Cognizant Reports Second Quarter 2018 Results
TEANECK, N.J., Aug. 2, 2018 /PRNewswire/ -- Cognizant Technology Solutions Corporation (Nasdaq: CTSH), one of the world's leading professional services companies, today announced its second quarter 2018 financial results.
Highlights - Second Quarter 2018¹
-- Quarterly revenue rose to $4.01 billion, up 9.2% from the year-ago
quarter.
-- Quarterly GAAP diluted EPS was $0.78, compared to $0.80 in the year-ago
quarter.
-- Quarterly non-GAAP diluted EPS(2) was $1.19, compared to $0.93 in the
year-ago quarter.
Revenue for the second quarter of 2018 rose to $4.01 billion, up 9.2% from $3.67 billion in the second quarter of 2017. GAAP operating margin was 16.7% and non-GAAP operating margin(2) was 22.0% for the second quarter of 2018. GAAP net income was $456 million, or $0.78 per diluted share, compared to $470 million, or $0.80 per diluted share, in the second quarter of 2017. The decrease in GAAP net income was primarily due to net non-operating foreign exchange losses driven by the depreciation of the Indian rupee versus the prior year period and the initial funding of the Cognizant U.S. Foundation. Non-GAAP diluted EPS was $1.19, compared to $0.93 in the second quarter of 2017.
"As our second-quarter results confirm, we're making solid progress on our plan to accelerate our shift to digital services and solutions," said Francisco D'Souza, Chief Executive Officer and Vice Chairman of the Board. "We've been methodical in developing, aligning, and applying our portfolio of skills, services, and solutions to clients' needs, so they can become fully digital organizations. And we remain confident in our ability to invest for growth and achieve our financial targets."
______________________
(1)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. For the three months
ended June 30, 2018, adoption of the
New Revenue Standard had a positive
impact on revenue of $31 million,
income from operations of $38
million and diluted earnings per
share of $0.05 per share.
(2)Non-GAAP diluted EPS and non-
GAAP operating margin exclude stock-
based compensation costs and
acquisition-related charges,
realignment charges (for the three
months ended June 30, 2017 only),
the initial funding of Cognizant
U.S. Foundation (for the three
months ended June 30, 2018 only)
and, in the case of non-GAAP
diluted EPS, net non-operating
foreign currency exchange gains or
losses and the tax effect of the
above adjustments. Reconciliations
of non-GAAP diluted EPS and non-
GAAP operating margin to the
corresponding GAAP measures are
included at the end of this release.
Third Quarter & Full Year 2018 Outlook
The Company is providing the following guidance:
-- Third quarter 2018 revenue expected to be in the range of $4.06 billion
to $4.10 billion.
-- Third quarter 2018 non-GAAP diluted EPS(3) expected to be at least
$1.13.
-- Full year 2018 revenue expected to be in the range of $16.05 billion to
$16.30 billion.
-- Full year 2018 non-GAAP diluted EPS expected to be at least $4.50.
"Year-over-year non-GAAP operating margin expansion reflects strong operational execution and positions us well to absorb planned investments in the second half of the year," said Karen McLoughlin, Chief Financial Officer. "As a result of this solid performance we are pleased to raise our full year non-GAAP EPS guidance. Our strong balance sheet and cash flows continue to support both our capital return program and our investments in the business designed to create long term value."
Return of Capital Program
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 August 22, 2018. This dividend will be payable on August 31, 2018.
In February 2017, the Company announced a plan to return $3.4 billion to stockholders by the end of 2018 through a combination of $2.7 billion in stock repurchases and $0.7 billion in dividends. With the anticipated settlement of the accelerated share repurchase program during the third quarter of 2018, the Company will have completed its committed stock repurchases.
Conference Call
Cognizant will host a conference call on August 2, 2018 at 8:00 a.m. (Eastern) to discuss the Company's second quarter 2018 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 13681678 from two hours after the end of the call until 11:59 p.m. (Eastern) on Thursday, August 16, 2018. The replay will also be available at Cognizant's website www.cognizant.com for 60 days following the call.
_____________________________
(3) A 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, as well as the tax
effects of stock-based
compensation expense, 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 statements include, 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 factors discussed 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 three and six months ended June 30, 2018, the initial funding of Cognizant U.S. Foundation. Acquisition-related charges include, when applicable, 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. 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, when applicable. In addition to excluding stock-based compensation costs, acquisition-related charges, realignment charges, and the initial funding of Cognizant U.S. Foundation, our non-GAAP diluted EPS also excludes 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 six months ended June 30, 2017, the effect of recognition of an income tax benefit previously unrecognized in our consolidated financial statements. 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.
- tables to follow -
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2018(a) 2017(a) 2018(a) 2017(a)
------ ------ ------ ------
Revenues $4,006 $3,670 $7,918 $7,216
Operating expenses:
Cost of revenues (exclusive of depreciation and amortization expense 2,417 2,261 4,818 4,455
shown separately below)
Selling, general and administrative expenses 805 709 1,516 1,395
Depreciation and amortization expense 114 94 221 190
--- --- --- ---
Income from operations 670 606 1,363 1,176
--- --- ----- -----
Other income (expense), net:
Interest income 40 31 81 63
Interest expense (7) (6) (13) (12)
Foreign currency exchange gains (losses), net (80) 5 (111) 57
Other, net - (1) - -
--- --- --- ---
Total other income (expense), net (47) 29 (43) 108
--- --- --- ---
Income before provision for income taxes 623 635 1,320 1,284
Provision for income taxes (168) (165) (345) (257)
Income from equity method investments 1 - 1 -
Net income $456 $470 $976 $1,027
==== ==== ==== ======
Basic earnings per share $0.78 $0.80 $1.67 $1.72
===== ===== ===== =====
Diluted earnings per share $0.78 $0.80 $1.66 $1.71
===== ===== ===== =====
Weighted average number of common shares outstanding - Basic 585 589 586 597
Dilutive effect of shares issuable under stock-based compensation plans 1 2 1 2
--- --- --- ---
Weighted average number of common shares outstanding - Diluted 586 591 587 599
=== === === ===
Dividends declared per common share $0.20 $0.15 $0.40 $0.15
===== ===== ===== =====
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 June
30, 2018, adoption of the New
Revenue Standard had a positive
impact on revenue of $31
million, income from operations
of $38 million and diluted
earnings per share of $0.05 per
share. For the six months ended
June 30, 2018, adoption of the
New Revenue Standard had a
positive impact on revenue of
$52 million, income from
operations of $67 million and
diluted earnings per share of
$0.09 per share.
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(in millions, except par values)
June 30, December 31,
2018(a) 2017(a)
------ ------
Assets
Current assets:
Cash and cash equivalents $901 $1,925
Short-term investments 3,346 3,131
Trade accounts receivable, net 3,204 2,865
Unbilled accounts receivable - 357
Other current assets 852 833
--- ---
Total current assets 8,303 9,111
Property and equipment, net 1,345 1,324
Goodwill 3,036 2,704
Intangible assets, net 1,060 981
Deferred income tax assets, net 367 418
Long-term investments 80 235
Other noncurrent assets 615 448
--- ---
Total assets $14,806 $15,221
======= =======
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable $217 $210
Deferred revenue 308 383
Short-term debt 100 175
Accrued expenses and other current liabilities 1,912 2,071
----- -----
Total current liabilities 2,537 2,839
Deferred revenue, noncurrent 77 104
Deferred income tax liabilities, net 145 146
Long-term debt 649 698
Long-term income taxes payable 508 584
Other noncurrent liabilities 242 181
--- ---
Total liabilities 4,158 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 6 6
and outstanding at June 30, 2018 and December 31, 2017, respectively
Additional paid-in capital 55 49
Retained earnings 10,681 10,544
Accumulated other comprehensive income (loss) (94) 70
--- ---
Total stockholders' equity 10,648 10,669
------ ------
Total liabilities and stockholders' equity $14,806 $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 June 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 Six Months Ended Guidance
June 30, June 30,
2018(a) 2017(a) 2018(a) 2017(a) Q3 2018 Full Year 2018
------ ------ ------ ------ -------
GAAP income from operations $670 $606 $1,363 $1,176
Add: Stock-based compensation expense (b) 71 55 130 109
Add: Acquisition-related charges (c) 41 35 82 69
Add: Realignment charges (d) - 39 1 50
Add: Initial funding of Cognizant U.S. 100 - 100 -
Foundation (e)
Non-GAAP income from operations $882 $735 $1,676 $1,404
==== ==== ====== ======
GAAP operating margin 16.7% 16.5% 17.2% 16.3%
Effect of stock-based compensation expense 1.8 1.5 1.6 1.5 1.6% - 1.8%
Effect of acquisition-related charges 1.0 1.0 1.1 1.0 (c)
Effect of realignment charges - 1.0 - 0.7 0.1% - 0.2%
Effect of initial funding of Cognizant U.S. 2.5 - 1.3 - 0.6%
Foundation
Non-GAAP operating margin 22.0% 20.0% 21.2% 19.5% approximately 21.0%
==== ==== ==== ====
GAAP diluted earnings per share $0.78 $0.80 $1.66 $1.71
Effect of above operating adjustments, pre-tax 0.36 0.22 0.53 0.38 (b), (c), (d), (e) (b), (c), (d). (e)
Effect of non-operating foreign currency 0.14 (0.01) 0.19 (0.10) (f) (f)
exchange (gains) losses, pre-tax (f)
Tax effect of non-GAAP adjustments to pre-tax income (g) (0.09) (0.08) (0.13) (0.14) (b), (c), (d), (e) (b), (c), (d), (e)
Effect of recognition of income tax benefit - - - (0.09) - -
related to an uncertain tax position (h)
Non-GAAP diluted earnings per share $1.19 $0.93 $2.25 $1.76 at least $1.13 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 Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Cost of revenues $16 $13 $31 $28
Selling, general and administrative expenses 55 42 99 81
Our guidance anticipates pre-tax
stock-based compensation to be in
the range of $0.11 to $0.12 per
diluted share for the third
quarter of 2018 and $0.45 to $0.47
per diluted share for the full
year 2018. We cannot provide the
tax effect of stock-based
compensation on a forward-looking
basis without unreasonable effort
as it is subject to significant
fluctuations based on the timing
and number of stock options
exercised by employees, the price
of our stock at the time of such
exercises and the price of our
stock at the time of vesting of
other stock-based awards.
(c) Acquisition-related charges
include, when applicable,
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. 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.
The total costs related to the
realignment are reported in
"Selling, general and
administrative expenses" in our
consolidated statements of
operations. Commencing in Q3 2018
and during the remainder of 2018,
we intend to take additional
actions to further improve our
cost structure primarily by
optimizing our resource pyramid.
As a result of these actions, we
expect to incur $25 million to $35
million in severance costs, or
approximately $0.04 to $0.06 per
diluted share, on a pre-tax basis
during the remainder of 2018. The
tax impact of these charges is
expected to be $0.01 per diluted
share. The final amount and timing
of these charges is uncertain and
may change as the program
continues to develop.
(e) In the second quarter of 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 (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 Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Non-GAAP income tax benefit (expense) related to:
Stock-based compensation expense $19 $20 $38 $41
Acquisition-related charges 11 12 20 24
Realignment charges - 14 - 18
Foreign currency exchange gains (losses) (8) - (9) 5
Initial funding of Cognizant U.S. Foundation 28 - 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 three months ended March
31, 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 in the first quarter of
2017 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.
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 June 30, 2018(a)
% Change
--------
$ % of total Year over
Year
----
Revenues by Segment:
Financial Services $1,469 36.7% 4.5%
Healthcare 1,156 28.9% 10.1%
Products and Resources 840 21.0% 12.4%
Communications, Media and
Technology 541 13.5% 15.8%
Total Revenues $4,006 9.2%
======
Revenues by Geography:
North America $3,067 76.6% 7.6%
------
United Kingdom 309 7.7% 7.3%
Rest of Europe 381 9.5% 30.9%
---
Europe - Total 690 17.2% 19.2%
---
Rest of World 249 6.2% 3.8%
Total Revenues $4,006 9.2%
======
Six Months Ended June 30, 2018(a)
% Change
--------
$ % of total Year over
Year
----
Revenues by Segment:
Financial Services $2,930 37.0% 5.3%
Healthcare 2,277 28.8% 10.9%
Products and Resources 1,661 21.0% 11.9%
Communications, Media and
Technology 1,050 13.3% 17.1%
Total Revenues $7,918 9.7%
======
Revenues by Geography:
North America $6,042 76.3% 7.7%
------
United Kingdom 619 7.8% 10.1%
Rest of Europe 755 9.5% 31.1%
---
Europe - Total 1,374 17.4% 20.7%
-----
Rest of World 502 6.3% 7.7%
Total Revenues $7,918 9.7%
======
Employee Metrics: June 30, June 30,
2018 2017
--------- ---------
Number of employees 268,900 256,800
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 Six Months Ended
June 30, June 30,
2018 2017 2018 2017
---- ---- ---- ----
Cash flows from operating activities:
Net income $456 $470 $976 $1,027
Adjustments for non-cash income and expenses 322 157 525 278
Changes in assets and liabilities (138) (106) (473) (507)
Net cash provided by operating activities 640 521 1,028 798
--- --- ----- ---
Cash flows from investing activities:
Purchases of property and equipment (91) (60) (187) (126)
Net (purchases) of investments (16) (329) (146) (166)
Payments for business combinations, net of cash acquired (477) - (478) (6)
Net cash (used in) investing activities (584) (389) (811) (298)
---- ---- ---- ----
Cash flows from financing activities:
Repurchases of common stock (633) (30) (949) (1,544)
Net change in borrowings and capital lease obligations (25) (221) (139) 108
Dividends paid (118) (89) (236) (89)
Issuance of common stock under stock-based compensation plans 42 43 102 104
--- --- --- ---
Net cash (used in) financing activities (734) (297) (1,222) (1,421)
---- ---- ------ ------
Effect of exchange rate changes on cash and cash equivalents (20) 14 (19) 44
--- --- --- ---
(Decrease) in cash and cash equivalents (698) (151) (1,024) (877)
Cash and cash equivalents, beginning of period 1,599 1,308 1,925 2,034
----- ----- ----- -----
Cash and cash equivalents, end of period $901 $1,157 $901 $1,157
==== ====== ==== ======
SUPPLEMENTAL CASH FLOW INFORMATION
(in millions)
Three Months Ended
Stock Repurchases under June 30,
Board of Directors' 2018
authorized stock
repurchase program: June 30, 2017
--------- -------------
Number of shares
repurchased(a) 7.2 -
Remaining authorized
balance $800
Notes:
(a) In June 2018, we entered into an
accelerated share repurchase
agreement, or ASR, with a
financial institution. Under
the terms of the June 2018 ASR
and in exchange for up-front
payments of $600 million, the
financial institution initially
delivered 6.5 million shares, a
portion of the Company's total
expected shares to be
repurchased under the June 2018
ASR. The total number of shares
ultimately delivered, and
therefore the average price
paid per share, will be
determined at the end of the
purchase period, which is
scheduled to end during the
third quarter of 2018, based on
the volume-weighted average
price of the Company's common
stock during that period.
In March 2018, the Company
entered into an ASR to purchase
up to $300 million of the
Company's Class A common stock.
In May 2018, the purchase
period for the March ASR ended
and an additional 0.7 million
shares were delivered. In
total, 3.7 million shares were
delivered under the March ASR
at an average repurchase price
of $79.95.
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SOURCE Cognizant
