<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
-------------
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
(Mark One):
/X/ ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934 [NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996].
For the fiscal year ended December 31, 1998
/ / TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED].
For the transition period from to
------ ------
Commission file number
--------
A. Full title of the plan and the address of the plan, if
different from that of the issuer named below:
U.S. Robotics Corporation 401(k) Retirement Savings Plan
B. Name of issuer of the securities held pursuant to the plan and
the address of its principal executive office:
3Com Corporation
5400 Bayfront Plaza
Santa Clara, California 95052-8145
<PAGE>
U.S. Robotics Corporation 401(k)
Retirement Savings Plan
REQUIRED INFORMATION
The U.S. Robotics Corporation 401(k) Retirement Savings Plan (the "Plan") is
subject to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Therefore, in lieu of the requirements of Items 1-3 of Form 11-K,
the financial statements and schedules of the Plan for the two fiscal years
ended December 31, 1998 and 1997, which have been prepared in accordance with
the financial reporting requirements of ERISA, are attached hereto and
incorporated herein by reference.
<PAGE>
U.S. ROBOTICS CORPORATION
401(k) RETIREMENT SAVINGS PLAN
FINANCIAL STATEMENTS
AND SUPPLEMENTAL SCHEDULES
TOGETHER WITH
INDEPENDENT AUDITORS' REPORT
DECEMBER 31, 1998 AND 1997
MORRIS, DAVIS, CHAN
Certified Public Accountants
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
Independent Auditors' Report 1
Statements of Net Assets Available for Benefits 2
Statements of Changes in Net Assets Available for Benefits 3-4
Notes to Financial Statements 5-11
Supplemental Schedule: 12
Schedule of Reportable Transactions 13
</TABLE>
i
<PAGE>
INDEPENDENT AUDITORS' REPORT
Administrative Committee
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
We have audited the accompanying statements of net assets available for
benefits of U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN (the
Plan), as of December 31, 1998 and 1997, and the related statements of
changes in net assets available for benefits for the years then ended. These
financial statements are the responsibility of the Plan'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 audits 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 net assets available for benefits of the Plan as
of December 31, 1998 and 1997, and the changes in its net assets available
for benefits for the years then ended in conformity with generally accepted
accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule
of reportable transactions for the year ended December 31, 1998 is presented
for purposes of complying with the Department of Labor's Rules and
Regulations for Reporting and Disclosure under the Employee Retirement Income
Security Act of 1974 and is not a required part of the basic financial
statements. The supplemental schedule has been subjected to the auditing
procedures applied in our audit of the basic financial statements and, in our
opinion, is fairly stated in all material respects in relation to the basic
financial statements taken as a whole.
March 26, 1999
1
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
--------------- --------------
<S> <C> <C>
Assets:
Investments at fair value $ --- $ 63,119,224
Participant loans --- 2,016,905
--------------- --------------
Total investments --- 65,136,129
--------------- --------------
Cash --- ---
--------------- --------------
Receivables
Employer contributions --- 2,040,069
Participant contributions --- 1,254,461
Other --- 24,488
--------------- --------------
Total receivables --- 3,319,018
--------------- --------------
Total assets --- 68,455,147
Liabilities: --- ---
--------------- --------------
Net assets available for benefits $ --- $ 68,455,147
--------------- --------------
--------------- --------------
</TABLE>
2
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1998
<TABLE>
<CAPTION>
AETC
Collective IDS
Money Funds- Bond
Market Fund Equity Fund
------------------- --------------------- -------------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest and dividends $ 166,307 $ 26,663 $ 164,960
Net appreciation (depreciation) in fair value
of investments - 2,153,927 (2,337)
------------------- --------------------- -------------------
166,307 2,180,590 162,623
------------------- --------------------- -------------------
Contributions
Participants' elective deferral and rollovers 582,552 1,438,783 459,562
Employer - 393,111 132,992
------------------- --------------------- -------------------
582,552 1,831,894 592,554
------------------- --------------------- -------------------
Total additions 748,859 4,012,484 755,177
------------------- --------------------- -------------------
Deductions from net assets attributed to:
Benefits paid to participants 571,742 940,965 198,202
------------------- --------------------- -------------------
Total deductions 571,742 940,965 198,202
------------------- --------------------- -------------------
Net increase (decrease) prior to loans, net
and transfers between funds 177,117 3,071,519 556,975
Loans, net (45,259) (94,369) (27,457)
Transfers betweeen funds 11,478 1,425,171 (104,951)
Transfer to 3Com Corporation 401(k) Plan (5,116,631) (17,354,604) (4,125,831)
------------------- --------------------- -------------------
Net decrease (4,973,295) (12,952,283) (3,701,264)
Net assets available for benefits
Beginning of year 4,973,295 12,952,283 3,701,264
------------------- --------------------- -------------------
End of year $ - $ - $ -
------------------- --------------------- -------------------
------------------- --------------------- -------------------
</TABLE>
<TABLE>
<CAPTION>
IDS AIM New
Mutual Constellation Dimensions
Fund Fund Fund
-------------------- -------------------- ---------------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest and dividends $ 173,395 $ 20,350 $ 32,136
Net appreciation (depreciation) in fair value
of investments 193,634 480,923 2,375,344
-------------------- -------------------- ---------------------
367,029 501,273 2,407,480
-------------------- -------------------- ---------------------
Contributions
Participants' elective deferral and rollovers 871,052 1,267,563 1,870,779
Employer 256,217 314,439 501,022
-------------------- -------------------- ---------------------
1,127,269 1,582,002 2,371,801
-------------------- -------------------- ---------------------
Total additions 1,494,298 2,083,275 4,779,281
-------------------- -------------------- ---------------------
Deductions from net assets attributed to:
Benefits paid to participants 615,815 628,809 1,398,031
-------------------- -------------------- ---------------------
Total deductions 615,815 628,809 1,398,031
-------------------- -------------------- ---------------------
Net increase (decrease) prior to loans, net
and transfers between funds 878,483 1,454,466 3,381,250
Loans, net (27,776) (24,278) (118,134)
Transfers betweeen funds (234,350) (143,440) (154,474)
Transfer to 3Com Corporation 401(k) Plan (9,119,327) (7,230,852) (18,224,782)
-------------------- -------------------- ---------------------
Net decrease (8,502,970) (5,944,104) (15,116,140)
Net assets available for benefits
Beginning of year 8,502,970 5,944,104 15,116,140
-------------------- -------------------- ---------------------
End of year $ --- $ --- $ ---
-------------------- -------------------- ---------------------
-------------------- -------------------- ---------------------
</TABLE>
<TABLE>
<CAPTION>
3Com
Templeton Corporation Participant
Foreign Company Loan
Fund Stock Fund Fund Total
-------------------- --------------------- ------------------- -------------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest and dividends $ 15,798 $ 23,310 $ 92,912 $ 715,831
Net appreciation (depreciation) in fair value
of investments 32,892 (2,882,607) --- 2,351,776
-------------------- --------------------- ------------------- -------------
48,690 (2,859,297) 92,912 3,067,607
-------------------- --------------------- ------------------- -------------
Contributions
Participants' elective deferral and rollovers 835,544 1,271,379 --- 8,597,214
Employer 212,970 361,316 --- 2,172,067
-------------------- --------------------- ------------------- -------------
1,048,514 1,632,695 --- 10,769,281
-------------------- --------------------- ------------------- -------------
Total additions 1,097,204 (1,226,602) 92,912 13,836,888
-------------------- --------------------- ------------------- -------------
Deductions from net assets attributed to:
Benefits paid to participants 371,487 410,010 166,382 5,301,443
-------------------- --------------------- ------------------- -------------
Total deductions 371,487 410,010 166,382 5,301,443
-------------------- --------------------- ------------------- -------------
Net increase (decrease) prior to loans, net
and transfers between funds 725,717 (1,636,612) (73,470) 8,535,445
Loans, net (19,749) (56,111) 413,133 ---
Transfers betweeen funds (268,864) (530,570) - ---
Transfer to 3Com Corporation 401(k) Plan (5,457,028) (8,004,969) (2,356,568) (76,990,592)
-------------------- --------------------- ------------------- -------------
Net decrease (5,019,924) (10,228,262) (2,016,905) (68,455,147)
Net assets available for benefits
Beginning of year 5,019,924 10,228,262 2,016,905 68,455,147
-------------------- --------------------- ------------------- -------------
End of year $ --- $ --- $ --- $ ---
-------------------- --------------------- ------------------- -------------
-------------------- --------------------- ------------------- -------------
</TABLE>
3
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997
<TABLE>
<CAPTION>
AETC
Collective IDS
Money Funds- Bond
Market Fund Equity Fund
------------------ -------------------- -------------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest and dividends $ 207,888 $ 39 $ 252,387
Net appreciation (depreciation) in fair value
of investments --- 2,694,663 34,936
------------------ -------------------- -------------------
207,888 2,694,702 287,323
------------------ -------------------- -------------------
Contributions
Participants' elective deferral and rollovers 1,140,374 2,634,710 1,034,231
Employer 559,237 1,025,485 451,304
------------------ -------------------- -------------------
1,699,611 3,660,195 1,485,535
------------------ -------------------- -------------------
Total additions 1,907,499 6,354,897 1,772,858
------------------ -------------------- -------------------
Deductions from net assets attributed to:
Benefits paid to participants 290,050 526,746 176,759
------------------ -------------------- -------------------
Total deductions 290,050 526,746 176,759
------------------ -------------------- -------------------
Net increase (decrease) prior to loans, net
and transfers between funds 1,617,449 5,828,151 1,596,099
Loans, net (114,911) (172,795) (66,197)
Transfers betweeen funds 197,239 334,890 12,588
------------------ -------------------- -------------------
Net increase 1,699,777 5,990,246 1,542,490
Net assets available for benefits
Beginning of year 3,273,518 6,962,037 2,158,774
------------------ -------------------- -------------------
End of year $ 4,973,295 $ 12,952,283 $ 3,701,264
------------------ -------------------- -------------------
------------------ -------------------- -------------------
</TABLE>
<TABLE>
<CAPTION>
IDS AIM New
Mutual Constellation Dimensions
Fund Fund Fund
--------------------- -------------------- -------------------
<S> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest and dividends $ 1,157,984 $ 391,972 $ 1,076,165
Net appreciation (depreciation) in fair value
of investments 44,610 65,308 1,500,602
--------------------- -------------------- -------------------
1,202,594 457,280 2,576,767
--------------------- -------------------- -------------------
Contributions
Participants' elective deferral and rollovers 2,018,847 2,494,437 3,963,678
Employer 880,216 923,849 1,585,555
--------------------- -------------------- -------------------
2,899,063 3,418,286 5,549,233
--------------------- -------------------- -------------------
Total additions 4,101,657 3,875,566 8,126,000
--------------------- -------------------- -------------------
Deductions from net assets attributed to:
Benefits paid to participants 541,753 250,876 964,315
--------------------- -------------------- -------------------
Total deductions 541,753 250,876 964,315
--------------------- -------------------- -------------------
Net increase (decrease) prior to loans, net
and transfers between funds 3,559,904 3,624,690 7,161,685
Loans, net (158,370) (70,837) (176,467
Transfers betweeen funds (280,743) (348,697) (539,635
--------------------- -------------------- -------------------
Net increase 3,120,791 3,205,156 6,445,583
Net assets available for benefits
Beginning of year 5,382,179 2,738,948 8,670,557
--------------------- -------------------- -------------------
End of year $ 8,502,970 $ 5,944,104 $ 15,116,140
--------------------- -------------------- -------------------
--------------------- -------------------- -------------------
</TABLE>
<TABLE>
<CAPTION>
3Com
Templeton Corporation Participant
Foreign Company Loan
Fund Stock Fund Fund Total
--------------------- -------------------- ------------------ ----------
<S> <C> <C> <C> <C>
Additions to net assets attributed to:
Investment income
Interest and dividends $ 508,696 $ 74 $ 112,536 $ 3,707,741
Net appreciation (depreciation) in fair value
of investments (320,311) (1,031,531) --- 2,988,277
--------------------- -------------------- ------------------ -----------
188,385 (1,031,457) 112,536 6,696,018
--------------------- -------------------- ------------------ -----------
Contributions
Participants' elective deferral and rollovers 1,680,218 3,142,651 --- 18,109,146
Employer 654,398 1,472,336 --- 7,552,380
--------------------- -------------------- ------------------ -----------
2,334,616 4,614,987 --- 25,661,526
--------------------- -------------------- ------------------ -----------
Total additions 2,523,001 3,583,530 112,536 32,357,544
--------------------- -------------------- ------------------ -----------
Deductions from net assets attributed to:
Benefits paid to participants 306,189 448,322 146,388 3,651,398
--------------------- -------------------- ------------------ -----------
Total deductions 306,189 448,322 146,388 3,651,398
--------------------- -------------------- ------------------ -----------
Net increase (decrease) prior to loans, net
and transfers between funds 2,216,812 3,135,208 (33,852) 28,706,146
Loans, net (57,705) (186,493) 1,003,775 ---
Transfers betweeen funds 48,804 575,554 --- ---
--------------------- -------------------- ------------------ -----------
Net increase 2,207,911 3,524,269 969,923 28,706,146
Net assets available for benefits
Beginning of year 2,812,013 6,703,993 1,046,982 39,749,001
--------------------- -------------------- ------------------ -----------
End of year $ 5,019,924 $ 10,228,262 $ 2,016,905 $68,455,147
--------------------- -------------------- ------------------ -----------
--------------------- -------------------- ------------------ -----------
</TABLE>
4
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - DESCRIPTION OF THE PLAN
A. GENERAL:
The U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN (the "Plan") is a
defined contribution plan that covers substantially all employees of the U.S.
Robotics Corporation (the "Employer" or "Company"). It is subject to the
provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"). The
following description of the Plan provides only general information.
Participants should refer to the summary plan description for a more complete
description of the Plan's provisions.
B. ELIGIBILITY:
Each eligible employee shall commence participation on the entry date
corresponding with or next following the later of: (1) the date the employee
completes three months of service or (2) the date the employee attains age 21.
The Plan excludes certain categories of employees. The Plan's entry dates are
the first day of each calendar month.
A year of service, for purposes of eligibility and vesting, is credited for each
twelve consecutive month period in which an employee completes at least 1,000
hours of service.
C. PARTICIPANT CONTRIBUTIONS:
A participant may elect to make salary deferral contributions in the amount of
1% to 15% of the participant's eligible compensation. However, the maximum
before-tax salary deferral that a participant may contribute is limited to
$10,000 and $9,500 in 1998 and 1997, respectively.
D. EMPLOYER CONTRIBUTIONS:
The Employer will make a matching contribution equal to a percentage of eligible
compensation. In 1998 and 1997, the Employer contributed $.50 per dollar of
participant contributions, up to a maximum of 6% of eligible compensation in
each payroll period.
In addition to the above matching contributions, in Plan year 1997, the Employer
contributed an additional amount of $500 to all participants who were
authorizing contributions to the Plan, were actively employed, and either
completed 1,000 hours of service as of the last day of the Plan year or who
terminated their employment with the Company during the Plan year as a result of
attaining normal retirement age (65), death, or disability. No additional
contributions were made by the Employer during 1998.
5
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - DESCRIPTION OF THE PLAN - (CONTINUED)
E. PARTICIPANT ACCOUNTS:
Each participant's account is credited with the participant's contribution and
allocations of (a) the Company's contributions and (b) Plan earnings (or
losses). Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that can
be provided from the participant's vested account.
F. PARTICIPANT ELECTIONS:
Participants have the opportunity to change the percentage of their salary
deferred on the first day of any calendar month. At any time, participants may
change the allocation percentage of their deferrals to the funds or transfer
balances between funds, with the changes to be effective as soon as
administratively practical.
G. INVESTMENT OPTIONS:
MONEY MARKET FUND - The American Express Trust Money Market Fund's investment
objective is to provide as high a level of current interest income as is
consistent with maintaining liquidity and stability of principal.
AETC COLLECTIVE FUNDS - Equity - The American Express Trust Equity Index Fund is
an equity collective fund whose investment objective is to achieve a rate of
return as close as possible to the return of the Standard & Poor's 500 Stock
Index (S&P 500).
IDS BOND FUND - The Bond Fund's investment objective is to provide shareholders
with a high level of current income while attempting to conserve the value of
the investment and to continue a high level of income for the longest period of
time.
IDS MUTUAL FUND - The Mutual Fund's investment objective is to provide
shareholders with a balance of growth of capital and current income.
AIM CONSTELLATION FUND - The AIM Constellation Fund's investment objective is to
seek capital appreciation primarily through investments in common stock of
emerging growth companies.
NEW DIMENSIONS FUND - The New Dimensions Fund's investment objective is to
provide shareholders with long-term growth of capital.
6
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - DESCRIPTION OF THE PLAN - (CONTINUED)
G. INVESTMENT OPTIONS: (Continued)
TEMPLETON FOREIGN FUND - The Foreign Fund's investment objective is long-term
capital growth through a flexible policy of investing in stocks and debt
obligations of companies and governments outside of the United States.
3COM CORPORATION COMPANY STOCK FUND - The 3Com Corporation Company Stock Fund's
(formerly the Fund held U.S. Robotics Corporation Common Stock) investment
objective is capital appreciation through investments, primarily in shares of
3Com Corporation Common Stock.
H. VESTING:
Participants are fully vested in their salary deferral contributions and
rollover contributions. Participants' account balances arising from employer
contributions are vested based on a three-year graded vesting schedule. All
accounts are fully vested after three years. Full vesting also occurs upon
obtaining normal retirement age, death, or disability.
I. DISTRIBUTIONS:
Upon attaining normal retirement age, death, financial hardship, termination of
employment or disability, participants can receive distributions of their vested
account balances. Generally any distribution will be made in a single lump sum
with certain exceptions for those employees who participated under a previous
plan that offered forms of distribution in addition to single lump-sum payments.
Due to the Plan merger discussed in Note 6, there were no amounts due to
participants who had separated from service as of December 31, 1998. As of
December 31, 1997, amounts due to participants who had separated from service
were $441,814.
J. LOANS:
Loans to participants who are employees or parties-in-interest may be made for
any purpose. A participant may borrow a maximum of 50% of his account balance,
but not more than $50,000. The $50,000 limit is reduced by the highest
outstanding loan balance during the one year period preceding the date of a new
loan.
7
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 1 - DESCRIPTION OF THE PLAN - (CONTINUED)
K. ADMINISTRATION:
The day to day administration of the Plan is overseen by an Administrative
Committee consisting of Company officers. The Company is the Plan Administrator.
American Express Trust, Inc. served as Trustee and Record-keeper.
L. FORFEITURES:
Forfeitures resulting from the termination of a participant whose account is not
100% vested at such time, can be used by the Plan to reduce employer
contributions or to pay administrative expenses. For the year ended December 31,
1998, forfeitures were used to reduce employer matching contributions. For the
year ended December 31, 1997, forfeited non-vested accounts remained in a
forfeiture holding account.
M. ADMINISTRATIVE EXPENSES:
For the years ended December 31, 1998 and 1997, all administrative expenses of
the Plan were paid by the Company.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The financial statements of the Plan have been prepared in conformity with
generally accepted accounting principles as applied to employee benefit plans,
and in accordance with the terms of the Plan Agreement. A summary of the
significant accounting policies applied in the preparation of the accompanying
financial statements follows.
A. ESTIMATES:
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of changes in net assets during the reporting period.
Actual results could differ from these estimates.
8
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - (CONTINUED)
B. INVESTMENT VALUATION:
Investments are valued at quoted market prices which represent the net asset
value of shares held by the Plan at year end. In accordance with the policy of
stating investments at fair value, net unrealized appreciation (depreciation)
for the year is reflected in the Statements of Changes in Net Assets Available
for Benefits.
Participant loans are valued at cost, which approximates fair value.
C. INVESTMENT TRANSACTIONS AND INCOME:
Purchases and sales of securities are reflected on a trade-date basis. Realized
gains and losses on the sale of securities are computed on each individual
security.
Dividend income is recorded on the ex-dividend date. Income from other
investments is recorded on an accrual basis as earned.
The aggregate of (a) the net unrealized appreciation or depreciation in the fair
value of investments for the years ended December 31, 1998 and 1997, and (b) the
net realized gains (losses) on dispositions of investments during the years is
reflected as net appreciation (depreciation) in the fair value of investments.
D. PAYMENT OF BENEFITS:
Benefits are recorded when paid.
NOTE 3 - TAX STATUS
The Plan has received a determination letter dated April 24, 1998 from the
Internal Revenue Service stating that the Plan and related trust are designed in
accordance with Section 401(a) of the Internal Revenue Code, ("IRC"), therefore,
no provision has been made for taxes.
9
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 4 - INVESTMENTS
A schedule which represents the values as defined in Note 2 of the Plan's
investments at December 31, 1997 is as follows:
Investments at fair value as determined by quoted market prices:
<TABLE>
<CAPTION>
<S> <C>
Money Market Fund $ 4,724,188 *
AETC Collective Funds - Equity 12,438,766 *
IDS Bond Fund 3,509,631 *
IDS Mutual Fund 8,157,366 *
AIM Constellation Fund 5,503,340 *
New Dimensions Fund 14,482,240 *
Templeton Foreign Fund 4,728,685 *
3Com Corporation Company Stock Fund 9,575,008 *
-------------
$63,119,224
Participant loans, at estimated fair value 2,016,905
-------------
Total investments $2,016,905
=============
</TABLE>
* Represents 5% or more of net assets.
NOTE 5 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500
The following is a reconciliation of net assets available for benefits per the
financial statements at December 31, 1998 and 1997 to Form 5500:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Net assets available for benefits per the financial statement s $ --- $68,455,147
Less: Amounts allocated to terminated participants (441,814)
---
------------- ------------
Net assets available for benefits per Form 5500 $ --- $68,455,147
============= ============
</TABLE>
10
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998 AND 1997
NOTE 5 - RECONCILIATION OF FINANCIAL STATEMENTS TO FORM 5500 - (CONTINUED)
The following is a reconciliation of benefits paid to participants per the
financial statements for the years ended December 31, 1998 and 1997 to Form
5500:
<TABLE>
<CAPTION>
1998 1997
------------- -------------
<S> <C> <C>
Benefits paid to participants per the financial statements $ 5,301,443 $ 3,651,398
Add: Amounts allocated to withdrawing participants
at end of year --- 441,814
Less: Amounts allocated to withdrawing participants
at beginning of year (441,814) ---
------------- -------------
Benefits paid to participants per Form 5500
$4,859,629 $4,093,212
============== =============
</TABLE>
Amounts allocated to withdrawing participants are recorded on Form 5500 for
benefits claims that have been processed and approved for payment prior to year
end but not yet paid as of that date. Due to the Plan merger discussed in Note
6, there were no amounts allocated to withdrawing participants as of December
31, 1998.
NOTE 6 - PLAN MERGER
On June 12, 1997, U.S. Robotics Corporation merged with 3Com Corporation, with
3Com Corporation as the surviving corporate entity. Effective June 12, 1997, the
U.S. Robotics Company Stock Fund Investment Option was converted to the 3Com
Corporation Company Stock Fund. Each share of U.S. Robotics common stock was
converted to 1.75 shares of 3Com Corporation common stock pursuant to the terms
of the merger agreement. U.S. Robotics Corporation, as a wholly owned subsidiary
of 3Com Corporation continued as the "Employer" or "Company" and the Plan
Administrator until the Plan merged with and into the 3Com Corporation 401(k)
Plan during August 1998.
11
<PAGE>
SUPPLEMENTAL SCHEDULE
12
<PAGE>
U.S. ROBOTICS CORPORATION 401(k) RETIREMENT SAVINGS PLAN
EIN 36-3994412 Plan No. 001
Form 5500 Line 27d -- Schedule of Reportable Transactions
For the Year Ended December 31, 1998
<TABLE>
<CAPTION>
(a) (b) (c) (d)
Identity of Party Purchase Selling
Involved Description of Asset Price Price
- ------------------------------------------------ --------------------------------- -------------------- --------------------
<S> <C> <C> <C>
Category (I) - Single Transactions
American Express Trust, Inc. Money Market Fund II $ - $ 5,116,631
American Express Trust, Inc. Equity Index Fund - 17,354,608
American Express Trust, Inc. IDS Bond Fund - 4,125,831
American Express Trust, Inc. IDS Mutual Fund - 9,119,149
AIM Equity Fund Inc. Constellation Fund - 7,230,855
American Express Financial Advisors IDS New Dimensions Fund - 18,224,782
Templeton Funds Inc. Foreign Fund - 5,457,030
3Com Corporation Common Stock 8,002,418 -
3Com Corporation Common Stock - 8,002,418
Category (iii) - Series of Transactions
American Express Trust, Inc. Money Market Fund I 4,176,451 -
American Express Trust, Inc. Money Market Fund I - 4,602,185
American Express Trust, Inc. Money Market Fund II 2,194,714 -
American Express Trust, Inc. Money Market Fund II - 1,802,272
American Express Trust, Inc. Equity Index Fund 3,792,463 -
American Express Trust, Inc. Equity Index Fund - 1,030,318
American Express Financial Advisors IDS New Dimensions Fund 3,181,288 -
American Express Financial Advisors IDS New Dimensions Fund - 1,814,013
3Com Corporation Common Stock 2,676,247 -
3Com Corporation Common Stock - 927,969
</TABLE>
<TABLE>
<CAPTION>
(a) (e) (f) (g)
Identity of Party Lease Incurred with Cost
Involved Rental Transaction of Asset
- ------------------------------------------------ ------------- ----------------- -------------------
<S> <C> <C> <C>
Category (I) - Single Transactions
American Express Trust, Inc. N/A $ - $ 5,116,631
American Express Trust, Inc. N/A - 12,384,582
American Express Trust, Inc. N/A - 4,088,600
American Express Trust, Inc. N/A - 8,982,453
AIM Equity Fund Inc. N/A - 6,794,946
American Express Financial Advisors N/A - 14,403,801
Templeton Funds Inc. N/A - 5,635,626
3Com Corporation N/A - -
3Com Corporation N/A - 11,532,074
Category (iii) - Series of Transactions
American Express Trust, Inc. N/A - -
American Express Trust, Inc. N/A - 4,602,185
American Express Trust, Inc. N/A - -
American Express Trust, Inc. N/A - 1,802,272
American Express Trust, Inc. N/A - -
American Express Trust, Inc. N/A - 688,037
American Express Financial Advisors N/A - -
American Express Financial Advisors N/A - 1,418,357
3Com Corporation N/A - -
3Com Corporation N/A - 1,022,431
</TABLE>
<TABLE>
<CAPTION>
(a) (h) (i)
Current Value
Identity of Party of Asset on Net Gain
Involved Transaction Date or (Loss)
- ------------------------------------------------ --------------------- ------------------
<S> <C> <C>
Category (I) - Single Transactions
American Express Trust, Inc. $ 5,116,631 $ -
American Express Trust, Inc. 17,354,608 4,970,026
American Express Trust, Inc. 4,125,831 37,231
American Express Trust, Inc. 9,119,149 136,696
AIM Equity Fund Inc. 7,230,855 435,909
American Express Financial Advisors 18,224,782 3,820,981
Templeton Funds Inc. 5,457,030 (178,596)
3Com Corporation 8,002,418 -
3Com Corporation 8,002,418 (3,529,656)
Category (iii) - Series of Transactions
American Express Trust, Inc. 4,176,451 -
American Express Trust, Inc. 4,602,185 -
American Express Trust, Inc. 2,194,714 -
American Express Trust, Inc. 1,802,272 -
American Express Trust, Inc. 3,792,463 -
American Express Trust, Inc. 1,030,318 342,281
American Express Financial Advisors 3,181,288 -
American Express Financial Advisors 1,814,013 395,656
3Com Corporation 2,676,247 -
3Com Corporation 927,969 (94,462)
</TABLE>
13
<PAGE>
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities and Exchange
Act of 1934, the trustees (or other persons who administer the U.S. Robotics
Corporation 401(k) Retirement Savings Plan) have duly caused this annual report
to be signed on its behalf by the undersigned hereunto duly authorized.
U.S ROBOTICS CORPORATION 401(k)
RETIREMENT SAVINGS PLAN
------------------------------
(Name of plan)
Date: June 23,1999 By: /s/ Arthur Taylor
------------------------------
(Signature)
Name: Arthur Taylor
Title: Treasurer
3COM CORPORATION ON BEHALF
OF THE PLAN ADMINISTRATOR OF THE
U.S. ROBOTICS CORPORATION 401(k)
RETIREMENT SAVINGS PLAN
<PAGE>
[MORRIS, DAVIS & CHAN, LLP LETTERHEAD]
CONSENT OF MORRIS, DAVIS & CHAN, INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement
number 333-29099 on Form S-8 filed with the Securities and Exchange
Commission on June 12, 1997 and Registration Statement number 33-97632 on
Form S-8 filed with the Securities and Exchange Commission on October 2,
1995, as amended by Amendment No. 1 filed August 5, 1997, pertaining to our
report dated March 26, 1999 with respect to the financial statements and
schedule of the U.S. Robotics Corporation 401(k) Retirement Savings Plan
included in this Annual Report (Form 11-K) for the year ended December 31,
1998.
/s/ Morris, Davis & Chan
- -----------------------------
Morris, Davis & Chan
Oakland, California
March 26, 1999
