##### Table of Contents



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 February 29, 2008
 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
 3COMCORPORATION
 (Exact name of registrant as specified in its charter)
 Delaware
    
    94-2605794(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)350 Campus DriveMarlborough, Massachusetts
    
    01752(Address of principal executive offices)
    
    (Zip Code)
 508) 323-1000
 N/A
 þ o
 (Check
one):
 Large accelerated filer þ
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 Yes
o     No
þ




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##### 



3COM CORPORATION
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED FEBRUARY 28, 2008
TABLE OF CONTENTS
 PagePART I.
    
    FINANCIAL INFORMATION
    
    1Item 1.
    
    Financial Statements
    
    1Condensed Consolidated Statements of Operations
Three and Nine Months Ended February 28, 2008 and 2007
    
    1Condensed Consolidated Balance Sheets
February 28, 2008 and May 31, 2007
    
    2Condensed Consolidated Statements of Cash Flows
Nine Months Ended February 28, 2008 and 2007
    
    3Notes to Condensed Consolidated Financial Statements
    
    4Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    18Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    29Item 4.
    
    Controls and Procedures
    
    30PART II.
    
    OTHER INFORMATION
    
    30Item 1.
    
    Legal Proceedings
    
    30Item 1A.
    
    Risk Factors
    
    30Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    43Item 6.
    
    Exhibits
    
    44SIGNATURES
    
    
    
    45EXHIBITS
    
    
    
    46Ex-31.1 Section 302 Certification of CEOEx-31.2 Section 302 Certification of CFOEx-32.1 Section 906 Certification of CEO and CFO




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PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 3COM CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 28,(In thousands, except per share data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Sales
    
    $
    336,390
    
    
    $
    323,441
    
    
    $
    973,625
    
    
    $
    956,561Cost of sales
    
    
    156,716
    
    
    
    170,004
    
    
    
    492,895
    
    
    
    516,544Gross profit
    
    
    179,674
    
    
    
    153,437
    
    
    
    480,730
    
    
    
    440,017Operating expenses:Sales and marketing
    
    
    82,428
    
    
    
    77,338
    
    
    
    237,617
    
    
    
    230,648Research and development
    
    
    50,530
    
    
    
    48,419
    
    
    
    155,039
    
    
    
    144,363General and administrative
    
    
    26,268
    
    
    
    22,466
    
    
    
    78,806
    
    
    
    65,083Amortization
    
    
    25,778
    
    
    
    10,228
    
    
    
    78,044
    
    
    
    34,630In-process research and development
    
    
    
    
    
    
    1,700
    
    
    
    
    
    
    
    1,700Restructuring charges
    
    
    736
    
    
    
    2,221
    
    
    
    4,308
    
    
    
    2,776Total operating expenses
    
    
    185,740
    
    
    
    162,372
    
    
    
    553,814
    
    
    
    479,200Operating loss
    
    
    (6,066
    )
    
    
    (8,935
    )
    
    
    (73,084
    )
    
    
    (39,183
    )Gain (loss) on investments, net
    
    
    23
    
    
    
    (582
    )
    
    
    351
    
    
    
    799Interest (expense) income, net
    
    
    (2,879
    )
    
    
    11,265
    
    
    
    (10,412
    )
    
    
    32,802Other income, net
    
    
    10,568
    
    
    
    9,637
    
    
    
    32,994
    
    
    
    26,971Income (loss) before income taxes and minority interest
    
    
    1,646
    
    
    
    11,385
    
    
    
    (50,151
    )
    
    
    21,389Income tax provision
    
    
    (9,486
    )
    
    
    (1,374
    )
    
    
    (11,967
    )
    
    
    (5,047
    )Minority interest in income of consolidated joint venture
    
    
    
    
    
    
    (14,790
    )
    
    
    
    
    
    
    (38,705
    )Net loss
    
    $
    (7,840
    )
    
    $
    (4,779
    )
    
    $
    (62,118
    )
    
    $
    (22,363
    )Basic and diluted net loss per share
    
    $
    (0.02
    )
    
    $
    (0.01
    )
    
    $
    (0.16
    )
    
    $
    (0.06
    )Shares used in computing per share amounts:Basic and diluted
    
    
    400,142
    
    
    
    394,351
    
    
    
    398,724
    
    
    
    393,196
  1




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3COM CORPORATION
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  February 28,
    
    
    May 31,(In thousands, except per share data)
    
    2008
    
    
    2007ASSETSCurrent assets:Cash and equivalents
    
    $
    466,030
    
    
    $
    559,217Notes receivable
    
    
    106,595
    
    
    
    77,368Accounts receivable, less allowance for
doubtful accounts of $12,788 and $15,292
respectively
    
    
    142,309
    
    
    
    102,952Inventories
    
    
    93,850
    
    
    
    107,988Other current assets
    
    
    46,601
    
    
    
    50,157Total current assets
    
    
    855,385
    
    
    
    897,682Property and equipment, less accumulated
depreciation and amortization of $197,947 and
$234,554 respectively
    
    
    56,766
    
    
    
    76,460Goodwill
    
    
    767,274
    
    
    
    766,444Intangible assets, net
    
    
    300,307
    
    
    
    371,289Deposits and other assets
    
    
    26,757
    
    
    
    39,217Total assets
    
    $
    2,006,489
    
    
    $
    2,151,092LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    104,489
    
    
    $
    110,430Current portion of long-term debt
    
    
    48,000
    
    
    
    94,000Accrued liabilities and other
    
    
    414,693
    
    
    
    435,638Total current liabilities
    
    
    567,182
    
    
    
    640,068Deferred taxes and long-term obligations
    
    
    16,839
    
    
    
    23,725Long-term debt
    
    
    288,000
    
    
    
    336,000Stockholders 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: 402,913
and 399,064 respectively
    
    
    2,342,574
    
    
    
    2,323,356Retained earnings (deficit)
    
    
    (1,238,526
    )
    
    
    (1,176,406
    )Accumulated other comprehensive income
    
    
    30,420
    
    
    
    4,349Total stockholders equity
    
    
    1,134,468
    
    
    
    1,151,299Total liabilities and stockholders equity
    
    $
    2,006,489
    
    
    $
    2,151,092
  2




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3COM CORPORATION
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  Nine Months EndedFebruary 28,(In thousands)
    
    2008
    
    
    2007Cash flows from operating activities:Net loss
    
    $
    (62,118
    )
    
    $
    (22,363
    )Adjustments to reconcile net loss to cash used in operating
activities:Depreciation and amortization
    
    
    102,731
    
    
    
    58,255Stock-based compensation charges
    
    
    15,413
    
    
    
    15,133Loss (gain) on property and equipment disposals
    
    
    2,227
    
    
    
    (10,898
    )In-process research and development
    
    
    
    
    
    
    1,700Gain on investments, net
    
    
    (185
    )
    
    
    (1,476
    )Minority interest in income of consolidated joint venture
    
    
    
    
    
    
    38,705Deferred income taxes
    
    
    (448
    )
    
    
    (8,836
    )Changes in assets and liabilities:Accounts receivable
    
    
    (59,344
    )
    
    
    (12,392
    )Inventories
    
    
    22,704
    
    
    
    23,754Other assets
    
    
    7,733
    
    
    
    31,689Accounts payable
    
    
    (13,447
    )
    
    
    (28,098
    )Other liabilities
    
    
    (25,297
    )
    
    
    9,682Net cash (used in) provided by operating activities
    
    
    (10,031
    )
    
    
    94,855Cash flows from investing activities:Purchases of investments
    
    
    
    
    
    
    (225,005
    )Proceeds from maturities and sales of investments
    
    
    442
    
    
    
    495,941Purchases of property and equipment
    
    
    (13,269
    )
    
    
    (24,152
    )Business acquired in purchase transactions, net of cash acquired
    
    
    
    
    
    
    (7,830
    )Proceeds from sale of property and equipment
    
    
    944
    
    
    
    33,111Net cash (used in) provided by investing activities
    
    
    (11,883
    )
    
    
    272,065Cash flows from financing activities:Issuances of common stock
    
    
    6,124
    
    
    
    13,088Repurchases of common stock
    
    
    (2,321
    )
    
    
    (4,788
    )Repayment of long term debt
    
    
    (94,000
    )
    
    
    Dividend paid to minority interest shareholder
    
    
    
    
    
    
    (40,785
    )Net cash used in financing activities
    
    
    (90,197
    )
    
    
    (32,485
    )Effect of exchange rate changes on cash and equivalents
    
    
    18,924
    
    
    
    7,229Net change in cash and equivalents during period
    
    
    (93,187
    )
    
    
    341,664Cash and equivalents, beginning of period
    
    
    559,217
    
    
    
    501,097Cash and equivalents, end of period
    
    $
    466,030
    
    
    $
    842,761
  3




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3COM CORPORATION
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 1. BASIS OF PRESENTATION
   Accounting for Uncertainty in Income Taxes, an
interpretation of FASB Statement No. 109
 Recently issued accounting pronouncements
   4




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5




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NOTE 2. STOCK-BASED COMPENSATION
    Three Months
    
    Nine Months
    
    Nine MonthsEnded
    
    Ended
    
    EndedFebruary 28,
    
    February 28,
    
    February 28,2007
    
    2008
    
    2007Employee stock options:Volatility
    
    
    41.8
    %
    
    
    40.5
    %
    
    
    41.8
    %Risk-free interest rate
    
    
    4.7
    %
    
    
    4.7
    %
    
    
    4.7
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected life (years)
    
    
    4.0
    
    
    
    3.8
    
    
    
    4.0Weighted average fair value per grant
    
    $
    1.59
    
    
    $
    1.49
    
    
    $
    1.67Employee Stock Purchase Plan:Volatility
    
    
    49.2
    %
    
    
    61.1
    %
    
    
    49.2
    %Risk-free interest rate
    
    
    5.1
    %
    
    
    4.0
    %
    
    
    5.1
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected life (years)
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.5Weighted average fair value per grant
    
    $
    1.27
    
    
    $
    1.60
    
    
    $
    1.27Restricted Stock Awards:Weighted average fair value per grant
    
    
    *
    
    
    $
    3.90
    
    
    $
    4.45Restricted Stock Units:Weighted average fair value per grant
    
    $
    4.12
    
    
    $
    3.72
    
    
    $
    4.43
 
 *
    
    No grants during the period. 6




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Three Months
    
    Three Months
    
    Nine Months
    
    Nine MonthsEnded February
    
    Ended February
    
    Ended February
    
    Ended February28, 2008
    
    28, 2007
    
    28, 2008
    
    28, 2007Cost of sales
    
    $
    496
    
    
    $
    418
    
    
    $
    1,403
    
    
    $
    1,119Sales and marketing
    
    
    1,753
    
    
    
    1,553
    
    
    
    4,146
    
    
    
    4,358Research and development
    
    
    1,100
    
    
    
    1,060
    
    
    
    2,794
    
    
    
    3,774General and administrative
    
    
    2,195
    
    
    
    1,865
    
    
    
    7,070
    
    
    
    5,882Stock-based compensation
expense before tax
    
    $
    5,544
    
    
    $
    4,896
    
    
    $
    15,413
    
    
    $
    15,133
 Stock Options.
 WeightedaverageNumber of
    
    
    exerciseshares
    
    
    priceOutstanding May 31, 2007
    
    
    52,280
    
    
    $
    5.23Granted
    
    
    1,455
    
    
    
    4.08Exercised
    
    
    (1,800
    )
    
    
    2.12Cancelled
    
    
    (5,639
    )
    
    
    5.97Outstanding February 28, 2008
    
    
    46,296
    
    
    $
    5.23Exercisable
    
    
    25,307
    
    
    $
    5.76Weighted average grant-date fair value of options
granted
    
    
    
    
    
    $
    1.49
   WeightedWeighted
    
    AverageNumber of
    
    average
    
    Remaining
    
    AggregateShares
    
    Grant-Date
    
    Contractual
    
    Intrinsic Value(in thousands)
    
    Fair Value
    
    Life (in years)
    
    (in thousands)Vested and expected
to vest at February
28, 2008
    
    
    36,307
    
    
    $
    5.40
    
    
    
    4.2
    
    
    $
    4,873
 7




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Restricted Stock Awards.
 WeightedNumber of
    
    
    averageShares
    
    
    Grant-Date(unvested)
    
    
    Fair ValueOutstanding May 31, 2007
    
    
    2,403
    
    
    $
    4.33Granted
    
    
    790
    
    
    
    3.90Vested
    
    
    (586
    )
    
    
    4.36Forfeited
    
    
    (281
    )
    
    
    4.14Outstanding February 28, 2008
    
    
    2,326
    
    
    $
    4.20
  Restricted Stock Units.
 Number ofShares(unvested)Outstanding May 31, 2007
    
    
    3,111Granted
    
    
    4,427Vested
    
    
    (1,449
    )Forfeited
    
    
    (553
    )Outstanding February 28, 2008
    
    
    5,536
  Employee Stock Purchase Plan.
 NOTE 3. ACQUISITIONS
  8




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NOTE 4. RESTRUCTURING CHARGES
     Fiscal 2008 Actions
  EmployeeSeparation Expense
    
    
    TotalBalance as of May 31, 2007
    
    $
    
    
    
    $
    Provisions
    
    
    4,214
    
    
    
    4,214Payments and non-cash charges
    
    
    (2,462
    )
    
    
    (2,462
    )Balance as of February 28, 2008
    
    $
    1,752
    
    
    $
    1,752
   9




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Fiscal 2007 Actions
  Employee
    
    
    Facilities-
    
    
    OtherSeparation
    
    
    related
    
    
    RestructuringExpense
    
    
    Charges
    
    
    Costs
    
    
    TotalBalance as of May 31, 2007
    
    $
    1,330
    
    
    $
    264
    
    
    $
    
    
    
    $
    1,594Provisions (benefits)
    
    
    (93
    )
    
    
    59
    
    
    
    53
    
    
    
    19Payments and non-cash charges
    
    
    (1,237
    )
    
    
    (174
    )
    
    
    (53
    )
    
    
    (1,464
    )Balance as of February 28, 2008
    
    $
    
    
    
    $
    149
    
    
    $
    
    
    
    $
    149
   Fiscal 2001 through 2006 Actions
  Employee
    
    
    
    
    
    
    OtherSeparation
    
    
    Facilities-
    
    
    RestructuringExpense
    
    
    related Charges
    
    
    Costs
    
    
    TotalBalance as of May 31, 2007
    
    $
    303
    
    
    $
    1,479
    
    
    $
    
    
    
    $
    1,782Provisions (benefits)
    
    
    17
    
    
    
    55
    
    
    
    3
    
    
    
    75Payments and non-cash charges
    
    
    
    
    
    
    (976
    )
    
    
    (3
    )
    
    
    (979
    )Balance as of February 28, 2008
    
    $
    320
    
    
    $
    558
    
    
    $
    
    
    
    $
    878
   NOTE 5. INCOME TAXES
  10




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NOTE 6. COMPREHENSIVE INCOME (LOSS)
  Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Net income (loss)
    
    $
    (7,840
    )
    
    $
    (4,779
    )
    
    $
    (62,118
    )
    
    $
    (22,363
    )Other comprehensive income:Net unrealized gain (loss) on investments
    
    
    
    
    
    
    248
    
    
    
    (210
    )
    
    
    2,252Change in accumulated translation
adjustments
    
    
    11,822
    
    
    
    2,947
    
    
    
    26,071
    
    
    
    6,614Total comprehensive income (loss)
    
    $
    3,982
    
    
    $
    (1,584
    )
    
    $
    (36,257
    )
    
    $
    (13,497
    )
 NOTE 7. NET LOSS PER SHARE
  11




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NOTE 8. INVENTORIES
  February 28,
    
    
    May 31,2008
    
    
    2007Finished goods
    
    $
    67,794
    
    
    $
    61,857Work-in-process
    
    
    4,587
    
    
    
    7,143Raw materials
    
    
    21,469
    
    
    
    38,988Total
    
    $
    93,850
    
    
    $
    107,988
 NOTE 9. INTANGIBLE ASSETS, NET
  February 28, 2008
    
    
    May 31, 2007Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedGross
    
    
    Amortization
    
    
    Net
    
    
    Gross
    
    
    Amortization
    
    
    NetExisting technology
    
    $
    377,170
    
    
    $
    (182,282
    )
    
    $
    194,888
    
    
    $
    387,233
    
    
    $
    (148,641
    )
    
    $
    238,592Trademark
    
    
    55,502
    
    
    
    
    
    
    
    55,502
    
    
    
    55,500
    
    
    
    
    
    
    
    55,500Huawei non-compete
agreement
    
    
    33,633
    
    
    
    (16,569
    )
    
    
    17,064
    
    
    
    33,000
    
    
    
    (61
    )
    
    
    32,939OEM agreement
    
    
    24,496
    
    
    
    (5,966
    )
    
    
    18,530
    
    
    
    23,800
    
    
    
    (22
    )
    
    
    23,778Maintenance contracts
    
    
    19,000
    
    
    
    (9,764
    )
    
    
    9,236
    
    
    
    19,000
    
    
    
    (7,389
    )
    
    
    11,611Other
    
    
    22,089
    
    
    
    (17,002
    )
    
    
    5,087
    
    
    
    21,924
    
    
    
    (13,055
    )
    
    
    8,869Total
    
    $
    531,890
    
    
    $
    (231,583
    )
    
    $
    300,307
    
    
    $
    540,457
    
    
    $
    (169,168
    )
    
    $
    371,289
   NOTE 10. ACCRUED WARRANTY
   Nine Months EndedFebruary 28,2008
    
    
    2007Accrued warranty, beginning of period
    
    $
    40,596
    
    
    $
    41,791Cost of warranty claims processed during the period
    
    
    (31,040
    )
    
    
    (37,851
    )Provision for warranties related to products sold during the period
    
    
    29,122
    
    
    
    35,817Accrued warranty, end of period
    
    $
    38,678
    
    
    $
    39,757
 12




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NOTE 11. LONG-TERM DEBT
    Tranche A
    
    Tranche B2009
    
    
    46,000
    
    
    
    2,0002010
    
    
    46,000
    
    
    
    2,0002011
    
    
    46,000
    
    
    
    2,0002012
    
    
    
    
    
    
    20,0002013
    
    
    
    
    
    
    172,000
    NOTE 12. SEGMENT INFORMATION
   13




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Three Months Ended February 28, 2008Tipping
    
    
    
    
    
    Eliminations/(in thousands)
    
    H3C
    
    DVBU
    
    Point
    
    Corp
    
    Other
    
    TotalRevenue
    
    $
    212,558
    
    
    $
    134,603
    
    
    $
    23,639
    
    
    
    
    
    
    
    $(34,410
    )a
    
    $
    336,390Gross profit
    
    
    120,230
    
    
    
    43,362
    
    
    
    16,578
    
    
    
    
    
    
    
    (496
    )c
    
    
    179,674Operating expense
    
    
    73,413
    
    
    
    49,445
    
    
    
    17,337
    
    
    
    10,995
    b
    
    
    34,550
    )d
    
    
    185,740Operating income (loss)
    
    $
    46,817
    
    
    $
    (6,083
    )
    
    $
    (759
    )
    
    $
    (10,995
    )
    
    $
    (35,046
    )
    
    $
    (6,066
    )
 Three Months Ended February 28, 2007Tipping
    
    
    
    
    
    Eliminations/(in thousands)
    
    H3C
    
    DVBU
    
    Point
    
    Corp
    
    Other
    
    TotalRevenue
    
    $
    195,144
    
    
    $
    132,882
    
    
    $
    24,503
    
    
    
    
    
    
    $
    (29,088
    )a
    
    $
    323,441Gross profit
    
    
    89,640
    
    
    
    47,672
    
    
    
    16,807
    
    
    
    (264
    )b
    
    
    (418
    )c
    
    
    153,437Operating expense
    
    
    64,066
    
    
    
    47,509
    
    
    
    18,626
    
    
    
    13,544
    b
    
    
    18,627
    d
    
    
    162,372Operating income (loss)
    
    $
    25,574
    
    
    $
    163
    
    
    $
    (1,819
    )
    
    $
    (13,808
    )
    
    $
    (19,045
    )
    
    $
    (8,935
    )
 Nine Months Ended February 28, 2008Tipping
    
    
    
    
    
    Eliminations/(in thousands)
    
    H3C
    
    DVBU
    
    Point
    
    Corp
    
    Other
    
    TotalRevenue
    
    $
    582,309
    
    
    $
    414,058
    
    
    $
    74,892
    
    
    
    
    
    
    
    $(97,634)
    a
    
    $
    973,625Gross profit
    
    
    315,693
    
    
    
    127,029
    
    
    
    50,740
    
    
    
    (210
    )b
    
    
    (12,522
    )c
    
    
    480,730Operating expense
    
    
    214,150
    
    
    
    147,257
    
    
    
    51,505
    
    
    
    33,952
    b
    
    
    106,950
    d
    
    
    553,814Operating income (loss)
    
    $
    101,543
    
    
    $
    (20,228
    )
    
    $
    (765
    )
    
    $
    (34,162
    )
    
    $
    (119,472
    )
    
    $
    (73,084
    )
 Nine Months Ended February 28, 2007Tipping
    
    
    
    
    
    Eliminations/(in thousands)
    
    H3C
    
    DVBU
    
    Point
    
    Corp
    
    Other
    
    TotalRevenue
    
    $
    555,403
    
    
    $
    414,218
    
    
    $
    65,515
    
    
    
    
    
    
    
    $(78,575)
    a
    
    $
    956,561Gross profit
    
    
    260,439
    
    
    
    137,593
    
    
    
    44,059
    
    
    
    (954
    )b
    
    
    (1,120)
    c
    
    
    440,017Operating expense
    
    
    184,905
    
    
    
    155,013
    
    
    
    52,018
    
    
    
    34,775
    b
    
    
    52,489
    d
    
    
    479,200Operating income (loss)
    
    $
    75,534
    
    
    $
    (17,420
    )
    
    $
    (7,959
    )
    
    $
    (35,729
    )
    
    $
    (53,609
    )
    
    $
    (39,183
    )
 
 a  Represents eliminations for inter-company revenue during the respective periods.b  Represents costs not directly attributable to any operating business segment.c  Includes stock based compensation in all periods plus purchase accounting inventory related
adjustments as applicable.d  Includes stock-based compensation, amortization and restructuring in all periods and
acquisition related expenses as applicable. 14




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Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Networking
    
    $
    279,771
    
    
    
    83
    %
    
    $
    259,196
    
    
    
    80
    %
    
    $
    797,280
    
    
    
    82
    %
    
    $
    776,081
    
    
    
    81
    %Security
    
    
    30,459
    
    
    
    9
    %
    
    
    30,647
    
    
    
    9
    %
    
    
    97,004
    
    
    
    10
    %
    
    
    87,691
    
    
    
    9
    %Voice
    
    
    15,093
    
    
    
    5
    %
    
    
    18,700
    
    
    
    6
    %
    
    
    48,071
    
    
    
    5
    %
    
    
    51,198
    
    
    
    5
    %Services
    
    
    10,309
    
    
    
    3
    %
    
    
    9,805
    
    
    
    3
    %
    
    
    29,292
    
    
    
    3
    %
    
    
    26,724
    
    
    
    3
    %Legacy connectivity
products
    
    
    758
    
    
    
    
    %
    
    
    5,093
    
    
    
    2
    %
    
    
    1,978
    
    
    
    
    %
    
    
    14,867
    
    
    
    2
    %Total
    
    $
    336,390
    
    
    
    
    
    
    $
    323,441
    
    
    
    
    
    
    $
    973,625
    
    
    
    
    
    
    $
    956,561
 NOTE 13. GEOGRAPHIC INFORMATION
  Three Months Ended February 28,
    
    
    Nine Months Ended February 28,2008
    
    
    2007
    
    
    2008
    
    
    2007China
    
    $
    169,864
    
    
    $
    154,291
    
    
    $
    459,725
    
    
    $
    445,076Europe, Middle East, and Africa
    
    
    75,368
    
    
    
    65,736
    
    
    
    218,239
    
    
    
    206,203North America
    
    
    42,871
    
    
    
    58,538
    
    
    
    155,478
    
    
    
    172,120Asia Pacific (except China)
    
    
    27,059
    
    
    
    26,906
    
    
    
    76,306
    
    
    
    79,577Latin and South America
    
    
    21,228
    
    
    
    17,970
    
    
    
    63,877
    
    
    
    53,585Total
    
    $
    336,390
    
    
    $
    323,441
    
    
    $
    973,625
    
    
    $
    956,561
  NOTE 14. LITIGATION
   15




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NOTE 15. PROPOSED ACQUISITION BY AFFILIATES OF BAIN CAPITAL PARTNERS LLC
         17




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ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 INTRODUCTION
  BUSINESS OVERVIEW
   §
    
    Networking;§
    
    Security;§
    
    Voice;§
    
    Services; and§
    
    Legacy Connectivity Products.
  §
    
    The proposed acquisition of the Company by affiliates of Bain Capital Partners;§
    
    the formation and subsequent 100 percent acquisition of our Chinese joint venture H3C;§
    
    financing a portion of the purchase price for our acquisition of H3C by entering into
a $430 million senior secured credit agreement;§
    
    restructuring activities, which included outsourcing of information technology, all
manufacturing activity in our DVBU segment, significant headcount reductions in other
functions, and selling excess facilities;§
    
    significant changes to our executive leadership;§
    
    acquiring TippingPoint Technologies, Inc.; and§
    
    realigning our DVBU sales and marketing channels and expenditures.
  Significant Events
 Proposed Acquisition of the Company
  18




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##### Table of Contents



H3C
   New Products
  Business Environment and Future Trends
  §
    
    Intense competition in the market for higher-end, enterprise core routing and switching products;§
    
    Aggressive product pricing by competitors targeted at gaining share in market segments where we
have had a strong position historically, such as the small to medium-sized enterprise market;
and§
    
    The advanced nature and ready availability of merchant silicon, which allows low-end competitors
to deliver competitive products and makes it increasingly difficult for us to differentiate our
products.
  19




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##### Table of Contents



Summary of Three Months Ended February29, 2008 Financial Performance
 §
    
    Our sales in the three months ended February 28, 2008 were $336.4 million, compared to
sales of $323.4 million in the three months ended February 28, 2007, an increase of $13.0
million, or 4.0 percent.§
    
    Our gross margin improved to 53.4 percent in the three months ended February 28, 2008
from 47.4 percent in the three months ended February 28, 2007.§
    
    Our operating expenses in the three months ended February 28, 2008 were $185.7 million,
compared to $162.4 million in the three months ended February 28, 2007, a net increase of
$23.3 million, or 14.3 percent.§
    
    Our net loss in the three months ended February 28, 2008 was $7.8 million, compared to a
net loss of $4.8 million in the three months ended February 28, 2007.§
    
    Our balance sheet contains cash and equivalents of $466.0 million as of February 28,
2008, compared to cash and equivalents of $559.2 million at June 1, 2007 (the end of fiscal
2007). The balance sheet also includes debt of $336 million with $48 million classified as
a current liability as of February 28, 2008 compared with debt of $430 million with $94
million classified as a current liability at the end of fiscal 2007.
 20




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Summary of Nine Months Ended February 28, 2008 Financial Performance
 §
    
    Our sales in the nine months ended February 28, 2008 were $973.6 million, compared to
sales of $956.6 million in the nine months ended February 28, 2007, an increase of $17.0
million, or 1.8 percent.§
    
    Our gross margin improved to 49.4 percent in the nine months ended February 28, 2008
from 46.0 percent in the nine months ended February 28, 2007.§
    
    Our operating expenses in the nine months ended February 28, 2008 were $553.8 million,
compared to $479.2 million in the nine months ended February 28, 2007, a net increase of
$74.6 million, or 15.6 percent.§
    
    Our net loss in the nine months ended February 28, 2008 was $62.1 million, compared to
a net loss of $22.4 million in the nine months ended February 28, 2007.
 CRITICAL ACCOUNTING POLICIES
      21




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RESULTS OF OPERATIONS
THREE AND NINE MONTHS ENDED FEBRUARY 28, 2008 AND 2007
  Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    46.6
    
    
    
    52.6
    
    
    
    50.6
    
    
    
    54.0Gross profit margin
    
    
    53.4
    
    
    
    47.4
    
    
    
    49.4
    
    
    
    46.0Operating expenses:Sales and marketing
    
    
    24.5
    
    
    
    23.9
    
    
    
    24.5
    
    
    
    24.1Research and development
    
    
    15.0
    
    
    
    15.0
    
    
    
    15.9
    
    
    
    15.1General and administrative
    
    
    7.8
    
    
    
    6.9
    
    
    
    8.1
    
    
    
    6.8Amortization and write-down of intangible assets
    
    
    7.7
    
    
    
    3.2
    
    
    
    8.0
    
    
    
    3.6In-process research and development
    
    
    
    
    
    
    0.5
    
    
    
    
    
    
    
    0.2Restructuring charges
    
    
    0.2
    
    
    
    0.7
    
    
    
    0.4
    
    
    
    0.3Total operating expenses
    
    
    55.2
    
    
    
    50.2
    
    
    
    56.9
    
    
    
    50.1Operating loss
    
    
    (1.8
    )
    
    
    (2.8
    )
    
    
    (7.5
    )
    
    
    (4.1
    )(Loss) gain on investments, net
    
    
    0.0
    
    
    
    (0.2
    )
    
    
    0.0
    
    
    
    0.1Interest (expense) income, net
    
    
    (0.9
    )
    
    
    3.5
    
    
    
    (1.1
    )
    
    
    3.4Other income, net
    
    
    3.2
    
    
    
    3.0
    
    
    
    3.4
    
    
    
    2.8Income (loss) before income taxes and minority interest
    
    
    0.5
    
    
    
    3.5
    
    
    
    (5.2
    )
    
    
    2.2Income tax provision
    
    
    (2.8
    )
    
    
    (0.4
    )
    
    
    (1.2
    )
    
    
    (0.5
    )Minority interest in income of consolidated joint venture
    
    
    
    
    
    
    (4.6
    )
    
    
    
    
    
    
    (4.0
    )Net loss
    
    
    (2.3
    )%
    
    
    (1.5
    )%
    
    
    (6.4
    )%
    
    
    (2.3
    )%
 Sales
  Three Months Ended
    
    Nine Months EndedFebruary 28,
    
    February 28,2008
    
    2007
    
    2008
    
    2007H3C
    
    $
    212.6
    
    
    $
    195.1
    
    
    $
    582.3
    
    
    $
    555.4DVBU
    
    
    134.6
    
    
    
    132.9
    
    
    
    414.0
    
    
    
    414.2TippingPoint
    
    
    23.6
    
    
    
    24.5
    
    
    
    74.9
    
    
    
    65.5Intercompany eliminations and other
    
    
    (34.4
    )
    
    
    (29.1
    )
    
    
    (97.6
    )
    
    
    (78.5
    )Consolidated sales
    
    $
    336.4
    
    
    $
    323.4
    
    
    $
    973.6
    
    
    $
    956.6
  22




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.
    Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 28,2008
    
    
    2007
    
    
    2008
    
    
    2007Networking
    
    $
    279.8
    
    
    
    83
    %
    
    $
    259.2
    
    
    
    80
    %
    
    $
    797.3
    
    
    
    82
    %
    
    $
    776.1
    
    
    
    81
    %Security
    
    
    30.5
    
    
    
    9
    %
    
    
    30.6
    
    
    
    9
    %
    
    
    97.0
    
    
    
    10
    %
    
    
    87.7
    
    
    
    9
    %Voice
    
    
    15.1
    
    
    
    5
    %
    
    
    18.7
    
    
    
    6
    %
    
    
    48.0
    
    
    
    5
    %
    
    
    51.2
    
    
    
    5
    %Services
    
    
    10.3
    
    
    
    3
    %
    
    
    9.8
    
    
    
    3
    %
    
    
    29.3
    
    
    
    3
    %
    
    
    26.7
    
    
    
    3
    %Connectivity Products
    
    
    0.7
    
    
    
    
    %
    
    
    5.1
    
    
    
    2
    %
    
    
    2.0
    
    
    
    
    %
    
    
    14.9
    
    
    
    2
    %Total
    
    $
    336.4
    
    
    
    100
    %
    
    $
    323.4
    
    
    
    100
    %
    
    $
    973.6
    
    
    
    100
    %
    
    $
    956.6
    
    
    
    100
    %
   23




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Gross Margin
  Three Months Ended
    
    
    Nine Months EndedFebruary 28,
    
    
    February 28,2008
    
    
    2007
    
    
    2008
    
    
    2007H3C
    
    
    56.6
    %
    
    
    45.9
    %
    
    
    54.2
    %
    
    
    46.9
    %DVBU
    
    
    32.2
    %
    
    
    35.9
    %
    
    
    30.7
    %
    
    
    33.2
    %TippingPoint
    
    
    70.1
    %
    
    
    68.6
    %
    
    
    67.8
    %
    
    
    67.3
    %Intercompany eliminations and other
    
    
    1.4
    %
    
    
    1.4
    %
    
    
    12.8
    %
    
    
    1.4
    %Gross Margin
    
    
    53.4
    %
    
    
    47.4
    %
    
    
    49.4
    %
    
    
    46.0
    %
     24




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Operating Expenses
 Three Months Ended
    
    
    
    
    
    
    
    
    
    
    Nine Months EndedFebruary 28,
    
    
    Change
    
    
    February 28,
    
    
    Change(dollars in millions)
    
    2008
    
    
    2007
    
    
    $
    
    
    %
    
    
    2008
    
    
    2007
    
    
    $
    
    
    %Sales and marketing
    
    $
    82.4
    
    
    $
    77.4
    
    
    $
    5.0
    
    
    
    6
    %
    
    $
    237.6
    
    
    $
    230.6
    
    
    $
    7.0
    
    
    
    3
    %Research and development
    
    
    50.5
    
    
    
    48.4
    
    
    
    2.1
    
    
    
    4
    %
    
    
    155.0
    
    
    
    144.4
    
    
    
    10.6
    
    
    
    7
    %General and administrative
    
    
    26.3
    
    
    
    22.5
    
    
    
    3.8
    
    
    
    17
    %
    
    
    78.8
    
    
    
    65.1
    
    
    
    13.7
    
    
    
    21
    %Amortization
    
    
    25.8
    
    
    
    10.2
    
    
    
    15.6
    
    
    
    153
    %
    
    
    78.1
    
    
    
    34.6
    
    
    
    43.5
    
    
    
    126
    %In-process
research and development
    
    
    
    
    
    
    1.7
    
    
    
    (1.7
    )
    
    
    -100
    %
    
    
    
    
    
    
    1.7
    
    
    
    (1.7
    )
    
    
    -100
    %Restructuring
    
    
    0.7
    
    
    
    2.2
    
    
    
    (1.5
    )
    
    
    -68
    %
    
    
    4.3
    
    
    
    2.8
    
    
    
    1.5
    
    
    
    54
    %Total
    
    $
    185.7
    
    
    $
    162.4
    
    
    $
    23.3
    
    
    
    14
    %
    
    $
    553.8
    
    
    $
    479.2
    
    
    $
    74.6
    
    
    
    16
    %
 Sales and Marketing.
 Research and Development.
 eneral and Administrative.
 Amortization.
 Restructuring Charges
   Gain (loss) on Investments, Net
  25




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Interest Expense/Income, Net
  Other Income, Net
  Income Tax Provision
   Minority Interest of Huawei in the Income of Consolidated Huawei-3Com Joint Venture
  Net Loss
  26




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LIQUIDITY AND CAPITAL RESOURCES
  Nine Months EndedFebruary 28,(In millions)
    
    2008
    
    
    2007Cash and equivalents, beginning of period
    
    $
    559.2
    
    
    $
    501.1Net cash (used in) provided by operating activities
    
    
    (10.0
    )
    
    
    94.9Net cash (used in) provided by investing activities
    
    
    (11.9
    )
    
    
    272.1Net cash used in financing activities
    
    
    (90.2
    )
    
    
    (32.5
    )Other
    
    
    18.9
    
    
    
    7.2Cash and equivalents, end of period
    
    $
    466.0
    
    
    $
    842.8
         27




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EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
        28




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Accounting for NonRefundable Advance Payments for Goods
or Services Received for Use in Future Research and Development Activities
    
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  29




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ITEM 4. CONTROLS AND PROCEDURES
   
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  
 ITEM 1A. RISK FACTORS
  Risk Related to Announced Acquisition by an entity controlled by affiliates of Bain Capital
Partners
   
    
    managements and our employees attention from our day-to-day business may be diverted
because matters related to the proposed acquisition may require substantial commitments of
their time and resources;
    
    we may lose key employees;
    
    our relationships with customers and vendors may be substantially disrupted as a result
of uncertainties with regard to our business and prospects;
    
    certain costs related to the proposed acquisition, such as legal and accounting fees and
reimbursement of certain expenses, are payable by us whether or not the proposed
acquisition is completed;
    
    under certain circumstances, if the proposed acquisition is not completed, we may be
required to pay a termination (break-up) fee of up to $66 million; and
    
    the market price of shares of our common stock may decline to the extent that the
current market price of those shares reflects a market assumption that the proposed
acquisition will be completed.
 30




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Risks Related to Historical Losses, Financial Condition and Substantial Indebtedness
 We have incurred significant net losses in recent fiscal periods, including $7.8 million for the
quarter ended February 28, 2008 and $4.8 million for the quarter ended February 28, 2007 and we may
not be able to return to profitability.
  
    
    declining sales due to price competition and reduced incoming order rate;
    
    operating expenses that, as a percentage of sales, have exceeded our desired financial
model;
    
    management changes;
    
    disruptions and expenses resulting from our workforce reductions, management changes and
employee attrition;
    
    risk of increased excess and obsolete inventories; and
    
    interest expense resulting from our senior secured loan.
  We may not be able to compensate for lower sales or unexpected cash outlays with cost reductions
sufficient to generate positive net income or cash flow.
   31




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Efforts to reduce operating expenses have involved, and could involve further, workforce
reductions, closure of offices and sales or discontinuation of businesses, leading to reduced sales
and other disruptions in our business; if these efforts are not successful, we may experience
higher expenses than we desire.
  Our substantial debt could adversely affect our financial condition; and the related debt service
obligations may adversely affect our cash flow and ability to invest in and grow our businesses.
    
    
    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 any cash flow from operations to the
payment of principal of, and interest on, our indebtedness, thereby reducing the
availability of such cash flow to fund growth, working capital, capital expenditures and
other general corporate purposes;
    
    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.
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The restrictions imposed by the terms of our senior secured loan facility could adversely impact
our ability to invest in and grow our H3C business.
  An adverse change in the interest rates for our borrowings could adversely affect our financial
condition.
  Rating downgrades may make it more expensive for us to refinance our debt or borrow money.
  Risks Related to H3C Segment and Dependence Thereon
 We are significantly dependent on our H3C segment; if H3C is not successful we will likely
experience a material adverse impact to our business, business prospects and operating results.
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Sales from our H3C segment, and therefore in China, constitute a material portion of our total
sales, and our business, financial condition and results of operations will to a significant degree
be subject to economic, political and social events in the PRC.
  Our H3C segment is dependent on Huawei Technologies in several material respects, including as an
important customer; should Huawei reduce its business with H3C, our business will likely be
materially adversely affected.
  We must execute on a global strategy to leverage the benefits of our H3C acquisition, including
integration activities we determine to undertake; if we are not successful in these efforts, our
business will suffer.
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Risks Related to Personnel
 Our success is dependent on continuing to hire and retain qualified managers and other personnel,
including at our H3C segment, and reducing senior management turnover in our other segments; if we
are not successful in attracting and retaining these personnel, our business will suffer.
    Risks Related to Competition
 If we do not respond effectively to increased competition caused by industry volatility and
consolidation our business could be harmed.
  
    
    industry volatility resulting from rapid product development cycles;
    
    increasing price competition due to maturation of basic networking technologies;
    
    industry consolidation resulting in competitors with greater financial, marketing, and
technical resources; and
    
    the presence of existing competitors with greater financial resources together with the
potential emergence of new competitors with lower cost structures and more competitive
offerings.
 Our competition with Huawei in the enterprise networking market could have a material adverse
effect on our sales and our results of operations; and after a contractual non-compete period
expires, Huawei can increase its level of competition, which would likely materially and adversely
affect our business.
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Risks Related to Business and Technology Strategy
 We may not be successful at identifying and responding to new and emerging market 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 in a timely manner;
    
    gain market acceptance of new products and solutions, particularly in targeted emerging
markets; and
    
    rapidly and efficiently transition our customers from older to newer enterprise
networking technologies.
  
    
    there is a delay in introducing new products;
    
    we lose certain channels of distribution or key partners;
    
    our products do not satisfy customers in terms of features, functionality or quality; or
    
    our products cost more to produce than we expect.
  We expect to utilize strategic relationships and other alliances as key elements in our strategy.
If we are not successful in forming desired ventures and alliances or if such ventures and
alliances are not successful, our ability to achieve our growth and profitability goals could be
adversely affected.
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Our strategy of outsourcing functions and operations may fail to reduce cost and may disrupt our
operations.
   Our reliance on industry standards, technological change in the marketplace, and new product
initiatives may cause our sales to fluctuate or decline.
  
    
    the convergence of technologies, such as voice, data and video on single, secure
networks;
    
    the timely adoption and market acceptance of industry standards, and timely resolution
of conflicting U.S. and international industry standards; and
    
    our ability to influence the development of emerging industry standards and to introduce
new and enhanced products that are compatible with such standards.
  We focus on enterprise networking, and our results of operations may fluctuate based on factors
related entirely to conditions in this market.
  Risks Related to Operations and Distribution Channels
 A significant portion of our DVBU and TippingPoint sales are derived from a small number of
distributors. If any of these partners reduces its business with us, our business could be
seriously harmed.
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We depend on distributors who maintain inventories of our products. If the distributors reduce
their inventories of our products, our sales could be adversely affected.
  If we are unable to successfully develop relationships with system integrators, service providers,
and enterprise VARs, our sales may be negatively affected.
  We may pursue acquisitions of other companies that, if not successful, could adversely affect our
business, financial position and results of operations.
  We may be unable to manage our supply chain successfully, which would adversely impact our sales,
gross margin and profitability.
  
    
    in the past, some key components have had limited availability;
    
    as integration of networking features on a reduced number of computer chips continues,
we are increasingly facing competition from parties who are our suppliers;
    
    our ability to accurately forecast demand is diminished;
    
    our reliance on, and long-term arrangements with, third-party manufacturers places much
of the supply chain process out of our direct control and heightens the need for accurate
forecasting and reduces our ability to transition quickly to alternative supply chain
strategies; and
    
    we may experience disruptions to our logistics.
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Our strategies to outsource the majority of our manufacturing requirements to contract
manufacturers may not result in meeting our cost, quality or performance standards. The inability
of any contract manufacturer to meet our cost, quality or performance standards could adversely
affect our sales and overall results from operations.
   If we fail to adequately evolve our financial and managerial control and reporting systems and
processes, including the management of our H3C segment, our ability to manage and grow our business
will be negatively affected.
  Risks Related to our Operations in the Peoples Republic of China
 Chinas governmental and regulatory reforms and changing economic environment may impact our
ability to do 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 inflation or stimulate growth; or
    
    any actions that limit our ability to develop, manufacture, import or sell our products
in China, or to finance and operate our business in China.
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Uncertainties with respect to the Chinese legal system may adversely affect us.
  If PRC tax benefits available to H3C are reduced or repealed, our business could suffer.
  H3C is subject to restrictions on paying dividends and making other payments to us.
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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.
   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.
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We may not be able to defend ourselves successfully against claims that we are infringing the
intellectual property rights of others.
   OSN, our new open source strategy, subjects us to additional intellectual property risks, such as
less control over development of certain technology that forms a part of this strategy and a higher
likelihood of litigation.
  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;
    
    variations between our actual financial results and published analysts expectations;
and
    
    announcements by our competitors.
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We may be required to record a significant charge to earnings if our goodwill or intangible assets
become impaired, and the recent decline in our stock price heightens this risk.
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  Total Number
    
    
    Averageof Shares
    
    
    Price PaidPeriod
    
    Purchased
    
    
    per ShareDecember 1, 2007 through December 28, 2007
    
    
    1,983
    (1)
    
    $
    4.29December 29, 2007 through January 25, 2008
    
    
    31,923
    (1)
    
    
    4.24January 26, 2008 through February 29, 2008
    
    
    220,031
    (1)
    
    
    3.89Total
    
    
    253,937
    
    
    $
    3.94
 
 (1)
    
    Represents shares returned to us to satisfy tax withholding obligations that arose upon the
vesting of restricted stock awards. 43




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ITEM 6. EXHIBITS
 Incorporated by ReferenceExhibit
 Number
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Filed
 Herewith2.1
    
    Master Separation and Distribution
    
    10-Q
    
    002-92053
    
    2.1
    
    4/4/00Agreement between the Registrant and Palm,Inc. effective as of December 13, 19992.2
    
    Indemnification and Insurance Matters
    
    10-Q
    
    002-92053
    
    2.11
    
    4/4/00Agreement between the Registrant and Palm,Inc.2.3
    
    Agreement and Plan of Merger, dated
    
    8-K
    
    000-12867
    
    2.1
    
    12/16/04December 13, 2004, by and among theRegistrant, Topaz Acquisition Corporationand TippingPoint Technologies, Inc.2.4
    
    Securities Purchase Agreement by and among
    
    8-K/A
    
    000-12867
    
    2.1
    
    3/30/063Com Corporation, 3Com Technologies, HuaweiTechnologies Co., Ltd. and Shenzen HuaweiInvestment & Holding Co., Ltd., dated as ofOctober 28, 20052.5
    
    Stock Purchase Agreement by and between
    
    8-K
    
    000-12867
    
    10.1
    
    12/27/06Shenzhen Huawei Investment & Holding Co.,Ltd. and 3Com Technologies, dated as ofDecember 22, 20062.6
    
    Agreement and Plan of Merger by and among
    
    8-K/A
    
    000-12867
    
    2.1
    
    9/28/073Com Corporation, Diamond II Holdings Inc.and Diamond II Acquisition Corp., datedSeptember 28, 20073.1
    
    Corrected Certificate of Merger filed to
    
    10-Q
    
    002-92053
    
    3.4
    
    10/8/99correct an error in the Certificate ofMerger3.2
    
    Registrants Bylaws, as amended on March
    
    8-K
    
    000-12867
    
    3.1
    
    3/28/0523, 20053.3
    
    Certificate of Designation of Rights,
    
    10-Q
    
    000-12867
    
    3.6
    
    10/11/01Preferences and Privileges of Series AParticipating Preferred Stock4.1
    
    Third Amended and Restated Preferred Shares
    
    8-A/A
    
    000-12867
    
    4.1
    
    11/27/02Rights Agreement, dated as of November 4,2002 (Rights Agreement)4.2
    
    Amendment No. 1 to Rights Agreement, dated
    
    8-K
    
    000-12867
    
    4.1
    
    9/28/07as of September 28, 200731.1
    
    Certification of Principal Executive Officer
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of Principal Financial Officer
    
    
    
    
    
    
    
    
    
    
    X32.1
    
    Certification of Chief Executive Officer
    
    
    
    
    
    
    
    
    
    
    Xand Chief Financial Officer pursuant to 18U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of2002
 
 *
    
    Indicates a management contract or compensatory plan 44




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##### Table of Contents



3Com Corporation
(Registrant)Dated:      April 8, 2008
    By:
    /s/   Jay ZagerJay ZagerExecutive Vice President, Finance and

Chief Financial Officer

(Principal Financial and
Accounting Officer and a duly authorized
officer of the registrant) 45




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##### Table of Contents



EXHIBIT LIST
 Incorporated by ReferenceExhibit
 Number
    
    Exhibit Description
    
    Form
    
    File No.


Exhibit
    
Filing Date
    

    
Filed
 Herewith2.1
    
    Master Separation and Distribution
    
    10-Q
    
    002-92053
    
    2.1
    
    4/4/00Agreement between the Registrant and Palm,Inc. effective as of December 13, 19992.2
    
    Indemnification and Insurance Matters
    
    10-Q
    
    002-92053
    
    2.11
    
    4/4/00Agreement between the Registrant and Palm,Inc.2.3
    
    Agreement and Plan of Merger, dated
    
    8-K
    
    000-12867
    
    2.1
    
    12/16/04December 13, 2004, by and among theRegistrant, Topaz Acquisition Corporationand TippingPoint Technologies, Inc.2.4
    
    Securities Purchase Agreement by and among
    
    8-K/A
    
    000-12867
    
    2.1
    
    3/30/063Com Corporation, 3Com Technologies, HuaweiTechnologies Co., Ltd. and Shenzen HuaweiInvestment & Holding Co., Ltd., dated as ofOctober 28, 20052.5
    
    Stock Purchase Agreement by and between
    
    8-K
    
    000-12867
    
    10.1
    
    12/27/06Shenzhen Huawei Investment & Holding Co.,Ltd. and 3Com Technologies, dated as ofDecember 22, 20062.6
    
    Agreement and Plan of Merger by and among
    
    8-K/A
    
    000-12867
    
    2.1
    
    9/28/073Com Corporation, Diamond II Holdings Inc.and Diamond II Acquisition Corp., datedSeptember 28, 20073.1
    
    Corrected Certificate of Merger filed to
    
    10-Q
    
    002-92053
    
    3.4
    
    10/8/99correct an error in the Certificate ofMerger3.2
    
    Registrants Bylaws, as amended on March
    
    8-K
    
    000-12867
    
    3.1
    
    3/28/0523, 20053.3
    
    Certificate of Designation of Rights,
    
    10-Q
    
    000-12867
    
    3.6
    
    10/11/01Preferences and Privileges of Series AParticipating Preferred Stock4.1
    
    Third Amended and Restated Preferred Shares
    
    8-A/A
    
    000-12867
    
    4.1
    
    11/27/02Rights Agreement, dated as of November 4,2002 (Rights Agreement)4.2
    
    Amendment No. 1 to Rights Agreement, dated
    
    8-K
    
    000-12867
    
    4.1
    
    9/28/07as of September 28, 200731.1
    
    Certification of Principal Executive Officer
    
    
    
    
    
    
    
    
    
    
    X31.2
    
    Certification of Principal Financial Officer
    
    
    
    
    
    
    
    
    
    
    X32.1
    
    Certification of Chief Executive Officer
    
    
    
    
    
    
    
    
    
    
    Xand Chief Financial Officer pursuant to 18U.S.C. Section 1350, as adopted pursuant toSection 906 of the Sarbanes-Oxley Act of2002
 
 *
    
    Indicates a management contract or compensatory plan 46