3Com Reports First Quarter Results for Fiscal 2009 Monday, September 22, 2008 4:07 PM
Symbols: COMS
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 © 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 29,
|
|
August 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
|
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Condensed Consolidated Balance Sheets
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(in thousands)
|
|
(unaudited)
|
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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
|
|
|
|
|
|
|
|
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LIABILITIES AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
|
|
|
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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 29,
|
|
August 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 29,
|
|
August 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.
|
3Com Corporation
Media & Investor Relations
John
Vincenzo, 508-323-1260
john_vincenzo@3com.com
or
Media
Relations
Kevin Flanagan, 508-323-1101
kevin_flanagan@3com.com
(Source: Business Wire )
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