UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 5, 2008
VIRTUSA CORPORATION
(Exact Name of Registrant as Specified in Charter)
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Delaware
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001-33625
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04-3512883 |
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(State or Other Juris-
diction of Incorporation
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(Commission
File Number)
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(IRS Employer
Identification No.) |
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2000 West Park Drive
Westborough, Massachusetts
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01581 |
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(Address of Principal Executive Offices)
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(Zip Code) |
Registrants telephone number, including area code: (508) 389-7300
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions (see General
Instruction A.2. below):
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b)) |
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act
(17 CFR 240.13e-4(c))
Item 8.01. Other Events.
Virtusa Corporation (the Company) is filing this Current Report on Form 8-K in connection with
the recent developments and publicity regarding the auction rate securities markets. As of
December 31, 2007, the total amount of the Companys cash and cash equivalents and short term
investments was approximately $95.4 million. As of March 5, 2008, the Company had $8.35 million
invested in auction rate securities. All of these auction rate securities are AAA or Aaa rated by
one or more of the major credit rating agencies. Furthermore, 85% of these auction rate securities
are issued by state agencies which issue student loans, of which approximately 97% are guaranteed
by the U.S. government under the Federal Family Education Loan Program. The remaining 15% of these
auction rate securities consists of investments in municipal bonds and preferred shares in a closed
end mutual fund.
As of March 5, 2008, the Company has experienced failed auctions with respect to all of its auction
rate securities, resulting in the Companys inability to sell these securities. An auction fails
when there is insufficient demand for these securities. However, this does not represent a default
by the issuer of the auction rate security. Upon an auction failure, the interest rate does not
reset at a market rate but instead resets based on a formula contained in the security, which is
generally higher than the current market rate. The Company has assessed each failed auction and
believes that none of the underlying issuers of its auction rate securities are presently at risk
for default or that such securities are otherwise impaired. As such, the Company currently
believes the carrying value of these auction rate securities approximates their fair value. If the
issuers are unable to successfully close future auctions and their credit ratings deteriorate, the
Company may be required to record an impairment charge on these investments in the future.
In addition, with respect to auction rate securities that have failed auctions, the Company may
have to wait until the final maturity of the underlying notes to realize the investments recorded
value. Therefore, based on the current lack of liquidity and demand in the financial markets
relating to auction rate securities, the Company is reclassifying all $8.35 million of its auction
rate securities from short-term investments to long-term investments. The Company does not
currently anticipate that any potential lack of liquidity in its auction rate securities will
affect its ability to execute its current business plan.
FORWARD-LOOKING STATEMENTS
Certain statements in this Current Report on Form 8-K are forward-looking statements made pursuant
to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The
forward-looking statements may use the words expect, anticipate, plan, intend, project,
may, believe and similar expressions. Such forward-looking statements include, without
limitation, statements regarding the condition and status of the issuers of auction rate securities
held in the Companys investment portfolio, their ability to hold successful auctions with respect
to these securities in the future, potential impairment charges, and the potential for any lack of
liquidity to affect the Companys ability to fund its operations. These statements are only
predictions and reflect the current beliefs and expectations of Virtusa Corporation. Actual events
or results may differ materially from those contained in the projections or forward-looking
statements. Factors that may cause future results to differ materially from the Companys current
expectations include, among others, risks related to the value and liquidity of the Companys
short-term investments, including its investments in auction rate securities, as well as the risks
discussed under Risk Factors in its Quarterly Reports on Form 10-Q for the quarters ended June
30, 2007, September 30, 2007 and December 31. 2007 and its other filings with the Securities and
Exchange Commission. Any forward-looking statements contained in this report represent the
Companys estimates only as of the date hereof, or as of such earlier dates as are indicated, and
should not be relied upon as representing its estimates as of any subsequent date. Virtusa Corporation undertakes no obligation to publicly
update any forward-looking statements whether as a result of new information, future events or
otherwise.