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> News
& Events > Press Releases > 2005 |
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Teaneck, NJ
- February 9, 2006 - Cognizant Technology
Solutions Corporation (NASDAQ: CTSH),
a leading provider of IT services, today
announced its financial results for the
fourth quarter ended December 31, 2005.
Highlights - Fourth Quarter 2005
- Quarterly revenue increased to $256.9
million, up 49% from the year-ago quarter.
- Quarterly diluted EPS, on a GAAP basis,
was $0.39 for the quarter.
- Quarterly diluted EPS, excluding a
one-time income tax benefit, was $0.31,
compared to $0.21 in the year-ago quarter.
Revenue for the fourth quarter increased
to $256.9 million, up 9% from $235.5 million
in the third quarter of 2005, and up 49%
from $172.8 million in the fourth quarter
of 2004. GAAP net income was $57.7 million,
or $0.39 per diluted share. In the fourth
quarter of 2005, Cognizant completed the
repatriation of approximately $60 million
of earnings pursuant to the American Jobs
Creation Act of 2004, leading to a one-time
income tax benefit of approximately $12.4
million, or $0.08 per diluted share. Excluding
this one-time tax benefit, net income
for the fourth quarter increased to $45.3
million on an adjusted basis, or $0.31
per diluted share, compared to $30.6 million
or $0.21 per diluted share in the fourth
quarter of 2004. Operating margin for
the quarter was 19.9%, at the high end
of the Company's targeted 19 to 20% range.
Highlights - Full Year 2005
- Annual revenue increased to $885.8
million, up 51% compared to 2004.
- Full year operating margin was 20.1%,
compared to 20.0% for 2004.
- Annual diluted EPS, on a GAAP basis,
increased to $1.13 for 2005.
- Annual diluted EPS, excluding the
one-time income tax benefit, was $1.05,
up from $0.70 in 2004.
- Headcount surpassed 24,300 on record
hiring.
Revenue for 2005 increased to $885.8
million, compared to $586.7 million in
2004. GAAP net income was $166.3 million,
or $1.13 per diluted share. Excluding
the one-time tax benefit, net income for
the full year increased to $153.9 million,
or $1.05 per diluted share on an adjusted
basis, compared to $100.2 million or $0.70
per diluted share in 2004.
Business Highlights
"Cognizant's strong performance during
the fourth quarter concludes a year of
exceptional overall performance for the
company, driving us past an annual revenue
run rate of $1 billion and firmly placing
us in the top tier of the offshore IT
services industry," said Lakshmi Narayanan,
President and CEO of Cognizant. "Our dedicated
focus on collaborating and building increasingly
deeper relationships with our clients
propelled our growth across all our key
vertical practices, and we finished the
year with 67 strategic clients. We extended
our leadership position in Financial Services
with the addition of two more strategic
clients within the quarter, and Healthcare
and Life Sciences, where Cognizant now
has client relationships with seven of
the world's top pharmaceutical companies
and three of America's top five healthcare
organizations."
Cognizant added over 9,000 associates
during the year, ending December with
more than 24,300 employees. Key hires
during the quarter included engineering
graduates, MBAs, senior-level architects,
program managers, and practice leaders
from major corporations in the Company's
key industry verticals.
"We are also pleased that we have been
able to effectively manage this industry-leading
growth while reinvesting in the business,"
continued Narayanan. "Our reinvestment
strategy, especially in hiring client-facing
managers in North America and Europe and
industry experts across the globe, results
in consistently high levels of client
satisfaction and has enabled us to drive
deeper relationships with our clients
and cross-sell a broader range of services.
We believe that the combination of our
focus on vertically aligned practices,
deep commitment to strengthening our customers'
businesses, and consistent execution positions
Cognizant to continue to grow at a rate
faster than our competition in 2006."
2006 Outlook - First Quarter
& Full Year
Based on current visibility, the Company
is now providing the following guidance:
- First quarter 2006 revenue anticipated
to be at least $275 million.
- First quarter 2006 diluted EPS expected
to be $0.29 on a GAAP basis, including
FAS 123R equity compensation expense
of approximately $0.03 cents.
- First quarter 2006 diluted EPS on
an adjusted basis, excluding the impact
of FAS 123R, expected to be $0.32.
- Fiscal 2006 revenue anticipated to
be at least $1.26 billion.
- Fiscal 2006 diluted EPS expected to
be at least $1.30 on a GAAP basis, including
FAS 123R equity compensation expense
of approximately $0.13 cents.
- Fiscal 2006 diluted EPS on an adjusted
basis, excluding the impact of FAS 123R,
expected to be at least $1.43.
- Total headcount by end of full year
2006 expected to exceed 34,500.
"During 2005, we continued to successfully
execute on our long-standing strategy
of reinvesting in the future growth of
the business while maintaining consistent
operating margins," said Gordon Coburn,
Chief Financial Officer of Cognizant.
"This strategy has enabled us to expand
and further enhance our operations in
Asia, North America and Europe ahead of
demand and to invest in the people and
programs to deliver industry-leading growth.
We ended the year with $424 million in
cash and short-term investments on our
balance sheet, an increase of over $109
million for the year. We look forward
to another year of strong performance,
based on the robust demand for Cognizant's
increasing range of services across both
vertical and geographic markets."
Conference Call
Cognizant will host a conference call
today, February 9, at 10:00 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 "4331879" from two hours
after the end of the call until 11:59
p.m. (ET) on February 16, 2006.
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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 25,000 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 one of Forbes' Best
Small Companies in America for the fourth
consecutive year, and ranked among the
top information technology companies in
BusinessWeek's Hot Growth Companies. Cognizant
is a member of the NASDAQ-100 Index, and
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.
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| COGNIZANT
TECHNOLOGY SOLUTIONS CORPORATION |
| CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS (Unaudited) |
| (In thousands, except
per share data) |
| |
Three Months Ended |
Twelve Months Ended |
| December 31, |
December 31, |
| 2005 |
2004 |
2005 |
2004 |
| US GAAP |
Adjustments |
As Adjusted |
US GAAP |
| Revenues |
$256,902
|
|
$256,902
|
$172,781 |
| Cost of revenues |
135,978
|
|
135,978
|
94,657 |
| Gross profit |
120,924 |
|
120,924 |
78,124 |
Selling, general and administrative expenses
|
64,604 |
|
64,604 |
38,182 |
Depreciation and amortization expense
|
5,280 |
|
5,280 |
4,671 |
| Income from operations |
51,040 |
|
51,040 |
35,271 |
| Other income/(expense): |
| Interest income |
2,860 |
|
2,860 |
1,467 |
| Other income/(expense), net |
(737) |
|
(737) |
117 |
| Total other income/(expense) |
2,123 |
|
2,123 |
1,584 |
| Income before provision for income taxes |
53,163 |
|
53,163 |
36,855 |
(Benefit) provision for income taxes
|
(4,510) |
12,411* |
7,901 |
6,253 |
| Net income |
$57,673 |
12,411
|
$45,262 |
$30,602 |
| Basic earnings per share |
$0.42 |
$(0.09) |
$0.33 |
$0.23 |
| Diluted earnings per share |
$0.39 |
$(0.08) |
$0.31 |
$0.21 |
| Weighted average number of common shares outstanding |
138,617 |
138,617 |
138,617 |
133,215 |
| Weighted average number of common and dilutive shares outstanding |
147,924 |
147,924 |
147,924 |
144,690 |
| In
addition to its reported US GAAP operating
results, Cognizant has included in
the table above as adjusted operating
results that the Securities and Exchange
Commission defines as "non-GAAP
financial measures." Management
believes that such non-GAAP financial
measures, when read in conjunction
with the company's reported results,
can provide useful supplemental information
for investors analyzing period to
period comparisons of the Company's
growth. The as adjusted column above
for the three months ended December
31, 2005 reflects the following adjustment:
*To exclude the reduction of income
tax expense (one-time income tax
benefit) related to the repatriation
of approximately $60 million of
earnings of its foreign subsidiaries
pursuant to the American Jobs Creation
Act of 2004.
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| COGNIZANT TECHNOLOGY
SOLUTIONS CORPORATION |
| CONDENSED CONSOLIDATED
STATEMENT OF FINANCIAL POSITION
(Unaudited) |
| (In thousands) |
| |
September
30, 2005 |
December
31, 2004 |
| Assets |
| Current Assets |
|
|
| Cash and cash equivalents(1) |
$196,938
|
$199,296 |
| Short-term investments(1) |
227,063 |
115,465 |
Trade accounts receivable, net
of allowances of $2,325 and $1,560
respectively
|
153,971
|
96,363 |
Unbilled Accounts Receivable
|
22,725
|
14,154 |
| Deferred income tax assets |
42,752 |
16,815 |
Other current assets
|
19,974
|
11,904 |
| Total Current Assets |
663,423 |
453,997 |
| Property and equipment - net |
146,982 |
90,705 |
| Goodwill |
18,223 |
9,701 |
| Other Intangible assets - net |
16,277 |
12,126 |
| Deferred income tax assets |
14,099 |
- |
| Other assets |
7,741 |
6,216 |
| Total Assets |
$866,745 |
$572,745 |
| Liabilities
and Stockholders' Equity |
| Current Liabilities |
|
|
| Accounts payable |
$16,420 |
$11,190 |
| Accrued expenses and other liabilities |
136,180 |
103,870 |
| Total Current Liabilities |
152,600 |
115,060 |
| Deferred income tax liabilities |
- |
4,156 |
| Total Liabilities |
152,600 |
119,216 |
| Stockholders' Equity |
714,145 |
453,529 |
| Total Liabilities
and Stockholders' Equity |
$866,745 |
$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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Contact |
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Gordon Coburn
Chief Financial Officer
201-678-2712 |
Investors:
Gordon McCoun/Peter
Schmidt |
Press:
Brian Maddox/Scot
Hoffman
Financial Dynamics
212-850-5600
shoffman@fd-us.com |
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