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): February 9, 2006

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.)

500 Glenpointe Centre West 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)).

Item 2.02. Results of Operations and Financial Condition.

On February 9, 2006, Cognizant Technology Solutions Corporation, a Delaware corporation (the “Company”), issued a press release to report the Company’s financial results for the quarter and year ended December 31, 2005. 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.

(c) Exhibits.

Exhibit No.	Description
99.1	Press Release of Cognizant Technology Solutions Corporation dated February 9, 2006 reporting its financial results.

* The information in this 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/ Steven Schwartz
Name:	Steven Schwartz
Title:	Vice President and General Counsel

Date: February 9, 2006

EX-99.1

Exhibit 99.1

	500 Glenpointe Centre West
FINAL– FOR APPROVAL	Teaneck, NJ 07666 CONTACT: Gordon Coburn Chief Financial Officer 201-678-2712 Investors: Gordon McCoun/Peter Schmidt Press: Brian Maddox/Scot Hoffman Financial Dynamics 212-850-5600 shoffman@fd-us.com

COGNIZANT REPORTS RECORD FOURTH QUARTER & FULL YEAR 2005 RESULTS

Surpasses $1 Billion Annualized Revenue Run Rate in Fourth Quarter

Adds Over 9,000 Employees During the Year and Increases Global Headcount Beyond 24,000

Anticipates Continued Revenue Momentum into 2006

Teaneck, NJ – February 9, 2006 – Cognizant Technology Solutions Corporation (NASDAQ: CTSH), a leading provider of IT services, today announced its financial results for the fourth quarter ended December 31, 2005.

Highlights – Fourth Quarter 2005

• Quarterly revenue increased to $256.9 million, up 49% from the year-ago quarter.

• Quarterly diluted EPS, on a GAAP basis, was $0.39 for the quarter.

• Quarterly diluted EPS, excluding a one-time income tax benefit, was $0.31, compared to $0.21 in the year-ago quarter.

Revenue for the fourth quarter increased to $256.9 million, up 9% from $235.5 million in the third quarter of 2005, and up 49% from $172.8 million in the fourth quarter of 2004. GAAP net income was $57.7 million, or $0.39 per diluted share. In the fourth quarter of 2005, Cognizant completed the repatriation of approximately $60 million of earnings pursuant to the American Jobs Creation Act of 2004, leading to a one-time income tax benefit of approximately $12.4 million, or $0.08 per diluted share. Excluding this one-time tax benefit, net income for the fourth quarter increased to $45.3 million on an adjusted basis, or $0.31 per diluted share, compared to $30.6 million or $0.21 per diluted share in the fourth quarter of 2004. Operating margin for the quarter was 19.9%, at the high end of the Company’s targeted 19 to 20% range.

Highlights – Full Year 2005

• Annual revenue increased to $885.8 million, up 51% compared to 2004.

• Full year operating margin was 20.1%, compared to 20.0% for 2004.

• Annual diluted EPS, on a GAAP basis, increased to $1.13 for 2005.

• Annual diluted EPS, excluding the one-time income tax benefit, was $1.05, up from $0.70 in 2004.

• Headcount surpassed 24,300 on record hiring.

Revenue for 2005 increased to $885.8 million, compared to $586.7 million in 2004. GAAP net income was $166.3 million, or $1.13 per diluted share. Excluding the one-time tax benefit, net income for the full year increased to $153.9 million, or $1.05 per diluted share on an adjusted basis, compared to $100.2 million or $0.70 per diluted share in 2004.

Business Highlights

“Cognizant’s strong performance during the fourth quarter concludes a year of exceptional overall performance for the company, driving us past an annual revenue run rate of $1 billion and firmly placing us in the top tier of the offshore IT services industry,” said Lakshmi Narayanan, President and CEO of Cognizant. “Our dedicated focus on collaborating and building increasingly deeper relationships with our clients propelled our growth across all our key vertical practices, and we finished the year with 67 strategic clients. We extended our leadership position in Financial Services with the addition of two more strategic clients within the quarter, and Healthcare and Life Sciences, where Cognizant now has client relationships with seven of the world’s top pharmaceutical companies and three of America’s top five healthcare organizations.”

Cognizant added over 9,000 associates during the year, ending December with more than 24,300 employees. Key hires during the quarter included engineering graduates, MBAs, senior-level architects, program managers, and practice leaders from major corporations in the Company’s key industry verticals.

“We are also pleased that we have been able to effectively manage this industry-leading growth while reinvesting in the business,” continued Narayanan. “Our reinvestment strategy, especially in hiring client-facing managers in North America and Europe and industry experts across the globe, results in consistently high levels of client satisfaction and has enabled us to drive deeper relationships with our clients and cross-sell a broader range of services. We believe that the combination of our focus on vertically aligned practices, deep commitment to strengthening our customers’ businesses, and consistent execution positions Cognizant to continue to grow at a rate faster than our competition in 2006.”

2006 Outlook – First Quarter & Full Year

Based on current visibility, the Company is now providing the following guidance:

• First quarter 2006 revenue anticipated to be at least $275 million.

• First quarter 2006 diluted EPS expected to be $0.29 on a GAAP basis, including FAS 123R equity compensation expense of approximately $0.03 cents.

• First quarter 2006 diluted EPS on an adjusted basis, excluding the impact of FAS 123R, expected to be $0.32.

• Fiscal 2006 revenue anticipated to be at least $1.26 billion.

• Fiscal 2006 diluted EPS expected to be at least $1.30 on a GAAP basis, including FAS 123R equity compensation expense of approximately $0.13 cents.

• Fiscal 2006 diluted EPS on an adjusted basis, excluding the impact of FAS 123R, expected to be at least $1.43.

• Total headcount by end of full year 2006 expected to exceed 34,500.

“During 2005, we continued to successfully execute on our long-standing strategy of reinvesting in the future growth of the business while maintaining consistent operating margins,” said Gordon Coburn, Chief Financial Officer of Cognizant. “This strategy has enabled us to expand and further enhance our operations in Asia, North America and Europe ahead of demand and to invest in the people and programs to deliver industry-leading growth. We ended the year with $424 million in cash and short-term investments on our balance sheet, an increase of over $109 million for the year. We look forward to another year of strong performance, based on the robust demand for Cognizant’s increasing range of services across both vertical and geographic markets.”

Conference Call

Cognizant will host a conference call today, February 9, at 10:00 a.m. (ET) to discuss the Company’s quarterly results. To listen to the call please dial (888) 652-6834 domestically or (706) 679-3288 internationally. The call will also be broadcast live via the Internet at Cognizant’s web site, www.cognizant.com. Please go to the web site at least fifteen minutes prior to the call to register, download and install any necessary audio software. A replay will be made available on the web site at www.cognizant.com or by calling (800) 642-1687 for domestic callers and (706) 645-9291 for international callers and entering “4331879” from two hours after the end of the call until 11:59 p.m. (ET) on February 16, 2006.

About Cognizant

Cognizant (NASDAQ: CTSH) is a leading provider of IT services. Focused on delivering strategic information technology solutions that address the complex business needs of its clients, Cognizant provides applications management, development, integration, and re-engineering, infrastructure management, business process outsourcing, and a number of related services such as enterprise consulting, technology architecture, program management, and change management through its onsite/offshore outsourcing model.

Cognizant’s more than 25,000 employees are committed to partnerships that sustain long-term, proven value for customers by delivering high-quality, cost-effective solutions through its development centers in India and onsite client teams. Cognizant maintains P-CMM and SEI-CMM Level 5 assessments from an independent third-party assessor, was recently named one of Forbes’ Best Small Companies in America for the fourth consecutive year, and ranked among the top information technology companies in BusinessWeek’s Hot Growth Companies. Cognizant is a member of the NASDAQ-100 Index, and further information about Cognizant can be found at www.cognizant.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, the accuracy of which are necessarily subject to risks, uncertainties, and assumptions as to future events that may not prove to be accurate. Factors that could cause actual results to differ materially from those expressed or implied include general economic conditions and the factors discussed in our most recent 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.

-tables to follow-

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share data)

	Three Months Ended December 31,									Three Months Ended December 31, 2004 US GAAP
	2005 US GAAP			2005 Adjustments			2005 As Adjusted
Revenues	$	256,902					$	256,902		$	172,781
Cost of revenues		135,978						135,978			94,657
Gross profit		120,924						120,924			78,124
Selling, general and administrative expenses		64,604						64,604			38,182
Depreciation and amortization expense		5,280						5,280			4,671
Income from operations		51,040						51,040			35,271
Other income (expense):
Interest income		2,860						2,860			1,467
Other income / (expense), net		(737	)					(737	)		117
Total other income / (expense)		2,123						2,123			1,584
Income before provision for income taxes		53,163						53,163			36,855
(Benefit) provision for income taxes		(4,510	)		12,411	(a)		7,901			6,253
Net income	$	57,673			12,411		$	45,262		$	30,602
Basic earnings per share	$	0.42		$	(0.09	)	$	0.33		$	0.23
Diluted earnings per share	$	0.39		$	(0.08	)	$	0.31		$	0.21
Weighted average number of common shares outstanding		138,617			138,617			138,617			133,215
Weighted average number of common and dilutive shares outstanding		147,924			147,924			147,924			144,690

In addition to its reported US GAAP operating results, Cognizant has included in the table above as adjusted operating results that the Securities and Exchange Commission defines as “non-GAAP financial measures.” Management believes that such non-GAAP financial measures, when read in conjunction with the company’s reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the company’s growth. The as adjusted column above for the three months ended December 31, 2005 reflects the following adjustment:

(a) To exclude the reduction of income tax expense (one-time income tax benefit) related to the repatriation of approximately $60 million of earnings of its foreign subsidiaries pursuant to the American Jobs Creation Act of 2004.

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

(In thousands, except per share data)

	Twelve Months Ended December 31,									Twelve Months Ended December 31, 2004 US GAAP
	2005 US GAAP			2005 Adjustments			2005 As Adjusted
Revenues	$	885,830					$	885,830		$	586,673
Cost of revenues		479,915						479,915			319,810
Gross profit		405,915						405,915			266,863
Selling, general and administrative expenses		206,899						206,899			132,796
Depreciation and amortization expense		21,400						21,400			16,447
Income from operations		177,616						177,616			117,620
Other income (expense):
Interest income		8,982						8,982			4,389
Other income / (expense), net		(1,326	)					(1,326	)		86
Total other income / (expense)		7,656						7,656			4,475
Income before provision for income taxes		185,272						185,272			122,095
Provision for income taxes		19,006			12,411	(a)		31,417			21,852
Net income	$	166,266			12,411		$	153,855		$	100,243
Basic earnings per share	$	1.22		$	(0.09	)	$	1.13		$	0.77
Diluted earnings per share	$	1.13		$	(0.08	)	$	1.05		$	0.70
Weighted average number of common shares outstanding		136,494			136,494			136,494			130,990
Weighted average number of common and dilutive shares outstanding		146,895			146,895			146,895			142,556

In addition to its reported US GAAP operating results, Cognizant has included in the table above as adjusted operating results that the Securities and Exchange Commission defines as “non-GAAP financial measures.” Management believes that such non-GAAP financial measures, when read in conjunction with the company’s reported results, can provide useful supplemental information for investors analyzing period to period comparisons of the company’s growth. The as adjusted column above for the twelve months ended December 31, 2005 reflects the following adjustment:

(a) To exclude the reduction of income tax expense (one-time income tax benefit) related to the repatriation of approximately $60 million of earnings of its foreign subsidiaries pursuant to the American Jobs Creation Act of 2004.

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION (Unaudited)

(In thousands)

	December 31, 2005		December 31, 2004
Assets
Current Assets
Cash and cash equivalents (1)	$	196,938	$	199,296
Short-term investments (1)		227,063		115,465
Trade accounts receivable, net of allowances of $2,325 and $1,560, respectively		153,971		96,363
Unbilled accounts receivable		22,725		14,154
Deferred income tax assets		42,752		16,815
Other current assets		19,974		11,904
Total Current Assets		663,423		453,997
Property and equipment - net		146,982		90,705
Goodwill		18,223		9,701
Other Intangible assets - net		16,277		12,126
Deferred income tax assets		14,099		—
Other assets		7,741		6,216
Total Assets	$	866,745	$	572,745
Liabilities and Stockholders’ Equity
Current Liabilities
Accounts payable	$	16,420	$	11,190
Accrued expenses and other liabilities		136,180		103,870
Total Current Liabilities		152,600		115,060
Deferred income tax liabilities		—		4,156
Total Liabilities		152,600		119,216
Stockholders’ Equity		714,145		453,529
Total Liabilities and Stockholders’ Equity	$	866,745	$	572,745

(1) In the first quarter, the Company began to classify its investment in auction-rate securities as short-term investments. These investments were included in cash and equivalents in previous periods ($94.15 million as of December 31, 2004), and such amounts have been reclassified in the accompanying financial statements to conform to the current period classification. This change in classification had no effect on the amounts of total current assets, total assets, net income or cash flow from operations of the Company.