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Exhibit 99.1
3Com Completes Separation of
Palm, Inc.
Santa Clara, Calif., July 28, 2000-- 3Com Corporation (Nasdaq: COMS)
announced today it has completed the separation of Palm, Inc. through
the distribution of all of its 532 million shares of Palm, Inc.
(Nasdaq:PALM). After the close of market yesterday, July 27, 3Com
shareholders were issued 1.4832 shares of Palm, Inc. common stock for
each share of 3Com common stock held. Cash will be issued in lieu of
fractional shares. As a result of the distribution of shares of Palm,
Inc. common stock, Palm is now a fully independent company.
"Separating Palm was a major step in our strategic transformation. It
sharpens our focus on high growth markets, technologies and
products," said Eric Benhamou, 3Com chairman and CEO. "3Com is
concentrating its resources on three distinct networking markets:
consumers, commercial enterprises, and network service providers. For
these customers 3Com delivers seamless, rich connectivity, anytime
anywhere - leveraging its leadership in broadband connections,
wireless access and IP telephony."
Calculating Cost Basis
On July 24, an information statement was mailed to 3Com shareholders
which included information on the distribution ratio, as well as
information on how to calculate the tax basis for 3Com and the Palm
shares received as a dividend. Applying the calculation method
outlined in that information statement and using the valuation of
3Com ex-dividend and Palm at the open of trading on July 28,
shareholders may allocate 21.02% of pre-distribution tax basis to
their 3Com shares and the remaining 78.98% to their Palm shares
(including any fractional interest). Shareholders should consult
their tax advisors regarding the application of this calculation to
their particular circumstances.
The above referenced information statement is also available at
http://www.3Com.com/investor. Shareholders who have questions about
the Palm, Inc. distribution may also call 3Com's Information Agent,
Corporate Investor Communications, at (888) 560-9626.
Stock Option Adjustment in Connection with the Palm Distribution
As communicated previously, 3Com will adjust employee stock options
in connection with the Palm distribution in order to preserve the
intrinsic value of the options. 3Com has calculated the relationship
(the "Ratio") by taking the closing price of 3Com common stock on the
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last trading day before distribution (July 27) and dividing it by the
opening price of 3Com common stock on the first trading day after
distribution (July 28). Based on the closing price of COMS on July
27, which was $64.5625, and the opening price of COMS on July 28,
which was $13.375, the stock option adjustment ratio is 4.8.
The number of new 3Com options outstanding after the Palm
distribution is equal to the Ratio of 4.8 multiplied by the number of
3Com options outstanding immediately before distribution. As of July
27, 2000 immediately before the distribution, there were
approximately 35.0 million employee options outstanding. Therefore,
the new number of 3Com stock options outstanding is approximately
169.1 million. Of this amount, approximately 60.0 million employee
options are vested and immediately exercisable.
The new number of 3Com shares outstanding on a fully diluted basis is
equal to the basic number of shares outstanding, which is
approximately 358.7 million, plus the number of stock options vested
and immediately exercisable. Based on this calculation, the new
number of 3Com shares outstanding on a fully diluted basis is
approximately 418.7million.
The new option strike prices for the outstanding options will also be
adjusted by taking exercise strike prices before distribution and
dividing them by the Ratio of 4.8. The options will continue to have
the same terms and conditions set forth in the 3Com Stock Plans
including vesting schedules.
For additional information on the Palm distribution, please visit
3Com's investor relations' Web site, at www.3com.com/investor, or
call our toll-free investor information line at 1-877-463-6326 (U.S.
only) or 703-386-9710 (internationally). Investor information on
Palm, Inc. can be obtained at www.palm.com, or by calling 1-877-OWN-
PALM (U.S. only). For questions regarding shareholder certificates or
address changes, please contact EquiServe investor relations
department: 781-575-3120.
