Cognizant reports 6% increase in Q4 revenue

BANGALORE: Cognizant Technology Solutions Corp. has posted revenue of $ 43.5
million for the fourth quarter ended December 31, 2001. This is up by 6 per
cent, from $ 41.1 million in the fourth quarter of 2000. This was announced by
the company today, by a media release.

Gross margin and operating margin for the fourth quarter improved to 49.4 per
cent and 20.8 per cent, respectively from 48.8 per cent and 19.2 per cent,
respectively in the prior year.

Pro forma net income for the fourth quarter increased to $5.9 million or
$0.29 per diluted share from $5.4 million or $0.27 per diluted share in the
fourth quarter of 2000. Pro forma amounts exclude the effect of a one-time,
non-cash, after-tax charge of $1.2 million, related to an impairment loss
write-off of Questra, the Company’s only venture capital investment. Net
income for the fourth quarter of 2001, inclusive of the one-time charge, was
$4.6 million, or $0.23 per diluted share.

Revenue for the year ended December 31, 2001 increased 30 per cent to $177.8
million from $137.0 million in 2000. Pro forma net income for 2001 increased 32
per cent to $23.4 million, from $17.7 million in the prior year. 2001 Pro forma
EPS increased 32 per cent to $1.15 per diluted share from $0.87 per diluted
share in 2000. Net income for the year ended December 31, 2001, inclusive of the
one-time charge, increased to $22.2 million or $1.09 per diluted share.

"Offshore application management continued to move to the forefront of
corporate IT spending as a result of its cost effectiveness and value added
capabilities," said, Cognizant’s chairman and chief executive officer,
Kumar Mahadeva. "Cognizant’s results benefited from this mainstream
acceptance and resulted in 22 per cent growth in application management revenue
during the fourth quarter and a 43 per cent increase for the full year.
Additionally, investments in our vertical market strategy continue to bear fruit
as we experienced sequential growth in the fourth quarter in our health care and
financial services practices. This partially offset the substantial decline in
revenue from our travel industry clients. We do not expect any further decline
in revenues from the travel segment."

"Our cash balance increased over $5 million during the fourth quarter to
approximately $85 million as we continued to generate significant cash flow from
operations. Also, DSOs remained strong at 59 days," said, the company’s
chief financial officer, Gordon Coburn. "Additionally, our customer base
remains strong and loyal. Over 80 per cent of our fourth quarter revenue came
from customers who have utilized our services for more than one year."

Coburn added, "Although spending on development and integration projects
remains weak, we continue to see strong demand for offshore outsourcing services
and as a result expect to resume sequential revenue growth in the first quarter
of 2002."