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Gigamon Reports Third Quarter 2013 Financial Results

November 4, 2013

Third Quarter Revenue Growth of 52% year-over-year

SILICON VALLEY, Calif., Nov. 4, 2013 /PRNewswire/ — Gigamon®( )(NYSE: GIMO), a leader in traffic visibility solutions with the innovative Visibility Fabric(TM) architecture, today released financial results for the third quarter ended September 28, 2013.

Financial Highlights:

    --  Revenues for the third quarter of fiscal 2013 were $39.0 million,
        compared to $25.7 million in the third quarter of fiscal 2012,
        representing growth of 52% year-over-year.
    --  GAAP gross margins of 80% in the third fiscal quarter, in line with the
        third quarter of fiscal 2012.
    --  Non-GAAP gross margins of 81% in the third fiscal quarter, in line with
        the third quarter of fiscal 2012.
    --  GAAP net income for the third quarter of fiscal 2013 was $1.4 million,
        or $0.04 per diluted share, compared to GAAP net income of $1.1 million,
        or $0.06 per diluted share, in the third quarter of fiscal 2012.
    --  Non-GAAP net income for the third quarter of fiscal 2013 was $5.8
        million, or $0.18 per diluted share, compared to non-GAAP net income of
        $3.8 million, or $0.22 per diluted share, in the third quarter of fiscal
        2012.

“We are pleased with the results this quarter demonstrating our continued ability to execute,” said Paul Hooper, CEO of Gigamon. “During the quarter we added 86 new customers including 19 Fortune 1000 companies. We also received the largest order in the company’s history from a first time customer, indicating that visibility fabrics are increasingly being designed into major infrastructure projects. We are especially pleased with the performance of the GigaVUE HB-1, which experienced the fastest ramp of any Gigamon product since its launch in late June.”

Recent Business Highlights:

    --  Continued adoption of the GigaSMART platform in the third quarter, with
        approximately 40% of GigaVUE HB-1 customers purchasing one or more
        GigaSMART applications.
    --  Received the largest order in the Company's history from the U.S. Army.
    --  Launched an update to the Management Layer of the Company's patented
        Flow Mapping(®) technology that enables network services teams to
        deliver visibility across departmental silos within the IT organization.
    --  Hosted the Company's first Asia Pacific Partner conference in Bangkok,
        Thailand, which was attended by over 80 regional resellers and
        distributors.
    --  Announced a new Channel Onboarding and Education Program offering online
        training and certification modules for partner sales and pre-sales
        teams.
    --  Appointment of David Cox as Vice President of Operations.

Conference Call Information:

Gigamon will host an investor conference call and live webcast today at 5:00 p.m. ET (2:00 p.m. PT) to discuss its financial results for the third quarter ended September 28, 2013. To access the conference call, dial 877-941-8416, using conference code 4644738. Callers outside the U.S. and Canada should dial 480-629-9808, using conference code 4644738. A replay of the conference call will be available through Monday, November 11, 2013. To access the replay, please dial 800-406-7325 and enter pass code 4644738. Callers outside the U.S. and Canada should dial 303-590-3030 and enter pass code 4644738. The live webcast will be accessible on Gigamon’s investor relations website at http://investor.gigamon.com and will be archived and available on this site for twelve months.

Non-GAAP Financial Measurements

In addition to disclosing financial measures prepared in accordance with U.S. generally accepted accounting principles (GAAP), this press release and the accompanying tables contain certain non-GAAP financial measures. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similarly titled measures presented by other companies. Gigamon considers these non-GAAP financial measures to be 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 to be our core 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. Non-GAAP financial measures are presented for supplemental informational purposes only for 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, and may be different from non- GAAP financial measures presented by other companies. Please see the reconciliation of non-GAAP financial measures to the most directly comparable GAAP measure attached to this release.

Legal Notice Regarding Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements generally relate to future events or our future financial or operating performance. 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 our expectations, strategy, plans or intentions. Forward-looking statements in this press release include, but are not limited to, our expectations that the market for our products will continue to grow and develop; and our expectations regarding product developments and enhancements and adoption of those products by our customers. 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 our ability to continue to deliver and improve our products and successfully develop new products; customer acceptance and purchase of our existing products and new products; our ability to retain existing customers and generate new customers; the market for network traffic visibility solutions not continuing to develop; competition from other products and services; 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 Prospectus related to our public offering of common stock filed pursuant to Rule 424(b) under the Securities Act of 1933 (Registration No. 333-191581). The forward-looking statements in this press release are based on information available to Gigamon as of the date hereof, and Gigamon disclaims any obligation to update any forward-looking statements, except as required by law.

About the Visibility Fabric architecture

At Gigamon we realized that delivering the visibility essential to manage, analyze and secure the complex system that is the IT infrastructure requires a new approach. With millions of traffic flows across thousands of endpoints, visibility needs to be pervasive, intelligent and dynamic. Using our patented, unique technology, we created an innovative new approach for delivering this visibility called the Visibility Fabric architecture. This new approach is intelligent and versatile in its ability to enable visibility into the network. For more information visit http://www.gigamon.com/traffic-visibility-fabric.

About Gigamon

Gigamon provides an intelligent Visibility Fabric(TM) architecture for enterprises, data centers and service providers around the globe. Our technology empowers infrastructure architects, managers and operators with pervasive and dynamic intelligent visibility of traffic across both physical and virtual environments without affecting the performance or stability of the production network. Through patented technologies and centralized management, the Gigamon GigaVUE portfolio of high availability and high density products intelligently delivers the appropriate network traffic to management, analysis, compliance and security tools. With over eight years’ experience designing and building traffic visibility products in the US, Gigamon solutions are deployed globally across vertical markets including over half of the Fortune 100 and many government and federal agencies. www.gigamon.com


                                                                                    Gigamon Inc.

                                                                  Condensed Consolidated Statements of Operations

                                                                       (in thousands, except per share data)

                                                                                    (unaudited)

                                        Three Months Ended                    Nine Months Ended
                                        ------------------                    -----------------

                                           September 28,                        September 30,                     September 28,          September 30,

                                                             2013                                 2012                             2013                    2012
                                                             ----                                 ----                             ----                    ----

    Revenue:

       Product                                            $29,146                              $18,700                          $70,019                 $45,806

       Service                                              9,840                                6,994                           27,189                  19,057
                                                            -----                                -----                           ------                  ------

    Total
     revenue                                               38,986                               25,694                           97,208                  64,863

    Cost of
     revenue:

       Product                                              6,744                                4,524                           18,566                  11,975

       Service                                                993                                  557                            3,557                   1,502
                                                              ---                                  ---                            -----                   -----

    Cost of
     revenue
     (1), (2)                                               7,737                                5,081                           22,123                  13,477
                                                            -----                                -----                           ------                  ------

    Gross profit                                           31,249                               20,613                           75,085                  51,386

    Operating
     expenses:

       Research and
        development
        (1), (2)                                            8,958                                4,809                           31,726                  12,324

       Sales and
        marketing
        (1), (2)                                           15,485                                9,963                           54,020                  27,298

       General and
        administrative
        (1), (2)                                            4,696                                3,720                           20,893                   7,761

             Total
              operating
              expenses                                     29,139                               18,492                          106,639                  47,383
                                                           ------                               ------                          -------                  ------

    Income
     (loss) from
     operations                                             2,110                                2,121                          (31,554)                  4,003

    Other income
     (expense):

       Interest
        income                                                 32                                   55                               35                      61

       Other
        expense,
        net                                                   (52)                                 (17)                             (77)                    (50)
                                                              ---                                  ---                              ---                     ---

    Income
     (loss)
     before
     income
     taxes                                                  2,090                                2,159                          (31,596)                  4,014

    Income tax
     (expense)
     benefit (3)                                             (704)                                 (37)                          23,838                    (128)
                                                             ----                                  ---                           ------                    ----

    Net income
     (loss)                                                 1,386                                2,122                           (7,758)                  3,886
                                                            =====                                =====                           ======                   =====

    Accretion of
     preferred
     stock                                                      -                                 (564)                          (1,088)                 (1,661)

    (Earnings)
     loss
     attributable
     to
     preferred
     stock
     holders                                                    -                                 (497)                           1,107                    (710)

    Net income
     (loss) to
     common
     stock
     holders                                               $1,386                               $1,061                          $(7,739)                 $1,515
                                                           ======                               ======                          =======                  ======

    Net income (loss) per share attributable to
     common stock holders:

          Basic                                             $0.04                                $0.06                           $(0.34)                  $0.09
                                                            =====                                =====                           ======                   =====

          Diluted                                           $0.04                                $0.06                           $(0.34)                  $0.09
                                                            =====                                =====                           ======                   =====

    Weighted-
     average
     number of
     shares used
     in per
     share
     amounts:

          Basic                                            30,933                               17,300                           22,529                  17,300
                                                           ======                               ======                           ======                  ======

          Diluted                                          32,554                               17,307                           22,529                  17,300
                                                           ======                               ======                           ======                  ======

    (1) Includes
     stock-
     based
     compensation
     expenses,
     as follows:

       Cost of
        revenue                                              $340                                 $132                           $3,049                    $134

       Research and
        development                                         2,468                                  328                            8,846                     360

       Sales and
        marketing                                           2,735                                  473                            8,427                     559

       General and
        administrative                                      1,524                                  760                            5,035                   1,276

             Total stock-
              based
              compensation
              expenses                                     $7,067                               $1,693                          $25,357                  $2,329
                                                           ======                               ======                          =======                  ======

    (2) Includes
     performance
     unit plan
     compensation
     expenses,
     as follows:

       Cost of
        revenue                              $                  -                 $                  -                             $353          $            -

       Research and
        development                                             -                                    -                            5,188                       -

       Sales and
        marketing                                               -                                    -                            7,991                       -

       General and
        administrative                                          -                                    -                            6,839                       -

             Total
              performance
              unit plan
              compensation
              expenses                       $                  -                 $                  -                          $20,371          $            -
                                             ====================                 ====================                          =======          ==============

    (3) Includes
     tax benefit
     upon
     conversion
     of LLC to a
     C
     Corporation
     on May 31,
     2013                                    $                  -                 $                  -                          $14,811          $            -


                                        Gigamon Inc.

                           Condensed Consolidated Balance Sheets

                                       (in thousands)

                                        (unaudited)

                                         September 28,           December 31,

                                                       2013                   2012
                                                       ----                   ----

    Assets

    Current assets:

         Cash and
          cash
          equivalents                               $65,057                $18,675

         Short-
          term
          investments                                40,347                      -

         Accounts
          receivable,
          net                                        27,035                 20,677

         Inventories                                  1,247                  3,736

         Deferred
          income
          tax asset                                   4,447                      -

         Prepaid
          expenses
          and other
          current
          assets                                      5,357                  3,407
                                                      -----                  -----

              Total
               current
               assets                               143,490                 46,495

         Property
          and
          equipment,
          net                                         3,541                  2,686

         Deferred
          income
          tax
          asset,
          non-
          current                                    19,535                      -

         Other
          assets                                        574                  2,316
                                                        ---                  -----

                   Total
                    assets                         $167,140                $51,497
                                                   ========                =======

    Liabilities and Stockholders'
     Equity (Deficit)

    Current liabilities:

         Accounts
          payable                                    $1,477                 $3,221

         Accrued
          and other
          current
          liabilities                                17,745                 18,710

         Deferred
          revenue                                    32,240                 23,917
                                                     ------                 ------

              Total
               current
               liabilities                           51,462                 45,848

    Deferred
     revenue,
     non-
     current                                          8,705                  6,903

    Other
     liabilities                                        274                    447

    Commitments and contingencies

    Series A
     preferred
     stock                                                -                 28,344

    Stockholders' equity (deficit):

    Common
     stock                                                3                  1,625

    Treasury
     stock                                          (12,469)               (12,469)

    Additional
     paid in
     capital                                        126,310                  1,522

     Accumulated
     other
     comprehensive
     income                                               5                      -

     Accumulated
     deficit                                         (7,150)               (20,723)

              Total
               stockholders'
               equity
               (deficit)                            106,699                (30,045)
                                                    -------                -------

                    Total
                     liabilities,
                     preferred
                     stock and
                     stockholders'
                     equity
                     (deficit)                     $167,140                $51,497
                                                   ========                =======


                                                                                    Gigamon Inc.

                                                                  Condensed Consolidated Statements of Cash Flows

                                                                                   (in thousands)

                                                                                    (unaudited)

                                        Three Months Ended                    Nine Months Ended
                                        ------------------                    -----------------

                                           September 28,                        September 30,                     September 28,          September 30,

                                                             2013                                 2012                             2013                   2012
                                                             ----                                 ----                             ----                   ----

    Operating activities:

    Net income
     (loss)                                                $1,386                               $2,122                          $(7,758)                $3,886

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

         Depreciation
          and
          amortization                                        766                                  340                            1,964                    878

         Stock-based
          compensation
          expense                                           7,067                                1,693                           25,357                  2,329

         Deferred
          income
          taxes                                               603                                    -                          (23,982)                     -

         Inventory
          (recovery)
          write-offs                                         (242)                                 205                             (382)                 1,587

         Loss on
          disposal of
          fixed
          assets                                                -                                   51                               14                     51

         Changes in operating assets and liabilities:

            Accounts
             receivable,
             net                                           (9,127)                                 318                           (6,358)                 5,078

            Inventories                                     2,555                                1,624                            4,207                  1,976

            Prepaid
             expenses
             and other
             assets                                        (2,499)                                 698                           (2,269)                 1,382

            Accounts
             payable                                       (1,558)                                 170                           (1,643)                (1,118)

            Accrued and
             other
             liabilities                                  (17,515)                                 999                            1,770                  4,943

            Deferred
             revenue                                        4,644                                2,783                           10,125                  4,893
                                                            -----                                -----                           ------                  -----

                Net cash
                 (used in)
                 provided by
                 operating
                 activities                               (13,920)                              11,003                            1,045                 25,885

    Investing activities:

         Purchases of
          available-
          for-sale
          investments                                     (40,342)                                   -                          (40,342)                     -

         Purchases of
          property
          and
          equipment                                          (626)                                (265)                          (2,826)                (1,505)
                                                             ----                                 ----                           ------                 ------

                Net cash
                 used in
                 investing
                 activities                               (40,968)                                (265)                         (43,168)                (1,505)

    Financing activities:

         (Offering
          costs for)
          proceeds
          from
          initial
          public
          offering,
          net                                              (1,677)                                (572)                          95,391                   (572)

         Proceeds
          from
          exercise of
          stock
          options                                             100                                    -                              111                      -

         Distribution
          of income to
          LLC members                                           -                               (5,760)                          (6,997)               (13,200)
                                                              ---                               ------                           ------                -------

                Net cash
                 (used in)
                 provided by
                 financing
                 activities                                (1,577)                              (6,332)                          88,505                (13,772)

         Net
          (decrease)
          increase in
          cash and
          cash
          equivalents                                     (56,465)                               4,406                           46,382                 10,608

         Cash and
          cash
          equivalents
          at
          beginning
          of period                                       121,522                               19,304                           18,675                 13,102
                                                          -------                               ------                           ------                 ------

         Cash and
          cash
          equivalents
          at end of
          period                                          $65,057                              $23,710                          $65,057                $23,710
                                                          =======                              =======                          =======                =======


                                                                                          Gigamon Inc.

                                                                          Reconciliation of Non-GAAP Financial Measures

                                                                              (in thousands, except per share data)

                                                                                           (unaudited)

                                        Three Months Ended                            Nine Months Ended
                                        ------------------                            -----------------

                                           September 28,                                September 30,                         September 28,                  September 30,

                                                              2013                                              2012                            2013                          2012
                                                              ----                                              ----                            ----                          ----

    Reconciliation
     of Gross
     Profit and
     Gross Margin
     on a GAAP
     Basis to Gross
     Profit and
     Gross Margin
     on a Non-GAAP
     Basis:

    Gross profit on
     a GAAP basis                                          $31,249                                           $20,613                         $75,085                       $51,386

        Stock-based
         compensation
         expense             340                                     132                                               3,049                            134

        Performance
         unit plan
         compensation
         expense                                                -                                                 -                             353                             -

    Gross profit on
     a Non-GAAP
     basis                                                 $31,589                                           $20,745                         $78,487                       $51,520
                                                           =======                                           =======                         =======                       =======

    Revenue                                                $38,986                                           $25,694                         $97,208                       $64,863

        Gross margin on
         a GAAP basis         80%                                     80%                                                 77%                            79%

        Gross margin on
         a Non-GAAP
         basis                81%                                     81%                                                 81%                            79%

    Reconciliation
     of Operating         Basis:
     Income (Loss)
     and Operating
     Margin on a
     GAAP Basis to
     Operating
     Income and
     Operating
     Margin on a
     Non-GAAP

    Operating
     (loss) income
     on a GAAP
     basis                                                  $2,110                                            $2,121                        $(31,554)                       $4,003

        Stock-based
         compensation
         expense           7,067                                   1,693                                              25,357                          2,329

        Performance
         unit plan
         compensation
         expense                                                -                                                 -                          20,371                             -

    Operating
     income on a
     Non-GAAP
     basis                                                  $9,177                                            $3,814                         $14,174                        $6,332
                                                            ======                                            ======                         =======                        ======

        Operating
         margin on a
         GAAP basis            5%                                      8%                                                -32%                             6%

        Operating
         margin on a
         Non-GAAP
         basis                24%                                     15%                                                 15%                            10%

    Reconciliation
     of Net Income        Stockholders
     (Loss)               on a Non-GAAP
     Attributable         Basis:
     To Common
     Stockholders
     on a GAAP
     Basis to Net
     Income
     Attributable
     To Common

    Net income
     (loss)
     attributable
     to common
     stock holders
     on a GAAP
     basis                                                  $1,386                                            $1,061                         $(7,739)                       $1,515

         Accretion of
          preferred
          stock                                                 -                                               564                           1,088                         1,661

         Earnings (loss)
          attributable
          to preferred
          stock holders                                         -                                               497                          (1,107)                          710

       Stock-based
        compensation
        expense            7,067                                   1,693                                              25,357                          2,329

        Performance
         unit plan
         compensation
         expense                                                -                                                 -                          20,371                             -

        Tax benefit
         upon
         conversion of
         LLC to a C
         Corporation                                            -                                                 -                          14,811                             -

        Income tax
         effect of Non-
         GAAP
         adjustments     (2,670)                                                                                  -                         (42,967)                            -

    Net income on a
     Non-GAAP
     basis                                                  $5,783                                            $3,815                          $9,814                        $6,215
                                                            ======                                            ======                          ======                        ======


                                                                                                Gigamon Inc.

                                                                          Reconciliation of Non-GAAP Financial Measures (continued)

                                                                                    (in thousands, except per share data)

                                                                                                 (unaudited)

                                                        Three Months Ended                         Nine Months Ended
                                                        ------------------                         -----------------

                                                           September 28,                             September 30,                             September 28,                             September 30,

                                                                             2013                                      2012                                      2013                                      2012
                                                                             ----                                      ----                                      ----                                      ----

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

    Diluted net income (loss) per
     share on a GAAP basis                                                  $0.04                                     $0.06                                    $(0.34)                                    $0.09

         Accretion of preferred stock                                          -                                      0.03                                      0.05                                      0.10

         Earnings (loss) attributable
          to preferred stock holders                                           -                                      0.03                                     (0.05)                                     0.04

        Stock-based compensation
         expense                           0.22                                      0.10                                      1.13                                      0.13

        Performance unit plan
         compensation expense                                                  -                                         -                                      0.90                                         -

         Tax benefit upon conversion of
          LLC to a C corporation                                               -                                         -                                      0.66                                         -

         Income tax effect on non-GAAP
          adjustments                    (0.08)                                                                          -                                     (1.91)                                        -

         Impact of difference in number
          of GAAP and non-GAAP diluted
          shares                                                               -                                         -                                     (0.10)                                        -

    Diluted net income per share
     on a Non-GAAP basis                                                    $0.18                                     $0.22                                     $0.34                                     $0.36
                                                                            =====                                     =====                                     =====                                     =====

    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                    32,554                                    17,307                                    22,529                                    17,300

        Dilutive impact due to stock
         options, restricted stock
         units and employee stock
         purchase plan purchase rights

      223                                   234                                     6,288                                       122

    Non-GAAP diluted weighted-
     average number of shares            32,777                                    17,541                                    28,817                                    17,422
                                         ======                                    ======                                    ======                                    ======


                                                                                                                                                                            Condensed Non-GAAP Consolidated Income Statements

                                                                                                                                                                      Impact of Non-GAAP Adjustments on Reported Net Income (Loss)

                                                                                                                                                              For the Three and Nine Months Ended September 28, 2013 and September 30, 2012

                                                                                                                                                                                (In thousands, except per share amounts)

                                                                                                                                                                                               (unaudited)

                                                                      Three Months Ended September 28,                       Three Months Ended September 30,                             Nine Months Ended September                               Nine Months Ended September 30,
                                                                                   2013                                                  2012                                                  28, 2013                                                        2012
                                                                     --------------------------------                      --------------------------------                             ---------------------------                               --------------------------------

                                                                             As Reported               Adjustments                   Non-GAAP                 As Reported                     Adjustments                      Non-GAAP                     As Reported             Adjustments          Non-GAAP        As Reported          Adjustments         Non-GAAP
                                                                             -----------               -----------                   --------                 -----------                     -----------                      --------                     -----------             -----------          --------        -----------          -----------         --------

    Revenue:

        Product                                                                          $29,146        $               -                      $29,146                    $18,700              $                -                        $18,700                        $70,019          $            -         $70,019              $45,806    $              -           $45,806

        Service                                                                            9,840                        -                        9,840                      6,994                               -                          6,994                         27,189                       -          27,189               19,057                   -            19,057
                                                                                           -----                      ---                        -----                      -----                             ---                          -----                         ------                     ---          ------               ------                 ---            ------

    Total revenue                                                                         38,986                        -                       38,986                     25,694                               -                         25,694                         97,208                       -          97,208               64,863                   -            64,863

    Cost of revenue:

        Product (1), (2)                                                                   6,744                     (129)                       6,615                      4,524                             (33)                         4,491                         18,566                  (2,093)         16,473               11,975                 (35)           11,940

        Service (1), (2)                                                                     993                     (211)                         782                        557                             (99)                           458                          3,557                  (1,309)          2,248                1,502                 (99)            1,403
                                                                                             ---                     ----                          ---                        ---                             ---                            ---                          -----                  ------           -----                -----                 ---             -----

    Cost of revenue                                                                        7,737                     (340)                       7,397                      5,081                            (132)                         4,949                         22,123                  (3,402)         18,721               13,477                (134)           13,343
                                                                                           -----                     ----                        -----                      -----                            ----                          -----                         ------                  ------          ------               ------                ----            ------

    Gross profit                                                                          31,249                      340                       31,589                     20,613                             132                         20,745                         75,085                   3,402          78,487               51,386                 134            51,520
                                                                                          ------                      ---                       ------                     ------                             ---                         ------                         ------                   -----          ------               ------                 ---            ------

    Product Gross Margin                                                                      77%                                                   77%                        76%                                                            76%                            73%                                     76%                  74%                                   74%

    Service Gross Margin                                                                      90%                                                   92%                        92%                                                            93%                            87%                                     92%                  92%                                   93%

    Total Gross Margin                                                                        80%                                                   81%                        80%                                                            81%                            77%                                     81%                  79%                                   79%

    Operating expenses:

         Research and development (1), (2)                                                 8,958                   (2,468)                       6,490                      4,809                            (328)                         4,481                         31,726                 (14,034)         17,692               12,324                (360)           11,964

         Sales and marketing (1), (2)                                                     15,485                   (2,735)                      12,750                      9,963                            (473)                         9,490                         54,020                 (16,418)         37,602               27,298                (559)           26,739

         General and administrative (1), (2)                                               4,696                   (1,524)                       3,172                      3,720                            (760)                         2,960                         20,893                 (11,874)          9,019                7,761              (1,276)            6,485

              Total operating expenses                                                    29,139                   (6,727)                      22,412                     18,492                          (1,561)                        16,931                        106,639                 (42,326)         64,313               47,383              (2,195)           45,188
                                                                                          ------                   ------                       ------                     ------                          ------                         ------                        -------                 -------          ------               ------              ------            ------

    Income (loss) from operations                                                          2,110                    7,067                        9,177                      2,121                           1,693                          3,814                        (31,554)                 45,728          14,174                4,003               2,329             6,332
                                                                                           -----                    -----                        -----                      -----                           -----                          -----                        -------                  ------          ------                -----               -----             -----

    Other income (expense):

         Interest income                                                                      32                        -                           32                         55                               -                             55                             35                       -              35                   61                   -                61

         Other expense, net                                                                  (52)                       -                          (52)                       (17)                              -                            (17)                           (77)                      -             (77)                 (50)                  -               (50)
                                                                                             ---                      ---                          ---                        ---                             ---                            ---                            ---                     ---             ---                  ---                 ---               ---

    Income (Loss) before income taxes                                                      2,090                    7,067                        9,157                      2,159                           1,693                          3,852                        (31,596)                 45,728          14,132                4,014               2,329             6,343

    Income tax (expense) benefit (3), (4)                                                   (704)                  (2,670)                      (3,374)                       (37)                              -                            (37)                        23,838                 (28,156)         (4,318)                (128)                  -              (128)
                                                                                            ----                   ------                       ------                        ---                             ---                            ---                         ------                 -------          ------                 ----                 ---              ----

    Net income (loss)                                                                      1,386                    4,397                        5,783                      2,122                           1,693                          3,815                         (7,758)                 17,572           9,814                3,886               2,329             6,215
                                                                                           =====                    =====                        =====                      =====                           =====                          =====                         ======                  ======           =====                =====               =====             =====

    Accretion of preferred stock                                                               -                        -                            -                       (564)                            564                              -                         (1,088)                  1,088               -               (1,661)              1,661                 -

    Loss (earnings) attributable to preferred stock holders                                    -                        -                            -                       (497)                            497                              -                          1,107                  (1,107)              -                 (710)                710                 -

    Net income (loss) to common stock holders                                             $1,386                   $4,397                       $5,783                     $1,061                          $2,754                         $3,815                        $(7,739)                $17,553          $9,814               $1,515              $4,700            $6,215
                                                                                          ======                   ======                       ======                     ======                          ======                         ======                        =======                 =======          ======               ======              ======            ======

    Net income (loss) per share attributable to common stockholders:

       Basic                                                                               $0.04                    $0.15                        $0.19                      $0.06                           $0.16                          $0.22                         $(0.34)                  $0.78           $0.44                $0.09               $0.27             $0.36
                                                                                           =====                    =====                        =====                      =====                           =====                          =====                         ======                   =====           =====                =====               =====             =====

       Diluted                                                                             $0.04                    $0.14                        $0.18                      $0.06                           $0.16                          $0.22                         $(0.34)                  $0.68           $0.34                $0.09               $0.27             $0.36
                                                                                           =====                    =====                        =====                      =====                           =====                          =====                         ======                   =====           =====                =====               =====             =====

    Weighted-average number of shares used in per share amounts:

       Basic                                                                              30,933                        -                       30,933                     17,300                               -                         17,300                         22,529                       -          22,529               17,300                   -            17,300
                                                                                          ======                      ===                       ======                     ======                             ===                         ======                         ======                     ===          ======               ======                 ===            ======

       Diluted                                                                            32,554                      223                       32,777                     17,307                             234                         17,541                         22,529                   6,288          28,817               17,300                 122            17,422
                                                                                          ======                      ===                       ======                     ======                             ===                         ======                         ======                   =====          ======               ======                 ===            ======


    Notes:

    (1) Includes stock-based
     compensation in the three and
     nine months ended September
     28, 2013 and September 30,
     2012.

    (2) Includes performance unit
     plan compensation related
     expenses in the nine months
     ended September 28, 2013.

    (3) Amount for the nine months
     ended September 28, 2013
     includes tax benefit upon
     conversion from an LLC to a C
     Corporation on May 31, 2013.

    (4) Includes income tax effect
     on non-GAAP adjustments for
     the three and nine months
     ended September 28, 2013.

    Generally, a non-GAAP
     financial measure is a
     numerical measure of a
     company's performance,
     financial position or cash
     flows that either excludes or
     includes amounts that are not
     normally excluded or included
     in the most directly
     comparable measure calculated
     and presented in accordance
     with generally accepted
     accounting principles in the
     United States of America, or
     GAAP. Non-GAAP financial
     measures should not be
     considered as a substitute
     for, or superior to, measures
     of financial performance
     prepared in accordance with
     GAAP. These non-GAAP
     financial measures do not
     reflect a comprehensive
     system of accounting, differ
     from GAAP measures with the
     same captions and may differ
     from non-GAAP financial
     measures with the same or
     similar captions that are
     used by other companies.

    Gigamon's management uses the
     non-GAAP financial measures
     to gain an understanding of
     Gigamon's comparative
     operating performance and
     future prospects, and
     utilizes these measures in
     its internal financial
     statements for purposes of
     its internal budgets and
     financial goals. Management
     also believes that the
     exclusion of the non-GAAP
     items provides an additional
     measure of the company's
     operating results and
     facilitates comparisons of
     the company's core operating
     performance against prior
     periods and business model
     objectives. Management
     believes that investors
     should have access to the
     same set of tools that
     management uses to analyze
     Gigamon's results. These non-
     GAAP measures should be
     considered in addition to
     results prepared in
     accordance with GAAP, but
     should not be considered a
     substitute for or superior to
     GAAP. Gigamon endeavors to
     compensate for the limitation
     of the non-GAAP measures
     presented by also providing
     the most directly comparable
     GAAP measures and
     descriptions of the
     reconciling items and
     adjustments to derive the
     non-GAAP measures.

    For periods presented:
    - Non-GAAP gross margin is
     calculated as non-GAAP gross
     profit divided by GAAP
     revenue. Non-GAAP gross
     profit consists of GAAP gross
     profit excluding the effects
     of stock-based compensation
     expense and any performance
     unit plan compensation.
    - Non-GAAP operating margin
     is calculated as non-GAAP
     income (loss) from operations
     divided by GAAP revenue. Non-
     GAAP income (loss) from
     operations consists of GAAP
     income (loss) from operations
     excluding the effects of
     stock-based compensation
     expense and any performance
     unit compensation expenses.
    - Non-GAAP net income is
     calculated as GAAP net income
     (loss) excluding the effects
     of stock-based compensation
     expense and tax provision
     adjustments related to non-
     GAAP income. For the nine
     months ended September 28,
     2013, non-GAAP net income
     also excludes the effects of
     performance unit plan
     compensation, and a tax
     benefit for the conversion of
     LLC to C Corporation.
    - Non-GAAP net income per
     diluted share is calculated
     as non-GAAP net income
     divided by non-GAAP weighted
     average diluted shares
     outstanding for the three and
     nine months ended September
     28, 2013 and September 30,
     2012. Non-GAAP weighted-
     average diluted shares
     outstanding is calculated as
     GAAP weighted-average
     diluted shares outstanding
     including the dilutive impact
     due to stock options,
     employee stock purchase
     plan's purchase rights and
     restricted stock units.

SOURCE Gigamon


Source: PR Newswire