8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of report (Date of earliest event reported): October 30, 2018

Cognizant Technology Solutions Corporation

(Exact Name of Registrant as Specified in Charter)

Delaware	0-24429	13-3728359
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)
Glenpointe Centre West 500 Frank W. Burr Blvd. Teaneck, New Jersey		07666
(Address of Principal Executive Offices)		(Zip Code)

(201) 801-0233

(Registrant’s telephone number, including area code)

Not applicable

(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425).

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12).

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)).

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)).

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Item 2.02. Results of Operations and Financial Condition.

On October 30, 2018, Cognizant Technology Solutions Corporation, a Delaware corporation (the “Company”), issued a press release to report the Company’s financial results for the quarter ended September 30, 2018. The full text of the press release is attached to this current report on Form 8-K as Exhibit 99.1.*

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

Exhibit No.	Description
99.1	Press Release of Cognizant Technology Solutions Corporation, dated October 30, 2018.

* The information in Item 2.02 and Exhibit 99.1 of this current report on Form 8-K shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933 or the Exchange Act, except as expressly set forth by specific reference in such a filing.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
By:	/s/ Karen McLoughlin
Name:	Karen McLoughlin
Title:	Chief Financial Officer

Date: October 30, 2018

EX-99.1

Exhibit 99.1

Glenpointe Centre West

500 Frank W. Burr Blvd.

Teaneck, NJ 07666

COGNIZANT REPORTS THIRD QUARTER2018 RESULTS

Third quarter2018 revenue of $4.08 billion, up 8.3% over 2017

Declares quarterly cash dividend of $0.20 per share

TEANECK, N.J., October 30, 2018 - Cognizant Technology Solutions Corporation (Nasdaq: CTSH), one of the world’s leading professional services companies, today announced its third quarter2018 financial results.

Highlights - Third Quarter2018¹

• 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 quarter2018 revenue expected to be in the range of $4.09 billion to $4.13 billion.

▪ Fourth quarter2018 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 quarter2018 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.

_____________________________

³A 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 statementsinclude, 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 factorsdiscussed 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.

Contact: David Nelson

VP, Investor Relations & Treasurer

201-498-8840

david.nelson@cognizant.com

- 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.