##### 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 1934
 For the fiscal year ended June 1, 2007
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
 For the transition period from  to
 Commission file number: 0-12867
 3COM CORPORATION
  Delaware
    
    94-2605794(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. Employer
Identification No.)350 Campus DriveMarlborough, Massachusetts
    
    01752(Address of principal executive offices)
    
    (Zip Code)
 (508) 323-1000
 N/A
 :
 Title of each class
    
    Name of each exchange on which registeredCommon Stock, $0.01 par value per share 
Preferred Stock Purchase Rights
    
    The NASDAQ Stock Market LLC
The NASDAQ Stock Market LLC
 NONE
  þ o
  o þ
  þ o
 o
  þ o o
  o þ
   Class
    
    Outstanding at July 27, 2007Common Stock, $0.01 par value per share
    
    399,502,446 shares
 DOCUMENTS INCORPORATED BY REFERENCE
 Document
    
    Parts Into Which IncorporatedProxy Statement for the Annual
Meeting of Shareholders to be held
September 26, 2007 (Proxy Statement)
    
    Part III, to the extent stated herein




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##### 



3Com Corporation
Form 10-K Annual Report
For the Fiscal Year Ended June 1, 2007
Table of Contents
 PagePart IItem 1.
    
    Business
    
    
    3Item 1A.
    
    Risk Factors
    
    
    17Item 1B.
    
    Unresolved Staff Comments
    
    
    29Item 2.
    
    Properties
    
    
    29Item 3.
    
    Legal Proceedings
    
    
    30Item 4.
    
    Submission of Matters to a Vote of Security  Holders
    
    
    30Part IIItem 5.
    
    Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    30Item 6.
    
    Selected Financial Data
    
    
    32Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operation
    
    
    33Item 7A.
    
    Quantitative and Qualitative Disclosures about Market Risk
    
    
    51Item 8.
    
    Financial Statements and Supplementary Data
    
    
    53Item 9.
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    94Item 9A.
    
    Controls and Procedures
    
    
    94Item 9B.
    
    Other Information
    
    
    97Part IIIItem 10.
    
    Directors, Executive Officers and Corporate Governance
    
    
    97Item 11.
    
    Executive Compensation
    
    
    97Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    97Item 13.
    
    Certain Relationships and Related Transactions, and Director Independence
    
    
    97Item 14.
    
    Principal Accounting Fees and Services
    
    
    98Part IVItem 15.
    
    Exhibits and Financial Statement Schedules
    
    
    98Exhibit Index
    
    
    98Signatures
    
    
    104Financial Statement Schedule
    
    
    105EX-10.21 Zheng Employment Agreement, effective as of March 29, 2007EX-10.27 Hamilton Offer Letter dated November 2, 2005EX-10.28 Hamilton Severance Benfits Agreement dated February 28, 2007EX-10.29 Robert Y. L. Mao Employment Agreement, dated as of August 7, 2006EX-10.31 Summary of Equity Appreciation Rights PlanEX-10.33 Above Grade Severance Plan effective September 11, 2006EX-10.36 Form of Management Retention AgreementEX-10.53 Borrower Share Charge dated March 22, 2007EX-10.54 Borrower Fixed and Floating Charge dated March 22, 2007EX-10.55 Borrower Charge Over Bank Accounts dated March 22, 2007EX-10.56 H3C Fixed and Floating Charge dated April 3, 2007EX-10.57 H3C Share Mortgage dated March 30, 2007EX-10.58 H3C Equitable Share Charge dated March 29, 2007EX-10.59 Deed of Charge in relation to the 100% equity interest in WFOE dated April 3, 2007EX-10.60 Deed of Charge in relation to the 100% equity interest in Queenhive dated April 3, 2007EX-10.61 Deed of Release made march 30, 2007EX-21.1 Subsidiaries of RegistrantEX-23.1 Consent of Deloitte & Touche LLPEX-31.1 Certification of Principal Executive OfficerEX-31.2 Certification of Principal Financial OfficerEX-32.1 Certification of CEO and CFO Section 906
  1




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2




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PART I
 
 ITEM 1. BUSINESS
 GENERAL
         3




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www.3Com.com
 SECURED, CONVERGED NETWORKING SCN SEGMENT PRODUCTS AND SERVICES
   §
    
    Security;§
    
    IP Telephony;§
    
    Networking;and§
    
    Services.
   Security
   §
    
    Intrusion Prevention Systems;§
    
    Network Access Control; and§
    
    Firewalls.
 Intrusion Prevention Systems
   4




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®
 Network Access Control
  Firewalls
   §
    
    Integrated switch firewalls;§
    
    Secure network interface cards;§
    
    Secure switches and routers;and§
    
    SMB VPN firewall devices with Content Filter Services.
 Internet Protocol (IP) Telephony
  §
    
    IP Telephony Platforms§
    
    Convergence Application Suite§
    
    IP Phones
 IP Telephony Platforms
 ®
 5




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Convergence Application Suite
  §
    
    IP Telephony Module.Scalable and flexibly-deployed NBX and VCX solutions delivering proven
reliability and cost-effective capabilities for organizations of all sizes.§
    
    IP Messaging Module.Messaging with server software for centralized voice mail, fax mail, and
e-mail services.§
    
    IP Presence Module.Software for improving collaboration and communications.§
    
    IP Conferencing Module.Audio, video, and data sharing to cost-effectively enhance collaboration.§
    
    IP Mobility Module. 802.11 wireless phone and remote telecommuting options designed to address
the increasing needs of a mobile workforce.§
    
    IP Contact Center Module.Complete multi-media customer interaction management application.§
    
    IP Convergence Client. Provides convenient personal portal to a variety of interpersonal
communications functions including telephony, audio & video conferencing, messaging, presence,
document sharing and instant messaging.§
    
    IP Telecommuting Module. Delivers the benefits of 3Com Converged applications to users connecting
to enterprise network from remote locations.
 IP Phones
   §
    
    3108 Wireless Phone;§
    
    3106/3107 Cordless Phones;§
    
    3105 Attendant Console;§
    
    3103 Manager Phone;§
    
    3102 Business Phone;§
    
    3101 Basic Phone and with Speaker§
    
    3100 Entry Phone.
 Networking
  §
    
    Local Area Network (LAN) Switches;§
    
    Routers and Gateways;§
    
    Mobility and Wireless LAN;and§
    
    Network and Security Management.
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LAN Switches
   §
    
    Core Switching. We offer modular chassis core networking solutions in
our Switch 8800 series and Switch 7750 series of products. They are
highly resilient, secure and convergence-ready, with Layer 2 and Layer
3 IPv4 and IPv6 Gigabit Ethernet and 10-Gigabit connectivity. The
7750 series can also be used in conjunction with the 8800 as either an
aggregation or edge switch capable of delivering PoE, as well as
Quarantine Protection, a feature of our TippingPoint Security
Management System.§
    
    Gigabit Ethernet Switching. Our Switch 5500G, 4500G, 4200G families
of products address the growing requirements for Gigabit speeds at the
edge of the network as well as features such as PoE, security and
Quarantine Protection. These stackable switches are offered in
configurations to provide customers with both 24- and 48-port models
and built-in 10-Gigabit expansion slot capability.§
    
    Fast Ethernet Switching. We offer a full range of fixed-configuration
switches that deliver performance and flexibility to the edge of the
network. These include enterprise-class offerings such as the Switch
5500 family, Switch 4500 and Switch 4200 families of products, as well
as our OfficeConnect® and Baseline series. Several of these switches
are available in managed and unmanaged configurations, offer line
speeds of 10/100/1000 Mbps and incorporate PoE technology allowing
power from the wiring closet to be supplied to any compliant device,
including IP phones, wireless LAN access points and IntelliJack®
products.
 Routers and Gateways
   §
    
    Router 6000 Products. The Router 6000 series of products bring
enterprise-class WAN routing features, redundancy and performance to
the regional offices of large enterprise customers and to the
headquarters of medium-sized businesses.§
    
    Router 5000 Products. The Router 5000 series of modular products are
designed to connect corporate sites, from small branch to large
regional offices.§
    
    Router 3000 Products. The Router 3000 series of products provide a
fixed configuration platform to securely connect small offices and
remote offices of large enterprises.
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Mobility and Wireless LAN
   §
    
    Wireless LAN Access Points  stand-alone and managed;§
    
    Wireless Controllers and Switches;§
    
    Wireless Routers;§
    
    Wireless Bridges;and§
    
    Wireless Switch Manager.
 Network and Security Management
  §
    
    Network Supervisor.Practical, easy-to-use software, downloadable
from the Internet, maps and monitors the network and quickly alerts
administrators to emerging problems.§
    
    Network Director.Turnkey management application suite offering
advanced monitoring and control features to IT managers.§
    
    Enterprise Management Suite.Comprehensive and flexible solutions for
very large enterprise environments.§
    
    Solutions for Open Management Platforms.A selection of solutions
that enable enterprises to choose management applications that meet
their business and technical needs.§
    
    Security Management System.A scalable and flexible reporting tool
used to manage our intrusion prevention system, TippingPoint SMS
enables users to manage multiple devices and reports on network
security activity.
 Services
   H3C
  8




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H3C
SEGMENT PRODUCTS AND SERVICES
  §
    
    Networking  LAN Switches, Routers, Network Management Software and
Access Control Server;§
    
    Security  Firewalls and VPN Gateways;§
    
    Emerging Technology  IP Storage and IP Video Surveillance; and§
    
    Services.
  LAN Switches
  §
    
    Core Routing Switches. The S9500 Series 10G Multi-service Core
Routing Switch is a new generation high performance switch. It is
extensively applied as 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 (MANs).
Moreover, based on the 10G platform, it supports the new generation
high-speed 10Gbps interface card that provides interconnection between
MANs, campus networks and data centers to construct end-to-end
Ethernet, featuring cost-effective, high performance and reliability
to support abundant services. Furthermore, it provides Layer 2 and
Layer 3 wire-speed packet forwarding and distributed Multi-protocol
Label Switching (MPLS) wire-speed forwarding by its high performance,
high density and high reliability chassis architecture design. It
also provides rich service functions, such as a QoS guarantee,
complete security management and high reliability. The S9500 series
is designed to fully satisfy the requirements of end-users seeking,
its high capability, high reliability and multiple services.§
    
    Multi-Service Switches. The S7500 Series high-end multi-service
switch features high performance, high port density and high
flexibility. It can be applied to the core layer of enterprise
networks, campus networks and education MANs, to the convergence layer
of carriers IP MANs, and to the access layer of data centers. The
S7500 Series switch can provide Layer 2 and Layer 3 switching. It can
provide high-speed links for MAN, campus networks and data centers
based on the 10GE platform and offer service functions, such as
NAT/NetStream/PBR and PoE solutions, a powerful QoS guarantee, a
comprehensive security management mechanism and high level
carrier-class reliability, designed to fully satisfy the requirements
of high-end users for multiple services.§
    
    Layer 3 Intelligent and Resilient Switches. The S5600 Series Switches
are innovative switches that improve LAN operating efficiency by
integrating leading technology called Intelligent Resilient Framework
(IRF). These switches allow high stacking bandwidth up to 96G, high
density GE, 10GE uplink and a swappable power supply unit. This
series represents the next generation of desktop switches, which can
help customers implement a gigabit Ethernet core network or
aggregation layer with high availability as well as scalability.§
    
    Layer 2 Intelligent Gigabit Ethernet Switches.The S5000 Series are
intelligent Layer 2 wire-speed Gigabit Ethernet switching products
that provide high capacity with a full range of features. With the
high performance ASIC and flexible modular structure, they provide
Layer 2-Layer 7 intelligent flow classification and Access Control
Lists (ACL) policies. They implement complete service control and
user management, so they are suitable for the access layer switches in
enterprise networks and MANs.
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§
    
    Fast Ethernet Layer 3 Intelligent and Resilient Switches.The S3900
Series Ethernet Switches are a new generation of premier multi-layer
switches that are designed to meet the enterprise customers
requirement of designing and implementing a unified, highly resilient
network. One of the most important and innovative elements of these
switches, is their IRF technology that allows network managers to
build affordable stackable networks with the high resilience,
flexibility and exceptional performance of larger systems.§
    
    10/100 Mbps Enhanced Layer 3 Switches.The S3500 Series Switches are
Layer 3 wire-speed Ethernet switches with 10/100M aggregation in
service provider data centers, server cluster, wiring cabinet and
MANs. It provides six types of high performance Ethernet switches.
Running on H3Cs (VRP) networking operating system, this series of
products provides abundant routing protocols, Virtual LAN (VLAN)
switching, traffic management, QoS, powerful bandwidth control and
user management.§
    
    10/100 Mbps Enhanced Layer 2 Intelligent and Access Switches.The
S3000 and S2000-EI Series are intelligent Layer 2 wire-speed Ethernet
switching products that are designed to meet the needs of
large-capacity switching and high QoS requirements. This series
utilizes high performance ASICs and a flexible modular structure,
providing Layer 2 through Layer 7 intelligent flow classification,
complete QoS, comprehensive service control and subscriber management.
It can be used as the access layer switch for service control, user
management and network security guarantee in enterprise networks and
MANs.§
    
    Unmanaged Ethernet Switches.The S1000/1200 Series is a
non-intelligent, Layer 2 wire speed switch. By deploying power plug
and play and fan-less design, it provides a perfect silent desktop
access solution for offices. The S1000 series provides 10/100M
Ethernet ports while the S1200 series supports 10/100/1000M Ethernet
ports. With minimum cost required for network management, this
product line is an ideal choice for the small and home office
environment.
 Routers
  §
    
    NetEngine SeriesRouters.The NetEngine family of routers is purchased
from Huawei Technologies under an original equipment manufacturing
agreement. These core routers consist of products from a super-large
capacity core router, which can be applied in the national backbone
networks, provincial 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).
Incorporating advanced technologies such as a 10G/40G interface,
three-stage switching fabric, optical shelf interconnection for
multi-chassis stack, network processors (NP) for forwarding engine,
and the mature, stable VRP routing software, it can meet the
availability requirements and the multi-service demands of
carrier-class and large enterprise networks.§
    
    AR Series Routers.The AR Series Routers support multiple services,
integrating data voice and video in one device. The BIMS system
provides easy-to-use management tools. These routers offer VPN
functionality (L2TP, GRE, IPSec and MPLS VPN) as well as support
multiple security products including firewalls, IPS and Intrusion
Detection Systems (IDS), ACL, Authentification, Authorization, and
Accounting (AAA), CA, and Huawei Terminal Access Controller Access
Control System (Huawei-TACAS+).
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§
    
    Intelligent Multi-Service Enterprise Core Routers.The AR46
Intelligent Multi-Service Enterprise Core Routers are multi-service
routers with high performance and reliability developed for
enterprise, industry and carrier networks. AR46 routers can serve as
central routers for carrier networks. The AR46 routers are designed
to meet enterprise and carrier requirements for network performance,
service integration, high reliability, high security and three-in-one
solutions.§
    
    Modular Branch Routers.The AR28 Series are modular multi-service
branch routers, providing flexible LAN and WAN options, comprehensive
security and VPN solutions, and voice and data integration. The
extended performance, high density, enhanced security and concurrent
applications enable the AR28 Series to meet the growing demands of
enterprises.§
    
    Fixed Port Branch Routers.The AR18 Series Access Routers are
fixed-port products for small-sized enterprises and branch offices.
They feature enhanced security, superior reliability and advanced QoS
services.
 Network Management System
  Comprehensive Access Management Server (CAMS)
  Firewalls
  VPN Gateways
  IP Storage
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IP Video Surveillance
  Services
  CUSTOMERS AND MARKETS
    §
    
    view their networks as mission-critical tools that help them to deliver mandatory
and/or value-add differentiated services to their customers or constituents;§
    
    seek convergence-ready voice and data solutions and wireless solutions that are
standards-based to reduce complexity and protect their investments; and§
    
    value networking solutions that are affordable to acquire, operate, maintain and expand.
 SALES, MARKETING AND DISTRIBUTION
   COMPETITION
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§
    
    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 innovative products and solutions.To be considered innovative,
a provider must deliver a broad line of products and solutions and
maintain a substantial intellectual property portfolio.
 RESEARCH AND DEVELOPMENT
    SIGNIFICANT CUSTOMERS AND PRODUCTS
  FINANCIAL INFORMATION ABOUT SEGMENT, FOREIGN AND DOMESTIC OPERATIONS AND EXPORT
 SALES
   13




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BACKLOG
  SEASONALITY
  MANUFACTURING AND COMPONENTS
       INTELLECTUAL PROPERTY AND RELATED MATTERS
  14




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EMPLOYEES
 TotalSales and marketing
    
    
    1,855Customer service and supply chain operations
    
    
    975Research and development
    
    
    2,829General and administrative
    
    
    650Total
    
    
    6,309
    EXECUTIVE OFFICERS OF THE REGISTRANT
  Name
    
    Age
    
    PositionEdgar Masri
    
    
    49
    
    
    President and Chief Executive Officer, 3Com;
Chief Executive Officer, H3C Technologies Co.,
LimitedNeal D. Goldman
    
    
    56
    
    
    Executive Vice President, Chief Administrative
and Legal Officer and Secretary, 3ComJay Zager
    
    
    57
    
    
    Executive Vice President and Chief Financial
OfficerRobert Dechant
    
    
    45
    
    
    Senior Vice President and General Manager,
Data and Voice Business UnitJames Hamilton
    
    
    43
    
    
    President, TippingPoint DivisionDr. Shusheng Zheng
    
    
    40
    
    
    Chief Operating Officer, H3C Technologies Co.,
Limited
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Edgar Masri
 Neal D. Goldman
 Jay Zager
 Robert Dechant
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James Hamilton
 Dr. Shusheng Zheng
 
 ITEM 1A RISK FACTORS
  Risks Related to Historical Losses, Financial Condition and Substantial Indebtedness
 We have incurred significant net losses in recent fiscal periods, including $89 million for the
year ended May 31, 2007, $101 million for the year ended May 31, 2006 and $196 million for year
ended May 31, 2005, and we may not be able to return to profitability.
  
    
    declining sales due to price competition and reduced incoming order rate;
    
    operating expenses that, as a percentage of sales, have exceeded our desired financial model;
    
    management changes;
    
    disruptions and expenses resulting from our workforce reductions, management changes and employee attrition;
    
    risk of increased excess and obsolete inventories; and
    
    interest expense resulting from our senior secured loan.
  We may not be able to compensate for lower sales or unexpected cash outlays with cost reductions
sufficient to generate positive net income or cash flow.
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Efforts to reduce operating expenses have involved, and could involve further, workforce
reductions, closure of offices and sales or discontinuation of businesses, leading to reduced sales
and other disruptions in our business; if these efforts are not successful, we may experience
higher expenses than we desire.
  Our substantial debt could adversely affect our financial condition; and the related debt service
obligations may adversely affect our cash flow and ability to invest in and grow our businesses.
    
    
    increase our vulnerability to general adverse economic and industry conditions;
    
    limit our ability to obtain additional financing;
    
    require the dedication of a substantial portion of any cash flow from operations to the
payment of principal of, and interest on, our indebtedness, thereby reducing the
availability of such cash flow to fund growth, working capital, capital expenditures and
other general corporate purposes;
    
    limit our flexibility in planning for, or reacting to, changes in our business and our industry; and
    
    place us at a competitive disadvantage relative to our competitors with less debt.
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The restrictions imposed by the terms of our senior secured loan facility could adversely impact
our ability to invest in and grow our H3C business.
  An adverse change in the interest rates for our borrowings could adversely affect our financial
condition.
  Rating downgrades may make it more expensive for us to refinance our debt or borrow money.
  Risks Related to H3C Segment and Dependence Thereon
 We are significantly dependent on our H3C segment; if H3C is not successful we will likely
experience a material adverse impact to our business, business prospects and operating results.
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Sales from our H3C segment, and therefore in China, constitute a material portion of our total
sales, and our business, financial condition and results of operations will to a significant degree
be subject to economic, political and social events in the PRC.
  Our H3C segment is dependent on Huawei Technologies in several material respects, including as an
important customer; should Huawei reduce its business with H3C, our business will likely be
materially adversely affected.
  We must execute on a global strategy to leverage the benefits of our H3C acquisition, including
integration activities we determine to undertake; if we are not successful in these efforts, our
business will suffer.
   Risks Related to Personnel
 Our success is dependent on continuing to hire and retain qualified managers and other personnel,
including at our H3C segment and reducing senior management turnover in our SCN segment; if we are
not successful in attracting and retaining these personnel, our business will suffer.
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Risks Related to Competition
 If we do not respond effectively to increased competition caused by industry volatility and
consolidation our business could be harmed.
  
    
    industry volatility resulting from rapid product development cycles;
    
    increasing price competition due to maturation of basic networking technologies;
    
    industry consolidation resulting in competitors with greater financial, marketing, and technical resources; and
    
    the presence of existing competitors with greater financial resources together with the
potential emergence of new competitors with lower cost structures and more competitive
offerings.
 Our competition with Huawei in the enterprise networking market could have a material adverse
effect on our sales and our results of operations; and after a contractual non-compete period
expires, Huawei can increase its level of competition, which would likely materially and adversely
affect our business.
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Risks Related to Business and Technology Strategy
 We may not be successful at identifying and responding to new and emerging market and product
opportunities, or at responding quickly enough to technologies or markets that are in decline.
  
    
    identify new market and product opportunities;
    
    predict which technologies and markets will see declining demand;
    
    develop and introduce new products and solutions in a timely manner;
    
    gain market acceptance of new products and solutions, particularly in targeted emerging markets; and
    
    rapidly and efficiently transition our customers from older to newer enterprise networking technologies.
  
    
    there is a delay in introducing new products;
    
    we lose certain channels of distribution or key partners;
    
    our products do not satisfy customers in terms of features, functionality or quality; or
    
    our products cost more to produce than we expect.
  We expect to utilize strategic relationships and other alliances as key elements in our strategy.
If we are not successful in forming desired ventures and alliances or if such ventures and
alliances are not successful, our ability to achieve our growth and profitability goals could be
adversely affected.
   Our strategy of outsourcing functions and operations may fail to reduce cost and may disrupt our
operations.
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Our reliance on industry standards, technological change in the marketplace, and new product
initiatives may cause our sales to fluctuate or decline.
  
    
    the convergence of technologies, such as voice, data and video on single, secure
networks;
    
    the timely adoption and market acceptance of industry standards, and timely resolution
of conflicting U.S. and international industry standards; and
    
    our ability to influence the development of emerging industry standards and to introduce
new and enhanced products that are compatible with such standards.
  We focus on enterprise networking, and our results of operations may fluctuate based on factors
related entirely to conditions in this market.
  Risks Related to Operations and Distribution Channels
 A significant portion of our SCN sales is derived from a small number of distributors. If any of
these partners reduces its business with us, our business could be seriously harmed.
  We depend on distributors who maintain inventories of our products. If the distributors reduce
their inventories of our products, our sales could be adversely affected.
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If we are unable to successfully develop relationships with system integrators, service providers,
and enterprise VARs, our sales may be negatively affected.
  We may pursue acquisitions of other companies that, if not successful, could adversely affect our
business, financial position and results of operations.
  We may be unable to manage our supply chain successfully, which would adversely impact our sales,
gross margin and profitability.
  
    
    in the past, some key components have had limited availability;
    
    as integration of networking features on a reduced number of computer chips continues,
we are increasingly facing competition from parties who are our suppliers;
    
    our ability to accurately forecast demand is diminished;
    
    our reliance on, and long-term arrangements with, third-party manufacturers places much
of the supply chain process out of our direct control and heightens the need for accurate
forecasting and reduces our ability to transition quickly to alternative supply chain
strategies; and
    
    we may experience disruptions to our logistics.
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Our strategies to outsource the majority of our manufacturing requirements to contract
manufacturers may not result in meeting our cost, quality or performance standards. The inability
of any contract manufacturer to meet our cost, quality or performance standards could adversely
affect our sales and overall results from operations.
   If we fail to adequately evolve our financial and managerial control and reporting systems and
processes, including the management of our H3C segment, our ability to manage and grow our business
will be negatively affected.
  Risks Related to our Operations in the Peoples Republic of China
 Chinas governmental and regulatory reforms and changing economic environment may impact our
ability to do business in China.
  
    
    the promulgation of new laws and regulations and the interpretation of those laws and regulations;
    
    enforcement and application of rules and regulations by the Chinese government;
    
    the introduction of measures to control inflation or stimulate growth; or
    
    any actions that limit our ability to develop, manufacture, import or sell our products
in China, or to finance and operate our business in China.
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Uncertainties with respect to the Chinese legal system may adversely affect us.
  If PRC tax benefits available to H3C are reduced or repealed, our business could suffer.
   H3C is subject to restrictions on paying dividends and making other payments to us.
  We are subject to risks relating to currency rate fluctuations and exchange controls and we do not
hedge this risk in China.
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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.
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##### Table of Contents



OSN, our new open source strategy, subjects us to additional intellectual property risks, such as
less control over development of certain technology that forms a part of this strategy and a higher
likelihood of litigation.
  Risks Related to the Trading Market
 Fluctuations in our operating results and other factors may contribute to volatility in the market
price of our stock.
  
    
    fluctuations in our quarterly results of operations and cash flow;
    
    changes in our cash and equivalents and short term investment balances;
    
    variations between our actual financial results and published analysts expectations; and
    
    announcements by our competitors.
  28




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Risks Related to Anti-takeover Mechanisms
 We have various mechanisms in place to discourage takeover attempts, which may reduce or eliminate
our stockholders ability to sell their shares for a premium in a change of control transaction.
  
    
    no cumulative voting for directors, which would otherwise allow less than a majority of
stockholders to elect director candidates;
    
    control by our board of directors of the size of our board of directors and our classified board of directors;
    
    prohibition on the ability of stockholders to call special meetings of stockholders;
    
    the ability of our board of directors to alter our bylaws without stockholder approval;
    
    prohibition on the ability of stockholders to take actions by written consent;
    
    advance notice requirements for nominations of candidates for election to our board of
directors or for proposing matters that can be acted upon by our stockholders at
stockholder meetings;
    
    certain amendments to our certificate of incorporation and bylaws require the approval
of holders of at least
662/3
percent of the voting power of all outstanding stock; and
    
    the ability of our board of directors to issue, without stockholder approval, preferred
stock with rights that are senior to those of our common stock.
  
 ITEM 1B. UNRESOLVED STAFF COMMENTS
  
 ITEM 2. PROPERTIES
   Location
    
    Sq. Ft.
    
    Owned/Leased
    
    Primary UseUnited StatesBoston Area
    
    
    201,000
    
    
    Leased
    
    Corporate headquarters, office,
research and development, and
customer service.United StatesAustin Area
    
    
    70,000
    
    
    Leased
    
    TippingPoints main
office, research
and development,
and customer
service.United StatesChicago Area
    
    
    43,000
    
    
    Leased
    
    Office, research
and development,
and customer
service.EuropeU.K.
    
    
    39,000
    
    
    Leased
    
    Office, research
and development,
and customer
service.ChinaHangzhou
    
    
    1,682,000
    
    
    Leased
    
    Office, research
and development,
manufacturing,
sales, and
training. Used by
our H3C segment.
Lease expires
January 2009.ChinaBeijing
    
    
    481,000
    
    
    Leased
    
    Research and
development,
training, sales and
customer service.
Used by our H3C
segment.
 29




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ITEM 3. LEGAL PROCEEDINGS
  
 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 2007
    
    High
    
    Low
    
    Fiscal 2006
    
    High
    
    LowFirst Quarter
    
    $
    5.31
    
    
    $
    3.95
    
    
    First Quarter
    
    $
    4.00
    
    
    $
    3.21Second Quarter
    
    
    5.24
    
    
    
    3.95
    
    
    Second Quarter
    
    
    4.30
    
    
    
    3.37Third Quarter
    
    
    4.24
    
    
    
    3.73
    
    
    Third Quarter
    
    
    5.27
    
    
    
    3.47Fourth Quarter
    
    
    4.79
    
    
    
    3.60
    
    
    Fourth Quarter
    
    
    5.70
    
    
    
    4.25
  Total Number of
    
    
    Approximate DollarShares Purchased as
    
    
    Value of SharesTotal Number
    
    
    Average
    
    
    Part of Publicly
    
    
    that May Yet Beof Shares
    
    
    Price Paid
    
    
    Announced Plans or
    
    
    Purchased Under thePeriod
    
    Purchased
    
    
    per Share
    
    
    Programs(1)
    
    
    Plans or ProgramsMarch 3, 2007 through March 30, 2007
    
    
    396,751
    (2)
    
    $
    3.89
    
    
    
    
    
    
    $
    100,000,000March 31, 2007 through April 27, 2007
    
    
    13,634
    (2)
    
    
    3.94
    
    
    
    
    
    
    
    April 28, 2007 through June 1, 2007
    
    
    12,082
    (2)
    
    
    4.17
    
    
    
    
    
    
    
    Total
    
    
    422,467
    
    
    $
    3.90
    
    
    
    
    
    
    $
    
 
 (1)
    
    On March 23, 2005, our Board of Directors had approved a stock repurchase program providing
for expenditures of up to $100.0 million through March 31, 2007, provided that all repurchases
are pre-approved by the Audit and Finance Committee of the Board of Directors. We did not
repurchase shares of our common stock pursuant to this authorization in the year ended May 31,
2007. The program has now expired.(2)
    
    Represents shares surrendered to us to satisfy tax withholding obligations that arose upon
the vesting of restricted stock awards. 30




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COMPARISON OF STOCKHOLDER RETURN
 (1) (1) (2)(3)
 
 (1)
    
    Our New Peer Group consists of Avaya, Inc., Cisco Systems, Inc., Extreme Networks, Inc.,
Foundry Networks, Inc., McAfee, Inc. and Netgear Inc. Our Old Peer Group consists of Avaya,
Inc., Cisco Systems, Inc., Extreme Networks, Inc., Foundry Networks, Inc. and Netgear Inc.
Internet Security Systems Inc. was acquired in 2006 and has been removed from the Old Peer
Group.(2)
    
    Assumes that $100.00 was invested on May 31, 2002 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.
 COMPARISON OF 5 YEAR CUMULATIVE TOTAL RETURN*
 
 
 *
    
    $100 invested on 5/31/02 in stock or index-including reinvestment of dividends. Index calculated on month-end basis.Copyright © 2007, Standard & Poors, a division of The McGraw -Hill Companies, Inc. All rights reserved. 
w w w .researchdatagroup.com/S&P.htm 31




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DATA POINTS FOR PERFORMANCE GRAPH
 5/31/02
    
    5/30/03
    
    5/28/04
    
    6/3/05
    
    6/2/06
    
    6/1/073Com Corporation
    
    
    100.00
    
    
    
    88.31
    
    
    
    116.37
    
    
    
    63.67
    
    
    
    85.61
    
    
    
    84.35S&P 500
    
    
    100.00
    
    
    
    91.94
    
    
    
    108.79
    
    
    
    117.75
    
    
    
    127.92
    
    
    
    157.08New Peer Group
    
    
    100.00
    
    
    
    103.16
    
    
    
    141.66
    
    
    
    123.05
    
    
    
    130.39
    
    
    
    172.01Old Peer Group
    
    
    100.00
    
    
    
    104.12
    
    
    
    142.98
    
    
    
    122.20
    
    
    
    130.38
    
    
    
    171.23
 
 ITEM 6. SELECTED FINANCIAL DATA
   Fiscal Year May 31,(In thousands, except per share amounts)
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003Sales
    
    $
    1,267,481
    
    
    $
    794,807
    
    
    $
    651,244
    
    
    $
    698,884
    
    
    $
    932,866Net (loss)
    
    
    (88,589
    )
    
    
    (100,675
    )
    
    
    (195,686
    )
    
    
    (349,263
    )
    
    
    (283,754
    )(Loss) from continuing operations
before cumulative effect of accounting
change
    
    
    (88,589
    )
    
    
    (100,675
    )
    
    
    (195,686
    )
    
    
    (346,863
    )
    
    
    (230,093
    )(Loss) per share from continuing
operations before cumulative effect of
accounting change
Basic and diluted
    
    $
    (0.22
    )
    
    $
    (0.26
    )
    
    $
    (0.51
    )
    
    $
    (0.91
    )
    
    $
    (0.64
    )
  Balances as of May 31,(In thousands)
    
    2007
    
    2006
    
    2005
    
    2004
    
    2003Cash, equivalents and short-term investments
    
    $
    559,217
    
    
    $
    864,347
    
    
    $
    844,104
    
    
    $
    1,383,356
    
    
    $
    1,484,588Total assets
    
    
    2,151,092
    
    
    
    1,861,361
    
    
    
    1,592,967
    
    
    
    1,820,818
    
    
    
    2,062,360Working capital, (1)
    
    
    257,614
    
    
    
    778,064
    
    
    
    667,949
    
    
    
    1,213,108
    
    
    
    1,314,012Deferred taxes and long-term obligations
    
    
    23,725
    
    
    
    13,788
    
    
    
    8,484
    
    
    
    15,135
    
    
    
    4,595Long term debt
    
    
    336,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Retained deficit
    
    
    (1,176,406
    )
    
    
    (1,087,512
    )
    
    
    (967,952
    )
    
    
    (755,244
    )
    
    
    (405,981
    )Stockholders equity
    
    
    1,151,299
    
    
    
    1,202,362
    
    
    
    1,274,923
    
    
    
    1,499,114
    
    
    
    1,718,597
 
 (1)
    
    Working capital is defined as total current assets less total current liabilities. 32




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ITEM 7. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 INTRODUCTION
  BUSINESS OVERVIEW
   §
    
    Networking;§
    
    Security;§
    
    Voice;§
    
    Services; and§
    
    Legacy Connectivity Products.
  §
    
    forming the Huawei-3Com joint venture or H3C;§
    
    acquisition of majority ownership of H3C and subsequently purchasing
Huaweis remaining 49 percent ownership interest in H3C;§
    
    financing a portion of the purchase price for the acquisition of
Huaweis 49 percent ownership in H3C by entering into a $430 million
senior secured credit agreement;§
    
    restructuring activities which included outsourcing of information
technology, all manufacturing activity in our SCN segment, and
significant headcount reductions in other functions, and selling
excess facilities;§
    
    significant changes to our executive leadership;§
    
    acquiring TippingPoint Technologies, Inc.; and§
    
    realigning our SCN sales and marketing channels and expenditures.
 33




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Significant Events
 H3C
    New Products
  Business Environment and Future Trends
  §
    
    Intense competition in the market for higher end, enterprise core routing and switching products;§
    
    Aggressive product pricing by competitors targeted at gaining share in market segments where we
have had a strong position historically, such as the small to medium-sized enterprise market;
and§
    
    The advanced nature and ready availability of merchant silicon, which allows low-end competitors
to deliver competitive products and makes it increasingly difficult for us to differentiate our
products.
 34




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##### Table of Contents



§
    
    Launching the second phase of our integration of our Asia Pacific
Region sales models for data networking sales, especially in the
medium-enterprise market; and§
    
    Integrating certain information technology (IT), supply chain and
customer support functions to enable seamless go-to-market models and
achieve synergies between our operating segments.
   35




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BASIS OF PRESENTATION
         36




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CRITICAL ACCOUNTING POLICIES
  Revenue recognition:
     Allowance for doubtful accounts:
 Inventories:
 37




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Goodwill and intangible assets:
 Equity securities and other investments:
  Stock-based Compensation
   Restructuring charges:
 38




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Product Warranty:
 Income taxes:
 39




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RESULTS OF OPERATIONS  YEARS ENDED MAY 31, 2007, 2006, AND 2005
   2007
    
    2006
    
    2005Sales
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %Cost of sales
    
    
    54.4
    
    
    
    58.7
    
    
    
    64.0Gross profit margin
    
    
    45.6
    
    
    
    41.3
    
    
    
    36.0Operating expenses:Sales and marketing
    
    
    25.2
    
    
    
    34.6
    
    
    
    37.4Research and development
    
    
    17.0
    
    
    
    12.8
    
    
    
    14.5General and administrative
    
    
    7.4
    
    
    
    9.1
    
    
    
    9.2Amortization and write-down of intangible assets
    
    
    3.4
    
    
    
    2.6
    
    
    
    1.4In-process research and development
    
    
    2.8
    
    
    
    0.1
    
    
    
    1.0Restructuring charges
    
    
    0.3
    
    
    
    1.8
    
    
    
    3.7Total operating expenses
    
    
    56.1
    
    
    
    61.0
    
    
    
    67.2Operating loss
    
    
    (10.5
    )
    
    
    (19.7
    )
    
    
    (31.2
    )Gain on investments, net
    
    
    0.1
    
    
    
    0.5
    
    
    
    0.2Interest income, net
    
    
    3.2
    
    
    
    3.6
    
    
    
    3.3Other income (expense), net
    
    
    3.1
    
    
    
    1.0
    
    
    
    (0.7
    )Loss from operations before income taxes, equity
interest in loss of unconsolidated joint venture and
minority interest in income of consolidated joint
venture
    
    
    (4.1
    )
    
    
    (14.6
    )
    
    
    (28.4
    )Income tax (provision) benefit
    
    
    (0.8
    )
    
    
    1.9
    
    
    
    (0.5
    )Equity interest in income (loss) of unconsolidated joint
venture
    
    
    
    
    
    
    1.4
    
    
    
    (1.1
    )Minority interest in income of consolidated joint venture
    
    
    (2.1
    )
    
    
    (1.4
    )
    
    
    Net loss
    
    
    (7.0
    )%
    
    
    (12.7
    )%
    
    
    (30.0
    )%
 Comparison of fiscal 2007 and 2006
  Sales
  40




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Fiscal Year2007
    
    
    2006Networking
    
    $
    1,028.1
    
    
    
    81.1
    %
    
    $
    577.0
    
    
    
    72.6
    %Security
    
    
    120.1
    
    
    
    9.5
    
    
    
    88.0
    
    
    
    11.1Voice
    
    
    68.0
    
    
    
    5.4
    
    
    
    56.6
    
    
    
    7.1Services
    
    
    35.9
    
    
    
    2.8
    
    
    
    33.4
    
    
    
    4.2Connectivity Products
    
    
    15.4
    
    
    
    1.2
    
    
    
    39.8
    
    
    
    5.0Total
    
    $
    1,267.5
    
    
    
    
    
    
    $
    794.8
       Fiscal Year2007
    
    
    2006North America
    
    $
    233.7
    
    
    
    18.4
    %
    
    $
    248.5
    
    
    
    31.3
    %Latin and South America
    
    
    70.4
    
    
    
    5.6
    
    
    
    72.2
    
    
    
    9.1Europe, Middle East, and Africa
    
    
    272.8
    
    
    
    21.5
    
    
    
    298.5
    
    
    
    37.5Asia Pacific
    
    
    103.5
    
    
    
    8.2
    
    
    
    91.4
    
    
    
    11.5China
    
    
    587.1
    
    
    
    46.3
    
    
    
    84.2
    
    
    
    10.6Total
    
    $
    1,267.5
    
    
    
    
    
    
    $
    794.8
  41




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Gross Profit Margin
  Twelve MonthsEndedJune 1, 20071) Consolidation of H3C
    
    
    6.5
    %2) SCN cost improvements
    
    
    2.3
    %3) SCN product mix and selling price reductions
    
    
    (3.3
    %)4) SCN volume impact
    
    
    (1.2
    %)Total
    
    
    4.3
    %
 
 1)
    
    The increase is due to the consolidation of H3C results in the current
period. The H3C segment generally has higher gross margins.2)
    
    The increase in the SCN margin was primarily the result of lower
product material and delivery costs.3)
    
    The decrease in the SCN margin was the result of lower average selling
prices and an unfavorable shift in product mix.4)
    
    The decrease in the SCN margin was the result of lower revenue on the
portion of our costs that are fixed in nature. Operating Expenses
    Sales and Marketing.
 42




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Research and Development
 General and Administrative
 Amortization and Write-Down of Intangibles.
 In-process research and development.
 Restructuring Charges
  Gain on Investments, Net
  Interest Income and Other Income (Expense), Net
  43




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Income Tax (Provision) Benefit
  Minority Interest of Huawei in the Income of Consolidated Huawei-3Com Joint Venture
  Comparison of fiscal 2006 and 2005
 Sales
   Fiscal Year2006
    
    
    2005Networking
    
    $
    577.0
    
    
    
    72.6
    %
    
    $
    494.5
    
    
    
    75.9
    %Security
    
    
    88.0
    
    
    
    11.1
    
    
    
    25.8
    
    
    
    4.0Voice
    
    
    56.6
    
    
    
    7.1
    
    
    
    44.9
    
    
    
    6.9Services
    
    
    33.4
    
    
    
    4.2
    
    
    
    32.0
    
    
    
    4.9Connectivity Products
    
    
    39.8
    
    
    
    5.0
    
    
    
    54.0
    
    
    
    8.3Total
    
    $
    794.8
    
    
    
    
    
    
    $
    651.2
    44




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##### Table of Contents



Fiscal Year2006
    
    
    2005North America
    
    $
    248.5
    
    
    
    31.3
    %
    
    $
    214.1
    
    
    
    32.9
    %Latin and South America
    
    
    72.2
    
    
    
    9.1
    
    
    
    57.7
    
    
    
    8.9Europe, Middle East, and Africa
    
    
    298.5
    
    
    
    37.5
    
    
    
    294.7
    
    
    
    45.2Asia Pacific
    
    
    175.6
    
    
    
    22.1
    
    
    
    84.7
    
    
    
    13.0Total
    
    $
    794.8
    
    
    
    
    
    
    $
    651.2
  Gross Profit Margin
  1) Increased sales of security products and inclusion of
TippingPoint higher margin products for full current period
    
    
    3.6
    %2) Consolidation of H3C higher margin products
    
    
    2.13) SCN product mix and selling price reductions
    
    
    (2.4
    )4) Royalty payment reductions
    
    
    1.15) Other
    
    
    0.9Total
    
    
    5.3
    %
 
 1)
    
    The increase was the result of higher average selling prices and margin for
TippingPoints security products compared to other SCN products as well as the
inclusion of a full year of TippingPoint results in fiscal year 2006.2)
    
    The increase is due to the inclusion of two months of results of H3C which
generally have higher gross margins.3)
    
    The decrease in the SCN margin was the result of lower average selling prices and
an unfavorable shift in product mix. These declines were partially offset by
product cost reductions.4)
    
    Fiscal year 2005 included final disbursements on two significant royalty payments.5)
    
    Other cost reduction activities included freight consolidation, and a reduction
in the Connectivity Products business that consequently caused a decrease in unit
shipment per revenue dollar which lowered variable costs. 45




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##### Table of Contents



Operating Expenses
    Sales and Marketing.
 Research and Development
 General and Administrative
 Amortization and Write-Down of Intangibles.
 In-process research and development.
 Restructuring Charges
 46




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Gain on Investments, Net
  Interest Income and Other Income (Expense), Net
  Income Tax (Provision) Benefit
  Equity Interest in Income (Loss) of Unconsolidated Joint Venture
  Minority Interest of Huawei in the (Income) of Consolidated Huawei-3Com Joint Venture
  47




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LIQUIDITY AND CAPITAL RESOURCES
  2007
    
    
    2006
    
    
    2005Cash and equivalents
    
    $
    559.2
    
    
    $
    501.1
    
    
    $
    268.5Short-term investments
    
    
    
    
    
    
    363.2
    
    
    
    575.6Cash and equivalents and short term investments
    
    $
    559.2
    
    
    $
    864.3
    
    
    $
    844.1
   Years Ended May 31,(in millions)
    
    2007
    
    
    2006
    
    
    2005Cash and equivalents, beginning of period
    
    $
    501.1
    
    
    $
    268.5
    
    
    $
    476.3Net cash provided by (used in) operating activities
    
    
    165.5
    
    
    
    (86.2
    )
    
    
    (135.6
    )Net cash provided by (used in) investing activities
    
    
    (505.9
    )
    
    
    300.8
    
    
    
    (12.7
    )Net cash provided by (used in) financing activities
    
    
    387.9
    
    
    
    15.7
    
    
    
    (59.4
    )Other
    
    
    10.6
    
    
    
    2.3
    
    
    
    (0.1
    )Cash and equivalents, end of period
    
    $
    559.2
    
    
    $
    501.1
    
    
    $
    268.5
   Payments Due by PeriodLess than
    
    
    
    
    
    
    
    
    
    
    More thanContractual Obligations (1)
    
    Total
    
    
    one year
    
    
    1-3 years
    
    
    3-5 years
    
    
    5 yearsOperating leases
    
    $
    47.2
    
    
    $
    27.7
    
    
    $
    19.5
    
    
    $
    
    
    
    $
    Purchase commitments with
contract manufacturers
(2)
    
    
    70.3
    
    
    
    70.3
    
    
    
    
    
    
    
    
    
    
    
    Long term debt (3)
    
    
    430.0
    
    
    
    94.0
    
    
    
    144.0
    
    
    
    192.0
    
    
    
    Outsourcing agreements (4)
    
    
    12.0
    
    
    
    12.0
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    559.5
    
    
    $
    204.0
    
    
    $
    163.5
    
    
    $
    192.0
    
    
    $
    
 
 (1)
    
    Includes SCN segment obligations as of May 31, 2007 and H3C segment obligations as of March
31, 2007. Does not include EARP payment requirements described below.(2)
    
    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. 48




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##### Table of Contents



(3)
    
    Represents required principal and interest payments on our senior secured loan, but does not
include excess cash flow payments which are dependent on whether H3C generates any excess cash
flow, as defined in the A&R Loans.(4)
    
    Under our customer service, 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 at any time upon 120 days notice and the
payment of a termination fee ranging from approximately $1.1 million to $1.5 million, and our
research and development agreement may be terminated at any time with a $0.8 million payment. Our
customer service agreement with Siemens expires in 2011 but we have communicated that we are
terminating the contract for convenience on the third anniversary date, which is in October of
2007. We currently expect to incur approximately $1.7 million of termination fees.        49




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##### Table of Contents



plus
 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
    %
 plus
      50




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##### Table of Contents



Tranche A
    
    
    Tranche B2008
    
    $
    92,000
    
    
    $
    2,0002009
    
    
    46,000
    
    
    
    2,0002010
    
    
    46,000
    
    
    
    2,0002011
    
    
    46,000
    
    
    
    2,0002012
    
    
    
    
    
    
    20,0002013
    
    
    
    
    
    
    172,000
   2008
    
    $
    94,0002009
    
    
    39,0002010
    
    
    30,0002011
    
    
    17,000
  EFFECTS OF RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
  
 ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Market Risk Disclosures
 Interest Rate Sensitivity
 51




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Foreign Currency Exchange Risk
  Equity Security Price Risk
 52




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##### Table of Contents



ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE
 PageConsolidated Financial Statements:Report of Independent Registered Public Accounting Firm
    
    
    54Consolidated Statements of Operations for the years ended May 31, 2007, 2006, and 2005
    
    
    55Consolidated Balance Sheets as of May 31, 2007 and 2006
    
    
    56Consolidated Statements of Stockholders Equity for the years ended May 31, 2007,
2006, and 2005
    
    
    57Consolidated Statements of Cash Flows for the years ended May 31, 2007, 2006, and 2005
    
    
    58Notes to Consolidated Financial Statements
    
    
    59Financial Statement Schedule:Schedule II  Valuation and Qualifying Accounts and Reserves
    
    
    105
  53




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
    Share-Based Payment
 Internal ControlIntegrated Framework
  
 54




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3COM CORPORATION
 
 CONSOLIDATED STATEMENTS OF OPERATIONS
  Years Ended May 31,2007
    
    
    2006
    
    
    2005Sales
    
    $
    1,267,481
    
    
    $
    794,807
    
    
    $
    651,244Cost of sales
    
    
    689,027
    
    
    
    466,743
    
    
    
    416,916Gross profit
    
    
    578,454
    
    
    
    328,064
    
    
    
    234,328Operating expenses:Sales and marketing
    
    
    319,696
    
    
    
    274,745
    
    
    
    243,700Research and development
    
    
    215,632
    
    
    
    101,870
    
    
    
    94,584General and administrative
    
    
    93,875
    
    
    
    72,596
    
    
    
    59,833Amortization and write-down of intangible assets
    
    
    42,525
    
    
    
    20,903
    
    
    
    8,989In-process research and development
    
    
    35,753
    
    
    
    650
    
    
    
    6,775Restructuring charges
    
    
    3,494
    
    
    
    14,403
    
    
    
    23,922Total operating expenses
    
    
    710,975
    
    
    
    485,167
    
    
    
    437,803Operating loss
    
    
    (132,521
    )
    
    
    (157,103
    )
    
    
    (203,475
    )Gain on investments, net
    
    
    1,143
    
    
    
    4,333
    
    
    
    1,580Interest income, net
    
    
    40,863
    
    
    
    29,085
    
    
    
    21,406Other income (expense), net
    
    
    38,291
    
    
    
    8,235
    
    
    
    (4,785
    )Loss from operations before income taxes, equity interest in
income (loss) of unconsolidated joint venture, and minority
interest in income of consolidated joint venture
    
    
    (52,224
    )
    
    
    (115,450
    )
    
    
    (185,274
    )Income tax (provision) benefit
    
    
    (10,173
    )
    
    
    14,833
    
    
    
    (3,490
    )Equity interest in income (loss) of unconsolidated joint venture
    
    
    
    
    
    
    11,016
    
    
    
    (6,922
    )Minority interest in income of consolidated joint venture
    
    
    (26,192
    )
    
    
    (11,074
    )
    
    
    Net loss
    
    $
    (88,589
    )
    
    $
    (100,675
    )
    
    $
    (195,686
    )Basic and diluted net loss per share:Net loss
    
    $
    (0.22
    )
    
    $
    (0.26
    )
    
    $
    (0.51
    )Shares used in computing per share amounts:Basic and diluted
    
    
    393,894
    
    
    
    386,801
    
    
    
    382,309
 The accompanying notes are an integral part of these consolidated financial statements.
 55




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3COM CORPORATION
 
 CONSOLIDATED BALANCE SHEETS
  May 31,2007
    
    
    2006ASSETSCurrent assets:Cash and equivalents
    
    $
    559,217
    
    
    $
    501,097Short-term investments
    
    
    
    
    
    
    363,250Notes receivable
    
    
    77,368
    
    
    
    63,224Accounts receivable, less allowance for doubtful
accounts of $15,292 and $16,422, respectively
    
    
    102,952
    
    
    
    115,120Inventories
    
    
    107,988
    
    
    
    148,819Other current assets
    
    
    50,157
    
    
    
    57,835Total current assets
    
    
    897,682
    
    
    
    1,249,345Property and equipment, less accumulated depreciation
and amortization of $234,554 and $232,944,
respectively
    
    
    76,460
    
    
    
    89,109Goodwill
    
    
    766,444
    
    
    
    354,259Intangible assets, net
    
    
    371,289
    
    
    
    111,845Deposits and other assets
    
    
    39,217
    
    
    
    56,803Total assets
    
    $
    2,151,092
    
    
    $
    1,861,361LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    $
    110,430
    
    
    $
    153,245Current portion of long-term debt
    
    
    94,000
    
    
    
    Accrued liabilities and other
    
    
    435,638
    
    
    
    318,036Total current liabilities
    
    
    640,068
    
    
    
    471,281Deferred taxes and long-term obligations
    
    
    23,725
    
    
    
    13,788Long-term debt
    
    
    336,000
    
    
    
    Minority interest
    
    
    
    
    
    
    173,930Stockholders 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: 399,064 and 393,442
respectively
    
    
    2,323,356
    
    
    
    2,300,396Unamortized stock-based compensation
    
    
    
    
    
    
    (7,565
    )Retained deficit
    
    
    (1,176,406
    )
    
    
    (1,087,512
    )Accumulated other comprehensive income (loss)
    
    
    4,349
    
    
    
    (2,957
    )Total stockholders equity
    
    
    1,151,299
    
    
    
    1,202,362Total liabilities and stockholders equity
    
    $
    2,151,092
    
    
    $
    1,861,361
 The accompanying notes are an integral part of these consolidated financial statements.
 56




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3COM CORPORATION
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
  AccumulatedUnamortized
    
    
    
    
    
    
    OtherCommon Stock
    
    
    Treasury Stock
    
    
    Stock-based
    
    
    Retained
    
    
    ComprehensiveShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Compensation
    
    
    Deficit
    
    
    Income (Loss)
    
    
    TotalBalances, May 31, 2004
    
    
    392,738
    
    
    $
    2,262,223
    
    
    
    
    
    
    $
    
    
    
    $
    (2,577
    )
    
    $
    (755,244
    )
    
    $
    (5,288
    )
    
    $
    1,499,114Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (195,686
    )
    
    
    
    
    
    
    (195,686
    )Unrealized loss on available-for-sale
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (213
    )
    
    
    (213
    )Net unrealized loss on derivative
instruments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (81
    )
    
    
    (81
    )Accumulated translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99
    
    
    
    99Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (195,881
    )Repurchase of common stock
    
    
    (36
    )
    
    
    (181
    )
    
    
    (14,983
    )
    
    
    (73,364
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (73,545
    )Common stock issued under stock plans, net
of cancellations
    
    
    675
    
    
    
    3,698
    
    
    
    6,848
    
    
    
    33,543
    
    
    
    (4,760
    )
    
    
    (17,022
    )
    
    
    
    
    
    
    15,459Stock-based compensation expense
    
    
    
    
    
    
    395
    
    
    
    
    
    
    
    
    
    
    
    2,446
    
    
    
    
    
    
    
    
    
    
    
    2,841Stock issued in connection with acquisition
    
    
    
    
    
    
    36,055
    
    
    
    
    
    
    
    
    
    
    
    (9,120
    )
    
    
    
    
    
    
    
    
    
    
    26,935Balances, May 31, 2005
    
    
    393,377
    
    
    
    2,302,190
    
    
    
    (8,135
    )
    
    
    (39,821
    )
    
    
    (14,011
    )
    
    
    (967,952
    )
    
    
    (5,483
    )
    
    
    1,274,923Components of comprehensive loss:Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100,675
    )
    
    
    
    
    
    
    (100,675
    )Unrealized gain on available-for-sale
securities, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    300
    
    
    
    300Accumulated translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,226
    
    
    
    2,226Total comprehensive loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (98,149
    )Repurchase of common stock
    
    
    (588
    )
    
    
    (2,848
    )
    
    
    (864
    )
    
    
    (4,228
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (7,076
    )Common stock issued under stock plans, net
of cancellations
    
    
    653
    
    
    
    2,230
    
    
    
    8,999
    
    
    
    44,049
    
    
    
    (4,593
    )
    
    
    (18,885
    )
    
    
    
    
    
    
    22,801Stock-based compensation expense
    
    
    
    
    
    
    199
    
    
    
    
    
    
    
    
    
    
    
    9,664
    
    
    
    
    
    
    
    
    
    
    
    9,863Reduction of shares reserved for issuance
of options in connection with acquisition
    
    
    
    
    
    
    (1,375
    )
    
    
    
    
    
    
    
    
    
    
    1,375
    
    
    
    
    
    
    
    
    
    
    
    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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,310
    
    
    
    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
    
    
    $
    1,151,299
 The accompanying notes are an integral part of these consolidated financial statements.
 57




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3COM CORPORATION
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  Years Ended May 31,2007
    
    
    2006
    
    
    2005Cash flows from operating activities:Net loss
    
    $
    (88,589
    )
    
    $
    (100,675
    )
    
    $
    (195,686
    )Adjustments to reconcile net loss to net cash provided by (used
in) operating activities:Depreciation and amortization
    
    
    74,990
    
    
    
    44,685
    
    
    
    51,852Write-down of intangibles
    
    
    
    
    
    
    
    
    
    
    1,404Gain on property and equipment disposals
    
    
    (14,714
    )
    
    
    (646
    )
    
    
    (4,741
    )Minority interest
    
    
    26,192
    
    
    
    11,074
    
    
    
    Stock-based compensation expense
    
    
    20,095
    
    
    
    9,863
    
    
    
    2,841Gain on investments, net
    
    
    (1,417
    )
    
    
    (235
    )
    
    
    (1,580
    )Deferred income taxes
    
    
    (10,487
    )
    
    
    121
    
    
    
    3,044In-process research and development
    
    
    35,753
    
    
    
    650
    
    
    
    6,775Equity interest in (income) loss of unconsolidated joint venture
    
    
    
    
    
    
    (11,016
    )
    
    
    6,922Changes in assets and liabilities:Accounts receivable
    
    
    (24,677
    )
    
    
    5,913
    
    
    
    4,708Inventories
    
    
    50,589
    
    
    
    (23,047
    )
    
    
    (9,629
    )Other assets
    
    
    32,368
    
    
    
    1,891
    
    
    
    748Accounts payable
    
    
    (34,760
    )
    
    
    3,430
    
    
    
    19,224Other liabilities
    
    
    100,195
    
    
    
    (28,172
    )
    
    
    (21,476
    )Net cash provided by (used in) operating activities
    
    
    165,538
    
    
    
    (86,164
    )
    
    
    (135,594
    )Cash flows from investing activities:Purchases of investments
    
    
    (225,005
    )
    
    
    (421,279
    )
    
    
    (618,320
    )Proceeds from maturities and sales of investments
    
    
    609,342
    
    
    
    629,036
    
    
    
    931,122Purchases of property and equipment
    
    
    (28,331
    )
    
    
    (17,404
    )
    
    
    (21,121
    )Businesses acquired in purchase transactions, net of cash
acquired
    
    
    (898,529
    )
    
    
    110,407
    
    
    
    (355,686
    )Proceeds from sale of property and equipment
    
    
    36,580
    
    
    
    
    
    
    
    51,300Net cash (used in) provided by investing activities
    
    
    (505,943
    )
    
    
    300,760
    
    
    
    (12,705
    )Cash flows from financing activities:Issuances of common stock
    
    
    23,588
    
    
    
    22,801
    
    
    
    15,459Repurchases of common stock
    
    
    (13,463
    )
    
    
    (7,076
    )
    
    
    (73,545
    )Proceeds from long term debt
    
    
    415,811
    
    
    
    
    
    
    
    Repayments of borrowings
    
    
    
    
    
    
    
    
    
    
    (1,308
    )Dividend paid to minority interest shareholder
    
    
    (40,785
    )
    
    
    
    
    
    
    Other, net
    
    
    2,787
    
    
    
    
    
    
    
    Net cash provided by (used in) financing activities
    
    
    387,938
    
    
    
    15,725
    
    
    
    (59,394
    )Effect of exchange rate changes on cash and equivalents
    
    
    10,587
    
    
    
    2,241
    
    
    
    (46
    )Net change in cash and equivalents during period
    
    
    58,120
    
    
    
    232,562
    
    
    
    (207,739
    )Cash and equivalents, beginning of period
    
    
    501,097
    
    
    
    268,535
    
    
    
    476,274Cash and equivalents, end of period
    
    $
    559,217
    
    
    $
    501,097
    
    
    $
    268,535Other cash flow informationInterest paid
    
    $
    5,596
    
    
    $
    212
    
    
    $
    528Income tax (payments) refunds received, net
    
    
    (18,970
    )
    
    
    (2,230
    )
    
    
    10,402Inventory transferred to property and equipment
    
    
    8,814
    
    
    
    16,995
    
    
    
    7,996
 The accompanying notes are an integral part of these consolidated financial statements.
 58




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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
  Segment reporting
  Cash equivalents
  59




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Short-term investments
  Allowance for doubtful accounts
  Notes receivable
  Non-marketable equity securities and other investments
  Concentration of credit risk
  Inventories
  Property and equipment
  60




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##### Table of Contents



Long-lived assets
  Depreciation and amortization
  Goodwill and purchased intangible assets
 
 Revenue recognition
     61




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##### Table of Contents



Product warranty
  Advertising
  Restructuring charges
  Foreign currency remeasurement and translation
    62




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##### Table of Contents



Income taxes:
  Comprehensive income (loss)
   AccumulatedAccumulated
    
    
    OtherUnrealized
    
    
    Translation
    
    
    ComprehensiveGain (Loss)
    
    
    Adjustment
    
    
    Income (Loss)Balance as of May 31, 2004
    
    $
    (2,107
    )
    
    $
    (3,181
    )
    
    $
    (5,288
    )Change in period
    
    
    (294
    )
    
    
    99
    
    
    
    (195
    )Balance as of May 31, 2005
    
    
    (2,401
    )
    
    
    (3,082
    )
    
    
    (5,483
    )Change in period
    
    
    300
    
    
    
    2,226
    
    
    
    2,526Balance 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
    
    
    $
    4,349
 Stock-based Compensation
   63




---



##### Table of Contents



Net loss per share
  Recently issued accounting pronouncements
    64




---



##### Table of Contents



Note 3: Acquisitions
 H3C
       20072003
    
    
    2006
    
    
    PurchaseInvestment
    
    
    Purchase
    
    
    (Preliminary)Cash 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
 65




---



##### Table of Contents



2003
    
    
    2006
    
    
    2007Investment
    
    
    Purchase
    
    
    PurchaseNet tangible assets assumed
    
    
    
    
    
    $
    7.4
    
    
    $
    148.6Amortizable intangible assets:Existing technology
    
    $
    111.7
    
    
    
    17.8
    
    
    
    180.6Trade name and trademarks
    
    
    
    
    
    
    
    
    
    
    55.5Non-compete agreement with Huawei
    
    
    
    
    
    
    
    
    
    
    33.0Distributor agreements
    
    
    2.7
    
    
    
    0.4
    
    
    
    29.1Total amortizable intangible assets
    
    
    114.4
    
    
    
    18.2
    
    
    
    298.2Amortization prior to the 2006 acquisition
    
    
    (65.7
    )
    
    
    
    
    
    
    Net intangible assets
    
    
    48.7
    
    
    
    18.2
    
    
    
    298.2In-process research and development
    
    
    24.7
    
    
    
    0.7
    
    
    
    34.0Goodwill
    
    
    43.2
    
    
    
    1.9
    
    
    
    409.9Total preliminary purchase price allocation
    
    
    
    
    
    $
    28.2
    
    
    $
    890.7
       66




---



##### Table of Contents



TippingPoint
    Cash paid for common stock
    
    $
    389.5Fair value of outstanding stock options assumed
    
    
    36.1Acquisition direct costs
    
    
    4.4Total purchase price
    
    $
    430.0
  Net tangible assets assumed
    
    $
    37.4Amortizable intangible assets:Existing technology
    
    
    39.1Maintenance agreements
    
    
    19.0Other
    
    
    11.8Total amortizable intangible assets
    
    
    69.9In-process research and development
    
    
    5.1Deferred compensation on unvested stock options
    
    
    9.4Goodwill
    
    
    308.2Total purchase price
    
    $
    430.0
   67




---



##### Table of Contents



®
 Pro forma Results of Operations
  Fiscal Year(in millions, except per share amounts)
    
    2007
    
    2006Net sales
    
    $
    1,267.5
    
    
    $
    1,146.8Net loss
    
    
    (201.3
    )
    
    
    (102.2
    )Basic and diluted net loss per share
    
    $
    (0.51
    )
    
    $
    (0.26
    )
  Roving Planet Acquisition
    68




---



##### Table of Contents



2007Preliminary Purchase
    
    
    Useful Life for PurchasedPrice Allocation
    
    
    Intangible AssetsIn-process research and development
    
    $
    1.7
    
    
    
    Purchased core technology
    
    
    3.1
    
    
    3 yearsGoodwill
    
    
    3.2
    
    
    
    Other
    
    
    0.2
    
    
    
    Total acquisition value
    
    $
    8.2
    
    
    
    
  Note 4: Restructuring Charges
   §
    
    announced the integration of the support infrastructure of two of our business units
to leverage a common infrastructure in order to drive additional costs out of the
business;§
    
    organized around independent businesses that utilized shared central services;§
    
    outsourced the manufacturing of certain high volume desktop, mobile and server
connectivity products in a contract manufacturing arrangement;§
    
    entered into an agreement to outsource certain information technology (IT) functions;§
    
    outsourcing of our remaining manufacturing operations in Dublin, Ireland;§
    
    reduced our workforce; and§
    
    continued efforts to consolidate and dispose of excess facilities.
  §
    
    Reductions in workforce; and§
    
    continued efforts to consolidate and dispose of excess facilities.
  §
    
    Reductions in workforce; and§
    
    continued efforts to consolidate and dispose of excess facilities.
  §
    
    Further reductions in workforce; and§
    
    continued efforts to consolidate and dispose of excess facilities.
   69




---



##### Table of Contents



Fiscal 2007 Actions
  Employee
    
    
    Facilities-
    
    
    OtherSeparation
    
    
    related
    
    
    RestructuringExpense
    
    
    Charges
    
    
    Costs
    
    
    TotalBalance as of June 1, 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
    
    
    $
    
    
    
    $
    1,594
   Fiscal 2006 Actions
  Employee
    
    
    Facilities-Separation
    
    
    relatedExpense
    
    
    Charges
    
    
    TotalBalance as of June 1, 2005
    
    $
    
    
    
    $
    
    
    
    $
    Provisions
    
    
    9,558
    
    
    
    1,635
    
    
    
    11,193Payments and non-cash charges
    
    
    (4,681
    )
    
    
    (744
    )
    
    
    (5,425
    )Balance as of May 31, 2006
    
    
    4,877
    
    
    
    891
    
    
    
    5,768Provisions
    
    
    (688
    )
    
    
    (136
    )
    
    
    (824
    )Payments and non-cash charges
    
    
    (4,189
    )
    
    
    (619
    )
    
    
    (4,808
    )Balance as of May 31, 2007
    
    $
    
    
    
    $
    136
    
    
    $
    136
   70




---



##### Table of Contents



Fiscal 2005 Actions
  Employee
    
    
    Long-term
    
    
    Facilities-
    
    
    OtherSeparation
    
    
    Asset
    
    
    related
    
    
    RestructuringExpense
    
    
    Write-downs
    
    
    Charges
    
    
    Costs
    
    
    TotalBalance as of June 1, 2004
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Provisions
    
    
    23,391
    
    
    
    1,021
    
    
    
    468
    
    
    
    768
    
    
    
    25,648Payments and non-cash charges
    
    
    (15,186
    )
    
    
    (766
    )
    
    
    (80
    )
    
    
    (755
    )
    
    
    (16,787
    )Balance as of May 31, 2005
    
    
    8,205
    
    
    
    255
    
    
    
    388
    
    
    
    13
    
    
    
    8,861Provisions
    
    
    1,873
    
    
    
    221
    
    
    
    32
    
    
    
    364
    
    
    
    2,490Payments and non-cash charges
    
    
    (8,235
    )
    
    
    (221
    )
    
    
    (420
    )
    
    
    (364
    )
    
    
    (9,240
    )Balance as of May 31, 2006
    
    
    1,843
    
    
    
    255
    
    
    
    
    
    
    
    13
    
    
    
    2,111Provisions
    
    
    (1,395
    )
    
    
    (255
    )
    
    
    32
    
    
    
    (13
    )
    
    
    (1,631
    )Payments and non-cash charges
    
    
    (145
    )
    
    
    
    
    
    
    (32
    )
    
    
    
    
    
    
    (177
    )Balances as of May 31, 2007
    
    $
    303
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    303
      71




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##### Table of Contents



Fiscal 2001, 2002, 2003 and 2004 Actions
  Employee
    
    
    Long-term
    
    
    Facilities-
    
    
    OtherSeparation
    
    
    Asset
    
    
    related
    
    
    RestructuringExpense
    
    
    Write-downs
    
    
    Charges
    
    
    Costs
    
    
    TotalBalance as of May 31, 2004
    
    $
    5,529
    
    
    $
    
    
    
    $
    9,819
    
    
    $
    82
    
    
    $
    15,430Provisions
    
    
    (2,829
    )
    
    
    12
    
    
    
    813
    
    
    
    278
    
    
    
    (1,726
    )Payments and non-cash charges
    
    
    (2,700
    )
    
    
    (12
    )
    
    
    (1,891
    )
    
    
    (355
    )
    
    
    (4,958
    )Balance as of May 31, 2005
    
    
    
    
    
    
    
    
    
    
    8,741
    
    
    
    5
    
    
    
    8,746Provisions
    
    
    
    
    
    
    90
    
    
    
    609
    
    
    
    
    
    
    
    699Payments and non-cash charges
    
    
    
    
    
    
    (90
    )
    
    
    (3,709
    )
    
    
    
    
    
    
    (3,799
    )Balance as of May 31, 2006
    
    
    
    
    
    
    
    
    
    
    5,641
    
    
    
    5
    
    
    
    5,646Provisions
    
    
    
    
    
    
    
    
    
    
    1,053
    
    
    
    16
    
    
    
    1,069Payments and non-cash charges
    
    
    
    
    
    
    
    
    
    
    (5,351
    )
    
    
    (21
    )
    
    
    (5,372
    )Balance as of May 31, 2007
    
    $
    
    
    
    $
    
    
    
    $
    1,343
    
    
    $
    
    
    
    $
    1,343
     Note 5: Investment in Unconsolidated Joint Venture
    72




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##### Table of Contents



January 31,
    
    March 31,2006
    
    2005Balance SheetCurrent assets
    
    $
    404,068
    
    
    $
    259,369Non-current assets
    
    
    132,130
    
    
    
    149,571Current liabilities
    
    
    210,853
    
    
    
    109,097Non-current liabilities
    
    
    8,866
    
    
    
    8,866Statement of Operations:Sales
    
    $
    399,612
    
    
    $
    297,977Gross profit
    
    
    181,553
    
    
    
    120,498Income (loss) from operations
    
    
    10,132
    
    
    
    (17,064
    )Net income (loss)
    
    
    22,487
    
    
    
    (14,125
    )
   Note 6: Investments
  May 31, 2007Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValuePublicly traded corporate equity securities
    
    $
    257
    
    
    $
    210
    
    
    $
    
    
    
    $
    467Total
    
    $
    257
    
    
    $
    210
    
    
    $
    
    
    
    $
    467
 May 31, 2006Gross
    
    
    GrossAmortized
    
    
    Unrealized
    
    
    Unrealized
    
    
    EstimatedCost
    
    
    Gains
    
    
    Losses
    
    
    Fair ValueState and municipal securities
    
    $
    22,816
    
    
    $
    
    
    
    $
    (96
    )
    
    $
    22,720U.S. Government and agency securities
    
    
    136,317
    
    
    
    13
    
    
    
    (486
    )
    
    
    135,844Corporate debt securities
    
    
    205,793
    
    
    
    13
    
    
    
    (1,120
    )
    
    
    204,686Short-term investments
    
    
    364,926
    
    
    
    26
    
    
    
    (1,702
    )
    
    
    363,250Publicly traded corporate equity securities
    
    
    309
    
    
    
    93
    
    
    
    
    
    
    
    402Total
    
    $
    365,235
    
    
    $
    119
    
    
    $
    (1,702
    )
    
    $
    363,652
 73




---



##### Table of Contents



May 31, 2007Carrying ValuePublicly traded corporate equity securities
    
    $
    467Total corporate equity securities
    
    $
    467
 May 31, 2006Initial Cost
    
    
    Carrying ValueInvestments in limited partnership venture capital funds
    
    $
    25,498
    
    
    $
    15,794Direct investments in private companies
    
    
    12,262
    
    
    
    91Total private equity investments
    
    $
    37,760
    
    
    
    15,885Publicly traded corporate equity securities
    
    
    
    
    
    
    402Total corporate equity securities
    
    
    
    
    
    $
    16,287
   Years Ended May 31,2007
    
    
    2006
    
    
    2005Gross realized gains
    
    $
    3,560
    
    
    $
    5,499
    
    
    $
    3,594Gross realized losses
    
    
    (2,417
    )
    
    
    (1,166
    )
    
    
    (2,014
    )Total
    
    $
    1,143
    
    
    $
    4,333
    
    
    $
    1,580
 Note 7: Inventories
  May 31,2007
    
    
    2006Finished goods
    
    $
    61,857
    
    
    $
    69,386Work-in-process
    
    
    7,143
    
    
    
    12,777Raw materials
    
    
    38,988
    
    
    
    66,656Total
    
    $
    107,988
    
    
    $
    148,819
 74




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##### Table of Contents



Note 8: Property and Equipment
  May 31,2006
    
    
    2006Land
    
    $
    1,724
    
    
    $
    6,999Buildings and improvements
    
    
    
    
    
    
    11,122Machinery and equipment
    
    
    231,886
    
    
    
    202,407Software
    
    
    31,387
    
    
    
    63,814Furniture and fixtures
    
    
    20,217
    
    
    
    21,161Leasehold improvements
    
    
    17,201
    
    
    
    13,667Construction in progress
    
    
    8,599
    
    
    
    2,883Total
    
    
    311,014
    
    
    
    322,053Accumulated depreciation and amortization
    
    
    (234,554
    )
    
    
    (232,944
    )Property and equipment, net
    
    $
    76,460
    
    
    $
    89,109
 Significant property and equipment transactions
 For the Year Ended May 31, 2007.
 For the Year Ended May 31, 2006.
 For the Year Ended May 31, 2005.
 75




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##### Table of Contents



Note 9: Intangible Assets
  May 31, 2007
    
    
    May 31, 2006Accumulated
    
    
    
    
    
    
    
    
    
    
    AccumulatedGross
    
    
    Amortization
    
    
    Net
    
    
    Gross
    
    
    Amortization
    
    
    NetExisting technology
    
    $
    387,233
    
    
    $
    (148,641
    )
    
    $
    238,592
    
    
    $
    203,946
    
    
    $
    (114,235
    )
    
    $
    89,711Trademark
    
    
    55,500
    
    
    
    
    
    
    
    55,500
    
    
    
    
    
    
    
    
    
    
    
    Huawei non-compete
agreement
    
    
    33,000
    
    
    
    (61
    )
    
    
    32,939
    
    
    
    
    
    
    
    
    
    
    
    OEM agreement
    
    
    23,800
    
    
    
    (22
    )
    
    
    23,778
    
    
    
    
    
    
    
    
    
    
    
    Maintenance contracts
    
    
    19,000
    
    
    
    (7,389
    )
    
    
    11,611
    
    
    
    19,000
    
    
    
    (4,222
    )
    
    
    14,778Other
    
    
    21,924
    
    
    
    (13,055
    )
    
    
    8,869
    
    
    
    15,301
    
    
    
    (7,945
    )
    
    
    7,356Total
    
    $
    540,457
    
    
    $
    (169,168
    )
    
    $
    371,289
    
    
    $
    238,247
    
    
    $
    (126,402
    )
    
    $
    111,845
      2008
    
    2009
    
    2010
    
    2011
    
    2012Amortization expense
    
    $
    103,431
    
    
    $
    81,240
    
    
    $
    60,337
    
    
    $
    36,206
    
    
    $
    15,163
 76




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##### Table of Contents



Note 10: Accrued Liabilities and Other
  May 31,2007
    
    
    2006Accrued payroll and related expenses
    
    $
    81,791
    
    
    $
    88,305EARP Accrual
    
    
    94,563
    
    
    
    16,960Accrued rebates and other marketing
    
    
    67,446
    
    
    
    60,301Deferred revenue
    
    
    54,034
    
    
    
    57,050Accrued product warranty
    
    
    40,596
    
    
    
    41,791Income and other taxes payable
    
    
    36,365
    
    
    
    25,759Advance from customers
    
    
    8,300
    
    
    
    Restructuring
    
    
    3,376
    
    
    
    13,525Other
    
    
    49,167
    
    
    
    14,345Total
    
    $
    435,638
    
    
    $
    318,036
 Note 11: Accrued Warranty and Other Guarantees
   Years Ended May 31,2007
    
    
    2006
    
    
    2005Accrued warranty, beginning of period
    
    $
    41,791
    
    
    $
    41,782
    
    
    $
    43,825Cost of warranty claims
    
    
    (46,950
    )
    
    
    (32,958
    )
    
    
    (32,910
    )Accrual for warranties issued during the period
    
    
    46,406
    
    
    
    28,424
    
    
    
    30,867Adjustments to preexisting warranties
    
    
    (651
    )
    
    
    
    
    
    
    Reserves related to H3C at date of 2 percent acquisition
    
    
    
    
    
    
    4,543
    
    
    
    Accrued warranty, end of period
    
    $
    40,596
    
    
    $
    41,791
    
    
    $
    41,782
 Note 12: Long-Term Debt
   77




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##### Table of Contents



plus
 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
    %
 plus
     78




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##### Table of Contents



Tranche A
    
    Tranche B2008
    
    $
    92,000
    
    
    $
    2,0002009
    
    
    46,000
    
    
    
    2,0002010
    
    
    46,000
    
    
    
    2,0002011
    
    
    46,000
    
    
    
    2,0002012
    
    
    
    
    
    
    20,0002013
    
    
    
    
    
    
    172,000
 Note 13: Borrowing Arrangements and Commitments
    Future Lease
    
    
    Future RentalFiscal year
    
    Payments
    
    
    Income2008
    
    $
    27,671
    
    
    $
    2,3412009
    
    
    15,486
    
    
    
    8382010
    
    
    3,647
    
    
    
    5412011
    
    
    383
    
    
    
    702012
    
    
    42
    
    
    
    Total
    
    $
    47,229
    
    
    $
    3,790
   79




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##### Table of Contents



Note 14: Stock Based Compensation Plans
       (In thousands, except per share data)
    
    May 31, 2007Cost of sales
    
    $
    1,576Sales and marketing
    
    
    5,756Research and development
    
    
    4,621General and administrative
    
    
    8,142Incremental share-based compensation effect of SFAS No. 123(R) on net loss
    
    $
    20,095
 80




---



##### Table of Contents



(In thousands, except per share amounts)
    
    May 31, 2006
    
    
    May 31, 2005Net loss as reported
    
    $
    (100,675
    )
    
    $
    (195,686
    )Add: Stock-based compensation included in
reported net loss
    
    
    9,846
    
    
    
    2,841Deduct: Total stock-based compensation
determined under the fair value-based
method, net of related tax effects
    
    
    (25,496
    )
    
    
    (16,203
    )Adjusted net loss
    
    $
    (116,325
    )
    
    $
    (209,048
    )Net loss per share-basic and diluted:As reported
    
    $
    (0.26
    )
    
    $
    (0.51
    )Adjusted
    
    $
    (0.30
    )
    
    $
    (0.55
    )
   2007
    
    20061
    
    20051Employee stock options:Volatility
    
    
    42.7
    %
    
    
    41.9
    %
    
    
    53.2
    %Risk-free interest rate
    
    
    4.7
    %
    
    
    4.3
    %
    
    
    3.5
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected life (years)
    
    
    4.0
    
    
    
    4.0
    
    
    
    4.0Fair value per option
    
    $
    1.67
    
    
    $
    1.52
    
    
    $
    1.89Employee Stock Purchase Plan:Volatility
    
    
    39.2
    %
    
    
    38.1
    %
    
    
    39.2
    %Risk-free interest rate
    
    
    5.1
    %
    
    
    4.4
    %
    
    
    2.6
    %Dividend yield
    
    
    0.0
    %
    
    
    0.0
    %
    
    
    0.0
    %Expected life (years)
    
    
    0.5
    
    
    
    0.5
    
    
    
    0.5Fair value per option
    
    $
    1.10
    
    
    $
    1.20
    
    
    $
    1.04
 
 1  Assumptions used in the calculation of fair value according to the provisions of SFAS No.
123.
 81




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##### Table of Contents



Number of
    
    
    Weighted-Averageshares
    
    
    Exercise PriceOutstanding, May 31, 2004
    
    
    56,885
    
    
    $
    7.18Granted
    
    
    10,002
    
    
    
    4.22TippingPoint options assumed
    
    
    13,886
    
    
    
    1.31Exercised
    
    
    (4,273
    )
    
    
    2.01Canceled
    
    
    (13,141
    )
    
    
    6.90Outstanding, May 31, 2005
    
    
    63,359
    
    
    
    5.83Granted
    
    
    21,974
    
    
    
    4.22Exercised
    
    
    (5,467
    )
    
    
    2.07Canceled
    
    
    (18,445
    )
    
    
    5.83Outstanding, May 31, 2006
    
    
    61,421
    
    
    $
    5.71Granted
    
    
    24,285
    
    
    
    4.71Exercised
    
    
    (2,527
    )
    
    
    3.00Canceled
    
    
    (30,899
    )
    
    
    5.94Outstanding, May 31, 2007
    
    
    52,280
    
    
    $
    5.23Exercisable
    
    
    22,174
    
    
    $
    6.20Weighted-average grant-date fair value
of options granted
    
    
    
    
    
    $
    1.67
  Outstanding Options as of May 31, 2007
    
    
    Exercisable as of May 31, 2007Range of
    
    Number of
    
    
    Weighted-Average
    
    
    Weighted-Average
    
    
    Number of
    
    
    Weighted-AverageExercise Prices
    
    Shares
    
    
    Exercise Price
    
    
    Remaining Contractual Life
    
    
    
    
    
    
    Shares Exercise Price(in thousands)
    
    
    
    
    
    
    (in years)
    
    
    (in thousands)$0.00 - $4.00
    
    
    11,101
    
    
    $
    2.87
    
    
    
    5.5
    
    
    
    5,360
    
    
    $
    2.334.01 - 5.00
    
    
    21,172
    
    
    
    4.47
    
    
    
    5.7
    
    
    
    4,421
    
    
    
    4.525.01 - 6.00
    
    
    12,664
    
    
    
    5.52
    
    
    
    4.8
    
    
    
    5,238
    
    
    
    5.516.01 - 7.00
    
    
    1,363
    
    
    
    6.21
    
    
    
    2.4
    
    
    
    1,242
    
    
    
    6.217.01 - 8.00
    
    
    403
    
    
    
    7.35
    
    
    
    2.6
    
    
    
    354
    
    
    
    7.368.01 - 22.00
    
    
    5,577
    
    
    
    11.84
    
    
    
    2.6
    
    
    
    5,559
    
    
    
    11.85Total
    
    
    52,280
    
    
    $
    5.23
    
    
    
    5.0
    
    
    
    22,174
    
    
    $
    6.20
   82




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##### Table of Contents



Weighted-Weighted-
    
    AverageAverage
    
    Remaining
    
    AggregateNumber of
    
    Option
    
    Contractual
    
    Intrinsic ValueShares
    
    Price
    
    Life (in years)
    
    (in thousands)Vested and expected to vest at May 31, 2007
    
    
    38,248,782
    
    
    $
    5.46
    
    
    
    4.60
    
    
    $
    21,103
  Number of
    
    
    Weighted-Shares
    
    
    Average Grant-(unvested)
    
    
    Date Fair ValueOutstanding, May 31, 2004
    
    
    723
    
    
    $
    4.97Granted
    
    
    1,484
    
    
    
    4.23Exercised
    
    
    (154
    )
    
    
    5.31Canceled
    
    
    (316
    )
    
    
    4.90Outstanding, May 31, 2005
    
    
    1,737
    
    
    
    4.32Granted
    
    
    2,419
    
    
    
    3.84Exercised
    
    
    (854
    )
    
    
    4.07Canceled
    
    
    (1,185
    )
    
    
    3.96Outstanding, May 31, 2006
    
    
    2,117
    
    
    $
    4.07Granted
    
    
    2,380
    
    
    
    4.45Exercised
    
    
    (1,151
    )
    
    
    4.13Canceled
    
    
    (943
    )
    
    
    4.30Outstanding, May 31, 2007
    
    
    2,403
    
    
    $
    4.33
   Weighted-Average
    
    
    AggregateNumber of
    
    
    Weighted-
    
    
    Remaining
    
    
    IntrinsicShares
    
    
    Average
    
    
    Contractual
    
    
    Value (in(unvested)
    
    
    Purchase Price
    
    
    Term (Years)
    
    
    thousands)Outstanding June 1, 2006
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    Granted
    
    
    4,356
    
    
    
    
    
    
    
    
    
    
    
    Vested
    
    
    (836
    )
    
    
    
    
    
    
    
    
    
    
    3,319Forfeited
    
    
    (409
    )
    
    
    
    
    
    
    
    
    
    
    Outstanding May 31, 2007
    
    
    3,111
    
    
    $
    
    
    
    
    1.19
    
    
    $
    14,591
  83




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##### Table of Contents





Employee Stock Purchase Plan.


Preferred Shares Rights Plan.


Stock Reserved for Issuance.


Stock option and restricted stock plans for granted shares
    
    
    55,391Stock option and restricted stock plans for future grants
    
    
    14,918Employee stock purchase plan
    
    
    3,510Total shares reserved for issuance
    
    
    73,819




Stock Repurchase and Option Programs.




84



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##### Table of Contents



Note 15: Financial Instruments
  May 31, 2007
    
    May 31, 2006Carrying
    
    Estimated
    
    Carrying
    
    Estimated(in thousands)
    
    Amount
    
    Fair Value
    
    Amount
    
    Fair ValueCash and equivalents
    
    $
    559,217
    
    
    $
    559,217
    
    
    $
    501,097
    
    
    $
    501,097Short-term investments
    
    
    
    
    
    
    
    
    
    
    363,250
    
    
    
    363,250Corporate equity securities
    
    
    257
    
    
    
    467
    
    
    
    16,287
    
    
    
    16,174
  Cash and equivalents
 Short-term investments
 Corporate equity securities.
 Foreign exchange contracts.
   85




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##### Table of Contents



Note 16: Interest and Other Income (Expense), Net
  Years Ended May 31,2007
    
    
    2006
    
    
    2005Interest income
    
    $
    41,310
    
    
    $
    29,297
    
    
    $
    22,807Interest expense
    
    
    (447
    )
    
    
    (212
    )
    
    
    (1,401
    )Interest income, net
    
    $
    40,863
    
    
    $
    29,085
    
    
    $
    21,406Other income (expense), net
    
    $
    38,291
    
    
    $
    8,235
    
    
    $
    (4,785
    )
  Note 17: Income Taxes
  Years Ended May 31,2007
    
    
    2006
    
    
    2005Current:Federal
    
    $
    
    
    
    $
    
    
    
    $
    State
    
    
    530
    
    
    
    200
    
    
    
    308Foreign
    
    
    19,640
    
    
    
    (14,421
    )
    
    
    138Total current
    
    
    20,170
    
    
    
    (14,221
    )
    
    
    446DeferredFederal
    
    
    
    
    
    
    
    
    
    
    State
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    (9,997
    )
    
    
    (612
    )
    
    
    3,044Total deferred
    
    
    (9,997
    )
    
    
    (612
    )
    
    
    3,044Total
    
    $
    10,173
    
    
    $
    (14,833
    )
    
    $
    3,490
 86




---



##### Table of Contents



May 31, 2007
    
    
    May 31, 2006Gross deferred tax assets:Operating loss carryforwards
    
    $
    1,003,569
    
    
    $
    975,506Amortization and depreciation
    
    
    33,478
    
    
    
    42,725Tax credit carryforwards
    
    
    55,618
    
    
    
    60,075Capital loss carryforwards
    
    
    25,828
    
    
    
    10,979Unrealized losses on private investments, net
    
    
    
    
    
    
    19,053Royalty and purchased research and development
    
    
    3,639
    
    
    
    9,916Other
    
    
    1,270
    
    
    
    5,769Gross deferred tax assets
    
    
    1,123,402
    
    
    
    1,124,023Gross deferred tax liabilities:Reserves recognized in different periods for tax purposes
    
    
    (144,486
    )
    
    
    (146,565
    )Acquired intangibles
    
    
    (59,115
    )
    
    
    (25,375
    )Other
    
    
    
    
    
    
    (1,021
    )Gross deferred tax liabilities
    
    
    (203,601
    )
    
    
    (172,961
    )Valuation allowance
    
    
    (937,075
    )
    
    
    (942,758
    )Net deferred tax (liabilities) assets
    
    $
    (17,274
    )
    
    $
    8,304
    87




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##### Table of Contents



Years Ended May 31,2007
    
    2006
    
    2005Tax computed at federal statutory rate
    
    
    (35.0
    )%
    
    
    (35.0
    )%
    
    
    (35.0
    )%State income taxes, net of federal effect
    
    
    17.1
    
    
    
    (2.1
    )
    
    
    (2.5
    )Provision for combined foreign and U.S.
taxes on certain foreign income at rates
greater than U.S. rates
    
    
    31.7
    
    
    
    15.2
    
    
    
    10.9Valuation allowance
    
    
    (3.1
    )
    
    
    24.1
    
    
    
    27.5Income tax benefit arising from settlement
of foreign tax audit
    
    
    
    
    
    
    (19.9
    )
    
    
    Non-deductible purchased in-process
technology and merger-related charges
    
    
    7.0
    
    
    
    3.2
    
    
    
    0.9Other
    
    
    1.8
    
    
    
    1.7
    
    
    
    0.1Total
    
    
    19.5
    %
    
    
    (12.8
    )%
    
    
    1.9
    %
     88




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##### Table of Contents



Note 18: Net Loss per Share
  Years Ended May 31,2007
    
    
    2006
    
    
    2005Net loss
    
    $
    (88,589
    )
    
    $
    (100,675
    )
    
    $
    (195,686
    )Weighted-average shares  Basic
    
    
    393,894
    
    
    
    386,801
    
    
    
    382,309Effect of dilutive securities:Employee stock options
    
    
    
    
    
    
    
    
    
    
    Restricted stock
    
    
    
    
    
    
    
    
    
    
    Weighted-average shares  Diluted
    
    
    393,894
    
    
    
    386,801
    
    
    
    382,309Net loss per share  Basic and DilutedNet loss
    
    $
    (0.22
    )
    
    $
    (0.26
    )
    
    $
    (0.51
    )
  Note 19: Segment Information
     Year Ended May 31, 2007SCN
    
    H3C
    
    Eliminations
    
    TotalRevenue
    
    $
    642,816
    
    
    $
    731,132
    
    
    $
    (106,467
    )
    
    $
    1,267,481Gross profit
    
    
    239,245
    
    
    
    339,209
    
    
    
    
    
    
    
    578,454Sales and
marketing, research
and development,
and general and
administrative
    
    
    337,523
    
    
    
    291,680
    
    
    
    
    
    
    
    629,203Restructuring,
amortization, and
in-process
research and
development
    
    
    19,493
    
    
    
    62,279
    
    
    
    
    
    
    
    81,772Operating loss
    
    
    (117,771
    )
    
    
    (14,750
    )
    
    
    
    
    
    
    (132,521
    )Net (loss) income
    
    $
    (81,446
    )
    
    $
    19,049
    
    
    $
    (26,192
    )
    
    $
    (88,589
    )Total
expenditures for additions to property, plant and equipment
    
    $
    11,686
    
    
    $
    16,645
    
    
    
    
    
    
    $
    28,331Assets
    
    $
    1,408,214
    
    
    $
    1,394,199
    
    
    $
    (651,321
    )
    
    $
    2,151,092Goodwill
    
    $
    311,380
    
    
    $
    455,064
    
    
    
    
    
    
    $
    766,444
 89




---



##### Table of Contents



Year Ended May 31, 2006SCN
    
    H3C
    
    Eliminations
    
    TotalRevenue
    
    $
    705,339
    
    
    $
    108,290
    
    
    $
    (18,822
    )
    
    $
    794,807Gross profit
    
    
    276,627
    
    
    
    51,437
    
    
    
    
    
    
    
    328,064Sales and marketing,
research and
development, and
general and
administrative
    
    
    419,008
    
    
    
    30,203
    
    
    
    
    
    
    
    449,211Restructuring,
amortization, and
in-process
research and
development
    
    
    29,579
    
    
    
    6,377
    
    
    
    
    
    
    
    35,956Operating (loss) income
    
    
    (171,960
    )
    
    
    14,857
    
    
    
    
    
    
    
    (157,103
    )Net (loss) income
    
    $
    (114,420
    )
    
    $
    21,568
    
    
    $
    (7,823
    )
    
    $
    (100,675
    )Total
expenditures for additions to property, plant and equipment
    
    $
    14,426
    
    
    $
    2,978
    
    
    
    
    
    
    $
    17,404Assets
    
    $
    1,482,670
    
    
    $
    406,981
    
    
    $
    (28,290
    )
    
    $
    1,861,361Goodwill
    
    $
    309,918
    
    
    $
    44,341
    
    
    
    
    
    
    $
    354,259
  Years Ended May 31,2007
    
    
    2006
    
    
    2005Networking
    
    $
    1,028,090
    
    
    
    81.1
    %
    
    $
    577,038
    
    
    
    72.6
    %
    
    $
    494,492
    
    
    
    75.9
    %Security
    
    
    120,053
    
    
    
    9.5
    
    
    
    88,012
    
    
    
    11.1
    
    
    
    25,760
    
    
    
    4.0Voice
    
    
    68,033
    
    
    
    5.4
    
    
    
    56,632
    
    
    
    7.1
    
    
    
    44,950
    
    
    
    6.9Services
    
    
    35,871
    
    
    
    2.8
    
    
    
    33,357
    
    
    
    4.2
    
    
    
    32,062
    
    
    
    4.9Connectivity Products
    
    
    15,434
    
    
    
    1.2
    
    
    
    39,768
    
    
    
    5.0
    
    
    
    53,980
    
    
    
    8.3Total
    
    $
    1,267,481
    
    
    
    
    
    
    $
    794,807
    
    
    
    
    
    
    $
    651,244
  Years Ended May 31,Customer
    
    2007
    
    2006
    
    2005Huawei Technologies Co.
    
    
    20
    %
    
    
    4
    %
    
    
    
    %Ingram Micro, Inc.
    
    
    11
    %
    
    
    19
    %
    
    
    21
    %Tech Data (1)
    
    
    *
    
    
    
    11
    %
    
    
    13
    %Total
    
    
    31
    %
    
    
    34
    %
    
    
    34
    %
 
 (1)
    
    - Customer does meet the 10 percent threshold in fiscal 2007  Note 20: Geographical Information
  Years Ended May 31,Sales
    
    2007
    
    
    2006
    
    
    2005Americas
    
    $
    233,691
    
    
    $
    248,532
    
    
    $
    214,051Latin and South America
    
    
    70,419
    
    
    
    72,164
    
    
    
    57,717Europe, Middle East, and Africa
    
    
    272,826
    
    
    
    298,545
    
    
    
    294,753Asia Pacific
    
    
    103,501
    
    
    
    91,396
    
    
    
    84,723China
    
    
    587,044
    
    
    
    84,170
    
    
    
    Total
    
    $
    1,267,481
    
    
    $
    794,807
    
    
    $
    651,244
  90




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##### Table of Contents



May 31,
    
    
    May 31,2007
    
    
    2006Property and Equipment:United States
    
    $
    30,104
    
    
    $
    41,186United Kingdom
    
    
    7,843
    
    
    
    10,325China
    
    
    32,070
    
    
    
    32,859Other
    
    
    6,443
    
    
    
    4,739Total
    
    $
    76,460
    
    
    $
    89,109
   Note
21: Employee Benefit Plan and EARP
   91




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##### Table of Contents



Note 22: Litigation
  In re Initial Public Offering Securities Litigation, Brian Levey vs.
TippingPoint Technologies, Inc., et al.
  92




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Note 23: Impairment Charge
  Note 24: Quarterly Results of Operations (Unaudited)
 Fiscal 2007
    
    Fiscal 2006First
    
    Second
    
    Third
    
    Fourth
    
    First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter
    
    Quarter(In thousands, except per share data)Sales
    
    $
    300,144
    
    
    $
    332,976
    
    
    $
    323,441
    
    
    $
    310,920
    
    
    $
    177,636
    
    
    $
    184,332
    
    
    $
    177,563
    
    
    $
    255,276Gross profit
    
    
    136,429
    
    
    
    150,151
    
    
    
    153,437
    
    
    
    138,437
    
    
    
    70,066
    
    
    
    74,315
    
    
    
    72,406
    
    
    
    111,277Gross profit margin %
    
    
    45.5
    %
    
    
    45.1
    %
    
    
    47.4
    %
    
    
    44.5
    %
    
    
    39.4
    %
    
    
    40.3
    %
    
    
    40.8
    %
    
    
    43.6
    %Operating loss
    
    
    (20,868
    )
    
    
    (9,380
    )
    
    
    (8,935
    )
    
    
    (93,338
    )
    
    
    (46,685
    )
    
    
    (42,226
    )
    
    
    (47,272
    )
    
    
    (20,920
    )Net loss
    
    
    (14,068
    )
    
    
    (3,516
    )
    
    
    (4,779
    )
    
    
    (66,226
    )
    
    
    (42,041
    )
    
    
    (10,700
    )
    
    
    (32,760
    )
    
    
    (15,174
    )Basic and diluted loss per share
    
    $
    (0.04
    )
    
    $
    (0.01
    )
    
    $
    (0.01
    )
    
    $
    (0.17
    )
    
    $
    (0.11
    )
    
    $
    (0.03
    )
    
    $
    (0.08
    )
    
    $
    (0.04
    )
  93




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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
  
 ITEM 9A. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  MANAGEMENTS ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
 Internal Control-Integrated Framework
 (1)
    
    pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect our transactions and dispositions of our
assets;(2)
    
    provide reasonable assurance that transactions are recorded as
necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with authorizations
of our management and board of directors; and(3)
    
    provide reasonable assurance regarding prevention or timely detection
of unauthorized acquisition, use, or disposition of our assets that
could have a material effect on our financial statements.
    94




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Important Considerations
  95




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##### Table of Contents



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 Internal ControlIntegrated
Framework
    Internal ControlIntegrated Framework Internal ControlIntegrated Framework
 Share-Based Payment
  
 96




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##### Table of Contents



ITEM 9B. OTHER INFORMATION
  
 PART III
 
 ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
 (a) Directors
  (b) Executive Officers
  (c) Section 16(a) Beneficial Ownership Reporting Compliance
  (d) Code of Ethics
 http://www.3com.com http://www.3com.com
 (e) Corporate Governance
  
 ITEM 11. EXECUTIVE COMPENSATION
  
 ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER
MATTERS
  
 ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
  97




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##### Table of Contents



ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  
 PART IV
 
 ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
 (a)
    
    
    (1
    )
    
    Financial Statements  See Index to Consolidated Financial Statements and
Financial Statement Schedule at page 53 of this Form 10-K.(2
    )
    
    Financial Statement Schedule 
See Financial Statement Schedule at page 105 of
this Form 10-K.(3
    )
    
    Exhibits  See
Exhibit Index at page 98 of this Form 10-K.(b)
    
    See
Exhibit Index at page 98 of this Form 10-K.(c)
    
    See Index to
Consolidated Financial Statements and Financial Statement Schedule at
page 53 of this Form 10-K.
 
 EXHIBIT INDEX
 Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1
    
    Master Separation and Distribution
Agreement between the Registrant and Palm,
Inc. effective as of December 13, 1999
    
    10-Q
    
    002-92053
    
    
    2.1
    
    
    4/4/002.2
    
    Indemnification and Insurance Matters
Agreement between the Registrant and Palm,
Inc.
    
    10-Q
    
    002-92053
    
    
    2.11
    
    
    4/4/002.3
    
    Agreement and Plan of Merger, dated
December 13, 2004, by and among the
Registrant, Topaz Acquisition Corporation
and TippingPoint Technologies, Inc.
    
    8-K
    
    000-12867
    
    
    2.1
    
    
    12/16/042.4
    
    Securities Purchase Agreement by and among
3Com Corporation, 3Com Technologies, Huawei
Technologies Co., Ltd. and 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
    
    
    12/27/063.1
    
    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 March
23, 2005
    
    8-K
    
    000-12867
    
    
    3.1
    
    
    3/28/053.3
    
    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
    
    8-A/A
    
    000-12867
    
    
    4.1
    
    
    11/27/02
 98




---



##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.1
    
    3Com Corporation 1983 Stock Option Plan, as
amended and restated effective September
30, 2001*
    
    10-Q
    
    000-12867
    
    
    10.1
    
    
    1/11/0210.2
    
    3Com Corporation 1984 Employee Stock
Purchase Plan, as amended and restated as
of July 15, 2003*
    
    10-K
    
    000-12867
    
    
    10.3
    
    
    8/1/0310.3
    
    3Com Corporation Director Stock Option
Plan, as amended*
    
    10-Q
    
    000-12867
    
    
    10.4
    
    
    10/10/0310.4
    
    3Com Corporation Restricted Stock Plan, as
amended July 1, 2001*
    
    10-K
    
    000-12867
    
    
    10.6
    
    
    8/2/0210.5
    
    3Com Corporation 1994 Stock Option Plan, as
amended and restated effective April 30,
2002*
    
    10-K
    
    000-12867
    
    
    10.7
    
    
    8/2/0210.6
    
    3Com Corporation 2003 Stock Plan, as
amended*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    10/3/0510.7
    
    Stand Alone Stock Option Agreement dated
January 25, 2006 by and between R. Scott
Murray and 3Com Corporation *
    
    10-Q
    
    000-12867
    
    
    10.8
    
    
    4/10/0610.8
    
    Stand Alone Stock Option Agreement dated
September 5, 2006 by and between Edgar
Masri and 3Com Corporation *
    
    10-Q
    
    000-12867
    
    
    10.2
    
    
    10/10/0610.9
    
    Stand Alone Stock Option Agreement dated
July 3, 2007 by and between Jay Zager and
3Com Corporation *
    
    S-8
    
    333-144322
    
    
    10.2
    
    
    7/3/0710.10
    
    Stand Alone Restricted Stock Agreement
dated July 3, 2007 by and between Jay Zager
and 3Com Corporation *
    
    S-8
    
    333-144322
    
    
    10.3
    
    
    7/3/0710.11
    
    Form of Stock Option Agreement for 2003
Stock Plan (Non-Employee Directors)
    
    10-K
    
    000-12867
    
    
    10.7
    
    
    8/5/0510.12
    
    Form of Stock Option Agreement for 2003
Stock Plan (Employees)*
    
    10-K
    
    000-12867
    
    
    10.8
    
    
    8/5/0510.13
    
    Form of Performance Accelerated Vesting
Restricted Stock Agreement*
    
    10-K
    
    000-12867
    
    
    10.9
    
    
    8/5/0510.14
    
    Form of Performance Vesting Restricted
Stock Agreement*
    
    10-Q
    
    000-12867
    
    
    10.6
    
    
    4/10/0610.15
    
    Form of Restricted Stock Grant Agreement 
Standard 4-Year Vesting*
    
    10-K
    
    000-12867
    
    
    10.10
    
    
    8/5/0510.16
    
    Form of Restricted Stock Agreement
(Time-Based Vesting)*
    
    8-K
    
    000-12867
    
    
    10.2
    
    
    11/17/0510.17
    
    Form of Restricted Stock Unit Grant Award
Agreement*
    
    10-Q
    
    000-12867
    
    
    10.3
    
    
    10/10/0610.18
    
    R. Scott Murray Employment Agreement,
amended and restated as of February 2,
2006, between the registrant and R. Scott
Murray *
    
    8-K/A
    
    000-12867
    
    
    10.1
    
    
    2/6/0610.19
    
    Performance Vesting Restricted Stock
Agreement dated January 25, 2006 by and
between R. Scott Murray and 3Com
Corporation *
    
    10-Q
    
    000-12867
    
    
    10.7
    
    
    4/10/0610.20
    
    Edgar Masri Employment Agreement, dated as
of August 8, 2007, between the registrant
and Edgar Masri *
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    8/9/0610.21
    
    Employment Agreement, effective as of March
29, 2007, between H3C and Shusheng Zheng*
    
    
    
    
    
    
    
    
    
    
    
    X10.22
    
    Offer Letter dated May 9, 2007 between the
Registrant and Jay Zager*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    5/10/07
 99




---



##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.23
    
    Offer Letter dated June 19, 2004 between
the Registrant and Donald M, Halsted III*
    
    10-K
    
    000-12867
    
    
    10.16
    
    
    8/11/0610.24
    
    Offer Letter dated September 12, 2003
between the Registrant and Neal D. Goldman*
    
    10-K
    
    000-12867
    
    
    10.17
    
    
    8/11/0610.25
    
    Offer Letter dated November 2, 2005 between
the Registrant and Marc Willebeek-LeMair*
    
    10-K
    
    000-12867
    
    
    10.18
    
    
    8/11/0610.26
    
    Offer Letter dated April 11, 2006 between
the Registrant and Robert Dechant*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    4/17/0610.27
    
    Offer Letter dated November 2, 2005 between
the Registrant and James Hamilton*
    
    
    
    
    
    
    
    
    
    
    
    X10.28
    
    Severance Benefits Agreement dated February
28, 2007, between the Registrant and James
Hamilton*
    
    
    
    
    
    
    
    
    
    
    
    X10.29
    
    Robert Y. L. Mao Employment Agreement,
dated as of August 7, 2006, between the
registrant and Robert Mao*
    
    
    
    
    
    
    
    
    
    
    
    X10.30
    
    Summary of Executive Officer Fiscal 2008
Compensation
    
    8-K
    
    000-12867
    
    Text of Item 5.02(e)
    
    7/27/0710.31
    
    Summary of Equity Appreciation Rights Plan
(H3C Technologies)*
    
    
    
    
    
    
    
    
    
    
    
    X10.32
    
    3Com Corporation Section 16 Officer
Severance Plan, amended and restated
effective September 11, 2006 *
    
    10-Q
    
    000-12867
    
    
    10.3
    
    
    1/09/0710.33
    
    Above Grade Severance Plan effective
September 11, 2006 *
    
    
    
    
    
    
    
    
    
    
    
    X10.34
    
    Form of Severance Benefits Agreement
between the Registrant and each of the
officers or former officers named in our
proxy statement (other than Messrs. Masri
and Mao)*
    
    8-K
    
    000-12867
    
    
    10.3
    
    
    4/4/0610.35
    
    Form of Management Retention Agreement
between the Registrant and each of the
following officers or former officers named
in our proxy statement: Messrs. Goldman,
Halsted, Hamilton and Willebeek-LeMair*
    
    10-K
    
    000-12867
    
    
    10.15
    
    
    8/5/0510.36
    
    Form of Management Retention Agreement
between the Registrant and the following
officers or former officers named in our
proxy statements: Messrs. Dechant, Zheng
and Zager and future executive officers*
    
    
    
    
    
    
    
    
    
    
    
    X10.37
    
    3Com Corporation Deferred Compensation Plan*
    
    10-K
    
    000-12867
    
    
    10.23
    
    
    8/9/0410.38
    
    Form of Indemnity Agreement between the
Registrant and its officers and directors
    
    S-3/A
    
    333-102591
    
    
    10.1
    
    
    4/9/0310.39
    
    3Com Corporation Consultant Services
Agreement made as of August 8, 2006 by and
between 3Com Corporation and Anik Bose*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    8/11/0610.40
    
    Office Lease, dated as of November 26,
2002, by and between Marlborough Campus
Limited Partnership and the Registrant
    
    10-K
    
    000-12867
    
    
    10.20
    
    
    8/9/0410.41
    
    First Amendment to Lease, dated as of
November 26, 2002, by and between
Marlborough Campus Limited Partnership and
the Registrant
    
    10-K
    
    000-12867
    
    
    10.17
    
    
    8/5/05
 100




---



##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.42
    
    Second Amendment to Lease, dated as of July
18, 2005, by and between 3Com Corporation
and Marlborough Campus Limited Partnership
    
    10-Q
    
    000-12867
    
    
    10.2
    
    
    4/5/0510.43
    
    Third Amendment to Lease, dated as of July
18, 2005, by and between 3Com Corporation
and Marlborough Campus Limited Partnership
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    7/22/0510.44
    
    Fourth Amendment to Lease dated as of
December 12, 2005 by and between
Marlborough Campus Limited Partnership and
3Com Corporation
    
    10-Q
    
    000-12867
    
    
    10.1
    
    
    1/09/0710.45
    
    Fifth Amendment to Lease dated as of
October 27, 2006 by and between Bel
Marlborough I LLC and 3Com Corporation
    
    10-Q
    
    000-12867
    
    
    10.2
    
    
    1/09/0710.46
    
    Agreement for the Lease of Hangzhou Real
Property between Huawei Technologies Co.
Ltd. and Hangzhou Huawei-3Com Technology
Co., Ltd. dated January 1, 2004
    
    10-Q
    
    000-12867
    
    
    10.7
    
    
    10/10/0610.47
    
    Purchase and Sale Agreement made as of
July 24, 2006 by and between 3Com
Corporation and SSC II, L.P.
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    7/26/0610.48
    
    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
    
    
    8/11/0610.49
    
    Amendment No. 1 to the Shareholders
Agreement dated as of July 31, 2004
(Certain Potions Omitted; Confidential
Treatment Requested)
    
    10-K
    
    000-12867
    
    
    10.34
    
    
    8/11/0610.50
    
    Amendment No. 2 to the Shareholders
Agreement dated as of January 27, 2006
(Certain Portions Omitted; Confidential
Treatment Requested)
    
    10-K
    
    000-12867
    
    
    10.35
    
    
    8/11/0610.51
    
    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
    
    
    3/23/0710.52
    
    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
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    5/25/07
 101




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.53
    
    Borrower Share Charge dated March 22, 2007
among 3Com Technologies, as Chargor, and
Industrial and Commercial Bank of China
(Asia) Limited, as Collateral Agent
    
    
    
    
    
    
    
    
    
    
    
    X10.54
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.55
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.56
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.57
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.58
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.59
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.60
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.61
    
    Deed of Release made March 30, 2007 by
Industrial and Commercial Bank of China
(Asia) Limited, as Collateral Agent, in
favour of 3Com Technologies
    
    
    
    
    
    
    
    
    
    
    
    X10.62
    
    Commitment Letter, dated as of December 20,
2006, by and between 3Com Technologies and
Goldman Sachs Credit Partners L.P.
    
    10-Q
    
    000-12867
    
    
    10.1
    
    
    4/09/07
 102




---



##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    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 103




---



##### 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 31st day of July, 2007.
 3COM CORPORATION
(Registrant)By:
    /s/                Edgar MasriEdgar MasriPresident and 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
31st day of July, 2007
 Signature
    
    TitlePresident, Chief Executive Officer/s/     Edgar Masri
    
    and Director(Edgar Masri)
    
    (Principal
Executive Officer)Executive Vice President, Finance/s/     Jay Zager
    
    and Chief Financial Officer(Jay Zager)
    
    (Principal
Financial and Accounting Officer)/s/     Eric A. Benhamou
    
    Chairman of the Board(Eric A. Benhamou)/s/     Gary T. DiCamillo
    
    Director(Gary T. DiCamillo)/s/     James R. Long
    
    Director(James R. Long)/s/     Robert Mao
    
    Director(Robert Mao)/s/     Raj Reddy
    
    Director(Raj Reddy)/s/     Dominique Trempont
    
    Director(Dominique Trempont)/s/     Paul G. Yovovich
    
    Director(Paul G. Yovovich)
 104




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##### Table of Contents



AdditionsBalance at
    
    Charged to
    
    
    
    
    
    
    
    
    
    Balance atBeginning of
    
    Costs and
    
    
    
    
    
    
    
    
    
    End ofDescription
    
    Period
    
    Expenses
    
    Other
    
    Deductions
    
    PeriodYear ended May 31, 2005:Allowance for doubtful accounts
    
    $
    16,276
    
    
    $
    (2,251
    )
    
    $
    793
    (2)
    
    $
    (272)
    (1)
    
    $
    15,090Allowance for product returns
    
    
    5,917
    
    
    
    20,578
    
    
    
    
    
    
    
    21,443
    
    
    
    5,052Accrued product warranty
    
    
    43,825
    
    
    
    30,867
    
    
    
    
    
    
    
    32,910
    
    
    
    41,782Year ended May 31, 2006:Allowance for doubtful accounts
    
    $
    15,090
    
    
    $
    1,000
    
    
    $
    165
    (3)
    
    $
    (167)
    (1)
    
    $
    16,422Allowance for product returns
    
    
    5,052
    
    
    
    15,288
    
    
    
    6,768
    (3)
    
    
    18,416
    
    
    
    8,692Accrued product warranty
    
    
    41,782
    
    
    
    28,424
    
    
    
    4,543
    (3)
    
    
    32,958
    
    
    
    41,791Year ended May 31, 2007:Allowance for doubtful accounts
    
    
    16,422
    
    
    $
    (586
    )
    
    $
    
    
    
    $
    544
    (1)
    
    $
    15,292Allowance for product returns
    
    
    8,692
    
    
    
    13,963
    
    
    
    
    
    
    
    16,614
    
    
    
    6,041Accrued product warranty
    
    
    41,791
    
    
    
    46,406
    
    
    
    
    
    
    
    47,601
    
    
    
    40,596
 
 (1)
    
    Accounts written off  net of recoveries(2)
    
    Represents reserves related to the TippingPoint acquisition(3)
    
    Represents reserves related to the H3C acquisition 105




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##### Table of Contents



EXHIBIT INDEX
 Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith2.1
    
    Master Separation and Distribution
Agreement between the Registrant and Palm,
Inc. effective as of December 13, 1999
    
    10-Q
    
    002-92053
    
    
    2.1
    
    
    4/4/002.2
    
    Indemnification and Insurance Matters
Agreement between the Registrant and Palm,
Inc.
    
    10-Q
    
    002-92053
    
    
    2.11
    
    
    4/4/002.3
    
    Agreement and Plan of Merger, dated
December 13, 2004, by and among the
Registrant, Topaz Acquisition Corporation
and TippingPoint Technologies, Inc.
    
    8-K
    
    000-12867
    
    
    2.1
    
    
    12/16/042.4
    
    Securities Purchase Agreement by and among
3Com Corporation, 3Com Technologies, Huawei
Technologies Co., Ltd. and 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
    
    
    12/27/063.1
    
    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 March
23, 2005
    
    8-K
    
    000-12867
    
    
    3.1
    
    
    3/28/053.3
    
    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
    
    8-A/A
    
    000-12867
    
    
    4.1
    
    
    11/27/0210.1
    
    3Com Corporation 1983 Stock Option Plan, as
amended and restated effective September
30, 2001*
    
    10-Q
    
    000-12867
    
    
    10.1
    
    
    1/11/0210.2
    
    3Com Corporation 1984 Employee Stock
Purchase Plan, as amended and restated as
of July 15, 2003*
    
    10-K
    
    000-12867
    
    
    10.3
    
    
    8/1/0310.3
    
    3Com Corporation Director Stock Option
Plan, as amended*
    
    10-Q
    
    000-12867
    
    
    10.4
    
    
    10/10/0310.4
    
    3Com Corporation Restricted Stock Plan, as
amended July 1, 2001*
    
    10-K
    
    000-12867
    
    
    10.6
    
    
    8/2/0210.5
    
    3Com Corporation 1994 Stock Option Plan, as
amended and restated effective April 30,
2002*
    
    10-K
    
    000-12867
    
    
    10.7
    
    
    8/2/0210.6
    
    3Com Corporation 2003 Stock Plan, as
amended*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    10/3/0510.7
    
    Stand Alone Stock Option Agreement dated
January 25, 2006 by and between R. Scott
Murray and 3Com Corporation *
    
    10-Q
    
    000-12867
    
    
    10.8
    
    
    4/10/0610.8
    
    Stand Alone Stock Option Agreement dated
September 5, 2006 by and between Edgar
Masri and 3Com Corporation *
    
    10-Q
    
    000-12867
    
    
    10.2
    
    
    10/10/0610.9
    
    Stand Alone Stock Option Agreement dated
July 3, 2007 by and between Jay Zager and
3Com Corporation *
    
    S-8
    
    333-144322
    
    
    10.2
    
    
    7/3/07
 106




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.10
    
    Stand Alone Restricted Stock Agreement
dated July 3, 2007 by and between Jay Zager
and 3Com Corporation *
    
    S-8
    
    333-144322
    
    
    10.3
    
    
    7/3/0710.11
    
    Form of Stock Option Agreement for 2003
Stock Plan (Non-Employee Directors)
    
    10-K
    
    000-12867
    
    
    10.7
    
    
    8/5/0510.12
    
    Form of Stock Option Agreement for 2003
Stock Plan (Employees)*
    
    10-K
    
    000-12867
    
    
    10.8
    
    
    8/5/0510.13
    
    Form of Performance Accelerated Vesting
Restricted Stock Agreement*
    
    10-K
    
    000-12867
    
    
    10.9
    
    
    8/5/0510.14
    
    Form of Performance Vesting Restricted
Stock Agreement*
    
    10-Q
    
    000-12867
    
    
    10.6
    
    
    4/10/0610.15
    
    Form of Restricted Stock Grant Agreement 
Standard 4-Year Vesting*
    
    10-K
    
    000-12867
    
    
    10.10
    
    
    8/5/0510.16
    
    Form of Restricted Stock Agreement
(Time-Based Vesting)*
    
    8-K
    
    000-12867
    
    
    10.2
    
    
    11/17/0510.17
    
    Form of Restricted Stock Unit Grant Award
Agreement*
    
    10-Q
    
    000-12867
    
    
    10.3
    
    
    10/10/0610.18
    
    R. Scott Murray Employment Agreement,
amended and restated as of February 2,
2006, between the registrant and R. Scott
Murray *
    
    8-K/A
    
    000-12867
    
    
    10.1
    
    
    2/6/0610.19
    
    Performance Vesting Restricted Stock
Agreement dated January 25, 2006 by and
between R. Scott Murray and 3Com
Corporation *
    
    10-Q
    
    000-12867
    
    
    10.7
    
    
    4/10/0610.20
    
    Edgar Masri Employment Agreement, dated as
of August 8, 2007, between the registrant
and Edgar Masri *
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    8/9/0610.21
    
    Employment Agreement, effective as of March
29, 2007, between H3C and Shusheng Zheng*
    
    
    
    
    
    
    
    
    
    
    
    X10.22
    
    Offer Letter dated May 9, 2007 between the
Registrant and Jay Zager*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    5/10/0710.23
    
    Offer Letter dated June 19, 2004 between
the Registrant and Donald M, Halsted III*
    
    10-K
    
    000-12867
    
    
    10.16
    
    
    8/11/0610.24
    
    Offer Letter dated September 12, 2003
between the Registrant and Neal D. Goldman*
    
    10-K
    
    000-12867
    
    
    10.17
    
    
    8/11/0610.25
    
    Offer Letter dated November 2, 2005 between
the Registrant and Marc Willebeek-LeMair*
    
    10-K
    
    000-12867
    
    
    10.18
    
    
    8/11/0610.26
    
    Offer Letter dated April 11, 2006 between
the Registrant and Robert Dechant*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    4/17/0610.27
    
    Offer Letter dated November 2, 2005 between
the Registrant and James Hamilton*
    
    
    
    
    
    
    
    
    
    
    
    X10.28
    
    Severance Benefits Agreement dated February
28, 2007, between the Registrant and James
Hamilton*
    
    
    
    
    
    
    
    
    
    
    
    X10.29
    
    Robert Y. L. Mao Employment Agreement,
dated as of August 7, 2006, between the
registrant and Robert Mao*
    
    
    
    
    
    
    
    
    
    
    
    X10.30
    
    Summary of Executive Officer Fiscal 2008
Compensation
    
    8-K
    
    000-12867
    
    Text of Item 5.02(e)
    
    7/27/0710.31
    
    Summary of Equity Appreciation Rights Plan
(H3C Technologies)*
    
    
    
    
    
    
    
    
    
    
    
    X
 107




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.32
    
    3Com Corporation Section 16 Officer
Severance Plan, amended and restated
effective September 11, 2006 *
    
    10-Q
    
    000-12867
    
    
    10.3
    
    
    1/09/0710.33
    
    Above Grade Severance Plan effective
September 11, 2006 *
    
    
    
    
    
    
    
    
    
    
    
    X10.34
    
    Form of Severance Benefits Agreement
between the Registrant and each of the
officers or former officers named in our
proxy statement (other than Messrs. Masri
and Mao)*
    
    8-K
    
    000-12867
    
    
    10.3
    
    
    4/4/0610.35
    
    Form of Management Retention Agreement
between the Registrant and each of the
following officers or former officers named
in our proxy statement: Messrs. Goldman,
Halsted, Hamilton and Willebeek-LeMair*
    
    10-K
    
    000-12867
    
    
    10.15
    
    
    8/5/0510.36
    
    Form of Management Retention Agreement
between the Registrant and the following
officers or former officers named in our
proxy statements: Messrs. Dechant, Zheng
and Zager and future executive officers*
    
    
    
    
    
    
    
    
    
    
    
    X10.37
    
    3Com Corporation Deferred Compensation Plan*
    
    10-K
    
    000-12867
    
    
    10.23
    
    
    8/9/0410.38
    
    Form of Indemnity Agreement between the
Registrant and its officers and directors
    
    S-3/A
    
    333-102591
    
    
    10.1
    
    
    4/9/0310.39
    
    3Com Corporation Consultant Services
Agreement made as of August 8, 2006 by and
between 3Com Corporation and Anik Bose*
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    8/11/0610.40
    
    Office Lease, dated as of November 26,
2002, by and between Marlborough Campus
Limited Partnership and the Registrant
    
    10-K
    
    000-12867
    
    
    10.20
    
    
    8/9/0410.41
    
    First Amendment to Lease, dated as of
November 26, 2002, by and between
Marlborough Campus Limited Partnership and
the Registrant
    
    10-K
    
    000-12867
    
    
    10.17
    
    
    8/5/0510.42
    
    Second Amendment to Lease, dated as of July
18, 2005, by and between 3Com Corporation
and Marlborough Campus Limited Partnership
    
    10-Q
    
    000-12867
    
    
    10.2
    
    
    4/5/0510.43
    
    Third Amendment to Lease, dated as of July
18, 2005, by and between 3Com Corporation
and Marlborough Campus Limited Partnership
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    7/22/0510.44
    
    Fourth Amendment to Lease dated as of
December 12, 2005 by and between
Marlborough Campus Limited Partnership and
3Com Corporation
    
    10-Q
    
    000-12867
    
    
    10.1
    
    
    1/09/0710.45
    
    Fifth Amendment to Lease dated as of
October 27, 2006 by and between Bel
Marlborough I LLC and 3Com Corporation
    
    10-Q
    
    000-12867
    
    
    10.2
    
    
    1/09/0710.46
    
    Agreement for the Lease of Hangzhou Real
Property between Huawei Technologies Co.
Ltd. and Hangzhou Huawei-3Com Technology
Co., Ltd. dated January 1, 2004
    
    10-Q
    
    000-12867
    
    
    10.7
    
    
    10/10/0610.47
    
    Purchase and Sale Agreement made as of
July 24, 2006 by and between 3Com
Corporation and SSC II, L.P.
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    7/26/06
 108




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.48
    
    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
    
    
    8/11/0610.49
    
    Amendment No. 1 to the Shareholders
Agreement dated as of July 31, 2004
(Certain Potions Omitted; Confidential
Treatment Requested)
    
    10-K
    
    000-12867
    
    
    10.34
    
    
    8/11/0610.50
    
    Amendment No. 2 to the Shareholders
Agreement dated as of January 27, 2006
(Certain Portions Omitted; Confidential
Treatment Requested)
    
    10-K
    
    000-12867
    
    
    10.35
    
    
    8/11/0610.51
    
    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
    
    
    3/23/0710.52
    
    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
    
    8-K
    
    000-12867
    
    
    10.1
    
    
    5/25/0710.53
    
    Borrower Share Charge dated March 22, 2007
among 3Com Technologies, as Chargor, and
Industrial and Commercial Bank of China
(Asia) Limited, as Collateral Agent
    
    
    
    
    
    
    
    
    
    
    
    X10.54
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.55
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X
 109




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##### Table of Contents



Incorporated by ReferenceExhibit
    
    
    
    
    
    
    
    
    
    
    
    
    
    FiledNumber
    
    Exhibit Description
    
    Form
    
    File No.
    
    Exhibit
    
    Filing Date
    
    Herewith10.56
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.57
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.58
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.59
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.60
    
    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
    
    
    
    
    
    
    
    
    
    
    
    X10.61
    
    Deed of Release made March 30, 2007 by
Industrial and Commercial Bank of China
(Asia) Limited, as Collateral Agent, in
favour of 3Com Technologies
    
    
    
    
    
    
    
    
    
    
    
    X10.62
    
    Commitment Letter, dated as of December 20,
2006, by and between 3Com Technologies and
Goldman Sachs Credit Partners L.P.
    
    10-Q
    
    000-12867
    
    
    10.1
    
    
    4/09/0721.1
    
    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 110