EX-99 3 form8k_102103exh99-1.txt FOR: Cognizant Technology Solutions Corp. 500 Glenpointe Centre West Teaneck, NJ 07666 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 COGNIZANT TECHNOLOGY SOLUTIONS SEES STRONG CUSTOMER DEMAND DRIVE THIRD QUARTER GROWTH * QUARTERLY REVENUE GROWS 60% TO $98 MILLION * MARGINS & PRICING REMAIN FIRM * DILUTED EPS EXCEEDS EXPECTATIONS REACHING $0.23 Teaneck, NJ - October 21, 2003 - Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of IT services, today announced its financial results for the third quarter ended September 30, 2003. HIGHLIGHTS FOR THE THIRD QUARTER INCLUDE: o Revenue increased to $98.1 million, up 12% sequentially and 60% from the year ago quarter o Diluted EPS reached $0.23 compared to $0.15 in the third quarter of 2002 o Operating margin of 19.6% compared to 19.6% sequentially and 19.8% in the year ago period o Client acquisition sets a new record with 30 clients added during the quarter Revenue for the third quarter increased to $98.1 million, up 12 percent from $87.4 million in the second quarter of 2003, and up 60 percent from $61.2 million in the third quarter of 2002. Net income for the third quarter increased to $16.0 million, or $0.23 per diluted share compared to $13.5 million, or $0.20 per diluted share in the second quarter of 2003 and $9.7 million, or $0.15 per diluted share (on a split-adjusted basis) in the third quarter of 2002. Operating margin for the quarter held firm at 19.6%, compared to 19.6% in the second quarter of 2003 and 19.8% in the third quarter of 2002. "As a result of its well differentiated competitive position, Cognizant continues to grow faster than the industry," said Kumar Mahadeva, Chairman and Chief Executive Officer. "Our pipeline is the strongest it has ever been, and we are optimistic about our prospects for the future. Cognizant's focus remains on investing in the business to further differentiate ourselves from the competition. We continue to deepen our domain expertise, and introduce new service offerings. For example, our "transforming while performing" service has gained strong traction and allows us to ramp up client business faster, and build more strategic client relationships than our competition. Cognizant's strategy is facilitated by our locally based senior practice head and client partner approach, through which we can be highly responsive, and develop strong and lasting client partnerships. We believe that Cognizant's business model and execution capabilities are the best in the industry." "We are optimistic about the growth prospects for the remainder of the year and 2004, and anticipate Cognizant delivering continued revenue and earnings momentum and maintaining stable operating margin and pricing levels," said Gordon Coburn, Chief Financial Officer. "Our recurring revenue base from our high percentage of repeat business, coupled with the significant number of new client wins in Q3 and a strong new business pipeline leave us confident of Cognizant's future performance." CONFERENCE CALL --------------- Cognizant will host a conference call on October 21, at 10:00 AM. (ET) 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 "3046974" from two hours after the end of the call until 11:59 p.m. (EST) on October 28, 2003. ABOUT COGNIZANT TECHNOLOGY SOLUTIONS ------------------------------------ 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 more than 7,700 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 #1 in Forbes' Hot Shots 200 Up & Comers 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. 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. -tables to follow- 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, ----------------------- ------------------------ 2003 2002 2003 2002 --------- --------- --------- --------- Revenues $ 98,111 $ 55,714 $ 257,498 $ 146,510 Revenues-related party -- 5,519 2,575 15,565 --------- --------- --------- --------- Total revenues 98,111 61,233 260,073 162,075 Cost of revenues 52,968 32,970 141,126 86,507 --------- --------- --------- --------- Gross profit 45,143 28,263 118,947 75,568 Selling, general and administrative expenses 22,861 14,150 59,624 37,933 Depreciation and amortization expense 3,008 2,005 8,397 5,679 --------- --------- --------- --------- Income from operations 19,274 12,108 50,926 31,956 --------- --------- --------- --------- Other income (expense): ---------------------- Interest income 617 471 1,358 1,305 Other income / (expense), net (21) 24 (120) (89) Split-off costs (non tax deductible) -- -- (2,010) -- --------- --------- --------- --------- Total other income / (expense) 596 495 (772) 1,216 --------- --------- --------- --------- Income before provision for income taxes 19,870 12,603 50,154 33,172 Provision for income taxes (3,910) (2,936) (10,514) (7,749) --------- --------- --------- --------- Net income $ 15,960 $ 9,667 $ 39,640 $ 25,423 ========= ========= ========= ========= Basic earnings per share (1) $ 0.25 $ 0.16 $ 0.64 $ 0.43 ========= ========= ========= ========= Diluted earnings per share (1) $ 0.23 $ 0.15 $ 0.59 $ 0.40 ========= ========= ========= ========= Weighted average number of common shares outstanding 62,902 59,589 62,031 58,853 ========= ========= ========= ========= Weighted average number of common and dilutive shares outstanding 69,082 64,354 67,106 63,120 ========= ========= ========= =========
(1) Reflects a 3-for-1 stock split distributed on April 1, 2003 -Table to follow- COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) (In thousands) SEPTEMBER 30 DECEMBER 31 ------------ ----------- 2003 2002 ------------ ----------- ASSETS Current Assets Cash and cash equivalents $ 159,749 $ 126,211 Trade accounts receivable, net of allowances of $996 and $861, respectively 53,215 35,092 Trade accounts receivable - related party -- 1,605 Unbilled accounts receivable 8,519 4,159 Unbilled accounts receivable - related party -- 149 Current tax asset 13,248 3,711 Other current assets 8,139 4,907 ---------- ---------- Total Current Assets 242,870 175,834 Property and equipment - net 51,656 39,090 Goodwill - net 4,477 878 Other Intangible assets - net 11,959 12,870 Other assets 3,031 2,801 ---------- ---------- TOTAL ASSETS $ 313,993 $ 231,473 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts payable $ 6,289 $ 6,948 Accrued and other current liabilities 43,281 34,539 ---------- ---------- Total Current Liabilities 49,570 41,487 Deferred income taxes 27,454 24,505 ---------- ---------- TOTAL LIABILITIES 77,024 65,992 ---------- ---------- STOCKHOLDERS' EQUITY 236,969 165,481 ---------- ---------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 313,993 $ 231,473 ========== ========== ###