SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
F O R M 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 15, 1998
COGNIZANT CORPORATION
(Exact Name of Registrant as Specified in its Charter)
Delaware 001-12275 06-1450569
(State or other Jurisdiction (Commission File number) (I.R.S.Employer
of Incorporation) Identification No.)
200 Nyala Farms, Westport, Connecticut 06880
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (203) 222-4200
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Item 5. Other Events
The press release issued by Cognizant Corporation on January 15, 1998 is
attached to this Form 8-K as an exhibit and incorporated by
reference herein.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
COGNIZANT CORPORATION
(Registrant)
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By: Kenneth S. Siegel
Senior Vice President,
General Counsel and
Secretary
Date: January 15, 1998
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Exhibit
(1) Press Release issued January 15, 1998
Contact: Joseph C. Allen
For Immediate Release
(203) 222-4235
COGNIZANT TRANSFORMED INTO TWO INDEPENDENT PUBLIC
COMPANIES:
IMS HEALTH AND NIELSEN MEDIA RESEARCH
FOCUS ON HEALTHCARE AND MEDIA MARKETS
Accelerated Share Buy-back Planned in 1998
WESTPORT, Conn., Jan. 15 -- Cognizant Corporation (NYSE:CZT) today announced
that its board of directors has approved a plan to separate into two publicly
traded companies. The strategy would create IMS HEALTH as the premier global
provider of information solutions to the pharmaceutical and healthcare
industries, and establish an independent Nielsen Media Research, the leader in
electronic audience measurement services. "IMS HEALTH and Nielsen Media become
operating companies sharply focused on single industries," said Robert E.
Weissman, Cognizant chairman and chief executive officer. "Their market
leadership positions plus strong franchise performance enable excellent growth
prospects. As independent corporations, each can better pursue business
strategies tailored to unique customer needs, thus building shareholder value."
IMS HEALTH
IMS HEALTH incorporates IMS, the leading global provider of market information
and decision-support services to the pharmaceutical and healthcare industries;
Erisco, the premier supplier of software-based administrative and analytical
solutions to the managed care industry; and Enterprises, the company's venture
capital unit, focused on investments in emerging healthcare businesses. IMS
HEALTH becomes the largest shareholder of Gartner Group, Inc. (NASDAQ:GART), the
world's preeminent supplier of research and analysis to the information
technology industry, an equity investment. IMS HEALTH will also own
Cognizant Technology Solutions, an outsourcer of software applications and
development services specializing in Year 2000 conversion services. Operating in
over 90 countries, IMS HEALTH annual revenue is expected to exceed $1 billion in
1997. Robert E. Weissman will be chairman and chief executive officer of IMS
HEALTH upon completion of the transaction. Victoria R. Fash becomes president
and chief operating officer of IMS HEALTH, concurrent with her present
responsibilities as IMS chairman and chief executive officer. The IMS HEALTH
executive management team includes: Tommy Bohman, vice chairman and president,
IMS America; Gilles Pajot, vice chairman and president, IMS Europe; Shunsuke
Keimatsu, chairman and chief executive officer, IMS Japan; Hans Biedermann,
president, IMS Emerging Markets; James C. Newell, president, IMS Global
Services; Anthony Bellomo, president, Erisco; Venetia Kontogouris, president,
Enterprises; and Kumar Mahadeva, chairman and chief executive officer, Cognizant
Technology Solutions.
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"IMS HEALTH operates in the multi-billion dollar,
high-growth, global healthcare information market. Healthcare demand driven by
an aging population, coupled with cost-containment pressure, are creating
unprecedented opportunity," said Fash. "As the world's leading healthcare
information services company, IMS HEALTH can deploy significant strategic
advantages, including unparalleled global reach, financial strength, our
reputation for objectivity, and proven products which give our customers the
information insight critical to business success." "As an independent company,
IMS is better positioned than ever to focus on our four key growth drivers.
First, new products, such as the launch of prescription-based services,
initially in the U.S., then Canada, and now in Europe as Xtrend(TM). Second,
capitalizing on our global distribution channel for market extension into
high-growth areas, as we are now doing with Sales Technologies' Cornerstone(TM)
sales force automation suite. Third, geographic expansion, including building on
our initial presence in China, India and Poland, and 1998 start-ups in Sri
Lanka, Nepal, Namibia, Zimbabwe and Kenya. Fourth, moving into the broader
healthcare information services arena to provide new products and services which
our current and potential customers are requesting today. We're very bullish on
our growth opportunities in this dynamic market," concluded Fash.
Nielsen Media Research
Nielsen Media Research, the leading source of television audience measurement
services, is expected to generate 1997 revenue of over $350 million. The
company, which will be headquartered in New York City, employs 2,100
professionals in the United States and Canada. Nielsen Media's National People
Meter Service provides audience estimates for all national programming sources,
including broadcast networks, cable networks and national syndicators. Local
ratings services estimate audiences for each of 211 television markets in the
U.S., including electronic metered service in 38 cities. John A. Dimling will
serve as president and chief executive officer of Nielsen Media Research when it
becomes an independent company. William G. Jacobi will become chairman of the
board of directors. Dimling has been president and chief operating officer of
Nielsen Media Research since 1993, having joined the company in 1985. Jacobi
previously served as executive vice president of Cognizant Corporation, as well
as chairman and chief executive officer of Nielsen Media Research. "Nielsen
Media Research provides the information that supports the $40 billion television
advertising market. The objectivity and reliability of our data have made
Nielsen Media Research the preeminent franchise in our industry," said Dimling.
"As an independent company, our strategy will be to use our strong cash flow to
accelerate investment in the business to an all-time high," Dimling added. "This
will provide Nielsen Media customers with improved service and enhanced products
and services designed to meet their evolving needs. To stay a step ahead of the
digital TV age, a heavy technology investment in the Active/Passive Meter is our
top priority. We also plan to roll-out an unprecedented number of metered
markets, with metered service to be launched in an additional six cities by the
end of 1998. Separately, we are expanding our capabilities for the measurement
of multi-media advertising, the usage of personal computers and the Internet."
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Transaction Structure
The separation of Cognizant into two companies would be accomplished through a
tax-free dividend of one share of IMS HEALTH stock for each Cognizant share
held. Concurrent with the transaction, which is expected to occur
mid-summer 1998, Cognizant Corporation will change its name to Nielsen Media
Research. Both IMS HEALTH and Nielsen Media Research shares are expected to
trade on the New York Stock Exchange. Cognizant intends to seek a ruling from
the Internal Revenue Service with respect to the tax-free treatment of the
distribution. Completion of the transaction is subject to receipt of a favorable
ruling from the IRS, and final approval by the Cognizant board of directors.
"These two operating businesses have fundamentally different growth outlooks,
operating characteristics and customer requirements," said Weissman. "We believe
the ability to focus on their specific industries, and to deploy tailored
strategies, will build value for customers and shareholders."
Financial Outlook
"The primary financial advantage to this transaction is unlocking the
growth of IMS HEALTH," said Fash. "Our initial 1998 guidance for
Cognizant's EPS growth was 17-to-20 percent. We are revising 1998 EPS growth
guidance upward to the 21-to-24 percent range for IMS HEALTH. The revised IMS
HEALTH EPS growth target excludes Nielsen Media Research and transaction costs
associated with the spin (such as investment bank advisory fees)." Nielsen Media
Research remains on target to achieve 10-to-12 percent revenue and operating
income growth in 1998. "To further enhance value to shareholders, management is
committed to substantially complete the repurchase of the 9.4 million shares
remaining in the currently authorized repurchase program by the end of this
year," said Fash. "This will improve earnings per share incremental to our
21-to-24 percent EPS growth range projected for IMS HEALTH." Cognizant's current
dividend of $0.12 per share will continue through the effective date of the
transaction. IMS HEALTH plans to adopt Cognizant's current dividend policy of
$0.12 per share. Based on growth and capital allocation priorities, Nielsen
Media Research does not anticipate paying a dividend. Cognizant expects to
release pro forma balance sheet, cash flow and income statements for IMS HEALTH
and Nielsen Media Research in late February. Cognizant's 1997 financial results,
scheduled for release on February 18, 1998, remain on target to exceed 17-to-20
percent EPS growth, as previously indicated to investors. Additional information
is available at Cognizant's website, www.cognizantcorp.com
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January 15, 1998
This press release includes statements which may constitute forward- looking
statements made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995. Although Cognizant believes the expectations
contained in such forward-looking statements are reasonable, it can give no
assurance that such expectations will prove correct. This information may
involve risks and uncertainties that could cause actual results of Cognizant,
IMS HEALTH or Nielsen Media Research to differ materially from the
forward-looking statements.
Factors which could cause or contribute to such differences include, but are not
limited to (i) the risks associated with operating on a global basis, including
fluctuations in the value of foreign currencies relative to the U.S. dollar, and
the ability to successfully hedge such risks, (ii) to the extent they seek
growth through acquisition, the ability to identify and consummate acquisitions
on satisfactory terms, (iii) the ability to develop new or advanced technologies
and systems for their businesses on a cost-effective basis, (iv) the ability to
successfully achieve estimated effective tax rates and corporate overhead
levels, (v) competition in the market for audience measurement services, (vi)
regulatory and legislative initiatives, particularly in the area of medical
privacy, (vii) deterioration in economic conditions, particularly in the
pharmaceutical, healthcare, media, information technology or other industries in
which their customers operate, (viii) the final allocation of assets and
liabilities between IMS HEALTH and Nielsen Media Research, and other factors
detailed in Cognizant's SEC filings.
