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Cognizant Reports Third Quarter 2018 Results
Third quarter 2018 revenue of $4.08 billion, up 8.3% over 2017
Declares quarterly cash dividend of $0.20 per share

TEANECK, N.J., Oct. 30, 2018 /PRNewswire/ -- Cognizant Technology Solutions Corporation (Nasdaq: CTSH), one of the world's leading professional services companies, today announced its third quarter 2018 financial results.

Cognizant Logo (PRNewsfoto/Cognizant)

Highlights - Third Quarter 2018¹

  • Quarterly revenue rose to $4.08 billion, up 8.3% from the year-ago quarter.
  • Quarterly GAAP diluted EPS was $0.82, compared to $0.84 in the year-ago quarter.
  • Quarterly non-GAAP diluted EPS2 was $1.19, compared to $0.98 in the year-ago quarter.

Revenue for the third quarter of 2018 rose to $4.08 billion, up 8.3% from $3.77 billion in the third quarter of 2017. GAAP operating margin was 18.3% and non-GAAP operating margin2 was 21.1% for the third quarter of 2018. Net income was $477 million, or $0.82 per diluted share, compared to $495 million, or $0.84 per diluted share, in the third quarter of 2017. The decrease in net income was primarily due to higher net non-operating foreign exchange losses in 2018 driven by the depreciation of the Indian rupee versus the prior year period. Non-GAAP diluted EPS was $1.19, compared to $0.98 in the third quarter of 2017.

"Cognizant delivered strong third-quarter results in three of our four business segments," said Francisco D'Souza, Chief Executive Officer and Vice Chairman of the Board. "We made continued progress in our shift to digital by building new capabilities and helping our clients excel with digital services and solutions. We're speeding clients along their journey to create more engaging customer experiences, automate their processes, and modernize their technology foundations, a three-layer transformation we call digital at scale. Our performance this year demonstrates our ability to both invest for growth and achieve our financial targets."

_________________
1On January 1, 2018, we adopted ASC Topic 606, "Revenue from Contracts with Customers," or the New Revenue Standard, using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under the New Revenue Standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting. For the three months ended September 30, 2018, adoption of the New Revenue Standard had a positive impact on revenue of $33 million, income from operations of $37 million and diluted earnings per share of $0.05 per share.

2Non-GAAP diluted EPS and non-GAAP operating margin exclude stock-based compensation costs, acquisition-related charges, realignment charges and, in the case of non-GAAP diluted EPS, the effect of an income tax benefit recognized upon the finalization of our calculation of the one-time net income tax expense related to the enactment of the Tax Reform Act, net non-operating foreign currency exchange gains or losses and the tax effect of the above adjustments, as applicable. Reconciliations of non-GAAP diluted EPS and non-GAAP operating margin to the corresponding GAAP measures are included at the end of this release.

Fourth Quarter & Full Year 2018 Outlook

The Company is providing the following guidance:

  • Fourth quarter 2018 revenue expected to be in the range of $4.09 billion to $4.13 billion.
  • Fourth quarter 2018 non-GAAP diluted EPS3 expected to be at least $1.05.
  • Full year 2018 revenue expected to be in the range of $16.09 billion to $16.13 billion.
  • Full year 2018 non-GAAP diluted EPS expected to be at least $4.50.

"We delivered solid performance in the third quarter as we continued to focus on sustainable revenue growth while increasing margins," said Karen McLoughlin, Chief Financial Officer. "The strength of our balance sheet allows the company to maintain financial flexibility while driving a substantial return of capital to shareholders."

Return of Capital Program - Dividend

The Company has declared a quarterly cash dividend of $0.20 per share on Cognizant Class A common stock for shareholders of record at the close of business on November 20, 2018. This dividend will be payable on November 30, 2018.

Conference Call
Cognizant will host a conference call on October 30, 2018 at 8:00 a.m. (Eastern) to discuss the Company's third quarter 2018 results. To listen to the conference call, please dial (877) 810-9510 (domestically) or (201) 493-6778 (internationally) and provide the following conference passcode: "Cognizant Call."

The conference call will also be available live on the Investor Relations section of the Cognizant website at http://investors.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. An earnings supplement will also be available on the Cognizant website at the time of the conference call.

For those who cannot access the live broadcast, a replay will be available. To listen to the replay, please dial (877) 660-6853 (domestically) or (201) 612-7415  (internationally) and enter 13683206 from two hours after the end of the call until 11:59 p.m. (Eastern) on Tuesday, November 13, 2018. The replay will also be available at Cognizant's website www.cognizant.com for 60 days following the call.

_____________________________
3 A full reconciliation of non-GAAP diluted EPS guidance to GAAP diluted EPS guidance on a forward-looking basis cannot be provided without unreasonable efforts, as we are unable to provide reconciling information with respect to acquisition-related charges, realignment charges and net non-operating foreign currency exchange gains or losses, and the tax effects of these adjustments, all of which are adjustments to non-GAAP diluted EPS. The reconciling information for non-GAAP diluted EPS guidance to GAAP EPS guidance that is available without unreasonable efforts is included at the end of this release.

About Cognizant
Cognizant (Nasdaq-100: CTSH) is one of the world's leading professional services companies, transforming clients' business, operating and technology models for the digital era. Our unique industry-based, consultative approach helps clients envision, build and run more innovative and efficient businesses. Headquartered in the U.S., Cognizant is ranked 195 on the Fortune 500 and is consistently listed among the most admired companies in the world. Learn how Cognizant helps clients lead with digital at www.cognizant.com or follow us @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. These statements include, but are not limited to, express or implied forward-looking statements relating to our expectations regarding opportunities in the marketplace, investment in and growth of our business, our shift to digital solutions and services, our anticipated financial performance and our capital return program. These statements are neither promises nor guarantees, but are subject to a variety of risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from those contemplated in these forward-looking statements. Existing and prospective investors are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date hereof. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions, changes in the regulatory environment, including with respect to immigration and taxes, and the other 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 references to 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 non-GAAP financial measures to the corresponding GAAP measures should be carefully evaluated.

We seek to manage the Company to a non-GAAP operating margin, which excludes stock-based compensation costs, acquisition-related charges, realignment charges, and for the nine months ended September 30, 2018, the initial funding of Cognizant U.S. Foundation. In addition to excluding stock-based compensation costs, acquisition-related charges, realignment charges, and the initial funding of Cognizant U.S. Foundation, as applicable, our non-GAAP diluted EPS also excludes, the effect of an income tax benefit recognized in the three and nine months ended September 30, 2018, upon the finalization of our calculation of the one-time net income tax expense related to the enactment of the Tax Reform Act, net non-operating foreign currency exchange gains or losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, and, for the nine months ended September 30, 2017, the effect of recognition of an income tax benefit previously unrecognized in our consolidated financial statements, as applicable. In all periods presented, our non-GAAP diluted EPS is additionally adjusted for the income tax impact of the above items, as applicable. The income tax impact of each item is calculated by applying the statutory rate and local tax regulations in the jurisdiction in which the item was incurred.

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 various GAAP and non-GAAP financial measures for financial and operational decision making, to evaluate period-to-period comparisons, to determine portions of the compensation for our executive officers and for making comparisons of our operating results to those of our competitors. In addition, due to a variety of award types, valuation methodologies and subjective assumptions that affect the calculations of stock-based compensation expense, we believe that the exclusion of stock-based compensation expense allows for more accurate 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 supplemental measure for investors to evaluate our financial performance. Accordingly, we believe that the presentation of our non-GAAP measures, 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, acquisition-related charges, including amortization of purchased intangibles, and net non-operating foreign currency exchange gains or losses. 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 these limitations by providing specific information regarding the GAAP amounts excluded from non-GAAP operating margin and non-GAAP diluted EPS to allow investors to evaluate such non-GAAP financial measures.

- tables to follow -

 

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

(in millions, except per share data)

 
 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2018(a)

 

2017(a)

 

2018(a)

 

2017(a)

Revenues

$

4,078

   

$

3,766

   

$

11,996

   

$

10,982

 

Operating expenses:

             

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

2,480

   

2,337

   

7,298

   

6,792

 

Selling, general and administrative expenses

734

   

674

   

2,250

   

2,069

 

Depreciation and amortization expense

119

   

107

   

340

   

297

 

Income from operations

745

   

648

   

2,108

   

1,824

 

Other income (expense), net:

             

Interest income

47

   

34

   

128

   

97

 

Interest expense

(6)

   

(6)

   

(19)

   

(18)

 

Foreign currency exchange gains (losses), net

(122)

   

(16)

   

(233)

   

41

 

Other, net

(2)

   

(2)

   

(2)

   

(2)

 

Total other income (expense), net

(83)

   

10

   

(126)

   

118

 

Income before provision for income taxes

662

   

658

   

1,982

   

1,942

 

Provision for income taxes

(185)

   

(164)

   

(530)

   

(421)

 

Income from equity method investments

   

1

   

1

   

1

 

Net income

$

477

   

$

495

   

$

1,453

   

$

1,522

 

Basic earnings per share

$

0.82

   

$

0.84

   

$

2.49

   

$

2.56

 

Diluted earnings per share

$

0.82

   

$

0.84

   

$

2.48

   

$

2.55

 

Weighted average number of common shares outstanding - Basic

579

   

590

   

584

   

594

 

Dilutive effect of shares issuable under stock-based compensation plans

1

   

2

   

1

   

2

 

Weighted average number of common shares outstanding - Diluted

580

   

592

   

585

   

596

 

Dividends declared per common share

$

0.20

   

$

0.15

   

$

0.60

   

$

0.30

 
 

Notes:

(a)

On January 1, 2018, we adopted ASC Topic 606, "Revenue from Contracts with Customers," or the New Revenue Standard, using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under the New Revenue Standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting policies. For the three months ended September 30, 2018, adoption of the New Revenue Standard had a positive impact on revenue of $33 million, income from operations of $37 million and diluted earnings per share of $0.05 per share. For the nine months ended September 30, 2018, adoption of the New Revenue Standard had a positive impact on revenue of $85 million, income from operations of $104 million and diluted earnings per share of $0.14 per share.

 

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(Unaudited)

(in millions, except par values)

 
 

September 30, 
2018(a)

 

December 31, 
2017(a)

Assets

     

Current assets:

     

Cash and cash equivalents

$

1,339

   

$

1,925

 

Short-term investments

3,424

   

3,131

 

Trade accounts receivable, net

3,187

   

2,865

 

Unbilled accounts receivable

   

357

 

Other current assets

777

   

833

 

Total current assets

8,727

   

9,111

 

Property and equipment, net

1,362

   

1,324

 

Goodwill

3,037

   

2,704

 

Intangible assets, net

1,021

   

981

 

Deferred income tax assets, net

391

   

418

 

Long-term investments

93

   

235

 

Other noncurrent assets

643

   

448

 

Total assets

$

15,274

   

$

15,221

 

Liabilities and Stockholders' Equity

     

Current liabilities:

     

Accounts payable

$

223

   

$

210

 

Deferred revenue

244

   

383

 

Short-term debt

100

   

175

 

Accrued expenses and other current liabilities

2,126

   

2,071

 

Total current liabilities

2,693

   

2,839

 

Deferred revenue, noncurrent

72

   

104

 

Deferred income tax liabilities, net

157

   

146

 

Long-term debt

624

   

698

 

Long-term income taxes payable

490

   

584

 

Other noncurrent liabilities

260

   

181

 

Total liabilities

4,296

   

4,552

 

Stockholders' equity:

     

Preferred stock, $0.10 par value, 15.0 shares authorized, none issued

   

 

Class A common stock, $0.01 par value, 1,000 shares authorized, 580 and 588 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively

6

   

6

 

Additional paid-in capital

119

   

49

 

Retained earnings

11,041

   

10,544

 

Accumulated other comprehensive income (loss)

(188)

   

70

 

Total stockholders' equity

10,978

   

10,669

 

Total liabilities and stockholders' equity

$

15,274

   

$

15,221

 
 

Notes:

(a)

On January 1, 2018, we adopted the New Revenue Standard using the modified retrospective method. Upon adoption, we reclassified (i) balances representing receivables, as defined by the New Revenue Standard, from Unbilled accounts receivable to Trade accounts receivable, net and (ii) balances representing contract assets, as defined by the New Revenue Standard, from Unbilled accounts receivable to Other current assets. Balances as of September 30, 2018 are presented under the New Revenue Standard, while prior period balances are not adjusted and continue to be reported in accordance with our historic accounting policies.

 

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

Reconciliations of Non-GAAP Financial Measures

(Unaudited)

(dollars in millions, except per share amounts)

 
 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

Guidance

 

2018(a)

 

2017(a)

 

2018(a)

 

2017(a)

 

Q4 2018

 

Full Year 2018

GAAP income from operations

$

745

   

$

648

   

$

2,108

   

$

1,824

         

Add: Stock-based compensation expense (b)

69

   

52

   

199

   

161

         

Add: Acquisition-related charges (c)

37

   

35

   

119

   

104

         

Add: Realignment charges (d)

11

   

19

   

12

   

69

         

Add: Initial funding of Cognizant U.S. Foundation (e)

   

   

100

   

         

Non-GAAP income from operations

$

862

   

$

754

   

$

2,538

   

$

2,158

         
                       

GAAP operating margin

18.3

%

 

17.2

%

 

17.6

%

 

16.6

%

       

Effect of stock-based compensation expense

1.7

   

1.4

   

1.7

   

1.5

       

1.6% - 1.8%

Effect of acquisition-related charges

0.9

   

0.9

   

1.0

   

1.0

       

(c)

Effect of realignment charges

0.2

   

0.5

   

0.1

   

0.6

       

(d)

Effect of initial funding of Cognizant U.S. Foundation

   

   

0.8

   

       

0.6%

Non-GAAP operating margin

21.1

%

 

20.0

%

 

21.2

%

 

19.7

%

     

approximately
21.0%

                       

GAAP diluted earnings per share

$

0.82

   

$

0.84

   

$

2.48

   

$

2.55

         

Effect of above operating adjustments, pre-tax

0.20

   

0.18

   

0.74

   

0.56

   

(b), (c), (d), (e)

 

(b), (c), (d). (e)

Effect of non-operating foreign currency exchange (gains) losses, pre-tax (f)

0.21

   

0.02

   

0.39

   

(0.06)

   

(f)

 

(f)

Tax effect of non-GAAP adjustments to pre-tax income (g)

(0.03)

   

(0.06)

   

(0.16)

   

(0.21)

   

(b), (c), (d), (e)

 

(b), (c), (d), (e)

Effect of recognition of income tax benefit related to an uncertain tax position (h)

   

   

   

(0.09)

   

 

Effect of adjustment to the one-time income tax expense related to the Tax Reform Act (i)

(0.01)

   

   

(0.01)

   

   

 

(0.01)

Non-GAAP diluted earnings per share

$

1.19

   

$

0.98

   

$

3.44

   

$

2.75

   

at least $1.05

 

at least $4.50

 

Notes:

(a)

On January 1, 2018, we adopted the New Revenue Standard using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under the New Revenue Standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting policies.

(b)

Stock-based compensation expense reported in:

   
   

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

   

2018

 

2017

 

2018

 

2017

 

Cost of revenues

$

15

   

$

13

   

$

46

   

$

41

 
 

Selling, general and administrative expenses

54

   

39

   

153

   

120

 
   
 

Our guidance anticipates pre-tax stock-based compensation to be in the range of $0.11 to $0.12 per diluted share for the fourth quarter of 2018 and $0.45 to $0.47 per diluted share for the full year 2018. The tax effect of stock-based compensation is expected to be in the range of $0.03 to $0.04 per diluted share for the fourth quarter of 2018 and $0.12 to $0.13 per diluted share for the full year 2018.

(c)

Acquisition-related charges include, amortization of purchased intangible assets included in the depreciation and amortization expense line on our 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, as applicable. We cannot provide acquisition-related charges on a forward-looking basis without unreasonable effort as such charges may fluctuate based on the timing, size, and complexity of future acquisitions as well as other uncertainty inherent in mergers and acquisitions.

(d)

Realignment charges include severance costs, lease termination costs, and advisory fees related to non-routine shareholder matters and to the development of our realignment and return of capital programs, as applicable. We may incur additional realignment charges for the remainder of 2018 and in 2019. Our realignment initiatives are intended to further improve our cost structure primarily by optimizing our resource pyramid. The total costs related to the realignment are reported in "Selling, general and administrative expenses" in our consolidated statements of operations. We cannot provide realignment charges on a forward-looking basis without unreasonable effort as the amount and timing of such charges are uncertain.

(e)

During the nine months ended September 30, 2018, we provided $100 million of initial funding to Cognizant U.S. Foundation, which is focused on science, technology, engineering and math (or collectively, STEM) in the United States. This funding is not expected to recur at this magnitude in the foreseeable future and its impact on full year diluted earnings per share (pre-tax and net of tax) is not expected to change.

(f)

Non-operating foreign currency exchange gains or losses, inclusive of gains and losses on related foreign exchange forward contracts not designated as hedging instruments for accounting purposes, are reported in "Foreign currency exchange gains (losses), net" in our consolidated statements of operations. Non-operating foreign currency exchange gains and losses are subject to high variability and low visibility and therefore cannot be provided on a forward-looking basis without unreasonable efforts.

(g)

Presented below are the tax impacts of each of our non-GAAP adjustments to pre-tax income:

   
   

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

   

2018

 

2017

 

2018

 

2017

 

Non-GAAP income tax benefit (expense) related to:

             
 

Stock-based compensation expense

$

15

   

$

19

   

$

53

   

$

60

 
 

Acquisition-related charges

8

   

11

   

28

   

35

 
 

Realignment charges

3

   

6

   

3

   

24

 
 

Foreign currency exchange gains and losses

(6)

   

(1)

   

(15)

   

4

 
 

Initial funding of Cognizant U.S. Foundation

   

   

28

   

 
   
 

The effective tax rate related to each of our non-GAAP adjustments varies depending on the jurisdictions in which such income and expenses are generated and the statutory rates applicable in those jurisdictions.

(h)

During the nine months ended September 30, 2017, we recognized an income tax benefit previously unrecognized in our consolidated financial statements related to a specific uncertain tax position of $55 million. The recognition of the benefit was based on management's reassessment regarding whether this unrecognized tax benefit met the more-likely-than-not threshold in light of the lapse in the statute of limitations as to a portion of such benefit.

(i)

During the three and nine months ended September 30, 2018, we finalized our calculation of the one-time net income tax expense related to the enactment of the Tax Reform Act and recognized a $5 million income tax benefit, which reduced our provision for income taxes. This income tax benefit and its impact on full year diluted earnings per share is not expected to change.

 

The above tables serve 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)

(dollars in millions)

 
 

Three Months Ended September 30, 2018(a)

         

 % Change

 

$

 

 % of total

 

 Year over
Year

Revenues by Segment:

         

Financial Services

$

1,464

   

35.9

%

 

2.6

%

Healthcare

1,189

   

29.2

%

 

9.6

%

Products and Resources

863

   

21.2

%

 

11.5

%

Communications, Media and Technology

562

   

13.8

%

 

17.1

%

Total Revenues

$

4,078

       

8.3

%

           

Revenues by Geography:

         

North America

$

3,107

   

76.2

%

 

7.5

%

United Kingdom

325

   

8.0

%

 

8.0

%

Rest of Europe

398

   

9.8

%

 

21.7

%

Europe - Total

723

   

17.7

%

 

15.1

%

Rest of World

248

   

6.1

%

 

0.4

%

Total Revenues

$

4,078

       

8.3

%

 
 

Nine Months Ended September 30, 2018(a)

         

 % Change

 

$

 

 % of total

 

 Year over
Year

Revenues by Segment:

         

Financial Services

$

4,394

   

36.6

%

 

4.4

%

Healthcare

3,466

   

28.9

%

 

10.5

%

Products and Resources

2,524

   

21.0

%

 

11.8

%

Communications, Media and Technology

1,612

   

13.4

%

 

17.1

%

Total Revenues

$

11,996

       

9.2

%

           

Revenues by Geography:

         

North America

$

9,149

   

76.3

%

 

7.6

%

United Kingdom

944

   

7.9

%

 

9.4

%

Rest of Europe

1,153

   

9.6

%

 

27.7

%

Europe - Total

2,097

   

17.5

%

 

18.7

%

Rest of World

750

   

6.3

%

 

5.2

%

Total Revenues

$

11,996

       

9.2

%

 

Employee Metrics:

 

September 30,
2018

 

September 30,
2017

Number of employees

 

274,200

 

256,100

             
 

Notes:

(a)

On January 1, 2018, we adopted the New Revenue Standard using the modified retrospective method. Results for reporting periods beginning after January 1, 2018 are presented under the New Revenue Standard, while prior period amounts are not adjusted and continue to be reported in accordance with our historic accounting policies.

 

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(in millions)

 
 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

2018

 

2017

 

2018

 

2017

Cash flows from operating activities:

             

Net income

$

477

   

$

495

   

$

1,453

   

$

1,522

 

Adjustments for non-cash income and expenses

288

   

121

   

813

   

399

 

Changes in assets and liabilities

97

   

157

   

(376)

   

(350)

 

Net cash provided by operating activities

862

   

773

   

1,890

   

1,571

 

Cash flows from investing activities:

             

Purchases of property and equipment

(94)

   

(78)

   

(281)

   

(204)

 

Net (purchases) sales of investments

(171)

   

20

   

(317)

   

(146)

 

Payments for business combinations, net of cash acquired

(1)

   

(66)

   

(479)

   

(72)

 

Net cash (used in) investing activities

(266)

   

(124)

   

(1,077)

   

(422)

 

Cash flows from financing activities:

             

Repurchases of common stock

(45)

   

(13)

   

(994)

   

(1,557)

 

Net change in borrowings and capital lease obligations

(25)

   

(170)

   

(164)

   

(62)

 

Dividends paid

(116)

   

(90)

   

(352)

   

(179)

 

Issuance of common stock under stock-based compensation plans

40

   

42

   

142

   

146

 

Net cash (used in) financing activities

(146)

   

(231)

   

(1,368)

   

(1,652)

 

Effect of exchange rate changes on cash and cash equivalents

(12)

   

2

   

(31)

   

46

 

Increase (decrease) in cash and cash equivalents

438

   

420

   

(586)

   

(457)

 

Cash and cash equivalents, beginning of period

901

   

1,157

   

1,925

   

2,034

 

Cash and cash equivalents, end of period

$

1,339

   

$

1,577

   

$

1,339

   

$

1,577

 
 
 

SUPPLEMENTAL CASH FLOW INFORMATION

(in millions)

 
   

Three Months Ended

Stock Repurchases under Board of Directors' authorized stock repurchase program:

 

September 30,
2018

 

September 30,
2017

Number of shares repurchased(a)

 

1.4

   

 
         

Remaining authorized balance

 

$

775

     
               
   

Notes:

(a)

In June 2018, the Company entered into an ASR to purchase up to $600 million of the Company's Class A common stock. In August 2018, the purchase period for the ASR ended and an additional 1.1 million shares were delivered. In total, 7.6 million shares were delivered under the ASR at an average repurchase price of $79.42.

   
 

In addition to the ASR activity above, during the three months ended September 30, 2018, the Company repurchased 0.3 million shares of our Class A common stock for $25 million.

 

 

SOURCE Cognizant

For further information: David Nelson, VP, Investor Relations & Treasurer, 201-498-8840, david.nelson@cognizant.com