##### Table of Contents





UNITED STATES SECURITIES AND
    EXCHANGE COMMISSION
 Washington, D.C.
    20549
  Form 10-K
  þ

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d)  OF THE
    SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended
    May 29, 2009ORo

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)  OF
    THE SECURITIES EXCHANGE ACT OF 1934For the transition period
    from          to   Commission file
    number: 0-12867
  3COM CORPORATION
 (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(Address of principal
    executive offices)

01752(Zip Code)  (508) 323-1000
 (Registrants telephone
    number, including area code)
  Securities registered pursuant to Section 12(b) of the
    Act:
  Title of Each Class

Name of Each Exchange on Which RegisteredCommon Stock, $0.01 par value per share

The NASDAQ Global Select MarketPreferred Stock Purchase Rights

The NASDAQ Global Select Market   Securities registered pursuant to Section 12(g) of the
    Act: NONE
  þ o
  o þ
  þ o
  Regulation S-T o o
  Regulation S-K Form 10-K Form 10-K. þ
  Rule 12b-2
  Large
    accelerated
    filer þ
    Accelerated
    filer o
    Non-accelerated
    filer o
    Smaller reporting
    company o (Do not check if a smaller
    reporting company)
  Rule 12b-2 o þ
      Class

Outstanding at July 10, 2009Common Stock, $0.01 par value per share

391,069,877 shares   DOCUMENTS
    INCORPORATED BY REFERENCE
  Document

Parts Into Which IncorporatedProxy Statement for the Annual Meeting of Stockholders to be
    held September 23, 2009 (Proxy Statement)

Part III, to the extent stated herein




---



##### 





3Com
    CorporationForm 10-K
    Annual Report
    For the Fiscal Year Ended May 29, 2009
  Table of Contents
   
 PagePART IItem 1.


Business


3Item 1A.


Risk Factors


15Item 1B.


Unresolved Staff Comments


27Item 2.


Properties


27Item 3.


Legal Proceedings


27Item 4.


Submission of Matters to a Vote of Security
    Holders


28PART IIItem 5.


Market for Registrants Common Equity,
    Related Stockholder Matters and Issuer Purchases of Equity
    Securities


28Item 6.


Selected Financial Data


29Item 7.


Managements Discussion and Analysis of
    Financial Condition and Results of Operation


31Item 7A.


Quantitative and Qualitative Disclosures about
    Market Risk


54Item 8.


Financial Statements and Supplementary Data


56Item 9.


Changes in and Disagreements with Accountants on
    Accounting and Financial Disclosure


96Item 9A.


Controls and Procedures


96Item 9B.


Other Information


99PART IIIItem 10.


Directors, Executive Officers and Corporate
    Governance


99Item 11.


Executive Compensation


99Item 12.


Security Ownership of Certain Beneficial Owners
    and Management and Related Stockholder Matters


99Item 13.


Certain Relationships and Related Transactions,
    and Director Independence


100Item 14.


Principal Accounting Fees and Services


100PART IVItem 15.


Exhibits and Financial Statement Schedules


100Exhibit Index


100Signatures


106Financial Statement Schedules


107Ex-21.1 Subsidiaries of the RegistrantEx-23.1 Consent of Independent Registered Public Accounting FirmEx-31.1 Certification of Principal Executive OfficerEx-31.2 Certification of Principal Financial OfficerEx-32.1 Section 906 Certification of CEO and CFO   1




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Form 10-K
    Form 10-K
 2




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##### Table of Contents



PART I  ITEM 1.
    BUSINESS  GENERAL
  ® ® ®
          Form 10-K, Form 10-Q, Form 8-K, Form 10-K. Form 10-K
 3




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##### Table of Contents



1-800-SEC-0330. http://www.sec.gov.
  MARKETS
    AND CUSTOMERS
      
    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.  best-in-class
    PRODUCTS
    AND SERVICES
   4




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The
    H3C Portfolio for Large Enterprises
    
    Networking  LAN Switches, Router and Network
    Management Software;
    Security  Firewalls;
    Emerging Technology  IP Storage and IP Video
    Surveillance; and
    Services.  H3C
    Local Area Network, or LAN, Switches
    ® ®
    
    Data Center/Core Routing Switches.  The H3C
    S12500 and S9500 Series 10-gigabit multi-service core routing
    switches represent the next generation of high-performance
    switching. They are designed to fully satisfy the requirements
    of end users seeking high capability, high reliability and
    multiple services. These models are extensively deployed at the
    core layer of
    E-government
    networks, campus networks, education networks and other
    enterprise networks and core layer or aggregation layer of
    carriers IP Metro Area Networks (MAN).
    Multi-Service Switches.  The S7500E and S7500
    Series high-end multi-service switch lines feature high
    performance, high port density and high flexibility. They can be
    deployed in the core layer of enterprise networks, campus
    networks and education MANs, in the convergence layer of
    carriers IP MANs, and in the access layer of data centers.
    Flex-chassis switches.  The S5820X and S5800
    Series flex-chassis switches combine the resilient architecture
    and flexibility of a chassis in a compact, fixed platform. They
    feature high density, 10-gigabit line-rate performance and the
    ability to integrate applications into the network to help
    reduce total cost of ownership and enhance network performance.
    These switches are generally used in the 5




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core or edge layer of enterprise networks, campus networks and
    MANs. The S5820X can also be deployed as a top-of-rack solution
    in the data center.  
    Layer 3 Gigabit Stackable Switches.  The S5500
    and S5600 Series provide robust security, carrier-class
    reliability and excellent multi-service support capability,
    providing the features desired for the convergence layer of
    large enterprise networks or campus networks, the core layer of
    medium-size and small enterprise networks, and the edge layer of
    MANs.
    Layer 2 and Layer 3 Intelligent and Resilient
    Switches.  Layer 2 switches offer wire-speed
    Gigabit Ethernet connectivity that provides high capacity with a
    full range of features. Our Layer 3 switches represent the next
    generation of desktop switches, helping customers implement a
    Gigabit Ethernet core network or aggregation layer with high
    availability as well as scalability.  H3C
    Routers
      
    SR Series Routers.  The SR family consists
    of core routers ranging from products that support a super-large
    capacity network core, such as national backbone networks,
    provincial or state backbone networks and other super-large
    networks (including those serving at the backbone network edge
    and MAN core), to those working at the core networks of
    industries and enterprises.
    Intelligent Multi-Service Enterprise Core
    Routers.  The MSR Series routers support multiple
    services, integrating data, voice and video in one device. MSR
    Series routers utilize an optimized hardware and software
    structure to provide embedded security and significant
    performance while delivering services such as IP telephony,
    business video, and network analysis, among others.
    Fixed-Port Branch Routers.  The AR Series
    access routers are fixed-port products for small enterprises and
    branch offices. They provide enhanced security, superior
    reliability and advanced QoS services.  H3C
    Network and Access Management System
    H3C
    Security
     6




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defense-in-depth
  H3C
    Firewalls
    Emerging
    Technology
  H3C IP
    Storage
    H3C IP
    Video Surveillance
    Services
  on-site
  The 3Com
    Portfolio for Small and Medium-Size Businesses
    
    Networking;
    IP Telephony;and
    Services.  3Com
    Networking
    
    Ethernet Switching.  We offer a full range of
    fixed-configuration and modular Ethernet switches that deliver
    performance and flexibility to the edge and core of IP networks.
    At the edge, we include enterprise-class offerings such as the
    3Com®

    Switch 5500, Switch 4500 and Switch 4200 families, as 7




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well as our
    OfficeConnect®

    and Baseline series switches targeted at small businesses and
    branch offices of larger organizations. At the core, we offer
    fully resilient, high-capacity and feature-rich modular
    switching products, including our high-density Switch 8800 and
    our cost-effective Switch 7750 products.  
    Wireless LAN.  We offer wireless networking
    products and solutions that provide users with secure
    anytime, anywhere network access  whether
    in a branch office or in the field  to foster
    employee collaboration and increase productivity. Our wireless
    portfolio comprises high-performance, standards-based (including
    802.11 a/b/g /n wireless standards) wireless solutions, as well
    as wireless security and policy enforcement offerings.
    Routers.  We offer routing solutions that bring
    enterprise-class WAN routing features, redundancy and
    performance to the regional offices of large enterprise
    customers and to the headquarters of medium-size businesses. We
    also offer router products which provide fixed configuration
    solutions to securely connect small offices and remote offices
    of large enterprises.
    Security.  Leveraging the award-winning
    TippingPoint Intrusion Prevention System (IPS) technology and
    its
    DigitalVaccine®

    service that automatically provides updated attack filters, 3Com
    has a complete line of unified security platforms that protect
    small and medium-size enterprises from a myriad of threats.
    Network Management.  We offer flexible and
    comprehensive network management application packages for
    advanced IT environments. Our network management applications
    help customers manage large and small wired and wireless
    networks with tools for network monitoring, bandwidth
    allocation, device control and fast problem resolution.  3Com
    Internet Protocol (IP) Telephony
    
    IP Telephony Platforms
    Convergence Application Suite
    IP Phones  3Com
    Services
  on-site
  on-site
 8




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TIPPINGPOINT
    SECURITY PRODUCTS
  TippingPoint
    Security
  plug-and-play
    
    Intrusion Prevention Systems;
    Security Services; and
    Network Access Control.  TippingPoint
    Intrusion Prevention Systems
        TippingPoint
    Security Services
  ®
 9




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TippingPoint
    Network Access Control
    SALES,
    MARKETING AND DISTRIBUTION
      COMPETITION
        
    Offer price-performance value to end-users.  We
    believe that a strong price-performance value proposition,
    consisting of competitive pricing for robust equipment features
    and energy-efficient products, may be a material competitive
    factor for customers, particularly during more challenging
    economic times.
    Maintain tier-one capability and presence.  To
    maintain tier-one capability and presence, a provider must have
    a comprehensive distribution channel and a strong financial
    position. In addition, that provider must have a globally
    recognized and preferred brand and provide strong service and
    support capabilities.
    Offer a broad line of innovative products and solutions.A provider must have extensive research and development
    resources to deliver a broad line of products and solutions and
    maintain a substantial intellectual property portfolio.  RESEARCH
    AND DEVELOPMENT
   10




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SIGNIFICANT
    CUSTOMERS AND PRODUCTS
  Form 10-K.
  FINANCIAL
    INFORMATION ABOUT SEGMENT, FOREIGN AND DOMESTIC OPERATIONS AND
    EXPORT SALES
  Form 10-K
    BACKLOG
    SEASONALITY
   11




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MANUFACTURING
    AND COMPONENTS
              INTELLECTUAL
    PROPERTY AND RELATED MATTERS
     12




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EMPLOYEES
  TotalSales and marketing


1,909Customer service and supply chain operations


987Research and development


2,453General and administrative


519Total


5,868         EXECUTIVE
    OFFICERS OF THE REGISTRANT
    Name

Age

PositionPEO/PFORobert Y. L. Mao


65


Chief Executive OfficerJay Zager


59


Executive Vice President, Chief Financial OfficerOther Executives (in alphabetical order)Neal D. Goldman


58


Executive Vice President, Chief Administrative and Legal Officer
    and SecretaryRonald A. Sege


52


President and Chief Operating OfficerDr. Shusheng Zheng


42


Executive Vice President, 3Com and Chief Executive Officer, H3C     Robert Y. L. Mao
 13




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Jay Zager
  Neal D. Goldman
  Ronald A. Sege
  Dr. Shusheng Zheng
 14




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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, particularly in the developed markets in North
    America and Europe;
    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
  While
    we earned a profit in our 2009 fiscal year, we have incurred
    significant net losses in recent fiscal periods, including
    $228.8 million for the 2008 fiscal year, and we may not be
    able to sustain or increase this profitability in the
    future.
    
    declining sales in certain regions;
    operating expenses that, as a percentage of sales, have exceeded
    our desired financial model; 15




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
    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.    and/or
  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.     16




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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.        We are
    dependent on Huawei Technologies, or Huawei, as a significant
    customer; if, as expected, Huawei significantly reduces its
    business with us, it will likely materially adversely affect our
    business results.
   17




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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.
    small-and-medium small-and-medium-size small-and-medium small-and-medium
     18




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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.
    and/or
     19




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Our
    competition with Huawei in the enterprise networking market
    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 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;
    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.   20




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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. 21




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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.   22




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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.
  2006-2008.
      If the
    Chinese VAT Authorities discontinue, reduce, or defer the VAT
    Software Subsidy Program, our results will likely be adversely
    affected.
   23




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H3C is
    subject to restrictions on paying dividends and making other
    payments to us.
    We are
    subject to risks relating to currency rate fluctuations and
    exchange controls and we do not hedge this risk in
    China.
     24




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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.
      We may
    not be able to defend ourselves successfully against claims that
    we are infringing the intellectual property rights of
    others.
   25




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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 leverage China and emphasize larger
    enterprise 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 or significant customers.   26




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##### Table of Contents



and/or
  We may
    be required to record additional significant charges to earnings
    if our goodwill or intangible assets become
    impaired.
  non-amortizing and/or
  ITEM 1B.
    UNRESOLVED
    STAFF COMMENTS    ITEM 2.
    PROPERTIES  Form 10-K.
    Location

Sq. Ft.


Owned/Leased


Primary UseUnited States  Boston Area


175,000



Leased


Corporate headquarters, Rest of World (ROW)Segment
    Administration, and customer service.United States  Austin Area


87,000



Leased


TippingPoints main office, research and development, and
    customer service.Europe  U.K.


39,000



Leased


Corporate and ROW offices; ROW customer service.China  Hangzhou


1,706,029



Leased


H3C office, research and development, manufacturing, sales, and
    training.China  Beijing


512,275



Leased


Global research and development, training; H3C sales and
    customer service.       ITEM 3.
    LEGAL
    PROCEEDINGS  Form 10-K
 27




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ITEM 4.
    SUBMISSION
    OF MATTERS TO A VOTE OF SECURITY HOLDERS   PART II  ITEM 5.
    MARKET
    FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS
    AND ISSUER PURCHASES OF EQUITY SECURITIES    Fiscal 2009

Fiscal 2008High

Low

High

LowFirst Quarter

$
2.59


$
1.83


$
4.81


$
3.24Second Quarter


2.85



1.43



5.11



3.22Third Quarter


2.66



1.81



4.60



2.76Fourth Quarter


4.39



2.06



3.41



1.76     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 ProgramsFebruary 28, 2009 through March 27, 2009


59,315
(2)

$
2.66






$
50,046,813March 28, 2009 through April 24, 2009


44,458
(2)


3.55







50,046,813April 25, 2009 through May 29, 2009


407,079
(2)


4.05







50,046,813Total


510,852


$
3.85






$
50,046,813     (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)
    
    Consists of shares surrendered to us to satisfy tax withholding
    obligations that arose upon the vesting of restricted stock
    awards and units of 59,315 in March 2009, 44,458 in April 2009
    and 407,079 in May 2009.  COMPARISON
    OF STOCKHOLDER RETURN
  and/or
 28




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COMPARISON
    OF 5 YEAR CUMULATIVE TOTAL RETURN* Among
    3Com Corporation, The S&P 500 Index, 
    A New Peer Group And An Old Peer Group
  
  *
    
    $100 invested on 5/28/04 in stock or 5/31/04 in index, including
    reinvestment of dividends. Indexes calculated on month-end basis.  ©
  5/28/04


6/3/05


6/2/06


6/1/07


5/30/08


5/29/093Com Corporation



100.00




54.71




73.57




72.49




38.95




66.77S&P 500



100.00




108.24




117.59




144.39




134.72




90.84Old Peer Group



100.00




94.33




111.30




151.75




152.99




110.02New Peer Group



100.00




91.21




89.69




118.83




118.59




86.65   (1)
    
    Our New Peer Group consists of Brocade Communications Systems,
    Inc., Cisco Systems Inc., Extreme Networks, Inc., F5 Networks,
    Inc., Juniper Networks, Inc., McAfee, Inc., Riverbed Technology,
    Inc., and Symantec Corporation. Our Old Peer Group consists of
    Alcatel Lucent, Cisco Systems Inc., D-Link Corporation, Extreme
    Networks, Inc., Hewlett-Packard Company, McAfee, Inc., Netgear
    Inc., Nortel Networks Limited and Sourcefire, Inc. Foundry
    Networks, Inc. was acquired and has therefore been removed from
    the Peer Groups.(2)
    
    Assumes that $100.00 was invested on May 28, 2004 in our
    common stock and each index, and that all dividends were
    reinvested. No cash dividends have been declared on our common
    stock. Stockholder returns over the indicated period should not
    be considered indicative of future stockholder returns.(3)
    
    3Com uses a
    52-53 week
    fiscal year ending on the Friday nearest to May 31.  ITEM 6.
    SELECTED
    FINANCIAL DATA  Form 10-K.
 29




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##### Table of Contents



Form 10-K.
      Fiscal Year May 31,2009

2008

2007

2006

2005(In thousands, except per share amounts)Sales

$
1,316,978


$
1,294,879


$
1,267,481


$
794,807


$
651,244Net income (loss)


114,725
(1)


(228,841
)(2)


(88,589
)


(100,675
)


(195,686
)Income (loss) from continuing operations


114,725
(1)


(228,841
)(2)


(88,589
)


(100,675
)


(195,686
)Income (loss) per share from continuing operationsBasic and diluted

$
0.29


$
(0.57
)

$
(0.22
)

$
(0.26
)

$
(0.51
)     (1)
    
    During fiscal 2009 the Company had gains of $85.2 million
    as a result of a favorable patent dispute resolution and from
    the sale of patents.(2)
    
    During fiscal 2008 the Company recorded a goodwill impairment
    charge of $158.0 million the TippingPoint reporting unit.  Balances as of May 31,2009

2008

2007

2006

2005(In thousands)Cash, equivalents and short-term investments

$
644,175


$
503,644


$
559,217


$
864,347


$
844,104Total assets


1,815,357



1,775,130



2,151,092



1,861,361



1,592,967Working capital(1)


434,460



305,444



257,614



778,064



667,949Deferred taxes and long-term obligations


40,729



22,367



23,725



13,788



8,484Long term debt


152,000



253,000



336,000







Retained deficit


(1,290,522
)


(1,405,247
)


(1,176,406
)


(1,087,512
)


(967,952
)Stockholders equity


1,112,175



995,302



1,151,299



1,202,362



1,274,923     (1)
    
    Working capital is defined as total current assets less total
    current liabilities. 30




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##### Table of Contents



ITEM 7.
    MANAGEMENTS
    DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
    OPERATIONS  INTRODUCTION
  Form 10-K.
  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.     31




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##### Table of Contents




    Networking;
    Security;
    Voice; and
    Services.    
    Significant changes to our executive leadership;
    the formation and subsequent 100 percent acquisition of our
    China-based H3C subsidiary;
    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, certain manufacturing activity in our
    Networking Business, significant headcount reductions in other
    functions, and selling excess facilities; and
    integration activities following our H3C acquisition, including
    in our research and development and supply chain organizations
    and integrating our TippingPoint segment.  Business
    Environment and Future Trends
       32




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##### Table of Contents



Technology
    Strategy
    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. As
    discussed earlier, the results of these efforts have been
    hampered by the global economic slowdown.  Profitability
    and Cash Generation Objectives
     33




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##### Table of Contents



Segment
    Reporting
      BASIS OF
    PRESENTATION
        CRITICAL
    ACCOUNTING POLICIES
  Form 10-K.
  Revenue recognition:
 34




---



##### Table of Contents



97-2, SOP 97-2
  and/or
    Allowance for doubtful accounts:
 35




---



##### Table of Contents



Inventories:
  Goodwill and intangible assets:
  Stock-based Compensation.
       36




---



##### Table of Contents



Restructuring charges:
  Product Warranty: and/or
  Income taxes:
         37




---



##### Table of Contents



RESULTS
    OF OPERATIONS
 YEARS ENDED MAY 31, 2009, 2008, AND 2007
        2009

2008

2007Sales


100.0
%


100.0
%


100.0
%Cost of sales


42.9



49.5



54.4Gross profit margin


57.1



50.5



45.6Operating expenses (income):Sales and marketing


25.7



24.4



25.2Research and development


13.7



15.9



17.0General and administrative


8.6



10.0



7.4Amortization


7.2



8.0



3.4Realtek settlement and patent sale


(6.5
)






Goodwill impairment






12.2



In-process research and development










2.8Restructuring charges


0.7



0.3



0.3Operating expenses, net


49.4



70.8



56.1Operating income (loss)


7.7



(20.3
)


(10.5
)Interest (expense) income, net


(0.4
)


(1.0
)


3.2Other income, net


3.9



3.4



3.2Income (loss) from operations before income taxes and minority
    interest in income of consolidated joint venture


11.2



(17.9
)


(4.1
)Income tax benefit (provision)


(2.5
)


0.2



(0.8
)Minority interest in income of consolidated joint venture










(2.1
)Net income (loss)


8.7
%


(17.7
)%


(7.0
)%  38




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##### Table of Contents



Comparison
    of fiscal 2009 and 2008
    Sales
      Fiscal Year2009


2008China-based sales region

$
727.9



55
%

$
647.7



50
%Rest of World sales region


471.1



36
%


546.9



42
%TippingPoint security business


124.9



9
%


104.1



8
%Eliminations and other


(6.9
)


0
%


(3.8
)


0
%Consolidated sales

$
1,317.0



100
%

$
1,294.9



100
%       continually-updated
   39




---



##### Table of Contents



Fiscal Year2009


2008Networking

$
1,061.8



81
%

$
1,061.2



82
%Security


163.9



12
%


133.4



10
%Services


45.9



4
%


39.6



3
%Voice


45.4



3
%


60.7



5
%Total

$
1,317.0



100
%

$
1,294.9



100
%   10/100/1000
  tm
    tm ®
  Gross
    Margin
    Fiscal Year2009

2008Networking Business


55.8
%


50.0
%TippingPoint Security Business


68.5
%


67.4
%Consolidated gross margin


57.1
%


50.5
%    40




---



##### Table of Contents



Operating
    Expenses (Income)
        Sales and
    Marketing.
    Research
    and Development.
    General
    and Administrative.
   41




---



##### Table of Contents



Amortization.
    Patent
    dispute resolution and patent sale.
      Restructuring
    Charges
      Interest
    Expense, Net
    Other
    Income, Net
    Income
    Tax Provision
   42




---



##### Table of Contents



Segment
    Analysis (tables in thousands)
    China-based
    sales region:
  Fiscal Year2009


2008Sales

$
727,939


$
647,718Gross profit(a)


486,888



407,382Direct sales and marketing expenses


136,194



115,996Segment contribution profit

$
350,694


$
291,386       a
    
     Gross profit is defined for this region as standard
    margin, which is sales less standard cost of sales (which
    excludes certain indirect cost of goods sold, such as supply
    chain operations which are included in Central Functions). 43




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##### Table of Contents



Rest
    of World sales region:
  Fiscal Year2009


2008Sales

$
471,055


$
546,868Gross profit(a)


273,706



306,556Direct sales and marketing expenses


99,683



99,121Segment contribution profit

$
174,023


$
207,435       a
    
     Gross profit is defined for this region as standard
    margin, which is sales less standard cost of sales (which
    excludes certain indirect cost of goods sold, such as supply
    chain operations which are included in Central Functions).  Central
    Functions:
  Year Ended2009


2008Gross profit(a)

$
(91,585
)

$
(116,370
)Operating expenses


285,007



312,341Total costs and expenses

$
376,592


$
428,711       a
    
     Gross profit represents indirect cost of sales, such
    as supply chain operations expenses; these costs are not
    allocated to the sales regions.  TippingPoint
    Security business:
  Year Ended2009


2008Sales

$
124,864


$
104,101Gross profit


85,483



70,197Operating expenses


83,038



70,694Segment profit (loss)

$
2,445


$
(497
)    44




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##### Table of Contents



Comparison
    of fiscal 2008 and 2007
    Sales
    Fiscal Year2008


2007China-based sales region

$
647.7



50
%

$
634.6



49
%Rest of World sales region


546.9



42
%


542.7



44
%TippingPoint security business


104.1



8
%


90.2



7
%Eliminations and other


(3.8
)


0
%






0
%Consolidated sales

$
1,294.9



100
%

$
1,267.5



100
%               Fiscal Year2008


2007Networking

$
1,061.2



82
%

$
1,043.5



82
%Security


133.4



10
%


120.1



10
%Voice


60.7



5
%


68.0



5
%Services


39.6



3
%


35.9



3
%Total

$
1,294.9



100
%

$
1,267.5



100
%   10/100/1000
 45




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##### Table of Contents



tm ®
    Gross
    Margin
    Fiscal Year2008

2007Networking Business


50.0
%


44.6
%TippingPoint Security Business


67.4
%


66.9
%Consolidated gross margin


50.5
%


45.6
%         Operating
    Expenses
  change-in-control
   46




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##### Table of Contents



change-in-control
    Sales and
    Marketing.
  change-in-control
  Research
    and Development.
  change-in-control
  General
    and Administrative.
  change-in-control
  Amortization.
    In-process
    research and development,
   47




---



##### Table of Contents



Restructuring
    Charges.
    Interest
    (Expense) Income
    Other
    Income, Net
    Income
    Tax Benefit (Provision)
      Minority
    Interest in Income of Consolidated Joint Venture
    Segment
    Analysis (tables in thousands)
    China-based
    sales region:
  Fiscal Year2008


2007Sales

$
647,718


$
634,649Gross profit(a)


407,382



369,866Direct sales and marketing expenses


115,996



111,487Segment contribution profit

$
291,386


$
258,379  48




---



##### Table of Contents



a
    
     Gross profit is defined for this region as standard
    margin, which is sales less standard cost of sales (which
    excludes certain indirect cost of goods sold, such as supply
    chain operations which are included in Central Functions).  Rest
    of World sales region:
  Fiscal Year2008


2007Sales

$
546,868


$
542,654Gross profit(a)


306,556



258,350Direct sales and marketing expenses


99,121



92,809Segment contribution profit

$
207,435


$
165,541       a
    
     Gross profit is defined for this region as standard
    margin, which is sales less standard cost of sales (which
    excludes certain indirect cost of goods sold, such as supply
    chain operations which are included in Central Functions).  Central
    Functions:
  Year Ended2008


2007Gross profit(a)

$
(116,370
)

$
(102,712
)Operating expenses


312,341



284,046Total costs and expenses

$
428,711


$
386,758       a
    
     Gross profit represents indirect cost of sales, such
    as supply chain operations expenses; these costs not allocated
    to the sales regions.  TippingPoint
    Security business:
  Year Ended2008


2007Sales

$
104,101


$
90,178Gross profit


70,197



60,307Operating expenses


70,694



70,750Segment profit (loss)

$
(497
)

$
(10,443
)    49




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##### Table of Contents



LIQUIDITY
    AND CAPITAL RESOURCES
    2009


2008


2007Cash and equivalents

$
545.8


$
503.6


$
559.2Short-term investments


98.4







Cash and equivalents and short term investments

$
644.2


$
503.6


$
559.2         Years Ended May 31,2009


2008


2007(In millions)Cash and equivalents, beginning of period

$
503.6


$
559.2


$
501.1Net cash provided by operating activities


280.5



54.9



165.5Net cash used in investing activities


(99.4
)


(16.4
)


(505.9
)Net cash (used in) provided by financing activities


(147.8
)


(123.9
)


387.9Currency impact on cash


8.9



29.8



10.6Cash and equivalents, end of period

$
545.8


$
503.6


$
559.2        50




---



##### Table of Contents



Payments Due by PeriodLess Than








More ThanContractual Obligations(1)(2)

Total


One Year


1-3 Years


3-5 Years


5 YearsOperating leases(3)

$
72.5


$
22.7


$
26.3


$
7.0


$
16.5Purchase commitments with contract manufacturers(4)


64.2



64.2











Long term debt(5)


200.0



48.0



68.0



84.0



Outsourcing agreements(6)


11.3



6.0



4.7



0.6



Total

$
348.0


$
140.9


$
99.0


$
91.6


$
16.5     (1)
    
    Includes our non-H3C subsidiary
    related obligations as of May 31, 2009 and our H3C
    subsidiary obligations as of March 31, 2009.(2)
    
    As discussed in
    Note 16  Income Taxes, we have
    recorded a liability for unrecognized tax benefits of
    $21.9 million. This liability is included in the balance
    sheet under the caption Deferred taxes and long-term
    obligations. The table above excludes this liability
    because it is not possible to estimate with reasonable certainty
    if or when any or all of the liability will be settled in cash.(3)
    
    Includes rent for our Marlborough,
    MA facility as to which a lease was renewed on June 8, 2009.(4)
    
    We have entered into purchase
    agreements with our contract manufacturers. Pursuant to these
    agreements, if our actual orders and purchases fall below
    forecasted levels, we may be required to purchase finished goods
    inventory manufactured to meet our requirements. In addition, we
    may be required to purchase raw material and work in process
    inventory on-hand that is unique to our products, and we may be
    required to compensate the contract manufacturers with respect
    to their non-cancelable purchase orders for such inventory. The
    amount shown in the table above represents our estimate of
    inventory held by contract manufacturers that we could be
    required to purchase within the next 12 months. We do not
    expect any such required purchases to exceed our requirements
    for inventory to meet expected sales of our products to our
    customers.(5)
    
    Represents required principal
    payments on our senior secured loan, but does not include
    required excess cash flow payments, for periods
    greater than one year, which are dependent on whether H3C
    generates any excess cash flow. The amounts above exclude
    expected interest payments of $7.2 million that will be
    paid in the next fiscal year. Interest payments are expected to
    decline ratably with the debt balance in future years.(6)
    
    Under our IT outsourcing agreements
    and research and development agreement we are subject to service
    level commitments and contractor commitments levels providing
    for annual minimum payments that vary depending on the levels we
    choose. The amounts shown in the table above represent the
    amounts that would be payable, based on current levels, through
    the expiration of the agreements. However, our IT agreement may
    be terminated after 14 months upon 180 days notice. At
    this time if we were to terminate the contract we would incur a
    termination fee of approximately $4.5 million     51




---



##### Table of Contents



52




---



##### Table of Contents



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
%             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    53




---



##### Table of Contents



change-in-control)
    2010

$
24,3642011


14,000     EFFECTS
    OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
  Form 10-K.
  ITEM 7A.
    QUANTITATIVE
    AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK  Market Risk Disclosures. forward-looking
  Interest Rate Sensitivity.
  Foreign Currency Exchange Risk.
 54




---



##### Table of Contents



Cash Investments and Short-Term Investments.
   55




---



##### 



ITEM 8.
    FINANCIAL
    STATEMENTS AND SUPPLEMENTARY DATA  INDEX TO
    CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT
    SCHEDULES
   
 PageConsolidated Financial Statements:Report of Independent Registered Public
    Accounting Firm


57Consolidated Statements of Operations for the
    years ended May 31, 2009, 2008, and 2007


58Consolidated Balance Sheets as of May 31,
    2009 and 2008


59Consolidated Statements of Stockholders
    Equity for the years ended May 31, 2009, 2008, and 2007


60Consolidated Statements of Cash Flows for the
    years ended May 31, 2009, 2008, and 2007


61Notes to Consolidated Financial Statements


62Financial Statement Schedules:Schedule I  Condensed Financial
    Information of Registrant


107Schedule II  Valuation and
    Qualifying Accounts and Reserves


112     56




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM  To the Board
    of Directors and Stockholders of 3Com Corporation
         Internal Control  Integrated Framework
    
 57




---



##### Table of Contents



3COM
    CORPORATIONCONSOLIDATED STATEMENTS OF OPERATIONS
  Years Ended May 31,2009


2008


2007(In thousands, except per share amounts)Sales

$
1,316,978


$
1,294,879


$
1,267,481Cost of sales


565,514



640,424



689,027Gross profit


751,464



654,455



578,454Operating expenses (income):Sales and marketing


338,401



316,019



319,696Research and development


179,979



206,653



215,632General and administrative


113,900



129,116



93,875Amortization


95,013



103,670



42,525Patent dispute resolution and patent sale


(85,200
)






Goodwill impairment






157,977



In-process research and development










35,753Restructuring charges


8,679



4,501



3,494Operating expenses, net


650,772



917,936



710,975Operating income (loss)


100,692



(263,481
)


(132,521
)Interest (expense) income, net


(5,563
)


(13,087
)


40,863Other income, net


52,200



44,824



39,434Income (loss) from operations before income taxes and minority
    interest in income of consolidated joint venture


147,329



(231,744
)


(52,224
)Income tax (provision) benefit


(32,604
)


2,903



(10,173
)Minority interest in income of consolidated joint venture










(26,192
)Net income (loss)

$
114,725


$
(228,841
)

$
(88,589
)Basic and diluted net income (loss) per share:

$
0.29


$
(0.57
)

$
(0.22
)Shares used in computing per share amounts:Basic


392,092



399,524



393,894Diluted


394,207



399,524



393,894    58




---



##### Table of Contents



3COM
    CORPORATIONCONSOLIDATED BALANCE SHEETS
  May 31,2009


2008(In thousands, except per share amounts)ASSETSCurrent assets:Cash and equivalents

$
545,818


$
503,644Short-term investments


98,357



Notes receivable


40,590



65,116Accounts receivable, less allowance for doubtful accounts of
    $9,645 and $12,253, respectively


112,771



116,281Inventories


90,395



90,831Other current assets


56,982



34,033Total current assets


944,913



809,905Property and equipment, less accumulated depreciation and
    amortization of $172,717 and $205,835, respectively


40,012



54,314Goodwill


609,297



609,297Intangible assets, net


198,624



278,385Deposits and other assets


22,511



23,229Total assets

$
1,815,357


$
1,775,130LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
68,350


$
90,280Current portion of long-term debt


48,000



48,000Accrued liabilities and other


394,103



366,181Total current liabilities


510,453



504,461Deferred taxes and long-term obligations


40,729



22,367Long-term debt


152,000



253,000Stockholders 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: 389,284 and 405,656,
    respectively


2,336,961



2,353,688Retained deficit


(1,290,522
)


(1,405,247
)Accumulated other comprehensive income


65,736



46,861Total stockholders equity


1,112,175



995,302Total liabilities and stockholders equity

$
1,815,357


$
1,775,130    59




---



##### Table of Contents



3COM
    CORPORATIONCONSOLIDATED STATEMENTS OF STOCKHOLDERS
    EQUITY
  AccumulatedUnamortized





OtherCommon Stock


Treasury Stock


Stock-based


Retained


ComprehensiveShares


Amount


Shares


Amount


Compensation


Deficit


Income (Loss)


Total(In thousands)Balances, May 31, 2006


393,442


$
2,300,396










$
(7,565
)

$
(1,087,512
)

$
(2,957
)

$
1,202,362Elimination of unamortized stock-based compensation






(7,565
)










7,565Components of comprehensive loss:Net loss






















(88,589
)






(88,589
)Unrealized gain on available-for-sale securities, net of tax


























2,310



2,310Accumulated translation adjustments


























4,996



4,996Total comprehensive loss






























(81,283
)Repurchase of common stock


(2,359
)


(9,041
)


(870
)


(4,259
)






(163
)






(13,463
)Common stock issued under stock plans, net of cancellations


7,981



19,471



870



4,259







(142
)






23,588Stock-based compensation expense






20,095























20,095Balances, May 31, 2007


399,064



2,323,356















(1,176,406
)


4,349



1,151,299Components of comprehensive loss:Net loss






















(228,841
)






(228,841
)Unrealized gain on available-for-sale securities, net of tax


























(209
)


(209
)Accumulated translation adjustments


























42,721



42,721Total comprehensive loss






























(186,329
)Repurchase of common stock


(952
)


(3,180
)






















(3,180
)Common stock issued under stock plans, net of cancellations


7,544



8,305























8,305Stock-based compensation expense






25,207























25,207Balances, May 31, 2008


405,656



2,353,688















(1,405,247
)


46,861



995,302Components of comprehensive income:Net income






















114,725







114,725Accumulated translation adjustments


























18,875



18,875Total comprehensive income






























133,600Repurchase of common stock


(22,699
)


(53,378
)






















(53,378
)Common stock issued under stock plans, net of cancellations


6,327



6,571























6,571Stock-based compensation expense






30,080























30,080Balances, May 31, 2009


389,284


$
2,336,961






$



$



$
(1,290,522
)

$
65,736


$
1,112,175    60




---



##### Table of Contents



3COM
    CORPORATIONCONSOLIDATED STATEMENTS OF CASH FLOWS
  Years Ended May 31,2009


2008


2007(In thousands)Cash flows from operating activities:Net income (loss)

$
114,725


$
(228,841
)

$
(88,589
)Adjustments to reconcile net income (loss) to net cash provided
    by operating activities:Depreciation and amortization


124,794



136,030



74,990Loss (gain) on property and equipment disposals


1,257



2,224



(14,714
)Impairment of property and equipment


1,150







Minority interest










26,192Stock-based compensation expense


30,080



25,207



20,095Gain on investments, net






(185
)


(1,417
)Deferred income taxes


(10,078
)


(8,206
)


(10,487
)Goodwill impairment






157,977



In-process research and development










35,753Gain on sale of patent


(15,200
)






Changes in assets and liabilities:Accounts and notes receivable


35,747



7,895



(24,677
)Inventories


(3,342
)


32,621



50,589Other assets


(9,945
)


18,429



32,368Accounts payable


(32,075
)


(22,926
)


(34,760
)Other liabilities


43,356



(65,348
)


100,195Net cash provided by operating activities


280,469



54,877



165,538Cash flows from investing activities:Purchases of held-to-maturity investments


(98,235
)






(225,005
)Proceeds from maturities and sales of investments






442



609,342Proceeds from patent sale, net of $1.8 million fee


15,200







Purchases of property and equipment


(16,587
)


(17,893
)


(28,331
)Businesses acquired in purchase transactions, net of cash
    acquired










(898,529
)Proceeds from sale of property and equipment


228



1,096



36,580Net cash used in investing activities


(99,394
)


(16,355
)


(505,943
)Cash flows from financing activities:Issuances of common stock


6,571



8,305



23,588Repurchases of common stock


(53,378
)


(3,180
)


(13,463
)Net proceeds from long term debt










415,811Repayments of borrowings


(101,000
)


(129,000
)


Dividend paid to minority interest shareholder










(40,785
)Other, net










2,787Net cash (used in) provided by financing activities


(147,807
)


(123,875
)


387,938Effect of exchange rate changes on cash and equivalents


8,906



29,780



10,587Net change in cash and equivalents during year


42,174



(55,573
)


58,120Cash and equivalents, beginning of year


503,644



559,217



501,097Cash and equivalents, end of year

$
545,818


$
503,644


$
559,217Other cash flow informationInterest paid

$
14,373


$
24,362


$
5,596Income tax payments, net of refunds


19,248



14,199



18,970Inventory transferred to property and equipment


7,202



5,565



8,814    61




---



##### Table of Contents



NOTES TO
    CONSOLIDATED FINANCIAL STATEMENTS  Note 1:
    Description
    of Business    Note 2:
    Significant
    Accounting Policies  Fiscal
    year
    Use of
    estimates in the preparation of consolidated financial
    statements
    Basis of
    presentation
  No. 96-16,
  Segment
    reporting
   62




---



##### Table of Contents



(which
    excludes certain indirect cost of goods sold, such as supply
    chain operations which are included in central functions)
  Cash
    equivalents
    Short-term
    investments
    Notes
    receivable
    Allowance
    for doubtful accounts
   63




---



##### Table of Contents



Equity
    securities and other investments
    Fair
    Value of Financial Instruments
    Concentration
    of credit risk
    Inventories
  first-in,
  Property
    and equipment
    Long-lived
    assets
    Depreciation
    and amortization
  25-40 years.
 64




---



##### Table of Contents



Goodwill
    and intangible assets
    Revenue
    recognition
          97-2, SOP 97-2
 65




---



##### Table of Contents



and/or
    Product
    warranty
    Advertising
    Restructuring
    charges
    Foreign
    currency remeasurement and translation
     66




---



##### Table of Contents



Income
    taxes
          Comprehensive
    income (loss)
   67




---



##### Table of Contents



AccumulatedAccumulated


OtherUnrealized


Translation


ComprehensiveGain (Loss)


Adjustments


Income (Loss)Balance as of May 31, 2006

$
(2,101
)

$
(856
)

$
(2,957
)Change in period


2,310



4,996



7,306Balance as of May 31, 2007


209



4,140



4,349Change in period


(209
)


42,721



42,512Balance as of May 31, 2008






46,861



46,861Change in period






18,875



18,875Balance as of May 31, 2009

$



$
65,736


$
65,736   Stock-based
    Compensation
               68




---



##### Table of Contents



Net
    income (loss) per share
    Recently
    issued accounting pronouncements
      No. SFAS 157-2,
  FAS No. 142-3, FAS No. 142-3). FAS No. 142-3
 69




---



##### Table of Contents



FAS No. 142-3 FAS No. 142-3 FAS No. 142-3
  EITF 03-6-1, EITF 03-6-1). EITF 03-6-1 . EITF 03-6-1 EITF 03-6-1
    Note 3:
    Acquisitions  H3C
      No. 96-16,
   70




---



##### Table of Contents



2003


2006


2007Investment


Purchase


PurchaseCash paid for common stock

$
160.0


$
28.0


$
882.0Assets contributed


0.1







Acquisition direct costs


0.0



0.2



8.7Total purchase price

$
160.1


$
28.2


$
890.7     2003


2006


2007Investment


Purchase


PurchaseNet tangible assets assumed





$
7.4


$
148.6Amortizable intangible assets:Existing technology

$
111.7



17.8



180.6Non-compete agreement with Huawei










33.0Distributor agreements


2.7



0.4



29.1Total amortizable intangible assets


114.4



18.2



242.7Amortization prior to the 2006 acquisition


(65.7
)






Net amortizable intangible assets


48.7



18.2



242.7In-process research and development


24.7



0.7



34.0Trade name and trademarks










55.5Goodwill


43.2



1.9



409.9Total purchase price allocation





$
28.2


$
890.7      71




---



##### Table of Contents



Pro forma
    Results of Operations
  write-ups,
  Fiscal Year2007(In millions,except per share amounts)Net sales

$
1,267.5Net loss


(201.3
)Basic and diluted net loss per share

$
(0.51
)   Roving
    Planet Acquisition
   72




---



##### Table of Contents



2007 Purchase Price


Useful Life for PurchasedAllocation


Intangible AssetsIn-process research and development

$
1.7



Purchased core technology


3.1



3yearsGoodwill


3.2



Other


0.2



Total acquisition value

$
8.2



   Note 4:
    Fair
    Value  Fair
    Value Hierarchy
    Level 1 
  Level 2 
  Level 3 
     73




---



##### Table of Contents



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

$



$
313,315


$



$
313,315Money market fund deposits


132,380











132,380China government bonds and bank bills with a maturity of less
    than 3 months


100,123











100,123Total assets measured at fair value

$
232,503


$
313,315


$



$
545,818   and/or
  Note 5:
    Realtek
    Patent Dispute Resolution and Patent Sale  several-year-long
        Note 6:
    Restructuring
    Charges   74




---



##### Table of Contents




    reduced our workforce; and
    continued efforts to consolidate and dispose of excess facilities      Fiscal
    2009 Actions
    Employee


Facilities-


OtherSeparation


Related


RestructuringExpense


Charges


Costs


TotalBalance as of May 31, 2008

$



$



$



$
Provisions


6,146



617



801



7,564Payments and non-cash charges


(4,685
)


(617
)


(801
)


(6,103
)Balance as of May 31, 2009

$
1,461


$



$



$
1,461      75




---



##### Table of Contents



Fiscal
    2008 Actions
    EmployeeSeparationExpense


TotalBalance as of May 31, 2007

$



$
Provisions


4,285



4,285Payments


(3,598
)


(3,598
)Balance as of May 31, 2008

$
687


$
687Provisions


1,288



1,288Payments


(1,975
)


(1,975
)Balance as of May 31, 2009

$



$
     Fiscal
    2007 Actions
    Employee


Facilities-


OtherSeparation


Related


RestructuringExpense


Charges


Costs


TotalBalance as of May 31, 2006

$



$



$



$
Provisions


12,134



(7,501
)


247



4,880Payments and non-cash charges


(10,804
)


7,765



(247
)


(3,286
)Balance as of May 31, 2007


1,330



264







1,594Provisions


(93
)


71



53



31Payments


(1,237
)


(198
)


(53
)


(1,488
)Balance as of May 31, 2008

$



$
137


$



$
137Provisions






(36
)






(36
)Payments






(54
)






(54
)Balance as of May 31, 2009

$



$
47


$



$
47    76




---



##### Table of Contents



Fiscal
    2004, 2005 and 2006 Actions
    Employee


Long-term


Facilities-


OtherSeparation


Asset


Related


RestructuringExpense


Write-downs


Charges


Costs


TotalBalance as of May 31, 2006

$
6,720


$
255


$
6,532


$
18


$
13,525Provisions


(2,083
)


(255
)


949



3



(1,386
)Payments and non-cash charges


(4,334
)






(6,002
)


(21
)


(10,357
)Balance as of May 31, 2007


303







1,479







1,782Provisions


133







49



3



185Payments


(408
)






(980
)


(3
)


(1,391
)Balance as of May 31, 2008

$
28


$



$
548


$



$
576Provisions


(6
)






(131
)






(137
)Payments


(6
)






(417
)






(423
)Balance as of May 31, 2009

$
16


$



$



$



$
16           Note 7:
    Inventories    May 31,2009


2008Finished goods

$
69,860


$
62,055Work-in-process


3,420



6,119Raw materials


17,115



22,657Total

$
90,395


$
90,831  77




---



##### Table of Contents



Note 8:
    Property
    and Equipment    May 31,2009


2008Land

$
574


$
1,724Machinery and equipment


153,655



196,933Software


27,994



25,988Furniture and fixtures


5,324



6,668Leasehold improvements


23,674



23,390Construction in progress


1,508



5,446Total


212,729



260,149Accumulated depreciation and amortization


(172,717
)


(205,835
)Property and equipment, net

$
40,012


$
54,314   Significant
    property and equipment transactions
        Note 9:
    Goodwill
    and Other Intangible Assets     78




---



##### Table of Contents



China-Based


TippingPointSales Region


Segment


TotalBalance May 31, 2007

$
455,894


$
311,380


$
767,274Impairment charge






(157,977
)


(157,977
)Balance May 31, 2008


455,894



153,403



609,297Impairment charge










Balance May 31, 2009

$
455,894


$
153,403


$
609,297     May 31, 2009


May 31, 2008Weighted











WeightedAverage











AverageRemaining











RemainingAmortization





Accumulated





Amortization





AccumulatedPeriod


Gross


Amortization


Net


Period


Gross


Amortization


NetExisting technology


3.6


$
398,178


$
(272,460
)

$
125,718



4.6


$
380,254


$
(198,682
)

$
181,572Trademark


NA



55,502







55,502



NA



55,502







55,502Huawei non-compete


0.0



37,283



(37,283
)






0.5



33,650



(22,072
)


11,578OEM agreement


1.0



23,777



(14,852
)


8,925



2.0



24,844



(7,947
)


16,897Maintenance agreements


1.7



19,000



(13,724
)


5,276



2.7



19,000



(10,556
)


8,444Other


2.0



22,697



(19,494
)


3,203



2.0



22,176



(17,784
)


4,392$
556,437


$
(357,813
)

$
198,624






$
535,426


$
(257,041
)

$
278,385         2010

2011

2012

2013

2014Amortization expense

$
66,413


$
42,198


$
17,123


$
17,388



  79




---



##### Table of Contents



Note 10:
    Accrued
    Liabilities and Other    May 31,2009


2008Accrued payroll and related expenses

$
87,306


$
103,421Deferred revenue


80,181



66,844Accrued rebates and other marketing accruals


54,029



65,900Advances from customers


45,073



31,084Income and other taxes payable


34,720



5,134Accrued product warranty


29,587



36,897EARP Accrual


24,364



34,535Restructuring


1,514



1,400Other


37,329



20,966Total

$
394,103


$
366,181   Note 11:
    Accrued
    Warranty      Years Ended May 31,2009


2008


2007Accrued warranty, beginning of year

$
36,897


$
40,596


$
41,791Cost of warranty claims


(31,245
)


(37,688
)


(46,950
)Accrual for warranties issued during the year


23,935



33,989



46,406Adjustments to preexisting warranties










(651
)Accrued warranty, end of year

$
29,587


$
36,897


$
40,596   Note 12:
    Long-Term
    Debt     80




---



##### Table of Contents



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
%               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    81




---



##### Table of Contents



Note 13:
    Borrowing
    Arrangements and Commitments        Future Lease


Future RentalFiscal Year

Payments


Income2010

$
21,957


$
582011


14,993



52012


5,638



2013


694



2014


404Thereafter






Total

$
43,686


$
63         Note 14:
    Stock
    Based Compensation Plans  Stock Based Compensation.
     82




---



##### Table of Contents



go-forward
        May, 31,


May 31,


May 31,2009


2008


2007Cost of sales

$
3,028


$
2,134


$
1,576Sales and marketing


8,615



5,976



5,756Research and development


3,939



3,993



4,621General and administrative


14,498



13,104



8,142Stock-based compensation expense

$
30,080


$
25,207


$
20,095      83




---



##### Table of Contents



2009

2008

2007Employee stock options:Volatility


51.3
%


46.2
%


42.7
%Risk-free interest rate


2.6
%


3.0
%


4.7
%Dividend yield


0.0
%


0.0
%


0.0
%Expected life (years)


4.7



4.0



4.0Weighted average grant date fair value

$
1.04


$
1.15


$
1.67Restricted stock awards:Weighted average grant date fair value

$
2.28


$
2.88


$
4.45Restricted stock units:Weighted average grant date fair value

$
2.38


$
3.46


$
4.36Employee Stock Purchase Plan:Volatility


70.9
%


68.6
%


39.2
%Risk-free interest rate


0.8
%


2.5
%


5.1
%Dividend yield


0.0
%


0.0
%


0.0
%Expected life (years)


0.5



0.5



0.5Weighted average grant date fair value

$
0.97


$
1.10


$
1.20   Stock Options.
  Number of


Weighted-AverageShares


Exercise PriceOutstanding, May 31, 2006


61,421


$
5.71Granted


24,285



4.71Exercised


(2,527
)


3.00Forfeited


(16,538
)


4.79Expired


(14,361
)


7.27Outstanding, May 31, 2007


52,280



5.23Granted


6,362



2.95Exercised


(1,823
)


2.11Forfeited


(8,896
)


4.73Expired


(3,998
)


6.93Outstanding, May 31, 2008


43,925



4.98Granted


1,403



2.30Exercised


(1,572
)


2.00Forfeited


(3,367
)


4.33Expired


(12,028
)


5.39Outstanding, May 31, 2009


28,361


$
4.92     Weighted-Weighted-

AverageAverage

Remaining

AggregateNumber of

Option

Contractual

Intrinsic ValueShares

Price

Life (in Years)

(In thousands)Vested and expected to vest at May 31, 2009


26,140,182


$
5.07



3.2


$
15,085  84




---



##### Table of Contents



Restricted Stock Awards.
  Weighted-Number of


Average Grant-Shares


Date Fair ValueOutstanding, May 31, 2006


2,117


$
4.07Granted


2,380



4.45Vested


(1,151
)


4.13Forfeited


(943
)


4.30Outstanding, May 31, 2007


2,403



4.33Granted


3,740



2.88Vested


(1,051
)


4.33Forfeited


(1,997
)


3.02Outstanding, May 31, 2008


3,095



3.43Granted


325



2.28Vested


(1,213
)


3.50Forfeited


(748
)


3.75Outstanding, May 31, 2009


1,459


$
2.94    85




---



##### Table of Contents



Restricted Stock Units.
  Weighted-Number of


Average Grant-Units and Shares


Date Fair ValueOutstanding May 31, 2006





$
Granted


4,356



4.36Vested


(836
)


4.45Forfeited


(409
)


4.45Outstanding May 31, 2007


3,111



4.32Granted


5,738



3.46Vested


(2,181
)


4.13Forfeited


(924
)


4.01Outstanding May 31, 2008


5,744



3.59Granted


5,402



2.38Vested


(3,495
)


3.38Forfeited


(1,490
)


3.05Outstanding May 31, 2009


6,161


$
2.78     2003 Stock Plan Description.
    Employee Stock Purchase Plan.
 86




---



##### Table of Contents



Stock Reserved for Issuance.
  Stock option and restricted stock plans for granted shares


34,522Stock option and restricted stock plans for future grants


37,787Employee stock purchase plan


8,029Total shares reserved for issuance


80,338   Preferred Shares Rights Plan.
  Note 15:
    Interest
    (Expense) Income and Other Income, Net    Years Ended May 31,2009


2008


2007Interest income

$
14,006


$
2,683


$
41,310Interest expense


(19,569
)


(15,770
)


(447
)Interest (expense) income, net

$
(5,563
)

$
(13,087
)

$
40,863Other income, net

$
52,200


$
44,824


$
39,434    87




---



##### Table of Contents



Note 16:
    Income
    Taxes    Years Ended May 31,2009


2008


2007Current:Federal

$



$



$
State






(189
)


530Foreign


42,512



3,231



19,640Total current


42,512



3,042



20,170DeferredFederal










State










Foreign


(9,908
)


(5,945
)


(9,997
)Total deferred


(9,908
)


(5,945
)


(9,997
)Total

$
32,604


$
(2,903
)

$
10,173     May 31, 2009


May 31, 2008Gross deferred tax assets:Operating loss carryforwards

$
1,070,566


$
1,061,779Amortization and depreciation


39,356



40,722Tax credit carryforwards


55,653



55,708Capital loss carryforwards


8,769



13,541Reserves recognized in different periods for tax purposes


70,381



64,413Royalty and purchased research and development


2,988



3,639Other


368



577Gross deferred tax assets


1,248,081



1,240,379Gross deferred tax liabilities:PRC withholding tax


(16,480
)


Acquired intangibles


(22,443
)


(38,427
)Other


(6,118
)


Gross deferred tax liabilities


(45,041
)


(38,427
)Valuation allowance


(1,205,032
)


(1,210,771
)Net deferred tax liability

$
(1,992
)

$
(8,819
)    88




---



##### Table of Contents



paid-in-capital.
    Years Ended May 31,2009

2008

2007Tax computed at federal statutory rate


35.0
%


(35.0
)%


(35.0
)%State income taxes, net of federal effect






(0.6
)


17.1Foreign rate differential


(7.4
)


(6.8
)


31.7H3C revaluation of deferred assets and liabilities






2.6



Valuation allowance


(6.0
)


15.7



(3.1
)Goodwill impairment






23.9



Non-deductible purchased in-process technology and
    merger-related charges






(0.3
)


7.0Other


0.5



(0.8
)


1.8Total


22.1
%


(1.3
)%


19.5
%         Years Ended May 31,2009


2008Unrecognized benefits as of June 1, 2008 and 2007

$
18,136


$
31,536Increases related to tax positions in prior periods


305



896Decreases related to tax positions in prior periods


(1,911
)


(3,469
)Increases related to tax positions taken in the current period


7,006



3,804Settlements with tax authorities


(2,224
)


(13,866
)Lapses of statute of limitations


(511
)


(765
)Unrecognized benefits as of May 31, 2009 and 2008

$
20,801


$
18,136  89




---



##### Table of Contents



non-U.S.,
          Note 17:
    Net
    Income (Loss) per Share    Years Ended May 31,2009


2008


2007Net income (loss)

$
114,725


$
(228,841
)

$
(88,589
)Determination of shares:Weighted average shares outstanding


392,092



399,524



393,894Assumed conversion of dilutive stock options


956







Assumed conversion of dilutive restricted stock (awards and
    units)


1,159







Diluted weighted average shares outstanding


394,207



399,524



393,894Basic earnings (loss) per share

$
0.29


$
(0.57
)

$
(0.22
)Diluted earnings (loss) per share

$
0.29


$
(0.57
)

$
(0.22
)     Note 18:
    Segment
    Information   90




---



##### Table of Contents



May 31, 2009Networking Business


TippingPointRest of





SecurityWorld





BusinessChina-Based


Sales


Central


Tipping


Eliminations/Sales Region


Region


Functions(a)


Point(b)


Other



Total(In thousands)Sales

$
727,939


$
471,055


$



$
124,864


$
(6,880
)
c

$
1,316,978Gross profit


486,888



273,706



(91,585
)


85,483



(3,028
)
d


751,464Direct sales & marketing expenses


136,194



99,683







40,632



8,387

d


284,896Segment contribution profit (loss)


350,694



174,023



(91,585
)


44,851



(11,415
)



466,568Other operating expenses










285,007



42,406



38,463

f


365,876Segment income

$



$



$



$
2,445


$
Operating income






















$
100,692   91




---



##### Table of Contents



May 31, 2008Networking Business


TippingPointRest of





SecurityWorld





BusinessChina-Based


Sales


Central


Tipping


Eliminations/Sales Region


Region


Functions(a)


Point(b)


Other



TotalSales

$
647,718


$
546,868


$



$
104,101


$
(3,808
)
c

$
1,294,879Gross profit


407,382



306,556



(116,370
)


70,197



(13,310
)
d


654,455Direct sales & marketing expenses


115,996



99,121







38,404



5,345

e


258,866Segment contribution profit (loss)


291,386



207,435



(116,370
)


31,793



(18,655
)



395,589Other operating expenses










312,341



32,290



314,439

f


659,070Segment profit

$



$



$



$
(497
)

$
Operating loss






















$
(263,481
)   May 31, 2007Networking Business


TippingPointRest of





SecurityWorld





BusinessChina-Based


Sales


Central


Tipping


Eliminations/Sales Region


Region


Functions(a)


Point(b)


Other



Total(In thousands)Sales

$
634,649


$
542,654


$



$
90,178


$


c

$
1,267,481Gross profit


369,866



258,350



(102,712
)


60,307



(7,357
)
d


578,454Direct sales & marketing expenses


111,487



92,809







35,012



5,756

e


245,064Segment contribution profit (loss)


258,379



165,541



(102,712
)


25,295



(13,113
)



333,390Other operating expenses










284,046



35,738



146,127

f


465,911Segment profit

$



$



$



$
(10,443
)

$
Operating income






















$
(132,521
)     a
    
     Included in our Central Function results were
    depreciation expenses of $22.0 million, $31.6 million
    and $29.4 million for fiscal years 2009, 2008 and 2007,
    respectively.b
    
     Included in our TippingPoint segment profit were
    depreciation expenses of $3.6 million, $2.8 million
    and $3.1 million for fiscal years 2009, 2008 and 2007,
    respectively.c
    
     Represents eliminations from TippingPoint to Rest of
    World sales region for inter-segment revenue during the
    respective periods. Inter-segment sales are recorded at agreed
    upon transfer prices.d
    
     Represents costs not directly attributable to any
    operating business segment.e
    
     Includes stock based compensation in all periods plus
    purchase accounting inventory related adjustments as
    applicable.f
    
     Includes amortization and restructuring in all periods
    and stock-based compensation, patent dispute resolution, patent
    sales, acquisition related expenses, and goodwill impairment, as
    applicable.  92




---



##### Table of Contents



Identifiable assets

2009


2008(In thousands)China-based sales region(1)(2)

$
1,378,059


$
1,276,832Rest of World sales region(1)


875,788



908,944TippingPoint


228,440



231,277Eliminations(3)


(666,930
)


(641,923
)Total

$
1,815,357


$
1,775,130     (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 no 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.  Total Expenditures for Additions to Property and Equipment

2009


2008(In thousands)China-based sales region(1)

$
6,144


$
8,191Rest of World sales region(1)


7,211



6,448TippingPoint


3,232



3,254Total

$
16,587


$
17,893     (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 no
    segregate these expenditures as the CODM does not review the
    segment in that manner.    Years Ended May 31,2009


2008


2007Networking

$
1,061,802



80.6
%

$
1,061,155



81.9
%

$
1,043,524



82.3
%Security


163,941



12.5



133,445



10.3



120,053



9.5Services


45,888



3.5



39,583



3.1



35,871



2.8Voice


45,347



3.4



60,696



4.7



68,033



5.4Total

$
1,316,978






$
1,294,879






$
1,267,481     Years Ended May 31,Customer

2009

2008

2007Huawei Technologies Co.


17
%


17
%


20
%Ingram Micro, Inc.(1)



*


10
%


11
%Total


17
%


27
%


31
%     (1)
    
     Customer did not meet the 10 percent threshold in
    fiscal 2009.   93




---



##### Table of Contents



Note 19:
    Geographical
    Information    Years Ended May 31,2009


2008


2007SalesChina

$
702,107


$
609,498


$
587,044Europe, Middle East, and Africa


231,904



292,339



272,826North America


192,353



202,205



233,691Asia Pacific excluding China


101,979



106,820



103,501Latin and South America


88,635



84,017



70,419Total


1,316,978


$
1,294,879


$
1,267,481       May 31,


May 31,2009


2008Property and equipment, net:United States

$
18,450


$
22,022United Kingdom


5,104



8,008China


12,588



20,436Other


3,870



3,848Total

$
40,012


$
54,314     Note 20:
    Employee
    Benefit Plan and EARP     94




---



##### Table of Contents



change-in-control
  Note 21:
    Litigation    In re Initial Public Offering Securities
    Litigation, Brian Levey vs. TippingPoint Technologies, Inc., et
    al. and/or
   95




---



##### Table of Contents



Note 22:
    Quarterly
    Results of Operations (Unaudited)  Fiscal 2009

Fiscal 2008First

Second

Third

Fourth

First

Second

Third

FourthQuarter

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter

Quarter(In thousands, except per share data)Sales

$
342,650


$
354,562


$
324,707


$
295,059


$
319,434


$
317,801


$
336,390


$
321,254Gross profit


189,627



199,792



185,829



176,216



148,936



152,120



179,674



173,725Gross profit margin%


55.3
%


56.3
%


57.2
%


59.7
%


46.6
%


47.9
%


53.4
%


54.1
%Operating income (loss)


73,383
(1)


4,402



1,500



21,407
(2)


(25,687
)


(41,331
)


(6,066
)


(190,397
)(3)Net income (loss)


79,837
(1)


12,870



1,867



20,151
(2)


(18,654
)


(35,624
)


(7,840
)


(166,723
)(3)Basic and diluted income (loss) per share

$
0.20


$
0.03


$
0.00


$
0.05


$
(0.05
)

$
(0.09
)

$
(0.02
)

$
(0.41
)     (1)
    
    During the first quarter of fiscal 2009 the Company recognized a
    gain of $70.0 million form a favorable patent dispute
    resolution.(2)
    
    During the fourth quarter of fiscal 2009 the Company recognized
    a gain of $15.2 million from the sale of patents.(3)
    
    During the fourth quarter of fiscal 2008 the Company recorded a
    goodwill impairment charge of $158.0 million in the
    TippingPoint reporting unit.  ITEM 9.
    CHANGES
    IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
    FINANCIAL DISCLOSURE    ITEM 9A.
    CONTROLS
    AND PROCEDURES  Evaluation
    of Disclosure Controls and Procedures
  Form 10-K Rule 13a-15(b).
   96




---



##### Table of Contents



Changes
    in Internal Control over Financial Reporting
    MANAGEMENTS
    ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL
    REPORTING
  Rule 13a-15(f). Internal Control-Integrated
    Framework
              Form 10-K.
  Important
    Considerations
   97




---



##### Table of Contents



REPORT OF
    INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
      Internal
    Control  Integrated Framework
        Internal Control  Integrated Framework
        98




---



##### Table of Contents



ITEM 9B.
    OTHER
    INFORMATION   PART III  ITEM 10.
    DIRECTORS,
    EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE  (a)
    Directors    (b)
    Executive
    Officers  Form 10-K.
  (c)
    Section 16(a)
    Beneficial Ownership Reporting Compliance    (d)
    Code of
    Ethics  http://www.3com.com Form 8-K, http://www.3com.com
  (e)
    Corporate
    Governance    ITEM 11.
    EXECUTIVE
    COMPENSATION  Form 10-K
  ITEM 12.
    SECURITY
    OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
    RELATED STOCKHOLDER MATTERS  Form 10-K
 99




---



##### Table of Contents



ITEM 13.
    CERTAIN
    RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
    INDEPENDENCE  Form 10-K
  ITEM 14.
    PRINCIPAL
    ACCOUNTANT FEES AND SERVICES  Form 10-K
 PART IV  ITEM 15.
    EXHIBITS AND
    FINANCIAL STATEMENT SCHEDULES  10-K.
  Form 10-K.
  Form 10-K.
  Form 10-K.
  Form 10-K.
 EXHIBIT INDEX  Exhibit



Incorporated by Reference

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 Shenzhen
    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 Diamond II
    Holdings, Inc., Diamond II Acquisition Corp. and 3Com
    Corporation, dated as of September 28, 2007

8-K/A

000-12867


2
.1

9/28/07 100




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith3
.1

Corrected Certificate of Merger filed to correct an error in the
    Certificate of Merger

10-Q

002-92053


3
.4

10/8/993
.2

Registrants Bylaws, as amended on December 10, 2008

8-K

000-12867


3
.1

12/16/083
.3

Certificate of Designation of Rights, Preferences and Privileges
    of Series A Participating Preferred Stock

10-Q

000-12867


3
.6

10/11/014
.1

Third Amended and Restated Preferred Shares Rights Agreement,
    dated as of November 4, 2002 (Rights Plan)

8-A/A

000-12867


4
.1

11/27/024
.2

Amendment No. 1 to Rights Plan, dated as of
    September 28, 2007

8-K/A

000-12867


4
.1

9/28/0710
.1

3Com Corporation 1983 Stock Option Plan, as amended and restated
    effective September 30, 2001*

10-Q

000-12867


10
.1

1/11/0210
.2

Amended and Restated 3Com Corporation 1984 Employee Stock
    Purchase Plan, approved by stockholders on September 24,
    2008*

8-K

000-12867


10
.2

9/24/0810
.3

3Com Corporation Director Stock Option Plan, as amended*

10-Q

000-12867


10
.4

10/10/0310
.4

3Com Corporation 1994 Stock Option Plan, as amended and restated
    effective April 30, 2002*

10-K

000-12867


10
.7

8/2/0210
.5

3Com Corporation 2003 Stock Plan, as amended and restated
    effective January 1, 2009*

8-K

000-12867


10
.2

1/6/0910
.6

Form of Stock Option Agreement for 2003 Stock Plan (Non-Employee
    Directors)

10-K

000-12867


10
.7

8/5/0510
.7

Form of Stock Option Agreement  2003 Stock Plan*

8-K

000-12867


10
.1

12/18/0810
.8

Form of Restricted Stock Unit Agreement  2003 Stock
    Plan*

8-K

000-12867


10
.2

12/18/0810
.9

Form of Restricted Stock Grant Agreement  2003 Stock
    Plan*

8-K

000-12867


10
.3

12/18/0810
.10

Form of Stock Appreciation Right Agreement  2003
    Stock Plan*

8-K

000-12867


10
.4

12/18/0810
.11

Form of Stand Alone Restricted Stock Agreement*

S-8

333-153662


10
.3

9/24/0810
.12

Form of Stand Alone Stock Option Agreement*

S-8

333-153662


10
.4

9/24/0810
.13

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
.14

Offer Letter dated May 9, 2007 between the Registrant and
    Jay Zager*

8-K

000-12867


10
.1

5/10/0710
.15

Stand Alone Stock Option Agreement dated July 3, 2007 by
    and between Jay Zager and 3Com Corporation*

S-8

333-144322


10
.2

7/3/0710
.16

Stand Alone Restricted Stock Agreement dated July 3, 2007
    by and between Jay Zager and 3Com Corporation*

S-8

333-144322


10
.3

7/3/0710
.17

Offer Letter dated September 12, 2003 between the
    Registrant and Neal D. Goldman*

10-K

000-12867


10
.17

8/11/06 101




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith10
.18

Robert Y. L. Mao Employment Agreement, dated as of
    August 7, 2006, between the registrant and Robert Y. L. Mao*

10-K

000-12867


10
.29

7/31/0710
.19

Robert Y. L. Mao Employment Agreement dated as of April 29,
    2008, between the registrant and Robert Y. L. Mao*

8-K

000-12867


10
.1

4/30/0810
.20

First Amendment to Employment Agreement, effective as of
    January 1, 2009  Robert Y. L. Mao*

10-Q

000-12867


10
.8

4/08/0910
.21

Ronald A. Sege Employment Agreement dated as of April 29,
    2008, between the registrant and Ronald A. Sege*

8-K

000-12867


10
.2

4/30/0810
.22

First Amendment to Employment Agreement, effective as of
    January 1, 2009  Ronald A. Sege*

10-Q

000-12867


10
.9

4/08/0910
.23

Stand Alone Stock Option Agreement dated May 6, 2008 by and
    between Ronald A. Sege and 3Com Corporation*

10-K

000-12867


10
.32

7/25/0810
.24

Stand Alone Restricted Stock Agreement dated May 6, 2008 by
    and between Ronald A. Sege and 3Com Corporation*

10-K

000-12867


10
.33

7/25/0810
.25

Summary of Equity Appreciation Rights Plan (H3C Technologies)*

10-K

000-12867


10
.31

7/31/0710
.26

3Com Corporation Section 16 Officer Severance Plan,
    Amended & Restated effective as of January 15,
    2009*

10-Q

000-12867


10
.7

4/08/0910
.27

Form of Severance Benefits Agreement between the Registrant and
    each of the officers named in our proxy statement (other than
    Messrs. Mao and Sege)*

8-K

000-12867


10
.3

4/4/0610
.28

Form of First Amendment to Severance Benefit Agreement*

10-Q

000-12867


10
.10

4/08/0910
.29

Form of Second Amendment to Severance Benefit Agreement*

10-Q

000-12867


10
.11

4/08/0910
.30

Form of Management Retention Agreement between the Registrant
    and Mr. Goldman*

10-K

000-12867


10
.15

8/5/0510
.31

Form of First Amendment to Management Retention
    Agreement  Mr. Goldman*

10-Q

000-12867


10
.12

4/08/0910
.32

Form of Management Retention Agreement between the Registrant
    and Messrs. Zheng and Zager and future executive officers*

10-K

000-12867


10
.36

7/31/0710
.33

Form of First Amendment to Management Retention
    Agreement  Messrs. Zheng, Zager and future
    executive officers*

10-Q

000-12867


10
.13

4/08/0910
.34

Form of Second Amendment to Management Retention
    Agreement  Messrs. Zheng and Zager and future
    executive officers*

10-Q

000-12867


10
.14

4/08/0910
.35

3Com Corporation 2005 Deferred Compensation Plan,
    Amended & Restated effective as of January 1,
    2009*

10-Q

000-12867


10
.6

4/8/0910
.36

3Bonus Plan for Executive Officers*

8-K

000-12867


10
.1

7/13/09 102




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith10
.37

Form of Indemnity Agreement between the Registrant and its
    officers and directors

S-3/A

333-102591


10
.1

4/9/0310
.38

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, Marlborough, Massachusetts
    01752 as tenant

8-K

000-12867


10
.1

6/10/0910
.39

Hangzhou Manufacture Base Tenancy Agreement for No. 310
    Liuhe Road, Binjiang District, Hangzhou, Zhejiang, China,
    effective January 1, 2009, by and between Huawei
    Technologies Co., Ltd., as landlord, and Hangzhou H3C
    Technologies Co., Ltd., as tenant

8-K

000-12867


10
.1

1/6/0910
.40

Agreement dated and effective as of July 11, 2008 by and
    between 3Com Corporation and Realtek Semiconductor Corp.

10-Q

000-12867


10
.4

10/07/0810
.41

Gigabit Technology License Agreement dated and effective as of
    July 11, 2008 by and between 3Com Corporation, Realtek
    Semiconductor Corporation and Amber Universal Inc.

10-Q

000-12867


10
.5

10/07/0810
.42

Parallel Tasking Technology License Agreement dated and
    effective as of July 11, 2008 by and between 3Com
    Corporation, Realtek Semiconductor Corporation and Leading
    Enterprises Limited

10-Q

000-12867


10
.6

10/07/0810
.43

Shareholders Agreement by and among Shenzhen Huawei
    Investment & Holding Co. Ltd., 3Com Technologies and
    Huawei-3Com Co., Ltd. (the Shareholders
    Agreement) dated as of November 15, 2003 (Certain
    Portions Omitted; Confidential Treatment Requested)

10-K

000-12867


10
.33

8/11/0610
.44

Amendment No. 1 to the Shareholders Agreement dated
    as of July 31, 2004 (Certain Potions Omitted; Confidential
    Treatment Received)

10-K

000-12867


10
.34

8/11/0610
.45

Amendment No. 2 to the Shareholders Agreement dated
    as of January 27, 2006 (Certain Portions Omitted;
    Confidential Treatment Received)

10-K

000-12867


10
.35

8/11/0610
.46

Credit and Guaranty Agreement dated as of March 22, 2007
    among H3C Holdings Limited, as Borrower, 3Com Corporation, 3Com
    Holdings Limited and 3Com Technologies, as Holdco Guarantors,
    various Lenders, Goldman Sachs Credit Partners L.P., as Mandated
    Lead Arranger, Bookrunner, Administrative Agent and Syndication
    Agent, and Industrial and Commercial Bank of China (Asia)
    Limited, as Collateral Agent

8-K

000-12867


10
.1

3/23/07 103




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith10
.47

Amended and Restated Credit and Guaranty Agreement dated as of
    May 25, 2007 and effective as of May 31, 2007 among
    H3C Holdings Limited, as Borrower, 3Com Corporation, 3Com
    Holdings Limited and 3Com Technologies, as Holdco Guarantors,
    H3C Technologies Co., Limited, as Guarantor, various Lenders,
    Goldman Sachs Credit Partners L.P., as Mandated Lead Arranger,
    Bookrunner, Administrative Agent and Syndication Agent, and
    Industrial and Commercial Bank of China (Asia) Limited, as
    Collateral Agent (the A&R Credit Agreement)

8-K

000-12867


10
.1

5/25/0710
.48

First Amendment to A&R Credit Agreement, dated as of
    June 18, 2008

10-K

000-12867


10
.54

7/25/0810
.49

Borrower Share Charge dated March 22, 2007 among 3Com
    Technologies, as Chargor, and Industrial and Commercial Bank of
    China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.53

7/31/0710
.50

Borrower Fixed and Floating Charge dated March 22, 2007
    among H3C Holdings Limited, as Chargor, and Industrial and
    Commercial Bank of China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.54

7/31/0710
.51

Borrower Charge Over Bank Accounts dated March 22, 2007
    among H3C Holdings Limited, as Chargor, and Industrial and
    Commercial Bank of China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.55

7/31/0710
.52

H3C Fixed and Floating Charge dated April 3, 2007 among
    Huawei-3Com Co., Limited, as Chargor, and Industrial and
    Commercial Bank of China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.56

7/31/0710
.53

H3C Share Mortgage dated March 30, 2007 among H3C Holdings
    Limited, as Mortgagor, and Industrial and Commercial Bank of
    China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.57

7/31/0710
.54

H3C Equitable Share Charge dated March 29, 2007 among 3Com
    Technologies, as Chargor, and Industrial and Commercial Bank of
    China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.58

7/31/0710
.55

Deed of Charge in relation to the 100% equity interests in WFOE
    dated April 3, 2007 among Huawei-3Com Co., Limited, as
    Chargor, and Industrial and Commercial Bank of China (Asia)
    Limited, as Collateral Agent

10-K

000-12867


10
.59

7/31/0710
.56

Deed of Charge in relation to the 100% equity interests in
    Queenhive dated April 3, 2007 among Huawei-3Com Co.,
    Limited, as Chargor, and Industrial and Commercial Bank of China
    (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.60

7/31/0710
.57

Deed of Release made March 30, 2007 by Industrial and
    Commercial Bank of China (Asia) Limited, as Collateral Agent, in
    favour of 3Com Technologies

10-K

000-12867


10
.61

7/31/07 104




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith21
.1

Subsidiaries of Registrant











X23
.1

Consent of Independent Registered Public Accounting
    Firm  Deloitte & Touche LLP











X31
.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 or
    arrangement 105




---



##### Table of Contents



SIGNATURES  Pursuant to the requirements of Section 13 or 15(d) of
    the Securities Exchange Act of 1934, the registrant has duly
    caused this report to be signed on its behalf by the
    undersigned, thereunto duly authorized, on the 24th day of
    July, 2009.
  
  By
    /s/  Robert
    Y. L. Mao   Chief Executive Officer
  Pursuant to the requirements of the Securities Exchange Act
    of 1934, this report has been signed below by the following
    persons on behalf of the registrant and in the capacities
    indicated on the 24th day of July, 2009
  Signature

Title/s/  ROBERT
    Y. L. MAO(Robert
    Y. L. Mao)

Chief Executive Officer and Director 
    (Principal Executive Officer)/s/  JAY
    ZAGER(Jay
    Zager)

Executive Vice President,
    Chief Financial Officer 
    (Principal Financial and Accounting Officer)/s/  ERIC
    A. BENHAMOU(Eric
    A. Benhamou)

Chairman of the Board/s/  KATHLEEN
    A. COTE(Kathleen
    A. Cote)

Director/s/  GARY
    T. DICAMILLO(Gary
    T. DiCamillo)

Director/s/  DAVID
    HO(David
    Ho)

Director/s/  JAMES
    R. LONG(James
    R. Long)

Director/s/  RONALD
    A. SEGE(Ronald
    A. Sege)

President and Chief Operating Officer and Director/s/  DOMINIQUE
    TREMPONT(Dominique
    Trempont)

Director  106




---



##### Table of Contents



SCHEDULE 1 
    CONDENSED FINANCIAL INFORMATION OF REGISTRANT
    3COM CORPORATION
    PARENT COMPANY STATEMENTS OF OPERATIONS  Years Ended May 31,2009


2008


2007(In thousands)Sales:External

$
199,973


$
263,801


$
301,937Intercompany


16,311



31,424



41,387Total Sales


216,284



295,225



343,324Cost of sales


151,034



204,384



216,402Gross profit


65,250



90,841



126,922Operating expenses:Sales and marketing


76,110



93,959



108,467Research and development


19,631



49,604



74,102General and administrative


41,206



63,784



40,966Amortization






9,551



14,297Patent dispute resolution and patent sale


(85,200
)






In-process research and development










1,700Intercompany charges, net


(20,105
)


(15,177
)


(36,648
)Restructuring charges (credits)


4,170



750



(12,345
)Total operating expenses


35,812



202,471



190,539Operating income (loss)


29,438



(111,630
)


(63,617
)Interest income, net


1,818



6,754



26,322Intercompany interest income, net


825



3,035



3,490Other income (loss), net


853



5,447



(566
)Income (loss) before income taxes and equity interest in income
    (loss) of subsidiaries


32,934



(96,394
)


(34,371
)Income tax benefit (provision)


123



381



(98
)Equity in income (loss) of subsidiaries, net of tax


81,668



(132,828
)


(54,120
)Net income (loss)

$
114,725


$
(228,841
)

$
(88,589
)    107




---



##### Table of Contents



3COM
    CORPORATION
    PARENT COMPANY BALANCE SHEETS
  May 31,2009


2008(In thousands, except share data)ASSETSCurrent assets:Cash and equivalents

$
71,808


$
106,232Accounts receivable, less allowance for doubtful accounts of
    $5,014 and $8,239, respectively


32,319



26,629Intercompany receivables


105,090



91,163Inventories


12,425



10,704Other current assets


3,349



3,334Total current assets


224,991



238,062Property and equipment, less accumulated depreciation and
    amortization of $50,222 and $71,209, respectively


12,128



14,713Deposits and other assets


15,130



13,952Intercompany loans receivable


1,796



53,416Investment in subsidiaries


1,278,995



1,101,885Total assets

$
1,533,040


$
1,422,028LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable

$
24,239


$
27,737Intercompany payables


124,358



114,195Accrued liabilities and other


31,676



46,476Total current liabilities


180,273



188,408Long-term obligations


532



487Intercompany loans payable


240,060



237,831Stockholders 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: 389,284 and 405,656,
    respectively


2,336,961



2,353,688Retained deficit


(1,290,522
)


(1,405,247
)Accumulated other comprehensive income


65,736



46,861Total stockholders equity


1,112,175



995,302Total liabilities and stockholders equity

$
1,533,040


$
1,422,028    108




---



##### Table of Contents



3COM
    CORPORATION
    PARENT COMPANY STATEMENTS OF STOCKHOLDERS EQUITY
  AccumulatedCommon


Treasury


Unamortized





OtherStock


Stock


Stock-Based


Retained


ComprehensiveShares


Amount


Shares


Amount


Compensation


Deficit


Income (Loss)


Total(In thousands)Balances, May 31, 2006


393,442


$
2,300,396






$



$
(7,565
)

$
(1,087,512
)

$
(2,957
)

$
1,202,362Elimination of unamortized stock-based Compensation






(7,565
)










7,565











Components of comprehensive loss:Net loss






















(88,589
)






(88,589
)Unrealized gain on available-for-sale securities, net of tax


























2,147



2,147Total comprehensive loss






























(86,442
)Equity in other comprehensive income of subsidiaries


























5,159



5,159Repurchase of common stock


(2,359
)


(9,041
)


(870
)


(4,259
)






(163
)






(13,463
)Common stock issued under stock plans, net of cancellations


7,981



19,471



870



4,259







(142
)






23,588Stock-based compensation expense






20,095























20,095Balances, May 31, 2007


399,064


$
2,323,356






$



$



$
(1,176,406
)

$
4,349


$
1,151,299Components of comprehensive loss:Net loss






















(228,841
)






(228,841
)Unrealized loss on available-for-sale securities, net of tax


























(28
)


(28
)Total comprehensive loss






























(228,869
)Equity in other comprehensive income of subsidiaries


























42,540



42,540Repurchase of common stock


(952
)


(3,180
)






















(3,180
)Common stock issued under stock plans, net of cancellations


7,544



8,305























8,305Stock-based compensation expense






25,207























25,207Balances, May 31, 2008


405,656


$
2,353,688






$



$



$
(1,405,247
)

$
46,861


$
995,302Components of comprehensive income:Net Income






















114,725







114,725Total comprehensive income






























114,725Equity in other comprehensive income of subsidiaries


























18,875



18,875Repurchase of common stock


(22,699
)


(53,378
)






















(53,378
)Common stock issued under stock plans, net of cancellations


6,327



6,571























6,571Stock-based compensation expense






30,080























30,080Balances, May 31, 2009


389,284


$
2,336,961






$



$



$
(1,290,522
)

$
65,736


$
1,112,175    109




---



##### Table of Contents



3COM
    CORPORATION,
    PARENT COMPANY STATEMENTS OF CASH FLOWS
  Years Ended May 31,2009


2008


2007(In thousands)Net income (loss)

$
114,725


$
(228,841
)

$
(88,589
)Adjustments to reconcile net income (loss) to net cash provided
    by (used in) operating activities:Depreciation and amortization


3,994



18,548



19,731(Gain) loss on property and equipment disposals and patent sale


(15,103
)


469



907Stock-based compensation expense


23,954



25,207



20,095Loss on investments, net






155



912In-process research and development










1,700Equity interest in (income) loss of subsidiaries


(81,668
)


132,828



54,120Changes in assets and liabilities:Accounts receivable


(5,690
)


1,409



(10,836
)Intercompany, net


(3,764
)


(11,249
)


25,805Inventories


(1,721
)


4,559



(5,454
)Other assets


(1,193
)


6,089



2,080Accounts payable


(3,498
)


(13,092
)


(2,660
)Other liabilities


(14,404
)


9,003



(16,253
)Net cash provided by (used in) operating activities


15,632



(54,915
)


1,558Cash flows from investing activities:Purchases of investments










(225,005
)Proceeds from maturities and sales of investments










590,840Purchases of property and equipment


(2,448
)


(6,796
)


(11,356
)Businesses acquired in purchase transactions, net of cash
    acquired










(7,830
)Investments in subsidiaries


(69,877
)


(329
)


(472,000
)Proceeds from sale of property and equipment










16,097Proceeds from sale of patents, net of $1.8 million fee


15,200







Net cash used in investing activities


(57,125
)


(7,125
)


(109,254
)Cash flows from financing activities:Issuances of common stock


6,568



8,305



23,588Repurchases of common stock


(53,348
)


(3,180
)


(13,463
)Intercompany borrowings, net


53,849



(2,557
)


(6,180
)Other, net










2,806Net cash provided by financing activities


7,069



2,568



6,751Net change in cash and equivalents during year


(34,424
)


(59,472
)


(100,945
)Cash and equivalents, beginning of year


106,232



165,704



266,649Cash and equivalents, end of year

$
71,808


$
106,232


$
165,704    110




---



##### Table of Contents



NOTES TO
    PARENT COMPANY FINANCIAL STATEMENTS
  Note 1:
    Basis of
    Presentation      Rule 4-08(e)(3) Regulation S-X)
  Note 2:
    Dividends
    Received From Subsidiaries    Note 3:
    Long-Term
    Debt    Note 4:
    Commitments        Fiscal Year

Future Lease Payments2010

$
398Total

$
398    111




---



##### Table of Contents



SCHEDULE II      AdditionsBalance at

Charged to





Balance atBeginning of

Costs and





End ofDescription

Period

Expenses

Other

Deductions

Period(In thousands)Year ended May 31, 2007:Allowance for doubtful accounts

$
16,422


$
(586
)

$



$
544
(A)

$
15,292Allowance for product returns


8,692



13,963







16,614



6,041Accrued product warranty


41,791



46,406







47,601



40,596Year ended May 31, 2008:Allowance for doubtful accounts

$
15,292


$
(2,234
)

$



$
805
(A)

$
12,253Allowance for product returns


6,041



12,965







14,388



4,618Accrued product warranty


40,596



33,989







37,688



36,897Year ended May 31, 2009:Allowance for doubtful accounts

$
12,253


$
(2,604
)

$



$
(4
)(A)

$
9,645Allowance for product returns


4,618



11,909







12,322



4,205Accrued product warranty


36,897



23,935







31,245



29,587     (A)
    
    Accounts written off  net of recoveries 112




---



##### Table of Contents



EXHIBIT INDEX
  Exhibit



Incorporated by Reference

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 Shenzhen
    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 Diamond II
    Holdings, Inc., Diamond II Acquisition Corp. and 3Com
    Corporation, dated as of September 28, 2007

8-K/A

000-12867


2
.1

9/28/073
.1

Corrected Certificate of Merger filed to correct an error in the
    Certificate of Merger

10-Q

002-92053


3
.4

10/8/993
.2

Registrants Bylaws, as amended on December 10, 2008

8-K

000-12867


3
.1

12/16/083
.3

Certificate of Designation of Rights, Preferences and Privileges
    of Series A Participating Preferred Stock

10-Q

000-12867


3
.6

10/11/014
.1

Third Amended and Restated Preferred Shares Rights Agreement,
    dated as of November 4, 2002 (Rights Plan)

8-A/A

000-12867


4
.1

11/27/024
.2

Amendment No. 1 to Rights Plan, dated as of
    September 28, 2007

8-K/A

000-12867


4
.1

9/28/0710
.1

3Com Corporation 1983 Stock Option Plan, as amended and restated
    effective September 30, 2001*

10-Q

000-12867


10
.1

1/11/0210
.2

Amended and Restated 3Com Corporation 1984 Employee Stock
    Purchase Plan, approved by stockholders on September 24,
    2008*

8-K

000-12867


10
.2

9/24/0810
.3

3Com Corporation Director Stock Option Plan, as amended*

10-Q

000-12867


10
.4

10/10/0310
.4

3Com Corporation 1994 Stock Option Plan, as amended and restated
    effective April 30, 2002*

10-K

000-12867


10
.7

8/2/0210
.5

3Com Corporation 2003 Stock Plan, as amended and restated
    effective January 1, 2009*

8-K

000-12867


10
.2

1/6/0910
.6

Form of Stock Option Agreement for 2003 Stock Plan (Non-Employee
    Directors)

10-K

000-12867


10
.7

8/5/05 113




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith10
.7

Form of Stock Option Agreement  2003 Stock Plan*

8-K

000-12867


10
.1

12/18/0810
.8

Form of Restricted Stock Unit Agreement  2003 Stock
    Plan*

8-K

000-12867


10
.2

12/18/0810
.9

Form of Restricted Stock Grant Agreement  2003 Stock
    Plan*

8-K

000-12867


10
.3

12/18/0810
.10

Form of Stock Appreciation Right Agreement  2003
    Stock Plan*

8-K

000-12867


10
.4

12/18/0810
.11

Form of Stand Alone Restricted Stock Agreement*

S-8

333-153662


10
.3

9/24/0810
.12

Form of Stand Alone Stock Option Agreement*

S-8

333-153662


10
.4

9/24/0810
.13

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
.14

Offer Letter dated May 9, 2007 between the Registrant and
    Jay Zager*

8-K

000-12867


10
.1

5/10/0710
.15

Stand Alone Stock Option Agreement dated July 3, 2007 by
    and between Jay Zager and 3Com Corporation*

S-8

333-144322


10
.2

7/3/0710
.16

Stand Alone Restricted Stock Agreement dated July 3, 2007
    by and between Jay Zager and 3Com Corporation*

S-8

333-144322


10
.3

7/3/0710
.17

Offer Letter dated September 12, 2003 between the
    Registrant and Neal D. Goldman*

10-K

000-12867


10
.17

8/11/0610
.18

Robert Y. L. Mao Employment Agreement, dated as of
    August 7, 2006, between the registrant and Robert Y. L. Mao*

10-K

000-12867


10
.29

7/31/0710
.19

Robert Y. L. Mao Employment Agreement dated as of April 29,
    2008, between the registrant and Robert Y. L. Mao*

8-K

000-12867


10
.1

4/30/0810
.20

First Amendment to Employment Agreement, effective as of
    January 1, 2009  Robert Y. L. Mao*

10-Q

000-12867


10
.8

4/08/0910
.21

Ronald A. Sege Employment Agreement dated as of April 29,
    2008, between the registrant and Ronald A. Sege*

8-K

000-12867


10
.2

4/30/0810
.22

First Amendment to Employment Agreement, effective as of
    January 1, 2009  Ronald A. Sege*

10-Q

000-12867


10
.9

4/08/0910
.23

Stand Alone Stock Option Agreement dated May 6, 2008 by and
    between Ronald A. Sege and 3Com Corporation*

10-K

000-12867


10
.32

7/25/0810
.24

Stand Alone Restricted Stock Agreement dated May 6, 2008 by
    and between Ronald A. Sege and 3Com Corporation*

10-K

000-12867


10
.33

7/25/0810
.25

Summary of Equity Appreciation Rights Plan (H3C Technologies)*

10-K

000-12867


10
.31

7/31/0710
.26

3Com Corporation Section 16 Officer Severance Plan,
    Amended & Restated effective as of January 15,
    2009*

10-Q

000-12867


10
.7

4/08/09 114




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith10
.27

Form of Severance Benefits Agreement between the Registrant and
    each of the officers named in our proxy statement (other than
    Messrs. Mao and Sege)*

8-K

000-12867


10
.3

4/4/0610
.28

Form of First Amendment to Severance Benefit Agreement*

10-Q

000-12867


10
.10

4/08/0910
.29

Form of Second Amendment to Severance Benefit Agreement*

10-Q

000-12867


10
.11

4/08/0910
.30

Form of Management Retention Agreement between the Registrant
    and Mr. Goldman*

10-K

000-12867


10
.15

8/5/0510
.31

Form of First Amendment to Management Retention
    Agreement  Mr. Goldman*

10-Q

000-12867


10
.12

4/08/0910
.32

Form of Management Retention Agreement between the Registrant
    and Messrs. Zheng and Zager and future executive officers*

10-K

000-12867


10
.36

7/31/0710
.33

Form of First Amendment to Management Retention
    Agreement  Messrs. Zheng, Zager and future
    executive officers*

10-Q

000-12867


10
.13

4/08/0910
.34

Form of Second Amendment to Management Retention
    Agreement  Messrs. Zheng and Zager and future
    executive officers*

10-Q

000-12867


10
.14

4/08/0910
.35

3Com Corporation 2005 Deferred Compensation Plan,
    Amended & Restated effective as of January 1,
    2009*

10-Q

000-12867


10
.6

4/8/0910
.36

3Bonus Plan for Executive Officers*

8-K

000-12867


10
.1

7/13/0910
.37

Form of Indemnity Agreement between the Registrant and its
    officers and directors

S-3/A

333-102591


10
.1

4/9/0310
.38

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, Marlborough, Massachusetts
    01752 as tenant

8-K

000-12867


10
.1

6/10/0910
.39

Hangzhou Manufacture Base Tenancy Agreement for No. 310
    Liuhe Road, Binjiang District, Hangzhou, Zhejiang, China,
    effective January 1, 2009, by and between Huawei
    Technologies Co., Ltd., as landlord, and Hangzhou H3C
    Technologies Co., Ltd., as tenant

8-K

000-12867


10
.1

1/6/0910
.40

Agreement dated and effective as of July 11, 2008 by and
    between 3Com Corporation and Realtek Semiconductor Corp.

10-Q

000-12867


10
.4

10/07/0810
.41

Gigabit Technology License Agreement dated and effective as of
    July 11, 2008 by and between 3Com Corporation, Realtek
    Semiconductor Corporation and Amber Universal Inc.

10-Q

000-12867


10
.5

10/07/08 115




---



##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith10
.42

Parallel Tasking Technology License Agreement dated and
    effective as of July 11, 2008 by and between 3Com
    Corporation, Realtek Semiconductor Corporation and Leading
    Enterprises Limited

10-Q

000-12867


10
.6

10/07/0810
.43

Shareholders Agreement by and among Shenzhen Huawei
    Investment & Holding Co. Ltd., 3Com Technologies and
    Huawei-3Com Co., Ltd. (the Shareholders
    Agreement) dated as of November 15, 2003 (Certain
    Portions Omitted; Confidential Treatment Requested)

10-K

000-12867


10
.33

8/11/0610
.44

Amendment No. 1 to the Shareholders Agreement dated
    as of July 31, 2004 (Certain Potions Omitted; Confidential
    Treatment Received)

10-K

000-12867


10
.34

8/11/0610
.45

Amendment No. 2 to the Shareholders Agreement dated
    as of January 27, 2006 (Certain Portions Omitted;
    Confidential Treatment Received)

10-K

000-12867


10
.35

8/11/0610
.46

Credit and Guaranty Agreement dated as of March 22, 2007
    among H3C Holdings Limited, as Borrower, 3Com Corporation, 3Com
    Holdings Limited and 3Com Technologies, as Holdco Guarantors,
    various Lenders, Goldman Sachs Credit Partners L.P., as Mandated
    Lead Arranger, Bookrunner, Administrative Agent and Syndication
    Agent, and Industrial and Commercial Bank of China (Asia)
    Limited, as Collateral Agent

8-K

000-12867


10
.1

3/23/0710
.47

Amended and Restated Credit and Guaranty Agreement dated as of
    May 25, 2007 and effective as of May 31, 2007 among
    H3C Holdings Limited, as Borrower, 3Com Corporation, 3Com
    Holdings Limited and 3Com Technologies, as Holdco Guarantors,
    H3C Technologies Co., Limited, as Guarantor, various Lenders,
    Goldman Sachs Credit Partners L.P., as Mandated Lead Arranger,
    Bookrunner, Administrative Agent and Syndication Agent, and
    Industrial and Commercial Bank of China (Asia) Limited, as
    Collateral Agent (the A&R Credit Agreement)

8-K

000-12867


10
.1

5/25/0710
.48

First Amendment to A&R Credit Agreement, dated as of
    June 18, 2008

10-K

000-12867


10
.54

7/25/0810
.49

Borrower Share Charge dated March 22, 2007 among 3Com
    Technologies, as Chargor, and Industrial and Commercial Bank of
    China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.53

7/31/0710
.50

Borrower Fixed and Floating Charge dated March 22, 2007
    among H3C Holdings Limited, as Chargor, and Industrial and
    Commercial Bank of China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.54

7/31/0710
.51

Borrower Charge Over Bank Accounts dated March 22, 2007
    among H3C Holdings Limited, as Chargor, and Industrial and
    Commercial Bank of China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.55

7/31/07 116




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##### Table of Contents



Exhibit



Incorporated by Reference

FiledNumber

Exhibit Description

Form

File No.

Exhibit

Filing Date

Herewith10
.52

H3C Fixed and Floating Charge dated April 3, 2007 among
    Huawei-3Com Co., Limited, as Chargor, and Industrial and
    Commercial Bank of China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.56

7/31/0710
.53

H3C Share Mortgage dated March 30, 2007 among H3C Holdings
    Limited, as Mortgagor, and Industrial and Commercial Bank of
    China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.57

7/31/0710
.54

H3C Equitable Share Charge dated March 29, 2007 among 3Com
    Technologies, as Chargor, and Industrial and Commercial Bank of
    China (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.58

7/31/0710
.55

Deed of Charge in relation to the 100% equity interests in WFOE
    dated April 3, 2007 among Huawei-3Com Co., Limited, as
    Chargor, and Industrial and Commercial Bank of China (Asia)
    Limited, as Collateral Agent

10-K

000-12867


10
.59

7/31/0710
.56

Deed of Charge in relation to the 100% equity interests in
    Queenhive dated April 3, 2007 among Huawei-3Com Co.,
    Limited, as Chargor, and Industrial and Commercial Bank of China
    (Asia) Limited, as Collateral Agent

10-K

000-12867


10
.60

7/31/0710
.57

Deed of Release made March 30, 2007 by Industrial and
    Commercial Bank of China (Asia) Limited, as Collateral Agent, in
    favour of 3Com Technologies

10-K

000-12867


10
.61

7/31/0721
.1

Subsidiaries of Registrant











X23
.1

Consent of Independent Registered Public Accounting
    Firm  Deloitte & Touche LLP











X31
.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 or
    arrangement 117