10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

xQuarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2017

oTransition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

For the transition period from                      to

Commission File Number 001-33625

VIRTUSA CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware	7371	04-3512883
(State or Other Jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
Incorporation or Organization)	Classification Code Number)	Identification Number)

2000 West Park Drive

Westborough, Massachusetts 01581

(508) 389-7300

(Address, Including Zip Code, and Telephone Number,

Including Area Code, of Registrant’s Principal Executive Offices)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x  No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes x  No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer x	Accelerated filer o
Non-accelerated filer o	Smaller reporting company o
(Do not check if a smaller reporting company)	Emerging growth company o

                If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes o  No x

Indicate the number of shares outstanding of each of the issuer’s class of common stock, as of August 4, 2017:

Class	Number of Shares
Common Stock, par value $.01 per share	29,269,785

Virtusa Corporation and Subsidiaries

		Page
PART I. FINANCIAL INFORMATION		3
Item 1.	Consolidated Financial Statements (Unaudited)	3
	Consolidated Balance Sheets at June 30, 2017 and March 31, 2017	3
	Consolidated Statements of Income (Loss) for the Three Months Ended June 30, 2017 and 2016	4
	Consolidated Statements of Comprehensive Income (Loss) for the Three Months Ended June 30, 2017 and 2016	5
	Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2017 and 2016	6
	Notes to Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	43
Item 4.	Controls and Procedures	45
PART II. OTHER INFORMATION		45
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	45
Item 6.	Exhibits	47
SIGNATURES		48
EXHIBIT INDEX		49

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PART I.  FINANCIAL INFORMATION

Item 1.  Consolidated Financial Statements (Unaudited)

Virtusa Corporation and Subsidiaries

Consolidated Balance Sheets

(Unaudited)

(In thousands, except share and per share amounts)

	June 30, 2017			March 31, 2017
Assets
Current assets:
Cash and cash equivalents	$	153,979		$	144,908
Short-term investments	62,432			72,028
Accounts receivable, net of allowance of $2,253 and $1,805 at June 30, 2017 and March 31, 2017, respectively	146,960			135,453
Unbilled accounts receivable	56,056			66,122
Prepaid expenses	35,704			32,751
Restricted cash	262			174
Other current assets	32,884			28,806
Total current assets	488,277			480,242
Property and equipment, net	118,633			118,890
Investments accounted for using equity method	1,710			1,708
Long-term investments	18,655			20,057
Deferred income taxes	23,543			23,093
Goodwill	211,949			211,089
Intangible assets, net	56,778			58,361
Other long-term assets	9,147			9,980
Total assets	$	928,692		$	923,420
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable	$	22,178		$	20,514
Accrued employee compensation and benefits	43,583			52,582
Deferred revenue	9,780			7,479
Accrued expenses and other	35,314			33,251
Current portion of long-term debt	—			8,870
Income taxes payable	3,811			3,066
Total current liabilities	114,666			125,762
Deferred income taxes	25,396			26,682
Long-term debt, less current portion	104,869			176,722
Long-term liabilities	10,209			9,238
Total liabilities	255,140			338,404
Commitments and contingencies	—			—
Series A Convertible Preferred Stock: par value $0.01 per share, 108,000 shares authorized, 108,000 shares issued and outstanding as of June 30, 2017; no shares authorized or issued as of March 31, 2017; redemption amount and liquidation preference of $108,000 and $0 as of June 30, 2017 and March 31, 2017, respectively	106,872			—
Stockholders’ equity:
Undesignated preferred stock, $0.01 par value: Authorized 5,000,000 shares at June 30, 2017 and March 31, 2017; zero shares issued and outstanding at June 30, 2017 and March 31, 2017	—			—
Common stock, $0.01 par value: Authorized 120,000,000 shares at June 30, 2017 and March 31, 2017; issued 31,974,139 and 31,762,214 shares at June 30, 2017 and March 31, 2017, respectively; outstanding 29,169,730 and 29,905,511 shares at June 30, 2017 and March 31, 2017, respectively	320			318
Treasury stock, 2,804,409 and 1,856,703 common shares, at cost, at June 30, 2017 and March 31, 2017, respectively	(36,971		)	(9,652		)
Additional paid-in capital	310,528			305,387
Retained earnings	243,685			240,728
Accumulated other comprehensive loss	(40,128		)	(39,749		)
Total Virtusa stockholders’ equity	477,434			497,032
Noncontrolling interest in subsidiaries	89,246			87,984
Total equity	566,680			585,016
Total liabilities and stockholders’ equity	$	928,692		$	923,420

See accompanying notes to unaudited consolidated financial statements

3

Virtusa Corporation and Subsidiaries

Consolidated Statements of Income (Loss)

(Unaudited)

(In thousands, except per share amounts)

	Three Months Ended June 30,
	2017			2016
Revenue	$	227,345		$	205,471
Costs of revenue	166,279			153,560
Gross profit	61,066			51,911
Operating expenses:
Selling, general and administrative expenses	54,996			53,759
Income (loss) from operations	6,070			(1,848		)
Other income (expense):
Interest income	1,005			1,294
Interest expense	(1,658		)	(1,845		)
Foreign currency transaction losses	(77		)	(3,580		)
Other, net	105			6
Total other expense	(625		)	(4,125		)
Income (loss) before income tax expense (benefit)	5,445			(5,973		)
Income tax expense (benefit)	798			(463		)
Net income (loss)	$	4,647		$	(5,510	)
Less: net income attributable to noncontrolling interests, net of tax	989			746
Net income (loss) available to Virtusa stockholders	3,658			$	(6,256	)
Less: Series A Convertible Preferred Stock dividends and accretion	701			—
Net income (loss) available to Virtusa common stockholders	2,957			(6,256		)
Basic earnings (loss) per share	$	0.10		$	(0.21	)
Diluted earnings (loss) per share	$	0.10		$	(0.21	)

See accompanying notes to unaudited consolidated financial statements

4

Virtusa Corporation and Subsidiaries

Consolidated Statements of Comprehensive Income (Loss)

(Unaudited)

(In thousands)

	Three Months Ended June 30,
	2017			2016
Net income (loss)	$	4,647		$	(5,510	)
Other comprehensive income (loss):
Foreign currency translation adjustments	$	3,605		$	(5,062	)
Pension plan adjustment	45			24
Unrealized gain (loss) on available-for-sale securities, net of tax	299			231
Unrealized gain (loss) on effective cash flow hedges, net of tax	(4,055		)	1,153
Other comprehensive loss	$	(106	)	$	(3,654	)
Comprehensive income (loss)	$	4,541		$	(9,164	)
Less: comprehensive income (loss) attributable to noncontrolling interest, net of tax	1,262			(1,095		)
Comprehensive income (loss) available to Virtusa stockholders	$	3,279		$	(8,069	)

See accompanying notes to unaudited consolidated financial statements

5

Virtusa Corporation and Subsidiaries

Consolidated Statements of Cash Flows

(Unaudited)

(In thousands)

	Three Months Ended June 30,
	2017			2016
Cash flows from operating activities:
Net income (loss)	$	4,647		$	(5,510	)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	6,643			6,188
Share-based compensation expense	4,788			6,133
Provision for doubtful accounts	411			(5		)
Gain on disposal of property and equipment	(8		)	(77		)
Foreign currency transaction losses, net	77			3,580
Amortization of discounts and premiums on investments	93			96
Amortization of debt issuance cost	284			283
Net change in operating assets and liabilities:
Accounts receivable and unbilled receivable	(4,832		)	7,289
Prepaid expenses and other current assets	(2,667		)	(296		)
Other long-term assets	(179		)	4,579
Accounts payable	1,358			(4,266		)
Accrued employee compensation and benefits	(9,424		)	(16,202		)
Accrued expenses and other current liabilities	(3,135		)	(5,771		)
Income taxes payable	(2,648		)	(7,433		)
Other long-term liabilities	(614		)	(3,039		)
Net cash provided by (used) in operating activities	1,064			(14,451		)
Cash flows from investing activities:
Proceeds from sale of property and equipment	30			246
Purchase of short-term investments	(8,867		)	(19,333		)
Proceeds from sale or maturity of short-term investments	29,002			39,639
Purchase of long-term investments	(8,753		)	(6,259		)
Proceeds from sale or maturity of long-term investments	—			800
(Increase) decrease in restricted cash	(163		)	91,767
Business acquisition, net of cash acquired	(600		)	(2,606		)
Purchase of property and equipment	(3,044		)	(3,278		)
Net cash provided by investing activities	7,605			100,976
Cash flows from financing activities:
Proceeds from exercise of common stock options	1,629			476
Proceeds from exercise of subsidiary stock options	142			257
Payment of debt	(81,000		)	(2,500		)
Payments of withholding taxes related to net share settlements of restricted stock	(1,416		)	(2,276		)
Series A Convertible Preferred Stock proceeds, net of issuance costs of $1,154	106,846			—
Repurchase of common stock	(27,319		)	—
Payment of contingent consideration related to acquisitions	—			(830		)
Acquisition of noncontrolling interest	—			(89,147		)
Principal payments on capital lease obligation	(31		)	(43		)
Net cash used in financing activities	(1,149		)	(94,063		)
Effect of exchange rate changes on cash and cash equivalents	1,551			(1,109		)
Net increase (decrease) in cash and cash equivalents	9,071			(8,647		)
Cash and cash equivalents, beginning of period	144,908			148,986
Cash and cash equivalents, end of period	$	153,979		$	140,339

See accompanying notes to unaudited consolidated financial statements

6

Virtusa Corporation and Subsidiaries

Notes to Consolidated Financial Statements

(Unaudited)

(In thousands, except share and per share amounts)

(1) Nature of the Business

Virtusa Corporation (the “Company”, “Virtusa”, “we”, “us” or “our”) is a global provider of information technology (“IT”) consulting and 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 & Entertainment, as they look 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 & consulting, to technology & user experience (“UX”) design, development of IT applications, systems integration, testing & business assurance, and maintenance and support services, including infrastructure and managed services. Our services leverage our distinctive consulting approach and unique platforming methodology to transform our clients’ businesses through the innovative use of technology and domain knowledge to solve critical business problems. Our services enable our clients to accelerate business outcomes by consolidating, rationalizing and modernizing 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, 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.

(2) Unaudited Interim Financial Information

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, and should be read in conjunction with the Company’s audited consolidated financial statements (and notes thereto) for the fiscal year ended March 31, 2017 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or SEC, on May 26, 2017. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of the accompanying unaudited consolidated financial statements have been included, and all material adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire fiscal year.

Principles of Consolidation

The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of Virtusa Corporation and all of its subsidiaries that are directly or indirectly more than 50% owned or controlled. When the Company does not have a controlling interest in an entity, but exerts a significant influence on the entity, the Company applies the equity method of accounting. 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.

The consolidated financial statements reflect the accounts of the Company and its direct and indirect subsidiaries, Virtusa Consulting Services Private Limited, Virtusa Software Services Private Limited, Virtusa Technologies (India) Private Limited and Polaris Consulting & Services Limited, Optimus Global Services Limited, each organized and located in India; Virtusa (Private) Limited,

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organized and located in Sri Lanka; Virtusa UK Limited, Polaris Consulting & Services Limited, each organized and located in the United Kingdom; Virtusa US LLC, Virtusa Securities Corporation, a Massachusetts securities corporation, Apparatus, Inc. organized and located in Indiana, each organized and located in the United States; Virtusa International, B.V., Virtusa C.V., Virtusa Netherlands Cooperatief U.A., Polaris Software Lab B.V., each organized and located in the Netherlands; Virtusa Hungary Kft., Polaris Consulting & Serviced, Kft., each organized and located in Hungary; Virtusa Germany GmbH, Polaris Software Lab GmbH, each organized and located in Germany; Virtusa Switzerland GmbH, Polaris Consulting & Services SA, each organized and located in Switzerland; Virtusa Singapore Private Limited, Polaris Consulting & Services Pte Limited, each organized and located in Singapore; Virtusa Malaysia Private Limited Company, Polaris Consulting & Services, SND BHD, each organized and located in Malaysia; Virtusa Austria GmbH, organized and located in Austria; Virtusa Philippines Inc., organized and located in the Philippines; TradeTech Consulting Scandinavia AB, organized and located in Sweden; Virtusa Canada, Inc. and Polaris Consulting & Services Inc, each organized and located in Canada; Polaris Consulting & Services Ireland Limited, organized and located in Ireland; Polaris Consulting & Services Japan K.K., organized and located in Japan; Polaris Consulting & Services Pty Ltd., organized and located in Australia; Polaris Consulting & Services FZ-LLC, organized and located in Dubai; and Polaris Software Lab (Shanghai) Limited, organized and located in China. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the 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, share-based compensation, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, intangible assets, contingent consideration and valuation of financial instruments including derivative contracts and investments. Management bases its estimates on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated financial statements.

Fair Value of Financial Instruments

At June 30, 2017 and March 31, 2017, 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 5 of the notes to our financial statements for a discussion of the fair value of the Company’s other financial instruments.

Recent accounting pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2018. Early application is permitted but not before periods beginning on or after January 1, 2017. In March, April and May 2016, the FASB issued updates to the new revenue standard to clarify the implementation guidance on principal versus agent considerations for reporting revenue gross versus net, identifying performance obligations, accounting for licenses of intellectual property, transition, contract modifications, collectability, non-cash consideration and presentation of sales and other similar taxes with the same effective date. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is in the process of reviewing existing revenue contracts and related costs for evaluating the recognition of revenue from contracts with customers as well as commission and fulfillment costs that may require capitalization and amortization. The Company is also in the process of identifying and implementing changes to our processes to meet the reporting and disclosure requirements. The Company expects the new standard could change the amount and timing of revenue and costs under certain arrangement types. The Company has not yet determined what impact the new guidance will have on its consolidated financial statements and related disclosures or concluded on the transition method.

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In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The update also amends certain disclosure requirements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. Based on the Company’s current investment portfolio, the adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In February 2016, the FASB issued as update (ASU 2016-02) to the standard on leases to increase transparency and comparability among organizations. The new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use asset and a lease liability for all leases with lease terms equal to or greater than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize total lease expense on a straight-line basis. For public business entities this standard is effective for the annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption of this new standard is permitted. Entities will be required to use a modified retrospective transition which provides for certain practical expedients. The Company is currently evaluating the effect the new standard will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued an update (ASU 2016-09) to the standard on Compensation- Stock Compensation, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Upon adoption, entities will be required to apply a modified retrospective, prospective or retrospective transition method depending on the specific section of the guidance being adopted. The Company adopted this guidance effective April 1, 2017 and the following describe the results of adoption:

·The Company prospectively recognized tax benefits of $278 in the income tax expense line item of its consolidated statements of income (loss) in the three months ended June 30, 2017 related to excess tax benefits on stock options;

·The Company changed its accounting policy from estimated forfeitures to actual forfeitures effective April 1, 2017. The cumulative impact of the change in the accounting policy did not have a material impact on the consolidated financial statements, therefore prior period amounts have not been restated;

·The Company elected to adopt cash flow presentation of excess tax benefits retrospectively where these benefits are classified along with other income tax cash flows as operating cash flows. Accordingly, prior period amounts in the consolidated statement of cash flows have been restated;

·The Company adopted cash flow presentation of taxes paid when an employer withholds shares for tax-withholding purposes retrospectively and classified as a financing activity in the Company’s statement of cash flows. Accordingly, prior period amounts have been restated;

·The remaining amendments to this standard, as noted above, are either not applicable, or do not change the Company’s current accounting practices and thus do not impact its consolidated financial statements.

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.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update is intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows. This standard update addresses eight specific cash flow issues, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The guidance

9

requires application using a retrospective transition method. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, an update to the standard on income taxes. This new standard requires the recognition of current and deferred income taxes when an intra-entity transfer of assets other than inventory occurs. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2017. Early adoption is permitted in the first interim period. Upon adoption, the entities will be required to use a modified retrospective transition approach. The adoption of this guidance is not expected to have a material impact on 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 adoption of this guidance will impact the Company’s presentation of cash and cash equivalents. As of June 30, 2017 and March 31, 2017, the Company’s restricted cash was $341 and $178, respectively.

In January 2017, the FASB issued ASU 2017-01, an update on business combinations, which clarifies the definition of a business. The update requires a business to include at least an input and a substantive process that together significantly contribute to the ability to create outputs. The update also states that the definition of a business is not met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2018. Upon adoption, entities will be required to apply the update prospectively. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, an update on goodwill, which eliminates the need to calculate the implied fair value of goodwill when an impairment is indicated. The update states that goodwill impairment is measured as the excess of a reporting unit’s carrying value over its fair value, not to exceed the carrying amount of goodwill. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, 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 adoption of this guidance is not expected to have a material impact on the consolidated financial statements. The Company’s current presentation of service cost components is consistent with the requirements of the new standard. Upon adoption of the new standard, the Company expects to present the other components within other (income) expense.

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, an update that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under ASC 718, Compensation — Stock Compensation. Under the amendments in ASU 2017-09, an entity should account for the effects of a modification unless all of the following criteria are met: 1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified — if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; 2) the vesting conditions of the modified award are the same as the conditions of the original award immediately before the original award is modified; 3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In March 2017, FASB issued ASU 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” The amendments in this update shorten the amortization period for certain callable debt securities that are held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount, which would be amortized to maturity. This ASU is

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effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018, which for us is the first quarter ending December 31, 2019. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

(3) Earnings (loss) per Share

Basic earnings (loss) per share (“EPS”) is computed by dividing net income, 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 the Series A Convertible Preferred Stock, restricted stock units, unvested restricted stock and stock options. 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:

	Three Months Ended June 30,
	2017			2016
Numerators:
Net income (loss) available to Virtusa stockholders	$	3,658		$	(6,256	)
Less: Series A Convertible Preferred Stock dividends and accretion	(701		)	—
Net income (loss) available to Virtusa common stockholders	2,957			$	(6,256	)
Denominators:
Basic weighted average common shares outstanding	29,651,602			29,486,287
Basic earnings (loss) per share	$	0.10		$	(0.21	)

The components of diluted earnings (loss) per share are as follows:

	Three Months Ended June 30,
	2017		2016
Numerators:
Net income (loss) available to Virtusa common stockholders	$	2,957	$	(6,256	)
Add: Series A Convertible Preferred Stock dividends and accretion	—		—
Net income (loss) available to Virtusa common stockholders	2,957		$	(6,256	)
Denominators:
Basic weighted average common shares outstanding	29,651,602		29,486,287
Dilutive effect of Series A Convertible Preferred Stock	—		—
Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units	599,548		—
Weighted average shares-diluted	30,251,150		29,486,287
Diluted earnings (loss) per share	$	0.10	$	(0.21	)

During the three months ended June 30, 2017, unvested restricted stock awards and unvested restricted stock units issuable for, and options to purchase 287,606, shares of common stock were excluded from the calculations of diluted earnings per share as their effect would have been anti-dilutive. For the three months ended June 30, 2017, the weighted average shares of Series A Convertible Preferred Stock of 1,912,088 were excluded from the diluted earnings per share as their effect would have been anti-dilutive using the if-converted method. During the three months ended June 30, 2016, there were no shares excluded from the calculation of diluted earnings per share.

(4) Investment Securities

At June 30, 2017 and March 31, 2017, all of the Company’s investment securities were classified as available-for-sale and were carried on its balance sheet at their fair market value. A fair market value hierarchy based on three levels of inputs was used to

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measure each security (See Note 5 of the notes to our 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 June 30, 2017:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Corporate bonds:
Current	$	32,743	$	1	$	(57	)	$	32,687
Non-current	16,833		2		(35		)	16,800
Preference shares:
Current	—		—		—			—
Non-current	1,831		—		(169		)	1,662
Agency and short-term notes:
Current	2,612		—		(8		)	2,604
Non-current	—		—		—			—
Mutual funds:
Current	20,230		688		—			20,918
Commercial paper:
Current	2,058		—		—			2,058
Equity Shares/ Options:
Non-current	15		178					193
Time deposits:
Current	4,165		—		—			4,165
Total available-for-sale securities	$	80,487	$	869	$	(269	)	$	81,087

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The following is a summary of investment securities at March 31, 2017:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Corporate bonds:
Current	$	36,722	$	7	$	(55	)	$	36,674
Non-current	17,511		3		(48		)	17,466
Preference shares:
Current	1,633		—		(75		)	1,558
Non-current	1,829		—		(101		)	1,728
Agency and short-term notes:
Current	1,816		—		(3		)	1,813
Non-current	803		—		(3		)	800
Mutual funds:
Current	17,934		371		—			18,305
Commercial paper:
Current	2,993		—		—			2,993
Equity Shares/ Options:
Non-current	17		46					63
Time deposits:
Current	10,685		—		—			10,685
Total available-for-sale securities	$	91,943	$	427	$	(285	)	$	92,085

The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses at June 30, 2017 and March 31, 2017 are temporary. In making this determination, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, the underlying collateral of the investments, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position. Additionally, while the Company classifies the securities as available for sale, the Company does not currently intend to sell such investments and it is more likely than not the Company will not be required to sell such investments prior to the recovery of their carrying value.

Proceeds from sales of available-for-sale investment securities and the gross gains and losses that have been included in earnings as a result of those sales were as follows:

	Three Months Ended June 30,
	2017			2016
Proceeds from sales of available-for-sale investment securities	$	29,002		$	40,439
Gross gains	$	19		$	310
Gross losses	(90		)	—
Net realized gains on sales of available-for-sale investment securities	$	(71	)	$	310

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(5) Fair Value of Financial Instruments

The Company uses a framework for measuring fair value under U.S. generally accepted accounting principles and enhanced disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company’s financial assets and liabilities reflected in the consolidated financial statements at carrying value include marketable securities and other financial instruments which approximate fair value. Fair value for marketable securities is determined using a market approach based on quoted market prices at period end in active markets. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

·Level 1—Quoted prices in active markets for identical assets or liabilities.

·Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

·Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2017:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Available-for-sales securities—current	$	—	$	62,432	$	—	$	62,432
Available-for-sales securities—non-current	—		18,655		—		18,655
Foreign currency derivative contracts	—		11,789		—		11,789
Interest Rate Swap Contracts	—		1,568		—		1,568
Total assets	$	—	$	94,444	$	—	$	94,444
Liabilities:
Foreign currency derivative contracts	$	—	$	377	$	—	377
Contingent consideration	—				100		100
Total liabilities	$	—	$	377	$	100	$	477

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The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2017:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Available-for-sales securities—current	$	—	$	72,028	$	—	$	72,028
Available-for-sales securities—non-current	—		20,057		—		20,057
Foreign currency derivative contracts	—		16,431		—		16,431
Interest Rate Swap Contracts	—		1,842		—		1,842
Total assets	$	—	$	110,358	$	—	$	110,358
Liabilities:
Foreign currency derivative contracts	$	—	$	—	$	—	—
Interest Rate Swap Contracts	—		—		—		—
Total liabilities	$	—	$	—	$	—	$	—

The Company determines the fair value of the contingent consideration related to the Company’s acquisition of a small consulting company based on the probability of attaining a specific contract renewal target. See Note 7 of the notes to our financial statements included herein for a description of this acquisition. The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities at June 30, 2017.

	Level 3 Liabilities
Balance at April 1, 2017	$	—
Contingent consideration arising from acquisition (See Note 7)	100
Payments made during the period	—
Balance at June 30, 2017	$	100

(6) Derivative Financial Instruments

The Company evaluates its foreign exchange policy on an ongoing basis to assess its ability to address foreign exchange exposures on its consolidated balance sheets, statements of income 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 “Economic Hedge Program” involves the purchase of derivative instruments with maturities of up to 92 days, and is designed to mitigate the impact of foreign exchange on U.K. pound sterling, the euro and Swedish krona denominated revenue and costs with respect to the quarter for which such instruments are purchased. The Balance Sheet Program and the Economic Hedge Program are treated as economic hedges as these programs do not meet the criteria for hedge accounting and all gains and losses are recognized in consolidated statement of income 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 five counterparties as of June 30, 2017.

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 June 30, 2017, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of June 30, 2017, it could have been required to settle its obligations under these agreements at amounts which approximate the June 30, 2017 fair values reflected in the table below. During the three months ended June 30, 2017, the Company was not in default of any of its derivative obligations.

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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 three month ended June 30, 2017 or 2016.

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 $152,052 and $153,435 at June 30, 2017 and March 31, 2017, respectively. Unrealized net gains related to these contracts which are expected to be reclassified from AOCI to earnings during the next 12 months were $11,713 at June 30, 2017. At June 30, 2017, the maximum outstanding term of any derivative instrument was 15 months.

On July 26, 2016, the Company entered into two 12-month forward starting interest rate swap transactions and on July 28, 2016, the Company entered into a third 12-month forward starting interest rate swap transaction to mitigate Company’s interest rate risk on the Company’s variable rate debt (collectively, “The Interest Rate Swap Agreements”). 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 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 Interest Rate Swap Agreements have an effective date of July 31, 2017 and a maturity date of July 31, 2020. The swaps have an aggregate beginning notional amount of $93,800 and, with the pre-payment of $81,000 of principal on our existing debt, hedge approximately 86% of the Company’s forecasted outstanding debt balance as of July 31, 2017. The notional amount of the swaps amortizes over the three swap periods. The Interest Rate Swap agreements require the Company to make monthly fixed interest rate payments based on the amortized notional amount at a blended weighted average rate of 1.025% and the Company will receive 1-month LIBOR on the same notional amounts.

The counterparties to the Interest Rate Swap Agreements could demand an early termination of the 2016 Swap Agreements if the Company is in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and the Company is 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, 2016, of not more than 3.25 to 1.00 for the first year of the Credit Agreement, of not more than 3.00 to 1.00 for the second year of the Credit Agreement, and 2.75 to 1.00 thereafter, each as determined for the four consecutive quarter period ending on each fiscal quarter and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00. As of June 30, 2017, the Company was in compliance with these covenants. The unrealized gain associated with the 2016 Swap Agreement was $1,568 and 1,842 at June 30, 2017 and March 31, 2017, respectively, which represents the estimated amount that the Company would receive from the counterparties in the event of an early termination.

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The following table sets forth the fair value of derivative instruments included in the consolidated balance sheets at June 30, 2017 and March 31, 2017:

Derivatives designated as hedging instruments

	June 30, 2017		March 31, 2017
Foreign currency exchange contracts:
Other current assets	$	11,789	$	15,544
Other long-term assets	$	—	$	887
Accrued expenses and other	$	309	$	—
Long-term liabilities	$	68	$	—

	June 30, 2017		March 31, 2017
Interest rate swap contracts:
Other long-term assets	$	1,568	$	1,842

The following tables set forth the effect of the Company’s foreign currency exchange contracts on the consolidated financial statements of the Company for the three months ended June 30, 2017 and 2016:

	Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)
Derivatives Designated as Cash Flow	Three months ended June 30,
Hedging Relationships	2017			2016
Foreign currency exchange contracts	$	505		$	2,059
Interest rate swaps	(274		)	—

Location of Gain or (Loss) Reclassified	Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion)
from AOCI into Income (loss) (Effective	Three months ended June 30,
Portion)	2017		2016
Revenue	$	2,593	$	528
Costs of revenue	$	2,065	$	198
Operating expenses	$	1,161	$	121

		Amount of Gain or (Loss) Recognized in Income
		(loss) on Derivatives
		Three months ended
Derivatives not Designated	Location of Gain or (Loss)	June 30,
as Hedging Instrument	Recognized in Income (loss) on Derivatives	2017			2016
Foreign currency exchange contracts	Foreign currency transaction gains (losses)	$	—		$	(180	)
	Revenue	$	(181	)	$	109
	Costs of revenue	$	143		$	(54	)
	Selling, general and administrative expenses	$	31		$	(13	)

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(7) Acquisitions

On March 3, 2016, pursuant to a share purchase agreement (the “SPA”), dated as of November 5, 2015, by and among Virtusa Consulting Services Private Limited (“Virtusa India”), a subsidiary of the Company, Polaris Consulting & Services Limited (“Polaris”) and the Promoter Sellers named therein, as amended, the Company completed the purchase of 53,133,127 shares, or approximately 51.7% of the fully-diluted capitalization of Polaris from certain Polaris shareholders for approximately $168,257 (Indian rupees 11,391,365) in cash (the “Polaris SPA Transaction”). In addition, on April 6, 2016, Virtusa India completed an unconditional mandatory open offer with successful tender to purchase an additional 26% of the fully diluted outstanding shares of Polaris common stock from Polaris’ public shareholders. The mandatory open offer was conducted in accordance with requirements of the Securities and Exchange Board of India (“SEBI”) and the applicable Indian rules on takeovers. Virtusa India purchased 26,719,942 shares of Polaris common stock for an aggregate purchase price of approximately $89,147 (Indian rupees 5,935,260). Pursuant to the mandatory open offer, during the fiscal year ended March 31, 2016, the Company transferred $89,220 into an escrow account in accordance with the India takeover rules, which was recorded as restricted cash at March 31, 2016, and the mandatory open offer closed on April 6, 2016. On April 6, 2016, the restricted cash was released from the escrow account and used for settlement for the mandatory open offer.

Upon the closing of the mandatory offering, Virtusa’s ownership interest in Polaris increased from approximately 51.7% to 77.7% of Polaris’ fully diluted shares of common stock outstanding, and from approximately 52.9% to 78.8% of Polaris’ basic shares of common stock outstanding. Under applicable Indian rules on takeovers, Virtusa India was required to sell within one year of the settlement of the unconditional mandatory offer its shares of common stock in Polaris in excess of 75% of the basic outstanding shares of common stock of Polaris. In order to comply with the applicable Indian rules on takeovers, during the three months ended December 31, 2016, the Company sold 3.7% of its shares of Polaris common stock through a public offering. The sale offer closed on December 14, 2016, and the Company received approximately $7,645 in proceeds, net of $188 in brokerage fees and taxes. In addition to these costs, the Company incurred additional costs of $409 towards professional and legal fees and expense. The Company’s ownership interest in Polaris prior to the sale offer was 78.6% of the outstanding shares of common stock, and upon the closing of the sale offer, the Company’s ownership interest decreased from 78.6% to 74.9% of Polaris’ basic shares of common stock outstanding. As of June 30, 2017 the Company has 74.4% of ownership interest on Polaris basic shares of common stock. In accordance with ASC 810-10, changes in a parent’s ownership, while retaining its financial controlling interest, are accounted for as equity transactions.

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.

(8)  Series A Convertible Preferred Stock

On May 3, 2017, the Company and Orogen Viper LLC (the “Purchaser”), entered into an Investment Agreement (the “Investment Agreement”), pursuant to which the Company issued and sold to the Purchaser, and the Purchaser purchased from the Company, an aggregate of 70,000 shares of voting convertible preferred stock of the Company, designated as the Company’s 3.875% Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Voting Preferred Stock”), and 38,000 shares of a separate class of non-voting convertible preferred stock of the Company, designated as the Company’s 3.875% Series A-1 Convertible Preferred Stock, par value $0.01 per share (the “Series A-1 Preferred Stock” and, together with the Series A Voting Preferred Stock, the “Series A Convertible Preferred Stock”), in each case for a purchase price of $1,000 per share, representing $108,000 of gross proceeds to the Company.

The Investment Agreement provides the Purchaser the right, pursuant to the terms of the Series A Convertible Preferred Stock, to appoint a director to serve on our Board. Pursuant to the Investment Agreement, in connection with the closing of the transactions contemplated by the Investment Agreement (the “Closing”), our Board of Directors (the “Board”) increased the size of the Board from nine directors to ten directors and elected Vikram S. Pandit, the initial nominee designated by the Purchaser, to the Board, subject to replacement pursuant to the procedures described in the Investment Agreement. Such appointment right will terminate if the Purchaser and its affiliates fail to retain beneficial ownership of at least 50% of the number of shares of our common stock underlying the Series A Convertible Preferred Stock held by the Purchaser immediately following the Closing.

Following the conversion of the Series A Convertible Preferred Stock into shares of our common stock, so long as the Purchaser retains beneficial ownership of at least 50% of the number of shares of our common stock underlying the Series A Convertible Preferred Stock held by the Purchaser immediately following the Closing, we have agreed to include one nominee of the

18

Purchaser for election as a director of the same class (whether Class I, Class II or Class III) as the other directors nominated by us for election at our next meeting of stockholders following such conversion, and to renominate such individual thereafter at each meeting of stockholders electing such class of directors. We are required to use our reasonable efforts to cause the election of such person.

Pursuant to the Investment Agreement, the Purchaser has agreed, subject to certain exceptions, that until the later of (1) the first date on which there is no Purchaser-affiliated director serving on our Board, and (2) May 3, 2019 (the “Standstill Period”), the Purchaser will not, among other things, subject to certain exceptions described in the Investment Agreement: (i) acquire any securities of the Company if, immediately after such acquisition, the Purchaser would collectively own in the aggregate more than 20.0% of the then outstanding common stock of the Company, (ii) propose or seek to effect any tender or exchange offer, merger or other business combination involving the Company or its securities, or make any public statement with respect to such transaction, (iii) make, or in any way participate in any “proxy contest” or other solicitation of proxies, (iv) seek election or appointment to, or representation on, our Board other than as set forth in the Investment Agreement or the Series A Certificate of Designations (as defined below), or seek the removal of any of our directors, or (v) conduct any referendum of stockholders of the Company or make or be the proponent of any stockholder proposal.

The Investment Agreement restricts the Purchaser’s ability to transfer the Series A Convertible Preferred Stock or shares of our common stock issued or issuable upon conversion of the Series A Convertible Preferred Stock, subject to certain exceptions specified in the Investment Agreement. In particular, prior to the earliest of (i) May 3, 2019, (ii) a change of control of the Company or entry into a definitive agreement for a transaction that, if consummated, would result in a change of control of the Company, and (iii) the later of May 3, 2018 and the first date on which there is no Purchaser-affiliated director serving on our Board, the Purchaser will be restricted from selling, offering, transferring, assigning, pledging, mortgaging, hypothecating, gifting or disposing the Series A Convertible Preferred Stock or shares of common stock issued or issuable upon conversion of the Series A Convertible Preferred Stock. Such restrictions also prohibit the Purchaser from entering into or engaging in any hedge, swap, short sale, derivative transaction or other agreement or arrangement that transfers any ownership of, or interests in, the shares of Series A Convertible Preferred Stock or shares of common stock issued or issuable upon conversion of the Series A Convertible Preferred Stock. These restrictions do not apply to, among others, transfers to affiliates or in connection with certain third-party tender offers.

Subject to certain limitations, the Investment Agreement provides the Purchaser with certain registration rights for the shares of common stock underlying the Series A Convertible Preferred Stock (including any shares issued or issuable as dividends on the Series A Convertible Preferred Stock) held by the Purchaser. The Investment Agreement contains other customary terms for private investments in public companies, including representations, warranties and covenants.

On May 3, 2017, we filed with the Secretary of State of the State of Delaware (i) a Certificate of the Powers, Designations, Preferences and Rights of the 3.875% Series A Preferred Stock (the “Series A Certificate of Designations”) and (ii) a Certificate of the Powers, Designations, Preferences and Rights of the 3.875% Series A-1 Preferred Stock (the “Series A-1 Certificate of Designations” and, together with the Series A Certificate of Designations, the “Certificates of Designations”). Generally, except with respect to certain voting rights, and a conversion trigger applicable to the Series A-1 Preferred Stock described below as the “HSR Conversion,” the rights, preferences and privileges of the Series A Preferred Stock and the Series A-1 Preferred Stock are substantially identical.

The Series A Convertible Preferred Stock has a liquidation preference of $1,000 per share. In addition, cumulative Series A Convertible Preferred Stock dividends accumulate on the Series A Convertible Preferred Stock at a rate of 3.875% per annum, and are payable quarterly in arrears. The payments on such dividends may be paid in cash or, at our option, in shares of our common stock. We may only pay such dividends in shares of common stock on or after August 1, 2018, subject to an aggregate share cap and so long as we have paid full cumulative dividends on the Series A Convertible Preferred Stock for all past dividend periods, and there is adequate current public information with respect to the Company and no volume limitations would apply to the resale of such shares, in each case under Rule 144 under the Securities Act of 1933.

The Series A Convertible Preferred Stock is convertible at the option of the holders at any time into shares of the Company’s common stock at an initial conversion rate of 27.77778 shares of the Company’s common stock per share of Series A Convertible Preferred Stock (which is equal to an initial conversion price of approximately $36.00 per share of the Company’s common stock), subject to certain customary anti-dilution adjustments. If at any time after May 3, 2020, the closing sale price of our common stock exceeds 150% of the then applicable conversion price of the Series A Convertible Preferred Stock for at least 20 trading days during a period of 30 consecutive trading days, the Company may cause some or all of the Series A Convertible Preferred Stock to be converted into shares of common stock at the then applicable conversion rate. Upon the conversion of the Series A Convertible Preferred Stock into common stock, we are required to pay all accumulated but unpaid dividends in additional shares of common stock valued at the then applicable conversion price on the date of such conversion.

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Holders of Series A Convertible Preferred Stock are entitled to vote generally with the holders of common stock on an as-converted basis (including with respect to election of the members of our Board). Holders of Series A Convertible Preferred Stock are also entitled to certain limited special approval rights, including with respect to amendments to the Company’s organizational documents that have an adverse effect on the Series A Convertible Preferred Stock, certain issuances of senior or pari passu securities, certain purchases, redemptions or other acquisitions of junior securities or payments, dividends or distributions thereon. In addition, so long as any shares of Series A Convertible Preferred Stock are outstanding and the Purchaser and its affiliates collectively beneficially own at least a majority of the shares of Series A Convertible Preferred Stock beneficially owned by such holders immediately following the Closing, the holders of Series A Convertible Preferred Stock, voting as a separate class by majority vote, are entitled to elect one director to serve on our Board.

Holders of Series A-1 Preferred Stock generally have no voting rights except as required by law and with respect to amendments to the Company’s organizational documents that have an adverse effect on the Series A-1 Preferred Stock. At such time as any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 applicable to the acquisition of shares of Preferred Stock expires or is terminated, all shares of the Series A-1 Preferred Stock then issued and outstanding shall immediately and automatically convert on a one for one basis to shares of Series A Preferred Stock (the “HSR Conversion”). Upon such HSR Conversion (which occurred in May 2017), all accumulated but unpaid dividends on such shares of Series A-1 Preferred Stock immediately prior to such HSR Conversion will be converted into an equivalent amount of accumulated but unpaid dividends on shares of Series A Preferred Stock immediately following such HSR Conversion.

With certain exceptions, upon a Fundamental Change (as defined in the Certificates of Designations), the holders of the Series A Convertible Preferred Stock may require that the Company repurchase for cash all or any whole number of shares of Series A Convertible Preferred Stock at a per-share repurchase price equal to 100% of the liquidation preference of such shares, plus accumulated and unpaid dividends. If we fail 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 the date that the Company is required to effect such repurchase, 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. The definition of Fundamental Change includes a sale of substantially all the Company’s assets, a change of control of the Company by way of a tender offer, merger or similar event, the adoption of a plan relating to the Company’s liquidation or dissolution and certain delistings of our common stock, except in certain cases described in the Certificates of Designations in which the consideration received or to be received by the Company’s common stockholders in a sale or change of control transaction consists primarily of publicly listed and traded securities.

Holders of Series A Convertible Preferred Stock that are converted in connection with a Make-Whole Fundamental Change, as defined in the Certificates of Designations, are, under certain circumstances, entitled to an increase in the conversion rate for such shares of Series A Convertible Preferred Stock based on the effective date of such event and the applicable price attributable to the event as set forth in a table contained in the Certificates of Designations. The definition of Make-Whole Fundamental Change includes a sale of substantially all the Company’s assets, a change of control of the Company by way of a tender offer, merger or similar event, the adoption of a plan relating to the Company’s liquidation or dissolution and certain delistings of our common stock.

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 we fail 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 three months ended June 30, 2017, the Company recorded $27 as an accretion to the Series A Convertible Preferred Stock. 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. As of June 30, 2017, the Company had declared and accrued dividends of $674 associated with the Series A Convertible Preferred Stock.

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(9) Goodwill and Intangible Assets

Goodwill:

The Company has one operating segment. The following are details of the changes in goodwill balance at June 30, 2017:

	Amount
Balance at April 1, 2017	$	211,089
Goodwill arising from acquisitions	150
Foreign currency translation adjustments	710
Balance at June 30, 2017	$	211,949

The acquisition costs and goodwill balance deductible for our business acquisitions for tax purposes are $74,109. The acquisition costs and goodwill balance not deductible for tax purposes are $149,727 and relate to the Company’s TradeTech acquisition (closed on January 2, 2014) and the Polaris acquisition.

The Company performed the annual assessment of its goodwill during the fourth quarter of the fiscal year ended March 31, 2017 and determined that the estimated fair value of the Company’s reporting unit exceeded its carrying value and therefore goodwill was not impaired. The Company will continue to complete goodwill impairment assessments at least annually during the fourth quarter of each ensuing fiscal year. The Company will continue to evaluate whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets, including intangible assets, may warrant revision or that the carrying value of these assets may be impaired. Any write-downs are treated as permanent reductions in the carrying amount of the assets.

Intangible Assets:

The following are details of the Company’s intangible asset carrying amounts acquired and amortization at June 30, 2017.

	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Customer relationships	10.8	$	83,260	$	27,868	$	55,392
Trademark	2.1	2,968		1,906		1,062
Technology	5.0	500		176		324
	10.5	$	86,728	$	29,950	$	56,778

The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

(10) Income Taxes

The Company applies an estimated annual effective tax rate to its year-to-date operating results to determine the interim provision (benefit) for income tax expense. The Company’s effective tax rate was 14.7% for the three months ended June 30, 2017, as compared to an effective tax rate of 7.8% for the three months ended June 30, 2016. The Company’s reported effective tax rate is impacted by jurisdictional mix of profits and losses in which the Company operates, statutory tax rates in effect, unusual or infrequent discrete items requiring a provision during the period and certain exemptions or tax holidays applicable to the Company.

The Company created two export oriented units in India, one in Bangalore during the fiscal year ended March 31, 2011 and a second unit in Hyderabad (Special Economic Zone or “SEZ”) during the fiscal year ended March 31, 2010 for which no income tax exemptions were availed. The Indian subsidiaries also operate two development centers in areas designated as a SEZ, under the SEZ Act of 2005. In particular, the Company was approved as 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 elected to claim SEZ Co-developer income tax benefits starting in fiscal year ended March 31, 2013. In addition, the Company has leased facilities in SEZ designated locations in Hyderabad and Chennai, India. The Company’s profits from the Hyderabad and Chennai SEZ operations are eligible for certain income tax exemptions for a period of up to 15 years beginning in fiscal March 31, 2009. The Company’s India profits ineligible for SEZ benefits are subject to corporate income tax at the current rate of 34.61%. In the fiscal years ended March 31, 2013 and March 31, 2014, the Company leased a facility in an SEZ designated location in Bangalore and Pune, India each of which is eligible for tax holidays for up to 15 years beginning in the fiscal years ended March 31, 2013 and March 31, 2014 respectively. During the fiscal year ended March 31, 2016, the Company established a new unit in Hyderabad, in an SEZ designated area, for which it is eligible for tax holiday for up to 15 years. Based on the latest changes in tax laws, book profits of SEZ units are subject to MAT, commencing April 1, 2011, which will continue to negatively impact the Company’s cash flows.

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In addition, the Company’s Sri Lankan subsidiary, Virtusa (Private) Limited, is operating under a 12-year income tax holiday arrangement that is set to expire on March 31, 2019 and required Virtusa (Private) Limited to retain certain job creation and investment criteria through the expiration of the holiday period. During the fiscal year ended March 31, 2017, the Company believed it has fulfilled its hiring and investment commitments and is eligible for tax holiday through March 2019. The current agreement provides income tax exemption for all export business income. On October 31, 2016, the Company received confirmation from the Board of Investments that it had satisfied investment criteria through March 31, 2016 and is eligible for holiday benefits. At June 30, 2017, the Company believes it is eligible for continued benefits for the entire 12 year tax holiday.

The Company’s effective income tax rate is based on the composition of estimated income in different jurisdictions, including those where the Company is enjoying tax holidays, for the applicable fiscal year and adjustments, if any, in the applicable quarterly periods, for unrecognized tax benefits for uncertain income tax positions or other discrete items required to be reported during interim periods. The Company’s aggregate income tax rate in foreign jurisdictions is lower than its income tax rate in the United States due primarily to lower rates in jurisdictions in which the Company operates and applicable tax holiday benefits of the Company, obtained primarily in India and Sri Lanka.

In connection with the Company’s adoption of ASU 2016-09 (Stock Compensation), during the three months ended June 30, 2017, the Company has accounted on a prospective basis in the income statement for the income tax expense or benefit for the tax effects of differences recognized on or after the effective date of the equity-based payment awards between the deduction for an award for tax purposes and the cumulative compensation costs of that award recognized for financial reporting purposes. During the three months ended June 30, 2017, the Company recorded a tax benefit of $278 in the Company’s income tax expense. The Company also presented the excess tax benefits (deficiencies) as operating activities in the Consolidated Statements of Cash Flows on a retrospective basis and prior period has been restated.

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. Net loss in the United States has decreased during the three months ended June 30, 2017 compared with the three months ended June 30, 2016. The Company has a significant deferred tax asset in the United States at June 30, 2017. We continue to monitor all positive and negative evidence related to this asset. At June 30, 2017, the Company determined that a specific valuation allowance was not required.

Unrecognized tax benefits represent uncertain tax positions for which the Company has established reserves. At June 30, 2017 and March 31, 2017, the total liability for unrecognized tax benefits was $7,526 and $7,612, respectively. Unrecognized tax benefits may be adjusted upon the closing of the statute of limitations for income tax returns filed in various jurisdictions. During the three months ended June 30, 2017, the unrecognized tax benefits decreased by $86 and increased by $39 during the three months ended June 30, 2016. The decrease in unrecognized tax benefits in the three months period ending June 30, 2017 was predominantly due to the release of a prior period foreign tax position, offset by increases for incremental interest accrued on existing uncertain tax positions. The increase in unrecognized tax benefits in the three months period ending June 30, 2016 was predominantly due to increases for incremental interest accrued on existing uncertain tax positions.

Undistributed Earnings of Foreign Subsidiaries

A substantial amount of the Company’s income before provision for income tax is from operations earned in its Indian and Sri Lankan subsidiaries and is subject to tax holiday. The Company intends to use accumulated and future earnings of foreign subsidiaries to expand operations outside the United States and, accordingly, undistributed income is considered to be indefinitely reinvested. The Company does not provide for U.S. income taxes on foreign earnings. At June 30, 2017, the Company had $394,424 of unremitted earnings from foreign subsidiaries and approximately $154,602 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. However, under current law, any repatriation would be subject to United States federal income tax less applicable foreign tax credits. Due to the various methods by which such earnings could be repatriated in the future, the amount of taxes attributable to the undistributed earnings is not practicably determinable.

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(11) Concentration of Revenue and Assets

Total revenue is attributed to geographic areas based on the location of the client. Long-lived assets represent property, plant and equipment, intangible assets and goodwill, net of accumulated depreciation and amortization, and are attributed to geographic area based on their location. Geographic information is summarized as follows:

	Three Months Ended June 30,
	2017		2016
Client revenue:
North America	$	146,142	$	133,471
Europe	53,372		46,384
Other	27,831		25,616
Consolidated revenue	$	227,345	$	205,471

	June 30, 2017		March 31, 2017
Long-lived assets, net of accumulated depreciation and amortization:
North America	$	90,983	$	91,508
Asia	279,548		280,771
Europe and others	16,829		16,061
Consolidated long-lived assets, net	$	387,360	$	388,340

Revenue from significant clients as a percentage of the Company’s consolidated revenue was as follows:

	Three Months Ended June 30,
	2017		2016
Customer 1	18.1	%	15.7	%

(12) Debt

On February 25, 2016, in connection with the Polaris SPA Transaction, the Company entered into a credit agreement (the “Credit Agreement”) dated as of February 25, 2016, by and among the Company, its guarantor subsidiaries party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint book runners and lead arrangers. The Credit Agreement provides for a $100,000 revolving credit facility and a $200,000 delayed-draw term loan (together, the “Credit Facility”). To finance the Polaris SPA Transaction, on February 25, 2016, the Company drew down the full $200,000 of the term loan. Interest under these facilities accrues at a rate per annum of LIBOR plus 2.75%, subject to step-downs based on the Company’s ratio of debt to adjusted earnings before interest, taxes, depreciation, amortization, and stock compensation expense (“EBITDA”). The Company was required under the terms of the Credit Agreement to make quarterly principal payments on the term loan, however, the prepayment of the $81,000 from the proceeds from the Orogen Viper LLC investment (See Note 8 of the notes to our financial statements), has satisfied this obligation and no further principal payments are required. The Credit Agreement includes customary minimum cash, maximum debt to EBITDA and minimum fixed charge coverage covenants. The term of the Credit Agreement is five years ending February 24, 2021. At June 30, 2017, the interest rate on the Credit Facility was 3.98% and there were no borrowings under the revolving credit facility.

The Credit Agreement has financial covenants that require that the Company maintain a Total Leverage Ratio, commencing on June 30, 2016, of not more than 3.25 to 1.00 for the first year of the Credit Facility, of not more than 3.00 to 1.00 for the second year of the Credit Facility, and 2.75 to 1.00 thereafter, each as determined for the four consecutive quarter period ending on each fiscal quarter (the “Reference Period”). In addition, for a period, expected to be at least one year from the completion of the Company’s closing of the Polaris SPA Transaction, until the occurrence of certain events described in the Credit Agreement, at any time when the Total Leverage Ratio exceeds 1.50 to 1.00 as of the last day of a quarter, the Company must maintain at least $30,000 in unrestricted cash, cash equivalents and certain permitted investments under the Credit Facility held in bank deposits in the U.S., and $20,000 in unrestricted cash and certain permitted investments under the Credit Facility and long-term securities investments held in accordance with the Company’s current investment policy. The financial covenants also require that the Company maintain a Fixed Charge Coverage Ratio, commencing on June 30, 2016, of not less than 1.25 to 1.00, as of the last day of any Reference Period. For purposes of these covenants, “Total Leverage Ratio” means, as of the last day of any fiscal quarter, the ratio of Funded Debt to Adjusted EBITDA for the reference period ended on such date. “Funded Debt” refers generally to total indebtedness to third-parties for borrowed money, capital leases, deferred purchase price and earn-out obligations and related guarantees and “Adjusted EBITDA” is defined as consolidated net income plus (a) (i) GAAP depreciation and amortization, (ii) non-cash equity-based compensation expenses, (iii) fees and expenses incurred during such period in connection with the Credit Facility and loans made thereunder, (iv) fees and expenses incurred during such period in connection with any permitted acquisition, (v) one-time regulatory charges, (vi) other extraordinary and non-recurring losses or expenses, and (vii) all other non-cash charges, expenses and losses for such period, minus (b) (i) extraordinary or non-recurring income or gains for such period, and (ii) any cash payments made during such period in respect of non-cash charges, expenses or losses described in clauses (a)(ii), (a)(v) and (a)(vi) above taken in a prior period, subject to other adjustments and certain caps and limits on adjustments. The Fixed Charge Coverage Ratio is calculated under the

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Credit Agreement generally as the ratio of Adjusted EBITDA, excluding capital expenditures made during such period (to the extent not financed with indebtedness (other than Revolving Loans), an issuance of equity interests or capital contributions, or proceeds of asset sales, the proceeds of casualty insurance used to replace or restore assets), to fixed charges (regularly scheduled consolidated interest expense paid in cash, regularly scheduled amortization payments on indebtedness in cash, income taxes paid in cash and the interest component of capital lease obligation payments), on a consolidated basis.

The Credit Facility is secured by substantially all of the Company’s assets, including all intellectual property and all securities in domestic subsidiaries (other than certain domestic subsidiaries where the material assets of such subsidiaries are equity in foreign subsidiaries), subject to customary exceptions and exclusions from the collateral. All obligations under the Credit Agreement are unconditionally guaranteed by substantially all of the Company’s material direct and indirect domestic subsidiaries, with certain exceptions. These guarantees are secured by substantially all of the present and future property and assets of the guarantors, with certain exclusions.

At June 30, 2017, the Company is in compliance with our debt covenants and have provided a quarterly certification to our lenders to that effect. We believe that we currently meet all conditions set forth in the Credit Agreement to borrow thereunder and we are not aware of any conditions that would prevent us from borrowing part or all of the remaining available capacity under the revolving credit facility at June 30, 2017 and through the date of this filing.

Current portion of long-term debt

The following summarizes our short-term debt balances as of:

	June 30, 2017		March 31, 2017
Notes outstanding under the revolving credit facility	$	—	$	—
Term loan- current maturities	—		10,000
Less: deferred financing costs — current	—		(1,130		)
Total	$	—	$	8,870

Long-term debt, less current portion

The following summarizes our long-term debt balance as of:

	June 30, 2017			March 31, 2017
Term loan	$	190,000		$	190,000
Less:
Current maturities	—			(10,000		)
Repayment of Term loan	(81,000		)	—
Deferred financing costs, long-term	(4,131		)	(3,278		)
Total	$	104,869		$	176,722

In accordance with the recently adopted FASB ASU 2015-03, the Company has presented debt issuance costs in the balance sheet as a direct deduction from the carrying value of that debt liability.

On July 26, 2016, the Company entered into two 12-month forward starting interest rate swap transactions and on July 28, 2016, the Company entered into a third 12-month forward starting interest rate swap transaction to mitigate Company’s interest rate risk on Company’s variable rate debt (collectively, “The Interest Rate Swap Agreements”). 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 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 three Interest Rate Swap Agreements have an effective date of July 31, 2017 and a maturity date of July 31, 2020. The swaps have an aggregate beginning notional amount of $93,800 and, with the pre-payment of $81,000 of principal on our existing debt, hedge approximately 86% of our forecasted outstanding debt balance as of July 31, 2017. The notional amount of the swaps amortizes over the three swap periods corresponding to the quarterly principal payments on the term loan. The Interest Rate Swap Agreements require the Company to make monthly fixed interest rate payments based on the amortized notional amount at a blended weighted average rate of 1.025% and the Company will receive 1-month LIBOR on the same notional amounts. The unrealized gain associated with the 2016 Swap Agreement was $1,568 at June 30, 2017, which represents the estimated amount that the Company would receive from the counterparties in the event of an early termination.

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Beginning in fiscal 2009, the Company’s U.K. subsidiary entered into an agreement with an unrelated financial institution to sell, without recourse or continuing involvement, certain of its European-based accounts receivable balances from one client to such third party financial institution. During the three months ended June 30, 2017, $5,600 of receivables were sold under the terms of the financing agreement. Fees paid pursuant to this agreement were immaterial during the three months ended June 30, 2017. No amounts were due as of June 30, 2017, 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.

(13) Pensions and post-retirement benefits

The Company has noncontributory defined benefit plans covering its employees in India and Sri Lanka as mandated by the Indian and Sri Lankan governments. The following tables provide information regarding pension expense recognized:

	Three Months Ended June 30,
	2017			2016
Components of net periodic pension cost
Service cost	$	366		$	333
Interest cost	165			134
Expected return on plan assets	(173		)	(153		)
Amortization actuarial loss	39			41
Amortization of past service cost	2			2
Net periodic pension cost	$	399		$	357

The Company expects to contribute approximately $2,267 in cash to the gratuity plans during the fiscal year ending March 31, 2018. During the three months ended June 30, 2017, the Company made cash contributions of $465 towards the plans for the fiscal year 2018.

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(14) Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive income (loss) by component were as follows for the three months ended June 30, 2017 and 2016:

	Three Months Ended June 30,
Accumulated Other Comprehensive Income (Loss)	2017			2016
Investment securities
Beginning balance	$	57		$	23
Other comprehensive income (loss) (OCI) before reclassifications net of tax of $131, $172	245			300
Reclassifications from OCI to other income — net of tax of $26, $(38)	54			(69		)
(Less) : Noncontrolling interests, net of tax $(40), $(26)	(76		)	(49		)
Comprehensive income on investment securities, net of tax of $117, $108	223			182
Closing Balance	$	280		$	205
Currency Translation Adjustments
Beginning balance	$	(50,415	)	$	(45,211	)
OCI before reclassifications	3,605			(5,062		)
(Less): Noncontrolling interests, net of tax	(486		)	1,244
Comprehensive income (loss) on currency translation adjustment	3,119			(3,818		)
Closing Balance	$	(47,296	)	$	(49,029	)
Cash Flow Hedges
Beginning balance	$	11,789		$	3,934
OCI before reclassifications net of tax of $249 and $264	(18		)	1,795
Reclassifications from OCI to
- Revenue, net of tax of $(898) and $(183)	(1,695		)	(345		)
- Costs of revenue, net of tax of $(566) and $(14)	(1,499		)	(184		)
- Selling, general and administrative expenses, net of tax of $(318) and $(8)	(843		)	(113		)
(Less): Noncontrolling interests, net of tax $153, $342	289			646
Comprehensive income (loss) on cash flow hedges, net of tax of $(1,380) and $401	(3,766		)	1,799
Closing Balance	$	8,023		$	5,733
Benefit plans
Beginning balance	$	(1,180	)	$	(885	)
OCI before reclassifications net of tax of $0 for all periods	$	—		$	—
Reclassifications from OCI for prior service credit (cost) to:
- Costs of revenue, net of tax of $0 for all periods	2			2
- Selling, general and administrative expenses, net of tax of $0 for all periods	—			—
Reclassifications from OCI for net actuarial gain (loss) amortization to:
- Costs of revenue, net of tax of $0 for all periods	27			26
- Selling, general and administrative expenses, net of tax of $0 for all periods	12			15
Other adjustments	4			(19		)
Comprehensive income on benefit plans, net of tax of $0 for all periods	45			24
Closing Balance	$	(1,135	)	$	(861	)
Accumulated other comprehensive loss at June 30, 2017	$	(40,128	)	$	(43,952	)

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(15) Subsequent Events

On July 26, 2017, the Company purchased multiple foreign currency forward contracts designed to hedge fluctuation in the U.K. pound sterling (“GBP”) against the U.S. dollar, the Swedish Krona (“SEK”) against the U.S. dollar and the Euro against the U.S. dollar, each of which will expire on various dates during the period ending September 30, 2017. The GBP contracts have an aggregate notional amount of approximately £2,395 (approximately $3,126), the SEK contracts have an aggregate notional amount of approximately SEK 2,406 (approximately $294) and the Euro contracts have an aggregate notional amount of approximately EUR 381 (approximately $444). The weighted average U.S. dollar settlement rate associated with the GBP contracts is $1.305, the weighted average U.S dollar settlement rate associated with the SEK contracts is approximately $0.122, and the weighted average U.S. dollar settlement rate associated with the Euro contracts is approximately $1.165.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion of the financial condition and results of operations of Virtusa Corporation should be read in conjunction with the consolidated financial statements and the related notes thereto included elsewhere in this Quarterly Report on Form 10-Q and the audited financial statements and notes thereto and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017 (the “Annual Report”), which has been filed with the Securities and Exchange Commission, or SEC.

Forward looking statements

The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” “seek,” “intends,” “plans,” “estimates,” “projects,” “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. These forward-looking statements, such as statements regarding anticipated future revenue, contract percentage completions, capital expenditures, the effect of new accounting pronouncements, management’s plans and objectives and other statements regarding matters that are not historical facts, involve predictions. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, including those factors set forth in Item 1A. “Risk Factors” in the Annual Report on Form 10-K for the fiscal year ended March 31, 2017 and those factors referred to or discussed in or incorporated by reference into the section titled “Risk Factors” included in Item 1A of Part II of this Quarterly Report on Form 10-Q. We urge you to consider those risks and uncertainties in evaluating our forward-looking statements. We caution readers not to place undue reliance upon any such forward-looking statements, which speak only as of the date made. Except as otherwise required by the federal securities laws, we disclaim any obligation or undertaking to publicly release any updates or revisions to any forward-looking statement contained herein (or elsewhere) to reflect any change in our expectations with regard thereto or any change in events, conditions or circumstances on which any such statement is based.

Business overview

Virtusa Corporation (the “Company”, “Virtusa”, “we”, “us” or “our”) is a global provider of information technology (“IT”) consulting and outsourcing services that accelerate business outcomes for our clients. We support Forbes Global 2000 clients across large, consumer facing industries like banking and financial services, insurance, healthcare, communications, and media and entertainment, as they look 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. Our services leverage our distinctive consulting approach and unique platforming methodology to transform our clients’ businesses through the innovative use of technology and domain knowledge to solve critical business problems. Our services enable our clients to accelerate business outcomes by consolidating, rationalizing and modernizing 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, 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. At June 30, 2017, we had 18,120 employees, or team members, inclusive of our Polaris team members.

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On May 3, 2017, we 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 million with an initial conversion price of $36.00 (the “Orogen Preferred Stock Financing”). In connection with the investment, Vikram S. Pandit, the former CEO of Citigroup, was appointed to Virtusa’s Board of Directors. Orogen is a new operating company that was created by Vikram Pandit and Atairos Group, Inc., an independent private company focused on supporting growth-oriented businesses, to leverage the opportunities created by the evolution of the financial services landscape and to identify and invest in financial services companies and related businesses with proven business models.

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 our 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 we fail 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 investment, we repaid $81 million of our outstanding senior term loan, and our board of directors approved the repurchase of approximately $30 million of our common stock.

On March 3, 2016, pursuant to a share purchase agreement dated as of November 5, 2015, by and among Virtusa Consulting Services Private Limited (“Virtusa India”), a subsidiary of the Company, Polaris Consulting & Services Limited (“Polaris”) and the promoter sellers named therein, as amended on February 25, 2016 (the “SPA”), the Company completed the purchase of 53,133,127 shares, or approximately 51.7% of the fully-diluted capitalization of Polaris from certain Polaris shareholders for approximately $168.3 million in cash (the “Polaris SPA Transaction”). The primary strategic purpose and goal of Virtusa’s acquisition of Polaris was, and is, as follows:

·The combination of Virtusa and Polaris creates a unique, fully integrated provider of comprehensive solutions and services across the banking and financial services industry,

·The combination meaningfully expands our addressable market, and

·The transaction enhances our ability to pursue larger consulting and outsourcing contracts.

In addition, on April 6, 2016, as part of the Polaris acquisition, Virtusa India completed an unconditional mandatory open offer (the “Mandatory Tender Offer”) with successful tender to purchase an additional 26% of the fully diluted outstanding shares of Polaris from Polaris’ public shareholders. The Mandatory Tender Offer was conducted in accordance with requirements of the Securities and Exchange Board of India (“SEBI”) and the applicable Indian rules on takeovers. Virtusa India purchased 26,719,942 shares of Polaris common stock for approximately $3.32 per share for an aggregate purchase price of approximately $89.1 million (Indian rupees 5,935 million). Upon the closing of the Mandatory Tender Offer, Virtusa India’s ownership interest in Polaris increased from approximately 51.7% to 77.7% of Polaris’ fully diluted shares outstanding, and from approximately 52.9% to 78.8% of Polaris’ basic shares outstanding. Under applicable Indian rules on takeovers, Virtusa India was required to sell within one year of the settlement of the unconditional mandatory offer its shares of common stock in Polaris in excess of 75% of the basic outstanding shares of common stock of Polaris. In order to comply with the applicable Indian rules on takeovers, during the three months ended December 31, 2016, the Company sold 3.7% of its shares of Polaris common stock through a public offering. The sale offer closed on December 14, 2016, and the Company received approximately $7.6 million in proceeds, net of $0.2 million in brokerage fees and taxes. In addition to these costs, the Company incurred additional costs of $0.4 million towards professional and legal fees and expense. The Company’s ownership interest in Polaris prior to the sale offer was 78.6% of the outstanding shares of common stock, and upon the closing of the sale offer, the Company’s ownership interest decreased from 78.6% to 74.9% of Polaris’ basic shares of common stock outstanding.

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To finance the Polaris acquisition, on February 25, 2016, the Company entered into a credit agreement (the “Credit Agreement”) by and among the Company, its guarantor subsidiaries a party thereto, the lenders a party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint book runners and lead arrangers. The Credit Agreement replaced the Company’s existing $25.0 million credit agreement with JP Morgan Chase Bank, N.A. and provides for a $100.0 million revolving credit facility and a $200.0 million delayed-draw term loan (together, the “Credit Facility”). In connection with the Polaris acquisition, on February 25, 2016, the Company drew down the full $200.0 million of the term loan. Interest under these facilities accrues at a rate per annum of LIBOR plus 2.75%, subject to step-downs based on the Company’s ratio of debt to adjusted earnings before interest, taxes, depreciation, amortization, and stock compensation expense (“EBITDA”). We were required under the terms of the Credit Agreement to make quarterly principal payments on the term loan. On May 3, 2017, in connection with the Orogen Preferred Stock Financing, we amended our Credit Agreement primarily to issue the Series A Convertible Preferred Stock and pay certain dividends with respect to the Series A Convertible Preferred Stock and we repaid $81.0 million of our term loan under the Credit Facility. As a result of this pre-payment, the Company has no additional obligated principal payments until the amount due at maturity. Interest payments will continue per the terms of the Credit Agreement. The Credit Agreement includes customary minimum cash, maximum debt to EBITDA and minimum fixed charge coverage covenants. The term of the Credit Agreement is five years, ending February 24, 2021.

In connection with, and as part of the Polaris acquisition, on November 5, 2015, the Company entered into an amendment with Citigroup Technology, Inc. (“Citi”) and Polaris, which became effective upon the closing of the Polaris SPA Transaction, pursuant to which, (i) Citi agreed to appoint the Company and Polaris as a preferred vendor for Global Technology Resource Strategy (“GTRS”) for the provision of IT services to Citi on an enterprise wide basis (“GTRS Preferred Vendor”), (ii) the Company agreed to certain productivity savings and associated reduced spend commitments for a period of two years, which, if not achieved, would require the Company to provide certain minimum discounts to Citi, (iii) the parties amended Polaris’ master services agreement with Citi such that the Company would also be deemed a contracting party and the Company would assume, and agree to perform, or cause Polaris to perform, all applicable obligations under the master services agreement, as amended by the amendment (the “Citi/Virtusa MSA”), and (iv) Virtusa agreed to terminate Virtusa’s existing master services agreement with Citi, and have the Citi/Virtusa MSA be the sole surviving agreement.

Financial overview

In the three months ended June 30, 2017, our revenue increased by 11% to $227.3 million, compared to $205.5 million in the three months ended June 30, 2016.

In the three months ended June 30, 2017, net income available to Virtusa common stockholders increased by 147% to $3.0 million, as compared to a net loss of $6.3 million in the three months ended June 30, 2016.

The increase in revenue for the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, primarily resulted from:

·Broad based growth, particularly in our top ten clients

·Revenue growth primarily in banking, and media information and other (“M&I”) partially offset by a decrease in financial services and insurance revenue

·Revenue increases are partially offset by the substantial depreciation in the U.K. pound sterling, which is reflected in the factors listed above

The key drivers of our increase in our net income for the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, were as follows:

·Higher revenue, particularly in our top ten clients and growth in banking revenue

·Increase in gross profit due to higher revenue and higher gross margin driven by higher utilization;

·Decrease in foreign currency transaction losses due to the revaluation of Indian rupee denominated intercompany note;

partially offset by

·             Substantial depreciation in the U.K. pound sterling (“GBP”) which impacted our U.K. based revenues when consolidating into U.S. dollar and costs of revenue when converting Indian rupee denominated costs into GBP under our transfer pricing model

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High repeat business and client concentration are common in our industry. During the three months ended June 30, 2017 and 2016, 96% and 84%, respectively, of our revenue was derived from clients who had been using our services for more than one year. Accordingly, our global account management and service delivery teams focus on expanding client relationships and converting new engagements to long-term relationships to generate repeat revenue and expand revenue streams from existing clients. We also have a dedicated business development team focused on generating engagements with new clients to continue to expand our client base and, over time, reduce client concentration.

We derive our revenue from two types of service offerings: application outsourcing, which is recurring in nature; and consulting, including technology implementation, which is non-recurring in nature. For the three months ended June 30, 2017, our application outsourcing and consulting revenue represented 58% and 42%, respectively of our total revenue as compared to 59% and 41%, respectively, for the three months ended June 30, 2016.

In the three months ended June 30, 2017, our North America revenue increased by 9.5%, or $12.6 million, to $146.1 million, or 64% of total revenue, from $133.5 million, or 65% of total revenue in the three months ended June 30, 2016. The increase in revenue for the three months ended June 30, 2017 is primarily due to revenue growth in our banking and communication and technology (“C&T”) industry groups, partially offset by a decrease in our financial services and insurance industry groups.

In the three months ended June 30, 2017, our European revenue increased by 15.1%, or $7.0 million, to $53.4 million, or 24% of total revenue, from $46.4 million, or 23% of total revenue in the three months ended June 30, 2016. The increase in revenue for the three months ended June 30, 2017 is primarily due to an increase in revenue from European banking clients, partially offset by substantial depreciation of the U.K. pound sterling.

Our gross profit increased by $9.2 million to $61.1 million for the three months ended June 30, 2017, as compared to $51.9 million in the three months ended June 30, 2016. The increase in gross profit during the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, was primarily due to higher revenue and higher utilization offset by depreciation in the U.K. pound sterling. As a percentage of revenue, gross margin was 26.9% and 25.3% in the three months ended June 30, 2017 and 2016, respectively.

We perform our services under both time-and-materials and fixed-price contracts. Revenue from fixed-price contracts represented 37% and 41% of total revenue, and revenue from time-and-materials contracts represented 63% and 59% of total revenue for the three months ended June 30, 2017 and 2016, respectively. The revenue earned from fixed-price contracts in the three months ended June 30, 2017 primarily reflects our client preferences.

As an IT services company, our revenue growth is highly dependent on our ability to attract, develop, motivate and retain skilled IT professionals. We monitor our overall attrition rates and patterns to align our people management strategy with our growth objectives. At June 30, 2017, our attrition rate for the trailing 12 months, which reflects voluntary and involuntary attrition was approximately 24.4%, of which 5.6% relates to implementation of certain cost saving and restructuring initiatives during the fiscal year ended March 31, 2017. Our attrition rate at June 30, 2017 reflects a higher rate of attrition as compared to the corresponding prior year period. The majority of our attrition occurs in India and Sri Lanka, and is weighted towards the more junior members of our staff. In response to higher attrition and as part of our retention strategies, we have experienced increases in compensation and benefit costs, which may continue in the future. However, we try to absorb such cost increases through price increases or cost management strategies such as managing discretionary costs, the mix of professional staff and utilization levels and achieving other operating efficiencies. If our attrition rate increases or is sustained at higher levels, our growth may slow and our cost of attracting and retaining IT professionals could increase.

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We engage in a foreign currency hedging strategy using foreign currency forward contracts designed to hedge fluctuations in the Indian rupee against the U.S. dollar and U.K. pound sterling, as well as the euro, Swedish krona and the U.K. pound sterling against the U.S. dollar, when consolidated into U.S. dollars and intercompany balances. 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 to reduce the effect of change in these foreign currency exchange rates on our foreign operations. There is no assurance that these hedging programs or hedging contracts will be effective. Because these foreign currency forward contracts are designed to reduce volatility in the Indian rupee, U.K. pound sterling, euro and Swedish krona exchange rates, they not only reduce the negative impact of a stronger Indian rupee, weaker U.K. pound sterling, weaker euro and weaker Swedish krona, but also could reduce the positive impact of a weaker Indian rupee on our Indian rupee expenses or reduce the impact of a stronger U.K. pound sterling,  stronger euro or stronger Swedish krona on our U.K. pound sterling, euro and Swedish krona denominated revenues. In addition, to the extent that these hedges do not qualify for hedge accounting, we may have to recognize gains or losses on the aggregate amount of hedges placed earlier and in larger amounts than expected.

Application of critical accounting estimates and risks

The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible assets, the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, in particular those related to the recognition of revenue and profits based on the percentage of completion method of accounting for fixed-price contracts, share-based compensation, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, contingent consideration both upon and subsequent to acquisitions and valuation of financial instruments including derivative contracts and investments. Actual amounts could differ significantly from these estimates. Our management bases its estimates and judgments on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities and the amounts of revenue and expenses that are not readily apparent from other sources. Additional information about these critical accounting policies may be found in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section included in the Annual Report.

Results of operations

Three months ended June 30, 2017 compared to the three months ended June 30, 2016

The following table presents an overview of our results of operations for the three months ended June 30, 2017 and 2016:

	Three Months Ended June 30,						$		%
(dollars in thousands)	2017			2016			Change		Change
Revenue	$	227,345		$	205,471		$	21,874	10.6	%
Costs of revenue	166,279			153,560			12,719		8.3	%
Gross profit	61,066			51,911			9,155		17.6	%
Operating expenses	54,996			53,759			1,237		2.3	%
Income (loss) from operations	6,070			(1,848		)	7,918		(428.5	)%
Other expense	(625		)	(4,125		)	3,500		(84.8	)%
Income (loss) before income tax expense	5,445			(5,973		)	11,418		(191.2	)%
Income tax expense (benefit)	798			(463		)	1,261		(272.4	)%
Net income (loss)	4,647			(5,510		)	10,157		(184.3	)%
Less: net income attributable to noncontrolling interests, net of tax	989			746			243		32.6	%
Net income (loss) available to Virtusa stockholders	3,658			(6,256		)	9,914		(158.5	)%
Less: Series A Convertible Preferred Stock dividends and accretion	701			—			701		—
Net income (loss) available to Virtusa common stockholders	$	2,957		$	(6,256	)	$	9,213	(147.3	)%

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Revenue

Revenue increased by 10.6%, or $21.9 million, from $205.5 million during the three months ended June 30, 2016 to $227.3 million in the three months ended June 30, 2017. The increase in revenue was primarily driven by revenue growth in our banking and M&I industry group, partially offset by a decrease in our financial services and insurance industry groups and by the substantial depreciation in the U.K. pound sterling. Revenue from North American clients in the three months ended June 30, 2017 increased by $12.7 million, or 9.5%, as compared to the three months ended June 30, 2016, primarily due to revenue growth in our banking and C&T industry groups, partially offset by a decrease in our financial services and insurance industry groups. Revenue from European clients increased by $7.0 million, or 15.1%, as compared to the three months ended June 30, 2016, primarily due to an increase in revenue from European banking clients, partially offset by the substantial depreciation of the U.K. pound sterling. We had 196 active clients at June 30, 2017, as compared to 179 active clients at June 30, 2016.

Cost of Revenue

Costs of revenue increased from $153.6 million in the three months ended June 30, 2016 to $166.3 million in the three months ended June 30, 2017, an increase of $12.7 million, or 8.3%, which includes a benefit of $0.3 million due to the depreciation of the Indian rupee. The increase in cost of revenue was primarily due to an increase in the number of IT professionals and related compensation and benefit costs of $6.8 million. The increased costs of revenue are also due to an increase in subcontractor costs of $5.0 million and an increase in travel expenses of $0.9 million. At June 30, 2017, we had 16,484 IT professionals as compared to 16,075 at June 30, 2016.

As a percentage of revenue, cost of revenue decreased from 74.7% for the three months ended June 30, 2016 to 73.1% for three months ended June 30, 2017.

Gross profit

Our gross profit increased by $9.2 million, or 17.6%, to $61.1 million for the three months ended June 30, 2017, as compared to $51.9 million for the three months ended June 30, 2016, primarily due to an increase in revenue, partially offset by substantial depreciation of the U.K. pound sterling, and higher utilization. As a percentage of revenue, our gross profit was 26.9% and 25.3% in the three months ended June 30, 2017 and 2016, respectively.

Operating expenses

Operating expenses increased from $53.8 million in the three months ended June 30, 2016 to $55.0 million in the three months ended June 30, 2017, an increase of $1.2 million, or 2.3%, which includes a benefit of $0.1 million due to the depreciation of the Indian rupee. The increase in operating expenses was primarily due to an increase of $3.5 million in compensation related expenses partially offset by decrease in facilities expense of $2.2 million. As a percentage of revenue, our operating expenses decreased from 26.2% in the three months ended June 30, 2016 to 24.2% in the three months ended June 30, 2017, primarily due to certain acquisition and integration related expense incurred during the three months ended June 30, 2016.

Income (loss) from operations

Income (loss) from operations increased by 428.5%, from a $(1.8) million loss in the three months ended June 30, 2016 to $6.1 million income in the three months ended June 30, 2017. As a percentage of revenue, income (loss) from operations increased from (0.9)% in the three months ended June 30, 2016 to 2.7% in the three months ended June 30, 2017.

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Other expense

Other expense increased by $3.5 million from $4.1 million in the three months ended June 30, 2016 to $0.6 million in the three months ended June 30, 2017, primarily due to a decrease in foreign currency transaction losses due to the revaluation of Indian rupee denominated intercompany note.

Income tax expense (benefit)

Income tax expense increased by $1.3 million, from a benefit of $(0.5) million in the three months ended June 30, 2016 to an expense of $0.8 million in the three months ended June 30, 2017. Our effective tax rate increased from 7.8% for the three months ended June 30, 2016 to 14.7% for the three months ended June 30, 2017. The increase in the tax expense and effective tax rate for the three months ended June 30, 2017 was primarily due to an increase in income from operations and geographical mix of profits, offset by discrete tax benefits and certain foreign currency translation gains with no corresponding tax expense.

Noncontrolling interests

In connection with the Polaris acquisition, for the three months ended June 30, 2017, we recorded a noncontrolling interest of $1.0 million, representing a 25.5% share of profits of Polaris held by parties other than Virtusa.

Net income (loss) available to Virtusa stockholders

Net income available to Virtusa stockholders increased by 158.5%, from a net loss of $(6.3) million in the three months ended June 30, 2016 to $3.6 million in the three months ended June 30, 2017 driven by higher operating income primarily due to higher gross margin, lower operating expense as percentage of revenue and a decrease in foreign currency transaction losses.

Series A Convertible Preferred Stock dividends and accretion

In connection with the Orogen Preferred Stock Financing, we accrued dividends of $0.7 million at a rate of 3.875% per annum during the three months ended June 30, 2017.

Net income (loss) available to Virtusa common stockholders

Net income available to Virtusa common stockholders increased by 147.3%, from a net loss of $(6.3) million in the three months ended June 30, 2016 to $3.0 million in the three months ended June 30, 2017.

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Non-GAAP Financial Measures

We include 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 our financial statements prepared in accordance with GAAP.

We consider the measure of cash, cash equivalents, short-term and long-term investments to be an important indicator of our overall liquidity. All of our investments are classified as available-for-sale, including our 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 our investment policy as approved by our audit committee and board of directors.

We believe the following financial measures will provide additional insights to measure the operational performance of our business.

·We present the following consolidated statement of income measures that exclude acquisition-related charges, restructuring charges, stock-based compensation expense, foreign currency transaction gains and losses and the tax impact of dividends received from foreign subsidiaries to provide further insights into the comparison of our operating results among the periods:

·Non-GAAP income from operations: income (loss) from operations, as reported on our consolidated statements of income (loss), excluding stock-based compensation expense, and 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 available to Virtusa common stockholders: net income (loss) available to Virtusa common stockholders, as reported on our consolidated statements of income (loss), excluding stock-based compensation, acquisition-related charges, restructuring charges, foreign currency transaction gains and losses, each net of tax, and the tax impact of dividends received from foreign subsidiaries

·Non-GAAP diluted earnings per share: diluted earnings (loss) per share, as reported on our consolidated statements of income (loss) available to Virtusa common stockholders, excluding stock-based compensation, acquisition-related charges, restructuring charges, foreign currency transaction gains and losses, each net of tax, and the per share tax impact of dividends received from foreign subsidiaries

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The following table presents a reconciliation of each non-GAAP financial metric to the most comparable GAAP metric for the three months ended June 30, 2017 and 2016:

	Three Months Ended June 30,
	2017			2016
	(in thousands, except per share amounts)
GAAP income (loss) from operation	$	6,070		$	(1,848	)
Add: Stock-based compensation expense	4,788			6,133
Add: Acquisition-related charges and restructuring charges(1)	2,509			3,424
Non-GAAP income from operations	$	13,367		$	7,709
GAAP operating margin	2.7		%	(0.9		)%
Effect of above adjustments to income from operations	3.2		%	4.7		%
Non-GAAP operating margin	5.9		%	3.8		%
GAAP net income (loss) available to Virtusa common stockholders	$	2,957		$	(6,256	)
Add: Stock-based compensation expense	4,788			6,133
Add: Acquisition-related charges and restructuring charges(1)	2,509			3,424
Add: Foreign currency transaction (gains) losses(2)	77			3,580
Tax adjustments(3)	(2,522		)	(1,397		)
Less: Noncontrolling interest, net of tax (4)	(366		)	(199		)
Non-GAAP net income available to Virtusa common stockholders	$	7,443		$	5,285
GAAP diluted earnings (loss) per share	$	0.10		$	(0.21	)
Effect of stock-based compensation expense	0.16			0.21
Effect of acquisition-related charges and restructuring charges(1)	0.08			0.11
Effect of foreign currency transaction (gains) losses(2)	—			0.12
Tax adjustments(3)	(0.08		)	(0.04		)
Effect of noncontrolling interest(4)	(0.01		)	(0.01		)
Non-GAAP diluted earnings per share(5)	$	0.25		$	0.18
GAAP Weighted average shares outstanding, Basic(6)	30,251,150			29,486,287
Series A Convertible Preferred Stock as converted(6)	—			—
Non-GAAP Weighted average shares outstanding, Basic(6)	30,251,150			29,486,287

(1)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, when applicable, include termination benefits, as well as certain professional fees related to the restructuring. The following table provides the details of the acquisition-related charges and restructuring charges:

	Three Months Ended June 30,
	2017		2016
Amortization of intangibles	$	2,509	$	2,370
Acquisition and integration costs	—		1,054
Total	$	2,509	$	3,424

(2)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.

(3)Tax adjustments reflect the estimated tax effect of the non-GAAP adjustments using the tax rates at which these adjustments are expected to be realized for the respective periods.

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

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

(6)During the three months ended June 30, 2017, the weighted average shares outstanding of Series A Convertible Preferred Stock of 1,912,088 were excluded from the calculations of both GAAP and non-GAAP diluted earnings per share as their effect would have been anti-dilutive using the if-converted method.

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Liquidity and capital resources

We have financed our operations primarily from sales of shares of common stock, cash from operations, debt financing and from sales of shares of Series A Convertible Preferred Stock.

We plan to initiate a cost reduction plan during our second quarter to reduce future operating costs. As a result, we expect to incur approximately $1.5 million in restructuring charges during the second and third quarters of our fiscal year ending March 31, 2018.

On May 3, 2017, we 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 million with an initial conversion price of $36.00 (the “Orogen Preferred Stock Financing”). In connection with the investment, Vikram S. Pandit, the former CEO of Citigroup, was appointed to Virtusa’s Board of Directors. Orogen is a new operating company that was created by Vikram Pandit and Atairos Group, Inc., an independent private company focused on supporting growth-oriented businesses, to leverage the opportunities created by the evolution of the financial services landscape and to identify and invest in financial services companies and related businesses with proven business models.

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 our 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 we fail 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. The shares purchased consist of voting Series A Preferred Stock and a separate class of non-voting Series A-1 Preferred Stock, the latter of which automatically converted into shares of voting Series A Preferred Stock on a one-to-one basis upon the expiration or termination of the applicable waiting period (which occurred in May 2017) under the Hart-Scott-Rodino Antitrust Improvements Act. In connection with the investment, we repaid $81 million of our outstanding senior term loan, and our board of directors approved the repurchase of approximately $30 million of our common stock. During the three months ended June 30, 2017, we repurchased $27 million of our common stock.

On March 3, 2016, Virtusa Consulting Services Private Limited (“Virtusa India”), a subsidiary of Virtusa Corporation (“Virtusa” or the “Company”), purchased 53,133,127 shares, or approximately 51.7%, of the fully-diluted capitalization of Polaris Consulting & Services Limited (“Polaris”) from certain Polaris shareholders for approximately $168.3 million in cash (the “Polaris SPA Transaction”) pursuant to a definitive share purchase agreement (“SPA”) by and among Virtusa India, the Polaris founding shareholders, promoters, and certain other Polaris minority stockholders, which was entered into on November 5, 2015. On April 6, 2016, Virtusa India completed its purchase of an additional 26% of the fully diluted outstanding shares of Polaris from public shareholders for approximately $89.1 million in cash under a mandatory tender open offer as required under applicable India takeover rules. Pursuant to the mandatory offer, during the fiscal year ended March 31, 2016, the Company transferred $89.2 million into an escrow account in accordance with the India takeover rules, which is recorded as restricted cash at March 31, 2016. On April 6, 2016, the restricted cash was released from the escrow account and used for settlement for the mandatory open offer.

In order to comply with the applicable Indian rules on takeovers, during the three months ended December 31, 2016, the Company sold 3.7% of its shares of Polaris common stock through a public sale offer. The sale offer closed on December 14, 2016 and the Company received approximately $7.6 million in proceeds, net of $0.2 million in brokerage fees and taxes. In addition to these costs, the Company incurred additional professional and legal costs of $0.4 million. The Company’s ownership interest in Polaris prior to the sale offer was 78.6% and upon the closing of the sale offer, the Company’s ownership interest decreased from 78.6% to 74.9% of Polaris’ basic shares of common stock outstanding.

To finance the Polaris acquisition, on February 25, 2016, the Company entered into a credit agreement (the “Credit Agreement”) by and among the Company, its guarantor subsidiaries party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint book runners and lead arrangers. The Credit Agreement provides for a $100.0 million revolving credit facility and a $200.0 million delayed-draw term loan (together, the “Credit Facility”). In connection with the Polaris acquisition, on February 25, 2016, the Company drew down the full $200.0 million of the term loan. Interest under these facilities accrues at a rate per annum of LIBOR plus 2.75%, subject to step-downs based on the Company’s ratio of debt to adjusted earnings before interest, taxes, depreciation, amortization, and stock compensation expense (“EBITDA”). We are required under the terms of the Credit Agreement to make quarterly principal payments on the term

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loan. The Credit Agreement includes customary minimum cash, maximum debt to EBITDA and minimum fixed charge coverage covenants. The term of the Credit Agreement is five years, ending February 24, 2021. On May 3, 2017, in connection with the Orogen Preferred Stock Financing, we amended our Credit Agreement primarily to issue the Series A Convertible Preferred Stock and pay certain dividends with respect to the Series A Convertible Preferred Stock and we repaid principal payment of $81.0 million of our term loan. As a result of this pre-payment, the Company has no additional obligated principal payments until the amount due at maturity. Interest payments will continue per the terms of the Credit Agreement.

The Credit Agreement has financial covenants that require that the Company maintain a Total Leverage Ratio, commencing on June 30, 2016, of not more than 3.25 to 1.00 for the first year of the Credit Facility, of not more than 3.00 to 1.00 for the second year of the Credit Facility, and 2.75 to 1.00 thereafter, each as determined for the four consecutive quarter period ending on each fiscal quarter (the “Reference Period”). In addition, for a period, expected to be at least one year from the completion of the Company’s closing of the Polaris SPA Transaction, until the occurrence of certain events described in the Credit Agreement, at any time when the Total Leverage Ratio exceeds 1.50 to 1.00 as of the last day of a quarter, the Company must maintain at least $30.0 million in unrestricted cash, cash equivalents and certain permitted investments under the Credit Facility held in bank deposits in the U.S., and $20.0 million in unrestricted cash and certain permitted investments under the Credit Facility and long-term securities investments held in accordance with the Company’s current investment policy. The financial covenants also require that the Company maintain a Fixed Charge Coverage Ratio, commencing on June 30, 2016, of not less than 1.25 to 1.00, as of the last day of any Reference Period. For purposes of these covenants, “Total Leverage Ratio” means, as of the last day of any fiscal quarter, the ratio of Funded Debt to Adjusted EBITDA for the reference period ended on such date. “Funded Debt” refers generally to total indebtedness to third-parties for borrowed money, capital leases, deferred purchase price and earn-out obligations and related guarantees and “Adjusted EBITDA” is defined as consolidated net income plus (a) (i) GAAP depreciation and amortization, (ii) non-cash equity-based compensation expenses, (iii) fees and expenses incurred during such period in connection with the Credit Facility and loans made thereunder, (iv) fees and expenses incurred during such period in connection with any permitted acquisition, (v) one-time regulatory charges, (vi) other extraordinary and non-recurring losses or expenses, and (vii) all other non-cash charges, expenses and losses for such period, minus (b) (i) extraordinary or non-recurring income or gains for such period, and (ii) any cash payments made during such period in respect of non-cash charges, expenses or losses described in clauses (a)(ii), (a)(v) and (a)(vi) above taken in a prior period, subject to other adjustments and certain caps and limits on adjustments. The Fixed Charge Coverage Ratio is calculated under the Credit Agreement generally as the ratio of Adjusted EBITDA, excluding capital expenditures made during such period (to the extent not financed with indebtedness (other than Revolving Loans), an issuance of equity interests or capital contributions, or proceeds of asset sales, the proceeds of casualty insurance used to replace or restore assets), to fixed charges (regularly scheduled consolidated interest expense paid in cash, regularly scheduled amortization payments on indebtedness in cash, income taxes paid in cash and the interest component of capital lease obligation payments), on a consolidated basis.

The Credit Facility is secured by substantially all of the Company’s assets, including all intellectual property and all securities in domestic subsidiaries (other than certain domestic subsidiaries where the material assets of such subsidiaries are equity in foreign subsidiaries), subject to customary exceptions and exclusions from the collateral. All obligations under the Credit Agreement are unconditionally guaranteed by substantially all of the Company’s material direct and indirect domestic subsidiaries, with certain exceptions. These guarantees are secured by substantially all of the present and future property and assets of the guarantors, with certain exclusions.

As of June 30, 2017, we are in compliance with our debt covenants and have provided a quarterly certification to our lenders to that effect. We believe that we currently meet all conditions set forth in the credit agreement to borrow thereunder and we are not aware of any conditions that would prevent us from borrowing part or all of the remaining available capacity under the revolving credit facility as of June 30, 2017 and through the date of this filing.

On July 26, 2016, we entered into two 12-month forward starting interest rate swap transactions and, on July 28, 2016, we entered into a third 12-month forward starting interest rate swap transaction to mitigate our interest rate risk on our variable rate debt (collectively, “The Interest Rate Swap Agreements”). Our objective is to limit the variability of cash flows associated with changes in LIBOR interest rate payments due on the Credit Agreement by using pay-fixed, receive-variable interest rate swaps to offset the future variable rate interest payments. We will recognize these transactions in accordance with ASC 815 “Derivatives and Hedging,” and have designated the swaps as cash flow hedges.

The Interest Rate Swap Agreements have an effective date of July 31, 2017 and a maturity date of July 31, 2020. The swaps have an aggregate beginning notional amount of $93.8 million and with the pre-payment of $81 million of principal on our existing debt, hedge approximately 86% of our forecasted outstanding debt balance as of July 31, 2017. The notional amount of the swaps amortizes over the three swap periods. The Interest Rate Swap Agreements require us to make monthly fixed interest rate payments based on the amortized notional amount at a blended weighted average rate of 1.025% and we will receive 1-month LIBOR on the same notional amounts.

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The counterparties to the Interest Rate Swap Agreements could demand an early termination of the 2016 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 June 30, 2017, of not more than 3.25 to 1.00 for the first year of the Credit Agreement, of not more than 3.00 to 1.00 for the second year of the Credit Agreement, and 2.75 to 1.00 thereafter, each as determined for the four consecutive quarter period ending on each fiscal quarter and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00. As of June 30, 2017, we were in compliance with these covenants. The unrealized gain associated with the 2016 Swap Agreement was $1.6 million as of June 30, 2017, which represents the estimated amount that we would receive from the counterparties in the event of an early termination.

At June 30, 2017, a significant portion of our cash, cash equivalents, short-term and long-term investments was held by our foreign subsidiaries. We continually monitor our cash needs and employ tax planning and financing strategies to ensure cash is available in the appropriate jurisdictions to meet operating needs. The cash held by our foreign subsidiaries is considered indefinitely reinvested in local operations. If required, it could be repatriated to the United States. However, under current law, any repatriation would be subject to United States federal income tax less applicable foreign tax credits.

Beginning in fiscal 2009, our U.K. subsidiary entered into an agreement with an unrelated financial institution to sell, without recourse, certain of its Europe-based accounts receivable balances from one client to the financial institution. During the three months ended June 30, 2017, we sold $5.6 million of receivables under the terms of the financing agreement. Fees paid pursuant to this agreement were not material during the three months ended June 30, 2017. No amounts were due under the financing agreement at June 30, 2017, but we may elect to use this program again in future periods. However, we cannot provide any assurances that this or any other financing facilities will be available or utilized in the future

Cash flows

The following table summarizes our cash flows for the periods presented:

	Three Months Ended June 30,
(in thousands)	2017			2016
Net cash provided by (used in) operating activities	$	1,064		$	(14,451	)
Net cash provided by investing activities	7,605			100,976
Net cash used in financing activities	(1,149		)	(94,063		)
Effect of exchange rate changes on cash	1,551			(1,109		)
Net increase (decrease) in cash and cash equivalents	9,071			(8,647		)
Cash and cash equivalents, beginning of period	144,908			148,986
Cash and cash equivalents, end of period	$	153,979		$	140,339

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Operating activities

Net cash provided by operating activities increased in the three months ended June 30, 2017 compared to the three months ended June 30, 2016 from net cash used in operating activities, primarily driven by an increase in net income during the three months ended June 30, 2017 compared to the three months ended June 30, 2016.

Investing activities

Net cash provided by investing activities decreased in the three months ended June 30, 2017 compared to three months ended June 30, 2016. The decrease in net cash provided by investing activities is primarily due to the decrease in restricted cash related to the Polaris mandatory offering during the three months ended June 30, 2016.

Financing activities

Net cash used in financing activities decreased in the three months ended June 30, 2017 compared to three months ended June 30, 2016. The decrease in net cash used in financing activities is primarily due to the acquisition of noncontrolling interest during the three months ended June 30, 2016. During the three months ended June 30, 2017, the proceeds from issuance of Series A Convertible Preferred Stock is offset by the principal payment of our debt and repurchase of our common stock.

Off-balance sheet arrangements

We do not have investments in special purpose entities or undisclosed borrowings or debt.

We have entered into foreign currency derivative contracts with the objective of limiting our exposure to changes in the Indian rupee, the U.K. pound sterling, the euro and the Swedish Krona as described below and in “Quantitative and Qualitative Disclosures about Market Risk.”

We maintain a foreign currency cash flow hedging program designed to further mitigate the risks of volatility in the Indian rupee against the U.S. dollar and U.K. pound sterling as described below in “Quantitative and Qualitative Disclosures about Market Risk.” From time to time, we may also purchase multiple foreign currency forward contracts designed to hedge fluctuation in foreign currencies, such as the U.K. pound sterling, euro and Swedish Krona against the U.S. dollar to minimize the impact of foreign currency fluctuations on foreign currency denominated revenue and expenses. Other than these foreign currency derivative contracts, we have not entered into off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of or requirements for capital resources.

Recent accounting pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2018. Early application is permitted but not before periods beginning on or after January 1, 2017. In March, April and May 2016, the FASB issued updates to the new revenue standard to clarify the implementation guidance on principal versus agent considerations for reporting revenue gross versus net, identifying performance obligations, accounting for licenses of intellectual property, transition, contract modifications, collectability, non cash consideration and presentation of sales and other similar taxes with the same effective date. The standard permits the use of either the retrospective or cumulative effect transition method. We are in the process of reviewing existing revenue contracts and related costs for evaluating the recognition of revenue from contracts with customers as well as commission and fulfillment costs that may require capitalization and amortization. We are also in the process of identifying and implementing changes to our processes to meet the reporting and disclosure requirements. We expect the new standard could change the amount and timing of revenue and costs under certain arrangement types. We have not yet determined what impact the new guidance will have on our consolidated financial statements and related disclosures or concluded on the transition method.

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In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The update also amends certain disclosure requirements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. Based on our current investment portfolio, the adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In February 2016, the FASB issued as update (ASU 2016-02) to the standard on leases to increase transparency and comparability among organizations. The new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use asset and a lease liability for all leases with lease terms equal to or greater than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize total lease expense on a straight-line basis. For public business entities this standard is effective for the annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption of this new standard is permitted. Entities will be required to use a modified retrospective transition which provides for certain practical expedients. We are currently evaluating the effect the new standard will have on the consolidated financial statements and related disclosures.

In March 2016, the FASB issued an update (ASU 2016-09) to the standard on Compensation—Stock Compensation, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Upon adoption, entities will be required to apply a modified retrospective, prospective or retrospective transition method depending on the specific section of the guidance being adopted. We adopted this guidance effective April 1, 2017 and the following describe the results of adoption:

·We prospectively recognized tax benefits of $278 in the income tax expense line item of our consolidated statements of income (loss) in the three months ended June 30, 2017 related to excess tax benefits on stock options;

·We changed our accounting policy from estimated forfeitures to actual forfeitures effective April 1, 2017. The cumulative impact of the change in the accounting policy did not have a material impact on our consolidated financial statements, therefore the prior period amounts have not been restated;

·We elected to adopt cash flow presentation of excess tax benefits retrospectively where these benefits are classified along with other income tax cash flows as operating cash flows. Accordingly, prior period amounts in our consolidated statement of cash flows have been restated;

·We adopted cash flow presentation of taxes paid when an employer withholds shares for tax-withholding purposes retrospectively and classified as a financing activity in the our statement of cash flows. Accordingly, prior period amounts have been restated;

·The remaining amendments to this standard, as noted above, are either not applicable, or do not change our current accounting practices and thus do not impact its consolidated financial statements.

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. We are currently evaluating the effect of this new standard will have on its consolidated financial statements and related disclosures.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update is intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows. This standard update addresses eight specific cash flow issues, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The guidance

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requires application using a retrospective transition method. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, an update to the standard on income taxes. This new standard requires the recognition of current and deferred income taxes when an intra-entity transfer of assets other than inventory occurs. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2017. Early adoption is permitted in the first interim period. Upon adoption, the entities will be required to use a modified retrospective transition approach. The adoption of this guidance is not expected to have a material impact on 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 adoption of this guidance will impact our presentation of cash and cash equivalents. As of June 30, 2017 and 2017, our restricted cash was $0.3 million and $0.2 million, respectively.

In January 2017, the FASB issued ASU 2017-01, an update on business combinations, which clarifies the definition of a business. The update requires a business to include at least an input and a substantive process that together significantly contribute to the ability to create outputs. The update also states that the definition of a business is not met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2018. Upon adoption, entities will be required to apply the update prospectively. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, an update on goodwill, which eliminates the need to calculate the implied fair value of goodwill when an impairment is indicated. The update states that goodwill impairment is measured as the excess of a reporting unit’s carrying value over its fair value, not to exceed the carrying amount of goodwill. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. We are currently evaluating the impact of the new guidance on our consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, 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 adoption of this guidance is not expected to have a material impact on our consolidated financial statements. The Company’s current presentation of service cost components is consistent with the requirements of the new standard. Upon adoption of the new standard, we expect to present the other components within other (income) expense.

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, an update that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under ASC 718, Compensation — Stock Compensation. Under the amendments in ASU 2017-09, an entity should account for the effects of a modification unless all of the following criteria are met: 1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified — if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; 2) the vesting conditions of the modified award are the same as the conditions of the original award immediately before the original award is modified; 3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. The adoption of this guidance is not expected to have a material impact on our consolidated financial statements.

In March 2017, FASB issued ASU 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” The amendments in this update shorten the amortization period for certain callable debt securities that are held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount, which would be amortized to maturity. This ASU is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018, which for us is the first

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quarter ending December 31, 2019. Early adoption is permitted. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

Item 3.  Quantitative and Qualitative Disclosures About Market Risk

Our market risks, and the ways we manage them, are summarized in Item 7A of the Annual Report. There have been no material changes in the three months ended June 30, 2017 to such risks or to our management of such risks except for the additional factors noted below.

Foreign Currency Exchange Rate Risk

We are exposed to foreign currency exchange rate risk in the ordinary course of business. We have historically entered into, and in the future we may enter into, foreign currency derivative contracts to minimize the impact of foreign currency fluctuations on both foreign currency denominated assets and forecasted expenses. The purpose of this foreign exchange policy is to protect us from the risk that the recognition of and eventual cash flows related to Indian rupee denominated expenses might be affected by changes in exchange rates. Some of these contracts meet the criteria for hedge accounting as cash flow hedges (See Note 6 of the notes to our financial statements included herein for a description of recent hedging activities).

We evaluate our foreign exchange policy on an ongoing basis to assess our ability to address foreign exchange exposures on our balance sheet, statement of income and operating cash flows from all foreign currencies, including most significantly the U.K. pound sterling, the Indian rupee, and the Sri Lankan rupee.

We have two 18 month rolling programs comprised of a series foreign exchange forward contracts that are designated as cash flow hedges. One program is designed to mitigate the impact of volatility in the U.S. dollar equivalent of our Indian rupee denominated expenses. The second program was assumed as part of the Polaris acquisition and is intended to mitigate the volatility of the U.S. dollar denominated revenue that is translated into Indian rupees. While these hedges are achieving the designed objective, upon consolidation they may cause volatility in revenue. The U.S. dollar equivalent notional value of all outstanding foreign currency derivative contracts at June 30, 2017 was $152.1 million. There is no assurance that these hedging programs or hedging contracts will be effective. As these foreign currency hedging programs are designed to reduce volatility in the Indian rupee, they not only reduce the negative impact of a stronger Indian rupee but also reduce the positive impact of a weaker Indian rupee on our Indian rupee expenses. In addition, to the extent that these hedges do not qualify for hedge accounting, we may have to recognize gains or losses on the aggregate amount of hedges placed earlier than expected.

The U.K. pound sterling, Swedish krona and the euro exchange fluctuations can have an unpredictable impact on our U.K. pound sterling, Swedish krona and the euro revenues generated, and costs incurred. In response to this volatility, we have entered into hedging transactions designed to hedge our forecasted revenue and expenses denominated in the U.K. pound sterling, the Swedish krona as well as the euro. These derivative contracts have maximum duration of 92 days and do not meet the criteria for hedge accounting. Such hedges may not be effective in mitigating this currency volatility. These hedges are designed to reduce the negative impact of a weaker U.K. pound sterling, Swedish krona or the euro, however they also reduce the positive impact of a stronger U.K. pound sterling, Swedish krona or the euro on the respective revenues.

Interest Rate Risk

In connection with the Polaris acquisition, on February 25, 2016, we drew down the full $200.0 million of the term loan under the Credit Facility. Interest under this facility accrues at a rate per annum of LIBOR plus 2.75%, subject to step-downs based on the Company’s ratio of debt to EBITDA. The Credit Agreement includes customary minimum cash, maximum debt to EBITDA and minimum fixed charge coverage covenants—see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources”. The term of the Credit Agreement ends on February 24, 2021. We do not believe we are exposed to material direct risks associated with changes in interest rates other than with respect to our Credit Facility, our cash and cash equivalents, short-term investments and long-term investments. To mitigate the Company’s exposure to movements in the one-month London Inter-Bank Offer Rate (LIBOR) rate on future outstanding debt, the Company entered into the Interest Rate Swap Agreements to convert a portion of the Company’s outstanding debt from a floating to a fixed rate of interest (See Note 12 of the notes to our financial statements included herein for a detail description of our debt).

At June 30, 2017, we had $232.4 million in cash and cash equivalents, short-term investments and long-term investments, the interest income from which is affected by changes in interest rates. Our invested securities primarily consist of government sponsored

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entity bonds, money market mutual funds, commercial paper, corporate debts, preference shares and municipal bonds. Our investments in debt securities are classified as “available-for-sale” and are recorded at fair value. Our “available-for-sale” investments are sensitive to changes in interest rates. Interest rate changes would result in a change in the net fair value of these financial instruments due to the difference between the market interest rate at the period end and the market interest rate at the date of purchase of the financial instrument.

Information provided by the sensitivity analysis does not necessarily represent the actual changes that would occur under normal market conditions.

Concentration of Credit Risk

Financial instruments which potentially expose us to concentrations of credit risk primarily consist of cash and cash equivalents, short-term investments and long-term investments, accounts receivable, derivative contracts, other financial assets and unbilled accounts receivable. We place our operating cash, investments and derivatives in highly-rated financial institutions. We adhere to a formal investment policy with the primary objective of preservation of principal, which contains minimum credit rating and diversification requirements. We believe that our credit policies reflect normal industry terms and business risk. We do not anticipate non-performance by the counterparties and, accordingly, do not require collateral. Credit losses and write-offs of accounts receivable balances have historically not been material to our financial statements and have not exceeded our expectations.

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Item 4.  Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended (“the Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives, as ours are designed to do, and management necessarily was required to apply its judgment in evaluating the cost-benefit relationship of possible controls and procedures.

At June 30, 2017, we carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) and internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Based upon that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective at a reasonable assurance level in (i) enabling us to record, process, summarize and report information required to be included in our periodic SEC filings within the required time period and (ii) ensuring that information required to be disclosed in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the three months ended June 30, 2017 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II.  OTHER INFORMATION

Item 1A. Risk Factors

We operate in a rapidly changing environment that involves a number of risks that could materially affect our business, financial condition or future results, some of which are beyond our control. In addition to the other information set forth in this Quarterly Report on Form 10-Q, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended March 31, 2017, as filed with the Securities and Exchange Commission, on May 26, 2017 (the “Annual Report”), which could materially affect our business, financial condition or future results.

Item 2.  Unregistered Sale of Equity Securities and Use of Proceeds; Purchases of Equity Securities By the Issuer and Affiliated Purchasers

On May 3, 2017, we issued and sold an aggregate of 108,000 shares of preferred stock, consisting of Series A Convertible Preferred Stock and Series A-1 Convertible Preferred Stock to Orogen Viper LLC, an accredited investor as defined in Rule 501(a) of Regulation D promulgated under the Securities Act (“Orogen”) in a private placement pursuant to the terms of an Investment Agreement, for an aggregate purchase price of $108 million with an initial conversion price of $36.00.  In May 2017, the shares of Series A-1 Convertible Preferred Stock converted on a one to one basis into shares of Series A Convertible Preferred Stock in accordance with the terms thereof.

The Series A Convertible Preferred Stock is convertible into shares of the Company’s common stock at an initial conversion rate of 27.77778 shares of the Company’s common stock per share of Series A Convertible Preferred Stock, subject to certain customary anti-dilution adjustments.

The issuance of our Series A Convertible Preferred Stock was exempt from registration under the Securities Act pursuant to the safe harbor provided by Rule 506 of Regulation D promulgated thereunder.

Under the terms of our 2007 Stock Option and Incentive Plan (“2007 Plan”) and 2015 Stock Option and Incentive Plan (“2015 Plan”), we have issued shares of restricted stock to our employees. On the date that these restricted shares vest, we automatically withhold, via a net exercise provision pursuant to our applicable restricted stock agreements and the 2007 Plan and 2015 Plan, as the case may be, the number of vested shares (based on the closing price of our common stock on such vesting date) equal to tax liability owed by such grantee. The shares withheld from the grantees under the 2007 Plan or the 2015 Plan, as the case may be, to

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settle their tax liability are reallocated to the number of shares available for issuance under the 2015 Plan. For the three month period ended June 30, 2017, we withheld an aggregate of 48,260 shares of restricted stock at a price of $29.35 per share.

On May 3, 2017, our board of directors authorized a share repurchase program of up to $30 million of shares of our common stock on or prior to May 3, 2018. A summary of our stock repurchase activity under this program for the three months ended June 30, 2017 is set forth in the table below:

Issuer Purchases of Equity Securities

Period:	Total Number of Shares Purchased (#)	Average Price Paid per Share ($)(1)		Total Number of Shares Purchased as Part of Publicly Announced Program (#)	Remaining Dollar Value that may yet be Purchased Under Our Program ($)
May 2017	510,146	$	28.66	510,146	$	15,378,163
June 2017	437,560	28.96		437,560	2,704,311
Total	947,706	$	28.80	947,706	$	2,704,311

(1)Excludes applicable commissions.

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Item 6.  Exhibits.

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q:

Exhibit No.		Description
4.1		Certificate of the Powers, Designations, Preferences and Rights of the 3.875% Series A Convertible Preferred Stock (previously filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-33625) filed May 3, 2017 and incorporated by reference herein).
4.2		Certificate of the Powers, Designations, Preferences and Rights of the 3.875% Series A-1 Convertible Preferred Stock (previously filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-33625) filed May 3, 2017 and incorporated by reference herein).
10.1+*		Third Amended and Restated Director Compensation Policy
10.2*		Second Amendment to Master Professional Services Agreement (CITI-CONTRACT-14084-2015) dated as of July 1, 2015 by and between Polaris Consulting & Services Ltd and Citigroup Technology, Inc. (previously filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33625) filed on February 8, 2016, and incorporated herein by reference).
10.3++		Investment Agreement, dated as of May 3, 2017, between the Company and Orogen Viper LLC (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-33625) filed May 3, 2017 and incorporated by reference herein).
31.1*		Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of principal financial and accounting officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
32.2**		Certification of principal financial and accounting officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
99.1+		Amended and Restated Executive Agreement by and between the Company and Samir Dhir dated as of August 1, 2017 (previously filed as Exhibit 99.2 to the Registrant’s Current Report on Form 8-K (File No. 001-33625) filed on August 8, 2017 and incorporated by reference herein).
101*		The following financial statements from Virtusa Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, as filed with the SEC on August 8, 2017, formatted in XBRL (eXtensible Business Reporting Language), as follows:
	(i)	Consolidated Balance Sheets at June 30, 2017 (Unaudited) and March 31, 2017
	(ii)	Consolidated Statements of Income for the Three Months Ended June 30, 2017 and June 30, 2016 (Unaudited)
	(iii)	Consolidated Statements of Comprehensive Income (loss) for the Three Months Ended June 30, 2017 and June 30, 2016 (Unaudited)
	(iv)	Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2017 and June 30, 2016 (Unaudited)
	(v)	Notes to Condensed Consolidated Financial Statements (Unaudited)

+Indicates a management contract or compensation plan, contract or arrangement.

++Schedules (or similar attachments) to the applicable share or stock purchase agreement or asset purchase agreement, as the case may be, have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The Company supplementally will furnish copies of such omitted schedules (or similar attachments) to the Securities and Exchange Commission upon request.

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*Filed herewith.

**Furnished herewith. This certification shall not be deemed filed for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act of 1934.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	Virtusa Corporation
Date: August 8, 2017	By:	/s/ Kris Canekeratne
		Kris Canekeratne,
		Chairman and Chief Executive Officer
		(Principal Executive Officer)
Date: August 8, 2017	By:	/s/ Ranjan Kalia
		Ranjan Kalia,
		Executive Vice President
		and Chief Financial Officer
		(Principal Financial and Accounting Officer)

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EXHIBIT INDEX

Exhibit No.		Description
4.1		Certificate of the Powers, Designations, Preferences and Rights of the 3.875% Series A Convertible Preferred Stock (previously filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K (File No. 001-33625) filed May 3, 2017 and incorporated by reference herein).
4.2		Certificate of the Powers, Designations, Preferences and Rights of the 3.875% Series A-1 Convertible Preferred Stock (previously filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K (File No. 001-33625) filed May 3, 2017 and incorporated by reference herein).
10.1+*		Third Amended and Restated Director Compensation Policy
10.2*		Second Amendment to Master Professional Services Agreement (CITI-CONTRACT-14084-2015) dated as of July 1, 2015 by and between Polaris Consulting & Services Ltd and Citigroup Technology, Inc. (previously filed as Exhibit 10.3 to the Registrant’s Quarterly Report on Form 10-Q (File No. 001-33625) filed on February 8, 2016, and incorporated herein by reference).
10.3++		Investment Agreement, dated as of May 3, 2017, between the Company and Orogen Viper LLC (previously filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K (File No. 001-33625) filed May 3, 2017 and incorporated by reference herein).
31.1*		Certification of principal executive officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of principal financial and accounting officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of principal executive officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
32.2**		Certification of principal financial and accounting officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. 1350.
99.1+		Amended and Restated Executive Agreement by and between the Company and Samir Dhir dated as of August 1, 2017 (previously filed as Exhibit 99.2 to the Registrant’s Current Report on Form 8-K (File No. 001-33625) filed on August 8, 2017 and incorporated by reference herein).
101*		The following financial statements from Virtusa Corporation’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, as filed with the SEC on August 8, 2017, formatted in XBRL (eXtensible Business Reporting Language), as follows:
	(i)	Consolidated Balance Sheets at June 30, 2017 (Unaudited) and March 31, 2017
	(ii)	Consolidated Statements of Income for the Three Months Ended June 30, 2017 and June 30, 2016 (Unaudited)
	(iii)	Consolidated Statements of Comprehensive Income (loss) for the Three Months Ended June 30, 2017 and June 30, 2016 (Unaudited)
	(iv)	Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2017 and June 30, 2016 (Unaudited)
	(v)	Notes to Condensed Consolidated Financial Statements (Unaudited)

+              Indicates a management contract or compensation plan, contract or arrangement.

++Schedules (or similar attachments) to the applicable share or stock purchase agreement or asset purchase agreement, as the case may be, have been omitted from this filing pursuant to Item 601(b)(2) of Regulation S-K. The Company supplementally will furnish copies of such omitted schedules (or similar attachments) to the Securities and Exchange Commission upon request.

*              Filed herewith.

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**Furnished herewith. This certification shall not be deemed filed for any purpose, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act of 1934.

50

EX-10.1

Exhibit 10.1

Third Amended and Restated Director Compensation Policy

Effective July 1, 2017

Annual Compensation For Board Members:

·$150,000 of which, $100,000 is awarded by equity awards and $50,000 is awarded in cash, payable quarterly.

Additional Committee Chair Fees (payable quarterly):
Audit Committee:	$	22,000
Compensation Committee:	$	15,000
Nominating/Corporate Governance:	$	10,000
Finance Committee:	$	10,000
Lead Director	$	30,000

Subject to the terms herein, the equity awards granted as part of the annual compensation set forth above will be made at the Board Meeting immediately following the meeting of stockholders, commencing with the 2008 Annual Meeting of Stockholders.

Equity Awards granted to board members shall be in the form of restricted stock (or restricted stock units or other similar equity award instrument as agreed to by the compensation committee); these shares will vest in three equal installments annually at a rate of 33.333%, with the first installment vesting on the next September 1 following the annual meeting of stockholders, with vesting each one year anniversary thereafter.  The annual restricted stock award granted to a non-employee director under the non-employee director compensation policy will be made at the board of directors’ meeting immediately following our annual meeting of stockholders.

In addition, we will make, under our 2015 Stock Option and Incentive Plan (or plan that is in effect), a one-time, initial restricted stock unit award of $50,000 (with the number of shares or units determined by dividing $50,000 by the fair market value of the closing price of our common shares on the date of grant) to any new non-employee director (who was not previously a director) who joins the board of directors. These shares will vest in three equal installments annually at a rate of 33.333%, with the first vesting date on the anniversary of the first day of the third month of the quarter following the director’s join date.

The vesting of all of the equity awards granted to our non-employee directors will also accelerate by 12 months in the event of a change in control.

EX-10.2

Exhibit 10.2

AMENDMENT # 2 TO MASTER PROFESSIONAL SERVICES AGREEMENT Reference: CITI-CONTRACT-14084- 2015 Effective Date: 1st May 2017 Party: SERVICE PROVIDER CLIENT Name: Polaris Consulting & Services Limited Citigroup Technology, Inc. Address: # 34, IT Highway, Navallur, Chennai – 600 130, Tamilnadu, India 111 Wall Street, 7th Floor New York, NY 10005 Incorporation: India Delaware Name: Virtusa Corporation Address: 2000 West Park Drive Westborough MA 01581 Incorporation: Delaware Background: I. Polaris Consulting & Services limited (“Service Provider”) and Citigroup Technology, Inc. (“Client”) previously entered into a Master Professional Services Agreement dated 1st July 2015 (including any previous addendum, amendment, supplemental agreement or renewal of the same, collectively “Master Agreement”). II. Service Provider and Client shall jointly be referred to as “the Parties”. III. The Parties agree to amend the terms of the Master Agreement as set out herein. IN CONSIDERATION of the mutual covenants and undertakings contained in the Master Agreement and in this Amendment, and intending to be legally bound, Service Provider and Client agree as follows: 1. COUNTRY ADDENDA 1.1 The country-specific Schedules A to S in Appendix 3.3.1 to the Master Professional Services Agreement dated 1 July 2015 shall be deleted and replaced in their entirety with the revised Asia Pacific Country Schedules (Master Version 6.1 dated 23 March 2017), 1

attached to this Amendment. 2. NO OTHER CHANGES 2.1 Other than the amendments expressly set forth herein, all other provisions of the Master Agreement shall remain unmodified and shall continue to be valid and fully binding and enforceable as they exist as of the date hereof, IN WITNESS WHEREOF, the Parties hereto, through their duly authorized officers, have executed this Amendment as of the Effective Date designated above. Service Provider: Client: Polaris Consulting & Services Limited Citigroup Technology, Inc. By: /s/ NM. Vaidyanathan By: Brian Hagen Name: NM. Vaidyanathan Name: Director Title: Chief Financial Officer Title: Enterprise Supply Chain Asia Pacific Date: 25-04-2017 Date: 15/5/17 Virtusa Corporation By: /s/ Paul D. Tutun Name: Paul D. Tutun Title: EVP: GENERAL COUNSEL Date: 5/4/17 2

Local Country Addenda Legal and Regulatory Requirements - Asia Pacific (LCA Master Version 6.1 - Date: 23 March 2017) INDEX Schedule Country Version Effective Date Page No. A AUSTRALIA 3 12 May 2016 Revalidated 9 January 2017 3 B BANGLADESH 2 14 February 2017 6 C CHINA 6 17 January 2017 8 D HONG KONG 3 26 October 2015 12 E INDIA 5 23 March 2017 21 F INDONESIA 3 17 February 2017 26 G JAPAN 3 6 June 2014 Revalidated: 10 January 2017 30 H KOREA 3 25 February 2016 Revalidated: 17 January 2017 38 I MACAU 2 22 March 2017 41 J MALAYSIA 6 11 January 2017 42 K NEW ZEALAND 2 18 January 2017 48 L PHILIPPINES 2 30 April 2015 Revalidated: 9 January 2017 51 M SINGAPORE 6 17 October 2016 Revalidated: 23 January 2017 54 N SRI LANKA 3 15 February 2017 64 1

O TAIWAN 7 17 January 2017 67 P THAILAND 2 Revalidated: 18 January 2017 76 Q VIETNAM 6 23 March 2017 77 2

SCHEDULE A — AUSTRALIA LAW REQUIREMENTS (Version 3 — 12 May 2016; revalidated 9 January 2017) A. CONTINGENCY PLAN/CONTINUITY OF BUSINESS The Supplier must maintain a Business Continuity Plan. The Business Continuity Plan must enable the Supplier to provide the Services and comply with the terms of the Agreement, notwithstanding an event that disrupts, impairs or prevents the Supplier from otherwise providing the Services or complying with its obligations thereunder. The Business Continuity Plan must include procedures to ensure that the Supplier is able to provide the Services and otherwise comply with its obligations under the Agreement, notwithstanding that an agent, consultant or contractor of the Supplier is incapable of providing the Services to the Supplier. The Business Continuity Plan must be: (a) based upon a formal assessment of the applicable risks; (b) reviewed and updated on a regular basis and at least annually; (c) tested at least annually; and (d) subject to quality assurance review at least annually. B. APRA Where Citi is supervised by the Australian Prudential Regulation Authority (“APRA”), APRA may require information from Citi or the Supplier about the Services, the Supplier or the Agreement. Subject to applicable law or authority in the country in which it is based, the Supplier will give APRA any information relating to the Agreement as soon as possible after Citi or APRA asks the Supplier to do so. Unless prohibited by relevant law or legal authority, the Supplier will promptly inform Citi as soon as practicable after APRA asks the Supplier to provide information under this Section. The Supplier will permit APRA to conduct any on-site visit of the Supplier’s premises that is necessary to APRA’s role as prudential supervisor of Citi. If APRA notifies Citi of its intention to conduct an on-site visit of the Supplier’s premises, Citi will promptly notify the Supplier. Where APRA conducts an on-site visit of the Supplier’s premises, the Supplier must not disclose or advertise that APRA has conducted such a visit without the prior written consent of Citi. The Supplier will use its best endeavours to satisfy APRA about any questions or concerns it may raise about the Services. The Supplier agrees that the existence of, and any information relating to, any investigation, question or concern raised by APRA about the services provided by the Supplier to Citi or in relation to Citi, is Confidential Information. C. DO NOT CALL REGISTER ACT AND TELECOMMUNICATIONS ACT OBLIGATIONS Where telemarketing call services make up any part of the Services provided by the Supplier to Citi under the Agreement, the Supplier must comply with the: (i) Do Not Call Register Act 2006 (Cth); and (ii) Part 6 of the Telecommunications Act 1997 (Cth), and take all reasonable steps to ensure that its employees, agents and subcontractors comply with these Acts. Where fax marketing services make up any part of the Services provided by you to Citigroup under the Agreement, you must comply with Part 6 of the Telecommunications Act 1997 (Cth), and take all reasonable steps to ensure that your Personnel comply with that Act. D. PRIVACY The parties acknowledge and agree that: (a) Citi is subject to the Privacy Act 1988 (Cth) including the Australian Privacy Principles (“APPs”); 3

(b) the APPs require that Citi shall ensure that any recipient of Personal Information (defined below) handles such Personal Information in accordance with the APPs: (c) the Supplier must:- a. only collect use and disclose Personal Information strictly for the purpose for which that Personal Information was disclosed to it; b. unless otherwise instructed by Citi, only store Personal Information for the period necessary to fulfil that purpose and must destroy that information when it is no longer required and upon request from Citi; c. comply with any of Citi’s reasonable requests or directions in respect to the Personal Information; d. protect Personal Information it holds from misuse, interference and loss, as well as maintain/implement systems and processes to ensure the security of personal information; e. reasonably assist Citi to resolve any request for access, correction or a complaint in relation to Personal Information; f. provide individuals with the right to access and seek correction of Personal Information; g. promptly notify Citi if it is aware of any misuse, interference and loss, unauthorised access, modification or disclosure by itself or its personnel; h. only disclose Personal Information to others in compliance with these requirements after obtaining Citi’s consent and in accordance with any conditions Citi reasonably deems fit to impose; i. allow Citi or any applicable regulatory body to audit the Supplier’s compliance of these requirements and any records the Supplier holds containing the Personal Information, subject to the Supplier’s obligations of confidentiality to other parties and any other law or authority with jurisdiction over Supplier; and j. comply with any additional reasonable requirements notified to it by Citi from time to time in respect of Personal Information. (d) For the avoidance of doubt, Personal Information is a form of “Confidential Information” as defined in the Agreement; (e) For the purposes of this section D, “Personal Information” means information or an opinion about an identified individual, or an individual who is reasonably identifiable: (a) whether the information or opinion is true or not; and (b) whether the information or opinion is recorded in a material form or not. E. TAXES Other than as specified below, the Supplier will be responsible for all taxes of any kind in connection with the provision of Services under the Agreement. For the purposes of this clause, “Consideration”, “Creditable Acquisition”, “GST”, “Input Tax Credit”, “Recipient”, “Supply”, “Tax Invoice” and “Taxable Supply” have the same meaning as in the GST Act. 1. This clause applies if one party (the supplier) makes a Taxable Supply to another party (the Recipient) and the Consideration for that Supply (apart from any payable under this clause) is not expressed to be inclusive of GST. 2. If this clause applies, the Recipient must pay the supplier an additional amount on account of GST. 3. The additional amount payable on account of GST is, generally, equal to the Consideration for that Supply (apart from any payable under this clause) multiplied by the prevailing GST rate. 4. To the extent that the Consideration for the Supply (other than that payable under this clause) is payable as a reimbursement for an expense incurred by the supplier as a result of a Creditable Acquisition it makes, the additional amount will be calculated by: (i) first reducing the Consideration for that Creditable Acquisition by any Input Tax Credit to which the supplier is entitled on making the Creditable Acquisition; and 4

(ii) then applying the prevailing GST rate to that reduced amount. 5. The additional amount is to be paid when the Recipient pays or provides any of the Consideration for the Supply, provided always that such amount will only be payable if a Tax Invoice for the Supply is provided to the Recipient. F. LEGALLY REQUIRED DISCLOSURES Where the Supplier is required to disclose Citi’s Confidential Information under any applicable law, regulation or an order from a court, regulatory agency or other governmental authority having competent jurisdiction, and is further required to notify Citi of the order, the Supplier must promptly send a copy of the order and accompanying documentation by facsimile transmission to the General Counsel, Citigroup Pty Limited, +612 8225 5238. G. ADDITIONAL TERMINATION RIGHTS In addition to any right available to Citi under the Agreement, Citi may terminate the Work Order immediately upon the occurrence of an “Event of Default” by the Supplier. Any right of termination will not limit Citi from exercising any other rights or remedies it may have at law or in equity. For the purposes of this clause F, “Event of Default” means the occurrence of any one of the following: (i) a representation or warranty of the Supplier is false or misleading in any material respect when it was made; (ii) the Supplier: a. suspends payment of its debts generally; b. becomes insolvent within the meaning of the Corporations Act 2001; c. enters into or resolve to enter into any arrangement, composition or compromise with, or assignment for the benefit of, its creditors or any class of them; d. has a receiver, receiver and manager, controller, managing controller, administrator, official manager, trustee of provisional or official liquidator appointed over its assets and/or undertakings; or e. is the subject of an application that is filed or an order that is made or a resolution that is passed for its winding up or dissolution other than for the purposes of reconstruction or amalgamation. H. SCOPE OF SERVICES Unless expressly stated in the Work Order, the Supplier agrees that: (i) the Agreement and/or Work Order is not an exclusive arrangement between Citi and the Supplier; (ii) Citi may purchase services similar to the Services from other suppliers; and (iii) Citi does not commit to purchase any volume or dollar amount of Services. I. GOVERNING LAW AND JURISDICTION Notwithstanding any term to the contrary in the Agreement and/or Addendum, the governing law and jurisdiction clause as it applies to Work Orders entered into by Affiliates and branches of Citibank, NA located in Australia, is varied as follows: “The validity of this Agreement as it applies to the Work Order, the construction and enforcement of its terms, and the interpretation of the rights and duties of the parties to the Work Order shall be governed by the laws of New South Wales, Australia. The Parties to the Work Order submit to the non-exclusive jurisdiction of the courts of New South Wales and of the Commonwealth of Australia.” 5

SCHEDULE B — BANGLADESH LAW REQUIREMENTS (version 2 - 14 February 2017) A. GENERAL The requirements set out hereunder which are imposed by the Bangladesh Bank (the central bank of Bangladesh) and may change from time to time, including by BRPD Circular No-02 dated 19 January 2015 attached hereto as Annexure A as a reference, shall be applicable to the Services and the Deliverables under the Agreement. B. AUDIT, INSPECTION AND MONITORING Supplier agrees that the Services it performs and the Deliverables it provides are subject to examination and regulation of the Bangladesh Bank or any competent court of law, or other judicial, quasi-judicial, statutory, regulatory or supervisory authority or any agent appointed by any of them. Citi shall be entitled to access all books, records and information relevant to the activities of Supplier in relation to Citi, and conduct audits thereof. Citi shall be entitled to monitor continuously, and assess the performance of Supplier so that any necessary corrective measures can be taken immediately. Supplier shall provide all material and information in the form and format Citi may require. Supplier confirms that it has all relevant approvals from all relevant authorities and that no additional approval from anybody in any jurisdiction will be required for Citi, Bangladesh regulators or anybody engaged/ approved by Citi or the Bangladesh regulator for conducting any on-site/ off-site audit, review or control activity. C. RESTRICTION ON TYPE OF SERVICES The Services to be provided by Supplier are subject to the approval from the Bangladesh Bank. Pursuant to Section 12 of the Bank Companies Act, 1991 and BRPD Circular No-02 dated 19 January 2015, issued by the Banking Regulation and Policy Department of the Bangladesh Bank, Citi shall not remove and/or transfer any records and/or documents (including any information retained by electronic means) relating to Citi’s business to a place outside Bangladesh, without the prior permission in writing of the Bangladesh Bank. Similar approvals may be required from other applicable regulatory authorities of Citi. For example:Section 19 of The Securities and Exchange Ordinance, 1969, Section 35 (e) (f) of The Merchant Banking Rules, Section 11 of The Custody Rules 2003 restrict sharing customers’ information without approval of the Bangladesh Securities and Exchange Commission. Supplier shall not allow access to Citi’s data by any person other than those authorized by Citi. Supplier shall contact Citi to confirm such authorization by Citi. Supplier shall obtain consent from Citi for any sub-contracting or sub-outsourcing of 6

the activities to be carried out by Supplier in relation to Citi, or for making any direct contact with a customer of Citi. D. RESTRICTION ON THE REMOVAL/TRANSFER OF CITI’S RECORDS/DOCUMENTS The Supplier and its Affiliates shall not transfer and/or allow access to Citi’s records and/or documents (including any memory dump), to any other party, outside the premises of the Supplier and its Affiliates, without ensuring Citigroup standard information security measures being in place. The Supplier shall inform Citi’s Branch Information Security Officer (BISO) of such actions giving details of security measures taken. E. RESTRICTION ON THE REMITTANCE OF FEES BY CITI Due to Section 5 of the Foreign Exchange Regulation Act 1947, Citi shall not remit any fees or any other payment to Supplier. Citi shall only make such payment if there is a specific prior approval of the Bangladesh Bank. F. CONTINGENCY ARRANGEMENTS Supplier shall establish and maintain appropriate contingency plans, including a plan for disaster recovery and periodic testing of backup facilities. G. INSOLVENCY AND MATERIAL CORPORATE CHANGE The Agreement shall be terminated in the event of Supplier filing an application for being declared insolvent or is adjudged insolvent by a competent authority. Any material change in the corporate structure of Supplier must be notified to Citi. Annexure A: Guidelines on Outsourcing Arrange 7

SCHEDULE C — CHINA LAW REQUIREMENTS (Version 6 — 17 January 2017) [NOTE: According to China’s regulatory requirement on outsourcing, besides those provided in this China Law Requirements, the following provisions shall also be covered by the service contract, and please ensure they are so covered: (1) the scope and standards of the outsourcing service; (2) the arrangements for the confidentiality and safety of the outsourcing service; (3) the settlement mechanism for the outsourcing disputes; and (4) the liabilities for breach of contract. If the Master Agreement and/or the Work Order does not cover the above provisions, it should be added to this Schedule of China Law Requirements.] 1. Cooperation for Outsourcing Due Diligence Prior to the outsourcing of any Services by Citi to Supplier, the Supplier shall reasonably cooperate with Citi to fulfill all legal and regulatory requirements in respect of the Services for the purpose of Citi’s due diligence of the Supplier. 2. Audit and Inspection Right 2.1 Citi, its auditors, or its authorized regulator shall have the right to audit the Supplier to ensure compliance with the Master Agreement and/or the relevant Work Order in relation to the Services. Supplier shall cooperate with Citi’s internal and external auditors and regulators. Supplier shall keep complete and accurate records of all of its work and expenses in providing the Services to Citi for a period not less than two (2) years from the date which the record was created or such other longer period as requested by Citi in writing. 2.2 The Supplier shall require any subcontractor appointed (if applicable) to also maintain complete and accurate records of all of its work and expenses in relation to the Service subcontracted to it. Supplier shall ensure and procure that these requirements are set forth in its arrangements with any subcontractor. 2.3 The Supplier shall allow Citi, its auditors and/or its regulators to (i) to obtain records and documents of transactions and information of Citi given to, stored at or processed by Supplier, (ii) access any report and findings made on the Supplier in conjunction with the Services performed for Citi, (iii) access to the business premises of the Supplier in the exercise of its rights herein; and (iv) inspect, examine and audit the Supplier’s operations and records insofar as they are relevant to the Services. 3. Cross-border Outsourcing1 3.1 For any cross-border outsourcing, the Supplier shall be, and shall ensure its sub-contractor(s) be in one of the countries or jurisdictions set forth in the attached Appendix A, representing those countries or jurisdictions where the regulator(s) have signed a memorandum of understanding or other agreement (the “MOU”) with PRC banking regulators. No cross-border outsourcing shall take place in any country or jurisdiction not listed in the attached Appendix A without the prior written consent of Citi. 4. Controls 4.1 The Supplier shall regularly report Service related matters to Citi in accordance with Citi’s reasonable requirements. 1 This provision is only applicable when the Supplier is incorporated outside of mainland China. 8

4.2 The Supplier shall promptly notify Citi of any issue which may affect the provisions of the Services or of any problems, accidents or disruptions which may have a material impact on the Services. 4.3 Except for the Services provided in the Master Agreement and/or the relevant Work Order, the Supplier shall not conduct any other activity in the name of Citi. 4.4 The Supplier shall ensure that the software and/or hardware (if any) applied to the Service shall not infringe upon any patent, copyright, trademark, trade secret or other proprietary right of Citi and any third party. 4.5 The Supplier shall logically segregate and separate its service resources related to the Services provided to Citi from those of Supplier’s other clients or customers, and ensure that only Citi has the highest access authority to Citi’s business system and data. 5. Continuity of Business 5.1 The Supplier and Citi shall each use reasonable efforts to develop, maintain and adhere to a plan providing measures to be taken by the Supplier in the event of various contingencies, in order to ensure the Supplier’s ability to continue providing the Services. The Supplier’s established service continuity plans and its agreed targets therein shall be consistently managed by Supplier, and shall in all circumstances satisfy the requirements of business continuity of Citi. 6. Termination 6.1 Where the Supplier is found to be unable to protect Citi’s customer information or Citi’s customer rights are jeopardized due to Supplier’s failure to protect Citi’s customer information, Citi shall have the right, in addition to others rights or remedies that are available to Citi under the Master Agreement and/or the Work Order and/or applicable law, to terminate, with immediate effect upon notice, the services provided to or for the benefit of Citi in the People’s Republic of China under any Work Order or relevant agreement. 7. Transition Services 7.1 Upon the termination of the Master Agreement and/or the relevant Work Order for any reason whatsoever (including a default by either party), each party shall provide such information, cooperation and assistance to the other party, as such other party may reasonably request, to assure an orderly return or transfer to the requesting party or its designee of all proprietary data (and related records and files) materials and/or facilities (if any) of the requesting party. 7.2 If the Master Agreement and/or the relevant Work Order is terminated for any reason other than a circumstance which could expose the Supplier to ongoing damages or liability, the Supplier shall provide such assistance to Citi as Citi reasonably requests to transition to another service provider of Citi’s choice, subject to Citi’s agreement to pay the Supplier’s reasonable costs and expense for such transition assistance. 8. Assignment and Subcontracting 8.1 The Supplier is prohibited from (i) completely transferring/assigning or outsourcing all of the Services to a third party and /or, (ii) sub-contracting any key part of the Services to a third party. Additionally, the Supplier shall ensure that its sub-contractor(s) does not further transfer/assign the sub-outsourced business to any third party. 9

8.2 If the Services are sub-outsourced, the Supplier shall monitor the subcontractor and shall, in accordance with the provisions of the Master Agreement and/or the relevant Work Order, obtain prior approval from or provide notice to Citi regarding the changes of subcontractor (if any). 8.3 All provisions of the Master Agreement and/or the relevant Work Order shall be binding upon and shall inure for the benefit of the Supplier and Citi and their legal successors and permitted assigns. 9. Protection of Personal Information 9.1 Personal information relating to Citi’s customer shall include personal financial information, which means the personal information obtained, processed or stored by Citi through business operation or through access to credit report systems, payment system and other systems, including the following: (1) Personal identification information, including name, gender, nationality, form of ID, ID number, expiration date of ID, occupation, contact, marriage status, family information, residential address, work address, photo, etc. (2) Personal property information, including income, real estate ownership, vehicle ownership, tax amount, housing fund payment, etc. (3) Personal account information, including account number, account opening time, account opening bank, account balance, account transaction information, etc. (4) Personal credit information, including credit card repayment information, loan repayment information and other information formed in personal economic activities which can reflect such person’s credit condition. (5) Personal financial transaction information, including personal information obtained, preserved or stored by Citi in its payment and settlement, wealth management, security box businesses and the personal information disclosed when Citi’s customer does business with insurance company, security company, fund company and other third party institution through Citi. (6) Derivative information, including personal consumption habit, investment willingness, and other information derived from processing and analyzing the original information which can reveal a person’s particular features. (7) Other personal information obtained or stored through establishment of business relationship with a person. (hereinafter called “Personal Information”) 9.2 The Supplier agrees to take effective measure to protect the Personal Information obtained through the provision of the Service, ensure information security, confidentiality and avoid unauthorized disclosure or misuse during the collection, transmission, processing, storage and usage of such Personal Information. 9.3 The Supplier agrees not to send Personal Information (which was obtained in China) outside of China, and ensure the storage, processing and analysis of Personal Information is conducted within China. 10

9.4 Upon the termination of the Master Agreement and/or the relevant Work Order, the Supplier shall destroy or return to Citi, subject to Citi’s instruction, all personal financial information of Citi’s customer obtained through providing the Services to Citi.  10. Governing Law and Jurisdiction  Where both Citi and Supplier are entities incorporated in China, the governing law shall be the PRC law, and all claims or disputes arising out of or in connection with Master Agreement and/or the relevant Work Order shall be submitted to the PRC court where Citi is located.  Appendix A — Memorandum of Understanding List (As of June 2016)  MOU List as of June  30 2016.xlsx  11

SCHEDULE D — HONG KONG LAW REQUIREMENTS (Version 3 — 26 October 2015) [Note: it is assumed that Services provided by the Supplier under the Agreement do not involve its provision / marketing of banking services / product to customers, sale / transfer of personal data or deployment of any online tracking (i.e., collection by website operators / owners of information regarding users’ online interaction with the websites). If the Services involve any of the above, please contact Hong Kong legal counsel as additional provisions (such as PDPO and the related Info Leaflet “Online Behavioural Tracking”) would need to be incorporated into the Agreement.] Where Services and/or Deliverables are provided by Supplier or its Affiliates (collectively, “Supplier”) to or for the benefit of Citi and/or its Affiliates in Hong Kong, this Schedule E shall be added to and deemed to be expressly incorporated into the Agreement (and any work order or purchase order (as applicable, “Work Order”) executed by Citi and/or its Affiliates for work to be performed in Hong Kong): 1. Provision of Services and/or Deliverables. (a) During the term of the Agreement, each Party shall designate their respective representatives who will be the key contacts for coordinating management meetings/visits and addressing issues relating to the Services and/or Deliverables and such other arrangements or transactions as contemplated under the Agreement. (b) Supplier agrees to participate in and report to Citi on performance reviews to be conducted on a regular basis as reasonably required by Citi. (c) Supplier shall render Services and/or furnish Deliverables with due care according to its security and operation control process, which are designed to ensure accuracy and timeliness on all its service delivery. (d) Supplier shall ensure that any records and reports (including but not limited to the invoices) in whatever form prepared by Supplier in accordance with the Agreement and any of Citi’s Confidential Information shall be subject to Citi’s document retention policy (a copy of which shall be provided by Citi to Supplier). Such records, reports and information shall be made available for Citi’s inspection at any time provided that sufficient prior written notice shall be given to Supplier. (e) The Agreement shall be reviewed and revised as needed by the parties on an annual basis. However, if the Agreement is not reviewed and/or revised in a year, the then current Agreement shall continue to apply. 2. Fees and Expenses. The fees charged by the Supplier to Citi in respect of the provision of the Services and/or Deliverables shall be reviewed and agreed by Supplier and Citi on an annual basis. However, if such fees are not revised in a year, then the previously agreed fees shall continue to apply. 3. Confidential Information. (a) Without prejudice to the confidentiality provisions under the Agreement, the Receiving Party may also disclose the Disclosing Party’s Confidential Information to any relevant Affiliate which is bound to comply with the obligations of confidentiality at least as stringent as those set forth in the Agreement. 12

(b) If the Receiving Party shall be under a legal, regulatory, administrative or judicial obligation to disclose any Confidential Information, such party shall, where it is practical and legally able to do so, give the Disclosing Party prompt notice thereof. (c) Supplier shall ensure that Citi’s Confidential Information shall be segregated or compartmentalized from Supplier’s own or its other customers’ Personal Information. (d) The Receiving Party acknowledges and agrees that the unauthorized disclosure or use of any Confidential Information of the Disclosing Party may cause irreparable damage to such other party which could not be adequately compensated by monetary damages. The Receiving Party, to the extent possible, therefore authorizes the Disclosing Party to seek any temporary or permanent injunctive relief necessary to prevent such disclosure or use, or threat of disclosure or use, without proof of actual damages. The provisions of this subsection shall survive the termination of the Agreement. (e) To the extent that Supplier receives, obtains or generates Citi’s Confidential Information as a result of the performance of its obligations under this Agreement, and notwithstanding anything to the contrary contained in this Agreement, Supplier agrees that it will, and will ensure that each of its Personnel will, comply with the following requirements: (i) not disclose, transfer or use any of Citi’s Confidential Information except to the extent necessary to carry out its obligations under or permitted by this Agreement and for no other purpose; (ii) not disclose or transfer any of Citi’s Confidential Information to any third party, including, without limitation, its third party service providers without the prior written consent of Citi and subject to the further requirements of this section and (to the extent Citi’s Confidential Information constitutes Personal Data (as defined below)) Section 4; (iii) host and use Citi’s Confidential Information only in Hong Kong and not export or transmit Citi’s Confidential Information to any other jurisdiction without the prior written consent of Citi; (iv) employ appropriate administrative, technical and physical safeguards to prevent unauthorized or accidental access, disclosure, transfer, processing, erasure, loss or use of Citi’s Confidential Information received by it. (v) comply with all the obligations of confidentiality at least as stringent as those applicable to Supplier and all applicable rules and regulations concerning confidentiality to ensure that Citi’s Confidential Information is protected against unauthorized or accidental access, disclosure, transfer, processing, erasure, loss or use; (vi) promptly provide such information regarding its privacy and information security systems, policies and procedures as Citi may request from time to time; and (vii) not keep any of Citi’s Confidential Information for longer than is necessary for processing of such data. Upon the request by Citi or the cessation of the provision of certain Services and/or Deliverables to Citi, or at any time after any of such information has been processed by Supplier, Supplier will, at Citi’s option, as soon as reasonably practicable return or securely destroy any such Information in its possession or under its control. Supplier will certify in writing that it has fully complied with its obligations under this subsection (and that no copies of such information have been retained) within seven (7) calendar days following the date it receives a request from Citi for such a certification. 13

The Supplier warrants that its Personnel have been properly trained in respect of the handling of Citi’s Confidential Information such that they will comply with the relevant requirements under the Agreement. If Supplier engages any third party, whether within or outside Hong Kong, to process personal data on behalf of Supplier, Supplier shall adopt contractual or other means (i) to prevent any personal data transferred to such third party from being kept longer than is necessary for processing of the data; and (ii) to prevent unauthorized or accidental access, processing, erasure, loss or use of the data transferred to such third party for processing. (f) At all times during the duration of this Agreement, Supplier will have in place, and will regularly and thoroughly test, security arrangements which are sufficient to: (i) protect the integrity and security of any of Citi’s Confidential Information which has been disclosed to, processed by, generated by or otherwise handled by Supplier or any of its Personnel in the course of the performance of Supplier’s obligations under this Agreement and any other agreement; and (ii) ensure that any of Citi’s Confidential Information is not lost, destroyed, accessed, transferred, , processed, used or disclosed without appropriate authorization or by accident while it is in the possession or under the control of Supplier or any of its Personnel. On request from Citi, Supplier will use all commercially reasonable efforts to demonstrate to Citi its compliance with this subsection, and will ensure that each of its relevant Personnel does so. (g) Supplier will, as part of the Services and/or Deliverables provided, conduct an audit reviewable by Citi of the security arrangements in place in the format and frequency set forth in the applicable Work Order, to ensure that the security arrangements comply with the relevant policies in place to safeguard Citi’s Confidential Information. (h) If Supplier becomes aware that the security of any of Citi’s Confidential Information has been (or may be) compromised, then it will immediately: (i) inform Citi; (ii) take whatever action is necessary to minimize the impact of the security breach, correct the causes of the breach to the fullest extent possible and advise Citi of the status of its remedial actions; and (iii) promptly investigate the underlying causes of the breach and prepare and deliver to Citi a written report which details the causes, and sets out the measures Supplier proposes to implement to prevent reoccurrence of the breach. (i) If Supplier is required under any relevant laws or regulations to supply any of Citi’s Confidential Information to any government authority outside Hong Kong for examination, Supplier shall inform Citi of such examination and shall seek written consent from Citi before releasing / disclosing such data and information to such governmental authority, as the case may be. Citi shall not unreasonably withhold or delay to provide to Supplier such written consent if it is required, subject to obtaining the necessary consent from the Hong Kong Monetary Authority (“HKMA”) or other relevant government authorities, if applicable. (j) Notwithstanding anything herein to the contrary, this Section 3 shall survive termination of this Agreement. 14

4. Personal Data (a) In this Section 4: (i) “Personal Data” means any data (1) relating directly or indirectly to a living individual, (2) from which it is practicable for the identity of the individual to be directly or indirectly ascertained, and (3) in a form in which access to or processing of the data is practicable; for present purposes Personal Data includes names, addresses, emails, dates of birth, telephone numbers. (ii) “Data Subject” means an individual who is the subject of any part of the Transfer Data, and for present purposes Data Subjects include Citi’s past and present customers whose personal data is transferred to Supplier (for the avoidance of doubt, “past customers” refer to customers who cease their banking relationship with Citi after personal data is transferred to Supplier); (iii) “Transfer Purposes” means purposes for which Personal Data is transferred by Citi and/or its Affiliates in Hong Kong to Supplier, and includes enabling Supplier to provide the Services and perform the Work Order; and (iv) “Transfer Data” means any Personal Data relating to Citi’s customers transferred or to be transferred by Citi and/or its Affiliate(s) in Hong Kong to Supplier in connection with the Agreement or any Work Order. (b) Supplier acknowledges that Citi is subject to the Personal Data (Privacy) Ordinance (Cap. 486 of the Laws of Hong Kong) (“PDPO”) including without limitation the Data Protection Principles (“DPP”) therein. Supplier agrees that it shall, and shall ensure that each of its Personnel shall, comply with the PDPO and other requirements imposed by the Privacy Commissioner of Personal Data from time to time. (c) For the avoidance doubt, Personal Data may be Confidential Information and vice versa, depending on the nature of the information in question. In the event that certain information constitutes both Personal Data and Confidential Information, both Sections 3 and 4 shall apply. (d) Supplier shall not collect any Personal Data for and on behalf of Citi unless Citi has approved in writing the collection and specified a Personal Data collection form and Personal Data collection statement to be used for such collection. If Citi has given its aforesaid approval, Personal Data collected by the Supplier on behalf of Citi shall be regarded as part of the Transfer Data for the purposes of this Schedule, and the collection and use of such Personal Data shall be conducted by Supplier strictly in accordance with the Personal Data collection statement and other directions given by Citi from time to time. (e) Supplier shall not transfer or provide any Transfer Data to any party without Citi’s prior written consent. (f) If Supplier engages any third party, whether within or outside Hong Kong, to process the Transfer Data on behalf of Supplier (and Citi’s prior written consent has been obtained), Supplier shall adopt contractual or other means (i) to prevent any Transfer Data transferred to such third party from being kept longer than is necessary for processing of the data; and (ii) to prevent unauthorized or accidental access, processing, erasure, loss or use of the Transfer Data transferred to such third party for processing. (g) Supplier represents, warrants and undertakes the following:- (i) Supplier shall process or use the Transfer Data for the Transfer Purposes to the exclusion of any other purpose. Where the Transfer Data is to be used for a new 15

purpose, Supplier shall, with Citi’s permission, obtain the prescribed consent of the Data Subject under the PDPO; (ii) Supplier shall hold the Transfer Data securely in accordance with the requirements of DPP4 of the PDPO. Supplier shall have in place appropriate technical and organizational measures and standards to protect the Transfer Data against unauthorized or accidental access, processing, erasure, loss or use, including without limitation:- (A) having robust policies and procedures in place and providing adequate training for its staff; and (B) adopting physical and computer security measures; (iii) Supplier shall not retain the Transfer Data longer than is necessary for the fulfillment of the Transfer Purposes (including any directly related purpose(s)). (iv) Supplier shall use the Transfer Data exclusively for the Transfer Purposes and shall not transfer or disclose, either free of charge or in return for any benefits, the Transfer Data to any third party, except when it is compelled to do so under the applicable laws. (v) Supplier shall immediately rectify, erase or return the Transfer Data on receiving instructions to this effect from Citi. Supplier undertakes in particular to rectify, erase or return all or part of the Transfer Data or other Personal Data if it appears that such measures are required by the requirements of the PDPO. (vi) Supplier has and shall at all times have in place accessible documents which clearly specify its policies and practices in relation to Personal Data. (vii) Supplier shall ensure that Data Subjects have rights of access to and correction of their Personal Data in the same way as they would have had under the PDPO. (viii) Supplier shall not disclose, transfer or allow access to the Transfer Data to a third party data user or data processor (“Sub-transferee”) located outside Hong Kong unless it has obtained the prior written consent from Citi and: (A) the sub-transfer is made to a place that has in force any law which is substantially similar to, or serves the same purposes as the PDPO; (B) such Sub-transferee becomes a signatory to this agreement or another written data transfer agreement which imposes the same obligations on it as are imposed on Supplier under this Section 4; or (C) adopted all reasonable non-contractual measures and auditing mechanisms to the reasonable satisfaction of Citi to monitor the Sub-transferee’s compliance with the obligations under this Section 4 as if they are applicable to that Sub-transferee. (h) Upon Citi’s request, Supplier shall submit its data processing facilities, policies and procedures, data files, documentation and any other relevant information for reviewing, auditing and/or certifying by Citi or an inspection body composed of independent members and in possession of the required professional qualifications bound by a duty of confidentiality, selected by Citi, to ascertain compliance with its warranties and undertakings in this Schedule. (i) Without prejudice to the confidentiality provisions of the Agreement and Section 3 hereunder, Supplier acknowledges and agrees that Citigroup may maintain computer systems in data centers and in various countries throughout the world and that Citigroup and its Personnel 16

may collect, store, process, disseminate or use the Personal Information in manner that causes it to be transferred or accessed from computer systems owned or operated by or on behalf of Citigroup or its Personnel throughout its global computer network provided that the PDPO (if applicable) is complied with. (j) Supplier has no reason to believe that there are currently in force any local laws that would have adverse effect on its warranties or undertakings above, and Supplier shall notify Citi if it becomes aware of any such laws. (k) Supplier has the legal capacity and the authority to give the warranties and undertakings in this Section 4. (I) Supplier shall promptly inform Citi of its inability to fulfill any of its obligations in this Section 4. (m) Supplier shall promptly notify Citi about any abnormalities or any loss, accidental or unauthorized access or processing, erasure or other use of the Transfer Data. (n) Supplier shall deal with promptly and properly all reasonable enquiries from Citi relating to the fulfillment of its obligations hereunder and Supplier shall abide by the reasonable instructions and advice (if any) of Citi or any supervisory authority in this regard. (o) Supplier shall ensure its staff who handles the Transfer Data will carry out the security measures and obligations specified in this Section 4. (p) Supplier shall notify Citi about Supplier’s contact person in relation to the handling of the Transfer Data, and shall cooperate with Citi, Data Subjects and relevant authorities concerning all enquiries within reasonable time. 5. Compliance with Applicable Laws. (a) Supplier agrees to cooperate with Citi’s internal and external auditors and the relevant regulatory authorities including, but without limitation, the HKMA, the Hong Kong Securities and Futures Commission, and the Hong Kong Privacy Commissioner for Personal Data for their (or any person appointed by them) review, supervision, audit, or inspection of materials or the status of operation by Supplier in connection with the Services and/or Deliverables provided by Supplier pursuant to the Agreement. Supplier shall notify Citi of any overseas regulatory authorities which seek access to any of Citi’s Confidential Information. (b) Supplier shall report to Citi if there is any material change in the Services and/or Deliverables or any material problems, incidents, accidents or disruption which has/have a material impact on the Services and/or Deliverables. 6. Inspection and Right to Audit. (a) Supplier agrees that the Services it performs and/or the Deliverables it furnishes for a branch of U.S. bank in The Hong Kong Special Administrative Region of the People’s Republic of China (“Hong Kong”) are subject to examination of the HKMA and the Office of the Comptroller of the Currency (“OCC”). Supplier shall, upon reasonable notice, allow Citi, its management, its auditors and/or its regulators, the opportunity of obtaining, inspecting, examining and auditing Supplier’s operations, contingency plans and the business records (including but not limited to copies of the independent audit and financial review report) which are relevant to the Services and/or Deliverables provided hereunder by Supplier including but not limited to Supplier’s critical processes to confirm that Supplier’s processes meet or exceed industry standards in such area of contingency 17

planning, continuity of business plans, software engineering and test processes, change control procedures, critical staff succession planning and compliance with applicable laws and regulations. Supplier shall cooperate fully with Citi’s internal or external auditors to ensure a prompt and accurate audit. If Citi provides recommendations for enhancing Supplier’s critical processes, Supplier shall use its best effort to implement the recommended and/or corrective measures and/or correct any practices which are found to be deficient as a result of any such audit within a reasonable time after receipt of Citi’s audit. Supplier shall notify Citi, within reasonable time, any changes to any of the aforesaid plans. (b) If an audit leads Citi to conclude that Supplier has breached the provisions of this Agreement or that any of Supplier’s business or professional practices related to its performance of Services and/or its furnishing of Deliverables presents a risk of unauthorized disclosure of Citi’s Confidential Information, Supplier and Citi shall use their best efforts to reach a mutually satisfactory resolution. Supplier shall also use its best efforts to correct any practices which are found to be deficient as a result of any such audit within a reasonable time after receipt of Citi’s audit report. (c) Citi shall be entitled to enter all or any of Supplier’s premises from time to time to inspect and examine Supplier’s operations and to check that Supplier is complying with its obligations under this Agreement. Citi shall endeavour to give reasonable notice of its exercise of its rights hereunder but in circumstances where Citi is of the view that it would prejudice Citi’s interests to give such notice, no prior notice shall be required to be given by Citi. Citi’s rights under this Section may be exercisable by Citi from time to time without Supplier’s consent and Citi is empowered to take all necessary or reasonable steps in order to exercise its rights under this Section fully. (d) Supplier will submit a yearly financial report audited by a certified accountant to Citi for the assessment of Supplier’s financial health in supporting the Services and/or Deliverables. (e) Under no circumstances shall Supplier have any lien over any or all of the properties that are proprietary to Citi herein stipulated; Supplier shall at all times hold the documents available for Citi to use, take, or move at Citi’s sole discretion. 7. Continuity of Business. (a) If any of the disaster or disruption events occurs, shall have occurred, happened or come into effect; namely the circumstances are beyond the reasonable control of the Supplier, which affects the provision or receipt of the whole or any of the Services and/or Deliverables, the Supplier must: (i) immediately notify and consult Citi; and (ii) provide recovery services and otherwise do everything reasonably necessary to reestablish the provision of the Services and/or the Deliverables. (b) If a party receives advance warning or notice of the possibility of the occurrence of any disaster or disruption, that party shall notify the other party and the parties shall use their best endeavours to make such alternative or emergency arrangements as may be necessary or desirable in order to ensure that the Services and/or the Deliverables are continuously provided in accordance with this Agreement. 18

8. Subcontracting (a) Supplier may not subcontract the performance of any of its obligations in the Agreement without the prior written consent of Citi. To the extent that Supplier subcontracts to third parties any of its obligations set forth in the Agreement with the consent of Citi, Supplier shall remain fully responsible for such obligations and for all acts or omissions of its subcontractors or agents. Nothing in the Agreement shall be construed to create any contractual relationship between Citi and the subcontractors or agents aforementioned, except as may be otherwise required by law. (b) For purposes of this Section 9, the use by Supplier of individual independent contractors who are designated or assigned to perform the Services and/or to furnish the Deliverables under the direct management and supervision of Supplier and subject to Citi’s policies and standards of confidentiality undertaking shall not constitute an assignment, transfer or subcontracting, and shall not require Citi’s prior approval. 9. Amendment. Notwithstanding any terms under the Agreement to the contrary, to the extent that any term in the Agreement is in conflict with any applicable Hong Kong laws and regulations, the HKMA’s Outsourcing Guidelines or Citi’s Outsourcing Policy, Citi shall notify Supplier with a suggested amendment to the Agreement to the extent necessary to comply with such laws and regulations, Guidelines and Policy, and Supplier shall have the option either to accept such amendments (which shall become effective upon notification) or to terminate the Agreement by giving 30 days’ notice in writing to Citi. 10. Termination. Citi shall have the right to terminate any Work Order (which has been or shall be entered into with any relevant Citi entity in Hong Kong) or the services provided to or for the benefit of any relevant Citi entity in Hong Kong (or the provision of any part of the relevant Services and/or Deliverables to Hong Kong) under any Work Order or relevant agreement with immediate effect and without penalty by giving three (3) days prior written notice to the other party in the event that the HKMA or any other competent authority requires Citi to do so, or to make alternative arrangements in relation thereto (it being agreed that a certificate from the relevant party that this has occurred shall be conclusive of that fact). The right of termination in this paragraph is in addition and independent to those in the Agreement. 11. Governing law. This Schedule shall be governed by, and construed in accordance with, the laws of Hong Kong, and the parties hereby agree to submit to the non-exclusive jurisdiction of the Hong Kong courts. 12. Privacy disputes Without prejudice to Section 12, in the event of a dispute or claims brought by a Data Subject or the privacy enforcement authority concerning the processing of the Transfer Data against any or all parties hereto, the parties shall inform each other about any such disputes or claims, and shall cooperate with a view to settling them amicably in a timely fashion. 13. Third party rights 19

Nothing in this Schedule, whether expressed or implied, is intended to, or will, confer on any person any benefit or any right to enforce any term which such person would not have but for the Contracts (Rights of Third Parties) Ordinance (Cap. 623 of the Laws of Hong Kong). 20

SCHEDULE E — INDIA LAW REQUIREMENTS (Version 5 — 23 March 2017) 1. SUPPLIER REPRESENTATIONS Supplier represents, warrants and covenants to Citi that: the Services shall be executed, and provided to Citi, taking due and proper note of Citi’s requirements; Supplier shall employ same standards of care for the Services as that is expected of Citi; Supplier complies with all applicable law (including but not limited to all information technology and data privacy laws in India), has, and shall at all relevant times, have the requisite and valid licenses and permissions from all regulatory and statutory authorities, for provision of the Services; there is no litigation or proceeding or dispute pending or threatened against it or any of its Affiliate which may affect its ability to provide the Services in accordance with the terms of the Agreement and/or have an adverse impact on the Services or the quality and integrity thereof, in any manner; it shall promptly inform Citi of any event or situation which may effect its ability to provide Services effectively, including but not limited to situations of financial distress faced by the Supplier or events resulting in material change in strategic goals or significant changes in Supplier Personnel. 2. STANDARD OF SERVICES Supplier represents, warrants and covenants that: (i) apart from Citi, the Supplier renders similar services to various Corporates and as part of normal course of business activity of the Supplier, the Supplier deploys/rotates its employees/personnel/representatives amongst various Corporates. Accordingly, at all points of times, it will be the obligation of Supplier to ensure that the presence of its employees/personnel/representatives in Citi and/or its affiliates/subsidiaries/Citi group entity shall not exceed 238 days in a calendar year (unless otherwise agreed to in writing by Citi, and which could enhance the period to a maximum of three calendar years); (ii) the Services the Deliverables, and any information or materials provided to Citi in connection with this Agreement will be provided, in a timely and professional manner, by qualified and skilled individuals with appropriate expertise, and in conformity with standards generally accepted in Supplier’s industry and the financial services industry, and (iii) the Services will conform to the Services description set forth in this Agreement, including any applicable Work Orders. If Supplier fails to provide the Services as warranted and Citi so notifies Supplier within thirty (30) Business Days following the date Supplier declares the Services to have been completed, then Supplier will re-perform the Services at no additional charge. In the event, the Services are received by a customer of Citi, the Supplier agrees to forward to Citi any service complaint it receives from the customers of Citi in a prompt and timely manner. The Supplier also warrants to remedy the complaints it receives from the customers as a part of its Services rendered to Citi hereunder. If Supplier is unable or unwilling to re-perform the Services as warranted, then Citi shall be entitled to address such customer complaints (directly or through other supplier) and recover the fees paid to Supplier for the deficient Services or the amount paid to other supplier whichever is higher. 21

3. INDEPENDENT SERVICE PROVIDER Supplier shall provide the Services as an independent service provider on a non-exclusive basis. Service Provider shall not use subcontractors for all or part of the Service without prior consent of Citi, such consent shall be provided by Citi only after review of such subcontracting agreements. Nothing contained in the Agreement or otherwise shall be deemed to create any partnership, joint venture, employment, or relationship of principal and agent, or master and servant between the Parties hereto or any of their respective employees, affiliates, subsidiaries, related business entities, agents, contractors or subcontractors or to provide either Party with any right, power or authority, whether express or implied, to create any duty or obligation on behalf of the other Party. Supplier acknowledges that the Services provided are solely within its control, and confirms that neither Supplier nor any Supplier Personnel, including contractors or subcontractors of Supplier (if any), will hold out as anything but that (i) Supplier is an independent and nonexclusive service provider to Citi, and (ii) that the employees of Supplier are employees solely of Supplier and that other representatives, agents, contractors or subcontractors of Supplier are those of Supplier. Supplier shall cooperate with, and extend support to, the foregoing position, in the event of any finding related to an employment, partnership or joint venture relationship between Supplier or any of its employees, representatives, agents, contractors or subcontractors on the one hand and Citi on the other hand. Supplier asserts that upon employing/engaging with any persons, Supplier shall, at that time, clearly communicate to such persons that Supplier is the sole employer of such persons. Supplier declares and agrees (i) that it has the inalienable and exclusive right, and at all times retains that right, to exercise full control of and supervision over the performance of Supplier’s obligations hereunder and full control over the employment, direction, compensation and discharge of all its employees and other Supplier Personnel; (ii) that it will be solely responsible for all matters relating to payment of salaries and wages of all its employees and other Supplier Personnel, and for due and proper compliance with compensation and benefits requirements for all its employees and other Supplier Personnel under applicable laws, insurance, fidelity insurance and such other insurance, social security withholding, and all other laws, rules and regulations governing such matters and for the redressal of grievances of its employees and other Supplier Personnel; (iii) that it shall be responsible for its own acts and those of it employees and other Supplier Persons including contractors (if any) and subcontractors (if any) during the performance of Supplier’s obligations to Citi under this Agreement. Supplier and Supplier Personnel are not entitled to unemployment insurance benefits from Citi as a result of the Services or this Agreement. Supplier and Citi agree that the Agreement shall not be construed as an agreement for establishing a joint venture or partnership between Citi and Supplier. Supplier further warrants that it will not do or purport to do any act, deed, thing or matter which will prejudice the interests of Citi, in any manner whatsoever. 4. CONTINUITY OF BUSINESS The Supplier agrees and confirms that it has in place a robust contingency and business 22

resumption plan, including adequate resources, systems and all other infrastructure requirements, in place, to ensure that Services would not be adversely affected in any manner on account of any factors including but not limited to systems break-downs and/or natural and/or man-made disasters, which may cause disruption in the normal functioning of the Supplier. Additionally, the Supplier shall conduct periodic testing to check the effectiveness, satisfactory state and readiness of the aforesaid continuity of business plan. The Supplier shall, if so requested by Citi, permit Citi to conduct joint testing of the aforesaid continuity of business plan along with the Supplier. 5. POST-TERMINATION OBLIGATIONS Commencing upon notice by either Party of expiration or termination of this Agreement and continuing through the effective date of expiration or termination, the Supplier confirms that the Supplier shall not deny Citi reasonable termination assistance as requested by Citi to allow the use of Services without interruption or adverse effect and to facilitate the orderly transfer of the subject matter of the Agreement as desired by Citi. If requested by Citi in this regard, the Supplier undertakes that the Supplier will also reasonably co-operate with a third party service provider in connection with the preparation and implementation of a transition plan by such third party and/or Citi upon the termination or expiration of this Agreement. It is hereby clarified that such termination assistance shall be provided to Citi by the Supplier at no additional costs except to the extent of fee for Services as may be calculated on any pro-rata basis that is applicable. 6. INSPECTION AND RIGHT TO AUDIT 6.1 The Supplier shall keep complete and accurate records of all operations and expenses in connection with the Services. All the said records shall be kept on file by the Supplier for a period of 8 (Eight) years from the date the record is made or as otherwise set forth by applicable law, and in any event, shall not be excised without first having duly and adequately and timely informed Citi in writing and also providing Citi with the option of having such records transferred into the custody of Citi. 6.2 The Supplier shall, at reasonable hours, allow Citi, its management, its auditors and/or regulators (including Indian and United States regulators and Citigroup auditors), the opportunity of inspecting, examining and auditing the Supplier’s operations, including its security practices and control processes, including practices and procedures in relation to data security, and business records directly relevant to the Services, and financial agreements, its balance-sheet and profit and loss account and audit reports, and all other documents which the Supplier may be called upon to produce for the purposes of ascertaining the financial viability of the Supplier as a service provider. The Supplier shall, as and when requested by Citi , provide access to and make available to any of Citi’s officers / employees/ management or internal / external auditors, regulators and their representatives, the necessary records for inspection / examination / audit, and cooperate to the fullest extent so as to clarify on any activities and to assure a prompt and accurate audit related to the Services. 6.3 The Supplier shall co-operate with Citi’s internal or external auditors, and regulators to assure a prompt and accurate audit/inspection. The Supplier shall also co-operate in good faith with Citi to correct any practices, which are found to be deficient as a result of any such audit, within a reasonable time after receipt of reports. 23

Such audits or reviews will be at the expense of Citi. However, if the audit discovers discrepancies or overcharges, then upon completion of such audit or review, the Supplier shall be bound and liable to promptly reimburse to Citi for such discrepancies or overcharges, and for the cost of the audit. 6.4 In addition to what is provided hereinabove, the Supplier shall on an year-on-year basis provide to its independent auditors (“Auditors”) access at reasonable hours to Supplier Personnel and to Supplier’s records and other pertinent information, all to the extent relevant to the performance of Supplier’s financial, regulatory and Service obligations under the Agreement. Such access shall be provided for the purpose of performing audits and inspections by the Auditors. The Supplier shall without delay submit the audit report to Citi. Citi and the Supplier shall develop and agree upon an action plan to promptly address and resolve any deficiencies, concerns and/or recommendations in such audit report in relation to the Services, and the Supplier, at its own expense, shall undertake remedial action in accordance with such action plan. The audit fees incurred under this clause shall be to the Supplier’s sole account. 7. MONITORING RESPONSIBILITY Except as otherwise directed by Citi, the Supplier agrees to meet with Citi, on a monthly basis, for the purpose of reviewing the Services provided by Supplier pursuant to the requirements of the Agreement. The Supplier shall submit a monthly report to Citi which shall include, but not be limited to, the following information, (i) a status report on Services provided during the month, identifying, in particular, any performance standards not met; and (ii) any other information requested by Citi. The Supplier agrees to meet with Citi on a quarterly basis to review all aspects of the Services provided and/or any other matters of mutual interest to the Supplier and Citi. Further, the Supplier agrees to meet with Citi at anytime at the request of Citi to review the Services provided by Supplier. The Supplier agrees to provide Citi with any and all information requested by Citi for the purpose of documenting and/or analyzing the Services provided. Citi will select, at its sole discretion, the information reports necessary for its management information needs. 8. CONSENT FOR DISCLOSURE Unless consent is prohibited by law, Supplier hereby consents to the transfer and disclosure by Citi of any information relating to the Supplier or any Service (i) to and between the branches, representative offices, affiliates and agents of Citi and third parties selected by any of them, wherever situated, for confidential use (including in connection with the provisions of any service and for data processing, statistical and risk analysis purposes); and (ii) to any person to (or through) whom Citi transfers or assigns (or may potentially transfer or assign) all or any of its rights, benefits and obligations hereunder, or with (or through) whom Citi enters into (or may potentially enter into) any sub-participation or the like in relation to, or any other transaction under which Services are to be made or received by reference to, the Agreement and this Addendum. Citi and any branch, representative office, affiliate, agent or third party may transfer and disclose any such information as required by law, court, regulator or legal process. Further, this provision shall be in addition to, and not in substitution for, any other provision agreed to between the parties (whether before or after the date hereof) which gives broader rights of disclosure to either party than contained herein. 24

9. GOVERNING LAW AND JURISDICTION Where both Citi (or Affiliate) and/or Supplier are located in or entities incorporated in the India, the governing law shall be the laws of India, and all claims or disputes arising out of or in connection with Agreement and/or the relevant Work Order shall be submitted to the court in India where Citi (or Affiliate) is located. 25

SCHEDULE F — INDONESIA LAW REQUIREMENTS  (Version 3 — 17 February 2017) 1. PROVISIONS REQUIRED BY LOCAL LAWS OR REGULATIONS For the purposes of the Agreement and each Work Order made between the Supplier and Citi (or Affiliate) in Indonesia, the following wording shall be added to the Agreement in its entirety: 2. GENERAL REQUIREMENTS FOR ALL SERVICES(2) The following provisions shall apply to all Services provided by the Supplier to Citi: 2.1 Examinations or Audits by Regulators of the Supplier(3) Supplier shall notify Citi of any examination or audit by regulators of the Supplier which impacts the Services of Citi or the confidential information (including Indonesia data) of Citi. The notice must be addressed to Citi’s Country Compliance and must be received by Citi 3 (three) weeks before the examination or the audit commences. The Supplier should not release any Indonesia data without the approval of Citi. 2.2 Audits by Financial Services Authority / Otoritas Jasa Keuangan (“OJK”) (or any successor authority) on Citi(4) In the event of an audit conducted by OJK (or any successor authority) on Citi, any data requested to the Supplier must be provided by the Supplier to Citi within 5 (five) Indonesia business days from the date of request by Citi. 2.3 Critical Event(5) The Supplier agrees to also, as soon as possible, notify Citi of the occurrence of any critical event in regard to Citi, i.e. an event which may result in a financial loss to Citi and/or impede the smooth running of Citi’s operations. 2.4 Assignment and Subcontracting(6) The Supplier shall provide prior notification to Citi in the form of Appendix I hereof, for any assignment or subcontracting by the Supplier of any of its rights, obligations or responsibilities under the Agreement and the Work Order. If agreed by Citi, the notification can be made through e-mail to the designated person of Citi. 2.5 Classification of Services where Citi is Citibank, N.A., Indonesia In the case where Citi is Citibank, N.A., Indonesia, depending on whether or not a specific Service is classified by Citibank, N.A., Indonesia as an Information Technology Service (2) Regulations: a. OJK Regulations No 9/ POJK.03/2016 on Outsourcing (“OJK Reg. No 9/ 2016”). b. OJK Regulations No 38/ POJK.03/2016 on Risk Management Implementation on Information Technology (“OJK Reg. No 38/2016”) c. SEBI No 9/30/2007 on Risk Management Implementation on Information Technology (SEBI no 9/2007) d. SEBI No 14/20/DPNP/2012 on Prudential Principal on Outsourcing. (3) Section 10.3.3.1 of SEBI no 9/2007 (4) Section 10.3.3.1 of SEBI no 9/2007 (5) Section 10.3.3.1 of SEBI no 9/2007 (6) Section 10.3.3.1 of SEBI no 9/2007 26

pursuant to the regulation of OJK(7) (or any successor authority), different requirements may apply to the Service. The Supplier shall obtain confirmation from Citibank, N.A., Indonesia on the classification of Services provided under the Agreement. Reference should also be made in any Work Order. 3. SPECIFIC REQUIREMENTS FOR INFORMATION TECHNOLOGY SERVICES(8) In addition to the requirements as, set forth in Section 2 above, the provisions under Section 3 of this Schedule shall apply to the Services where it is identified as Information Technology Services in the Agreement or in any Work Order. 3.1 Definitions(9) a. Information Technology is a technology to gather, organize, keep, process, announce, analyze, and/or publish information; which are related to computer, telecommunication and other electronics means used to operate financial data and/or provide banking services; b. Data Centre is a main facility for data processing for Citi by Supplier, consisting of hardware and software to support the operational activities of Citi continuously; c. Disaster Recovery Centre is a substitute facility, in the event the Data Centre experiences a disturbance or dysfunction, among others due to: no electricity to the computer room, fire, explosion or computer damage, temporarily used during the recovery of the Supplier’s Data Centre, to ensure business continuity; d. Technology-based-Transaction Processing is an activity in the form of addition, amendment, deletion of data and/or data authorization to be performed on the application system(s) used to process Citi transactions. 3.2 Information Technology Services For all Services that are identified as Information Technology Services, the following requirements shall apply:(10) a. The Supplier must apply reasonable information technology control principles (the application of both physical and logical security measures) which shall be evidenced by an independent audit report commissioned by Supplier. b. The Supplier shall provide technical document(s) to Citi in relation to the Information Technology Services being provided, which include among others the Information Technology processes and data base structure. c. The Supplier shall provide qualified and competent personnel in accordance with the Information Technology Services being provided. The Supplier must do transfer of knowledge to Citi, so that there will be a personnel in Citi that understands the Information Technology processes and applications provided by the Supplier, which may be done among others by way of providing trainings to Citi. d. The Supplier must report to Citi of any request for access or disclosure of the confidential information, to the extent that such confidential information must be disclosed under applicable laws. (7) OJK. Reg No 38/2016 (8) OJK Reg No 38/2016 (9) In accordance to Section 1 of OJK Reg. No. 38/2016 (10) Section 10.3.3.1 of SEBI no 9/2007 27

e. The Supplier must report to Citi in the event of any change of situation which may limit or hinder the rights of Citi or OJK (or any successor authority) to access information in regard to the Information Technology Services. f. Upon request by Citi, the Supplier shall provide Citi with report of the monitoring result on its performance related to a Work Order. g. In addition and without prejudice to the business continuity or disaster recover provisions of the Master Agreement, the Supplier shall ensure that the Disaster Recovery Plan is tested from time to time. For Information Technology Services that are specifically identified as maintenance of a Data Centre, Disaster Recovery Services and/or Technology-based Transaction Processing Services, additional requirements as set forth in Subsection 3.3 of this Schedule shall apply. 3.3 Data Centre, Disaster Recovery Services and Technology-based Transaction Processing Services For Information Technology Services that are specifically identified as maintenance of Data Centre or Disaster Recovery Services and/or Technology-based Transaction Processing Services, in addition to the requirement of Subsection 3.2 of this Schedule, the following requirements shall apply:(11) a. Submission of Documents Prior to Initiation of Services As part of the requirement for Citi to apply to OJK (or any successor authority) for approval of the outsourcing of Data Centre, Disaster Recovery Services and/or Technology-based Transaction Processing Services to Supplier, the Supplier shall submit to OJK (or any successor authority) via Citi a written confirmation from the regulatory or statutory authority having local jurisdiction over the Supplier that: (i) Supplier is within its supervisory jurisdiction; (ii) the authority shall allow OJK (or any successor authority), at a reasonable time, to examine Supplier’s provision of services to Citi. In the event there is no authority having jurisdiction over the Supplier, the Supplier shall advise Citi of the circumstance. Citi shall seek advice from OJK (or any successor authority) of a confirmation acceptable to OJK (or any successor authority) in lieu of the above written confirmation. b. Risk Management Controls: Supplier shall provide Citi, on an annual basis, an appraisal on the risk management controls in effect at the Supplier. The foregoing report must be submitted no later than a month after the completion of such review. For the purpose of this clause Appendix II hereto is a summary of the least coverage to be observed in a technology risk management pursuant to the prevailing regulation. c. Submission of Independent Audit Report The Supplier shall submit an independent audit report on Data Centre, Disaster Recovery Services and/or Technology-based Transaction Processing Services to OJK (or any successor authority) via Citi on an annual basis. The report must be submitted to OJK (or any successor authority) within 2 (two) months after the completion of the audit. d. Data Transmission (11) Section 10.3.3.1 of SEBI no 9/2007 28

The Supplier shall ensure the availability of online means of communication, security on data access and transmission from and to the Data Centre, Disaster Recovery Centre and Technology-based Transaction Processing Centre and shall have clear stipulations regarding security in the submission of necessary source document to and from Data Centre, Disaster Recovery Centre, and Technology-based Transaction Processing Centre. 4. WITHHOLDING TAXES AND TAX RECEIPTS The Supplier shall upon Citi’s request furnish Citi with a Certificate of Residence issued by the competent tax authority of the Supplier on an annual basis. 5. LANGUAGE(12) The Supplier agrees that to the extent that Law No. 24 of 2009 of the Republic of Indonesia (“Law No.24/2009”) on Flag, Language, State Emblem and National Anthem applies to this Agreement (as an agreement to which an Indonesian entity is a party), the Supplier shall, within 30 (thirty) days after being requested by Citi (or Affiliate) from time to time, or if required by any implementing regulations under Law No. 24/2009, translate this Agreement into Indonesian language and ratify the Indonesian language translation. An Indonesian language version of this Agreement is only intended for compliance with the above mentioned Law No.24/2009 as a reference between the parties to this Agreement. The parties agree that in the event of any inconsistency between the English language and the Indonesian language version, the English language version shall prevail. The Supplier acknowledges that it fully understands the language and the content of this Agreement and the Supplier agrees that it will not use the provisions under Law No.24/2009 to invalidate this Agreement. 6. GOVERNING LAW AND JURISDICTION Where both Citi (or Affiliate) and Supplier are located in or entities incorporated in the Republic of Indonesia, the governing law shall be the laws of the Republic of Indonesia, and all claims or disputes arising out of or in connection with Master Agreement and/or the relevant Work Order shall be submitted to the court in Indonesia where Citi (or Affiliate) is located. Appendix I Appendix II (12) Law No. 24 of 2009 of the Republic of Indonesia on Flag, Language, State Emblem and National Anthem. 29

SCHEDULE G — JAPAN LAW REQUIREMENTS (Version 3 — 6 June 2014; re-validated 10 January 2017) I. General 1.1 Unless otherwise a separate Work Order, Statements of Work or any additional ancillary agreement (collectively “Work Order”) is directly made and entered into by and between the Supplier or its local Affiliate (collectively, the “Supplier”) and any Affiliate of Citi in Japan (“Citi”), the Supplier shall be subject to Section II of this Schedule in connection with providing the Services to Citi or for the benefit (whether direct or indirect) of Citi. 1.2 Where necessary or appropriate, in Citi’s determination, for Citi to receive the Services in Japan, the Supplier and Citi will enter into a separate Work Order setting forth such additional terms and conditions applicable in Japan. The Japanese local agreements may address as necessary any specific legal, regulatory, human resource or procedural requirements necessary for compliance with applicable Japanese laws, due to variations in practices or as otherwise agreed to by the Parties. If a separate Japanese local agreement is made and entered into by and between the Supplier and Citi, such Japanese local agreement shall supersede this Addendum including this Schedule. II. Provisions required by JAPANESE laws or regulations If Citi receives the Services from the Supplier, or if the Services are for the benefit (whether direct or indirect) of Citi, the following additional terms and conditions shall be applied to provision of the Services in addition to the master agreement to which this Schedule applies (“Master Agreement”). 1. Protected Information If Citi or its affiliates is required to furnish, supply, disclose, or make available the Protected Information (defined below) to Supplier in connection with provision of the Services, the following additional terms and conditions shall be applied to the Parties in addition to the Master Agreement: 1.1 The “Protected Information” means and includes personal information of a natural person (the “Personal Information”) within the meaning of the Act on the Protection of Personal Information of Japan (Law No. 57 of 2003, as amended from time to time. Hereinafter referred to as the “PIP”) and non-public information of an artificial person held by Citi. 1.2 If Citi or its affiliates furnishes, supplies or discloses to Supplier Citi’s Protected Information in connection with the Services or otherwise, and the Supplier obtains or 30

accesses such Protected Information, the Supplier shall take the following necessary and appropriate measures to prevent divulgence, loss, or destruction of the Protected Information in accordance with the PIP and other laws and regulations of Japan (collectively, the “Japanese Laws”). (1) The organizational security measures to ensure that the Supplier will disclose the Protected Information only to those of the Supplier’s personnel who have a need to know such Protected Information (only to the extent necessary) in order to fulfill the purposes contemplated by the Work Order, and set forth internal rules for use of and access to the Protected Information, which is subject to the Supplier’s periodical review; (2) The individual security measures to ensure that the Supplier will instruct and supervise its personnel who uses or has access to the Protected Information to prohibit the personnel from committing unauthorized disclosure, access, use and misappropriation of the Protected Information; and (3) The technological security measures to ensure that the Supplier will implement systems to limit access to the Protected Information and monitor such access. 1.3 Pursuant to the Japanese Laws, the Supplier acknowledges and agrees that: (1) Citi reserves the rights to supervise and audit the Supplier in connection with the provision of the Services and the Protected Information disclosed to the Supplier; (2) Citi reserves the rights not to furnish, supply, disclose, or make available the Protected Information to the Supplier in connection with provision of the Services IF the Supplier fails to comply with the terms and conditions set forth in this Schedule; (3) The Supplier shall use the Citi’s Protected Information only for the purpose of providing the Services and shall not destroy, alter, misappropriate, reproduce, or store the Protected Information nor divulge or disclose the Protected Information, in any form or manner, to a third party without the prior written consent of Citi; and (4) The Supplier shall be responsible for damages arising out of, or relating to divulgence, loss, alteration, misappropriation, and/or unauthorized disclosure of the Protected Information caused by the Supplier. 1.4 Notwithstanding Section 2 hereof, the Supplier shall not outsource handling of Citi’s Protected Information to the Supplier’s subcontractor UNLESS the Supplier satisfies all of the following requirements in addition to Sections 2 and 3 of this Schedule: 31

(1) The Supplier shall obtain the prior written consent of Citi; and (2) The Supplier shall cause its subcontractor to adopt the adequate security measures as set forth in Section 1.2 of this Schedule. 1.5 Except as otherwise expressly provided for by the Master Agreement and the Work Order, upon the request of Citi at any time during the term of the applicable Work Order or after the termination thereof, the Supplier shall promptly return or destroy the Protected Information or its duplicates supplied to, or otherwise obtained by, the Supplier in connection with the Services, in the form or manner specifically instructed by Citi. If the Protected Information was stored or saved in the Supplier’s computers, servers, or any other electromagnetic medium, the Supplier also shall delete or purge such stored or saved Protected Information in the form or manner specifically instructed by Citi. 1.6 Where the Supplier is required to disclose Citi’s Protected Information under any applicable law, regulation or an order from a court, regulatory agency or other governmental authority having competent jurisdiction, and is further required to notify Citi, the Supplier must promptly send a copy of the order and accompanying documentation by facsimile transmission to Citi. 2. Subcontracting 2.1 The Supplier shall not subcontract any part of the Services to a third party, including its Affiliates, without the prior written consent of Citi. 2.2 If the Supplier subcontracts any part of the Services to a third party, the Supplier shall select a subcontractor which meets satisfactory criteria, including but not limited to, all of the following three (3) criteria: (1) A subcontractor who, in light of Citi’s coherent business operations, is able to provide Citi and Supplier with the Services at the reasonably sufficient level in the industry; (2) A subcontractor whose financial and management conditions are sufficient enough to provide Citi and Supplier with the Services in accordance with the Master Agreement, applicable Work Order, this Schedule and subcontracting agreement, and to indemnify Citi for damages arising out of, or relating to the Services; and (3) A subcontractor will not risk the reputation of Citi. 2.3 A subcontracting agreement to be entered into by and between the Supplier and a subcontractor shall contain satisfactory stipulations, including but not limited to, all of the following four, (4) terms and conditions: 32

(1) Description of the services to be subcontracted, the service level standards for providing the services, and procedures for terminating the subcontracting agreement; (2) The subcontractor’s liability for damages arising out of subcontractor’s failure to perform the services in accordance with the subcontracting agreement or subcontractor’s breach of the subcontracting agreement (placing a security deposit, collateral, or lien if necessary); (3) Items to be reported by the subcontractor to the Supplier in connection with the provision of the services and subcontractor’s management conditions; and (4) Cooperation with internal and external auditors and regulators of Citi and/or the Supplier. 2.4 A subcontracting agreement to be entered into by and between the Supplier and a subcontractor shall not violate the applicable Japanese Laws. 2.5 The Supplier shall adopt sufficient internal control measures, including but not limited to, designating a project manager who is responsible for the subcontracted services, monitoring a subcontractor and its performance, and establishing audit functions. 2.6 A subcontractor shall provide the Supplier with a periodical report on the status of subcontracted services and the subcontractor, upon request of Citi and/or the Supplier, must provide Citi and/or the Supplier with necessary information in a prompt manner. 2.7 The Supplier shall audit a subcontractor periodically to ensure that such subcontractor complies with applicable Japanese Laws and all terms and conditions set forth in the Master Agreement, applicable Work Order and this Schedule. 2.8 The Supplier shall prepare a continuity of business plan in order to provide Citi with continuous Services in case of emergency or subcontractor’s failure to perform the Services in accordance with the subcontracting agreement. 2.9 The Supplier, upon the request of Citi, shall provide Citi with information of its subcontractor, including but not limited to, name of the subcontractor and its project manager, contact information of the subcontractor, description of the services subcontracted, and the subcontracting agreement. 3. Continuity of Business Plan 3.1 The Supplier must maintain a continuity of business plan (“COB Plan”). The COB Plan must enable the Supplier to provide the Services and comply with the terms of the Master Agreement, notwithstanding an event that disrupts, impairs or prevents the Supplier from otherwise providing the Services or complying with its obligations thereunder. 33

3.2 The COB Plan must include procedures to ensure that the Supplier is able to provide the Services and otherwise comply with its obligations under the Master Agreement, notwithstanding that an agent, consultant or contractor of the Supplier is incapable of providing the Services to the Supplier. 3.3 The COB Plan must be: (1) based upon a formal assessment of the applicable risks; (2) reviewed and updated on a regular basis and at least annually; (3) tested at least annually; and (4) subject to quality assurance review at least annually. 4. Representation and Warranties for Anti-Social Forces 4.1 For the purpose of this Schedule, “Anti-Social Force” means and includes a crime organization (boryokudan), a listed member (boryokudan —in) or an affiliated member (jun-boryokudan —in) of such crime organization, a corporate entity affiliated with such crime organization, a corporate racketeer (sokaiya), an individual or an organization which demands and/or acquires financial interests of others in unlawful manners and/or causes or threatens to cause physical harm to others, and all other equivalent or similar individuals or organizations. 4.2 The Supplier, to the best of its knowledge, represents and warrants on or after execution of an applicable Work Order that Supplier, its subcontractor and its subcontractors’ personnel have never belonged to or will never belong to the Anti-Social Force. 4.3 The Supplier, to the best of its knowledge, represents and warrants to a Japanese Entity on or after execution of an applicable Work Order that the Supplier and its subcontractors by themselves or through any third party have not engaged in or will not engage in the following acts: (1) Extortion, racketeering and/or similar unlawful demand; (2) Unreasonable demand and/or claim beyond its legal rights and obligations; (3) Employment of threatening language or physical force in connection with a transaction; (4) Defamation of others and/or disruption of others’ business activities by disseminating false or misleading statements, employing fraudulent means, or resorting to fearful forces; or (5) Any other acts similar to the foregoing, including but not limited to money laundering. 4.4 Citi reserves right to terminate an applicable Work Order if the Supplier and/or its subcontractors breaches or misrepresents any one of the representations and warranties set forth in this Section 4 and it becomes unreasonable to maintain a contractual relationship with Citi (or the relevant Citi affiliate). 5. Inspection and Rights to Audit 34

5.1 Citi, its auditors, or its authorized regulator shall have the right to audit the Supplier to ensure compliance with the Master Agreement and/or an applicable Work Order in relation to the Services. The Supplier shall cooperate with Citi’s internal and external auditors and regulators. The Supplier shall keep complete and accurate records of all of its work and expenses in providing the Services to Citi for a period not less than seven (7) years from the date which the record was created or such other longer period as requested by Citi in writing. 5.2 The Supplier shall require any subcontractor appointed (if applicable) to also maintain complete and accurate records of all of its work and expenses in relation to the Service subcontracted to it. The Supplier shall ensure and procure that these requirements are set forth in its arrangements with any subcontractor, 5.3 The Supplier shall allow Citi, its auditors and/or its regulators: (1) to obtain records and documents of transactions and information of Citi given to, stored at or processed by the Supplier; (2) to access any report and findings made on the Supplier in conjunction with the Services performed for Citi; (3) to access to the business premises of the Supplier in the exercise of its rights herein; and (4) to inspect, examine and audit the Supplier’s operations and records insofar as they are relevant to the Services. 6. Notice 6.1 If the Supplier receives Citi’s Protected Information, the Supplier, upon a request of Citi, shall fill out all necessary information in the Protected Information Sharing Attestation (Form 1) attached hereto and submit Form I to Citi. .If Supplier subcontracts all or any part of handling of the Protected Information to a third party, Supplier shall also fill out the “Outsourcing” part of the Form 1 and submit the Form 1 to Citi prior to the subcontracting. 6.2 If the Supplier returns or destroys the Protected Information in accordance with Section 1.5, the Supplier, upon a request of Citi, shall fill out all necessary information in the Protected Information Return/Deletion Attestation (Form 2) attached hereto and submit Form 2 to Citi without unnecessary delay. 6.3 If the Supplier outsources all or a part of the Services to a subcontractor, the Supplier, upon a request of Citi, shall fill out all necessary information in the Subcontract Attestation (Form 3) attached hereto and submit Form 3 to Citi prior to such outsourcing arrangement. 6.4 If the Supplier makes material changes in provision of the Services which give rise to a direct or indirect impact on Citi, including but not limited to system upgrade and/or alteration, changes in business processes, and changes in the Subcontractor and/or its 35

 supervisory management, the Supplier, upon a request of Citi, shall fill out all necessary information in the Service Report (Form 4) attached hereto and submit Form 4 to Citi without unnecessary delay. 6.5 Citi reserves the right to request the Supplier for a periodic report on provision of the Services by filling out all necessary information in the Service Report (Form 4) attached hereto and submitting Form 4 to Citi without unnecessary delay. 7. Governing Law and Jurisdiction This Schedule shall be governed by, and construed in accordance with, the laws of Japan, and the parties hereby agree to submit to the non-exclusive jurisdiction of the Tokyo District Courts. III. Governing Law and Jurisdiction for direct Work Orders In the event a separate Work Order is directly made and entered into by and between the Supplier and Citi, notwithstanding any term to the contrary in the Master Agreement and/or Schedule, the governing law and jurisdiction clause as it applies to the applicable Work Orders entered into by and between Citi and the Supplier is varied as follows: “The validity of this Agreement as it applies to the Work Order, the construction and enforcement of its terms, and the interpretation of the rights and duties of the parties to the Work Order shall be governed by the laws of Japan. The Parties to the Work Order submit to the non-exclusive jurisdiction of the courts of the Tokyo District Court with respect to any dispute arising out of or in connection with the relevant Work Order and the Services provided in Japan.” FORM 1 — PROTECTED INFORMATION SHARING ATTESTATION Form 1.doc FORM 2 — PROTECTED INFORMATION RETURN/DELETION ATTESTATION Form 2.doc FORM 3 — SUBCONTRACT ATTESTATION Form 3.doc 36

FORM 4 — SERVICE REPORT Form 4.doc 37

SCHEDULE H — KOREA LAW REQUIREMENTS (Version 3 — 25 February 2016; revalidated 17 January 2017) In addition to the provisions under the Agreement, the Supplier shall comply with the requirements set forth below in accordance with applicable laws of Korea. To the extent that the terms and conditions of the Agreement are inconsistent with the terms and conditions herein, the terms and conditions herein will prevail. 1. Requirements under the (i) Personal Information Protection Act and (ii) Use and Protection of Credit Information Act: The following provisions shall apply to the Supplier to the extent that the Supplier receives Personal Information. Personal information refers to information pertaining to a living individual which contains information identifying a specific person with a name, a resident registration number, or similar in a form of an image, etc. (including information that does not, by itself, make it possible to identify a specific person but that when combined with other information readily identifies such a person). For the avoidance of doubt, Personal Information includes any credit information that relates to determination of credit rating or credit transactions capacities of a person as such term is defined under the Use and Protection of Credit Information Act. 1.1 The Supplier shall take measures, including establishment and operation of facilities and systems, to achieve the following in connection with processing any Personal Information: - prevent any distortion of access records to the Personal Information; - encrypt the Personal Information for transmission purposes; and - examine the Personal Information access records on a regular basis. In addition, the Supplier shall take such other measures necessary to protect the Personal Information as reasonably required by Citi. 1.2 Personal Information Protection Officer (a) For each service provided, the Supplier shall designate an individual to act as a Personal Information Protection Officer who will be responsible for processing all Personal Information pertaining to a natural person and ensure that the following duties are performed by such person: - adopt internal policies and procedures to protect the Personal Information (the “Personal Information Protection Procedures); - oversee and manage the Personal Information processing practice and make any improvement on such practice if necessary; - address any complaint the Supplier receives in connection with the Personal Information processing; - establish an internal control system to prevent any theft, misuse or abuse of the Personal Information; - establish a program and educate the Supplier Personnel regarding protection of the Personal Information; - manage and supervise maintenance and protection of documents that include the Personal Information; and - perform any other duties that may be necessary to process and protect the Personal Information. 38

(b) The Supplier shall ensure that the Personal Information Protection Officer (i) has the authority to make inquiries or require any person who deals with the Personal Information to report to him/her regarding processing status or processing system of the Personal Information and (ii) does not suffer from any disadvantage in performing his/her duties set forth in Section 1.2(a) above. 1.3 Upon occurrence of any breach of the Personal Information Protection Procedures or theft of the Personal Information (the “Occurrence”), the Supplier shall, without delay, take necessary measures to minimize the damage or loss and immediately notify Citi and Citi’s Project manager of the Occurrence and the following information as applicable: - the items of the Personal Information that are disclosed or stolen; - the time and details of the Occurrence; - measures that victims of the Occurrence may take to minimize their damage or loss; - measures adopted by and reliefs to be provided by the Supplier to remedy the Occurrence; and - contact information to which the victims may report their damage or loss. 1.4 The Personal Information pertaining to an individual must be made available for review, correction, or deletion, or must be subject to suspension of being processed upon such individual’s request. In the event that such individual to which the Personal Information pertains raises any objection to the manners in which his/her request concerning the foregoing matters are addressed by Citi, the Supplier shall endeavor to assist Citi in dealing with such objection. 2. Delegation Matters under the Regulations on Business Delegation by Financial Institutions The Supplier shall maintain a continuity of business (“COB”) plan designed to deal with a major destruction or incapacity of its facilities and/or systems. Pursuant to the COB plan, the Supplier shall maintain resources, guidelines, general action steps and backup sites, facilities and systems to resume business in case of disruption due to natural disaster, accidents or system failure. The COB plan shall include procedures including, but not limited to, for business site relocation, restoration of business functions and telecommunications resumption. Redundant servers shall be in place for several key systems and daily tape backups shall capture all key data and be stored offsite. The Supplier’s COB plan shall be updated and tested on an ongoing basis. 3. Requirements under Regulation on Outsourcing of Data Processing of Financial Companies 3.1 Pursuant to the Regulation on Outsourcing of Data Processing of Financial Companies, the outsourcing agreement between Citi and Supplier shall include but not be limited to the following: access and control to data transferred, joint responsibility between Citi and Supplier with regard to damage or loss suffered by Citi’s customer arising from an IT incident, inspection right on the Supplier by the regulator of Citi, jurisdiction in the event of legal dispute between Citi and Supplier. 3.2. When Citi outsources for data processing under this regulation, the Supplier may re-outsource the outsourced business to its affiliates, in which case, the outsourcing agreement between the Supplier and its affiliates is also subject to the requirements as set out in this Schedule. 3.3 The outsourcing agreement shall be governed by and construed in accordance with the laws of the Republic of Korea. Any dispute concerning the Service Provider over the outsourcing agreement is subject to the jurisdiction of the courts of the Republic of Korea. 39

4. Requirements under the Financial Investment Services and Capital Markets Act (FISCMA) The Supplier understands and acknowledges that, according to the FISCMA, Citi may entrust the Supplier with part of the affairs that it carries on as other financial businesses and incidental operations, while the Supplier or its Subcontractors shall not be entrusted with the affairs, prescribed under the Enforcement Decree of the FISCMA as those that are likely to undermine the protection of investors or sound order in trading, including (i) business of a compliance officer, (ii) business of performing internal auditing, (iii) business of managing risk, and (iv) business of analyzing and assessing credit risk, etc. The Supplier further understands that Citi shall report an agreement related to the above entrustment or delegation to the Financial Services Commission and the Supplier shall use its best efforts to facilitate the report process. 40

SCHEDULE I — MACAU LAW REQUIREMENTS (Version 2 — 22 March 2017) 1. Compliance with the law of Macau Special Administrative Region of the People’s Republic of China Prior to the provision of any Services by Supplier to Citi, both Parties shall comply with all legal and regulatory requirements in respect of the Services. 2. Audit and Inspection Right 2.1 The Supplier agrees that the services it performs for Citi are subject to examination of relevant authorities in Macau. Citi shall keep complete and accurate records of all of its work and expenses in receiving the Services from the Supplier for a period of at least ten (10) years from the date which the record was created. The Supplier shall, upon reasonable notice, allow Citi, its management, its auditors and/or its regulators, the opportunity of inspecting, examining and auditing the Supplier’s operations and the business records which are relevant to the Services provided hereunder by the Supplier including but not limited to the Supplier’s critical processes to confirm that the Supplier’s processes meet or exceed industry standards in such area of contingency planning, continuity of business plans, software engineering and test processes, change control procedures, critical staff succession planning and compliance with applicable laws and regulations. The Supplier shall cooperate fully with Citi’s internal or external auditors to ensure a prompt and accurate audit. If Citi provides recommendations for enhancing the Supplier’s critical processes, then the Supplier shall give due consideration to implementing such recommendations. 2.2 If an audit leads Citi to conclude that the Supplier breached the provisions of this Agreement or that any of the Supplier’s business or professional practices related to its performance of Services presents a risk of unauthorized disclosure of Information, the Supplier and Citi shall use their best efforts to reach a mutually satisfactory resolution. The Supplier shall also use its best efforts to correct any practices which are found to be deficient as a result of any such audit within a reasonable time after receipt of Citi’s audit report. 2.3 Citi shall be entitled to enter all or any of the Supplier’s premises from time to time to inspect and examine the Supplier’s operations and to check that the Supplier is complying with its obligations under this Agreement. Citi shall endeavor to give reasonable notice of its exercise of its rights hereunder but in circumstances where Citi is of the view that it would prejudice Citi’s interests to give such notice, no prior notice shall be required to be given by Citi. Citi’s rights under this clause may be exercisable by Citi from time to time without the Supplier’s consent and Citi is empowered to take all necessary or reasonable steps in order to exercise its rights under this clause fully. 3. Data processing To the extent the Macau Data Protection Act (the “Act”) applies to the Supplier in its provision of services, Supplier shall comply with the requirements of the Act. when the Supplier is acting as data processor, and is collecting, holding, processing, using or transferring personal data of individuals under this Schedule J (Macau Law Requirements). To the extent required by the Act the Supplier (i) will use appropriate technology and organizational measures to protect the personal data collected and / or stored with it and (ii) will ensure its employees and other persons who work for the Supplier (on a permanent or temporary basis) are bound by obligations of confidentiality. 41

SCHEDULE J — MALAYSIA LAW REQUIREMENTS (Version .6 — 11 January 2017) 1 Definitions For the purposes of this Schedule and its Appendices, the following terms shall have the meanings:- 1.1 “Citi Malaysia” means any Customer Affiliate in Malaysia. 1.2 “Citi Malaysia Information” includes all tangible or intangible information or materials, in any form or medium (and without regard to whether the information or materials are owned by Citi Malaysia or by a third party), that is provided or disclosed to Supplier by Citi Malaysia (including Personal Data and Citi Malaysia’s customers’ documents and information) or where the information or materials is provided or disclosed by Citi Malaysia to a third party (including an Affiliate), it is accessed, observed or otherwise obtained by Supplier. 2. Confidentiality and Security 2.1 Supplier hereby acknowledges receipt of section 133 of the Financial Services Act, 2013 of Malaysia (“FSA”), section 178 of the Labuan Financial Services and Securities Act, 2010 of Malaysia (“LFSSA”) and section 43 of the Securities Industry (Central Depositories) Act, 1991 of Malaysia (“SICDA”) (see Appendix A attached hereto). Supplier hereby acknowledges that it has been made aware of the effect of, and agrees and undertakes to, and to procure all Supplier Personnel and Supplier Affiliates that it uses to provide the Services, to observe all precautionary measures to prevent disclosure of information that will cause a violation of section 133 of the FSA or section 178 of the LFSSA or section 43 of the SICDA. Supplier further agrees and undertakes that it will not, and will covenant all Supplier Personnel and Supplier Affiliates not to do anything which will violate section 133 of the FSA or section 178 of the LFSSA or section 43 of the SICDA or otherwise be guilty of an offence there under. 2.2 Notwithstanding anything to the contrary and subject to the provisions of this Schedule, Supplier shall not, without Citi Malaysia’s written consent, disclose Citi Malaysia Information to any person (save for disclosure to Supplier’s employees (and only to the extent necessary in order to fulfill the purposes contemplated by the relevant Work Order)). Where the Citi Malaysia Information includes an Affiliate’s Confidential Information, Supplier shall comply with such additional obligations as may be required by that Affiliate as provided in the Agreement or notified in writing to Supplier. For the avoidance of doubt, the term “person” includes Supplier Affiliates, agents, consultants, contract non-employee workers, contractors, sub-contractors, third party hires and third party vendors. 2.3 Supplier shall at all times take technical, personnel, organizational and other measures to ensure:- 2.3.1 the confidentiality of Citi Malaysia Information between its various customers; and 2.3.2 that all Citi Malaysia Information and assets can be clearly identified and segregated so that Citi Malaysia Information and assets can either be 42

removed from the possession of Supplier or deleted, destroyed or rendered unusable. 2.4 Supplier shall retain all documents in connection with the provision of the Services in accordance with Citi Malaysia’s record retention policies or for such longer periods as may be reasonably instructed in writing by Citi Malaysia from time to time. Except as otherwise specified in the relevant Work Order or as required under any Applicable Law, upon the request of Citi Malaysia, Supplier will return (or purge its systems and files of, and suitably account for) all Citi Malaysia Information supplied to, or otherwise obtained by, Supplier in connection with the relevant Work Order. Supplier will certify in writing that it has fully complied with its obligations under this Clause 2.4 within seven (7) days following the date it receives a request from Citi Malaysia for such a certification. 2.5 Supplier shall not, without Citi Malaysia’s express prior written approval, send any Citi Malaysia Information to, store Citi Malaysia Information at, or provide access to Citi Malaysia Information from, any facility or data center outside of the country from which such Citi Malaysia Information was collected. 2.6 Supplier acknowledges that Citi Malaysia and its Affiliates are global companies and may, from time to time, collect, store, process, disseminate or use Personal Data relating to or provided by Supplier, or any person (natural person or legal entity) that Supplier assigns or engages (whether directly or indirectly) to exercise its rights or fulfill its obligations under the Agreement and relevant Work Order (collectively “Supplier Personal Data”). Supplier consents to, and warrants that it has obtained the consents of each person whose Personal Data is provided by Supplier or who is assigned or engaged to interact with Citi Malaysia or an Affiliate in connection with the subject matter of the Agreement and relevant Work Order for the collection, storage, processing, dissemination or use of such Supplier Personal Data by Citi Malaysia and the Affiliates for all purposes relating to the business contemplated under the Agreement and the relevant Work Order, including without limitation Citi Malaysia’s or an Affiliate’s administration of applicable policies or the administration of Citi Malaysia’s or an Affiliate’s vendor management program. 2.7 This Clause 2 (Confidentiality and Security) of this Malaysia Law Requirements Schedule shall survive termination or expiration of the relevant Work Order. 3 Business Continuity Management 3.1 Supplier represents, warrants and covenants that it has in place a satisfactory and a fully documented and adequately resourced Business Continuity Management (“BCM”) plan comprising (1) a Business Continuity Plan (“BCP”) evidencing how Supplier shall, under exceptional circumstances, be in a position to perform its obligations under the relevant Work Order, including but not limited to continuity of service and (ii) a Disaster Recovery Plan (“DRP”) evidencing how Supplier shall, in the event of a disaster, be in a position to perform its obligations under the relevant Work Order, including but not limited to disaster (whether natural or man-made) recovery plans that minimize the probability and impact of interruption to Citi Malaysia’s business, back up processing, protecting program and data files and equipment for the orderly and expeditious provision of the Services. 3.2 Supplier further represents and warrants that in respect of each Work Order, the BCP and the DRP shall be in place for the entire term of the relevant Work Order and for such period where transition services are provided by Supplier to Citi Malaysia. Supplier is required to declare its state of business continuity readiness to Citi 43

Malaysia on an annual basis. Supplier shall provide Citi Malaysia and comply with Recovery Time Objectives (“RTO”) stipulating the timeframe required for any of Supplier’s information technology systems and applications to be recovered and to be operationally ready to support the Services after an outage in accordance with such specifications as may be acceptable to Citi Malaysia. 3.3 Supplier shall test the BCP in relation to the Services and all facilities used by it in connection with the BCP on a regular basis and at least annually and notify Citi Malaysia of any test finding that may affect the Supplier’s performance, the test results and action to be undertaken to address any gap in the BCP. 3.4 Supplier shall test the DRP in relation to the Services and all facilities used by it in connection with the DRP on a regular basis and at least twice a year and notify Citi Malaysia of any test finding that may affect the Supplier’s performance, the test results and action to be undertaken to address any gap in the DRP. 3.5 If Supplier makes any significant change(s) to the BCM or there are any adverse developments that may significantly impact the Services, it shall notify Citi Malaysia in writing and provide a full description of such significant change(s) and/or adverse developments immediately. 3.6 In the event that such test(s) on the BCM in relation to the Services are reasonably required by Citi Malaysia in connection with the testing of its own business continuity plan, Supplier shall co-operate fully with Citi Malaysia to ensure that such test(s) are carried out as soon as reasonably practicable and accurately in accordance with Citi Malaysia’s reasonable requirements. 3.7 Supplier shall allow Citi Malaysia’s internal auditors or other independent party appointed by Citi Malaysia to review the BCM of Supplier. 3.8 The BCP and DRP should include, at least:- 3.8.1 Procedures to be followed in response to a major disruption to business operations. The procedures should enable the institution to respond swiftly to a crisis situation, recover and resume the critical business functions, resources and infrastructure outlined in the BCP within the stipulated timeframe. 3.8.2 Escalation, declaration and notification procedures including a call tree and contact list. 3.8.3 The conditions for BCP activation and the individual who has the authority to declare a disaster and grant permission to execute the recovery processes. 3.8.4 A list of all resources required to recover the critical business functions in the face of a major disruption including but not limited to key recovery personnel, computer hardware and software, office equipment and relevant documentation. 3.8.5 Relevant information about the alternate and recovery sites. 3.8.6 Procedures for restoring normal business operations, which should include the orderly entry of all business transactions and records into the relevant information technology systems and the completion of all verification and reconciliation procedures. 3.9 “Business Continuity Management” or “BCM” means a whole-of-business approach that includes policies, standards and procedures for ensuring that specified operations can be maintained or recovered in a timely fashion in the event of a disruption. Its purpose is to minimize the operational, financial, legal, reputational and 44

other material consequences arising from a disruption. BCP and DRP are the key components of BCM. 3.10 “Business Continuity Plan” or “BCP” means a comprehensive documented action plan that outlines procedures, processes and systems necessary to resume or restore the business operation of an institution in the event of a disruption. 3.11 “Disaster Recovery Plan” or “DRP” means a comprehensive written plan of action that sets out the procedures and establishes the processes for information technology systems and requirements that are necessary to support and restore the business operation of an institution in the event of a disruption. 4 Monitoring and Control Supplier agrees to (i) meet with Citi Malaysia at any time and from time to time upon prior written notice being given to Supplier at the reasonable request of Citi Malaysia to review all aspects of the Services provided by Supplier pursuant to the relevant Work Order and/or other matters of mutual interest to Supplier and Citi Malaysia, and (ii) adopt any recommendations and/or measures reasonably proposed by Citi Malaysia to ensure, inter alia, compliance with legal and regulatory obligations. 5 Assignment and Sub-Contracting 5.1 Supplier shall not assign, outsource or subcontract any or all of its obligations or responsibilities set forth in the relevant Work Order to any third parties without the prior written consent of Citi Malaysia, and for the avoidance of doubt, the term “third parties” includes Supplier Affiliates, agents, consultants, contract non-employee workers, contractors, sub-contractors, third party hires and third party vendors. 5.2 To the extent that Supplier is so permitted to assign, outsource or subcontract any of its obligations set forth in the relevant Work Order, Supplier shall procure the compliance by all assignees/outsourcees/sub-contractors with the provisions of the Work Order and this Malaysia Law Requirements Schedule relating to the performance of such obligations (including, without limitation, provisions relating to security and confidentiality, assignment and sub-contracting, transition services, audit and inspection and business continuity management). 5.3 Where Citi Malaysia has consented to Supplier assigning, outsourcing or subcontracting any or all of its obligations set forth in the relevant Work Order to a third party, Citi Malaysia may require Supplier to, and Supplier shall (if so required by Citi Malaysia), provide to Citi Malaysia written notification of any venation or termination of the agreement between Supplier and that third party. If so requested by Citi Malaysia, the written notification shall be provided to Citi Malaysia within three (3) days of the variation or termination, or within any longer period of time as Citi Malaysia may allow. 6 Right of Audit 6.1 Subject to Clause 7 (Examinations, Review and Audits) of this Malaysia Law Requirements Schedule, Supplier will allow Citi Malaysia’s and an Affiliate’s internal or external auditors (i) to inspect, examine and audit Supplier’s operations and records insofar as they are relevant to the Services provided by Supplier, and (ii) to obtain copies of any report and finding made on Supplier in conjunction with the Services performed, directly or indirectly, for Citi Malaysia. Supplier shall cooperate with Citi Malaysia’s and an Affiliate’s internal and external auditors to ensure a prompt and accurate audit. 45

6.2 Subject to Clause 7 (Examinations, Review and Audits) of this Malaysia Law Requirements Schedule, Supplier will allow (with reasonable prior notice from Citi Malaysia) the Office of the Comptroller of the Currency (“OCC”), the Federal Reserve Board (“FED”), the Labuan Financial Services Authority (“LFSA”), Bank Negara Malaysia (“BNM”), the Securities Commission of Malaysia (“SC”) and any other authority having jurisdiction over Citi Malaysia or an Affiliate (the OCC, FED, LFSA, BNM, SC and any other authority having jurisdiction over Citi Malaysia or an Affiliate shall hereinafter be referred to as “Regulator”) or any agent appointed by any Regulator, to inspect, examine and audit Supplier’s operations and records insofar as they are relevant to the Services including but not limited to (i) records and documents relating to transactions, (ii) reports and findings made on Supplier in conjunction with the Services, and (iii) the internal controls adopted by Supplier with respect to preservation of the confidentiality of data generally and Citi Malaysia’s or an Affiliate’s Confidential Information specifically (where applicable). Supplier will ensure that these requirements are made part of its arrangements with any party Supplier may engage in the outsourcing (if applicable), including any disaster recovery and backup service providers. 6.3 Supplier confirms that, other than as provided in Clause 7 of this Malaysia Law Requirements Schedule, no governmental, regulatory, statutory or other approvals are required by it in respect of the inspection, examination and audit referred to in paragraphs 6.1 and 6.2 above. 6.4 Supplier will give due consideration to the findings and recommendations of any Regulator and those of the internal or external auditors of Citi Malaysia or an Affiliate. The parties shall discuss, in good faith, the feasibility of implementing said findings and recommendations, as well as the assignment of costs in connection therewith. If Supplier elects not to comply with the findings and recommendations, Citi Malaysia or an Affiliate shall be entitled to terminate the relevant Work Order or any part thereof without penalty by giving Supplier sixty (60) days (or such other period as may be decided by Citi Malaysia) prior written notice. During the notice period, Supplier shall not be compelled to comply with the findings and recommendations. 6.5 Supplier shall notify Citi Malaysia if any Regulator or other person seeks access to Citi Malaysia Information or if a situation arises where the rights of access of Citi Malaysia, an Affiliate, Citi Malaysia’s or an Affiliate’s internal or external auditors or any Regulator is restricted or denied. 7 Examinations, Review and Audits As an examination, review or audit of the books, accounts or transactions of Citi Malaysia may require the approval of Citi Malaysia’s or an Affiliate’s Regulator, any such examination, review or audit must be first approved by Citi Malaysia. 8 Malaysia’s Export Control laws Supplier shall execute the Letter of Assurance attached hereto as Appendix B if requested by Citi Malaysia or an Affiliate(s). 9 Transition Services Commencing upon notice to Supplier of expiration or termination of the relevant Work Order for any reason whatsoever (including a breach by either party) and continuing for up to twelve (12) months (or such longer period as may be required by Citi Malaysia) from the effective date 46

 of expiration or termination, Supplier will provide to Citi Malaysia or an Affiliate such information, cooperation and reasonable termination assistance (“Transition Services”) requested by Citi Malaysia or an Affiliate to allow for the provision of services without interruption or adverse effect and to facilitate the orderly transfer of the subject matter of the relevant Work Order as desired by Citi Malaysia or an Affiliate. If requested by Citi Malaysia or an Affiliate, Supplier will reasonably cooperate with a third party in connection with the preparation and implementation of a transition plan by such third party or Citi Malaysia or an Affiliate upon the termination or expiration of the relevant Work Order and Supplier shall promptly furnish Citi Malaysia, an Affiliate or Citi Malaysia’s or an Affiliate’s designee with any documents, records, information, proprietary data (and related records and files) and materials of Citi Malaysia in the possession, power or control of Supplier or Supplier Affiliate or Supplier Personnel and all Work Product (in its current condition), which are required to facilitate the orderly transfer of the subject matter of the relevant Work Order as desired by Citi Malaysia or an Affiliate. Citi Malaysia or an Affiliate shall pay Supplier promptly the applicable fees (as agreed between the parties prior to the commencement of the Transition Services pursuant to this Clause 9 of this Malaysia Law Requirements Schedule) or the reasonable value for the said services properly performed by Supplier. Appendix A • Section 133 of the Financial Services Act 2013 of Malaysia • Section 178 of the Labuan Financial Services and Securities Act 2010 of Malaysia • Section 43 of the Securities Industry (Central Depositories) Act 1991 of Malaysia Appendix A (MY_201307).doc Appendix B Customer/Vendor Letter of Assurance / End User Certification for the purposes of the Strategic Trade Act 2010 STA Certification (revised_23102015).doc 47

 SCHEDULE K— NEW ZEALAND LAW REQUIREMENTS (Version 2 — 18 January 2017) A. REGULATOR REQUESTS FOR INFORMATION Where Citi is supervised by a banking regulator such as the Reserve Bank of New Zealand or the Financial Markets Authority (both a “Regulator”) the Regulator may require information from Citi or the Supplier about the Services, the Supplier or the Agreement. Subject to applicable law or authority in the country in which it is based, the Supplier will give the Regulator any information relating to the Agreement as soon as possible after Citi or the Regulator asks the Supplier to do so. Unless prohibited by relevant law or legal authority, the Supplier will promptly inform Citi as soon as practicable after a Regulator asks the Supplier to provide information under this Section. The Supplier will permit the Regulator to conduct any on-site visit of the Supplier’s premises that is necessary to the Regulator’s role as supervisor of Citi. If a Regulator notifies Citi of its intention to conduct an on-site visit of the Supplier’s premises, Citi will promptly notify the Supplier. Where a Regulator conducts an on-site visit of the Supplier’s premises, the Supplier must not disclose or advertise that the Regulator has conducted such a visit without the prior written consent of Citi. The Supplier will use its best endeavours to satisfy the Regulator about any questions or concerns it may raise about the Services. The Supplier agrees that the existence of, and any information relating to, any investigation, question or concern raised by a Regulator about the services provided by the Supplier to Citi or in relation to Citi, is Confidential Information. B. PRIVACY The Privacy Act (1993) of New Zealand as amended from time to time (“Privacy Act”) applies to the handling of all personal information collected or held by government agencies and most businesses. Coverage of the private sector includes sole traders, major New Zealand-owned businesses and the local arms of overseas-owned businesses. The legislation identifies ‘personal information’ as information about an identifiable living person, irrespective of whether it is on a computer or a paper file. All references to ‘personal information’ in this Schedule shall be read as references to ‘personal information’ as defined in the Privacy Act. The parties and acknowledge and agree that: (a) each party to this Agreement that is resident in New Zealand (each, a “New Zealand Entity”) must: (i) comply with all applicable privacy laws, including the Privacy Act and any privacy principles prescribed thereunder (“Privacy Laws”); and (ii) ensure that personal information held, transferred or otherwise disclosed in connection with this Agreement does not breach any Privacy Laws; (b) each New Zealand Entity shall be responsible to obtain express or implied consent that the personal information can be used for (i) the transaction to which it relates; or (ii) those other purposes disclosed by the New Zealand Entity (“Purpose”); (c) where any party to this Agreement that is not resident in New Zealand (each, a “Non-New Zealand Entity”) holds personal information (i) solely as agent for the New Zealand Entity, or (ii) for the sole purpose of safe custody, or (iii) for the sole purpose of processing information on behalf of the New Zealand Entity, that Non-New Zealand Entity must comply the following conditions with respect to personal information disclosed to it by the New Zealand Entity: 48

 A. the Non-New Zealand Entity must ensure that the personal information is protected against (i) loss, (ii) unauthorised access, use, modification or disclosure, or (iii) other misuse, by implementing such security safeguards in respect of the personal information as is reasonable in the circumstances; B. the Non- New Zealand Entity must hold the personal information in such a way that it can readily be retrieved in the event that the New Zealand Entity (or the individual concerned) wishes to access or correct the personal information; C. the Non-New Zealand Entity must not keep the personal information for longer than is required for the Purpose; D. the personal information must only be used for the Purpose; and E. they personal information must not be disclosed to any other person or body by the Non-New Zealand Entity unless the Non-New Zealand Entity believes on reasonable grounds that: I. the disclosure of the personal information is one of the Purpose for which the information was obtained or is directly related to the Purpose; or II. the source of the personal information is a publicly available publication; or III. the disclosure is to the individual concerned or authorised by the individual concerned; or IV. the disclosure is necessary: (i) to avoid prejudice to the maintenance of the law by any public sector agency, including the prevention, detection, investigation, prosecution, and punishment of offences, or (ii) for the enforcement of a law imposing a pecuniary penalty, or (iii) for the protection of the public revenue, or (iv) for the conduct of proceedings before any court or tribunal (being proceedings that have been commenced or are reasonably in contemplation); or V. the disclosure is necessary to prevent or lessen a serious threat to public health or public safety or the life or health of the individual concerned or another individual; or VI. the disclosure is necessary to facilitate the sale or other disposition of a business as a going concern; or VII. the information is to be used in a form in which the individual is not identified or is to be used for statistical or research purposes and will not be published in a form that could reasonably be expected to identify the individual concerned; or VIII. the disclosure has been authorized by the New Zealand Privacy Commissioner under section 54 of the Privacy Act; in all other circumstances, each Non-New Zealand Entity must hold personal information disclosed to it by the New Zealand Entity in the manner prescribed by the laws of the country in which it holds the personal information; and (d) if a Non-New Zealand Entity becomes aware of a breach of paragraph (c) above, that Non-New Zealand Entity shall promptly advise the New Zealand Entity of such breach. C. UNSOLICITED ELECTRONIC MESSAGES ACT (2007) The Unsolicited Electronic Messages Act (2007) applies to prohibit unsolicited commercial electronic messages with a New Zealand link from being sent. It requires the recipient to have consented (actual or implied) to receiving the electronic message and the electronic messages to include accurate information about the person who authorised the sending of the message and a functional unsubscribe facility in order to enable the recipient to instruct the sender that no further messages are 49

 to be sent to the recipient. The Supplier must take all reasonable steps to ensure that its employees, agents and subcontractors comply with that Act. 50

 SCHEDULE L — PHILIPPINES LAW REQUIREMENTS (Version 2 — 30 April 2015) [NOTE: With the recent changes to data privacy regulations in the Philippines, a further update to this schedule is expected within the first half of 2017. In the interim and pending changes to this schedule, this version represents the current laws and regulations for the Philippines.] Philippine Legal Vehicles (the “Phil LVs”) shall include:- (1) CITIBANK, N.A., PHILIPPINE BRANCH (2) CITICORP FINANCIAL SERVICES AND INSURANCE BROKERAGE PHILIPPINES, INC. (3) CITICORP CAPITAL PHILIPPINES, INC. (4) CITIGROUP BUSINESS PROCESS SOLUTIONS PTE LTD. FORMERLY KNOWN AS CRESCENT SERVICES (PHILIPPINES) PTE. LTD. (5) CITIBANK N.A., REGIONAL OPERATING HEADQUARTERS 1.1.1 Supplier hereby acknowledges that it is aware of and understands the effect of, and agrees and undertakes to, observe the Philippine bank secrecy laws as well as such other applicable legal or regulatory restrictions, as described in Appendix I hereto (collectively referred to herein as the “Philippine Laws and Regulations”) in connection with the provision of the Services pursuant to the Agreement, and further agrees and undertakes that it will not do anything which will cause the Phil LVs or any of its customers or affiliates to violate any provision of the Philippine Laws and Regulations or otherwise be guilty of an offense thereunder. Supplier further undertakes to procure that its Personnel shall observe the Philippine Laws and Regulations. Supplier undertakes that it, together with its Personnel, shall be liable with the Phil LVs should the disclosure of information by Supplier and its Personnel result to a violation by the Phil LVs of the Philippine Laws and Regulations. 1.1.2 Subject to clauses 1.1.8 and 1.1.9 below, if Supplier hires another person to assist it in the performance of the Services, or assigns or sub-contracts any portion of its rights or responsibilities or obligations to another person, Supplier shall cause the vendor, assignee, sub-contractor or delegate to be bound to retain the confidentiality of the information and comply with all other provisions of the Agreement. Supplier shall ensure that each and every vendor, assignee, subcontractor or delegate will execute the Confidentiality Undertaking set out in Appendix II hereto, and submit a copy of the same to the Phil LVs upon request. 1.1.3 The parties agree that any unauthorized use or disclosure of information by Supplier may cause immediate and irreparable harm to the Phil Lvs for which money damages may not constitute an adequate remedy. In such event, the parties agree that the Phil LVs may seek injunctive relief as appropriate. 1.1.4 Supplier agrees and undertakes, and shall procure all its Personnel, to segregate each of the Phil LV’sdata from its own data and data of any other entity. 1.1.5 Supplier shall permit the auditors and regulators of the Phil LVs, during normal business hours upon reasonable advance notice, to conduct an examination of Supplier’s business and operations in relation to the Services under the Agreement, and shall provide access to information as may be requested by the Phil LVs. Supplier shall give due consideration to the implementation of the recommendations of Citi or its auditors or regulations for enhancing 51

Supplier’s critical processes. Supplier shall further procure its Personnel to comply with and satisfy the findings and recommendations of the regulators and those of the internal and/or external auditors of Citi and/or Supplier. The parties shall discuss, in good faith, the manner in which the said findings and recommendations of the regulators and internal and/or external auditors shall be implemented, as well as the assignment of costs in connection therewith. If it is not possible or commercially expedient for Supplier to comply with the findings and recommendations or the parties fail to agree on the implementation of such recommendations, either party shall be entitled to terminate the Agreement by giving the other party sixty (60) days prior written notice. During the notice period, Supplier shall not be compelled to comply with the findings and recommendations. 1.1.6 The Phil LVs shall at all times retain the ownership of all master and transaction data files containing Confidential Information of the Phil LVs. 1.1.7 Supplier shall maintain, at its sole expense, throughout the performance of its obligations, the following insurance coverage satisfactory to the Phil LVs: (a) fidelity insurance coverage for losses incurred as a result of dishonesty, fraud or misconduct on the part of its Personnel; (b) fire insurance providing coverage against loss or damage of the Phil LV’s data and equipment due to fire; and (c) such other insurance policies as is customary for similar service providers. None of the requirements contained herein as to types and approval of insurance coverage to be maintained by Supplier are intended to and shall not in any manner limit the liabilities and obligations assumed by Supplier under the Agreement. 1.1.8 Supplier acknowledges that subcontractors, third party hires, secondees or vendors shall not be given access to Confidential Information until the use of such subcontractors, secondees and third party hires and vendors have been approved by the Phil LVs. 1.1.9 The parties acknowledge that assignment and outsourcing arrangements that require the consent of the Phil LVs include the use of secondees, temporary staff and any other third party hire. Upon receipt of a request from Supplier, the Phil LVs shall review the proposed assignment and outsourcing arrangement and advise Supplier whether the approval of, or notification to, the outsourcing governance committee, the BSP or any relevant regulator is required for such arrangement. Until such approval is obtained or notification is given, Supplier shall not enter into or implement such assignment or outsourcing arrangement for Services to the Phil LVs. 1.2.0 Supplier acknowledges that any variation to the Agreement may require the approval of, or notification to, the outsourcing governance committee, the BSP or any relevant regulator. Supplier shall promptly advise the Phil LVs of any proposed amendment so that the Phil LVs may take the appropriate action. 1.2.1 Supplier confirms that it has business continuity contingency plans and procedures (“COB Plan”) in place which have been properly tested, and shall provide said COB Plan to the Phil LVs upon request. 52

Appendix I — PHILIPPINE LAWS AND REGULATIONS — PHILIPPINE BANK SECRECY LAWS Philippine Law and Regs (for LCA)_Marcl Appendix II — CONFIDENTIALITY AND SECRECY UNDERTAKING Schedule B_Confi Undertaking for Supp 53

SCHEDULE M — SINGAPORE LAW REQUIREMENTS (Version 6.0 — revalidated 23 January 2017) 1. DEFINITIONS For the purposes of this Schedule / Local Country Addendum and its Appendices, the following terms shall have the following meanings:- (1) “Citi S’pore” shall refer to Citi and any Citi Affiliate in Singapore (each “Citi S’pore”); (2) “Citi S’pore Information” shall include all tangible or intangible information and materials, in any form or medium (and without regard to whether the information is owned by Citi Spore or by a third party), that is furnished or disclosed to the Supplier by Citi S’pore or which is collected by the Supplier for or on behalf of Citi S’pore as part of providing the Services or any Deliverable (including Customer Information, Protected Information and Personal Information); (3) “Customer Information” shall be as defined in Appendix I; (4) “Permitted Purpose” means any Use relating to or in connection with the particular project described on a Work Order, as permitted by Citi S’pore in writing; (5) “Protected Information” shall be as defined in Appendix IV; (6) “Regulator” shall include the Personal Data Protection Commission of Singapore; (7) “third parties” includes affiliates, agents, consultants, contract non-employee workers, contractors, sub-contractors, third party hires of the Supplier; (8) “Use” means collection, processing, disclosure or other use;, (9) “Personal Information” shall have the same meaning as “Personal Data”, and (if neither term is defined in the Agreement) shall mean any information that relates to a person and that could be used, either directly or indirectly, to identify such person, whether a natural person or a legal entity; and (10) “Work Order” shall include “Purchase Order” or “Statement of Work”. 2. CONFIDENTIAL INFORMATION (INCLUDING PERSONAL INFORMATION) 2.1 Notwithstanding anything to the contrary and subject to the provisions in this Schedule / Local Country Addendum, the Supplier (i) shall not, without Citi S’pore’s prior written consent, disclose Citi S’pore Information (including Customer Information, Protected Information and Personal Information) provided pursuant to any Work Order in any manner except as expressly authorized by the Agreement and Work Order, and (ii) shall treat information with at least the same degree of care that it treats its own confidential information, but in no event with less than a reasonable degree of care. The Supplier undertakes to Use Citi S’pore Information solely for the Permitted Purpose and in accordance with all of Citi S’pore’s further instructions relating to such Use which Citi S’pore may issue from time to time (including instructions to completely cease Use of any specific Citi S’pore Information), and shall not retain any Personal Information comprised in the Citi S’pore Information longer than is necessary to Use the Citi S’pore information for the Permitted Purposes (unless mandatorily required by Applicable Law). 54

2.2 Notwithstanding anything stated to the contrary, all Citi S’pore Information disclosed to the Supplier shall remain the property of Citi S’pore. 2.3 The Supplier shall at all times be capable of logically or physically segregating, clearly identifying and protecting all Citi S’pore Information, documents, records and assets that are processed by and/or stored with the Supplier pursuant to the Agreement and Work Order. The Supplier shall take all necessary technical, personnel and organizational measures in order to: 2.3.1 maintain the confidentiality of Citi S’pore Information between its various customers; and 2.3.2 prevent unauthorised access, collection, use, disclosure, copying, modification, disposal or similar issues. 2.4 If the Supplier is directed by court order, subpoena or other legal or administrative proceeding, regulatory or supervisory agency’s request or similar process to disclose any Citi S’pore Information, the Supplier shall notify Citi S’pore in writing (unless it has a legal obligation to the contrary), with a copy of such document attached, in sufficient detail immediately upon receipt of such court order, subpoena, legal or administrative, regulatory or supervisory agency’s request or similar process, in order to permit application by Citi S’pore for an appropriate protective order. 2.5 The Supplier shall: 2.5.1 notify Citi S’pore if any overseas regulator or authority were to seek access to Citi S’pore Information or if a situation were to arise where the rights of access of Citi S’pore or Monetary Authority of Singapore (“MAS”) as set out in this Schedule have been restricted or denied; 2.5.2 attend to whatever queries MAS may have and cooperate with MAS in supervising the outsourcing risks to Citi S’pore, including complying, as soon as possible, with any request from MAS or Citi S’pore for the Supplier or its sub-contractors to submit any reports on the security or control environment of the Supplier or its sub-contractors in relation to the Services; and 2.5.3 as soon as it becomes aware of any breach or potential breach of security relating to Citi S’pore Information, any unauthorised Use or loss of Citi S’pore Information, or any breach of its obligations relating to Citi S’pore Information, in addition to its obligations in this regard under the Agreement: (i) in the case of unauthorised Use of Citi S’pore Information, take reasonable measures, including legal proceedings, to restrain or prevent such unauthorised Use; and (ii) use all reasonable endeavour to prevent a recurrence of the same. 2.6 Where required by Citi S’pore in respect of Citi S’pore Information which is Personal Information, Supplier shall provide Citi S’pore with full details of its internal procedures and processes with regards to its Use of Personal Information (“Data Protection Processes”) and will work with Citi S’pore within the agreed timescales to prepare and agree in writing (amending its current procedures as required), a method for ensuring its procedures comply with Citi S’pore’s requirements as notified to Supplier. If at any time the Supplier changes any of its Data Protection Processes affecting the Agreement and/or Work Order as agreed with Citi S’pore pursuant to this sub-clause, it will promptly notify Citi S’pore in writing of such changes and refrain from implementing and using any such changes unless and until agreed by Citi S’pore. 2.7 The Supplier shall not transfer, whether within or out of its country, any Personal Information comprised in the Citi S’pore Information without the prior written consent of Citi S’pore. If given, the Supplier shall provide an adequate level of protection to any such Personal 55

 Information transferred in accordance with relevant Citi S’pore policies and all reasonable instructions of Citi S’pore. 2.8 Where the Supplier provides Services to or deals with a Citi S’pore entity that is subject to the Banking Act, including without limitation, Citibank N.A. Singapore Branch, Citibank Singapore Limited and Citicorp Investment Bank (Singapore) Limited, the following provisions shall apply:- 2.8.1 The Supplier hereby acknowledges receipt of a written notice from Citi S’pore highlighting Citi S’pore’s obligations of confidentiality under the Singapore Banking Act and the Banking Regulations. The written notice is attached hereto as Appendix I. 2.8.2 The Supplier agrees to execute the Confidentiality and Secrecy Undertaking in the form specified in Appendix II and the Supplier hereby acknowledges that it is aware and understands the effect of, and agrees and undertakes to, and to procure all its employees, servants, agents, representatives and Personnel to observe all precautionary measures and prevent disclosure of information that will cause Citi S’pore or any of its Affiliates to violate its statutory duty pursuant to Section 47 of the Banking Act and similar provisions in the Banking Regulations not to disclose any information relating to, or any particulars of, an account of a customer of Citi S’pore, whether the account is in respect of a loan, investment or any other type of transaction or deposit information to any person except as expressly provided in the Banking Act and Banking Regulations. 2.8.3 The Supplier further agrees and undertakes that it will not, and will covenant all employees, servants, agents, representatives and Personnel not to do anything which will cause Citi S’pore or its Affiliates to violate any provision of Section 47 or otherwise be guilty of an offence thereunder. 2.8.4 The Supplier shall procure the execution of the Confidentiality and Secrecy Undertaking in the form specified in Appendix III by each of the Supplier’s Personnel appointed or to be appointed in connection with Work Order and/or to perform the Services or part thereof for and on behalf of Supplier. 2.8.5 The Supplier and its employees shall not without Citi S’pore’s prior written consent further disclose Customer Information (as defined in the Singapore Banking Act) to any third parties unless required to do so by law. For the avoidance of doubt, the Supplier’s Affiliate (other than one approved by Citi S’pore to provide the Services) shall be considered a third party for the purposes of this clause. 2.9 Where the Supplier provides Services to or deals with a Citi S’pore entity that is subject to the Trust Companies Act, including without limitation, CitiTrust (Singapore) Limited and Citicorp Trustee (Singapore) Limited, the following provisions shall apply:- 2.9.1 The Supplier hereby acknowledges receipt of a written notice from Citi S’pore highlighting Citi S’pore’s obligations of confidentiality under the Singapore Trust Companies Act, (Cap. 336) (the “Act”). The written notice is attached hereto as Appendix IV. 2.9.2 The Supplier agrees to execute the Confidentiality and Secrecy Undertaking in the form specified in Appendix II. The Supplier hereby acknowledges that it is aware of and understands the effect of, and agrees and undertakes to, and to procure all its employees, servants, agents, representatives and Personnel to observe all precautionary measures and prevent disclosure of information that will cause Citi S’pore or any of its Affiliates to violate its statutory duty pursuant to Section 49 of the Act not to disclose any Protected Information except as expressly provided in the Act. 2.9.3 The Supplier shall procure the execution of the Confidentiality and Secrecy Undertaking in the form specified in Appendix III by each of the Supplier’s Personnel 56

 appointed or to be appointed in connection with Work Order and/or to perform the Services or part thereof for and on behalf of Supplier. 2.9.4 The Supplier and its employees shall not, without Citi S’pore’s prior written consent, further disclose Protected Information to any third parties unless required to do so by law. The Supplier further agrees and undertakes that it will not, and will covenant all employees, servants, agents and representatives not to do anything which will cause Citi S’pore or any of its Affiliates to violate any provision of Section 49 or otherwise be guilty of an offence thereunder. For the avoidance of doubt, the Supplier’s Affiliate (other than one approved by Citi S’pore to provide the Services) shall be considered a third party for the purposes of this clause. 2.10 Where the Supplier provides Services to or deals with a Citi S’pore entity that is subject to the Securities & Futures Act or the Financial Advisors Act (such as Citigroup Global Markets Singapore Pte Limited and Citigroup Global Markets Securities Singapore Pte Limited), the following provisions shall apply:- 2.10.1 The Supplier hereby acknowledges that it is aware and understands Citi S’pore is a capital markets services licence holder and is subject to statutory confidentiality obligations under the Securities and Futures Act and the Financial Advisors Act. The Supplier agrees and undertakes to, and to procure all its employees, servants, agents and representatives to observe all precautionary measures and prevent disclosure of information that will cause Citi S’pore to violate its statutory duty pursuant to not to disclose any information relating to, or any particulars of, an account of a customer of Citi S’pore. 2.10.2 The Service Provider further agrees and undertakes that it will not, and will covenant all employees, servants, agents and representatives not to do anything which will cause the Customer or any of its customers or affiliates to violate its statutory confidentiality obligations or otherwise be guilty of an offence thereunder. 2.10.3 The Supplier and its employees shall not without the Citi S’pore’s prior written consent further disclose customer information to any third parties unless required to do so by law. 2.11 Where the Supplier collects any Citi S’pore Information from Citi Personnel or any third party, it shall limit the collection of such Citi S’pore Information to the Permitted Purposes or purposes ancillary or incidental to the Permitted Purposes, and only carry out such collection after notifying or obtaining the consent of the individual (“Subject Individuals”) in such manner as Citi S’pore may prescribe or otherwise consistent with any Data Protection Processes where relevant. 2.12 To the extent that the Supplier receives, from an individual (or a person/entity acting on the individual’s behalf), a request, complaint or other third party communication which is in any way related to Citi Singapore Information, it will notify Citi S’pore of such request, complaint or other communication promptly and provide Citi S’pore with its full co-operation and assistance, including by: (i) providing Citi S’pore with full details of the request, complaint or other communication; (ii) if required, assisting Citi to comply with the individual’s access request within the relevant timescales set out by Citi and in accordance with Citi S’pore’s instructions; (iii) providing Citi S’pore with all Personal Information it holds in relation to the relevant individual within the timescales required by Citi S’pore; and (iv) providing Citi S’pore with any other information reasonably requested by Citi S’pore in connection thereto. 3 BUSINESS CONTINUITY MANAGEMENT 3.1 The Supplier represents, warrants and covenants that it has in place satisfactory business continuity plans (“BCP”), evidencing how the Supplier shall, under exceptional circumstances, be in a position to perform its obligations under the Agreement, including but not limited to continuity of service, disaster (whether natural or man-made) recovery plans that minimize the 57

 probability and, impact of interruption to Citi S’pore’s business including recovery time objectives, recovery point objectives and resumption operating capacities, back up processing, protecting program and data files and equipment for the orderly and expeditious provision of the Services. The Supplier will provide Citi S’pore with all required information in relation to the BCP, including any alternative locations or sites established by the Supplier for such purposes. The Supplier further represents and warrants that the BCP shall be in place for the entire term of the Agreement. 3.2 The Supplier shall test the BCP in relation to the Services and all facilities used by it in connection with the BCP on a regular basis and notify Citi S’pore of any test finding that may affect the Supplier’s performance. Where requested, Supplier shall also allow Citi S’pore to participate in and jointly test Supplier’s BCP and disaster recovery exercises, The Supplier will ensure that all relevant personnel receive regular training in activating the BCP and executing recovery procedures. if the Supplier makes any substantial change(s) to the BCP or there are any adverse developments that may substantially impact the Services, it shall notify Citi S’pore in writing and provide a full description of such significant change(s) and/or adverse developments immediately. 3.3 In the event that such test(s) on the BCP in relation to the Services are reasonably required by Citi S’pore in connection with the testing of its own business continuity plan, the Supplier shall co-operate fully with Citi S’pore to ensure that such test(s) are carried out as soon as reasonably practicable and accurately in accordance with Citi S’pore’s reasonable requirements. 3.4 The Supplier shall at all times be capable logically or physically segregating, clearly identifying and protecting all Citi S’pore Information, documents, records and assets such that in adverse conditions, all such information, documents, records of transactions and information given to the Supplier, and assets of Citi S’pore, can be either promptly removed from the possession of the Supplier in order to continue its business operations, or deleted, destroyed or rendered unusable 4 INSPECTION AND RIGHT TO AUDIT 4.1 The Supplier agrees that the services it performs for a branch of a U.S. bank in Singapore are subject to examination of the Office of the Comptroller of the Currency (“OCC”) and MAS. The Supplier shall, and procure its sub-contractors to: 4.1.1 allow Citi S’pore to obtain copies of any report and finding made on the Supplier and its sub-contractors in relation to the Services under the Work Order, whether produced by the Supplier or its sub-contractors’ internal or external auditors, or by agents appointed by the Supplier and its sub-contractors; 4.1.2 allow the OCC, the MAS, or any agent appointed by OCC or MAS, to (i) access and inspect the Supplier and its sub-contractors, and to obtain records and documents, of transactions, and information of Citi S’pore given to, stored at or processed by the Supplier and its sub-contractors; and (ii) access any report and finding made on the Supplier and its sub-contractors in relation to the Services under the Work Order, whether produced by the Supplier or its sub-contractors’ internal or external auditors, or by agents appointed by the Supplier and its sub-contractors; 4.1.3 adopt supervisory actions and additional measures which MAS may require to be taken by Citi S’pore, depending on the potential impact of the outsourcing on Citi S’pore and the financial system, or as circumstances warrant; and 4.1.4 adopt appropriate corrective measures, including enforcement actions, imposed by OCC to address violations of law and regulations or unsafe or unsound banking practices by Citi S’pore or the Supplier. 58

4.2 The Supplier shall remove from its possession, delete, destroy or render unusable Citi S’pore’s information, documents, records and assets as directed by Citi S’pore, subject always to the legal requirements for the retention of records in Singapore. The Supplier shall keep complete and accurate records of all of its work and expenses in providing the Services to Citi S’pore for a period of seven (7) years from the date from which the record was created. 4.3 The Supplier shall, and shall procure its sub-contractors to, upon reasonable notice, allow Citi S’pore, its internal or external auditors, agents and/or its regulators (the “Citi S’pore auditing parties”), the opportunity of inspecting, examining and auditing Supplier’s and its subcontractors’ operations and business records which are relevant to the Services provided, including but not limited to, Supplier’s and its sub-contractors’ critical processes, to confirm that such processes meet industry standards in such areas of contingency planning, continuity of business plans, software engineering and test processes, change control procedures, critical staff succession planning and compliance with applicable laws and regulations. The Supplier shall, and shall procure its sub-contractors to, cooperate fully with the Citi S’pore auditing parties to ensure a prompt and accurate audit. If Citi S’pore provides recommendations for enhancing the Supplier’s and its sub-contractors’ critical processes, then the Supplier and its sub-contractors shall give due consideration to implementing such recommendations. 4.4 The Supplier and its sub-contractors shall also use its best efforts to correct any practices which are found to be deficient as a result of any audit within a reasonable time after receipt of the audit report. 5 MONITORING AND CONTROL The Supplier agrees to meet with Citi S’pore at any time and from time to time upon prior written notice being given to the Supplier at the reasonable request of Citi S’pore to review all aspects of the Services provided by the Supplier pursuant to a Work Order and/or other matters of mutual interest to the Supplier and Citi S’pore and adopt any recommendations and/or measures reasonably proposed by Citi S’pore to ensure, inter alia, compliance with legal and regulatory obligations. 6 TERMINATION 6.1 Notwithstanding anything to contrary in the Agreement and/or Work Order, Citi S’pore shall have the right to terminate a Work Order with immediate effect and without penalty by giving written notice in the event that: 6.1.1 in Citi S’pore’s reasonable opinion, there has been: (i) a breach of security or confidentiality, including but not limited to, a failure to safeguard the confidentiality of Citi S’pore Information; (ii) a situation where the security and confidentiality of Citi S’pore Information is lowered due to changes in the control environment of the Supplier; or (iii) a demonstrable deterioration in the ability of the Supplier to perform the contracted Services; 6.1.2 the Supplier undergoes a change in ownership; 6.1.3 the Supplier shall (i) commence a voluntary case or other proceeding seeking liquidation, reorganization or other relief with respect to itself or its debts under any bankruptcy, insolvency, corporation or other similar law now or hereafter in effect that 59

authorizes the reorganization or liquidation of the Supplier or its debt or the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, or (ii) consent to any such relief or to the appointment of or taking possession by any such official in an involuntary case or other proceeding commenced against it, or (iii) make a general assignment for the benefit of creditors, or (iv) fail generally to pay its debts as they become due, or (v) take any corporate action to authorize any of the foregoing; or 6.1.4 an involuntary case or other proceeding shall be commenced by persons (that are not bound or affected by the Agreement and/or Work Order) against the Supplier seeking liquidation, reorganization or other relief with respect to it or its debts under any bankruptcy, insolvency or other similar law now or hereafter in effect seeking the appointment of a trustee, receiver, liquidator, custodian or other similar official of it or any substantial part of its property, and such involuntary case or other proceeding shall remain undismissed and unstayed for a period of 60 days; or an order is entered by a court of competent jurisdiction affecting substantially all of the property or affairs of the Supplier against which proceedings have been commenced under bankruptcy, insolvency or other similar laws as now or hereafter in effect and such order shall remain undismissed and unstayed for a period of 60 days. 6.2 Commencing upon notice to Supplier of termination (or for a material amendment) of the Work Order and continuing through the effective date of termination (or amendment), the Supplier will provide to Citi S’pore reasonable termination (or amendment) assistance requested by Citi S’pore to allow the use of the Services without interruption or adverse effect and to facilitate the orderly transfer of the subject matter of the Work Order to a third party supplier or “bridge-institution13” as desired by Citi S’pore. If requested by Citi S’pore, the Supplier will reasonably cooperate with the third party supplier or bridge-institution in connection with the preparation and implementation of a transition plan by such party. 6.3 Upon termination of the Agreement and/or Work Order, the Supplier shall allow Citi S’pore to remove from the Supplier all Citi S’pore Information previously provided to the Supplier (including without limitation, information incorporated in computer software or held in electronic storage media, together with any analyses, compilations, studies, reports or other documents or materials containing any such data, Customer Information or Protected Information, as are in the possession or control of the Supplier), and Citi S’pore shall be allowed to delete, destroy or render unusable by the Supplier all such data, customer information or protected information previously given. The Supplier shall certify in writing to Citi S’pore within seven (7) days of the termination of the Agreement and/or Work Order that it has not retained any such data, Customer Information or Protected Information in any form whatsoever. 7 ASSIGNMENT AND SUB-CONTRACTING 7.1 Notwithstanding anything to the contrary in the Agreement and/or Work Order, the Supplier shall not assign, outsource or subcontract any or all of its obligations set forth in the Agreement and/or Work Order to any third parties without the prior written consent of Citi S’pore. Supplier’s use of a sub-contractor pursuant to any consent provided is subject to the condition that Supplier will ensure that its own agreement with such sub-contractor includes provisions that permit Citi S’pore and its (or its Affiliates’) regulators, internal and external auditors and agents to have reasonable access to the books and records of the subcontractor, as well as the right to perform audits on the sub-contractor, under the same terms and conditions as described in Section 4 (Inspection and Rights of Audit). 7.2 To the extent that the Supplier is so permitted by Citi S’pore to assign, outsource or subcontract any of its obligations set forth in the Agreement and/or Work Order pursuant to the sub-clause above, the Supplier shall procure the compliance by all assignees/outsourcees/sub-contractors (and their respective Personnel) with the provisions of the Agreement, Work Order and this Schedule / Local Country Addendum relating to the 13 As defined in the Monetary Authority of Singapore “Guidelines on Outsourcing” dated 27 July 2016. 60

performance of such obligations (including, without limitation, provisions relating to security and confidentiality, audit and inspection and business continuity management). Supplier is solely responsible for all acts and omissions of its sub-contractors, including the performance and risk management practices of such sub-contractors, as if such acts and omissions were its own and nothing herein shall be construed to create any contractual relationship between Citi S’pore and any sub-contractor. 8 SUPPLIER PERSONNEL 8.1 Supplier shall ensure that all its Personnel involved in the provision of the Services are assessed to meet and comply with Citi S’pore’s hiring policies and standards, as made known to Supplier, for the respective services or roles they are providing or performing. Examples of the relevant assessment criteria, include but are not limited to: 8.1.1 whether they have been the subject of any proceedings of a disciplinary or criminal nature; 8.1.2 whether they have been convicted of any offence (in particular, that associated with a finding or fraud, misrepresentation or dishonesty); 8.1.3 whether they have accepted civil liability for fraud or misrepresentation; and 8.1.4 whether they are financially sound. 9 NOTIFICATION OF ADVERSE DEVELOPMENTS 9.1 Supplier shall immediately notify Citi S’pore of any adverse developments or changes, including those affecting its Affiliates or approved assignees/outsources/sub-contractors (and their respective Personnel), that has or could be reasonably expected to have a material impact on the Supplier’s ability to carry out (or Citi S’pore’s ability to receive) the Services and/or Deliverables effectively and in accordance with the provisions of the Agreement and this Schedule. Examples of adverse developments and changes, include but are not limited to: 9.1.1 any interruption of Services (including unplanned unavailability of any systems, software or infrastructure Supplier uses to deliver the Services); 9.1.2 any event that could potentially lead to prolonged service failure or disruption to the Services; 9.1.3 any breach of security and confidentiality of Citi S’pore Information; 9.1.4 any force majeure or other event that would cause Supplier to invoke business continuity or disaster recovery plans; 9.1.5 any regulatory or enforcement action taken against Supplier or any failure of Supplier and its Personnel to comply with this Schedule; 9.1.6 any strategic business change that could impact Service provision such as a change of control of Supplier; 9.1.7 any proposed change to Supplier’s management or key Personnel; 9.1.8 any material adverse change in the financial standing of Supplier; 9.1.9 any proposed implementation of new or revised policies, processes or information technology; and 9.1.10 any issues identified by Supplier’s internal or external auditors that may have or has a material adverse impact on the provision of the Services. 10 CLOUD COMPUTING SERVICES 10.1 Where Supplier has been approved by Citi S’pore to provide public or private cloud computing services or a portion of the Services that Supplier has been approved by Citi S’pore to provide involve the use of public or private cloud architecture, technology or a multi-tenanted system, 61

such as Software as a Service (“SaaS”), Platform as a Service (“PaaS”) or Infrastructure as a Service (“IaaS”), the Supplier shall: 10.1.1 clearly identify and segregate all Citi S’pore Information using strong physical or logical controls that have been reviewed and approved by Citi S’pore; 10.1.2 implement robust access controls that have been reviewed and approved by Citi S’pore to protect all Citi S’pore Information at all times, including but not limited to, up-to-date authentication, tokenization and data encryption technology; 10.1.3 not make changes to the approved and contracted service structure and any security settings without the prior written consent of Citi S’pore and 10.1.4 immediately notify Citi S’pore of any breach of security and confidentiality of Citi S’pore Information. 10.2 The Supplier hereby acknowledges and agrees that a breach of this section 10 shall entitle Citi S’pore to terminate the Work Order in accordance with section 6 (Termination). 11. GOVERNING LAW AND JURISDICTION Notwithstanding any term to the contrary in the Agreement, the governing law and jurisdiction clause as it applies to this Schedule and Work Orders entered into by Citi S’pore is varied as follows: “The validity of this Agreement as it applies to the Work Order, the construction and enforcement of its terms, and the interpretation of the rights and duties of the parties to the Work Order shall be governed by the laws of Singapore. The parties to the Work Order submit to the non-exclusive jurisdiction of the courts of Singapore.” 12. SURVIVAL 12.1 The provision of this Schedule that, by their nature and content, must survive the completion, rescission, termination or expiration in order to achieve their fundamental purpose and effect hereof, shall so survive the Agreement and Work Order, and continue to bind the Supplier. 12.2 Without limiting the generality of the foregoing, the following provisions shall survive: sections 2, 3.4, 6.2, 6.3, 10.1.1, 10.1.2 and 11. 62

APPENDIX I — BANKING SECRECY UNDER THE SINGAPORE BANKING ACT, (CAP. 19) APPLICABLE TO CITIBANK N.A., SINGAPORE BRANCH AND CITIBANK SINGAPORE LIMITED AND THE BANKING REGULATIONS 2001 APPLICABLE TO CITICORP INVESTMENT BANK (SINGAPORE) LIMITED APPENDIX II - SINGAPORE LAWS AND REGULATION — CONFIDENTIALITY AND SECRECY UNDERTAKING (FOR THE SUPPLIER) APPENDIX III - SINGAPORE LAWS AND REGULATIONS - CONFIDENTIALITY AND SECRECY UNDERTAKING (for Supplier’s employees/agents/servants/Personnel) APPENDIX IV - SINGAPORE LAWS AND REGULATIONS — CONFIDENTIALITY UNDER THE TRUST COMPANIES ACT, CAP. 336 OF SINGAPORE (THE “ACT”) APPLICABLE TO CITITRUST (SINGAPORE) LIMITED AND CITICORP TRUSTEE (SINGAPORE) LIMITED 63

SCHEDULE N — SRI LANKA LAW REQUIREMENTS  (Version 3 — 15 February 2017) The Bank has an obligation under the Common Law to keep the affairs of its customers confidential. ADDITIONAL CLAUSES REQUIRED TO COMPLY WITH THE LAWS AND REGULATIONS APPLICABLE IN SRI LANKA. In order to ensure compliance with Part V of the Banking Act No. 30 of 1988 as amended and Section 29 of the Monetary Law Act No. 58 of 1949 as amended, the Supplier shall comply with the additional clauses set out in (1) below :- 1. Audit and Inspection  1.1 The Supplier shall: 1.1.1 maintain such records as may be agreed between Citi and the Supplier relating to the Services provided by the Supplier under this Agreement. The Supplier shall procure that any sub-contractor appointed (if applicable and including any disaster recovery and back-up suppliers) shall also maintain complete and accurate records of all its work in relation to the Services sub-contracted to it; 1.1.2 subject to the approval of the applicable regulatory authorities of the Supplier, allow Citi to conduct audits on the Supplier, whether by its internal or external auditors, or by agents appointed by Citi; and to obtain copies of any report and finding made on the Supplier in conjunction with the Services performed for Citi. The Supplier shall co-operate with Citi’s internal and external auditors to ensure a prompt and accurate audit; 1.1.3 subject to the approval of the applicable regulatory authorities of the Supplier, allow any duly authorised officer or representative of the Central Bank of Sri Lanka, any competent court of law, or other judicial, quasi-judicial, statutory, regulatory or supervisory authority or any agent appointed by any of them, to access the Supplier to obtain records and documents, of transactions, and information of Citi given to, stored at or processed by the Supplier, the right to access any report and finding made on the Supplier and to inspect, examine and audit the Supplier’s operations and records insofar as they are relevant to the Services provided by the Supplier under this Agreement, including but not limited to the internal controls adopted by the Supplier with respect to preservation of the confidentiality of data generally and Citi’s information specifically (where applicable). The Supplier should ensure and procure that these requirements are met in its arrangements with any sub-contractor that the Supplier may engage in the outsourcing (if applicable), including any disaster recovery and backup suppliers; 1.1.4 adopt whatever supervisory actions and additional measures which the Central Bank of Sri Lanka, any competent court of law, or other judicial, quasi-judicial, statutory, regulatory or supervisory authority or any agent appointed by any of them may require to be taken by Citi, depending on the potential impact of the outsourcing on Citi and the financial system, or as circumstances warrant, as communicated by Citi to the Supplier; 1.1.5 adopt whatever appropriate corrective measures, including enforcement actions, imposed by the Central Bank of Sri Lanka, any competent court of law, or other 64

judicial, quasi-judicial, statutory, regulatory or supervisory authority or any agent appointed by any of them, to address violations of law and regulations or unsafe or unsound banking practices by Citi or the Supplier. Citi will communicate such measures to the Supplier if the request made by the Central Bank of Sri Lanka or such other party is not addressed to the Supplier; and 1.1.6 provide such information as may be required by Citi in a timely manner in order that Citi may comply with any requirements imposed on Citi by law, the Central Bank of Sri Lanka, any competent court of law, or other judicial, quasi-judicial, statutory, regulatory or supervisory authority. 1.2 The Supplier agrees that the Services it performs for Citi are subject to examination and regulation of the Central Bank of Sri Lanka, any competent court of law, or other judicial, quasi-judicial, statutory, regulatory or supervisory authority or any agent appointed by any of them. 2. Declarations of Secrecy 2.1 In terms of Section 77 of the Banking Act No. 30 of 1988, as amended and the Banking Act Direction No. 02/04/002/005/001 dated 1” December 1999, the Supplier shall procure its employees, servants, agents, representatives and contractors to execute a confidentiality undertaking, in form and substance acceptable to Citi and the Supplier. 3. Special clause/condition in software maintenance agreements or service agreements with software companies 3.1 In terms of the Banking Act Direction No. 02/04/002/005/001 dated 1” December 1999 and Banking Act Direction No 02 of 2012 on the Outsourcing of Business Operations of a Licensed Commercial Bank and Licensed Specialized Bank, the Supplier shall ensure that where there are any agreements with third parties (appointed with Citi’s prior written consent) with regard to any software maintenance or services such agreements shall include a confidentiality clause substantially similar to the clause set out below. “The parties agree that all information provided pursuant to this Agreement by each party to the other party is confidential and proprietary to the party providing the information and no party shall use any information provided by the other party for any purpose other than as permitted or required for performance under this Agreement. Each party agrees not to disclose or provide any information provided by the other party to any third party (with the exception of (i) any affiliate or subsidiary, which is bound to retain the confidentiality of the information; (ii) employees who have a need to know in the course of receiving or performing the Services pursuant to this Agreement, as the case may be, and such disclosure shall be to the extent required, provided that such employees are bound to retain the confidentiality of the information; (iii) third party vendors as necessary for the Supplier to provide Services to Citi under this Agreement, provided that such vendors are bound to retain the confidentiality of the information; and (iv) Citi’s disclosure of data to its internal and external auditors) without the express written consent of the other party, and each party agrees to take all reasonable measures, including, without limitation, measures taken by each party to safeguard its own confidential information to prevent any such disclosure by employees, agents, or contractors. In no event shall Citi divulge to any third party the contents in any invoices/charge documentation that it receives from the Supplier, without the written consent of the Supplier unless pursuant to any request made by the Central Bank of Sri Lanka, any competent court of law, or other judicial, 65

quasi-judicial, statutory, regulatory or supervisory authority or any agent appointed by any of them or by the Internal or External Auditors of Citi. Nothing provided herein shall prevent any party from disclosing information to the extent the information (i) is or hereafter becomes part of the public domain through no fault of that party; (ii) is received from and furnished to a third party without similar restriction on disclosure by such third party; (iii) is independently developed by it; (iv) is required to be disclosed under law or any applicable regulation, at the order of a court of law, or at the request or order of any statutory, regulatory or supervisory authority with whom it customarily complies; or (v) is already known to it. If either party hires another person to assist it in the performance of this Agreement, or assigns any portion of its rights or delegates any portion of its responsibilities or obligations under this Agreement to another person, the assigning or delegating party shall cause its assignee or delegate to be bound to retain the confidentiality of the information.” 3.2 The Supplier shall obtain confidentiality undertakings, in form and substance acceptable to Citi and the Supplier from such software companies and the employees of such software companies who are or will be engaged in the provision of the services contemplated in this Agreement. 4. Form of Undertaking 4.1 Citi confirms that the Undertaking set out in the Appendix I hereto is sufficient for the purposes of complying with clauses 2.1 and 3.2. 5. Compliance with Banking Act Directions No. 2 of 2012 5.1 The Supplier shall do all such things necessary to ensure that Citi is in compliance with the Banking Act Direction No 02 of 2012 on the Outsourcing of Business Operations of a Licensed Commercial Bank and Licensed Specialized Bank, the following in particular: 5.1.1 The Supplier shall have a satisfactory business continuity plan and conduct regular tests thereon. 5.1.2 The Supplier shall do all such things and provide all such information necessary to enable Citi to make transaction reports and suspicious transactions reports to the Financial Intelligence Unit, as provided under the Financial Transactions Reporting Act No. 6 of 2006. APPENDIX I - UNDERTAKING14 Undertaking  2011.doc 14 Note: for Supplier’s employees, servants, agents, representatives and contractors to execute. 66

SCHEDULE O — TAIWAN LAW REQUIREMENTS  (Version 7— 17 January 2017) A. REGULATOR CONTROL 1. Supplier shall, except to the extent prohibited or restricted by any law, regulation, or legal authority (including but not limited to any in the host country of Supplier): (i) adopt, , as it relates to the Services, supervisory actions and additional measures to reasonably assist Citi’s adoption of necessary measures which the Regulators (including but not limited to Office of the Comptroller of the Currency, the Financial Supervisory Commission, the Central Bank of China, and any other Taiwan regulators, collectively referred to herein as the “Regulators”) may require to be taken by Citi (which may include obtaining necessary approvals or consents from the regulators of Supplier, if any, and negotiate and amend the Agreement and/or any contracts between Supplier and any sub-contractors to incorporate contract clauses mandated by the Regulators), depending on the potential impact of the outsourcing on Citi and the financial system, or as circumstances warrant; and (ii) adopt whatever appropriate corrective measures, including enforcement actions, imposed by the Regulators to address violations of law and regulations or unsafe or unsound banking practices of the Supplier and to reasonably facilitate Citi’s adoption of necessary measures to address violations of law and regulations or unsafe or unsound banking practices of Citi. (iii) allow the services it performs for branches of a U.S. bank in Taiwan or any Citi affiliate in Taiwan to be subject to examination and regulation of the Regulators. (iv) allow Regulators based in Taiwan (hereinafter referred to as “Taiwan Regulators”) or any agent appointed by Taiwan Regulators/Citi, to obtain from Supplier, in a timely manner, records and documents, of transactions, and information of Citi given to, stored at or processed by Supplier, the right to access any report and finding made on Supplier and to inspect, examine and audit Supplier’s operations and records insofar as they are relevant to the Services provided by Supplier under this Agreement, including but not limited to the internal controls adopted by Supplier with respect to preservation of the confidentiality of data generally and Citi information specifically (where applicable). Supplier should ensure and procure that requirements consistent with the foregoing are met in its arrangements with any sub-contractor that Supplier may engage in the outsourcing (if applicable), including any disaster recovery and backup supplier. For the avoidance of doubt, it is understood that the abovementioned parties will be granted access only to information of Citi and/or Citi’s customers / employees. In addition, Citi shall ensure that any agent(s) appointed by Citi who it uses in connection with this Section to treat any information it receives as Confidential and, without limiting the foregoing, shall be liable to Supplier for any breach by such agent(s). (v) allow Citi to obtain copies of any report and finding made on the Supplier in conjunction with the Service. B. CONFIDENTIALITY AND SECURITY Further to the confidentiality clause in the Agreement, if Citi furnished, supplied, disclosed, or made available Confidential Information (including Confidential Information as defined under the Agreement and Personal Data defined below) to Supplier in connection with provision of 67

the Services (without regard to whether the information is owned by Citi or by a third party), the following additional terms and conditions shall be applied to the Parties: 1. “Personal Data” means and includes personal information of a natural person within the meaning of Article 2 of the Personal Data Protection Act (“PDPA”, the relevant extract is attached hereto in Appendix I as a reference). 2. All Confidential Information, documents and records of transactions provided or generated pursuant to the Agreement, any Work Order or Statement of Work, shall remain the property of Citi. Supplier shall while the same is in its possession hold the same for and on behalf of Citi and shall deliver the same forthwith upon request. The retention period of each document/record shall follow Citi’s record retention schedule. Supplier’s obligations under this clause shall continue after the termination of the Agreement. 3. Any Confidential Information, documents and records of transaction disclosed by Citi may only be collected, processed, disseminated, reproduced or used by Supplier for the purpose of providing the Services pursuant to the Agreement. Notwithstanding any provision in the Agreement, Supplier shall not, without Citi’s prior written consent and subject to the further requirement of this section, further disclose the Confidential Information to an unauthorized third party unless required to do so by law. For the avoidance of doubt, Supplier’s affiliate or third party service providers (other than those approved by Citi to provide the Services) shall be considered a third party for the purpose of this clause. Further, Supplier shall procure each of Supplier’s personnel appointed or to be appointed in connection with Work Order / Statement of Work and/or to perform the Services or part thereof for and on behalf of Supplier to execute the Confidentiality and Secrecy Undertaking in the form specified in Form 1 attached hereto or other form accepted by Citi. 4. Supplier shall treat Confidential Information with at least the same degree of care that it treats its own confidential information, but in no event with less than a reasonable degree of care, and shall implement and maintain adequate technical, personnel and organizational and other necessary security measures (“Security Measures”) that are designed to safeguard the information of the other from being stolen, altered, damaged, destroyed, disclosed or accessed without authorisation, misused and misappropriated. These Security Measures shall include the following:- 4.1 Organizational security measures to ensure Supplier will disclose the Confidential Information only to those of Supplier’s authorized personnel who have a need to know such Confidential Information (only to the extent necessary) in order to fulfill the purposes contemplated by the Agreement or the Work Order, and set forth internal rules and procedures for use of and access to the Confidential Information, which is subject to Supplier’s periodical review; 4.2 Personnel security measures to ensure that Supplier will (i) educate and train its personnel regarding information security practices and procedures and any special requirement of Citi and (ii) instruct and supervise its personnel who uses or has access to the Confidential Information to prohibit the personnel from committing unauthorized disclosure, access, use and misappropriation of the Confidential Information; 4.3 Technical security measures to ensure that Supplier will implement systems or technological controls to limit access to the Confidential Information and monitor such access; 4.4 Other security measures to protect Personal Data as required by Article 8 and 12 of the Enforcement Rules of the PDPA (attached hereto in Appendix II as a reference) or by Citi to be communicated by Citi to Supplier from time to time, and thereafter to be summarized/set out in this Clause 4.4 below: 68

4.4.1 Allocation of management personnel and resources for protection of Personal Data; 4.4.2 Defining the scope, classification, purpose and retention period of Personal Data; 4.4.3 Risk assessment and management mechanism for Personal Data; 4.4.4 Mechanisms for prevention, notification, remediation, and handling of security incidents; 4.4.5 Internal management procedures for collection, processing, and use of Personal Data; 4.4.6 Information security management and personnel management; 4.4.7 Awareness promotion and educational training; 4.4.8 Management of information security and IT infrastructure; 4.4.9 Mechanisms for information security auditing; 4.4.10 Necessary preservation of records of use, track log files, and evidence; and 4.4.11 Continuing assessment on any improvement on security and maintenance of Personal Data. 4.5 Other reasonable measures necessary to protect the Confidential Information as communicated by Citi to Supplier from time to time. 5. Supplier shall at all times be capable of segregating and clearly identifying all of Citi’s information, documents, records and assets that are processed by and/or stored with Supplier pursuant to the Agreement. Supplier agrees that the Confidential Information (in electronic, paper form or other media) shall effectively be segregated from those of Supplier and those of other institutions (the data of which is) handled by Supplier. The segregation shall be at least logically distinct and the access to and use of the Confidential Information shall be strictly controlled in order to avoid data misuse. For the sake of clarity, in the event that the Services provided by Supplier to Citi involves multiple legal entities (meaning other Citi entities within Taiwan, each a “Service Recipient Entity”), Supplier shall ensure that the data of each Service Recipient Entity shall be effectively segregated from that of other Service Recipient Entity, that of Supplier, and/or that of other institutions (the data of which is) handled by Supplier. 6. Upon occurrence of any security breach, theft, loss, unauthorized disclosure or use of Confidential Information Supplier received from Citi (the “Occurrence”), Supplier shall, without delay, take necessary measures to minimize the damage or loss and notify Citi immediately of the Occurrence and the following information as applicable: 6.1 the items of the Confidential Information that are disclosed or stolen; 6.2 the time and details of the Occurrence; 6.3 measures that Citi may take to minimize their damage or loss; 6.4 measures adopted by and reliefs to be provided by Supplier to remedy the Occurrence; and 6.5 contact information to which Citi may report their damage or loss. 69

7. The Personal Data pertaining to an individual may be made available for review, correction, or deletion, or must be subject to suspension of being processed upon such individual’s request and Citi shall endeavor to assist Supplier in dealing with such request. In the event that such individual to which the Personal Data pertains raises any objection to the manners in which his/her request concerning the foregoing matters are addressed by Citi, Supplier shall endeavor to assist Citi in dealing with such objection. 8. Except as otherwise expressly provided for by the Agreement and the Work Order, upon demand by Citi, or upon the termination of the Agreement and/or the relevant Work Order, Supplier shall promptly return or destroy the Confidential Information or its duplicates, supplied to, or otherwise obtained by, Supplier in connection with the Services, in the form or manner specifically instructed by Citi. If the Confidential Information was stored or saved in Supplier’s computers, servers, or any other electromagnetic medium, Supplier also shall delete or purge such stored or saved Confidential Information in the form or manner specifically instructed by Citi. 9. If Supplier is directed by court order, subpoena or other legal or administrative proceeding or similar process to disclose any of the Confidential Information provided pursuant to this Agreement, Supplier shall promptly notify Citi in writing (unless it has a legal obligation to the contrary), with a copy of such document attached, in sufficient detail promptly upon receipt of such court order, subpoena, legal or administrative, or similar process, in order to permit application by Citi for an appropriate protective order. 10.If Supplier receives any request from Supplier’s or any overseas regulatory or supervisory agency to access to any Confidential Information or if a situation were to arise where the rights of access of Citi or Taiwan Regulator have been restricted or denied, Supplier shall provide prompt notice of such request to Citi to enable Citi to notify its Taiwan Regulator and seek any required regulatory approval for the provision of such customer data by Supplier. 11.Supplier acknowledges and agrees that: 11.1 Citi reserves the rights to supervise and audit Supplier in connection with the provision of the Services and the Confidential Information disclosed to Supplier; 11.2 Citi reserves the rights not to furnish, supply, disclose, or make available the Confidential Information to Supplier in connection with provisions of the Services if Supplier fails to comply with the terms and conditions set forth in Section B hereof; and 11.3 Supplier shall be responsible for damages arising out of, or relating to divulgence, loss, alteration, misappropriation, and/or unauthorized disclosure of the Confidential Information caused by Supplier. 12. Where services entail access to Taiwan’s customer information/confidential information: 12.1 Citi reserves the right to revoke, restrict and monitor the use and access to Citi’s systems, customer information and confidential information. Supplier will obtain Citi’s agreement before it grants any of its personnel (including that of its subcontractors) access to the systems which contains Citi’s customer information/confidential information. Upon Citi’s request, Supplier will provide full list and job function of such personnel. In the event of any security breaches, unauthorized access or use of Citi’s systems/customer information/confidential information, Supplier will promptly notify Citi without delay. 12.2 In the event Supplier uses Citi’s customer information/confidential information to produce reports for regional/global management for the purposes of Citigroup internal control and management or risk analytical/management, Supplier will obtain Citi’s agreement for the following matters:- 70

(i) a full list of regular management report (and samples) and the nature, extent and recipients of such reports Supplier intends to generate; and (ii) each ad hoc report not listed on the approved list. 12.3 Supplier will obtain Citi’s agreement before it sends/stores/provides access to Citi’s customer information/confidential information to any facility/data center outside Citi premises. C. MONITORING AND CONTROL Supplier agrees to meet with Citi as reasonable time and from time to time upon prior written notice being given to Supplier at the reasonable request of Citi to review all aspects of the Services provided by Supplier hereunder and/or other matters of mutual interest to Supplier and Citi and adopt any recommendations and/or measures reasonably proposed by Citi to ensure, inter alia, compliance with legal and regulatory obligations. Supplier further agrees, in accordance with the standard operating procedures set out in Citigroup corporate policies, to maintain a customer protection system, a risk management system, an internal control system, an internal audit system, a mechanism to cooperate with Citi to settle consumers’ disputes and the management of personnel hired by Supplier, in each case as required by such Citigroup corporate policies. Supplier shall endeavor to follow the requirements set forth in the applicable Outsourcing Due Diligence Form (attached hereto in Form 5 as a reference) as provided by Citi from time to time or other written requirement notified by Citi. Supplier agrees to conduct regular and irregular internal audits and immediately notify Citi if the Services cannot be duly discharged, or there is difficulty, or a threat of encountering difficulty, in performing such Services. D. COMPLIANCE WITH LAWS Supplier shall not violate mandatory or prohibitive provisions of the law, public order or good morals, and shall ensure that the banking law, the anti-money laundering law, the PDPA, consumer protection law and other applicable laws and regulations in Taiwan (such laws and regulations to be communicated by Citi to Supplier from time to time, and thereafter to be summarized/set out in this Schedule) are complied with. E. SUBCONTRACTING Further to clauses in the Agreement dealing with subcontracting:- 1. Notwithstanding any other provisions in the Agreement or in this Schedule may provide otherwise, Supplier shall not subcontract or outsource any or all of its obligations set forth in this Agreement to any third party (including without limitation Supplier’s subsidiaries or affiliates) unless obtaining the prior written approval from Citi. 2. If Supplier is permitted to outsource or subcontract to third parties any of its obligations set forth in the Agreement, Supplier shall (i) procure the compliance by all assignees/ outsources/ sub-contractors with the provisions of the Agreement and the country addenda relating to the performance of such obligations (including, without limitation, provisions relating to security and confidentiality, audit and inspection and business continuity management), and (ii) require all non-affiliated third party sub-contractors to accept and comply with the terms of this Schedule, as well as the Local Country Addendum of other relevant countries (collectively “LCAs”). (The LCAs set out local laws and regulatory requirements applicable to non-affiliated parties, and have been drafted to fit into standard Citi vendor agreements. Supplier shall obtain up-to-date versions of the relevant LCAs from Citi). Supplier shall be remain fully responsible to Citi for its 71

obligations under this Agreement and for the subcontractor’s performance of such duties and obligations regardless of whether Supplier is negligent in respect of its selection or supervision of the subcontractor. 3. Without prejudice to the above, and in accordance with Article 10 of the Financial Supervision Commission (“FSC”) Outsourcing Guidelines for Financial Institutions (attached hereto in Appendix III, as a reference), Supplier’s agreements with its subcontractors shall, at the minimum, specify the following matters, in order to maintain the quality of the outsourced services:- 3.1 Description of the specific outsourced items and the scope thereof, as well as the rights and duties of the sub-contractors. 3.2 The relevant Taiwan laws and regulations (including the Banking Law, Anti-Money Laundering Law, the PDPA, Consumer Protection Law and other laws and regulations) applicable to Citi with which the subcontractors must comply (such laws and regulations to be provided/updated by Citi from time to time). 3.3 The protection of consumer rights, including confidentiality and security measures regarding Citi’s information. 3.4 The consumer protection, risk management, internal control and internal audit systems to be implemented by the sub-contractor in accordance with the standard operating procedures set out in Citigroup corporate policies. 3.5 Procedure for settlement of consumer disputes should follow Citigroup corporate policies. 3.6 Management of personnel hired by the sub-contractors, including hiring, review and sanctions related to its personnel, should follow Citigroup corporate policies. 3.7 Material events which constitute cause for termination of the outsourcing agreement including provisions regarding the termination or recession of the agreement upon notification of the Regulators. 3.8 The agreement of the sub-contractors that the Regulators may request relevant information or reports and conduct financial audits, or may order such sub-contractors to provide relevant information or reports within prescribed deadlines. 3.9 Agreement that the sub-contractors shall not use the name of Citi when dealing with the public in the course of handling the outsourced matters. 3.10 Other terms and conditions to the effect that the sub-contractor will be subject to and comply with the terms and conditions of the Agreement and the LCAs. 4. Supplier shall adopt sufficient internal control measures, including but not limited to, designating a project manager who is responsible for the subcontracted services, monitoring a subcontractor and its performance, and establishing audit functions. 5. Supplier shall cause the subcontractor to periodically report to Supplier on the status of subcontracted services and the subcontractor, upon request of Citi and/or Supplier, must provide Citi and/or Supplier with necessary information in a prompt manner. 6. Supplier shall audit a subcontractor periodically to ensure that such subcontractor complies with applicable Taiwan laws and regulations and all terms and conditions set forth in the Agreement, applicable Work Order and this Schedule. 72

7. Supplier shall prepare a continuity of business plan in order to provide Citi with continuous Services in case of emergency or subcontractor’s failure to perform the Services in accordance with the subcontracting agreement. 8. Supplier, upon the request of Citi, shall provide Citi with information of its subcontractor, including but not limited to, name of the subcontractor and its project manager, contact information of the subcontractor, description of the services subcontracted, the subcontracting agreement, and the periodical report on the subcontracted services. 9. Where Citi has consented to Supplier assigning, outsourcing or sub-contracting any or all of the Services, Citi may require Supplier to, and Supplier shall, provide to Citi written notification of any variation or termination of the agreement between Supplier and that third party. The written notification shall be provided to Citi within three (3) days of the variation or termination. F. IDENTITY OF SERVICE PROVIDER Supplier, when providing the Service, shall not hold itself out to others as Citi. Supplier shall not engage in untrue advertisements or collect fees from consumers when dealing with the public in the course of handling the Services. G. NOTICE 1. If Supplier receives Citi’s Confidential Information, Supplier, upon a request of Citi, shall fill out all necessary information in the Confidential Information Sharing Attestation (Form 2) attached hereto or other form accepted by Citi and submit such Form to Citi. If Supplier subcontracts all or any part of handling of the Protected Information to a third party, Supplier shall also fill out the Subcontract Consent and Attestation (Form 4) attached hereto or other form accepted by Citi and submit such Form to Citi prior to the subcontracting. 2. If Supplier returns or destroys the Protected Information in accordance with Section B 8, Supplier, upon a request of Citi, shall fill out all necessary information in the Confidential Information Return/Deletion Attestation (Form 3) attached hereto or other form accepted by Citi and submit such Form to Citi without unnecessary delay. 3. If Supplier outsources all or a part of the Services to a subcontractor, Supplier, upon a request of Citi, shall fill out all necessary information in the Subcontract Consent and Attestation (Form 4) attached hereto or other form accepted by Citi and submit such Form to Citi prior to such outsourcing arrangement. 4. If Supplier makes material changes in provision of the Service upon occurrence of any matter which give rise to a material impact on Citi, including but not limited to system upgrade and/or alteration, changes in business processes, changes in ownership, and changes in the supervisory and management of the subcontractor, Supplier shall notify Citi promptly and, upon Citi’s request, provide relevant service report or necessary information in relation thereto. Furthermore, if any aforementioned changes exceed or potentially exceed the scope of services approved by the competent authority, such changes will not be effective until approval or waiver from such competent authority is obtained. 5. Citi reserves the right to request Supplier to provide a service report periodically or upon Citi’s notification from time to time on provision of the Services in a form accepted by Citi. 6. Supplier will notify Citi promptly if there are any significant or major litigation arising from or in relation to the services covered hereunder. 73

H. ADDITIONAL DAMAGES CLAUSES 1. Without limiting any of Supplier’s rights or remedies in the event of breach by Citi, in the event that Supplier does not comply, or it reasonably appears that Supplier is not complying, in any material respect with the provision of the Agreement applicable to a Service provided to or for the benefit of Citi in Taiwan (including the service standard set forth in the applicable work order), Citi may upon reasonable notice: 1.1 require Supplier to take any necessary action to remedy or mitigate the relevant deficiency in such reasonable manner as Citi may reasonably specify; 1.2 require Supplier to compensate Citi for any actual loss incurred therefrom or any liquidated damages, if applicable, agreed by both Parties in the Agreement or the Work Order (if any) (provided (i) Citi has not caused or contributed to any such failure as a result of its own act, omission or breach of the Agreement and or work order (if any), and (ii) such failure is not caused by any force majeure event); and/or 1.3 where there is any breach of a material obligation under the Agreement, terminate the Services provided to or for the benefit of Citi in Taiwan in accordance with relevant clauses. 2. In the event that any Service level failure is subject to liquidated damages (under the applicable Work Order or as otherwise agreed in writing by the Parties), then the payment by (or credit from) Supplier under the relevant liquidated damage provision shall be deemed as full satisfaction for such Service level failure, provided that nothing in the foregoing shall limit a claim by Citi for damages in the event that the failure constitutes a separate breach under the Agreement. In the event of a claim for damages based on such a separate breach, Supplier shall receive a credit for any liquidated damages paid or payable. Appendix I Article 2 of the Personal Data Protection Act Appendix II Article 8 and 12 of the Enforcement Rules of Personal Data Protection Act Appendix III Article 10 of the Financial Supervision Commission (“FSC”) Outsourcing Guidelines for Financial Institutions (see attached for Appendices) Appendices I II & III  2017.docx FORM 1—CONFIDENTIALITY AND SECRECY UNDERTAKING 74

FORM 2 — CONFIDENTIAL INFORMATION SHARING ATTESTATION Form 2,SOMIZEIREraikin FORM 3 — CONFIDENTIAL INFORMATION RETURN/DELETION ATTESTATION FORM 4 — SUBCONTRACT CONSENT AND ATTESTATION Form 4 for LCA_subcontract con FORM 5 — OUTSOURCING DUE DILIGENCE FORM 75

SCHEDULE P —THAILAND LAW REQUIREMENTS  (Version 2— revalidated 18 January 2017) 1. Right to audit and access [Section 5 (13), Annex 3 of BOT Notification No. SorNorSor 8/2557 dated December 25th, 2557and Section 5.5.1 (3.2) of BOT Notification No. SorNorSor 6/2557 dated July 14,2557] With reasonable prior written notice to the Supplier, the Supplier shall allow Citi, its regulators (including but not limited to Bank of Thailand, the Anti-Money Laundering Office of Thailand) or any person appointed by them and/or its internal and external auditors to (i) access any report and finding made on the Supplier in connection with the Services performed for Citi; (ii) access to the business premises of the Supplier in the exercise of its right herein; (iii) inspect, examine and audit the Supplier’s operations and records in relation to the Services provided by the Supplier under the Agreement including but not limited to the internal controls and the confidentiality and security system; and (iv) obtain and make copies of reports, documents of transactions and information stored or processed by the Supplier in connection with the Services pursuant to the Agreement. 2. Information Security [Sections (3) ((1)) and (5(8), Annex (3) of BOT Notification # SorNorSor 8/2557 dated December 25th, 2557 ] The Supplier agrees and undertakes, and shall procure all its personnel, to segregate Citi’s data from its own data and data of any other entity and to stipulate a data access right of the Supplier’s personnel strictly to protect confidentiality of Citi and its clients’ information. 3. Transition Services [Sections 3 (5), Annex 3 of BOT Notification # SorNorSor 8/2557 dated December 25th, 2557 and Section 5.5.1 (4.3) of BOT Notification No. SorNorSor 6/2557 dated July 14, 2557] Upon termination of any Service, the Supplier shall return, destroy or delete all confidential information and personal information of Citi or its clients previously given (including without limitation, information incorporated in computer software or held in electronic storage media, together with any analyses, compilations, studies, reports or other documents or materials containing any such confidential information or personal information, as are in the possession or control of the Supplier) subject to the legal requirements for retention of records. The Supplier shall certify in writing to Citi within 30 days of the termination of the Services that it has not retained any such confidential information or personal information in any form whatsoever. 76

SCHEDULE Q —VIETNAM LAW REQUIREMENTS  (Version 6 — 23 March 2017) For the purposes of each Work Order made between the Supplier and Citi, the following terms and conditions shall be added to the Agreement and the Work Order, as applicable, in its entirety: 1. REGULATOR CONTROL OF THE VIETNAM ENTITY The Supplier and Citi, as the case may be, shall be subject to and shall fully comply with and abide by the laws of the Socialist Republic of Vietnam which include, but are not limited to, finance and banking laws and regulations applicable to the execution and implementation in force from time to time and each party warrants that the required approvals (if any) have been obtained and will be maintained for the duration of the Work Order concerned. Especially, for purposes of services provision under the Master Service Agreement and applicable Work Order, the Supplier shall satisfy all business conditions when conducting business in the lines of business investment which are subject to conditions in accordance with the Law on Investment and to ensure maintenance of all such business investment conditions during the process of business operation pursuant to Article 8.1 Law on Enterprises No. 68/2014/QH13 dated 26 November 2014. With regards to the foreign exchange control, Citi and the Supplier shall comply with the requirements of the Civil Code 2005, the Foreign Exchange Control Ordinance No. 28/2005/PL-UBTVQH11, Decree 70/2014/ND-CP dated 17 July 2014 of the Government on foreign exchange control and any implementation guidelines, replacement, supplement or in addition thereof and other laws and regulations as may be applicable from time to time. 2. INFORMATION CONFIDENTIALITY, DATA PRIVACY, STATE SECRECY AND IT SYSTEM SECURITY 2.1. The Supplier will maintain and enforce safety and physical security procedures with respect to its access and maintenance of Citi’s Confidential Information that are (a) at least equal to industry standards for such types of locations, and (b) which provide reasonably appropriate technical and organizational safeguards against accidental or unlawful destruction, loss, alteration or unauthorized disclosure of or access to Citi’s Confidential Information. Without limiting the generality of the foregoing, the Supplier will take all reasonable measures to secure and defend its location and equipment against “hackers” and others who may seek, without authorization, to modify or access the Supplier’s systems or the information found therein. The Supplier will periodically test its systems for potential areas where security could be breached. The Supplier will immediately report to Citi any breaches of security or unauthorized access to Citi’s systems that the Supplier detects or becomes aware of. The Supplier will use diligent efforts to remedy such breach of security or unauthorized access in a timely manner and deliver to Citi a root cause assessment and future incident mitigation plan with regard to any breach of security or unauthorized access affecting Citi’s Confidential Information. 2.2. The Supplier hereby acknowledges receipt of a written notice from Citi highlighting Citi’s Supplier’s obligations of confidentiality and data privacy, State secrets protection and IT system security under the laws of Vietnam. The written notice is attached hereto as Appendix I. The Supplier hereby undertake that the Supplier shall fully understand and strictly comply with the local laws and regulations applicable to the services provided by the Supplier under the Agreement and Work Order, including but not limited to the regulations as set forth in the Appendix I. 77

2.3. The Supplier hereby acknowledges that it is aware of and understands the effect of, and agrees and undertakes to, and to procure all its Personnel, third party vendors and Supplier Affiliates to observe all precautionary measures and prevent disclosure of information that will cause Citi to violate any applicable regulation as mentioned herein. 2.4. The Supplier further agrees and undertakes that it will not, and will covenant all its Personnel, third party vendors and Supplier Affiliates not to do anything which will cause the Vietnam Entity or any of its customers to violate the laws set out herein. 2.5. The Supplier (i) shall not, without Citi’s prior written consent, disclose the information provided pursuant to the Agreement and the Work Order in any manner (read with this Schedule) and (ii) shall treat information with at least the same degree of care that it treats its own confidential information, but in no event with less than a reasonable degree of care. 2.6. The Supplier and its employees shall not without Citi’s prior written consent further disclose Citi’s Confidential Information to any person (save for disclosure to the Supplier’s employees in compliance with Citi’s policies and procedures and applicable laws of Vietnam). For the avoidance of doubt, the term “person” includes the Supplier’s Affiliates. 2.7. Citi is allowed to transfer data, provide customer information including deposits, assets, and other information to its offshore head office or its branches at other countries provided that Citi ensures compliance with regulations on confidentiality of information, storage, safety, State secrecy and for internal operational purposes only. Subject to the foregoing regulation, Citi may have Confidential Information of an Affiliate and in connection with the Services provided by the Supplier to Citi, Citi may disclose Confidential Information of an Affiliate to the Supplier. Citi will inform the Supplier whether Confidential Information of an Affiliate is being provided to the Supplier in connection with the Services provided by the Supplier to Citi. The Supplier shall not disclose that Confidential Information to any other party (including, for the avoidance of doubt, any other Affiliate) unless such disclosure is with the written consent of Citi. The Supplier shall further comply with the Schedule applicable to that Affiliate. 2.8. The Supplier shall at all times be capable of segregating and clearly identifying all of Citi’s information, documents, records and assets that are processed by and/or stored with the Supplier pursuant to the Agreement and the Work Order. The Supplier shall take technical, personnel and organizational measures in order to maintain the confidentiality of Citi’s information between its various customers. 2.9. The Supplier hereby acknowledges that Citi may be requested at any time by the SBV to provide information and statistical data for purposes of assessment, inspection and supervision of operations of the credit institutions. 2.10. Citi shall not be permitted to provide any other organization or individual with information of Citi’s client at Citi under the laws of Vietnam, unless requested by competent authority or unless agreed by such clients pursuant to Civil Code 2005 (replaced by Civil Code 2015 as from 1 January 2017) and Law on Credit Institutions. The use of personal information is restricted only for the purpose(s) as prior agreed by the personal information’s owner; and the personal information’s owner reserves right upon request to update, modify or revoke any information which Citi or Supplier has been properly granted access to pursuant to Law on Cyber-information Security and Law on Protection of Consumers’ rights. 2.11. If any Citi’s information or data (even concerning deposits and deposited asset of the Citi’s clients) is considered as State secrets pursuant to Chapter 2 Ordinance 30/2000/PL-UBTVQH10 dated 28 December 2000 on State secrets protection, Decision No.15/2003/QD- 78

TTg issued by Prime Minister dated 20 January 2003 and Decree No. 70/2000/ND-CP dated 21 November 2000 ("State Secrets"), Citi is only permitted to disclose of such State Secrets to offshore entities after obtaining SBV Governor's approval except for complicated cases requiring approval from a higher-level authority as stated under SBV's Decision No. 1087/2003/QD-NHNN dated 17 September 2003. It is also required that such entity after receiving the State Secrets as approved is not allowed to disclose the same to any third party. 3. LANGUAGE Language used in Citi's official transaction documents shall be either Vietnamese or either bilingual including Vietnamese (pursuant to Article 20 Circular No. 40/2011/TT-NHNN dated 15 December 2011, Article 18 Decree 22/2006/ND-CP dated 28 February 2006 and Article 5.3.a Decision No. 1789/2005/QD-NHNN dated 12 December 2005). 4. WITHHOLDING TAX The Supplier being foreign contractors shall incur value added tax and corporate income tax imposed on the Services and/or Deliverables under the Master Service Agreement and applicable Work Order as required by laws of Vietnam, and Citi will pay such taxes on behalf of the Supplier pursuant to Article 1.1, Article 5.1 and Article 11 Circular 103/2014/TT-BTC dated 6 August 2014. 5. GOVERNING LAW AND JURISDICTION As from 1 January 2017, the governing law applicable to Master Agreement and/or the Work Order shall be agreed at the parties' discretion pursuant to Article 683.1 Civil Code 2015. All claims or disputes arising out of or in connection with the Master Agreement and/or the relevant Work Order which is performed, in whole and in part, in Vietnam may be submitted to the non-exclusive jurisdiction of court in Vietnam pursuant to Article 469.1 Code on Civil Proceedings 2015 (effective as from 1 July 2017); otherwise resolved by arbitration if the Parties have an arbitration agreement made either prior or after the dispute arises. APPENDIX I Appendix I­ Regulation list (6Febt 79 TTg issued by Prime Minister dated 20 January 2003 and Decree No. 70/2000/ND-CP dated 21 November 2000 (“State Secrets”), Citi is only permitted to disclose of such State Secrets to offshore entities after obtaining SBV Governor’s approval except for complicated cases requiring approval from a higher-level authority as stated under SBV’s Decision No. 1087/2003/QD-NHNN dated 17 September 2003. It is also required that such entity after receiving the State Secrets as approved is not allowed to disclose the same to any third party. 3. LANGUAGE Language used in Citi’s official transaction documents shall be either Vietnamese or either bilingual including Vietnamese (pursuant to Article 20 Circular No. 40/2011/TT-NHNN dated 15 December 2011, Article 18 Decree 22/2006/ND-CP dated 28 February 2006 and Article 5.3.a Decision No. 1789/2005/QD-NHNN dated 12 December 2005). 4. WITHHOLDING TAX The Supplier being foreign contractors shall incur value added tax and corporate income tax imposed on the Services and/or Deliverables under the Master Service Agreement and applicable Work Order as required by laws of Vietnam, and Citi will pay such taxes on behalf of the Supplier pursuant to Article 1.1, Article 5.1 and Article 11 Circular 103/2014/TT-BTC dated 6 August 2014. 5. GOVERNING LAW AND JURISDICTION As from 1 January 2017, the governing law applicable to Master Agreement and/or the Work Order shall be agreed at the parties’ discretion pursuant to Article 683.1 Civil Code 2015. All claims or disputes arising out of or in connection with the Master Agreement and/or the relevant Work Order which is performed, in whole and in part, in Vietnam may be submitted to the non-exclusive jurisdiction of court in Vietnam pursuant to Article 469.1 Code on Civil Proceedings 2015 (effective as from 1 July 2017); otherwise resolved by arbitration if the Parties have an arbitration agreement made either prior or after the dispute arises. APPENDIX I Appendix I - Regulation list (6Feb2 79

EX-31.1

Exhibit 31.1

CERTIFICATION

I, Kris Canekeratne, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Virtusa Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2017	/s/ Kris Canekeratne
	Kris Canekeratne
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION

I, Ranjan Kalia, certify that:

1.I have reviewed this quarterly report on Form 10-Q of Virtusa Corporation;

2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect the registrant’s internal control over financial reporting; and

5.The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation, of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 8, 2017	/s/ Ranjan Kalia
	Ranjan Kalia
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

EX-32.1

EXHIBIT 32.1

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Virtusa Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Kris Canekeratne, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2017	/s/ Kris Canekeratne
	Kris Canekeratne
	Chairman and Chief Executive Officer
	(Principal Executive Officer)

EX-32.2

EXHIBIT 32.2

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Virtusa Corporation (the “Company”) on Form 10-Q for the period ended June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Ranjan Kalia, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1)The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and

(2)The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 8, 2017	/s/ Ranjan Kalia
	Ranjan Kalia
	Executive Vice President and Chief Financial Officer
	(Principal Financial and Accounting Officer)

XML

Document and Entity Information - shares	3 Months Ended
	Jun. 30, 2017	Aug. 04, 2017
Document and Entity Information
Entity Registrant Name	VIRTUSA CORP
Entity Central Index Key	0001207074
Document Type	10-Q
Document Period End Date	Jun. 30, 2017
Amendment Flag	false
Current Fiscal Year End Date	--03-31
Entity Current Reporting Status	Yes
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		29,269,785
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1

XML

Consolidated Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Current assets:
Cash and cash equivalents	$ 153,979	$ 144,908
Short-term investments	62,432	72,028
Accounts receivable, net of allowance of $2,253 and $1,805 at June 30, 2017 and March 31, 2017, respectively	146,960	135,453
Unbilled accounts receivable	56,056	66,122
Prepaid expenses	35,704	32,751
Restricted cash	262	174
Other current assets	32,884	28,806
Total current assets	488,277	480,242
Property and equipment, net	118,633	118,890
Investments accounted for using equity method	1,710	1,708
Long-term investments	18,655	20,057
Deferred income taxes	23,543	23,093
Goodwill	211,949	211,089
Intangible assets, net	56,778	58,361
Other long-term assets	9,147	9,980
Total assets	928,692	923,420
Current liabilities:
Accounts payable	22,178	20,514
Accrued employee compensation and benefits	43,583	52,582
Deferred revenue	9,780	7,479
Accrued expenses and other	35,314	33,251
Current portion of long-term debt		8,870
Income taxes payable	3,811	3,066
Total current liabilities	114,666	125,762
Deferred income taxes	25,396	26,682
Long-term debt, less current portion	104,869	176,722
Long-term liabilities	10,209	9,238
Total liabilities	255,140	338,404
Commitments and contingencies
Series A Convertible Preferred Stock: par value $0.01 per share, 108,000 shares authorized, 108,000 shares issued and outstanding as of June 30, 2017; no shares authorized or issued as of March 31, 2017; redemption amount and liquidation preference of $108,000 and $0 as of June 30, 2017 and March 31, 2017, respectively	106,872
Stockholders' equity:
Undesignated preferred stock, $0.01 par value: Authorized 5,000,000 shares at June 30, 2017 and March 31, 2017; zero shares issued and outstanding at June 30, 2017 and March 31, 2017
Common stock, $0.01 par value: Authorized 120,000,000 shares at June 30, 2017 and March 31, 2017; issued 31,974,139 and 31,762,214 shares at June 30, 2017 and March 31, 2017, respectively; outstanding 29,169,730 and 29,905,511 shares at June 30, 2017 and March 31, 2017, respectively	320	318
Treasury stock, 2,804,409 and 1,856,703 common shares, at cost, at June 30, 2017 and March 31, 2017, respectively	(36,971)	(9,652)
Additional paid-in capital	310,528	305,387
Retained earnings	243,685	240,728
Accumulated other comprehensive loss	(40,128)	(39,749)
Total Virtusa stockholders' equity	477,434	497,032
Noncontrolling interest in subsidiaries	89,246	87,984
Total equity	566,680	585,016
Total liabilities and stockholders' equity	$ 928,692	$ 923,420

XML

Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Consolidated Balance Sheets
Accounts receivable, allowance (in dollars)	$ 2,253	$ 1,805
Series A convertible preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01
Series A convertible preferred stock, shares authorized	108,000	0
Series A convertible preferred stock, shares issued	108,000	0
Series A convertible preferred stock, shares outstanding	108,000	0
Series A convertible preferred stock, redemption amount	$ 108,000	$ 0
Series A convertible preferred stock, liquidation preference	$ 108,000	$ 0
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	31,974,139	31,762,214
Common stock, shares outstanding	29,169,730	29,905,511
Treasury stock, common shares	2,804,409	1,856,703

XML

Consolidated Statements of Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements of Income (Loss)
Revenue	$ 227,345	$ 205,471
Costs of revenue	166,279	153,560
Gross profit	61,066	51,911
Operating expenses:
Selling, general and administrative expenses	54,996	53,759
Income (loss) from operations	6,070	(1,848)
Other income (expense):
Interest income	1,005	1,294
Interest expense	(1,658)	(1,845)
Foreign currency transaction losses	(77)	(3,580)
Other, net	105	6
Total other expense	(625)	(4,125)
Income (loss) before income tax expense (benefit)	5,445	(5,973)
Income tax expense (benefit)	798	(463)
Net income (loss)	4,647	(5,510)
Less: net income attributable to noncontrolling interests, net of tax	989	746
Net income (loss) available to Virtusa stockholders	3,658	(6,256)
Less: Series A Convertible Preferred Stock dividends and accretion	701
Net income (loss) available to Virtusa common stockholders	$ 2,957	$ (6,256)
Basic earnings (loss) per share (in dollars per share)	$ 0.10	$ (0.21)
Diluted earnings (loss) per share (in dollars per share)	$ 0.10	$ (0.21)

XML

Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Consolidated Statements of Comprehensive Income (Loss)
Net income (loss)	$ 4,647	$ (5,510)
Other comprehensive income (loss):
Foreign currency translation adjustments	3,605	(5,062)
Pension plan adjustment	45	24
Unrealized gain (loss) on available-for-sale securities, net of tax	299	231
Unrealized gain (loss) on effective cash flow hedges, net of tax	(4,055)	1,153
Other comprehensive loss	(106)	(3,654)
Comprehensive income (loss)	4,541	(9,164)
Less: comprehensive income (loss) attributable to noncontrolling interest, net of tax	1,262	(1,095)
Comprehensive income (loss) available to Virtusa stockholders	$ 3,279	$ (8,069)

XML

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Cash flows from operating activities:
Net income (loss)	$ 4,647	$ (5,510)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	6,643	6,188
Share-based compensation expense	4,788	6,133
Provision for doubtful accounts	411	(5)
Gain on disposal of property and equipment	(8)	(77)
Foreign currency transaction losses, net	77	3,580
Amortization of discounts and premiums on investments	93	96
Amortization of debt issuance cost	284	283
Net change in operating assets and liabilities:
Accounts receivable and unbilled receivable	(4,832)	7,289
Prepaid expenses and other current assets	(2,667)	(296)
Other long-term assets	(179)	4,579
Accounts payable	1,358	(4,266)
Accrued employee compensation and benefits	(9,424)	(16,202)
Accrued expenses and other current liabilities	3,135	(5,771)
Income taxes payable	(2,648)	(7,433)
Other long-term liabilities	(614)	(3,039)
Net cash provided by (used in) operating activities	1,064	(14,451)
Cash flows from investing activities:
Proceeds from sale of property and equipment	30	246
Purchase of short-term investments	(8,867)	(19,333)
Proceeds from sale or maturity of short-term investments	29,002	39,639
Purchase of long-term investments	(8,753)	(6,259)
Proceeds from sale or maturity of long-term investments		800
(Increase) decrease in restricted cash	(163)	91,767
Business acquisition, net of cash acquired	(600)	(2,606)
Purchase of property and equipment	(3,044)	(3,278)
Net cash provided by investing activities	7,605	100,976
Cash flows from financing activities:
Proceeds from exercise of common stock options	1,629	476
Proceeds from exercise of subsidiary stock options	142	257
Payment of debt	(81,000)	(2,500)
Payments of withholding taxes related to net share settlements of restricted stock	(1,416)	(2,276)
Series A Convertible Preferred Stock proceeds, net of issuance costs of $1,154	106,846
Repurchase of common stock	(27,319)
Payment of contingent consideration related to acquisitions		(830)
Acquisition of noncontrolling interest		(89,147)
Principal payments on capital lease obligation	(31)	(43)
Net cash used in financing activities	(1,149)	(94,063)
Effect of exchange rate changes on cash and cash equivalents	1,551	(1,109)
Net increase (decrease) in cash and cash equivalents	9,071	(8,647)
Cash and cash equivalents, beginning of period	144,908	148,986
Cash and cash equivalents, end of period	$ 153,979	$ 140,339

XML

Consolidated Statements of Cash Flows (Parenthetical) $ in Thousands	3 Months Ended
	Jun. 30, 2017 USD ($)
Series A Convertible Preferred Stock Member
Issuance costs	$ 1,154

XML

Nature of the Business

3 Months Ended

Jun. 30, 2017

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 information technology (“IT”) consulting and 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 & Entertainment, as they look 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 & consulting, to technology & user experience (“UX”) design, development of IT applications, systems integration, testing & business assurance, and maintenance and support services, including infrastructure and managed services. Our services leverage our distinctive consulting approach and unique platforming methodology to transform our clients’ businesses through the innovative use of technology and domain knowledge to solve critical business problems. Our services enable our clients to accelerate business outcomes by consolidating, rationalizing and modernizing 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, 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.

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Unaudited Interim Financial Information

3 Months Ended

Jun. 30, 2017

Unaudited Interim Financial Information

Unaudited Interim Financial Information

(2) Unaudited Interim Financial Information

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, and should be read in conjunction with the Company’s audited consolidated financial statements (and notes thereto) for the fiscal year ended March 31, 2017 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or SEC, on May 26, 2017. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of the accompanying unaudited consolidated financial statements have been included, and all material adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire fiscal year.

Principles of Consolidation

The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of Virtusa Corporation and all of its subsidiaries that are directly or indirectly more than 50% owned or controlled. When the Company does not have a controlling interest in an entity, but exerts a significant influence on the entity, the Company applies the equity method of accounting. 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.

The consolidated financial statements reflect the accounts of the Company and its direct and indirect subsidiaries, Virtusa Consulting Services Private Limited, Virtusa Software Services Private Limited, Virtusa Technologies (India) Private Limited and Polaris Consulting & Services Limited, Optimus Global Services Limited, each organized and located in India; Virtusa (Private) Limited, organized and located in Sri Lanka; Virtusa UK Limited, Polaris Consulting & Services Limited, each organized and located in the United Kingdom; Virtusa US LLC, Virtusa Securities Corporation, a Massachusetts securities corporation, Apparatus, Inc. organized and located in Indiana, each organized and located in the United States; Virtusa International, B.V., Virtusa C.V., Virtusa Netherlands Cooperatief U.A., Polaris Software Lab B.V., each organized and located in the Netherlands; Virtusa Hungary Kft., Polaris Consulting & Serviced, Kft., each organized and located in Hungary; Virtusa Germany GmbH, Polaris Software Lab GmbH, each organized and located in Germany; Virtusa Switzerland GmbH, Polaris Consulting & Services SA, each organized and located in Switzerland; Virtusa Singapore Private Limited, Polaris Consulting & Services Pte Limited, each organized and located in Singapore; Virtusa Malaysia Private Limited Company, Polaris Consulting & Services, SND BHD, each organized and located in Malaysia; Virtusa Austria GmbH, organized and located in Austria; Virtusa Philippines Inc., organized and located in the Philippines; TradeTech Consulting Scandinavia AB, organized and located in Sweden; Virtusa Canada, Inc. and Polaris Consulting & Services Inc, each organized and located in Canada; Polaris Consulting & Services Ireland Limited, organized and located in Ireland; Polaris Consulting & Services Japan K.K., organized and located in Japan; Polaris Consulting & Services Pty Ltd., organized and located in Australia; Polaris Consulting & Services FZ-LLC, organized and located in Dubai; and Polaris Software Lab (Shanghai) Limited, organized and located in China. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the 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, share-based compensation, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, intangible assets, contingent consideration and valuation of financial instruments including derivative contracts and investments. Management bases its estimates on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated financial statements.

Fair Value of Financial Instruments

At June 30, 2017 and March 31, 2017, 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 5 of the notes to our financial statements for a discussion of the fair value of the Company’s other financial instruments.

Recent accounting pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2018. Early application is permitted but not before periods beginning on or after January 1, 2017. In March, April and May 2016, the FASB issued updates to the new revenue standard to clarify the implementation guidance on principal versus agent considerations for reporting revenue gross versus net, identifying performance obligations, accounting for licenses of intellectual property, transition, contract modifications, collectability, non-cash consideration and presentation of sales and other similar taxes with the same effective date. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is in the process of reviewing existing revenue contracts and related costs for evaluating the recognition of revenue from contracts with customers as well as commission and fulfillment costs that may require capitalization and amortization. The Company is also in the process of identifying and implementing changes to our processes to meet the reporting and disclosure requirements. The Company expects the new standard could change the amount and timing of revenue and costs under certain arrangement types. The Company has not yet determined what impact the new guidance will have on its consolidated financial statements and related disclosures or concluded on the transition method.

In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The update also amends certain disclosure requirements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. Based on the Company’s current investment portfolio, the adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In February 2016, the FASB issued as update (ASU 2016-02) to the standard on leases to increase transparency and comparability among organizations. The new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use asset and a lease liability for all leases with lease terms equal to or greater than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize total lease expense on a straight-line basis. For public business entities this standard is effective for the annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption of this new standard is permitted. Entities will be required to use a modified retrospective transition which provides for certain practical expedients. The Company is currently evaluating the effect the new standard will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued an update (ASU 2016-09) to the standard on Compensation- Stock Compensation, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Upon adoption, entities will be required to apply a modified retrospective, prospective or retrospective transition method depending on the specific section of the guidance being adopted. The Company adopted this guidance effective April 1, 2017 and the following describe the results of adoption:

· The Company prospectively recognized tax benefits of $278 in the income tax expense line item of its consolidated statements of income (loss) in the three months ended June 30, 2017 related to excess tax benefits on stock options;

· The Company changed its accounting policy from estimated forfeitures to actual forfeitures effective April 1, 2017. The cumulative impact of the change in the accounting policy did not have a material impact on the consolidated financial statements, therefore prior period amounts have not been restated;

· The Company elected to adopt cash flow presentation of excess tax benefits retrospectively where these benefits are classified along with other income tax cash flows as operating cash flows. Accordingly, prior period amounts in the consolidated statement of cash flows have been restated;

· The Company adopted cash flow presentation of taxes paid when an employer withholds shares for tax-withholding purposes retrospectively and classified as a financing activity in the Company’s statement of cash flows. Accordingly, prior period amounts have been restated;

· The remaining amendments to this standard, as noted above, are either not applicable, or do not change the Company’s current accounting practices and thus do not impact its consolidated financial statements.

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.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update is intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows. This standard update addresses eight specific cash flow issues, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The guidance requires application using a retrospective transition method. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, an update to the standard on income taxes. This new standard requires the recognition of current and deferred income taxes when an intra-entity transfer of assets other than inventory occurs. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2017. Early adoption is permitted in the first interim period. Upon adoption, the entities will be required to use a modified retrospective transition approach. The adoption of this guidance is not expected to have a material impact on 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 adoption of this guidance will impact the Company’s presentation of cash and cash equivalents. As of June 30, 2017 and March 31, 2017, the Company’s restricted cash was $341 and $178, respectively.

In January 2017, the FASB issued ASU 2017-01, an update on business combinations, which clarifies the definition of a business. The update requires a business to include at least an input and a substantive process that together significantly contribute to the ability to create outputs. The update also states that the definition of a business is not met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2018. Upon adoption, entities will be required to apply the update prospectively. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, an update on goodwill, which eliminates the need to calculate the implied fair value of goodwill when an impairment is indicated. The update states that goodwill impairment is measured as the excess of a reporting unit’s carrying value over its fair value, not to exceed the carrying amount of goodwill. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, 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 adoption of this guidance is not expected to have a material impact on the consolidated financial statements. The Company’s current presentation of service cost components is consistent with the requirements of the new standard. Upon adoption of the new standard, the Company expects to present the other components within other (income) expense.

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, an update that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under ASC 718, Compensation — Stock Compensation. Under the amendments in ASU 2017-09, an entity should account for the effects of a modification unless all of the following criteria are met: 1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified — if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; 2) the vesting conditions of the modified award are the same as the conditions of the original award immediately before the original award is modified; 3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In March 2017, FASB issued ASU 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” The amendments in this update shorten the amortization period for certain callable debt securities that are held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount, which would be amortized to maturity. This ASU is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018, which for us is the first quarter ending December 31, 2019. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

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Earnings (loss) per Share

3 Months Ended

Jun. 30, 2017

Earnings (loss) per Share

Earnings (loss) per Share

(3) Earnings (loss) per Share

Basic earnings (loss) per share (“EPS”) is computed by dividing net income, 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 the Series A Convertible Preferred Stock, restricted stock units, unvested restricted stock and stock options. 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:

	Three Months Ended June 30,
	2017			2016
Numerators:
Net income (loss) available to Virtusa stockholders	$	3,658		$	(6,256	)
Less: Series A Convertible Preferred Stock dividends and accretion	(701		)	—
Net income (loss) available to Virtusa common stockholders	2,957			$	(6,256	)
Denominators:
Basic weighted average common shares outstanding	29,651,602			29,486,287
Basic earnings (loss) per share	$	0.10		$	(0.21	)

The components of diluted earnings (loss) per share are as follows:

	Three Months Ended June 30,
	2017		2016
Numerators:
Net income (loss) available to Virtusa common stockholders	$	2,957	$	(6,256	)
Add: Series A Convertible Preferred Stock dividends and accretion	—		—
Net income (loss) available to Virtusa common stockholders	2,957		$	(6,256	)
Denominators:
Basic weighted average common shares outstanding	29,651,602		29,486,287
Dilutive effect of Series A Convertible Preferred Stock	—		—
Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units	599,548		—
Weighted average shares-diluted	30,251,150		29,486,287
Diluted earnings (loss) per share	$	0.10	$	(0.21	)

During the three months ended June 30, 2017, unvested restricted stock awards and unvested restricted stock units issuable for, and options to purchase 287,606, shares of common stock were excluded from the calculations of diluted earnings per share as their effect would have been anti-dilutive. For the three months ended June 30, 2017, the weighted average shares of Series A Convertible Preferred Stock of 1,912,088 were excluded from the diluted earnings per share as their effect would have been anti-dilutive using the if-converted method. During the three months ended June 30, 2016, there were no shares excluded from the calculation of diluted earnings per share.

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Investment Securities

3 Months Ended

Jun. 30, 2017

Investment Securities

Investment Securities

(4) Investment Securities

At June 30, 2017 and March 31, 2017, all of the Company’s investment securities were classified as available-for-sale and were carried on its balance sheet at their fair market value. A fair market value hierarchy based on three levels of inputs was used to measure each security (See Note 5 of the notes to our 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 June 30, 2017:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Corporate bonds:
Current	$	32,743	$	1	$	(57	)	$	32,687
Non-current	16,833		2		(35		)	16,800
Preference shares:
Current	—		—		—			—
Non-current	1,831		—		(169		)	1,662
Agency and short-term notes:
Current	2,612		—		(8		)	2,604
Non-current	—		—		—			—
Mutual funds:
Current	20,230		688		—			20,918
Commercial paper:
Current	2,058		—		—			2,058
Equity Shares/ Options:
Non-current	15		178					193
Time deposits:
Current	4,165		—		—			4,165
Total available-for-sale securities	$	80,487	$	869	$	(269	)	$	81,087

The following is a summary of investment securities at March 31, 2017:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Corporate bonds:
Current	$	36,722	$	7	$	(55	)	$	36,674
Non-current	17,511		3		(48		)	17,466
Preference shares:
Current	1,633		—		(75		)	1,558
Non-current	1,829		—		(101		)	1,728
Agency and short-term notes:
Current	1,816		—		(3		)	1,813
Non-current	803		—		(3		)	800
Mutual funds:
Current	17,934		371		—			18,305
Commercial paper:
Current	2,993		—		—			2,993
Equity Shares/ Options:
Non-current	17		46					63
Time deposits:
Current	10,685		—		—			10,685
Total available-for-sale securities	$	91,943	$	427	$	(285	)	$	92,085

The Company evaluates investments with unrealized losses to determine if the losses are other than temporary. The Company has determined that the gross unrealized losses at June 30, 2017 and March 31, 2017 are temporary. In making this determination, the Company considered the financial condition, credit ratings and near-term prospects of the issuers, the underlying collateral of the investments, and the magnitude of the losses as compared to the cost and the length of time the investments have been in an unrealized loss position. Additionally, while the Company classifies the securities as available for sale, the Company does not currently intend to sell such investments and it is more likely than not the Company will not be required to sell such investments prior to the recovery of their carrying value.

Proceeds from sales of available-for-sale investment securities and the gross gains and losses that have been included in earnings as a result of those sales were as follows:

	Three Months Ended June 30,
	2017			2016
Proceeds from sales of available-for-sale investment securities	$	29,002		$	40,439
Gross gains	$	19		$	310
Gross losses	(90		)	—
Net realized gains on sales of available-for-sale investment securities	$	(71	)	$	310

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Fair Value of Financial Instruments

3 Months Ended

Jun. 30, 2017

Fair Value of Financial Instruments

Fair Value of Financial Instruments

(5) Fair Value of Financial Instruments

The Company uses a framework for measuring fair value under U.S. generally accepted accounting principles and enhanced disclosures about fair value measurements. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The Company’s financial assets and liabilities reflected in the consolidated financial statements at carrying value include marketable securities and other financial instruments which approximate fair value. Fair value for marketable securities is determined using a market approach based on quoted market prices at period end in active markets. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, that may be used to measure fair value which are the following:

· Level 1—Quoted prices in active markets for identical assets or liabilities.

· Level 2—Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

· Level 3—Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2017:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Available-for-sales securities—current	$	—	$	62,432	$	—	$	62,432
Available-for-sales securities—non-current	—		18,655		—		18,655
Foreign currency derivative contracts	—		11,789		—		11,789
Interest Rate Swap Contracts	—		1,568		—		1,568
Total assets	$	—	$	94,444	$	—	$	94,444
Liabilities:
Foreign currency derivative contracts	$	—	$	377	$	—	377
Contingent consideration	—				100		100
Total liabilities	$	—	$	377	$	100	$	477

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2017:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Available-for-sales securities—current	$	—	$	72,028	$	—	$	72,028
Available-for-sales securities—non-current	—		20,057		—		20,057
Foreign currency derivative contracts	—		16,431		—		16,431
Interest Rate Swap Contracts	—		1,842		—		1,842
Total assets	$	—	$	110,358	$	—	$	110,358
Liabilities:
Foreign currency derivative contracts	$	—	$	—	$	—	—
Interest Rate Swap Contracts	—		—		—		—
Total liabilities	$	—	$	—	$	—	$	—

The Company determines the fair value of the contingent consideration related to the Company’s acquisition of a small consulting company based on the probability of attaining a specific contract renewal target. See Note 7 of the notes to our financial statements included herein for a description of this acquisition. The following table provides a summary of changes in fair value of the Company’s Level 3 financial liabilities at June 30, 2017.

	Level 3 Liabilities
Balance at April 1, 2017	$	—
Contingent consideration arising from acquisition (See Note 7)	100
Payments made during the period	—
Balance at June 30, 2017	$	100

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Derivative Financial Instruments

3 Months Ended

Jun. 30, 2017

Derivative Financial Instruments

Derivative Financial Instruments

(6) Derivative Financial Instruments

The Company evaluates its foreign exchange policy on an ongoing basis to assess its ability to address foreign exchange exposures on its consolidated balance sheets, statements of income 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 “Economic Hedge Program” involves the purchase of derivative instruments with maturities of up to 92 days, and is designed to mitigate the impact of foreign exchange on U.K. pound sterling, the euro and Swedish krona denominated revenue and costs with respect to the quarter for which such instruments are purchased. The Balance Sheet Program and the Economic Hedge Program are treated as economic hedges as these programs do not meet the criteria for hedge accounting and all gains and losses are recognized in consolidated statement of income 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 five counterparties as of June 30, 2017.

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 June 30, 2017, the Company had not posted any collateral related to these agreements. If the Company had breached any of these provisions as of June 30, 2017, it could have been required to settle its obligations under these agreements at amounts which approximate the June 30, 2017 fair values reflected in the table below. During the three months ended June 30, 2017, 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 three month ended June 30, 2017 or 2016.

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 $152,052 and $153,435 at June 30, 2017 and March 31, 2017, respectively. Unrealized net gains related to these contracts which are expected to be reclassified from AOCI to earnings during the next 12 months were $11,713 at June 30, 2017. At June 30, 2017, the maximum outstanding term of any derivative instrument was 15 months.

On July 26, 2016, the Company entered into two 12-month forward starting interest rate swap transactions and on July 28, 2016, the Company entered into a third 12-month forward starting interest rate swap transaction to mitigate Company’s interest rate risk on the Company’s variable rate debt (collectively, “The Interest Rate Swap Agreements”). 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 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 Interest Rate Swap Agreements have an effective date of July 31, 2017 and a maturity date of July 31, 2020. The swaps have an aggregate beginning notional amount of $93,800 and, with the pre-payment of $81,000 of principal on our existing debt, hedge approximately 86% of the Company’s forecasted outstanding debt balance as of July 31, 2017. The notional amount of the swaps amortizes over the three swap periods. The Interest Rate Swap agreements require the Company to make monthly fixed interest rate payments based on the amortized notional amount at a blended weighted average rate of 1.025% and the Company will receive 1-month LIBOR on the same notional amounts.

The counterparties to the Interest Rate Swap Agreements could demand an early termination of the 2016 Swap Agreements if the Company is in default under the Credit Agreement, or any agreement that amends or replaces the Credit Agreement in which the counterparty is a member, and the Company is 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, 2016, of not more than 3.25 to 1.00 for the first year of the Credit Agreement, of not more than 3.00 to 1.00 for the second year of the Credit Agreement, and 2.75 to 1.00 thereafter, each as determined for the four consecutive quarter period ending on each fiscal quarter and a minimum consolidated fixed charge coverage ratio of 1.25 to 1.00. As of June 30, 2017, the Company was in compliance with these covenants. The unrealized gain associated with the 2016 Swap Agreement was $1,568 and 1,842 at June 30, 2017 and March 31, 2017, respectively, which represents the estimated amount that the Company would receive from the counterparties in the event of an early termination.

The following table sets forth the fair value of derivative instruments included in the consolidated balance sheets at June 30, 2017 and March 31, 2017:

Derivatives designated as hedging instruments

	June 30, 2017		March 31, 2017
Foreign currency exchange contracts:
Other current assets	$	11,789	$	15,544
Other long-term assets	$	—	$	887
Accrued expenses and other	$	309	$	—
Long-term liabilities	$	68	$	—

	June 30, 2017		March 31, 2017
Interest rate swap contracts:
Other long-term assets	$	1,568	$	1,842

The following tables set forth the effect of the Company’s foreign currency exchange contracts on the consolidated financial statements of the Company for the three months ended June 30, 2017 and 2016:

	Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)
Derivatives Designated as Cash Flow	Three months ended June 30,
Hedging Relationships	2017			2016
Foreign currency exchange contracts	$	505		$	2,059
Interest rate swaps	(274		)	—

Location of Gain or (Loss) Reclassified	Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion)
from AOCI into Income (loss) (Effective	Three months ended June 30,
Portion)	2017		2016
Revenue	$	2,593	$	528
Costs of revenue	$	2,065	$	198
Operating expenses	$	1,161	$	121

		Amount of Gain or (Loss) Recognized in Income
		(loss) on Derivatives
		Three months ended
Derivatives not Designated	Location of Gain or (Loss)	June 30,
as Hedging Instrument	Recognized in Income (loss) on Derivatives	2017			2016
Foreign currency exchange contracts	Foreign currency transaction gains (losses)	$	—		$	(180	)
	Revenue	$	(181	)	$	109
	Costs of revenue	$	143		$	(54	)
	Selling, general and administrative expenses	$	31		$	(13	)

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Acquisitions

3 Months Ended

Jun. 30, 2017

Acquisitions

Acquisitions

(7) Acquisitions

On March 3, 2016, pursuant to a share purchase agreement (the “SPA”), dated as of November 5, 2015, by and among Virtusa Consulting Services Private Limited (“Virtusa India”), a subsidiary of the Company, Polaris Consulting & Services Limited (“Polaris”) and the Promoter Sellers named therein, as amended, the Company completed the purchase of 53,133,127 shares, or approximately 51.7% of the fully-diluted capitalization of Polaris from certain Polaris shareholders for approximately $168,257 (Indian rupees 11,391,365) in cash (the “Polaris SPA Transaction”). In addition, on April 6, 2016, Virtusa India completed an unconditional mandatory open offer with successful tender to purchase an additional 26% of the fully diluted outstanding shares of Polaris common stock from Polaris’ public shareholders. The mandatory open offer was conducted in accordance with requirements of the Securities and Exchange Board of India (“SEBI”) and the applicable Indian rules on takeovers. Virtusa India purchased 26,719,942 shares of Polaris common stock for an aggregate purchase price of approximately $89,147 (Indian rupees 5,935,260). Pursuant to the mandatory open offer, during the fiscal year ended March 31, 2016, the Company transferred $89,220 into an escrow account in accordance with the India takeover rules, which was recorded as restricted cash at March 31, 2016, and the mandatory open offer closed on April 6, 2016. On April 6, 2016, the restricted cash was released from the escrow account and used for settlement for the mandatory open offer.

Upon the closing of the mandatory offering, Virtusa’s ownership interest in Polaris increased from approximately 51.7% to 77.7% of Polaris’ fully diluted shares of common stock outstanding, and from approximately 52.9% to 78.8% of Polaris’ basic shares of common stock outstanding. Under applicable Indian rules on takeovers, Virtusa India was required to sell within one year of the settlement of the unconditional mandatory offer its shares of common stock in Polaris in excess of 75% of the basic outstanding shares of common stock of Polaris. In order to comply with the applicable Indian rules on takeovers, during the three months ended December 31, 2016, the Company sold 3.7% of its shares of Polaris common stock through a public offering. The sale offer closed on December 14, 2016, and the Company received approximately $7,645 in proceeds, net of $188 in brokerage fees and taxes. In addition to these costs, the Company incurred additional costs of $409 towards professional and legal fees and expense. The Company’s ownership interest in Polaris prior to the sale offer was 78.6% of the outstanding shares of common stock, and upon the closing of the sale offer, the Company’s ownership interest decreased from 78.6% to 74.9% of Polaris’ basic shares of common stock outstanding. As of June 30, 2017 the Company has 74.4% of ownership interest on Polaris basic shares of common stock. In accordance with ASC 810-10, changes in a parent’s ownership, while retaining its financial controlling interest, are accounted for as equity transactions.

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.

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Series A Convertible Preferred Stock

3 Months Ended

Jun. 30, 2017

Series A Convertible Preferred Stock

Series A Convertible Preferred Stock

(8)  Series A Convertible Preferred Stock

On May 3, 2017, the Company and Orogen Viper LLC (the “Purchaser”), entered into an Investment Agreement (the “Investment Agreement”), pursuant to which the Company issued and sold to the Purchaser, and the Purchaser purchased from the Company, an aggregate of 70,000 shares of voting convertible preferred stock of the Company, designated as the Company’s 3.875% Series A Convertible Preferred Stock, par value $0.01 per share (the “Series A Voting Preferred Stock”), and 38,000 shares of a separate class of non-voting convertible preferred stock of the Company, designated as the Company’s 3.875% Series A-1 Convertible Preferred Stock, par value $0.01 per share (the “Series A-1 Preferred Stock” and, together with the Series A Voting Preferred Stock, the “Series A Convertible Preferred Stock”), in each case for a purchase price of $1,000 per share, representing $108,000 of gross proceeds to the Company.

The Investment Agreement provides the Purchaser the right, pursuant to the terms of the Series A Convertible Preferred Stock, to appoint a director to serve on our Board. Pursuant to the Investment Agreement, in connection with the closing of the transactions contemplated by the Investment Agreement (the “Closing”), our Board of Directors (the “Board”) increased the size of the Board from nine directors to ten directors and elected Vikram S. Pandit, the initial nominee designated by the Purchaser, to the Board, subject to replacement pursuant to the procedures described in the Investment Agreement. Such appointment right will terminate if the Purchaser and its affiliates fail to retain beneficial ownership of at least 50% of the number of shares of our common stock underlying the Series A Convertible Preferred Stock held by the Purchaser immediately following the Closing.

Following the conversion of the Series A Convertible Preferred Stock into shares of our common stock, so long as the Purchaser retains beneficial ownership of at least 50% of the number of shares of our common stock underlying the Series A Convertible Preferred Stock held by the Purchaser immediately following the Closing, we have agreed to include one nominee of the Purchaser for election as a director of the same class (whether Class I, Class II or Class III) as the other directors nominated by us for election at our next meeting of stockholders following such conversion, and to renominate such individual thereafter at each meeting of stockholders electing such class of directors. We are required to use our reasonable efforts to cause the election of such person.

Pursuant to the Investment Agreement, the Purchaser has agreed, subject to certain exceptions, that until the later of (1) the first date on which there is no Purchaser-affiliated director serving on our Board, and (2) May 3, 2019 (the “Standstill Period”), the Purchaser will not, among other things, subject to certain exceptions described in the Investment Agreement: (i) acquire any securities of the Company if, immediately after such acquisition, the Purchaser would collectively own in the aggregate more than 20.0% of the then outstanding common stock of the Company, (ii) propose or seek to effect any tender or exchange offer, merger or other business combination involving the Company or its securities, or make any public statement with respect to such transaction, (iii) make, or in any way participate in any “proxy contest” or other solicitation of proxies, (iv) seek election or appointment to, or representation on, our Board other than as set forth in the Investment Agreement or the Series A Certificate of Designations (as defined below), or seek the removal of any of our directors, or (v) conduct any referendum of stockholders of the Company or make or be the proponent of any stockholder proposal.

The Investment Agreement restricts the Purchaser’s ability to transfer the Series A Convertible Preferred Stock or shares of our common stock issued or issuable upon conversion of the Series A Convertible Preferred Stock, subject to certain exceptions specified in the Investment Agreement. In particular, prior to the earliest of (i) May 3, 2019, (ii) a change of control of the Company or entry into a definitive agreement for a transaction that, if consummated, would result in a change of control of the Company, and (iii) the later of May 3, 2018 and the first date on which there is no Purchaser-affiliated director serving on our Board, the Purchaser will be restricted from selling, offering, transferring, assigning, pledging, mortgaging, hypothecating, gifting or disposing the Series A Convertible Preferred Stock or shares of common stock issued or issuable upon conversion of the Series A Convertible Preferred Stock. Such restrictions also prohibit the Purchaser from entering into or engaging in any hedge, swap, short sale, derivative transaction or other agreement or arrangement that transfers any ownership of, or interests in, the shares of Series A Convertible Preferred Stock or shares of common stock issued or issuable upon conversion of the Series A Convertible Preferred Stock. These restrictions do not apply to, among others, transfers to affiliates or in connection with certain third-party tender offers.

Subject to certain limitations, the Investment Agreement provides the Purchaser with certain registration rights for the shares of common stock underlying the Series A Convertible Preferred Stock (including any shares issued or issuable as dividends on the Series A Convertible Preferred Stock) held by the Purchaser. The Investment Agreement contains other customary terms for private investments in public companies, including representations, warranties and covenants.

On May 3, 2017, we filed with the Secretary of State of the State of Delaware (i) a Certificate of the Powers, Designations, Preferences and Rights of the 3.875% Series A Preferred Stock (the “Series A Certificate of Designations”) and (ii) a Certificate of the Powers, Designations, Preferences and Rights of the 3.875% Series A-1 Preferred Stock (the “Series A-1 Certificate of Designations” and, together with the Series A Certificate of Designations, the “Certificates of Designations”). Generally, except with respect to certain voting rights, and a conversion trigger applicable to the Series A-1 Preferred Stock described below as the “HSR Conversion,” the rights, preferences and privileges of the Series A Preferred Stock and the Series A-1 Preferred Stock are substantially identical.

The Series A Convertible Preferred Stock has a liquidation preference of $1,000 per share. In addition, cumulative Series A Convertible Preferred Stock dividends accumulate on the Series A Convertible Preferred Stock at a rate of 3.875% per annum, and are payable quarterly in arrears. The payments on such dividends may be paid in cash or, at our option, in shares of our common stock. We may only pay such dividends in shares of common stock on or after August 1, 2018, subject to an aggregate share cap and so long as we have paid full cumulative dividends on the Series A Convertible Preferred Stock for all past dividend periods, and there is adequate current public information with respect to the Company and no volume limitations would apply to the resale of such shares, in each case under Rule 144 under the Securities Act of 1933.

The Series A Convertible Preferred Stock is convertible at the option of the holders at any time into shares of the Company’s common stock at an initial conversion rate of 27.77778 shares of the Company’s common stock per share of Series A Convertible Preferred Stock (which is equal to an initial conversion price of approximately $36.00 per share of the Company’s common stock), subject to certain customary anti-dilution adjustments. If at any time after May 3, 2020, the closing sale price of our common stock exceeds 150% of the then applicable conversion price of the Series A Convertible Preferred Stock for at least 20 trading days during a period of 30 consecutive trading days, the Company may cause some or all of the Series A Convertible Preferred Stock to be converted into shares of common stock at the then applicable conversion rate. Upon the conversion of the Series A Convertible Preferred Stock into common stock, we are required to pay all accumulated but unpaid dividends in additional shares of common stock valued at the then applicable conversion price on the date of such conversion.

Holders of Series A Convertible Preferred Stock are entitled to vote generally with the holders of common stock on an as-converted basis (including with respect to election of the members of our Board). Holders of Series A Convertible Preferred Stock are also entitled to certain limited special approval rights, including with respect to amendments to the Company’s organizational documents that have an adverse effect on the Series A Convertible Preferred Stock, certain issuances of senior or pari passu securities, certain purchases, redemptions or other acquisitions of junior securities or payments, dividends or distributions thereon. In addition, so long as any shares of Series A Convertible Preferred Stock are outstanding and the Purchaser and its affiliates collectively beneficially own at least a majority of the shares of Series A Convertible Preferred Stock beneficially owned by such holders immediately following the Closing, the holders of Series A Convertible Preferred Stock, voting as a separate class by majority vote, are entitled to elect one director to serve on our Board.

Holders of Series A-1 Preferred Stock generally have no voting rights except as required by law and with respect to amendments to the Company’s organizational documents that have an adverse effect on the Series A-1 Preferred Stock. At such time as any waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 applicable to the acquisition of shares of Preferred Stock expires or is terminated, all shares of the Series A-1 Preferred Stock then issued and outstanding shall immediately and automatically convert on a one for one basis to shares of Series A Preferred Stock (the “HSR Conversion”). Upon such HSR Conversion (which occurred in May 2017), all accumulated but unpaid dividends on such shares of Series A-1 Preferred Stock immediately prior to such HSR Conversion will be converted into an equivalent amount of accumulated but unpaid dividends on shares of Series A Preferred Stock immediately following such HSR Conversion.

With certain exceptions, upon a Fundamental Change (as defined in the Certificates of Designations), the holders of the Series A Convertible Preferred Stock may require that the Company repurchase for cash all or any whole number of shares of Series A Convertible Preferred Stock at a per-share repurchase price equal to 100% of the liquidation preference of such shares, plus accumulated and unpaid dividends. If we fail 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 the date that the Company is required to effect such repurchase, 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. The definition of Fundamental Change includes a sale of substantially all the Company’s assets, a change of control of the Company by way of a tender offer, merger or similar event, the adoption of a plan relating to the Company’s liquidation or dissolution and certain delistings of our common stock, except in certain cases described in the Certificates of Designations in which the consideration received or to be received by the Company’s common stockholders in a sale or change of control transaction consists primarily of publicly listed and traded securities.

Holders of Series A Convertible Preferred Stock that are converted in connection with a Make-Whole Fundamental Change, as defined in the Certificates of Designations, are, under certain circumstances, entitled to an increase in the conversion rate for such shares of Series A Convertible Preferred Stock based on the effective date of such event and the applicable price attributable to the event as set forth in a table contained in the Certificates of Designations. The definition of Make-Whole Fundamental Change includes a sale of substantially all the Company’s assets, a change of control of the Company by way of a tender offer, merger or similar event, the adoption of a plan relating to the Company’s liquidation or dissolution and certain delistings of our common stock.

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 we fail 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 three months ended June 30, 2017, the Company recorded $27 as an accretion to the Series A Convertible Preferred Stock. 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. As of June 30, 2017, the Company had declared and accrued dividends of $674 associated with the Series A Convertible Preferred Stock.

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Goodwill and Intangible Assets

3 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets

Goodwill and Intangible Assets

(9) Goodwill and Intangible Assets

Goodwill:

The Company has one operating segment. The following are details of the changes in goodwill balance at June 30, 2017:

	Amount
Balance at April 1, 2017	$	211,089
Goodwill arising from acquisitions	150
Foreign currency translation adjustments	710
Balance at June 30, 2017	$	211,949

The acquisition costs and goodwill balance deductible for our business acquisitions for tax purposes are $74,109. The acquisition costs and goodwill balance not deductible for tax purposes are $149,727 and relate to the Company’s TradeTech acquisition (closed on January 2, 2014) and the Polaris acquisition.

The Company performed the annual assessment of its goodwill during the fourth quarter of the fiscal year ended March 31, 2017 and determined that the estimated fair value of the Company’s reporting unit exceeded its carrying value and therefore goodwill was not impaired. The Company will continue to complete goodwill impairment assessments at least annually during the fourth quarter of each ensuing fiscal year. The Company will continue to evaluate whether events or circumstances have occurred that indicate that the estimated remaining useful life of its long-lived assets, including intangible assets, may warrant revision or that the carrying value of these assets may be impaired. Any write-downs are treated as permanent reductions in the carrying amount of the assets.

Intangible Assets:

The following are details of the Company’s intangible asset carrying amounts acquired and amortization at June 30, 2017.

	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Customer relationships	10.8	$	83,260	$	27,868	$	55,392
Trademark	2.1	2,968		1,906		1,062
Technology	5.0	500		176		324
	10.5	$	86,728	$	29,950	$	56,778

The intangible assets are being amortized based upon the pattern in which the economic benefits of the intangible assets are being utilized.

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Income Taxes

3 Months Ended

Jun. 30, 2017

Income Taxes

Income Taxes

(10) Income Taxes

The Company applies an estimated annual effective tax rate to its year-to-date operating results to determine the interim provision (benefit) for income tax expense. The Company’s effective tax rate was 14.7% for the three months ended June 30, 2017, as compared to an effective tax rate of 7.8% for the three months ended June 30, 2016. The Company’s reported effective tax rate is impacted by jurisdictional mix of profits and losses in which the Company operates, statutory tax rates in effect, unusual or infrequent discrete items requiring a provision during the period and certain exemptions or tax holidays applicable to the Company.

The Company created two export oriented units in India, one in Bangalore during the fiscal year ended March 31, 2011 and a second unit in Hyderabad (Special Economic Zone or “SEZ”) during the fiscal year ended March 31, 2010 for which no income tax exemptions were availed. The Indian subsidiaries also operate two development centers in areas designated as a SEZ, under the SEZ Act of 2005. In particular, the Company was approved as 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 elected to claim SEZ Co-developer income tax benefits starting in fiscal year ended March 31, 2013. In addition, the Company has leased facilities in SEZ designated locations in Hyderabad and Chennai, India. The Company’s profits from the Hyderabad and Chennai SEZ operations are eligible for certain income tax exemptions for a period of up to 15 years beginning in fiscal March 31, 2009. The Company’s India profits ineligible for SEZ benefits are subject to corporate income tax at the current rate of 34.61%. In the fiscal years ended March 31, 2013 and March 31, 2014, the Company leased a facility in an SEZ designated location in Bangalore and Pune, India each of which is eligible for tax holidays for up to 15 years beginning in the fiscal years ended March 31, 2013 and March 31, 2014 respectively. During the fiscal year ended March 31, 2016, the Company established a new unit in Hyderabad, in an SEZ designated area, for which it is eligible for tax holiday for up to 15 years. Based on the latest changes in tax laws, book profits of SEZ units are subject to MAT, commencing April 1, 2011, which will continue to negatively impact the Company’s cash flows.

In addition, the Company’s Sri Lankan subsidiary, Virtusa (Private) Limited, is operating under a 12-year income tax holiday arrangement that is set to expire on March 31, 2019 and required Virtusa (Private) Limited to retain certain job creation and investment criteria through the expiration of the holiday period. During the fiscal year ended March 31, 2017, the Company believed it has fulfilled its hiring and investment commitments and is eligible for tax holiday through March 2019. The current agreement provides income tax exemption for all export business income. On October 31, 2016, the Company received confirmation from the Board of Investments that it had satisfied investment criteria through March 31, 2016 and is eligible for holiday benefits. At June 30, 2017, the Company believes it is eligible for continued benefits for the entire 12 year tax holiday.

The Company’s effective income tax rate is based on the composition of estimated income in different jurisdictions, including those where the Company is enjoying tax holidays, for the applicable fiscal year and adjustments, if any, in the applicable quarterly periods, for unrecognized tax benefits for uncertain income tax positions or other discrete items required to be reported during interim periods. The Company’s aggregate income tax rate in foreign jurisdictions is lower than its income tax rate in the United States due primarily to lower rates in jurisdictions in which the Company operates and applicable tax holiday benefits of the Company, obtained primarily in India and Sri Lanka.

In connection with the Company’s adoption of ASU 2016-09 (Stock Compensation), during the three months ended June 30, 2017, the Company has accounted on a prospective basis in the income statement for the income tax expense or benefit for the tax effects of differences recognized on or after the effective date of the equity-based payment awards between the deduction for an award for tax purposes and the cumulative compensation costs of that award recognized for financial reporting purposes. During the three months ended June 30, 2017, the Company recorded a tax benefit of $278 in the Company’s income tax expense. The Company also presented the excess tax benefits (deficiencies) as operating activities in the Consolidated Statements of Cash Flows on a retrospective basis and prior period has been restated.

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. Net loss in the United States has decreased during the three months ended June 30, 2017 compared with the three months ended June 30, 2016. The Company has a significant deferred tax asset in the United States at June 30, 2017. We continue to monitor all positive and negative evidence related to this asset. At June 30, 2017, the Company determined that a specific valuation allowance was not required.

Unrecognized tax benefits represent uncertain tax positions for which the Company has established reserves. At June 30, 2017 and March 31, 2017, the total liability for unrecognized tax benefits was $7,526 and $7,612, respectively. Unrecognized tax benefits may be adjusted upon the closing of the statute of limitations for income tax returns filed in various jurisdictions. During the three months ended June 30, 2017, the unrecognized tax benefits decreased by $86 and increased by $39 during the three months ended June 30, 2016. The decrease in unrecognized tax benefits in the three months period ending June 30, 2017 was predominantly due to the release of a prior period foreign tax position, offset by increases for incremental interest accrued on existing uncertain tax positions. The increase in unrecognized tax benefits in the three months period ending June 30, 2016 was predominantly due to increases for incremental interest accrued on existing uncertain tax positions.

Undistributed Earnings of Foreign Subsidiaries

A substantial amount of the Company’s income before provision for income tax is from operations earned in its Indian and Sri Lankan subsidiaries and is subject to tax holiday. The Company intends to use accumulated and future earnings of foreign subsidiaries to expand operations outside the United States and, accordingly, undistributed income is considered to be indefinitely reinvested. The Company does not provide for U.S. income taxes on foreign earnings. At June 30, 2017, the Company had $394,424 of unremitted earnings from foreign subsidiaries and approximately $154,602 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. However, under current law, any repatriation would be subject to United States federal income tax less applicable foreign tax credits. Due to the various methods by which such earnings could be repatriated in the future, the amount of taxes attributable to the undistributed earnings is not practicably determinable.

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Concentration of Revenue and Assets

3 Months Ended

Jun. 30, 2017

Concentration of Revenue and Assets

Concentration of Revenue and Assets

(11) Concentration of Revenue and Assets

Total revenue is attributed to geographic areas based on the location of the client. Long-lived assets represent property, plant and equipment, intangible assets and goodwill, net of accumulated depreciation and amortization, and are attributed to geographic area based on their location. Geographic information is summarized as follows:

	Three Months Ended June 30,
	2017		2016
Client revenue:
North America	$	146,142	$	133,471
Europe	53,372		46,384
Other	27,831		25,616
Consolidated revenue	$	227,345	$	205,471

	June 30, 2017		March 31, 2017
Long-lived assets, net of accumulated depreciation and amortization:
North America	$	90,983	$	91,508
Asia	279,548		280,771
Europe and others	16,829		16,061
Consolidated long-lived assets, net	$	387,360	$	388,340

Revenue from significant clients as a percentage of the Company’s consolidated revenue was as follows:

	Three Months Ended June 30,
	2017		2016
Customer 1	18.1	%	15.7	%

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Debt

3 Months Ended

Jun. 30, 2017

Debt

Debt

(12) Debt

On February 25, 2016, in connection with the Polaris SPA Transaction, the Company entered into a credit agreement (the “Credit Agreement”) dated as of February 25, 2016, by and among the Company, its guarantor subsidiaries party thereto, the lenders party thereto, JPMorgan Chase Bank, N.A., as administrative agent, and J.P. Morgan Securities LLC and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint book runners and lead arrangers. The Credit Agreement provides for a $100,000 revolving credit facility and a $200,000 delayed-draw term loan (together, the “Credit Facility”). To finance the Polaris SPA Transaction, on February 25, 2016, the Company drew down the full $200,000 of the term loan. Interest under these facilities accrues at a rate per annum of LIBOR plus 2.75%, subject to step-downs based on the Company’s ratio of debt to adjusted earnings before interest, taxes, depreciation, amortization, and stock compensation expense (“EBITDA”). The Company was required under the terms of the Credit Agreement to make quarterly principal payments on the term loan, however, the prepayment of the $81,000 from the proceeds from the Orogen Viper LLC investment (See Note 8 of the notes to our financial statements), has satisfied this obligation and no further principal payments are required. The Credit Agreement includes customary minimum cash, maximum debt to EBITDA and minimum fixed charge coverage covenants. The term of the Credit Agreement is five years ending February 24, 2021. At June 30, 2017, the interest rate on the Credit Facility was 3.98% and there were no borrowings under the revolving credit facility.

The Credit Agreement has financial covenants that require that the Company maintain a Total Leverage Ratio, commencing on June 30, 2016, of not more than 3.25 to 1.00 for the first year of the Credit Facility, of not more than 3.00 to 1.00 for the second year of the Credit Facility, and 2.75 to 1.00 thereafter, each as determined for the four consecutive quarter period ending on each fiscal quarter (the “Reference Period”). In addition, for a period, expected to be at least one year from the completion of the Company’s closing of the Polaris SPA Transaction, until the occurrence of certain events described in the Credit Agreement, at any time when the Total Leverage Ratio exceeds 1.50 to 1.00 as of the last day of a quarter, the Company must maintain at least $30,000 in unrestricted cash, cash equivalents and certain permitted investments under the Credit Facility held in bank deposits in the U.S., and $20,000 in unrestricted cash and certain permitted investments under the Credit Facility and long-term securities investments held in accordance with the Company’s current investment policy. The financial covenants also require that the Company maintain a Fixed Charge Coverage Ratio, commencing on June 30, 2016, of not less than 1.25 to 1.00, as of the last day of any Reference Period. For purposes of these covenants, “Total Leverage Ratio” means, as of the last day of any fiscal quarter, the ratio of Funded Debt to Adjusted EBITDA for the reference period ended on such date. “Funded Debt” refers generally to total indebtedness to third-parties for borrowed money, capital leases, deferred purchase price and earn-out obligations and related guarantees and “Adjusted EBITDA” is defined as consolidated net income plus (a) (i) GAAP depreciation and amortization, (ii) non-cash equity-based compensation expenses, (iii) fees and expenses incurred during such period in connection with the Credit Facility and loans made thereunder, (iv) fees and expenses incurred during such period in connection with any permitted acquisition, (v) one-time regulatory charges, (vi) other extraordinary and non-recurring losses or expenses, and (vii) all other non-cash charges, expenses and losses for such period, minus (b) (i) extraordinary or non-recurring income or gains for such period, and (ii) any cash payments made during such period in respect of non-cash charges, expenses or losses described in clauses (a)(ii), (a)(v) and (a)(vi) above taken in a prior period, subject to other adjustments and certain caps and limits on adjustments. The Fixed Charge Coverage Ratio is calculated under the Credit Agreement generally as the ratio of Adjusted EBITDA, excluding capital expenditures made during such period (to the extent not financed with indebtedness (other than Revolving Loans), an issuance of equity interests or capital contributions, or proceeds of asset sales, the proceeds of casualty insurance used to replace or restore assets), to fixed charges (regularly scheduled consolidated interest expense paid in cash, regularly scheduled amortization payments on indebtedness in cash, income taxes paid in cash and the interest component of capital lease obligation payments), on a consolidated basis.

The Credit Facility is secured by substantially all of the Company’s assets, including all intellectual property and all securities in domestic subsidiaries (other than certain domestic subsidiaries where the material assets of such subsidiaries are equity in foreign subsidiaries), subject to customary exceptions and exclusions from the collateral. All obligations under the Credit Agreement are unconditionally guaranteed by substantially all of the Company’s material direct and indirect domestic subsidiaries, with certain exceptions. These guarantees are secured by substantially all of the present and future property and assets of the guarantors, with certain exclusions.

At June 30, 2017, the Company is in compliance with our debt covenants and have provided a quarterly certification to our lenders to that effect. We believe that we currently meet all conditions set forth in the Credit Agreement to borrow thereunder and we are not aware of any conditions that would prevent us from borrowing part or all of the remaining available capacity under the revolving credit facility at June 30, 2017 and through the date of this filing.

Current portion of long-term debt

The following summarizes our short-term debt balances as of:

	June 30, 2017		March 31, 2017
Notes outstanding under the revolving credit facility	$	—	$	—
Term loan- current maturities	—		10,000
Less: deferred financing costs — current	—		(1,130		)
Total	$	—	$	8,870

Long-term debt, less current portion

The following summarizes our long-term debt balance as of:

	June 30, 2017			March 31, 2017
Term loan	$	190,000		$	190,000
Less:
Current maturities	—			(10,000		)
Repayment of Term loan	(81,000		)	—
Deferred financing costs, long-term	(4,131		)	(3,278		)
Total	$	104,869		$	176,722

In accordance with the recently adopted FASB ASU 2015-03, the Company has presented debt issuance costs in the balance sheet as a direct deduction from the carrying value of that debt liability.

On July 26, 2016, the Company entered into two 12-month forward starting interest rate swap transactions and on July 28, 2016, the Company entered into a third 12-month forward starting interest rate swap transaction to mitigate Company’s interest rate risk on Company’s variable rate debt (collectively, “The Interest Rate Swap Agreements”). 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 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 three Interest Rate Swap Agreements have an effective date of July 31, 2017 and a maturity date of July 31, 2020. The swaps have an aggregate beginning notional amount of $93,800 and, with the pre-payment of $81,000 of principal on our existing debt, hedge approximately 86% of our forecasted outstanding debt balance as of July 31, 2017. The notional amount of the swaps amortizes over the three swap periods corresponding to the quarterly principal payments on the term loan. The Interest Rate Swap Agreements require the Company to make monthly fixed interest rate payments based on the amortized notional amount at a blended weighted average rate of 1.025% and the Company will receive 1-month LIBOR on the same notional amounts. The unrealized gain associated with the 2016 Swap Agreement was $1,568 at June 30, 2017, which represents the estimated amount that the Company would receive from the counterparties in the event of an early termination.

Beginning in fiscal 2009, the Company’s U.K. subsidiary entered into an agreement with an unrelated financial institution to sell, without recourse or continuing involvement, certain of its European-based accounts receivable balances from one client to such third party financial institution. During the three months ended June 30, 2017, $5,600 of receivables were sold under the terms of the financing agreement. Fees paid pursuant to this agreement were immaterial during the three months ended June 30, 2017. No amounts were due as of June 30, 2017, 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.

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Pensions and post-retirement benefits

3 Months Ended

Jun. 30, 2017

Pensions and post-retirement benefits

Pensions and post-retirement benefits

(13) Pensions and post-retirement benefits

The Company has noncontributory defined benefit plans covering its employees in India and Sri Lanka as mandated by the Indian and Sri Lankan governments. The following tables provide information regarding pension expense recognized:

	Three Months Ended June 30,
	2017			2016
Components of net periodic pension cost
Service cost	$	366		$	333
Interest cost	165			134
Expected return on plan assets	(173		)	(153		)
Amortization actuarial loss	39			41
Amortization of past service cost	2			2
Net periodic pension cost	$	399		$	357

The Company expects to contribute approximately $2,267 in cash to the gratuity plans during the fiscal year ending March 31, 2018. During the three months ended June 30, 2017, the Company made cash contributions of $465 towards the plans for the fiscal year 2018.

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Accumulated Other Comprehensive Loss

3 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Loss

Accumulated Other Comprehensive Loss

(14) Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive income (loss) by component were as follows for the three months ended June 30, 2017 and 2016:

	Three Months Ended June 30,
Accumulated Other Comprehensive Income (Loss)	2017			2016
Investment securities
Beginning balance	$	57		$	23
Other comprehensive income (loss) (OCI) before reclassifications net of tax of $131, $172	245			300
Reclassifications from OCI to other income — net of tax of $26, $(38)	54			(69		)
(Less) : Noncontrolling interests, net of tax $(40), $(26)	(76		)	(49		)
Comprehensive income on investment securities, net of tax of $117, $108	223			182
Closing Balance	$	280		$	205
Currency Translation Adjustments
Beginning balance	$	(50,415	)	$	(45,211	)
OCI before reclassifications	3,605			(5,062		)
(Less): Noncontrolling interests, net of tax	(486		)	1,244
Comprehensive income (loss) on currency translation adjustment	3,119			(3,818		)
Closing Balance	$	(47,296	)	$	(49,029	)
Cash Flow Hedges
Beginning balance	$	11,789		$	3,934
OCI before reclassifications net of tax of $249 and $264	(18		)	1,795
Reclassifications from OCI to
- Revenue, net of tax of $(898) and $(183)	(1,695		)	(345		)
- Costs of revenue, net of tax of $(566) and $(14)	(1,499		)	(184		)
- Selling, general and administrative expenses, net of tax of $(318) and $(8)	(843		)	(113		)
(Less): Noncontrolling interests, net of tax $153, $342	289			646
Comprehensive income (loss) on cash flow hedges, net of tax of $(1,380) and $401	(3,766		)	1,799
Closing Balance	$	8,023		$	5,733
Benefit plans
Beginning balance	$	(1,180	)	$	(885	)
OCI before reclassifications net of tax of $0 for all periods	$	—		$	—
Reclassifications from OCI for prior service credit (cost) to:
- Costs of revenue, net of tax of $0 for all periods	2			2
- Selling, general and administrative expenses, net of tax of $0 for all periods	—			—
Reclassifications from OCI for net actuarial gain (loss) amortization to:
- Costs of revenue, net of tax of $0 for all periods	27			26
- Selling, general and administrative expenses, net of tax of $0 for all periods	12			15
Other adjustments	4			(19		)
Comprehensive income on benefit plans, net of tax of $0 for all periods	45			24
Closing Balance	$	(1,135	)	$	(861	)
Accumulated other comprehensive loss at June 30, 2017	$	(40,128	)	$	(43,952	)

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Subsequent Events

3 Months Ended

Jun. 30, 2017

Subsequent Events

Subsequent Events

(15) Subsequent Events

On July 26, 2017, the Company purchased multiple foreign currency forward contracts designed to hedge fluctuation in the U.K. pound sterling (“GBP”) against the U.S. dollar, the Swedish Krona (“SEK”) against the U.S. dollar and the Euro against the U.S. dollar, each of which will expire on various dates during the period ending September 30, 2017. The GBP contracts have an aggregate notional amount of approximately £2,395 (approximately $3,126), the SEK contracts have an aggregate notional amount of approximately SEK 2,406 (approximately $294) and the Euro contracts have an aggregate notional amount of approximately EUR 381 (approximately $444). The weighted average U.S. dollar settlement rate associated with the GBP contracts is $1.305, the weighted average U.S dollar settlement rate associated with the SEK contracts is approximately $0.122, and the weighted average U.S. dollar settlement rate associated with the Euro contracts is approximately $1.165.

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Unaudited Interim Financial Information (Policies)

3 Months Ended

Jun. 30, 2017

Unaudited Interim Financial Information

Basis of Presentation

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared by the Company in accordance with U.S. generally accepted accounting principles and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, and should be read in conjunction with the Company’s audited consolidated financial statements (and notes thereto) for the fiscal year ended March 31, 2017 included in the Company’s Annual Report on Form 10-K, which was filed with the Securities and Exchange Commission, or SEC, on May 26, 2017. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted pursuant to such SEC rules and regulations. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of the accompanying unaudited consolidated financial statements have been included, and all material adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire fiscal year.

Principles of Consolidation

Principles of Consolidation

The accompanying financial statements have been prepared on a consolidated basis and reflect the financial statements of Virtusa Corporation and all of its subsidiaries that are directly or indirectly more than 50% owned or controlled. When the Company does not have a controlling interest in an entity, but exerts a significant influence on the entity, the Company applies the equity method of accounting. 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.

The consolidated financial statements reflect the accounts of the Company and its direct and indirect subsidiaries, Virtusa Consulting Services Private Limited, Virtusa Software Services Private Limited, Virtusa Technologies (India) Private Limited and Polaris Consulting & Services Limited, Optimus Global Services Limited, each organized and located in India; Virtusa (Private) Limited, organized and located in Sri Lanka; Virtusa UK Limited, Polaris Consulting & Services Limited, each organized and located in the United Kingdom; Virtusa US LLC, Virtusa Securities Corporation, a Massachusetts securities corporation, Apparatus, Inc. organized and located in Indiana, each organized and located in the United States; Virtusa International, B.V., Virtusa C.V., Virtusa Netherlands Cooperatief U.A., Polaris Software Lab B.V., each organized and located in the Netherlands; Virtusa Hungary Kft., Polaris Consulting & Serviced, Kft., each organized and located in Hungary; Virtusa Germany GmbH, Polaris Software Lab GmbH, each organized and located in Germany; Virtusa Switzerland GmbH, Polaris Consulting & Services SA, each organized and located in Switzerland; Virtusa Singapore Private Limited, Polaris Consulting & Services Pte Limited, each organized and located in Singapore; Virtusa Malaysia Private Limited Company, Polaris Consulting & Services, SND BHD, each organized and located in Malaysia; Virtusa Austria GmbH, organized and located in Austria; Virtusa Philippines Inc., organized and located in the Philippines; TradeTech Consulting Scandinavia AB, organized and located in Sweden; Virtusa Canada, Inc. and Polaris Consulting & Services Inc, each organized and located in Canada; Polaris Consulting & Services Ireland Limited, organized and located in Ireland; Polaris Consulting & Services Japan K.K., organized and located in Japan; Polaris Consulting & Services Pty Ltd., organized and located in Australia; Polaris Consulting & Services FZ-LLC, organized and located in Dubai; and Polaris Software Lab (Shanghai) Limited, organized and located in China. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

Use of Estimates

The preparation of financial statements in accordance with U.S. generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of revenue and expenses during the 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, share-based compensation, income taxes, including reserves for uncertain tax positions, deferred taxes and liabilities, intangible assets, contingent consideration and valuation of financial instruments including derivative contracts and investments. Management bases its estimates on historical experience and on various other factors and assumptions that are believed to be reasonable under the circumstances. The actual amounts may vary from the estimates used in the preparation of the accompanying consolidated financial statements.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

At June 30, 2017 and March 31, 2017, 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 5 of the notes to our financial statements for a discussion of the fair value of the Company’s other financial instruments.

Recent accounting pronouncements

Recent accounting pronouncements

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers, which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. The ASU will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. The new standard is effective for the Company on April 1, 2018. Early application is permitted but not before periods beginning on or after January 1, 2017. In March, April and May 2016, the FASB issued updates to the new revenue standard to clarify the implementation guidance on principal versus agent considerations for reporting revenue gross versus net, identifying performance obligations, accounting for licenses of intellectual property, transition, contract modifications, collectability, non-cash consideration and presentation of sales and other similar taxes with the same effective date. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is in the process of reviewing existing revenue contracts and related costs for evaluating the recognition of revenue from contracts with customers as well as commission and fulfillment costs that may require capitalization and amortization. The Company is also in the process of identifying and implementing changes to our processes to meet the reporting and disclosure requirements. The Company expects the new standard could change the amount and timing of revenue and costs under certain arrangement types. The Company has not yet determined what impact the new guidance will have on its consolidated financial statements and related disclosures or concluded on the transition method.

In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. The update also amends certain disclosure requirements. For public business entities, the amendments in this update are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. Based on the Company’s current investment portfolio, the adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In February 2016, the FASB issued as update (ASU 2016-02) to the standard on leases to increase transparency and comparability among organizations. The new standard replaces the existing guidance on leases and requires the lessee to recognize a right-of-use asset and a lease liability for all leases with lease terms equal to or greater than twelve months. For finance leases, the lessee would recognize interest expense and amortization of the right-of-use asset, and for operating leases, the lessee would recognize total lease expense on a straight-line basis. For public business entities this standard is effective for the annual periods beginning after December 15, 2018, and interim periods within those annual periods. Early adoption of this new standard is permitted. Entities will be required to use a modified retrospective transition which provides for certain practical expedients. The Company is currently evaluating the effect the new standard will have on its consolidated financial statements and related disclosures.

In March 2016, the FASB issued an update (ASU 2016-09) to the standard on Compensation- Stock Compensation, which simplifies several aspects of the accounting for employee share-based payment transactions including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. For public business entities, the amendments in this update are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Upon adoption, entities will be required to apply a modified retrospective, prospective or retrospective transition method depending on the specific section of the guidance being adopted. The Company adopted this guidance effective April 1, 2017 and the following describe the results of adoption:

· The Company prospectively recognized tax benefits of $278 in the income tax expense line item of its consolidated statements of income (loss) in the three months ended June 30, 2017 related to excess tax benefits on stock options;

· The Company changed its accounting policy from estimated forfeitures to actual forfeitures effective April 1, 2017. The cumulative impact of the change in the accounting policy did not have a material impact on the consolidated financial statements, therefore prior period amounts have not been restated;

· The Company elected to adopt cash flow presentation of excess tax benefits retrospectively where these benefits are classified along with other income tax cash flows as operating cash flows. Accordingly, prior period amounts in the consolidated statement of cash flows have been restated;

· The Company adopted cash flow presentation of taxes paid when an employer withholds shares for tax-withholding purposes retrospectively and classified as a financing activity in the Company’s statement of cash flows. Accordingly, prior period amounts have been restated;

· The remaining amendments to this standard, as noted above, are either not applicable, or do not change the Company’s current accounting practices and thus do not impact its consolidated financial statements.

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.

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). This update is intended to reduce diversity in practice in how certain cash receipts and payments are classified in the statement of cash flows. This standard update addresses eight specific cash flow issues, including debt prepayment or extinguishment costs, the settlement of contingent liabilities arising from a business combination, proceeds from insurance settlements, and distributions from certain equity method investees. The guidance is effective for interim and annual periods beginning after December 15, 2017, and early adoption is permitted. The guidance requires application using a retrospective transition method. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In October 2016, the FASB issued ASU 2016-16, an update to the standard on income taxes. This new standard requires the recognition of current and deferred income taxes when an intra-entity transfer of assets other than inventory occurs. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2017. Early adoption is permitted in the first interim period. Upon adoption, the entities will be required to use a modified retrospective transition approach. The adoption of this guidance is not expected to have a material impact on 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 adoption of this guidance will impact the Company’s presentation of cash and cash equivalents. As of June 30, 2017 and March 31, 2017, the Company’s restricted cash was $341 and $178, respectively.

In January 2017, the FASB issued ASU 2017-01, an update on business combinations, which clarifies the definition of a business. The update requires a business to include at least an input and a substantive process that together significantly contribute to the ability to create outputs. The update also states that the definition of a business is not met if substantially all of the fair value of the gross assets acquired is concentrated in a single identifiable asset or a group of similar identifiable assets. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2018. Upon adoption, entities will be required to apply the update prospectively. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In January 2017, the FASB issued ASU 2017-04, an update on goodwill, which eliminates the need to calculate the implied fair value of goodwill when an impairment is indicated. The update states that goodwill impairment is measured as the excess of a reporting unit’s carrying value over its fair value, not to exceed the carrying amount of goodwill. The update is effective for fiscal years, and interim periods within those fiscal years, beginning after January 1, 2020. Early adoption is permitted for any impairment tests performed after January 1, 2017. The Company is currently evaluating the impact of the new guidance on the consolidated financial statements.

In March 2017, the FASB issued ASU 2017-07, 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 adoption of this guidance is not expected to have a material impact on the consolidated financial statements. The Company’s current presentation of service cost components is consistent with the requirements of the new standard. Upon adoption of the new standard, the Company expects to present the other components within other (income) expense.

In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting, an update that provides guidance about which changes to the terms or conditions of a share-based payment award require an entity to apply modification accounting under ASC 718, Compensation — Stock Compensation. Under the amendments in ASU 2017-09, an entity should account for the effects of a modification unless all of the following criteria are met: 1) the fair value of the modified award is the same as the fair value of the original award immediately before the original award is modified — if the modification does not affect any of the inputs to the valuation technique that the entity uses to value the award, the entity is not required to estimate the value immediately before and after the modification; 2) the vesting conditions of the modified award are the same as the conditions of the original award immediately before the original award is modified; 3) the classification of the modified award as an equity instrument or a liability instrument is the same as the classification of the original award immediately before the original award is modified. The standard is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2017. Early adoption is permitted, including adoption in any interim period for which financial statements have not yet been issued. The adoption of this guidance is not expected to have a material impact on the consolidated financial statements.

In March 2017, FASB issued ASU 2017-08, “Receivables-Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities.” The amendments in this update shorten the amortization period for certain callable debt securities that are held at a premium. The amendments require the premium to be amortized to the earliest call date. The amendments do not require an accounting change for securities held at a discount, which would be amortized to maturity. This ASU is effective for fiscal years and interim periods within those fiscal years, beginning after December 15, 2018, which for us is the first quarter ending December 31, 2019. Early adoption is permitted. The Company does not expect the adoption of this guidance to have a material impact on the consolidated financial statements.

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Earnings (loss) per Share (Tables)

3 Months Ended

Jun. 30, 2017

Earnings (loss) per Share

Schedule of components of basic earnings (loss) per share

	Three Months Ended June 30,
	2017			2016
Numerators:
Net income (loss) available to Virtusa stockholders	$	3,658		$	(6,256	)
Less: Series A Convertible Preferred Stock dividends and accretion	(701		)	—
Net income (loss) available to Virtusa common stockholders	2,957			$	(6,256	)
Denominators:
Basic weighted average common shares outstanding	29,651,602			29,486,287
Basic earnings (loss) per share	$	0.10		$	(0.21	)

Schedule of components of diluted earnings (loss) per share

	Three Months Ended June 30,
	2017		2016
Numerators:
Net income (loss) available to Virtusa common stockholders	$	2,957	$	(6,256	)
Add: Series A Convertible Preferred Stock dividends and accretion	—		—
Net income (loss) available to Virtusa common stockholders	2,957		$	(6,256	)
Denominators:
Basic weighted average common shares outstanding	29,651,602		29,486,287
Dilutive effect of Series A Convertible Preferred Stock	—		—
Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units	599,548		—
Weighted average shares-diluted	30,251,150		29,486,287
Diluted earnings (loss) per share	$	0.10	$	(0.21	)

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Investment Securities (Tables)

3 Months Ended

Jun. 30, 2017

Investment Securities

Schedule of investment securities

The following is a summary of investment securities at June 30, 2017:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Corporate bonds:
Current	$	32,743	$	1	$	(57	)	$	32,687
Non-current	16,833		2		(35		)	16,800
Preference shares:
Current	—		—		—			—
Non-current	1,831		—		(169		)	1,662
Agency and short-term notes:
Current	2,612		—		(8		)	2,604
Non-current	—		—		—			—
Mutual funds:
Current	20,230		688		—			20,918
Commercial paper:
Current	2,058		—		—			2,058
Equity Shares/ Options:
Non-current	15		178					193
Time deposits:
Current	4,165		—		—			4,165
Total available-for-sale securities	$	80,487	$	869	$	(269	)	$	81,087

The following is a summary of investment securities at March 31, 2017:

	Amortized Cost		Gross Unrealized Gains		Gross Unrealized Losses			Fair Value
Available-for-sale securities:
Corporate bonds:
Current	$	36,722	$	7	$	(55	)	$	36,674
Non-current	17,511		3		(48		)	17,466
Preference shares:
Current	1,633		—		(75		)	1,558
Non-current	1,829		—		(101		)	1,728
Agency and short-term notes:
Current	1,816		—		(3		)	1,813
Non-current	803		—		(3		)	800
Mutual funds:
Current	17,934		371		—			18,305
Commercial paper:
Current	2,993		—		—			2,993
Equity Shares/ Options:
Non-current	17		46					63
Time deposits:
Current	10,685		—		—			10,685
Total available-for-sale securities	$	91,943	$	427	$	(285	)	$	92,085

Schedule of proceeds from sales of available-for-sale investment securities and the gross gains and losses that have been included in earnings

	Three Months Ended June 30,
	2017			2016
Proceeds from sales of available-for-sale investment securities	$	29,002		$	40,439
Gross gains	$	19		$	310
Gross losses	(90		)	—
Net realized gains on sales of available-for-sale investment securities	$	(71	)	$	310

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Fair Value of Financial Instruments (Tables)

3 Months Ended

Jun. 30, 2017

Fair Value of Financial Instruments

Schedule of financial assets and liabilities measured at fair value on a recurring basis

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at June 30, 2017:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Available-for-sales securities—current	$	—	$	62,432	$	—	$	62,432
Available-for-sales securities—non-current	—		18,655		—		18,655
Foreign currency derivative contracts	—		11,789		—		11,789
Interest Rate Swap Contracts	—		1,568		—		1,568
Total assets	$	—	$	94,444	$	—	$	94,444
Liabilities:
Foreign currency derivative contracts	$	—	$	377	$	—	377
Contingent consideration	—				100		100
Total liabilities	$	—	$	377	$	100	$	477

The following table summarizes the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2017:

	Level 1		Level 2		Level 3		Total
Assets:
Investments:
Available-for-sales securities—current	$	—	$	72,028	$	—	$	72,028
Available-for-sales securities—non-current	—		20,057		—		20,057
Foreign currency derivative contracts	—		16,431		—		16,431
Interest Rate Swap Contracts	—		1,842		—		1,842
Total assets	$	—	$	110,358	$	—	$	110,358
Liabilities:
Foreign currency derivative contracts	$	—	$	—	$	—	—
Interest Rate Swap Contracts	—		—		—		—
Total liabilities	$	—	$	—	$	—	$	—

Schedule of changes in fair value of the Company's Level 3 financial liabilities

	Level 3 Liabilities
Balance at April 1, 2017	$	—
Contingent consideration arising from acquisition (See Note 7)	100
Payments made during the period	—
Balance at June 30, 2017	$	100

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Derivative Financial Instruments (Tables)

3 Months Ended

Jun. 30, 2017

Derivative Financial Instruments

Schedule of fair value of derivative instruments included in the consolidated balance sheets

Derivatives designated as hedging instruments

	June 30, 2017		March 31, 2017
Foreign currency exchange contracts:
Other current assets	$	11,789	$	15,544
Other long-term assets	$	—	$	887
Accrued expenses and other	$	309	$	—
Long-term liabilities	$	68	$	—

	June 30, 2017		March 31, 2017
Interest rate swap contracts:
Other long-term assets	$	1,568	$	1,842

Schedule of effect of the Company's foreign currency exchange contracts on the consolidated financial statements

	Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)
Derivatives Designated as Cash Flow	Three months ended June 30,
Hedging Relationships	2017			2016
Foreign currency exchange contracts	$	505		$	2,059
Interest rate swaps	(274		)	—

Location of Gain or (Loss) Reclassified	Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion)
from AOCI into Income (loss) (Effective	Three months ended June 30,
Portion)	2017		2016
Revenue	$	2,593	$	528
Costs of revenue	$	2,065	$	198
Operating expenses	$	1,161	$	121

		Amount of Gain or (Loss) Recognized in Income
		(loss) on Derivatives
		Three months ended
Derivatives not Designated	Location of Gain or (Loss)	June 30,
as Hedging Instrument	Recognized in Income (loss) on Derivatives	2017			2016
Foreign currency exchange contracts	Foreign currency transaction gains (losses)	$	—		$	(180	)
	Revenue	$	(181	)	$	109
	Costs of revenue	$	143		$	(54	)
	Selling, general and administrative expenses	$	31		$	(13	)

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Goodwill and Intangible Assets (Tables)

3 Months Ended

Jun. 30, 2017

Goodwill and Intangible Assets

Schedule of changes in goodwill

	Amount
Balance at April 1, 2017	$	211,089
Goodwill arising from acquisitions	150
Foreign currency translation adjustments	710
Balance at June 30, 2017	$	211,949

Schedule of the Company's intangible asset carrying amounts acquired and amortization

The following are details of the Company’s intangible asset carrying amounts acquired and amortization at June 30, 2017.

	Weighted Average Useful Life	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Customer relationships	10.8	$	83,260	$	27,868	$	55,392
Trademark	2.1	2,968		1,906		1,062
Technology	5.0	500		176		324
	10.5	$	86,728	$	29,950	$	56,778

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Concentration of Revenue and Assets (Tables)

3 Months Ended

Jun. 30, 2017

Concentration of Revenue and Assets

Schedule of revenue attributed to geographic areas based on location of the client

	Three Months Ended June 30,
	2017		2016
Client revenue:
North America	$	146,142	$	133,471
Europe	53,372		46,384
Other	27,831		25,616
Consolidated revenue	$	227,345	$	205,471

Schedule of long-lived assets, net of accumulated depreciation and amortization attributed to geographic areas based on location of assets

	June 30, 2017		March 31, 2017
Long-lived assets, net of accumulated depreciation and amortization:
North America	$	90,983	$	91,508
Asia	279,548		280,771
Europe and others	16,829		16,061
Consolidated long-lived assets, net	$	387,360	$	388,340

Schedule of revenue from significant clients as a percentage of the Company's consolidated revenue

	Three Months Ended June 30,
	2017		2016
Customer 1	18.1	%	15.7	%

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Debt (Tables)

3 Months Ended

Jun. 30, 2017

Debt

Summary of short-term debt

	June 30, 2017		March 31, 2017
Notes outstanding under the revolving credit facility	$	—	$	—
Term loan- current maturities	—		10,000
Less: deferred financing costs — current	—		(1,130		)
Total	$	—	$	8,870

Summary of long-term debt

	June 30, 2017			March 31, 2017
Term loan	$	190,000		$	190,000
Less:
Current maturities	—			(10,000		)
Repayment of Term loan	(81,000		)	—
Deferred financing costs, long-term	(4,131		)	(3,278		)
Total	$	104,869		$	176,722

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Pensions and post-retirement benefits (Tables)

3 Months Ended

Jun. 30, 2017

Pensions and post-retirement benefits

Schedule of pension expense recognized

	Three Months Ended June 30,
	2017			2016
Components of net periodic pension cost
Service cost	$	366		$	333
Interest cost	165			134
Expected return on plan assets	(173		)	(153		)
Amortization actuarial loss	39			41
Amortization of past service cost	2			2
Net periodic pension cost	$	399		$	357

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Accumulated Other Comprehensive Loss (Tables)

3 Months Ended

Jun. 30, 2017

Accumulated Other Comprehensive Loss

Schedule of changes in accumulated other comprehensive income (loss) by component

	Three Months Ended June 30,
Accumulated Other Comprehensive Income (Loss)	2017			2016
Investment securities
Beginning balance	$	57		$	23
Other comprehensive income (loss) (OCI) before reclassifications net of tax of $131, $172	245			300
Reclassifications from OCI to other income — net of tax of $26, $(38)	54			(69		)
(Less) : Noncontrolling interests, net of tax $(40), $(26)	(76		)	(49		)
Comprehensive income on investment securities, net of tax of $117, $108	223			182
Closing Balance	$	280		$	205
Currency Translation Adjustments
Beginning balance	$	(50,415	)	$	(45,211	)
OCI before reclassifications	3,605			(5,062		)
(Less): Noncontrolling interests, net of tax	(486		)	1,244
Comprehensive income (loss) on currency translation adjustment	3,119			(3,818		)
Closing Balance	$	(47,296	)	$	(49,029	)
Cash Flow Hedges
Beginning balance	$	11,789		$	3,934
OCI before reclassifications net of tax of $249 and $264	(18		)	1,795
Reclassifications from OCI to
- Revenue, net of tax of $(898) and $(183)	(1,695		)	(345		)
- Costs of revenue, net of tax of $(566) and $(14)	(1,499		)	(184		)
- Selling, general and administrative expenses, net of tax of $(318) and $(8)	(843		)	(113		)
(Less): Noncontrolling interests, net of tax $153, $342	289			646
Comprehensive income (loss) on cash flow hedges, net of tax of $(1,380) and $401	(3,766		)	1,799
Closing Balance	$	8,023		$	5,733
Benefit plans
Beginning balance	$	(1,180	)	$	(885	)
OCI before reclassifications net of tax of $0 for all periods	$	—		$	—
Reclassifications from OCI for prior service credit (cost) to:
- Costs of revenue, net of tax of $0 for all periods	2			2
- Selling, general and administrative expenses, net of tax of $0 for all periods	—			—
Reclassifications from OCI for net actuarial gain (loss) amortization to:
- Costs of revenue, net of tax of $0 for all periods	27			26
- Selling, general and administrative expenses, net of tax of $0 for all periods	12			15
Other adjustments	4			(19		)
Comprehensive income on benefit plans, net of tax of $0 for all periods	45			24
Closing Balance	$	(1,135	)	$	(861	)
Accumulated other comprehensive loss at June 30, 2017	$	(40,128	)	$	(43,952	)

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Unaudited Interim Financial Information - Recent accounting pronouncements (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2017
Recent accounting pronouncements
Restricted cash	$ 341		$ 178
Recognized tax benefits	(798)	$ 463
ASU 2016-09
Recent accounting pronouncements
Recognized tax benefits	$ 278

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Earnings (loss) per Share - Basic earnings (loss) per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Numerators:
Net income (loss) available to Virtusa stockholders	$ 3,658	$ (6,256)
Less: Series A Convertible Preferred Stock dividends and accretion	(701)
Net income (loss) available to Virtusa common stockholders	$ 2,957	$ (6,256)
Denominators:
Basic weighted average common shares outstanding (in shares)	29,651,602	29,486,287
Basic earnings (loss) per share (in dollars per share)	$ 0.10	$ (0.21)

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Earnings (loss) per Share - Diluted earnings (loss) per share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Numerators:
Net income (loss) available to Virtusa common stockholders	$ 2,957	$ (6,256)
Net income (loss) available to Virtusa common stockholders	$ 2,957	$ (6,256)
Denominators:
Basic weighted average common shares outstanding (in shares)	29,651,602	29,486,287
Dilutive effect of employee stock options and unvested restricted stock awards and restricted stock units (in shares)	599,548
Weighted average shares-diluted (in shares)	30,251,150	29,486,287
Diluted earnings (loss) per share (in dollars per share)	$ 0.10	$ (0.21)
Shares excluded from computation of earnings per share	287,606	0
Series A Convertible Preferred Stock
Denominators:
Shares excluded from computation of earnings per share	1,912,088

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Investment Securities (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2017
Investment Securities
Amortized Cost	$ 80,487		$ 91,943
Gross Unrealized Gains	869		427
Gross Unrealized Losses	(269)		(285)
Fair Value	81,087		92,085
Proceeds from sales of available-for-sale investment securities and the gross gains and losses
Proceeds from sales of available-for-sale investment securities	29,002	$ 40,439
Gross gains	19	310
Gross losses	(90)
Net realized gains on sales of available-for-sale investment securities	(71)	$ 310
Corporate bonds | Current
Investment Securities
Amortized Cost	32,743		36,722
Gross Unrealized Gains	1		7
Gross Unrealized Losses	(57)		(55)
Fair Value	32,687		36,674
Corporate bonds | Non-current
Investment Securities
Amortized Cost	16,833		17,511
Gross Unrealized Gains	2		3
Gross Unrealized Losses	(35)		(48)
Fair Value	16,800		17,466
Preference shares | Current
Investment Securities
Amortized Cost			1,633
Gross Unrealized Losses			(75)
Fair Value			1,558
Preference shares | Non-current
Investment Securities
Amortized Cost	1,831		1,829
Gross Unrealized Losses	(169)		(101)
Fair Value	1,662		1,728
Agency and short-term notes | Current
Investment Securities
Amortized Cost	2,612		1,816
Gross Unrealized Losses	(8)		(3)
Fair Value	2,604		1,813
Agency and short-term notes | Non-current
Investment Securities
Amortized Cost			803
Gross Unrealized Losses			(3)
Fair Value			800
Mutual funds | Current
Investment Securities
Amortized Cost	20,230		17,934
Gross Unrealized Gains	688		371
Fair Value	20,918		18,305
Commercial paper | Current
Investment Securities
Amortized Cost	2,058		2,993
Fair Value	2,058		2,993
Equity Shares/ Options | Non-current
Investment Securities
Amortized Cost	15		17
Gross Unrealized Gains	178		46
Fair Value	193		63
Time deposits | Current
Investment Securities
Amortized Cost	4,165		10,685
Fair Value	$ 4,165		$ 10,685

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Fair Value of Financial Instruments - Financial assets and liabilities measured at fair value on a recurring basis (Details) - Recurring - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Investments:
Available-for-sales securities-current	$ 62,432	$ 72,028
Available-for-sales securities-non-current	18,655	20,057
Foreign currency derivative contracts	11,789	16,431
Interest Rate Swap Contracts	1,568	1,842
Total assets	94,444	110,358
Liabilities:
Foreign currency derivative contracts	377
Contingent consideration	100
Total liabilities	477
Level 2
Investments:
Available-for-sales securities-current	62,432	72,028
Available-for-sales securities-non-current	18,655	20,057
Foreign currency derivative contracts	11,789	16,431
Interest Rate Swap Contracts	1,568	1,842
Total assets	94,444	$ 110,358
Liabilities:
Foreign currency derivative contracts	377
Total liabilities	377
Level 3
Liabilities:
Contingent consideration	100
Total liabilities	$ 100

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Fair Value of Financial Instruments - Level 3 financial liabilities (Details) - Level 3 $ in Thousands	3 Months Ended
	Jun. 30, 2017 USD ($)
Changes in fair value of the Company's Level 3 financial liabilities
Contingent consideration arising from acquisition (See Note 7)	$ 100
Balance at the end of the period	$ 100

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Derivative Financial Instruments - Derivatives (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2017 USD ($) item	Jun. 30, 2016 USD ($)	Mar. 31, 2017 USD ($)
Derivative Financial Instruments
Other income (expense)	$ (625)	$ (4,125)
Number of parties under derivative contact | item	5
Foreign currency exchange contract
Derivative Financial Instruments
Number of hedging programs maintained | item	4
Derivatives designated as hedging instrument | Foreign currency exchange contract
Derivative Financial Instruments
Period hedged by Cash Flow Program	18 months
Additional period after which the contract is deemed ineffective	2 months
U.S. dollar notional value	$ 152,052		$ 153,435
Unrealized net gains related to derivative instruments expected to be reclassified from AOCI into earnings during the next 12 months	$ 11,713
Derivatives designated as hedging instrument | Foreign currency exchange contract | Maximum
Derivative Financial Instruments
Maturity period of derivatives	15 months
Derivatives designated as hedging instrument | Foreign currency exchange contract | Cash Flow Hedges | Reclassification out of accumulated other comprehensive income
Derivative Financial Instruments
Other income (expense)	$ 0	$ 0
Derivatives not designated as hedging instrument | Foreign currency exchange contract
Derivative Financial Instruments
Maturity period of derivatives	30 days
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Maximum
Derivative Financial Instruments
Maturity period of derivatives	92 days
Polaris | Derivatives designated as hedging instrument | Foreign currency exchange contract
Derivative Financial Instruments
Period hedged by Cash Flow Program	18 months

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Derivative Financial Instruments - Interest rate swaps (Details) $ in Thousands					1 Months Ended	3 Months Ended
	Jul. 31, 2017 USD ($) contract	Jul. 28, 2016 contract	Jul. 26, 2016 contract	Feb. 25, 2016	Jul. 31, 2017 USD ($) contract	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)
Forward starting interest rate swaps
Interest rate cash flow hedges
Number of derivative contracts | contract		1	2
Derivative, term of contract		12 months	12 months
Unrealized gain on derivative						$ 1,568	$ 1,842
Forward starting interest rate swaps | Forecast
Interest rate cash flow hedges
Number of derivative contracts | contract	3				3
Derivative, term of contract	3 years
Aggregate notional amount	$ 93,800				$ 93,800
Pre-payment of principal on existing debt					$ 81,000
Percentage of debt hedged	86.00%				86.00%
Amortized notional amount at a blended weighted average rate	1.025%				1.025%
JPM | Senior secured debt financing
Interest rate cash flow hedges
First year maximum leverage ratio				3.25
Second year maximum leverage ratio				3.00
Maximum leverage ratio for four consecutive quarter ending on each fiscal quarter				2.75
Minimum fixed charge coverage ratio as of last day of any reference period				1.25

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Derivative Financial Instruments - Foreign currency exchange contracts designated as hedging instruments (Details) - Derivatives designated as hedging instrument - Foreign currency exchange contract - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Foreign currency exchange and interest rate swap contracts
Other current assets	$ 11,789	$ 15,544
Other long-term assets		$ 887
Accrued expenses and other	309
Long-term liabilities	$ 68

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Derivative Financial Instruments - Interest rate swap contracts designated as hedging instruments (Details) - USD ($) $ in Thousands	Jun. 30, 2017	Mar. 31, 2017
Derivatives designated as hedging instrument | Forward starting interest rate swaps
Foreign currency exchange and interest rate swap contracts
Other long-term assets	$ 1,568	$ 1,842

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Derivative Financial Instruments - Effect of foreign currency exchange contracts (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Revenue
Derivative Financial Instruments
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion)	$ 2,593	$ 528
Costs of revenue
Derivative Financial Instruments
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion)	2,065	198
Operating expenses
Derivative Financial Instruments
Amount of Gain or (Loss) Reclassified from AOCI into Income (loss) (Effective Portion)	1,161	121
Derivatives designated as hedging instrument | Foreign currency exchange contract
Derivative Financial Instruments
Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)	505	2,059
Derivatives designated as hedging instrument | Forward starting interest rate swaps
Derivative Financial Instruments
Amount of Gain or (Loss) Recognized in AOCI on Derivative (Effective Portion)	(274)
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Foreign currency transaction gains (losses)
Derivative Financial Instruments
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives		(180)
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Revenue
Derivative Financial Instruments
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives	(181)	109
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Costs of revenue
Derivative Financial Instruments
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives	143	(54)
Derivatives not designated as hedging instrument | Foreign currency exchange contract | Selling, general and administrative expenses
Derivative Financial Instruments
Amount of Gain or (Loss) Recognized in Income (loss) on Derivatives	$ 31	$ (13)

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Acquisitions (Details) ₨ in Thousands, $ in Thousands									3 Months Ended
	Jun. 29, 2017 USD ($)	Dec. 14, 2016 USD ($)	Dec. 13, 2016	Apr. 06, 2016 INR (₨) shares	Apr. 06, 2016 USD ($) shares	Apr. 05, 2016	Mar. 03, 2016 INR (₨) shares	Mar. 03, 2016 USD ($) shares	Jun. 30, 2017 USD ($)	Dec. 31, 2016	Mar. 31, 2017 USD ($)	Mar. 31, 2016 USD ($)
Purchase Price Allocation:
Goodwill									$ 211,949		$ 211,089
Consulting company of India
Acquisitions
Escrow deposit	$ 50
Holdback payment term	1 year
Consideration Transferred:
Cash paid at closing	$ 750
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
Polaris | Public Offering
Acquisitions
Ownership interest sold through open offer (as a percent)										3.70%
Ownership interest prior to the sale offer (as a percent)			78.60%
Ownership interest of basic shares (as a percent)		74.90%	78.60%
Proceeds from issuance of common stock		$ 7,645
Brokerage fees and taxes		188
Professional and legal fees and expense		$ 409
Virtusa Consulting Services Private Limited | Polaris
Acquisitions
Ownership interest of diluted shares (as a percent)				77.70%	77.70%	51.70%
Ownership interest of basic shares (as a percent)				78.80%	78.80%	52.90%			74.40%
Period to sell				1 year	1 year
Stock ownership percentage threshold				75.00%	75.00%
Virtusa Consulting Services Private Limited | Polaris | Certain Polaris Shareholders
Acquisitions
Number of shares purchased | shares							53,133,127	53,133,127
Shares acquired (as a percent)							51.70%	51.70%
Consideration Transferred:
Cash paid at closing							₨ 11,391,365	$ 168,257
Virtusa Consulting Services Private Limited | Polaris | Polaris Public Shareholders
Acquisitions
Number of shares purchased | shares				26,719,942	26,719,942
Shares acquired (as a percent)				26.00%	26.00%
Total consideration				₨ 5,935,260	$ 89,147
Escrow deposit												$ 89,220

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Series A Convertible Preferred Stock (Details) $ / shares in Units, $ in Thousands		3 Months Ended
	May 03, 2017 USD ($) director item $ / shares shares	Jun. 30, 2017 USD ($) $ / shares	Mar. 31, 2017 $ / shares
Series A Convertible Preferred Stock
Par value (in dollars per share)		$ 0.01	$ 0.01
Series A Convertible Preferred Stock
Series A Convertible Preferred Stock
Dividend rate (as a percent)	3.875%
Liquidation preference (in dollars per share)	$ 1,000
Orogen | Series A Convertible Preferred Stock
Series A Convertible Preferred Stock
Aggregate purchase price | $	$ 108,000
Initial conversion rate (in shares)	27.77778
Conversion price (in dollars per share)	$ 36.00
Repurchase price, as a percent of liquidation preference	100.00%
Increase in preference dividend rate, per annum (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%
Orogen | Series A Convertible Preferred Stock | Prior To May 3, 2024
Series A Convertible Preferred Stock
Increase in preference dividend rate, per annum (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%
Orogen | Series A Convertible Preferred Stock | Any time after May 3, 2020
Series A Convertible Preferred Stock
Period of consecutive trading days, during which the conversion of preferred stock can be triggered	30 days
Orogen | Series A Voting Preferred Stock
Series A Convertible Preferred Stock
Sale of convertible preferred stock (in shares) | shares	70,000
Dividend rate (as a percent)	3.875%
Par value (in dollars per share)	$ 0.01
Purchase price (in dollars per share)	$ 1,000
Number of directors in the board | director	9
Increased number of directors in the board | director	10
Minimum beneficial ownership percentage to be maintained, to keep intact the appointment rights	50.00%
Minimum beneficial ownership percentage to be maintained, post conversion of preferred shares	50.00%
Number of nominees of the purchaser elected as a director | item	1
Outstanding common stock ownership, percentage	20.00%
Number of directors entitled to be elected to serve on the board | item	1
Direct and incremental expenses incurred | $		$ 1,154
Accretion on preferred stock | $		27
Declared and accrued dividends | $		$ 674
Orogen | Series A-1 Preferred Stock
Series A Convertible Preferred Stock
Sale of convertible preferred stock (in shares) | shares	38,000
Dividend rate (as a percent)	3.875%
Par value (in dollars per share)	$ 0.01
Purchase price (in dollars per share)	$ 1,000
Preferred stock conversion ratio	1
Minimum | Orogen | Series A Convertible Preferred Stock | Any time after May 3, 2020
Series A Convertible Preferred Stock
Percentage by which the closing common stock price exceeds the then applicable conversion price of the Preferred Stock, to trigger the conversion of preferred stock	150.00%
Number of trading days during a period of 30 consecutive trading days, during which the conversion of preferred stock can be triggered | item	20
Maximum | Orogen | Series A Convertible Preferred Stock
Series A Convertible Preferred Stock
Dividend rate (as a percent)	6.875%
Maximum | Orogen | Series A Convertible Preferred Stock | Prior To May 3, 2024
Series A Convertible Preferred Stock
Dividend rate (as a percent)	6.875%

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Goodwill and Intangible Assets - Goodwill (Details) $ in Thousands	3 Months Ended
	Jun. 30, 2017 USD ($) segment
Goodwill:
Number of operating segments | segment	1
Changes in goodwill
Balance at the beginning of the period	$ 211,089
Goodwill arising from acquisitions	150
Foreign currency translation adjustments	710
Balance at the end of the period	211,949
Acquisition costs and goodwill deductible for tax purposes	74,109
Trade Tech and Polaris
Changes in goodwill
Acquisition costs and goodwill not deductible for tax purposes	$ 149,727

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Goodwill and Intangible Assets - Intangible assets (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Mar. 31, 2017
Intangible Assets
Weighted Average Useful Life	10 years 6 months
Gross Carrying Amount	$ 86,728
Accumulated Amortization	29,950
Net Carrying Amount	$ 56,778	$ 58,361
Customer relationships
Intangible Assets
Weighted Average Useful Life	10 years 9 months 18 days
Gross Carrying Amount	$ 83,260
Accumulated Amortization	27,868
Net Carrying Amount	$ 55,392
Trademark
Intangible Assets
Weighted Average Useful Life	2 years 1 month 6 days
Gross Carrying Amount	$ 2,968
Accumulated Amortization	1,906
Net Carrying Amount	$ 1,062
Technology
Intangible Assets
Weighted Average Useful Life	5 years
Gross Carrying Amount	$ 500
Accumulated Amortization	176
Net Carrying Amount	$ 324

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Income Taxes - Income tax information (Details) $ in Thousands	3 Months Ended		12 Months Ended
	Jun. 30, 2017 USD ($) a item	Jun. 30, 2016 USD ($)	Mar. 31, 2016	Mar. 31, 2014	Mar. 31, 2013	Mar. 31, 2011 subsidiary	Mar. 31, 2010 subsidiary	Mar. 31, 2009	Mar. 31, 2017 USD ($)
Income Taxes
Effective tax rate (as a percent)	14.70%	7.80%
Total liability for unrecognized tax benefits which would impact the annual effective rate, if realized	$ 7,526								$ 7,612
Increase (decrease) in unrecognized tax benefits	(86)	$ 39
Unremitted earnings from foreign subsidiaries	394,424
Cash, cash equivalents, short-term and long-term investments available for distribution if not indefinitely reinvested	$ 154,602
Bangalore
Income Taxes
Number of export oriented units created | subsidiary						1
Hyderabad
Income Taxes
Number of export oriented units created | subsidiary							1
India
Income Taxes
Number of export oriented units created | subsidiary						2
India | Indian operations in areas designated as a SEZ
Income Taxes
Number of development centers operated | item	2
India | Indian operations in areas designated as a SEZ | Hyderabad
Income Taxes
Parcel of land (in acres) | a	6.3
Consecutive period of income tax exemption	10 years
Income tax benefits total eligibility period	15 years
India | Virtusa India
Income Taxes
Current corporate income tax rate	34.61%
Sri Lanka | Virtusa (Private) Limited
Income Taxes
Income tax exemption period	12 years
Maximum | India | Indian operations in areas designated as a SEZ | Bangalore
Income Taxes
Income tax exemption period				15 years	15 years
Maximum | India | Indian operations in areas designated as a SEZ | Hyderabad
Income Taxes
Income tax exemption period			15 years
Maximum | India | Indian operations in areas designated as a SEZ | Pune
Income Taxes
Income tax exemption period				15 years	15 years
Maximum | India | Indian operations in areas designated as a SEZ | Hyderabad and Chennai
Income Taxes
Income tax exemption period								15 years

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Income Taxes - ASU 2016-09 (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Recent accounting pronouncements
Income tax expense (benefit)	$ (798)	$ 463
ASU 2016-09
Recent accounting pronouncements
Income tax expense (benefit)	$ 278

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Concentration of Revenue and Assets - Geographic concentration (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2017
Concentration of Revenue and Assets
Consolidated revenue	$ 227,345	$ 205,471
Consolidated long-lived assets, net	387,360		$ 388,340
North America
Concentration of Revenue and Assets
Consolidated revenue	146,142	133,471
Consolidated long-lived assets, net	90,983		91,508
Europe
Concentration of Revenue and Assets
Consolidated revenue	53,372	46,384
Other
Concentration of Revenue and Assets
Consolidated revenue	27,831	$ 25,616
Asia
Concentration of Revenue and Assets
Consolidated long-lived assets, net	279,548		280,771
Europe and others
Concentration of Revenue and Assets
Consolidated long-lived assets, net	$ 16,829		$ 16,061

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Concentration of Revenue and Assets - Revenue percentage (Details)	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Sales revenue | Customer 1
Concentration of Revenue and Assets
Revenue from significant clients as a percentage of consolidated revenue	18.10%	15.70%

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Debt - General information (Details) - JPM - USD ($) $ in Thousands	May 03, 2017	Feb. 25, 2016	Jun. 30, 2017
Orogen
Debt
Prepayment of principal on debt	$ 81,000
Senior secured debt financing
Debt
First year maximum leverage ratio		3.25
Second year maximum leverage ratio		3.00
Maximum leverage ratio for four consecutive quarter ending on each fiscal quarter		2.75
Threshold period to maintain unrestricted cash		1 year
Minimum total leverage ratio limit to maintain unrestricted cash deposit		150.00%
Minimum unrestricted cash to maintain as deposit in U.S. bank on exceeding leverage ratio		$ 30,000
Minimum unrestricted cash and certain permitted investments to maintain		$ 20,000
Minimum fixed charge coverage ratio as of last day of any reference period		1.25
Senior secured debt financing | Polaris
Debt
Term of credit facility		5 years
Senior secured debt financing | LIBOR | Polaris
Debt
Interest rate added to the base rate (as a percent)		2.75%
Interest rate (as a percentage)			3.98%
Revolving credit facility | Polaris
Debt
Amount outstanding under the credit facility			$ 0
Revolving credit facility | Virtusa Consulting Services Private Limited | Polaris
Debt
Maximum borrowing capacity under the credit agreement		$ 100,000
Delayed-draw term loan | Polaris
Debt
Drew down during the period		200,000
Delayed-draw term loan | Virtusa Consulting Services Private Limited | Polaris
Debt
Maximum borrowing capacity under the credit agreement		$ 200,000

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Debt - Current portion of long-term debt (Details) $ in Thousands	Mar. 31, 2017 USD ($)
Current portion of long-term debt
Total	$ 8,870
JPM
Current portion of long-term debt
Term loan - current maturities	10,000
Less: deferred financing costs - current	(1,130)
Total	$ 8,870

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Debt - Long-term debt, less current portion (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Mar. 31, 2017
Long-term debt, less current portion
Repayment of Term loan	$ (81,000)	$ (2,500)
Total	104,869		$ 176,722
JPM
Long-term debt, less current portion
Current maturities			(10,000)
Delayed-draw term loan | JPM
Long-term debt, less current portion
Term loan	190,000		190,000
Current maturities			(10,000)
Repayment of Term loan	(81,000)
Deferred financing costs, long-term	(4,131)		(3,278)
Total	$ 104,869		$ 176,722

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Debt - Long term debt maturities and swap agreements (Details) $ in Thousands				1 Months Ended	3 Months Ended
	Jul. 31, 2017 USD ($) contract	Jul. 28, 2016 contract	Jul. 26, 2016 contract	Jul. 31, 2017 USD ($) contract	Jun. 30, 2017 USD ($)	Mar. 31, 2017 USD ($)
Forward starting interest rate swaps
Debt
Number of derivative contracts | contract		1	2
Derivative, term of contract		12 months	12 months
Unrealized gain on derivative					$ 1,568	$ 1,842
Forward starting interest rate swaps | Forecast
Debt
Number of derivative contracts | contract	3			3
Derivative, term of contract	3 years
Aggregate notional amount	$ 93,800			$ 93,800
Pre-payment of principal on existing debt				$ 81,000
Percentage of debt hedged	86.00%			86.00%
Amortized notional amount at a blended weighted average rate	1.025%			1.025%
U.K. Subsidiary
Debt
Receivables sold under the terms of the financing agreement					5,600
Amounts due related to a financing agreement to sell certain accounts receivable balances					$ 0

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Pensions and post-retirement benefits (Details) - Pension benefits - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Components of net periodic pension cost
Service cost	$ 366	$ 333
Interest cost	165	134
Expected return on plan assets	(173)	(153)
Amortization of actuarial loss	39	41
Amortization past service cost	2	2
Net periodic pension cost	399	$ 357
Expected cash contributions to the plans in current fiscal period	2,267
Employer contributions	$ 465

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Accumulated Other Comprehensive Loss (Details) - USD ($) $ in Thousands	3 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
Changes in the components of accumulated other comprehensive income (loss)
Balance	$ 585,016
Reclassifications from OCI to:
Revenue	227,345	$ 205,471
Costs of revenue	(166,279)	(153,560)
Selling, General and Administrative Expense	(54,996)	(53,759)
(Less) : Noncontrolling interests, net of tax	(1,262)	1,095
Other comprehensive loss	(106)	(3,654)
Balance	566,680
Accumulated Other Comprehensive Income (Loss)
Reclassifications from OCI to:
Balance	(40,128)	(43,952)
Investment securities
Changes in the components of accumulated other comprehensive income (loss)
Balance	57	23
Other comprehensive income (loss) (OCI) before reclassifications net of tax	245	300
Reclassifications from OCI to:
(Less) : Noncontrolling interests, net of tax	(76)	(49)
Other comprehensive loss	223	182
Balance	280	205
Other Comprehensive Income (Loss), Tax
OCI before reclassifications	131	172
OCI, Available-for-sale Securities, Tax	117	108
Noncontrolling interests, Tax	(40)	(26)
Investment securities | Reclassification out of accumulated other comprehensive income
Reclassifications from OCI to:
Other Income	54	(69)
Other Comprehensive Income (Loss), Tax
OCI, Reclassification Adjustment from AOCI for Sale of Securities, Tax	26	(38)
Currency Translation Adjustments
Changes in the components of accumulated other comprehensive income (loss)
Balance	(50,415)	(45,211)
Other comprehensive income (loss) (OCI) before reclassifications net of tax	3,605	(5,062)
Reclassifications from OCI to:
(Less) : Noncontrolling interests, net of tax	(486)	1,244
Other comprehensive loss	3,119	(3,818)
Balance	(47,296)	(49,029)
Cash Flow Hedges
Changes in the components of accumulated other comprehensive income (loss)
Balance	11,789	3,934
Other comprehensive income (loss) (OCI) before reclassifications net of tax	(18)	1,795
Reclassifications from OCI to:
(Less) : Noncontrolling interests, net of tax	289	646
Other comprehensive loss	(3,766)	1,799
Balance	8,023	5,733
Other Comprehensive Income (Loss), Tax
OCI before reclassifications	249	264
Noncontrolling interests, Tax	153	342
Comprehensive income (loss), Tax	(1,380)	401
Cash Flow Hedges | Reclassification out of accumulated other comprehensive income
Reclassifications from OCI to:
Revenue	(1,695)	(345)
Costs of revenue	(1,499)	(184)
Selling, General and Administrative Expense	(843)	(113)
Cash Flow Hedges | Reclassification out of accumulated other comprehensive income | Revenue
Other Comprehensive Income (Loss), Tax
OCI, Reclassification Adjustment from AOCI on Derivatives, Tax	(898)	(183)
Cash Flow Hedges | Reclassification out of accumulated other comprehensive income | Costs of revenue
Other Comprehensive Income (Loss), Tax
OCI, Reclassification Adjustment from AOCI on Derivatives, Tax	(566)	(14)
Cash Flow Hedges | Reclassification out of accumulated other comprehensive income | Selling, general and administrative expenses
Other Comprehensive Income (Loss), Tax
OCI, Reclassification Adjustment from AOCI on Derivatives, Tax	(318)	(8)
Benefit plans
Changes in the components of accumulated other comprehensive income (loss)
Balance	(1,180)	(885)
Reclassifications from OCI to:
Other adjustments	4	(19)
Other comprehensive loss	45	24
Balance	(1,135)	(861)
Other Comprehensive Income (Loss), Tax
OCI before reclassifications	0	0
Comprehensive income (loss), Tax	0	0
Benefit plans, prior service credit (cost) | Reclassification out of accumulated other comprehensive income
Reclassifications from OCI to:
Costs of revenue	2	2
Benefit plans, prior service credit (cost) | Reclassification out of accumulated other comprehensive income | Costs of revenue
Other Comprehensive Income (Loss), Tax
OCI, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), Tax	0	0
Benefit plans, prior service credit (cost) | Reclassification out of accumulated other comprehensive income | Selling, general and administrative expenses
Other Comprehensive Income (Loss), Tax
OCI, Amortization Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Prior Service Cost (Credit), Tax	0	0
Benefit plans, net actuarial gain (loss) | Reclassification out of accumulated other comprehensive income
Reclassifications from OCI to:
Costs of revenue	27	26
Selling, General and Administrative Expense	12	15
Benefit plans, net actuarial gain (loss) | Reclassification out of accumulated other comprehensive income | Costs of revenue
Other Comprehensive Income (Loss), Tax
OCI, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), Tax	0	0
Benefit plans, net actuarial gain (loss) | Reclassification out of accumulated other comprehensive income | Selling, general and administrative expenses
Other Comprehensive Income (Loss), Tax
OCI, Reclassification Adjustment from AOCI, Pension and Other Postretirement Benefit Plans, for Net Gain (Loss), Tax	$ 0	$ 0

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Subsequent Events (Details) - Subsequent Events - Derivatives designated as hedging instrument € in Thousands, £ in Thousands, SEK in Thousands, $ in Thousands	Jul. 26, 2017 GBP (£)	Jul. 26, 2017 SEK	Jul. 26, 2017 EUR (€)	Jul. 26, 2017 USD ($)
U.S. Dollar and U.K. Pound Sterling Forward Contract
Subsequent Events
Aggregate notional amount	£ 2,395			$ 3,126
Weighted average settlement rate	1.305	1.305	1.305	1.305
U.S. dollar and Swedish Krona ("SEK") Forward Contract
Subsequent Events
Aggregate notional amount		SEK 2,406		$ 294
Weighted average settlement rate	0.122	0.122	0.122	0.122
U.S. Dollar and Euro Forward Contract
Subsequent Events
Aggregate notional amount			€ 381	$ 444
Weighted average settlement rate	1.165	1.165	1.165	1.165