COGNIZANT TECHNOLOGY SOLUTIONS CORP - FORM 10-Q - November 6, 2014

Attached files

file filename
EXCEL - IDEA: XBRL DOCUMENT - COGNIZANT TECHNOLOGY SOLUTIONS CORPFinancial_Report.xls
EX-31.2 - EXHIBIT 31.2 - COGNIZANT TECHNOLOGY SOLUTIONS CORPctshexhibit3129-30x2014.htm
EX-32.1 - EXHIBIT 32.1 - COGNIZANT TECHNOLOGY SOLUTIONS CORPctshexhibit3219-30x2014.htm
EX-31.1 - EXHIBIT 31.1 - COGNIZANT TECHNOLOGY SOLUTIONS CORPctshexhibit3119-30x2014.htm
EX-32.2 - EXHIBIT 32.2 - COGNIZANT TECHNOLOGY SOLUTIONS CORPctshexhibit3229-30x2014.htm

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 September 30, 2014
¨
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 October 31, 2014:
Class
 
Number of Shares
Class A Common Stock, par value $.01 per share
 
608,917,740


 
 
 

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
TABLE OF CONTENTS
 
 
 
Page
PART I.
 
 
 
Item 1.
 
 
 
 
Condensed Consolidated Statements of Operations (Unaudited) for the Three Months Ended September 30, 2014 and 2013 and for the Nine Months Ended September 30, 2014 and 2013
 
 
 
 
Condensed Consolidated Statements of Comprehensive Income (Unaudited) for the Three Months Ended September 30, 2014 and 2013 and for the Nine Months Ended September 30, 2014 and 2013
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 6.
 
 


PART I. FINANCIAL INFORMATION
 
Item 1.    Condensed Consolidated Financial Statements (Unaudited).
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
(in thousands, except per share data)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2013
 
2014
 
2013
Revenues
$
2,581,009

 
$
2,305,723

 
$
7,520,451

 
$
6,487,701

Operating expenses:
 
 
 
 
 
 
 
Cost of revenues (exclusive of depreciation and amortization expense shown separately below)
1,569,828

 
1,382,336

 
4,501,734

 
3,854,314

Selling, general and administrative expenses
506,019

 
443,376

 
1,474,399

 
1,277,106

Depreciation and amortization expense
47,649

 
42,652

 
138,848

 
126,212

Income from operations
457,513

 
437,359

 
1,405,470

 
1,230,069

Other income (expense), net:
 
 
 
 
 
 
 
Interest income
17,201

 
10,696

 
44,838

 
37,023

Foreign currency exchange gains (losses), net
(11,222
)
 
(9,189
)
 
(13,191
)
 
(32,014
)
Other, net
247

 
332

 
1,648

 
1,700

Total other income (expense), net
6,226

 
1,839

 
33,295

 
6,709

Income before provision for income taxes
463,739

 
439,198

 
1,438,765

 
1,236,778

Provision for income taxes
108,115

 
119,571

 
362,355

 
332,532

Net income
$
355,624

 
$
319,627

 
$
1,076,410

 
$
904,246

Basic earnings per share
$
0.58

 
$
0.53

 
$
1.77

 
$
1.50

Diluted earnings per share
$
0.58

 
$
0.53

 
$
1.76

 
$
1.48

Weighted average number of common shares outstanding - Basic
608,070

 
603,265

 
607,894

 
603,437

Dilutive effect of shares issuable under stock-based compensation plans
4,053

 
5,284

 
4,500

 
5,827

Weighted average number of common shares outstanding - Diluted
612,123

 
608,549

 
612,394

 
609,264

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

1

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
(in thousands)
 
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2013
 
2014
 
2013
Net income
$
355,624

 
$
319,627

 
$
1,076,410

 
$
904,246

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
Foreign currency translation adjustments
(31,962
)
 
25,346

 
(30,826
)
 
5,183

Change in unrealized losses on cash flow hedges, net of taxes
21,565

 
(77,067
)
 
184,135

 
(139,156
)
Change in unrealized gains and losses on available-for-sale securities, net of taxes
(1,801
)
 
1,234

 
(708
)
 
(1,433
)
Other comprehensive income (loss)
(12,198
)
 
(50,487
)
 
152,601

 
(135,406
)
Comprehensive income
$
343,426

 
$
269,140

 
$
1,229,011

 
$
768,840

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

2

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
(Unaudited)
(in thousands, except par values)
 
 
September 30,  
 2014
 
December 31, 
 2013
Assets
 
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
2,617,619

 
$
2,213,006

Short-term investments
2,000,860

 
1,534,467

Trade accounts receivable, net of allowances of $29,415 and $26,824, respectively
1,809,038

 
1,648,785

Unbilled accounts receivable
338,093

 
226,487

Deferred income tax assets, net
259,474

 
256,230

Other current assets
234,942

 
268,907

Total current assets
7,260,026

 
6,147,882

Property and equipment, net of accumulated depreciation of $807,865 and $719,336, respectively
1,101,468

 
1,081,164

Goodwill
437,776

 
444,236

Intangible assets, net
109,692

 
131,274

Deferred income tax assets, net
142,733

 
147,149

Other noncurrent assets
175,348

 
183,013

Total assets
$
9,227,043

 
$
8,134,718

Liabilities and Stockholders’ Equity
 
 
 
Current liabilities:
 
 
 
Accounts payable
$
130,040

 
$
113,394

Deferred revenue
169,385

 
182,893

Accrued expenses and other current liabilities
1,442,039

 
1,478,221

Total current liabilities
1,741,464

 
1,774,508

Deferred income tax liabilities, net
18,041

 
21,170

Other noncurrent liabilities
85,828

 
203,249

Total liabilities
1,845,333

 
1,998,927

Commitments and contingencies (See Note 7)

 

Stockholders’ Equity:
 
 
 
Preferred stock, $0.10 par value, 15,000 shares authorized, none issued
—

 
—

Class A common stock, $0.01 par value, 1,000,000 shares authorized, 608,911 and 607,729 shares issued and outstanding at September 30, 2014 and December 31, 2013, respectively
6,089

 
6,077

Additional paid-in capital
560,502

 
543,606

Retained earnings
6,938,777

 
5,862,367

Accumulated other comprehensive income (loss)
(123,658
)
 
(276,259
)
Total stockholders’ equity
7,381,710

 
6,135,791

Total liabilities and stockholders’ equity
$
9,227,043

 
$
8,134,718

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

3

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(in thousands)
 
 
For the Nine Months Ended 
 September 30,
 
2014
 
2013
Cash flows from operating activities:
 
 
 
Net income
$
1,076,410

 
$
904,246

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
145,191

 
132,013

Provision for doubtful accounts
2,878

 
5,985

Deferred income taxes
(43,373
)
 
(22,844
)
Stock-based compensation expense
100,622

 
86,353

Excess tax benefits on stock-based compensation plans
(14,547
)
 
(16,450
)
Other
12,796

 
52,171

Changes in assets and liabilities:
 
 
 
Trade accounts receivable
(167,655
)
 
(273,502
)
Other current assets
(75,821
)
 
(56,647
)
Other noncurrent assets
22,880

 
(9,604
)
Accounts payable
44,601

 
3,251

Other current and noncurrent liabilities
44,832

 
112,931

Net cash provided by operating activities
1,148,814

 
917,903

Cash flows from investing activities:
 
 
 
Purchases of property and equipment
(137,547
)
 
(154,346
)
Purchases of investments
(2,180,305
)
 
(1,368,812
)
Proceeds from maturity or sale of investments
1,702,703

 
1,297,258

Business combinations, net of cash acquired
(11,487
)
 
(152,476
)
Net cash (used in) investing activities
(626,636
)
 
(378,376
)
Cash flows from financing activities:
 
 
 
Issuance of common stock under stock-based compensation plans
49,853

 
76,837

Excess tax benefits on stock-based compensation plans
14,547

 
16,450

Repurchases of common stock
(171,288
)
 
(154,336
)
Debt issuance costs
(1,500
)
 
—

Net cash (used in) financing activities
(108,388
)
 
(61,049
)
Effect of exchange rate changes on cash and cash equivalents
(9,177
)
 
(17,436
)
Increase in cash and cash equivalents
404,613

 
461,042

Cash and cash equivalents, beginning of year
2,213,006

 
1,570,077

Cash and cash equivalents, end of period
$
2,617,619

 
$
2,031,119

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

4

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(dollar amounts in thousands)

Note 1 — Interim Condensed Consolidated Financial Statements
The terms “Cognizant,” “we,” “our,” “us” and “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, 2013. 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.

In August 2014, the company announced that its Board of Directors approved an expansion of its stock repurchase program. The Board of Directors increased the company’s stock repurchase authorization under the program from $1,500,000 to $2,000,000 and extended the term of the stock repurchase program from December 31, 2014 to December 31, 2015.
During the nine months ended September 30, 2014, we repurchased 2,700,000 shares of our Class A common stock for $130,246, inclusive of fees and expenses, under our existing stock repurchase program approved by our Board of Directors. As of September 30, 2014, the remaining available balance under the Board authorization was $871,899. 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 nine months ended September 30, 2014, such repurchases totaled 849,465 shares at an aggregate cost of $41,042.

Stock Split
On February 4, 2014, the company’s Board of Directors declared a two-for-one stock split of our Class A common stock in the form of a 100% stock dividend, which was paid on March 7, 2014 to stockholders of record as of February 21, 2014. The stock split has been reflected in the accompanying condensed consolidated financial statements, and all applicable references as to the number of outstanding common shares and per share information, except par values, have been retroactively adjusted to reflect the stock split as if it occurred at the beginning of the earliest period presented. Stockholders’ equity accounts have been retroactively adjusted to reflect a reclassification of an amount equal to the par value of the increase in issued shares of Class A common stock from the additional paid-in-capital account to the Class A common stock account.
Recently Adopted 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. The new standard will be effective for periods beginning on or after January 1, 2017. Early adoption is not permitted. 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 July 2013, the FASB issued new guidance which requires the netting of any unrecognized tax benefits against all available same-jurisdiction deferred income tax carryforward assets that would apply if the uncertain tax positions were settled. We adopted this standard on January 1, 2014. As of September 30, 2014, we netted an unrecognized tax benefit of $81,161 against same-jurisdiction non-current deferred income tax assets. In our December 31, 2013 consolidated statement of financial position, we reclassified $74,196 from "other non-current liabilities" to non-current "deferred income tax assets, net" to conform to current period's presentation. The adoption of this standard had no effect on our condensed consolidated results of operations or stockholder's equity.





5

Note 2 — Short-term Investments

Our short-term investments were as follows:
 
September 30, 2014
 
December 31, 2013
Available-for-sale investment securities:
 
 
 
U.S. Treasury and agency debt securities
$
678,793

 
$
506,285

Corporate and other debt securities
400,634

 
301,841

Certificates of deposit and commercial paper
68,971

 
99,959

Asset-backed securities
228,019

 
160,267

Municipal debt securities
114,514

 
115,196

Mutual funds
21,741

 
21,136

Total available-for-sale investment securities
1,512,672

 
1,204,684

Time deposits
488,188

 
329,783

Total short-term investments
$
2,000,860

 
$
1,534,467

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. The carrying value of the time deposits approximated fair value as of September 30, 2014 and December 31, 2013.
Available-for-Sale Investment Securities
The amortized cost, gross unrealized gains and losses and fair value of available-for-sale investment securities at September 30, 2014 were as follows:
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury and agency debt securities
$
678,771

 
$
509

 
$
(487
)
 
$
678,793

Corporate and other debt securities
400,683

 
605

 
(654
)
 
400,634

Certificates of deposit and commercial paper
68,915

 
56

 
—

 
68,971

Asset-backed securities
228,298

 
109

 
(388
)
 
228,019

Municipal debt securities
114,018

 
508

 
(12
)
 
114,514

Mutual funds
23,590

 
297

 
(2,146
)
 
21,741

Total available-for-sale investment securities
$
1,514,275

 
$
2,084

 
$
(3,687
)
 
$
1,512,672

The amortized cost, gross unrealized gains and losses and fair value of available-for-sale investment securities at December 31, 2013 were as follows:
 
Amortized
Cost
 
Unrealized
Gains
 
Unrealized
Losses
 
Fair
Value
U.S. Treasury and agency debt securities
$
506,094

 
$
544

 
$
(353
)
 
$
506,285

Corporate and other debt securities
300,994

 
1,090

 
(243
)
 
301,841

Certificates of deposit and commercial paper
99,897

 
62

 
—

 
99,959

Asset-backed securities
160,559

 
99

 
(391
)
 
160,267

Municipal debt securities
114,888

 
348

 
(40
)
 
115,196

Mutual funds
22,705

 
280

 
(1,849
)
 
21,136

Total available-for-sale investment securities
$
1,205,137

 
$
2,423

 
$
(2,876
)
 
$
1,204,684


6

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 September 30, 2014:
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. Treasury and agency debt securities
$
267,403

 
$
(487
)
 
$
—

 
$
—

 
$
267,403

 
$
(487
)
Corporate and other debt securities
237,753

 
(654
)
 
—

 
—

 
237,753

 
(654
)
Asset-backed securities
140,490

 
(256
)
 
11,320

 
(132
)
 
151,810

 
(388
)
Municipal debt securities
14,319

 
(12
)
 
—

 
—

 
14,319

 
(12
)
Mutual funds
—

 
—

 
20,607

 
(2,146
)
 
20,607

 
(2,146
)
Total
$
659,965

 
$
(1,409
)
 
$
31,927

 
$
(2,278
)
 
$
691,892

 
$
(3,687
)

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, 2013:
 
Less than 12 Months
 
12 Months or More
 
Total
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
 
Fair
Value
 
Unrealized
Losses
U.S. Treasury and agency debt securities
$
221,548

 
$
(353
)
 
$
—

 
$
—

 
$
221,548

 
$
(353
)
Corporate and other debt securities
106,485

 
(243
)
 
—

 
—

 
106,485

 
(243
)
Asset-backed securities
84,051

 
(333
)
 
5,048

 
(58
)
 
89,099

 
(391
)
Municipal debt securities
10,702

 
(34
)
 
1,019

 
(6
)
 
11,721

 
(40
)
Mutual funds
—

 
—

 
20,183

 
(1,849
)
 
20,183

 
(1,849
)
Total
$
422,786

 
$
(963
)
 
$
26,250

 
$
(1,913
)
 
$
449,036

 
$
(2,876
)
The unrealized losses for the above securities as of September 30, 2014 and December 31, 2013 are primarily attributable to changes in interest rates. As of September 30, 2014, 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 September 30, 2014 are set forth in the following table:
 
Amortized
Cost
 
Fair
Value
Due within one year
$
188,349

 
$
188,543

Due after one year up to two years
526,575

 
527,250

Due after two years up to three years
519,035

 
518,719

Due after three years up to four years
28,428

 
28,400

Asset-backed securities
228,298

 
228,019

Fixed income available-for-sale investment securities
$
1,490,685

 
$
1,490,931

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

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 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2013
 
2014
 
2013
Proceeds from sales of available-for-sale investment securities
$
670,498

 
$
211,696

 
$
1,028,320

 
$
871,696

 
 
 
 
 
 
 
 
Gross gains
$
604

 
$
315

 
$
1,357

 
$
1,530

Gross losses
(68
)
 
(166
)
 
(134
)
 
(553
)
Net realized gains on sales of available-for-sale investment securities
$
536

 
$
149

 
$
1,223

 
$
977


Note 3 — Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities were as follows:
 
September 30, 2014
 
December 31, 2013
Compensation and benefits
$
837,271

 
$
894,986

Income taxes
15,123

 
24,312

Professional fees
65,033

 
45,453

Travel and entertainment
40,569

 
29,645

Customer volume incentives
220,911

 
170,669

Derivative financial instruments
105,408

 
191,584

Other
157,724

 
121,572

Total accrued expenses and other current liabilities
$
1,442,039

 
$
1,478,221


Note 4 — 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 operations outside of SEZs are subject to corporate income tax at the current rate of 33.99%. In addition, all Indian profits, including those generated within SEZs, are subject to the Minimum Alternative Tax, or MAT, at the current rate of approximately 20.9%, including surcharges. 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
September 30,
 
Nine Months Ended
September 30,
 
2014
 
2013
 
2014
 
2013
Effective income tax rate
23.3
%
 
27.2
%
 
25.2
%
 
26.9
%
For the 2014 and 2013 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 2014, our effective income tax rate decreased primarily due to changes in the geographic mix of our estimated current year earnings towards countries with lower statutory rates and discrete tax benefits recorded in 2014, partially offset by a scheduled reduction of certain income tax holiday benefits in India in 2014.

Note 5 — 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

8

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.
The following table summarizes our financial assets and (liabilities) measured at fair value on a recurring basis as of September 30, 2014:
 
Level 1
 
Level 2
 
Level 3
 
Total
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
1,141,034

 
$
—

 
$
—

 
$
1,141,034

Time deposits
—

 
50,054

 
—

 
50,054

Total cash equivalents
1,141,034

 
50,054

 
—

 
1,191,088

Short-term investments:
 
 
 
 
 
 
 
Time deposits
—

 
488,188

 
—

 
488,188

Available-for-sale investment securities:
 
 
 
 
 
 
 
U.S. Treasury and agency debt securities
527,186

 
151,607

 
—

 
678,793

Corporate and other debt securities


 
400,634

 
—

 
400,634

Certificates of deposit and commercial paper
—

 
68,971

 
—

 
68,971

Asset-backed securities


 
228,019

 
—

 
228,019

Municipal debt securities


 
114,514

 
—

 
114,514

Mutual funds
—

 
21,741

 
—

 
21,741

Total available-for-sale investment securities
527,186

 
985,486

 
—

 
1,512,672

Total short-term investments
527,186

 
1,473,674

 
—

 
2,000,860

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

 
2,717

 
—

 
2,717

Accrued expenses and other current liabilities
—

 
(105,408
)
 
—

 
(105,408
)
Other noncurrent assets
—

 
234

 
—

 
234

Other noncurrent liabilities
—

 
(33,330
)
 
—

 
(33,330
)
Total
$
1,668,220

 
$
1,387,941

 
$
—

 
$
3,056,161


9

The following table summarizes our financial assets and (liabilities) measured at fair value on a recurring basis as of December 31, 2013:
 
Level 1
 
Level 2
 
Level 3
 
Total
Cash equivalents:
 
 
 
 
 
 
 
Money market funds
$
694,416

 
$
—

 
$
—

 
$
694,416

Time deposits
—

 
128,654

 
—

 
128,654

Commercial paper
—

 
22,000

 
—

 
22,000

Total cash equivalents
694,416

 
150,654

 
—

 
845,070

Short-term investments:
 
 
 
 
 
 
 
Time deposits
—

 
329,783

 
—

 
329,783

Available-for-sale investment securities:
 
 
 
 
 
 
 
U.S. Treasury and agency debt securities
423,051

 
83,234

 
—

 
506,285

Corporate and other debt securities
—

 
301,841

 
—

 
301,841

Certificates of deposit and commercial paper
—

 
99,959

 
—

 
99,959

Asset-backed securities
—

 
160,267

 
—

 
160,267

Municipal debt securities
—

 
115,196

 
—

 
115,196

Mutual funds
—

 
21,136

 
—

 
21,136

Total available-for-sale investment securities
423,051

 
781,633

 
—

 
1,204,684

Total short-term investments
423,051

 
1,111,416

 
—

 
1,534,467

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

 
11,105

 
—

 
11,105

Accrued expenses and other current liabilities
—

 
(191,584
)
 
—

 
(191,584
)
Other noncurrent liabilities
—

 
(164,490
)
 
—

 
(164,490
)
Total
$
1,117,467

 
$
917,101

 
$
—

 
$
2,034,568


We measure the fair value of money market funds and U.S. Treasury securities based on quoted prices in active markets for identical assets. 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.
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 nine months ended September 30, 2014 and the year ended December 31, 2013, there were no transfers among Level 1, Level 2, or Level 3 financial assets and liabilities.

Note 6 — 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 global financial institutions, limiting the amount of credit exposure with any one financial institution and conducting ongoing evaluation of the creditworthiness of the financial

10

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:
 
 
 
 
September 30, 2014
 
December 31, 2013
Designation of Derivatives
 
Location on Statement of
Financial Position
 
Assets
 
Liabilities
 
Assets  
 
Liabilities
Cash Flow Hedges – Designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
Other current assets
 
$
1,286

 
$
—

 
$
—

 
$
—

 
 
Other noncurrent assets
 
234

 
—

 
—

 
—

 
 
Accrued expenses and other current liabilities
 
—

 
105,245

 
—

 
190,386

 
 
Other noncurrent liabilities
 
—

 
33,330

 
—

 
164,490

 
 
Total
 
1,520

 
138,575

 
—

 
354,876

Other Derivatives – Not designated as hedging instruments
 
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
 
Other current assets
 
1,431

 
—

 
11,105

 
—

 
 
Accrued expenses and other current liabilities
 
—

 
163

 
—

 
1,198

 
 
Total
 
1,431

 
163

 
11,105

 
1,198

Total
 
 
 
$
2,951

 
$
138,738

 
$
11,105

 
$
356,074


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 2014, 2015, and 2016. 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 September 30, 2014, we estimate that $87,880, 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:
 
September 30, 2014
 
December 31, 2013
2014
$
300,000

 
$
1,200,000

2015
1,200,000

 
900,000

2016
240,000

 
240,000

Total notional value of contracts outstanding
$
1,740,000

 
$
2,340,000

Net unrealized (loss) included in accumulated other comprehensive income (loss), net of taxes
$
(115,858
)
 
$
(299,993
)

11

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 September 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)
 
2014
 
2013
 
 
 
2014
 
2013
Cash Flow Hedges – Designated as hedging instruments
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
$
(5,355
)
 
$
(149,916
)
 
Cost of revenues
 
$
(25,601
)
 
$
(48,755
)
 
 
 
 
 
Selling, general and administrative expenses
 
(5,263
)
 
(9,995
)
 
 
 
 
 
Total
 
$
(30,864
)
 
$
(58,750
)
The following table provides information on the location and amounts of pre-tax (losses) on our cash flow hedges for the nine months ended September 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)
 
2014
 
2013
 
 
 
2014
 
2013
Cash Flow Hedges – Designated as hedging instruments
 
 
 
 
 
 
 
 
 
Foreign exchange forward contracts
$
115,625

 
$
(278,285
)
 
Cost of revenues
 
$
(84,717
)
 
$
(91,848
)
 
 
 
 
 
Selling, general and administrative expenses
 
(17,479
)
 
(19,357
)
 
 
 
 
 
Total
 
$
(102,196
)
 
$
(111,205
)
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 8.
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. We entered into foreign exchange forward contracts to purchase U.S. dollars and sell Indian rupees, Euros and British pounds. Contracts outstanding as of September 30, 2014 are scheduled to mature in 2014 and 2015. 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 condensed consolidated statements of operations.

12

Additional information related to our outstanding contracts is as follows:
 
September 30, 2014
 
December 31, 2013
 
Notional
 
Market Value

 
Notional
 
Market Value

Contracts to purchase U.S. dollars and sell:
 
 
 
 
 
 
 
Indian rupees
$
160,008

 
$
780

 
$
171,802

 
$
11,105

Euros
14,800

 
266

 
55,500

 
(412
)
British pounds
27,000

 
222

 
52,000

 
(786
)
Total
$
201,808

 
$
1,268

 
$
279,302

 
$
9,907

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 nine months ended September 30, 2014 and 2013:
 
Location of Net Gains  (Losses) on
Derivative Instruments
 
Amount of Net Gains (Losses) on Derivative Instruments
 
 
 
Three Months Ended
September 30,
 
Nine Months Ended
September 30,
 
 
 
2014
 
2013
 
2014
 
2013
Other Derivatives – Not designated as hedging instruments
Foreign currency exchange gains (losses), net
 
 
 
 
 
 
 
 
Foreign exchange forward contracts:
 
 
$
5,856

 
$
7,126

 
$
(6,760
)
 
$
22,096

The related cash flow impacts of all of our derivative activities are reflected as cash flows from operating activities.

Note 7 — Commitments and Contingencies
In September 2014, we announced a definitive agreement to acquire TZ US Parent, Inc. ("TriZetto"), a private U.S. healthcare information technology company for $2,700,000 in cash, subject to customary adjustments. The transaction is expected to close in the fourth quarter of 2014. We intend to finance the acquisition through a combination of cash on hand and debt, and have obtained $1,000,000 of committed financing ("Bridge Financing") in support of this transaction (see Note 10 - Debt).
 As of September 30, 2014, we had outstanding fixed capital commitments of approximately $33,985 related to our India development center expansion program to build new state-of-the-art IT development and delivery centers.
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

13

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.

Note 8 — Accumulated Other Comprehensive Income (Loss)
Changes in accumulated other comprehensive income (loss) by component were as follows for the three and nine months ended September 30, 2014:
 
Three Months
 
Nine Months
 
Before Tax
Amount
 
Tax
Effect
 
Net of Tax
Amount
 
Before Tax
Amount
 
Tax
Effect
 
Net of Tax
Amount
Foreign currency translation adjustments:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
25,169

 
$
—

 
$
25,169

 
$
24,033

 
$
—

 
$
24,033

Change in foreign currency translation adjustments
(31,962
)
 
—

 
(31,962
)
 
(30,826
)
 
—

 
(30,826
)
Ending balance
$
(6,793
)
 
$
—

 
$
(6,793
)
 
$
(6,793
)
 
$
—

 
$
(6,793
)
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) on available-for-sale investment securities:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
1,269

 
$
(475
)
 
$
794

 
$
(453
)
 
$
154

 
$
(299
)
Net unrealized (losses) gains arising during the period
(2,327
)
 
867

 
(1,460
)
 
54

 
(6
)
 
48

Reclassification of net (gains) to Other, net
(545
)
 
204

 
(341
)
 
(1,204
)
 
448

 
(756
)
Net change
(2,872
)
 
1,071

 
(1,801
)
 
(1,150
)
 
442

 
(708
)
Ending balance
$
(1,603
)
 
$
596

 
$
(1,007
)
 
$
(1,603
)
 
$
596

 
$
(1,007
)
 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) on cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(162,564
)
 
$
25,141

 
$
(137,423
)
 
$
(354,876
)
 
$
54,883

 
$
(299,993
)
Net unrealized (losses) gains arising during the period
(5,355
)
 
830

 
(4,525
)
 
115,625

 
(17,881
)
 
97,744

Reclassifications of losses to:
 
 
 
 
 
 
 
 
 
 
 
Cost of revenues
25,601

 
(3,959
)
 
21,642

 
84,717

 
(13,101
)
 
71,616

Selling, general and administrative expenses
5,263

 
(815
)
 
4,448

 
17,479

 
(2,704
)
 
14,775

Net change
25,509

 
(3,944
)
 
21,565

 
217,821

 
(33,686
)
 
184,135

Ending balance
$
(137,055
)
 
$
21,197

 
$
(115,858
)
 
$
(137,055
)
 
$
21,197

 
$
(115,858
)
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(136,126
)
 
$
24,666

 
$
(111,460
)
 
$
(331,296
)
 
$
55,037

 
$
(276,259
)
Other comprehensive income (loss)
(9,325
)
 
(2,873
)
 
(12,198
)
 
185,845

 
(33,244
)
 
152,601

Ending balance
$
(145,451
)
 
$
21,793

 
$
(123,658
)
 
$
(145,451
)
 
$
21,793

 
$
(123,658
)




14

Changes in accumulated other comprehensive income (loss) by component were as follows for the three and nine months ended September 30, 2013:
 
Three Months
 
Nine Months
 
Before Tax
Amount
 
Tax
Effect
 
Net of Tax
Amount
 
Before Tax
Amount
 
Tax
Effect
 
Net of Tax
Amount
Foreign currency translation adjustments:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(8,591
)
 
$
—

 
$
(8,591
)
 
$
11,572

 
$
—

 
$
11,572

Change in foreign currency translation adjustments
25,346

 
—

 
25,346

 
5,183

 
—

 
5,183

Ending balance
$
16,755

 
$
—

 
$
16,755

 
$
16,755

 
$
—

 
$
16,755

 
 
 
 
 
 
 
 
 
 
 
 
Unrealized gains (losses) on available-for-sale investment securities:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(1,717
)
 
$
605

 
$
(1,112
)
 
$
2,440

 
$
(885
)
 
$
1,555

Net unrealized gains (losses) arising during the period
2,080

 
(757
)
 
1,323

 
(1,396
)
 
488

 
(908
)
Reclassification of net (gains) to Other, net
(144
)
 
55

 
(89
)
 
(825
)
 
300

 
(525
)
Net change
1,936

 
(702
)
 
1,234

 
(2,221
)
 
788

 
(1,433
)
Ending balance
$
219

 
$
(97
)
 
$
122

 
$
219

 
$
(97
)
 
$
122

 
 
 
 
 
 
 
 
 
 
 
 
Unrealized (losses) on cash flow hedges:
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(372,509
)
 
$
57,610

 
$
(314,899
)
 
$
(296,595
)
 
$
43,785

 
$
(252,810
)
Unrealized (losses) arising during the period
(149,916
)
 
23,185

 
(126,731
)
 
(278,285
)
 
45,064

 
(233,221
)
Reclassifications of losses to:
 
 
 
 
 
 
 
 
 
 
 
Cost of revenues
48,755

 
(7,540
)
 
41,215

 
91,848

 
(14,158
)
 
77,690

Selling, general and administrative expenses
9,995

 
(1,546
)
 
8,449

 
19,357

 
(2,982
)
 
16,375

Net change
(91,166
)
 
14,099

 
(77,067
)
 
(167,080
)
 
27,924

 
(139,156
)
Ending balance
$
(463,675
)
 
$
71,709

 
$
(391,966
)
 
$
(463,675
)
 
$
71,709

 
$
(391,966
)
 
 
 
 
 
 
 
 
 
 
 
 
Accumulated other comprehensive income (loss):
 
 
 
 
 
 
 
 
 
 
 
Beginning balance
$
(382,817
)
 
$
58,215

 
$
(324,602
)
 
$
(282,583
)
 
$
42,900

 
$
(239,683
)
Other comprehensive income (loss)
(63,884
)
 
13,397

 
(50,487
)
 
(164,118
)
 
28,712

 
(135,406
)
Ending balance
$
(446,701
)
 
$
71,612

 
$
(375,089
)
 
$
(446,701
)
 
$
71,612

 
$
(375,089
)

Note 9 — 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; 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. 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

15

as “unallocated” 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 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 
 
 
 
 
 
 
Financial Services
$
1,082,245

 
$
954,379

 
$
3,164,467

 
$
2,720,427

Healthcare
655,415

 
599,947

 
1,916,770

 
1,651,540

Manufacturing/Retail/Logistics
533,048

 
490,622

 
1,559,288

 
1,378,062

Other
310,301

 
260,775

 
879,926

 
737,672

Total revenue
$
2,581,009

 
$
2,305,723

 
$
7,520,451

 
$
6,487,701

                                                                                     Segment Operating Profit:
 
 
 
 
 
 
 
Financial Services
$
318,022

 
$
324,450

 
$
1,019,986

 
$
895,079

Healthcare
200,804

 
230,145

 
642,399

 
612,210

Manufacturing/Retail/Logistics
168,686

 
177,075

 
527,786

 
466,485

Other
96,762

 
86,959

 
290,451

 
238,611

Total segment operating profit
784,274

 
818,629

 
2,480,622

 
2,212,385

Less: unallocated costs(1)
326,761

 
381,270

 
1,075,152

 
982,316

Income from operations
$
457,513

 
$
437,359

 
$
1,405,470

 
$
1,230,069

_____________________
(1)
Includes $31,271 and $27,023 of stock-based compensation expense for the three months ended September 30, 2014 and 2013, respectively, and $100,622 and $86,353 of stock-based compensation expense for the nine months ended September 30, 2014 and 2013, respectively. In addition, the unallocated costs for the three and nine months ended September 30, 2014 include the benefit of accruing incentive-based compensation at lower accrual rates than the comparable 2013 periods.

Geographic Area Information
Revenue and long-lived assets, by geographic area, are as follows:
 
Three Months Ended 
 September 30,
 
Nine Months Ended 
 September 30,
 
2014
 
2013
 
2014
 
2013
Revenues: (1)
 
 
 
 
 
 
 
North America(2)
$
1,981,229

 
$
1,783,081

 
$
5,746,012

 
$
5,042,666

Europe(3)
472,114

 
414,656

 
1,408,508

 
1,150,140

Rest of World (4) 
127,666

 
107,986

 
365,931

 
294,895

Total
$
2,581,009

 
$
2,305,723

 
$
7,520,451

 
$
6,487,701

 
As of
 
September 30,
2014
 
December 31,
2013
Long-lived Assets: (5)
 
 
 
North America(2)
$
50,781

 
$
48,352

Europe
24,586

 
22,707