Syntel Reports Third Quarter 2008 Financial Results

Highlights:

-- Q3 revenue $103.8M

-- Q3 EPS of $0.54 per diluted share

-- Quarter-ending global headcount of 12,277

-- Company revises Outlook for 2008
TROY, Mich.--(Business Wire)--
Syntel, Inc. (NASDAQ: SYNT), a global information technology
services and Knowledge Process Outsourcing (KPO) firm, today announced
financial results for the third quarter, ended September 30, 2008.

Third Quarter Financial Highlights

Syntel's total revenue for the third quarter increased 18 percent
to $103.8 million, compared to $87.9 million in the prior-year period
and less than one percent sequentially from $103.4 million in the
second quarter of 2008. The Company's gross margin was 44.3 percent in
the third quarter, compared to 39.8 percent in the prior-year period
and 41.1 percent in the second quarter of 2008.

During the third quarter, Applications Outsourcing accounted for
68 percent of total revenue, with Knowledge Process Outsourcing (KPO)
at 19 percent, e-Business contributing 11 percent and Team Sourcing at
two percent.

The Company's Selling, General and Administrative (SG&A) expenses
were 19.1 percent in the third quarter of 2008, compared to 20.9
percent in the prior-year period and 19.1 percent in the second
quarter of 2008. Syntel's income from operations expanded to 25.2
percent in the third quarter, compared to 19.0 percent in the
prior-year period and 22.1 percent in the second quarter of 2008.

Operating margins during the quarter were favorably impacted by
depreciation in the Indian Rupee. This benefit was partially offset by
losses in currency hedging, which negatively impacted "other income".

Net income for the third quarter was $22.1 million or $0.54 per
diluted share, compared to $18.3 million or $0.44 per diluted share in
the prior-year period and net income of $17.4 million or $0.42 per
diluted share in the second quarter of 2008.

During the third quarter, Syntel added 10 new clients and two new
"Hunting Licenses" or preferred partnership agreements, bringing the
total number to 92 strategic relationships.

Operational Highlights

"The macroeconomic environment during the third quarter continued
to deteriorate, resulting in reduced customer confidence and
increasingly conservative behavior," said Syntel Chairman and Chief
Executive Officer Bharat Desai. "Although the overall economy is
currently struggling, the mega-trend toward globalization of services
remains intact. Syntel as an organization remains focused on the
long-term business opportunity and creating value for all key
stakeholders."

"While third quarter revenue was pressured by foreign exchange and
demand softness, earnings power was strong. Based on the current
economic environment, we are cautious in our outlook for the upcoming
quarter and early 2009, and have adjusted our guidance accordingly,"
said Keshav Murugesh, Syntel's President and Chief Operating Officer.
"We remain optimistic, however, about the health of our growing
business pipeline and the overall positioning of the Company. We
continue to invest in target markets, verticals and services to help
our customers achieve their business objectives."

2008 Guidance

Based on current visibility levels and an exchange rate assumption
of 48.8 rupees to the dollar, the Company is updating 2008 guidance to
reflect revenue of $408 to $412 million and EPS in the range of $1.88
to $1.93.

Syntel to Host Conference Call

Syntel will discuss its third quarter results today on a
conference call at 10:00 a.m. (Eastern). To listen to the call, please
dial (877) 219-1781. The call will also be broadcast live via the
Internet at Syntel's web site: www.syntelinc.com under the "Investor
Relations" section. Please access the site at least 15 minutes prior
to the call to register and download any necessary software. A replay
will be available by dialing (800) 642-1687 and entering "69524818"
from 2:00 p.m. on October 23, 2008 until midnight on October 31, 2008.
International callers may dial (706) 645-9291 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. Recently
named one of the "50 Best Managed Global Outsourcing Vendors" by The
Black Book of Outsourcing, Syntel has over 12,200 employees worldwide,
is assessed at SEI CMMi Level 5, and is ISO 27001 and 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 11, 2008
and the Company's Quarterly Report on Form 10-Q for the period ending
June 30, 2008.

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SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT SHARE DATA)

THREE MONTHS NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------- -----------------
2008 2007 2008 2007
-------- ------- -------- --------

Net revenues $103,765 $87,885 $305,697 $243,672
Cost of revenues 57,814 52,887 177,542 148,486
-------- ------- -------- --------
Gross profit 45,951 34,998 128,155 95,186
Selling, general and administrative
expenses 19,815 18,333 60,046 47,431
-------- ------- -------- --------

Income from operations 26,136 16,665 68,109 47,755

Other income (expense), net 629 1,659 718 4,328
-------- ------- -------- --------

Income before provision for income
taxes 26,765 18,324 68,827 52,083

Income tax expense 4,620 11 8,832 5,131
-------- ------- -------- --------

Net income $ 22,145 $18,313 $ 59,995 $ 46,952
======== ======= ======== ========

Dividend per share $ 0.06 $ 0.06 $ 0.18 $ 0.18

EARNINGS PER SHARE:
Basic $ 0.54 $ 0.45 $ 1.46 $ 1.14
Diluted $ 0.54 $ 0.44 $ 1.45 $ 1.14

Weighted average common shares
outstanding:

Basic 41,275 41,100 41,194 41,036
======== ======= ======== ========
Diluted 41,347 41,256 41,321 41,253
======== ======= ======== ========
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SYNTEL, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)

September 30, December 31,
2008 2007
------------- ------------

ASSETS

Current assets:
Cash and cash equivalents $ 69,442 $ 61,555
Short term investments 49,225 54,643
Accounts receivable, net of allowance for
doubtful accounts of $443 and $499 at
September 30, 2008 and December 31, 2007,
respectively 55,319 51,783
Revenue earned in excess of billings 11,829 7,340
Deferred income taxes and other current
assets 27,588 23,761
------------- ------------

Total current assets 213,403 199,082

Property and equipment 121,321 110,186
Less accumulated depreciation and
amortization 47,989 44,602
------------- ------------

Property and equipment, net 73,332 65,584

Goodwill 906 906

Deferred income taxes and other noncurrent
assets 11,507 6,032
------------- ------------

$299,148 $271,604
============= ============

LIABILITIES

Current liabilities:
Accrued payroll and related costs $ 26,333 $ 27,242
Income taxes payable 11,129 10,580
Accounts payable and other current
liabilities 26,585 22,341
Deferred revenue 3,709 3,691

------------- ------------
Total liabilities 67,756 63,854

SHAREHOLDERS' EQUITY

Total shareholders' equity 231,392 207,750
------------- ------------

Total liabilities and shareholders' equity $299,148 $271,604
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Syntel
Jon Luebke, 248-619-3503, jon_luebke@syntelinc.com

Copyright Business Wire 2008