Syntel Reports First Quarter 2007 Financial Results

Syntel, Inc. (SYNT), a global information technology services and Business Process Outsourcing (BPO) firm, today announced financial results for the first quarter, ended March 31, 2007. First Quarter Financial Highlights Syntel's total revenue for the first quarter increased 18.8 percent to $75.4 million, compared to $63.5 million in the prior-year period and 3.2 percent sequentially from $73.1 million in the fourth quarter of 2006. The Company's gross margin was 39.1 percent in the first quarter, compared to 38.3 percent in the prior-year period and 38.8 percent in the fourth quarter of 2006. During the first quarter, Syntel's focus area of Applications Outsourcing accounted for 70 percent of total revenue, with e-Business contributing 13 percent, Business Process Outsourcing (BPO) at 12 percent and TeamSourcing at 5 percent. The Company's Selling, General and Administrative (SG&A) expenses were 17.2 percent in the first quarter of 2007, compared to 16.7 percent in the prior-year period and 19.3 percent in the fourth quarter of 2006. Syntel's income from operations was 22 percent in the first quarter, compared to 21.6 percent in the prior-year quarter and 19.6 percent in the fourth quarter of 2006. Net income for the first quarter was $15.4 million or $0.37 per diluted share, compared to $12.1 million or $0.29 per diluted share in the prior-year period and net income of $13.3 million or $0.32 per diluted share in the fourth quarter of 2006. During the first quarter, Syntel added five new clients and launched 108 new engagements. In addition, the Company added one new "Hunting License" or preferred partnership agreement. Operational Highlights "Syntel recorded another solid quarter of financial and operational performance during Q1,” said Syntel Chairman and Chief Executive Officer Bharat Desai. "As an organization, we are completely focused on leveraging our full suite of ITO/BPO solutions to enable our customers to operate even more efficiently and gain competitive advantage. Our aggressive investments in People, New Services, and World-Class Infrastructure are helping us do just that.” "During the first quarter, Syntel broke ground on our new 29-acre campus program in Chennai, as we continued to create world-class facilities for our clients as well as our employees,” said Keshav Murugesh, Syntel President and Chief Operating Officer. "We created in excess of 2,000 seats in our new Pune campus during the quarter. That now gives us more than 3,000 seats in Phase I of the Pune technology campus. From a services standpoint, our BPO and Global Testing Practices continued to show very strong growth in the quarter as these offerings continue to resonate extremely well with our clients.” 2007 Guidance Based on current visibility levels, Syntel is updating its full-year guidance. The Company currently expects revenue in the range of $313 to $326 million and EPS between $1.28 to $1.36. For the upcoming quarter, Syntel expects the seasonal impacts of visa processing costs as well as salary increases in India to adversely affect sequential margins and EPS. Syntel to Host Conference Call Syntel will discuss its first quarter performance today on a conference call at 10:00 a.m. (Eastern). To listen to the call, please dial (888) 689-9220. The call will also be broadcast live via the Internet at Syntel's web site: www.syntelinc.com under the "Investor Relations" section. Please go to the web site at least 15 minutes prior to the call start time to register and download any necessary audio software. A replay will be available by dialing (800) 642-1687 and entering "5341000" from 1:00 p.m. on April 18, 2007 until midnight on April 25, 2007. International callers may dial (706) 645-9291 and enter the same pass code. About Syntel Syntel (NASDAQ: SYNT) is a leading global provider of custom outsourcing solutions in a broad spectrum of information technology and information technology-enabled services. The Company's vertical practices support the entire Design-Build-Operate-Optimize lifecycle of systems and processes for corporations in the Financial Services, Insurance, Retail, Health Care and Automotive industries. The first US-based firm to launch a Global Delivery Service to drive speed-to-market and quality advantages for its customers, Syntel now leverages this efficient model for the majority of its Global 2000 customers. Recently named one of Forbes Magazine's "Best 200 Small Companies in America," Syntel has more than 8,600 employees worldwide, is assessed at Level 5 of the SEI's CMMI, BS 7799-2:2002 as well as ISO 9001:2000 certified. To learn more, visit us at: www.syntelinc.com. Safe Harbor Provision This news release includes forward-looking statements, including 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 Form 10-K document dated March 15, 2007. 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. SYNTEL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED STATEMENTS OF INCOME (IN THOUSANDS, EXCEPT PER SHARE DATA)     THREE MONTHS ENDED MARCH 31 2007  2006    Net Revenues $ 75,430  $ 63,496  Cost of revenues   45,902    39,162  GROSS PROFIT 29,528  24,334  Selling, general and administrative expenses   12,939    10,598    Income from operations 16,589  13,736    Other income, principally interest   1,243    889    Income before income taxes 17,832  14,625    Provision for income taxes   2,456    2,570    NET INCOME $ 15,376  $ 12,055      Dividend Per Share : $ 0.06  $ 0.06    EARNINGS PER SHARE : Basic $ 0.38  $ 0.30  Diluted $ 0.37  $ 0.29    WEIGHTED AVERAGE COMMON SHARES OUTSTANDING :   Basic   40,966    40,696    Diluted   41,318    40,948  SYNTEL, INC. AND SUBSIDIARIES CONDENSED CONSOLIDATED BALANCE SHEETS (IN THOUSANDS)   March, 31 Dec., 31 2007  2006      ASSETS   Current assets: Cash and cash equivalents $ 46,884  $ 51,555  Short term investments 41,458  42,319  Accounts receivable, net of allowance for doubtful accounts of $309 and $2,828 at March 31, 2007 and December 31, 2006, respectively 40,006  33,706  Revenue earned in excess of billings 13,083  11,947  Deferred income taxes and other current assets   17,085    13,983    Total current assets 158,516  153,510    Property and equipment 81,365  69,672  Less accumulated depreciation and amortization   33,581    31,358    Property and equipment, net 47,784  38,314    Goodwill 906  906    Deferred income taxes and other noncurrent assets   3,421    4,959    $ 210,627  $ 197,689    LIABILITIES   Current liabilities: Accrued payroll and related costs $ 18,612  $ 20,034  Income taxes payable 5,968  2,732  Accounts payable and other current liabilities 19,497  19,221  Deferred revenue 4,740  5,960      Total liabilities 48,817  47,947    SHAREHOLDERS' EQUITY     Total shareholders' equity   161,810    149,742    Total liabilities and shareholders' equity $ 210,627  $ 197,689