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.