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EX-2.1 - EX-2.1 - Gigamon Inc.d461357dex21.htm

Exhibit 99.3

 

INVESTOR CONTACT:

     

MEDIA CONTACT:

Jennifer Gianola

     

Naomi Miller

+1 (408) 831-4452

     

+1 (408) 831-4460

jennifer.gianola@gigamon.com

     

naomi.miller@gigamon.com

Gigamon Reports Third Quarter 2017 Financial Results

Santa Clara, Calif., October 26, 2017 - Gigamon Inc. (NYSE:GIMO), the leader in traffic visibility solutions, today released financial results for its third quarter ended September 30, 2017.

Third Quarter 2017 Financial Highlights:

 

  Revenue of $79.2 million, compared to $83.5 million in the third quarter of fiscal 2016.

 

  GAAP gross margin was 82%, compared to 83% in the third quarter of fiscal 2016.

 

  Non-GAAP gross margin was 82%, compared to 83% in the third quarter of fiscal 2016.

 

  GAAP net income was $2.2 million, or $0.06 per basic and diluted share, compared to GAAP net income of $6.1 million, or $0.16 per diluted share, in the third quarter of fiscal 2016.

 

  Non-GAAP net income was $9.5 million, or $0.23 per diluted share, compared to non-GAAP net income of $14.0 million, or $0.36 per diluted share, in the third quarter of fiscal 2016.

 

  Cash and short-term investments were $264.6 million, up $6 million from the second quarter of 2017 and up $20 million from the third quarter of fiscal 2016.

Conference Call Information:

In light of the pending acquisition by Elliott Management, Gigamon will not hold its earnings conference call today to discuss its third quarter 2017 results. Additionally, Gigamon will not be providing financial guidance.

Additional Information and Where to Find It

Gigamon will file relevant materials with the Securities and Exchange Commission (the “SEC”) in connection with the proposed merger, including a preliminary proxy statement on Schedule 14A. Under the proposed terms, promptly after filing its definitive proxy statement with the SEC, Gigamon will mail or otherwise make available the definitive


proxy statement and a proxy card to each stockholder entitled to vote at the special meeting relating to the proposed transaction. GIGAMON STOCKHOLDERS AND OTHER INVESTORS ARE ADVISED TO CAREFULLY READ THESE MATERIALS (INCLUDING ANY AMENDMENTS OR SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS FILED WITH THE SEC IN RESPECT OF THE PROPOSED MERGER WHEN THEY BECOME AVAILABLE, AS THOSE DOCUMENTS WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED MERGER AND THE PARTIES TO THE PROPOSED MERGER. Gigamon stockholders and other investors may obtain free copies of the definitive proxy statement, the preliminary proxy statement and other relevant materials in connection with the proposed merger (when they become available), along with other documents filed by Gigamon with the SEC, at the SEC’s website (http://www.sec.gov).

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements generally relate to future events, including the timing of the proposed transaction and other information related to the proposed transaction. In some cases, you can identify forward-looking statements because they contain words such as “may,” “will,” “should,” “expects,” “plans,” “anticipates,” “could,” “intends,” “target,” “projects,” “contemplates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these words or other similar terms or expressions that concern the proposed transaction and our expectations, strategy, plans or intentions regarding it. Forward-looking statements in this press release include, but are not limited to, our pending acquisition by Elliott Management. Our expectations and beliefs regarding these matters may not materialize, and actual results in future periods are subject to risks and uncertainties that could cause actual results to differ materially from those projected. These risks include the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect our business and the trading price of our common stock; the failure to satisfy the conditions to closing of the transaction, including obtaining regulatory and shareholder approval; the occurrence of any event, change or other circumstance that could give rise to the termination of the definitive agreement; the potential for litigation relating to the transaction; the risk that the definitive agreement may be terminated in circumstances that require us to pay a termination fee; the effect of the announcement or pendency of the transaction on our business


relationships, results of operations and business generally; risks that the proposed transaction disrupts current plans and operations; risk related to diverting management’s attention; and general market, political, economic and business conditions. The forward-looking statements contained in this press release are also subject to other risks and uncertainties, including those more fully described in our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K for the period ended December 31, 2016 and our most recently filed quarterly report on Form 10-Q. The forward-looking statements in this press release are based on information available to Gigamon as of the date hereof.

Non-GAAP Financial Measures

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and accompanying tables contain certain non-GAAP financial measures that exclude stock-based compensation and related payroll taxes, income tax effects of stock-based compensation expense, non-recurring items such as restructuring charges and advisory services and other costs related to non-routine stockholder matters, and periodic tax items. Non-GAAP financial measures do not have any standardized meaning and our non-GAAP financial measures may not be comparable to similarly titled measures presented by other companies. Gigamon considers these non-GAAP financial measures important because they provide useful measures of the operating performance of the company, exclusive of unusual events or factors that do not directly affect what we consider core to our operating performance, and are used by the company’s management for that purpose. In addition, investors often use similar measures to evaluate the operating performance of a company. We present non-GAAP financial measures for supplemental informational purposes only to provide additional information in understanding the company’s operating results. The non-GAAP financial measures should not be considered a substitute for financial information presented in accordance with GAAP. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measures attached to this release.

Gigamon

Gigamon (NYSE: GIMO) provides active visibility into physical and virtual network traffic, enabling stronger security and superior performance. Gigamon’s Visibility Fabric and GigaSECURE®, the industry’s first Security Delivery Platform, deliver advanced intelligence so that security, network and application performance management solutions in enterprise, government and service provider networks operate more efficiently and effectively. See more at www.gigamon.com, the Gigamon Blog, or follow Gigamon on Twitter, LinkedIn or Facebook.


Gigamon Inc.

Consolidated Statements of Operations

(In thousands, except per share amounts)

(unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2017
    October 1,
2016
    September 30,
2017
    October 1,
2016
 

Revenue:

        

Product

   $ 51,861     $ 59,835     $ 139,063     $ 155,805  

Service

     27,330       23,677       78,832       70,021  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenue

     79,191       83,512       217,895       225,826  

Cost of revenue:

        

Product

     11,401       12,197       32,429       34,414  

Service

     3,049       2,141       8,649       6,562  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total cost of revenue

     14,450       14,338       41,078       40,976  
  

 

 

   

 

 

   

 

 

   

 

 

 

Gross profit

     64,741       69,174       176,817       184,850  

Operating expenses:

        

Research and development

     18,783       18,306       59,451       50,914  

Sales and marketing

     34,914       31,994       105,247       88,494  

General and administrative

     10,697       8,887       30,033       26,029  
  

 

 

   

 

 

   

 

 

   

 

 

 

Total operating expenses

     64,394       59,187       194,731       165,437  
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) from operations

     347       9,987       (17,914     19,413  

Other income (expense):

        

Interest income

     541       235       1,374       661  

Other expense, net

     (241     (144     (433     (386
  

 

 

   

 

 

   

 

 

   

 

 

 

Income (loss) before income tax (provision) benefit

     647       10,078       (16,973     19,688  

Income tax benefit (provision)

     1,531       (3,999     9,576       23,321  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss)

   $ 2,178     $ 6,079     $ (7,397   $ 43,009  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income (loss) per share:

        

Basic

   $ 0.06     $ 0.17     $ (0.20   $ 1.22  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

   $ 0.06     $ 0.16     $ (0.20   $ 1.15  
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average shares used in computing net income (loss) per share:

        

Basic

     37,196       35,770       36,885       35,171  
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted

     39,574       38,113       36,885       37,341  
  

 

 

   

 

 

   

 

 

   

 

 

 


Gigamon Inc.

Consolidated Balance Sheets

(In thousands)

(unaudited)

 

     September 30, 2017     December 31, 2016  

ASSETS

    

CURRENT ASSETS:

    

Cash and cash equivalents

   $ 173,182     $ 148,926  

Short-term investments

     91,380       109,238  

Accounts receivable, net

     71,741       75,522  

Inventories, net

     15,472       11,347  

Prepaid expenses and other current assets

     12,048       9,909  
  

 

 

   

 

 

 

Total current assets

     363,823       354,942  

Property and equipment, net

     20,735       11,809  

Deferred tax assets, non-current

     50,734       33,094  

Other assets, non-current

     1,103       1,154  
  

 

 

   

 

 

 

TOTAL ASSETS

   $ 436,395     $ 400,999  
  

 

 

   

 

 

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

    

CURRENT LIABILITIES:

    

Accounts payable

   $ 5,585     $ 5,208  

Accrued liabilities

     26,897       34,649  

Deferred revenue

     69,960       68,997  
  

 

 

   

 

 

 

Total current liabilities

     102,442       108,854  

Deferred revenue, non-current

     32,126       28,785  

Deferred and other tax liabilities, non-current

     553       201  

Other liabilities, non-current

     933       499  
  

 

 

   

 

 

 

TOTAL LIABILITIES

     136,054       138,339  

STOCKHOLDERS’ EQUITY

    

Common stock

     4       4  

Additional paid-in-capital

     298,400       256,774  

Accumulated other comprehensive loss

     (75     (17

Retained earnings (Accumulated deficit)

     2,012       5,899  
  

 

 

   

 

 

 

TOTAL STOCKHOLDERS’ EQUITY

     300,341       262,660  
  

 

 

   

 

 

 

TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY

   $ 436,395     $ 400,999  
  

 

 

   

 

 

 


Gigamon Inc.

Consolidated Statements of Cash Flows

(In thousands)

(unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2017
    October 1,
2016
    September 30,
2017
    October 1,
2016
 

CASH FLOWS FROM OPERATING ACTIVITIES:

        

Net income (loss)

   $ 2,178     $ 6,079     $ (7,397   $ 43,009  

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

        

Depreciation and amortization

     2,214       1,642       6,411       4,815  

Stock-based compensation expense

     10,973       10,104       39,991       28,884  

Deferred and other income taxes

     (1,790     (679     (10,147     (31,570

Other

     6       54       148       366  

Changes in operating assets and liabilities:

        

Accounts receivable

     (8,221     (14,929     3,672       (11,567

Inventories

     (1,336     (862     (4,761     (4,316

Prepaid expenses and other assets

     78       (1,753     (1,944     (2,991

Accounts payable

     1,757       569       532       54  

Accrued liabilities and other liabilities

     1,083       9,227       (9,308     3,470  

Deferred revenue

     5,413       3,290       4,304       1,015  
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) operating activities

     12,355       12,742       21,501       31,169  

CASH FLOWS FROM INVESTING ACTIVITIES:

        

Purchase of short-term investments

     (8,941     (20,942     (78,099     (84,773

Proceeds from maturities of short-term investments

     25,300       24,500       96,012       85,747  

Purchase of property and equipment

     (6,977     (1,523     (12,179     (6,001
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) investing activities

     9,382       2,035       5,734       (5,027

CASH FLOWS FROM FINANCING ACTIVITIES:

        

Proceeds from employee stock purchase plan

     4,487       3,417       9,443       6,785  

Proceeds from exercise of stock options

     40       5,528       983       9,654  

Shares repurchased for tax withholdings on vesting of restricted stock units

     (4,188     (3,411     (12,592     (7,240
  

 

 

   

 

 

   

 

 

   

 

 

 

Net cash provided by (used in) financing activities

     339       5,534       (2,166     9,199  
  

 

 

   

 

 

   

 

 

   

 

 

 

NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH

     22,076       20,311       25,069       35,341  

CASH, CASH EQUIVALENTS AND RESTRICTED CASH — Beginning of period

     151,919       135,242       148,926       120,212  
  

 

 

   

 

 

   

 

 

   

 

 

 

CASH, CASH EQUIVALENTS AND RESTRICTED CASH — End of period

   $ 173,995     $ 155,553     $ 173,995     $ 155,553  
  

 

 

   

 

 

   

 

 

   

 

 

 


Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures

(In thousands, except percentages)

(unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2017
    October 1,
2016
    September 30,
2017
    October 1,
2016
 

Total Revenue

   $ 79,191     $ 83,512     $ 217,895     $ 225,826  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of GAAP Gross Profit and GAAP Gross Margin to Non-GAAP Gross Profit and Non-GAAP Gross Margin:

        

GAAP gross profit

     64,741       69,174       176,817       184,850  

Stock-based compensation expense

     333       519       1,802       1,527  

Stock-based compensation related payroll taxes

     19       28       79       64  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP gross profit

   $ 65,093     $ 69,721     $ 178,698     $ 186,441  
  

 

 

   

 

 

   

 

 

   

 

 

 

GAAP gross margin

     82     83     81     82

Non-GAAP gross margin

     82     83     82     83

Reconciliation of GAAP Operating Income (Loss) to Non-GAAP Operating Income:

        

GAAP operating income (loss)

   $ 347     $ 9,987     $ (17,914   $ 19,413  

Stock-based compensation expense

     10,973       10,104       39,991       28,884  

Stock-based compensation related payroll taxes

     199       414       1,036       971  

Non-recurring items

     2,305       —         2,891       —    
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP operating income

   $ 13,824     $ 20,505     $ 26,004     $ 49,268  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of GAAP Net Income (Loss) to Non-GAAP Net Income:

        

GAAP net income (loss)

   $ 2,178     $ 6,079     $ (7,397   $ 43,009  

Stock-based compensation expense

     10,973       10,104       39,991       28,884  

Stock-based compensation related payroll taxes

     199       414       1,036       971  

Non-recurring items

     2,305       —         2,891       —    

Income tax effect of Non-GAAP adjustments

     (6,189     (2,593     (18,468     (39,176
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP net income

   $ 9,466     $ 14,004     $ 18,053     $ 33,688  
  

 

 

   

 

 

   

 

 

   

 

 

 


Gigamon Inc.

Reconciliation of GAAP to Non-GAAP Financial Measures (continued)

(In thousands, except per share amounts)

(unaudited)

 

     Three Months Ended     Nine Months Ended  
     September 30,
2017
    October 1,
2016
    September 30,
2017
    October 1,
2016
 

Reconciliation of GAAP Diluted Net Income (Loss) per Share to Non-GAAP Diluted Net Income per Share:

        

GAAP diluted net income (loss) per share

   $ 0.06     $ 0.16     $ (0.20   $ 1.15  
  

 

 

   

 

 

   

 

 

   

 

 

 

Stock-based compensation expense

     0.27       0.27       1.08       0.77  

Stock-based compensation related payroll taxes

     0.01       0.01       0.03       0.03  

Non-recurring items

     0.06       —         0.08       —    

Income tax effect of non-GAAP adjustments

     (0.16     (0.07     (0.50     (1.05

Impact of difference in number of GAAP and non-GAAP diluted shares

     (0.01     (0.01     (0.05     (0.01
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted net income per share

   $ 0.23     $ 0.36     $ 0.44     $ 0.89  
  

 

 

   

 

 

   

 

 

   

 

 

 

Reconciliation of GAAP Diluted Weighted-Average Number of Shares to Non-GAAP Diluted Weighted-Average Number of Shares:

        

GAAP diluted weighted-average number of shares

     39,574       38,113       36,885       37,341  

Dilutive impact due to stock-based compensation

     1,546       544       3,827       673  
  

 

 

   

 

 

   

 

 

   

 

 

 

Non-GAAP diluted weighted-average number of shares

     41,120       38,657       40,712       38,014