Cognizant Reports Fourth Quarter And Full Year 2012 Results Fourth quarter revenue up 3% sequentially and 17% year-over-year; Annual revenue of $7.35 billion, up 20% year-over-year; Provides guidance for 2013 revenue growth of at least 17% PR Newswire TEANECK, N.J., Feb. 7, 2013 TEANECK, N.J., Feb. 7, 2013 /PRNewswire/ -- Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of information technology, consulting, and business process outsourcing services, today announced its fourth quarter and full year 2012 financial results. Highlights – Fourth Quarter 2012 oQuarterly revenue rose to $1.95 billion, up 17.1% from the year-ago quarter and 3.0% sequentially. oQuarterly diluted EPS on a GAAP basis was $0.92, compared to $0.78 in the year-ago quarter. oQuarterly diluted EPS on a non-GAAP basis, which excludes stock-based compensation expense, was $0.99, compared to $0.84 in the year-ago quarter. oNet headcount addition for the quarter exceeded 6,300; year-end headcount was approximately 156,700. Revenue for the fourth quarter of 2012 rose to $1.95 billion, up 17.1% from $1.66 billion in the fourth quarter of 2011. GAAP net income was $278.8 million, or $0.92 per diluted share, compared to $240.1 million, or $0.78 per diluted share, in the fourth quarter of 2011. Diluted EPS on a non-GAAP basis was $0.99. GAAP operating margin for the quarter was 18.3%. Excluding stock-based compensation expense of $27.4 million, non-GAAP operating margin was 19.7%, within the Company's targeted 19-20% range. Reconciliations of non-GAAP financial measures to GAAP operating results and diluted EPS are included at the end of this release. "We are pleased to once again deliver industry-leading revenue growth in 2012," said Francisco D'Souza, Chief Executive Officer of Cognizant. "As we look to 2013, it is clear that secular industry shifts, new technology architectures, virtual business models and changing demographics are forcing clients to re-examine how they operate. Increasingly, clients are finding incremental levels of performance inadequate and are challenging the status quo to find ways to maintain their market leadership." "When confronting their businesschallenges, clients not only look to Cognizant to help them run their operations better, but increasingly turn to us to help them run their operations differently in order to differentiate themselves in the market and drive topline growth," said Gordon Coburn, President of Cognizant. "Given our strong client relationships and our deep consulting and domain expertise, Cognizant is uniquely positioned to address clients' dual mandate of 'running better' and 'running different' from one global platform." Highlights – Full Year 2012 oRevenue increased to $7.35 billion, up 20.0% from the previous year. oDiluted EPS on a GAAP basis was $3.44, compared to $2.85 in the previous year. oDiluted EPS on a non-GAAP basis, which excludes stock-based compensation expense, was $3.70, compared to $3.07 in the previous year. oGAAP and non-GAAP diluted EPS includes the impact of $0.05 in net non-operating foreign currency exchange loss. Revenue for 2012 increased to $7.35 billion, up 20.0% from $6.12 billion for 2011. GAAP net income was $1.05 billion, or $3.44 per diluted share, compared to $883.6 million, or $2.85 per diluted share, for 2011. Diluted EPS on a non-GAAP basis was $3.70. GAAP operating margin was 18.5%. Excluding stock-based compensation expense of $107.4 million, non-GAAP operating margin was 20.0%. Reconciliations of these non-GAAP financial measures to GAAP operating results and diluted EPS are included in the table at the end of this release. First Quarter & Full Year 2013 Outlook Starting in 2013, our reported non-GAAP financial measures will exclude acquisition-related charges, including amortization of purchased intangibles, as well as stock-based compensation expense. This change is not reflected in our reported 2012 quarterly or annual results above, but is reflected in our 2013 non-GAAP guidance below. The Company is providing the following guidance: oFirst quarter 2013 revenue anticipated to be at least $2.0 billion. oFirst quarter 2013 diluted EPS expected to be $0.92 on a GAAP basis and $1.01 on a non-GAAP basis. oFull year 2013 revenue expected to be at least $8.60 billion, up at least 17.0% compared to 2012. This guidance includes anticipated acquisition revenue of $90 million. oFull year 2013 diluted EPS expected to be at least $3.95 on a GAAP basis, and $4.31 on a non-GAAP basis. oEPS guidance excludes the impact of any non-operating foreign currency exchange gains or losses. "Generating broad-based, industry leading growth of 20% within a tough demand environment of 2012 is a testament to the strength of our business model," said Karen McLoughlin, Chief Financial Officer. "Furthermore, 2012 was a strong year of cash generation. Our cash and short-term investments balances grew by $430 million during the year, after covering over $480 million of share repurchases." Conference Call Cognizant will host a conference call February 7, 2013 at 8:00 a.m. (Eastern) to discuss the Company's quarterly and full year 2012 results. To listen to the conference call, please dial (877) 810-9510 (domestically) and (201) 493-6778 (internationally) and provide the following conference passcode: "Cognizant Call." The conference call will also be available live via the Internet by accessing the Cognizant website at www.cognizant.com. Please go to the website at least 15 minutes prior to the call to register and to download and install any necessary audio software. For those who cannot access the live broadcast, a replay will be available by dialing (877) 660-6853 for domestic callers or (201) 612-7415 for international callers and entering 407306 from two hours after the end of the call until 11:59 p.m. (Eastern) on Thursday, February 21, 2013. The replay will also be available at Cognizant's website www.cognizant.com for 60 days following the call. About Cognizant Cognizant (NASDAQ: CTSH) is a leading provider of information technology, consulting, and business process outsourcing services, dedicated to helping the world's leading companies build stronger businesses. Headquartered in Teaneck, New Jersey (U.S.), Cognizant combines a passion for client satisfaction, technology innovation, deep industry and business process expertise, and a global, collaborative workforce that embodies the future of work. With over 50 delivery centers worldwide and approximately 156,700 employees as of December 31, 2012, Cognizant is a member of the NASDAQ-100, the S&P 500, the Forbes Global 2000, and the Fortune 500 and is ranked among the top performing and fastest growing companies in the world. Visit us online at www.cognizant.com or follow us on Twitter: Cognizant. Forward-Looking Statements 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 Annual Report on 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, except as may be required under applicable securities law. About Non-GAAP Financial Measures To supplement our financial results presented in accordance with GAAP, this press release includes the following measures defined by the Securities and Exchange Commission as non-GAAP financial measures: non-GAAP operating margin and non-GAAP diluted earnings per share. These non-GAAP measures are not based on any comprehensive set of accounting rules or principles and should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and may be different from non-GAAP measures used by other companies. In addition, these non-GAAP measures should be read in conjunction with our financial statements prepared in accordance with GAAP. The reconciliations of Cognizant's GAAP financial measures to the corresponding non-GAAP measures should be carefully evaluated. Historically, we sought to manage the company to a targeted operating margin, excluding stock-based compensation costs, of 19% to 20% of revenues. In 2013, we will continue to seek to manage the company to the same targeted operating margin, but will exclude acquisition-related charges, including amortization of purchased intangible assets, in addition to stock-based compensation expense, in setting our internal operating targets. Accordingly, in 2013, our aforementioned non-GAAP measures will also exclude acquisition-related charges. Management believes providing investors with an operating view consistent with how it manages the company provides enhanced transparency into the operating results of the company. For our internal management reporting and budgeting purposes, we use non-GAAP financial statements for financial and operational decision making, to evaluate period-to-period comparisons and for making comparisons of our operating results to those of our competitors. Therefore, it is our belief that the use of non-GAAP financial measures provides a meaningful measure for investors to evaluate our financial performance. Accordingly, we believe that the presentation of non-GAAP operating margin and non-GAAP diluted earnings per share, when read in conjunction with our reported GAAP results, can provide useful supplemental information to our management and investors regarding financial and business trends relating to our financial condition and results of operations. A limitation of using non-GAAP measures versus financial measures calculated in accordance with GAAP is that non-GAAP measures do not reflect all of the amounts associated with our operating results as determined in accordance with GAAP and exclude costs that are recurring, namely stock-based compensation and acquisition-related charges, including amortization of purchased intangibles. In addition, other companies may calculate non-GAAP financial measures differently than us, thereby limiting the usefulness of these non-GAAP financial measures as a comparative tool. We compensate for this limitation by providing specific information regarding the GAAP amounts excluded from non-GAAP operating margin and non-GAAP diluted earnings per share to allow investors to evaluate such non-GAAP financial measures with financial measures calculated in accordance with GAAP. - tables to follow - 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, 2012 2011 2012 2011 Revenues $1,948,215 $1,663,707 $ 7,346,472 $ 6,121,156 Operating expenses: Cost of revenues (exclusive of depreciation 1,150,934 970,689 4,278,241 3,538,622 andamortization expense shown separately below) Selling, general and 401,746 352,456 1,557,646 1,328,665 administrative expenses Depreciation and 39,282 32,419 149,089 117,401 amortization expense Income from operations 356,253 308,143 1,361,496 1,136,468 Other income (expense), net: Interest income 11,417 10,868 44,514 39,249 Other, net (1,826) 4,069 (18,414) (6,568) Total other income 9,591 14,937 26,100 32,681 (expense), net Income before provision 365,844 323,080 1,387,596 1,169,149 for income taxes Provision for income 87,065 82,953 336,333 285,531 taxes Net income $ 278,779 $ 240,127 $ 1,051,263 $ 883,618 Basic earnings per share $ $ $ $ 0.93 0.79 3.49 2.91 Diluted earnings per $ $ $ $ share 0.92 0.78 3.44 2.85 Weighted average number of commonshares outstanding - Basic 300,452 302,354 301,291 303,277 Weighted average number of commonshares 303,777 308,827 305,861 310,351 outstanding - Diluted COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited) (In thousands) December 31, December 31, 2012 2011 Assets Current Assets Cash and cash equivalents $ 1,570,077 $ 1,310,906 Short-term investments 1,293,681 1,121,358 Trade accounts receivable, net of allowances of $25,816 and $24,658, respectively 1,345,661 1,179,043 Unbilled accounts receivable 183,085 139,627 Deferred income tax assets, net 201,894 109,042 Other current assets 219,896 225,530 Total Current Assets 4,814,294 4,085,506 Property and equipment, net 971,486 758,034 Goodwill 309,185 288,772 Intangible assets, net 87,475 97,616 Deferred income tax assets, net 178,824 164,192 Other noncurrent assets 160,307 113,813 Total Assets $ 6,521,571 $ 5,507,933 Liabilities and Stockholders' Equity Current Liabilities Accounts payable $ $ 108,707 72,205 Deferred revenue 149,696 105,713 Accrued expenses and other 1,118,927 1,031,787 current liabilities Total Current Liabilities 1,377,330 1,209,705 Deferred income tax liabilities, 2,777 3,339 net Other noncurrent liabilities 287,081 342,003 Total Liabilities 1,667,188 1,555,047 Stockholders' Equity 4,854,383 3,952,886 Total Liabilities and $ 6,521,571 $ 5,507,933 Stockholders' Equity COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures (Unaudited) (In thousands, except per share amounts) Three Months Ended December 31, Three Months Ended December 31, 2012 2012 2012 2011 2011 2011 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Income $ $ $ $ $ $ from 356,253 27,444 (a) 383,697 308,143 25,988 (c) 334,131 operations Operating 18.3% 1.4% (a) 19.7% 18.5% 1.6% (c) 20.1% margin Diluted $ $ $ $ $ $ earnings 0.07 (e) 0.78 0.06 (e) per share 0.92 0.99 0.84 Twelve Months Ended December 31, Twelve Months Ended December 31, 2012 2012 2012 2011 2011 2011 GAAP Adjustments Non-GAAP GAAP Adjustments Non-GAAP Income $ $ $ $ $ $ from 1,361,496 107,355 (b) 1,468,851 1,136,468 90,232 (d) 1,226,700 operations Operating 18.5% 1.5% (b) 20.0% 18.6% 1.4% (d) 20.0% margin Diluted $ $ $ $ $ $ earnings 0.26 (e) 2.85 0.22 (e) per share 3.44 3.70 3.07 Notes: (a) Adjustment to exclude stock-based compensation of $27,444 from income from operations of which $4,120 was reported in cost of revenues and $23,324 was reported in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations. (b) Adjustment to exclude stock-based compensation of $107,355 from income from operations of which $16,773 was reported in cost of revenues and $90,582 was reported in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations. (c) Adjustment to exclude stock-based compensation of $25,988 from income from operations of which $4,118 was reported in cost of revenues and $21,870 was reported in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations. (d) Adjustment to exclude stock-based compensation of $90,232 from income from operations of which $15,257 was reported in cost of revenues and $74,975 was reported in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations. (e) Adjustment to exclude the per share effect of stock-based compensation expense net of the related tax benefit. COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION Schedule of Supplemental Information (Unaudited) (In thousands) Three Months Ended December 31, 2012 Growth % $ % of Sequential Year over total Year Revenue by Segment: Financial Services $ 41.9% 3.4% 19.9% 815,399 Healthcare 500,090 25.7% 3.5% 9.4% Manufacturing/Retail/Logistics 408,706 21.0% 3.1% 28.2% Other 224,020 11.5% 0.2% 7.7% Total Revenue $ 3.0% 17.1% 1,948,215 Revenue by Geography: North America $ 78.8% 2.1% 15.7% 1,535,859 United Kingdom 206,082 10.6% 5.4% 17.1% Rest of Europe 120,154 6.2% 12.2% 22.2% Europe - Total 326,236 16.8% 7.8% 19.0% Rest of World 86,120 4.4% 2.1% 38.4% Total Revenue $ 3.0% 17.1% 1,948,215 Twelve Months Ended December 31, 2012 Growth% $ % of Year over total Year Revenue by Segment: Financial Services $ 41.3% 20.5% 3,035,447 Healthcare 1,934,898 26.3% 19.3% Manufacturing/Retail/Logistics 1,498,668 20.4% 25.2% Other 877,459 11.9% 12.0% Total Revenue $ 20.0% 7,346,472 Revenue by Geography: North America $ 79.4% 21.5% 5,836,258 United Kingdom 764,936 10.4% 9.5% Rest of Europe 430,554 5.9% 8.0% Europe - Total 1,195,490 16.3% 8.9% Rest of World 314,724 4.3% 42.6% Total Revenue $ 20.0% 7,346,472 SOURCE Cognizant Technology Solutions Corporation Website: http://www.cognizant.com Contact: David Nelson, VP, Investor Relations & Treasurer, +1-201-498-8840, email@example.com
Cognizant Reports Fourth Quarter And Full Year 2012 Results
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