8-KMaterial AgreementsExhibits & Filings

COGNIZANT TECHNOLOGY SOLUTIONS CORP 8-K Report, Material Agreement (Mar 14, 2017)

Filed March 14, 2017For Securities:CTSH

Summary

Cognizant Technology Solutions Corp. (CTSH) announced on March 14, 2017, that it has entered into accelerated stock repurchase (ASR) agreements with three financial institutions: Barclays, Citibank, and UBS. These agreements involve a total repurchase of $1.5 billion of Cognizant's Class A common stock, an action that aligns with the company's previously announced plan to return $3.4 billion to shareholders over the next two years through a combination of share buybacks and dividends. The ASR agreements stipulate immediate payments totaling $1.5 billion to the banks, with an initial delivery of approximately 7.2 million shares expected on the same day as the filing. The final number of shares repurchased will be determined by the volume-weighted average stock price during the ASR term, subject to discounts and potential adjustments. This strategic move underscores Cognizant's commitment to enhancing shareholder value by reducing the outstanding share count.

Key Highlights

  • 1Cognizant entered into $1.5 billion in accelerated stock repurchase (ASR) agreements.
  • 2The ASR agreements are with Barclays Bank PLC, Citibank N.A., and UBS AG, London Branch.
  • 3This buyback program is part of a larger plan to return $3.4 billion to shareholders over two years (announced Feb 2017).
  • 4The company made a $1.5 billion payment on March 14, 2017, for the ASR program.
  • 5An initial delivery of approximately 7.2 million shares is expected from the ASR agreements.
  • 6The final number of shares repurchased will be determined by the volume-weighted average stock price during the ASR term.
  • 7Final settlement of the ASR transactions is expected by the third quarter of 2017.

Frequently Asked Questions

The primary purpose is to reduce the number of outstanding shares of Cognizant's common stock, thereby returning capital to shareholders and potentially increasing earnings per share. This is part of a broader shareholder return plan announced by the company.

The total value of the accelerated stock repurchases is $1.5 billion. The exact number of shares to be repurchased will be determined by the volume-weighted average stock price of Cognizant's common stock during the term of the agreements, less a discount and subject to potential adjustments.

The final settlement of the transactions under the ASR agreements is scheduled to occur during or prior to the third quarter of 2017. However, these transactions may be terminated early under certain specified circumstances.

No, this $1.5 billion repurchase is part of a larger plan announced in February 2017 to return a total of $3.4 billion to shareholders over the next two years. This plan includes both share repurchases and dividends.