3Com Reports Third Quarter Fiscal Year 2006 Results; Delivers Continued Year-over-Year Improvements in Bottom-Line Performance; Provides Pro Forma Consolidated Results Including Majority-Owned Huawei-3Com Joint Venture.MARLBOROUGH Marl·bor·ough or Marl·bo·ro A city of east-central Massachusetts east-northeast of Worcester. Settled in 1657, it was nearly destroyed in 1676 during King Philip's War. Population: 38,100. , Mass. -- Third Quarter Highlights --Pro forma forma, adj/n minor elements between the members of a botanical species. consolidated con·sol·i·date v. con·sol·i·dat·ed, con·sol·i·dat·ing, con·sol·i·dates v.tr. 1. To unite into one system or whole; combine: revenue (assuming consolidation of Huawei-3Com from the beginning of the period) of $305 million up from $242 million in the prior-year quarter; stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). revenue was $178 million, compared to $161 million for the prior-year quarter; --GAAP loss per share was $0.08 in the current quarter, improved from a $0.14 loss per share in the prior-year quarter; and, --Huawei-3Com delivered fourth quarter 2005 revenue of $145 million and profit of $18 million.(1) 3Com Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : COMS COMS 3Com Corporation (stock symbol) COMS Certified Orientation and Mobility Specialist COMS Continuous Opacity Monitoring Systems COMS City of Manchester Stadium (UK) ) today reported financial results for its third quarter of fiscal year 2006 ended March 3, 2006. 3Com Results Generally Accepted Accounting Principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP) revenue, on a stand-alone 3Com basis, for the third quarter of fiscal 2006 was $178 million, a 10 percent increase over the same period in fiscal 2005, which had revenue of $161 million. GAAP gross profit was $72 million, or 41 percent of revenue, a 5 percentage point increase over the year-ago period gross margin of 36 percent. GAAP operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. were $120 million, resulting in a GAAP operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $47 million. This compares to GAAP operating expenses of $114 million and a $56 million GAAP operating loss in the prior-year quarter. Non-GAAP(2) operating loss for the third quarter of fiscal 2006 was $30 million, a 25 percent improvement over the prior-year quarter's non-GAAP operating loss of $40 million. GAAP net loss for the third quarter of fiscal 2006 was $33 million, or $0.08 per share. Included in this loss per share are costs for restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). and amortization, totaling $8 million or $0.02 per share, and certain unusual charges that total an additional $9 million or $0.02 per share. GAAP net loss per share for the prior-year period was $0.14, including restructuring and amortization costs totaling $11 million or $0.03 per share, and certain unusual charges that total an additional $5 million or $0.01 per share. 3Com ended the quarter with $706 million in cash, cash equivalents and short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. investments. Cash used in operations was $18 million, and cash used to acquire the incremental Additional or increased growth, bulk, quantity, number, or value; enlarged. Incremental cost is additional or increased cost of an item or service apart from its actual cost. 2 percent ownership of Huawei-3Com (H-3C) was $28 million. Huawei-3Com Financial Results During its fourth quarter of calendar 2005, H-3C had revenue of $145 million, an increase of 66 percent over its fourth quarter of fiscal 2004, and net income, on a U.S. GAAP basis, of $18 million. For the calendar year ended December December: see month. 31, 2005, H-3C's revenue was $434 million and it had net income, on a U.S. GAAP basis, of $16 million. This compares to revenue of $262 million and a net loss of $15 million for its calendar year ended December 31, 2004. H-3C ended its calendar 2005 with $141 million in cash, cash equivalents and short-term investments, with no bank debt. 3Com's share of the fourth quarter calendar financial performance of the unconsolidated H-3C joint-venture was equity income of $9 million as compared to an equity loss inclusion of $2 million in the prior-year period. 3Com Corporation will begin to consolidate Consolidate To combine the assets, liabilities, and other financial items of two or more entities into one. Notes: This term is generally used in the context of consolidated financial statements. H-3C's results commencing with 3Com Corporation's fiscal fourth quarter ending June June: see month. 2, 2006.(3) Pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma Consolidated Financial Results Revenue, on a pro forma basis, assuming H-3C had been consolidated from the beginning of the relevant periods, was $305 million for the third fiscal quarter of 2006, up from $242 million in the prior-year period. Pro forma consolidated net loss would have been $33 million compared to a pro forma consolidated net loss of $53 million for the prior-year period. "I am pleased to see that our joint venture continues to perform well and that we see collaboration Working together on a project. See collaborative software. in the channel between our two businesses," commented 3Com CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. , Scott Murray
ongoing current - occurring in or belonging to the present time; "current events"; "the current topic"; "current negotiations"; "current psychoanalytic theories"; "the ship's current position" operating costs operating costs npl → gastos mpl operacionales , but we still have a way to go in these efforts. We are committed to building a profitable business as quickly as we can. We believe that our strong balance sheet and global operations Global Operations is a first-person shooter computer game developed by Barking Dog Studios and published by both Crave Entertainment and Electronic Arts. It was released in March of 2002, following its public multiplayer beta version which contained only the Quebec map. will allow us to achieve this goal." Mr. Murray Murray, river, Australia Murray, principal river of Australia, 1,609 mi (2,589 km) long, rising in the Australian Alps, SE New South Wales, and flowing westward to form the New South Wales–Victoria boundary. added, "I am particularly impressed im·press 1 tr.v. im·pressed, im·press·ing, im·press·es 1. To affect strongly, often favorably: with our results from our Security business, which includes the TippingPoint Acquired by 3Com in 2005, TippingPoint sells Intrustion Prevention Systems (IPS). History Early 1999: Founded as Shbang! TippingPoint was originally founded in 1999, selling internet appliances under the name Shbang!. business that was acquired just over a year ago. Our Security business delivered double-digit dou·ble-dig·it adj. Being between 10 and 99 percent: double-digit inflation. sequential One after the other in some consecutive order such as by name or number. revenue growth and we continue to take a leadership position in developing new products for our enterprise customers around the world." Conference Call: Management will host a conference call and webcast at 5 p.m. EST P.M. also p.m. or p.m. abbr. post meridiem Usage Note: By definition, 12 a.m. today. To participate on the call, U.S. and international parties may dial (913) 981-4911. Alternatively, interested parties may listen to the live broadcast of the call over the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at 3Com's Investor Relations Investor relations The process by which the corporation communicates with its investors. Web site (www.3com.com/IR) in the Earnings webcast section. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. This press release contains forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including forward-looking statements regarding our strategic direction, goal to reach profitability and reduce costs, enterprise product development, the performance of, and our collaboration with, H-3C, and the consolidation of H-3C's results into our financial statements and the method and timing of such consolidation. 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 relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc : our ability to return to profitability in light of significant historical net losses; our focus on enterprise networking The networking infrastructure in a large enterprise with multiple computer systems and networks of different types is extraordinarily complex. Due to the myriad of interfaces that are required, much of what goes on has little to do with the real data processing of the payroll and orders. and fluctuating fluc·tu·ate v. fluc·tu·at·ed, fluc·tu·at·ing, fluc·tu·ates v.intr. 1. To vary irregularly. See Synonyms at swing. 2. To rise and fall in or as if in waves; undulate. v. results based on conditions in that market; our ability to respond effectively to increased competition; our ability to compensate for lower sales or cash outlays Outlays Payments on obligations in the form of cash, checks, the issuance of bonds or notes, or the maturing of interest coupons. with cost reductions sufficient to generate positive net income or cash flow; the consequences of expense reduction; our ability to evolve Evolve may refer to several terms:
When a person begins a civil lawsuit, the person enters into a process called litigation. to protect, maintain or enforce our intellectual property; our ability to successfully defend intellectual property infringement The encroachment, breach, or violation of a right, law, regulation, or contract. The term is most frequently used in reference to the invasion of rights secured by Copyright, patent, or trademark. claims; fluctuations in operating results contributing to stock price volatility Volatility 1. A statistical measure of the tendency of a market or security to rise or fall sharply within a period of time. 2. A variable in option pricing formulas that denotes the extent to which the return of the underlying asset will fluctuate between now and the ; risks related to our China joint venture, H-3C, and doing business in China; 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 Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended June 3, 2005. 3Com Corporation assumes no obligation to update any forward-looking for·ward-look·ing adj. Concerned with or making provision for the future: forward-looking educators; a forward-looking corporate plan. Adj. 1. information contained in this press release or with respect to the announcements described herein. References to the financial information included in this press release reflect rounded numbers and should be considered approximate ap·prox·i·mate v. To bring together, as cut edges of tissue. adj. 1. Relating to the contact surfaces, either proximal or distal, of two adjacent teeth; proximate. 2. Close together. values. About 3Com Corporation 3Com Corporation 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 Verb 1. excel at - be good at; "She shines at math" shine at excel, surpass, stand out - distinguish oneself; "She excelled in math" delivering business value for its customers. Through its TippingPoint division, 3Com is the leading provider of network-based intrusion prevention See IPS and IDS. systems that deliver in-depth in-depth adj. Detailed; thorough: an in-depth study. in-depth Adjective detailed or thorough: an in-depth analysis application protection, infrastructure protection, and performance protection. 3Com also is the majority owner of Huawei-3Com Co., Ltd. (H-3C), a China-based joint venture formed by 3Com and Huawei in November November: see month. 2003. H-3C brings innovative and cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. product development and manufacturing and a strong footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. in one of the world's most dynamic markets. For further information, please visit www.3com.com, or the press site www.3com.com/pressbox. Copyright (C) 2006 3Com Corporation. 3Com and the 3Com logo are registered trademarks and TippingPoint is a trademark of 3Com Corporation. All other company and product names may be trademarks of their respective holders (1)These numbers do not reflect inter-company eliminations. In addition, 3Com Corporation will only record its proportionate pro·por·tion·ate adj. Being in due proportion; proportional. tr.v. pro·por·tion·at·ed, pro·por·tion·at·ing, pro·por·tion·ates To make proportionate. share of any profit or loss. (2)Non-GAAP operating loss excludes restructuring, amortization, in-process R&D, executive transition, and impairment Impairment 1. A reduction in a company's stated capital. 2. The total capital that is less than the par value of the company's capital stock. Notes: 1. This is usually reduced because of poorly estimated losses or gains. 2. . The required reconciliations and other disclosures are set forth later in this press release and in the Current Report on Form 8-K Form 8-K The form required by the SEC when a publicly held company incurs any event that might affect its financial situation or the share value of its stock. Form 8-K See 8-K. furnished fur·nish tr.v. fur·nished, fur·nish·ing, fur·nish·es 1. To equip with what is needed, especially to provide furniture for. 2. to the SEC on the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . (3)H-3C is on a calendar reporting schedule (a two-month difference from 3Com Corporation's fiscal reporting schedule). The 2 month time lag, combined with the January January: see month. 27, 2006 closing date of the two percent acquisition giving 3Com control over H-3C, means that only two months of H-3C's first fiscal quarter ending March 31, 2006 will be consolidated into 3Com Corporation's fiscal fourth quarter.
3Com Corporation
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
----------------------------------------------
March 3, February 25, March 3, February 25,
2006 2005 2006 2005
--------- ------------ ---------- ------------
Sales $177,563 $161,185 $539,531 $474,602
Cost of sales 105,157 103,825 322,744 302,456
--------- ------------ ---------- ------------
Gross profit 72,406 57,360 216,787 172,146
Operating expenses:
Sales and marketing 67,073 59,358 204,885 173,851
Research and
development 25,075 24,445 69,497 67,369
General and
administrative 19,520 13,959 56,025 44,016
Amortization of
intangibles 3,862 1,716 11,586 4,905
In-process research
and development - 5,100 - 6,775
Restructuring charges 4,148 9,093 10,977 16,374
--------- ------------ ---------- ------------
Total operating
expenses 119,678 113,671 352,970 313,290
--------- ------------ ---------- ------------
Operating loss (47,272) (56,311) (136,183) (141,144)
Gain on investments, net 173 1,661 3,270 1,743
Interest and other
income, net 6,593 4,853 19,699 10,667
--------- ------------ ---------- ------------
Loss from operations
before income taxes and
equity interest
in unconsolidated
Huawei - 3Com joint
venture (40,506) (49,797) (113,214) (128,734)
Income tax (provision)
benefit (1,030) (959) 19,948 (1,502)
Equity interest in
income (loss) of
unconsolidated Huawei -
3Com joint venture 8,776 (2,249) 7,765 (7,125)
--------- ------------ ---------- ------------
Net loss $(32,760) $(53,005) $(85,501) $(137,361)
========= ============ ========== ============
Basic and diluted loss
per share: $(0.08) $(0.14) $(0.22) $(0.36)
========= ============ ========== ============
Shares used in computing
basic and diluted per
share amounts 387,754 379,946 385,652 382,075
3Com Corporation
Condensed Consolidated Balance Sheets
(in thousands)
(unaudited)
March 3, June 3,
2006 2005
----------- -----------
ASSETS
Current assets:
Cash and short-term investments $706,000 $844,104
Accounts receivable, net 89,899 61,664
Inventories, net 31,071 29,311
Other current assets 33,721 42,430
----------- -----------
Total current assets 860,691 977,509
Property & equipment, net 71,647 69,535
Investment in joint venture 171,948 135,969
Other assets 31,301 33,705
Goodwill 309,121 310,367
Intangibles, net 54,295 65,882
----------- -----------
Total assets $1,499,003 $1,592,967
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $92,300 $99,632
Accrued liabilities and other 196,497 209,928
----------- -----------
Total current liabilities 288,797 309,560
Deferred revenue and long-term obligations 5,382 8,484
Stockholders' equity 1,204,824 1,274,923
----------- -----------
Total liabilities and stockholders'
equity $1,499,003 $1,592,967
=========== ===========
3Com Corporation
Additional Financial Data
(in thousands)
(unaudited)
Sales by
Geography
Three Months Ended Nine Months Ended
---------------------------------- ---------------------
March 3, December 2, February 25, March 3, February 25,
2006 2005 2005 2006 2005
--------- ----------- ------------ --------- -----------
North America $60,875 $61,521 $49,660 $191,019 $153,463
Latin and
South
America 19,781 19,487 14,046 53,386 42,043
Europe, Middle
East and
Africa 74,956 81,196 76,385 231,060 216,712
Asia Pacific
Rim 21,951 22,128 21,094 64,066 62,384
--------- ----------- ------------ --------- -----------
Total Sales $177,563 $184,332 $161,185 $539,531 $474,602
========= =========== ============ ========= ===========
Sales by
Product
Category
Three Months Ended Nine Months Ended
---------------------------------- ---------------------
March 3, December 2, February 25, March 3, February 25,
2006 2005 2005 2006 2005
--------- ----------- ------------ --------- -----------
Networking $119,473 $131,682 $124,953 $378,209 $367,497
Security 25,542 20,922 4,529 63,340 10,879
Voice 12,503 14,202 10,956 42,113 30,848
Services 7,958 8,754 7,760 24,547 23,743
Connectivity
Products 12,087 8,772 12,987 31,322 41,635
--------- ----------- ------------ --------- -----------
Total Sales $177,563 $184,332 $161,185 $539,531 $474,602
========= =========== ============ ========= ===========
3Com Corporation
Reconciliation of Non-GAAP Financial Measures to Most Directly
Comparable U.S. GAAP Measures
(Unaudited)
The non-GAAP measures we use in this press release, our related
conference call or in other public forums are not prepared in
accordance with, and should not be considered an alternative to,
measurements required by GAAP. The presentation of this additional
information is not meant to be considered in isolation or as a
substitute for the most directly comparable GAAP measures. In
addition, our non-GAAP financial measures may not be comparable to
similar measures reported by other companies. The non-GAAP operating
loss measure we use is defined to exclude the following charges and
benefits: restructuring, amortization, in-process research and
development and special items that management believes are unusual and
outside of our on-going operations, such as, for the periods presented
in this release, executive transition and impairment. In future
periods when FAS 123(R) is adopted by the Company, we would expect to
also exclude the resulting stock-based compensation expense. Please
see the text of our Current Report on Form 8-K, dated the date hereof,
for a discussion of the purposes for which management uses these
non-GAAP measures and why we believe they are useful to investors.
The following reconciles non-GAAP financial measures used in this
press release (and/or on our conference call announcing our quarterly
results or in other public forums) to the most directly comparable
GAAP measure for the respective periods:
3Com Corporation
Reconciliation of Non-GAAP Operating Loss
(in thousands)
(unaudited)
Three Months Ended
-----------------------------
March 3, December 2, February 25,
2006 2005 2005
--------- --------- ---------
GAAP operating
loss $(47,272) $(42,226) $(56,311)
Asset
impairment(a) 4,200 - -
Executive
transition(b) 4,612 - -
Restructuring 4,148 3,468 9,093
Amortization
of intangible
assets 3,862 3,862 1,716
In-process
research and
development - - 5,100
--------- --------- ---------
Non-GAAP
operating loss $(30,450) $(34,896) $(40,402)
========= ========= =========
(a) This charge is the result of the Company's decision to abandon
development plans utilizing licensed software for which the
Company has no alternative use.
(b) These charges represent expenses associated with Bruce Claflin's
severance agreement entered on January 11, 2006 and the hiring of
the Company's new Chief Executive Officer, R. Scott Murray. Mr
Claflin served as the Company's President and Chief Executive
Officer until he retired and resigned from the Board of Directors
following the appointment of R. Scott Murray on January 25, 2006.
The "pro forma consolidated" column in the tables below show selected
items from 3Com Corporation's GAAP statement of operations and balance
sheet on a pro forma basis as if H-3C was consolidated as of the
beginning of the relevant periods. For the sake of clarity, the non-
GAAP adjustments made to 3Com's stand-alone operating loss measure on
the prior page of this release have not been made to these financials.
3Com Corporation
Non-GAAP Pro Forma Consolidated Statements of Operations
(in thousands, except per share data)
(unaudited)
Three Months Ended
-----------------------------------------------
GAAP Adjustments Pro Forma
3Com H-3C Consolidated
March 3, December Eliminations March 3, 2006
2006 31, 2005
--------------------------------------------------
Sales $177,563 $144,973 $(17,598) $304,938
Gross profit 72,406 69,544 141,950
----------- ---------- ----------- ------------
Total operating
expenses 119,678 59,863 179,541
----------- ---------- ----------- ------------
Operating loss (47,272) 9,681 (37,591)
----------- ---------- ----------- ------------
Net loss $(32,760) $17,910 $(17,910) $(32,760)
=========== ========== =========== ============
Shares used in
computing EPS 387,754
EPS ($0.08)
Three Months Ended
-----------------------------------------------
GAAP Adjustments Pro Forma (a)
3Com H-3C Consolidated
December 2, September Eliminations December 2,
2005 30, 2005 2005
--------------------------------------------------
Sales $184,332 $111,177 $(13,039) $282,470
Gross profit 74,315 47,187 121,502
----------- ---------- ----------- ------------
Total operating
expenses 116,541 51,123 167,664
----------- ---------- ----------- ------------
Operating loss (42,226) (3,936) (46,162)
----------- ---------- ----------- ------------
Net loss $(10,700) $(2,030) $2,030 $(10,700)
=========== ========== =========== ============
Shares used in
computing EPS 385,442
EPS ($0.03)
Three Months Ended
-----------------------------------------------
GAAP Adjustments Pro Forma
3Com H-3C Consolidated
February 25, December Eliminations February 25,
2005 31, 2004 2005
--------------------------------------------------
Sales $161,185 $87,116 $(5,993) $242,308
Gross profit 57,360 33,717 91,077
----------- ---------- ----------- ------------
Total operating
expenses 113,671 39,913 153,584
----------- ---------- ----------- ------------
Operating loss (56,311) (6,196) (62,507)
----------- ---------- ----------- ------------
Net loss $(53,005) $(4,589) $4,589 $(53,005)
=========== ========== =========== ============
Shares used in
computing EPS 379,946
EPS ($0.14)
(a) When presented on a pro forma consolidated basis, these measures
are considered non-GAAP financial measures. The most directly
comparable GA(AP measure is listed in the column titled "GAAP
3Com." The reconciliation from the non-GAAP measure to the most
directly comparable GAAP measure is set forth in the above table.
Please see the text of our Current Report on Form 8-K, dated the
date hereof, for a discussion of the purposes for which management
uses these non-GAAP measures and why we believe they are useful to
investors.
3Com Corporation
Non-GAAP Pro Forma Consolidated Balance Sheet
(in thousands)
(unaudited)
GAAP Adjustments Pro Forma (a)
3Com H-3C Consolidated
March 3, December Eliminations March 3, 2006
2006 31, 2005
--------------------------------------------------
Cash and short-term
investments $706,000 $140,504 $- $846,504
Other current
assets 154,691 236,974 (25,624) 366,041
Long term assets 638,312 134,222 ($171,948) 600,586
----------- ---------- ----------- ------------
Total assets $1,499,003 $511,700 $(197,572) $1,813,131
=========== ========== =========== ============
Current liabilities $288,797 $193,125 $(25,624) $456,298
Non-current
liabilities 5,382 8,866 14,248
Minority interest 137,761 137,761
Shareholder equity 1,204,824 309,709 ($309,709) 1,204,824
----------- ---------- ----------- ------------
Total liabilities
and stockholders'
equity $1,499,003 $511,700 $(197,572) $1,813,131
=========== ========== =========== ============
(a) When presented on a pro forma consolidated basis, these measures
are considered non-GAAP financial measures. The most directly
comparable GA(AP measure is listed in the column titled "GAAP
3Com." The reconciliation from the non-GAAP measure to the most
directly comparable GAAP measure is set forth in the above table.
Please see the text of our Current Report on Form 8-K, dated the
date hereof, for a discussion of the purposes for which management
uses these non-GAAP measures and why we believe they are useful to
investors.
3Com Corporation
Additional Financial Data
Huawei-3Com Joint Venture
(in thousands)
(unaudited)
CY 2005(a) PY 2004
(a)
----------------------------------------------------------
Quarter Ended YTD YTD
---------------------------------------
03/31/05 06/30/05 09/30/05 12/31/05 12/31/05 12/31/04
-------- -------- -------- -------- -------- --------
Sales $82,281 $95,772 $111,177 $144,973 $434,203 $261,726
Gross profit 36,013 40,450 47,187 69,544 193,194 102,346
-- As a %
of sales 43.8% 42.2% 42.4% 48.0% 44.5% 39.1%
Net profit
(loss) (b) 415 (33) (2,030) 17,910 16,262 (15,336)
3Com equity
in earnings
(loss) $203 $(16) $(995) $8,776 $7,968 $(7,515)
Notes:
(a) The Huawei-3Com Joint Venture (H-3C) reports on a calendar years
basis. H-3C was formed and commenced operations in November 2003.
(b) In determining 3Com's share of H-3C's net earnings or loss,
certain adjustments to H-3C's reported results are required. Such
adjustments are made primarily to defer H- 3C's sales and gross
profit related to products sold to 3Com that remained in 3Com's
inventory at the end of the accounting period, and to recognize
amortization expense associated with Huawei's contributed
intangible assets.
3Com Corporation
Additional Financial Data
(in thousands, except per share amounts)
(unaudited)
Stock Options
Outstanding Options as of
March 3, 2006
-------------------------------
Range of Number Weighted average
exercise price of shares exercise price
----------------------------------------------------------------------
$0.00 - 4.00 16,229 $2.83
4.01 - 5.00 18,837 4.62
5.01 - 6.00 15,497 5.68
6.01 - 7.00 2,519 6.23
7.01 - 8.00 1,534 7.70
$8.01 - 22.00 10,084 11.43
---------------
Total 64,700 $5.62
===============
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