Cognizant Reports Fourth Quarter and Full Year 2013 Results

         Cognizant Reports Fourth Quarter and Full Year 2013 Results

Annual revenue of $8.84 billion, up 20% year-over-year;

Provides guidance for 2014 revenue growth of at least 16.5%;

Announces two-for-one stock split

PR Newswire

TEANECK, N.J., Feb. 5, 2014

TEANECK, N.J., Feb. 5, 2014 /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 2013 financial results.

Highlights – Fourth Quarter 2013

  oQuarterly revenue rose to $2.355 billion, up 20.9% from the year-ago
    quarter and 2.2% sequentially.
  oQuarterly diluted EPS on a GAAP basis was $1.06, compared to $0.92 in the
    year-ago quarter.
  oQuarterly diluted EPS on a non-GAAP basis, which excludes stock-based
    compensation expense and acquisition-related charges, was $1.15, compared
    to $0.99 in the year-ago quarter.
  oNet headcount addition for the quarter was approximately 5,000; year-end
    headcount was approximately 171,400.

Revenue for the fourth quarter of 2013 rose to $2.355 billion, up 20.9% from
$1.948 billion in the fourth quarter of 2012. GAAP net income was $324.3
million, or $1.06 per diluted share, compared to $278.8 million, or $0.92 per
diluted share, in the fourth quarter of 2012. Diluted EPS on a non-GAAP basis
was $1.15, compared to $0.99 in the fourth quarter of 2012. GAAP operating
margin for the quarter was 19.0%. Non-GAAP operating margin was 20.7%, higher
than 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
2013," said Francisco D'Souza, Chief Executive Officer of Cognizant. "As we
celebrate our 20 year anniversary, I would like to thank our clients who have
placed their faith in us, our associates for their wonderful contribution to
our growth and success, and our other stakeholders who have played a critical
role in our accomplishments. Our strategy through these twenty years has been
to challenge the status quo and constantly reinvent for the future, thus
positioning us to help our clients build stronger businesses. We believe that
we are well positioned to continue to do so in 2014 and beyond."

"Our growth during 2013 was broad-based across our industries, geographies and
service lines," said Gordon Coburn, President of Cognizant. "This strong
growth was fueled by our clients' on-going drive to 'run better' for more
efficient and productive operations and to 'run different' to create the
capabilities and business models they need for future success. Our strong
portfolio of services coupled with our focus on new technologies and
platform-based delivery models will help clients drive meaningful change as
businesses become increasingly technology intensive. We anticipate that the
healthy demand environment we witnessed in 2013 will continue into 2014 and we
are well positioned to capture it."

Highlights – Full Year 2013

  oRevenue increased to $8.843 billion, up 20.4% from 2012.
  oDiluted EPS on a GAAP basis was $4.03, compared to $3.44 in 2012.
  oDiluted EPS on a non-GAAP basis, which excludes stock-based compensation
    expense and acquisition-related charges, was $4.38, compared to $3.74 in
    2012.
  oGAAP and non-GAAP diluted EPS includes the impact of $0.15 in net
    non-operating foreign currency exchange losses.

Revenue for 2013 increased to $8.843 billion, up 20.4% from $7.346 billion for
2012. GAAP net income was $1.23 billion, or $4.03 per diluted share, compared
to $1.05 billion, or $3.44 per diluted share, for 2012. Diluted EPS on a
non-GAAP basis was $4.38. GAAP operating margin was 19.0%. Non-GAAP operating
margin was 20.6%, higher than the company's targeted 19-20% range.
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.

Two-for-One Stock Split

The Board of Directors of Cognizant has declared a two-for-one stock split on
its Class A common stock in the form of a 100% stock dividend. Stockholders of
record as of February 21, 2014 will be entitled to one additional share of
Class A common stock for each share held on the record date. The stock
dividend distribution is expected to occur on or about March 7, 2014, and it
is anticipated that the Company's Class A common stock will begin trading on a
post-split basis the business day following the distribution date. The
consolidated financial statements that accompany this press release do not
reflect this stock split. All applicable references to the number of
outstanding common shares and per share information have not been adjusted to
reflect this stock split.

First Quarter & Full Year 2014 Outlook

Starting in 2014, our reported non-GAAP diluted EPS will exclude net
non-operating foreign currency exchange gains or losses, as well as
stock-based compensation expense and acquisition-related charges. This change
is not reflected in our reported 2013 quarterly or annual results above, but
is reflected in our 2014 non-GAAP guidance below.

The Company is providing the following guidance:

  oFirst quarter 2014 revenue anticipated to be at least $2.42 billion.
  oFirst quarter 2014 diluted EPS on a non-GAAP basis is expected to be $1.18
    (prior to impact of upcoming stock split).
  oFull year 2014 revenue expected to be at least $10.3 billion, up at least
    16.5% compared to 2013.
  oFull year 2014 diluted EPS on a non-GAAP basis expected to be at least
    $5.02 (prior to impact of upcoming stock split).

"The stock split underscores our confidence in the strength of the business
model and in our prospects for 2014 and beyond," said Karen McLoughlin, Chief
Financial Officer. "We further strengthened our balance sheet during 2013,
allowing us to continue to support our industry-leading growth, by investing
in service line capabilities, industry expertise, new technologies, new
delivery platforms, and expanded geographical reach."

Conference Call

Cognizant will host a conference call February 5, 2014 at 8:00 a.m. (Eastern)
to discuss the Company's quarterly and full year 2013 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 13574087 from two hours after the end of
the call until 11:59 p.m. (Eastern) on Wednesday, February 19, 2014. 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 171,400
employees as of December 31, 2013, 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 ("non-GAAP diluted EPS"). 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.
With respect to our expectations in the "First Quarter & Full Year 2014
Outlook" section above, reconciliation of non-GAAP diluted EPS guidance to
GAAP diluted EPS cannot be provided without unreasonable efforts on a
forward-looking basis due to the high variability and low visibility with
respect to net non-operating foreign currency exchange gains or losses which
are excluded from the non-GAAP diluted EPS.

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 continued to manage the company to the same targeted operating margin, but
excluded acquisition-related charges, in addition to stock-based compensation
expense, in setting our internal operating targets. Acquisition-related
charges include, when applicable, amortization of purchased intangible assets
included in the depreciation and amortization expense line on our condensed
consolidated statements of operations, external deal costs,
acquisition-related retention bonuses, integration costs, changes in the fair
value of contingent consideration liabilities, charges for impairment of
acquired intangible assets and other acquisition-related costs. In 2014, our
non-GAAP diluted earnings per share will also exclude net non-operating
foreign currency exchange gains or losses. 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 measures 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,
                          2013          2012          2013         2012
Revenues                  $2,355,488    $1,948,215    $8,843,189   $7,346,472
Operating expenses:
Cost of revenues
(exclusive of
depreciation and    1,411,155     1,150,934     5,265,469    4,278,241

amortization expense
shown separately below)
Selling, general and      450,503       401,746       1,727,609    1,557,646
administrative expenses
Depreciation and          45,989        39,282        172,201      149,089
amortization expense
Income from operations    447,841       356,253       1,677,910    1,361,496
Other income (expense),
net:
Interest income           11,873        11,417        48,896       44,514
Other, net                (8,575)       (1,826)       (38,889)     (18,414)
Total other income        3,298         9,591         10,007       26,100
(expense), net
Income before provision   451,139       365,844       1,687,917    1,387,596
for income taxes
Provision for income      126,807       87,065        459,339      336,333
taxes
Net income                $  324,332  $  278,779  $1,228,578   $1,051,263
Basic earnings per share  $        $        $       $     
                          1.07          0.93          4.07         3.49
Diluted earnings per      $        $        $       $     
share                     1.06          0.92          4.03         3.44
Weighted average number
of common
 shares outstanding -    302,873       300,452       302,007      301,291
Basic
Weighted average number
of common
 shares outstanding -    305,428       303,777       304,831      305,861
Diluted



COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
(In thousands)
                                   December 31,           December 31,
                                   2013                   2012
Assets
Current Assets
 Cash and cash equivalents       $     2,213,006   $     1,570,077
 Short-term investments          1,534,467              1,293,681
 Trade accounts receivable, net
of allowances of $26,824
 and $25,816, respectively        1,648,785              1,345,661
 Unbilled accounts receivable     226,487                183,085
 Deferred income tax assets, net  256,230                201,894
 Other current assets             268,907                219,896
 Total Current Assets    6,147,882              4,814,294
Property and equipment, net        1,081,164              971,486
Goodwill                           444,236                309,185
Intangible assets, net             131,274                87,475
Deferred income tax assets, net    221,345                178,824
Other noncurrent assets            183,013                160,307
Total Assets                       $     8,208,914   $     6,521,571
Liabilities and Stockholders'
Equity
Current Liabilities
Accounts payable                   $       113,394  $      
                                                          108,707
Deferred revenue                   182,893                149,696
Accrued expenses and other         1,478,221              1,118,927
current liabilities
 Total Current Liabilities   1,774,508              1,377,330
Deferred income tax liabilities,   21,170                 2,777
net
Other noncurrent liabilities       277,445                287,081
Total Liabilities                  2,073,123              1,667,188
Stockholders' Equity               6,135,791              4,854,383
Total Liabilities and              $     8,208,914   $     6,521,571
Stockholders' Equity



COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
Reconciliations of Non-GAAP Financial Measures (Unaudited)
(In thousands, except per share amounts)
                         Three Months Ended        Twelve Months Ended
                         December 31,              December 31,
                         2013           2012       2013           2012
GAAP income from         $          $       $            $  
operations               447,841                 1,677,910     1,361,496
                                        356,253
Add: Stock-based
compensation expense     32,447         27,444     118,800        107,355
(a)
Add:
Acquisition-related      6,316          5,445      24,002         15,871
charges (b)
Non-GAAP income from     $          $       $            $  
operations               486,604                 1,820,712     1,484,722
                                        389,142
GAAP operating margin    19.0%          18.3%      19.0%          18.5%
Effect of above          1.7%           1.7%       1.6%           1.7%
adjustments
Non-GAAP operating       20.7%          20.0%      20.6%          20.2%
margin
GAAP diluted earnings    $         $       $         $     
per share                   1.06               4.03        3.44
                                        0.92
Effect of above
adjustments, net of      0.09           0.07       0.35           0.30
tax
Non-GAAP diluted         $         $       $         $     
earnings per share          1.15               4.38        3.74
                                        0.99
Notes:
(a) For the three months ended December 31, 2013, the $32,447 adjustment to
exclude stock-based compensation from income from operations includes $5,537,
which was reported in cost of revenues and $26,910, which was reported in
selling, general and administrative expenses in our unaudited condensed
consolidated statements of operations.



For the three months ended December 31, 2012, the $27,444 adjustment to
exclude stock-based compensation from income from operations includes $4,120,
which was reported in cost of revenues and $23,324, which was reported in
selling, general and administrative expenses in our unaudited condensed
consolidated statements of operations.



For the twelve months ended December 31, 2013, the $118,800 adjustment to
exclude stock-based compensation from income from operations includes $19,107,
which was reported in cost of revenues and $99,693, which was reported in
selling, general and administrative expenses in our unaudited condensed
consolidated statements of operations.



For the twelve months ended December 31, 2012, the $107,355 adjustment to
exclude stock-based compensation from income from operations includes $16,773,
which was reported in cost of revenues and $90,582, which was reported in
selling, general and administrative expenses in our unaudited condensed
consolidated statements of operations.



(b) Adjustments to exclude acquisition-related charges, including the
following when applicable: amortization of acquired intangible assets,
external deal costs, acquisition-related retention payments, changes to
contingent consideration, integration costs and other acquisition-related
costs.



The above tables serves to reconcile the Non-GAAP financial measures to
comparable GAAP measures. Please refer to the "About Non-GAAP Financial
Measures" section of our press release for further information on the use of
these Non-GAAP measures.



COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
Schedule of Supplemental Information (Unaudited)
(In thousands)
                                Three Months Ended December 31, 2013
                                                       Growth %
                                $            % of      Sequential  Year over
                                             total                 Year
Revenue by Segment:
Financial Services              $ 997,146    42.3%     4.5%        22.3%
Healthcare                      613,286      26.0%     2.2%        22.6%
Manufacturing/Retail/Logistics  490,243      20.8%     -0.1%       20.0%
Other                           254,813      10.8%     -2.3%       13.7%
Total Revenue                   $ 2,355,488            2.2%        20.9%
Revenue by Geography:
North America                   $ 1,817,401  77.2%     1.9%        18.3%
United Kingdom                  245,929      10.4%     -0.2%       19.3%
Rest of Europe                  183,136      7.8%      8.8%        52.4%
Europe - Total                  429,065      18.2%     3.5%        31.5%
Rest of World                   109,022      4.6%      1.0%        26.6%
Total Revenue                   $ 2,355,488            2.2%        20.9%
                                Twelve Months Ended December 31, 2013
                                                                   Growth %
                                $            % of                  Year over
                                             total                 Year
Revenue by Segment:
Financial Services              $ 3,717,573  42.0%                 22.5%
Healthcare                      2,264,826    25.6%                 17.1%
Manufacturing/Retail/Logistics  1,868,305    21.1%                 24.7%
Other                           992,485      11.2%                 13.1%
Total Revenue                   $ 8,843,189                        20.4%
Revenue by Geography:
North America                   $ 6,860,067  77.6%                 17.5%
United Kingdom                  942,579      10.7%                 23.2%
Rest of Europe                  636,626      7.2%                  47.9%
Europe - Total                  1,579,205    17.9%                 32.1%
Rest of World                   403,917      4.6%                  28.3%
Total Revenue                   $ 8,843,189                        20.4%

SOURCE Cognizant Technology Solutions Corporation

Website: http://www.cognizant.com
Contact: David Nelson, VP, Investor Relations & Treasurer, 201-498-8840,
david.nelson@cognizant.com
 
Press spacebar to pause and continue. Press esc to stop.