<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the quarterly period ended March 31, 1999 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 0-22903
--------------
Syntel, Inc.
----------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Michigan 38-2312018
------------------------------- -------------------
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) 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)
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 X 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: 38,082,660 shares issued and outstanding as of
May 5, 1999.
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<PAGE> 2
SYNTEL, INC.
INDEX
<TABLE>
<CAPTION>
Page
<S> <C>
Part I Financial Information
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis of 8
Financial Condition and Results of Operation
Part II Other Information 13
Signatures 14
Index to Exhibits 15
</TABLE>
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<PAGE> 3
SYNTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
3 MONTHS
ENDED MARCH 31
----------------------------------
1999 1998
---- ----
<S> <C> <C>
Revenues $38,797 $41,592
Cost of revenues 23,942 27,047
------- -------
Gross profit 14,855 14,545
Selling, general and administrative expenses 7,245 6,093
------- -------
Income from operations 7,610 8,452
Other income, principally interest 532 398
------- -------
Income before income taxes 8,142 8,850
Income taxes 2,708 2,814
------- -------
Net income $ 5,434 $ 6,036
======= =======
HISTORICAL EARNINGS PER SHARE (1)
Basic $ 0.14 $ 0.16
Diluted $ 0.14 $ 0.15
Weighted average common shares
outstanding - diluted 38,886 39,269
======= =======
</TABLE>
(1) Gives effect to a 3:2 stock split effective April 22, 1998.
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE> 4
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1999 1998
----- ----
ASSETS
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 65,888 $ 64,660
Accounts receivable, net 22,299 23,581
Advanced billings and other current assets 10,307 10,330
-------- --------
Total current assets 98,494 98,571
Property and equipment 13,053 12,635
Less accumulated depreciation 7,570 7,037
-------- --------
Property and equipment, net 5,483 5,598
Deferred income taxes, noncurrent 110 66
-------- --------
$104,087 $104,235
======== ========
LIABILITIES
Current liabilities:
Accrued payroll and related costs $ 13,492 $ 15,258
Accounts payable and other current liabilities 14,116 14,009
Deferred revenue 7,052 10,442
-------- --------
Total current liabilities 34,660 39,709
Income taxes payable 423 379
-------- --------
Total liabilities 35,083 40,088
SHAREHOLDERS' EQUITY
Total shareholders' equity 69,004 64,147
-------- --------
Total liabilities and shareholders' equity $104,087 $104,235
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
SYNTEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED MARCH 31
---------------------------------
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 5,434 $ 6,036
-------- --------
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation 533 435
Deferred income taxes (44) (161)
Compensation expense related to
stock options 14 11
Changes in assets and liabilities:
Accounts receivable, net 1,282 (10,010)
Advance billing and other assets 23 (2,871)
Accrued payroll and other liabilities (1,615) 2,893
Deferred revenues (3,390) 2,857
-------- --------
Net cash provided by (used in) operating activities 2,237 (810)
Cash flows used in investing activities,
property and equipment expenditures (418) (409)
Cash flows used in financing activities:
Net proceeds from issuance of stock 24 0
Common stock repurchases (590) 0
-------- --------
Net cash used in financing activities (566) 0
Effect of foreign currency exchange rate changes on cash (25) (12)
-------- --------
Net increase (decrease) in cash and cash equivalents 1,228 (1,231)
Cash and cash equivalents, beginning of period $ 64,660 $ 32,945
======== ========
Cash and cash equivalents, end of period $ 65,888 $ 31,714
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
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<PAGE> 6
SYNTEL, INC. AND SUBSIDIARIES
NOTES TO THE FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION:
The accompanying condensed consolidated financial statements of Syntel, Inc.
(the "Company") have been prepared by management, without audit, 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, Inc. and it's
subsidiaries as of March 31, 1999, the results of its operations for the three
month period ended March 31, 1999 and March 31, 1998, and cash flows for the
three months ended March 31, 1999 and March 31, 1998. The year end condensed
balance sheet as of December 31, 1998 was derived from audited financial
statements but does not include all disclosures required by generally accepted
accounting principles. For further information refer to the consolidated
financial statements and footnotes thereto included in the Company's annual
report on Form 10K for the year ended December 31, 1998.
Operating results for the three months ended March 31, 1999 are not necessarily
indicative of the results that may be expected for the year ending December 31,
1999.
2. PRINCIPLES OF CONSOLIDATION AND ORGANIZATION
The condensed consolidated financial statements include all the accounts of the
Company and its wholly owned subsidiaries; Syntel Software Private Limited
("Syntel India"), an Indian limited liability company, Syntel (Singapore) PTE.,
Ltd. ("Syntel Singapore"), a Singapore limited liability company, and Syntel
Europe Ltd. ("Syntel Europe"), a United Kingdom limited liability company. All
intercompany accounts and transactions have been eliminated.
3. CASH EQUIVALENTS
For the purpose of reporting cash and cash equivalents, the Company considers
all liquid investments purchased with a maturity of three months or less to be
cash equivalents. Cash equivalents are principally triple A rated corporate
bonds and treasury notes held by a bank with maturity dates of less than ninety
days.
4. COMPREHENSIVE INCOME
The Company adopted Statement No. 130, "Reporting Comprehensive Income", as of
January 1, 1998. Total Comprehensive Income for the three month period ended
March 31, 1999 and 1998 was as follows (in thousands):
<TABLE>
<CAPTION>
Three Months Ended March 31
---------------------------
1999 1998
---- ----
<S> <C> <C>
Net Income $5,434 $6,036
Other Comprehensive income
Foreign currency translation Adjustments (25) (12)
------ ------
Total comprehensive income $5,409 $6,024
</TABLE>
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<PAGE> 7
5. EARNINGS PER SHARE
Basic earnings per share is calculated by dividing net income by the average
number of shares outstanding during the applicable period. The Company has stock
options which are considered to be potentially dilutive to common stock. Diluted
earnings per share is calculated by dividing net income by the average number of
shares outstanding during the applicable period adjusted for these potentially
dilutive options.
Additionally, the Company effected a 3:2 stock split effective April 22, 1998.
The following table sets forth the computation of earnings per share.
Outstanding shares have been restated to reflect the 3:2 stock split for all
periods presented.
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999 March 31, 1998
-------------- --------------
Weighted Earnings Weighted Earnings
Average per Average per
Shares share Shares share
-------- -------- -------- --------
(in thousands, except per share earnings)
<S> <C> <C> <C> <C>
Basic earnings per share 38,182 $ 0.14 38,175 $ 0.16
Net dilutive effect of stock options
outstanding 684 1,094
------ ------ ------ ------
Diluted earnings per share 38,866 $ 0.14 39,269 $ 0.15
</TABLE>
6. SEGMENT REPORTING
The Company manages its operations through two segments, IntelliSourcing
and TeamSourcing. Management allocates all corporate expenses to the segments.
Key financial data for each segment for the three month periods ending March 31,
1999 and March 31, 1998 is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999 March 31, 1998
-------------- --------------
(in thousands)
<S> <C> <C>
Revenues:
IntelliSourcing $ 23,722 $ 25,183
TeamSourcing 15,075 16,409
-------- --------
38,797 41,592
Gross Profit:
IntelliSourcing 10,466 10,650
TeamSourcing 4,389 3,895
-------- --------
14,855 14,545
</TABLE>
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<PAGE> 8
PART I - FINANCIAL INFORMATION
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
SYNTEL INC. AND SUBSIDIARIES
RESULTS OF OPERATIONS
Revenues. The Company's revenues consist of fees derived from its
IntelliSourcing and TeamSourcing business segments. Revenues decreased 6.7% to
$38.8 million in the first quarter of 1999 from $41.6 million in the first
quarter of 1998. Worldwide billable headcount, including personnel employed by
Syntel India, Singapore, and Syntel Europe, as of March 31, 1999 decreased to
1,456 compared to 1,782 as of March 31, 1998.
IntelliSourcing Revenues. IntelliSouricng revenues decreased to $23.7 million
for the first quarter of 1999, or 61.1% of total revenues, from $25.2 million,
or 60.5% of first quarter revenues for 1998. The $1.5 million decrease in
revenues was attributable primarily to anticipated staffing decreases in several
outsourcing engagements as well as the completion of several projects that
contributed revenues in the first quarter of 1998 but were completed during
1998, which combined, resulted in decreased revenues of approximately $8.8
million. This was largely offset by growth in several engagements as well as new
engagements, which combined, contributed approximately $7.3 million.
IntelliSourcing Cost of Revenues. Cost of revenues consist of costs directly
associated with billable consultants in the US and offshore, including salaries,
payroll taxes, benefits, relocation costs, immigration costs, finders fees,
trainee compensation, travel, and warranty reserves. IntelliSourcing costs of
revenues decreased to 55.9% of total IntelliSouricng revenues for the first
quarter of 1999, from 57.7% for the first quarter of 1998. The decrease in cost
of revenues as a percent of revenues was attributable primarily to a release of
warranty reserves, reduced travel, outside agency fees, and relocation costs, as
well as a non-recurring payroll tax charge in the first quarter of 1998,
contributing approximately 2.4%, 1.6%, and 2.3% respectively, to the increased
margin. These were partially offset by an increase in average compensation
levels as well as a decrease in the percentage of work performed offshore,
impacting margins approximately 2.7% and 1.8% respectively.
TeamSourcing Revenues. TeamSourcing revenues decreased to $15.1 million for the
first quarter of 1999, or 38.9% of total revenues, down from $16.4 million, or
39.5% of total revenues for the first quarter of 1998. The $1.3 million revenue
decrease was attributable primarily to a $2.6 million decrease resulting from a
decrease in U.S. based billable consultants in various engagements, partially
offset by billing rate increases of $0.4 million and growth in the U.K and
Singapore of $0.9 million.
TeamSourcing Cost of Revenues. TeamSourcing cost of revenues consist of costs
directly associated with billable consultants in the US and offshore, including
salaries, payroll taxes, benefits, relocation costs, immigration costs, finders
fees, trainee compensation, and travel. TeamSourcing cost of revenues decreased
to 70.9% of TeamSourcing revenues for the first quarter of 1999, down from 76.3%
for the first quarter of 1998. The decrease in cost of revenues as a percent of
TeamSourcing revenues was attributable primarily to a non-recurring payroll tax
charge in the first quarter of 1998 and a decrease in travel and relocation
costs, contributing approximatley 4.8% and .5% respectively to the increased
margins; partially offset by a .4% decrease due to compensation increases.
Selling, General, and Administrative Expenses. Selling, general, and
administrative expenses consist primarily of salaries, payroll taxes and
benefits for sales, solutions, delivery, finance, administrative, and corporate
staff, travel, telecommunications, business promotions, marketing and various
facility costs for the Company's Global Development Centers and various offices.
Selling, general , and administrative costs for the three
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<PAGE> 9
months ended March 31, 1999 were $7.2 million, or 18.7% of total revenues,
compared to $6.1 million or 14.7% of total revenues for the three months ended
March 31, 1998. The $1.1 million increase in selling, general, and
administrative costs was primarily attributable to increased professional
staffing in sales, marketing, recruiting, and support.
LIQUIDITY AND CAPITAL RESOURCES
The Company has financed its working capital needs through operations. Both the
Mumbai and Chennai expansion programs, completed in mid 1998, were financed from
internally generated funds.
Net cash generated by operating activities was $2.2 million for the first three
months of 1999, compared to a net $0.8 million use of cash for the first three
months of 1998. The $3.0 million increase was attributable primarily to a $11.3
million improvement in accounts receivable and a $2.9 million decrease in
advanced billings; offset by a $4.5 million decrease in accrued payroll and
other liabilities, a $6.2 million decrease in deferred revenues, and a $0.6
million decrease in net income. The decrease in accounts receivable was due
primarily to a 12 day improvement in days sales outstanding and reduced first
quarter revenues.
Net cash used in investing activities was $0.4 million for the first three
months of both 1998 and 1999. Cash used for investing activities for the three
months ended March 31, 1999 consisted primarily of capitalized development costs
of $0.2 million and computer equipment of $0.2 million. Cash used for investing
activities for the three months ended March 31, 1998 consisted primarily of
license fees for a new accounting and human resources information systems.
Net cash used in financing activities for the three months ended March 31, 1999
consisted primarily of the purchase of 65,000 shares of treasury stock for $0.6
million.
The Company has a line of credit with NBD Bank, which provides for borrowings of
up to $30.0 million. The line of credit expires on August 31, 1999. The line of
credit contains covenants restricting the Company from, among other things,
incurring additional debt, issuing guarantees and creating liens on the
Company's property, without prior consent of the bank. The line of credit also
requires the Company to maintain certain tangible net worth levels and leverage
ratios. At March 31, 1999, there was no indebtedness outstanding under the line
of credit. Borrowings under the line of credit bear interest at the lower of the
Eurodollar rate plus the applicable Eurodollar margin, the bank's prime rate or
a negotiated rate established with the bank at the time of borrowing. In
addition to the bank line of credit, the Company has a $15.0 million facility
with NBD Bank to finance acquisitions which also expires on August 31, 1999. The
Company has not borrowed any amounts under this facility. The Company intends to
renew both the $30 million and the $15 million line of credit before the
expiration date.
The Company believes that the combination of present cash balances and future
operating cash flows will be sufficient to meet the Company's currently
anticipated operating cash requirements for at least the next 12 months.
YEAR 2000 READINESS
The Year 2000 issue is the result of date-sensitive devices, systems, and
computer programs that were deployed using two digits rather than four to define
the applicable year. Any such technologies may recognize a year containing "00"
as 1900 rather than the year 2000. This could result in system failure or
miscalculations causing disruptions of operations including, among other things,
a temporary inability to process transactions or engage in similar normal
business activities.
STATE OF READINESS. The Company has a Year 2000 project plan designed to
identify and assess the risks of non-compliance associated with its information
systems, operations, suppliers, and customers; and to develop and implement
remediation and contingency plans to mitigate the risks. The year 2000 project
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<PAGE> 10
plan consists of the following activities:
- - IT and non-IT systems.
- Complete inventory of all hardware, software, and firmware components.
- Impact assessment - identify and prioritize components that are not Year
2000 compliant.
- Develop solution plan - determine and prioritize remediation procedures
for each non-compliant component, including decision to replace or
repair.
- Complete remediation and test systems
- Develop contingency plans
- - Third party confirmations
- Obtain written verification from key suppliers that services will not be
impacted by Year 2000 issues.
- Obtain representations from major
customers that their ongoing service requirements as well as accounts
payable processes will not be impacted by Year 2000 issues.
- Develop contingency plans
The Year 2000 remediation project is being directed by the Manager of
Information Systems. Reporting to the manager is a Project Manager dedicated
full time to the project. The Project Manager is supported by an assistant
assigned full time to the project, as well as coordinators and subject matter
experts at each of the Company's Global Development Centers. The Manager of
Information Systems provides weekly status reports to the Company's senior
management team.
The Company's Internal IT and non-IT issues are minimized by the nature of
its service offerings. As an Information Technology company, Syntel's revenues
are driven by the extensive knowledge base of its professional IT consultants.
IT and non-IT Year 2000 issues are principally associated with the compliance of
personal computers, servers, communication equipment, and software residing on
both individual personal computers and on the servers.
Over 58% of the Company's IT professionals work on-site at the client
location. These consultants utilize client provided work stations and software.
Of approximately 1100 personal computers in operation at the Company's Global
Development Centers and various branch offices, less than 75 will require
replacement. All other non-compliant PCs have been or will be made Year 2000
compliant by means of a Bios upgrade and software patches. All PCs in the Cary
Development Center, the Troy headquarters, and the Chennai Development Center
have been upgraded and tested for compliance. Upgrades and replacement of PCs at
the Mumbai Development Center is in process with a targeted completion date by
the end of the second quarter.
All proprietary delivery software as well as internal applications are Year
2000 compliant. The Company is currently implementing Year 2000 compliant,
PeopleSoft financial and human resources information systems. The human resource
system will be placed into live production in the middle of the second quarter
of 1999 while the financial information system is on track to be placed into
production during the third quarter of 1999. The financial information systems
in Mumbai and Chennai, India are fully Year 2000 compliant.
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<PAGE> 11
The following chart summarizes the project status as of May 1, 1999:
<TABLE>
<CAPTION>
% completed Planned Completion
Task At 5/01/99 Date
---- ---------- ----
<S> <C> <C>
Create Y2K awareness 100% -
Equipment & software inventory 100% -
Critical Systems impact assessment 100% -
Develop plan (budget, priorities,
Resources) 100% -
Non-critical systems impact assessment 100% -
Supplier mailings & follow-up 60% June-99
Customer validations & follow-up 10% June-99
Remediate non-compliant systems 45% Aug-99
Develop contingency plans 5% Aug-99
Project closure & review Sep-99
</TABLE>
The most significant internal remediation activities yet to be completed include
replacement of the telephone switches in the Troy Headquarters and the Cary
Global Development Center, replacement of various communication hubs, and
completion of PC upgrades and replacements in the Mumbai global Development
Center. All of these activities are in process and are targeted for completion
during the third quarter of 1999.
COSTS TO ADDRESS YEAR 2000 ISSUES. The Company anticipates total remediation
costs to be approximately $700,000. These costs include amounts necessary to
replace or upgrade hardware, replace phone systems, replace data communications
equipment, replace non-compliant software, and compensation costs of individuals
assigned full time to the project. The replacement of hardware costs will total
approximately $500,000, software will total approximately $80,000, and
compensation costs will total approximately $120,000. Costs to implement new
Human Resource and Financial Information Systems are not considered as Year 2000
costs as these projects were based on growing business needs independent of Year
2000 issues, and were not accelerated by Year 2000 remediation requirements. The
$700,000 has been fully reflected in the Company's 1999 operating plan and
forecasts. As of March 31, 1999, year-to-date Year 2000 expenditures totaled
less than $50,000.
The refocusing of resources to the Year 2000 has not caused any major
internal projects to be deferred; however, the completion of projects to
automate several internal processes have been slightly delayed. These delays
will not have any material impact on the financial condition or results of
operations.
MAJOR RISKS OF THE COMPANY'S YEAR 2000 ISSUES. The Company believes that its
greatest potential financial and operational risks are associated with service
interruptions from key communication and utility service providers. To fully
assess the extent of this risk, the Company has sent questionnaires to all key
service providers via certified mail; is following up with secondary mailings,
and is reviewing vendor web sites on the Internet for confirmation of Year 2000
compliance. To date, the Company has mailed approximately 290 confirmations to
key suppliers and has received over 200 responses, including positive
confirmation from its largest communications vendor, Sprint, as well as ADP, the
Company's payroll processor. A vast majority of the vendors have reported
significant progress in Year 2000 remediation efforts and expect to be fully
compliant before the end of the year. The loss of communication capabilities
would have an immediate impact on the Company's ability to maintain operations
as would the loss of power at any of the Company's Global Development Centers.
The occurrence of either situation could cause a material adverse effect on the
Company's financial condition. The Mumbai, India Global Development Center, the
Company's largest development center, is supported by a back-up power generator
which could provide full power to the center indefinitely, in the event of a
power failure.
The next greatest potential risk is the potential for lost revenue
should the Company's customers encounter Year 2000 issues, forcing a
reallocation of resources from existing applications and projects. To
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<PAGE> 12
fully assess the extent of this risk, the Company is exploring customer
readiness via direct communication by engagement managers and account executives
and by monitoring customer web sites for confirmation of Year 2000 compliance.
This risk is partially mitigated by several factors, including: (1) The Company
has completed, tested, and delivered Year 2000 compliance services to five of
the projected top 10 customers based on projected revenue for 1999 and 2000. (2)
The Company's revenue base is comprised primarily of revenues from Fortune 1000
companies. Significant Year 2000 issues by these companies would suggest
widespread problems, which in turn would open opportunities to selectively
provide additional Year 2000 remediation services, potentially offsetting
revenues lost from the suspension of non-year 2000 application support and
development projects.
The next greatest potential risk is the inability to process payroll,
reduced or lost banking capabilities, and lost air travel capabilities. While
loss of these capabilities would not have an immediate impact on the Company's
ability to maintain normal operations, an extended loss of any of these
functions could have a material adverse effect on the Company's business,
results of operations, and financial condition. The Company receives payroll
services from ADP (Automatic Data Processing) and banking services from NBD
Bank. As indicated with other key service providers, the Company has requested
written confirmation of Year 2000 Compliance from these vendors, and will
follow-up with their account representatives to ensure receipt of confirmation.
ADP has confirmed that all products used by the Company are fully compliant.
YEAR 2000 CONTINGENCY PLANS. The Company is in the process of developing
contingency plans. Because the major risks (communications and utilities) are
associated with large, external service providers for which the Company has no
influence or control, and for which the implementation of substitute processes
are not practical, contingency plans are anticipated to consist of migrating
activity from vendors for which Year 2000 compliance has not been confirmed and
in shifting work to Global Development Centers for which Year 2000 compliance
for utilities and communications have been confirmed. In regard to air travel,
the Company will attempt to reduce the impact from a temporary termination of
services by assessing new customer placement requirements for early January
2000, and will suggest an earlier start date to ensure that key placements are
not delayed.
The Company has implemented a significant program to identify,
evaluate, and remediate Year 2000 issues; however, as the Year 2000 project
continues, additional Year 2000 issues may be discovered or the Company may find
that the costs of these activities exceed current expectations. In many cases
the Company must rely on assurances from suppliers that key services will be
Year 2000 compliant. While the Company plans to validate representations
wherever possible, it cannot be sure that validations will be adequate, or that
if problems are identified, they will be addressed in a timely and satisfactory
manner. Even if the Company, in a timely manner, completes all of its
assessments, implements and tests all remediation plans believed to be adequate,
and develops contingency plans believed to be adequate, some problems may not be
identified or corrected in time to prevent material adverse consequences or
business interruptions to the Company.
FORWARD LOOKING STATEMENTS
This report contains forward-looking statements, including those with respect to
future levels of business for Syntel, Inc. These statements are necessarily
subject to risk and uncertainty. Actual results could differ materially from
those projected in these forward-looking statements as a result of certain risk
factors set forth in the Company's Annual Report Form 10-K document dated March
30, 1999. Factors that could cause results to differ materially from those set
forth above include general trends and developments in the information
technology industry, which is subject to rapid technological changes, and the
Company's concentration of sales in a relatively small number of large
customers, as well as intense competition in the information technology
industry, which the Company believes will increase.
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<PAGE> 13
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
The Company is currently not a party to any material pending legal proceedings.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS.
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit No. Description
- ---------------------------------
27 Financial Data Schedule
(b) Reports on Form 8-K
The Corporation did not file any reports on Form 8-K during the three month
period ended March 31, 1999.
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<PAGE> 14
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.
-----------------
(Registrant)
Date May 10, 1999 By /s/ Bharat Desai
------------ -------------------
Bharat Desai, President and
Chief Executive Officer
Date May 10, 1999 By /s/ John Andary
------------- -----------------
John Andary, Chief Financial Officer
(principal financial and chief accounting officer)
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<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
Sequentially
Numbered
Exhibit No. Description Page
- -----------------------------------------------------------------------
<S> <C> <C>
27 Financial Data Schedule 13
</TABLE>
-15-
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
FINANCIAL STATEMENTS FOR THE PERIOD ENDED MARCH 31, 1999 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 65,888
<SECURITIES> 0
<RECEIVABLES> 22,299
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 98,494
<PP&E> 13,053
<DEPRECIATION> 7,570
<TOTAL-ASSETS> 104,087
<CURRENT-LIABILITIES> 34,660
<BONDS> 0
0
0
<COMMON> 1
<OTHER-SE> 69,471
<TOTAL-LIABILITY-AND-EQUITY> 104,087
<SALES> 0
<TOTAL-REVENUES> 38,797
<CGS> 0
<TOTAL-COSTS> 23,942
<OTHER-EXPENSES> 7,245
<LOSS-PROVISION> 0
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<EPS-PRIMARY> .14
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</TABLE>
