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