UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
8-K
CURRENT
REPORT PURSUANT
TO
SECTION 13 OR 15(d) OF THE
SECURITIES
EXCHANGE ACT OF 1934
Date
of report (Date of earliest event reported): January 28, 2016
NETSCOUT
SYSTEMS, INC.
(Exact name of registrant as specified in
its charter)
Delaware
(State or other jurisdiction of
incorporation)
000-26251 |
04-2837575 |
|
(Commission File Number) |
(IRS Employer Identification No.) |
310 Littleton Road |
01886 |
|
(Address of principal executive offices) |
(Zip Code) |
(978) 614-4000
(Registrant’s telephone number, including area
code)
Not Applicable
(Former Name or Former Address, if
changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02. Results of Operations and Financial Condition.
The following information and the Exhibit attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
On January 28, 2016, NetScout Systems, Inc. (the “Company”) issued a press release regarding its financial results for the third quarter of fiscal year 2016 ended December 31, 2015, its expectations of future performance and its intention to hold a conference call regarding these topics. The Company's press release is furnished as Exhibit 99.1 to this report.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
The Company hereby furnishes the following exhibit:
99.1 Press release dated January 28, 2016.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
NETSCOUT SYSTEMS, INC. |
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By: |
/s/ Jean Bua |
Jean Bua |
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Executive Vice President and |
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Chief Financial Officer |
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Date: |
January 28, 2016 |
Exhibit Index
Exhibit Number |
Description |
99.1 |
Press release dated January 28, 2016. |
Exhibit 99.1
NetScout Systems Reports Strong Third-Quarter Financial Results
Company Refines Fiscal Year 2016 EPS Targets Within Prior Guidance Range as
Challenging Market Conditions Impact Full-Year Revenue Outlook
WESTFORD, Mass.--(BUSINESS WIRE)--January 28, 2016--NetScout Systems, Inc. (NASDAQ: NTCT), a market leader in service assurance and cybersecurity solutions, today announced financial results for its third quarter of fiscal year 2016 ended December 31, 2015.
“NetScout produced a strong third-quarter performance,” stated Anil Singhal, NetScout’s president and CEO. “We were pleased with the revenue performance across the enterprise and service provider markets. Our top-line results, in combination with disciplined spending to advance key development, sales and integration initiatives, enabled us to deliver strong profit margins, along with a robust EPS performance. During the quarter, we also continued to make good progress integrating our acquisition of the Danaher Communications Business.”
Notable third-quarter fiscal year 2016 integration milestones included:
Commenting on the Company’s outlook, Singhal concluded, “We’ve seen concern within our customer base, especially in the service provider market, regarding their own plans for calendar year 2016 due largely to the uncertain macroeconomic environment. As a result, we’ve taken a more cautious and conservative review of our customers’ projects and anticipated near-term spending plans. At this time, we believe it is prudent to revise our fiscal year 2016 guidance with a focus on preserving our earnings performance. We remain confident that our value proposition, breadth and depth of innovative solutions, excellent financial foundation and long-standing customer relationships will continue to serve us well as we move forward. We are in the early stages of an exciting transition from legacy products to integrated solutions that we believe can leverage our differentiated software technology, drive further traction with customers worldwide and help us further accelerate margin improvement moving into fiscal year 2017.”
Q3 FY16 Financial Results
NetScout’s financial results for the third quarter of fiscal year 2016 include a full quarter’s contribution from Danaher’s Communications Business, which NetScout acquired on July 14, 2015. The timing and magnitude of the contributions from the acquired businesses impact year-over-year comparisons for the three-month and nine-month periods ended December 31, 2015.
Total revenue for the third quarter of fiscal year 2016 was $307.7 million. Non-GAAP total revenue for the third quarter of fiscal year 2016 was $333.4 million. A reconciliation of GAAP and non-GAAP results is included in the attached financial tables.
Product revenue for the third quarter of fiscal year 2016 was $209.1 million, which was approximately 68% of total revenue. On a non-GAAP basis, product revenue for the third quarter of fiscal year 2016 was $216.4 million, which was approximately 65% of total revenue. Service revenue for the third quarter of fiscal year 2016 was $98.6 million, or approximately 32% of total revenue. On a non-GAAP basis, service revenue for fiscal year 2016’s third quarter was $116.9 million, which was approximately 35% of total revenue.
NetScout’s income from operations was $2.3 million in the third quarter of fiscal year 2016. Third-quarter fiscal year 2016 non-GAAP income from operations was $88.3 million. NetScout’s non-GAAP operating margin for the third quarter of fiscal year 2016 was 26.5%.
Net loss for the third quarter of fiscal year 2016 was $24.5 million, or $0.25 per diluted share. On a non-GAAP basis, net income for the third quarter was $57.2 million, or $0.58 per diluted share.
Other notable financial and operations highlights for the third quarter and first nine months of fiscal year 2016 included:
Guidance:
For fiscal year 2016, NetScout is updating its guidance.
Conference Call Instructions:
NetScout will host a
conference call to discuss its third-quarter fiscal year 2016 financial
results today at 8:30 a.m. ET. This call will be webcast live through
NetScout’s website at http://ir.netscout.com/phoenix.zhtml?c=92658&p=irol-irhome.
Alternatively, people can listen to the call by dialing is (785)
424-1051. The conference call ID is NTCTQ316. A replay of the call will
be available after 12:00 p.m. ET on January 28, 2016 for approximately
one week. The number for the replay is (800) 374-0328 for U.S./Canada
and (402) 220-0663 for international callers.
Use of Non-GAAP Financial Information:
To supplement
the financial measures presented in NetScout's press release in
accordance with accounting principles generally accepted in the United
States ("GAAP"), NetScout also reports the following non-GAAP measures:
non-GAAP total revenue, non-GAAP product revenue, non-GAAP service
revenue, non-GAAP income from operations, non-GAAP net income, non-GAAP
net income per diluted share, and non-GAAP operating margin. Non-GAAP
revenue eliminates the GAAP effects of acquisitions by adding back
revenue related to deferred revenue revaluation, revenue affected by the
timing of the delayed transfer of certain acquired foreign entities, and
revenue impacted by the amortization of intangible assets. Non-GAAP
income from operations includes the aforementioned revenue adjustments
and also removes expenses related to the amortization of acquired
intangible assets, stock-based compensation, certain expenses relating
to acquisitions including inventory fair value adjustments, depreciation
costs, compensation for post-combination services and business
development and integration costs. Non-GAAP net income includes the
aforementioned items related to non-GAAP income from operations, net of
related income tax effects. Non-GAAP diluted net income per share also
excludes these expenses as well as the related impact of all these
adjustments on the provision for income taxes. Non-GAAP operating margin
is calculated based on the non-GAAP financial metrics discussed above.
These non-GAAP measures are not in accordance with GAAP, should not be considered an alternative for measures prepared in accordance with GAAP (revenue, net income and diluted net income per share), and may have limitations in that they do not reflect all of NetScout’s results of operations as determined in accordance with GAAP. These non-GAAP measures should only be used to evaluate NetScout’s results of operations in conjunction with the corresponding GAAP measures. The presentation of non-GAAP information is not meant to be considered superior to, in isolation from or as a substitute for results prepared in accordance with GAAP.
NetScout believes these non-GAAP financial measures will enhance the reader’s overall understanding of NetScout’s current financial performance and NetScout's prospects for the future by providing a higher degree of transparency for certain financial measures and providing a level of disclosure that helps investors understand how the Company plans and measures its own business. NetScout believes that providing these non-GAAP measures affords investors a view of NetScout’s operating results that may be more easily compared to peer companies and also enables investors to consider NetScout’s operating results on both a GAAP and non-GAAP basis during and following the integration period of NetScout’s acquisitions. Presenting the GAAP measures on their own would not be indicative of NetScout’s core operating results. Furthermore, NetScout believes that the presentation of non-GAAP measures when shown in conjunction with the corresponding GAAP measures provide useful information to management and investors regarding present and future business trends relating to its financial condition and results of operations.
NetScout management regularly uses supplemental non-GAAP financial measures internally to understand, manage and evaluate its business and to make operating decisions. These non-GAAP measures are among the primary factors that management uses in planning and forecasting.
About NetScout Systems, Inc.
NetScout Systems, Inc.
(NASDAQ: NTCT) is a market leader in real-time service assurance and
cyber security solutions for today’s most demanding service provider,
enterprise and government networks. NetScout’s Adaptive Service
Intelligence (ASI) technology continuously monitors the service delivery
environment to identify performance issues and provides insight into
network-based security threats, helping teams to quickly resolve issues
that can cause business disruptions or impact user experience. NetScout
delivers unmatched service visibility and protects the digital
infrastructure that supports our connected world. To learn more, visit www.netscout.com.
Safe Harbor
Forward-looking statements in this release
are made pursuant to the safe harbor provisions of Section 21E of the
Securities Exchange Act of 1934 and other federal securities laws.
Investors are cautioned that statements in this press release, which are
not strictly historical statements, including without limitation, the
statements related to the financial guidance for NetScout, statements
related to the Company’s future stock repurchase activities, the
statements related to our value proposition, breadth and depth of
innovative solutions, excellent financial foundation and long-standing
customer relationships continuing to serve us well into the future, and
statements related to the transition from legacy products to integrated
solutions that can leverage our technology, drive further traction with
customers worldwide and help us accelerate margin improvement moving
into fiscal year 2017, constitute forward-looking statements which
involve risks and uncertainties. Actual results could differ materially
from the forward-looking statements due to known and unknown risk,
uncertainties, assumptions and other factors. Such factors include
slowdowns or downturns in economic conditions generally and in the
market for advanced network and service assurance solutions
specifically; the volatile foreign exchange environment; the Company’s
relationships with strategic partners; dependence upon broad-based
acceptance of the Company’s network performance management solutions;
the presence of competitors with greater financial resources than ours
and their strategic response to our products; changes in the various
factors impacting the Company’s decisions regarding timing and volume of
stock repurchases; our ability to retain key executives and employees;
lower than expected demand for the Company’s products and services; and
the ability of NetScout to successfully integrate the merged assets and
the associated technology and achieve operational efficiencies. For a
more detailed description of the risk factors associated with the
Company, please refer to the Company’s Annual Report on Form 10-K for
the fiscal year ended March 31, 2015 and the Company’s subsequent
Quarterly Reports on Form 10-Q, which are on file with the Securities
and Exchange Commission. NetScout assumes no obligation to update any
forward-looking information contained in this press release or with
respect to the announcements described herein.
©2016 NetScout Systems, Inc. All rights reserved. NetScout and the NetScout logo are registered trademarks or trademarks of NetScout Systems, Inc. and/or its subsidiaries and/or affiliates in the USA and/or other countries.
NetScout Systems, Inc. | |||||||||||||||||||||
Condensed Consolidated Statements of Operations | |||||||||||||||||||||
(In thousands, except per share data) | |||||||||||||||||||||
Three Months Ended | Nine Months Ended | ||||||||||||||||||||
December 31, | December 31, | ||||||||||||||||||||
2015 | 2014 | 2015 | 2014 | ||||||||||||||||||
Revenue: | |||||||||||||||||||||
Product | $ | 209,124 | $ | 76,446 | $ | 437,616 | $ | 198,765 | |||||||||||||
Service | 98,555 | 46,387 | 231,916 | 135,519 | |||||||||||||||||
Total revenue | 307,679 | 122,833 | 669,532 | 334,284 | |||||||||||||||||
Cost of revenue: | |||||||||||||||||||||
Product | 77,147 | 18,310 | 165,066 | 45,015 | |||||||||||||||||
Service | 28,968 | 8,672 | 62,532 | 26,158 | |||||||||||||||||
Total cost of revenue | 106,115 | 26,982 | 227,598 | 71,173 | |||||||||||||||||
Gross profit | 201,564 | 95,851 | 441,934 | 263,111 | |||||||||||||||||
Operating expenses: | |||||||||||||||||||||
Research and development | 65,131 | 18,864 | 149,085 | 56,872 | |||||||||||||||||
Sales and marketing | 91,386 | 34,836 | 208,631 | 104,304 | |||||||||||||||||
General and administrative | 30,973 | 13,391 | 82,477 | 33,211 | |||||||||||||||||
Amortization of acquired intangible assets | 11,249 | 821 | 21,901 | 2,539 | |||||||||||||||||
Restructuring charges | 572 | - | 468 | - | |||||||||||||||||
Total operating expenses | 199,311 | 67,912 | 462,562 | 196,926 | |||||||||||||||||
Income (loss) from operations | 2,253 | 27,939 | (20,628 | ) | 66,185 | ||||||||||||||||
Interest and other expense, net | (2,903 | ) | (512 | ) | (3,877 | ) | (1,186 | ) | |||||||||||||
Income (loss) before income tax expense | (650 | ) | 27,427 | (24,505 | ) | 64,999 | |||||||||||||||
Income tax expense | 23,857 | 9,798 | 248 | 24,661 | |||||||||||||||||
Net income (loss) | $ | (24,507 | ) | $ | 17,629 | $ | (24,753 | ) | $ | 40,338 | |||||||||||
Basic net income (loss) per share | $ | (0.25 | ) | $ | 0.43 | $ | (0.32 | ) | $ | 0.98 | |||||||||||
Diluted net income (loss) per share | $ | (0.25 | ) | $ | 0.42 | $ | (0.32 | ) | $ | 0.97 | |||||||||||
Weighted average common shares outstanding used in computing: | |||||||||||||||||||||
Net income per share - basic | 98,797 | 41,206 | 77,126 | 41,128 | |||||||||||||||||
Net income per share - diluted | 98,797 | 41,536 | 77,126 | 41,679 | |||||||||||||||||
NetScout Systems, Inc. | |||||||||
Consolidated Balance Sheets | |||||||||
(In thousands) | |||||||||
December 31, | March 31, | ||||||||
2015 | 2015 | ||||||||
Assets | |||||||||
Current assets: | |||||||||
Cash, cash equivalents and marketable securities | $ | 358,272 | $ | 206,285 | |||||
Accounts receivable and unbilled costs, net | 244,957 | 82,226 | |||||||
Inventories | 63,427 | 12,130 | |||||||
Prepaid expenses and other current assets | 87,216 | 36,643 | |||||||
Total current assets | 753,872 | 337,284 | |||||||
Fixed assets, net | 58,663 | 23,864 | |||||||
Goodwill and intangible assets, net | 2,769,408 | 247,625 | |||||||
Long-term marketable securities | 17,961 | 58,572 | |||||||
Other assets | 35,210 | 1,704 | |||||||
Total assets | $ | 3,635,114 | $ | 669,049 | |||||
Liabilities and Stockholders' Equity | |||||||||
Current liabilities: | |||||||||
Accounts payable | $ | 52,660 | $ | 13,077 | |||||
Accrued compensation | 100,817 | 36,553 | |||||||
Accrued other | 23,828 | 14,581 | |||||||
Deferred revenue and customer deposits | 255,822 | 123,422 | |||||||
Total current liabilities | 433,127 | 187,633 | |||||||
Other long-term liabilities | 6,889 | 6,479 | |||||||
Deferred tax liability | 330,254 | 10,639 | |||||||
Accrued long-term retirement benefits | 28,977 | 1,587 | |||||||
Long-term deferred revenue | 56,570 | 26,961 | |||||||
Long-term debt | 250,000 | - | |||||||
Total liabilities | 1,105,817 | 233,299 | |||||||
Stockholders' equity: | |||||||||
Common stock | 114 | 51 | |||||||
Additional paid-in capital | 2,627,807 | 298,101 | |||||||
Accumulated other comprehensive loss | (3,688 | ) | (4,645 | ) | |||||
Treasury stock, at cost | (381,942 | ) | (169,516 | ) | |||||
Retained earnings | 287,006 | 311,759 | |||||||
Total stockholders' equity | 2,529,297 | 435,750 | |||||||
Total liabilities and stockholders' equity | $ | 3,635,114 | $ | 669,049 | |||||
NetScout Systems, Inc. | ||||||||||||||||||||||||||||
Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures | ||||||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2015 | 2014 | ||||||||||||||||||||||||
GAAP Revenue | $ | 307,679 | $ | 122,833 | $ | 261,110 | $ | 669,532 | $ | 334,284 | ||||||||||||||||||
Product deferred revenue fair value adjustment | 4,959 | - | 3,107 | 8,066 | 18 | |||||||||||||||||||||||
Service deferred revenue fair value adjustment | 18,371 | - | 14,945 | 33,316 | - | |||||||||||||||||||||||
Delayed transfer entity adjustment (1) | - | - | 633 | 633 | - | |||||||||||||||||||||||
Amortization of acquired intangible assets (3) | 2,357 | - | 2,028 | 4,385 | - | |||||||||||||||||||||||
Non-GAAP Revenue | $ | 333,366 | $ | 122,833 | $ | 281,823 | $ | 715,932 | $ | 334,302 | ||||||||||||||||||
GAAP Gross profit | $ | 201,564 | $ | 95,851 | $ | 160,923 | $ | 441,934 | $ | 263,111 | ||||||||||||||||||
Product deferred revenue fair value adjustment | 4,959 | - | 3,107 | 8,066 | 18 | |||||||||||||||||||||||
Service deferred revenue fair value adjustment | 18,371 | - | 14,945 | 33,316 | - | |||||||||||||||||||||||
Inventory fair value adjustment | 9,485 | - | 12,773 | 22,258 | - | |||||||||||||||||||||||
Delayed transfer entity adjustment (1) | - | - | 535 | 535 | - | |||||||||||||||||||||||
Share-based compensation expense (2) | 917 | 379 | 921 | 2,313 | 1,074 | |||||||||||||||||||||||
Amortization of acquired intangible assets (3) | 17,122 | 905 | 16,835 | 34,715 | 2,762 | |||||||||||||||||||||||
Business development and integration expense (4) | 675 | - | 225 | 900 | - | |||||||||||||||||||||||
Compensation for post combination services (5) | 1,593 | 2 | 2,079 | 3,672 | 19 | |||||||||||||||||||||||
Acquisition related depreciation expense (6) | 103 | - | 87 | 190 | - | |||||||||||||||||||||||
Non-GAAP Gross profit | $ | 254,789 | $ | 97,137 | $ | 212,430 | $ | 547,899 | $ | 266,984 | ||||||||||||||||||
GAAP Income (loss) from operations | $ | 2,253 | $ | 27,939 | $ | (35,270 | ) | $ | (20,628 | ) | $ | 66,185 | ||||||||||||||||
Product deferred revenue fair value adjustment | 4,959 | - | 3,107 | 8,066 | 18 | |||||||||||||||||||||||
Service deferred revenue fair value adjustment | 18,371 | - | 14,945 | 33,316 | - | |||||||||||||||||||||||
Inventory fair value adjustment | 9,485 | - | 12,773 | 22,258 | - | |||||||||||||||||||||||
Delayed transfer entity adjustment (1) | - | - | 383 | 383 | - | |||||||||||||||||||||||
Share-based compensation expense (2) | 8,286 | 4,150 | 7,503 | 20,384 | 11,947 | |||||||||||||||||||||||
Amortization of acquired intangible assets (3) | 28,371 | 1,726 | 26,678 | 56,616 | 5,301 | |||||||||||||||||||||||
Business development and integration expense (4) | 5,763 | 4,698 | 14,544 | 23,669 | 6,175 | |||||||||||||||||||||||
Compensation for post combination services (5) | 8,887 | 312 | 21,661 | 30,569 | 1,393 | |||||||||||||||||||||||
Restructuring charges | 572 | - | (104 | ) | 468 | - | ||||||||||||||||||||||
Acquisition related depreciation expense (6) | 1,356 | - | 1,177 | 2,533 | - | |||||||||||||||||||||||
Non-GAAP Income from operations | $ | 88,303 | $ | 38,825 | $ | 67,397 | $ | 177,634 | $ | 91,019 | ||||||||||||||||||
GAAP Net income (loss) | $ | (24,507 | ) | $ | 17,629 | $ | (7,915 | ) | $ | (24,753 | ) | $ | 40,338 | |||||||||||||||
Product deferred revenue fair value adjustment | 4,959 | - | 3,107 | 8,066 | 18 | |||||||||||||||||||||||
Service deferred revenue fair value adjustment | 18,371 | - | 14,945 | 33,316 | - | |||||||||||||||||||||||
Inventory fair value adjustment | 9,485 | - | 12,773 | 22,258 | - | |||||||||||||||||||||||
Share-based compensation expense (2) | 8,286 | 4,150 | 7,503 | 20,384 | 11,947 | |||||||||||||||||||||||
Amortization of acquired intangible assets (3) | 28,371 | 1,726 | 26,678 | 56,616 | 5,301 | |||||||||||||||||||||||
Business development and integration expense (4) | 5,763 | 4,698 | 14,544 | 23,669 | 6,175 | |||||||||||||||||||||||
Compensation for post combination services (5) | 8,887 | 312 | 21,661 | 30,569 | 1,393 | |||||||||||||||||||||||
Restructuring charges | 572 | - | (104 | ) | 468 | - | ||||||||||||||||||||||
Acquisition related depreciation expense (6) | 1,356 | - | 1,177 | 2,533 | - | |||||||||||||||||||||||
Loss on extinguishment of debt (7) | - | - | 55 | 55 | - | |||||||||||||||||||||||
Income tax adjustments (8) | (4,299 | ) | (3,909 | ) | (50,868 | ) | (58,719 | ) | (8,727 | ) | ||||||||||||||||||
Non-GAAP Net income | $ | 57,244 | $ | 24,606 | $ | 43,556 | $ | 114,462 | $ | 56,445 | ||||||||||||||||||
GAAP Diluted Net income (loss) per share | $ | (0.25 | ) | $ | 0.42 | $ | (0.09 | ) | $ | (0.32 | ) | $ | 0.97 | |||||||||||||||
Share impact of non-GAAP adjustments identified above | 0.83 | 0.17 | 0.56 | 1.79 | 0.38 | |||||||||||||||||||||||
Non-GAAP Diluted net income per share | $ | 0.58 | $ | 0.59 | $ | 0.47 | $ | 1.47 | $ | 1.35 | ||||||||||||||||||
Shares used in computing non-GAAP diluted net income per share | 99,155 | 41,536 | 91,967 | 77,629 | 41,679 | |||||||||||||||||||||||
NetScout Systems, Inc. | ||||||||||||||||||||||||||||
Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures - Continued | ||||||||||||||||||||||||||||
(In thousands, except per share data) | ||||||||||||||||||||||||||||
Three Months Ended | Three Months Ended | Nine Months Ended | ||||||||||||||||||||||||||
December 31, | September 30, | December 31, | ||||||||||||||||||||||||||
2015 | 2014 | 2015 | 2015 | 2014 | ||||||||||||||||||||||||
(1 | ) | Delayed transfer entity adjustment included in these amounts | ||||||||||||||||||||||||||
is as follows: | ||||||||||||||||||||||||||||
Product Revenue | $ | - | $ | - | $ | 633 | $ | 633 | $ | - | ||||||||||||||||||
Cost of product revenue | - | - | (98 | ) | (98 | ) | - | |||||||||||||||||||||
Sales and Marketing | - | - | (152 | ) | (152 | ) | - | |||||||||||||||||||||
Other Income(Expense) | - | - | (383 | ) | (383 | ) | - | |||||||||||||||||||||
Total Delayed transfer entity adjustment | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||||||||||
(2 | ) | Share-based compensation expense included in these amounts | ||||||||||||||||||||||||||
is as follows: | ||||||||||||||||||||||||||||
Cost of product revenue | $ | 196 | $ | 85 | $ | 167 | $ | 465 | $ | 238 | ||||||||||||||||||
Cost of service revenue | 721 | 294 | 754 | 1,848 | 836 | |||||||||||||||||||||||
Research and development | 2,579 | 1,455 | 2,572 | 6,641 | 3,971 | |||||||||||||||||||||||
Sales and marketing | 2,718 | 1,221 | 2,240 | 6,361 | 3,419 | |||||||||||||||||||||||
General and administrative | 2,072 | 1,095 | 1,770 | 5,069 | 3,483 | |||||||||||||||||||||||
Total share-based compensation expense | $ | 8,286 | $ | 4,150 | $ | 7,503 | $ | 20,384 | $ | 11,947 | ||||||||||||||||||
(3 | ) | Amortization expense related to acquired software and product | ||||||||||||||||||||||||||
technology, tradenames, customer relationships included in these | ||||||||||||||||||||||||||||
amounts is as follows: | ||||||||||||||||||||||||||||
Total revenue adjustment | $ | 2,357 | $ | - | $ | 2,028 | $ | 4,385 | $ | - | ||||||||||||||||||
Cost of product revenue | 14,765 | 905 | 14,807 | 30,330 | 2,762 | |||||||||||||||||||||||
Operating expenses | 11,249 | 821 | 9,843 | 21,901 | 2,539 | |||||||||||||||||||||||
Total amortization expense | $ | 28,371 | $ | 1,726 | $ | 26,678 | $ | 56,616 | $ | 5,301 | ||||||||||||||||||
(4 | ) | Business development and integration expense included in | ||||||||||||||||||||||||||
these amounts is as follows: | ||||||||||||||||||||||||||||
Cost of product revenue | $ | 675 | $ | - | $ | 131 | $ | 806 | $ | - | ||||||||||||||||||
Cost of service revenue | - | - | 94 | 94 | - | |||||||||||||||||||||||
Research and development | - | - | 256 | 256 | - | |||||||||||||||||||||||
Sales and marketing | 187 | - | 271 | 1,441 | - | |||||||||||||||||||||||
General and administrative | 4,901 | 4,698 | 13,792 | 21,072 | 6,175 | |||||||||||||||||||||||
Total business development and integration expense | $ | 5,763 | $ | 4,698 | $ | 14,544 | $ | 23,669 | $ | 6,175 | ||||||||||||||||||
(5 | ) | Compensation for post combination services included in these | ||||||||||||||||||||||||||
amounts is as follows: | ||||||||||||||||||||||||||||
Cost of product revenue | $ | 142 | $ | 1 | $ | 328 | $ | 470 | $ | 13 | ||||||||||||||||||
Cost of service revenue | 1,451 | 1 | 1,751 | 3,202 | 6 | |||||||||||||||||||||||
Research and development | 4,027 | 211 | 8,262 | 12,310 | 631 | |||||||||||||||||||||||
Sales and marketing | 1,790 | 14 | 7,472 | 9,262 | 90 | |||||||||||||||||||||||
General and administrative | 1,477 | 85 | 3,848 | 5,325 | 653 | |||||||||||||||||||||||
Total compensation for post combination services | $ | 8,887 | $ | 312 | $ | 21,661 | $ | 30,569 | $ | 1,393 | ||||||||||||||||||
(6 | ) | Acquisition related depreciation expense included in these | ||||||||||||||||||||||||||
amounts is as follows: | ||||||||||||||||||||||||||||
Cost of product revenue | $ | 55 | $ | - | $ | 46 | $ | 101 | $ | - | ||||||||||||||||||
Cost of service revenue | 48 | - | 41 | 89 | - | |||||||||||||||||||||||
Research and development | 932 | - | 802 | 1,734 | - | |||||||||||||||||||||||
Sales and marketing | 145 | - | 125 | 270 | - | |||||||||||||||||||||||
General and administrative | 176 | - | 163 | 339 | - | |||||||||||||||||||||||
Total acquisition related depreciation expense | $ | 1,356 | $ | - | $ | 1,177 | $ | 2,533 | $ | - | ||||||||||||||||||
(7 | ) | Loss on extinguishment of debt included in these | ||||||||||||||||||||||||||
amounts is as follows | ||||||||||||||||||||||||||||
Interest and Other Income/(Expense), net | $ | - | $ | - | $ | 55 | $ | 55 | $ | - | ||||||||||||||||||
Total loss on estinguishment of debt | $ | - | $ | - | $ | 55 | $ | 55 | $ | - | ||||||||||||||||||
(8 | ) | Total income tax adjustment included in these | ||||||||||||||||||||||||||
amounts is as follows: | ||||||||||||||||||||||||||||
Tax effect of non-GAAP adjustments above | $ | (4,299 | ) | $ | (4,136 | ) | $ | (50,868 | ) | $ | (58,719 | ) | $ | (9,437 | ) | |||||||||||||
Tax impact of non-GAAP reconciling items in loss jurisdictions | - | 227 | - | - | 710 | |||||||||||||||||||||||
Total income tax adjustments | $ | (4,299 | ) | $ | (3,909 | ) | $ | (50,868 | ) | $ | (58,719 | ) | $ | (8,727 | ) | |||||||||||||
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