Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Mar. 31, 2019 | May 21, 2019 | Sep. 28, 2018 | |
Document and Entity Information | |||
Entity Registrant Name | VIRTUSA CORP | ||
Entity Central Index Key | 0001207074 | ||
Document Type | 10-K | ||
Document Period End Date | Mar. 31, 2019 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --03-31 | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Public Float | $ 1,375,810,600 | ||
Entity Common Stock, Shares Outstanding | 30,151,009 | ||
Entity Shell Company | false | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 189,676 | $ 194,897 |
Short-term investments | 33,138 | 45,900 |
Accounts receivable, net of allowance of $2,253 and $3,328 at March 31, 2019 and March 31, 2018, respectively | 162,396 | 151,455 |
Unbilled accounts receivable | 113,431 | 103,829 |
Prepaid expenses | 42,314 | 31,724 |
Restricted cash | 351 | 301 |
Asset held for sale | 8,978 | |
Other current assets | 29,967 | 21,229 |
Total current assets | 580,251 | 549,335 |
Property and equipment, net | 119,865 | 121,565 |
Investments accounted for using equity method | 1,446 | 1,588 |
Long-term investments | 322 | 4,140 |
Deferred income taxes | 28,770 | 31,528 |
Goodwill | 279,543 | 297,251 |
Intangible assets, net | 92,440 | 96,001 |
Other long-term assets | 29,836 | 11,772 |
Total assets | 1,132,473 | 1,113,180 |
Current liabilities: | ||
Accounts payable | 46,471 | 29,541 |
Accrued employee compensation and benefits | 74,801 | 71,500 |
Deferred revenue | 6,421 | 7,908 |
Accrued expenses and other | 70,050 | 91,306 |
Current portion of long-term debt | 11,407 | 11,407 |
Income taxes payable | 4,844 | 5,038 |
Total current liabilities | 213,994 | 216,700 |
Deferred income taxes | 15,824 | 21,341 |
Long-term debt, less current portion | 351,320 | 288,227 |
Long-term liabilities | 29,824 | 43,833 |
Total liabilities | 610,962 | 570,101 |
Commitments and contingencies | ||
Series A Convertible Preferred Stock: par value $0.01 per share, 108,000 shares authorized, 108,000 shares issued and outstanding at March 31, 2019 and March 31, 2018; redemption amount and liquidation preference of $108,000 at March 31, 2019 and March 31, 2018 | 107,161 | 106,996 |
Redeemable noncontrolling interest | 23,576 | |
Stockholders' equity: | ||
Undesignated preferred stock, $0.01 par value; Authorized 5,000,000 shares at March 31, 2019 and March 31, 2018; zero shares issued and outstanding at March 31, 2019 and March 31, 2018, respectively | ||
Common stock, $0.01 par value; Authorized 120,000,000 shares at March 31, 2019 and March 31, 2018; issued 33,012,775 and 32,469,092 shares at March 31, 2019 and March 31, 2018, respectively; outstanding 30,132,776 and 29,589,093 shares at March 31, 2019 and March 31, 2018, respectively | 330 | 325 |
Treasury stock, 2,879,999 common shares, at cost, at March 31, 2019 and 2018 | (39,652) | (39,652) |
Additional paid-in capital | 239,204 | 260,612 |
Retained earnings | 250,279 | 238,019 |
Accumulated other comprehensive loss | (59,387) | (40,681) |
Total Virtusa stockholders’ equity | 390,774 | 418,623 |
Noncontrolling interest in subsidiaries | 17,460 | |
Total Stockholders' equity | 390,774 | 436,083 |
Total liabilities, Series A convertible preferred stock, redeemable noncontrolling interest and stockholders’ equity | $ 1,132,473 | $ 1,113,180 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance (in dollars) | $ 2,253 | $ 3,328 |
Series A convertible preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Series A convertible preferred stock, shares authorized | 108,000 | 108,000 |
Series A convertible preferred stock, shares issued | 108,000 | 108,000 |
Series A convertible preferred stock, shares outstanding | 108,000 | 108,000 |
Series A convertible preferred stock, redemption amount | $ 108,000 | $ 108,000 |
Series A convertible preferred stock, liquidation preference | $ 108,000 | $ 108,000 |
Undesignated preferred stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Undesignated preferred stock, shares authorized | 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, shares authorized | 120,000,000 | 120,000,000 |
Common stock, shares issued | 33,012,775 | 32,469,092 |
Common stock, shares outstanding | 30,132,776 | 29,589,093 |
Treasury stock, common shares | 2,879,999 | 2,879,999 |
Consolidated Statements of Inco
Consolidated Statements of Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Statements of Income (Loss) | |||
Revenue | $ 1,247,863 | $ 1,020,669 | $ 858,731 |
Costs of revenue | 884,652 | 725,445 | 620,950 |
Gross profit | 363,211 | 295,224 | 237,781 |
Operating expenses: | |||
Selling, general and administrative expenses | 292,943 | 248,837 | 219,410 |
Income from operations | 70,268 | 46,387 | 18,371 |
Other income (expense): | |||
Interest income | 2,672 | 4,264 | 4,115 |
Interest expense | (18,164) | (7,634) | (7,682) |
Foreign currency transaction gains (losses), net | (13,130) | (3,543) | 3,009 |
Other, net | (3,482) | 2,362 | 1,005 |
Total other income (expense) | (32,104) | (4,551) | 447 |
Income before income tax expense | 38,164 | 41,836 | 18,818 |
Income tax expense | 20,473 | 32,888 | 2,561 |
Net income | 17,691 | 8,948 | 16,257 |
Less: net income attributable to noncontrolling interests, net of tax | 1,545 | 7,694 | 4,399 |
Net income available to Virtusa stockholders | 16,146 | 1,254 | 11,858 |
Less: Series A Convertible Preferred Stock dividends and accretion | 4,350 | 3,963 | |
Net income (loss) available to Virtusa common stockholders | $ 11,796 | $ (2,709) | $ 11,858 |
Basic earnings (loss) per share available to Virtusa common stockholders (in dollars per share) | $ 0.40 | $ (0.09) | $ 0.40 |
Diluted earnings (loss) per share available to Virtusa common stockholders (in dollars per share) | $ 0.38 | $ (0.09) | $ 0.39 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Net income | $ 17,691 | $ 8,948 | $ 16,257 |
Other comprehensive income (loss): | |||
Foreign currency translation adjustment | (17,305) | 8,262 | (3,810) |
Pension plan adjustment, net of tax effect of $39, $(146), $(174) | (687) | (249) | (276) |
Unrealized gain (loss) on available-for-sale securities, net of tax effect of $78, $(138), $60 | (69) | (15) | 78 |
Unrealized gain (loss) on effective cash flow hedges, net of tax effect of $(912), $(4,230), $3,655 | (1,866) | (10,986) | 7,989 |
Other Comprehensive Income (Loss) | (19,927) | (2,988) | 3,981 |
Comprehensive income (loss) | (2,236) | 5,960 | 20,238 |
Less: comprehensive income attributable to noncontrolling interest, net of tax | 324 | 5,638 | 5,990 |
Comprehensive income (loss) available to Virtusa stockholders | $ (2,560) | $ 322 | $ 14,248 |
Consolidated Statements of Co_2
Consolidated Statements of Comprehensive Income (Loss) (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Consolidated Statements of Comprehensive Income (Loss) | |||
Pension plan adjustment, tax | $ 39 | $ (146) | $ (174) |
Unrealized gain (loss) on available-for-sale securities, tax | 78 | (138) | 60 |
Unrealized gain (loss) on effective cash flow hedges, tax | $ (912) | $ (4,230) | $ 3,655 |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Total Virtusa Stockholders’ Equity | Common Stock | Treasury Stock | Additional Paid In Capital | Retained Earnings | Accumulated Other Comprehensive Income | Non-controlling interest | Redeemable Noncontrolling Interest | Total |
Balance at Mar. 31, 2016 | $ 475,013 | $ 313 | $ (9,652) | $ 297,621 | $ 228,870 | $ (42,139) | $ 152,942 | $ 627,955 | |
Balance (in shares) at Mar. 31, 2016 | 31,287,074 | (1,856,703) | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Proceeds from the exercise of stock options and vesting of restricted stock | 1,484 | $ 5 | 1,479 | 1,484 | |||||
Proceeds from the exercise of stock options and vesting of restricted stock (in shares) | 475,140 | ||||||||
Proceeds from the exercise of subsidiary stock options | 1,166 | 1,166 | 1,166 | ||||||
Restricted stock awards withheld for tax | (6,102) | (6,102) | (6,102) | ||||||
Share-based compensation | 20,741 | 20,741 | 20,741 | ||||||
Subsidiary share-based compensation | 1,382 | 1,382 | 1,382 | ||||||
Excess tax (expense) benefits from stock option exercises | (719) | (719) | (719) | ||||||
Other | (50) | (50) | |||||||
Purchase of Polaris additional noncontrolling interest, net of transactions costs | (4,782) | (4,782) | (84,365) | (89,147) | |||||
Sale of Polaris stock, net of transaction costs | (5,399) | (5,399) | 12,635 | 7,236 | |||||
Noncontrolling interest purchase price adjustment | 4,348 | 4,348 | |||||||
Foreign currency translation on noncontrolling interest | (3,516) | (3,516) | |||||||
Other comprehensive income (loss) | 2,390 | 2,390 | 1,591 | 3,981 | |||||
Net income | 11,858 | 11,858 | 11,858 | ||||||
Net income | 4,399 | 4,399 | |||||||
Net income | 16,257 | ||||||||
Balance at Mar. 31, 2017 | 497,032 | $ 318 | $ (9,652) | 305,387 | 240,728 | (39,749) | 87,984 | 585,016 | |
Balance (in shares) at Mar. 31, 2017 | 31,762,214 | (1,856,703) | |||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Proceeds from the exercise of stock options | 4,063 | $ 3 | 4,060 | 4,063 | |||||
Proceeds from the exercise of stock options (in shares) | 322,317 | ||||||||
Proceeds from the exercise of subsidiary stock options | 1,837 | 1,837 | 1,837 | ||||||
Restricted stock awards vested | $ 4 | (4) | |||||||
Restricted stock awards vested (in shares) | 384,561 | ||||||||
Restricted stock awards withheld for tax | (7,173) | (7,173) | (7,173) | ||||||
Repurchase of common stock | (30,000) | $ (30,000) | (30,000) | ||||||
Repurchase of common stock (in shares) | (1,023,296) | ||||||||
Share-based compensation | 27,230 | 27,230 | 27,230 | ||||||
Subsidiary share-based compensation | 181 | 181 | 181 | ||||||
Other | (42) | (42) | |||||||
Purchase of Polaris additional noncontrolling interest, net of transactions costs | (70,906) | (70,906) | (76,120) | (147,026) | |||||
Series A Convertible Preferred Stock dividends and accretion | (3,963) | (3,963) | (3,963) | ||||||
Other comprehensive income (loss) | (932) | (932) | (2,056) | (2,988) | |||||
Net income | 1,254 | 1,254 | 1,254 | ||||||
Net income | 7,694 | 7,694 | |||||||
Net income | 8,948 | ||||||||
Balance at Mar. 31, 2018 | 418,623 | $ 325 | $ (39,652) | 260,612 | 238,019 | (40,681) | 17,460 | $ 436,083 | |
Balance (in shares) at Mar. 31, 2018 | 32,469,092 | (2,879,999) | 29,589,093 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Proceeds from the exercise of stock options | 1,019 | $ 1 | 1,018 | $ 1,019 | |||||
Proceeds from the exercise of stock options (in shares) | 101,618 | ||||||||
Proceeds from the exercise of subsidiary stock options | 259 | 259 | $ 54 | 259 | |||||
Restricted stock awards vested | $ 4 | (4) | |||||||
Restricted stock awards vested (in shares) | 442,065 | ||||||||
Restricted stock awards withheld for tax | (12,094) | (12,094) | (12,094) | ||||||
Share-based compensation | 27,892 | 27,892 | 27,892 | ||||||
Subsidiary share-based compensation | 34 | 34 | 34 | ||||||
Reclassification of previously recognized stock compensation related to liabilities classified awards for Polaris to liabilities | (619) | (619) | (619) | ||||||
Cumulative effect of adopting ASC Topic 606, net of tax | 464 | 464 | 464 | ||||||
Other | (115) | (115) | (290) | (405) | |||||
Purchase of redeemable noncontrolling interest related to Polaris | (31,979) | 31,979 | |||||||
Foreign currency translation on redeemable noncontrolling interest | (1,051) | ||||||||
Series A Convertible Preferred Stock dividends and accretion | (4,350) | (4,350) | (4,350) | ||||||
Other comprehensive income (loss) | (18,706) | (18,706) | (1,466) | 245 | (20,172) | ||||
Net income | 16,146 | 16,146 | 799 | 16,146 | |||||
Net income | 746 | 1,545 | |||||||
Net income | 16,892 | ||||||||
Balance at Mar. 31, 2019 | 390,774 | $ 330 | $ (39,652) | 239,204 | $ 250,279 | $ (59,387) | 23,576 | $ 390,774 | |
Balance (in shares) at Mar. 31, 2019 | 33,012,775 | (2,879,999) | 30,132,776 | ||||||
Increase (Decrease) in Stockholders' Equity | |||||||||
Adjustments of redeemable noncontrolling interest to redemption value | $ (37,779) | $ (37,779) | $ (16,450) | $ 55,508 | $ (54,229) |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities: | |||
Net income | $ 17,691 | $ 8,948 | $ 16,257 |
Adjustments to reconcile net income to net cash provided by operating activities: | |||
Depreciation and amortization | 29,001 | 27,537 | 25,852 |
Share-based compensation expense | 29,056 | 27,411 | 22,123 |
Provision (recovery) for doubtful accounts | (864) | 1,248 | 1,015 |
Gain on disposal of property and equipment | (71) | (10) | (434) |
Impairment of long-lived asset classified as held for sale | 3,955 | ||
Impairment of investment | 1,411 | ||
Deferred income taxes, net | (1,770) | (9,946) | (10,856) |
Foreign currency transaction losses (gains), net | 13,130 | 3,543 | (3,009) |
Amortization of discounts and premiums on investments | 83 | 313 | 905 |
Amortization of debt issuance cost | 1,092 | 1,057 | 1,129 |
Net changes in operating assets and liabilities | |||
Accounts receivable and unbilled receivable | (22,741) | (36,542) | (13,508) |
Prepaid expenses and other current assets | (21,498) | (9,260) | 1,009 |
Other long-term assets | (21,812) | (1,377) | 8,216 |
Accounts payable | 16,452 | 4,413 | (6,482) |
Accrued employee compensation and benefits | 3,663 | 13,772 | (2,207) |
Accrued expenses and other current liabilities | 13,059 | 3,931 | 1,851 |
Income taxes payable | 4,120 | 12,683 | (8,729) |
Other long-term liabilities | 4,662 | 14,978 | (5,522) |
Net cash provided by operating activities | 68,619 | 62,699 | 27,610 |
Cash flows from investing activities: | |||
Proceeds from sale of property and equipment | 1,033 | 261 | 2,631 |
Purchase of short-term investments | (96,557) | (100,486) | (112,652) |
Proceeds from sale or maturity of short-term investments | 109,512 | 157,194 | 131,116 |
Purchase of long-term investments | (16,772) | (35,099) | |
Proceeds from sale or maturity of long-term investments | 1,606 | 7,116 | |
Business acquisitions, net of cash acquired | (78,376) | (3,460) | |
Payment of deferred consideration related to business acquisition | (52,784) | ||
Purchase of property and equipment | (35,912) | (16,096) | (15,341) |
Net cash used in investing activities | (74,708) | (52,669) | (25,689) |
Cash flows from financing activities: | |||
Proceeds from debt | 141,000 | ||
Payment of debt | (12,500) | (81,000) | (10,000) |
Payment of debt issuance costs | (2,716) | ||
Borrowings on revolving credit facility | 74,500 | 75,000 | |
Repayment of revolving credit facility | (20,000) | ||
Payment of contingent consideration related to acquisitions | (100) | (830) | |
Acquisition of noncontrolling interest | (147,026) | (89,147) | |
Purchase of redeemable noncontrolling interest related to Polaris | (31,979) | ||
Acquisition of other noncontrolling interest | (373) | (42) | (50) |
Proceeds from subsidiary stock sale | 7,236 | ||
Principal payments on capital lease obligation | (89) | (220) | (140) |
Payments of withholding taxes related to net share settlements of restricted stock | (12,094) | (7,173) | (6,098) |
Series A Convertible Preferred Stock proceeds, net of issuance costs of $1,154 | 106,846 | ||
Repurchase of common stock | (30,000) | ||
Payment of dividend on Series A Convertible Preferred Stock | (4,184) | (3,127) | |
Net cash provided by (used in) financing activities | 14,749 | 37,442 | (96,384) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (13,782) | 2,677 | (3,379) |
Net increase (decrease) in cash and cash equivalents and restricted cash | (5,122) | 50,149 | (97,842) |
Cash, cash equivalents and restricted cash, beginning of year | 195,235 | 145,086 | 242,928 |
Cash, cash equivalents and restricted cash, end of year | 190,113 | 195,235 | 145,086 |
Supplemental disclosure of cash flow information: | |||
Cash paid for interest | 16,900 | 5,573 | 7,180 |
Cash receipts from interest | 3,229 | 4,322 | 3,956 |
Cash paid for income tax | 23,591 | 16,116 | 14,314 |
Non cash investing activities | |||
Assets acquired under capital lease | 41 | ||
Parent | |||
Cash flows from financing activities: | |||
Proceeds from exercise of common stock options | 1,019 | 4,063 | 1,479 |
Subsidiaries | |||
Cash flows from financing activities: | |||
Proceeds from exercise of common stock options | $ 549 | $ 1,837 | $ 1,166 |
Consolidated Statements of Ca_2
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2019 | Mar. 31, 2017 | |
Balance sheet classification | |||
Cash and cash equivalents | $ 194,897 | $ 189,676 | $ 144,908 |
Restricted cash in current assets | 301 | 351 | 174 |
Restricted cash in other long-term assets | $ 37 | $ 86 | $ 4 |
Restricted cash in other long-term assets, balance sheet location | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent | us-gaap:OtherAssetsNoncurrent |
Total restricted cash | $ 338 | $ 437 | $ 178 |
Total cash, cash equivalents and restricted cash | 195,235 | $ 190,113 | $ 145,086 |
Series A Convertible Preferred Stock | |||
Issuance costs | $ 1,154 |
Nature of the Business
Nature of the Business | 12 Months Ended |
Mar. 31, 2019 | |
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 provider of digital engineering and information technology (“IT”) outsourcing services that accelerate business outcomes for our clients. We support Forbes Global 2000 clients across large, consumer facing industries like banking, financial services insurance healthcare, communications, and media and entertainment, as these clients seek to improve their business performance through accelerating revenue growth, delivering compelling consumer experiences, improving operational efficiencies, and lowering overall IT costs. We provide services across the entire spectrum of the IT services lifecycle, from strategy and consulting, to technology and user experience (“UX”) design, development of IT applications, systems integration, testing and business assurance, and maintenance and support services, including infrastructure and managed services. We help our clients solve critical business problems by leveraging a combination of our distinctive consulting approach, unique platforming methodology, and deep domain and technology expertise. Our services enable our clients to accelerate business outcomes by consolidating, rationalizing and modernizing their 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. Our industry leading business transformational solutions combine deep domain expertise with our strengths in software engineering and business consulting to support our clients’ business imperative initiatives across business growth and IT operations. 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, Qatar, Mexico, 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. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Mar. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (2) Summary of Significant Accounting Policies (a) 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. For those majority-owned subsidiaries that are not 100% owned by the Company, the interests of the minority owners are accounted for as noncontrolling interests. (b) 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 reported period. Management re‑evaluates 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, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, intangible assets, 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. (c) The functional currencies of the Company’s non-U.S. subsidiaries are the local currency of the country in which the subsidiary operates except for Hungary, which uses the euro and certain Netherlands entities, which use the U.S. dollar. Operating and capital expenditures of the Company’s subsidiaries located in India, Sri Lanka, the Netherlands, Australia, Canada, Singapore, Malaysia, the Philippines, Germany, Austria, Sweden and the United Kingdom, are denominated in their local currency which is the currency most compatible with their expected economic results. India and Sri Lanka local expenditures form the underlying basis for intercompany transactions which are subsequently conducted in both U.S. dollars and U.K. pounds sterling. U.K. client sales contracts are primarily conducted in U.K. pounds sterling. All transactions and account balances are recorded in the functional currency. The Company translates the value of these non‑U.S. subsidiaries’ local currency denominated assets and liabilities into U.S. dollars at the rates in effect at the balance sheet date. Resulting translation adjustments are recorded in stockholders’ equity as a component of accumulated other comprehensive income (loss). The local currency denominated statement of income amounts are translated into U.S. dollars using the average exchange rates in effect during the period. Realized foreign currency transaction gains and losses are included in the consolidated statements of income (loss). The Company’s non‑U.S. subsidiaries do not operate in “highly inflationary” countries. (d) The Company enters into forward foreign exchange contracts to mitigate the risk of changes in foreign exchange rates on intercompany transactions and forecasted transactions denominated in foreign currencies. The Company also enters into interest rate swaps to mitigate interest rate risk on the Company’s variable rate debt. The Company designates derivative contracts as cash flow hedges and any ineffective portions if they satisfy the criteria for hedge accounting. Changes in fair values of derivatives designated as cash flow hedges are deferred and recorded as a component of accumulated other comprehensive income, net of taxes, until the hedged transactions occur and are then recognized in the consolidated statements of income, the effective components are recognized in the same line item as the underlying and any ineffective components would be recognized as other income (expense). Changes in fair value of derivatives not designated as hedging instruments are recognized immediately in the consolidated statements of income. With respect to derivatives designated as cash flow hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. The Company also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative will be highly effective in offsetting changes in fair values or cash flows of the hedged item. If the Company determines that a derivative or a portion thereof is not highly effective as a hedge, or if a derivative ceases to qualify for hedge accounting, the Company prospectively discontinues hedge accounting with respect to that derivative. (e) The Company considers all highly liquid investments with an initial maturity of three months or less from the date of purchase to be cash equivalents. At March 31, 2019, cash equivalents consisted of money market instruments and certificates of deposit. The Company had short-term and long-term restricted cash totaling $437 and $338 at March 31, 2019 and 2018, respectively. Restricted cash includes the restricted deposits with banks to secure the import of computer and other equipment and bank guarantees associated with the purchase of property and equipment of the Company’s facilities in India. (f) The Company classifies its investment securities as available for sale securities and equity securities. These securities are classified as short‑term investments and long‑term investments on the consolidated balance sheet based on their maturity dates and are carried at fair market value. Any unrealized gains and losses on available for sale securities are reported in accumulated other comprehensive income (loss), net of tax, as a separate component of stockholders’ equity unless the decline in value is deemed to be other‑than‑temporary, in which case, investments are written down to fair value and the loss is charged to the consolidated statements of income (loss). Any unrealized gains and losses on equity securities are charged to the consolidated statements of income (loss). The Company determines the cost of the securities sold based on the specific identification method. The Company conducts a periodic review and evaluation of its investment securities to determine if the decline in fair value of any security is deemed to be other‑than‑temporary. Other‑than‑temporary impairment losses are recognized on securities when: (i) the holder has an intention to sell the security; (ii) it is more likely than not that the security will be required to be sold prior to recovery; or (iii) the holder does not expect to recover the entire amortized cost basis of the security. Other‑than‑temporary losses are reflected in earnings as a charge against gain on sale of investments to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. The Company has no intention to sell any securities in an unrealized loss position at March 31, 2019 nor is it more likely than not that the Company would be required to sell such securities prior to the recovery of the unrealized losses. (g) The Company accounts for its business combinations under the acquisition method of accounting. The Company records the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price for acquisitions over the fair value of the net assets acquired, including other intangible assets, is recorded as goodwill. Goodwill is not amortized but is tested for impairment at the reporting unit level, defined as the Company level, in the fourth quarter of each fiscal year or more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. In assessing goodwill for impairment, an entity has the option to assess qualitative factors to determine whether events or circumstances indicate that it is not more likely than not that fair value of a reporting unit is less than its carrying amount. If this is the case, then performing the quantitative two‑step goodwill impairment test is unnecessary. An entity can choose not to perform a qualitative assessment for any or all of its reporting units, and proceed directly to the use of the two‑step impairment test. The two‑step process begins with an estimation of the fair value of a reporting unit. Goodwill impairment exists when a reporting unit’s carrying value of goodwill exceeds its implied fair value. Significant judgment is applied when goodwill is assessed for impairment. For the Company’s goodwill impairment analysis, the Company operates under one reporting unit. Any impairment would be measured based upon the fair value of the related assets. In performing the first step of the goodwill impairment testing and measurement process, the Company compares its entity‑wide estimated fair value to net book value to identify potential impairment. Management estimates the entity‑wide fair value utilizing the Company’s market capitalization, plus an appropriate control premium. Market capitalization is determined by multiplying the shares outstanding on the assessment date by the market price of the Company’s common stock. If the fair value of the reporting unit is less than the book value, the second step is performed to determine if goodwill is impaired. If the Company determines through the impairment evaluation process that goodwill has been impaired, an impairment charge would be recorded in the consolidated statement of income. The Company completed the annual impairment test required during the fourth quarter of the fiscal year ended March 31, 2019 and determined that there was no impairment. The Company continues to closely monitor its market capitalization. If the Company’s market capitalization, plus an estimated control premium, is below its carrying value for a period considered to be other‑than‑temporary, it is possible that the Company may be required to record an impairment of goodwill either as a result of the annual assessment that the Company conducts in the fourth quarter of each fiscal year, or in a future quarter if an indication of potential impairment is evident. The estimated fair value of the reporting unit on the assessment date significantly exceeded the carrying book value. Other intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods appropriate for the type of intangible asset and reported separately from goodwill. Intangible assets with definite lives are amortized over the estimated useful lives and are tested for impairment when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. The Company tests other intangible assets with definite lives for impairment by comparing the carrying amount to the sum of the net undiscounted cash flows expected to be generated by the asset whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds its net undiscounted cash flows, then an impairment loss is recognized for the amount by which the carrying amount exceeds its fair value. (h) 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. At March 31, 2019 and 2018, 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, other accrued expenses and long-term debt, approximate their fair values due to the nature of the items. See Note 8 to the consolidated financial statements for further information of the fair value of the Company’s other financial instruments. (i) Financial instruments which potentially expose the Company to concentrations of credit risk are primarily comprised of cash and cash equivalents, investments, derivatives, accounts receivable and unbilled accounts receivable. The Company places its cash, investments and derivatives in highly‑rated financial institutions. The Company adheres to a formal investment policy with the primary objective of preservation of principal, which contains credit rating minimums and diversification requirements. Management believes its credit policies reflect normal industry terms and business risk. The Company does not anticipate non‑performance by the counterparties and, accordingly, does not require collateral. At March 31, 2019, no client accounted for 10% of gross accounts receivable and at March 31, 2018, one client accounted for 10%, of gross accounts receivable. Revenue from significant clients as a percentage of the Company’s consolidated revenue was as follows: Year Ended March 31, 2019 2018 2017 Customer A % % % (j) Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight‑line method. Leasehold improvements are amortized over the shorter of their lease term or the estimated useful life of the related asset. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income. Repair and maintenance costs are expensed as incurred. (k) The Company reviews the carrying value of its long‑lived assets or asset groups with definite useful lives to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying value of an asset to the future net undiscounted cash flows directly associated with the asset. If assets are considered to be impaired, the impairment recognized is the amount by which the carrying value exceeds the fair value of the asset. The Company uses a discounted cash flow approach or other methods, if appropriate, to assess fair value. Long‑lived assets to be disposed of by sale are reported at the lower of carrying value or fair value less cost to sell and depreciation is ceased. Long‑lived assets to be disposed of other than by sale are considered to be held and used until disposal. (l) The Company capitalizes costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation and testing. Costs incurred during the preliminary project stage, along with post‑implementation stages of internal use computer software, are expensed as incurred. Capitalized development costs are typically amortized over the estimated life of the software, typically three to ten years, using the straight line method, beginning with the date that an asset is ready for its intended use. At March 31, 2019 and 2018, capitalized software development costs, which include software development work in progress, were approximately $13,083 and $11,022, respectively. These costs were recorded in property and equipment. For the fiscal years ended March 31, 2019, 2018 and 2017, amortization of capitalized software development costs amounted to approximately $1,749, $2,377, and $1,702, respectively. (m) Income Taxes Income taxes are accounted for using the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Changes to enacted tax rates would result in either increases or decreases in the provision for income taxes in the period of changes. The Company evaluates the realizability of deferred tax assets and recognizes a valuation allowance when it is more likely than not that all, or a portion of, deferred tax assets will not be realized. The calculation of the Company’s tax liabilities involves uncertainties in the application of complex tax regulations in multiple jurisdictions. The Company records liabilities for estimated tax obligations in the United States and other tax jurisdictions in which it has operations (see Note 16 to the consolidated financial statements). The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense are recognized on the full amount of deferred benefits for uncertain tax positions. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. (n) The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenues are recognized when control of the promised services is transferred to its customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company generally recognizes revenue for services over time as the Company’s performance creates or enhances an asset that the customer controls from fixed price contracts related to complex design, development and customization. For these contracts, the Company measures the progress and recognizes revenue using effort-based input methods, as the Company performs, based on actual efforts spent compared to the total expected efforts for the contract. The use of the effort based input method requires significant judgment relative to estimating total efforts, including assumptions relative to the length of time to complete the project and the nature and complexity of the work to be performed. Estimates of total efforts are continuously monitored during the term of the contract and are subject to revision as the contract progresses. When revisions in estimated contract revenue and efforts are determined, such adjustments are recorded in the period in which they are first identified. An input method is used to recognize revenue as the value of services provided to the customer is best represented by the hours expended to deliver those services. The Company generally recognizes revenue for services over time as the customer simultaneously receives and consumes the benefits as the Company performs for fixed-price contracts related to consulting or other IT services. For these contracts, the Company measures the progress and recognizes revenue using effort-based input methods as the Company performs based on actual efforts spent compared to the total expected efforts for the contract. The cumulative impact of any change in estimates of the contract revenue is reflected in the period in which the changes become known. The Company has applied the as-invoiced practical expedient to recognize revenues for services the Company renders to customers on time and material basis contracts. The Company generally recognizes revenue from fixed-price applications management, maintenance, or support engagements over time as customers receive and consume the benefits of such services and has applied the as-invoiced practical expedient to recognize revenue for services the Company renders to customers based on the amount the Company has a right to invoice, which is representative of the value being delivered. Contracts are often modified to account for changes in contract specification and requirements. The Company considers a contract modification when the modification either creates new or changes the existing enforceable rights and obligations. The accounting for modifications involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price. Certain customers may receive discounts, incentive payments or service level credits. A portion of the revenues relating to such arrangements are accounted for as variable consideration when the amount of revenue to be recognized can be estimated to the extent that it is probable that a significant reversal of any revenue will not occur. The Company estimates these amounts based on the expected amount to be provided to customers and adjusts revenues recognized. The Company’s estimates the amount of variable consideration and determination of whether to include estimated amounts in the transaction price may involve judgment and are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available to us. From time to time, the Company may enter into contracts with customers that include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on an expected cost plus a margin approach. The Company’s warranties generally provide a customer with assurance that the related deliverable will function as the parties intended because it complies with agreed-upon specifications and is therefore not considered as an additional performance obligation in the contract. When the Company receives consideration from a customer prior to transferring services to the customer under the terms of a contract, the Company records deferred revenue, which represents a contract liability. The Company recognizes deferred revenue as revenue after the Company has transferred control of the services to the customer and all revenue recognition criteria are met. Unbilled accounts receivable represent revenue earned on contracts to be billed, in subsequent periods, as per the terms of the related contracts. The Company’s payment terms vary by the type and location of its customers. The term between invoicing and when payment is due is not significant. As a practical expedient, the Company does not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is one year or less. Revenue includes reimbursements of travel and out‑of‑pocket expenses, with equivalent amounts of expense recorded in costs of revenue, of $13,271, $12,924 and $12,920 for the fiscal years ended March 31, 2019, 2018 and 2017, respectively. Any tax assessed by a governmental authority that is incurred as a result of a revenue transaction (e.g. sales tax) is excluded from the Company’s assessment of transaction prices. (o) Costs of revenue consist principally of salaries, employee benefits and share-based compensation expense, reimbursable and non‑reimbursable travel costs, subcontractor fees, and immigration related expenses for IT professionals. Selling and marketing expenses are charged to operating expenses as incurred. Selling and marketing expenses are those expenses associated with promoting and selling the Company’s services and include such items as sales and marketing personnel salaries, stock compensation expense and related fringe benefits, commissions, travel, and the cost of advertising and other promotional activities. Advertising and promotional expenses incurred were approximately $477, $306 and $560 for the fiscal years ended March 31, 2019, 2018 and 2017, respectively. General and administrative expenses include other operating items such as officers’ and administrative personnel salaries, share-based compensation expense and related fringe benefits, legal and audit expenses, public company related expenses, insurance, facility costs, provision for doubtful accounts, depreciation and amortization, including amortization of purchased intangibles and operating lease expenses. (p) Share-based compensation cost is determined by estimating the fair value at the grant date of the Company’s common stock and expensing the total compensation cost on a straight-line basis over the requisite employee service period or for grants issued with performance conditions, on a graded-vesting basis over the requisite employee service period. The requisite service period is generally between three and four years. The Company changed its accounting policy from estimated forfeitures to actual forfeitures effective April 1, 2017 upon adoption of ASU 2016-09 Accounting Standard Update (“ASU”) No. 2016-09, Compensation —Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The allocation of total share‑based compensation expense between costs of revenue and selling, general and administrative expenses is based on employee classification as follows: Year Ended March 31, 2019 2018 2017 Costs of revenue $ 499 $ 895 $ 2,501 Selling, general and administrative expenses 28,557 26,516 19,622 Total share-based compensation expense $ 29,056 $ 27,411 $ 22,123 (q) The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to make required payments. The allowance for doubtful accounts is determined by evaluating the relative credit worthiness of each client, historical collections experience and other information, including the aging of the receivables. We evaluate the collectability of our accounts receivables on an on-going basis and write-off accounts when they are deemed to be uncollectible. (r) Recently Adopted Accounting Pronouncements Unless otherwise discussed below, the adoption of new accounting standards did not have an impact on the consolidated financial statements. In May 2014, the FASB issued an Accounting Standard Update (“ASU” ) No. 2014-09, Revenue from Contracts with Customers (“Accounting Standard Codification (“ASC”) Topic 606”) as well as other clarifications and technical guidance related to this new revenue standard, including ASC Topic 340-40, Other Assets and Deferred Costs — Contracts with Customers (“ASC 340-40”). ASC Topic 606 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. 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 modified retrospective method. The Company adopted the standard effective April 1, 2018 using the modified retrospective method applied to those contracts which were not completed as of that date. Upon adoption of ASC Topic 606 on April 1, 2018, the Company recorded a net increase to opening retained earnings of approximately $464, after a tax impact of $142. The impact of adoption primarily relates to the longer period of amortization for costs to fulfill a contract compared to the amortization period prior to adoption. The following table summarizes the cumulative effect of adopting ASC Topic 606 using the modified retrospective method of adoption as of April 1, 2018: Balance as of ASC Topic 606 Balance as of March 31, 2018 Adjustments April 1, 2018 Balance Sheet : Assets Other current assets $ 21,229 $ (62) $ 21,167 Deferred income taxes 31,528 (142) 31,386 Other long-term assets 11,772 668 12,440 Stockholders’ equity Retained earnings $ 238,019 $ 464 $ 238,483 See Note 9 “Revenues” in the consolidated financial statements for additional information regarding revenues. 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. The Company adopted this guidance on April 1, 2018. The adoption of this guidance did not have a material impact on the consolidated financial statements, therefore, the Company did not record any cumulative adjustments to the opening retained earnings in the consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Restricted Cash (Topic 230), which is intended to reduce diversity in practice on how changes in restricted cash are classified and presented in the statement of cash flows. This ASU requires amounts generally described as restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company adopted the standard effective April 1, 2018 using the retrospective method. As a result of the adoption, the Company restated its conso |
Earnings (Loss) per Share
Earnings (Loss) per Share | 12 Months Ended |
Mar. 31, 2019 | |
Earnings (Loss) per Share | |
Earnings (Loss) per Share | (3) Earnings (loss) per Share Basic earnings (loss) per share available to Virtusa common stock holders (“EPS”) is computed by dividing net income (loss), less any dividends and accretion of issuance cost on the Series A Convertible Preferred Stock by the weighted average number of shares of common stock outstanding for the period. In computing diluted EPS, the Company adjusts the numerator used in the basic EPS computation, subject to anti-dilution requirements, to add back the dividends (declared or cumulative undeclared) applicable to the Series A Convertible Preferred Stock. Such add-back would also include any adjustments to equity in the period to accrete the Series A Convertible Preferred Stock to its redemption price. The Company adjusts the denominator used in the basic EPS computation, subject to anti-dilution requirements, to include the dilution from potential shares resulting from the issuance of restricted stock units, unvested restricted stock and stock options along with the conversion of the Series A Convertible Preferred Stock to common stock. The following table sets forth the computation of basic and diluted EPS for the periods set forth below: The components of basic earnings (loss) per share are as follows: Year Ended March 31, 2019 2018 2017 Numerators: Net income available to Virtusa stockholders $ 16,146 $ 1,254 $ 11,858 Less: Series A Convertible Preferred Stock dividends and accretion (4,350) (3,963) — Net income (loss) available to Virtusa common stockholders $ 11,796 $ (2,709) $ 11,858 Denominators: Basic weighted average common shares outstanding 29,817,526 29,397,350 29,650,026 Basic earnings (loss) per share available to Virtusa common stockholders $ 0.40 $ (0.09) $ 0.40 The components of diluted earnings (loss) per share are as follows: Year Ended March 31, 2019 2018 2017 Numerators: Net income (loss) available to Virtusa common stockholders $ 11,796 $ (2,709) $ 11,858 Add : Series A Convertible Preferred Stock dividends and accretion — — — Net income (loss) available to Virtusa common stockholders and assumed conversion $ 11,796 $ (2,709) $ 11,858 Denominators: Basic weighted average common shares outstanding 29,817,526 29,397,350 29,650,026 Dilutive effect of Series A Convertible Preferred Stock if converted — — — Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units 842,128 — 564,853 Dilutive effect of stock appreciation rights — — 292 Weighted average shares—diluted 30,659,654 29,397,350 30,215,171 Diluted earnings (loss) per share available to Virtusa common stockholders $ 0.38 $ (0.09) $ 0.39 During the fiscal years ended March 31, 2019, 2018, and 2017, unvested restricted stock awards and unvested restricted stock units issuable for, and options to purchase, 13,336, 918,305 and 378,627 shares of common stock in the aggregate for such fiscal years, respectively, were excluded from the calculations of diluted earnings per share as their effect would have been anti‑dilutive. For the fiscal years ended March 31, 2019 and 2018, the weighted average shares of the Series A Convertible Preferred Stock of 1,500,000 and 2,728,022, respectively were excluded from diluted earnings (loss) per share as their effect would have been anti-dilutive using the if-converted method. |
Acquisitions
Acquisitions | 12 Months Ended |
Mar. 31, 2019 | |
Acquisitions | |
Acquisitions | (4) Acquisitions Fiscal 2019 None. Fiscal 2018 On March 12, 2018, (i) the Company entered into an equity purchase agreement by and among the Company, eTouch Systems Corp. ("eTouch US") and each of the equityholders of eTouch US to acquire all of the outstanding shares of eTouch US, and (ii) certain of the Company's Indian subsidiaries entered into a share purchase agreement by and among those Company subsidiaries, eTouch Systems (India) Pvt. Ltd ("eTouch India," together with eTouch US, "eTouch") and the equityholders of eTouch India to acquire all of the outstanding shares of eTouch India (together with the acquisition of eTouch US, the "Acquisition"). The Acquisition strengthens the Company’s digital engineering capabilities, and establishes a solid base in Silicon Valley. Under the terms of the equity purchase agreement and the share purchase agreement, on March 12, 2018, the Company acquired all of the outstanding shares of eTouch US and eTouch India for approximately $140,000 in cash, subject to certain adjustments. The purchase price will be paid in three tranches with $80,000 paid at closing, $42,500 on the 12-month anniversary of the close of the transaction, and $17,500 on the 18-month anniversary of the close of the transaction, subject in each case to certain adjustments. As part of the acquisition, the Company sets aside up to an additional $15,000 for retention bonuses to be paid to eTouch management and key employees, in equal installments on the first and second anniversary of the transaction. The Company used the net cash proceeds of a $70,000 delayed draw term loan funded pursuant to the Credit Agreement (as defined in Note 13 to the consolidated financial statements) and $10,000 of cash on hand to make the payments due at the closing of the Acquisition. The Company paid an amount equal to $66,000 to the equityholders of eTouch US, and an amount equal to $14,000 to the equityholders of eTouch India, which together comprise the first of three tranches of the purchase price to be paid in connection with the closing of the Acquisition. The purchase price is subject to adjustment after the closing in the event the working capital associated with eTouch deviates from a threshold amount and other contractual adjustments. During the three months ended March 31, 2019, the Company paid the 12-month anniversary purchase price payment of $42,500 and the first anniversary payment of retention bonus to the eTouch management and key employees. 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. During the three months ended March 31, 2019, the Company completed its fair values determination during the one year measurement period. During the fiscal year ended March 31, 2019, the Company recorded $10,100 as a reduction of goodwill related to updating the fair value assessment of customer relationships and trademark, $2,395 as an increase in goodwill related to a tax liability payable to the equity holders of eTouch US and $298 as an increase in goodwill related to other adjustments. A summary of the fair values for eTouch is as follows: Amount Useful Life Consideration Transferred: Cash paid at closing $ 80,000 Fair value of the future payments 57,858 Tax related liability 11,708 Fair value of consideration 149,566 Less: Cash acquired (2,411) Total purchase price, net of cash acquired $ 147,155 Assets and Liabilities: Cash and cash equivalents 2,411 Accounts receivable 15,300 Unbilled receivables 2,986 Prepaid expenses 815 Other current assets 389 Property and equipment 2,625 Other long-term assets 98 Goodwill 78,210 Trademark 900 2 years Customer relationships 56,000 10 - 15 years Accounts payable (3,228) Deferred revenue (852) Accrued expenses and other current liabilities (727) Accrued employee compensation and benefits (4,192) Income taxes payable (250) Deferred income taxes (367) Other long-term liabilities (552) Total purchase price $ 149,566 Acquisition costs are recorded in selling, general and administrative expenses. The primary items that generated goodwill are the value of the acquired assembled workforces and synergies between eTouch and the Company, neither of which qualify as an amortizable intangible asset. On June 29, 2017, the Company acquired certain assets of a small consulting company located in India. The purchase price was approximately $750 payable in cash subject to a holdback payment of $50 after one year and a payment of $100 in earn-out consideration after two years based on certain achievement. The purchase price allocation was as follows: goodwill of $150 and customer relationships of $600. Fiscal 2017 None. |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 12 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets | |
Goodwill and Intangible Assets | (5) Goodwill and Intangible Assets Goodwill: The Company has one reportable segment at March 31, 2019 and 2018. The following are details of the changes in goodwill balance as of: March 31, 2019 March 31, 2018 Beginning balance $ 297,251 $ 211,089 Goodwill arising from acquisitions — 85,767 Purchase price adjustment (7,407) — Foreign currency translation adjustments (10,301) 395 Ending balance $ 279,543 $ 297,251 The acquisition costs and goodwill balance deductible for our business acquisitions for tax purposes are $145,660. The acquisition costs and goodwill balance not deductible for tax purposes are $146,786 and relate to the Company’s TradeTech acquisition (closed on January 2, 2014), the Polaris acquisition and the eTouch acquisition. Intangible Assets: The following are details of the Company’s intangible asset carrying amounts acquired and amortization for the fiscal year ended March 31, 2019 and March 31, 2018: March 31, 2019 Weighted Gross Net Average Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amortizable intangible assets: Customer relationships 13.0 $ 125,520 $ 33,679 $ 91,841 Trademark 2.0 900 431 469 Technology 5.0 500 370 130 12.9 $ 126,920 $ 34,480 $ 92,440 March 31, 2018 Weighted Gross Net Average Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amortizable intangible assets: Customer relationships 12.1 $ 129,264 $ 34,296 $ 94,968 Trademark 2.1 3,760 2,975 785 Technology 5.0 500 252 248 11.8 $ 133,524 $ 37,523 $ 96,001 The Company’s amortization expense related to intangible assets acquired through acquisitions was $11,394, $10,089 and $9,523 for the fiscal years ended March 31, 2019, 2018 and 2017, respectively. The components included in the gross carrying amounts of amortization expense in the table above reflect the Company’s previous acquisitions and the Company’s recent acquisition of eTouch on March 12, 2018. The intangible assets are being amortized on either a straight-line basis or using the most appropriate economic pattern of consumption over their estimated useful lives. The estimated amortization expense related to the purchased intangible assets listed in the table above at March 31, 2019 is as follows for the following fiscal years: Fiscal year Amount 2020 $ 11,618 2021 10,682 2022 9,640 2023 9,283 2024 8,704 Thereafter 42,513 Total $ 92,440 |
Investment Securities
Investment Securities | 12 Months Ended |
Mar. 31, 2019 | |
Investment Securities. | |
Investment Securities | (6) Investment Securities At March 31, 2019 and 2018 all of the Company’s investment securities were classified as available-for-sale securities and equity securities. These 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 8 of the notes to our consolidated financial statements for a discussion of the fair value of the Company’s other financial instruments). The following is a summary of investment securities at March 31, 2019: Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Available-for-sale securities: Corporate bonds: Current $ 2,779 $ 1 $ (2) $ 2,778 Non-current — — — — Preference shares: 188 — — 188 Agency and short-term notes: Current 1,492 1 — 1,493 Time Deposits: Current 15,861 — — 15,861 Equity securities: Mutual funds: Current 12,912 94 — 13,006 Equity Shares/ Options: Non-current 8 126 — 134 Total available-for-sale securities and equity securities $ 33,240 $ 222 $ (2) $ 33,460 The following is a summary of investment securities at March 31, 2018: Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Available-for-sale securities: Corporate bonds: Current $ 25,397 $ — $ (126) $ 25,271 Non-current 2,293 — (22) 2,271 Preference shares: Non-current 1,726 — (70) 1,656 Agency and short-term notes: Current 800 — (1) 799 Mutual funds: Current 1,540 11 — 1,551 Equity Shares/ Options: Non-current 15 198 — 213 Time deposits: Current 18,279 — — 18,279 Total available-for-sale securities $ 50,050 $ 209 $ (219) $ 50,040 The Company evaluates investments with unrealized losses to determine if the losses are other than 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 or equity securities, the Company does not currently intend to sell such investments and it is more likely than not that the Company will not be required to sell such investments prior to the recovery of their carrying value. During the fiscal year ending March 31, 2019, the issuer of the Company’s investment in preference shares began showing signs of financial distress. This included down-grades to its credit rating and a decrease in trading activity and market pricing for this security. Due to the uncertainty in recovering the amortized cost of this security, the Company has determined the unrealized losses are other-than-temporary and recorded the impairment in earnings. The Company has determined that other unrealized losses at March 31, 2019 and 2018 are temporary. The following is a summary of other-than-temporary impairment unrealized losses recognized during the fiscal year ended March 31, 2019: Year Ended March 31, 2019 Unrealized losses recognized in other comprehensive income (loss) as of April 1, 2018 $ 70 Add: unrealized losses recognized 1,341 Less: Other-than-temporary impairment recognized in earnings (1,411) Unrealized losses in other comprehensive income (loss) as of March 31, 2019 $ — The following tables show the gross unrealized losses and fair value of the Company’s investment securities with unrealized losses that are not deemed to be other‑than‑temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2019 and 2018: Less Than 12 Months Gross Unrealized Fair Value Loss Available-for-sale securities at March 31, 2019: Corporate bonds $ 253 $ — Agency bonds — — Preference shares — — Total $ 253 $ — Available-for-sale securities at March 31, 2018: Corporate bonds $ 22,081 $ (135) Agency bonds — — Mutual funds — — Total $ 22,081 $ (135) Greater Than 12 Months Gross Unrealized Fair Value Loss Available-for-sale securities at March 31, 2019: Corporate bonds $ 2,297 $ (2) Agency bonds — — Preference shares — — Total $ 2,297 $ (2) Available-for-sale securities at March 31, 2018: Corporate bonds $ 5,461 $ (13) Agency bonds 799 (1) Preference shares 1,656 (70) Total $ 7,916 $ (84) At March 31, 2019, there were no investment securities owned by the Company for which the fair value was less than the carrying value for a period greater than 12 months. Available‑for‑sale securities and equity securities by contractual maturity were as follows: March 31, 2019 Due in one year or less $ 33,138 Due after 1 year through 5 years 322 Due after 5 years — Total $ 33,460 Proceeds from sales of available-for-sale investment securities and equity securities and the gross gains and losses that have been included in earnings as a result of those sales were as follows: Year Ended March 31, 2019 2018 2017 Proceeds from sales or maturities of available-for-sale $ 109,512 $ 158,800 $ 138,232 Gross gains $ 1,023 $ 1,655 $ 1,007 Gross losses (13) (127) (1) Net realized gains on sales of available-for-sale investment $ $ 1,528 $ 1,006 |
Investments in Unconsolidated A
Investments in Unconsolidated Affiliates | 12 Months Ended |
Mar. 31, 2019 | |
Investments in Unconsolidated Affiliates | |
Investments in Unconsolidated Affiliates | (7) Investments in Unconsolidated Affiliates Investments in entities in which the Company owns between 20% and 50% of the voting interest or otherwise acquires management influence are accounted for using the equity method and initially recognized at cost. Under the equity method, the Company’s share of the post-acquisition profits and losses is recognized in the Consolidated Statements of Income. As of March 31, 2019, through its Polaris subsidiary, the Company owns a 50% interest in Intellect Polaris Design LLC, an LLC which holds certain real estate in New Jersey, which is being accounted for using the equity method of accounting. As of March 31, 2019, the difference between the carrying amount and our equity in net assets of this investment was $629. This is due to fair value measurement of the investment upon the Polaris acquisition. |
Fair Value of Financial Instrum
Fair Value of Financial Instruments | 12 Months Ended |
Mar. 31, 2019 | |
Fair Value of Financial Instruments | |
Fair Value of Financial Instruments | (8) Fair Value of Financial Instruments The Company carries certain assets and liabilities at fair value on a recurring basis on its consolidated balance sheets. The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2019 Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ 20,132 — $ 20,132 Equity securities—current — 13,006 — 13,006 Available-for-sales securities—non-current — 188 — 188 Equity securities—non-current — 134 — 134 Derivative financial instruments: Foreign currency derivative contracts — 3,411 — 3,411 Interest Rate Swap Contracts — 1,349 — 1,349 Total assets $ — $ 38,220 — $ 38,220 Liabilities: — Foreign currency derivative contracts — 321 — 321 Interest Rate Swap Contracts — 3,633 — 3,633 Total liabilities $ — $ 3,954 $ — $ 3,954 The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2018 Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ 45,900 — $ 45,900 Available-for-sales securities—non-current — 4,140 — 4,140 Foreign currency derivative contracts — 2,122 — 2,122 Interest Rate Swap Contracts — 2,486 — 2,486 Total assets $ — $ 54,648 $ — $ 54,648 Liabilities: Foreign currency derivative contracts $ — 1,023 $ — 1,023 Interest Rate Swap Contracts — — — — Contingent consideration — — 100 100 Total liabilities $ — $ 1,023 $ 100 $ 1,123 |
Revenues
Revenues | 12 Months Ended |
Mar. 31, 2019 | |
Revenues | |
Revenues | (9) Revenues Effective April 1, 2018, the Company adopted ASU No. 2014-09, Revenue from Contracts with Customers (“Topic 606”) as amended. The Company adopted the new guidance using the modified retrospective method by recognizing the cumulative effect of adoption as an adjustment to retained earnings as of April 1, 2018. Results for reporting periods beginning after April 1, 2018 are presented under Topic 606, while prior period amounts are not adjusted and continue to be reported in accordance with Revenue Recognition (“Topic 605”). The impact of adoption of the new guidance on the Company’s consolidated financial statements as of April 1, 2018 is presented in Note 2 to the Company’s consolidated financial statements. The following table summarizes the impacts of changes in accounting policies after adoption of ASC 606 on the Company’s consolidated financial statements as of and for the fiscal year ended March 31, 2019: As of March 31, 2019 Impacts of the New As reported Pro-forma Amounts Revenue standard Balance Sheet : Assets Other current assets (1) $ 29,967 $ 29,566 $ 401 Total current assets 401 Deferred income taxes (3) 28,770 29,022 (252) Other long-term assets (1) 29,836 29,845 (9) Total Assets $ 140 Liabilities, Series A Convertible Preferred Stock, Redeemable noncontrolling interest Deferred revenue (2) 6,421 7,206 (785) Total current liabilities (785) Stockholders’ equity: Retained earnings 250,279 249,354 925 Total liabilities, Series A convertible preferred stock, redeemable noncontrolling $ 140 Year Ended March 31, 2019 Impact from Pro-forma New Revenue As reported Amounts Standard Revenue (2) $ 1,247,863 $ 1,247,078 $ 785 Costs of revenue (1) 884,652 885,044 (392) Gross profit 363,211 362,034 1,177 Operating expenses: Selling, general and administrative expenses 292,943 292,943 — Income from operations 70,268 69,091 1,177 Other income (expense) (32,104) (32,104) - Income before income tax expense 38,164 36,987 1,177 Income tax expense (3) 20,473 20,221 252 Net income $ 17,691 16,766 $ 925 Less: net income attributable to noncontrolling interests, net of tax 1,545 1,545 — Net income available to Virtusa stockholders $ 16,146 15,221 $ 925 Less: Series A Convertible Preferred Stock dividends and accretion 4,350 4,350 — Net income available to Virtusa common stockholders 11,796 10,871 925 Basic earnings per share available to Virtusa common stockholders $ 0.40 0.37 $ 0.03 Diluted earnings per share available to Virtusa common stockholders $ 0.38 0.35 $ 0.03 Notes (1) Reflects the impact of a longer period of amortization for costs to fulfill a contract. (2) Reflects the impact of changes in timing of revenue recognition on our software licenses and certain fixed-price application maintenance contracts. (3) Reflects the income tax impact of the above items. Receivables and Contract Balances The Company classifies its right to consideration in exchange for deliverables as either a receivable or a contract asset. A receivable is a right to consideration that is unconditional (i.e. only the passage of time is required before payment is due). The Company presents such receivables in accounts receivable or unbilled accounts receivable, in its consolidated statements of financial position at their net estimated realizable value. Contract assets included in unbilled accounts receivable are recorded when services have been provided but the Company does not have an unconditional right to receive consideration. Contracts assets are primarily related to unbilled amounts on fixed-price contracts utilizing the input method of revenue recognition. The timing between services rendered and timing of payment is less than one year. The Company recognizes an impairment loss when the contract carrying amount is greater than the remaining consideration receivable, less directly related costs to be incurred. The table below shows significant movements during the fiscal year ended March 31, 2019 in contract assets: Contract Assets Balance at April 1, 2018 $ 15,998 Revenues recognized during the period but not yet billed 120,536 Amounts billed (117,687) Other (309) Balance at March 31, 2019 $ 18,538 Contract liabilities comprise amounts billed to customers for revenues not yet earned. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. The table below shows significant movements in the deferred revenue balances during the fiscal year ended March 31, 2019: Contract Liabilities Balance at April 1, 2018 $ 7,908 Amounts billed but not yet recognized as revenues 5,844 Revenues recognized related to the opening balance of deferred revenue (6,906) Other (425) Balance at March 31, 2019 $ 6,421 Remaining performance obligation ASC 606 requires that the Company discloses the aggregate amount of transaction price that is allocated to performance obligations that have not yet been satisfied as of March 31, 2019. This disclosure is not required for: (1) (2) (3) (4) Many of the Company’s performance obligations meet one or more of these exemptions. As of March 31, 2019, the aggregate amount of transaction price allocated to remaining performance obligations, other than those meeting the exclusion criteria above, was $43,292 and will be recognized as revenue within 4 years. Costs to obtain and fulfill The Company’s costs to obtain contracts are generally expensed as incurred, as the liability is not solely a result of obtaining the contract. The costs to obtain contracts are triggered by multiple conditions such as being contingent on future performance, including continued employment and revenue recognized associated with the contract. The Company’s recurring operating costs for contracts with customers are recognized as expense as incurred. Certain eligible costs incurred in the initial phases of the Company’s application maintenance, business process outsourcing and infrastructure services contracts (i.e. set-up or transition costs) are capitalized when such costs (1) relate directly to the contract, (2) generate or enhance resources of the Company that will be used in satisfying the performance obligation in the future, and (3) are expected to be recovered. These costs are expensed ratably over the estimated life of the customer relationship, including expected renewals. In determining the estimated life of the customer relationship, the Company evaluates the contract term, the expected life of the enhanced assets as well as the rate of technological and industry change. Capitalized amounts are monitored regularly for impairment. Impairment losses are recorded when projected remaining undiscounted operating cash flows are not sufficient to recover the carrying amount of the capitalized costs to fulfill. The following table presents information related to the capitalized costs to fulfill, such as set-up or transition activities, for the fiscal years ended March 31, 2019: Costs to Fulfill Balance at April 1, 2018 $ 4,278 Costs capitalized 2,382 Amortization expense (2,248) Foreign currency translation adjustments (113) Balance at March 31, 2019 $ 4,299 Costs to fulfill are recorded in “Other current assets” and “Other long-term assets” in the consolidated balance sheets. Disaggregation of Revenue The table below presents disaggregated revenues from the Company’s contracts with customers by geography, industry groups, service offerings and contract-type. The Company believes this disaggregation best depicts how the nature, amount, timing and uncertainty of its revenues and cash flows are affected by industry, market and other economic factors. Year Ended Revenue by geography: March 31, 2019 North America $ 884,114 Europe 261,967 Rest of World 101,782 Consolidated revenue $ 1,247,863 Year Ended Revenue by Customer’s Industry Groups March 31, 2019 Banking financial services insurance $ 776,955 Communications and Technology 360,967 Media & Information and Other 109,941 Consolidated revenue $ 1,247,863 Year Ended Revenue by service offerings March 31, 2019 Application outsourcing $ 672,636 Consulting 575,227 Consolidated revenue $ 1,247,863 Year Ended Revenue by contract type March 31, 2019 Time-and-materials $ 738,309 Fixed-price* 509,554 Consolidated revenue $ 1,247,863 * Fixed-price includes both retainer-billing basis and fixed-price progress towards completion |
Property and Equipment
Property and Equipment | 12 Months Ended |
Mar. 31, 2019 | |
Property and Equipment | |
Property and Equipment | (10) Property and Equipment Property and equipment and their estimated useful lives in years consist of the following: Estimated Useful March 31, Life (Years) 2019 2018 Computer and other equipment 3 - 5 $ 60,771 $ 50,154 Furniture and fixtures 7 15,764 14,862 Vehicles 3 - 5 1,232 1,753 Software 3 - 10 24,752 23,963 Leasehold improvements Over the lease period or estimated useful life of the assets whichever is lower 14,642 10,558 Buildings 15 - 30 31,813 32,382 Land 45,765 56,611 Capital work-in-progress 4,269 1,745 $ 199,008 $ 192,028 Less—accumulated depreciation and amortization 79,143 70,463 Property and equipment, net $ 119,865 $ 121,565 Depreciation and amortization expense for the fiscal years ended March 31, 2019, 2018 and 2017 was $17,174, $17,448 and $16,329, respectively. Capital work‑in‑progress represents advances paid towards the acquisition of property and equipment, and the cost of property and equipment including internally developed software not placed in service before the balance sheet date. The cost and accumulated amortization of assets under capital leases at March 31, 2019 were $257 and $219, respectively. The cost and accumulated amortization of assets under capital leases at March 31, 2018 were $262 and $174, respectively. |
Assets Held for Sale
Assets Held for Sale | 12 Months Ended |
Mar. 31, 2019 | |
Assets Held for Sale | |
Assets Held for Sale | (11) Asset Held for Sale During the three months ended March 31, 2019, the Company has recorded an impairment loss of $3,955 relating to the reclassification of land acquired in the Polaris acquisition to held for sale. The decision to sell this land was made as part of our annual planning process where the Company evaluated strategic alternatives to maximize return on the Company’s cash and assets. The reclassification to held for sale triggered a reduction in value to $8,978, which represents the lower of net book value and market value. The Company is actively marketing this land for sale and expects to complete a transaction during the fiscal year March 31, 2020. The impairment loss is included in other (income) expense on the consolidated statements of income (loss). |
Accrued Expenses and Other
Accrued Expenses and Other | 12 Months Ended |
Mar. 31, 2019 | |
Accrued Expenses and Other | |
Accrued Expenses and Other | (12) Accrued Expenses and Other Accrued expenses and other consists of the following: March 31, March 31, 2019 2018 Accrued other taxes $ 9,177 $ 6,776 Accrued professional fees 21,908 18,422 Acquisition related liabilities 18,519 50,619 Hedge liability 527 1,043 Accrued discounts 9,055 6,255 Accrued employee travel and other expense 5,303 3,413 Accrued other 5,561 4,778 Total $ 70,050 $ 91,306 |
Debt
Debt | 12 Months Ended |
Mar. 31, 2019 | |
Debt | |
Debt | (13) Debt On February 6, 2018, the Company entered into a credit agreement (the “Credit Agreement”) dated as of February 6, 2018, by and among the Company, its guarantor subsidiaries party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint book runners and lead arrangers. The Credit Agreement replaces the prior $300,000 credit agreement with J.P. Morgan Securities and Merrill Lynch, Pierce, Fenner & Smith Incorporated. and provides for a $200,000 revolving credit facility, a $180,000 term loan facility, and a $70,000 delayed‑draw term loan. The Company drew down $180,000 under the term loan of the Credit Agreement and $55,000 under the revolving credit facility under the Credit Agreement to repay in full the amount outstanding under the prior credit agreement and fund the Polaris delisting transaction. On March 12, 2018, we drew down the $70,000 delayed draw to fund the eTouch acquisition. Interest under this new credit facility accrues at a rate per annum of LIBOR plus 3.0%, subject to step‑downs based on the Company’s ratio of debt to EBITDA. 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. The Company entered into interest rate swap agreements to minimize interest rate exposure (see Note 22 to the Consolidated Financial Statements for further information). The Credit Agreement includes maximum debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”) and minimum fixed charge coverage covenants. The term of the Credit Agreement is five years, ending February 6, 2023 On August 14, 2018, the Company drew down $32,000 from the credit facility to finance the Polaris Consulting & Services Limited (“Polaris”) delisting open offer. The Company is required under the terms of the Credit Agreement to make quarterly principal payments on the term loan. For the fiscal year ending March 31, 2019, the Company is required to make principal payments of $3,125 per quarter. The Credit Agreement includes customary maximum debt to EBITDA and minimum fixed charge coverage covenants. The term of the Credit Agreement is five years ending February 6, 2023. On March 11, 2019, the Company drew down the $42,500 delayed draw to fund the eTouch first anniversary purchase price payment. At March 31, 2019, the interest rate on the term loan and line of credit was 5.00%. At March 31, 2019, the Company is in compliance with its debt covenants and has provided a quarterly certification to its lenders to that effect. The Company believes that it currently meets all conditions set forth in the Credit Agreement to borrow thereunder and the Company is not aware of any conditions that would prevent it from borrowing part or all of the remaining available capacity under the existing revolving credit facility at March 31, 2019 and through the date of this filing. Current portion of long-term debt The following summarizes our short-term debt balance as of: March 31, 2019 March 31, 2018 Notes outstanding under the revolving credit facility $ — $ — Term loan- current maturities 12,500 12,500 Less: deferred financing costs, current (1,093) (1,093) Total $ 11,407 $ 11,407 Long-term debt, less current portion The following summarizes our long-term debt balance as of: March 31, 2019 March 31, 2018 Term loan $ 237,500 $ 250,000 Borrowings under revolving credit facility 129,500 55,000 Less: Current maturities (12,500) (12,500) Deferred financing costs, long-term (3,180) (4,273) Total $ 351,320 $ 288,227 In July 2016 and November 2018, the Company entered into interest rate swap transactions to mitigate Company’s interest rate risk on Company’s variable rate debt (See Note 22 to the consolidated financial statements). The following represents the schedule of maturities of long-term debt: Fiscal year ending March 31 : 2020 $ 12,500 2021 18,750 2022 25,000 2023 310,750 2024 — Total $ 367,000 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 course of the fiscal year ended March 31, 2019, $31,872 of receivables were sold under the terms of the financing agreement. Fees paid pursuant to this agreement were immaterial during the fiscal year ended March 31, 2019. No amounts were due as of March 31, 2019, 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. |
Series A Convertible Preferred
Series A Convertible Preferred Stock | 12 Months Ended |
Mar. 31, 2019 | |
Series A Convertible Preferred Stock. | |
Series A Convertible Preferred Stock | (14) Series A Convertible Preferred Stock On May 3, 2017, the Company entered into an investment agreement with The Orogen Group (‘‘Orogen’’) pursuant to which Orogen purchased 108,000 shares of the Company’s newly issued Series A Convertible Preferred Stock, initially convertible into 3,000,000 shares of common stock, for an aggregate purchase price of $108,000 with an initial conversion price of $36.00 (the ‘‘Orogen Preferred Stock Financing’’). Under the terms of the investment, the Series A Convertible Preferred Stock has a 3.875% dividend per annum, payable quarterly in additional shares of common stock and/or cash at the Company’s option. If any shares of Series A Convertible Preferred Stock have not been converted into common stock prior to May 3, 2024, the Company will be required to repurchase such shares at a repurchase price equal to the liquidation preference of the repurchased shares plus the amount of accumulated and unpaid dividends thereon. If the Company fails to effect such repurchase, the dividend rate on the Series A Convertible Preferred Stock will increase by 1% per annum and an additional 1% per annum on each anniversary of May 3, 2024 during the period in which such failure to effect the repurchase is continuing, except that the dividend rate will not increase to more than 6.875% per annum. In connection with the issuance of the Series A Convertible Preferred Stock, the Company incurred direct and incremental expenses of $1,154, including financial advisory fees, closing costs, legal expenses and other offering-related expenses. These issuance costs are recorded as a reduction to the proceeds received from issuance of Series A Convertible Preferred Stock. These direct and incremental expenses reduced the Series A Convertible Preferred Stock, and will be accreted through retained earnings as a deemed dividend from the date of issuance through the first possible known redemption date, May 3, 2024. During the fiscal year ended March 31, 2019 and 2018, the Company recorded accretions to the Series A Convertible Preferred Stock related to its issuance cost. Holders of Series A Convertible Preferred Stock are entitled to a cumulative dividend at the rate of 3.875% per annum, payable quarterly in arrears. During the fiscal year ended March 31, 2019 and 2018 the Company has paid $4,184 and $3,127 in required cash dividends on its Series A Convertible Preferred Stock. As of March 31, 2019, the Company had declared and accrued dividends of $686 associated with the Series A Convertible Preferred Stock. |
Stock Options, Restricted Stock
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | 12 Months Ended |
Mar. 31, 2019 | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | (15) Stock Options, Restricted Stock Awards and Stock Appreciation Rights The Company’s Amended and Restated 2000 Stock Option Plan (the “2000 Plan”) was adopted in the fiscal year ended March 31, 2001. Under the 2000 Plan, shares were reserved for issuance to the Company’s employees, directors, and consultants. As of March 31, 2019, there were no shares reserved for issuance under this plan. Options granted under the 2000 Plan may be incentive stock options, nonqualified stock options or restricted stock. Incentive stock options may only be granted to employees. Options granted have a term of ten years and generally vest over four years. The Company settles employee stock option exercises with newly issued shares. The compensation committee of the board of directors determines (upon board of director approval) the term of awards on an individual case basis. The exercise price of incentive stock options shall be no less than 100% of the fair market value per share of the Company’s common stock on the grant date. If an individual owns stock representing more than 10% of the outstanding shares, the price of each share shall be at least 110% of fair market value. In May 2007, the Company’s board of directors determined that no further grants would be made under the 2000 Plan. In July 2005, the Company adopted the Virtusa Corporation 2005 Stock Appreciation Rights Plan (the “SAR Plan”). Under the SAR Plan, the Company may grant up to 479,233 SARs to employees and consultants of Virtusa and its foreign subsidiaries, and settles the SARs in cash or common stock, as set forth in the SAR Plan. Prior to the Company’s initial public offering (“IPO”), the SARs could only be settled in cash. After the Company’s IPO, the cash settlement feature of the SARs ceased and exercises may only be settled in shares of the Company’s common stock. In May 2007, the Company’s board of directors determined that no further grants would be made under the SAR Plan. The Company’s board of directors and its stockholders approved the Company’s 2007 Stock Option and Incentive Plan (the “2007 Plan”), in May 2007, and the stockholders of the Company again approved the 2007 Plan in September 2008. The 2007 Plan permits the Company to make grants of incentive stock options, non‑qualified stock options, SARs, deferred stock awards, restricted stock awards, unrestricted stock awards, and dividend equivalent rights. The Company reserved 830,670 shares of its common stock for the issuance of awards under the 2007 Plan. The 2007 Plan provides that the number of shares reserved and available for issuance under the plan will be automatically increased each April 1, beginning in 2008, by 2.9% of the outstanding number of shares of common stock on the immediately preceding March 31 or such lower number of shares of common stock as determined by the board of directors. This number is subject to adjustment in the event of a stock split, stock dividend or other change in the Company’s capitalization. Generally, shares that are forfeited, cancelled or withheld to settle tax liabilities from awards under the 2007 Plan also will be available for future awards. In addition, available shares under the 2000 Plan and the SAR Plan, as a result of the forfeiture, expiration, cancellation, termination or net issuances of awards, are automatically made available for issuance under the 2007 Plan. In May 2015, the Company’s board of directors determined that no further grants would be made under the 2007 Plan. In May 2015, the Company adopted the 2015 Stock Option and Incentive Plan (“2015 Plan”) which was also approved the Company’s stockholders on September 1, 2015. The 2015 Plan replaces the 2007 Plan and permits the granting of incentive stock options, non-qualified stock options, restricted stock awards, restricted stock units, unrestricted stock awards, performance share awards, performance-based awards to covered employees, cash-based awards and dividend equivalent rights. Stock options, restricted stock and restricted stock units generally vest over four years. Performance share awards and performance-based awards generally vest over three years. The Company reserved 3,000,000 shares of its common stock for the issuance of awards under the 2015 Plan as well as the number of shares of stock as is equal to the shares underlying any stock options and awards that are returned to the Company’s 2007 Plan after the 2015 Plan’s effective date as a result of the expiration, forfeiture, acquisition by the Company prior to vesting, cancellation or termination of such stock options and awards (other than by exercise) as set forth in the 2007 Plan. Additionally, shares that are forfeited or cancelled or otherwise terminated (other than by exercise) or held back by the Company or tendered by the grantee of any equity award to settle applicable taxes on any equity award under the 2015 Plan shall be added back to the shares of common stock available for future issuance under the 2015 Plan. At March 31, 2019, the number of shares reserved for issuance under the 2015 Plan was 1,211,012. The following tables summarize stock option and restricted stock activity under the 2000 Plan, the 2007 Plan and the 2015 Plan, as the case may be, for the fiscal years ended March 31, 2019, 2018 and 2017: Stock Option Activity Number of Weighted Options Weighted Average to Purchase Average Remaining Aggregate Common Exercise Life Intrinsic Shares Price (in years) Value Outstanding at March 31, 2016 679,138 $ 13.58 Granted — — Exercised (104,853) 14.18 Forfeited or cancelled (4,624) 31.97 Outstanding at March 31, 2017 569,661 13.31 Granted — — Exercised (322,317) 12.60 Forfeited or cancelled — — Outstanding at March 31, 2018 247,344 14.24 Granted — — Exercised (101,618) 10.02 Forfeited or cancelled Outstanding at March 31, 2019 145,726 $ 17.18 2.88 $ 5,286 Exercisable at March 31, 2019 145,726 $ 17.18 2.88 $ 5,286 Restricted Stock Award Activity Number of Restricted Weighted Average Stock Awards Grant Date Fair Value Unvested at March 31, 2016 477,391 $ 31.69 Awarded — — Vested (226,838) 26.41 Forfeited (32,993) 42.59 Unvested at March 31, 2017 217,560 35.55 Awarded — — Vested (126,843) 32.64 Forfeited (15,090) 37.55 Unvested at March 31, 2018 75,627 40.04 Awarded — — Vested (57,822) 37.93 Forfeited (3,786) 45.88 Unvested at March 31, 2019 14,019 $ 47.17 Restricted Stock Unit Activity Number of Restricted Weighted Average Stock Units Grant Date Fair Value Unvested at March 31, 2016 607,240 $ 44.43 Awarded 1,863,658 24.63 Vested (339,582) 39.54 Forfeited (151,700) 35.82 Unvested at March 31, 2017 1,979,616 27.29 Awarded 731,363 35.99 Vested (436,225) 39.14 Forfeited (752,765) 25.06 Unvested at March 31, 2018 1,521,989 29.18 Awarded 775,532 46.27 Vested (612,854) 30.11 Forfeited (291,547) 31.66 Unvested at March 31, 2019 1,393,120 $ 37.76 The aggregate intrinsic value of options exercised during the fiscal years ended March 31, 2019, 2018 and 2017 was $4,215, $7,816 and $1,629, respectively. There were no options granted during the fiscal year ended March 31, 2019, 2018 or 2017. During the fiscal years ended March 31, 2019, 2018 and 2017, the Company realized $3,388, $1,481 and $(719) respectively, of income tax (expense) benefits from the exercise of stock options as a windfall (shortfall). The Company adopted ASU 2016-09 on April 1, 2017. All excess tax benefits and all tax deficiencies are recognized as income tax expense or benefit in the consolidated statement of income for the fiscal year ending March 31, 2019. As of March 31, 2019, there was $31,395 of total unrecognized compensation cost related to unvested stock options, restricted stock awards, deferred stock awards and restricted stock units granted under the Company’s Amended and Restated 2000 Option Plan, the Company’s 2007 Stock Option and Incentive Plan and the Company’s 2015 Stock Option and Incentive Plan. The unrecognized compensation cost is expected to be recognized over a remaining weighted average period of 1.55 years. |
Income Taxes
Income Taxes | 12 Months Ended |
Mar. 31, 2019 | |
Income Taxes | |
Income Taxes | (16) Income Taxes The income before income tax expense shown below is based on the geographic location to which such income is attributed for each of the fiscal years ended March 31, 2019, 2018 and 2017: Year Ended March 31, 2019 2018 2017 United States $ 9,454 $ (31,526) $ (52,390) Foreign 28,710 73,362 71,208 Total $ 38,164 $ 41,836 $ 18,818 The provision for income taxes for each of the fiscal years ended March 31, 2019, 2018 and 2017 consisted of the following: Year Ended March 31, 2019 2018 2017 Current provision: Federal $ 672 $ 18,747 $ (1,966) State 447 (108) 170 Foreign 21,124 24,195 15,213 Total current provision $ 22,243 $ 42,834 $ 13,417 Deferred (benefit) provision: Federal $ (315) $ (1,289) $ (7,870) State 1,105 (2,726) (2,888) Foreign (2,560) (5,931) (98) Total deferred (benefit) provision $ (1,770) $ (9,946) $ (10,856) Total provision for income taxes $ 20,473 $ 32,888 $ 2,561 The items which gave rise to differences between the income taxes in the statements of income and the income taxes computed at the U.S. statutory rate 21.0%, 30.7% and 34.0% for the year ended March 31, 2019, 2018 and 2017 respectively are summarized as follows: Year Ended March 31, 2019 2018 2017 Tax on income before income tax expense at U.S. statutory rate $ 8,014 $ 12,865 $ 6,398 U.S. state and local taxes (benefit), net of U.S. federal income tax effects 1,459 (2,800) (2,776) Benefit from foreign subsidiaries’ tax holidays (5,778) (7,727) (7,973) Foreign rate difference 11,795 (2,215) (7,688) Tax rate change 431 9,915 — Nondeductible business costs 1,032 2,721 2,090 Repatriated foreign earnings — — 5,879 Deemed repatriated foreign earnings (1,628) 17,834 — GILTI and BEAT tax 3,763 — — Excess stock-based compensation benefits (3,388) (1,674) — Nondeductible interest 6,213 6,500 6,138 Other adjustments (1,440) (2,531) 493 Income tax expense $ 20,473 $ 32,888 $ 2,561 Deferred tax assets (liabilities) at March 31, 2019 and 2018 were as follows: March 31, 2019 2018 Deferred revenue $ 898 $ 649 Bad debt reserve 662 774 Tax credit carry forwards 591 2,836 Accrued expenses and reserves 14,087 13,825 Share-based compensation expense 4,911 3,985 Unrealized losses 583 — Intangible assets 3,324 3,477 Net operating loss 14,777 15,160 Total gross deferred tax assets $ 39,833 $ 40,706 Valuation allowance (2,492) (2,535) Total deferred tax assets $ 37,341 $ 38,171 Depreciable assets (7,351) (10,054) Unrealized gains — (698) Acquisition and other liabilities (8,890) (11,052) Goodwill (8,154) (6,180) Total deferred tax liabilities $ (24,395) $ (27,984) Net deferred tax assets/(liabilities) $ 12,946 $ 10,187 The ultimate realization of deferred tax assets is dependent upon management’s assessment of the Company’s ability to generate sufficient taxable income to realize the deferred tax assets during the periods in which the temporary differences become deductible. Management considers the historical level of taxable income, projections for future taxable income, and tax planning strategies in making this assessment. The Company has a significant deferred tax asset in the United States. The Company assessed the available positive and negative evidence to estimate if sufficient future taxable income will be generated to realize the existing deferred tax assets. The Company recorded a decrease to the valuation allowance totaling $43 during the fiscal year ended March 31, 2019 related to realization of net operating losses and foreign tax credits, which were previously reserved. The Company has determined for all other deferred assets that it is more likely than not that the results of future operations will generate sufficient taxable income to realize the deferred tax assets. We continue to monitor all positive and negative evidence related to this asset. Net losses in the United States and the United Kingdom have decreased during the fiscal year ended March 31, 2019 compared with the fiscal year ended March 31, 2018. A valuation allowance is required if, based on available evidence, it is more likely than not that all or some portion of the asset will not be realized due to the inability of the Company to generate sufficient taxable income in a specific jurisdiction. The Company has $24,040 and $1,483 of net deferred tax assets in the United States and the United Kingdom, respectively, at March 31, 2019. The Company has not recorded a valuation allowance as management has concluded it is more likely than not to be utilized before expiration. The Company expects sufficient taxable income in future periods related to the impact of the global intangible low-taxed income (“GILTI”) and the election to treat several foreign entities as disregarded entities. The losses in the United Kingdom are not subject to expiration and are not material in the consolidated financial statements At March 31, 2019, the Company has $591 of US foreign tax credits which begin to expire in March 2029 and for which a full valuation allowance has been recorded. The Company also has $12,935 of net operating losses, or NOLs as of March 31, 2019, which begin to expire in 2038 and $1,843 of capital loss carryover which begin to expire in 2020. The Company has determined that it is more likely than not that the results of future operations will generate sufficient taxable income to realize $12,285 of these deferred tax assets for which a valuation allowance is not provided. During the fiscal year ended March 31, 2019, the Company recorded $854 of net income tax benefit directly in other comprehensive income (loss) related to the unrealized gain (loss) on available for sale securities, the unrealized gain/loss on effective cash flow hedges and the foreign currency loss on certain long-term intercompany balances. During the fiscal year ended March 31, 2019, the Company recognized $3,388 of net income tax benefit related to a windfall in the tax benefits of share-based compensation which was recorded as an income tax benefit in the consolidated statement of income (loss) pursuant to ASU 2016-09. During the fiscal year ended March 31, 2019, the Company elected to treat several foreign entities as disregarded entities. The earnings of these subsidiaries will be subject to US taxation as well as local taxation with a corresponding foreign tax credit or deduction, at the election of the Company. The election resulted in a deferred tax charge of $2,674 during fiscal year ended March 31, 2019. The election also makes available to the Company benefits of foreign tax credits. The Company’s income tax provision for the fiscal year ended March 31, 2019 includes the expected impact of GILTI and executive compensation limitations of the Tax Cuts and Jobs Act (the “Tax Act”) impacting the operating results for the Company’s 2019 fiscal year ended March 31, 2019. The Company’s aggregate income tax rate in foreign jurisdictions is comparable to its income tax rate in the United States, as a result of the Tax Act, other than in jurisdictions in which the Company has tax holiday benefits. The Company’s effective tax rate for the fiscal year ended March 31, 2019 was significantly impacted by electing disregarded entity treatment for certain foreign subsidiaries, GILTI provisions and executive compensation limitations and base erosion anti-abuse tax (BEAT) enacted in the Tax Act, enacted on December 22, 2017 by the U.S. government. The Company’s reported effective tax rate is also impacted by jurisdictional mix of profits and losses in which the Company operates, foreign statutory tax rates in effect, unusual or infrequent discrete items requiring a provision and certain exemptions or tax holidays applicable to the Company. During the fiscal year ended March 31, 2019, the Company made a final assessment of the deemed repatriation tax on unremitted earnings and the remeasurement of the Company’s opening U.S. deferred tax assets to reflect the lower statutory rate by the Tax Act. The Company recognized a $1,628 reduction to income tax expense related to the deemed repatriation of unremitted earnings as the Company finalized its provisional calculation related to the enactment of the Tax Act. The total impact from the Tax Act was $16,207. At March 31, 2019, the remaining deemed repatriation balance is $14,599, of which $1,137 is included in income tax payable and $13,461 is included in long-term liabilities in the consolidated balance sheet. The Company has elected to pay the deemed repatriation tax on unremitted earnings in eight installments through the fiscal year 2025. In July 2018, the Company paid approximately $1,427 representing the first year installment out of the eight yearly installments. The U.S. Tax Act subjects a U.S. shareholder to GILTI earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or provide for the tax expense related to GILTI in the year the tax is incurred. The Company has elected to provide for GILTI in the year incurred. The Company’s results for the fiscal year ended March 31, 2019 include the expected impact of GILTI. The Company’s Indian subsidiaries operate several development centers in areas designated a special economic zone, or SEZ, under the SEZ Act of 2005. In particular, the Company was approved as an SEZ Co-developer and has built a campus on a 6.3 acre parcel of land in Hyderabad, India that has been designated as an SEZ. As an 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 other units at various stages of tax holiday benefit in different locations in India. In addition, the Company’s Sri Lankan subsidiary, Virtusa (Private) Limited, is operating under a 12-year income tax holiday arrangement that expires 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, 2019, the Company believes it had fulfilled its hiring and investment commitments and is eligible for tax holiday through March 2019. The India and Sri Lanka income tax holidays reduced the overall tax provision and increased both net income and diluted earnings per share in the fiscal years ended March 31, 2019, 2018 and 2017 by $5,778 $7,727 and $7,973, respectively, and by $0.19, $0.26 and $0.27, respectively. As of March 31, 2019, two SEZ tax holidays in Chennai and Hyderabad, India are in the eleventh year, subject to a partial expiration of fifty percent of their tax benefits, may be extended on a limited basis for an additional five years per unit if certain reinvestment criteria are met. 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 indefinitely reinvested. The Company does not provide for U.S. income taxes on foreign currency translation or applicable withholding tax until a distribution is declared. At March 31, 2019, the Company had approximately $171,977 of cash, cash equivalents, short-term 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. 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. Each fiscal year, unrecognized tax benefits may be adjusted upon the closing of the statute of limitations for income tax returns filed in various jurisdictions. The total amount of unrecognized tax benefits that would reduce income tax expense and the effective income tax rate, if recognized, is $6,744, $7,544 and $7,612 as of March 31, 2019, 2018 and 2017, respectively. Although it would be difficult to anticipate the final outcome on timing of resolution of any particular uncertain tax position, the Company anticipates that $10 of unrecognized tax benefits will reverse during the twelve- month period ending March 31, 2020 due to settlement or expiration of statute of limitations on open tax years. All of these benefits are expected to have an impact on the effective tax rate as they are realized. The following summarizes the activity related to the gross unrecognized tax benefits: Year Ended March 31, 2019 2018 2017 Balance at beginning of the fiscal year $ 7,544 $ 7,612 $ 6,693 Foreign currency translation related to prior year tax positions (472) 105 122 Decreases related to prior year tax positions (770) (332) — Decreases related to prior year tax positions due to settlements or lapse in applicable statute of limitations (206) (335) (597) Increases related to prior year tax positions 648 494 1,394 Balance at end of the fiscal year $ 6,744 $ 7,544 $ 7,612 The Company continues to classify accrued interest and penalties related to unrecognized tax benefits in income tax expense. During the fiscal years ended March 31, 2019 and 2018, the Company expensed accrued interest and penalties of $311 and $162, respectively, through income tax expense consistent with its prior positions, to reflect interest and penalties on certain unrecognized tax benefits as part of income tax. The total accrued interest and penalties, including foreign currency translation relating to certain foreign and domestic tax matters at March 31, 2019 and 2018, were $1,572 and $1,567, respectively. During the fiscal year ended March 31, 2019, the Company’s unrecognized tax benefits decreased by $800. The decrease in the unrecognized tax benefits during the fiscal year ended March 31, 2019 was predominantly due to foreign currency movements and the settlement of a prior period position offset by increases for incremental interest accrued on existing uncertain tax positions. The net movement in unrecognized tax benefits for the fiscal year ended March 31, 2019 was as follows: $277 benefit recorded to income tax expense and $51 for cash settlements offset by $472 to other comprehensive income (loss) for foreign currency impact. The Company has recorded unrecognized tax benefits in long-term liabilities if settlement is not expected in the next year. The Company has been under income tax examination in India, the U.K and the United states. The Indian taxing authorities issued an assessment order with respect to their examination of the various tax returns for the fiscal years ended March 31, 2005 to March 31, 2014 of the Company’s Indian subsidiary, Virtusa (India) Private Ltd, now merged with and into Virtusa Consulting Services Private Limited (collectively referred to as “Virtusa India”). At issue were several matters, the most significant of which was the redetermination of the arm’s-length profit which should be recorded by Virtusa India on the intercompany transactions with its affiliates. During the fiscal year ended March 31, 2011, the Company entered into a competent authority settlement and settled the uncertain tax position for the fiscal years ended March 31, 2004 and 2005. However, the redetermination of arm’s-length profit on transactions with respect to the Company’s subsidiaries and Virtusa UK Limited has not been resolved and remains under appeal for the fiscal year ended March 31, 2005. The Company is currently appealing assessments for fiscal years ended March 31, 2005 through 2014. In the United Kingdom, the Company is currently under examination for transfer pricing and research benefits for the years ended March 31, 2014 to March 31, 2017. In the United States, the IRS has initiated an examination of fiscal years ended March 31, 2015 and March 31, 2017. |
Post-retirement Benefits
Post-retirement Benefits | 12 Months Ended |
Mar. 31, 2019 | |
Post-retirement Benefits | |
Post-retirement Benefits | (17) Post‑retirement Benefits The Company has noncontributory defined benefit plans (the “Benefit Plans”) covering its employees in India and Sri Lanka as mandated by the Indian and Sri Lankan governments. Benefits are based on the employee’s years of service and compensation at the time of termination. The Company uses March 31 as the measurement date for its plans. Cost of pension plans Year Ended March 31, 2019 2018 2017 Components of net periodic pension expense Expected return on plan assets $ (807) $ (692) $ (606) Service costs for benefits earned 1,914 1,464 1,326 Interest cost on projected benefit obligation 741 660 580 Amortization of prior service cost 44 9 9 Recognized net actuarial loss 146 138 135 Net periodic pension expense $ 2,038 $ 1,579 $ 1,444 In accordance with the recently adopted FASB ASU 2017-07, Compensation—Retirement Benefits (Topic 715), “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost, the Company presented the service cost component in costs of revenue and selling, general and administrative expenses. The other components of net periodic pension cost are presented within other (income) expense in the Consolidated Statements of Income (Loss). The adoption of this guidance did not have a material impact on the consolidated financial statements, therefore, the Company did not retrospectively change the presentation of the financial statements. Actuarial assumptions Year Ended March 31, 2019 2018 2017 Discount rate 7.10 % - 11.16 % 7.30 % - 10.34 % 6.75 % - 12.00 % Compensation increases (annual) 5.00 % - 8.00 % 5.00 % - 8.00 % 5.00 % - 7.50 % Expected return on assets 7.00 % - 11.87 % 7.50 % - 12.20 % 7.50 % - 11.98 % The discount rate is based upon high quality fixed income investments in India and Sri Lanka. The discount rates at March 31, 2019 were used to measure the year‑end benefit obligations and the pension cost for the subsequent year. To determine the expected long‑term rate of return on pension plan assets, the Company considers the current and expected asset allocations, as well as historical and expected returns on various categories of plan assets. The Company amortizes unrecognized actuarial gains or losses over a period no longer than the average future service of employees. The Company’s benefit obligations are described in the following tables. Accumulated and projected benefit obligations (“ABO” and “PBO”, respectively) represent the obligations of a pension plan for past service as of the measurement date. ABO is the present value of benefits earned to date with benefits computed based on current compensation levels. PBO is ABO increased to reflect expected future compensation. Accumulated benefit obligation and projected benefit obligation As of March 31, 2019 2018 Accumulated benefit obligation $ 8,208 $ 7,260 Projected benefit obligation: Beginning balance $ 10,524 $ 9,148 Service cost 1,914 1,779 Interest cost 741 660 Actuarial (gain) loss 698 (62) Benefits paid (1,398) (930) eTouch SPA transaction & plan combination 259 — Exchange rate adjustments (810) (71) Ending balance $ 11,928 $ 10,524 Fair value of plan assets As of March 31, 2019 2018 Beginning balance $ 9,885 $ 7,832 Employer contributions 1,794 2,646 Actual return on plan assets 518 394 Actuarial loss (3) (9) Benefits paid (1,398) (930) Exchange rate adjustments (741) (48) Balance at March 31, 2019 $ 10,055 $ 9,885 At March 31, 2019, 2018 India and Sri Lanka together had $1,873, $639, respectively, net projected benefit obligation recorded in the consolidated balance sheets as “accrued employee compensation and benefits”. Plan asset allocation March 31, 2019 Target Actual Allocation Allocation Government securities % - % % Corporate debt % - % % Other % - % % The Company’s plan assets are being managed by insurance companies in India and Sri Lanka. Plan Assets The following table presents the fair values of the Company’s pension plan assets. Fair Value Measurements Quoted Prices in Significant Active Markets for Observable Identical Assets Inputs Asset Category Total (Level 1) (Level 2) At March 31, 2019 Government Bonds(1) $ 4,975 — 4,975 Corporate Bonds(2) 4,097 — 4,097 Equity Shares and Others(3) 983 346 637 $ 10,055 $ 346 $ 9,709 At March 31, 2018 Government Bonds(1) $ 3,991 $ — $ 3,991 Corporate Bonds(2) 4,723 — 4,723 Equity Shares and Others(3) 1,171 365 806 $ 9,885 $ 365 $ 9,520 (1) This category comprises government fixed income investments with investments in India and Sri Lanka. (2) This category represents investment in bonds and debentures from diverse industries. (3) This category represents equity shares, money market investments and other investments. The fair values of the government bonds are measured based on market quotes. Corporate bonds and other bonds are valued based on market quotes as of the balance sheet date. Equity share funds are valued at their market prices as of the balance sheet date. Money market funds are valued at their market price. Pension liability March 31, 2019 2018 PBO $ 11,928 $ 10,524 Fair value of plan assets 10,055 9,885 Funded status recognized $ 1,873 $ 639 Amount recorded in accumulated other comprehensive income $ 2,402 $ 1,763 The amount in accumulated other comprehensive income (loss) that is expected to be recognized as a component of net periodic benefit cost over the fiscal year ended March 31, 2020 is $186. The Company expects to contribute $4,501 to its gratuity plans during the fiscal year ending March 31, 2020. The pretax amounts of prior service cost and actuarial gain (loss) recognized from accumulated other comprehensive income consists of: March 31, 2019 2018 2017 Prior service cost $ (44) $ (9) $ (9) Net amortization gain (loss) (146) (138) (135) Total $ (190) $ (147) $ (144) Estimated future benefits payments Fiscal year ending March 31 : 2020 $ 1,639 2021 1,771 2022 1,991 2023 2,296 2024 2,794 2025 - 2028 $ 16,086 On February 28, 2019, Supreme Court of India issued a ruling interpreting certain statutory defined contribution obligations of employees and employers, which altered historical understandings of such obligations, extending them to cover additional portions of employee income. As a result, contributions by the Company’s employees and the Company will increase in future periods. There is uncertainty as to whether the Indian government will apply the Supreme Court's ruling on a retroactive basis and if so, how this liability should be calculated as it is impacted by multiple variables, including the period of assessment, the application with respect to certain current and former employees and whether interest and penalties may be assessed. If the Indian Government were to apply the Supreme Court ruling retroactively, without assessing interest and penalties, the impact would be a charge of approximately $6,400 to the Company’s income from operations and cash flows. |
401(k) Plan
401(k) Plan | 12 Months Ended |
Mar. 31, 2019 | |
401(k) Plan | |
401(k) Plan | (18) 401(k) Plan The Company sponsors a defined contribution retirement savings plan, qualified under Section 401(k) of the Internal Revenue Code (the “401(k) Plan”). Eligible employees may defer a portion of their compensation into the Company’s 401(k) Plan on a pre‑tax and/or Roth basis. The Company’s 401(k) Plan currently offers a safe harbor match feature that provides Company matching contributions for certain employee contributions. For the fiscal periods ended March 31, 2019, 2018 and 2017, the Company recorded $2,091, $1,407 and $1,305 for the employer match, respectively. The Company’s 401(k) Plan may be amended at the discretion of the Company’s board of directors to discontinue the safe harbor match program at any time. |
Redeemable noncontrolling inter
Redeemable noncontrolling interest | 12 Months Ended |
Mar. 31, 2019 | |
Redeemable noncontrolling interest | |
Redeemable noncontrolling interest | (19) Redeemable noncontrolling interest On March 3, 2016, the Company’s Indian subsidiary, Virtusa Consulting Services Private Limited (“Virtusa India”), acquired approximately 51.7% of the fully diluted shares of Polaris Consulting & Services Limited (“Polaris”) for approximately $168,257 in cash (the “Polaris Transaction”) pursuant to a share purchase agreement dated as of November 5, 2015, by and among Virtusa India, Polaris and the promoter sellers named therein. Through a series of transactions and in compliance with the applicable Indian rules on takeovers and SEBI Delisting Regulations, Virtusa increased its ownership interest in Polaris from 51.7% to 93.0% by February 12, 2018, when Virtusa consummated its Polaris delisting offer with respect to the public shareholders of Polaris. The delisting offer resulted in an accepted exit price of INR 480 per share (“Exit Price”), for an aggregate consideration of approximately $145,000, exclusive of transaction and closing costs. On July 11, 2018, the stock exchanges on which Polaris common shares are listed notified Polaris that trading in equity shares of Polaris would be discontinued and delisted effective on August 1, 2018. For a period of one year following the date of delisting, Virtusa India will, in compliance with SEBI Delisting Regulations, permit the public shareholders of Polaris to tender their shares for sale to Virtusa India at the Exit Price. In connection with the Polaris delisting offer, during the fiscal year ended March 31, 2019, Virtusa India purchased 4,669,716 shares, or approximately 4.52% of Polaris common stock from shareholders for an aggregate purchase price of approximately $31,979. As of March 31, 2019, the Polaris common stock held by noncontrolling interest shareholders was 3,227,592 or approximately 3.13% of Polaris’ basic shares of common stock outstanding. In accordance with ASC 480, Distinguishing Liabilities from Equity, the Company has recorded the fair value of these shares as well as comprehensive income attributable to noncontrolling interest totaling $22,309 and presented this in the mezzanine section of the consolidated balance sheet as redeemable noncontrolling interest. As of March 31, 2019, the Company had approximately $776 of Polaris stock options at fair value that were reclassified to current liabilities related to a deemed cash settlement modification resulting from the delisting offer. |
Accumulated Other Comprehensive
Accumulated Other Comprehensive Loss | 12 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Loss. | |
Accumulated Other Comprehensive Loss | (20) Accumulated Other Comprehensive Loss March 31, 2019 2018 2017 Investment securities Beginning balance $ 69 $ 57 $ 23 Other comprehensive income (loss) (OCI) before reclassifications, net of tax of $58, $108, $57 (219) 175 72 Reclassifications from OCI to other income, net of tax of $20, $(246), $3 150 (190) 6 Less: Noncontrolling interests, net of tax of $7, $15, $(23) 12 27 (44) Comprehensive income (loss) on investment securities, net of tax of $85, $(123), $37 (57) 12 34 Closing balance $ 12 $ 69 $ 57 Currency translation adjustments Beginning balance $ (41,207) $ (50,415) $ (45,211) OCI before reclassifications (17,305) 8,262 (3,810) Less: Noncontrolling interests 1,158 946 (1,394) Comprehensive income (loss) on currency translation adjustments (16,147) 9,208 (5,204) Closing balance $ (57,354) $ (41,207) $ (50,415) Cash flow hedges Beginning balance $ 1,881 $ 11,789 $ 3,934 OCI before reclassifications net of tax of $(1,966), $1,265, $6,713 (4,104) 2,428 16,328 Reclassifications from OCI to —Revenue, net of tax of $738, $(3,036), $(1,432) 1,375 (5,651) (2,706) —Costs of revenue, net of tax of $392, $(1,543), $(1,015) 1,089 (4,855) (3,526) —Selling, general and administrative expenses, net of tax of $175, $(852), $(611) 488 (2,748) (2,107) —Interest expenses, net of tax of $(251), $(64),$0 (714) (160) Less: Noncontrolling interests, net of tax of $13, $571 $(71) 24 1,078 (134) Comprehensive income (loss) on cash flow hedges, net of tax of $(899), $(3,659) $3,583 (1,842) (9,908) 7,855 Closing balance $ 39 $ 1,881 $ 11,789 Benefit plans Beginning balance $ (1,424) $ (1,180) $ (885) OCI before reclassifications net of tax of $40, $(198), $(227) (1,024) (364) (379) Reclassifications from OCI for prior service credit (cost) to: —Costs of revenue, net of tax of $0, $34, $32 — 62 53 —Selling, general and administrative expenses, net of tax of $0, $15, $18 — 27 32 Other income (expense), net of tax of $13, $0, $0 137 — — Reclassifications from net actuarial gain (loss) amortization to: —Costs of revenue, net of tax of $0, $3, $3 — 5 5 —Selling, general and administrative expenses, net of tax of $0 for all periods — 1 1 Other income (expense), net of tax of $3, $0, $0 41 — — Other adjustments, net of tax of $(17), 0, 0 159 20 12 (Less): Noncontrolling interests, net of tax $9, $2, $(10) 27 5 (19) Comprehensive income (loss) on benefit plans, net of tax of $48, $(144), $(184) (660) (244) (295) Closing balance (2,084) $ (1,424) $ (1,180) Accumulated other comprehensive loss $ (59,387) $ (40,681) $ (39,749) |
Commitments, Contingencies and
Commitments, Contingencies and Guarantees | 12 Months Ended |
Mar. 31, 2019 | |
Commitments, Contingencies and Guarantees | |
Commitments, Contingencies and Guarantees | (21) Commitments, Contingencies and Guarantees The Company leases office space under operating leases, which expire at various dates through fiscal year 2029. Certain leases contain renewal provisions and generally require the Company to pay utilities, insurance, taxes, and other operating expenses. Future minimum lease payments related to operating leases for the five fiscal years following March 31, 2019 and thereafter are: Operating Capital Leases Leases Fiscal year ending March 31, : 2020 $ 14,685 $ 38 2021 13,895 13 2022 12,663 1 2023 9,879 — 2024 5,686 — 2025 and thereafter 16,761 — Total minimum lease payments $ 73,569 52 Less: amount representing interest 4 Present value of future lease payments 48 Less: current portion 35 Long term capital lease obligation $ 13 Total rental expense for operating leases was approximately $14,569 $12,011 and $11,701 for the fiscal years ended March 31, 2019, 2018 and 2017, respectively. The future minimum lease payments to be received in the future under non-cancellable sublease are $956. Total amortization expenses for the assets purchased under capital leases were $66, $88 and $116 for the fiscal year ended March 31, 2019, 2018 and 2017 respectively. The Company indemnifies its officers and directors for certain events or occurrences under its charter or by‑laws and under indemnification agreements while the officer or director is, or was, serving at its request in a defined capacity. The term of the indemnification period is with respect to the period that such person was an officer or director of the Company. The maximum potential amount of future payments the Company could be required to make under these indemnification obligations is unlimited. The costs incurred to defend lawsuits or settle claims related to these indemnification obligations have not been material. As a result, the Company believes that its estimated exposure on these obligations is minimal. Accordingly, the Company had no liabilities recorded for these obligations as of March 31, 2019. The Company is insured against any actual or alleged act, error, omission, neglect, misstatement or misleading statement or breach of duty by any current or former officer, director or employee while rendering information technology services. The Company believes that its financial exposure from such actual or alleged actions, should they arise, is minimal and no liability was recorded at March 31, 2019. The Company is not a party to any pending litigation or other legal proceedings that are likely to have a material adverse effect on its consolidated financial statements. |
Derivative Financial Instrument
Derivative Financial Instruments | 12 Months Ended |
Mar. 31, 2019 | |
Derivative Financial Instruments | |
Derivative Financial Instruments | (22) 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 and consolidated statement of cash flows from all foreign currencies, including most significantly the U.K. pound sterling, 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 18‑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 Balance Sheet Program is currently inactive. 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, the Canadian dollar, the Australian dollar 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 under the same line item as the underlying exposure being hedged. The Company is exposed to credit losses in the event of non-performance by the counterparties on its financial instruments. All counterparties currently have investment grade credit ratings. The Company anticipates that these counterparties will be able to fully satisfy their obligations under the contracts. The Company has derivative contracts with six counterparties as of March 31, 2019. The Company's agreements with its counterparties contain provisions pursuant to which the Company could be declared in default of its derivative obligations. As of March 31, 2019, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of March 31, 2019, it could have been required to settle its obligations under these agreements at amounts which approximate the March 31, 2019 fair values reflected in the table below. During the fiscal year ended March 31, 2019, the Company was not in default of any of its derivative obligations. Changes in fair value of the designated cash flow hedges for our 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 statements of income 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 hedge relationships are discontinued, and should the forecasted transaction be deemed probable of not occurring by the end of the originally specified period or within an additional two‑month period of time thereafter, any related derivative amounts recorded in equity are reclassified to earnings in other income (expense). There were no amounts reclassified to earnings as a result of hedge ineffectiveness for the fiscal year ended March 31, 2019 and 2018. Changes in the fair value of the hedges for the Balance Sheet Program and the Economic Hedge Program, if any, are recognized in the same line item as the underlying exposure being hedged and the ineffective portion of cash flow hedges, if any, is recognized as other income (expense). The Company values 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. The U.S. dollar notional value of all outstanding foreign currency derivative contracts was $118,557 and $140,347 at March 31, 2019 and 2018, respectively. Unrealized net gains related to these contracts which are expected to be reclassified from AOCI to earnings during the next 12 months are $2,946 at March 31, 2019. At March 31, 2019, the maximum outstanding term of any derivative instrument was 15 months. The Company also uses interest rate swaps to mitigate the Company's interest rate risk on the Company's variable rate debt. The Company's objective is to limit the variability of cash flows associated with changes in LIBOR interest rate payments due on the Credit Agreement (see Note 13 to the Consolidated financial statements), by using pay-fixed, receive-variable interest rate swaps to offset the future variable rate interest payments. The Company will recognize these transactions in accordance with ASC 815 "Derivatives and Hedging," and have designated the swaps as cash flow hedges. The Company purchased interest rate swaps in July 2016 with an effective date of July 2017 and in November 2018. The July 2016 interest rate swaps are at a blended weighted average of 1.025% and the Company will receive 1-month LIBOR on the same notional amounts. The November 2018 interest rate swaps were entered into to mitigate the interest rate risk associated with the Credit Agreement executed in February 2018 and subsequent additional borrowings. The November 2018 interest rate swaps are at a fixed rate of 2.85% and are designed to maintain a 50% coverage of our LIBOR debt, therefore the notional amount changes over the life of the swap to retain the 50% coverage target. At March 31, 2019, the total notional amounts of the interest rate swaps were $183,500 with remaining maturity of approximately 4 years. The unrealized loss in associated with the 2016 Swap Agreements was $2,284 and $2,486 at March 31, 2019 and March 31, 2018, respectively, which represents the estimated amount that the Company would pay to the counterparties in the event of an early termination. The counterparties to the Interest Rate Swap Agreements could demand an early termination of the June 2016 and November 2018 Swap Agreements if we are in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and we are unable to cure the default. An event of default under the Credit Agreement includes customary events of default and failure to comply with financial covenants, including a maximum consolidated leverage ratio commencing on December 31, 2017, of not more than 3.50 to 1.00 for periods ending prior to December 31, 2019, of not more than 3.25 to 1.00 commencing December 31, 2019 and for periods ending prior to September 30, 2020, and 3.00 to 1.00 thereafter and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00. As of December 31, 2018, the Company is in compliance with these covenants. The net unrealized loss associated with Interest Rate Swap Agreements was $2,284 as of March 31, 2019, which represents the estimated amount that the Company would pay to the counterparties in the event of an early termination. The following tables set forth the fair value of derivative instruments included in the consolidated balance sheets at March 31, 2019 and March 31, 2018: Derivatives designated as hedging instruments March 31, 2019 March 31, 2018 Foreign currency exchange contracts: Other current assets $ 3,264 $ 2,109 Other long-term assets $ 147 $ 13 Accrued expenses and other $ 318 $ 1,023 Long-term liabilities $ 3 $ — March 31, 2019 March 31, 2018 Interest rate swap contracts : Other long-term assets $ 1,349 $ 2,486 Long-term liabilities $ 3,633 $ — The following tables set forth the effect of the Company’s foreign currency exchange and interest rate swap contracts on the consolidated financial statements of the Company for the fiscal years ended March 31, 2019 and 2018: Recognized in AOCI on Derivatives Designated as Derivatives Cash Flow Hedging Relationships March 31, 2019 March 31, 2018 Foreign currency exchange contracts $ (2,266) $ 2,825 Interest rate swaps $ (3,804) $ 868 Reclassified from AOCI into Location of Gain or (Loss) Reclassified Income from AOCI into Income March 31, 2019 March 31, 2018 Revenue $ (2,113) $ 8,687 Costs of revenue $ (1,481) $ 6,398 Operating expenses $ (663) $ 3,600 Interest Expenses $ 965 $ 224 Amount of Gain or (Loss) Recognized in Income Derivatives not Designated Location of Gain Or (Loss) on Derivatives as Hedging Instruments Recognized in Income on Derivatives March 31, 2019 March 31, 2018 Foreign currency exchange contracts Foreign currency transaction gains (losses) $ — Revenue $ 1,427 $ (171) Costs of revenue $ (941) $ 73 Selling, general and administrative expenses $ (41) $ (47) |
Business Segment Information
Business Segment Information | 12 Months Ended |
Mar. 31, 2019 | |
Business Segment Information | |
Business Segment Information | (23) Business Segment Information Accounting pronouncements establish standards for the manner in which public companies report information about operating segments in annual and interim financial statements. Operating segments are components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-maker on deciding on how to allocate resources and in assessing performance. The Company’s chief operating decision-maker is considered to be the Company’s Chief Executive Officer. The Company’s Chief Executive Officer reviews financial information presented on an entity level basis for purposes of making operating decisions and assessing financial performance. Therefore, the Company has determined that it operates in a single operating and reportable segment. Geographic information: Total revenue is attributed to geographic areas based on location of the client. Geographic information is summarized as follows: Year Ended March 31, 2019 2018 2017 Customer revenue: United States of America $ 843,791 $ 628,147 $ 532,244 United Kingdom 209,232 195,547 164,970 Rest of World 194,840 196,975 161,517 Consolidated revenue $ 1,247,863 $ 1,020,669 $ 858,731 March 31, March 31, 2019 2018 Long-lived assets, net of accumulated depreciation and amortization: United States of America $ 216,279 $ 213,024 India 251,722 276,512 Rest of World 23,847 25,281 Consolidated long-lived assets, net $ 491,848 $ 514,817 |
Quarterly Results of Operations
Quarterly Results of Operations (unaudited) | 12 Months Ended |
Mar. 31, 2019 | |
Quarterly Results of Operations (unaudited) | |
Quarterly Results of Operations (unaudited) | (24) Quarterly Results of Operations (unaudited) Three Months Ended March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, 2019 2018 2018 2018 2018 2017 2017 2017 Revenue $ 327,631 $ 314,681 $ 305,520 $ 300,031 $ 281,341 $ 263,809 $ 248,174 $ 227,345 Costs of revenue 230,364 221,461 216,346 216,481 197,342 183,420 178,404 166,279 Gross profit 97,267 93,220 89,174 83,550 83,999 80,389 69,770 61,066 Operating expenses 74,227 73,935 75,155 69,626 67,624 66,726 59,491 54,996 Income from operations 23,040 19,285 14,019 13,924 16,375 13,663 10,279 6,070 Other income (expense) (9,930) 3,912 (12,461) (13,625) (5,582) 2,843 (1,187) (625) Income before income tax expense 13,110 23,197 1,558 299 10,793 16,506 9,092 5,445 Income tax expense (benefit) 4,611 10,400 (402) 5,864 6,163 24,427 1,500 798 Net income (loss) 8,499 12,797 1,960 (5,565) 4,630 (7,921) 7,592 4,647 Noncontrolling interest 138 221 455 731 1,747 2,134 2,824 989 Net income (loss) available to Virtusa stockholders $ 8,361 $ 12,576 $ 1,505 $ (6,296) $ 2,883 $ (10,055) $ 4,768 $ 3,658 Less: Series A Convertible Preferred Stock dividends and accretion 1,088 1,087 1,088 1,087 1,088 1,087 1,087 701 Net income (loss) available to Virtusa common stockholders 7,273 11,489 $ 417 $ (7,383) $ 1,795 (11,142) $ 3,681 $ 2,957 Basic earnings (loss) per share available to Virtusa common stockholders (1) $ 0.24 $ 0.38 $ 0.01 $ (0.25) $ 0.06 $ (0.38) $ 0.13 $ 0.10 Diluted earnings (loss) per share available to Virtusa common stockholders (1) $ 0.24 $ 0.37 $ 0.01 $ (0.25) $ 0.06 $ (0.38) $ 0.12 $ 0.10 (1) Earnings (loss) per share amounts for each quarter may not total to the yearly earnings (loss) per share due to the weighting of shares outstanding on a quarterly and year-to-date basis . |
Schedule II-Valuation and Quali
Schedule II-Valuation and Qualifying Accounts | 12 Months Ended |
Mar. 31, 2019 | |
Schedule II-Valuation and Qualifying Accounts | |
Schedule II-Valuation and Qualifying Accounts | Balance at Charged to Balance at Beginning Costs and Deductions/ End of Description of Period Expenses Other Period (In thousands) Accounts receivable allowance for doubtful accounts: Year ended March 31, 2017 $ 1,046 $ 1,015 $ (256) $ 1,805 Year ended March 31, 2018 $ 1,805 $ 1,248 $ 275 $ 3,328 Year ended March 31, 2019 $ 3,328 $ 864 $ (1,939) $ 2,253 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Mar. 31, 2019 | |
Summary of Significant Accounting Policies | |
Principles of Consolidation | (a) 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. For those majority-owned subsidiaries that are not 100% owned by the Company, the interests of the minority owners are accounted for as noncontrolling interests. |
Use of Estimates | (b) 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 reported period. Management re‑evaluates 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, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, intangible assets, 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. |
Foreign Currency Translation | (c) The functional currencies of the Company’s non-U.S. subsidiaries are the local currency of the country in which the subsidiary operates except for Hungary, which uses the euro and certain Netherlands entities, which use the U.S. dollar. Operating and capital expenditures of the Company’s subsidiaries located in India, Sri Lanka, the Netherlands, Australia, Canada, Singapore, Malaysia, the Philippines, Germany, Austria, Sweden and the United Kingdom, are denominated in their local currency which is the currency most compatible with their expected economic results. India and Sri Lanka local expenditures form the underlying basis for intercompany transactions which are subsequently conducted in both U.S. dollars and U.K. pounds sterling. U.K. client sales contracts are primarily conducted in U.K. pounds sterling. All transactions and account balances are recorded in the functional currency. The Company translates the value of these non‑U.S. subsidiaries’ local currency denominated assets and liabilities into U.S. dollars at the rates in effect at the balance sheet date. Resulting translation adjustments are recorded in stockholders’ equity as a component of accumulated other comprehensive income (loss). The local currency denominated statement of income amounts are translated into U.S. dollars using the average exchange rates in effect during the period. Realized foreign currency transaction gains and losses are included in the consolidated statements of income (loss). The Company’s non‑U.S. subsidiaries do not operate in “highly inflationary” countries. |
Derivative Instruments and Hedging Activities | (d) The Company enters into forward foreign exchange contracts to mitigate the risk of changes in foreign exchange rates on intercompany transactions and forecasted transactions denominated in foreign currencies. The Company also enters into interest rate swaps to mitigate interest rate risk on the Company’s variable rate debt. The Company designates derivative contracts as cash flow hedges and any ineffective portions if they satisfy the criteria for hedge accounting. Changes in fair values of derivatives designated as cash flow hedges are deferred and recorded as a component of accumulated other comprehensive income, net of taxes, until the hedged transactions occur and are then recognized in the consolidated statements of income, the effective components are recognized in the same line item as the underlying and any ineffective components would be recognized as other income (expense). Changes in fair value of derivatives not designated as hedging instruments are recognized immediately in the consolidated statements of income. With respect to derivatives designated as cash flow hedges, the Company formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. The Company also formally assesses both at the inception of the hedge and on an ongoing basis, whether each derivative will be highly effective in offsetting changes in fair values or cash flows of the hedged item. If the Company determines that a derivative or a portion thereof is not highly effective as a hedge, or if a derivative ceases to qualify for hedge accounting, the Company prospectively discontinues hedge accounting with respect to that derivative. |
Cash and Cash Equivalents and Restricted Cash | (e) The Company considers all highly liquid investments with an initial maturity of three months or less from the date of purchase to be cash equivalents. At March 31, 2019, cash equivalents consisted of money market instruments and certificates of deposit. The Company had short-term and long-term restricted cash totaling $437 and $338 at March 31, 2019 and 2018, respectively. Restricted cash includes the restricted deposits with banks to secure the import of computer and other equipment and bank guarantees associated with the purchase of property and equipment of the Company’s facilities in India. |
Investment Securities | (f) The Company classifies its investment securities as available for sale securities and equity securities. These securities are classified as short‑term investments and long‑term investments on the consolidated balance sheet based on their maturity dates and are carried at fair market value. Any unrealized gains and losses on available for sale securities are reported in accumulated other comprehensive income (loss), net of tax, as a separate component of stockholders’ equity unless the decline in value is deemed to be other‑than‑temporary, in which case, investments are written down to fair value and the loss is charged to the consolidated statements of income (loss). Any unrealized gains and losses on equity securities are charged to the consolidated statements of income (loss). The Company determines the cost of the securities sold based on the specific identification method. The Company conducts a periodic review and evaluation of its investment securities to determine if the decline in fair value of any security is deemed to be other‑than‑temporary. Other‑than‑temporary impairment losses are recognized on securities when: (i) the holder has an intention to sell the security; (ii) it is more likely than not that the security will be required to be sold prior to recovery; or (iii) the holder does not expect to recover the entire amortized cost basis of the security. Other‑than‑temporary losses are reflected in earnings as a charge against gain on sale of investments to the extent the impairment is related to credit losses. The amount of the impairment related to other factors is recognized in other comprehensive income. The Company has no intention to sell any securities in an unrealized loss position at March 31, 2019 nor is it more likely than not that the Company would be required to sell such securities prior to the recovery of the unrealized losses. |
Goodwill and Other Intangible Assets | (g) The Company accounts for its business combinations under the acquisition method of accounting. The Company records the assets acquired and liabilities assumed based on their estimated fair values at the date of acquisition. The excess of the purchase price for acquisitions over the fair value of the net assets acquired, including other intangible assets, is recorded as goodwill. Goodwill is not amortized but is tested for impairment at the reporting unit level, defined as the Company level, in the fourth quarter of each fiscal year or more frequently when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. In assessing goodwill for impairment, an entity has the option to assess qualitative factors to determine whether events or circumstances indicate that it is not more likely than not that fair value of a reporting unit is less than its carrying amount. If this is the case, then performing the quantitative two‑step goodwill impairment test is unnecessary. An entity can choose not to perform a qualitative assessment for any or all of its reporting units, and proceed directly to the use of the two‑step impairment test. The two‑step process begins with an estimation of the fair value of a reporting unit. Goodwill impairment exists when a reporting unit’s carrying value of goodwill exceeds its implied fair value. Significant judgment is applied when goodwill is assessed for impairment. For the Company’s goodwill impairment analysis, the Company operates under one reporting unit. Any impairment would be measured based upon the fair value of the related assets. In performing the first step of the goodwill impairment testing and measurement process, the Company compares its entity‑wide estimated fair value to net book value to identify potential impairment. Management estimates the entity‑wide fair value utilizing the Company’s market capitalization, plus an appropriate control premium. Market capitalization is determined by multiplying the shares outstanding on the assessment date by the market price of the Company’s common stock. If the fair value of the reporting unit is less than the book value, the second step is performed to determine if goodwill is impaired. If the Company determines through the impairment evaluation process that goodwill has been impaired, an impairment charge would be recorded in the consolidated statement of income. The Company completed the annual impairment test required during the fourth quarter of the fiscal year ended March 31, 2019 and determined that there was no impairment. The Company continues to closely monitor its market capitalization. If the Company’s market capitalization, plus an estimated control premium, is below its carrying value for a period considered to be other‑than‑temporary, it is possible that the Company may be required to record an impairment of goodwill either as a result of the annual assessment that the Company conducts in the fourth quarter of each fiscal year, or in a future quarter if an indication of potential impairment is evident. The estimated fair value of the reporting unit on the assessment date significantly exceeded the carrying book value. Other intangible assets acquired in a business combination are recognized at fair value using generally accepted valuation methods appropriate for the type of intangible asset and reported separately from goodwill. Intangible assets with definite lives are amortized over the estimated useful lives and are tested for impairment when events or circumstances occur that indicate that it is more likely than not that an impairment has occurred. The Company tests other intangible assets with definite lives for impairment by comparing the carrying amount to the sum of the net undiscounted cash flows expected to be generated by the asset whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. If the carrying amount of the asset exceeds its net undiscounted cash flows, then an impairment loss is recognized for the amount by which the carrying amount exceeds its fair value. |
Fair Value of Financial Instruments | (h) 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. At March 31, 2019 and 2018, 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, other accrued expenses and long-term debt, approximate their fair values due to the nature of the items. See Note 8 to the consolidated financial statements for further information of the fair value of the Company’s other financial instruments. |
Concentration of Credit Risk and Significant Customers | (i) Financial instruments which potentially expose the Company to concentrations of credit risk are primarily comprised of cash and cash equivalents, investments, derivatives, accounts receivable and unbilled accounts receivable. The Company places its cash, investments and derivatives in highly‑rated financial institutions. The Company adheres to a formal investment policy with the primary objective of preservation of principal, which contains credit rating minimums and diversification requirements. Management believes its credit policies reflect normal industry terms and business risk. The Company does not anticipate non‑performance by the counterparties and, accordingly, does not require collateral. At March 31, 2019, no client accounted for 10% of gross accounts receivable and at March 31, 2018, one client accounted for 10%, of gross accounts receivable. Revenue from significant clients as a percentage of the Company’s consolidated revenue was as follows: Year Ended March 31, 2019 2018 2017 Customer A % % % |
Property and Equipment | (j) Property and equipment are recorded at cost and depreciated over their estimated useful lives using the straight‑line method. Leasehold improvements are amortized over the shorter of their lease term or the estimated useful life of the related asset. Upon retirement or sale, the cost of assets disposed of and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is credited or charged to income. Repair and maintenance costs are expensed as incurred. |
Long-Lived Assets | (k) The Company reviews the carrying value of its long‑lived assets or asset groups with definite useful lives to be held and used for impairment whenever events or changes in circumstances indicate that the carrying value of these assets may not be recoverable. Recoverability of these assets is measured by a comparison of the carrying value of an asset to the future net undiscounted cash flows directly associated with the asset. If assets are considered to be impaired, the impairment recognized is the amount by which the carrying value exceeds the fair value of the asset. The Company uses a discounted cash flow approach or other methods, if appropriate, to assess fair value. Long‑lived assets to be disposed of by sale are reported at the lower of carrying value or fair value less cost to sell and depreciation is ceased. Long‑lived assets to be disposed of other than by sale are considered to be held and used until disposal. |
Internally-Developed Software | (l) The Company capitalizes costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation and testing. Costs incurred during the preliminary project stage, along with post‑implementation stages of internal use computer software, are expensed as incurred. Capitalized development costs are typically amortized over the estimated life of the software, typically three to ten years, using the straight line method, beginning with the date that an asset is ready for its intended use. At March 31, 2019 and 2018, capitalized software development costs, which include software development work in progress, were approximately $13,083 and $11,022, respectively. These costs were recorded in property and equipment. For the fiscal years ended March 31, 2019, 2018 and 2017, amortization of capitalized software development costs amounted to approximately $1,749, $2,377, and $1,702, respectively. |
Income Taxes | (m) Income Taxes Income taxes are accounted for using the asset and liability method whereby deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates in effect for the year in which those temporary differences are expected to be recovered or settled. Changes to enacted tax rates would result in either increases or decreases in the provision for income taxes in the period of changes. The Company evaluates the realizability of deferred tax assets and recognizes a valuation allowance when it is more likely than not that all, or a portion of, deferred tax assets will not be realized. The calculation of the Company’s tax liabilities involves uncertainties in the application of complex tax regulations in multiple jurisdictions. The Company records liabilities for estimated tax obligations in the United States and other tax jurisdictions in which it has operations (see Note 16 to the consolidated financial statements). The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based upon the technical merits of the position. The tax benefit recognized in the financial statements from such a position is measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. Also, interest and penalties expense are recognized on the full amount of deferred benefits for uncertain tax positions. The Company’s policy is to include interest and penalties related to unrecognized tax benefits in income tax expense. |
Revenue Recognition | (n) The Company accounts for a contract when it has approval and commitment from both parties, the rights of the parties are identified, payment terms are identified, the contract has commercial substance and collectability of consideration is probable. Revenues are recognized when control of the promised services is transferred to its customers in an amount that reflects the consideration the Company expects to be entitled to in exchange for those services. The Company generally recognizes revenue for services over time as the Company’s performance creates or enhances an asset that the customer controls from fixed price contracts related to complex design, development and customization. For these contracts, the Company measures the progress and recognizes revenue using effort-based input methods, as the Company performs, based on actual efforts spent compared to the total expected efforts for the contract. The use of the effort based input method requires significant judgment relative to estimating total efforts, including assumptions relative to the length of time to complete the project and the nature and complexity of the work to be performed. Estimates of total efforts are continuously monitored during the term of the contract and are subject to revision as the contract progresses. When revisions in estimated contract revenue and efforts are determined, such adjustments are recorded in the period in which they are first identified. An input method is used to recognize revenue as the value of services provided to the customer is best represented by the hours expended to deliver those services. The Company generally recognizes revenue for services over time as the customer simultaneously receives and consumes the benefits as the Company performs for fixed-price contracts related to consulting or other IT services. For these contracts, the Company measures the progress and recognizes revenue using effort-based input methods as the Company performs based on actual efforts spent compared to the total expected efforts for the contract. The cumulative impact of any change in estimates of the contract revenue is reflected in the period in which the changes become known. The Company has applied the as-invoiced practical expedient to recognize revenues for services the Company renders to customers on time and material basis contracts. The Company generally recognizes revenue from fixed-price applications management, maintenance, or support engagements over time as customers receive and consume the benefits of such services and has applied the as-invoiced practical expedient to recognize revenue for services the Company renders to customers based on the amount the Company has a right to invoice, which is representative of the value being delivered. Contracts are often modified to account for changes in contract specification and requirements. The Company considers a contract modification when the modification either creates new or changes the existing enforceable rights and obligations. The accounting for modifications involves assessing whether the services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Services added that are not distinct are accounted for on a cumulative catch up basis, while those that are distinct are accounted for prospectively, either as a separate contract if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price. Certain customers may receive discounts, incentive payments or service level credits. A portion of the revenues relating to such arrangements are accounted for as variable consideration when the amount of revenue to be recognized can be estimated to the extent that it is probable that a significant reversal of any revenue will not occur. The Company estimates these amounts based on the expected amount to be provided to customers and adjusts revenues recognized. The Company’s estimates the amount of variable consideration and determination of whether to include estimated amounts in the transaction price may involve judgment and are based largely on an assessment of the Company’s anticipated performance and all information that is reasonably available to us. From time to time, the Company may enter into contracts with customers that include multiple performance obligations. For such arrangements, the Company allocates revenue to each performance obligation based on its relative standalone selling price. The Company generally determines standalone selling prices based on an expected cost plus a margin approach. The Company’s warranties generally provide a customer with assurance that the related deliverable will function as the parties intended because it complies with agreed-upon specifications and is therefore not considered as an additional performance obligation in the contract. When the Company receives consideration from a customer prior to transferring services to the customer under the terms of a contract, the Company records deferred revenue, which represents a contract liability. The Company recognizes deferred revenue as revenue after the Company has transferred control of the services to the customer and all revenue recognition criteria are met. Unbilled accounts receivable represent revenue earned on contracts to be billed, in subsequent periods, as per the terms of the related contracts. The Company’s payment terms vary by the type and location of its customers. The term between invoicing and when payment is due is not significant. As a practical expedient, the Company does not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is one year or less. Revenue includes reimbursements of travel and out‑of‑pocket expenses, with equivalent amounts of expense recorded in costs of revenue, of $13,271, $12,924 and $12,920 for the fiscal years ended March 31, 2019, 2018 and 2017, respectively. Any tax assessed by a governmental authority that is incurred as a result of a revenue transaction (e.g. sales tax) is excluded from the Company’s assessment of transaction prices. |
Costs of Revenue and Operating Expenses | (o) Costs of revenue consist principally of salaries, employee benefits and share-based compensation expense, reimbursable and non‑reimbursable travel costs, subcontractor fees, and immigration related expenses for IT professionals. Selling and marketing expenses are charged to operating expenses as incurred. Selling and marketing expenses are those expenses associated with promoting and selling the Company’s services and include such items as sales and marketing personnel salaries, stock compensation expense and related fringe benefits, commissions, travel, and the cost of advertising and other promotional activities. Advertising and promotional expenses incurred were approximately $477, $306 and $560 for the fiscal years ended March 31, 2019, 2018 and 2017, respectively. General and administrative expenses include other operating items such as officers’ and administrative personnel salaries, share-based compensation expense and related fringe benefits, legal and audit expenses, public company related expenses, insurance, facility costs, provision for doubtful accounts, depreciation and amortization, including amortization of purchased intangibles and operating lease expenses. |
Share-Based Compensation | (p) Share-based compensation cost is determined by estimating the fair value at the grant date of the Company’s common stock and expensing the total compensation cost on a straight-line basis over the requisite employee service period or for grants issued with performance conditions, on a graded-vesting basis over the requisite employee service period. The requisite service period is generally between three and four years. The Company changed its accounting policy from estimated forfeitures to actual forfeitures effective April 1, 2017 upon adoption of ASU 2016-09 Accounting Standard Update (“ASU”) No. 2016-09, Compensation —Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting. The allocation of total share‑based compensation expense between costs of revenue and selling, general and administrative expenses is based on employee classification as follows: Year Ended March 31, 2019 2018 2017 Costs of revenue $ 499 $ 895 $ 2,501 Selling, general and administrative expenses 28,557 26,516 19,622 Total share-based compensation expense $ 29,056 $ 27,411 $ 22,123 |
Allowance for Doubtful Accounts | (q) The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of clients to make required payments. The allowance for doubtful accounts is determined by evaluating the relative credit worthiness of each client, historical collections experience and other information, including the aging of the receivables. We evaluate the collectability of our accounts receivables on an on-going basis and write-off accounts when they are deemed to be uncollectible. |
Recent accounting pronouncements | (r) Recently Adopted Accounting Pronouncements Unless otherwise discussed below, the adoption of new accounting standards did not have an impact on the consolidated financial statements. In May 2014, the FASB issued an Accounting Standard Update (“ASU” ) No. 2014-09, Revenue from Contracts with Customers (“Accounting Standard Codification (“ASC”) Topic 606”) as well as other clarifications and technical guidance related to this new revenue standard, including ASC Topic 340-40, Other Assets and Deferred Costs — Contracts with Customers (“ASC 340-40”). ASC Topic 606 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. 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 modified retrospective method. The Company adopted the standard effective April 1, 2018 using the modified retrospective method applied to those contracts which were not completed as of that date. Upon adoption of ASC Topic 606 on April 1, 2018, the Company recorded a net increase to opening retained earnings of approximately $464, after a tax impact of $142. The impact of adoption primarily relates to the longer period of amortization for costs to fulfill a contract compared to the amortization period prior to adoption. The following table summarizes the cumulative effect of adopting ASC Topic 606 using the modified retrospective method of adoption as of April 1, 2018: Balance as of ASC Topic 606 Balance as of March 31, 2018 Adjustments April 1, 2018 Balance Sheet : Assets Other current assets $ 21,229 $ (62) $ 21,167 Deferred income taxes 31,528 (142) 31,386 Other long-term assets 11,772 668 12,440 Stockholders’ equity Retained earnings $ 238,019 $ 464 $ 238,483 See Note 9 “Revenues” in the consolidated financial statements for additional information regarding revenues. 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. The Company adopted this guidance on April 1, 2018. The adoption of this guidance did not have a material impact on the consolidated financial statements, therefore, the Company did not record any cumulative adjustments to the opening retained earnings in the consolidated financial statements. In November 2016, the FASB issued ASU 2016-18, Restricted Cash (Topic 230), which is intended to reduce diversity in practice on how changes in restricted cash are classified and presented in the statement of cash flows. This ASU requires amounts generally described as restricted cash to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The amendments in this update should be applied using a retrospective transition method to each period presented. The Company adopted the standard effective April 1, 2018 using the retrospective method. As a result of the adoption, the Company restated its consolidated statement of cash flows for all of the prior periods presented. The following table summarizes the impact of this standard on the Company’s consolidated cash flows for the fiscal years ended March 31, 2018 and 2017: Year Ended March 31, 2018 As Reported Restated Effect Cash flows from investing activities: Increase in restricted cash $ (158) $ — $ 158 Net cash provided by investing activities (52,827) (52,669) 158 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 2,675 2,677 2 Net increase in cash, cash equivalents and restricted cash 49,989 50,149 160 Cash, cash equivalents and restricted cash, beginning of period 144,908 145,086 178 Cash, cash equivalents and restricted cash, end of period $ 194,897 $ 195,235 $ 338 Year Ended March 31, 2017 As Reported Restated Effect Cash flows from investing activities: Decrease in restricted cash $ 92,704 $ — $ (92,704) Net cash provided by (used in) investing activities 67,015 (25,689) (92,704) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (2,319) (3,379) (1,060) Net decrease in cash, cash equivalents and restricted cash (4,078) (97,842) (93,764) Cash, cash equivalents and restricted cash, beginning of period 148,986 242,928 93,942 Cash, cash equivalents and restricted cash, end of period $ 144,908 $ 145,086 $ 178 In March 2017, the FASB issued ASU 2017-07, Compensation—Retirement Benefits (Topic 715), “Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost”, a guidance on presentation of net periodic pension cost and net periodic postretirement benefit cost. The new standard requires that an employer disaggregate the service costs components of net benefit cost. The employer is required to report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net benefit cost are required to be presented in the income statement separately from the service cost component, such as in other income and expense. The guidance is effective for fiscal years beginning after December 15, 2017. The Company adopted this guidance effective April 1, 2018. Upon adoption, the Company presented the service cost component in costs of revenue and selling, general and administrative expenses. The other components of net periodic pension cost are presented within other (income) expense in the Consolidated Statements of Income (Loss). The adoption of this guidance did not have a material impact on the consolidated financial statements, therefore, the Company did not retrospectively change the presentation of the financial statements. In June 2018, the FASB issued ASU No. 2018-07, Compensation — Stock Compensation (Topic 718), Improvements to Nonemployee Share-Based Payment Accounting. The new standard is intended to simplify aspects of share-based compensation issued to non-employees by making the guidance consistent with accounting for employee share-based compensation. The guidance is effective for annual periods beginning after December 15, 2018 and interim periods within those annual periods, with early adoption permitted but no earlier than an entity’s adoption date of Topic 606. The Company early adopted this guidance effective April 1, 2018. The adoption of this guidance did not have an impact on the consolidated financial statements. New Accounting Pronouncements Unless otherwise discussed below, the Company believes the impact of recently issued standards that are not yet effective will not have a material impact on its consolidated financial statements. In February 2016, the FASB issued an update (ASU 2016-02) to the standard on leases to increase transparency and comparability among organizations. The FASB subsequently issued ASU 2018-10, ASU 2018-11 in July 2018, ASU 2018-20 in December 2018 and ASU 2019-01 in March 2019, which provide clarifications and improvements to this new standard. ASU 2018-11 also provides the optional transition method which allows companies to apply the new lease standard at the adoption date instead of at the earliest comparative period presented. 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 will adopt this standard effective April 1, 2019 using a modified retrospective effective date method. The Company is near completion of implementing its transition plan, which includes evaluating its population of leased assets to assess the impact of the ASU on its lease portfolio, and designing and implementing new processes and controls. The Company has elected the package of practical expedients which permits the Company to not reassess prior conclusions related to contracts containing leases, lease classification and initial direct costs. The Company does not expect to elect the use of hindsight practical expedient. While the Company is currently finalizing its assessment, the Company expects to recognize right-of-use assets ranging from $48,000 to $58,000 and lease liabilities ranging from $52,000 to $62,000 on its consolidated balance sheet upon adoption, primarily related to its office space leases. The Company does not expect the new guidance to have a material impact on its consolidated statement of income (loss) and comprehensive income (loss) or its consolidated statements of cash flows. 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. |
Reclassification | Reclassification Certain prior-year amounts have been reclassified to conform to the fiscal year ended March 31, 2019 presentation. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Summary of significant accounting policies | |
Schedule of revenue from significant clients as a percentage of Company's consolidated revenue | At March 31, 2019, no client accounted for 10% of gross accounts receivable and at March 31, 2018, one client accounted for 10%, of gross accounts receivable. Revenue from significant clients as a percentage of the Company’s consolidated revenue was as follows: Year Ended March 31, 2019 2018 2017 Customer A % % % |
Schedule of allocation of total share-based compensation expense between costs of revenue and selling, general and administrative expenses | The allocation of total share‑based compensation expense between costs of revenue and selling, general and administrative expenses is based on employee classification as follows: Year Ended March 31, 2019 2018 2017 Costs of revenue $ 499 $ 895 $ 2,501 Selling, general and administrative expenses 28,557 26,516 19,622 Total share-based compensation expense $ 29,056 $ 27,411 $ 22,123 |
Summary of cumulative effect of adopting ASC Topic 606 using the modified retrospective method | Balance as of ASC Topic 606 Balance as of March 31, 2018 Adjustments April 1, 2018 Balance Sheet : Assets Other current assets $ 21,229 $ (62) $ 21,167 Deferred income taxes 31,528 (142) 31,386 Other long-term assets 11,772 668 12,440 Stockholders’ equity Retained earnings $ 238,019 $ 464 $ 238,483 |
ASU 2016-18 | |
Summary of significant accounting policies | |
Summary of impact of accounting standard adoption | The following table summarizes the impact of this standard on the Company’s consolidated cash flows for the fiscal years ended March 31, 2018 and 2017: Year Ended March 31, 2018 As Reported Restated Effect Cash flows from investing activities: Increase in restricted cash $ (158) $ — $ 158 Net cash provided by investing activities (52,827) (52,669) 158 Effect of exchange rate changes on cash, cash equivalents, and restricted cash 2,675 2,677 2 Net increase in cash, cash equivalents and restricted cash 49,989 50,149 160 Cash, cash equivalents and restricted cash, beginning of period 144,908 145,086 178 Cash, cash equivalents and restricted cash, end of period $ 194,897 $ 195,235 $ 338 Year Ended March 31, 2017 As Reported Restated Effect Cash flows from investing activities: Decrease in restricted cash $ 92,704 $ — $ (92,704) Net cash provided by (used in) investing activities 67,015 (25,689) (92,704) Effect of exchange rate changes on cash, cash equivalents, and restricted cash (2,319) (3,379) (1,060) Net decrease in cash, cash equivalents and restricted cash (4,078) (97,842) (93,764) Cash, cash equivalents and restricted cash, beginning of period 148,986 242,928 93,942 Cash, cash equivalents and restricted cash, end of period $ 144,908 $ 145,086 $ 178 |
Earnings (Loss) per Share (Tabl
Earnings (Loss) per Share (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Earnings (Loss) per Share | |
Schedule of components of basic earnings (loss) per share | The components of basic earnings (loss) per share are as follows: Year Ended March 31, 2019 2018 2017 Numerators: Net income available to Virtusa stockholders $ 16,146 $ 1,254 $ 11,858 Less: Series A Convertible Preferred Stock dividends and accretion (4,350) (3,963) — Net income (loss) available to Virtusa common stockholders $ 11,796 $ (2,709) $ 11,858 Denominators: Basic weighted average common shares outstanding 29,817,526 29,397,350 29,650,026 Basic earnings (loss) per share available to Virtusa common stockholders $ 0.40 $ (0.09) $ 0.40 |
Schedule of components of diluted earnings (loss) per share | The components of diluted earnings (loss) per share are as follows: Year Ended March 31, 2019 2018 2017 Numerators: Net income (loss) available to Virtusa common stockholders $ 11,796 $ (2,709) $ 11,858 Add : Series A Convertible Preferred Stock dividends and accretion — — — Net income (loss) available to Virtusa common stockholders and assumed conversion $ 11,796 $ (2,709) $ 11,858 Denominators: Basic weighted average common shares outstanding 29,817,526 29,397,350 29,650,026 Dilutive effect of Series A Convertible Preferred Stock if converted — — — Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units 842,128 — 564,853 Dilutive effect of stock appreciation rights — — 292 Weighted average shares—diluted 30,659,654 29,397,350 30,215,171 Diluted earnings (loss) per share available to Virtusa common stockholders $ 0.38 $ (0.09) $ 0.39 |
Acquisitions (Tables)
Acquisitions (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
eTouch | |
Acquisitions | |
Summary of the purchase price allocation | A summary of the fair values for eTouch is as follows: Amount Useful Life Consideration Transferred: Cash paid at closing $ 80,000 Fair value of the future payments 57,858 Tax related liability 11,708 Fair value of consideration 149,566 Less: Cash acquired (2,411) Total purchase price, net of cash acquired $ 147,155 Assets and Liabilities: Cash and cash equivalents 2,411 Accounts receivable 15,300 Unbilled receivables 2,986 Prepaid expenses 815 Other current assets 389 Property and equipment 2,625 Other long-term assets 98 Goodwill 78,210 Trademark 900 2 years Customer relationships 56,000 10 - 15 years Accounts payable (3,228) Deferred revenue (852) Accrued expenses and other current liabilities (727) Accrued employee compensation and benefits (4,192) Income taxes payable (250) Deferred income taxes (367) Other long-term liabilities (552) Total purchase price $ 149,566 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Goodwill and Intangible Assets | |
Schedule of changes in goodwill | The Company has one reportable segment at March 31, 2019 and 2018. The following are details of the changes in goodwill balance as of: March 31, 2019 March 31, 2018 Beginning balance $ 297,251 $ 211,089 Goodwill arising from acquisitions — 85,767 Purchase price adjustment (7,407) — Foreign currency translation adjustments (10,301) 395 Ending balance $ 279,543 $ 297,251 |
Schedule of intangible asset carrying amounts acquired and amortization | The following are details of the Company’s intangible asset carrying amounts acquired and amortization for the fiscal year ended March 31, 2019 and March 31, 2018: March 31, 2019 Weighted Gross Net Average Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amortizable intangible assets: Customer relationships 13.0 $ 125,520 $ 33,679 $ 91,841 Trademark 2.0 900 431 469 Technology 5.0 500 370 130 12.9 $ 126,920 $ 34,480 $ 92,440 March 31, 2018 Weighted Gross Net Average Carrying Accumulated Carrying Useful Life Amount Amortization Amount Amortizable intangible assets: Customer relationships 12.1 $ 129,264 $ 34,296 $ 94,968 Trademark 2.1 3,760 2,975 785 Technology 5.0 500 252 248 11.8 $ 133,524 $ 37,523 $ 96,001 |
Schedule of estimated amortization expense related to the purchased intangible assets | The estimated amortization expense related to the purchased intangible assets listed in the table above at March 31, 2019 is as follows for the following fiscal years: Fiscal year Amount 2020 $ 11,618 2021 10,682 2022 9,640 2023 9,283 2024 8,704 Thereafter 42,513 Total $ 92,440 |
Investment Securities (Tables)
Investment Securities (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Investment Securities. | |
Summary of investment securities | The following is a summary of investment securities at March 31, 2019: Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Available-for-sale securities: Corporate bonds: Current $ 2,779 $ 1 $ (2) $ 2,778 Non-current — — — — Preference shares: 188 — — 188 Agency and short-term notes: Current 1,492 1 — 1,493 Time Deposits: Current 15,861 — — 15,861 Equity securities: Mutual funds: Current 12,912 94 — 13,006 Equity Shares/ Options: Non-current 8 126 — 134 Total available-for-sale securities and equity securities $ 33,240 $ 222 $ (2) $ 33,460 The following is a summary of investment securities at March 31, 2018: Gross Gross Amortized Unrealized Unrealized Cost Gains Losses Fair Value Available-for-sale securities: Corporate bonds: Current $ 25,397 $ — $ (126) $ 25,271 Non-current 2,293 — (22) 2,271 Preference shares: Non-current 1,726 — (70) 1,656 Agency and short-term notes: Current 800 — (1) 799 Mutual funds: Current 1,540 11 — 1,551 Equity Shares/ Options: Non-current 15 198 — 213 Time deposits: Current 18,279 — — 18,279 Total available-for-sale securities $ 50,050 $ 209 $ (219) $ 50,040 |
Summary of other-than-temporary impairment unrealized losses recognized | The following is a summary of other-than-temporary impairment unrealized losses recognized during the fiscal year ended March 31, 2019: Year Ended March 31, 2019 Unrealized losses recognized in other comprehensive income (loss) as of April 1, 2018 $ 70 Add: unrealized losses recognized 1,341 Less: Other-than-temporary impairment recognized in earnings (1,411) Unrealized losses in other comprehensive income (loss) as of March 31, 2019 $ — |
Schedule of gross unrealized losses and fair value of the Company's investment securities with unrealized losses that are not deemed to be other-than-temporarily impaired | The following tables show the gross unrealized losses and fair value of the Company’s investment securities with unrealized losses that are not deemed to be other‑than‑temporarily impaired, aggregated by investment category and length of time that individual securities have been in a continuous unrealized loss position at March 31, 2019 and 2018: Less Than 12 Months Gross Unrealized Fair Value Loss Available-for-sale securities at March 31, 2019: Corporate bonds $ 253 $ — Agency bonds — — Preference shares — — Total $ 253 $ — Available-for-sale securities at March 31, 2018: Corporate bonds $ 22,081 $ (135) Agency bonds — — Mutual funds — — Total $ 22,081 $ (135) Greater Than 12 Months Gross Unrealized Fair Value Loss Available-for-sale securities at March 31, 2019: Corporate bonds $ 2,297 $ (2) Agency bonds — — Preference shares — — Total $ 2,297 $ (2) Available-for-sale securities at March 31, 2018: Corporate bonds $ 5,461 $ (13) Agency bonds 799 (1) Preference shares 1,656 (70) Total $ 7,916 $ (84) |
Schedule of available-for-sale securities by contractual maturity | Available‑for‑sale securities and equity securities by contractual maturity were as follows: March 31, 2019 Due in one year or less $ 33,138 Due after 1 year through 5 years 322 Due after 5 years — Total $ 33,460 |
Schedule of proceeds from sales of available-for-sale investment securities and equity securities and gross gains and losses included in earnings as a result | Proceeds from sales of available-for-sale investment securities and equity securities and the gross gains and losses that have been included in earnings as a result of those sales were as follows: Year Ended March 31, 2019 2018 2017 Proceeds from sales or maturities of available-for-sale $ 109,512 $ 158,800 $ 138,232 Gross gains $ 1,023 $ 1,655 $ 1,007 Gross losses (13) (127) (1) Net realized gains on sales of available-for-sale investment $ $ 1,528 $ 1,006 |
Fair Value of Financial Instr_2
Fair Value of Financial Instruments (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Fair Value of Financial Instruments | |
Schedule of financial assets and liabilities measured at fair value on a recurring basis | The Company carries certain assets and liabilities at fair value on a recurring basis on its consolidated balance sheets. The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2019 Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ 20,132 — $ 20,132 Equity securities—current — 13,006 — 13,006 Available-for-sales securities—non-current — 188 — 188 Equity securities—non-current — 134 — 134 Derivative financial instruments: Foreign currency derivative contracts — 3,411 — 3,411 Interest Rate Swap Contracts — 1,349 — 1,349 Total assets $ — $ 38,220 — $ 38,220 Liabilities: — Foreign currency derivative contracts — 321 — 321 Interest Rate Swap Contracts — 3,633 — 3,633 Total liabilities $ — $ 3,954 $ — $ 3,954 The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2018 Level 1 Level 2 Level 3 Total Assets: Investments: Available-for-sales securities—current $ — $ 45,900 — $ 45,900 Available-for-sales securities—non-current — 4,140 — 4,140 Foreign currency derivative contracts — 2,122 — 2,122 Interest Rate Swap Contracts — 2,486 — 2,486 Total assets $ — $ 54,648 $ — $ 54,648 Liabilities: Foreign currency derivative contracts $ — 1,023 $ — 1,023 Interest Rate Swap Contracts — — — — Contingent consideration — — 100 100 Total liabilities $ — $ 1,023 $ 100 $ 1,123 |
Revenues (Tables)
Revenues (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Recently Adopted Accounting Pronouncements | |
Schedule of significant movements in contract assets and deferred revenue balances | The table below shows significant movements during the fiscal year ended March 31, 2019 in contract assets: Contract Assets Balance at April 1, 2018 $ 15,998 Revenues recognized during the period but not yet billed 120,536 Amounts billed (117,687) Other (309) Balance at March 31, 2019 $ 18,538 Contract liabilities comprise amounts billed to customers for revenues not yet earned. Such amounts are anticipated to be recorded as revenues when services are performed in subsequent periods. The table below shows significant movements in the deferred revenue balances during the fiscal year ended March 31, 2019: Contract Liabilities Balance at April 1, 2018 $ 7,908 Amounts billed but not yet recognized as revenues 5,844 Revenues recognized related to the opening balance of deferred revenue (6,906) Other (425) Balance at March 31, 2019 $ 6,421 |
Schedule of capitalized costs to fulfill | Costs to Fulfill Balance at April 1, 2018 $ 4,278 Costs capitalized 2,382 Amortization expense (2,248) Foreign currency translation adjustments (113) Balance at March 31, 2019 $ 4,299 |
Schedule of disaggregation of revenue | Year Ended Revenue by geography: March 31, 2019 North America $ 884,114 Europe 261,967 Rest of World 101,782 Consolidated revenue $ 1,247,863 Year Ended Revenue by Customer’s Industry Groups March 31, 2019 Banking financial services insurance $ 776,955 Communications and Technology 360,967 Media & Information and Other 109,941 Consolidated revenue $ 1,247,863 Year Ended Revenue by service offerings March 31, 2019 Application outsourcing $ 672,636 Consulting 575,227 Consolidated revenue $ 1,247,863 Year Ended Revenue by contract type March 31, 2019 Time-and-materials $ 738,309 Fixed-price* 509,554 Consolidated revenue $ 1,247,863 |
ASU 2014-09 | |
Recently Adopted Accounting Pronouncements | |
Summary of impact of changes in accounting policies after adoption of ASC 606 | The following table summarizes the impacts of changes in accounting policies after adoption of ASC 606 on the Company’s consolidated financial statements as of and for the fiscal year ended March 31, 2019: As of March 31, 2019 Impacts of the New As reported Pro-forma Amounts Revenue standard Balance Sheet : Assets Other current assets (1) $ 29,967 $ 29,566 $ 401 Total current assets 401 Deferred income taxes (3) 28,770 29,022 (252) Other long-term assets (1) 29,836 29,845 (9) Total Assets $ 140 Liabilities, Series A Convertible Preferred Stock, Redeemable noncontrolling interest Deferred revenue (2) 6,421 7,206 (785) Total current liabilities (785) Stockholders’ equity: Retained earnings 250,279 249,354 925 Total liabilities, Series A convertible preferred stock, redeemable noncontrolling $ 140 Year Ended March 31, 2019 Impact from Pro-forma New Revenue As reported Amounts Standard Revenue (2) $ 1,247,863 $ 1,247,078 $ 785 Costs of revenue (1) 884,652 885,044 (392) Gross profit 363,211 362,034 1,177 Operating expenses: Selling, general and administrative expenses 292,943 292,943 — Income from operations 70,268 69,091 1,177 Other income (expense) (32,104) (32,104) - Income before income tax expense 38,164 36,987 1,177 Income tax expense (3) 20,473 20,221 252 Net income $ 17,691 16,766 $ 925 Less: net income attributable to noncontrolling interests, net of tax 1,545 1,545 — Net income available to Virtusa stockholders $ 16,146 15,221 $ 925 Less: Series A Convertible Preferred Stock dividends and accretion 4,350 4,350 — Net income available to Virtusa common stockholders 11,796 10,871 925 Basic earnings per share available to Virtusa common stockholders $ 0.40 0.37 $ 0.03 Diluted earnings per share available to Virtusa common stockholders $ 0.38 0.35 $ 0.03 Notes (1) Reflects the impact of a longer period of amortization for costs to fulfill a contract. (2) Reflects the impact of changes in timing of revenue recognition on our software licenses and certain fixed-price application maintenance contracts. Reflects the income tax impact of the above items |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Property and Equipment | |
Schedule of property and equipment and their estimated useful lives in years | Property and equipment and their estimated useful lives in years consist of the following: Estimated Useful March 31, Life (Years) 2019 2018 Computer and other equipment 3 - 5 $ 60,771 $ 50,154 Furniture and fixtures 7 15,764 14,862 Vehicles 3 - 5 1,232 1,753 Software 3 - 10 24,752 23,963 Leasehold improvements Over the lease period or estimated useful life of the assets whichever is lower 14,642 10,558 Buildings 15 - 30 31,813 32,382 Land 45,765 56,611 Capital work-in-progress 4,269 1,745 $ 199,008 $ 192,028 Less—accumulated depreciation and amortization 79,143 70,463 Property and equipment, net $ 119,865 $ 121,565 |
Accrued Expenses and Other (Tab
Accrued Expenses and Other (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Accrued Expenses and Other | |
Schedule of accrued expenses and other | Accrued expenses and other consists of the following: March 31, March 31, 2019 2018 Accrued other taxes $ 9,177 $ 6,776 Accrued professional fees 21,908 18,422 Acquisition related liabilities 18,519 50,619 Hedge liability 527 1,043 Accrued discounts 9,055 6,255 Accrued employee travel and other expense 5,303 3,413 Accrued other 5,561 4,778 Total $ 70,050 $ 91,306 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Debt | |
Summary of short-term debt balances | The following summarizes our short-term debt balance as of: March 31, 2019 March 31, 2018 Notes outstanding under the revolving credit facility $ — $ — Term loan- current maturities 12,500 12,500 Less: deferred financing costs, current (1,093) (1,093) Total $ 11,407 $ 11,407 |
Summary of long-term debt balances | The following summarizes our long-term debt balance as of: March 31, 2019 March 31, 2018 Term loan $ 237,500 $ 250,000 Borrowings under revolving credit facility 129,500 55,000 Less: Current maturities (12,500) (12,500) Deferred financing costs, long-term (3,180) (4,273) Total $ 351,320 $ 288,227 |
Schedule of maturities of long-term debt | The following represents the schedule of maturities of long-term debt: Fiscal year ending March 31 : 2020 $ 12,500 2021 18,750 2022 25,000 2023 310,750 2024 — Total $ 367,000 |
Stock Options, Restricted Sto_2
Stock Options, Restricted Stock Awards and Stock Appreciation Rights (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | |
Summary of stock option activity under the 2000 Plan, the 2007 Plan and the 2015 Plan | The following tables summarize stock option and restricted stock activity under the 2000 Plan, the 2007 Plan and the 2015 Plan, as the case may be, for the fiscal years ended March 31, 2019, 2018 and 2017: Stock Option Activity Number of Weighted Options Weighted Average to Purchase Average Remaining Aggregate Common Exercise Life Intrinsic Shares Price (in years) Value Outstanding at March 31, 2016 679,138 $ 13.58 Granted — — Exercised (104,853) 14.18 Forfeited or cancelled (4,624) 31.97 Outstanding at March 31, 2017 569,661 13.31 Granted — — Exercised (322,317) 12.60 Forfeited or cancelled — — Outstanding at March 31, 2018 247,344 14.24 Granted — — Exercised (101,618) 10.02 Forfeited or cancelled Outstanding at March 31, 2019 145,726 $ 17.18 2.88 $ 5,286 Exercisable at March 31, 2019 145,726 $ 17.18 2.88 $ 5,286 |
Restricted Stock | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | |
Summary of restricted stock activity under the 2000 Plan, the 2007 Plan and the 2015 Plan | Restricted Stock Award Activity Number of Restricted Weighted Average Stock Awards Grant Date Fair Value Unvested at March 31, 2016 477,391 $ 31.69 Awarded — — Vested (226,838) 26.41 Forfeited (32,993) 42.59 Unvested at March 31, 2017 217,560 35.55 Awarded — — Vested (126,843) 32.64 Forfeited (15,090) 37.55 Unvested at March 31, 2018 75,627 40.04 Awarded — — Vested (57,822) 37.93 Forfeited (3,786) 45.88 Unvested at March 31, 2019 14,019 $ 47.17 |
Restricted Stock Units R S U | |
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | |
Summary of restricted stock activity under the 2000 Plan, the 2007 Plan and the 2015 Plan | Restricted Stock Unit Activity Number of Restricted Weighted Average Stock Units Grant Date Fair Value Unvested at March 31, 2016 607,240 $ 44.43 Awarded 1,863,658 24.63 Vested (339,582) 39.54 Forfeited (151,700) 35.82 Unvested at March 31, 2017 1,979,616 27.29 Awarded 731,363 35.99 Vested (436,225) 39.14 Forfeited (752,765) 25.06 Unvested at March 31, 2018 1,521,989 29.18 Awarded 775,532 46.27 Vested (612,854) 30.11 Forfeited (291,547) 31.66 Unvested at March 31, 2019 1,393,120 $ 37.76 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Income Taxes | |
Schedule of income before income tax expense based on the geographic location | The income before income tax expense shown below is based on the geographic location to which such income is attributed for each of the fiscal years ended March 31, 2019, 2018 and 2017: Year Ended March 31, 2019 2018 2017 United States $ 9,454 $ (31,526) $ (52,390) Foreign 28,710 73,362 71,208 Total $ 38,164 $ 41,836 $ 18,818 |
Schedule of provision for income taxes | The provision for income taxes for each of the fiscal years ended March 31, 2019, 2018 and 2017 consisted of the following: Year Ended March 31, 2019 2018 2017 Current provision: Federal $ 672 $ 18,747 $ (1,966) State 447 (108) 170 Foreign 21,124 24,195 15,213 Total current provision $ 22,243 $ 42,834 $ 13,417 Deferred (benefit) provision: Federal $ (315) $ (1,289) $ (7,870) State 1,105 (2,726) (2,888) Foreign (2,560) (5,931) (98) Total deferred (benefit) provision $ (1,770) $ (9,946) $ (10,856) Total provision for income taxes $ 20,473 $ 32,888 $ 2,561 |
Summary of items which gave rise to differences between the income taxes in the statements of income and the income taxes computed at the U.S. statutory rate | The items which gave rise to differences between the income taxes in the statements of income and the income taxes computed at the U.S. statutory rate 21.0%, 30.7% and 34.0% for the year ended March 31, 2019, 2018 and 2017 respectively are summarized as follows: Year Ended March 31, 2019 2018 2017 Tax on income before income tax expense at U.S. statutory rate $ 8,014 $ 12,865 $ 6,398 U.S. state and local taxes (benefit), net of U.S. federal income tax effects 1,459 (2,800) (2,776) Benefit from foreign subsidiaries’ tax holidays (5,778) (7,727) (7,973) Foreign rate difference 11,795 (2,215) (7,688) Tax rate change 431 9,915 — Nondeductible business costs 1,032 2,721 2,090 Repatriated foreign earnings — — 5,879 Deemed repatriated foreign earnings (1,628) 17,834 — GILTI and BEAT tax 3,763 — — Excess stock-based compensation benefits (3,388) (1,674) — Nondeductible interest 6,213 6,500 6,138 Other adjustments (1,440) (2,531) 493 Income tax expense $ 20,473 $ 32,888 $ 2,561 |
Schedule of deferred tax assets (liabilities) | Deferred tax assets (liabilities) at March 31, 2019 and 2018 were as follows: March 31, 2019 2018 Deferred revenue $ 898 $ 649 Bad debt reserve 662 774 Tax credit carry forwards 591 2,836 Accrued expenses and reserves 14,087 13,825 Share-based compensation expense 4,911 3,985 Unrealized losses 583 — Intangible assets 3,324 3,477 Net operating loss 14,777 15,160 Total gross deferred tax assets $ 39,833 $ 40,706 Valuation allowance (2,492) (2,535) Total deferred tax assets $ 37,341 $ 38,171 Depreciable assets (7,351) (10,054) Unrealized gains — (698) Acquisition and other liabilities (8,890) (11,052) Goodwill (8,154) (6,180) Total deferred tax liabilities $ (24,395) $ (27,984) Net deferred tax assets/(liabilities) $ 12,946 $ 10,187 |
Summary of the activity related to the gross unrecognized tax benefits | The following summarizes the activity related to the gross unrecognized tax benefits: Year Ended March 31, 2019 2018 2017 Balance at beginning of the fiscal year $ 7,544 $ 7,612 $ 6,693 Foreign currency translation related to prior year tax positions (472) 105 122 Decreases related to prior year tax positions (770) (332) — Decreases related to prior year tax positions due to settlements or lapse in applicable statute of limitations (206) (335) (597) Increases related to prior year tax positions 648 494 1,394 Balance at end of the fiscal year $ 6,744 $ 7,544 $ 7,612 |
Post-retirement Benefits (Table
Post-retirement Benefits (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Post-retirement Benefits | |
Schedule of cost of pension plans | Year Ended March 31, 2019 2018 2017 Components of net periodic pension expense Expected return on plan assets $ (807) $ (692) $ (606) Service costs for benefits earned 1,914 1,464 1,326 Interest cost on projected benefit obligation 741 660 580 Amortization of prior service cost 44 9 9 Recognized net actuarial loss 146 138 135 Net periodic pension expense $ 2,038 $ 1,579 $ 1,444 |
Schedule of actuarial assumptions | Year Ended March 31, 2019 2018 2017 Discount rate 7.10 % - 11.16 % 7.30 % - 10.34 % 6.75 % - 12.00 % Compensation increases (annual) 5.00 % - 8.00 % 5.00 % - 8.00 % 5.00 % - 7.50 % Expected return on assets 7.00 % - 11.87 % 7.50 % - 12.20 % 7.50 % - 11.98 % |
Schedule of accumulated benefit obligation and projected benefit obligation | As of March 31, 2019 2018 Accumulated benefit obligation $ 8,208 $ 7,260 Projected benefit obligation: Beginning balance $ 10,524 $ 9,148 Service cost 1,914 1,779 Interest cost 741 660 Actuarial (gain) loss 698 (62) Benefits paid (1,398) (930) eTouch SPA transaction & plan combination 259 — Exchange rate adjustments (810) (71) Ending balance $ 11,928 $ 10,524 |
Schedule of fair value of plan assets | As of March 31, 2019 2018 Beginning balance $ 9,885 $ 7,832 Employer contributions 1,794 2,646 Actual return on plan assets 518 394 Actuarial loss (3) (9) Benefits paid (1,398) (930) Exchange rate adjustments (741) (48) Balance at March 31, 2019 $ 10,055 $ 9,885 |
Schedule of plan asset allocation | March 31, 2019 Target Actual Allocation Allocation Government securities % - % % Corporate debt % - % % Other % - % % |
Schedule of fair values of the Company's pension plan assets | The following table presents the fair values of the Company’s pension plan assets. Fair Value Measurements Quoted Prices in Significant Active Markets for Observable Identical Assets Inputs Asset Category Total (Level 1) (Level 2) At March 31, 2019 Government Bonds(1) $ 4,975 — 4,975 Corporate Bonds(2) 4,097 — 4,097 Equity Shares and Others(3) 983 346 637 $ 10,055 $ 346 $ 9,709 At March 31, 2018 Government Bonds(1) $ 3,991 $ — $ 3,991 Corporate Bonds(2) 4,723 — 4,723 Equity Shares and Others(3) 1,171 365 806 $ 9,885 $ 365 $ 9,520 (1) This category comprises government fixed income investments with investments in India and Sri Lanka. (2) This category represents investment in bonds and debentures from diverse industries. (3) This category represents equity shares, money market investments and other investments. |
Schedule of pension liability | March 31, 2019 2018 PBO $ 11,928 $ 10,524 Fair value of plan assets 10,055 9,885 Funded status recognized $ 1,873 $ 639 Amount recorded in accumulated other comprehensive income $ 2,402 $ 1,763 |
Schedule of pretax amounts of prior service cost and actuarial gain (loss) recognized from accumulated other comprehensive income | March 31, 2019 2018 2017 Prior service cost $ (44) $ (9) $ (9) Net amortization gain (loss) (146) (138) (135) Total $ (190) $ (147) $ (144) |
Schedule of estimated future benefits payments | Fiscal year ending March 31 : 2020 $ 1,639 2021 1,771 2022 1,991 2023 2,296 2024 2,794 2025 - 2028 $ 16,086 |
Accumulated Other Comprehensi_2
Accumulated Other Comprehensive Loss (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Accumulated Other Comprehensive Loss. | |
Schedule of changes in accumulated other comprehensive loss by component | March 31, 2019 2018 2017 Investment securities Beginning balance $ 69 $ 57 $ 23 Other comprehensive income (loss) (OCI) before reclassifications, net of tax of $58, $108, $57 (219) 175 72 Reclassifications from OCI to other income, net of tax of $20, $(246), $3 150 (190) 6 Less: Noncontrolling interests, net of tax of $7, $15, $(23) 12 27 (44) Comprehensive income (loss) on investment securities, net of tax of $85, $(123), $37 (57) 12 34 Closing balance $ 12 $ 69 $ 57 Currency translation adjustments Beginning balance $ (41,207) $ (50,415) $ (45,211) OCI before reclassifications (17,305) 8,262 (3,810) Less: Noncontrolling interests 1,158 946 (1,394) Comprehensive income (loss) on currency translation adjustments (16,147) 9,208 (5,204) Closing balance $ (57,354) $ (41,207) $ (50,415) Cash flow hedges Beginning balance $ 1,881 $ 11,789 $ 3,934 OCI before reclassifications net of tax of $(1,966), $1,265, $6,713 (4,104) 2,428 16,328 Reclassifications from OCI to —Revenue, net of tax of $738, $(3,036), $(1,432) 1,375 (5,651) (2,706) —Costs of revenue, net of tax of $392, $(1,543), $(1,015) 1,089 (4,855) (3,526) —Selling, general and administrative expenses, net of tax of $175, $(852), $(611) 488 (2,748) (2,107) —Interest expenses, net of tax of $(251), $(64),$0 (714) (160) Less: Noncontrolling interests, net of tax of $13, $571 $(71) 24 1,078 (134) Comprehensive income (loss) on cash flow hedges, net of tax of $(899), $(3,659) $3,583 (1,842) (9,908) 7,855 Closing balance $ 39 $ 1,881 $ 11,789 Benefit plans Beginning balance $ (1,424) $ (1,180) $ (885) OCI before reclassifications net of tax of $40, $(198), $(227) (1,024) (364) (379) Reclassifications from OCI for prior service credit (cost) to: —Costs of revenue, net of tax of $0, $34, $32 — 62 53 —Selling, general and administrative expenses, net of tax of $0, $15, $18 — 27 32 Other income (expense), net of tax of $13, $0, $0 137 — — Reclassifications from net actuarial gain (loss) amortization to: —Costs of revenue, net of tax of $0, $3, $3 — 5 5 —Selling, general and administrative expenses, net of tax of $0 for all periods — 1 1 Other income (expense), net of tax of $3, $0, $0 41 — — Other adjustments, net of tax of $(17), 0, 0 159 20 12 (Less): Noncontrolling interests, net of tax $9, $2, $(10) 27 5 (19) Comprehensive income (loss) on benefit plans, net of tax of $48, $(144), $(184) (660) (244) (295) Closing balance (2,084) $ (1,424) $ (1,180) Accumulated other comprehensive loss $ (59,387) $ (40,681) $ (39,749) |
Commitments, Contingencies an_2
Commitments, Contingencies and Guarantees (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Commitments, Contingencies and Guarantees | |
Schedule of future minimum lease payments under non-cancelable leases | Future minimum lease payments related to operating leases for the five fiscal years following March 31, 2019 and thereafter are: Operating Capital Leases Leases Fiscal year ending March 31, : 2020 $ 14,685 $ 38 2021 13,895 13 2022 12,663 1 2023 9,879 — 2024 5,686 — 2025 and thereafter 16,761 — Total minimum lease payments $ 73,569 52 Less: amount representing interest 4 Present value of future lease payments 48 Less: current portion 35 Long term capital lease obligation $ 13 |
Derivative Financial Instrume_2
Derivative Financial Instruments (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Derivative Financial Instruments | |
Schedule of fair value of derivative instruments included in the consolidated balance sheets | March 31, 2019 March 31, 2018 Foreign currency exchange contracts: Other current assets $ 3,264 $ 2,109 Other long-term assets $ 147 $ 13 Accrued expenses and other $ 318 $ 1,023 Long-term liabilities $ 3 $ — March 31, 2019 March 31, 2018 Interest rate swap contracts : Other long-term assets $ 1,349 $ 2,486 Long-term liabilities $ 3,633 $ — |
Schedule of effect of the Company’s foreign currency exchange and interest rate swap contracts on the consolidated financial statements | The following tables set forth the effect of the Company’s foreign currency exchange and interest rate swap contracts on the consolidated financial statements of the Company for the fiscal years ended March 31, 2019 and 2018: Recognized in AOCI on Derivatives Designated as Derivatives Cash Flow Hedging Relationships March 31, 2019 March 31, 2018 Foreign currency exchange contracts $ (2,266) $ 2,825 Interest rate swaps $ (3,804) $ 868 Reclassified from AOCI into Location of Gain or (Loss) Reclassified Income from AOCI into Income March 31, 2019 March 31, 2018 Revenue $ (2,113) $ 8,687 Costs of revenue $ (1,481) $ 6,398 Operating expenses $ (663) $ 3,600 Interest Expenses $ 965 $ 224 Amount of Gain or (Loss) Recognized in Income Derivatives not Designated Location of Gain Or (Loss) on Derivatives as Hedging Instruments Recognized in Income on Derivatives March 31, 2019 March 31, 2018 Foreign currency exchange contracts Foreign currency transaction gains (losses) $ — Revenue $ 1,427 $ (171) Costs of revenue $ (941) $ 73 Selling, general and administrative expenses $ (41) $ (47) |
Business Segment Information (T
Business Segment Information (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Business Segment Information | |
Schedule of revenue attributed to geographic areas based on location of the client | Year Ended March 31, 2019 2018 2017 Customer revenue: United States of America $ 843,791 $ 628,147 $ 532,244 United Kingdom 209,232 195,547 164,970 Rest of World 194,840 196,975 161,517 Consolidated revenue $ 1,247,863 $ 1,020,669 $ 858,731 |
Schedule of long-lived assets, net of accumulated depreciation and amortization, attributed to geographic areas based on location of assets | March 31, March 31, 2019 2018 Long-lived assets, net of accumulated depreciation and amortization: United States of America $ 216,279 $ 213,024 India 251,722 276,512 Rest of World 23,847 25,281 Consolidated long-lived assets, net $ 491,848 $ 514,817 |
Quarterly Results of Operatio_2
Quarterly Results of Operations (unaudited) (Tables) | 12 Months Ended |
Mar. 31, 2019 | |
Quarterly Results of Operations (unaudited) | |
Schedule of quarterly results of operations | Three Months Ended March 31, December 31, September 30, June 30, March 31, December 31, September 30, June 30, 2019 2018 2018 2018 2018 2017 2017 2017 Revenue $ 327,631 $ 314,681 $ 305,520 $ 300,031 $ 281,341 $ 263,809 $ 248,174 $ 227,345 Costs of revenue 230,364 221,461 216,346 216,481 197,342 183,420 178,404 166,279 Gross profit 97,267 93,220 89,174 83,550 83,999 80,389 69,770 61,066 Operating expenses 74,227 73,935 75,155 69,626 67,624 66,726 59,491 54,996 Income from operations 23,040 19,285 14,019 13,924 16,375 13,663 10,279 6,070 Other income (expense) (9,930) 3,912 (12,461) (13,625) (5,582) 2,843 (1,187) (625) Income before income tax expense 13,110 23,197 1,558 299 10,793 16,506 9,092 5,445 Income tax expense (benefit) 4,611 10,400 (402) 5,864 6,163 24,427 1,500 798 Net income (loss) 8,499 12,797 1,960 (5,565) 4,630 (7,921) 7,592 4,647 Noncontrolling interest 138 221 455 731 1,747 2,134 2,824 989 Net income (loss) available to Virtusa stockholders $ 8,361 $ 12,576 $ 1,505 $ (6,296) $ 2,883 $ (10,055) $ 4,768 $ 3,658 Less: Series A Convertible Preferred Stock dividends and accretion 1,088 1,087 1,088 1,087 1,088 1,087 1,087 701 Net income (loss) available to Virtusa common stockholders 7,273 11,489 $ 417 $ (7,383) $ 1,795 (11,142) $ 3,681 $ 2,957 Basic earnings (loss) per share available to Virtusa common stockholders (1) $ 0.24 $ 0.38 $ 0.01 $ (0.25) $ 0.06 $ (0.38) $ 0.13 $ 0.10 Diluted earnings (loss) per share available to Virtusa common stockholders (1) $ 0.24 $ 0.37 $ 0.01 $ (0.25) $ 0.06 $ (0.38) $ 0.12 $ 0.10 Earnings (loss) per share amounts for each quarter may not total to the yearly earnings (loss) per share due to the weighting of shares outstanding on a quarterly and year-to-date basis |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Cash and cash equivalents and restricted cash (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 |
Summary of Significant Accounting Policies | ||
Restricted cash | $ 437 | $ 338 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Goodwill and other intangible assets (Details) $ in Thousands | 12 Months Ended |
Mar. 31, 2019USD ($)item | |
Summary of Significant Accounting Policies | |
Number of reporting units for goodwill impairment analysis | item | 1 |
Goodwill impairment charge | $ | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Concentration of credit risk and significant customers (Details) - item | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Credit Concentration Risk | Accounts Receivable | |||
Significant Customers | |||
Number of clients | 0 | 1 | |
Concentration risk percentage | 10.00% | ||
Customer A | Customer Concentration Risk | Sales Revenue Net | |||
Significant Customers | |||
Concentration risk percentage | 18.00% | 19.00% | 17.00% |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Internally-developed software (Details) - Software - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Internally-Developed Software | |||
Capitalized software development costs | $ 13,083 | $ 11,022 | |
Amortization of capitalized software development costs | $ 1,749 | $ 2,377 | $ 1,702 |
Minimum | |||
Internally-Developed Software | |||
Estimated useful life | 3 years | ||
Maximum | |||
Internally-Developed Software | |||
Estimated useful life | 10 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Revenue recognition, cost of revenue and operating expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Revenue Recognition | |||
Reimbursements of travel and out-of-pocket expenses | $ 13,271 | $ 12,924 | $ 12,920 |
Costs of Revenue and Operating Expenses | |||
Advertising and promotional expenses | $ 477 | $ 306 | $ 560 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Share based compensation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Share-based compensation | |||
Total share-based compensation expense | $ 29,056 | $ 27,411 | $ 22,123 |
Cost Of Sales | |||
Share-based compensation | |||
Total share-based compensation expense | 499 | 895 | 2,501 |
Selling General And Administrative Expenses | |||
Share-based compensation | |||
Total share-based compensation expense | $ 28,557 | $ 26,516 | $ 19,622 |
Minimum | |||
Share-based compensation | |||
Requisite service period | 3 years | ||
Maximum | |||
Share-based compensation | |||
Requisite service period | 4 years |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Recent accounting pronouncements ASC 606 (Details) - USD ($) $ in Thousands | Apr. 01, 2018 | Mar. 31, 2019 | Mar. 31, 2018 |
Recently Adopted Accounting Pronouncements | |||
Net increase to opening retained earnings, after tax | $ 464 | ||
Assets | |||
Other current assets | $ 21,167 | 29,967 | $ 21,229 |
Deferred income taxes | 31,386 | 28,770 | 31,528 |
Other long-term assets | 12,440 | 29,836 | 11,772 |
Stockholders' equity: | |||
Retained earnings | 238,483 | 250,279 | $ 238,019 |
ASU 2014-09 | |||
Recently Adopted Accounting Pronouncements | |||
Net increase to opening retained earnings, after tax | 464 | ||
Tax impact on opening retained earnings | 142 | ||
ASU 2014-09 | Impact from New Revenue Standard, ASC Topic 606 | |||
Assets | |||
Other current assets | (62) | 401 | |
Deferred income taxes | (142) | (252) | |
Other long-term assets | 668 | (9) | |
Stockholders' equity: | |||
Retained earnings | $ 464 | $ 925 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Recent accounting pronouncements ASU 2016-18 (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from investing activities: | |||
Net cash provided by (used in) investing activities | $ (74,708) | $ (52,669) | $ (25,689) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (13,782) | 2,677 | (3,379) |
Net increase (decrease) in cash and cash equivalents and restricted cash | (5,122) | 50,149 | (97,842) |
Cash, cash equivalents and restricted cash, beginning of year | 195,235 | 145,086 | 242,928 |
Cash, cash equivalents and restricted cash, end of year | 190,113 | 195,235 | 145,086 |
ASU 2016-18 | As Reported | |||
Cash flows from investing activities: | |||
Increase in restricted cash | (158) | ||
Decrease in restricted cash | 92,704 | ||
Net cash provided by (used in) investing activities | (52,827) | 67,015 | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2,675 | (2,319) | |
Net increase (decrease) in cash and cash equivalents and restricted cash | 49,989 | (4,078) | |
Cash, cash equivalents and restricted cash, beginning of year | 194,897 | 144,908 | 148,986 |
Cash, cash equivalents and restricted cash, end of year | 194,897 | 144,908 | |
ASU 2016-18 | Effect | |||
Cash flows from investing activities: | |||
Increase in restricted cash | 158 | ||
Decrease in restricted cash | (92,704) | ||
Net cash provided by (used in) investing activities | 158 | (92,704) | |
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 2 | (1,060) | |
Net increase (decrease) in cash and cash equivalents and restricted cash | 160 | (93,764) | |
Cash, cash equivalents and restricted cash, beginning of year | $ 338 | 178 | 93,942 |
Cash, cash equivalents and restricted cash, end of year | $ 338 | $ 178 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - New accounting pronouncements (Details) - Effect - ASU 2016-02 $ in Thousands | Apr. 01, 2019USD ($) |
Minimum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Right-of-use-assets | $ 48,000 |
Lease liabilities | 52,000 |
Maximum | |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |
Right-of-use-assets | 58,000 |
Lease liabilities | $ 62,000 |
Earnings (Loss) per Share - Bas
Earnings (Loss) per Share - Basic earnings (loss) per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Numerator: | |||||||||||
Net income (loss) available to Virtusa stockholders | $ 8,361 | $ 12,576 | $ 1,505 | $ (6,296) | $ 2,883 | $ (10,055) | $ 4,768 | $ 3,658 | $ 16,146 | $ 1,254 | $ 11,858 |
Less: Series A Convertible Preferred Stock dividends and accretion | 1,088 | 1,087 | 1,088 | 1,087 | 1,088 | 1,087 | 1,087 | 701 | 4,350 | 3,963 | |
Net income (loss) available to Virtusa common stockholders | $ 7,273 | $ 11,489 | $ 417 | $ (7,383) | $ 1,795 | $ (11,142) | $ 3,681 | $ 2,957 | $ 11,796 | $ (2,709) | $ 11,858 |
Denominator: | |||||||||||
Basic weighted average common shares outstanding (in shares) | 29,817,526 | 29,397,350 | 29,650,026 | ||||||||
Basic earnings (loss) per share available to Virtusa common stockholders (in dollars per share) | $ 0.24 | $ 0.38 | $ 0.01 | $ (0.25) | $ 0.06 | $ (0.38) | $ 0.13 | $ 0.10 | $ 0.40 | $ (0.09) | $ 0.40 |
Earnings (Loss) per Share - Dil
Earnings (Loss) per Share - Diluted earnings (loss) per share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Numerator: | |||||||||||
Net income (loss) available to Virtusa common stockholders | $ 7,273 | $ 11,489 | $ 417 | $ (7,383) | $ 1,795 | $ (11,142) | $ 3,681 | $ 2,957 | $ 11,796 | $ (2,709) | $ 11,858 |
Net income (loss) available to Virtusa common stockholders and assumed conversion | $ 11,796 | $ (2,709) | $ 11,858 | ||||||||
Denominator: | |||||||||||
Basic weighted average common shares outstanding (in shares) | 29,817,526 | 29,397,350 | 29,650,026 | ||||||||
Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units (in shares) | 842,128 | 564,853 | |||||||||
Dilutive effect of stock appreciation rights (in shares) | 292 | ||||||||||
Weighted average shares-diluted (in shares) | 30,659,654 | 29,397,350 | 30,215,171 | ||||||||
Diluted earnings (loss) per share available to Virtusa common stockholders (in dollars per share) | $ 0.24 | $ 0.37 | $ 0.01 | $ (0.25) | $ 0.06 | $ (0.38) | $ 0.12 | $ 0.10 | $ 0.38 | $ (0.09) | $ 0.39 |
Earnings (Loss) per Share - Ant
Earnings (Loss) per Share - Anti-dilutive securities (Details) - shares | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Employee stock options and unvested restricted stock awards and restricted stock units | |||
Anti-dilutive securities | |||
Shares excluded from computation of earnings (loss) per share | 13,336 | 918,305 | 378,627 |
Series A Convertible Preferred Stock | |||
Anti-dilutive securities | |||
Shares excluded from computation of earnings (loss) per share | 1,500,000 | 2,728,022 |
Acquisitions - eTouch - Transac
Acquisitions - eTouch - Transaction details (Details) $ in Thousands | Sep. 12, 2019USD ($) | Mar. 12, 2019USD ($) | Mar. 12, 2018USD ($)tranche | Mar. 31, 2019USD ($) |
Acquisitions | ||||
Increase (reduction) in goodwill related to fair value assessment | $ (7,407) | |||
eTouch | ||||
Acquisitions | ||||
Cash purchase price | $ 140,000 | |||
Maximum additional amount set aside for retention bonuses | $ 15,000 | |||
Number of tranches for payment of purchase price | tranche | 3 | |||
Cash payments for acquisition | $ 42,500 | $ 80,000 | $ 42,500 | |
Measurement period | 1 year | |||
Consideration paid at closing, from cash on hand | 10,000 | |||
Tax liability payable to equity holders | $ 2,395 | |||
eTouch | Customer relationships and trademark | ||||
Acquisitions | ||||
Increase (reduction) in goodwill related to fair value assessment | 10,100 | |||
eTouch | Other adjustments. | ||||
Acquisitions | ||||
Increase (reduction) in goodwill related to fair value assessment | $ 298 | |||
eTouch | Scenario Forecast | ||||
Acquisitions | ||||
Cash payments for acquisition | $ 17,500 | |||
eTouch | Delayed-draw term loan | Credit Agreement | JPM | ||||
Acquisitions | ||||
Consideration paid at closing, from cash proceeds under credit agreement | 70,000 | |||
eTouch US | ||||
Acquisitions | ||||
Cash payments for acquisition | 66,000 | |||
eTouch India | ||||
Acquisitions | ||||
Cash payments for acquisition | $ 14,000 |
Acquisitions - eTouch - Purchas
Acquisitions - eTouch - Purchase price allocation (Details) - USD ($) $ in Thousands | Mar. 12, 2019 | Mar. 12, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 |
Assets and Liabilities: | |||||
Goodwill | $ 279,543 | $ 297,251 | $ 211,089 | ||
Weighted Average Useful Life | 12 years 10 months 24 days | 11 years 9 months 18 days | |||
Trademarks | |||||
Assets and Liabilities: | |||||
Weighted Average Useful Life | 2 years | 2 years 1 month 6 days | |||
Customer Relationships | |||||
Assets and Liabilities: | |||||
Weighted Average Useful Life | 13 years | 12 years 1 month 6 days | |||
eTouch | |||||
Consideration Transferred: | |||||
Cash paid at closing | $ 42,500 | $ 80,000 | $ 42,500 | ||
Fair value of the future payments | 57,858 | ||||
Tax related liability | 11,708 | ||||
Fair value of consideration | 149,566 | ||||
Less: Cash acquired | (2,411) | ||||
Total purchase price, net of cash acquired | 147,155 | ||||
Assets and Liabilities: | |||||
Cash and cash equivalents | 2,411 | ||||
Accounts receivable | 15,300 | ||||
Unbilled receivables | 2,986 | ||||
Prepaid expenses | 815 | ||||
Other current assets | 389 | ||||
Property and equipment | 2,625 | ||||
Other long-term assets | 98 | ||||
Goodwill | 78,210 | ||||
Accounts payable | (3,228) | ||||
Deferred revenue | (852) | ||||
Accrued expenses and other current liabilities | (727) | ||||
Accrued employee compensation and benefits | (4,192) | ||||
Income taxes payable | (250) | ||||
Deferred income taxes | (367) | ||||
Other long-term liabilities | (552) | ||||
Total purchase price | 149,566 | ||||
eTouch | Trademarks | |||||
Assets and Liabilities: | |||||
Intangible assets | $ 900 | ||||
Weighted Average Useful Life | 2 years | ||||
eTouch | Customer Relationships | |||||
Assets and Liabilities: | |||||
Intangible assets | $ 56,000 | ||||
eTouch | Customer Relationships | Minimum | |||||
Assets and Liabilities: | |||||
Weighted Average Useful Life | 10 years | ||||
eTouch | Customer Relationships | Maximum | |||||
Assets and Liabilities: | |||||
Weighted Average Useful Life | 15 years |
Acquisitions - Consulting Compa
Acquisitions - Consulting Company in India (Details) - USD ($) $ in Thousands | Jun. 29, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 |
Purchase price allocation: | ||||
Goodwill | $ 279,543 | $ 297,251 | $ 211,089 | |
Consulting company of India | ||||
Acquisitions | ||||
Cash paid at closing | $ 750 | |||
Escrow deposit | $ 50 | |||
Holdback payment term | 1 year | |||
Additional payment earn-out consideration after two years | $ 100 | |||
Earn-out consideration period based on certain achievement | 2 years | |||
Purchase price allocation: | ||||
Goodwill | $ 150 | |||
Consulting company of India | Customer Relationships | ||||
Purchase price allocation: | ||||
Intangible assets | $ 600 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands | 12 Months Ended | |
Mar. 31, 2019USD ($)item | Mar. 31, 2018USD ($) | |
Goodwill and Intangible Assets | ||
Number of reportable segments | item | 1 | |
Changes in goodwill | ||
Balance at the beginning of the period | $ 297,251 | $ 211,089 |
Goodwill arising from acquisitions | 85,767 | |
Purchase price adjustment | (7,407) | |
Foreign currency translation adjustments | (10,301) | 395 |
Balance at the end of the period | 279,543 | $ 297,251 |
Acquisition costs and goodwill deductible for tax purposes | 145,660 | |
Acquisition costs and goodwill not deductible for tax purposes | $ 146,786 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Intangible Assets | |||
Weighted Average Useful Life | 12 years 10 months 24 days | 11 years 9 months 18 days | |
Gross Carrying Amount | $ 126,920 | $ 133,524 | |
Accumulated Amortization | 34,480 | 37,523 | |
Net Carrying Amount | 92,440 | 96,001 | |
Amortization of Intangible Assets | 11,394 | $ 10,089 | $ 9,523 |
Estimated amortization expense related to the purchased intangible assets | |||
2020 | 11,618 | ||
2021 | 10,682 | ||
2022 | 9,640 | ||
2023 | 9,283 | ||
2024 | 8,704 | ||
Thereafter | 42,513 | ||
Total | $ 92,440 | ||
Customer Relationships | |||
Intangible Assets | |||
Weighted Average Useful Life | 13 years | 12 years 1 month 6 days | |
Gross Carrying Amount | $ 125,520 | $ 129,264 | |
Accumulated Amortization | 33,679 | 34,296 | |
Net Carrying Amount | $ 91,841 | $ 94,968 | |
Trademarks | |||
Intangible Assets | |||
Weighted Average Useful Life | 2 years | 2 years 1 month 6 days | |
Gross Carrying Amount | $ 900 | $ 3,760 | |
Accumulated Amortization | 431 | 2,975 | |
Net Carrying Amount | $ 469 | $ 785 | |
Technology | |||
Intangible Assets | |||
Weighted Average Useful Life | 5 years | 5 years | |
Gross Carrying Amount | $ 500 | $ 500 | |
Accumulated Amortization | 370 | 252 | |
Net Carrying Amount | $ 130 | $ 248 |
Investment Securities (Details)
Investment Securities (Details) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019USD ($)item | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | |
Total available-for-sale and equity securities | |||
Amortized Cost | $ 33,240 | ||
Gross Unrealized Gains | 222 | ||
Gross Unrealized Losses | (2) | ||
Fair Value | 33,460 | ||
Total available-for-sale and equity securities | |||
Amortized Cost | $ 50,050 | ||
Gross Unrealized Gains | 209 | ||
Gross Unrealized Losses | (219) | ||
Fair Value | 50,040 | ||
Other-than-temporary impairment losses recognized | |||
Unrealized losses recognized in other comprehensive loss at beginning | 70 | ||
Add: unrealized losses recognized | 1,341 | ||
Less: Other than temporary impairment recognized in earnings | (1,411) | ||
Unrealized losses recognized in other comprehensive loss at ending | 70 | ||
Fair Value | |||
Less Than 12 Months | 253 | 22,081 | |
Greater Than 12 Months | 2,297 | 7,916 | |
Gross Unrealized Loss | |||
Less Than 12 Months | (135) | ||
Greater Than 12 Months | $ (2) | (84) | |
Number of investment securities in unrealized loss positions for greater than 12 months | item | 0 | ||
Available-for-sale securities by contractual maturity | |||
Due in one year or less | $ 33,138 | ||
Due after 1 year through 5 years | 322 | ||
Total | 33,460 | ||
Proceeds from sales or maturities of available-for-sale investment and equity securities | |||
Proceeds from sales or maturities of available-for-sale investment securities and equity securities | 109,512 | 158,800 | $ 138,232 |
Gross gains | 1,023 | 1,655 | 1,007 |
Gross losses | (13) | (127) | (1) |
Net realized gains on sales of available-for-sale investment securities and equity securities | 1,010 | 1,528 | $ 1,006 |
Corporate Debt Securities | |||
Fair Value | |||
Less Than 12 Months | 253 | 22,081 | |
Greater Than 12 Months | 2,297 | 5,461 | |
Gross Unrealized Loss | |||
Less Than 12 Months | (135) | ||
Greater Than 12 Months | (2) | (13) | |
Corporate Debt Securities | Current | |||
Available-for-sale securities | |||
Amortized Cost | 2,779 | ||
Gross Unrealized Gains | 1 | ||
Gross Unrealized Losses | (2) | ||
Fair Value | 2,778 | ||
Total available-for-sale and equity securities | |||
Amortized Cost | 25,397 | ||
Gross Unrealized Losses | (126) | ||
Fair Value | 25,271 | ||
Corporate Debt Securities | Noncurrent | |||
Total available-for-sale and equity securities | |||
Amortized Cost | 2,293 | ||
Gross Unrealized Losses | (22) | ||
Fair Value | 2,271 | ||
Preference shares | |||
Available-for-sale securities | |||
Amortized Cost | 188 | ||
Fair Value | 188 | ||
Fair Value | |||
Greater Than 12 Months | 1,656 | ||
Gross Unrealized Loss | |||
Greater Than 12 Months | (70) | ||
Preference shares | Noncurrent | |||
Total available-for-sale and equity securities | |||
Amortized Cost | 1,726 | ||
Gross Unrealized Losses | (70) | ||
Fair Value | 1,656 | ||
Agency And Short Term Notes | |||
Fair Value | |||
Greater Than 12 Months | 799 | ||
Gross Unrealized Loss | |||
Greater Than 12 Months | (1) | ||
Agency And Short Term Notes | Current | |||
Available-for-sale securities | |||
Amortized Cost | 1,492 | ||
Gross Unrealized Gains | 1 | ||
Fair Value | 1,493 | ||
Total available-for-sale and equity securities | |||
Amortized Cost | 800 | ||
Gross Unrealized Losses | (1) | ||
Fair Value | 799 | ||
Time Deposits | Current | |||
Available-for-sale securities | |||
Amortized Cost | 15,861 | ||
Fair Value | 15,861 | ||
Total available-for-sale and equity securities | |||
Amortized Cost | 18,279 | ||
Fair Value | 18,279 | ||
Mutual funds | Current | |||
Equity securities | |||
Amortized Cost | 12,912 | ||
Gross Unrealized Gains | 94 | ||
Fair Value | 13,006 | ||
Total available-for-sale and equity securities | |||
Amortized Cost | 1,540 | ||
Gross Unrealized Gains | 11 | ||
Fair Value | 1,551 | ||
Equity Shares/ Options | Noncurrent | |||
Equity securities | |||
Amortized Cost | 8 | ||
Gross Unrealized Gains | 126 | ||
Fair Value | $ 134 | ||
Total available-for-sale and equity securities | |||
Amortized Cost | 15 | ||
Gross Unrealized Gains | 198 | ||
Fair Value | $ 213 |
Investments in Unconsolidated_2
Investments in Unconsolidated Affiliates (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Investments in Unconsolidated Affiliates | |
Difference between carrying amount and equity in net assets | $ 629 |
Intellect Polaris Design LLC | |
Investments in Unconsolidated Affiliates | |
Ownership interest (as a percent) | 50.00% |
Fair Value of Financial Instr_3
Fair Value of Financial Instruments - Financial assets and liabilities measured at fair value on a recurring basis (Details) - Fair Value Measurements Recurring - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 |
Investments: | ||
Available-for-sales securities - current | $ 20,132 | |
Equity securities - current | 13,006 | |
Available-for-sales securities - non-current | 188 | |
Equity securities - non-current | 134 | |
Available-for-sales securities—current (prior guidance) | $ 45,900 | |
Available-for-sales securities—non-current (prior guidance) | 4,140 | |
Derivative financial instruments: | ||
Foreign currency derivative contracts | 3,411 | 2,122 |
Interest Rate Swap Contracts | 1,349 | 2,486 |
Total assets | 38,220 | 54,648 |
Liabilities: | ||
Foreign currency derivative contracts | 321 | 1,023 |
Interest Rate Swap Contracts | 3,633 | |
Contingent consideration | 100 | |
Total liabilities | 3,954 | 1,123 |
Fair Value Inputs Level2 | ||
Investments: | ||
Available-for-sales securities - current | 20,132 | |
Equity securities - current | 13,006 | |
Available-for-sales securities - non-current | 188 | |
Equity securities - non-current | 134 | |
Available-for-sales securities—current (prior guidance) | 45,900 | |
Available-for-sales securities—non-current (prior guidance) | 4,140 | |
Derivative financial instruments: | ||
Foreign currency derivative contracts | 3,411 | 2,122 |
Interest Rate Swap Contracts | 1,349 | 2,486 |
Total assets | 38,220 | 54,648 |
Liabilities: | ||
Foreign currency derivative contracts | 321 | 1,023 |
Interest Rate Swap Contracts | 3,633 | |
Total liabilities | $ 3,954 | 1,023 |
Fair Value Inputs Level3 | ||
Liabilities: | ||
Contingent consideration | 100 | |
Total liabilities | $ 100 |
Revenues - Impacts of changes i
Revenues - Impacts of changes in accounting policies after adoption of ASC 606 on the Company's consolidated financial statements (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | ||||||||||
Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | Apr. 01, 2018 | |
Assets | ||||||||||||
Other current assets | $ 29,967 | $ 21,229 | $ 29,967 | $ 21,229 | $ 21,167 | |||||||
Total current assets | 580,251 | 549,335 | 580,251 | 549,335 | ||||||||
Deferred income taxes | 28,770 | 31,528 | 28,770 | 31,528 | 31,386 | |||||||
Other long-term assets | 29,836 | 11,772 | 29,836 | 11,772 | 12,440 | |||||||
Total assets | 1,132,473 | 1,113,180 | 1,132,473 | 1,113,180 | ||||||||
Liabilities, Series A convertible preferred stock, redeemable noncontrolling interest and stockholders’ equity | ||||||||||||
Deferred revenue | 6,421 | 7,908 | 6,421 | 7,908 | ||||||||
Total current liabilities | 213,994 | 216,700 | 213,994 | 216,700 | ||||||||
Stockholders' equity: | ||||||||||||
Retained earnings | 250,279 | 238,019 | 250,279 | 238,019 | 238,483 | |||||||
Total liabilities, Series A convertible preferred stock, redeemable noncontrolling interest and stockholders’ equity | 1,132,473 | 1,113,180 | 1,132,473 | 1,113,180 | ||||||||
Consolidated Statements of Income | ||||||||||||
Revenue | 1,247,863 | |||||||||||
Costs of revenue | 230,364 | $ 221,461 | $ 216,346 | $ 216,481 | 197,342 | $ 183,420 | $ 178,404 | $ 166,279 | 884,652 | 725,445 | $ 620,950 | |
Gross profit | 97,267 | 93,220 | 89,174 | 83,550 | 83,999 | 80,389 | 69,770 | 61,066 | 363,211 | 295,224 | 237,781 | |
Operating expenses: | ||||||||||||
Selling, general and administrative expenses | 74,227 | 73,935 | 75,155 | 69,626 | 67,624 | 66,726 | 59,491 | 54,996 | 292,943 | 248,837 | 219,410 | |
Income from operations | 23,040 | 19,285 | 14,019 | 13,924 | 16,375 | 13,663 | 10,279 | 6,070 | 70,268 | 46,387 | 18,371 | |
Other income (expense) | (9,930) | 3,912 | (12,461) | (13,625) | (5,582) | 2,843 | (1,187) | (625) | (32,104) | (4,551) | 447 | |
Income before income tax expense | 13,110 | 23,197 | 1,558 | 299 | 10,793 | 16,506 | 9,092 | 5,445 | 38,164 | 41,836 | 18,818 | |
Income tax expense | 4,611 | 10,400 | (402) | 5,864 | 6,163 | 24,427 | 1,500 | 798 | 20,473 | 32,888 | 2,561 | |
Net income | 8,499 | 12,797 | 1,960 | (5,565) | 4,630 | (7,921) | 7,592 | 4,647 | 17,691 | 8,948 | 16,257 | |
Less: net income attributable to noncontrolling interests, net of tax | 138 | 221 | 455 | 731 | 1,747 | 2,134 | 2,824 | 989 | 1,545 | 7,694 | 4,399 | |
Net income available to Virtusa stockholders | 8,361 | 12,576 | 1,505 | (6,296) | 2,883 | (10,055) | 4,768 | 3,658 | 16,146 | 1,254 | 11,858 | |
Less: Series A Convertible Preferred Stock dividends and accretion | 1,088 | 1,087 | 1,088 | 1,087 | 1,088 | 1,087 | 1,087 | 701 | 4,350 | 3,963 | ||
Net income (loss) available to Virtusa common stockholders | $ 7,273 | $ 11,489 | $ 417 | $ (7,383) | $ 1,795 | $ (11,142) | $ 3,681 | $ 2,957 | $ 11,796 | $ (2,709) | $ 11,858 | |
Basic earnings per share available to Virtusa common stockholders (in dollars per share) | $ 0.24 | $ 0.38 | $ 0.01 | $ (0.25) | $ 0.06 | $ (0.38) | $ 0.13 | $ 0.10 | $ 0.40 | $ (0.09) | $ 0.40 | |
Diluted earnings per share available to Virtusa common stockholders (in dollars per share) | $ 0.24 | $ 0.37 | $ 0.01 | $ (0.25) | $ 0.06 | $ (0.38) | $ 0.12 | $ 0.10 | $ 0.38 | $ (0.09) | $ 0.39 | |
Pro-forma Amounts | ASU 2014-09 | ||||||||||||
Assets | ||||||||||||
Other current assets | $ 29,566 | $ 29,566 | ||||||||||
Deferred income taxes | 29,022 | 29,022 | ||||||||||
Other long-term assets | 29,845 | 29,845 | ||||||||||
Liabilities, Series A convertible preferred stock, redeemable noncontrolling interest and stockholders’ equity | ||||||||||||
Deferred revenue | 7,206 | 7,206 | ||||||||||
Stockholders' equity: | ||||||||||||
Retained earnings | 249,354 | 249,354 | ||||||||||
Consolidated Statements of Income | ||||||||||||
Revenue | 1,247,078 | |||||||||||
Costs of revenue | 885,044 | |||||||||||
Gross profit | 362,034 | |||||||||||
Operating expenses: | ||||||||||||
Selling, general and administrative expenses | 292,943 | |||||||||||
Income from operations | 69,091 | |||||||||||
Other income (expense) | (32,104) | |||||||||||
Income before income tax expense | 36,987 | |||||||||||
Income tax expense | 20,221 | |||||||||||
Net income | 16,766 | |||||||||||
Less: net income attributable to noncontrolling interests, net of tax | 1,545 | |||||||||||
Net income available to Virtusa stockholders | 15,221 | |||||||||||
Less: Series A Convertible Preferred Stock dividends and accretion | 4,350 | |||||||||||
Net income (loss) available to Virtusa common stockholders | $ 10,871 | |||||||||||
Basic earnings per share available to Virtusa common stockholders (in dollars per share) | $ 0.37 | |||||||||||
Diluted earnings per share available to Virtusa common stockholders (in dollars per share) | $ 0.35 | |||||||||||
Impact from New Revenue Standard, ASC Topic 606 | ASU 2014-09 | ||||||||||||
Assets | ||||||||||||
Other current assets | 401 | $ 401 | (62) | |||||||||
Total current assets | 401 | 401 | ||||||||||
Deferred income taxes | (252) | (252) | (142) | |||||||||
Other long-term assets | (9) | (9) | 668 | |||||||||
Total assets | 140 | 140 | ||||||||||
Liabilities, Series A convertible preferred stock, redeemable noncontrolling interest and stockholders’ equity | ||||||||||||
Deferred revenue | (785) | (785) | ||||||||||
Total current liabilities | (785) | (785) | ||||||||||
Stockholders' equity: | ||||||||||||
Retained earnings | 925 | 925 | $ 464 | |||||||||
Total liabilities, Series A convertible preferred stock, redeemable noncontrolling interest and stockholders’ equity | $ 140 | 140 | ||||||||||
Consolidated Statements of Income | ||||||||||||
Revenue | 785 | |||||||||||
Costs of revenue | (392) | |||||||||||
Gross profit | 1,177 | |||||||||||
Operating expenses: | ||||||||||||
Income from operations | 1,177 | |||||||||||
Income before income tax expense | 1,177 | |||||||||||
Income tax expense | 252 | |||||||||||
Net income | 925 | |||||||||||
Net income available to Virtusa stockholders | 925 | |||||||||||
Net income (loss) available to Virtusa common stockholders | $ 925 | |||||||||||
Basic earnings per share available to Virtusa common stockholders (in dollars per share) | $ 0.03 | |||||||||||
Diluted earnings per share available to Virtusa common stockholders (in dollars per share) | $ 0.03 |
Revenues - Receivable and Contr
Revenues - Receivable and Contract Balances (Details) $ in Thousands | 12 Months Ended |
Mar. 31, 2019USD ($) | |
Significant movements in contract assets | |
Balance at the beginning of the period | $ 15,998 |
Revenues recognized during the period but not yet billed | 120,536 |
Amounts billed | (117,687) |
Other | (309) |
Balance at the end of the period | 18,538 |
Significant movements in deferred revenue balances | |
Balance at the beginning of the period | 7,908 |
Amounts billed but not yet recognized as revenues | 5,844 |
Revenues recognized related to the opening balance of deferred revenue | (6,906) |
Other | (425) |
Balance at the end of the period | 6,421 |
Aggregate amount of transaction price allocated to remaining performance obligations | $ 43,292 |
Revenues - Remaining performanc
Revenues - Remaining performance obligation (Details) | Mar. 31, 2019 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2019-03-31 | |
Remaining performance obligation, expected period of recognition | 4 years |
Revenues - Capitalized costs (D
Revenues - Capitalized costs (Details) $ in Thousands | 12 Months Ended |
Mar. 31, 2019USD ($) | |
Capitalized costs to fulfill | |
Balance at the beginning of the period | $ 4,278 |
Costs capitalized | 2,382 |
Amortization expense | (2,248) |
Foreign currency translation adjustments | (113) |
Balance at the end of the period | $ 4,299 |
Revenues - Disaggregation of Re
Revenues - Disaggregation of Revenue (Details) $ in Thousands | 12 Months Ended |
Mar. 31, 2019USD ($) | |
Disaggregation of Revenue | |
Revenue | $ 1,247,863 |
Time-and-materials | |
Disaggregation of Revenue | |
Revenue | 738,309 |
Fixed-price | |
Disaggregation of Revenue | |
Revenue | 509,554 |
Application outsourcing | |
Disaggregation of Revenue | |
Revenue | 672,636 |
Consulting | |
Disaggregation of Revenue | |
Revenue | 575,227 |
Banking financial services insurance | |
Disaggregation of Revenue | |
Revenue | 776,955 |
Communications and Technology | |
Disaggregation of Revenue | |
Revenue | 360,967 |
Media & Information and Other | |
Disaggregation of Revenue | |
Revenue | 109,941 |
North America | |
Disaggregation of Revenue | |
Revenue | 884,114 |
Europe | |
Disaggregation of Revenue | |
Revenue | 261,967 |
Rest Of World | |
Disaggregation of Revenue | |
Revenue | $ 101,782 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Property and Equipment | |||
Property and equipment, gross | $ 199,008 | $ 192,028 | |
Less-accumulated depreciation and amortization | 79,143 | 70,463 | |
Property and equipment, net | 119,865 | 121,565 | |
Depreciation and amortization expense | 17,174 | 17,448 | $ 16,329 |
Computer And Other Equipment | |||
Property and Equipment | |||
Property and equipment, gross | $ 60,771 | 50,154 | |
Computer And Other Equipment | Minimum | |||
Property and Equipment | |||
Estimated Useful Life | 3 years | ||
Computer And Other Equipment | Maximum | |||
Property and Equipment | |||
Estimated Useful Life | 5 years | ||
Furniture And Fixtures | |||
Property and Equipment | |||
Estimated Useful Life | 7 years | ||
Property and equipment, gross | $ 15,764 | 14,862 | |
Vehicles | |||
Property and Equipment | |||
Property and equipment, gross | $ 1,232 | 1,753 | |
Vehicles | Minimum | |||
Property and Equipment | |||
Estimated Useful Life | 3 years | ||
Vehicles | Maximum | |||
Property and Equipment | |||
Estimated Useful Life | 5 years | ||
Software | |||
Property and Equipment | |||
Property and equipment, gross | $ 24,752 | 23,963 | |
Software | Minimum | |||
Property and Equipment | |||
Estimated Useful Life | 3 years | ||
Software | Maximum | |||
Property and Equipment | |||
Estimated Useful Life | 10 years | ||
Leasehold Improvements | |||
Property and Equipment | |||
Property and equipment, gross | $ 14,642 | 10,558 | |
Building | |||
Property and Equipment | |||
Property and equipment, gross | $ 31,813 | 32,382 | |
Building | Minimum | |||
Property and Equipment | |||
Estimated Useful Life | 15 years | ||
Building | Maximum | |||
Property and Equipment | |||
Estimated Useful Life | 30 years | ||
Land | |||
Property and Equipment | |||
Property and equipment, gross | $ 45,765 | 56,611 | |
Capital work in progress | |||
Property and Equipment | |||
Property and equipment, gross | 4,269 | 1,745 | |
Assets Held Under Capital Leases | |||
Property and Equipment | |||
Property and equipment, gross | 257 | 262 | |
Less-accumulated depreciation and amortization | $ 219 | $ 174 |
Assets Held for Sale (Details)
Assets Held for Sale (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019USD ($) | Mar. 31, 2019USD ($) | |
Assets Held for Sale | ||
Impairment loss relating to the reclassification of land acquired in the Polaris acquisition to held for sale | $ 3,955 | $ 3,955 |
Asset held for sale | $ 8,978 | $ 8,978 |
Accrued Expenses and Other (Det
Accrued Expenses and Other (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 |
Accrued Expenses and Other | ||
Accrued other taxes | $ 9,177 | $ 6,776 |
Accrued professional fees | 21,908 | 18,422 |
Acquisition related liabilities | 18,519 | 50,619 |
Hedge liability | 527 | 1,043 |
Accrued discounts | 9,055 | 6,255 |
Accrued employee travel and other expense | 5,303 | 3,413 |
Accrued other | 5,561 | 4,778 |
Total | $ 70,050 | $ 91,306 |
Debt - Credit Agreement (Detail
Debt - Credit Agreement (Details) - USD ($) $ in Thousands | Mar. 11, 2019 | Aug. 14, 2018 | Mar. 12, 2018 | Feb. 06, 2018 | Mar. 31, 2019 | Mar. 31, 2018 | Feb. 05, 2018 |
Debt | |||||||
Amount drawn down on credit facility | $ 74,500 | $ 75,000 | |||||
Repayment of line of credit balance | 20,000 | ||||||
Proceeds from Issuance of Debt | $ 141,000 | ||||||
Credit Agreement | JPM | |||||||
Debt | |||||||
Term of credit facility | 5 years | ||||||
Credit Agreement | JPM | London Interbank Offered Rate L I B O R | |||||||
Debt | |||||||
Interest rate added to the base rate (as a percent) | 3.00% | ||||||
Credit Agreement | JPM | Revolving credit facility | |||||||
Debt | |||||||
Maximum borrowing capacity under the credit agreement | $ 200,000 | ||||||
Amount drawn down on credit facility | $ 32,000 | 55,000 | |||||
Credit Agreement | JPM | Delayed-draw term loan | |||||||
Debt | |||||||
Maximum borrowing capacity under the credit agreement | 70,000 | ||||||
Amount drawn down on credit facility | $ 42,500 | $ 70,000 | |||||
Required principal payments per quarter | $ 3,125 | ||||||
Frequency of required principal payments | quarter | ||||||
Interest rate (as a percent) | 5.00% | ||||||
Credit Agreement | JPM | Term loan facility | |||||||
Debt | |||||||
Maximum borrowing capacity under the credit agreement | 180,000 | ||||||
Amount drawn down on credit facility | $ 180,000 | ||||||
Prior Credit Agreement | JPM | |||||||
Debt | |||||||
Maximum borrowing capacity under the credit agreement | $ 300,000 |
Debt - Current portion of long-
Debt - Current portion of long-term debt (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 |
Current portion of long-term debt | ||
Total | $ 11,407 | $ 11,407 |
JPM | ||
Current portion of long-term debt | ||
Term loan - current maturities | 12,500 | 12,500 |
Less: deferred financing costs, current | (1,093) | (1,093) |
Total | $ 11,407 | $ 11,407 |
Debt - Long-term debt, less cur
Debt - Long-term debt, less current portion (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 |
Less: | ||
Total | $ 351,320 | $ 288,227 |
JPM | ||
Less: | ||
Current maturities | (12,500) | (12,500) |
Deferred financing costs, long-term | (3,180) | (4,273) |
Total | 351,320 | 288,227 |
Delayed-draw term loan | JPM | ||
Long-term debt, less current portion | ||
Term loan and borrowings under revolving credit facility | 237,500 | 250,000 |
Revolving credit facility | JPM | ||
Long-term debt, less current portion | ||
Term loan and borrowings under revolving credit facility | $ 129,500 | $ 55,000 |
Debt - Long term debt maturitie
Debt - Long term debt maturities (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Maturities of long-term debt | |
2020 | $ 12,500 |
2021 | 18,750 |
2022 | 25,000 |
2023 | 310,750 |
Total | $ 367,000 |
Debt - Sale of accounts receiva
Debt - Sale of accounts receivable (Details) - U.K. Subsidiary $ in Thousands | 12 Months Ended |
Mar. 31, 2019USD ($) | |
Debt | |
Receivables sold under the terms of the financing agreement | $ 31,872 |
Amounts due related to a financing agreement to sell certain accounts receivable balances | $ 0 |
Series A Convertible Preferre_2
Series A Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | May 03, 2017 | Mar. 31, 2019 | Mar. 31, 2018 |
Series A Convertible Preferred Stock | |||
Cash dividends paid | $ 4,184 | $ 3,127 | |
Series A Convertible Preferred Stock | Orogen | |||
Series A Convertible Preferred Stock | |||
Sale of convertible preferred stock (in shares) | 108,000 | ||
Shares issuable upon conversion (in shares) | 3,000,000 | ||
Aggregate purchase price | $ 108,000 | ||
Conversion price (in dollars per share) | $ 36 | ||
Dividend rate (as a percent) | 3.875% | ||
Direct and incremental expenses incurred | $ 1,154 | ||
Declared and accrued dividends | 686 | ||
Cash dividends paid | $ 4,184 | $ 3,127 | |
Series A Convertible Preferred Stock | Orogen | After May 3, 2024 | |||
Series A Convertible Preferred Stock | |||
Increase in preference dividend rate, per annum upon failure to repurchase (as a percent) | 1.00% | ||
Additional increase in preference dividend rate, per annum on each anniversary of the date that the Company is required to effect such repurchase (as a percent) | 1.00% | ||
Series A Convertible Preferred Stock | Orogen | After May 3, 2024 | Maximum | |||
Series A Convertible Preferred Stock | |||
Dividend rate (as a percent) | 6.875% |
Stock Options, Restricted Sto_3
Stock Options, Restricted Stock Awards and Stock Appreciation Rights (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | |||||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | May 31, 2015 | May 31, 2007 | Jul. 31, 2005 | |
Additional disclosure | ||||||
Unrecognized compensation cost related to unvested stock options, restricted stock awards, deferred stock awards and restricted stock units | $ 31,395 | |||||
Weighted average period for recognition of unrecognized compensation cost | 1 year 6 months 18 days | |||||
Employee Stock Option | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Term of awards | 10 years | |||||
Vesting period | 4 years | |||||
Number of Options to Purchase Common Shares | ||||||
Outstanding at the beginning of the period (in shares) | 247,344 | 569,661 | 679,138 | |||
Granted (in shares) | 0 | 0 | 0 | |||
Exercised (in shares) | (101,618) | (322,317) | (104,853) | |||
Forfeited or cancelled (in shares) | (4,624) | |||||
Outstanding at the end of the period (in shares) | 145,726 | 247,344 | 569,661 | |||
Exercisable at the end of the period (in shares) | 145,726 | |||||
Weighted Average Exercise Price | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ 14.24 | $ 13.31 | $ 13.58 | |||
Exercised (in dollars per share) | 10.02 | 12.60 | 14.18 | |||
Forfeited or cancelled (in dollars per share) | 31.97 | |||||
Outstanding at the end of the period (in dollars per share) | 17.18 | $ 14.24 | $ 13.31 | |||
Exercisable at the end of the period (in dollars per share) | $ 17.18 | |||||
Weighted Average Remaining Life (in years) | ||||||
Outstanding at the end of the period | 2 years 10 months 17 days | |||||
Exercisable at the end of the period | 2 years 10 months 17 days | |||||
Aggregate Intrinsic Value | ||||||
Outstanding at the end of the period | $ 5,286 | |||||
Exercisable at the end of the period | 5,286 | |||||
Additional disclosure | ||||||
Aggregate intrinsic value of options exercised | 4,215 | $ 7,816 | $ 1,629 | |||
Income tax (expense) benefits realized from the exercise of stock options | $ 3,388 | $ 1,481 | $ (719) | |||
Employee Stock Option | Minimum | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Purchase price of the entity's common stock expressed as a percentage of fair market value | 100.00% | |||||
Employee Stock Option | More Than Ten Percent Stockholder | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Ownership percentage triggering higher purchase price of the entity's shares | 10.00% | |||||
Employee Stock Option | More Than Ten Percent Stockholder | Minimum | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Purchase price of the entity's common stock expressed as a percentage of fair market value | 110.00% | |||||
Restricted Stock | ||||||
Number of Restricted Stock Awards | ||||||
Unvested at the beginning of the period (in shares) | 75,627 | 217,560 | 477,391 | |||
Vested (in shares) | (57,822) | (126,843) | (226,838) | |||
Forfeited (in shares) | (3,786) | (15,090) | (32,993) | |||
Unvested at the end of the period (in shares) | 14,019 | 75,627 | 217,560 | |||
Weighted Average Grant Date Fair Value | ||||||
Unvested at the beginning of the period (in dollars per share) | $ 40.04 | $ 35.55 | $ 31.69 | |||
Vested (in dollars per share) | 37.93 | 32.64 | 26.41 | |||
Forfeited (in dollars per share) | 45.88 | 37.55 | 42.59 | |||
Unvested at the end of the period (in dollars per share) | $ 47.17 | $ 40.04 | $ 35.55 | |||
Restricted Stock Units R S U | ||||||
Number of Restricted Stock Awards | ||||||
Unvested at the beginning of the period (in shares) | 1,521,989 | 1,979,616 | 607,240 | |||
Awarded (in shares) | 775,532 | 731,363 | 1,863,658 | |||
Vested (in shares) | (612,854) | (436,225) | (339,582) | |||
Forfeited (in shares) | (291,547) | (752,765) | (151,700) | |||
Unvested at the end of the period (in shares) | 1,393,120 | 1,521,989 | 1,979,616 | |||
Weighted Average Grant Date Fair Value | ||||||
Unvested at the beginning of the period (in dollars per share) | $ 29.18 | $ 27.29 | $ 44.43 | |||
Awarded (in dollars per share) | 46.27 | 35.99 | 24.63 | |||
Vested (in dollars per share) | 30.11 | 39.14 | 39.54 | |||
Forfeited (in dollars per share) | 31.66 | 25.06 | 35.82 | |||
Unvested at the end of the period (in dollars per share) | $ 37.76 | $ 29.18 | $ 27.29 | |||
Amended And Restated Stock Option Plan 2000 | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Shares available for future grant (in shares) | 0 | |||||
Number of shares reserved for issuance | 0 | |||||
Virtusa Corporation Stock Appreciation Right Plan 2005 | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Shares available for future grant (in shares) | 0 | |||||
Number of shares reserved for issuance | 479,233 | |||||
2015 Plan | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Number of shares reserved for issuance | 1,211,012 | 3,000,000 | ||||
2015 Plan | Stock options, restricted stock and restricted stock units | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Vesting period | 4 years | |||||
2015 Plan | Performance-based awards | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Vesting period | 3 years | |||||
Stock Option And Incentive Plan 2007 | ||||||
Stock Options, Restricted Stock Awards and Stock Appreciation Rights | ||||||
Shares available for future grant (in shares) | 0 | |||||
Number of shares reserved for issuance | 830,670 | |||||
Percentage of increase in authorized shares on each April 1, beginning in 2008 | 2.90% |
Income Taxes - Provision, recon
Income Taxes - Provision, reconciliation and deferred tax assets/liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Income before income tax expense based on the geographic location | |||||||||||
United States | $ 9,454 | $ (31,526) | $ (52,390) | ||||||||
Foreign | 28,710 | 73,362 | 71,208 | ||||||||
Income before income tax expense | $ 13,110 | $ 23,197 | $ 1,558 | $ 299 | $ 10,793 | $ 16,506 | $ 9,092 | $ 5,445 | 38,164 | 41,836 | 18,818 |
Current provision: | |||||||||||
Federal | 672 | 18,747 | (1,966) | ||||||||
State | 447 | (108) | 170 | ||||||||
Foreign | 21,124 | 24,195 | 15,213 | ||||||||
Total current provision | 22,243 | 42,834 | 13,417 | ||||||||
Deferred (benefit) provision: | |||||||||||
Federal | (315) | (1,289) | (7,870) | ||||||||
State | 1,105 | (2,726) | (2,888) | ||||||||
Foreign | (2,560) | (5,931) | (98) | ||||||||
Total deferred (benefit) provision | (1,770) | (9,946) | (10,856) | ||||||||
Total provision for income taxes | 4,611 | 10,400 | (402) | 5,864 | 6,163 | 24,427 | 1,500 | 798 | 20,473 | 32,888 | 2,561 |
Income tax reconciliation | |||||||||||
Tax on income before income tax expense at U.S. statutory rate | 8,014 | 12,865 | 6,398 | ||||||||
U.S. state and local taxes (benefit), net of U.S. federal income tax effects | 1,459 | (2,800) | (2,776) | ||||||||
Benefit from foreign subsidiaries’ tax holidays | (5,778) | (7,727) | (7,973) | ||||||||
Foreign rate difference | 11,795 | (2,215) | (7,688) | ||||||||
Tax rate change | 431 | 9,915 | |||||||||
Nondeductible business costs | 1,032 | 2,721 | 2,090 | ||||||||
Repatriated foreign earnings | 5,879 | ||||||||||
Deemed repatriated foreign earnings | (1,628) | 17,834 | |||||||||
GILTI and BEAT tax | 3,763 | ||||||||||
Excess stock-based compensation benefits | (3,388) | (1,674) | |||||||||
Nondeductible interest | 6,213 | 6,500 | 6,138 | ||||||||
Other adjustments | (1,440) | (2,531) | 493 | ||||||||
Total provision for income taxes | 4,611 | 10,400 | (402) | 5,864 | 6,163 | 24,427 | 1,500 | 798 | $ 20,473 | $ 32,888 | $ 2,561 |
Items which gave rise to differences between the income taxes in the statements of income and the income taxes computed at the U.S. statutory rate | |||||||||||
Statutory tax rate (as a percent) | 21.00% | 30.70% | 34.00% | ||||||||
Deferred tax assets (liabilities) | |||||||||||
Deferred revenue | 898 | 649 | $ 898 | $ 649 | |||||||
Bad debt reserve | 662 | 774 | 662 | 774 | |||||||
Tax credit carry forwards | 591 | 2,836 | 591 | 2,836 | |||||||
Accrued expenses and reserves | 14,087 | 13,825 | 14,087 | 13,825 | |||||||
Share-based compensation expense | 4,911 | 3,985 | 4,911 | 3,985 | |||||||
Unrealized losses | 583 | 583 | |||||||||
Intangible assets | 3,324 | 3,477 | 3,324 | 3,477 | |||||||
Net operating loss | 14,777 | 15,160 | 14,777 | 15,160 | |||||||
Total gross deferred tax assets | 39,833 | 40,706 | 39,833 | 40,706 | |||||||
Valuation allowance | (2,492) | (2,535) | (2,492) | (2,535) | |||||||
Total deferred tax assets | 37,341 | 38,171 | 37,341 | 38,171 | |||||||
Depreciable assets | (7,351) | (10,054) | (7,351) | (10,054) | |||||||
Unrealized gains | (698) | (698) | |||||||||
Acquisition and other liabilities | (8,890) | (11,052) | (8,890) | (11,052) | |||||||
Goodwill | (8,154) | (6,180) | (8,154) | (6,180) | |||||||
Total deferred tax liabilities | (24,395) | (27,984) | (24,395) | (27,984) | |||||||
Net deferred tax assets/(liabilities) | 12,946 | 10,187 | 12,946 | 10,187 | |||||||
Decrease in valuation allowance | 43 | ||||||||||
Income tax benefit related to Comprehensive income (loss), Tax | 854 | ||||||||||
Income Tax Expense (Benefit) | 4,611 | $ 10,400 | $ (402) | $ 5,864 | $ 6,163 | $ 24,427 | $ 1,500 | $ 798 | 20,473 | $ 32,888 | $ 2,561 |
Deferred tax charge for disregarded entity election | 2,674 | ||||||||||
Net operating loss carry forwards which begin to expire in 2038 | 12,935 | 12,935 | |||||||||
Capital loss carryover which begin to expire in 2020 | 1,843 | 1,843 | |||||||||
Deferred tax assets likely to be realized for which a valuation allowance is not provided | 12,285 | 12,285 | |||||||||
United States | |||||||||||
Deferred tax assets (liabilities) | |||||||||||
Total gross deferred tax assets | 24,040 | 24,040 | |||||||||
Foreign Country | |||||||||||
Deferred tax assets (liabilities) | |||||||||||
Total gross deferred tax assets | 1,483 | 1,483 | |||||||||
Tax credits which begin to expire in March 2023 | $ 591 | 591 | |||||||||
ASU 2016-02 | |||||||||||
Deferred (benefit) provision: | |||||||||||
Total provision for income taxes | 3,388 | ||||||||||
Income tax reconciliation | |||||||||||
Total provision for income taxes | 3,388 | ||||||||||
Deferred tax assets (liabilities) | |||||||||||
Income Tax Expense (Benefit) | $ 3,388 |
Income Taxes - Income tax holid
Income Taxes - Income tax holiday and other (Details) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019USD ($)aitem$ / shares | Mar. 31, 2018USD ($)$ / shares | Mar. 31, 2017USD ($)$ / shares | |
Income Taxes [Line Items] | |||
Parcel of land (in acres) | a | 6.3 | ||
Consecutive period of income tax exemption | 10 years | ||
Income tax benefits total eligibility period | 15 years | ||
Cash, cash equivalents, short-term investments and long-term investments available for distribution if not indefinitely reinvested | $ 171,977 | ||
Total amount of unrecognized tax benefits that would reduce income tax expense and the effective income tax rate, if recognized | $ 6,744 | $ 7,544 | $ 7,612 |
Percentage of tax benefit subject to expiration | 50.00% | ||
Unrecognized tax benefits to be realized through settlement with tax authorities or expiration of statute of limitations during next twelve months | $ 10 | ||
Activity related to the gross unrecognized tax benefits | |||
Balance as of beginning of the fiscal year | 7,544 | 7,612 | 6,693 |
Foreign currency translation related to prior year tax positions | 105 | 122 | |
Foreign currency translation related to prior year tax positions | (472) | ||
Decreases related to prior year tax positions | (770) | (332) | |
Decreases related to prior year tax positions due to settlements or lapse in applicable statute of limitations | (206) | (335) | (597) |
Increases related to prior year tax positions | 648 | 494 | 1,394 |
Balance at end of the fiscal year | 6,744 | 7,544 | 7,612 |
Accrued interest and penalties | 311 | 162 | |
Total accrued interest and penalties, including foreign currency translation relating to certain foreign and domestic tax matters | 1,572 | 1,567 | |
Decrease in unrecognized tax benefits | 800 | ||
Cash settlements | |||
Activity related to the gross unrecognized tax benefits | |||
Decrease in unrecognized tax benefits | $ 51 | ||
Virtusa India Private Limited [Member] | |||
Income Taxes [Line Items] | |||
Income tax exemption period | 12 years | ||
Hyderabad and Chennai, India | |||
Income Taxes [Line Items] | |||
Number of special economic zones subject to partial expiration of tax benefits | item | 2 | ||
Limited basis extension of tax holiday available | 5 years | ||
India and Sri Lanka | |||
Income Taxes [Line Items] | |||
Increase in net income due to income tax holiday | $ 5,778 | $ 7,727 | $ 7,973 |
Increase in diluted earning per share due to income tax holiday (in dollars per share) | $ / shares | $ 0.19 | $ 0.26 | $ 0.27 |
Other Comprehensive Loss | |||
Activity related to the gross unrecognized tax benefits | |||
Decrease in unrecognized tax benefits | $ 472 | ||
Income Tax Expense | |||
Activity related to the gross unrecognized tax benefits | |||
Decrease in unrecognized tax benefits | $ 277 |
Income Taxes - Tax Act (Details
Income Taxes - Tax Act (Details) $ in Thousands | 1 Months Ended | 12 Months Ended |
Jul. 31, 2018USD ($) | Mar. 31, 2019USD ($)installment | |
Income Taxes | ||
Tax Cuts and Jobs Act of 2017, Change in Tax Rate, Income Tax Expense (Benefit) | $ 1,628 | |
Tax Cuts and Jobs Act of 2017, Income Tax Expense (Benefit) | 16,207 | |
Deemed repatriation liability | 14,599 | |
Deemed repatriation included in income taxes payable | 1,137 | |
Deemed repatriation included in long-term liabilities | $ 13,461 | |
Number of installments to pay deemed repatriation tax on unremitted earnings | installment | 8 | |
Payment for deemed repatriation | $ 1,427 |
Post-retirement Benefits (Detai
Post-retirement Benefits (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Post-retirement Benefits | |||
Type of defined benefit plans | us-gaap:PensionPlansDefinedBenefitMember | us-gaap:PensionPlansDefinedBenefitMember | us-gaap:PensionPlansDefinedBenefitMember |
Components of net periodic pension expense | |||
Expected return on plan assets | $ (807) | $ (692) | $ (606) |
Service costs for benefits earned | 1,914 | 1,464 | 1,326 |
Interest cost on projected benefit obligation | 741 | 660 | 580 |
Amortization of prior service cost | 44 | 9 | 9 |
Recognized net actuarial loss | 146 | 138 | 135 |
Net periodic pension cost | 2,038 | 1,579 | 1,444 |
Accumulated benefit obligation and projected benefit obligation | |||
Accumulated benefit obligation | 8,208 | 7,260 | |
Projected benefit obligation: | |||
Beginning balance | 10,524 | 9,148 | |
Service cost | 1,914 | 1,779 | |
Interest cost | 741 | 660 | 580 |
Actuarial (gain) loss | 698 | (62) | |
Benefits paid | (1,398) | (930) | |
eTouch SPA transaction & plan combination | 259 | ||
Exchange rate adjustments | (810) | (71) | |
Ending balance | 11,928 | 10,524 | 9,148 |
Fair value of plan assets | |||
Balance at the beginning of the year | 9,885 | 7,832 | |
Employer contributions | 1,794 | 2,646 | |
Actual return on plan assets | 518 | 394 | |
Actuarial loss | (3) | (9) | |
Benefits paid | (1,398) | (930) | |
Exchange rate adjustments | (741) | (48) | |
Balance at the end of the year | 10,055 | 9,885 | $ 7,832 |
Accrued employee compensation and benefits | 74,801 | 71,500 | |
India and Sri Lanka | |||
Fair value of plan assets | |||
Accrued employee compensation and benefits | $ 1,873 | $ 639 | |
Minimum | |||
Actuarial assumptions | |||
Discount rate (as a percent) | 7.10% | 7.30% | 6.75% |
Compensation increases (annual) (as a percent) | 5.00% | 5.00% | 5.00% |
Expected return on assets (as a percent) | 7.00% | 7.50% | 7.50% |
Maximum | |||
Actuarial assumptions | |||
Discount rate (as a percent) | 11.16% | 10.34% | 12.00% |
Compensation increases (annual) (as a percent) | 8.00% | 8.00% | 7.50% |
Expected return on assets (as a percent) | 11.87% | 12.20% | 11.98% |
Post-retirement Benefits - Plan
Post-retirement Benefits - Plan asset allocation (Details) - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 |
Plan asset allocation | |||
Fair values of the pension plan assets | $ 10,055 | $ 9,885 | $ 7,832 |
Fair Value Inputs Level1 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | 346 | 365 | |
Fair Value Inputs Level2 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | $ 9,709 | 9,520 | |
Foreign Government Debt Securities | |||
Plan asset allocation | |||
Actual Allocation (as a percent) | 49.00% | ||
Fair values of the pension plan assets | $ 4,975 | 3,991 | |
Foreign Government Debt Securities | Minimum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 40.00% | ||
Foreign Government Debt Securities | Maximum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 50.00% | ||
Foreign Government Debt Securities | Fair Value Inputs Level2 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | $ 4,975 | 3,991 | |
Corporate Debt Securities | |||
Plan asset allocation | |||
Actual Allocation (as a percent) | 41.00% | ||
Fair values of the pension plan assets | $ 4,097 | 4,723 | |
Corporate Debt Securities | Minimum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 30.00% | ||
Corporate Debt Securities | Maximum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 40.00% | ||
Corporate Debt Securities | Fair Value Inputs Level2 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | $ 4,097 | 4,723 | |
Other Assets | |||
Plan asset allocation | |||
Actual Allocation (as a percent) | 10.00% | ||
Fair values of the pension plan assets | $ 983 | 1,171 | |
Other Assets | Minimum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 1.00% | ||
Other Assets | Maximum | |||
Plan asset allocation | |||
Target Allocation (as a percent) | 10.00% | ||
Other Assets | Fair Value Inputs Level1 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | $ 346 | 365 | |
Other Assets | Fair Value Inputs Level2 | |||
Plan asset allocation | |||
Fair values of the pension plan assets | $ 637 | $ 806 |
Post-retirement Benefits - Pens
Post-retirement Benefits - Pension liability (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Pension liability | |||
PBO | $ 11,928 | $ 10,524 | $ 9,148 |
Fair value of plan assets | 10,055 | 9,885 | 7,832 |
Funded status recognized | 1,873 | 639 | |
Amount recorded in accumulated other comprehensive income | 2,402 | 1,763 | |
Amount in accumulated other comprehensive income (loss) that is expected to be recognized as a component of net periodic benefit cost | 186 | ||
Expected contribution to gratuity plans by employer | 4,501 | ||
Pretax amounts of prior service cost recognized in accumulated other comprehensive income | |||
Prior service cost | (44) | (9) | (9) |
Net amortization gain (loss) | (146) | (138) | (135) |
Total | (190) | $ (147) | $ (144) |
Estimated future benefits payments | |||
2020 | 1,639 | ||
2021 | 1,771 | ||
2022 | 1,991 | ||
2023 | 2,296 | ||
2024 | 2,794 | ||
2025- 2028 | 16,086 | ||
Scenario Expected | |||
Pension liability | |||
Impact on income from operations and cash flows | $ 6,400 |
401(k) Plan (Details)
401(k) Plan (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
401(k) Plan | |||
Employer matching contribution recorded | $ 2,091 | $ 1,407 | $ 1,305 |
Redeemable noncontrolling int_2
Redeemable noncontrolling interest - (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 01, 2018 | Feb. 12, 2018 | Mar. 03, 2016 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 |
Acquisitions | ||||||
Amount drawn down on credit facility | $ 74,500 | $ 75,000 | ||||
Acquisition of other noncontrolling interest | $ (373) | $ (42) | $ (50) | |||
Virtusa India Private Limited | Polaris | ||||||
Acquisitions | ||||||
Shares acquired (as a percent) | 51.70% | |||||
Cash paid at closing | $ 168,257 | |||||
Virtusa India Private Limited | Polaris | ||||||
Acquisitions | ||||||
Shares acquired (as a percent) | 51.70% | |||||
Ownership interest of diluted shares (as a percent) | 93.00% | |||||
Exit price (in INR per share) | $ 480 | |||||
Expected amount of payment to settle the delisting offer | $ 145,000 | |||||
Maximum period for public shareholders to tender shares after delisting | 1 year |
Redeemable noncontrolling int_3
Redeemable noncontrolling interest - Polaris and Virtusa India (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2019 | Feb. 12, 2018 | |
Redeemable noncontrolling interest | ||
Aggregate purchase price of shares of delisted entity | $ 31,979 | |
Virtusa India Private Limited | Polaris | ||
Redeemable noncontrolling interest | ||
Shares held by noncontrolling interest shareholders of delisted entity (as a percent) | 3.13% | |
Virtusa India Private Limited | Polaris | ||
Redeemable noncontrolling interest | ||
Number of shares purchased from stockholders of delisted subsidiary | 4,669,716 | |
Shares purchased from stockholders of delisted subsidiary (as a percent) | 4.52% | |
Aggregate purchase price of shares of delisted entity | $ 31,979 | |
Number of shares held by noncontrolling interest shareholders of delisted entity | 3,227,592 | |
Fair value of the redeemable noncontrolling interest | $ 22,309 | |
Stock options reclassified to current liabilities for deemed cash settlement resulting from the delisting offer | $ 776 | |
Shares acquired (as a percent) | 51.70% |
Accumulated Other Comprehensi_3
Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
Balance | $ 436,083 | $ 585,016 | $ 436,083 | $ 585,016 | $ 627,955 | ||||||
Reclassifications from OCI to: | |||||||||||
Other income | 3,482 | (2,362) | (1,005) | ||||||||
Revenue | $ (327,631) | $ (314,681) | $ (305,520) | (300,031) | $ (281,341) | $ (263,809) | $ (248,174) | (227,345) | (1,247,863) | (1,020,669) | (858,731) |
Costs of revenue | 230,364 | 221,461 | 216,346 | 216,481 | 197,342 | 183,420 | 178,404 | 166,279 | 884,652 | 725,445 | 620,950 |
Selling, general and administrative expenses | 74,227 | 73,935 | 75,155 | 69,626 | 67,624 | 66,726 | 59,491 | 54,996 | 292,943 | 248,837 | 219,410 |
Interest expense | 18,164 | 7,634 | 7,682 | ||||||||
Less: comprehensive income attributable to noncontrolling interest, net of tax | 324 | 5,638 | 5,990 | ||||||||
Other comprehensive income (loss) | (20,172) | (2,988) | 3,981 | ||||||||
Other income (expense), net of tax | 9,930 | $ (3,912) | $ 12,461 | 13,625 | 5,582 | $ (2,843) | $ 1,187 | 625 | 32,104 | 4,551 | (447) |
Balance | 390,774 | 436,083 | 390,774 | 436,083 | 585,016 | ||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Comprehensive income (loss), Tax | (854) | ||||||||||
Investment securities, including noncontrolling interests | |||||||||||
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
OCI before reclassifications net of tax | (219) | 175 | 72 | ||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI before reclassifications, Tax | 58 | 108 | 57 | ||||||||
Investment securities, including noncontrolling interests | Other income (expense) | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 20 | (246) | 3 | ||||||||
Investment securities, including noncontrolling interests | Reclassification Out Of Accumulated Other Comprehensive Income | |||||||||||
Reclassifications from OCI to: | |||||||||||
Other income | 150 | (190) | 6 | ||||||||
Investment securities, noncontrolling interests | |||||||||||
Reclassifications from OCI to: | |||||||||||
Less : Noncontrolling interests, net of tax | 12 | 27 | (44) | ||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Noncontrolling interests, Tax | 7 | 15 | (23) | ||||||||
Accumulated Net Unrealized Investment Gain Loss | |||||||||||
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
Balance | 69 | 57 | 69 | 57 | 23 | ||||||
Reclassifications from OCI to: | |||||||||||
Comprehensive income (loss) | (57) | 12 | 34 | ||||||||
Balance | 12 | 69 | 12 | 69 | 57 | ||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Comprehensive income (loss), Tax | 85 | (123) | 37 | ||||||||
Currency Translation Adjustments, including noncontrolling interests | |||||||||||
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
OCI before reclassifications net of tax | (17,305) | 8,262 | (3,810) | ||||||||
Foreign currency translation noncontrolling interests | |||||||||||
Reclassifications from OCI to: | |||||||||||
Less : Noncontrolling interests, net of tax | 1,158 | 946 | (1,394) | ||||||||
Accumulated Translation Adjustment [Member] | |||||||||||
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
Balance | (41,207) | (50,415) | (41,207) | (50,415) | (45,211) | ||||||
Reclassifications from OCI to: | |||||||||||
Comprehensive income (loss) | (16,147) | 9,208 | (5,204) | ||||||||
Balance | (57,354) | (41,207) | (57,354) | (41,207) | (50,415) | ||||||
Cash Flow Hedges, including noncontrolling interests | |||||||||||
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
OCI before reclassifications net of tax | (4,104) | 2,428 | 16,328 | ||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI before reclassifications, Tax | (1,966) | 1,265 | 6,713 | ||||||||
Cash Flow Hedges, including noncontrolling interests | Sales | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 738 | (3,036) | (1,432) | ||||||||
Cash Flow Hedges, including noncontrolling interests | Cost Of Sales | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 392 | (1,543) | (1,015) | ||||||||
Cash Flow Hedges, including noncontrolling interests | Selling General And Administrative Expenses | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 175 | (852) | (611) | ||||||||
Cash Flow Hedges, including noncontrolling interests | Interest expenses | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | (251) | (64) | 0 | ||||||||
Cash Flow Hedges, including noncontrolling interests | Reclassification Out Of Accumulated Other Comprehensive Income | |||||||||||
Reclassifications from OCI to: | |||||||||||
Revenue | 1,375 | (5,651) | (2,706) | ||||||||
Costs of revenue | 1,089 | (4,855) | (3,526) | ||||||||
Selling, general and administrative expenses | 488 | (2,748) | (2,107) | ||||||||
Interest expense | (714) | (160) | |||||||||
Cash Flow Hedges, noncontrolling interests | |||||||||||
Reclassifications from OCI to: | |||||||||||
Less : Noncontrolling interests, net of tax | 24 | 1,078 | (134) | ||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Noncontrolling interests, Tax | 13 | 571 | (71) | ||||||||
Accumulated Net Gain Loss From Designated Or Qualifying Cash Flow Hedges | |||||||||||
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
Balance | 1,881 | 11,789 | 1,881 | 11,789 | 3,934 | ||||||
Reclassifications from OCI to: | |||||||||||
Comprehensive income (loss) | (1,842) | (9,908) | 7,855 | ||||||||
Balance | 39 | 1,881 | 39 | 1,881 | 11,789 | ||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Comprehensive income (loss), Tax | (899) | (3,659) | 3,583 | ||||||||
Benefit plans, including noncontrolling interests | |||||||||||
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
OCI before reclassifications net of tax | (1,024) | (364) | (379) | ||||||||
Reclassifications from OCI to: | |||||||||||
Other adjustments | 159 | 20 | 12 | ||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
OCI before reclassifications, Tax | 40 | (198) | (227) | ||||||||
Benefit plans, prior service credit (cost), including noncontrolling interests | Cost Of Sales | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 0 | 34 | 32 | ||||||||
Benefit plans, prior service credit (cost), including noncontrolling interests | Selling General And Administrative Expenses | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 0 | 15 | 18 | ||||||||
Benefit plans, prior service credit (cost), including noncontrolling interests | Other income (expense) | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 13 | 0 | 0 | ||||||||
Benefit plans, prior service credit (cost), including noncontrolling interests | Reclassification Out Of Accumulated Other Comprehensive Income | |||||||||||
Reclassifications from OCI to: | |||||||||||
Costs of revenue | 62 | 53 | |||||||||
Selling, general and administrative expenses | 27 | 32 | |||||||||
Other income (expense), net of tax | 137 | ||||||||||
Benefit plans, net actuarial gain (loss), including noncontrolling interest | Cost Of Sales | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 0 | 3 | 3 | ||||||||
Benefit plans, net actuarial gain (loss), including noncontrolling interest | Selling General And Administrative Expenses | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 0 | 0 | 0 | ||||||||
Benefit plans, net actuarial gain (loss), including noncontrolling interest | Other income (expense) | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | 3 | 0 | 0 | ||||||||
Benefit plans, net actuarial gain (loss), including noncontrolling interest | Other adjustments | |||||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Reclassifications from OCI, Tax | (17) | 0 | 0 | ||||||||
Benefit plans, net actuarial gain (loss), including noncontrolling interest | Reclassification Out Of Accumulated Other Comprehensive Income | |||||||||||
Reclassifications from OCI to: | |||||||||||
Costs of revenue | 5 | 5 | |||||||||
Selling, general and administrative expenses | 1 | 1 | |||||||||
Other income (expense), net of tax | 41 | ||||||||||
Benefit plans, noncontrolling interests | |||||||||||
Reclassifications from OCI to: | |||||||||||
Less : Noncontrolling interests, net of tax | 27 | 5 | (19) | ||||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Noncontrolling interests, Tax | 9 | 2 | (10) | ||||||||
Accumulated Defined Benefit Plans Adjustment | |||||||||||
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
Balance | (1,424) | (1,180) | (1,424) | (1,180) | (885) | ||||||
Reclassifications from OCI to: | |||||||||||
Comprehensive income (loss) | (660) | (244) | (295) | ||||||||
Balance | (2,084) | (1,424) | (2,084) | (1,424) | (1,180) | ||||||
Other Comprehensive Income (Loss), Tax | |||||||||||
Comprehensive income (loss), Tax | 48 | (144) | (184) | ||||||||
Accumulated Other Comprehensive Income | |||||||||||
Changes in the components of accumulated other comprehensive income (loss) | |||||||||||
Balance | $ (40,681) | $ (39,749) | (40,681) | (39,749) | (42,139) | ||||||
Reclassifications from OCI to: | |||||||||||
Other comprehensive income (loss) | (18,706) | (932) | 2,390 | ||||||||
Balance | $ (59,387) | $ (40,681) | $ (59,387) | $ (40,681) | $ (39,749) |
Commitments, Contingencies an_3
Commitments, Contingencies and Guarantees - Future minimum lease payments (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Operating Leases | |
2020 | $ 14,685 |
2021 | 13,895 |
2022 | 12,663 |
2023 | 9,879 |
2024 | 5,686 |
2025 and thereafter | 16,761 |
Total minimum lease payments | 73,569 |
Capital Leases | |
2020 | 38 |
2021 | 13 |
2022 | 1 |
Total minimum lease payments | 52 |
Less: amount representing interest | 4 |
Present value of future lease payments | 48 |
Less: current portion | 35 |
Long term capital lease obligation | $ 13 |
Commitments, Contingencies an_4
Commitments, Contingencies and Guarantees - Other commitments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Commitments, Contingencies and Guarantees | |||
Total rental expense for operating leases | $ 14,569 | $ 12,011 | $ 11,701 |
Future minimum lease payments to be received in the future under non-cancellable sublease | 956 | ||
Amortization expenses for assets purchased under capital leases | $ 66 | $ 88 | $ 116 |
Commitments, Contingencies an_5
Commitments, Contingencies and Guarantees - Loss contingencies (Details) $ in Thousands | Mar. 31, 2019USD ($) |
Indemnification Guarantee [Member] | |
Loss contingencies | |
Liability recorded | $ 0 |
Acts Under Information Technology Services [Member] | |
Loss contingencies | |
Liability recorded | $ 0 |
Derivative Financial Instrume_3
Derivative Financial Instruments - Hedging Programs (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Sep. 30, 2018USD ($) | Jun. 30, 2018USD ($) | Mar. 31, 2018USD ($) | Dec. 31, 2017USD ($) | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2019USD ($)item | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | |
Derivative Financial Instruments | |||||||||||
Other income (expense), net of tax | $ (9,930) | $ 3,912 | $ (12,461) | $ (13,625) | $ (5,582) | $ 2,843 | $ (1,187) | $ (625) | $ (32,104) | $ (4,551) | $ 447 |
Number of parties under derivative contact | item | 6 | 6 | |||||||||
Foreign Exchange Contract | |||||||||||
Derivative Financial Instruments | |||||||||||
Number of hedging programs maintained | item | 4 | ||||||||||
Designated As Hedging Instrument | Foreign Exchange Contract | |||||||||||
Derivative Financial Instruments | |||||||||||
Period hedged by Cash Flow Program | 18 months | ||||||||||
Additional period after which the contract is deemed ineffective | 2 months | ||||||||||
Notional value of outstanding contracts | $ 118,557 | $ 140,347 | $ 118,557 | 140,347 | |||||||
Unrealized net gains related to derivative instruments expected to be reclassified from AOCI into earnings during the next 12 months | $ 2,946 | ||||||||||
Designated As Hedging Instrument | Foreign Exchange Contract | Maximum | |||||||||||
Derivative Financial Instruments | |||||||||||
Outstanding term of derivative instruments | 15 months | ||||||||||
Designated As Hedging Instrument | Foreign Exchange Contract | Reclassification Out Of Accumulated Other Comprehensive Income | Accumulated Net Gain Loss From Designated Or Qualifying Cash Flow Hedges | |||||||||||
Derivative Financial Instruments | |||||||||||
Other income (expense), net of tax | $ 0 | $ 0 | |||||||||
Designated As Hedging Instrument | Foreign Exchange Contract | Polaris | |||||||||||
Derivative Financial Instruments | |||||||||||
Period hedged by Cash Flow Program | 18 months | ||||||||||
Nondesignated | Foreign Exchange Contract | |||||||||||
Derivative Financial Instruments | |||||||||||
Outstanding term of derivative instruments | 30 days | ||||||||||
Nondesignated | Foreign Exchange Contract | Maximum | |||||||||||
Derivative Financial Instruments | |||||||||||
Outstanding term of derivative instruments | 92 days |
Derivative Financial Instrume_4
Derivative Financial Instruments - Interest rate swaps (Details) $ in Thousands | Feb. 25, 2016 | Mar. 31, 2019USD ($) | Mar. 31, 2018USD ($) |
JPM | Prior Credit Agreement | |||
Interest rate cash flow hedges | |||
First year maximum leverage ratio | 3.50 | ||
Second year maximum leverage ratio | 3.25 | ||
Maximum leverage ratio for four consecutive quarter ending on each fiscal quarter | 3 | ||
Minimum fixed charge coverage ratio as of last day of any reference period | 1.25 | ||
Interest rate swaps | |||
Interest rate cash flow hedges | |||
Notional value of outstanding contracts | $ 183,500 | ||
Outstanding term of derivative instruments | 4 years | ||
Unrealized loss on derivative | $ 2,284 | ||
2016 interest rate swaps | |||
Interest rate cash flow hedges | |||
Unrealized loss on derivative | $ 2,284 | $ 2,486 | |
2016 interest rate swaps | 1-month LIBOR | |||
Interest rate cash flow hedges | |||
Blended weighted average rate | 1.025% | ||
2018 interest rate swaps | |||
Interest rate cash flow hedges | |||
Fixed interest rate | 2.85% | ||
Percentage of coverage target retain | 50.00% | ||
2018 interest rate swaps | London Interbank Offered Rate L I B O R | |||
Interest rate cash flow hedges | |||
Percentage of coverage on debt | 50.00% |
Derivative Financial Instrume_5
Derivative Financial Instruments - Fair Value (Details) - Designated As Hedging Instrument - USD ($) $ in Thousands | Mar. 31, 2019 | Mar. 31, 2018 |
Foreign Exchange Contract | ||
Foreign currency exchange and interest rate swap contracts | ||
Other current assets | $ 3,264 | $ 2,109 |
Other long-term assets | 147 | 13 |
Accrued expenses and other | 318 | 1,023 |
Long-term liabilities | 3 | |
Interest rate swaps | ||
Foreign currency exchange and interest rate swap contracts | ||
Other long-term assets | 1,349 | $ 2,486 |
Long-term liabilities | $ 3,633 |
Derivative Financial Instrume_6
Derivative Financial Instruments - Effect of foreign currency exchange and interest rate swap contracts (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Designated As Hedging Instrument | Cash flow hedges. | Sales | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) | $ (2,113) | $ 8,687 |
Designated As Hedging Instrument | Cash flow hedges. | Cost Of Sales | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) | (1,481) | 6,398 |
Designated As Hedging Instrument | Cash flow hedges. | Operating Expense | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) | (663) | 3,600 |
Designated As Hedging Instrument | Cash flow hedges. | Interest expenses | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) | 965 | 224 |
Designated As Hedging Instrument | Cash flow hedges. | Foreign Exchange Contract | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in AOCI on Derivatives | (2,266) | 2,825 |
Designated As Hedging Instrument | Cash flow hedges. | Interest rate swaps | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in AOCI on Derivatives | (3,804) | 868 |
Nondesignated | Foreign Exchange Contract | Sales | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives | 1,427 | (171) |
Nondesignated | Foreign Exchange Contract | Cost Of Sales | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives | (941) | 73 |
Nondesignated | Foreign Exchange Contract | Selling General And Administrative Expenses | ||
Derivative Financial Instruments | ||
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives | $ (41) | $ (47) |
Business Segment Information (D
Business Segment Information (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Business Segment Information | |||||||||||
Revenues. | $ 327,631 | $ 314,681 | $ 305,520 | $ 300,031 | $ 281,341 | $ 263,809 | $ 248,174 | $ 227,345 | $ 1,247,863 | $ 1,020,669 | $ 858,731 |
Long-lived assets, net | 491,848 | 514,817 | 491,848 | 514,817 | |||||||
United States of America | |||||||||||
Business Segment Information | |||||||||||
Revenues. | 843,791 | 628,147 | 532,244 | ||||||||
Long-lived assets, net | 216,279 | 213,024 | 216,279 | 213,024 | |||||||
United Kingdom | |||||||||||
Business Segment Information | |||||||||||
Revenues. | 209,232 | 195,547 | 164,970 | ||||||||
India | |||||||||||
Business Segment Information | |||||||||||
Long-lived assets, net | 251,722 | 276,512 | 251,722 | 276,512 | |||||||
Rest Of World | |||||||||||
Business Segment Information | |||||||||||
Revenues. | 194,840 | 196,975 | $ 161,517 | ||||||||
Long-lived assets, net | $ 23,847 | $ 25,281 | $ 23,847 | $ 25,281 |
Quarterly Results of Operatio_3
Quarterly Results of Operations (unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Quarterly Results of Operations (unaudited) | |||||||||||
Revenue | $ 327,631 | $ 314,681 | $ 305,520 | $ 300,031 | $ 281,341 | $ 263,809 | $ 248,174 | $ 227,345 | $ 1,247,863 | $ 1,020,669 | $ 858,731 |
Costs of revenue | 230,364 | 221,461 | 216,346 | 216,481 | 197,342 | 183,420 | 178,404 | 166,279 | 884,652 | 725,445 | 620,950 |
Gross profit | 97,267 | 93,220 | 89,174 | 83,550 | 83,999 | 80,389 | 69,770 | 61,066 | 363,211 | 295,224 | 237,781 |
Operating expenses | 74,227 | 73,935 | 75,155 | 69,626 | 67,624 | 66,726 | 59,491 | 54,996 | 292,943 | 248,837 | 219,410 |
Income from operations | 23,040 | 19,285 | 14,019 | 13,924 | 16,375 | 13,663 | 10,279 | 6,070 | 70,268 | 46,387 | 18,371 |
Other income (expense) | (9,930) | 3,912 | (12,461) | (13,625) | (5,582) | 2,843 | (1,187) | (625) | (32,104) | (4,551) | 447 |
Income before income tax expense | 13,110 | 23,197 | 1,558 | 299 | 10,793 | 16,506 | 9,092 | 5,445 | 38,164 | 41,836 | 18,818 |
Income tax expense (benefit) | 4,611 | 10,400 | (402) | 5,864 | 6,163 | 24,427 | 1,500 | 798 | 20,473 | 32,888 | 2,561 |
Net income (loss) | 8,499 | 12,797 | 1,960 | (5,565) | 4,630 | (7,921) | 7,592 | 4,647 | 17,691 | 8,948 | 16,257 |
Noncontrolling interest | 138 | 221 | 455 | 731 | 1,747 | 2,134 | 2,824 | 989 | 1,545 | 7,694 | 4,399 |
Net income (loss) available to Virtusa stockholders | 8,361 | 12,576 | 1,505 | (6,296) | 2,883 | (10,055) | 4,768 | 3,658 | 16,146 | 1,254 | 11,858 |
Less: Series A Convertible Preferred Stock dividends and accretion | 1,088 | 1,087 | 1,088 | 1,087 | 1,088 | 1,087 | 1,087 | 701 | 4,350 | 3,963 | |
Net income (loss) available to Virtusa common stockholders | $ 7,273 | $ 11,489 | $ 417 | $ (7,383) | $ 1,795 | $ (11,142) | $ 3,681 | $ 2,957 | $ 11,796 | $ (2,709) | $ 11,858 |
Basic earnings (loss) per share available to Virtusa common stockholders (in dollars per share) | $ 0.24 | $ 0.38 | $ 0.01 | $ (0.25) | $ 0.06 | $ (0.38) | $ 0.13 | $ 0.10 | $ 0.40 | $ (0.09) | $ 0.40 |
Diluted earnings (loss) per share available to Virtusa common stockholders (in dollars per share) | $ 0.24 | $ 0.37 | $ 0.01 | $ (0.25) | $ 0.06 | $ (0.38) | $ 0.12 | $ 0.10 | $ 0.38 | $ (0.09) | $ 0.39 |
Schedule II-Valuation and Qua_2
Schedule II-Valuation and Qualifying Accounts (Details) - Allowance For Doubtful Accounts [Member] - USD ($) $ in Thousands | 12 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Mar. 31, 2017 | |
Valuation and Qualifying Accounts | |||
Balance at Beginning of Period | $ 3,328 | $ 1,805 | $ 1,046 |
Charged to Costs and Expenses | 864 | 1,248 | 1,015 |
Deductions/ Other | (1,939) | 275 | (256) |
Balance at End of Period | $ 2,253 | $ 3,328 | $ 1,805 |