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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 June 30, 2002 or
---------------
[ ] Transition report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the transition period from to
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Commission file number 0-22903
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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.)
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 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: 38,726,557 shares issued and outstanding as of
July 16, 2002.
1
SYNTEL, INC.
INDEX
Page
----
Part I Financial Information
Item 1 Financial Statements
Condensed Consolidated Statement of Income 3
Condensed Consolidated Balance Sheet 4
Condensed Consolidated Statement of Cash Flows 5
Notes to the Condensed Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis of 8
Financial Condition and Results of Operations
Part II Other Information 12
Signatures 13
2
SYNTEL, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
3 MONTHS 6 MONTHS
ENDED JUNE 30 ENDED JUNE 30
------------------------- ----------------------------
2002 2001 2002 2001
---- ---- ---- ----
Revenues $ 39,500 $ 42,953 $ 79,990 $ 85,705
Cost of revenues 23,903 26,337 48,462 53,482
----------- ---------- ---------- ----------
Gross profit 15,597 16,616 31,528 32,223
Selling, general and administrative expenses 7,648 8,436 15,669 17,249
----------- ---------- ---------- ----------
Income from operations 7,949 8,180 15,859 14,974
Other income, principally interest 733 912 1,411 1,869
----------- ---------- ---------- ----------
Income before income taxes 8,682 9,092 17,270 16,843
Income taxes 2,398 2,522 4,624 4,387
----------- ---------- ---------- ----------
Net income loss before loss from equity
investment in unconsolidated subsidiaries 6,284 6,570 12,646 12,456
Loss from equity investment in unconsolidated
subsidiaries 0 218 0 539
----------- ---------- ---------- ----------
Net income $ 6,284 $ 6,352 $ 12,646 $ 11,917
=========== ========== ========== ==========
EARNINGS PER SHARE
Basic $ 0.16 $ 0.17 $ 0.32 $ 0.31
Diluted $ 0.16 $ 0.16 $ 0.31 $ 0.31
Basic share outstanding 39,038 38,464 39,028 38,468
=========== ========== ========== ==========
Weighted average common shares
outstanding -- diluted 40,139 38,841 40,208 38,828
=========== ========== ========== ==========
The accompanying notes are an integral part of the condensed consolidated
financial statements.
3
SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEET
(IN THOUSANDS)
JUNE 30, DECEMBER 31,
2002 2001
----- ----
ASSETS
Current assets:
Cash and cash equivalents $ 102,350 $ 88,010
Investments, marketable securities 13,096 17,203
Accounts receivable, net 25,798 30,982
Advanced billings and other current assets 7,684 7,448
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Total current assets
148,928 143,643
Property and equipment 19,745 19,041
Less accumulated depreciation 14,859 13,823
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Property and equipment, net 4,886 5,218
Goodwill, net of amortization 906 906
Deferred income taxes, noncurrent 2,710 2,632
------------- -------------
$ 157,430 $ 152,399
============= =============
LIABILITIES
Current liabilities:
Accrued payroll and related costs $ 10,293 $ 12,984
Accounts payable and other current liabilities 14,237 16,968
Deferred revenue 2,358 5,451
------------- -------------
Total current liabilities 26,888 35,403
SHAREHOLDERS' EQUITY
Total shareholders' equity 130,542 116,996
------------- -------------
Total liabilities and shareholders' equity $ 157,430 $ 152,399
============= =============
4
SYNTEL, INC. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(IN THOUSANDS)
SIX MONTHS
ENDED JUNE 30
-----------------------------------
2002 2001
---- ----
Cash flows from operating activities:
Net income $ 12,646 $ 11,917
------------- -------------
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 1,036 1,322
Goodwill 0 38
Realized losses on sales of available-for-sale securities (53) 0
Deferred income taxes (78) 286
Compensation expense related to stock options 0 41
Loss on equity investments 0 539
Changes in assets and liabilities:
Accounts receivable, net 5,114 2,313
Advance billing and other assets (234) (1,575)
Accrued payroll and other liabilities (5,425) (662)
Deferred revenues (3,093) 999
------------- -------------
Net cash provided by operating activities 9,913 15,218
------------- -------------
Cash flows provided by (used in) investing activities,
Property and equipment expenditures (704) (1,836)
Equity and other investments 0 (301)
Purchase of available-for-sale securities (15,175) (12,770)
Proceeds from sales of available-for-sale securities 19,335 3,889
------------- -------------
Net cash provided by (used in) investing activities 3,456 (11,018)
------------- -------------
Cash flows provided by financing activities:
Net proceeds from issuance of stock 3,669 887
Common stock repurchases (2,905) (765)
------------- -------------
Net cash provided by financing activities 764 122
------------- -------------
Effect of foreign currency exchange rate changes on cash 206 (330)
------------- -------------
Net increase in cash and cash equivalents 14,340 3,992
Cash and cash equivalents, beginning of period 88,010 73,478
------------- -------------
Cash and cash equivalents, end of period $ 102,350 $ 77,470
============= =============
The accompanying notes are an integral part of the consolidated financial
statements.
5
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 accounting principles generally accepted in United
States of America have been condensed or omitted pursuant to such rules and
regulations. In the opinion of the 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 its subsidiaries as of June 30, 2002, the results
of their operations for the three and six month periods ended June 30, 2002 and
June 30, 2001, and cash flows for the six months ended June 30, 2002 and June
30, 2001. The year end condensed balance sheet as of December 31, 2001 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 10K for
the year ended December 31, 2001.
Operating results for the six months ended June 30, 2002 are not necessarily
indicative of the results that may be expected for the year ending December 31,
2002.
2. PRINCIPLES OF CONSOLIDATION AND ORGANIZATION
The consolidated financial statements include the accounts of Syntel, Inc.
("Syntel") and its wholly owned subsidiaries Syntel (India) Limited ("Syntel
India"), an Indian limited liability company, Syntel "Singapore" PTE., Ltd.,
("Syntel Singapore"), a Singapore limited liability company, Syntel Europe,
Ltd., ("Syntel U.K."), a United Kingdom limited liability company, Syntel Canada
Inc., ("Syntel Canada") a Canada limited liability company, Syntel Deutschland
GmbH, ("Syntel Germany") a Germany limited liability Company, Syntel Hong Kong
Ltd., ("Syntel Hong Kong") a Hong Kong limited liability Company, Syntel
Mauritius Limited, ("Syntel Mauritius") a Mauritius limited liability Company
and Syntel "Australia" Pty. Limited, ("Syntel Australia"), an Australian limited
liability Company. All intercompany balances and transactions have been
eliminated.
3. RECLASSIFICATION
Certain prior quarter amounts have been reclassified to conform with the current
quarter presentation.
4. REVENUE RECOGNITION
The Company recognizes revenues from time and material contracts as services are
rendered and costs are incurred. Revenue on fixed-price, fixed deliverable
projects is measured by the percentage of cost incurred to date to the estimated
total cost at completion. Revenue from fixed-price application management and
support engagements is recognized as earned. The cumulative impact of any change
in estimates of the percentage complete or losses on contracts is reflected in
the period in which the changes become known.
5. 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.
At June 30, 2002 and 2001, approximately $50,068 thousand and $53,742 thousand,
respectively, represent corporate bonds and treasury notes held by Bank One, for
which a triple A rated letter of credit has been provided by the bank. The
remaining cash and cash equivalents are certificates of deposit, corporate
bonds, and treasury notes held by various banking institutions including other
U.S.-based and local India-based banks.
6
6. EQUITY
During the second quarter of 2002, Syntel Inc. issued 322,210 warrants at $ 7.25
per share. Under the terms of the agreement, certain milestones are required to
be met in order for the holder to exercise these warrants. It is not probable
such milestones will be met. Accordingly, the impact of such issuance has not
been given in the accompanying statements or earnings-per-share calculations.
The warrants have a term of 10 years and were issued with a retroactive
effective date of October 16, 2000.
7. COMPREHENSIVE INCOME
Total comprehensive income for the three and six months period ended June 30,
2002 and 2001 was as follows (in thousands):
Three Months Ended Six Months Ended
------------------ ----------------
June 30 June 30
------- -------
2002 2001 2002 2001
---- ---- ---- ----
Net income $6,284 $6,352 $12,646 $11,917
Other comprehensive income
Foreign currency translation adjustments 192 (20) 135 (183)
------- ------- -------- --------
Total comprehensive income $6,476 $6,332 $12,781 $11,734
======= ======= ======== ========
8. 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. The Company
has stock options, which are considered to be potentially dilutive to common
stock. Diluted earnings per share are calculated considering these potentially
dilutive options.
The following table sets forth the computation of earnings per share.
Three Months Ended
June 30, 2002 June 30, 2001
-------------- -------------
Weighted Earnings Weighted Earnings
Average per Average per
Shares share Shares share
------ ----- ------ -----
(in thousands, except per share earnings)
Basic earnings per share 39,038 $ 0.16 38,464 $ 0.17
Net dilutive effect of stock options
outstanding 1,101 - 377 (0.01)
------ ------- ------ -------
Diluted earnings per share 40,139 $ 0.16 38,841 $ 0.16
====== ======= ====== =======
Six Months Ended
June 30, 2002 June 30, 2001
-------------- -------------
Weighted Earnings Weighted Earnings
Average per Average per
Shares share Shares share
------ ----- ------ -----
(in thousands, except per share earnings)
Basic earnings per share 39,028 $ 0.32 38,468 $ 0.31
Net dilutive effect of stock options
outstanding 1,180 (0.01) 360 -
------ ------- ------ -------
Diluted earnings per share 40,208 $ 0.31 38,828 $ 0.31
====== ======= ====== =======
7
9. SEGMENT REPORTING
The Company manages its operations through three segments, Applications
Outsourcing, e-Business, and TeamSourcing. Management allocates all direct
expenses to the segments. Financial data for each segment for the three and six
months period ended June 30, 2002 and June 30, 2001 is as follows:
Three Months Ended Six Months Ended
------------------ ----------------
June 30, 2002 June 30, 2001 June 30, 2002 June 30, 2001
------------- ------------- ------------- -------------
(In thousands) (In thousands)
Revenues:
Applications Outsourcing $26,726 $26,551 $54,193 $52,056
e-Business 8,572 10,360 17,129 21,751
TeamSourcing 4,202 6,042 8,668 11,898
------- ------- ------- -------
39,500 42,953 79,990 85,705
Gross Profit:
Applications Outsourcing 11,978 11,462 24,121 21,528
e-Business 3,121 3,638 6,182 7,783
TeamSourcing 498 1,516 1,225 2,912
------- ------- ------- -------
15,597 16,616 31,528 32,223
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 Applications
Outsourcing, e-Business, and TeamSourcing business segments. Revenues decreased
8.0% to $39.5 million in the second quarter of 2002 from $42.9 million in the
second quarter of 2001. Worldwide billable headcount, including personnel
employed by Syntel India, Syntel Singapore, Syntel Europe, and Syntel Germany as
of June 30, 2002 increased to 1,781 compared to 1,551 as of June 30, 2001.
APPLICATIONS OUTSOURCING REVENUES. Applications Outsourcing revenues increased
to $26.7 million for the second quarter of 2002, or 67.7% of total revenues,
from $26.6 million, or 61.8% of second quarter revenues for 2001. The revenues
for first six months of 2002 increased to $54.2 million, or 67.7% of total
revenues, from $52.1 million or 60.7% of total revenues for the first six months
of 2001. The $0.1 million increase for the second quarter was attributable
principally to net growth in new engagements, contributing approximately $6.5
million, largely offset by $6.4 million in lost revenues as a result of project
completion. The $2.1 million increase for first six months of 2002 was
attributable principally to net growth in new engagements, contributing
approximately $11.7 million, largely offset by $9.6 million in lost revenues as
a result of projects completion.
APPLICATIONS OUTSOURCING COST OF REVENUES. Cost of revenues consists 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. Applications Outsourcing costs of
revenues decreased to 55.2% of total Applications Outsourcing revenues for the
second quarter of 2002, from 56.8% for the second quarter of 2001. Cost of
Revenues for the first six months of 2002 decreased to 55.5% of total
Applications Outsourcing revenues, from 58.6% for the first six months of 2001.
Both 1.6% and 3.1% decrease in cost of revenues, as a percent of revenues for
the second quarter and for the first six months of 2002 was attributable to the
increase in higher margin offshore component of the overall services.
E-BUSINESS REVENUES. e-Business revenues decreased to $8.6 million for the
second quarter of 2002, or 21.7% of total consolidated revenues, from $10.4
million, or 24.1% of total consolidated revenues for the second quarter of 2001.
The $1.8 million decrease for the second quarter was attributable principally to
lost revenues as a result of project completions, contributing approximately
$4.1 million, partially offset by new business revenues of $2.3 million.
Revenues for the first six months of 2002 decreased to $17.1 million, or 21.4%
of total revenues, from $21.8 million or 25.4% of total revenues for the first
six months of 2001. The $4.6 million decrease for the six months of 2002 was
attributable principally to lost revenues as a
8
result of project completions, contributing approximately $9.1 million,
partially offset by new business revenues of $4.5 million.
E-BUSINESS COST OF REVENUES. e-Business cost of revenues consists 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. e-Business cost of revenues decreased to
63.6% of total e-Business revenues for the second quarter of 2002, from 64.9%
for the second quarter of 2001. For the first six months of 2002, e-Business
costs of revenues decreased to 63.9% of total e-business revenues, from 64.2%
for the first six months of 2001. Both 1.3% and 0.3% decrease in cost of
revenues as a percent of total e-business revenues for the first three and six
months of 2002, respectively, was attributable primarily to improved onsite
utilization rates.
TEAMSOURCING REVENUES. TeamSourcing revenues decreased to $4.2 million for the
second quarter of 2002, or 10.6% of total revenues, down from $6.0 million, or
14.1% of total revenues for the second quarter of 2001. For the first six months
of 2002, TeamSourcing revenues decreased to $8.7 million, or 10.8% of total
revenues, down from $11.9 million or 13.9% of total revenues for the first six
months of 2001. Both the $1.8 million decrease for the second quarter as well as
the $3.2 million decrease for the first six months of 2002 were principally due
to a decrease in US based billable consultants on various engagements, as a
result of a conscious decision by management to reduce organizational focus away
from this segment and focusing on higher margin Segments.
TEAMSOURCING COST OF REVENUES. TeamSourcing cost of revenues consists of costs
directly associated with billable consultants in the US, including salaries,
payroll taxes, benefits, relocation costs, immigration costs, finders fees,
trainee compensation, and travel. TeamSourcing cost of revenues increased to
88.1% of TeamSourcing revenues for the second quarter of 2002, from 74.9% for
the second quarter of 2001. The cost of revenues as a percent of revenues
increased to 85.9% of total TeamSourcing revenues for the six month period ended
Jun 30, 2002, from 75.5% for the six month period ending June 30, 2001. Both the
13.2% and 10.4% increase in cost of revenues as a percent of total TeamSourcing
revenues for the first three and six months of 2002, respectively, was
attributable primarily to lower utilization due to the softness in the economy.
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES. Selling, general, and
administrative expenses consist primarily of salaries, payroll taxes and
benefits for sales, solutions, 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 months ended June 30, 2002 were
$7.6 million, or 19.4% of total revenues, compared to $8.4 million or 19.6% of
total revenues for the three months ended June 30, 2001. The $0.8 million
decrease was attributable principally to decrease in compensation costs due to
reduced corporate staff in US and UK, reversal of bonus provisions in US,
reduction in the depreciation expenses due to fully depreciated assets and
recovery of previously reserved for receivable contributing approximately $0.9
million, $2.8 million, $0.1 million and $0.8 million, respectively. The decrease
was partially offset by increase in marketing expenses, office expenses,
recognition of current period allowance for doubtful accounts provision in US,
recognition of current period bonus provision and increased facility costs at
Germany contributing approximately $0.2 million, $0.2 million, $1.1 million,
$2.2 million and $0.1 million, respectively. Selling, General and Administrative
Expenses decreased to $15.7 million, or 19.6% of total revenues for the six
month period ending June 30, 2002 from $17.2 million or 20.1% of total revenue
for the same period in 2001. The decrease of $1.5 million in Selling, General
and Administrative expenses in six month period ended June 30, 2002 over the
same period in 2001 was attributable principally to decrease in compensation
costs due to reduced corporate staff in US and UK, reversal of bonus provisions
in US, reduction in the depreciation expenses due to fully depreciated assets
and recovery of previously reserved for receivable contributing approximately
$1.8 million, $2.8 million, $0.4 million and $0.8 million, respectively. The
decrease was partially offset by increase in marketing expenses, office
expenses, recognition of current period allowance for doubtful accounts in US,
recognition of current period bonus provision, travel, office rent,
telecommunication and increased facility costs at Germany contributing
approximately $0.2 million, $0.2 million, $1.1 million, $2.2 million, $0.1
million, $0.1 million, $0.1 million and $0.3 million, respectively.
LIQUIDITY AND CAPITAL RESOURCES
In recent history, the Company has financed its working capital needs through
operations. The Company's cash and cash equivalents consist primarily of
certificates of deposit, corporate bonds and treasury notes. A large majority of
such amounts are held by Bank One for which a triple A rated letter of credit
has been provided. Remaining amounts are held by various banking institutions
including other U.S.-based and local India-based banks.
9
Net cash generated by operating activities was $9.9 million for the first six
months of 2002, compared to $15.2 million for the first six months of 2001. The
number of days sales outstanding in accounts receivable was approximately 59
days and 62 days as of June 30, 2002 and June 30, 2001, respectively.
Net cash provided by investing activities was $3.4 million for the first six
months of 2002, consisted principally of $19.3 million for proceeds from sale of
available-for-sale securities, partially offset by $15.2 million for purchase of
available-for- sale securities and $ 0.7 million for capital expenditures,
consisting principally of computer equipment and communication equipment. Net
cash used in investing activities was $11.0 million for the six months of 2001,
consisted principally of $12.8 million for purchase of available-for- sale
securities, $1.1 million for the acquisition of land for construction of the new
development and training center in Pune, India, $0.7 million in computer
equipment and $0.3 million in equity and other investments partially offset by
$3.9 million for proceeds from sale of available-for-sale securities.
Net cash provided by financing activities was $0.8 million and $0.1 million for
the first six months of 2002 and 2001, respectively. Cash provided by financing
activities for the first six months of 2002 consisted principally of $3.7
million for the proceeds from the exercise of stock options; offset by common
stock repurchases of $2.9 million. Cash provided by financing activities for the
first six months of 2001 consisted principally of $0.9 million for the proceeds
from the exercise of stock options; offset by common stock repurchases of $0.8
million.
The Company has a line of credit with Bank One, which provides for borrowings up
to $20.0 million. The line of credit expires on August 31, 2002. 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 the prior consent of the bank. The line of credit
also requires the Company to maintain certain tangible net worth levels and
leverage ratios. At June 30, 2002, there was no indebtedness outstanding under
the line of credit. The letters of credit bear 1% fee of the face value payable
annually in advance. Borrowings under the line of credit bear interest at 1) a
formula approximating the bank's Eurodollar rate plus applicable margin of 1.25%
or 2) the bank's prime rate plus 1.25%.
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 cash requirements for at least the next 12 months.
FORWARD LOOKING STATEMENTS / RISK FACTORS
Certain statements contained in this Report are forward looking
statements within the meaning of the Securities Exchange Act of 1934. In
addition, the Company from time to time may 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. Factors which could affect the forward looking
statements include those listed below. The Company does not intend to update
these forward looking statements.
- Recruitment and Retention of IT Professionals
- Government Regulation of Immigration
- Variability of Quarterly Operating Results
- Customer Concentration; Risk of Termination
- Exposure to Regulatory and General Economic Conditions in India
- Intense Competition
- Ability to Manage Growth
- Fixed-Price Engagements
- Potential Liability to Customers
- Dependence on Principal
- Risks Related to Possible Acquisitions
- Limited Intellectual Property Protection
RECENT ACCOUNTING PRONOUNCEMENTS
In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142
10
"Goodwill and Other Intangible Assets". SFAS 141 replaces Accounting Principles
Board Opinion 16, "Business Combinations" and requires that the purchase method
of accounting be used for all business combinations initiated after June 30,
2001. SFAS 142 replaces APB 17, "Intangible Assets". In accordance with SFAS No.
141 and 142, effective for the Company's year ended December 31, 2002, as a
replacement to amortization of goodwill and intangible assets with indefinite
lives, the Company will evaluate goodwill and intangible assets for impairment
annually. The standards have been adopted as of January 1, 2002 and have not had
a material effect on the financial statements. As of June 30, 2002, net goodwill
was approximately $906,000.
In February 2002, the Emerging Issues Task Force issued Topic D-103, "Income
Statement Characterization of Reimbursements Received for "Out-of-Pocket"
Expenses", which requires reimbursements of out-of-pocket expenses to be
presented as revenues and the associated costs to be presented as expenses. The
Company has adopted the above statement from January 1, 2002 resulting in
increased revenues and corresponding expenses, the impact of which is not
significant. The prior quarter figures have been reclassified to conform with
the current quarter presentation as above.
11
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
While the Company is a party to ordinary routine litigation incidental to its
business, the Company is 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.
The Corporation held an annual meeting of shareholders on Friday, May 17, 2002.
At the meeting, Neerja Sethi and Douglas E. Van Houweling were elected directors
of the Corporation to serve three year terms until the annual meeting of
shareholders in 2005. The vote of the shareholders with regard to the election
of Ms. Sethi as a director was 37,594,483 shares FOR and 204,489 shares
WITHHELD. The vote of the shareholders with regard to the election of Mr. Van
Houweling as a director was 37,794,367 shares FOR and 4,605 shares WITHHELD. The
following persons continued to serve their terms of office as directors of the
Corporation after the meeting: Paritosh K. Choksi, Bharat Desai, and George R.
Mrkonic.
ITEM 5. OTHER INFORMATION.
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits
Exhibit No. Description
99.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
(b) Reports on Form 8-K
The Corporation did not file any reports on Form 8-K during the three month
period ended June 30, 2002.
12
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 August 12, 2002 By /s/ Bharat Desai
-----------------------
Bharat Desai, President and
Chief Executive Officer
Date August 12, 2002 By /s/ Keshav Murugesh
-------------------------
Keshav Murugesh, Chief Financial Officer
13
EXHIBIT INDEX
Exhibit No. Description
99.1 Certification of Chief Executive Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
99.2 Certification of Chief Financial Officer Pursuant to 18
U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
14