CTSH.2015.6.30-10Q
Table of Contents

 
 
 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
 
FORM 10-Q
 
 
 
ý
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the quarterly period ended June 30, 2015
¨
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
 
For the transition period from                      to                     
Commission File Number 0-24429
 
 
 
 COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
(Exact Name of Registrant as Specified in Its Charter)
 
 
 
Delaware
 
13-3728359
(State or Other Jurisdiction of
Incorporation or Organization)
 
(I.R.S. Employer
Identification No.)
 
 
Glenpointe Centre West
500 Frank W. Burr Blvd.
Teaneck, New Jersey
 
07666
(Address of Principal Executive Offices)
 
(Zip Code)
Registrant’s telephone number, including area code (201) 801-0233
 
 
 
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ý    No:  ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ý    No:  ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
ý
Accelerated filer
¨
 
 
 
 
Non-accelerated filer
¨  (Do not check if a smaller reporting company)
Smaller reporting company
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes  ¨ No  ý
Indicate the number of shares outstanding of each of the issuer’s class of common stock, as of July 31, 2015:
Class
 
Number of Shares
Class A Common Stock, par value $.01 per share
 
609,529,268


 
 
 

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
TABLE OF CONTENTS
 
 
 
Page
PART I.
 
 
 
Item 1.
 
 
 
 
 
 
 
 
Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended June 30, 2015 and 2014 and for the Six Months Ended June 30, 2015 and 2014
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended June 30, 2015 and 2014 and for the Six Months Ended June 30, 2015 and 2014
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 6.
 
 


Table of Contents

PART I. FINANCIAL INFORMATION
 
Item 1.    Condensed Consolidated Financial Statements (Unaudited).
 
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(in millions, except par values)
 
 
June 30,  
 2015

December 31, 
 2014
Assets



Current assets:



Cash and cash equivalents
$
1,089.3


$
2,010.1

Short-term investments
2,477.2


1,764.6

Trade accounts receivable, net of allowances of $33.3 and $36.9, respectively
2,162.2


1,968.7

Unbilled accounts receivable
386.5


324.6

Deferred income tax assets, net
333.5


329.7

Other current assets
322.7


352.6

Total current assets
6,771.4


6,750.3

Property and equipment, net of accumulated depreciation of $957.8 and $852.1, respectively
1,277.3


1,247.2

Goodwill
2,405.3


2,413.6

Intangible assets, net
906.1


953.7

Deferred income tax assets, net
159.8


144.4

Other noncurrent assets
277.7


209.7

Total assets
$
11,797.6


$
11,718.9

Liabilities and Stockholders’ Equity



Current liabilities:



Accounts payable
$
169.0


$
145.7

Deferred revenue
288.8


224.1

Short-term debt
150.0


700.0

Accrued expenses and other current liabilities
1,348.7


1,522.3

Total current liabilities
1,956.5


2,592.1

Deferred revenue, noncurrent
50.3


81.0

Deferred income tax liabilities, net
233.6


251.7

Long-term debt
912.5


937.5

Other noncurrent liabilities
103.9


116.4

Total liabilities
3,256.8


3,978.7

Commitments and contingencies (See Note 8)

 

Stockholders’ Equity:
 
 
 
Preferred stock, $0.10 par value, 15.0 shares authorized, none issued

 

Class A common stock, $0.01 par value, 1,000.0 shares authorized, 609.5 and 609.4 shares issued and outstanding at June 30, 2015 and December 31, 2014, respectively
6.1

 
6.1

Additional paid-in capital
520.6

 
555.6

Retained earnings
8,104.6

 
7,301.6

Accumulated other comprehensive income (loss)
(90.5
)
 
(123.1
)
Total stockholders’ equity
8,540.8


7,740.2

Total liabilities and stockholders’ equity
$
11,797.6


$
11,718.9

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

1

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in millions, except per share data)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Revenues
$
3,085.1


$
2,517.1


$
5,996.5


$
4,939.4

Operating expenses:







Cost of revenues (exclusive of depreciation and amortization expense shown separately below)
1,844.8


1,499.5


3,572.0


2,931.9

Selling, general and administrative expenses
612.0


482.9


1,222.8


968.3

Depreciation and amortization expense
82.8


46.7


155.9


91.2

Income from operations
545.5


488.0


1,045.8


948.0

Other income (expense), net:







Interest income
17.6


14.1


35.6


27.6

Interest expense
(4.1
)



(9.1
)


Foreign currency exchange gains (losses), net
(10.4
)

(0.8
)

(12.6
)

(2.0
)
Other, net
0.2


0.5


(0.3
)

1.4

Total other income (expense), net
3.3


13.8


13.6


27.0

Income before provision for income taxes
548.8


501.8


1,059.4


975.0

Provision for income taxes
128.7


129.9


256.4


254.2

Net income
$
420.1


$
371.9


$
803.0


$
720.8

Basic earnings per share
$
0.69


$
0.61


$
1.32


$
1.19

Diluted earnings per share
$
0.68


$
0.61


$
1.31


$
1.18

Weighted average number of common shares outstanding - Basic
609.9


607.9


609.7


607.8

Dilutive effect of shares issuable under stock-based compensation plans
4.0

 
4.3

 
4.2

 
4.7

Weighted average number of common shares outstanding - Diluted
613.9


612.2


613.9


612.5

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

2

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in millions)
 
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Net income
$
420.1

 
$
371.9

 
$
803.0

 
$
720.8

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
23.2

 
(0.3
)
 
(17.6
)
 
1.2

Change in unrealized losses on cash flow hedges, net of taxes
6.9

 
55.5

 
49.1

 
162.5

Change in unrealized gains and losses on available-for-sale securities, net of taxes
(1.3
)
 
0.6

 
1.1

 
1.1

Other comprehensive income (loss)
28.8

 
55.8

 
32.6

 
164.8

Comprehensive income
$
448.9

 
$
427.7

 
$
835.6

 
$
885.6

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

3

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in millions)
 
 
For the Six Months Ended 
 June 30,
 
2015
 
2014
Cash flows from operating activities:
 
 
 
Net income
$
803.0

 
$
720.8

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
159.6

 
95.5

Provision for doubtful accounts
(1.4
)
 
6.2

Deferred income taxes
(36.9
)
 
2.4

Stock-based compensation expense
95.2

 
69.4

Excess tax benefits on stock-based compensation plans
(15.3
)
 
(12.0
)
Other
8.7

 
(3.3
)
Changes in assets and liabilities:
 
 
 
Trade accounts receivable
(185.7
)
 
(161.2
)
Other current assets
(20.6
)
 
(52.6
)
Other noncurrent assets
(50.3
)
 
19.4

Accounts payable
19.4

 
8.1

Other current and noncurrent liabilities
(130.3
)
 
(127.1
)
Net cash provided by operating activities
645.4

 
565.6

Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(133.6
)
 
(82.0
)
Purchases of investments
(1,565.8
)
 
(1,407.6
)
Proceeds from maturity or sale of investments
845.9

 
809.9

Business combinations, net of cash acquired

 
(11.5
)
Net cash (used in) investing activities
(853.5
)
 
(691.2
)
Cash flows from financing activities:
 
 
 
Issuance of common stock under stock-based compensation plans
68.5

 
49.8

Excess tax benefits on stock-based compensation plans
15.3

 
12.0

Repurchases of common stock
(214.0
)
 
(161.8
)
Repayment of term loan borrowings and capital lease obligations
(26.2
)
 

Net change in notes outstanding under revolving credit facility
(550.0
)
 

Net cash (used in) financing activities
(706.4
)
 
(100.0
)
Effect of exchange rate changes on cash and cash equivalents
(6.3
)
 
5.0

(Decrease) in cash and cash equivalents
(920.8
)
 
(220.6
)
Cash and cash equivalents, beginning of year
2,010.1

 
2,213.0

Cash and cash equivalents, end of period
$
1,089.3

 
$
1,992.4

The accompanying notes are an integral part of the unaudited condensed consolidated financial statements.

4

Table of Contents

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Note 1 — Interim Condensed Consolidated Financial Statements
The terms “Cognizant,” “we,” “our,” “us” and “the Company” refer to Cognizant Technology Solutions Corporation unless the context indicates otherwise. We have prepared the accompanying unaudited condensed consolidated financial statements included herein in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and Article 10 of Regulation S-X under the Securities Exchange Act of 1934, as amended. The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our audited consolidated financial statements (and notes thereto) included in our Annual Report on Form 10-K for the year ended December 31, 2014. In our opinion, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year.
During the six months ended June 30, 2015, we repurchased 2,800,000 shares of our Class A common stock for $177.9 million, inclusive of fees and expenses, under our existing stock repurchase program approved by our Board of Directors. As of June 30, 2015, the remaining available balance under the Board authorization was $636.0 million. Additional stock repurchases were made in connection with our stock-based compensation plans, whereby company shares were tendered by employees for payment of applicable statutory tax withholdings. During the six months ended June 30, 2015, such repurchases totaled 565,830 shares at an aggregate cost of $36.1 million.
New Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board, or FASB, issued a standard on revenue from contracts with customers. The new standard sets forth a single comprehensive model for recognizing and reporting revenue. The standard also requires additional financial statement disclosures that will enable users to understand the nature, amount, timing and uncertainty of revenue and cash flows relating to customer contracts. In July 2015, the FASB deferred the effective date of the standard by one year to periods beginning on or after January 1, 2018. Early adoption is permitted but not before the original effective date of periods beginning on or after January 1, 2017. The standard allows for two methods of adoption: the full retrospective adoption, which requires the standard to be applied to each prior period presented, or the modified retrospective adoption, which requires the cumulative effect of adoption to be recognized as an adjustment to opening retained earnings in the period of adoption. We are currently evaluating the effect the new standard will have on our consolidated financial statements and related disclosures.

In April 2015, the FASB issued a standard related to the presentation of debt issuance costs. The standard requires debt issuance costs related to a recognized debt liability to be presented in the balance sheet as a direct deduction from the carrying value of that debt liability. The recognition and measurement guidance for debt issuance costs are not affected by this standard. The amendment is effective on a retrospective basis for fiscal years, and interim periods within those years, beginning on or after January 1, 2016. The adoption of this standard will affect financial statement presentation only and is expected to have no effect on our financial condition or results of operations.

In April 2015, the FASB issued a standard providing guidance to customers in evaluating whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the standard requires the customer to account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer is required to account for the arrangement as a service contract. The amendments are effective for fiscal years, and interim periods within those years, beginning on or after January 1, 2016. The Company is currently in the process of evaluating the impact of adoption of the standard on our consolidated financial statements.








5

Table of Contents

Note 2 — Short-term Investments

Our short-term investments were as follows:
 
June 30, 2015
 
December 31, 2014
 
(in millions)
Available-for-sale investment securities:
 
 
 
U.S. Treasury and agency debt securities
$
524.7

 
$
544.7

Corporate and other debt securities
374.0

 
358.6

Certificates of deposit and commercial paper
549.7

 
4.6

Asset-backed securities
231.2

 
220.1

Municipal debt securities
114.3

 
112.8

Mutual funds
22.4

 
21.9

Total available-for-sale investment securities
1,816.3

 
1,262.7

Time deposits
660.9

 
501.9

Total short-term investments
$
2,477.2

 
$
1,764.6

Our available-for-sale investment securities consist of U.S. dollar denominated investments primarily in U.S. Treasury notes, U.S. government agency debt securities, municipal debt securities, non-U.S. government debt securities, U.S. and international corporate bonds, certificates of deposit, commercial paper, debt securities issued by supranational institutions, mutual funds invested in fixed income securities, and asset-backed securities, including Government National Mortgage Association (GNMA) mortgage backed securities and securities backed by auto loans, credit card receivables, and other receivables. Our investment guidelines are to purchase securities which are investment grade at the time of acquisition. We monitor the credit ratings of the securities in our portfolio on an ongoing basis.
Available-for-Sale Investment Securities
The amortized cost, gross unrealized gains and losses and fair value of available-for-sale investment securities at June 30, 2015 were as follows:
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
(in millions)
U.S. Treasury and agency debt securities
$
523.6

 
$
1.3

 
$
(0.2
)
 
$
524.7

Corporate and other debt securities
373.9

 
0.5

 
(0.4
)
 
374.0

Certificates of deposit and commercial paper
549.4

 
0.3

 

 
549.7

Asset-backed securities
231.2

 
0.2

 
(0.2
)
 
231.2

Municipal debt securities
114.1

 
0.3

 
(0.1
)
 
114.3

Mutual funds
24.6

 
0.2

 
(2.4
)
 
22.4

Total available-for-sale investment securities
$
1,816.8

 
$
2.8

 
$
(3.3
)
 
$
1,816.3

The amortized cost, gross unrealized gains and losses and fair value of available-for-sale investment securities at December 31, 2014 were as follows:
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
 
(in millions)
U.S. Treasury and agency debt securities
$
544.7

 
$
0.4

 
$
(0.4
)
 
$
544.7

Corporate and other debt securities
359.0

 
0.3

 
(0.7
)
 
358.6

Certificates of deposit and commercial paper
4.6

 

 

 
4.6

Asset-backed securities
220.4

 
0.1

 
(0.4
)
 
220.1

Municipal debt securities
112.5

 
0.4

 
(0.1
)
 
112.8

Mutual funds
23.9

 
0.3

 
(2.3
)
 
21.9

Total available-for-sale investment securities
$
1,265.1

 
$
1.5

 
$
(3.9
)
 
$
1,262.7


6

Table of Contents

The fair value and related unrealized losses of available-for-sale investment securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer were as follows as of June 30, 2015:
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
(in millions)
U.S. Treasury and agency debt securities
$
155.2

 
$
(0.2
)
 
$

 
$

 
$
155.2

 
$
(0.2
)
Corporate and other debt securities
175.6

 
(0.4
)
 

 

 
175.6

 
(0.4
)
Certificates of deposit and commercial paper
35.0

 

 

 

 
35.0

 

Asset-backed securities
65.4

 
(0.1
)
 
5.5

 
(0.1
)
 
70.9

 
(0.2
)
Municipal debt securities
43.0

 
(0.1
)
 

 

 
43.0

 
(0.1
)
Mutual funds

 

 
21.1

 
(2.4
)
 
21.1

 
(2.4
)
Total
$
474.2

 
$
(0.8
)
 
$
26.6

 
$
(2.5
)
 
$
500.8

 
$
(3.3
)

The fair value and related unrealized losses of available-for-sale investment securities in a continuous unrealized loss position for less than 12 months and for 12 months or longer were as follows as of December 31, 2014:
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
(in millions)
U.S. Treasury and agency debt securities
$
256.9

 
$
(0.4
)
 
$

 
$

 
$
256.9

 
$
(0.4
)
Corporate and other debt securities
229.7

 
(0.7
)
 

 

 
229.7

 
(0.7
)
Certificates of deposit and commercial paper
3.7

 

 

 

 
3.7

 

Asset-backed securities
151.9

 
(0.3
)
 
2.8

 
(0.1
)
 
154.7

 
(0.4
)
Municipal debt securities
28.0

 
(0.1
)
 

 

 
28.0

 
(0.1
)
Mutual funds

 

 
20.7

 
(2.3
)
 
20.7

 
(2.3
)
Total
$
670.2

 
$
(1.5
)
 
$
23.5

 
$
(2.4
)
 
$
693.7

 
$
(3.9
)
The unrealized losses for the above securities as of June 30, 2015 and December 31, 2014 are primarily attributable to changes in interest rates. As of June 30, 2015, we do not consider any of the investments to be other-than-temporarily impaired. The gross unrealized gains and losses in the above tables were recorded, net of tax, in accumulated other comprehensive income (loss).
The contractual maturities of our fixed income available-for-sale investment securities as of June 30, 2015 are set forth in the following table:
 
Amortized
Cost
 
Fair
Value
 
(in millions)
Due within one year
$
583.1

 
$
583.5

Due after one year up to two years
499.5

 
500.4

Due after two years up to three years
471.1

 
471.5

Due after three years up to four years
7.3

 
7.3

Asset-backed securities
231.2

 
231.2

Fixed income available-for-sale investment securities
$
1,792.2

 
$
1,793.9

Asset-backed securities were excluded from the maturity categories because the actual maturities may differ from the contractual maturities since the underlying receivables may be prepaid without penalties. Further, actual maturities of debt securities may differ from those presented above since certain obligations provide the issuer the right to call or prepay the obligation prior to scheduled maturity without penalty.

7

Table of Contents

Proceeds from sales of available-for-sale investment securities and the gross gains and losses that have been included in earnings as a result of those sales were as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Proceeds from sales of available-for-sale investment securities
$
246.3

 
$
178.8

 
$
428.1

 
$
357.8

 
 
 
 
 
 
 
 
Gross gains
$
0.5

 
$
0.4

 
$
0.9

 
$
0.8

Gross losses

 
(0.1
)
 
(0.1
)
 
(0.1
)
Net realized gains on sales of available-for-sale investment securities
$
0.5

 
$
0.3

 
$
0.8

 
$
0.7


Note 3 — Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities were as follows:
 
June 30, 2015
 
December 31, 2014
 
(in millions)
Compensation and benefits
$
782.9

 
$
906.8

Income taxes
33.2

 
23.8

Professional fees
75.4

 
82.7

Travel and entertainment
34.9

 
35.0

Customer volume incentives
200.4

 
192.1

Derivative financial instruments
45.2

 
97.3

Other
176.7

 
184.6

Total accrued expenses and other current liabilities
$
1,348.7

 
$
1,522.3


Note 4 — Debt
On November 20, 2014, we entered into a credit agreement with a commercial bank syndicate providing for a $1,000.0 million unsecured term loan and a $750.0 million unsecured revolving credit facility. The term loan was used to pay a portion of the cash consideration in connection with the 2014 acquisition of TZ US Parent, Inc., or TriZetto. The revolving credit facility is available for general corporate purposes. The term loan and the revolving credit facility both mature on November 20, 2019. As of June 30, 2015 and December 31, 2014, we had notes outstanding under the revolving credit facility of $100.0 million and $650.0 million, respectively. All notes drawn to date under the revolving credit facility have been less than 90 days in duration. We are required under the credit agreement to make scheduled quarterly principal payments on the term loan.
Short-term Debt
The following summarizes our short-term debt balances as of:
 
 
June 30, 2015
 
December 31, 2014
 
 
(in millions)
Notes outstanding under revolving credit facility
 
$
100.0

 
$
650.0

Term loan - current maturities
 
50.0

 
50.0

Total short-term debt
 
$
150.0

 
$
700.0


8

Table of Contents

Long-term Debt
The following summarizes our long-term debt balances as of:
 
 
June 30, 2015
 
December 31, 2014
 
 
(in millions)
Term loan, due 2019
 
$
962.5

 
$
987.5

Less: current maturities
 
(50.0
)
 
(50.0
)
Long-term debt, net of current maturities
 
$
912.5

 
$
937.5


Note 5 — Income Taxes
Our Indian subsidiaries, collectively referred to as Cognizant India, are primarily export-oriented and are eligible for certain income tax holiday benefits granted by the government of India for export activities conducted within Special Economic Zones, or SEZs, for periods of up to 15 years. Our Indian profits ineligible for SEZ benefits are subject to corporate income tax at the rate of 34.6%. In addition, all our Indian profits, including those generated within SEZs, are subject to the Minimum Alternative Tax, or MAT, at the rate of 21.3%. Any MAT paid is creditable against future Indian corporate income tax, subject to limitations.
Our effective income tax rates were as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
Effective income tax rate
23.5
%
 
25.9
%
 
24.2
%
 
26.1
%
For the 2015 and 2014 periods, the principal difference between our effective income tax rates and the U.S. federal statutory rate is the effect of the Indian tax holiday and earnings taxed in countries that have lower rates than the United States. In 2015, our effective income tax rate decreased primarily due to discrete tax benefits recorded in 2015, including those related to the settlement of an uncertain tax position in the second quarter of 2015.

Note 6 — Fair Value Measurements
We measure our cash equivalents, investments and foreign exchange forward contracts at fair value. The authoritative guidance defines fair value as the exit price, or the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants as of the measurement date. The authoritative guidance also establishes a fair value hierarchy that is intended to increase consistency and comparability in fair value measurements and related disclosures. The fair value hierarchy is based on inputs to valuation techniques that are used to measure fair value that are either observable or unobservable. Observable inputs reflect assumptions market participants would use in pricing an asset or liability based on market data obtained from independent sources while unobservable inputs reflect a reporting entity’s pricing based upon their own market assumptions.
The fair value hierarchy consists of the following three levels:
Level 1 – Inputs are quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs are quoted prices for similar assets or liabilities in an active market, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable and market-corroborated inputs which are derived principally from or corroborated by observable market data.
Level 3 – Inputs are derived from valuation techniques in which one or more significant inputs or value drivers are unobservable.

9

Table of Contents

The following table summarizes our financial assets and (liabilities) measured at fair value on a recurring basis as of June 30, 2015:
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(in millions)
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
154.8

 
$

 
$

 
$
154.8

Commercial paper

 
6.1

 

 
6.1

Total cash equivalents
154.8

 
6.1

 

 
160.9

Short-term investments:
 
 
 
 
 
 
 
Time deposits

 
660.9

 

 
660.9

Available-for-sale investment securities:
 
 
 
 
 
 
 
U.S. Treasury and agency debt securities
419.7

 
105.0

 

 
524.7

Corporate and other debt securities

 
374.0

 

 
374.0

Certificates of deposit and commercial paper

 
549.7

 

 
549.7

Asset-backed securities

 
231.2

 

 
231.2

Municipal debt securities

 
114.3

 

 
114.3

Mutual funds

 
22.4

 

 
22.4

Total available-for-sale investment securities
419.7

 
1,396.6

 

 
1,816.3

Total short-term investments
419.7

 
2,057.5

 

 
2,477.2

Derivative financial instruments - foreign exchange forward contracts:
 
 
 
 
 
 
 
Other current assets

 
11.4

 

 
11.4

Accrued expenses and other current liabilities

 
(45.2
)
 

 
(45.2
)
Other noncurrent assets

 
3.5

 

 
3.5

Other noncurrent liabilities

 
(16.5
)
 

 
(16.5
)
Total
$
574.5

 
$
2,016.8

 
$

 
$
2,591.3


10

Table of Contents

The following table summarizes our financial assets and (liabilities) measured at fair value on a recurring basis as of December 31, 2014:
 
Level 1
 
Level 2
 
Level 3
 
Total
 
(in millions)
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
176.5

 
$

 
$

 
$
176.5

Commercial paper

 
7.4

 

 
7.4

Total cash equivalents
176.5

 
7.4

 

 
183.9

Short-term investments:
 
 
 
 
 
 
 
Time deposits

 
501.9

 

 
501.9

Available-for-sale investment securities:
 
 
 
 
 
 
 
U.S. Treasury and agency debt securities
426.8

 
117.9

 

 
544.7

Corporate and other debt securities

 
358.6

 

 
358.6

Certificates of deposit and commercial paper

 
4.6

 

 
4.6

Asset-backed securities

 
220.1

 

 
220.1

Municipal debt securities

 
112.8

 

 
112.8

Mutual funds

 
21.9

 

 
21.9

Total available-for-sale investment securities
426.8

 
835.9

 

 
1,262.7

Total short-term investments
426.8

 
1,337.8

 

 
1,764.6

Derivative financial instruments - foreign exchange forward contracts:
 
 
 
 
 
 
 
Other current assets

 
2.7

 

 
2.7

Accrued expenses and other current liabilities

 
(97.3
)
 

 
(97.3
)
Other noncurrent assets

 
3.9

 

 
3.9

Other noncurrent liabilities

 
(10.0
)
 

 
(10.0
)
Total
$
603.3

 
$
1,244.5

 
$

 
$
1,847.8


We measure the fair value of money market funds and U.S. Treasury securities based on quoted prices in active markets for identical assets and therefore classify these assets as Level 1. The fair value of commercial paper, certificates of deposit, U.S. government agency securities, municipal debt securities, U.S. and international corporate bonds and foreign government debt securities is measured based on relevant trade data, dealer quotes, or model-driven valuations using significant inputs derived from or corroborated by observable market data, such as yield curves and credit spreads. We measure the fair value of our asset-backed securities using model-driven valuations based on significant inputs derived from or corroborated by observable market data such as dealer quotes, available trade information, spread data, current market assumptions on prepayment speeds and defaults and historical data on deal collateral performance. The value of the mutual funds invested in fixed income securities is based on the net asset value, or NAV, of the fund, with appropriate consideration of the liquidity and any restrictions on disposition of our investment in the fund. The carrying value of the time deposits approximated fair value as of June 30, 2015 and December 31, 2014.
We estimate the fair value of each foreign exchange forward contract by using a present value of expected cash flows model. This model calculates the difference between the current market forward price and the contracted forward price for each foreign exchange contract and applies the difference in the rates to each outstanding contract. The market forward rates include a discount and credit risk factor. The amounts are aggregated by type of contract and maturity.
During the six months ended June 30, 2015 and the year ended December 31, 2014, there were no transfers among Level 1, Level 2, or Level 3 financial assets and liabilities.


11

Table of Contents

Note 7 — Derivative Financial Instruments
In the normal course of business, we use foreign exchange forward contracts to manage foreign currency exchange rate risk. The estimated fair value of the foreign exchange forward contracts considers the following items: discount rate, timing and amount of cash flow and counterparty credit risk. Derivatives may give rise to credit risks from the possible non-performance by counterparties. Credit risk is generally limited to the fair value of those contracts that are favorable to us. We have limited our credit risk by entering into derivative transactions only with highly-rated financial institutions, limiting the amount of credit exposure with any one financial institution and conducting ongoing evaluation of the creditworthiness of the financial institutions with which we do business. In addition, all the assets and liabilities related to our foreign exchange forward contracts set forth in the below table are subject to International Swaps and Derivatives Association, or ISDA, master netting arrangements or other similar agreements with each individual counterparty. These master netting arrangements generally provide for net settlement of all outstanding contracts with the counterparty in the case of an event of default or a termination event. We have presented all the assets and liabilities related to our foreign exchange forward contracts on a gross basis, with no offsets, in our accompanying unaudited condensed consolidated statements of financial position. There is no financial collateral (including cash collateral) posted or received by us related to our foreign exchange forward contracts.
The following table provides information on the location and fair values of derivative financial instruments included in our unaudited condensed consolidated statement of financial position as of:
 
 
 
 
June 30, 2015
 
December 31, 2014
Designation of Derivatives
 
Location on Statement of
Financial Position
 
Assets
 
Liabilities
 
Assets  
 
Liabilities
 
 
 
 
(in millions)
Cash Flow Hedges – Designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
Other current assets
 
$
10.7

 
$

 
$
0.7

 
$

 
 
Other noncurrent assets
 
3.5

 

 
3.9

 

 
 
Accrued expenses and other current liabilities
 

 
43.7

 

 
97.2

 
 
Other noncurrent liabilities
 

 
16.5

 

 
10.0

 
 
Total
 
14.2

 
60.2

 
4.6

 
107.2

Other Derivatives – Not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
Other current assets
 
0.7

 

 
2.0

 

 
 
Accrued expenses and other current liabilities
 

 
1.5

 

 
0.1

 
 
Total
 
0.7

 
1.5

 
2.0

 
0.1

Total
 
 
 
$
14.9

 
$
61.7

 
$
6.6

 
$
107.3


12

Table of Contents


Cash Flow Hedges
We have entered into a series of foreign exchange forward contracts that are designated as cash flow hedges of Indian rupee denominated payments in India. These contracts are intended to partially offset the impact of movement of exchange rates on future operating costs and are scheduled to mature each month during 2015, 2016, 2017, and 2018. Under these contracts, we purchase Indian rupees and sell U.S. dollars. The changes in fair value of these contracts are initially reported in the caption “Accumulated other comprehensive income (loss)” in our consolidated statements of financial position and are subsequently reclassified to earnings in the same period the hedge contract matures. As of June 30, 2015, we estimate that $27.1 million, net of tax, of the net losses related to derivatives designated as cash flow hedges recorded in accumulated other comprehensive income (loss) is expected to be reclassified into earnings within the next 12 months.
The notional value of our outstanding contracts by year of maturity and the net unrealized (loss) included in accumulated other comprehensive income (loss) for such contracts were as follows as of:
 
June 30, 2015
 
December 31, 2014
 
(in millions)
2015
$
660.0

 
$
1,320.0

2016
1,020.0

 
720.0

2017
795.0

 
420.0

2018
255.0

 

Total notional value of contracts outstanding
$
2,730.0

 
$
2,460.0

Net unrealized (loss) included in accumulated other comprehensive income (loss), net of taxes
$
(37.6
)
 
$
(86.7
)
Upon settlement or maturity of the cash flow hedge contracts, we record the related gain or loss, based on our designation at the commencement of the contract, with the hedged Indian rupee denominated expense reported within cost of revenues and selling, general and administrative expenses. Hedge ineffectiveness was immaterial for all periods presented.
The following table provides information on the location and amounts of pre-tax (losses) on our cash flow hedges for the three months ended June 30:
 
(Increase) Decrease in
Derivative
Losses Recognized
in Accumulated Other
Comprehensive Income (Loss)
(effective portion)
 
Location of Net Derivative
(Losses) Reclassified
from Accumulated Other
Comprehensive Income (Loss)
into Income
(effective portion)
 
Net (Loss) Reclassified
from Accumulated Other
Comprehensive Income (Loss)
into Income
(effective portion)
 
2015
 
2014
 
 
 
2015
 
2014
 
(in millions)
Cash Flow Hedges – Designated as hedging instruments
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
$
(9.0
)
 
$
34.7

 
Cost of revenues
 
$
(14.1
)
 
$
(25.6
)
 
 
 
 
 
Selling, general and administrative expenses
 
(3.1
)
 
(5.4
)
 
 
 
 
 
Total
 
$
(17.2
)
 
$
(31.0
)


13

Table of Contents

The following table provides information on the location and amounts of pre-tax (losses) on our cash flow hedges for the six months ended June 30:
 
(Increase) Decrease in
Derivative
Losses Recognized
in Accumulated Other
Comprehensive Income (Loss)
(effective portion)
 
Location of Net Derivative
(Losses) Reclassified
from Accumulated Other
Comprehensive Income (Loss)
into Income
(effective portion)
 
Net (Loss) Reclassified
from Accumulated Other
Comprehensive Income (Loss)
into Income
(effective portion)
 
2015
 
2014
 
 
 
2015
 
2014
 
(in millions)
Cash Flow Hedges – Designated as hedging instruments
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
$
25.7

 
$
121.0

 
Cost of revenues
 
$
(25.3
)
 
$
(59.1
)
 
 
 
 
 
Selling, general and administrative expenses
 
(5.6
)
 
(12.2
)
 
 
 
 
 
Total
 
$
(30.9
)
 
$
(71.3
)
The activity related to the change in net unrealized (losses) on our cash flow hedges included in accumulated other comprehensive income (loss) is presented in Note 9.
Other Derivatives
We use foreign exchange forward contracts, which have not been designated as hedges, to hedge balance sheet exposure to certain monetary assets and liabilities denominated in currencies other than the functional currency of our foreign subsidiaries. Contracts outstanding as of June 30, 2015 are scheduled to mature in 2015 and 2016. Realized gains or losses and changes in the estimated fair value of these derivative financial instruments are recorded in the caption "Foreign currency exchange gains (losses), net" in our consolidated statements of operations.
Additional information related to our outstanding contracts is as follows:
 
June 30, 2015
 
December 31, 2014
 
Notional
 
Market Value

 
Notional
 
Market Value

 
(in millions)
Contracts to purchase U.S. dollars and sell:
 
 
 
 
 
 
 
Indian rupees
$
152.9

 
$
(1.4
)
 
$
160.0

 
$
1.8

Euros
23.5

 
0.4

 
24.4

 
0.2

British pounds

 

 
17.9

 

Australian dollars
9.7

 
$
0.1

 
9.6

 
(0.1
)
Canadian dollars
5.9

 
0.1

 
3.7

 

Total
$
192.0

 
$
(0.8
)
 
$
215.6

 
$
1.9

The following table provides information on the location and amounts of realized and unrealized pre-tax gains and losses on our other derivative financial instruments for the three and six months ended June 30, 2015 and 2014:
 
Location of Net Gains (Losses) on
Derivative Instruments
 
Amount of Net Gains (Losses) on Derivative Instruments
 
 
 
Three Months Ended
June 30,
 
Six Months Ended
June 30,
 
 
 
2015
 
2014
 
2015
 
2014
 
 
 
(in millions)
Other Derivatives – Not designated as hedging instruments
Foreign currency exchange gains (losses), net
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
 
$
0.1

 
$
(4.3
)
 
$
(1.7
)
 
$
(12.6
)
The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.


14

Table of Contents

Note 8 — Commitments and Contingencies
We are involved in various claims and legal actions arising in the ordinary course of business. We accrue a liability when a loss is considered probable and the amount can be reasonably estimated. In the opinion of management, the outcome of any existing claims and legal or regulatory proceedings, if decided adversely, is not expected to have a material adverse effect on our business, financial condition, results of operations and cash flows. Additionally, many of our engagements involve projects that are critical to the operations of our customers’ business and provide benefits that are difficult to quantify. Any failure in a customer’s systems or our failure to meet our contractual obligations to our clients, including any breach involving a customer’s confidential information or sensitive data, or our obligations under applicable laws or regulations could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we attempt to contractually limit our liability for damages arising from negligent acts, errors, mistakes, or omissions in rendering our services, there can be no assurance that the limitations of liability set forth in our contracts will be enforceable in all instances or will otherwise protect us from liability for damages. Although we have general liability insurance coverage, including coverage for errors or omissions, there can be no assurance that such coverage will cover all types of claims, continue to be available on reasonable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not disclaim coverage as to any future claim. The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, results of operations, financial condition and cash flows.
In the normal course of business and in conjunction with certain client engagements, we have entered into contractual arrangements through which we may be obligated to indemnify clients or other parties with whom we conduct business with respect to certain matters. These arrangements can include provisions whereby we agree to hold the indemnified party and certain of their affiliated entities harmless with respect to third-party claims related to such matters as our breach of certain representations or covenants, or out of our intellectual property infringement, our gross negligence or willful misconduct or certain other claims made against certain parties. Payments by us under any of these arrangements are generally conditioned on the client making a claim and providing us with full control over the defense and settlement of such claim. It is not possible to determine the maximum potential amount under these indemnification agreements due to the unique facts and circumstances involved in each particular agreement. Historically, we have not made payments under these indemnification agreements and therefore they have not had any impact on our operating results, financial position, or cash flows. However, if events arise requiring us to make payment for indemnification claims under our indemnification obligations in contracts we have entered, such payments could have material impact on our business, results of operations, financial condition and cash flows.


15

Table of Contents

Note 9 — Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) by component were as follows for the three and six months ended June 30, 2015:
 
Three Months
 
Six Months
 
Before Tax
Amount
 
Tax
Effect
 
Net of Tax
Amount
 
Before Tax
Amount
 
Tax
Effect
 
Net of Tax
Amount
 
(in millions)
Foreign currency translation adjustments:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(75.6
)
 
$

 
$
(75.6
)
 
$
(34.8
)
 
$

 
$
(34.8
)
Change in foreign currency translation adjustments
23.2

 

 
23.2

 
(17.6
)
 

 
(17.6
)
Ending balance
$
(52.4
)
 
$

 
$
(52.4
)
 
$
(52.4
)
 
$

 
$
(52.4
)
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) on available-for-sale investment securities:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
1.5

 
$
(0.7
)
 
$
0.8

 
$
(2.4
)
 
$
0.8

 
$
(1.6
)
Net unrealized (losses) gains arising during the period
(1.6
)
 
0.5

 
(1.1
)
 
2.6

 
(1.2
)
 
1.4

Reclassification of net (gains) to Other, net
(0.4
)
 
0.2

 
(0.2
)
 
(0.7
)
 
0.4

 
(0.3
)
Net change
(2.0
)
 
0.7

 
(1.3
)
 
1.9

 
(0.8
)
 
1.1

Ending balance
$
(0.5
)
 
$

 
$
(0.5
)
 
$
(0.5
)
 
$

 
$
(0.5
)
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) on cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(54.2
)
 
$
9.7

 
$
(44.5
)
 
$
(102.6
)
 
$
15.9

 
$
(86.7
)
Net unrealized (losses) gains arising during the period
(9.0
)
 
1.8

 
(7.2
)
 
25.7

 
(1.9
)
 
23.8

Reclassifications of losses to:
 
 
 
 
 
 
 
 
 
 
 
Cost of revenues
14.1

 
(2.6
)
 
11.5

 
25.3

 
(4.6
)
 
20.7

Selling, general and administrative expenses
3.1

 
(0.5
)
 
2.6

 
5.6

 
(1.0
)
 
4.6

Net change
8.2

 
(1.3
)
 
6.9

 
56.6

 
(7.5
)
 
49.1

Ending balance
$
(46.0
)
 
$
8.4

 
$
(37.6
)
 
$
(46.0
)
 
$
8.4

 
$
(37.6
)
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(128.3
)
 
$
9.0

 
$
(119.3
)
 
$
(139.8
)
 
$
16.7

 
$
(123.1
)
Other comprehensive income (loss)
29.4

 
(0.6
)
 
28.8

 
40.9

 
(8.3
)
 
32.6

Ending balance
$
(98.9
)
 
$
8.4

 
$
(90.5
)
 
$
(98.9
)
 
$
8.4

 
$
(90.5
)




16

Table of Contents

Changes in accumulated other comprehensive income (loss) by component were as follows for the three and six months ended June 30, 2014:
 
Three Months
 
Six Months
 
Before Tax
Amount
 
Tax
Effect
 
Net of Tax
Amount
 
Before Tax
Amount
 
Tax
Effect
 
Net of Tax
Amount
 
(in millions)
Foreign currency translation adjustments:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
25.5

 
$

 
$
25.5

 
$
24.0

 
$

 
$
24.0

Change in foreign currency translation adjustments
(0.3
)
 

 
(0.3
)
 
1.2

 

 
1.2

Ending balance
$
25.2

 
$

 
$
25.2

 
$
25.2

 
$

 
$
25.2

 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) on available-for-sale investment securities:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
0.3

 
$
(0.1
)
 
$
0.2

 
$
(0.4
)
 
$
0.1

 
$
(0.3
)
Net unrealized gains arising during the period
1.3

 
(0.5
)
 
0.8

 
2.4

 
(0.9
)
 
1.5

Reclassification of net (gains) to Other, net
(0.3
)
 
0.1

 
(0.2
)
 
(0.7
)
 
0.3

 
(0.4
)
Net change
1.0

 
(0.4
)
 
0.6

 
1.7

 
(0.6
)
 
1.1

Ending balance
$
1.3

 
$
(0.5
)
 
$
0.8

 
$
1.3

 
$
(0.5
)
 
$
0.8

 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) on cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(228.3
)
 
$
35.3

 
$
(193.0
)
 
$
(354.9
)
 
$
54.9

 
$
(300.0
)
Unrealized gains arising during the period
34.7

 
(5.4
)
 
29.3

 
121.0

 
(18.8
)
 
102.2

Reclassifications of losses to:
 
 
 
 
 
 
 
 
 
 
 
Cost of revenues
25.6

 
(4.0
)
 
21.6

 
59.1

 
(9.2
)
 
49.9

Selling, general and administrative expenses
5.4

 
(0.8
)
 
4.6

 
12.2

 
(1.8
)
 
10.4

Net change
65.7

 
(10.2
)
 
55.5

 
192.3

 
(29.8
)
 
162.5

Ending balance
$
(162.6
)
 
$
25.1

 
$
(137.5
)
 
$
(162.6
)
 
$
25.1

 
$
(137.5
)
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(202.5
)
 
$
35.2

 
$
(167.3
)
 
$
(331.3
)
 
$
55.0

 
$
(276.3
)
Other comprehensive income (loss)
66.4

 
(10.6
)
 
55.8

 
195.2

 
(30.4
)
 
164.8

Ending balance
$
(136.1
)
 
$
24.6

 
$
(111.5
)
 
$
(136.1
)
 
$
24.6

 
$
(111.5
)

Note 10 — Segment Information
Our reportable segments are:
Financial Services, which includes customers providing banking/transaction processing, capital markets and insurance services;
Healthcare, which includes healthcare providers and payers as well as life sciences customers, including pharmaceutical, biotech and medical device companies;
Manufacturing/Retail/Logistics, which includes consumer goods, manufacturers, retailers, travel and other hospitality customers, as well as customers providing logistics services; and
Other, which is an aggregation of industry segments each of which, individually, represents less than 10% of consolidated revenues and segment operating profit. The Other reportable segment includes our information, media and entertainment services, communications and high technology operating segments. Our sales managers, account executives, account managers and project teams are aligned in accordance with the specific industries they serve.
Our chief operating decision maker evaluates the company’s performance and allocates resources based on segment revenues and operating profit. Segment operating profit is defined as income from operations before unallocated costs. Generally, operating expenses for each operating segment have similar characteristics and are subject to the same factors, pressures and challenges. However, the economic environment and its effects on industries served by our operating segments may affect revenue and operating expenses to differing degrees. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as a per seat charge for use of the development and delivery centers.

17

Table of Contents

Certain selling, general and administrative expenses, excess or shortfall of incentive compensation for delivery personnel as compared to target, stock-based compensation expense, a portion of depreciation and amortization and the impact of the settlements of our cash flow hedges are not allocated to individual segments in internal management reports used by the chief operating decision maker. Accordingly, such expenses are excluded from segment operating profit and are separately disclosed as “unallocated costs” and adjusted only against our total income from operations. Additionally, management has determined that it is not practical to allocate identifiable assets by segment, since such assets are used interchangeably among the segments.
Revenues from external customers and segment operating profit, before unallocated expenses, for the Financial Services, Healthcare, Manufacturing/Retail/Logistics, and Other reportable segments were as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Revenues:
 
 
 
 
 
 
 
Financial Services
$
1,250.1

 
$
1,058.5

 
$
2,411.2

 
$
2,082.2

Healthcare
897.3

 
645.5

 
1,776.4

 
1,261.4

Manufacturing/Retail/Logistics
578.3

 
514.3

 
1,127.2

 
1,026.2

Other
359.4

 
298.8

 
681.7

 
569.6

Total revenue
$
3,085.1

 
$
2,517.1

 
$
5,996.5

 
$
4,939.4

                                                                                     Segment Operating Profit:
 
 
 
 
 
 
 
Financial Services
$
420.1

 
$
354.0

 
$
767.5

 
$
701.9

Healthcare
317.5

 
227.3

 
562.6

 
441.6

Manufacturing/Retail/Logistics
201.2

 
177.4

 
382.5

 
359.1

Other
122.9

 
104.1

 
214.9

 
193.7

Total segment operating profit
1,061.7

 
862.8

 
1,927.5

 
1,696.3

Less: unallocated costs
516.2

 
374.8

 
881.7

 
748.3

Income from operations
$
545.5

 
$
488.0

 
$
1,045.8

 
$
948.0



18

Table of Contents

Geographic Area Information
Revenue and long-lived assets, by geographic area, are as follows:
 
Three Months Ended 
 June 30,
 
Six Months Ended 
 June 30,
 
2015
 
2014
 
2015
 
2014
 
(in millions)
Revenues: (1)
 
 
 
 
 
 
 
North America(2)
$
2,423.9

 
$
1,928.6

 
$
4,715.9

 
$
3,764.8

Europe(3)
502.3

 
466.3

 
978.2

 
936.4

Rest of World (4) 
158.9

 
122.2

 
302.4

 
238.2

Total
$
3,085.1

 
$
2,517.1<