EX-99.1 2 a17-4108_1ex99d1.htm EX-99.1

Exhibit 99.1

 

 

Virtusa Announces Third Quarter 2017 Consolidated Financial Results

 

·                  Third quarter fiscal 2017 revenue of $217.2 million, an increase of 3.4% sequentially and 44.2% year-over-year.

 

·                  Third quarter fiscal 2017 diluted EPS of $0.15 on a GAAP basis, and $0.37 on a Non-GAAP basis.

 

·                  $237.2 million of cash, cash equivalents, and short-term and long-term investments at the end of third quarter fiscal 2017.

 

Westborough, MA — (February 9, 2017) Virtusa Corporation (NASDAQ GS: VRTU), a global business consulting and IT outsourcing company that combines innovation, technology leadership and industry solutions to enhance business performance, accelerate time-to-market, increase productivity and improve customer experience, today reported consolidated financial results for the third quarter of fiscal 2017, ended December 31, 2016.

 

Third Quarter Fiscal 2017 Consolidated Financial Results

 

Revenue for the third quarter of fiscal 2017 was $217.2 million, an increase of 3.4% sequentially and 44.2% year-over-year.  On a constant currency basis, (1) third quarter revenue increased 4.2% sequentially and 48.6% year-over-year.

 

Virtusa reported GAAP income from operations of $6.5 million for the third quarter of fiscal 2017, compared to $3.5 million for the second quarter of fiscal 2017 and $14.1 million for the third quarter of fiscal 2016. Third quarter fiscal 2017 GAAP income from operations includes $1.9 million of restructuring charges related to certain cost savings initiatives.

 

On a GAAP basis, net income for the third quarter of fiscal 2017 was $4.4 million, or $0.15 per diluted share, compared to $3.2 million, or $0.11 per diluted share, for the second quarter of fiscal 2017, and $11.3 million, or $0.38 per diluted share, for the third quarter of fiscal 2016. Third quarter fiscal 2017 GAAP net income includes the impact of the aforementioned restructuring charges related to certain cost savings initiatives, net of tax.

 

Non GAAP Results:

 

Non-GAAP income from operations, which excludes stock-based compensation expense, restructuring charges and acquisition related charges, was $16.3 million for the third quarter of fiscal 2017, compared to $12.9 million for the second quarter of fiscal 2017, and compared to $20.7 million for the third quarter of fiscal 2016.

 

Non-GAAP net income, which excludes stock-based compensation expense, restructuring charges, acquisition related charges, and foreign currency transaction gains and losses, each net of tax, for the third quarter of fiscal 2017, was $11.0 million, or $0.37 per diluted share, compared to $8.4 million, or $0.27 per diluted

 



 

share, for the second quarter of fiscal 2017, and compared to $15.9 million, or $0.54 per diluted share, for the third quarter of fiscal 2016.

 

Balance Sheet and Cash Flow

 

The Company ended the third quarter of fiscal 2017 with $237.2 million of cash, cash equivalents, and short-term and long-term investments (2).  Cash flow from operations was $13.5 million for the third quarter of fiscal 2017.

 

Management Commentary

 

Kris Canekeratne, Virtusa’s Chairman and CEO, stated, “We are pleased with our third quarter results. We see continuing client demand across our industry groups and geographies for our Digital Transformation and Innovation and Operational Excellence solutions. Our differentiated solution strategy and deep domain expertise are enabling us to win in the market, and position us well for sustained growth.”

 

Ranjan Kalia, Chief Financial Officer, said, “During the third quarter, we delivered solid revenue growth across all industry groups and geographies. We expect this trend will continue into the fourth quarter, leading to our fourth quarter sequential revenue growth guidance of 4% at the midpoint. In addition, our Q4 fiscal 2017 guidance calls for strong non-GAAP operating margin accretion driven by top-line growth and SG&A leverage. The midpoint of our fiscal 2017 non-GAAP EPS guidance is reduced by $0.04 primarily due to a change in our effective tax rate assumption.”

 

Financial Outlook

 

Virtusa management provided the following current financial guidance:

 

·                  Fourth quarter fiscal 2017 revenue is expected to be in the range of $224 to $229 million. GAAP diluted EPS is expected to be in the range of $0.31 to $0.35. Non-GAAP diluted EPS is expected to be in the range of $0.43 to $0.47.

 

·                  Fiscal year 2017 revenue is expected to be in the range of $856.8 to $861.8 million. GAAP diluted EPS is expected to be in the range of $0.36 to $0.40. Non-GAAP diluted EPS is expected to be in the range of $1.24 to $1.28.

 

·                  Virtusa anticipates a restructuring charge in the fourth quarter fiscal 2017 of approximately $0.8 million related to certain cost savings initiatives. This charge will not impact reported non-GAAP EPS.

 

The Company’s fourth quarter and fiscal year 2017 diluted EPS estimates are based on average share counts of approximately 30.4 million and 30.2 million, respectively, (assuming no further exercises of stock-based awards) and assumes a stock price of $25.57, which was derived from the average closing price of the Company’s stock over the five trading days ended on February 6, 2017.  Deviations from this stock price may cause actual diluted EPS to vary based on share dilution from Virtusa’s stock options and stock appreciation rights.

 



 

Conference Call and Webcast

 

Virtusa will host a conference call today, February 9, 2017 at 8:00 a.m. Eastern Time to discuss the Company’s third quarter fiscal 2017 financial results, current financial guidance, and other corporate developments. To access this call, please dial 888-487-0346 (domestic) or 719-325-2108 (international). The passcode is 4170077. A replay of this conference call will be available through February 16, 2017 at 844-512-2921 (domestic) or 412-317-6671 (international).  The replay passcode is 4170077.  A live webcast of this conference call will be available on the “Investors” page of the Company’s website (www.virtusa.com), and a replay will be archived on the website as well.

 

About Virtusa

 

Virtusa provides end-to-end information technology (IT) services to Global 2000 companies. These services, which include IT consulting, application maintenance, development, systems integration and managed services, leverage a unique Platforming methodology that transforms clients’ businesses through IT rationalization. Virtusa helps customers accelerate business outcomes by consolidating, rationalizing, and modernizing their core customer-facing processes into one or more core systems.

 

Virtusa delivers cost-effective solutions through a global delivery model, applying advanced methods such as Agile and Accelerated Solution Design to ensure that its solutions meet the clients’ requirements. As a result, its clients simultaneously reduce their IT operations cost while increasing their ability to meet changing business needs.

 

On March 3, 2016, Virtusa, through its India subsidiary, acquired an aggregate of approximately 51.7% of the fully diluted outstanding shares of Polaris Consulting & Services, Ltd., from founding shareholders, promoters, and certain other minority stockholders. In April 2016, Virtusa purchased an additional 26% of the fully diluted outstanding shares of Polaris from the company’s public shareholders in a mandatory open offer. In December 2016, to comply with applicable India rules on takeovers, Virtusa sold 3.71% of its shares of Polaris common stock through a public offering, and its ownership interest decreased from 78.6% to 74.9% of Polaris’ basic shares of common stock outstanding. Polaris is a majority owned subsidiary of Virtusa.

 

Founded in 1996 and headquartered in Massachusetts, Virtusa has operations in North America, Europe, and Asia.

 

© 2011 - 2017 Virtusa Corporation.  All rights reserved.

 

Virtusa, Accelerating Business Outcomes, BPM Test Drive and Productization are registered trademarks of Virtusa Corporation. All other company and brand names may be trademarks or service marks of their respective holders.

 



 

Non-GAAP Financial Information

 

This press release includes certain Non-GAAP financial measures as defined by Regulation G by the Securities and Exchange Commission. These Non-GAAP financial measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from Non-GAAP measures used by other companies. In addition, these Non-GAAP measures should be read in conjunction with Virtusa’s financial statements prepared in accordance with GAAP.

 

Virtusa believes the following financial measures will provide additional insights to measure the operational performance of the business.

 

·                  Virtusa presents constant currency revenue growth rates to provide insights into, and a framework for assessing, how Virtusa’s revenue performed excluding the effect of foreign currency rate fluctuations (see footnote 1).

 

·                  Virtusa presents a reconciliation of its cash, cash equivalents, short term and long term investments which Virtusa believes provides insight into its cash position and overall liquidity (see footnote 2).

 

·                  Virtusa also presents the following consolidated statement of income measures that exclude acquisition-related charges, restructuring charges, stock-based compensation expense and foreign currency transaction gains and losses to provide further insights into the comparison of Virtusa’s operating results among the periods:

 

·                  Non-GAAP income from operations: income from operations, as reported on Virtusa’s consolidated statements of income, excluding stock-based compensation expense, acquisition-related charges, and restructuring charges.

 

·                  Non-GAAP operating margin: Non-GAAP income from operations as a percentage of reported revenues.

 

·                  Non-GAAP net income: net income, as reported on Virtusa’s consolidated statements of income, excluding the tax adjusted impact of the following, stock-based compensation, acquisition-related charges, restructuring charges, and foreign currency transaction gains and losses.

 

·                  Non-GAAP diluted earnings per share: diluted earnings per share, as reported on Virtusa’s consolidated statements of income, excluding tax adjusted per share impact of the following, stock-based compensation, acquisition-related charges, restructuring charges, and foreign currency transaction gains and losses.

 

The following table presents a reconciliation of each Non-GAAP financial measure to the most comparable GAAP measure:

 



 

 

 

(in thousands, except per share amounts)

 

 

 

Three Months Ended December 31,

 

Nine Months Ended December 31,

 

 

 

2016

 

2015

 

2016

 

2015

 

GAAP income from operations

 

$

6,458

 

$

14,134

 

$

8,147

 

$

39,800

 

Add: Stock-based compensation expense

 

4,748

 

3,683

 

17,023

 

10,317

 

Add: acquisition-related charges and restructuring charges(a)

 

5,116

 

2,926

 

11,787

 

7,614

 

Non-GAAP income from operations

 

$

16,322

 

$

20,743

 

$

36,957

 

$

57,731

 

 

 

 

 

 

 

 

 

 

 

GAAP operating margin

 

3.0

%

9.4

%

1.3

%

9.3

%

Effect of above adjustments to income from operations

 

4.5

%

4.4

%

4.6

%

4.2

%

Non-GAAP operating margin

 

7.5

%

13.8

%

5.9

%

13.5

%

 

 

 

 

 

 

 

 

 

 

GAAP net income

 

$

4,435

 

$

11,313

 

$

1,393

 

$

32,512

 

Add: Stock-based compensation expense

 

4,748

 

3,683

 

17,023

 

10,317

 

Add: acquisition-related charges and restructuring charges(a)

 

5,116

 

2,926

 

11,787

 

7,614

 

Add: Foreign currency transaction (gains) losses(b)

 

1,252

 

(201

)

2,802

 

(395

)

Tax adjustments(c)

 

(4,198

)

(1,816

)

(7,397

)

(4,777

)

Noncontrolling interest, net of taxes (d)

 

(319

)

 

(875

)

 

Non-GAAP net income

 

$

11,034

 

$

15,905

 

$

24,733

 

$

45,271

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings per share

 

$

0.15

 

$

0.38

 

$

0.05

 

$

1.08

 

Effect of stock-based compensation expense

 

0.07

 

0.09

 

0.41

 

0.25

 

Effect of acquisition-related charges and restructuring charges(a)

 

0.10

 

0.07

 

0.28

 

0.18

 

Effect of foreign currency transaction (gains) losses(b)

 

0.06

 

 

0.11

 

(0.01

)

Effect of noncontrolling interest (d)

 

(0.01

)

 

(0.03

)

 

Non-GAAP diluted earnings per share (e)

 

$

0.37

 

$

0.54

 

$

0.82

 

$

1.50

 

 


(a) Acquisition-related charges include, when applicable, amortization of purchased intangibles, external deal costs, acquisition-related retention bonuses, changes in the fair value of contingent consideration liabilities, charges for impairment of acquired intangible assets and other acquisition-related costs including integration expenses consisting of outside professional and consulting services and direct and incremental travel costs.  Restructuring charges include one-time termination benefits, as well as certain professional fees related to the restructuring.

 

(b) Foreign currency transaction gains and losses are inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes.

 

(c) Tax adjustments reflect the tax effect of the non-GAAP adjustments using the non-GAAP effective statutory tax rate for the respective periods.

 

(d) Noncontrolling interest represents the minority shareholders interest of Polaris

 

(e) Non-GAAP diluted earnings per share is subject to rounding

 



 


Footnotes

 

(1) To determine sequential revenue change in constant currency for the Company’s third quarter of fiscal 2017, revenue from entities reporting in U.K. Pounds (GBP), Euros, and Swedish Krona (SEK) were converted into U.S. dollars at the average exchange rates in effect for the three months ended September 30, 2016, rather than the actual exchange rate in effect for the three months ended December 31, 2016.  To determine year-over-year revenue change in constant currency for the Company’s third quarter of fiscal 2017, revenue from entities reporting in U.K. Pounds (GBP), Euros, and Swedish Krona (SEK) were converted into U.S. dollars at the average exchange rates in effect for the three months ended December 31, 2015, rather than the actual exchange rate in effect for the three months ended December 31, 2016. The average exchange rates for the three months ended December 31, 2015, September 30, 2016, and December 31, 2016 are presented in the following table:

 

Average U.S. Dollar Exchange Rate

 

 

 

For the Three Months Ended

 

 

 

December 31, 2015

 

September 30, 2016

 

December 31, 2016

 

GBP

 

1.51

 

1.31

 

1.24

 

Euro

 

1.10

 

1.12

 

1.08

 

SEK

 

8.50

 

9.28

 

9.11

 

 

(2) The Company considers the measure of cash, cash equivalents, short-term and long-term investments to be an important indicator of the Company’s overall liquidity. All of the Company’s investments are classified as available-for-sale, including the Company’s long-term investments which consist of fixed income securities, including government agency bonds and municipal and corporate bonds, which meet the credit rating and diversification requirements of the Company’s investment policy as approved by the Company’s audit committee and board of directors.

 

(3) On March 3, 2016 Virtusa acquired a majority interest in Polaris. In accordance with US GAAP, Polaris financial results for the quarter ending December 31, 2016 and assets and liabilities as of that date have been consolidated in full into Virtusa’s financial statements.  Profit attributable to minority shareholders (Non-controlling Interest) in the Consolidated Statements of Income was $1.1 million, while net assets attributable to ownership in Polaris by minority shareholders (Non-controlling Interest) in our Consolidated Balance Sheets was $82.7 million at December 31, 2016.

 

(4) The impact of the Polaris transaction on GAAP EPS includes Virtusa’s controlling interest in earnings per share for Polaris, interest on debt, Polaris acquisition related charges, lost interest income on cash used to fund the acquisition, the foreign exchange translation gain or loss relating to the funding of the Polaris acquisition and related tax effects.  The impact of the Polaris transaction on Non-GAAP EPS includes Virtusa’s controlling interest in earnings per share for Polaris, interest on debt, lost interest income on cash used to fund the acquisition and related tax effects, but excludes the effect of acquisition related charges, amortization of Polaris intangibles, the foreign exchange translation gain or loss relating to the funding of the Polaris acquisition and Polaris stock-compensation cost.

 



 

Forward-Looking Statements

 

This press release contains certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including statements regarding, Virtusa’s expectations concerning management’s forecast of financial performance, the growth of our business and management’s plans, objectives, and strategies. These forward-looking statements include, but are not limited to, plans, objectives, expectations and intentions and other statements contained in this press release that are not historical facts, and statements identified by words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “see,” “seeks,” “estimates,” “will,” “should,” “may,” “confident,” “positions,” “look forward to,” and variations of such words or words of similar meaning and the use of future dates. These forward-looking statements reflect our current views about our plans, intentions, expectations, strategies and prospects, which are based on the information currently available to us and on assumptions we have made. Although we believe that our plans, intentions, expectations, strategies and prospects as reflected in or suggested by those forward-looking statements are reasonable, we can give no assurance that these plans, intentions, expectations or strategies will be attained or achieved. Furthermore, actual results may differ materially from those described in the forward-looking statements and will be affected by a variety of risks and factors that are beyond our control including, without limitation:  Virtusa’s failure to realize the intended benefits of the Polaris acquisition, including the inability to integrate Virtusa’s and Polaris’ business and operations or the inability to realize the anticipated synergies and revenues or growth rates in the expected amounts or within the anticipated time frames or cost expectations or at all; the possibility that Virtusa’s current or future estimated combined or standalone guidance may differ materially from expectations; the ability of Virtusa to manage an Indian public company; Virtusa incurring unexpected costs or liabilities in connection with the Polaris acquisition; unanticipated acquisition related costs and negative effects on Virtusa’s reported results of operations from acquisition related charges; increase in client or employee attrition due to the Polaris acquisition;  inability of Virtusa to service the $200 million term loan incurred by Virtusa to acquire Polaris or to maintain compliance with certain financial covenants under the loan facility; Virtusa’s ability to integrate the operations of, and achieve expected synergies and operating efficiencies in connection with, other previously acquired businesses; unanticipated acquisition related costs and negative effects on Virtusa’s reported results of operations from previous acquisitions; Virtusa’s dependence on a limited number of clients as well as clients located principally in the United States and United Kingdom and in concentrated industries; currency exchange rate fluctuations of the Indian and Sri Lankan rupee, the U.S. dollar, the U.K pound sterling, the Swedish krona, and the euro; the international nature of our business; restrictions on immigration or changes in immigration laws; Virtusa’s ability to hire and retain enough sufficiently trained IT professionals to support its operations; Virtusa’s ability to expand its business or effectively manage growth; Virtusa’s ability to sustain profitability or maintain profitable engagements; increasing competition in the IT services outsourcing industry; Virtusa’s ability to attract and retain clients and meet their expectations; quarterly fluctuations in Virtusa’s earnings; client terminations or contracting delays, or delays in revenue recognition in any reporting period; Virtusa’s ability to successfully manage its billing and utilization rates and its targeted on-site

 



 

to offshore delivery mix; technological innovation; Virtusa’s ability to effectively manage its facility, infrastructure and capacity needs; regulatory, legislative and judicial developments in Virtusa’s operations areas and Virtusa’s ability to comply with changing or complex laws and maintain effective internal controls to ensure ongoing compliance; the loss of any key member of Virtusa’s senior management team, political or economic instability in India or Sri Lanka; any reduction or withdrawal of tax benefits provided to Virtusa by the governments of India and Sri Lanka, or new legislation by such governments which could be harmful to Virtusa; wage inflation and increases in government mandated benefits in India and Sri Lanka; telecommunications or technology disruptions; worldwide economic and business conditions; and the volatility of the market price of Virtusa’s common stock. For additional disclosure regarding these and other risks faced by Virtusa, see the disclosure contained in Virtusa’s public filings with the Securities and Exchange Commission, including Virtusa’s Annual Report on Form 10-K for the fiscal year ended March 31, 2016 and subsequent Quarterly Reports on Form 10-Q, as filed with the Securities and Exchange Commission.

 



 

Virtusa Corporation and Subsidiaries

Condensed Consolidated Balance Sheets

(In thousands, unaudited)

 

 

 

December 31, 2016

 

March 31, 2016

 

Assets:

 

 

 

 

 

Cash and cash equivalents

 

$

133,878

 

$

148,986

 

Short-term investments

 

80,731

 

53,917

 

Accounts receivable, net

 

117,926

 

138,530

 

Unbilled accounts receivable

 

71,127

 

58,063

 

Prepaid expenses

 

32,576

 

12,094

 

Restricted cash

 

220

 

93,921

 

Other current assets

 

24,392

 

23,268

 

Total current assets

 

460,850

 

528,779

 

 

 

 

 

 

 

Property and equipment, net

 

114,569

 

116,282

 

Investments accounted for using equity method

 

1,671

 

2,869

 

Long-term investments

 

22,547

 

28,817

 

Deferred income taxes

 

19,636

 

15,890

 

Goodwill

 

204,762

 

200,424

 

Intangible assets, net

 

59,110

 

66,846

 

Other long-term assets

 

9,365

 

20,105

 

Total assets

 

$

892,510

 

$

980,012

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

Accounts payable

 

$

30,701

 

$

27,452

 

Accrued employee compensation and benefits

 

41,260

 

53,897

 

Deferred revenue

 

10,872

 

5,971

 

Accrued expenses and other

 

26,971

 

42,763

 

Current portion of long-term debt

 

8,870

 

8,881

 

Income taxes payable

 

2,880

 

2,300

 

Total current liabilities

 

121,554

 

141,264

 

Deferred income taxes

 

25,215

 

16,121

 

Long-term debt, less current portion

 

178,939

 

185,633

 

Long-term liabilities

 

8,791

 

9,039

 

Total liabilities

 

334,499

 

352,057

 

 

 

 

 

 

 

Virtusa stockholders equity

 

475,333

 

475,013

 

Noncontrolling interest

 

82,678

 

152,942

 

Stockholders equity

 

558,011

 

627,955

 

Total liabilities and stockholders’ equity

 

$

892,510

 

$

980,012

 

 



 

Virtusa Corporation and Subsidiaries

 Consolidated Statements of Income

(In thousands except share and per share amounts, unaudited)

 

 

 

Three Months Ended

 

Nine Months Ended

 

 

 

December 31,

 

December 31,

 

 

 

2016

 

2015

 

2016

 

2015

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

217,209

 

$

150,603

 

$

632,769

 

$

428,449

 

Costs of revenue

 

154,847

 

96,908

 

460,776

 

277,770

 

Gross profit

 

62,362

 

53,695

 

171,993

 

150,679

 

Total operating expenses

 

55,904

 

39,561

 

163,846

 

110,879

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

6,458

 

14,134

 

8,147

 

39,800

 

 

 

 

 

 

 

 

 

 

 

Other income (expense):

 

 

 

 

 

 

 

 

 

Interest income (expense)

 

(899

)

1,319

 

(2,607

)

4,246

 

Foreign currency transaction (losses) gains

 

(1,252

)

201

 

(2,802

)

395

 

Other, net

 

(180

)

133

 

371

 

232

 

Total other income (expense)

 

(2,331

)

1,653

 

(5,038

)

4,873

 

 

 

 

 

 

 

 

 

 

 

Income before income tax expense

 

4,127

 

15,787

 

3,109

 

44,673

 

Income tax expense (benefit)

 

(1,414

)

4,474

 

(1,378

)

12,161

 

Total net income

 

5,541

 

11,313

 

4,487

 

32,512

 

Less: Noncontrolling interest, net of tax

 

1,106

 

 

3,094

 

 

Net income attributable to Virtusa common stockholders

 

4,435

 

$

11,313

 

$

1,393

 

$

32,512

 

 

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

$

0.15

 

$

0.39

 

$

0.05

 

$

1.11

 

Diluted earnings per share

 

$

0.15

 

$

0.38

 

$

0.05

 

$

1.08

 

Weighted average number of common shares outstanding

 

 

 

 

 

 

 

 

 

Basic

 

29,704,526

 

29,287,968

 

29,602,331

 

29,191,578

 

Diluted

 

30,151,590

 

30,064,943

 

30,129,378

 

30,002,680

 

 



 

Virtusa Corporation and Subsidiaries

Consolidated Statement of Cash Flows

(In thousands, unaudited)

 

 

 

Nine Months Ended

 

 

 

December 31,

 

 

 

2016

 

2015

 

Cash flows from by operating activities:

 

 

 

 

 

Net income

 

$

4,487

 

$

32,512

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

Depreciation and amortization

 

19,185

 

11,862

 

Share-based compensation expense

 

17,023

 

10,317

 

Provision for doubtful accounts, net

 

702

 

204

 

(Gain)/loss on disposal of property and equipment

 

(388

)

4

 

Foreign currency losses (gains) , net

 

2,802

 

(395

)

Amortization of discounts and premiums on investments, net

 

807

 

535

 

Amortization of debt issuance cost

 

847

 

 

Deferred income taxes, net

 

454

 

 

Excess tax benefits from stock option exercises

 

593

 

(2,886

)

Net changes in operating assets and liabilities:

 

 

 

 

 

Accounts receivable and unbilled receivable

 

(3,669

)

(10,095

)

Prepaid expenses and other current assets

 

(4,422

)

(4,806

)

Other long-term assets

 

10,753

 

(135

)

Accounts payable

 

7,356

 

1,836

 

Accrued employee compensation and benefits

 

(15,907

)

(2,190

)

Accrued expenses and other current liabilities

 

1,033

 

1,738

 

Income taxes payable

 

(14,593

)

2,154

 

Other long-term liabilities

 

(5,459

)

233

 

Net cash provided by operating activities

 

21,604

 

40,888

 

Cash flows from investing activities:

 

 

 

 

 

Proceeds from sale of property and equipment

 

2,536

 

13

 

Purchase of short-term investments

 

(100,131

)

(29,261

)

Proceeds from sale or maturity of short-term investments

 

99,888

 

68,311

 

Purchase of long-term investments

 

(28,984

)

(22,215

)

Proceeds from sale or maturity of long-term investments

 

7,116

 

9,200

 

Decrease (Increase) in restricted cash

 

92,651

 

(23,748

)

Business acquisition, net of cash acquired

 

(3,460

)

(37,167

)

Purchase of property and equipment

 

(10,947

)

(10,314

)

Net cash provided by (used in) investing activities

 

58,669

 

(45,181

)

Cash flows from financing activities:

 

 

 

 

 

Proceeds from exercise of common stock options

 

816

 

1,087

 

Proceeds from exercise of subsidiary stock options

 

357

 

 

Payment of debt

 

(7,500

)

 

Payment of contingent consideration related to acquisition

 

(830

)

(352

)

Acquisition of noncontrolling interest

 

(89,147

)

 

Payment of other noncontrolling interest

 

(50

)

 

Proceeds from subsidiary stock sale

 

7,236

 

 

Principal payments on capital lease obligation

 

(118

)

(87

)

Excess tax benefits from stock option exercises

 

(593

)

2,886

 

Net cash (used in) provided by financing activities

 

(89,829

)

3,534

 

Effect of exchange rate changes on cash and cash equivalents

 

(5,552

)

(4,301

)

Net decrease in cash and cash equivalents

 

(15,108

)

(5,060

)

Cash and cash equivalents, beginning of period

 

148,986

 

124,802

 

Cash and cash equivalents, end of period

 

$

133,878

 

$

119,742

 

 

Supplemental Non-GAAP Financial Information as of December 31, 2016 and 2015

 

 

 

 

 

 

 

 

 

 

 

Reconciliation to total cash and cash equivalents, short-term investments and long-term investments:

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents, end of period

 

$

133,878

 

$

119,742

 

 

 

 

 

 

 

Short-term investments

 

80,731

 

59,374

 

Long-term investments

 

22,547

 

22,080

 

Total short-term and long-term investments, end of period

 

103,278

 

81,454

 

 

 

 

 

 

 

Total cash and cash equivalents, short-term investments and long-term investments

 

$

237,156

 

$

201,196

 

 



 

 

Virtusa Corporation and Subsidiaries

Reconciliation of Non-GAAP Guidance**

 

 

 

Three months ending

 

Fiscal Year ending

 

 

 

March 31, 2017

 

March 31, 2017

 

 

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

 

 

 

GAAP diluted earnings per share

 

$

0.31

 

$

0.35

 

$

0.36

 

$

0.40

 

 

 

 

 

 

 

 

 

 

 

Effect of stock-cased compensation expense

 

0.07

 

0.07

 

0.47

 

0.47

 

Effect of acquisition related charges

 

0.06

 

0.06

 

0.34

 

0.34

 

Effect of foreign currency transaction (gains) losses

 

0.00

 

0.00

 

0.11

 

0.11

 

Effect of noncontrolling interest

 

(0.01

)

(0.01

)

(0.04

)

(0.04

)

Non-GAAP diluted earnings per share

 

$

0.43

 

$

0.47

 

$

1.24

 

$

1.28

 

 

 

 

 

 

 

 

 

 

 

Weighted average diluted shares outstanding

 

30.4

 

30.4

 

30.2

 

30.2

 

 


** EPS impact is subject to rounding.

 

Media Contact:

Greenough

Amy Legere, (617) 275-6517

alegere@greenough.biz

 

Investor Contact:

ICR

William Maina, 646-277-1236

william.maina@icrinc.com