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Teaneck, NJ – October 26, 2004
– Cognizant Technology Solutions
Corporation (NASDAQ: CTSH), a leading
provider of IT services, today announced
its financial results for the third quarter
ended September 30, 2004. Highlights
for the third quarter include:
- Quarterly revenue increased to $155.4 million, up 12% sequentially and 58% from the year ago quarter
- Operating margin of 19.9% compared to 19.6% in the year-ago period
- Diluted quarterly EPS of $0.18
Revenue for the third quarter increased
to $155.4 million, up 12% from $138.7
million in the second quarter of 2004,
and up 58% from $98.1 million in the third
quarter of 2003. Net income for the third
quarter increased to $26.1 million, or
$0.18 per diluted share compared to $16.0
million or $0.12 per diluted share (on
a split-adjusted basis) in the third quarter
of 2003. Operating margin for the quarter
increased to 19.9%, compared to 19.6%
in the third quarter of 2003. In a separate
release issued today, Cognizant also announced
a further expansion of its planned India
construction program to meet the continuing
strong demand for its offshore services
from new and existing clients. "Our strong third-quarter financial results were marked by balanced growth across our key verticals, continued strength in our applications management business, and sustained growth in discretionary development spending," said Lakshmi Narayanan, President and CEO of Cognizant. "During the quarter we also saw growing demand from existing customers for our infrastructure services capabilities, where Cognizant remotely manages its clients' mission critical IT infrastructure. Our business-driven services, highly skilled employees, strong execution and solid customer satisfaction reinforce our position among the top providers of offshore IT outsourcing services. Additionally, our ongoing focus on strengthening and deepening our relationships with existing clients while maintaining our strong win rate has further enhanced our competitive position and provides a solid foundation for our continuing success in the future."
2004 Outlook
Based on current visibility, the Company is now providing the following updated guidance
- Fourth quarter 2004 revenue now anticipated to be at least $167 million
- Fourth quarter 2004 expected diluted EPS of $0.19
- Fiscal 2004 revenue now anticipated to be at least $581 million
- Fiscal 2004 expected diluted EPS of $0.68
- Total headcount by end of Fiscal 2004 expected to reach 15,000
"In addition to our strong revenue
and margin performance during the quarter,
we are particularly pleased with our cash
flow metrics, including the generation
of over $41 million of cash from operations,"
said Gordon Coburn, Chief Financial Officer
of Cognizant. "Our pipeline of new
business remains strong as the interest
level and demand from prospective customers
continues to increase in both North America
and Europe. Additionally, we continue
to have significant visibility due to
the high level of recurring revenue from
our long-term customer relationships.
As a result of our ongoing investment
in infrastructure and the recruitment
and training of our highly skilled staff,
we believe that Cognizant is well positioned
for strong performance for the remainder
of this year and going into 2005." Conference
Call
Cognizant will host a
conference call on October 26th, at 9:00
a.m. (ET) to discuss the Company’s
quarterly results. To listen to the call
please dial (888) 652-6834 domestic and
(706) 679-3288 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 "1330076"
from two hours after the end of the call
until 11:59 p.m. (ET) on November 2, 2004. |
| |
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 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 more than 14,000 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 onsite client teams. Cognizant
maintains P-CMM 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 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 made pursuant
to the safe harbor provisions of the Private
Securities Litigation Reform Act 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 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 |
Nine
Months Ended |
| |
September
30, |
September
30, |
| |
2004 |
2003 |
2004 |
2003 |
| Revenues |
$155,429 |
$98,111 |
$413,892 |
$257,498 |
| Revenues-related party |
|
|
|
2,575 |
| Total revenues |
155,429 |
98,111 |
413,892 |
260,073 |
| Cost of revenues |
84,585 |
52,968 |
225,153 |
141,126 |
| Gross profit |
70,844 |
45,143 |
188,739 |
118,947 |
| Selling, general and administrative
expenses |
35,889 |
22,861 |
94,614 |
59,624 |
| Depreciation and amortization expense |
4,083 |
3,008 |
11,776 |
8,397 |
| Income from operations |
30,872 |
19,274 |
82,349 |
50,926 |
| Other income/(expense): |
| Interest income |
1,267 |
617 |
2,922 |
1,358 |
| Other income/(expense), net |
(252) |
(21) |
(31) |
(120) |
| Split-off costs - non tax deductible |
|
|
|
(2,010) |
| Total other income/(expense) |
1,015 |
596 |
2,891 |
(772) |
| Income before provision for income
taxes |
31,887 |
19,870 |
85,240 |
50,154 |
| Provision for income taxes |
(5,835) |
(3,910) |
(15,599) |
(10,514) |
| Net income |
$26,052 |
$15,960 |
$69,641 |
$39,640 |
| Basic earnings per share* |
$0.20 |
$0.13 |
$0.53 |
$0.32 |
| Diluted earnings per share* |
$0.18 |
$0.12 |
$0.49 |
$0.30 |
| Weighted average number of common
shares outstanding |
131,747 |
125,803 |
130,248 |
124,063 |
| Weighted average number of common
and dilutive shares outstanding |
142,721 |
138,164 |
141,845 |
134,212 |
|
| |
| COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION |
| CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION (Unaudited) |
| (In thousands) |
| |
September
30, 2004 |
December
31, 2003 |
| Assets |
| Cash and cash equivalents |
$250,370 |
$194,221 |
| Investments in short-term bank
deposits |
20,021 |
|
| Trade accounts receivable, net
of allowances of $1,261 and $989 respectively |
86,781 |
52,253 |
| Unbilled Accounts Receivable |
16,952 |
9,543 |
| Current tax asset |
23,609 |
14,066 |
| Other current assets |
14,271 |
8,414 |
| Total Current Assets |
412,004
|
278,497
|
| Property and equipment - net |
70,075 |
58,438 |
| Goodwill |
5,603 |
4,477 |
| Other Intangible assets - net |
14,627 |
16,436 |
| Other assets |
4,533 |
2,741 |
| Total Assets |
$506,842
|
$360,589
|
| Liabilities and
Stockholders' Equity |
| Current Liabilities |
|
|
| Accounts payable |
$11,739 |
$9,423 |
| Accrued and other current liabilities |
84,545 |
53,213 |
| Total Current Liabilities |
96,284
|
62,636
|
| Deferred income taxes |
16,449 |
23,883 |
| Total Liabilities |
112,733
|
86,519
|
| Stockholders' Equity |
394,109 |
274,070 |
| Total Liabilities
and Stockholders' Equity |
$506,842
|
$360,589
|
|
| Contact |
Investors Contact |
Media Contact |
Gordon Coburn
Chief Financial
Officer
201-678-2712 |
Ian Bailey/Kirin Smith |
Brian Maddox/Scot Hoffman
Financial
Dynamics
212-850-5600
shoffman@fd-us.com |
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