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) July 23, 2015
Syntel, Inc.
(Exact name of registrant as specified in its charter)
| Michigan | 000-22903 | 38-2312018 | ||
| (State or other jurisdiction | (Commission | (IRS Employer | ||
| of incorporation) | File Number) | 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 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)) |
| Item 2.02. | Results of Operations and Financial Condition. |
On July 23, 2015, Syntel, Inc. (the “Company”) issued a press release announcing results of operations and related financial information for its second quarter ended June 30, 2015. 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 July 23, 2015. | |
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 | July 23, 2015 |
By | /s/ Daniel M. Moore | |||||
| Daniel M. Moore, Chief Administrative Officer | ||||||||
2
EXHIBIT INDEX
| Exhibit No. |
Description | |
| 99.1 | Press Release dated July 23, 2015. | |
3
Exhibit 99.1
Syntel Reports Second Quarter 2015 Financial Results
Highlights:
| • | Q2 revenue of $239.8M, up 5% from year-ago quarter and 9% sequentially |
| • | Q2 EPS of $0.72 per diluted share, up 2% from year-ago quarter, and 51% sequentially |
| • | Q2 cash & short term investments of $929.7M |
| • | Global Headcount of 23,006 on June 30, 2015, down 5% versus prior year |
TROY, Mich. – July 23, 2015 – Syntel, Inc. (Nasdaq:SYNT), a global provider of digital transformation, information technology and knowledge process services to Global 2000 companies, today announced financial results for the second quarter, ended June 30, 2015.
Second Quarter Financial Highlights
Syntel’s revenue for the second quarter rose to $239.8 million from $228.2 million in the prior-year period and $220.6 million in the first quarter of 2015. During the second quarter, Banking and Financial Services accounted for 48.3 percent of total revenue, with Retail, Logistics and Telecom at 16.6 percent, Healthcare and Life Sciences at 16.4 percent, Insurance at 14.6 percent, and Manufacturing at 4.1 percent.
The Company’s gross margin was 38 percent in the second quarter, compared to 39.2 percent in the prior-year period and 35.7 percent in the first quarter of 2015. Selling, General and Administrative (SG&A) expenses were 9.1 percent of revenue in the second quarter, compared to 11.5 percent in the prior-year period and 16 percent in the previous quarter.
The second quarter income from operations was 28.9 percent of revenue as compared to 27.7 percent in the prior-year period and 19.7 percent in the first quarter. The sequential rise in operating margin during the second quarter primarily reflects higher revenue and utilization and the impact of currency-related balance sheet translations.
Net income for the second quarter was $60.6 million or $0.72 per diluted share, compared to $59.3 million or $0.71 per diluted share in the prior-year period and net income of $40 million or $0.48 per diluted share in the first quarter of 2015.
During Q2, Syntel spent $5.7 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $929.7 million. The Company ended the quarter with 23,006 employees globally.
Operational Highlights
“We executed well during the second quarter, regaining momentum across many of our industry groups,” said Syntel CEO and President Nitin Rakesh. “Digital initiatives remained a high priority this quarter as customers sought to build competitive advantage and these projects started to ramp.”
“Strong execution is evident in our Healthcare and Life Sciences industry group, which grew both sequentially and year on year despite some difficult year ago comparisons,” said Rakesh. “I am pleased to see positive early returns on the investments we’ve made to broaden our capabilities in the payer and provider segments.”
“Our ability to provide innovative solutions in response to rapid changes in our customers’ businesses has been critical in strengthening these relationships and driving our growth. We remain committed to providing high-value solutions that address our clients’ most pressing needs and look forward to supporting their long-term success.”
2015 Guidance
Based on current visibility levels and an exchange rate assumption of 63.50 Indian rupees to the dollar, the Company currently expects 2015 revenue of $985 million to $1,005 million and EPS in the range of $2.70 to $2.85.
Syntel to Host Conference Call
Syntel will discuss its second quarter 2015 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 July 30, 2015 by dialing (855) 859-2056 and entering “71931291”. International callers may dial (404) 537-3406 and enter the same pass code.
About Syntel
Syntel (Nasdaq: SYNT) is a global provider of digital transformation, information technology and knowledge process services to Global 2000 companies. Syntel’s mission is to create new opportunities for clients by harnessing our passion, talent and innovation. We combine technology expertise, industry knowledge and a global delivery model to drive business value creation. Syntel’s “Customer for Life” philosophy drives our relentless focus to build long-term, collaborative client partnerships. To learn more, visit us at: www.syntelinc.com
Safe Harbor Provision
This news release may include 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, 2014, the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2015 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 PER SHARE DATA)
| THREE MONTHS ENDED JUNE 30, |
SIX MONTHS ENDED JUNE 30, |
|||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||
| Net revenues |
$ | 239,797 | $ | 228,250 | $ | 460,396 | $ | 447,773 | ||||||||
| Cost of revenues |
148,704 | 138,702 | 290,489 | 262,202 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Gross profit |
91,093 | 89,548 | 169,907 | 185,571 | ||||||||||||
| Selling, general and administrative expenses |
21,728 | 26,321 | 57,110 | 58,542 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income from operations |
69,365 | 63,227 | 112,797 | 127,029 | ||||||||||||
| Other income , net |
9,887 | 12,175 | 19,225 | 23,960 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Income before provision for income taxes |
79,252 | 75,402 | 132,022 | 150,989 | ||||||||||||
| Income tax expense |
18,673 | 16,118 | 31,422 | 33,557 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net income |
$ | 60,579 | $ | 59,284 | $ | 100,600 | $ | 117,432 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other Comprehensive Income |
||||||||||||||||
| Foreign currency translation adjustments |
$ | (16,546 | ) | $ | (7,004 | ) | $ | (5,920 | ) | $ | 17,843 | |||||
| Gains on derivatives: |
||||||||||||||||
| Gains arising during period on net investment hedges |
— | — | — | 724 | ||||||||||||
| Unrealized gains on securities: |
||||||||||||||||
| Unrealized holding gains arising during period |
2,413 | 2,889 | 5,178 | 5,272 | ||||||||||||
| Reclassification adjustment for gains included in net income |
(1,712 | ) | (1,541 | ) | (2,905 | ) | (3,054 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 701 | 1,348 | 2,273 | 2,218 | |||||||||||||
| Defined benefit pension plans: |
||||||||||||||||
| Net Profit (Loss) arising during period |
— | (1 | ) | — | — | |||||||||||
| Amortization of prior service cost included in net periodic pension cost |
34 | 9 | 59 | 10 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| 34 | 8 | 59 | 10 | |||||||||||||
| Other comprehensive income (Loss), before tax |
(15,811 | ) | (5,648 | ) | (3,588 | ) | 20,795 | |||||||||
| Income tax benefit (expenses) related to Other Comprehensive Income (loss) |
(547 | ) | 327 | (1,033 | ) | 74 | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Other comprehensive income (Loss), net of tax |
(16,358 | ) | (5,321 | ) | (4,621 | ) | 20,869 | |||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Comprehensive Income |
$ | 44,221 | $ | 53,963 | $ | 95,979 | $ | 138,301 | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| EARNINGS PER SHARE: |
||||||||||||||||
| Basic |
$ | 0.72 | $ | 0.71 | $ | 1.20 | $ | 1.40 | ||||||||
| Diluted |
$ | 0.72 | $ | 0.71 | $ | 1.20 | $ | 1.40 | ||||||||
| Weighted average common shares outstanding: |
||||||||||||||||
| Basic |
83,936 | 83,730 | 83,922 | 83,704 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Diluted |
84,135 | 83,916 | 84,131 | 83,930 | ||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
| (Unaudited) June 30, 2015 |
(Audited) December 31, 2014 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 489,883 | $ | 197,708 | ||||
| Short term investments |
439,816 | 669,353 | ||||||
| Accounts receivable, net of allowance for doubtful accounts of $632 at June 30, 2015 and $703 at December 31, 2014, respectively |
115,543 | 111,993 | ||||||
| Revenue earned in excess of billings |
33,702 | 27,493 | ||||||
| Deferred income taxes and other current assets |
63,275 | 56,930 | ||||||
|
|
|
|
|
|||||
| Total current assets |
1,142,219 | 1,063,477 | ||||||
| Property and equipment |
218,971 | 210,206 | ||||||
| Less accumulated depreciation and amortization |
108,167 | 101,155 | ||||||
|
|
|
|
|
|||||
| Property and equipment, net |
110,804 | 109,051 | ||||||
| Goodwill |
906 | 906 | ||||||
| Non current Term Deposits with Banks |
90 | 105 | ||||||
| Deferred income taxes and other non current assets |
64,847 | 50,476 | ||||||
|
|
|
|
|
|||||
| TOTAL ASSETS |
$ | 1,318,866 | $ | 1,224,015 | ||||
|
|
|
|
|
|||||
| LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
| LIABILITIES | ||||||||
| Current liabilities: |
||||||||
| Accrued payroll and related costs |
$ | 49,016 | $ | 60,765 | ||||
| Income taxes payable |
30,050 | 23,781 | ||||||
| Accounts payable and other current liabilities |
38,406 | 33,573 | ||||||
| Deferred revenue |
2,919 | 3,266 | ||||||
| Loans and borrowings |
134,475 | 8,852 | ||||||
|
|
|
|
|
|||||
| Total current liabilities |
254,866 | 130,237 | ||||||
| Other non current liabilities |
16,482 | 16,198 | ||||||
| Non Current loans and borrowings |
— | 129,750 | ||||||
|
|
|
|
|
|||||
| TOTAL LIABILITIES |
271,348 | 276,185 | ||||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Total shareholders’ equity |
1,047,518 | 947,830 | ||||||
|
|
|
|
|
|||||
| TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY |
$ | 1,318,866 | $ | 1,224,015 | ||||
|
|
|
|
|
|||||