WESTPORT, Conn., July 21 /PRNewswire/ -- Cognizant Corporation (NYSE: CZT)
today reported record performance by its major businesses -- IMS, Nielsen
Media Research and Gartner Group -- which produced 12 percent revenue growth
and an 18 percent increase in operating income for the quarter ended June 30,
1997. Net income grew 17 percent to $60.1 million, and earnings per share
rose 20 percent to $0.36.
"Consistency in earnings growth is Cognizant's trademark," said Robert E.
Weissman, Chairman and CEO. "Renewable revenue streams, combined with
positive operating leverage, are generating sustained, predictable
performance. We're on track to deliver 17-to-20 percent earnings per share
growth in 1997."
In the first six months of 1997 (Table 2), revenues rose to
$899.3 million, a 14 percent increase from $785.7 million in the first half of
1996, and operating income grew 24 percent to $172.4 million. Net income
increased 23 percent to $113.0 million, or $0.67 per share, in the first half
of 1997, including an after-tax gain of $3.7 million, or $0.02 per share, from
the sale of a Cognizant Enterprises investment. Net income from continuing
operations (Table 1 footnote) totaled $91.5 million, or $0.54 per share, in
the first six months of 1996.
Share Repurchase Program
Cognizant initiated a stock repurchase program during the first quarter of
1997 to buy up to 8.5 million shares, or five percent, of the company's
outstanding stock over a two-year period. Through July 18, 1997, 6.8 million
shares have been acquired at a total cost of $226.4 million.
Foreign Exchange
Foreign currency translation adversely impacted Cognizant's reported
revenue and operating income during the second quarter and first half of 1997.
On a constant-dollar basis, revenue grew 13.6 percent, while operating income
rose 18.8 percent in the second quarter of 1997, compared with the year-
earlier period. For the first half of 1997, revenue increased 15.9 percent on
a constant-dollar basis, and operating income grew 25.3 percent, compared with
the 1996 first half.
Cognizant maintains a hedging program which utilizes forward contracts to
hedge a portion of committed IMS revenues from the impact of currency
fluctuations. Gains are reflected in revenue over 1997 quarters, matched to
the recognition of hedged revenue.
Operating Unit Results
IMS, the leading provider of global information solutions to the
pharmaceutical and healthcare industries, benefited from the strong
performance of its sales management products in North America, Japan and Latin
America, from excellent growth of its electronic territory management
products, and from geographic expansion. IMS's Xtrend prescription database
service was launched in Germany, Belgium and the Netherlands during the
quarter, expanding from the United Kingdom.
Constant-dollar growth most accurately represents IMS's business
performance. IMS's 1997 second quarter revenue grew 11.4 percent on a
constant-dollar basis, with operating income rising 17.8 percent. The impact
of foreign exchange reduced IMS's reported revenue growth to 8.0 percent, and
operating income growth to 16.8 percent in the second quarter of 1997.
Nielsen Media Research, the premier provider of electronic media
measurement services, achieved continuing growth from new metered markets,
additional cable networks, and its local Hispanic and Monitor Plus
measurement services. Revenue increased 11.5 percent and operating income
grew 11.1 percent in the 1997 second quarter, compared with the year-earlier
period.
Electronic measurement service was introduced in Memphis during the second
quarter and in Nashville on July 10, bringing the number of metered markets
to 38 cities. Nielsen Media and Lucent Technologies signed a professional
services agreement to partner in the development of a broad range of media
information technologies. The MSNBC cable network finalized a contract with
Nielsen Media to provide measurement services.
Gartner Group, Cognizant's majority-owned business that provides research
and advisory services to the information technology industry, reported 21.1
percent revenue growth and a 22.1 percent rise in operating income for the
quarter ended June 30, 1997. Gartner Group's quarterly financial results
announced on July 17, 1997 reflect higher growth rates than those reported for
Gartner Group by Cognizant, due to timing differences in the closing schedules
in 1996 (Table 1 footnote). Adjusted for the timing difference, Cognizant's
1997 second quarter revenue growth is 13.7 percent, with operating income up
20.8 percent.
Strong performance by Gartner Group's subscription-based advisory services
and excellent market acceptance of Decision Drivers, a computer-based
purchase decision analytic product, contributed to the quarterly growth.
Gartner Group strengthened its computer-based learning product line with the
launch of the Training Management System, a browser-based application designed
to manage enterprise-wide training programs, and expanded its European
operations with the acquisition of Bouhot and Le Gendre, a France-based
provider of information technology products and services.
Cognizant's Emerging Markets group, which includes investments in emerging
technology and information services businesses, reported revenue growth of
4.1 percent to $21.7 million and an operating loss of $9.9 million in the
second quarter of 1997. Erisco, a provider of software-based administrative
and analytical solutions to the healthcare industry, signed two major
contracts and posted a significant revenue gain from sales of its Facets(TM)
client/server system, which provides high-quality, cost-effective solutions to
managed-care organizations. Pilot Software, a developer of interactive
decision support software, reported a loss for the quarter. Cognizant
Technology Solutions, an outsourcer of software applications and development
services, continued to grow aggressively through additional contracts to
provide year 2000 conversion services.
Second-Quarter Balance Sheet Highlights
Through the second quarter of 1997, balance sheet changes included a
change in cash and cash equivalents from $428.5 million at December 31, 1996
to $429.2 million at June 30, 1997 (Table 3). At June 30, 1997, 164,298,943
shares were outstanding.
Cognizant Corporation integrates information and technology to create
business insight. Based in Westport, Conn., the company employs more than
10,000 professionals in nearly 100 countries. Its principal operating units
are: IMS, which offers global information solutions to the pharmaceutical and
healthcare industries; Nielsen Media Research, the leader in audience
measurement for electronic media; and a majority interest in Gartner Group,
the premier provider of research and advisory services to the information
technology industry. Cognizant's Emerging Markets Group focuses on new and
developing technologies in the information services industry.
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 to be correct. This
information may involve risk and uncertainties that could cause actual results
to differ materially from the forward-looking statements. Factors which could
cause or contribute to such differences include, but are not limited to,
factors detailed in the company's Securities and Exchange Commission filings.
COGNIZANT CORPORATION
Income Statement
Three Months Ended June 30
Table 1
(unaudited, in millions except per share)
1997 1996* % Change
Revenue
IMS $ 229.4 $ 212.3 8%
Nielsen Media Research 87.2 78.2 11
Gartner Group 126.3 104.3** 21
Emerging Markets 21.7 20.9 4
Total Revenue 464.6 415.7 12
Operating Income
IMS 56.4 48.3 17
Nielsen Media Research 27.3 24.6 11
Gartner Group 28.5 23.3** 22
Emerging Markets (9.9) (4.5) (122)
Corporate and Other (7.1) (11.1) 36
Total Operating Income 95.2 80.6 18
Interest Income 3.7 1.5 151
Gartner Group Minority Interest (9.2) (6.9)** (34)
Other Income (Expense) (1.4) 0.1 --
Income Before Provision for
Income Taxes 88.3 75.3 17
Provision for Income Taxes (28.2) (24.1) (17)
Net Income $60.1 $51.2 17%
Earnings Per Share $0.36 $0.30 20%
Average Shares Outstanding 165.5 170.1 3
*1996 results are continuing operations, defined as operating results for
Cognizant businesses on an on-going basis, which excludes all discontinued
operations, pre-spin one-time charges and gains, and non-recurring items. It
also reflects an effective tax rate of 32%, based on global tax planning
actions.
**For the quarter ended Mar. 31, 1996, Dun & Bradstreet's reported results
for Gartner varied from Gartner's reported results, due to timing differences
in their quarterly closing schedules. D&B reported results based on
preliminary Gartner financial results, which were $6.9 million lower in
revenue and $1.8 million lower in operating income than Gartner's final
reported results. The variance was adjusted in D&B's 1996 second quarter
results. This created a higher growth rate for Gartner in Cognizant's 1997
first quarter results, relative to Gartner's reported results, and a lower
growth rate comparison in Cognizant's 1997 second quarter results.
COGNIZANT CORPORATION
Income Statement
Six Months Ended June 30
Table 2
(unaudited, in millions except per share)
1997 1996* % Change
Revenue
IMS $ 439.2 $ 403.4 9%
Nielsen Media Research 173.4 155.0 12
Gartner Group 245.5 189.1 30
Emerging Markets 41.2 38.2 8
Total Revenue 899.3 785.7 14
Operating Income
IMS 93.7 81.9 14
Nielsen Media Research 53.6 48.2 11
Gartner Group 57.8 40.7 42
Emerging Markets (18.7) (9.7) (93)
Corporate and Other (14.0) (21.6) 35
Total Operating Income 172.4 139.5 24
Interest Income 8.6 3.3 162
Gartner Group Minority Interest (18.2) (12.0) (52)
Cognizant Enterprises Gain 5.4 -- --
Other Income (Expense) (2.1) 3.8 --
Income Before Provision for
Income Taxes 166.1 134.6 23
Provision for Income Taxes (53.1) (43.1) (23)
Net Income $ 113.0 $ 91.5 23%
Earnings Per Share $0.67 $ 0.54 24%
Average Shares Outstanding 167.6 169.8 1
*1996 results are continuing operations, defined as operating results for
Cognizant businesses on an on-going basis, which excludes all discontinued
operations, pre-spin one-time charges and gains, and non-recurring items. It
also reflects an effective tax rate of 32%, based on global tax planning
actions.
COGNIZANT CORPORATION
Summary Balance Sheet
Table 3
(unaudited, dollars in millions)
June 30, December 31,
1997 1996
Assets
Current Assets
Cash and Cash Equivalents $ 429.2 $ 428.5
Accounts Receivable, Net 469.9 453.8
Other Current Assets 109.8 112.2
Total Current Assets 1,008.9 994.5
Marketable Securities and
Other Investments 133.3 117.7
Property, Plant and Equipment, Net 263.2 268.9
Other Assets, Net
Computer Software 139.0 139.0
Goodwill 237.3 251.5
Other Assets 105.6 103.4
Total Other Assets 481.9 493.9
TOTAL ASSETS $1,887.3 $1,875.0
Liabilities and Shareholders' Equity
Current Liabilities $710.8 $670.2
Minority Interests 225.4 90.6
Other Liabilities 220.4 241.6
TOTAL LIABILITIES 1,156.6 1,002.4
Total Shareholders' Equity 730.7 872.6
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $1,887.3 $1,875.0
SOURCE Cognizant Corporation
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CONTACT:
Joseph C. Allen of Cognizant Corporation,
203-222-4235
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