10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the quarterly period ended June 30, 2017

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 000-22903

Syntel, Inc.

(Exact name of registrant as specified in its charter)

Michigan	38-2312018
(State or other jurisdiction of incorporation or organization)	(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)

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    ☐  No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    ☒  Yes    ☐  No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐  (Do not check if a smaller reporting company)	Smaller reporting company	☐
Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    ☐  Yes    ☒  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: 83,675,545 shares outstanding as of June 30, 2017.

SYNTEL, INC.

INDEX

		Page
Part I Financial Information
Item 1	Financial Statements
	Condensed Consolidated Statements of Comprehensive Income (unaudited)		3
	Condensed Consolidated Balance Sheets (unaudited)		4
	Condensed Consolidated Statement of Shareholders’ Deficit (unaudited)		5
	Condensed Consolidated Statements of Cash Flows (unaudited)		6
	Notes to the Unaudited Condensed Consolidated Financial Statements		7
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		36
Item 3	Quantitative and Qualitative Disclosures About Market Risk		47
Item 4	Controls and Procedures		49
Part II Other Information			50
Item 1.	Legal Proceedings		50
Item 1A.	Risk Factors		50
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		50
Item 6	Exhibits		51
Signatures			52
Exhibit 31.1 – Certification of Principal Executive Officer
Exhibit 31.2 – Certification of Principal Executive Officer
Exhibit 31.3 – Certification of Principal Financial Officer
Exhibit 32 – Certification of Principal Executive Officers and Principal Financial Officer

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PART I

Item 1. FINANCIAL STATEMENTS

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,
	2017			2016			2017			2016
Net revenues	$	226,811		$	246,018		$	452,680		$	487,408
Cost of revenues		145,351			155,033			288,798			306,699
Gross profit		81,460			90,985			163,882			180,709
Selling, general and administrative expenses		28,699			18,265			58,990			47,942
Income from operations		52,761			72,720			104,892			132,767
Interest expense		(3,216	)		(575	)		(6,592	)		(1,145	)
Other income		462			5,450			958			10,116
Other income(expense), net (See note23)		(2,754	)		4,875			(5,634	)		8,971
Income before provision for income taxes		50,007			77,595			99,258			141,738
Income tax expense		13,355			18,804			24,226			29,890
Net income	$	36,652		$	58,791		$	75,032		$	111,848
Other comprehensive income(loss)
Foreign currency translation adjustments	$	937		$	(16,094	)	$	7,112		$	(17,334	)
Gains/(losses) on derivatives:
Gain(loss) arising during period on cash flow hedges		(672	)		—			291			—
Unrealized gains on securities:
Unrealized holding gains arising during period		198			970			241			1,803
Reclassification adjustment for gains included in net income		(89	)		(1,130	)		(81	)		(69	)
		109			(160	)		160			1,734
Defined benefit pension plans:
Net profit (loss) arising during period		—			—			6			—
Amortization of prior service cost included in net periodic pension cost		24			19			32			35
		24			19			38			35
Other comprehensive Income (loss), before tax		398			(16,235	)		7,601			(15,565	)
Income tax benefit (expenses) related to other comprehensive loss		224			22			(179	)		(713	)
Other comprehensive Income (loss), net of tax		622			(16,213	)		7,422			(16,278	)
Comprehensive income	$	37,274		$	42,578		$	82,454		$	95,570
Earnings per share:
Basic	$	0.44		$	0.70		$	0.90		$	1.33
Diluted	$	0.44		$	0.70		$	0.89		$	1.33
Weighted average common shares outstanding:
Basic		83,818			84,140			83,807			84,126
Diluted		83,853			84,278			83,844			84,272

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SYNTEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

	(Unaudited)			(Audited)
	June 30,			December 31,
	2017			2016
ASSETS
Current assets:
Cash and cash equivalents	$	57,447		$	78,332
Short-term investments		29,562			21,614
Accounts receivable, net of allowance for doubtful accounts of $2,143 at June 30, 2017 and $801 at December 31, 2016, respectively.		106,060			118,299
Revenue earned in excess of billings		21,319			25,039
Other current assets		33,352			36,306
Total current assets		247,740			279,590
Property and equipment		237,700			227,056
Less accumulated depreciation and amortization		130,495			120,580
Property and equipment, net		107,205			106,476
Goodwill		906			906
Non-current term deposits with banks Deferred income taxes and other non-current assets		237 78,018			225 67,346
TOTAL ASSETS	$	434,106		$	454,543
LIABILITIES AND SHAREHOLDERS’ DEFICIT
LIABILITIES
Current liabilities:
Accounts payable	$	9,756		$	10,760
Accrued payroll and related costs		49,131			56,650
Income taxes payable		19,611			15,195
Accrued liabilities		21,164			20,799
Deferred revenue		4,827			7,973
Loans and borrowings		20,449			21,264
Total current liabilities		124,938			132,641
Deferred income taxes and other non-current liabilities		28,953			26,373
Non-current loans and borrowings		377,468			478,616
TOTAL LIABILITIES		531,359			637,630
Commitments and contingencies (See Note 16)
SHAREHOLDERS’ DEFICIT
Total shareholders’ deficit		(97,253	)		(183,087	)
TOTAL LIABILITIES AND SHAREHOLDERS’ DEFICIT	$	434,106		$	454,543

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SYNTEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS’ DEFICIT

(UNAUDITED)

(IN THOUSANDS)

	Common Stock							Restricted Stock					Additional Paid-In Capital		Retained (Deficit)/ Earnings			Accumulated other Comprehensive Loss			Total Shareholders’ (Deficit)
	Shares		Amount		Treasury Stock			Shares			Amount
Balance, December 31, 2016		83,635	$	1	$	(9,990	)		670		$	45,033	$	67,422	$	(30,648	)	$	(254,905	)	$	(183,087	)
Net income																75,032						75,032
Other comprehensive income, net of tax																			7,422			7,422
Restricted stock activity		41							(68	)		3,380										3,380
Balance, June 30, 2017		83,676	$	1	$	(9,990	)		602		$	48,413	$	67,422	$	44,384		$	(247,483	)	$	(97,253	)

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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SYNTEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(IN THOUSANDS)

	SIX MONTHS ENDED
	June 30,
	2017			2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income		75,032			111,848
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization		7,442			7,362
Provision for doubtful accounts / advances		1,349			38
Realized gains on sales of short term investments		(531	)		(2,477	)
Deferred income taxes		(3,944	)		(2,517	)
Compensation expense related to restricted stock		4,585			3,682
Unrealized foreign exchange (income) loss		(2,237	)		406
Changes in assets and liabilities:
Accounts receivable and revenue earned in excess of billings		16,755			1,259
Other current assets		6,487			(5,261	)
Accounts payable, income tax payable, accrued payroll and other liabilities		(13,404	)		(1,004	)
Deferred revenue		(3,095	)		(3,686	)
Net cash provided by operating activities		88,439			109,650
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures		(4,434	)		(9,133	)
Proceeds from sale of property and equipment		94			157
Purchase of mutual funds		(113,611	)		(92,702	)
Purchase of term deposits with banks		(812	)		(219,235	)
Proceeds from sales of mutual funds		104,762			135,179
Maturities of term deposits with banks		3,681			314,845
Net cash (used in) provided by investing activities		(10,320	)		129,111
CASH FLOWS FROM FINANCING ACTIVITIES:
Excess tax benefits on stock-based compensation plans		—			23
Proceeds from loans and borrowings		—			60,250
Repayment of loans and borrowings		(101,250	)		(93,125	)
Net cash (used in) financing activities		(101,250	)		(32,852	)
Effect of foreign currency exchange rate changes on cash		2,246			(3,962	)
Change in cash and cash equivalents		(20,885	)		201,947
Cash and cash equivalents, beginning of period		78,332			500,499
Cash and cash equivalents, end of period		57,447			702,446
Supplemental disclosures of cash flow information:
Cash paid for income taxes		17,124			37,540
Cash paid for interest		7,407			1,152

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

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Syntel, Inc. and Subsidiaries

Notes to the Unaudited Condensed Consolidated Financial Statements

1. BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements of Syntel, Inc. (the “Company” or “Syntel”) have been prepared by management, 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 generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of 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 and its subsidiaries as of June 30, 2017 and December 31, 2016, and the results of their operations for the three and six months ended June 30, 2017 and 2016, and cash flows for the six months ended June 30, 2017 and 2016. The year-end condensed consolidated balance sheet as of December 31, 2016 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 10-K for the year ended December 31, 2016.

Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

2. PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

The condensed consolidated financial statements include the accounts of Syntel, Inc., a Michigan corporation (“Syntel”), its wholly owned subsidiaries, and a joint venture and its subsidiary. All significant inter-company balances and transactions have been eliminated.

The wholly owned subsidiaries of Syntel, Inc. are:

• SkillBay LLC, a Michigan limited liability company (“SkillBay”);

• Syntel (Australia) Pty. Ltd., an Australian limited liability company;

• Syntel Canada Inc., an Ontario limited liability company;

• Syntel Consulting Inc., a Michigan corporation (“Syntel Consulting”);

• Syntel Delaware, LLC, a Delaware limited liability company (“Syntel Delaware”);

• Syntel Deutschland GmbH, a German limited liability company;

• Syntel Europe Limited, a United Kingdom limited liability company;

• Syntel Holding (Mauritius) Limited, a Mauritius limited liability company;

• Syntel (Hong Kong) Limited, a Hong Kong limited liability company;

• Syntel (Mauritius) Limited, a Mauritius limited liability company;

• Syntel Private Limited, an Indian limited liability company (“Syntel India”);

• Syntel Solutions Mexico, S. de R.L. de C.V., a Mexican limited liability company;

• Syntel SPC, Inc., a Michigan corporation; and

• Syntel Worldwide (Mauritius) Limited, a Mauritius limited liability company.

The wholly owned subsidiaries of Syntel Europe Limited are:

• Intellisourcing, SARL, a French limited liability company;

• Syntel Poland, sp. z o.o., a Polish limited liability company (“Syntel Poland”);

• Syntel Solutions BV, a Netherlands limited liability company; and

• Syntel Switzerland GmbH, a Switzerland limited liability company.

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The partially owned joint venture of Syntel Delaware is:

• State Street Syntel Services (Mauritius) Limited, a Mauritius limited liability company (“SSSSML”).

The wholly owned subsidiary of SSSSML is:

• State Street Syntel Services Private Limited, an Indian limited liability company (“SSSSPL”).

The wholly owned subsidiaries of Syntel (Mauritius) Limited are:

• Syntel Global Private Limited, an Indian limited liability company;

• Syntel International Private Limited, an Indian limited liability company; and

• Syntel Technologies (Mauritius) Limited, a Mauritius limited liability company.

The wholly owned subsidiaries of Syntel Holding (Mauritius) Limited are:

• Syntel Services Private Limited, an Indian limited liability company;

• Syntel Software (Mauritius) Limited, a Mauritius limited liability company; and

• Syntel Solutions (Mauritius) Limited, a Mauritius limited liability company.

The wholly owned subsidiary of Syntel Solutions (Mauritius) Limited is:

• Syntel Solutions (India) Private Limited, an Indian limited liability company.

The wholly owned subsidiary of Syntel Worldwide (Mauritius) Limited is:

• Syntel (Singapore) PTE Limited, a Singapore limited liability company.

The wholly owned subsidiary of Syntel (Singapore) PTE Limited is:

• Syntel Infotech, Inc., a Philippines corporation.

The wholly owned subsidiary of Syntel Technologies (Mauritius) Limited is:

• Syntel Technologies LLP, an Indian limited liability partnership.

The wholly owned subsidiary of Syntel Software (Mauritius) Limited is:

• Syntel Software LLP, an Indian limited liability partnership.

3. USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include, but are not limited to, the allowance for doubtful accounts, impairment of long-lived assets and goodwill, contingencies and litigation, the recognition of revenues and profits based on the proportional performance method, valuation allowance for deferred tax assets, potential tax liabilities and bonus accrual. Actual results could differ from those estimates and assumptions used in the preparation of the accompanying financial statements.

4. REVENUE RECOGNITION

The Company recognizes revenues from time and materials contracts as the services are performed.

Revenue from fixed-price applications management, maintenance and support engagements is recognized as earned which generally results in straight-line revenue recognition as services are performed continuously over the term of the engagements.

Revenue on fixed-price, applications development and integration projects are measured using the proportional performance method of accounting. Performance is generally measured based upon the efforts incurred to date in relation to the total estimated efforts to the completion of the contract. The Company monitors

8

estimates of total contract revenues and costs on a routine basis throughout the delivery period. The cumulative impact of any change in estimates of the contract revenues or costs is reflected in the period in which the changes become known. In the event that a loss is anticipated on a particular contract, a provision is made for the estimated loss in the period the loss is identified. The Company issues invoices related to fixed price contracts based on either the achievement of milestones during a project or other contractual terms. Differences between the timing of billings and the recognition of revenue based upon the proportional performance method of accounting are recorded as revenue earned in excess of billings or deferred revenue in the accompanying consolidated balance sheets.

Revenues are reported net of sales incentives to customers.

Reimbursements of out-of-pocket expenses are included in revenue in accordance with revenue guidance in the Financial Accounting Standards Board (“FASB”) Codification.

5. STOCK-BASED EMPLOYEE COMPENSATION PLANS

The Company recognizes stock-based compensation expense in the consolidated financial statements for awards of equity instruments to employees and non-employee directors based on the grant-date fair value of those awards on a straight-line basis over the requisite service period of the award, which is generally the vesting term. If a plan is modified, the incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award. The benefits/deficiencies of tax deductions in excess/short of recognized compensation expense are reported as an operating cash flow.

6. STOCK REPURCHASE PLANS

The Company recognizes the cost of repurchasing common stock acquired for purposes    other than retirement (formal or constructive), as a reduction from the total of capital stock, additional paid-in capital, and retained earnings.

7. DERIVATIVE INSTRUMENTS

The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as “market risks.” When deemed appropriate, the Company uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments are foreign currency exchange rate risk and interest rate risk.

Hedging transactions and derivative financial instruments

The Company uses derivative instruments such as interest rate swaps. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. We do not enter into derivative financial instruments for trading purposes.

All derivatives are carried at fair value in our consolidated balance sheets in the following line items, as applicable: other current assets; deferred income taxes and other non-current assets; accounts payable; and deferred income taxes and other non-current liabilities. The carrying values of the derivatives reflect the impact of legally enforceable master netting agreements as applicable. These master netting agreements allow the Company to net settle positive and negative positions (assets and liabilities) arising from different transactions with the same counterparty.

The accounting for gains and losses that result from changes in the fair values of derivative instruments depends on whether the derivatives have been designated and qualify as hedging instruments and the type of hedging relationships. Derivatives such as interest rate swaps can be designated as cash flow hedges. The changes in the fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in “Accumulated Other Comprehensive Loss” (AOCI) and are

9

reclassified into the line item in our consolidated statement of income in which the hedged items are recorded in the same period the hedged items affect earnings. Due to the high degree of effectiveness between the hedging instruments and the underlying exposures being hedged, fluctuations in the value of the derivative instruments are generally offset by changes in the fair values or cash flows of the underlying exposures being hedged. The changes in the fair values of derivatives that are not designated and/or do not qualify as hedging instruments are immediately recognized into earnings.

For derivatives that will be accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company formally assesses both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. Any ineffective portion of a financial instrument’s change in fair value is immediately recognized into earnings.

The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. Fair values of interest rate swaps are measured using standard valuation models using inputs that are readily available in public markets, or can be derived from observable market transactions, including LIBOR spot and forward rates.

Credit risk associated with derivatives

The Company considers the risks of non-performance by the counterparty as not material. The Company utilizes standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction and interest rate swap obligations. The Company also mitigates the credit risk of these derivatives by transacting with major banks as counterparties that are highly rated globally. The Company evaluates the credit and non-performance risks associated with its derivative counterparties, and believes that the impact of the credit risk associated with the outstanding derivatives is insignificant.

Cash flow hedging strategy

The Company uses cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in interest rates. The changes in the fair values of derivatives designated as cash flow hedges are recorded in AOCI and are reclassified into the line item in our consolidated statement of income in which the hedged items are recorded in the same period the hedged items affect earnings. The changes in fair values of hedges that are determined to be ineffective are immediately reclassified from AOCI into earnings. The maximum length of time for which the Company hedges its exposure to the variability in future cash flows is typically over the terms of hedged items.

Interest rate swaps

In connection with the Company’s Senior Credit facility with Bank of America N.A., the Company entered into an interest rate swap arrangement on November 30, 2016 to hedge interest rate risk on the entire term loan of $300 million by entering into a Pay Fixed and Receive Floating interest rate swap (the “Swap”). The Swap is designed to reduce the variability of future interest payments with respect to the term loan by effectively fixing the annual interest rate payable on the loan’s outstanding principal.

A designated hedge with exposure to variability in the future interest payments of a floating rate loan is a cash flow hedge. The criteria for designating a derivative as a cash flow hedge include the assessment of the instrument’s effectiveness in risk reduction, matching of the derivative instrument to its underlying transaction including its terms, and the assessment of the probability that the underlying transaction will occur. For derivatives with cash flow hedge accounting designation, the Company reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive

10

income and reclassifies it into earnings in the same period or periods in which the hedged transaction affects earnings, and in the same line item on the consolidated statements of income as the impact of the hedged transaction.

Measurement of effectiveness and ineffectiveness:

Effectiveness for interest rate swaps is generally measured by comparing the critical terms of the hedged item and the hedging instrument whereas ineffectiveness is measured by comparing the cumulative change in fair value of the swap with the cumulative change in the fair value of the hedged item.

An interest rate swap with an aggregate amount of $300 million economically converts a portion of the Company’s variable rate debt to fixed rate debt. The effective portions of cash flow hedges are recorded in “Accumulated other comprehensive income (loss)” until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of interest expense are recognized in “Other income (expense), net” in the same period as the related expense is recognized. The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in “Other income (expense), net.”

Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable that the forecasted hedged transaction will not occur in the initially identified time period. Deferred gains and losses in “Accumulated other comprehensive income (loss)” associated with such derivative instruments are reclassified immediately into “Other income (expense), net.” Any subsequent changes in fair value of such derivative instruments are reflected in “Other income (expense), net” unless they are re-designated as hedges of other transactions.

The following table provides information on the location and fair value of the derivative financial instrument included in our consolidated statement of financial positions as of June 30, 2017.

Particulars	Notional amount outstanding		Fair value of derivative and location on statement of financial position as on 30th June 2017				Loss on fair value for three months ended June 30, 2017					Gain on fair value for six months ended June 30, 2017
							Effective			Ineffective		Effective		Ineffective
			(In thousands)
Cash flow hedge				Deferred income taxes and other non-current assets		Other current assets
Pay fixed interest rate swap	$	288.8 Million	$	765	$	59	$	(672	)		—	$	291		—

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The following table presents the net gains (losses) recorded in accumulated other comprehensive (loss) income relating to the Swap contract designated as cash flow hedges for the periods ending June 30, 2017 and 2016.

Gains on Derivatives:

						(In thousands)
	THREE MONTHS ENDED June 30,					SIX MONTHS ENDED June 30,
	2017			2016		2017		2016
Gains (Loss) recognized in other comprehensive income	$	(672	)	$	—	$	291	$	—

The Company will reclassify an amount which will be equivalent to the accrued interest on the Swap contract in every reporting period as there is a similar impact of accrued interest on the loan in the income statement.

Derivative (Non-Designated) Hedging Strategy

In addition to derivative instruments that are designated and qualify for hedge accounting, the Company also uses certain derivatives for its foreign currency exposure. These derivatives were not designated and/or did not qualify for hedge accounting. The changes in fair value of derivatives are immediately recognized into earnings.

The Company periodically enters into foreign exchange forward contracts to mitigate the risk of changes in foreign currency exchange rates, specifically changes between the Indian rupee currency and U.S. dollar currency. The contracts are adjusted to fair value at each reporting period. Gains and losses on forward contracts are generally recorded in “Other income (expense), net” unless they are designated as an effective hedge. Although the Company cannot predict fluctuations in foreign currency rates, the Company currently anticipates that foreign currency risk may have a significant impact on the financial statements. In order to limit the exposure to fluctuations in foreign currency rates, when the Company enters into foreign exchange forward contracts, where the counter-party is a bank, these contracts may also have a material impact on the financial statements.

The Company’s Indian subsidiaries, whose functional currency is the Indian rupee, periodically enter into foreign exchange forward contracts to buy Indian rupees and sell U.S. dollars to mitigate the risk of changes in foreign exchange rates on U.S. dollar denominated assets, primarily comprised of receivables from the parent Company (Syntel, Inc.) and other direct customers, and liabilities recorded on the books of the Indian subsidiaries. These forward contracts are denominated in U.S. dollars.

These forward contracts do not qualify for hedge accounting under ASC 815, “Derivative and Hedging.” Accordingly, these contracts are carried at a fair value with the resulting gains or losses included in the statement of comprehensive income under “Other income (expense), net.” The related cash flow impacts of all of our derivative activities are recorded in the CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS statement under cash flows from operating activities.

During the period ended June 30, 2017, the Company did not enter into any foreign exchange forward contracts. At June 30, 2017 and December 31, 2016, no foreign exchange forward contracts were outstanding.

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8. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT)

The changes in balances of accumulated other comprehensive loss for the three months ended June 30, 2017 are as follows:

										(In thousands)
	Foreign Currency Translation Adjustments			Unrealized gain(losses) on derivatives designated as cash flow hedges			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(248,035	)	$	904		$	362		$	(1,336	)	$	(248,105	)
Other comprehensive income (loss) before reclassifications		937			(406	)		136			—			667
Amounts reclassified from accumulated other comprehensive income (loss)		—						(63	)		18			(45	)
Net current-period other comprehensive income	$	937			(406	)	$	73		$	18		$	622
Ending Balance	$	(247,098	)	$	498		$	435		$	(1,318	)	$	(247,483	)

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended June 30, 2017 are as follows:

								(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net income (loss) Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income ,net	$	(89	)	$	26		$	(63	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	24		$	(6	)	$	18

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The changes in balances of accumulated other comprehensive loss for the three months ended June 30, 2016 are as follows:

							(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(236,476	)	$	1,586		$	(784	)	$	(235,674	)
Other comprehensive income (loss) before reclassifications		(16,109	)		634			—			(15,475	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			(750	)		12			(738	)
Net current-period other comprehensive income (loss)	$	(16,109	)	$	(116	)	$	12		$	(16,213	)
Ending Balance	$	(252,585	)	$	1,470		$	(772	)	$	(251,887	)

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended June 30, 2016 are as follows:

								(In thousands)
Details about Accumulated Other Comprehensive Income (Loss)  Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income	$	(1,130	)	$	380		$	(750	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	19		$	(7	)	$	12

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The changes in balances of accumulated other comprehensive loss for the six months ended June 30, 2017 are as follows:

									(In thousands)
	Foreign Currency Translation Adjustments			Unrealized gain on derivatives designated as cash flow hedges		Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(254,210	)		322	$	328		$	(1,345	)	$	(254,905	)
Other comprehensive income(loss) before reclassifications		7,112			176		165			6			7,459
Amounts reclassified from accumulated other comprehensive income (loss)		—					(58	)		21			(37	)
Net current-period other comprehensive income (loss)	$	7,112			176	$	107		$	27		$	7,422
Ending Balance	$	(247,098	)		498	$	435		$	(1,318	)	$	(247,483	)

Reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2017 are as follows:

					(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net income(loss) Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income, net	$	(81	)	$	23		$	(58	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	32		$	(11	)	$	21

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The change in balances of accumulated comprehensive loss for the six months ended June 30, 2016 is as follows:

							(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income(Loss)
Beginning balance	$	(235,146	)	$	332		$	(795	)	$	(235,609	)
Other comprehensive income(loss) before reclassifications		(17,439	)		1,184			—			(16,255	)
Amounts reclassified from accumulated other comprehensive Income(loss)		—			(46	)		23			(23	)
Net current-period other comprehensive income	$	(17,439	)	$	1,138		$	23		$	(16,278	)
Ending Balance	$	(252,585	)	$	1,470		$	(772	)	$	(251,887	)

Reclassifications out of accumulated other comprehensive loss for the six months ended June 30, 2016 is as follows:

					(In thousands)
Details about Accumulated Other Comprehensive Loss Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax (Expense) Benefit			Net of Tax
Unrealized gains (losses) on available for sale securities	Other income, net	$	(69	)	$	23		$	(46	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	35		$	(12	)	$	23

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9. TAX ON OTHER COMPREHENSIVE INCOME (LOSS)

Total tax benefit (expense) on other comprehensive income (loss) for the three and six months ended June 30, 2017 and 2016 is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
	(In thousands)						(In thousands)
Foreign currency translation adjustments	$	—		$	(15	)	$	—		$	(105	)
Unrealized gain (loss) on derivatives designated as cash flow hedges		266			—			(115	)
Tax benefit(expense) on unrealized gains(losses) on securities		(36	)		44			(53	)		(596	)
Tax benefit(expense) on defined benefit pension plans		(6	)		(7	)		(11	)		(12	)
Total tax benefit(expense) on other comprehensive income(loss)	$	224		$	22		$	(179	)	$	(713	)

10. CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

Cash and Cash Equivalents

For the purpose of reporting cash and cash equivalents, the Company considers all liquid investments purchased with an original maturity of three months or less to be cash equivalents.

The cash and cash equivalents as of June 30, 2017 and December 31, 2016, were $57.4 million and $78.3 million, respectively, which were held in banks and fixed deposits with various banking and financial institutions.

Short-term Investments

The Company’s short-term investments consist of short-term mutual funds, which have been classified as available-for-sale and are carried at estimated fair value. Fair value is determined based on quoted market prices. Unrealized gains and losses, net of taxes, on available-for-sale securities are reported as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. Net realized gains or losses resulting from the sale of these investments, and losses resulting from decline in fair values of these investments that are other than temporary declines, are included in other income (expense), net. The cost of securities sold is determined using the weighted-average method.

Short-term investments include term deposits with an original maturity exceeding three months and whose maturity date is within one year from the date of the balance sheet. Term deposits were $4.0 million and $6.6 million at June 30, 2017 and December 31, 2016, respectively.

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The following table summarizes short-term investments as of June 30, 2017 and December 31, 2016:    

	2017		2016
	June 30		December 31
	(In thousands)
Investments in mutual funds at fair value	$	25,603	$	15,016
Term deposits with banks		3,959		6,598
Total	$	29,562	$	21,614

Non-current Term Deposits with Banks

Non-current term deposits with banks include deposits with maturity exceeding one year from the date of the balance sheet. As of June 30, 2017 and December 31, 2016 non-current term deposits with banks were $0.24 and $0.23 million, respectively. Term deposits with banks include restricted deposits of $0.61 million and $0.44 million as of June 30, 2017 and December 31, 2016, respectively, placed as security towards performance guarantees issued by the Company’s bankers on the Company’s behalf.

11. LINE OF CREDIT AND TERM LOAN

On May 23, 2013, Syntel entered into a Credit Agreement with Bank of America, N.A. for $150 million in credit facilities consisting of a three-year term loan facility of $60 million and a three-year revolving credit facility of $90 million (the “Credit Agreement”). The maturity date of both the three-year term loan facility and the three-year revolving credit facility was May 23, 2016. The Credit Agreement was amended on May 9, 2016 (the “First Amendment Effective Date”) thereby extending the maturity date from May 23, 2016 to May 9, 2019. Further, by way of the amended Credit Agreement, an additional $40 million for the term loan facility and $10 million for the revolving credit facility was granted by Bank of America to Syntel (the “First Amendment” and together with the Credit Agreement, the “Amended Credit Agreement”). Thus, the total amount of the credit facility was $200 million, consisting of a three-year term loan facility of $100 million and a three-year revolving credit facility of $100 million. The Amended Credit Agreement was guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the First Amendment, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates under the Amended Credit Agreement were, with respect to both the revolving credit facility and the term loan, (a) for the period beginning on the First Amendment Effective Date through and including the date prior to the first anniversary of the First Amendment Effective Date, (i) the Eurodollar Rate (as that term is defined in the Amended Credit Agreement) plus 1.50% with respect to Eurodollar Rate Loans (as that term is defined in the Amended Credit Agreement) and (ii) the Base Rate (as that term is defined in the Amended Credit Agreement) plus 0.50% with respect to Base Rate Loans (as that term is defined in the amendment to the Credit Agreement), (b) for the period beginning on the first anniversary of the First Amendment Effective Date through and including the date prior to the second anniversary of the First Amendment Effective Date, (i) the Eurodollar Rate plus 1.45% with respect to Eurodollar Rate Loans and (ii) the Base Rate plus 0.45% with respect to Base Rate Loans, and (c) for the period beginning on the second anniversary of the First Amendment Effective Date and continuing thereafter, (i) the Eurodollar Rate plus 1.40% with respect to Eurodollar Rate Loans and (ii) the Base Rate plus 0.40% with respect to Base Rate Loans.

During the year ended December 31, 2016, the Company fully repaid the revolving credit and term loan of $190.0 million, and terminated the Amended Credit Agreement.

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On September 12, 2016, the Company entered into a new credit agreement, as amended as of October 26, 2016 (the “First Amendment Effective Date”) and July 18, 2017 (the “Second Amendment Effective Date”),(“Senior Credit Facility”) with Bank of America, N.A, as administrative agent, L/C issuer and swing line lender, the other lenders party thereto, and Merrill, Lynch, Pierce, Fenner & Smith Incorporated, as sole lead arranger and sole bookrunner for $500 million in credit facilities consisting of a five-year term loan facility of $300 million (the “Term Loan”) and a five-year revolving credit facility of $200 million (the “Revolving Facility”). The maturity date of the Senior Credit Facility is September 11, 2021. The Revolving Facility allows for the issuance of letters of credit and swingline loans. The Senior Credit Facility is guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the Senior Credit Facility, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates applicable to the Senior Credit Facility other than in respect of swing line loans are LIBOR plus 1.50% or, at the option of the Company, the Base Rate (to be defined as the highest of (x) the Federal Funds Rate [as that term is defined in the Senior Credit Facility] plus 0.50%, (y) the Bank of America prime rate, or (z) LIBOR plus 1.00%) plus 0.50%. Each swingline loan shall bear interest at the Base Rate plus 0.50%. In no event shall LIBOR be less than 0% per annum.

As of June 30, 2017, the interest rates were 2.48% for the Term Loan and 2.48% and 2.27% for the two portions of the Revolving Facility.

The Company has also hedged interest rate risk on the entire Term Loan of $300 million by entering into a Pay Fixed and Receive Floating interest rate swap on November 30, 2016. The Company has designated the Swap in a hedging relationship with the Term Loan. The Swap is recorded at fair value and a loss of $0.7 million and gain of $0.3 million during the three months and six months ended June 30, 2017 is recorded in “Accumulated other comprehensive income” with the corresponding adjustment in other current assets and other non-current assets.

With the interest rates charged on the Senior Credit Facility being variable, the fair value of the Senior Credit Facility approximates the reported value as of June 30, 2017, as it reflects the current market value.

The Term Loan provides for the principal payments as under:

Period		Payment amount per quarter
Beginning from	Until	(In millions)
December 31, 2016	September 30, 2017	3.750
October 31, 2017	September 30, 2018	5.625
October 31, 2018	September 30, 2021	7.500

Principal payments on the Term Loan are due every quarter. During the three months and six months ended June 30, 2017, principal payments of $3.75 million and $11.25 million were made.

During the three months and six months ended June 30, 2017, a principal pre-payment of $45.0 million and $90.0 million were made towards the Revolving Facility.

The Senior Credit Facility requires compliance with certain financial ratios and covenants. As of June 30, 2017, the Company was in compliance with all financial covenants.

As of June 30, 2017 the outstanding balances of the Term Loan and Revolving Facility, including accrued interest, are $288.2 million and $109.7 million (net of $0.9 million unamortized debt issuance cost), respectively. As of December 31, 2016 the outstanding balances of the Term Loan and Revolving Facility, including accrued interest, are $299.9 million and $199.9 million (net of $0.9 million unamortized debt issuance cost), respectively.

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Future scheduled payments on the Senior Credit Facility, at June 30, 2017 are as follows:

			(In thousands)
	Term Loan		Revolving Facility
	Principal Payments		Principal Payments
2017	$	9,375
2018	$	24,375
2019	$	30,000
2020	$	30,000
2021	$	195,000	$	110,000

12. 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. If the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of basic and diluted earnings per share are adjusted retroactively for all periods presented to reflect that change in capital structure. If such changes occur after the close of the reporting period but before issuance of the financial statements, the per-share computations for that period and any prior-period financial statements presented are based on the new number of shares.

The Company has issued restricted stock units, which are considered to be potentially dilutive to its basic earnings per share. Diluted earnings per share is calculated using the treasury stock method for the dilutive effect of restricted stock units granted pursuant to the incentive plans, by dividing the net income by the weighted average number of shares outstanding during the period adjusted for these potentially dilutive restricted stock units, except when the results would be anti-dilutive. The dilutive earnings per share are computed using the treasury stock method.

The following tables set forth the computation of earnings per share:

	(in thousands, except per share earnings)
	Three Months Ended June 30,
	2017				2016
	Weighted Average Shares		Earnings per Share		Weighted Average Shares		Earnings per Share
Basic earnings per share		83,818	$	0.44		84,140	$	0.70
Potential dilutive effect of restricted stock units outstanding		35		—		138		—
Diluted earnings per share		83,853	$	0.44		84,278	$	0.70

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	(in thousands, except per share earnings)
	Six Months Ended June 30,
	2017					2016
	Weighted Average Shares		Earnings per Share			Weighted Average Shares		Earnings per Share
Basic earnings per share		83,807	$	0.90			84,126	$	1.33
Potential dilutive effect of restricted stock units outstanding		37		(0.01	)		146		—
Diluted earnings per share		83,844	$	0.89			84,272	$	1.33

13. SEGMENT REPORTING

The Company’s reportable business segments are as follows:

• Banking and Financial Services

• Healthcare and Life Sciences

• Insurance

• Manufacturing

• Retail, Logistics and Telecom

Syntel’s leadership evaluates the Company’s performance and allocates resources based on segment revenues and segment cost of revenues. Segment gross profit is defined as gross profit before Corporate Direct Costs.

The Company’s cost of revenues consist of costs directly associated with billable professionals in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Generally, the cost of revenues for each operating segment has similar characteristics and is subject to the same factors, pressures and challenges. However, the economic environment and its effects on industries served by our operating groups may affect revenue and cost of revenues to differing degrees.

In each of our business segments, Syntel helps customers adapt to market change by providing a broad array of technology-based, industry-specific solutions. These solutions leverage Syntel’s strong understanding of the underlying trends and market forces in our chosen industry segments. These solutions are complemented by strong capabilities in Digital Modernization, Social, Mobile, Analytics and Cloud (SMAC) technologies, Business Intelligence (BI), Knowledge Process Outsourcing (KPO), application services, testing, Enterprise Resource Planning (ERP), IT Infrastructure Management Services (IMS), and business and technology consulting.

Banking and Financial Services

Our Banking and Financial Services segment serves financial institutions throughout the world. Our clients include companies providing banking, capital markets, cards and payments, investments and transaction processing services to third parties. Our clients engage us to help make their operations as effective, productive and cost-efficient as possible, and to support new capabilities. We assist these clients in such areas as: payment solutions, retail banking, wholesale banking, consumer lending, risk management, investment banking, reconciliation, fraud analysis, mobile banking, and compliance and securities services. The demand for our services in the banking and financial services sector is being driven by changing global regulatory requirements, customer interest in newer technology areas and related services such as digital modernization, and an ongoing focus on cost reduction and operational efficiencies.

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Healthcare and Life Sciences

Our Healthcare and Life Sciences segment serves healthcare payers, providers and pharmaceutical and medical device providers, among others. The healthcare industry is constantly seeking to improve the quality of care while managing the cost of care in order to make healthcare affordable to a larger population. Our healthcare practice focuses on providing a broad range of services and solutions to the industry across the consumer lifecycle, which includes regulatory requirements, integrated care, stakeholder engagement and wider use of electronic health records, among others. We also partner with clients to modernize their systems and processes to enable them to deal with the increasing consumer orientation of healthcare, such as support for individual mandates and the adoption of mobile and analytics solutions to improve access to health information and decision making by end consumers.

In the life sciences category, we partner with leading pharmaceutical, biotech, and medical device companies, as well as providers of generics, animal health and consumer health products. Our life sciences solutions help transform many of the business processes in the life sciences value chain (research, clinical development, manufacturing and supply chain, and sales and marketing) as well as regulatory and administrative functions.

Insurance

We serve the needs of global property and casualty insurers, insurance brokers, personal, commercial, life and retirement insurance service providers. These customers turn to us for assistance in improving the efficiency and effectiveness of their operations and in achieving business transformation. We focus on aspects of our clients’ operations, such as policy administration, claims processing and compliance reporting. We also serve the growing trend among insurers to improve their sales and marketing processes by deepening direct retail customer relationships and strengthening interactions with networks of independent and captive insurance agents. This is often accomplished through the use of digital front-end technologies like cloud, social media and mobile, and supported by modernization of applications and infrastructure elements. Additionally, many insurers seek to improve business effectiveness by reducing expense ratios and exiting non-core lines of business and operations.

Manufacturing

We provide technology services and business consulting in a range of sub-sectors including industrial products, aerospace and automotive manufacturing, as well as to processors of raw materials and natural resources. Demand for our services in this segment is being driven by trends that, among others, include the increasing globalization of sourcing and the desire of clients to further penetrate emerging markets, leading to longer and more complex supply chains. Some of our solutions for industrial and manufacturing clients include warranty management, dealer system integration, Product Lifecycle Management (PLM), Supply Chain Management (SCM), sales and operations planning, and mobility.

Retail, Logistics and Telecom

In Retail, we serve a wide spectrum of retailers in specialty, apparel and home improvement segments. We also serve the travel and hospitality industry including airlines, hotels as well as online and travel retail, global distribution systems and intermediaries. Our domain intensive solutions transform customer/shopper experiences while keeping down the cost of IT Operations.

In Logistics, our clients look to Syntel to implement business-relevant changes that will make them more productive, competitive and cost effective. To that end, we help organizations improve operational efficiencies, enhance responsiveness and collaborate with trading partners to better serve their markets and end customers.

In Telecom, we help our clients address important changes in the telecom industry, such as the transition to new network technologies, designing, developing, testing and introducing new products and channels, improving customer service and increasing customer satisfaction.

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Syntel’s Retail Logistics and Telecom Business unit leverages its comprehensive understanding of the business and technology needs of the industry. Our industry solutions for our clients include SCM, sales and operations planning, mobility, Point of Sale (POS) testing, omnichannel enablement and integration, web content management solutions, sales force and cloud foundry enablement, among others.

In addition, there is strong demand for digital modernization services across these industries to enhance efficiency and agility of their underlying technology systems.

Corporate Direct Costs

Certain expenses, for cost centers such as Centers of Excellence, Architecture Solutions Group, Research and Development, Cloud Computing, and Application Management, are not allocated to specific industry segments because management believes it is not practical to allocate such expenses to individual segments as they are not directly attributable to any specific segment. Accordingly, these expenses are separately disclosed as Corporate Direct Costs and adjusted only against Total Gross Profit.

In accordance with ASC 280 “Disclosures about Segments of an Enterprise and Related Information,” segment disclosures are presented below. Revenues from external customers and gross profit for the Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom segments for the three and six months ended June 30, 2017 and June 30, 2016 are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
	(in thousands)						(in thousands)
Net Revenues:
Banking and Financial Services	$	103,663		$	120,351		$	209,632		$	241,809
Healthcare and Life Sciences		39,614			39,998			77,176			78,361
Insurance		33,102			32,271			65,501			62,820
Manufacturing		9,451			11,838			18,982			23,254
Retail, Logistics and Telecom		40,981			41,560			81,389			81,164
	$	226,811		$	246,018		$	452,680		$	487,408
Gross Profit:
Banking and Financial Services		37,681			43,892			76,993			90,297
Healthcare and Life Sciences		15,455			16,669			29,945			30,266
Insurance		10,348			11,420			21,319			21,981
Manufacturing		2,498			3,619			4,887			6,816
Retail, Logistics and Telecom		16,027			16,087			31,708			32,694
Total Segment Gross Profit		82,009			91,687			164,852			182,054
Corporate Direct cost		(549	)		(702	)		(970	)		(1,345	)
Gross Profit	$	81,460		$	90,985		$	163,882		$	180,709
Selling, general and administrative expenses		28,699			18,265			58,990			47,942
Income from operations	$	52,761		$	72,720		$	104,892		$	132,767

During the three and six months ended June 30, 2017, American Express Corp., State Street Bank and Federal Express Corp. each contributed revenues in excess of 10% of total consolidated revenues. Revenues from American Express Corp., State Street Bank and Federal Express Corp. were $37.6 million, $34.1 million and $31.6 million, respectively, during the three months ended June 30, 2017, contributing approximately 16.6%, 15.0% and 13.9%, respectively of total consolidated revenues. The revenues from American Express Corp. and State Street Bank were generated in the

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Banking and Financial Services segment. The revenue from Federal Express Corp. was generated in the Retail, Logistics and Telecom segment. The corresponding revenues for the three months ended June 30, 2016 from American Express Corp., State Street Bank and Federal Express Corp. were $53.7 million, $33.5 million and $30.5 million, respectively, contributing approximately 21.8%, 13.6% and 12.4%, respectively, of total consolidated revenues. During the six months ended June 30, 2017, revenues from American Express Corp., State Street Bank and Federal Express Corp. were $79.8 million, $67.9 million and $61.7 million, respectively, contributing approximately 17.6%, 15.0% and 13.6%, respectively, of total consolidated revenues. The corresponding revenues for the six months ended June 30, 2016 from American Express Corp., State Street Bank and Federal Express Corp. were $109.0 million, $67.4 million and $59.3 million, respectively, contributing approximately 22.4%, 13.8% and 12.2%, respectively, of total consolidated revenues. At June 30, 2017 and December 31, 2016, accounts receivable from American Express Corp. were $15.4 million and $24.3 million, respectively. Accounts receivable from State Street Bank were $15.9 million and $10.9 million, respectively, at June 30, 2017 and December 31, 2016. Accounts receivable from Federal Express Corp. were $11.5 million and $17.8 million, respectively, at June 30, 2017 and December 31, 2016.

14. GEOGRAPHIC INFORMATION

The Company’s net revenues and long-lived assets, by geographic area, are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Net Revenues (1)	2017		2016		2017		2016
	(in thousands)				(in thousands)
North America (2)	$	203,373	$	219,730	$	406,949	$	435,440
India		1,056		1,596		2,214		3,061
Europe (3)		21,734		24,084		42,253		47,711
Rest of the World		648		608		1,264		1,196
Total revenue	$	226,811	$	246,018	$	452,680	$	487,408

	As of		As of
Long-Lived Assets (4)	June, 30		December, 31
	2017		2016
	(in thousands)
North America (2)	$	2,850	$	3,307
India		103,111		102,638
Europe (3)		1,467		632
Rest of the world		683		805
Total	$	108,111	$	107,382

Notes for the Geographic Information Disclosure:

1. Net revenues are attributed to regions based upon customer location.

2. Primarily relates to operations in the United States.

3. Primarily relates to operations in the United Kingdom and Poland.

4. Long-lived assets include property and equipment, net of accumulated depreciation and amortization and goodwill.

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15. INCOME TAXES

The following table accounts for the differences between the federal statutory tax rate of 35% and the Company’s overall effective tax rate:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Statutory provision		35.0	%		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		1.1	%		0.4	%		1.9	%		0.5	%
City taxes		0.2	%		0.1	%		0.1	%		0.1	%
Foreign effective tax rates different from US statutory rate		(9.6	)%		(11.3	)%		(10.6	)%		(12.3	)%
Prior Year related state tax payment								0.9	%
Valuation Reserve Adjustment		—			—			(2.9	%)		(2.2	)%
Effective Income Tax Rate		26.7	%		24.2	%		24.4	%		21.1	%

The effective tax rate for the three months ended June 30, 2017, was impacted by onsite/offshore profits mix, the taxable/nontaxable and onsite/offshore revenue and expense mix of the Company.

The Company records provisions for income taxes based on enacted tax laws and rates in the various tax jurisdictions in which it operates. In determining the tax provisions, the Company provides for tax uncertainties in income taxes when it is more likely than not, based on the technical merits, that a tax position would not be sustained upon examination. Such uncertainties, which are recorded in income taxes payable, are based on management’s estimates and accordingly, are subject to revision based on additional information. The provision no longer required for any particular tax year is credited to the current period’s income tax expenses. Conversely, in the event of a future tax examination, any additional tax expense not previously provided for will be recognized in the period in which the actual liability is concluded or management determines that the Company will not prevail on certain tax positions taken in filed returns, based on the “more likely than not” concept.

Syntel, Inc. and its subsidiaries file income tax returns in various tax jurisdictions. The Company is no longer subject to U.S. federal tax examinations by tax authorities for years before 2013 and for State tax examinations for years before 2012.

Syntel India, the Company’s India subsidiary, has disputed tax matters for the financial years 1996-97 to 2013-14 pending at various levels of the Indian tax authorities. Financial year 2014-15 and onwards are open for regular tax scrutiny by the Indian tax authorities. However, the tax authorities in India are authorized to reopen the already concluded tax assessments and may re-open the case of Syntel India for financial years 2010-11 and onwards.

During the three months ended March 31, 2017, the Company reversed a valuation allowance against deferred tax assets recognized on the minimum alternative tax (“MAT”) of $2.92 million due to the extension of the MAT credit carry forward period which was enacted in March 2017. The MAT credit can be carried forward and set-off against future taxes payable for up to 15 years versus the earlier provision on MAT credit that allowed the MAT credit to be carried forward and set-off against future taxes payable for only up to 10 years.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. During the three months ended June 30, 2017 and 2016, the Company has accrued interest of approximately $0.24 million and $0.001 million, respectively. During the six months ended June 30, 2017 and 2016, the Company has accrued interest of approximately $0.28 million and $0.041 million respectively. The Company has accrued approximately $1.81 million and $1.45 million for interest and penalties as of June 30, 2017 and December 31, 2016, respectively.

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The liability for unrecognized tax benefits was $70.84 million and $68.51 million as of June 30, 2017 and December 31, 2016, respectively. The Company has paid income taxes of $43.58 million and $41.41 million against the liabilities for unrecognized tax benefits of $70.84 million and $68.51 million, as of June 30, 2017 and December 31, 2016, respectively. The Company has paid the taxes in order to reduce the possible interest and penalties related to these unrecognized tax benefits.

The Company’s net amount of unrecognized tax benefits for tax disputes of $1.66 million could change in the next twelve months as the court cases and global tax audits progress. At this time, due to the uncertain nature of this process, it is not reasonably possible to estimate an overall range of possible change.

Syntel has not provided for India Income Taxes which are disputed and pending at various levels (including potential tax disputes) of $15.27 million for the financial year 1996-97 to June 30, 2017, which is after providing $53.97 million as unrecognized tax benefits under ASC740. Indian tax exposures involve complex issues and may need an extended period to resolve the issues with the Indian income tax authorities. Syntel’s management, after consultation with legal counsel, believes that the resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

Service Tax Audit

Syntel India regularly files quarterly service tax refund applications and claims refunds of service tax on input services, which remain unutilized against a lack of service tax on export of services. As of June 30, 2017, Syntel Indian entities have not provided against service tax refund claims of $4.15 million disputed by the Indian Service Tax Department which are pending at various levels.

The Company obtained a tax consultant’s advice on the aforesaid disputes. The consultant is of the view that the tax disputes are contrary to the wording of the service tax notifications and provisions. The Company therefore believes that its claims of service tax refunds should be upheld at the appellate stage and the refunds should be accordingly granted. Based on the consultant’s tax advice, the Company believes that it has a reasonable basis to defend the rejection of the refunds. Accordingly, no provision has been made in the Company’s books.

Undistributed Earnings of Foreign Subsidiaries

During the three months ended September 30, 2016, and after a comprehensive review of anticipated sources and uses of capital both domestically and abroad, as well as other considerations, the Board of Directors determined that it was in the best interests of the Company and its shareholders to declare a special cash dividend of fifteen dollars ($15.00) per share. In conducting this evaluation, the Board of Directors considered, among other factors, the operational and financial objectives of the Company, long-term and short-term capital needs, the Company’s projections on growth and working capital needs, planned uses of U.S. and foreign earnings, the available sources of liquidity in the U.S., and growth plans outside of the U.S. As part of this evaluation, the Company determined that certain amounts which had been previously designated for internal and external expansion and investment at its foreign subsidiaries were no longer required for these purposes. The special cash dividend was funded through a one-time repatriation of approximately $1.03 billion (net of foreign income tax $210 million paid outside of the U.S) of cash held by the Company’s foreign subsidiaries and a portion of borrowings under the new Senior Credit Facility. In connection with the one-time repatriation, the Company recognized a one-time tax expense of approximately $270.6 million (net of foreign tax credits) in the third quarter of 2016. The Company has recorded additional state tax of $0.9 million, attributable to the above repatriation, in quarter ended March 31, 2017.

Management regularly evaluates foreign earnings to determine whether future foreign earnings that accumulate will be permanently invested outside the U.S. In conducting this evaluation, management considers, among other factors, the operational and financial objectives of the Company, long-term and short-term capital needs, the Company’s projections on growth and working capital needs,

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planned uses of U.S. and foreign earnings, the available sources of liquidity in the U.S., and growth plans outside of the U.S. The Company provides taxes on any foreign earnings in excess of these requirements. The June 30, 2017 provision includes the impact of certain foreign earnings that are not permanently invested. If in the future, management were to conclude that any additional portion of foreign earnings will not be permanently reinvested outside the U.S., this would result in an additional provision for income taxes, which could affect the Company’s future effective tax rate. If the Company determines to repatriate all undistributed repatriable earnings of foreign subsidiaries as of June 30, 2017, the Company would have accrued taxes of approximately $33.5 million.

Local Taxes

As of June 30, 2017, the Company had a local tax liability provision of approximately $0.4 million, equal to $0.3 million net of federal tax benefit, relating to local taxes including employer withholding taxes, employer payroll expense taxes, business licenses, and corporate income taxes. As of December 31, 2016, the local tax liability provision was approximately $0.4 million, equal to $0.3 million net of tax, relating to local taxes including employer withholding taxes, employer payroll expense taxes, business license registrations, and corporate income taxes.

Minimum Alternate Tax (MAT)

Minimum Alternate Tax (“MAT”) is payable on the Book Income, including the income for which deduction is claimed under section 10A and section 10AA of the Indian Income Tax Act. The excess MAT over the normal tax liability is “MAT Credit”. MAT Credit can be carried forward for 15 years (as amended by the Finance Act, 2017, as compared to 10 years, as previously provided) and set-off against future tax liabilities, if normal tax provisions are in excess of taxes payable under MAT. Accordingly, for the three months ended March 31, 2017, the Company has reversed a valuation allowance of $2.92 million against deferred tax assets which was recognized on MAT Credit. The MAT credit as of June 30, 2017 of $37.99 million (net of valuation allowance of $2.47 million) must be utilized before March 31 of the following financial years and will expire as follows:

Year of Expiry Of MAT Credit	Amount in USD (in millions)
2022-2023		0.20
2023-2024		0.27
2024- 2025		1.00
2025- 2026		1.85
2026- 2027		0.82
2027- 2028		6.16
2028- 2029		7.29
2029- 2030		8.00
2030- 2031		10.30
2031- 2032		3.29
2032- 2033		1.28
Total		40.46
Less: valuation allowance		(2.47	)
Total (net of valuation allowance)		37.99

16. COMMITMENTS AND CONTINGENCIES

As of June 30, 2017, and December 31, 2016, Syntel’s subsidiaries have commitments for capital expenditures (net of advances) of $29.0 million and $33.0 million, respectively, primarily related to the technology campuses being constructed at Pune and Chennai in India.

Syntel’s Indian subsidiaries’ operations are carried out from their development centers/units in Mumbai, Pune, Chennai and Gurgaon forming part of a SEZ/STPI scheme. Under these schemes, the registered units have export obligations, which are based on the formula provided by the notifications/circulars issued by the STPI and SEZ authorities from time to time. The consequence of not meeting the above commitments would be a retroactive levy of import duty on items previously imported

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duty free for these units. Additionally, the respective authorities have rights to levy penalties for any defaults on a case-by-case basis. The Company is confident of meeting these obligations.

The Company is party to various legal actions arising in the ordinary course    of business, including litigation and governmental and regulatory controls. The Company’s estimates regarding legal contingencies are based on information known about the matters and its experience in contesting, litigating and settling similar matters. It is the opinion of management with respect to pending or threatened litigation matters that unfavorable outcomes are neither probable nor remote and that estimates of possible loss are not able to be made. Although actual amounts could differ from management’s estimate, none of the pending or threatened actions are believed by management to involve future amounts that would be material to the Company’s financial position or results of operations.

The Company estimates the costs associated with known legal exposures and their related legal expenses and accrues reserves for either the probable liability, if that amount can be reasonably estimated, or otherwise the lower     end of an estimated range of potential liability. As at December 31, 2016, the Company has recorded a $0.3 million liability for a litigation matter related contingency which was subsequently paid during three months ended March 31, 2017. During the six months ended June 30, 2017, there was no accrual related to litigation.

17. STOCK BASED COMPENSATION

Share Based Compensation:

On June 1, 2006, the Company adopted an Amended and Restated Stock Option and Incentive Plan (the “Amended Plan”). Under the Amended Plan, a total of sixteen million shares of common stock (adjusted for the effects of the 2014 stock split) were reserved for issuance. The dates on which options or restricted stock units granted under the Amended Plan become first exercisable or have their restriction lapse are determined by the Compensation Committee of the Board of Directors, but generally occur over a four-year period from the date of grant. The term of any option may not exceed ten years from the date of grant. As of June 1, 2016, the Amended Plan terminated and no further awards may be made under the Amended Plan.

On February 28, 2016, the Company’s Board of Directors approved the adoption of the 2016 Incentive Plan (the “2016 Plan”) subject to shareholder approval. On June 8, 2016 the Company’s shareholders approved the 2016 Plan. The principal features of the 2016 Plan are substantially the same as those of the Amended Plan. Under the 2016 Plan, a total of sixteen million shares of common stock were reserved for issuance. The dates on which options or restricted stock units granted under the Amended Plan become first exercisable or have their restriction lapse are determined by the Compensation Committee of the Board of Directors, but for employees generally occur over a four-year period from the date of grant and for non-employee directors generally occur at the Company’s next annual meeting of shareholders.

On November 30, 2016, Company’s Board of Directors and the Compensation Committee established a program for a one-time grant of Restricted Stock Units (“RSUs”) to certain senior management employees. The parameters of the program and the restrictions on the RSUs granted are consistent with the 2016 Plan approved by shareholders on June 8, 2016, except as follows:

1. The employee may purchase up to a specified number of shares of Syntel, Inc. common stock (“Common Stock”) whose purchase price is equal to up to 25% of the employee’s base salary (“Purchased Shares”).

2. Upon proof of purchase of the Common Stock, the employee will receive a grant of RSUs equal to 25% of the number of the Purchased Shares (the “Grant”).

3. The restriction period on 25% of the Grant will lapse on each of the first four anniversaries of the grant date.

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The RSUs will be forfeited if the employee ceases to be an employee of the Company or if the employee does not retain Purchased Shares equal to four times the remaining RSUs from the Grant through the applicable restriction period. No stock options were issued for the three months and six months ended June 30, 2017 and 2016 under either the Amended Plan or the 2016 Plan.

The Company accounts for share-based compensation based on the fair value of share-based payment awards on the date of grant. Fair value of share-based payment awards are calculated based on the Company’s share prices which are quoted in market. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Statement of Comprehensive Income. Share-based compensation expense recognized as above for the three months ended June 30, 2017 and 2016 was $2.1 million (including charges for restricted stock units and a dividend equivalent) and $1.9 million, respectively, including a charge for restricted stock and for the six months ended June 30, 2017 and 2016 was $4.6 million (including charges for restricted stock units and a dividend equivalent) and $3.7 million, respectively, including a charge for restricted stock.

The shares issued upon the exercise of the options are new share issues.

Restricted Stock Units:

On different dates during the years ended December 31, 2016, 2015 and 2014,and for the six months ended June 30, 2017, the Company issued restricted stock awards (adjusted to account for the 2014 stock split) of 415,519, 135,440, 293,904 and 39,022, respectively, to its non-employee directors and some employees as well as to some employees of its subsidiaries. The restricted stock awards were granted to employees for their future services as a retention tool at a zero exercise price, vest in shares with regards to 25% of the awards issued on or after the first, second, third and fourth anniversary of the grant dates.

During the third quarter of 2016, the Board of Directors declared a special cash dividend of fifteen dollars ($15.00) per share on outstanding common stock which was payable on October 3, 2016, to shareholders of record at the close of business on September 22, 2016. Further, it was resolved by the Board of Directors that restricted stock units granted to employees and directors prior to the dividend record date will receive an amount equivalent to the dividend when the applicable restriction on the restricted stock units lapses. The special dividend resulted in a modification of the existing stock compensation plan. Accordingly, incremental compensation cost was measured as the excess, if any, of the fair value of the modified award over the fair value of the original award accounted on a graded basis with the incremental expense being recognized over the remaining vesting period. As a result of the above, the Company has recorded an additional compensation cost of $0.5 million during the three months ended June 30, 2017 and $1.2 million during the six months ended June 30, 2017.

The impact on the Company’s results of operations of recording stock-based compensation (including impact of restricted stock) for the three and six months ended June 30, 2017 and 2016 was as follows:

					(in thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(in thousands)				(in thousands)
Cost of revenues	$	957	$	729	$	1,937	$	1,389
Selling, general and administrative expenses		1,159		1,132		2,648		2,293
	$	2,116	$	1,861	$	4,585	$	3,682

No cash was received from option exercises under all share-based payment arrangements for the six months ended June 30, 2017 and 2016, respectively.

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A summary of the activity for restricted stock unit awards granted under our stock-based compensation plans as of June 30, 2017 and December 31, 2016 and changes during the period ended are presented below:

	Six Months Ended June 30, 2017					Year ended December 31, 2016
	Number Of Awards			Weighted Average Grant Date Fair Value		Number Of Awards			Weighted Average Grant Date Fair Value
Unvested at January 1		669,556		$	29.16		465,290		$	41.47
Granted		39,022		$	17.23		415,519		$	20.57
Vested		(40,590	)	$	41.69		(198,725	)	$	39.10
Forfeited		(66,165	)	$	37.99		(12,528	)	$	43.77
Unvested Total		601,823		$	26.57		669,556		$	29.16

As of June 30, 2017, $12.0 million of total remaining unrecognized stock-based compensation cost related to restricted stock awards is expected to be recognized over the weighted-average remaining requisite service period of 2.85 years.

18. VACATION PAY

The accrual for unutilized leave balance is determined based on the entire leave balance available to the employees at period end. The leave balance eligible for carry-forward is valued at gross compensation rates and eligible for compulsory encashment at basic compensation rates.

The gross charge (reversal) for unutilized earned leave was $(0.04) million and $1.9 million for the three months ended June 30, 2017 and 2016, respectively.

The gross charge (reversal) for unutilized earned leave of $(0.04) million during the three months ended June 30 ,2017 was primarily on account of reversal of leave cost for the differential between leave accruals and actual amount paid due to change in scheme of leave encashment availed by employees during second quarter of 2017.

The gross charge for unutilized earned leave was $0.4 million and $3.5 million for the six months ended June 30, 2017 and 2016, respectively.

The amounts accrued for unutilized earned leave are $20.5 million and $23.1 million as of June 30, 2017 and December 31, 2016, respectively, and are included within accrued payroll and related costs.

19. EMPLOYEE BENEFIT PLANS

The Company maintains a 401(k) retirement plan that covers all regular employees on Syntel, Inc.’s U.S. payroll. Eligible employees may contribute up to the lesser of 60% of their compensation or $18,000, subject to certain limitations, to the retirement plan. The Company may make contributions to the plan at the discretion of the Board of Directors; however, through June 30, 2017, no Company contributions have been made.

Eligible employees on Syntel’s Indian payroll receive benefits under the Provident Fund (“PF”), which is a defined contribution plan. Both the employee and the Company make monthly contributions equal to a specified percentage of the covered employee’s salary. The Company has no further obligations under the plan beyond its monthly contributions. The contributions made to the fund are administered and managed by the Government of India. The Company’s monthly contributions are expensed in the period they are incurred. Provident Fund Contribution expense recognized by Indian entities for the three months ended June 30, 2017 and 2016 was $1.5 million and $1.6 million, respectively and for six months ended June 30, 2017 and 2016 was $2.9 million and $3.1 million, respectively.

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In accordance with the Payment of Gratuity Act, 1972 of India, the Indian subsidiary provides for gratuity, a defined retirement benefit plan (the “Gratuity Plan”) covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, based on the respective employee’s salary and the tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation and are expensed in the period determined. The Gratuity Plan is a non-funded plan. The amounts accrued under this plan are $15.6 million and $13.6 million as of June 30, 2017 and December 31, 2016, respectively, and are included within current liabilities and in other non-current liabilities, as applicable. Expense recognized by Indian entities under the Gratuity Plan for the three months ended June 30, 2017 and 2016 was $0.9 million and $0.9 million, respectively, and for six months ended June 30, 2017 and 2016 was $1.9 million and $1.8 million, respectively.

20. CONSOLIDATION OF A VARIABLE INTEREST ENTITY

Syntel Delaware is a 100% subsidiary of Syntel, Inc. and a 49% shareholder of the joint venture (“JV”) entity SSSSML, the other shareholder being an affiliate of State Street Bank. Syntel Delaware has a variable interest in SSSSML as it is entitled to all the profits and solely responsible for all losses incurred by SSSSML even though it holds only 49% in the JV entity. Accordingly, Syntel Delaware consolidates the JV entity SSSSML.

The Company’s Banking and Financial Services to State Street Bank and one other client are provided through the above joint venture between the Company and an affiliate of State Street Bank. Sales of Banking and Financial Services to these two clients represented approximately 11.2% and 10.7% of the Company’s total revenues for the three months ended June 30, 2017 and 2016, respectively and 11.5% and 10.6% for the six months ended June 30, 2017 and 2016, respectively.

21. FAIR VALUE MEASUREMENTS

The Company follows the guidance for fair value measurements and fair value option for financial assets and liabilities, which primarily relate to the Company’s investments and forward contracts, interest rate swaps and other financial assets and liabilities.

This standard includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.

Fair values of interest rate swaps are measured using standard valuation models using inputs that are readily available in public markets, or can be derived from observable market transactions, including LIBOR spot and forward rates.

The fair value hierarchy consists of the following three levels:

• Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

• Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

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The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2017:

							(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	25.6	$	—	$	—	$	25.6
Term Deposits		—		4.2		—		4.2
Interest Rate Swap		—		0.8		—		0.8
Total Assets Measured at Fair Value	$	25.6	$	5.0	$	—	$	30.6

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2016:

							(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	15.0	$	—	$	—	$	15.0
Term Deposits		—		6.8		—		6.8
Interest Rate Swap		—		0.5				0.5
Total Assets Measured at Fair Value	$	15.0	$	7.3	$	—	$	22.3

22. TERM DEPOSITS

The following table summarizes the term deposits with various banks outstanding as of June 30, 2017 and December 31, 2016.

			(In Millions)
Balance Sheet Item	As of June 30, 2017		As of December 31, 2016
Short Term Investments	$	3.96	$	6.60
Non-Current Assets		0.24		0.23
Total	$	4.20	$	6.83

23. Other Income (Expense), Net

The following table represents the components of other income (expense), net.

							(In Thousands)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Interest expense	$	(3,216	)	$	(575	)	$	(6,592	)	$	(1,145	)
Interest income on term deposits		93			3,581			225			7,485
Gain on sale of mutual funds, net		329			1,778			560			2,479
Miscellaneous income		40			91			173			152
Total	$	(2,754	)	$	4,875		$	(5,634	)	$	8,971

24. Reclassifications

Certain amounts in previously issued consolidated financial statements have been reclassified to conform to the current period presentation.

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25. RECENT ACCOUNTING PRONOUNCEMENTS

Recently adopted accounting standards

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The effective date of ASU 2016-09 is for fiscal years beginning after December 15, 2016. The Company adopted the amendments in ASU 2016-09 during the first quarter of 2017. This standard simplifies or clarifies several aspects of the accounting for equity-based payment awards, including the income tax consequences, classification of awards as either equity or liabilities, and classification in the Consolidated Statements of Cash Flows. Certain changes under the ASU are required to be applied retrospectively, while other changes are required to be applied prospectively. There were no material impacts to the Company’s results of operations or liquidity as a result of adopting ASU 2016-09. The adoption of this ASU resulted in the following:

During the three months ended March 31, 2017, the Company has accounted on a prospective basis in the income statement for the income tax expense or benefit for the tax effects of differences recognized on or after the effective date of the equity-based payment awards between the deduction for an award for tax purposes and the cumulative compensation costs of that award recognized for financial reporting purposes. The Company has also presented on a prospective basis the excess tax benefits (deficiencies) as operating cash flows in its cash flow statement. Prior period cash flow statements have not been adjusted retrospectively to take into account the transition method.

The Company recognizes share-based payment forfeitures as they occur. Prior to adoption of this ASU, forfeitures were estimated in order to arrive at current period expense. There are no cumulative effect adjustments to accumulated deficit on the Consolidated Balance Sheet as of January 1, 2017 as a result of the adoption of these amendments.

Recently issued accounting standards

ASU 2014-09, Revenue from Contracts with Customers – Issued May 2014, was scheduled to be effective for Syntel beginning January 1, 2017, however on July 9, 2015, the FASB approved the proposal to defer the effective date of the ASU for public companies to January 1, 2018 with an option to elect to adopt the ASU as of the original effective date. The new standard is intended to substantially enhance the quality and consistency of how revenue is reported while also improving the comparability of the financial statements of companies using U.S. generally accepted accounting principles (GAAP) and those using International Financial Reporting Standards (IFRS). The core principle of ASU 2014-09 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

On March 17, 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. In April 2016, the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12 Narrow Scope Improvements and Practical Expedients, which amended ASU 2014-09, Revenue from Contract from Customers (Topic 606). These amendments of this ASU provide additional clarification on criterion within Topic 606 as well as additional guidance for transition to the new revenue recognition criteria. These amendments will provide additional guidance on the application of and transition to the new revenue recognition standards.

The new guidance also addresses the accounting for some costs to obtain or fulfill a customer contract and provides a set of disclosure requirements intended to give financial statement users comprehensive information about the nature, amount, timing, and uncertainty of revenues and cash flows arising from customer contracts. The requirements of this ASU and its impact on the Company are being evaluated. We have established a cross-functional coordinated implementation team to implement the standard update related to the recognition of revenue from contracts with customers.

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Evaluation of existing revenue contracts for any changes in line with above standard is in process with the help of experts. We are in the process of identifying and implementing changes to our processes to meet the standard’s updated reporting and disclosure requirements. We are also evaluating the internal control changes, if any, during the implementation of the standard. A transition method for this ASU is being evaluated.

In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after January 1, 2018. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. The requirements of this ASU and its impact on the Company are currently being evaluated.

In February 2016, the FASB issued an update (ASU 2016-02) to the standard on Leases to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for public business entities issuing financial statements for the annual periods beginning after December 15, 2018, and interim periods within those annual periods. The requirements of this ASU and its impact on the Company are currently being evaluated.

In June 2016, the FASB issued an update on Financial Instruments—Credit Losses (ASU 2016-13) Measurement of Credit Losses on Financial Instruments which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model; and (ii) provides for recording credit losses on available-for-sale (AFS) debt securities through an allowance account. The update also requires certain incremental disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The requirements of this ASU and its impact on the Company are currently being evaluated.

In August 2016, the FASB issued an update on Statement of Cash Flows (Topic 230)- Clarification of certain cash receipts and cash payments (ASU 2016-15) which requires the Company to present and classify certain cash receipts and cash payments in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The requirements of this ASU and its impact on the Company are currently being evaluated.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. This update requires the income tax consequences of intra-entity transfers of assets other than inventory to be recognized when the intra-entity transfer occurs rather than deferring recognition of income tax consequences until the transfer was made with an outside party. ASU 2016-16 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. Early application is permitted as of the beginning of the interim or annual reporting period. A modified retrospective approach should be applied. The Company does not expect that the adoption of this guidance will have a significant impact on the Company’s Consolidated Financial Statements.

In November 2016, the FASB issued an update on Statement of Cash Flows (Topic 230) - Restricted Cash (ASU 2016-18). The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted

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cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update do not provide a definition of restricted cash or restricted cash equivalents. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The requirements of this ASU and its impact on the Company are currently being evaluated.

In January 2017, the FASB issued an update (ASU 2017-04) to the standard on Intangibles—Goodwill and Other (Topic 350). To simplify the subsequent measurement of goodwill, the Board eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. The amendments in this Update modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. A public business entity that is a U.S. Securities and Exchange Commission filer should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The requirements of this ASU are not expected to have material impact on the Company’s Consolidated Financial Statements.

In March 2017, the FASB issued Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). The update requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service cost/credit and actuarial gain/loss, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement. ASU 2017-07 is effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company is currently evaluating the impact of adoption on its financial statements and related disclosures.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting guidance which provide clarity and reduce both (i) diversity in practice; and (ii) cost and complexity when accounting for a change in the terms or conditions of a share-based payment award. The amendments in this guidance should be applied prospectively in annual periods beginning after December 15, 2017, including interim periods within those periods, with early adoption permitted. The adoption of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.

26. SUBSEQUENT EVENTS

The Board has authorized a stock repurchase plan under which the Company may repurchase shares of common stock with a total value not to exceed $60 Million. The stock repurchase plan is effective on July 25, 2017 and is authorized to continue through December 31, 2018. Repurchases under the Company’s new program may be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements, and other relevant factors. Any repurchased common stock will be available for use in connection with the Company’s incentive plan and for other corporate purposes.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

SYNTEL INC. AND SUBSIDIARIES

RESULTS OF OPERATIONS

Net Revenues. The Company’s revenues consist of fees derived from its Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom business segments. Net revenues for the three months ended June 30, 2017 decreased to $226.8 million from $246.0 million for the three months ended June 30, 2016, representing a 7.8% decrease. Worldwide utilized billable headcount as of June 30, 2017 decreased by 4.2% to 16,887 employees as compared to 17,632 employees as of June 30, 2016. Soft macroeconomic uncertainty, industry specific or policy related headwinds, lower budgets and extended decision cycle contributed to a reduction in revenue. The Company’s verticalization sales strategy focusing on Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom has enabled better focus and relationships with key customers. Further, our investments in broadening account coverage, execution and in new offerings such as digital modernization and automation have a potential to contribute growth in the business across service lines and geographic regions. We also continue to invest in geographical expansion. As of June 30, 2017, the Company had approximately 75.8% of its utilized billable workforce in India as compared to 75.4% as of June 30, 2016. The Company’s top five clients accounted for 54.7% of the total revenues in the three months ended June 30, 2017, down from 58.1% of its total revenues in the three months ended June 30, 2016. The Company’s top five clients accounted for 55.4% of the total revenue in the six months ended June 30, 2017 as compared to 58.6% of its total revenue in the six months ended June 30, 2016. The Company’s top 10 clients accounted for 68.9% of the total revenues in the three months ended June 30, 2017 as compared to 72.3% in the three months ended June 30, 2016. The Company’s top 10 clients accounted for 70.0% of the total revenues in the six months ended June 30, 2017 as compared to 72.8% in the six months ended June 30, 2016. The Company’s top 4-50 clients accounted for 50.3% of the total revenues in the three months ended June 30, 2017, up from 47.6% of its total revenues in the three months ended June 30, 2016. The Company’s top 4-50 clients accounted for 49.4% of the total revenues in the six months ended June 30, 2017, up from 47.2% of its total revenues in the six months ended June 30, 2016.

Cost of Revenues. The Company’s cost of revenues consists of costs directly associated with billable consultants in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. The cost of revenues increased to 64.1% of total revenue for the three months ended June 30, 2017, from 63.0% for the three months ended June 30, 2016. The 1.1% increase in cost of revenues, as a percent of revenues, for the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, was attributable primarily to decrease in revenue and rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims. During the three months ended June 30, 2017, the Indian rupee has appreciated against the U.S. dollar, on average, 3.86% as compared to the three months ended June 30, 2016. This rupee appreciation negatively impacted the Company’s gross margin by 62 basis points, operating income by 104 basis points and net income by 111 basis points, each as a percentage of revenue.

The cost of revenues increased to 63.8% of total revenue for the six months ended June 30, 2017, from 62.9% for the six months ended June 30, 2016. The 0.9% increase in cost of revenues, as a percent of revenues, for the six months ended June 30, 2017, as compared to the six months ended June 30, 2016, was attributable primarily to decrease in revenue and rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and a decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims. During the six months ended June 30, 2017, the Indian rupee has appreciated against the U.S. dollar, on average, 2.80% as compared to the six months ended June 30, 2016. This rupee appreciation negatively impacted the Company’s gross margin by 41 basis points, operating income by 72 basis points and net income by 76 basis points, each as a percentage of revenue.

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Banking and Financial Services Revenues. Banking and Financial Services revenues decreased to $103.7 million for the three months ended June 30, 2017 or 45.7% of total revenues, from $120.4 million, or 48.9% of total revenues for the three months ended June 30, 2016. The $16.7 million decrease was attributable primarily to a $72.4 million decrease in revenue from project completions and an $8.7 million decrease in revenues from existing projects, largely offset by a $64.4 million increase in revenues from new engagements. Banking and Financial Services revenues decreased to $209.6 million for the six months ended June 30, 2017 or 46.3% of total revenues, from $241.8 million, or 49.6% of total revenues for the six months ended June 30, 2016. The $32.2 million decrease was attributable primarily to a $108.1 million decrease in revenue from project completion and a $51.7 million decrease in revenues from existing projects, largely offset by a $127.6 million increase in revenues from new engagements.

Banking and Financial Services Cost of Revenues. Banking and Financial Services cost of revenues consists of costs directly associated with billable consultants in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Banking and Financial Services cost of revenues increased to 63.7% of total Banking and Financial Services revenues for the three months ended June 30, 2017, from 63.5% for the three months ended June 30, 2016. The 0.2% increase in cost of revenues, as a percent of revenues for the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, was attributable primarily to decrease in revenue and rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims.

Cost of revenues for the six months ended June 30, 2017 increased to 63.3% of Banking and Financial Services revenues, from 62.7% for the six months ended June 30, 2016. The 0.6% increase in cost of revenues, as a percent of revenues for the six months ended June 30, 2017, as compared to the six months ended June 30, 2016, was attributable primarily to decrease in revenue and rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims.

Healthcare and Life Sciences Revenues. Healthcare and Life Sciences revenues decreased to $39.6 million for the three months ended June 30, 2017, or 17.5% of total revenues from $40.0 million for the three months ended June 30, 2016, or 16.3% of total revenues. The $0.4 million decrease was attributable primarily to a $9.4 million decrease in revenue from project completion, largely offset by an $8.9 million increase in revenues from new engagements and a $0.1 million increase in revenues from existing projects. The revenues for the six months ended June 30, 2017 decreased to $77.2 million, or 17.0% of total revenues, from $78.4 million or 16.1% of total revenues for the six months ended June 30, 2016. The $1.2 million decrease was attributable primarily to a $20.9 million decrease in revenue from project completion, largely offset by a $15.0 million increase in revenues from new engagements and a $4.7 million increase in revenues from existing projects.

Healthcare and Life Sciences Cost of Revenues. Healthcare and Life Sciences cost of revenues consists of costs directly associated with billable consultants in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Healthcare and Life Sciences cost of revenues increased to 61.2% of total Healthcare and Life Sciences revenues for the three months ended June 30, 2017, from 58.3% for the three months ended June 30, 2016. The 2.9% increase in cost of revenues, as a percent of revenues for the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, was attributable primarily to decrease in revenue and rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims.

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Cost of revenues for the six months ended June 30, 2017 decreased to 61.2% of Healthcare and Life Sciences revenues, from 61.4% for the six months ended June 30, 2016. The 0.2% decrease in cost of revenues, as a percent of revenues for the six months ended June 30, 2017, as compared to the six months ended June 30, 2016, was attributable primarily to decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims offset by decrease in revenue and rupee appreciation.

Insurance Revenues. Insurance revenues increased to $33.1 million for the three months ended June 30, 2017 or 14.6% of total revenues, from $32.3 million, or 13.1% of total revenues for the three months ended June 30, 2016. The $0.8 million increase was attributable primarily to revenues from new engagements contributing an $8.0 million largely offset by $5.1 million in lost revenues as a result of project completion and a $2.1 million net decrease in revenues from existing projects. The revenues for the six months ended June 30, 2017 increased to $65.5 million, or 14.5% of total revenues, from $62.8 million or 12.9% of total revenues for the six months ended June 30, 2016. The $2.7 million increase was attributable primarily to a $14.1 million increase in revenues from new engagements, largely offset by a $8.1 million in lost revenues as a result of project completion and a $3.3 million net decrease in revenues from existing projects.

Insurance Cost of Revenues. Insurance cost of revenues consists of costs directly associated with billable consultants, including salaries, payroll taxes, benefits, finder’s fees, trainee compensation and travel. Insurance cost of revenues increased to 68.7% of total insurance revenues for the three months ended June 30, 2017, from 64.6% for the three months ended June 30, 2016. The 4.1% increase in cost of revenues, as a percent of total revenues for the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, was attributable primarily to rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims and increase in revenue.

Cost of revenues for the six months ended June 30, 2017 increased to 67.5% of insurance revenues, from 65.0% for the six months ended June 30, 2016. The 2.5% increase in cost of revenues, as a percent of revenues for the six months ended June 30, 2017, as compared to the six months ended June 30, 2016, was attributable primarily to rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims and increase in revenue.

Manufacturing Revenues. Manufacturing revenues decreased to $9.5 million for the three months ended June 30, 2017 or 4.2% of total revenues, from $11.8 million, or 4.8% of total revenues for the three months ended June 30, 2016. The $2.3 million decrease was attributable primarily to a $3.3 million decrease in revenues from existing projects and a $2.9 million decrease in revenue from project completion, largely offset by a $3.9 million increase in revenues from new engagements. The revenues for the six months ended June 30, 2017 decreased to $19.0 million, or 4.2% of total revenues, from $23.3 million or 4.8% of total revenues for the six months ended June 30, 2016. The $4.3 million decrease was attributable primarily to a $5.1 million decrease in revenues from existing projects and a $4.5 million decrease in revenue from project completion, largely offset by a $5.3 million increase in revenues from new engagements.

Manufacturing Cost of Revenues. Manufacturing cost of revenues consists of costs directly associated with billable consultants in the U.S., including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Manufacturing cost of revenues increased to 73.6% of total manufacturing revenues for the three months ended June 30, 2017, from 69.4% for the

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three months ended June 30, 2016. The 4.2% increase in cost of revenues for the three months ended June 30, 2017, as a percent of total Manufacturing revenues, as compared to the three months ended June 30, 2016, was attributable primarily to decrease in revenue and rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims.

Cost of revenues for the six months ended June 30, 2017 increased to 74.3% of Manufacturing revenues, from 70.7% for the six months ended June 30, 2016. The 3.6% increase in cost of revenues, as a percent of revenues for the six months ended June 30, 2017, as compared to the six months ended June 30, 2016, was attributable primarily to decrease in revenue and rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims.

Retail, Logistics and Telecom Revenues. Retail, Logistics and Telecom revenues decreased to $41.0 million for the three months ended June 30, 2017 or 18.1% of total revenues, from $41.6 million, or 16.9% of total revenues for the three months ended June 30, 2016. The $0.6 million decrease was attributable primarily to a $3.1 million decrease in revenue from project completion and $1.7 million decrease in revenues from existing projects, largely offset by a $4.2 million increase in revenues from new engagements. The revenues for the six months ended June 30, 2017 increased to $81.4 million, or 18.0% of total revenues, from $81.2 million or 16.7% of total revenues for the six months ended June 30, 2016. The $0.2 million increase was attributable primarily to a $28.3 million net increase in revenues from existing projects and a $6.9 million increase in revenue from new engagements, largely offset by a $35.0 million in lost revenues as a result of project completion.

Retail, Logistics and Telecom Cost of Revenues. Retail, Logistics and Telecom, cost of revenues consists of costs directly associated with billable consultants in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Retail, Logistics and Telecom cost of revenues decreased to 60.9% of total Retail, Logistics and Telecom revenues for the three months ended June 30, 2017, from 61.3% for the three months ended June 30, 2016. The 0.4% decrease in cost of revenues, as a percent of revenues for the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, was attributable primarily to decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims offset by decrease in revenue and rupee appreciation.

Cost of revenues for the six months ended June 30, 2017 increased to 61.0% of Retail, Logistics and Telecom revenues, from 59.7% for the six months ended June 30, 2016. The 1.3% increase in cost of revenues, as a percent of revenues for the six months ended June 30, 2017, as compared to the six months ended June 30, 2016, was attributable primarily to rupee appreciation offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount, decreased immigration expenses, decreased contract services cost, decreased benefits cost including decrease in health insurance cost, decreased travel expenses due to decrease in onsite travel claims and increase in revenue

Corporate Direct Costs - Cost of Revenues. Certain expenses, for cost centers such as Centers of Excellence, Architecture Solutions Group, Research and Development, Cloud Computing, and Application Management, are not specifically allocated to specific segments because management believes it is not practical to allocate such expenses to individual segments as they are not directly attributable to any specific segment. Accordingly, these expenses are separately disclosed as Corporate Direct Costs and adjusted only against the Total Gross Profit.

Corporate Direct Costs cost of revenues decreased to 0.2% of total revenue for the three months ended June 30, 2017, from 0.3% for the three months ended June 30, 2016. The 0.1% decrease in cost of revenues, for the three months ended June 30, 2017, as compared to the three months ended June 30, 2016, is primarily attributable to decrease in compensation expenses due to decrease in headcount.

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Corporate Direct Cost of revenues decreased to 0.2% of total revenue for the six months ended June 30, 2017, from 0.3% of total revenue for the six months ended June 30, 2016. The decrease of 0.1% is primarily attributable to decrease in compensation expenses due to decrease in headcount.

Selling, General, and Administrative Expenses. Selling, general, and administrative expenses consist primarily of salaries, payroll taxes and benefits for sales,    finance, administrative, and corporate staff; travel; telecommunications; business promotions; and marketing and various facility costs for the Company’s global development centers and other offices.

Selling, general, and administrative expenses for the three months ended June 30, 2017 were $28.7 million or 12.7% of total revenues, compared to $18.3 million or 7.4% of total revenues for the three months ended June 30, 2016.

Selling, general and administrative expenses for the three months ended June 30, 2017 were impacted by a decrease in revenue of $19.2 million that resulted in a 1.0% increase in selling, general and administrative expenses as a percentage of total revenue. The overall increase in selling, general and administrative expenses was attributable to an increase in corporate expenses of $11.1 million primarily due to a decrease in foreign exchange gain of $9.6 million (a $0.003 million loss for the three months ended June 30, 2017 as against a gain of $9.6 million for the three months ended June 30, 2016), an increase in office expenses of $0.8 million offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount of $0.9 million, decrease in office rent expenses of $0.2 million, decrease in voice and data expenses of $0.1 million and increase in other expenses of $0.3 million.

Selling, general, and administrative expenses for the six months ended June 30, 2017 were $59.0 million or 13.0% of total revenues, compared to $47.9 million or 9.8% of total revenues for the six months ended June 30, 2016.

Selling, general and administrative expenses for the six months ended June 30, 2017 were impacted by a decrease in revenue of $34.7 million that resulted in a 0.9% increase in selling, general and administrative expenses as a percentage of total revenue. The overall increase in selling, general and administrative expenses was attributable to an increase in corporate expenses of $10.7 million primarily due to a decrease in foreign exchange gain of $7.7 million (a $1.6 million gain for the six months ended June 30, 2017 as against a gain of $9.3 million for the three months ended June 30, 2016), an increase in office expenses of $1.2 million, increase in marketing expenses of $0.4 million offset by decrease in compensation cost due to reversal of leave accruals and decrease in headcount $0.8 million, decrease in office rent expenses of $0.3 million, decrease in voice and data expenses of $0.2 million.

Other Income (Expense), Net. Other income (expense), net includes interest and dividend income, gains and losses on forward contracts, gains and losses from the sale of securities, other investments, treasury operations and interest expenses on loans and borrowings.

Other income (expense), net for the three months ended June 30, 2017 was ($2.75) million or -1.2% of total revenues, compared to $4.9 million or 2.0% of total revenues for the three months ended June 30, 2016. The decrease in other income (expense), net of $7.6 million was attributable to a decrease in interest income of $3.5 million, a decrease in gains from the sale of mutual funds of $1.5 million and an increase in interest expenses of $2.6 million.

Other income (expense), net for the six months ended June 30, 2017 was ($5.63) million or -1.2% of total revenues, compared to $8.9 million or 1.8% of total revenues for the six months ended June 30, 2016. The decrease in other income (expense), net of $14.6 million was attributable to a decrease in interest income of $7.3 million, a decrease in gains from the sale of mutual funds of $1.9 million and an increase in interest expenses of $5.4 million.

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Income Taxes

The Company records provisions for income taxes based on enacted tax laws and rates in the various taxing jurisdictions in which it operates. In determining the tax provisions, the Company provides for tax uncertainties in income taxes, when it is more likely than not, based on the technical merits, that a tax position would not be sustained upon examination. Such uncertainties, which are recorded in income taxes payable, are based on management’s estimates and accordingly, are subject to revision based on additional information. The provision no longer required for any particular tax year is credited to the current period’s income tax expenses. Conversely, in the event of a future tax examination, any additional tax expense not previously provided for will be recognized in the period in which the actual liability is concluded or when management determines that the Company will not prevail on certain tax positions taken in filed returns, based on the “more likely than not” concept.

During the three months ended June 30, 2017 and 2016, the effective income tax rates were 26.7% and 24.2%, respectively. During the six months ended June 30, 2017 and 2016, the effective income tax rates were 24.4% and 21.1%, respectively .The tax rate for the three months ended June 30, 2017 and 2016 was impacted by offshore/onsite profits and revenue mix, the taxable/nontaxable and expense mix and exchange gain.

Other Comprehensive Income (Loss)

Other comprehensive income (loss) consists of foreign currency translation adjustments, gain (losses) on cash flow hedges, unrealized gains (losses) on securities and a component of a defined benefit plan. During the three months ended June 30, 2017 the other comprehensive income amounted to $0.6 million, primarily attributable to foreign currency translation adjustments of $0.9 million and effective portion of loss on the cash flow hedge on Swap of $0.7 million. During the six months ended June 30, 2017 the other comprehensive income amounted to $7.4 million, primarily attributable to foreign currency translation adjustments of $7.1 million and effective portion of loss on the cash flow hedge reserve on Swap of $0.3 million

During the three months ended June 30, 2016 the other comprehensive loss amounted to

$16.2 million, primarily attributable to foreign currency translation adjustments of a loss of $16.1 million. During the six months ended June 30, 2016 the other comprehensive loss amounted to $16.3 million, primarily attributable to foreign currency translation adjustments of $17.3 million.

FINANCIAL POSITION

Cash and Cash Equivalents and Short-term investments: Cash and cash equivalents and short term investments decreased to $87.0 million at June 30, 2017 from $99.9 million at December 31, 2016. The decrease was primarily due to the payment of the Senior Credit Facility.

LIQUIDITY AND CAPITAL RESOURCES

The Company generally has financed its working capital needs through operations. The Mumbai, Chennai, Pune (India) and other expansion programs are financed from internally generated funds. The Company’s cash and cash equivalents consist primarily of certificates of deposit and cash deposited in banks. These amounts are held by various banking institutions including U.S.-based and India-based banks. As of June 30, 2017, the total cash and cash equivalents and short term investment balances was $87.0 million. Out of that balance, $71.4 million was held by Indian subsidiaries and was composed of $40.1 million held in U.S. dollars with the balance of the amount held in Indian rupees. The Company believes that the amount of cash and cash equivalents outside the U.S. will not have a material impact on liquidity.

The Board has authorized a stock repurchase plan under which the Company may repurchase shares of common stock with a total value not to exceed $60 Million. The stock repurchase plan is effective on July 25, 2017 and is authorized to continue through December 31, 2018. Repurchases under the Company’s new program may be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements, and other relevant factors. Any repurchased common stock will be available for use in connection with the Company’s incentive plan and for other corporate purposes.

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Net cash provided by operating activities was $88.4 million for the six months ended June 30, 2017, consisting principally of net income from operations, a decrease in accounts receivable and decrease in other assets offset by a decrease in other liabilities. The number of days sales outstanding in net accounts receivable was approximately 51 days and 60 days as of June 30, 2017 and 2016, respectively. The decrease in the number of day’s sales outstanding in net accounts receivable was due to higher collections during the corresponding period in 2017.

Net cash used by investing activities was $10.3 million for the six months ended June 30, 2017, consisting principally of the purchase of mutual funds of $113.6 million, purchase of term deposits with banks of $0.8 million and $4.4 million of capital expenditures primarily for the construction/acquisition of the Global Development Center at Pune, the Knowledge Process Outsourcing facility at Mumbai and an additional facility in Chennai, the acquisition of computers, software and communications equipment offset by $104.8 million from sales of mutual funds and $3.7 million from maturities of term deposits with banks.

Net cash used by financing activities was $101.3 million for the six months ended June 30, 2017, consisting of the repayment of loans and borrowing of $101.3 million.

On May 23, 2013, Syntel entered into a Credit Agreement with Bank of America, N.A. for $150 million in credit facilities consisting of a three-year term loan facility of $60 million and a three-year revolving credit facility of $90 million (the “Credit Agreement”). The maturity date of both the three-year term loan facility and the three-year revolving credit facility was May 23, 2016. The Credit Agreement was amended on May 9, 2016(the “First Amendment Effective Date”) thereby extending the maturity date from May 23, 2016 to May 9, 2019. Further, by way of the amended Credit Agreement, an additional $40 million for the term loan facility and $10 million for the revolving credit facility was granted by Bank of America to Syntel (the “First Amendment” and together with the Credit Agreement, the “Amended Credit Agreement”). Thus, the total amount of the credit facility was $200 million, consisting of a three-year term loan facility of $100 million and a three-year revolving credit facility of $100 million. The Amended Credit Agreement was guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the First Amendment, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates under the Amended Credit Agreement were, with respect to both the revolving credit facility and the term loan, (a) for the period beginning on the First Amendment Effective Date through and including the date prior to the first anniversary of the First Amendment Effective Date, (i) the Eurodollar Rate (as that term is defined in the Amended Credit Agreement) plus 1.50% with respect to Eurodollar Rate Loans (as that term is defined in the Amended Credit Agreement) and (ii) the Base Rate (as that term is defined in the Amended Credit Agreement) plus 0.50% with respect to Base Rate Loans (as that term is defined in the amendment to the Credit Agreement), (b) for the period beginning on the first anniversary of the First Amendment Effective Date through and including the date prior to the second anniversary of the First Amendment Effective Date, (i) the Eurodollar Rate plus 1.45% with respect to Eurodollar Rate Loans and (ii) the Base Rate plus 0.45% with respect to Base Rate Loans, and (c) for the period beginning on the second anniversary of the First Amendment Effective Date and continuing thereafter, (i) the Eurodollar Rate plus 1.40% with respect to Eurodollar Rate Loans and (ii) the Base Rate plus 0.40% with respect to Base Rate Loans.

During the year ended December 31, 2016, the Company fully repaid the revolving credit and term loan of $190.0 million, and terminated the Amended Credit Agreement.

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On September 12, 2016, the Company entered into a new credit agreement, as amended as of October 26, 2016 (the “First Amendment Effective Date”) and July 18, 2017 (the “Second Amendment Effective Date”),(“Senior Credit Facility”) with Bank of America, N.A, as administrative agent, L/C issuer and swing line lender, the other lenders party thereto, and Merrill, Lynch, Pierce, Fenner & Smith Incorporated, as sole lead arranger and sole bookrunner for $500 million in credit facilities consisting of a five-year term loan facility of $300 million (the “Term Loan”) and a five-year revolving credit facility of $200 million (the “Revolving Facility). The maturity date of the Senior Credit Facility is September 11, 2021. The Revolving Facility allows for the issuance of letters of credit and swingline loans. The Senior Credit Facility is guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the Senior Credit Facility, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates applicable to the Senior Credit Facility other than in respect of swing line loans are LIBOR plus 1.50% or, at the option of the Company, the Base Rate (to be defined as the highest of (x) the Federal Funds Rate [as that term is defined in the Senior Credit Facility] plus 0.50%, (y) the Bank of America prime rate, or (z) LIBOR plus 1.00%) plus 0.50%. Each swingline loan shall bear interest at the Base Rate plus 0.50%. In no event shall LIBOR be less than 0% per annum.

As of June 30, 2017, the interest rates were 2.48% for the Term Loan and 2.48% and 2.27% for the two portions of the Revolving Facility.

The Company has also hedged interest rate risk on the entire Term Loan of $300 million by entering into a Pay Fixed and Receive Floating interest rate swap on November 30, 2016. The Company has designated this Interest rate swap in a hedging relationship with the Term Loan. The Swap is recorded at fair value and a loss of $0.7 million and gain of $0.3 million during the three months and six months ended June 30, 2017 is recorded in “Accumulated other comprehensive income” with the corresponding adjustment in other current assets and other non-current assets.

With the interest rates charged on the Senior Credit Facility being variable, the fair value of the Senior Credit Facility approximates the reported value as of June 30, 2017, as it reflects the current market value.

The Term Loan provides for the principal payments as under:

Period			Payment amount per quarter
Beginning from	Until		(In millions)
December 31, 2016		September 30, 2017	3.750
October 31, 2017		September 30, 2018	5.625
October 31, 2018		September 30, 2021	7.500

Principal payments on the Term Loan are due every quarter. During the three months and six months ended June 30, 2017, principal payments of $3.75 million and $11.25 million were made.

During the three months and six months ended June 30, 2017, a principal pre-payment of $45.0 million and $90.0 million were made towards the Revolving Facility.

The Senior Credit Facility requires compliance with certain financial ratios and covenants. As of June 30, 2017, the Company was in compliance with all financial covenants.

As of June 30, 2017 the outstanding balances of the Term Loan and Revolving Facility, including accrued interest, are $288.2 million and $109.7 million (net of $0.9 million unamortized debt issuance cost), respectively. As of December 31, 2016 the outstanding balances of the Term Loan and Revolving Facility, including accrued interest, are $299.9 million and $199.9 million (net of $0.9 million unamortized debt issuance cost), respectively.

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Future scheduled payments on the Senior Credit Facility, at June 30, 2017 are as follows:

			(In thousands)
	Term Loan		Revolving Facility
	Principal Payments		Principal Payments
2017	$	9,375
2018	$	24,375
2019	$	30,000
2020	$	30,000
2021	$	195,000	$	110,000

CRITICAL ACCOUNTING POLICIES

We believe the following critical accounting policies, among others, involve the more significant judgments and estimates used in the preparation of our consolidated financial statements. The Company has discussed critical accounting policies and the estimates with Audit Committee of the Board of Directors.

Revenue Recognition. Revenue recognition is the most significant accounting policy for the Company. The Company recognizes revenue from time and material contracts as services are performed. During the three months ended June 30, 2017 and 2016, revenues from time and material contracts constituted 57% and 57%, respectively, of total revenues. Revenue from fixed-price, application management, maintenance and support engagements is recognized as earned, which generally results in straight-line revenue recognition as services are performed continuously over the term of the engagement. During the three months ended June 30, 2017 and 2016, revenues from fixed price application management and support engagements constituted 38% and 34% of total revenues, respectively.

Revenue on fixed price application development and integration projects is measured using the proportional performance method of accounting. Performance is generally measured based upon the efforts incurred to date in relation to the total estimated efforts required through the completion of the contract. The Company monitors estimates of total contract revenues and cost on a routine basis throughout the delivery period. The cumulative impact of any change in estimates of the contract revenues or costs is reflected in the period in which the change becomes known. In the event that a loss is anticipated on a particular contract, provision is made for the estimated loss. The Company issues invoices related to fixed price contracts based on either the achievement of milestones during a project or other contractual terms. Differences between the timing of billings and the recognition of revenue based upon the proportional performance method of accounting are recorded as revenue earned in excess of billings or deferred revenue in the accompanying financial statements. During the three months ended June 30, 2017 and 2016, revenues from fixed price application development and integration contracts constituted 6% and 9% of total revenues, respectively.

Significant Accounting Estimates

The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses for the reporting period. By their nature, these estimates and judgments are subject to an inherent degree of uncertainty. The Company bases its estimates and judgments on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual results could differ from those estimates.

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Revenue Recognition. The use of the proportional performance method of accounting requires that the Company make estimates about its future efforts and costs relative to its fixed price contracts. While the Company has procedures in place to monitor the estimates throughout the performance period, such estimates are subject to change as each contract progresses. The cumulative impact of any such change is reflected in the period in which the change becomes known.

Allowance for Doubtful Accounts. The Company records an allowance for doubtful accounts based on a specific review of aged receivables. The allowance for doubtful accounts was $2.1 million as of June 30, 2017 and $0.8 million as of December 31, 2016. The provision for the allowance for doubtful accounts is recorded in selling, general and administrative expenses. These estimates are based on our assessment of the probable collection from specific client accounts, the aging of the accounts receivable, analysis of credit data, bad debt write-offs and other known factors.

Income Taxes—Estimates of Effective Tax Rates and Reserves for Tax Contingencies. The Company records provisions for income taxes based on enacted tax laws and rates in the various taxing jurisdictions in which it operates. In determining the tax provisions, the Company also reserves for tax contingencies based on the Company’s assessment of future regulatory reviews of filed tax returns. Such reserves, which are recorded in income taxes payable, are based on management’s estimates and accordingly are subject to revision based on additional information. The reserve no longer required for any particular tax year is credited to the current year’s income tax provision.

Accruals for Legal Expenses and Exposures. The Company is party to various legal actions arising in the ordinary course of business, including litigation and governmental and regulatory controls. The Company’s estimates regarding legal contingencies are based on information known about the matters and its experience in contesting, litigating and settling similar matters. It is the opinion of management with respect to pending or threatened litigation matters that unfavorable outcomes are neither probable nor remote and that estimates of possible loss are not able to be made. Although actual amounts could differ from management’s estimate, none of the pending or threatened actions are believed by management to involve future amounts that would be material to the Company’s financial position or results of operations.

The Company estimates the costs associated with known legal exposures and their related legal expenses and accrues reserves for either the probable liability, if that amount can be reasonably estimated, or otherwise the lower end of an estimated range of potential liability. As at December 31, 2016, the Company recorded a $0.3 million liability for a litigation matter related contingency which was subsequently paid during three months ended March 31, 2017. During the six months ended June 30, 2017, there was no accrual related to litigation.

Undistributed earnings of foreign subsidiaries.

During the three months ended September 30, 2016, and after a comprehensive review of anticipated sources and uses of capital both domestically and abroad, as well as other considerations, the Board of Directors determined that it was in the best interests of the Company and its shareholders to declare a special cash dividend of fifteen dollars ($15.00) per share. In conducting this evaluation, the Board of Directors considered, among other factors, the operational and financial objectives of the Company, long-term and short-term capital needs, the Company’s projections on growth and working capital needs, planned uses of U.S. and foreign earnings, the available sources of liquidity in the U.S., and growth plans outside of the U.S. As part of this evaluation, the Company determined that certain amounts which had been previously designated for internal and external expansion and investment at its foreign subsidiaries were no longer required for these purposes. The special cash dividend was funded through a one-time repatriation of approximately $1.03 billion (net of foreign income tax of $210 million paid outside of the U.S) of cash held by the Company’s foreign subsidiaries and a portion of borrowings under the new Senior Credit Facility. In connection with the one-time repatriation, the Company recognized a one-time tax expense of approximately $270.6 million (net of foreign tax credits) in the third quarter of 2016. The Company has recorded additional state tax of $0.9 million, attributable to the above repatriation, in quarter ended March 31, 2017.

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Management regularly evaluates foreign earnings to determine whether future foreign earnings that accumulate will be permanently invested outside the U.S. In conducting this evaluation, management considers, among other factors, the operational and financial objectives of the Company, long-term and short-term capital needs, the Company’s projections on growth and working capital needs, planned uses of U.S. and foreign earnings, the available sources of liquidity in the U.S., and growth plans outside of the U.S. The Company provides taxes on any foreign earnings in excess of these requirements. The June 30, 2017 provision includes the impact of certain foreign earnings that are not permanently invested. If in the future, management were to conclude that any additional portion of foreign earnings will not be permanently reinvested outside the U.S., this would result in an additional provision for income taxes, which could affect the Company’s future effective tax rate. If the Company determines to repatriate all undistributed repatriable earnings of foreign subsidiaries as of June 30, 2017, the Company would have accrued taxes of approximately $33.5 million.

Goodwill

In accordance with guidance on goodwill impairment in the FASB Codification, goodwill is evaluated for impairment at least annually. Management believes goodwill was not impaired at June 30, 2017.

FORWARD LOOKING STATEMENTS

Certain statements and information contained in Management’s Discussion and Analysis of Financial Condition and Results of Operations and other sections of this report, including the allowance for doubtful accounts, contingencies and litigation, potential tax liabilities, interest rate or foreign currency risks, and projections regarding our liquidity and capital resources, could be construed as forward looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include statements containing words such as “could”, “expects”, “may”, “anticipates”, “believes”, “estimates”, “plans”, and similar expressions. In addition, the Company or persons acting on its behalf may, from time to time, 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.

Although management believes that the expectations, forecasts and goals reflected in these forward-looking statements are reasonable, actual results could differ materially for a variety of reasons, including, without limitation, the risks and uncertainties detailed in “Item 1A. Risk Factors” in the Company’s annual report on Form 10-K for the year ended December 31, 2016.

Other factors not currently anticipated may also materially and adversely affect our results of operations, cash flows, financial position and prospects. There can be no assurance that future results will meet expectations. While we believe that the forward-looking statements in this Quarterly Report on Form 10-Q are reasonable, you should not place undue reliance on any forward-looking statement. In addition, these statements speak only as of the date made. We do not undertake, and expressly disclaim any obligation to update or alter any statements, whether as a result of new information, future events or otherwise, except as required by applicable law.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Company is exposed to the impact of interest rate changes and foreign currency fluctuations.

Interest Rate Risk

The Company considers investments purchased with an original maturity of less than three months at date of purchase to be cash equivalents. The following table summarizes the Company’s cash and cash equivalents and investments in marketable securities:

	June 30,		December 31,
	2017		2016
	(in thousands)
ASSETS
Cash and cash equivalents	$	57,447	$	78,332
Short-term investments		29,562		21,614
Total	$	87,009	$	99,946

As of June 30, 2017, the total cash and cash equivalents and short-term investment balance was $87.0 million. Out of the above, an amount of $71.4 million was held by Indian subsidiaries which were comprised of an amount of $40.1 million held in U.S. dollars with the balance of the amount held in Indian rupees. The Company believes that the amount of cash and cash equivalents outside the U.S. will not have a material impact on liquidity.

The Company’s exposure to market rate risk for changes in interest rates relates primarily to its investment portfolio and its senior credit facility. The Company does not use derivative financial instruments in its investment portfolio. The Company’s investments are in high-quality Indian Mutual Funds and, by policy, limit the amount of credit exposure to any one issuer. At any time, changes in interest rates could have a material impact on interest earnings for our investment portfolio. The Company strives to protect and preserve our invested funds by limiting default, market and reinvestment risk. Investments in interest earning instruments carry a degree of interest rate risk. Floating rate securities may produce less income than expected if there is a decline in interest rates. Due in part to these factors, the Company’s future investment income may fall short of expectations, or the Company may suffer a loss in principal if the Company is forced to sell securities, which have declined in market value due to changes in interest rates as stated above.

The currency composition of the investment portfolio also impacts the investment income generated by the Company. Investment income generated from the Indian rupee denominated investment portfolio is higher than that generated by the U.S. dollar denominated investment portfolio. As at June 30, 2017 and December 31, 2016, the Company held 36% and 24% of total funds in Indian rupees.

The Company is also exposed to variable interest rate risk under the Senior Credit Facility. In connection with the Senior Credit Facility, the Company entered into an Interest Rate Swap arrangement (the “Swap”) on November 30, 2016 to hedge interest rate risk on the Term Loan. The Swap is designed to reduce the variability of future interest payments with respect to the term loan by effectively fixing the annual interest rate payable on the Term Loan’s outstanding principal.

The Swap is recorded at fair value and a loss of $0.7 million and gain of $0.3 million during the three months and six months ended June 30, 2017 is recorded in “Accumulated other comprehensive income” with the corresponding adjustment in other current assets and other non-current assets.

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The Company does not use derivative instruments for speculative purpose.

A hypothetical decrease in benchmark interest rates of up to 1.0% would have resulted in a decrease of approximately $9.6 million in the fair value of the Swap as of June 30, 2017. Whereas a hypothetical increase in benchmark interest rates of up to 1.0% would have resulted in an increase in the fair value of the Swap of approximately $9.2 million as of June 30, 2017.

Foreign Currency Risk

The Company’s sales are primarily sourced in the United States of America and its subsidiary in the United Kingdom and are mostly denominated in U.S. dollars or UK pounds, respectively. Its foreign subsidiaries, primarily Indian entities, incur most of their expenses in the local currency, i.e. Indian rupees. All foreign subsidiaries use the local currency as their functional currency. The Company’s business is subject to risks typical of an international business, including, but not limited to differing economic conditions, changes in political climate, differing tax structures, other regulations and restrictions, and foreign exchange rate volatility. Accordingly, the Company’s future results could be materially adversely impacted by changes in these or other factors. The risk is partially mitigated as the Company has sufficient resources in the respective local currencies to meet immediate requirements. The Company is also exposed to foreign exchange rate fluctuations as the financial results of foreign subsidiaries are translated into U.S. dollars in consolidation. As exchange rates vary, these results, when translated, may vary from expectations.

During the three months ended June 30, 2017, the Indian rupee has appreciated against the U.S. dollar, on average, 3.07% as compared to the three months ended March 31, 2017. This rupee appreciation negatively impacted the Company’s gross margin by 50 basis points, operating income by 83 basis points and net income by 88 basis points, each as a percentage of revenue. The Indian rupee denominated cost of revenues and selling, general and administrative expense was 26.1% and 85.3% of the expenses, respectively.

The rupee appreciation has resulted in foreign currency translation adjustments of $0.9 million, during the three months ended June 30, 2017, which has been reported as other comprehensive income.

Although the Company cannot predict future movement in interest rates or fluctuations in foreign currency rates, the Company currently anticipates that interest rate risk or foreign currency risk may have a significant impact on the financial statements. In order to limit the exposure to fluctuations in foreign currency rates, when the Company enters into foreign exchange forward contracts, where the counter party is a bank, these contracts may also have a material impact on the financial statements.

During the three months ended June 30, 2017, the Company did not enter into new foreign exchange forward contracts. At June 30, 2017, no foreign exchange forward contracts were outstanding.

The Company managed exposure to interest risk by investing in high-quality Indian Mutual Funds, by adhering to policies that limit the amount of credit exposure to any one issuer, by avoiding use of any derivative financial instruments, by entering into foreign exchange forward contracts and option contracts with only financially sound banks that have passed Syntel internal review to hedge no more than 100% of the Company’s India- based entity revenue, and by generally, limiting foreign exchange forward contracts and option contracts to maturities of one to six months. The Company also specifically discloses any net gain or loss on contracts, which are not designated as hedges, under the heading of “Other Income (expense), net” in the Statement of Income.

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ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures

The Company’s management evaluated, with the participation of the Company’s principal executive officers (the Chairman of the Board, Chief Executive Officer and Chief Financial Officer), the effectiveness of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities and Exchange Act of 1934) as of the end of the period covered by this report. Based on that evaluation, the principal executive officers have concluded that the Company’s disclosure controls and procedures were effective, at a reasonable assurance level, as of the end of the period covered by this report.

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). We maintain internal control over financial reporting designed to provide reasonable, but not absolute, assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Therefore, internal control over financial reporting determined to be effective provides only reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Changes in Internal Control over Financial Reporting

There has been no change in the Company’s internal control over financial reporting that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1. Legal Proceedings.

While the Company is a party to ordinary routine litigation incidental to the business, the Company is not currently a party to any material legal proceeding or governmental investigation. In the opinion of our management, the outcome of such litigation, if decided adversely, is not expected to have a material adverse effect on our quarterly or annual operating results, cash flows or consolidated financial position.

Item 1A. Risk Factors.

There have been no material changes in the Company’s risk factors as disclosed in the Company’s annual report on Form 10-K for the year ended December 31, 2016.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The Board has authorized a stock repurchase plan under which the Company may repurchase shares of common stock with a total value not to exceed $60 Million. The stock repurchase plan is effective on July 25, 2017 and is authorized to continue through December 31, 2018. Repurchases under the Company’s new program may be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements, and other relevant factors. Any repurchased common stock will be available for use in connection with the Company’s incentive plan and for other corporate purposes.

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Item 6. Exhibits.

The Company’s Chairman shares certain principal executive officer responsibilities with the Company’s Chief Executive Officer and President. Therefore, in accordance with Rule 13a-14(a)/Rule 15d-14(a), both the Chairman and the Chief Executive Officer and President sign a 302 certification and the 906 certification as principal executive officers.

Exhibits

Exhibit No.	Description
10.1	Second Amendment, dated July 18, 2017, to the Credit Agreement dated September 12, 2016, between the Company and Bank of America, N.A., as administrative agent, L/C issuer and swing line lender and the other lenders party thereto, filed as an Exhibit to the Registrant’s Current Report on Form 8-K dated July 18, 2017, and incorporated herein by reference.
31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.3	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32 Section 1350 Certification of Principal Executive Officers and Principal Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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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.
Date: July 31, 2017	/s/ Rakesh Khanna
	Rakesh Khanna,
	Chief Executive Officer and President (principal executive officer)
Date: July 31, 2017	/s/ Anil Agrawal
	Anil Agrawal,
	Chief Financial Officer and
	Chief Information Security Officer (principal financial officer and principal accounting officer)

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EXHIBIT INDEX

Exhibit No.	Description
10.1	Second Amendment, dated July 18, 2017, to the Credit Agreement dated September 12, 2016, between the Company and Bank of America, N.A., as administrative agent, L/C issuer and swing line lender and the other lenders party thereto, filed as an Exhibit to the Registrant’s Current Report on Form 8-K dated July 18, 2017, and incorporated herein by reference.
31.1	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.2	Rule 13a-14(a)/15d-14(a) Certification of Principal Executive Officer.
31.3	Rule 13a-14(a)/15d-14(a) Certification of Principal Financial Officer.
32 Section 1350 Certification of Principal Executive Officers and Principal Financial Officer.
101.INS	XBRL Instance Document
101.SCH	XBRL Taxonomy Extension Schema
101.CAL	XBRL Taxonomy Extension Calculation Linkbase
101.DEF	XBRL Taxonomy Extension Definition Linkbase
101.LAB	XBRL Taxonomy Extension Label Linkbase
101.PRE	XBRL Taxonomy Extension Presentation Linkbase

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Rakesh Khanna, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Syntel, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)     Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)     Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2017

/s/ Rakesh Khanna

Rakesh Khanna,

Chief Executive Officer and President

(principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Bharat Desai, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Syntel, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2017

/s/ Bharat Desai

Bharat Desai, Co-Chairman

(principal executive officer)

EX-31.3

Exhibit 31.3

CERTIFICATION PURSUANT TO SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Anil Agrawal, certify that:

1.    I have reviewed this quarterly report on Form 10-Q of Syntel, Inc.;

2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.    The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)    Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)    Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.    The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: July 31, 2017

/s/ Anil Agrawal

Anil Agrawal,

Chief Financial Officer &

Chief Information Security Officer.

(principal financial officer and

principal accounting officer)

EX-32

Exhibit 32

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Syntel, Inc. (the “Company”) on Form 10-Q for the period ending June 30, 2017 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), we, Bharat Desai, Co-Chairman of the Company, Rakesh Khanna, Chief Executive Officer and President of the Company and Anil Agrawal, Chief Financial Officer & Chief Information Security Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that:

(1)     The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2)     The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ Bharat Desai

Bharat Desai

Syntel, Inc. Co-Chairman

(principal executive officer)

July 31, 2017

/s/ Rakesh Khanna

Rakesh Khanna

Syntel, Inc. Chief Executive Officer and President

(principal executive officer)

July 31, 2017

/s/ Anil Agrawal

Anil Agrawal

Syntel, Inc. Chief Financial Officer &

Chief Information Security Officer

(principal financial officer and

principal accounting officer)

July 31, 2017

XML

Document and Entity Information	6 Months Ended
	Jun. 30, 2017 shares
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Jun. 30, 2017
Document Fiscal Year Focus	2017
Document Fiscal Period Focus	Q2
Trading Symbol	SYNT
Entity Registrant Name	SYNTEL INC
Entity Central Index Key	0001040426
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding	83,675,545

XML

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) shares in Thousands, $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Net revenues	[1]	$ 226,811	$ 246,018	$ 452,680	$ 487,408
Cost of revenues		145,351	155,033	288,798	306,699
Gross profit		81,460	90,985	163,882	180,709
Selling, general and administrative expenses		28,699	18,265	58,990	47,942
Income from operations		52,761	72,720	104,892	132,767
Interest expense		(3,216)	(575)	(6,592)	(1,145)
Other income		462	5,450	958	10,116
Other income (expense), net		(2,754)	4,875	(5,634)	8,971
Income before provision for income taxes		50,007	77,595	99,258	141,738
Income tax expense		13,355	18,804	24,226	29,890
Net income		36,652	58,791	75,032	111,848
Other comprehensive income (loss)
Foreign currency translation adjustments		937	(16,094)	7,112	(17,334)
Unrealized gains on securities:
Unrealized holding gains arising during period		198	970	241	1,803
Reclassification adjustment for gains included in net income		(89)	(1,130)	(81)	(69)
Unrealized gains on securities, Total		109	(160)	160	1,734
Defined benefit pension plans:
Net profit (loss) arising during period				6
Amortization of prior service cost included in net periodic pension cost		24	19	32	35
Defined Benefit Pension plans, Total		24	19	38	35
Other comprehensive Income (loss), before tax		398	(16,235)	7,601	(15,565)
Income tax benefit (expenses) related to other comprehensive loss		224	22	(179)	(713)
Net current-period other comprehensive income (loss)		622	(16,213)	7,422	(16,278)
Comprehensive income		$ 37,274	$ 42,578	$ 82,454	$ 95,570
Earnings per share:
Basic		$ 0.44	$ 0.70	$ 0.90	$ 1.33
Diluted		$ 0.44	$ 0.70	$ 0.89	$ 1.33
Weighted average common shares outstanding:
Basic		83,818	84,140	83,807	84,126
Diluted		83,853	84,278	83,844	84,272
Cash flow Hedge
Gains/(losses) on derivatives:
Gain (loss) arising during period		$ (672)		$ 291

[1] Net revenues are attributed to regions based upon customer location.

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CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Current assets:
Cash and cash equivalents	$ 57,447	$ 78,332
Short-term investments	29,562	21,614
Accounts receivable, net of allowance for doubtful accounts of $2,143 at June 30, 2017 and $801 at December 31, 2016 respectively.	106,060	118,299
Revenue earned in excess of billings	21,319	25,039
Other current assets	33,352	36,306
Total current assets	247,740	279,590
Property and equipment	237,700	227,056
Less accumulated depreciation and amortization	130,495	120,580
Property and equipment, net	107,205	106,476
Goodwill	906	906
Non-current term deposits with banks	237	225
Deferred income taxes and other non-current assets	78,018	67,346
TOTAL ASSETS	434,106	454,543
Current liabilities:
Accounts payable	9,756	10,760
Accrued payroll and related costs	49,131	56,650
Income taxes payable	19,611	15,195
Accrued liabilities	21,164	20,799
Deferred revenue	4,827	7,973
Loans and borrowings	20,449	21,264
Total current liabilities	124,938	132,641
Deferred income taxes and other non-current liabilities	28,953	26,373
Non-current loans and borrowings	377,468	478,616
TOTAL LIABILITIES	531,359	637,630
Commitments and contingencies (See Note 16)
SHAREHOLDERS' DEFICIT
Total shareholders' deficit	(97,253)	(183,087)
TOTAL LIABILITIES AND SHAREHOLDERS' DEFICIT	$ 434,106	$ 454,543

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CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Accounts receivable, allowance for doubtful accounts	$ 2,143	$ 801

XML

CONDENSED CONSOLIDATED STATEMENT OF SHAREHOLDERS' DEFICIT - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock	Treasury Stock	Additional Paid-In Capital	Retained (Deficit)/ Earnings	Accumulated Other Comprehensive Loss	Restricted Stock
Beginning balance at Dec. 31, 2015						$ (235,609)
Net income	$ 111,848
Other comprehensive income, net of tax	(16,278)
Ending Balance at Jun. 30, 2016						(251,887)
Beginning balance at Mar. 31, 2016						(235,674)
Net income	58,791
Other comprehensive income, net of tax	(16,213)
Ending Balance at Jun. 30, 2016						(251,887)
Beginning balance at Dec. 31, 2016	(183,087)	$ 1	$ (9,990)	$ 67,422	$ (30,648)	(254,905)	$ 45,033
Beginning Balance (in shares) at Dec. 31, 2016		83,635					670
Net income	75,032				75,032
Other comprehensive income, net of tax	7,422					7,422
Restricted stock activity	3,380						$ 3,380
Restricted stock activity (in shares)		41					(68)
Ending Balance at Jun. 30, 2017	(97,253)	$ 1	(9,990)	67,422	44,384	(247,483)	$ 48,413
Ending Balance (in shares) at Jun. 30, 2017		83,676					602
Beginning balance at Mar. 31, 2017						(248,105)
Net income	36,652
Other comprehensive income, net of tax	622
Ending Balance at Jun. 30, 2017	$ (97,253)	$ 1	$ (9,990)	$ 67,422	$ 44,384	$ (247,483)	$ 48,413
Ending Balance (in shares) at Jun. 30, 2017		83,676					602

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income	$ 75,032	$ 111,848
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization	7,442	7,362
Provision for doubtful accounts / advances	1,349	38
Realized gains on sales of short term investments	(531)	(2,477)
Deferred income taxes	(3,944)	(2,517)
Compensation expense related to restricted stock	4,585	3,682
Unrealized foreign exchange (income) loss	(2,237)	406
Changes in assets and liabilities:
Accounts receivable and revenue earned in excess of billings	16,755	1,259
Other current assets	6,487	(5,261)
Accounts payable, income tax payable, accrued payroll and other liabilities	(13,404)	(1,004)
Deferred revenue	(3,095)	(3,686)
Net cash provided by operating activities	88,439	109,650
CASH FLOWS FROM INVESTING ACTIVITIES:
Property and equipment expenditures	(4,434)	(9,133)
Proceeds from sale of property and equipment	94	157
Purchase of mutual funds	(113,611)	(92,702)
Purchase of term deposits with banks	(812)	(219,235)
Proceeds from sales of mutual funds	104,762	135,179
Maturities of term deposits with banks	3,681	314,845
Net cash (used in) provided by investing activities	(10,320)	129,111
CASH FLOWS FROM FINANCING ACTIVITIES:
Excess tax benefits on stock-based compensation plans		23
Proceeds from loans and borrowings		60,250
Repayment of loans and borrowings	(101,250)	(93,125)
Net cash (used in) financing activities	(101,250)	(32,852)
Effect of foreign currency exchange rate changes on cash	2,246	(3,962)
Change in cash and cash equivalents	(20,885)	201,947
Cash and cash equivalents, beginning of period	78,332	500,499
Cash and cash equivalents, end of period	57,447	702,446
Supplemental disclosures of cash flow information:
Cash paid for income taxes	17,124	37,540
Cash paid for interest	$ 7,407	$ 1,152

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BASIS OF PRESENTATION

6 Months Ended

Jun. 30, 2017

BASIS OF PRESENTATION

1. BASIS OF PRESENTATION:

The accompanying unaudited condensed consolidated financial statements of Syntel, Inc. (the “Company” or “Syntel”) have been prepared by management, 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 generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations. In the opinion of 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 and its subsidiaries as of June 30, 2017 and December 31, 2016, and the results of their operations for the three and six months ended June 30, 2017 and 2016, and cash flows for the six months ended June 30, 2017 and 2016. The year-end condensed consolidated balance sheet as of December 31, 2016 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 10-K for the year ended December 31, 2016.

Operating results for the six months ended June 30, 2017 are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.

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PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

6 Months Ended

Jun. 30, 2017

PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

2. PRINCIPLES OF CONSOLIDATION AND ORGANIZATION

The condensed consolidated financial statements include the accounts of Syntel, Inc., a Michigan corporation (“Syntel”), its wholly owned subsidiaries, and a joint venture and its subsidiary. All significant inter-company balances and transactions have been eliminated.

The wholly owned subsidiaries of Syntel, Inc. are:

• SkillBay LLC, a Michigan limited liability company (“SkillBay”);

• Syntel (Australia) Pty. Ltd., an Australian limited liability company;

• Syntel Canada Inc., an Ontario limited liability company;

• Syntel Consulting Inc., a Michigan corporation (“Syntel Consulting”);

• Syntel Delaware, LLC, a Delaware limited liability company (“Syntel Delaware”);

• Syntel Deutschland GmbH, a German limited liability company;

• Syntel Europe Limited, a United Kingdom limited liability company;

• Syntel Holding (Mauritius) Limited, a Mauritius limited liability company;

• Syntel (Hong Kong) Limited, a Hong Kong limited liability company;

• Syntel (Mauritius) Limited, a Mauritius limited liability company;

• Syntel Private Limited, an Indian limited liability company (“Syntel India”);

• Syntel Solutions Mexico, S. de R.L. de C.V., a Mexican limited liability company;

• Syntel SPC, Inc., a Michigan corporation; and

• Syntel Worldwide (Mauritius) Limited, a Mauritius limited liability company.

The wholly owned subsidiaries of Syntel Europe Limited are:

• Intellisourcing, SARL, a French limited liability company;

• Syntel Poland, sp. z o.o., a Polish limited liability company (“Syntel Poland”);

• Syntel Solutions BV, a Netherlands limited liability company; and

• Syntel Switzerland GmbH, a Switzerland limited liability company.

The partially owned joint venture of Syntel Delaware is:

• State Street Syntel Services (Mauritius) Limited, a Mauritius limited liability company (“SSSSML”).

The wholly owned subsidiary of SSSSML is:

• State Street Syntel Services Private Limited, an Indian limited liability company (“SSSSPL”).

The wholly owned subsidiaries of Syntel (Mauritius) Limited are:

• Syntel Global Private Limited, an Indian limited liability company;

• Syntel International Private Limited, an Indian limited liability company; and

• Syntel Technologies (Mauritius) Limited, a Mauritius limited liability company.

The wholly owned subsidiaries of Syntel Holding (Mauritius) Limited are:

• Syntel Services Private Limited, an Indian limited liability company;

• Syntel Software (Mauritius) Limited, a Mauritius limited liability company; and

• Syntel Solutions (Mauritius) Limited, a Mauritius limited liability company.

The wholly owned subsidiary of Syntel Solutions (Mauritius) Limited is:

• Syntel Solutions (India) Private Limited, an Indian limited liability company.

The wholly owned subsidiary of Syntel Worldwide (Mauritius) Limited is:

• Syntel (Singapore) PTE Limited, a Singapore limited liability company.

The wholly owned subsidiary of Syntel (Singapore) PTE Limited is:

• Syntel Infotech, Inc., a Philippines corporation.

The wholly owned subsidiary of Syntel Technologies (Mauritius) Limited is:

• Syntel Technologies LLP, an Indian limited liability partnership.

The wholly owned subsidiary of Syntel Software (Mauritius) Limited is:

• Syntel Software LLP, an Indian limited liability partnership

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USE OF ESTIMATES

6 Months Ended

Jun. 30, 2017

USE OF ESTIMATES

3. USE OF ESTIMATES

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting periods. Such estimates include, but are not limited to, the allowance for doubtful accounts, impairment of long-lived assets and goodwill, contingencies and litigation, the recognition of revenues and profits based on the proportional performance method, valuation allowance for deferred tax assets, potential tax liabilities and bonus accrual. Actual results could differ from those estimates and assumptions used in the preparation of the accompanying financial statements.

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REVENUE RECOGNITION

6 Months Ended

Jun. 30, 2017

REVENUE RECOGNITION

4. REVENUE RECOGNITION

The Company recognizes revenues from time and materials contracts as the services are performed.

Revenue from fixed-price applications management, maintenance and support engagements is recognized as earned which generally results in straight-line revenue recognition as services are performed continuously over the term of the engagements.

Revenue on fixed-price, applications development and integration projects are measured using the proportional performance method of accounting. Performance is generally measured based upon the efforts incurred to date in relation to the total estimated efforts to the completion of the contract. The Company monitors estimates of total contract revenues and costs on a routine basis throughout the delivery period. The cumulative impact of any change in estimates of the contract revenues or costs is reflected in the period in which the changes become known. In the event that a loss is anticipated on a particular contract, a provision is made for the estimated loss in the period the loss is identified. The Company issues invoices related to fixed price contracts based on either the achievement of milestones during a project or other contractual terms. Differences between the timing of billings and the recognition of revenue based upon the proportional performance method of accounting are recorded as revenue earned in excess of billings or deferred revenue in the accompanying consolidated balance sheets.

Revenues are reported net of sales incentives to customers.

Reimbursements of out-of-pocket expenses are included in revenue in accordance with revenue guidance in the Financial Accounting Standards Board (“FASB”) Codification.

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STOCK-BASED EMPLOYEE COMPENSATION PLANS

6 Months Ended

Jun. 30, 2017

STOCK-BASED EMPLOYEE COMPENSATION PLANS

5. STOCK-BASED EMPLOYEE COMPENSATION PLANS

The Company recognizes stock-based compensation expense in the consolidated financial statements for awards of equity instruments to employees and non-employee directors based on the grant-date fair value of those awards on a straight-line basis over the requisite service period of the award, which is generally the vesting term. If a plan is modified, the incremental compensation cost is measured as the excess, if any, of the fair value of the modified award over the fair value of the original award. The benefits/deficiencies of tax deductions in excess/short of recognized compensation expense are reported as an operating cash flow.

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STOCK REPURCHASE PLANS

6 Months Ended

Jun. 30, 2017

STOCK REPURCHASE PLANS

6. STOCK REPURCHASE PLANS

The Company recognizes the cost of repurchasing common stock acquired for purposes    other than retirement (formal or constructive), as a reduction from the total of capital stock, additional paid-in capital, and retained earnings.

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DERIVATIVE INSTRUMENTS

6 Months Ended

Jun. 30, 2017

DERIVATIVE INSTRUMENTS

7. DERIVATIVE INSTRUMENTS

The Company is directly and indirectly affected by changes in certain market conditions. These changes in market conditions may adversely impact the Company’s financial performance and are referred to as “market risks.” When deemed appropriate, the Company uses derivatives as a risk management tool to mitigate the potential impact of certain market risks. The primary market risks managed by the Company through the use of derivative instruments are foreign currency exchange rate risk and interest rate risk.

Hedging transactions and derivative financial instruments

The Company uses derivative instruments such as interest rate swaps. A swap agreement is a contract between two parties to exchange cash flows based on specified underlying notional amounts, assets and/or indices. We do not enter into derivative financial instruments for trading purposes.

All derivatives are carried at fair value in our consolidated balance sheets in the following line items, as applicable: other current assets; deferred income taxes and other non-current assets; accounts payable; and deferred income taxes and other non-current liabilities. The carrying values of the derivatives reflect the impact of legally enforceable master netting agreements as applicable. These master netting agreements allow the Company to net settle positive and negative positions (assets and liabilities) arising from different transactions with the same counterparty.

The accounting for gains and losses that result from changes in the fair values of derivative instruments depends on whether the derivatives have been designated and qualify as hedging instruments and the type of hedging relationships. Derivatives such as interest rate swaps can be designated as cash flow hedges. The changes in the fair values of derivatives that have been designated and qualify as cash flow hedges are recorded in “Accumulated Other Comprehensive Loss” (AOCI) and are reclassified into the line item in our consolidated statement of income in which the hedged items are recorded in the same period the hedged items affect earnings. Due to the high degree of effectiveness between the hedging instruments and the underlying exposures being hedged, fluctuations in the value of the derivative instruments are generally offset by changes in the fair values or cash flows of the underlying exposures being hedged. The changes in the fair values of derivatives that are not designated and/or do not qualify as hedging instruments are immediately recognized into earnings.

For derivatives that will be accounted for as hedging instruments, the Company formally designates and documents, at inception, the financial instrument as a hedge of a specific underlying exposure, the risk management objective and the strategy for undertaking the hedge transaction. In addition, the Company formally assesses both at the inception and at least quarterly thereafter, whether the financial instruments used in hedging transactions are effective at offsetting changes in either the fair values or cash flows of the related underlying exposures. Any ineffective portion of a financial instrument’s change in fair value is immediately recognized into earnings.

The Company determines the fair values of its derivatives based on quoted market prices or pricing models using current market rates. Fair values of interest rate swaps are measured using standard valuation models using inputs that are readily available in public markets, or can be derived from observable market transactions, including LIBOR spot and forward rates.

Credit risk associated with derivatives

The Company considers the risks of non-performance by the counterparty as not material. The Company utilizes standard counterparty master agreements containing provisions for the netting of certain foreign currency transaction and interest rate swap obligations. The Company also mitigates the credit risk of these derivatives by transacting with major banks as counterparties that are highly rated globally. The Company evaluates the credit and non-performance risks associated with its derivative counterparties, and believes that the impact of the credit risk associated with the outstanding derivatives is insignificant.

Cash flow hedging strategy

The Company uses cash flow hedges to minimize the variability in cash flows of assets or liabilities or forecasted transactions caused by fluctuations in interest rates. The changes in the fair values of derivatives designated as cash flow hedges are recorded in AOCI and are reclassified into the line item in our consolidated statement of income in which the hedged items are recorded in the same period the hedged items affect earnings. The changes in fair values of hedges that are determined to be ineffective are immediately reclassified from AOCI into earnings. The maximum length of time for which the Company hedges its exposure to the variability in future cash flows is typically over the terms of hedged items.

Interest rate swaps

In connection with the Company’s Senior Credit facility with Bank of America N.A., the Company entered into an interest rate swap arrangement on November 30, 2016 to hedge interest rate risk on the entire term loan of $300 million by entering into a Pay Fixed and Receive Floating interest rate swap (the “Swap”). The Swap is designed to reduce the variability of future interest payments with respect to the term loan by effectively fixing the annual interest rate payable on the loan’s outstanding principal.

A designated hedge with exposure to variability in the future interest payments of a floating rate loan is a cash flow hedge. The criteria for designating a derivative as a cash flow hedge include the assessment of the instrument’s effectiveness in risk reduction, matching of the derivative instrument to its underlying transaction including its terms, and the assessment of the probability that the underlying transaction will occur. For derivatives with cash flow hedge accounting designation, the Company reports the after-tax gain or loss from the effective portion of the hedge as a component of accumulated other comprehensive income and reclassifies it into earnings in the same period or periods in which the hedged transaction affects earnings, and in the same line item on the consolidated statements of income as the impact of the hedged transaction.

Measurement of effectiveness and ineffectiveness:

Effectiveness for interest rate swaps is generally measured by comparing the critical terms of the hedged item and the hedging instrument whereas ineffectiveness is measured by comparing the cumulative change in fair value of the swap with the cumulative change in the fair value of the hedged item.

An interest rate swap with an aggregate amount of $300 million economically converts a portion of the Company’s variable rate debt to fixed rate debt. The effective portions of cash flow hedges are recorded in “Accumulated other comprehensive income (loss)” until the hedged item is recognized in earnings. Deferred gains and losses associated with cash flow hedges of interest expense are recognized in “Other income (expense), net” in the same period as the related expense is recognized. The ineffective portions and amounts excluded from the effectiveness testing of cash flow hedges are recognized in “Other income (expense), net.”

Derivative instruments designated as cash flow hedges must be de-designated as hedges when it is probable that the forecasted hedged transaction will not occur in the initially identified time period. Deferred gains and losses in “Accumulated other comprehensive income (loss)” associated with such derivative instruments are reclassified immediately into “Other income (expense), net.” Any subsequent changes in fair value of such derivative instruments are reflected in “Other income (expense), net” unless they are re-designated as hedges of other transactions.

The following table provides information on the location and fair value of the derivative financial instrument included in our consolidated statement of financial positions as of June 30, 2017.

Particulars	Notional amount outstanding		Fair value of derivative and location on statement of financial position as on 30th June 2017				Loss on fair value for three months ended June 30, 2017					Gain on fair value for six months ended June 30, 2017
							Effective			Ineffective		Effective		Ineffective
			(In thousands)
Cash flow hedge				Deferred income taxes and other non-current assets		Other current assets
Pay fixed interest rate swap	$	288.8 Million	$	765	$	59	$	(672	)		—	$	291		—

The following table presents the net gains (losses) recorded in accumulated other comprehensive (loss) income relating to the Swap contract designated as cash flow hedges for the periods ending June 30, 2017 and 2016.

Gains on Derivatives:

						(In thousands)
	THREE MONTHS ENDED June 30,					SIX MONTHS ENDED June 30,
	2017			2016		2017		2016
Gains (Loss) recognized in other comprehensive income	$	(672	)	$	—	$	291	$	—

The Company will reclassify an amount which will be equivalent to the accrued interest on the Swap contract in every reporting period as there is a similar impact of accrued interest on the loan in the income statement.

Derivative (Non-Designated) Hedging Strategy

In addition to derivative instruments that are designated and qualify for hedge accounting, the Company also uses certain derivatives for its foreign currency exposure. These derivatives were not designated and/or did not qualify for hedge accounting. The changes in fair value of derivatives are immediately recognized into earnings.

The Company periodically enters into foreign exchange forward contracts to mitigate the risk of changes in foreign currency exchange rates, specifically changes between the Indian rupee currency and U.S. dollar currency. The contracts are adjusted to fair value at each reporting period. Gains and losses on forward contracts are generally recorded in “Other income (expense), net” unless they are designated as an effective hedge. Although the Company cannot predict fluctuations in foreign currency rates, the Company currently anticipates that foreign currency risk may have a significant impact on the financial statements. In order to limit the exposure to fluctuations in foreign currency rates, when the Company enters into foreign exchange forward contracts, where the counter-party is a bank, these contracts may also have a material impact on the financial statements.

The Company’s Indian subsidiaries, whose functional currency is the Indian rupee, periodically enter into foreign exchange forward contracts to buy Indian rupees and sell U.S. dollars to mitigate the risk of changes in foreign exchange rates on U.S. dollar denominated assets, primarily comprised of receivables from the parent Company (Syntel, Inc.) and other direct customers, and liabilities recorded on the books of the Indian subsidiaries. These forward contracts are denominated in U.S. dollars.

These forward contracts do not qualify for hedge accounting under ASC 815, “Derivative and Hedging.” Accordingly, these contracts are carried at a fair value with the resulting gains or losses included in the statement of comprehensive income under “Other income (expense), net.” The related cash flow impacts of all of our derivative activities are recorded in the CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS statement under cash flows from operating activities.

During the period ended June 30, 2017, the Company did not enter into any foreign exchange forward contracts. At June 30, 2017 and December 31, 2016, no foreign exchange forward contracts were outstanding.

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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT)

6 Months Ended

Jun. 30, 2017

CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT)

8. CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT)

The changes in balances of accumulated other comprehensive loss for the three months ended June 30, 2017 are as follows:

										(In thousands)
	Foreign Currency Translation Adjustments			Unrealized gain(losses) on derivatives designated as cash flow hedges			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(248,035	)	$	904		$	362		$	(1,336	)	$	(248,105	)
Other comprehensive income (loss) before reclassifications		937			(406	)		136			—			667
Amounts reclassified from accumulated other comprehensive income (loss)		—						(63	)		18			(45	)
Net current-period other comprehensive income	$	937			(406	)	$	73		$	18		$	622
Ending Balance	$	(247,098	)	$	498		$	435		$	(1,318	)	$	(247,483	)

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended June 30, 2017 are as follows:

								(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net income (loss) Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income ,net	$	(89	)	$	26		$	(63	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	24		$	(6	)	$	18

The changes in balances of accumulated other comprehensive loss for the three months ended June 30, 2016 are as follows:

							(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(236,476	)	$	1,586		$	(784	)	$	(235,674	)
Other comprehensive income (loss) before reclassifications		(16,109	)		634			—			(15,475	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			(750	)		12			(738	)
Net current-period other comprehensive income (loss)	$	(16,109	)	$	(116	)	$	12		$	(16,213	)
Ending Balance	$	(252,585	)	$	1,470		$	(772	)	$	(251,887	)

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended June 30, 2016 are as follows:

								(In thousands)
Details about Accumulated Other Comprehensive Income (Loss)  Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income	$	(1,130	)	$	380		$	(750	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	19		$	(7	)	$	12

The changes in balances of accumulated other comprehensive loss for the six months ended June 30, 2017 are as follows:

									(In thousands)
	Foreign Currency Translation Adjustments			Unrealized gain on derivatives designated as cash flow hedges		Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(254,210	)		322	$	328		$	(1,345	)	$	(254,905	)
Other comprehensive income(loss) before reclassifications		7,112			176		165			6			7,459
Amounts reclassified from accumulated other comprehensive income (loss)		—					(58	)		21			(37	)
Net current-period other comprehensive income (loss)	$	7,112			176	$	107		$	27		$	7,422
Ending Balance	$	(247,098	)		498	$	435		$	(1,318	)	$	(247,483	)

Reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2017 are as follows:

					(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net income(loss) Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income, net	$	(81	)	$	23		$	(58	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	32		$	(11	)	$	21

The change in balances of accumulated comprehensive loss for the six months ended June 30, 2016 is as follows:

							(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income(Loss)
Beginning balance	$	(235,146	)	$	332		$	(795	)	$	(235,609	)
Other comprehensive income(loss) before reclassifications		(17,439	)		1,184			—			(16,255	)
Amounts reclassified from accumulated other comprehensive Income(loss)		—			(46	)		23			(23	)
Net current-period other comprehensive income	$	(17,439	)	$	1,138		$	23		$	(16,278	)
Ending Balance	$	(252,585	)	$	1,470		$	(772	)	$	(251,887	)

Reclassifications out of accumulated other comprehensive loss for the six months ended June 30, 2016 is as follows:

					(In thousands)
Details about Accumulated Other Comprehensive Loss Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax (Expense) Benefit			Net of Tax
Unrealized gains (losses) on available for sale securities	Other income, net	$	(69	)	$	23		$	(46	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	35		$	(12	)	$	23

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TAX ON OTHER COMPREHENSIVE INCOME (LOSS)

6 Months Ended

Jun. 30, 2017

TAX ON OTHER COMPREHENSIVE INCOME (LOSS)

9. TAX ON OTHER COMPREHENSIVE INCOME (LOSS)

Total tax benefit (expense) on other comprehensive income (loss) for the three and six months ended June 30, 2017 and 2016 is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
	(In thousands)						(In thousands)
Foreign currency translation adjustments	$	—		$	(15	)	$	—		$	(105	)
Unrealized gain (loss) on derivatives designated as cash flow hedges		266			—			(115	)
Tax benefit(expense) on unrealized gains(losses) on securities		(36	)		44			(53	)		(596	)
Tax benefit(expense) on defined benefit pension plans		(6	)		(7	)		(11	)		(12	)
Total tax benefit(expense) on other comprehensive income(loss)	$	224		$	22		$	(179	)	$	(713	)

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CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

6 Months Ended

Jun. 30, 2017

CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

10. CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS

Cash and Cash Equivalents

For the purpose of reporting cash and cash equivalents, the Company considers all liquid investments purchased with an original maturity of three months or less to be cash equivalents.

The cash and cash equivalents as of June 30, 2017 and December 31, 2016, were $57.4 million and $78.3 million, respectively, which were held in banks and fixed deposits with various banking and financial institutions.

Short-term Investments

The Company’s short-term investments consist of short-term mutual funds, which have been classified as available-for-sale and are carried at estimated fair value. Fair value is determined based on quoted market prices. Unrealized gains and losses, net of taxes, on available-for-sale securities are reported as a separate component of accumulated other comprehensive income (loss) in shareholders’ equity. Net realized gains or losses resulting from the sale of these investments, and losses resulting from decline in fair values of these investments that are other than temporary declines, are included in other income (expense), net. The cost of securities sold is determined using the weighted-average method.

Short-term investments include term deposits with an original maturity exceeding three months and whose maturity date is within one year from the date of the balance sheet. Term deposits were $4.0 million and $6.6 million at June 30, 2017 and December 31, 2016, respectively.

The following table summarizes short-term investments as of June 30, 2017 and December 31, 2016:    

	2017		2016
	June 30		December 31
	(In thousands)
Investments in mutual funds at fair value	$	25,603	$	15,016
Term deposits with banks		3,959		6,598
Total	$	29,562	$	21,614

Non-current Term Deposits with Banks

Non-current term deposits with banks include deposits with maturity exceeding one year from the date of the balance sheet. As of June 30, 2017 and December 31, 2016 non-current term deposits with banks were $0.24 and $0.23 million, respectively. Term deposits with banks include restricted deposits of $0.61 million and $0.44 million as of June 30, 2017 and December 31, 2016 respectively, placed as security towards performance guarantees issued by the Company’s bankers on the Company’s behalf.

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LINE OF CREDIT AND TERM LOAN

6 Months Ended

Jun. 30, 2017

LINE OF CREDIT AND TERM LOAN

11. LINE OF CREDIT AND TERM LOAN

On May 23, 2013, Syntel entered into a Credit Agreement with Bank of America, N.A. for $150 million in credit facilities consisting of a three-year term loan facility of $60 million and a three-year revolving credit facility of $90 million (the “Credit Agreement”). The maturity date of both the three-year term loan facility and the three-year revolving credit facility was May 23, 2016. The Credit Agreement was amended on May 9, 2016 (the “First Amendment Effective Date”) thereby extending the maturity date from May 23, 2016 to May 9, 2019. Further, by way of the amended Credit Agreement, an additional $40 million for the term loan facility and $10 million for the revolving credit facility was granted by Bank of America to Syntel (the “First Amendment” and together with the Credit Agreement, the “Amended Credit Agreement”). Thus, the total amount of the credit facility was $200 million, consisting of a three-year term loan facility of $100 million and a three-year revolving credit facility of $100 million. The Amended Credit Agreement was guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the First Amendment, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates under the Amended Credit Agreement were, with respect to both the revolving credit facility and the term loan, (a) for the period beginning on the First Amendment Effective Date through and including the date prior to the first anniversary of the First Amendment Effective Date, (i) the Eurodollar Rate (as that term is defined in the Amended Credit Agreement) plus 1.50% with respect to Eurodollar Rate Loans (as that term is defined in the Amended Credit Agreement) and (ii) the Base Rate (as that term is defined in the Amended Credit Agreement) plus 0.50% with respect to Base Rate Loans (as that term is defined in the amendment to the Credit Agreement), (b) for the period beginning on the first anniversary of the First Amendment Effective Date through and including the date prior to the second anniversary of the First Amendment Effective Date, (i) the Eurodollar Rate plus 1.45% with respect to Eurodollar Rate Loans and (ii) the Base Rate plus 0.45% with respect to Base Rate Loans, and (c) for the period beginning on the second anniversary of the First Amendment Effective Date and continuing thereafter, (i) the Eurodollar Rate plus 1.40% with respect to Eurodollar Rate Loans and (ii) the Base Rate plus 0.40% with respect to Base Rate Loans.

During the year ended December 31, 2016, the Company fully repaid the revolving credit and term loan of $190.0 million, and terminated the Amended Credit Agreement.

On September 12, 2016, the Company entered into a new credit agreement, as amended as of October 26, 2016 (the “First Amendment Effective Date”) and July 18, 2017 (the “Second Amendment Effective Date”),(“Senior Credit Facility”) with Bank of America, N.A, as administrative agent, L/C issuer and swing line lender, the other lenders party thereto, and Merrill, Lynch, Pierce, Fenner & Smith Incorporated, as sole lead arranger and sole bookrunner for $500 million in credit facilities consisting of a five-year term loan facility of $300 million (the “Term Loan”) and a five-year revolving credit facility of $200 million (the “Revolving Facility”). The maturity date of the Senior Credit Facility is September 11, 2021. The Revolving Facility allows for the issuance of letters of credit and swingline loans. The Senior Credit Facility is guaranteed by two of the Company’s domestic subsidiaries, SkillBay and Syntel Consulting (collectively, the “Guarantors”). In connection with the Senior Credit Facility, the Company and the Guarantors also entered into a related security and pledge agreement granting a security interest in the assets of the Company and the Guarantors, including, without limitation, a pledge of 65% of the equity interests in Syntel India.

The interest rates applicable to the Senior Credit Facility other than in respect of swing line loans are LIBOR plus 1.50% or, at the option of the Company, the Base Rate (to be defined as the highest of (x) the Federal Funds Rate [as that term is defined in the Senior Credit Facility] plus 0.50%, (y) the Bank of America prime rate, or (z) LIBOR plus 1.00%) plus 0.50%. Each swingline loan shall bear interest at the Base Rate plus 0.50%. In no event shall LIBOR be less than 0% per annum.

As of June 30, 2017, the interest rates were 2.48% for the Term Loan and 2.48% and 2.27% for the two portions of the Revolving Facility.

The Company has also hedged interest rate risk on the entire Term Loan of $300 million by entering into a Pay Fixed and Receive Floating interest rate swap on November 30, 2016. The Company has designated the Swap in a hedging relationship with the Term Loan. The Swap is recorded at fair value and a loss of $0.7 million and gain of $0.3 million during the three months and six months ended June 30, 2017 is recorded in “Accumulated other comprehensive income” with the corresponding adjustment in other current assets and other non-current assets.

With the interest rates charged on the Senior Credit Facility being variable, the fair value of the Senior Credit Facility approximates the reported value as of June 30, 2017, as it reflects the current market value.

The Term Loan provides for the principal payments as under:

Period		Payment amount per quarter
Beginning from	Until	(In millions)
December 31, 2016	September 30, 2017	3.750
October 31, 2017	September 30, 2018	5.625
October 31, 2018	September 30, 2021	7.500

Principal payments on the Term Loan are due every quarter. During the three months and six months ended June 30, 2017, principal payments of $3.75 million and $11.25 million were made.

During the three months and six months ended June 30, 2017, a principal pre-payment of $45.0 million and $90.0 million were made towards the Revolving Facility.

The Senior Credit Facility requires compliance with certain financial ratios and covenants. As of June 30, 2017, the Company was in compliance with all financial covenants.

As of June 30, 2017 the outstanding balances of the Term Loan and Revolving Facility, including accrued interest, are $288.2 million and $109.7 million (net of $0.9 million unamortized debt issuance cost), respectively. As of December 31, 2016 the outstanding balances of the Term Loan and Revolving Facility, including accrued interest, are $299.9 million and $199.9 million (net of $0.9 million unamortized debt issuance cost), respectively.

Future scheduled payments on the Senior Credit Facility, at June 30, 2017 are as follows:

			(In thousands)
	Term Loan		Revolving Facility
	Principal Payments		Principal Payments
2017	$	9,375
2018	$	24,375
2019	$	30,000
2020	$	30,000
2021	$	195,000	$	110,000

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EARNINGS PER SHARE

6 Months Ended

Jun. 30, 2017

EARNINGS PER SHARE

12. 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. If the number of common shares outstanding increases as a result of a stock dividend or stock split or decreases as a result of a reverse stock split, the computations of basic and diluted earnings per share are adjusted retroactively for all periods presented to reflect that change in capital structure. If such changes occur after the close of the reporting period but before issuance of the financial statements, the per-share computations for that period and any prior-period financial statements presented are based on the new number of shares.

The Company has issued restricted stock units, which are considered to be potentially dilutive to its basic earnings per share. Diluted earnings per share is calculated using the treasury stock method for the dilutive effect of restricted stock units granted pursuant to the incentive plans, by dividing the net income by the weighted average number of shares outstanding during the period adjusted for these potentially dilutive restricted stock units, except when the results would be anti-dilutive. The dilutive earnings per share are computed using the treasury stock method.

The following tables set forth the computation of earnings per share:

	(in thousands, except per share earnings)
	Three Months Ended June 30,
	2017				2016
	Weighted Average Shares		Earnings per Share		Weighted Average Shares		Earnings per Share
Basic earnings per share		83,818	$	0.44		84,140	$	0.70
Potential dilutive effect of restricted stock units outstanding		35		—		138		—
Diluted earnings per share		83,853	$	0.44		84,278	$	0.70

	(in thousands, except per share earnings)
	Six Months Ended June 30,
	2017					2016
	Weighted Average Shares		Earnings per Share			Weighted Average Shares		Earnings per Share
Basic earnings per share		83,807	$	0.90			84,126	$	1.33
Potential dilutive effect of restricted stock units outstanding		37		(0.01	)		146		—
Diluted earnings per share		83,844	$	0.89			84,272	$	1.33

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SEGMENT REPORTING

6 Months Ended

Jun. 30, 2017

SEGMENT REPORTING

13. SEGMENT REPORTING

The Company’s reportable business segments are as follows:

• Banking and Financial Services

• Healthcare and Life Sciences

• Insurance

• Manufacturing

• Retail, Logistics and Telecom

Syntel’s leadership evaluates the Company’s performance and allocates resources based on segment revenues and segment cost of revenues. Segment gross profit is defined as gross profit before Corporate Direct Costs.

The Company’s cost of revenues consist of costs directly associated with billable professionals in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder’s fees, trainee compensation and travel. Generally, the cost of revenues for each operating segment has similar characteristics and is subject to the same factors, pressures and challenges. However, the economic environment and its effects on industries served by our operating groups may affect revenue and cost of revenues to differing degrees.

In each of our business segments, Syntel helps customers adapt to market change by providing a broad array of technology-based, industry-specific solutions. These solutions leverage Syntel’s strong understanding of the underlying trends and market forces in our chosen industry segments. These solutions are complemented by strong capabilities in Digital Modernization, Social, Mobile, Analytics and Cloud (SMAC) technologies, Business Intelligence (BI), Knowledge Process Outsourcing (KPO), application services, testing, Enterprise Resource Planning (ERP), IT Infrastructure Management Services (IMS), and business and technology consulting.

Banking and Financial Services

Our Banking and Financial Services segment serves financial institutions throughout the world. Our clients include companies providing banking, capital markets, cards and payments, investments and transaction processing services to third parties. Our clients engage us to help make their operations as effective, productive and cost-efficient as possible, and to support new capabilities. We assist these clients in such areas as: payment solutions, retail banking, wholesale banking, consumer lending, risk management, investment banking, reconciliation, fraud analysis, mobile banking, and compliance and securities services. The demand for our services in the banking and financial services sector is being driven by changing global regulatory requirements, customer interest in newer technology areas and related services such as digital modernization, and an ongoing focus on cost reduction and operational efficiencies.

Healthcare and Life Sciences

Our Healthcare and Life Sciences segment serves healthcare payers, providers and pharmaceutical and medical device providers, among others. The healthcare industry is constantly seeking to improve the quality of care while managing the cost of care in order to make healthcare affordable to a larger population. Our healthcare practice focuses on providing a broad range of services and solutions to the industry across the consumer lifecycle, which includes regulatory requirements, integrated care, stakeholder engagement and wider use of electronic health records, among others. We also partner with clients to modernize their systems and processes to enable them to deal with the increasing consumer orientation of healthcare, such as support for individual mandates and the adoption of mobile and analytics solutions to improve access to health information and decision making by end consumers.

In the life sciences category, we partner with leading pharmaceutical, biotech, and medical device companies, as well as providers of generics, animal health and consumer health products. Our life sciences solutions help transform many of the business processes in the life sciences value chain (research, clinical development, manufacturing and supply chain, and sales and marketing) as well as regulatory and administrative functions.

Insurance

We serve the needs of global property and casualty insurers, insurance brokers, personal, commercial, life and retirement insurance service providers. These customers turn to us for assistance in improving the efficiency and effectiveness of their operations and in achieving business transformation. We focus on aspects of our clients’ operations, such as policy administration, claims processing and compliance reporting. We also serve the growing trend among insurers to improve their sales and marketing processes by deepening direct retail customer relationships and strengthening interactions with networks of independent and captive insurance agents. This is often accomplished through the use of digital front-end technologies like cloud, social media and mobile, and supported by modernization of applications and infrastructure elements. Additionally, many insurers seek to improve business effectiveness by reducing expense ratios and exiting non-core lines of business and operations.

Manufacturing

We provide technology services and business consulting in a range of sub-sectors including industrial products, aerospace and automotive manufacturing, as well as to processors of raw materials and natural resources. Demand for our services in this segment is being driven by trends that, among others, include the increasing globalization of sourcing and the desire of clients to further penetrate emerging markets, leading to longer and more complex supply chains. Some of our solutions for industrial and manufacturing clients include warranty management, dealer system integration, Product Lifecycle Management (PLM), Supply Chain Management (SCM), sales and operations planning, and mobility.

Retail, Logistics and Telecom

In Retail, we serve a wide spectrum of retailers in specialty, apparel and home improvement segments. We also serve the travel and hospitality industry including airlines, hotels as well as online and travel retail, global distribution systems and intermediaries. Our domain intensive solutions transform customer/shopper experiences while keeping down the cost of IT Operations.

In Logistics, our clients look to Syntel to implement business-relevant changes that will make them more productive, competitive and cost effective. To that end, we help organizations improve operational efficiencies, enhance responsiveness and collaborate with trading partners to better serve their markets and end customers.

In Telecom, we help our clients address important changes in the telecom industry, such as the transition to new network technologies, designing, developing, testing and introducing new products and channels, improving customer service and increasing customer satisfaction.

Syntel’s Retail Logistics and Telecom Business unit leverages its comprehensive understanding of the business and technology needs of the industry. Our industry solutions for our clients include SCM, sales and operations planning, mobility, Point of Sale (POS) testing, omnichannel enablement and integration, web content management solutions, sales force and cloud foundry enablement, among others.

In addition, there is strong demand for digital modernization services across these industries to enhance efficiency and agility of their underlying technology systems.

Corporate Direct Costs

Certain expenses, for cost centers such as Centers of Excellence, Architecture Solutions Group, Research and Development, Cloud Computing, and Application Management, are not allocated to specific industry segments because management believes it is not practical to allocate such expenses to individual segments as they are not directly attributable to any specific segment. Accordingly, these expenses are separately disclosed as Corporate Direct Costs and adjusted only against Total Gross Profit.

In accordance with ASC 280 “Disclosures about Segments of an Enterprise and Related Information,” segment disclosures are presented below. Revenues from external customers and gross profit for the Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom segments for the three and six months ended June 30, 2017 and June 30, 2016 are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
	(in thousands)						(in thousands)
Net Revenues:
Banking and Financial Services	$	103,663		$	120,351		$	209,632		$	241,809
Healthcare and Life Sciences		39,614			39,998			77,176			78,361
Insurance		33,102			32,271			65,501			62,820
Manufacturing		9,451			11,838			18,982			23,254
Retail, Logistics and Telecom		40,981			41,560			81,389			81,164
	$	226,811		$	246,018		$	452,680		$	487,408
Gross Profit:
Banking and Financial Services		37,681			43,892			76,993			90,297
Healthcare and Life Sciences		15,455			16,669			29,945			30,266
Insurance		10,348			11,420			21,319			21,981
Manufacturing		2,498			3,619			4,887			6,816
Retail, Logistics and Telecom		16,027			16,087			31,708			32,694
Total Segment Gross Profit		82,009			91,687			164,852			182,054
Corporate Direct cost		(549	)		(702	)		(970	)		(1,345	)
Gross Profit	$	81,460		$	90,985		$	163,882		$	180,709
Selling, general and administrative expenses		28,699			18,265			58,990			47,942
Income from operations	$	52,761		$	72,720		$	104,892		$	132,767

During the three and six months ended June 30, 2017, American Express Corp., State Street Bank and Federal Express Corp. each contributed revenues in excess of 10% of total consolidated revenues. Revenues from American Express Corp., State Street Bank and Federal Express Corp. were $37.6 million, $34.1 million and $31.6 million, respectively, during the three months ended June 30, 2017, contributing approximately 16.6%, 15.0% and 13.9%, respectively of total consolidated revenues. The revenues from American Express Corp. and State Street Bank were generated in the Banking and Financial Services segment. The revenue from Federal Express Corp. was generated in the Retail, Logistics and Telecom segment. The corresponding revenues for the three months ended June 30, 2016 from American Express Corp., State Street Bank and Federal Express Corp. were $53.7 million, $33.5 million and $30.5 million, respectively, contributing approximately 21.8%, 13.6% and 12.4%, respectively, of total consolidated revenues. During the six months ended June 30, 2017, revenues from American Express Corp., State Street Bank and Federal Express Corp. were $79.8 million, $67.9 million and $61.7 million, respectively, contributing approximately 17.6%, 15.0% and 13.6%, respectively, of total consolidated revenues. The corresponding revenues for the six months ended June 30, 2016 from American Express Corp., State Street Bank and Federal Express Corp. were $109.0 million, $67.4 million and $59.3 million, respectively, contributing approximately 22.4%, 13.8% and 12.2%, respectively, of total consolidated revenues. At June 30, 2017 and December 31, 2016, accounts receivable from American Express Corp. were $15.4 million and $24.3 million, respectively. Accounts receivable from State Street Bank were $15.9 million and $10.9 million, respectively, at June 30, 2017 and December 31, 2016. Accounts receivable from Federal Express Corp. were $11.5 million and $17.8 million, respectively, at June 30, 2017 and December 31, 2016.

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GEOGRAPHIC INFORMATION

6 Months Ended

Jun. 30, 2017

GEOGRAPHIC INFORMATION

14. GEOGRAPHIC INFORMATION

The Company’s net revenues and long-lived assets, by geographic area, are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Net Revenues (1)	2017		2016		2017		2016
	(in thousands)				(in thousands)
North America (2)	$	203,373	$	219,730	$	406,949	$	435,440
India		1,056		1,596		2,214		3,061
Europe (3)		21,734		24,084		42,253		47,711
Rest of the World		648		608		1,264		1,196
Total revenue	$	226,811	$	246,018	$	452,680	$	487,408

	As of		As of
Long-Lived Assets (4)	June, 30		December, 31
	2017		2016
	(in thousands)
North America (2)	$	2,850	$	3,307
India		103,111		102,638
Europe (3)		1,467		632
Rest of the world		683		805
Total	$	108,111	$	107,382

Notes for the Geographic Information Disclosure:

1. Net revenues are attributed to regions based upon customer location.

2. Primarily relates to operations in the United States.

3. Primarily relates to operations in the United Kingdom and Poland.

4. Long-lived assets include property and equipment, net of accumulated depreciation and amortization and goodwill.

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INCOME TAXES

6 Months Ended

Jun. 30, 2017

INCOME TAXES

15. INCOME TAXES

The following table accounts for the differences between the federal statutory tax rate of 35% and the Company’s overall effective tax rate:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Statutory provision		35.0	%		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		1.1	%		0.4	%		1.9	%		0.5	%
City taxes		0.2	%		0.1	%		0.1	%		0.1	%
Foreign effective tax rates different from US statutory rate		(9.6	)%		(11.3	)%		(10.6	)%		(12.3	)%
Prior Year related state tax payment								0.9	%
Valuation Reserve Adjustment		—			—			(2.9	%)		(2.2	)%
Effective Income Tax Rate		26.7	%		24.2	%		24.4	%		21.1	%

The effective tax rate for the three months ended June 30, 2017, was impacted by onsite/offshore profits mix, the taxable/nontaxable and onsite/offshore revenue and expense mix of the Company.

The Company records provisions for income taxes based on enacted tax laws and rates in the various tax jurisdictions in which it operates. In determining the tax provisions, the Company provides for tax uncertainties in income taxes when it is more likely than not, based on the technical merits, that a tax position would not be sustained upon examination. Such uncertainties, which are recorded in income taxes payable, are based on management’s estimates and accordingly, are subject to revision based on additional information. The provision no longer required for any particular tax year is credited to the current period’s income tax expenses. Conversely, in the event of a future tax examination, any additional tax expense not previously provided for will be recognized in the period in which the actual liability is concluded or management determines that the Company will not prevail on certain tax positions taken in filed returns, based on the “more likely than not” concept.

Syntel, Inc. and its subsidiaries file income tax returns in various tax jurisdictions. The Company is no longer subject to U.S. federal tax examinations by tax authorities for years before 2013 and for State tax examinations for years before 2012.

Syntel India, the Company’s India subsidiary, has disputed tax matters for the financial years 1996-97 to 2013-14 pending at various levels of the Indian tax authorities. Financial year 2014-15 and onwards are open for regular tax scrutiny by the Indian tax authorities. However, the tax authorities in India are authorized to reopen the already concluded tax assessments and may re-open the case of Syntel India for financial years 2010-11 and onwards.

During the three months ended March 31, 2017, the Company reversed a valuation allowance against deferred tax assets recognized on the minimum alternative tax (“MAT”) of $2.92 million due to the extension of the MAT credit carry forward period which was enacted in March 2017. The MAT credit can be carried forward and set-off against future taxes payable for up to 15 years versus the earlier provision on MAT credit that allowed the MAT credit to be carried forward and set-off against future taxes payable for only up to 10 years.

The Company recognizes accrued interest and penalties related to unrecognized tax benefits as part of income tax expense. During the three months ended June 30, 2017 and 2016, the Company has accrued interest of approximately $0.24 million and $0.001 million, respectively. During the six months ended June 30, 2017 and 2016, the Company has accrued interest of approximately $0.28 million and $0.041 million respectively. The Company has accrued approximately $1.81 million and $1.45 million for interest and penalties as of June 30, 2017 and December 31, 2016, respectively.

The liability for unrecognized tax benefits was $70.84 million and $68.51 million as of June 30, 2017 and December 31, 2016, respectively. The Company has paid income taxes of $43.58 million and $41.41 million against the liabilities for unrecognized tax benefits of $70.84 million and $68.51 million, as of June 30, 2017 and December 31, 2016, respectively. The Company has paid the taxes in order to reduce the possible interest and penalties related to these unrecognized tax benefits.

The Company’s net amount of unrecognized tax benefits for tax disputes of $1.66 million could change in the next twelve months as the court cases and global tax audits progress. At this time, due to the uncertain nature of this process, it is not reasonably possible to estimate an overall range of possible change.

Syntel has not provided for India Income Taxes which are disputed and pending at various levels (including potential tax disputes) of $15.27 million for the financial year 1996-97 to June 30, 2017, which is after providing $53.97 million as unrecognized tax benefits under ASC740. Indian tax exposures involve complex issues and may need an extended period to resolve the issues with the Indian income tax authorities. Syntel’s management, after consultation with legal counsel, believes that the resolution of these matters will not have a material adverse effect on the Company’s consolidated financial position or results of operations.

Service Tax Audit

Syntel India regularly files quarterly service tax refund applications and claims refunds of service tax on input services, which remain unutilized against a lack of service tax on export of services. As of June 30, 2017, Syntel Indian entities have not provided against service tax refund claims of $4.15 million disputed by the Indian Service Tax Department which are pending at various levels.

The Company obtained a tax consultant’s advice on the aforesaid disputes. The consultant is of the view that the tax disputes are contrary to the wording of the service tax notifications and provisions. The Company therefore believes that its claims of service tax refunds should be upheld at the appellate stage and the refunds should be accordingly granted. Based on the consultant’s tax advice, the Company believes that it has a reasonable basis to defend the rejection of the refunds. Accordingly, no provision has been made in the Company’s books.

Undistributed Earnings of Foreign Subsidiaries

During the three months ended September 30, 2016, and after a comprehensive review of anticipated sources and uses of capital both domestically and abroad, as well as other considerations, the Board of Directors determined that it was in the best interests of the Company and its shareholders to declare a special cash dividend of fifteen dollars ($15.00) per share. In conducting this evaluation, the Board of Directors considered, among other factors, the operational and financial objectives of the Company, long-term and short-term capital needs, the Company’s projections on growth and working capital needs, planned uses of U.S. and foreign earnings, the available sources of liquidity in the U.S., and growth plans outside of the U.S. As part of this evaluation, the Company determined that certain amounts which had been previously designated for internal and external expansion and investment at its foreign subsidiaries were no longer required for these purposes. The special cash dividend was funded through a one-time repatriation of approximately $1.03 billion (net of foreign income tax $210 million paid outside of the U.S) of cash held by the Company’s foreign subsidiaries and a portion of borrowings under the new Senior Credit Facility. In connection with the one-time repatriation, the Company recognized a one-time tax expense of approximately $270.6 million (net of foreign tax credits) in the third quarter of 2016. The Company has recorded additional state tax of $0.9 million, attributable to the above repatriation, in quarter ended March 31, 2017.

Management regularly evaluates foreign earnings to determine whether future foreign earnings that accumulate will be permanently invested outside the U.S. In conducting this evaluation, management considers, among other factors, the operational and financial objectives of the Company, long-term and short-term capital needs, the Company’s projections on growth and working capital needs, planned uses of U.S. and foreign earnings, the available sources of liquidity in the U.S., and growth plans outside of the U.S. The Company provides taxes on any foreign earnings in excess of these requirements. The June 30, 2017 provision includes the impact of certain foreign earnings that are not permanently invested. If in the future, management were to conclude that any additional portion of foreign earnings will not be permanently reinvested outside the U.S., this would result in an additional provision for income taxes, which could affect the Company’s future effective tax rate. If the Company determines to repatriate all undistributed repatriable earnings of foreign subsidiaries as of June 30, 2017, the Company would have accrued taxes of approximately $33.5 million.

Local Taxes

As of June 30, 2017, the Company had a local tax liability provision of approximately $0.4 million, equal to $0.3 million net of federal tax benefit, relating to local taxes including employer withholding taxes, employer payroll expense taxes, business licenses, and corporate income taxes. As of December 31, 2016, the local tax liability provision was approximately $0.4 million, equal to $0.3 million net of tax, relating to local taxes including employer withholding taxes, employer payroll expense taxes, business license registrations, and corporate income taxes.

Minimum Alternate Tax (MAT)

Minimum Alternate Tax (“MAT”) is payable on the Book Income, including the income for which deduction is claimed under section 10A and section 10AA of the Indian Income Tax Act. The excess MAT over the normal tax liability is “MAT Credit”. MAT Credit can be carried forward for 15 years (as amended by the Finance Act, 2017, as compared to 10 years, as previously provided) and set-off against future tax liabilities, if normal tax provisions are in excess of taxes payable under MAT. Accordingly, for the three months ended March 31, 2017, the Company has reversed a valuation allowance of $2.92 million against deferred tax assets which was recognized on MAT Credit. The MAT credit as of June 30, 2017 of $37.99 million (net of valuation allowance of $2.47 million) must be utilized before March 31 of the following financial years and will expire as follows:

Year of Expiry Of MAT Credit	Amount in USD (in millions)
2022-2023		0.20
2023-2024		0.27
2024- 2025		1.00
2025- 2026		1.85
2026- 2027		0.82
2027- 2028		6.16
2028- 2029		7.29
2029- 2030		8.00
2030- 2031		10.30
2031- 2032		3.29
2032- 2033		1.28
Total		40.46
Less: valuation allowance		(2.47	)
Total (net of valuation allowance)		37.99

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COMMITMENTS AND CONTINGENCIES

6 Months Ended

Jun. 30, 2017

COMMITMENTS AND CONTINGENCIES

16. COMMITMENTS AND CONTINGENCIES

As of June 30, 2017, and December 31, 2016, Syntel’s subsidiaries have commitments for capital expenditures (net of advances) of $29.0 million and $33.0 million, respectively, primarily related to the technology campuses being constructed at Pune and Chennai in India.

Syntel’s Indian subsidiaries’ operations are carried out from their development centers/units in Mumbai, Pune, Chennai and Gurgaon forming part of a SEZ/STPI scheme. Under these schemes, the registered units have export obligations, which are based on the formula provided by the notifications/circulars issued by the STPI and SEZ authorities from time to time. The consequence of not meeting the above commitments would be a retroactive levy of import duty on items previously imported duty free for these units. Additionally, the respective authorities have rights to levy penalties for any defaults on a case-by-case basis. The Company is confident of meeting these obligations.

The Company is party to various legal actions arising in the ordinary course    of business, including litigation and governmental and regulatory controls. The Company’s estimates regarding legal contingencies are based on information known about the matters and its experience in contesting, litigating and settling similar matters. It is the opinion of management with respect to pending or threatened litigation matters that unfavorable outcomes are neither probable nor remote and that estimates of possible loss are not able to be made. Although actual amounts could differ from management’s estimate, none of the pending or threatened actions are believed by management to involve future amounts that would be material to the Company’s financial position or results of operations.

The Company estimates the costs associated with known legal exposures and their related legal expenses and accrues reserves for either the probable liability, if that amount can be reasonably estimated, or otherwise the lower     end of an estimated range of potential liability. As at December 31, 2016, the Company has recorded a $0.3 million liability for a litigation matter related contingency which was subsequently paid during three months ended March 31, 2017. During the six months ended June 30, 2017, there was no accrual related to litigation.

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STOCK BASED COMPENSATION

6 Months Ended

Jun. 30, 2017

STOCK BASED COMPENSATION

17. STOCK BASED COMPENSATION

Share Based Compensation:

On June 1, 2006, the Company adopted an Amended and Restated Stock Option and Incentive Plan (the “Amended Plan”). Under the Amended Plan, a total of sixteen million shares of common stock (adjusted for the effects of the 2014 stock split) were reserved for issuance. The dates on which options or restricted stock units granted under the Amended Plan become first exercisable or have their restriction lapse are determined by the Compensation Committee of the Board of Directors, but generally occur over a four-year period from the date of grant. The term of any option may not exceed ten years from the date of grant. As of June 1, 2016, the Amended Plan terminated and no further awards may be made under the Amended Plan.

On February 28, 2016, the Company’s Board of Directors approved the adoption of the 2016 Incentive Plan (the “2016 Plan”) subject to shareholder approval. On June 8, 2016 the Company’s shareholders approved the 2016 Plan. The principal features of the 2016 Plan are substantially the same as those of the Amended Plan. Under the 2016 Plan, a total of sixteen million shares of common stock were reserved for issuance. The dates on which options or restricted stock units granted under the Amended Plan become first exercisable or have their restriction lapse are determined by the Compensation Committee of the Board of Directors, but for employees generally occur over a four-year period from the date of grant and for non-employee directors generally occur at the Company’s next annual meeting of shareholders.

On November 30, 2016, Company’s Board of Directors and the Compensation Committee established a program for a one-time grant of Restricted Stock Units (“RSUs”) to certain senior management employees. The parameters of the program and the restrictions on the RSUs granted are consistent with the 2016 Plan approved by shareholders on June 8, 2016, except as follows:

1. The employee may purchase up to a specified number of shares of Syntel, Inc. common stock (“Common Stock”) whose purchase price is equal to up to 25% of the employee’s base salary (“Purchased Shares”).

2. Upon proof of purchase of the Common Stock, the employee will receive a grant of RSUs equal to 25% of the number of the Purchased Shares (the “Grant”).

3. The restriction period on 25% of the Grant will lapse on each of the first four anniversaries of the grant date.

The RSUs will be forfeited if the employee ceases to be an employee of the Company or if the employee does not retain Purchased Shares equal to four times the remaining RSUs from the Grant through the applicable restriction period. No stock options were issued for the three months and six months ended June 30, 2017 and 2016 under either the Amended Plan or the 2016 Plan.

The Company accounts for share-based compensation based on the fair value of share-based payment awards on the date of grant. Fair value of share-based payment awards are calculated based on the Company’s share prices which are quoted in market. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s Statement of Comprehensive Income. Share-based compensation expense recognized as above for the three months ended June 30, 2017 and 2016 was $2.1 million (including charges for restricted stock units and a dividend equivalent) and $1.9 million, respectively, including a charge for restricted stock and for the six months ended June 30, 2017 and 2016 was $4.6 million (including charges for restricted stock units and a dividend equivalent) and $3.7 million, respectively, including a charge for restricted stock.

The shares issued upon the exercise of the options are new share issues.

Restricted Stock Units:

On different dates during the years ended December 31, 2016, 2015 and 2014,and for the six months ended June 30, 2017, the Company issued restricted stock awards (adjusted to account for the 2014 stock split) of 415,519, 135,440, 293,904 and 39,022, respectively, to its non-employee directors and some employees as well as to some employees of its subsidiaries. The restricted stock awards were granted to employees for their future services as a retention tool at a zero exercise price, vest in shares with regards to 25% of the awards issued on or after the first, second, third and fourth anniversary of the grant dates.

During the third quarter of 2016, the Board of Directors declared a special cash dividend of fifteen dollars ($15.00) per share on outstanding common stock which was payable on October 3, 2016, to shareholders of record at the close of business on September 22, 2016. Further, it was resolved by the Board of Directors that restricted stock units granted to employees and directors prior to the dividend record date will receive an amount equivalent to the dividend when the applicable restriction on the restricted stock units lapses. The special dividend resulted in a modification of the existing stock compensation plan. Accordingly, incremental compensation cost was measured as the excess, if any, of the fair value of the modified award over the fair value of the original award accounted on a graded basis with the incremental expense being recognized over the remaining vesting period. As a result of the above, the Company has recorded an additional compensation cost of $0.5 million during the three months ended June 30, 2017 and $1.2 million during the six months ended June 30, 2017.

The impact on the Company’s results of operations of recording stock-based compensation (including impact of restricted stock) for the three and six months ended June 30, 2017 and 2016 was as follows:

					(in thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(in thousands)				(in thousands)
Cost of revenues	$	957	$	729	$	1,937	$	1,389
Selling, general and administrative expenses		1,159		1,132		2,648		2,293
	$	2,116	$	1,861	$	4,585	$	3,682

No cash was received from option exercises under all share-based payment arrangements for the six months ended June 30, 2017 and 2016, respectively.

A summary of the activity for restricted stock unit awards granted under our stock-based compensation plans as of June 30, 2017 and December 31, 2016 and changes during the period ended are presented below:

	Six Months Ended June 30, 2017					Year ended December 31, 2016
	Number Of Awards			Weighted Average Grant Date Fair Value		Number Of Awards			Weighted Average Grant Date Fair Value
Unvested at January 1		669,556		$	29.16		465,290		$	41.47
Granted		39,022		$	17.23		415,519		$	20.57
Vested		(40,590	)	$	41.69		(198,725	)	$	39.10
Forfeited		(66,165	)	$	37.99		(12,528	)	$	43.77
Unvested Total		601,823		$	26.57		669,556		$	29.16

As of June 30, 2017, $12.0 million of total remaining unrecognized stock-based compensation cost related to restricted stock awards is expected to be recognized over the weighted-average remaining requisite service period of 2.85 years.

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VACATION PAY

6 Months Ended

Jun. 30, 2017

VACATION PAY

18. VACATION PAY

The accrual for unutilized leave balance is determined based on the entire leave balance available to the employees at period end. The leave balance eligible for carry-forward is valued at gross compensation rates and eligible for compulsory encashment at basic compensation rates.

The gross charge (reversal) for unutilized earned leave was $(0.04) million and $1.9 million for the three months ended June 30, 2017 and 2016, respectively.

The gross charge (reversal) for unutilized earned leave of $(0.04) million during the three months ended June 30 ,2017 was primarily on account of reversal of leave cost for the differential between leave accruals and actual amount paid due to change in scheme of leave encashment availed by employees during second quarter of 2017.

The gross charge for unutilized earned leave was $0.4 million and $3.5 million for the six months ended June 30, 2017 and 2016, respectively.

The amounts accrued for unutilized earned leave are $20.5 million and $23.1 million as of June 30, 2017 and December 31, 2016, respectively, and are included within accrued payroll and related costs.

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EMPLOYEE BENEFIT PLANS

6 Months Ended

Jun. 30, 2017

EMPLOYEE BENEFIT PLANS

19. EMPLOYEE BENEFIT PLANS

The Company maintains a 401(k) retirement plan that covers all regular employees on Syntel, Inc.’s U.S. payroll. Eligible employees may contribute up to the lesser of 60% of their compensation or $18,000, subject to certain limitations, to the retirement plan. The Company may make contributions to the plan at the discretion of the Board of Directors; however, through June 30, 2017, no Company contributions have been made.

Eligible employees on Syntel’s Indian payroll receive benefits under the Provident Fund (“PF”), which is a defined contribution plan. Both the employee and the Company make monthly contributions equal to a specified percentage of the covered employee’s salary. The Company has no further obligations under the plan beyond its monthly contributions. The contributions made to the fund are administered and managed by the Government of India. The Company’s monthly contributions are expensed in the period they are incurred. Provident Fund Contribution expense recognized by Indian entities for the three months ended June 30, 2017 and 2016 was $1.5 million and $1.6 million, respectively and for six months ended June 30, 2017 and 2016 was $2.9 million and $3.1 million, respectively.

In accordance with the Payment of Gratuity Act, 1972 of India, the Indian subsidiary provides for gratuity, a defined retirement benefit plan (the “Gratuity Plan”) covering eligible employees. The Gratuity Plan provides a lump sum payment to vested employees at retirement, death, incapacitation or termination of employment, based on the respective employee’s salary and the tenure of employment. Liabilities with regard to the Gratuity Plan are determined by actuarial valuation and are expensed in the period determined. The Gratuity Plan is a non-funded plan. The amounts accrued under this plan are $15.6 million and $13.6 million as of June 30, 2017 and December 31, 2016, respectively, and are included within current liabilities and in other non-current liabilities, as applicable. Expense recognized by Indian entities under the Gratuity Plan for the three months ended June 30, 2017 and 2016 was $0.9 million and $0.9 million, respectively, and for six months ended June 30, 2017 and 2016 was $1.9 million and $1.8 million, respectively.

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CONSOLIDATION OF A VARIABLE INTEREST ENTITY

6 Months Ended

Jun. 30, 2017

CONSOLIDATION OF A VARIABLE INTEREST ENTITY

20. CONSOLIDATION OF A VARIABLE INTEREST ENTITY

Syntel Delaware is a 100% subsidiary of Syntel, Inc. and a 49% shareholder of the joint venture (“JV”) entity SSSSML, the other shareholder being an affiliate of State Street Bank. Syntel Delaware has a variable interest in SSSSML as it is entitled to all the profits and solely responsible for all losses incurred by SSSSML even though it holds only 49% in the JV entity. Accordingly, Syntel Delaware consolidates the JV entity SSSSML.

The Company’s Banking and Financial Services to State Street Bank and one other client are provided through the above joint venture between the Company and an affiliate of State Street Bank. Sales of Banking and Financial Services to these two clients represented approximately 11.2% and 10.7% of the Company’s total revenues for the three months ended June 30, 2017 and 2016, respectively and 11.5% and 10.6% for the six months ended June 30, 2017 and 2016, respectively.

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FAIR VALUE MEASUREMENTS

6 Months Ended

Jun. 30, 2017

FAIR VALUE MEASUREMENTS

21. FAIR VALUE MEASUREMENTS

The Company follows the guidance for fair value measurements and fair value option for financial assets and liabilities, which primarily relate to the Company’s investments and forward contracts, interest rate swaps and other financial assets and liabilities.

This standard includes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.

Fair values of interest rate swaps are measured using standard valuation models using inputs that are readily available in public markets, or can be derived from observable market transactions, including LIBOR spot and forward rates.

The fair value hierarchy consists of the following three levels:

• Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.

• Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.

• Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2017:

							(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	25.6	$	—	$	—	$	25.6
Term Deposits		—		4.2		—		4.2
Interest Rate Swap		—		0.8		—		0.8
Total Assets Measured at Fair Value	$	25.6	$	5.0	$	—	$	30.6

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2016:

							(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	15.0	$	—	$	—	$	15.0
Term Deposits		—		6.8		—		6.8
Interest Rate Swap		—		0.5				0.5
Total Assets Measured at Fair Value	$	15.0	$	7.3	$	—	$	22.3

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TERM DEPOSITS

6 Months Ended

Jun. 30, 2017

TERM DEPOSITS

22. TERM DEPOSITS

The following table summarizes the term deposits with various banks outstanding as of June 30, 2017 and December 31, 2016.

			(In Millions)
Balance Sheet Item	As of June 30, 2017		As of December 31, 2016
Short Term Investments	$	3.96	$	6.60
Non-Current Assets		0.24		0.23
Total	$	4.20	$	6.83

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OTHER INCOME (EXPENSE), NET

6 Months Ended

Jun. 30, 2017

OTHER INCOME (EXPENSE), NET

23. Other Income (Expense), Net

The following table represents the components of other income (expense), net.

							(In Thousands)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Interest expense	$	(3,216	)	$	(575	)	$	(6,592	)	$	(1,145	)
Interest income on term deposits		93			3,581			225			7,485
Gain on sale of mutual funds, net		329			1,778			560			2,479
Miscellaneous income		40			91			173			152
Total	$	(2,754	)	$	4,875		$	(5,634	)	$	8,971

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RECLASSIFICATIONS

6 Months Ended

Jun. 30, 2017

RECLASSIFICATIONS

24. Reclassifications

Certain amounts in previously issued consolidated financial statements have been reclassified to conform to the current period presentation.

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RECENT ACCOUNTING PRONOUNCEMENTS

6 Months Ended

Jun. 30, 2017

RECENT ACCOUNTING PRONOUNCEMENTS

25. RECENT ACCOUNTING PRONOUNCEMENTS

Recently adopted accounting standards

In March 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-09, Compensation—Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”). The effective date of ASU 2016-09 is for fiscal years beginning after December 15, 2016. The Company adopted the amendments in ASU 2016-09 during the first quarter of 2017. This standard simplifies or clarifies several aspects of the accounting for equity-based payment awards, including the income tax consequences, classification of awards as either equity or liabilities, and classification in the Consolidated Statements of Cash Flows. Certain changes under the ASU are required to be applied retrospectively, while other changes are required to be applied prospectively. There were no material impacts to the Company’s results of operations or liquidity as a result of adopting ASU 2016-09. The adoption of this ASU resulted in the following:

During the three months ended March 31, 2017, the Company has accounted on a prospective basis in the income statement for the income tax expense or benefit for the tax effects of differences recognized on or after the effective date of the equity-based payment awards between the deduction for an award for tax purposes and the cumulative compensation costs of that award recognized for financial reporting purposes. The Company has also presented on a prospective basis the excess tax benefits (deficiencies) as operating cash flows in its cash flow statement. Prior period cash flow statements have not been adjusted retrospectively to take into account the transition method.

The Company recognizes share-based payment forfeitures as they occur. Prior to adoption of this ASU, forfeitures were estimated in order to arrive at current period expense. There are no cumulative effect adjustments to accumulated deficit on the Consolidated Balance Sheet as of January 1, 2017 as a result of the adoption of these amendments.

Recently issued accounting standards

ASU 2014-09, Revenue from Contracts with Customers – Issued May 2014, was scheduled to be effective for Syntel beginning January 1, 2017, however on July 9, 2015, the FASB approved the proposal to defer the effective date of the ASU for public companies to January 1, 2018 with an option to elect to adopt the ASU as of the original effective date. The new standard is intended to substantially enhance the quality and consistency of how revenue is reported while also improving the comparability of the financial statements of companies using U.S. generally accepted accounting principles (GAAP) and those using International Financial Reporting Standards (IFRS). The core principle of ASU 2014-09 is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

On March 17, 2016, the FASB issued ASU No. 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), that clarifies how to apply revenue recognition guidance related to whether an entity is a principal or an agent. In April 2016, the FASB issued ASU 2016-10, Identifying Performance Obligations and Licensing, and ASU 2016-12 Narrow Scope Improvements and Practical Expedients, which amended ASU 2014-09, Revenue from Contract from Customers (Topic 606). These amendments of this ASU provide additional clarification on criterion within Topic 606 as well as additional guidance for transition to the new revenue recognition criteria. These amendments will provide additional guidance on the application of and transition to the new revenue recognition standards.

The new guidance also addresses the accounting for some costs to obtain or fulfill a customer contract and provides a set of disclosure requirements intended to give financial statement users comprehensive information about the nature, amount, timing, and uncertainty of revenues and cash flows arising from customer contracts. The requirements of this ASU and its impact on the Company are being evaluated. We have established a cross-functional coordinated implementation team to implement the standard update related to the recognition of revenue from contracts with customers. Evaluation of existing revenue contracts for any changes in line with above standard is in process with the help of experts. We are in the process of identifying and implementing changes to our processes to meet the standard’s updated reporting and disclosure requirements. We are also evaluating the internal control changes, if any, during the implementation of the standard. A transition method for this ASU is being evaluated.

In January 2016, the FASB issued an update (ASU 2016-01) to the standard on financial instruments. The update significantly revises an entity’s accounting related to (1) the classification and measurement of investments in equity securities and (2) the presentation of certain fair value changes for financial liabilities measured at fair value. It also amends certain disclosure requirements. The update is effective for fiscal years, and interim periods within those fiscal years, beginning on or after January 1, 2018. Upon adoption, entities will be required to make a cumulative-effect adjustment to the statement of financial position as of the beginning of the first reporting period in which the guidance is effective. However, the specific guidance on equity securities without readily determinable fair value will apply prospectively to all equity investments that exist as of the date of adoption. Early adoption of certain sections of this update is permitted. The requirements of this ASU and its impact on the Company are currently being evaluated.

In February 2016, the FASB issued an update (ASU 2016-02) to the standard on Leases to increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The ASU is effective for public business entities issuing financial statements for the annual periods beginning after December 15, 2018, and interim periods within those annual periods. The requirements of this ASU and its impact on the Company are currently being evaluated.

In June 2016, the FASB issued an update on Financial Instruments—Credit Losses (ASU 2016-13) Measurement of Credit Losses on Financial Instruments which (i) significantly changes the impairment model for most financial assets that are measured at amortized cost and certain other instruments from an incurred loss model to an expected loss model; and (ii) provides for recording credit losses on available-for-sale (AFS) debt securities through an allowance account. The update also requires certain incremental disclosures. The amendments in this update are effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The requirements of this ASU and its impact on the Company are currently being evaluated.

In August 2016, the FASB issued an update on Statement of Cash Flows (Topic 230)- Clarification of certain cash receipts and cash payments (ASU 2016-15) which requires the Company to present and classify certain cash receipts and cash payments in the statement of cash flows under Topic 230, Statement of Cash Flows, and other Topics. This update addresses eight specific cash flow issues with the objective of reducing the existing diversity in practice. The amendments in this update are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The requirements of this ASU and its impact on the Company are currently being evaluated.

In October 2016, the FASB issued ASU 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”. This update requires the income tax consequences of intra-entity transfers of assets other than inventory to be recognized when the intra-entity transfer occurs rather than deferring recognition of income tax consequences until the transfer was made with an outside party. ASU 2016-16 is effective for annual reporting periods, and interim periods therein, beginning after December 15, 2017. Early application is permitted as of the beginning of the interim or annual reporting period. A modified retrospective approach should be applied. The Company does not expect that the adoption of this guidance will have a significant impact on the Company’s Consolidated Financial Statements.

In November 2016, the FASB issued an update on Statement of Cash Flows (Topic 230) - Restricted Cash (ASU 2016-18). The amendments in this update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this update do not provide a definition of restricted cash or restricted cash equivalents. The amendments in this update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The requirements of this ASU and its impact on the Company are currently being evaluated.

In January 2017, the FASB issued an update (ASU 2017-04) to the standard on Intangibles—Goodwill and Other (Topic 350). To simplify the subsequent measurement of goodwill, the Board eliminated Step 2 from the goodwill impairment test. In computing the implied fair value of goodwill under Step 2, an entity had to perform procedures to determine the fair value at the impairment testing date of its assets and liabilities (including unrecognized assets and liabilities) following the procedure that would be required in determining the fair value of assets acquired and liabilities assumed in a business combination. The amendments in this Update modify the concept of impairment from the condition that exists when the carrying amount of goodwill exceeds its implied fair value to the condition that exists when the carrying amount of a reporting unit exceeds its fair value. An entity no longer will determine goodwill impairment by calculating the implied fair value of goodwill by assigning the fair value of a reporting unit to all of its assets and liabilities as if that reporting unit had been acquired in a business combination. Because these amendments eliminate Step 2 from the goodwill impairment test, they should reduce the cost and complexity of evaluating goodwill for impairment. A public business entity that is a U.S. Securities and Exchange Commission filer should adopt the amendments in this update for its annual or any interim goodwill impairment tests in fiscal years beginning after December 15, 2019. The requirements of this ASU are not expected to have material impact on the Company’s Consolidated Financial Statements.

In March 2017, the FASB issued Accounting Standards Update No. 2017-07, Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). The update requires employers to present the service cost component of the net periodic benefit cost in the same income statement line item as other employee compensation costs arising from services rendered during the period. The other components of net benefit cost, including interest cost, expected return on plan assets, amortization of prior service cost/credit and actuarial gain/loss, and settlement and curtailment effects, are to be presented outside of any subtotal of operating income. Employers will have to disclose the line(s) used to present the other components of net periodic benefit cost, if the components are not presented separately in the income statement. ASU 2017-07 is effective for fiscal years and interim periods beginning after December 15, 2017, and early adoption is permitted. The Company is currently evaluating the impact of adoption on its financial statements and related disclosures.

In May 2017, the FASB issued ASU 2017-09, Compensation—Stock Compensation (Topic 718): Scope of Modification Accounting guidance which provide clarity and reduce both (i) diversity in practice; and (ii) cost and complexity when accounting for a change in the terms or conditions of a share-based payment award. The amendments in this guidance should be applied prospectively in annual periods beginning after December 15, 2017, including interim periods within those periods, with early adoption permitted. The adoption of this guidance is not expected to have a material effect on the Company’s consolidated financial statements.

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SUBSEQUENT EVENTS

6 Months Ended

Jun. 30, 2017

SUBSEQUENT EVENTS

26. SUBSEQUENT EVENTS

The Board has authorized a stock repurchase plan under which the Company may repurchase shares of common stock with a total value not to exceed $60 Million. The stock repurchase plan is effective on July 25, 2017 and is authorized to continue through December 31, 2018. Repurchases under the Company’s new program may be made in open market or privately negotiated transactions in compliance with Securities and Exchange Commission Rule 10b-18, subject to market conditions, applicable legal requirements, and other relevant factors. Any repurchased common stock will be available for use in connection with the Company’s incentive plan and for other corporate purposes.

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DERIVATIVE INSTRUMENTS (Tables)

6 Months Ended

Jun. 30, 2017

Information of Location and Fair Value of Derivative Financial Instrument Included in Consolidated Statement of Financial Positions

The following table provides information on the location and fair value of the derivative financial instrument included in our consolidated statement of financial positions as of June 30, 2017.

Particulars	Notional amount outstanding		Fair value of derivative and location on statement of financial position as on 30th June 2017				Loss on fair value for three months ended June 30, 2017					Gain on fair value for six months ended June 30, 2017
							Effective			Ineffective		Effective		Ineffective
			(In thousands)
Cash flow hedge				Deferred income taxes and other non-current assets		Other current assets
Pay fixed interest rate swap	$	288.8 Million	$	765	$	59	$	(672	)		—	$	291		—

Interest Rate Swap | Cash flow Hedge

Net Gains (Losses) Recorded in Accumulated Other Comprehensive (Loss) Income

The following table presents the net gains (losses) recorded in accumulated other comprehensive (loss) income relating to the Swap contract designated as cash flow hedges for the periods ending June 30, 2017 and 2016.

Gains on Derivatives:

						(In thousands)
	THREE MONTHS ENDED June 30,					SIX MONTHS ENDED June 30,
	2017			2016		2017		2016
Gains (Loss) recognized in other comprehensive income	$	(672	)	$	—	$	291	$	—

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CHANGES IN ACCUMULATED OTHER COMPREHENSIVE LOSS BY COMPONENT (NET OF TAX EXPENSE OR BENEFIT) (Tables)

6 Months Ended

Jun. 30, 2017

Changes in Balances of Accumulated Other Comprehensive Loss

The changes in balances of accumulated other comprehensive loss for the three months ended June 30, 2017 are as follows:

										(In thousands)
	Foreign Currency Translation Adjustments			Unrealized gain(losses) on derivatives designated as cash flow hedges			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(248,035	)	$	904		$	362		$	(1,336	)	$	(248,105	)
Other comprehensive income (loss) before reclassifications		937			(406	)		136			—			667
Amounts reclassified from accumulated other comprehensive income (loss)		—						(63	)		18			(45	)
Net current-period other comprehensive income	$	937			(406	)	$	73		$	18		$	622
Ending Balance	$	(247,098	)	$	498		$	435		$	(1,318	)	$	(247,483	)

The changes in balances of accumulated other comprehensive loss for the three months ended June 30, 2016 are as follows:    

							(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(236,476	)	$	1,586		$	(784	)	$	(235,674	)
Other comprehensive income (loss) before reclassifications		(16,109	)		634			—			(15,475	)
Amounts reclassified from accumulated other comprehensive income (loss)		—			(750	)		12			(738	)
Net current-period other comprehensive income (loss)	$	(16,109	)	$	(116	)	$	12		$	(16,213	)
Ending Balance	$	(252,585	)	$	1,470		$	(772	)	$	(251,887	)

The changes in balances of accumulated other comprehensive loss for the six months ended June 30, 2017 are as follows:    

									(In thousands)
	Foreign Currency Translation Adjustments			Unrealized gain on derivatives designated as cash flow hedges		Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Loss
Beginning balance	$	(254,210	)		322	$	328		$	(1,345	)	$	(254,905	)
Other comprehensive income(loss) before reclassifications		7,112			176		165			6			7,459
Amounts reclassified from accumulated other comprehensive income(loss)		—					(58	)		21			(37	)
Net current-period other comprehensive income (loss)	$	7,112			176	$	107		$	27		$	7,422
Ending Balance	$	(247,098	)		498	$	435		$	(1,318	)	$	(247,483	)

The change in balances of accumulated comprehensive loss for the six months ended June 30, 2016 is as follows:    

							(In thousands)
	Foreign Currency Translation Adjustments			Unrealized Gains (Losses) on Securities			Defined Benefit Pension Plans			Accumulated Other Comprehensive Income(Loss)
Beginning balance	$	(235,146	)	$	332		$	(795	)	$	(235,609	)
Other comprehensive income(loss) before reclassifications		(17,439	)		1,184			—			(16,255	)
Amounts reclassified from accumulated other comprehensive Income(loss)		—			(46	)		23			(23	)
Net current-period other comprehensive income	$	(17,439	)	$	1,138		$	23		$	(16,278	)
Ending Balance	$	(252,585	)	$	1,470		$	(772	)	$	(251,887	)

Reclassifications Out of Accumulated Other Comprehensive Income (Loss)

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended June 30, 2017 are as follows:    

					(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net income (loss) Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income, net	$	(89	)	$	26		$	(63	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	24		$	(6	)	$	18

Reclassifications out of accumulated other comprehensive income (loss) for the three months ended June 30, 2016 are as follows:    

					(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income	$	(1,130	)	$	380		$	(750	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	19		$	(7	)	$	12

Reclassifications out of accumulated other comprehensive income (loss) for the six months ended June 30, 2017 are as follows:    

					(In thousands)
Details about Accumulated Other Comprehensive Income (Loss) Components	Affected Line Item in the Statement Where Net income (loss) Is Presented	Before Tax Amount			Tax Expense (Benefit)			Net of Tax
Unrealized (gains) losses on available for sale securities	Other income, net	$	(81	)	$	23		$	(58	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	32		$	(11	)	$	21

Reclassifications out of accumulated other comprehensive loss for the six months ended June 30, 2016 is as follows:    

					(In thousands)
Details about Accumulated Other Comprehensive Loss Components	Affected Line Item in the Statement Where Net Income Is Presented	Before Tax Amount			Tax (Expense) Benefit			Net of Tax
Unrealized gains (losses) on available for sale securities	Other income, net	$	(69	)	$	23		$	(46	)
Amortization of prior service cost included in net periodic pension cost	Cost of revenues	$	35		$	(12	)	$	23

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TAX ON OTHER COMPREHENSIVE INCOME (LOSS) (Tables)

6 Months Ended

Jun. 30, 2017

Total Tax Benefit (Expense) on Other Comprehensive Income (Loss)

Total tax benefit (expense) on other comprehensive income (loss) for the three and six months ended June 30, 2017 and 2016 is as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
	(In thousands)						(In thousands)
Foreign currency translation adjustments	$	—		$	(15	)	$	—		$	(105	)
Unrealized gain (loss) on derivatives designated as cash flow hedges		266			—			(115	)
Tax benefit(expense) on unrealized gains(losses) on securities		(36	)		44			(53	)		(596	)
Tax benefit(expense) on defined benefit pension plans		(6	)		(7	)		(11	)		(12	)
Total tax benefit(expense) on other comprehensive income(loss)	$	224		$	22		$	(179	)	$	(713	)

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CASH AND CASH EQUIVALENTS AND SHORT TERM INVESTMENTS (Tables)

6 Months Ended

Jun. 30, 2017

Summary of Short-term Investments

The following table summarizes short-term investments as of June 30, 2017 and December 31, 2016:    

	2017		2016
	June 30		December 31
	(In thousands)
Investments in mutual funds at fair value	$	25,603	$	15,016
Term deposits with banks		3,959		6,598
Total	$	29,562	$	21,614

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LINE OF CREDIT AND TERM LOAN (Tables)

6 Months Ended

Jun. 30, 2017

Principal Payment For Term Loan

The Term Loan provides for the principal payments as under:

Period		Payment amount per quarter
Beginning from	Until	(In millions)
December 31, 2016	September 30, 2017		3.750
October 31, 2017	September 30, 2018		5.625
October 31, 2018	September 30, 2021		7.500

Future Scheduled Payments on Senior Credit Facility

Future scheduled payments on the Senior Credit Facility, at June 30, 2017 are as follows:

			(In thousands)
	Term Loan		Revolving Facility
	Principal Payments		Principal Payments
2017	$	9,375
2018	$	24,375
2019	$	30,000
2020	$	30,000
2021	$	195,000	$	110,000

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EARNINGS PER SHARE (Tables)

6 Months Ended

Jun. 30, 2017

Computation of Earnings Per Share

The following tables set forth the computation of earnings per share:

	(in thousands, except per share earnings)
	Three Months Ended June 30,
	2017				2016
	Weighted Average Shares		Earnings per Share		Weighted Average Shares		Earnings per Share
Basic earnings per share		83,818	$	0.44		84,140	$	0.70
Potential dilutive effect of restricted stock units outstanding		35		—		138		—
Diluted earnings per share		83,853	$	0.44		84,278	$	0.70

	(in thousands, except per share earnings)
	Six Months Ended June 30,
	2017					2016
	Weighted Average Shares		Earnings per Share			Weighted Average Shares		Earnings per Share
Basic earnings per share		83,807	$	0.90			84,126	$	1.33
Potential dilutive effect of restricted stock units outstanding		37		(0.01	)		146		—
Diluted earnings per share		83,844	$	0.89			84,272	$	1.33

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SEGMENT REPORTING (Tables)

6 Months Ended

Jun. 30, 2017

Schedule of Revenues from External Customers and Segment Gross Profit

Related Information,” segment disclosures are presented below. Revenues from external customers and gross profit for the Banking and Financial Services; Healthcare and Life Sciences; Insurance; Manufacturing; and Retail, Logistics and Telecom segments for the three and six months ended June 30, 2017 and June 30, 2016 are as follows:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
	(in thousands)						(in thousands)
Net Revenues:
Banking and Financial Services	$	103,663		$	120,351		$	209,632		$	241,809
Healthcare and Life Sciences		39,614			39,998			77,176			78,361
Insurance		33,102			32,271			65,501			62,820
Manufacturing		9,451			11,838			18,982			23,254
Retail, Logistics and Telecom		40,981			41,560			81,389			81,164
	$	226,811		$	246,018		$	452,680		$	487,408
Gross Profit:
Banking and Financial Services		37,681			43,892			76,993			90,297
Healthcare and Life Sciences		15,455			16,669			29,945			30,266
Insurance		10,348			11,420			21,319			21,981
Manufacturing		2,498			3,619			4,887			6,816
Retail, Logistics and Telecom		16,027			16,087			31,708			32,694
Total Segment Gross Profit		82,009			91,687			164,852			182,054
Corporate Direct cost		(549	)		(702	)		(970	)		(1,345	)
Gross Profit	$	81,460		$	90,985		$	163,882		$	180,709
Selling, general and administrative expenses		28,699			18,265			58,990			47,942
Income from operations	$	52,761		$	72,720		$	104,892		$	132,767

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GEOGRAPHIC INFORMATION (Tables)

6 Months Ended

Jun. 30, 2017

Net Revenues and Long-Lived Assets by Geographic Area

The Company’s net revenues and long-lived assets, by geographic area, are as follows:

	Three Months Ended June 30,				Six Months Ended June 30,
Net Revenues (1)	2017		2016		2017		2016
	(in thousands)				(in thousands)
North America (2)	$	203,373	$	219,730	$	406,949	$	435,440
India		1,056		1,596		2,214		3,061
Europe (3)		21,734		24,084		42,253		47,711
Rest of the World		648		608		1,264		1,196
Total revenue	$	226,811	$	246,018	$	452,680	$	487,408

	As of		As of
Long-Lived Assets (4)	June, 30		December, 31
	2017		2016
	(in thousands)
North America (2)	$	2,850	$	3,307
India		103,111		102,638
Europe (3)		1,467		632
Rest of the world		683		805
Total	$	108,111	$	107,382

Notes for the Geographic Information Disclosure:

1. Net revenues are attributed to regions based upon customer location.

2. Primarily relates to operations in the United States.

3. Primarily relates to operations in the United Kingdom and Poland.

4. Long-lived assets include property and equipment, net of accumulated depreciation and amortization and goodwill.

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INCOME TAXES (Tables)

6 Months Ended

Jun. 30, 2017

Differentiation between Federal Statutory Tax Rate and Overall Effective Tax Rate

The following table accounts for the differences between the federal statutory tax rate of 35% and the Company’s overall effective tax rate:

	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Statutory provision		35.0	%		35.0	%		35.0	%		35.0	%
State taxes, net of federal benefit		1.1	%		0.4	%		1.9	%		0.5	%
City taxes		0.2	%		0.1	%		0.1	%		0.1	%
Foreign effective tax rates different from US statutory rate		(9.6	)%		(11.3	)%		(10.6	)%		(12.3	)%
Prior Year related state tax payment								0.9	%
Valuation Reserve Adjustment		—			—			(2.9	%)		(2.2	)%
Effective Income Tax Rate		26.7	%		24.2	%		24.4	%		21.1	%

Minimum Alternate Tax (MAT)

Expiration Years of Minimum Alternate Tax Credit

The MAT credit as of June 30, 2017 of $37.99 million (net of valuation allowance of $2.47 million) must be utilized before March 31 of the following financial years and will expire as follows:

Year of Expiry Of MAT Credit	Amount in USD (in millions)
2022-2023		0.20
2023-2024		0.27
2024-2025		1.00
2025-2026		1.85
2026-2027		0.82
2027-2028		6.16
2028-2029		7.29
2029-2030		8.00
2030-2031		10.30
2031-2032		3.29
2032-2033		1.28
Total		40.46
Less: valuation allowance		(2.47	)
Total (net of valuation allowance)		37.99

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STOCK BASED COMPENSATION (Tables)

6 Months Ended

Jun. 30, 2017

Stock-Based Compensation Impact on Company's Operations

The impact on the Company’s results of operations of recording stock-based compensation (including impact of restricted stock) for the three and six months ended June 30, 2017 and 2016 was as follows:

					(in thousands)
	Three Months Ended June 30,				Six Months Ended June 30,
	2017		2016		2017		2016
	(in thousands)				(in thousands)
Cost of revenues	$	957	$	729	$	1,937	$	1,389
Selling, general and administrative expenses		1,159		1,132		2,648		2,293
	$	2,116	$	1,861	$	4,585	$	3,682

Summary of Activity for Restricted Stock Unit Awards Granted

A summary of the activity for restricted stock unit awards granted under our stock-based compensation plans as of June 30, 2017 and December 31, 2016 and changes during the period ended are presented below:

	Six Months Ended June 30, 2017					Year ended December 31, 2016
	Number Of Awards			Weighted Average Grant Date Fair Value		Number Of Awards			Weighted Average Grant Date Fair Value
Unvested at January 1		669,556		$	29.16		465,290		$	41.47
Granted		39,022		$	17.23		415,519		$	20.57
Vested		(40,590	)	$	41.69		(198,725	)	$	39.10
Forfeited		(66,165	)	$	37.99		(12,528	)	$	43.77
Unvested Total		601,823		$	26.57		669,556		$	29.16

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FAIR VALUE MEASUREMENTS (Tables)

6 Months Ended

Jun. 30, 2017

Financial Assets Measured at Fair Value on Recurring Basis

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of June 30, 2017:

							(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	25.6	$	—	$	—	$	25.6
Term Deposits		—		4.2		—		4.2
Interest Rate Swap		—		0.8		—		0.8
Total Assets Measured at Fair Value	$	25.6	$	5.0	$	—	$	30.6

The following table summarizes the Company’s financial assets measured at fair value on a recurring basis as of December 31, 2016:

							(In Millions)
	Level 1		Level 2		Level 3		Total
Short Term Investments-
Available for Sale Securities	$	15.0	$	—	$	—	$	15.0
Term Deposits		—		6.8		—		6.8
Interest Rate Swap		—		0.5				0.5
Total Assets Measured at Fair Value	$	15.0	$	7.3	$	—	$	22.3

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TERM DEPOSITS (Tables)

6 Months Ended

Jun. 30, 2017

Term Deposits with Various Banks Outstanding

The following table summarizes the term deposits with various banks outstanding as of June 30, 2017 and December 31, 2016.

			(In Millions)
Balance Sheet Item	As of June 30, 2017		As of December 31, 2016
Short Term Investments	$	3.96	$	6.60
Non-Current Assets		0.24		0.23
Total	$	4.20	$	6.83

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OTHER INCOME (EXPENSE), NET (Tables)

6 Months Ended

Jun. 30, 2017

Components of Other Income (Expense), Net

The following table represents the components of other income (expense), net.

							(In Thousands)
	Three Months Ended						Six Months Ended
	June 30,						June 30,
	2017			2016			2017			2016
Interest expense	$	(3,216	)	$	(575	)	$	(6,592	)	$	(1,145	)
Interest income on term deposits		93			3,581			225			7,485
Gain on sale of mutual funds, net		329			1,778			560			2,479
Miscellaneous income		40			91			173			152
Total	$	(2,754	)	$	4,875		$	(5,634	)	$	8,971

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Derivative Instruments - Additional Information (Detail)	Jun. 30, 2017 USD ($) Derivative	Dec. 31, 2016 Derivative	Nov. 30, 2016 USD ($)
Foreign Exchange Forward
Derivative Instruments And Hedging Activities [Line Items]
Foreign exchange forward contracts outstanding | Derivative	0	0
Cash flow Hedge | Interest Rate Swap
Derivative Instruments And Hedging Activities [Line Items]
Derivate Notional Amount | $	$ 288,800,000		$ 300,000,000

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Information on the Location and Fair Value of Derivative Financial Instrument Included in Consolidated Statement of Financial Positions (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Nov. 30, 2016
Derivatives, Fair Value [Line Items]
Gain (loss) on fair value, Effective	$ (672,000)	$ 0	$ 291,000	$ 0
Cash flow Hedge | Interest Rate Swap
Derivatives, Fair Value [Line Items]
Notional amount Outstanding	288,800,000		288,800,000		$ 300,000,000
Gain (loss) on fair value, Effective	(672,000)		291,000
Gain (loss) on fair value, Ineffective	0		0
Cash flow Hedge | Deferred Income Taxes and Other Non-current Assets | Interest Rate Swap
Derivatives, Fair Value [Line Items]
Fair value of derivative	765,000		765,000
Cash flow Hedge | Other Current Assets | Interest Rate Swap
Derivatives, Fair Value [Line Items]
Fair value of derivative	$ 59,000		$ 59,000

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Net Gains (Losses) Recorded in Accumulated Other Comprehensive (Loss) Income Relating to Swap Contract Designated as Cash Flow Hedges (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Derivative [Line Items]
Gains (Loss) recognized in other comprehensive income	$ (672)	$ 0	$ 291	$ 0

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Changes in Balances of Accumulated Other Comprehensive Loss (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance			$ (183,087)
Other comprehensive income (loss) before reclassifications	$ 667	$ (15,475)	7,459	$ (16,255)
Amounts reclassified from accumulated other comprehensive income (loss)	(45)	(738)	(37)	(23)
Net current-period other comprehensive income (loss)	622	(16,213)	7,422	(16,278)
Ending Balance	(97,253)		(97,253)
Foreign Currency Translation Adjustments
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(248,035)	(236,476)	(254,210)	(235,146)
Other comprehensive income (loss) before reclassifications	937	(16,109)	7,112	(17,439)
Net current-period other comprehensive income (loss)	937	(16,109)	7,112	(17,439)
Ending Balance	(247,098)	(252,585)	(247,098)	(252,585)
Unrealized Gain on Derivatives Designated as Cash Flow Hedges
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	904		322
Other comprehensive income (loss) before reclassifications	(406)		176
Net current-period other comprehensive income (loss)	(406)		176
Ending Balance	498		498
Unrealized Gains (Losses) on Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	362	1,586	328	332
Other comprehensive income (loss) before reclassifications	136	634	165	1,184
Amounts reclassified from accumulated other comprehensive income (loss)	(63)	(750)	(58)	(46)
Net current-period other comprehensive income (loss)	73	(116)	107	1,138
Ending Balance	435	1,470	435	1,470
Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(1,336)	(784)	(1,345)	(795)
Other comprehensive income (loss) before reclassifications			6
Amounts reclassified from accumulated other comprehensive income (loss)	18	12	21	23
Net current-period other comprehensive income (loss)	18	12	27	23
Ending Balance	(1,318)	(772)	(1,318)	(772)
Accumulated Other Comprehensive Loss
Accumulated Other Comprehensive Income (Loss) [Line Items]
Beginning balance	(248,105)	(235,674)	(254,905)	(235,609)
Net current-period other comprehensive income (loss)			7,422
Ending Balance	$ (247,483)	$ (251,887)	$ (247,483)	$ (251,887)

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Reclassifications Out of Accumulated Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive income (loss)	$ (45)	$ (738)	$ (37)	$ (23)
Unrealized Gains (Losses) on Securities
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive income (loss), before tax amount	(89)	(1,130)	(81)	(69)
Amounts reclassified from accumulated other comprehensive income (loss), tax expense (benefit)	26	380	23	23
Amounts reclassified from accumulated other comprehensive income (loss)	(63)	(750)	(58)	(46)
Defined Benefit Pension Plans
Accumulated Other Comprehensive Income (Loss) [Line Items]
Amounts reclassified from accumulated other comprehensive income (loss), before tax amount	24	19	32	35
Amounts reclassified from accumulated other comprehensive income (loss), tax expense (benefit)	(6)	(7)	(11)	(12)
Amounts reclassified from accumulated other comprehensive income (loss)	$ 18	$ 12	$ 21	$ 23

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Total Tax Benefit (Expense) on Other Comprehensive Income (Loss) (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Components of Taxes Other Than Income [Line Items]
Foreign currency translation adjustments		$ (15)		$ (105)
Unrealized gain (loss) on derivatives designated as cash flow hedges	$ 266		$ (115)
Tax benefit(expense) on unrealized gains(losses) on securities	(36)	44	(53)	(596)
Tax benefit(expense) on defined benefit pension plans	(6)	(7)	(11)	(12)
Total tax benefit(expense) on other comprehensive income(loss)	$ 224	$ 22	$ (179)	$ (713)

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Cash and Cash Equivalents and Short Term Investments - Additional Information (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016	Jun. 30, 2016	Dec. 31, 2015
Restricted Cash and Cash Equivalents Items [Line Items]
Cash and cash equivalents	$ 57,447	$ 78,332	$ 702,446	$ 500,499
Term deposits	4,000	6,600
Non current term deposits with banks	237	225
Restricted Deposits
Restricted Cash and Cash Equivalents Items [Line Items]
Term deposits	$ 610	$ 440

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Summary of Short-term Investments (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule of Investments [Line Items]
Investments in mutual funds at fair value	$ 25,603	$ 15,016
Term deposits with banks	3,959	6,598
Total	$ 29,562	$ 21,614

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Line of Credit and Term Loan - Additional Information (Detail) - USD ($)				3 Months Ended		6 Months Ended		12 Months Ended
	Sep. 12, 2016	May 09, 2016	May 23, 2013	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016	Nov. 30, 2016
Line of Credit Facility [Line Items]
Gains/ (losses) recognized in other comprehensive income (loss)				$ (672,000)	$ 0	$ 291,000	$ 0
Interest Rate Risk
Line of Credit Facility [Line Items]
Hedged interest rate risk on entire term loan									$ 300,000,000
Term Loan Facility
Line of Credit Facility [Line Items]
Debt principal payment				3,750,000		11,250,000
Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt principal payment				45,000,000		90,000,000
Interest Rate Swap | Term Loan Facility
Line of Credit Facility [Line Items]
Gains/ (losses) recognized in other comprehensive income (loss)				(700,000)		300,000
Amended Credit Agreement
Line of Credit Facility [Line Items]
Unamortized debt issuance cost				900,000		900,000		$ 900,000
Amended Credit Agreement | Term Loan Facility
Line of Credit Facility [Line Items]
Debt outstanding balance				288,200,000		288,200,000		299,900,000
Amended Credit Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt outstanding balance				$ 109,700,000		$ 109,700,000		199,900,000
Amended Credit Agreement | Term Loan and Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt interest rate description						The interest rates under the Amended Credit Agreement were, with respect to both the revolving credit facility and the term loan, (a) for the period beginning on the First Amendment Effective Date through and including the date prior to the first anniversary of the First Amendment Effective Date, (i) the Eurodollar Rate (as that term is defined in the Amended Credit Agreement) plus 1.50% with respect to Eurodollar Rate Loans (as that term is defined in the Amended Credit Agreement) and (ii) the Base Rate (as that term is defined in the Amended Credit Agreement) plus 0.50% with respect to Base Rate Loans (as that term is defined in the amendment to the Credit Agreement), (b) for the period beginning on the first anniversary of the First Amendment Effective Date through and including the date prior to the second anniversary of the First Amendment Effective Date, (i) the Eurodollar Rate plus 1.45% with respect to Eurodollar Rate Loans and (ii) the Base Rate plus 0.45% with respect to Base Rate Loans, and (c) for the period beginning on the second anniversary of the First Amendment Effective Date and continuing thereafter, (i) the Eurodollar Rate plus 1.40% with respect to Eurodollar Rate Loans and (ii) the Base Rate plus 0.40% with respect to Base Rate Loans.
Amended Credit Agreement | Term Loan and Revolving Credit Facility | Eurodollar | First Amendment Effective Date through to the First Anniversary
Line of Credit Facility [Line Items]
Debt interest rate		1.50%
Amended Credit Agreement | Term Loan and Revolving Credit Facility | Eurodollar | First Anniversary of the First Amendment Effective Date through Prior to the Second Anniversary Date
Line of Credit Facility [Line Items]
Debt interest rate		1.45%
Amended Credit Agreement | Term Loan and Revolving Credit Facility | Eurodollar | Second Anniversary of the First Amendment Effective Date and Continuing Thereafter
Line of Credit Facility [Line Items]
Debt interest rate		1.40%
Amended Credit Agreement | Term Loan and Revolving Credit Facility | Base Rate | First Amendment Effective Date through to the First Anniversary
Line of Credit Facility [Line Items]
Debt interest rate		0.50%
Amended Credit Agreement | Term Loan and Revolving Credit Facility | Base Rate | First Anniversary of the First Amendment Effective Date through Prior to the Second Anniversary Date
Line of Credit Facility [Line Items]
Debt interest rate		0.45%
Amended Credit Agreement | Term Loan and Revolving Credit Facility | Base Rate | Second Anniversary of the First Amendment Effective Date and Continuing Thereafter
Line of Credit Facility [Line Items]
Debt interest rate		0.40%
Senior Credit Facility
Line of Credit Facility [Line Items]
Debt interest rate description						The interest rates applicable to the Senior Credit Facility other than in respect of swing line loans are LIBOR plus 1.50% or, at the option of the Company, the Base Rate (to be defined as the highest of (x) the Federal Funds Rate plus 0.50%, (y) the Bank of America prime rate, or (z) LIBOR plus 1.00%) plus 0.50%. Each swingline loan shall bear interest at the Base Rate plus 0.50%. In no event shall LIBOR be less than 0% per annum.
Senior Credit Facility | Base Rate | Option Two
Line of Credit Facility [Line Items]
Debt interest rate	0.50%
Senior Credit Facility | LIBOR | Option One
Line of Credit Facility [Line Items]
Debt interest rate	1.50%
Senior Credit Facility | LIBOR | Option Two
Line of Credit Facility [Line Items]
Debt interest rate	1.00%
Senior Credit Facility | Federal Funds Effective Swap Rate | Option Two
Line of Credit Facility [Line Items]
Debt interest rate	0.50%
Senior Credit Facility | Term Loan Facility
Line of Credit Facility [Line Items]
Line of credit, effective interest rate				2.48%		2.48%
Senior Credit Facility | $160 million of Revolving Facility
Line of Credit Facility [Line Items]
Line of credit, effective interest rate				2.48%		2.48%
Senior Credit Facility | $40 million of Revolving Facility
Line of Credit Facility [Line Items]
Line of credit, effective interest rate				2.27%		2.27%
Swing Line Loan | Base Rate
Line of Credit Facility [Line Items]
Debt interest rate	0.50%
Swing Line Loan | LIBOR | Maximum
Line of Credit Facility [Line Items]
Debt interest rate	0.00%
Bank of America | Credit Agreement
Line of Credit Facility [Line Items]
Debt maximum borrowing capacity			$ 150,000,000
Bank of America | Credit Agreement | Term Loan Facility
Line of Credit Facility [Line Items]
Debt maximum borrowing capacity			$ 60,000,000
Debt maturity period			3 years
Maturity date of debt instrument			May 23, 2016
Repayments of debt								$ 190,000,000
Bank of America | Credit Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt maximum borrowing capacity			$ 90,000,000
Debt maturity period			3 years
Maturity date of debt instrument			May 23, 2016
Bank of America | Amended Credit Agreement
Line of Credit Facility [Line Items]
Debt maximum borrowing capacity		$ 200,000,000
Bank of America | Amended Credit Agreement | Guarantors | Syntel India | Security and Pledge Agreement
Line of Credit Facility [Line Items]
Pledge in equity interests in Syntel India		65.00%
Bank of America | Amended Credit Agreement | Term Loan Facility
Line of Credit Facility [Line Items]
Debt maximum borrowing capacity		$ 100,000,000
Maturity date of debt instrument		May 09, 2019
Additional debt borrowing capacity		$ 40,000,000
Bank of America | Amended Credit Agreement | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt maximum borrowing capacity		$ 100,000,000
Maturity date of debt instrument		May 09, 2019
Additional debt borrowing capacity		$ 10,000,000
Bank of America | Senior Credit Facility
Line of Credit Facility [Line Items]
Debt maximum borrowing capacity	$ 500,000,000
Bank of America | Senior Credit Facility | Guarantors | Syntel India | Security and Pledge Agreement
Line of Credit Facility [Line Items]
Pledge in equity interests in Syntel India	65.00%
Bank of America | Senior Credit Facility | Term Loan Facility
Line of Credit Facility [Line Items]
Debt maximum borrowing capacity	$ 300,000,000
Debt maturity period	5 years
Maturity date of debt instrument	Sep. 11, 2021
Bank of America | Senior Credit Facility | Revolving Credit Facility
Line of Credit Facility [Line Items]
Debt maximum borrowing capacity	$ 200,000,000
Debt maturity period	5 years
Maturity date of debt instrument	Sep. 11, 2021

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Principal Payment For Term Loan (Detail) - Term Loan Facility - USD ($) $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 30, 2017	Jun. 30, 2017
Line of Credit Facility [Line Items]
Payment amount per quarter	$ 3,750	$ 11,250
Senior Credit Facility | Debt Instrument, Redemption, Period One
Line of Credit Facility [Line Items]
Principal payments, beginning from		Dec. 31, 2016
Principal payments, until		Sep. 30, 2017
Payment amount per quarter		$ 3,750
Senior Credit Facility | Debt Instrument, Redemption, Period Two
Line of Credit Facility [Line Items]
Principal payments, beginning from		Oct. 31, 2017
Principal payments, until		Sep. 30, 2018
Payment amount per quarter		$ 5,625
Senior Credit Facility | Debt Instrument, Redemption, Period Three
Line of Credit Facility [Line Items]
Principal payments, beginning from		Oct. 31, 2018
Principal payments, until		Sep. 30, 2021
Payment amount per quarter		$ 7,500

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Future Scheduled Payments on Senior Credit Facility (Detail) $ in Thousands	Jun. 30, 2017 USD ($)
Term Loan
Schedule Of Debt Instruments [Line Items]
Line of credit and term loan, future schedule payment 2017	$ 9,375
Line of credit and term loan, future schedule payment 2018	24,375
Line of credit and term loan, future schedule payment 2019	30,000
Line of credit and term loan, future schedule payment 2020	30,000
Line of credit and term loan, future schedule payment 2021	195,000
Revolving Credit Facility
Schedule Of Debt Instruments [Line Items]
Line of credit and term loan, future schedule payment 2021	$ 110,000

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Computation of Earnings Per Share (Detail) - $ / shares shares in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Earnings Per Share Basic And Diluted [Line Items]
Basic earnings per share, Weighted Average Shares	83,818	84,140	83,807	84,126
Potential dilutive effect of restricted stock units outstanding	35	138	37	146
Diluted earnings per share, Weighted Average Shares	83,853	84,278	83,844	84,272
Basic earnings per share, Earnings per Share	$ 0.44	$ 0.70	$ 0.90	$ 1.33
Potential dilutive effect of restricted stock units outstanding			(0.01)
Diluted earnings per share, Earnings per Share	$ 0.44	$ 0.70	$ 0.89	$ 1.33

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Financial Data for Each Segment (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Quarterly Financial Data [Line Items]
Net revenues	[1]	$ 226,811	$ 246,018	$ 452,680	$ 487,408
Gross Profit		81,460	90,985	163,882	180,709
Selling, general and administrative expenses		28,699	18,265	58,990	47,942
Income from operations		52,761	72,720	104,892	132,767
Banking and Financial Services
Quarterly Financial Data [Line Items]
Net revenues		103,663	120,351	209,632	241,809
Healthcare and Life Sciences
Quarterly Financial Data [Line Items]
Net revenues		39,614	39,998	77,176	78,361
Insurance
Quarterly Financial Data [Line Items]
Net revenues		33,102	32,271	65,501	62,820
Manufacturing
Quarterly Financial Data [Line Items]
Net revenues		9,451	11,838	18,982	23,254
Retail, Logistics and Telecom
Quarterly Financial Data [Line Items]
Net revenues		40,981	41,560	81,389	81,164
Operating Segments
Quarterly Financial Data [Line Items]
Gross Profit		82,009	91,687	164,852	182,054
Operating Segments | Banking and Financial Services
Quarterly Financial Data [Line Items]
Gross Profit		37,681	43,892	76,993	90,297
Operating Segments | Healthcare and Life Sciences
Quarterly Financial Data [Line Items]
Gross Profit		15,455	16,669	29,945	30,266
Operating Segments | Insurance
Quarterly Financial Data [Line Items]
Gross Profit		10,348	11,420	21,319	21,981
Operating Segments | Manufacturing
Quarterly Financial Data [Line Items]
Gross Profit		2,498	3,619	4,887	6,816
Operating Segments | Retail, Logistics and Telecom
Quarterly Financial Data [Line Items]
Gross Profit		16,027	16,087	31,708	32,694
Corporate direct costs
Quarterly Financial Data [Line Items]
Gross Profit		$ (549)	$ (702)	$ (970)	$ (1,345)

[1] Net revenues are attributed to regions based upon customer location.

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Segment Reporting - Additional Information (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Revenue, Major Customer [Line Items]
Total consolidated revenue from customer	[1]	$ 226,811	$ 246,018	$ 452,680	$ 487,408
American Express Corp.
Revenue, Major Customer [Line Items]
Total consolidated revenue from customer		$ 37,600	$ 53,700	$ 79,800	$ 109,000
Percent of total consolidated revenues from customer		16.60%	21.80%	17.60%	22.40%
Accounts receivable from customer		$ 15,400		$ 15,400		$ 24,300
State Street Bank
Revenue, Major Customer [Line Items]
Total consolidated revenue from customer		$ 34,100	$ 33,500	$ 67,900	$ 67,400
Percent of total consolidated revenues from customer		15.00%	13.60%	15.00%	13.80%
Accounts receivable from customer		$ 15,900		$ 15,900		10,900
Federal Express Corporation
Revenue, Major Customer [Line Items]
Total consolidated revenue from customer		$ 31,600	$ 30,500	$ 61,700	$ 59,300
Percent of total consolidated revenues from customer		13.90%	12.40%	13.60%	12.20%
Accounts receivable from customer		$ 11,500		$ 11,500		$ 17,800
Sales Revenue, Net | Customer Concentration Risk | American Express Corp.
Revenue, Major Customer [Line Items]
Concentration of sales by customer		10.00%		10.00%
Sales Revenue, Net | Customer Concentration Risk | State Street Bank
Revenue, Major Customer [Line Items]
Concentration of sales by customer		10.00%		10.00%
Sales Revenue, Net | Customer Concentration Risk | Federal Express Corporation
Revenue, Major Customer [Line Items]
Concentration of sales by customer		10.00%		10.00%

[1] Net revenues are attributed to regions based upon customer location.

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Net Revenues and Long Lived Assets by Geographic Area (Detail) - USD ($) $ in Thousands		3 Months Ended		6 Months Ended
		Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Segment Reporting Information [Line Items]
Net revenues	[1]	$ 226,811	$ 246,018	$ 452,680	$ 487,408
Long-lived assets	[2]	108,111		108,111		$ 107,382
North America
Segment Reporting Information [Line Items]
Net revenues	[1],[3]	203,373	219,730	406,949	435,440
Long-lived assets	[2],[3]	2,850		2,850		3,307
India
Segment Reporting Information [Line Items]
Net revenues	[1]	1,056	1,596	2,214	3,061
Long-lived assets	[2]	103,111		103,111		102,638
Europe
Segment Reporting Information [Line Items]
Net revenues	[1],[4]	21,734	24,084	42,253	47,711
Long-lived assets	[2],[4]	1,467		1,467		632
Rest of the World
Segment Reporting Information [Line Items]
Net revenues	[1]	648	$ 608	1,264	$ 1,196
Long-lived assets	[2]	$ 683		$ 683		$ 805

[1] Net revenues are attributed to regions based upon customer location.

[2] Long-lived assets include property and equipment, net of accumulated depreciation and amortization and goodwill.

[3] Primarily relates to operations in the United States.

[4] Primarily relates to operations in the United Kingdom and Poland.

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Income Taxes - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended				6 Months Ended		12 Months Ended
	Jun. 30, 2017	Mar. 31, 2017	Sep. 30, 2016	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Income Taxes [Line Items]
Statutory provision	35.00%			35.00%	35.00%	35.00%
Expense recognized for accrued interest and penalties	$ 240			$ 1	$ 280	$ 41
Accrued interest and penalties related to unrecognized tax benefits	1,810				1,810		$ 1,450
Income taxes paid against liabilities for unrecognized tax benefits	43,580				43,580		41,410
Unrecognized tax benefits	70,840				70,840		68,510
Unrecognized tax benefits, tax disputes					1,660
Service tax refunds claims	(4,150)				(4,150)
Income tax expense repatriation of foreign earnings			$ 270,600
Dividends per share			$ 15.00
Dividend distribution related taxes			$ 210,000
Repatriation of foreign earning			$ 1,030,000
Accrued taxes, likely amount	33,500				33,500
Local tax liability gross	400				400		400
Local tax liability net	300				$ 300		$ 300
Minimum Alternate Tax (MAT)
Income Taxes [Line Items]
Reversal of valuation allowance		$ 2,920
Minimum alternate tax credit expiration period					15 years		10 years
Valuation allowance, net tax charge	37,990				$ 37,990
Valuation allowance	2,470				2,470
Tax Year 1996-97
Income Taxes [Line Items]
Unrecognized tax benefits	53,970				53,970
Income tax liability recognized	$ 15,270				$ 15,270

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Differentiation between Federal Statutory Tax Rate and Overall Effective Tax Rate (Detail)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Income Tax Rate Reconciliation [Line Items]
Statutory provision	35.00%	35.00%	35.00%	35.00%
State taxes, net of federal benefit	1.10%	0.40%	1.90%	0.50%
City taxes	0.20%	0.10%	0.10%	0.10%
Foreign effective tax rates different from US statutory rate	(9.60%)	(11.30%)	(10.60%)	(12.30%)
Prior Year related state tax payment			0.90%
Valuation Reserve Adjustment			(2.90%)	(2.20%)
Effective Income Tax Rate	26.70%	24.20%	24.40%	21.10%

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Expiration Years of Minimum Alternate Tax Credit (Detail) - Minimum Alternate Tax (MAT) $ in Thousands	Jun. 30, 2017 USD ($)
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	$ 40,460
Less: valuation allowance	(2,470)
Total (net of valuation allowance)	37,990
2022-2023
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	200
2023-2024
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	270
2024-2025
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	1,000
2025-2026
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	1,850
2026-2027
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	820
2027-2028
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	6,160
2028-2029
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	7,290
2029-2030
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	8,000
2030-2031
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	10,300
2031-2032
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	3,290
2032-2033
Tax Credit Carryforward [Line Items]
Minimum Alternate Tax Credit	$ 1,280

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Commitments and Contingencies - Additional Information (Detail) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Loss Contingencies [Line Items]
Commitments for capital expenditure	$ 29,000,000	$ 33,000,000
Accrual related to litigation	$ 0	$ 300,000

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Stock Based Compensation - Additional Information (Detail)			3 Months Ended			6 Months Ended		12 Months Ended
	Nov. 30, 2016	Jun. 08, 2016 shares	Jun. 30, 2017 USD ($) $ / shares shares	Sep. 30, 2016 $ / shares	Jun. 30, 2016 USD ($) shares	Jun. 30, 2017 USD ($) $ / shares shares	Jun. 30, 2016 USD ($) shares	Dec. 31, 2016 $ / shares shares	Dec. 31, 2015 $ / shares shares	Dec. 31, 2014 $ / shares shares	Jun. 01, 2006 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Restricted stock-based compensation expense | $			$ 2,116,000		$ 1,861,000	$ 4,585,000	$ 3,682,000
Dividends per share declared | $ / shares				$ 15.00
Dividend payable, date to be paid				Oct. 03, 2016
Dividend payable, record date				Sep. 22, 2016
Additional compensation cost | $			500,000			1,200,000
Cash received from options exercised | $						0	$ 0
Restricted stock unit, unrecognized stock-based compensation cost | $			$ 12,000,000			$ 12,000,000
Restricted stock unit, weighted-average remaining requisite service period						2 years 10 months 6 days
25% of the shares issued
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Incentive restricted stock unit issued						39,022		415,519	135,440	293,904
Shares granted exercise price | $ / shares			$ 0			$ 0		$ 0	$ 0	$ 0
Percentage of shares vested						25.00%		25.00%	25.00%	25.00%
Restricted Stock
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of restricted stock units issuance as percentage of stock options granted	25.00%
RSUs will be forfeited if Purchased Shares does not equal threshold of remaining RSUs from Grant	4
Restricted Stock | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Purchase price that equal to up to percentage of the employee's base salary	25.00%
Amended Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option issued			0		0	0	0
Amended Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for issuance											16,000,000
Options granted vesting period						4 years
Amended Plan | Employee Stock Option | Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted vesting period						10 years
2016 Plan
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock option issued			0		0	0	0
2016 Plan | Employee Stock Option
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for issuance		16,000,000
Options granted vesting period		4 years

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Stock-Based Compensation Impact on Company Operations (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Restricted stock-based compensation expense	$ 2,116	$ 1,861	$ 4,585	$ 3,682
Cost of revenues
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Restricted stock-based compensation expense	957	729	1,937	1,389
Selling, general and administrative expenses
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Restricted stock-based compensation expense	$ 1,159	$ 1,132	$ 2,648	$ 2,293

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Summary of Activity for Restricted Stock Unit Awards Granted (Detail) - $ / shares	6 Months Ended	12 Months Ended
	Jun. 30, 2017	Dec. 31, 2016
Number Of Awards
Unvested at beginning of period	669,556	465,290
Granted	39,022	415,519
Vested	(40,590)	(198,725)
Forfeited	(66,165)	(12,528)
Unvested Total	601,823	669,556
Weighted Average Grant Date Fair Value
Unvested at beginning of period	$ 29.16	$ 41.47
Granted	17.23	20.57
Vested	41.69	39.10
Forfeited	37.99	43.77
Unvested Total	$ 26.57	$ 29.16

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Vacation Pay - Additional Information (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Executive Compensation Plan Expense [Line Items]
Unutilized earned leave gross charge (reversal)	$ (40)	$ 1,900	$ 400	$ 3,500
Accrual for unutilized earned leave	$ 20,500		$ 20,500		$ 23,100

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Employee Benefit Plans - Additional Information (Detail) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016	Dec. 31, 2016
Defined Benefit Plan Disclosure [Line Items]
Employee contribution amount			$ 18,000
Defined Benefit Plan, contributions by employer			$ 0
Maximum
Defined Benefit Plan Disclosure [Line Items]
Employee contribution percentage			60.00%
Provident Fund
Defined Benefit Plan Disclosure [Line Items]
Contribution expense recognized by Indian entities	$ 1,500,000	$ 1,600,000	$ 2,900,000	$ 3,100,000
Gratuity Plan
Defined Benefit Plan Disclosure [Line Items]
Contribution expense recognized by Indian entities	900,000	$ 900,000	1,900,000	$ 1,800,000
Accrued liability for retirement plan	$ 15,600,000		$ 15,600,000		$ 13,600,000

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Consolidation of Variable Interest Entity - Additional Information (Detail) - Person	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
State Street Bank | Banking and Financial Services
Revenue, Major Customer [Line Items]
Number of clients	2	2	2	2
Sales Revenue, Net | Customer Concentration Risk | State Street Bank
Revenue, Major Customer [Line Items]
Concentration of sales by customer	10.00%		10.00%
Sales Revenue, Net | Customer Concentration Risk | State Street Bank | Banking and Financial Services
Revenue, Major Customer [Line Items]
Concentration of sales by customer	11.20%	10.70%	11.50%	10.60%
Syntel Delaware
Revenue, Major Customer [Line Items]
Ownership percentage in subsidiary	100.00%		100.00%
SSSSML
Revenue, Major Customer [Line Items]
Ownership percentage in subsidiary	49.00%		49.00%

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Financial Assets Measured at Fair Value on Recurring Basis (Detail) - USD ($) $ in Millions	Jun. 30, 2017	Dec. 31, 2016
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for Sale Securities	$ 25.6	$ 15.0
Term Deposits	4.2	6.8
Interest Rate Swap	0.8	0.5
Total Assets Measured at Fair Value	30.6	22.3
Level 1
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Available for Sale Securities	25.6	15.0
Total Assets Measured at Fair Value	25.6	15.0
Level 2
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Term Deposits	4.2	6.8
Interest Rate Swap	0.8	0.5
Total Assets Measured at Fair Value	$ 5.0	$ 7.3

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Term Deposits with Various Banks Outstanding (Detail) - USD ($) $ in Thousands	Jun. 30, 2017	Dec. 31, 2016
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Term deposits outstanding	$ 4,200	$ 6,830
Short-term investments
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Term deposits outstanding	3,960	6,600
Non-current assets
Schedule of Fair Value of Separate Accounts by Major Category of Investment [Line Items]
Term deposits outstanding	$ 240	$ 230

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Components of Other Income (Expense), Net (Detail) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2017	Jun. 30, 2016	Jun. 30, 2017	Jun. 30, 2016
Component Of Other Expense Income Nonoperating [Line Items]
Interest expense	$ (3,216)	$ (575)	$ (6,592)	$ (1,145)
Interest income on term deposits	93	3,581	225	7,485
Gain on sale of mutual funds, net	329	1,778	560	2,479
Miscellaneous income	40	91	173	152
Other income (expense), net	$ (2,754)	$ 4,875	$ (5,634)	$ 8,971

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Subsequent Events - Additional Information (Detail)	Jul. 25, 2017 USD ($)
Subsequent Event
Subsequent Event [Line Items]
Common stock repurchase,maximum amount	$ 60,000,000