Cognizant Reports Fourth Quarter And Full Year 2012 Results

         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

  o Quarterly revenue rose to $1.95 billion, up 17.1% from the year-ago
    quarter and 3.0% sequentially.
  o Quarterly diluted EPS on a GAAP basis was $0.92, compared to $0.78 in the
    year-ago quarter.
  o Quarterly 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.
  o Net 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 business challenges, 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

  o Revenue increased to $7.35 billion, up 20.0% from the previous year.
  o Diluted EPS on a GAAP basis was $3.44, compared to $2.85 in the previous
    year.
  o Diluted EPS on a non-GAAP basis, which excludes stock-based compensation
    expense, was $3.70, compared to $3.07 in the previous year. 
  o GAAP 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:

  o First quarter 2013 revenue anticipated to be at least $2.0 billion.
  o First quarter 2013 diluted EPS expected to be $0.92 on a GAAP basis and
    $1.01 on a non-GAAP basis.
  o Full 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.
  o Full year 2013 diluted EPS expected to be at least $3.95 on a GAAP basis,
    and $4.31 on a non-GAAP basis.
  o EPS 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
and  amortization 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 common shares
outstanding - Basic       300,452       302,354       301,291      303,277
Weighted average number
of common shares          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,
david.nelson@cognizant.com