Cognizant Reports Strong First Quarter Results; Exceeds Revenue and Earnings Expectations; Accelerates Momentum in Newer Service Offerings; Raises Outlook for Full Year 2006.TEANECK Teaneck (tē`nĕk), residential township (1990 pop. 37,825), Bergen co., NE N.J., near the Hackensack River; settled in the early 1600s, inc. 1895. Jewelry, electrical equipment, and food seasonings are among its manufactures. , N.J. -- Cognizant Technology Solutions Cognizant redirects here. For a definition of the word see the entry for at Wiktionary Cognizant Technology Solutions (NASDAQ: CTSH) is an information technology services company with headquarters in New Jersey U.S.A. Corporation (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CTSH), a leading provider of IT services, today announced its financial results for the first quarter ended March 31, 2006. Highlights - First Quarter 2006 --Quarterly revenue increased to $285.5 million, up 57% from the year-ago quarter. --Quarterly diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis was $0.32. --Quarterly diluted EPS on a non-GAAP basis, excluding the impact of stock-based compensation expense, was $0.36, compared to $0.22 in the year-ago quarter. Revenue for the first quarter increased to $285.5 million, up 11% from $256.9 million in the fourth quarter of 2005, and up 57% from $181.7 million in the first quarter of 2005. GAAP net income was $47.2 million, or $0.32 per diluted share. Net income for the first quarter increased to $53.6 million on a non-GAAP basis, or $0.36 per diluted share, compared to $32.0 million, or $0.22 per diluted share, in the first quarter of 2005. GAAP operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the quarter was 18.6%. Non-GAAP operating margin was 21.3%, slightly above the Company's targeted 19 to 20% range, due to greater than expected revenue growth. Reconciliations of non-GAAP measures to GAAP operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. , net income, and EPS are included at the end of this release. "We are pleased with our outstanding financial performance during the quarter and our strong start to 2006," said Lakshmi Narayanan Lakshmi Narayanan is the vice chairman and ex-CEO of Cognizant Technology Solutions (CTS) . He was the CEO and president of Cognizant till 2006. [1] Lakshmi has played a leading role in the global information technology industry for more than 25 years, managing divisions , President and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Cognizant cog·ni·zant adj. Fully informed; conscious. See Synonyms at aware. [From cognizance.] Adj. 1. . "Our first quarter results were driven by escalating demand for our integrated set of services across our entire range of industry verticals. We experienced strong growth in our newer verticals, especially media and telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , and strengthened our leadership positions in financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , healthcare and life sciences, stemming from our continued investment in building deep relationships with our customers." Mr. Narayanan Narayanan may mean
tr.v. character·ized, character·iz·ing, character·iz·es 1. To describe the qualities or peculiarities of: characterized the warden as ruthless. 2. by an increase in customer spending on strategic development initiatives, and we experienced strong sequential revenue growth across the full range of our service offerings, especially ERP (Enterprise Resource Planning) An integrated information system that serves all departments within an enterprise. Evolving out of the manufacturing industry, ERP implies the use of packaged software rather than proprietary software written by or for one customer. , CRM (Customer Relationship Management) An integrated information system that is used to plan, schedule and control the presales and postsales activities in an organization. , testing and data warehousing See data warehouse. data warehousing - data warehouse . Overall, Cognizant's first quarter results further build on our track record of successfully managing our industry-leading growth through our integrated and seamless onsite/offshore delivery model. We are confident that our commitment to cultivating deep client relationships and demonstrated success in strengthening their businesses through delivering comprehensive IT solutions will enable Cognizant to sustain our superior growth rate throughout 2006." 2006 Outlook - Second Quarter & Full Year Based on current visibility, the Company is now providing the following guidance: --Second quarter 2006 revenue anticipated to be at least $317 million. --Second quarter 2006 diluted EPS expected to be approximately $0.33 on a GAAP basis, and $0.36 on a non-GAAP basis, which excludes the impact of stock-based compensation expense. --Fiscal 2006 revenue now anticipated to be at least $1.3 billion. --Fiscal 2006 diluted EPS expected to be at least $1.37 on a GAAP basis. --Fiscal 2006 diluted EPS expected to be at least $1.52 on a non-GAAP basis, which excludes the impact of stock-based compensation expense. --Total headcount head count or head·count n. 1. The act of counting people in a particular group. 2. The number of people counted in this way. Noun 1. by end of 2006 expected to exceed 35,000. "Our strong first quarter results and increasingly diversified diversified (di·verˑ·s revenue stream reflect the successful execution of our long-standing strategy of reinvesting in the future growth of the business," said Gordon Coburn, Chief Financial Officer of Cognizant. "As we said last quarter, we have been investing heavily in our infrastructure and training programs to build out our vertical expertise and service-area capabilities, as well as our geographical presence. These investments have enabled us to deploy the right resources and deliver high quality solutions that meet the unique business needs of our clients. Based on our continued success in winning new strategic clients and expanding our existing relationships, combined with the overall positive demand environment, we have increased our revenue and earnings expectations for Fiscal 2006." Conference Call Cognizant will host a conference call today, May 3, at 10:00 a.m. (ET) to discuss the Company's quarterly results. To listen to the call please dial (888) 652-6834 domestically or (706) 679-3288 internationally. The call will also be broadcast live via the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the at Cognizant's web site, www.cognizant.com. Please go to the web site at least fifteen minutes prior to the call to register, download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. and install any necessary audio software. A replay will be made available on the web site at www.cognizant.com or by calling (800) 642-1687 for domestic callers and (706) 645-9291 for international callers and entering "8093905" from two hours after the end of the call until 11:59 p.m. (ET) on May 10, 2006. About Cognizant Cognizant (NASDAQ: CTSH) is a leading provider of IT services. Focused on delivering strategic information technology solutions that address the complex business needs of its clients, Cognizant uses its own on-site/offshore outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. model to provide applications management, development, integration, and reengineering; infrastructure management; business process outsourcing Business process outsourcing (BPO) is the contracting of a specific business task, such as payroll, to a third-party service provider. Usually, BPO is implemented as a cost-saving measure for tasks that a company requires but does not depend upon to maintain its position in ; and numerous related services, such as enterprise consulting, technology architecture, program management, and change management. Cognizant's more than 27,000 employees are committed to partnerships that sustain long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. , proven value for customers by delivering high-quality, cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. solutions through its development centers in India and on-site client teams. Cognizant maintains P-CMM P-CMM People Capability Maturity Model (Software Engineering Institute) P-CMM Personnel Capability Maturity Model and SEI-CMM Level 5 assessments from an independent third-party assessor, was recently named one of Forbes' Best Small Companies in America for the fourth consecutive year, and ranked among the top information technology companies in BusinessWeek's Hot Growth Companies. Cognizant is a member of the NASDAQ-100 Index. Find additional information about Cognizant at www.cognizant.com. This press release includes statements which may constitute forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. made pursuant to the safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions and the factors discussed in our most recent Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. and other filings with the Securities and Exchange Commission. Cognizant undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Three
Months
Three Months Ended March 31, Ended
------------------------------- March 31,
2006 200 2005
US GAAP Adjustments Non-GAAP US GAAP
--------- ----------- --------- ----------
Revenues $285,479 $ - $285,479 $ 181,681
Cost of revenues 158,588 (3,147)(a) 155,441 97,994
-------- ---------- -------- ---------
Gross profit 126,891 3,147 130,038 83,687
Selling, general and
administrative expenses 66,705 (4,455)(a) 62,250 41,410
Depreciation and
amortization expense 7,030 - 7,030 5,090
-------- ---------- -------- ---------
Income from operations 53,156 7,602 60,758 37,187
-------- ---------- -------- ---------
Other income (expense):
-----------------------
Interest income 3,437 - 3,437 1,840
Other income / (expense),
net (41) - (41) (124)
-------- ---------- -------- ---------
Total other income /
(expense) 3,396 - 3,396 1,716
-------- ---------- -------- ---------
Income before provision for
income taxes 56,552 7,602 64,154 38,903
Provision for income taxes 9,388 1,133(a) 10,521 6,925
-------- ---------- -------- ---------
Net income $ 47,164 6,469 $ 53,633 $ 31,978
======== ========== ======== =========
--------- ---------- --------- ----------
Basic earnings per share $ 0.34 $ 0.05 $ 0.38 $ 0.24
======== ========== ======== =========
--------- ---------- --------- ----------
Diluted earnings per share $ 0.32 $ 0.04 $ 0.36 $ 0.22
======== ========== ======== =========
--------- ---------- --------- ----------
Weighted average number of
common shares outstanding 139,665 139,665 139,665 134,485
======== ========== ======== =========
--------- ---------- --------- ----------
Weighted average number of
common and dilutive
shares outstanding 149,354 149,354 149,354 145,821
======== ========== ======== =========
In addition to its reported operating results in accordance with U.S.
generally accepted accounting principles (GAAP), Cognizant has
included in the table above non-GAAP operating measures that the
Securities and Exchange Commission defines as "non-GAAP financial
measures." Management believes that such non-GAAP financial measures,
when read in conjunction with the company's reported results, can
provide useful supplemental information for investors analyzing period
to period comparisons of the company's results. The non-GAAP financial
measures disclosed by the company should not be considered a
substitute for, or superior to, financial measures calculated in
accordance with GAAP, and the financial results calculated in
accordance with GAAP and reconciliations to those financial statements
should be carefully evaluated. The non-GAAP column above for the three
months ended March 31, 2006 reflects the following adjustment:
(a) To exclude stock-based compensation expense under FAS 123R, and
related income tax benefit, recorded in the quarter ended March
31, 2006.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
(In thousands)
March 31, December 31,
------------ ------------
2006 2005
----------- -----------
Assets
Current Assets
Cash and cash equivalents $ 165,362 $ 196,938
Short-term investments 257,186 227,063
Trade accounts receivable, net of
allowances of $2,325 and $2,325,
respectively 184,356 153,971
Unbilled accounts receivable 33,327 22,725
Deferred income tax assets, net 43,847 42,752
Other current assets 25,055 19,974
------------ ------------
Total Current Assets 709,133 663,423
Property and equipment, net 161,577 146,982
Goodwill 18,270 18,223
Other Intangible assets, net 15,803 16,277
Deferred income tax assets, net 19,641 17,247
Other assets 9,903 7,741
------------ ------------
Total Assets $ 934,327 $ 869,893
=========== ===========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 21,439 $ 16,420
Accrued expenses and other liabilities 117,435 137,375
------------ ------------
Total Current Liabilities 138,874 153,795
Other noncurrent liabilities 2,302 1,953
------------ ------------
Total Liabilities 141,176 155,748
----------- -----------
------------ ------------
Stockholders' Equity 793,151 714,145
----------- -----------
------------ ------------
Total Liabilities and Stockholders' Equity $ 934,327 $ 869,893
=========== ===========
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