offer additional growth opportunities.
  
    
    Emerging markets outside of China We expect to target growth opportunities outside of
China in other developing markets. We believe that our successful penetration of the Chinese
market has provided experience that is transferable to many emerging markets. We believe
this experience will position us to gain market share in developing markets.
    
    Developed global markets Our goal in developed markets is to increase our market
share. Our strategy is to focus on large enterprise and government accounts and to implement
this strategy we intend to increase go to market resources. We intend to offer these
customers our comprehensive end to end solutions and highlight our products price to
performance value proposition and energy efficiency. Our goal is to be well positioned for
the economic recovery and in fact we saw some stabilization in certain
markets in our first fiscal quarter of 2010.
 Profitability and Cash Generation Objectives
   Segment Reporting
  21




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##### Table of Contents



Summary of Three Months Ended August 31, 2009 Financial Performance
 
    
    Our sales in the three months ended August 31, 2009 were $290.5 million, compared to
sales of $342.7 million in the three months ended August 31, 2008, a decrease of $52.2
million, or 15.2 percent.
    
    Our gross margin improved to 57.3 percent in the three months ended August 31, 2009 from
55.3 percent in the three months ended August 31, 2008.
    
    Our operating expenses (income) in the three months ended August 31, 2009 were $163.3
million, compared to $116.2 million in the three months ended August 31, 2008, a net
increase of $47.1 million, or 40.5 percent. Included in the three months ended August 31,
2008 operating expenses (income) is $70.0 million of income related to the Realtek patent
dispute resolution.
    
    Our net income in the three months ended August 31, 2009 was $7.5 million, compared to
net income of $79.8 million in the three months ended August 31, 2008. Included in the
three months ended August 31, 2008 net income is $70.0 million of income related to the
Realtek patent dispute resolution.
    
    Our balance sheet contains cash and equivalents and short term investments of $665.8
million as of August 31, 2009, compared to cash and equivalents and short term investments
of $644.2 million at the end of fiscal 2009. The balance sheet also includes debt of $200
million with $88 million classified as a current liability as of August 31, 2009 and $48
million classified as a current liability as of May 31, 2009.
 CRITICAL ACCOUNTING POLICIES
  22




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RESULTS OF OPERATIONS  THREE MONTHS ENDED AUGUST 31, 2009 AND 2008
  Three Months EndedAugust 31,2009
    
    
    2008Sales
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    42.7
    
    
    
    44.7Gross profit margin
    
    
    57.3
    
    
    
    55.3Operating expenses (income):Sales and marketing
    
    
    29.1
    
    
    
    25.5Research and development
    
    
    13.4
    
    
    
    13.8General and administrative
    
    
    7.4
    
    
    
    7.1Amortization
    
    
    5.9
    
    
    
    7.3Realtek patent resolution
    
    
    
    
    
    
    (20.4
    )Restructuring charges
    
    
    0.4
    
    
    
    0.6Operating expenses, net
    
    
    56.2
    
    
    
    33.9Operating income
    
    
    1.1
    
    
    
    21.4Interest expense, net
    
    
    (0.4
    )
    
    
    (0.4
    )Other income, net
    
    
    4.0
    
    
    
    3.8Income before income taxes
    
    
    4.7
    
    
    
    24.8Income tax provision
    
    
    (2.1
    )
    
    
    (1.5
    )Net income
    
    
    2.6
    %
    
    
    23.3
    %
 Sales
  Three Months EndedAugust 31,2009
    
    
    2008China-based sales region
    
    $
    152.0
    
    
    $
    175.4Rest of World sales region
    
    
    107.2
    
    
    
    140.3TippingPoint security business
    
    
    32.6
    
    
    
    28.2Eliminations and other
    
    
    (1.3
    )
    
    
    (1.2
    )Consolidated sales
    
    $
    290.5
    
    
    $
    342.7
    23




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Three Months EndedAugust 31,2009
    
    2008Switches
and routers
    
    $
    195.2
    
    
    
    67
    %
    
    $
    254.2
    
    
    
    74
    %Other networking equipment
    
    
    42.4
    
    
    
    15
    %
    
    
    41.1
    
    
    
    12
    %Security
    
    
    41.1
    
    
    
    14
    %
    
    
    36.4
    
    
    
    11
    %Services
    
    
    11.8
    
    
    
    4
    %
    
    
    11.0
    
    
    
    3
    %Total
    
    $
    290.5
    
    
    
    100
    %
    
    $
    342.7
    
    
    
    100
    %
     Gross Margin
  Three Months EndedAugust 31,2009
    
    2008Networking business
    
    
    55.2
    %
    
    
    54.1
    %TippingPoint security business
    
    
    72.2
    %
    
    
    69.4
    %Consolidated margin
    
    
    57.3
    %
    
    
    55.3
    %
  24




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Operating Expenses (Income)
 Three Months EndedAugust 31,
    
    
    Change(Dollars in millions, except percentages)
    
    2009
    
    
    2008
    
    
    $
    
    
    %Sales and marketing
    
    $
    84.8
    
    
    $
    87.5
    
    
    $
    (2.7
    )
    
    
    (3
    )%Research and development
    
    
    38.9
    
    
    
    47.1
    
    
    
    (8.2
    )
    
    
    (17
    )%General and administrative
    
    
    21.4
    
    
    
    24.4
    
    
    
    (3.0
    )
    
    
    (12
    )%Amortization
    
    
    17.1
    
    
    
    25.2
    
    
    
    (8.1
    )
    
    
    (32
    )%Patent dispute resolution
    
    
    
    
    
    
    (70.0
    )
    
    
    70.0
    
    
    
    *Restructuring charges, net
    
    
    1.1
    
    
    
    2.0
    
    
    
    (0.9
    )
    
    
    (45
    )%Operating expenses, net
    
    $
    163.3
    
    
    $
    116.2
    
    
    $
    47.1
    
    
    
    (41
    )%
 
 *
    
    percentage calculation not meaningful. Sales and Marketing
  Research and Development
  General and Administrative
  Amortization of Intangible Assets
  Patent Dispute Resolution
   25




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Restructuring Charges
    Interest Expense, Net
  Other Income, Net
  Income Tax Provision
   Segment Analysis (tables in thousands)
  China-based sales region:
 Three months endedAugust 31,2009
    
    
    2008Sales
    
    $
    152,013
    
    
    $
    175,397Standard margin
    
    
    104,900
    
    
    
    115,527Direct sales and marketing expenses
    
    
    35,039
    
    
    
    33,600Segment contribution profit
    
    $
    69,861
    
    
    $
    81,927
  26




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##### Table of Contents



Rest of World sales region:
 Three months endedAugust 31,2009
    
    
    2008Sales
    
    $
    107,202
    
    
    $
    140,314Standard margin
    
    
    62,995
    
    
    
    82,253Direct sales and marketing expenses
    
    
    23,327
    
    
    
    28,152Segment contribution profit
    
    $
    39,668
    
    
    $
    54,101
  Central Functions:
 Three months endedAugust 31,2009
    
    
    2008Research and development expenses
    
    $
    32,177
    
    
    $
    39,317Other operating expenses
    
    
    56,047
    
    
    
    60,022Total cost and expenses
    
    $
    88,224
    
    
    $
    99,339
  TippingPoint Security business:
 Three months endedAugust 31,2009
    
    
    2008Sales
    
    $
    32,596
    
    
    $
    28,199Standard margin
    
    
    27,772
    
    
    
    23,396Direct sales and marketing expenses
    
    
    11,028
    
    
    
    10,073Segment contribution profit
    
    
    16,744
    
    
    
    13,323Research and development expenses
    
    
    6,315
    
    
    
    6,946Segment income
    
    $
    10,429
    
    
    $
    6,377
  27




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LIQUIDITY AND CAPITAL RESOURCES
  August 31,
    
    
    May 31,2009
    
    
    2009Cash and equivalents
    
    $
    625.9
    
    
    $
    545.8Short-term investments
    
    
    39.9
    
    
    
    98.4Cash and equivalents and short term investments
    
    $
    665.8
    
    
    $
    644.2
  Three Months EndedAugust 31,2009
    
    
    2008Cash and equivalents, beginning of period
    
    $
    545.8
    
    
    $
    503.6Net cash provided by operating activities
    
    
    16.9
    
    
    
    39.3Net cash provided by (used in) investing activities
    
    
    55.7
    
    
    
    (7.5
    )Net cash provided by (used in) financing activities
    
    
    6.4
    
    
    
    (0.3
    )Effect of exchange rate changes on cash
    
    
    1.1
    
    
    
    6.3Cash and equivalents, end of period
    
    $
    625.9
    
    
    $
    541.4
       Calendar Year
    
    
    3Com Fiscal Year
    
    Tranche A
    
    Tranche B2010
    
    
    2011
    
    
    
    46,000
    
    
    
    2,0002011
    
    
    2012
    
    
    
    
    
    
    
    20,0002012
    
    
    2013
    
    
    
    
    
    
    
    44,000
  28




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Leverage Ratio
    
    LIBOR +
    
    Base Rate +>3.0:10
    
    
    2.25
    %
    
    
    1.25
    %≤3.0:1.0 but > 2.0:1.0
    
    
    2.00
    %
    
    
    1.00
    %≤2.0:1.0 but > 1.0:1.0
    
    
    1.75
    %
    
    
    0.75
    %≤1.0:1.0
    
    
    1.50
    %
    
    
    0.50
    %
 29




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EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
   30




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31




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##### Table of Contents



ITEM 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Sensitivity.
 Foreign Currency Exchange Risk.
  
 ITEM 4.
    
    CONTROLS AND PROCEDURES
    
 PART II.
    
    OTHER INFORMATION
 
 ITEM 1.
    
    LEGAL PROCEEDINGS
  32




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##### Table of Contents



ITEM 1A.
    
    RISK FACTORS
  Risk Related to Current Severe Global Economic Conditions and Related Credit Crisis
 Our Operating Results Have Been Adversely Affected by Current Unfavorable Economic and Credit
Conditions in Many Regions of the World and We May Continue to Experience These Conditions.
  
    
    reduced demand for our products in many regions as a result of constraints on information
technology-related capital spending by our customers;
    
    risk of excess and obsolete inventories;
    
    longer sales cycles;
    
    delayed and/or cancelled purchases due to factors such as tight credit conditions and
unfavorable local currency translation (noting that we denominate sales in USD in most
locations outside of China); and
    
    risk of longer cash cycles as customers take longer to pay us for products and services
and some customers deal with insolvency issues.
   Risks Related to Ability to Sustain and Increase Profitability and the Impact of our Secured Indebtedness
 We may not be able to sustain or increase our profitability in the future.
  
    
    declining sales in certain regions;
    
    operating expenses that, as a percentage of sales, have exceeded our desired financial
model;
    
    significant senior leadership and other management changes;
    
    significant non-cash accounting charges;
    
    increased sales and marketing expense as part of a strategy to help grow our market
share; and
    
    disruptions and expenses resulting from our workforce reductions and employee attrition.
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Our indebtedness could adversely affect our financial condition and ability to grow our business.
   
    
    increase our vulnerability to general adverse economic and industry conditions;
    
    limit our ability to obtain additional financing;
    
    require the dedication of a substantial portion of our cash flow from operations to
satisfy debt obligations, reducing the availability of capital to finance operations and
growth;
    
    limit our flexibility in planning for, or reacting to, changes in our business and our
industry; and
    
    place us at a competitive disadvantage relative to our competitors with less debt.
   34




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##### Table of Contents



Risks Related to China-based Sales region and Dependence Thereon
 We are significantly dependent on our China-based segment; if it is not successful we will likely
experience a material adverse impact to our business, business prospects and operating results.
  
    
    maintain a leading position in the networking equipment market in China;
    
    develop and execute strategies to operate successfully in the current global economic
downturn, which has negatively impacted the Chinese economy;
    
    build profitable operations in other emerging markets throughout the world, but
particularly in the Asia Pacific region;
    
    offer new and innovative products and services to attract and retain a larger customer
base;
    
    increase awareness of the H3C brand and continue to develop customer loyalty;
    
    respond to rapidly changing competitive market conditions;
    
    respond to changes in the regulatory environment;
    
    manage risks associated with intellectual property rights;
    
    maintain effective control of costs and expenses; and
    
    attract, retain and motivate qualified personnel.
    If, as expected, Huawei Technologies, or Huawei, continues to significantly reduce its business
with us, our business results will be materially adversely affected if we cannot increase other
business to offset the decline.
  35




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##### Table of Contents



Risk Related to Core Business Strategy
 If we cannot increase our enterprise account business outside of China, leveraging China as our
home market, we likely will not reach our growth and profitability goals.
     36




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##### Table of Contents



Risk Related to Personnel
 Our success is dependent on continuing to hire and retain qualified managers and other personnel
and reducing senior management turnover; if we are not successful in attracting and retaining key
personnel, our business will suffer.
   Risks Related to Competition
 Intense competition in the market for networking solutions and new or developing product markets
could prevent us from increasing revenue and profitability.
     37




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##### Table of Contents



Our competition with Huawei could have a material adverse effect on our sales and our results of
operations, particularly if Huawei increases its level of competition against us.
   Risks Related to Business and Technology Strategy
 Our industry is characterized by a short product life cycle, and we may not be successful at
identifying and responding to new and emerging market, technology and product opportunities, or at
responding quickly enough to technologies or markets that are in decline.
  
    
    identify new market and product opportunities;
    
    predict which technologies and markets will see declining demand;
    
    develop and introduce new products and solutions (and new features and
functionality for existing products and solutions) in a timely manner;
    
    gain market acceptance of new products and solutions; and
    
    rapidly and efficiently transition our customers from older to newer enterprise
networking technologies.
  
    
    there is a delay in introducing new products, features or functionality;
    
    we lose key channel partners;
    
    our products do not satisfy customers in terms of features, functionality or
quality; or
    
    our products cost more to produce than we expect.
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Risks Related to Operations and Distribution Channels
 If we are not successful at partnering with system integrators and expanding our base of enterprise
channel partners, reaching our growth and profitability goals will be more challenging and we will
likely not reach our full potential.
  A significant portion of our sales is derived from a small number of distributors. If any of these
channel partners reduces its business with us, our business could be adversely affected.
   We may be unable to manage our supply chain successfully, which would adversely impact our sales,
gross margin and profitability.
  
    
    our ability to accurately forecast demand for our products and services;
    
    our reliance on, and long-term arrangements with, third-party manufacturers (which places
much of the supply chain process out of our direct control, heightens the need for accurate
forecasting and reduces our ability to transition quickly to alternative supply chain
strategies); and
    
    our ability to minimize disruptions to our logistics and effectively manage disruptions
that do occur.
 39




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##### Table of Contents



If we fail to adequately evolve our financial and managerial control and reporting systems and
processes, our ability to manage and grow our business may be negatively affected.
  Risks Related to our Operations in the Peoples Republic of China
 Chinas legal and regulatory regime and changing political and economic environment may impact our
business in China.
  
    
    the promulgation of new laws and regulations and the interpretation of those laws and
regulations;
    
    enforcement and application of rules and regulations by the Chinese government;
    
    the introduction of measures to control growth or inflation or stimulate growth;
    
    any actions that limit our ability to develop, manufacture, import or sell our products
in China, or export our products outside of China, or to finance and operate our business in
China; or
    
    laws, rules or regulations that negatively impact our ability to pay dividends from China
to outside of China, or impose restrictions (including conditions or timing restrictions) or
additional taxes on such dividends.
  40




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##### Table of Contents



Uncertainties with respect to the Chinese legal and regulatory system may adversely affect us.
  If PRC tax benefits available to us are reduced or repealed, our profitability or cash flow could
suffer.
   If the Chinese VAT Authorities discontinue, reduce, or defer the VAT Software Subsidy Program, our
results will likely be adversely affected.
  H3C is subject to restrictions on paying dividends and making other payments to us.
  41




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##### Table of Contents



We are subject to risks relating to currency rate fluctuations and exchange controls and we do not
hedge this risk in China.
    Risks Related to Intellectual Property
 If our products contain undetected software or hardware errors, we could incur significant
unexpected expenses and could lose sales.
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##### Table of Contents



We may need to engage in complex and costly litigation in order to protect, maintain or enforce our
intellectual property rights; in some jurisdictions, such as China, our rights may not be as strong
as the rights we enjoy in the U.S.
   We may not be able to defend ourselves successfully against claims that we are infringing the
intellectual property rights of others.
    43




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##### Table of Contents



Risks Related to the Trading Market
 Fluctuations in our operating results and other factors may contribute to volatility in the market
price of our stock.
  
    
    fluctuations in our quarterly results of operations and cash flow;
    
    changes in our cash and equivalents and short term investment balances;
    
    our ability to execute on our strategic plan, including our core business strategy to
emphasize larger enterprise and government account business;
    
    general economic conditions, such as the current global economic crisis;
    
    variations between our actual financial results and published analysts expectations; and
    
    announcements by our competitors, and announcements by, sales to or loss of significant
customers.
  We may be required to record additional significant charges to earnings if our goodwill or
intangible assets become impaired.
  
 ITEM 2.
    
    UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Total Number of
    
    Approximate DollarTotal
    
    
    
    
    
    Shares Purchased as
    
    Value of SharesNumber
    
    Average
    
    Part of Publicly
    
    that May yet Beof Shares
    
    Price Paid
    
    Announced Plans or
    
    Purchased Under thePeriod
    
    Purchased
    
    per Share
    
    Programs(1)
    
    Plans or Programs (2)May 30, 2009 through June 26, 2009
    
    
    2,199
    (3)
    
    $
    4.87
    
    
    
    
    
    
    $
    50,046,813June 27, 2009 through July 24, 2009
    
    
    54,986
    (3)
    
    
    4.79
    
    
    
    
    
    
    
    50,046,813July 25, 2009 through August 28, 2009
    
    
    240,579
    (3)
    
    
    3.91
    
    
    
    
    
    
    
    50,046,813Total
    
    
    297,764
    
    
    $
    4.08
    
    
    
    
    
    
    $
    50,046,813
 44




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##### Table of Contents



(1)
    
    On September 24, 2008, our Board of Directors approved a stock repurchase program providing for repurchases of up
to $100.0 million through September 23, 2009.(2)
    
    Program expired on September 23, 2009.(3)
    
    Consists of shares surrendered to us to satisfy tax withholding obligations that arose upon the vesting of
restricted stock awards and units of 2,199 in June 2009, 54,986 in July 2009 and 240,579 in August 2009. 
 ITEM 6.
    
    EXHIBITS
 Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1
    
    Master Separation and Distribution
Agreement between the Registrant and Palm,
Inc. effective as of December 13, 1999
    
    10-Q
    
    002-92053
    
    
    2.1
    
    
    4/4/002.2
    
    Indemnification and Insurance Matters
Agreement between the Registrant and Palm,
Inc.
    
    10-Q
    
    002-92053
    
    
    2.11
    
    
    4/4/002.3
    
    Agreement and Plan of Merger, dated
December 13, 2004, by and among the
Registrant, Topaz Acquisition Corporation
and TippingPoint Technologies, Inc.
    
    8-K
    
    000-12867
    
    
    2.1
    
    
    12/16/042.4
    
    Securities Purchase Agreement by and among
3Com Corporation, 3Com Technologies, Huawei
Technologies Co., Ltd. and Shenzen Huawei
Investment & Holding Co., Ltd., dated as of
October 28, 2005
    
    8-K/A
    
    000-12867
    
    
    2.1
    
    
    3/30/062.5
    
    Stock Purchase Agreement by and between
Shenzhen Huawei Investment & Holding Co.,
Ltd. and 3Com Technologies, dated as of
December 22, 2006
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    12/27/062.6
    
    Agreement and Plan of Merger by and among
3Com Corporation, Diamond II Holdings Inc.
and Diamond II Acquisition Corp., dated
September 28, 2007
    
    8-K/A
    
    000-12867
    
    
    2.1
    
    
    9/28/073.1
    
    Amended and Restated Certificate of
Incorporation filed with the Secretary of
State of the State of Delaware on September
23, 2009
    
    8-K
    
    000-12867
    
    
    3.1
    
    
    9/24/093.2
    
    Registrants Bylaws, as amended on December
10, 2008
    
    8-K
    
    000-12867
    
    
    3.1
    
    
    12/16/084.1
    
    Third Amended and Restated Preferred Shares
Rights Agreement, dated as of November 4,
2002 (Rights Agreement)
    
    8-A/A
    
    000-12867
    
    
    4.1
    
    
    11/27/024.2
    
    Amendment No. 1 to Rights Agreement, dated
as of September 28, 2007
    
    8-K/A
    
    000-12867
    
    
    4.1
    
    
    9/28/0710.1
    
    Form of Performance-Based Restricted Stock
Unit Agreement  2003 Stock Plan*
    
    
    
    
    
    
    
    
    
    
    
    X10.2
    
    3Bonus Plan for Executive Officers
(approved July 7, 2009)*
    
    
    
    
    
    
    
    
    
    
    
    X10.3
    
    Employment Agreement, signed on July 20,
2009 and effective as of April 27, 2009, by
and between Hangzhou H3C Technologies Co.,
Ltd. And Dr. Shusheng Zheng*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    7/20/0910.4
    
    Amended and Restated Office Lease made and
entered into as of the 1st day of June,
2009, by and between Bel Marlborough I LLC,
a Delaware limited liability company,
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    6/10/09
 45




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewithhaving an office at c/o Eaton Vance
Management, 2 International Place, Boston,
Massachusetts 02110 as landlord and 3Com
Corporation, a Delaware corporation having
an office at 350 Campus Drive, Marlborough,
Massachusetts 01752 as tenant31.1
    
    Certification of Principal Executive Officer
    
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of Principal Financial Officer
    
    
    
    
    
    
    
    
    
    
    
    X32.1
    
    Certification of Chief Executive Officer
and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
    
    
    
    
    
    
    
    
    
    
    
    X
 
 *
    
    Indicates a management contract or compensatory plan 46




---



##### Table of Contents



SIGNATURES
  3Com Corporation
(Registrant)Dated:      October 6, 2009
    By:
    /s/   Jay ZagerJay ZagerExecutive Vice President and
Chief Financial Officer
(Principal Financial and
Accounting Officer and a duly authorized
officer of the registrant) 47




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##### Table of Contents



EXHIBIT INDEX
 Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1
    
    Master Separation and Distribution
Agreement between the Registrant and Palm,
Inc. effective as of December 13, 1999
    
    10-Q
    
    002-92053
    
    
    2.1
    
    
    4/4/002.2
    
    Indemnification and Insurance Matters
Agreement between the Registrant and Palm,
Inc.
    
    10-Q
    
    002-92053
    
    
    2.11
    
    
    4/4/002.3
    
    Agreement and Plan of Merger, dated
December 13, 2004, by and among the
Registrant, Topaz Acquisition Corporation
and TippingPoint Technologies, Inc.
    
    8-K
    
    000-12867
    
    
    2.1
    
    
    12/16/042.4
    
    Securities Purchase Agreement by and among
3Com Corporation, 3Com Technologies, Huawei
Technologies Co., Ltd. and Shenzen Huawei
Investment & Holding Co., Ltd., dated as of
October 28, 2005
    
    8-K/A
    
    000-12867
    
    
    2.1
    
    
    3/30/062.5
    
    Stock Purchase Agreement by and between
Shenzhen Huawei Investment & Holding Co.,
Ltd. and 3Com Technologies, dated as of
December 22, 2006
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    12/27/062.6
    
    Agreement and Plan of Merger by and among
3Com Corporation, Diamond II Holdings Inc.
and Diamond II Acquisition Corp., dated
September 28, 2007
    
    8-K/A
    
    000-12867
    
    
    2.1
    
    
    9/28/073.1
    
    Amended and Restated Certificate of
Incorporation filed with the Secretary of
State of the State of Delaware on September
23, 2009
    
    8-K
    
    000-12867
    
    
    3.1
    
    
    9/24/093.2
    
    Registrants Bylaws, as amended on December
10, 2008
    
    8-K
    
    000-12867
    
    
    3.1
    
    
    12/16/084.1
    
    Third Amended and Restated Preferred Shares
Rights Agreement, dated as of November 4,
2002 (Rights Agreement)
    
    8-A/A
    
    000-12867
    
    
    4.1
    
    
    11/27/024.2
    
    Amendment No. 1 to Rights Agreement, dated
as of September 28, 2007
    
    8-K/A
    
    000-12867
    
    
    4.1
    
    
    9/28/0710.1
    
    Form of Performance-Based Restricted Stock
Unit Agreement  2003 Stock Plan*
    
    
    
    
    
    
    
    
    
    
    
    X10.2
    
    3Bonus Plan for Executive Officers
(approved July 7, 2009)*
    
    
    
    
    
    
    
    
    
    
    
    X10.3
    
    Employment Agreement, signed on July 20,
2009 and effective as of April 27, 2009, by
and between Hangzhou H3C Technologies Co.,
Ltd. And Dr. Shusheng Zheng*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    7/20/0910.4
    
    Amended and Restated Office Lease made and
entered into as of the 1st day of June,
2009, by and between Bel Marlborough I LLC,
a Delaware limited liability company,
having an office at c/o Eaton Vance
Management, 2 International Place, Boston,
Massachusetts 02110 as landlord and 3Com
Corporation, a Delaware corporation having
an office at 350 Campus Drive,
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    6/10/09
 48




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    HerewithMarlborough,
Massachusetts 01752 as tenant31.1
    
    Certification of Principal Executive Officer
    
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of Principal Financial Officer
    
    
    
    
    
    
    
    
    
    
    
    X32.1
    
    Certification of Chief Executive Officer
and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of
2002
    
    
    
    
    
    
    
    
    
    
    
    X
 
 *
    
    Indicates a management contract or compensatory plan 49