Syntel Announces a Change in Segment Financial Reporting

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| Source: Syntel, Inc.

TROY, Mich., April 14, 2014 (GLOBE NEWSWIRE) -- Syntel, Inc. (Nasdaq:SYNT), a global information technology services and Knowledge Process Outsourcing (KPO) company today announced a realigned financial reporting structure, which will become effective as of the quarter ending March 31, 2014.

While this financial data reflects the change in the Company's reportable segments described below, the Company has not in any way revised or restated its historical financial statements for any period.

Under the realigned structure, the Company's reportable segments are as follows: (1) Banking and Financial Services – which includes banking, transaction processing and capital markets customers; (2) Insurance – which includes insurance customers; (3) Healthcare and Life Sciences – which includes healthcare and life sciences customers; (4) Manufacturing – which includes automotive and manufacturing customers; and (5) Retail, Logistics and Telecom – which includes retail, travel and other hospitality services, logistics services, telecommunication, and all other customers.

Historical results reflecting the new business segments for previously reported fiscal periods for the 2013 and 2012 quarterly and 2013, 2012, and 2011 year-end periods are attached. The Company will begin to report results under the new reporting segments with the filing of its Quarterly Report on Form 10-Q for the quarter ending March 31, 2014.

This information is being furnished in order to provide the financial community with summary financial information and historical data for the 2013 and 2012 quarterly and 2013, 2012, and 2011 year-end periods that is on a basis consistent with the Company's new reporting segments. In accordance with ASC 280, "Segment Reporting," those prior period's segment disclosures have been restated to reflect industry segments as follows.

Syntel's leadership evaluates the Company's performance and allocates resources based on segment revenues and segment cost of revenues. Segment Gross Profit is defined as gross profit before Corporate Direct Costs.

The Company's cost of revenues consists of costs directly associated with billable professionals in the U.S. and offshore, including salaries, payroll taxes, benefits, relocation costs, immigration costs, finder's fees, trainee compensation and travel.

Generally, the cost of revenues for each operating segment has similar characteristics and is subject to the same factors, pressures and challenges. However, the economic environment and its effects on industries served by our operating groups may affect revenue and cost of revenues to differing degrees.

Certain expenses, for cost centers such as Centers of Excellence, Architecture Solutions Group (ASG), Research and Development (R&D), Cloud Computing, Application Management, etc., are not specifically allocated to specific segments because management believes it is not practical to allocate such costs to individual segments as they are not directly attributable to any specific segment.

Accordingly, these expenses are separately disclosed as Corporate Direct Costs and adjusted only against the Total Gross Profit.

The following table describes the historical results reflecting the new business segments for previously reported fiscal periods for the 2013 and 2012 quarterly and 2013, 2012, and 2011 year end periods.

Quarterly and YTD Revenue and Income from Operations for 2013.

           
  Q1-2013 Q2-2013 Q3-2013 Q4-2013 YTD 2013
Net Revenues $ in thousands % $ in thousands % $ in thousands % $ in thousands % $ in thousands %
Banking and Financial Services  102,892 54.4%  106,038 52.4%  104,397 49.7%  109,911 49.2%  423,238 51.3%
Insurance  29,101 15.4%  30,042 14.8%  30,400 14.5%  32,546 14.6%  122,089 14.8%
Healthcare and Life Sciences  29,490 15.6%  33,654 16.6%  37,336 17.8%  38,098 17.1%  138,578 16.8%
Manufacturing   8,269 4.4%  7,731 3.8%  7,178 3.4%  7,144 3.2%  30,322 3.7%
Retail, Logistics & Telecom  19,354 10.2%  25,036 12.4%  30,560 14.6%  35,588 15.9%  110,538 13.4%
Total Net Revenues  189,106    202,501    209,871    223,287    824,765  
                     
Gross Profit                    
Banking and Financial Services  44,989 43.7%  45,684 43.1%  49,154 47.1%  53,075 48.3%  192,902 45.6%
Insurance  11,143 38.3%  11,614 38.7%  13,206 43.4%  13,646 41.9%  49,609 40.6%
Healthcare and Life Sciences  12,625 42.8%  14,972 44.5%  19,459 52.1%  18,772 49.3%  65,828 47.5%
Manufacturing   2,982 36.1%  2,645 34.2%  2,533 35.3%  2,684 37.6%  10,844 35.8%
Retail, Logistics & Telecom  6,860 35.4%  9,650 38.5%  14,326 46.9%  17,969 50.5%  48,805 44.2%
Segment Gross Profit  78,599 41.6%  84,565 41.8%  98,678 47.0%  106,146 47.5%  367,988 44.6%
                     
Corporate Direct Costs  (822) -0.4%  (984) -0.5%  (965) -0.5%  (1,028) -0.5%  (3,799) -0.5%
Total Gross Profit  77,777 41.1%  83,581 41.3%  97,713 46.6%  105,118 47.1%  364,189 44.2%
                     
Selling, General and                     
administrative expenses  25,693 13.6%  18,690 9.2%  22,445 10.7%  29,759 13.3%  96,587 11.7%
                     
Income from Operations  52,084 27.5%  64,891 32.0%  75,268 35.9%  75,359 33.7%  267,602 32.4%

Quarterly and YTD Revenue and Income from Operations for 2012 and YTD for 2011.

             
  Q1-2012 Q2-2012 Q3-2012 Q4-2012 YTD 2012 YTD 2011
Net Revenues $ in thousands % $ in thousands % $ in thousands % $ in thousands % $ in thousands % $ in thousands %
Banking and Financial Services  93,954 55.0%  98,561 55.1%  102,630 55.1%  102,656 54.7%  397,801 55.0%  367,220 57.2%
Insurance  22,752 13.3%  25,488 14.2%  25,843 13.9%  26,993 14.4%  101,076 14.0%  82,423 12.8%
Healthcare and Life Sciences  31,209 18.3%  31,727 17.7%  32,428 17.4%  31,499 16.8%  126,863 17.5%  113,008 17.6%
Manufacturing   7,973 4.7%  7,844 4.4%  8,082 4.3%  8,324 4.4%  32,223 4.5%  24,886 3.9%
Retail, Logistics & Telecom  14,856 8.7%  15,359 8.6%  17,424 9.3%  18,301 9.7%  65,940 9.1%  54,867 8.5%
Total Net Revenues  170,744    178,979    186,407    187,773    723,903    642,404  
                         
Gross Profit                        
Banking and Financial Services  41,121 43.8%  42,132 42.7%  47,645 46.4%  47,431 46.2%  178,329 44.8%  144,014 39.2%
Insurance  8,742 38.4%  10,137 39.8%  10,680 41.3%  11,404 42.2%  40,963 40.5%  28,808 35.0%
Healthcare and Life Sciences  13,299 42.6%  13,396 42.2%  16,370 50.5%  15,606 49.5%  58,671 46.2%  45,398 40.2%
Manufacturing   3,106 39.0%  3,050 38.9%  3,418 42.3%  3,341 40.1%  12,915 40.1%  9,698 39.0%
Retail, Logistics & Telecom  5,997 40.4%  5,959 38.8%  7,511 43.1%  7,813 42.7%  27,280 41.4%  22,790 41.5%
Segment Gross Profit  72,265 42.3%  74,674 41.7%  85,624 45.9%  85,595 45.6%  318,158 44.0%  250,708 39.0%
                         
Corporate Direct Costs  (813) -0.5%  (816) -0.5%  (805) -0.4%  (740) -0.4%  (3,174) -0.4%  (3,759) -0.6%
Total Gross Profit  71,452 41.8%  73,858 41.3%  84,819 45.5%  84,855 45.2%  314,984 43.5%  246,949 38.4%
                         
Selling, General and                         
administrative expenses  26,946 15.8%  18,931 10.6%  29,036 15.6%  28,131 15.0%  103,044 14.2%  108,721 16.9%
                         
Income from Operations  44,506 26.1%  54,927 30.7%  55,783 29.9%  56,724 30.2%  211,940 29.3%  138,228 21.5%

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 December 31, 2013, Syntel employed more than 23,000 people worldwide. To learn more, visit us at: www.syntelinc.com.

Safe Harbor Provision

This news release may include forward-looking statements. Forward-looking statements are necessarily subject to risk and uncertainty. Actual results could differ materially from those projected in 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 or from other factors not currently anticipated.

North America/Europe: Jon Luebke, (248) 619-3503,


Asia/Pacific: Sikta Samantaray, +91 9167512186,