24 unchanged sentences
The information required by this Item 13 will be included, as applicable, under the captions "Corporate Governance --Director Independence," "Compensation and Other Information Concerning Directors and Executive Officers -- Employment and Other Agreements" and "Transactions with Related Persons" in our definitive Proxy Statement with respect to our 2021 Annual Meeting of Stockholders to be filed with the SEC not later than 120 days after the end of the fiscal year covered by this Annual Report and is incorporated herein by reference.
−Removed: Principal Accounting Fees and Services
+Added: Principal Accountant Fees and Services
The information required by this Item 14 will be included under the captions "Auditors Fees and Services" and "Auditors Fees and Services -- Policy on Audit Committee Pre-approval of Audit and Non-Audit Services" in our definitive Proxy Statement with respect to our 2021 Annual Meeting of Stockholders to be filed with the SEC not later than 120 days after the end of the fiscal year covered by this Annual Report and is incorporated herein by reference.
−Removed: Exhibits, Financial Statement Schedules
+Added: Exhibits and Financial Statement Schedules
Consolidated Financial Statements.
20 unchanged sentences
000-26251, filed on June 29, 2001, and incorporated herein by reference).
−Removed: Description of Common Stock (filed herewith).
+Added: Description of Common Stock (filed as Exhibit 4.4 to NetScout's Annual Report on Form 10-K for the fiscal year ended March 31, 2020, SEC File No.
+Added: 000-26251, filed on May 20, 2020 and incorporated herein by reference).
Form of Amended and Restated Indemnification Agreement between NetScout and each director and executive officer filed as Exhibit 10.1 to NetScout's Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2013, SEC File No.
46 unchanged sentences
and the lenders party thereto (filed as Exhibit 10.5 to NetScout’s current report on Form 8-K, SEC File No.
−Removed: 000-26251, filed with the SEC on January 18, 2018 and incorporated by reference herein.
+Added: 000-26251, filed with the SEC on January 18, 2018 and incorporated herein by reference.
Summary of Non-Employee Director Compensation (filed as Exhibit 10.1 to NetScout's Quarterly Report on Form 10Q for the quarterly period ended September 30, 2018, SEC File No.
000-26251, filed on November 8, 2018 and incorporated herein by reference.
+Added: NetScout Systems, Inc.
+Added: 2019 Equity Incentive Plan, as amended and restated (filed as Exhibit 99.1 to NetScout’s Registration Statement on Form S-8, SEC File No.
+Added: 333-248786, filed on September 14, 2020 and incorporated herein by reference).
+Added: Form of Restricted Stock Unit Agreement with respect to the NetScout Systems, Inc.
+Added: 2019 Equity Incentive Plan (filed as Exhibit 10.1 to NetScout’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2019, SEC File No.
+Added: 000-26251, filed on February 6, 2020 and incorporated herein by reference).
Subsidiaries of NetScout (filed herewith).
4 unchanged sentences
Certification Pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 (furnished herewith).
−Removed: 101.INS** XBRL Instance Document.
+Added: 101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document.
3 unchanged sentences
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document.
−Removed: 104 The cover page from the Company's Annual Report on Form 10-K for the year ended March 31, 2020 formatted in Inline XBRL
+Added: 104 The cover page from the Company's Annual Report on Form 10-K for the fiscal year ended March 31, 2021 formatted in Inline XBRL
* Indicates a management contract or compensatory plan or arrangement.
−Removed: ** XBRL (Extensible Business Reporting Language) information is furnished and not filed or a part of a registration statement or prospectus for purposes of sections 11 or 12 of the Securities Act of 1933, as amended, is deemed not filed for purposes of section 18 of the Securities Exchange Act of 1934, as amended, and otherwise is not subject to liability under these sections.
† Exhibit has been furnished, is not deemed filed and is not to be incorporated by reference into any of the Company's filings under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, irrespective of any general incorporation language contained in any such filing
47 unchanged sentences
Report of Independent Registered Public Accounting Firm
−Removed: To the Board of Directors and Stockholders of NetScout Systems, Inc.:
+Added: To the Board of Directors and Shareholders of NetScout Systems, Inc.:
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of NetScout Systems, Inc.
−Removed: and its subsidiaries (the “Company”) as of March 31, 2020 and 2019, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the three years in the period ended March 31, 2020, including the related notes and financial statement schedule listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).
+Added: and its subsidiaries (the “Company”) as of March 31, 2021 and 2020, and the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity and cash flows for each of the three years in the period ended March 31, 2021, including the related notes and schedule of valuation and qualifying accounts listed in the index appearing under Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).
We also have audited the Company's internal control over financial reporting as of March 31, 2021, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
2 unchanged sentences
Changes in Accounting Principles
−Removed: As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in fiscal year 2020 and the manner in which it accounts for revenues from contracts with customers in fiscal year 2019.
+Added: As discussed in Notes 1 and 3 to the consolidated financial statements, the Company changed the manner in which it accounts for leases in 2020 and the manner in which it accounts for revenues from contracts with customers in 2019.
Basis for Opinions
−Removed: The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Report on Internal Control Over Financial Reporting appearing under Item 9A.
+Added: The Company's management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 9A.
Our responsibility is to express opinions on the Company’s consolidated financial statements and on the Company's internal control over financial reporting based on our audits.
11 unchanged sentences
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.
−Removed: A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and
−Removed: dispositions of the assets of the company;
+Added: A company’s internal control over financial reporting includes those policies and procedures
+Added: that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;
(ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;
3 unchanged sentences
Critical Audit Matters
−Removed: The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
−Removed: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.
+Added: The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.
+Added: The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Revenue from Contracts with Customers - Identification of Distinct Performance Obligations
3 unchanged sentences
During the year ended March 31, 2021, the Company recognized revenue from contracts with customers of $831.3 million.
−Removed: The principal considerations for our determination that performing procedures relating to revenue from contracts with customers, specifically the identification of distinct performance obligations, is a critical audit matter are there was significant judgment by management in determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation.
−Removed: This in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating management’s identification of distinct performance obligations.
+Added: The principal considerations for our determination that performing procedures relating to revenue from contracts with customers, specifically the identification of distinct performance obligations, is a critical audit matter are the significant judgment by management in determining whether the products and services are considered distinct performance obligations that should be accounted for separately or as one combined performance obligation, which in turn led to a high degree of auditor judgment, subjectivity and effort in performing procedures to evaluate management’s identification of distinct performance obligations.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
These procedures included testing the effectiveness of controls relating to the revenue recognition process, including controls over the identification of distinct performance obligations.
−Removed: These procedures also included, among others, testing management’s process for identifying distinct performance obligations and evaluating the revenue recognition impact of contractual terms and conditions by examining customer contracts on a test basis.
−Removed: Goodwill Impairment Assessment
−Removed: As described in Note 9 to the consolidated financial statements, the Company’s consolidated goodwill balance was $1.7 billion as of March 31, 2020.
−Removed: Management assesses goodwill for impairment at the reporting unit level at least annually, as of January 31, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the Company’s reporting unit below its carrying value.
−Removed: Management determined the fair value of the reporting unit by preparing a discounted cash flow analysis using forward looking projections of the reporting unit’s future operating results and by comparing the value of the reporting unit to the implied market value of selected peers.
−Removed: The assumptions used in the discounted cash flow analysis include:
−Removed: projected revenues, selling margins, and other operating expenditures, as well as a discount rate, which is essentially equal to the "market participant" weighted-average cost of capital (WACC).
−Removed: The principal considerations for our determination that performing procedures relating to the goodwill
−Removed: impairment assessment is a critical audit matter are there was significant judgment by management when developing the fair value measurement of the reporting unit, which in turn led to a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating evidence related to management’s assumptions, specifically the assumptions related to projected revenues and other operating expenditures.
−Removed: In addition, the audit effort involved the use of professionals with specialized skills and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.
−Removed: Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.
−Removed: These procedures included testing the effectiveness of controls relating to management’s goodwill impairment assessment, including controls over the determination of the fair value measurement of the Company’s reporting unit.
−Removed: These procedures also included, among others (i) testing management’s process for developing the fair value measurement of the reporting unit and evaluating the appropriateness of the discounted cash flow analysis, (ii) evaluating the assumptions used by management in developing the fair value measurement, including projected revenues and other operating expenditures, and (iii) testing the completeness and accuracy of the underlying data used by management to develop their estimates.
−Removed: Evaluating management’s assumptions related to projected revenues and other operating expenditures involved evaluating whether the assumptions used were reasonable considering the current and historical performance of the business and whether these assumptions were consistent with evidence obtained in other areas of the audit as well as external market and industry data.
−Removed: Professionals with specialized skills and knowledge were used to assist in evaluating the appropriateness of management’s discounted cash flow analysis.
+Added: These procedures also included, among others, (i) testing management’s process for identifying distinct performance obligations, and (ii) evaluating the revenue recognition impact of contractual terms and conditions by examining customer contracts on a test basis.
/s/ PricewaterhouseCoopers LLP
47 unchanged sentences
Additional paid-in capital 2,955,400 2,891,553
−Removed: Accumulated other comprehensive income (loss) ( 3,160 ) ( 2,639 )
+Added: Accumulated other comprehensive loss ( 1,940 ) ( 3,160 )
Treasury stock at cost, 50,446,359 and 49,785,171 shares at March 31, 2021 and 2020, respectively
7 unchanged sentences
(In thousands, except per share data)
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
17 unchanged sentences
Income (loss) from operations 37,130 17,638 ( 71,580 )
−Removed: Interest and other income (expense), net:
+Added: Interest and other expense, net:
Interest income 646 4,528 5,245
14 unchanged sentences
(In thousands)
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
2 unchanged sentences
Cumulative translation adjustments 2,926 ( 1,644 ) ( 3,229 )
−Removed: Recognition of actuarial net gain (loss) from pension and other post-retirement plans, net of taxes (benefit) of $ 590 , ($ 976 ), and $ 435
+Added: Recognition of actuarial net (losses) gains from pension and other post-retirement plans, net of (benefit) tax of ($ 657 ), $ 590 , and ($ 976 )
( 1,548 ) 1,054 ( 2,278 )
Changes in market value of investments:
−Removed: Changes in unrealized gains (losses), net of taxes of $ 39 , $ 19 , and $ 15
+Added: Changes in unrealized (losses) gains, net of (benefit) tax of ($ 41 ), $ 39 , and $ 19
+Added: ( 130 ) 126 60
Total net change in market value of investments
+Added: ( 130 ) 126 60
Changes in market value of derivatives:
−Removed: Changes in market value of derivatives, net of (benefits) tax of ($ 25 ), ($ 172 ), and $ 267
+Added: Changes in market value of derivatives, net of tax (benefit) of $ 66 , ($ 25 ), and ($ 172 )
208 ( 78 ) ( 524 )
−Removed: Reclassification adjustment for net gains (losses) included in net income (loss), net of taxes (benefit) of $ 7 , $ 138 , and ($ 219 )
+Added: Reclassification adjustment for net (loss) gain included in net income (loss), net of (benefit) tax of ($ 73 ), $ 7 , and $ 138
( 236 ) 21 437
15 unchanged sentences
Balance, March 31, 2018 117,744,913 $ 117 $ 2,665,120 $ 2,895 37,474,890 $ ( 995,843 ) $ 396,493 $ 2,068,782
−Removed: Net income 79,812 79,812
−Removed: Unrealized net investment losses ( 6 ) ( 6 )
−Removed: Unrealized net gains on derivative financial instruments 131 131
+Added: Net loss ( 73,324 ) ( 73,324 )
+Added: Unrealized net investment gains 60 60
+Added: Unrealized net losses on derivative financial instruments ( 87 ) ( 87 )
Cumulative translation adjustments ( 3,229 ) ( 3,229 )
−Removed: Recognition of actuarial net gains from pension and other post-retirement plan 1,353 1,353
+Added: Recognition of actuarial net losses from pension and other post-retirement plan ( 2,278 ) ( 2,278 )
Issuance of common stock pursuant to vesting of restricted stock units 1,438,219 3 3
2 unchanged sentences
Repurchase of treasury stock 96,783 4,674,881 ( 123,220 ) ( 26,437 )
+Added: Cumulative effect of adoption of ASU 2014-09 34,924 34,924
Balance, March 31, 2019 119,760,132 120 2,828,922 ( 2,639 ) 42,149,771 ( 1,119,063 ) 358,093 2,065,433
3 unchanged sentences
Cumulative translation adjustments ( 1,644 ) ( 1,644 )
−Removed: Recognition of actuarial net losses from pension and other post-retirement plan ( 2,278 ) ( 2,278 )
+Added: Recognition of actuarial net gains from pension and other post-retirement plan 1,054 1,054
Issuance of common stock pursuant to vesting of restricted stock units 1,651,284 2 2
2 unchanged sentences
Repurchase of treasury stock 7,635,400 ( 186,872 ) ( 186,872 )
−Removed: Cumulative effect of adoption of ASU 2014-09 34,924 34,924
Balance, March 31, 2020 122,006,077 122 2,891,553 ( 3,160 ) 49,785,171 ( 1,305,935 ) 355,339 1,937,919
−Removed: Net loss ( 2,754 ) ( 2,754 )
−Removed: Unrealized net investment gains 126 126
+Added: Net income 19,352 19,352
+Added: Unrealized net investment losses ( 130 ) ( 130 )
Unrealized net losses on derivative financial instruments ( 28 ) ( 28 )
Cumulative translation adjustments 2,926 2,926
−Removed: Recognition of actuarial net gains from pension and other post-retirement plan 1,054 1,054
+Added: Recognition of actuarial net losses from pension and other post-retirement plan ( 1,548 ) ( 1,548 )
Issuance of common stock pursuant to vesting of restricted stock units 1,630,228 2 2
7 unchanged sentences
(In thousands)
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
12 unchanged sentences
Deferred income taxes ( 23,804 ) ( 9,821 ) ( 33,442 )
−Removed: Other (gains) losses ( 152 ) ( 152 ) 18
+Added: Other gains ( 196 ) ( 152 ) ( 152 )
Changes in assets and liabilities
17 unchanged sentences
Acquisition of businesses, net of cash acquired — ( 11,347 ) —
−Removed: Increase in deposits ( 31 ) ( 97 ) ( 330 )
−Removed: Contingent purchase consideration — — 523
+Added: Decrease (increase) in deposits 88 ( 31 ) ( 97 )
Collection of contingent consideration — 52 —
Capitalized software development costs — — ( 134 )
−Removed: Net cash (used in) provided by investing activities ( 4,309 ) ( 26,252 ) 57,128
+Added: Net cash provided by (used in) investing activities 24,698 ( 4,309 ) ( 26,252 )
Cash flows from financing activities:
1 unchanged sentence
Payment of contingent consideration ( 1,748 ) — ( 2,851 )
−Removed: Treasury stock repurchases, including accelerated share repurchases ( 175,000 ) ( 14,468 ) ( 501,324 )
+Added: Treasury stock repurchases ( 3,275 ) ( 175,000 ) ( 14,468 )
Tax withholding on restricted stock units ( 13,286 ) ( 11,872 ) ( 11,969 )
−Removed: Proceeds from issuance of long-term debt, net of issuance costs — — 294,619
Repayment of long-term debt ( 100,000 ) ( 100,000 ) ( 50,000 )
1 unchanged sentence
Effect of exchange rate changes on cash and cash equivalents 6,627 ( 3,427 ) ( 5,212 )
−Removed: Net (decrease) increase in cash and cash equivalents ( 69,583 ) 39,089 65,005
+Added: Net increase (decrease) in cash and cash equivalents 126,939 ( 69,583 ) 39,089
Cash and cash equivalents and restricted cash, beginning of year 340,237 409,820 370,731
17 unchanged sentences
As a result, customers can quickly resolve issues that cause business disruptions, downtime, poor service quality or compromised security, thereby driving compelling returns on their investments in their network and broader information technology (IT) initiatives.
−Removed: The Company reports revenue and income in one reportable segment.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2 unchanged sentences
Inter-company transactions and balances have been eliminated in consolidation.
−Removed: Certain amounts for the twelve months ended March 31, 2018 have been reclassified to conform to the current period presentation.
−Removed: These reclassifications had no effect on the reported results of operations.
Segment Reporting
5 unchanged sentences
These items are continuously monitored and analyzed by management for changes in facts and circumstances and material changes in these estimates could occur in the future.
−Removed: The Company considered the impact of the COVID-19 pandemic on the use of estimates and assumptions used for financial reporting and determined that there was no adverse material impact to its results of operations for the fourth quarter of fiscal year 2020.
+Added: The Company considered the impact of the COVID-19 pandemic on the use of estimates and assumptions used for financial reporting.
The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company's business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain it or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets.
2 unchanged sentences
COVID-19 Risks and Uncertainties
−Removed: The Company is closely monitoring the impact of COVID-19 on all aspects of its business.
+Added: The Company is closely monitoring the impact of the COVID-19 pandemic on all aspects of its business.
COVID-19 was declared a global pandemic by the World Health Organization on March 11, 2020 and the President of the United States declared the COVID-19 outbreak a national emergency.
−Removed: While the COVID-19 pandemic has not had a material adverse impact on the Company’s operations to date, the future impacts of the pandemic and any resulting economic impact are largely unknown and rapidly evolving.
+Added: The future impacts of the pandemic and any resulting economic impact on the Company's operations are largely unknown and rapidly evolving.
It is possible that the COVID-19 pandemic, the measures taken by the governments of countries affected and the resulting economic impact may materially and adversely affect the Company’s results of operations, cash flows and financial position as well as its customers.
−Removed: Under Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40), or ASC 205-40, the Company has the responsibility to evaluate whether conditions and/or events raise substantial
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued.
+Added: Under Accounting Standards Update (ASU) 2014-15, Presentation of Financial Statements—Going Concern (Subtopic 205-40), or ASC 205-40, the Company has the responsibility to evaluate whether conditions and/or events raise substantial doubt about its ability to meet its future financial obligations as they become due within one year after the date that the financial statements are issued.
The Company is taking precautionary actions to reduce costs and spending across the organization.
This includes limiting discretionary spending and reducing hiring activities.
−Removed: The Company has temporarily halted the stock repurchase program, although the repurchase authorization remains effective.
−Removed: In addition, based on covenant levels at March 31, 2020, the Company has an incremental $ 285 million available under the $ 1.0 billion revolving credit facility.
+Added: In addition, based on covenant levels at March 31, 2021, the Company has an incremental $ 336 million available under its $ 1.0 billion revolving credit facility.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) was enacted.
+Added: The CARES Act, among other things, includes provisions relating to refundable payroll tax credits, deferment of employer social security payments, net operating loss carryback periods, alternative minimum tax credit refunds, modifications to the net interest deduction limitations and technical corrections to tax depreciation methods for qualified improvement property.
+Added: The Company has elected to defer the employer-paid portion of social security taxes.
+Added: As of March 31, 2021, the Company had deferred $ 8.9 million of employer payroll taxes, of which 50% are required to be deposited by December 2021 and the remaining 50% by December 2022.
+Added: The balance of $ 4.5 million was included as accrued other and a balance of $ 4.4 million was included as other long-term liabilities in the Company's consolidated balance sheet at March 31, 2021.
The Company expects net cash provided by operations combined with cash, cash equivalents, and marketable securities and borrowing availability under the revolving credit facility to provide sufficient liquidity to fund current obligations, capital spending, debt service requirements and working capital requirements over at least the next twelve months.
Cash and Cash Equivalents and Marketable Securities
−Removed: Under current authoritative guidance, NetScout has classified its investments as "available-for-sale" which are carried at fair value based on quoted market prices and associated unrealized gains or losses are recorded as a separate component of stockholders’ equity until realized.
+Added: Under current authoritative guidance, NetScout has classified its investments as "available-for-sale" which are carried at fair value associated unrealized gains or losses are recorded as a separate component of stockholders’ equity until realized.
NetScout considers all highly liquid investments purchased with an original maturity of three months or less to be cash equivalents and those investments with original maturities greater than three months to be marketable securities.
14 unchanged sentences
NetScout's cash, cash equivalents, and marketable securities are placed with financial institutions with high credit standings.
−Removed: At March 31, 2020 and 2019 , the Company had no direct customers or indirect channel partners which accounted for more than 10% of the accounts receivable balance.
+Added: At March 31, 2021 , the Company had one direct customer who accounted for more than 10% of the accounts receivable balance, while no indirect channel partners accounted for more than 10% of the accounts receivable balance.
+Added: At March 31, 2020 , the Company had no direct customers or indirect channel partners which accounted for more than 10% of the accounts receivable balance.
During the fiscal ye ars ended March 31, 2021, 2020 and 2019 respectively, no direct customers or indirect channel partners accounted for more than 10% of total rev enue.
Historically, the Company has not experienced any significant failure of its customers to meet their payment obligations nor does the Company anticipate material non-performance by its customers in the future;
−Removed: accordingly, the Company does not require collateral from its customers.
−Removed: However, if the Company’s assumptions are incorrect, there could be an adverse impact on its allowance for doubtful accounts.
+Added: accordingly, the Company does not
NetScout Systems, Inc.
Notes to Consolidated Financial Statements—(Continued)
+Added: require collateral from its customers.
+Added: However, if the Company’s assumptions are incorrect, there could be an adverse impact on its allowance for doubtful accounts.
Trade Receivable Valuations
7 unchanged sentences
Expenditures for replacements and building improvements are capitalized, while expenditures for maintenance and repairs are charged against earnings as incurred.
−Removed: Effective April 1, 2019, the Company adopted ASU 2016-02, Leases (Topic 842), which requires leases to be recognized on the balance sheet.
−Removed: Leases with an original term of 12 months or less are not recognized on the Company’s balance sheet, and the lease expense related to those short-term leases is recognized over the lease term.
−Removed: The Company does not account for lease and non-lease (e.g.
−Removed: common area maintenance) components of contracts separately for any underlying asset class.
−Removed: For fiscal years ending prior to this date, the Company followed the guidance for leases under Topic 840, Leases.
−Removed: See Recently Issued Accounting Pronouncements below and Footnote 18, Leases, for further details.
+Added: The Company accounts for leases in accordance with ASU No.
+Added: 2016-02, Leases (Topic 842), which was adopted April 1, 2019.
+Added: Prior to the adoption of Topic 842, the Company followed the guidance for leases under Topic 840, Leases.
+Added: For further discussion of the Company's policies related to leases see Note 18, "Leases."
The Company has operating leases for administrative, research and development, sales and marketing and manufacturing facilities and equipment under various non-cancelable lease agreements.
9 unchanged sentences
Reporting units are determined based on the components of a Company's operating segments that constitute a business for which financial information is available and for which operating results are regularly reviewed by segment management.
−Removed: Through the first half of fiscal year 2020, the Company had two reporting units:
−Removed: (1) Service Assurance and (2) Security.
−Removed: As part of its continued integration efforts, effective during the third quarter of fiscal year 2020, the Company reorganized its business units.
−Removed: As a result of this change, the Company reduced the number of reporting units from two reporting units to one reporting unit.
−Removed: The former Service Assurance and Security reporting units were combined as result of organizational changes made to fully integrate the resources and assets of the Service Assurance and Security business units.
+Added: The Company has one reporting unit.
To test impairment, the Company first assesses qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the intangible asset is impaired.
1 unchanged sentence
However, if the Company concludes otherwise, quantitative impairment testing is not required.
−Removed: During fiscal year 2020, the Company performed its annual impairment analysis for goodwill as of January 31, 2020.
−Removed: The Company performed a quantitative analysis and determined the fair value of the reporting unit's goodwill using established income and market valuation approaches.
−Removed: Goodwill was estimated to be recoverable as of January 31, 2020.
−Removed: The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic to be a
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: triggering event.
−Removed: As such, the Company performed a quantitative analysis as of March 31, 2020 and determined the fair value of the reporting unit's goodwill using established income and market valuation approaches.
−Removed: Goodwill was determined to be recoverable as of March 31, 2020.
+Added: During fourth quarter of fiscal year 2021, the Company performed its annual impairment analysis for goodwill as of January 31, 2021, using the qualitative Step 0 assessment as the Company concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying value.
Indefinite-lived intangible assets are tested for impairment at least annually, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the indefinite-lived intangible assets below its carrying value.
To test impairment, the Company first assesses qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the indefinite-lived intangible is impaired.
−Removed: If based on the Company's qualitative assessment, the Company concludes that it is more likely than not that the fair value of the indefinite-lived asset is greater than its carrying amount, quantitative impairment testing is not required.
−Removed: The Company completed its annual impairment test of the indefinite-lived intangible asset at January 31, 2020 using the qualitative Step 0 assessment.
−Removed: No impairment indicators were observed as of January 31, 2020.
−Removed: The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and concluded that it was not more likely than not that the trade name was impaired and therefore a quantitative Step 1 assessment was not performed as of March 31, 2020.
−Removed: The Company completed three acquisitions and one divestiture during the three-year period ended March 31, 2020.
+Added: If based on the Company's qualitative assessment, the Company concludes that it is more likely than not that the fair value of the indefinite-
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: lived asset is less than its carrying amount, quantitative impairment testing is required.
+Added: However, if the Company concludes otherwise, quantitative impairment testing is not required.
+Added: During the fourth quarter of fiscal year 2021, the Company completed its annual impairment test of the indefinite-lived intangible at January 31, 2021, using the qualitative Step 0 assessment as the Company concluded that it was more likely than not that the fair value of the indefinite-lived asset exceeded its carrying value.
+Added: The Company completed two acquisitions and one divestiture during the three-year period ended March 31, 2021.
The acquisition method of accounting requires an estimate of the fair value of the assets and liabilities acquired as part of these transactions.
1 unchanged sentence
The Company's level 3 liabilities at March 31, 2020 consisted of contingent purchase consideration related to the two acquisitions that occurred during the fiscal year 2020.
−Removed: The contingent purchase consideration related to the two acquisitions represent amounts deposited into escrow accounts, which were established to cover damages NetScout may suffer related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the sellers as described in the acquisition agreements.
+Added: The contingent purchase consideration related to the two acquisitions represent amounts deposited into escrow accounts, which were established to cover damages NetScout may have suffered related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the sellers as described in the acquisition agreements.
The contingent purchase consideration of $ 0.7 million and $ 1.0 million related to the Gigavation Incorporated (Gigavation) and Eastwind Networks, Inc.
−Removed: (Eastwind) acquisitions are included as accrued other in the Company's consolidated balance sheet at March 31, 2020.
−Removed: Except to the extent that valid indemnification claims are made prior to such time, the $ 0.7 million of purchase consideration related to the Gigavation acquisition will be paid to the seller in February 2021.
−Removed: The contingent purchase consideration related to the Eastwind acquisition was paid to the seller in April 2020.
−Removed: The Company had a contingent consideration asset related to the divestiture of its handheld network test (HNT) tools business in September 2018.
−Removed: The contingent consideration asset represented potential future earnout payments to the Company of up to $ 4.0 million over two years that were contingent on the HNT tools business achieving certain milestones.
+Added: (Eastwind) acquisitions, respectively are included as accrued other in the Company's consolidated balance sheet at March 31, 2020.
+Added: The $ 0.7 million related to the Gigavation acquisition was paid to the seller in February 2021.
+Added: The $ 1.0 million related to the Eastwind acquisition was paid to the seller in April 2020.
+Added: During fiscal year 2019, the Company recorded a contingent consideration related to the divestiture of the Company's handheld network test (HNT) tools business in September 2018.
+Added: The contingent consideration represented potential future earnout payments to the Company of up to $ 4.0 million over two years that were contingent on the HNT tools business achieving certain milestones.
The fair value of the contingent consideration of $ 2.3 million was recognized on the divestiture date and was measured using unobservable (Level 3) inputs.
−Removed: The value of the contingent consideration asset at March 31, 2020 and 2019 was $ 0 and $ 0.8 million, respectively.
−Removed: The Company had a contingent liability at March 31, 2018 for $ 0.5 million related to the acquisition of Efflux in July 2017 for which an escrow account was established to cover damages NetScout may have suffered related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the seller as described in the acquisition agreement.
−Removed: The $ 0.5 million was paid to the seller in July 2018.
−Removed: The Company had a contingent liability at March 31, 2018 for $ 4.9 million related to the acquisition of Simena LLC in November 2011, which was based on the ultimate settlement of assets and liabilities acquired as part of the transaction, and the former owners' future period of employment with NetScout.
−Removed: The contingent purchase consideration of $ 5.0 million was paid to the seller in November 2018.
+Added: The Company recorded an $ 0.8 million and a $ 1.6 million change in the fair value of the contingent consideration, which is included in other expense, net within the Company's consolidated statement of operations for the years ended March 31, 2020 and 2019.
Capitalized Software Development Costs
4 unchanged sentences
Unamortized capitalized software development costs that are determined to be in excess of the net realizable value of the software products would be expensed in the period in which such a determination is made.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
Typically for accounting purposes, these R&D investments have not been capitalized because of the development methodology employed.
The developments are added individually to the core code over a shorter period of time but marketed as a release once all portions are complete.
−Removed: Amortization included as cost of product revenue w as $ 0.5 million, $ 1.1 million , and $ 1.0 million for the fiscal years ended March 31, 2020, 2019, and 2018, respectively.
−Removed: The Company capitaliz ed $ 0 an d $ 0.1 million in software development costs in the fiscal years ended March 31, 2020 and 2019.
+Added: Amortization included as cost of product revenue was $ 0.1 million, $ 0.5 million, and $ 1.1 million for the fiscal years ended March 31, 2021, 2020, and 2019, respectively.
+Added: The Company did no t capitalize software development costs in the fiscal years ended March 31, 2021 or 2020.
Derivative Financial Instruments
6 unchanged sentences
The Company records the fair value of its derivatives in prepaid expenses and other current assets and accrued other in the Company's consolidated balance sheet.
−Removed: The effective portion of gains or losses resulting from changes in the fair value of qualifying hedges are recorded in other comprehensive income (loss) until the forecasted transaction occurs, with any ineffective portion classified directly to the Company’s consolidated statement of operations based on the expense categories of the items being hedged.
+Added: The effective portion of gains or losses resulting from
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: changes in the fair value of qualifying hedges are recorded in other comprehensive income (loss) until the forecasted transaction occurs, with any ineffective portion classified directly to the Company’s consolidated statement of operations based on the expense categories of the items being hedged.
When forecasted transactions occur, unrealized gains or losses associated with the effective portion of the hedge are reclassified to the respective expense categories in the Company’s consolidated statement of operations.
1 unchanged sentence
If the underlying forecasted transactions do not occur, or it becomes probable that they will not occur, the gain or loss on the related cash flow hedge is recognized immediately in earnings.
+Added: NetScout also periodically enters into forward contracts to manage exchange rate risk associated with certain third-party transactions and for which the Company does not elect hedge accounting treatment as there is no difference in the timing of gain or loss recognition on the hedge instrument and the hedged item.
Contingencies
14 unchanged sentences
Under the fair value recognition provisions, share-based compensation is calculated net of an estimated forfeiture rate and compensation cost is only recognized for those shares expected to vest on a straight-line basis over the expected requisite service period of the award.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
Foreign Currency
9 unchanged sentences
Under this program, increases or decreases in foreign currency exposures are partially offset by gains or losses on forward contracts, to mitigate the impact of foreign currency transaction gains or losses.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
The Company does not use forward contracts to engage in currency speculation.
7 unchanged sentences
Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss).
−Removed: Other comprehensive income (loss) typically consists of unrealized gains and losses on marketable securities, unrealized gain (loss) on hedge contracts, actuarial gains and losses, and foreign currency translation adjustments.
+Added: Other comprehensive income (loss) typically consists of unrealized gains and losses on marketable securities, unrealized gain and losses on hedge contracts, actuarial gains and losses, and foreign currency translation adjustments.
NetScout accounts for its income taxes under the asset and liability method.
11 unchanged sentences
The amendments apply only to contracts and hedging relationships that reference LIBOR or another reference rate expected to be discontinued due to reference rate reform.
−Removed: These amendments are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022.
−Removed: The adoption will not have a material impact on the Company's financial position, results of operations, and disclosures.
+Added: In January 2021, the FASB issued ASU 2021-01, Reference Rate Reform, which clarifies the scope and application of certain optional expedients and exceptions regarding the original guidance.
+Added: ASU 2021-01 may be applied prospectively through December 31, 2022.
+Added: The expedients and exceptions provided by the amendments do not apply to contract modifications made and hedging relationships entered into or evaluated after December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.
+Added: The adoption is not expected to have a material impact on the Company's financial position, results of operations, and disclosures.
In January 2020, the FASB issued ASU 2020-01, Investments-Equity Securities (Topic 321), Investments-Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815) - Clarifying the Interactions between Topic 321, Topic 323, and Topic 815.
3 unchanged sentences
ASU 2020-01 is effective for NetScout beginning April 1, 2021.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: The Company is currently assessing the effect that ASU 2020-01 will have on its financial position, results of operations, and disclosures.
+Added: The adoption is not expected to have a material impact on the Company's financial position, results of operations, and disclosures.
In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes.
3 unchanged sentences
Most amendments within the standard are required to be applied on a prospective basis, while certain amendments must be applied on a retrospective or modified retrospective basis.
−Removed: The Company is currently assessing the effect that ASU 2019-12 will have on its financial position, results of operations, and disclosures.
+Added: The adoption is not expected to have a material impact on the Company's financial position, results of operations, and disclosures.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans – General (Subtopic 715-20):
1 unchanged sentence
This ASU adds, modifies and clarifies several disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans.
−Removed: This guidance is effective for fiscal years ending after December 15, 2020.
−Removed: ASU 2018-14 is effective for NetScout beginning April 1, 2020.
−Removed: Early adoption is permitted.
−Removed: This guidance will have no impact on the Company's consolidated financials statements upon adoption other than with respect to the updated disclosure requirements.
+Added: The Company adopted the guidance as of April 1, 2020.
+Added: The adoption did not have a material impact on the Company's consolidated financial statements.
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):
1 unchanged sentence
ASU 2018-13 adds, modifies and removes several disclosure requirements relative to the three levels of inputs used to measure fair value in accordance with Topic 820, Fair Value Measurement.
−Removed: This guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within that fiscal year.
−Removed: ASU 2018-13 is effective for NetScout beginning April 1, 2020.
−Removed: Early adoption is permitted.
−Removed: The Company does not believe the adoption of ASU 2018-13 will have a material impact on its financial position, results of operations, and disclosures.
−Removed: In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815), Targeted Improvements to Accounting for Hedging Activities (ASU 2017-12).
−Removed: ASU 2017-12 provides guidance to better align an entity's risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results.
−Removed: The amendments expand and refine hedge accounting for both non-financial and financial risk components and align the recognition and presentation of the effects of the hedging instrument and the hedged item in the financial statements.
−Removed: This standard is effective for financial statements issued for fiscal years beginning after December 15, 2018.
−Removed: The Company adopted ASU 2017-12 effective April 1, 2019.
−Removed: The adoption has had an immaterial impact on the Company's consolidated financial statements.
+Added: The Company adopted the guidance as of April 1, 2020.
+Added: The adoption did not have a material impact on the Company's consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):
3 unchanged sentences
Topic 326 replaces the existing incurred loss impairment model with an expected loss methodology, which will result in more timely recognition of credit losses.
−Removed: Topic 326 is effective for annual periods beginning after December 15, 2019, and interim periods therein.
−Removed: Topic 326 is effective for NetScout beginning April 1, 2020, and earlier adoption is permitted.
−Removed: The Company does not believe the adoption of Topic 326 will have a material impact on its financial position, results of operations, and disclosures.
−Removed: In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) Section A - Leases:
−Removed: Amendments to the FASB Accounting Standards Codification (ASU 2016-02) and issued subsequent amendments to initial guidance in July 2018 within ASU 2018-10, Codification Improvements to Topic 842, Leases and ASU 2018-11, Leases (Topic 842):
−Removed: Targeted Improvements (collectively, ASC 842).
−Removed: ASC 842 aims to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements.
−Removed: The Company adopted the guidance as of April 1, 2019 using the modified retrospective method.
−Removed: Please refer to Note 18, "Leases" for further details.
+Added: The Company adopted the guidance prospectively as of April 1, 2020.
+Added: The adoption did not result in a cumulative adjustment to retained earnings and did not have an impact on the Company's consolidated financial statements other than with respect to the updated disclosure requirements.
NOTE 3 - REVENUE RECOGNITION
2 unchanged sentences
Topic 606 replaced most existing revenue recognition guidance under GAAP.
−Removed: The new standard introduces a five-step process to be followed in determining the amount
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: and timing of revenue recognition.
+Added: The new standard introduces a five-step process to be followed in determining the amount and timing of revenue recognition.
It also provides guidance on accounting for costs incurred to obtain or fulfill contracts with customers and establishes disclosure requirements which are more extensive than those required under prior GAAP.
5 unchanged sentences
The Company derives revenues primarily from the sale of network management tools and security solutions for service provider and enterprise customers, which include hardware, software and service offerings.
−Removed: The majority of the Company's product sales consist of hardware products with embedded software that are essential to providing customers the intended functionality of the solutions.
−Removed: The Company also sells software offerings decoupled from the underlying hardware and software solutions to provide customers with enhanced functionality.
+Added: The Company's product sales consist of software only offerings and offerings which include hardware appliances with embedded software that are essential to providing customers the intended functionality of the solutions.
The Company accounts for revenue once a legally enforceable contract with a customer has been approved by the parties and the related promises to transfer products or services have been identified.
5 unchanged sentences
and collection of the related receivable is probable.
−Removed: If any significant obligations to the customer remain post-delivery, typically involving obligations relating to installation and acceptance by the customer, revenue recognition is deferred until such obligations have been fulfilled.
+Added: If any significant obligations to the customer remain post-delivery, typically involving obligations relating to installation and acceptance by the customer, revenue recognition is deferred until such
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: obligations have been fulfilled.
The Company's service offerings include installation, integration, extended warranty and maintenance services, post-contract customer support, stand-ready software-as-a-service (SAAS) and other professional services including consulting and training.
18 unchanged sentences
SSP has been established for product elements as the average or median selling price the element was recently sold for, whether sold alone or sold as part of a multiple element transaction.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: Company reviews sales of the product elements on a quarterly basis and updates, when appropriate, its SSP for such elements to ensure that it reflects recent pricing experience.
+Added: The Company reviews sales of the product elements on a quarterly basis and updates, when appropriate, its SSP for such elements to ensure that it reflects recent pricing experience.
The Company's products are distributed through its direct sales force and indirect distribution channels through alliances with resellers and distributors.
17 unchanged sentences
The Company did not have any material variable consideration such as obligations for returns, refunds or warranties at March 31, 2021.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
At March 31, 2021, the Company had total deferred revenue of $ 373.1 million, which represents the aggregate total contract price allocated to undelivered performance obligations.
1 unchanged sentence
NetScout expects that the amount of billed and unbilled deferred revenue will change from quarter to quarter for several reasons, including the specific timing, duration and size of large customer support and service agreements, varying billing cycles of such agreements, the specific timing of customer renewals, and foreign currency fluctuations.
−Removed: The Company did not have any significant financing components, or variable consideration or performance obligations satisfied in a prior period recognized during the twelve months ended March 31, 2020.
+Added: The Company did not have material significant financing components, or variable consideration or performance obligations satisfied in a prior period recognized during the twelve months ended March 31, 2021.
Contract Balances
−Removed: The Company may receive payments from customers based on a billing schedule as established by the Company’s contracts.
+Added: The Company may receive payments from customers based on billing schedules as established by the Company's contracts.
Contract assets relate to performance obligations where control has transferred to the customer in advance of scheduled billings.
The Company records unbilled accounts receivable representing the right to consideration in exchange for goods or services that have been transferred to a customer conditional on the passage of time.
−Removed: Deferred revenue relates to payments received in advance of performance under the contract.
+Added: Deferred revenue relates to scenarios where billings occur before all performance obligations are delivered or payments are received in advance of performance under the contract.
Costs to Obtain Contracts
2 unchanged sentences
The Company expenses costs as incurred for sales commissions when the amortization period would have been one year or less.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: At March 31, 2020, the consolidated balance sheet included $ 7.2 million in assets related to sales commissions to be expensed in future periods.
−Removed: A balance of $ 3.9 million was included in prepaid expenses and other current assets, and a balance of $ 3.3 million was included as other assets in the Company's consolidated balance sheet at March 31, 2020.
+Added: At March 31, 2021, the consolidated balance sheet inclu ded $ 7.4 million in assets related to sales commissions to be expensed in future periods.
+Added: A balance of $ 4.1 million wa s included in prepaid expenses and other current assets, and a balance of $ 3.3 million was included as other assets in the Company's consolidated balance sheet at March 31, 2021.
At March 31, 2020, the consolidated balance sheet included $ 7.2 million in assets related to sales commissions to be expensed in future periods.
A balance of $ 3.9 million was included in prepaid expenses and other current assets, and a balance of $ 3.3 million was included in other assets in the Company's consolidated balance sheet at March 31, 2020.
−Removed: During the twelve months ended March 31, 2020 and 2019, the Company recog nized $ 6.5 million of amortization related to this sales commission asset, which is included in the sales and marketing expense line in the Company's consolidated statements of operations.
+Added: During the twelve months ended March 31, 2021 and 2020, the Company recognized $ 6.3 million and $ 6.5 million of amortization related to this sales commission asset, which is included in the sales and marketing expense line in the Company's consolidated statements of operations.
+Added: Allowance for Credit Losses
+Added: The Company continually monitors collections from its customers.
+Added: The Company evaluates the collectability of its accounts receivable and determines the appropriate allowance for credit losses based on a combination of factors, including but not limited to, analysis of the aging schedules, past due balances, historical collection experience and prevailing economic conditions.
+Added: The following table summarizes the activity in the allowance for credit losses (in thousands):
+Added: Balance at March 31, 2020 $ 1,350
+Added: Provision for allowance for credit losses 48
+Added: Recoveries and other adjustments ( 733 )
+Added: Write off charged against the allowance for credit losses ( 249 )
+Added: Balance at March 31, 2021 $ 416
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
NOTE 4 – CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES
−Removed: Cash and cash equivalen ts consisted of U.S government and municipal obligations, commercial paper, mone y market instruments and cash maintained with various financial institutions at March 31, 2020 and 2019.
+Added: Cash and cash equivalents mainly consisted of U.S government and municipal obligations, commercial paper, corporate bonds, money market instruments and cash maintained with various financial institutions at March 31, 2021 and 2020.
Cash, Cash Equivalents and Restricted Cash
12 unchanged sentences
Commercial paper 5,699 — 5,699
−Removed: Corporate bonds 4,587 10 4,597
Total short-term marketable securities 9,270 7 9,277
−Removed: government and municipal obligations 2,562 51 2,613
Total long-term marketable securities — — —
Total marketable securities $ 9,270 $ 7 $ 9,277
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
The following is a summary of marketable securities held by NetScout at March 31, 2020, classified as short-term and long-term (in thousands):
3 unchanged sentences
Commercial paper 14,644 — 14,644
−Removed: Total short-term marketable securities 76,332 12 76,344
Corporate bonds 4,587 10 4,597
+Added: Total short-term marketable securities 47,852 117 47,969
+Added: government and municipal obligations 2,562 51 2,613
Total long-term marketable securities 2,562 51 2,613
Total marketable securities $ 50,414 $ 168 $ 50,582
−Removed: Contractual maturities of the Company’s marketable securities held at March 31, 2020 and March 31, 2019 were as follows (in thousands):
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: Contractual maturities of the Company's marketable securities held at March 31, 2021 and 2020 (in thousands) were as follows:
2021 March 31,
14 unchanged sentences
Commercial paper — 5,699 — 5,699
−Removed: Corporate bonds 4,597 — — 4,597
+Added: Derivative financial instruments — 57 — 57
$ 469,715 $ 6,795 $ — $ 476,510
−Removed: Contingent purchase consideration $ — $ — $ ( 1,748 ) $ ( 1,748 )
Derivative financial instruments — ( 191 ) — ( 191 )
$ — $ ( 191 ) $ — $ ( 191 )
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
Fair Value Measurements at
5 unchanged sentences
Corporate bonds 4,597 — — 4,597
−Removed: Derivative financial instruments — 58 — 58
−Removed: Contingent consideration — — 762 762
$ 374,427 $ 14,644 $ — $ 389,071
+Added: Contingent purchase consideration $ — $ — $ ( 1,748 ) $ ( 1,748 )
Derivative financial instruments — ( 49 ) — ( 49 )
$ — $ ( 49 ) $ ( 1,748 ) $ ( 1,797 )
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value.
6 unchanged sentences
The Company's Level 3 liabilities at March 31, 2020 consisted of contingent purchase consideration related to the two acquisitions that occurred during the fiscal year 2020.
−Removed: The contingent purchase consideration related to the two acquisitions represent amounts deposited into escrow accounts, which were established to cover damages NetScout may suffer related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the sellers as described in the acquisition agreements.
−Removed: The contingent purchase consideration of $ 0.7 million and $ 1.0 million related to the Gigavation and Eastwind acquisitions are included as accrued other in the Company's consolidated balance sheet at March 31, 2020.
−Removed: Except to the extent that valid indemnification claims are made prior to such time, the $ 0.7 million of purchase consideration related to the Gigavation acquisition will be paid to the seller in February 2021.
−Removed: The contingent purchase consideration related to the Eastwind acquisition was paid to the seller in April 2020.
−Removed: The Company's Level 3 assets at March 31, 2019 consisted of contingent consideration related to the divestiture of the Company's handheld network test (HNT) tools business in September 2018.
+Added: The contingent purchase consideration related to the two acquisitions represented amounts deposited into escrow accounts, which were established to cover damages NetScout may have suffered related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the sellers as described in the acquisition agreements.
+Added: The contingent purchase consideration of $ 0.7 million and $ 1.0 million related to the Gigavation and Eastwind acquisitions, respectively were included as accrued other in the Company's consolidated balance sheet at March 31, 2020.
+Added: The $ 0.7 million related to the Gigavation acquisition was paid to the seller in February 2021.
+Added: The $ 1.0 million related to the Eastwind acquisition was paid to the seller in April 2020.
+Added: During fiscal year 2019, the Company recorded a contingent consideration related to the divestiture of the Company's handheld network test (HNT) tools business in September 2018.
The contingent consideration represented potential future earnout payments to the Company of up to $ 4.0 million over two years that were contingent on the HNT tools business achieving certain milestones.
The fair value of the contingent consideration of $ 2.3 million was recognized on the divestiture date and was measured using unobservable (Level 3) inputs.
−Removed: The Company recorde d a $ 0.8 million an d a $ 1.6 million change in the fair value of the contingent consideration, which is included in other expense, net within the Company's consolidated statement of operations for the years ended March 31, 2020 and 2019, respectively.
−Removed: The $ 0.8 million of co ntingent consideration was included in other assets within the Company’s consolidated balance sheet at March 31, 2019.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial liabilities for the year ended March 31, 2020 (in thousands):
−Removed: Consideration Contingent Consideration
+Added: The Company recorde d an $ 0.8 million and a $ 1.6 million change in the fair value of the contingent consideration, which is included in other expense, net within the Company's consolidated statement of operations for the years ended March 31, 2020 and 2019.
+Added: The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial liabilities for the fiscal year ended March 31, 2021 (in thousands):
+Added: Consideration
Balance at March 31, 2020 $ ( 1,748 )
Additions to Level 3 —
−Removed: Change in fair value of contingent consideration — ( 762 )
−Removed: Payments received 52 —
+Added: Payments made 1,748
Balance at March 31, 2021 $ —
−Removed: Accretion income related to the contingent consideration received as partial consideration for the divestiture of the HNT tools business for the fiscal year ended March 31, 2020 was $ 36 thousand and was included within interest income.
−Removed: The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial liabilities for the year ended March 31, 2019 (in thousands):
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial assets and liabilities for the fiscal year ended March 31, 2020 (in thousands):
Consideration Contingent
1 unchanged sentence
Balance at March 31, 2019 $ — $ 762
−Removed: Contingent consideration pursuant to divestiture of the HNT tools business — 2,257
+Added: Additions to Level 3 ( 1,800 ) —
Change in fair value of contingent consideration — ( 762 )
−Removed: Payments made 5,566 —
+Added: Payments received 52 —
Balance at March 31, 2020 $ ( 1,748 ) $ —
−Removed: Deal related compensation expense and accretion charges related to the contingent purchase consideration for the fiscal year ended March 31, 2019 were $ 102 thousand and were included within research and development expense.
Accretion income related to the contingent consideration received as partial consideration for the divestiture of the HNT tools business for the fiscal year ended March 31, 2020 was $ 36 thousand and was included within interest income.
8 unchanged sentences
$ 22,813 $ 22,227
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
NOTE 7 – FIXED ASSETS
5 unchanged sentences
177,098 170,518
−Removed: Demonstration and spare part units 2 - 5
−Removed: 51,910 17,928
Leasehold improvements (1) up to 12
53,980 51,910
+Added: Demonstration and spare part units 2 - 5
17,968 19,626
+Added: 258,788 251,615
Less – accumulated depreciation ( 210,314 ) ( 193,900 )
1 unchanged sentence
(1) Leasehold improvements are depreciated over the shorter of the lease term or anticipated useful life of the improvement.
+Added: A typographical error in the prior year presentation of the above disclosure has been corrected in the current period.
Depreciation expense was $ 22.4 million, $ 23.4 million and $ 27.4 million for the fiscal years ended March 31, 2021, 2020 and 2019, respectively.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
NOTE 8 – ACQUISITIONS & DIVESTITURES
2 unchanged sentences
Gigavation's solutions provide security to device communication protocols, end point protection and security analytics.
−Removed: The Gigavation technology and engineering talent have been integrated into our service assurance products in order to support the ongoing enhancement of that products portfoli o.
−Removed: The Company has completed the purchase accounting related to the Gigavation acquisition as of March 31, 2020.
+Added: The Gigavation technology and engineering talent have been integrated into our service assurance products in order to support the ongoing enhancement of that portfoli o.
+Added: The Company completed the accounting related to the Gigavation acquisition as of March 31, 2020.
Goodwill and intangible assets recorded as part of the acquisition are not deductible for tax purposes.
The Company determined Gigavation's results of operations are not material.
−Removed: As such, the pro forma information is not required for fiscal year 2020.
+Added: As such, the pro forma information is not required.
The following table summarizes the allocation of the purchase price (in thousands):
10 unchanged sentences
Goodwill $ 3,816
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
Of the total consideration, $ 0.8 million was deposited into an escrow account.
−Removed: The escrow account was established to cover damages NetScout may suffer related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the seller as described in the acquisition agreement.
+Added: The escrow account was established to cover damages NetScout may have suffered related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the seller as described in the acquisition agreement.
Generally, indemnification claims that Gigavation would be liable for are limited to the total amount of the escrow account, which shall be the sole source for the satisfaction of any damages to the Company for such claims, but such limitation does not apply with respect to the seller's breach of certain fundamental representations or related to other specified indemnity items, for which certain of Gigavation's shareholders may be liable for additional amounts in excess of the escrow amount.
−Removed: During the year ended March 31, 2020, $ 0.1 million was withdrawn from the escrow account to satisfy an indemnification claim.
−Removed: Except to the extent that valid indemnification claims are made prior to such tim e, the remaining $ 0.7 million will b e paid to the seller in February 2021.
+Added: During the fiscal year ended March 31, 2020, $ 0.1 million was withdrawn from the escrow account to satisfy an indemnification claim.
+Added: The remaining $ 0.7 million was paid to the seller in February 2021.
In connection with the Gigavation acquisition, certain former employees of Gigavation received restricted stock units.
5 unchanged sentences
This fair value measurement was based on significant inputs not observable in the market and thus represents Level 3 fair value measurements.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
The following table reflects the fair value of the acquired identifiable intangible asset and related estimated useful life (in thousands):
8 unchanged sentences
The Company determined Eastwind's results of operations are not material.
−Removed: As such, the pro forma information is not required for fiscal year 2020.
+Added: As such, the pro forma information is not required.
Initial cash payment $ 4,154
6 unchanged sentences
Goodwill $ 1,003
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
Of the total consideration, $ 1.0 million was deposited into an escrow account.
−Removed: The escrow account was established to cover damages NetScout may suffer related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the seller as described in the acquisition agreement.
+Added: The escrow account was established to cover damages NetScout may have suffered related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the seller as described in the acquisition agreement.
Generally, indemnification claims that Eastwind would be liable for are limited to the total amount of the escrow account, which shall be the sole source for the satisfaction of any damages to the Company for such claims, but such limitation does not apply with respect to the seller's breach of certain fundamental representations or related to other specified indemnity items, for which certain of Eastwind's shareholders may be liable for additional amounts in excess of the escrow amount.
−Removed: The contingent purchase consideration of $ 1.0 million was pai d to the seller in April 2020.
+Added: The contingent purchase consideration of $ 1.0 million was paid to the seller in April 2020.
In connection with the Eastwind acquisition, certain former employees of Eastwind received cash retention payments totaling $ 0.3 million on the Eastwind Closing Date.
2 unchanged sentences
The cash retention payment liability related to these future cash retention payments were accounted for separately from the business combination as the cash retention payment is automatically forfeited upon termination of employment.
−Removed: The Company will record the liability over the period it is earned as compensation expense for post-combination services.
+Added: The Company recorded the liability over the period it was earned as compensation expense for post-combination services.
The fair value of intangible asset was based on a valuation using a cost method approach.
−Removed: The underlying assumptions include estimates of cost to replace or reproduce the asset, less adjustments for physical deterioration and functional obsolescence, if relevant.
+Added: The underlying assumptions include estimates of cost to replace or reproduce the asset, less adjustments for physical deterioration and functional
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: obsolescence, if relevant.
This fair value measurement was based on significant inputs not observable in the market and thus represents Level 3 fair value measurements.
4 unchanged sentences
HNT Tools Business Divestiture
−Removed: On September 14, 2018 (the HNT Divestiture Date), the Company divested its HNT tools business for cash proceeds of $ 1.3 million and potential future earnout payments of up to $ 4.0 million over two years that are contingent on the HNT tools business achieving certain milestones.
+Added: On September 14, 2018 (the HNT Divestiture Date), the Company divested its handheld network test (HNT) tools business for cash proceeds of $ 1.3 million and potential future earnout payments of up to $ 4.0 million over two years that were contingent on the HNT tools business achieving certain milestones.
The fair value of the contingent consideration in the amount of $ 2.3 million was recognized on the HNT Divestiture Date and was measured using unobservable (Level 3) inputs.
−Removed: The contingent consideration is presented as a non-cash investing activity on the consolidated statement of cash flows.
−Removed: The Company transferred $ 4.6 million of consideration along with net liabilities of the HNT tools business related to a working capital adjustment during the year ended March 31, 2019.
+Added: The contingent consideration was presented as a non-cash investing activity on the consolidated statement of cash flows.
+Added: The Company transferred $ 4.6 million of consideration along with net liabilities of the HNT tools business related to a working capital adjustment during the fiscal year ended March 31, 2019.
The Company recorded a loss on the divestiture for the year ended March 31, 2019 totaling $ 9.5 million, which included $ 1.3 million of transaction costs and $ 0.5 million of incentive compensation payable to the HNT tools business employees negotiated as part of the sale.
−Removed: In connection with the divestiture, the Company has entered into a transitional services agreement with the buyer to provide certain services for a period of up to eighteen months .
−Removed: Income associated with the transitional services agreement for the fiscal years ended March 31, 2020 and 2019 w as $ 1.2 million and $ 2.2 million, respectively, and is included within other expense, net in the Company's consolidated statement of operations.
−Removed: The Company determined that the sale of the HNT tools business did not represent a strategic shift and will not have a major effect on its consolidated results of operations, financial position or cash flows.
−Removed: Accordingly, the Company has not presented the sale as a discontinued operation in the consolidated financial statements.
−Removed: On July 12, 2017 (the Efflux Closing Date), the Company completed the acquisition of Efflux for $ 8.6 million.
−Removed: Efflux's technology detects, analyzes and correlates threat activity within enterprise networks.
−Removed: The Efflux technology and engineering talent have been integrated into our security products in order to support the ongoing enhancement of that products portfolio.
+Added: In connection with the divestiture, the Company had entered into a transitional services agreement with the buyer to provide certain services for a period of up to eighteen months .
+Added: Income associated with the transitional services agreement for the fiscal years ended March 31, 2021 and 2020 was $ 0.2 million and $ 1.2 million, respectively, and is included within other expense, net in the Company's consolidated statement of operations.
+Added: NOTE 9 – GOODWILL & INTANGIBLE ASSETS
+Added: The Company has one reporting unit.
+Added: Goodwill is tested for impairment at a reporting unit level at least annually, as of January 31, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting unit below its carrying value.
+Added: At March 31, 2021 and 2020, the carrying amount of goodwill was $ 1.7 billion.
+Added: During fiscal years 2021 and 2020, the Company's annual impairment tests indicated that goodwill was not impaired.
+Added: In the fourth quarter of fiscal year 2021, the Company completed its annual goodwill impairment test at January 31, 2021, using the qualitative Step 0 assessment as the Company concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying value .
+Added: The change in the carrying amount of goodwill for the fiscal year ended March 31, 2021 is due to the impact of foreign currency translation adjustments related to asset balances that are recorded in currencies other than the U.S.
NetScout Systems, Inc.
Notes to Consolidated Financial Statements—(Continued)
−Removed: Goodwill of $ 6.1 million was recognized for the excess purchase price over the fair value of the net assets acquired.
−Removed: Goodwill and intangible assets recorded as part of the acquisition are not deductible for tax purposes.
−Removed: NOTE 9 – GOODWILL & INTANGIBLE ASSETS
−Removed: The Company assesses goodwill for impairment at the reporting unit level at least annually, as of January 31, or on an interim basis if an event occurs or circumstances change that would, more likely than not, reduce the fair value of the reporting unit below its carrying value.
−Removed: Reporting units are determined based on the components of a Company's operating segments that constitute a business for which financial information is available and for which operating results are regularly reviewed by segment management.
−Removed: Through the first half of fiscal year 2020, the Company had two reporting units:
−Removed: (1) Service Assurance and (2) Security.
−Removed: As part of its continued integration efforts, effective during the third quarter of fiscal year 2020, the Company reorganized its business units.
−Removed: As a result of this change, the Company reduced the number of reporting units from two reporting units to one reporting unit.
−Removed: The former Service Assurance and Security reporting units were combined as result of organizational changes made to fully integrate the resources and assets of the Service Assurance and Security business units.
−Removed: At March 31, 2020 and 2019, the carrying amount of goodw ill was $ 1.7 billion.
−Removed: In fiscal years 2020 and 2019, the Company's quantitative impairment tests indicated that goodwill was not impaired.
−Removed: The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic to be a triggering event.
−Removed: As such, the Company performed a quantitative analysis as of March 31, 2020.
−Removed: The quantitative impairment test indicated goodwill was not impaired as of March 31, 2020.
−Removed: The Company determined the fair value of its reporting unit by preparing a discounted cash flow analysis using forward looking projections of the reporting unit's future operating results and by comparing the value of the reporting unit to the implied market value of selected peers.
−Removed: The assumptions used in the discounted cash flow analysis include:
−Removed: projected revenues, selling margins, and other operating expenditures.
−Removed: The discount rate used is a cost of equity method, which is essentially equal to the "market participant" weighted-average cost of capital (WACC).
−Removed: The goodwill fair value substantially exceeded the carrying value.
−Removed: The change in the carrying amount of goodwill for the fiscal year ended March 31, 2020 is due to the acquisitions of Eastwind a nd Gigavation and imp act of foreign currency translation adjustments related to asset balances that are recorded in currencies other than the U.S.
The changes in the carrying amount of goodwill for the fiscal years ended March 31, 2021 and 2020 are as follows (in thousands):
Balance at March 31, 2019 $ 1,715,485
−Removed: Divestiture of the HNT tools business ( 4,414 )
−Removed: Foreign currency translation impact 7,135
−Removed: Balance at March 31, 2019 $ 1,715,485
Goodwill attributed to the Eastwind acquisition 1,003
2 unchanged sentences
Balance at March 31, 2020 $ 1,725,680
+Added: Foreign currency translation impact ( 8,126 )
+Added: Balance at March 31, 2021 $ 1,717,554
Intangible Assets
3 unchanged sentences
The carrying value of the indefinite lived trade name is evaluated for potential impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
During fiscal year 2019, the Company performed a quantitative analysis on certain intangible assets related to the HNT tools business, which has since been divested.
2 unchanged sentences
The impairment charge was recorded within a separate operating expense line item in the Company's consolidated statements of operations during the twelve months ended March 31, 2019.
−Removed: During fiscal year 2019, the Company completed the divestiture of the HNT tools business.
−Removed: As a result, the net carrying value of the Company's intangible assets was reduced by $ 10.2 million.
−Removed: In fiscal year 2020 and 2019, the Company's annual impairment tests indicated that the acquired trade name was not impaired.
−Removed: In the fourth quarter of fiscal year 2019, the Company completed its annual impairment test of the indefinite lived intangible at January 31, 2020 using the qualitative Step 0 assessment.
−Removed: No impairment indicators were observed at January 31, 2020.
−Removed: The Company considered the current and expected future economic and market conditions surrounding the COVID-19 pandemic and concluded that it was not more likely than not that the trade name was impaired and therefore a quantitative Step 1 assessment was not performed as of March 31, 2020.
+Added: During fiscal year 2021 and 2020, the Company's annual impairment tests indicated that the acquired trade name was not impaired.
+Added: In the fourth quarter of fiscal year 2021, the Company completed its annual impairment test of the indefinite lived intangible at January 31, 2021 using the qualitative Step 0 assessment as the Company concluded that it was more likely than not that the fair value of the indefinite-lived asset exceeded its carrying value.
+Added: During the fiscal year ended March 31, 2021, the Company acquired $ 4.5 million of technology licenses.
+Added: These amounts are included within distributor relationships and are being amortizing using the economic benefit method over useful lives of between three and four years .
+Added: The Company did no t acquire any technology licenses during the fiscal year ended March 31, 2020.
Intangible assets include the indefinite lived trade name with a carrying value of $ 18.6 million and the following amortizable intangible assets at March 31, 2021 (in thousands):
8 unchanged sentences
Non-compete agreements 292 ( 292 ) —
−Removed: Leasehold interest 500 ( 500 ) —
−Removed: Backlog 16,223 ( 16,223 ) —
Capitalized software 3,317 ( 3,281 ) 36
1 unchanged sentence
$ 1,091,217 $ ( 597,951 ) $ 493,266
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
Intangible assets include the indefinite lived trade name with a carrying value of $ 18.6 million and the following amortizable intangible assets at March 31, 2020 (in thousands):
13 unchanged sentences
$ 1,091,953 $ ( 528,374 ) $ 563,579
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: Amortization included as product revenue consists of amortization of backlog.
Amortization included as cost of product revenue consists of amortization of developed technology, distributor relationships and technology licenses, core technology and software.
4 unchanged sentences
Amortization of intangible assets included as:
−Removed: Product revenue $ — $ — $ 9
Cost of product revenue 20,457 26,664 34,039
15 unchanged sentences
The Company manages its foreign cash flow risk by hedging forecasted cash flows for operating expenses denominated in foreign currencies for up to twelve months , within specified guidelines through the use of forward contracts.
−Removed: The Company enters into foreign currency exchange contracts to hedge cash flow exposures from costs that are denominated in currencies other than the U.S.
+Added: The Company enters into foreign currency exchange contracts to hedge cash
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: flow exposures from costs that are denominated in currencies other than the U.S.
These hedges are designated as cash flow hedges at inception.
+Added: NetScout also periodically enters into forward contracts to manage exchange rate risk associated with certain third-party transactions and for which the Company does not elect hedge accounting treatment as there is no difference in the timing of gain or loss recognition on the hedge instrument and the hedged item.
All of the Company's derivative instruments are utilized for risk management purposes, and the Company does not use derivatives for speculative trading purposes.
5 unchanged sentences
Forward contracts $ 11,037 $ 1,722 $ 57 $ — $ 152 $ 49
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: (a) Notional amounts represent the gross contract/notional amount of the derivatives outstanding.
−Removed: The following table provides the effect foreign exchange forward contracts had on other comprehensive income (loss), (OCI) and results of operations at March 31, 2020 and 2019 (in thousands):
−Removed: Loss Recognized
+Added: Derivatives Not Designated as Hedging Instruments:
+Added: Forward contracts 6,373 — — — 39 —
+Added: $ 57 $ — $ 191 $ 49
+Added: Notional amounts represent the gross contract/notional amount of the derivatives outstanding.
+Added: The following table provides the effect foreign exchange forward contracts had on other comprehensive income (loss), (OCI) and results of operations during the fiscal years ended March 31, 2021 and 2020 (in thousands):
+Added: Gain (Loss) Recognized
in OCI on Derivative
8 unchanged sentences
(b) The amount represents reclassification from other comprehensive income to earnings that occurs when the hedged item affects earnings.
+Added: The following table provides the effect foreign exchange forward contracts not designated as hedging instruments had on the Company's results of operations during the fiscal years ended March 31, 2021 and 2020 (in thousands):
+Added: Gain Recognized in Income
+Added: March 31, March 31,
+Added: Location 2021 2020
+Added: Forward contracts General and administrative $ 115 $ —
+Added: (a) The amount represents the change in fair value of derivative contracts due to changes in spot rates.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
NOTE 11 – RESTRUCTURING CHARGES
−Removed: During the fourth quarter of fiscal year 2017, the Company restructured certain departments to better align functions subsequent to the Comms Transaction.
−Removed: Communication of the plan to the impacted employees was substantially completed on March 31, 2017.
−Removed: As a result of the workforce reduction, during the fiscal year ended March 31, 2017, the Company recorded a restructuring charge totaling $ 1.9 million related to one-time termination benefits and $ 0.4 million in facility related charges.
−Removed: All of the workforce reduction was completed during the second quarter of fiscal year 2018 and as a result the Company recorded an additional charge for one-time termination benefits and facility-related costs of $ 0.9 million during the fiscal year ended March 31, 2018.
−Removed: The one-time termination benefits and facilities-related costs related to this plan were paid in full during the fiscal year ended March 31, 2018.
During the fiscal year ended March 31, 2018, the Company restructured certain departments to better align functions.
5 unchanged sentences
Additional one-time termination benefit charges of $ 0.1 million were recorded in the fiscal year ended March 31, 2020.
−Removed: The one-time termination benefits were paid in full by the end of the first quarter of the fiscal year ended March 31, 2020.
+Added: The one-time termination benefits were paid in full during the fiscal year ended March 31, 2020.
During the fiscal year ended March 31, 2020, the Company approved two restructuring plans.
During the second quarter of the fiscal year ended March 31, 2020, the Company restructured certain departments to better align functions.
−Removed: As a result of the workforce reduction, the Company recorded a restructuring charge totaling $ 0.5 million during the year ended March 31, 2020.
−Removed: The one-time termination benefits are expected to be paid in full during the first three months of the fiscal year ending March 31, 2021.
−Removed: During the fourth quarter of the fiscal year ended March 31, 2020, the Company restructured certain departments to better align functions.
As a result of the workforce reduction, the Company recorded a restructuring charge totaling $ 0.5 million during the fiscal year ended March 31, 2020.
−Removed: The one-time termination benefits are expected to be paid in full by the second quarter of the fiscal year ending March 31, 2021.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
+Added: The one-time termination benefits were paid in full during the first quarter of the fiscal year ending March 31, 2021.
+Added: During the fourth quarter of the fiscal year ended March 31, 2020, the Company restructured certain departments to better align functions.
+Added: As a result of the workforce reduction, the Company recorded a restructuring charge totaling $ 2.1 million during the fiscal year ended March 31, 2020 and an additional $ 0.1 million during the fiscal year ended March 31, 2021.
+Added: The one-time termination benefits were paid in full by the end of the second quarter of the fiscal year ending March 31, 2021.
The following table provides a summary of the activity related to the restructuring plans and the related restructuring liability (in thousands):
−Removed: Q4 FY2017 Plan FY2018 Plan VSP Q2 FY20 Plan Q4 FY20 Plan
−Removed: Employee-Related Facilities Related Employee-Related Facilities Related Employee-Related Employee-Related Employee-Related Total
+Added: FY2018 Plan VSP Q2 FY20 Plan Q4 FY20 Plan
+Added: Employee-Related Facilities Related Employee-Related Employee-Related Employee-Related Total
Balance at March 31, 2018 $ 3,696 $ — $ — $ — $ — $ 3,696
11 unchanged sentences
Balance at March 31, 2021 $ — $ — $ — $ — $ — $ —
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
NOTE 12 – LONG-TERM DEBT
13 unchanged sentences
or (b) such adjusted LIBOR rate (for the interest period selected by the Company), in each case plus an applicable margin.
−Removed: For the period from the delivery of the Company's financial statements for the quarter ended December 31, 2019, until the Company has delivered financial statements for the quarter ended March 31, 2020, the applicable margin will be 1.50 % per annum for LIBOR loans and 0.50 % per annum for Alternate Base Rate loans, and thereafter the applicable margin will vary depending on the Company's leverage ratio, ranging from 1.00 % per annum for Base Rate loans and 2.00 % per annum for LIBOR loans if the Company's consolidated leverage ratio is greater than 3.50 to 1.00, down to 0.00 % per annum for Alternate Base Rate loans and 1.00 % per annum for LIBOR loans if the Company's consolidated leverage ratio is equal to or less than 1.50 to 1.00.
+Added: For the period from the delivery of the Company's financial statements for the quarter ended December 31, 2020, until the Company has delivered financial statements for the quarter ended March 31, 2021, the applicable margin will be 1.50 % per annum for LIBOR loans and 0.50 % per annum for Alternate Base Rate loans, and thereafter the applicable margin will vary depending on the Company's leverage ratio, ranging from 0.75 % per annum for Base Rate loans and 1.75 % per annum for LIBOR loans if the Company's consolidated leverage ratio is less than or equal to 3.50 to 1.00, down to 0.00 % per annum for Alternate Base Rate loans and 1.00 % per annum for LIBOR loans if the Company's consolidated leverage ratio is equal to or less than 1.50 to 1.00.
+Added: As of March 31, 2021, the Company’s maximum allowed consolidated leverage ratio is 3.50 to 1.00.
On July 27, 2017, the U.K.
Financial Conduct Authority (FCA) announced that it will no longer require banks to submit rates for the calculation of LIBOR after 2021.
−Removed: The Company's Amended Credit Agreement provides for the Administrative
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: Agent to determine if (i) adequate and reasonable means do not exist for ascertaining the LIBOR rate or (ii) the FCA or Government Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the LIBOR rate shall no longer be used for determining interest rates for loans and the Administrative Agent determines that (i) and (ii) above are unlikely to be temporary then the Administrative Agent and the Company would agree to transition to an Alternate Base Rate borrowing as described above or amend the Credit Agreement to establish an alternate rate of interest to LIBOR that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time.
+Added: On March 5, 2021, the Intercontinental Exchange Benchmark Administration (IBA), the FCA-regulated and authorized administrator of LIBOR, announced, and the FCA confirmed, that one week and two-month USD LIBOR settings will cease on December 31, 2021, and that the USD LIBOR panel will cease on June 30, 2023.
+Added: IBA notes that any publication of the Overnight and 1, 3, 6 and 12 Months USD LIBOR settings based on panel bank submissions beyond December 31, 2021 will need to comply with applicable regulations, including as to representativeness.
+Added: Based on current information from panel banks, IBA anticipates there being a representative panel for the continuation of these USD LIBOR settings through to June 30, 2023.
+Added: The Company's Amended Credit Agreement, which matures on January 16, 2023 prior to the June 30, 2023 cessation of USD LIBOR publications, provides for the Administrative Agent to determine if (i) adequate and reasonable means do not exist for ascertaining the LIBOR rate or (ii) the FCA or Government Authority having jurisdiction over the Administrative Agent has made a public statement identifying a specific date after which the LIBOR rate shall no longer be used for determining interest rates for loans and the Administrative Agent determines that (i) and (ii) above are unlikely to be temporary, then the Administrative Agent and the Company would agree to transition to an Alternate Base Rate borrowing as described above or amend the Credit Agreement to establish an alternate rate of interest to LIBOR that gives due consideration to the then prevailing market convention for determining a rate of interest for syndicated loans in the United States at such time.
The Company's consolidated leverage ratio is the ratio of its total funded debt compared to its consolidated adjusted EBITDA.
2 unchanged sentences
For the period from the delivery of the Company's financial statements for the quarter ended December 31, 2020 until the Company has delivered financial statements for the quarter ended March 31, 2021, the commitment fee will be 0.25 % per annum, and thereafter the commitment fee will vary depending on the Company's consolidated leverage ratio, ranging from 0.30 % per annum if the Company's consolidated leverage ratio is greater than 2.75 to 1.00, down to 0.15 % per annum if the Company's consolidated leverage ratio is equal to or less than 1.50 to 1.00.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
Letter of credit participation fees are payable to each lender on the amount of such lender’s letter of credit exposure, during the period from the closing date of the Amended Credit Agreement to but excluding the date which is the later of (i) the date on which such lender’s commitment terminates or (ii) the date on which such lender ceases to have any letter of credit exposure, at a rate per annum equal to the applicable margin for LIBOR loans.
12 unchanged sentences
Upon an event of default, the administrative agent with the consent of, or at the request of, the holders of more than 50 % in principal amount of the loans and commitments may terminate the commitments and accelerate the maturity of the loans and enforce certain other remedies under the Amended Credit Agreement and the other loan documents.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
In connection with the Company's Amended Credit Agreement described above, the Company terminated its previous term loan dated as of July 14, 2015, by and among the Company;
8 unchanged sentences
The balance of $ 1.7 million was included as prepaid expenses and other current assets and a balance of $ 1.4 million was included as other assets in the Company's consolidated balance sheet.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
NOTE 13 – NET INCOME (LOSS) PER SHARE
Calculations of the basic and diluted net income (loss) per share and potential common shares are as follows (in thousands, except for per share data):
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
8 unchanged sentences
The following table sets forth restricted stock units excluded from the calculation of diluted net income per share, since their inclusion would be antidilutive (in thousands):
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
5 unchanged sentences
As the Company incurred a net loss in the fiscal years ended March 31, 2020 and 2019, all outstanding restricted stock units have an anti-dilutive effect and are therefore excluded from the computation of diluted weighted average share outstanding.
−Removed: For the fiscal year ended March 31, 2018, the delivery of 7.4 million shares under the Company's accelerated share repurchase (ASR) agreements reduced its outstanding shares used to determine its weighted average common shares outstanding for purposes of calculating basic and diluted earnings per share.
−Removed: See Note 14 for additional information.
−Removed: The Company evaluated the ASR agreements for potential dilutive effects of any shares remaining to be received or owed upon settlement and determined the additional shares to be received would be anti-dilutive, and therefore they were not included in the Company's calculation of diluted earnings per share for the fiscal year ended March 31, 2018.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
NOTE 14 – TREASURY STOCK
−Removed: On May 19, 2015, the Company’s Board of Directors approved a share repurchase program, conditional upon the completion of the Comms Transaction.
−Removed: This program enabled the Company to repurchase up to 20 million shares of its common stock.
−Removed: This plan became effective on July 14, 2015 upon the completion of the Comms Transaction and replaced the Company's previously existing open market stock repurchase program.
−Removed: The Company was not obligated to acquire any specific amount of common stock within any particular timeframe under this program.
−Removed: The Company repurchased 6,773,438 shares for $ 227.6 million in the open market under this stock repurchase plan during the fiscal year ended March 31, 2018.
−Removed: At March 31, 2018, there were no shares of common stock that remained available to be purchased under this plan.
−Removed: On October 24, 2017, the Company’s Board of Directors approved a new share repurchase program that enables the Company to repurchase up to twenty-five million shares of its common stock.
−Removed: This new program became effective once the Company’s previously disclosed twenty million share repurchase program was completed.
−Removed: The Company is not obligated to acquire any specific amount of common stock within any particular timeframe as a result of its new share repurchase program.
−Removed: On February 1, 2018, the Company entered into ASR agreements with two third-party financial institutions (the Dealers) to repurchase an aggregate of $ 300 million of the Company's common stock via accelerated stock repurchase transactions under the Company’s twenty million share repurchase program and the twenty-five million share repurchase program.
−Removed: The Company borrowed $ 300 million against its Amended Credit Facility in order to finance the payment of the initial purchase price to each of the Dealers.
−Removed: Under the terms of the ASR, the Company made a $ 150 million payment to each of the Dealers on February 2, 2018, and received an initial delivery of 3,693,931 shares from each of the Dealers, or 7,387,862 shares in the aggregate, which is approximately 70 percent of the total number of shares of the Company's common stock expected to be repurchased under the ASR.
−Removed: As part of this purchase, 970,650 shares for $ 27.6 million were deducted under the twenty million share repurchase program and 6,417,212 shares for $ 182.4 million were deducted from the twenty-five million share repurchase program during the fiscal year ended March 31, 2018.
−Removed: Final settlement of the ASR agreements was completed in August 2018.
−Removed: As a result, the Company received an additional 3,679,947 shares of its common stock for $ 96.8 million, which reduced the number of shares available to be purchased from the twenty-five million share repurchase program during the fiscal year ended March 31, 2019.
+Added: On October 24, 2017, the Company’s Board of Directors approved a share repurchase program that enables the Company to repurchase up to twenty-five million shares of its common stock.
+Added: This program became effective once the Company’s previously disclosed twenty million share repurchase program was completed.
+Added: The Company is not obligated to acquire any specific amount of common stock within any particular timeframe as a result of this share repurchase program.
+Added: On February 1, 2018, the Company entered into ASR agreements with two third-party financial institutions to repurchase an aggregate of $ 300 million of the Company's common stock via accelerated stock repurchase transactions under the Company’s twenty million share repurchase program and the twenty-five million share repurchase program.
+Added: During the fiscal year ended March 31, 2018, the Company received an initial delivery of 7,387,862 shares for $ 210.0 million, of which 970,650 shares were deducted from the twenty million share repurchase program and 6,417,212 shares were deducted from the twenty-five million share repurchase program.
+Added: During the fiscal year ended March 31, 2019, final settlement of the ASR agreements was completed and as a result, the Company received an additional 3,679,947 shares of its common stock for $ 96.8 million, which reduced the number of shares available to be purchased from the twenty-five million share repurchase program during the fiscal year ended March 31, 2019.
In total, 11,067,809 shares of the Company's common stock were repurchased under the ASR at an average cost per share of $ 27.11 .
−Removed: The Company repurchased an additional 7,116,159 shares for $ 175.0 million, and 543,251 shares for $ 14.5 million under the twenty-five million share repurchase program during the fiscal years ended March 31, 2020 and 2019, respectively.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: The Company repurchased an additional 154,271 shares for $ 3.3 million, 7,116,159 shares for $ 175.0 million, and 543,251 shares for $ 14.5 million under the twenty-five million share repurchase program during the fiscal years ended March 31, 2021, 2020 and 2019, respectively.
At March 31, 2021, 7,089,160 shares of common stock remained available to be purchased under the current repurchase program.
14 unchanged sentences
At March 31, 2021, 1,751,813 shares were available for future issuance under the ESPP.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
2019 Equity Incentive Plan
5 unchanged sentences
At September 12, 2019, there was a total of 6,794,651 shares reserved for issuance under the 2019 Plan, which consisted of 5,500,000 new shares plus 1,294,651 shares that remained available for grant under the Amended 2007 Plan as of September 12, 2019, the effective date of the 2019 Plan.
−Removed: The aggregate number of shares available for issuance under the 2019 Plan will increase by 2.76 shares for each share:
−Removed: (i) subject to an award granted under the Amended 2007 Plan or 2019 Plan that are not issued because such award expires or otherwise terminates without all of the shares covered by such award having been issued;
−Removed: (ii) any shares subject to an award under the Amended 2007 Plan or 2019 Plan that are not issued because such award is settled in cash;
−Removed: (iii) any shares issued pursuant to an award granted under the Amended 2007 Plan or 2019 Plan that are forfeited back to or repurchased by the Company because of failure to vest;
−Removed: and (iv) any shares that are reacquired or withheld by the Company to satisfy tax withholding obligations in connection with common stock issued pursuant to restricted stock, restricted stock units, performance stock awards, or other stock awards granted under the Amended 2007 Plan and 2019 Plan.
−Removed: Furthermore, the share reserve under the 2019 Plan is reduced by one share for each share of common stock issued pursuant to a stock option or stock appreciation right and 2.76 shares for each share of common stock issued pursuant to restricted stock, restricted stock units, performance stock awards, or other stock awards granted under the 2019 Plan on or after September 12, 2019.
−Removed: At March 31, 2020, an aggregate of 4,274,473 shares of unvested equity awards were outstanding under the 2019 Plan.
−Removed: The 2019 Plan is administered by the Compensation Committee of the Board of Directors.
+Added: On September 10, 2020, the Company's stockholders approved an amendment to the 2019 Equity Incentive Plan (2019 Amended Plan).
+Added: The amendment increased the number of shares reserved for issuance by 4,700,000 shares, established a one-year minimum vesting requirement for awards granted on or after September 10, 2020, and changed the factor used to calculate the increase or reduction in the number of shares available for issuance under the 2019 Amended Plan.
+Added: At September 10, 2020, there was a total of 7,667,262 shares reserved for issuance under the 2019 Amended Plan, which consisted of 4,700,000 new shares plus 2,967,262 shares that remained available for grant under the 2019 Plan as of September 10, 2020, the effective date of the 2019 Amended Plan.
+Added: The aggregate number of shares available for issuance under the 2019 Amended Plan will increase by 1.00 share for each share of common stock returned to the 2019 Amended Plan pursuant to a stock option or stock appreciation right and increase for each share:
+Added: (i) subject to an award granted under the Amended 2007 Plan or 2019 Amended Plan that are not issued because such award expires or otherwise terminates without all of the shares covered by such award having been issued;
+Added: (ii) any shares subject to an award under the Amended 2007 Plan or 2019 Amended Plan that are not issued because such award is settled in cash;
+Added: (iii) any shares issued pursuant to an award granted under the Amended 2007 Plan or 2019 Amended Plan that are
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
+Added: forfeited back to or repurchased by the Company because of failure to vest;
+Added: and (iv) any shares that are reacquired or withheld by the Company to satisfy tax withholding obligations in connection with common stock issued pursuant to restricted stock, restricted stock units, performance stock awards, or other stock awards granted under the Amended 2007 Plan and 2019 Amended Plan by 2.76 for awards that are returned to the 2019 Amended Plan prior to September 10, 2020 and by 2.32 shares for awards that are returned to the 2019 Amended Plan on or after September 10, 2020.
+Added: Furthermore, the share reserve under the 2019 Amended Plan is reduced by one share for each share of common stock issued pursuant to a stock option or stock appreciation right, 2.76 shares for each share of common stock issued pursuant to restricted stock, restricted stock units, performance stock awards, or other stock awards granted under the 2019 Amended Plan on or after September 12, 2019 but prior to September 10, 2020 and 2.32 shares for each share of common stock issued pursuant to restricted stock, restricted stock units, performance stock awards, or other stock awards after September 10, 2020.
+Added: At March 31, 2021, an aggregate of 4,495,613 shares of unvested equity awards were outstanding under the 2019 Amended Plan.
+Added: The 2019 Amended Plan is administered by the Compensation Committee of the Board of Directors.
The Compensation Committee operates under guidelines established by the Board of Directors.
5 unchanged sentences
The following is a summary of share-based compensation expense including restricted stock units and employee stock purchases made under the Company's employee stock purchase plan (ESPP) based on estimated fair values within the applicable cost and expense lines identified below (in thousands):
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
7 unchanged sentences
Notes to Consolidated Financial Statements—(Continued)
−Removed: Transactions under the Amended 2007 and 2019 Plan during the fiscal years ended March 31, 2020, 2019 and 2018 are summarized in the table below.
+Added: Transactions under the Amended 2007, 2019 Plan and 2019 Amended Plan during the fiscal years ended March 31, 2021, 2020 and 2019 are summarized in the table below.
Restricted Stock Units
13 unchanged sentences
Outstanding – March 31, 2021 4,495,613 $ 28.14
−Removed: At March 31, 2020, there were 6,967,333 shares of common stock available for grant under the 2019 Plan.
−Removed: The Company does not currently expect to repurchase shares from any source to satisfy its obligations under the 2019 Plan.
+Added: At March 31, 2021, there were 7,868,290 shares of common stock available for grant under the 2019 Amended Plan.
+Added: The Company does not currently expect to repurchase shares from any source to satisfy its obligations under the 2019 Amended Plan.
The aggregate intrinsic value of stock options exercised and the fair value of restricted stock units vested at March 31, 2021, 2020 and 2019 were as follows (in thousands):
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
30 unchanged sentences
The following sets forth the components of the Company's net periodic pension cost of the noncontributory defined benefit pension plans for the fiscal years ended March 31, 2021, 2020, and 2019 (in thousands):
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
7 unchanged sentences
Rate of compensation increase 3.00 % 3.00 % 3.00 %
−Removed: As of March 31, 2020, unrecognized actuarial gain of $ 1.6 million ($ 1.1 million, net of tax) which have not yet been recognized in net periodic pension cost are included in accumulated other comprehensive income (loss).
+Added: As of March 31, 2021, unrecognized actuarial loss of $ 2.2 million ($ 1.5 million, net of tax) which have not yet been recognized in net periodic pension cost are included in accumulated other comprehensive income (loss).
The unrecognized actuarial gains and losses are calculated as the difference between the actuarially determined projected benefit obligation and the value of the plan assets less accrued pension costs.
9 unchanged sentences
Income (loss) before income tax expense (benefit) consisted of the following (in thousands):
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
3 unchanged sentences
The components of the income tax expense (benefit) are as follows (in thousands):
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
13 unchanged sentences
The income tax expense (benefit) computed using the federal statutory income tax rate differs from NetScout's effective tax rate primarily due to the following:
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
5 unchanged sentences
Meals and entertainment 0.7 43.7 ( 1.0 )
−Removed: Domestic production activities deduction — — 13.8
Change in valuation allowance 24.0 250.0 2.2
10 unchanged sentences
The components of net deferred tax assets and liabilities are as follows (in thousands):
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
Deferred tax assets:
7 unchanged sentences
Operating lease liability 17,333 18,213
+Added: Other deferred tax assets 2,116 20
Total gross deferred tax assets 90,990 77,122
3 unchanged sentences
Intangible assets ( 132,635 ) ( 146,950 )
−Removed: Other deferred liabilities ( 8,061 ) ( 1,609 )
+Added: Other deferred tax liabilities ( 8,848 ) ( 8,061 )
Operating lease right-of-use asset ( 14,474 ) ( 15,152 )
8 unchanged sentences
In situations where the Company concludes that it does not have sufficient objective and verifiable evidence to support the realizability of the asset it creates a valuation allowance against it.
−Removed: As a result, the Company established a valuation allowance of $ 0.8 million as of March 31, 2019 and $ 5.6 million as of March 31, 2020, representing an increase of $ 4.8 million.
−Removed: The increase in the valuation allowance as of March 31, 2020, as compared to March 31, 2019, is primarily related to deferred tax assets related to foreign tax credits that the Company believes are not more likely than not to be realized.
−Removed: If it is later determined the Company is able to use all or a portion of the deferred tax assets for which a valuation allowance has been established, then the Company may be required to recognize these deferred tax assets through a tax benefit recorded in the period such determination is made.
+Added: As a result, the Company established a valuation allowance of $ 5.6 million as of March 31, 2020 and $ 11.4 million as of March 31, 2021, repres enting an increase of $ 5.8 million.
+Added: The increase in the valuation allowance as of March 31, 2021, as compared to March 31, 2020, is primarily due to deferred tax assets related to U.S.
+Added: foreign tax credits that the Company believes are not more likely than not to be realized.
+Added: If it is later determined the Company is able to use all or a portion of the deferred tax assets for which a valuation allowance has been established, then the Company may be required to recognize these deferred tax assets as a tax benefit recorded in the period such determination is made.
At March 31, 2021, the Company had U.S.
1 unchanged sentence
The net operating loss and credit carryforwards will expire at various dates beginning in 2026.
−Removed: The Company also had foreign net operating loss carryforwards of approximately $ 45 million at March 31, 2020 and tax credit carryforwards of approximately $ 4 million.
+Added: The Company also had foreign net operating loss carryforwards of approximately $ 45 million at March 31, 2021 and foreign tax credit carryforwards of approximately $ 7 million.
The majority of foreign net operating losses have no expiration dates.
7 unchanged sentences
In the normal course of business, NetScout and its subsidiaries are examined by various taxing authorities, including the IRS in the United States.
−Removed: A reconciliation of the beginning and ending amount of unrecognized tax benefits for the fiscal years ended March 31, 2020, 2019 and 2018 is as follows (in thousands):
−Removed: Year Ended March 31,
+Added: A reconciliation of the beginning and ending amount of gross unrecognized tax benefits, excluding interest and penalties, for the fiscal years ended March 31, 2021, 2020 and 2019 is as follows (in thousands):
+Added: Fiscal Year Ended March 31,
2021 2020 2019
7 unchanged sentences
The Company includes interest and penalties accrued in the consolidated financial statements as a component of the tax provision.
−Removed: During fiscal year 2019, we completed our analysis and recording of all the tax effects related to the Tax Cuts and Jobs Act (TCJA), as required under SAB 118, and recorded a benefit of $ 87.0 million due to the re-measurement of our deferred taxes and a $ 2.0 million one-time transition tax.
+Added: During fiscal year 2019, the Company completed its analysis and recording of all the tax effects related to the Tax Cuts and Jobs Act (TCJA), as required under SAB 118, and recorded a benefit of $ 87.0 million due to the re-measurement of its deferred taxes and a $ 2.0 million one-time transition tax.
The Company is subject to a territorial tax system under the TCJA, in which we are required to provide for tax on Global Intangible Low-Taxed Income (GILTI) earned by certain foreign subsidiaries.
−Removed: The Company has established an accounting policy to provide for tax expense related to GILTI in the year the tax is incurred as a period expense.
−Removed: As a result of the TJCA, the Company expects that foreign earnings can be repatriated tax efficiently.
−Removed: Specifically, foreign earnings will not be indefinitely reinvested where the Company can repatriate those earnings in a tax efficient manner acceptable to management and which comply with local statutory and operational requirements.
−Removed: The Company repatriated certain previously taxed historical earnings during the current fiscal year in a tax efficient manner.
−Removed: The Company continues to
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: assert that any remainder of historical book over tax basis differences will be permanently reinvested.
−Removed: It is not practicable to estimate the amount of unrecognized deferred U.S.
−Removed: taxes on these differences.
+Added: The Company has established an accounting policy to provide for GILTI as a tax expense in the year incurred.
+Added: The Company continues to assert that certain historical book over tax outside basis differences primarily related to foreign unremitted earnings and cumulative translation adjustments are permanently reinvested.
+Added: The determination of the amount of unrecognized deferred tax liability related to such outside basis differences is not practicable due to the uncertainty in the manner and timing in which such differences become taxable and is dependent upon various circumstances and factors, including availability of tax planning.
+Added: The Company's intent is to only make distributions from its foreign subsidiaries in the future when they can be made at no or immaterial net tax cost.
NOTE 18 – LEASES
11 unchanged sentences
The Company determines if an arrangement is a lease at inception.
−Removed: ROU assets represent the Company’s right to use an underlying asset for the duration of the lease term.
+Added: Right-of-use (ROU) assets represent the Company's right to use an underlying asset for the duration of the lease term.
Lease liabilities represent the Company's contractual obligation to make lease payments over the lease term.
10 unchanged sentences
Most of the Company's lease agreements contain variable payments, primarily for common area maintenance (CAM), which are expensed as incurred and not included in the measurement of the ROU assets and lease liabilities.
−Removed: The components of operating lease cost for the fiscal year ended March 31, 2020 were as follows (in thousands):
+Added: The components of operating lease cost for the fiscal years ended March 31, 2021 and 2020 were as follows (in thousands):
+Added: Fiscal Year Ended March 31,
Lease cost under long-term operating leases $ 13,092 $ 13,318
2 unchanged sentences
Total operating lease cost $ 20,570 $ 21,749
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: The table below presents supplemental cash flow information related to leases during the fiscal year ended March 31, 2020 (in thousands):
+Added: The table below presents supplemental cash flow information related to leases during the fiscal years ended March 31, 2021 and 2020 (in thousands):
+Added: Fiscal Year Ended March 31,
Right-of-use assets obtained in exchange for new operating lease liabilities $ 2,492 $ 11,127
−Removed: Weighted average remaining lease term in years and weighted average discount rate are as follows:
+Added: At March 31, 2021 and 2020, the weighted average remaining lease term in years and weighted average discount rate were as follows:
+Added: March 31, 2021 March 31, 2020
Weighted average remaining lease term in years - operating leases 7.70 8.59
7 unchanged sentences
Present value of lease liabilities $ 73,621
−Removed: As previously disclosed in the Company’s fiscal year Form 10-K and under the previous lease accounting standard, ASC 840, Leases, the following table summarizes the future non-cancelable minimum lease commitments (including office space, copiers, and automobiles) at March 31, 2019 (in thousands):
−Removed: Year Ending March 31,
−Removed: 2020 $ 16,102
−Removed: Remaining years 43,997
−Removed: Total minimum lease payments $ 98,269
NOTE 19 – COMMITMENTS AND CONTINGENCIES
1 unchanged sentence
The Company's Level 3 liabilities at March 31, 2021 consisted of contingent purchase consideration related to the two acquisitions that occurred during the fiscal year 2020.
−Removed: The contingent purchase consideration related to the two acquisitions represent amounts deposited into escrow accounts, which were established to cover damages NetScout may suffer related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the sellers as described in the acquisition agreements.
−Removed: The contingent purchase consideration of $ 0.7 million and $ 1.0 million related to the
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: Gigavation and Eastwind acquisitions are included as accrued other in the Company's consolidated balance sheet at March 31, 2020.
−Removed: Except to the extent that valid indemnification claims are made prior to such time, the $ 0.7 million of purchase consideration related to the Gigavation acquisition will be paid to the seller in February 2021.
−Removed: The contingent purchase consideration related to the Eastwind acquisition was paid to the seller in April 2020.
−Removed: The Company had a contingent consideration asset related to the divestiture of its HNT tools business in September 2018.
−Removed: The contingent consideration asset represented potential future earnout payments to the Company of up to $ 4.0 million over two years that were contingent on the HNT tools business achieving certain milestones.
−Removed: The fair value of the contingent consideration of $ 2.3 million was recognized on the acquisition date and was measured using unobservable (Level 3) inputs.
−Removed: The contingent consideration asset at March 31, 2020 and 2019 was $ 0 and $ 0.8 million, respectively.
−Removed: The Company had a contingent liability at March 31, 2018 for $ 0.5 million related to the acquisition of Efflux in July 2017 for which an escrow account was established to cover damages NetScout may have suffered related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the seller as described in the acquisition agreement.
−Removed: The $ 0.5 million was paid to the sellers in July 2018.
−Removed: The Company had a contingent liability at March 31, 2018 for $ 4.9 million related to the acquisition of Simena LLC in November 2011, which was based on the ultimate settlement of assets and liabilities acquired as part of the transaction, and the former owners' future period of employment with NetScout.
−Removed: The contingent purchase consideration of $ 5.0 million was paid to the seller in November 2018.
+Added: The contingent purchase consideration related to the two acquisitions represent amounts deposited into escrow accounts, which were established to cover damages NetScout may have suffered related to any liabilities that NetScout did not agree to assume or as a result of the breach of representations and warranties of the sellers as described in the acquisition agreements.
+Added: The contingent purchase consideration of $ 0.7 million and $ 1.0 million related to the Gigavation and Eastwind acquisitions, respectively were included as accrued other in the Company's consolidated balance sheet at March 31, 2020.
+Added: The $ 0.7 million related to the Gigavation acquisition was paid to the seller in February 2021.
+Added: The $ 1.0 million related to the Eastwind acquisition was paid to the seller in April 2020.
+Added: During fiscal year 2019, the Company paid $ 0.5 million and $ 5.0 million of contingent liabilities to the sellers of Efflux Systems, Inc.
+Added: (Efflux) and Simena, LLC (Simena), respectively related to prior acquisitions.
From time to time, NetScout is subject to legal proceedings and claims in the ordinary course of business.
In the opinion of management, the amount of ultimate expense with respect to any current legal proceedings and claims, if determined adversely, will not have a material adverse effect on the Company's financial condition, results of operations or cash flows.
+Added: NetScout Systems, Inc.
+Added: Notes to Consolidated Financial Statements—(Continued)
As previously disclosed, in March 2016, Packet Intelligence LLC (Packet Intelligence or Plaintiff) filed a Complaint against NetScout and two subsidiary entities in the United States District Court for the Eastern District of Texas asserting infringement of five United States patents.
4 unchanged sentences
The jury indicated that the awarded damages amounts were intended to reflect a running royalty.
−Removed: The Court also conducted a bench trial on whether these patents were unenforceable due to, among other things, inequitable conduct.
In September 2018, the Court entered judgment and "enhanced" the jury verdict in the amount of $ 2.8 million as a result of a jury finding.
−Removed: The judgment also awards pre- and post judgement interest, and a running royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last date being June 2022.
−Removed: The Court denied the Plaintiff's motion for fees.
−Removed: Following additional motions for judgment as a matter of law, the court entered final judgment.
−Removed: On June 12, 2019, NetScout filed its Notice of Appeal of the judgment and all other adverse findings.
−Removed: NetScout has concluded that the risk of loss from this matter is currently neither remote nor probable, and therefore, under GAAP definitions, the risk of loss is termed "reasonably possible".
−Removed: Therefore, accounting rules require NetScout to provide an estimate for the range of potential liability.
−Removed: NetScout currently estimates that the estimated range of liability is between $ 0 and the aggregate amount awarded by the jury and the Court's award of enhanced damages, plus potential additional pre- and post-judgment interest amounts and costs and any royalties owed on post-trial sales of the accused G10 and GeoBlade products.
+Added: The judgment also awards pre- and post-judgment interest, and a running royalty on the G10 and GeoBlade products until the expiration of the patents at issue, the last date being June 2022.
+Added: Following the entry of final judgment, on June 12, 2019, NetScout filed its Notice of Appeal.
+Added: On July 14, 2020, the Court of Appeals for the Federal Circuit issued a decision vacating the $ 3,500,000 pre-suit damages award, affirming the $ 2,250,000 post-suit damages award, and remanding to the district court to determine what, if any, enhancement should be awarded.
+Added: On March 15, 2021, NetScout filed a petition for a writ of certiorari to the United States Supreme Court, which was subsequently denied, challenging, among other issues, the basis for enhanced damages and the patentability of the claimed technology.
+Added: NetScout continues to avail itself of its legal options.
+Added: NetScout has concluded that the risk of loss associated with the post-suit damages award is "probable" in accounting terms, regardless of the options NetScout may pursue, and that the risk of loss associated with pre-suit damages is now remote.
+Added: Accounting rules require NetScout to provide an estimate for the range of potential liability.
+Added: NetScout currently estimates that the range of liability is the sum of post-suit damages, plus pre- and post-judgment interest amounts and royalties owed on post-trial sales of the accused G10 and GeoBlade products.
+Added: Any potential enhancement is not reasonably estimable but is likely within the range of $ 0 to $ 2,800,000 .
Unconditional Purchase Obligations
−Removed: At March 31, 2020, the Company had unconditional purchase obligati ons of $ 35.5 million, which represent estimated open purchase orders to purchase inventory as well as commitments for products and services used in the normal course of business.
−Removed: NetScout Systems, Inc.
−Removed: Notes to Consolidated Financial Statements—(Continued)
−Removed: Other Contingent Liabilities
−Removed: During fiscal year 2020, one of the Company’s subsidiaries, located in the United Kingdom (UK), determined that value added tax (VAT) was not properly applied to certain supplies of service to the UK.
−Removed: The Company filed a blank disclosure with HM Revenue & Customs (HMRC) notifying HMRC of these application differences, and subsequently filed a voluntary disclosure agreement (VDA).
−Removed: The VDA covered the period of March 1, 2016 through February 29, 2020.
−Removed: The penalties associated with the application differences can range from 0%-30% of the underpayment and are based on objective and subjective determinations to be made by HMRC.
−Removed: At March 31, 2020 the Company has accrued the penalties that it believes are probable and estimable of assessment by HMRC.
−Removed: A majority of the difference in the Company's application of the VAT rules relates to services for which the subsidiary did not collect VAT from its customers and for which customers would have been eligible to reclaim under the UK VAT regime.
−Removed: Based on these facts the Company currently believes that it is probable that it will not be required to settle these amounts separately with its customers and HMRC, hence the Company has not recorded a payable to HMRC and a receivable from its customers for these amounts.
−Removed: The Company believes that it is reasonably possible that HMRC will require separate settlement;
−Removed: if that occurred, the Company would be required to collect approximately £ 16 million from its current customers and remit that amount to HMRC.
+Added: At March 31, 2021, the Company had unconditional purchase obligations of $ 55.3 million, which represent estimated open purchase orders to purchase inventory as well as commitments for products and services used in the normal course of business.
NOTE 20 – SEGMENT AND GEOGRAPHIC INFORMATION
2 unchanged sentences
The Company's policies mandate compliance with economic sanctions and export controls.
+Added: The Company reports revenues and income under one reportable segment.
Total revenue by geography is as follows (in thousands):
−Removed: Year Ended March 31,
+Added: Fiscal Year Ended March 31,
2021 2020 2019
9 unchanged sentences
Substantially all of the Company's identifiable assets are located in the United States.
−Removed: NOTE 21 – QUARTERLY RESULTS OF OPERATIONS – UNAUDITED
−Removed: The following table sets forth certain unaudited quarterly results of operations of NetScout for the fiscal years ended March 31, 2020 and 2019.
−Removed: In the opinion of management, this information has been prepared on the same basis as the audited consolidated financial statements and all necessary adjustments, consisting only of normal recurring adjustments, have been included in the amounts stated below to present fairly the quarterly information when read in conjunction with the audited consolidated financial statements and notes thereto included elsewhere in this Annual Report on Form 10-K.
−Removed: The quarterly operating results are not necessarily indicative of future results of operations.
−Removed: Three Months Ended
−Removed: (in thousands, except per share data)
−Removed: March 31, 2020 Dec.
−Removed: 2019 June 30,
−Removed: 2019 March 31, 2019 Dec.
−Removed: 2018 June 30,
−Removed: Revenue $ 229,351 $ 260,024 $ 216,421 $ 186,024 $ 235,002 $ 246,008 $ 223,797 $ 205,111
−Removed: Gross profit $ 166,619 $ 194,439 $ 157,289 $ 131,281 $ 176,466 $ 176,424 $ 159,817 $ 143,084
−Removed: Net income (loss) $ 7,336 $ 36,725 $ ( 17,472 ) $ ( 29,343 ) $ 19,211 $ ( 3,603 ) $ ( 26,428 ) $ ( 62,504 )
−Removed: Diluted net income (loss) per share $ 0.10 $ 0.49 $ ( 0.23 ) $ ( 0.38 ) $ 0.24 $ ( 0.05 ) $ ( 0.34 ) $ ( 0.78 )
NetScout Systems, Inc.
1 unchanged sentence
(in thousands)
−Removed: of Year Additions
+Added: of Fiscal Year Additions
Operations Charges to
1 unchanged sentence
Due to Write-Offs Balance at
−Removed: Year ended March 31, 2018
−Removed: Allowance for doubtful accounts $ 2,066 $ 695 $ ( 346 ) $ ( 424 ) $ 1,991
+Added: End of Fiscal Year
+Added: Fiscal year ended March 31, 2019
+Added: Allowance for credit losses $ 1,991 $ 826 $ ( 464 ) $ ( 770 ) $ 1,583
Deferred tax asset valuation allowance $ 3,108 $ 905 $ —
$ ( 3,178 ) $ 835
−Removed: Year ended March 31, 2019
−Removed: Allowance for doubtful accounts $ 1,991 $ 826 $ ( 464 ) $ ( 770 ) $ 1,583
+Added: Fiscal year ended March 31, 2020
+Added: Allowance for credit losses $ 1,583 $ 1,450 $ ( 1,202 ) $ ( 481 ) $ 1,350
Deferred tax asset valuation allowance $ 835 $ 4,806 $ — $ — $ 5,641
−Removed: Year ended March 31, 2020
−Removed: Allowance for doubtful accounts $ 1,583 $ 1,450 $ ( 1,202 ) $ ( 481 ) $ 1,350
+Added: Fiscal year ended March 31, 2021
+Added: Allowance for credit losses $ 1,350 $ 48 $ ( 733 ) $ ( 249 ) $ 416
Deferred tax asset valuation allowance $ 5,641 $ 5,765 $ — $ — $ 11,406
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.