Focus on Healthcare and Media Markets
Accelerated Share Buy-back Planned in 1998
WESTPORT, Conn., Jan. 15 /PRNewswire/ -- Cognizant Corporation
(NYSE: CZT) today announced that its board of directors has approved a plan to
separate into two publicly traded companies. The strategy would create IMS
HEALTH as the premier global provider of information solutions to the
pharmaceutical and healthcare industries, and establish an independent Nielsen
Media Research, the leader in electronic audience measurement services.
"IMS HEALTH and Nielsen Media become operating companies sharply focused
on single industries," said Robert E. Weissman, Cognizant chairman and chief
executive officer. "Their market leadership positions plus strong franchise
performance enable excellent growth prospects. As independent corporations,
each can better pursue business strategies tailored to unique customer needs,
thus building shareholder value."
IMS HEALTH
IMS HEALTH incorporates IMS, the leading global provider of market
information and decision-support services to the pharmaceutical and healthcare
industries; Erisco, the premier supplier of software-based administrative and
analytical solutions to the managed care industry; and Enterprises, the
company's venture capital unit, focused on investments in emerging healthcare
businesses. IMS HEALTH becomes the largest shareholder of Gartner Group, Inc.
(Nasdaq: GART), the world's preeminent supplier of research and analysis to
the information technology industry, an equity investment. IMS HEALTH will
also own Cognizant Technology Solutions, an outsourcer of software
applications and development services specializing in Year 2000 conversion
services. Operating in over 90 countries, IMS HEALTH annual revenue is
expected to exceed $1 billion in 1997.
Robert E. Weissman will be chairman and chief executive officer of IMS
HEALTH upon completion of the transaction. Victoria R. Fash becomes president
and chief operating officer of IMS HEALTH, concurrent with her present
responsibilities as IMS chairman and chief executive officer. The IMS HEALTH
executive management team includes: Tommy Bohman, vice chairman and president,
IMS America; Gilles Pajot, vice chairman and president, IMS Europe; Shunsuke
Keimatsu, chairman and chief executive officer, IMS Japan; Hans Biedermann,
president, IMS Emerging Markets; James C. Newell, president, IMS Global
Services; Anthony Bellomo, president, Erisco; Venetia Kontogouris, president,
Enterprises; and Kumar Mahadeva, chairman and chief executive officer,
Cognizant Technology Solutions.
"IMS HEALTH operates in the multi-billion dollar, high-growth, global
healthcare information market. Healthcare demand driven by an aging
population, coupled with cost-containment pressure, are creating unprecedented
opportunity," said Fash. "As the world's leading healthcare information
services company, IMS HEALTH can deploy significant strategic advantages,
including unparalleled global reach, financial strength, our reputation for
objectivity, and proven products which give our customers the information
insight critical to business success."
"As an independent company, IMS is better positioned than ever to focus on
our four key growth drivers. First, new products, such as the launch of
prescription-based services, initially in the U.S., then Canada, and now in
Europe as Xtrend(TM). Second, capitalizing on our global distribution channel
for market extension into high-growth areas, as we are now doing with Sales
Technologies' Cornerstone(TM) sales force automation suite. Third, geographic
expansion, including building on our initial presence in China, India and
Poland, and 1998 start-ups in Sri Lanka, Nepal, Namibia, Zimbabwe and Kenya.
Fourth, moving into the broader healthcare information services arena to
provide new products and services which our current and potential customers
are requesting today. We're very bullish on our growth opportunities in this
dynamic market," concluded Fash.
Nielsen Media Research
Nielsen Media Research, the leading source of television audience
measurement services, is expected to generate 1997 revenue of over
$350 million. The company, which will be headquartered in New York City,
employs 2,100 professionals in the United States and Canada. Nielsen Media's
National People Meter Service provides audience estimates for all national
programming sources, including broadcast networks, cable networks and national
syndicators. Local ratings services estimate audiences for each of 211
television markets in the U.S., including electronic metered service in
38 cities.
John A. Dimling will serve as president and chief executive officer of
Nielsen Media Research when it becomes an independent company. William G.
Jacobi will become chairman of the board of directors. Dimling has been
president and chief operating officer of Nielsen Media Research since 1993,
having joined the company in 1985. Jacobi previously served as executive vice
president of Cognizant Corporation, as well as chairman and chief executive
officer of Nielsen Media Research.
"Nielsen Media Research provides the information that supports the
$40 billion television advertising market. The objectivity and reliability of
our data have made Nielsen Media Research the preeminent franchise in our
industry," said Dimling.
"As an independent company, our strategy will be to use our strong cash
flow to accelerate investment in the business to an all-time high," Dimling
added. "This will provide Nielsen Media customers with improved service and
enhanced products and services designed to meet their evolving needs. To stay
a step ahead of the digital TV age, a heavy technology investment in the
Active/Passive Meter is our top priority. We also plan to roll-out an
unprecedented number of metered markets, with metered service to be launched
in an additional six cities by the end of 1998. Separately, we are expanding
our capabilities for the measurement of multi-media advertising, the usage of
personal computers and the Internet."
Transaction Structure
The separation of Cognizant into two companies would be accomplished
through a tax-free dividend of one share of IMS HEALTH stock for each
Cognizant share held. Concurrent with the transaction, which is expected to
occur mid-summer 1998, Cognizant Corporation will change its name to Nielsen
Media Research. Both IMS HEALTH and Nielsen Media Research shares are
expected to trade on the New York Stock Exchange.
Cognizant intends to seek a ruling from the Internal Revenue Service with
respect to the tax-free treatment of the distribution. Completion of the
transaction is subject to receipt of a favorable ruling from the IRS, and
final approval by the Cognizant board of directors.
"These two operating businesses have fundamentally different growth
outlooks, operating characteristics and customer requirements," said Weissman.
"We believe the ability to focus on their specific industries, and to deploy
tailored strategies, will build value for customers and shareholders."
Financial Outlook
"The primary financial advantage to this transaction is unlocking the
growth of IMS HEALTH," said Fash. "Our initial 1998 guidance for Cognizant's
EPS growth was 17-to-20 percent. We are revising 1998 EPS growth guidance
upward to the 21-to-24 percent range for IMS HEALTH. The revised IMS HEALTH
EPS growth target excludes Nielsen Media Research and transaction costs
associated with the spin (such as investment bank advisory fees)."
Nielsen Media Research remains on target to achieve 10-to-12 percent
revenue and operating income growth in 1998.
"To further enhance value to shareholders, management is committed to
substantially complete the repurchase of the 9.4 million shares remaining in
the currently authorized repurchase program by the end of this year," said
Fash. "This will improve earnings per share incremental to our 21-to-24
percent EPS growth range projected for IMS HEALTH."
Cognizant's current dividend of $0.12 per share will continue through the
effective date of the transaction. IMS HEALTH plans to adopt Cognizant's
current dividend policy of $0.12 per share. Based on growth and capital
allocation priorities, Nielsen Media Research does not anticipate paying a
dividend.
Cognizant expects to release pro forma balance sheet, cash flow and income
statements for IMS HEALTH and Nielsen Media Research in late February.
Cognizant's 1997 financial results, scheduled for release on February 18,
1998, remain on target to exceed 17-to-20 percent EPS growth, as previously
indicated to investors.
Additional information is available at Cognizant's website,
http://www.cognizantcorp.com
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. Although Cognizant believes the
expectations contained in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove correct. This
information may involve risks and uncertainties that could cause actual
results of Cognizant, IMS HEALTH or Nielsen Media Research to differ
materially from the forward-looking statements. Factors which could cause or
contribute to such differences include, but are not limited to (i) the risks
associated with operating on a global basis, including fluctuations in the
value of foreign currencies relative to the U.S. dollar, and the ability to
successfully hedge such risks, (ii) to the extent they seek growth through
acquisition, the ability to identify and consummate acquisitions on
satisfactory terms, (iii) the ability to develop new or advanced technologies
and systems for their businesses on a cost-effective basis, (iv) the ability
to successfully achieve estimated effective tax rates and corporate overhead
levels, (v) competition in the market for audience measurement services, (vi)
regulatory and legislative initiatives, particularly in the area of medical
privacy, (vii) deterioration in economic conditions, particularly in the
pharmaceutical, healthcare, media, information technology or other industries
in which their customers operate, (viii) the final allocation of assets and
liabilities between IMS HEALTH and Nielsen Media Research, and other factors
detailed in Cognizant's SEC filings.
SOURCE Cognizant Corporation
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Related links:
http://www.cognizantcorp.com
CONTACT:
Joseph C. Allen of Cognizant Corporation,
203-222-4235
CNOC: http://www.prnewswire.com or fax, 800-758-5804, ext.
115785
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