Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Jun. 30, 2016 | Aug. 04, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | VIRTUSA CORP | |
Entity Central Index Key | 1,207,074 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --03-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 29,869,268 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 140,339 | $ 148,986 |
Short-term investments | 48,123 | 53,917 |
Accounts receivable, net of allowance of $1,031 and $1,046 at June 30, 2016 and March 31, 2016, respectively | 127,261 | 138,530 |
Unbilled accounts receivable | 59,638 | 58,063 |
Prepaid expenses | 21,422 | 12,094 |
Restricted cash | 1,089 | 93,921 |
Other current assets | 22,652 | 23,268 |
Total current assets | 420,524 | 528,779 |
Property and equipment, net of accumulated depreciation of $44,996 and $42,722 at June 30, 2016 and March 31, 2016, respectively | 114,522 | 116,282 |
Investments accounted for using equity method | 2,784 | 2,869 |
Long-term investments | 19,398 | 28,817 |
Deferred income taxes | 15,507 | 15,890 |
Goodwill | 196,041 | 200,424 |
Intangible assets, net | 63,491 | 66,846 |
Other long-term assets | 17,298 | 20,105 |
Total assets | 849,565 | 980,012 |
Current liabilities: | ||
Accounts payable | 23,766 | 27,452 |
Accrued employee compensation and benefits | 37,729 | 53,897 |
Deferred revenue | 5,958 | 5,971 |
Accrued expenses and other | 28,198 | 42,763 |
Current portion of long-term debt | 8,870 | 8,881 |
Income taxes payable | 2,410 | 2,300 |
Total current liabilities | 106,931 | 141,264 |
Deferred income taxes | 16,809 | 16,121 |
Long-term debt, less current portion | 183,374 | 185,633 |
Long-term liabilities | 9,805 | 9,039 |
Total liabilities | 316,919 | 352,057 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Undesignated preferred stock, $0.01 par value: Authorized 5,000,000 shares at June 30, 2016 and March 31, 2016; zero shares issued and outstanding at June 30, 2016 and March 31, 2016 | ||
Common stock, $0.01 par value: Authorized 120,000,000 shares at June 30, 2016 and March 31, 2016; issued 31,438,033 and 31,287,074 shares at June 30, 2016 and March 31, 2016 respectively; outstanding 29,581,330 and 29,430,371 shares at June 30, 2016 and March 31,2016, respectively | 314 | 313 |
Treasury stock, 1,856,703 common shares, at cost, at June 30, 2016 and March 31, 2016, respectively | (9,652) | (9,652) |
Additional paid-in capital | 297,792 | 297,621 |
Retained earnings | 222,614 | 228,870 |
Accumulated other comprehensive loss | (43,952) | (42,139) |
Total Virtusa stockholders' equity | 467,116 | 475,013 |
Noncontrolling interest in subsidiaries | 65,530 | 152,942 |
Total equity | 532,646 | 627,955 |
Total liabilities, undesignated preferred stock and stockholders' equity | $ 849,565 | $ 980,012 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance (in dollars) | $ 1,031 | $ 1,046 |
Property and equipment, accumulated depreciation (in dollars) | $ 44,996 | $ 42,722 |
Undesignated preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Undesignated preferred stock, Authorized shares | 5,000,000 | 5,000,000 |
Undesignated preferred stock, shares issued | 0 | 0 |
Undesignated preferred stock, shares outstanding | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, Authorized shares | 120,000,000 | 120,000,000 |
Common stock, Issued shares | 31,438,033 | 31,287,074 |
Common stock, Outstanding shares | 29,581,330 | 29,430,371 |
Treasury stock, common shares | 1,856,703 | 1,856,703 |
Consolidated Statements of Inco
Consolidated Statements of Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Consolidated Statements of Income (Loss) | ||
Revenue | $ 205,471 | $ 134,844 |
Costs of revenue | 153,560 | 87,362 |
Gross profit | 51,911 | 47,482 |
Operating expenses: | ||
Selling, general and administrative expenses | 53,759 | 35,072 |
Income (loss) from operations | (1,848) | 12,410 |
Other income (expense): | ||
Interest income (expense) | (551) | 1,425 |
Foreign currency transaction losses | (3,580) | (25) |
Other, net | 6 | (10) |
Total other income (expense) | (4,125) | 1,390 |
Income (loss) before income tax expense | (5,973) | 13,800 |
Income tax expense (benefit) | (463) | 3,687 |
Net income (loss) | (5,510) | 10,113 |
Less: net income attributable to noncontrolling interests, net of tax | 746 | |
Net income (loss) attributable to Virtusa common stockholders | $ (6,256) | $ 10,113 |
Net income (loss) per share of common stock: | ||
Basic earnings (loss) per share | $ (0.21) | $ 0.35 |
Diluted earnings (loss) per share | $ (0.21) | $ 0.34 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Consolidated Statements of Comprehensive Income (Loss) | ||
Net income (loss) | $ (5,510) | $ 10,113 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | (5,062) | (1,614) |
Pension plan adjustment | 24 | 56 |
Unrealized gain (loss) on available-for-sale securities, net of tax | 231 | (15) |
Unrealized gain (loss) on effective cash flow hedges, net of tax | 1,153 | (3,397) |
Other comprehensive loss | (3,654) | (4,970) |
Comprehensive income (loss) | (9,164) | 5,143 |
Less: comprehensive income (loss) attributable to noncontrolling interest, net of tax | (1,095) | |
Comprehensive income (loss) attributable to Virtusa common stockholders | $ (8,069) | $ 5,143 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities: | ||
Net income (loss) | $ (5,510) | $ 10,113 |
Adjustments to reconcile net income (loss) to net cash from operating activities: | ||
Depreciation and amortization | 6,188 | 3,640 |
Share-based compensation expense | 6,133 | 3,529 |
Provision for doubtful accounts | (5) | 137 |
(Gain) loss on sale of property and equipment | (77) | 2 |
Foreign currency losses, net | 3,580 | 25 |
Amortization of discounts and premiums on investments | 96 | 193 |
Amortization of debt issuance cost | 283 | |
Excess tax benefits from stock option exercises | (366) | (1,673) |
Net change in operating assets and liabilities: | ||
Accounts receivable and unbilled receivable | 7,289 | (7,820) |
Prepaid expenses and other current assets | (296) | (5,969) |
Other long-term assets | 4,579 | (55) |
Accounts payable | (4,266) | (180) |
Accrued employee compensation and benefits | (18,478) | (5,382) |
Accrued expenses and other current liabilities | (5,771) | 2,675 |
Income taxes payable | (7,433) | 2,107 |
Other long-term liabilities | (3,039) | 103 |
Net cash (used in) provided by operating activities | (17,093) | 1,445 |
Cash flows from investing activities: | ||
Proceeds from sale of property and equipment | 246 | 2 |
Purchase of short-term investments | (19,333) | (2,761) |
Proceeds from sale or maturity of short-term investments | 39,639 | 15,954 |
Purchase of long-term investments | (6,259) | (3,419) |
Proceeds from sale of long-term investments | 800 | 3,100 |
Decrease (Increase) in restricted cash | 91,767 | (2,860) |
Business acquisition, net of cash acquired | (2,606) | (30,877) |
Purchase of property and equipment | (3,278) | (2,138) |
Net cash provided by (used in) investing activities | 100,976 | (22,999) |
Cash flows from financing activities: | ||
Proceeds from exercise of common stock options | 476 | 414 |
Proceeds from exercise of subsidiary stock options | 257 | |
Payment of debt | (2,500) | |
Payment of contingent consideration related to acquisitions | (830) | |
Acquisition of noncontrolling interest | (89,147) | |
Principal payments on capital lease obligation | (43) | (29) |
Excess tax benefits from stock option exercises | 366 | 1,673 |
Net cash (used in) provided by financing activities | (91,421) | 2,058 |
Effect of exchange rate changes on cash and cash equivalents | (1,109) | (1,458) |
Net decrease in cash and cash equivalents | (8,647) | (20,954) |
Cash and cash equivalents, beginning of period | 148,986 | 124,802 |
Cash and cash equivalents, end of period | $ 140,339 | $ 103,848 |
Nature of the Business
Nature of the Business | 3 Months Ended |
Jun. 30, 2016 | |
Nature of the Business | |
Nature of the Business | (1) Nature of the Business Virtusa Corporation (the “Company”, “Virtusa”, “we”, “us” or “our”) is a global information technology services provider. Using an enhanced global delivery model, we provide end-to-end information technology (“IT”) services to Global 2000 companies. These services include IT and business consulting, digital enablement services, user experience (“UX”) design, development of IT applications, maintenance and support services, systems integration, infrastructure and managed services. Our services leverage our distinctive consulting approach and unique platforming methodology to transform our clients’ businesses through the innovative use of technology and domain knowledge to solve critical business problems. Our services enable our clients to accelerate business outcomes by consolidating, rationalizing and modernizing our clients’ core customer-facing processes into one or more core systems. We deliver cost-effective solutions through a global delivery model, applying advanced methods such as Agile, an industry standard technique designed to accelerate application development. We also use our consulting methodology, which we refer to as Accelerated Solution Design (“ASD”), which is a collaborative decision-making and design process performed with the client, to ensure our solutions meet the client’s specifications and requirements. We have built targeted solutions that enable our clients to reduce their IT operations cost, while simultaneously increasing their ability to accelerate business growth in existing and new market segments. We further differentiate ourselves by enabling our clients to expand their addressable market through our millennial offerings and to improve the efficiencies of operating their business through our industry leading transformational solutions. Headquartered in Massachusetts, we have offices in the United States, Canada, the United Kingdom, the Netherlands, Germany, Switzerland, Sweden, Austria, the United Arab Emirates, Hong Kong, Japan, Australia and New Zealand, with global delivery centers in India, Sri Lanka, Hungary, Singapore and Malaysia, as well as near shore delivery centers in the United States. |
Unaudited Interim Financial Inf
Unaudited Interim Financial Information | 3 Months Ended |
Jun. 30, 2016 | |
Unaudited Interim Financial Information | |
Unaudited Interim Financial Information | (2) Unaudited Interim Financial Information Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, and should be read in conjunction with the Company’s audited consolidated financial statements (and notes thereto) for the fiscal year ended March 31, 2016 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or SEC, on May 27, 2016. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of the accompanying unaudited consolidated financial statements have been included, and all material adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire fiscal year. Principles of Consolidation The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of Virtusa Corporation and all of its subsidiaries that are directly or indirectly more than 50% owned or controlled. When the Company does not have a controlling interest in an entity, but exerts a significant influence on the entity, the Company applies the equity method of accounting. The consolidated financial statements reflect the accounts of the Company and its direct and indirect subsidiaries, Virtusa Consulting Services Private Limited, Virtusa Software Services Private Limited, Virtusa Technologies (India) Private Limited, Polaris Consulting & Services Limited and Optimus Global Services Limited, each organized and located in India; Virtusa (Private) Limited, organized and located in Sri Lanka; Virtusa UK Limited and Polaris Consulting & Services Limited, each organized and located in the United Kingdom; Virtusa Securities Corporation, a Massachusetts securities corporation; Apparatus, Inc. organized and located in Indiana; Virtusa International, B.V. and Polaris Software Lab B.V., each organized and located in the Netherlands; Virtusa Hungary Kft. and Polaris Consulting & Services, Kft., each organized and located in Hungary; Virtusa Germany GmbH and Polaris Software Lab GmbH, each organized and located in Germany; Virtusa Switzerland GmbH and Polaris Consulting & Services SA, each organized and located in Switzerland; Virtusa Singapore Private Limited and Polaris Consulting & Services Pte Limited, each organized and located in Singapore; Virtusa Malaysia Private Limited and Polaris Consulting & Services, SND BHD, each organized and located in Malaysia; Virtusa Austria GmbH, organized and located in Austria; Virtusa Philippines Inc., organized and located in the Philippines; Virtusa Sweden AB organized and located in Sweden; Virtusa Canada, Inc. and Polaris Consulting & Services Inc, each organized and located in Canada; Polaris Consulting & Services Ireland Limited, organized and located in Ireland; Polaris Consulting & Services Japan K.K., organized and located in Japan; Polaris Consulting & Services Pty Ltd., organized and located in Australia; Polaris Consulting & Services FZ-LLC, organized and located in Dubai; Polaris Software Lab (Shanghai) Limited, organized and located in China. All intercompany transactions and balances have been eliminated in consolidation. Use of Estimates The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management reevaluates these estimates on an ongoing basis. The most significant estimates relate to the recognition of revenue and profits based on the percentage of completion method of accounting for fixed price contracts, share based compensation, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, intangible assets, contingent consideration and valuation of financial instruments, including derivative contracts and investments. Management bases its estimates on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated financial statements. Fair Value of Financial Instruments At June 30, 2016 and March 31, 2016, the carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, unbilled accounts receivable, restricted cash, accounts payable, accrued employee compensation and benefits and other accrued expenses and long-term debt, approximate their fair values due to the nature of the items. See Note 5 for a discussion of the fair value of the Company’s other financial instruments. Recent accounting pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2018. Early application is permitted but not before periods beginning on or after January 1, 2017. In March, April and May 2016, the FASB issued updates to the new revenue standard to clarify the implementation guidance on principal versus agent considerations for reporting revenue gross versus net, identifying performance obligations, accounting for licenses of intellectual property, transition, contract modifications, collectability, non-cash consideration and presentation of sales and other similar taxes with the same effective date. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. In June 2014, the FASB issued ASU No. 2014-12—“Stock Compensation—Accounting for Share-Based Payments in some cases, the terms of an award may provide that a performance target that affects vesting could be achieved after an employee completes the requisite service period. That is, the employee would be eligible to vest in the award regardless of whether the employee is rendering service on the date the performance target is achieved. A performance target that affects vesting and that could be achieved after an employee’s requisite service period shall be accounted for as a performance condition. As such, the performance target shall not be reflected in estimating the fair value of the award at the grant date. Compensation cost shall be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service already has been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost for which requisite service has not yet been rendered shall be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period shall reflect the number of awards that are expected to vest and shall be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. The ASU is effective for annual and interim periods for fiscal years beginning on or after December 15, 2015. Entities can apply the amendment either a) prospectively to all awards granted or modified after the effective date or b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The ASU did not have an impact on the consolidated financial statements. In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The update also amends certain disclosure requirements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. The Company is currently evaluating the effect the new standard will have on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued as update (ASU 2016-02) to the standard on leases to increase transparency and comparability among organizations. The new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use asset and a lease liability for all leases with lease terms equal to or greater than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize total lease expense on a straight-line basis. For public business entities this standard is effective for the annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption of this new standard is permitted. Entities will be required to use a modified retrospective transition which provides for certain practical expedients. The Company is currently evaluating the effect the new standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued an update (ASU 2016-05) to the standard on derivatives and hedging on the effect of derivative contract novations on existing hedge accounting relationships. As it relates to derivative instruments, novation refers to replacing one of the parties to a derivative instrument with a new party, which may occur for a variety of reasons such as: financial institution mergers, intercompany transactions, an entity exiting a particular derivatives business or relationship, or because of laws or regulatory requirements. The update clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require designation of that hedge accounting relationship provided that all other hedge accounting criteria continue to be met. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after January 1, 2017. Upon adoption, the entities can choose to apply on either a prospective basis or a modified retrospective basis. Early adoption of this update is permitted. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements. In March 2016, the FASB issued an update (ASU 2016-09) to the standard on Compensation—Stock Compensation, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. Upon adoption, entities will be required to apply a modified retrospective, prospective or retrospective transition method depending on the specific section of the guidance being adopted. The Company is currently evaluating the effect the update will have on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Measurement of Credit Losses on Financial Instruments, which modifies the measurement of expected credit losses of certain financial instruments. This standard update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The company is currently evaluating the effect of this new standard will have on its consolidated financial statements and related disclosures. |
Earnings (loss) per Share
Earnings (loss) per Share | 3 Months Ended |
Jun. 30, 2016 | |
Earnings (loss) per Share | |
Earnings (loss) per Share | (3) Earnings (loss) per Share Basic earnings (loss) per share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period, and diluted earnings per share is computed by including the dilutive impact of common stock equivalents outstanding for the period in the denominator. Common stock equivalents include shares issuable upon the exercise of outstanding stock options, stock appreciation rights, issuance of shares on exercise or vesting of restricted stock units, unvested restricted stock awards, net of shares assumed to have been purchased with the proceeds, using the treasury stock method. The following table sets forth the computation of basic and diluted earnings per share for the periods set forth below: Three Months Ended June 30, 2016 2015 Numerators: Net income (loss) available to Virtusa common stockholders $ ) $ Denominators: Weighted average common shares outstanding Dilutive effect of employee stock options and unvested restricted stock — Dilutive effect of stock appreciation rights — Weighted average shares-diluted Basic earnings (loss) per share $ ) $ Diluted earnings (loss) per share $ ) $ |
Investment Securities
Investment Securities | 3 Months Ended |
Jun. 30, 2016 | |
Investment Securities. | |
Investment Securities | (4) Investment Securities At June 30, 2016 and March 31, 2016, all of the Company’s investment securities were classified as available-for-sale and were carried on its balance sheet at their fair market value. A fair market value hierarchy based on three levels of inputs was used to measure each security (see Note 5). The following is a summary of investment securities at June 30, 2016: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale securities: Corporate bonds: Current $ $ $ ) $ Non-current — Preference shares: Current — — Non-current — Agency and short-term notes: Current — Non-current — Mutual funds: Current — Time deposits: Current — — Total available-for-sale securities $ $ $ ) $ The following is a summary of investment securities at March 31, 2016: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale securities: Corporate bonds: Current $ $ $ ) $ Non-current ) Preference shares: Non-current — — Agency and short-term notes: Current — Non-current ) Mutual funds: Current ) Depository receipts: Current — Time deposits: Current — — Total available-for-sale securities $ $ $ ) $ The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses at June 30, 2016 and March 31, 2016 are temporary. In making this determination, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, the underlying collateral of the investments, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position. Additionally, while the Company classifies the securities as available for sale, the Company does not currently intend to sell such investments and it is more likely than not the Company will not be required to sell such investments prior to the recovery of their carrying value. Proceeds from sales of available-for-sale investment securities and the gross gains and losses that have been included in earnings as a result of those sales were as follows: Three Months Ended June 30, 2016 2015 Proceeds from sales of available-for-sale investment securities $ $ Gross gains $ $ Gross losses — — Net realized gains on sales of available-for-sale investment securities $ $ |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 3 Months Ended |
Jun. 30, 2016 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | (5) Fair Value of Financial Instruments The Company uses a framework for measuring fair value under U.S. generally accepted accounting principles and enhanced disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company’s financial assets and liabilities reflected in the consolidated financial statements at carrying value include marketable securities and other financial instruments which approximate fair value. Fair value for marketable securities is determined using a market approach based on quoted market prices at period end in active markets. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following: · Level 1—Quoted prices in active markets for identical assets or liabilities. · Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2016: Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ $ — Available-for-sales securities—non-current — — Foreign currency derivative contracts — — Total assets $ — $ $ — $ Liabilities: Foreign currency derivative contracts $ — $ $ — Total liabilities $ — $ $ — $ The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2016: Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ $ — Available-for-sales securities—non-current — — Foreign currency derivative contracts — — Total assets $ — $ $ — $ Liabilities: Foreign currency derivative contracts $ — $ $ — Contingent consideration Total liabilities $ — $ $ $ The Company determines the fair value of the contingent consideration related to acquisitions based on the probability of attaining certain revenue and profit margin targets using an appropriate discount rate to present value the liability. The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities at June 30, 2016. Level 3 Liabilities Balance at April 1, 2016 $ Contingent consideration recognized in earnings Payments made during the period ) Balance at June 30, 2016 $ — |
Derivative Financial Instrument
Derivative Financial Instruments | 3 Months Ended |
Jun. 30, 2016 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | (6) Derivative Financial Instruments The Company evaluates its foreign exchange policy on an ongoing basis to assess its ability to address foreign exchange exposures on its consolidated balance sheets, statements of income (loss) and consolidated statement of cash flows from all foreign currencies, including most significantly the U.K. pound sterling, the euro, Indian rupee and Sri Lankan rupee. The Company enters into hedging programs with highly rated financial institutions in accordance with its foreign exchange policy (as approved by the Company’s audit committee and board of directors) which permits hedging of material, known foreign currency exposures. There is no margin required, no cash collateral posted or received by us related to our foreign exchange forward contracts. Currently, the Company maintains four hedging programs, each with varying contract types, duration and purposes. The Company’s “Cash Flow Program” is designed to mitigate the impact of volatility in the U.S. dollar equivalent of the Company’s Indian rupee denominated expenses over a rolling 24-month period. The Cash Flow Program transactions currently meet the criteria for hedge accounting as cash flow hedges. In addition, as part of the Polaris acquisition, the Company has assumed a cash flow program designed to mitigate the impact of the volatility of the translation of Polaris U.S. dollar denominated revenue into Indian rupees over a rolling 18 month period (“Polaris Cash Flow Program”). These cash flow hedges meet the criteria for hedge accounting as cash flow hedges. The Company’s “Balance Sheet Program” involves the use of 30-day derivative instruments designed to mitigate the monthly impact of foreign exchange gains/losses on certain intercompany balances and payments. The Company’s “Economic Hedge Program” involves the purchase of derivative instruments with maturities of up to 92 days, and is designed to mitigate the impact of foreign exchange on U.K. pound sterling, the euro and Swedish krona denominated revenue and costs with respect to the quarter for which such instruments are purchased. The Balance Sheet Program and the Economic Hedge Program are treated as economic hedges as these programs do not meet the criteria for hedge accounting and all gains and losses are recognized in consolidated statement of income (loss) under the same line item as the underlying exposure being hedged. The Company evaluates all of its derivatives based on market observable inputs, including both forward and spot prices for currencies. Any significant change in the forward or spot prices for hedged currencies would have a significant impact on the value of the Company’s derivatives. Changes in fair value of the designated cash flow hedges for the Company’s Cash Flow Program as well as the Polaris Cash Flow Program are recorded as a component of accumulated other comprehensive income (loss) (“AOCI”), net of tax, until the forecasted hedged transactions occur and are then recognized in the consolidated statement of income (loss) in the same line item as the item being hedged . The Company evaluates hedge effectiveness at the time a contract is entered into, as well as on an ongoing basis. If, and when, all or part of a hedge relationship is discontinued because the forecasted transaction is deemed probable of not occurring by the end of the originally specified period or within an additional two-month period of time thereafter, the contract, or the relative amount of the contract, is deemed “ineffective” and any related derivative amounts recorded in equity are reclassified to earnings. There were no gains (losses) that were reclassified from AOCI into earnings as a result of forecasted transactions that were considered probable of not occurring for the three months ended June 30, 2016 and 2015. Changes in the fair value of the derivatives purchased under the Balance Sheet Program are reflected in the Company’s consolidated statement of income (loss) and are included in foreign currency transaction gains (losses) for each period. Changes in the fair value of the derivatives purchased under the Economic Hedge Program are also reflected in the Company’s consolidated statement of income (loss) and are included in the same line item as the underlying exposure being hedged for each period. The U.S. dollar notional equivalent market value, which consists of the notional value and net unrealized gain or loss, of all outstanding foreign currency derivative contracts, was $236,724 and $273,862 at June 30, 2016 and March 31, 2016, respectively. Unrealized net gains related to these contracts which are expected to be reclassified from AOCI to earnings during the next 12 months were $6,618 at June 30, 2016. At June 30, 2016, the maximum outstanding term of any derivative instrument was 24 months. The following table sets forth the fair value of derivative instruments included in the consolidated balance sheets at June 30, 2016 and March 31, 2016: Derivatives designated as hedging instruments June 30, 2016 March 31, 2016 Foreign currency exchange contracts: Other current assets $ $ Other long-term assets $ $ Accrued expenses and other $ $ Long-term liabilities $ $ The following tables set forth the effect of the Company’s foreign currency exchange contracts on the consolidated financial statements of the Company for the three months ended June 30, 2016 and 2015: Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion) Derivatives Designated as Cash Flow Three months ended June 30, Hedging Relationships 2016 2015 Foreign currency exchange contracts $ $ ) Location of Gain or (Loss) Reclassified Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion) from AOCI into Income (loss) (Effective Three months ended June 30, Portion) 2016 2015 Revenue $ $ — Costs of revenue $ $ Operating expenses $ $ Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives Derivatives not Designated Location of Gain or (Loss) Three months ended June 30, as Hedging Instrument Recognized in Income (loss) on Derivatives 2016 2015 Foreign currency exchange contracts Foreign currency transaction gains (losses) $ ) $ ) Revenue $ $ ) Costs of revenue $ ) $ Selling, general and administrative expenses $ ) $ |
Acquisitions
Acquisitions | 3 Months Ended |
Jun. 30, 2016 | |
Acquisitions | |
Acquisitions | (7) Acquisitions On March 3, 2016, pursuant to a share purchase agreement (the “SPA”), dated as of November 5, 2015, by and among Virtusa Consulting Services Private Limited (“Virtusa India”), a subsidiary of the Company, Polaris Consulting & Services Limited (“Polaris”) and the Promoter Sellers named therein, as amended, the Company completed the purchase of 53,133,127 shares, or approximately 51.7% of the fully-diluted capitalization of Polaris from certain Polaris shareholders for approximately $168,257 (Indian rupees 11,391,365) in cash (the “Polaris SPA Transaction”). In addition, on April 6, 2016, Virtusa India completed an unconditional mandatory open offer with successful tender to purchase an additional 26% of the fully diluted outstanding shares of Polaris from Polaris’ public shareholders. The mandatory open offer was conducted in accordance with requirements of the Securities and Exchange Board of India (“SEBI”) and the applicable Indian rules on takeovers. Virtusa India purchased 26,719,942 shares of Polaris common for an aggregate purchase price of approximately $89,147 (Indian rupees 5,935,260). Upon the closing of the mandatory offering, Virtusa’s ownership interest in Polaris increased from approximately 51.7% to 77.7% of Polaris’ fully diluted shares outstanding, and from approximately 52.9% to 78.8% of Polaris’ basic shares outstanding. Under applicable Indian rules on takeovers, Virtusa India is required to sell within one year of the settlement of the unconditional mandatory offer its shareholdings in Polaris in excess of 75% of the basic outstanding share capital of Polaris. Pursuant to the mandatory open offer, during the fiscal year ended March 31, 2016, the Company transferred $89,220 into an escrow account in accordance with the India takeover rules, which is recorded as restricted cash at March 31, 2016, and the mandatory open offer closed on April 6, 2016. On April 6, 2016, the restricted cash was released from the escrow account and used for settlement for the mandatory open offer. Under the purchase method of accounting, assets acquired and liabilities assumed are recorded at their estimated fair values. The Company may continue to adjust the preliminary estimated fair values after obtaining more information regarding asset valuations, liabilities assumed, and revision of preliminary estimates. The following is based on information available at June 30, 2016 and may be subject to change during the measurement period. During the three months ended June 30, 2016, the Company recorded $729 to goodwill related to deferred tax liabilities and $2,104 as a reduction of goodwill related to certain accruals. Amount Useful Life Consideration Transferred: Cash paid at closing $ Less: Cash acquired ) Total purchase price, net of cash acquired $ Acquisition-related costs $ Assets and liabilities Cash and cash equivalents $ Accounts receivable and unbilled receivable Short term investments Other current assets Property and equipment Long term investments Long term assets Goodwill Customer relationships 10 - 15 years Trademark 2 years Accounts Payable ) Deferred revenue ) Accrued expenses and other current liabilities ) Deferred income taxes ) Long term liabilities ) Noncontrolling interest ) Total purchase price Less: Cash acquired ) Total purchase price, net of cash acquired $ Acquisition costs are recorded in selling, general and administrative expenses. Noncontrolling interest was fair valued based on the Polaris closing stock price on the date of acquisition for the minority shares outstanding and the fair value of vested options exercisable using the black-Scholes option pricing model. The assets of Polaris acquired and liabilities assumed by the Company include net assets of $300 related to a business unit that is held for sale and which was sold to a third party on July 8, 2016. On February 25, 2016, the Company entered into a credit agreement (the “Credit Agreement”) dated as of February 25, 2016, by and among the Company, its guarantor subsidiaries a party thereto, the lenders a party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint book runners and lead arrangers. The Credit Agreement replaces the Company’s existing $25,000 credit agreement with JP Morgan Chase Bank, N.A. and provides for a $100,000 revolving credit facility and a $200,000 delayed-draw term loan (together, the “Credit Facility”). To finance the Polaris SPA Transaction, on February 25, 2016, the Company drew down the full $200,000 of the term loan. See Note 11 of the notes to our financial statements included herein for a detail description of our debt. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (8) Goodwill and Intangible Assets Goodwill: The Company has one reportable segment. The following are details of the changes in goodwill balance at June 30, 2016: Amount Balance at April 1, 2016 $ Preliminary purchase price allocation adjustment ) Foreign currency translation adjustments ) Balance at June 30, 2016 $ The acquisition costs and goodwill balance deductible for our business acquisitions for tax purposes are $74,108. The acquisition costs and goodwill balance not deductible for tax purposes are $133,821 and relate to the Company’s TradeTech acquisition (closed on January 2, 2014) and the Polaris acquisition. The Company performed the annual assessment of its goodwill during the fourth quarter of the fiscal year ended March 31, 2016 and determined that the estimated fair value of the Company’s reporting unit exceeded its carrying value and therefore goodwill was not impaired. The Company will continue to complete goodwill impairment assessments at least annually during the fourth quarter of each ensuing fiscal year. The Company will continue to evaluate whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets, including intangible assets, may warrant revision or that the carrying value of these assets may be impaired. Any write-downs are treated as permanent reductions in the carrying amount of the assets. Intangible Assets: The following are details of the Company’s intangible asset carrying amounts acquired and amortization at June 30, 2016. Weighted Average Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortizable intangible assets: Customer relationships $ $ $ Trademark Technology $ $ $ The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized. |
Income Taxes
Income Taxes | 3 Months Ended |
Jun. 30, 2016 | |
Income Taxes | |
Income Taxes | (9) Income Taxes The Company applies an estimated annual effective tax rate to its year-to-date operating results to determine the interim provision for income tax expense. The Company’s effective tax rate was 7.8% for the three months ended June 30, 2016, as compared to an effective tax rate of 26.7% for the three months ended June 30, 2015. The Company’s reported effective tax rate is impacted by jurisdictional mix of profits in which the Company operates, statutory tax rates in effect, unusual or infrequent discrete items requiring a provision during the period and certain exemptions or tax holidays applicable to the Company. The Company created two export oriented units in India; one in Bangalore during the fiscal year ended March 31, 2011 and a second unit in Hyderabad (Special Economic Zone or “SEZ”) during the fiscal year ended March 31, 2010 for which no income tax exemptions were availed. The Company’s Indian subsidiaries also operate two development centers in areas designated as a SEZ, under the SEZ Act of 2005. In particular, the Company was approved as a SEZ Co-developer and has built a campus on a 6.3 acre parcel of land in Hyderabad, India that has been designated as a SEZ. As a SEZ Co-developer, the Company is entitled to certain tax benefits for any consecutive period of 10 years during the 15 year period starting in fiscal year 2008. The Company has elected to claim SEZ Co-developer income tax benefits starting in fiscal year ended March 31, 2013. In addition, the Company has leased facilities in SEZ designated locations in Hyderabad and Chennai, India. The Company’s profits from the Hyderabad and Chennai SEZ operations are eligible for certain income tax exemptions for a period of up to 15 years beginning in fiscal March 31, 2009. In the fiscal year ended March 31, 2014, the Company leased two facilities in SEZ designated locations, in Bangalore and Pune, India each of which is eligible for tax holidays for up to 15 years beginning in the fiscal year ended March 31, 2014. During the fiscal year ended March 31, 2016, the Company expanded its facilities in Hyderabad to create a third export oriented unit and received approval for SEZ benefits for a period up to 15 years. The Company’s India profits ineligible for SEZ benefits are subject to corporate income tax at the current rate of 34.6%. Based on the latest changes in tax laws, book profits of SEZ units are subject to Indian Minimum Alternative Tax (“MAT”), commencing April 1, 2011, which will continue to negatively impact the Company’s cash flows. In addition, the Company’s Sri Lankan subsidiary, Virtusa (Private) Limited, is operating under a 12-year income tax holiday arrangement that is set to expire on March 31, 2019 and required Virtusa (Private) Limited to retain certain job creation and investment criteria through the expiration of the holiday period. During the fiscal year ended March 31, 2016, the Company believed it had fulfilled its hiring and investment commitments and is eligible for tax holiday through March 2019. The current agreement provides income tax exemption for all export business income. On September 30, 2015, the Company received confirmation for the Board of Investments that it has satisfied investment criteria through March 31, 2015 and is eligible for holiday benefits. At June 30, 2016, the Company believes it is eligible for continued benefits for the entire 12 year tax holiday. The Company’s effective income tax rate is based on the composition of estimated income in different jurisdictions, including those where the Company is enjoying tax holidays, for the applicable fiscal year and adjustments, if any, in the applicable quarterly periods, for unrecognized tax benefits for uncertain income tax positions or other discrete items required to be reported during interim periods. The Company’s aggregate income tax rate in foreign jurisdictions is lower than its income tax rate in the United States due primarily to lower rates generally in jurisdictions in which the Company operates and applicable tax holiday benefits of the Company, obtained primarily in India and Sri Lanka. Unrecognized tax benefits represent uncertain tax positions for which the Company has established reserves. At June 30, 2016 and March 31, 2016, the total liability for unrecognized tax benefits was $6,732 and $6,693. Unrecognized tax benefits may be adjusted upon the closing of the statute of limitations for income tax returns filed in various jurisdictions. During the three months ended June 30, 2016 and June 30, 2015, the unrecognized tax benefits increased by $39 and $10, respectively. The increase in unrecognized tax benefits in the three months period ending June 30, 2016 and 2015 was predominantly due to increases for incremental interest accrued on existing uncertain tax positions and a prior period tax position in a foreign jurisdiction. Undistributed Earnings of Foreign Subsidiaries A substantial amount of the Company’s income before provision for income tax is from operations earned in its Indian and Sri Lankan subsidiaries and is subject to tax holiday. The Company intends to use accumulated and future earnings of foreign subsidiaries to expand operations outside the United States and, accordingly, undistributed income is considered to be indefinitely reinvested. The Company does not provide for U.S. income taxes on foreign earnings. At June 30, 2016, the Company had $342,741 of unremitted earnings from foreign subsidiaries and approximately $119,419 of cash, short-term investments and long-term investments that would otherwise be available for potential distribution, if not indefinitely reinvested. If required, such cash and investments could be repatriated to the United States. However, under current law, any repatriation would be subject to United States federal income tax less applicable foreign tax credits. Due to the various methods by which such earnings could be repatriated in the future, the amount of taxes attributable to the undistributed earnings is not practicably determinable. |
Concentration of Revenue and As
Concentration of Revenue and Assets | 3 Months Ended |
Jun. 30, 2016 | |
Concentration of Revenue and Assets | |
Concentration of Revenue and Assets | (10) Concentration of Revenue and Assets Total revenue is attributed to geographic areas based on the location of the client. Long-lived assets represent property, plant and equipment, intangible assets and goodwill, net of accumulated depreciation and amortization, and are attributed to geographic area based on their location. Geographic information is summarized as follows: Three Months Ended June 30, 2016 2015 Client revenue: North America $ $ Europe Other Consolidated revenue $ $ June 30, 2016 March 31, 2016 Long-lived assets, net of accumulated depreciation and amortization: North America $ $ Asia Europe and others Consolidated long-lived assets, net $ $ Revenue from significant clients as a percentage of the Company’s consolidated revenue was as follows: Three Months Ended June 30, 2016 2015 Customer 1 % % |
Debt
Debt | 3 Months Ended |
Jun. 30, 2016 | |
Debt | |
Debt | (11) Debt On February 25, 2016, in connection with the Polaris SPA Transaction, the Company entered into a credit agreement (the “Credit Agreement”) dated as of February 25, 2016, by and among the Company, its guarantor subsidiaries a party thereto, the lenders a party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint book runners and lead arrangers. The Credit Agreement replaces the Company’s existing $25,000 credit agreement with JP Morgan Chase Bank, N.A. and provides for a $100,000 revolving credit facility and a $200,000 delayed-draw term loan (together, the “Credit Facility”). To finance the Polaris SPA Transaction, on February 25, 2016, the Company drew down the full $200,000 of the term loan. Interest under these facilities accrues at a rate per annum of LIBOR plus 2.75%, subject to step-downs based on the Company’s ratio of debt to adjusted earnings before interest, taxes, depreciation, amortization, and stock compensation expense (“EBITDA”). The Company is required under the terms of the Credit Agreement to make quarterly principle payments on the term loan. For the fiscal year ending March 31, 2017, the Company is required to make principle payments of $2,500 per quarter. The Credit Agreement includes customary minimum cash, maximum debt to EBITDA and minimum fixed charge coverage covenants. The term of the Credit Agreement is five years ending February 24, 2021. At June 30, 2016, the interest rate on the Credit Facility was 2.97% and there were no borrowings under the revolving credit facility. The Credit Agreement has financial covenants that require that the Company maintain a Total Leverage Ratio, commencing on June 30, 2016, of not more than 3.25 to 1.00 for the first year of the Credit Facility, of not more than 3.00 to 1.00 for the second year of the Credit Facility, and 2.75 to 1.00 thereafter, each as determined for the four consecutive quarter period ending on each fiscal quarter (the “Reference Period”). In addition, for a period, expected to be at least one year from the completion of the Company’s closing of the Polaris SPA Transaction, until the occurrence of certain events described in the Credit Agreement, at any time when the Total Leverage Ratio exceeds 1.50 to 1.00 as of the last day of a quarter, the Company must maintain at least $30,000 in unrestricted cash, cash equivalents and certain permitted investments under the Credit Facility held in bank deposits in the U.S., and $20,000 in unrestricted cash and certain permitted investments under the Credit Facility and long-term securities investments held in accordance with the Company’s current investment policy. The financial covenants also require that the Company maintain a Fixed Charge Coverage Ratio, commencing on June 30, 2016, of not less than 1.25 to 1.00, as of the last day of any Reference Period. For purposes of these covenants, “Total Leverage Ratio” means, as of the last day of any fiscal quarter, the ratio of Funded Debt to Adjusted EBITDA for the reference period ended on such date. “Funded Debt” refers generally to total indebtedness to third-parties for borrowed money, capital leases, deferred purchase price and earn-out obligations and related guarantees and “Adjusted EBITDA” is defined as consolidated net income plus (a) (i) GAAP depreciation and amortization, (ii) non-cash equity-based compensation expenses, (iii) fees and expenses incurred during such period in connection with the Credit Facility and loans made thereunder, (iv) fees and expenses incurred during such period in connection with any permitted acquisition, (v) one-time regulatory charges, (vi) other extraordinary and non-recurring losses or expenses, and (vii) all other non-cash charges, expenses and losses for such period, minus (b) (i) extraordinary or non-recurring income or gains for such period, and (ii) any cash payments made during such period in respect of non-cash charges, expenses or losses described in clauses (a)(ii), (a)(v) and (a)(vi) above taken in a prior period, subject to other adjustments and certain caps and limits on adjustments. The Fixed Charge Coverage Ratio is calculated under the Credit Agreement generally as the ratio of Adjusted EBITDA, excluding capital expenditures made during such period (to the extent not financed with indebtedness (other than Revolving Loans), an issuance of equity interests or capital contributions, or proceeds of asset sales, the proceeds of casualty insurance used to replace or restore assets), to fixed charges (regularly scheduled consolidated interest expense paid in cash, regularly scheduled amortization payments on indebtedness in cash, income taxes paid in cash and the interest component of capital lease obligation payments), on a consolidated basis. The Credit Facility is secured by substantially all of the Company’s assets, including all intellectual property and all securities in domestic subsidiaries (other than certain domestic subsidiaries where the material assets of such subsidiaries are equity in foreign subsidiaries), subject to customary exceptions and exclusions from the collateral. All obligations under the Credit Agreement are unconditionally guaranteed by substantially all of the Company’s material direct and indirect domestic subsidiaries, with certain exceptions. These guarantees are secured by substantially all of the present and future property and assets of the guarantors, with certain exclusions. As of June 30, 2016, we are in compliance with our debt covenants and have provided a quarterly certification to our lenders to that effect. We believe that we currently meet all conditions set forth in the Credit Agreement to borrow thereunder and we are not aware of any conditions that would prevent us from borrowing part or all of the remaining available capacity under the revolving credit facility as of June 30, 2016 and through the date of this filing. Current portion of long-term debt The following summarizes our short-term debt balances as of: June 30, 2016 March 31, 2016 Notes outstanding under the revolving credit facility $ — $ — Term loan- current maturities Less: deferred financing costs - current ) ) Total $ $ Long-term debt, less current portion The following summarizes our long-term debt balance as of: June 30, 2016 March 31, 2016 Term loan $ $ Less: Current maturities ) ) Deferred financing costs, long-term ) ) Total $ $ In accordance with the recently adopted FASB ASU 2015-03, the Company has presented debt issuance costs in the balance sheet as a direct deduction from the carrying value of that debt liability. On July 26, 2016, we entered into two 12-month forward starting interest rate swap transactions and on July 28, 2016 we entered into a third 12-month forward starting interest rate swap transaction to mitigate our interest rate risk on 50% of our variable rate debt. Our objective is to limit the variability of cash flows associated with changes in LIBOR interest rate payments due on the Credit Agreement by using pay-fixed, receive-variable interest rate swaps to offset the future variable rate interest payments. We will recognize these transactions in accordance with ASC 815 “Derivatives and Hedging,” and have designated the swaps as cash flow hedges. The three interest rate swaps have an effective date of July 31, 2017 and a maturity date of July 31, 2020. The swaps have an aggregate beginning notional amount of $93,800 and hedge approximately 50% of our forecasted outstanding debt balance as of July 31, 2017. The notional amount of the swaps amortizes over the three swap periods corresponding to the quarterly principle payments on the term loan. The interest rate swaps require us to make monthly fixed interest rate payments based on the amortized notional amount at a blended weighted average rate of 1.025% and we will receive 1-month LIBOR on the same notional amounts. Beginning in fiscal 2009, the Company’s U.K. subsidiary entered into an agreement with an unrelated financial institution to sell, without recourse or continuing involvement, certain of its European-based accounts receivable balances from one client to such third party financial institution. During the three months ended June 30, 2016, $5,524 of receivables were sold under the terms of the financing agreement. Fees paid pursuant to this agreement were immaterial during the three months ended June 30, 2016. No amounts were due as of June 30, 2016, but the Company may elect to use this program again in future periods. However, the Company cannot provide any assurances that this or any other financing facilities will be available or utilized in the future. |
Pensions and post-retirement be
Pensions and post-retirement benefits | 3 Months Ended |
Jun. 30, 2016 | |
Pensions and post-retirement benefits | |
Pensions and post-retirement benefits | (12) Pensions and post-retirement benefits The Company has noncontributory defined benefit plans covering its employees in India and Sri Lanka as mandated by the Indian and Sri Lankan governments. The following tables provide information regarding pension expense recognized: Three Months Ended June 30, 2016 2015 Components of net periodic pension cost Service cost $ $ Interest cost Expected return on plan assets ) ) Amortization actuarial loss Amortization of past service cost Net periodic pension cost $ $ The Company expects to contribute approximately $1,863 in cash to the gratuity plans during the fiscal year ending March 31, 2017. During the three months ended June 30, 2016, the Company made cash contributions of $451 towards the plans for the fiscal year 2017. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 3 Months Ended |
Jun. 30, 2016 | |
Accumulated Other Comprehensive Loss. | |
Accumulated Other Comprehensive Loss | (13) Accumulated Other Comprehensive Loss Changes in accumulated other comprehensive income (loss) by component were as follows for the three months ended June 30, 2016 and 2015: Three Months Ended June 30, Accumulated Other Comprehensive Income (Loss) 2016 2015 Investment securities Beginning balance $ $ ) Other comprehensive income (loss) (OCI) before reclassifications net of tax of $172, $0 for all periods ) Reclassifications from OCI to other income — net of tax of $(38), $0 for all periods ) ) (Less) : Noncontrolling interests, net of tax ) — Comprehensive income (loss) on investment securities, net of tax of $134, $0 for all periods ) Closing Balance $ $ ) Currency Translation Adjustments Beginning balance $ ) $ ) OCI before reclassifications ) ) (Less): Noncontrolling interests, net of tax — Comprehensive income (loss) on currency translation adjustment ) ) Closing Balance $ ) $ ) Cash Flow Hedges Beginning balance $ $ OCI before reclassifications net of tax of $264 and $(828) ) Reclassifications from OCI to - Revenue, net of tax of $(183) and $0 ) — - Costs of revenue, net of tax of $(14) and $(53) ) ) - Selling, general and administrative expenses, net of tax of $(8) and $(29) ) ) (Less): Noncontrolling interests, net of tax — Comprehensive income (loss) on cash flow hedges, net of tax of $59 and $(910) ) Closing Balance $ $ ) Benefit plans Beginning balance $ ) $ ) OCI before reclassifications net of tax of $0 for all periods $ — $ — Reclassifications from OCI for prior service credit (cost) to: - Costs of revenue, net of tax of $0 for all periods - Selling, general and administrative expenses, net of tax of $0 for all periods — — Reclassifications from OCI for net actuarial gain (loss) amortization to: - Costs of revenue, net of tax of $0 for all periods - Selling, general and administrative expenses, net of tax of $0 for all periods Other adjustments ) Comprehensive income (loss) on benefit plans, net of tax of $0 for all periods Closing Balance $ ) $ ) Accumulated other comprehensive loss at June 30, 2016 $ ) $ ) |
Subsequent Events
Subsequent Events | 3 Months Ended |
Jun. 30, 2016 | |
Subsequent Events | |
Subsequent Events | (14) Subsequent Events On July 13, 2016, the Company purchased multiple foreign currency forward contracts designed to hedge fluctuation in the U.K. pound sterling (“GBP”) against the U.S. dollar, the Swedish Krona (“SEK”) against the U.S. dollar and the Euro (“EUR”) against the U.S. dollar (the “Euro contracts”), each of which will expire on various dates during the period ending September 30, 2016. The GBP contracts have an aggregate notional amount of approximately £7,114 (approximately $9,384), the SEK contracts have an aggregate notional amount of approximately SEK 8,172 (approximately $968) and the EUR contracts have an aggregate notional amount of approximately EUR 437 (approximately $484). The weighted average U.S. dollar settlement rate associated with the GBP contracts is $1.319, the weighted average U.S dollar settlement rate associated with the SEK contracts is approximately $0.118, and the weighted average U.S. dollar settlement rate associated with the EUR contracts is approximately $1.107. On July 18, 2016, Virtusa Corporation (the “Company”) purchased multiple foreign currency forward contracts designed to hedge fluctuation in the Indian rupee against the U.K. pound sterling. The U.K. pound sterling contracts have an aggregate notional amount of approximately 310,485 Indian rupees (approximately $4,378) and have an average settlement rate of 92.70 Indian rupees. These contracts will expire at various dates during the 15 month period ending on September 30, 2017. The Company will be obligated to settle these contracts based upon the Reserve Bank of India published Indian rupee exchange rates. |
Unaudited Interim Financial I21
Unaudited Interim Financial Information | 3 Months Ended |
Jun. 30, 2016 | |
Unaudited Interim Financial Information | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, and should be read in conjunction with the Company’s audited consolidated financial statements (and notes thereto) for the fiscal year ended March 31, 2016 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or SEC, on May 27, 2016. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of the accompanying unaudited consolidated financial statements have been included, and all material adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire fiscal year. |
Principles of Consolidation | Principles of Consolidation The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of Virtusa Corporation and all of its subsidiaries that are directly or indirectly more than 50% owned or controlled. When the Company does not have a controlling interest in an entity, but exerts a significant influence on the entity, the Company applies the equity method of accounting. The consolidated financial statements reflect the accounts of the Company and its direct and indirect subsidiaries, Virtusa Consulting Services Private Limited, Virtusa Software Services Private Limited, Virtusa Technologies (India) Private Limited, Polaris Consulting & Services Limited and Optimus Global Services Limited, each organized and located in India; Virtusa (Private) Limited, organized and located in Sri Lanka; Virtusa UK Limited and Polaris Consulting & Services Limited, each organized and located in the United Kingdom; Virtusa Securities Corporation, a Massachusetts securities corporation; Apparatus, Inc. organized and located in Indiana; Virtusa International, B.V. and Polaris Software Lab B.V., each organized and located in the Netherlands; Virtusa Hungary Kft. and Polaris Consulting & Services, Kft., each organized and located in Hungary; Virtusa Germany GmbH and Polaris Software Lab GmbH, each organized and located in Germany; Virtusa Switzerland GmbH and Polaris Consulting & Services SA, each organized and located in Switzerland; Virtusa Singapore Private Limited and Polaris Consulting & Services Pte Limited, each organized and located in Singapore; Virtusa Malaysia Private Limited and Polaris Consulting & Services, SND BHD, each organized and located in Malaysia; Virtusa Austria GmbH, organized and located in Austria; Virtusa Philippines Inc., organized and located in the Philippines; Virtusa Sweden AB organized and located in Sweden; Virtusa Canada, Inc. and Polaris Consulting & Services Inc, each organized and located in Canada; Polaris Consulting & Services Ireland Limited, organized and located in Ireland; Polaris Consulting & Services Japan K.K., organized and located in Japan; Polaris Consulting & Services Pty Ltd., organized and located in Australia; Polaris Consulting & Services FZ-LLC, organized and located in Dubai; Polaris Software Lab (Shanghai) Limited, organized and located in China. All intercompany transactions and balances have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the reporting period. Management reevaluates these estimates on an ongoing basis. The most significant estimates relate to the recognition of revenue and profits based on the percentage of completion method of accounting for fixed price contracts, share based compensation, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, intangible assets, contingent consideration and valuation of financial instruments, including derivative contracts and investments. Management bases its estimates on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated financial statements. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments At June 30, 2016 and March 31, 2016, the carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, unbilled accounts receivable, restricted cash, accounts payable, accrued employee compensation and benefits and other accrued expenses and long-term debt, approximate their fair values due to the nature of the items. See Note 5 for a discussion of the fair value of the Company’s other financial instruments. |
Recent accounting pronouncements | Recent accounting pronouncements In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2018. Early application is permitted but not before periods beginning on or after January 1, 2017. In March, April and May 2016, the FASB issued updates to the new revenue standard to clarify the implementation guidance on principal versus agent considerations for reporting revenue gross versus net, identifying performance obligations, accounting for licenses of intellectual property, transition, contract modifications, collectability, non-cash consideration and presentation of sales and other similar taxes with the same effective date. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. In June 2014, the FASB issued ASU No. 2014-12—“Stock Compensation—Accounting for Share-Based Payments in some cases, the terms of an award may provide that a performance target that affects vesting could be achieved after an employee completes the requisite service period. That is, the employee would be eligible to vest in the award regardless of whether the employee is rendering service on the date the performance target is achieved. A performance target that affects vesting and that could be achieved after an employee’s requisite service period shall be accounted for as a performance condition. As such, the performance target shall not be reflected in estimating the fair value of the award at the grant date. Compensation cost shall be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the period(s) for which the requisite service already has been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost for which requisite service has not yet been rendered shall be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period shall reflect the number of awards that are expected to vest and shall be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. As indicated in the definition of vest, the stated vesting period (which includes the period in which the performance target could be achieved) may differ from the requisite service period. The ASU is effective for annual and interim periods for fiscal years beginning on or after December 15, 2015. Entities can apply the amendment either a) prospectively to all awards granted or modified after the effective date or b) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The ASU did not have an impact on the consolidated financial statements. In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The update also amends certain disclosure requirements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. The Company is currently evaluating the effect the new standard will have on the Company’s consolidated financial statements and related disclosures. In February 2016, the FASB issued as update (ASU 2016-02) to the standard on leases to increase transparency and comparability among organizations. The new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use asset and a lease liability for all leases with lease terms equal to or greater than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize total lease expense on a straight-line basis. For public business entities this standard is effective for the annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption of this new standard is permitted. Entities will be required to use a modified retrospective transition which provides for certain practical expedients. The Company is currently evaluating the effect the new standard will have on its consolidated financial statements and related disclosures. In March 2016, the FASB issued an update (ASU 2016-05) to the standard on derivatives and hedging on the effect of derivative contract novations on existing hedge accounting relationships. As it relates to derivative instruments, novation refers to replacing one of the parties to a derivative instrument with a new party, which may occur for a variety of reasons such as: financial institution mergers, intercompany transactions, an entity exiting a particular derivatives business or relationship, or because of laws or regulatory requirements. The update clarifies that a change in the counterparty to a derivative instrument that has been designated as the hedging instrument does not, in and of itself, require designation of that hedge accounting relationship provided that all other hedge accounting criteria continue to be met. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after January 1, 2017. Upon adoption, the entities can choose to apply on either a prospective basis or a modified retrospective basis. Early adoption of this update is permitted. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements. In March 2016, the FASB issued an update (ASU 2016-09) to the standard on Compensation—Stock Compensation, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. Upon adoption, entities will be required to apply a modified retrospective, prospective or retrospective transition method depending on the specific section of the guidance being adopted. The Company is currently evaluating the effect the update will have on its consolidated financial statements and related disclosures. In June 2016, the FASB issued ASU 2016-13, Financial Instruments — Measurement of Credit Losses on Financial Instruments, which modifies the measurement of expected credit losses of certain financial instruments. This standard update requires financial assets measured at amortized cost basis to be presented at the net amount expected to be collected. This update is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The company is currently evaluating the effect of this new standard will have on its consolidated financial statements and related disclosures. |
Earnings (loss) per Share (Tabl
Earnings (loss) per Share (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Earnings (loss) per Share | |
Schedule of computation of basic and diluted (loss) earnings per share | Three Months Ended June 30, 2016 2015 Numerators: Net income (loss) available to Virtusa common stockholders $ ) $ Denominators: Weighted average common shares outstanding Dilutive effect of employee stock options and unvested restricted stock — Dilutive effect of stock appreciation rights — Weighted average shares-diluted Basic earnings (loss) per share $ ) $ Diluted earnings (loss) per share $ ) $ |
Investment Securities (Tables)
Investment Securities (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Investment Securities. | |
Schedule of investment securities | The following is a summary of investment securities at June 30, 2016: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale securities: Corporate bonds: Current $ $ $ ) $ Non-current — Preference shares: Current — — Non-current — Agency and short-term notes: Current — Non-current — Mutual funds: Current — Time deposits: Current — — Total available-for-sale securities $ $ $ ) $ The following is a summary of investment securities at March 31, 2016: Amortized Cost Gross Unrealized Gains Gross Unrealized Losses Fair Value Available-for-sale securities: Corporate bonds: Current $ $ $ ) $ Non-current ) Preference shares: Non-current — — Agency and short-term notes: Current — Non-current ) Mutual funds: Current ) Depository receipts: Current — Time deposits: Current — — Total available-for-sale securities $ $ $ ) $ |
Schedule of proceeds from sales of available-for-sale investment securities and the gross gains and losses that have been included in earnings | Three Months Ended June 30, 2016 2015 Proceeds from sales of available-for-sale investment securities $ $ Gross gains $ $ Gross losses — — Net realized gains on sales of available-for-sale investment securities $ $ |
Fair Value of Financial Instr24
Fair Value of Financial Instruments (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Fair Value of Financial Instruments | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2016: Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ $ — Available-for-sales securities—non-current — — Foreign currency derivative contracts — — Total assets $ — $ $ — $ Liabilities: Foreign currency derivative contracts $ — $ $ — Total liabilities $ — $ $ — $ The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2016: Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ $ — Available-for-sales securities—non-current — — Foreign currency derivative contracts — — Total assets $ — $ $ — $ Liabilities: Foreign currency derivative contracts $ — $ $ — Contingent consideration Total liabilities $ — $ $ $ |
Schedule of changes in fair value of the Company's Level 3 financial liabilities | Level 3 Liabilities Balance at April 1, 2016 $ Contingent consideration recognized in earnings Payments made during the period ) Balance at June 30, 2016 $ — |
Derivative Financial Instrume25
Derivative Financial Instruments (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Derivative Financial Instruments | |
Schedule of fair value of derivative instruments included in the consolidated balance sheets | June 30, 2016 March 31, 2016 Foreign currency exchange contracts: Other current assets $ $ Other long-term assets $ $ Accrued expenses and other $ $ Long-term liabilities $ $ |
Schedule of effect of the foreign currency exchange contracts on the consolidated financial statements | Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion) Derivatives Designated as Cash Flow Three months ended June 30, Hedging Relationships 2016 2015 Foreign currency exchange contracts $ $ ) Location of Gain or (Loss) Reclassified Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion) from AOCI into Income (loss) (Effective Three months ended June 30, Portion) 2016 2015 Revenue $ $ — Costs of revenue $ $ Operating expenses $ $ Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives Derivatives not Designated Location of Gain or (Loss) Three months ended June 30, as Hedging Instrument Recognized in Income (loss) on Derivatives 2016 2015 Foreign currency exchange contracts Foreign currency transaction gains (losses) $ ) $ ) Revenue $ $ ) Costs of revenue $ ) $ Selling, general and administrative expenses $ ) $ |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Polaris | |
Acquisitions | |
Summary of the purchase price allocation | Amount Useful Life Consideration Transferred: Cash paid at closing $ Less: Cash acquired ) Total purchase price, net of cash acquired $ Acquisition-related costs $ Assets and liabilities Cash and cash equivalents $ Accounts receivable and unbilled receivable Short term investments Other current assets Property and equipment Long term investments Long term assets Goodwill Customer relationships 10 - 15 years Trademark 2 years Accounts Payable ) Deferred revenue ) Accrued expenses and other current liabilities ) Deferred income taxes ) Long term liabilities ) Noncontrolling interest ) Total purchase price Less: Cash acquired ) Total purchase price, net of cash acquired $ |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Goodwill and Intangible Assets | |
Schedule of changes in goodwill | Amount Balance at April 1, 2016 $ Preliminary purchase price allocation adjustment ) Foreign currency translation adjustments ) Balance at June 30, 2016 $ |
Schedule of carrying amount and amortization of acquired intangible asset | The following are details of the Company’s intangible asset carrying amounts acquired and amortization at June 30, 2016. Weighted Average Useful Life Gross Carrying Amount Accumulated Amortization Net Carrying Amount Amortizable intangible assets: Customer relationships $ $ $ Trademark Technology $ $ $ |
Concentration of Revenue and 28
Concentration of Revenue and Assets (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Concentration of Revenue and Assets | |
Schedule of revenue attributed to geographic areas based on location of the client | Three Months Ended June 30, 2016 2015 Client revenue: North America $ $ Europe Other Consolidated revenue $ $ |
Schedule of long-lived assets, net of accumulated depreciation and amortization attributed to geographic areas based on location of assets | June 30, 2016 March 31, 2016 Long-lived assets, net of accumulated depreciation and amortization: North America $ $ Asia Europe and others Consolidated long-lived assets, net $ $ |
Schedule of revenue from significant clients as a percentage of Company's consolidated revenue | Three Months Ended June 30, 2016 2015 Customer 1 % % |
Debt (Tables)
Debt (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Debt | |
Summary of short-term debt | June 30, 2016 March 31, 2016 Notes outstanding under the revolving credit facility $ — $ — Term loan- current maturities Less: deferred financing costs - current ) ) Total $ $ |
Summary of long-term debt | June 30, 2016 March 31, 2016 Term loan $ $ Less: Current maturities ) ) Deferred financing costs, long-term ) ) Total $ $ |
Pensions and post-retirement 30
Pensions and post-retirement benefits (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Pensions and post-retirement benefits | |
Schedule of cost of pension plans | Three Months Ended June 30, 2016 2015 Components of net periodic pension cost Service cost $ $ Interest cost Expected return on plan assets ) ) Amortization actuarial loss Amortization of past service cost Net periodic pension cost $ $ |
Accumulated Other Comprehensi31
Accumulated Other Comprehensive Loss (Tables) | 3 Months Ended |
Jun. 30, 2016 | |
Accumulated Other Comprehensive Loss. | |
Schedule of changes in accumulated other comprehensive income (loss) by component | Three Months Ended June 30, Accumulated Other Comprehensive Income (Loss) 2016 2015 Investment securities Beginning balance $ $ ) Other comprehensive income (loss) (OCI) before reclassifications net of tax of $172, $0 for all periods ) Reclassifications from OCI to other income — net of tax of $(38), $0 for all periods ) ) (Less) : Noncontrolling interests, net of tax ) — Comprehensive income (loss) on investment securities, net of tax of $134, $0 for all periods ) Closing Balance $ $ ) Currency Translation Adjustments Beginning balance $ ) $ ) OCI before reclassifications ) ) (Less): Noncontrolling interests, net of tax — Comprehensive income (loss) on currency translation adjustment ) ) Closing Balance $ ) $ ) Cash Flow Hedges Beginning balance $ $ OCI before reclassifications net of tax of $264 and $(828) ) Reclassifications from OCI to - Revenue, net of tax of $(183) and $0 ) — - Costs of revenue, net of tax of $(14) and $(53) ) ) - Selling, general and administrative expenses, net of tax of $(8) and $(29) ) ) (Less): Noncontrolling interests, net of tax — Comprehensive income (loss) on cash flow hedges, net of tax of $59 and $(910) ) Closing Balance $ $ ) Benefit plans Beginning balance $ ) $ ) OCI before reclassifications net of tax of $0 for all periods $ — $ — Reclassifications from OCI for prior service credit (cost) to: - Costs of revenue, net of tax of $0 for all periods - Selling, general and administrative expenses, net of tax of $0 for all periods — — Reclassifications from OCI for net actuarial gain (loss) amortization to: - Costs of revenue, net of tax of $0 for all periods - Selling, general and administrative expenses, net of tax of $0 for all periods Other adjustments ) Comprehensive income (loss) on benefit plans, net of tax of $0 for all periods Closing Balance $ ) $ ) Accumulated other comprehensive loss at June 30, 2016 $ ) $ ) |
Earnings (loss) per Share (Deta
Earnings (loss) per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Numerators: | ||
Net income (loss) available to common stockholders | $ (6,256) | $ 10,113 |
Denominators: | ||
Weighted average common shares outstanding (in shares) | 29,486,287 | 29,068,946 |
Dilutive effect of employee stock options and unvested restricted stock (in shares) | 861,353 | |
Dilutive effect of stock appreciation rights (in shares) | 4,329 | |
Weighted average shares-diluted (in shares) | 29,486,287 | 29,934,628 |
Basic earnings (loss) per share (in dollars per share) | $ (0.21) | $ 0.35 |
Diluted earnings (loss) per share (in dollars per share) | $ (0.21) | $ 0.34 |
Investment Securities (Details)
Investment Securities (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Mar. 31, 2016 | |
Investment Securities | |||
Amortized Cost | $ 67,150 | $ 82,712 | |
Gross Unrealized Gains | 376 | 130 | |
Gross Unrealized Losses | (5) | (108) | |
Fair Value | 67,521 | 82,734 | |
Proceeds from sales of available for sale investment securities and the gross gains and losses | |||
Proceeds from sales of available-for-sale investment securities | 40,439 | $ 19,054 | |
Gross gains | 310 | 1 | |
Net realized gains on sales of available-for-sale investment securities | 310 | $ 1 | |
Corporate Bonds | Current | |||
Investment Securities | |||
Amortized Cost | 34,802 | 26,662 | |
Gross Unrealized Gains | 20 | 7 | |
Gross Unrealized Losses | (5) | (10) | |
Fair Value | 34,817 | 26,659 | |
Corporate Bonds | Non-current | |||
Investment Securities | |||
Amortized Cost | 13,052 | 22,187 | |
Gross Unrealized Gains | 174 | 45 | |
Gross Unrealized Losses | (64) | ||
Fair Value | 13,226 | 22,168 | |
Preference Shares | Current | |||
Investment Securities | |||
Amortized Cost | 1,567 | ||
Fair Value | 1,567 | ||
Preference Shares | Non-current | |||
Investment Securities | |||
Amortized Cost | 2,495 | 4,149 | |
Gross Unrealized Gains | 141 | ||
Fair Value | 2,636 | 4,149 | |
Agency and short-term notes | Current | |||
Investment Securities | |||
Amortized Cost | 1,000 | 1,000 | |
Gross Unrealized Gains | 1 | 1 | |
Fair Value | 1,001 | 1,001 | |
Agency and short-term notes | Non-current | |||
Investment Securities | |||
Amortized Cost | 3,533 | 2,500 | |
Gross Unrealized Gains | 3 | 1 | |
Gross Unrealized Losses | (1) | ||
Fair Value | 3,536 | 2,500 | |
Mutual funds | Current | |||
Investment Securities | |||
Amortized Cost | 8,663 | 17,309 | |
Gross Unrealized Gains | 37 | 9 | |
Gross Unrealized Losses | (33) | ||
Fair Value | 8,700 | 17,285 | |
Depository receipts | Current | |||
Investment Securities | |||
Amortized Cost | 414 | ||
Gross Unrealized Gains | 67 | ||
Fair Value | 481 | ||
Time deposits | Current | |||
Investment Securities | |||
Amortized Cost | 2,038 | 8,491 | |
Fair Value | $ 2,038 | $ 8,491 |
Fair Value of Financial Instr34
Fair Value of Financial Instruments - Assets and Liabilities, Levels 1, 2, & 3 (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 |
Level 3 | ||
Liabilities: | ||
Total liabilities | $ 839 | |
Recurring | ||
Investments: | ||
Available-for-sale securities - current | $ 48,123 | 53,917 |
Available-for-sale securities - non-current | 19,398 | 28,817 |
Foreign currency derivative contracts | 7,175 | 5,694 |
Total assets | 74,697 | 88,428 |
Liabilities: | ||
Foreign currency derivative contracts | 563 | 560 |
Contingent consideration | 839 | |
Total liabilities | 563 | 1,399 |
Recurring | Level 2 | ||
Investments: | ||
Available-for-sale securities - current | 48,123 | 53,917 |
Available-for-sale securities - non-current | 19,398 | 28,817 |
Foreign currency derivative contracts | 7,175 | 5,694 |
Total assets | 74,697 | 88,428 |
Liabilities: | ||
Foreign currency derivative contracts | 563 | 560 |
Total liabilities | $ 563 | 560 |
Recurring | Level 3 | ||
Liabilities: | ||
Contingent consideration | 839 | |
Total liabilities | $ 839 |
Fair Value of Financial Instr35
Fair Value of Financial Instruments - Level 3 Financial Liabilities (Details) - Level 3 $ in Thousands | 3 Months Ended |
Jun. 30, 2016USD ($) | |
Changes in fair value of the Company's Level 3 financial liabilities | |
Balance at the beginning of the period | $ 839 |
Contingent consideration recognized in earnings | 33 |
Payments made during the period | $ (872) |
Derivative Financial Instrume36
Derivative Financial Instruments - Designated as Hedging Instruments (Details) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($) | Mar. 31, 2016USD ($) | |
Derivative Financial Instruments | |||
Amount reclassified to earnings as a result of hedge ineffectiveness | $ (5,510) | $ 10,113 | |
Foreign currency exchange contracts | |||
Derivative Financial Instruments | |||
Number of hedging programs maintained | item | 4 | ||
Maximum outstanding term of derivative instruments | 24 months | ||
U.S. dollar notional equivalent market value | $ 236,724 | $ 273,862 | |
Derivatives designated as hedging instruments | Foreign currency exchange contracts | |||
Derivative Financial Instruments | |||
Period hedged by Cash Flow Program | 18 months | ||
Additional period after which the contract is deemed ineffective | 2 months | ||
Unrealized net gains related to derivative instruments expected to be reclassified from AOCI into earnings during the next 12 months | $ 6,618 | ||
Foreign currency exchange contracts: | |||
Other current assets | 5,391 | 3,706 | |
Other long-term assets | 1,784 | 1,988 | |
Accrued expenses and other | 306 | 278 | |
Long-term liabilities | 257 | $ 282 | |
Derivatives designated as hedging instruments | Foreign currency exchange contracts | Cash flow hedges | Reclassification out of accumulated other comprehensive income | |||
Derivative Financial Instruments | |||
Amount reclassified to earnings as a result of hedge ineffectiveness | $ 0 | $ 0 | |
Derivatives not designated as hedging instrument | Foreign currency exchange contracts | |||
Derivative Financial Instruments | |||
Maturity period of Balance Sheet Program derivatives | 30 months | ||
Maximum outstanding term of derivative instruments | 92 days |
Derivative Financial Instrume37
Derivative Financial Instruments - Not Designated as Hedging Instrument (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Revenue | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion) | $ 528 | |
Costs of revenue | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion) | 198 | $ 280 |
Operating expenses | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion) | 121 | 151 |
Derivatives designated as hedging instruments | Foreign currency exchange contracts | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion) | 2,059 | (3,876) |
Derivatives not designated as hedging instrument | Foreign currency exchange contracts | Foreign currency transaction gains (losses) | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives | (180) | (898) |
Derivatives not designated as hedging instrument | Foreign currency exchange contracts | Revenue | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives | 109 | (286) |
Derivatives not designated as hedging instrument | Foreign currency exchange contracts | Costs of revenue | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives | (54) | 106 |
Derivatives not designated as hedging instrument | Foreign currency exchange contracts | Selling, general and administrative expenses | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives | $ (13) | $ 5 |
Acquisitions - Polaris (Details
Acquisitions - Polaris (Details) ₨ in Thousands, $ in Thousands | Apr. 06, 2016INR (₨)shares | Apr. 06, 2016USD ($)shares | Apr. 05, 2016 | Mar. 03, 2016INR (₨)shares | Mar. 03, 2016USD ($)shares | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Mar. 31, 2016USD ($) |
Acquisitions | ||||||||
Goodwill related to certain accruals | $ 1,375 | |||||||
Consideration Transferred: | ||||||||
Total purchase price, net of cash acquired | 2,606 | $ 30,877 | ||||||
Virtusa Consulting Services Private Limited | Polaris | ||||||||
Acquisitions | ||||||||
Total consideration | ₨ 5,935,260 | $ 89,147 | ||||||
Ownership interest of diluted shares (as a percent) | 77.70% | 77.70% | 51.70% | |||||
Ownership interest of basic shares ( as a percent) | 78.80% | 78.80% | 52.90% | |||||
Period to sell | 1 year | 1 year | ||||||
Stock ownership percentage threshold | 75.00% | 75.00% | ||||||
Goodwill related to deferred tax liabilities | 729 | |||||||
Goodwill related to certain accruals | $ 2,104 | |||||||
Consideration Transferred: | ||||||||
Cash paid at closing | $ 168,257 | |||||||
Less : Cash acquired | (40,782) | |||||||
Total purchase price, net of cash acquired | 127,475 | |||||||
Acquisition-related costs | $ 9,813 | |||||||
Virtusa Consulting Services Private Limited | Polaris | Certain Polaris Shareholders | ||||||||
Acquisitions | ||||||||
Number of shares purchased | shares | 53,133,127 | 53,133,127 | ||||||
Shares acquired (as a percent) | 51.70% | 51.70% | ||||||
Consideration Transferred: | ||||||||
Cash paid at closing | ₨ 11,391,365 | $ 168,257 | ||||||
Virtusa Consulting Services Private Limited | Polaris | Polaris Public Shareholders | ||||||||
Acquisitions | ||||||||
Number of shares purchased | shares | 26,719,942 | 26,719,942 | ||||||
Shares acquired (as a percent) | 26.00% | 26.00% | ||||||
Escrow deposit | $ 89,220 |
Acquisitions - Polaris - Assets
Acquisitions - Polaris - Assets acquired and liabilities assumed (Details) - USD ($) $ in Thousands | Mar. 03, 2016 | Jun. 30, 2016 | Mar. 31, 2016 |
Assets and liabilities | |||
Goodwill | $ 196,041 | $ 200,424 | |
Virtusa Consulting Services Private Limited | Polaris | |||
Assets and liabilities | |||
Cash and cash equivalents | $ 40,782 | ||
Accounts receivable and unbilled receivable | 71,844 | ||
Short term investments | 17,695 | ||
Other current assets | 13,912 | ||
Property and equipment | 74,391 | ||
Long term investments | 8,396 | ||
Long term assets | 13,575 | ||
Goodwill | 119,370 | ||
Accounts payable | (41,361) | ||
Deferred revenue | (5,117) | ||
Accrued expenses and other current liabilities | (11,590) | ||
Deferred income taxes | (13,026) | ||
Long term liabilities | (7,340) | ||
Noncontrolling interest | (147,674) | ||
Total purchase price | 168,257 | ||
Less : Cash acquired | (40,782) | ||
Total purchase price, net of cash acquired | 127,475 | ||
Customer relationships | Virtusa Consulting Services Private Limited | Polaris | |||
Assets and liabilities | |||
Intangibles assets | 32,000 | ||
Trademark | Virtusa Consulting Services Private Limited | Polaris | |||
Assets and liabilities | |||
Intangibles assets | $ 2,400 |
Acquisitions - Polaris - Asse40
Acquisitions - Polaris - Assets acquired and liabilities assumed, useful life (Details) | 1 Months Ended | 3 Months Ended |
Mar. 31, 2016 | Jun. 30, 2016 | |
Acquisitions | ||
Weighted Average Useful Life | 10 years 3 months 18 days | |
Customer relationships | ||
Acquisitions | ||
Weighted Average Useful Life | 10 years 9 months 18 days | |
Customer relationships | Virtusa Consulting Services Private Limited | Polaris | Minimum | ||
Acquisitions | ||
Weighted Average Useful Life | 10 years | |
Customer relationships | Virtusa Consulting Services Private Limited | Polaris | Maximum | ||
Acquisitions | ||
Weighted Average Useful Life | 15 years | |
Trademark | ||
Acquisitions | ||
Weighted Average Useful Life | 2 years 1 month 6 days | |
Trademark | Virtusa Consulting Services Private Limited | Polaris | ||
Acquisitions | ||
Weighted Average Useful Life | 2 years |
Acquisitions - Polaris - Maximu
Acquisitions - Polaris - Maximum borrowing capacity under the credit agreement (Details) - Virtusa Consulting Services Private Limited - Polaris - USD ($) $ in Thousands | Feb. 25, 2016 | Mar. 03, 2016 | Feb. 24, 2016 |
JPM | |||
Acquisitions | |||
Maximum borrowing capacity under the credit agreement | $ 25,000 | ||
Held for sale | Net assets acquired from Polaris, held for sale | |||
Acquisitions | |||
Net assets acquired | $ 300 | ||
Delayed-draw term loan | JPM | |||
Acquisitions | |||
Maximum borrowing capacity under the credit agreement | $ 200,000 | ||
Drawdown of loan facility | 200,000 | ||
Revolving credit facility | JPM | |||
Acquisitions | |||
Maximum borrowing capacity under the credit agreement | $ 100,000 |
Goodwill and Intangible Asset42
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 3 Months Ended |
Jun. 30, 2016USD ($)item | |
Goodwill: | |
Number of reportable segments | item | 1 |
Changes in goodwill | |
Balance at the beginning of the period | $ 200,424 |
Preliminary purchase price allocation adjustment | (1,375) |
Foreign currency translation adjustments | (3,008) |
Balance at the end of the period | 196,041 |
Acquisition costs and goodwill deductible for tax purposes | 74,108 |
Trade Tech and Polaris | |
Changes in goodwill | |
Acquisition costs and goodwill not deductible for tax purposes | $ 133,821 |
Goodwill and Intangible Asset43
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Mar. 31, 2016 | |
Intangible Assets | ||
Weighted Average Useful Life | 10 years 3 months 18 days | |
Gross Carrying Amount | $ 84,262 | |
Accumulated Amortization | 20,071 | |
Net Carrying Amount | $ 63,491 | $ 66,846 |
Customer relationships | ||
Intangible Assets | ||
Weighted Average Useful Life | 10 years 9 months 18 days | |
Gross Carrying Amount | $ 80,199 | |
Accumulated Amortization | 19,457 | |
Net Carrying Amount | $ 60,742 | |
Trademark | ||
Intangible Assets | ||
Weighted Average Useful Life | 2 years 1 month 6 days | |
Gross Carrying Amount | $ 2,863 | |
Accumulated Amortization | 529 | |
Net Carrying Amount | $ 2,334 | |
Technology | ||
Intangible Assets | ||
Weighted Average Useful Life | 5 years | |
Gross Carrying Amount | $ 500 | |
Accumulated Amortization | 85 | |
Net Carrying Amount | $ 415 |
Income Taxes (Details)
Income Taxes (Details) $ in Thousands | Mar. 31, 2014facility | Jun. 30, 2016USD ($)aitem | Jun. 30, 2015USD ($) | Mar. 31, 2016USD ($) | Mar. 31, 2014 | Mar. 31, 2011subsidiary | Mar. 31, 2010subsidiary | Mar. 31, 2009 | Mar. 31, 2011subsidiary |
Income Taxes | |||||||||
Effective tax rate (as a percent) | 7.80% | 26.70% | |||||||
Total liability for unrecognized tax benefits which would impact the annual effective rate, if realized | $ 6,732 | $ 6,693 | |||||||
Increase in unrecognized tax benefits | 39 | $ 10 | |||||||
Unremitted earnings from foreign subsidiaries | 342,741 | ||||||||
Cash short term and long-term investments available for distribution if not indefinitely reinvested | $ 119,419 | ||||||||
Hyderabad | |||||||||
Income Taxes | |||||||||
Number of export oriented units created | subsidiary | 1 | ||||||||
Bangalore | |||||||||
Income Taxes | |||||||||
Number of export oriented units created | subsidiary | 1 | ||||||||
Bangalore and Pune | |||||||||
Income Taxes | |||||||||
Number of facilities | facility | 2 | ||||||||
India | |||||||||
Income Taxes | |||||||||
Number of export oriented units created | subsidiary | 2 | ||||||||
India | Indian operations in areas designated as a SEZ | |||||||||
Income Taxes | |||||||||
Number of development centers operated | item | 2 | ||||||||
India | Indian operations in areas designated as a SEZ | Hyderabad | |||||||||
Income Taxes | |||||||||
Parcel of land (in acres) | a | 6.3 | ||||||||
Consecutive period of income tax exemption | 10 years | ||||||||
Income tax benefits total eligibility period | 15 years | ||||||||
India | Virtusa Consulting Services Private Limited | |||||||||
Income Taxes | |||||||||
Current corporate income tax rate | 34.60% | ||||||||
Sri Lanka | Virtusa (Private) Limited | |||||||||
Income Taxes | |||||||||
Income tax exemption period | 12 years | ||||||||
Maximum | India | Indian operations in areas designated as a SEZ | Hyderabad | |||||||||
Income Taxes | |||||||||
Income tax exemption period | 15 years | ||||||||
Maximum | India | Indian operations in areas designated as a SEZ | Pune | |||||||||
Income Taxes | |||||||||
Income tax exemption period | 15 years | ||||||||
Maximum | India | Indian operations in areas designated as a SEZ | Hyderabad and Chennai | |||||||||
Income Taxes | |||||||||
Income tax exemption period | 15 years | ||||||||
Maximum | Indian Operations Software Technology Parks | India | Bangalore | |||||||||
Income Taxes | |||||||||
Income tax exemption period | 15 years |
Concentration of Revenue and 45
Concentration of Revenue and Assets - Geographic Concentration (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Mar. 31, 2016 | |
Concentration of Revenue and Assets | |||
Consolidated revenue | $ 205,471 | $ 134,844 | |
Consolidated long-lived assets, net | 386,041 | $ 383,552 | |
North America | |||
Concentration of Revenue and Assets | |||
Consolidated revenue | 133,471 | 96,702 | |
Consolidated long-lived assets, net | 94,513 | 96,031 | |
Europe | |||
Concentration of Revenue and Assets | |||
Consolidated revenue | 46,384 | 30,346 | |
Other | |||
Concentration of Revenue and Assets | |||
Consolidated revenue | 25,616 | $ 7,796 | |
Asia | |||
Concentration of Revenue and Assets | |||
Consolidated long-lived assets, net | 273,755 | 268,636 | |
Europe and others | |||
Concentration of Revenue and Assets | |||
Consolidated long-lived assets, net | $ 17,773 | $ 18,885 |
Concentration of Revenue and 46
Concentration of Revenue and Assets - Revenue Percentage (Details) | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Sales revenue | Customer 1 | ||
Concentration of Revenue and Assets | ||
Revenue from significant clients as a percentage of consolidated revenue | 15.70% | 2.00% |
Debt (Details)
Debt (Details) $ in Thousands | Jul. 31, 2017USD ($)contract | Jul. 28, 2016contract | Jul. 26, 2016contract | Feb. 25, 2016USD ($) | Jun. 30, 2016USD ($) | Feb. 24, 2016USD ($) |
Interest rate swap | ||||||
Debt | ||||||
Number of derivative contracts | contract | 1 | 2 | ||||
Derivative, term of contract | 3 years | 12 months | 12 months | |||
Percentage of variable debt | 50.00% | 50.00% | ||||
Number of derivative instruments held | contract | 3 | |||||
Aggregate notional amount | $ 93,800 | |||||
Amortized notional amount at a blended weighted average rate | 1.025% | |||||
U.K. Subsidiary | ||||||
Debt | ||||||
Receivables sold under the terms of the financing agreement | $ 5,524 | |||||
Amounts due related to a financing agreement to sell certain accounts receivable balances | $ 0 | |||||
Virtusa Consulting Services Private Limited | JPM | Polaris | ||||||
Debt | ||||||
Maximum borrowing capacity under the credit agreement | $ 25,000 | |||||
Senior secured debt financing | JPM | ||||||
Debt | ||||||
First year maximum leverage ratio | 325.00% | |||||
Second year maximum leverage ratio | 300.00% | |||||
Maximum leverage ratio for four consecutive quarter ending on each fiscal quarter | 275.00% | |||||
Threshold period to maintain unrestricted cash | 1 year | |||||
Minimum total leverage ratio limit to maintain unrestricted cash deposit | 150.00% | |||||
Minimum unrestricted cash to maintain as deposit in U.S bank on exceeding leverage ratio | $ 30,000 | |||||
Minimum unrestricted cash and certain permitted investments to maintain | $ 20,000 | |||||
Minimum fixed charge coverage ratio as of last day of any reference period | 125.00% | |||||
Senior secured debt financing | JPM | Polaris | ||||||
Debt | ||||||
Term of credit facility | 5 years | |||||
Senior secured debt financing | LIBOR | JPM | Polaris | ||||||
Debt | ||||||
Interest rate added to the base rate (as a percent) | 2.75% | |||||
Interest rate (as a percentage) | 2.97% | |||||
Delayed-draw term loan | JPM | Polaris | ||||||
Debt | ||||||
Drew down during the period | $ 200,000 | |||||
Principal repayment per quarter | 2,500 | |||||
Delayed-draw term loan | Virtusa Consulting Services Private Limited | JPM | Polaris | ||||||
Debt | ||||||
Maximum borrowing capacity under the credit agreement | 200,000 | |||||
Revolving credit facility | JPM | Polaris | ||||||
Debt | ||||||
Amount outstanding under the credit facility | $ 0 | |||||
Revolving credit facility | Virtusa Consulting Services Private Limited | JPM | Polaris | ||||||
Debt | ||||||
Maximum borrowing capacity under the credit agreement | $ 100,000 |
Debt - Current portion of long-
Debt - Current portion of long-term debt (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 |
Current portion of long-term debt | ||
Total | $ 8,870 | $ 8,881 |
JPM | ||
Current portion of long-term debt | ||
Less: deferred financing costs- current | (1,130) | (1,119) |
Total | 8,870 | 8,881 |
Delayed-draw term loan | JPM | ||
Current portion of long-term debt | ||
Term loan - current maturities | $ 10,000 | $ 10,000 |
Debt - Long-term debt, less cur
Debt - Long-term debt, less current portion (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Mar. 31, 2016 |
Long-term debt, less current portion | ||
Total | $ 183,374 | $ 185,633 |
JPM | ||
Long-term debt, less current portion | ||
Deferred financing costs, long-term | (4,126) | (4,367) |
Total | 183,374 | 185,633 |
Delayed-draw term loan | JPM | ||
Long-term debt, less current portion | ||
Term Loan | 197,500 | 200,000 |
Current maturities | $ (10,000) | $ (10,000) |
Pensions and post-retirement 50
Pensions and post-retirement benefits (Details) - Pension benefits - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Components of net periodic pension cost | ||
Service cost | $ 333 | $ 186 |
Interest cost | 134 | 69 |
Expected return on plan assets | (153) | (82) |
Amortization actuarial loss | 41 | 39 |
Amortization of past service cost | 2 | 2 |
Net periodic pension cost | 357 | $ 214 |
Expected cash contributions to the plans in current fiscal period | 1,863 | |
Pension contributions for the prior fiscal year | $ 451 |
Accumulated Other Comprehensi51
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Changes in accumulated other comprehensive income (loss) | ||
Balance | $ 627,955 | |
Reclassifications from OCI to: | ||
Revenue | 205,471 | $ 134,844 |
Cost of Revenue | 153,560 | 87,362 |
(Less) : Noncontrolling interests, net of tax | 1,095 | |
Balance | 532,646 | |
Benefit plans, prior service credit (cost) | Reclassification out of accumulated other comprehensive income | ||
Reclassifications from OCI to: | ||
Cost of Revenue | 2 | 2 |
Benefit plans, prior service credit (cost) | Reclassification out of accumulated other comprehensive income | Costs of revenue | ||
Other Comprehensive Income (Loss), Tax | ||
OCI, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), Tax | 0 | 0 |
Benefit plans, prior service credit (cost) | Reclassification out of accumulated other comprehensive income | Selling, general and administrative expenses | ||
Other Comprehensive Income (Loss), Tax | ||
OCI, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), Tax | 0 | 0 |
Accumulated Other Comprehensive Loss | ||
Reclassifications from OCI to: | ||
Balance | (43,952) | (39,098) |
Investment securities | ||
Changes in accumulated other comprehensive income (loss) | ||
Balance | 23 | (18) |
OCI before reclassifications net of tax | 300 | (14) |
Reclassifications from OCI to: | ||
(Less) : Noncontrolling interests, net of tax | (49) | |
Comprehensive income (loss), net of tax | 182 | (15) |
Balance | 205 | (33) |
Other Comprehensive Income (Loss), Tax | ||
OCI before reclassification, tax | 172 | 0 |
OCI, Available-for-sale Securities, Tax | 134 | 0 |
Investment securities | Reclassification out of accumulated other comprehensive income | ||
Reclassifications from OCI to: | ||
Other Income | (69) | (1) |
Other Comprehensive Income (Loss), Tax | ||
OCI, Reclassification Adjustment from AOCI for Sale of Securities, Tax | (38) | 0 |
Currency translation adjustments | ||
Changes in accumulated other comprehensive income (loss) | ||
Balance | (45,211) | (35,565) |
OCI before reclassifications net of tax | (5,062) | (1,614) |
Reclassifications from OCI to: | ||
(Less) : Noncontrolling interests, net of tax | 1,244 | |
Comprehensive income (loss), net of tax | (3,818) | (1,614) |
Balance | (49,029) | (37,179) |
Cash flow hedges | ||
Changes in accumulated other comprehensive income (loss) | ||
Balance | 3,934 | 2,387 |
OCI before reclassifications net of tax | 1,795 | (3,048) |
Reclassifications from OCI to: | ||
(Less) : Noncontrolling interests, net of tax | 646 | |
Comprehensive income (loss), net of tax | 1,799 | (3,397) |
Balance | 5,733 | (1,010) |
Other Comprehensive Income (Loss), Tax | ||
OCI before reclassification, tax | 264 | (828) |
Comprehensive income (loss), Tax | 59 | (910) |
Cash flow hedges | Reclassification out of accumulated other comprehensive income | ||
Reclassifications from OCI to: | ||
Revenue | (345) | |
Cost of Revenue | (184) | (227) |
Selling, General and Administrative Expense | (113) | (122) |
Cash flow hedges | Reclassification out of accumulated other comprehensive income | Revenue | ||
Other Comprehensive Income (Loss), Tax | ||
OCI, Reclassification Adjustment from AOCI on Derivatives, Tax | (183) | 0 |
Cash flow hedges | Reclassification out of accumulated other comprehensive income | Costs of revenue | ||
Other Comprehensive Income (Loss), Tax | ||
OCI, Reclassification Adjustment from AOCI on Derivatives, Tax | (14) | (53) |
Cash flow hedges | Reclassification out of accumulated other comprehensive income | Selling, general and administrative expenses | ||
Other Comprehensive Income (Loss), Tax | ||
OCI, Reclassification Adjustment from AOCI on Derivatives, Tax | (8) | (29) |
Benefit plans | ||
Changes in accumulated other comprehensive income (loss) | ||
Balance | (885) | (932) |
Reclassifications from OCI to: | ||
Other adjustments | (19) | 15 |
Comprehensive income (loss), net of tax | 24 | 56 |
Balance | (861) | (876) |
Other Comprehensive Income (Loss), Tax | ||
OCI before reclassification, tax | 0 | 0 |
Comprehensive income (loss), Tax | 0 | 0 |
Benefit plans, net actuarial gain (loss) | Reclassification out of accumulated other comprehensive income | ||
Reclassifications from OCI to: | ||
Cost of Revenue | 26 | 24 |
Selling, General and Administrative Expense | 15 | 15 |
Benefit plans, net actuarial gain (loss) | Reclassification out of accumulated other comprehensive income | Costs of revenue | ||
Other Comprehensive Income (Loss), Tax | ||
OCI, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), Tax | 0 | 0 |
Benefit plans, net actuarial gain (loss) | Reclassification out of accumulated other comprehensive income | Selling, general and administrative expenses | ||
Other Comprehensive Income (Loss), Tax | ||
OCI, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), Tax | $ 0 | $ 0 |
Subsequent Events (Details)
Subsequent Events (Details) - Subsequent event - Derivatives designated as hedging instruments - Foreign currency forward contracts € in Thousands, ₨ in Thousands, £ in Thousands, SEK in Thousands, $ in Thousands | Jul. 18, 2016INR (₨)₨ / £ | Jul. 18, 2016USD ($)₨ / £ | Jul. 13, 2016GBP (£) | Jul. 13, 2016SEK | Jul. 13, 2016EUR (€) | Jul. 13, 2016USD ($) |
U.S. Dollar and U.K. Pound Sterling Forward Contract | ||||||
Subsequent Events | ||||||
Aggregate notional amount | £ 7,114 | $ 9,384 | ||||
Weighted average settlement rate | 1.319 | 1.319 | 1.319 | 1.319 | ||
U.S. dollar and Swedish Krona ("SEK") Forward Contract | ||||||
Subsequent Events | ||||||
Aggregate notional amount | SEK 8,172 | $ 968 | ||||
Weighted average settlement rate | 0.118 | 0.118 | 0.118 | 0.118 | ||
U.S. Dollar and Euro Forward Contract | ||||||
Subsequent Events | ||||||
Aggregate notional amount | € 437 | $ 484 | ||||
Weighted average settlement rate | 1.107 | 1.107 | 1.107 | 1.107 | ||
U.K. Pound Sterling and Indian Rupee Forward Contract | ||||||
Subsequent Events | ||||||
Aggregate notional amount | ₨ 310,485 | $ 4,378 | ||||
Weighted average settlement rate | 92.70 | 92.70 | ||||
Foreign currency forward contracts expiration period | 15 months |