Ladies and gentlemen, thank you for standing by and welcome to NetScout's Third Quarter of Fiscal Year 2015 Operating Results Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. Instructions will be given to you at that time. As a reminder this conference call is being recorded. With us today is NetScout's President and CEO, Mr. Anil Singhal. He is accompanied by NetScout's Chief Operating Officer, Mr. Michael Szabados; the Company's Chief Financial Officer, Ms. Jean Bua; and Vice President of Investor Relations, Andrew Kramer. At this time, I will turn the call over to Andrew Kramer.

Thank you Heather and good morning everyone. Welcome to NetScout's fiscal 2015 third quarter conference call for the period ended December 31, 2014. As Heather noted joining me on this morning’s call are Anil Singhal, NetScout’s Co-Founder President and CEO; Michael Szabados, NetScout’s Chief Operating Officer; and Jean Bua, NetScout’s Senior Vice President and Chief Financial Officer. We have included a slide presentation of key financial data that accompany the financial section of our prepared remarks. For those listeners who have dialed into the call this morning and would like to view this slide presentation, you can find it by going to our website at www.netscout.com/investors and then clicking on today's webcast. You can advance the slides in the webcast viewer if you are listening via the internet to follow along with our commentary. We will try to remember to call out the slide number we are referencing in our remarks. In terms of our agenda for today's call, Anil Singhal will first share his perspective on the results for the quarter and ongoing initiatives to continue our momentum including an update on our previously announced plan to acquire Danaher’s Communications business. Our COO, Michael Szabados will provide his perspective on how both service providers and enterprises are benefitting from NetScout solutions. Jean Bua will then provide additional insight into the financial performance as well as discuss our guidance for the fiscal year. Before we begin with our prepared remarks I'd like you direct your attention to Slide number 3. NetScout’s registration statement on Form S-4, proxy statement and other documents concerning the proposed acquisition have been filed with the Securities and Exchange Commission. Investors are urged to read the S-4 registration statement and proxy statement along with other relevant documents filed with the SEC, because they contain important information.…

Thank you Andy. We reported another strong quarter of performance, revenue for the third quarter was $122.8 million an 11% increase. We converted this topline growth into 18% EPS growth with non-GAAP EPS of $0.59. More importantly on a year-to-date basis we have generated revenue of $334.3 million a 17% increase over the comparable period last year. For the year to date period our non-GAAP EPS of $1.35 per share is 29% higher than the same period one year ago. Based on our progress thus far with only one quarter left in the current fiscal year, we have tightened the range for anticipated fiscal year 2015 revenue to be between 455 million and 460 million. This fine tuning leaves the midpoint of our original revenue guidance unchanged. At the same time we are ahead of our plan on earnings, so we have increased our non-GAAP EPS target to be between $1.87 per share and $1.91 per share. During the third quarter we continue to see our largest service provider customers direct spending to NetScout. For the year to date total non-GAAP revenue from service provider customers is up by 20% which is generally in line with our expectations. Our largest service provider customers continuing to use our solutions to help them monitor the overall performance of their 4G network and increasingly to have them assure high quality Voice over LTE services. We believe that their overall Voice over LTE services and other rich communication services will continue to open new doors for NetScout both in the U.S. and abroad. We also generated good growth from our enterprise customers as more enterprises adopt mobility and cloud based services assuring application and network performance and end user experience have become mission critical. We’re also seeing that our ability to help, [them] [ph],…

Thank you Anil. I would like to highlight a few of the different ways that our customers across a variety of industries, gain value from our solutions. Besides the success stories underpin our ability to deliver strong results in a highly competitive marketplace. In the service provider market, our largest customers in the U.S. continue to rely on NetScout to help them assure service quality in their 4G LTE networks. At the same time we are making good progress to win new projects with service provider customers outside of the United States and these efforts have contributed to growth both in Europe and in Israel off late. For example a large Southeast Asian service provider has been using [indiscernible] for their mobile packet or control and user monitoring and this has been successfully improving service levels to our [service workforce] [ph]. This track record combined with our ASI business intelligence capabilities help secure our role in the current expansion of their mobile core network and winning us a significant deal this quarter against a number of legacy [vendors at the account] [ph]. Our success in helping service providers gain better visibility into the performance of their mobile networks is also leading to new opportunities in other parts of their network. One of our North American service provider customers selected NetScout service assurance solutions this quarter to help them unify their mobile, fixed line and traditional corporate IT infrastructures in a deal valued in excess of $1 million. Additionally, last quarter I highlighted our progress in the cable multi-service operator area where we are winning new projects to help these service providers monitor and manage carrier grade Wi-Fi connectivity services, that are being rolled out to attract and retain consumers in an intensively competitive marketplace. We continue to gain traction on…

Thank you Michael and good morning everyone. I plan to review key metrics for both the third quarter and first nine months of fiscal year 2015, and then I will discuss our guidance. As mentioned at the outset, we will be referencing non-GAAP metrics when appropriate and comparing all figures against the comparable prior year period unless otherwise noted. To begin our financial discussion we will be starting with Slide number 8 of our presentation which is accompanying our call and is posted on our website. For our third fiscal quarter, total revenue was $122.8 million which is an increase of 11% from the same quarter in fiscal year 2014. Our product revenue was $76.4 million, which is an increase of 12% over the same quarter in fiscal year 2014. Service revenue was $46.4 million, which is a 10% increase on a non-GAAP basis from the same quarter in the prior year. The uptick in our service revenue growth reflects our strong product sales over the past two years. Our earnings per share for the third quarter were $0.59, which is an 18% increase from the same quarter in the prior year. Let’s turn to Slide 9 to review our profitability during the third quarter in more detail. We again achieved our quarterly results, while delivering strong margins that remain within or near our long-term targets. Focusing on the non-GAAP metrics on the lower half of this slide our gross profit was $97.1 million representing a 79.1% gross margin, this compares against 88.1 million and a gross margin of 79.7% for the prior year. Income from operations was $38.8 million and our operating margin for the quarter was 31.6%. As Anil mentioned we’ve made significant progress in advancing our strategy over the past several years and the 18% growth in…

[Operator Instructions]. Your first question comes from the line of Mark Kelleher with D.A. Davidson. Your line is open.

Just wondered -- look at gross margin on the product side to start off. Seem to have dip a little bit in the quarter; can you just address the competitive environment and what you’re seeing there?

Sure Mark, this is Jean. Gross margin as you know we’ve invested over the last few years in our premium services which assist our customers in rapidly implementing our solutions so that they can gain value as soon as possible. Additionally in this quarter we had invested in inventory for a unique customer opportunity that didn’t advance during the quarter, so we took a reserve which impacted the gross margin.

And last question, on the operating lines you’ve got some good leverage there. Are any of those being affected by the pending merger G&A particularly? Are there any -- is the merger affecting any decisions you’re making on those lines?

No not at this time. We consider that until the transaction is complete we still have to generate -- provide service to our customers, continue to move forward with our plans and to continue to generate returns to our shareholders.

Your next question comes from the line of Scott Zeller with Needham & Co. Your line is open.

Could you comment please on the comments from Anil regarding the 10% growth? And if you could lay out a broad timeline on what your expectations would be for that?

Well we talked about -- I mean we were sort Female: reiterating what we have already Scott, have said in the S-4. So we said if you look at the individual number and because of projections for standalone companies based on certain investment, we had some numbers in there but we talked about basically almost like a CAGR of 10% over the next five years, after the first year of the combined operation, starting with a 1.2 billion plus number.

And just to clarify that’s post -- that’s having one year under the belt, one year under the belt that we’re looking at that growth?

Yes.

Your next question comes from the line of Kevin Liu with B. Riley & Co. Your line is open.

Just a quick question on the revised revenue guidance range obviously implies kind of flattish revenues in the fourth quarter. So wondering if you could talk about some of the puts and takes there, it does seem like service provider needs to accelerate with all the products out to keep you out of 20% growth rate and advices clearly been ramping strongly also, just wondering if there is any area where you expect it to slow up a bit just from a quarterly perspective or if there are other factors that drive a more conservative guidance.

Well I think, first of all I don’t know why you’re calling it conservative guidance; it’s exactly the same as what we had one year ago. And as to the quarterly we have mentioned many times previously that service provider revenue is lumpy and one quarter something in the first quarter or the previous quarter or moving things into next quarter or sometimes even into the next fiscal year quarter one can make a big difference. So we don’t look at service provider, I think it’s probably not right to look at the trends in service provider business over a headquarter fixed quarter basis and that’s why we started talking about year-to-date numbers. So I think if you look at it that way, I think the growth has been sort of consistent with the 20% we had suggested at the beginning of the year.

And just one last question, just you guys had talked last quarter about potentially recapitalizing the balance sheet to perhaps buyback some stocks for this acquisition. Just wondering if you could update us on whether -- how much leverage you are willing to put on this business and anything in the way of how sizeable the buyback you’re willing to pursue?

This is Jean. So as you mentioned we have been looking through our strategies as it relates to [rack] [ph] optimization, share buyback, tax strategies, we’re still in that process. We have different alternatives that we’re looking at. Our EBITDA on a combined basis should be anywhere from between a lot of -- I'll give you a very broad range, $300 million to $400 million in the first full year of operations. So we’re generally conservative in nature and we’re still reviewing all of these guidelines and thinking about the R&D. So at this point we still would be thinking about what we think makes most sense in looking at how the transaction is unfolding in the timeline. So we’ll get back to you when we have a much firmer idea of exactly which alterative we’ll be pursuing.

Your next question comes from the line of Eric Martinuzzi with Lake Street Capital. Your line is open.

My question has to do with the anti-trust review. It’s kind of in two parts. First of all I am curious to know are they looking at the merger more from a -- this is a probe marketing or are they looking at it more is this a service assurance market? And then the second part, since they came back to you from your initial submission, what’s changed -- what else are they looking for greater clarity on?

Well I’m not sure that we can talk about a lot of details, but yes we have -- and then the best way to look at this market is the service assurance market because we compete for budget in the service provider space. And clearly their questions are more related to Tektronix and hardly anything to do with Arbor and Fluke, so just want to clarify that and maybe you’re referring to that also. So in that space, we compete actually more with service assurance vendors who say you don’t need probes or embedded solutions from [indiscernible] and some new breed of customers like IBM and buying [new] [ph] factory and doing Big Data analytics as well as emerging solution in the virtualization space. So when you look at that market, then we look at all this area as general service assurance space. They may have looked at initially as IT-probe market space and maybe that prompted some of the questions, but we don’t always know all the details and concerns. And so we are working through this and we are still optimistic as we mentioned to meet the original timetable of closing.

And then one last question the FX impact you guys mentioned about three quarters of business is domestic, but do you still have about a quarter overseas Jean for the quarter and the guide, what was the FX impact?

It was negligible.

And that would be just kind of the cost structure offsetting the revenue impact?

Usually in around the globe we sell mostly in U.S. dollars. It’s one of our I would say advantages, so anything that is sold in foreign currency is extremely minimal to our revenue line item. And then we do have treasury activities that we use to offset the FX in our cost structure.

[Operator Instructions] Your next question comes from the line of Alex Kurtz with Sterne Agee. Your line is open.

Anil back to Tektronix here and what the organic growth rate is and I think that’s a question that keeps coming up with investors when we speak with, going back to the filing in December, obviously that if you back it out there’s some deceleration in that business year-over-year and as I understand it maybe that’s customer specific, but when you -- you mentioned a 10% growth rate after the first year of integration. I think people are trying to understand is that really what you think the organic growth of the combined business is or is that a conservative take based on what you see Tektronix tracking to you today?

No I mean you’ve seen the numbers, they’re not tracking to 10% today. And -- or you’ve seen the total business even the total business is not tracking to 10% if you look at the forecast or the numbers we have in that also, a lot of it is organic, lot of it is cross-selling, lot of it is combined value of monitoring plus troubleshooting and then always puts pressures on the network management or service assurance space. And so sometime you can mitigate that with more greater value without changing the price, so we believe customer is going to get lot more value for roughly the same price and that will promote the value of the instrumentation. And also while CapEx spending is a challenge, I think some of our solutions can help us -- help them reduce CapEx spending, so those are some of the things. So yes, bulk of it is -- I mean all the non-organic part will be all seen in the first year or when we -- during the first year all the growth I would term as organic after that.

Hi Alex this is Jean, just to add onto Anil’s comments, as we spoke before there is very little product overlap, so the product, the technologies are very complementary and they will serve our markets that we’re in on a standalone basis very well. And we typically for the markets that they’re in; our technology will also serve their markets. So we see that through the combination of this strategic acquisitions that we’ll be able to benefit our customers both the Tektronix and the NetScout customers through cross-selling different product technologies as well as getting new customers around the globe as the trends that we’ve talked about on the call today LTE, virtualization make it [indiscernible] more complex world where they need all of the solutions that we bring in the way of monitoring and troubleshooting to get their customers the best experience possible.

So Jean just to clarify, I mean the product growth in the filings in December show Tektronix decelerating from a product growth perspective, so the conviction that post the integration that you can reverse that trend that’s based on the view that there’s going to be more efficiencies in the market in how NetScout sells both products in that? Or there’s more customer specific issues there that you think are going to get reversed?

Let me just mention a couple of things, one is that Tektronix portion will be only one-third of the total revenue in the first year, so I just know -- I want to make sure that that’s just one-third of the total. We have security, we have lot other stuff. Second thing is some of the investment Techtronic has made in a company called Newfield Wireless and RAM optimization, just happened about a year ago and they have not hit the revenue stream. We might be able to compensate for some of the other issues Tektronix has faced, they were already planning to do that, will be able to compensate with these other investment which will come to fruition now.

Your next question comes from the line Chad Bennett with Craig-Hallum. Your line is open.

So did you have any 10% customers in the quarter Jean?

No we did not.

And year to date what is that number? Is it…

We have no 10% customers on a year to date basis either.

And then in the non-GAAP part of the expenses, the business development expense went up quite a bit sequentially, obviously because of the Danaher transaction. So I think it went up about little over $3 million sequentially and obviously benefited non-GAAP EPS this quarter. Is that kind of a run rate at least until the deal closes or how should we think about that in the March quarter?

So in the quarter we probably will continue to have some business development expenses, I would imagine sitting here today that guidance includes about $6 million to $7 million of business development expenses for the year.

And the service provider outside of the business, I guess is there any way to characterize what you see, what the prospects are over the next couple quarters, three to four quarters even in terms of what the pipeline looks like from new customers, international customers, further 4G roll outs versus Voice over IP or other applications that service providers are going to roll out over the next year. Is there any way to kind of characterize where you’ll see growth going forward in that business?

So I think first thing is that all these things which you’re talking about, whether its Voice over IP or Voice over LTE or continuous capacity expansion on LTE and other areas in both the U.S. market and international will continue as it develops the case this year, so no big ups and downs. It will be very hard to come up with growth numbers and share that because we’re at the midst of this combination, we don’t know whether we’re going to have one quarter of standalone or when will the combined stuff will start, I would at the high level will look at for the standalone company, roughly similar patterns as last year. But that doesn’t mean it’s going to be same pattern quarter-over-quarter versus last year.

So just on a general worldwide trend, as we talked before the U.S. and some of the Asian countries are the leaders in LTE. So NetScout has been very successful in the past few years as they have been rolling out their networks and just making sure they’ve got connectivity. Those areas should continue to roll out applications of services with Volti being the first one. And then the rest of the globe as you circle around the globe, they’re also anticipated over the coming years to be rolling out LTE and 4G also. So we would anticipate that those trends that you see in the U.S. will continue to roll out through Asia and Europe as they also experience the need to move to data intensive network that their consumers respond to well.

Just one last one quick for Anil. Anil you voiced a little bit of frustration I think last quarter maybe frustration is a wrong word on the adoption of the nGeniusONE. That being said, Enterprise had another great quarter again this quarter. Any type of color on nGeniusONE adoption and penetration into the [ATM] [ph] marketplace? And then I’ll jump offline. Thanks.

I think it was not really frustration, I think it maybe little bit our expectations were higher in terms of the time it will take to start gaining traction. And we see that I think some of the better than expected numbers is nGeniusONE, some is the traction in the unified communication area. So I think all in all maybe our expectation was too high, but I think we’re not frustrated customers are very excited and lot of excitement in the sales force and which can be seen by very little traction if any during the last 18 months. So I think people are very excited and maybe were they too excited and too optimistic about how long it takes to get traction that even with existing customers. But I think now will be mostly behind us.

Your next question comes from the line of Matt Robison with Wunderlich Securities. Your line is open.

So let’s talk a little bit about how you're defining accretive, you mentioned -- first of all is it accretive in the second year of operations or the first year and are you guys [Multiple Speakers] little more context Anil, you had earnings [Multiple Speakers]?

Yes, what accretive means that we’ll be -- that as compared to what we would have done as a standalone company in fiscal year. So, in the first 12 years of operation, first 12 months of operation of the combined company if whatever we would have done without the combination or with the combination and so that’s what accretive means that that’s using the base. And right now you don’t have the numbers, but if you were to -- if it was magically going to close on April 1st, then we’ll be accretive to the fiscal year ‘16 guidance which we’ll provide as a standalone company.

So you guys grew based on the guidance implied for your first quarter about 24% EPS for 2015, so we would expect some level of earnings growth comparable to that or maybe comparable to last year when you grew 17% or do you expect that there would be a dramatic slowdown in your organic business that would therefore make a lower growth rate accretive? A – Jean Bua: So when we think about the business going forward as we’ve talked about in the past, we’re in the fourth year of our five year strategy and we’ve discussed that we would be going into areas that included business intelligence, cyber security, increased functionality so that service providers could monitor customer experience. And as we look to those plans, we would come out with our next five year operating model which would have been predicated on say FY ‘16 forward. The Danaher acquisition at this time negates the necessity for us to continue to develop in those areas after the transaction comes to fruition. So when we talk about accretive, when we put the combined companies together in the first full year of operations which of course is dependent on when the transaction close, we had measured it as at least $0.01 accretive to guidance at that time. What you’re experiencing, what we’re experiencing in the business this year is as we talked about on the all a few one-times mostly the success that we’ve had in improving our operating margins and our revenue as a result of the investments that we made back in FY ‘12, FY ‘13 and FY ‘14. So we anticipate that as we go into the first full year of operations, we will be able to obtain synergies with the TekComm’s business and that that same pattern of being able to produce quality technologies to face the trends that our customers are experiencing along with our continued prudent cost control that we’ll be able to get back to significant returns towards the end of our next five year period or even in the middle of our five year period. So as we work through the FY ‘16 plans and the Danaher acquisition timing, when we come out with guidance we will explain all of these items to you.

Now you guys grew pretty well during those investment years, you grew 19% in ‘13, 17% in ‘14 and before you announced the Danaher deal you talked about getting into these new markets there was no discussion that you were going to bomb the income the P&L with a huge amount of investment at that time, so if you presume that you’re going to have a more measured investment so that you can perform similarly to your past investment period you'd still potentially be growing in the high teens right so you’re going to -- with Danaher do you still think you can grow like that or is it going to [Multiple Speakers] of that investment?

I think there is some confusion on how you’re treating that what is accretive and what we’re saying is the EPS will still be higher even in the first year of operation than would we with a standalone company. And so that’s what we’re defining as accretive or that’s how everyone defines as accretive that our EPS with or without Danaher -- I mean even with the combination of Danaher will be at least $0.01 higher than it would have been. So that takes care of all those things, I think growth rate is not the best way to look at it. You have a bigger space and things like that.

So just to summarize in the registration statement, we’ve said that we would have a CAGR of 10% on a clearly much larger business which was -- is over $1 billion as Anil has referenced 1.2 billion. And that we feel confident that our operating margins will continue to increase. And that we will hit 30 plus by the end -- before or by the end of our next five year period and that we will continue to generate significant cash flow. And we feel confident in the Danaher acquisition in what we’ll be able to do with that business. [Multiple Speakers] shareholders.

That sounds great but you’re not really addressing the dilutiveness, but I can see this is probably going to an awareness call. I just have a couple of more questions; I guess your operating cash flow down year-over-year is principally due to the business development expense.

No it’s principally due to changes in working capital just with the balances of receivables in the third quarter, we usually get a lot of service renewals, it’s one of our stronger quarters that comes in at the very end of the time period. So we have very little revenue but higher receivable balances and the receivables the DSO as I said is relatively consistent with what it was in Q3 of last year.

Yes I was given the year-over-year comparison that you have decline that to sequential, so it doesn’t answer that. Can you just…

We cannot answer that Matt. I think were down about $3 million and I told you because of receivables working capital and that the DSO was about 62 this quarter versus 61 in Q3 of 2014.

Your next question comes from the line of Scott Zeller with Needham & Co. Your line is open.

It’s just a follow up question. Thank you. So you mentioned in the Enterprise commentary Jean that healthcare and utilities had performed well. Could you or Michael or Anil comment on what it is that’s driving spending in those two verticals healthcare and utilities that maybe we haven’t seen previously why is business better in those verticals?

I think there are at least two things but then unfortunately we can’t talk about the names, but I think people are first of all moving to unified communications. And so they are revamping the duel set and things like that and there are couple of places even though we are not deep down into the security area, our product is being used for compliance. So those are two or three big new used cases or revised used cases for us which is driving some of that performance in healthcare. Michael?

Prominently and there is also signs that spending is driven by one major service or application, one mission critical new application roll out will drive significant new instrumentation for that one particular servicer application. So that we see both in the energy sector, utility sector as I mentioned deliveries and certainly in healthcare.

And Scott just one more thing in the healthcare sector, one of the customers that has been buying just continues to illustrate the customer loyalty that we have and the fact that we have been penetrating this customer through our different solutions and through their different department. So they have been a flagship customer for NetScout and the success that we have in a relationship with our customers and being able to continue to provide solutions for them.

Operator is there any other questions coming?

There are no further questions at this time.

Well I’d like to thank everybody for their time and joining us this morning. As always we look forward to any follow up questions that you might have and feel free to reach us at investor relations, ir@netscout.com. In that regard we look forward to our next quarterly call which would be our fourth quarter and that would occur likely in the Late April early May timeframe. Look forward to continued dialog with our investors. Thank you very much.