<< Back
3Com Reports First Quarter Results for Fiscal 2009

Please click here for a complete version of the financial tables.

MARLBOROUGH, Mass.--(BUSINESS WIRE)--Sept. 22, 2008--3Com Corporation (NASDAQ: COMS) today reported financial results for its fiscal 2009 first quarter, which ended August 29, 2008. Revenue in the quarter was $342.7 million compared to revenue of $319.4 million in the corresponding period in fiscal 2008, a 7 percent increase.

Net income in the quarter was $79.8 million, or $0.20 per diluted share, compared with a net loss of $18.7 million, or $0.05 per share, in the first quarter of fiscal year 2008. In the first quarter of fiscal 2009, 3Com recorded a $70.0 million, or $0.17 per diluted share, benefit from the previously disclosed resolution of a patent dispute between the company and Realtek. On a non-GAAP basis, net income was $43.4 million, or $0.11 per diluted share, compared with net income of $12.2 million, or $0.03 per diluted share, for the first quarter of fiscal year 2008.

"Overall this was an excellent quarter for 3Com as we achieved GAAP profitability," said Bob Mao, 3Com CEO. "In addition, we delivered our three key objectives in the quarter: solid year-over-year revenue growth, improved profit margins, including record gross margins again, and strong cash generation. These results exceeded our revised guidance for the quarter, and showed several examples of improved execution of our strategy and the benefit of efficiencies gained from our integration activities. We believe that our strategy offers a compelling value proposition of price-performance leadership to value-conscious enterprise customers."

In the first quarter, 3Com generated $39.3 million in cash from operations. 3Com's cash and cash equivalents balance at August 29, 2008, was $541.4 million.

Management will host a conference call and Webcast at 5 p.m. EDT, Monday, September 22, 2008, to discuss the company's financial results and business outlook. To participate on the call, U.S. and international parties may dial 913-312-0681. Alternatively, interested parties may listen to the live broadcast of the call over the Internet at 3Com's Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section.

For those unable to participate on the live call, a 24-hour replay will be available starting at 8:00 p.m. EDT on September 23, 2008, by dialing (719) 457-0820 or (888) 203-1112, Confirmation Code: 4966065. A replay also will be available over the Internet at 3Com's Investor Relations Web site (www.3com.com/investor) in the Earnings Webcast section. The replay will be available for approximately three weeks after posting.

For additional financial information, please refer to the Investor Relations section of our Web site.

Safe Harbor

This news release contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including forward-looking statements regarding our business objectives and goals. These statements are neither promises nor guarantees, but involve risks and uncertainties that could cause actual results to differ materially from those set forth in the forward-looking statements, including, without limitation, risks relating to: our ability to grow profitably, expand outside of China, maintain and expand in China, improve expense controls while making investments to grow and other risks detailed in the Company's filings with the SEC, including those discussed in the Company's annual report filed with the SEC on Form 10-K for the year ended May 30, 2008.

3Com Corporation does not intend, and disclaims any obligation, to update any forward-looking information contained in this release or with respect to the announcements described herein.

The non-GAAP measures used by the Company exclude restructuring, amortization, in-process research and development, stock-based compensation expense and, if applicable in the relevant period, unusual items, such as the $70 million Realtek benefit and those other items detailed in the tables attached to this press release. The required reconciliations and other disclosures for all non-GAAP measures used by the Company are set forth later in this press release, in the Current Report on Form 8-K furnished to the SEC on the date hereof and/or in the investor relations section of our Web site, www.3com.com.

References to the financial information included in this news release reflect rounded numbers and should be considered approximate values.

About 3Com Corporation

3Com Corporation (NASDAQ: COMS) is a leading provider of secure, converged voice and data networking solutions for enterprises of all sizes. 3Com offers a broad line of innovative products backed by world class sales, service and support, which excel at delivering business value for its customers. Through its TippingPoint division, 3Com is a leading provider of network-based intrusion prevention systems that deliver in-depth application protection, infrastructure protection, and performance protection. For further information, please visit www.3com.com, or the press site www.3com.com/pressbox.

Copyright (C) 2008 3Com Corporation. 3Com, the 3Com logo and TippingPoint are registered trademarks and H3C is a trademark of 3Com Corporation or its wholly owned subsidiaries. All other company and product names may be trademarks of their respective holders.

                           3Com Corporation
           Condensed Consolidated Statements of Operations
                (in thousands, except per share data)
                             (unaudited)
                               TABLE A

                                                   Three Months Ended
                                                   -------------------
                                                    August    August
                                                      29,       31,
                                                     2008      2007
                                                   --------- ---------

Sales                                              $342,650  $319,434
Cost of sales                                       153,023   170,498
                                                   --------- ---------

Gross profit                                        189,627   148,936

Operating expenses (income):
 Sales and marketing                                 86,282    74,404
 Research and development                            45,747    52,310
 General and administrative                          27,054    21,478
 Amortization of intangibles                         25,164    26,006
 Realtek patent resolution                          (70,000)        -
 Restructuring charges                                1,997       425
                                                   --------- ---------
  Total operating expenses (income)                 116,244   174,623
                                                   --------- ---------

Operating income (loss)                              73,383   (25,687)

Interest expense, net                                (1,251)   (3,567)
Other income, net                                    12,871    12,411
                                                   --------- ---------

Income (loss) from operations before income taxes    85,003   (16,843)


Income tax provision                                 (5,166)   (1,811)

Net income (loss)                                  $ 79,837  $(18,654)
                                                   ========= =========

Basic and diluted income (loss) per share          $   0.20  $  (0.05)
                                                   ========= =========

Shares used in computing basic per share amounts    402,889   397,041

Shares used in computing diluted per share amounts  404,072   397,041
                           3Com Corporation
                Condensed Consolidated Balance Sheets
                            (in thousands)
                             (unaudited)
                               TABLE B

                                                 August 29,  May 30,
                                                    2008       2008
                                                 ---------- ----------

ASSETS

Current assets:
 Cash and equivalents                            $  541,428 $  503,644
 Notes receivable                                    88,100     65,116
 Accounts receivable, net                           143,135    116,281
 Inventories, net                                   108,376     90,831
 Other current assets                                35,584     34,033
                                                 ---------- ----------
  Total current assets                              916,623    809,905

Property & equipment, net                            54,258     54,314
Goodwill                                            609,297    609,297
Intangibles, net                                    254,296    278,385
Deposits and other assets                            22,727     23,229
                                                 ---------- ----------

  Total assets                                   $1,857,201 $1,775,130
                                                 ========== ==========

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
 Accounts payable                                $   95,391 $   90,280
 Current portion of long-term debt                   88,000     48,000
 Accrued liabilities and other                      341,108    366,181
                                                 ---------- ----------

  Total current liabilities                         524,499    504,461

Deferred taxes and long-term obligations             30,696     22,367
Long-term debt                                      213,000    253,000
Stockholders' equity                              1,089,006    995,302
                                                 ---------- ----------

  Total liabilities and stockholders' equity     $1,857,201 $1,775,130
                                                 ========== ==========
                           3Com Corporation
                 Reconciliation of Non-GAAP Measures
           (in thousands, except margin and per-share data)
                             (unaudited)
                               TABLE C

                                                   Three Months Ended
                                                   -------------------
                                                    August    August
                                                      29,       31,
                                                     2008      2007
                                                   --------- ---------
GAAP operating income (loss)                       $ 73,383  $(25,687)
    Restructuring                                     1,997       425
    Amortization of intangible assets                25,164    26,006
    Impacts to cost of sales from purchase
     accounting adjustments to inventory (a)              -     5,528
    Realtek patent resolution (b)                   (70,000)        -
    Stock-based compensation expense (c)              6,442     3,863
                                                   --------- ---------
Non-GAAP operating income                          $ 36,986  $ 10,135
                                                   ========= =========


GAAP net income (loss)                             $ 79,837  $(18,654)
    Restructuring                                     1,997       425
    Amortization of intangible assets                25,164    26,006
    Impacts to cost of sales from purchase
     accounting adjustments to inventory (a)              -     5,528
    Realtek patent resolution (b)                   (70,000)        -
    Stock-based compensation expense (c)              6,442     3,863
    Gain on sale of assets (d)                            -    (4,930)
                                                   --------- ---------
Non-GAAP net income                                $ 43,440  $ 12,238
                                                   ========= =========


GAAP net income (loss) per share                   $   0.20  $  (0.05)
    Restructuring                                      0.00      0.00
    Amortization of intangible assets                  0.06      0.07
    Impacts to cost of sales from purchase
     accounting adjustments to inventory (a)              -      0.01
    Realtek patent resolution (b)                     (0.17)        -
    Stock-based compensation expense (c)               0.02      0.01
    Gain on sales of assets (d)                           -     (0.01)
                                                   --------- ---------
Non-GAAP net income per share, diluted             $   0.11  $   0.03
                                                   ========= =========
Shares used in computing diluted per share amounts  404,072   400,543


(a) Results from our 49% H3C acquisition transaction.
(b) Realtek resolution of patent dispute.
(c) Stock-based compensation expense is included in the following cost
 and expense categories by period:

                                                   Three Months Ended
                                                   -------------------
                                                    August    August
                                                      29,       31,
                                                     2008      2007
                                                   --------- ---------
Cost of sales                                           758       384
Sales and marketing                                   1,758       975
Research and development                                884       721
General and administrative                            3,042     1,783

(d) The gain relates to a patent sale in fiscal 2008.

CONTACT: 3Com Corporation
Media & Investor Relations
John Vincenzo, 508-323-1260
john_vincenzo@3com.comv or
Media Relations
Kevin Flanagan, 508-323-1101
kevin_flanagan@3com.com

SOURCE: 3Com Corporation

Could not find file '\\aws.nasdaqomx.com\irwebpro\content3\IRXMLDATA\61\61382\Disclaimers.xml'.