8-KOther Events

COGNIZANT TECHNOLOGY SOLUTIONS CORP 8-K Report, Corporate Update (Dec 23, 2005)

Filed December 23, 2005For Securities:CTSH

Summary

Cognizant Technology Solutions Corporation (CTSH) has announced the successful repatriation of approximately $60 million in earnings from its foreign subsidiaries. This action was undertaken in accordance with the American Jobs Creation Act of 2004. As a direct result of this repatriation, the company anticipates recording a one-time income tax benefit of approximately $12 million in the fourth quarter of fiscal year 2005. This tax benefit is considered incremental to the company's previously issued earnings guidance, suggesting a positive impact on its financial results beyond initial expectations. Investors should note this event as it directly impacts the company's reported profitability for the period.

Key Highlights

  • 1Repatriation of approximately $60 million in foreign subsidiary earnings completed on December 22, 2005.
  • 2Action taken under the provisions of the American Jobs Creation Act of 2004.
  • 3Expected one-time income tax benefit of approximately $12 million to be recorded in Q4 fiscal 2005.
  • 4The tax benefit is incremental to previously provided earnings guidance.
  • 5This event positively impacts the company's net income for the fourth quarter of fiscal 2005.

Frequently Asked Questions

Repatriating foreign earnings allows Cognizant to bring cash generated overseas back to the U.S. for domestic use. In this case, it also triggered a significant one-time income tax benefit due to the American Jobs Creation Act of 2004, which favorably impacts the company's net income.

Cognizant expects to record a one-time income tax benefit of approximately $12 million in the fourth quarter of fiscal 2005. This benefit will increase the company's reported net income for that period.

No, the company explicitly states that the impact of this reduction in income tax expense is incremental to its previously stated earnings guidance. This means the actual earnings per share for Q4 2005 may be higher than previously forecast due to this event.

The American Jobs Creation Act of 2004 was a U.S. tax law that provided a temporary tax incentive for U.S. companies to repatriate their foreign earnings by allowing them to do so at a reduced tax rate.