What changed in this filing

/stocks — the workspaceLOADING

Item 9A. Controls and Procedures

2024-05-16 compared with 2023-05-16 · 375 added, 311 removed, 1098 unchanged (38% of the section changed)

15 unchanged sentences

Other Information

Insider Adoption or Termination of Trading Arrangements:

During the fiscal quarter ended March 31, 2024, none of our directors or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as those terms are defined in Regulation S-K, Item 408, except as described in the table below:

Name & Title Date Adopted Character of Trading Arrangement (1)

Aggregate Number of Shares of Common Stock to be Purchased or Sold Pursuant to Trading Arrangement Duration (2)

Date Terminated

John Downing , Executive Vice President, Worldwide Sales

March 7, 2024 Rule 10b5-1 Trading Arrangement Up to 20,000 shares to be sold

February 27, 2025 N/A

Christopher Perretta , Director

March 15, 2024 Rule 10b5-1 Trading Arrangement Up to 11,905 shares to be sold

March 10, 2025 N/A

(1) Each trading arrangement marked as a “Rule 10b5-1 Trading Arrangement” is intended to satisfy the affirmative defense of Rule 10b5-1(c), as amended (the “Rule”).

(2) Represents the expiration date of the Rule 10b5-1 Trading Arrangement..

Pursuant to the terms of the Rule 10b5-1 Trading Arrangement, the Rule 10b5-1 Trading Arrangement may terminate earlier upon the occurrence of certain events.

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

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Directors, Executive Officers and Corporate Governance

The information required by this Item 10 will be included under the captions "Directors and Executive Officers," "Proposal 1 Election of Directors," "Delinquent Section 16(a) Reports," "Corporate Governance -- Code of Ethics," "The Board of Directors and its Committees" and "Corporate Governance" in our definitive Proxy Statement with respect to our 2023 Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report and is incorporated herein by reference.

The information required by this Item 10 will be included in our definitive Proxy Statement with respect to our 2024 Annual Meeting of Stockholders to be filed with the SEC no later than 120 days after the end of the fiscal year covered by this Annual Report and is incorporated herein by reference.

We have adopted a written code of business conduct that applies to all of our employees, officers and directors, including our principal executive officer, principal financial officer and principal accounting officer.

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Executive Compensation

The information required by this Item 11 will be included under the caption "Compensation and Other Information Concerning Directors and Executive Officers" in our definitive Proxy Statement with respect to our 2023 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.

The information required by this Item 11 will be included in our definitive Proxy Statement with respect to our 2024 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.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item 12 will be included under the captions "Security Ownership of Certain Beneficial Owners and Management" and "Compensation and Other Information Concerning Directors and Executive Officers -- Equity Compensation Plan Information" in our definitive Proxy Statement with respect to our 2023 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.

The information required by this Item 12 will be included in our definitive Proxy Statement with respect to our 2024 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.

Certain Relationships and Related Transactions, and Director Independence

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 2023 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.

The information required by this Item 13 will be included in our definitive Proxy Statement with respect to our 2024 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.

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 2023 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.

The information required by this Item 14 will be included in our definitive Proxy Statement with respect to our 2024 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.

Exhibits and Financial Statement Schedules

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Consolidated Statements of Operations for the Years Ended March 31, 202 4 , 202 3 and 202 2

Consolidated Statements of Comprehensive Income for the Years Ended March 31, 202 3 , 202 2 and 20 21

Consolidated Statements of Comprehensive Income (Loss) for the Years Ended March 31, 202 4 , 202 3 and 202 2

Consolidated Statements of Stockholders' Equity for the Years Ended March 31, 202 4 , 202 3 and 202 2

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000-26251, filed on June 1, 2012 and incorporated herein by reference).

NetScout Systems, Inc.

2007 Equity Incentive Plan, as amended (filed as Appendix A to the Registrant’s Definitive Proxy Statement on Schedule 14A, SEC File No.

000-26251, filed with the Commission on July 28, 2015 and incorporated herein by reference).

NetScout Form of Restricted Stock Unit Agreement with respect to the NetScout 2007 Equity Incentive Plan (filed as Exhibit 99.2 to NetScout’s Registration Statement on Form S-8, SEC File No.

333-148364, filed on December 27, 2007 and incorporated herein by reference).

Form of Amended and Restated Severance Agreement for Named Executive Officers (other than the CEO and CFO) (filed as Exhibit 10.1 to NetScout’s Current Report on Form 8-K, SEC File No.

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000-26251, filed on February 22, 2023 and incorporated herein by reference).

NetScout Systems, Inc.

Amended and Restated Insider Trading and Window Policy

Subsidiaries of NetScout (filed herewith).

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Certification Pursuant to Section 906 of the Sarbanes–Oxley Act of 2002 (furnished herewith).

NetScout Systems, Inc.

Executive Compensation Recovery Policy

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.

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Christopher Perretta

/ S / S USAN L.

Director May 16, 2023

/ S / V IVIAN V ITALE

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Consolidated Statements of Operations for the Years Ended March 31, 202 4 , 202 3 and 202 2

Consolidated Statements of Comprehensive Income for the Years Ended March 31, 202 3 , 202 2 and 20 21

Consolidated Statements of Comprehensive Income ( Loss) for the Years Ended March 31, 202 4 , 202 3 and 202 2

Consolidated Statements of Stockholders' Equity for the Years Ended March 31, 202 4 , 202 3 and 202 2

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We have audited the accompanying consolidated balance sheets of NetScout Systems, Inc.

and its subsidiaries (the “Company”) as of March 31, 2023 and 2022, and the related consolidated statements of operations, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended March 31, 2023, 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").

and its subsidiaries (the "Company") as of March 31, 2024 and 2023, and the related consolidated statements of operations, of comprehensive income (loss), of stockholders' equity and of cash flows for each of the three years in the period ended March 31, 2024, 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").

We also have audited the Company's internal control over financial reporting as of March 31, 2024, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

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Critical Audit Matters

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.

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.

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.

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.

Interim and Annual Goodwill Impairment Assessments

As described in Note 9 to the consolidated financial statements, the Company has one reporting unit and the goodwill balance was $1.5 billion as of March 31, 2024.

Goodwill is tested by management for impairment at the reporting unit level annually, as of January 31, and on an interim basis if an event occurs or circumstances change (a "triggering event") that would indicate the fair value of the reporting unit is below its carrying value.

As a result of a sustained decline in the Company's stock price and overall market capitalization during the third quarter of fiscal year 2024, along with other qualitative considerations including the continued impact from the conditions in the macroeconomic environment, management determined a triggering event occurred, indicating goodwill may be impaired.

Accordingly, management performed a quantitative impairment test of goodwill as of December 31, 2023, which resulted in a goodwill impairment charge of $167.1 million.

Management performed the annual goodwill impairment test as of January 31, 2024, which resulted in an impairment charge of $50.2 million.

Management estimated the implied fair value of the reporting unit using a market approach.

As disclosed by management, the key assumption in the market approach was the company-specific control premium.

The principal considerations for our determination that performing procedures relating to the interim and annual goodwill impairment assessments is a critical audit matter are (i) the significant judgment by management when developing the fair value estimates of the reporting unit;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management's company-specific control premium significant assumption;

and (iii) the audit effort involved in the use of professionals with specialized skill and knowledge.

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 management's goodwill impairment assessments, including controls over the valuation of the reporting unit.

These procedures also included, among others (i) testing management’s process for developing the fair value estimates of the reporting unit;

(ii) evaluating the appropriateness of the market approach used by management;

(iii) testing the completeness and accuracy of underlying data used in the market approach;

and (iv) evaluating the reasonableness of the significant assumption used by management related to the company-specific control premium.

Evaluating management's assumption related to the company-specific control premium involved evaluating whether the assumption used by management was reasonable considering (i) the current and past performance of the reporting unit;

(ii) the synergies which a market participant could achieve;

(iii) the consistency with external market and industry data;

and (iv) whether the assumption was consistent with evidence obtained in other areas of the audit.

Professionals with specialized skill and knowledge were used to assist in evaluating (i) the appropriateness of the market approach and (ii) the reasonableness of the company-specific control premium assumption.

Revenue from Contracts with Customers - Identification of Distinct Performance Obligations

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During the year ended March 31, 2024, the Company recognized revenue from contracts with customers of $829.5 million.

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.

The principal considerations for our determination that performing procedures relating to revenue from contracts with customers - identification of distinct performance obligations is a critical audit matter are (i) 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 and (ii) a high degree of auditor judgment, subjectivity and effort in performing procedures and evaluating 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.

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.

These procedures also included, among others, for a sample of contracts, (i) reading the executed contract to understand the terms and conditions and (ii) evaluating management's identification of the performance obligations.

/s/ PricewaterhouseCoopers LLP

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Cash and cash equivalents $ 389,674 $ 386,794

Marketable securities 32,204 67,037

Accounts receivable and unbilled costs, net of allowance for doubtful accounts of $ 675 and $ 1,649 at March 31, 2023 and 2022, respectively

Marketable securities and investments 33,459 32,204

Accounts receivable and unbilled costs, net of allowance for doubtful accounts o f $ 479 and $ 675 at March 31, 2024 and 2023, respectively

192,096 143,855

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Stockholders’ equity:

Preferred stock, $ 0.001 par value:

Preferred stoc k, $ 0.001 par value:

5,000,000 shares authorized;

no shares issued or outstanding at March 31, 2024 and 2023

Common stock, $ 0.001 par value:

Common st ock, $ 0.001 par value:

300,000,000 shares authorized;

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Accumulated other comprehensive income 3,572 5,738

Treasury stock at cost, 57,434,779 and 52,323,090 shares at March 31, 2023 and 2022, respectively

Treasury stock a t cost, 59,912,093 and 57,434,779 shares at March 31, 2024 and 2023, respectively

( 1,615,483 ) ( 1,546,128 )

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Restructuring charges — 1,782 —

Goodwill impairment 217,260 — —

Gain on divestiture of a business ( 3,806 ) — —

Total operating expenses 791,869 613,768 592,755

Income from operations 77,664 48,634 37,130

Interest and other expense, net:

Income (loss) from operations ( 149,826 ) 77,664 48,634

Interest and other income (expense), net:

Interest income 9,602 4,923 297

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Other income (expense), net 4,365 ( 3,924 ) 2,009

Total interest and other expense, net ( 9,249 ) ( 5,742 ) ( 14,826 )

Income before income tax expense 68,415 42,892 22,304

Total interest and other income (expense), net 5,316 ( 9,249 ) ( 5,742 )

Income (loss) before income tax expense ( 144,510 ) 68,415 42,892

Income tax expense 3,224 8,767 7,018

Net income $ 59,648 $ 35,874 $ 19,352

Basic net income per share $ 0.83 $ 0.48 $ 0.26

Diluted net income per share $ 0.82 $ 0.48 $ 0.26

Net income (loss) $ ( 147,734 ) $ 59,648 $ 35,874

Basic net income (loss) per share $ ( 2.07 ) $ 0.83 $ 0.48

Diluted net income (loss) per share $ ( 2.07 ) $ 0.82 $ 0.48

Weighted average common shares outstanding used in computing:

Net income per share—basic 71,781 74,019 73,103

Net income per share—diluted 73,046 75,084 73,822

Net income (loss) per share—basic 71,474 71,781 74,019

Net income (loss) per share—diluted 71,474 73,046 75,084

The accompanying notes are an integral part of these consolidated financial statements.

NetScout Systems, Inc.

Consolidated Statements of Comprehensive Income

Consolidated Statements of Comprehensive Inco me (Loss)

(In thousands)

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2024 2023 2022

Net income $ 59,648 $ 35,874 $ 19,352

Other comprehensive income:

Net in come (loss)

$ ( 147,734 ) $ 59,648 $ 35,874

Other comprehensive income (loss) :

Cumulative translation adjustments ( 113 ) ( 270 ) 153

Recognition of actuarial net gains (losses) from pension and other post-retirement plans, net of tax (benefit) of $ 2,448 , $ 824 , and ($ 657 )

Recognition of actuarial net (losses) gains from pension and other post-retirement plans, net of (benefit) tax of ($ 823 ), $ 2,448 , and $ 824

( 1,937 ) 5,759 1,937

Changes in market value of investments:

Changes in unrealized gains (losses), net of tax (benefit) of $ 14 , ($ 9 ), and ($ 41 )

Changes in unrealized (losses) gains, net of (benefit) tax of ($ 15 ) , $ 14 , and ($ 9 )

( 45 ) 42 ( 29 )

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Changes in market value of derivatives:

Changes in market value of derivatives, net of (benefit) tax of ($ 116 ), $ 19 , and $ 66

Changes in market value of derivatives, net of (benefit) ta x of ($ 9 ), ($ 116 ), and $ 19

( 24 ) ( 361 ) 63

Reclassification adjustment for net gain (loss) included in net income, net of tax (benefit) of $ 137 , ($ 13 ), and ($ 73 )

Reclassification adjustment for net (loss) gain included in net income (loss), net of (benefit) tax of ($ 15 ), $ 137 , and ($ 13 )

( 47 ) 427 ( 43 )

Total net change in market value of derivatives

Other comprehensive income 5,597 2,081 1,220

Total comprehensive income $ 65,245 $ 37,955 $ 20,572

Other comprehensive income (loss)

( 2,166 ) 5,597 2,081

Total comprehensive inco me (loss)

$ ( 149,900 ) $ 65,245 $ 37,955

The accompanying notes are an integral part of these consolidated financial statements.

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Unrealized net investment losses ( 29 ) ( 29 )

Unrealized net losses on derivative financial instruments ( 28 ) ( 28 )

Unrealized net gains on derivative financial instruments 20 20

Cumulative translation adjustments 153 153

Recognition of actuarial net losses from pension and other post-retirement plan ( 1,548 ) ( 1,548 )

Recognition of actuarial net gains from pension and other post-retirement plan 1,937 1,937

Issuance of common stock pursuant to vesting of restricted stock units 1,728,994 2 2

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Net income 59,648 59,648

Unrealized net investment losses ( 29 ) ( 29 )

Unrealized net investment gains 42 42

Unrealized net gains on derivative financial instruments 66 66

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Balance, March 31, 2023 128,683,824 128 3,099,698 5,738 57,434,779 ( 1,546,128 ) 470,213 2,029,649

Net income 59,648 59,648

Unrealized net investment gains 42 42

Unrealized net gains on derivative financial instruments 66 66

( 147,734 ) ( 147,734 )

Unrealized net investmen t losses

( 45 ) ( 45 )

Unrealized net losses on de rivative financial instruments

( 71 ) ( 71 )

Cumulative translation adjustments ( 113 ) ( 113 )

Recognition of actuarial net gains from pension and other post-retirement plan 5,759 5,759

Recognition of actuarial net losses from pension and other post-retirement plan

( 1,937 ) ( 1,937 )

Issuance of common stock pursuant to vesting of restricted stock units 2,067,558 3 3

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Cash flows from operating activities:

Net income $ 59,648 $ 35,874 $ 19,352

Adjustments to reconcile net income to cash provided by operating activities, net of the effects of acquisitions:

Net income (loss)

$ ( 147,734 ) $ 59,648 $ 35,874

Adjustments to reconcile net income (loss) to cash provided by operating activities, net of the effects of acquisitions:

Depreciation and amortization 74,986 85,918 95,784

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Operating lease right-of-use assets 10,533 10,598 10,292

Gain on divestiture of a business ( 3,806 ) — —

Loss on disposal of fixed assets 303 49 5

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Change in fair value of derivative instrument ( 206 ) 1,380 —

Goodwill impairment 217,260 — —

Net change in fair value of contingent and contractual liabilities — — ( 837 )

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Cash flows from investing activities:

Purchase of marketable securities ( 114,513 ) ( 78,367 ) ( 15,673 )

Purchase of marketable securities and investments ( 52,774 ) ( 114,513 ) ( 78,367 )

Proceeds from maturity of marketable securities 64,728 140,462 20,569

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Purchase of intangible assets — ( 161 ) ( 50 )

Decrease (increase) in deposits 3 ( 155 ) 88

Net cash provided by (used in) investing activities 15,304 ( 68,353 ) 24,698

Proceeds from divestiture of a business 7,766 — —

(Increase) decrease in deposits ( 25 ) 3 ( 155 )

Net cash provided by (used in) investin g activities

13,358 15,304 ( 68,353 )

Cash flows from financing activities:

Issuance of common stock under stock plans 3 2 2

Payment of contingent consideration — — ( 1,748 )

Treasury stock repurchases ( 150,039 ) ( 35,653 ) ( 3,275 )

Treasury stock repurchases, including accelerated share repurchases ( 50,000 ) ( 150,039 ) ( 35,653 )

Tax withholding on restricted stock units ( 19,355 ) ( 19,393 ) ( 15,691 )

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Collection of contingent consideration — — 837

Net cash used in financing activities ( 419,430 ) ( 54,165 ) ( 118,307 )

Net cash used in fina ncing activities

( 69,352 ) ( 419,430 ) ( 54,165 )

Effect of exchange rate changes on cash and cash equivalents 63 ( 1,891 ) ( 4,510 )

Net (decrease) increase in cash and cash equivalents ( 249,367 ) 168,985 126,939

Cash and cash equivalents and restricted cash, beginning of year 636,161 467,176 340,237

Cash and cash equivalents and restricted cash, end of year $ 386,794 $ 636,161 $ 467,176

Net increase (decrease) in cash and cash equivalents 2,880 ( 249,367 ) 168,985

Cash and cash equivalents, beginning of year 386,794 636,161 467,176

Cash and cash equivalents, end of year $ 389,674 $ 386,794 $ 636,161

Supplemental disclosures of cash flow information:

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NOTE 1 – NATURE OF BUSINESS

NetScout Systems, Inc., or NetScout or the Company, has been a technology innovator for three-plus decades since its founding in 1984.

NetScout Systems, Inc., or NetScout or the Company, has been a technology innovator for nearly four decades since its founding in 1984.

The Company's solutions, based on patented Adaptive Service Intelligence (ASI) technology, help customers identify network and application performance issues, defend their networks from denial of service (DDoS) attacks, and rapidly find and isolate advanced network threats.

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Global and Macroeconomic Conditions

The Company continues to closely monitor the current global and macroeconomic conditions, including the impacts of the war in Ukraine and related sanctions, global geopolitical tension, stock market volatility, exchange rate fluctuations, rising inflation and interest rates, the risk of a recession, and the impacts of epidemics or pandemics such as the coronavirus (COVID-19) on all aspects of its business, including the manner and extent to which they have impacted and could continue to impact its customers, employees, supply chain, and distribution network.

The impacts of these global and macroeconomic trends remain uncertain.

The Company continues to closely monitor the current global and macroeconomic conditions, including the impacts of the ongoing war in Ukraine and hostilities in the Middle East, global geopolitical tension, stock market volatility, industry-specific capital spending trends, exchange rate fluctuations, inflation, interest rates, and the risk of a recession, including the manner and extent to which they have impacted and could continue to impact its business, customers, employees, supply chain, and distribution network.

The full extent of the impacts of these global and macroeconomic trends remain uncertain.

It is possible that the measures taken by the governments of countries affected and the resulting economic impacts may materially and adversely affect the Company's future results of operations, cash flows and financial position as well as its customers.

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 has taken and continues to take precautionary actions to manage costs and spending across the organization.

The macroeconomic environment remains challenging with constrained customer spending and the Company expects this to persist into the remainder of fiscal year 2025.

The Company has taken and continues to take precautionary actions to manage costs and increase productivity across the organization.

This includes managing discretionary spending and hiring activities.

In addition, based on covenant levels, the Company had as of March 31, 2024 an incremental $ 700 million available under the revolving credit facility.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security Act (the CARES Act) was enacted.

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.

The Company elected to defer the employer-paid portion of social security taxes.

The Company had deferred $ 4.5 million of employer payroll

The Company expects net cash provided by operations combined with cash, cash equivalents, marketable securities and investments 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.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

taxes, which was included as accrued other in the Company's consolidated balance sheet at March 31, 2022.

The balance was paid in December 2022.

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

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While the receivable represents an enforceable obligation, the Company does not believe its right to payment is unconditional, therefore for balance sheet presentation purposes, the Company has not recognized the deferred revenue or the related account receivable and no amounts appear in the consolidated balance sheets for such transactions because control of the underlying deliverable has not transferred.

The aggregate amount of unrecognized accounts receivable and deferred revenue w as $ 6.6 million a nd $ 9.4 million at March 31, 2023 and 2022, respectively.

The aggregate amount of unrecognized accounts receivable and deferred reve nue was $ 5.9 million a nd $ 6.6 million at March 31, 2024 and 2023, respectively.

Concentration of Credit Risk

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At March 31, 2024 and March 31, 2023, the Company had no direct customers or indirect channel partners which accounted for more than 10% of the accounts receivable balance.

During the fiscal years ended March 31, 2024, and 2022, no direct customers or indirect channel partners accounted for more than 10% of the Company's total revenue.

During the fiscal year ended March 31, 2023, one direct customer, Verizon, accounted for more than 10% of the Company's total revenue, while no indirect channel partners accounted for more than 10% of the Company's total revenue.

During the fiscal years ended March 31, 2022 and 2021 respectively, no direct customers or indirect channel partners accounted for more than 10% of total revenue.

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;

1 unchanged sentence

However, if the Company’s assumptions are incorrect, there could be an adverse impact on its allowance for doubtful accounts.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Trade Receivable Valuations

3 unchanged sentences

Cost is determined by using the first-in, first-out (FIFO) method.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Fixed assets are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets.

8 unchanged sentences

For further discussion of the Company's policies related to leases see Note 18, "Leases."

Valuation of Goodwill, Intangible Assets and Other Acquisition Accounting Items

Valuation of Goodwill, Intangible Assets and Other Acquisition and Divestiture Accounting Items

The Company amortizes acquired definite-lived intangible assets over their estimated useful lives.

Goodwill and other indefinite-lived intangible assets are not amortized but subject to annual impairment tests;

more frequently if events or circumstances occur that would indicate a potential decline in their fair value.

Goodwill is not amortized but subject to annual impairment tests;

more frequently if events or circumstances occur (a "triggering event") that would indicate the fair value of its reporting unit is below its carrying value.

The Company performs the assessment annually during the fourth quarter and on an interim basis if potential impairment indicators arise.

4 unchanged sentences

However, if the Company concludes otherwise, quantitative impairment testing is not required.

The Company performed its annual impairment analysis for goodwill as of January 31, 2023, using the qualitative (Step 0) assessment, and the Company concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying value.

The acquisition method of accounting requires an estimate of the fair value of the assets and liabilities acquired as part of these transactions.

In order to estimate the fair value of acquired intangible assets, the Company uses either an income, market or cost method approach.

The contingent purchase consideration represents 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 Company did not have any acquisitions during the years ended March 31, 2023, 2022 and 2021.

The contingent purchase consideration represents amounts deposited into escrow accounts, which were established to cover damages NetScout may have suffered related to any liabilities that NetScout does 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 Company did not complete any acquisitions and completed one divestiture during the three years ended March 31, 2024.

Capitalized Software Development Costs

Costs incurred in the research and development of the Company's products are expensed as incurred, except for certain software development costs.

Costs associated with the development of computer software are expensed prior to the establishment of technological feasibility and capitalized thereafter until the related software products are available for first

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

customer shipment.

Such costs are amortized using the straight-line method over the estimated economic life of the product, which generally does not exceed three years .

4 unchanged sentences

Derivative Financial Instruments

Under authoritative guidance for derivative financial instruments and hedging activities, all hedging activities must be documented at the inception of the hedge and must meet the definition of highly effective in offsetting changes to future cash flows in order for the derivative to qualify for hedge accounting.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

flows in order for the derivative to qualify for hedge accounting.

Under the guidance, if an instrument qualifies for hedge accounting, the changes in the fair value each period for open contracts, measured at the end of the period, are recorded to other comprehensive income.

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dollars are translated into U.S.

dollars using the period-end exchange rate, and income and expense items are translated using the

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

average exchange rate during the period.

dollars using the period-end exchange rate, and income and expense items are translated using the average exchange rate during the period.

Cumulative translation adjustments are reflected as a separate component of stockholders' equity.

6 unchanged sentences

These amounts are included in other income (expense), net in the Company's consolidated statements of operations.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Advertising Expense

NetScout recognizes advertising expense as incurred.

Advertising expense was $ 10.2 million, $ 11.4 million and $ 8.7 million for the fiscal years ended March 31, 2023, 2022 and 2021, respectively.

Advertising expense wa s $ 6.8 million, $ 10.2 million and $ 11.4 million for the fiscal years ended March 31, 2024, 2023 and 2022, respectively.

Comprehensive Income

11 unchanged sentences

ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, with early adoption permitted.

ASU 2021-08 is effective for the Company beginning April 1, 2023.

ASU 2021-08 was adopted on April 1, 2023.

Amendments within the standard are required to be applied on a prospective basis from the date of adoption.

The adoption is not expected to have a material impact on the Company's financial position, results of operations, and disclosures.

We will apply the provisions of ASU 2021-08 after adoption to future acquisitions, if any.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting.

The amendments provide optional guidance for a limited time to ease the potential burden in accounting for reference rate reform.

The new guidance provides optional expedients and exceptions for applying U.S.

GAAP to contracts, hedging relationships and other transactions affected by reference rate reform if certain criteria are met.

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.

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.

In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848):

Deferral of the Sunset Date of Topic 848, which provides optional guidance to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform by delaying the effective date of the guidance issued in ASU 2020-04 to December 31, 2024.

The Company adopted this guidance in the fourth quarter of fiscal year 2023 on a prospective basis, which did not have a material impact on the Company's financial position, results of operations, and disclosures.

See Note 11 Long-term Debt for further discussion.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

The Company will apply the provisions of ASU 2021-08 to future acquisitions, if any.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures.

ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures.

The amendments address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information.

The amendments are effective retrospectively for fiscal years beginning after December 15, 2024.

The amendments should be applied prospectively;

however, retrospective application is also permitted.

ASU 2023-09 is effective for NetScout beginning April 1, 2025.

Early adoption is permitted.

The Company is in the process of evaluating the impact that the adoption ASU 2023-09 will have to the financial statements and related disclosures.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures, which provides updates to qualitative and quantitative reportable segment disclosure requirements, including enhanced disclosures about significant segment expenses and increased interim disclosure requirements, among others.

The amendments in ASU 2023-07 are effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted, and the amendments should be applied retrospectively.

The Company plans to adopt ASU 2023-07 beginning with its fiscal year ending March 31, 2025.

The Company is in the process of evaluating the impact that the adoption ASU 2023-07 will have to the financial statements and related disclosures.

NOTE 3 - REVENUE RECOGNITION

2 unchanged sentences

The Company derives revenues primarily from the sale of network management tools and cybersecurity solutions for service provider and enterprise customers, which include hardware, software, and service offerings.

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's product

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

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.

28 unchanged sentences

that is, when control of the product transfers to the reseller or distributor.

The Company records consideration given to a customer as a reduction of revenue to the extent they have

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

recorded revenue from the customer.

The Company records consideration given to a customer as a reduction of revenue to the extent they have recorded revenue from the customer.

With limited exceptions, the Company's return policy does not allow product returns for a refund.

1 unchanged sentence

In addition, the Company has a history of successfully collecting receivables from its resellers and distributors.

During the fiscal year ended March 31, 2023, the Company recognized reven ue of $ 328.2 million rela ted to the Company's deferred revenue balance reported at March 31, 2022.

During the fiscal year ended March 31, 2024, the Company recognized reven ue of $ 311.3 million related to the Company's deferred revenue balance reported at March 31, 2023.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Performance Obligations

9 unchanged sentences

The Company did not have any material variable consideration such as obligations for returns, refunds or warranties at March 31, 2024.

At March 31, 2023, the Company had total deferred revenu e of $ 441.3 million, which represents the aggregate total contract price allocated to undelivered performance obligations.

The Company expect s to recognize $ 311.5 million, or 71 %, of this revenue during the next 12 months, and expects to recognize the remaining $ 129.8 million, or 29 %, of this revenue thereafter.

At March 31, 2024, the Company had total deferred revenue of $ 432.0 million, which represents the aggregate total contract price allocated to undelivered performance obligations.

The Company expects to recognize $ 301.8 million, or 70 %, of this revenue during the next 12 months, and expects to recognize the remaining $ 130.2 million, or 30 %, of this revenue thereafter.

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.

9 unchanged sentences

The Company expenses costs as incurred for sales commissions when the amortization period would have been one year or less.

At March 31, 2023, th e consolidated ba lance sheet included $ 9.4 million in assets related to sales commissions to be expensed in future periods.

A balance of $ 4.7 million was included in prepaid expenses and other current assets, and a balance of $ 4.7 million was in cluded in other assets in the Company's consolidated balance sheet at March 31, 2023.

At March 31, 2022, the consolidated balance sheet included $ 8.8 million in assets related to sales commissions to be expensed in future

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

At March 31, 2024, th e consolidated balance sheet included $ 9.3 million in assets related to sales commissions to be expensed in future periods.

A balance of $ 4.8 million was included in prepaid expenses and other current assets, and a balance of $ 4.5 million was included in other assets in the Company's consolidated balance sheet at March 31, 2024.

At March 31, 2023, the consolidated balance sheet included $ 9.4 million in assets related to sales commissions to be expensed in future periods.

A balance of $ 4.7 million was included in prepaid expenses and other current assets, and a balance of $ 4.7 million was included in other assets in the Company's consolidated balance sheet at March 31, 2023.

During the twelve months ended March 31, 2024 and 2023, the Company recognized $ 6.8 million and $ 7.0 million of amortization related to this sales commission asset, which is included in the sales and marketing expense line in the Comp any's consolidated statements of operations.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Allowance for Credit Losses

3 unchanged sentences

Balance at March 31, 2023

Provision for allowance for credit losses 479

Recoveries and other adjustments 876

Write off charged against the allowance for credit losses ( 2,329 )

Additions resulting in charges to operations 485

Deductions due to write-offs ( 681 )

Balance at March 31, 2024

NOTE 4 – CASH, CASH EQUIVALENTS AND MARKETABLE SECURITIES

Cash and cash equivalents mainly consisted of U.S government and municipal obligations, commercial pap er, corporate bonds, certificate o f deposits, money market instruments and cash maintained with various financial institutions at March 31, 2023 and 2022.

Cash, Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the consolidated statements of cash flows (in thousands):

March 31, 2023 March 31, 2022 March 31, 2021 March 31, 2020

Cash and cash equivalents $ 386,794 $ 636,161 $ 467,176 $ 338,489

Restricted cash — — — 1,748

Total cash, cash equivalents and restricted cash $ 386,794 $ 636,161 $ 467,176 $ 340,237

The Company's restricted cash includes cash balances which are legally or contractually restricted.

The Company's restricted cash is included within prepaid and other current assets and consists of amounts related to holdbacks associated with prior acquisitions.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

NOTE 4 – CASH, CASH EQUIVALENTS, MARKETABLE SECURITIES AND INVESTMENTS

Cash and cash equivalents mainly consisted of U.S government and municipal obligations, commercial pap er, money market instruments and cash maintained with various financial institutions at March 31, 2024 and 2023.

Marketable Securities

1 unchanged sentence

Cost Unrealized

Gains (Losses) Fair

Type of security:

1 unchanged sentence

Commercial paper 8,648 — 8,648

Corporate bonds 310 — 310

Certificate of deposits 3,963 — 3,963

Certificates of deposit 2,807 — 2,807

Total short-term marketable securities 21,978 ( 26 ) 21,952

4 unchanged sentences

Cost Unrealized

Gains (Losses) Fair

Type of security:

4 unchanged sentences

Total short-term marketable securities 32,205 ( 1 ) 32,204

government and municipal obligations 8,915 25 8,940

Total long-term marketable securities 8,915 25 8,940

Total marketable securities $ 41,120 $ 24 $ 41,144

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Contractual maturities of the Company's marketable securities held at March 31, 2024 and 2023 (in thousands) were as follows:

4 unchanged sentences

$ 22,946 $ 41,144

In February 2023, the Company entered into a forward share purchase agreement with Napatech A/S (Napatech), a publicly traded Danish company registered on the Oslo stock exchange, to purchase approximately 6.2 million shares of Napatech's common stock for $ 7.5 million.

In April 2023, the Company settled the forward share purchase contract with Napatech in exchange for approximately 6.2 million shares of Napatech's common stock.

As part of the agreement, the Company received the right to designate a representative to be nominated for election to the Napatech Board of Directors, which was approved by Napatech's Nomination Committee in April 2023.

The Company accounts for this investment under the equity method and has elected to apply the fair value option to the investment.

The Company records the investment at fair value at the end of each period based on the closing price of Napatech's stock and any change in fair value during the period is recorded in other income (expense), net within the Company's consolidated statement of operations.

At March 31, 2024, the fair value of the investment in Napatech was $ 11.5 million and was included in marketable securities and investments in the Company's consolidated balance sheet.

During the fiscal year ended March 31, 2024, the Company recognized a $ 5.5 million increase in the fair value of the equity investment in Napatech in other income (expense), net within the Company's consolidated statement of operations.

For the fiscal year ended March 31, 2024, the unrealized losses related to foreign currency translation on the equity investment in Napatech were immaterial.

NetScout Systems, Inc.

11 unchanged sentences

Commercial paper — 8,648 — 8,648

Corporate bonds 310 — — 310

Certificate of deposits — 3,963 — 3,963

Certificates of deposit — 2,807 — 2,807

Equity investment in Napatech 11,507 — — 11,507

Derivative financial instruments — 11 — 11

9 unchanged sentences

Corporate bonds 310 — — 310

Certificate of deposits — 2,000 — 2,000

Certificates of deposit — 3,963 — 3,963

Derivative financial instruments — 59 — 59

6 unchanged sentences

The Company's Level 2 investments are classified as such because they are valued using observable inputs other than Level 1 quoted prices that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets, or quoted prices for identical or similar assets in markets that are not active.

The Company's Level 3 assets consisted of contingent consideration related to the divestiture of the Company's handheld network test (HNT) tools business in September 2018, which represented potential future earn outs to the Company that were contingent on the HNT tools business achieving certain milestones.

During the fiscal year ended March 31, 2022, the Company

The Company’s Level 3 liability at March 31, 2023 consisted of a forward share purchase contract with Napatech to purchase approximately 6.2 million shares of Napatech's common stock for $ 7.5 million, which qualified as a derivative instrument under authoritative guidance.

The Company measured the forward share purchase contract at March 31, 2023 at fair

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

recorded an $ 0.8 million change in the fair value of the contingent consideration, which is included in other income (expense) , net within the Company's consolidated statement of operations related to the divestiture of the handheld network test (HNT) tools business in September 2018.

The contingent consideration, which was a Level 3 asset, represented potential future earn outs to the Company that were contingent on the HNT tools business achieving certain milestones.

The $ 0.8 million of contingent consideration was paid to the Company as the final earnout during the fiscal year ended March 31, 2022.

The Company’s Level 3 liability at March 31, 2023 consisted of a forward share purchase contract, which qualified as a derivative instrument under authoritative guidance.

In February 2023, the Company entered into an agreement with Napatech A/S (Napatech) to purchase approximately 6.2 million shares of Napatech’s common stock for $ 7.5 million.

The Company measured the forward share purchase contract at March 31, 2023 at fair value based on inputs which were observable and those which were not observable in the market, resulting in a charge related to the Level 3 fair value hierarchy classification.

During the fiscal year ended March 31, 2023, the Company recorded a $ 1.4 million change in the fair value of the derivative instrument in other income (expense) , net within the Company's consolidated statement of operations.

On April 14, 2023, the Company settled the contract and paid $ 7.5 million to Napatech in exchange for approximately 6.2 million shares of Napatech's common stock.

During the fiscal year ended March 31, 2021, the Company paid contingent purchase consideration related to the two acquisitions that occurred during fiscal year 2020.

The $ 0.7 million of purchase consideration related to the Gigavation acquisition was paid to the seller in February 2021.

The $ 1.0 million contingent purchase consideration related to the Eastwind acquisition was paid to the seller in April 2020.

The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial asset for the fiscal year ended March 31, 2022 (in thousands):

Contingent Consideration

Balance at March 31, 2021 $ —

Change in fair value of contingent consideration 837

Collection of contingent consideration ( 837 )

Balance at March 31, 2022 $ —

The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial liability for the fiscal year ended March 31, 2023 (in thousands):

value based on inputs which were observable and those which were not observable in the market, resulting in a charge related to the Level 3 fair value hierarchy classification.

In April 2023, the Company settled the forward share purchase contract with Napatech in exchange for approximately 6.2 million shares of Napatech's common stock valued at $ 6.2 million at such time.

During the fiscal years ended March 31, 2024 and 2023, the Company recorded a $ 0.2 million and $ 1.4 million change in the fair value of the derivative instrument in other income (expense) , net within the Company's consolidated statement of operations.

During the fiscal year ended March 31, 2022, the Company received $ 0.8 million of contingent consideration related to the divestiture of the Company's handheld network test (HNT) tools business that occurred during fiscal year 2019.

The following table sets forth a reconciliation of changes in the fair value of the Company’s Level 3 financial liability for the fiscal years ended March 31, 2024 and 2023 (in thousands):

Derivative Instrument

2 unchanged sentences

Balance at March 31, 2023 $ ( 1,380 )

NOTE 6 – INVENTORIES

Change in fair value of derivative instrument 206

Settlement of derivative instrument 1,174

Balance at March 31, 2024 $ —

NOTE 6 – INVENTORIES AND DEFERRED COSTS

Inventories are stated at the lower of actual cost or net realizable value.

6 unchanged sentences

$ 14,095 $ 17,956

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

NOTE 7 – FIXED ASSETS

14 unchanged sentences

Depreciation expense was $ 15.9 million, $ 18.8 million and $ 20.1 million for the fiscal years ended March 31, 2024, 2023 and 2022, respectively.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

NOTE 8- DIVESTITURES

Business Divestiture

On September 8, 2023, the Company entered into an Asset Purchase Agreement to divest its Test Optimization business (TO business) for a purchase price of $ 7.8 million, inclusive of a working capital adjustment.

The Company recorded a gain of $ 3.8 million on the divestiture for the fiscal year ended March 31, 2024.

In connection with the divestiture, the Company had entered into a transitional services agreement with the buyer to provide certain services which ended on December 31, 2023.

The Company determined that the sale of the TO business did not represent a strategic shift and will not have a major effect on its consolidated results of operations, financial position or cash flow.

Accordingly, the Company has not presented the sale as a discontinued operation in the consolidated financial statements.

NOTE 9 – GOODWILL & INTANGIBLE ASSETS

The Company has one reporting unit.

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.

At March 31, 2023 and 2022, the carrying amount of goodwill was $ 1.7 billion.

During fiscal years 2023 and 2022, the Company's annual impairment tests indicated that goodwill was not impaired.

The Company completed its annual goodwill impairment test at January 31, 2023, using the qualitative (Step 0) assessment, and the Company concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying value.

The change in the carrying amount of goodwill for the fiscal year ended March 31, 2023 is due to the impact 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, 2023 and 2022 are as follows (in thousands):

Goodwill is tested for impairment at a reporting unit level at least annually, as of January 31, and on an interim basis if an event occurs or circumstances change (a "triggering event") that would indicate that the fair value of the reporting unit is below its carrying value.

During the year ended March 31, 2024, the Company recorded $ 217.3 million in goodwill impairment charges.

As a result of a sustained decline in the Company’s stock price and overall market capitalization during the third quarter of fiscal year 2024, along with other qualitative considerations including the continued impact from the conditions in the macroeconomic environment, the Company determined a triggering event occurred, indicating goodwill may be impaired.

Accordingly, the Company performed a quantitative impairment test of goodwill at December 31, 2023.

The Company estimated the implied fair value of the reporting unit using a market approach.

As a result of the quantitative impairment test, the Company determined goodwill was impaired and recorded a goodwill impairment charge of $ 167.1 million during the third quarter of fiscal year 2024.

During the fourth quarter of fiscal year 2024, the Company performed its annual goodwill impairment test as of January 31, 2024, again using a quantitative assessment and estimated the implied fair value of its reporting unit using a market approach.

As a result of the quantitative impairment test, the Company determined goodwill was further impaired and recorded an impairment charge of $ 50.2 million during the fourth quarter of fiscal year 2024.

The additional impairment charge recorded in the fourth quarter of fiscal year 2024 was primarily due to a decrease in the Company’s stock price from December 31, 2023 to January 31, 2024 and an increase in the forecasted interest rate yield curve, which impacted the Company’s weighted-average cost of capital.

At March 31, 2024, the Company performed a triggering event assessment and concluded no events or circumstances occurred that indicated goodwill was further impaired.

During fiscal year 2023, the Company completed its annual goodwill impairment test at January 31, 2023, using the qualitative assessment, and the Company concluded that it was more likely than not that the fair value of the reporting unit exceeded its carrying value.

The Company will continue to monitor relevant facts and circumstances, including future changes in its stock price.

The Company may be required to record additional goodwill impairment charges.

While management cannot predict if or when additional goodwill impairments may occur, future goodwill impairments could have material adverse effects on the Company's results of operations and financial condition.

At March 31, 2024 and 2023, the carrying amou nts of goodwill were $ 1.5 billion and $ 1.7 billion, respectively.

The cha nge in the carrying amount of goodwill for the fiscal year ended March 31, 2024 was due to the impairment of goodwill, the divestiture of the TO business, and 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)

The following table summarizes the changes in the carrying amount of goodwill for the fiscal years ended March 31, 2024 and 2023 as follows (in thousands):

Balance at March 31, 2022

1 unchanged sentence

Balance at March 31, 2023

Goodwill impairment ( 217,260 )

Divestiture of a business ( 4,259 )

Foreign currency translation impact ( 65 )

1 unchanged sentence

Intangible Assets

The net carrying amounts of intangible assets we re $ 366.6 million and $ 433.4 million at March 31, 2023 and 2022, respectively.

The net carrying amounts of intangible assets w ere $ 308.7 million and $ 366.6 million at March 31, 2024 and 2023, respectively.

Intangible assets acquired in a business combination are recorded under the acquisition method of accounting at their estimated fair values at the date of acquisition.

The Company amortizes intangible assets over their estimated useful lives.

During the first quarter of fiscal year 2022, in conjunction with the renewal process of an acquired indefinite-lived trade name and the Company's focus on advancing new product lines, the Company reassessed the estimated economic life of the acquired indefinite-lived trade name.

As a result, the Company began amortizing the acquired trade name over 8 years.

Prior to reclassifying the acquired trade name to a finite-lived intangible asset, the Company tested the acquired trade name for impairment and determined the fair value of the asset exceeded the carrying value.

This change in estimate did not materially impact the Company's income statement.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

During the fiscal years ended March 31, 2023, 2022 and 2021, the Company acquired $ 0.2 million , $ 50 thousand, and $ 4.5 million of technol ogy licenses, respectively.

These amounts are included within distributor relationships and are being amortizing using the economic benefit method over useful lives of between one and four years .

The Company reviews definite-lived intangible assets for impairment when an event occurs that may indicate potential impairment.

In conjunction with the goodwill impairment analysis performed at December 31, 2023 and January 31, 2024, the Company conducted an impairment test of its definite-lived intangible assets.

Based on these assessments, the Company concluded that the carrying values of the Company's definite-lived intangible assets were recoverable as of December 31, 2023 and January 31, 2024.

However, if future events occur or if business conditions deteriorate, the Company may be required to record an impairment loss, and or accelerate the amortization of definite-live intangible assets in the future, which could be mater ial to its results of operations and financial condition.

Intangible assets include the following amortizable intangible assets at March 31, 2024 (in thousands):

11 unchanged sentences

7,192 ( 7,192 ) —

Non-compete agreements 3 years

292 ( 292 ) —

Capitalized software 3 years

3 unchanged sentences

$ 1,089,529 $ ( 780,870 ) $ 308,659

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Intangible assets include the following amortizable intangible assets at March 31, 2023 (in thousands):

7 unchanged sentences

11,547 ( 10,133 ) 1,414

Definite-lived trademark and trade name (a) 2 - 9 years

Definite-lived trademark and trade name 2 - 9 years

57,694 ( 43,489 ) 14,205

8 unchanged sentences

$ 1,099,332 $ ( 732,741 ) $ 366,591

(a) The Company’s $ 18.6 million acquired trade name changed from indefinite-lived to definite-lived during the first quarter of fiscal year 2022.

Amortization included as cost of product revenue consists of amortization of developed technology, distributor relationships and technology licenses, core technology and software.

Amortization included as cost of product revenue consists of amortization of developed technology, and distributor relationships and technology licenses.

Amortization included as operating expense consists of all other intangible assets.

6 unchanged sentences

$ 57,999 $ 65,952 $ 74,361

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

The following is the expected future amortization expense at March 31, 2024 for the fiscal years ended March 31 (in thousands):

10 unchanged sentences

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.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

All of the Company's foreign exchange forward contract derivative instruments are utilized for risk management purposes, and the Company does not use derivatives for speculative trading purposes.

9 unchanged sentences

(a) Notional amounts represent the gross contract/notional amount of the derivatives outstanding.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

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, 2024 and 2023 (in thousands):

Gain (Loss) Recognized

Loss Recognized

in OCI on Derivative

9 unchanged sentences

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, 2024 and 2023 (in thousands):

Loss Recognized in Income

Gain (Loss) Recognized in Income

March 31, March 31,

3 unchanged sentences

(a) The amount represents the change in fair value of derivative contracts due to changes in spot rates.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

In addition to foreign exchange forward contracts, as discussed in Note 5, during the fiscal year ended March 31, 2023, the Company entered into a forward share purchase contract to purchase approximately 6.2 million shares of Napatech's common stock for $ 7.5 million, which qualified as a derivative instrument under authoritative guidance.

1 unchanged sentence

At March 31, 2023, the fair value of the derivative instrument of $ 1.4 million was included as accrued other in the Company's consolidated balance sheet.

During the fiscal year ended March 31, 2023, the Company recorded a $ 1.4 million charge related to the change in the fair value of the derivative instrument in other income (expense), net within the Company's consolidated statement of operations.

In April 2023, the Company settled the forward share purchase contract with Napatech.

During the fiscal years ended March 31, 2024 and 2023, the Company recorded a $ 0.2 million and $ 1.4 million change in the fair value of the derivative instrument in other income (expense), net within the Company's consolidated statement of operations.

NOTE 11 – RESTRUCTURING CHARGES

During the fiscal year ended March 31, 2020, the Company approved two restructuring plans to restructure certain departments to better align functions.

During the second quarter of the fiscal year ended March 31, 2020, as a result of the first workforce reduction, the Company recorded a restructuring charge totaling $ 0.5 million during the fiscal year ended March 31, 2020.

During the fourth quarter of the fiscal year ended March 31, 2020, as a result of the second 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.

The one-time employee-related termination benefits for the two approved restructuring plans were paid in full during the fiscal year ended March 31, 2021.

During the fiscal year ended March 31, 2022, the Company did not approve any restructuring plans.

During the fiscal years ended March 31, 2024 and 2022, the Company did not approve any restructuring plans.

During the fiscal year ended March 31, 2023, the Company restructured certain departments to better align functions resulting in the termination of eighteen employees.

1 unchanged sentence

The one-time employee-related termination benefits were paid in full during the fiscal year ended March 31, 2023.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

The following table provides a summary of the activity related to the restructuring plans and the related restructuring liability (in thousands):

Q2 FY20 Plan Q4 FY20 Plan FY23 Plan Total

Balance at March 31, 2020 $ 3 $ 1,717 $ — $ 1,720

Restructuring charges to operations — 62 — 62

Cash payments ( 3 ) ( 1,860 ) — ( 1,863 )

Other adjustments — 81 — 81

Balance at March 31, 2021 $ — $ — $ — $ —

Balance at March 31, 2022 $ — $ — $ — $ —

Restructuring charges to operations — — 1,861 1,861

Cash payments — — ( 1,712 ) ( 1,712 )

Other adjustments — — ( 149 ) ( 149 )

Balance at March 31, 2023 $ — $ — $ — $ —

NOTE 12 – LONG-TERM DEBT

On July 27, 2021, the Company amended and extended the existing credit facility (Second Amended and Restated Credit Agreement) with a syndicate of lenders by and among:

On July 27, 2021, the Company amended and extended its existing credit facility (as amended, the Second Amended and Restated Credit Agreement) with a syndicate of lenders by and among:

JPMorgan Chase Bank, N.A.

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The commitments under the Second Amended and Restated Credit Agreement will expire on July 27, 2026, and any outstanding loans will be due on that date.

In connection with the Second Amended and Restated Credit Agreement, during the fiscal year ended March 31, 2022, the Company paid off the outstanding balance of $ 350 million under the previous amended credit agreement by borrowing the same amount under the Second Amended and Restated Credit Agreement.

Additionally, the Company recorded a loss on the extinguishment of debt of $ 0.6 million, representing the write off of unamortized deferred financing costs, which was included in interest expense in the consolidated statements of operations for the fiscal year ended March 31, 2022.

At March 31, 202 4, $ 100 million was outstanding under the Second Amended and Restated Credit Agreement.

On May 13, 2024, the Company repaid $ 25.0 million of borrowings under the Second Amended and Restated Credit Agreement.

On February 22, 2023, the Company entered into a First Amendment Agreement (First Amendment) of its Second Amended and Restated Credit Agreement with its syndicate of lenders.

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dollar-denominated loans based on a term secured overnight financing rate (SOFR).

During the fiscal year ended March 31, 2023, the Company repaid $ 250.0 million of borrowings under the Second Amended and Restated Credit Agreement.

At March 31, 2023, $ 100 million was outstanding under the Second Amended and Restated Credit Agreement.

The First Amendment provides that U.S.

dollar-denominated advances under the Second Amended Credit Agreement will bear interest at a term SOFR rate plus a credit spread adjustment of 0.10 % or an Alternate Base Rate (defined in a customary manner), at the option of the Company, plus a margin that ranges from 1.00 % per annum for Alternate Base Rate loans and 2.00 % per annum for term SOFR loans if the Company’s consolidated gross leverage ratio is greater than 3.50 to 1.00, down to 0 % per annum for Alternate Base Rate loans and 1.00 % per annum for term SOFR loans if the Company's consolidated gross leverage ratio is equal to or less than 1.50 to 1.00.

For the period from the delivery of the Company's financial statements for the quarter ended December 31, 2022, until the Company has delivered financial statements for the quarter ended March 31, 2023, the applicable margin will be 1.00 % per annum for Term Benchmark Revolving loans and 0 % per annum for Alternate Base Rate loans, and thereafter the applicable margin will vary depending on the Company's

dollar-denominated advances under the Second Amended and Restated Credit Agreement will bear interest at a term SOFR rate plus a credit spread adjustment of 0.10 % or an Alternate Base Rate (defined in a customary manner), at the option of the Company, plus a margin that ranges from 1.00 % per annum for Alternate Base Rate loans and 2.00 % per annum for term SOFR loans if the Company's consolidated gross leverage ratio is greater than 3.50 to 1.00, down to 0 % per annum for Alternate Base Rate loans and 1.00 % per annum for term SOFR loans if the Company's consolidated gross leverage ratio is equal to or less than 1.50 to 1.00.

For the period from the delivery of the Company's financial statements for the quarter ended December 31, 2023, until the Company has delivered financial statements for the quarter ended March 31, 2024, the applicable margin will be 1.00 % per annum for Term Benchmark Revolving loans and 0 % per annum for Alternate Base Rate loans, and thereafter the applicable margin will vary depending on the Company's consolidated gross leverage ratio, ranging from 1.00 % per annum for Alternate Base Rate loans and 2.00 % per annum for Term Benchmark Revolving loans if the Company's consolidated gross leverage ratio is greater than 3.50 to 1.00, down to 0 % per annum for Alternate Base Rate loans and 1.00 % per annum for Term Benchmark Revolving loans if the Company's consolidated gross leverage ratio is equal to or less than 1.50 to 1.00.

The Company's consolidated gross leverage ratio is the ratio of its consolidated total debt compared to its consolidated EBITDA as defined in the Second Amended and Restated Credit Agreement (adjusted consolidated EBITDA).

Adjusted consolidated EBITDA includes certain adjustments, including, without limitation, adjustments relating to extraordinary,

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

consolidated gross leverage ratio, ranging from 1.00 % per annum for Alternate Base Rate loans and 2.00 % per annum for Term Benchmark Revolving loans if the Company’s consolidated gross leverage ratio is greater than 3.50 to 1.00, down to 0 % per annum for Alternate Base Rate loans and 1.00 % per annum for Term Benchmark Revolving loans if the Company’s consolidated gross leverage ratio is equal to or less than 1.50 to 1.00.

Adjusted consolidated EBITDA includes certain adjustments, including, without limitation, adjustments relating to extraordinary, unusual or non-recurring charges, certain restructuring charges, non-cash charges, certain transaction costs and expenses and certain pro forma adjustments in connection with material acquisitions and dispositions, all as set forth in detail in the Second Amended and Restated Credit Agreement.

unusual or non-recurring charges, certain restructuring charges, non-cash charges, certain transaction costs and expenses and certain pro forma adjustments in connection with material acquisitions and dispositions, all as set forth in detail in the Second Amended and Restated Credit Agreement.

Commitment fees will accrue on the daily unused amount of the credit facility.

For the period from the delivery of the Company's financial statements for the quarter ended December 31, 2023, until the Company has delivered financial statements for the quarter ended March 31, 2024, the commitment fee will be 0.15 % per annum, and thereafter the commitment fee will vary depending on the Company's consolidated gross leverage ratio, ranging from 0.30 % per annum if the Company's consolidated gross leverage ratio is greater than 2.75 to 1.00, down to 0.15 % per annum if the Company's consolidated gross leverage ratio is equal to or less than 1.50 to 1.00.

Letter of credit participation fees are payable to each lender providing the letter of credit subfacility on the amount of such lender’s letter of credit exposure, at a rate per annum equal to the applicable margin for term SOFR loans.

Letter of credit participation fees are payable to each lender providing the letter of credit sub-facility on the amount of such lender's letter of credit exposure, during the period from the closing date of the Second Amended and Restated 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 term SOFR loans assuming such loans were outstanding during the period.

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The Company may also prepay loans under the Second Amended and Restated Credit Agreement at any time, without penalty, subject to certain notice requirements.

The loans and other obligations under the credit facility are (a) guaranteed by each of the Company’s wholly-owned material domestic restricted subsidiaries, subject to certain exceptions, and (b) are secured by substantially all of the assets of the Company and the subsidiary guarantors, including a pledge of all the capital stock of material subsidiaries held directly by the Borrower and the subsidiary guarantors (which pledge, in the case of any foreign subsidiary, is limited to 65 % of the voting stock), subject to certain customary exceptions and limitations.

The loans and other obligations under the credit facility are (a) guaranteed by each of the Company's wholly-owned material domestic restricted subsidiaries, subject to certain exceptions, and (b) are secured by substantially all of the assets of the Company and the subsidiary guarantors, including a pledge of all the capital stock of material subsidiaries held directly by the Company and the subsidiary guarantors (which pledge, in the case of any foreign subsidiary, is limited to 65 % of the voting stock), subject to certain customary exceptions and limitations.

The Second Amended and Restated Credit Agreement generally prohibits any other liens on the assets of the Company and its restricted subsidiaries, subject to certain exceptions as described in the Second Amended and Restated Credit Agreement.

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These covenants and limitations are more fully described in the Second Amended and Restated Credit Agreement.

As of March 31, 2023, the Company was in compliance with all covenants, including the specified total consolidated net leverage ratio range of 4.00 to 1.00.

At March 31, 2024, the Company was in compliance with all covenants, including the specified total consolidated net leverage ratio range of 4.00 to 1.00.

The Second Amended and Restated Credit Agreement provides that events of default will exist in certain circumstances, including failure to make payment of principal or interest on the loans when required, failure to perform certain obligations under the Second Amended and Restated Credit Agreement and related documents including a failure to meet the maximum total consolidated net leverage ratio covenant, defaults under certain other indebtedness, certain insolvency events, certain events arising under ERISA, a change of control and certain other events.

Upon an event of default, the administrative agent

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

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 Second Amended and Restated Credit Agreement and the other loan documents.

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 Second Amended and Restated Credit Agreement and the other loan documents.

The Company had unamortized capitalized debt issuance costs, net of $ 2.6 million at March 31, 2024, which are being amortized over the life of the revolving credit facility.

The unamortized capitalized debt issuance costs balance of $ 1.1 million was included as prepaid expenses and other current assets and a balance of $ 1.5 million was included as other assets in the Company's consolidated balance sheet at March 31, 2024.

NOTE 12 – NET INCOME PER SHARE

Calculations of the basic and diluted net income per share and potential common shares are as follows (in thousands, except for per share data):

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

NOTE 13 – NET INCOM E (LOSS) PER SH ARE

Calculations of the basic and diluted net inco me (loss) pe r share and potential common shares are as follows (in thousands, except for per share data):

Fiscal Year Ended March 31,

2024 2023 2022

Net income $ 59,648 $ 35,874 $ 19,352

Denominator for basic net income per share - weighted average common shares outstanding 71,781 74,019 73,103

Net incom e (loss)

$ ( 147,734 ) $ 59,648 $ 35,874

Denominator for basic net inco me (loss) per sh are - weighted average common shares outstanding

71,474 71,781 74,019

Dilutive common equivalent shares:

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— 1,265 1,065

Denominator for diluted net income per share - weighted average shares outstanding 73,046 75,084 73,822

Net income per share:

Basic net income per share $ 0.83 $ 0.48 $ 0.26

Diluted net income per share $ 0.82 $ 0.48 $ 0.26

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):

Denominator for diluted net inc ome (loss) per sha re - weighted average shares outstanding

71,474 73,046 75,084

Net income (loss) p er share:

Basic net incom e (loss) per sh are

$ ( 2.07 ) $ 0.83 $ 0.48

Diluted net in come (loss) per share

$ ( 2.07 ) $ 0.82 $ 0.48

The following table sets forth restricted stock units excluded from the calculation of diluted net inc ome (loss) per share, since their inclusion would be antidilutive (in thousands):

Fiscal Year Ended March 31,

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Restricted stock units 820 1,799 1,222

Basic net income per share is calculated by dividing net income by the weighted average number of shares outstanding during the period.

Basic net inco me (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding during the period.

Unvested restricted shares, although legally issued and outstanding, are not considered outstanding for purposes of calculating basic earnings per share.

Diluted net income per share is calculated by dividing net income by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding restricted shares and restricted stock units using the treasury stock method.

Diluted net income (loss) per share is calculated by dividing net income (loss) by the weighted average number of shares outstanding plus the dilutive effect, if any, of outstanding restricted shares and restricted stock units using the treasury stock method.

The calculation of the dilutive effect of outstanding equity awards under the treasury stock method includes consideration of proceeds from the assumed exercise of unrecognized compensation expense as additional proceeds.

The delivery of 4.5 million shares under the Company's ASR agreements reduced the Company's outstanding shares used to determine the weighted average common shares outstanding for purposes of calculating basic and diluted earnings per share for the fiscal year ended March 31, 2023.

As the Company incurred a net loss for the fiscal year ended March 31, 2024, all outstanding restricted stock units and performance-based restricted stock units have an anti-dilutive effect and are therefore excluded from the computation of diluted weighted average shares outstanding.

The de livery of 4.5 million shares under the Company's ASR agreements reduced the Company's outstanding shares used to determine the weighted average common shares outstanding for purposes of calculating basic and diluted earnings per share for the fiscal year ended March 31, 2023.

See Note 14 for additional information.

NOTE 14 – TREASURY STOCK

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 (2017 Share Repurchase Program).

This program became effective once the Company's previously disclosed twenty million share repurchase program was completed.

The Company is

On October 24, 2017, the Company's Board of Directors approved a share repurchase program that enabled the Company to repurchase up to twenty-five million shares of its common stock (2017 Share Repurchase Program).

Through March 31, 2024, the Company repurchased all of the authorized 25,000,000 shares for $ 694.1 million in the open market under the 2017 Share Repurchase Program.

The Company repurchased 1,209,153 shares for $ 33.6 million during the fiscal year ended March 31, 2024 under the 2017 Share Repurchase Program.

At March 31, 2024, there were no shares of common stock that remained available to be purchased under the 2017 Share Repurchase Program.

On May 3, 2022, the Company's Board of Directors approved an additional share repurchase program that enables the Company to repurchase up to twenty-five million shares of its common stock (2022 Share Repurchase Program).

The 2022 Share Repurchase Program became effective when the 2017 Share Repurchase Program was completed.

The Company is not obligated to acquire any specific amount of common stock within any particular timeframe as a result of the 2022 Share Repurchase Program.

The Company repurchased 614,516 shares for $ 16.4 million under this share repurchase program during

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

not obligated to acquire any specific amount of common stock within any particular timeframe as a result of this share repurchase program.

On May 3, 2022, 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 (2022 Share Repurchase Program).

The 2022 Share Repurchase Program will become effective once the 2017 Share Repurchase Program is completed.

The Company is not obligated to acquire any specific amount of common stock within any particular timeframe as a result of the 2022 Share Repurchase Program.

the fiscal year ended March 31, 2024.

At March 31, 2024, 24,385,484 shares of common stock remained available to be purchased under the current program.

On May 9, 2022, the Company entered into accelerated share repurchase (ASR) agreements with Mizuho Markets Americas LLC (Mizuho) and Wells Fargo Bank, National Association (Wells Fargo) (collectively, the Dealers) to repurchase an aggregate of $ 150 million of the Company's common stock via accelerated stock repurchase transactions under the 2017 Share Repurchase Program.

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In total, 4,549,329 shares of the Company's common stock were repurchased under the ASR agreements at an average cost per share of $ 32.97 during the fiscal year ended March 31, 2023.

Through March 31, 2023, the Company repurchased a total of 23,790,847 shares for $ 660.4 million in the open market under the 2017 Share Repurchase Program.

At March 31, 2023, 1,209,153 shares of common stock remained available to be purchased under the 2017 Share Repurchase Program, and 25,000,000 shares of common stock remained available to be purchased under the 2022 Share Repurchase Program.

The Co mpany repurchased 4,549,329 shares for $ 152.9 million, 1,330,678 shares for $ 35.6 million, and 154,271 shares for $ 3.3 million of its common stock under the 2017 Share Repurchase Program during the fiscal years ended March 31, 2023, 2022 and 2021, respectively.

In connection with the vesting and release of the restriction on shares of restricted stock, the Company repurchased 653,645 shares for $ 19.4 million, 562,360 shares for $ 19.4 million and 546,053 shares for $ 15.7 million related to minimum statutory tax withholding requirements on the se restricted stock units during the fiscal years ended March 31, 2024, 2023 and 2022, respectively.

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2011 Employee Stock Purchase Plan

On September 7, 2011, the Company's stockholders approved the 2011 Employee Stock Purchase Plan (the ESPP), under which 2.5 million shares of the Company's common stock were reserved for issuance.

On November 8, 2018, the Company increased the number of shares available under the ESPP by an additional 3 million shares, and on August 24, 2022, the Company's stockholders approved an amendment to the ESPP that increased the number of shares available under the ESPP by another 2,000,000 shares .

On September 7, 2011, the Company's stockholders approved the 2011 Employee Stock Purchase Plan (the ESPP), under which 2,500,000 shares of the Company's common stock were reserved for issuance.

On November 8, 2018, the Company increased the number of shares available under the ESPP by an additional 3,000,000 shares, and on August 24, 2022, the Company's stockholders approved an amendment to the ESPP that increased the number of shares available under the ESPP by another 2,000,000 shares .

The Company implemented the ESPP on March 1, 2012.

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Under the ESPP, shares of the Company's common stock may be purchased on the last day of each bi-annual offering period at 85 % of the fair market value on the last day of such offering period.

The offering periods run from March 1 through August 31 and from September 1 through the last day of February of each year.

The o ffering periods run from March 1 through August 31 and from September 1 through the last day of February of each year.

During the fiscal year ended March 31, 2024, employees purchased 564,927 shares under the ESPP with a weighted average purchase price per share of $ 24.24 .

At March 31, 2024, 2,207,688 shares were available for future issuance under the ESPP.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

2019 Equity Incentive Plan

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The 2019 Plan permits the granting of incentive and nonstatutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, and other stock awards, collectively referred to as "share-based awards."

On September 10, 2020, the Company's stockholders approved an amendment and restatement of the 2019 Equity Incentive Plan (2019 First Amended Plan) to increase 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 change the "fungible share counting ratio" used to calculate the increase or reduction in the number of shares available for issuance under the 2019 First Amended Plan.

On August 24, 2022, the Company's stockholders approved an amendment to the 2019 First Amended Plan (2019 Second Amended Plan).

This amendment increased the number of shares reserved for issuance by 7,000,000 shares and changed the "fungible share counting ratio" used to calculate the increase or reduction in the number of shares available for issuance under the 2019 Second Amended Plan.

At August 24, 2022, there was a total of 8,764,811 shares reserved for issuance under the 2019 Second Amended Plan, which consisted of 7,000,000 new shares plus 1,764,811 shares that remained available for grant under the 2019 First Amended Plan as of August 24, 2022, the effective date of the 2019 Second Amended Plan.

We refer the the 2019 Plan, 2019 First Amended Plan and 2019 Second Amended Plan collectively as the "Amended 2019 Plan".

The aggregate number of shares available for issuance under the 2019 Second Amended Plan will increase for any shares (each a "Returning Share"):

On September 10, 2020, the Company's stockholders approved an amendment and restatement of the 2019 Equity Incentive Plan (2019 First Amended Plan) to increase the number of shares reserved for issuance by 4,700,000 shares, establish a one-year minimum vesting requirement for awards granted on or after September 10, 2020, and change the "fungible share counting ratio" used to calculate the increase or reduction in the number of shares available for issuance under the 2019 First Amended Plan.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

On August 24, 2022, the Company's stockholders approved an amendment and restatement of the 2019 Equity Incentive Plan (2019 Second Amended Plan) to increase the number of shares reserved for issuance by 7,000,000 shares, and change the "fungible share counting ratio" used to calculate the increase or reduction in the number of shares available for issuance under the 2019 Second Amended Plan.

On September 14, 2023, the Company's stockholders approved an amendment and restatement to the 2019 First Amended Plan (2019 Third Amended Plan) to further increase the number of shares reserved for issuance by 5,900,000 shares and changed the "fungible share counting ratio" used to calculate the increase or reduction in the number of shares available for issuance under the 2019 Third Amended Plan.

At September 14, 2023, there was a total of 8,263,547 shares reserved for issuance under the 2019 Third Amended Plan, which consisted of 5,900,000 new shares plus 2,363,547 shares that remained available for grant under the 2019 Second Amended Plan as of September 14, 2023, the effective date of the 2019 Third Amended Plan.

The Company refers to the 2019 Plan, 2019 First Amended Plan, 2019 Second Amended Plan and 2019 Third Amended Plan collectively as the "Amended 2019 Plan".

The aggregate number of shares available for issuance under the 2019 Third Amended Plan will increase for any shares (each a "Returning Share"):

(i) subject to an award granted under the Amended 2007 Plan or Amended 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;

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The amount of such increase will be (i) one share for each Returning Share subject to a stock option or stock appreciation right with an exercise or strike price that is at least 100 % of the fair market value of the Company's common stock on the date of grant (an "Appreciation Award");

and (ii) 2.34 shares for each Returning Share subject to an equity award other than an Appreciation Award (a "Full Value Award") that is returned on or after August 24, 2022.

Furthermore, the share reserve under the 2019 Second Amended Plan is reduced by:

and (ii) 2.67 shares for each Returning Share subject to an equity award other than an Appreciation Award (a "Full Value Award") that is returned on or after September 14, 2023.

Furthermore, the share reserve under the 2019 Third Amended Plan is reduced by:

(i) one share for each share of common stock issued pursuant to an Appreciation Award, (ii) 2.76 shares for each share of common stock issued pursuant to a Full Value Award granted under the Amended 2019 Plan on or after September 12, 2019 but prior to September 10, 2020;

(iii) 2.32 shares for each share of common stock issued pursuant to a Full Value Award granted under the Amended 2019 Plan on or after September 10, 2020 but prior to August 24, 2022;

and (iv) by 2.34 shares for each share of common stock issued pursuant to a Full Value Award granted under the Amended 2019 Plan on or after August 24, 2022.

(iv) by 2.34 shares for each share of common stock issued pursuant to a Full Value Award granted under the Amended 2019 Plan on or after August 24, 2022;

and (v) by 2.67 shares for each share of common stock issued pursuant to a Full Value Award granted under the Amended 2019 Plan on or after September 14, 2023.

At March 31, 2024, an aggregate of 5,920,671 shares of unvested equity awards granted under the amended 2019 Plan were outstanding.

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Periodically, the Company grants share-based awards to employees, officers, and directors of the Company and its subsidiaries.

During the fiscal years ended March 31, 2023 and 2022, the Company granted performance-based restricted stock units to certain executive officers that vest based upon the Company's total shareholder return as compared to the Russell 2000 Index over a three-year period.

Additionally, the Company periodically grants performance-based restricted stock units to certain executive officers that vest based upon the Company's total shareholder return as compared to the Russell 2000 Index over a three-year period.

The performance-based restricted stock units were valued using the Monte Carlo Simulation model.

The measurement and recognition of compensation expense is based on estimated fair values for all share-based payment awards made to its employees and directors.

Share-based award grants are generally measured at fair value on the date

Share-based award grants are generally measured at fair value on the date of grant based on the number of shares granted and the quoted price of the Company's common stock.

Such value is recognized as a cost of revenue or an operating expense over the corresponding vesting period.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

of grant based on the number of shares granted and the quoted price of the Company's common stock.

Such value is recognized as a cost of revenue or an operating expense over the corresponding vesting period.

The following is a summary of share-based compensation expense including restricted stock units and performance-based restricted stock units granted pursuant to the Company's Amended 2007 Plan, the 2019 Plan, the 2019 Amended Plan, and the 2019 Second Amended Plan, and employee stock purchases made under the Company's 2011 Amended and Restated Employee Stock Purchase Plan (ESPP), based on estimated fair values within the applicable cost and expense lines identified below (in thousands):

The following is a summary of share-based compensation expense including restricted stock units and performance-based restricted stock units granted pursuant to the Company's Amended 2007 Plan and the Amended 2019 Plan, and employee stock purchases made under the Company's 2011 Amended and Restated Employee Stock Purchase Plan (ESPP), based on estimated fair values within the applicable cost and expense lines identified below (in thousands):

Fiscal Year Ended March 31,

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$ 70,799 $ 61,986 $ 56,074

Transactions under the Amended 2007, 2019 Plan, the 2019 Amended Plan, and the 2019 Second Amended Plan during the fiscal years ended March 31, 2023, 2022 and 2021 are summarized in the table below.

Transactions under the Amended 2007 and the Amended 2019 Plan during the fiscal years ended March 31, 2024, 2023 and 2022 are summarized in the table below.

Restricted Stock Units

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Outstanding – March 31, 2024 5,920,671 $ 30.50

At March 31, 2023, the re were 6,241,002 shares of common stock available for grant under the 2019 Second Amended Plan.

At March 31, 2024, there were 8,387,662 shares of common stock available for grant under the 2019 Third Amended Plan.

The aggregate intrinsic value of stock options exercised and the fair value of restricted stock units vested at March 31, 2024, 2023 and 2022 were as follows (in thousands):

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In general, these plans are funded based on considerations relating to legal requirements, underlying asset returns, the plan's funded status, the anticipated deductibility of the contribution, local practices, market conditions, interest rates and other factors.

The components of the change in benefit obligation of the pension plan is as follows (in thousands):

The Company recognizes on its balance sheet a liability equal to the under-funded benefit obligation of its defined benefit pension plan.

Actuarial gains or losses are not recognized as components of net periodic benefit cost, but are recognized, net of tax, as a component of other comprehensive income (loss).

The following sets forth the amounts included in accumulated other comprehensive income at March 31, 2024 and 2023 (in thousands):

March 31, March 31,

Unrecognized actuarial net gain $ 5,802 $ 8,562

For fiscal year 2024, the unrecognized net actuarial gains exceeded 10% of the projected benefit obligation at the beginning of the fiscal year, therefore, amortization of such excess has been included in net periodic benefit costs during the year ended March 31, 2024.

The amortization period is the average remaining service period that active employees are expected to receive benefits, unless a plan is mostly inactive in which case the amortization period if the average remaining life expectancy of the plan participants.

The following sets forth the change in accumulated other comprehensive income during the fiscal years ended March 31, 2024 and 2023 (in thousands):

March 31, March 31,

Unrecognized actuarial loss (gain) $ 1,832 $ ( 8,207 )

Amortization of net actuarial gain 928 —

Change in accumulated other comprehensive income $ 2,760 $ ( 8,207 )

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

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, 2024, 2023, and 2022 (in thousands):

Fiscal Year Ended March 31,

2024 2023 2022

Service cost $ 206 $ 291 $ 331

Interest cost 999 699 560

Amortization of net actuarial gain ( 928 ) — —

Net periodic pension cost $ 277 $ 990 $ 891

The components of the change in benefit obligation of the pension plan are as follows (in thousands):

March 31, March 31,

Benefit obligation, at beginning of year $ 24,567 $ 32,849

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Benefits paid and other ( 576 ) ( 535 )

Actuarial gain ( 8,207 ) ( 2,761 )

Actuarial loss (gain) 1,832 ( 8,207 )

Foreign exchange rate impact 23 ( 530 )

Benefit obligation, at end of year $ 27,051 $ 24,567

The Company’s benefit obligation of the pension plan is reported in the following components of the Company's consolidated balance sheet at March 31, 2024 and 2023:

March 31, March 31,

Accrued compensation $ 714 $ 582

Accrued long-term retirement benefits 26,337 23,985

Benefit obligation, at end of year $ 27,051 $ 24,567

The reconciliation of the beginning and ending balances of the fair value of the assets of the pension plan is as follows (in thousands):

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Fair value of plan assets, at end of year $ — $ —

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, 2023, 2022, and 2021 (in thousands):

Fiscal Year Ended March 31,

2023 2022 2021

Service cost $ 291 $ 331 $ 333

Interest cost 699 560 667

Net periodic pension cost $ 990 $ 891 $ 1,000

Weighted average assumptions used to determine net periodic pension cost at date of measurement:

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Notes to Consolidated Financial Statements—(Continued)

As of March 31, 2023, unrecognized actuarial gain of $ 8.2 million ($ 5.8 million, net of tax) whi ch have not yet been recognized in net periodic pension cost are included in accumulated other comprehensive income.

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.

None of this amount is expected to be recognized in net periodic pension costs during the fiscal year endin g March 31, 2024.

No plan assets are expected to be returned to the Company during the fiscal year ending March 31, 2024.

Expected Contributions

During the fiscal year ended March 31, 2023, the Company contributed $ 535 thousand to its defined benefit pension plan.

The following sets forth benefit payments, which reflect expected future service, as appropriate, expected to be paid by the plan in the periods indicated (in thousands):

During the fiscal year ended March 31, 2024, the Comp any contributed $ 576 thousand to its defined benefit pension plan.

The following sets forth benefit payments, which reflect expected future service, as appropriate, e xpected to be paid by the plan in the periods indicated (in thousands):

2030-2034 $ 6,744

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Change in valuation allowance ( 4.1 ) 3.5 5.1

Goodwill impairment ( 28.5 ) — —

Stock compensation ( 1.0 ) ( 0.6 ) 2.0

Divestiture ( 0.6 ) — —

Global intangible low taxed income ( 0.2 ) — ( 0.1 )

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The 2017 Tax Cuts and Jobs Act (TCJA) contained a provision which became effective for R&D expenditures incurred in years beginning on or after Jan.

1, 2022, that R&D expenditures incurred are no longer allowed as an immediate deduction for federal income tax purposes.

Rather, R&D expenditures incurred must be capitalized and amortized over a five-year period or fifteen -year period depending on if the expenditures are domestic or foreign, respectively.

1, 2022, that R&D expenditures incurred are no longer allowed as an immediate deduction for

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

federal income tax purposes.

Rather, R&D expenditures incurred must be capitalized and amortized over a five-year period or fifteen -year period depending on if the expenditures are domestic or foreign, respectively.

Deferred tax assets and liabilities are recognized based on the anticipated future tax consequences, attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.

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The Company weighs objective and verifiable evidence more heavily in this analysis.

In situations where the Company concludes that it does not have sufficient objective and verifiable evidence to suppo rt the realizability of the asset it creates a valuation allowance against it.

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.

As a result, the Company established a valuation allowance of $ 15.6 million as of March 31, 2023 and $ 21.2 million as of March 31, 2024, representing an increase of $ 5.6 million.

The increase in the valuation allowance as of March 31, 2023, as compared to March 31, 2022, is primarily due to deferred tax assets related to U.S.

foreign tax credits that the Company believes are not more likely than not to be realized.

I f 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.

The increase in the valuation allowance as of March 31, 2024, as compared to March 31, 2023, is primarily due to deferred tax assets related to foreign tax credits that the Company believes are not more likely than not to be realized.

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, 2024, the Company had U.S.

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foreign tax credit carryforwards and state tax credits of $ 10 million and $ 12 million that are subject to expire at various dates beginning 2030 and 2033, respectively.

At March 31, 2023, the Company had foreign net operating loss carryforwards of $ 40 million and foreign tax credit carryforwards of $ 7 million, respectively.

At March 31, 2024, the Company had foreign net operating loss carryforwards of $ 37 million and foreign tax credit carryforwards of $ 11 million.

The majority of foreign net operating losses and foreign tax credits have no expiration dates.

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T he Company does not expect taxes related to the unremitted foreign earnings to be material if they were distributed which would primarily consist of foreign withholding taxes.

In 2021, the Organization for Economic Co-operation and Development announced an Inclusive Framework on Base Erosion and Profit Shifting including Pillar Two Model Rules defining the global minimum tax, which calls for the taxation of

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

large multinational corporations at a minimum rate of 15%.

Subsequently multiple sets of administrative guidance have been issued.

Many non-US tax jurisdictions have either recently enacted legislation to adopt certain components of the Pillar Two Model Rules beginning in 2024 with the adoption of additional components in later years or announced their plans to enact legislation in future years.

Considering the Company does not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum, these rules are not expected to materially increase its global tax costs.

There remains uncertainty as to the final Pillar Two model rules.

The Company continues to evaluate the impacts of enacted legislation and pending legislation to enact Pillar Two Model Rules in the non-US tax jurisdictions it operates in.

NOTE 18 – LEASES

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The Company's lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Company has an obligation to return certain leased facilities to their original condition at the end of the respective lease term.

These obligations were not material to the Company's financial statements for all years presented.

The Company has asset retirement obligations (ARO) to return certain leased facilities to their original condition at the end of the respective lease term.

The estimated fair value of these ARO liabilities is recognized in the period in which the liability is generated and a corresponding increase to the carrying value of the related asset is recorded and depreciated over the useful life of the asset.

The Company's estimates of its ultimate AROs could change because of changes in regulations, the extent of environmental remediations required, the means of reclamation, cost estimates, exit or disposal activities or time period estimates.

ARO liabilities totaled $ 2.3 million and $ 2.4 million at March 31, 2024 and 2023, respectively.

There was a balance of $ 0.1 million included in accrued other and a balance of $ 2.2 million included in other long-term liabilities in the consolidated balance sheets for the fiscal year ended March 31, 2024, and a balance of $ 2.4 million included other long-term liabilities in the consolidated balance sheets for the fiscal year ended March 31, 2023.

Accretion expense related to these liabilities was not material for any periods presented.

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.

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Total operating lease cost $ 17,947 $ 19,229

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

The table below presents supplemental cash flow information related to leases during the fiscal years ended March 31, 2024 and 2023 (in thousands):

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Weighted average discount rate - operating leases 4.2 % 4.2 %

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Future minimum payments under non-cancellable leases at March 31, 2024 are as follows (in thousands):

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NOTE 19 – COMMITMENTS AND CONTINGENCIES

F rom 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.

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.

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NetScout filed an Answer denying Plaintiff's allegations and asserting that Plaintiff's patents were, among other things, invalid, not infringed, and unenforceable due to inequitable conduct.

In October 2017, a jury trial was held to address the parties' claims and counterclaims regarding infringement of three patents by the G10 and GeoBlade products, invalidity of these patents, and damages.

In October 2017, the jury rendered a verdict finding in favor of the Plaintiff and that Plaintiff was entitled to $ 3.5 million for pre-suit damages and $ 2.3 million for post-suit damages.

The jury indicated that the awarded damages amounts were intended to reflect a running royalty.

In October 2017, a jury rendered a verdict finding in favor of the Plaintiff and that Plaintiff was entitled to $ 3.5 million for pre-suit damages and $ 2.3 million for post-suit damages.

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.

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Following the entry of final judgment, NetScout appealed, and in July 2020, the Court of Appeals for the Federal Circuit (Federal Circuit) issued a decision vacating the $ 3.5 million pre-suit damages award, affirming the $ 2.3 million post-suit damages award, vacating the $ 2.8 million enhancement award, and remanding to the district court to determine what, if any, enhancement should be awarded.

In March 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.

In addition, on September 8 and 9, 2021, in proceedings initiated by third parties that did not involve NetScout, the Patent Trial and Appeal Board (PTAB) invalidated all the patent claims that were also asserted against NetScout in this case.

After the PTAB decisions were issued, NetScout moved, among other things, to dismiss the case and enter judgment in its favor on the grounds that the PTAB decisions invalidating the asserted claims precluded Plaintiff from continuing to assert its patent infringement causes of action and from seeking damages from NetScout.

The District Court denied NetScout’s motion with respect to its request to dismiss the case and enter judgment in its favor, but in response to alternative requests for relief requested by NetScout, "enhanced" the jury verdict in the amount of $ 1.1 million and also lowered the ongoing royalty rate on the G10 and GeoBlade products.

The District Court entered an amended final judgment awarding Plaintiff $ 2.3 million in post-suit damages, $ 1.1 million in enhanced damages, 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 expiration date being June 2022.

On July 20, 2022, NetScout filed a notice of appeal to the Federal Circuit from, among other things, the amended final judgment.

Enforcement of the amended judgment is stayed pending the resolution of the appeal.

In view of the current circumstances, and if the post-suit and enhanced damages award along with the associated interest and royalties survive the recent PTAB invalidation decisions and NetScout's appeal, NetScout has concluded that the risk of loss

In March 2021, NetScout filed a petition for a writ of certiorari to the United States Supreme Court, which was denied, challenging, among other issues, the basis for enhanced damages and the patentability of the claimed technology.

On September 8 and 9, 2021, in proceedings initiated by third parties that did not involve NetScout, the Patent Trial and Appeal Board (PTAB) invalidated all the patent claims that were also asserted against NetScout in this case.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

associated with such damages award remains "probable" in accounting terms, and that the risk of loss associated with pre-suit damages is remote.

infringement causes of action and from seeking damages from NetScout.

The District Court denied NetScout’s motion with respect to its request to dismiss the case and enter judgment in its favor.

On July 20, 2022, NetScout filed a notice of appeal to the Federal Circuit from, among other things, the amended final judgment.

On May 2, 2024, in a separate action the Federal Circuit affirmed the PTAB decisions, which as a result found that all of the patent claims asserted by Packet Intelligence against NetScout were invalid.

Also on May 2, 2024, the Federal Circuit ruled in NetScout's favor in its appeal, vacating the District Court's final judgment and remanding the case to the District Court to dismiss the case against NetScout as moot.

In view of the current circumstances, NetScout has concluded that the risk of loss associated with damages that may result from this case is remote.

As a result, the Company recorded a $ 4.6 million reduction in contingent liabilities and legal fees during the year ended March 31, 2024.

Unconditional Purchase Obligations

At March 31, 2023, the Company had unconditional purchase obligations of $ 100.1 million, which represent estimated open purchase orders to purchase inventory as well as commitments for products and services used i n the normal course of business.

At March 31, 2024, the Company had unconditional purchase o bligations of $ 67.5 million, which represent estimated open purchase orders to purchase inventory as well as commitments for products and services used in the n ormal course of business.

NOTE 20 – SEGMENT AND GEOGRAPHIC INFORMATION

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Substantially all of the Company's identifiable assets are located in the United States.

NOTE 21 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events for adjustment to or disclosure in its consolidated financial statements through the date the consolidated financial statements were issued.

Except as disclosed in Note 12, "Long-term Debt" and Note 19, "Commitments and Contingencies," no other recordable or disclosable events occurred.

NetScout Systems, Inc.

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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.

What changed 10-K

Item 9A. Controls and Procedures