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Teaneck, NJ
— July 22, 2003 — Cognizant
Technology Solutions Corporation (Nasdaq:
CTSH), a leading provider of IT services,
today announced its financial results
for the second quarter ended June 30,
2003.
Highlights for the second quarter
include:
- Revenue for the second quarter increased
to $87.4 million, up 61 percent from
$54.4 million in the second quarter
of 2002
- Diluted EPS reached $0.20
- Operating margins of 19.6% compared
to 19.5% sequentially and 19.7% in the
year ago period
Revenue for the second quarter increased
to $87.4 million, up 17 percent from $74.5
million in the first quarter of 2003,
and up 61 percent from $54.4 million in
the second quarter of 2002. As previously
announced, on April 1, 2003 Cognizant
closed its acquisition of Aces, a specialist
in CRM solutions. Now fully integrated
with Cognizant's operations, Aces accounted
for $2.3 million of revenue during the
quarter. Net income for the second quarter
increased to $13.5 million, or $0.20 per
diluted share compared to $8.6 million,
or $0.14 per diluted share (on a split-adjusted
basis) in the second quarter of 2002.
Operating margin for the quarter was 19.6%,
compared to 19.5% in the first quarter
of 2003 and 19.7% in the second quarter
of 2002.
"Our solid second quarter results
reflect Cognizant's strong position as
a leader in the fast growing offshore
services market," said Kumar Mahadeva,
Chairman and Chief Executive Officer.
"Building on our track record of
effective execution, we continue to win
and ramp-up strategic clients who look
to Cognizant to help drive bottom-line
results through offshore outsourcing.
Our fourth generation delivery model helps
companies to drastically cut their IT
and business process costs while aligning
their IT portfolios with business needs.
We have seen strong demand across all
our verticals, with financial services
and healthcare performing particularly
well. We further stepped up discretionary
investment in our sales and marketing
organization which will continue to be
a key strategic advantage for Cognizant
as the industry evolves and grows."
"Our record of strong repeat business
continues with approximately 83% of our
revenue from clients who have been working
with us for at least a year," said Gordon
Coburn, Chief Financial Officer. "As we
continue to strengthen and grow relationships
with our clients, we have developed a
strong recurring revenue base which gives
us greater visibility and confidence in
our future."
Conference Call
Cognizant will host a conference call
on July 22, at 10:00 AM. (EST) 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 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 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 "1555402" from
two hours after the end of the call until
11:59 p.m. (EST) on July 29, 2003. |
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About Cognizant
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, and a number
of related services such as enterprise
consulting, technology architecture, program
management and change management through
its onsite/offshore outsourcing model.
Cognizant's 6,700 employees are committed
to partnerships that sustain long-term,
proven value for customers by delivering
high-quality, cost-effective solutions
through its development centers in India
and Ireland, and onsite client teams.
Cognizant maintains P-CMM and SEI-CMM
Level 5 assessments from an independent
third-party assessor and was recently
ranked as the top information technology
company in Forbes' 200 Best Small Companies
in America and 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 made pursuant
to the safe harbor provisions of the Private
Securities Litigation Reform Act 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 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, 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; (xiv)
a change in the Company's intent to repatriate
undistributed 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. |
| 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, |
| |
2003 |
2002 |
2003 |
2002 |
| Revenues |
$87,446 |
$49,146 |
$159,387 |
$90,796 |
| Revenues -related party |
- |
5,212 |
2,575 |
10,046 |
| Total revenues |
87,446 |
54,358 |
161,962
|
100,842
|
| Cost of revenues |
47,199 |
29,348 |
88,158 |
53,537 |
| Gross profit |
40,247 |
25,010 |
73,804 |
47,305 |
| Selling, general and administrative
expenses |
20,352 |
12,561 |
36,763 |
23,783 |
| Depreciation and amortization expense |
2,767 |
1,747 |
5,389 |
3,674 |
| Income from operations |
17,128 |
10,702 |
31,652 |
19,848 |
| Other income/(expense): |
| Interest income |
320 |
405 |
741 |
834 |
| Other income/(expense), net |
98 |
46 |
(99) |
(113) |
| Split-off costs - non tax deductible |
- |
- |
(2,010) |
- |
| Total other income/(expense) |
418 |
451 |
(1,368) |
721 |
| Income before provision for income
taxes |
17,546 |
11,153 |
30,284 |
20,569 |
| Provision for income taxes |
(4,044) |
(2,506) |
(6,604) |
(4,813) |
| Net income |
13,502 |
8,647 |
23,680 |
15,756 |
| Basic earnings per share* |
$0.22 |
$0.15 |
$0.38 |
$0.27 |
| Diluted earnings per share* |
$0.20 |
$0.14 |
$0.36 |
$0.25 |
| Weighted average number of common
shares outstanding |
61,885 |
58,738 |
61,601 |
58,738 |
| Weighted average number of common
and dilutive shares outstanding |
66,239 |
63,165 |
66,115 |
62,755 |
* Reflects a 3-for-1 stock split distributed
on April 1, 2003. |
|
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| COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION |
| CONDENSED CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION (Unaudited) |
| (In thousands) |
| |
June
30, 2003 |
December
31, 2002 |
| Assets |
| Current Assets |
|
|
| Cash and cash equivalents |
$ 137,739 |
$ 126,211 |
| Trade accounts receivable, net of
allowances of $963 and $861, respectively |
42,908 |
35,092 |
| Trade accounts receivable - related
party |
- |
1,605 |
| Unbilled accounts receivable |
9,326 |
4,159 |
| Unbilled accounts receivable -
related party |
- |
149 |
| Current tax asset |
5,916 |
3,711 |
| Other current assets |
7,970 |
4,907 |
| Total Current Assets |
203,859 |
175,834 |
| Property and equipment - net |
47,765 |
39,090 |
| Goodwill - net |
4,477 |
878 |
| Other Intangible assets - net |
12,293 |
12,870 |
| Other assets |
3,018 |
2,801 |
| Total Assets |
$ 271,412 |
$ 231,473 |
| Liabilities and Stockholder's Equity |
|
|
| Current Liabilities |
|
|
| Accounts Payable |
$ 6,839 |
$ 6,948 |
| Accrued and other current liabilities |
34,752 |
34,539 |
| Total Current Liabilities |
41,591 |
41,487 |
| Deferred income taxes |
26,424 |
24,505 |
| Total Liabilities |
68,015 |
65,992 |
| Stockholders' Equity |
203,397 |
165,481 |
| Total Liabilities
and Stockholders' Equity |
$ 271,412 |
$ 231,473 |
|
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Contact |
Investors
Contact |
Media
Contact |
Gordon Coburn
Chief Financial Officer
201-678-2712 |
Ian Bailey/Kirin
Smith |
Brian Maddox/Scot
Hoffman
FD Morgen-Walke
212-850-5600
shoffman@fdmw.com |
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