As filed with the Securities and Exchange Commission on June 30, 1995.
Registration No. 33-60497
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 1
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
3Com CORPORATION
(Exact name of Registrant as specified in its charter)
California 3577 94-2605794
(State or other (Primary Standard Industrial) (I.R.S. Employer
jurisdiction of Classification Number) Identification No.)
incorporation
or organization)
5400 Bayfront Plaza
Santa Clara, CA 95052-8145
(408) 764-5000
(Address, including zip code, and telephone number, including area
code, of Registrant's principal executive offices)
ERIC A. BENHAMOU
President and Chief Executive Officer
3Com CORPORATION
5400 Bayfront Plaza
Santa Clara, CA 95052-8145
(408) 764-5000
(Name, address, including zip code, and telephone number, including
area code, of agent for service)
Copies to:
BRADLEY J. ROCK, ESQ. MARK D. MICHAEL, ESQ.
JOHN W. KUO, ESQ. Vice President,
Gray Cary Ware & Freidenrich General Counsel and Secretary
A Professional Corporation 3Com Corporation
400 Hamilton Avenue 5400 Bayfront Plaza
Palo Alto, CA 94301 Santa Clara, CA 95052-9145
Approximate date of commencement of proposed sale to the public:
As soon as practicable after the effective date of this Registration
Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box: [ ]
If any of the securities being registered on this Form are to be offered
on a delayed or continuous basis pursuant to Rule 415 under the Securities Act
of 1933, check the following box: [ X ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
This Registration Statement shall become effective in accordance with Section
8(a) of the Securities Act of 1933, or until the Registration Statement shall
become effective on such date as the Commission, acting pursuant to such
Section 8(a), may determine.
483,309 Shares
3COM CORPORATION
Common Stock
_____________________________________
The 483,309 shares of Common Stock of 3Com Corporation (3Com or
the Company) covered by this Prospectus (the Shares) are outstanding
shares that may be sold from time to time by or on behalf of certain
Shareholders (the Selling Shareholders) of the Company described in
this Prospectus under "Selling Shareholders." The Selling
Shareholders acquired the Shares from the Company in a private
transaction related to the Company's acquisition of all of the
outstanding stock of Sonix Communications Limited (Sonix), a company
formed and registered in England. The Company has agreed to register
the Shares under the Securities Act of 1933, as amended (the
Securities Act), and to use its best efforts to cause the registration
statement covering the Shares to be declared effective and to remain
effective for up to two (2) years following the date of the
Acquisition and Exchange Agreement, dated March 22, 1995, by and among
3Com and the Shareholders of Sonix (the Acquisition Agreement). The
Company will not receive any of the proceeds from the sale of the
Shares by the Selling Shareholders.
The Company has been advised by the Selling Shareholders that
they may sell all or a portion of the Shares from time to time in the
Nasdaq National Market, in negotiated transactions or otherwise, and
on terms and at prices then obtainable. The Selling Shareholders and
any broker-dealers, agents or underwriters that participate with the
Selling Shareholders in the distribution of any of the Shares may be
deemed to be "underwriters" within the meaning of the Securities Act,
and any commission received by them and any profit on the resale of
the Shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act. The Company and
the Selling Shareholders have agreed to certain indemnification
arrangements. See "Plan of Distribution."
The Company will bear the cost of preparing and printing the
Registration Statement, the Prospectus and any Prospectus Supplements
and all filing fees and legal and accounting expenses associated with
registration under federal and state securities laws. The Selling
Shareholders will pay all other expenses related to the distribution
of the Shares.
THE SHARES HAVE NOT BEEN REGISTERED FOR SALE UNDER THE SECURITIES
LAWS OF ANY STATE OR JURISDICTION AS OF THE DATE OF THIS PROSPECTUS.
BROKERS OR DEALERS EFFECTING TRANSACTIONS IN THE SHARES SHOULD CONFIRM
THE REGISTRATION OF THE SHARES UNDER THE SECURITIES LAWS OF THE STATES
IN WHICH SUCH TRANSACTIONS OCCUR, OR THE EXISTENCE OF ANY EXEMPTIONS
FROM SUCH REGISTRATION.
The Company's Common Stock is listed on the National Market of
the National Association of Securities Dealers, Inc. (the NASD) and is
traded under the symbol "COMS". On June 28, 1995, the last sales
price of the Company's Common Stock as reported on the NASD Automatic
Quotation System was $67.
See "Risk Factors" beginning on page 3 hereof for information that
should be considered by prospective purchasers of the Shares offered hereby.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY
IS A CRIMINAL OFFENSE.
The date of this Prospectus is July __, 1995.
AVAILABLE INFORMATION
3Com Corporation (3Com or the Company) is subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended (the Exchange Act), and in accordance therewith files reports,
proxy statements, and other information with the Securities and
Exchange Commission (the Commission). Such reports, proxy statements
and other information filed by the Company can be inspected and copied
at the Commission's public reference room at 450 Fifth Street, N.W.,
Washington, D.C. 20549, as well as at the Regional Offices of the
Commission located at 500 West Madison Street, Chicago, Illinois 60621
and 75 Park Place, New York, New York 10007. Copies of such material
can be obtained by mail from the Public Reference Section of the
Commission at 450 Fifth Street, N.W., Washington, D.C. 20549, upon
payment of the fees prescribed by the Commission.
The Company has also filed a Registration Statement (together
with all amendments and exhibits thereto, the Registration Statement)
under the Securities Act of 1933, as amended (the Securities Act) with
the Commission. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain parts of
which are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the
Registration Statement, copies of which may be obtained from the
Public Reference Section of the Commission, 450 Fifth Street, N.W.,
Washington, D.C. 20549, upon payment of the fees prescribed by the
Commission.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents filed by the Company with the Commission
pursuant to the Exchange Act are incorporated herein by reference:
(1) the Company's Current Report on Form 8-K as filed on May 16, 1995,
as amended, regarding the acquisition of Sonix Communications Limited;
(2) the Company's Current Report on Form 8-K filed June 20, 1995
regarding the acquisition of Primary Access Corporation; (3) the
Company's Annual Report on Form 10-K for the year ended May 31, 1995
filed June 29, 1995; and (4) the description of the Company's Common
Stock contained in the Company's Registration Statement on Form 8-A,
as filed with the Commission on September 28, 1984.
All documents filed by the Company pursuant to Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of this offering shall be
deemed to be incorporated by reference herein and to be a part hereof
from the date of filing of such documents. Any statement incorporated
by reference herein shall be deemed to be modified or superseded for
purposes of this Prospectus to the extent that a statement contained
herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes
such statement. Any statement so modified or superseded shall not be
deemed, except as so modified or superseded, to constitute a part of
this Prospectus.
The Company will provide without charge to each person to whom
this Prospectus is delivered, upon written or oral request, a copy of
any or all of the foregoing documents incorporated by reference in
this Prospectus (other than any exhibits thereto). Requests for such
documents should be directed to 3Com Corporation at 5400 Bayfront
Plaza, Santa Clara, CA 95052-8145, Attn: General Counsel (phone
number 408-764-5000).
-----------------
THE COMPANY
3Com designs, develops, manufactures, markets and supports a
broad range of ISO 9000-compliant global data networking connectivity
solutions for building/campus backbone, wide-area network (WAN)
backbone, workgroup, remote office and personal office environments.
3Com offers virtually all the necessary components to build and manage
these networking infrastructures, including routers, hubs, remote
access servers, switches, adapters and network management for
Ethernet, Token Ring, FDDI, ATM and other high-speed data networks.
As data networks have grown in size and importance and have become the
primary computing environment for many organizations, customers are
demanding increased performance, scalability and network access.
3Com's architecture for scaling performance and extending the reach of
customers' data networks is called High Performance Scalable
Networking (HPSN). HPSN encompasses the full breadth of 3Com's
products and provides a blueprint for planning, implementing and
managing customers' connectivity systems requirements. With an
emphasis on industry standards, interoperability and investment
protection, 3Com solutions are designed to reduce the overall cost of
network ownership.
3Com's products are marketed worldwide through multiple indirect
channels, such as systems integrators, value-added resellers,
distributors and original equipment manufacturers, as well as directly
to large customers. 3Com maintains sales offices in 30 countries,
service and support centers on three continents and manufacturing and
distribution centers in the U.S. and Europe. 3Com sells its products
to a wide range of customers in a variety of markets, including
financial services, education, government, healthcare, manufacturing
and technology.
3Com was incorporated in California in June 1979. 3Com's
executive offices are located at 5400 Bayfront Plaza, Santa Clara,
California 95052-8145; its telephone number at that address is (408)
764-5000.
RISK FACTORS
In addition to other information contained in this Prospectus or
incorporated by reference, the following factors should be considered
carefully in evaluating the Company and its business before purchasing
the shares of Common Stock offered hereby.
New Products and Technological Change. The market for 3Com's
products is characterized by rapid technological developments,
evolving industry standards, changes in customer requirements,
frequent new product introductions and enhancements and short product
life cycles. 3Com's success depends in substantial part upon its
ability, on a cost-effective and timely basis, to continue to enhance
its existing products and to develop and introduce new products that
take advantage of technological advances. An unexpected change in one
or more of the technologies affecting data networking or in market
demand for products based on a particular technology could have a
material adverse effect on 3Com's operating results. For instance, a
large portion of 3Com's revenues is comprised of sales of products
based on Ethernet technology. 3Com's operating results could be
adversely affected if there is an unexpected change in demand for
products based on such technology or if 3Com does not respond timely
and effectively to expected changes. 3Com is engaged in research and
development activities in certain emerging LAN and WAN high-speed
technologies, such as 100 Mbps Ethernet, ATM and ISDN. There can be
no assurance that 3Com will be able to timely and successfully develop
new products to address new industry transmission standards and
technological changes or to respond to new product announcements by
others or that such products will achieve market acceptance.
Competition. 3Com experiences and expects substantial additional
competition from established and emerging computer, communications,
intelligent network wiring and network management companies. The
primary competitors for 3Com's products are Bay Networks, Inc.,
Cabletron Systems, Inc., Cisco Systems, Intel Corporation and Standard
Microsystems Corporation. There can be no assurance that 3Com will be
able to compete successfully in the future with existing competitors
or new competitors. The data networking industry has become
increasingly competitive and 3Com's results may be adversely affected
by the actions of existing or future competitors. Such actions may
include the development or acquisition of new technologies,
the introduction of new products, the assertion by third parties of
patent or similar intellectual property rights, and the reduction of
prices by competitors to gain or retain market share. Industry
consolidation or alliances may also affect the competitive
environment. In particular, competitive pressures from existing or
new competitors who offer lower prices or introduce new products could
result in delayed or deferred purchasing decisions by potential
customers and price reductions, both of which would adversely affect
3Com's sales and operating margins. The industry in which the Company
competes is characterized by declining average selling prices, which
the Company anticipates will continue. This trend could adversely
impact 3Com's sales and operating margins. 3Com participates in the
designing, manufacturing and marketing on-premises equipment. 3Com's
competitors typically compete in one or more segments of the on-
premises sector of the data networking market. These companies are
using their resources and technical expertise to improve and expand
their product lines in an effort to gain market share. Several are
extending their product offerings beyond a single market segment and
pursuing strategies more closely resembling 3Com's global data
networking strategy.
Product Protection and Intellectual Property. 3Com currently
relies upon a combination of patents, copyrights, trademarks and trade
secret laws to establish and protect its proprietary rights in its
products. 3Com maintains as proprietary the software and other
portions of the technology incorporated in its products. 3Com has
been issued and has applied for numerous patents in the United States
on various aspects of its hardware and software products. There can
be no assurance that the steps taken by 3Com to protect its
proprietary rights will be adequate to prevent misappropriation of its
technology or that 3Com's competitors will not independently develop
technologies that are substantially equivalent or superior to 3Com's
technology. In addition, the laws of some foreign countries do not
protect 3Com's proprietary rights to the same extent as do the laws of
the United States. In addition, no assurance can be given that any
patents currently held or issued to 3Com in the future will not be
challenged, invalidated or circumvented or that the rights granted
thereunder will provide competitive advantages.
From time to time 3Com receives communications asserting that
3Com's use of trademarks, or that 3Com's products infringe or may
infringe the rights of third parties. There can be no assurance that
any such claims will not result in protracted and costly litigation;
however, based upon general practice in the industry 3Com believes
that such matters can ordinarily be resolved without any material
impact on its financial position or results of operations.
Uncertainties Related to the Integration of Recently Acquired
Businesses. The successful integration of companies in the networking
industry may be more difficult to accomplish than in other industries.
3Com has recently consummated the acquisition of Primary Access
Corporation (Primary Access) and Sonix Communications Limited (Sonix).
There can be no assurance that 3Com will be successful in developing
products based on Primary Access' or Sonix's technology or engineering
expertise, that 3Com will be successful in integrating its own
distribution channels with those of Primary Access or Sonix, that 3Com
will be successful in penetrating Primary Access' or Sonix's installed
customer base, that 3Com will be successful in selling Primary Access'
or Sonix's products to its own customer base, that the combined
companies will retain their key personnel or that 3Com will realize
any of the other anticipated benefits of the acquisitions.
Acquisition Strategy. Acquisitions of complementary businesses
are an active part of 3Com's overall business strategy. In addition
to the Primary Access and Sonix acquisitions, 3Com has recently
consummated acquisitions of several other businesses, including
NiceCom, Ltd., Synernetics, Inc. and Centrum Communications, Inc.
3Com continually evaluates potential acquisition and investment
opportunities. There can be no assurance that products, technologies
and businesses of acquired companies will be effectively assimilated
into 3Com's business or product offerings. In addition, 3Com may
incur significant expenses to complete acquisitions and investments
and to support the acquired products, and there can be no assurance
that such technologies or businesses will contribute to 3Com's
revenues or earnings to any material extent. Further, the challenge
of managing the integration of several companies simultaneously is
significant, and there can be no assurance that 3Com will be able to
successfully manage such integration.
Volatility of Stock Price. Based on the trading history of its
stock, 3Com believes factors such as announcements of new products
by 3Com or its competitors, sales of stock into the market by
existing holders, quarterly fluctuations in 3Com's financial results and
general conditions in the data networking market have caused and are likely
to continue to cause the market price of the 3Com Common Stock to
fluctuate substantially. In addition, technology company stocks have
experienced extreme price and volume fluctuations that often have been
unrelated to the operating performance of such companies. This market
volatility may adversely affect the market price of 3Com's Common
Stock.
Small Backlog and Potential Fluctuations in Quarterly Results.
3Com customers place orders on an as needed basis and 3Com typically
ships products within one to four weeks after receipt of an order.
Accordingly, 3Com does not maintain a substantial backlog, and most of
its revenues in each quarter result from orders booked in that
quarter. 3Com establishes its expenditure levels based on its
expectations as to future revenues, and if revenue levels were to be
below expectations this could cause expenses to be disproportionately
high. As a result, a drop in near term demand will significantly
affect operating results which may fluctuate for this reason or as a
result of a number of other factors, including increased competition,
variations in the mix of sales, announcements of new products by 3Com
or its competitors and capital spending patterns of 3Com's customers.
Dependence Upon Suppliers. Some key components of 3Com's
products are currently available only from single sources. The
inability of 3Com to obtain certain components could require 3Com to
redesign or delay shipment of several of its data networking products.
3Com has sought to establish close relationships with sole-source
suppliers and/or to build up inventory of such components; however,
there can be no assurance that production will not be interrupted due
to the unavailability of components. 3Com believes that its inventory
levels of these components, combined with finished components held by
3Com's suppliers, are adequate for its presently forecasted needs.
Although 3Com has contractual arrangements with certain of its sole-
source suppliers, there can be no assurance that in the future 3Com's
suppliers will be able to meet the demand for components in a timely
and cost-effective manner. 3Com's operating results and customer
relationships could be adversely affected by either an increase in
prices for, or an interruption or reduction in supply of, any key
components.
Certain Charter Provisions. Certain charter provisions and
3Com's shareholder rights plan could have the effect of delaying,
deferring or preventing a change in control of 3Com. In addition,
3Com's charter eliminates the personal monetary liability of its
directors for breach of their duty of care, and 3Com has entered into
agreements with its officers and directors indemnifying them against
losses they may incur in legal proceedings resulting from their
service to 3Com.
Acts of God. 3Com's corporate headquarters and a large portion
of its research and development activities and other critical business
operations are located near major earthquake faults. Operating
results could be materially adversely affected in the event of a major
earthquake.
Attraction and Retention of Key Employees. Competition for
qualified personnel in the computer and communications industries is
intense. The future success of 3Com will depend in large part on its
ability to attract and retain key employees.
Manufacturing Facilities. 3Com is currently increasing its
manufacturing capabilities in two locations. While 3Com has
significant experience in expanding its manufacturing operations, such
expansion may be subject to delay due to labor issues, adverse weather
and construction or other unforeseeable delays, which could adversely
affect 3Com's operating results and customer relationships.
MATERIAL CHANGES
Please note the descriptions of recently acquired businesses set
forth in the Company's Current Report on Form 8-K as filed on May 16,
1995, as amended, regarding the acquisition of Sonix Communications
Limited, the Company's Current Report on Form 8-K as filed on June 20,
1995, regarding the acquisition of Primary Access Corporation, and the
Company's Annual Report on Form 10-K for the fiscal year ended May 31,
1995 as filed on June 29, 1995.
SELLING SHAREHOLDERS
Schroder International Trust Company Limited, as trustee of
Schroder UK Venture Fund III Trust; Schroder Venture Managers Inc., as
general partner of Schroder UK Venture Fund III LP1; Schroder Venture
Managers Inc., as general partner of Schroder UK Venture Fund III LP2;
and Greylock Limited Partnership acquired their Shares from the
Company in connection with the Company's acquisition of all of the
outstanding stock of Sonix Communications Limited (Sonix), a company
formed and registered in England. The acquisition was consummated on
May 1, 1995. Pursuant to the Acquisition and Exchange Agreement dated
March 22, 1995 between the Company and all of the shareholders of
Sonix, the Selling Shareholders received the Shares directly from the
Company in exchange for the Sonix Ordinary Shares owned and held by
them.
The following table lists the Selling Shareholders, the number of
shares of the Company's Common Stock which each owned or had the right
to acquire as of June 20, 1995, the number of shares of the Company's
Common Stock which may be sold by each, and the number and (if one
percent or more) the percentage of the Company's shares of Common
Stock which each will own or have the right to acquire after the
offering pursuant to this Registration Statement, assuming the sale of
all the shares which may be sold:
Shares Shares Percentage
Owned Shares to Owned After Owned After
Selling Shareholders Before Sale Be Sold Sale Sale
Schroder International
Trust Company Limited,
as trustee of Schroder
UK Venture Fund III Trust 130,663 130,663 -- --
Schroder Venture Manager
Inc., as general partner
of Schroder UK Venture
Fund III LP1 127,692 127,692 -- --
Schroder Venture Manager
Inc., as general partner
of Schroder UK Venture
Fund III LP2 63,851 63,851 -- --
Greylock Limited
Partnership 161,103 161,103 -- --
PLAN OF DISTRIBUTION
The Company has been advised by the Selling Shareholders that
they may sell all or a portion of the Shares from time to time on the
Nasdaq National Market, or otherwise, at prices and on terms
prevailing at the time of sale or at prices related to the then
current market price, or in negotiated transactions. The Shares may
be sold by one or more of the following methods: (a) a block trade in
which the broker or dealer so engaged will attempt to sell the Shares
as agent, but may position and resell a portion of the block as
principal to facilitate the transaction; (b) purchases by a broker or
dealer as principal and resale by such broker or dealer for its own
account pursuant to this Prospectus; (c) an over-the-counter
distribution in accordance with the rules of the Nasdaq National
Market; (d) ordinary brokerage transactions and transactions in which
the broker solicits purchasers; and (e) in privately negotiated
transactions. The Selling Shareholders have agreed to certain
restrictions on trading in 3Com Common Stock that prohibit open market
offers or sales (i) beginning fourteen (14) days prior to the end of
each fiscal year or quarter of 3Com and ending the date of 3Com's
filing of a periodic report on Form 10-K or 10-Q corresponding to such
fiscal year or quarter, and (ii) during such other time that 3Com, in
its reasonable judgment, determines that there is or may be material
undisclosed information or events with respect to 3Com. There is no
assurance that any of the Selling Shareholders will offer or sell any
or all of the Shares registered hereunder.
In effecting sales, brokers or dealers engaged by the Selling
Shareholders may arrange for other brokers or dealers to participate.
Brokers or dealers will receive commissions or discounts from the
Selling Shareholders in amounts to be negotiated prior to the sale.
Such brokers or dealers and any other participating brokers or dealers
may be deemed to be "underwriters" within the meaning of the
Securities Act of 1933, as amended, in connection with such sales.
The Company will pay all expenses incident to the offering and sale of
the Shares to the public other than any commissions and discounts of
underwriters, dealers or agents and any transfer taxes.
The Company has agreed to indemnify the Selling Shareholders, and
any underwriter and certain control and other persons related to the
foregoing persons against certain liabilities, including liabilities
under the Securities Act. The Selling Shareholders have agreed to
indemnify the Company and certain related persons against certain
liabilities, including liabilities under the Securities Act.
The Company has agreed with the Selling Shareholders to keep the
Registration Statement, of which this Prospectus constitutes a part,
effective for up to two (2) years following the date of the
Acquisition Agreement. The Company intends to de-register any of the
Shares not sold by the Selling Shareholders at the end of such two (2)
year period; however, at such time, any unsold shares may be freely
tradable subject to compliance with Rule 144 of the Securities Act.
USE OF PROCEEDS
The Company will not receive any proceeds from the sale of Common
Stock by the Selling Shareholders.
EXPERTS
The supplemental and historical consolidated financial statements
of 3Com Corporation as of May 31, 1995 and 1994 and for each of the
three years in the period ended May 31, 1995 included and incorporated
by reference in this Prospectus have been audited by Deloitte & Touche
LLP, as stated in their reports, dated June 28, 1995 (which includes
an emphasis paragraph relating to the restatement of the supplemental
consolidated financial statements for a pooling of interests
subsequent to the date of the historical financial statements) and
dated June 14, 1995, which are included and incorporated by reference
herein, except for the premerger financial statements of Primary
Access Corporation as of October 3, 1993, and for the fifty-three
weeks ended October 3, 1993 and the fifty-two weeks ended September
27, 1992 which have been audited by KPMG Peat Marwick LLP, as stated
in their report included herein (which financial statements are
included in the fiscal 1994 and 1993 supplemental consolidated
financial statements of 3Com Corporation) and have been so included
and incorporated in reliance upon the respective reports of such firms
given upon their authority as experts in accounting and auditing.
Both of the foregoing firms are independent auditors.
LEGAL MATTERS
The legality of the Shares is being passed upon by Gray Cary Ware
& Freidenrich, A Professional Corporation, Palo Alto, California.
3Com Corporation
Index to Supplemental Consolidated Financial Statements
-------------------------------------------------------
Supplemental Financial Statements:
Independent Auditors' Report - Deloitte & Touche LLP
Independent Auditors' Report - KPMG Peat Marwick LLP
Supplemental Consolidated Statements of Operations for the years ended
May 31, 1995, 1994 and 1993
Supplemental Consolidated Balance Sheets at May 31, 1995 and 1994
Supplemental Consolidated Statements of Shareholders' Equity for the
years ended May 31, 1995, 1994 and 1993
Supplemental Consolidated Statements of Cash Flows for the years ended
May 31, 1995, 1994 and 1993
Notes to Supplemental Consolidated Financial Statements
Independent Auditors' Report
- ----------------------------
To the Shareholders and Board of Directors of 3Com Corporation:
We have audited the accompanying supplemental consolidated balance sheets of
3Com Corporation and its subsidiaries as of May 31, 1995 and 1994, and the
related supplemental consolidated statements of operations, shareholders'
equity, and cash flows for each of the three years in the period ended May
31, 1995. These supplemental financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these supplemental financial statements based on our audits. We did not
audit the balance sheet of Primary Access Corporation as of October 3, 1993,
or the related statements of operations, stockholders' equity (deficit), and
cash flows of Primary Access Corporation for the fifty-three weeks ended
October 3, 1993 and the fifty-two weeks ended September 27, 1992, which
statements are combined with 3Com Corporation's statements as of May 31,
1994 and for the years ended May 31, 1994 and 1993, and reflect total assets
of $12,897,000 , total revenues of $24,052,000 and $13,798,000,
respectively, and net income of $4,478,000 and $1,116,000, respectively.
Those statements were audited by other auditors whose report, dated November
5, 1993, on those statements has been furnished to us, and our opinion,
insofar as it relates to the amounts included for Primary Access
Corporation, is based solely on the report of such other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits and the report
of the other auditors provide a reasonable basis for our opinion.
The supplemental consolidated financial statements give retroactive effect
to the merger of 3Com Corporation and Primary Access Corporation on June 9,
1995, which has been accounted for as a pooling-of-interests as described in
Notes 1 and 3 to the supplemental consolidated financial statements. Generally
accepted accounting principles proscribe giving effect to a consummated business
combination accounted for by the pooling-of-interests method in financial
statements that do not include the date of consummation. These financial
statements do not extend through the date of consummation, however, they
will become the historical consolidated financial statements of 3Com
Corporation and subsidiaries after financial statements covering the date of
consummation of the business combination are issued.
In our opinion, based on our audits and the report of the other auditors,
the accompanying supplemental consolidated financial statements present
fairly, in all material respects, the financial position of 3Com Corporation
and its subsidiaries at May 31, 1995 and 1994, and the results of their
operations and their cash flows for each of the three years in the period
ended May 31, 1995 in conformity with generally accepted accounting
principles applicable after financial statements are issued for a period
which includes the date of consummation of the business combination.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
San Jose, California
June 28, 1995
Independent Auditors' Report
The Board of Directors and Stockholders
Primary Access Corporation:
We have audited the balance sheet of Primary Access Corporation (the Company)
as of October 3, 1993, and the related statements of operations, stockholders'
equity (deficit), and cash flows for the fifty-three weeks ended October 3,
1993 and the fifty-two weeks ended September 27, 1992 (not presented
herein). These financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on
these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Primary Access
Corporation as of October 3, 1993, and the related statements of operations,
stockholders' equity (deficit), and cash flows for the fifty-three weeks
ended October 3, 1993 and the fifty-two weeks ended September 27, 1992, in
conformity with generally accepted accounting principles.
/s/ KPMG Peat Marwick LLP
San Diego, California
November 5, 1993
Supplemental Consolidated Statements of Operations
- --------------------------------------------------
Years Ended May 31,
----------------------------------------
(In thousands, except per share data) 1995 1994 1993
Sales $1,325,693 $851,047 $630,966
Costs and Expenses:
Cost of sales 615,253 415,980 326,985
Sales and marketing 259,458 175,972 139,066
Research and development 133,687 79,327 66,995
General and administrative 54,982 41,865 36,391
Purchased in-process technology 60,796 134,481 -
Non-recurring items 5,000 - 1,316
--------- ------- -------
Total 1,129,176 847,625 570,753
--------- ------- -------
Operating income 196,517 3,422 60,213
Gain on sale of investment - 17,746 -
Other income-net 3,359 3,313 1,200
--------- ------- -------
Income before income taxes 199,876 24,481 61,413
Income tax provision 73,877 48,697 21,736
---------- -------- --------
Net income (loss) $ 125,999 $(24,216) $ 39,677
========== ======== ========
Net income (loss) per common and equivalent share:
Primary $ 1.67 $ (0.37) $ 0.61
Fully-diluted $ 1.65 $ (0.37) $ 0.60
Common and equivalent shares used in
computing per share amount:
Primary 75,531 64,810 65,392
Fully-diluted 76,349 64,810 66,436
See notes to supplemental consolidated financial statements.
Supplemental Consolidated Balance Sheets
- ----------------------------------------
Years Ended May 31,
----------------------
(Dollars in thousands) 1995 1994
Assets
Current Assets:
Cash and cash equivalents $149,210 $ 69,768
Temporary cash investments 184,338 63,413
Trade receivables, less allowance
for doubtful accounts
($16,221 in 1995 and $10,493 in 1994) 199,939 124,843
Inventories 124,058 73,358
Deferred income taxes 43,922 31,236
Other 21,868 10,277
------- -------
Total current assets 723,335 372,895
Property and equipment--net 110,449 68,063
Other assets 24,022 16,282
-------- --------
Total $857,806 $457,240
======== ========
Liabilities and Shareholders' Equity
Current Liabilities:
Accounts payable $ 92,750 $ 53,155
Accrued and other liabilities 126,124 93,747
Income taxes payable 52,853 19,090
Current portion of long-term obligations 197 590
-------- --------
Total current liabilities 271,924 166,582
Long-term debt 110,000 -
Other long-term obligations 1,094 1,229
Shareholders' Equity:
Preferred stock, no par value,
3,000,000 shares authorized;
none outstanding - -
Common stock, no par value,
200,000,000 shares authorized;
shares outstanding: 1995--71,532,286;
1994--67,202,269 311,075 231,985
Unamortized restricted stock grants (2,037) (202)
Retained earnings 165,735 57,951
Unrealized gain on available-for-sale
securities 184 -
Accumulated translation adjustments (169) (305)
-------- --------
Total shareholders' equity 474,788 289,429
-------- --------
Total $857,806 $457,240
======== ========
See notes to supplemental consolidated financial statements.
Supplemental Consolidated Statements of Shareholders' Equity
- ------------------------------------------------------------
<TABLE>
<S> <C> <C> <C> <C> <C> <C> <C>
Unamortized
Restricted
Common Stock Stock Grants Unrealized Accumulated
------------ and Notes Retained Gain on Translation
Shares Amount Receivables Earnings Securities Adjustments Total
------------------------------------------------------------------------
Balances, June 1, 1992,
as previously reported 58,676 $129,063 $ (120) $71,354 $ - $2,128 $202,425
Restatement for pooling of
interests-Primary Access 1,092 8,807 (10) (8,969) - (172)
------ -------- ------ ------- ------- ------ --------
As restated 59,768 137,870 (130) 62,385 - 2,128 $202,253
Stock issued 5,869 22,904 22,904
Stock warrants buyback (1,300) (1,300)
Repurchase of common stock (1,772) (4,300) (5,340) (9,640)
Tax benefit from employee
stock transactions 11,955 11,955
Cancellation of restricted
stock grants (20) (131) 120 (11)
Pro forma tax provision
of pooled entity 1,604 1,604
Equity distributions of
a pooled entity (5,179) (5,179)
Adjustment to conform fiscal year
of a pooled entity-Star Tek 2,163 2,163
Accumulated translation adjustments (1,986) (1,986)
Repayment of notes receivable 5 5
Net income 39,677 39,677
------ ------- ----- ------ ------- ------ --------
Balances, May 31, 1993 63,845 166,998 (5) 95,310 - 142 262,445
Stock issued 4,757 22,925 (255) 22,670
Repurchase of common stock (1,400) (3,501) (13,143) (16,644)
Tax benefit from employee
stock transactions 24,474 24,474
Amortization of restricted
stock grants 53 53
Stock options assumed in
connection with acquisitions 21,089 21,089
Accumulated translation adjustments (447) (447)
Repayment of note receivable 5 5
Net loss (24,216) (24,216)
------ -------- ------ ------- ---- ------ --------
Balances, May 31, 1994 67,202 231,985 (202) 57,951 - (305) 289,429
Stock issued 3,765 33,963 (2,128) 31,835
Repurchase of common stock (785) (2,674) (16,916) (19,590)
Tax benefit from employee
stock transaction 40,306 40,306
Amortization of restricted
stock grants 293 293
Stock options assumed in
connection with
acquisitions 6,508 6,508
Adjustment to conform pooled
entity-Sonix 1,208 844 (2,079) (69) (1,304)
Adjustment to conform fiscal
year of pooled entity-
Primary Access 142 143 780 923
Unrealized gain on available-
for-sale securities 184 184
Accumulated translation adjustments 205 205
Net income 125,999 125,999
------ -------- -------- -------- ---- ----- --------
Balances, May 31, 1995 71,532 $311,075 $(2,037) $165,735 $184 $(169) $474,788
====== ======== ======== ======== ==== ====== ========
</TABLE>
See notes to supplemental consolidated financial statements.
Supplemental Consolidated Statements of Cash Flows
- --------------------------------------------------
Years Ended May 31,
----------------------------------
(Dollars in thousands) 1995 1994 1993
Cash flows from operations:
Net income (loss) $125,999 $(24,216) $ 39,677
Adjustments to reconcile net income
(loss) to cash provided by operations:
Depreciation and amortization 47,482 30,922 25,361
Gain on sale of investment - (17,746) -
Deferred income taxes (24,175) (9,865) (3,523)
Purchased in-process technology 60,796 134,481 -
Adjustment to conform fiscal year
of pooled entity 3,013 - 2,163
Pro forma provision for income taxes - - 1,604
Non-cash restructuring costs (1,100) - (3,346)
Changes in assets and liabilities
net of effects of acquisitions:
Trade receivables (73,067) (33,779) (22,904)
Inventories (50,190) 1,019 (20,055)
Other current assets (11,045) 6,160 (3,889)
Accounts payable 37,556 9,556 11,573
Accrued and other liabilities 39,747 (1,185) 6,902
Income taxes payable 73,821 34,927 17,618
------- ------- ------
Net cash provided by operations 228,837 130,274 51,181
------- ------- ------
Cash flows from investment activities:
Proceeds from sale of investment - 18,066 -
Purchase of property and equipment (77,817) (36,938) (22,534)
Purchase of temporary cash investments (183,232) (76,841) (72,962)
Proceeds from temporary cash investments 60,585 90,612 40,496
Acquisition of businesses and related
purchase-price adjustment (65,832) (98,128) 2,946
Other-net 4,007 (3,020) 907
--------- --------- --------
Net cash used for investment activities (262,289) (106,249) (51,147)
--------- --------- --------
Cash flows from financing activities:
Sale of stock 28,155 22,670 22,397
Repurchase of common stock (19,590) (16,644) (9,640)
Repurchase of stock warrants - - (1,300)
Net proceeds from issuance of
convertible debt 107,330 - -
Notes payable - - 3,326
Repayments of notes payable and
capital lease obligations (3,206) (2,287) (750)
Equity distributions of pooled entity - - (5,179)
Other-net 205 (448) (1,867)
------- ------- ------
Net cash provided by financing activities 112,894 3,291 6,987
------- ------- ------
Increase in cash and cash equivalents 79,442 27,316 7,021
------- ------- ------
Cash and cash equivalents at
beginning of year 69,768 42,452 35,431
-------- ------- -------
Cash and cash equivalents at end of year $149,210 $69,768 $42,452
======== ======= =======
Other cash flow information:
Interest paid $ 5,526 $ 165 $ 418
Income taxes paid 25,039 22,169 5,910
Non-cash investing and financing activities-
Tax benefit on stock option
transactions 40,306 24,474 11,955
Stock issued and options assumed in
business acquisitions 10,118 21,089 -
- -------------------------------------------------------------------------------
In connection with the purchase acquisitions in fiscal 1995 (see Note 3),
the Company paid cash, net of cash acquired, of $51.6 million, and recorded
non-cash value of stock issued and options assumed of $3.7 million and $6.5
million, respectively. The fair value of assets acquired, excluding the
$60.8 million purchased in-process technology charged to operations, was
$4.3 million, and liabilities of $2.6 million were assumed. In connection
with the acquisition of Centrum in fiscal 1994 (see Note 3), the Company
made a final payment in cash of $14.3 million in fiscal 1995.
In connection with the acquisitions in fiscal 1994 (see Note 3), the Company
paid cash, net of cash acquired, of $98.1 million plus $14.3 million payable
in August 1994, and recorded non-cash value of options assumed of $21.1
million. The fair value of assets acquired, excluding the $132.1 million
purchased in-process technology charged to operations, was $35.6 million,
and liabilities of $11.3 million were assumed.
See notes to supplemental consolidated financial statements.
Notes to Supplemental Consolidated Financial Statements
- -------------------------------------------------------
Note 1: Description of Business and Basis of Presentation
Description of Business
- -----------------------
Founded in 1979, 3Com Corporation pioneered the data networking industry and
is committed to providing customers global access to information. Today,
3Com offers a broad range of ISO 9000-compliant global data networking
connectivity solutions which include routers, hubs, remote access servers,
switches, adapters and network management for Ethernet, Token Ring, FDDI,
ATM and other high-speed data networks. Headquartered in Santa Clara,
California, 3Com has worldwide research and development, manufacturing,
marketing, sales and support capabilities.
Basis of Presentation
- ---------------------
The supplemental consolidated financial statements of 3Com Corporation and
subsidiaries (the Company) have been prepared to give retroactive effect to
the merger with Primary Access Corporation on June 9, 1995. Generally
accepted accounting principles proscribe giving effect to a consummated
business combination accounted for by the pooling-of-interests method in
financial statements that do not include the date of consummation. These
financial statements do not extend through the date of consummation,
however, they will become the historical consolidated financial statements
of the Company after financial statements covering the date of consummation
of the business combination are issued.
Note 2: Significant Accounting Policies
Principles of consolidation. The consolidated financial statements include
the accounts of 3Com Corporation and its wholly-owned subsidiaries. All
significant intercompany balances and transactions are eliminated in
consolidation.
Cash equivalents are highly liquid debt investments acquired with a maturity
of three months or less.
Temporary cash investments consist of short-term investments acquired with
maturities exceeding three months. Effective June 1, 1994, the Company
adopted Statement of Financial Accounting Standards (SFAS) No. 115,
"Accounting for Certain Investments in Debt and Equity Securities." This
statement requires the Company to classify debt and equity securities with
readily determinable fair values as "held-to-maturity," "available-for-sale"
or "trading". Adoption of SFAS 115 did not have a significant effect on the
Company's financial position or results of operations. While the Company's
intent is to hold debt securities to maturity, the Company has classified
all securities held as available-for-sale securities as the sale of such
securities may be required prior to maturity to implement management
strategies. Such securities are reported at fair value with unrealized
gains or losses excluded from earnings and reported as a separate component
of shareholders' equity, net of applicable taxes. Prior to the adoption of
SFAS 115, all investment securities were carried at amortized cost.
Concentration of credit risk and major customer. Financial instruments
which potentially subject the Company to concentrations of credit risk
consist principally of investments and trade receivables. The Company
invests in instruments with an investment credit rating of AA and better.
The Company also places its investments for safekeeping with high-credit-
quality financial institutions. Credit risk with respect to trade
receivables is generally diversified due to the large number of entities
comprising the Company's customer base and their dispersion across many
different industries and geographies. The Company often sells its products
through third-party distributors, and, as a result, may maintain
individually significant receivable balances with major distributors. The
Company believes that its credit evaluation, approval and monitoring
processes substantially mitigate potential credit risks.
In fiscal 1995, the Company had one customer which accounted for
approximately 11 percent of total sales. The Company did not have any
customers which individually accounted for more than 10 percent of total
sales in fiscal 1994 and 1993, respectively.
Inventories are stated at the lower of standard cost (which approximates
first-in, first-out cost) or market.
Property and equipment is stated at cost. Equipment under capital leases is
stated at the lower of fair market value or the present value of the minimum
lease payments at the inception of the lease.
Purchased technology is included in other assets and is amortized over 2-4
years.
Depreciation and amortization are computed over the shorter of the estimated
useful lives, lease terms, or terms of license agreements of the respective
assets, on a straight-line basis--generally 2-7 years, except for buildings
which are at 25 years.
Revenue recognition. The Company recognizes revenue and accrues related
product return reserves, warranty and royalty expenses upon shipment. At
the time of sale, no material vendor or post-contract support obligations
remain outstanding, except as provided by separate service agreement, and
collection of the resulting receivable is probable. Service and
subscription revenue is recognized over the contract term. The Company
extends limited product return and price protection rights to certain
distributors and resellers. Such rights are generally limited to a certain
percentage of sales over a three-month period. Historically, actual amounts
recorded for product returns and price protection have not varied
significantly from estimated amounts. The Company warrants products for
periods which range from 90 days to life depending upon the product.
Foreign currency translations. For foreign operations with the local
currency as the functional currency, assets and liabilities are translated
at year-end exchange rates, and statements of operations are translated at
the average exchange rates during the year. Gains or losses resulting from
foreign currency translation are accumulated as a separate component of
shareholders' equity.
For foreign operations with the U.S. dollar as the functional currency,
assets and liabilities are translated at the year-end exchange rates except
for inventories, prepaid expenses, and property and equipment, which are
translated at historical exchange rates. Statements of operations are
translated at the average exchange rates during the year except for those
expenses related to balance sheet amounts that are translated using
historical exchange rates. Gains or losses resulting from foreign currency
translation are included in other income - net in the statements of
operations and were not significant for any of the years presented.
Net income (loss) per common and equivalent share is computed using the
weighted average number of common and common equivalent shares outstanding
and the dilutive effects of stock options, using the treasury stock method.
The effect of the assumed conversion of the 10.25% convertible subordinated
notes was antidilutive for the periods presented.
Reclassifications. Certain prior year amounts have been reclassified to
conform to the current year presentation.
Note 3: Business Combinations
For the Year Ended May 31, 1995. On October 18, 1994, the Company
acquired substantially all the assets and assumed substantially all the
liabilities of NiceCom, Ltd. (NiceCom), and assumed all outstanding
NiceCom stock options. The purchase price consisted of approximately
$53.2 million which was paid using funds from the Company's working
capital and the issuance of 93,162 shares of common stock of the Company,
with an aggregate value of $3.7 million. In addition, the Company assumed
stock options with an associated value of $5.7 million. NiceCom is
engaged in the development of asynchronous transfer mode (ATM) switches
and an Ethernet-to-ATM solution to provide a migration path from existing
Ethernet LANs to ATM networking.
On October 14, 1994, the Company acquired all of the outstanding shares
and assumed all outstanding stock options of a company engaged in the
development of network adapter technology. The purchase price consisted
of approximately $2.3 million in cash plus the assumption of stock options
with an associated value of approximately $400,000. The purchase price
was paid using funds from the Company's working capital.
The acquisitions were accounted for as purchases and, accordingly, the
acquired assets and liabilities were recorded at their estimated fair
market values at the dates of acquisitions. The aggregate purchase price
of $61.6 million, plus $2.0 million of costs directly attributable to the
completion of the acquisitions, has been allocated to the assets and
liabilities acquired. Approximately $60.8 million of the total purchase
price represented the value of in-process technology that had not yet
reached technological feasibility and had no alternative future use and
was charged to the Company's operations in the second quarter of fiscal
1995.
On February 28, 1995, the Company acquired AccessWorks Communications, a
company involved in developing, manufacturing and marketing Integrated
Services Digital Network (ISDN) transmission products. The acquisition
was accounted for as a purchase. The purchase price and costs directly
attributable to the completion of the acquisition were not significant.
The Company's consolidated results of operations include the operating
results of the acquired companies from their acquisition dates. Pro forma
results of operations of 3Com and the aforementioned acquired companies
for the periods prior to the acquisitions are not presented as the amounts
would not significantly differ from the Company's historical results.
On May 1, 1995, the Company acquired Sonix Communications Limited (Sonix) by
issuing approximately 1.2 million shares of common stock for all of the
outstanding stock of Sonix. Sonix develops, manufactures and markets a
range of networking connectivity solutions using ISDN technology. The
acquisition was accounted for as a pooling-of-interests. All financial data
of the Company for fiscal 1995 has been restated to include the operating
results of Sonix. As the historical operations of Sonix were not
significant to any year presented, the Company's financial statements for
prior years have not been restated and the financial effect of the prior
year's results of operations of Sonix have been accounted for as a $2.1
million charge against retained earnings in fiscal 1995.
Subsequent Event. On June 9, 1995, the Company acquired Primary Access
Corporation (Primary Access) by issuing approximately 2.3 million shares of
common stock for all of the outstanding stock of Primary Access. The
Company also assumed and exchanged all options and warrants to purchase
Primary Access stock for options and warrants to purchase approximately
500,000 shares of the Company's common stock. Primary Access develops,
manufactures and markets integrated network access systems. The acquisition
was accounted for as a pooling-of-interests. All financial data of the
Company for the periods prior to the acquisition were restated to include
the historical financial data of Primary Access. Primary Access maintained
its financial records on a 52-53 week fiscal year ending nearest to
September 30. The May 31, 1994 restated consolidated balance sheet includes
the balance sheet of Primary Access as of October 3, 1993. The restated
consolidated statements of operations and cash flows for the years ended May
31, 1994 and 1993 include the Primary Access statements of operations and
cash flows for the years ended October 3, 1993 and September 27, 1992,
respectively.
The results of operations of Primary Access for the eight-month period ended
May 31, 1994 reflected revenues of $14.6 million and net income of $780,000,
which has been reported as an increase in the Company's fiscal 1995 retained
earnings. No significant adjustments were required to conform the
accounting policies of the Company and Primary Access. Financial
information as of May 31, 1995 and for the year then ended reflects the
Company's and Primary Access' operations for that period.
The following table shows the effect on the results of operations for the
fiscal years in which the combinations of Sonix and Primary Access were
effected:
(in thousands) Year ended Year ended Year ended
May 31, 1995 May 31, 1994 May 31, 1993
- --------------------------------------------------------------------------
Sales:
3Com $1,269,908 $826,995 $617,168
Primary Access 30,382 24,052 13,798
Sonix 25,403 - -
Combined $1,325,693 $851,047 $630,966
- --------------------------------------------------------------------------
Net income (loss):
3Com $ 123,450 $(28,694) $ 38,561
Primary Access 293 4,478 1,116
Sonix 2,256 - -
Combined $ 125,999 $(24,216) $ 39,677
- --------------------------------------------------------------------------
For the Year Ended May 31, 1994. On January 14, 1994, the Company acquired
all of the outstanding shares of Synernetics, Inc. (Synernetics) and assumed
all outstanding Synernetics stock options. The purchase price consisted of
approximately $104.0 million, plus $3.3 million of stock options. A
substantial portion of the purchase price was paid using funds from the
Company's working capital. Synernetics is engaged in the development,
manufacturing and marketing of LAN switching products.
On February 2, 1994, the Company acquired all of the outstanding shares of
Centrum Communications, Inc. (Centrum) and assumed all outstanding Centrum
stock options. The purchase price consisted of approximately $36.0 million,
of which $16.0 million was paid in cash at the time of the acquisition and
$14.3 million was paid in cash in August 1994 pursuant to the acquisition
agreement. The remainder was associated with the value of the assumed stock
options. Centrum is engaged in the development, manufacturing and marketing
of remote access products and technology.
The acquisitions were accounted for as purchases and, accordingly, the
acquired assets and liabilities were recorded at their estimated fair values
at the dates of acquisition. The aggregate purchase price of $143.3
million, plus $13.1 million of costs directly attributable to the completion
of the acquisitions, has been allocated to the assets and liabilities
acquired. Approximately $132.1 million of the total purchase price
represented in-process technology that had not yet reached technological
feasibility and had no alternative future use and was charged to the
Company's operations.
The Company's consolidated results of operations include the operating
results of the acquired companies since their acquisition dates.
For the Year Ended May 31, 1993. On January 29, 1993, the Company acquired
Star-Tek, Inc. (Star-Tek) by issuing approximately 3.5 million shares of
common stock for all of the outstanding shares of Star-Tek. Star-Tek
designs, manufactures and markets a range of Token Ring products focused
primarily on the connectivity needs of larger organizations with IBM
mainframe, mid-range and Token Ring LAN-based information systems. The
acquisition was accounted for by the pooling-of-interests method. Star-Tek
maintained its financial records on a fiscal year ending December 31. The
results of operations of Star-Tek for the five-month period ended May 31,
1992 reflected net income of $1.6 million and pro-forma tax adjustment of
$595,000, the sum of which has been reported as an increase in the Company's
fiscal 1993 retained earnings.
Note 4: Temporary Cash Investments
Available-for-sale securities consist of:
May 31, 1995
------------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Estimated
(in thousands) Cost Gains Losses Fair Value
-------- ------- ------- ----------
State and municipal securities $108,625 $214 $(22) $108,817
Corporate debt securities 49,773 76 - 49,849
U.S. Government and agency
securities 25,633 39 - 25,672
-------- ---- ----- --------
Total $184,031 $329 $(22) $184,338
======== ==== ===== ========
There were no realized gains or losses for the year ended May 31, 1995.
The contractual maturity of available-for-sale securities at May 31, 1995
was as follows:
Amortized Estimated
(in thousands) Cost Fair Value
- ------------------------------------------------------------------
Within one year $142,158 $142,312
Over one year to two years 41,873 42,026
-------- --------
Total $184,031 $184,338
======== ========
Note 5: Inventories
Inventories at May 31 consist of:
(in thousands) 1995 1994
- ----------------------------------------------------------------
Finished goods $ 73,061 $44,876
Work-in-process 14,035 8,248
Raw materials 36,962 20,234
-------- -------
Total $124,058 $73,358
======== =======
Note 6: Property and Equipment
Property and equipment at May 31 consists of:
(in thousands) 1995 1994
- ---------------------------------------------------------------
Land $ 1,303 $ 1,303
Building 7,365 7,365
Machinery and equipment 176,088 124,670
Furniture and fixtures 19,564 14,647
Leasehold improvements 16,771 15,477
Construction in progress 15,613 -
-------- --------
Total 236,704 163,462
Accumulated depreciation and
amortization (126,255) (95,399)
-------- --------
Property and equipment - net $110,449 $ 68,063
======== ========
Note 7: Accrued and Other Liabilities
Accrued and other liabilities at May 31 consist of:
(in thousands) 1995 1994
- ----------------------------------------------------------------
Accrued payroll and related expenses $ 38,950 $22,048
Accrued product warranty 20,769 14,102
Accrued cooperative advertising 12,015 11,544
Accrued payment to Centrum shareholders - 14,267
Other accrued liabilities 54,390 31,786
-------- -------
Accrued and other liabilities $126,124 $93,747
======== =======
Note 8: Borrowing Arrangements and Commitments
In November 1994, the Company completed a private placement of $110 million
aggregate principal amount of convertible subordinated notes under Rule
144A of the Securities Act of 1933. The notes mature in 2001. Interest is
payable semi-annually at 10.25% per annum. The notes are convertible at
the option of the note holders into the Company's common stock at an
initial conversion price of $69.125 per share. Beginning in November 1997,
the notes are redeemable at the option of the Company at an initial
redemption price of 102.929% of the principal amount. The Company has
reserved 1,591,320 shares of common stock for the conversion of these
notes.
In July 1994, the Company signed a five-year lease for 225,000 square feet
of office and manufacturing space to be built on land adjacent to its
existing headquarters in Santa Clara. This arrangement provides the Company
with an option to purchase the related property during the lease term, and
at the end of the lease term the Company is obligated to either purchase the
property or arrange for the sale of the property to a third party with a
guaranteed residual value of up to $33.5 million to the seller of the
property. The Company estimates that it will commence occupancy of portions
of the facility in June 1995, with payments on the lease estimated to start
in September 1995. Future minimum lease payments are included in the table
below.
In April 1995, the Company signed an eight-year lease for 80,000 square feet
of office and manufacturing space in Boxborough, Massachusetts to
consolidate existing facilities in that area. Concurrent with this lease,
the Company entered into an agreement pursuant to which the Company has the
option to purchase the property in November 1995. Future minimum lease
payments are included in the table below.
As of May 31, 1995, the Company had approximately $29 million in capital
expenditure commitments, primarily associated with the expansion and upgrade
of product manufacturing lines and facilities.
The Company has a $40 million revolving bank credit agreement which expires
on December 31, 1996. Under the agreement, the Company may select among
various interest rate options, including borrowing at the bank's prime rate.
The agreement requires that the Company maintain certain financial ratios
and minimum net worth. At May 31, 1995, all such requirements were met and
there were no outstanding borrowings under the agreement. The Company has
no restrictions on paying cash dividends on its common stock.
3Com Development Corporation, a wholly-owned subsidiary of 3Com, is a
limited partner in a lease/joint venture arrangement to acquire and develop
the Company's corporate offices in Santa Clara, which were initially
occupied in the first quarter of fiscal 1991. Future minimum lease payments
are included in the table below.
The Company leases its facilities and certain equipment under operating
leases. Leases expire at various dates from 1996 to 2013 and certain
facility leases have renewal options with rentals based upon changes in the
Consumer Price Index or the fair market rental value of the property.
Future operating lease commitments are as follows:
(in thousands)
- --------------------------------------------------------------
Fiscal year
1996 $20,648
1997 17,975
1998 13,242
1999 12,247
2000 9,919
Thereafter 15,416
-------
Total $89,447
=======
Rent expense was $17.8 million, $14.0 million, and $14.1 million for fiscal
1995, 1994, and 1993, respectively.
Note 9: Common Stock
The Company's common stock was split two-for-one on September 1, 1994 for
shareholders of record on August 16, 1994. All applicable share and per
share data in these financial statements have been restated to give effect
to this stock split.
Shareholder Rights Plan. In September 1989, the Company's Board of
Directors approved an amendment and restatement of the stock purchase rights
plan and declared a dividend distribution of one common stock purchase right
for each outstanding share of its common stock. The Company's Board of
Directors approved an amendment and restatement of the rights plan in
December 1994. The rights become exercisable based on certain limited
conditions related to acquisitions of stock, tender offers and certain
business combination transactions of the Company. In the event one of the
limited conditions is triggered, each right entitles the registered holder
to purchase for $250 a number of shares of 3Com common stock (or any
acquiring company) with a fair market value of $500. The rights are
redeemable at the Company's option for $.01 per right and expire on December
13, 2004.
Stock Option Plans. The Company has stock option plans under which
employees and directors may be granted options to purchase common stock.
Options are generally granted at not less than the fair market value at
grant date, vest over a four-year period, and expire ten years after the
grant date.
A summary of option transactions under the plans follows:
Years ended May 31,
(in thousands except
price per share) 1995 1994 1993
- ----------------------------------------------------------------
Number of option shares:
Granted and assumed 3,660 4,815 4,383
Exercised (3,104) (3,722) (3,659)
Cancelled (594) (448) (651)
Outstanding at end of year 12,665 12,703 12,058
- ----------------------------------------------------------------
Option price per share:
Granted and assumed $0.03-68.25 $0.44-30.88 $0.48-19.69
Exercised 0.44-52.13 0.44-25.88 0.48-17.50
Cancelled 0.73-52.19 0.45-28.19 0.48-17.55
Outstanding at end of year $0.03-68.25 $0.44-30.88 $0.48-19.69
In connection with the fiscal 1995 purchase acquisitions discussed in Note
3, the Company assumed certain outstanding options to purchase common stock
of the acquired companies and exchanged them for options to acquire 164,000
shares of the Company's common stock at exercise prices of $0.03 to $3.44
per share.
In connection with the acquisition of Primary Access in June 1995, the
Company assumed certain outstanding options to purchase common stock of
Primary Access and exchanged them for options to acquire 452,000 shares of
the Company's common stock at excercise prices of $0.48 to $52.13 per share.
The Company also assumed certain outstanding warrants to purchase common
stock of Primary Access and exchanged them for warrants to acquire 27,000
shares of the Company's common stock at excercise prices of $4.52 to $9.77
as of May 31, 1995. The warrants expire through 1997.
At May 31, 1995, options for 5.3 million shares were exercisable, 4.8
million shares were available for future grants, and 17.4 million shares
were reserved for issuance under the stock option plans.
Employee Stock Purchase Plan. The Company has an employee stock purchase
plan, under which eligible employees may authorize payroll deductions of up
to 10 percent of their compensation (as defined) to purchase common stock at
a price not less than 85 percent of the lower of the fair market values as
of the beginning or the end of the offering period. At May 31, 1995,
629,000 shares of common stock were reserved for issuance under this plan.
Restricted Stock Plan. The Company has a restricted stock plan, under which
200,000 shares of common stock were reserved for issuance at no cost to key
employees. The shares are issued at the fair market value on the date of
the grant. Any compensation expense is recognized as the granted shares
vest over a one to four year period. Through May 31, 1995, 57,000 shares of
common stock have been issued under this plan. At May 31, 1995, 143,000
shares were reserved for future issuance.
Stock Repurchase Program. The Board of Directors has authorized the Company
to repurchase up to 15.0 million shares of common stock. Under this
authorization, 12.3 million shares have been repurchased and the Company may
repurchase up to an additional 2.7 million shares of common stock.
Note 10: Foreign Exchange Contracts
Intercompany balances and balance sheet exposures. The Company enters into
foreign exchange forward contracts to hedge certain balance sheet exposures
and intercompany balances against future movements in foreign exchange
rates. Gains and losses on the foreign exchange contracts are included in
other income - net, which offset foreign exchange gains or losses from
revaluation of foreign currency-denominated balance sheet items and
intercompany balances.
At May 31, 1995 and 1994, the Company had outstanding foreign exchange
forward contracts of $16.7 million and $14.6 million, respectively,
excluding the foreign exchange contracts related to the Irish manufacturing
facility. The contracts require the Company to exchange foreign currencies
for U.S. dollars or vice versa, and generally mature in one month.
Irish manufacturing facility. The Company has entered into foreign exchange
forward contracts to minimize fluctuation in the expected U.S. dollar cost
of expanding its Irish manufacturing facility due to movements in the Irish
pound to U.S. dollar exchange rate. Gains and losses on the forward
contracts, when material, are included in construction in progress. At May
31, 1995, the outstanding foreign exchange contracts related to the
construction in Ireland were $10.1 million. The contracts require the
Company to exchange U.S. dollars for Irish pounds and have maturities from
one to seven months.
Note 11: Financial Instruments Fair Value Disclosure
The following summary disclosures are made in accordance with the provisions
of SFAS No. 107, "Disclosures About Fair Value of Financial Instruments,"
which requires the disclosure of fair value information about both on- and
off-balance sheet financial instruments where it is practicable to estimate
the value. Fair value is defined in SFAS No. 107 as the amount at which an
instrument could be exchanged in a current transaction between willing
parties, other than in a forced or liquidation sale. It is not the
Company's intent to enter into such exchanges.
Because SFAS No. 107 excludes certain financial instruments and all non-
financial instruments from its disclosure requirements, any aggregation of
the fair value amounts presented would not represent the underlying value of
the Company.
May 31, 1995 May 31, 1994
--------------------- ---------------------
Carrying Estimated Carrying Estimated
(in thousands) Amount Fair Value Amount Fair Value
- ------------------------------------------------------------------------------
Assets:
Cash and cash equivalents $149,210 $149,210 $69,768 $69,768
Temporary cash investments 184,338 184,338 63,413 63,208
Liabilities:
Convertible subordinated notes $110,000 $138,050 $ - $ -
Commitments:
Foreign exchange contracts $ 26,796 $ 26,782 $14,634 $14,648
The following methods and assumptions were used in estimating the fair
values of financial instruments:
Cash and cash equivalents. The carrying amounts reported in the balance
sheets for cash and cash equivalents approximate their estimated fair
values.
Temporary cash investments, foreign exchange contracts and convertible
subordinated notes. The fair value of temporary cash investments, foreign
exchange contracts and convertible subordinated notes are based on quoted
market prices.
Note 12: License
In fiscal 1994, the Company licensed certain in-process wireless technology
from Pacific Monolithics, Inc. This technology was still under development
and, accordingly, $2.4 million of the $2.5 million cost of obtaining this
license represented in-process technology and was charged to operations in
fiscal 1994.
Note 13: Non-recurring Items
Non-recurring items for the year ended May 31, 1995 consists of merger costs
of $6.1 million related to the acquisitions of Sonix and Primary Access (see
Note 3) offset by a $1.1 million reduction in accrued costs associated with
the fiscal 1991 restructuring based on revised estimates of future costs.
Non-recurring items for the year ended May 31, 1993 consists of the net cost
of a litigation settlement of $3.6 million (see Note 17), and merger costs
of $1.0 million related to the acquisition of Star-Tek (see Note 3), offset
by a reduction in accrued restructuring costs of $3.3 million based on
revised estimates of future costs.
Note 14: Other Income - Net
Other income - net consists of:
(in thousands) 1995 1994 1993
- -----------------------------------------------------------------
Interest income $10,204 $4,033 $3,657
Interest expense (6,874) (164) (419)
Other 29 (556) (2,038)
------ ------ ------
Total $3,359 $3,313 $1,200
====== ====== ======
Note 15: Income Taxes
The provision for income taxes consists of:
(in thousands) 1995 1994 1993
- ----------------------------------------------------------------
Current:
Federal $56,122 $31,880 $13,808
State 19,393 8,208 3,139
Foreign 22,537 16,771 8,293
------- ------- -------
Total current 98,052 56,859 25,240
------- ------- -------
Deferred:
Federal (17,600) (9,266) (1,658)
State (6,885) - -
Foreign 310 1,104 (1,846)
------- ------- -------
Total deferred (24,175) (8,162) (3,504)
------- ------- -------
Total $73,877 $48,697 $21,736
======= ======= =======
The components of the net deferred tax asset consist of:
(in thousands) 1995 1994
- -----------------------------------------------------------------
Deferred tax assets:
Amortization and depreciation $29,180 $ 4,168
Reserves not recognized for tax purposes 32,324 32,289
Other 15,092 4,505
Valuation allowance (6,845) (8,274)
------- -------
Total deferred tax asset 69,751 32,688
------- -------
Deferred tax liabilities -
Unremitted earnings (12,828) -
Net unrealized gain on securities
available-for-sale (123) -
Other (85) (25)
------- -------
Net deferred tax asset $56,715 $32,663
======= =======
Valuation allowance relates primarily to expenses, the realization of which
is not assured on future state income tax returns. The valuation allowance
decreased $1.4 million in fiscal 1995, and increased $926,000 and $1.1
million in 1994 and 1993, respectively.
Tax carryforwards of acquired businesses consist of $1.0 million and $800,000
of net operating loss and tax credit carryforwards, respectively, that expire
in 2004 through 2008.
The provision for income taxes differs from the amount computed by applying the
federal statutory income tax rate to income before taxes as follows:
1995 1994 1993
- ----------------------------------------------------------------
Tax computed at federal
statutory rate 35.0% 35.0% 34.0%
State income taxes, net
of federal effect 4.1 3.6 3.4
Foreign sales corporation (0.6) (4.2) (1.2)
Tax exempt investment income (0.8) (4.5) (1.5)
Benefit of net operating loss
carryforwards - (7.4) (0.8)
Provision for combined foreign
and U.S. taxes on certain
foreign income at rates less
than U.S. rates (4.1) (6.0) (0.4)
Research tax credits (1.5) (6.9) (0.2)
Non-deductible purchased
in-process technology 3.0 192.7 -
Effect of tax law changes - (5.1) -
Other 1.9 1.7 2.1
----- ---- ----
Total 37.0% 198.9% 35.4%
==== ===== ====
Income before income taxes for the years ended 1995, 1994, and 1993 includes
income of $131.2 million, $58.2 million and $18.7 million from the Company's
foreign subsidiaries. The Company has not provided for federal income taxes
on approximately $38.7 million of undistributed earnings of foreign
subsidiaries, which the Company intends to reinvest in subsidiary operations
indefinitely. If such undistributed earnings were to be remitted, the
related tax liability would be approximately $10.7 million.
Note 16: Geographic Area Information
The Company operates in a single industry segment: the design, manufacture,
marketing, and support of data networking systems. The Company's foreign
operations consist primarily of central distribution and order
administration, manufacturing and research and development facilities in
Western Europe, and sales, marketing and customer service activities
conducted through sales subsidiaries throughout the world.
Sales, operating income and identifiable assets, classified by the major
geographic areas in which the Company operates, are as follows:
(in thousands) 1995 1994 1993
- ----------------------------------------------------------------
Revenues from unaffiliated
customers:
United States operations $ 623,153 $423,888 $322,677
Export sales from United
States operations 179,225 103,127 69,237
European operations 523,151 324,032 224,891
Other 164 - 14,161
---------- -------- --------
Total $1,325,693 $851,047 $630,966
========== ======== ========
Transfers from geographic areas
(eliminated in consolidation):
United States operations $144,862 $112,418 $101,570
European operations 123,360 52,595 39,920
Other 439 - 23,354
-------- -------- --------
Total $268,661 $165,013 $164,844
======== ======== ========
Operating income (loss):
United States operations $ 79,117 $(55,869) $ 40,393
European operations 141,367 63,306 23,757
Other (2,149) 587 (212)
Eliminations (21,818) (4,602) (3,725)
-------- -------- --------
Total $196,517 $ 3,422 $ 60,213
======== ======== ========
Identifiable assets:
United States operations $647,072 $345,548
European operations 235,634 123,144
Other 10,009 2,498
Eliminations (34,909) (13,950)
-------- --------
Total $857,806 $457,240
======== ========
Operating income (loss) for the United States operations for the years ended
May 31, 1995 and 1994 included charges of approximately $60.8 million and
$134.5 million, respectively, for purchased in-process technology resulting
from the Company's acquisitions in those years. Transfers between
geographic areas are accounted for at prices representative of unaffiliated
party transactions.
Note 17: Litigation
In August 1989, four class action lawsuits were filed in the United States
District Court for the Northern District of California naming the Company
and certain of its directors and officers as defendants. The suits, which
were consolidated into a single action, alleged that defendants
misrepresented or failed to disclose material facts about the Company's
operations and financial results, which plaintiffs contended artificially
inflated the price of the Company's securities during the period December 6,
1988 to August 7, 1989.
In April 1993, the Company and plaintiffs reached an agreement to settle the
consolidated action in its entirety. Although the Company believes that the
claims asserted in the class action were without merit, the Company believed
it was in the best interest of its shareholders to settle the case due to
the continuing costs of defense, the distraction of management's attention
and the uncertainties inherent in any litigation. The principal terms of
the agreement called for a settlement of $9.9 million, a substantial portion
of which was paid by the Company's insurance carrier.
No dealer, salesman or other 483,309 Shares
person has been authorized to
give any information or to make
any representations other than
those contained or incorporated 3COM CORPORATION
by reference in this Prospectus
in connection with the offering
described herein, and, if given
or made, such information or COMMON STOCK
representation must not be
relied upon as having been
authorized by the Company or by
any Underwriter. This
Prospectus does not constitute ---------------
an offer to sell, or a
solicitation of an offer to buy, PROSPECTUS
any securities other than the
registered securities to which ---------------
it relates, or an offer to sell,
or a solicitation of an offer to
buy, in any jurisdiction in
which it is unlawful to make
such offer or solicitation.
Neither the delivery of this
Prospectus nor any sale made
hereunder shall, under any
circumstances, create an
implication that there has been
no change in the affairs of the
Company since the date hereof or
that the information contained
herein is correct as of any time
subsequent to the date hereof.
TABLE OF CONTENTS
Available Information
Incorporation of Certain
Documents by Reference
The Company
Risk Factors
Material Changes
Selling Shareholders
Plan of Distribution
Use of Proceeds
Legal Matters
Experts
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth the costs and expenses in
connection with the sale and distribution of the securities being
registered, other than underwriting discounts and commissions. All of
the amounts shown are estimates except the Securities and Exchange
Commission registration fees and NASD filing fee.
To be Paid
By The
Registrant
----------
SEC Registration Fee $11,083
NASD filing fee 17,500
Accounting fees and expenses 25,000
Transfer agent and registrar fees and expenses -0-
Blue Sky fees and expenses (including counsel fees) -0-
Legal fees and expenses 7,000
Miscellaneous expenses 1,000
-------
Total $61,583
=======
The Company intends to pay all expenses of registration, issuance
and distribution, excluding Underwriter's discounts and commissions,
with respect to those shares being sold by the Selling Shareholders.
Item 15. Indemnification of Directors and Officers.
The Company's Bylaws provide that the Company shall indemnify its
directors, officers, employees, and agents to the full extent
permitted by the California Corporation Law, including in
circumstances in which indemnification is otherwise discretionary
under such law. In addition, with the approval of the Board of
Directors and the shareholders, the Company has entered into separate
indemnification agreements with its directors, officers and certain
employees which require the Company, among other things, to indemnify
them against certain liabilities which may arise by reason of their
status or service (other than liabilities arising from willful
misconduct of a culpable nature) and to obtain directors' and
officers' insurance, if available on reasonable terms.
Item 16. Exhibits.
The following exhibits are filed with this Registration
Statement:
Exhibit
Number Exhibit Title
- ------ -------------
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich, A Professional
Corporation.
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of KPMG Peat Marwick LLP.
23.3 Consent of Gray Cary Ware & Freidenrich, A Professional Corporation,
is included in Exhibit 5.1.
24.1* Power of Attorney is included in the Signature Page contained in Part
II of the Registration Statement.
* Included with previous filing.
Item 17. Undertakings.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933 (the "Securities Act"); (ii) To reflect in the
prospectus any facts or events arising after the effective date of the
registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration
statement; (iii) To include any material information with respect to
the plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement; provided, however, that clauses (1)(i) and
(1)(ii) do not apply if the information required to be included in a
post-effective amendment by those paragraphs is contained in periodic
reports filed by the Registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the
low or high end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate offering
price set forth in the "Calculation of Registration Fee" table in the
effective registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold
at the termination of the offering.
The undersigned Registrant hereby undertakes that for purposes of
determining any liability under the Securities Act, each filing of the
Registrant's annual report pursuant to section 13(a) or section 15(d)
of the Securities Exchange Act of 1934 that is incorporated by
reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers, and
controlling persons of the Registrant pursuant to the foregoing
provisions, or otherwise, the Registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer, or
controlling person of the Registrant in the successful defense of any
action, suit, or proceeding) is asserted by such director, officer, or
controlling person in connection with the securities being registered,
the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by
it is against public policy as expressed in the Securities Act and
will be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For the purposes of determining any liability under the
Securities Act, the information omitted from the form of prospectus
filed as part of this registration statement in reliance upon
Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of the registration
statement as of the time it was declared effective.
(2) For the purposes of determining any liability under the
Securities Act, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering
thereof.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly
caused this Amendment No. 1 to the Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized, in the
City of Santa Clara, State of California, on the 30th day of June,
1995.
3COM CORPORATION
By: /s/ Christopher B. Paisley
------------------------------
Christopher B. Paisley
Vice President, Finance and
Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933, this
Amendment No. 1 to the Registration Statement on Form S-3 has been
signed below on June 30, 1995 by the following persons in the
capacities indicated.
Signature Title
/s/ Eric A. Benhamou* President, Chief Executive Officer,
- ----------------------------- and Director (Principal Executive Officer)
Eric A. Benhamou
/s/ Christopher B. Paisley Vice President, Finance and Chief Financial
- ----------------------------- Officer (Principal Financial Officer and
Christopher B. Paisley Principal Accounting Officer)
/s/ James L. Barksdale* Director
- -----------------------------
James L. Barksdale
/s/ Gordon A. Campbell* Director
- -----------------------------
Gordon A. Campbell
- ----------------------------- Director
David W. Dorman
/s/ Jean-Louis Gassee* Director
- -----------------------------
Jean-Louis Gassee
/s/ Stephen C. Johnson* Director
- -----------------------------
Stephen C. Johnson
/s/ Philip C. Kantz* Director
- -----------------------------
Philip C. Kantz
/s/ William F. Zuendt* Director
- -----------------------------
William F. Zuendt
*By: /s/ Christopher B. Paisley
---------------------------
(Christopher B. Paisley, Attorney-in-Fact)
INDEX TO EXHIBITS
Exhibit No.
- -----------
5.1 Opinion and Consent of Gray Cary Ware & Freidenrich,
A Professional Corporation
23.1 Consent of Deloitte & Touche LLP
23.2 Consent of KPMG Peat Marwick LLP
23.3 Consent of Gray Cary Ware & Freidenrich (included in Exhibit 5.1)
Exhibit 5.1
June 29, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: 3Com Corporation
Registration Statement on Form S-3,
filed on June 22, 1995 (Registration No. 33-60497)
Gentlemen and Ladies:
As legal counsel for 3Com Corporation, a California corporation
(the "Company"), we are rendering this opinion in connection with the
preparation and filing of a registration statement on Form S-3, filed
with the Securities and Exchange Commission on June 22, 1995 and as
may be amended (the "Registration Statement"), relating to the
registration under the Securities Act of 1933, as amended, of 483,309
shares of Common Stock issued by the Company pursuant to an
Acquisition and Exchange Agreement dated March 22, 1995 between the
Company and the shareholders of Sonix Communications Limited, a
company formed and registered in England.
We have examined such instruments, documents and records as we
deemed relevant and necessary for the basis of our opinion hereinafter
expressed. In such examination, we have assumed the genuineness of
all signatures and the authenticity of all documents submitted to us
as originals and the conformity to the originals of all documents
submitted to us as copies.
Based on such examination, we are of the opinion that the 483,309
shares of Common Stock of the Company being registered pursuant to the
Registration Statement and to be sold by the selling shareholders are
duly authorized shares of Common Stock and are validly issued, fully
paid, and nonassessable.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement referred to above and the use of our name
wherever it appears in said Registration Statement.
Respectfully submitted,
/s/ Gray Cary Ware & Freidenrich
- --------------------------------
GRAY CARY WARE & FREIDENRICH
A Professional Corporation
Exhibit 23.1
CONSENT OF DELOITTE & TOUCHE LLP
We consent to the use in Amendment No. 1 to Registration Statement No.
33-60497 of 3Com Corporation on Form S-3 of our report dated June 14,
1995, appearing in the Annual Report on Form 10-K of 3Com Corporation
for the year ended May 31, 1995, and to the use of our report dated
June 28, 1995 (which includes an emphasis paragraph relating to the
restatement of the supplemental consolidated financial statements for
a pooling of interests subsequent to the date of the historical
financial statements), appearing in the Prospectus, which is part of
this Registration Statement. We also consent to the reference to us
under the heading "Experts" in such Prospectus.
/s/ Deloitte & Touche LLP
- -------------------------
DELOITTE & TOUCHE LLP
San Jose, California
June 28, 1995
Exhibit 23.2
CONSENT OF KPMG PEAT MARWICK LLP
The Board of Directors
Primary Access Corporation:
We consent to the use of our report included herein relating to the
balance sheet of Primary Access Corporation as of October 3, 1993, and
the related statements of operations, stockholders' equity (deficit),
and cash flows for the fifty-three weeks ended October 3, 1993 and the
fifty-two weeks ended September 27, 1992 (not presented herein), and
to the reference to our firm under the heading "Experts" in the
Prospectus.
/s/ KPMG Peat Marwick LLP
San Diego, California
June 29, 1995
