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Press release from GlobeNewswire (a Nasdaq OMX company)

Syntel Reports First Quarter 2012 Financial Results

Thursday, April 19, 2012

Syntel Reports First Quarter 2012 Financial Results05:30 EDT Thursday, April 19, 2012Highlights: Q1 revenue of $170.7M, up 17% from year-ago quarter, down 1% sequentially Q1 EPS of $0.98 per diluted share, up 62% from year-ago quarter, down 7% sequentially Q1 cash & short term investments of $334.4M Global Headcount of 19,659 on March 31, 2012, up 12% versus prior year TROY, Mich., April 19, 2012 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) firm, today announced financial results for the first quarter, ended March 31, 2012.First Quarter Financial Highlights Syntel's revenue for the first quarter increased 17 percent to $170.7 million, compared to $145.4 million in the prior-year period, and decreased one percent sequentially from $172.4 million in the fourth quarter of 2011. During the first quarter, Applications Outsourcing accounted for 75 percent of total revenue, with Knowledge Process Outsourcing (KPO) at 15 percent, e-Business contributing eight percent and TeamSourcing at two percent. The Company's gross margin was 41.8 percent in the first quarter, compared to 35 percent in the prior-year period and 42.1 percent in the fourth quarter of 2011. Selling, General and Administrative (SG&A) expenses were 15.8 percent of revenue in the first quarter, compared to 16.9 percent in the prior-year period and 11.4 percent in the previous quarter. The first quarter income from operations was 26.1 percent of revenue as compared to 18 percent in the prior-year period and 30.7 percent in the fourth quarter. The sequential reduction in operating margin primarily reflects the impact of balance sheet translations and the appreciation in the Indian rupee during the first quarter. Net income for the first quarter was $40.7 million or $0.98 per diluted share, compared to $25 million or $0.60 per diluted share in the prior-year period and net income of $44 million or $1.05 per diluted share in the fourth quarter of 2011. During Q1, Syntel spent $4.5 million in CAPEX, largely in support of campus infrastructure, and finished the quarter with cash and short-term investments of $334.4 million. The Company also added 175 net employees, ending the quarter with 19,659 employees globally.Operational Highlights "Our company's commitment to its customers yielded benefits during the quarter," said Syntel CEO and President Prashant Ranade. "Year-over-year revenue growth of 17% in the first quarter positions us well to meet our goals for 2012. While we are mindful of the global backdrop, we saw stable trends for client spending during the quarter and building pipelines." "Syntel's commitment to providing value to our customers guides our plans for investment in our business," said Ranade. "We remain on track with hiring and infrastructure build-outs and expect to make additional investment as 2012 progresses." "During the first quarter, we were pleased to see growth from clients six through 20 continue to outpace that of the company overall. We think our investments in value-added horizontal solutions coupled with our deep domain expertise will help us develop these relationships over the long-term. In addition to the innovation we deliver, our customer-centric culture will be a key success factor as we look to help all our clients meet their internal objectives and derive value from their IT investment."2012 Guidance Based on current visibility levels and an exchange rate assumption of 51.80 Indian Rupees to the dollar, the Company currently expects 2012 revenue of $730 to $755 million and EPS in the range of $3.40 to $3.65.Syntel to Host Conference Call Syntel will discuss its first quarter 2012 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 April 26, 2012 by dialing (855) 859-2056 and entering "72301028". International callers may dial (404) 537-3406 and enter the same passcode.About Syntel Syntel (Nasdaq:SYNT) is a leading global provider of integrated information technology and Knowledge Process Outsourcing (KPO) solutions spanning the entire lifecycle of business and information systems and processes. The Company is driven by its mission to create new opportunities for clients by harnessing the passion, talent and innovation of Syntel employees worldwide. Syntel leverages dedicated Centers of Excellence, a flexible Global Delivery Model, and a strong track record of building collaborative client partnerships to create sustainable business advantage for Global 2000 organizations. Syntel is assessed at SEI CMMi Level 5, and is ISO 27001 and ISO 9001:2008 certified. As of March 31, 2012, Syntel employed more than 19,000 people worldwide. To learn more, visit us at: www.syntelinc.com.Safe Harbor Provision This news release includes 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, 2011 or from other factors not currently anticipated.SYNTEL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(IN THOUSANDS, EXCEPT SHARE DATA)               THREE MONTHS ENDED   MARCH 31,   2012 2011       Net revenues  $ 170,744  $ 145,372 Cost of revenues 99,292 94,560 Gross profit 71,452 50,812 Selling, general and administrative expenses 26,946 24,623       Income from operations 44,506 26,189       Other income, principally interest 8,289 6,119       Income before income taxes  52,795  32,308       Income tax expense 12,050 7,259       Net income  $ 40,745  $ 25,049       Other Comprehensive Income, Net of tax           Foreign currency translation adjustments  16,012 3,036       Unrealized gains on securities:     Unrealized holding gains arising during period  272 229 Less: reclassification adjustment for gains included in net income  (177)  (192)    95  37       Defined benefit pension plans:     Prior service cost arising during period     Net loss arising during period  (4) 10 Less: amortization of prior service cost included in net periodic pension cost  9  --    5  10       Other comprehensive income, before tax  16,112  3,083 Income tax expenses related to Other Comprehensive Income  (31)  (2) Other comprehensive income, net of tax  16,081  3,081       Comprehensive Income  56,826  28,130       Dividend per share  $ 0.06  $ 0.06       EARNINGS PER SHARE:     Basic  $ 0.98  $ 0.60 Diluted  $ 0.98  $ 0.60      Weighted average common shares outstanding:         Basic 41,653 41,579       Diluted 41,765 41,711      SYNTEL, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(IN THOUSANDS)        March 31,December 31,   2012  2011             ASSETS           Current assets:     Cash and cash equivalents  $ 83,849  $ 104,628 Short term investments 250,549 215,798 Accounts receivable, net of allowance for doubtful accounts of $1,727 and $2,409 at March 31, 2012 and December 31, 2011, respectively  96,544 88,573 Revenue earned in excess of billings 15,480 5,131 Deferred income taxes and other current assets 54,662 46,353        Total current assets  501,084  460,483       Property and equipment 189,824 179,576 Less accumulated depreciation and amortization 80,154 73,574        Property and equipment, net  109,670  106,002       Goodwill 906 906       Non current Term Deposits with Banks 136 130             Deferred income taxes and other non current assets 31,780 29,727       $ 643,576  $ 597,248      LIABILITIES           Current liabilities:     Accrued payroll and related costs  $ 36,658  $ 45,949 Income taxes payable 5,711 3,080 Accounts payable and other current liabilities 36,068 35,341 Deferred revenue 5,823 9,692        Total current liabilities  84,260  94,062       Other non current liabilities 10,946 9,997        Total liabilities  95,206  104,059      SHAREHOLDERS' EQUITY                 Total shareholders' equity  548,370  493,189       Total liabilities and shareholders' equity $ 643,576  $ 597,248      CONTACT: North America/Europe: Jon Luebke, Syntel, 248/619-3503, jon_luebke@syntelinc.com AsiaPac: Suruchi Sharma, Syntel, +91 9833691415, suruchi_sharma@syntelinc.com