-----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, O97Z2NG6crDMzjXY+nxgYhZkumpg7POOlaBJ+f2GjSiQKMOoP6Dd4BJeWqpio2B7 ZoZC70ft/+xuyvL8i5wv+w== 0000950124-99-006348.txt : 19991207 0000950124-99-006348.hdr.sgml : 19991207 ACCESSION NUMBER: 0000950124-99-006348 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19990922 ITEM INFORMATION: FILED AS OF DATE: 19991206 FILER: COMPANY DATA: COMPANY CONFORMED NAME: SYNTEL INC CENTRAL INDEX KEY: 0001040426 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-COMPUTER PROGRAMMING SERVICES [7371] IRS NUMBER: 382312018 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 000-22903 FILM NUMBER: 99768968 BUSINESS ADDRESS: STREET 1: 2800 LIVERNOIS STREET 2: SUITE 400 CITY: TROY STATE: MI ZIP: 48043 BUSINESS PHONE: 2486192800 MAIL ADDRESS: STREET 1: 2800 LIVERNOIS STREET 2: SUITE 400 CITY: TROY STATE: MI ZIP: 48043 8-K/A 1 FORM 8-K/A 1 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 Date of report (Date of earliest event reported): September 22, 1999 Syntel, Inc. ---------------------------------------------------- (Exact name of Registrant as Specified in Its Charter) Michigan 0-22903 38-2312018 ------------------------------ ----------- ------------- (State or Other Jurisdiction of (Commission (IRS Employer Incorporation or Organization) File Number) Identification No.) 2800 Livernois Road, Suite 400, Troy Michigan 48083 - --------------------------------------------- --------- (Address of Principal Executive Offices) (Zip Code) (248)-619-2800 -------------------------------------------------- (Registrant's Telephone Number, Including Area Code) 2 Syntel (the "Company") hereby amends and restates Item 7 of its report on Form 8-K dated September 22, 1999 as follows: ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements of Business Acquired. The financial statements of Metier, Inc. required by this item are included in exhibit 99.1 to this Current Report on Form 8-K/A and incorporated herein by reference. (b) Pro Forma financial Information The financial statements of Metier, Inc. required by this item are included in exhibit 99.2 to this Current Report on Form 8-K/A and incorporated herein by reference. (c) Exhibits See exhibit index attached hereto. Pursuant to the requirements of the Securities and Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. SYNTEL, INC. By: /s/ John Andary -------------------------- John Andary Dated: December 3, 1999 Chief Financial Officer EXHIBITS
Exhibit No. Description ----------- ----------- 99.1 Financial Statements of Metier, Inc. - Audited financial statements for the 12 months ended September 30, 1998 - Condensed statements of income for the nine month periods ended June 30, 1999 and June 30, 1998. - Condensed balance sheets as of June 30, 1999 and June 30, 1998. - Condensed statement of cash flows for the nine month periods ended June 30, 1999 and June 30, 1998. 99.2 Pro Forma Financial Information - Pro forma statement of operations for the 12 months ended December 31, 1998 and the six months ended June 30, 1999. - Pro forma condensed balance sheet as of June 30, 1999.
EX-99.1 2 FINANCIAL STATEMENTS OF METIER, INC. 1 EXHIBIT 99.1 Audited Financial Statements Metier, Inc. Year ended September 30, 1998 with Report of Independent Auditors 2 Metier, Inc. Audited Financial Statements Year ended September 30, 1998 CONTENTS Report of Independent Auditors....................................1 Audited Financial Statements Balance Sheet.....................................................2 Statement of Income...............................................3 Statement of Stockholders' Equity.................................4 Statement of Cash Flows...........................................5 Notes to Financial Statements.....................................6
3 Report of Independent Auditors The Board of Directors Metier, Inc. We have audited the accompanying balance sheet of Metier, Inc. as of September 30, 1998, and the related statements of income, stockholders' equity, and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Metier, Inc. at September 30, 1998, and the results of its operations and its cash flows for the year then ended, in conformity with generally accepted accounting principles. /s/ Ernst & Young LLP August 6, 1999, except for Note 7 for which the date is September 22, 1999 1 4 Metier, Inc. Balance Sheet September 30, 1998 ASSETS Current assets: Cash and cash equivalents $ 228,700 Marketable securities 472,154 Accounts receivable, less allowance for doubtful accounts of $90,000 3,014,533 Prepaid expenses 4,027 ----------- Total current assets 3,719,414 Property and equipment: Computer equipment 151,829 Equipment and furniture 179,637 Leasehold improvements 109,675 Computer software 18,141 ----------- 459,282 Less accumulated depreciation (139,485) ----------- 319,797 Other assets 12,498 ----------- Total assets $ 4,051,709 =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities Accounts payable and accrued expenses $ 1,225,169 Income taxes payable 141,112 ----------- Total current liabilities 1,366,281 Deferred income taxes 858,627 Stockholders' equity: Common stock, no par value 25,000,000 shares authorized, 7,168,940 issued and outstanding 93,740 Retained earnings 1,810,677 Accumulated other comprehensive loss (77,616) ----------- Total stockholders' equity 1,826,801 ----------- Total liabilities and stockholders' equity $ 4,051,709 ===========
See accompanying notes. 2 5 Metier, Inc. Statement of Income Year ended September 30, 1998 Revenues $ 15,138,470 Operating expenses: Salaries and wages 5,333,967 Professional services 5,174,299 General and administrative 2,804,902 ------------ Operating income 1,825,302 Other income (expense): Interest income 9,089 Realized loss on marketable securities (5,975) ------------ Income before provision for income taxes 1,828,416 Provision for income taxes 757,449 ------------ Net income $ 1,070,967 ============
See accompanying notes. 3 6 Metier, Inc. Statement of Stockholders' Equity Year ended September 30, 1998
Common Stock Other ----------------------- Retained Comprehensive Shares Amount Earnings Loss Total ---------------------------------------------------------------------- Balance at October 1, 1997 7,256,124 $ 94,880 $ 741,990 $ - $ 836,870 Stock redemption (87,184) (1,140) (2,280) - (3,420) Net income - - 1,070,967 - 1,070,967 Unrealized loss on marketable securities - - - (77,616) (77,616) ----------- Comprehensive income - - - - 993,351 ---------------------------------------------------------------------- Balance at September 30, 1998 7,168,940 $ 93,740 $ 1,810,677 $ (77,616) $ 1,826,801 ======================================================================
See accompanying notes. 4 7 Metier, Inc. Statement of Cash Flows Year ended September 30, 1998 OPERATING ACTIVITIES Net income $ 1,070,967 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 80,236 Deferred income taxes 453,280 Loss on sale of asset 595 Realized loss on marketable securities 5,975 Changes in operating assets and liabilities: Accounts receivable (1,616,043) Prepaid expenses (2,197) Other assets 5,395 Accounts payable and accrued expenses 783,359 Income taxes payable 136,169 ----------- Net cash provided by operating activities 917,736 INVESTING ACTIVITIES Purchase of marketable securities (555,745) Purchase of property and equipment (132,101) Proceeds from sale of computer equipment 600 ----------- Net cash used in investing activities (687,246) FINANCING ACTIVITIES Stock redemption (3,420) Repayment of note payable - stockholders (65,205) ----------- Net cash used in financing activities (68,625) ----------- Net increase in cash and cash equivalents 161,865 Cash and cash equivalents at beginning of year 66,835 ----------- Cash and cash equivalents at end of year $ 228,700 =========== Supplemental disclosure of cash flow information: Cash paid during the year for: Income taxes $ 168,000 Interest 10,382
See accompanying notes. 5 8 Metier, Inc. Notes to Financial Statements September 30, 1998 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION Metier, Inc. (the Company), incorporated under the laws of the state of California on November 28, 1995, is primarily engaged in the business of providing software installation consulting services. In connection with establishing an employee stock option plan, the Company effected a 19.12 for one stock split of the Company's common stock in February 1998. All references in the accompanying financial statements to the number of shares of common stock have been retroactively adjusted to reflect the stock split. RECOGNITION OF REVENUE Substantially all of the Company's contracts are on a time and material basis. Revenue from such contracts is recognized as services are rendered and costs are incurred. CONCENTRATION OF RISK During the year ended September 30, 1998, one customer accounted for 49% of the Company's total revenues. As of September 30, 1998, $1,542,117 of the Company's accounts receivable was due from this customer. CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash and highly liquid investments with original maturities of three months or less. MARKETABLE SECURITIES Marketable securities consist of bonds and equity securities. All marketable securities are classified as "available for sale" and are carried at fair value. As of September 30, 1998, the cost and fair value of marketable securities were $549,770 and $472,154, respectively, and the gross unrealized losses pertaining to these securities were $77,616. 6 9 Metier, Inc. Notes to Financial Statements September 30, 1998 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) PROPERTY AND EQUIPMENT Property and equipment is stated at cost. Depreciation of property and equipment is provided on a straight-line method over the following estimated useful lives of the assets: Computer equipment 5 years Equipment and furniture 5 years Leasehold improvements 6 years Computer software 3 years
Expenditures for major renewals and betterments that extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are charged to expense as incurred. INCOME TAXES The Company accounts for income taxes under provisions of Statement of Financial Accounting Standards (SFAS) No. 109, "Accounting for Income Taxes." SFAS No. 109 requires a company to recognize deferred tax liabilities and assets for the expected future tax consequences of events that have been recognized in a company's financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect in the years in which the differences are expected to reverse. A valuation allowance is recognized if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. ESTIMATES USED IN THE PREPARATION OF THE FINANCIAL STATEMENTS The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates, and such differences may be material to the financial statements. 7 10 Metier, Inc. Notes to Financial Statements September 30, 1998 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) ADVERTISING COSTS The Company expenses the costs of advertising as incurred. Advertising expense was $71,009 for the year ended September 30, 1998. 2. INCOME TAXES Effective October 1, 1998, the Company, with the consent of its stockholders, has elected to be taxed under the provisions of Subchapter S of the Internal Revenue Code. Under those provisions, for periods subsequent to September 30, 1998, the Company will not pay federal corporate income taxes on its taxable income. Instead, the stockholders will be liable for individual income taxes on their respective shares of the Company's taxable income. The provision for income taxes for the year ended September 30, 1998 included in the statement of income consists of: Current: Federal $239,269 State 64,900 -------- 304,169 Deferred: Federal 344,265 State 109,015 -------- 453,280 -------- $757,449 ========
The provision for income taxes for the year ended September 30, 1998 is at a rate different than the U.S. federal statutory tax rate for the following reasons: Computed tax at statutory rate $621,661 Permanent items 8,712 State income taxes, net of federal benefit 114,785 Other 12,291 -------- $757,449 ========
8 11 Metier, Inc. Notes to Financial Statements September 30, 1998 2. INCOME TAXES (CONTINUED) Deferred income taxes reflect the tax impact of temporary differences between the amounts of assets and liabilities for financial reporting purposes and such amounts as measured by tax laws and regulations. The components of deferred tax assets (liabilities) for the year ended September 30, 1998 are as follows: Accrual to cash adjustment $(966,195) Depreciation (20,268) State taxes 22,066 Federal benefit of state deferral 69,379 Unrealized loss on securities 33,635 Other 2,756 --------- $(858,627) =========
3. LEASE COMMITMENTS The Company leases its four office facilities and certain equipment under operating leases, which expire at various dates through July 2004. Future minimum rentals under these noncancelable operating leases were as follows: 1999 $ 228,797 2000 415,725 2001 385,921 2002 331,143 2003 249,269 Thereafter 109,948 ============== Total minimum lease payments $ 1,720,803 ==============
4. RETIREMENT PLAN In 1997, the Company established a 401(k) savings plan for certain employees of the Company. The Company sponsors the plan for employees who are 21 years of age or older. Plan participants are allowed to contribute up to 15% of their base annual compensation. The plan also provides for the Company to make a non-discretionary matching contribution for 50% of the participant's first 3% contributed. Participant 9 12 Metier, Inc. Notes to Financial Statements September 30, 1998 4. RETIREMENT PLAN (CONTINUED) contributions to the plan are immediately fully vested while Company matching contributions are subject to a six-year vesting period. The cost of the Plan for the year ended September 30, 1998 was $128,396. 5. EMPLOYEE STOCK OPTION INCENTIVE PLAN In 1998, the Company established Metier, Inc.'s Non-Qualified Stock Option Plan (the Plan) which provides for grants of stock options to certain employees of the Company. The total number of shares of common stock that can be issued under the Plan is not to exceed 9,300,000 shares. Options generally vest over a four-year period. All options expire ten years after date of grant. The exercise price per share is the fair market value, as determined by the board of directors, on the date each option is granted. The following table summarizes the activity in common shares subject to options for the year ended September 30, 1998:
SHARES OPTION PRICE --------------------------- Outstanding at October 1, 1997 - - Granted 1,477,810 $1.00 Canceled (150,000) $1.00 =========================== Outstanding at September 30, 1998 1,327,810 $1.00 ===========================
As of September 30, 1998, options for 231,917 shares were exercisable. As of September 30, 1998, 7,972,190 shares were available for future grants. The Company has adopted the disclosure-only provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation." Accordingly, no compensation cost has been recognized for the stock option plan. Had compensation cost for the Company's stock option plan been determined based on the fair value at the grant date for awards under those plans consistent with the provisions of SFAS No. 123, the Company's net earnings for the year ended September 30, 1998 would have been reduced to the pro forma amounts indicated below: Net income - as reported $ 1,070,967 Net income - pro forma $ 1,018,390
10 13 Metier, Inc. Notes to Financial Statements September 30, 1998 5. EMPLOYEE STOCK OPTION INCENTIVE PLAN (CONTINUED) The fair value of each option grant is estimated using the Minimum Value Method option-pricing model with the following weighted average assumptions used for grants in 1998: dividend yields of 0%; expected volatility of 0%; risk-free interest rates of 6.5% and expected lives of five years. The following table summarizes information related to stock options outstanding at September 30, 1998:
OUTSTANDING EXERCISABLE - --------------------------------------------- ------------------------------ AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE SHARES LIFE (FI) PRICE SHARES PRICE - --------------------------------------------- ------------------------------ 1,327,810 9.73 $1.00 231,917 $1.00
(F1) Average contractual life remaining in years 6. YEAR 2000 COMPLIANCE (UNAUDITED) Many existing computer systems and applications and other control devices use only two digits to identify a year in the date field, without considering the impact of the upcoming change in the century. As a result, such systems and applications could fail or create erroneous results unless corrected so that they can process data related to the year 2000. The Company relies on its systems, applications and devices in operating and monitoring all major aspects of its business. The Company also relies, directly or indirectly, on external systems of business enterprises for accurate exchange of data. The Company believes that all of its significant computer software is Year 2000 compliant and that it will not need to modify or replace its software so that its computer systems will function properly with respect to dates in the Year 2000 and beyond. However, if internal or external systems do not function as anticipated, the Year 2000 issue could have a material impact through disruption of the Company's business and disruptions in the operation of the enterprises with which the Company interacts. 11 14 Metier, Inc. Notes to Financial Statements September 30, 1998 7. SUBSEQUENT EVENT On September 22, 1999, the Company entered into an agreement with Syntel, Inc. to sell substantially all of the assets of the Company to Syntel, Inc. for approximately $17.4 million in cash and 300,000 shares of Syntel, Inc. common stock. In addition, the agreement provides for earnout payments not to exceed $16 million based on revenues and earnings for the 24 month period beginning January 1, 2000. The acquisition, with an effective date of July 1, 1999, will be treated by Syntel, Inc. as a purchase transaction. 12 15 METIER, INC. CONDENSED STATEMENTS OF INCOME (In thousands) (Unaudited)
NINE MONTHS ENDED JUNE 30 ------------------------- 1999 1998 ---- ---- Revenues $23,346 $10,801 Cost of revenues 16,579 7,199 ------- ------- Gross Profit 6,767 3,602 Sales, General, and Administrative 3,861 1,715 ------- ------- Income from operations 2,906 1,887 ------- ------- Other Income 126 -- ------- ------- Income before taxes 3,032 1,887 Income taxes 65 786 ------- ------- Net Income $ 2,967 $ 1,101 ======= =======
The accompanying notes are an integral part of the financial statements. 16 METIER INC. CONDENSED BALANCE SHEETS (IN THOUSANDS) (UNAUDITED)
June 30, 1999 June 30, 1998 ------------- ------------- ASSETS Current assets: Cash and cash equivalents $ 4,484 $ 1,079 Accounts receivable, net 5,494 2,738 Advanced billings and other current assets 127 18 -------- -------- Total current assets 10,105 3,835 Property and equipment 929 434 Less accumulated depreciation (204) (119) -------- -------- Property and equipment, net 725 315 $ 10,830 $ 4,150 ======== ======== LIABILITIES Current liabilities: Accrued payroll and related costs 649 296 Accounts payable and other current liabilities 4,561 1,897 -------- -------- Total current liabilities 5,210 2,193 Income taxes payable 19 -------- -------- Total liabilities 5,210 2,212 SHAREHOLDERS' EQUITY Total shareholders' equity 5,620 1,938 -------- -------- Total liabilities and shareholders' equity $ 10,830 $ 4,150 ======== ========
The accompanying notes are an integral part of the financial statements. 17 METIER, INC. CONDENSED STATEMENT OF CASH FLOWS (IN THOUSANDS)
NINE MONTHS ENDED JUNE 30 ------------- 1999 1998 ---- ---- Cash flows from operating activities: Net income $ 2,967 $ 1,101 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 65 59 Deferred income taxes (33) (386) Changes in assets and liabilities Accounts receivable, net (2,479) (1,340) Advance billing and other assets (111) 2 Accrued payroll and other liabilities 3,844 1,681 ------- ------- Net cash provided by operating activities 4,253 1,117 Cash flows used in investing activities, Property and equipment expenditures (470) (105) ------- ------- Net cash used in investing activities (470) (105) ------- ------- Net increase in cash and cash equivalents 3,783 1,012 Cash and cash equivalents, beginning of period $ 701 $ 67 ------- ------- Cash and cash equivalents, end of period $ 4,484 $ 1,079 ======= =======
The accompanying notes are an integral part of the financial statements. 18 Metier, Inc. Notes to Condensed Financial Statements June 30, 1999 and 1998 Note 1. Basis of presentation The accompanying financial statements of Metier, Inc. (Metier) have been prepared by management, without audit, in accordance with generally accepted accounting principles applicable to interim periods. In the opinion of management, the financial statements contain all normal recurring adjustments necessary to present fairly the financial position of Metier as of June 30, 1999 and June 30, 1998, the results of its operations for the nine months ended June 30, 1999 and June 30, 1998, and the cash flows for the nine months ended June 30, 1999 and June 30, 1998. The results of operations for the nine months ended June 30, 1999 are not necessarily indicative of the results that may be expected for the year ending September 30, 1999. Note 2. Tax filing status Prior to October 1, 1998 the Company elected to operate as a C-corporation under the Internal Revenue Code. Effective October 1, 1998 the Company terminated its C-corporation status and elected to operate as an S-corporation. An S-corporation is not subject to income taxes at the corporate level (with exceptions under certain state income tax laws). Note 3. Subsequent event On September 22, 1999, Metier signed an agreement with Syntel, Inc. to sell substantially all of its assets and business to Syntel, Inc. EX-99.2 3 PRO FORMA FINANCIAL INFORMATION 1 EXHIBIT 99.2 PRO FORMA FINANCIAL INFORMATION On September 22, 1999, Syntel Inc. (the "Company") executed a purchase agreement with Metier, Inc. to acquire substantially all of the assets and business of Metier, Inc. Consideration included 300,000 shares of Syntel Common Stock and a cash payment of $17,389,611 at closing. In addition, the agreement provides for earnout payments not to exceed $16 million based on revenues and earnings for the 24 month period beginning January 1, 2000. The acquisition was treated as a purchase transaction. The unaudited Pro Forma Statements of Operations for the year ended December 31, 1998 and the six months ended June 30, 1999 give effect to the acquisition of Metier as if it had occurred on January 1, 1998. The Pro Forma Statements of Operations are based on historical results of the Company for the twelve months ended December 31, 1998 and the six months ended June 30, 1999 and historical results of Metier are based on historical results for the twelve months ended September 30, 1998 and the six months ended March 31, 1999. The unaudited Pro Forma Condensed Consolidated Balance Sheet gives effect to the acquisition of Metier as if it been acquired on June 30, 1999. The Pro Forma Statements of Operations, the Pro Forma Balance Sheet, and the accompanying notes thereto should be read in conjunction with and are qualified by the historical consolidated financial statements of the Company and notes thereto. The Pro Forma Financial Information is intended for informational purposes only and is not necessarily indicative of the future financial position or future results of operations of the combined company after the acquisition of Metier, or of the financial position or results of operations of the combined company had such transaction actually been completed the days indicated above. 2 SYNTEL, INC. AND SUBSIDIARIES PRO FORMA STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1998 (IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS) (UNAUDITED)
Historical Historical Pro Forma Pro Forma Syntel Metier Adjustments Consolidated -------------- -------------- --------------- ------------- Revenues $ 167,975 $ 15,138 $ 183,113 Cost of revenues 104,971 10,508 115,479 -------------- -------------- ------------- Gross Profit 63,004 4,630 67,634 Sales, general & administrative expenses 28,026 2,805 1,261 (a) 32,092 -------------- -------------- --------------- ------------- Income from operations 34,978 1,825 (1,261) 35,542 -------------- -------------- --------------- ------------- Other Income 2,077 3 (645) (b) 1,435 -------------- -------------- --------------- ------------- Income before taxes 37,055 1,828 (1,906) 36,977 Income taxes 12,424 757 (537) (c) 12,644 -------------- -------------- --------------- ------------- Net Income $ 24,631 $ 1,071 $ (1,369) $ 24,333 ============== ============== =============== ============= Pro forma diluted earnings per share $ 0.63 $ 0.61 ============== ============= Weighted Average shares outstanding 39,294 39,594 ============== =============
(a) Goodwill amortization, 15 years. (b) Lost interest income due to use of cash in acquisition. (c) Tax impact of pro forma adjustments to Metier Income. 3 SYNTEL, INC. AND SUBSIDIARIES PRO FORMA STATEMENT OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 1999 (IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS) (UNAUDITED)
Historical Historical Pro Forma Pro Forma Syntel Metier Adjustments Consolidated ----------- ---------- ------------- ----------------- Revenues $ 78,451 $ 12,141 $ 90,592 Cost of revenues 48,319 9,053 57,372 ----------- ---------- ------------ Gross Profit 30,132 3,088 - 33,220 Sales, general & administrative expenses 14,552 2,085 631 (a) 17,268 ----------- ---------- ----------- ------------ Income from operations 15,580 1,003 (631) 15,952 ----------- ---------- ----------- ------------ Other Income 1,107 103 (322) (b) 888 ----------- ---------- ----------- ------------ Income before taxes 16,687 1,106 (953) 16,840 Income taxes 5,365 66 119 (c) 5,550 ----------- ---------- ----------- ------------ Net Income $ 11,322 $ 1,040 $ (1,072) $ 11,290 =========== ========== =========== ============ Pro forma diluted earnings per share $ 0.29 $ 0.29 =========== ============ Weighted Average shares outstanding(Diluted) 38,775 39,075 =========== ============
(a) Goodwill amortization, 15 years. (b) Lost interest income due to use of cash in acquisition. (c) Tax impact of pro forma adjustments to Metier income. 4 ================================================================================ SYNTEL, INC. AND SUBSIDIARIES PRO FORMA UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1999 (IN THOUSANDS)
HISTORICAL HISTORICAL PRO FORMA PRO FORMA SYNTEL, INC. METIER ADJUSTMENTS CONSOLIDATED ------------- ------------ -------------- ----------------- ASSETS Current assets: Cash and cash equivalents $ 70,750 $ 4,484 $ (731) (a) $ 57,113 (17,390) (b) Accounts receivable, net 19,488 5,494 (341) (c) 24,641 Advanced billings and other current assets 12,565 127 12,692 ---------- ------------ -------------- ---------------- Total current assets 102,803 10,105 (18,462) 94,446 Property and equipment, net 5,323 725 (120) (c) 5,928 Goodwill, net of amortization - - 18,919 (c) 18,919 ---------- ------------ -------------- ---------------- $ 108,126 $ 10,830 $ 337 $ 119,293 ========== ============ ============== ================ LIABILITIES Current liabilities: Accrued payroll and related costs $ 13,643 $ 649 $ 14,292 Accounts payable and other current 14,059 4,561 (12) (a) 20,077 liabilities Deferred revenue 4,910 - 1,469 (b) 4,910 ---------- ------------ -------------- ---------------- Total current liabilities 32,612 5,210 1,457 39,279 Income taxes payable 1,100 - 1,100 ---------- ------------ -------------- ---------------- Total liabilities 33,712 5,210 1,457 40,379 SHAREHOLDERS' EQUITY Total shareholders' equity 74,414 5,620 (719) (a) 78,914 ---------- ------------ ---------------- 4,500 (b) (461) (c) (4,440) (c) -------------- Total liabilities and shareholders' equity $ 108,126 $ 10,830 $ 337 $ 119,293 ========== ============ ============== ================
5 a. The pro forma adjustment reflects assets not acquired and liabilities not assumed by the Company. Cash $ (731) Liabilities 12 ----------- (719)
b. The pro forma adjustment reflects the Company's purchase price in Metier. Cash paid by Syntel $ (17,390) Common stock issued (4,500) Direct transaction costs (1,469) ------------- (23,359)
c. The pro forma adjustment reflects the allocation of the purchase price paid to the assets acquired and liabilities assumed based on their respective fair values and to eliminate the purchased equity in Metier. Adjust to fair values $ (461) Goodwill 18,919 Eliminate Metier equity 4,901 ------- 23,359
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