What changed in this filing

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Item 9A. Controls and Procedures

2025-05-15 compared with 2024-05-16 · 264 added, 289 removed, 1184 unchanged (32% of the section changed)

21 unchanged sentences

John Downing , Executive Vice President, Worldwide Sales

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

February 21, 2025 Rule 10b5-1 Trading Arrangement Up to 24,000 shares to be sold

February 27, 2026 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”).

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000-26251, filed on June 1, 2012 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.

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

Amended and Restated Severance Agreement, dated May 28, 2012, by and between the Company and Jean Bua (filed as Exhibit 10.2 to NetScout’s Current Report on Form 8-K, SEC File No.

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

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

Transition agreement, dated May 7, 2025 by and between the Company and Jean Bua (filed herewith).

Transition agreement, dated May 7, 2025 by and between the Company and Michael Szabados (filed herewith).

Offer Letter, dated May 7, 2025, by and between the Company and Anthony Piazza (filed herewith).

Offer Letter, dated May 7, 2025, by and between the Company and Sanjay Munshi (filed herewith).

Third Amendment Agreement, dated August 10, 2010, to that certain Lease, dated August 17, 2000, as amended, between the Company and Westford West I Limited Partnership, as successor to Arturo J.

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000-26251, filed on January 27, 2015 and incorporated herein by reference).

Second Amendment and Restatement Agreement, dated as of July 27, 2021, to the Amended and Restated Credit Agreement, dated as of January 16, 2018, by and among NetScout Systems, Inc., as borrower;

Third Amendment and Restatement Agreement, dated as of October 4, 2024, to the Second Amended and Restated Credit Agreement, dated as of July 27, 2021, by and among NetScout Systems, Inc., as borrower;

certain subsidiaries of NetScout Systems, Inc., as loan parties;

the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent attaching the Second Amended and Restated Credit Agreement, dated as of July 27, 2021, by and among NetScout Systems, Inc., as borrower;

the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent attaching the Third Amended and Restated Credit Agreement, dated as of October 4, 2024, by and among NetScout Systems, Inc., as borrower;

JPMorgan Chase Bank, N.A., as administrative agent and collateral agent;

JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, BofA Securities Inc., RBC Capital Markets, PNC Capital Markets LLC and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners;

Santander Bank, N.A., U.S.

Bank National Association, Fifth Third Bank, National Association, Silicon Valley Bank and TD Bank, N.A.

as co-documentation agents;

JPMorgan Chase Bank, N.A., Bank of America, N.A., RBC Capital Markets, PNC Capital Markets LLC and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners;

TD Bank, N.A.

and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as co-documentation agents;

and the lenders and issuing banks party thereto (filed as Exhibit 10.1 to NetScout's current report on Form 8-K, SEC File No.

000-26251, filed on July 27, 2021 and incorporated herein by reference).

000-26251, filed on October 4, 2024).

Summary of Non-Employee Director Compensation (filed as Exhibit 10.2 to NetScout's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2021, SEC File No.

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2019 Equity Incentive Plan, as amended (filed as Exhibit 99.1 to NetScout’s Registration Statement on Form S-8, SEC File No.

333-282184, filed on September 17, 2024 and incorporated herein by reference).

Form of Restricted Stock Unit Award Agreement with respect to the NetScout Systems, Inc.

2019 Equity Incentive Plan (filed herewith).

Form of Performance-Based Restricted Stock Unit Award with respect to the NetScout Systems, Inc.

2019 Equity Incentive Plan (filed as Exhibit 10.1 to NetScout’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2024, SEC File No.

000-26251, filed on August 5, 2024 and incorporated herein by reference).

Form of Restricted Stock Unit Agreement with respect to the NetScout Systems, Inc.

2019 Equity Incentive Plan (filed as Exhibit 10.1 to NetScout’s Quarterly Report on Form 10-Q for the quarterly period ended December 31, 2019, SEC File No.

000-26251, filed on February 6, 2020 and incorporated herein by reference).

First Amendment Agreement, dated as of February 22, 2023, to the Second Amended and Restated Credit Agreement, dated as of July 27, 2021, by and among NetScout Systems, Inc., as borrower;

certain subsidiaries of NetScout Systems, Inc., as loan parties;

the lenders and issuing banks party thereto and JPMorgan Chase Bank, N.A., as administrative agent, attaching Second Amended and Restated Credit Agreement, dated as of July 27, 2021 (as amended by the First Amendment Agreement), by and among NetScout Systems, Inc., as borrower;

JPMorgan Chase Bank, N.A., as administrative agent and collateral agent;

JPMorgan Chase Bank, N.A., Wells Fargo Securities, LLC, BofA Securities Inc., RBC Capital Markets, PNC Capital Markets LLC and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners;

Santander Bank, N.A., U.S.

Bank National Association, Fifth Third Bank, National Association, Silicon Valley Bank and TD Bank, N.A.

as co-documentation agents;

and the lenders and issuing banks party thereto (filed as Exhibit 10.1 to NetScout's current report on Form 8-K, SEC File No.

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

NetScout Systems, Inc.

Amended and Restated Insider Trading and Window Policy

Amended and Restated Insider Trading and Window (filed herewith).

Subsidiaries of NetScout (filed herewith).

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NetScout Systems, Inc.

Executive Compensation Recovery Policy

Executive Compensation Recovery Policy (filed as Exhibit 97 to NetScout’s Annual Report on Form 10-K for the fiscal year ended March 31, 2024, SEC File No.

000-26251, filed on May 16, 2024 and incorporated herein by reference).

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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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

Interim Goodwill Impairment Assessment

As described in Note 9 to the consolidated financial statements, the Company has one reporting unit and the goodwill balance was $1.1 billion as of March 31, 2025.

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.

As a result of a continued decrease in the Company's stock price and overall market capitalization during the first quarter of fiscal year 2025, 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 June 30, 2024, which resulted in a goodwill impairment charge of $427 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;

The principal considerations for our determination that performing procedures relating to the interim goodwill impairment assessment is a critical audit matter are (i) the significant judgment by management when developing the fair value estimate 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;

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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;

These procedures included testing the effectiveness of controls relating to management's goodwill impairment assessment, 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 estimate of the reporting unit;

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

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During the year ended March 31, 2025, the Company recognized revenue from contracts with customers of $822.7 million.

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.

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.

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( 1,654,702 ) ( 1,615,483 )

Retained earnings 322,479 470,213

(Accumulated deficit) Retained earnings ( 44,443 ) 322,479

Total stockholders' equity 1,560,395 1,892,065

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Cumulative translation adjustments ( 327 ) ( 113 ) ( 270 )

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

Recognition of actuarial net gains (losses) from pension and other post-retirement plans, net of tax (benefit) of $ 277 , ($ 823 ), and $ 2,448

653 ( 1,937 ) 5,759

Changes in market value of investments:

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

( 45 ) 42 ( 29 )

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

Total net change in market value of investments

( 45 ) 42 ( 29 )

Changes in market value of derivatives:

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

Changes in market value of derivatives, net of benefit of $ 35 , $ 9 , and $ 116

( 114 ) ( 24 ) ( 361 )

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

Reclassification adjustment for net gain (loss) included in net income (loss), net of tax (benefit) of $ 83 , ($ 15 ), and $ 137

262 ( 47 ) 427

Total net change in market value of derivatives

148 ( 71 ) 66

Other comprehensive income (loss)

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Comprehensive

Income (Loss) Treasury stock Retained

Income Treasury stock (Accumulated Deficit) Retained

Earnings Total

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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

Net loss ( 147,734 ) ( 147,734 )

Unrealized net investment losses ( 45 ) ( 45 )

Unrealized net losses on derivative 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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Balance, March 31, 2024 131,316,309 131 3,181,366 3,572 59,912,093 ( 1,615,483 ) 322,479 1,892,065

( 147,734 ) ( 147,734 )

Unrealized net investmen t losses

( 45 ) ( 45 )

Unrealized net losses on de rivative financial instruments

( 71 ) ( 71 )

Net loss ( 366,922 ) ( 366,922 )

Unrealized net investment gains 27 27

Unrealized net gains on derivative financial instruments 148 148

Cumulative translation adjustments ( 327 ) ( 327 )

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

( 1,937 ) ( 1,937 )

Recognition of actuarial net gains from pension and other post-retirement plan 653 653

Issuance of common stock pursuant to vesting of restricted stock units 2,205,063 3 3

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Goodwill impairment 426,967 217,260 —

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

Deferred income taxes ( 37,567 ) ( 45,949 ) ( 54,032 )

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Proceeds from divestiture of a business — 7,766 —

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

Net cash provided by (used in) investin g activities

Net cash (used in) provided by investin g activities

( 6,996 ) 13,358 15,304

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Proceeds from issuance of long-term debt 75,000 — —

Collection of contingent consideration — — 837

Net cash used in fina ncing activities

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

Net cash used in financing activities ( 142,011 ) ( 69,352 ) ( 419,430 )

Effect of exchange rate changes on cash and cash equivalents ( 922 ) 63 ( 1,891 )

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NOTE 1 – NATURE OF BUSINESS

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

NetScout Systems, Inc., or NetScout or the Company, has been a technology innovator for 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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Segment Reporting

The Company's operating segments are determined based on the units that constitute a business for which financial information is available and for which operating results are regularly reviewed by the Chief Operating Decision Maker (CODM).

The Company reports revenue and income in one reportable segment.

The Company's operating segments are determined based on the units that constitute a business for which discrete financial information is available and for which operating results are regularly reviewed by the chief operating decision maker (CODM).

The Company's President and CEO is the CODM.

Operating results are reviewed by the CODM primarily at the consolidated entity level for the purpose of making resource allocation decisions and for evaluating financial performance, primarily by monitoring actual results compared to forecasted results as well as by reviewing year-over-year results.

The Company's CODM evaluates company-wide performance and determines allocation of resources based on multiple performance measures, including, but not limited to net income (loss).

The Company has determined it operates as a single operating segment and has one reportable segment which includes product and service revenue related to the sale of enterprise performance management, carrier service assurance, cybersecurity, and DDoS protection solutions.

The Company's results for the one reportable segment are the same as presented in the Company's consolidated statements of operations and there is no expense information that is supplemental to those disclosed in these consolidated financial statements, that are regularly provided to the CODM.

The measure of segment assets is reported on the Company's consolidated balance sheet as total assets.

Segment asset information is not used by the CODM to allocate resources.

Use of Estimates

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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 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 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, international trade relations (including trade protection measures, such as tariffs and other trade barriers), 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.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

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

The macroeconomic environment remains challenging with constrained customer spending and the Company expects this to persist during fiscal year 2026.

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

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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)

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 reve nue was $ 5.9 million a nd $ 6.6 million at March 31, 2024 and 2023, respectively.

The aggregate amount of unrecognized accounts receivable and deferred revenue was $ 5.5 million and $ 5.9 million at March 31, 2025 and 2024, respectively.

Concentration of Credit Risk

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NetScout's cash, cash equivalents, and marketable securities are placed with financial institutions with high credit standings.

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.

At March 31, 2025 and March 31, 2024, the Company had no direct customers or indirect channel partners wh ich accounted for more than 10% of the accounts receivable balance.

During the fiscal years ended March 31, 2025 and 2024, 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.

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;

accordingly, the Company does not require collateral from its customers.

accordingly, the Company does not

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

require collateral from its customers.

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

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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.

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

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

Valuation of Goodwill and Intangible Assets

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

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.

Goodwill is not amortized but subjected to annual impairment tests;

or 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 goodwill impairment assessment annually during the fourth quarter and on an interim basis if potential impairment indicators arise.

Reporting units are determined based on the components of a Company's operating segments that constitute a business for which financial information is available and for which operating results are regularly reviewed by segment management.

The Company has one reporting unit.

To test impairment, the Company first assesses qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the intangible asset is impaired.

If, based on the Company’s qualitative assessment, it is more likely than not that the fair value of the intangible asset is less than its carrying amount, quantitative impairment testing is required.

To test impairment for long-lived assets, including tangible and definite-lived intangible assets, the Company first assesses qualitative factors to determine whether the existence of events and circumstances indicate that it is more likely than not that the long-lived assets are impaired.

If, based on the Company's qualitative assessment, it is more likely than not that the fair value of the long-lived assets are less than its carrying amount, quantitative impairment testing is required.

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

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 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

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Unamortized capitalized software development costs that are determined to be in excess of the net realizable value of the software products would be expensed in the period in which such a determination is made.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Typically for accounting purposes, these R&D investments have not been capitalized because of the development methodology employed.

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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

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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In order to partially offset the risks associated with the effects of certain foreign currency exposures, NetScout has established a program that utilizes foreign currency forward contracts.

Under this program, increases or decreases in foreign currency exposures are partially offset by gains or losses on forward contracts, to mitigate the impact of foreign currency transaction gains or losses.

Under this program, increases or decreases in foreign currency exposures are

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

partially offset by gains or losses on forward contracts, to mitigate the impact of foreign currency transaction gains or losses.

The Company does not use forward contracts to engage in currency speculation.

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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 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

Comprehensive income consists of net income and other comprehensive income.

Other comprehensive income typically consists of unrealized gains and losses on marketable securities, unrealized gains and losses on hedge contracts, actuarial gains and losses, and foreign currency translation adjustments.

Advertising expense was $ 4.9 million, $ 6.8 million and $ 10.2 million for the fiscal years ended March 31, 2025, 2024 and 2023, respectively.

Comprehensive Income (Loss)

Comprehensive income (loss) consists of net income (loss) and other comprehensive income (loss).

Other comprehensive income (loss) typically consists of unrealized gains and losses on marketable securities, unrealized gains and losses on hedge contracts, actuarial gains and losses, and foreign currency translation adjustments.

NetScout accounts for its income taxes under the asset and liability method.

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Recent Accounting Standards

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which requires companies to recognize and measure contract assets and contract liabilities acquired in a business combination as if the acquiring company originated the related revenue contracts.

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

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

In November 2024, the Financial Accounting Standards Board (FASB) issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses (ASU 2024-03).

Additionally, in January 2025, the FASB issued ASU 2025-01 to clarify the effective date of ASU 2024-03.

ASU 2024-03 provides guidance to expand disclosures related to the disaggregation of income statement expenses.

The standard requires, in the notes to the financial statements, disclosure of specified information about certain costs and expenses which includes purchases of inventory, employee compensation, depreciation, and intangible asset amortization that are included on the face of the statement of income.

ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods within fiscal years beginning after December 15, 2027, with early adoption permitted.

ASU 2024-03 is effective for NetScout beginning with its fiscal year ending March 31, 2028.

The Company is in the process of evaluating the impact that the adoption of ASU 2024-03 will have on its disclosures.

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

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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.

The disclosures are also required for public entities that have a single reporting segment.

The Company adopted the amendments within ASU 2023-07 for fiscal year ended March 31, 2025, on a retrospective basis.

The adoption of the guidance did not have a material impact on the Company's financial statements and related disclosures.

See "Note 20 - Segment and Geographic Information" for additional required disclosures.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

NOTE 3 - REVENUE RECOGNITION

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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

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's product sales consist of software only offerings and offerings which include hardware appliances with embedded software that are essential to providing customers the intended functionality of the solutions.

The Company accounts for revenue once a legally enforceable contract with a customer has been approved by the parties and the related promises to transfer products or services have been identified.

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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 recorded revenue from the customer.

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.

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

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

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)

During the fiscal year ended March 31, 2025, the Company recognized revenue of $ 293.8 million relat ed to the Company's deferred revenue balance reported at March 31, 2024.

Performance Obligations

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The Company did not have any material variable consideration such as obligations for returns, refunds or warranties at March 31, 2025.

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.

At March 31, 2025, the Company had total deferred revenue and customer deposits of $ 449.3 million, which represents the aggregate total contract price allocated to undelivered performance obligations.

The Company expects to recognize $ 301.8 million, or 67 %, of this revenue during the next 12 months, and expects to recognize the remaining $ 147.5 million, or 33 %, of this revenue thereafter.

12 unchanged sentences

A balance of $ 5.4 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, 2025.

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.

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

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

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.

During the twelve months ended March 31, 2025 and 2024, and 2023, the Company recogni zed $ 7.1 million, $ 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.

Allowance for Credit Losses

4 unchanged sentences

Additions resulting in charges to operations 195

Charges (recoveries) to other accounts ( 447 )

Deductions due to write-offs ( 13 )

1 unchanged sentence

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.

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, 2025 and 2024.

Marketable Securities

The following is a summary of marketable securities held by NetScout at March 31, 2024 classified as short-term and long-term (in thousands):

The following is a summary of marketable securities held by the Company at March 31, 2025 classified as short-term and long-term (in thousands):

Cost Unrealized

Gains (Losses) Fair

Type of security:

6 unchanged sentences

Total marketable securities $ 23,281 $ — $ 23,281

The following is a summary of marketable securities held by NetScout at March 31, 2023, classified as short-term and long-term (in thousands):

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

The following is a summary of marketable securities held by the Company at March 31, 2024, classified as short-term and long-term (in thousands):

Cost Unrealized

Gains (Losses) Fair

Type of security:

1 unchanged sentence

Commercial paper 8,648 — 8,648

Corporate bonds 310 — 310

Certificates of deposit 2,807 — 2,807

3 unchanged sentences

Total marketable securities $ 22,982 $ ( 36 ) $ 22,946

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

Contractual maturities of the Company's marketable securities held at March 31, 2025 and 2024 (in thousands) were as follows:

5 unchanged sentences

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.

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 and recorded a $ 0.2 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, 2024.

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.

1 unchanged sentence

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.

At March 31, 2025 and 2024, the fair value of the investment in Napatech was $ 11.8 million and $ 11.5 million, respectively, and was included in marketable securities and investments in the Company's consolidated balance sheet.

During the fiscal years ended March 31, 2025 and 2024, the Company recognized gains of $ 0.4 million and $ 5.5 million, respectively, 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 years ended March 31, 2025 and 2024, the unrealized losses related to foreign currency translation on the equity investment in Napatech were immaterial .

NetScout Systems, Inc.

23 unchanged sentences

Commercial paper — 8,648 — 8,648

Corporate bonds 310 — — 310

Certificates of deposit — 2,807 — 2,807

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

Derivative financial instruments — 11 — 11

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 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)

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

Balance at March 31, 2022 $ —

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

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

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

23 unchanged sentences

Depreciation expense was $ 11.9 million, $ 15.9 million and $ 18.8 million for the fiscal years ended March 31, 2025, 2024 and 2023, respectively.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

NOTE 8- DIVESTITURES

7 unchanged sentences

The Company has one reporting unit.

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.

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 the fair value of the reporting unit is below its carrying value.

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

During fiscal year 2024, the Company recorded $ 217.3 million in goodwill impairment charges as a result of the sustained decrease in the Company's stock price and overall market capitalization.

During the first quarter of fiscal year 2025, due to the continued decrease in the Company's stock price and overall market capitalization, along with other qualitative considerations including the continued impact from the conditions in the macroeconomic environment, it was determined a Triggering Event occurred, indicating goodwill may be impaired.

Accordingly, the Company conducted a quantitative impairment test of its goodwill at June 30, 2024.

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.

As a result of the quantitative impairment test performed during the first quarter of fiscal year 2025, the Company determined goodwill was impaired and recorded a goodwill impairment charge of $ 427.0 million during the three months ended June 30, 2024.

The additional impairment charge recorded in the first quarter of fiscal year 2025 was primarily due to the continued decrease in the Company's stock price from March 31, 2024 to June 30, 2024, an increase in the Company's weighted-average cost of capital, and the refinement to the expected cost synergies that could be realized by a hypothetical buyer as a result of the voluntary separation program (VSP) implemented by the Company in the first quarter of fiscal year 2025, which impacted the company-specific control premium used to determine the fair value of the reporting unit under the market approach.

At September 30, 2024, December 31, 2024, and March 31, 2025, the Company performed a Triggering Event assessment and concluded no events or circumstances occurred that indicated goodwill was further impaired.

During fiscal year 2025, the Company completed its annual goodwill impairment test at January 31, 2025, 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.

2 unchanged sentences

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)

At March 31, 2025 and 2024, the carrying amounts of goodwill were $ 1.1 billion and $ 1.5 billion, respectively.

The change in the carrying amount of goodwill for the fiscal year ended March 31, 2025 was due to the impairment of goodwill, and the impact of foreign currency translation adjustments related to asset balances that are recorded in currencies other than the U.S.

The following table summarizes the changes in the carrying amount of goodwill for the fiscal years ended March 31, 2025 and 2024 as follows (in thousands):

Balance at March 31, 2023

Goodwill impairment ( 217,260 )

Divestiture of a business ( 4,259 )

Foreign currency translation impact ( 65 )

1 unchanged sentence

Goodwill impairment ( 426,967 )

Divestiture of a business ( 4,259 )

Foreign currency translation impact 530

1 unchanged sentence

Intangible Assets

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

The net carrying amounts of intangible asset s were $ 258.7 million and $ 308.7 million at March 31, 2025 and 2024, 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.

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.

The Company re views long-lived assets including tangible and definite-lived intangible assets for impairment when an event occurs that may indicate potential impairment.

In conjunction with the goodwill impairment analysis performed at June 30, 2024, the Company conducted an impairment test of its long-lived assets at June 30, 2024.

Based on this assessment, the Company concluded that the carrying values of the Company's long-lived assets were recoverable.

At September 30, 2024, December 31, 2024, and March 31, 2025 the Company performed a Triggering Event assessment and concluded no events or circumstances occurred that indicated intangible assets may be impaired.

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):

Estimated Useful Life in Years Cost Accumulated

Amortization Net

Developed technology 3 - 13 years

$ 248,385 $ ( 238,470 ) $ 9,915

Customer relationships 8 - 18 years

763,943 ( 475,592 ) 288,351

Distributor relationships and technology licenses 1 - 6 years

7,785 ( 7,463 ) 322

Definite-lived trademark and trade name 2 - 9 years

57,699 ( 47,814 ) 9,885

Core technology 10 years

7,192 ( 7,192 ) —

Capitalized software 3 years

3,317 ( 3,317 ) —

Other 1 - 20 years

1,208 ( 1,022 ) 186

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

NetScout Systems, Inc.

1 unchanged sentence

Intangible assets include the following amortizable intangible assets at March 31, 2025 (in thousands):

Estimated Useful Life in Years Cost Accumulated

Cost Accumulated

Amortization Net

Developed technology 3 - 13 years

$ 249,903 $ ( 233,440 ) $ 16,463

Customer relationships 8 - 18 years

768,179 ( 433,876 ) 334,303

Distributor relationships and technology licenses 1 - 6 years

11,547 ( 10,133 ) 1,414

Definite-lived trademark and trade name 2 - 9 years

57,694 ( 43,489 ) 14,205

Core technology 10 years

7,192 ( 7,192 ) —

Non-compete agreements 3 years

292 ( 292 ) —

Capitalized software 3 years

3,317 ( 3,317 ) —

Other 1 - 20 years

Developed technology $ 248,232 $ ( 242,298 ) $ 5,934

Customer relationships 763,397 ( 518,995 ) 244,402

Distributor relationships and technology licenses 5,097 ( 4,022 ) 1,075

Definite-lived trademark and trade name 57,675 ( 50,562 ) 7,113

Core technology 7,192 ( 7,192 ) —

Capitalized software 3,317 ( 3,317 ) —

Other 1,208 ( 1,042 ) 166

$ 1,086,118 $ ( 827,428 ) $ 258,690

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

Cost Accumulated

Amortization Net

Developed technology $ 248,385 $ ( 238,470 ) $ 9,915

Customer relationships 763,943 ( 475,592 ) 288,351

Distributor relationships and technology licenses 7,785 ( 7,463 ) 322

Definite-lived trademark and trade name 57,699 ( 47,814 ) 9,885

Core technology 7,192 ( 7,192 ) —

Capitalized software 3,317 ( 3,317 ) —

Other 1,208 ( 1,022 ) 186

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

12 unchanged sentences

Total $ 258,690

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

NOTE 10 – DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING ACTIVITIES

6 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.

5 unchanged sentences

Foreign exchange forward contracts $ 10,649 $ 11,676 $ 197 $ 11 $ 55 $ 74

Derivatives Not Designated as Hedging Instruments:

Foreign exchange forward contracts — 6,031 — — — 20

$ 197 $ 11 $ 55 $ 74

12 unchanged sentences

(b) The amount represents reclassification from other comprehensive income to earnings that occurs when the hedged item affects earnings.

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):

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

The following table provides the effect foreign exchange forward contrac ts not designated as hedging instruments had on the Company's results of operations during the fiscal years ended March 31, 2025 and 2024 (in thousands):

Gain (Loss) Recognized in Income

4 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.

In addition to foreign exchange forward contracts, 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.

The notional amount of the derivative instrument was $ 7.5 million.

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.

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

1 unchanged sentence

NOTE 11 – RESTRUCTURING CHARGES

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.

NOTE 12 – LONG-TERM DEBT

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.

(JPMorgan), as administrative agent and collateral agent;

JPMorgan, Wells Fargo Securities, LLC, BofA Securities Inc., RBC Capital Markets, PNC Capital Markets LLC and Mizuho Bank, Ltd., as joint lead arrangers and joint bookrunners;

Santander Bank, N.A., U.S.

Bank National Association, Fifth Third Bank National Association, Silicon Valley Bank and TD Bank, N.A., as co-documentation agents;

and the lenders party thereto.

The Second Amended and Restated Credit Agreement provides for a five-year , $ 800.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $ 75.0 million.

The Company may elect to use the credit facility for general corporate purposes (including to finance the repurchase of shares of the Company's common stock).

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.

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.

The Company entered into the First Amendment in order to remove and replace the LIBOR-based interest rate benchmark provisions for U.S.

dollar-denominated loans with interest rate benchmark provisions for U.S.

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

The First Amendment provides that U.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,

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

During the first quarter of fiscal year 2025, the Company implemented a voluntary separation program (VSP) for employees who met certain age and service requirements to reduce overall headcount.

As a result of the related workforce reduction, during the fiscal year ended March 31, 2025, the Company recorded restructuring charges totaling $ 19.6 million related to one-time termination benefits for one hundred forty-two employees who voluntarily terminated their employment with the Company during the fiscal year ended March 31, 2025.

All one-time termination benefits are expected to be paid in full during the first quarter of fiscal year ending March 31, 2026.

During the third quarter of fiscal year 2025, the Company entered into transition agreements that provided termination benefits for certain employees to ensure an orderly transition of responsibilities for continuity purposes.

As a result of the related workforce changes, during the fiscal year ended March 31, 2025, the Company recorded restructuring charges totaling $ 0.9 million.

The Company estimates that approximately $ 1.0 million and $ 0.1 million in additional restructuring charges will be recorded in the fiscal years ending March 31, 2026 and 2027, respectively, related to one-time termination benefits for the ten employees who continue to render services to the Company.

A majority of the one-time termination benefits are expected to be paid in full by the end of the second quarter of fiscal year ending March 31, 2026, with the remaining amounts expected to be paid in full by the end of the fiscal year ending March 31, 2027.

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

Q1 FY25 VSP Q3FY25 Plan

Employee-related Employee-related TOTAL

Balance at March 31, 2024 $ — $ — $ —

Restructuring charges to operations 19,608 906 20,514

Payments ( 19,583 ) — ( 19,583 )

Other adjustments ( 16 ) — ( 16 )

Balance at March 31, 2025 $ 9 $ 906 $ 915

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

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.

NOTE 12 – LONG-TERM DEBT

On July 27, 2021, the Company amended and extended its existing credit facility (as amended, the Second Amended and Restated Credit Agreement), which provided for a five-year , $ 800.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $ 75.0 million.

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

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

On October 4, 2024, the Company amended and restated the Second Amended and Restated Credit Agreement (as amended and restated, the Third Amended and Restated Credit Agreement) with a syndicate of lenders by and among:

the Company, as borrower;

certain subsidiaries of NetScout Systems, Inc., as borrower;

JPMorgan Chase Bank, N.A., as administrative agent and collateral agent;

JPMorgan Chase Bank, N.A., Bank of America, N.A., RBC Capital Markets, PNC Capital Markets LLC and Mizuho Bank, Ltd, as joint lead arrangers and joint bookrunners;

TD Bank, N.A.

and Silicon Valley Bank, a division of First-Citizens Bank & Trust Company, as co-documentation agents;

and the lenders and issuing banks party thereto.

The Third Amended and Restated Credit Agreement provides for a five-year , $ 600.0 million senior secured revolving credit facility, including a letter of credit sub-facility of up to $ 75.0 million.

The Company may elect to use the amended credit facility for working capital and other general corporate purposes (including to repurchase shares of the Company's common stock).

The commitments under the Third Amended and Restated Credit Agreement will expire on October 4, 2029, and any outstanding loans will be due on that date.

In connection with the Third Amended and Restated Credit Agreement, the Company paid off the outstanding balance of $ 75.0 million under the Second Amended and Restated Credit Agreement on October 4, 2024 by borrowing the same amount under the Third Amended and Restated Credit Agreement.

Additionally, the Company recorded a loss on the extinguishment of debt of $ 1.1 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, 2025.

On February 3, 2025, the Company paid the outstanding balance of $ 75.0 million in full under the Third Amended and Restated Credit Agreement.

At March 31, 2025, there were no amounts outstanding under the Third Amended and Restated Credit Agreement.

At the Company's election, revolving loans under the Third Amended and Restated Credit Agreement bear interest at either (a) a term SOFR rate plus a credit spread adjustment of 0.10 % or (b) an Alternate Base Rate (defined in a customary manner), in each case plus an applicable margin.

For the period from the delivery of the Company's financial statements for the quarter ended December 31, 2024, until the Company has delivered financial statements for the quarter ended March 31, 2025, the applicable margin will be 1.00 % per annum for term SOFR 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 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.

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

Consolidated adjusted 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 Third 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, 2024, until the Company has delivered financial statements for the quarter ended March 31, 2025, 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 3.50 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 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.

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 Third 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

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

term SOFR loans.

Additionally, the Company will pay a fronting fee to each issuing bank in amounts to be agreed to between the Company and the applicable issuing bank.

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Interest on term SOFR loans is payable at the end of each interest rate period or at the end of each three-month interval within an interest rate period if the period is longer than three months.

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 Company may also prepay loans under the Third 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 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.

The Second Amended and Restated Credit Agreement contains certain covenants applicable to the Company and its restricted subsidiaries, including, without limitation, limitations on additional indebtedness, liens, various fundamental changes, dividends and distributions, investments (including acquisitions), transactions with affiliates, asset sales, including sale-leaseback transactions, speculative hedge agreements, payment of junior financing, changes in business and other limitations customary in senior secured credit facilities.

The Second Amended and Restated Credit Agreement requires the Company to maintain a certain consolidated net leverage ratio and removes the previous requirement under the Company's previous amended credit agreement that the Company maintain a minimum consolidated interest coverage ratio.

The Third 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 Third Amended and Restated Credit Agreement.

The Third Amended and Restated Credit Agreement contains certain covenants applicable to the Company and its restricted subsidiaries, including, without limitation, limitations on additional indebtedness, liens, various fundamental changes, dividends and distributions, investments (including acquisitions), transactions with affiliates, asset sales, including sale-leaseback transactions, speculative hedge agreements, payment of junior financing, changes in business and other limitations customary in senior secured credit facilities.

The Third Amended and Restated Credit Agreement provides for certain baskets that are available to the Company and its restricted subsidiaries to incur additional indebtedness, to repay junior financing, for asset sales and to make investments and restricted payments.

Such baskets are substantially similar to the baskets set forth in the Company’s previous amended credit agreement.

The Third Amended and Restated Credit Agreement requires the Company to maintain a certain consolidated net leverage ratio.

The Company's consolidated net leverage ratio is the ratio of its Consolidated Total Debt minus the lesser of unrestricted cash and 125 % of adjusted consolidated EBITDA compared to its adjusted consolidated EBITDA.

The Company's maximum consolidated net leverage ratio is 4.00 to 1.00.

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

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

At March 31, 2025, 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 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 Third 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 Third Amended and Restated Credit Agreement and related documents, 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 may, or at the request of the holders of more than 50 % in principal amount of the loans and commitments shall, terminate the commitments and accelerate the maturity of the loans and enforce certain other remedies under the Third Amended and Restated Credit Agreement and the other loan documents.

The Company had unamortized capitalized debt iss uance costs, net of $ 3.3 million at March 31, 2025, which are being amortized over the life of the revolving credit facility.

The unamortized capitalized debt issuance costs balance of $ 0.7 million was included as prepaid expenses and other current assets and a balance of $ 2.6 million was included as other assets in the Company's consolidated balance sheet at March 31, 2025.

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Weighted average restricted stock units and performance-based restricted stock units

— 1,265 1,065

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

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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.

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.

As the Company incurred a net loss for the fiscal years ended March 31, 2025 and 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 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.

See Note 14 for additional information.

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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

The 2022 Share Repurchase Program became effective in the third quarter of fiscal year 2024 when the 2017 Share Repurchase Program was completed.

T he 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 repurchas ed 1,362,205 shares for $ 25.3 million and 614,516

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

the fiscal year ended March 31, 2024.

shares for $ 16.4 million under this share repurchase program during the fiscal years ended March 31, 2025 and 2024 , respectively.

At March 31, 2025, 23,023,279 shares of common stock remained available to be purchased under the current program.

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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 .

During the fiscal year ended March 31, 2025, employees purchased 516,890 shares under the ESPP with a weighted average purchase price pe r share of $ 22.07 .

At March 31, 2025, 1,690,798 shares were available for future issuance under the ESPP.

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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"):

On September 12, 2024, the Company's stockholders approved an amendment and restatement to the 2019 First Amended Plan (2019 Fourth Amended Plan) to further increase the number of shares reserved for issuance by 3,400,000 .

At September 12, 2024, the effective date of the 2019 Fourth Amended Plan, there was a total of 7,947,545 shares reserved for issuance under the 2019 Fourth Amended Plan, which consisted of 3,400,000 new shares plus 4,547,545 shares that remained available for grant under the 2019 Third Amended Plan.

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

The aggregate number of shares available for issuance under the 2019 Fourth 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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(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;

(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 but prior to September 14, 2023;

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.

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The term of stock options granted cannot exceed seven years ( five years for incentive stock options granted to holders of more than 10 % of the voting stock of NetScout).

Based on historical experience, the Company assumed an annualized forfeit ure rate of 0 % for awards granted to its independent directors, approximately 2 % for awards granted to its senior executives, and approximately 5 % granted to all remaining employees during the fiscal years ended March 31, 2024, 2023 and 2022.

Based on historical experience, the Company assumed an annualized forfeiture rate of 0 % for awards granted to its independent directors, approximately 2 % for awards granted to its senior executives, and approximately 5 % granted to all remaining employees during the fiscal years ended March 31, 2025, 2024 and 2023.

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

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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 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.

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

NetScout Systems, Inc.

Notes to Consolidated Financial Statements—(Continued)

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):

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 and the Amended 2019 Plan, and employee stock purchases made under the 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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Outstanding – March 31, 2025 5,745,989 $ 25.75

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

At March 31, 2025, there were 8,148,385 shares of common s tock available for grant under the 2019 Fourth Amended Plan.

The aggregate intrinsic value of stock options exercised and the fair value of restricted stock units vested at March 31, 2025, 2024 and 2023 were as follows (in thousands):

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Total fair value of restricted stock unit awards vested $ 43,733 $ 61,130 $ 61,128

At March 31, 2024, the total unrecognized compensation cost related to restricted stock unit aw ards was $ 131.3 million, which is expected to be amortized over a weighted-average period of 1.3 years.

At March 31, 2025, the total unrecognized compensation cost related to restricted stock unit awards was $ 103.7 million, which is expected to be amortized over a weighted-average period of 1.2 years.

NetScout Systems, Inc.

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Unrecognized actuarial net gain $ 6,732 $ 5,802

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.

For fiscal year 2025 and 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 years ended March 31, 2025 and 2024.

The amorti zation 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, 2025 and 2024 (in thousands):

March 31, March 31,

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

Unrecognized actuarial (gain) loss $ ( 1,396 ) $ 1,832

Amortization of net actuarial gain 466 928

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Net periodic pension cost $ 708 $ 277 $ 990

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

The components of the change in benefit obligation of the pension plan at March 31, 2025 and 2024 are as follows (in thousands):

March 31, March 31,

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Benefits paid and other ( 645 ) ( 576 )

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

Actuarial (gain) loss ( 1,396 ) 1,832

Foreign exchange rate impact ( 161 ) 23

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Benefit obligation, at end of year $ 26,023 $ 27,051

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

The reconciliation of the beginning and ending balances of the fair value of the assets of the pension plan at March 31, 2025 and 2024 are as follows (in thousands):

March 31, March 31,

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Notes to Consolidated Financial Statements—(Continued)

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

During the fiscal year ended March 31, 2025, the Comp any contributed $ 645 thousand to its d efined 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):

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Operating lease liability 10,503 12,292

Other deferred tax assets — 35

Total gross deferred tax assets 178,699 160,889

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Total deferred tax liabilities $ 63,651 $ 26,393

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

Th e 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.

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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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.

federal net operating loss carry forwards of $ 2 million and state net operating loss carryforwards of $ 20 million that are subject to expire at various dates beginning in 2025 and 2036, respectively.

At March 31, 2025, the Company had state net operating loss carry forwards of $ 22 million that are subject to expire at various dates beginning in 2036.

At March 31, 2025, the Company also had U.S.

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The Company's intent is to only make distributions from its foreign subsidiaries in the future when they can be made at no or an immaterial net tax cost.

Unremitted foreign earnings total approximatel y $ 145 million.

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

Unremitted foreign earnings total approximately $ 121 million.

The 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.

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

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.

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.

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The Company has operating leases for administrative, research and development, sales and marketing and manufacturing facilities and equipment under various non-cancelable lease agreements.

The Company's leases have remaining lease terms ranging from 1 year to 7 years.

The Company's leases have remaining lease terms rangi ng from 1 year to 7 years.

The Company's lease terms may include options to extend or terminate the lease where it is reasonably certain that the Company will exercise those options.

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ARO liabilities totaled $ 2.2 million and $ 2.3 million at March 31, 2025 and 2024, 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.

There was a balan ce of $ 2.2 million i ncluded in other long-term liabilities in the consolidated balance sheets for the fiscal year ended March 31, 2025, and a balance of $ 0.1 million included in accrued other and a balance of $ 2.2 million included other long-term liabilities in the consolidated balance sheets for the fiscal year ended March 31, 2024.

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

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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.

As a result, during the year ended March 31, 2024, NetScout concluded that the risk of loss associated with damages that may result from this case was remote and recorded a $ 4.6 million reduction in contingent liabilities and legal fees.

On June 26, 2024, the District Court issued its Order dismissing the case against NetScout.

Unconditional Purchase Obligations

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.

At March 31, 2025, the Company had unconditional purchase obligations of $ 80.4 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

The Company's President and CEO is the CODM.

The Company's CODM evaluates company-wide performance and determines allocation of resources based on multiple performance measures, including but not limited to net income (loss).

The measure of segment assets is reported on the Company's consolidated balance sheet as total assets.

Segment asset information is not used by the CODM to allocate resources.

Geographic Information

The Company manages its business in the following geographic areas:

1 unchanged sentence

The Company's policies mandate compliance with economic sanctions and export controls.

The Company reports revenues and income under one reportable segment.

Total revenue by geography is as follows (in thousands):

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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