Edgar Filing: NETSCOUT SYSTEMS INC

425

Investor Presentation

Anil Singhal, President & CEO

NetScout Systems, Inc.

February 2015

Filed by NetScout Systems, Inc.

Pursuant to Rule 425 under the Securities Act of 1933, as amended

and deemed filed pursuant to Rule 14a-12

under the Securities Exchange Act of 1934, as amended

Subject Company: NetScout Systems, Inc.

(Commission File No. 000-26251)

The following is a copy of slide deck used by NetScout Systems, Inc. beginning on February 4, 2015.

NetScout

Systems

Overview

January

2015

1992-2015

NetScout

Systems,

Inc.

All

rights

reserved.

Additional Information and Where You Can Find It

NetScout’s Registration Statement on Form S-4, Proxy Statement and other

documents concerning the proposed acquisition of Danaher’s Communications

business have been filed with the Securities and Exchange Commission (the

“SEC”). Investors are urged to read the S-4 Registration Statement and Proxy

Statement, along with other relevant documents filed with the SEC as well any

amendments or supplements to those documents because they will contain

important information. Security holders may obtain a free copy of the Registration

Statement and Proxy Statement (when it is available) and other documents filed by

NetScout with the SEC at the SEC’s website at www.sec.gov. The Registration

Statement and Proxy Statement, along with other documents, may also be obtained

for free by contacting Andrew Kramer, Vice President of Investor Relations, by

telephone at 978-614-4000, by email at ir@netscout.com, or by mail at Investor

Relations, NetScout Systems, Inc., 310 Littleton Road, Westford, MA 01886.

This communication is not a solicitation of a proxy from any security holder of

NetScout. However, NetScout, Danaher and certain of their respective directors

and executive officers may be deemed to be participants in the solicitation of

proxies from NetScout’s stockholders in connection with the proposed transaction.

Information about NetScout’s directors and executive officers and their beneficial

ownership of NetScout’s common stock may be found in its preliminary proxy

statement filed with the SEC on January 9, 2015 as amended. This document can

obtained

free

charge

from

the

SEC

website

www.sec.gov.

NetScout

Systems

Overview

January

2015

1992-2015

NetScout

Systems,

Inc.

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rights

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Safe Harbor & Non-GAAP Financial Metrics

Forward-looking statements in this communication 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 presentation, which are not strictly

historical statements, including without limitation, the statements related to the timing associated with completing the merger with Danaher’s

communication business and the financial guidance for NetScout’s fourth fiscal quarter and other financial guidance, 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 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, our ability to retain key executives and employees, the failure to obtain, delays in obtaining or adverse conditions

related to obtaining shareholder or regulatory approvals; the anticipated tax treatment of the transaction and related transactions; risks relating to any

unforeseen changes to or the effects on liabilities, future capital expenditures, revenue, expenses, synergies, indebtedness, financial condition, losses

and future prospects; failure to consummate or delay in consummating the transaction for other reasons; 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 Registration Statement on Form S-4, Annual Report on Form 10-K for the fiscal year ended

March 31, 2014 and Quarterly Reports on Form 10-Q for the quarters ended June 30, 2014, September 30, 2014 and December 31, 2014, all of which

are on file with the Securities and Exchange Commission. NetScout assumes no obligation to update any forward-looking information contained in this

communication or with respect to the announcements described herein.

This presentation makes reference to certain non-GAAP measures such as non-GAAP revenue and non-GAAP earnings

per share. 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. The reconciliation of these non-GAAP metrics to the comparable GAAP metrics are set forth in the accompanying tables in the index of

this presentation and are available on our website at

Forward Looking Statements:

Regulation G Disclosure:

http://ir.netscout.com.

NetScout

Systems

Overview

January

2015

1992-2015

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Systems,

Inc.

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NetScout Today

NASDAQ: NTCT

Market Cap: $1.5B (as of 2/3/15)

* non-GAAP

•

Market leader in network and application performance

management differentiated by:

–

Core, patented technologies enabling the most powerful,

real-time information capture and analytics from the most

robust data source: network traffic

–

Deep domain expertise based on analyzing the world’s

most complex, “mission-critical”

IP-based networks

–

Leveraging core technology to support a diverse, global

and growing customer base spanning Fortune 1000

enterprises, top service providers and government

agencies

–

Innovator in providing operational intelligence to help

customers adapt to and thrive on major technology trends

•

International footprint with sales, support, and services

in over 30 countries

•

400 man-years in core technology investment in the

last 3 years; 70+ patents; numerous industry

accolades; Three Decades of focus & experience

•

FY ’14 revenue: $397M, $1.53 EPS*

•

1000+ employees worldwide

NetScout

Systems

Overview

January

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NetScout Investment Highlights

•

Market leader

in network and application

performance management

•

Award-winning solutions based on proprietary

software:

“ASI”

enabling

real-time

intelligence

and analytics

•

Working with leading service provider and

enterprise

customers

achieve

ROI

and

manage

risk

through

operational

intelligence

gained from NetScout analytics

•

Financial strength

built on profitability and cash

flow arising from increasing revenue within

scalable infrastructure

•

Capitalizing on attractive growth opportunities

being

shaped

today’s

trends

•

Announced

transformational

acquisition

Danaher’s Communications Business

Free

Cash

Flow

(non-GAAP, $ in

millions)

$309

$352

$397

FY '12

FY '13

FY '14

$1.10

$1.32

$1.53

FY '12

FY '13

FY '14

$57

$83

$97

FY '12

FY '13

FY '14

Total

Revenue

(non-GAAP, $ in millions)

Earnings

Per Share

(non-GAAP)

NetScout

Systems

Overview

January

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Mission-critical performance requires real-time, reliable,

scalable analytics and intelligence

Providing Visibility into the Network and the

Services and Applications that Run Over Them

Service Providers

Enterprise

ROI:

Reduce costs

Improve productivity

Generate incremental revenue

Risks:

Outages/downtime

Cyber attacks

Non-compliance/fines

Reputational damage

Voice

Data

Video

Healthcare

Financial Services

Government

Retail

Manufacturing

High Tech

Utilities & Energy

NetScout

Systems

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•

4G/LTE:

Global deployments

Consumer adoption

•

Services deployed (e.g.

VoLTE)

•

Network analytics

•

Geo-analytics

•

Virtualization

•

Voice/video/data

convergence

•

“Big Data”

Source: Ericsson Mobility Report, May 2014

Carrier Trends Driving Future Growth

Service

Providers:

Monetize

their

investment

and

retain

customers

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•

Mobility: “BYOD”

•

Virtualization

•

Unified communications

•

Converged infrastructure

•

Cloud-based services

•

“Big Data”

•

“Internet of things”

Enterprises:

“Uptime”

and user experience with cost-effective delivery

Enterprise Trends Driving Future Growth

NetScout

Systems

Overview

January

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Network Monitoring

Service Assurance

Cyber Intelligence

Packet

Flow

Intelligent Edge

Processing

Smart

Data Reduction

Third-Party

Platforms

BI/Analytics

CEM

Marketing Intelligence

NetScout Technology & Product Strategy

Scalable, Real-Time, Actionable Intelligence

Custom HW

COTS HW

NFV

Virtual Machine

ASI on a Brick

Proposed Acquisition of Danaher’s

Communications Business

NetScout

Systems

Overview

January

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Confidential Business Information

•

Announced on October 13, 2014

•

NetScout to acquire most of Danaher’s Communications

business*

•

Structured as Reverse Morris Trust

•

DHR shareholders will receive an aggregate of 62.5 million

NetScout

shares,

valued

approximately

$2.3

billion

•

DHR Shareholders will own approximately 59.5% of NetScout,

NTCT shareholders will own approximately 40.5% on a fully

diluted basis

•

NetScout senior management team to lead combined company;

NetScout board of directors to expand with the addition of DHR

EVP Jim Lico

•

Expected to close during the first half of NetScout’s FY16,

subject to approval by NetScout shareholders, regulatory

approvals and other conditions

Includes

TekComms,

Arbor

Networks,

VSS

Monitoring

and

Enterprise

Network

Solutions

(“ENS”) of FNET, excludes Data Communications Installer (“DCI”) and Communications

Service Providers (“CSP”) portfolios of FNET

Based on NTCT closing stock price of $36.55 on 2/3/15

Transaction Structure

DHR

Shareholders

NetScout

Shareholders

NetScout

DHR

~59.5% owned

by DHR stockholders and

~40.5% owned by current

NTCT stockholders

–

Danaher to spin-off or split-off (to be determined at later date) its

Communications business to DHR Shareholders

–

The separation is immediately followed by a merger with NetScout

NetScout

Systems

Overview

January

2015

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Systems,

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Go-to-Market

More global and diverse

Broader sales and

channel presence

worldwide

More customers and

more touch points within

the customer

Increased customer

mindshare

Best-In-Class

Solutions

Broader portfolio for

service providers

Extends reach into the

mid-tier enterprise

market

Jump-starts our entry

into Cyber Intelligence,

RAN optimization, BI

Next-Gen platform and

software

Financially Compelling

Combined $1.2B+

revenue base* positioned

for growth

Expected to be accretive

to non-GAAP earnings

Expected Year 2 run-rate

cost synergies of ~5% of

total combined cost base*

Continued prudent cost

control

Non-GAAP

First full year of combined operations

Roughly doubles our

total addressable

market to $8B+

Furthering our strategic

capabilities to our

customers

Increasing operating

margins and cash flow

Strategic Rationale for the Transaction

NetScout

Systems

Overview

January

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Broader portfolio of

complementary

offerings for service

providers

Together, we can offer

market-leading

troubleshooting and

performance monitoring

capabilities across a broad

spectrum of wireline/2G/3G

and 4G networks

Well positioned to win future

technology turns

Extends reach further into

Radio Access Networks and

Packet Flow Switches

Proven Business Intelligence

and Customer Experience

Management offerings

Extending our reach

from the high-end into

the mid-tier of the

enterprise market

Fluke Networks has a broad

range of network monitoring

solutions and troubleshooting

tools sold into the mid-sized

and smaller enterprises

Complementary vertical focus

in Software-as-a-Service,

Cloud and WiFi monitoring

Jump-starts our entry

into Cyber Intelligence

Arbor Networks is the market

leader in Distributed Denial of

Service attack detection and

mitigation

for service provider and large

enterprise networks

Highly complementary

adjacent sector

Arbor platform accelerates our

internal plans to help

customers address advanced

persistent threat, which we

believe is an emerging growth

area

Expanding our total addressable market to $8B+ and

capitalizing on investment in developing our Next-Gen platform

Best-In-Class Solutions

NetScout

Systems

Overview

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Systems,

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Stronger Go-to-Market Capabilities

Furthering our strategic capabilities to our customers

More global and

diverse

Broader customer footprint

outside of North America with

both service provider and

enterprise customers

International revenue will

increase from 25% of total

revenue to ~1/3 of total revenue

Extensive European and Asia-

Pacific operations for sales,

R&D and support

Strong relationships with Tier

One service providers in North

America, Europe and AP

1000s of enterprise customers

Broader sales and

channel presence

worldwide

Extensive direct sales presence

worldwide

Augmented direct presence with

very strong reseller channels

outside of the United States

Top VARs with the technical

knowledge and resources to

drive adoption in key

international markets like

Germany, Australia, and Japan

More customers

worldwide and more

touch points within

the customer

Loyal customer bases in both

the service provider and

enterprise markets

Excellent opportunities to

accelerate Arbor’s expansion

into the enterprise market

Compelling cross-selling

opportunities within the

combined NetScout-Fluke base

of enterprise customers

Increased customer mindshare

NetScout

Systems

Overview

January

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Systems,

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Service providers and enterprises have invested significantly in

their

infrastructures during the past decade but they lack holistic IT management

Current solutions offer limited capability (component management), ineffective

deployment

and

poor

quality

data

feeds

into

‘Big

Data’

analytics

Acquiring Danaher’s Communications business is a transformational

transaction for NetScout, providing:

Expanded solutions for addressing customer needs in growing end markets

Go-to-market advantages

Scale and leverage

Virtualization

Cloud

SDN

Mobility

BYOD

Internet

iPhone

Voice

Cable

IP Convergence

10gig

40gig

100gig

Positioned to Capitalize on Powerful Long-

Term Technology Trends

Compelling Financial Opportunity

NetScout

Systems

Overview

January

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Impressive Track Record of Performance

Revenue & EPS Performance

CAGRs at Mid-Point of Guidance

12% Revenue, 16% EPS

$337

$240

$157

$100

$40

$386

Free Cash Flow

Q3 FY ‘15

FY ’14

FY ’13

FY ’12

FY ’11

Cash and Securities

$241

$219

$154

$212

$229

Accounts Receivable

$83

$61

$74

$70

$63

Total Debt

$62

$68

Total Deferred Revenue

$135

$134

$121

$112

$100

Total Stockholders’

Equity

$432

$409

$372

$342

$320

Free Cash Flow

$49*

$97

$83

$57

$60

Balance Sheet Highlights

Total Liquidity Exceeds $490M

(* ytd)

($ in millions)

(

Non-GAAP)

Guidance as of 1/22/15

$290

$309

$352

$397

$455-

$460

$285

$334

$1.04

$1.10

$1.32

$1.53

$1.87 -

$1.91

$1.05

$1.35

FY '11

FY '12

FY '13

FY '14

FY '15

Guidance

9 Mos.

FY14

9 Mos.

FY15

$100

$200

$300

$400

FY '10

FY '11

FY '12

FY '13

FY '14

FY '15

YTD

FY '15 YTD FCF

FY '14 FCF

FY '13 FCF

FY '12 FCF

FY '11 FCF

FY '10 FCF

NetScout

Systems

Overview

January

2015

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Inc.

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•

Mid-cap technology leader positioned for solid double-digit revenue growth

on a much larger, $1B+ annual revenue base

•

We expect substantial operating leverage and strong free cash flow growth

as we return non-GAAP gross margin to prior levels in the high-70% range,

drive additional synergies across a range of functional areas and invest

prudently across a scalable infrastructure

•

Potential to support incremental EPS gains as we currently evaluate

strategies to drive tax efficiencies and capital deployment

Post-Acquisition NetScout

Operating targets attained

assuming ~10% annual revenue

growth

Current Operating

Targets

Post-Acquisition

5-Year Operating

Targets

Gross Margin

78 –

81%

75 –

78%+

Operating Margin

24 –

27%

26% –

31%+

NetScout

Systems

Overview

January

2015

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Systems,

Inc.

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•

Spent 400 man years in last 3 years on NextGen Technology

•

Significant growth drivers in Enterprise and Carrier segments

•

Acquisition of Danaher’s Communications assets is expected to increase

our TAM to $8B+

•

We have a track record of executing on both technology and

transformative acquisitions, like NetGen, in Nov. 2007

•

anticipate

that

superior

technology,

experience

and

execution

will

translate into significant ROI for current and future shareholders

Carrier / Service Provider

Enterprise

Performance

Service Assurance + Business

Intelligence + Customer

Experience Mgmt.

Network Performance Mgmt. +

Application Performance Mgmt.

Security

Distributed Denial of Service

(DDoS)

DDOS + Forensic (incl. Advanced

Persistent Threat)

Summary

Thank You

Appendix: Non-GAAP Measure Reconciliation

NetScout

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Overview

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Non-GAAP Measure Reconciliation:

Revenue, EPS and Free Cash Flow

Free Cash Flow

($ in millions)

YTD Q3 FY'15

Operating Cash Flow

57.3

Purchase of Fixed Assets & Intangible Assets

(8.8)

Free Cash Flow

48.5

(in thousands, except per share data)

For the Fiscal Years Ended

March 31,

2011

2012

2013

2014

GAAP Revenue

290,540

308,679

350,550

396,647

Deferred revenue fair value adjustment / Impact of accounting change

(797)

312

1,215

558

Non-GAAPRevenue

289,743

308,991

351,765

397,205

GAAP Gross profit

229,179

243,007

276,542

312,134

Deferred revenue fair value adjustment

132

312

1,215

558

Inventory fair value adjustment

453

Share-basedcompensationexpense(1)

352

419

577

969

Amortization of acquired intangible assets (2)

3,980

4,651

4,547

3,333

Compensation for post combination services (4)

Non-GAAP Gross profit

232,714

248,399

283,348

317,028

GAAP Income from operations

58,065

53,683

64,529

78,014

Deferred revenue fair value adjustment

132

312

1,215

558

Inventory fair value adjustment

453

Share-basedcompensationexpense(1)

6,439

8,702

9,580

12,930

Amortization of acquired intangible assets (2)

5,887

6,782

7,424

6,765

Business development and integration expense (3)

755

4,347

1,618

523

Compensation for post combination services (4)

438

2,721

2,215

Restructuring charges

603

1,065

Non-GAAPIncomefromoperations

70,349

74,867

88,605

101,005

GAAP Net income

37,265

32,428

40,609

49,106

Deferred revenue fair value adjustment / Impact of accounting change

(797)

312

1,215

558

Inventory fair value adjustment

453

Share-based compensation expense (1)

6,439

8,702

9,580

12,930

Amortization of acquired intangible assets (2)

5,887

6,782

7,424

6,765

Business development and integration expense (3)

755

4,715

1,618

523

Compensation for post combination services (4)

438

2,721

2,215

Loss on extinguishment of debt (5)

603

Income tax adjustments (6)

(4,668)

(7,700)

(8,671)

(7,879)

Restructuring charges

690

1,065

Non-GAAP Net income

44,881

46,970

56,014

64,218

GAAP Diluted Net income per share

0.87

0.76

0.96

1.17

Share impact of non-GAAP adjustments identified above

0.17

0.34

0.36

Non-GAAPDilutednetincomepershare

1.04

1.10

1.32

1.53

Shares used in computing non-GAAP diluted net income per share

42,973

42,750

42,322

41,955

(1) Share-based compensation expense included in these amounts is as follows:

Cost of product revenue

134

192

235

228

Cost of service revenue

218

227

342

741

Research and development

1,651

2,486

2,944

4,361

Sales and marketing

2,527

3,052

3,035

3,791

General and administrative

1,909

2,745

3,024

3,809

Total share-based compensation expense

6,439

8,702

9,580

12,930

(2) Amortization expense related to acquired software and product technology included in these amounts is as follows:

Cost of product revenue

3,980

4,651

4,547

3,333

Operating expenses

1,907

2,131

2,877

3,432

Total amortization expense

5,887

6,782

7,424

6,765

(3) Business development and integration expense included in these amounts is as follows:

Cost of service revenue

Research and development

1,545

Sales and marketing

346

General and administrative

755

2,446

1,593

523

Other income (expense), net

368

Total business development and integration expense

755

4,715

1,618

523

(4) Compensation for post combination services included in these

amounts is as follows:

Cost of product revenue

Cost of service revenue

Research and development

438

1,670

902

Sales and marketing

153

General and administrative

973

1,126

Total compensation for post combination services

438

2,721

2,215

Loss on extinguishment of debt included in this amount is as follows:

Interest and other income (expense), net

690

(6) Total income tax adjustment is as follows:

Tax effect of non-GAAP adjustments above at 38%

(5,021)

(8,452)

(9,149)

(8,737)

Tax impact of non-GAAP reconciling items in loss jurisdictions

752

478

858

Total income tax adjustments

(5,021)

(7,700)

(8,671)

(7,879)

NetScout Systems, Inc.

Reconciliation of Current GAAP to Current and Historical Non-GAAP Financial Measures

(In thousands, except per share data)

Three Months Ended

September 30,

2014

2013

2014

2013

GAAP Revenue

122,833

110,428

103,599

334,284

284,330

Deferred revenue fair value adjustment

140

419

Non-GAAP Revenue

122,833

110,568

103,599

334,302

284,749

GAAP Gross profit

95,851

86,826

82,004

263,111

224,102

Deferred revenue fair value adjustment

140

419

Share-based compensation expense (1)

379

256

407

1,074

740

Amortization of acquired intangible assets (2)

905

837

923

2,762

2,480

Compensation for post combination services (4)

Non-GAAP Gross profit

97,137

88,067

83,343

266,984

227,766

GAAP Income from operations

27,939

27,264

18,644

66,185

52,029

Deferred revenue fair value adjustment

140

419

Share-based compensation expense (1)

4,150

3,217

4,495

11,947

9,959

Amortization of acquired intangible assets (2)

1,726

1,697

1,779

5,301

5,051

Business development and integration expense (3)

4,698

1,477

6,175

482

Compensation for post combination services (4)

312

530

545

1,393

1,685

Non-GAAP Income from operations

38,825

32,926

26,940

91,019

69,625

GAAP Net income

17,629

17,294

11,233

40,338

32,430

Deferred revenue fair value adjustment

140

419

Share-based compensation expense (1)

4,150

3,217

4,495

11,947

9,959

Amortization of acquired intangible assets (2)

1,726

1,697

1,779

5,301

5,051

Business development and integration expense (3)

4,698

1,477

6,175

482

Compensation for post combination services (4)

312

530

545

1,393

1,685

Income tax adjustments (5)

(3,909)

(1,941)

(2,908)

(8,727)

(6,034)

Non-GAAP Net income

24,606

21,015

16,621

56,445

43,992

GAAP Diluted Net income per share

0.42

0.41

0.27

0.97

0.77

Share impact of non-GAAP adjustments identified above

0.17

0.09

0.13

0.38

0.28

Non-GAAP Diluted net income per share

0.59

0.50

0.40

1.35

1.05

Shares used in computing non-GAAP diluted net income per share

41,536

41,884

41,652

41,679

41,969

(1)

Share-based compensation expense included in these amounts

is as follows:

Cost of product revenue

238

174

Cost of service revenue

294

194

314

836

566

Research and development

1,455

1,157

1,490

3,971

3,316

Sales and marketing

1,221

944

1,235

3,419

2,952

General and administrative

1,095

860

1,363

3,483

2,951

Total share-based compensation expense

4,150

3,217

4,495

11,947

9,959

(2)

Amortization expense related to acquired software and product

technology included in these amounts is as follows:

Cost of product revenue

905

837

923

2,762

2,480

Operating expenses

821

860

856

2,539

2,571

Total amortization expense

1,726

1,697

1,779

5,301

5,051

(3)

Business development and integration expense included in

these amounts is as follows:

General and administrative

4,698

1,477

6,175

482

Total business development and integration expense

4,698

1,477

6,175

482

(4)

Compensation for post combination services included in these

amounts is as follows:

Cost of product revenue

Cost of service revenue

Research and development

211

209

215

631

703

Sales and marketing

115

General and administrative

274

284

653

842

Total compensation for post combination services

312

530

545

1,393

1,685

(5)

Total income tax adjustment is as follows:

Tax effect of non-GAAP adjustments above at 38%

(4,136)

(2,149)

(3,153)

(9,437)

(6,685)

Tax impact of non-GAAP reconciling items in loss jurisdictions

227

208

245

710

651

Total income tax adjustments

(3,909)

(1,941)

(2,908)

(8,727)

(6,034)

Three Months Ended

Nine Months Ended

December 31,

Supporting Slides

NetScout

Systems

Overview

January

2015

1992-2015

NetScout

Systems,

Inc.

All

rights

reserved.

NetScout

Arbor

TekComms

FNET

Telecom

Service Providers

Large

Enterprises

Small and Medium

Enterprises

Field Technicians

and Engineers

Performance

Monitoring

Subscriber

Troubleshooting

Network

Security

Core Functionality

NetScout does not offer similar products;

Additional ASI-based products planned

NetScout does not offer similar products

NetScout addresses different customers

Best-in-Class Solutions:

Expanding Our Product Portfolio and Extending Our Reach

NetScout

Systems

Overview

January

2015

1992-2015

NetScout

Systems,

Inc.

All

rights

reserved.

NetScout

TekComms

Arbor

FNET

Telecom

Service Providers

Large

Enterprises

Small and Medium

Enterprises

Field Technicians

and Engineers

Performance

Monitoring

Subscriber

Troubleshooting

Network

Security

•

NetScout and

TekComms offer service

assurance solutions for

telecom networks

•

Customers will benefit

from the union of the

different and

complementary service

assurance capabilities

from both businesses

•

NetScout: deployed

primarily for proactive

performance monitoring

•

TekComms: deployed

primarily for subscriber

troubleshooting

Core Functionality

Best-in-Class Solutions:

Tektronix Communications

NetScout

Systems

Overview

January

2015

1992-2015

NetScout

Systems,

Inc.

All

rights

reserved.

Proven Track Record for Successful Integration

11/1/07

4/1/11

10/3/11

11/21/11

7/19/12

11/1/12

$0.27

$0.48

$0.86

$1.04

$1.10

$1.32

$1.53

$1.05

$1.35

9.2%

14.5%

21.9%

22.4%

24.3%

24.2%

25.2%

25.4%

24.5%

27.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

$0.25

$0.50

$0.75

$1.00

$1.25

$1.50

$1.75

FY07

FY08

FY09

FY10

FY11

FY12

FY13

FY14

FY14 9

mos.

FY15 9

mos.

Non-

GAAP EPS

Non-

GAAP Operating Margin

NetScout

Systems

Overview

January

2015

1992-2015

NetScout

Systems,

Inc.

All

rights

reserved.

Non-GAAP Measure Reconciliation:

NetScout and DHR Communications Historical Information

12-months

6-months

12-months

6-months

12-months

6-months

FY2014

FY2015

CY2013

CY2014

FY2014

FY2015

Revenue:

Product

234,268

122,319

623,632

230,271

857,900

352,590

Service

162,379

89,132

211,259

113,032

373,638

202,164

Total GAAP revenue

396,647

211,451

834,891

343,303

1,231,538

554,754

Non-GAAP Adjustments

558

Total Non-GAAP revenue

397,205

211,469

834,891

343,303

1,232,096

554,772

Cost of revenue:

Product

51,219

26,705

195,077

86,502

246,296

113,207

Service

33,294

17,486

48,043

25,551

81,337

43,037

Total GAAP cost of revenue

84,513

44,191

243,120

112,053

327,633

156,244

Non-GAAP Adjustments

(4,336)

(2,569)

(9,344)

(5,021)

(13,680)

(7,590)

Total Non-GAAP cost of revenue

80,177

41,622

233,776

107,032

313,953

148,654

Gross profit - GAAP

312,134

167,260

591,771

231,250

903,905

398,510

Non-GAAP Adjustments

4,894

2,587

9,344

5,021

14,238

7,608

Gross profit - Non-GAAP

317,028

169,847

601,115

236,271

918,143

406,118

Operating expenses:

Research and development

70,454

38,008

147,553

82,185

218,007

120,193

Sales and marketing

129,611

69,468

276,896

133,095

406,507

202,563

General and administrative

30,623

19,820

30,623

19,820

Impairment of intangible assets

31,063

Amortization of acquired intangible assets

3,432

1,718

19,661

8,274

23,093

9,992

Total operating expenses - GAAP

234,120

129,014

475,173

223,554

709,293

352,568

Non-GAAP Adjustments

(18,097)

(11,361)

(73,130)

(17,422)

(91,227)

(28,783)

Total operating expenses - Non-GAAP

216,023

117,653

402,043

206,132

618,066

323,785

Income from operations - GAAP

78,014

38,246

116,598

7,696

194,612

45,942

Non-GAAP Adjustments

22,991

13,948

82,474

22,443

105,465

36,391

Income from operations - Non-GAAP

101,005

52,194

199,072

30,139

300,077

82,333

Interest and other expense, net

(158)

(674)

(158)

(674)

Income before income tax expense

77,856

37,572

116,598

7,696

194,454

45,268

Income tax expense - GAAP

28,750

14,863

32,792

2,311

61,542

17,174

Non-GAAP Adjustments

(7,879)

(4,818)

(40,068)

(8,720)

(47,947)

(13,538)

Income tax expense - Non-GAAP

36,629

19,681

72,860

11,031

109,489

30,712

Net income - GAAP

49,106

22,709

83,806

5,385

132,912

28,094

Non-GAAP Adjustments

15,112

9,130

42,406

13,723

57,518

22,853

Net income - Non-GAAP

64,218

31,839

126,212

19,108

190,430

50,947

WSO - diluted

41,955

41,732

62,500

104,455

104,232

Diluted net income per share - GAAP

1.17

0.54

1.27

0.27

Diluted net income per share - Non-GAAP

1.53

0.76

1.82

0.49

DHR Communications

Combined Proforma

NTCT