Cognizant

Cognizant Reports Strong Second Quarter Results

    Teaneck, New Jersey (ots/PRNewswire) -

    - Exceeds Revenue and Earnings Expectations

    - Raises Outlook for Full Year 2006

    Cognizant Technology Solutions Corporation (Nasdaq: CTSH), a leading provider of IT services, today announced its financial results for the second quarter ended June 30, 2006.

@@start.t1@@      Highlights - Second Quarter 2006
      - Quarterly revenue increased to US$336.8 million, up 59% from the
         year-ago quarter.
      - Quarterly diluted EPS on a GAAP basis was US$0.37.
      - Quarterly diluted EPS on a non-GAAP basis, excluding the impact of
         stock-based compensation expense, was US$0.41, compared to US$0.25 in
         the year-ago quarter.@@end@@

    Revenue for the second quarter increased to US$336.8 million, up 18% sequentially from US$285.5 million in the first quarter of 2006, and up 59% from US$211.7 million in the second quarter of 2005. GAAP net income was US$55.1 million, or US$0.37 per diluted share. Net income for the second quarter increased to US$61.0 million on a non-GAAP basis, or US$0.41 per diluted share, compared to US$36.0 million, or US$0.25 per diluted share, in the second quarter of 2005. GAAP operating margin for the quarter was 18.0%. Non-GAAP operating margin was 20.0%, at the high end of the Company's targeted 19-20% range. Reconciliations of non-GAAP measures to GAAP operating income, net income, and EPS are included at the end of this release.

    "We are very pleased with our strong second quarter results, driven by significant revenue growth across an expanding range of industries, service-offerings and geographies," said Lakshmi Narayanan, President and CEO of Cognizant. "As expected, our leadership in financial services, healthcare and life sciences, combined with our competitive expertise in newer verticals, allowed us to generate significant growth from our continually expanding client base. During the quarter we continued to experience strong demand for our full range of service offerings, particularly ERP and CRM, advanced solutions development, testing, data warehousing and infrastructure management. We are also pleased with the considerable traction we have gained in Europe, where the growth rate exceeded that of the rest of the Company this quarter."

    Mr. Narayanan continued, "As Cognizant accelerates past the one-billion dollar revenue mark, our focus continues to be on preparing the Company for steadfast growth in 2007 and beyond. Today we have announced an organizational change that we believe will provide a strong foundation for managing that growth, including the appointment of Francisco D'Souza to President and Chief Executive Officer, effective as of January 1, 2007. Cognizant's strength lies in its operational excellence, and by enhancing the depth of our senior management team with leadership from seasoned Cognizant veterans, we are focused on maintaining our industry-leading strategy for growth well into the future."

    2006 Outlook - Third Quarter & Full Year

    Based on current visibility, the Company is now providing the following guidance:

@@start.t2@@      - Third quarter 2006 revenue anticipated to be at least US$363 million.
      - Third quarter 2006 diluted EPS expected to be approximately US$0.38 on
         a GAAP basis, and US$0.42 on a non-GAAP basis, which excludes the
         impact of stock-based compensation expense.
      - Fiscal 2006 revenue now anticipated to be at least US$1.37 billion.
      - Fiscal 2006 diluted EPS expected to be at least US$1.45 on a GAAP
         basis.
      - Fiscal 2006 diluted EPS expected to be at least US$1.62 on a non-GAAP
         basis, which excludes the impact of stock-based compensation expense.
      - Total headcount by end of 2006 expected to exceed 36,000.@@end@@

    "Our strong financial results are clearly the product of our strategic investments to differentiate Cognizant in the marketplace and in the eyes of our clients," said Gordon Coburn, Chief Financial Officer of Cognizant. "Our success in anticipating customer demand through ahead-of-the-curve investments in vertical expertise and service-area capabilities continues to generate high levels of client satisfaction and provide additional drivers of future growth. During the quarter, we also invested further in campus recruitment and training programs for staff members at all levels to ensure that Cognizant continues to attract a superior quality of employees and cultivate their development. As a result of our strong performance over the first half of the year, our confidence in our reinvestment strategy and the growing demand environment, we have increased our revenue and earnings expectations for Fiscal 2006."

    Conference Call

    Cognizant will host a conference call today, August 2, at 9:00 a.m. (ET) to discuss the Company's quarterly results. To listen to the call please dial +1-888-652-6834 domestically or +1-706-679-3288 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 +1-800-642-1687 for domestic callers and +1-706-645-9291 for international callers and entering "3072892" from two hours after the end of the call until 11:59 p.m. (ET) on August 9, 2006.

    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 uses its own on-site/offshore outsourcing model to provide applications management, development, integration, and reengineering; infrastructure management; business process outsourcing; and numerous related services, such as enterprise consulting, technology architecture, program management, and change management.

    Cognizant's more than 31,000 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 on-site 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. Find additional information about Cognizant at 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.

@@start.t3@@                                  COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
                      CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                                 (In thousands of US$, except per share data)
                                                         Three Months Ended        Six Months Ended
                                                                 June 30,                      June 30,
                                                          2006            2005         2006          2005
      Revenues                                    $336,836      $211,711  $622,315    $393,392
      Cost of revenues                         188,320        117,768    346,908      215,762
      Gross profit                                148,516         93,943    275,407      177,630
      Selling, general and
        administrative expenses              80,044         46,126    146,749        87,536
      Depreciation and amortization
        expense                                         7,801          5,449      14,831        10,539
      Income from operations                 60,671         42,368    113,827        79,555
      Other income (expense):
      Interest income                              3,853          2,061        7,290         3,901
      Other income / (expense), net        1,508            (595)      1,467          (719)
      Total other income / (expense)      5,361          1,466        8,757         3,182
      Income before provision for
        income taxes                                66,032         43,834    122,584        82,737
      Provision for income taxes          10,961          7,802      20,349        14,727
      Net income                                  $55,071        $36,032  $102,235      $68,010
      Basic earnings per share                $0.39          $0.27        $0.73         $0.50
      Diluted earnings per share            $0.37          $0.25        $0.68         $0.47
      Weighted average number of
        common shares outstanding         140,542        135,687    140,103      135,086
      Weighted average number of
        common and dilutive
        shares outstanding                    150,493        146,554    149,924      146,187
                            COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
                CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
                                                 (In thousands)
                                                                                June 30,          December 31,
                                                                                    2006                    2005
      Assets
      Current Assets
         Cash and cash equivalents                                $203,105              $196,938
         Short-term investments                                      265,095                227,063
         Trade accounts receivable, net of
          allowances of $2,962
          and $2,325, respectively                                 227,985                153,971
         Unbilled accounts receivable                              38,274                 22,725
         Deferred income tax assets, net                         50,833                 42,752
         Other current assets                                          26,298                 19,974
                        Total Current Assets                          811,590                663,423
      Property and equipment, net                                 179,277                146,982
      Goodwill                                                                 18,430                 18,223
      Other Intangible assets, net                                 15,414                 16,277
      Deferred income tax assets, net                            10,779                 17,247
      Other assets                                                          10,576                  7,741
      Total Assets                                                    $1,046,066              $869,893
      Liabilities and Stockholders' Equity
      Current Liabilities
      Accounts payable                                                  $24,871                $16,420
      Accrued expenses and other liabilities                144,449                137,375
                 Total Current Liabilities                         169,320                153,795
      Other noncurrent liabilities                                  2,553                  1,953
      Total Liabilities                                                 171,873                155,748
      Stockholders' Equity                                            874,193                714,145
      Total Liabilities and Stockholders'
        Equity                                                            $1,046,066              $869,893
                            COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                                        Non-GAAP Financial Measures
                                (In thousands, except per share data)
                                                                                                      Three Months
                                                                                                          Ended
                                                Three Months Ended June 30,              June 30,
                                                 2006              2006            2006          2005
                                            US GAAP  Adjustments      Non-GAAP         US GAAP
      Revenues                      $336,836                 $-        $336,836        $211,711
      Cost of revenues          188,320          (3,332)(a)  184,988         117,768
      Gross profit                 148,516            3,332         151,848          93,943
      Selling, general and
        administrative
        expenses                        80,044          (3,437)(a)    76,607          46,126
      Depreciation and
        amortization expense      7,801                  -            7,801            5,449
      Income from operations  60,671            6,769          67,440          42,368
      Total other income /
        (expense)                        5,361                  -            5,361            1,466
      Income before provision
        for income taxes          66,032            6,769          72,801          43,834
      Provision for income
        taxes                            10,961                842(a)      11,803            7,802
      Net income                    $55,071            5,927         $60,998         $36,032
      Diluted earnings
        per share                        $0.37            $0.04            $0.41            $0.25
      Weighted average number
        of common and dilutive
        shares outstanding      150,493                              150,493         146,554
                                                                                                        Six Months
                                                                                                          Ended
                                                      Six Months Ended June 30,          June 30,
                                                2006                2006            2006          2005
                                          US GAAP    Adjustments      Non-GAAP         US GAAP
      Revenues                      $622,315                 $-        $622,315        $393,392
      Cost of revenues          346,908          (6,479)(a)  340,429         215,762
      Gross profit                 275,407            6,479         281,886         177,630
      Selling, general and
        administrative
        expenses                      146,749          (7,892)(a)  138,857          87,536
      Depreciation and
        amortization expense    14,831                  -          14,831          10,539
      Income from operations 113,827          14,371         128,198          79,555
      Total other income /
        (expense)                        8,757                  -            8,757            3,182
      Income before provision
        for income taxes         122,584          14,371         136,955          82,737
      Provision for income
        taxes                            20,349            1,975(a)      22,324          14,727
      Net income                  $102,235          12,396        $114,631         $68,010
      Diluted earnings
        per share                        $0.68            $0.08            $0.76            $0.47
      Weighted average number
        of common and dilutive
        shares outstanding      149,924                              149,924         146,187@@end@@

    In addition to its reported operating results in accordance with U.S.  generally accepted accounting principles (GAAP), Cognizant has included in  the table above non-GAAP operating measures 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 results. The non-GAAP financial measures disclosed by the Company should not be  considered a substitute for, or superior to, financial measures calculated  in accordance with GAAP, and the financial results calculated in accordance  with GAAP and reconciliations to those financial statements should be  carefully evaluated. The non-GAAP column above for the three and six months  ended June 30, 2006 reflects the following adjustment:

@@start.t4@@      (a) To exclude stock-based compensation expense under FAS 123R, and
            related income tax benefit, recorded during the three and six months
            ended June 30, 2006.@@end@@

    For 2006, the weighted average number of common and dilutive shares  outstanding were calculated taking into account the requirements of FAS 123R.

    Web site:  http://www.cognizant.com

ots Originaltext: Cognizant Technology Solutions Corporation
Im Internet recherchierbar: http://www.presseportal.de

Contact:
Gordon Coburn, Chief Financial Officer, +1-201-678-2712; Investors:
Gordon McCoun, Press: Brian Maddox/Scot Hoffman, Financial Dynamics,
+1-212-850-5600, shoffman@fd-us.com

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