10-Q 1 k71059e10vq.txt FORM 10-Q FOR QUARTER ENDED JUNE 30, 2002 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q (Mark One) [X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended June 30, 2002 or --------------- [ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ------------ ------------- Commission file number 0-22903 ------- SYNTEL, INC. (Exact Name of Registrant as Specified in Its Charter) Michigan 38-2312018 ------------------------------- ------------------- (State or Other Jurisdiction of (IRS Employer Incorporation or Organization) Identification No.) 525 E. Big Beaver Road, Suite 300, Troy, Michigan 48083 ------------------------------------------------- ---------- (Address of Principal Executive Offices) (Zip Code) (248) 619-2800 ----------------------------------------------------- (Registrant's Telephone Number, Including Area Code) 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 -------------- -------------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Common Stock, no par value: 38,726,557 shares issued and outstanding as of July 16, 2002. 1 SYNTEL, INC. INDEX
Page ---- Part I Financial Information Item 1 Financial Statements Condensed Consolidated Statement of Income 3 Condensed Consolidated Balance Sheet 4 Condensed Consolidated Statement of Cash Flows 5 Notes to the Condensed Consolidated Financial Statements 6 Item 2 Management's Discussion and Analysis of 8 Financial Condition and Results of Operations Part II Other Information 12 Signatures 13
2 SYNTEL, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
3 MONTHS 6 MONTHS ENDED JUNE 30 ENDED JUNE 30 ------------------------- ---------------------------- 2002 2001 2002 2001 ---- ---- ---- ---- Revenues $ 39,500 $ 42,953 $ 79,990 $ 85,705 Cost of revenues 23,903 26,337 48,462 53,482 ----------- ---------- ---------- ---------- Gross profit 15,597 16,616 31,528 32,223 Selling, general and administrative expenses 7,648 8,436 15,669 17,249 ----------- ---------- ---------- ---------- Income from operations 7,949 8,180 15,859 14,974 Other income, principally interest 733 912 1,411 1,869 ----------- ---------- ---------- ---------- Income before income taxes 8,682 9,092 17,270 16,843 Income taxes 2,398 2,522 4,624 4,387 ----------- ---------- ---------- ---------- Net income loss before loss from equity investment in unconsolidated subsidiaries 6,284 6,570 12,646 12,456 Loss from equity investment in unconsolidated subsidiaries 0 218 0 539 ----------- ---------- ---------- ---------- Net income $ 6,284 $ 6,352 $ 12,646 $ 11,917 =========== ========== ========== ========== EARNINGS PER SHARE Basic $ 0.16 $ 0.17 $ 0.32 $ 0.31 Diluted $ 0.16 $ 0.16 $ 0.31 $ 0.31 Basic share outstanding 39,038 38,464 39,028 38,468 =========== ========== ========== ========== Weighted average common shares outstanding -- diluted 40,139 38,841 40,208 38,828 =========== ========== ========== ==========
The accompanying notes are an integral part of the condensed consolidated financial statements. 3 SYNTEL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS)
JUNE 30, DECEMBER 31, 2002 2001 ----- ---- ASSETS Current assets: Cash and cash equivalents $ 102,350 $ 88,010 Investments, marketable securities 13,096 17,203 Accounts receivable, net 25,798 30,982 Advanced billings and other current assets 7,684 7,448 ------------- ------------- Total current assets 148,928 143,643 Property and equipment 19,745 19,041 Less accumulated depreciation 14,859 13,823 ------------- ------------- Property and equipment, net 4,886 5,218 Goodwill, net of amortization 906 906 Deferred income taxes, noncurrent 2,710 2,632 ------------- ------------- $ 157,430 $ 152,399 ============= ============= LIABILITIES Current liabilities: Accrued payroll and related costs $ 10,293 $ 12,984 Accounts payable and other current liabilities 14,237 16,968 Deferred revenue 2,358 5,451 ------------- ------------- Total current liabilities 26,888 35,403 SHAREHOLDERS' EQUITY Total shareholders' equity 130,542 116,996 ------------- ------------- Total liabilities and shareholders' equity $ 157,430 $ 152,399 ============= =============
4 SYNTEL, INC. AND SUBSIDIARY CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS (IN THOUSANDS)
SIX MONTHS ENDED JUNE 30 ----------------------------------- 2002 2001 ---- ---- Cash flows from operating activities: Net income $ 12,646 $ 11,917 ------------- ------------- Adjustments to reconcile net income to net cash provided by (used in) operating activities: Depreciation and amortization 1,036 1,322 Goodwill 0 38 Realized losses on sales of available-for-sale securities (53) 0 Deferred income taxes (78) 286 Compensation expense related to stock options 0 41 Loss on equity investments 0 539 Changes in assets and liabilities: Accounts receivable, net 5,114 2,313 Advance billing and other assets (234) (1,575) Accrued payroll and other liabilities (5,425) (662) Deferred revenues (3,093) 999 ------------- ------------- Net cash provided by operating activities 9,913 15,218 ------------- ------------- Cash flows provided by (used in) investing activities, Property and equipment expenditures (704) (1,836) Equity and other investments 0 (301) Purchase of available-for-sale securities (15,175) (12,770) Proceeds from sales of available-for-sale securities 19,335 3,889 ------------- ------------- Net cash provided by (used in) investing activities 3,456 (11,018) ------------- ------------- Cash flows provided by financing activities: Net proceeds from issuance of stock 3,669 887 Common stock repurchases (2,905) (765) ------------- ------------- Net cash provided by financing activities 764 122 ------------- ------------- Effect of foreign currency exchange rate changes on cash 206 (330) ------------- ------------- Net increase in cash and cash equivalents 14,340 3,992 Cash and cash equivalents, beginning of period 88,010 73,478 ------------- ------------- Cash and cash equivalents, end of period $ 102,350 $ 77,470 ============= =============
The accompanying notes are an integral part of the consolidated financial statements. 5 SYNTEL, INC. AND SUBSIDIARIES NOTES TO THE FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION: The accompanying condensed consolidated financial statements of Syntel, Inc. (the "Company") have been prepared by management, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in United States of America have been condensed or omitted pursuant to such rules and regulations. In the opinion of the management, the accompanying unaudited condensed consolidated financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to present fairly the financial position of Syntel, Inc. and its subsidiaries as of June 30, 2002, the results of their operations for the three and six month periods ended June 30, 2002 and June 30, 2001, and cash flows for the six months ended June 30, 2002 and June 30, 2001. The year end condensed balance sheet as of December 31, 2001 was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's annual report on Form 10K for the year ended December 31, 2001. Operating results for the six months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. 2. PRINCIPLES OF CONSOLIDATION AND ORGANIZATION The consolidated financial statements include the accounts of Syntel, Inc. ("Syntel") and its wholly owned subsidiaries Syntel (India) Limited ("Syntel India"), an Indian limited liability company, Syntel "Singapore" PTE., Ltd., ("Syntel Singapore"), a Singapore limited liability company, Syntel Europe, Ltd., ("Syntel U.K."), a United Kingdom limited liability company, Syntel Canada Inc., ("Syntel Canada") a Canada limited liability company, Syntel Deutschland GmbH, ("Syntel Germany") a Germany limited liability Company, Syntel Hong Kong Ltd., ("Syntel Hong Kong") a Hong Kong limited liability Company, Syntel Mauritius Limited, ("Syntel Mauritius") a Mauritius limited liability Company and Syntel "Australia" Pty. Limited, ("Syntel Australia"), an Australian limited liability Company. All intercompany balances and transactions have been eliminated. 3. RECLASSIFICATION Certain prior quarter amounts have been reclassified to conform with the current quarter presentation. 4. REVENUE RECOGNITION The Company recognizes revenues from time and material contracts as services are rendered and costs are incurred. Revenue on fixed-price, fixed deliverable projects is measured by the percentage of cost incurred to date to the estimated total cost at completion. Revenue from fixed-price application management and support engagements is recognized as earned. The cumulative impact of any change in estimates of the percentage complete or losses on contracts is reflected in the period in which the changes become known. 5. CASH EQUIVALENTS For the purpose of reporting cash and cash equivalents, the Company considers all liquid investments purchased with a maturity of three months or less to be cash equivalents. At June 30, 2002 and 2001, approximately $50,068 thousand and $53,742 thousand, respectively, represent corporate bonds and treasury notes held by Bank One, for which a triple A rated letter of credit has been provided by the bank. The remaining cash and cash equivalents are certificates of deposit, corporate bonds, and treasury notes held by various banking institutions including other U.S.-based and local India-based banks. 6 6. EQUITY During the second quarter of 2002, Syntel Inc. issued 322,210 warrants at $ 7.25 per share. Under the terms of the agreement, certain milestones are required to be met in order for the holder to exercise these warrants. It is not probable such milestones will be met. Accordingly, the impact of such issuance has not been given in the accompanying statements or earnings-per-share calculations. The warrants have a term of 10 years and were issued with a retroactive effective date of October 16, 2000. 7. COMPREHENSIVE INCOME Total comprehensive income for the three and six months period ended June 30, 2002 and 2001 was as follows (in thousands):
Three Months Ended Six Months Ended ------------------ ---------------- June 30 June 30 ------- ------- 2002 2001 2002 2001 ---- ---- ---- ---- Net income $6,284 $6,352 $12,646 $11,917 Other comprehensive income Foreign currency translation adjustments 192 (20) 135 (183) ------- ------- -------- -------- Total comprehensive income $6,476 $6,332 $12,781 $11,734 ======= ======= ======== ========
8. EARNINGS PER SHARE Basic earnings per share is calculated by dividing net income by the weighted average number of shares outstanding during the applicable period. The Company has stock options, which are considered to be potentially dilutive to common stock. Diluted earnings per share are calculated considering these potentially dilutive options. The following table sets forth the computation of earnings per share.
Three Months Ended June 30, 2002 June 30, 2001 -------------- ------------- Weighted Earnings Weighted Earnings Average per Average per Shares share Shares share ------ ----- ------ ----- (in thousands, except per share earnings) Basic earnings per share 39,038 $ 0.16 38,464 $ 0.17 Net dilutive effect of stock options outstanding 1,101 - 377 (0.01) ------ ------- ------ ------- Diluted earnings per share 40,139 $ 0.16 38,841 $ 0.16 ====== ======= ====== ======= Six Months Ended June 30, 2002 June 30, 2001 -------------- ------------- Weighted Earnings Weighted Earnings Average per Average per Shares share Shares share ------ ----- ------ ----- (in thousands, except per share earnings) Basic earnings per share 39,028 $ 0.32 38,468 $ 0.31 Net dilutive effect of stock options outstanding 1,180 (0.01) 360 - ------ ------- ------ ------- Diluted earnings per share 40,208 $ 0.31 38,828 $ 0.31 ====== ======= ====== =======
7 9. SEGMENT REPORTING The Company manages its operations through three segments, Applications Outsourcing, e-Business, and TeamSourcing. Management allocates all direct expenses to the segments. Financial data for each segment for the three and six months period ended June 30, 2002 and June 30, 2001 is as follows:
Three Months Ended Six Months Ended ------------------ ---------------- June 30, 2002 June 30, 2001 June 30, 2002 June 30, 2001 ------------- ------------- ------------- ------------- (In thousands) (In thousands) Revenues: Applications Outsourcing $26,726 $26,551 $54,193 $52,056 e-Business 8,572 10,360 17,129 21,751 TeamSourcing 4,202 6,042 8,668 11,898 ------- ------- ------- ------- 39,500 42,953 79,990 85,705 Gross Profit: Applications Outsourcing 11,978 11,462 24,121 21,528 e-Business 3,121 3,638 6,182 7,783 TeamSourcing 498 1,516 1,225 2,912 ------- ------- ------- ------- 15,597 16,616 31,528 32,223
PART I - FINANCIAL INFORMATION ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS. SYNTEL INC. AND SUBSIDIARIES RESULTS OF OPERATIONS REVENUES. The Company's revenues consist of fees derived from its Applications Outsourcing, e-Business, and TeamSourcing business segments. Revenues decreased 8.0% to $39.5 million in the second quarter of 2002 from $42.9 million in the second quarter of 2001. Worldwide billable headcount, including personnel employed by Syntel India, Syntel Singapore, Syntel Europe, and Syntel Germany as of June 30, 2002 increased to 1,781 compared to 1,551 as of June 30, 2001. APPLICATIONS OUTSOURCING REVENUES. Applications Outsourcing revenues increased to $26.7 million for the second quarter of 2002, or 67.7% of total revenues, from $26.6 million, or 61.8% of second quarter revenues for 2001. The revenues for first six months of 2002 increased to $54.2 million, or 67.7% of total revenues, from $52.1 million or 60.7% of total revenues for the first six months of 2001. The $0.1 million increase for the second quarter was attributable principally to net growth in new engagements, contributing approximately $6.5 million, largely offset by $6.4 million in lost revenues as a result of project completion. The $2.1 million increase for first six months of 2002 was attributable principally to net growth in new engagements, contributing approximately $11.7 million, largely offset by $9.6 million in lost revenues as a result of projects completion. APPLICATIONS OUTSOURCING COST OF REVENUES. Cost of revenues consists of costs directly associated with billable consultants in the US and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finders fees, trainee compensation, and travel. Applications Outsourcing costs of revenues decreased to 55.2% of total Applications Outsourcing revenues for the second quarter of 2002, from 56.8% for the second quarter of 2001. Cost of Revenues for the first six months of 2002 decreased to 55.5% of total Applications Outsourcing revenues, from 58.6% for the first six months of 2001. Both 1.6% and 3.1% decrease in cost of revenues, as a percent of revenues for the second quarter and for the first six months of 2002 was attributable to the increase in higher margin offshore component of the overall services. E-BUSINESS REVENUES. e-Business revenues decreased to $8.6 million for the second quarter of 2002, or 21.7% of total consolidated revenues, from $10.4 million, or 24.1% of total consolidated revenues for the second quarter of 2001. The $1.8 million decrease for the second quarter was attributable principally to lost revenues as a result of project completions, contributing approximately $4.1 million, partially offset by new business revenues of $2.3 million. Revenues for the first six months of 2002 decreased to $17.1 million, or 21.4% of total revenues, from $21.8 million or 25.4% of total revenues for the first six months of 2001. The $4.6 million decrease for the six months of 2002 was attributable principally to lost revenues as a 8 result of project completions, contributing approximately $9.1 million, partially offset by new business revenues of $4.5 million. E-BUSINESS COST OF REVENUES. e-Business cost of revenues consists of costs directly associated with billable consultants in the US and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finders fees, trainee compensation, and travel. e-Business cost of revenues decreased to 63.6% of total e-Business revenues for the second quarter of 2002, from 64.9% for the second quarter of 2001. For the first six months of 2002, e-Business costs of revenues decreased to 63.9% of total e-business revenues, from 64.2% for the first six months of 2001. Both 1.3% and 0.3% decrease in cost of revenues as a percent of total e-business revenues for the first three and six months of 2002, respectively, was attributable primarily to improved onsite utilization rates. TEAMSOURCING REVENUES. TeamSourcing revenues decreased to $4.2 million for the second quarter of 2002, or 10.6% of total revenues, down from $6.0 million, or 14.1% of total revenues for the second quarter of 2001. For the first six months of 2002, TeamSourcing revenues decreased to $8.7 million, or 10.8% of total revenues, down from $11.9 million or 13.9% of total revenues for the first six months of 2001. Both the $1.8 million decrease for the second quarter as well as the $3.2 million decrease for the first six months of 2002 were principally due to a decrease in US based billable consultants on various engagements, as a result of a conscious decision by management to reduce organizational focus away from this segment and focusing on higher margin Segments. TEAMSOURCING COST OF REVENUES. TeamSourcing cost of revenues consists of costs directly associated with billable consultants in the US, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finders fees, trainee compensation, and travel. TeamSourcing cost of revenues increased to 88.1% of TeamSourcing revenues for the second quarter of 2002, from 74.9% for the second quarter of 2001. The cost of revenues as a percent of revenues increased to 85.9% of total TeamSourcing revenues for the six month period ended Jun 30, 2002, from 75.5% for the six month period ending June 30, 2001. Both the 13.2% and 10.4% increase in cost of revenues as a percent of total TeamSourcing revenues for the first three and six months of 2002, respectively, was attributable primarily to lower utilization due to the softness in the economy. SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Selling, general, and administrative expenses consist primarily of salaries, payroll taxes and benefits for sales, solutions, finance, administrative, and corporate staff, travel, telecommunications, business promotions, marketing and various facility costs for the Company's Global Development Centers and various offices. Selling, general, and administrative costs for the three months ended June 30, 2002 were $7.6 million, or 19.4% of total revenues, compared to $8.4 million or 19.6% of total revenues for the three months ended June 30, 2001. The $0.8 million decrease was attributable principally to decrease in compensation costs due to reduced corporate staff in US and UK, reversal of bonus provisions in US, reduction in the depreciation expenses due to fully depreciated assets and recovery of previously reserved for receivable contributing approximately $0.9 million, $2.8 million, $0.1 million and $0.8 million, respectively. The decrease was partially offset by increase in marketing expenses, office expenses, recognition of current period allowance for doubtful accounts provision in US, recognition of current period bonus provision and increased facility costs at Germany contributing approximately $0.2 million, $0.2 million, $1.1 million, $2.2 million and $0.1 million, respectively. Selling, General and Administrative Expenses decreased to $15.7 million, or 19.6% of total revenues for the six month period ending June 30, 2002 from $17.2 million or 20.1% of total revenue for the same period in 2001. The decrease of $1.5 million in Selling, General and Administrative expenses in six month period ended June 30, 2002 over the same period in 2001 was attributable principally to decrease in compensation costs due to reduced corporate staff in US and UK, reversal of bonus provisions in US, reduction in the depreciation expenses due to fully depreciated assets and recovery of previously reserved for receivable contributing approximately $1.8 million, $2.8 million, $0.4 million and $0.8 million, respectively. The decrease was partially offset by increase in marketing expenses, office expenses, recognition of current period allowance for doubtful accounts in US, recognition of current period bonus provision, travel, office rent, telecommunication and increased facility costs at Germany contributing approximately $0.2 million, $0.2 million, $1.1 million, $2.2 million, $0.1 million, $0.1 million, $0.1 million and $0.3 million, respectively. LIQUIDITY AND CAPITAL RESOURCES In recent history, the Company has financed its working capital needs through operations. The Company's cash and cash equivalents consist primarily of certificates of deposit, corporate bonds and treasury notes. A large majority of such amounts are held by Bank One for which a triple A rated letter of credit has been provided. Remaining amounts are held by various banking institutions including other U.S.-based and local India-based banks. 9 Net cash generated by operating activities was $9.9 million for the first six months of 2002, compared to $15.2 million for the first six months of 2001. The number of days sales outstanding in accounts receivable was approximately 59 days and 62 days as of June 30, 2002 and June 30, 2001, respectively. Net cash provided by investing activities was $3.4 million for the first six months of 2002, consisted principally of $19.3 million for proceeds from sale of available-for-sale securities, partially offset by $15.2 million for purchase of available-for- sale securities and $ 0.7 million for capital expenditures, consisting principally of computer equipment and communication equipment. Net cash used in investing activities was $11.0 million for the six months of 2001, consisted principally of $12.8 million for purchase of available-for- sale securities, $1.1 million for the acquisition of land for construction of the new development and training center in Pune, India, $0.7 million in computer equipment and $0.3 million in equity and other investments partially offset by $3.9 million for proceeds from sale of available-for-sale securities. Net cash provided by financing activities was $0.8 million and $0.1 million for the first six months of 2002 and 2001, respectively. Cash provided by financing activities for the first six months of 2002 consisted principally of $3.7 million for the proceeds from the exercise of stock options; offset by common stock repurchases of $2.9 million. Cash provided by financing activities for the first six months of 2001 consisted principally of $0.9 million for the proceeds from the exercise of stock options; offset by common stock repurchases of $0.8 million. The Company has a line of credit with Bank One, which provides for borrowings up to $20.0 million. The line of credit expires on August 31, 2002. The line of credit contains covenants restricting the Company from, among other things, incurring additional debt, issuing guarantees and creating liens on the Company's property, without the prior consent of the bank. The line of credit also requires the Company to maintain certain tangible net worth levels and leverage ratios. At June 30, 2002, there was no indebtedness outstanding under the line of credit. The letters of credit bear 1% fee of the face value payable annually in advance. Borrowings under the line of credit bear interest at 1) a formula approximating the bank's Eurodollar rate plus applicable margin of 1.25% or 2) the bank's prime rate plus 1.25%. The Company believes that the combination of present cash balances and future operating cash flows will be sufficient to meet the Company's currently anticipated cash requirements for at least the next 12 months. FORWARD LOOKING STATEMENTS / RISK FACTORS Certain statements contained in this Report are forward looking statements within the meaning of the Securities Exchange Act of 1934. In addition, the Company from time to time may publish other forward looking statements. Such forward looking statements are based on management's estimates, assumptions and projections and are subject to risks and uncertainties that could cause actual results to differ materially from those discussed in the forward looking statements. Factors which could affect the forward looking statements include those listed below. The Company does not intend to update these forward looking statements. - Recruitment and Retention of IT Professionals - Government Regulation of Immigration - Variability of Quarterly Operating Results - Customer Concentration; Risk of Termination - Exposure to Regulatory and General Economic Conditions in India - Intense Competition - Ability to Manage Growth - Fixed-Price Engagements - Potential Liability to Customers - Dependence on Principal - Risks Related to Possible Acquisitions - Limited Intellectual Property Protection RECENT ACCOUNTING PRONOUNCEMENTS In July 2001, the Financial Accounting Standards Board issued SFAS No. 141, "Business Combinations" and SFAS No. 142 10 "Goodwill and Other Intangible Assets". SFAS 141 replaces Accounting Principles Board Opinion 16, "Business Combinations" and requires that the purchase method of accounting be used for all business combinations initiated after June 30, 2001. SFAS 142 replaces APB 17, "Intangible Assets". In accordance with SFAS No. 141 and 142, effective for the Company's year ended December 31, 2002, as a replacement to amortization of goodwill and intangible assets with indefinite lives, the Company will evaluate goodwill and intangible assets for impairment annually. The standards have been adopted as of January 1, 2002 and have not had a material effect on the financial statements. As of June 30, 2002, net goodwill was approximately $906,000. In February 2002, the Emerging Issues Task Force issued Topic D-103, "Income Statement Characterization of Reimbursements Received for "Out-of-Pocket" Expenses", which requires reimbursements of out-of-pocket expenses to be presented as revenues and the associated costs to be presented as expenses. The Company has adopted the above statement from January 1, 2002 resulting in increased revenues and corresponding expenses, the impact of which is not significant. The prior quarter figures have been reclassified to conform with the current quarter presentation as above. 11 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS. While the Company is a party to ordinary routine litigation incidental to its business, the Company is not a party to any material pending legal proceedings. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS. None. ITEM 3. DEFAULTS UPON SENIOR SECURITIES. None. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. The Corporation held an annual meeting of shareholders on Friday, May 17, 2002. At the meeting, Neerja Sethi and Douglas E. Van Houweling were elected directors of the Corporation to serve three year terms until the annual meeting of shareholders in 2005. The vote of the shareholders with regard to the election of Ms. Sethi as a director was 37,594,483 shares FOR and 204,489 shares WITHHELD. The vote of the shareholders with regard to the election of Mr. Van Houweling as a director was 37,794,367 shares FOR and 4,605 shares WITHHELD. The following persons continued to serve their terms of office as directors of the Corporation after the meeting: Paritosh K. Choksi, Bharat Desai, and George R. Mrkonic. ITEM 5. OTHER INFORMATION. None. ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K. (a) Exhibits Exhibit No. Description 99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (b) Reports on Form 8-K The Corporation did not file any reports on Form 8-K during the three month period ended June 30, 2002. 12 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. Syntel, Inc. ------------ (Registrant) Date August 12, 2002 By /s/ Bharat Desai ----------------------- Bharat Desai, President and Chief Executive Officer Date August 12, 2002 By /s/ Keshav Murugesh ------------------------- Keshav Murugesh, Chief Financial Officer 13 EXHIBIT INDEX Exhibit No. Description 99.1 Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 99.2 Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 14