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Technology Stocks : 3Com Corporation (COMS) -- Ignore unavailable to you. Want to Upgrade?

To: Glenn D. Rudolph who wrote (14290)	3/5/1998 9:31:00 PM
From: jim bender	Read Replies (3) \| Respond to of 45548

WSJ Spin on 3Com FY97 Restatement Adds 2 Months From U.S. Robotics By JOELLE TESSLER Dow Jones Newswires NEW YORK -- In calculating earnings for 3Com Corp. (COMS) and U.S. Robotics as a combined company for fiscal 1997, 3Com has restated the figures to reflect two months from U.S. Robotics that weren't previously accounted for in the fiscal year report. 3Com acquired U.S. Robotics in June of 1997, which fell during 3Com's fiscal 1998 first quarter. 3Com Corp.'s Chief Financial Officer, Christopher Paisley, said the company restated the combined historical results because "some in the financial community" and the Securities and Exchange Commission expressed concern about the way 3Com had accounted for U.S. Robotics' fiscal 1997 results. U.S. Robotics' last reported quarter as an independent company ended in March of 1997, while 3Com's 1997 fiscal year ended two months later in May. 3Com therefore initially calculated the combined historical results for fiscal 1997 by using the earnings for the 12 months ended in May from 3Com - its regular fiscal year - and the numbers for the 12 months ended in March from U.S. Robotics. This left a "stub period" of results from U.S. Robotics - for April and May of 1997 - that did not show up in the combined operating results for fiscal 1997, Paisley said in a conference call late Thursday. 3Com previously reported the U.S. Robotics results for April and May of 1997 as an adjustment to its retained earnings in the first quarter of fiscal 1998. Paisley said 3Com has therefore restated its combined fiscal 1997 results using the 12 months ended in May 1997 for 3Com, just as it had before, but adjusting the months used for U.S. Robotics. The restated results include the numbers from July 1996 through May 1997 for U.S. Robotics. 3Com then added in U.S. Robotics' results from March 1997 a second time in order to have a complete 12-month year for U.S. Robotics. The restated fiscal 1997 results now include the numbers for April and May of 1997 from U.S. Robotics. Paisley also said 3Com reduced the merger restructuring charge recorded in the fiscal 1998 first quarter to $270 million from $426 million. He said the company overestimated the expenses associated with the acquisition and has chosen to recognize these expenses as they occur rather than account for them entirely in the quarter in which the deal was closed. 3Com Chairman and Chief Executive Eric Benhamou told Dow Jones that in upcoming quarters, the company could record merger-related line-item charges that would reflect any adjustments in business assumptions or any new charges associated with the merger. In addition, the company expects merger-related operating expenses of $1 million to $2 million a quarter in coming periods. Benhamou stressed, however, that these operating expenses will be nominal - amounting to less than one third of a penny per share. He added that the restatements announced Thursday will have no impact on 3Com's operating model going forward. Stressing that 3Com is in a quiet period for fiscal third quarter, ended in February, Paisley said he would not discuss the third quarter outlook. The company's third quarter numbers are due out later this month.