UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): November 7, 2012

 

 

Cognizant Technology Solutions Corporation

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   0-24429   13-3728359

(State or Other Jurisdiction

of Incorporation)

 

(Commission

File Number)

 

(IRS Employer

Identification No.)

Glenpointe Centre West

500 Frank W. Burr Blvd.

Teaneck, New Jersey

  07666
(Address of Principal Executive Offices)   (Zip Code)

(201) 801-0233

(Registrant’s telephone number, including area code)

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

 

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

 

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

 

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

 

 

 


Item 2.02. Results of Operations and Financial Condition.

On November 7, 2012, Cognizant Technology Solutions Corporation, a Delaware corporation (the “Company”), issued a press release to report the Company’s financial results for the quarter ended September 30, 2012. The full text of the press release is attached to this current report on Form 8-K as Exhibit 99.1.*

 

Item 9.01. Financial Statements and Exhibits.

 

  (d) Exhibits.

 

Exhibit
No.

  

Description

99.1    Press Release of Cognizant Technology Solutions Corporation, dated November 7, 2012, reporting its financial results.

 

* The information in this Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.


SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
By:  

/s/ Steven Schwartz

  Name:   Steven Schwartz
  Title:   Senior Vice President, General Counsel and Secretary

Date: November 7, 2012

Press Release

Exhibit 99.1

 

LOGO      
     

Glenpointe Centre West

500 Frank W. Burr Blvd.

Teaneck, NJ 07666

FOR IMMEDIATE RELEASE

COGNIZANT ANNOUNCES RECORD THIRD QUARTER 2012 RESULTS

Revenue up 5.4% sequentially and 18.2% year-over-year;

Reaffirms full-year revenue guidance and increases full-year EPS expectations

TEANECK, N.J., November 7, 2012 – Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of information technology, consulting, and business process outsourcing services, today announced its third quarter 2012 financial results.

Highlights – Third Quarter 2012

 

   

Quarterly revenue rose to $1.892 billion, up 5.4% sequentially and 18.2% from the year-ago quarter.

 

   

Quarterly diluted EPS on a GAAP basis was $0.91, compared to $0.73 in the year-ago quarter.

 

   

Quarterly diluted EPS on a non-GAAP basis, which excludes stock-based compensation expense, was $0.97, compared to $0.80 in the year-ago quarter.

 

   

GAAP and non-GAAP diluted EPS includes the impact of $0.01 in net non-operating foreign currency exchange loss.

 

   

Net headcount addition for the quarter was approximately 5,100.

Revenue for the third quarter of 2012 rose to $1.892 billion, up 18.2% from $1.601 billion in the third quarter of 2011. GAAP net income was $276.9 million, or $0.91 per diluted share, compared to $227.1 million, or $0.73 per diluted share, in the third quarter of 2011. Diluted earnings per share on a non-GAAP basis was $0.97. GAAP operating margin for the quarter was 18.8%. Excluding stock-based compensation expense of $22.3 million, non-GAAP operating margin was 20.0%, in line with 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.

“Cognizant’s strong results reaffirm the acceptance of our value proposition that helps clients address the dual mandate of driving efficiency and effectiveness in their core business while investing in innovation and business transformation for long-term growth,” said Francisco D’Souza, Chief Executive Officer. “Our consulting-led approach, intimate client relationships, deep domain knowledge and robust execution give us the confidence to deliver revenue growth of at least 20% in 2012.”

“We are pleased that our growth was broad-based across services and geographies,” said Gordon Coburn, President. “Of particular note this quarter is the performance of our newer service offerings of Consulting, Business Process Outsourcing and IT Infrastructure Services. On a combined basis, these services have been growing materially faster than company average, and this quarter comprised nearly 20% of total revenue. They will continue to be important drivers of our long-term growth as each represents a large addressable market with low penetration of the global delivery model.”


2012 Outlook – Fourth Quarter and Full Year

The Company is providing the following guidance:

 

   

Fourth quarter 2012 revenue anticipated to be at least $1.94 billion.

 

   

Fourth quarter 2012 diluted EPS expected to be $0.91 on a GAAP basis and $0.97 on a non-GAAP basis, which excludes estimated stock-based compensation expense.

 

   

Fiscal 2012 revenue expected to be at least $7.34 billion, up at least 20% compared to 2011.

 

   

Fiscal 2012 diluted EPS expected to be at least $3.42 on a GAAP basis, and $3.69 on a non-GAAP basis, which excludes estimated stock-based compensation expense.

 

   

EPS guidance excludes any fourth quarter non-operating foreign currency exchange gain or loss.

“Our financial model continues to allow us to deliver robust top-line growth with stable margins, while investing in our next generation of services to ensure long-term strength,” said Karen McLoughlin, Chief Financial Officer. “Despite the recent appreciation of the Indian Rupee, we remain confident in our ability to maintain our non-GAAP operating margin within our stated 19-20% range. Our extensive India Rupee hedge program, which now totals approximately $3.7 billion, helps mitigate the impact of such volatility on our operating margins. In addition, strong cash flows during the quarter allowed us to increase our cash and investment balances by almost $300 million to over $2.6 billion.”

Conference Call

Cognizant will host a conference call November 7, 2012 at 8:00 a.m. (Eastern) to discuss the Company’s third quarter 2012 results. To listen to the conference call, please dial (800) 374-0467 (domestic) and (706) 679-3288 (international) and provide the following conference ID number: 33259675.

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 (855) 859-2056 for domestic callers or (404) 537-3406 for international callers and entering 33259675 from a half hour after the end of the call until 11:59 p.m. (Eastern) on Wednesday, November 21, 2012. 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 150,400 employees as of September 30, 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 the consolidated financial statements 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, the financial statements prepared in accordance with GAAP and reconciliations of Cognizant’s GAAP financial statements to such non-GAAP measures should be carefully evaluated.

We seek to manage the company to a targeted operating margin, excluding stock-based compensation costs, of 19% to 20% of revenues. Accordingly, we believe that non-GAAP operating margin and non-GAAP diluted earnings per share, excluding stock-based compensation costs, are meaningful measures for investors to evaluate our financial performance. For our internal management reporting and budgeting purposes, we use financial statements that do not include stock-based compensation expense 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. Moreover, because of varying available valuation methodologies permitted under U.S. GAAP and the variety of award types that companies can use, we believe that providing non-GAAP financial measures that exclude stock-based compensation expense allows investors to make additional comparisons between our operating results to those of other companies. 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 operating margin and non-GAAP diluted earnings per share versus operating margin and diluted earnings per share calculated in accordance with GAAP is that non-GAAP operating margin and non-GAAP diluted earnings per share exclude costs, namely stock-based compensation, that are recurring. Stock-based compensation will continue to be for the foreseeable future a significant recurring expense in our business. 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 and evaluating such non-GAAP financial measures with financial measures calculated in accordance with GAAP.

Contact: David Nelson

VP, Investor Relations & Treasurer

201-498-8840

david.nelson@cognizant.com

- tables to follow -


COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share amounts)

 

     Three Months Ended
September 30,
    Nine Months Ended
September 30,
 
     2012     2011     2012     2011  

Revenues

   $ 1,891,688      $ 1,600,954      $ 5,398,257      $ 4,457,449   

Operating expenses:

        

Cost of revenues (exclusive of depreciation and amortization expense shown separately below)

     1,111,898        924,886        3,127,307        2,567,933   

Selling, general and administrative expenses

     384,951        353,161        1,155,900        976,209   

Depreciation and amortization expense

     39,453        29,905        109,807        84,982   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income from operations

     355,386        293,002        1,005,243        828,325   
  

 

 

   

 

 

   

 

 

   

 

 

 

Other income (expense), net:

        

Interest income

     12,041        9,970        33,097        28,381   

Other, net

     (3,044     (15,008     (16,588     (10,637
  

 

 

   

 

 

   

 

 

   

 

 

 

Total other income (expense), net

     8,997        (5,038     16,509        17,744   
  

 

 

   

 

 

   

 

 

   

 

 

 

Income before provision for income taxes

     364,383        287,964        1,021,752        846,069   

Provision for income taxes

     87,482        60,845        249,268        202,578   
  

 

 

   

 

 

   

 

 

   

 

 

 

Net income

   $ 276,901      $ 227,119      $ 772,484      $ 643,491   
  

 

 

   

 

 

   

 

 

   

 

 

 

Basic earnings per share

   $ 0.93      $ 0.75      $ 2.56      $ 2.12   
  

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 0.91      $ 0.73      $ 2.52      $ 2.07   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding—Basic

     299,058        302,723        301,571        303,584   
  

 

 

   

 

 

   

 

 

   

 

 

 

Weighted average number of common shares outstanding—Diluted

     303,132        309,297        306,555        310,859   
  

 

 

   

 

 

   

 

 

   

 

 

 


COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)

(In thousands)

 

     September 30,      December 31,  
     2012      2011  

Assets

     

Current Assets

     

Cash and cash equivalents

   $ 1,324,739       $ 1,310,906   

Short-term investments

     1,307,009         1,121,358   

Trade accounts receivable, net of allowances of $27,370 and $24,658, respectively

     1,363,454         1,179,043   

Unbilled accounts receivable

     213,741         139,627   

Deferred income tax assets, net

     166,164         109,042   

Other current assets

     166,424         225,530   
  

 

 

    

 

 

 

Total Current Assets

     4,541,531         4,085,506   

Property and equipment, net

     878,561         758,034   

Goodwill

     301,403         288,772   

Intangible assets, net

     87,583         97,616   

Deferred income tax assets, net

     154,927         164,192   

Other noncurrent assets

     143,034         113,813   
  

 

 

    

 

 

 

Total Assets

   $ 6,107,039       $ 5,507,933   
  

 

 

    

 

 

 

Liabilities and Stockholders’ Equity

     

Current Liabilities

     

Accounts payable

   $ 111,420       $ 72,205   

Deferred revenue

     116,427         105,713   

Accrued expenses and other current liabilities

     1,047,741         1,031,787   
  

 

 

    

 

 

 

Total Current Liabilities

     1,275,588         1,209,705   

Deferred income tax liabilities, net

     4,593         3,339   

Other noncurrent liabilities

     254,488         342,003   
  

 

 

    

 

 

 

Total Liabilities

     1,534,669         1,555,047   
  

 

 

    

 

 

 

Stockholders’ Equity

     4,572,370         3,952,886   
  

 

 

    

 

 

 

Total Liabilities and Stockholders’ Equity

   $ 6,107,039       $ 5,507,933   
  

 

 

    

 

 

 


COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures (Unaudited)

(In thousands, except per share amounts)

 

     Three Months Ended September 30,     Three Months Ended September 30,  
     2012
GAAP
    2012
Adjustments
    2012
Non-GAAP
    2011
GAAP
    2011
Adjustments
    2011
Non-GAAP
 

Income from operations

   $ 355,386      $ 22,261 (a)    $ 377,647      $ 293,002      $ 24,500 (c)    $ 317,502   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating margin

     18.8     1.2 %(a)      20.0     18.3     1.5 %(c)      19.8
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 0.91      $ 0.06 (e)    $ 0.97      $ 0.73      $ 0.07 (e)    $ 0.80   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
     Nine Months Ended September 30,     Nine Months Ended September 30,  
     2012
GAAP
    2012
Adjustments
    2012
Non-GAAP
    2011
GAAP
    2011
Adjustments
    2011
Non-GAAP
 

Income from operations

   $ 1,005,243      $ 79,911 (b)    $ 1,085,154      $ 828,325      $ 64,244 (d)    $ 892,569   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Operating margin

     18.6     1.5 %(b)      20.1     18.6     1.4 %(d)      20.0
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Diluted earnings per share

   $ 2.52      $ 0.20 (e)    $ 2.72      $ 2.07      $ 0.16 (e)    $ 2.23   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Notes:

(a) Adjustment to exclude stock-based compensation of $22,261 from income from operations of which $3,889 was reported in cost of revenues and $18,372 was reported in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations.
(b) Adjustment to exclude stock-based compensation of $79,911 from income from operations of which $12,653 was reported in cost of revenues and $67,258 was reported in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations.
(c) Adjustment to exclude stock-based compensation of $24,500 from income from operations of which $3,990 was reported in cost of revenues and $20,510 was reported in selling, general and administrative expenses in our unaudited condensed consolidated statements of operations.
(d) Adjustment to exclude stock-based compensation of $64,244 from income from operations of which $11,139 was reported in cost of revenues and $53,105 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 September 30, 2012  
                  Growth %  
     $      % of total     Sequential     Year over Year  

Revenue by Segment:

         

Financial Services

   $ 788,439         41.7     7.0     20.2

Healthcare

     483,109         25.5     -0.2     12.4

Manufacturing/Retail/Logistics

     396,557         21.0     10.6     27.9

Other

     223,583         11.8     3.8     8.9
  

 

 

      

 

 

   

 

 

 

Total Revenue

   $ 1,891,688           5.4     18.2
  

 

 

      

 

 

   

 

 

 

Revenue by Geography:

         

North America

   $ 1,504,706         79.5     4.9     20.3

United Kingdom

     195,538         10.3     6.9     6.4

Rest of Europe

     107,110         5.7     7.4     0.2
  

 

 

    

 

 

   

 

 

   

 

 

 

Europe—Total

     302,648         16.0     7.1     4.1

Rest of World

     84,334         4.5     8.7     41.4
  

 

 

      

 

 

   

 

 

 

Total Revenue

   $ 1,891,688           5.4     18.2
  

 

 

      

 

 

   

 

 

 
     Nine Months Ended September 30, 2012  
                        Growth %  
     $      % of total           Year over Year  

Revenue by Segment:

         

Financial Services

   $ 2,220,048         41.1       20.8

Healthcare

     1,434,808         26.6       23.1

Manufacturing/Retail/Logistics

     1,089,962         20.2       24.0

Other

     653,439         12.1       13.6
  

 

 

        

 

 

 

Total Revenue

   $ 5,398,257             21.1
  

 

 

        

 

 

 

Revenue by Geography:

         

North America

   $ 4,300,399         79.7       23.7

United Kingdom

     558,854         10.4       6.9

Rest of Europe

     310,400         5.7       3.4
  

 

 

    

 

 

     

 

 

 

Europe—Total

     869,254         16.1       5.6

Rest of World

     228,604         4.2       44.2
  

 

 

        

 

 

 

Total Revenue

   $ 5,398,257             21.1