Cognizant Technology Solutions Sees Strong Customer Demand Drive Third Quarter Growth.Business Editors/High-Tech Writers 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.--(BUSINESS WIRE)--Oct. 21, 2003 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)
Quarterly Revenue Grows 60% to $98 Million
Margins & Pricing Remain Firm
Diluted EPS exceeds expectations reaching $0.23
Cognizant Technology Solutions Corporation (NASDAQ:CTSH), a leading provider of IT services, today announced its financial results for the third quarter ended September September: see month. 30, 2003. Highlights for the third quarter include: -- Revenue increased to $98.1 million, up 12% sequentially and 60% from the year ago quarter -- 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. reached $0.23 compared to $0.15 in the third quarter of 2002 -- Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: of 19.6% compared to 19.6% sequentially and 19.8% in the year ago period -- Client acquisition sets a new record with 30 clients added during the quarter Revenue for the third quarter increased to $98.1 million, up 12 percent from $87.4 million in the second quarter of 2003, and up 60 percent from $61.2 million in the third quarter of 2002. Net income for the third quarter increased to $16.0 million, or $0.23 per diluted share compared to $13.5 million, or $0.20 per diluted share in the second quarter of 2003 and $9.7 million, or $0.15 per diluted share (on a split-adjusted basis) in the third quarter of 2002. Operating margin for the quarter held firm at 19.6%, compared to 19.6% in the second quarter of 2003 and 19.8% in the third quarter of 2002. "As a result of its well differentiated competitive position, Cognizant cog·ni·zant adj. Fully informed; conscious. See Synonyms at aware. [From cognizance.] Adj. 1. continues to grow faster than the industry," said Kumar Kumar (from Sanskrit meaning prince or an (unmarried) youth) is an Indian title, given name or family name. As a title it can mean son of a Rājā, prince, or heir apparent and enters in princely compound titles. Mahadeva Mahadeva may refer to :
n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our prospects for the future. Cognizant's focus remains on investing in the business to further differentiate ourselves from the competition. We continue to deepen deep·en tr. & intr.v. deep·ened, deep·en·ing, deep·ens To make or become deep or deeper. deepen Verb to make or become deeper or more intense Verb 1. our domain expertise, and introduce new service offerings. For example, our "transforming while performing" service has gained strong traction Traction Definition Traction is the use of a pulling force to treat muscle and skeleton disorders. Purpose Traction is usually applied to the arms and legs, the neck, the backbone, or the pelvis. and allows us to ramp up Ramp Up To increase a company's operations in anticipation of increased demand. Notes: A company might 'ramp up' operations if they just signed a contract creating substantially more demand for their product. See also: Demand, Economies of Scale client business faster, and build more strategic client relationships than our competition. Cognizant's strategy is facilitated by our locally based senior practice head and client partner approach, through which we can be highly responsive, and develop strong and lasting client partnerships. We believe that Cognizant's business model and execution capabilities are the best in the industry." "We are optimistic about the growth prospects for the remainder of the year and 2004, and anticipate Cognizant delivering continued revenue and earnings momentum and maintaining stable operating margin and pricing levels," 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. "Our recurring re·cur intr.v. re·curred, re·cur·ring, re·curs 1. To happen, come up, or show up again or repeatedly. 2. To return to one's attention or memory. 3. To return in thought or discourse. revenue base from our high percentage of repeat business, coupled with the significant number of new client wins in Q3 and a strong new business pipeline leave us confident of Cognizant's future performance." Conference Call Cognizant will host a conference call on October October: see month. 21, at 10:00 AM. (ET) to discuss the Company's quarterly results. To listen to the call please dial 800-953-6584 domestic and 706-645-0156 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 "3046974" from two hours after the end of the call until 11:59 p.m. (EST EST electroshock therapy. EST abbr. electroshock therapy ) on October 28, 2003. About Cognizant Technology Solutions Cognizant Technology Solutions Corporation (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 7,700 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 Ireland, 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 and was recently ranked #1 in Forbes' Hot Shots 200 Up & Comers and ranked as the top information technology company in BusinessWeek's Hot Growth Companies. Further information about Cognizant can be found at http://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. Although Cognizant believes the expectations contained in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove correct. This information may involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Potential risks and uncertainties that could cause or contribute to differences include, but are not limited to: (i) the significant fluctuations of Cognizant's quarterly operating results caused by a variety of factors, many of which are not within Cognizant's control, including (a) the number, timing, scope and contractual terms A contractual term is "[a]ny provision forming part of a contract"[1] Each term gives rise to a contractual obligation, breach of which will can give rise to litigation. of application design, development and maintenance projects, (b) delays in the performance of projects, (c) the accuracy of estimates of costs, resources and time to complete projects, (d) seasonal patterns of Cognizant's services required by customers, (e) levels of market acceptance for Cognizant's services, (f) potential adverse impacts of new tax legislation, and (g) the hiring of additional staff; (ii) changes in Cognizant's billing and employee utilization rates; (iii) Cognizant's ability to manage its growth effectively, which will require Cognizant (a) to increase the number of its personnel, particularly skilled technical, marketing and management personnel, (b) to find suitable acquisition candidates to support geographic expansion, and (c) to continue to develop and improve its operational, financial, communications and other internal systems, in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , India and Europe; (iv) Cognizant's reliance on key customers and large projects; (v) the highly competitive nature of the markets for Cognizant's services; (vi) Cognizant's ability to successfully address the continuing changes in information technology, evolving industry standards and changing customer objectives and preferences; (vii) Cognizant's reliance on the continued services of its key executive officers and leading technical personnel; (viii) Cognizant's ability to attract and retain a sufficient number of highly skilled employees in the future; (ix) Cognizant's ability to protect its intellectual property rights; (x) the concentration of Cognizant's operations in India and the related geo-political risks of local and cross-border conflicts; (xi) terrorist activity, the threat of terrorist activity, and responses to and results of terrorist activity and threats, including, but not limited to, effects, domestically and/or internationally, on Cognizant, its personnel and facilities, its customers and suppliers, financial markets and general economic conditions; (xii) the effects, domestically and/or internationally, on Cognizant, its personnel and facilities, its customers and suppliers, financial markets and general economic conditions arising from hostilities involving the United States in Iraq or elsewhere; (xiii) a breach of the Distribution Agreement entered into between the Company and IMS Health IMS Health (NYSE: RX) is an international consulting and data services company that supplies the pharmaceutical industry with sales data and consulting services. IMS Health was founded in 1954 by Bill Frohlich and David Dubow. ; (xiv) a change in the Company's intent to repatriate repatriate To bring home assets that are currently held in a foreign country. Domestic corporations are frequently taxed on the profits that they repatriate, a factor inducing the firms to leave overseas the profits earned there. undistributed Adj. 1. undistributed - (of investments) not distributed among a variety of securities undiversified - not diversified earnings; and (xv) general economic conditions. Such forward-looking statements include risks and uncertainties; consequently, actual transactions and results may differ materially from those expressed or implied thereby. Additional information on factors that may affect the business and financial results of the companies can be found in filings of the companies made from time to time with the Securities and Exchange Commission. -tables to follow-
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
(In thousands, except per share data)
Three Months Ended Nine Months Ended
September 30, September 30,
----------------- -------------------
2003 2002 2003 2002
-------- -------- --------- ---------
Revenues $98,111 $55,714 $257,498 $146,510
Revenues -related party - 5,519 2,575 15,565
-------- -------- --------- ---------
Total revenues 98,111 61,233 260,073 162,075
Cost of revenues 52,968 32,970 141,126 86,507
-------- -------- --------- ---------
Gross profit 45,143 28,263 118,947 75,568
Selling, general and
administrative expenses 22,861 14,150 59,624 37,933
Depreciation and amortization
expense 3,008 2,005 8,397 5,679
-------- -------- --------- ---------
Income from operations 19,274 12,108 50,926 31,956
-------- -------- --------- ---------
Other income (expense):
-----------------------
Interest income 617 471 1,358 1,305
Other income / (expense), net (21) 24 (120) (89)
Split-off costs (non tax
deductible) (2,010)
-------- -------- --------- ---------
Total other income / (expense) 596 495 (772) 1,216
-------- -------- --------- ---------
Income before provision for
income taxes 19,870 12,603 50,154 33,172
Provision for income taxes (3,910) (2,936) (10,514) (7,749)
-------- -------- --------- ---------
Net income $15,960 $9,667 $39,640 $25,423
======== ======== ========= =========
-------- -------- --------- ---------
Basic earnings per share (1) $0.25 $0.16 $0.64 $0.43
======== ======== ========= =========
-------- -------- --------- ---------
Diluted earnings per share (1) $0.23 $0.15 $0.59 $0.40
======== ======== ========= =========
Weighted average number of common
-------- -------- --------- ---------
shares outstanding 62,902 59,589 62,031 58,853
======== ======== ========= =========
Weighted average number of common
and dilutive shares -------- -------- --------- ---------
outstanding 69,082 64,354 67,106 63,120
======== ======== ========= =========
(1) Reflects a 3-for-1 stock split distributed on April 1, 2003
-Table to follow-
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
(In thousands)
September 30, December 31,
------------- ------------
2003 2002
------------- ------------
Assets
Current Assets
Cash and cash equivalents $159,749 $126,211
Trade accounts receivable, net of
allowances of $996
and $861, respectively 53,215 35,092
Trade accounts receivable - related party - 1,605
Unbilled accounts receivable 8,519 4,159
Unbilled accounts receivable - related
party - 149
Current tax asset 13,248 3,711
Other current assets 8,139 4,907
------------- ------------
Total Current Assets 242,870 175,834
Property and equipment - net 51,656 39,090
Goodwill - net 4,477 878
Other Intangible assets - net 11,959 12,870
Other assets 3,031 2,801
------------- ------------
Total Assets $313,993 $231,473
============= ============
Liabilities and Stockholders' Equity
Current Liabilities
Accounts payable $6,289 $6,948
Accrued and other current liabilities 43,281 34,539
------------- ------------
Total Current Liabilities 49,570 41,487
Deferred income taxes 27,454 24,505
------------- ------------
Total Liabilities 77,024 65,992
------------- ------------
------------- ------------
Stockholders' Equity 236,969 165,481
------------- ------------
------------- ------------
Total Liabilities and Stockholders' Equity $313,993 $231,473
============= ============
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