Form 8-K SYNTEL INC For: Feb 19

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 OR 15(d)

of The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) February 19, 2015

 

 

Syntel, Inc.

(Exact name of registrant as specified in its charter)

 

 

 

Michigan		000-22903		38-2312018
(State or other jurisdiction of incorporation)		(Commission File Number)		(IRS Employer Identification No.)

 

525 E. Big Beaver Road, Suite 300, Troy, Michigan		48083
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code (248) 619-2800

 

(Former name or former address, if changed since last report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

¨	Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨	Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨	Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨	Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

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Item 2.02.

Results of Operations and Financial Condition.

On February 19, 2015, Syntel, Inc. (the “Company”) issued a press release announcing results of operations and related financial information for its fourth quarter and year ended December 31, 2014. A copy of the press release is attached to this Report as Exhibit 99.1. The information contained in this Current Report, including Exhibit 99.1, is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities and Exchange Act of 1934 (the “Exchange Act”) or otherwise subject to the liabilities of that Section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except if the Company expressly states that such information is to be considered “filed” under the Exchange Act or incorporates it by specific reference in such filing.

 

Item 9.01.

Financial Statements and Exhibits.

 

(d)

Exhibits.

 

Exhibit Number
99.1		Press Release dated February 19, 2015.

 

2

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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 hereunto duly authorized.

 

						Syntel, Inc.
						(Registrant)
Date		February 19, 2015				By		/s/ Daniel M. Moore
								Daniel M. Moore, Chief Administrative Officer

 

3

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EXHIBIT INDEX

 

Exhibit No.		Description
99.1		Press Release dated February 19, 2015.

 

4

Exhibit 99.1

Syntel Reports Fourth Quarter and Full Year 2014 Financial Results

Highlights:

 

•

Q4 revenue of $235.3M, up 5% from year-ago quarter, and 3% sequentially

 

•

Q4 EPS of $0.84 per diluted share, up 6% from year-ago quarter, and 15% sequentially

 

•

Full year 2014 revenue of $911.4M, an increase of 11% over the prior-year period

 

•

Full year 2014 EPS of $2.97 per diluted share, an increase of 13% over the prior-year period

 

•

2014 year-ending cash & short term investments of $867.1M

 

•

Global Headcount of 24,553 on December 31, 2014, up 4% from year-ago quarter

TROY, Mich. – February 19, 2015 –Syntel, Inc. (Nasdaq: SYNT), a global provider of digital transformation, information technology and knowledge process services to Global 2000 companies, today announced financial results for the fourth quarter and full year, ended December 31, 2014.

Fourth Quarter Financial Highlights

Syntel’s revenue for the fourth quarter increased five percent to $235.3 million from $223.3 million in the prior-year period, and three percent from $228.3 million in the third quarter of 2014. During the fourth quarter, Banking and Financial Services accounted for 50.4 percent of total revenue, with Retail, Logistics and Telecom at 16.3 percent, Insurance at 15.4 percent, Healthcare and Life Sciences at 14.6 percent and Manufacturing at 3.3 percent.

The Company’s gross margin was 41.4 percent in the fourth quarter, compared to 47.1 percent in the prior-year period and 41.4 percent in the third quarter of 2014. Selling, General and Administrative (SG&A) expenses were 10.2 percent of revenue in the fourth quarter, compared to 13.3 percent in the prior-year period and 11.6 percent in the previous quarter.

The fourth quarter income from operations was 31.2 percent of revenue as compared to 33.7 percent in the prior-year period and 29.8 percent in the third quarter.

Net income for the fourth quarter was $70.7 million or $0.84 per diluted share, compared to $66.3 million or $0.79 per diluted share in the prior-year period and net income of $61.6 million or $0.73 per diluted share in the third quarter of 2014.

Full Year 2014 Financial Highlights

Revenue for 2014 increased 11 percent to $911.4 million, from $824.8 million in 2013. The Company’s 2014 operating margin was 29.4 percent, compared to 32.4 percent in 2013. Net income for the year was $249.7 million compared to $219.7 million in 2013. EPS for 2014 increased 13 percent to $2.97 per diluted share from $2.62 per diluted share in 2013.

During 2014, Syntel spent $19.2 million in CAPEX, largely in support of campus infrastructure, and finished the year with cash and short-term investments of $867.1 million. The Company added 27 new clients during the year and ended 2014 with 24,553 employees globally.

Operational Highlights

“During the fourth quarter of 2014, Syntel continued to execute well on our strategic and operational plans,” said Syntel CEO and President Nitin Rakesh. “We see numerous opportunities to build on this in 2015, as customers look for a strong partner with broad technological expertise and deep industry capabilities.”

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“Interest in digital-led transformation initiatives remains high across our focus industries as our clients look for ways to drive growth and enhance customer connect,” said Rakesh. “Syntel’s robust capabilities in this area are helping our customers navigate through change while supporting a seamless transition for the critical systems that run their businesses.”

“Our relentless focus on delivering innovation and aligning with trends impacting our customers guides our investment in high-value service capabilities. This positions us to build on our valued long-standing relationships, and develop newer ones that will be important to our future success.”

2015 Guidance

Based on current visibility levels and an exchange rate assumption of 62 Indian rupees to the dollar, the Company currently expects 2015 revenue of $985 million to $1,025 million and EPS in the range of $2.70 to $2.95.

Syntel to Host Conference Call

Syntel will discuss its fourth quarter 2014 results today on a conference call at 10:00 a.m. (EDT). To listen to the call, please dial (877) 837-3915 in the US/Canada or (973) 638-3495 internationally. The call will also be broadcast live via the Internet at Syntel’s web site: investor.syntelinc.com. Please access the site at least 15 minutes prior to the call to register and download any necessary software. A replay will be available until February 26, 2015 by dialing (855) 859-2056 and entering “86305287”. International callers may dial (404) 537-3406 and enter the same passcode.

About Syntel

Syntel (Nasdaq: SYNT) is a global provider of digital transformation, information technology and knowledge process services to Global 2000 companies. Syntel’s mission is to create new opportunities for clients by harnessing our passion, talent and innovation. We combine technology expertise, industry knowledge and a global delivery model to drive business value creation. Syntel’s “Customer for Life” philosophy drives our relentless focus to build long-term, collaborative client partnerships. To learn more, visit us at: www.syntelinc.com

Safe Harbor Provision

This news release may include forward-looking statements, including those with respect to the future level of business for Syntel, Inc. These statements are necessarily subject to risk and uncertainty. Actual results could differ materially from those projected in these forward-looking statements as a result of certain risk factors set forth in the Company’s Annual Report on Form 10-K for the year ended December 31, 2013, the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2014 or from other factors not currently anticipated.

Contacts:

North America/Europe: Jon Luebke, Syntel, 248/619-3503, [email protected]

Asia/Pacific: Sikta Samantaray, +91 9167512186, [email protected]

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SYNTEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(IN THOUSANDS, EXCEPT PER SHARE DATA)

 

		THREE MONTHS ENDED DECEMBER 31,								TWELVE MONTHS ENDED DECEMBER 31,
		2014				2013				2014				2013
Net revenues		$	235,324			$	223,287			$	911,429			$	824,765
Cost of revenues			137,856				118,169				533,862				460,576
Gross profit			97,468				105,118				377,567				364,189
Selling, general and administrative expenses			24,109				29,759				109,217				96,587
Income from operations			73,359				75,359				268,350				267,602
Other income, net			15,906				9,802				50,523				18,220
Income before provision for income taxes			89,265				85,161				318,873				285,822
Income tax expense			18,563				18,856				69,133				66,164
Net income		$	70,702			$	66,305			$	249,740			$	219,658
Other Comprehensive Income (Loss)
Foreign currency translation adjustments		$	(27,371	)		$	10,690			$	(32,381	)		$	(64,641	)
Gains (losses) on derivatives:
Gains (losses) arising during period on net investment hedges			—				1,116				724				(6,796	)
Unrealized gains (losses) on securities:
Unrealized holding gains arising during period			1,972				2,773				5,777				5,460
Reclassification adjustment for gains included in net income			(5,813	)			(311	)			(4,555	)			(942	)
			(3,841	)			2,462				1,222				4,518
Defined benefit pension plans:
Net Profit arising during period			(1,146	)			281				(1,147	)			280
Amortization of prior service cost included in net periodic pension cost			7				75				29				146
			(1,139	)			356				(1,118	)			426
Other comprehensive income (loss), before tax			(32,351	)			14,624				(31,553	)			(66,493	)
Income tax benefits (expenses) related to Other Comprehensive Income (loss)			286				(951	)			(388	)			(1,677	)
Other comprehensive income (loss), net of tax			(32,065	)			13,673				(31,941	)			(68,170	)
Comprehensive Income		$	38,637			$	79,978			$	217,799			$	151,488
Dividend per share		$	—			$	—			$	—			$	—
EARNINGS PER SHARE:
Basic		$	0.84			$	0.79			$	2.98			$	2.63
Diluted		$	0.84			$	0.79			$	2.97			$	2.62
Weighted average common shares outstanding:
Basic			83,897				83,672				83,785				83,582
Diluted			84,055				83,900				83,971				83,764

 

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SYNTEL, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(IN THOUSANDS)

 

		December 31, 2014				December 31, 2013
ASSETS
Current assets:
Cash and cash equivalents		$	197,708			$	178,757
Short term investments			669,353				490,177
Accounts receivable, net of allowance for doubtful accounts of $703 and $2,022 at December 31, 2014 and December 31, 2013, respectively			111,993				101,974
Revenue earned in excess of billings			27,493				22,275
Deferred income taxes and other current assets			56,930				49,929
Total current assets			1,063,477				843,112
Property and equipment			210,206				198,687
Less accumulated depreciation and amortization			101,155				89,082
Property and equipment, net			109,051				109,605
Goodwill			906				906
Non current Term Deposits with Banks			105				163
Deferred income taxes and other non current assets			50,476				43,390
TOTAL ASSETS		$	1,224,015			$	997,176
LIABILITIES AND SHAREHOLDERS’ EQUITY
LIABILITIES
Current liabilities:
Accrued payroll and related costs		$	60,765			$	56,308
Income taxes payable			23,781				19,224
Accounts payable and other current liabilities			33,573				36,661
Deferred revenue			3,266				4,729
Loans and borrowings			8,852				7,363
Total current liabilities			130,237				124,285
Other non current liabilities			16,198				11,970
Non Current loans and borrowings			129,750				138,375
TOTAL LIABILITIES			276,185				274,630
SHAREHOLDERS’ EQUITY
Total shareholders’ equity			947,830				722,546
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY		$	1,224,015			$	997,176

 

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