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EXHIBIT 99.1
FOR IMMEDIATE RELEASE
For more information, please contact:
Brian D. Johnson
3Com Public Relations
408.326.1962
[email protected]
Shirley Stacy
3Com Investor Relations
408.326.6301
[email protected]
3COM ANNOUNCES PALM DISTRIBUTION RATIO OF 1.484
- Reaffirms Stock Repurchase Plan Of Up To One Billion Dollars -
SANTA CLARA, Calif., June 14, 2000 -- 3Com Corporation (Nasdaq: COMS) today
announced that the final Palm distribution ratio is 1.484 shares of Palm for
each share of 3Com. The final ratio was calculated by taking the total number
of Palm shares owned by 3Com and dividing it by the number of shares of 3Com
common stock outstanding on the record date, July 11, 2000. 3Com owns
532,000,000 shares of Palm and as of July 11 there were 358,496,844 shares of
3Com common stock outstanding. The Palm shares will be distributed to 3Com
shareholders of record as of 5:00 p.m. Eastern Time on July 27, 2000.
"The distribution of Palm completes the commitment we made last September to
create two independent leadership companies in the field of handheld computing
and networking," said Eric Benhamou, 3Com Chairman and CEO and Palm Chairman.
"We are pleased to have reached this milestone earlier than originally
anticipated, while generating shareholder value in the process. 3Com's strategic
focus has been sharpened, and its potential to create further shareholder value
enhanced through this transformation. We remain firmly committed to our growth
objectives, and to the delivery of rich, yet simple network solutions, based
upon strategic technologies such as broadband connectivity, wireless access, and
IP telephony."
3Com shareholders will receive whole shares of Palm and cash payments for
fractional shares. Based on the ruling from the Internal Revenue Service, the
distribution of whole shares of Palm, Inc. common stock will be tax-free to 3Com
and its stockholders for U.S. federal income tax purposes. Cash received in lieu
of fractional shares will be taxable.
An information statement, which includes the final distribution ratio, as well
as information on how to calculate the share cost basis will be mailed to 3Com
shareholders of record during the week of July 17. This information statement
will also be available at
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http://www.3Com.com/investor. Shareholders who have questions about the Palm,
Inc. spin-off also may call 3Com's Information Agent, Corporate Investor
Communications, at (888) 560-9626.
As part of the distribution process, the derivative securities COMSV and PALMV
have begun trading and will continue through the July 27 distribution date.
These different stock symbols are due to the creation of two markets on the
Nasdaq for 3Com and Palm, the "regular way" market and the "ex-distribution"
market.
3Com trading in the regular way market, under the ticker symbol COMS, includes
the entitlement to the Palm dividend. 3Com trading in the ex-distribution
market, under the ticker symbol COMSV, trades without entitlement to the Palm
dividend. Palm trading in the regular way market, under the ticker symbol PALM,
represents Palm stock that is not held by 3Com. Palm trading in the ex-
distribution market, under the ticker symbol PALMV, represents Palm stock that a
3Com shareholder of record is due to receive on the distribution date.
Stock Option Adjustment in Connection with the Palm Distribution
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As communicated in the Palm S-1 public registration statement filed with the
Securities and Exchange Commission, 3Com anticipates adjusting employee stock
options in connection with the Palm distribution in order to preserve the
intrinsic value of the options as follows: 3Com will calculate the relationship
(the "Ratio") between the opening price of 3Com common stock on the first
trading day after distribution (July 28) and the closing price of 3Com common
stock on the last trading day before distribution (July 27). The number of new
3Com options outstanding after the Palm distribution will be equal to the
quotient of the number of 3Com options outstanding immediately before
distribution divided by the Ratio. The new option strike prices for the
underlying outstanding options will be equal to the product of the option
exercise strike prices before distribution multiplied by the Ratio. The options
will continue to have the same terms and conditions set forth in the 3Com Stock
Plans including vesting schedules.
Stock Option Conversion for Palm employees in Connection with the Palm
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Distribution
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3Com stock options held by Palm employees will be assumed by Palm and converted
into Palm options. This process will occur as follows: The option conversion
will be achieved by calculating the relationship (the "Palm Ratio") between the
opening price of Palm common stock on the first trading day after distribution
(July 28) and the closing price of 3Com common stock on the last trading day
before distribution (July 27). The number of new Palm options outstanding after
the Palm distribution will be equal to the quotient of the number of 3Com
options outstanding immediately before distribution divided by the Palm Ratio.
The new option strike prices for the underlying outstanding options will be
equal to the product of the 3Com option exercise strike prices before
distribution multiplied by the Palm Ratio. The options will continue to have the
same terms and conditions set forth in the 3Com Stock Plans including vesting
schedules.
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As of July 11, 2000 there were approximately 37.3 million employee options
outstanding, of which 3.5 million are held by Palm employees and will be
converted into Palm options. Approximately 10.7 million employee options are
vested and immediately exercisable, of which 1.0 million are held by Palm
employees. 3Com does not expect the number of employee stock options
outstanding to change materially between July 11 and July 27. The current
average strike price for total employee stock options is approximately $27.48
per share.
As previously announced, 3Com's Board of Directors authorized a stock repurchase
program in the amount of up to one billion dollars. Such purchases could be
used to offset shares created as a result of employee's exercising stock options
and employee stock purchase plan requirements. The amount and timing of shares
to be purchased will be based on several factors, including method of repurchase
selected, the price of the company's stock, the level of stock issuances under
the company's employee stock plans and market conditions. The Board has
authorized a two-year time limit on the repurchase authorizations, and except
for re-issuances in connection with employee stock programs, there are no
specific plans for shares that might be purchased.
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.
About 3Com Corporation
3Com simplifies how people connect to information and services through easy-to-
use, connectivity products and solutions for consumers and commercial
organizations. The company also provides access infrastructures and IP services
platforms for network service providers. For further information, visit
www.3com.com or the press site at www.3com.com/pressbox.
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About Palm, Inc.
Palm, Inc. is the leading provider of handheld computers (IDC, Dec 1999),
including the Palm III, Palm V and Palm VII series of handheld computers. The
Palm OS platform is the foundation for the industry-leading handheld computers
from the company as well as products from its strategic partners such as IBM,
QUALCOMM, Franklin Covey, Handspring, TRG and Symbol Technologies. Platform
licensees also include Sony and Nokia. Designed to support the increasingly
mobile and geographically dispersed nature of information management, the
company's handheld solutions allow people to carry their most critical
information in their pockets.
