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 17, 2013
Syntel, Inc.
(Exact name of registrant as specified in its charter)
| Michigan | 000-22903 | 38-2312018 | ||
| (State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) | ||
| 525 E. Big Beaver Road, Suite 300, Troy, Michigan | 48083 | |||
| (Address of principal executive offices) | (Zip Code) | |||
Registrant’s telephone number, including area code (248) 619-2800
(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 follwing 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)) |
Item 2.02. Results of Operations and Financial Condition.
On October 17, 2013, Syntel, Inc. (the “Company”) issued a press release announcing results of operations and related financial information for its third quarter ended September 30, 2013. 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.
(d) Exhibits.
| Exhibit |
||
| 99.1 | Press Release dated October 17, 2013. | |
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 17, 2013 | By | /s/ Daniel M. Moore | |||
| Daniel M. Moore, Chief Administrative Officer | ||||||
2
EXHIBIT INDEX
| Exhibit No. | Description | |
| 99.1 | Press Release dated October 17, 2013. | |
3
Exhibit 99.1
Syntel Reports Third Quarter 2013 Financial Results
Highlights:
| • | Q3 revenue of $209.9M, up 13% from year-ago quarter, and 4% sequentially |
| • | Q3 EPS of $1.42 per diluted share, up 15% from year-ago quarter, and 25% sequentially |
| • | Q3 cash & short term investments of $579M |
| • | Global Headcount of 22,936 on September 30, 2013, up 14% from year-ago quarter |
TROY, Mich. – October 17, 2013 – Syntel, Inc. (NASDAQ: SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the third quarter, ended September 30, 2013.
Third Quarter Financial Highlights
Syntel’s revenue for the third quarter increased 13 percent to $209.9 million from $186.4 million in the prior-year period, and increased four percent sequentially from $202.5 million in the second quarter of 2013. During the third quarter, Applications Outsourcing accounted for 77 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 15 percent, e-Business contributing seven percent and TeamSourcing at one percent.
The Company’s gross margin was 46.6 percent in the third quarter, compared to 45.5 percent in the prior-year period and 41.3 percent in the second quarter of 2013. Selling, General and Administrative (SG&A) expenses were 11 percent of revenue in the third quarter, compared to 15.6 percent in the prior-year period and 9.4 percent in the previous quarter.
The third quarter income from operations was 35.6 percent of revenue as compared to 29.9 percent in the prior-year period and 31.9 percent in the second quarter. The sequential rise in operating margin during the third quarter reflects the impact of the depreciation in the Indian rupee, lower visa and immigration-related expenses and an ongoing focus on operational efficiency.
Net income for the third quarter was $59.4 million or $1.42 per diluted share, compared to $51.5 million or $1.23 per diluted share in the prior-year period and net income of $47.5 million or $1.14 per diluted share in the second quarter of 2013.
During Q3, Syntel spent $4.3 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $579 million. The Company also added 70 net employees, ending the quarter with 22,936 employees globally.
Operational Highlights
“We made solid progress on our strategic initiatives during the third quarter and built on the successes we have seen year-to-date,” said Syntel CEO and President Prashant Ranade. “We are strengthening our customer relationships by investing in the technology areas that are relevant to our clients.”
“Our responsiveness to our customers’ needs and our flexibility in supporting their goals in a changing environment are key tenets of our company,” said Ranade. “Our domain expertise and innovative approach to addressing their business challenges contributes to our mutual success.”
“We continue to see healthy demand for our services and feel well-positioned in the markets we serve. Our pipelines reflect our enhanced competitive standing and our willingness to take a long-term view of our client relationships. This long-term focus fortifies our relationships and generates opportunities that will help sustain our growth for years to come.”
2013 Guidance
Based on current visibility levels and an exchange rate assumption of 61 Indian Rupees to the dollar, the Company currently expects 2013 revenue of $810 to $815 million and EPS in the range of $4.90 to $5.00.
Syntel to Host Conference Call
Syntel will discuss its third quarter 2013 results today on a conference call at 10:00 a.m. (EDT). To listen to the call, please dial (877) 837-3915 in the US/Canada or (973) 638-3495 internationally. The call will also be broadcast live via the Internet at Syntel’s web site: investor.syntelinc.com. Please access the site at least 15 minutes prior to the call to register and download any necessary software. A replay will be available until October 24, 2013 by dialing (855) 859-2056 and entering “85630017”. International callers may dial (404) 537-3406 and enter the same passcode.
About Syntel
Syntel (Nasdaq:SYNT) is a leading global provider of integrated information technology and Knowledge Process Outsourcing (KPO) solutions spanning the entire lifecycle of business and information systems and processes. The Company is driven by its mission to create new opportunities for clients by harnessing the passion, talent and innovation of Syntel employees worldwide. Syntel leverages dedicated Centers of Excellence, a flexible Global Delivery Model, and a strong track record of building collaborative client partnerships to create sustainable business advantage for Global 2000 organizations. Syntel is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2008 certified. As of September 30, 2013, Syntel employed more than 22,000 people worldwide. To learn more, visit us at: www.syntelinc.com.
Safe Harbor Provision
This news release includes forward-looking statements, including those 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 Report on Form 10-K for the year ended December 31, 2012, the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013 or from other factors not currently anticipated.
Contacts:
North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com
Asia/Pacific: Sikta Samantaray, +91 9167512186, sikta_samantaray@syntelinc.com
# # #
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(UNAUDITED)
(IN THOUSANDS, EXCEPT SHARE DATA)
| THREE MONTHS ENDED SEPTEMBER 30, |
NINE MONTHS ENDED SEPTEMBER 30, |
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| 2013 | 2012 | 2013 | 2012 | |||||||||||||
| Net revenues |
$ | 209,871 | $ | 186,407 | $ | 601,478 | $ | 536,130 | ||||||||
| Cost of revenues |
112,158 | 101,588 | 342,407 | 306,001 | ||||||||||||
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| Gross profit |
97,713 | 84,819 | 259,071 | 230,129 | ||||||||||||
| Selling, general and administrative expenses |
23,060 | 29,036 | 68,036 | 74,913 | ||||||||||||
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| Income from operations |
74,653 | 55,783 | 191,035 | 155,216 | ||||||||||||
| Other income, net |
1,564 | 9,964 | 9,626 | 20,708 | ||||||||||||
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| Income before provision for income taxes |
76,217 | 65,747 | 200,661 | 175,924 | ||||||||||||
| Income tax expense |
16,800 | 14,265 | 47,308 | 40,308 | ||||||||||||
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| Net income |
$ | 59,417 | $ | 51,482 | $ | 153,353 | $ | 135,616 | ||||||||
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| Other Comprehensive Income (loss) |
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| Foreign currency translation adjustments |
$ | (32,445 | ) | $ | 35,877 | $ | (80,380 | ) | $ | 6,439 | ||||||
| Gains (losses) on derivatives: |
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| Gains (losses) arising during period on net investment hedges |
1,855 | 1,061 | (2,863 | ) | (1,234 | ) | ||||||||||
| Unrealized gains (losses) on securities: |
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| Unrealized holding gains arising during period |
2,456 | 758 | 3,086 | 916 | ||||||||||||
| Reclassification adjustment for gains included in net income |
(199 | ) | (213 | ) | (1,029 | ) | (159 | ) | ||||||||
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| 2,257 | 545 | 2,057 | 757 | |||||||||||||
| Defined benefit pension plans: |
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| Net Profit/ (loss) arising during period |
15 | (9 | ) | 43 | (13 | ) | ||||||||||
| Amortization of prior service cost included in net periodic pension cost |
7 | 8 | 23 | 24 | ||||||||||||
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| 22 | (1 | ) | 66 | 11 | ||||||||||||
| Other comprehensive income (loss), before tax |
(28,311 | ) | 37,482 | (81,120 | ) | 5,973 | ||||||||||
| Income tax benefit (expense) related to Other Comprehensive Income (loss) |
(771 | ) | (174 | ) | (723 | ) | (241 | ) | ||||||||
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| Other comprehensive income (loss), net of tax |
(29,082 | ) | 37,308 | (81,843 | ) | 5,732 | ||||||||||
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| Comprehensive Income (loss) |
$ | 30,335 | $ | 88,790 | $ | 71,510 | $ | 141,348 | ||||||||
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| Dividend per share |
$ | — | $ | 0.06 | $ | — | $ | 0.18 | ||||||||
| EARNINGS PER SHARE: |
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| Basic |
$ | 1.42 | $ | 1.23 | $ | 3.67 | $ | 3.25 | ||||||||
| Diluted |
$ | 1.42 | $ | 1.23 | $ | 3.66 | $ | 3.25 | ||||||||
| Weighted average common shares outstanding: |
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| Basic |
41,815 | 41,720 | 41,776 | 41,683 | ||||||||||||
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| Diluted |
41,888 | 41,802 | 41,859 | 41,780 | ||||||||||||
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SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(IN THOUSANDS)
| September 30, | December 31, | |||||||
| 2013 | 2012 | |||||||
| ASSETS |
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| Current assets: |
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| Cash and cash equivalents |
$ | 150,240 | $ | 94,622 | ||||
| Short term investments |
428,501 | 326,653 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $1,999 and $2,168 at September 30, 2013 and December 31, 2012, respectively |
97,339 | 86,004 | ||||||
| Revenue earned in excess of billings |
29,405 | 11,875 | ||||||
| Deferred income taxes and other current assets |
53,315 | 51,736 | ||||||
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| Total current assets |
758,800 | 570,890 | ||||||
| Property and equipment |
189,910 | 204,151 | ||||||
| Less accumulated depreciation and amortization |
84,078 | 85,033 | ||||||
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| Property and equipment, net |
105,832 | 119,118 | ||||||
| Goodwill |
906 | 906 | ||||||
| Non current Term Deposits with Banks |
2,404 | 14 | ||||||
| Deferred income taxes and other non current assets |
37,760 | 34,908 | ||||||
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| TOTAL ASSETS |
$ | 905,702 | $ | 725,836 | ||||
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| LIABILITIES AND SHAREHOLDERS’ EQUITY LIABILITIES |
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| Current liabilities: |
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| Accrued payroll and related costs |
$ | 47,485 | $ | 49,889 | ||||
| Income taxes payable |
13,954 | 8,873 | ||||||
| Accounts payable and other current liabilities |
41,899 | 34,950 | ||||||
| Deferred revenue |
2,685 | 4,694 | ||||||
| Loans and borrowings |
7,004 | 50,029 | ||||||
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| Total current liabilities |
113,027 | 148,435 | ||||||
| Other non current liabilities |
11,925 | 11,731 | ||||||
| Non Current loans and borrowings |
140,250 | — | ||||||
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| TOTAL LIABILITIES |
265,202 | 160,166 | ||||||
| SHAREHOLDERS’ EQUITY |
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| Total shareholders’ equity |
640,500 | 565,670 | ||||||
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| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 905,702 | $ | 725,836 | ||||
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