-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ju9Ws6MHobH39E1m6ljMJyI8ZNaOy+CAJnWXDQedq90K3vteeldT7u+u00cYU5fr khWOzwZz4a4yhBLhgSV1LQ== 0000950124-04-005098.txt : 20041027 0000950124-04-005098.hdr.sgml : 20041027 20041027090443 ACCESSION NUMBER: 0000950124-04-005098 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20041027 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20041027 DATE AS OF CHANGE: 20041027 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNTEL INC CENTRAL INDEX KEY: 0001040426 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 382312018 STATE OF INCORPORATION: MI FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-22903 FILM NUMBER: 041098110 BUSINESS ADDRESS: STREET 1: 525 EAST BIG BEAVER ROAD STREET 2: SUITE 300 CITY: TROY STATE: MI ZIP: 48083 BUSINESS PHONE: 2486193524 MAIL ADDRESS: STREET 1: 525 EAST BIG BEAVER ROAD STREET 2: SUITE 300 CITY: TROY STATE: MI ZIP: 48083 8-K 1 k89114e8vk.txt CURRENT REPORT, DATED OCTOBER 27, 2004 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) October 27, 2004 ----------------------------- Syntel, Inc. - ------------------------------------------------------------------------------- (Exact Name of Registrant as Specified in Its Charter) Michigan - ------------------------------------------------------------------------------- (State or Other Jurisdiction of Incorporation) 0-22903 38-2312018 - ------------------------------------------------------------------------------- (Commission File Number) (IRS Employer 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) - ------------------------------------------------------------------------------- (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 obligations of the registrant under any of the following provisions (see General Instruction A.2. below): [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) 1 ITEM 2.02. RESULTS OF OPERATIONS AND FINANCIAL CONDITION. On October 27, 2004, Syntel, Inc. (the "Company") issued a press release announcing results of operations and related financial information for the third quarter ended September 30, 2004. A copy of the press release is attached to this Report as Exhibit 99.1. The information contained in this Current Report, including Exhibit 99.1, is being furnished and shall not be deemed to be "filed" for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the "Exchange Act") or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except if the Company expressly states that such information is to be considered "filed" under the Exchange Act or incorporates it by specific reference in such filing. ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS. (c) Exhibits. Exhibit Number 99.1 Press Release dated October 27, 2004. 2 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 hereunto duly authorized. Syntel, Inc. ------------------------------------------ (Registrant) Date October 27, 2004 By /s/ Keshav Murugesh ---------------------- ---------------------------------------- Keshav Murugesh, Chief Financial Officer 3 EXHIBIT INDEX Exhibit No. Description 99.1 Press Release dated October 27, 2004. 4 EX-99.1 2 k89114exv99w1.txt PRESS RELEASE DATED OCTOBER 27, 2004 EXHIBIT 99.1 Syntel Reports Results for Third Quarter 2004 Quarterly Highlights: - Revenue of $46.6M - Gross margin of 42.0% - EPS of $0.29 per diluted share - Cash and Short-term investments of $156.4M TROY, Mich. -- Oct. 27, 2004--Syntel, Inc., a global information technology services firm, today announced financial results for the third quarter ended Sept. 30, 2004. Syntel's total revenue for the third quarter was $46.6 million, compared to $44.1 million in the prior-year period and $45.8 million in the second quarter of 2004. The gross margin was 42.0 percent in the third quarter of 2004, compared to 41.6 percent in the prior-year period and 42.8 percent in the second quarter of 2004. Global utilization levels were 76 percent in the third quarter, as compared to 81 percent in the prior-year quarter as hiring and training of key employees continued. During the third quarter, Syntel's core focus area of Applications Outsourcing accounted for 78.8 percent of total revenue, with e-Business contributing 13.2 percent, Team Sourcing at 7.1 percent and Business Process Outsourcing (BPO) at 0.9 percent. "Syntel made progress in the third quarter in terms of our billable headcount growth, offshore delivery mix, and we set a record for the largest quarterly contribution by Applications Outsourcing, our key focus area," said Bharat Desai, Syntel Chairman and CEO. "In addition, we've completed a new 400-seat BPO facility in Mumbai and have made solid progress on our 40-acre technology campus in Pune." The Company's Selling, General and Administrative (SG&A) expenses were 19.0 percent in the third quarter of 2004, compared to 12.2 percent in the prior-year period and 19.2 percent in the second quarter of 2004. As previously reported, the Company had reversed accruals during the third quarter of 2003 related to the settlement of litigation and successful collection of overdue debts. Syntel's income from operations was 23.0 percent in the third quarter, compared to 29.5 percent in the prior-year period and 23.5 percent in the second quarter of 2004. Syntel's income tax rate was a negative 3.5 percent in the third quarter of 2004, compared to 21.2 percent in the prior-year period and 15.6 percent in the second quarter of 2004. The Company makes provisions for tax contingencies based on management's estimates. The provision no longer required for any particular tax year, is credited to the current period's income tax expenses. During the third quarter of 2004, income tax expenses were reduced by $2.3 million for tax provisions no longer required, which had a positive impact of $0.06 on EPS. The income tax rate in the third quarter of 2004, without adjusting the above-mentioned reversal was 16.2 percent. Net income for the third quarter was $11.9 million or $0.29 per diluted share, compared to $10.8 million or $0.26 per diluted share in the prior-year period, and $9.4 million or $0.23 per diluted share in the second quarter of 2004. Cont'd on Page 2 During the third quarter of 2004, Syntel added two new corporate clients to its roster and launched 85 new engagements. At the end of the third quarter, Syntel's "hunting licenses" or preferred partnership agreements with Global 2000 corporations totaled 60. Global headcount grew to 4,317 in the third quarter of 2004, compared to 4,054 in the second quarter of 2004. Billable headcount in the current quarter was 2,939. Utilization during the third quarter was 97 percent domestically and 65 percent offshore. "Syntel's financial position and cash generation remain very strong," said Keshav Murugesh, Syntel COO and CFO. "We ended the third quarter with $156.4 million in cash and short-term investments and the Company remains debt-free." UPDATED OUTLOOK While Syntel is making progress in adding new corporate clients, enhancing infrastructure and investing in sales & marketing activities, the timing of the revenue ramp continues to present a challenge. Based on the third quarter financial performance, the Company now expects revenue in the range of $182.5M to $185.0M and EPS between $0.94 to $0.98 for the full year 2004. SYNTEL TO HOST CONFERENCE CALL Syntel will discuss its third quarter performance today on a conference call at 10:00 a.m. (Eastern). To listen to the call, please dial (888) 689-9220. The call will also be broadcast live via the Internet at Syntel's web site: www.syntelinc.com under the "Investor Relations" section. Please go to the web site at least 15 minutes prior to call start time to register and download any necessary audio software. A replay will be available by dialing (800) 642-1687 and entering "141637" from 1:00 p.m. on October 27, 2004 until midnight on November 4, 2004. International callers may dial (706) 645-9291 and enter the same passcode. Balance sheet and income statement to follow. ABOUT SYNTEL Syntel (SYNT) is a leading global provider of custom outsourcing solutions in a broad spectrum of information technology and information technology-enabled services. The Company's vertical practices support the entire Design-Build-Operate-Optimize lifecycle of systems and processes for corporations in the Financial Services, Insurance, Retail, Health Care and Automotive industries. The first US-based firm to launch a Global Delivery Service to drive speed-to-market and quality advantages for its customers, Syntel now leverages this efficient model for the majority of its Global 2000 customers. Recently named one of Forbes Magazine's "Best 200 Small Companies in America," Syntel has more than 4,300 employees worldwide, is assessed at Level 5 of the SEI's CMM and is ISO 9001:2000 certified. To learn more, visit us at: www.syntelinc.com. SAFE HARBOR PROVISION This news release includes forward-looking statements, including with respect to the future level of business for Syntel, Inc. These statements are necessarily subject to risk and uncertainty. Actual results could differ materially from those projected in these forward-looking statements as a result of certain risk factors set forth in the Company's Annual Form 10-K document dated March 12, 2004. Factors that could cause results to differ materially from those set forth above include general trends and developments in the information technology industry, which is subject to rapid technological changes, and the Company's concentration of sales in a relatively small number of large customers, as well as intense competition in the information technology industry, which the Company believes will increase. SYNTEL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENT OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)
3 MONTHS 9 MONTHS ENDED SEPT 30 ENDED SEPT 30 --------------------------- -------------------------- 2004 2003 2004 2003 ---- ---- ---- ---- Net revenues $ 46,602 $ 44,105 $ 137,537 $ 132,098 Cost of revenues 27,014 25,738 79,333 74,974 --------- --------- --------- --------- Gross profit 19,588 18,367 58,204 57,124 Selling, general and administrative expenses 8,850 5,371 26,511 19,769 --------- --------- --------- --------- Income from operations 10,738 12,996 31,693 37,355 Other income, principally interest 753 632 2,106 2,092 --------- --------- --------- --------- Income before income taxes 11,491 13,628 33,799 39,447 Provision for / (benefit from) income taxes (402) 2,884 3,179 10,052 --------- --------- --------- --------- Income before income /(loss) from equity investment 11,893 10,744 30,620 29,395 Income / (loss) from equity investment 0 13 0 (34) --------- --------- --------- --------- Net income $ 11,893 $ 10,757 $ 30,620 $ 29,361 ========= ========= ========= ========= $ 0.06 $ 1.31 $ 0.18 $ 1.31 Dividend per share EARNINGS PER SHARE: Basic $ 0.30 $ 0.27 $ 0.76 $ 0.74 Diluted $ 0.29 $ 0.26 $ 0.76 $ 0.72 WEIGHTED AVERAGE COMMON SHARES OUTSTANDING : Basic 40,236 39,718 40,205 39,478 Diluted 40,335 40,975 40,486 40,634
SYNTEL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEET (IN THOUSANDS)
SEPTEMBER, 30 DECEMBER 31, 2004 2003 ----- ---- ASSETS Current assets: Cash and cash equivalents $106,292 $102,854 Short term investments 50,069 33,982 Accounts receivable, net of allowances of $799 and $809 at September 30, 2004 and December 31, 2003, respectively 28,787 25,197 Revenue earned in excess of billings 5,139 6,324 Deferred income taxes and other current assets 6,012 5,642 ------------------------------- Total current assets 196,299 173,999 Property and equipment 33,142 25,617 Less accumulated depreciation 20,090 18,502 ------------------------------- Property and equipment, net 13,052 7,115 Goodwill 906 906 Deferred income taxes and other noncurrent assets 2,341 3,178 ------------------------------- $212,598 $185,198 =============================== LIABILITIES Current liabilities: Accrued payroll and related costs $ 13,089 $ 11,851 Income taxes payable 5,926 6,507 Accounts payable and other current liabilities 10,161 9,255 Deferred revenue 4,910 4,179 -------------------------------- Total liabilities 34,086 31,792 SHAREHOLDERS' EQUITY Total shareholders' equity 178,512 153,406 ------------------------------- Total liabilities and shareholders' equity $212,598 $185,198 ===============================
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