<PAGE>
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
May 8, 2000
PALM, INC.
--------------
(Exact name of registrant as specified in its charter)
Delaware 0-29597 94-3150688
- ---------------------------- ------- --------------------
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
5470 Great America Parkway
Santa Clara, CA
95052
(Address of Principal Executive Offices)
(Zip Code)
Registrant's telephone number, including area code: (408) 326-9000
----------------------------------------------------------------------
(Former name or former address, if changed since last report)
- --------------------------------------------------------------------------------
<PAGE>
Item 5. Other Events
On March 8, 2000 3Com Corporation and Palm, Inc. announced that 3Com's
Board of Directors has declared a stock dividend of all 3Com's shares in Palm
and that the shares will be distributed to 3Com shareholders of record as of
5:00 PM Eastern Daylight Time on July 27, 2000.
Item 7. Financial Statements and Exhibits
(c) Exhibits
The following exhibits are filed herewith:
99.1 Text of Press Release, dated May 8, 2000, titled "3Com Board
Sets Record Date And Distribution Date For Palm Stock
Dividend."
-2-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PALM, INC.
Date: May 12, 2000 By: /s/ Judy Bruner
----------------
Judy Bruner
Senior Vice President and Chief Financial
Officer
-3-
<PAGE>
EXHIBIT INDEX
-------------
99.1 Text of Press Release, dated May 8, 2000, titled "3Com Board Sets
Record Date And Distribution Date For Palm Stock Dividend."
-4-
<PAGE>
EXHIBIT 99.1
3Com Board Sets Record Date And Distribution Date For Palm Stock Dividend
Also Announces Expanded Stock Repurchase Program Of Up To One Billion Dollars
SANTA CLARA, Calif., May 8, 2000 -- 3Com Corporation (Nasdaq:COMS) and Palm,
Inc. (Nasdaq: PALM) today announced that 3Com's Board of Directors has declared
a stock dividend of all of 3Com's shares in Palm. The shares will be distributed
to 3Com shareholders of record as of 5:00 PM Eastern Daylight Time on July 27,
2000. The record date which establishes the ratio of Palm shares to be
distributed per 3Com share will be 5:00 Eastern Daylight Time on July 11, 2000.
3Com currently owns 532 million shares, or approximately 94.3 percent, of the
outstanding common stock in Palm.
"Today's announcement follows through on our commitment to spin-off our handheld
business and increase shareholder value, as communicated last fall," said Eric
Benhamou, 3Com Chairman and CEO. "We're pleased to confirm the distribution of
our Palm holdings will occur more quickly than our previous estimates."
"The establishment of two fully independent and publicly traded companies, 3Com
and Palm, will maximize both companies' focus and ability to strengthen their
leadership in their respective markets," continued Benhamou.
On May 8, 2000, 3Com received a ruling from the Internal Revenue Service that
the Palm distribution will be tax-free to shareholders for U.S. federal income
tax purposes. The number of shares of Palm common stock that each holder of a
share of 3Com common stock will receive will be based on the actual number of
shares of 3Com common stock outstanding on the record date. Based on the
approximately 351 million shares of 3Com common stock outstanding as of April
24, 2000, the distribution ratio would be approximately 1.5 shares of Palm for
every share of 3Com. There are approximately 14 million immediately exercisable
options for 3Com common stock that
<PAGE>
could be exercised between now and the record date. Therefore the final ratio
will be based on the actual number of shares outstanding as of the record date
July 11. 3Com shareholders will receive whole shares of Palm and cash payments
for fractional shares. Cash received in lieu of fractional shares will be
taxable.
An information statement will be mailed to 3Com shareholders of record after
July 11. The information statement will include the final distribution ratio, as
well as information on how to calculate the share cost basis.
Expanded Stock Repurchase Program
3Com also announced today that its Board of Directors has authorized expansion
of the company's stock repurchase program in the amount of up to one billion
dollars. The company is exploring various methods for the repurchase of shares
including, but not limited to, accelerated repurchase agreements with broker
dealers and more traditional open market purchases. Such purchases could be used
to offset shares created as a result of employee's exercising stock options and
employee stock purchase plan requirements. This new program replaces previous
authorizations totaling 45 million shares between June 1998 and September 1999.
During fiscal 2000 the company repurchased 20.5 million shares, bringing the
total number of shares repurchased since June 1998 to 35.3 million, which
represents a total outlay of $919.3 million.
"We believe this expanded stock repurchase program is an important component in
our multiple efforts to increase shareholder value," continued Benhamou. "Our
strong balance sheet which includes over $3 billion in cash and short-term
investments is the foundation for this repurchase program, as well as for
strategic investments and acquisitions."
The amount and timing of shares to be purchased will be based on several
factors, including method of repurchased selected, the price of the company's
stock, the level of stock issuances under the company's employee stock plans and
market conditions. The Board has authorized a two-year time limit on the
repurchase authorizations, and except for re-issuances in connection with
employee stock programs, there are no specific plans for shares that might be
purchased.
Stock Option Adjustment in Connection with the Palm Distribution
3Com anticipates adjusting employee stock options in connection with the Palm
distribution. Such an adjustment in the quantity and exercise strike prices for
outstanding options will preserve the intrinsic value of the options as follows:
3Com will calculate the relationship (the "Ratio") between the opening price of
3Com
<PAGE>
common stock on the first trading day after distribution and the closing price
of 3Com common stock on the last trading day before distribution. The number of
new 3Com options outstanding after the Palm distribution will be equal to the
quotient of the number of 3Com options outstanding immediately before
distribution divided by the Ratio. The new option strike prices for the
underlying outstanding options will be equal to the product of the option
exercise strike prices before distribution multiplied by the Ratio. The options
will continue to have the same terms and conditions set forth in the 3Com Stock
Plans including vesting schedules.
As of April 24, 2000 there were approximately 41 million employee options
outstanding. Of this amount, approximately 14 million options were immediately
exercisable. The total number of 3Com shares outstanding as of April 24, 2000
was approximately 351 million.
Stock Option Conversion for Palm employees in Connection with the Palm
Distribution
Similarly, 3Com stock options held by Palm employees will be assumed by Palm and
converted into Palm options. This process will occur as follows: The option
conversion will be achieved by calculating the relationship (the "Palm Ratio")
between the opening price of Palm common stock on the first trading day after
distribution and the closing price of 3Com common stock on the last trading day
before distribution. The number of new Palm options outstanding after the Palm
distribution will be equal to the quotient of the number of 3Com options
outstanding immediately before distribution divided by the Palm Ratio. The new
option strike prices for the underlying outstanding options will be equal to the
product of the 3Com option exercise strike prices before distribution multiplied
by the Palm Ratio. The options will continue to have the same terms and
conditions set forth in the 3Com Stock Plans including vesting schedules.
As of April 24, 2000, there were approximately 4.0 million 3Com stock options
outstanding held by Palm employees. Of this amount, approximately 1.4 million
options were immediately exercisable. For further information about the 3Com
options held by Palm employees, please see the Employee Matters Agreement
entered into between Palm and 3Com on February 26, 2000 and included as an
exhibit in 3Com's fiscal quarter 10Q filed on April 4, 2000 or as an exhibit to
Palm's fiscal third quarter 10Q filed on April 10, 2000.
For additional information on the Palm distribution, please visit 3Com's
investor relations' Web site, at www.3com.com/investor, or call our toll-free
investor information line at 1-877-463-6326
<PAGE>
(U.S. only) or 703-386-9710 (internationally). Investor information on Palm,
Inc. can be obtained at www.palm.com, or by calling 1-877-OWN-PALM (U.S. only).
For questions regarding shareholder certificates or address changes, please
contact EquiServe investor relations department: 781-575-3120.
About 3Com Corporation
With more than 300 million customer connections worldwide, 3Com Corporation
connects more people and organizations to information and each other in more
innovative, simple and reliable ways than any other networking company. 3Com
delivers web-enabled solutions to consumers, small- to medium-sized business
locations and network service providers. For more information, visit 3Com's web
site at www.3com.com/pressbox.
---------------------
About Palm, Inc.
Palm, Inc. is the leading provider of handheld computing devices (IDC, Dec.
1999), including the Palm III/TM/, Palm V/TM/ and Palm VII/TM/ series of
handheld computers. The Palm OS/R/ platform is the foundation for the company's
market-leading handheld computers as well as products from its strategic
partners such as IBM, QUALCOMM, Franklin Covey, Handspring, TRG and Symbol
Technologies. Designed to support the increasingly mobile, wireless and
geographically dispersed nature of information management, the company's
handheld solutions allow people to carry their most critical information in
their pockets. For more information, please visit www.palm.com.
------------
===============================================================================
3COm is a registered trademark of 3Com Corporation. All other names may be
trademarks of the companies with which they are associated.
===============================================================================
