Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2016 | May. 16, 2016 | Sep. 30, 2015 | |
Document and Entity Information [Abstract] | |||
Entity Registrant Name | NETSCOUT SYSTEMS INC | ||
Trading Symbol | NTCT | ||
Entity Central Index Key | 1,078,075 | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Filer Category | Large Accelerated Filer | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2016 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Common Stock, Shares Outstanding | 93,757,507 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Public Float | $ 3,413,523,295 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 210,711 | $ 104,893 |
Marketable securities | 128,003 | 101,392 |
Accounts receivable and unbilled costs, net of allowance for doubtful accounts of $5,069 and $173 at March 31, 2016 and 2015, respectively | 247,199 | 82,226 |
Inventories | 58,029 | 12,130 |
Prepaid income taxes | 18,137 | 1,393 |
Deferred income taxes | 0 | 21,755 |
Prepaid expenses and other current assets (related party balances of $44,161 and $0, respectively) | 78,399 | 13,495 |
Total current assets | 740,478 | 337,284 |
Fixed assets, net | 62,033 | 23,864 |
Goodwill | 1,709,369 | 197,445 |
Intangible assets, net | 1,054,040 | 50,180 |
Deferred income taxes | 6,206 | 0 |
Long-term marketable securities | 13,361 | 58,572 |
Other assets | 7,356 | 1,704 |
Total assets | 3,592,843 | 669,049 |
Current liabilities: | ||
Accounts payable (related party balances of $5,893 and $0, respectively) | 43,969 | 13,077 |
Accrued compensation | 82,303 | 36,553 |
Accrued other | 32,045 | 14,474 |
Income taxes payable | 2,091 | 107 |
Deferred revenue and customer deposits | 296,648 | 123,422 |
Total current liabilities | 457,056 | 187,633 |
Other long-term liabilities | 2,903 | 1,995 |
Deferred tax liability | 285,359 | 10,639 |
Accrued long-term retirement benefits | 31,378 | 1,587 |
Long-term deferred revenue and customer deposits | 68,129 | 26,961 |
Long-term debt | 300,000 | 0 |
Contingent liabilities, net of current portion | 4,636 | 4,484 |
Total liabilities | $ 1,149,461 | $ 233,299 |
Commitments and contingencies (Note 16) | ||
Stockholders’ equity: | ||
Preferred stock, $0.001 par value: 5,000,000 shares authorized; no shares issued or outstanding at March 31, 2016 and 2015 | $ 0 | $ 0 |
Common stock, $0.001 par value: 150,000,000 shares authorized; 114,495,614 and 50,812,548 shares issued and 94,088,469 and 40,807,805 shares outstanding at March 31, 2016 and 2015, respectively | 114 | 51 |
Additional paid-in capital | 2,642,745 | 298,101 |
Accumulated other comprehensive loss | (1,501) | (4,645) |
Treasury stock at cost, 20,407,145 and 10,004,743 shares at March 31, 2016 and 2015, respectively | (481,366) | (169,516) |
Retained earnings | 283,390 | 311,759 |
Total stockholders’ equity | 2,443,382 | 435,750 |
Total liabilities and stockholders’ equity | $ 3,592,843 | $ 669,049 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Related Party Transaction [Line Items] | ||
Accounts receivable, allowance for doubtful accounts | $ 5,069 | $ 173 |
Related party prepaid expenses and other current assets | 78,399 | 13,495 |
Related party accounts payable | $ 43,969 | $ 13,077 |
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 5,000,000 | 5,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 150,000,000 | 150,000,000 |
Common stock, shares issued (in shares) | 114,495,614 | 50,812,548 |
Common stock, shares outstanding (in shares) | 94,088,469 | 40,807,805 |
Treasury stock (in shares) | 20,407,145 | 10,004,743 |
Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Related party prepaid expenses and other current assets | $ 44,161 | $ 0 |
Related party accounts payable | $ 5,893 | $ 0 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Revenue: | |||
Product | $ 633,408 | $ 272,895 | $ 234,268 |
Service | 322,011 | 180,774 | 162,379 |
Total revenue | 955,419 | 453,669 | 396,647 |
Cost of revenue: | |||
Product (related party balances of $25,055, $0 and $0, respectively) | 238,037 | 59,037 | 51,219 |
Service (related party balances of $5,736, $0 and $0, respectively) | 90,412 | 35,524 | 33,294 |
Total cost of revenue | 328,449 | 94,561 | 84,513 |
Gross profit | 626,970 | 359,108 | 312,134 |
Operating expenses: | |||
Research and development (related party balances of $16,701, $0 and $0, respectively) | 208,630 | 75,242 | 70,454 |
Sales and marketing (related party balances of $15,430, $0 and $0, respectively) | 293,335 | 136,446 | 129,611 |
General and administrative (related party balances of $16,055, $0 and $0, respectively) | 117,714 | 47,296 | 30,623 |
Amortization of acquired intangible assets | 32,373 | 3,351 | 3,432 |
Restructuring charges | 468 | 0 | 0 |
Total operating expenses | 652,520 | 262,335 | 234,120 |
Income (loss) from operations | (25,550) | 96,773 | 78,014 |
Interest and other income (expense), net: | |||
Interest income | 691 | 445 | 309 |
Interest expense | (6,329) | (773) | (768) |
Other income (expense), net (related party balances of ($379), $0 and $0, respectively) | (1,251) | (1,480) | 301 |
Total interest and other expense, net | (6,889) | (1,808) | (158) |
Income (loss) before income tax expense (benefit) | (32,439) | 94,965 | 77,856 |
Income tax expense (benefit) | (4,070) | 33,773 | 28,750 |
Net income (loss) | $ (28,369) | $ 61,192 | $ 49,106 |
Basic net income (loss) per share (in dollars per share) | $ (0.35) | $ 1.49 | $ 1.19 |
Diluted net income (loss) per share (in dollars per share) | $ (0.35) | $ 1.47 | $ 1.17 |
Weighted average common shares outstanding used in computing: | |||
Net income (loss) per share-basic (in shares) | 81,927 | 41,105 | 41,366 |
Net income (loss) per share-diluted (in shares) | 81,927 | 41,637 | 41,955 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Related Party Transaction [Line Items] | |||
Related party product | $ 238,037 | $ 59,037 | $ 51,219 |
Related party service | 90,412 | 35,524 | 33,294 |
Related party research and development | 208,630 | 75,242 | 70,454 |
Related party selling and marketing | 293,335 | 136,446 | 129,611 |
Related party general and administrative expense | 117,714 | 47,296 | 30,623 |
Related party other income (expense), net | (1,251) | (1,480) | 301 |
Affiliated Entity | |||
Related Party Transaction [Line Items] | |||
Related party product | 25,055 | 0 | 0 |
Related party service | 5,736 | 0 | 0 |
Related party research and development | 16,701 | 0 | 0 |
Related party selling and marketing | 15,430 | 0 | 0 |
Related party general and administrative expense | 16,055 | 0 | 0 |
Related party other income (expense), net | $ (379) | $ 0 | $ 0 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ (28,369) | $ 61,192 | $ 49,106 |
Other comprehensive income (loss): | |||
Cumulative translation adjustments | 1,446 | (6,311) | 1,887 |
Recognition of actuarial net gain from pension and other post-retirement plans, net of taxes of $215, $0 and $0 | 632 | 0 | 0 |
Changes in market value of investments: | |||
Changes in unrealized (losses) gains, net of taxes of $0, $0 and $0 | 3 | (12) | 5 |
Total net change in market value of investments | 3 | (12) | 5 |
Changes in market value of derivatives: | |||
Changes in market value of derivatives, net of (benefit) taxes of ($329), ($1,113) and $33 | (523) | (1,937) | 62 |
Reclassification adjustment for net gains included in net income, net of taxes of $915, $497 and $62 | 1,586 | 843 | 147 |
Total net change in market value of derivatives | 1,063 | (1,094) | 209 |
Other comprehensive income (loss) | 3,144 | (7,417) | 2,101 |
Total comprehensive income (loss) | $ (25,225) | $ 53,775 | $ 51,207 |
Consolidated Statements of Com7
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Statement of Comprehensive Income [Abstract] | |||
Recognition of actuarial net gain from pension and other post-retirement plans, taxes | $ 215 | $ 0 | $ 0 |
Changes in unrealized (losses) gains, taxes | 0 | 0 | 0 |
Changes in market value of derivatives, taxes (benefit) | (329) | (1,113) | 33 |
Reclassification adjustment for net gains included in net income, taxes | $ 915 | $ 497 | $ 62 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total | Common stock Voting | Additional Paid In Capital | Accumulated Other Comprehensive Income (Loss) | Treasury stock | Retained Earnings |
Beginning Balance at Mar. 31, 2013 | $ 371,903 | $ 49 | $ 253,202 | $ 671 | $ (83,480) | $ 201,461 |
Beginning Balance (in shares) at Mar. 31, 2013 | 49,007,491 | 7,540,570 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 49,106 | 49,106 | ||||
Unrealized net investment gains (losses) | 5 | 5 | ||||
Unrealized net gains (losses) on derivative financial instruments | 209 | 209 | ||||
Cumulative translation adjustments | 1,887 | 1,887 | ||||
Recognition of actuarial net gain from pension and other post-retirement plan | 0 | |||||
Issuance of common stock pursuant to exercise of options | $ 811 | $ 0 | 811 | |||
Issuance of common stock pursuant to exercise of options (in shares) | 117,650 | 117,650 | ||||
Issuance of common stock pursuant to vesting of restricted stock units | $ 1 | $ 1 | ||||
Issuance of common stock pursuant to vesting of restricted stock units (in shares) | 635,254 | |||||
Stock-based compensation expense for restricted stock units granted to employees | 12,178 | 12,178 | ||||
Issuance of common stock under employee stock purchase plan | 4,995 | 4,995 | ||||
Issuance of common stock under employee stock purchase plan (in shares) | 162,564 | |||||
Repurchase of treasury stock | (34,322) | $ (34,322) | ||||
Repurchase of treasury stock (in shares) | 1,216,605 | |||||
Excess tax benefit from share-based compensation awards | 2,388 | 2,388 | ||||
Ending Balance at Mar. 31, 2014 | 409,161 | $ 50 | 273,574 | 2,772 | $ (117,802) | 250,567 |
Ending Balance (in shares) at Mar. 31, 2014 | 49,922,959 | 8,757,175 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 61,192 | 61,192 | ||||
Unrealized net investment gains (losses) | (12) | (12) | ||||
Unrealized net gains (losses) on derivative financial instruments | (1,094) | (1,094) | ||||
Cumulative translation adjustments | (6,311) | (6,311) | ||||
Recognition of actuarial net gain from pension and other post-retirement plan | 0 | |||||
Issuance of common stock pursuant to exercise of options | $ 139 | $ 0 | 139 | |||
Issuance of common stock pursuant to exercise of options (in shares) | 23,850 | 23,850 | ||||
Issuance of common stock pursuant to vesting of restricted stock units | $ 1 | $ 1 | ||||
Issuance of common stock pursuant to vesting of restricted stock units (in shares) | 728,239 | |||||
Stock-based compensation expense for restricted stock units granted to employees | 15,685 | 15,685 | ||||
Issuance of common stock under employee stock purchase plan | 5,889 | 5,889 | ||||
Issuance of common stock under employee stock purchase plan (in shares) | 137,500 | |||||
Repurchase of treasury stock | (51,714) | $ (51,714) | ||||
Repurchase of treasury stock (in shares) | 1,247,568 | |||||
Excess tax benefit from share-based compensation awards | 2,814 | 2,814 | ||||
Ending Balance at Mar. 31, 2015 | 435,750 | $ 51 | 298,101 | (4,645) | $ (169,516) | 311,759 |
Ending Balance (in shares) at Mar. 31, 2015 | 50,812,548 | 10,004,743 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | (28,369) | (28,369) | ||||
Unrealized net investment gains (losses) | 3 | 3 | ||||
Unrealized net gains (losses) on derivative financial instruments | 1,063 | 1,063 | ||||
Cumulative translation adjustments | 1,446 | 1,446 | ||||
Recognition of actuarial net gain from pension and other post-retirement plan | $ 632 | 632 | ||||
Issuance of common stock pursuant to exercise of options (in shares) | 0 | |||||
Issuance of common stock pursuant to vesting of restricted stock units | $ 1 | $ 1 | ||||
Issuance of common stock pursuant to vesting of restricted stock units (in shares) | 736,170 | |||||
Stock-based compensation expense for restricted stock units granted to employees | 26,609 | 26,609 | ||||
Issuance of common stock under employee stock purchase plan | 10,560 | 10,560 | ||||
Issuance of common stock under employee stock purchase plan (in shares) | 447,252 | |||||
Repurchase of treasury stock | (311,850) | $ (311,850) | ||||
Repurchase of treasury stock (in shares) | 10,402,402 | |||||
Issuance of shares related to the Transaction | 2,305,611 | $ 62 | 2,305,549 | |||
Issuance of shares related to the Transaction (in shares) | 62,499,644 | |||||
Excess tax benefit from share-based compensation awards | 1,926 | 1,926 | ||||
Ending Balance at Mar. 31, 2016 | $ 2,443,382 | $ 114 | $ 2,642,745 | $ (1,501) | $ (481,366) | $ 283,390 |
Ending Balance (in shares) at Mar. 31, 2016 | 114,495,614 | 20,407,145 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Cash flows from operating activities: | |||
Net income (loss) | $ (28,369) | $ 61,192 | $ 49,106 |
Adjustments to reconcile net income (loss) to cash provided by operating activities, net of the effects of acquisitions: | |||
Depreciation and amortization | 140,071 | 19,709 | 18,260 |
Loss on disposal of fixed assets | 134 | 300 | 39 |
Deal related compensation expense and accretion charges | 6,728 | 153 | 151 |
Share-based compensation expense associated with equity awards | 28,351 | 16,580 | 12,930 |
Net change in fair value of contingent and contractual liabilities | 0 | (10) | (303) |
Deferred income taxes | (42,121) | 2,736 | 5,214 |
Other (gains) losses | (279) | 168 | (86) |
Changes in assets and liabilities | |||
Accounts receivable and unbilled costs | (23,259) | (21,801) | 13,451 |
Due from related party | (18,483) | 0 | 0 |
Inventories | 5,523 | (499) | (6,798) |
Prepaid expenses and other assets | (29,481) | (2,169) | (2,841) |
Accounts payable | 2,334 | 1,355 | 1,498 |
Accrued compensation and other expenses | 33,250 | 13,233 | 6,734 |
Due to related party | (6,743) | 0 | 0 |
Income taxes payable | 1,984 | (684) | 677 |
Deferred revenue | 25,645 | 16,670 | 12,914 |
Net cash provided by operating activities | 95,285 | 106,933 | 110,946 |
Cash flows from investing activities: | |||
Purchase of marketable securities | (100,278) | (133,212) | (128,122) |
Proceeds from maturity of marketable securities | 118,881 | 89,954 | 65,570 |
Purchase of fixed assets | (24,783) | (12,808) | (13,066) |
Purchase of intangible assets | (3,962) | (174) | (1,086) |
Acquisition of businesses, net of cash acquired | 27,700 | 0 | 0 |
Decrease (increase) in deposits | (150) | 55 | 123 |
Collection of contingently returnable consideration | 9,306 | 0 | 0 |
Capitalized software development costs | (1,625) | 0 | 0 |
Net cash provided by (used in) investing activities | 25,089 | (56,185) | (76,581) |
Cash flows from financing activities: | |||
Issuance of common stock under stock plans | 1 | 140 | 812 |
Payment of contingent consideration | 0 | 0 | (841) |
Treasury stock repurchases | (311,850) | (51,714) | (34,322) |
Proceeds from issuance of long-term debt, net of issuance costs | 294,623 | 0 | 0 |
Excess tax benefit from share-based compensation awards | 1,926 | 2,814 | 2,388 |
Net cash used in financing activities | (15,300) | (48,760) | (31,963) |
Effect of exchange rate changes on cash and cash equivalents | 744 | 829 | (256) |
Net increase in cash and cash equivalents | 105,818 | 2,817 | 2,146 |
Cash and cash equivalents, beginning of year | 104,893 | 102,076 | 99,930 |
Cash and cash equivalents, end of year | 210,711 | 104,893 | 102,076 |
Supplemental disclosures of cash flow information: | |||
Cash paid for interest | 3,807 | 0 | 0 |
Cash paid for income taxes | 50,658 | 29,233 | 21,456 |
Non-cash transactions: | |||
Transfers of inventory to fixed assets | 1,229 | 940 | 1,781 |
Additions to property, plant and equipment included in accounts payable | (1,065) | (187) | 124 |
Debt issuance costs settled through the issuance of additional debt | 5,377 | 0 | 0 |
Issuance of common stock under employee stock purchase plans | 10,560 | 5,889 | 4,995 |
Purchase consideration | |||
Non-cash transactions: | |||
Noncash business transaction | 2,276,256 | 0 | 0 |
Contingently returnable consideration | |||
Non-cash transactions: | |||
Noncash business transaction | $ 29,355 | $ 0 | $ 0 |
NATURE OF BUSINESS
NATURE OF BUSINESS | 12 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
NATURE OF BUSINESS | NATURE OF BUSINESS NetScout Systems, Inc., or NetScout or the Company, is an industry leader for real-time operational intelligence and performance analytics for service assurance and cyber security solutions that are used in many of the most demanding service provider, enterprise and government networks. Our solutions, based on proprietary Adaptive Service Intelligence (ASI) technology, help customers continuously monitor the service delivery environment to identify performance issues and to provide insight into network-based security threats. As a result, customers can quickly resolve issues that cause business disruptions or that adversely impact the user experience. We manufacture and market these products for integrated hardware and software solutions and are also well positioned to help customers deploy our software in commercial-off-the-shelf hardware and in virtualized form factors. Regardless of the platform, customers use our solutions to help drive ROI on their network and broader IT initiatives while reducing the tangible risks associated with downtime, poor service quality and compromised security. We report revenues and income under five operating segments that aggregate under a single reportable segment. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 12 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation The consolidated financial statements include the accounts of NetScout and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. The accompanying audited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. On July 14, 2015, the Company completed the acquisition of Danaher Corporation’s (Danaher) Communications Business (Communications Business), which included certain assets, liabilities, technology and employees within Tektronix Communications, VSS Monitoring, Arbor Networks and certain portions of the Fluke Networks Enterprise business, which excluded Danaher’s data communications cable installation business and its communication service provider business (the Transaction). The Transaction is more fully described in Note 7 below. The Transaction was recorded using the acquisition method of accounting; accordingly, the financial results of the acquisition are included in the accompanying audited consolidated financial statements for the periods subsequent to the acquisition. Fiscal Year End The fiscal year end of NetScout and its wholly-owned subsidiaries ends on March 31st, except for Fluke Networks Enterprise business, which ended on April 1, 2016. NetScout’s quarters end on the last calendar day of the months of June, September and December. The fiscal year 2016 quarter end dates of the entities acquired as part of the Communications Business were October 2nd and December 31st. The Company does not adjust for the difference in fiscal periods between the acquired entities and itself, as such difference would be less than 93 days, pursuant to Regulation S-X Rule 3A-02. References herein to Fiscal 2016, 2015 and 2014 refer to the fiscal years ended March 31, 2016, 2015 and 2014, respectively. Segment Reporting The Company reports revenues and income under five operating segments that aggregate under one reportable segment. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include those involving revenue recognition, valuation of goodwill and acquired assets and liabilities, valuation of the pension obligation and share-based compensation. These items are continuously monitored and analyzed by management for changes in facts and circumstances and material changes in these estimates could occur in the future. Cash and Cash Equivalents and Marketable Securities Under current authoritative guidance, NetScout has classified its investments as “available-for-sale” which are carried at fair value based on quoted market prices and associated unrealized gains or losses are recorded as a separate component of stockholders’ equity until realized. NetScout considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents and those investments with original maturities greater than three months to be marketable securities. At March 31, 2016 and periodically throughout the year, NetScout has maintained cash balances in various operating accounts in excess of federally insured limits. NetScout limits the amount of credit exposure by investing only with credit worthy institutions which we believe are those institutions with an investment grade rating for deposits. Revenue Recognition The Company exercises judgment and uses estimates in connection with determining the amounts of product and services revenues to be recognized in each accounting period. The Company derives revenues primarily from the sale of network management tools and security solutions for service provider and enterprise customers, which include hardware, software and service offerings. The majority of the Company’s product sales consist of hardware products with embedded software that are essential to providing customers the intended functionality of the solutions. The Company also sells stand-alone software solutions to provide customers with enhanced functionality. In addition, the Company sells hardware bundled with a software license. Product revenue is recognized upon shipment, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, and in the case of software products, when the customer has the rights and ability to access the software, fees are fixed or determinable and collection of the related receivable is reasonably assured. If any significant obligations to the customer remain post-delivery, typically involving obligations relating to installation and acceptance by the customer, revenue recognition is deferred until such obligations have been fulfilled. Because many of the Company’s solutions are comprised of both hardware and more than incidental software components, the Company recognizes revenue in accordance with authoritative guidance on both hardware and software revenue recognition. The Company’s service offerings include installation, integration, extended warranty and maintenance services, post-contract customer support (PCS), and other professional services including consulting and training. The Company generally provides software and/or hardware support as part of product sales. Revenue related to the initial bundled software and hardware support is recognized ratably over the support period. In addition, customers can elect to purchase extended support agreements for periods after the initial software/hardware warranty expiration. Support services generally include rights to unspecified upgrades (when and if available), telephone and internet-based support, updates and bug fixes. Consulting services are recognized upon delivery or completion of performance. Reimbursements of out-of-pocket expenditures incurred in connection with providing consulting services are included in services revenue, with the offsetting expense recorded in cost of service revenue. Training services include on-site and classroom training. Training revenues are recognized upon delivery of the training. Generally, the Company’s contracts are accounted for individually. However, when contracts are closely interrelated and dependent on each other, it may be necessary to account for two or more contracts as one to reflect the substance of the group of contracts. Multi-element arrangements are concurrent customer purchases of a combination of the Company’s product and service offerings that may be delivered at various points in time. For multi-element arrangements comprised only of hardware products and related services, the Company allocates the total arrangement consideration to the multiple elements based on each element’s fair value compared to the total relative selling price of all the elements. Each element’s selling price is based on management’s best estimate of selling price (BESP) paid by customers based on the element’s historical pricing when vendor-specific objective evidence (VSOE) or third-party evidence (TPE) does not exist. The Company has established BESP for product elements as the average or median selling price the element was recently sold for, whether sold alone or sold as part of a multiple element transaction. The Company also considers its overall pricing objectives and practices across different sales channels and geographies, and market conditions. The Company reviews sales of the product elements on a quarterly basis and updates when appropriate, its BESP for such elements to ensure that it reflects recent pricing experience. The Company has established VSOE for a majority of its service elements based on historical stand-alone sales or by the renewal rate offered to the customer. However certain business units acquired as part of the Transaction are unable to establish VSOE for undelivered elements. This occurs because the pricing for standalone sales does not occur in tight bands around a midpoint, and they are not contractually fixed. In these scenarios the Company has typically established BESP by creating wider bands around a midpoint for standalone transactions or in some cases using cost plus a margin for the underlying services and products. If VSOE of fair value does not exist for a deliverable, the Company uses its BESP for that deliverable. For multi-element arrangements comprised only of software products and related services, the Company allocates a portion of the total arrangement consideration to the undelivered elements, primarily support agreements and professional services, using vendor-specific objective evidence of fair value for the undelivered elements. The remaining portion of the total arrangement consideration is allocated to the delivered software, referred to as the residual method. VSOE of fair value of the undelivered elements is based on the price customers pay when the element is sold separately. The Company reviews the separate sales of the undelivered elements on a regular basis and updates when appropriate, its VSOE of fair value for such elements to ensure that it reflects recent pricing experience. If the Company cannot objectively determine the VSOE of the fair value of any undelivered software element, revenue is deferred until all elements are delivered and services have been performed, or until fair value can objectively be determined for any remaining undelivered elements. However, if the only undelivered element is maintenance and support, the entire arrangement fee is recognized over the service period. For multi-element arrangements comprised of a combination of hardware and software elements, the total arrangement consideration is bifurcated between the hardware and hardware related deliverables and the software and software related deliverables based on the relative selling prices of all deliverables as a group. Then, arrangement consideration for the hardware and hardware-related services is recognized upon delivery or as the related services are provided outlined above and revenue for the software and software-related services is allocated following the residual method and recognized based upon delivery or as the related services are provided. The Company’s products are distributed through its direct sales force and indirect distribution channels through alliances with resellers. Revenue arrangements with resellers are recognized on a sell-in basis; that is, when the Company delivers the product to the reseller. The Company records consideration given to a reseller as a reduction of revenue to the extent the Company has recorded revenue from the reseller. With limited exceptions, the Company’s return policy does not allow product returns for a refund. Returns have been insignificant to date. In addition, the Company has a history of successfully collecting receivables from the resellers. Commission Expense The Company recognizes commission expense related to the renewal of maintenance contracts at the time an order is booked. As a result, commission expense can be recognized in full even though the related revenue may not be fully recognized. Base commission expense on product revenue and corresponding new maintenance contracts is recognized in the same period as related product revenue, typically upon shipment. Uncollected Deferred Product Revenue Because of NetScout’s revenue recognition policies, there are circumstances for which the Company does not recognize revenue relating to sales transactions that have been billed, but the related account receivable has not been collected. While the receivable represents an enforceable obligation, for balance sheet presentation purposes, the Company has not recognized the deferred revenue or the related account receivable and no amounts appear in the consolidated balance sheets for such transactions. The aggregate amount of unrecognized accounts receivable and deferred revenue was $2.0 million and $2.0 million at March 31, 2016 and 2015 , respectively. Concentration of Credit Risk Financial instruments that potentially subject us to concentration of credit risk consist primarily of investments, trade accounts receivable and accounts payable. Our cash, cash equivalents, and marketable securities are placed with financial institutions with high credit standings. At March 31, 2016 , the Company had one direct customer which accounted for more than 10% of the accounts receivable balance, while no indirect channel partner accounted for more than 10% of the accounts receivable balance. At March 31, 2015 , the Company had one direct customer which accounted for more than 10% of the accounts receivable balance, while no indirect channel partner accounted for more than 10% of the accounts receivable balance. During the fiscal year ended March 31, 2016 , one direct customer accounted for more than 10% of total revenue, while no indirect channel partner accounted for more than 10% of total revenue. During the fiscal year ended March 31, 2015 , two direct customers accounted for more than 10% of total revenue, while no indirect channel partner accounted for more than 10% of total revenue. During the fiscal year ended March 31, 2014 , one direct customer accounted for more than 10% of total revenue, while no indirect channel partner accounted for more than 10% of total revenue. As disclosed parenthetically within the Company's consolidated balance sheet, the Company has a receivable from Danaher in the amount of $44.2 million that represents a concentration of credit risk at March 31, 2016 . Historically, the Company has not experienced any significant failure of its customers to meet their payment obligations nor does the Company anticipate material non-performance by its customers in the future; accordingly, the Company does not require collateral from its customers. However, if the Company’s assumptions are incorrect, there could be an adverse impact on its allowance for doubtful accounts. Trade Receivable Valuations Accounts receivable are stated at their net realizable value. The allowance against gross trade receivables reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. Inventories Inventories are stated at the lower of actual cost or net realizable value. Cost is determined by using the first-in, first-out (FIFO) method. Fixed Assets Fixed assets are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or anticipated useful life of the improvement. Gains and losses upon asset disposal are recognized in the year of disposition. Expenditures for replacements and building improvements are capitalized, while expenditures for maintenance and repairs are charged against earnings as incurred. Valuation of Goodwill, Intangible Assets and Other Acquisition Accounting Items The Company amortizes acquired definite-lived intangible assets over their estimated useful lives. Goodwill and other indefinite-lived intangible assets are not amortized but subject to annual impairment tests; more frequently if events or circumstances occur that would indicate a potential decline in their fair value. The Company performs the assessment annually during the fourth quarter and on an interim basis if potential impairment indicators arise. The Company has identified five reporting units: (1) NetScout, (2) Arbor Networks, (3) Tektronix Communications, (4) VSS and (5) FNET and an indefinite-lived trade name. To test impairment, the Company first assesses qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the intangible asset is impaired. If based on the Company's qualitative assessment it is more likely than not that the fair value of the intangible asset is less than its carrying amount, quantitative impairment testing is required. However, if the Company concludes otherwise, quantitative impairment testing is not required. During fiscal year 2016, the Company performed a quantitative analysis for goodwill and its non-amortizing intangible asset. The Company determined the fair value of the reporting unit's goodwill using established income and market valuation approaches and the fair value of its trade names using a forward-looking relief from royalty model. All goodwill and indefinite-lived intangible assets were estimated to be recoverable as of January 31, 2016. The Company completed one acquisition during the three year period ended March 31, 2016 . The acquisition method of accounting requires an estimate of the fair value of the assets and liabilities acquired as part of these transactions. In order to estimate the fair value of acquired intangible assets the Company uses a relief from royalty model which requires management to estimate: future revenues expected to be generated by the acquired intangible assets, a royalty rate which a market participant would pay related to the projected revenue stream, a present value factor which approximates a risk adjusted rate of return for a market participant purchasing the assets, and a technology migration curve representing a period of time over which the technology assets or some portion thereof are still being used. The Company is also required to develop the fair value for customer relationships acquired as part of these transactions which requires that we create estimates for the following items: a projection of future revenues associated with the acquired company’s existing customers, a turnover rate for those customers, a margin related to those sales, and risk adjusted rate of return for a market participant purchasing those relationships. The Transaction contained both contingently returnable consideration and contingent purchase consideration. The contingently returnable consideration represents a contingent right of return from Danaher to reimburse NetScout for certain cash awards to be paid by NetScout to employees of the Communications Business transferred to Newco for post-combination services on various dates through August 4, 2016. The contingently returnable consideration was $16.1 million , net of taxes at March 31, 2016. During the fiscal year ended March 31, 2016, certain post-combination cash retention payments have been disbursed. Danaher will reimburse the Company for those costs and NetScout will reimburse Danaher for the tax benefit. Because the right of offset has not been met, the Company recorded the gross amount of compensation as contingently returnable consideration and the tax benefit of $2.7 million as contingent purchase consideration. For additional information, see Note 7 of the Company's Notes to Consolidated Financial Statements. The acquisition of Simena LLC on November 18, 2011 also contained contingent consideration based on the ultimate settlement of assets and liabilities acquired as part of the transaction, and the former owners' future period of employment with the Company. Contingent consideration accounting requires the Company to estimate the probability of various settlement scenarios, the former owners' expected period of employment with NetScout, and a risk adjusted interest rate to present value the payment streams. Capitalized Software Development Costs Costs incurred in the research and development of the Company’s products are expensed as incurred, except for certain software development costs. Costs associated with the development of computer software are expensed prior to the establishment of technological feasibility and capitalized thereafter until the related software products are available for first customer shipment. Such costs are amortized using the straight-line method over the estimated economic life of the product, which generally does not exceed three years . Capitalized software development costs are periodically assessed for recoverability in the event of changes to the anticipated future revenue for the software products or changes in product technologies. Unamortized capitalized software development costs that are determined to be in excess of the net realizable value of the software products would be expensed in the period in which such a determination is made. Typically for accounting purposes, these R&D investments have not been capitalized because of the development methodology employed. The developments are added individually to the core code over a shorter period of time but marketed as a release once all portions are complete. Amortization included as cost of product revenue was $0 for the years ended March 31, 2016 , 2015 , and 2014 . The Company capitalized $1.6 million and $0 in software development costs in the years ended March 31, 2016 and 2015 . Derivative Financial Instruments Under authoritative guidance for derivative instruments and hedging activities, all hedging activities must be documented at the inception of the hedge and must meet the definition of highly effective in offsetting changes to future cash flows in order for the derivative to qualify for hedge accounting. Under the guidance, if an instrument qualifies for hedge accounting, the changes in the fair value each period for open contracts, measured at the end of the period, are recorded to other comprehensive income. Otherwise, changes in the fair value are recorded in earnings each period. Management must perform initial and ongoing tests in order to qualify for hedge accounting. In accordance with the guidance, the Company accounts for its instruments under hedge accounting. The effectiveness and a measurement of ineffectiveness of qualifying hedge contracts are assessed by the Company quarterly. The Company records the fair value of its derivatives in prepaid and other current assets and accrued other in the Company's consolidated balance sheet. The effective portion of gains or losses resulting from changes in the fair value of qualifying hedges are recorded in other comprehensive income (loss) until the forecasted transaction occurs, with any ineffective portion classified directly to the Company’s consolidated statement of operations based on the expense categories of the items being hedged. When forecasted transactions occur, unrealized gains or losses associated with the effective portion of the hedge are reclassified to the respective expense categories in the Company’s consolidated statement of operations. Gains or losses related to hedging activity are included as operating activities in the Company’s consolidated statement of cash flows. If the underlying forecasted transactions do not occur, or it becomes probable that they will not occur, the gain or loss on the related cash flow hedge is recognized immediately in earnings. Contingencies NetScout accounts for claims and contingencies in accordance with authoritative guidance that requires an estimated loss to be recorded from a claim or loss contingency when information available prior to issuance of our consolidated financial statements indicates that it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount of the loss can be reasonably estimated. If NetScout determines that it is reasonably possible but not probable that an asset has been impaired or a liability has been incurred or if the amount of a probable loss cannot be reasonably estimated, then in accordance with the authoritative guidance, we disclose the amount or range of estimated loss if the amount or range of estimated loss is material. Accounting for claims and contingencies requires NetScout to use its judgment. NetScout consults with legal counsel on those issues related to litigation and seeks input from other experts and advisors with respect to matters in the ordinary course of business. See Note 16 for a discussion of contingencies. Contingent liabilities include contingent consideration in connection with the Company’s acquisitions. Contingent consideration represents earnout payments in connection with the Company’s acquisitions and is recognized at fair value on the acquisition date and remeasured each reporting period with subsequent adjustments recognized in the consolidated statements of income. The Company discounts the contingent purchase consideration to present value using a risk adjusted interest rate at each reporting period. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. The Company believes its estimates and assumptions are reasonable, however, there is significant judgment involved. Changes in the fair value of contingent liabilities may result from changes in discount periods. The Company reflects changes in fair value due to probability changes in earnings in the consolidated statements of income. Earnout payments are reflected in cash flows from financing activities and the changes in fair value are reflected in cash flows from operating activities in the consolidated statements of cash flows. Share-Based Compensation NetScout recognizes compensation expense for all share-based payments granted. Under the fair value recognition provisions, share-based compensation is calculated net of an estimated forfeiture rate and compensation cost is only recognized for those shares expected to vest on a straight-line basis over the requisite service period of the award. Foreign Currency NetScout accounts for its reporting of foreign operations in accordance with guidance which establishes guidelines for the determination of the functional currency of foreign subsidiaries. In accordance with the guidance, NetScout has determined its functional currency for those foreign subsidiaries that are an extension of NetScouts U.S. operations to be the U.S. Dollar. Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. dollars are translated into United States dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period. Cumulative translation adjustments are reflected as a separate component of stockholders’ equity. NetScout will experience currency exchange risk with respect to foreign currency denominated expenses. In order to partially offset the risks associated with the effects of certain foreign currency exposures, NetScout has established a program that utilizes foreign currency forward contracts. Under this program, increases or decreases in foreign currency exposures are partially offset by gains or losses on forward contracts, to mitigate the impact of foreign currency transaction gains or losses. The Company does not use forward contracts to engage in currency speculation. All outstanding foreign currency forward contracts are recorded at fair value at the end of each fiscal period. The Company had a foreign currency loss of $1.5 million , a loss of $1.4 million and a gain of $315 thousand for the years ended March 31, 2016 , 2015 and 2014 , respectively. These amounts are included in other income (expense), net. Advertising Expense NetScout recognizes advertising expense as incurred. Advertising expense was $6.4 million , $3.1 million and $2.4 million for the years ended March 31, 2016 , 2015 and 2014 , respectively. Comprehensive Income (Loss) Comprehensive income (loss) is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) typically consists of unrealized gains and losses on marketable securities, unrealized gain (loss) on hedge contracts, actuarial gains and losses, and foreign currency translation adjustments. Income Taxes NetScout accounts for its income taxes under the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis, as well as the effect of any net operating loss and tax credit carryforwards. Income tax expense is comprised of the current tax liability or benefit and the change in deferred tax assets and liabilities. We evaluate the recoverability of deferred tax assets by considering all positive and negative evidence relating to future profitability. We weigh objective and verifiable evidence more heavily in this analysis. In situations where we conclude that we do not have sufficient objective and verifiable evidence to support the realizability of the deferred tax asset, we create a valuation allowance against it. Recent Accounting Standards In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for the Company beginning April 1, 2017. The Company is currently assessing the potential impact of the adoption of ASU 2016-09 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Section A - Leases: Amendments to the FASB Accounting Standards Codification (ASU 2016-02), its new standard on accounting for leases. This update requires the recognition of leased assets and lease obligations by lessees for those leases currently classified as operating leases under existing lease guidance. Short term leases with a term of 12 months or less are not required to be recognized. The update also requires disclosure of key information about leasing arrangements to increase transparency and comparability among organizations. ASU 2016-02 is effective for annual reporting periods beginning after December 31, 2018 and interim periods within those fiscal years, and early adoption is permitted. The Company is currently assessing the potential impact of the adoption of ASU 2016-02 on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. The Company adopted this standard prospectively in the third quarter of fiscal year 2016 as early adoption was permitted and prior periods were not retrospectively adjusted. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (ASU 2015-16), which eliminates the requirement to restate prior financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment be recognized in the reporting period in which the adjustment is identified. The Company adopted this standard in the second quarter of fiscal year 2016 as early adoption was permitted. In August 2015, the FASB issued ASU 2015-15, Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-Of-Credit Arrangements and Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (ASU 2015-15). The guidance in the previously issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferr |
CASH, CASH EQUIVALENTS AND MARK
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES | 12 Months Ended |
Mar. 31, 2016 | |
Cash and Cash Equivalents [Abstract] | |
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES | CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES Cash and cash equivalents consisted of money market instruments and cash maintained with various financial institutions at March 31, 2016 and 2015 . The following is a summary of marketable securities held by NetScout at March 31, 2016 classified as short-term and long-term (in thousands): Amortized Cost Unrealized Gains (Losses) Fair Value Type of security: U.S. government and municipal obligations $ 109,963 $ 4 $ 109,967 Commercial paper 16,172 — 16,172 Corporate bonds 1,864 — 1,864 Total short-term marketable securities 127,999 4 128,003 U.S. government and municipal obligations 13,349 12 13,361 Corporate bonds — — — Total long-term marketable securities 13,349 12 13,361 Total marketable securities $ 141,348 $ 16 $ 141,364 The following is a summary of marketable securities held by NetScout at March 31, 2015 , classified as short-term and long-term (in thousands): Amortized Cost Unrealized Gains (Losses) Fair Value Type of security: U.S. government and municipal obligations $ 88,651 $ 3 $ 88,654 Commercial paper 5,093 2 5,095 Corporate bonds 7,644 (1 ) 7,643 Total short-term marketable securities 101,388 4 101,392 U.S. government and municipal obligations 56,683 8 56,691 Corporate bonds 1,880 1 1,881 Total long-term marketable securities 58,563 9 58,572 Total marketable securities $ 159,951 $ 13 $ 159,964 Contractual maturities of the Company’s marketable securities held at March 31, 2016 and March 31, 2015 were as follows (in thousands): March 31, March 31, Available-for-sale securities: Due in 1 year or less $ 128,003 $ 101,392 Due after 1 year through 5 years 13,361 58,572 $ 141,364 $ 159,964 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 12 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair value. Level 1 refers to fair values determined based on quoted prices in active markets for identical assets. Level 2 refers to fair values estimated using significant other observable inputs, and Level 3 includes fair values estimated using significant non-observable inputs. The following tables present the Company’s financial assets and liabilities measured on a recurring basis using the fair value hierarchy at March 31, 2016 and 2015 (in thousands). Fair Value Measurements at March 31, 2016 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 210,711 $ — $ — $ 210,711 U.S. government and municipal obligations 41,116 82,212 — 123,328 Commercial paper — 16,172 — 16,172 Corporate bonds 1,864 — — 1,864 Derivative financial instruments — 191 — 191 Contingently returnable consideration — 16,131 16,131 $ 253,691 $ 98,575 $ 16,131 $ 368,397 LIABILITIES: Contingent consideration $ — $ — $ (7,293 ) $ (7,293 ) Derivative financial instruments — (158 ) — (158 ) $ — $ (158 ) $ (7,293 ) $ (7,451 ) Fair Value Measurements at March 31, 2015 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 104,893 $ — $ — $ 104,893 U.S. government and municipal obligations 46,564 98,781 — 145,345 Commercial paper — 5,095 — 5,095 Corporate bonds 9,524 — — 9,524 Derivative financial instruments — 15 — 15 $ 160,981 $ 103,891 $ — $ 264,872 LIABILITIES: Contingent consideration $ — $ — $ (4,484 ) $ (4,484 ) Derivative financial instruments — (1,664 ) — (1,664 ) $ — $ (1,664 ) $ (4,484 ) $ (6,148 ) This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. On a recurring basis, the Company measures certain financial assets and liabilities at fair value, including marketable securities and derivative financial instruments. The Company’s Level 1 investments are classified as such because they are valued using quoted market prices or alternative pricing sources with reasonable levels of price transparency. The Company’s Level 2 investments are classified as such because fair value is being calculated using data from similar but not identical sources, or a discounted cash flow model using the contractual interest rate as compared to the underlying interest yield curve. The Company's derivative financial instruments consist of forward foreign exchange contracts and are classified as Level 2 because the fair values of these derivatives are determined using models based on market observable inputs, including spot prices for foreign currencies and credit derivatives, as well as an interest rate factor. The Company classifies municipal obligations as level 2 because the fair values are determined using quoted prices from markets the Company considers to be inactive. Commercial paper is classified as Level 2 because the Company uses market information from similar but not identical instruments and discounted cash flow models based on interest rate yield curves to determine fair value. For further information on the Company's derivative instruments refer to Note 9. The Company's Level 3 asset and liabilities consist of contingently returnable consideration and contingent purchase consideration, respectively. The Company's contingently returnable consideration represents a contingent right of return from Danaher to reimburse NetScout for cash awards to be paid by NetScout to employees of the Communications Business transferred to Newco (as defined below) for post-combination services on various dates through August 4, 2016 as part of the Transaction. The contingently returnable consideration is classified as Level 3 because the fair value of the asset was determined using assumptions developed by management in determining the estimated cash awards expected to be paid through August 4, 2016 after applying an assumed forfeiture rate. The contingently returnable consideration of $16.1 million , net of taxes as of March 31, 2016 is included as prepaid expenses and other current assets in the Company’s consolidated balance sheet. During the fiscal year ended March 31, 2016 , certain post-combination cash retention payments have been disbursed. Danaher will reimburse the Company for those costs and NetScout will reimburse Danaher for the Company's estimated tax benefit. Because the right of offset has not been met, the Company recorded the gross amount of compensation as contingently returnable consideration and the tax benefit of $2.7 million as contingent purchase consideration. For additional information, see Note 7 of the Company's Notes to Consolidated Financial Statements. The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial liabilities for the year ended March 31, 2016 (in thousands): Contingent Purchase Consideration Contingently Returnable Consideration Balance at March 31, 2015 $ (4,484 ) $ — (Increase) / decrease in fair value and accretion expense (included within research and development expense) (152 ) — Contingently returnable consideration — 19,125 Increase in fair value (21 ) 3,676 Gross presentation of contingently returnable consideration to contingent purchase consideration (2,636 ) 2,636 Payments received — (9,306 ) Balance at March 31, 2016 $ (7,293 ) $ 16,131 Deal-related compensation expense and accretion charges related to the contingent consideration for the fiscal year ended March 31, 2016 was $152 thousand and was included as part of earnings. The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial liabilities for the year ended March 31, 2015 (in thousands): Contingent Purchase Consideration Contingent Contractual Non-compliance Liability Balance at March 31, 2014 $ (4,291 ) $ (49 ) (Increase) / decrease in fair value and accretion expense (included within research and development expense) (193 ) 49 Balance at March 31, 2015 $ (4,484 ) $ 0 The Company had updated the probabilities used in the fair value calculation of the contingent liabilities at March 31, 2015, which reduced the liability by $9 thousand and is included as part of earnings for the fiscal year ended March 31, 2015. Key assumptions include a 3.3% discount rate, and a percent weighted-probability of the settlement of the contingent contractual non-compliance liability. Deal related compensation expense, accretion charges and changes related to settlements of contractual non-compliance liabilities for the fiscal year ended March 31, 2015 was $153 thousand and was included as part of earnings. |
INVENTORIES
INVENTORIES | 12 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
INVENTORIES | INVENTORIES Inventories are stated at the lower of actual cost or net realizable value. Cost is determined by using the FIFO method. Inventories consist of the following (in thousands): March 31, 2016 2015 Raw materials $ 18,617 $ 6,134 Work in process 651 17 Finished goods 38,761 5,979 $ 58,029 $ 12,130 |
FIXED ASSETS
FIXED ASSETS | 12 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
FIXED ASSETS | FIXED ASSETS Fixed assets consist of the following (in thousands): Estimated Useful Life in Years March 31, 2016 2015 Furniture and fixtures 3-7 $ 5,843 $ 3,739 Computer equipment and internal use software 3-5 118,974 69,259 Demonstration and spare part units 2-5 6,860 12,092 Leasehold improvements (1) up to 12 22,490 14,709 154,167 99,799 Less – accumulated depreciation (92,134 ) (75,935 ) $ 62,033 $ 23,864 (1) Leasehold improvements are depreciated over the shorter of the lease term or anticipated useful life of the improvement. Depreciation expense was $26.6 million , $12.6 million and $11.4 million for the years ended March 31, 2016 , 2015 and 2014 , respectively. |
ACQUISITIONS
ACQUISITIONS | 12 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS On July 14, 2015 (Closing Date), the Company completed the Transaction, which included certain assets, liabilities, technology and employees within Tektronix Communications, VSS Monitoring, Arbor Networks and certain portions of the Fluke Networks Enterprise business, which excluded Danaher's data communications cable installation business and its communication service provider business. The acquisition was structured as a Reverse Morris Trust transaction (the Transaction) whereby Danaher contributed its Communications Business to a new subsidiary, Potomac Holding LLC (Newco). The total equity consideration was approximately $2.3 billion based on issuing approximately 62.5 million new shares of NetScout common stock to the existing common unit holders of Newco, based on the July 13, 2015 NetScout common stock closing share price of $36.89 per share. On the Closing Date, the Company did not gain control over certain foreign entities due to regulatory and other compliance requirements (Delayed Close Entities). The Company closed on the acquisition of these Delayed Close Entities on October 7, 2015. The Transaction was accounted for under the acquisition method of accounting with the operations of the Communications Business included in the Company’s operating results from the relevant date of acquisition. The acquisition method of accounting requires, among other things, that assets acquired and liabilities assumed be recognized at their fair values as of the acquisition date. The preliminary determination of the fair value of assets acquired and liabilities assumed has been recognized based on management's estimates and assumptions using the information about facts and circumstances that existed at the acquisition date. While the Company uses its best estimates and assumptions as part of the purchase price allocation process to value the assets acquired and liabilities assumed on the acquisition date, its estimates and assumptions are subject to refinement. Fair value estimates are based on a complex series of judgments about future events and uncertainties and rely heavily on estimates and assumptions. The judgments used to determine the estimated fair value assigned to each class of assets acquired and liabilities assumed, as well as asset lives, can materially impact the Company's results of operations. The finalization of the purchase accounting assessment will result in a change in the valuation of assets acquired and liabilities assumed and may have a material impact on the Company's results of operations and financial position. As a result, during the measurement period, which may be up to one year from the acquisition date, the Company records adjustments to the assets acquired and liabilities assumed with a corresponding offset to goodwill to reflect additional information received about facts and circumstances which existed at the date of acquisition. The Company records adjustments to the assets acquired and liabilities assumed subsequent to the purchase price allocation period in the Company’s operating results in the period in which the adjustments were determined. The size and breadth of the Transaction will necessitate the use of this measurement period to adequately analyze and assess a number of the factors used in establishing the fair value of certain tangible and intangible assets acquired and liabilities assumed as of the acquisition date and the related tax impacts of any changes made. Any potential adjustments made could be material in relation to the preliminary values presented below. The primary areas of the purchase price allocation that are not yet finalized are related to the valuation of deferred income taxes, the valuation of the pension obligation liability and residual goodwill. During the fiscal year ended March 31, 2016, the Company identified measurement period adjustments that impacted the estimated fair value of the assets and liabilities assumed on July 14, 2015 as a result of new information obtained about the facts and circumstances that existed as of the acquisition date. The table below, which summarizes the allocation of the purchase price for the entities acquired on July 14, 2015, has been updated to reflect these measurement period adjustments. The total measurement period adjustments recorded in the year ended March 31, 2016 resulted in an increase in equity consideration for replacement awards of $3.7 million , an increase in accounts receivable of $5.3 million , an increase in inventory of $0.2 million , a decrease in prepaid expenses and other assets of $0.4 million , an increase in property, plant and equipment of $0.3 million , an increase in accounts payable of $0.1 million , an increase in accrued expenses of $3.4 million , a decrease in deferred revenue of $11.7 million , an increase in deferred tax liabilities of $25.0 million and an overall increase in goodwill of $7.7 million . This change to the provisional amounts of fair value of the assets and liabilities assumed had no impact on the Statement of Operations for the period ended September 30, 2015, December 31, 2015 or March 31, 2016. During the fiscal year ended March 31, 2016, the Company determined that the accounts payable, accrued expenses and goodwill balances of the acquired entities reported in the Company’s unaudited interim consolidated financial statements for the period ended September 30, 2015 were overstated and inventory and deferred revenue was understated. The affected balances were revised in the audited consolidated financial statements for the fiscal year ended March 31, 2016. These revisions correct the immaterial errors identified. The revision resulted in inventory increasing by $0.2 million , accounts payable decreasing by $0.6 million , accrued expenses decreasing by $4.8 million , deferred revenue increasing $1.4 million and an overall decrease in goodwill of $4.2 million . There was no impact to the Statement of Operations for the period ended September 30, 2015, December 31, 2015 or March 31, 2016. In connection with the Transaction, under the Employee Matters Agreement dated July 14, 2015 by and among the Company, Danaher and Newco, Danaher will fund certain contracts under which employees will provide post-combination services to the Company. 1) For any outstanding Danaher restricted stock units or stock options held by employees of the Communications Business transferred to Newco (Newco Employees) that vested from July 14, 2015 through August 4, 2015, the awards continued to vest in Danaher shares. These awards met the definition of a derivative under ASC 815 and as such, the Company determined the fair value of these awards on July 14, 2015 and recorded them separate from the business combination as prepaid compensation. The derivative was amortized into compensation expense through August 4, 2015, the post-combination requisite settlement date. The total amount of compensation expense for post-combination services recorded for fiscal year ended March 31, 2016 was $6.5 million . 2) All outstanding Danaher restricted stock units or stock options held by Newco Employees that were due to vest after August 4, 2015 were cancelled and replaced by NetScout with a cash retention award equal to one half of the value of the employee’s cancelled Danaher equity award and up to $15 million of restricted stock units relating to shares of NetScout common stock equal to the remaining one half of the value of the employee’s cancelled Danaher equity award. The restricted stock units issued are considered new share-based payment awards granted by NetScout to the former employees of Danaher. NetScout accounted for these new awards separately from the business combination. The Company recognized share-based compensation net of an estimated forfeiture rate and only recognized compensation cost for those shares expected to vest on a straight-line basis over the requisite service period of the award. The cash retention award will become payable on August 4, 2016, subject to the employee’s continued employment with NetScout through the applicable vesting date of August 4, 2016. Danaher will reimburse NetScout for the amount of the cash retention payments (net of any applicable employment taxes and tax deductions). The cash retention award liability will be accounted for separately from the business combination as the cash retention award is automatically forfeited upon termination of employment. NetScout will record the cash retention award liability over the period it is earned as compensation expense for post-combination services. The reimbursement by Danaher to NetScout of the estimated cash retention award payment represents contingently returnable consideration, which will be accounted for separately from the business combination on the date of the acquisition. At March 31, 2016 , the Company has recorded a receivable from Danaher in the amount of $8.4 million , net of tax and is included as prepaid expenses and other current assets in Company’s consolidated balance sheet. At March 31, 2016 , the Company has recorded a cash retention award liability of $8.0 million and is included as accrued compensation in Company’s consolidated balance sheet. For the fiscal year ended March 31, 2016 , $8.0 million has been recorded as compensation expense for post-combination services. 3) Newco Employees that were entitled to receive an incentive bonus under the Danaher annual bonus plan and who continued to be employed by NetScout through December 31, 2015 received a cash incentive bonus payment. The cash incentive bonus liability was accounted for separately from the business combination as the cash incentive bonus is automatically forfeited upon termination of employment. NetScout recorded the liability over the period it was earned as compensation expense for post-combination services. The payment of the cash retention award, which was reimbursed by Danaher to NetScout, was accounted for separately from the business combination on the date of the acquisition. For the fiscal year ended March 31, 2016 , $9.3 million has been recorded as compensation expense for post-combination services. 4) Certain Newco Employees received cash retention payments that were subject to the employee’s continued employment with NetScout through October 16, 2015, ninety (90) days after the close of the acquisition. The cash retention payment liability was accounted for separately from the business combination as the cash retention payment was automatically forfeited upon termination of employment. NetScout recorded the liability over the period it was earned as compensation expense for post-combination services. The payment of the cash retention award will be reimbursed by Danaher to NetScout, which was accounted for separately from the business combination on the date of the acquisition. At March 31, 2016 , the Company has recorded a receivable due from Danaher in the amount of $7.8 million , and is included as prepaid expenses and other current assets in the Company's consolidated balance sheet. At March 31, 2016, the Company has recorded the tax effect of the cash retention award of $2.6 million , which is included as accounts payable in the Company's consolidated balance sheet. For the fiscal year ended March 31, 2016 , $7.8 million has been recorded as compensation expense for post-combination services. The following table summarizes the allocation of the purchase price for the entities acquired on July 14, 2015 (in thousands): Purchase Price Allocation: Total equity consideration $ 2,299,911 (1) Less: Equity consideration for replacement awards (29,355 ) (2) Estimated Purchase Price $ 2,270,556 Estimated fair value of assets acquired and liabilities assumed: Cash 27,701 Accounts receivable 140,586 Inventories 80,719 Prepaid expenses and other assets 6,715 Property, plant and equipment 36,825 Deferred income taxes 13,067 Intangible assets 1,080,700 Other assets 999 Accounts payable (21,311 ) Accrued compensation (24,316 ) Accrued other (12,916 ) Deferred revenue (187,882 ) Other long-term liabilities (3,615 ) Accrued retirement benefits (29,917 ) Deferred tax liabilities (344,646 ) Goodwill $ 1,507,847 (1) Represents approximately 62.5 million new shares (plus cash in lieu of fractional shares) of NetScout common stock issued to the existing common unit holders of Newco based on the July 13, 2015 NetScout common stock closing share price of $36.89 per share, less the fair value attributable to the foreign entities that the Company did not obtain control over on July 14, 2015 due to regulatory and other compliance requirements. (2) Represents the value of certain outstanding Danaher equity awards held by Newco Employees for which continuing employees will receive value after the Closing Date. A portion of this amount relates to awards that will continue to vest in Danaher shares after the Closing Date. These future compensation amounts will be settled in shares other than shares of the acquired business. The balance of this amount also represents future compensation expense and relates to cash awards to be paid by NetScout to acquired Newco employees on August 4, 2016. The cash payments by NetScout will be reimbursed by Danaher. These items are further described in the Employee Matters Agreement dated July 14, 2015 by and among NetScout Systems, Inc., Danaher Corporation and Potomac Holding LLC and have been accounted for separately from the Communications Business Acquisition. The following table summarizes the allocation of the purchase price for the Delayed Close Entities acquired on October 7, 2015 (in thousands): Purchase Price Allocation: Total equity consideration $ 5,700 (1) Estimated Purchase Price $ 5,700 Estimated fair value of assets acquired and liabilities assumed: Accounts receivable $ 110 Inventories 78 Prepaid expenses and other assets 35 Property, plant and equipment 1,254 Other assets 281 Accounts payable (8 ) Accrued compensation (824 ) Accrued other (176 ) Deferred revenue (65 ) Other long-term liabilities (126 ) Goodwill $ 5,141 (1) Represents the fair value attributable to the Delayed Close Entities that the Company obtained control over on October 7, 2015. The Transaction is expected to extend the Company's reach into growth-oriented adjacent markets, including cyber security, with a broader range of market-leading products and capabilities, strengthen the Company's go-to-market resources to better support a larger, more diverse and more global customer base, and increase scale and elevate the Company's strategic position within key accounts. Goodwill was recognized for the excess purchase price over the fair value of the assets acquired. Goodwill of $1.5 billion from the acquisition will be included within the following operating segments: $534.8 million in Arbor Networks, $794.4 million in Tektronix Communications, $57.0 million in VSS, and $125.1 million in FNET. All reporting units resulting from the Transaction were included in the Company’s annual goodwill impairment review. Goodwill and intangible assets recorded as part of the acquisition are not deductible for tax purposes. The fair values of intangible assets were based on valuations using an income approach. These assumptions include estimates of future revenues associated with the technology purchased as part of the acquisition and the migration of the current technology to more advanced version of the software. This fair value measurement was based on significant inputs not observable in the market and thus represents Level 3 fair value measurements. The following table reflects the fair value of the acquired identifiable intangible assets and related estimates of useful lives (in thousands): Fair Value Useful Life (Years) Developed technology $ 221,900 9 - 13 Customer relationships 794,100 13 - 18 Backlog 18,200 1 - 3 Definite lived trademark and tradenames 43,900 3 - 9 Leasehold interest 2,600 4 - 6 $ 1,080,700 The weighted average useful life of identifiable intangible assets acquired in the transaction is 14.7 years . Developed technology is amortized using an accelerated amortization method and has a weighted average useful life of 11.7 years . Customer relationships are amortized using an accelerated amortization method and have a weighted average useful life of 16.3 years . Backlog is amortized using an accelerated amortization method and has a weighted average useful life of 2.0 years . Trademarks and tradenames are amortized using an accelerated amortization method and has a weighted average useful life of 8.5 years . Leasehold interests are amortized on a straight-line basis and has a weighted average useful life of 5.6 years . The Company incurred approximately $29.4 million of acquisition-related costs related to the Transaction during the fiscal year ended March 31, 2016 . During the fiscal year ended March 31, 2016 , the Company has recorded $501.9 million of revenue and a net loss of $65.4 million directly attributable to the Transaction within its consolidated financial statements. The following table presents unaudited pro forma results of the historical Consolidated Statements of Operations of the Company and the Communications Business of Danaher for the fiscal years ended March 31, 2016 and 2015 , giving effect to the Transaction as it they occurred on April 1, 2014 (in thousands, except per share data): Year Ended March 31, (unaudited) 2016 2015 Pro forma revenue $ 1,131,626 $ 1,177,938 Pro forma net income (loss) $ (58,806 ) $ (2,323 ) Pro forma income (loss) per share: Basic $ (0.59 ) $ (0.02 ) Diluted $ (0.59 ) $ (0.02 ) Pro forma shares outstanding Basic 99,687 103,573 Diluted 99,687 103,573 The pro forma results for the fiscal years ended March 31, 2016 and 2015 primarily include adjustments for amortization of intangibles. This pro forma information does not purport to indicate the results that would have actually been obtained had the acquisitions been completed on the assumed date, or which may be realized in the future. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 12 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL & INTANGIBLE ASSETS Goodwill The Company has five reporting units: (1) NetScout, (2) Arbor Networks, (3) Tektronix Communications, (4) VSS and (5) FNET. At March 31, 2016 and March 31, 2015 , goodwill attributable to the NetScout reporting unit was $198.1 million and $197.4 million , respectively. Goodwill attributable to the Arbor Networks, Tektronix Communications, VSS and FNET reporting units at March 31, 2016 were $534.8 million , $794.4 million , $57.0 million and $125.1 million respectively. Goodwill is tested for impairment at a reporting unit level at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting unit below its carrying value. The Company completed its annual impairment test on January 31, 2016 . The fair value of the reporting unit's goodwill is determined using established income and market valuation approaches. In fiscal year 2016 and 2015, the Company's annual impairment tests indicated that goodwill was not impaired. In fiscal year 2016, the Company performed a quantitative step 1 analysis of each of its 5 reporting units. The Company determined the fair values of its reporting unit’s goodwill by preparing a discounted cash flow analysis using updated forward-looking projections of the unit's future operating results and by comparing the value of the operating segments to the implied market value of selected peers of the reporting unit. The significant assumptions used in the discounted cash flow analysis include: revenue and revenue growth, selling margins, other operating expenditures, projected capex, the discount rate used to present value future cash flows and terminal growth rates. The discount rate used is a cost of equity method, which is essentially equal to the “market participant” weighted-average cost of capital (WACC). The NetScout goodwill fair value substantially exceeded its carrying values. The Company performed a sensitivity analysis on our significant assumptions used to determine the fair value of the Arbor reporting unit and has determined that a reasonable, negative change in its assumptions, as follows, would not impact our conclusion: decrease projected revenue growth by 3% , decrease the selling margin by 2% , decrease the operating margin by 2% or increase the WACC by 75 basis points . The Company performed a sensitivity analysis on our significant assumptions used to determine the fair value of the Tektronix Communications reporting unit and has determined that a reasonable, negative change in its assumptions, as follows, would not impact our conclusion: decrease projected revenue growth by 3% , decrease the selling margin by 4% , decrease the operating margin by 4% or increase the WACC by 100 basis points . The Company performed a sensitivity analysis on our significant assumptions used to determine the fair value of the VSS reporting unit and has determined that a reasonable, negative change in its assumptions, as follows, would not impact our conclusion: decrease projected revenue growth by 17% , decrease the selling margin by 8% , decrease the operating margin by 8% or increase the WACC by 600 basis points . The Company performed a sensitivity analysis on our significant assumptions used to determine the fair value of the FNET reporting unit and has determined that a reasonable, negative change in its assumptions, as follows, would not impact our conclusion: decrease projected revenue growth by 16% , decrease the selling margin by 7% , decrease the operating margin by 7% or increase the WACC by 500 basis points . The change in the carrying amount of goodwill for the fiscal year ended March 31, 2016 is due to the Transaction, deferred revenue adjustments, deferred tax liability adjustments, purchase accounting adjustments, change in assumptions for assumed liabilities and the impact of foreign currency translation adjustments related to asset balances that are recorded in currencies other than the U.S. Dollar. The changes in the carrying amount of goodwill for the fiscal years ended March 31, 2016 and 2015 are as follows (in thousands): Balance at March 31, 2014 $ 203,446 Purchase accounting adjustments — Foreign currency translation impact (6,001 ) Balance at March 31, 2015 $ 197,445 Goodwill acquired during the quarter ended September 30, 2015 1,504,261 Goodwill acquired during the quarter ended December 31, 2015 from Delayed Close Entities 5,141 Deferred revenue adjustments (11,392 ) Purchase accounting adjustments (527 ) Change in assumptions for assumed liabilities (6,258 ) Adjust deferred tax liability 25,034 Adjust tax effect on equity consideration (3,271 ) Foreign currency translation impact (1,064 ) Balance at March 31, 2016 $ 1,709,369 Intangible Assets The net carrying amounts of intangible assets were $1.1 billion and $50.2 million at March 31, 2016 and 2015 , respectively. Intangible assets acquired in a business combination are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition. The Company amortizes intangible assets over their estimated useful lives, except for the acquired trade name which resulted from the Network General acquisition, which has an indefinite life and thus is not amortized. The carrying value of the indefinite lived trade name is evaluated for potential impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired. In fiscal year 2016 and 2015, the Company's annual impairment tests indicated that the acquired trade name was not impaired. In the fourth quarter of fiscal year 2016, the Company performed a quantitative step 1 analysis of its non-amortizing trade name. The Company determined the fair value of its trade name using a forward-looking relief from royalty model. The significant assumptions used in the forward-looking relief from royalty method include: revenue growth, royalty rates and the discount rate. The non-amortizing trade name fair value substantially exceeded its carrying values. During fiscal year ended March 31, 2016, the Company acquired a technology license for $3.7 million . This amount is included within distributor relationships and is being amortized using the economic benefit method over a useful life of 4 years. Intangible assets include the indefinite lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at March 31, 2016 (in thousands): Cost Accumulated Amortization Net Developed technology $ 253,249 $ (69,810 ) $ 183,439 Customer relationships 834,091 (42,526 ) 791,565 Distributor relationships 5,348 (1,633 ) 3,715 Definite lived trademark and trade name 43,964 (5,511 ) 38,453 Core technology 7,169 (4,659 ) 2,510 Net beneficial leases 336 (336 ) — Non-compete agreements 288 (288 ) — Leasehold interest 2,600 (416 ) 2,184 Backlog 18,245 (6,750 ) 11,495 Capitalized software 1,625 — 1,625 Other 1,191 (737 ) 454 $ 1,168,106 $ (132,666 ) $ 1,035,440 Intangible assets include the indefinite lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at March 31, 2015 (in thousands): Cost Accumulated Amortization Net Developed technology $ 30,865 $ (25,561 ) $ 5,304 Customer relationships 38,498 (16,935 ) 21,563 Distributor relationships 1,585 (711 ) 874 Core technology 7,118 (3,660 ) 3,458 Non-compete agreements 280 (280 ) — Other 943 (562 ) 381 $ 79,289 $ (47,709 ) $ 31,580 Amortization of software and core technology included as cost of product revenue was $45.1 million , $3.6 million and $3.3 million for the fiscal years ended March 31, 2016 , 2015 and 2014 , respectively. Amortization of other intangible assets included as operating expense was $32.5 million , $3.5 million and $3.6 million for the fiscal years ended March 31, 2016 , 2015 and 2014 , respectively. The following is the expected future amortization expense at March 31, 2016 for the years ended March 31 (in thousands): 2017 $ 123,988 2018 110,449 2019 104,839 2020 97,333 2021 85,360 Thereafter 513,471 Total $ 1,035,440 The weighted average amortization period of developed technology and core technology is 11.5 years. The weighted average amortization period for customer and distributor relationships is 16.1 years. The weighted average amortization period for trademarks and trade names is 8.5 years. The weighted average amortization period for leasehold interests is 5.6 years . The weighted average amortization period for backlog is 2.0 years . The weighted average amortization period for amortizing capitalized software is 4.0 years . The weighted average amortization period for amortizing all intangible assets is 14.6 years. |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 12 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES NetScout operates internationally and, in the normal course of business, is exposed to fluctuations in foreign currency exchange rates. The exposures result from costs that are denominated in currencies other than the U.S. Dollar, primarily the Euro, British Pound, Canadian Dollar, and Indian Rupee. The Company manages its foreign cash flow risk by hedging forecasted cash flows for operating expenses denominated in foreign currencies for up to twelve months, within specified guidelines through the use of forward contracts. The Company enters into foreign currency exchange contracts to hedge cash flow exposures from costs that are denominated in currencies other than the U.S. Dollar. These hedges are designated as cash flow hedges at inception. All of the Company’s derivative instruments are utilized for risk management purposes, and the Company does not use derivatives for speculative trading purposes. These contracts will mature over the next twelve months and are expected to impact earnings on or before maturity. The notional amounts and fair values of derivative instruments in the consolidated balance sheets at March 31, 2016 and 2015 were as follows (in thousands): Notional Amounts (a) Prepaid Expenses and Other Current Assets Accrued Other March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Derivatives Designated as Hedging Instruments: Forward contracts $ 17,490 $ 20,203 $ 191 $ 15 $ 158 $ 1,664 (a) Notional amounts represent the gross contract/notional amount of the derivatives outstanding. The following table provides the effect foreign exchange forward contracts had on other comprehensive income (loss), (OCI) and results of operations at March 31, 2016 and 2015 (in thousands): Derivatives in Cash Flow Hedging Relationships Effective Portion Ineffective Portion Gain (Loss) Recognized in OCI on Derivative (a) Gain (Loss) Reclassified from Accumulated OCI into Income (b) Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) (c) March 31, March 31, March 31, March 31, March 31, March 31, 2016 2015 Location 2016 2015 Location 2016 2015 Forward contracts $ (852 ) $ (3,050 ) Research and development $ 206 $ 217 Research and development $ 113 $ 193 Sales and marketing 2,295 1,123 Sales and marketing (24 ) 25 $ (852 ) $ (3,050 ) $ 2,501 $ 1,340 $ 89 $ 218 (a) The amount represents the change in fair value of derivative contracts due to changes in spot rates. (b) The amount represents reclassification from other comprehensive income to earnings that occurs when the hedged item affects earnings. (c) The amount represents the change in fair value of derivative contracts due to changes in the difference between the spot price and forward price that is excluded from the assessment of hedge effectiveness and therefore recognized in earnings. No gains or losses were reclassified as a result of discontinuance of cash flow hedges. |
LONG-TERM DEBT
LONG-TERM DEBT | 12 Months Ended |
Mar. 31, 2016 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT On July 14, 2015, the Company entered into a certain credit facility with a syndicate of lenders pursuant to a Credit Agreement (Credit Agreement), dated as of July 14, 2015, by and among: the Company; JPMorgan Chase Bank, N.A. (JPMorgan), as administrative agent and collateral agent; J.P. Morgan Securities LLC, KeyBanc Capital Markets, Merrill Lynch, Pierce, Fenner & Smith Incorporated, RBC Capital Markets and Wells Fargo Securities, LLC, as joint lead arrangers and joint bookrunners; Santander Bank, N.A., SunTrust Bank, N.A. and U.S. Bank National Association, as co-documentation agents; and the lenders party thereto. The Credit Agreement provides for a five -year $800 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $50 million. The Company may elect to use the new credit facility for working capital purposes or repurchase of up to 20 million shares of common stock under the Company's common stock repurchase plan. The commitments under the Credit Agreement will expire on July 14, 2020, and any outstanding loans will be due on that date. At March 31, 2016 , $300 million was outstanding under this credit facility. At the Company’s election, revolving loans under the Credit Agreement bear interest at either (a) a Alternate Base Rate per annum equal to the greatest of (1) JPMorgan’s prime rate, (2) 0.50% in excess of the Federal Funds effective rate, or (3) an adjusted one month LIBO rate plus 1% ; or (b) such adjusted LIBO rate (for the interest period selected by the Company), in each case plus an applicable margin. For the initial period until the Company has delivered financial statements for the quarter ended March 31, 2016, the applicable margin will be 1.75% per annum for LIBOR loans and 0.75% per annum for Alternate Base Rate loans, and thereafter the applicable margin will vary depending on the Company’s leverage ratio, ranging from 1.00% per annum for Base Rate loans and 2.00% per annum for LIBOR loans if the Company’s consolidated leverage ratio is greater than 2.50 to 1.00, down to 0.25% per annum for Alternate Base Rate loans and 1.25% per annum for LIBOR loans if the Company’s consolidated leverage ratio is equal to or less than 1.00 to 1.00. The Company’s consolidated leverage ratio is the ratio of its total funded debt compared to its consolidated adjusted EBITDA. Consolidated adjusted EBITDA includes certain adjustments, including, adjustments relating to extraordinary, unusual or non-recurring charges, certain restructuring charges, non-cash charges, certain transaction costs and expenses and certain pro forma adjustments in connection with material acquisitions and dispositions, all as set forth in detail in the definition of Consolidated EBITDA in the Credit Agreement. Commitment fees will accrue on the daily unused amount of the credit facility. For the initial period until the Company has delivered financial statements for the quarter ended March 31, 2016, the commitment fee will be 0.30% per annum, and thereafter the commitment fee will vary depending on the Company’s consolidated leverage ratio, ranging from 0.35% per annum if the Company’s consolidated leverage ratio is greater than 2.50 to 1.00, down to 0.20% per annum if the Company’s consolidated leverage ratio is equal to or less than 1.00 . Letter of credit participation fees are payable to each lender on the amount of such lender’s letter of credit exposure, during the period from the closing date of the Credit Agreement to but excluding the date which is the later of (i) the date on which such lender’s commitment terminates or (ii) the date on which such lender ceases to have any letter of credit exposure, at a rate per annum equal to the applicable margin for LIBOR loans. Additionally, the Company will pay a fronting fee to each issuing bank in amounts to be agreed to between the Company and the applicable issuing bank. Interest on Alternate Base Rate loans is payable at the end of each calendar quarter. Interest on LIBOR loans is payable at the end of each interest rate period or at the end of each three-month interval within an interest rate period if the period is longer than three months. The Company may also prepay loans under the Credit Agreement at any time, without penalty, subject to certain notice requirements. Debt is recorded at the amount drawn on the revolving credit facility plus interest based on floating rates reflective of changes in the market which approximates fair value. The loans and other obligations under the credit facility are (a) guaranteed by each of the Company’s wholly owned material domestic restricted subsidiaries, subject to certain exceptions, and (b) are secured by substantially all of the assets of the Company and the subsidiary guarantors, including a pledge of all the capital stock of material subsidiaries held directly by the Company and the subsidiary guarantors (which pledge, in the case of any foreign subsidiary, is limited to 65% of the voting stock), subject to certain customary exceptions and limitations. The Credit Agreement generally prohibits any other liens on the assets of the Company and its restricted subsidiaries, subject to certain exceptions as described in the Credit Agreement. The Credit Agreement contains certain covenants applicable to the Company and its restricted subsidiaries, including, without limitation, limitations on additional indebtedness, liens, various fundamental changes, dividends and distributions, investments (including acquisitions), transactions with affiliates, asset sales, including sale-leaseback transactions, speculative hedge agreements, payment of junior financing, changes in business and other limitations customary in senior secured credit facilities. In addition, the Company is required to maintain certain consolidated leverage and interest coverage ratios. These covenants and limitations are more fully described in the Credit Agreement. At March 31, 2016 , the Company was in compliance with all of these covenants. The Credit Agreement provides that events of default will exist in certain circumstances, including failure to make payment of principal or interest on the loans when required, failure to perform certain obligations under the Credit Agreement and related documents, defaults under certain other indebtedness, certain insolvency events, certain events arising under ERISA, a change of control and certain other events. Upon an event of default, the administrative agent with the consent of, or at the request of, the holders of more than 50% in principal amount of the loans and commitments may terminate the commitments and accelerate the maturity of the loans and enforce certain other remedies under the Credit Agreement and the other loan documents. In connection with the Company’s new revolving credit facility described above, effective as of the Closing Date, the Company terminated its existing term loan and revolving credit facility pursuant to the Credit and Security Agreement, dated as of November 22, 2011, by and among the Company, KeyBank National Association, as joint lead arranger, sole book runner and administrative agent, Wells Fargo Bank, National Association, as joint lead arranger and co-syndication agent, Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead arranger, Bank of America, N.A., as co-syndication agent, and Silicon Valley Bank and Comerica Bank, as co-documentation agents, and the Lenders party thereto. The Company capitalized $6.6 million of debt issuance costs associated with the origination of the Credit Agreement, which are being amortized over the life of the revolving credit facility. The unamortized balance was $5.8 million as of March 31, 2016 . The balance of $1.4 million is included as prepaid expenses and other current assets and a balance of $4.4 million was included as other assets in Company’s consolidated balance sheet. |
NET INCOME (LOSS) PER SHARE
NET INCOME (LOSS) PER SHARE | 12 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
NET INCOME (LOSS) PER SHARE | NET INCOME (LOSS) PER SHARE Calculations of the basic and diluted net income (loss) per share and potential common shares are as follows (in thousands, except for per share data): Year Ended March 31, 2016 2015 2014 Numerator: Net income (loss) $ (28,369 ) $ 61,192 $ 49,106 Denominator: Denominator for basic net income (loss) per share - weighted average common shares outstanding 81,927 41,105 41,366 Dilutive common equivalent shares: Weighted average stock options — 9 54 Weighted average restricted stock units — 523 535 Denominator for diluted net income (loss) per share - weighted average shares outstanding 81,927 41,637 41,955 Net income (loss) per share: Basic net income (loss) per share $ (0.35 ) $ 1.49 $ 1.19 Diluted net income (loss) per share $ (0.35 ) $ 1.47 $ 1.17 The following table sets forth options and restricted stock units excluded from the calculation of diluted net income per share, since their inclusion would be antidilutive (in thousands): Year Ended March 31, 2016 2015 2014 Restricted stock units 453 14 — Basic net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period. Unvested restricted shares, although legally issued and outstanding, are not considered outstanding for purposes of calculating basic earnings per share. Diluted net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding stock options, restricted shares and restricted stock units using the treasury stock method. The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of proceeds from the assumed exercise of stock options, unrecognized compensation expense and any tax benefits as additional proceeds. As we incurred a net loss in the year ended March 31, 2016, all outstanding restricted stock units have an anti-dilutive effect and are therefore excluded from the computation of diluted weighted average share outstanding. |
TREASURY STOCK
TREASURY STOCK | 12 Months Ended |
Mar. 31, 2016 | |
Equity [Abstract] | |
TREASURY STOCK | TREASURY STOCK Under an open market stock repurchase program, subject to market conditions and other factors, the Company had the option to purchase up to four million shares of the Company's outstanding common stock. The Company repurchased 243,300 shares for $9.4 million and 1,000,407 shares for $28.8 million under the program during the fiscal years ended March 31, 2015 and 2014 , respectively. As of March 31, 2015, the Company had repurchased all authorized shares under this stock repurchase program. On April 22, 2014, the Company's board of directors approved an additional stock repurchase program. This program authorizes management to make additional repurchases of NetScout outstanding common stock of up to $100 million . Through March 31, 2016, the Company has repurchased 824,452 shares totaling $ 34.3 million in the open market under this stock repurchase plan. At March 31, 2016, there were no shares of common stock that remained available to be purchased under this plan due to the approval of a new, replacement share repurchase program on May 19, 2015. The Company repurchased 67,752 shares for $2.8 million and 756,700 shares for $31.5 million under the program during the fiscal years ended March 31, 2016 and 2015, respectively. On May 19, 2015, the Company’s board of directors approved a new share repurchase program, conditional upon the completion of the Transaction. This program enables the Company to repurchase up to 20 million shares of its common stock. This plan became effective on July 14, 2015 upon the completion of the Transaction and replaced the Company's previously existing open market stock repurchase program described above. The Company is not obligated to acquire any specific amount of common stock within any particular timeframe under this program. For additional information regarding the Transaction, see Note 7. Through March 31, 2016 , the Company has repurchased 10,078,136 shares totaling $300.0 million in the open market under this stock repurchase plan. At March 31, 2016 , 9,921,864 shares of common stock remained available to be purchased under the plan. In connection with the vesting and release of the restriction on previously vested shares of restricted stock, the Company repurchased 256,514 shares for $9.1 million , 247,568 shares for $10.8 million and 216,198 shares for $5.5 million related to minimum statutory tax withholding requirements on these restricted stock units during the fiscal years ended March 31, 2016 , 2015 and 2014 , respectively. These repurchase transactions do not fall under the repurchase program described above, and therefore do not reduce the amount that is available for repurchase under that program. |
STOCK PLANS
STOCK PLANS | 12 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
STOCK PLANS | STOCK PLANS 2011 Employee Stock Purchase Plan On September 7, 2011, the Company’s stockholders approved the 2011 Employee Stock Purchase Plan (the ESPP), under which 2,500,000 shares of the Company’s common stock have been reserved for issuance. The Company implemented the ESPP on March 1, 2012. Eligible employees may purchase shares of the Company’s common stock through regular payroll deductions of up to 20% of their eligible compensation. Under the terms of the offering under the ESPP, the number of shares of the Company’s common stock which a participant could purchase during any purchase period is limited to 2,000 . In addition, the fair market value of shares purchased by an individual participant in the plan may not exceed $25,000 if the contribution period is within any calendar year. However, if contribution periods overlap calendar years, an individual participant is eligible to utilize the unused portion of the $25,000 limit from the subsequent purchase in the current purchase up to $50,000 . Under the ESPP, shares of the company's common stock may be purchased on the last day of each bi-annual offering period at 85% of the fair market value on the last day of such offering period. The offering periods run from March 1 through August 31 and from September 1 through the last day of February 28 of each year. During the fiscal year ended March 31, 2016 , employees purchased 447,252 shares under the ESPP with a weighted average purchase price per share of $23.61 . At March 31, 2016 , 1,567,748 shares were available for future issuance under the ESPP. 1999 Stock Option and Incentive Plan In April 1999, NetScout adopted the 1999 Stock Option and Incentive Plan (1999 Stock Option Plan). The 1999 Stock Option Plan, which was replaced by the 2007 Equity Incentive Plan effective September 12, 2007, provided for the grant of share-based awards to employees, officers and directors, consultants or advisors. Under the 1999 Stock Option Plan, NetScout could grant options that were intended to qualify as incentive stock options, options not intended to qualify as incentive stock options, restricted stock and other share-based awards. Incentive stock options could be granted only to employees of NetScout. At March 31, 2016 , no options to purchase shares of common stock were outstanding under the 1999 Stock Option Plan. No additional grants can be made under the 1999 Stock Option Plan. 2007 Equity Incentive Plan Enacted in September 2007, the 2007 Equity Incentive Plan (2007 Plan), replaced the 1999 Stock Option Plan. The 2007 Plan permits the granting of stock options, restricted stock and restricted stock units, collectively referred to as “share-based awards.” Periodically, the Company grants share-based awards to employees and officers of the Company and its subsidiaries. The Company accounts for these share-based awards in accordance with GAAP, which requires the measurement and recognition of compensation expense based on estimated fair values for all share-based payment awards made to its employees and directors. Share-based award grants are generally measured at fair value on the date of grant based on the number of shares granted and the quoted price of the Company’s common stock. Such value is recognized as a cost of revenue or an operating expense over the corresponding vesting period. On September 7, 2011, the Company’s stockholders approved an amendment and restatement of the 2007 Equity Incentive Plan to increase the shares of common stock reserved for issuance by 8,000,000 shares. On September 22, 2015, the Company's stockholders approved an amendment and restatement of the 2007 Equity Incentive Plan (the Amended 2007 Plan) to increase the shares of common stock reserved for issuance by 8,500,000 . A total of 21,500,000 shares are reserved for issuance under the Amended 2007 Plan. In addition, any shares not delivered to a participant because an award is exercised through a reduction of shares subject to the award (cashless exercise) will not be available for issuance under the Amended 2007 Plan and any shares reacquired by the Company to cover withholding taxes upon exercise of a stock option or stock appreciation right or as consideration for the exercise of a stock option or stock appreciation right will not become available for issuance under the Amended 2007 Plan. Shares withheld to cover tax liabilities of restricted stock unit grants will be restored to the available reserve on the 2 for 1 amount. Furthermore, the share reserve under the Amended 2007 Plan is reduced one share for each share of common stock issued pursuant to a stock option or stock appreciation right and two shares for each share of common stock issued pursuant to restricted stock, restricted stock units, performance stock awards, or other stock awards granted under the Amended 2007 Plan on or after March 31, 2011. At March 31, 2016 , an aggregate of 2,873,306 equity awards were outstanding under the Amended 2007 Plan. The Amended 2007 Plan is administered by the Compensation Committee of the Board of Directors. The Compensation Committee operates under guidelines established by the Board of Directors. The Compensation Committee had the authority to select the employees and consultants to whom awards are granted (except for directors and executive officers) and determine the terms of each award, including the number of shares of common stock subject to the award. Share-based awards generally vest over four years. The exercise price of incentive stock options shall not be less than 100% of the fair market value of the common stock at the date of grant ( 110% for incentive stock options granted to holders of more than 10% of the voting stock of NetScout). The term of options granted cannot exceed ten years ( five years for incentive stock options granted to holders of more than 10% of the voting stock of NetScout). Based on historical experience, the Company assumed an annualized forfeiture rate of 0% for awards granted to its independent directors, 2% for awards granted to its senior executives, and 5% granted to all remaining employees during the fiscal years ended March 31, 2016 and 2015. During the fiscal year ended March 31, 2014, the Company assumed an annualized forfeiture rate of 0% for awards granted to its directors, and an annualized forfeiture rate of 10% for awards granted to its senior executives and remaining employees. The following is a summary of share-based compensation expense including restricted stock units and employee stock purchases made under our employee stock purchase plan (ESPP) based on estimated fair values within the applicable cost and expense lines identified below (in thousands): Year Ended March 31, 2016 2015 2014 Cost of product revenue $ 645 $ 338 $ 228 Cost of service revenue 2,601 1,194 741 Research and development 9,205 5,505 4,361 Sales and marketing 8,725 4,841 3,791 General and administrative 7,175 4,702 3,809 $ 28,351 $ 16,580 $ 12,930 Transactions under the 1999 Stock Option Plan and the 2007 Equity Incentive Plan during the fiscal years ended March 31, 2016 , 2015 and 2014 are summarized in the table below. Stock Options Restricted Stock Units Number of Shares Weighted Average Exercise Price Number of Awards Weighted Average Fair Value Outstanding – March 31, 2013 154,000 $ 6.63 1,870,826 $ 18.09 Granted — — 602,359 25.75 Exercised (Options)/Issued (RSU’s) (117,650 ) 6.91 (635,254 ) 17.14 Canceled (5,000 ) 3.76 (99,632 ) 17.61 Outstanding – March 31, 2014 31,350 $ 5.87 1,738,299 $ 21.11 Granted — — 1,009,770 36.92 Exercised (Options)/Issued (RSU’s) (23,850 ) 5.87 (728,239 ) 18.97 Canceled (7,500 ) 5.87 (90,515 ) 21.44 Outstanding – March 31, 2015 — $ — 1,929,315 $ 30.18 Granted — — 1,806,490 37.20 Exercised (Options)/Issued (RSU’s) — — (736,170 ) 26.52 Canceled — — (126,329 ) 34.99 Outstanding – March 31, 2016 — $ — 2,873,306 $ 35.32 At March 31, 2016 , there were 11,335,425 shares of common stock available for grant under the Amended 2007 Plan. The Company does not currently expect to repurchase shares from any source to satisfy its obligations under the 2007 Plan. The aggregate intrinsic value of stock options exercised and the fair value of restricted stock units vested at March 31, 2016 , 2015 and 2014 were as follows (in thousands): Year Ended March 31, 2016 2015 2014 Total intrinsic value of stock options exercised $ — $ 800 $ 2,375 Total fair value of restricted stock unit awards vested $ 25,936 $ 31,651 $ 16,104 At March 31, 2016 , there was no unrecognized compensation cost related to stock options. At March 31, 2016 , the total unrecognized compensation cost related to restricted stock unit awards was $85.6 million , which is expected to be amortized over a weighted-average period of 1.9 years. |
PENSION BENEFIT PLANS
PENSION BENEFIT PLANS | 12 Months Ended |
Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
PENSION BENEFIT PLANS | PENSION BENEFIT PLANS 401(k) Plan The Company has a defined contribution program for certain employees that is qualified under Section 401(k) of the Internal Revenue Code of 1986, as amended. The Company matches 50% of the employee’s contribution up to 6% of the employee’s salary. NetScout contributions vest at a rate of 25% per year of service. NetScout made matching contributions of $7.8 million , $2.6 million and $2.5 million to the plan for the years ended March 31, 2016 , 2015 and 2014 , respectively. Defined Benefit Pension Plan Certain of the Company's non-U.S. employees participate in certain noncontributory defined benefit pension plans acquired in the Communications Business acquisition on July 14, 2015. None of the Company's employees in the U.S. participate in any noncontributory defined benefit pension plans. In general, these plans are funded based on considerations relating to legal requirements, underlying asset returns, the plan’s funded status, the anticipated deductibility of the contribution, local practices, market conditions, interest rates and other factors. The components of the change in benefit obligation of the pension plan is as follows (in thousands): March 31, 2016 Benefit obligation, beginning of year $ — Service cost 279 Interest cost 391 Benefits paid and other (175 ) Acquisitions 29,033 Actuarial gain (847 ) Foreign exchange rate impact 507 Benefit obligation, at end of year $ 29,188 The reconciliation of the beginning and ending balances of the fair value of the assets of the pension plan is as follows (in thousands): March 31, 2016 Fair value of plan assets, at beginning of year $ — Employer direct benefit payments 175 Benefits paid and other (175 ) Fair value of plan assets, at end of year $ — The following sets forth the components of the Company's net periodic pension cost of the noncontributory defined benefit pension plans for the fiscal year ended March 31, 2016 (in thousands): March 31, 2016 Service cost $ 279 Interest cost 391 Net periodic pension cost $ 670 There was no net periodic pension cost for fiscal years prior to fiscal year 2016 as the pension plan was acquired as a result of the Transaction during the fiscal year ended March 31, 2016. Weighted average assumptions used to determine net periodic pension cost at date of measurement: March 31, 2016 Discount rate 2.30 % Rate of compensation increase 2.25 % As of March 31, 2016, unrecognized actuarial gains of $847 thousand ( $632 thousand , net of tax) which have not yet been recognized in net periodic pension cost are included in accumulated other comprehensive income (loss). The unrecognized actuarial gains are calculated as the difference between the actuarially determined projected benefit obligation and the value of the plan assets less accrued pension costs at March 31, 2016. None of this amount is expected to be recognized in net periodic pension costs during the fiscal year ending March 31, 2017. No plan assets are expected to be returned to the Company during the fiscal year ending March 31, 2017. Expected Contributions During the fiscal year ended March 31, 2016, the Company contributed $ 175 thousand to its defined benefit pension plan. The following sets forth benefit payments, which reflect expected future service, as appropriate, expected to be paid by the plan in the periods indicated (in thousands): 2017 $ 275 2018 $ 319 2019 $ 369 2020 $ 422 2021 $ 480 2022 - 2026 $ 3,334 |
INCOME TAXES
INCOME TAXES | 12 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES Income (loss) before income tax expense (benefit) consisted of the following (in thousands): Year Ended March 31, 2016 2015 2014 Domestic $ (6,979 ) $ 93,447 $ 80,515 Foreign (25,460 ) 1,518 (2,659 ) $ (32,439 ) $ 94,965 $ 77,856 The components of the income tax expense (benefit) are as follows (in thousands): Year Ended March 31, 2016 2015 2014 Current income tax expense: Federal $ 29,238 $ 25,927 $ 20,123 State 2,223 3,825 2,260 Foreign 6,628 1,307 1,174 38,089 31,059 23,557 Deferred income tax expense (benefit): Federal (30,216 ) 2,836 5,347 State (4,461 ) 17 96 Foreign (7,482 ) (139 ) (250 ) (42,159 ) 2,714 5,193 $ (4,070 ) $ 33,773 $ 28,750 The income tax expense (benefit) computed using the federal statutory income tax rate differs from NetScout’s effective tax rate primarily due to the following: Year Ended March 31, 2016 2015 2014 Statutory U.S. federal tax rate 35.0 % 35.0 % 35.0 % State taxes, net of federal tax effect 3.1 3.2 2.8 Research and development tax credits 13.0 (1.4 ) (1.9 ) Tax rate differential of foreign operations (18.2 ) 0.1 0.2 Domestic production activities deduction 9.2 (2.9 ) (2.7 ) Change in valuation allowance 0.7 0.4 2.0 Transaction costs (19.1 ) — — Foreign withholding (6.1 ) — — Other (5.1 ) 1.2 1.5 12.5 % 35.6 % 36.9 % The components of net deferred tax assets and liabilities are as follows (in thousands): Year Ended March 31, 2016 2015 Deferred tax assets: Accrued expenses $ 6,734 $ 3,730 Deferred revenue 13,913 9,054 Reserves 7,916 1,651 Pension and other retiree benefits 4,842 — Net operating loss carryforwards 41,225 19,214 Tax credit carryforwards 5,824 3,838 Share-based compensation 4,975 2,660 Transaction related costs — 4,001 Other 426 808 Total gross deferred tax assets 85,855 44,956 Valuation allowance (3,777 ) (3,906 ) Net deferred tax assets 82,078 41,050 Deferred tax liabilities: Intangible assets (354,601 ) (29,202 ) Depreciation (6,630 ) (732 ) Total deferred tax asset (liability) $ (279,153 ) $ 11,116 Deferred tax assets and liabilities are recognized based on the anticipated future tax consequences, attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which the differences are expected to reverse. We evaluate the recoverability of deferred tax assets by considering all positive and negative evidence relating to future profitability. We weigh objective and verifiable evidence more heavily in this analysis. In situations where we conclude that we do not have sufficient objective and verifiable evidence to support the realizability of the asset we create a valuation allowance against it. A valuation allowance has been established for the deferred tax assets related to Psytechnics Ltd., and for certain deferred tax assets related to the acquisition of ONPATH, as well as for the federal foreign tax credits acquired as part of the Network General acquisition, as the Company has determined there is not sufficient objective evidence to support the realizability of these tax assets. If it is later determined the Company is able to use all or a portion of the deferred tax assets for which a valuation allowance has been established, then the Company may be required to recognize these deferred tax assets through a tax benefit recorded in the period such determination is made. At March 31, 2016 , undistributed earnings of non-U.S. subsidiaries totaled approximately $36 million . No provision for U.S. income and foreign withholding taxes has been made for these permanently invested foreign earnings because it is expected that such earnings will be reinvested indefinitely. If these earnings were distributed to the United States in the form of dividends or otherwise, they would be included in the Company’s U.S. taxable income. At this time, the Company has deemed it to be impracticable to determine the amount of any taxes payable if these amounts were to be repatriated to the United States. At March 31, 2016, the Company had United States federal net operating loss carry forwards of approximately $77 million , state net operating loss carryforwards of approximately $86 million and tax credit carryforwards of approximately $6 million . The net operating loss and credit carryforwards will expire at various dates beginning in 2023 and extending through 2037, if not utilized. The Company also had foreign net operating loss carryforwards of approximately $71 million at March 31, 2016. The majority of foreign net operating losses have no expiration dates. Utilization of the U.S. net operating losses and credits are subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986, as amended, and similar state tax provisions. The Company files U.S. federal tax returns and files returns in various state, local and foreign jurisdictions. With respect to the U.S. federal and primary state jurisdictions, the Company is no longer subject to examinations by tax authorities for tax years before 2013, although carryforward attributes that were generated prior to 2013 may still be adjusted upon examination if they either have been or will be used in a future period. The Company also receives inquiries from various tax jurisdictions during the year, and some of those inquiries may include an audit of the tax return previously filed. In the normal course of business, NetScout and its subsidiaries are examined by various taxing authorities, including the IRS in the United States. A reconciliation of the beginning and ending amount of unrecognized tax benefits for the fiscal years ended March 31, 2016 , 2015 and 2014 is as follows (in thousands): Year Ended March 31, 2016 2015 2014 Balance at April 1, $ 1,038 $ 421 $ 370 Additions based on tax positions related to the current year 48 45 51 Release of tax positions of prior years — (75 ) — Increase in unrecognized tax benefits as a result of a tax position taken during a prior period 502 647 — Balance at March 31, $ 1,588 $ 1,038 $ 421 We are unable to make a reliable estimate when cash settlement, if any, will occur with a tax authority as the timing of examinations and ultimate resolution of those examinations is uncertain. All of the unrecognized tax benefits would affect the effective tax rate if recognized. The Company includes interest and penalties accrued in the consolidated financial statements as a component of the tax provision. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 12 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Acquisition related The Company has one contingent liability related to the acquisition of Simena in November 2011 for future consideration to be paid to the former seller which had an initial fair value of $8.0 million at the time of acquisition. At March 31, 2016 , the present value of the future consideration was $4.6 million . The Company has one contingent liability related to the Transaction in July 2015 which represents the tax effected portion of the contingently returnable consideration. At March 31, 2016 , the fair value of the future consideration to be paid to Danaher was $2.7 million . For additional information, see Note 7 of the Company's Notes to consolidated Financial Statements. Legal From time to time, NetScout is subject to legal proceedings and claims in the ordinary course of business. In the opinion of management, the amount of ultimate expense with respect to any current legal proceedings and claims, if determined adversely, will not have a significant adverse effect on the Company’s financial condition, results of operations or cash flows. Unconditional purchase obligations At March 31, 2016, the Company had unconditional purchase obligations of $54.1 million , which represent estimated open purchase orders to purchase inventory as well as commitments for products and services used in the normal course of business. Leases NetScout leases office space under non-cancelable operating leases. Total rent expense under the leases was $12.8 million , $5.9 million and $6.0 million for the fiscal years ended March 31, 2016 , 2015 and 2014 , respectively. At March 31, 2016 , future non-cancelable minimum lease commitments (including office space, copiers and automobiles) are as follows (in thousands): Year Ending March 31, 2017 $ 21,448 2018 15,750 2019 10,064 2020 4,720 2021 3,542 Remaining years 6,333 Total minimum lease payments $ 61,857 |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 12 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION The Company reports revenues and income under five operating segments that aggregate under one reportable segment. The Company manages its business in the following geographic areas: United States, Europe, Asia and the rest of the world. In accordance with United States export control regulations, the Company does not sell or do business with countries subject to economic sanctions and export controls. Total revenue by geography is as follows (in thousands): Year Ended March 31, 2016 2015 2014 United States $ 681,569 $ 348,354 $ 303,364 Europe 137,411 46,253 45,837 Asia 61,566 27,685 20,646 Rest of the world 74,873 31,377 26,800 $ 955,419 $ 453,669 $ 396,647 The United States revenue includes sales to resellers in the United States. These resellers fulfill customer orders and may subsequently ship the Company’s products to international locations. The Company reports these shipments as United States revenue since the Company ships the products to a United States location. A majority of revenue attributable to locations outside of the United States is a result of export sales. Substantially all of the Company’s identifiable assets are located in the United States. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 12 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS A member of the Company’s Board of Directors serves as an executive officer (under Section 16 of the Securities Exchange Act of 1934, as amended (the Exchange Act)) of Danaher. As part of the split off of Danaher’s Communications Business and the Company’s subsequent acquisition of that business from Newco's shareholders, NetScout has entered into multiple transactions with Danaher which include: transitions services agreements, lease agreements, closing agreements, and compensation for post-combination services provisions within the separation and distribution agreement. The Company has disclosed these transactions parenthetically within the financial statements. A member of the Company’s Board of Directors also serves as a member of the board of directors for EMC Corp. (EMC) and therefore, the Company considers sales to EMC to be a related party transaction. The Company generated $475 thousand and $374 thousand in revenue from EMC during the fiscal years ended March 31, 2016 and 2015 in the ordinary course of business. A member of the Company’s Board of Directors also serves as a member of the board of directors for Mitre Corp. (Mitre) and therefore, the Company considers sales to Mitre to be a related party transaction. The Company generated $125 thousand in revenue from Mitre during the fiscal year ended March 31, 2016 in the ordinary course of business. Another member of the Company’s Board of Directors had served as a Section 16 officer of State Street during the year and therefore, the Company considers sales to State Street to be a related party transaction. The Company generated $452 thousand and $240 thousand in revenue from State Street during the fiscal years ended March 31, 2016 and 2015 in the ordinary course of business. |
QUARTERLY RESULTS OF OPERATIONS
QUARTERLY RESULTS OF OPERATIONS - UNAUDITED | 12 Months Ended |
Mar. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
QUARTERLY RESULTS OF OPERATIONS - UNAUDITED | QUARTERLY RESULTS OF OPERATIONS – UNAUDITED The following table sets forth certain unaudited quarterly results of operations of NetScout for the fiscal years ended March 31, 2016 and 2015 . In the opinion of management, this information has been prepared on the same basis as the audited consolidated financial statements and all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the quarterly information when read in conjunction with the audited consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. The quarterly operating results are not necessarily indicative of future results of operations. Three Months Ended (in thousands, except per share data) March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015 Dec. 31, 2014 Sept. 30, 2014 June 30, 2014 Revenue $ 285,887 $ 307,679 $ 261,110 $ 100,743 $ 119,385 $ 122,833 $ 103,599 $ 107,852 Gross profit $ 185,036 $ 201,564 $ 160,923 $ 79,447 $ 95,997 $ 95,851 $ 82,004 $ 85,256 Net income (loss) $ (3,616 ) $ (24,507 ) $ (7,915 ) $ 7,669 $ 20,854 $ 17,629 $ 11,233 $ 11,476 Diluted net income (loss) per share $ (0.04 ) $ (0.25 ) $ (0.09 ) $ 0.19 $ 0.50 $ 0.42 $ 0.27 $ 0.27 |
SCHEDULE II - VALUATION AND QUA
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS | 12 Months Ended |
Mar. 31, 2016 | |
Valuation and Qualifying Accounts [Abstract] | |
Schedule II - Valuation and Qualifying Accounts | NetScout Systems, Inc. Schedule II—Valuation and Qualifying Accounts (in thousands) Balance at Beginning of Year Additions Resulting in Charges to Operations Charges to Other Accounts Deductions Due to Write-Offs Balance at End of Year Year ended March 31, 2014 Allowance for doubtful accounts $ 971 $ 250 $ (40 ) $ (868 ) $ 313 Deferred tax asset valuation allowance $ 3,795 $ 837 $ 309 $ — $ 4,941 Year ended March 31, 2015 Allowance for doubtful accounts $ 313 $ (140 ) $ — $ — $ 173 Deferred tax asset valuation allowance $ 4,941 $ 152 $ — $ (1,187 ) $ 3,906 Year ended March 31, 2016 Allowance for doubtful accounts $ 173 $ 1,824 $ 3,221 $ (149 ) $ 5,069 Deferred tax asset valuation allowance $ 3,906 $ 99 $ — $ (228 ) $ 3,777 |
SUMMARY OF SIGNIFICANT ACCOUN30
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 12 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation The consolidated financial statements include the accounts of NetScout and its wholly-owned subsidiaries. All inter-company transactions and balances have been eliminated in consolidation. |
Fiscal Year End | Fiscal Year End The fiscal year end of NetScout and its wholly-owned subsidiaries ends on March 31st, except for Fluke Networks Enterprise business, which ended on April 1, 2016. NetScout’s quarters end on the last calendar day of the months of June, September and December. The fiscal year 2016 quarter end dates of the entities acquired as part of the Communications Business were October 2nd and December 31st. The Company does not adjust for the difference in fiscal periods between the acquired entities and itself, as such difference would be less than 93 days, pursuant to Regulation S-X Rule 3A-02. References herein to Fiscal 2016, 2015 and 2014 refer to the fiscal years ended March 31, 2016, 2015 and 2014, respectively. |
Segment Reporting | Segment Reporting The Company reports revenues and income under five operating segments that aggregate under one reportable segment. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles (GAAP) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Significant estimates in these financial statements include those involving revenue recognition, valuation of goodwill and acquired assets and liabilities, valuation of the pension obligation and share-based compensation. These items are continuously monitored and analyzed by management for changes in facts and circumstances and material changes in these estimates could occur in the future. |
Cash and Cash Equivalents and Marketable Securities | Cash and Cash Equivalents and Marketable Securities Under current authoritative guidance, NetScout has classified its investments as “available-for-sale” which are carried at fair value based on quoted market prices and associated unrealized gains or losses are recorded as a separate component of stockholders’ equity until realized. NetScout considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents and those investments with original maturities greater than three months to be marketable securities. At March 31, 2016 and periodically throughout the year, NetScout has maintained cash balances in various operating accounts in excess of federally insured limits. NetScout limits the amount of credit exposure by investing only with credit worthy institutions which we believe are those institutions with an investment grade rating for deposits. |
Revenue Recognition | Revenue Recognition The Company exercises judgment and uses estimates in connection with determining the amounts of product and services revenues to be recognized in each accounting period. The Company derives revenues primarily from the sale of network management tools and security solutions for service provider and enterprise customers, which include hardware, software and service offerings. The majority of the Company’s product sales consist of hardware products with embedded software that are essential to providing customers the intended functionality of the solutions. The Company also sells stand-alone software solutions to provide customers with enhanced functionality. In addition, the Company sells hardware bundled with a software license. Product revenue is recognized upon shipment, provided that evidence of an arrangement exists, title and risk of loss have passed to the customer, and in the case of software products, when the customer has the rights and ability to access the software, fees are fixed or determinable and collection of the related receivable is reasonably assured. If any significant obligations to the customer remain post-delivery, typically involving obligations relating to installation and acceptance by the customer, revenue recognition is deferred until such obligations have been fulfilled. Because many of the Company’s solutions are comprised of both hardware and more than incidental software components, the Company recognizes revenue in accordance with authoritative guidance on both hardware and software revenue recognition. The Company’s service offerings include installation, integration, extended warranty and maintenance services, post-contract customer support (PCS), and other professional services including consulting and training. The Company generally provides software and/or hardware support as part of product sales. Revenue related to the initial bundled software and hardware support is recognized ratably over the support period. In addition, customers can elect to purchase extended support agreements for periods after the initial software/hardware warranty expiration. Support services generally include rights to unspecified upgrades (when and if available), telephone and internet-based support, updates and bug fixes. Consulting services are recognized upon delivery or completion of performance. Reimbursements of out-of-pocket expenditures incurred in connection with providing consulting services are included in services revenue, with the offsetting expense recorded in cost of service revenue. Training services include on-site and classroom training. Training revenues are recognized upon delivery of the training. Generally, the Company’s contracts are accounted for individually. However, when contracts are closely interrelated and dependent on each other, it may be necessary to account for two or more contracts as one to reflect the substance of the group of contracts. Multi-element arrangements are concurrent customer purchases of a combination of the Company’s product and service offerings that may be delivered at various points in time. For multi-element arrangements comprised only of hardware products and related services, the Company allocates the total arrangement consideration to the multiple elements based on each element’s fair value compared to the total relative selling price of all the elements. Each element’s selling price is based on management’s best estimate of selling price (BESP) paid by customers based on the element’s historical pricing when vendor-specific objective evidence (VSOE) or third-party evidence (TPE) does not exist. The Company has established BESP for product elements as the average or median selling price the element was recently sold for, whether sold alone or sold as part of a multiple element transaction. The Company also considers its overall pricing objectives and practices across different sales channels and geographies, and market conditions. The Company reviews sales of the product elements on a quarterly basis and updates when appropriate, its BESP for such elements to ensure that it reflects recent pricing experience. The Company has established VSOE for a majority of its service elements based on historical stand-alone sales or by the renewal rate offered to the customer. However certain business units acquired as part of the Transaction are unable to establish VSOE for undelivered elements. This occurs because the pricing for standalone sales does not occur in tight bands around a midpoint, and they are not contractually fixed. In these scenarios the Company has typically established BESP by creating wider bands around a midpoint for standalone transactions or in some cases using cost plus a margin for the underlying services and products. If VSOE of fair value does not exist for a deliverable, the Company uses its BESP for that deliverable. For multi-element arrangements comprised only of software products and related services, the Company allocates a portion of the total arrangement consideration to the undelivered elements, primarily support agreements and professional services, using vendor-specific objective evidence of fair value for the undelivered elements. The remaining portion of the total arrangement consideration is allocated to the delivered software, referred to as the residual method. VSOE of fair value of the undelivered elements is based on the price customers pay when the element is sold separately. The Company reviews the separate sales of the undelivered elements on a regular basis and updates when appropriate, its VSOE of fair value for such elements to ensure that it reflects recent pricing experience. If the Company cannot objectively determine the VSOE of the fair value of any undelivered software element, revenue is deferred until all elements are delivered and services have been performed, or until fair value can objectively be determined for any remaining undelivered elements. However, if the only undelivered element is maintenance and support, the entire arrangement fee is recognized over the service period. For multi-element arrangements comprised of a combination of hardware and software elements, the total arrangement consideration is bifurcated between the hardware and hardware related deliverables and the software and software related deliverables based on the relative selling prices of all deliverables as a group. Then, arrangement consideration for the hardware and hardware-related services is recognized upon delivery or as the related services are provided outlined above and revenue for the software and software-related services is allocated following the residual method and recognized based upon delivery or as the related services are provided. The Company’s products are distributed through its direct sales force and indirect distribution channels through alliances with resellers. Revenue arrangements with resellers are recognized on a sell-in basis; that is, when the Company delivers the product to the reseller. The Company records consideration given to a reseller as a reduction of revenue to the extent the Company has recorded revenue from the reseller. With limited exceptions, the Company’s return policy does not allow product returns for a refund. Returns have been insignificant to date. In addition, the Company has a history of successfully collecting receivables from the resellers. |
Commission Expense | Commission Expense The Company recognizes commission expense related to the renewal of maintenance contracts at the time an order is booked. As a result, commission expense can be recognized in full even though the related revenue may not be fully recognized. Base commission expense on product revenue and corresponding new maintenance contracts is recognized in the same period as related product revenue, typically upon shipment. |
Uncollected Deferred Product Revenue | Uncollected Deferred Product Revenue Because of NetScout’s revenue recognition policies, there are circumstances for which the Company does not recognize revenue relating to sales transactions that have been billed, but the related account receivable has not been collected. While the receivable represents an enforceable obligation, for balance sheet presentation purposes, the Company has not recognized the deferred revenue or the related account receivable and no amounts appear in the consolidated balance sheets for such transactions. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject us to concentration of credit risk consist primarily of investments, trade accounts receivable and accounts payable. Our cash, cash equivalents, and marketable securities are placed with financial institutions with high credit standings. |
Trade Receivable Valuations | Trade Receivable Valuations Accounts receivable are stated at their net realizable value. The allowance against gross trade receivables reflects the best estimate of probable losses inherent in the receivables portfolio determined on the basis of historical experience, specific allowances for known troubled accounts and other currently available information. |
Inventories | Inventories Inventories are stated at the lower of actual cost or net realizable value. Cost is determined by using the first-in, first-out (FIFO) method. |
Fixed Assets | Fixed Assets Fixed assets are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Leasehold improvements are amortized on a straight-line basis over the shorter of the lease term or anticipated useful life of the improvement. Gains and losses upon asset disposal are recognized in the year of disposition. Expenditures for replacements and building improvements are capitalized, while expenditures for maintenance and repairs are charged against earnings as incurred. |
Valuation of Goodwill, Intangible Assets and Other Acquisition Accounting Items | Valuation of Goodwill, Intangible Assets and Other Acquisition Accounting Items The Company amortizes acquired definite-lived intangible assets over their estimated useful lives. Goodwill and other indefinite-lived intangible assets are not amortized but subject to annual impairment tests; more frequently if events or circumstances occur that would indicate a potential decline in their fair value. The Company performs the assessment annually during the fourth quarter and on an interim basis if potential impairment indicators arise. The Company has identified five reporting units: (1) NetScout, (2) Arbor Networks, (3) Tektronix Communications, (4) VSS and (5) FNET and an indefinite-lived trade name. To test impairment, the Company first assesses qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the intangible asset is impaired. If based on the Company's qualitative assessment it is more likely than not that the fair value of the intangible asset is less than its carrying amount, quantitative impairment testing is required. However, if the Company concludes otherwise, quantitative impairment testing is not required. During fiscal year 2016, the Company performed a quantitative analysis for goodwill and its non-amortizing intangible asset. The Company determined the fair value of the reporting unit's goodwill using established income and market valuation approaches and the fair value of its trade names using a forward-looking relief from royalty model. All goodwill and indefinite-lived intangible assets were estimated to be recoverable as of January 31, 2016. The Company completed one acquisition during the three year period ended March 31, 2016 . The acquisition method of accounting requires an estimate of the fair value of the assets and liabilities acquired as part of these transactions. In order to estimate the fair value of acquired intangible assets the Company uses a relief from royalty model which requires management to estimate: future revenues expected to be generated by the acquired intangible assets, a royalty rate which a market participant would pay related to the projected revenue stream, a present value factor which approximates a risk adjusted rate of return for a market participant purchasing the assets, and a technology migration curve representing a period of time over which the technology assets or some portion thereof are still being used. The Company is also required to develop the fair value for customer relationships acquired as part of these transactions which requires that we create estimates for the following items: a projection of future revenues associated with the acquired company’s existing customers, a turnover rate for those customers, a margin related to those sales, and risk adjusted rate of return for a market participant purchasing those relationships. The Transaction contained both contingently returnable consideration and contingent purchase consideration. The contingently returnable consideration represents a contingent right of return from Danaher to reimburse NetScout for certain cash awards to be paid by NetScout to employees of the Communications Business transferred to Newco for post-combination services on various dates through August 4, 2016. The contingently returnable consideration was $16.1 million , net of taxes at March 31, 2016. During the fiscal year ended March 31, 2016, certain post-combination cash retention payments have been disbursed. Danaher will reimburse the Company for those costs and NetScout will reimburse Danaher for the tax benefit. Because the right of offset has not been met, the Company recorded the gross amount of compensation as contingently returnable consideration and the tax benefit of $2.7 million as contingent purchase consideration. For additional information, see Note 7 of the Company's Notes to Consolidated Financial Statements. The acquisition of Simena LLC on November 18, 2011 also contained contingent consideration based on the ultimate settlement of assets and liabilities acquired as part of the transaction, and the former owners' future period of employment with the Company. Contingent consideration accounting requires the Company to estimate the probability of various settlement scenarios, the former owners' expected period of employment with NetScout, and a risk adjusted interest rate to present value the payment streams. |
Capitalized Software Development Costs | Capitalized Software Development Costs Costs incurred in the research and development of the Company’s products are expensed as incurred, except for certain software development costs. Costs associated with the development of computer software are expensed prior to the establishment of technological feasibility and capitalized thereafter until the related software products are available for first customer shipment. Such costs are amortized using the straight-line method over the estimated economic life of the product, which generally does not exceed three years . Capitalized software development costs are periodically assessed for recoverability in the event of changes to the anticipated future revenue for the software products or changes in product technologies. Unamortized capitalized software development costs that are determined to be in excess of the net realizable value of the software products would be expensed in the period in which such a determination is made. Typically for accounting purposes, these R&D investments have not been capitalized because of the development methodology employed. The developments are added individually to the core code over a shorter period of time but marketed as a release once all portions are complete. |
Derivative Financial Instruments | Derivative Financial Instruments Under authoritative guidance for derivative instruments and hedging activities, all hedging activities must be documented at the inception of the hedge and must meet the definition of highly effective in offsetting changes to future cash flows in order for the derivative to qualify for hedge accounting. Under the guidance, if an instrument qualifies for hedge accounting, the changes in the fair value each period for open contracts, measured at the end of the period, are recorded to other comprehensive income. Otherwise, changes in the fair value are recorded in earnings each period. Management must perform initial and ongoing tests in order to qualify for hedge accounting. In accordance with the guidance, the Company accounts for its instruments under hedge accounting. The effectiveness and a measurement of ineffectiveness of qualifying hedge contracts are assessed by the Company quarterly. The Company records the fair value of its derivatives in prepaid and other current assets and accrued other in the Company's consolidated balance sheet. The effective portion of gains or losses resulting from changes in the fair value of qualifying hedges are recorded in other comprehensive income (loss) until the forecasted transaction occurs, with any ineffective portion classified directly to the Company’s consolidated statement of operations based on the expense categories of the items being hedged. When forecasted transactions occur, unrealized gains or losses associated with the effective portion of the hedge are reclassified to the respective expense categories in the Company’s consolidated statement of operations. Gains or losses related to hedging activity are included as operating activities in the Company’s consolidated statement of cash flows. If the underlying forecasted transactions do not occur, or it becomes probable that they will not occur, the gain or loss on the related cash flow hedge is recognized immediately in earnings. |
Contingencies | Contingencies NetScout accounts for claims and contingencies in accordance with authoritative guidance that requires an estimated loss to be recorded from a claim or loss contingency when information available prior to issuance of our consolidated financial statements indicates that it is probable that a liability has been incurred at the date of the consolidated financial statements and the amount of the loss can be reasonably estimated. If NetScout determines that it is reasonably possible but not probable that an asset has been impaired or a liability has been incurred or if the amount of a probable loss cannot be reasonably estimated, then in accordance with the authoritative guidance, we disclose the amount or range of estimated loss if the amount or range of estimated loss is material. Accounting for claims and contingencies requires NetScout to use its judgment. NetScout consults with legal counsel on those issues related to litigation and seeks input from other experts and advisors with respect to matters in the ordinary course of business. See Note 16 for a discussion of contingencies. Contingent liabilities include contingent consideration in connection with the Company’s acquisitions. Contingent consideration represents earnout payments in connection with the Company’s acquisitions and is recognized at fair value on the acquisition date and remeasured each reporting period with subsequent adjustments recognized in the consolidated statements of income. The Company discounts the contingent purchase consideration to present value using a risk adjusted interest rate at each reporting period. Contingent consideration is valued using significant inputs that are not observable in the market which are defined as Level 3 inputs pursuant to fair value measurement accounting. The Company believes its estimates and assumptions are reasonable, however, there is significant judgment involved. Changes in the fair value of contingent liabilities may result from changes in discount periods. The Company reflects changes in fair value due to probability changes in earnings in the consolidated statements of income. Earnout payments are reflected in cash flows from financing activities and the changes in fair value are reflected in cash flows from operating activities in the consolidated statements of cash flows. |
Share-based Compensation | Share-Based Compensation NetScout recognizes compensation expense for all share-based payments granted. Under the fair value recognition provisions, share-based compensation is calculated net of an estimated forfeiture rate and compensation cost is only recognized for those shares expected to vest on a straight-line basis over the requisite service period of the award. |
Foreign Currency | Foreign Currency NetScout accounts for its reporting of foreign operations in accordance with guidance which establishes guidelines for the determination of the functional currency of foreign subsidiaries. In accordance with the guidance, NetScout has determined its functional currency for those foreign subsidiaries that are an extension of NetScouts U.S. operations to be the U.S. Dollar. Assets and liabilities of subsidiaries operating outside the United States with a functional currency other than U.S. dollars are translated into United States dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period. Cumulative translation adjustments are reflected as a separate component of stockholders’ equity. NetScout will experience currency exchange risk with respect to foreign currency denominated expenses. In order to partially offset the risks associated with the effects of certain foreign currency exposures, NetScout has established a program that utilizes foreign currency forward contracts. Under this program, increases or decreases in foreign currency exposures are partially offset by gains or losses on forward contracts, to mitigate the impact of foreign currency transaction gains or losses. The Company does not use forward contracts to engage in currency speculation. All outstanding foreign currency forward contracts are recorded at fair value at the end of each fiscal period. |
Advertising Expense | Advertising Expense NetScout recognizes advertising expense as incurred. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) is comprised of net income and other comprehensive income (loss). Other comprehensive income (loss) typically consists of unrealized gains and losses on marketable securities, unrealized gain (loss) on hedge contracts, actuarial gains and losses, and foreign currency translation adjustments. |
Income Taxes | Income Taxes NetScout accounts for its income taxes under the asset and liability method. Under the asset and liability method, deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax basis, as well as the effect of any net operating loss and tax credit carryforwards. Income tax expense is comprised of the current tax liability or benefit and the change in deferred tax assets and liabilities. We evaluate the recoverability of deferred tax assets by considering all positive and negative evidence relating to future profitability. We weigh objective and verifiable evidence more heavily in this analysis. In situations where we conclude that we do not have sufficient objective and verifiable evidence to support the realizability of the deferred tax asset, we create a valuation allowance against it. |
Recent Accounting Standards | Recent Accounting Standards In March 2016, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (ASU 2016-09), which simplifies several aspects of the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU 2016-09 is effective for the Company beginning April 1, 2017. The Company is currently assessing the potential impact of the adoption of ASU 2016-09 on its consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Section A - Leases: Amendments to the FASB Accounting Standards Codification (ASU 2016-02), its new standard on accounting for leases. This update requires the recognition of leased assets and lease obligations by lessees for those leases currently classified as operating leases under existing lease guidance. Short term leases with a term of 12 months or less are not required to be recognized. The update also requires disclosure of key information about leasing arrangements to increase transparency and comparability among organizations. ASU 2016-02 is effective for annual reporting periods beginning after December 31, 2018 and interim periods within those fiscal years, and early adoption is permitted. The Company is currently assessing the potential impact of the adoption of ASU 2016-02 on its consolidated financial statements. In November 2015, the FASB issued ASU 2015-17, Balance Sheet Classification of Deferred Taxes (ASU 2015-17), which eliminates the current requirement to present deferred tax liabilities and assets as current and noncurrent in a classified balance sheet. Instead, entities will be required to classify all deferred tax assets and liabilities as noncurrent. The Company adopted this standard prospectively in the third quarter of fiscal year 2016 as early adoption was permitted and prior periods were not retrospectively adjusted. In September 2015, the FASB issued ASU 2015-16, Simplifying the Accounting for Measurement-Period Adjustments (ASU 2015-16), which eliminates the requirement to restate prior financial statements for measurement period adjustments. The new guidance requires that the cumulative impact of a measurement period adjustment be recognized in the reporting period in which the adjustment is identified. The Company adopted this standard in the second quarter of fiscal year 2016 as early adoption was permitted. In August 2015, the FASB issued ASU 2015-15, Interest-Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-Of-Credit Arrangements and Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting (ASU 2015-15). The guidance in the previously issued ASU 2015-03, Interest-Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs does not address presentation or subsequent measurement of debt issuance costs related to line-of-credit arrangements. Given the absence of authoritative guidance within ASU 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. The Company adopted this standard in the second quarter of fiscal year 2016 as early adoption was permitted. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09), to supersede nearly all existing revenue recognition guidance under GAAP. The core principle of ASU 2014-09 is to recognize revenues when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. ASU 2014-09 defines a five step process to achieve this core principle and, in doing so, it is possible more judgment and estimates may be required within the revenue recognition process than required under existing GAAP, including identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. Existing accounting guidance applicable to these transfers has been amended or superseded. In August 2015, the FASB issued ASU 2015-14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date, which defers the original effective date of interim and annual reporting periods by one year. As a result, public entities would not be required to apply the new revenue standard until annual reporting periods beginning after December 15, 2017. In March 2016, the FASB issued ASU 2016-08, Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net) (ASU 2016-08) to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard in response to feedback received from the FASB-IASB joint revenue recognition transition resource group. ASU 2016-08 clarifies the implementation guidance on principal-versus-agent considerations regarding how an entity determines whether it is a principal or an agent for each specified good or service promised to the customer and how an entity determines the nature of each specified good or service. ASU 2016-08 also provides clarification regarding the application of the principal-versus-agent guidance. ASU 2016-08 is effective at the same time as ASU 2014-09 (as amended by ASU 2015-14), and will be effective for the Company in the first quarter of its fiscal year 2019. Early adoption is not permitted. The Company is currently assessing the potential impact of the adoption of ASU 2014-09 on its consolidated financial statements. |
CASH, CASH EQUIVALENTS AND MA31
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Cash and Cash Equivalents [Abstract] | |
Summary of Marketable Securities Classified as Short-term and Long-term | The following is a summary of marketable securities held by NetScout at March 31, 2016 classified as short-term and long-term (in thousands): Amortized Cost Unrealized Gains (Losses) Fair Value Type of security: U.S. government and municipal obligations $ 109,963 $ 4 $ 109,967 Commercial paper 16,172 — 16,172 Corporate bonds 1,864 — 1,864 Total short-term marketable securities 127,999 4 128,003 U.S. government and municipal obligations 13,349 12 13,361 Corporate bonds — — — Total long-term marketable securities 13,349 12 13,361 Total marketable securities $ 141,348 $ 16 $ 141,364 The following is a summary of marketable securities held by NetScout at March 31, 2015 , classified as short-term and long-term (in thousands): Amortized Cost Unrealized Gains (Losses) Fair Value Type of security: U.S. government and municipal obligations $ 88,651 $ 3 $ 88,654 Commercial paper 5,093 2 5,095 Corporate bonds 7,644 (1 ) 7,643 Total short-term marketable securities 101,388 4 101,392 U.S. government and municipal obligations 56,683 8 56,691 Corporate bonds 1,880 1 1,881 Total long-term marketable securities 58,563 9 58,572 Total marketable securities $ 159,951 $ 13 $ 159,964 |
Summary of Contractual Maturities of Marketable Securities | Contractual maturities of the Company’s marketable securities held at March 31, 2016 and March 31, 2015 were as follows (in thousands): March 31, March 31, Available-for-sale securities: Due in 1 year or less $ 128,003 $ 101,392 Due after 1 year through 5 years 13,361 58,572 $ 141,364 $ 159,964 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Schedule of Financial Assets and Liabilities | The following tables present the Company’s financial assets and liabilities measured on a recurring basis using the fair value hierarchy at March 31, 2016 and 2015 (in thousands). Fair Value Measurements at March 31, 2016 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 210,711 $ — $ — $ 210,711 U.S. government and municipal obligations 41,116 82,212 — 123,328 Commercial paper — 16,172 — 16,172 Corporate bonds 1,864 — — 1,864 Derivative financial instruments — 191 — 191 Contingently returnable consideration — 16,131 16,131 $ 253,691 $ 98,575 $ 16,131 $ 368,397 LIABILITIES: Contingent consideration $ — $ — $ (7,293 ) $ (7,293 ) Derivative financial instruments — (158 ) — (158 ) $ — $ (158 ) $ (7,293 ) $ (7,451 ) Fair Value Measurements at March 31, 2015 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 104,893 $ — $ — $ 104,893 U.S. government and municipal obligations 46,564 98,781 — 145,345 Commercial paper — 5,095 — 5,095 Corporate bonds 9,524 — — 9,524 Derivative financial instruments — 15 — 15 $ 160,981 $ 103,891 $ — $ 264,872 LIABILITIES: Contingent consideration $ — $ — $ (4,484 ) $ (4,484 ) Derivative financial instruments — (1,664 ) — (1,664 ) $ — $ (1,664 ) $ (4,484 ) $ (6,148 ) |
Schedule of Reconciliation of Changes in Fair Value of Level Three Financial Liabilities | The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial liabilities for the year ended March 31, 2016 (in thousands): Contingent Purchase Consideration Contingently Returnable Consideration Balance at March 31, 2015 $ (4,484 ) $ — (Increase) / decrease in fair value and accretion expense (included within research and development expense) (152 ) — Contingently returnable consideration — 19,125 Increase in fair value (21 ) 3,676 Gross presentation of contingently returnable consideration to contingent purchase consideration (2,636 ) 2,636 Payments received — (9,306 ) Balance at March 31, 2016 $ (7,293 ) $ 16,131 The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial liabilities for the year ended March 31, 2015 (in thousands): Contingent Purchase Consideration Contingent Contractual Non-compliance Liability Balance at March 31, 2014 $ (4,291 ) $ (49 ) (Increase) / decrease in fair value and accretion expense (included within research and development expense) (193 ) 49 Balance at March 31, 2015 $ (4,484 ) $ 0 |
INVENTORIES (Tables)
INVENTORIES (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories are stated at the lower of actual cost or net realizable value. Cost is determined by using the FIFO method. Inventories consist of the following (in thousands): March 31, 2016 2015 Raw materials $ 18,617 $ 6,134 Work in process 651 17 Finished goods 38,761 5,979 $ 58,029 $ 12,130 |
FIXED ASSETS (Tables)
FIXED ASSETS (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Property, Plant and Equipment [Abstract] | |
Schedule of Fixed Assets | Fixed assets consist of the following (in thousands): Estimated Useful Life in Years March 31, 2016 2015 Furniture and fixtures 3-7 $ 5,843 $ 3,739 Computer equipment and internal use software 3-5 118,974 69,259 Demonstration and spare part units 2-5 6,860 12,092 Leasehold improvements (1) up to 12 22,490 14,709 154,167 99,799 Less – accumulated depreciation (92,134 ) (75,935 ) $ 62,033 $ 23,864 (1) Leasehold improvements are depreciated over the shorter of the lease term or anticipated useful life of the improvement. |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Business Combinations [Abstract] | |
Summary of Purchase Price Allocation | The following table summarizes the allocation of the purchase price for the entities acquired on July 14, 2015 (in thousands): Purchase Price Allocation: Total equity consideration $ 2,299,911 (1) Less: Equity consideration for replacement awards (29,355 ) (2) Estimated Purchase Price $ 2,270,556 Estimated fair value of assets acquired and liabilities assumed: Cash 27,701 Accounts receivable 140,586 Inventories 80,719 Prepaid expenses and other assets 6,715 Property, plant and equipment 36,825 Deferred income taxes 13,067 Intangible assets 1,080,700 Other assets 999 Accounts payable (21,311 ) Accrued compensation (24,316 ) Accrued other (12,916 ) Deferred revenue (187,882 ) Other long-term liabilities (3,615 ) Accrued retirement benefits (29,917 ) Deferred tax liabilities (344,646 ) Goodwill $ 1,507,847 (1) Represents approximately 62.5 million new shares (plus cash in lieu of fractional shares) of NetScout common stock issued to the existing common unit holders of Newco based on the July 13, 2015 NetScout common stock closing share price of $36.89 per share, less the fair value attributable to the foreign entities that the Company did not obtain control over on July 14, 2015 due to regulatory and other compliance requirements. (2) Represents the value of certain outstanding Danaher equity awards held by Newco Employees for which continuing employees will receive value after the Closing Date. A portion of this amount relates to awards that will continue to vest in Danaher shares after the Closing Date. These future compensation amounts will be settled in shares other than shares of the acquired business. The balance of this amount also represents future compensation expense and relates to cash awards to be paid by NetScout to acquired Newco employees on August 4, 2016. The cash payments by NetScout will be reimbursed by Danaher. These items are further described in the Employee Matters Agreement dated July 14, 2015 by and among NetScout Systems, Inc., Danaher Corporation and Potomac Holding LLC and have been accounted for separately from the Communications Business Acquisition. The following table summarizes the allocation of the purchase price for the Delayed Close Entities acquired on October 7, 2015 (in thousands): Purchase Price Allocation: Total equity consideration $ 5,700 (1) Estimated Purchase Price $ 5,700 Estimated fair value of assets acquired and liabilities assumed: Accounts receivable $ 110 Inventories 78 Prepaid expenses and other assets 35 Property, plant and equipment 1,254 Other assets 281 Accounts payable (8 ) Accrued compensation (824 ) Accrued other (176 ) Deferred revenue (65 ) Other long-term liabilities (126 ) Goodwill $ 5,141 (1) Represents the fair value attributable to the Delayed Close Entities that the Company obtained control over on October 7, 2015. |
Schedule of Fair value of Acquired Identifiable Intangible Assets and Related Estimates of Useful Lives | The following table reflects the fair value of the acquired identifiable intangible assets and related estimates of useful lives (in thousands): Fair Value Useful Life (Years) Developed technology $ 221,900 9 - 13 Customer relationships 794,100 13 - 18 Backlog 18,200 1 - 3 Definite lived trademark and tradenames 43,900 3 - 9 Leasehold interest 2,600 4 - 6 $ 1,080,700 |
Schedule of Pro Forma Results of Consolidated Statement of Operations | The following table presents unaudited pro forma results of the historical Consolidated Statements of Operations of the Company and the Communications Business of Danaher for the fiscal years ended March 31, 2016 and 2015 , giving effect to the Transaction as it they occurred on April 1, 2014 (in thousands, except per share data): Year Ended March 31, (unaudited) 2016 2015 Pro forma revenue $ 1,131,626 $ 1,177,938 Pro forma net income (loss) $ (58,806 ) $ (2,323 ) Pro forma income (loss) per share: Basic $ (0.59 ) $ (0.02 ) Diluted $ (0.59 ) $ (0.02 ) Pro forma shares outstanding Basic 99,687 103,573 Diluted 99,687 103,573 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the fiscal years ended March 31, 2016 and 2015 are as follows (in thousands): Balance at March 31, 2014 $ 203,446 Purchase accounting adjustments — Foreign currency translation impact (6,001 ) Balance at March 31, 2015 $ 197,445 Goodwill acquired during the quarter ended September 30, 2015 1,504,261 Goodwill acquired during the quarter ended December 31, 2015 from Delayed Close Entities 5,141 Deferred revenue adjustments (11,392 ) Purchase accounting adjustments (527 ) Change in assumptions for assumed liabilities (6,258 ) Adjust deferred tax liability 25,034 Adjust tax effect on equity consideration (3,271 ) Foreign currency translation impact (1,064 ) Balance at March 31, 2016 $ 1,709,369 |
Schedule of Intangible Assets | Intangible assets include the indefinite lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at March 31, 2016 (in thousands): Cost Accumulated Amortization Net Developed technology $ 253,249 $ (69,810 ) $ 183,439 Customer relationships 834,091 (42,526 ) 791,565 Distributor relationships 5,348 (1,633 ) 3,715 Definite lived trademark and trade name 43,964 (5,511 ) 38,453 Core technology 7,169 (4,659 ) 2,510 Net beneficial leases 336 (336 ) — Non-compete agreements 288 (288 ) — Leasehold interest 2,600 (416 ) 2,184 Backlog 18,245 (6,750 ) 11,495 Capitalized software 1,625 — 1,625 Other 1,191 (737 ) 454 $ 1,168,106 $ (132,666 ) $ 1,035,440 Intangible assets include the indefinite lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at March 31, 2015 (in thousands): Cost Accumulated Amortization Net Developed technology $ 30,865 $ (25,561 ) $ 5,304 Customer relationships 38,498 (16,935 ) 21,563 Distributor relationships 1,585 (711 ) 874 Core technology 7,118 (3,660 ) 3,458 Non-compete agreements 280 (280 ) — Other 943 (562 ) 381 $ 79,289 $ (47,709 ) $ 31,580 |
Schedule of Expected Future Amortization Expense | The following is the expected future amortization expense at March 31, 2016 for the years ended March 31 (in thousands): 2017 $ 123,988 2018 110,449 2019 104,839 2020 97,333 2021 85,360 Thereafter 513,471 Total $ 1,035,440 |
DERIVATIVE INSTRUMENTS AND HE37
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Summary of Notional Amounts and Fair Values of Derivative Instruments on Consolidated Balance Sheet | The notional amounts and fair values of derivative instruments in the consolidated balance sheets at March 31, 2016 and 2015 were as follows (in thousands): Notional Amounts (a) Prepaid Expenses and Other Current Assets Accrued Other March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 March 31, 2016 March 31, 2015 Derivatives Designated as Hedging Instruments: Forward contracts $ 17,490 $ 20,203 $ 191 $ 15 $ 158 $ 1,664 (a) Notional amounts represent the gross contract/notional amount of the derivatives outstanding. |
Summary of Effect of Foreign Exchange Forward Contracts on OCI and Results of Operations | The following table provides the effect foreign exchange forward contracts had on other comprehensive income (loss), (OCI) and results of operations at March 31, 2016 and 2015 (in thousands): Derivatives in Cash Flow Hedging Relationships Effective Portion Ineffective Portion Gain (Loss) Recognized in OCI on Derivative (a) Gain (Loss) Reclassified from Accumulated OCI into Income (b) Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) (c) March 31, March 31, March 31, March 31, March 31, March 31, 2016 2015 Location 2016 2015 Location 2016 2015 Forward contracts $ (852 ) $ (3,050 ) Research and development $ 206 $ 217 Research and development $ 113 $ 193 Sales and marketing 2,295 1,123 Sales and marketing (24 ) 25 $ (852 ) $ (3,050 ) $ 2,501 $ 1,340 $ 89 $ 218 (a) The amount represents the change in fair value of derivative contracts due to changes in spot rates. (b) The amount represents reclassification from other comprehensive income to earnings that occurs when the hedged item affects earnings. (c) The amount represents the change in fair value of derivative contracts due to changes in the difference between the spot price and forward price that is excluded from the assessment of hedge effectiveness and therefore recognized in earnings. No gains or losses were reclassified as a result of discontinuance of cash flow hedges. |
NET INCOME (LOSS) PER SHARE (Ta
NET INCOME (LOSS) PER SHARE (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Schedule of Calculations of Basic and Diluted Net Income per Share and Potential Common Shares | Calculations of the basic and diluted net income (loss) per share and potential common shares are as follows (in thousands, except for per share data): Year Ended March 31, 2016 2015 2014 Numerator: Net income (loss) $ (28,369 ) $ 61,192 $ 49,106 Denominator: Denominator for basic net income (loss) per share - weighted average common shares outstanding 81,927 41,105 41,366 Dilutive common equivalent shares: Weighted average stock options — 9 54 Weighted average restricted stock units — 523 535 Denominator for diluted net income (loss) per share - weighted average shares outstanding 81,927 41,637 41,955 Net income (loss) per share: Basic net income (loss) per share $ (0.35 ) $ 1.49 $ 1.19 Diluted net income (loss) per share $ (0.35 ) $ 1.47 $ 1.17 |
Summary of Antidilutive Securities Excluded from Computation of Diluted EPS | The following table sets forth options and restricted stock units excluded from the calculation of diluted net income per share, since their inclusion would be antidilutive (in thousands): Year Ended March 31, 2016 2015 2014 Restricted stock units 453 14 — |
STOCK PLANS (Tables)
STOCK PLANS (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Summary of Share-Based Compensation Expense | The following is a summary of share-based compensation expense including restricted stock units and employee stock purchases made under our employee stock purchase plan (ESPP) based on estimated fair values within the applicable cost and expense lines identified below (in thousands): Year Ended March 31, 2016 2015 2014 Cost of product revenue $ 645 $ 338 $ 228 Cost of service revenue 2,601 1,194 741 Research and development 9,205 5,505 4,361 Sales and marketing 8,725 4,841 3,791 General and administrative 7,175 4,702 3,809 $ 28,351 $ 16,580 $ 12,930 |
Summary of Transactions under 1999 Stock Option Plan and 2007 Equity Incentive Plan | Transactions under the 1999 Stock Option Plan and the 2007 Equity Incentive Plan during the fiscal years ended March 31, 2016 , 2015 and 2014 are summarized in the table below. Stock Options Restricted Stock Units Number of Shares Weighted Average Exercise Price Number of Awards Weighted Average Fair Value Outstanding – March 31, 2013 154,000 $ 6.63 1,870,826 $ 18.09 Granted — — 602,359 25.75 Exercised (Options)/Issued (RSU’s) (117,650 ) 6.91 (635,254 ) 17.14 Canceled (5,000 ) 3.76 (99,632 ) 17.61 Outstanding – March 31, 2014 31,350 $ 5.87 1,738,299 $ 21.11 Granted — — 1,009,770 36.92 Exercised (Options)/Issued (RSU’s) (23,850 ) 5.87 (728,239 ) 18.97 Canceled (7,500 ) 5.87 (90,515 ) 21.44 Outstanding – March 31, 2015 — $ — 1,929,315 $ 30.18 Granted — — 1,806,490 37.20 Exercised (Options)/Issued (RSU’s) — — (736,170 ) 26.52 Canceled — — (126,329 ) 34.99 Outstanding – March 31, 2016 — $ — 2,873,306 $ 35.32 |
Schedule of Aggregate Intrinsic Values of Stock Options and Restricted Stock Units | The aggregate intrinsic value of stock options exercised and the fair value of restricted stock units vested at March 31, 2016 , 2015 and 2014 were as follows (in thousands): Year Ended March 31, 2016 2015 2014 Total intrinsic value of stock options exercised $ — $ 800 $ 2,375 Total fair value of restricted stock unit awards vested $ 25,936 $ 31,651 $ 16,104 |
PENSION BENEFIT PLANS (Tables)
PENSION BENEFIT PLANS (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of Changes in Benefit Obligation | The components of the change in benefit obligation of the pension plan is as follows (in thousands): March 31, 2016 Benefit obligation, beginning of year $ — Service cost 279 Interest cost 391 Benefits paid and other (175 ) Acquisitions 29,033 Actuarial gain (847 ) Foreign exchange rate impact 507 Benefit obligation, at end of year $ 29,188 |
Schedule of Changes in Fair Value of Plan Assets | The reconciliation of the beginning and ending balances of the fair value of the assets of the pension plan is as follows (in thousands): March 31, 2016 Fair value of plan assets, at beginning of year $ — Employer direct benefit payments 175 Benefits paid and other (175 ) Fair value of plan assets, at end of year $ — |
Schedule of Net Benefit Costs | The following sets forth the components of the Company's net periodic pension cost of the noncontributory defined benefit pension plans for the fiscal year ended March 31, 2016 (in thousands): March 31, 2016 Service cost $ 279 Interest cost 391 Net periodic pension cost $ 670 |
Schedule of Assumptions Used | Weighted average assumptions used to determine net periodic pension cost at date of measurement: March 31, 2016 Discount rate 2.30 % Rate of compensation increase 2.25 % |
Schedule of Expected Benefit Payments | The following sets forth benefit payments, which reflect expected future service, as appropriate, expected to be paid by the plan in the periods indicated (in thousands): 2017 $ 275 2018 $ 319 2019 $ 369 2020 $ 422 2021 $ 480 2022 - 2026 $ 3,334 |
INCOME TAXES (Tables)
INCOME TAXES (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax Expense | Income (loss) before income tax expense (benefit) consisted of the following (in thousands): Year Ended March 31, 2016 2015 2014 Domestic $ (6,979 ) $ 93,447 $ 80,515 Foreign (25,460 ) 1,518 (2,659 ) $ (32,439 ) $ 94,965 $ 77,856 |
Summary of Components of Income Tax Expense | The components of the income tax expense (benefit) are as follows (in thousands): Year Ended March 31, 2016 2015 2014 Current income tax expense: Federal $ 29,238 $ 25,927 $ 20,123 State 2,223 3,825 2,260 Foreign 6,628 1,307 1,174 38,089 31,059 23,557 Deferred income tax expense (benefit): Federal (30,216 ) 2,836 5,347 State (4,461 ) 17 96 Foreign (7,482 ) (139 ) (250 ) (42,159 ) 2,714 5,193 $ (4,070 ) $ 33,773 $ 28,750 |
Schedule of Federal Statutory Income Tax Rate to Effective Tax Rate | The income tax expense (benefit) computed using the federal statutory income tax rate differs from NetScout’s effective tax rate primarily due to the following: Year Ended March 31, 2016 2015 2014 Statutory U.S. federal tax rate 35.0 % 35.0 % 35.0 % State taxes, net of federal tax effect 3.1 3.2 2.8 Research and development tax credits 13.0 (1.4 ) (1.9 ) Tax rate differential of foreign operations (18.2 ) 0.1 0.2 Domestic production activities deduction 9.2 (2.9 ) (2.7 ) Change in valuation allowance 0.7 0.4 2.0 Transaction costs (19.1 ) — — Foreign withholding (6.1 ) — — Other (5.1 ) 1.2 1.5 12.5 % 35.6 % 36.9 % |
Summary of Components of Net Deferred Tax Assets | The components of net deferred tax assets and liabilities are as follows (in thousands): Year Ended March 31, 2016 2015 Deferred tax assets: Accrued expenses $ 6,734 $ 3,730 Deferred revenue 13,913 9,054 Reserves 7,916 1,651 Pension and other retiree benefits 4,842 — Net operating loss carryforwards 41,225 19,214 Tax credit carryforwards 5,824 3,838 Share-based compensation 4,975 2,660 Transaction related costs — 4,001 Other 426 808 Total gross deferred tax assets 85,855 44,956 Valuation allowance (3,777 ) (3,906 ) Net deferred tax assets 82,078 41,050 Deferred tax liabilities: Intangible assets (354,601 ) (29,202 ) Depreciation (6,630 ) (732 ) Total deferred tax asset (liability) $ (279,153 ) $ 11,116 |
Schedule of Reconciliation of Unrecognized Tax Benefits | A reconciliation of the beginning and ending amount of unrecognized tax benefits for the fiscal years ended March 31, 2016 , 2015 and 2014 is as follows (in thousands): Year Ended March 31, 2016 2015 2014 Balance at April 1, $ 1,038 $ 421 $ 370 Additions based on tax positions related to the current year 48 45 51 Release of tax positions of prior years — (75 ) — Increase in unrecognized tax benefits as a result of a tax position taken during a prior period 502 647 — Balance at March 31, $ 1,588 $ 1,038 $ 421 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
Schedule of Future Non-Cancelable Minimum Lease Commitments | At March 31, 2016 , future non-cancelable minimum lease commitments (including office space, copiers and automobiles) are as follows (in thousands): Year Ending March 31, 2017 $ 21,448 2018 15,750 2019 10,064 2020 4,720 2021 3,542 Remaining years 6,333 Total minimum lease payments $ 61,857 |
SEGMENT AND GEOGRAPHIC INFORM43
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Summary of Total Revenue by Geography | Total revenue by geography is as follows (in thousands): Year Ended March 31, 2016 2015 2014 United States $ 681,569 $ 348,354 $ 303,364 Europe 137,411 46,253 45,837 Asia 61,566 27,685 20,646 Rest of the world 74,873 31,377 26,800 $ 955,419 $ 453,669 $ 396,647 |
QUARTERLY RESULTS OF OPERATIO44
QUARTERLY RESULTS OF OPERATIONS - UNAUDITED (Tables) | 12 Months Ended |
Mar. 31, 2016 | |
Quarterly Financial Information Disclosure [Abstract] | |
Schedule of Unaudited Quarterly Results of Operations | The following table sets forth certain unaudited quarterly results of operations of NetScout for the fiscal years ended March 31, 2016 and 2015 . In the opinion of management, this information has been prepared on the same basis as the audited consolidated financial statements and all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the quarterly information when read in conjunction with the audited consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K. The quarterly operating results are not necessarily indicative of future results of operations. Three Months Ended (in thousands, except per share data) March 31, 2016 Dec. 31, 2015 Sept. 30, 2015 June 30, 2015 March 31, 2015 Dec. 31, 2014 Sept. 30, 2014 June 30, 2014 Revenue $ 285,887 $ 307,679 $ 261,110 $ 100,743 $ 119,385 $ 122,833 $ 103,599 $ 107,852 Gross profit $ 185,036 $ 201,564 $ 160,923 $ 79,447 $ 95,997 $ 95,851 $ 82,004 $ 85,256 Net income (loss) $ (3,616 ) $ (24,507 ) $ (7,915 ) $ 7,669 $ 20,854 $ 17,629 $ 11,233 $ 11,476 Diluted net income (loss) per share $ (0.04 ) $ (0.25 ) $ (0.09 ) $ 0.19 $ 0.50 $ 0.42 $ 0.27 $ 0.27 |
NATURE OF BUSINESS (Details)
NATURE OF BUSINESS (Details) | 12 Months Ended |
Mar. 31, 2016Segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 5 |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) | 12 Months Ended | 36 Months Ended | ||
Mar. 31, 2016USD ($)SegmentCustomer | Mar. 31, 2015USD ($)Customer | Mar. 31, 2014USD ($)Customer | Mar. 31, 2015USD ($)company | |
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of operating segments | Segment | 5 | |||
Number of reportable segments | Segment | 1 | |||
Unrecognized accounts receivable and deferred revenue | $ 2,000,000 | $ 2,000,000 | $ 2,000,000 | |
Number of companies acquired | company | 1 | |||
Amortization included as cost of product | 0 | 0 | $ 0 | |
Capitalized software development costs | 1,600,000 | 0 | $ 0 | |
Foreign currency gain (loss) | (1,500,000) | (1,400,000) | 315,000 | |
Advertising expense | 6,400,000 | 3,100,000 | $ 2,400,000 | |
Contingently returnable consideration | 16,131,000 | |||
Tax benefit of contingent purchase consideration | $ 7,293,000 | $ 4,484,000 | $ 4,484,000 | |
Computer equipment and internal use software | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Estimated useful life | 3 years | |||
Minimum | Computer equipment and internal use software | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Estimated useful life | 3 years | |||
Direct customer | Customer concentration risk | Accounts receivable | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of customers contributing more than 10% | Customer | 1 | 1 | ||
Direct customer | Customer concentration risk | Accounts receivable | Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk, percentage | 10.00% | 10.00% | ||
Direct customer | Customer concentration risk | Sales revenue | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of customers contributing more than 10% | Customer | 1 | 2 | 1 | |
Direct customer | Customer concentration risk | Sales revenue | Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% | |
Indirect customer | Customer concentration risk | Accounts receivable | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of customers contributing more than 10% | Customer | 0 | 0 | ||
Indirect customer | Customer concentration risk | Accounts receivable | Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk, percentage | 10.00% | 10.00% | ||
Indirect customer | Customer concentration risk | Sales revenue | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Number of customers contributing more than 10% | Customer | 0 | 0 | 0 | |
Indirect customer | Customer concentration risk | Sales revenue | Minimum | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Concentration risk, percentage | 10.00% | 10.00% | 10.00% | |
Danaher | Customer concentration risk | Accounts receivable | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Accounts receivable | $ 44,200,000 | |||
Communications Business | ||||
Summary Of Significant Accounting Policies [Line Items] | ||||
Contingently returnable consideration | 16,100,000 | |||
Tax benefit of contingent purchase consideration | $ 2,700,000 |
CASH, CASH EQUIVALENTS AND MA47
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES - Summary of Marketable Securities Classified as Short-term and Long-term (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Amortized Cost | $ 141,348 | $ 159,951 |
Unrealized Gains (Losses) | 16 | 13 |
Fair Value | 141,364 | 159,964 |
U.S. government and municipal obligations | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Fair Value | 123,328 | 145,345 |
Commercial paper | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Fair Value | 16,172 | 5,095 |
Corporate bonds | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Fair Value | 1,864 | 9,524 |
Short-term marketable securities | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Amortized Cost | 127,999 | 101,388 |
Unrealized Gains (Losses) | 4 | 4 |
Fair Value | 128,003 | 101,392 |
Short-term marketable securities | U.S. government and municipal obligations | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Amortized Cost | 109,963 | 88,651 |
Unrealized Gains (Losses) | 4 | 3 |
Fair Value | 109,967 | 88,654 |
Short-term marketable securities | Commercial paper | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Amortized Cost | 16,172 | 5,093 |
Unrealized Gains (Losses) | 0 | 2 |
Fair Value | 16,172 | 5,095 |
Short-term marketable securities | Corporate bonds | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Amortized Cost | 1,864 | 7,644 |
Unrealized Gains (Losses) | 0 | (1) |
Fair Value | 1,864 | 7,643 |
Long-term marketable securities | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Amortized Cost | 13,349 | 58,563 |
Unrealized Gains (Losses) | 12 | 9 |
Fair Value | 13,361 | 58,572 |
Long-term marketable securities | U.S. government and municipal obligations | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Amortized Cost | 13,349 | 56,683 |
Unrealized Gains (Losses) | 12 | 8 |
Fair Value | 13,361 | 56,691 |
Long-term marketable securities | Corporate bonds | ||
Cash, Cash Equivalents and Marketable Securities [Line Items] | ||
Amortized Cost | 0 | 1,880 |
Unrealized Gains (Losses) | 0 | 1 |
Fair Value | $ 0 | $ 1,881 |
CASH, CASH EQUIVALENTS AND MA48
CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES - Summary of Contractual Maturities of Marketable Securities (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Available-for-sale securities: | ||
Due in 1 year or less | $ 128,003 | $ 101,392 |
Due after 1 year through 5 years | 13,361 | 58,572 |
Fair Value | $ 141,364 | $ 159,964 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
ASSETS: | ||
Cash and cash equivalents | $ 210,711 | $ 104,893 |
Marketable securities | 141,364 | 159,964 |
Derivative financial instruments | 191 | 15 |
Contingently returnable consideration | 16,131 | |
Total assets | 368,397 | 264,872 |
LIABILITIES: | ||
Contingent consideration | (7,293) | (4,484) |
Derivative financial instruments | (158) | (1,664) |
Total liabilities | (7,451) | (6,148) |
U.S. government and municipal obligations | ||
ASSETS: | ||
Marketable securities | 123,328 | 145,345 |
Commercial paper | ||
ASSETS: | ||
Marketable securities | 16,172 | 5,095 |
Corporate bonds | ||
ASSETS: | ||
Marketable securities | 1,864 | 9,524 |
Level 1 | ||
ASSETS: | ||
Cash and cash equivalents | 210,711 | 104,893 |
Derivative financial instruments | 0 | 0 |
Contingently returnable consideration | 0 | |
Total assets | 253,691 | 160,981 |
LIABILITIES: | ||
Contingent consideration | 0 | 0 |
Derivative financial instruments | 0 | 0 |
Total liabilities | 0 | 0 |
Level 1 | U.S. government and municipal obligations | ||
ASSETS: | ||
Marketable securities | 41,116 | 46,564 |
Level 1 | Commercial paper | ||
ASSETS: | ||
Marketable securities | 0 | 0 |
Level 1 | Corporate bonds | ||
ASSETS: | ||
Marketable securities | 1,864 | 9,524 |
Level 2 | ||
ASSETS: | ||
Cash and cash equivalents | 0 | 0 |
Derivative financial instruments | $ 191 | 15 |
Contingently returnable consideration | ||
Total assets | $ 98,575 | 103,891 |
LIABILITIES: | ||
Contingent consideration | 0 | 0 |
Derivative financial instruments | (158) | (1,664) |
Total liabilities | (158) | (1,664) |
Level 2 | U.S. government and municipal obligations | ||
ASSETS: | ||
Marketable securities | 82,212 | 98,781 |
Level 2 | Commercial paper | ||
ASSETS: | ||
Marketable securities | 16,172 | 5,095 |
Level 2 | Corporate bonds | ||
ASSETS: | ||
Marketable securities | 0 | 0 |
Level 3 | ||
ASSETS: | ||
Cash and cash equivalents | 0 | 0 |
Derivative financial instruments | 0 | 0 |
Contingently returnable consideration | 16,131 | |
Total assets | 16,131 | 0 |
LIABILITIES: | ||
Contingent consideration | (7,293) | (4,484) |
Derivative financial instruments | 0 | 0 |
Total liabilities | (7,293) | (4,484) |
Level 3 | U.S. government and municipal obligations | ||
ASSETS: | ||
Marketable securities | 0 | 0 |
Level 3 | Commercial paper | ||
ASSETS: | ||
Marketable securities | 0 | 0 |
Level 3 | Corporate bonds | ||
ASSETS: | ||
Marketable securities | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingently returnable consideration | $ 16,131 | |
Tax effected portion of contingently returnable consideration | 2,700 | |
Liability adjustment included in earnings | $ (9) | |
Fair value assumption, discount rate | 3.30% | |
Fair value, measurements, recurring | Contingent consideration | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingently returnable consideration | 0 | |
Liability adjustment included in earnings | (152) | $ (193) |
Fair value, measurements, recurring | Contingent Contractual Non-compliance Liability | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability adjustment included in earnings | 49 | |
Fair value, measurements, recurring | Contingent Contractual Non-compliance Liability, Updated | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Liability adjustment included in earnings | $ (153) | |
Level 3 | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingently returnable consideration | 16,131 | |
Level 3 | Prepaid expenses and other current assets | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Contingently returnable consideration | $ 16,100 |
FAIR VALUE MEASUREMENTS - Sch51
FAIR VALUE MEASUREMENTS - Schedule of Reconciliation of Changes in Fair Value of Level 3 Financial Liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
(Increase) / decrease in fair value and accretion expense (included within research and development expense) | $ (9) | ||
Contingently returnable consideration | $ 16,131 | ||
Payments received | (9,306) | 0 | $ 0 |
Fair value, measurements, recurring | Contingent Purchase Consideration | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | (4,484) | (4,291) | |
(Increase) / decrease in fair value and accretion expense (included within research and development expense) | (152) | (193) | |
Contingently returnable consideration | 0 | ||
Increase in fair value | (21) | ||
Gross presentation of contingently returnable consideration to contingent purchase consideration | (2,636) | ||
Payments received | 0 | ||
Ending balance | (7,293) | (4,484) | (4,291) |
Fair value, measurements, recurring | Contingently Returnable Consideration | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | 0 | ||
(Increase) / decrease in fair value and accretion expense (included within research and development expense) | 0 | ||
Contingently returnable consideration | 19,125 | ||
Increase in fair value | 3,676 | ||
Gross presentation of contingently returnable consideration to contingent purchase consideration | 2,636 | ||
Payments received | (9,306) | ||
Ending balance | 16,131 | 0 | |
Fair value, measurements, recurring | Contingent Contractual Non-compliance Liability | |||
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |||
Beginning balance | $ 0 | (49) | |
(Increase) / decrease in fair value and accretion expense (included within research and development expense) | 49 | ||
Ending balance | $ 0 | $ (49) |
INVENTORIES - Schedule of Inven
INVENTORIES - Schedule of Inventories (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 18,617 | $ 6,134 |
Work in process | 651 | 17 |
Finished goods | 38,761 | 5,979 |
Total inventories | $ 58,029 | $ 12,130 |
FIXED ASSETS - Schedule of Fixe
FIXED ASSETS - Schedule of Fixed Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 154,167 | $ 99,799 |
Less – accumulated depreciation | (92,134) | (75,935) |
Fixed assets, net | 62,033 | 23,864 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 5,843 | 3,739 |
Furniture and fixtures | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 3 years | |
Furniture and fixtures | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 7 years | |
Computer equipment and internal use software | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 3 years | |
Fixed assets, gross | $ 118,974 | 69,259 |
Computer equipment and internal use software | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 3 years | |
Computer equipment and internal use software | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 5 years | |
Demonstration and spare part units | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 6,860 | 12,092 |
Demonstration and spare part units | Minimum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 2 years | |
Demonstration and spare part units | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 5 years | |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Fixed assets, gross | $ 22,490 | $ 14,709 |
Leasehold improvements | Maximum | ||
Property, Plant and Equipment [Line Items] | ||
Estimated useful life | 12 years |
FIXED ASSETS - Narrative (Detai
FIXED ASSETS - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Property, Plant and Equipment [Abstract] | |||
Depreciation expense | $ 26.6 | $ 12.6 | $ 11.4 |
ACQUISITIONS - Narrative (Detai
ACQUISITIONS - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Oct. 07, 2015 | Jul. 14, 2015 | Mar. 31, 2016 | Jul. 13, 2015 | Mar. 31, 2015 | Mar. 31, 2014 |
Business Acquisition [Line Items] | ||||||
Measurement period | 1 year | |||||
Increase (decrease) in goodwill | $ 1,709,369 | $ 197,445 | $ 203,446 | |||
Weighted average useful life of acquired intangible assets | 14 years 7 months 2 days | |||||
Backlog | ||||||
Business Acquisition [Line Items] | ||||||
Weighted average useful life of acquired intangible assets | 2 years | |||||
Trademarks and trade names | ||||||
Business Acquisition [Line Items] | ||||||
Weighted average useful life of acquired intangible assets | 8 years 6 months | |||||
Leasehold interest | ||||||
Business Acquisition [Line Items] | ||||||
Weighted average useful life of acquired intangible assets | 5 years 7 months | |||||
Arbor Networks | ||||||
Business Acquisition [Line Items] | ||||||
Increase (decrease) in goodwill | $ 534,800 | |||||
Tektronix Communications | ||||||
Business Acquisition [Line Items] | ||||||
Increase (decrease) in goodwill | 794,400 | |||||
VSS | ||||||
Business Acquisition [Line Items] | ||||||
Increase (decrease) in goodwill | 57,000 | |||||
FNET | ||||||
Business Acquisition [Line Items] | ||||||
Increase (decrease) in goodwill | $ 125,100 | |||||
Cash retention award | Vesting after August 4, 2015 | ||||||
Business Acquisition [Line Items] | ||||||
Percent of cancelled Danaher equity awards replaced | 50.00% | |||||
Restricted stock units | Vesting after August 4, 2015 | ||||||
Business Acquisition [Line Items] | ||||||
Shares issued in business acquisition (in shares) | 15,000,000 | |||||
Percent of cancelled Danaher equity awards replaced | 50.00% | |||||
Post combination compensation expense, Danaher equity awards | Vesting July 14, 2015 through August 4, 2015 | ||||||
Business Acquisition [Line Items] | ||||||
Post combination compensation expense | $ 6,500 | |||||
Post combination compensation expense, Danaher equity awards | Vesting after August 4, 2015 | ||||||
Business Acquisition [Line Items] | ||||||
Post combination compensation expense | 8,000 | |||||
Contingently returnable consideration, cash retention award | Prepaid Expenses and Other Current Assets | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, separately recognized transactions, assets recognized | 7,800 | |||||
Contingently returnable consideration, cash retention award | Vesting after August 4, 2015 | Prepaid Expenses and Other Current Assets | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, separately recognized transactions, assets recognized | 8,400 | |||||
Contingently returnable consideration, tax effect of cash retention award | Accounts payable | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, separately recognized transactions, liabilities recognized | 2,600 | |||||
Cash retention award | Vesting after August 4, 2015 | Accrued compensation | ||||||
Business Acquisition [Line Items] | ||||||
Business combination, separately recognized transactions, liabilities recognized | 8,000 | |||||
Post combination compensation expense, Danaher bonus | ||||||
Business Acquisition [Line Items] | ||||||
Post combination compensation expense | 9,300 | |||||
Post combination compensation expense, Danaher retention | ||||||
Business Acquisition [Line Items] | ||||||
Post combination compensation expense | $ 7,800 | |||||
Common stock Voting | ||||||
Business Acquisition [Line Items] | ||||||
Share price (in dollars per share) | $ 36.89 | |||||
Communications Business | ||||||
Business Acquisition [Line Items] | ||||||
Total equity consideration | $ 5,700 | $ 2,299,911 | ||||
Increase (decrease) in accounts receivable | 110 | 140,586 | ||||
Increase in inventory | 78 | 80,719 | ||||
Decrease in prepaid expenses and other assets | (35) | (6,715) | ||||
Increase in property, plant and equipment | 1,254 | 36,825 | ||||
Increase (decrease) in accounts payable | 8 | 21,311 | ||||
Increase (decrease) in accrued expenses | 176 | 12,916 | ||||
Increase (decrease) in deferred revenue | 65 | 187,882 | ||||
Increase in deferred tax liabilities | 344,646 | |||||
Increase (decrease) in goodwill | $ 5,141 | 1,507,847 | ||||
Weighted average useful life of acquired intangible assets | 14 years 8 months | |||||
Revenues | $ 501,900 | |||||
Net loss | 65,400 | |||||
Communications Business | General and administrative | ||||||
Business Acquisition [Line Items] | ||||||
Acquisition related costs | $ 29,400 | |||||
Communications Business | Developed technology | ||||||
Business Acquisition [Line Items] | ||||||
Weighted average useful life of acquired intangible assets | 11 years 8 months 12 days | |||||
Communications Business | Customer relationships | ||||||
Business Acquisition [Line Items] | ||||||
Weighted average useful life of acquired intangible assets | 16 years 3 months 18 days | |||||
Communications Business | Backlog | ||||||
Business Acquisition [Line Items] | ||||||
Weighted average useful life of acquired intangible assets | 2 years | |||||
Communications Business | Trademarks and trade names | ||||||
Business Acquisition [Line Items] | ||||||
Weighted average useful life of acquired intangible assets | 8 years 6 months | |||||
Communications Business | Leasehold interest | ||||||
Business Acquisition [Line Items] | ||||||
Weighted average useful life of acquired intangible assets | 5 years 7 months 6 days | |||||
Communications Business | Arbor Networks | ||||||
Business Acquisition [Line Items] | ||||||
Increase (decrease) in goodwill | 534,800 | |||||
Communications Business | Tektronix Communications | ||||||
Business Acquisition [Line Items] | ||||||
Increase (decrease) in goodwill | 794,400 | |||||
Communications Business | VSS | ||||||
Business Acquisition [Line Items] | ||||||
Increase (decrease) in goodwill | 57,000 | |||||
Communications Business | FNET | ||||||
Business Acquisition [Line Items] | ||||||
Increase (decrease) in goodwill | $ 125,100 | |||||
Communications Business | Common stock Voting | Newco | ||||||
Business Acquisition [Line Items] | ||||||
Shares issued in business acquisition (in shares) | 62,500,000 | |||||
Communications Business | Immaterial error correction | ||||||
Business Acquisition [Line Items] | ||||||
Increase in inventory | $ 200 | |||||
Increase (decrease) in accounts payable | (600) | |||||
Increase (decrease) in accrued expenses | (4,800) | |||||
Increase (decrease) in deferred revenue | 1,400 | |||||
Increase (decrease) in goodwill | (4,200) | |||||
Communications Business | Fair value adjustments | ||||||
Business Acquisition [Line Items] | ||||||
Total equity consideration | 3,700 | |||||
Increase (decrease) in accounts receivable | 5,300 | |||||
Increase in inventory | 200 | |||||
Decrease in prepaid expenses and other assets | 400 | |||||
Increase in property, plant and equipment | 300 | |||||
Increase (decrease) in accounts payable | 100 | |||||
Increase (decrease) in accrued expenses | 3,400 | |||||
Increase (decrease) in deferred revenue | (11,700) | |||||
Increase in deferred tax liabilities | 25,000 | |||||
Increase (decrease) in goodwill | $ 7,700 |
ACQUISITIONS - Summary of Purch
ACQUISITIONS - Summary of Purchase Price Allocation (Details) - USD ($) $ in Thousands | Oct. 07, 2015 | Jul. 14, 2015 | Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 |
Estimated fair value of assets acquired and liabilities assumed: | |||||
Goodwill | $ 1,709,369 | $ 197,445 | $ 203,446 | ||
Communications Business | |||||
Business Acquisition [Line Items] | |||||
Total equity consideration | $ 5,700 | $ 2,299,911 | |||
Estimated Purchase Price | 5,700 | 2,270,556 | |||
Estimated fair value of assets acquired and liabilities assumed: | |||||
Cash | 27,701 | ||||
Accounts receivable | 110 | 140,586 | |||
Inventories | 78 | 80,719 | |||
Prepaid expenses and other assets | 35 | 6,715 | |||
Property, plant and equipment | 1,254 | 36,825 | |||
Deferred income taxes | 13,067 | ||||
Intangible assets | 1,080,700 | ||||
Other assets | 281 | 999 | |||
Accounts payable | (8) | (21,311) | |||
Accrued compensation | (824) | (24,316) | |||
Accrued other | (176) | (12,916) | |||
Deferred revenue | (65) | (187,882) | |||
Other long-term liabilities | (126) | (3,615) | |||
Accrued retirement benefits | (29,917) | ||||
Deferred tax liabilities | (344,646) | ||||
Goodwill | $ 5,141 | 1,507,847 | |||
Communications Business | Replacement Awards | |||||
Business Acquisition [Line Items] | |||||
Total equity consideration | $ (29,355) |
ACQUISITIONS - Summary of Pur57
ACQUISITIONS - Summary of Purchase Price Allocation (Footnote) (Details) - Common stock Voting - $ / shares shares in Millions | Jul. 14, 2015 | Jul. 13, 2015 |
Business Acquisition [Line Items] | ||
Share price (in dollars per share) | $ 36.89 | |
Newco | Communications Business | ||
Business Acquisition [Line Items] | ||
Shares issued in business acquisition (in shares) | 62.5 |
ACQUISITIONS - Schedule of Fair
ACQUISITIONS - Schedule of Fair value of Acquired Identifiable Intangible Assets and Related Estimates of Useful Lives (Details) - Communications Business $ in Thousands | 12 Months Ended |
Mar. 31, 2016USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair value of finite-lived intangible assets | $ 1,080,700 |
Developed technology | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair value of finite-lived intangible assets | $ 221,900 |
Developed technology | Minimum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 9 years |
Developed technology | Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 13 years |
Customer relationships | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair value of finite-lived intangible assets | $ 794,100 |
Customer relationships | Minimum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 13 years |
Customer relationships | Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 18 years |
Backlog | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair value of finite-lived intangible assets | $ 18,200 |
Backlog | Minimum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 1 year |
Backlog | Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 3 years |
Definite lived trademark and tradenames | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair value of finite-lived intangible assets | $ 43,900 |
Definite lived trademark and tradenames | Minimum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 3 years |
Definite lived trademark and tradenames | Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 9 years |
Leasehold interest | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Fair value of finite-lived intangible assets | $ 2,600 |
Leasehold interest | Minimum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 4 years |
Leasehold interest | Maximum | |
Acquired Finite-Lived Intangible Assets [Line Items] | |
Useful life of identifiable finite-lived intangible assets | 6 years |
ACQUISITIONS - Schedule of Pro
ACQUISITIONS - Schedule of Pro Forma Results of Consolidated Statement of Operations (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Business Acquisition, Pro Forma Information [Abstract] | ||
Pro forma revenue | $ 1,131,626 | $ 1,177,938 |
Pro forma net income (loss) | $ (58,806) | $ (2,323) |
Pro forma income (loss) per share: | ||
Basic (in dollars per share) | $ (0.59) | $ (0.02) |
Diluted (in dollars per share) | $ (0.59) | $ (0.02) |
Pro forma shares outstanding | ||
Basic (in shares) | 99,687 | 103,573 |
Diluted (in shares) | 99,687 | 103,573 |
GOODWILL AND INTANGIBLE ASSET60
GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016USD ($)Segment | Mar. 31, 2015USD ($) | Mar. 31, 2014USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Number of operating segments | Segment | 5 | ||
Goodwill | $ 1,709,369 | $ 197,445 | $ 203,446 |
Carrying value of intangible assets | 1,054,040 | 50,180 | |
Amortization expenses | $ 32,373 | 3,351 | 3,432 |
Weighted average useful life of acquired intangible assets | 14 years 7 months 2 days | ||
Technology license | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Finite-lived intangible assets acquired | $ 3,700 | ||
Weighted average useful life of acquired intangible assets | 4 years | ||
Acquired software and core technology | Included as cost of product revenue | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Amortization expenses | $ 45,100 | 3,600 | 3,300 |
Other acquired intangible assets | Included as operating expense | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Amortization expenses | $ 32,500 | 3,500 | $ 3,600 |
Developed and core technology | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 11 years 6 months | ||
Customer and distributor relationships | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 16 years 1 month 18 days | ||
Trademarks and trade names | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 8 years 6 months | ||
Leasehold interest | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 5 years 7 months | ||
Backlog | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 2 years | ||
Capitalized software | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 4 years | ||
Trade name | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Indefinite-lived intangible assets | $ 18,600 | 18,600 | |
Legacy | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | 198,100 | $ 197,400 | |
Arbor Networks | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 534,800 | ||
Goodwill impairment test, sensitivity analysis, decrease of projected revenue growth | 3.00% | ||
Goodwill impairment test, sensitivity analysis, decrease of selling margin | 2.00% | ||
Goodwill impairment test, sensitivity analysis,, decrease of operating margin | 2.00% | ||
Goodwill impairment test, sensitivity analysis, increase of WACC | 75.00% | ||
Tektronix Communications | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 794,400 | ||
Goodwill impairment test, sensitivity analysis, decrease of projected revenue growth | 3.00% | ||
Goodwill impairment test, sensitivity analysis, decrease of selling margin | 4.00% | ||
Goodwill impairment test, sensitivity analysis,, decrease of operating margin | 4.00% | ||
Goodwill impairment test, sensitivity analysis, increase of WACC | 100.00% | ||
VSS | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 57,000 | ||
Goodwill impairment test, sensitivity analysis, decrease of projected revenue growth | 17.00% | ||
Goodwill impairment test, sensitivity analysis, decrease of selling margin | 8.00% | ||
Goodwill impairment test, sensitivity analysis,, decrease of operating margin | 8.00% | ||
Goodwill impairment test, sensitivity analysis, increase of WACC | 600.00% | ||
FNET | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 125,100 | ||
Goodwill impairment test, sensitivity analysis, decrease of projected revenue growth | 16.00% | ||
Goodwill impairment test, sensitivity analysis, decrease of selling margin | 7.00% | ||
Goodwill impairment test, sensitivity analysis,, decrease of operating margin | 7.00% | ||
Goodwill impairment test, sensitivity analysis, increase of WACC | 500.00% |
GOODWILL AND INTANGIBLE ASSET61
GOODWILL AND INTANGIBLE ASSETS - Schedule of Changes in Carrying Amount of Goodwill (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Goodwill [Roll Forward] | ||
Beginning balance | $ 197,445 | $ 203,446 |
Purchase accounting adjustments | (527) | 0 |
Foreign currency translation impact | (1,064) | (6,001) |
Goodwill acquired | 1,504,261 | |
Deferred revenue adjustments | (11,392) | |
Change in assumptions for assumed liabilities | (6,258) | |
Adjust deferred tax liability | 25,034 | |
Adjust tax effect on equity consideration | (3,271) | |
Ending balance | 1,709,369 | $ 197,445 |
Delayed Close Entities | ||
Goodwill [Roll Forward] | ||
Goodwill acquired | $ 5,141 |
GOODWILL AND INTANGIBLE ASSET62
GOODWILL AND INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 1,168,106 | $ 79,289 |
Accumulated Amortization | (132,666) | (47,709) |
Net | 1,035,440 | 31,580 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 253,249 | 30,865 |
Accumulated Amortization | (69,810) | (25,561) |
Net | 183,439 | 5,304 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 834,091 | 38,498 |
Accumulated Amortization | (42,526) | (16,935) |
Net | 791,565 | 21,563 |
Distributor relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 5,348 | 1,585 |
Accumulated Amortization | (1,633) | (711) |
Net | 3,715 | 874 |
Definite lived trademark and tradenames | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 43,964 | |
Accumulated Amortization | (5,511) | |
Net | 38,453 | |
Core technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 7,169 | 7,118 |
Accumulated Amortization | (4,659) | (3,660) |
Net | 2,510 | 3,458 |
Net beneficial leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 336 | |
Accumulated Amortization | (336) | |
Net | 0 | |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 288 | 280 |
Accumulated Amortization | (288) | (280) |
Net | 0 | 0 |
Leasehold interest | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 2,600 | |
Accumulated Amortization | (416) | |
Net | 2,184 | |
Backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 18,245 | |
Accumulated Amortization | (6,750) | |
Net | 11,495 | |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,625 | |
Accumulated Amortization | 0 | |
Net | 1,625 | |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,191 | 943 |
Accumulated Amortization | (737) | (562) |
Net | $ 454 | $ 381 |
GOODWILL AND INTANGIBLE ASSET63
GOODWILL AND INTANGIBLE ASSETS - Schedule of Expected Future Amortization Expense (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2,017 | $ 123,988 | |
2,018 | 110,449 | |
2,019 | 104,839 | |
2,020 | 97,333 | |
2,021 | 85,360 | |
Thereafter | 513,471 | |
Net | $ 1,035,440 | $ 31,580 |
DERIVATIVE INSTRUMENTS AND HE64
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) | 12 Months Ended |
Mar. 31, 2016 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Hedging forecasted cash flows for operating expenses denominated in foreign currencies managed in months (up to) | 12 months |
Contract maturing over next months | 12 months |
DERIVATIVE INSTRUMENTS AND HE65
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Notional Amounts and Fair Values of Derivative Instruments on Consolidated Balance Sheet (Details) - Forward contracts - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | $ 17,490 | $ 20,203 |
Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid Expenses and Other Current Assets | 191 | 15 |
Accrued Other | ||
Derivatives, Fair Value [Line Items] | ||
Accrued Other | $ 158 | $ 1,664 |
DERIVATIVE INSTRUMENTS AND HE66
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Effect of Foreign Exchange Forward Contracts on Other Comprehensive Income And Results Of Operations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Recognized in OCI on Derivative | $ (852) | $ (3,050) |
Gain (Loss) Reclassified from Accumulated OCI into Income | 2,501 | 1,340 |
Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) | 89 | 218 |
Forward contracts | Research and development | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Recognized in OCI on Derivative | (852) | (3,050) |
Gain (Loss) Reclassified from Accumulated OCI into Income | 206 | 217 |
Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) | 113 | 193 |
Forward contracts | Sales and marketing | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI into Income | 2,295 | 1,123 |
Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) | $ (24) | $ 25 |
LONG-TERM DEBT - Narrative (Det
LONG-TERM DEBT - Narrative (Details) | Mar. 31, 2016USD ($) | Jul. 14, 2015USD ($)shares | Mar. 31, 2016USD ($) | Jul. 26, 2006shares |
Debt Instrument [Line Items] | ||||
Stock authorized to repurchase under stock repurchase program (in shares) | shares | 4,000,000 | |||
Maximum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 2.50 | 2.50 | 2.50 | |
Minimum | ||||
Debt Instrument [Line Items] | ||||
Leverage ratio | 1 | 1 | 1 | |
Common Stock Repurchase Plan | ||||
Debt Instrument [Line Items] | ||||
Stock authorized to repurchase under stock repurchase program (in shares) | shares | 20,000,000 | |||
Senior secured revolving credit facility | Line of credit | ||||
Debt Instrument [Line Items] | ||||
Debt term | 5 years | |||
Credit facility | $ 800,000,000 | |||
Amount outstanding under credit facility | $ 300,000,000 | $ 300,000,000 | ||
Commitment fee percentage | 0.30% | |||
Debt default, acceleration clause, required consent percentage | 50.00% | |||
Unamortized debt issuance costs | 5,800,000 | $ 6,600,000 | $ 5,800,000 | |
Senior secured revolving credit facility | Line of credit | Prepaid Expenses and Other Current Assets | ||||
Debt Instrument [Line Items] | ||||
Unamortized debt issuance costs | 1,400,000 | 1,400,000 | ||
Senior secured revolving credit facility | Line of credit | Other assets | ||||
Debt Instrument [Line Items] | ||||
Unamortized debt issuance costs | $ 4,400,000 | $ 4,400,000 | ||
Senior secured revolving credit facility | Line of credit | Maximum | ||||
Debt Instrument [Line Items] | ||||
Commitment fee percentage | 0.35% | |||
Senior secured revolving credit facility | Line of credit | Maximum | Foreign Subsidiaries | ||||
Debt Instrument [Line Items] | ||||
Voting stock pledge limit for any foreign subsidiary | 65.00% | |||
Senior secured revolving credit facility | Line of credit | Minimum | ||||
Debt Instrument [Line Items] | ||||
Commitment fee percentage | 0.20% | |||
Senior secured revolving credit facility | Line of credit | Federal funds effective rate | ||||
Debt Instrument [Line Items] | ||||
Interest rate in excess of effective rate | 0.50% | |||
Senior secured revolving credit facility | Line of credit | LIBOR | ||||
Debt Instrument [Line Items] | ||||
Interest rate in excess of effective rate | 1.00% | |||
Senior secured revolving credit facility | Line of credit | LIBOR | LIBOR loans | ||||
Debt Instrument [Line Items] | ||||
Interest rate in excess of effective rate | 1.75% | |||
Senior secured revolving credit facility | Line of credit | LIBOR | LIBOR loans | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate in excess of effective rate | 2.00% | |||
Senior secured revolving credit facility | Line of credit | LIBOR | LIBOR loans | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate in excess of effective rate | 1.25% | |||
Senior secured revolving credit facility | Line of credit | Base rate | Base rate loans | ||||
Debt Instrument [Line Items] | ||||
Interest rate in excess of effective rate | 0.75% | |||
Senior secured revolving credit facility | Line of credit | Base rate | Base rate loans | Maximum | ||||
Debt Instrument [Line Items] | ||||
Interest rate in excess of effective rate | 1.00% | |||
Senior secured revolving credit facility | Line of credit | Base rate | Base rate loans | Minimum | ||||
Debt Instrument [Line Items] | ||||
Interest rate in excess of effective rate | 0.25% | |||
Letter of credit sub-facility | Line of credit | ||||
Debt Instrument [Line Items] | ||||
Credit facility | $ 50,000,000 |
NET INCOME (LOSS) PER SHARE - S
NET INCOME (LOSS) PER SHARE - Schedule of Calculations of Basic and Diluted Net Income per Share and Potential Common Shares (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Numerator: | |||||||||||
Net income (loss) | $ (3,616) | $ (24,507) | $ (7,915) | $ 7,669 | $ 20,854 | $ 17,629 | $ 11,233 | $ 11,476 | $ (28,369) | $ 61,192 | $ 49,106 |
Weighted Average Number of Shares Outstanding, Basic [Abstract] | |||||||||||
Denominator for basic net income per share - weighted average common shares outstanding (in shares) | 81,927 | 41,105 | 41,366 | ||||||||
Dilutive common equivalent shares: | |||||||||||
Weighted average stock options (in shares) | 0 | 9 | 54 | ||||||||
Weighted average restricted stock units (in shares) | 0 | 523 | 535 | ||||||||
Denominator for diluted net income per share - weighted average shares outstanding (in shares) | 81,927 | 41,637 | 41,955 | ||||||||
Net income (loss) per share: | |||||||||||
Basic net income (loss) per share (in dollars per share) | $ (0.35) | $ 1.49 | $ 1.19 | ||||||||
Diluted net income (loss) per share (in dollars per share) | $ (0.04) | $ (0.25) | $ (0.09) | $ 0.19 | $ 0.50 | $ 0.42 | $ 0.27 | $ 0.27 | $ (0.35) | $ 1.47 | $ 1.17 |
NET INCOME (LOSS) PER SHARE -69
NET INCOME (LOSS) PER SHARE - Summary of Antidilutive Securities Excluded from Computation of Diluted EPS (Details) - shares shares in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Restricted stock units | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Anti-dilutive securities excluding from calculation of diluted net income per share (in shares) | 453 | 14 | 0 |
TREASURY STOCK - Narrative (Det
TREASURY STOCK - Narrative (Details) - USD ($) | 10 Months Ended | 12 Months Ended | 23 Months Ended | |||||
Mar. 31, 2016 | Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | Mar. 31, 2016 | May. 19, 2015 | Apr. 22, 2014 | Jul. 26, 2006 | |
Equity, Class of Treasury Stock [Line Items] | ||||||||
Stock authorized to repurchase under stock repurchase program (in shares) | 4,000,000 | |||||||
Shares repurchased during the period, value | $ 311,850,000 | $ 51,714,000 | $ 34,322,000 | |||||
Restricted stock units | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Shares repurchased during the period (in shares) | 256,514 | 247,568 | 216,198 | |||||
Shares repurchased during the period, value | $ 9,100,000 | $ 10,800,000 | $ 5,500,000 | |||||
Open market stock repurchase program | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Shares repurchased during the period (in shares) | 243,300 | 1,000,407 | ||||||
Shares repurchased during the period, value | $ 9,400,000 | $ 28,800,000 | ||||||
Share repurchase program, April 2014 | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Shares repurchased during the period (in shares) | 824,452 | |||||||
Shares repurchased during the period, value | $ 34,300,000 | |||||||
Additional authorized stock repurchase amount | $ 100,000,000 | |||||||
Common stock available to be purchased | 0 | 0 | 0 | |||||
Share repurchase program, May 2015 | ||||||||
Equity, Class of Treasury Stock [Line Items] | ||||||||
Stock authorized to repurchase under stock repurchase program (in shares) | 20,000,000 | |||||||
Shares repurchased during the period (in shares) | 10,078,136 | 67,752 | 756,700 | |||||
Shares repurchased during the period, value | $ 300,000,000 | $ 2,800,000 | $ 31,500,000 | |||||
Common stock available to be purchased | 9,921,864 | 9,921,864 | 9,921,864 |
STOCK PLANS - Narrative (Detail
STOCK PLANS - Narrative (Details) | Sep. 07, 2011USD ($)shares | Sep. 30, 2007shares | Mar. 31, 2016USD ($)$ / sharesshares | Mar. 31, 2015shares | Mar. 31, 2014shares | Sep. 22, 2015shares | Mar. 31, 2013shares |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding (in shares) | 0 | 0 | 31,350 | 154,000 | |||
Employee stock | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Shares purchased by employees | 447,252 | ||||||
Shares issued under ESPP plan, weighted average purchase price per share (in dollars per share) | $ / shares | $ 23.61 | ||||||
Shares available for future issuance under the ESPP | 1,567,748 | ||||||
Incentive options | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Term of options granted, years | 5 years | ||||||
Stock options | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total unrecognized compensation cost | $ | $ 0 | ||||||
Restricted stock units | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Total unrecognized compensation cost | $ | $ 85,600,000 | ||||||
Unrecognized cost, period for recognition, years | 1 year 10 months 8 days | ||||||
2011 Employee Stock Purchase Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock, equity awards reserved for issuance | 2,500,000 | ||||||
Maximum payroll deductions for purchase of shares by participants | 20.00% | ||||||
Maximum number of shares available for purchased by participants | 2,000 | ||||||
Cap on fair value of shares available for purchase by participants | $ | $ 25,000 | ||||||
Percentage of common stock price for employees | 85.00% | ||||||
2011 Employee Stock Purchase Plan | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Cap on fair value of shares available for purchase by participants | $ | $ 50,000 | ||||||
1999 Stock Option And Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Options outstanding (in shares) | 0 | ||||||
Shares available for grant | 0 | ||||||
2007 Equity Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock, equity awards reserved for issuance | 21,500,000 | ||||||
Shares available for grant | 11,335,425 | ||||||
Restoration ratio of restricted stock unit grants withheld | 2 | ||||||
Reduction for each share of common stock pursuant to option | 1 | ||||||
Reduction for each share of common stock pursuant to other than option | 2 | ||||||
Equity awards outstanding | 2,873,306 | ||||||
Share-based awards generally vest, years | 4 years | ||||||
Percentage of incentive stock option granted | 110.00% | ||||||
2007 Equity Incentive Plan | Common stock voting | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Common stock, equity awards reserved for issuance | 8,000,000 | 8,500,000 | |||||
2007 Equity Incentive Plan | Minimum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of fair market value of common stock | 100.00% | ||||||
Percentage of voting stock | 10.00% | ||||||
2007 Equity Incentive Plan | Maximum | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Term of options granted, years | 10 years | ||||||
Independent Directors | 2007 Equity Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of incentive stock option granted | 0.00% | ||||||
Percentage of annualized forfeiture rate for awards granted | 0.00% | ||||||
Directors | 2007 Equity Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of annualized forfeiture rate for awards granted | 0.00% | ||||||
Senior Executives and Remaining Employees | 2007 Equity Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of annualized forfeiture rate for awards granted | 10.00% | ||||||
Employees | 2007 Equity Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of incentive stock option granted | 5.00% | ||||||
Percentage of annualized forfeiture rate for awards granted | 5.00% | ||||||
Senior Executives | 2007 Equity Incentive Plan | |||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||||
Percentage of incentive stock option granted | 2.00% | ||||||
Percentage of annualized forfeiture rate for awards granted | 2.00% |
STOCK PLANS - Summary of Share-
STOCK PLANS - Summary of Share-Based Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | $ 28,351 | $ 16,580 | $ 12,930 |
Cost of product revenue | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | 645 | 338 | 228 |
Cost of service revenue | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | 2,601 | 1,194 | 741 |
Research and development | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | 9,205 | 5,505 | 4,361 |
Sales and marketing | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | 8,725 | 4,841 | 3,791 |
General and administrative | |||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | |||
Share-based compensation expense | $ 7,175 | $ 4,702 | $ 3,809 |
STOCK PLANS - Summary of Transa
STOCK PLANS - Summary of Transactions under 1999 Stock Option Plan and 2007 Equity Incentive Plan (Details) - $ / shares | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Stock Options, Number of Shares | |||
Beginning outstanding balance (in shares) | 0 | 31,350 | 154,000 |
Granted (in shares) | 0 | 0 | 0 |
Exercised (Options)/Issued (RSU’s) (in shares) | 0 | (23,850) | (117,650) |
Canceled (in shares) | 0 | (7,500) | (5,000) |
Ending outstanding balance (in shares) | 0 | 0 | 31,350 |
Stock Options, Weighted Average Exercise Price | |||
Beginning outstanding balance (in dollars per share) | $ 0 | $ 5.87 | $ 6.63 |
Granted (in dollars per share) | 0 | 0 | 0 |
Exercised (Options)/Issued (RSU’s) (in dollars per share) | 0 | 5.87 | 6.91 |
Canceled (in dollars per share) | 0 | 5.87 | 3.76 |
Ending outstanding balance (in dollars per share) | $ 0 | $ 0 | $ 5.87 |
Restricted Stock Units, Number of Awards | |||
Beginning outstanding balance (in shares) | 1,929,315 | 1,738,299 | 1,870,826 |
Granted (in shares) | 1,806,490 | 1,009,770 | 602,359 |
Exercised (Options)/Issued (RSU’s) (in shares) | (736,170) | (728,239) | (635,254) |
Canceled (in shares) | (126,329) | (90,515) | (99,632) |
Ending outstanding balance (in shares) | 2,873,306 | 1,929,315 | 1,738,299 |
Restricted Stock Units, Weighted Average Fair Value | |||
Beginning outstanding balance (in dollars per share) | $ 30.18 | $ 21.11 | $ 18.09 |
Granted (in dollars per share) | 37.20 | 36.92 | 25.75 |
Exercised (Options)/Issued (RSU’s) (in dollars per share) | 26.52 | 18.97 | 17.14 |
Canceled (in dollars per share) | 34.99 | 21.44 | 17.61 |
Ending outstanding balance (in dollars per share) | $ 35.32 | $ 30.18 | $ 21.11 |
STOCK PLANS - Schedule of Aggre
STOCK PLANS - Schedule of Aggregate Intrinsic Values of Stock Options and Restricted Stock Units (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total intrinsic value of stock options exercised | $ 0 | $ 800 | $ 2,375 |
Restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Total fair value of restricted stock unit awards vested | $ 25,936 | $ 31,651 | $ 16,104 |
PENSION BENEFIT PLANS - Narrati
PENSION BENEFIT PLANS - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Compensation and Retirement Disclosure [Abstract] | |||
Retirement plan employee's contribution, percentage matched | 50.00% | ||
Retirement plan employee's contribution, percentage of match | 6.00% | ||
Retirement plan employer contributions vest at rate per year of service, percentage | 25.00% | ||
Retirement plan employer contributions | $ 7,800 | $ 2,600 | $ 2,500 |
Unrecognized actual gains, before tax | 847 | ||
Unrecognized actual gains, net of tax | $ 632 |
PENSION BENEFIT PLANS - Defined
PENSION BENEFIT PLANS - Defined Benefit Pension Plan (Details) $ in Thousands | 12 Months Ended |
Mar. 31, 2016USD ($) | |
Defined Benefit Plan, Change in Benefit Obligation [Roll Forward] | |
Benefit obligation, beginning of year | $ 0 |
Service cost | 279 |
Interest cost | 391 |
Benefits paid and other | (175) |
Acquisitions | 29,033 |
Actuarial gain | (847) |
Foreign exchange rate impact | 507 |
Benefit obligation, at end of year | 29,188 |
Defined Benefit Plan, Change in Fair Value of Plan Assets [Roll Forward] | |
Fair value of plan assets, at beginning of year | 0 |
Employer direct benefit payments | 175 |
Benefits paid and other | (175) |
Fair value of plan assets, at end of year | 0 |
Defined Benefit Plan, Net Periodic Benefit Cost [Abstract] | |
Service cost | 279 |
Interest cost | 391 |
Net periodic pension cost | $ 670 |
Defined Benefit Plan, Weighted Average Assumptions Used in Calculating Net Periodic Benefit Cost [Abstract] | |
Discount rate | 2.30% |
Rate of compensation increase | 2.25% |
PENSION BENEFIT PLANS - Expecte
PENSION BENEFIT PLANS - Expected Contributions (Details) $ in Thousands | 12 Months Ended |
Mar. 31, 2016USD ($) | |
Compensation and Retirement Disclosure [Abstract] | |
Employer direct benefit payments | $ 175 |
Defined Benefit Plan, Expected Future Benefit Payments, Fiscal Year Maturity [Abstract] | |
2,017 | 275 |
2,018 | 319 |
2,019 | 369 |
2,020 | 422 |
2,021 | 480 |
2022-2026 | $ 3,334 |
INCOME TAXES - Schedule of Inco
INCOME TAXES - Schedule of Income Before Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Domestic | $ (6,979) | $ 93,447 | $ 80,515 |
Foreign | (25,460) | 1,518 | (2,659) |
Income before income tax expense | $ (32,439) | $ 94,965 | $ 77,856 |
INCOME TAXES - Summary of Compo
INCOME TAXES - Summary of Components of Income Tax Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Current income tax expense: | |||
Federal | $ 29,238 | $ 25,927 | $ 20,123 |
State | 2,223 | 3,825 | 2,260 |
Foreign | 6,628 | 1,307 | 1,174 |
Current income tax expense, Total | 38,089 | 31,059 | 23,557 |
Deferred income tax expense (benefit): | |||
Federal | (30,216) | 2,836 | 5,347 |
State | (4,461) | 17 | 96 |
Foreign | (7,482) | (139) | (250) |
Deferred income tax expense (benefit), Total | (42,159) | 2,714 | 5,193 |
Income tax expense (benefit), Total | $ (4,070) | $ 33,773 | $ 28,750 |
INCOME TAXES - Schedule of Fede
INCOME TAXES - Schedule of Federal Statutory Income Tax Rate to Effective Tax Rate (Details) | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Income Tax Disclosure [Abstract] | |||
Statutory U.S. federal tax rate | 35.00% | 35.00% | 35.00% |
State taxes, net of federal tax effect | 3.10% | 3.20% | 2.80% |
Research and development tax credits | 13.00% | (1.40%) | (1.90%) |
Tax rate differential of foreign operations | (18.20%) | 0.10% | 0.20% |
Domestic production activities deduction | 9.20% | (2.90%) | (2.70%) |
Change in valuation allowance | 0.70% | 0.40% | 2.00% |
Transaction costs | (19.10%) | 0.00% | 0.00% |
Foreign withholding | (6.10%) | 0.00% | 0.00% |
Other | (5.10%) | 1.20% | 1.50% |
Total effective income tax rate | 12.50% | 35.60% | 36.90% |
INCOME TAXES - Summary of Com81
INCOME TAXES - Summary of Components of Net Deferred Tax Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Mar. 31, 2015 |
Deferred tax assets: | ||
Accrued expenses | $ 6,734 | $ 3,730 |
Deferred revenue | 13,913 | 9,054 |
Reserves | 7,916 | 1,651 |
Pension and other retiree benefits | 4,842 | 0 |
Net operating loss carryforwards | 41,225 | 19,214 |
Tax credit carryforwards | 5,824 | 3,838 |
Share-based compensation | 4,975 | 2,660 |
Transaction related costs | 0 | 4,001 |
Other | 426 | 808 |
Total gross deferred tax assets | 85,855 | 44,956 |
Valuation allowance | (3,777) | (3,906) |
Net deferred tax assets | 82,078 | 41,050 |
Deferred tax liabilities: | ||
Intangible assets | (354,601) | (29,202) |
Depreciation | (6,630) | (732) |
Total deferred tax liability | $ (279,153) | |
Total deferred tax asset | $ 11,116 |
INCOME TAXES - Narrative (Detai
INCOME TAXES - Narrative (Details) $ in Millions | Mar. 31, 2016USD ($) |
Income Tax Disclosure [Abstract] | |
Foreign undistributed earnings | $ 36 |
State net operating loss carryforwards | 77 |
Federal net operating loss carryforwards | 86 |
Tax credit carryforwards | 6 |
Foreign net operating loss carryforwards | $ 71 |
INCOME TAXES - Schedule of Reco
INCOME TAXES - Schedule of Reconciliation of Unrecognized Tax Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Reconciliation of Unrecognized Tax Benefits [Roll Forward] | |||
Balance at April 1, | $ 1,038 | $ 421 | $ 370 |
Additions based on tax positions related to the current year | 48 | 45 | 51 |
Release of tax positions of prior years | 0 | (75) | 0 |
Increase in unrecognized tax benefits as a result of a tax position taken during a prior period | 502 | 647 | 0 |
Balance at March 31, | $ 1,588 | $ 1,038 | $ 421 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Narrative (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Commitments and Contingencies Disclosure [Line Items] | |||
Fair value of contingent liability | $ 7,293 | $ 4,484 | |
Unconditional purchase obligation | 54,100 | ||
Total rent expense under non-cancelable operating leases | 12,800 | $ 5,900 | $ 6,000 |
Communications Business | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Fair value of contingent liability | 2,700 | ||
Fair value of future consideration to be paid | 2,700 | ||
Simena LLC | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Fair value of contingent liability | 8,000 | ||
Simena LLC | Present value of future consideration | |||
Commitments and Contingencies Disclosure [Line Items] | |||
Fair value of contingent liability | $ 4,600 |
COMMITMENTS AND CONTINGENCIES85
COMMITMENTS AND CONTINGENCIES - Schedule of Future Non Cancelable Minimum Lease Commitments (Details) $ in Thousands | Mar. 31, 2016USD ($) |
Operating Leases, Future Minimum Payments Due, Fiscal Year Maturity [Abstract] | |
2,017 | $ 21,448 |
2,018 | 15,750 |
2,019 | 10,064 |
2,020 | 4,720 |
2,021 | 3,542 |
Remaining years | 6,333 |
Total minimum lease payments | $ 61,857 |
SEGMENT AND GEOGRAPHIC INFORM86
SEGMENT AND GEOGRAPHIC INFORMATION - Narrative (Details) | 12 Months Ended |
Mar. 31, 2016Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 5 |
Number of reportable segments | 1 |
SEGMENT AND GEOGRAPHIC INFORM87
SEGMENT AND GEOGRAPHIC INFORMATION - Summary of Total Revenue by Geography (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | $ 285,887 | $ 307,679 | $ 261,110 | $ 100,743 | $ 119,385 | $ 122,833 | $ 103,599 | $ 107,852 | $ 955,419 | $ 453,669 | $ 396,647 |
United States | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | 681,569 | 348,354 | 303,364 | ||||||||
Europe | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | 137,411 | 46,253 | 45,837 | ||||||||
Asia | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | 61,566 | 27,685 | 20,646 | ||||||||
Rest of the world | |||||||||||
Segment Reporting Information [Line Items] | |||||||||||
Total revenue | $ 74,873 | $ 31,377 | $ 26,800 |
RELATED PARTY TRANSACTIONS - Na
RELATED PARTY TRANSACTIONS - Narrative (Details) - Member of board of directors - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
EMC, Corp. | ||
Related Party Transaction [Line Items] | ||
Revenue | $ 475 | $ 374 |
Mitre Corp. | ||
Related Party Transaction [Line Items] | ||
Revenue | 125 | |
State Street | ||
Related Party Transaction [Line Items] | ||
Revenue | $ 452 | $ 240 |
QUARTERLY RESULTS OF OPERATIO89
QUARTERLY RESULTS OF OPERATIONS - UNAUDITED - Schedule of Unaudited Quarterly Results of Operations (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Sep. 30, 2014 | Jun. 30, 2014 | Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Quarterly Financial Information Disclosure [Abstract] | |||||||||||
Revenue | $ 285,887 | $ 307,679 | $ 261,110 | $ 100,743 | $ 119,385 | $ 122,833 | $ 103,599 | $ 107,852 | $ 955,419 | $ 453,669 | $ 396,647 |
Gross profit | 185,036 | 201,564 | 160,923 | 79,447 | 95,997 | 95,851 | 82,004 | 85,256 | 626,970 | 359,108 | 312,134 |
Net income (loss) | $ (3,616) | $ (24,507) | $ (7,915) | $ 7,669 | $ 20,854 | $ 17,629 | $ 11,233 | $ 11,476 | $ (28,369) | $ 61,192 | $ 49,106 |
Diluted net income (loss) per share (in dollars per share) | $ (0.04) | $ (0.25) | $ (0.09) | $ 0.19 | $ 0.50 | $ 0.42 | $ 0.27 | $ 0.27 | $ (0.35) | $ 1.47 | $ 1.17 |
SCHEDULE II - VALUATION AND Q90
SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | |
Allowance for doubtful accounts | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at Beginning of Year | $ 173 | $ 313 | $ 971 |
Additions Resulting in Charges to Operations | 1,824 | (140) | 250 |
Charges to Other Accounts | 3,221 | 0 | (40) |
Deductions Due to Write-Offs | (149) | 0 | (868) |
Balance at End of Year | 5,069 | 173 | 313 |
Deferred tax asset valuation allowance | |||
Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance at Beginning of Year | 3,906 | 4,941 | 3,795 |
Additions Resulting in Charges to Operations | 99 | 152 | 837 |
Charges to Other Accounts | 0 | 0 | 309 |
Deductions Due to Write-Offs | (228) | (1,187) | 0 |
Balance at End of Year | $ 3,777 | $ 3,906 | $ 4,941 |