Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2018 | Jul. 27, 2018 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | NETSCOUT SYSTEMS INC | |
Entity Central Index Key | 1,078,075 | |
Current Fiscal Year End Date | --03-31 | |
Entity Filer Category | Large Accelerated Filer | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Document Fiscal Year Focus | 2,019 | |
Document Fiscal Period Focus | Q1 | |
Trading Symbol | NTCT | |
Amendment Flag | false | |
Entity Common Stock, Shares Outstanding | 80,535,277 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 353,416 | $ 369,821 |
Marketable securities | 105,637 | 77,941 |
Accounts receivable and unbilled costs, net of allowance for doubtful accounts of $1,473 and $1,991 at June 30, 2018 and March 31, 2018, respectively | 165,331 | 213,438 |
Inventories and deferred costs | 32,739 | 34,774 |
Prepaid income taxes | 28,544 | 22,932 |
Prepaid expenses and other current assets (related party balances of $1,651 and $3,187 at June 30, 2018 and March 31, 2018, respectively) | 32,407 | 33,502 |
Total current assets | 718,074 | 752,408 |
Fixed assets, net | 60,006 | 52,511 |
Goodwill | 1,718,499 | 1,712,764 |
Intangible assets, net | 756,418 | 831,374 |
Deferred income taxes | 5,575 | 6,685 |
Other assets | 19,036 | 12,866 |
Total assets | 3,277,608 | 3,368,608 |
Current liabilities: | ||
Accounts payable (related party balances of $619 and $369 at June 30, 2018 and March 31, 2018, respectively) | 25,122 | 30,133 |
Accrued compensation | 55,331 | 46,552 |
Accrued other | 30,997 | 33,164 |
Income taxes payable | 210 | 1,526 |
Deferred revenue and customer deposits | 248,165 | 301,925 |
Total current liabilities | 359,825 | 413,300 |
Other long-term liabilities | 15,092 | 8,308 |
Deferred tax liability | 143,542 | 151,563 |
Accrued long-term retirement benefits | 33,457 | 35,246 |
Long-term deferred revenue and customer deposits | 80,491 | 91,409 |
Long-term debt | 600,000 | 600,000 |
Total liabilities | 1,232,407 | 1,299,826 |
Commitments and contingencies (Note 13) | ||
Stockholders' equity: | ||
Preferred stock, $0.001 par value, 5,000,000 shares authorized; no shares issued or outstanding at June 30, 2018 and March 31, 2018 | 0 | 0 |
Common stock, $0.001 par value, 300,000,000 shares authorized; 118,139,282 and 117,744,913 shares issued and 80,535,277 and 80,270,023 shares outstanding at June 30, 2018 and March 31, 2018, respectively | 117 | 117 |
Additional paid-in capital | 2,676,382 | 2,665,120 |
Accumulated other comprehensive income (loss) | (107) | 2,895 |
Treasury stock at cost, 37,604,005 and 37,474,890 shares at June 30, 2018 and March 31, 2018, respectively | (999,329) | (995,843) |
Retained earnings | 368,138 | 396,493 |
Total stockholders' equity | 2,045,201 | 2,068,782 |
Total liabilities and stockholders' equity | $ 3,277,608 | $ 3,368,608 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Related Party Transaction [Line Items] | ||
Accounts receivable, allowance for doubtful accounts | $ 1,473 | $ 1,991 |
Prepaid expenses and other current assets | 32,407 | 33,502 |
Related party accounts payable | $ 25,122 | $ 30,133 |
Preferred stock, par value (in USD 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 USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, shares issued (in shares) | 118,139,282 | 117,744,913 |
Common stock, shares outstanding (in shares) | 80,535,277 | 80,270,023 |
Treasury stock, shares (in shares) | 37,604,005 | 37,474,890 |
Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Prepaid expenses and other current assets | $ 1,651 | $ 3,187 |
Related party accounts payable | $ 619 | $ 369 |
Consolidated Statements of Oper
Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Revenue: | ||
Total revenue | $ 205,111 | $ 225,756 |
Cost of revenue: | ||
Total cost of revenue | 62,027 | 66,562 |
Gross profit | 143,084 | 159,194 |
Operating expenses: | ||
Research and development (related party balances of $2, and $3, respectively) | 55,463 | 58,966 |
Sales and marketing (related party balances of $0 and $2, respectively) | 78,132 | 85,361 |
General and administrative (related party balances of $13 and $244, respectively) | 26,059 | 29,872 |
Amortization of acquired intangible assets | 23,465 | 18,383 |
Restructuring charges | 1,147 | 167 |
Impairment of intangible assets | 35,871 | 0 |
Total operating expenses | 220,137 | 192,749 |
Loss from operations | (77,053) | (33,555) |
Interest and other expense, net: | ||
Interest income | 941 | 480 |
Interest expense | (5,888) | (2,550) |
Other income (expense) | 254 | (1,065) |
Total interest and other expense, net | (4,693) | (3,135) |
Loss before income tax benefit | (81,746) | (36,690) |
Income tax benefit | (19,242) | (12,468) |
Net loss | $ (62,504) | $ (24,222) |
Basic net loss per share (in USD per share) | $ (0.78) | $ (0.27) |
Diluted net loss per share (in USD per share) | $ (0.78) | $ (0.27) |
Weighted average common shares outstanding used in computing: | ||
Net loss per share - basic (in shares) | 80,358 | 91,180 |
Net loss per share - diluted (in shares) | 80,358 | 91,180 |
Product | ||
Revenue: | ||
Total revenue | $ 96,927 | $ 108,659 |
Cost of revenue: | ||
Total cost of revenue | 32,965 | 36,462 |
Service | ||
Revenue: | ||
Total revenue | 108,184 | 117,097 |
Cost of revenue: | ||
Total cost of revenue | $ 29,062 | $ 30,100 |
Consolidated Statements of Ope5
Consolidated Statements of Operations (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Related Party Transaction [Line Items] | ||
Total cost of revenue | $ 62,027 | $ 66,562 |
Related party research and development | 55,463 | 58,966 |
Related party selling and marketing | 78,132 | 85,361 |
Related party general and administrative expense | 26,059 | 29,872 |
Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Related party research and development | 2 | 3 |
Related party selling and marketing | 0 | 2 |
Related party general and administrative expense | 13 | 244 |
Product | ||
Related Party Transaction [Line Items] | ||
Total cost of revenue | 32,965 | 36,462 |
Product | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Total cost of revenue | 0 | 245 |
Service | ||
Related Party Transaction [Line Items] | ||
Total cost of revenue | 29,062 | 30,100 |
Service | Affiliated Entity | ||
Related Party Transaction [Line Items] | ||
Total cost of revenue | $ 174 | $ 29 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (62,504) | $ (24,222) |
Other comprehensive income (loss): | ||
Cumulative translation adjustments | (2,708) | 1,135 |
Changes in market value of investments: | ||
Changes in unrealized gains (losses), net of tax (benefit) of $29 and ($2), respectively | 28 | (4) |
Total net change in market value of investments | 28 | (4) |
Changes in market value of derivatives: | ||
Changes in market value of derivatives, net of (benefit) tax of ($126), and $189, respectively | (393) | 305 |
Reclassification adjustment for net gains included in net income, net of taxes of $23 and $5, respectively | 71 | 7 |
Total net change in market value of derivatives | (322) | 312 |
Other comprehensive income (loss) | (3,002) | 1,443 |
Total comprehensive loss | $ (65,506) | $ (22,779) |
Consolidated Statements of Com7
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Statement of Comprehensive Income [Abstract] | ||
Changes in unrealized (losses) gains, (benefit) tax | $ 29 | $ (2) |
Changes in market value of derivatives, tax (benefit) | (126) | 189 |
Reclassification adjustment for net gains included in net income (loss), taxes | $ 23 | $ 5 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Cash flows from operating activities: | ||
Net loss | $ (62,504) | $ (24,222) |
Adjustments to reconcile net loss to cash provided by operating activities, net of the effects of acquisitions: | ||
Depreciation and amortization | 40,347 | 37,713 |
Loss on disposal of fixed assets | 63 | 411 |
Deal-related compensation expense and accretion charges | 38 | 38 |
Share-based compensation expense associated with equity awards | 12,965 | 10,231 |
Impairment of intangible assets | 35,871 | 0 |
Deferred income taxes | (14,306) | (8,564) |
Other gains (losses) | (206) | 616 |
Changes in assets and liabilities | ||
Accounts receivable and unbilled costs | 47,939 | 109,572 |
Due from related party | 1,536 | 0 |
Inventories | (138) | (4,737) |
Prepaid expenses and other assets | (3,426) | (1,152) |
Accounts payable | (5,206) | (7,126) |
Accrued compensation and other expenses | 5,566 | (20,787) |
Due to related party | 250 | (22) |
Income taxes payable | (1,882) | 185 |
Deferred revenue | (31,387) | (39,521) |
Net cash provided by operating activities | 25,520 | 52,635 |
Cash flows from investing activities: | ||
Purchase of marketable securities | (69,211) | (35,413) |
Proceeds from maturity of marketable securities | 41,573 | 47,318 |
Purchase of fixed assets | (6,468) | (3,297) |
Decrease (increase) in deposits | 4 | (9) |
Capitalized software development costs | 0 | (45) |
Net cash (used in) provided by investing activities | (34,102) | 8,554 |
Cash flows from financing activities: | ||
Treasury stock repurchases | 0 | (100,000) |
Tax withholding on restricted stock units | (3,486) | (5,381) |
Net cash used in financing activities | (3,486) | (105,381) |
Effect of exchange rate changes on cash and cash equivalents | (4,337) | 1,048 |
Net decrease in cash and cash equivalents | (16,405) | (43,144) |
Cash and cash equivalents and restricted cash, beginning of period | 370,731 | 305,726 |
Cash and cash equivalents and restricted cash, end of period | 354,326 | 262,582 |
Non-cash transactions: | ||
Transfers of inventory to fixed assets | 1,589 | 4,262 |
Additions to property, plant and equipment included in accounts payable | 54 | 522 |
Tenant improvement allowance | $ 6,788 | $ 0 |
BASIS OF PRESENTATION
BASIS OF PRESENTATION | 3 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BASIS OF PRESENTATION | BASIS OF PRESENTATION The accompanying unaudited interim consolidated financial statements have been prepared by NetScout Systems, Inc., or NetScout or the Company. Certain information and footnote disclosures normally included in financial statements prepared under United States generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the Company's financial position, results of operations and cash flows. The year-end consolidated balance sheet data was derived from the Company's audited financial statements, but does not include all disclosures required by GAAP. The results reported in these unaudited interim consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. All significant intercompany accounts and transactions are eliminated in consolidation. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 filed with the Securities and Exchange Commission on May 21, 2018. Certain amounts for the three months ended June 30, 2017 have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported results of operations. Recent Accounting Pronouncements In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income (ASU 2018-02). ASU 2018-02 amends ASC 220, Income Statement - Reporting Comprehensive Income, to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (Tax Legislation). In addition, under the ASU 2018-02, we may be required to provide certain disclosures regarding stranded tax effects. ASU 2018-02 is effective for years beginning after December 15, 2018, and interim periods within those fiscal years. ASU 2018-02 is effective for NetScout beginning April 1, 2019. Early adoption is permitted. We do not believe the adoption of ASU 2018-02 will have a material impact on our consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). ASU 2017-12 provides guidance to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both non-financial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2018, with early adoption permitted. ASU 2017-12 is effective for the Company beginning April 1, 2019. The Company is currently assessing the potential impact of the adoption of ASU 2017-12 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. ASU 2016-02 is effective for the company beginning April 1, 2019. The Company is currently assessing the potential impact of the adoption of ASU 2016-02 on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09). ASU 2014-09 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted ASU 2014-09 as of April 1, 2018 using the modified retrospective transition method. Please refer to Note 2, "Revenue Recognition" for further details. |
REVENUE RECOGNITION
REVENUE RECOGNITION | 3 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE RECOGNITION | REVENUE RECOGNITION Revenue from Contracts with Customers In May 2014, the FASB issued Topic 606, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. Topic 606 replaced most existing revenue recognition guidance under GAAP. The new standard introduces a five-step process to be followed in determining the amount and timing of revenue recognition. It also provides guidance on accounting for costs incurred to obtain or fulfill contracts with customers and establishes disclosure requirements which are more extensive than those required under prior GAAP. Topic 606 became effective for the Company on April 1, 2018. The Company elected to use the modified retrospective transition approach. Therefore, the comparative financial information has not been restated and continues to be reported under the accounting standards in effect for those periods. Revenue Recognition Policy The Company exercises judgment and use 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 its 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. The Company accounts for revenue once a legally enforceable contract with a customer has been approved by the parties and the related promises to transfer products or services have been identified. A contract is defined by the Company as an arrangement with commercial substance identifying payment terms, each party’s rights and obligations regarding the products or services to be transferred and collection is probable. Customer contracts may include promises to transfer multiple products and services to a customer. Determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation may require significant judgment. Revenue is recognized when control of the products or services are transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in exchange for products and services. Product revenue is recognized upon shipment, provided a legally enforceable contract exists, control has passed to the customer, and in the case of software products, when the customer has the rights and ability to access the software, and collection of the related receivable is probable. 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. The Company's service offerings include installation, integration, extended warranty and maintenance services, post-contract customer support, stand-ready software-as-a-service (SAAS) 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, bug fixes and hardware repair and replacement. Consulting services are recognized upon delivery or completion of performance depending on the terms of the underlying contract. SAAS services are recognized ratably over the contract term beginning on the commencement of services. 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. Bundled arrangements are concurrent customer purchases of a combination of our product and service offerings that may be delivered at various points in time. The Company allocates the transaction price among the performance obligations in an amount that depicts the relative standalone selling prices (SSP) of each obligation. Judgment is required to determine the SSP for each distinct performance obligation. The Company uses a range of amounts to estimate SSP when it sells each of the products and services separately based on the element’s historical pricing. The Company also considers its overall pricing objectives and practices across different sales channels and geographies, and market conditions. Generally, the Company has established SSP for a majority of its service elements based on historical standalone sales. In certain instances, the Company has established SSP for services based upon an estimate of profitability and the underlying cost to fulfill those services. Further, for certain service engagements, the Company considers quoted prices as part of multi element arrangements of those engagements as a basis for establishing SSP. SSP has been established 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 reviews sales of the product elements on a quarterly basis and updates, when appropriate, its SSP for such elements to ensure that it reflects recent pricing experience. The Company's products are distributed through its direct sales force and indirect distribution channels through alliances with resellers and distributors. Revenue arrangements with resellers and distributors are recognized on a sell-in basis; that is, product is delivered to the reseller or distributor. The Company records consideration given to a reseller or distributor as a reduction of revenue to the extent they have recorded revenue from the reseller or distributor. With limited exceptions, its 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 its resellers and distributors. Financial Statement Impact of Adoption The cumulative impact of applying Topic 606 to all contracts with outstanding performance obligations as of April 1, 2018 was recorded as an adjustment to retained earnings as of the adoption date. As a result of applying the modified retrospective approach to adopt the new standard, the following adjustments were made to accounts on the consolidated balance sheet at April 1, 2018 (in thousands): Balance at March 31, 2018 Adjustments from Adopting Topic 606 Balance at April 1, 2018 ASSETS: Accounts receivable and unbilled costs $ 213,438 $ 1,195 $ 214,633 Prepaid expenses and other current assets 33,502 4,626 38,128 Other assets 12,866 4,748 17,614 LIABILITIES: Deferred revenue and customer deposits 301,925 (30,227 ) 271,698 Deferred tax liability 151,563 7,899 159,462 Long-term deferred revenue and customer deposits 91,409 (1,252 ) 90,157 STOCKHOLDERS' EQUITY: Retained earnings 396,493 34,149 430,642 In connection with the adoption of the new revenue recognition accounting standard, the Company increased its retained earnings by $34.1 million , due to uncompleted contracts at April 1, 2018, for which $34.9 million of revenue will not be recognized in future periods under the new standard. The Company capitalized $7.1 million of incremental sales commission costs on the adoption date directly related to obtaining customer contracts and is amortizing these costs as it satisfies the underlying performance obligations, which for certain contracts can include anticipated renewal periods. The acceleration of revenue that was deferred under prior guidance as of April 1, 2018 was primarily attributable to no longer requiring the separation of promised goods or services, such as software licenses, technical support, specified and unspecified upgrade rights on the basis of vendor specific objective evidence, and the impact of allocating the transaction price to the software performance obligations in the contract on a relative basis using standalone selling price rather than allocating under the residual method, which allocates the entire arrangement discount to the delivered performance obligations. In addition, revenue from perpetual licenses and associated hardware with extended payment terms and term licenses are now recognized when control is transferred to the customer, the point in time when the customer can use and benefit from the license. Previously the Company recognized revenue over the term of the agreements as payments became due or earlier if prepaid. The net change in deferred income taxes of $7.9 million is primarily due to the deferred tax effects resulting from the adjustment to retained earnings for the cumulative effect of applying Topic 606 to active contracts as of the adoption date. Impact of Topic 606 on Financial Statement Line Items The impact of adoption of Topic 606 on our consolidated balance sheet at June 30, 2018 and on our consolidated statement of operations for the three months ended June 30, 2018 was as follows (in thousands): June 30, 2018 As Reported Balance without Adoption of Topic 606 Effect of Change Higher (Lower) ASSETS: Accounts receivable and unbilled costs $ 165,331 $ 161,554 $ 3,777 Prepaid expenses and other current assets 32,407 28,472 3,935 Other assets 19,036 12,353 6,683 LIABILITIES: Deferred revenue and customer deposits 248,165 268,230 (20,065 ) Deferred tax liability 143,542 135,914 7,628 Long-term deferred revenue and customer deposits 80,491 88,416 (7,925 ) STOCKHOLDERS' EQUITY: Retained earnings 368,138 334,867 33,271 Three Months Ended June 30, 2018 As Reported Balance without Adoption of Topic 606 Effect of Change Higher (Lower) Total revenues $ 205,111 $ 203,354 $ 1,757 Total cost of revenue 62,027 62,027 — Sales and marketing expense 78,132 77,524 608 Income tax provision (19,242 ) (19,513 ) 271 Net loss (62,504 ) (63,382 ) 878 Basic net loss per share $ (0.78 ) $ (0.79 ) $ 0.01 Diluted net loss per share $ (0.78 ) $ (0.79 ) $ 0.01 The adoption of Topic 606 had no impact to net cash provided by or used in operating, investing and financing activities on the Company’s consolidated statements of cash flows during the three months ended June 30, 2018. Performance Obligations Customer contracts may include promises to transfer multiple products and services to a customer. Determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation may require significant judgment. The transaction price is allocated among performance obligations in bundled contracts in an amount that depicts the relative standalone selling prices of each obligation. For contracts involving distinct hardware and software licenses, the performance obligations are satisfied at a point in time when control is transferred to the customer. For standalone maintenance and post-contract support (PCS) the performance obligation is satisfied ratably over the contract term as a stand-ready obligation. For consulting and training services, the performance obligation may be satisfied over the contract term as a stand-ready obligation, satisfied over a period of time as those services are delivered, or satisfied at the completion of the service when control has transferred or the services have expired unused. Payments for hardware, software licenses, one-year maintenance, PCS and consulting services, are typically due up front with payment terms of 30 to 90 days. However, the Company does have contracts which billings occur ratably over a period of years following the transfer of control for the contracted performance obligations. Payments on multi-year maintenance, PCS and consulting services are typically due in annual installments over the contract term. The Company did not have any material variable consideration such as obligations for returns, refunds or warranties at June 30, 2018. At June 30, 2018, the Company had total deferred revenue of $328.7 million , which represents the aggregate total contract price allocated to undelivered performance obligations. The Company expects to recognize $248.2 million or 76% of this revenue during the next 12 months, and expects to recognize the remaining $80.5 million or 24% of this revenue thereafter. 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 $18.7 million and $20.0 million at June 30, 2018 and March 31, 2018, respectively. NetScout expects that the amount of billed and unbilled deferred revenue will change from quarter to quarter for several reasons, including the specific timing, duration and size of large customer support and service agreements, varying billing cycles of such agreements, the specific timing of customer renewals, and foreign currency fluctuations. The Company did not have any significant financing components, or variable consideration or performance obligations satisfied in a prior period recognized during the three months ended June 30, 2018. Contract Balances The Company receives payments from customers based on a billing schedule as established by the Company’s contracts. Contract assets relate to performance obligations in advance of scheduled billings. Upon adoption, the Company recorded unbilled accounts receivable representing the right to consideration in exchange for goods or services that have been transferred to a customer conditional on the passage of time. The Company did not record any contract assets upon adoption. Deferred revenue relates to payments received in advance of performance under the contract. The following table provides information about contract assets and liabilities (in thousands): April 1, 2018 June 30, 2018 Increase/ (Decrease) ASSETS: Customer accounts receivable $ 205,299 $ 155,613 $ (49,686 ) Unbilled receivables 4,338 5,190 852 Other receivables 4,996 4,528 (468 ) Long-term unbilled receivables 2,254 4,504 2,250 $ 216,887 $ 169,835 $ (47,052 ) LIABILITIES: Deferred revenue $ 271,698 $ 248,165 $ (23,533 ) Deferred revenue, long-term 90,157 80,491 (9,666 ) $ 361,855 $ 328,656 $ (33,199 ) Changes in deferred revenue during the three months ended June 30, 2018 were as follows (in thousands): Balance at April 1, 2018 $ 361,855 Revenue recognized in the period (185,501 ) Additions to customer deposits and contract liabilities 152,472 Reclassifications and other adjustments (170 ) Balance at June 30, 2018 $ 328,656 Costs to Obtain Contracts The Company has determined the only significant incremental costs incurred to obtain contracts with clients within the scope of Topic 606 are sales commissions paid to its associates. Sales commissions are recorded as an asset and amortized to expense ratably over the remaining performance periods of the related contracts with remaining performance obligations. The Company applies the practical expedient in Topic 606 and expenses costs as incurred for sales commissions when the amortization period would have been one year or less. At June 30, 2018 , the consolidated balance sheet included $6.1 million in assets related to sales commissions to be expensed in future periods. A balance of $3.9 million was included in prepaid expenses and other current assets, and a balance of $2.2 million was included as other assets in the Company's consolidated balance sheet at June 30, 2018 . During the three months ended June 30, 2018 , the Company recognized $0.6 million of amortization related to this sales commission asset, which is included in the sales and marketing expense line in our consolidated statements of operations. |
CONCENTRATION OF CREDIT RISK AN
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS | 3 Months Ended |
Jun. 30, 2018 | |
Risks and Uncertainties [Abstract] | |
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS | CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS Financial instruments that potentially subject the Company to concentration of credit risk consist primarily of investments, trade accounts receivable and accounts payable. The Company's cash, cash equivalents, and marketable securities are placed with financial institutions with high credit standings. At June 30, 2018 and March 31, 2018 , the Company had no direct customers or indirect channel partners which accounted for more than 10% of the accounts receivable balance. During the three months ended June 30, 2018 and June 30, 2017 , no direct customers or indirect channel partners accounted for more than 10% of the Company's total revenue. As disclosed parenthetically within the Company's consolidated balance sheet, the Company has receivables from related parties included within prepaid expenses and other current assets that represent a concentration of credit risk of $1.7 million and $3.2 million at June 30, 2018 and March 31, 2018 , respectively. Historically, the Company has not experienced any significant failure of its customers' ability 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. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 3 Months Ended |
Jun. 30, 2018 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION The following is a summary of share-based compensation expense including restricted stock units granted pursuant to the Company's 2007 Equity Incentive Plan, as amended, and employee stock purchases made under the Company's 2011 Employee Stock Purchase Plan (ESPP) based on estimated fair values within the applicable cost and expense lines identified below (in thousands): Three Months Ended June 30, 2018 2017 Cost of product revenue $ 269 $ 213 Cost of service revenue 1,330 1,016 Research and development 4,151 3,175 Sales and marketing 4,359 3,444 General and administrative 2,856 2,383 $ 12,965 $ 10,231 Employee Stock Purchase Plan – The Company maintains the ESPP for all eligible employees as described in the Company's Annual Report on Form 10-K for the year ended March 31, 2018 . 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 value on the last day of such offering period. The offering periods run from March 1st through August 31st and from September 1st through the last day of February each year. |
CASH, CASH EQUIVALENTS, RESTRIC
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND MARKETABLE SECURITIES | 3 Months Ended |
Jun. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND MARKETABLE SECURITIES | CASH, CASH EQUIVALENTS, RESTRICTED CASH AND MARKETABLE SECURITIES The Company 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. Cash and cash equivalents consisted of money market instruments and cash maintained with various financial institutions at June 30, 2018 and March 31, 2018 . Cash, Cash Equivalents and Restricted Cash The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows (in thousands): June 30, March 31, 2018 June 30, March 31, Cash and cash equivalents $ 353,416 $ 369,821 $ 261,736 $ 304,880 Restricted cash 910 910 846 846 Total cash, cash equivalents and restricted cash $ 354,326 $ 370,731 $ 262,582 $ 305,726 The Company's restricted cash includes cash balances which are legally or contractually restricted. The Company's restricted cash is included within prepaid and other current assets and consists of amounts related to holdbacks associated with prior acquisitions. Marketable Securities The following is a summary of marketable securities held by NetScout at June 30, 2018 , classified as short-term and long-term (in thousands): Amortized Cost Unrealized Losses Fair Value Type of security: U.S. government and municipal obligations $ 46,019 $ (4 ) $ 46,015 Commercial paper 56,877 — 56,877 Corporate bonds 2,746 (1 ) 2,745 Total short-term marketable securities 105,642 (5 ) 105,637 Total long-term marketable securities — — — Total marketable securities $ 105,642 $ (5 ) $ 105,637 The following is a summary of marketable securities held by NetScout at March 31, 2018 , classified as short-term and long-term (in thousands): Amortized Cost Unrealized Losses Fair Value Type of security: U.S. government and municipal obligations $ 42,246 $ (60 ) $ 42,186 Commercial paper 33,003 — 33,003 Corporate bonds 2,754 (2 ) 2,752 Total short-term marketable securities 78,003 (62 ) 77,941 Total long-term marketable securities — — — Total marketable securities $ 78,003 $ (62 ) $ 77,941 Contractual maturities of the Company's marketable securities held at June 30, 2018 and March 31, 2018 were as follows (in thousands): June 30, March 31, Available-for-sale securities: Due in 1 year or less $ 105,637 $ 77,941 $ 105,637 $ 77,941 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and March 31, 2018 (in thousands): Fair Value Measurements at June 30, 2018 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 353,416 $ — $ — $ 353,416 U.S. government and municipal obligations 15,271 30,744 — 46,015 Commercial paper — 56,877 — 56,877 Corporate bonds 2,745 — — 2,745 $ 371,432 $ 87,621 $ — $ 459,053 LIABILITIES: Contingent purchase consideration $ — $ — $ (5,502 ) $ (5,502 ) Derivative financial instruments — (381 ) — (381 ) $ — $ (381 ) $ (5,502 ) $ (5,883 ) Fair Value Measurements at March 31, 2018 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 369,821 $ — $ — $ 369,821 U.S. government and municipal obligations 14,513 27,673 — 42,186 Commercial paper — 33,003 — 33,003 Corporate bonds 2,752 — — 2,752 Derivative financial instruments — 122 — 122 $ 387,086 $ 60,798 $ — $ 447,884 LIABILITIES: Contingent purchase consideration $ — $ — $ (5,464 ) $ (5,464 ) Derivative financial instruments — (40 ) — (40 ) $ — $ (40 ) $ (5,464 ) $ (5,504 ) 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 calculated using market observable data for similar but not identical instruments, or a discounted cash flow model using the contractual interest rate as compared with the underlying interest yield curve. 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. 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's Level 3 liabilities consist of contingent purchase consideration. The fair value of contingent purchase consideration related to the acquisition of Simena LLC (Simena) in November 2011 for future consideration to be paid to the seller is $5.0 million and $4.9 million at June 30, 2018 and March 31, 2018 respectively. The contingent purchase consideration is included as a contingent liability within accrued other in the Company's consolidated balance sheet at June 30, 2018 and March 31, 2018 . The Company's contingent purchase consideration also includes $523 thousand related to the acquisition of certain assets and liabilities of Efflux Systems, Inc. (Efflux) in the second quarter of fiscal year 2018. The contingent purchase consideration represents amounts deposited into an escrow account, which was established to cover damages NetScout may suffer related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the seller as described in the merger agreement. The contingent purchase consideration is included as accrued other in the Company's consolidated balance sheet at June 30, 2018 and March 31, 2018 . The following table sets forth a reconciliation of changes in the fair value of the Company's Level 3 financial assets and liabilities for the three months ended June 30, 2018 (in thousands): Contingent Purchase Consideration Balance at March 31, 2018 $ (5,464 ) Increase in fair value and accretion expense (included within research and development expense) (38 ) Balance at June 30, 2018 $ (5,502 ) Deal-related compensation expense and accretion charges related to the contingent consideration for the three months ended June 30, 2018 was $38 thousand and was included as part of earnings. |
INVENTORIES
INVENTORIES | 3 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
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. Inventories consist of the following (in thousands): June 30, March 31, Raw materials $ 21,094 $ 20,860 Work in process 182 2,589 Finished goods 8,027 8,500 Deferred costs 3,436 2,825 $ 32,739 $ 34,774 |
ACQUISITIONS
ACQUISITIONS | 3 Months Ended |
Jun. 30, 2018 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITIONS Efflux On July 12, 2017 (the Efflux Closing Date), the Company completed the acquisition of Efflux Systems, Inc. (Efflux) for $8.6 million . Efflux's technology detects, analyzes and correlates threat activity within enterprise networks. The Efflux technology and engineering talent have been integrated into Arbor Networks in order to support the ongoing enhancement of Arbor Spectrum for advanced threat detection. Goodwill was recognized for the excess purchase price over the fair value of the net assets acquired. Goodwill of $6.1 million from the acquisition was included within the Security reporting unit. Goodwill and intangible assets recorded as part of the acquisition are not deductible for tax purposes. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 3 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill The Company has two reporting units: (1) Service Assurance and (2) Security. The Company assesses goodwill for impairment at the 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, 2018. The Company performed an interim quantitative test as of June 30, 2018 related to the intangible asset impairment. The estimated fair value of both reporting units significantly exceeded their carrying value. At June 30, 2018 , goodwill attributable to our Service Assurance and Security reporting units was $1.2 billion and $555.3 million , respectively. At March 31, 2018 , goodwill attributable to our Service Assurance and Security reporting units was $1.2 billion and $555.9 million , respectively. The change in the carrying amount of goodwill for the three months ended June 30, 2018 is due to 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 three months ended June 30, 2018 are as follows (in thousands): Balance at March 31, 2018 $ 1,712,764 Foreign currency translation impact 5,735 Balance at June 30, 2018 $ 1,718,499 Intangible Assets The net carrying amounts of intangible assets were $756.4 million and $ 831.4 million at June 30, 2018 and March 31, 2018 , 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 Central Corporation (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. During the three months ended June 30, 2018 , the Company performed a quantitative analysis on certain intangible assets related to the handheld network tools product area, which is currently in the process of being divested. At June 30, 2018 , the handheld network tools asset group did not qualify as held for sale. The fair value for the intangible assets related to the handheld network tools asset group was calculated considering a range of potential transaction prices which we consider to be a Level 3 measurement. The fair value of these intangible assets was determined to be less than the carrying value, and as a result, the Company recognized an impairment charge of $35.9 million in the three months ended June 30, 2018 . The impairment charge was recorded within a separate operating expense line item in the Company's consolidated statements of operations during the three months ended June 30, 2018 . Intangible assets include the indefinite-lived trade name with a carrying value of $18.6 million and the following amortizable intangible assets at June 30, 2018 (in thousands): Cost Accumulated Amortization Net Developed technology $ 243,961 $ (146,123 ) $ 97,838 Customer relationships 784,361 (172,969 ) 611,392 Distributor relationships and technology licenses 8,909 (5,802 ) 3,107 Definite-lived trademark and trade name 40,514 (17,376 ) 23,138 Core technology 7,228 (6,667 ) 561 Net beneficial leases 336 (336 ) — Non-compete agreements 298 (298 ) — Leasehold interest 2,600 (2,415 ) 185 Backlog 18,346 (18,346 ) — Capitalized software 3,183 (1,887 ) 1,296 Other 1,208 (907 ) 301 $ 1,110,944 $ (373,126 ) $ 737,818 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, 2018 (in thousands): Cost Accumulated Amortization Net Developed technology $ 259,758 $ (148,937 ) $ 110,821 Customer relationships 845,490 (176,425 ) 669,065 Distributor relationships and technology licenses 9,019 (5,389 ) 3,630 Definite-lived trademark and trade name 44,387 (18,138 ) 26,249 Core technology 7,345 (6,712 ) 633 Net beneficial leases 336 (336 ) — Non-compete agreements 317 (317 ) — Leasehold interest 2,600 (2,130 ) 470 Backlog 18,544 (18,544 ) — Capitalized software 3,183 (1,621 ) 1,562 Other 1,247 (903 ) 344 $ 1,192,226 $ (379,452 ) $ 812,774 Amortization included as product revenue consists of amortization of backlog. Amortization included as cost of product revenue consists of amortization of developed technology, distributor relationships and technology licenses, core technology and software. Amortization included as operating expense consists of all other intangible assets. The following table provides a summary of amortization expense for the three months ended June 30, 2018 and 2017, respectively (in thousands): Three Months Ended June 30, 2018 2017 Amortization of intangible assets included as: Product revenue $ — $ 2 Cost of product revenue 9,191 9,814 Operating expense 23,470 18,389 $ 32,661 $ 28,205 The following is the expected future amortization expense at June 30, 2018 for the fiscal years ending March 31 (in thousands): 2019 (remaining nine months) $ 79,970 2020 97,080 2021 79,741 2022 69,327 2023 61,632 Thereafter 350,068 $ 737,818 The weighted-average amortization period of developed technology and core technology is 11.4 years . The weighted-average amortization period for customer and distributor relationships is 16.0 years . The weighted-average amortization period for trademarks and trade names is 8.4 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 capitalized software is 4.0 years . The weighted-average amortization period for amortizing all intangible assets is 14.5 years . |
DERIVATIVE INSTRUMENTS AND HEDG
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES | 3 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and March 31, 2018 were as follows (in thousands): Notional Amounts (a) Prepaid Expenses and Other Current Assets Accrued Other June 30, March 31, June 30, March 31, June 30, March 31, Derivatives Designated as Hedging Instruments: Forward contracts $ 10,096 $ 11,225 $ — $ 122 $ 381 $ 40 (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 for the three months ended June 30, 2018 and 2017 (in thousands): Derivatives in Cash Flow Hedging Relationships Effective Portion Ineffective Portion Gain (Loss) Recognized in Gain (Loss) Reclassified from Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) (c) June 30, 2018 June 30, 2017 Location June 30, 2018 June 30, 2017 Location June 30, 2018 June 30, 2017 Forward contracts $ (519 ) $ 494 Research and development $ 30 $ (28 ) Research and development $ 17 $ 3 Sales and marketing 64 40 Sales and marketing (59 ) (28 ) $ (519 ) $ 494 $ 94 $ 12 $ (42 ) $ (25 ) (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 | 3 Months Ended |
Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
LONG-TERM DEBT | LONG-TERM DEBT On January 16, 2018, the Company amended and expanded its existing credit agreement (Amended Credit Agreement) with a syndicate of lenders 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; Fifth Third Bank, Santander Bank, N.A., SunTrust Bank, N.A. and U.S. Bank National Association, as co-documentation agents; and the lenders party thereto. The Amended Credit Agreement provides for a five -year, $1.0 billion senior secured revolving credit facility, including a letter of credit sub-facility of up to $75.0 million . The Company may elect to use the new credit facility for general corporate purposes or to finance the repurchase of the Company's common stock under the Company's common stock repurchase plan. The commitments under the Amended Credit Agreement will expire on January 16, 2023, and any outstanding loans will be due on that date. On February 1, 2018, the Company also announced that it entered into agreements with JPMorgan Chase Bank, National Association and Bank of America, N.A. (the Dealers) to repurchase an aggregate of $300 million of the Company's common stock via accelerated stock repurchase transactions (the ASR) under the Company's previously disclosed share repurchase program. On February 1, 2018, the Company borrowed an additional $300 million aggregate principal amount under its Amended Credit Agreement in order to finance the payment of the ASR to each of the Dealers. At June 30, 2018 , $600 million was outstanding under the Amended Credit Agreement. At the Company's election, revolving loans under the Amended Credit Agreement bear interest at either (a) an Alternate Base Rate per annum equal to the greatest of (1) JPMorgan's prime rate, (2) 0.50% in excess of the New York Federal Reserve Bank (NYFRB) rate, or (3) an adjusted one month LIBOR rate plus 1% ; or (b) such adjusted LIBOR rate (for the interest period selected by the Company), in each case plus an applicable margin. For the period from the delivery of the Company's financial statements for the quarter ended March 31, 2018, until the Company has delivered financial statements for the quarter ended June 30, 2018 , the applicable margin will be 1.50% per annum for LIBOR loans and 0.50% 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 3.50 to 1.00, down to 0.00% per annum for Alternate Base Rate loans and 1.00% per annum for LIBOR loans if the Company's consolidated leverage ratio is equal to or less than 1.50 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, without limitation, 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 adjusted EBITDA in the Amended Credit Agreement. Commitment fees will accrue on the daily unused amount of the credit facility. For the period from the delivery of the Company's financial statements for the quarter ended March 31, 2018 until the Company has delivered financial statements for the quarter ended June 30, 2018 , the commitment fee was 0.25% per annum, and thereafter the commitment fee will vary depending on the Company's consolidated leverage ratio, ranging from 0.30% per annum if the Company's consolidated leverage ratio is greater than 2.75 to 1.00, down to 0.15% per annum if the Company's consolidated leverage ratio is equal to or less than 1.50 to 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 Amended 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 Amended 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 Amended 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 Amended Credit Agreement. The Amended 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 Amended Credit Agreement. At June 30, 2018 , the Company was in compliance with all covenants. The Amended 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 Amended 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 Amended Credit Agreement and the other loan documents. In connection with the Company's Amended Credit Agreement described above, the Company terminated its previous term loan 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 Company has capitalized debt issuance costs totaling $12.2 million at June 30, 2018 , which are being amortized over the life of the revolving credit facility. The unamortized balance was $7.9 million as of June 30, 2018 . The balance of $1.7 million was included as prepaid expenses and other current assets and a balance of $6.2 million was included as other assets in the Company's consolidated balance sheet. |
RESTRUCTURING CHARGES
RESTRUCTURING CHARGES | 3 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING CHARGES | RESTRUCTURING CHARGES During the fourth quarter of fiscal year ended March 31, 2017, the Company restructured certain departments to better align functions subsequent to the acquisition of Danaher Corporation's 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 Comms Transaction), resulting in the termination of forty-one employees. As a result of the workforce reduction, during the fiscal year ended March 31, 2017, the Company recorded a restructuring charge totaling $1.9 million related to one-time termination benefits and $0.4 million in facility-related charges. The Company recorded an additional charge for one-time termination benefits of $0.9 million during the fiscal year ended March 31, 2018, of which $0.2 million was recorded during the quarter ended June 30, 2017. The one-time termination benefits and facilities-related costs related to this plan were paid in full during the fiscal year ended March 31, 2018. During the third quarter of fiscal year ended March 31, 2018, the Company restructured certain departments to better align functions resulting in the termination of sixty-one employees. As a result of the workforce reduction, during the twelve months ended March 31, 2018, the Company recorded a restructuring charge totaling $5.1 million related to one-time termination benefits for the employees that were notified during the period. During the three months ended June 30, 2018 , the Company recorded restructuring expenses of $1.1 million for one-time termination benefits and facilities-related costs. Additional one-time termination benefit charges and facility-related costs of approximately $0.1 million are anticipated to be recorded in the next three months. The one-time termination benefits will be paid in full during the fiscal year ending March 31, 2019. The following table provides a summary of the activity related to the restructuring plans and the related restructuring liability (in thousands): Q3 FY 2018 Plan Employee-Related Facility-Related Total Balance at March 31, 2018 $ 3,696 $ — $ 3,696 Restructuring charges to operations 1,017 643 1,660 Cash payments (2,302 ) (458 ) (2,760 ) Other adjustments (648 ) (185 ) (833 ) Balance at June 30, 2018 $ 1,763 $ — $ 1,763 The accrual for employee-related severance is included as accrued compensation in the Company's consolidated balance sheets at June 30, 2018 and March 31, 2018 as the balance is expected to be paid in full within the next twelve months. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Jun. 30, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Acquisition related – The Company has a contingent liability related to the acquisition of Simena in November 2011 for future consideration to be paid to the seller which had an initial fair value of $8.0 million at the time of acquisition. At June 30, 2018 and March 31, 2018, the present value of the future consideration was $5.0 million and $4.9 million , respectively. The Company had a contingent liability at June 30, 2018 for $523 thousand related to the acquisition of Efflux in July 2017 for which an escrow account was established to cover damages NetScout may suffer related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the seller as described in the merger agreement. The $523 thousand was paid to the sellers in July 2018. 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 material adverse effect on the Company’s financial condition, results of operations or cash flows. As previously disclosed, in March 2016, Packet Intelligence LLC (“Packet Intelligence” or “Plaintiff”) filed a Complaint against NetScout and two subsidiary entities in the United States District Court for the Eastern District of Texas asserting infringement of five United States patents. Plaintiff’s Complaint alleged that legacy Tektronix GeoProbe products, including the G10 and GeoBlade products, infringed these patents. NetScout filed an Answer denying Plaintiff’s allegations and asserting that Plaintiff’s patents were, among other things, invalid, not infringed, and unenforceable due to inequitable conduct. In October 2017, a jury trial was held to address the parties’ claims and counterclaims regarding infringement of three patents by the G10 and GeoBlade products, invalidity of these patents, and damages. On October 13, 2017, the jury rendered a verdict finding in favor of the Plaintiff and that Plaintiff was entitled to $3,500,000 for pre-suit damages and $2,250,000 for post-suit damages. The jury indicated that the awarded damages amounts were intended to reflect a running royalty. The Court also conducted a bench trial on whether these patents were unenforceable due to, among other things, inequitable conduct. The Court has not yet rendered a decision on the equitable issues or entered final judgment in this matter. NetScout has concluded that the risk of loss from this matter is currently neither remote nor probable, and therefore, under GAAP definitions, the risk of loss is termed "reasonably possible". Therefore, accounting rules require NetScout to provide an estimate for the range of potential liability. Netscout currently estimates that the estimated range of liability is between $0 and the aggregate amount awarded by the jury, plus potential additional pre- and post-judgment interest amounts, subject to other adjustments that the Court may make. NetScout intends to continue to vigorously dispute Packet Intelligence’s claims including through appeal, if necessary. |
PENSION BENEFIT PLANS
PENSION BENEFIT PLANS | 3 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
PENSION BENEFIT PLANS | PENSION BENEFIT PLANS Certain of the Company's non-U.S. employees participate in certain noncontributory defined benefit pension plans acquired in the Comms Transaction 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 following sets forth the components of the Company's net periodic pension cost of the noncontributory defined benefit pension plans for the three months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, 2018 2017 Service cost $ 63 $ 197 Interest cost 121 381 Net periodic pension cost $ 184 $ 578 Expected Contributions During the three months ended June 30, 2018 , the Company made contributions of $0.1 million to its defined benefit pension plans. During the fiscal year ending March 31, 2019 , the Company's cash contribution requirements for its defined benefit pension plans are expected to be less than $1.0 million . As a majority of the participants within the Company's plans are all active employees, the benefit payments are not expected to be material in the foreseeable future. |
TREASURY STOCK
TREASURY STOCK | 3 Months Ended |
Jun. 30, 2018 | |
Equity [Abstract] | |
TREASURY STOCK | TREASURY STOCK On May 19, 2015, the Company's board of directors approved a share repurchase program, conditional upon the completion of the Comms Transaction. This program enabled 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 Comms Transaction. The Company was not obligated to acquire any specific amount of common stock within any particular timeframe under this program. The Company repurchased 2,780,433 shares for $100.0 million under this program during the three months ended June 30, 2017. Through March 31, 2018 , the Company had repurchased 20,000,000 shares totaling $607.6 million in the open market under this stock repurchase plan. At March 31, 2018 , there were no shares of common stock that remained available to be purchased under the plan. On October 24, 2017, the Company’s Board of Directors approved a new share repurchase program that enables the Company to repurchase up to twenty-five million shares of its common stock. This new program became effective when the Company’s previously disclosed twenty million share repurchase program was completed. The Company is not obligated to acquire any specific amount of common stock within any particular timeframe as a result of this new share repurchase program. On February 1, 2018, the Company entered into ASR agreements with two third-party financial institutions (the Dealers) to repurchase an aggregate of $300 million of the Company's common stock via accelerated stock repurchase transactions under the Company’s twenty million share repurchase program and the twenty-five million share repurchase program. The Company borrowed $300 million against its Amended Credit Facility to finance the payment of the initial purchase price to each of the Dealers. Under the terms of the ASR, the Company made a $150 million payment to each of the Dealers on February 2, 2018, and received an initial delivery of 3,693,931 shares from each of the Dealers, or 7,387,862 shares in the aggregate, which is approximately 70 percent of the total number of shares of the Company's common stock expected to be repurchased under the ASR. As part of this purchase, 970,650 shares for $27.6 million were deducted under the twenty million share repurchase program and 6,417,212 shares for $182.4 million were deducted from the twenty-five million share repurchase program during the fiscal year ended March 31, 2018. The final number of ASR shares is dependent upon the average of the daily volume-weighted average prices of the Company’s common stock during the term of the ASR, less a discount and subject to adjustments pursuant to the terms and conditions of the ASR. The delivery of additional shares of common stock to the Company or an additional delivery of shares of common stock or a cash payment, at NetScout's election, by the Company to the Dealers may be required. The final settlement of each of the ASR transactions is expected to occur no later than the end of the second quarter of fiscal year 2019. At June 30, 2018 , 18,582,788 shares of common stock remained available to be purchased under the current program. In connection with the delivery of common shares upon vesting of restricted stock units, the Company withheld 129,115 shares at a cost of $3.5 million related to minimum statutory tax withholding requirements on these restricted stock units during the three months ended June 30, 2018 . These withholding 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. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 3 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE Calculations of the basic and diluted net loss per share and potential common shares are as follows (in thousands, except for per share data): Three Months Ended June 30, 2018 2017 Numerator: Net loss $ (62,504 ) $ (24,222 ) Denominator: Denominator for basic net loss per share - weighted average common shares outstanding 80,358 91,180 Dilutive common equivalent shares: Weighted average restricted stock units — — Denominator for diluted net loss per share - weighted average shares outstanding 80,358 91,180 Net loss per share: Basic net loss per share $ (0.78 ) $ (0.27 ) Diluted net loss per share $ (0.78 ) $ (0.27 ) The following table sets forth restricted stock units excluded from the calculation of diluted net loss per share, since their inclusion would be anti-dilutive (in thousands): Three Months Ended June 30, 2018 2017 Restricted stock units 1,065 1,029 Basic net loss per share is calculated by dividing net 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 loss per share is calculated by dividing net 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 and unrecognized compensation expense as additional proceeds. As we incurred a net loss for the three months ended June 30, 2018 and 2017, all outstanding restricted stock units have an anti-dilutive effect and are therefore excluded from the computation of diluted weighted average shares outstanding. The delivery of approximately 7.4 million shares under the Company's accelerated share repurchase (ASR) agreements reduced our outstanding shares used to determine our weighted average common shares outstanding for purposes of calculating basic and diluted earnings per share for the three months ended June 30, 2018 . See Note 15 for additional information. We evaluated the ASR agreements for potential dilutive effects of any shares remaining to be received or owed upon settlement and determined the additional shares to be received would be anti-dilutive, and therefore they were not included in our calculation of diluted earnings per share for the three months ended June 30, 2018 . |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Jun. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company's effective income tax rates were 23.5% and 34.0% for the three months ended June 30, 2018 and 2017 , respectively. Generally, the effective tax rate differs from the statutory tax rate due to the impact of the research and development credit, the impact of state taxes and income generated in jurisdictions that have a different tax rate than the U.S. statutory rate. The effective tax rate for the three months ended June 30, 2018 is lower than the effective rate for the three months ended June 30, 2017 , primarily due to the enactment of the Tax Legislation and a significant decrease in pre-tax earnings. On December 22, 2017, the Tax Legislation was signed into law. The Tax Legislation significantly revises the U.S. tax code by, among other things, lowering the corporate tax rate from 35% to 21% ; imposing a minimum tax on certain foreign earnings; limiting the deductibility of interest expense; implementing a territorial tax system and repealing the domestic production activities deduction. In December 2017, the SEC issued Staff Accounting Bulletin No. 118 (SAB 118), which addresses situations where the accounting is incomplete for the income tax effects of the Tax Legislation. SAB 118 directs taxpayers to consider the impact of the Tax Legislation as “provisional” when the Company does not have the necessary information available, prepared or analyzed (including computations) to finalize the accounting for the change in tax law. Companies are provided a measurement period of up to one year to obtain, prepare, and analyze information necessary to finalize the accounting for provisional amounts or amounts that could not be estimated as of December 31, 2017. While the Company continues to assess the impact of the Tax Legislation on its consolidated financial statements, the Company has not recorded any adjustments to the provisional amounts recorded through June 30, 2018. The Company is still in the process of analyzing the impact of the Tax Legislation, including any potential impact on its indefinite reinvestment assertion. The Company is subject to the tax on the Global Intangible Low-Taxed Income (GILTI) but has not completed its analysis of the applicability of the tax. As of June 30, 2018, the Company is still evaluating the effects of the GILTI provisions as guidance and interpretations continue to develop. Therefore, the Company will not make a policy election on how to account for GILTI (as part of deferred taxes or as a period expense) until management has received and evaluated the necessary information. However, the standard requires that the Company reflects the impact of the GILTI provisions as a period expense until the accounting policy is finalized. Accordingly, the Company has included the provisional estimate of GILTI in its estimated annual effective tax rate and will update the impact and accounting policy once the analysis related to the GILTI provisions is complete. |
SEGMENT AND GEOGRAPHIC INFORMAT
SEGMENT AND GEOGRAPHIC INFORMATION | 3 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
SEGMENT AND GEOGRAPHIC INFORMATION | SEGMENT AND GEOGRAPHIC INFORMATION The Company reports revenues and income 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): Three Months Ended June 30, 2018 2017 United States $ 127,246 $ 138,618 Europe 31,021 35,448 Asia 17,900 19,527 Rest of the world 28,944 32,163 $ 205,111 $ 225,756 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 because the Company ships the products to a United States location. Further, the Company determines the geography of its sales after considering where the contract originated. 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 | 3 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS During our fiscal year ended March 31, 2016, a member of the Company's Board of Directors served as an executive officer 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: transition services agreements, lease agreements, closing agreements, and compensation for post-combination services provisions within the separation and distribution agreement. This board member is now the founding President and CEO of Fortive Corporation (Fortive), which spun off of Danaher in July 2016. As part of the spin-off of Fortive, the transition services agreement was amended to, among other things, assign Danaher's rights, duties, obligations and liabilities under the transition services agreement to Fluke Corporation, a subsidiary of Fortive. The Company has disclosed the transactions with Danaher and Fortive parenthetically within the financial statements. As disclosed parenthetically within the Company's consolidated balance sheet, the Company has receivables from related parties. The following table summarizes those balances (in thousands): June 30, 2018 March 31, 2018 Danaher $ 194 $ 252 Fortive 1,457 2,935 $ 1,651 $ 3,187 As disclosed parenthetically within the Company's consolidated balance sheet, the Company has payables due to related parties. The following table summarizes those balances (in thousands): June 30, 2018 March 31, 2018 Danaher $ 259 $ — Fortive $ 360 $ 369 $ 619 $ 369 As disclosed parenthetically within the Company's consolidated statements of operations, the Company has recorded expenses from related parties. The following table summarizes those balances (in thousands): Three Months Ended June 30, 2018 2017 Danaher: Cost of product revenue $ — $ — Cost of service revenue — — Research and development expenses — — Sales and marketing — 2 General and administrative expenses — 1 $ — $ 3 Fortive: Cost of product revenue $ — $ 245 Cost of service revenue 174 29 Research and development expenses 2 3 Sales and marketing — — General and administrative expenses 13 243 $ 189 $ 520 As disclosed within the Company's consolidated statements of cash flows, the Company has cash flows resulting from amounts due to related parties and due from related parties. The following table summarizes those cash flows (in thousands): Three Months Ended June 30, 2018 2017 Due from related party: Danaher $ 58 $ — Fortive 1,478 — Total $ 1,536 $ — Due to related party: Danaher $ 259 $ 63 Fortive (9 ) (85 ) Total $ 250 $ (22 ) |
BASIS OF PRESENTATION (Policies
BASIS OF PRESENTATION (Policies) | 3 Months Ended |
Jun. 30, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | The accompanying unaudited interim consolidated financial statements have been prepared by NetScout Systems, Inc., or NetScout or the Company. Certain information and footnote disclosures normally included in financial statements prepared under United States generally accepted accounting principles (GAAP) have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission (SEC). In the opinion of management, the unaudited interim consolidated financial statements include all adjustments, consisting of normal recurring adjustments, necessary for a fair statement of the Company's financial position, results of operations and cash flows. The year-end consolidated balance sheet data was derived from the Company's audited financial statements, but does not include all disclosures required by GAAP. The results reported in these unaudited interim consolidated financial statements are not necessarily indicative of results that may be expected for the entire year. All significant intercompany accounts and transactions are eliminated in consolidation. These unaudited interim consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including the notes thereto, included in the Company’s Annual Report on Form 10-K for the fiscal year ended March 31, 2018 filed with the Securities and Exchange Commission on May 21, 2018. Certain amounts for the three months ended June 30, 2017 have been reclassified to conform to the current period presentation. These reclassifications had no effect on the reported results of operations. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2018-02, Reclassification of Certain Tax Effects From Accumulated Other Comprehensive Income (ASU 2018-02). ASU 2018-02 amends ASC 220, Income Statement - Reporting Comprehensive Income, to allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act (Tax Legislation). In addition, under the ASU 2018-02, we may be required to provide certain disclosures regarding stranded tax effects. ASU 2018-02 is effective for years beginning after December 15, 2018, and interim periods within those fiscal years. ASU 2018-02 is effective for NetScout beginning April 1, 2019. Early adoption is permitted. We do not believe the adoption of ASU 2018-02 will have a material impact on our consolidated financial statements. In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12). ASU 2017-12 provides guidance to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The amendments expand and refine hedge accounting for both non-financial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements. This standard is effective for financial statements issued for fiscal years beginning after December 15, 2018, with early adoption permitted. ASU 2017-12 is effective for the Company beginning April 1, 2019. The Company is currently assessing the potential impact of the adoption of ASU 2017-12 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. ASU 2016-02 is effective for the company beginning April 1, 2019. The Company is currently assessing the potential impact of the adoption of ASU 2016-02 on its consolidated financial statements. In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers: Topic 606 (ASU 2014-09). ASU 2014-09 supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and requires entities to recognize revenue when control of the promised goods or services is transferred to customers at an amount that reflects the consideration to which the entity expects to be entitled to in exchange for those goods or services. The Company adopted ASU 2014-09 as of April 1, 2018 using the modified retrospective transition method. Please refer to Note 2, "Revenue Recognition" for further details. |
REVENUE RECOGNITION (Tables)
REVENUE RECOGNITION (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Financial Statement Impact of Adoption | The impact of adoption of Topic 606 on our consolidated balance sheet at June 30, 2018 and on our consolidated statement of operations for the three months ended June 30, 2018 was as follows (in thousands): June 30, 2018 As Reported Balance without Adoption of Topic 606 Effect of Change Higher (Lower) ASSETS: Accounts receivable and unbilled costs $ 165,331 $ 161,554 $ 3,777 Prepaid expenses and other current assets 32,407 28,472 3,935 Other assets 19,036 12,353 6,683 LIABILITIES: Deferred revenue and customer deposits 248,165 268,230 (20,065 ) Deferred tax liability 143,542 135,914 7,628 Long-term deferred revenue and customer deposits 80,491 88,416 (7,925 ) STOCKHOLDERS' EQUITY: Retained earnings 368,138 334,867 33,271 Three Months Ended June 30, 2018 As Reported Balance without Adoption of Topic 606 Effect of Change Higher (Lower) Total revenues $ 205,111 $ 203,354 $ 1,757 Total cost of revenue 62,027 62,027 — Sales and marketing expense 78,132 77,524 608 Income tax provision (19,242 ) (19,513 ) 271 Net loss (62,504 ) (63,382 ) 878 Basic net loss per share $ (0.78 ) $ (0.79 ) $ 0.01 Diluted net loss per share $ (0.78 ) $ (0.79 ) $ 0.01 The cumulative impact of applying Topic 606 to all contracts with outstanding performance obligations as of April 1, 2018 was recorded as an adjustment to retained earnings as of the adoption date. As a result of applying the modified retrospective approach to adopt the new standard, the following adjustments were made to accounts on the consolidated balance sheet at April 1, 2018 (in thousands): Balance at March 31, 2018 Adjustments from Adopting Topic 606 Balance at April 1, 2018 ASSETS: Accounts receivable and unbilled costs $ 213,438 $ 1,195 $ 214,633 Prepaid expenses and other current assets 33,502 4,626 38,128 Other assets 12,866 4,748 17,614 LIABILITIES: Deferred revenue and customer deposits 301,925 (30,227 ) 271,698 Deferred tax liability 151,563 7,899 159,462 Long-term deferred revenue and customer deposits 91,409 (1,252 ) 90,157 STOCKHOLDERS' EQUITY: Retained earnings 396,493 34,149 430,642 |
Contract with Customer, Asset and Liability | The following table provides information about contract assets and liabilities (in thousands): April 1, 2018 June 30, 2018 Increase/ (Decrease) ASSETS: Customer accounts receivable $ 205,299 $ 155,613 $ (49,686 ) Unbilled receivables 4,338 5,190 852 Other receivables 4,996 4,528 (468 ) Long-term unbilled receivables 2,254 4,504 2,250 $ 216,887 $ 169,835 $ (47,052 ) LIABILITIES: Deferred revenue $ 271,698 $ 248,165 $ (23,533 ) Deferred revenue, long-term 90,157 80,491 (9,666 ) $ 361,855 $ 328,656 $ (33,199 ) Changes in deferred revenue during the three months ended June 30, 2018 were as follows (in thousands): Balance at April 1, 2018 $ 361,855 Revenue recognized in the period (185,501 ) Additions to customer deposits and contract liabilities 152,472 Reclassifications and other adjustments (170 ) Balance at June 30, 2018 $ 328,656 |
SHARE-BASED COMPENSATION (Table
SHARE-BASED COMPENSATION (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
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 granted pursuant to the Company's 2007 Equity Incentive Plan, as amended, and employee stock purchases made under the Company's 2011 Employee Stock Purchase Plan (ESPP) based on estimated fair values within the applicable cost and expense lines identified below (in thousands): Three Months Ended June 30, 2018 2017 Cost of product revenue $ 269 $ 213 Cost of service revenue 1,330 1,016 Research and development 4,151 3,175 Sales and marketing 4,359 3,444 General and administrative 2,856 2,383 $ 12,965 $ 10,231 |
CASH, CASH EQUIVALENTS, RESTR31
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND MARKETABLE SECURITIES (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Investments, Debt and Equity Securities [Abstract] | |
Schedule of Cash, Cash Equivalents | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows (in thousands): June 30, March 31, 2018 June 30, March 31, Cash and cash equivalents $ 353,416 $ 369,821 $ 261,736 $ 304,880 Restricted cash 910 910 846 846 Total cash, cash equivalents and restricted cash $ 354,326 $ 370,731 $ 262,582 $ 305,726 |
Schedule of Restricted Cash | The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows (in thousands): June 30, March 31, 2018 June 30, March 31, Cash and cash equivalents $ 353,416 $ 369,821 $ 261,736 $ 304,880 Restricted cash 910 910 846 846 Total cash, cash equivalents and restricted cash $ 354,326 $ 370,731 $ 262,582 $ 305,726 |
Summary of Marketable Securities | The following is a summary of marketable securities held by NetScout at June 30, 2018 , classified as short-term and long-term (in thousands): Amortized Cost Unrealized Losses Fair Value Type of security: U.S. government and municipal obligations $ 46,019 $ (4 ) $ 46,015 Commercial paper 56,877 — 56,877 Corporate bonds 2,746 (1 ) 2,745 Total short-term marketable securities 105,642 (5 ) 105,637 Total long-term marketable securities — — — Total marketable securities $ 105,642 $ (5 ) $ 105,637 The following is a summary of marketable securities held by NetScout at March 31, 2018 , classified as short-term and long-term (in thousands): Amortized Cost Unrealized Losses Fair Value Type of security: U.S. government and municipal obligations $ 42,246 $ (60 ) $ 42,186 Commercial paper 33,003 — 33,003 Corporate bonds 2,754 (2 ) 2,752 Total short-term marketable securities 78,003 (62 ) 77,941 Total long-term marketable securities — — — Total marketable securities $ 78,003 $ (62 ) $ 77,941 |
Summary of Contractual Maturities of Marketable Securities | Contractual maturities of the Company's marketable securities held at June 30, 2018 and March 31, 2018 were as follows (in thousands): June 30, March 31, Available-for-sale securities: Due in 1 year or less $ 105,637 $ 77,941 $ 105,637 $ 77,941 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and March 31, 2018 (in thousands): Fair Value Measurements at June 30, 2018 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 353,416 $ — $ — $ 353,416 U.S. government and municipal obligations 15,271 30,744 — 46,015 Commercial paper — 56,877 — 56,877 Corporate bonds 2,745 — — 2,745 $ 371,432 $ 87,621 $ — $ 459,053 LIABILITIES: Contingent purchase consideration $ — $ — $ (5,502 ) $ (5,502 ) Derivative financial instruments — (381 ) — (381 ) $ — $ (381 ) $ (5,502 ) $ (5,883 ) Fair Value Measurements at March 31, 2018 Level 1 Level 2 Level 3 Total ASSETS: Cash and cash equivalents $ 369,821 $ — $ — $ 369,821 U.S. government and municipal obligations 14,513 27,673 — 42,186 Commercial paper — 33,003 — 33,003 Corporate bonds 2,752 — — 2,752 Derivative financial instruments — 122 — 122 $ 387,086 $ 60,798 $ — $ 447,884 LIABILITIES: Contingent purchase consideration $ — $ — $ (5,464 ) $ (5,464 ) Derivative financial instruments — (40 ) — (40 ) $ — $ (40 ) $ (5,464 ) $ (5,504 ) |
Schedule of Reconciliation of Changes in Fair Value of Level III Financial Assets | The following table sets forth a reconciliation of changes in the fair value of the Company's Level 3 financial assets and liabilities for the three months ended June 30, 2018 (in thousands): Contingent Purchase Consideration Balance at March 31, 2018 $ (5,464 ) Increase in fair value and accretion expense (included within research and development expense) (38 ) Balance at June 30, 2018 $ (5,502 ) |
INVENTORIES (Tables)
INVENTORIES (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Inventory Disclosure [Abstract] | |
Schedule of Inventories | Inventories consist of the following (in thousands): June 30, March 31, Raw materials $ 21,094 $ 20,860 Work in process 182 2,589 Finished goods 8,027 8,500 Deferred costs 3,436 2,825 $ 32,739 $ 34,774 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Changes in Carrying Amount of Goodwill | The changes in the carrying amount of goodwill for the three months ended June 30, 2018 are as follows (in thousands): Balance at March 31, 2018 $ 1,712,764 Foreign currency translation impact 5,735 Balance at June 30, 2018 $ 1,718,499 |
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 June 30, 2018 (in thousands): Cost Accumulated Amortization Net Developed technology $ 243,961 $ (146,123 ) $ 97,838 Customer relationships 784,361 (172,969 ) 611,392 Distributor relationships and technology licenses 8,909 (5,802 ) 3,107 Definite-lived trademark and trade name 40,514 (17,376 ) 23,138 Core technology 7,228 (6,667 ) 561 Net beneficial leases 336 (336 ) — Non-compete agreements 298 (298 ) — Leasehold interest 2,600 (2,415 ) 185 Backlog 18,346 (18,346 ) — Capitalized software 3,183 (1,887 ) 1,296 Other 1,208 (907 ) 301 $ 1,110,944 $ (373,126 ) $ 737,818 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, 2018 (in thousands): Cost Accumulated Amortization Net Developed technology $ 259,758 $ (148,937 ) $ 110,821 Customer relationships 845,490 (176,425 ) 669,065 Distributor relationships and technology licenses 9,019 (5,389 ) 3,630 Definite-lived trademark and trade name 44,387 (18,138 ) 26,249 Core technology 7,345 (6,712 ) 633 Net beneficial leases 336 (336 ) — Non-compete agreements 317 (317 ) — Leasehold interest 2,600 (2,130 ) 470 Backlog 18,544 (18,544 ) — Capitalized software 3,183 (1,621 ) 1,562 Other 1,247 (903 ) 344 $ 1,192,226 $ (379,452 ) $ 812,774 |
Finite-lived Intangible Assets Amortization Expense | The following table provides a summary of amortization expense for the three months ended June 30, 2018 and 2017, respectively (in thousands): Three Months Ended June 30, 2018 2017 Amortization of intangible assets included as: Product revenue $ — $ 2 Cost of product revenue 9,191 9,814 Operating expense 23,470 18,389 $ 32,661 $ 28,205 |
Schedule of Expected Future Amortization Expense | The following is the expected future amortization expense at June 30, 2018 for the fiscal years ending March 31 (in thousands): 2019 (remaining nine months) $ 79,970 2020 97,080 2021 79,741 2022 69,327 2023 61,632 Thereafter 350,068 $ 737,818 |
DERIVATIVE INSTRUMENTS AND HE35
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
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 June 30, 2018 and March 31, 2018 were as follows (in thousands): Notional Amounts (a) Prepaid Expenses and Other Current Assets Accrued Other June 30, March 31, June 30, March 31, June 30, March 31, Derivatives Designated as Hedging Instruments: Forward contracts $ 10,096 $ 11,225 $ — $ 122 $ 381 $ 40 (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 for the three months ended June 30, 2018 and 2017 (in thousands): Derivatives in Cash Flow Hedging Relationships Effective Portion Ineffective Portion Gain (Loss) Recognized in Gain (Loss) Reclassified from Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) (c) June 30, 2018 June 30, 2017 Location June 30, 2018 June 30, 2017 Location June 30, 2018 June 30, 2017 Forward contracts $ (519 ) $ 494 Research and development $ 30 $ (28 ) Research and development $ 17 $ 3 Sales and marketing 64 40 Sales and marketing (59 ) (28 ) $ (519 ) $ 494 $ 94 $ 12 $ (42 ) $ (25 ) (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. |
RESTRUCTURING CHARGES (Tables)
RESTRUCTURING CHARGES (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring Liability | The following table provides a summary of the activity related to the restructuring plans and the related restructuring liability (in thousands): Q3 FY 2018 Plan Employee-Related Facility-Related Total Balance at March 31, 2018 $ 3,696 $ — $ 3,696 Restructuring charges to operations 1,017 643 1,660 Cash payments (2,302 ) (458 ) (2,760 ) Other adjustments (648 ) (185 ) (833 ) Balance at June 30, 2018 $ 1,763 $ — $ 1,763 |
PENSION BENEFIT PLANS (Tables)
PENSION BENEFIT PLANS (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of Net Periodic Pension Costs of Noncontributory Defined Benefit Pension Plans | The following sets forth the components of the Company's net periodic pension cost of the noncontributory defined benefit pension plans for the three months ended June 30, 2018 and 2017 (in thousands): Three Months Ended June 30, 2018 2017 Service cost $ 63 $ 197 Interest cost 121 381 Net periodic pension cost $ 184 $ 578 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Earnings Per Share [Abstract] | |
Schedule of Calculations of the Basic and Diluted Net Income (Loss) Per Share and Potential Common Shares | Calculations of the basic and diluted net loss per share and potential common shares are as follows (in thousands, except for per share data): Three Months Ended June 30, 2018 2017 Numerator: Net loss $ (62,504 ) $ (24,222 ) Denominator: Denominator for basic net loss per share - weighted average common shares outstanding 80,358 91,180 Dilutive common equivalent shares: Weighted average restricted stock units — — Denominator for diluted net loss per share - weighted average shares outstanding 80,358 91,180 Net loss per share: Basic net loss per share $ (0.78 ) $ (0.27 ) Diluted net loss per share $ (0.78 ) $ (0.27 ) |
Summary of Antidilutive Securities Excluded from Computation of Diluted EPS | The following table sets forth restricted stock units excluded from the calculation of diluted net loss per share, since their inclusion would be anti-dilutive (in thousands): Three Months Ended June 30, 2018 2017 Restricted stock units 1,065 1,029 |
SEGMENT AND GEOGRAPHIC INFORM39
SEGMENT AND GEOGRAPHIC INFORMATION (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Segment Reporting [Abstract] | |
Summary of Total Revenue by Geography | Total revenue by geography is as follows (in thousands): Three Months Ended June 30, 2018 2017 United States $ 127,246 $ 138,618 Europe 31,021 35,448 Asia 17,900 19,527 Rest of the world 28,944 32,163 $ 205,111 $ 225,756 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended |
Jun. 30, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | As disclosed parenthetically within the Company's consolidated balance sheet, the Company has receivables from related parties. The following table summarizes those balances (in thousands): June 30, 2018 March 31, 2018 Danaher $ 194 $ 252 Fortive 1,457 2,935 $ 1,651 $ 3,187 As disclosed parenthetically within the Company's consolidated balance sheet, the Company has payables due to related parties. The following table summarizes those balances (in thousands): June 30, 2018 March 31, 2018 Danaher $ 259 $ — Fortive $ 360 $ 369 $ 619 $ 369 As disclosed parenthetically within the Company's consolidated statements of operations, the Company has recorded expenses from related parties. The following table summarizes those balances (in thousands): Three Months Ended June 30, 2018 2017 Danaher: Cost of product revenue $ — $ — Cost of service revenue — — Research and development expenses — — Sales and marketing — 2 General and administrative expenses — 1 $ — $ 3 Fortive: Cost of product revenue $ — $ 245 Cost of service revenue 174 29 Research and development expenses 2 3 Sales and marketing — — General and administrative expenses 13 243 $ 189 $ 520 As disclosed within the Company's consolidated statements of cash flows, the Company has cash flows resulting from amounts due to related parties and due from related parties. The following table summarizes those cash flows (in thousands): Three Months Ended June 30, 2018 2017 Due from related party: Danaher $ 58 $ — Fortive 1,478 — Total $ 1,536 $ — Due to related party: Danaher $ 259 $ 63 Fortive (9 ) (85 ) Total $ 250 $ (22 ) |
REVENUE RECOGNITION - Additiona
REVENUE RECOGNITION - Additional Information (Details) - USD ($) $ in Thousands | Apr. 01, 2018 | Jun. 30, 2018 | Mar. 31, 2018 |
Disaggregation of Revenue [Line Items] | |||
Retained earnings | $ 430,642 | $ 368,138 | $ 396,493 |
Capitalized contract cost | 7,100 | 6,100 | |
Deferred tax liability | 159,462 | 143,542 | 151,563 |
Deferred revenue | 361,855 | 328,656 | |
Unrecognized accounts receivable and deferred revenue | 18,700 | $ 20,000 | |
Capitalized contract cost, amortization | 600 | ||
Accounting Standards Update 2014-09 | |||
Disaggregation of Revenue [Line Items] | |||
Revenue will not be recognized in future periods | 34,900 | ||
Effect of Change Higher (Lower) | Accounting Standards Update 2014-09 | |||
Disaggregation of Revenue [Line Items] | |||
Retained earnings | 34,149 | 33,271 | |
Deferred tax liability | $ 7,899 | 7,628 | |
Prepaid expenses and other current assets | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost | 3,900 | ||
Other assets | |||
Disaggregation of Revenue [Line Items] | |||
Capitalized contract cost | $ 2,200 | ||
Minimum | |||
Disaggregation of Revenue [Line Items] | |||
Payment terms | 30 days | ||
Maximum | |||
Disaggregation of Revenue [Line Items] | |||
Payment terms | 90 days |
REVENUE RECOGNITION - Performan
REVENUE RECOGNITION - Performance Obligation (Details) $ in Millions | Jun. 30, 2018USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2018-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, amount | $ 248.2 |
Revenue, remaining performance obligation, percentage | 76.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period | 12 months |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-07-01 | |
Revenue from Contract with Customer [Abstract] | |
Revenue, remaining performance obligation, amount | $ 80.5 |
Revenue, remaining performance obligation, percentage | 24.00% |
Revenue, remaining performance obligation, expected timing of satisfaction, period |
REVENUE RECOGNITION - Financial
REVENUE RECOGNITION - Financial Statement Impact of Adoption (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Apr. 01, 2018 | Mar. 31, 2018 | |
ASSETS: | ||||
Accounts receivable and unbilled costs | $ 165,331 | $ 214,633 | $ 213,438 | |
Prepaid expenses and other current assets | 32,407 | 38,128 | 33,502 | |
Other assets | 19,036 | 17,614 | 12,866 | |
LIABILITIES: | ||||
Deferred revenue and customer deposits | 248,165 | 271,698 | 301,925 | |
Deferred tax liability | 143,542 | 159,462 | 151,563 | |
Long-term deferred revenue and customer deposits | 80,491 | 90,157 | 91,409 | |
STOCKHOLDERS' EQUITY: | ||||
Retained earnings | 368,138 | 430,642 | $ 396,493 | |
Income Statement [Abstract] | ||||
Total revenue | 205,111 | $ 225,756 | ||
Total cost of revenue | 62,027 | 66,562 | ||
Sales and marketing | 78,132 | 85,361 | ||
Income tax provision | (19,242) | (12,468) | ||
Net loss | $ (62,504) | $ (24,222) | ||
Basic net loss per share (in USD per share) | $ (0.78) | $ (0.27) | ||
Diluted net loss per share (in USD per share) | $ (0.78) | $ (0.27) | ||
Balance without Adoption of Topic 606 | ||||
ASSETS: | ||||
Accounts receivable and unbilled costs | $ 161,554 | |||
Prepaid expenses and other current assets | 28,472 | |||
Other assets | 12,353 | |||
LIABILITIES: | ||||
Deferred revenue and customer deposits | 268,230 | |||
Deferred tax liability | 135,914 | |||
Long-term deferred revenue and customer deposits | 88,416 | |||
STOCKHOLDERS' EQUITY: | ||||
Retained earnings | 334,867 | |||
Income Statement [Abstract] | ||||
Total revenue | 203,354 | |||
Total cost of revenue | 62,027 | |||
Sales and marketing | 77,524 | |||
Income tax provision | (19,513) | |||
Net loss | $ (63,382) | |||
Basic net loss per share (in USD per share) | $ (0.79) | |||
Diluted net loss per share (in USD per share) | $ (0.79) | |||
Accounting Standards Update 2014-09 | Effect of Change Higher (Lower) | ||||
ASSETS: | ||||
Accounts receivable and unbilled costs | $ 3,777 | 1,195 | ||
Prepaid expenses and other current assets | 3,935 | 4,626 | ||
Other assets | 6,683 | 4,748 | ||
LIABILITIES: | ||||
Deferred revenue and customer deposits | (20,065) | (30,227) | ||
Deferred tax liability | 7,628 | 7,899 | ||
Long-term deferred revenue and customer deposits | (7,925) | (1,252) | ||
STOCKHOLDERS' EQUITY: | ||||
Retained earnings | 33,271 | $ 34,149 | ||
Income Statement [Abstract] | ||||
Total revenue | 1,757 | |||
Total cost of revenue | 0 | |||
Sales and marketing | 608 | |||
Income tax provision | 271 | |||
Net loss | $ 878 | |||
Basic net loss per share (in USD per share) | $ 0.01 | |||
Diluted net loss per share (in USD per share) | $ 0.01 |
REVENUE RECOGNITION - Contract
REVENUE RECOGNITION - Contract Balances (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2018 | Apr. 01, 2018 | Mar. 31, 2018 | |
ASSETS: | ||||
Customer accounts receivable | $ 155,613 | $ 205,299 | ||
Increase (decrease) in customer accounts receivable | $ (49,686) | |||
Unbilled receivables | 5,190 | 4,338 | ||
Increase (decrease) of unbilled receivables | 852 | |||
Other receivables | 4,528 | 4,996 | ||
Increase (decrease) in other receivables | (468) | |||
Long-term unbilled receivables | 4,504 | 2,254 | ||
Increase (decrease) of long-term unbilled receivables | 2,250 | |||
Contract sssets | 169,835 | 216,887 | ||
Increase (decrease) in contract assets | (47,052) | |||
LIABILITIES: | ||||
Deferred revenue | 248,165 | 271,698 | $ 301,925 | |
Increase (decrease) in deferred revenue | (23,533) | |||
Deferred revenue, long-term | 80,491 | 90,157 | $ 91,409 | |
Increase (decrease) in deferred revenue, long-term | (9,666) | |||
Contract liabilities | 328,656 | $ 328,656 | $ 361,855 | |
Increase (decrease) in contract liabilities | (33,199) | |||
Changes In Contract With Customer, Liabilities [Roll Forward] | ||||
Revenue recognized in the period | (185,501) | |||
Additions to customer deposits and contract liabilities | 152,472 | |||
Reclassifications and other adjustments | (170) | |||
Balance at June 30, 2018 | $ 328,656 |
CONCENTRATION OF CREDIT RISK 45
CONCENTRATION OF CREDIT RISK AND SIGNIFICANT CUSTOMERS (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Apr. 01, 2018 | Mar. 31, 2018 |
Concentration Risk [Line Items] | |||
Prepaid expenses and other current assets | $ 32,407 | $ 38,128 | $ 33,502 |
Affiliated Entity | |||
Concentration Risk [Line Items] | |||
Prepaid expenses and other current assets | $ 1,651 | $ 3,187 |
SHARE-BASED COMPENSATION (Detai
SHARE-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 12,965 | $ 10,231 |
ESPP | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Percentage of common stock price for employees | 85.00% | |
Cost of product revenue | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 269 | 213 |
Cost of service revenue | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 1,330 | 1,016 |
Research and development | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 4,151 | 3,175 |
Sales and marketing | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | 4,359 | 3,444 |
General and administrative | ||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||
Share-based compensation expense | $ 2,856 | $ 2,383 |
CASH, CASH EQUIVALENTS, RESTR47
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND MARKETABLE SECURITIES - Summary of Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 | Jun. 30, 2017 | Mar. 31, 2017 |
Investments, Debt and Equity Securities [Abstract] | ||||
Cash and cash equivalents | $ 353,416 | $ 369,821 | $ 261,736 | $ 304,880 |
Restricted cash | 910 | 910 | 846 | 846 |
Total cash, cash equivalents and restricted cash | $ 354,326 | $ 370,731 | $ 262,582 | $ 305,726 |
CASH, CASH EQUIVALENTS, RESTR48
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND MARKETABLE SECURITIES - Summary of Marketable Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | $ 105,642 | $ 78,003 |
Unrealized Losses | (5) | (62) |
Fair Value | 105,637 | 77,941 |
U.S. government and municipal obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 46,015 | 42,186 |
Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 56,877 | 33,003 |
Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Fair Value | 2,745 | 2,752 |
Short-term marketable securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 105,642 | 78,003 |
Unrealized Losses | (5) | (62) |
Fair Value | 105,637 | 77,941 |
Short-term marketable securities | U.S. government and municipal obligations | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 46,019 | 42,246 |
Unrealized Losses | (4) | (60) |
Fair Value | 46,015 | 42,186 |
Short-term marketable securities | Commercial paper | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 56,877 | 33,003 |
Unrealized Losses | 0 | 0 |
Fair Value | 56,877 | 33,003 |
Short-term marketable securities | Corporate bonds | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 2,746 | 2,754 |
Unrealized Losses | (1) | (2) |
Fair Value | 2,745 | 2,752 |
Long-term marketable securities | ||
Debt Securities, Available-for-sale [Line Items] | ||
Amortized Cost | 0 | 0 |
Unrealized Losses | 0 | 0 |
Fair Value | $ 0 | $ 0 |
CASH, CASH EQUIVALENTS, RESTR49
CASH, CASH EQUIVALENTS, RESTRICTED CASH AND MARKETABLE SECURITIES - Summary of Contractual Maturities of Marketable Securities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Available-for-sale securities: | ||
Due in 1 year or less | $ 105,637 | $ 77,941 |
Fair Value | $ 105,637 | $ 77,941 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
ASSETS: | ||
Cash and cash equivalents | $ 353,416 | $ 369,821 |
Available-for-sale securities | 105,637 | 77,941 |
Derivative financial instruments | 122 | |
Total assets | 459,053 | 447,884 |
LIABILITIES: | ||
Contingent purchase consideration | (5,502) | (5,464) |
Derivative financial instruments | (381) | (40) |
Total liabilities | (5,883) | (5,504) |
U.S. government and municipal obligations | ||
ASSETS: | ||
Available-for-sale securities | 46,015 | 42,186 |
Commercial paper | ||
ASSETS: | ||
Available-for-sale securities | 56,877 | 33,003 |
Corporate bonds | ||
ASSETS: | ||
Available-for-sale securities | 2,745 | 2,752 |
Level 1 | ||
ASSETS: | ||
Cash and cash equivalents | 353,416 | 369,821 |
Derivative financial instruments | 0 | |
Total assets | 371,432 | 387,086 |
LIABILITIES: | ||
Contingent purchase consideration | 0 | 0 |
Derivative financial instruments | 0 | 0 |
Total liabilities | 0 | 0 |
Level 1 | U.S. government and municipal obligations | ||
ASSETS: | ||
Available-for-sale securities | 15,271 | 14,513 |
Level 1 | Commercial paper | ||
ASSETS: | ||
Available-for-sale securities | 0 | 0 |
Level 1 | Corporate bonds | ||
ASSETS: | ||
Available-for-sale securities | 2,745 | 2,752 |
Level 2 | ||
ASSETS: | ||
Derivative financial instruments | 122 | |
Total assets | 87,621 | 60,798 |
LIABILITIES: | ||
Contingent purchase consideration | 0 | 0 |
Derivative financial instruments | (381) | (40) |
Total liabilities | (381) | (40) |
Level 2 | U.S. government and municipal obligations | ||
ASSETS: | ||
Available-for-sale securities | 30,744 | 27,673 |
Level 2 | Commercial paper | ||
ASSETS: | ||
Available-for-sale securities | 56,877 | 33,003 |
Level 2 | Corporate bonds | ||
ASSETS: | ||
Available-for-sale securities | 0 | 0 |
Level 3 | ||
ASSETS: | ||
Derivative financial instruments | 0 | |
Total assets | 0 | 0 |
LIABILITIES: | ||
Contingent purchase consideration | (5,502) | (5,464) |
Derivative financial instruments | 0 | 0 |
Total liabilities | (5,502) | (5,464) |
Level 3 | U.S. government and municipal obligations | ||
ASSETS: | ||
Available-for-sale securities | 0 | 0 |
Level 3 | Commercial paper | ||
ASSETS: | ||
Available-for-sale securities | 0 | 0 |
Level 3 | Corporate bonds | ||
ASSETS: | ||
Available-for-sale securities | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS - Narra
FAIR VALUE MEASUREMENTS - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2018 | Mar. 31, 2018 | Sep. 30, 2017 | Nov. 30, 2011 | |
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value of contingent purchase consideration | $ 5,502 | $ 5,464 | ||
Fair value, measurements, recurring | Contingent Purchase Consideration | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Deal related compensation expense, accretion charges and changes related to settlements of contractual non-compliance liabilities | 38 | |||
Level 3 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value of contingent purchase consideration | 5,502 | 5,464 | ||
Simena | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value of contingent purchase consideration | $ 8,000 | |||
Simena | Level 3 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value of contingent purchase consideration | $ 5,000 | 4,900 | ||
Efflux | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value of contingent purchase consideration | $ 523 | |||
Efflux | Level 3 | ||||
Fair Value, Balance Sheet Grouping, Financial Statement Captions [Line Items] | ||||
Estimated fair value of contingent purchase consideration | $ 523 |
FAIR VALUE MEASUREMENTS - Recon
FAIR VALUE MEASUREMENTS - Reconciliation of Changes in Level 3 Assets (Details) - Fair value, measurements, recurring - Contingent Purchase Consideration $ in Thousands | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Balance at March 31, 2018 | $ (5,464) |
Increase in fair value and accretion expense (included within research and development expense) | (38) |
Balance at June 30, 2018 | $ (5,502) |
INVENTORIES (Details)
INVENTORIES (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Inventory Disclosure [Abstract] | ||
Raw materials | $ 21,094 | $ 20,860 |
Work in process | 182 | 2,589 |
Finished goods | 8,027 | 8,500 |
Deferred costs | 3,436 | 2,825 |
Total inventories | $ 32,739 | $ 34,774 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) - USD ($) $ in Thousands | Jul. 12, 2017 | Jun. 30, 2018 | Mar. 31, 2018 |
Business Acquisition [Line Items] | |||
Goodwill | $ 1,718,499 | $ 1,712,764 | |
Efflux | |||
Business Acquisition [Line Items] | |||
Estimated purchase price | $ 8,600 | ||
Goodwill | $ 6,100 |
GOODWILL AND INTANGIBLE ASSET55
GOODWILL AND INTANGIBLE ASSETS - Narrative (Details) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2018USD ($)reporting_unit | Jun. 30, 2017USD ($) | Mar. 31, 2018USD ($) | |
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Number of reporting units | reporting_unit | 2 | ||
Goodwill | $ 1,718,499 | $ 1,712,764 | |
Carrying value of intangible assets | 756,418 | 831,374 | |
Impairment of intangible assets | $ 35,871 | $ 0 | |
Weighted average useful life of acquired intangible assets | 14 years 6 months | ||
Developed and core technology | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 11 years 4 months 15 days | ||
Customer and distributor relationships | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 16 years | ||
Trademarks and trade names | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 8 years 5 months | ||
Leasehold interest | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Weighted average useful life of acquired intangible assets | 5 years 7 months 6 days | ||
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 | |
Service Assurance | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | 1,200,000 | 1,200,000 | |
Security | |||
Acquired Finite-Lived Intangible Assets [Line Items] | |||
Goodwill | $ 555,300 | $ 555,900 |
GOODWILL AND INTANGIBLE ASSET56
GOODWILL AND INTANGIBLE ASSETS - Schedule of Changes in Carrying Amount of Goodwill (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Goodwill [Roll Forward] | |
Balance at March 31, 2018 | $ 1,712,764 |
Foreign currency translation impact | 5,735 |
Balance at June 30, 2018 | $ 1,718,499 |
GOODWILL AND INTANGIBLE ASSET57
GOODWILL AND INTANGIBLE ASSETS - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Finite-Lived Intangible Assets [Line Items] | ||
Cost | $ 1,110,944 | $ 1,192,226 |
Accumulated Amortization | (373,126) | (379,452) |
Net | 737,818 | 812,774 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 243,961 | 259,758 |
Accumulated Amortization | (146,123) | (148,937) |
Net | 97,838 | 110,821 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 784,361 | 845,490 |
Accumulated Amortization | (172,969) | (176,425) |
Net | 611,392 | 669,065 |
Distributor relationships and technology licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 8,909 | 9,019 |
Accumulated Amortization | (5,802) | (5,389) |
Net | 3,107 | 3,630 |
Definite-lived trademark and trade name | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 40,514 | 44,387 |
Accumulated Amortization | (17,376) | (18,138) |
Net | 23,138 | 26,249 |
Core technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 7,228 | 7,345 |
Accumulated Amortization | (6,667) | (6,712) |
Net | 561 | 633 |
Net beneficial leases | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 336 | 336 |
Accumulated Amortization | (336) | (336) |
Net | 0 | 0 |
Non-compete agreements | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 298 | 317 |
Accumulated Amortization | (298) | (317) |
Net | 0 | 0 |
Leasehold interest | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 2,600 | 2,600 |
Accumulated Amortization | (2,415) | (2,130) |
Net | 185 | 470 |
Backlog | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 18,346 | 18,544 |
Accumulated Amortization | (18,346) | (18,544) |
Net | 0 | 0 |
Capitalized software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 3,183 | 3,183 |
Accumulated Amortization | (1,887) | (1,621) |
Net | 1,296 | 1,562 |
Other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Cost | 1,208 | 1,247 |
Accumulated Amortization | (907) | (903) |
Net | $ 301 | $ 344 |
GOODWILL AND INTANGIBLE ASSET58
GOODWILL AND INTANGIBLE ASSETS - Schedule of Amortization Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | $ 32,661 | $ 28,205 |
Product revenue | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | 0 | 2 |
Cost of product revenue | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | 9,191 | 9,814 |
Operating expense | ||
Finite-Lived Intangible Assets [Line Items] | ||
Amortization of acquired intangible assets | $ 23,470 | $ 18,389 |
GOODWILL AND INTANGIBLE ASSET59
GOODWILL AND INTANGIBLE ASSETS - Schedule of Expected Future Amortization Expense (Details) - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | ||
2019 (remaining nine months) | $ 79,970 | |
2,020 | 97,080 | |
2,021 | 79,741 | |
2,022 | 69,327 | |
2,023 | 61,632 | |
Thereafter | 350,068 | |
Net | $ 737,818 | $ 812,774 |
DERIVATIVE INSTRUMENTS AND HE60
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Narrative (Details) | 3 Months Ended |
Jun. 30, 2018 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Managing period of hedging forecasted cash flows for operating expenses denominated in foreign currencies | 12 months |
Contract maturity period | 12 months |
DERIVATIVE INSTRUMENTS AND HE61
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Notional Amounts and Fair Values of Derivative Instruments on Consolidated Balance Sheet (Details) - Forward contracts - Cash flow hedges - Designated as hedging instrument - USD ($) $ in Thousands | Jun. 30, 2018 | Mar. 31, 2018 |
Derivatives, Fair Value [Line Items] | ||
Notional Amounts | $ 10,096 | $ 11,225 |
Prepaid Expenses and Other Current Assets | ||
Derivatives, Fair Value [Line Items] | ||
Prepaid Expenses and Other Current Assets | 0 | 122 |
Accrued Other | ||
Derivatives, Fair Value [Line Items] | ||
Accrued Other | $ 381 | $ 40 |
DERIVATIVE INSTRUMENTS AND HE62
DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES - Summary of Effect of Foreign Exchange Forward Contracts on Other Comprehensive Income and Results of Operations (Details) - USD ($) | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||
Reclassified gain (loss) as a result of discontinuance of cash flow hedges | $ 0 | $ 0 |
Forward contracts | Cash flow hedges | Designated as hedging instrument | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Recognized in OCI on Derivative | (519,000) | 494,000 |
Gain (Loss) Reclassified from Accumulated OCI into Income | 94,000 | 12,000 |
Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) | (42,000) | (25,000) |
Forward contracts | Cash flow hedges | Designated as hedging instrument | Research and development | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI into Income | 30,000 | (28,000) |
Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) | 17,000 | 3,000 |
Forward contracts | Cash flow hedges | Designated as hedging instrument | Sales and marketing | ||
Derivative Instruments, Gain (Loss) [Line Items] | ||
Gain (Loss) Reclassified from Accumulated OCI into Income | 64,000 | 40,000 |
Gain (Loss) Recognized in Income (Amount Excluded from Effectiveness Testing) | $ (59,000) | $ (28,000) |
LONG-TERM DEBT (Details)
LONG-TERM DEBT (Details) | Feb. 01, 2018USD ($) | Jul. 14, 2015USD ($) | Jun. 30, 2018USD ($) |
Debt Instrument [Line Items] | |||
Authorized amount of share repurchase program | $ 300,000,000 | ||
Amount outstanding under credit facility | 300,000,000 | ||
Senior secured revolving credit facility | Line of credit | |||
Debt Instrument [Line Items] | |||
Debt term | 5 years | ||
Credit facility | $ 1,000,000,000 | ||
Proceeds from line of credit | $ 300,000,000 | ||
Amount outstanding under credit facility | $ 600,000,000 | ||
Commitment fee percentage | 0.25% | ||
Debt default, acceleration clause, required consent percentage | 50.00% | ||
Debt issuance cost, gross | $ 12,200,000 | ||
Unamortized debt issuance costs | 7,900,000 | ||
Senior secured revolving credit facility | Line of credit | Prepaid expenses and other current assets | |||
Debt Instrument [Line Items] | |||
Unamortized debt issuance costs | 1,700,000 | ||
Senior secured revolving credit facility | Line of credit | Other assets | |||
Debt Instrument [Line Items] | |||
Unamortized debt issuance costs | $ 6,200,000 | ||
Senior secured revolving credit facility | Line of credit | Maximum | |||
Debt Instrument [Line Items] | |||
Leverage ratio | 3.50 | 2.75 | |
Commitment fee percentage | 0.30% | ||
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] | |||
Leverage ratio | 1.50 | 1.50 | |
Commitment fee percentage | 0.15% | ||
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 | 1.50% | ||
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 | 1.00% | ||
Senior secured revolving credit facility | Line of credit | Base rate | Base rate loans | |||
Debt Instrument [Line Items] | |||
Interest rate in excess of effective rate | 0.50% | ||
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 | 0.00% | ||
Letter of credit sub-facility | Line of credit | |||
Debt Instrument [Line Items] | |||
Credit facility | $ 75,000,000 |
RESTRUCTURING CHARGES - Narrati
RESTRUCTURING CHARGES - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2018 | Jun. 30, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | |
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 1,147 | $ 167 | ||
Q4 FY2017 Plan | Employee-Related | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 200 | $ 900 | $ 1,900 | |
Q4 FY2017 Plan | Facility-Related | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 400 | |||
Q3 FY 2018 Plan | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | 1,100 | |||
Expected restructuring costs to be recorded | $ 100 | |||
Q3 FY 2018 Plan | Employee-Related | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Restructuring charges | $ 5,100 |
RESTRUCTURING CHARGES - Schedul
RESTRUCTURING CHARGES - Schedule of Restructuring Liability (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2018USD ($) | |
Restructuring Reserve [Roll Forward] | |
Balance at March 31, 2018 | $ 3,696 |
Restructuring charges to operations | 1,660 |
Cash payments | (2,760) |
Other adjustments | (833) |
Balance at June 30, 2018 | 1,763 |
Q3 FY 2018 Plan | Employee-Related | |
Restructuring Reserve [Roll Forward] | |
Balance at March 31, 2018 | 3,696 |
Restructuring charges to operations | 1,017 |
Cash payments | (2,302) |
Other adjustments | (648) |
Balance at June 30, 2018 | 1,763 |
Q3 FY 2018 Plan | Facility-Related | |
Restructuring Reserve [Roll Forward] | |
Balance at March 31, 2018 | 0 |
Restructuring charges to operations | 643 |
Cash payments | (458) |
Other adjustments | (185) |
Balance at June 30, 2018 | $ 0 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) | Oct. 13, 2017 | Jun. 30, 2018 | Mar. 31, 2018 | Nov. 30, 2011 |
Commitments and Contingencies Disclosure [Line Items] | ||||
Estimated fair value of contingent purchase consideration | $ 5,502,000 | $ 5,464,000 | ||
Minimum | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Estimated litigation liability | 0 | |||
Simena | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Estimated fair value of contingent purchase consideration | $ 8,000,000 | |||
Present value of future consideration | $ 5,000,000 | 4,900,000 | ||
Efflux | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Estimated fair value of contingent purchase consideration | $ 523,000 | |||
Pre-suit damages | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Damages sought | $ 3,500,000 | |||
Post-suit damages | ||||
Commitments and Contingencies Disclosure [Line Items] | ||||
Damages sought | $ 2,250,000 |
PENSION BENEFIT PLANS - Narrati
PENSION BENEFIT PLANS - Narrative (Details) $ in Millions | 3 Months Ended |
Jun. 30, 2018USD ($)Employee | |
Defined Benefit Plan Disclosure [Line Items] | |
Contributions to defined benefit pension plans | $ 0.1 |
Expected cash contribution requirements for defined benefit pension plans, less than | $ 1 |
United States | |
Defined Benefit Plan Disclosure [Line Items] | |
Number of employees participating in noncontributory defined benefit pension plans | Employee | 0 |
PENSION BENEFIT PLANS - Net Per
PENSION BENEFIT PLANS - Net Periodic Pension Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Retirement Benefits [Abstract] | ||
Service cost | $ 63 | $ 197 |
Interest cost | 121 | 381 |
Net periodic pension cost | $ 184 | $ 578 |
TREASURY STOCK (Details)
TREASURY STOCK (Details) $ in Thousands | Feb. 02, 2018USD ($)shares | Feb. 01, 2018USD ($)Dealer | Jun. 30, 2018USD ($)shares | Jun. 30, 2017USD ($)shares | Mar. 31, 2018USD ($)shares | Oct. 24, 2017shares | May 19, 2015shares |
Equity, Class of Treasury Stock [Line Items] | |||||||
Shares repurchased during the period, value | $ | $ 0 | $ 100,000 | |||||
Amount borrowed for repurchase | $ | $ 300,000 | ||||||
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) | 970,650 | 2,780,433 | 20,000,000 | ||||
Shares repurchased during the period, value | $ | $ 27,600 | $ 100,000 | $ 607,600 | ||||
Stock remaining to be purchased (in shares) | 0 | ||||||
Share repurchase program, October 2017 | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Stock authorized to repurchase under stock repurchase program (in shares) | 25,000,000 | ||||||
Shares repurchased during the period (in shares) | 6,417,212 | ||||||
Shares repurchased during the period, value | $ | $ 182,400 | ||||||
ASR Agreements | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Stock Repurchase Program, Number Of Dealers | Dealer | 2 | ||||||
Shares repurchased during the period (in shares) | 7,387,862 | ||||||
Shares repurchased during the period, value | $ | $ 150,000 | $ 300,000 | |||||
Stock remaining to be purchased (in shares) | 18,582,788 | ||||||
Number of shares acquired from each of dealers | 3,693,931 | ||||||
Percentage of total number of shares expected to be repurchased | 70.00% | ||||||
Restricted stock units | |||||||
Equity, Class of Treasury Stock [Line Items] | |||||||
Shares paid for tax withholding | 129,115 | ||||||
Cost related to tax withholding | $ | $ 3,500 |
NET LOSS PER SHARE - Schedule o
NET LOSS PER SHARE - Schedule of Calculations of EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Numerator: | ||
Net loss | $ (62,504) | $ (24,222) |
Denominator: | ||
Denominator for basic net loss per share - weighted average common shares outstanding (in shares) | 80,358 | 91,180 |
Dilutive common equivalent shares: | ||
Weighted average restricted stock units (in shares) | 0 | 0 |
Denominator for diluted net loss per share - weighted average shares outstanding (in shares) | 80,358 | 91,180 |
Net loss per share: | ||
Basic net loss per share (in USD per share) | $ (0.78) | $ (0.27) |
Diluted net loss per share (in USD per share) | $ (0.78) | $ (0.27) |
NET LOSS PER SHARE - Antidiluti
NET LOSS PER SHARE - Antidilutive Securities Excluded from Computation (Details) - shares shares in Thousands | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 1,065 | 1,029 |
Repurchased shares under ASR agreements | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities (in shares) | 7,400 |
INCOME TAXES (Details)
INCOME TAXES (Details) | 3 Months Ended | |
Jun. 30, 2018 | Jun. 30, 2017 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | 23.50% | 34.00% |
SEGMENT AND GEOGRAPHIC INFORM73
SEGMENT AND GEOGRAPHIC INFORMATION (Details) $ in Thousands | 3 Months Ended | |
Jun. 30, 2018USD ($)Segment | Jun. 30, 2017USD ($) | |
Segment Reporting [Abstract] | ||
Number of reportable segments | Segment | 1 | |
Segment Reporting Information [Line Items] | ||
Total revenue | $ 205,111 | $ 225,756 |
United States | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 127,246 | 138,618 |
Europe | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 31,021 | 35,448 |
Asia | ||
Segment Reporting Information [Line Items] | ||
Total revenue | 17,900 | 19,527 |
Rest of the world | ||
Segment Reporting Information [Line Items] | ||
Total revenue | $ 28,944 | $ 32,163 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Jun. 30, 2018 | Jun. 30, 2017 | Apr. 01, 2018 | Mar. 31, 2018 | |
Related Party Transaction [Line Items] | ||||
Prepaid expenses and other current assets | $ 32,407 | $ 38,128 | $ 33,502 | |
Related party accounts payable | 25,122 | 30,133 | ||
Total cost of revenue | 62,027 | $ 66,562 | ||
Research and development expenses | 55,463 | 58,966 | ||
Sales and marketing | 78,132 | 85,361 | ||
General and administrative expenses | 26,059 | 29,872 | ||
Cash flows, due from related party | (1,536) | 0 | ||
Cash flows, due to related party | 250 | (22) | ||
Product | ||||
Related Party Transaction [Line Items] | ||||
Total cost of revenue | 32,965 | 36,462 | ||
Service | ||||
Related Party Transaction [Line Items] | ||||
Total cost of revenue | 29,062 | 30,100 | ||
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Prepaid expenses and other current assets | 1,651 | 3,187 | ||
Related party accounts payable | 619 | 369 | ||
Research and development expenses | 2 | 3 | ||
Sales and marketing | 0 | 2 | ||
General and administrative expenses | 13 | 244 | ||
Cash flows, due from related party | 1,536 | 0 | ||
Cash flows, due to related party | 250 | (22) | ||
Affiliated Entity | Product | ||||
Related Party Transaction [Line Items] | ||||
Total cost of revenue | 0 | 245 | ||
Affiliated Entity | Service | ||||
Related Party Transaction [Line Items] | ||||
Total cost of revenue | 174 | 29 | ||
Danaher | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Prepaid expenses and other current assets | 194 | 252 | ||
Related party accounts payable | 259 | 0 | ||
Research and development expenses | 0 | 0 | ||
Sales and marketing | 0 | 2 | ||
General and administrative expenses | 0 | 1 | ||
Related party transaction | 0 | 3 | ||
Cash flows, due from related party | 58 | 0 | ||
Cash flows, due to related party | 259 | 63 | ||
Danaher | Affiliated Entity | Product | ||||
Related Party Transaction [Line Items] | ||||
Total cost of revenue | 0 | 0 | ||
Danaher | Affiliated Entity | Service | ||||
Related Party Transaction [Line Items] | ||||
Total cost of revenue | 0 | 0 | ||
Fortive | Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Prepaid expenses and other current assets | 1,457 | 2,935 | ||
Related party accounts payable | 360 | $ 369 | ||
Research and development expenses | 2 | 3 | ||
Sales and marketing | 0 | 0 | ||
General and administrative expenses | 13 | 243 | ||
Related party transaction | 189 | 520 | ||
Cash flows, due from related party | 1,478 | 0 | ||
Cash flows, due to related party | (9) | (85) | ||
Fortive | Affiliated Entity | Product | ||||
Related Party Transaction [Line Items] | ||||
Total cost of revenue | 0 | 245 | ||
Fortive | Affiliated Entity | Service | ||||
Related Party Transaction [Line Items] | ||||
Total cost of revenue | $ 174 | $ 29 |