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Teaneck, NJ - July 28, 2005 - Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of IT services, today announced its financial results for the second quarter ended June 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 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 share compared to $23.8 million or $0.17 per diluted share in the second quarter of 2004. Operating margin 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," commented Lakshmi Narayanan, President and CEO 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, retail and manfacturing, telecommunications, 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 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 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 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 and Coimbatore. 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 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 "7896348" from two hours after the end of the call until 11:59 p.m. (ET) on August 4, 2005. |
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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 20,000 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 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 www.cognizant.com.
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| 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 |
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 |
|
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| COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION |
| CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
(Unaudited) |
| (In thousands) |
| |
June
30, 2005 |
December
31,2004 |
| Assets |
| Current Assets |
|
|
| Cash and cash equivalents* |
$180,123 |
$199,296 |
| Short-term investments* |
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 |
| *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. |
|
| Contact |
Gordon Coburn
Chief Financial Officer
201-678-2712 |
Investors:
Ian Bailey/Kirin Smith |
Press:
Brian Maddox/Scot Hoffman
Financial Dynamics
212-850-5600
shoffman@fd-us.com |
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