NETSCOUT Systems Completes 8-K/A Filing with Network General Financials and Updates Acquisition Status

January 14, 2008

Debt from acquisition of Network General refinanced

Integration proceeding as planned

WESTFORD, Mass.--(BUSINESS WIRE)--Jan. 14, 2008--NetScout Systems, Inc. (NASDAQ: NTCT), an industry pacesetter for advanced network and service assurance solutions, provided an update today on its recent acquisition of Network General Corporation. On November 1, 2007 NetScout closed the acquisition of privately-held Network General, a leader in packet-level network analysis and data mining. The combined company, now doubled in size, will focus its resources, technology, and intellectual property on new and enhanced solutions aimed at reducing Mean Time To Resolution for enterprises, wireless providers and government agencies. The acquisition enables NetScout to offer customers best-of-breed solutions with early-warning capability, real-time and historical application flow analysis, and deep packet forensics.

The transaction was valued at approximately $213 million. The purchase price consisted of a combination of six million shares of NetScout common stock, $100 million of NetScout's senior secured floating rate notes and approximately $57 million in cash.

On December 21, 2007 NetScout entered into a Credit and Security Agreement for a $100 million five-year term loan and a $10 million revolving credit facility. The proceeds of the term loan were used to redeem all of the outstanding senior secured floating rate notes due 2012 issued as a result of the recent acquisition of Network General. The new term loan and revolving facility was provided at favorable rates by a banking syndicate led by KeyBank, including Silicon Valley Bank, Wells Fargo Foothill, Comerica, Sovereign Bank and RBS Citizens.

"The original loan from the controlling stockholders of Network General was valuable in facilitating the rapid close of the Network General acquisition. This new term loan provides NetScout significantly lower interest rates that decline over time as the loan is paid down, along with other favorable terms including the flexibility to make accelerated prepayments as our future operating cash flow warrants," said David Sommers, Sr. VP and CFO of NetScout. "Rather than issuing more equity and causing dilution, we have chosen to continue our leveraged financial structure and retire the debt over time based on our outlook for strong cash flow from the combined company and to help us drive growth in earnings per share."

On January 14, 2008, NetScout filed related financial statements and information relating to the acquisition of Network General in a Form 8-K/A including historical financial statements for Network General and pro forma combined results. The Company provided discussion in Item 7.01 of the 8-K of its prior guidance issued on September 20, 2007 when NetScout announced its intention to acquire Network General.

The financial statements in the 8-K/A show Network General's revenue growth for the nine month period ended October 31, 2007, versus the comparable period a year ago. This growth was driven by their newest product line, Infinistream. Infinistream is replacing revenue from older product lines that have been in decline over the past several years. The Infinistream product line is complementary to NetScout's nGenius product line and was the basis for NetScout's interest in acquiring Network General. NetScout announced the potential acquisition of Network General on September 20, 2007 and issued guidance that fiscal year 2009 revenue for the combined company would be approximately double the then current run rate of NetScout's standalone revenue. The guidance was based on the historical revenue of Network General and was mitigated by the expectation that next year's revenue may be dampened by customer hesitation and sales disruption caused by the integration of the two companies' sales forces. NetScout also announced guidance at that time that the acquisition was expected to be accretive to earnings per share on a non-GAAP basis for fiscal year 2009. That guidance was based on more than $30 million of expense reductions from reduced headcount, marketing programs and facilities in the combined company. To date, the majority of those expense reductions have been achieved through actions taken since the closing of the transaction and the remainder is planned for implementation by the beginning of fiscal 2009. NetScout expects to achieve pro forma profitability and cash flow from combined operations sufficient to exceed the covenants and service requirements of its outstanding debt.

"We are optimistic in our outlook for the future of the new, larger NetScout. That outlook and our plans to achieve improved profitability were the basis of the underwriting decisions of the banks that refinanced the new term loan and revolving credit facility. We were pleased that the new financing generated significant interest and was substantially oversubscribed despite the recent turmoil in the credit markets," said Anil Singhal, President and CEO of NetScout. "Our integration plans are on track. In addition to the $30 million of expense reductions we expect to achieve additional cost synergies from the integration of manufacturing operations during FY 2009. Our product integration road map is progressing smoothly and we are happy that our customers are excited and receptive to the product plans we have shared with them to date. We look forward to sharing the details of our outlook for the balance of the 2008 and the 2009 fiscal years in our scheduled earnings release and conference call on February 4th at 4:30 pm."

About NetScout Systems

NetScout Systems, Inc. (NASDAQ: NTCT) has been an industry leader for advanced network and service assurance solutions for over twenty years. NetScout's breakthrough technology solutions provide trusted, comprehensive real-time and historical performance intelligence, including advanced early warnings and rapid, definitive problem analysis. These capabilities are vital to IT operators who are accountable for reducing the Mean Time to Resolution. The world's largest enterprises, government agencies, and service providers depend upon NetScout's nGenius and Sniffer (formerly Network General) brand solutions to assure service levels to their users by reducing or preventing disruptions and degradations. More information about NetScout is available at

Safe Harbor:

Forward-looking statements in this release are made pursuant to the safe harbor provisions of Section 21E of the Securities Exchange Act of 1934 and other federal securities laws. Investors are cautioned that statements in this release, which are not strictly historical statements, including the Company's reference to prior guidance that the FY 2009 revenue for the combined company will be twice the then current run rate for NetScout, the Company's belief that it will realize further expense reductions and or maintain already realized reductions with respect to Network General, the Company's expectation of maintaining pro forma profitability and strong cash flow, and its outlook that combined company performance will be accretive on a non-GAAP basis to NetScout in FY 2009, constitute forward-looking statements which involve risks and uncertainties. Actual results could differ materially from the forward-looking statements. Risks and uncertainties which could cause actual results to differ include, without limitation, risks and uncertainties associated with the Company's acquisition of Network General, including the ability to integrate the acquisition successfully, costs associated with the acquisition, the ability to achieve market introduction and acceptance of new products from the acquisition, difficulties in managing geographically dispersed operations and in achieving expected synergies and expense reductions, and other factors relating to acquisitions generally, as well as the Company's relationships with strategic partners, dependence upon broad-based acceptance of the Company's network performance management solutions, the Company's ability to achieve and maintain a high rate of growth, introduction and market acceptance of new products and product enhancements, the ability of the Company to take advantage of service provider opportunities, competitive pricing pressures, reliance on sole source suppliers, successful expansion and management of direct and indirect distribution channels and dependence on proprietary technology, and risks of slowdowns or downturns in economic conditions generally and in the market for network performance management solutions specifically. For a more detailed description of the risk factors associated with the Company, please refer to the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2007 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2007 on file with the Securities and Exchange Commission. NetScout assumes no obligation to update any forward-looking information contained in this press release or with respect to the announcements described herein.

(C)2008 NetScout Systems, Inc. All rights reserved. NetScout and the NetScout logo and nGenius are registered trademarks of NetScout Systems, Inc.

(C)2008 Network General Corporation. All Rights Reserved. Network General and the Network General logo are registered trademarks or trademarks of Network General Corporation and/or its affiliates in the United States and/or other countries. Only Network General Corporation makes Sniffer(R) brand products.

CONTACT: NetScout Systems, Inc.
Catherine Taylor, 978-614-4286
Director of Investor Relations

SOURCE: NetScout Systems, Inc.