Cognizant Reports Strong Second Quarter Results (y 2)

    
                      COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
              CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                     (In thousands of US$, except per share data)
    
                                    Three Months Ended     Six Months Ended
                                         June 30,              June 30,
                                     2006        2005      2006       2005
    Revenues                       $336,836    $211,711  $622,315   $393,392
    Cost of revenues                188,320     117,768   346,908    215,762
    
    Gross profit                    148,516      93,943   275,407    177,630
    
    Selling, general and          
     administrative expenses         80,044      46,126   146,749     87,536
    
    Depreciation and amortization
     expense                          7,801       5,449    14,831     10,539
    Income from operations           60,671      42,368   113,827     79,555
    
    Other income (expense):
    Interest income                   3,853       2,061     7,290      3,901
    Other income / (expense), net     1,508        (595)    1,467       (719)
    Total other income / (expense)    5,361       1,466     8,757      3,182
    
    Income before provision for  
     income taxes                    66,032      43,834   122,584     82,737
    
    Provision for income taxes       10,961       7,802    20,349     14,727
    
    Net income                      $55,071     $36,032  $102,235    $68,010
    
    Basic earnings per share          $0.39       $0.27     $0.73      $0.50
    
    Diluted earnings per share        $0.37       $0.25     $0.68      $0.47
    
    Weighted average number of    
     common shares outstanding      140,542     135,687   140,103    135,086
    
    Weighted average number of    
     common and dilutive
     shares outstanding             150,493     146,554   149,924    146,187

                  COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
          CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)
                               (In thousands)
    
                                                  June 30,       December 31,
                                                     2006             2005
    Assets
    Current Assets
    
      Cash and cash equivalents                    $203,105         $196,938
    
      Short-term investments                        265,095          227,063
    
      Trade accounts receivable, net of  
       allowances of $2,962
       and $2,325, respectively                     227,985          153,971
      Unbilled accounts receivable                   38,274           22,725
    
      Deferred income tax assets, net                50,833           42,752
    
      Other current assets                           26,298           19,974
    
               Total Current Assets                 811,590          663,423
    
    Property and equipment, net                     179,277          146,982
    
    Goodwill                                         18,430           18,223
    
    Other Intangible assets, net                     15,414           16,277
    
    Deferred income tax assets, net                  10,779           17,247
    
    Other assets                                     10,576            7,741
    
    Total Assets                                 $1,046,066         $869,893
    
    Liabilities and Stockholders' Equity
    
    Current Liabilities
    
    Accounts payable                                $24,871          $16,420
    
    Accrued expenses and other liabilities          144,449          137,375
    
           Total Current Liabilities                169,320          153,795
    
    Other noncurrent liabilities                      2,553            1,953
    
    Total Liabilities                               171,873          155,748
    
    Stockholders' Equity                            874,193          714,145
    
    Total Liabilities and Stockholders'  
     Equity                                      $1,046,066         $869,893

                  COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
         CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
                         Non-GAAP Financial Measures
                    (In thousands, except per share data)

                                                                Three Months  
                                                                   Ended  
                              Three Months Ended June 30,         June 30,
                               2006         2006        2006       2005
                            US GAAP  Adjustments    Non-GAAP      US GAAP
      
    Revenues              $336,836           $-     $336,836     $211,711
                                  
    Cost of revenues       188,320       (3,332)(a)  184,988      117,768
                                  
    Gross profit           148,516        3,332      151,848       93,943
                                  
    Selling, general and  
     administrative  
     expenses               80,044       (3,437)(a)   76,607       46,126
                                  
    Depreciation and  
     amortization expense    7,801            -        7,801        5,449
                                  
    Income from operations  60,671        6,769       67,440       42,368
                                  
    Total other income /  
     (expense)               5,361            -        5,361        1,466
                                  
    Income before provision  
     for income taxes       66,032        6,769       72,801       43,834
                                  
    Provision for income  
     taxes                  10,961          842(a)    11,803        7,802
                                  
    Net income             $55,071        5,927      $60,998      $36,032
                                  
    
    Diluted earnings  
     per share               $0.37        $0.04        $0.41        $0.25
                                  
    Weighted average number  
     of common and dilutive  
     shares outstanding    150,493                   150,493      146,554
                                  
                                                                 Six Months  
                                                                   Ended
                                  Six Months Ended June 30,       June 30,
                              2006          2006        2006       2005          
                           US GAAP   Adjustments    Non-GAAP      US GAAP
                                        
    Revenues              $622,315           $-     $622,315     $393,392
                                  
    Cost of revenues       346,908       (6,479)(a)  340,429      215,762
                                  
    Gross profit           275,407        6,479      281,886      177,630  
    Selling, general and  
     administrative  
     expenses              146,749       (7,892)(a)  138,857       87,536  
    Depreciation and  
     amortization expense   14,831            -       14,831       10,539  
    Income from operations 113,827       14,371      128,198       79,555  
    Total other income /  
     (expense)               8,757            -        8,757        3,182  
    Income before provision  
     for income taxes      122,584       14,371      136,955       82,737  
    Provision for income  
     taxes                  20,349        1,975(a)    22,324       14,727  
    Net income            $102,235       12,396     $114,631      $68,010  
    
    Diluted earnings  
     per share               $0.68        $0.08        $0.76        $0.47  
    Weighted average number  
     of common and dilutive  
     shares outstanding    149,924                   149,924      146,187

In addition to its reported operating results in accordance with U.S. generally accepted accounting principles (GAAP), Cognizant has included in the table above non-GAAP operating measures that the Securities and Exchange Commission defines as "non-GAAP financial measures." Management believes that such non-GAAP financial measures, when read in conjunction with the Company's reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the Company's results. The non-GAAP financial measures disclosed by the Company should not be considered a substitute for, or superior to, financial measures calculated in accordance with GAAP, and the financial results calculated in accordance with GAAP and reconciliations to those financial statements should be carefully evaluated. The non-GAAP column above for the three and six months ended June 30, 2006 reflects the following adjustment:

    
    (a) To exclude stock-based compensation expense under FAS 123R, and
        related income tax benefit, recorded during the three and six months
        ended June 30, 2006.

For 2006, the weighted average number of common and dilutive shares outstanding were calculated taking into account the requirements of FAS 123R.

Web site: http://www.cognizant.com

Gordon Coburn, Chief Financial Officer, +1-201-678-2712; Investors: Gordon McCoun, Press: Brian Maddox/Scot Hoffman, Financial Dynamics, +1-212-850-5600, shoffman@fd-us.com