Cognizant Technology Solutions Reports Record Second Quarter 2005 Results.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. -- Strong Revenue and Net Income Performance Exceeds Expectations; Continued Growth across Full Range of Vertical Industry Practices; Raises Outlook for 2005 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 second quarter ended June June: see month. 30, 2005. Highlights - Second Quarter 2005 --Quarterly revenue increased to $211.7 million, up 53% from the year-ago quarter --Net income increased to $36.0 million, up 51% from the year-ago quarter --Diluted quarterly 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. of $0.25 compared to $0.17 in the year-ago quarter --Record quarter of hiring, with a net addition of 2,200 associates in the second quarter, bringing total number of employees to 19,250 Revenue for the second quarter increased to $211.7 million, up 53% from $138.7 million in the second quarter of 2004. Net income for the second quarter increased to $36.0 million, or $0.25 per 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. share compared to $23.8 million or $0.17 per diluted share in the second quarter of 2004. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: for the quarter was 20.0%, in line with the 20.0% operating margin achieved in the second quarter of 2004. "We are pleased to report another record quarter of strong revenue and earnings growth for Cognizant cog·ni·zant adj. Fully informed; conscious. See Synonyms at aware. [From cognizance.] Adj. 1. ," commented 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. "Our second quarter performance was driven by growing demand for our deep industry knowledge and expertise across our entire range of verticals, including 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. , retail and manufacturing, telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. , and healthcare. For example, during the quarter, we signed one of the largest pharmaceutical companies in the world as a new strategic client, and we are now partnering with five of the top ten global pharmaceutical companies to provide them with a comprehensive range of business-aligned IT solutions. Our proven success as a strategic partner with global companies in increasingly complex projects means we are in an ideal position to address a broader range of our clients' business and technology needs and deliver future growth for the Company." 2005 Outlook - Third Quarter & Full Year Based on current visibility, the Company is now providing the following guidance: --Third quarter 2005 revenue anticipated to be at least $232 million --Third quarter 2005 expected diluted EPS of $0.26 --Fiscal 2005 revenue anticipated to be at least $876 million --Fiscal 2005 diluted EPS of approximately $1.01 --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 Fiscal 2005 expected to exceed 23,000 "We saw continued strong demand for Cognizant's unique service offerings during the second quarter. We continue to invest in our people, our infrastructure and the development of additional best-of-breed The best product of its type. Organizations often purchase software from different vendors in order to obtain the best-of-breed for each application area; for example, a human resources package from one vendor and an accounting package from another. service offerings to ensure we can meet current and future demand, while also maintaining our leadership position as a premier global provider of IT solutions," said Gordon Gordon, river in W Tasmania, Australia, 125 mi (200 km) long. Flowing from mountains to the W coast, its main tributaries are the Franklin and Denison from the N, and Serpentine and Olga to the S. Coburn, Chief Financial Officer of Cognizant. "To that end, we have continued to aggressively invest in the construction of Cognizant's own training and development centers, as well as expand into new locations, including our recently opened technology centers in Mumbai Mumbai (m  mbī`, m m`bī), formerly Bombay (bŏmbā`), city (1991 pop. and Coimbatore Coimbatore (kwĭmbətôr`), city (1991 pop. 1,000,746), Tamil Nadu state, SE India. Commanding the eastern approach to the Palghat Gap, the major pass through the Western Ghats, it was important in the wars of Haidar Ali and Tippoo Sahib. . We also
maintained healthy operating margins of 20% during the quarter, which
included absorbing the impact of our previously announced wage increases
which took effect at the beginning of the second quarter of 2005. Based
on our current visibility and the strong demand for our services, we
have increased our revenue and earnings expectations for Fiscal
2005."Conference Call Cognizant will host a conference call today, July 28th, at 9:00 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 "7896348" from two hours after the end of the call until 11:59 p.m. (ET) on August 4, 2005. About Cognizant Technology Solutions 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 provides applications management, development, integration, and re-engineering, 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 a number of related services such as enterprise consulting, technology architecture, program management, and change management through its onsite/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. Cognizant's more than 20,000 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 onsite 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 Forbes' Best Small Company in America for the second consecutive year, and ranked among the top information technology companies in BusinessWeek's Hot Growth Companies. Cognizant is also included as a component of the NASDAQ-100 Index. Further information about Cognizant can be found at. 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 Ended Six Months Ended
June 30, June 30,
------------------- -------------------
2005 2004 2005 2004
--------- --------- --------- ---------
Revenues $211,711 $138,719 $393,392 $258,463
Cost of revenues 117,768 75,558 215,762 140,568
--------- --------- --------- ---------
Gross profit 93,943 63,161 177,630 117,895
Selling, general and
administrative expenses 46,126 31,543 87,536 58,725
Depreciation and amortization
expense 5,449 3,828 10,539 7,693
--------- --------- --------- ---------
Income from operations 42,368 27,790 79,555 51,477
--------- --------- --------- ---------
Other income (expense):
-----------------------
Interest income 2,061 815 3,901 1,655
Other income / (expense), net (595) (80) (719) 221
--------- --------- --------- ---------
Total other income / (expense) 1,466 735 3,182 1,876
--------- --------- --------- ---------
Income before provision for
income taxes 43,834 28,525 82,737 53,353
Provision for income taxes 7,802 4,724 14,727 9,764
--------- --------- --------- ---------
Net income $ 36,032 $ 23,801 $ 68,010 $ 43,589
========= ========= ========= =========
--------- --------- --------- ---------
Basic earnings per share $ 0.27 $ 0.18 $ 0.50 $ 0.34
========= ========= ========= =========
--------- --------- --------- ---------
Diluted earnings per share $ 0.25 $ 0.17 $ 0.47 $ 0.31
========= ========= ========= =========
Weighted average number of --------- --------- --------- ---------
common shares outstanding 135,687 130,117 135,086 129,499
========= ========= ========= =========
Weighted average number of
common and dilutive shares --------- --------- --------- ---------
outstanding 146,554 141,164 146,187 141,407
========= ========= ========= =========
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
(In thousands)
June December
30, 31,
--------- ---------
2005 2004
--------- ---------
Assets
Current Assets
Cash and cash equivalents (1) $180,123 $199,296
Short-term investments (1) 146,679 115,465
Trade accounts receivable, net of allowances
of $2,355 and $1,560, respectively 143,076 96,363
Unbilled accounts receivable 22,602 14,154
Deferred income tax assets 23,552 16,815
Other current assets 15,826 11,904
--------- ---------
Total Current Assets 531,858 453,997
Property and equipment - net 108,522 90,705
Goodwill 18,907 9,701
Other Intangible assets - net 16,205 12,126
Deferred income tax assets 591 -
Other assets 7,125 6,216
--------- ---------
Total Assets $683,208 $572,745
========= =========
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $ 16,363 $ 11,190
Accrued expenses and other liabilities 101,657 103,870
--------- ---------
Total Current Liabilities 118,020 115,060
Deferred income tax liabilities - 4,156
--------- ---------
Total Liabilities 118,020 119,216
--------- ---------
--------- ---------
Stockholders' Equity 565,188 453,529
--------- ---------
--------- ---------
Total Liabilities and Stockholders' Equity $683,208 $572,745
========= =========
(1) In the first quarter, the Company began to classify its investment
in auction-rate securities as short-term investments. These
investments were included in cash and equivalents in previous
periods ($94.15 million as of December 31, 2004), and such amounts
have been reclassified in the accompanying financial statements to
conform to the current period classification. This change in
classification had no effect on the amounts of total current
assets, total assets, net income or cash flow from operations of
the Company.
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