COGNIZANT TECHNOLOGY SOLUTIONS CORP, 424B4, 1998-06-19

COGNIZANT TECHNOLOGY SOLUTIONS CORP
424B4, 1998-06-19
COMPUTER PROGRAMMING SERVICES

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FILED PURSUANT TO RULE 424(b)(4)
REGISTRATION NO. 333-49783

[LOGO]

2,917,000 SHARES
CLASS A COMMON STOCK

Of the 2,917,000 shares of Class A Common Stock offered hereby, 2,500,000
shares are being sold by Cognizant Technology Solutions Corporation ("CTS" or
the "Company") and 417,000 shares are being sold by the Company's parent,
Cognizant Corporation ("Cognizant" or the "Selling Stockholder"). See "Principal
and Selling Stockholders." The Company will not receive any of the proceeds from
the sale of shares by Cognizant.

The Company has two classes of authorized Common Stock, Class A Common
Stock, which is offered hereby, and Class B Common Stock, all of which is owned
by Cognizant. Holders of Class A Common Stock generally have identical rights to
holders of Class B Common Stock, except that holders of Class A Common Stock are
entitled to one vote per share while holders of Class B Common Stock are
entitled to ten votes per share on all matters submitted to a vote of
stockholders. See "Company Background," "Certain Transactions" and "Description
of Capital Stock."

Prior to this offering, Cognizant has owned substantially all of the capital
stock of the Company. Upon completion of this offering, Cognizant will own all
of the Company's outstanding Class B Common Stock, which will represent
approximately 66.7% of the outstanding Common Stock of the Company, and
approximately 95.3% of the combined voting power of the Company's outstanding
Common Stock, and Cognizant will continue to control the Company. See "Company
Background," "Certain Transactions" and "Principal and Selling Stockholders."

Prior to this offering, there has been no public market for any capital
stock of the Company. The Class A Common Stock has been approved for quotation
on the Nasdaq National Market, subject to official notice of issuance, under the
trading symbol "CTSH."
------------------------

THE CLASS A COMMON STOCK OFFERED HEREBY INVOLVES A HIGH DEGREE OF RISK.
SEE "RISK FACTORS" BEGINNING ON PAGE 7.
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS
THE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
UNDERWRITING PROCEEDS TO
PRICE TO DISCOUNTS AND PROCEEDS TO SELLING
PUBLIC COMMISSIONS (1) COMPANY (2) STOCKHOLDER (3)
<S> <C> <C> <C> <C>
Per Share................................. $10.00 $ 0.70 $ 9.30 $ 9.30
Total (3)................................. $29,170,000 $2,041,900 $23,250,000 $3,878,100
</TABLE>

(1) The Company and the Selling Stockholder have agreed to indemnify the
Underwriters as stated herein (the "Underwriters") against certain
liabilities, including liabilities under the Securities Act of 1933, as
amended (the "Securities Act"). See "Underwriting."

(2) Before deducting expenses payable by the Company, estimated at $845,000.

(3) The Selling Stockholder has granted to the Underwriters a 30-day option to
purchase an aggregate of up to an additional 437,550 shares of Class A
Common Stock on the same terms as set forth above, solely to cover
over-allotments, if any. See "Underwriting." If this option is exercised in
full, the total Price to Public, Underwriting Discounts and Commissions and
Proceeds to Selling Stockholder will be $33,545,500, $2,348,185 and
$7,947,315, respectively.
------------------------

The Class A Common Stock is offered by the Underwriters as stated herein,
subject to receipt and acceptance by them and subject to their right to reject
any order in whole or in part. It is expected that delivery of such shares will
be made through the offices of BancAmerica Robertson Stephens, San Francisco,
California, on or about June 24, 1998.

BANCAMERICA ROBERTSON STEPHENS

COWEN & COMPANY

ADAMS, HARKNESS & HILL, INC.

The date of this Prospectus is June 19, 1998
<PAGE>
[Inside cover art--Pyramid graphic design comprised of six boxes representing
each of the Company's six services (application development, application
maintenance support, Year 2000 compliance, Eurocurrency compliance, testing and
quality assurance and re-hosting and re-engineering) above four boxes
representing the elements of the Company's solution (people, methodology,
infrastructure and technology) above four photographs representing such
elements. Beneath the graphic design on the right is the Company's name, logo
and the text, "You create the future. We'll develop it for you." Beneath the
graphic design on the left is the text, "Cognizant Technology Solutions ("CTS")
delivers high-quality, cost-effective, full life cycle solutions to complex
software development and maintenance problems through the use of a seamless
on-site and offshore project team. CTS's business model combines a technical and
account management team located on-site at the customer location and six
development centers in India. To support this business model, CTS has recruited
and trained over 1,000 programmers in India and has put in place a well
developed facilities, technology and communications infrastructure."]

CERTAIN PERSONS PARTICIPATING IN THIS OFFERING MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE CLASS A COMMON
STOCK, INCLUDING ENTERING STABILIZING BIDS, EFFECTING SYNDICATE COVERING
TRANSACTIONS OR IMPOSING PENALTY BIDS. FOR A DESCRIPTION OF THESE ACTIVITIES,
SEE "UNDERWRITING."
<PAGE>
NO DEALER, SALES REPRESENTATIVE OR ANY OTHER PERSON HAS BEEN AUTHORIZED TO
GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATIONS IN CONNECTION WITH THIS
OFFERING OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE,
SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY, THE SELLING STOCKHOLDER OR ANY UNDERWRITER. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A SOLICITATION OF ANY OFFER
TO BUY, ANY SECURITIES OTHER THAN THE REGISTERED SECURITIES TO WHICH IT RELATES
OR AN OFFER TO, OR SOLICITATION OF, ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE
ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF
ANY TIME SUBSEQUENT TO THE DATE HEREOF.

UNTIL JULY 14, 1998 (25 DAYS AFTER THE DATE OF THIS PROSPECTUS), ALL DEALERS
EFFECTING TRANSACTIONS IN THE REGISTERED SECURITIES, WHETHER OR NOT
PARTICIPATING IN THIS DISTRIBUTION, MAY BE REQUIRED TO DELIVER A PROSPECTUS.
THIS DELIVERY REQUIREMENT IS IN ADDITION TO THE OBLIGATION OF DEALERS TO DELIVER
A PROSPECTUS WHEN ACTING AS UNDERWRITERS AND WITH RESPECT TO THEIR UNSOLD
ALLOTMENTS OR SUBSCRIPTIONS.
------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Summary.................................................................................................... 4
Risk Factors............................................................................................... 7
Company Background......................................................................................... 18
Use of Proceeds............................................................................................ 19
Dividend Policy............................................................................................ 19
Capitalization............................................................................................. 20
Dilution................................................................................................... 21
Selected Consolidated Financial Data....................................................................... 22
Management's Discussion and Analysis of Financial
Condition and Results of Operations...................................................................... 24
Business................................................................................................... 33
Management................................................................................................. 43
Certain Transactions....................................................................................... 51
Principal and Selling Stockholders......................................................................... 55
Description of Capital Stock............................................................................... 56
Shares Eligible for Future Sale............................................................................ 58
Underwriting............................................................................................... 59
Legal Matters.............................................................................................. 61
Experts.................................................................................................... 61
Additional Information..................................................................................... 61
Index to Consolidated Financial Statements................................................................. F-1
</TABLE>

------------------------

The Company's principal executive offices are located at 1700 Broadway, New
York, New York 10019 and its telephone number is (212) 887-2385. The Company
intends to mail to all of its stockholders an annual report containing audited
financial statements certified by an independent public accounting firm and make
available quarterly reports containing unaudited interim financial information
for each of the first three quarters of each fiscal year of the Company.

Cognizant-TM-, the Cognizant logo, CTS-TM-, QVIEW-TM- and Century Transition
Services 2000-TM- are trademarks owned or licensed by the Company. Trade names
and trademarks of other companies appearing in this Prospectus are the property
of their respective owners.

3
<PAGE>
SUMMARY

THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE DETAILED
INFORMATION, INCLUDING INFORMATION SET FORTH IN "RISK FACTORS" AND THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES THERETO, APPEARING ELSEWHERE IN THIS
PROSPECTUS. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTIES. THE COMPANY'S ACTUAL RESULTS MAY DIFFER MATERIALLY FROM
THOSE RESULTS DISCUSSED IN THESE FORWARD-LOOKING STATEMENTS AND FROM THE RESULTS
HISTORICALLY EXPERIENCED. FACTORS THAT MIGHT CAUSE SUCH A DIFFERENCE INCLUDE,
BUT ARE NOT LIMITED TO, THOSE DISCUSSED IN "RISK FACTORS" AND "MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."
REFERENCES IN THIS PROSPECTUS TO THE "COMMON STOCK" SHALL INCLUDE BOTH THE
COMPANY'S CLASS A COMMON STOCK, PAR VALUE $.01 PER SHARE (THE "CLASS A COMMON
STOCK"), AND THE COMPANY'S CLASS B COMMON STOCK, PAR VALUE $.01 PER SHARE (THE
"CLASS B COMMON STOCK"). SEE "DESCRIPTION OF CAPITAL STOCK."
THE COMPANY

Cognizant Technology Solutions Corporation ("CTS" or the "Company") delivers
high-quality, cost-effective, full life cycle solutions to complex software
development and maintenance problems through the use of a seamless on-site and
offshore project team. These solutions include application development and
maintenance services, Year 2000 and Eurocurrency compliance services, testing
and quality assurance services and re-hosting and re-engineering services. CTS
provides world-class service to its customers through an integrated business
model that combines a technical and account management team located on-site at
the customer location and six development centers located in India.

Many companies today face increasing customer demands to improve service
levels, lower costs and shorten time to market. At the same time, the pace of
technology evolution has accelerated and companies are increasingly adopting
emerging technologies in order to remain competitive. Although these emerging
technologies offer the promise of faster, more functional and more flexible IT
systems, their implementation presents major challenges and requires a large
number of highly skilled individuals trained in many diverse technologies and
architectures. Excess global demand for qualified IT professionals both to
develop and implement new IT solutions and to maintain legacy systems has led
some IT service providers to attempt to access the large talent pool in certain
developing countries. However, although the use of offshore IT personnel can
offer faster delivery of IT solutions, more flexible scheduling and lower costs,
it also presents a number of challenges. The offshore implementation of software
services requires highly developed project management skills to design, develop
and deploy high-quality solutions in a timely and cost-effective manner. In
addition, IT service providers must have the methodologies, processes and
communications capabilities to successfully integrate offshore workforces with
on-site personnel. Finally, service providers utilizing offshore workforces must
continually recruit and manage their workforces to deliver solutions using
emerging technologies.

To facilitate the cost-effective, on-time delivery of high-quality software
development and maintenance solutions integrating on-site and offshore teams,
the Company has recruited and trained approximately 1,000 programmers in India
and put in place a well developed facilities, technology and communications
infrastructure. By basing its technical operations in India, the Company has
access to a large pool of skilled, English-speaking IT professionals with which
to service customers on a cost basis significantly lower than in developed
countries. The Company has developed proprietary methodologies encapsulated in
its QVIEW software engineering process to define and implement projects from the
design, development and deployment stages through to ongoing application
maintenance. The Company has also placed significant emphasis on recruiting and
training its large workforce of highly-skilled professionals to ensure that they
are versed in the Company's processes and methodologies. The Company's technical
professionals have project experience and expertise across multiple
architectures and technologies, including emerging technologies such as data
warehousing, Internet/intranet applications and object-oriented development. The
Company's extensive facilities, technology and communications infrastructure
enables the seamless integration of its on-site and offshore workforces,
allowing for rapid completion of projects, off-peak utilization of customers'
technological resources and real-time access to project information.

The Company's objective is to be a leading provider of full life cycle
software development and maintenance solutions utilizing an on-site and offshore
model by pursuing several key strategies. The Company seeks to develop long-term
strategic relationships with customers and business partners and to leverage
these relationships into additional project opportunities. The Company has a
team dedicated to

4
<PAGE>
developing new service offerings in emerging technologies and also collaborates
with its customers to develop such offerings. The Company is committed to
improving and enhancing its proprietary QVIEW software engineering process and
other methodologies and toolsets. As the Company expands its customer base, it
plans to open additional sales and marketing offices worldwide to enable it to
sell to and support existing and prospective customers. Finally, the Company
believes that opportunities exist in the fragmented IT services market to expand
its business through strategic acquisitions to enable it to expand its
geographic presence, enter new technology areas or expand capacity.

The Company markets and sells its services directly through its professional
staff, senior management and direct sales personnel operating out of its New
York City headquarters and its regional offices, as well as through independent
sales agents. Historically, the Company has provided services principally to
affiliated companies and has only recently begun to provide services to
third-party customers. During the period from January 1, 1997 to March 31, 1998,
the Company provided services to a total of 27 customers, including ACNielsen
Corporation ("ACNielsen"), Aetna Life Insurance Company of Canada ("Aetna
Canada"), CSC Consulting, Inc. ("CSC Consulting"), Cognizant, Douglas County,
Nebraska, The Dun & Bradstreet Corporation, First Data Investor Services Group,
Inc., GEAC Computer Corporation Limited ("GEAC"), Manugistics, Inc., Northwest
Airlines, Inc., Pacific Exchange, Inc. (the "Pacific Exchange"), Pilot Software,
Inc. ("Pilot Software") and SQM, Inc. ("SQM").

The Company began its software development and maintenance services business
in early 1994 as an in-house technology development center for The Dun &
Bradstreet Corporation and its operating units. These operating units
principally included A.C. Nielsen Company, Dun & Bradstreet Information
Services, Dun & Bradstreet Software, Erisco, Inc. ("Erisco"), IMS International,
Inc. ("IMS"), NCH Promotional Services, Inc., Nielsen Media Research, Inc.
("Nielsen Media Research"), The Reuben H. Donnelley Corporation ("RHDonnelley"),
Pilot Software and Sales Technologies, Inc. ("Sales Technologies"), plus a
majority interest in Gartner Group, Inc. ("Gartner Group"). In November 1996,
the Company, ERISCO, IMS, Nielsen Media Research, Pilot Software, Sales
Technologies and certain other entities, plus a majority interest in Gartner
Group, were spun-off from The Dun & Bradstreet Corporation to form Cognizant,
the parent of the Company. At that time, ACNielsen was separately spun-off from
The Dun & Bradstreet Corporation and Dun & Bradstreet Software was sold to GEAC.
In 1997, Cognizant sold Pilot Software to a third party. Also in 1997, the
Company purchased the 24.0% minority interest in its Indian subsidiary from a
third party resulting in such subsidiary becoming a wholly owned subsidiary of
the Company. During 1996, the Company made a strategic decision to attract
customers that were not affiliated with Cognizant or any of the former
affiliates of The Dun & Bradstreet Corporation, and the Company has pursued this
strategy along with continuing to service its existing customers.
THE OFFERING

<TABLE>
<S> <C>
Class A Common Stock Offered by the Company.......... 2,500,000 shares
Class A Common Stock Offered by Cognizant............ 417,000 shares
Common Stock to be Outstanding after the Offering(1):
Class A Common Stock............................... 3,030,750 shares
Class B Common Stock............................... 6,083,000 shares
Total.......................................... 9,113,750 shares
Use of Proceeds...................................... To repay intercompany balance owed
to Cognizant, for capital
expenditures and for working capital
and other general corporate
purposes. See "Use of Proceeds."
Nasdaq National Market Symbol........................ CTSH
</TABLE>

- ------------------------
(1) Excludes as of the date of this Prospectus (i) 507,000 shares of Class A
Common Stock issuable upon the exercise of outstanding stock options granted
under the Amended and Restated Cognizant Technology Solutions Key Employees'
Stock Option Plan (the "Employee Option Plan") at a weighted average
exercise price of $3.85 per share, (ii) 112,200 shares of Class A Common
Stock issuable upon exercise of options granted under the Employee Option
Plan effective upon the consummation of this offering to certain employees
at an exercise price equal to the initial public offering price, (iii)
49,500 shares of Class A Common Stock issuable upon the exercise of
outstanding stock options granted under the Amended and Restated Cognizant
Technology Solutions Non-Employee Directors' Stock Option Plan (the
"Directors' Option Plan") at a weighted average exercise price of $9.76 per
share, (iv) 79,550 and 22,000 shares of Class A Common Stock reserved for
future issuance pursuant to the Employee Option Plan and the Directors'
Option Plan, respectively, and (v) 48,750 shares of Class A Common Stock
issuable upon the exercise of outstanding options granted to Wijeyaraj
Mahadeva, the Company's Chairman and Chief Executive Officer, at an exercise
price of $6.92 per share. See "Capitalization," "Management--Stock Option
Plans" and "Principal and Selling Stockholders."

5
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SUMMARY CONSOLIDATED FINANCIAL DATA
(in thousands, except per share data)
<TABLE>
<CAPTION>
THREE
MONTHS
ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------ ---------
1994 1995 1996 1997 1997
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA: (1)
Total revenues....................................................... $ 1,687 $ 7,175 $ 12,032 $ 24,744 $ 4,256
Gross profit......................................................... 1,153 3,608 6,012 10,385 1,849
Income (loss) from operations........................................ (263) 1,019 1,466 2,129 165
Income (loss) before provision for income taxes...................... (278) 1,070 1,475 2,154 166
Minority interest (2)................................................ (22) (362) (492) (545) (104)
Net income (loss).................................................... $ (195) $ 461 $ 642 $ 1,028 $ 44
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income (loss) per share, basic................................... $ (0.03) $ 0.07 $ 0.10 $ 0.16 $ 0.01
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income (loss) per share, diluted (3)............................. $ (0.03) $ 0.07 $ 0.10 $ 0.16 $ 0.01
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average number of common shares outstanding................. 6,500 6,500 6,500 6,547 6,500
Weighted average number of common shares and stock options
outstanding........................................................ 6,500 6,500 6,500 6,605 6,500

1998
---------
<S> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA: (1)
Total revenues....................................................... $ 10,238
Gross profit......................................................... 4,309
Income (loss) from operations........................................ 1,124
Income (loss) before provision for income taxes...................... 1,138
Minority interest (2)................................................ --
Net income (loss).................................................... $ 712
---------
---------
Net income (loss) per share, basic................................... $ 0.11
---------
---------
Net income (loss) per share, diluted (3)............................. $ 0.10
---------
---------
Weighted average number of common shares outstanding................. 6,614
Weighted average number of common shares and stock options
outstanding........................................................ 6,818
</TABLE>

<TABLE>
<CAPTION>
AT MARCH 31, 1998
-------------------------------------------
PRO FORMA
ACTUAL PRO FORMA(4) AS ADJUSTED(5)
----------- ------------- ---------------
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA:
Cash and cash equivalents............................................. $ 2,197 $ 2,197 $ 18,128
Working capital....................................................... 6,922 6,922 22,853
Total assets.......................................................... 19,452 19,452 35,383
Due to related party.................................................. 6,474 6,474 --
Total stockholders' equity............................................ 4,196 4,634 27,039
</TABLE>

- ------------------------------

(1) The Company is a Delaware corporation originally organized in 1988. The
Company's software development and maintenance services business began
operations in 1994. Since its organization, the Company held stock in
various companies engaged in unrelated businesses. As part of the
reorganization of The Dun & Bradstreet Corporation, these unrelated
businesses have been spun-off from the Company. All information contained in
this Prospectus excludes the unrelated businesses and the results of the
unrelated businesses have been excluded from the Consolidated Financial
Statements and other financial information contained herein. See Note 1 of
Notes to Consolidated Financial Statements.

(2) Minority interest was attributed to the 24.0% ownership of the Company's
Indian subsidiary by a third party. In October 1997, the Company purchased
this 24.0% interest for $3.4 million. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

(3) Diluted net income (loss) per share was calculated in a manner consistent
with basic net income (loss) per share and includes potentially dilutive
options to purchase 57,130 shares of Class A Common Stock for the year ended
December 31, 1997 and potentially dilutive options to purchase 204,646
shares of Class A Common Stock for the three months ended March 31, 1998.

(4) Gives effect to the termination upon the consummation of this offering of
the put rights associated with the outstanding mandatorily redeemable common
stock.

(5) Adjusted to give effect to the sale of 2,500,000 shares of Class A Common
Stock offered by the Company hereby, after deducting underwriting discounts
and commissions and estimated offering expenses payable by the Company, and
the application of the net proceeds therefrom. See "Use of Proceeds" and
"Capitalization."
------------------------------

EXCEPT AS OTHERWISE INDICATED, THE INFORMATION CONTAINED IN THIS PROSPECTUS
(I) GIVES EFFECT TO THE AMENDMENT AND RESTATEMENT OF THE COMPANY'S RESTATED
CERTIFICATE OF INCORPORATION PRIOR TO THE DATE OF THIS PROSPECTUS, PURSUANT TO
WHICH EACH OUTSTANDING SHARE OF COMMON STOCK OF THE COMPANY WAS REDESIGNATED,
CHANGED AND CONVERTED INTO 0.65 OF A SHARE OF CLASS A COMMON STOCK, AND THE
EXCHANGE BY COGNIZANT OF ALL OUTSTANDING SHARES OF CLASS A COMMON STOCK OF THE
COMPANY HELD BY COGNIZANT (OTHER THAN THOSE OFFERED HEREBY) FOR AN EQUAL NUMBER
OF SHARES OF CLASS B COMMON STOCK (THE "RECAPITALIZATION") AND (II) ASSUMES NO
EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT OPTION. UNLESS THE CONTEXT
OTHERWISE REQUIRES, REFERENCES IN THIS PROSPECTUS TO "CTS" OR THE "COMPANY"
REFER TO COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION AND ITS CONSOLIDATED
SUBSIDIARIES.

6
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RISK FACTORS

This Prospectus contains forward-looking statements which involve risks and
uncertainties. The Company's actual results could differ materially from those
anticipated in these forward-looking statements and from the results
historically experienced as a result of certain factors, including those in the
following risk factors and elsewhere in this Prospectus. In addition to the
other information contained in this Prospectus, the following risk factors
should be considered carefully in evaluating the Company and its business before
purchasing the shares of Class A Common Stock offered hereby.

RISK OF SIGNIFICANT FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company historically has experienced significant quarterly fluctuations
in revenues and results of operations and expects these fluctuations to
continue. Among the factors causing these variations have been the number,
timing, scope and contractual terms of software development and maintenance
projects in which the Company is engaged, delays incurred in the performance of
such projects, the accuracy of estimates of resources and time required to
complete ongoing projects and general economic conditions. In addition, the
Company's future revenues and operating results may fluctuate as a result of
changes in pricing in response to customer demand and competitive pressures, the
mix of on-site and offshore staffing and the ratio of fixed-price contracts
versus time-and-materials contracts, the timing of collection of accounts
receivable and the breakdown of revenues by distribution channel. A high
percentage of the Company's operating expenses, particularly personnel and rent,
are relatively fixed in advance of any particular quarter. As a result,
unanticipated variations in the number and timing of the Company's projects or
in employee utilization rates may cause significant variations in operating
results in any particular quarter, and could result in losses to the Company.
Any significant shortfall of revenues in relation to the Company's expectations,
any material reduction in utilization rates for the Company's professional staff
or variance in the on-site, offshore staffing mix, an unanticipated termination
of a major project, a customer's decision not to pursue a new project or proceed
to succeeding stages of a current project or the completion during a quarter of
several major customer projects could require the Company to pay underutilized
employees and could therefore have a material adverse effect on the Company's
business, results of operations and financial condition.

The Company's quarterly operating results are also subject to certain
seasonal fluctuations. The Company has in the past recruited new professional
staff in the first and second quarters and such employees have not conducted
billable services until later in the year. The Company's third quarter includes
the months of July and August, when billable services activity by professional
staff, as well as engagement decisions by customers, may be reduced due to
summer vacation schedules. Demand for the Company's services may be lower in the
fourth quarter due to reduced activity during the holiday season and fewer
working days for those customers that curtail operations during such period.
These and other seasonal factors may contribute to fluctuations in the Company's
operating results from quarter to quarter.

Due to the foregoing factors, it is possible that in some future periods the
Company's revenues and operating results may be significantly below the
expectations of public market analysts and investors. In such an event, the
price of the Company's Class A Common Stock would likely be materially and
adversely affected. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations."

EXTREMELY COMPETITIVE MARKET FOR TECHNICAL PERSONNEL

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ability to maintain and renew existing engagements and obtain new business will
depend, in large part, on its ability to attract, train and retain technical
personnel with the skills that keep pace with continuing changes in information
technology, evolving industry standards and changing customer preferences.
Further, the Company must train and manage its growing employee base, requiring
an increase in the level of responsibility for both existing and new management
personnel. There can be no assurance that the management skills and systems
currently in place will be adequate or that the Company will be able to
assimilate new employees successfully. The Company's failure to attract, train
and retain current or future employees could have a material adverse effect on
the Company's business, results of operations and financial condition. See
"--United States Immigration Issues," "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "Business--Employees."

EXPOSURE TO REGULATORY, ECONOMIC AND POLITICAL CONDITIONS IN INDIA

The Company intends to continue to develop and expand its offshore
facilities in India where, as of March 31, 1998, approximately 74% of the
Company's technical professionals were located. While wage costs are lower in
India than in the United States and other developed countries for comparably
skilled professionals, wages in India are increasing at a faster rate than in
the United States, which could result in the Company incurring increased costs
for technical professionals and reduced margins. In addition, there is intense
competition in India for skilled technical professionals, and the Company
expects such competition to increase. In the past, India has experienced
significant inflation, low growth in gross domestic product and shortages of
foreign exchange. India also has experienced civil unrest and terrorism and, in
the past, has been involved in conflicts with neighboring countries.

In early 1998, a new government was elected in India. In May 1998, India
conducted several underground tests of nuclear weapons. As a result of such
tests and the Indian government's unwillingness to agree not to test or detonate
nuclear weapons, the United States announced that it would impose economic
sanctions against India pursuant to the Nuclear Proliferation Prevention Act of
1994. Such sanctions will result in the termination of most aid to India, will
bar U.S. banks from making loans to the Indian government, will restrict exports
of computers and other equipment to India and will require the United States to
oppose loans to India by the World Bank or the International Monetary Fund.
Other nations, including Japan, Germany, Sweden and Denmark, have similarly
announced economic sanctions against India. The actual extent of the sanctions,
and the future impact of such sanctions, cannot be ascertained at this time.
However, such sanctions may have a material adverse effect on the Company's
business, results of operations and financial condition. If the sanctions
imposed by the United States involve the revocation of the work-permitted visas
of Indian nationals working for the Company in the United States, if the United
States were to prohibit the conduct of all business by U.S. companies in India
or if restrictions on transferring computer software code to or from India were
imposed, the Company's business, results of operations and financial condition
would be materially adversely affected. The uncertainty surrounding the current
events in India and the extent of the sanctions could also have an adverse
effect on the Company's ability to attract and retain customers. Any adverse
reaction in India to the sanctions could also have an adverse affect on the
Company's ability to attract and retain qualified IT professionals in India. As
a result of the U.S. sanctions, there have been organized protests against U.S.
corporations doing business in India. Any acts of violence or vandalism
involving any of the Company's six development centers in India, its
telecommunications infrastructure or its employees would have a material adverse
effect on the Company's business, results of operations and financial condition.

India has been engaged in armed conflicts with China and Pakistan in the
past, and there can be no assurance that future conflicts will not arise. If
India were to become engaged in armed hostilities, particularly if these
hostilities were protracted or involved the threat or use of nuclear weapons,
there can be no assurance that the Company would be able to continue to operate
as a going concern.

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No assurance can be given that the Company will not be adversely affected by
changes in inflation, interest rates, taxation, social stability or other
political, economic or diplomatic developments in or affecting India in the
future.

In addition, the Indian government has exercised and continues to exercise
significant influence over many aspects of the Indian economy, and Indian
government actions concerning the economy could have a material adverse effect
on private sector entities, including the Company. During the past five years,
India's government has provided significant tax incentives and relaxed certain
regulatory restrictions in order to encourage foreign investment in specified
sectors of the economy, including the software development industry. Certain of
those programs which have benefited the Company include, among others, tax
holidays, liberalized import and export duties and preferential rules on foreign
investment and repatriation. Notwithstanding these benefits, however, India's
central and state governments remain significantly involved in the Indian
economy as regulators. The elimination of any of the benefits realized by the
Company from its Indian operations could have a material adverse effect on the
Company's business, results of operations and financial condition. See
"--Extremely Competitive Market for Technical Personnel" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations."

CONTROL BY PRINCIPAL STOCKHOLDER; BENEFITS OF OFFERING TO COGNIZANT

Upon completion of this offering, Cognizant will own all of the Company's
outstanding Class B Common Stock, which will represent approximately 66.7% of
the outstanding Common Stock of the Company (approximately 61.9% if the
Underwriters' over-allotment option is exercised in full), and approximately
95.3% of the combined voting power of the Company's outstanding Common Stock
(approximately 94.2% if the Underwriters' over-allotment option is exercised in
full). As a result, Cognizant will be able to control all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions, and, under the Delaware General Corporation
Law (the "DGCL"), Cognizant may exercise such voting control by written consent
without convening a meeting of the Company's stockholders. Accordingly, subject
to certain restrictions contained in an agreement between the Company and
Cognizant, effective upon the consummation of this offering (the "Intercompany
Agreement"), Cognizant will be able to effect a sale or merger of the Company
without prior notice to, or the consent of, holders of Class A Common Stock. In
addition, pursuant to the Intercompany Agreement, certain actions by the Company
will require the approval of Cognizant, such as: (i) any acquisition or
disposition with a value in excess of the greater of $10.0 million and six
percent of the Company's market capitalization; (ii) any issuance of equity
securities, other than pursuant to existing option plans and options; and (iii)
the incurrence of any indebtedness in excess of $10.0 million. The voting
control of Cognizant will have the effect of preventing a change in control of
the Company that is not approved by Cognizant. See "Company Background,"
"Certain Transactions," "Principal and Selling Stockholders" and "Description of
Capital Stock."

Beneficial ownership of at least 80% of the total voting power and value of
the outstanding Common Stock is required in order for Cognizant to continue to
include the Company in its consolidated group for federal income tax purposes,
and ownership of at least 80% of the total voting power is required in order for
Cognizant to be able to effect a tax-free spin-off of its interest in the
Company to its stockholders under the Internal Revenue Code of 1986, as amended
(the "Code"). Upon completion of this offering, the Company will cease to be
included in Cognizant's consolidated group for federal income tax purposes, but
Cognizant will continue to own more than 80% of the total voting power of the
Company. See "Description of Capital Stock."

Cognizant will benefit from this offering in several ways. First, a portion
of the net proceeds to the Company from this offering will be used to repay the
intercompany balance owed to Cognizant, which was approximately $6.5 million as
of March 31, 1998. This amount is subject to change based on the Company's
operations between March 31, 1998 and the consummation of this offering. In
addition, Cognizant will

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receive an estimated $3.9 million of net proceeds ($7.9 million if the
Underwriters' over-allotment option is exercised in full) from the sale of the
shares of Class A Common Stock offered by Cognizant hereby. Cognizant's cost for
the shares of Class A Common Stock offered by Cognizant hereby was $0.1 million
($0.1 million for the shares subject to the Underwriters' over-allotment
option). Finally, this offering will result in the creation of a public market
for the Class A Common Stock. Upon consummation of this offering, the unrealized
appreciation in the value of the Class B Common Stock retained by Cognizant will
be $59.3 million, assuming a value of $60.8 million for such shares (based on
the initial public offering price of $10.00 per share) and after deducting the
cost of such shares ($1.5 million). See "Use of Proceeds."

POTENTIAL CONFLICTS OF INTEREST

The Company has entered into Master Service Agreements with certain of
Cognizant's other operating subsidiaries for the provision of software
development and maintenance services (the "Master Services Agreements"). In the
years ended December 31, 1996 and 1997 and the three months ended March 31,
1998, the Company had revenues of $4.4 million, $10.3 million and $3.7 million,
respectively, from Cognizant and its current affiliates. In addition, pursuant
to the Intercompany Services Agreement (the "Intercompany Services Agreement"),
effective upon the consummation of this offering, Cognizant will continue to
provide certain administrative services to the Company, including payroll and
payables processing and tax compliance and the Company and its employees will
continue to be covered by Cognizant's insurance policies and certain Cognizant
employee benefit plans. While the Company believes that the terms of such
agreements in the aggregate are reasonable, conflicts of interest may arise
under such agreements. Furthermore, subject to the terms of the Intercompany
Agreement, Cognizant, in its capacity as a controlling stockholder, may at times
vote its shares (or act by written consent without prior notice to the holders
of Class A Common Stock), in a manner inconsistent with the desires of the
minority stockholders of the Company and may approve a sale of its Class B
Common Stock or of the Company to a third party without the consent of the
minority stockholders. See "--Control By Principal Stockholder; Benefits of
Offering to Cognizant," "Company Background" and "Certain Transactions."

CUSTOMER CONCENTRATION

Approximately 88.8%, 73.7% and 70.2% of the Company's revenues in 1996, 1997
and the three months ended March 31, 1998, respectively, were generated from
current and former affiliates of the Company, including approximately 36.4%,
41.8% and 36.2% of the Company's revenues in 1996, 1997 and the three months
ended March 31, 1998, respectively, from Cognizant and its current subsidiaries.
In addition, the Company has derived and believes that it will continue to
derive a significant portion of its revenues from a limited number of large
third-party customers. During 1996, 1997 and the three months ended March 31,
1998, the Company's five largest customers (other than Cognizant and its current
subsidiaries) accounted for 60.0%, 36.6% and 45.6% of revenues, respectively. In
1996, Dun & Bradstreet Software (which was subsequently acquired by GEAC),
ACNielsen and The Dun & Bradstreet Corporation and its subsidiaries, all of
which were affiliates of the Company prior to November 1996, accounted for
approximately 17.9%, 14.6% and 13.3%, respectively, of the Company's revenues.
In 1997, ACNielsen accounted for 13.9% of the Company's revenues. For the three
months ended March 31, 1998, ACNielsen and GEAC accounted for 14.5% and 12.1% of
the Company's revenues, respectively. The volume of work performed for Cognizant
and its subsidiaries and other customers is likely to vary from year to year,
and a major customer, whether affiliated or unaffiliated, in one year may not
provide the same level of revenues in any subsequent year. The loss of any large
customer could have a material adverse effect on the Company's business, results
of operations and financial condition. See "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and "Business--Customers and
Representative Projects."

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LIMITED OPERATING HISTORY WITH UNAFFILIATED CUSTOMERS; LIMITED THIRD-PARTY
REVENUES TO DATE

The Company began its software development and maintenance services business
in early 1994 as an in-house technology development center for The Dun &
Bradstreet Corporation and its operating units. In 1996, the Company, Erisco,
IMS, Nielsen Media Research, Pilot Software, Sales Technologies and certain
other entities, plus a majority interest in Gartner Group, were spun-off from
The Dun & Bradstreet Corporation to form Cognizant, the parent of the Company.
During 1996, the Company made a strategic decision to attract customers that
were not affiliated with Cognizant or any of the former affiliates of The Dun &
Bradstreet Corporation. Approximately 36.4%, 41.8% and 36.2% of the Company's
revenues in 1996, 1997 and the three months ended March 31, 1998, respectively,
were generated from Cognizant and its current affiliates and an additional
52.4%, 31.9% and 34.0%of the Company's revenues in 1996, 1997 and the three
months ended March 31, 1998, respectively, were generated from companies
previously affiliated with The Dun & Bradstreet Corporation. Therefore, while
the Company has been engaged in providing software development and maintenance
solutions since 1994, it has only serviced third-party customers for a limited
time period and has generated only limited revenues from such engagements. There
can be no assurance that the Company will continue to secure business from third
parties or, if it does, that it will be successful in retaining such customers.
See "Company Background" and "Business-- Customers and Representative Projects."

DEPENDENCE ON THE YEAR 2000 MARKET

A significant portion of the Company's past and current engagements have
been for Year 2000 compliance services and the Company expects to derive a
higher percentage of its revenues from these services for at least the next two
years. The Company realized 26.4%, 44.4% and 46.9% of its revenues from Year
2000 compliance services in 1996, 1997 and the three months ended March 31,
1998, respectively. An unexpected decline in the demand for the Company's Year
2000 compliance services would have a material adverse effect on the Company's
business, results of operations and financial condition.

Although the Company believes that the market for products and professional
services relating to the Year 2000 problem will grow as the year 2000
approaches, there can be no assurance that this market will develop to the
extent anticipated by the Company. Significant expenses for sales and marketing
may be required to educate potential customers about the Year 2000 problem and
the need for products and professional services addressing the problem. There
can be no assurance that prospective customers will understand or acknowledge
the problem. In addition, affected organizations may not be willing or able to
allocate the resources, financial or otherwise, to address the problem in a
timely manner. Many organizations may attempt to resolve the problem internally
rather than by contracting with outside firms such as the Company. Other
organizations may elect to replace their existing systems with new Year
2000-compliant hardware and software, rather than incur substantial costs in
making their existing systems Year 2000-compliant. In addition, there can be no
assurance that one or more competitors will not develop a fully automated
solution to the Year 2000 problem. Due to these and other factors, development
of the market for the Company's Year 2000 services is uncertain and
unpredictable. Additionally, the Company believes that demand for Year 2000
compliance services will diminish after the Year 2000, as many solutions are
implemented and tested.

A core element of the Company's strategy is to use the business
relationships and the knowledge of its customers' computer systems obtained in
providing Year 2000 services to generate additional projects for these
customers. There can be no assurance, however, that the Company will be
successful in generating demand for other services from its Year 2000 customers.
In addition, utilization of significant resources during the next few years to
solve its customers' Year 2000 problems could have a material adverse effect on
the Company's ability to continue to successfully develop and deliver other
services. The failure of the Company to successfully develop and market
competitive software development and maintenance services

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<PAGE>
other than Year 2000 solutions would have a material adverse effect on the
Company's business, results of operations and financial condition. See
"Business--Strategy" and "--Services."

INTENSE COMPETITION

The IT services market includes a large number of participants, is subject
to rapid change and is highly competitive. This market includes participants
from a variety of market segments, including systems integration firms, contract
programming companies, application software companies, the professional services
groups of computer equipment companies, facilities management and outsourcing
companies and "Big Six" accounting firms, as well as smaller local competitors
in the various geographic markets in which the Company operates. The Company
competes with, among others, Alydaar Corp., Cambridge Technology Partners, Inc.,
Cap Gemini America, Inc., Complete Business Solutions, Inc., Computer Horizons
Corp., Computer Task Group, CSC Consulting, Information Management Resources,
Inc., Infosys, Inc., IBM Global Services, Keane, Inc., Mastech Corporation,
Satyam Computer Services Limited, SHL Systemhouse (a division of MCI
Communications Corporation), Syntel, Inc., Tata Consultancy Services and
Whittman-Hart, Inc. In certain markets in which the Company competes, such as
the Year 2000 compliance market, there are no significant barriers to entry.
Current and potential competitors may introduce new and more competitive
services, make strategic acquisitions or establish cooperative relationships
among themselves or with third parties, thereby increasing their ability to
address the needs of customers. Many of the Company's competitors have
significantly greater financial, technical and marketing resources and greater
name recognition than the Company. In order to be successful in the future, the
Company must continue to respond promptly and effectively to technological
change and competitors' innovations. There can be no assurance that the Company
will be able to compete successfully against current and future competitors, and
its failure to do so would have a material adverse effect upon the Company's
business, results of operations and financial condition. See
"Business--Competition."

RAPID TECHNOLOGICAL CHANGE; DEPENDENCE ON NEW SERVICES

The IT services market is characterized by rapid technological change,
evolving industry standards, changing customer preferences and new product and
service introductions. The Company's future success will depend on its ability
to develop solutions that keep pace with changes in the IT services market.
There can be no assurance that the Company will be successful in developing new
services addressing evolving technologies on a timely or cost-effective basis
or, if these services are developed, that the Company will be successful in the
marketplace. In addition, there can be no assurance that products, services or
technologies developed by others will not render the Company's services
non-competitive or obsolete. The Company's failure to address these developments
could have a material adverse effect on the Company's business, results of
operations and financial condition.

The Company's ability to remain competitive will also depend on its ability
to design and implement, in a timely and cost-effective manner, solutions for
customers moving from the mainframe environment to client/server or other
advanced architectures. The failure of the Company to design and implement such
solutions in a timely and cost-effective manner could have a material adverse
effect on the Company's business, results of operations and financial condition.
See "Business--Industry Background."

UNITED STATES IMMIGRATION ISSUES

The Company's future success will depend on its ability to attract and
retain employees with technical and project management skills from developing
countries, especially India. As of March 31, 1998, approximately 245, or 93% of
the Company's employees in the United States, were working in the H-1B,
nonimmigrant work-permitted visa classification. The H-1B visa classification
enables U.S. employers to hire qualified foreign workers in positions which
require an education at least equal to a U.S. Baccalaureate Degree in specialty
occupations such as software systems engineering and systems analysis. The H-1B
visa usually permits an individual to work and live in the United States for a
period of up to six years.

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<PAGE>
There is a limit on the number of new H-1B petitions that the U.S. Immigration
and Naturalization Service ("INS") may approve in any federal fiscal year, and
in years in which this limit is reached, the Company may be unable to obtain
H-1B visas necessary to bring foreign employees to the United States. In the
federal fiscal year ended September 30, 1997, this limit was reached for the
first time in August 1997, and in the current federal fiscal year, this limit
was reached in May 1998. The inability of the Company to bring qualified
technical personnel into the United States to staff on-site customer locations
would have a material adverse effect on the Company's business, results of
operations and financial condition. The Company also processes immigrant visas
for lawful permanent residency (evidenced by a card commonly referred to as the
"Green Card") for employees to fill positions for which there are no able,
willing and qualified U.S. workers available to fill the positions. Compliance
with existing U.S. immigration laws, or changes in such laws making it more
difficult to hire foreign nationals or limiting the ability of the Company to
retain H-1B employees in the United States, could require the Company to incur
additional unexpected labor costs and expenses. A finding by the U.S. Department
of Labor of the Company's willful or substantial failure to comply with existing
regulations on the H-1B classification may result in a bar on future
work-authorized nonimmigrant or immigrant petitions by the Company. Any such
restrictions or limitations on the Company's hiring practices could have a
material adverse effect on the Company's business, results of operations and
financial condition. See "--Exposure to Regulatory, Economic and Political
Conditions in India" and "Business--Employees."

RISKS ASSOCIATED WITH RAPID GROWTH

Since the Company began providing software development and maintenance
services in early 1994, the Company's software development professional and
support staff has increased from approximately 25 to approximately 1,170 as of
March 31, 1998. The Company's anticipated growth will continue to place
significant demands on its management and other resources. In particular, the
Company will have to continue to increase the number of its personnel,
particularly skilled technical, marketing and management personnel, and continue
to develop and improve its operational, financial, communications and other
internal systems, both in the United States and India. The Company's inability
to manage its anticipated growth effectively could have a material adverse
effect on the Company's business, results of operations and financial condition.
See "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

RISKS ASSOCIATED WITH FIXED-PRICE PROJECTS

The Company expects that an increasing number of its future projects will be
fixed-price rather than time-and-materials (which has historically been the
basis for its contracts). The Company bears the risk of cost over-runs and
inflation in connection with fixed-price projects. The Company's failure to
estimate accurately the resources and time required for a fixed-price project,
or its failure to complete its contractual obligations within the time frame
committed, could have a material adverse effect on the Company's business,
results of operations and financial condition. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations."

POTENTIAL LIABILITY TO CUSTOMERS

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<PAGE>
omissions, there can be no assurance that such coverage will 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 Company's insurance policies generally have
deductibles of $500,000, but in the case of certain coverage for errors and
omissions, the deductible is $1.5 million. The successful assertion of one or
more large claims against the Company that exceed available insurance coverage
or changes in the Company's insurance policies, including premium increases or
the imposition of large deductible or co-insurance requirements, would have a
material adverse effect on the Company's business, results of operations and
financial condition.

LIMITED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS

The Company's future success will depend on its ability to protect its
intellectual property rights. The Company presently holds no patents or
registered copyrights, and relies upon a combination of copyright and trade
secret laws, non-disclosure and other contractual arrangements and various
security measures to protect its intellectual property rights. India is a member
of the Berne Convention, and has agreed to recognize protections on copyrights
conferred under the laws of foreign countries, including the laws of the United
States. The Company believes that laws, rules, regulations and treaties in
effect in the United States and India are adequate to protect it from
misappropriation or unauthorized use of its copyrights. However, there can be no
assurance that such laws will not change and, in particular, that the laws of
India will not change in ways that may prevent or restrict the transfer of
software components, libraries and toolsets from India to the United States.
There can be no assurance that the steps taken by the Company to protect its
intellectual property rights will be adequate to deter misappropriation of any
of its intellectual property, or that the Company will be able to detect
unauthorized use and take appropriate steps to enforce its rights.

A competitor of the Company recently announced the filing with the U.S.
Patent and Trademark Office of three patent applications relating to Year 2000
processes. The Company does not know the proprietary features of the processes
covered by such patent applications since patent applications are not publicly
available until the patents are issued. The Company has no prior relationship
with this competitor. Although the Company believes that its intellectual
property rights do not infringe on the intellectual property rights of such
competitor or others, there can be no assurance that such claims will not be
asserted against the Company in the future, that assertion of such claims will
not result in litigation or that the Company would prevail in such litigation or
be able to obtain a license for the use of any infringed intellectual property
from a third party on commercially reasonable terms, if at all. The Company
expects that the risk of infringement claims against the Company will increase
if more of the Company's competitors are able to successfully obtain patents for
software products and processes. Any such claims, regardless of their outcome,
could result in substantial cost to the Company and divert management's
attention from the Company's operations. Any infringement claim or litigation
against the Company could, therefore, have a material adverse effect on the
Company's business, results of operations and financial condition.

Pursuant to the License Agreement between Cognizant and the Company (the
"License Agreement"), effective upon the consummation of this offering,
Cognizant has granted to the Company a non-exclusive, non-transferable,
revocable license to use the "Cognizant" name and certain related trade and
service marks. The License Agreement provides that, subject to Cognizant's right
to revoke such license under certain circumstances, such license will remain in
effect for at least ten years following this offering. The revocation of such
license could have a material adverse effect on the Company's business, results
of operations and financial condition. However, Cognizant has agreed to transfer
all of its rights to the "Cognizant" name and related trade and service marks to
the Company upon the consummation of the previously announced reorganization of
Cognizant which, subject to certain conditions, is expected to be consummated by
mid-1998. See "Company Background," "Business--Intellectual Property" and
"Certain Transactions--Agreements with Cognizant."

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RISKS ASSOCIATED WITH INTERNATIONAL SALES AND OPERATIONS

Revenues from customers outside of North America represented 19.9%, 14.3%
and 16.6% of the Company's revenues for 1996, 1997 and the three months ended
March 31, 1998, respectively. The Company anticipates that revenues from
customers outside of North America will continue to account for a material
portion of its revenues in the foreseeable future and may increase as the
Company expands its international presence, particularly in Europe. In addition,
a substantial majority of the Company's employees and all of its software
development centers are located in India. As a result, the Company may be
subject to certain risks associated with international operations, including
risks associated with foreign currency exchange rate fluctuations and risks
associated with the application and imposition of protective legislation and
regulations relating to import or export or otherwise resulting from foreign
policy or the variability of foreign economic conditions. To date, the Company
has not engaged in any hedging transactions to mitigate its risks relating to
exchange rate fluctuations. Additional risks associated with international
operations include difficulties in enforcing intellectual property rights, the
burdens of complying with a wide variety of foreign laws, potentially adverse
tax consequences, tariffs, quotas and other barriers and potential difficulties
in collecting accounts receivable. There can be no assurance that these and
other factors will not have a material adverse effect on the Company's business,
results of operations and financial condition. See "--United States Immigration
Issues," "--Exposure to Regulatory, Economic and Political Conditions in India"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations."

RISKS ASSOCIATED WITH POSSIBLE ACQUISITIONS

The Company believes that opportunities exist to expand its geographic
presence, enter new technology areas or expand capacity through strategic
acquisitions. As of the date of this Prospectus, the Company has no agreements,
commitments or understandings to effect any acquisition and is not engaged in
any negotiations with respect to any acquisition. There can be no assurance that
the Company will identify suitable acquisition candidates available for sale at
reasonable prices, consummate any acquisition or successfully integrate any
acquired business into the Company's operations. Further, acquisitions involve a
number of special risks, including diversion of management's attention, failure
to retain key personnel, unanticipated events or circumstances, legal
liabilities, amortization of acquired intangible assets and potential exposure
to the Year 2000 problem, some or all of which could have a material adverse
effect on the Company's business, results of operations and financial condition.
The Company may finance any future acquisitions with a portion of the proceeds
from this offering as well as with debt financing, the issuance of equity
securities or a combination of the foregoing. There can be no assurance that the
Company will be able to arrange adequate financing on acceptable terms. In
addition, acquisitions financed with the issuance of the Company's equity
securities could be dilutive. Under current accounting principles relating to
purchase accounting, for so long as the Company is controlled by Cognizant and
for a period of two years thereafter and until the Company is autonomous, any
business combination involving the Company must be accounted for as a purchase,
and not as a pooling of interests. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Risks Associated with the Year
2000" and "Business--Strategy."

DEPENDENCE ON KEY PERSONNEL

The Company's future performance depends to a significant degree upon the
continued service of the key members of its management team, as well as
marketing, sales and technical personnel, and its ability to attract and retain
new management and other personnel. The Company does not maintain key man life
insurance on any of its executive officers or significant employees. Although
the Company has entered into noncompetition agreements with its executive
officers, there can be no assurance that such agreements are enforceable and
such agreements do not ensure the continued service of such executive officers.
Competition for such personnel is intense, and there can be no assurance that
the Company will be able to retain its

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<PAGE>
key employees or that it will be successful in attracting and retaining new
personnel in the future. The loss of any one or more of the Company's key
personnel or the failure to attract and retain key personnel could have a
material adverse effect on the Company's business, results of operations and
financial condition. See "Management."

SHARES ELIGIBLE FOR FUTURE SALE

Upon consummation of this offering, the Company will have outstanding
3,030,750 shares of Class A Common Stock and 6,083,000 shares of Class B Common
Stock. Of these shares, the 2,917,000 shares of Class A Common Stock offered
hereby will be freely tradable without restriction in the public market, unless
purchased by affiliates of the Company.

Cognizant and the executive officers and directors of the Company, who will
own an aggregate of 113,750 shares of Class A Common Stock and 6,083,000 shares
of Class B Common Stock upon consummation of this offering, have agreed that
they will not, directly or indirectly, offer to sell, sell or otherwise dispose
of any shares of Class A Common Stock or securities convertible into or
exchangeable or exercisable for shares of Class A Common Stock (including the
Class B Common Stock) for 180 days after the date of the Prospectus without the
prior consent of BancAmerica Robertson Stephens. BancAmerica Robertson Stephens
may, in its sole discretion and at any time without notice, release all or any
portion of the securities subject to the lock-up agreements. See "Underwriting."

Pursuant to the Intercompany Agreement, Cognizant has certain contractual
rights to cause the Company to register Cognizant's shares for sale. In
addition, the Company intends to file registration statements on Form S-8 under
the Securities Act as soon as practicable after consummation of this offering in
order to register all shares of Class A Common Stock issuable or reserved for
issuance under the Employee Option Plan, the Directors' Option Plan and other
outstanding options.

Sales of substantial amounts of the Class A Common Stock or the availability
of such shares for sale could adversely affect prevailing market prices of the
Class A Common Stock. See "Certain Transactions" and "Shares Eligible for Future
Sale."

CERTAIN ANTI-TAKEOVER PROVISIONS

The Company's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation") and the DGCL contain provisions that may have
the effect of deterring unsolicited takeover proposals or delaying or preventing
changes in control or management of the Company, including transactions in which
stockholders might otherwise receive a premium for their shares over then
current market prices. In addition, these provisions may limit the ability of
stockholders to approve transactions that they may deem to be in their best
interests. The Company's Board of Directors has the authority, subject to
approval by Cognizant pursuant to the Intercompany Agreement, without further
action by the stockholders, to fix the rights and preferences, and issue shares,
of preferred stock. The DGCL also contains provisions preventing certain
stockholders from engaging in business combinations with the Company, subject to
certain exceptions. Such provisions could also discourage bids for the shares of
Class A Common Stock at a premium as well as create a depressive effect on the
market price of the shares of Class A Common Stock. Because of the voting
control of Cognizant, there can be no change in control

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of the Company or its Board of Directors without the consent of Cognizant. See
"--Control by Principal Stockholder; Benefits of Offering to Cognizant" and
"Description of Capital Stock."

NO PRIOR PUBLIC MARKET FOR COMMON STOCK; POSSIBLE VOLATILITY OF STOCK PRICE

Prior to this offering, there has been no public market for the Class A
Common Stock. Although the Class A Common Stock has been approved for quotation
on the Nasdaq National Market, subject to official notice of issuance, there can
be no assurance that an active trading market will develop or be sustained after
this offering. The initial public offering price of the Class A Common Stock
offered hereby was determined through negotiations among the Company, Cognizant
and the Representatives (as defined) of the Underwriters and may bear no
relationship to the market price of the Class A Common Stock after this
offering. The market price of the Class A Common Stock will be subject to
significant fluctuations in response to variations in quarterly operating
results, technological innovation by the Company or its competitors and general
market conditions specific to the IT services industry. The stock prices for
many companies in the technology and emerging growth sectors have experienced
wide fluctuations which have often been unrelated to the operating performance
of such companies. These broad fluctuations may adversely affect the market
price of the Class A Common Stock. See "--Risk of Significant Fluctuations in
Quarterly Operating Results" and "Underwriting."

BROAD DISCRETION AS TO USE OF PROCEEDS

A substantial portion of the net proceeds to be received by the Company from
this offering is allocated to working capital and general corporate purposes.
Accordingly, the Company's management will have broad discretion with respect to
the expenditure of such proceeds. Purchasers of shares of Class A Common Stock
offered hereby will be entrusting their funds to the Company's management, upon
whose judgment they must depend, with limited information concerning the
specific working capital requirements and general corporate purposes to which
the funds will ultimately be applied. See "Use of Proceeds."

IMMEDIATE AND SUBSTANTIAL DILUTION

Purchasers of Class A Common Stock will experience immediate and substantial
dilution in net tangible book value per share of the Class A Common Stock from
the initial public offering price per share. After giving effect to the sale of
the 2,500,000 shares of Class A Common Stock offered by the Company hereby,
after deducting underwriting discounts and commissions and estimated offering
expenses payable by the Company, and the application of the net proceeds
therefrom, the Company's pro forma net tangible book value as of March 31, 1998
would have been $25.0 million, or $2.74 per share of Class A Common Stock. This
represents an immediate dilution in net tangible book value of $7.26 per share
to new investors purchasing shares in this offering. See "Dilution."

ABSENCE OF DIVIDENDS

The Company has never paid cash dividends and does not anticipate paying any
cash dividends on its Class A Common Stock for the foreseeable future. See
"Dividend Policy."

17
<PAGE>
COMPANY BACKGROUND

In November 1996, the Company, Erisco, IMS, Nielsen Media Research, Pilot
Software, Sales Technologies and certain other entities, plus a majority
interest in Gartner Group, were spun-off from The Dun & Bradstreet Corporation
to form Cognizant, the parent of the Company. At that time, ACNielsen was
separately spun-off from The Dun & Bradstreet Corporation and Dun & Bradstreet
Software was sold to GEAC. In 1997, Cognizant sold Pilot Software to a third
party. Also in 1997, the Company purchased the 24.0% minority interest in its
Indian subsidiary from a third party for $3.4 million resulting in the entity
becoming a wholly owned subsidiary of the Company.

During 1996, the Company made a strategic decision to attract customers that
were not affiliated with Cognizant or any of the former affiliates of The Dun &
Bradstreet Corporation. As a result, sales from customers not currently or
previously affiliated with Cognizant, The Dun & Bradstreet Corporation and any
of their respective subsidiaries grew from $1.3 million or 11.2% of revenues in
1996 to $6.5 million or 26.3% of revenues in 1997 and $3.1 million or 29.8% of
revenues for the three months ended March 31, 1998. Approximately 36.4%, 41.8%
and 36.2% of the Company's revenues in 1996, 1997 and the three months ended
March 31, 1998, respectively, were generated from Cognizant and its current
affiliates and an additional 52.4%, 31.9% and 34.0% of the Company's revenues in
1996, 1997 and the three months ended March 31, 1998, respectively, were
generated from companies previously affiliated with The Dun & Bradstreet
Corporation.

Prior to this offering, Cognizant has held substantially all of the capital
stock of the Company and will hold approximately 66.7% of the Common Stock and
95.3% of the combined voting power of the outstanding Common Stock upon
consummation of this offering (61.9% and 94.2%, respectively, if the
Underwriters' over-allotment option is exercised in full) and will have certain
rights with respect to the Company pursuant to agreements entered into in
connection with this offering. Further, a majority of the Board of Directors of
the Company are employees of Cognizant or the Company. In addition, Cognizant
will continue to provide certain corporate services to the Company following
this offering. The Company will use a portion of the net proceeds to repay the
intercompany balance owed to Cognizant at the time of the consummation of this
offering. The intercompany balance was approximately $6.5 million as of March
31, 1998. This amount is subject to change based on the Company's operations
between March 31, 1998 and the consummation of this offering. See "Use of
Proceeds," "Certain Transactions" and "Description of Capital Stock."

On January 15, 1998, Cognizant announced that it would reorganize by
splitting the Nielsen Media Research business from the rest of its businesses,
creating two publicly traded companies, IMS Health Incorporated ("IMS HEALTH")
and Nielsen Media Research. Subject to certain conditions, including obtaining a
ruling on the reorganization from the Internal Revenue Service and final
Cognizant board approval, Cognizant expects the reorganization to be consummated
by mid-1998. The shares of the Company held by Cognizant will be held by IMS
HEALTH following the reorganization and all services previously provided to the
Company by Cognizant will be provided by IMS HEALTH. Upon consummation of the
reorganization, Cognizant's rights to the Cognizant name and related trade and
service marks will be transferred to the Company. See "Certain
Transactions--Agreements with Cognizant." Following the reorganization, Nielsen
Media Research will no longer be affiliated with the Company. For the year ended
December 31, 1997 and the three months ended March 31, 1998, approximately $4.4
million or 17.6% and $1.4 million or 13.3%, respectively, of the Company's
revenues were generated from Nielsen Media Research.

18
<PAGE>
USE OF PROCEEDS

The net proceeds to the Company from the sale of the 2,500,000 shares of
Class A Common Stock offered by the Company hereby are estimated to be
approximately $22.4 million, after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company. The Company
will not receive any proceeds from the sale of shares of Class A Common Stock by
Cognizant in this offering. See "Principal and Selling Stockholders."

The principal purposes of this offering are to increase the Company's equity
capital, to establish a public market for the Company's Class A Common Stock, to
provide enhanced equity incentives to attract and retain key employees, to
increase the Company's visibility in the marketplace, to facilitate future
access to public capital markets and to obtain additional working capital.

The Company will use a portion of the net proceeds to repay the intercompany
balance owed to Cognizant, which was approximately $6.5 million as of March 31,
1998. This amount is subject to change based on the Company's operations between
March 31, 1998 and the consummation of this offering. This intercompany balance
is the result of certain advances from Cognizant consisting of approximately
$3.4 million used to purchase the minority interest of the Company's Indian
subsidiary and the remainder primarily to fund payroll and accounts payable. The
Company does not pay interest on its intercompany advances from Cognizant. Of
the remaining net proceeds, up to $3.5 million will be used for capital
expenditures in 1998, primarily for hardware, software and leasehold
improvements for the Company's software development centers in India. The
remainder will be used for working capital and other general corporate purposes.
Pending such uses, the Company intends to invest the net proceeds in short-term,
interest-bearing, investment grade securities. See "Risk Factors--Broad
Discretion as to Use of Proceeds" and "Management's Discussion and Analysis of
Financial Condition and Results of Operations."

The Company may also use a portion of the net proceeds to fund possible
acquisitions of, or investments in, businesses and technologies that are
complementary to those of the Company. The Company has no specific agreements,
commitments or understandings, and is not engaged in any negotiations, with
respect to any acquisitions or investments. See "Risk Factors--Risks Associated
with Possible Acquisitions" and "Business--Strategy."

DIVIDEND POLICY

The Company has never paid cash dividends on the Common Stock and does not
anticipate paying cash dividends on the Common Stock in the foreseeable future.
Management anticipates that all earnings and other cash resources of the
Company, if any, will be retained by the Company for investment in its business.
The payment of dividends is subject to the discretion of the Board of Directors
of the Company and will depend on the Company's results of operations, financial
position and capital requirements, general business conditions, restrictions
imposed by financing arrangements, if any, legal and regulatory restrictions on
the payment of dividends and other factors the Board of Directors deems
relevant. See "Management's Discussion and Analysis of Financial Condition and
Results of Operations--Liquidity and Capital Resources."

19
<PAGE>
CAPITALIZATION

The following table sets forth, as of March 31, 1998, the capitalization of
the Company and balance due to related party (i) on an actual basis, (ii) on a
pro forma basis giving effect to the termination upon the consummation of this
offering of the put rights associated with the outstanding mandatorily
redeemable common stock and (iii) on a pro forma as adjusted basis after giving
effect to the sale by the Company of the 2,500,000 shares of Class A Common
Stock offered by the Company hereby, after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company, and the
application of the net proceeds therefrom as described in "Use of Proceeds."
This table should be read in conjunction with "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and the Consolidated
Financial Statements and Notes thereto appearing elsewhere in this Prospectus.
<TABLE>
<CAPTION>
AT MARCH 31, 1998
-----------------------------------
<S> <C> <C> <C>
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
--------- ----------- -----------

<CAPTION>
(in thousands, except share and per
share data)
<S> <C> <C> <C>
Due to related party......................................................... $ 6,474 $ 6,474 $ --
--------- ----------- -----------
--------- ----------- -----------
Mandatorily Redeemable Common Stock (1)...................................... $ 438 $ -- $ --
--------- ----------- -----------
--------- ----------- -----------
Stockholders' equity:
Preferred Stock, $.10 par value; 15,000,000 shares authorized; none issued
and outstanding actual, pro forma or pro forma
as adjusted................................................................ $ -- $ -- $ --
Class A Common Stock, $.01 par value; 100,000,000 shares authorized; 417,000
shares issued and outstanding actual, 530,750 shares issued and outstanding
pro forma and 3,030,750 shares issued and outstanding pro forma as adjusted
(2)........................................................................ 4 5 30
Class B Common Stock, $.01 par value; 15,000,000 shares authorized; 6,083,000
shares issued and outstanding actual, pro forma and pro forma as
adjusted................................................................... 61 61 61
Additional paid-in capital................................................... 1,482 1,919 24,299
Retained earnings............................................................ 2,648 2,648 2,648
Cumulative translation adjustment............................................ 1 1 1
--------- ----------- -----------
Total stockholders' equity............................................... 4,196 4,634 27,039
--------- ----------- -----------
--------- ----------- -----------
Total capitalization................................................... $ 11,108 $ 11,108 $ 27,039
--------- ----------- -----------
--------- ----------- -----------
</TABLE>

- ------------------------
(1) Consists of 113,750 shares of Class A Common Stock held by certain directors
and executive officers of the Company who have the right to sell such shares
back to the Company at cost. Such rights will expire upon the consummation
of this offering.

(2) Excludes as of the date of this Prospectus (i) 507,000 shares of Class A
Common Stock issuable upon the exercise of outstanding stock options granted
under the Employee Option Plan at a weighted average exercise price of $3.85
per share, (ii) 112,200 shares of Class A Common Stock issuable upon
exercise of options granted under the Employee Option Plan effective upon
the consummation of this offering to certain employees at an exercise price
equal to the initial public offering price, (iii) 49,500 shares of Class A
Common Stock issuable upon the exercise of outstanding stock options granted
under the Directors' Option Plan at a weighted average exercise price of
$9.76 per share, (iv) 79,550 and 22,000 shares of Class A Common Stock
reserved for future issuance pursuant to the Employee Option Plan and the
Directors' Option Plan, respectively, and (v) 48,750 shares of Class A
Common Stock issuable upon the exercise of outstanding options granted to
Wijeyaraj Mahadeva, the Company's Chairman and Chief Executive Officer, at
an exercise price of $6.92 per share. See "Management--Stock Option Plans"
and "Principal and Selling Stockholders."

20
<PAGE>
DILUTION

The net tangible book value of the Company as of March 31, 1998 was $2.6
million, or $0.39 per share of outstanding Common Stock. Net tangible book value
per share is equal to the Company's total tangible assets less total
liabilities, divided by the total number of shares of Common Stock outstanding.
After giving effect to the sale of the 2,500,000 shares of Class A Common Stock
offered by the Company hereby, after deducting underwriting discounts and
commissions and estimated offering expenses payable by the Company, and the
receipt of the net proceeds therefrom, the adjusted net tangible book value of
the Company as of March 31, 1998 would have been $25.0 million, or $2.74 per
share of Common Stock. This represents an immediate increase in net tangible
book value of $2.35 per share to the existing stockholders and an immediate
dilution of $7.26 per share to investors purchasing shares of Class A Common
Stock in this offering. The following table illustrates this per share dilution
to new investors:

<TABLE>
<S> <C> <C>
Initial public offering price per share..................... $ 10.00

Net tangible book value per share at March 31, 1998....... $ 0.39
Increase per share attributable to new investors.......... 2.35
---------
Net tangible book value per share after this offering....... 2.74
---------
Dilution per share to new investors......................... $ 7.26
---------
---------
</TABLE>

The following table summarizes as of March 31, 1998 the differences between
number of shares of Common Stock purchased from the Company, the total
consideration paid and the average price paid per share by the existing
stockholders and by new investors:

<TABLE>
<CAPTION>
SHARES PURCHASED(1) TOTAL CONSIDERATION
----------------------- -------------------------- AVERAGE PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
---------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Existing stockholders(1).................. 6,613,750 72.6% $ 1,985,000 7.4% $ 0.30

New investors............................. 2,500,000 27.4 25,000,000 92.6 10.00
---------- ----- ------------- -----
Total................................. 9,113,750 100.0% $ 26,985,000 100.0%
---------- ----- ------------- -----
---------- ----- ------------- -----
</TABLE>

- ------------------------

(1) Sales by the Selling Stockholder in this offering will cause the number of
shares of Common Stock held by existing stockholders to be reduced to
6,196,750 shares, or 68.0% of the total number of shares of Common Stock to
be outstanding after this offering (or 61.9%, if the Underwriters'
over-allotment option is exercised in full), and will increase the number of
shares of Common Stock held by the new investors to 2,917,000 shares, or
32.0% of the total number of shares of Common Stock to be outstanding
immediately after this offering (or 3,354,500 shares, or 36.8%, if the
Underwriters' over-allotment option is exercised in full). See "Principal
and Selling Stockholders."

The calculation of net tangible book value per share and the other
computations above exclude, as of the date of this Prospectus, (i) 507,000
shares of Class A Common Stock issuable upon the exercise of outstanding stock
options granted under the Employee Option Plan at a weighted average exercise
price of $3.85 per share, (ii) 112,200 shares of Class A Common Stock issuable
upon exercise of options granted under the Employee Option Plan effective upon
the consummation of this offering to certain employees at an exercise price
equal to the initial public offering price, (iii) 49,500 shares of Class A
Common Stock issuable upon the exercise of outstanding stock options granted
under the Directors' Option Plan at a weighted average exercise price of $9.76
per share, (iv) 79,550 and 22,000 shares of Class A Common Stock reserved for
future issuance pursuant to the Employee Option Plan and the Directors' Option
Plan, respectively, and (v) 48,750 shares of Class A Common Stock issuable upon
the exercise of outstanding options granted to Wijeyaraj Mahadeva, the Company's
Chairman and Chief Executive Officer, at an exercise price of $6.92 per share.
See "Capitalization," "Management--Stock Option Plans" and "Principal and
Selling Stockholders."

21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The consolidated statement of operations data and consolidated balance sheet
data set forth below as of and for each of the years ended December 31, 1994
through December 31, 1997 have been derived from the Company's audited
consolidated financial statements. The Company's audited consolidated financial
statements as of December 31, 1996 and 1997 and for each of the three years in
the period ended December 31, 1997 are included elsewhere in this Prospectus.
The consolidated statement of operations data for the three months ended March
31, 1997 and 1998, and the consolidated balance sheet data as of March 31, 1998,
are derived from unaudited consolidated financial statements of the Company
prepared in accordance with accounting standards appropriate for interim
financial statements and, in the opinion of management, include all adjustments
consisting of normal recurring adjustments necessary for a fair presentation of
the Company's financial position and results of operations. Historical results
are not necessarily indicative of results to be expected for any future period.
The selected consolidated financial data set forth below should be read in
conjunction with the Consolidated Financial Statements and Notes thereto and
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" appearing elsewhere in this Prospectus.

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------------------ --------------------
1994 1995 1996 1997 1997 1998
--------- --------- --------- --------- --------- ---------
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA: (1)
Total revenues........................ $ 1,687 $ 7,175 $ 12,032 $ 24,744 $ 4,256 $ 10,238
Cost of revenues...................... 534 3,567 6,020 14,359 2,407 5,929
Gross profit.......................... 1,153 3,608 6,012 10,385 1,849 4,309
Selling, general and administrative
expense............................. 1,416 2,589 4,546 8,256 1,684 3,185
Income (loss) from operations......... (263) 1,019 1,466 2,129 165 1,124
Income (loss) before provision for
income taxes........................ (278) 1,070 1,475 2,154 166 1,138
Minority interest (2)................. (22) (362) (492) (545) (104) --
Net income (loss)..................... $ (195) $ 461 $ 642 $ 1,028 $ 44 $ 712
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Net income (loss) per share, basic.... $ (0.03) $ 0.07 $ 0.10 $ 0.16 $ 0.01 $ 0.11
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Net income (loss) per share, diluted
(3)................................. $ (0.03) $ 0.07 $ 0.10 $ 0.16 $ 0.01 $ 0.10
--------- --------- --------- --------- --------- ---------
--------- --------- --------- --------- --------- ---------
Weighted average number of common
shares outstanding.................. 6,500 6,500 6,500 6,547 6,500 6,614
Weighted average number of common
shares and stock options
outstanding......................... 6,500 6,500 6,500 6,605 6,500 6,818

Supplemental net income per share,
basic and diluted (4)............... $ 0.14 $ 0.10
--------- ---------
--------- ---------
</TABLE>

<TABLE>
<CAPTION>
AT DECEMBER 31,
------------------------------------------ AT MARCH 31,
1994 1995 1996 1997 1998
--------- --------- --------- --------- ------------
<S> <C> <C> <C> <C> <C>
(in thousands)
CONSOLIDATED STATEMENT OF FINANCIAL POSITION DATA: (1)
Cash and cash equivalents.............................. $ 174 $ 546 $ 1,810 $ 2,715 $ 2,197
Working capital........................................ 305 1,126 2,781 5,694 6,922
Total assets........................................... 1,824 5,451 7,827 18,298 19,452
Due to related party................................... 690 662 976 6,646 6,474
Total stockholders' equity............................. 408 1,766 2,806 3,419 4,196
</TABLE>

- ------------------------

(1) See Note 1 of Notes to Consolidated Financial Statements.
(2) Minority interest was attributed to the 24.0% ownership of the Company's
Indian subsidiary by a third party. In October 1997, the Company purchased
this 24.0% interest for $3.4 million. See "Management's Discussion and
Analysis of Financial Condition and Results of Operations" and "Company
Background."

22
<PAGE>
(3) Diluted net income (loss) per share was calculated in a manner consistent
with basic net income (loss) per share which includes potentially dilutive
options to purchase 57,130 shares of Class A Common Stock for the year ended
December 31, 1997 and potentially dilutive options to purchase 204,646
shares of Class A Common Stock for the three months ended March 31, 1998.
(4) Supplemental net income per share is presented to reflect the impact on net
income per share when proceeds from 647,400 shares of Class A Common Stock
offered by the Company hereby are used to repay the intercompany balance
owed to Cognizant. The supplemental basic shares of 7,194,796 and diluted
shares of 7,251,925 as of December 31, 1997 were computed by adding 647,400
shares of Class A Common Stock offered by the Company hereby to the
6,547,396 basic weighted average shares outstanding and to the 6,604,525
diluted weighted average shares outstanding as of December 31, 1997. The
supplemental basic shares of 7,261,150 and diluted shares of 7,465,796 as of
March 31, 1998 were computed by adding 647,400 shares of Class A Common
Stock offered by the Company hereby to 6,613,750 basic weighted average
shares outstanding and to the 6,818,396 diluted weighted average shares
outstanding as of March 31, 1998.

23
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion contains forward-looking statements which involve
risks and uncertainties. The Company's actual results may differ significantly
from the results discussed in the forward-looking statements. Factors that might
cause such a difference include, but are not limited to, those discussed in
"Risk Factors."

OVERVIEW

CTS delivers full life cycle software development and maintenance services
to its customers through the use of a seamless on-site and offshore project
team. These services include application development and maintenance services,
Year 2000 and Eurocurrency compliance services, testing and quality assurance
services and re-hosting and re-engineering services. At March 31, 1998, the
Company employed approximately 270 persons in its North American headquarters
and satellite offices and on-site North American customer locations,
approximately 30 persons in its European satellite office and on-site European
customer locations and approximately 870 persons in its six offshore software
development centers in India.

The Company began its software development and maintenance services business
in early 1994, as an in-house technology development center for The Dun &
Bradstreet Corporation and its operating units. In 1996, the Company, Erisco,
IMS, Nielsen Media Research, Pilot Software, Sales Technologies and certain
other entities, plus a majority interest in Gartner Group, were spun-off from
The Dun & Bradstreet Corporation to form Cognizant, the parent of the Company.
In 1997, the Company purchased the 24.0% minority interest in its Indian
subsidiary from a third party for $3.4 million, making the subsidiary wholly
owned by the Company.

During 1996, the Company made a strategic decision to attract customers that
were not affiliated with Cognizant or any of the former affiliates of The Dun &
Bradstreet Corporation. As a result, sales from customers not currently or
previously affiliated with Cognizant, The Dun & Bradstreet Corporation and any
of their respective subsidiaries grew from $1.3 million, or 11.2% of revenues,
in 1996 to $6.5 million, or 26.3% of revenues, in 1997 and $3.1 million, or
29.8% of revenues, for the three months ended March 31, 1998. While the Company
has been engaged in providing software development and maintenance solutions
since 1994, it has provided services to third-party customers for only a limited
time period and has generated only limited revenues from such engagements. There
can be no assurance that the Company will continue to secure business from
unaffiliated third parties or, if it does, that it will be successful in
retaining such customers. See "Risk Factors--Limited Operating History with
Unaffiliated Customers; Limited Third-Party Revenues to Date," "Company
Background," "Business--Customers and Representative Projects" and "Certain
Transactions--Agreements with Cognizant."

Approximately 95.8%, 88.8%, 73.7% and 70.2% of the Company's revenues in
1995, 1996, 1997 and the three months ended March 31, 1998, respectively, were
generated from current and former affiliates of the Company and The Dun &
Bradstreet Corporation, including approximately 26.1%, 36.4%, 41.8% and 36.2%,
respectively, from Cognizant and its current subsidiaries. In addition, the
Company has derived and believes that it will continue to derive a significant
portion of its revenues from a limited number of large third-party customers.
During 1995, 1996, 1997 and the three months ended March 31, 1998, the Company's
five largest customers (other than Cognizant and its current subsidiaries)
accounted for 73.8%, 60.0%, 36.6% and 45.6% of revenues, respectively. In 1995,
Dun & Bradstreet Software (which was subsequently acquired by GEAC), The Dun &
Bradstreet Corporation and ACNielsen, all of whom were affiliates of the Company
prior to November 1996, accounted for approximately 32.9%, 17.4% and 14.6%,
respectively, of the Company's revenues. In 1996, Dun & Bradstreet Software,
ACNielsen and The Dun & Bradstreet Corporation accounted for approximately
17.9%, 14.6% and 13.3%, respectively, of the Company's revenues. In 1997,
ACNielsen accounted for 13.9% of the Company's revenues. For the three

24
<PAGE>
months ended March 31, 1998, ACNielsen and GEAC accounted for 14.5% and 12.1% of
the Company's revenues, respectively. The volume of work performed for Cognizant
and its subsidiaries and other customers is likely to vary from year to year,
and a major customer, whether affiliated or unaffiliated, in one year may not
provide the same level of revenues in any subsequent year. See "Risk
Factors--Customer Concentration" and "--Limited Operating History With
Unaffiliated Customers; Limited Third-Party Revenues To Date."

Approximately 31.0%, 26.4%, 44.4% and 46.8% of the Company's revenues were
derived from Year 2000 compliance services in 1995, 1996, 1997 and the three
months ended March 31, 1998, respectively. Application development services
represented approximately 24.4%, 20.9%, 19.4% and 22.1% of the Company's
revenues in 1995, 1996, 1997 and the three months ended March 31, 1998,
respectively. Application maintenance services accounted for 33.8%, 44.2%, 28.4%
and 21.7% of the Company's revenues in 1995, 1996, 1997 and the three months
ended March 31, 1998, respectively.

The Company's services are performed on either a time-and-materials or
fixed-price basis. The Company expects that an increasing number of its future
projects will be fixed-price rather than time-and-materials (which has
historically been the basis for its contracts). Revenues related to
time-and-materials contracts are recognized as the service is performed.
Revenues related to fixed-price contracts are recognized using the
percentage-of-completion method of accounting, under which the sales value of
performance, including earnings thereon, is recognized on the basis of the
percentage that each contract's cost to date bears to the total estimated cost.
Estimates are subject to adjustment as a project progresses to reflect changes
in expected completion costs or dates. The cumulative impact of any revision in
estimates of the percentage of work completed is reflected in the financial
reporting period in which the change in the estimate becomes known, and any
anticipated losses are recognized immediately. Since the Company bears the risk
of cost over-runs and inflation associated with fixed-price projects, the
Company's operating results may be adversely affected by changes in estimates of
contract completion costs and dates. See "Risk Factors--Risks Associated with
Fixed-Price Projects."

The majority of the Company's revenues are earned within North America.
Revenues outside of North America totaled $1.4 million, $2.4 million, $3.5
million and $1.7 million in 1995, 1996, 1997 and the three months ended March
31, 1998, respectively. Revenues outside of North America have historically been
generated primarily in the United Kingdom and Germany. As a percentage of
revenues, revenues outside of North America represented 20.0%, 19.9%, 14.3% and
16.6% in 1995, 1996, 1997 and the three months ended March 31, 1998,
respectively. The primary denomination for invoices issued by the Company is
U.S. dollars, with the exception of invoices issued in Canada and the United
Kingdom which are issued in local currency. Gains and losses as a result of
fluctuations in foreign currency exchange rates have not had a significant
impact on results of operations.

25
<PAGE>
RESULTS OF OPERATIONS

The following table sets forth certain financial data for the periods
indicated expressed as a percentage of total revenues:

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
Total revenues.................................... 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues.................................. 49.7 50.0 58.0 56.6 57.9
--------- --------- --------- --------- ---------
Gross profit...................................... 50.3 50.0 42.0 43.4 42.1

Selling, general and administrative expense....... 36.1 37.8 33.4 39.6 31.1
--------- --------- --------- --------- ---------
Income from operations............................ 14.2 12.2 8.6 3.9 11.0

Interest income................................... 0.1 0.1 0.1 -- 0.3
Other income, net................................. 0.6 -- -- -- (0.2)
--------- --------- --------- --------- ---------
Total other income.............................. 0.7 0.1 0.1 -- 0.1

Income before provision for income taxes.......... 14.9 12.3 8.7 3.9 11.1
Provision for income taxes........................ (3.4) (2.8) (2.3) (0.4) (4.1)
Minority interest................................. (5.0) (4.1) (2.2) (2.4) --
--------- --------- --------- --------- ---------
Net income........................................ 6.4% 5.3% 4.2% 1.0% 7.0%
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

THREE MONTHS ENDED MARCH 31, 1998 AND 1997

TOTAL REVENUES. The Company's revenues increased 140.6% from $4.3 million
in the three months ended March 31, 1997 to $10.2 million in the three months
ended March 31, 1998. This increase included $3.1 million of increased sales of
Year 2000 compliance services, and $2.8 million of increased sales of software
development, maintenance and Eurocurrency compliance services. The percentage of
revenues from unrelated parties increased from 50.2% or $2.1 million in the
three months ended March 31, 1997 to 63.8% or $6.5 million in the three months
ended March 31, 1998. This increase resulted from the Company's continued
efforts to pursue unaffiliated third-party customers.

GROSS PROFIT. Gross profit increased 133.0% from $1.8 million in the three
months ended March 31, 1997 to $4.3 million in the three months ended March 31,
1998. As a percentage of revenues, gross profit declined from 43.4% in the three
months ended March 31, 1997 to 42.1% in the three months ended March 31, 1998.
Cost of revenues, consisting primarily of the cost of salaries, payroll taxes,
benefits, immigration and travel for technical personnel, and the cost of sales
commissions related to revenues increased from $2.4 million in the three months
ended March 31, 1997 to $5.9 million in the three months ended March 31, 1998.
The increase in cost of revenues was primarily attributable to an increase in
the number of the Company's technical professionals from approximately 650
employees at March 31, 1997 to approximately 1,060 employees at March 31, 1998.
The increase in cost of revenues as a percentage of revenues resulted primarily
from a movement in the mix of programmers from offshore to on-site locations,
which resulted in higher labor rates and lower gross margins.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense consists primarily of salaries, employee benefits,
travel, promotion, communications, management, finance, administrative and
occupancy costs. Selling, general and administrative expense increased 117.6%
from $1.7 million in the three months ended March 31, 1997 to $3.2 million in
the three months ended March 31, 1998. This increase included $0.6 million in
increased sales and marketing expenses and $0.9 million in increased
infrastructure expenses to support the Company's revenue growth. As a percentage
of revenues, selling, general and administrative expense declined from 39.6% in
the three months ended March 31, 1997 to 31.1% in the three months ended March
31, 1998. Management expects selling, general and administrative expense to
continue to increase in absolute dollars to support the planned growth of the

26
<PAGE>
Company. Management also expects the Company's accounting, insurance and legal
fees and expenses to increase after the consummation of this offering as a
result of being a public company. Moreover, if Cognizant ceases to own at least
50% of the outstanding Common Stock of the Company, the Company may no longer be
able to participate in certain insurance and employee benefit plans as a
subsidiary of Cognizant and the expenses of obtaining coverage and maintaining
such plans would increase. See "Certain Transactions."

INCOME FROM OPERATIONS. Income from operations increased from $165,000 in
the three months ended March 31, 1997 to $1.1 million in the three months ended
March 31, 1998, representing 3.9% and 11.0% of revenues, respectively. The
increase in operating margin was primarily due to the increased third-party
revenue resulting from the Company's sales and marketing efforts during 1997.

PROVISION FOR INCOME TAXES. Historically, the Company has been included in
the consolidated federal income tax returns of The Dun & Bradstreet Corporation
and Cognizant. The Company's provision for income taxes in the consolidated
statements of income reflects federal and state income taxes calculated on the
Company's separate income. The provision for income taxes increased from $19,000
in the three months ended March 31, 1997 to $426,000 in the three months ended
March 31, 1998, resulting in an effective tax rate of 11.4% in 1997 and 37.4% in
1998. Without the effect of minority interest, the effective tax rate would have
been approximately 30.6% in 1997.

MINORITY INTEREST. In the three months ended March 31, 1997, minority
interest expense was $104,000. This expense was attributable to profitability of
the Company's Indian subsidiary in which an unaffiliated third party held a
24.0% minority interest. The Company purchased the minority interest in October
1997 for $3.4 million. The Company has not recognized any minority interest
expense subsequent to such purchase.

NET INCOME. Net income was $44,000 in the three months ended March 31, 1997
as compared to $712,000 in the three months ended March 31, 1998, representing
1.0% and 7.0% of revenues, respectively.

YEARS ENDED DECEMBER 31, 1997 AND 1996

TOTAL REVENUES. The Company's revenues increased 105.7% from $12.0 million
in 1996 to $24.7 million in 1997. This increase included $7.8 million of
increased sales of Year 2000 compliance services, and $4.9 million of increased
sales of software development and maintenance services. The percentage of
revenues from unrelated parties increased from 23.1% or $2.8 million in 1996 to
56.2% or $13.9 million in 1997. This increase resulted from the full-year impact
in 1997 of the fourth quarter 1996 spin-off of Cognizant (including the Company)
from The Dun & Bradstreet Corporation, as well as the Company's expanded efforts
to pursue unaffiliated third-party customers. For statement of operations
purposes, revenues from related parties only include revenues recognized during
the period in which the related party was affiliated with the Company.

GROSS PROFIT. Gross profit increased 72.7% from $6.0 million in 1996 to
$10.4 million in 1997. As a percentage of revenues, gross profit declined from
50.0% in 1996 to 42.0% in 1997. Cost of revenues increased 138.5% from $6.0
million in 1996 to $14.4 million in 1997. The increase in cost of revenues was
primarily attributable to increases in the number of the Company's technical
professionals from approximately 500 employees at December 31, 1996 to
approximately 900 employees at December 31, 1997. The increase in cost of
revenues as a percentage of revenues resulted primarily from a movement in the
mix of programmers from offshore to on-site locations, which resulted in higher
labor rates and lower gross margins.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased 81.6% from $4.5 million in 1996 to $8.3 million
in 1997. This increase included $2.3 million in increased sales and marketing
expenses and $1.4 million in increased infrastructure expenses to support the

27
<PAGE>
Company's revenue growth as the Company opened its fourth development center in
India. As a percentage of revenues, selling, general and administrative expense
declined from 37.8% in 1996 to 33.4% in 1997.

INCOME FROM OPERATIONS. Income from operations increased 45.2% from $1.5
million in 1996 to $2.1 million in 1997, representing 12.2% and 8.6% of
revenues, respectively. The decrease in operating margin was primarily due to
the Company's investment in its expanding sales and marketing infrastructure to
support its strategy of continued pursuit of third-party customers and, to a
lesser extent, the movement in the mix of project staff from offshore to on-site
locations.

PROVISION FOR INCOME TAXES. The provision for income taxes increased 70.4%
from $341,000 in 1996 to $581,000 in 1997, resulting in an effective tax rate of
23.1% in 1996 and 27.0% in 1997. Without the effect of minority interest, the
effective tax rate would have been approximately 35.0% for both periods.

MINORITY INTEREST. In 1996, minority interest expense was $492,000 compared
to $545,000 in 1997. The increase in absolute dollars was attributable to
increased profitability of the Company's Indian subsidiary in which a third
party held the 24.0% minority interest offset by the effect on the income
statement of the purchase of such minority interest in October 1997 for $3.4
million. The Company has not recognized any minority interest expense subsequent
to such purchase.

NET INCOME. Net income was $642,000 in 1996 as compared to $1.0 million in
1997, representing 5.3% and 4.2% as a percentage of revenues, respectively.

YEARS ENDED DECEMBER 31, 1996 AND 1995

TOTAL REVENUES. The Company's revenues increased 67.7% from $7.2 million in
1995 to $12.0 million in 1996. This increase included $.9 million from increased
sales of Year 2000 compliance services, and $3.7 million of increased sales of
software development and maintenance services. The percentage of revenues from
unrelated parties increased from 4.2% in 1995 to 23.1% in 1996. This increase
resulted from the partial impact in 1996 of the spin-off of Cognizant and the
Company from The Dun & Bradstreet Corporation, as well as the Company's initial
efforts to pursue third-party contracts.

GROSS PROFIT. Gross profit increased 66.6% from $3.6 million in 1995 to
$6.0 million in 1996. As a percentage of revenues, gross profit remained
relatively constant at 50.3% in 1995 compared to 50.0% in 1996. Cost of revenues
increased 68.8% from $3.6 million in 1995 to $6.0 million in 1996. The increase
in cost of revenues was primarily attributable to increases in the number of the
Company's technical professionals, located both in India and the United States
from approximately 350 at December 31, 1995 to approximately 500 at December 31,
1996. As a percentage of revenues, cost of revenues remained relatively constant
at 49.7% in 1995 compared to 50.0% in 1996.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSE. Selling, general and
administrative expense increased approximately 75.6% from $2.6 million in 1995
to $4.5 million in 1996. This increase included $1.2 million in increased
expenses incurred to begin expansion of the Company's sales and marketing
activities to attract third-party customers and $0.7 million in increased
expenses to expand the Company's infrastructure to support continued revenue
growth as the Company opened its third development center in India. As a
percentage of revenues, selling, general and administrative expenses increased
from 36.1% in 1995 to 37.8% in 1996.

INCOME FROM OPERATIONS. Income from operations increased 43.9% from $1.0
million in 1995 to $1.5 million in 1996.

28
<PAGE>
PROVISION FOR INCOME TAXES. The provision for income taxes increased 38.1%
from $247,000 in 1995 to $341,000 for 1996, resulting in an effective tax rate
of 23.1% in 1995 and 1996. Without the minority interest, the effective tax rate
would have been approximately 35.0% for both periods.

MINORITY INTEREST. In 1995, minority interest expense was $362,000 compared
to $492,000 for 1996.

NET INCOME. Net income was $461,000 in 1995 as compared to $642,000 in
1996, representing 6.4% and 5.3% as a percentage of revenues, respectively.

QUARTERLY RESULTS OF OPERATIONS

The following table sets forth certain unaudited quarterly statement of
operations data for each of the nine quarters in the period ended March 31,
1998, and the percentage of the Company's revenues represented by each item in
the respective quarters. In the opinion of management, all necessary
adjustments, consisting only of normal recurring adjustments, have been included
in the amounts stated below to present fairly the unaudited quarterly results
when read in conjunction with the Consolidated Financial Statements and Notes
thereto. The unaudited results of operations for any quarter are not necessarily
indicative of results for any future period.
<TABLE>
<CAPTION>
QUARTER ENDED
-----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
MAR. 31, JUNE 30, SEPT. 30, DEC. 31, MAR. 31, JUNE 30, SEPT. 30,
1996 1996 1996 1996 1997 1997 1997
----------- ----------- ----------- ----------- ----------- ----------- -----------

<CAPTION>
(in thousands, except per share data)
<S> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Total revenues...................... $ 2,832 $ 3,038 $ 2,816 $ 3,345 $ 4,257 $ 5,319 $ 7,146
Cost of revenues.................... 1,349 1,415 1,496 1,761 2,407 3,144 4,146
----------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit........................ 1,483 1,623 1,320 1,584 1,850 2,175 3,000
Selling, general and administrative
expense........................... 1,010 1,006 1,031 1,500 1,684 1,845 2,408
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income from operations.............. 473 617 289 85 165 330 593
Interest income..................... 2 2 2 2 1 2 2
Other income........................ -- 1 -- -- -- -- --
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income before provision for income
taxes............................. 475 621 291 87 166 332 596
Provision for income taxes.......... (114) (152) (65) (10) (19) (55) (110)
Minority interest................... (151) (150) (103) (88) (104) (170) (271)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)................... $ 210 $ 319 $ 123 $ (11) $ 43 $ 107 $ 215
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------

Net income (loss) per share,
basic............................. $ 0.03 $ 0.05 $ 0.02 $ (--) $ 0.01 $ 0.02 $ 0.03
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss) per share,
diluted........................... $ 0.03 $ 0.05 $ 0.02 $ (--) $ 0.01 $ 0.02 $ 0.03
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------
Weighted average number of common
shares outstanding................ 6,500 6,500 6,500 6,500 6,500 6,500 6,547
Weighted average number of common
shares and stock options
outstanding....................... 6,500 6,500 6,500 6,500 6,500 6,500 6,605

AS A PERCENTAGE OF TOTAL REVENUES:
Total revenues...................... 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Cost of revenues.................... 47.6 46.6 53.1 52.6 56.5 59.1 58.0
----------- ----------- ----------- ----------- ----------- ----------- -----------
Gross profit........................ 52.4 53.4 46.9 47.4 43.4 40.9 42.0
Selling, general and administrative
expense........................... 35.7 33.1 36.6 44.8 39.6 34.7 33.7
----------- ----------- ----------- ----------- ----------- ----------- -----------
Income from operations.............. 16.7 20.3 10.3 2.5 3.9 6.2 8.3
Interest income..................... 0.1 0.1 0.1 0.1 -- -- --
Income before provision for income
taxes............................. 16.8 20.4 10.3 2.6 3.9 6.2 8.3
Provision for income taxes.......... (4.0) (5.0) (2.3) (0.3) (0.4) (1.0) (1.5)
Minority interest................... (5.3) (4.9) (3.7) (2.6) (2.4) (3.2) (3.8)
----------- ----------- ----------- ----------- ----------- ----------- -----------
Net income (loss)................... 7.4% 10.5% 4.4% (0.4)% 1.1% 2.0% 3.0%
----------- ----------- ----------- ----------- ----------- ----------- -----------
----------- ----------- ----------- ----------- ----------- ----------- -----------

<S> <C> <C>
DEC. 31, MAR. 31,
1997 1998
----------- -----------

<S> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS
DATA:
Total revenues...................... $ 8,022 $ 10,238
Cost of revenues.................... 4,662 5,929
----------- -----------
Gross profit........................ 3,360 4,309
Selling, general and administrative
expense........................... 2,320 3,185
----------- -----------
Income from operations.............. 1,041 1,124
Interest income..................... 20 31
Other income........................ -- (17)
----------- -----------
Income before provision for income
taxes............................. 1,060 1,138
Provision for income taxes.......... (397) (426)
Minority interest................... -- --
----------- -----------
Net income (loss)................... $ 663 $ 712
----------- -----------
----------- -----------
Net income (loss) per share,
basic............................. $ 0.10 $ 0.11
----------- -----------
----------- -----------
Net income (loss) per share,
diluted........................... $ 0.10 $ 0.10
----------- -----------
----------- -----------
Weighted average number of common
shares outstanding................ 6,614 6,614
Weighted average number of common
shares and stock options
outstanding....................... 6,779 6,818
AS A PERCENTAGE OF TOTAL REVENUES:
Total revenues...................... 100.0% 100.0%
Cost of revenues.................... 58.1 57.9
----------- -----------
Gross profit........................ 41.9 42.1
Selling, general and administrative
expense........................... 28.9 31.1
----------- -----------
Income from operations.............. 13.0 11.0
Interest income..................... 0.2 0.3
Income before provision for income
taxes............................. 13.2 11.1
Provision for income taxes.......... (4.9) (4.2)
Minority interest................... -- --
----------- -----------
Net income (loss)................... 8.3% 7.0%
----------- -----------
----------- -----------
</TABLE>

29
<PAGE>
The Company's revenues have generally increased on a quarterly basis. The
increase in revenues during 1997 was due, in part, to new customer engagements
resulting from the Company's strategy to pursue third-party revenues and the
associated expansion of its sales and marketing efforts. The quarterly decline
in gross profit during the periods resulted from a movement in the mix of
programmers from offshore to on-site locations, which normally results in higher
labor rates and lower gross margins. Income from operations declined in late
1996 and early 1997 due to the Company's investment in expansion of its sales
and marketing efforts. Minority interest expense ceased after the quarter ended
September 30, 1997 due to the Company's acquisition of the 24.0% minority
interest in its Indian subsidiary for $3.4 million in October 1997.

LIQUIDITY AND CAPITAL RESOURCES

The Company's primary sources of funding have been cash flow from operations
and intercompany cash transfers from its parent. Working capital was $1.1
million, $2.8 million and $5.7 million as of December 31, 1995, 1996 and 1997,
respectively, and $6.9 million as of March 31, 1998. This increase was due
primarily to a higher level of accounts receivable.

The Company's operating activities provided net cash of $1.0 million, $1.9
million and $1.7 million for the years ended December 31, 1995, 1996 and 1997,
respectively. The decline for 1997 compared to 1996 reflects a higher level of
accounts receivable primarily due to increased revenues, partially offset by
increased income, accrued liabilities, accounts payable and deferred taxes.
Accounts receivable increased from $2.7 million at December 31, 1996, to $7.4
million at December 31, 1997 and to $7.7 million at March 31, 1998. The faster
rate of accounts receivable growth in fiscal 1997 was partially due to weaker

30
<PAGE>
accounts receivable collection efforts. In order to further improve accounts
receivable collections, the Company has hired additional employees to analyze
outstanding accounts receivable balances and has begun evaluating account
manager performance based on the timeliness of collecting outstanding accounts
receivable balances. The Company monitors turnover, aging and the collection of
accounts receivable through the use of management reports which are prepared on
a customer basis and evaluated by the Company's finance staff. For the three
months ended March 31, 1998, the Company's operating activities used net cash of
$0.6 million.

The Company's investing activities used net cash of $1.7 million, $1.3
million and $6.4 million for the years ended December 31, 1995, 1996 and 1997,
respectively. The increase for 1997 compared to 1996 reflects the $3.4 million
used to fund the acquisition of the minority interest in the Company's Indian
subsidiary and increased purchases of equipment to expand the Company's offshore
development infrastructure. For the three months ended March 31, 1998, the
Company's investing activities used net cash of $0.9 million.

The Company's financing activities provided net cash of $1.1 million, $0.7
million and $5.7 million for the years ended December 31, 1995, 1996 and 1997,
respectively. The increase for 1997 compared to 1996 resulted primarily from the
increase in the intercompany balance with the Company's parent of $5.7 million,
in part due to the acquisition of the minority interest in the Indian
subsidiary. For the three months ended March 31, 1998, the Company's financing
activities used net cash of $0.2 million.

As of March 31, 1998, the Company had no significant third-party debt. The
Company has been part of The Dun & Bradstreet Corporation's and Cognizant's cash
management systems and has relied on these systems for its working capital and
other financing needs. As part of these systems, the Company's cash balances
were kept to a minimum. Upon consummation of this offering, the Company will
settle its outstanding non-trade intercompany balance with Cognizant. As of
March 31, 1998, this balance was approximately $6.5 million. This amount is
subject to change based on the Company's operations between March 31, 1998 and
the consummation of this offering.

The Company anticipates capital expenditures will be approximately $3.5
million subsequent to this offering during the remainder of 1998, primarily for
hardware, software and leasehold improvements to support the addition of
technical professionals located in India.

The Company believes that the proceeds from the sale of the Class A Common
Stock offered by the Company hereby together with funds generated from
operations will be sufficient to finance the Company's operations for at least
the next 18 months. The Company's ability to expand and grow its business in
accordance with its current plans, to make acquisitions and to meet its
long-term capital requirements beyond this 18-month period will depend on many
factors, including, but not limited to, the rate, if any, at which the Company's
cash flow increases, the ability and willingness of the Company to accomplish
acquisitions with its capital stock and the availability to the Company of
public and private debt and equity financing. No assurance can be given that
additional financing, if required, will be available or that, if available, it
will be available on terms favorable to the Company. See "Use of Proceeds."

FOREIGN CURRENCY TRANSLATION. The assets and liabilities of the Company's
Canadian and European subsidiaries are translated into U.S. dollars at current
exchange rates and revenues and expenses are translated at average monthly
exchange rates. The resulting translation adjustments are recorded in a separate
component of stockholders' equity. For the Company's Indian subsidiary, the
functional currency is the U.S. dollar since its sales are made primarily in the
United States, the sales price is predominantly in U.S. dollars and there is a
high volume of intercompany transactions denominated in U.S. dollars between the
Indian subsidiary and its U.S. affiliates. Non-monetary assets and liabilities
are translated at historical exchange rates, while monetary assets and
liabilities are translated at current exchange rates. A portion of the Company's
costs in India are denominated in local currency and subject to exchange rate
fluctuations, which has had no material adverse effect on the Company's results
of operations.

31
<PAGE>
EFFECTS OF INFLATION

The Company's most significant costs are the salaries and related benefits
for its programming staff and other professionals. Competition in India and the
United States for professionals with advanced technical skills necessary to
perform the services offered by the Company have caused wages to increase at a
rate greater than the general rate of inflation. As with other IT service
providers, the Company must adequately anticipate wage increases, particularly
on its fixed-price contracts. There can be no assurance that the Company will be
able to recover cost increases through increases in the prices that it charges
for its services in the United States and elsewhere. See "Risk
Factors--Extremely Competitive Market for Technical Personnel" and "--Risks
Associated with Fixed-Price Projects."

RISKS ASSOCIATED WITH THE YEAR 2000

The Company does not believe that it has any material exposure to the Year
2000 issue with respect to its own information systems. With the exception of
the Company's financial accounting system, all of the Company's systems
correctly define the year 2000 and subsequent years. The Company expects to
install the available year 2000 compliant upgrade to its financial accounting
software at the end of 1998. However, the Company might face additional exposure
to the Year 2000 problem if it were to acquire a business with exposure to the
Year 2000 problem. See "Risk Factors--Risks Associated with Possible
Acquisitions."

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive
Income." SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in the financial statements. It does
not, however, require a specific format for the disclosure but requires the
Company to display an amount representing total comprehensive income in the
financial statements. The Company has implemented SFAS No. 130. The adoption of
this pronouncement did not have a material effect on the Company's financial
statements.

Also in June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments
of an Enterprise and Related Information." SFAS No. 131 establishes standards
for the manner in which public companies report information about operating
segments in annual and interim financial statements. The Company will be
required to implement SFAS No. 131 for the year ending December 31, 1998. The
Company expects that the adoption of this pronouncement will not have a material
effect on the Company's financial statements.

In October 1997, the American Institute of Certified Public Accountants (the
"AICPA") issued Statement of Position ("SOP") 97-2, "Software Revenue
Recognition," which provides guidance on when and in what amounts revenue should
be recognized for the licensing, selling, leasing or marketing of computer
software. This statement is effective for the periods beginning after December
15, 1997. The adoption of this pronouncement did not have a material effect on
the Company's financial statements.

In February 1998, the FASB issued Statement No. 132, "Employers' Disclosures
About Pension and Other Postretirement Benefits," which changes current
financial statement disclosure requirements from those required under SFAS 87,
Employers' Accounting for Pensions, SFAS 88, Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits, and SFAS 106, Employers' Accounting for Postretirement
Benefits Other than Pensions. The statement does not change the existing
measurement or recognition provisions of FASB Statement Nos. 87, 88 or 106, and
is effective for the fiscal years beginning after December 15, 1997. The Company
is in the process of evaluating the disclosure requirements under this standard.

In March 1998, the AICPA issued SOP 98-1, "Accounting For The Costs Of
Computer Software Developed Or Obtained For Internal Use." SOP 98-1 provides
guidance on costs to be capitalized and when capitalization of such costs should
commence. SOP 98-1 applies to costs incurred after adoption, including costs for
software projects that are in progress at the time of adoption. The Company is
evaluating the impact of this SOP on its financial position and results of
operations and will be required to implement SOP 98-1 for fiscal years beginning
after December 15, 1998.

32
<PAGE>
BUSINESS

OVERVIEW

Cognizant Technology Solutions Corporation delivers high-quality,
cost-effective, full life cycle solutions to complex software development and
maintenance problems through the use of a seamless on-site and offshore project
team. These solutions include application development and maintenance services,
Year 2000 and Eurocurrency compliance services, testing and quality assurance
services and re-hosting and re-engineering services. CTS provides world-class
service to its customers through an integrated business model that combines a
technical and account management team located on-site at the customer location
and six development centers located in India.

The Company markets and sells its services directly through its professional
staff, senior management and direct sales personnel operating out of its New
York City headquarters and its regional offices, as well as through independent
sales agents. Historically, the Company has provided services principally to
affiliated companies and has only recently begun to provide services to
third-party customers. During the period from January 1, 1997 to March 31, 1998,
the Company provided services to a total of 27 customers, including ACNielsen,
Aetna Canada, CSC Consulting, Cognizant, Douglas County, Nebraska, The Dun &
Bradstreet Corporation, First Data Investor Services Group, Inc., GEAC,
Manugistics, Inc., Northwest Airlines, Inc., the Pacific Exchange, Pilot
Software and SQM.

INDUSTRY BACKGROUND

Many companies today face increasing customer demands to improve service
levels, lower costs and shorten time to market. In this competitive environment,
improving IT systems is one critical way to achieve these objectives. At the
same time, the pace of technology evolution has accelerated and companies are
increasingly adopting emerging technologies, such as client/server
architectures, data warehousing, Internet/intranet applications and
object-oriented development in order to remain competitive. Although these
emerging technologies offer the promise of faster, more functional and more
flexible IT systems, their implementation presents major challenges and requires
a large number of highly skilled individuals trained in many diverse
technologies and architectures. In addition, companies also require additional
technical resources to maintain their large legacy systems and to address Year
2000 and Eurocurrency compliance issues.

Many companies have made the strategic decision to focus on their core
competencies and reduce their cost structures rather than invest in the large IT
staffs that are necessary to evaluate, implement and manage IT initiatives.
Consequently, these companies have turned to IT service providers both to
develop and implement new IT solutions and to maintain legacy systems. Industry
sources estimate that the worldwide market for IT services, which includes data
center management, distributed or client/server environment computing, local and
wide area network operations, application development and maintenance and help
desk operations, was approximately $32.0 billion in 1997 and is expected to grow
at a compounded annual growth rate of 12.0% through 2001.

As the demand for IT services has increased, the number of qualified
technical professionals has not kept pace with such demand. As a result, some IT
service providers have attempted to access the large talent pool in certain
developing countries, such as India, which is widely acknowledged as the leader
in offshore software development. Historically, IT service providers have used
the offshore labor pool primarily to supplement the internal staffing needs of
customers. However, evolving customer demands have led to the utilization of
offshore resources for higher value-added services, such as application
development and maintenance. The use of offshore personnel can offer a number of
benefits, including faster delivery of new IT solutions, more flexible
scheduling and lower costs. However, utilizing an offshore workforce to provide
value-added services presents a number of challenges to IT service providers.

The offshore implementation of value-added software services requires highly
developed project management skills to design, develop and deploy high quality
solutions in a timely and cost-effective

33
<PAGE>
manner. In addition, IT service providers must have the methodologies, processes
and communications capabilities to successfully integrate offshore workforces
with on-site personnel. Additionally, service providers utilizing offshore
workforces must continually recruit and manage their workforces to deliver
solutions using emerging technologies. As a result of the increasing demand for
global IT services, a significant opportunity exists for IT service providers
that can successfully address the challenges in utilizing an offshore talent
pool.

THE CTS SOLUTION

CTS delivers high-quality, cost-effective, full life cycle solutions to
complex software development and maintenance problems through the use of a
seamless on-site and offshore project team. These solutions include application
development and maintenance services, Year 2000 and Eurocurrency compliance
services, testing and quality assurance services and re-hosting and
re-engineering services. The Company provides world-class service to its
customers through an integrated business model which combines a technical and
account management team located on-site at the customer location and six
development centers located in India. To support this business model, the
Company has recruited and trained in excess of 1,000 programmers in India and
put in place a well developed facilities, technology and communications
infrastructure. By basing its technical operations in India, the Company has
access to a large pool of skilled, English-speaking IT professionals with which
to service customers on a cost basis significantly lower than in developed
countries. The main elements of the CTS solution, which the Company believes
differentiate it from other IT service providers, include the following:

ESTABLISHED AND SCALEABLE PROPRIETARY PROCESSES. To facilitate the
cost-effective, on-time delivery of high-quality projects integrating an on-site
and offshore team, the Company has developed proprietary methodologies
encapsulated in its QVIEW software engineering process, which is available to
all on-site and offshore programmers. The Company utilizes this ISO 9000
certified process to define and implement projects from the design, development
and deployment stages through to ongoing application maintenance. For every
project, QVIEW is used to make an extensive front-end assessment defining the
scope and risks of the project and to subdivide the project into smaller phases
with frequent deliverables and feedback from customers. The Company also
utilizes its QVIEW process to detect, mitigate and correct quality defects and
to establish appropriate contingencies for each project. In order to ensure
implementation of its quality process, the Company assigns a quality facilitator
to each project who reports to a centralized quality assurance and software
engineering group. This group performs, on a sample basis, continuous quality
audits, deliverables verifications, metrics collection and analysis, which are
used to continually improve the Company's processes and methodologies. The
Company's processes and methodologies have proven to be scaleable as the Company
has increased its number of offshore development centers, customers and
projects.

HIGHLY SKILLED WORKFORCE. The Company has placed significant emphasis on
recruiting and training its workforce of highly skilled professionals and
ensuring that they are versed in the Company's processes and methodologies,
particularly the QVIEW software engineering process. The Company has
approximately 100 project managers and senior technical personnel on its staff,
many of whom have significant work experience in the United States. The
Company's project managers and senior technical personnel provide in-depth
project management expertise to customers. The Company maintains programs and
personnel, including an extensive campus recruiting program, to hire the best
available technical professionals and to train these professionals in both
legacy systems and emerging technologies, as well as the Company's software
development and quality processes. The Company provides five months of combined
classroom and on-the-job training to new hires and additional training each year
to continually enhance the business practices, tools, technology and consulting
skills of its professional staff.

FULL RANGE OF TECHNOLOGIES. The Company has project experience and
expertise across multiple architectures and technologies, including emerging
technologies such as data warehousing, Internet/ intranet applications and
object-oriented development. Because most of the Company's programmers are

34
<PAGE>
trained in multiple technologies and architectures, the Company is able to react
to customers' needs and quickly redeploy programmers to new technologies. In
addition, through its internal research and development activities and the
continuing education of its technical personnel, the Company assures that its
collective skillset keeps pace with emerging technologies. The ability to work
in new technologies allows the Company to address the needs of its customers and
to foster long-term relationships.

WELL DEVELOPED INFRASTRUCTURE. The Company's extensive facilities,
technology and communications infrastructure facilitates the seamless
integration of its on-site and offshore workforces by permitting team members in
different locations to access common project information and to work directly on
customer projects. This infrastructure allows for rapid completion of projects,
off-peak utilization of customers' technological resources and real-time access
to project information by the on-site account manager or the customer. By using
the excess capacity of a customer's existing computing facilities during
off-peak hours, the Company's offshore development centers can undertake
additional projects without substantial customer investment in new hardware and
software. In addition, for large projects with short time frames, the Company's
offshore facilities allow for parallel processing of various development phases
to accelerate delivery time.

STRATEGY

The Company's objective is to be a leading provider of full life cycle
software development and maintenance services utilizing an on-site and offshore
model. The Company plans to pursue the following strategies to achieve this
objective:

DEVELOP LONG-TERM CUSTOMER RELATIONSHIPS AND STRATEGIC ALLIANCES. The
Company seeks to develop long-term strategic relationships with customers and
business partners and to leverage these relationships into additional project
opportunities. For example, the Company intends to use its Year 2000 compliance
expertise to establish relationships with new customers. The Company believes
that the knowledge of customers' systems gained during the performance of Year
2000 compliance services will provide a competitive advantage in securing
additional software development and maintenance projects from these customers.
In addition, the Company believes that through its working relationships with
independent software vendors it can obtain projects from such vendors' customers
due to the detailed knowledge gained by the Company in the development process.

EXTEND SERVICE OFFERINGS AND SOLUTIONS. The Company has a team dedicated to
developing new service offerings in emerging technologies and also collaborates
with its customers to develop such offerings. For example, the Company has
recently undertaken Eurocurrency compliance projects and is developing
proprietary solutions using data warehousing and Internet/intranet technology.
To facilitate the development of new solutions, the Company conducts internal
research and development and promotes knowledge building and sharing across the
organization. The Company believes that the continued expansion of its service
offerings will reduce its reliance on any one technology initiative and foster
long-term relationships with its customers.

ENHANCE PROCESSES, METHODOLOGIES AND PRODUCTIVITY TOOLSETS. The Company is
committed to improving and enhancing its proprietary QVIEW software engineering
process and other methodologies and toolsets. With the rapid evolution of
technology, the Company believes that continued investment in research and
development is critical to its success. The Company currently is designing and
developing new productivity software tools to automate testing processes and
improve project estimation and risk assessment techniques. The Company
continually refines its processes by utilizing groupware technology to share
project experience and best practice methodologies across the organization.

EXPAND GEOGRAPHIC PRESENCE. As the Company expands its customer base, it
plans to open additional sales and marketing offices in the United States to
enable it to sell to and support existing and prospective customers. In
addition, the Company intends to pursue market opportunities in Europe through
its recently established U.K. office.

35
<PAGE>
PURSUE SELECTIVE STRATEGIC ACQUISITIONS. The Company believes that
opportunities exist in the fragmented IT services market to expand its business
through selective strategic acquisitions. The Company believes that acquisition
candidates may enable it to expand its geographic presence, enter new technology
areas or expand capacity.

SERVICES

CTS provides a broad range of software services, including: (i) application
development; (ii) application maintenance support; (iii) Year 2000 compliance;
(iv) Eurocurrency compliance; (v) testing and quality assurance; and (vi)
re-hosting and re-engineering. The Company uses its QVIEW software engineering
process, its on-site and offshore delivery model and well developed facilities,
technology and communications infrastructure to deliver these services. For each
of these services, the Company utilizes its QVIEW proprietary processes and
methodologies to define the execution and delivery of the projects.

<TABLE>
<CAPTION>
SERVICE SUMMARY DESCRIPTION OF SERVICE OFFERINGS
- -------------------------------------------------------- --------------------------------------------------------
<S> <C>

Application Development................................. Define requirements, write specifications and design,
develop and test software.

Application Maintenance Support......................... Support some or all of a customer's applications
ensuring that systems remain operational and responsive
to changing user requirements.

Year 2000 Compliance.................................... Renovate applications to correctly process dates in the
next century, including impact analysis, code
conversion, testing and implementation.

Eurocurrency Compliance................................. Renovate applications to correctly process transactions
which are denominated in Eurocurrency, as well as
existing currencies.

Testing and Quality Assurance........................... Test source and/or binary code to verify that it
conforms to specifications and compatibility
requirements.

Re-hosting and Re-engineering........................... Modify and test applications to enable systems to
function in new operating environments.
</TABLE>

APPLICATION DEVELOPMENT SERVICES. The Company develops new applications for
IBM mainframe, client/server architectures and other emerging technology
environments. The Company follows either of two alternative approaches,
including (i) full life cycle application development, in which the Company
assumes total start-to-finish responsibility and accountability for analysis,
design, implementation and testing of systems, or (ii) cooperative development,
in which the Company's employees work with a customer's in-house IT personnel to
jointly analyze, design, implement and test new systems. In both cases, the
Company's on-site team members work closely with the end-users of the
application to develop specifications and define requirements. Detailed design,
implementation and testing are generally performed offshore at the Company's six
software development centers located in India. In addition, the Company
maintains an on-site presence at the customer's location in order to address
evolving customer needs and resulting changes to the project.

APPLICATION MAINTENANCE SUPPORT SERVICES. The Company provides services to
ensure that a customer's legacy software systems are operational and responsive
to end-users' changing needs. In doing so, the Company is often able to
introduce process enhancements and improve service levels to customers
requesting modifications and on-going support.

36
<PAGE>
Through its on-site and offshore delivery model, the Company is able to
provide a range of support services to its customers. On-site team members often
provide help desk services at the customer's facility. These team members
typically carry pagers in the event of an emergency service request and are
often available to quickly resolve customer problems from remote locations.
Routine maintenance services, including modifications, enhancements and
documentation, which typically have longer turn around times, are completed
offshore utilizing satellite telecommunications and the resources of the
Company's software development centers.

YEAR 2000 COMPLIANCE SERVICES. With the year 2000 approaching, computer
software systems that were not designed to correctly process dates in the next
century are expected to fail. Organizations rely on mission-critical software
systems and must either repair the problem presented by the Year 2000 issue or
replace legacy systems.

The Company uses its proprietary Year 2000 toolset and methodology, Century
Transition Services 2000, to provide a cost-effective total solution for all
phases of a Year 2000 compliance project. The Century Transition Services 2000
methodology covers the entire life cycle of a Year 2000 compliance project, and
is comprised of a seven step process: (i) inventory preparation; (ii) impact
analysis; (iii) strategy and design; (iv) code change and data migration; (v)
unit, system and acceptance testing; (vi) implementation; and (vii)
post-implementation support. The Company believes that it differentiates itself
from its competitors through the use of its Century Transition Services 2000.

The Century Transition Services 2000 toolset covers a wide array of common
programming languages and environments including many client/server
environments. This toolset is capable of identifying Year 2000 problems in
COBOL, Model 204, SAS, Mark IV, CLIST, REXX, PL/1, IBM Mainframe Assembler,
TELON, JCL and other languages. In the midrange and client/server environment,
the Company's toolset addresses, among other languages, C, C++, Visual Basic,
PowerBuilder, Sybase, MS-Office (Word, Excel, Access), Oracle, Informix,
Paradox, Clipper, FoxPro and Lotus Notes. The Company is thus able to provide
complete solutions across a large portion of customers' systems.

EUROCURRENCY COMPLIANCE SERVICES. The upcoming monetary union of the
European Community presents a significant opportunity for the Company as
computer systems which deal with any European denominated currency will need to
be modified to handle local currency and Eurocurrency transactions. Based on the
current schedule for European monetary unification, non-cash Euro transactions
will start on January 1, 1999, bank notes and coins will start circulating on
January 1, 2002 and national currencies will be withdrawn by July 1, 2002.

The Company has begun to address the Eurocurrency compliance problem and has
established a dedicated practice to focus on this problem. The Company believes
that portions of its Year 2000 toolset and methodology can be extended to
efficiently address the Eurocurrency compliance needs of customers.

TESTING AND QUALITY ASSURANCE SERVICES. Testing and quality assurance is a
critical aspect of any software development activity. The Company works with
customers to better define the quality assurance processes which are in use by
the customers' in-house IT departments. The Company utilizes its quality
assurance expertise, based on its QVIEW software engineering process, to ensure
better quality software through fundamental process improvements.

The Company also advises certain customers, principally independent software
vendors, on testing applications which may or may not have been developed by the
Company. Various types of testing services such as top-down testing, bottom-up
testing, black-box/white-box testing, unit testing, integration testing and
system testing are provided by a large offshore team in a short time, with
minimal impact on product release. Defect tracking is automated by a
CTS-developed tool that ensures that all detected defects are tracked to
closure.

RE-HOSTING AND RE-ENGINEERING SERVICES. Through the Company's re-hosting
and re-engineering service offerings, the Company works with customers to
migrate systems based on legacy computing

37
<PAGE>
environments to newer, open systems-based platforms and client/server
architectures. The Company's re-engineering tools automate many of the processes
required to implement advanced client/server technologies, thereby substantially
reducing the time and cost to perform these services. These tools enable the
Company to perform source code analysis and to re-design target databases and
convert certain programming languages. If necessary, the Company's software
engineers also re-design and convert user interfaces.

CUSTOMERS AND REPRESENTATIVE PROJECTS

Historically, the Company has provided services principally to affiliated
companies. The Company has provided services to third-party customers only for a
limited time and has generated only limited revenues from such engagements.
During the period from January 1, 1997 to March 31, 1998, the Company provided
services to a total of 27 customers. The Company received revenues in excess of
$200,000 in 1997 from ACNielsen, Aetna Canada, CSC Consulting, Cognizant,
Douglas County, Nebraska, The Dun & Bradstreet Corporation, First Data Investor
Services Group, Inc., GEAC, Manugistics, Inc., Northwest Airlines, Inc., the
Pacific Exchange, Pilot Software and SQM. During 1997 and the three months ended
March 31, 1998, the Company's top five third-party customers accounted for 36.6%
and 45.6% of revenues, respectively. During 1997 and the three months ended
March 31, 1998, Cognizant and its current subsidiaries accounted for 41.8% and
36.2% of revenues, respectively. The volume of work performed for specific
customers is likely to vary from year to year, and a significant customer in one
year may not use the Company's services in a subsequent year. See "Risk
Factors--Customer Concentration" and "--Limited Operating History With
Unaffiliated Customers; Limited Third-Party Revenues To Date."

While customer engagements vary, the following examples illustrate the types
of business needs the Company has addressed:

APPLICATION DEVELOPMENT FOR NIELSEN MEDIA RESEARCH. Nielsen Media Research,
a subsidiary of Cognizant, is the leading provider of television information
services, both nationally and locally, for television networks and affiliates,
independent stations, syndicators, cable networks, cable systems, advertisers
and advertising agencies in the United States and Canada. Nielsen Media Research
contracted with the Company to develop a new media planning product called New
Millennium. The product, which collects, sorts and analyzes large amounts of
research data from Nielsen Media Research's database, addresses the information
and planning needs of media planners such as advertising agencies, television
stations and Internet advertisers. This allows media planners to optimize the
allocation of media dollars across various media outlets in order to maximize
the return on customers' advertising budgets.

As part of the project, the Company provided overall project management,
application design, development and testing. The Company worked closely with
Nielsen Media Research to specify, design, implement and test the New Millenium
product. The Company worked with Nielsen Media Research subject matter experts,
end-users and internal IT staff to define the product requirements. During the
design phase of the project that was conducted on-site, an offshore CTS team
provided extensive prototype development support. The offshore team also
performed all of the construction and testing for the product, working
simultaneously with the on-site team to ensure that customer requirements were
fully met.

APPLICATION MAINTENANCE FOR AETNA LIFE INSURANCE COMPANY OF CANADA. Aetna
Canada is a leading provider of individual life and disability insurance
products and one of the top ten providers of employee group benefits in Canada.
In early 1997, the Company was engaged by Aetna Canada to provide maintenance,
enhancement and support services for Aetna Canada's Employee Benefit Services
Systems. The system is comprised of several large IBM mainframe-based
applications, which were developed more than ten years ago. The system tends to
be highly volatile as frequent regulatory changes and user requirement changes
are required to keep the system operational. Working on-site, CTS employees
worked with Aetna Canada technical and application experts before returning to
the CTS software development centers in India, where second level
(non-emergency) support is currently being provided. In addition, a core team of
CTS employees remain on-site at Aetna Canada to provide emergency and time

38
<PAGE>
critical maintenance, enhancement and support, as required. By outsourcing the
maintenance of this system to the Company, Aetna Canada has been able to improve
service levels by creating a 24-hour maintenance cycle. Aetna Canada has also
benefited from the flexible staffing that the Company is able to provide to
cover peak demand situations.

RE-ENGINEERING OF DATA MANAGEMENT SYSTEM FOR IMS AMERICA. IMS America, Ltd.
("IMS America"), a subsidiary of Cognizant, is a leading provider of business
information to the pharmaceutical and healthcare industries. One of IMS
America's flagship products, DDD-TM-, is used by pharmaceutical manufacturers in
the United States to monitor and measure product movement through the
marketplace. IMS America decided in 1995 to re-engineer one of the core data
management processes that supported the DDD product lines. Working with CSC
Consulting, the Company designed, developed, and implemented a new data
management system to accomplish these goals. Working in on-site design sessions
with CSC consultants and IMS America, the Company first developed a conceptual
system prototype to support the redesigned business process. An offshore team
then developed a functional prototype that was tested and refined in on-site
business processing simulations. Detailed design was performed primarily
on-site, and construction and testing of the system was then performed offshore,
with concurrent on-site coordination and integration testing. By utilizing a
rules-based pattern matching engine and a three-tiered client/ server
architecture, the system reduced the number of unresolved exceptions in the data
management process and significantly reduced the number of days to process the
data, which improved productivity and provided faster results to customers.

YEAR 2000 COMPLIANCE FOR THE PACIFIC EXCHANGE. The Pacific Exchange is
America's third most active stock exchange and third largest stock options
market. The Pacific Exchange operates automated equities trading floors in San
Francisco and Los Angeles, trading more than 2,600 stocks, bonds, options and
warrants.

The Pacific Exchange engaged the Company to provide Year 2000 compliance
services to support the trading of long-term options with expiration dates in
the next century. A significant risk existed that if the project was not
completed on time, it would result in long-term options failing to trade
properly on the Pacific Exchange. The Company was involved in all aspects of the
Year 2000 compliance project, including impact analysis, code compliance,
testing and implementation, and was able to complete the project within budget
and ahead of schedule. Following the successful completion of the Year 2000
compliance of the options system, the Pacific Exchange has engaged the Company
on various other Year 2000 and non-Year 2000 projects.

SALES AND MARKETING

The Company markets and sells its services directly through its professional
staff, senior management and direct sales persons operating out of its New York
City headquarters and business development offices in Chicago, Toronto and
London. At March 31, 1998, the Company had four direct sales persons, 20 account
managers and eight independent sales agents. The sales and marketing group works
with the Company's technical team as the sales process moves closer to the
customer's selection of an IT service provider. The duration of the sales
process varies depending on the type of service, ranging from approximately two
months to over one year. The account manager or sales executive works with the
technical team to define the scope, deliverables, assumptions and execution
strategies for a proposed project, develop project estimates, prepare pricing
and margin analyses and finalize sales proposals. Management reviews and
approves the proposal, which is then presented to the prospective customer.
Sales and account management personnel remain actively involved in the project
through the execution phase.

The Company focuses its marketing efforts on businesses with intensive
information processing needs. The Company maintains a prospect/customer
database, which is continuously updated and utilized throughout the sales cycle
from prospect qualification to close. As a result of this marketing system, the
Company prequalifies sales opportunities, and direct sales representatives are
able to minimize the time

39
<PAGE>
spent on prospect qualification. The Company also generates a portion of its
business through outside agents, who work on a commission basis. In this regard,
account managers play an important role in developing a long-term relationship
with customers. In addition, substantial emphasis is placed on customer
retention and expansion of services provided to existing customers.

COMPETITION

The IT services market includes a large number of participants, is subject
to rapid change and is highly competitive. This market includes participants
from a variety of market segments, including systems integration firms, contract
programming companies, application software companies, the professional services
groups of computer equipment companies, facilities management and outsourcing
companies and "Big Six" accounting firms, as well as smaller local competitors
in the various geographic markets in which the Company operates. The Company
competes with, among others, Alydaar Corp., Cambridge Technology Partners, Inc.,
Cap Gemini America, Inc., Complete Business Solutions, Inc., Computer Horizons
Corp., Computer Task Group, Inc., CSC Consulting, Information Management
Resources, Inc., Infosys, Inc., IBM Global Services, Keane, Inc., Mastech
Corporation, Satyam Computer Services Limited, SHL Systemhouse (a division of
MCI Communications Corporation), Syntel, Inc., Tata Consultancy Services and
Whittman-Hart, Inc. In certain markets in which the Company competes, such as
the Year 2000 compliance market, there are no significant barriers to entry.
Current and potential competitors may introduce new and more competitive
services, make strategic acquisitions or establish cooperative relationships
among themselves or with third parties, thereby increasing the ability of their
services to address the needs of customers. Many of the Company's competitors
have significantly greater financial, technical and marketing resources and
greater name recognition than the Company. The principal competitive factors
affecting the markets for the Company's services include (i) performance and
reliability, (ii) quality of technical support, training and services, (iii)
responsiveness to customer needs, (iv) reputation, experience and financial
stability and (v) competitive pricing of services. The Company competes by
offering a well developed recruiting, training and retention model, a successful
service delivery model, an excellent referral base, continual investment in
process improvement and knowledge capture, and continued focus on responsiveness
to customer needs, quality of services, competitive prices, project management
capabilities and technical expertise. In order to be successful in the future,
the Company must continue to respond promptly and effectively to technological
change and competitors' innovations. There can be no assurance that the Company
will be able to compete successfully against current and future competitors, and
its failure to do so would have a material adverse effect upon the Company's
business, results of operations and financial condition. See "Risk
Factors--Intense Competition."

INTELLECTUAL PROPERTY

The Company's business includes the development of software applications and
other deliverables including written specifications and documentation in
connection with specific customer engagements. The Company's future success will
depend on its ability to protect its intellectual property rights. The Company
presently holds no patents or registered copyrights, and relies upon a
combination of copyright and trade secret laws, non-disclosure and other
contractual arrangements and various security measures to protect its
intellectual property rights. India is a member of the Berne Convention, and has
agreed to recognize protections on copyrights conferred under the laws of
foreign countries, including the laws of the United States. The Company believes
that laws, rules, regulations and treaties in effect in the United States and
India are adequate to protect it from misappropriation or unauthorized use of
its copyrights. However, there can be no assurance that such laws will not
change and, in particular, that the laws of India will not change in ways that
may prevent or restrict the transfer of software components, libraries and
toolsets from India to the United States. There can be no assurance that the
steps taken by the Company to protect its intellectual property rights will be
adequate to deter misappropriation of any of its intellectual property, or that
the Company will be able to detect unauthorized use and take appropriate steps
to enforce its rights.

40
<PAGE>
A competitor of the Company recently announced the filing with the U.S.
Patent and Trademark Office of three patent applications relating to Year 2000
processes. The Company does not know the proprietary features of the processes
covered by such patent applications since patent applications are not publicly
available until the patents are issued. The Company has no prior relationship
with this competitor. Although the Company believes that its intellectual
property rights do not infringe on the intellectual property rights of such
competitor or others, there can be no assurance that such claims will not be
asserted against the Company in the future, that assertion of such claims will
not result in litigation or that the Company would prevail in such litigation or
be able to obtain a license for the use of any infringed intellectual property
from a third party on commercially reasonable terms, if at all. The Company
expects that the risk of infringement claims against the Company will increase
if more of the Company's competitors are able to successfully obtain patents for
software products and processes. Any such claims, regardless of their outcome,
could result in substantial cost to the Company and divert management's
attention from the Company's operations. Any infringement claim or litigation
against the Company could, therefore, have a material adverse effect on the
Company's business, results of operations and financial condition.

Pursuant to the License Agreement, Cognizant has granted to the Company a
non-exclusive, non-assignable, revocable license to use the "Cognizant" name and
certain related trade and service marks. The License Agreement provides that,
subject to Cognizant's right to revoke such license under certain circumstances,
such license will remain in effect for at least ten years following this
offering. The revocation of such license could have a material adverse effect on
the Company's business, results of operations and financial condition. However,
Cognizant has agreed to transfer all of its rights to the "Cognizant" name and
related trade and service marks to the Company upon the consummation of the
previously announced reorganization of Cognizant which, subject to certain
conditions, is expected to be consummated by mid-1998. See "Risk
Factors--Limited Protection of Intellectual Property Rights," "Company
Background" and "Certain Transactions--Agreements with Cognizant."

EMPLOYEES

At March 31, 1998, the Company employed approximately 270 persons on a
full-time basis in its North American headquarters and satellite offices and
on-site North American customer locations (15 of whom are United States citizens
or permanent residents), approximately 30 persons on a full-time basis in its
European satellite office and on-site European customer locations and
approximately 870 persons on a full-time basis in its offshore software
development centers in India. As of March 31, 1998, approximately 245, or 93% of
the Company's employees working in the United States, were working in the H-1B,
nonimmigrant work-permitted visa classification. None of the Company's employees
is subject to a collective bargaining arrangement. The Company considers its
relations with its employees to be good. See "Risk Factors--Exposure to
Regulatory, Economic and Political Conditions in India" and "--United States
Immigration Issues."

The future success of the Company will depend to a significant extent on its
ability to attract, train and retain highly skilled software development
professionals, particularly project managers, software engineers and other
senior technical personnel. The Company believes that in both the United States
and India there is a shortage of, and significant competition for, software
development professionals with the advanced technological skills necessary to
perform the services offered by the Company. The Company has an active
recruitment program in India and has developed a recruiting system and database
that facilitates the rapid identification of skilled candidates. During the
course of the year, the Company visits approximately 45 premier colleges and
technical schools in India. The Company evaluates candidates based on academic
performance, the results of a written aptitude test measuring problem-solving
skills and a technical interview. In addition, the Company has an active lateral
recruiting program. The Company believes it is one of the more attractive
employers for IT graduates in India.

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<PAGE>
Senior project managers are hired from leading consulting firms in the
United States and India. The Company's senior management and substantially all
of the project managers have experience working in the United States and Europe,
which enhances the Company's ability to attract and retain other professionals
with experience in the United States.

The Company has also adopted a career and education management program to
define the employees' objectives and career plans. Through an intensive
orientation and training program, the Company introduces new employees to the
QVIEW software engineering process and the Company's services. See "Risk
Factors--Extremely Competitive Market for Technical Personnel" and "--United
States Immigration Issues."

FACILITIES

The Company's executive and business development office is located in New
York, New York. The Company intends to relocate this office locally within the
next 12 months. The Company believes that its existing facilities are adequate
to support its existing operations and that, as needed, it will be able to
obtain suitable additional facilities on commercially reasonable terms. The
remaining lease terms on the Company's development facilities in India range up
to nine years. The Company may terminate such leases, without penalty, upon 90
days' notice.

The Company occupies the following properties, which are all leased:

<TABLE>
<CAPTION>
APPROXIMATE AREA
LOCATION (IN SQ. FEET) USE NATURE OF OCCUPANCY
- ----------------------------- ----------------- ------------------------------------ -----------------------------
<S> <C> <C> <C>

Chennai, India............... 33,700 Software Development Facility Lease expiring 12/1/06 with a
renewal option

Chennai, India............... 20,100 Software Development Facility Multiple leases expiring
11/15/98-2/28/01
with renewal options

Chennai, India............... 20,000 Software Development Facility Lease expiring 8/31/04 with a
renewal option

Chennai, India............... 15,500 Software Development Facility Multiple leases expiring
1/31/06-4/30/06
with renewal options

Calcutta, India.............. 9,300 Software Development Facility Lease expiring 12/1/00 with a
renewal option

Calcutta, India.............. 4,000 Software Development Facility Lease expiring 3/31/01

New York, New York........... 3,800 Executive and Business Development Lease expiring 5/31/99
Office

London, England.............. 800 Business Development Office Monthly lease

Chicago, Illinois............ 400 Business Development Office Monthly lease

Toronto, Canada.............. 200 Business Development Office Lease expiring 1/31/99
</TABLE>

LEGAL PROCEEDINGS

The Company is not currently a party to any material legal proceedings.

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<PAGE>
MANAGEMENT

EXECUTIVE OFFICERS AND DIRECTORS

The executive officers and directors of the Company are as follows:

<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- --- -----------------------------------------------------
<S> <C> <C>
Wijeyaraj Mahadeva................................... 46 Chairman of the Board and Chief Executive Officer

Lakshmi Narayanan.................................... 45 President and Chief Operating Officer

Gordon Coburn........................................ 34 Chief Financial Officer, Treasurer and Secretary

Francisco D'Souza.................................... 29 Vice President, North American Operations and
Business Development

Anthony Bellomo (2).................................. 44 Director

Paul Cosgrave (1)(2)................................. 47 Director

Victoria Fash........................................ 46 Director

John Klein (1)(2).................................... 56 Director

Venetia Kontogouris.................................. 47 Director
</TABLE>

- --------------

(1) Member of the Audit Committee.

(2) Member of the Compensation Committee.

WIJEYARAJ (KUMAR) MAHADEVA was elected Chairman and Chief Executive Officer
of the Company's Indian subsidiary in 1994, and led the team that established
the software development and maintenance business conducted by the Company. Mr.
Mahadeva was elected Vice President of the Company in 1994, and was elected
President on April 17, 1996. Effective in March 1998, Mr. Mahadeva was elected
Chairman and Chief Executive Officer of the Company. Mr. Mahadeva concurrently
served as Chairman of The Dun & Bradstreet Corporation India and China from 1993
to 1996. Mr. Mahadeva previously served as Vice President, Corporate Strategy,
at The Dun & Bradstreet Corporation from 1989 to 1993, as Director, Business
Markets Group, at AT&T from 1985 to 1989, and as a management consultant at
McKinsey and Company from 1978 to 1985. Mr. Mahadeva holds a Master of Business
Administration degree from Harvard University and a Masters in Electrical
Engineering from Cambridge University (U.K.).

LAKSHMI NARAYANAN was elected President and Chief Operating Officer of the
Company in March 1998. Mr. Narayanan joined the Indian subsidiary of the Company
as Chief Technology Officer in 1994 and was elected President of such subsidiary
on January 1, 1996. Prior to joining the Company, Mr. Narayanan was the regional
head of Tata Consultancy Services, a large consulting and software services
company in India, from 1975 to 1994. Mr. Narayanan holds a Bachelor of Science
degree, a Master of Science degree and a Master of Business Administration
degree from the Indian Institute of Science.

GORDON COBURN was elected Chief Financial Officer, Treasurer and Secretary
of the Company in March 1998 and Vice President of the Company in September
1996. Since 1990, Mr. Coburn has held key financial positions with Cognizant and
The Dun & Bradstreet Corporation. Mr. Coburn most recently served as Senior
Director--Group Finance & Operations for Cognizant from November 1996 to
December 1997. Mr. Coburn holds a Bachelor of Arts degree from Wesleyan
University and a Master of Business Administration degree from the Amos Tuck
School at Dartmouth College.

FRANCISCO D'SOUZA was appointed Vice President, North American Operations
and Business Development of the Company in March 1998 and was appointed
Director--North American Operations and Business Development on June 1, 1997.
From January 1996 to June 1997, Mr. D'Souza was employed as a

43
<PAGE>
consultant to the Company. From February 1995 to December 1995, Mr. D'Souza was
employed as Product Manager at Pilot Software. Between 1992 and 1995, Mr.
D'Souza held various marketing, business development and technology management
positions as a Management Associate at The Dun & Bradstreet Corporation. While
working at The Dun & Bradstreet Corporation, Mr. D'Souza was part of the team
that established the software development and maintenance business conducted by
the Company. Mr. D'Souza holds a Bachelor of Business Administration degree from
the University of East Asia and a Master of Science degree in Industrial
Administration from Carnegie-Mellon University.

ANTHONY BELLOMO was elected to the Board of Directors of the Company in
March 1998. Mr. Bellomo is President of Erisco, which position he has held since
1994. Mr. Bellomo joined Erisco in 1977 and has held various positions at Erisco
since that time. Mr. Bellomo holds a Bachelor of Arts degree in engineering from
the Polytechnic Institute of Brooklyn.

PAUL COSGRAVE was elected to the Board of Directors in March 1998. Mr.
Cosgrave serves as President of Strategies4Success, a strategic consulting firm.
From July 1994 until February 1998, he was Chairman, President and CEO of
Claremont Technology Group, Inc., an information technology consulting services
company. From January 1993 until June 1994, Mr. Cosgrave was Executive Vice
President of Technology Solutions Company, also an information technology
services company. From February 1992 until January 1993, he was President and
Chief Executive Officer of AGS Computers, Inc., a subsidiary of NYNEX
Corporation. From September 1982 until January 1992, he was a Partner at
Andersen Consulting, LLP, a management consulting firm. Mr. Cosgrave holds a
Bachelor of Science degree and a Master of Science degree from Rensselaer
Polytechnic Institute.

VICTORIA FASH was elected to the Board of Directors of the Company in
December 1997. Ms. Fash was appointed Chairman and Chief Executive Officer of
IMS in December 1997. She serves concurrently as Executive Vice President and
Chief Financial Officer of Cognizant, a position she has held since 1996. From
1991 to 1995, she was the Vice President, Business Operations at The Dun &
Bradstreet Corporation, and in 1995 was promoted to Senior Vice President,
Business Strategy. Ms. Fash serves on the board of directors of Ligand
Pharmaceuticals Inc. and Orion Capital Corporation. Ms. Fash holds a Bachelor of
Science degree in computer science and a Master of Business Administration
degree from the University of Illinois.

JOHN KLEIN was elected to the Board of Directors in March 1998. Mr. Klein
currently serves as Chief Executive Officer of MDIS Group PLC, a software
development and service company, where he has been employed since June 1995.
From July 1997, Mr. Klein has also served as the Chairman and Chief Executive
Officer of Glovia International, a resource planning software and services
company. From August 1996, Mr. Klein has also served as the Chairman of PRO IV
Limited, a 4GL development tools company. From January 1993 to April 1994, Mr.
Klein was the Vice President, Consumer, Process & Transportation-- Customer
Business Unit, for Digital Equipment Corporation. Mr. Klein holds a Bachelor of
Science degree from the U.S. Merchant Marine Academy and a Master of Business
Administration degree from New York University.

VENETIA KONTOGOURIS was elected to the Board of Directors of the Company in
December 1997. Ms. Kontogouris is currently President of Cognizant Enterprises,
Inc. where she has held various positions since 1989. Prior to joining Cognizant
Enterprises, Ms. Kontogouris was Vice President of New Product Development for
The Dun & Bradstreet Corporation. Ms. Kontogouris serves on the board of
directors of e data resources, inc., T.R.A.D.E., Inc., SR Research, Inc.,
Internet Profiles Corporation, Vality Technology Inc., Viant Corporation and
Avesta Technologies, Inc. Ms. Kontogouris holds a Bachelor of Arts degree from
Northeastern University and a Master of Business Administration degree and a
Master in International Relations degree from the University of Chicago.

44
<PAGE>
SIGNIFICANT EMPLOYEES

G. BALAKRISHNAN was appointed Director, Projects in July 1995 for the
Company's Indian subsidiary. Prior to joining the Company, Mr. Balakrishnan
worked as a Consultant for The World Bank, International Finance Corporation and
International Monetary Fund in the United States from 1983 to 1995. Mr.
Balakrishnan holds a Bachelor of Science degree and a Bachelor of Technology
degree from the University of Madras and a Master of Business Administration
degree from the University of Wisconsin, Milwaukee.

SIDDHARTHA MUKHERJEE was appointed Director of Calcutta Operations in
January 1998 for the Company's Indian subsidiary, which he joined in June 1996
as Senior Manager. Prior to joining the Company, Mr. Mukherjee served as
Regional Manager in the United States and as a consultant in India for Tata
Consultancy Services from May 1982 to May 1996. Mr. Mukherjee holds a Masters in
Economics degree and Masters of Business Administration degree from Xavier
Institute, Jamshedpur, India.

NARESH NAGARAJAN was appointed Director of Projects in January 1998 for the
Company's Indian subsidiary, which he joined in March 1994 as Senior Manager,
Business Development. Prior to joining the Company, Mr. Nagarajan was Group
Business Manager for Citibank's Technology Division in India from December 1990
to February 1994. Mr. Nagarajan holds a Bachelor of Mechanical Engineering
degree from the University of Mysore, India and a Masters of Science in Computer
Science and a degree in Business Management from Rutgers University.

S. RENGARAJAN was appointed Director, Projects in January 1997 for the
Company's Indian subsidiary, which he joined in September 1995 as Senior
Manager, Projects. Prior to joining the Company, Mr. Rengarajan served as Senior
Consultant in India for Tata Consultancy Services from December 1989 to August
1995. His prior experience includes seven years of independent consulting in
Scandinavia. Mr. Rengarajan holds a Masters of Science in Mathematics from
Madras University and a Masters of Technology in Computer Science from the
Indian Institute of Technology, Madras.

KASI SAMBASIVAM was appointed Director, Projects in January 1997 for the
Company's Indian subsidiary, which he joined in January 1994 as Senior Manager,
Projects. Prior to joining the Company, Mr. Sambasivam served as Deputy General
Manager of Pentafour Software & Exports in India from October 1992 to December
1993. In addition, he was a consultant to IBM's Federal Sector Division in the
United States from January 1991 to September 1992 and Data Processing Manager
for Zambia State Insurance Corporation in Zambia from July 1987 to August 1990.
Mr. Sambasivam holds a Bachelor of Engineering degree from the University of
Madras.

WILLIAM SCHULE was appointed Director of Sales of the Company in April 1997.
From January 1991 to March 1997, he was a Regional Sales Manager of Syncsort,
Inc., a large international manufacturer and distributor of high-performance
systems software packages specializing in the mainframe, mid-range and PC
marketplace. Prior to joining Synscort, Mr. Schule was a Branch Manager for
Howard Systems Inc., an IT consulting firm based in New York, from April 1986 to
January 1991. Mr. Schule holds a Bachelor of Arts degree from St. John's
University.

CHANDRA SEKARAN was appointed Vice President, Software Services in January
1997 of the Company's Indian subsidiary, which he joined in December 1994 as
Assistant Vice President. Prior to joining the Company, Mr. Sekaran served as
Regional Director in the United States and as a consultant in India for Tata
Consultancy Services from May 1985 to November 1994. Mr. Sekaran holds a
Bachelor of Engineering degree from Madras University and a Master of Business
Administration degree from the Indian Institute of Management.

COMMITTEES OF THE BOARD OF DIRECTORS

The Board of Directors has established an Audit Committee and a Compensation
Committee. The Board of Directors does not have an Executive or Nominating
Committee. The selection of nominees to the Board of Directors will be made by
the entire Board of Directors.

45
<PAGE>
The Audit Committee, which is comprised of Messrs. Cosgrave and Klein, is
responsible for reviewing with management the financial controls and accounting
and reporting activities of the Company. The Audit Committee reviews the
qualifications of the Company's independent auditors, makes recommendations to
the Board of Directors regarding the selection of independent auditors, reviews
the scope, fees and results of any audit and reviews non-audit services and
related fees.

The Compensation Committee, which is comprised of Messrs. Bellomo, Cosgrave
and Klein, is responsible for the administration of all salary and incentive
compensation plans for the officers and key employees of the Company, including
bonuses. The Compensation Committee also administers the Company's stock option
plans and establishes the terms and conditions of all stock options granted
thereunder.

DIRECTOR COMPENSATION

Directors who are employees of the Company and its subsidiaries or Cognizant
and its subsidiaries receive no cash remuneration for serving as directors. All
other non-employee directors receive $2,000 for attendance at each meeting of
the Board of Directors and $1,000 for attendance at each meeting of a committee
of the Board of Directors. All directors who are not employees of the Company
and its subsidiaries are eligible to participate in the Directors' Option Plan.
Options to purchase 6,500 shares of Class A Common Stock have been granted to
each of Mr. Bellomo, Ms. Fash and Ms. Kontogouris and options to purchase 15,000
shares of Class A Common Stock have been granted to each of Mr. Cosgrave and Mr.
Klein under the Directors' Option Plan. See "--Stock Option Plans--Directors'
Option Plan."

46
<PAGE>
EXECUTIVE COMPENSATION

The following table sets forth certain information concerning the
compensation paid by the Company in 1997 to the Company's Chief Executive
Officer and each of the other executive officers of the Company (collectively,
the "Named Executive Officers").

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
-------------
ANNUAL COMPENSATION SECURITIES
---------------------- UNDERLYING ALL OTHER
NAME AND POSITIONS SALARY ($) BONUS($) OPTIONS(#) COMPENSATION($)
- ---------------------------------------------------------- ----------- --------- ------------- -----------------
<S> <C> <C> <C> <C>
Wijeyaraj Mahadeva(1)..................................... 235,000 228,136 130,000 14,717
Chairman of the Board and
Chief Executive Officer
Lakshmi Narayanan(2)...................................... 57,566 60,440 58,500 1,372
President and Chief
Operating Officer
Gordon Coburn(3).......................................... -- -- 26,000 0
Chief Financial Officer,
Treasurer and Secretary
Francisco D'Souza(4)...................................... 120,000 35,000 32,500 0
Vice President, North
American Operations and
Business Development
</TABLE>

- ------------------------

(1) Mr. Mahadeva's other compensation consisted of a 401(k) plan Company
matching contribution.

(2) Mr. Narayanan's other compensation consisted of the interest savings on a
loan made to Mr. Narayanan by the Company in October 1997, which bears
interest at 2% per annum. See "Certain Transactions--Transactions with
Cognizant and Other Affiliates."

(3) Mr. Coburn was employed by Cognizant during 1997 and his responsibilities
included significant activities unrelated to the Company's business as well
as services provided to the Company on behalf of Cognizant. Mr. Coburn's
compensation expenses for 1997 were an unallocated component of the
aggregate costs allocated to the Company by Cognizant based upon assets
employed by the Company in proportion to Cognizant's total assets. Mr.
Coburn's 1998 compensation, including salary of $133,250, bonus target of
$38,813, and $5,162 of other compensation comprised of 401(k) plan Company
matching contribution, will be borne entirely by the Company.

(4) Reflects compensation received in all capacities from the Company during
1997. Mr. D'Souza worked as an independent consultant to the Company until
June 1, 1997, when he became a full-time employee of the Company.

47
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR

The following table sets forth all individual grants of stock options during
the year ended December 31, 1997 to each of the Named Executive Officers:

<TABLE>
<CAPTION>
POTENTIAL REALIZABLE
INDIVIDUAL GRANTS VALUE AT
-------------------------------------------------------- ASSUMED ANNUAL
NUMBER OF RATES OF STOCK PRICE
SECURITIES PERCENT OF APPRECIATION FOR
UNDERLYING TOTAL OPTIONS OPTION
OPTIONS GRANTED TO EXERCISE OR TERM(2)
GRANTED EMPLOYEES IN BASE PRICE EXPIRATION --------------------
NAME (#)(1) FISCAL YEAR ($/SH) DATE 5%($) 10%($)
- ---------------------------------- ----------- --------------- ------------- ----------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Wijeyaraj Mahadeva................ 130,000 25.0% 3.85 7/24/07 314,447 796,871
Lakshmi Narayanan................. 58,500 11.2 3.85 7/24/07 141,501 358,592
Gordon Coburn..................... 26,000 5.0 3.85 7/24/07 62,889 159,374
Francisco D'Souza................. 32,500 6.3 3.85 7/24/07 78,612 199,218
</TABLE>

- ------------------------

(1) All options were granted pursuant to the Employee Option Plan at an exercise
price equal to or greater than the fair market value of the Class A Common
Stock on the date of grant, as determined by the Company's Board of
Directors, and vest 25% a year over a four-year period. Such options expire
on the tenth anniversary of the date of grant. Pursuant to the agreements
described below under "--Severance and Noncompetition Agreements," such
options will vest in full immediately upon a Change of Control (as defined
therein).

(2) Potential realizable value is based on the assumption that the price of the
Class A Common Stock appreciates from the exercise price of $3.85 per share
at the annual rate shown (compounded annually) from the date of grant until
the expiration of the ten year option term. Calculated using the initial
public offering price as a base, the potential realizable value at the
assumed 5% and 10% rates of stock appreciation would be as follows:
$1,617,063 and $2,871,365 for Mr. Mahadeva, $727,678 and $1,292,114 for Mr.
Narayanan, $323,412 and $574,273 for Mr. Coburn and $404,265 and $717,841
for Mr. D'Souza. These values are calculated in accordance with rules
promulgated by the Securities and Exchange Commission and do not reflect the
Company's estimate of future stock price appreciation.

FISCAL YEAR-END OPTION VALUES

The following table sets forth information with respect to the number and
value of the outstanding options held by the Named Executive Officers at
December 31, 1997:

<TABLE>
<CAPTION>
NUMBER OF SECURITIES VALUE OF UNEXERCISED
UNDERLYING UNEXERCISED IN-THE-MONEY
OPTIONS AT FISCAL YEAR-END OPTIONS AT FISCAL YEAR-END
(#): ($):
NAME EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE(1)
- ----------------------------------------------------- ----------------------------- ----------------------------
<S> <C> <C>
Wijeyaraj Mahadeva................................... --/130,000 --/680,000
Lakshmi Narayanan.................................... --/58,500 --/306,000
Gordon Coburn........................................ --/26,000 --/136,000
Francisco D'Souza.................................... --/32,500 --/170,000
</TABLE>

- ------------------------

(1) Based on the fair market value of the Common Stock as of December 31, 1997
($9.08 per share), as determined by the Company's Board of Directors.

48
<PAGE>
SEVERANCE AND NONCOMPETITION AGREEMENTS

The Company has entered into a Severance and Noncompetition Agreement
(collectively, the "Severance and Noncompetition Agreements") with each of the
Named Executive Officers. The Severance and Noncompetition Agreements provide
that each Named Executive Officer will receive one year's base salary and a full
annual bonus upon termination of employment, other than in the case of a
termination for cause. In addition, such agreements provide that all options
held by the Named Executive Officers will vest in full immediately upon a Change
of Control. Pursuant to such agreements, each Named Executive Officer has agreed
not to engage in any competitive business in any capacity for one year following
termination of employment and not to solicit any of the Company's employees to
leave the Company within the one-year period following termination of
employment. Finally, such agreements include customary proprietary rights
assignment and confidentiality provisions. See "Risk Factors--Dependence on Key
Personnel."

STOCK OPTION PLANS

EMPLOYEE OPTION PLAN

The Company's Employee Option Plan became effective in July 1997, and was
amended in March 1998. The aggregate number of shares of Class A Common Stock
reserved for issuance under the Employee Option Plan is 698,750 shares, of which
options to acquire 619,200 shares of Class A Common Stock are outstanding at a
weighted average exercise price of $4.96 per share. Prior to this offering, no
shares of Common Stock have been issued upon exercise of options granted under
the Employee Option Plan.

Options granted under the Employee Option Plan may be either (i) options
intended to qualify as "incentive stock options" under Section 422 of the Code
or (ii) stock options that are non-qualified for Federal income tax purposes.
Options may be granted under the Employee Option Plan to key employees (but not
members of the Compensation Committee or any person who serves only as a
director) of the Company and its subsidiaries and Cognizant and its subsidiaries
(if such persons are responsible for the management, growth and protection of
the business of the Company).

The Employee Option Plan is administered by the Compensation Committee of
the Board of Directors. Subject to the provisions of the Employee Option Plan,
the Compensation Committee has the authority to interpret the provisions of the
Employee Option Plan, to determine the persons to whom options will be granted,
the number of shares to be covered by each option and the terms and conditions
upon which an option may be granted. Options granted under the Employee Option
Plan may not be granted at an exercise price less than fair market value of the
underlying shares on the date of grant. Options granted under the Employee
Option Plan become exercisable (i) as to 25% upon the later of the first
anniversary of the grant and the consummation of this offering, (ii) as to 25%
upon the later of the second anniversary of the date of grant and the
consummation of this offering, (iii) as to 25% upon the later of the third
anniversary of the grant and the consummation of this offering and (iv) as to
25% upon the later of the fourth anniversary of the date of grant and the
consummation of this offering. Pursuant to the Severance and Noncompetition
Agreements, the options held by executive officers will vest in full immediately
upon a Change of Control. Furthermore, in the case of options held by certain
other key employees, certain options will vest 50% upon a Change of Control (as
such term is defined in the Employee Option Plan). Options granted under the
Employee Option Plan expire in 10 years, are nontransferable and, with certain
exceptions in the event of a death of a participant, may be exercised by the
optionee only during employment. In the event of an optionee's death, disability
or retirement, the unexercised portion of an option may be exercised during the
shorter of the remaining stated term of the option or five years after the date
of death, disability or retirement, but only to the extent such option was
exercisable at the time of such termination or becomes exercisable during such
later period as stated in the Employee Option Plan. In the case of a termination
for any other reason, the unexercised portion of and option may be exercised for
the period ending ninety days after termination, but only to the extent such

49
<PAGE>
option was exercisable at the time of termination. Notwithstanding the
foregoing, the Compensation Committee may, in its sole discretion, accelerate
the vesting of unvested options if an optionee is terminated without cause (as
determined by the Compensation Committee).

DIRECTORS' OPTION PLAN

The Directors' Option Plan became effective in December 1997 and was amended
in March 1998. The aggregate number of shares of Class A Common Stock reserved
for issuance under the Directors' Option Plan is 71,500 shares, of which options
to acquire 49,500 shares of Class A Common Stock are outstanding at a weighted
average exercise price of $9.76 per share. Prior to this offering, no shares of
Class A Common Stock have been issued upon exercise of options granted under the
Directors' Option Plan.

The Directors' Option Plan, which is administered by the Compensation
Committee, provides for the issuance of non-qualified stock options to purchase
up to 15,000 shares of Class A Common Stock in any year to any director of the
Company who is not an employee of the Company or any subsidiary of the Company.
Subject to the provisions of the Directors' Option Plan, the Compensation
Committee has the authority to interpret the provisions of the Directors' Option
Plan, to determine the persons to whom options will be granted, the number of
shares to be covered by each option and the terms and conditions upon which an
option may be granted. The option price for options granted under the Directors'
Option Plan shall be determined by the Compensation Committee and may be granted
at an exercise price greater than, less than or equal to the fair market value
of the underlying shares on the date of grant. Options granted under the
Directors' Option Plan become exercisable (i) as to 50% upon the later of the
first anniversary of the grant and the consummation of this offering and (ii) as
to 50% upon the later of the second anniversary of the date of grant and the
consummation of this offering. Options granted under the Director's Option Plan
expire after 10 years, are nontransferable and, with certain exceptions in the
event of a death of a participant, may be exercised by the optionee only during
service. In the event of an optionee's death or disability, the unexercised
portion of an option immediately vests in full and may be exercised until (i)
the earlier of the remaining stated term of the option or five years after the
date of death with respect to a termination due to death or (ii) the earlier of
the remaining stated term of the option and the longer of five years after the
date of termination due to disability or one year after the date of death, in
the case of a termination due to disability. In the case of a termination for
any other reason, the unexercised portion of and option may be exercised for the
period ending ninety days after termination, but only to the extent such option
was exercisable at the time of termination.

LIMITATION OF LIABILITY AND INDEMNIFICATION OF OFFICERS AND DIRECTORS

The Company's Certificate of Incorporation and Bylaws provide that the
liability of the directors for monetary damages shall be limited to the fullest
extent permissible under Delaware law. This limitation of liability does not
affect the availability of injunctive relief or other equitable remedies.

The Company's Bylaws provide that the Company will indemnify its directors
and officers to the fullest extent permissible under Delaware law. These
indemnification provisions require the Company to indemnify such persons against
certain liabilities and expenses to which they may become subject by reason of
their service as a director or officer of the Company or any of its affiliated
enterprises. In addition, prior to the consummation of this offering, the
Company will enter into indemnification agreements with each of its directors
and executive officers providing indemnification to the fullest extent permitted
by applicable law and also setting forth certain procedures, including the
advancement of expenses, that apply in the event of a claim for indemnification.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Mr. Bellomo serves as a member of the Compensation Committee of the Board of
Directors. In March 1998, the Company granted non-qualified stock options under
the Directors' Option Plan to purchase 6,500 shares of Class A Common Stock to
Mr. Bellomo for an exercise price equal to the initial public offering price per
share.

50
<PAGE>
CERTAIN TRANSACTIONS

AGREEMENTS WITH COGNIZANT

The Company and IMS America, IMS and Nielsen Media Research, operating
subsidiaries of Cognizant, have entered into Master Services Agreements and,
prior to the consummation of this offering, the Company and Cognizant will enter
into the Intercompany Agreement, the Intercompany Services Agreement and the
License Agreement, each of which will be effective upon the consummation of this
offering. The material terms of these agreements are summarized below. Because
the Company is controlled by Cognizant, none of these agreements results from
arms'-length negotiations and, therefore, the terms thereof may be more or less
favorable to the Company than those obtainable from unaffiliated third parties.
Upon the consummation of the previously announced reorganization of Cognizant,
the Master Services Agreements will remain in effect and the Intercompany
Agreement and the Intercompany Services Agreement will be assigned by Cognizant
to IMS HEALTH. See "Company Background."

MASTER SERVICES AGREEMENTS. The Company and Cognizant's operating
subsidiaries, IMS America, IMS and Nielsen Media Research, have entered into the
Master Services Agreements, pursuant to which the Company will continue to
provide software development and maintenance services to such operating
subsidiaries. Pursuant to each Master Services Agreement, the Company and the
Cognizant subsidiary issue work orders for specific projects. The Company
invoices the subsidiaries monthly for services on a time-and-materials basis for
Year 2000 compliance services and as provided in the applicable work order for
other services. Each Master Service Agreement provides that it and any work
order issued thereunder may be terminated by the Cognizant subsidiary with or
without cause on 30 days' prior written notice.

INTERCOMPANY AGREEMENT. The Intercompany Agreement provides that until
Cognizant and its affiliates cease to control at least 50% of the combined
voting power of the outstanding voting stock of the Company, the prior written
consent of Cognizant will be required for (i) any acquisition of capital stock
or assets by the Company or any of its subsidiaries or disposition of assets of
the Company or any of its subsidiaries (other than transactions to which the
Company and its subsidiaries are the only parties), or any series of related
acquisitions or dispositions, involving gross consideration (including the
assumption of indebtedness) in excess of the greater of $10.0 million and six
percent of the Company's total equity market capitalization, (ii) any issuance
by the Company or any subsidiary of the Company of any equity securities or
rights, warrants or options to purchase such equity securities, except for
equity securities issued to directors, employees and consultants pursuant to the
Employee Option Plan and Directors' Option Plan and other outstanding options
and equity securities issued in connection with acquisitions approved by
Cognizant and (iii) the creation or incurrence by the Company or any of its
subsidiaries of indebtedness for borrowed money in excess of $10.0 million,
except for indebtedness incurred to finance any acquisition approved by
Cognizant. Pursuant to the Intercompany Agreement, for a period of 18 months
following this offering (the "Restricted Period"), the approval of a majority of
the members of the Board of Directors of the Company who are not employed by or
otherwise affiliated with Cognizant, the Company (other than as directors) or
any of their respective affiliates (the "Independent Directors") will be
required for a merger or consolidation involving the Company, a sale by the
Company of all or substantially all of its assets or a liquidation, dissolution
or winding up of the Company's business, in any case, for per share
consideration below the initial public offering price per share, and a fairness
opinion from a nationally recognized investment banking firm or the approval of
at least one Independent Director will be required for any of such transactions
for per share consideration at or above the initial public offering price per
share. Also pursuant to the Intercompany Agreement, during the Restricted
Period, subject to certain limited exceptions, Cognizant will not sell any of
the shares of Common Stock owned by it on the date of this Prospectus other than
pursuant to a registered public offering, pursuant to Rule 144 promulgated under
the Securities Act, at a price per share equal to or greater than the initial
public offering price per share or, with the approval of a majority of the
Independent Directors, at a price per share below the initial public offering
price per share. In addition, during the Restricted Period, Cognizant will not
acquire additional shares of Common Stock, other than pursuant to a transaction
involving all of

51
<PAGE>
the Company's outstanding Common Stock at a price per share in excess of the
initial public offering price per share, with respect to which a fairness
opinion from a nationally recognized investment banking firm or the approval of
at least one Independent Director has been obtained. During the Restricted
Period, Cognizant will not vote its shares of Common Stock (or act by written
consent) to reduce the ratio of Independent Directors to be less than the ratio
of two of seven directors and will not vote its shares of Common Stock (or act
by written consent) to remove any Independent Director other than for cause or
with the approval of the holders of a majority of the outstanding Class A Common
Stock voting as a separate class.

Pursuant to the Intercompany Agreement, the Company will grant to Cognizant
certain demand and "piggyback" registration rights with respect to shares of
Common Stock owned by Cognizant. Cognizant will have the right to request up to
two demand registrations in each calendar year, but not more than six in any
five-year period. The Company may postpone such a demand under certain
circumstances. Cognizant will also have the right, which it may exercise at any
time and from time to time, to include the shares of Common Stock held by it in
any registration of common equity securities of the Company initiated by the
Company on its own behalf or on behalf of any other stockholders of the Company.
Such registration rights will be transferable by Cognizant. The Company will
agree to pay all costs and expenses in connection with each such registration,
except underwriting discounts and commissions applicable to the shares of Common
Stock sold by Cognizant. The Intercompany Agreement contains customary terms and
provisions with respect to, among other things, registration procedures and
certain rights to indemnification granted by parties thereunder in connection
with the registration of Common Stock on behalf of Cognizant.

Pursuant to the Intercompany Agreement, the Company will indemnify Cognizant
and its subsidiaries (other than the Company) and their respective officers,
directors, employees and agents against certain losses based on, arising out of
or resulting from the conduct of the Company's business and Cognizant will
similarly indemnify the Company and its subsidiaries and their respective
officers, directors, employees and agents against certain losses based on,
arising out of or resulting from Cognizant's other businesses. In addition,
Cognizant will assign to the Company certain rights to indemnification from The
Dun & Bradstreet Corporation and certain of its former affiliates.

The Intercompany Agreement may not be amended without the approval of a
majority of the Independent Directors.

INTERCOMPANY SERVICES AGREEMENT. Pursuant to the Intercompany Services
Agreement, Cognizant will provide certain services to the Company, including
payroll and payables processing, e-mail, tax, finance, personnel administration,
real estate and risk management services, and the Company and its employees will
continue to be covered by Cognizant's insurance policies and certain Cognizant
employee benefit plans. The Intercompany Services Agreement's initial term will
extend through December 31, 1998. Subsequent to December 31, 1998, the
Intercompany Services Agreement will continue for successive one-year terms
unless terminated by either party on not less than 60 days' written notice prior
to the end of the initial term or any renewal term. Any change in the fees
provided for under the terms of the Intercompany Services Agreement will be
subject to the approval of a majority of the Independent Directors.

LICENSE AGREEMENT. Pursuant to the License Agreement, Cognizant will grant
to the Company a non-exclusive, non-transferable, revocable license to use the
"Cognizant" trade name and certain other trade and service marks specifically
identified in the License Agreement (collectively, the "Marks"). The License
Agreement has an initial term of ten years from the consummation of this
offering and renews for successive ten-year terms. Cognizant may revoke the
license if the Company breaches the terms and conditions thereof. Upon
revocation of such license, the Company and its subsidiaries would be required
to discontinue use of the Marks and to change their names to exclude the word
"Cognizant." In addition, the License Agreement will provide that the Company
and its subsidiaries will not, without the prior written consent of Cognizant,
take any action with respect to (i) any litigation or proceeding involving the
Marks, (ii) any change in the Company's names, logos and other identifications
that might reasonably be

52
<PAGE>
expected to adversely affect the Marks or (iii) any advertising campaigns or
strategies that use the Marks or that refer to Cognizant that are inconsistent
with Cognizant's guidelines and standards. In addition, Cognizant can revoke any
of the Company's subsidiaries' use of the Marks if there is a change of control
of any such subsidiary.

Pursuant to the License Agreement, Cognizant will transfer all rights to the
Marks to the Company upon the consummation of the previously announced
reorganization of Cognizant expected to be consummated by mid-1998, subject to
certain conditions. See "Company Background."

TRANSACTIONS WITH COGNIZANT AND OTHER AFFILIATES

Prior to this offering, Cognizant and The Dun & Bradstreet Corporation
provided the Company with certain administrative services, including financial
planning and administration, legal, tax planning and compliance, treasury and
communications, and permitted the Company to participate in Cognizant's
insurance and employee benefit plans. Costs for these services were allocated to
the Company based on utilization of certain specific services and, where not
estimable, based upon assets employed by the Company in proportion to
Cognizant's total assets. Management believes that such amounts are lower than
the aggregate amounts the Company would have paid for these services had the
Company obtained such services from unrelated third parties. These allocations
were $185,000, $354,000 and $835,000 for the years ended December 31, 1995, 1996
and 1997, respectively, and $405,000 for the three months ended March 31, 1998.

On January 1, 1997, the Company began subleasing office space in New York
City from a subsidiary of Cognizant. The Company made lease payments to the
subsidiary of $99,000 in 1997 and $26,000 in the three months ended March 31,
1998, which it believes is fair market value for the sublease.

In November 1996, Cognizant and its subsidiaries, including the Company,
were spun-off from The Dun & Bradstreet Corporation. In connection with that
transaction, certain benefits were accelerated and paid to certain employees of
The Dun & Bradstreet Corporation. In this regard, Mr. Mahadeva was paid an
aggregate of $408,398 and restrictions on transfer were removed from 598 shares
of the common stock of The Dun & Bradstreet Corporation held by Mr. Mahadeva.
During 1996, Mr. Mahadeva devoted time to the Company as well as to other
business conducted by The Dun & Bradstreet Corporation, as a result of which
only $222,064 of the amount referred to above was expensed over a three-year
period ended December 31, 1996, in the Company's financial statements. Also in
November 1996, in consideration for his services to the Company, Cognizant
granted Mr. Mahadeva options to purchase an aggregate of 114,900 shares of the
common stock of Cognizant at an exercise price of $33.38 per share. Mr. Mahadeva
has agreed to forfeit options to purchase an aggregate of 58,334 shares of
Cognizant common stock upon the consummation of this offering. The balance of
Mr. Mahadeva's options to purchase the common stock of Cognizant will continue
to vest in consideration of Mr. Mahadeva's employment with the Company. In 1997,
Cognizant paid Mr. Mahadeva an aggregate of $93,674 in connection with his
relocation upon the completion of activities unrelated to the Company's
business, none of which was charged to the Company.

In November 1996, in consideration for services to Cognizant, Cognizant
granted Mr. Coburn options to purchase an aggregate of 60,000 shares of the
common stock of Cognizant at an exercise price of $33.38 per share. In addition,
in November 1996, Mr. Coburn was granted options to purchase an aggregate of
20,000 shares of the common stock of Cognizant at an exercise price of $33.38
per share, which was equal to the fair market value at the date of grant by
paying ten percent of the option exercise price as an advance payment toward
such exercise. The remaining 90% is payable at exercise. Mr. Coburn's options to
purchase the common stock of Cognizant will continue to vest in consideration of
Mr. Coburn's employment with the Company.

In the event that Cognizant ceases to own at least 50% of the outstanding
Common Stock of the Company, Cognizant has agreed with Messrs. Mahadeva and
Coburn that certain of their options to purchase the common stock of Cognizant
will continue to vest, rather than cease to vest and terminate as otherwise
provided in Cognizant's options.

53
<PAGE>
Certain employees of the Company, including Mr. Mahadeva and Mr. Coburn,
participate in Cognizant's defined benefit pension plans. The plans are cash
balance pension plans under which six percent of creditable compensation plus
interest is credited to the employee's retirement account on a monthly basis.
The cash balance earns monthly investment credits based on the 30-year Treasury
bond yield. At the time of retirement, the vested employee's account balance is
actuarially converted into an annuity. The Company's cost for these plans is
included in the allocation of expense from Cognizant for employee benefits
plans.

On July 25, 1997, certain management employees of the Company and its
affiliates subscribed for and subsequently purchased an aggregate of 113,750
shares of Class A Common Stock at the then estimated fair market value of $3.85
per share, including 81,250 shares for Mr. Mahadeva, 16,250 shares for Mr.
Coburn, 9,750 shares for Mr. D'Souza, 3,250 shares for Ms. Fash and 3,250 shares
for Ms. Kontogouris.

On July 25, 1997, the Company granted non-qualified stock options under the
Employee Option Plan to purchase an aggregate of 520,325 shares of Class A
Common Stock to certain executive officers and employees of the Company for an
exercise price of $3.85 per share, including options to purchase (i) 130,000
shares to Mr. Mahadeva, (ii) 58,500 shares to Mr. Narayanan, (iii) 26,000 shares
to Mr. Coburn and (iv) 32,500 shares to Mr. D 'Souza. On December 31, 1997, the
Company granted non-qualified stock options under the Directors' Option Plan to
purchase an aggregate of 13,000 shares of Class A Common Stock to certain
directors of the Company for an exercise price of $9.08 per share, including
options to purchase (i) 6,500 shares to Ms. Fash and (ii) 6,500 shares to Ms.
Kontogouris.

In October 1997, the Company loaned $63,300 to Mr. Narayanan for the
purchase of a residence. The loan is secured by the residence and bears interest
at the rate of two percent per annum. Principal and interest on the loan is
payable over a ten-year period. The loan matures in October 2007. In the event
of termination of employment, Mr. Narayanan must repay the outstanding balance
of the loan, plus interest at a higher rate under certain circumstances. As of
March 31, 1998, the outstanding balance of the loan, including principal and
accrued interest, was $61,190.

In March 1998, the Company granted non-qualified stock options to purchase
an aggregate of 48,750 shares of Class A Common Stock to Mr. Mahadeva for an
exercise price of $6.92 per share.

In March 1998, the Company granted non-qualified stock options under the
Employee Option Plan to purchase an aggregate of 47,450 shares of Class A Common
Stock to certain employees, including options to purchase 6,500 shares to Mr.
D'Souza, effective upon consummation of this offering at an exercise price equal
to the initial public offering price per share. The Company also granted
non-qualified stock options under the Directors' Option Plan to purchase an
aggregate of 36,500 shares of Class A Common Stock to certain directors,
including options to purchase 6,500 shares to Mr. Bellomo and options to
purchase 15,000 shares each to Messrs. Cosgrave and Klein, effective upon
consummation of this offering at an exercise price equal to the initial public
offering price per share.

In May 1998, the Company granted non-qualified stock options under the
Employee Option Plan to purchase an aggregate of 64,750 shares of Class A Common
Stock to certain employees effective upon consummation of this offering at an
exercise price equal to the initial public offering price per share.

In May 1998, in connection with the resolution of certain matters between an
affiliate of Cognizant and Pilot Software, Pilot Software agreed to remit
$500,000 to the Company. Of such amount, $315,321 is in respect of amounts due
to the Company from Pilot Software for services rendered through April 30, 1998
and $184,679 is a prepayment for services to be provided to Pilot Software by
the Company after such date.

54
<PAGE>
PRINCIPAL AND SELLING STOCKHOLDERS

The following table sets forth certain information with respect to the
beneficial ownership of the Company's Common Stock as of the date of this
Prospectus and as adjusted to reflect the sale of the shares offered hereby with
respect to: (i) each director of the Company; (ii) each of the Named Executive
Officers; (iii) the Selling Stockholder, which is the only beneficial owner of
more than 5% of the Company's Common Stock; and (iv) all executive officers and
directors as a group. Except as otherwise noted, the persons or entities named
in the table have sole voting and investment power with respect to all shares of
Common Stock beneficially owned by them, subject to community property laws
where applicable. Except as otherwise indicated, the street address of each
beneficial owner is c/o Cognizant Technology Solutions Corporation, 1700
Broadway, New York, New York 10019. See "Risk Factors--Control By Principal
Stockholder; Benefits of Offering to Cognizant" and "Use of Proceeds."

<TABLE>
<CAPTION>
SHARES OF COMMON STOCK BENEFICIALLY SHARES OF SHARES OF COMMON STOCK BENEFICIALLY
COMMON
OWNED PRIOR TO THE OFFERING(1) STOCK OWNED AFTER THE OFFERING(1)
------------------------------------- TO BE SOLD -------------------------------------
NUMBER OF % OF VOTING IN NUMBER OF % OF VOTING
NAME SHARES OUTSTANDING POWER OFFERING SHARES OUTSTANDING POWER
- ------------------------------------ --------- ------------- ----------- ----------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Wijeyaraj Mahadeva.................. 81,250 1.3% * -- 81,250 * *
Lakshmi Narayanan................... -- -- -- -- -- -- --
Gordon Coburn....................... 16,250 * * -- 16,250 * *
Francisco D'Souza................... 9,750 * * -- 9,750 * *
Anthony Bellomo (2)................. -- -- -- -- -- -- --
Paul Cosgrave....................... -- -- -- -- -- -- --
Victoria Fash (2)................... 3,250 * * -- 3,250 * *
John Klein.......................... -- -- -- -- -- -- --
Venetia Kontogouris (2)............. 3,250 * * -- 3,250 * *
All executive officers and directors
as a group (9 persons)............. 113,750 1.7% * -- 113,750 * *
Cognizant Corporation (3)........... 6,500,000 98.3% 99.8% 417,000 6,083,000 66.7 95.3
200 Nyala Farms
Westport, CT 06880
</TABLE>

- ------------------------

* Less than one percent.

(1) Applicable percentage of ownership is based on 6,613,750 shares of Common
Stock outstanding as of the date of this Prospectus and 9,113,750 shares
upon consummation of this offering. Beneficial ownership is determined in
accordance with the rules of the Securities and Exchange Commission and
generally includes voting or investment power with respect to securities,
subject to community property laws, where applicable.

(2) Mr. Bellomo, a director of the Company, is the President of Erisco, a
subsidiary of Cognizant. Ms. Fash, a director of the Company, is Executive
Vice President and Chief Financial Officer of Cognizant. Ms. Kontogouris, a
director of the Company, is President of Cognizant Enterprises, Inc., a
subsidiary of Cognizant. None of the shares indicated as owned by Mr.
Bellomo, Ms. Fash and Ms. Kontogouris include shares owned by Cognizant. Mr.
Bellomo, Ms. Fash and Ms. Kontogouris disclaim beneficial ownership of the
shares owned by Cognizant within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934.

(3) If the Underwriters' over-allotment option is exercised in full, Cognizant
will beneficially own 5,645,500 shares of Class B Common Stock after this
offering, which will represent 61.9% of the outstanding Common Stock and
94.2% of the combined voting power of the outstanding Common Stock.

55
<PAGE>
DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 130,000,000 shares
consisting of (i) 100,000,000 shares of Class A Common Stock, par value $.01 per
share, (ii) 15,000,000 shares of Class B Common Stock, par value $.01 per share,
and (iii) 15,000,000 shares of Preferred Stock, par value $.10 per share. As of
the date of this Prospectus, the Company had issued and outstanding 530,750
shares of Class A Common Stock, 6,083,000 shares of Class B Common Stock and had
granted options to purchase 717,450 shares of Class A Common Stock at a weighted
average exercise price of $5.43 per share. No shares of preferred stock have
been designated or issued. The following description of the capital stock of the
Company is a summary and is qualified in its entirety by the provisions of the
Company's Certificate of Incorporation and the Bylaws, copies of which have been
filed as exhibits to the Registration Statement of which this Prospectus is a
part.

COMMON STOCK

The holders of Class A Common Stock and Class B Common Stock generally have
identical rights except that holders of Class A Common Stock are entitled to one
vote per share while holders of Class B Common Stock are entitled to ten votes
per share on all matters to be voted on by stockholders. The holders of Common
Stock are not entitled to cumulative voting rights. Generally, all matters to be
voted on by stockholders must be approved by a majority (or, in the case of
election of directors, by a plurality) of the votes entitled to be cast by all
shares of Class A Common Stock and Class B Common Stock present in person or
represented by proxy, voting together as a single class, subject to any voting
rights granted to holders of any Preferred Stock. In the event of a voluntary or
involuntary liquidation, dissolution or winding up of the Company, the holders
of shares of Common Stock would be entitled to share ratably in all assets
remaining after payment of liabilities subject to prior distribution rights and
payment of any distributions owing to holders of shares of Preferred Stock then
outstanding, if any. Holders of the shares of Common Stock have no preemptive
rights, and the shares of Common Stock are not subject to further calls or
assessment by the Company. There are no redemption or sinking fund provisions
applicable to the shares of Common Stock.

Holders of Class A Common Stock and Class B Common Stock will share in an
equal amount per share in any dividend declared by the Board of Directors,
subject to any preferential rights of any outstanding Preferred Stock. Dividends
consisting of shares of Class A Common Stock and Class B Common Stock may be
paid only as follows: (i) shares of Class A Common Stock may be paid only to
holders of Class A Common Stock and shares of Class B Common Stock may be paid
only to holders of Class B Common Stock and (ii) shares shall be paid
proportionally with respect to each outstanding share of Class A Common Stock
and Class B Common Stock.

While Cognizant does not have a current intention of effecting a Tax-Free
Spin-Off (as hereinafter defined), Cognizant will continually evaluate its
ownership of the Class B Common Stock of the Company and there can be no
assurances whether Cognizant will effect a Tax-Free Spin-Off in the future. Each
outstanding share of Class B Common Stock is convertible at the holder's option
into one share of Class A Common Stock at any time prior to a Tax-Free Spin-Off.
If a Tax-Free Spin-Off occurs, the stockholders of Cognizant will receive Class
B Common Stock, which will continue to have ten votes per share. Thereafter,
shares of Class B Common Stock shall convert upon transfer to Class A Common
Stock but shall no longer be convertible into shares of Class A Common Stock at
the option of the holder thereof. Additionally, each share of Class B Common
Stock shall automatically convert into one share of Class A Common Stock if at
any time the number of outstanding shares of Class B Common Stock represents
less than 35% of the economic ownership represented by the aggregate number of
shares of Common Stock then outstanding.

Except as provided below, any shares of Class B Common Stock transferred to
a person other than Cognizant or any of its subsidiaries or successors
(including IMS HEALTH) shall automatically convert to shares of Class A Common
Stock upon such disposition. Shares of Class B Common Stock transferred to
stockholders of Cognizant in a transaction intended to be on a tax-free basis (a
"Tax-Free Spin-Off") under the Code shall not convert to shares of Class A
Common Stock upon the occurrence of such Tax-Free Spin-Off.

56
<PAGE>
Following a Tax-Free Spin-Off, shares of Class B Common Stock shall convert
upon transfer to Class A Common Stock; provided, however, that shares of Class B
Common Stock shall automatically convert into shares of Class A Common stock on
the fifth anniversary of the Tax-Free Spin-Off, unless prior to such Tax-Free
Spin-Off, Cognizant delivers to the Company written advice of counsel reasonably
satisfactory to the Company to the effect that (i) such conversion could
adversely affect the ability of Cognizant to obtain a favorable ruling from the
Internal Revenue Service that the distribution would be a Tax-Free Spin-Off or
(ii) the Internal Revenue Service has adopted a general non-ruling policy on
tax-free spinoffs and that such conversion could adversely affect the status of
the transaction as a Tax-Free Spin-Off. If such written advice is received,
approval of such conversation shall be submitted to a vote of the holders of the
Common Stock as soon as practicable after the fifth anniversary of the Tax-Free
Spin-Off, unless Cognizant delivers to the Company written advice of counsel
reasonably satisfactory to the Company prior to such anniversary that such vote
could adversely affect the status of the distribution as a Tax-Free Spin-Off,
including the ability to obtain a favorable ruling from the Internal Revenue
Service. If such written advice is delivered, such vote shall not be held.
Approval of such conversion will require the affirmative vote of the holders of
a majority of the shares of both Class A Common Stock and Class B Common Stock
present and voting, voting together as a single class, with each share entitled
to one vote for such purpose. No assurance can be given that such conversion
would be consummated. The foregoing requirements are intended to ensure that
tax-free treatment of a Tax-Free Spin-Off is preserved should the Internal
Revenue Service challenge such automatic conversion as violating the 80% vote
requirement currently required by the Code for a Tax-Free Spin-Off. See "Risk
Factors--Control by Principal Stockholder; Benefits of Offering to Cognizant."

PREFERRED STOCK

The Company's Certificate of Incorporation authorizes the issuance of
preferred stock with such designations, rights and preferences as may be
determined from time to time by its Board of Directors. Accordingly, the
Company's Board of Directors is empowered, without stockholder approval, to
issue preferred stock with dividends, liquidation, compliance, voting or other
rights that could adversely affect the voting power or other rights of the
holders of Common Stock. Pursuant to the Intercompany Agreement, Cognizant's
consent would be required to issue any preferred stock. In the event of
issuance, the preferred stock could be used, under certain circumstances, as a
method of discouraging, delaying or preventing a change in control of the
Company. No shares of preferred stock are issued or outstanding and the Company
has no present plans to issue any shares of preferred stock. See "Risk
Factors--Certain Anti-Takeover Provisions."

CERTAIN PROVISIONS OF DELAWARE LAW

Section 203 of the DGCL prohibits, with certain exceptions, a Delaware
corporation from engaging in any of a broad range of business combinations, such
as mergers, consolidations and sales of assets, with an "interested stockholder"
for a period of three years from the date that such person became an interested
stockholder. This makes a takeover of a company more difficult and may have the
effect of diminishing the possibility of certain types of "front-end loaded"
acquisitions of a company or other unsolicited attempts to acquire a company.
This may further have the effect of preventing changes in the Board of Directors
of a company and it is possible that such provisions could make it more
difficult to accomplish transactions which stockholders may otherwise deem to be
in their best interests. See "Risk Factors--Certain Anti-Takeover Provisions."

LISTING

The Class A Common Stock has been approved for quotation on the Nasdaq
National Market, subject to official notice of issuance, under the trading
symbol "CTSH."

TRANSFER AGENT AND REGISTRAR

The transfer agent for the Company's Class A Common Stock is Continental
Stock Transfer & Trust Company.

57
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE

Prior to this offering, there has been no public market for the capital
stock of the Company.

Upon consummation of this offering, the Company will have outstanding
9,113,750 shares of Common Stock and will have granted options for the purchase
of 717,450 shares of Class A Common Stock at a weighted average exercise price
of $5.43 per share. Of such options granted, none are exercisable as of, or
within 60 days of, March 1, 1998. Of the 9,113,750 shares of Common Stock
outstanding upon consummation of this offering, the 2,917,000 shares of Class A
Common Stock sold in this offering will be freely tradable without restriction
or further registration under the Securities Act, unless they are purchased by
"affiliates" of the Company as that term is defined in Rule 144 under the
Securities Act (which sales would be subject to certain limitations and
restrictions described below). The remaining 6,196,750 outstanding shares of
Common Stock may be sold only if registered or pursuant to an exemption from
registration such as Rule 144 or 144(k) promulgated under the Securities Act.
The holders of all remaining 6,196,750 shares of Common Stock have agreed not to
offer, sell, contract to sell, grant any option to purchase or otherwise dispose
of, or agree to dispose of, any shares of Class A Common Stock until 180 days
after the date of this Prospectus without prior written consent of BancAmerica
Robertson Stephens. See "Underwriting." BancAmerica Robertson Stephens in its
sole discretion at any time and without notice may release for sale in the
public market all or any portion of the shares subject to the lock-up
agreements. In addition, pursuant to the Intercompany Agreement, Cognizant's
ability to sell its shares of Common Stock will be restricted for a period of 18
months following the consummation of this offering. See "Certain Transactions."

In general, under Rule 144 as currently in effect, beginning 90 days after
the date of this Prospectus, a person (or persons whose shares are aggregated)
who has beneficially owned shares for a least one year (including the holding
period of any prior owner except an affiliate) is entitled to sell in "brokers'
transactions" or to market makers, within any three-month period a number of
shares that does not exceed the greater of: (i) 1% of the number of shares of
Class A Common Stock then outstanding (approximately 91,000 shares immediately
after this offering); or (ii) the average weekly trading volume in the Class A
Common Stock during the four calendar weeks preceding the required filing of a
Form 144 with respect to such sale. Sales under Rule 144 are subject to the
availability of current public information about the Company. Under Rule 144(k),
a person who is not deemed to have been an affiliate of the Company at any time
during the 90 days preceding a sale, and who has beneficially owned the shares
proposed to be sold for at least two years, is entitled to sell such shares
without having to comply with the manner of sale, public information, volume
limitation or notice filing provisions of Rule 144. Under Rule 701 under the
Securities Act, persons who purchase shares upon exercise of options granted
prior to this offering are entitled to sell such shares 90 days after this
offering in reliance on Rule 144, without having to comply with the holding
period requirements of Rule 144 and, in the case of non-affiliates, without
having to comply with the volume limitation or notice filing provisions of Rule
144.

The Company is unable to estimate accurately the number of "restricted"
shares that will be sold under Rule 144 since this will depend in part on the
market price for the Class A Common Stock, the personal circumstances of the
seller and other factors. See "Risk Factors--Shares Eligible for Future Sale."

After the completion of this offering, the Company intends to file
Registration Statements on Form S-8 under the Securities Act to register an
aggregate of 819,000 shares of Class A Common Stock reserved for issuance under
the Employee Option Plan and Directors' Option Plan and other options
outstanding as of the date of this Prospectus. Of the 717,450 options
outstanding on the date of this Prospectus, 351,750 are subject to the lock-up
agreements described above and 300,700 of the remaining 365,700 options will not
become exercisable before December 31, 1998.

58
<PAGE>
UNDERWRITING

The Underwriters named below, acting through their representatives,
BancAmerica Robertson Stephens, Cowen & Company and Adams, Harkness & Hill, Inc.
(the "Representatives"), have severally agreed, subject to the terms and
conditions of the Underwriting Agreement, to purchase from the Company and the
Selling Stockholder the number of shares of Class A Common Stock set forth
opposite their respective names below. The Underwriters are committed to
purchase and pay for all such shares if any are purchased.

<TABLE>
<CAPTION>
NUMBER
UNDERWRITER OF SHARES
- ----------------------------------------------------------------------------------------------------- ----------
<S> <C>
BancAmerica Robertson Stephens....................................................................... 1,171,825
Cowen & Company...................................................................................... 801,775
Adams, Harkness & Hill, Inc.......................................................................... 493,400
Furman Selz LLC...................................................................................... 75,000
Hanifen, Imhoff Inc.................................................................................. 75,000
Kaufman Bros., L.P................................................................................... 75,000
Laidlaw Global Securities, Inc....................................................................... 75,000
Pacific Crest Securities............................................................................. 75,000
Punk, Ziegel & Company, L.P.......................................................................... 75,000
----------
Total........................................................................................ 2,917,000
----------
----------
</TABLE>

The Company has been advised by the Representatives that the Underwriters
propose to offer the shares of Class A Common Stock to the public at the initial
public offering price set forth on the cover page of this Prospectus and to
certain dealers at such price less a concession of not more than $.40 per share,
of which $.10 per share may be reallowed to other dealers. After the initial
public offering, the public offering price, concession and reallowance to
dealers may be reduced by the Representatives. No such reduction shall change
the amount of proceeds to be received by the Company as set forth on the cover
page of this Prospectus.

The Selling Stockholder has granted to the Underwriters an option,
exercisable during the 30-day period after the date of this Prospectus, to
purchase an aggregate of up to an additional 437,550 shares of Class A Common
Stock at the same price per share as the Company and the Selling Stockholder
receive for the 2,917,000 shares that the Underwriters have agreed to purchase.
To the extent that the Underwriters exercise such option, each of the
Underwriters will have a firm commitment to purchase approximately the same
percentage of such additional shares that the number of shares of Class A Common
Stock to be purchased by it shown in the above table represents as a percentage
of the 2,917,000 shares offered hereby. If purchased, such additional shares
will be sold by the Underwriters on the same terms as those on which the
2,917,000 shares are being sold. The Selling Stockholder will be obligated,
pursuant to the option, to sell shares to the Underwriters to the extent the
option is exercised. The Underwriters may exercise such option only to cover
over-allotments made in connection with the sale of shares of Class A Common
Stock offered hereby.

The Underwriting Agreement contains covenants of indemnity among the
Underwriters, the Company and the Selling Stockholder against certain civil
liabilities, including liabilities under the Securities Act and liability
arising from breaches of representations and warranties contained in the
Underwriting Agreement or the inaccuracy of certain information set forth herein
that was provided by the Underwriters.

Cognizant and the executive officers, directors and stockholders of the
Company have agreed with the Representatives that, until 180 days from the
effective date of the Registration Statement of which this Prospectus is a part,
subject to certain limited exceptions, they will not, directly or indirectly,
offer, sell, contract to sell, grant any option to purchase, pledge, or
otherwise dispose of or transfer, any shares of

59
<PAGE>
Class A Common Stock, or any securities convertible into or exchangeable for, or
any rights to purchase or acquire, shares of Class A Common Stock, now owned or
hereafter acquired by such holders or with respect to which they have or
hereafter acquire the power of disposition, without the prior written consent of
BancAmerica Robertson Stephens. BancAmerica Robertson Stephens may, in its sole
discretion and without notice, release all or any portion of the securities
subject to the lock-up agreements. In addition, the Company has agreed that,
until 180 days from the date of this Prospectus, the Company will not, without
the prior written consent of BancAmerica Robertson Stephens, subject to certain
exceptions, sell or otherwise dispose of any shares of Class A Common Stock, any
options or warrants to purchase any shares of Class A Common Stock or any
securities convertible into, exercisable for or exchangeable for shares of Class
A Common Stock other than the Company's sale of shares in this offering, the
issuance of Common Stock upon the exercise of outstanding options or the
Company's grant of options and issuance of stock under the Employee Option Plans
and the Directors' Option Plan. See "Shares Eligible for Future Sale."

The Representatives have advised the Company and the Selling Stockholder
that the Underwriters do not intend to confirm sales to accounts over which they
exercise discretionary authority.

Certain persons participating in this offering may overallot or effect
transactions which stabilize, maintain or otherwise affect the market price of
the Class A Common Stock at levels above those which might otherwise prevail in
the open market, including by entering stabilizing bids, effecting syndicate
covering transactions or imposing penalty bids. A stabilizing bid means the
placing of any bid or effecting of any purchase for the purpose of pegging,
fixing or maintaining the price of the Class A Common Stock. A syndicate
covering transaction means the placing of any bid on behalf of the underwriting
syndicate or the effecting of any purchase to reduce a short position created in
connection with this offering. A penalty bid means an arrangement that permits
the Underwriters to reclaim a selling concession from a syndicate member in
connection with this offering when shares of Class A Common Stock sold by the
syndicate member are purchased in syndicate covering transactions. Such
transactions may be effected, where permitted, on the Nasdaq National Market or
otherwise. Such stabilizing, if commenced, may be discontinued at any time.

The Underwriters have reserved for sale, at the initial public offering
price, up to 5% of the shares of Class A Common Stock offered hereby for
employees of the Company and Cognizant, including executive officers, and
certain individuals who have expressed an interest in purchasing shares of Class
A Common Stock in this offering. The number of shares available for sale to the
general public will be reduced to the extent such persons purchase such reserved
shares. Any reserved shares not so purchased will be offered by the Underwriters
to the general public on the same basis as other shares offered hereby.

Prior to this offering, there has been no public market for the capital
stock of the Company. Consequently, the initial public offering price for the
Class A Common Stock was determined through negotiations among the Company, the
Selling Stockholder and the Representatives. The material factors considered in
such negotiations were prevailing market and economic conditions, certain
financial information of the Company for recent periods, the market valuations
of other companies engaged in activities similar to those of the Company,
estimates of the business potential and prospects of the Company, the present
state of the Company's business operations, the Company's management and other
factors deemed relevant. There can be no assurance that an active or orderly
trading market will develop for the Class A Common Stock or that the Class A
Common Stock will trade in the public market subsequent to this offering at or
above the initial trading price. See "Risk Factors--No Prior Public Market for
Common Stock; Possible Volatility of Stock Price."

60
<PAGE>
LEGAL MATTERS

The validity of the shares of Class A Common Stock offered hereby will be
passed upon for the Company and the Selling Stockholder by O'Sullivan Graev &
Karabell, LLP, New York, New York. Certain legal matters in connection with this
offering will be passed upon for the Underwriters by Hale and Dorr LLP, Boston,
Massachusetts.

EXPERTS

The Consolidated Financial Statements and schedule included in this
Prospectus and elsewhere in the Registration Statement have been audited by
Coopers & Lybrand L.L.P., independent accountants, as indicated in their reports
with respect thereto, and are included herein in reliance upon the authority of
such firm as experts in accounting and auditing.

ADDITIONAL INFORMATION

The Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement (of which this Prospectus is a part) on
Form S-1 (together with all amendments, schedules and exhibits thereto, the
"Registration Statement") under the Securities Act with respect to the shares of
Class A Common Stock offered hereby. This Prospectus does not contain all of the
information set forth in the Registration Statement, certain portions of which
have been omitted as permitted by the rules and regulations of the Commission.
Statements contained in this Prospectus as to the content of any contract or
other documents are not necessarily complete, and with respect to each such
contract or other document filed as an exhibit to the Registration Statement
reference is made to the exhibit, and each such statement is qualified in all
respects by such reference. For further information regarding the Company and
the Class A Common Stock offered hereby, reference is hereby made to the
Registration Statement and such exhibits and schedules which may be obtained
from the Commission at its principal office in Washington, D.C. upon payment of
the fees prescribed by the Commission.

The Registration Statement, including the exhibits and schedules forming a
part thereof, filed by the Company with the Commission can be inspected and
copies obtained from the public reference facilities maintained by the
Commission at Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington,
D.C. 20549, and at the following regional offices of the Commission: Seven World
Trade Center, Suite 1300, New York, New York 10048, and Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661-2511. Copies of such
material can be obtained from the Public Reference Section of the Commission,
450 Fifth Street, N. W., Washington, D.C. 20549, at prescribed rates. In
addition, the Commission maintains a Web site (http:\\www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants, including the Company, that file electronically with the
Commission.

61
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

<TABLE>
<S> <C>
Report of Independent Accountants..................................................... F-2
Consolidated Statements of Financial Position as of December 31, 1996 and 1997 and
March 31, 1998 (unaudited).......................................................... F-3
Consolidated Statements of Operations for the Years Ended
December 31, 1995, 1996 and 1997 and the Three Months Ended March 31, 1997 and 1998
(unaudited)......................................................................... F-4
Consolidated Statements of Stockholders' Equity for the Years Ended
December 31, 1995, 1996 and 1997 and the Three Months Ended March 31, 1998
(unaudited)......................................................................... F-5
Consolidated Statements of Cash Flows for the Years Ended
December 31, 1995, 1996 and 1997 and the Three Months Ended March 31, 1997 and 1998
(unaudited)......................................................................... F-6
Notes to Consolidated Financial Statements............................................ F-7
</TABLE>

F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Stockholders and Board of Directors of Cognizant Technology Solutions
Corporation:

We have audited the accompanying consolidated statements of financial
position of Cognizant Technology Solutions Corporation as of December 31, 1997
and 1996, and the related consolidated statements of operations, stockholders'
equity and cash flows for each of the three years in the period ended December
31, 1997. These consolidated financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted the audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Cognizant
Technology Solutions Corporation as of December 31, 1997 and 1996, and the
consolidated results of its operations and its cash flows for each of the three
years in the period ended December 31, 1997, in conformity with generally
accepted accounting principles.

Coopers & Lybrand L.L.P.

New York, New York
March 24, 1998, except as to
Note 7A which is as of
June 12, 1998.

F-2
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

(in thousands, except par values)

<TABLE>
<CAPTION>
AT DECEMBER 31, AT MARCH 31,
-------------------- ------------
1996 1997 1998
--------- --------- ------------
<S> <C> <C> <C>
(UNAUDITED)
ASSETS
Current assets
Cash and cash equivalents...................................................... $ 1,810 $ 2,715 $ 2,197
Trade accounts receivable, net................................................. 1,548 4,733 5,770
Trade accounts receivable--related party....................................... 1,161 2,670 1,993
Other current assets........................................................... 186 778 2,287
--------- --------- ------------
Total current assets..................................................... 4,705 10,896 12,247
Property and equipment, net.................................................... 2,711 4,453 5,080
Goodwill, net.................................................................. -- 2,147 2,068
Other assets................................................................... 411 802 57
--------- --------- ------------
Total assets............................................................. $ 7,827 $ 18,298 $ 19,452
--------- --------- ------------
--------- --------- ------------

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable............................................................... $ 701 $ 1,543 $ 1,295
Accrued and other liabilities.................................................. 1,223 3,659 4,030
--------- --------- ------------
Total current liabilities................................................ 1,924 5,202 5,325
--------- --------- ------------
Deferred income taxes.......................................................... 940 2,593 3,019
Due to related party........................................................... 976 6,646 6,474
Minority interest.............................................................. 1,181 -- --
--------- --------- ------------
Total liabilities........................................................ 5,021 14,441 14,818
--------- --------- ------------

Commitments and contingencies

Mandatorily redeemable common stock (114 shares issued and outstanding)........ -- 438 438

Stockholders' equity:
Preferred stock, $.10 par value, 15,000 shares authorized, none issued
and outstanding.............................................................. -- -- --
Class A common stock, $.01 par value, 100,000 shares authorized, 417 shares
issued and outstanding at December 31, 1996 and 1997 and at March 31, 1998... 4 4 4
Class B common stock, $.01 par value, 15,000 shares authorized, 6,083 issued
and outstanding at December 31, 1996 and 1997 and at March 31, 1998.......... 61 61 61
Additional paid-in capital..................................................... 1,833 1,420 1,482
Retained earnings.............................................................. 908 1,936 2,648
Cumulative translation adjustment.............................................. -- (2) 1
--------- --------- ------------
Total stockholders' equity............................................... 2,806 3,419 4,196
--------- --------- ------------
Total liabilities and stockholders' equity............................. $ 7,827 $ 18,298 $ 19,452
--------- --------- ------------
--------- --------- ------------
</TABLE>

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

F-3
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(UNAUDITED)
Revenues..................................................... $ 298 $ 2,775 $ 13,898 $ 2,138 $ 6,529
Revenues-related party....................................... 6,877 9,257 10,846 2,118 3,709
--------- --------- --------- --------- ---------
Total revenues....................................... 7,175 12,032 24,744 4,256 10,238

Cost of revenues............................................. 3,567 6,020 14,359 2,407 5,929
--------- --------- --------- --------- ---------
Gross profit................................................. 3,608 6,012 10,385 1,849 4,309
Selling, general and administrative expense.................. 2,213 3,727 6,898 1,403 2,705
Depreciation and amortization expense........................ 376 819 1,358 281 480
--------- --------- --------- --------- ---------
Income from operations....................................... 1,019 1,466 2,129 165 1,124

Other income:
Interest income.............................................. 7 8 25 1 31
Other income, net............................................ 44 1 -- -- (17)
--------- --------- --------- --------- ---------
Total other income................................... 51 9 25 1 14
--------- --------- --------- --------- ---------

Income before provision for income taxes..................... 1,070 1,475 2,154 166 1,138
Provision for income taxes................................... (247) (341) (581) (19) (426)
Minority interest............................................ (362) (492) (545) (104) --
--------- --------- --------- --------- ---------
Net income................................................... $ 461 $ 642 $ 1,028 $ 44 $ 712
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

Net income per share, basic.................................. $ 0.07 $ 0.10 $ 0.16 $ 0.01 $ 0.11
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Net income per share, diluted................................ $ 0.07 $ 0.10 $ 0.16 $ 0.01 $ 0.10
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

Weighted average number of common shares outstanding......... 6,500 6,500 6,547 6,500 6,614
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
Weighted average number of common shares and stock options
outstanding................................................ 6,500 6,500 6,605 6,500 6,818
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

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

F-4
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(in thousands)
<TABLE>
<CAPTION>
CLASS A CLASS B
COMMON STOCK COMMON STOCK ADDITIONAL RETAINED CUMULATIVE
-------------------------- ------------------------ PAID-IN EARNINGS/ TRANSLATION
SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) ADJUSTMENT
----------- ------------- ----------- ----------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994.... 417 $ 4 6,083 $ 61 $ 538 $ (195) $ --
Net transfers (to) from
related party................. -- -- -- -- 897 -- --
Net income.................... -- -- -- -- -- 461 --
--
--- ----- --- ----------- ----------- -----
Balance, December 31, 1995.... 417 4 6,083 61 1,435 266 --
Net transfers (to) from
related party................. -- -- -- -- 398 -- --
Net income.................... -- -- -- -- -- 642 --
--
--- ----- --- ----------- ----------- -----
Balance, December 31, 1996.... 417 4 6,083 61 1,833 908 --
Net transfers (to) from
related party................. -- -- -- -- (413) -- --
Translation adjustment........ -- -- -- -- -- -- (2)
Net income.................... -- -- -- -- -- 1,028 --
--
--- ----- --- ----------- ----------- -----
Balance, December 31, 1997.... 417 4 6,083 61 1,420 1,936 (2)
Net transfers (to) from
related party (unaudited)..... -- -- -- -- 62 -- --
Translation adjustment
(unaudited)................... -- -- -- -- -- -- 3
Net income (unaudited)........ -- -- -- -- -- 712 --
--
--- ----- --- ----------- ----------- -----
Balance, March 31,
1998 (unaudited).............. 417 $ 4 6,083 $ 61 $ 1,482 $ 2,648 $ 1
--
--
--- ----- --- ----------- ----------- -----
--- ----- --- ----------- ----------- -----

TOTAL
---------
<S> <C>
Balance, December 31, 1994.... $ 408
Net transfers (to) from
related party................. 897
Net income.................... 461

---------
Balance, December 31, 1995.... 1,766
Net transfers (to) from
related party................. 398
Net income.................... 642

---------
Balance, December 31, 1996.... 2,806
Net transfers (to) from
related party................. (413)
Translation adjustment........ (2)
Net income.................... 1,028

---------
Balance, December 31, 1997.... 3,419
Net transfers (to) from
related party (unaudited)..... 62
Translation adjustment
(unaudited)................... 3
Net income (unaudited)........ 712

---------
Balance, March 31,
1998 (unaudited).............. $ 4,196

---------
---------
</TABLE>

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

F-5
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
YEAR ENDED DECEMBER 31, MARCH 31,
------------------------------- --------------------
1995 1996 1997 1997 1998
--------- --------- --------- --------- ---------
(UNAUDITED)
<S> <C> <C> <C> <C> <C>
Cash flows from operating activities:
Net income............................................... $ 461 $ 642 $ 1,028 $ 44 $ 712
Adjustments to reconcile net income to net cash provided
by
operating activities:
Depreciation and amortization.......................... 376 819 1,358 281 480
Provision for doubtful accounts........................ -- -- 239 -- (62)
Deferred income taxes.................................. 397 518 1,170 112 426
Minority interest...................................... 362 492 545 104 --
Changes in assets and liabilities:
Accounts receivable...................................... (1,646) (440) (4,933) (34) (1,269)
Other current assets..................................... (150) 37 (591) (689) (538)
Other assets............................................. (99) (199) (390) 410 747
Accounts payable......................................... 832 (474) 842 1,013 (249)
Accrued and other liabilities............................ 515 487 2,386 (415) 371
--------- --------- --------- --------- ---------
Net cash provided by operating activities................ 1,048 1,882 1,654 826 618
--------- --------- --------- --------- ---------

Cash flows from investing activities:
Purchases of property and equipment...................... (1,737) (1,329) (3,025) (207) (906)
Payment for acquisition of minority interest in
subsidiary............................................. -- -- (3,418) -- --
--------- --------- --------- --------- ---------
Net cash used in investing activities.................... (1,737) (1,329) (6,443) (207) (906)
--------- --------- --------- --------- ---------

Cash flows from financing activities:
Proceeds from issued shares/contributed capital.......... 1,088 397 25 (53) (58)
Proceeds to (from) related party......................... (28) 315 5,669 (209) (172)
--------- --------- --------- --------- ---------
Net cash (used in) or provided from financing
activities............................................. 1,060 712 5,694 (262) (230)
--------- --------- --------- --------- ---------
Net increase in cash and cash equivalents................ 371 1,265 905 357 (518)
Cash and cash equivalents, at beginning of year.......... 174 545 1,810 1,810 2,715
--------- --------- --------- --------- ---------
Cash and cash equivalents, at end of year................ $ 545 $ 1,810 $ 2,715 $ 2,167 $ 2,197
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------

Supplemental information:
Cash paid for income taxes during the year............... $ -- $ 32 $ 158 $ -- $ 2
--------- --------- --------- --------- ---------
--------- --------- --------- --------- ---------
</TABLE>

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

F-6
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share and per share data)

1. BASIS OF PRESENTATION

Cognizant Technology Solutions Corporation (the "Company") is currently
owned 98% by Cognizant Corporation ("Cognizant") and 2% by certain employees and
directors of the Company. Prior to the reorganization of The Dun & Bradstreet
Corporation on November 1, 1996, the Company was a wholly owned and controlled
subsidiary of The Dun & Bradstreet Corporation, the former parent of Cognizant.

The Company is principally engaged in the software development and
maintenance services business with operations and subsidiaries in India, the
United Kingdom, Canada and the United States. It delivers services to customers,
principally in the United States, through an on-site and offshore project team.
These services include application development and maintenance services, Year
2000 and Eurocurrency compliance services, testing and quality assurance
services and re-hosting and re-engineering services.

The Company is a Delaware corporation originally organized in 1988. The
Company's software development and maintenance services business began
operations in 1994. Since its organization, the Company held stock in various
companies engaged in unrelated businesses. As part of the reorganization of The
Dun & Bradstreet Corporation, these unrelated businesses have been spun-off from
the Company. The results of the Company for all years presented reflect the
Company's software development and maintenance services business, as all other
entities were in dissimilar businesses, historically had been managed and
financed autonomously and had no common facilities or costs. Pursuant to the
Intercompany Agreement between Cognizant and the Company and the assignment of
certain indemnification rights of Cognizant to the Company, there are no
material financial commitments, guarantees or contingent liabilities of the
Company to the unrelated businesses.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

PRINCIPLES OF CONSOLIDATION. The consolidated financial statements reflect
the consolidated financial position, results of operations and cash flows of the
Company and its consolidated subsidiaries as if it were a separate entity for
all periods presented. The Dun & Bradstreet Corporation and Cognizant provided
the Company with certain administrative services, including financial planning
and administration, legal, tax planning and compliance, treasury and
communications services and permitted the Company to participate in their
respective insurance and employee benefit plans. These services and costs were
allocated to the Company based on utilization of certain specific services and,
where not estimable, based upon total assets employed by the Company in
proportion to Cognizant's total assets. Management believes these allocations
are reasonable.

UNAUDITED INTERIM FINANCIAL INFORMATION. The accompanying interim
consolidated balance sheet as of March 31, 1998 and the consolidated statements
of operations and cash flows for the three months ended March 31, 1997 and 1998
together with the related disclosures and amounts set forth in the notes are
unaudited but include all adjustments, consisting of only normal recurring
adjustments, which the Company considers necessary to present fairly, in all
material respects, the consolidated financial position, the consolidated results
of operations and cash flows for the three months ended March 31, 1997 and 1998.
Results for the three months ended March 31, 1997 and 1998 are not necessarily
indicative of results for the entire year.

CASH AND CASH EQUIVALENTS. Cash and cash equivalents primarily include time
and demand deposits in the Company's operating bank accounts. The Company
considers all highly liquid instruments with an initial maturity of three months
or less to be cash equivalents.

F-7
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
OTHER ASSETS. Other assets include approximately $104 in costs incurred in
connection with the contemplated public offering that have been deferred as of
March 31, 1998. These costs will be offset against additional paid-in capital
upon the consummation of the offering.

PROPERTY AND EQUIPMENT. Property and equipment are stated at cost, net of
accumulated depreciation. Depreciation is calculated on the straight-line basis
over the estimated useful lives of the assets. Leasehold improvements are
amortized on a straight-line basis over the shorter of the term of the lease or
the estimated useful life of the improvement. Maintenance and repairs are
expensed as incurred, while renewals and betterments are capitalized.

GOODWILL. Goodwill represents the excess of the purchase price of the
former minority interest in the Company's Indian subsidiary over the fair values
of amounts assigned to the incremental net assets acquired. Amortization expense
is recorded using the straight-line method over a period of seven years.
Accumulated amortization was $76 and $154 as of December 31, 1997 and March 31,
1998, respectively.

At each balance sheet date, the Company reviews the recoverability of
goodwill by comparing the unamortized balance to the related anticipated
undiscounted future cash flows from operating activities.

REVENUE RECOGNITION. The Company's services are entered into on either a
time-and-materials or fixed-price basis. Revenues related to time-and-material
contracts are recognized as the service is performed. Revenues related to
fixed-price contracts are recognized as the service is performed using the
percentage-of-completion method of accounting, under which the sales value of
performance, including earnings thereon, is recognized on the basis of the
percentage that each contract's cost to date bears to the total estimated cost.
Fixed price contracts are cancellable subject to a specified notice period. All
services provided by the Company through the date of cancellation are due and
payable under the contract terms. The Company issues invoices related to fixed
price contracts based upon achievement of milestones during a project. Estimates
are subject to adjustment as a project progresses to reflect changes in expected
completion costs or dates. The cumulative impact of any revision in estimates is
reflected in the financial reporting period in which the change in estimate
becomes known and any anticipated losses on contracts are recognized
immediately. A reserve for warranty provisions under such contracts, which
generally exist for ninety days past contract completion, is estimated and
accrued during the contract period.

UNBILLED ACCOUNTS RECEIVABLE. Unbilled accounts receivable represent
revenues on contracts to be billed, in subsequent periods, as per the terms of
the contracts.

FOREIGN CURRENCY TRANSLATION. The assets and liabilities of the Company's
Canadian and European subsidiaries are translated into U.S. dollars at current
exchange rates and revenues and expenses are translated at average monthly
exchange rates. The resulting translation adjustments are recorded in a separate
component of stockholders' equity. For the Company's Indian subsidiary ("CTS
India"), the functional currency is the U.S. dollar, since its sales are made
primarily in the United States, the sales price is predominantly in U.S. dollars
and there is a high volume of intercompany transactions denominated in U.S.
dollars between CTS India and its U.S. affiliates. Non-monetary assets and
liabilities are translated at historical exchange rates, while monetary assets
and liabilities are translated at current exchange rates. The resulting gain
(loss) is included in other income. Such gain (loss) was $44 in 1995, not
material in 1997 and 1996 and $(17) for the three months ended March 31, 1998.

F-8
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
RISKS AND UNCERTAINTIES. The preparation of financial statements in
accordance with generally accepted accounting principles requires management to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities as of the date
of the financial statements, and the reported amounts of revenues and expenses
during the reported period. The most significant estimates relate to the
allowance for doubtful accounts, reserve for warranties, depreciation of fixed
assets and the recognition of revenue and profits based on the percentage of
completion method. Actual results could vary from the estimates and assumptions
used in the preparation of the accompanying financial statements.

All of the Company's software development centers, including a substantial
majority of its employees and assets, are located in India. As a result, the
Company may be subject to certain risks associated with international
operations, including risks associated with foreign currency exchange rate
fluctuations and risks associated with the application and imposition of
protective legislation and regulations relating to import and export or
otherwise resulting from foreign policy or the variability of foreign economic
conditions. To date, the Company has not engaged in any hedging transactions to
mitigate its risks relating to exchange rate fluctuations. Additional risks
associated with international operations include difficulties in enforcing
intellectual property rights, the burdens of complying with a wide variety of
foreign laws, potentially adverse tax consequences, tariffs, quotas and other
barriers.

A significant portion of the Company's current engagements are for the
Company's Year 2000 compliance projects. An unanticipated decline in the demand
for Year 2000 compliance services would have a material adverse effect on the
Company's business, results of operations and financial condition.

The Company believes that demand for Year 2000 compliance services will
diminish after the year 2000, as many solutions are implemented and tested. A
core element of the Company's strategy is to use the business relationships and
the knowledge of its customers' computer systems obtained in providing Year 2000
services to generate additional projects from these customers. There can be no
assurance that the Company will be successful in generating demand for other
services from its Year 2000 customers.

Many of the Company's engagements involve projects that are critical to the
operations of its customers' businesses and provide benefits that are difficult
to quantify. Any failure in a customer's computer system could result in a claim
for substantial damages against the Company, regardless of the Company's
responsibility for such failure. Although the Company attempts to contractually
limit its liability for damages arising from negligent acts, errors, mistakes or
omissions in rendering its software development and maintenance services, there
can be no assurance that the limitations of liability set forth in its contracts
will be enforceable in all instances or will otherwise protect the Company from
liability for damages. Although the Company has general liability insurance
coverage, including coverage for errors or omissions, there can be no assurance
that such coverage will 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 the Company that exceed available
insurance coverage or changes in the Company's insurance policies, including
premium increases or the imposition of large deductible or co-insurance
requirements, would have a material adverse effect on the Company's business,
results of operations and financial condition.

NET INCOME PER SHARE. In 1997, the Company adopted Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings Per Share," which replaces the
presentation of primary net income (loss) per

F-9
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
share ("EPS") and fully diluted EPS with a presentation of basic EPS and diluted
EPS, respectively. Basic EPS excludes dilution and is computed by dividing
earnings available to common stockholders by the weighted-average number of
common shares outstanding for the period. Similar to fully diluted EPS, diluted
EPS includes all dilutive potential common stock in the weighted average shares
outstanding.

Included in diluted net income per share are potentially dilutive common
shares relating to options of 57,130 for the year ended December 31, 1997.

CONCENTRATION OF CREDIT RISK. Financial instruments that potentially
subject the Company to significant concentrations of credit risk consist
primarily of cash and cash equivalents and trade accounts receivable. The
Company maintains its cash and cash equivalents with high credit quality
financial institutions.

INCOME TAXES. The Company has been included in the federal and certain
state income tax returns of Cognizant and The Dun & Bradstreet Corporation. The
provision for income taxes in the Company's consolidated financial statements
has been calculated on a separate company basis. Income tax benefits realized by
the Company and utilized by Cognizant or The Dun & Bradstreet Corporation are
included in stockholders' equity. The Company will no longer be included in the
consolidated return of Cognizant, and will be required to file separate income
tax returns, upon the consummation of the Company's initial public offering.

The Company provides for income taxes utilizing the asset and liability
method of accounting for income taxes. Under this method, deferred income taxes
are recorded to reflect the tax consequences in future years of differences
between the tax basis of assets and liabilities and their financial reporting
amounts at each year end based on enacted tax laws and statutory tax rates
applicable to the periods in which the differences are expected to affect
taxable income. If it is determined that it is more likely than not that future
tax benefits associated with a deferred tax asset will not be realized, a
valuation allowance will be provided. The effect on deferred tax assets and
liabilities of a change in the tax rates is recognized in income in the period
that includes the enactment date.

CTS India is an export oriented company that is entitled to claim a tax
holiday for a period of five years from April 1996 through March 2001 in respect
to its export profits. Under the Indian Income Tax Act of 1961, all of the
earnings of the Company's Indian subsidiary are currently exempt from Indian
Income Tax as profits are attributable to export operations. However, since
management intends to repatriate all accumulated earnings from India to the
United States, the Company has provided deferred U.S. income taxes on all
undistributed earnings.

STOCK-BASED COMPENSATION. With respect to stock options granted to
employees, SFAS No. 123 "Accounting for Stock-Based Compensation" permits
companies to continue using the accounting method promulgated by the Accounting
Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to
Employees," to measure compensation or to adopt the fair value based method
prescribed by SFAS No. 123. If the APB 25 method is continued, pro forma
footnote disclosures are required as if SFAS No. 123 accounting provisions were
followed. Management has determined not to adopt the SFAS No. 123's accounting
recognition provisions, but has included the required pro forma disclosures.

RECENTLY ISSUED ACCOUNTING STANDARDS. In June 1997, the Financial
Accounting Standards Board issued Statement of Financial Accounting Standards
("SFAS") No. 130, "Reporting Comprehensive

F-10
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Income." SFAS No. 130 establishes standards for reporting and displaying
comprehensive income and its components in the financial statements. It does
not, however, require a specific format for the disclosure but requires the
Company to display an amount representing total comprehensive income in the
financial statements. The Company has implemented SFAS No. 130. The adoption of
this pronouncement did not have a material effect of the Company's financial
statements.

In February 1998, the FASB issued Statement No. 132, "Employers' Disclosure
About Pensions and Other Postretirement Benefits," which changes current
financial statement disclosure requirements from those required under SFAS 87,
Employers' Accounting for Pensions, SFAS 88, Employers' Accounting for
Settlements and Curtailments of Defined Benefit Pension Plans and for
Termination Benefits, and SFAS 106, Employers' Accounting for Postretirement
Benefits Other Than Pensions. The statement does not change the existing
measurement or recognition provisions of FASB Statement Nos. 87, 88 or 106, and
is effective for the fiscal years beginning after December 15, 1997. The Company
is in the process of evaluating the disclosure requirements under this standard.

F-11
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

3. SUPPLEMENTAL FINANCIAL DATA

TRADE ACCOUNTS RECEIVABLE

Accounts receivable consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31
-------------------- -----------
1996 1997 1998
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Trade accounts receivable -- net of allowance of $239 as
of December 31, 1997 and $177 as of March 31, 1998..... $ 1,545 $ 4,523 $ 7,678
Unbilled receivables..................................... 3 210 85
--------- --------- -----------
$ 1,548 $ 4,733 $ 7,763
--------- --------- -----------
--------- --------- -----------
</TABLE>

PROPERTY AND EQUIPMENT

Property and equipment consist of the following:

<TABLE>
<CAPTION>
ESTIMATED DECEMBER 31
USEFUL LIFE -------------------- MARCH 31
(YEARS) 1996 1997 1998
----------- --------- --------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
Computer equipment and purchased software...... 3 $ 2,204 $ 4,196 $ 4,303
Furniture and equipment........................ 5 - 9 1,114 1,700 1,893
Leasehold improvements......................... various 653 1,099 1,504
--------- --------- -----------
Accumulated depreciation and amortization...... (1,260) (2,542) (2,620)
--------- --------- -----------
$ 2,711 $ 4,453 $ 5,080
--------- --------- -----------
--------- --------- -----------
</TABLE>

ACCRUED EXPENSES AND OTHER LIABILITIES

Accrued expenses and other current liabilities consist of the following:

<TABLE>
<CAPTION>
DECEMBER 31, MARCH 31,
--------------------
1996 1997 1998
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
Accrued bonuses and commissions.................. $ 582 $ 2,003 $ 1,332
Accrued vacation................................. 203 415 415
Other............................................ 438 1,241 2,283
--------- --------- -----------
$ 1,223 $ 3,659 $ 4,030
--------- --------- -----------
--------- --------- -----------
</TABLE>

4. ACQUISITION OF MINORITY INTEREST

On July 3, 1997, the Company signed a memorandum of understanding to
purchase the 24.0% minority interest in CTS India from a third party. On October
31, 1997, the Company paid $3,468 to the

F-12
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

4. ACQUISITION OF MINORITY INTEREST (CONTINUED)
minority shareholder increasing the Company's ownership in CTS India from 76.0%
to 100.0%. The Company accounted for the acquisition of the minority interest
using the purchase method. The incremental assets acquired have been recorded at
their fair value at the date of acquisition. The excess of purchase price over
the fair value of the incremental net assets acquired has been recorded as
goodwill and is being amortized on a straight-line basis over a seven year
period. The following is a summary of the purchase price allocation for the
acquisition of the minority interest:

<TABLE>
<S> <C>
Fair value of assets................................................ $ 1,727
Deferred taxes...................................................... (482)
Goodwill............................................................ 2,223
---------
Total purchase price................................................ $ 3,468
---------
---------
</TABLE>

The results of operations of CTS India have been included in the Company's
operations since the acquisition date. Had the acquisition of the minority
interest taken place on January 1, 1996 or 1997, the results of operations would
not have reflected minority interest expense in each year and would have
reflected amortization of the related goodwill of $317 for 1996 and 1997.

5. EMPLOYEE BENEFITS

Beginning in 1997, certain U.S. employees of the Company were eligible to
participate in Cognizant's 401(k) plan. The Company matches up to 50% of the
eligible employee's contribution. The amount charged to expense for the matching
contribution was $15 for the year ended December 31, 1997 and $7 for the three
months ended March 31, 1998.

Certain of the Company's employees participate in Cognizant's defined
benefit pension plan. The costs allocated to the Company and recognized as
postretirement benefit costs and related liabilities were not material to the
Company's results of operations or financial position for the years presented.

CTS India maintains an employee benefit plan that covers substantially all
India-based employees. The employees' provident fund, pension and family pension
plans are statutory defined contribution retirement benefit plans. Under the
plans, employees contribute up to ten percent of their base compensation, which
is matched by an equal contribution by CTS India. Contribution expense
recognized was $31, $73 and $128 for the years ended December 31, 1995, 1996 and
1997, respectively.

CTS India also maintains a statutory gratuity plan that is a statutory
postemployment benefit plan providing defined lump sum benefits. CTS India makes
annual contributions to an employees' gratuity fund established with a
government-owned insurance corporation to fund a portion of the estimated
obligation. The Company estimates its obligation based upon employee salary and
projected turnover rates. Expense recognized by the Company was $31, $60 and $94
for the years ended December 31, 1995, 1996 and 1997, respectively.

F-13
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

6. INCOME TAXES

Income (loss) before provision for income taxes consisted of the following
for years ended December 31:

<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
U.S............................................................. $ (451) $ (611) $ (1,812)
Non-U.S......................................................... 1,521 2,086 3,966
--------- --------- ---------
Total........................................................... $ 1,070 $ 1,475 $ 2,154
--------- --------- ---------
--------- --------- ---------
</TABLE>

The provision (benefit) for income taxes consists of the following for the
years ended December 31,

<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
U.S. Federal and state:
Current.......................................................... $ (150) $ (177) $ (607)
Deferred......................................................... 397 518 1,178
--------- --------- ---------
Total U.S. Federal and state................................... 247 341 571
--------- --------- ---------
Non-U.S.:
Current.......................................................... -- -- 18
Deferred......................................................... -- -- (8)
--------- --------- ---------
Total non-U.S.................................................. -- -- 10
--------- --------- ---------
Total.......................................................... $ 247 $ 341 $ 581
--------- --------- ---------
--------- --------- ---------
</TABLE>

The following table sets forth the significant differences between the U.S.
federal statutory taxes and the Company's provision for income taxes for
consolidated financial statement purposes:

<TABLE>
<CAPTION>
1995 1996 1997
--------- --------- ---------
<S> <C> <C> <C>
Tax expense at statutory rate....................................... $ 364 $ 502 $ 732
Goodwill............................................................ -- -- 26
Effect of minority interest on foreign earnings..................... (123) (168) (185)
Other............................................................... 6 7 8
--------- --------- ---------
Total taxes..................................................... $ 247 $ 341 $ 581
--------- --------- ---------
--------- --------- ---------
</TABLE>

The Company's deferred tax assets (liabilities) are comprised of the
following at December 31:

<TABLE>
<CAPTION>
1996 1997
--------- ---------
<S> <C> <C>
Deferred tax assets:....................................................... $ -- $ 8
--------- ---------
Total deferred tax assets.............................................. $ -- $ 8
--------- ---------
Deferred tax liabilities:
Undistributed Indian income............................................ (940) (2,601)
--------- ---------
Total deferred tax liabilities......................................... (940) (2,601)
--------- ---------
Net deferred tax liability................................................. $ (940) $ (2,593)
--------- ---------
--------- ---------
</TABLE>

F-14
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

6. INCOME TAXES (CONTINUED)
CTS India is an export oriented company that is entitled to claim a tax
holiday for a period of five years from April 1996 through March 2001 in respect
to its export profits. Under the Indian Income Tax Act of 1961, all of the
Company's earnings are currently exempt from Indian Income Tax as profits are
attributable to export operations. However, since management intends to
repatriate all earnings from India to the United States, the Company has
provided deferred U.S. income taxes on all undistributed earnings. The Company
has determined that the income taxes recorded by the Company would not be
materially different in the absence of the current tax exemption and, therefore,
the tax exemption had no material effect on earnings per share.

7. CAPITAL STOCK

A. COMMON STOCK. On June 12, 1998, the Company amended and restated its
certificate of incorporation to authorize 100,000,000 shares of Class A common
stock, par value $.01 per share, 15,000,000 shares of Class B common stock, par
value $.01 per share, and 15,000,000 shares of preferred stock, par value $.10
per share, and effected a 0.65 for one reverse stock split. All applicable
shares and per share amounts in the accompanying financial statements have been
retroactively adjusted to reflect this recapitalization. Holders of Class A
common stock have one vote per share and holders of Class B common stock have
ten votes per share. Holders of Class B common stock are entitled to convert
their shares into Class A common stock at any time on a share for share basis.
No preferred stock has been issued.

B. REDEEMABLE COMMON STOCK. On July 25, 1997, certain management employees
of the Company and its affiliates subscribed and subsequently purchased Common
Stock under the "Key Employees Restricted Stock Purchase Plan." These shares
were purchased by the employees at the then estimated fair market value of $3.85
per share. Holders of the stock may put, at any time, to the Company their
shares at the lower of the purchase price or the share price based on a
valuation of the Company at the time of the put. Upon the consummation of a
public offering, this put right would terminate. The Company has recorded the
value of the purchased stock outside the equity section. When all redemption
conditions are removed, such stock will be reclassified to common stock.

8. EMPLOYEE STOCK OPTIONS PLANS

In July 1997, the Company adopted the Key Employees' Stock Option Plan (the
"Employee Option Plan"). Under the Employee Option Plan, the Company may grant
non-qualified stock options which become exercisable on April 2006, with certain
acceleration provisions of the vesting period to 25.0% per year over four years
from the grant date should an initial public offering or change in control
occur. The number of shares authorized for issuance under the Employee Option
Plan is 747,500 of which 520,325 options were granted as of December 31, 1997.
These options give certain employees the right to purchase the Company's Common
Stock at an exercise price at least equal to the fair value of the stock at the
date of the grant. In July 1997, the exercise price was equal to the fair value
of the Company Stock, determined by the Board of Directors based upon the
purchase price of the minority interest in the Company's Indian subsidiary, as
well as an independent valuation. Effective prior to the consummation of the
Company's initial public offering, the number of shares authorized for issuance
under the Employee Option Plan will be reduced to 698,750 from 747,500. In March
and May 1998, the Company granted options to purchase an aggregate of 112,200
shares under the Employee Option Plan to certain employees effective upon the

F-15
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

8. EMPLOYEE STOCK OPTIONS PLANS (CONTINUED)
consummation of the Company's initial public offering at an exercise price equal
to the initial public offering price per share.

In December 1997, the Company adopted the 1997 Non-Employee Directors' Stock
Option Plan (the "Directors Option Plan"). Under the Directors Option Plan, the
Company granted non-qualified stock options to certain directors which become
exercisable in April 2006, with certain acceleration provisions of the vesting
period to 50.0% per year over two years from the grant date should an initial
public offering or change in control occur. The number of shares authorized for
issuance under the Directors Option Plan is 32,500. On December 31, 1997, 19,500
options were granted under the Directors Option Plan and are outstanding.
Effective prior to the consummation of the Company's initial public offering,
the number of shares authorized for issuance under the Directors Option Plan was
increased to 71,500 from 32,500 shares. In March 1998, the Company granted
options to purchase an aggregate of 36,500 shares under the Directors Option
Plan to certain directors effective upon the consummation of the Company's
initial public offering at an exercise price equal to the initial public
offering price per share.

In March 1998, the Company granted non-qualified stock options to purchase
an aggregate of 48,750 shares to the Company's Chairman and Chief Executive
Officer at an exercise price of $6.92 per share.

A summary of the Company's stock option activity, and related information is
as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
----------------------------
<S> <C> <C>
WEIGHTED AVERAGE
SHARES EXERCISE PRICE
--------- -----------------
Outstanding at beginning of year.................................................. -- --

Granted, Employee Option Plan................................................... 520,325 $ 3.85
Granted, Directors Option Plan.................................................. 19,500 9.08
Exercised....................................................................... -- --
Canceled........................................................................ -- --
--------- -----

Outstanding -- end of year........................................................ 539,825 4.04

Exercisable -- end of year........................................................ -- --
</TABLE>

The following summarizes information about the Company's stock options
outstanding and exercisable by price range at December 31, 1997:

<TABLE>
<CAPTION>
AVERAGE REMAINING
NUMBER CONTRACTUAL NUMBER
OUTSTANDING LIFE IN YEARS EXERCISE PRICE EXERCISABLE
- ----------- ----------------- --------------- ---------------
<C> <S> <C> <C>
520,325... 8.6 years $ 3.85 --
19,500.... 9.0 years $ 9.08 --
- -----------
539,825
</TABLE>

No compensation cost was recognized by the Company under APB 25 for 1995,
1996 or 1997.

Had compensation cost for the Company's stock-based compensation plans, as
well as Cognizant options held by certain executive officers (Note 9), been
determined based on the fair value at the grant

F-16
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

8. EMPLOYEE STOCK OPTIONS PLANS (CONTINUED)
dates for awards under those plans, consistent with the method prescribed by
SFAS No. 123, the Company's net income and net income per share would have been
reduced to the pro forma amounts indicated below:

<TABLE>
<CAPTION>
DECEMBER 31,
-------------------------------
<S> <C> <C> <C>
1995 1996 1997
--------- --------- ---------
Net income
As reported.......................................................................... $ 461 $ 642 $ 1,028
Pro forma............................................................................ $ 461 $ 608 $ 778

As reported
Net income per share, basic.......................................................... $ 0.07 $ 0.10 $ 0.16
Net income per share, diluted........................................................ $ 0.07 $ 0.10 $ 0.16

Pro forma
Net income per share, basic.......................................................... $ 0.07 $ 0.09 $ 0.12
Net income per share, diluted........................................................ $ 0.07 $ 0.09 $ 0.12
</TABLE>

The pro forma disclosures shown above are not representative of the effects
on net income and earnings per share in future years.

For purposes of pro forma disclosures only, the fair value for all Company
options was estimated at the date of grant using the Black-Scholes option model
with the following weighted average assumptions in 1997: risk-free interest rate
of 6.3%, expected dividend yield of 0.0%, expected volatility of 40.0% and
expected life of 8.7 years. The weighted-average fair value of the Company's
options granted was $2.38 during 1997. The assumptions used in 1996 and 1997 for
Cognizant stock options were: risk-free interest rate of 5.9%, expected dividend
yield of 0.3%, expected volatility of 25.0% and expected life of 4.5 years. The
weighted averge fair value of Cognizant stock options granted to certain
executive officers in 1996 and 1997 was $9.76 and $13.12, respectively.

9. TRANSACTIONS WITH AFFILIATES

BACKGROUND. The Company began its software development and maintenance
services business in early 1994 as an in-house technology development center for
The Dun & Bradstreet Corporation and its operating units. These operating units
principally included A.C.Nielsen, Dun & Bradstreet Information Services, Dun &
Bradstreet Software, Erisco, Inc. ("Erisco"), IMS International, Inc. ("IMS"),
NCH Promotional Services, Inc. ("NCH Promotional Services"), Nielsen Media
Research, Inc. ("Nielsen Media Research"), The Reuben H. Donnelley Corporation
("RHDonnelley"), Pilot Software, Inc. ("Pilot Software") and Sales Technologies,
Inc. ("Sales Technologies"), and a majority interest in Gartner Group, Inc.
("Gartner Group"). In November 1996, the Company, Erisco, IMS, Nielsen Media
Research, Pilot Software, Sales Technologies and certain other entities, plus a
majority interest in Gartner Group, were spun-off from The Dun & Bradstreet
Corporation to form Cognizant, the parent of the Company. At that time,
ACNielsen was separately spun-off from The Dun & Bradstreet Corporation and Dun
& Bradstreet Software was sold to GEAC Software. In 1997, Cognizant sold Pilot
Software to a third party.

F-17
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

9. TRANSACTIONS WITH AFFILIATES (CONTINUED)
REVENUES. In 1995, the Company recognized related party revenues totaling
$6,877 including revenues from A.C.Nielsen, Dun & Bradstreet Information
Services, Dun & Bradstreet Software, NCH Promotional Services, Erisco, IMS,
Nielsen Media Research and Pilot Software.

In 1996, the Company recognized related party revenues totaling $9,257
including revenues from A.C.Nielsen, Dun & Bradstreet Information Services, Dun
& Bradstreet Software and NCH Promotional Services through November 1, 1996 (the
effective date of the spin-off of Cognizant from The Dun & Bradstreet
Corporation) and revenues from Erisco, IMS, Nielsen Media Research and Pilot
Software are included as related party revenues for the full year.

In 1997, the Company recognized related party revenues totaling $10,846
including revenues from Erisco, IMS, Nielsen Media Research, Sales Technologies,
Pilot Software and Gartner Group for the full year.

In the three months ended March 31, 1998, the Company recognized related
party revenues totaling $3,709, including revenues from IMS, Nielsen Media
Research, Sales Technologies and Gartner Group.

SERVICES. The Company and certain operating subsidiaries of Cognizant have
entered into Master Services Agreements pursuant to which the Company provides
IT services to such subsidiaries.

Cognizant and The Dun & Bradstreet Corporation provided the Company with
certain administrative services, including financial planning and
administration, legal, tax planning and compliance, treasury and communications,
and permitted the Company to participate in Cognizant's insurance and employee
benefit plans. Costs for these services were allocated to the Company based on
utilization of certain specific services and, where not estimable, based upon
assets employed by the Company in proportion to Cognizant's total assets.
Management believes that these allocations are reasonable. These allocations
were $185, $354, and $835 for the years ended December 31, 1995, 1996 and 1997,
respectively, and $405 for the three months ended March 31, 1998.

The Company has financed the acquisition of the minority interest and its
operations through the expansion and contraction of intercompany balances with
Cognizant. No interest has been charged on these transactions.

Such transactions in 1995, 1996 and 1997 and the three months ended March
31, 1998 are as follows:

<TABLE>
<CAPTION>
THREE MONTHS
ENDED
1995 1996 1997 MARCH 31, 1998
--------- --------- --------- ---------------
<S> <C> <C> <C> <C>
(UNAUDITED)
Loans and advances, net............................. $ (28) $ 315 $ 2,251 $ (172)
Purchase of minority interest....................... -- -- 3,418 --
--- --------- --------- -----
Proceeds (to) from related party.................... $ (28) $ 315 $ 5,669 $ (172)
--- --------- --------- -----
--- --------- --------- -----
</TABLE>

LEASES. Beginning January 1, 1997 through May 31, 1999, the Company began
subleasing office space from a subsidiary of Cognizant. The Company made annual
lease payments to the subsidiary of $99 in 1997 and $26 in the three months
ended March 31, 1998.

F-18
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

9. TRANSACTIONS WITH AFFILIATES (CONTINUED)
PENSION PLANS. Certain employees of the Company participate in Cognizant's
defined benefit pension plans. The plans are cash balance pension plans under
which six percent of creditable compensation plus interest is credited to the
employee's retirement account on a monthly basis. The cash balance earns monthly
investment credits based on the 30-year Treasury bond yield. At the time of
retirement, the vested employee's account balance is actuarially converted into
an annuity. The Company's cost for these plans is included in the allocation of
expense from Cognizant for employee benefits plans.

COGNIZANT STOCK OPTIONS. In November 1996, in consideration for services to
the Company, Cognizant granted an executive officer and director of the Company
options to purchase an aggregate of 114,900 shares of the common stock of
Cognizant at an exercise price of $33.38 per share. Such executive officer and
director has agreed to forfeit options to purchase 58,334 shares of Cognizant
common stock upon the consummation of the Company's initial public offering.

In November 1996, Cognizant granted an executive officer options to purchase
an aggregate of 60,000 shares of the common stock of Cognizant at an exercise
price of $33.38 per share. In addition, in November 1996, such executive officer
was granted options to purchase an aggregate of 20,000 shares of the common
stock of Cognizant at an exercise price of $33.38 per share, which was equal to
the fair market value at the grant date, by paying ten percent of the option
exercise price as an advance payment toward such exercise. The unvested portion
of such advance payment is refundable under certain conditions. The remaining 90
percent is payable at exercise.

LOAN. In October 1997, the Company loaned $63 to an executive officer. The
loan bears interest at the rate of two percent per annum.

10. COMMITMENTS

The Company leases office space under operating leases which expire at
various dates through year 2004. Certain leases contain renewal provisions and
generally require the Company to pay utilities, insurance, taxes, and other
operating expenses. The remaining lease terms on the Company's development
facilities in India range from two to nine years. These leases contain a
one-sided right for the Company to terminate its occupancy, without penalty,
with ninety days notification. Future minimum rental payments under operating
leases that have initial or remaining non-cancelable lease terms in excess of
one year as of December 31, 1997 are as follows:

<TABLE>
<S> <C>
1998................................................................ $ 283
1999................................................................ 45
---------
Total minimum lease payments........................................ $ 328
---------
---------
</TABLE>

Included in the above figures are future rental payments to a related party
of $105 in 1998 and $44 in 1999.

Rental expense totaled $141, $241 and $509 for years ended December 31,
1995, 1996 and 1997, respectively and $181 for the three months ended March 31,
1998.

At December 31, 1997, the Company had a letter of credit in the amount of
$725 for the purchase of a mainframe computer. Subsequent to year end, the
letter of credit was paid.

F-19
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

11. SEGMENT INFORMATION

Information about the Company's operations and total assets in North
America, Europe and Asia is presented as follows:

<TABLE>
<CAPTION>
THREE
MONTHS
ENDED MARCH
1995 1996 1997 31, 1998
--------- --------- --------- -----------
<S> <C> <C> <C> <C>
(UNAUDITED)
REVENUES
North America.................................... $ 5,737 $ 9,641 $ 21,217 $ 8,544
Europe........................................... 1,438 2,114 3,177 1,610
Asia............................................. -- 277 350 84
--------- --------- --------- -----------
Consolidated..................................... $ 7,175 $ 12,032 $ 24,744 $ 10,238
--------- --------- --------- -----------
--------- --------- --------- -----------
OPERATING INCOME
North America.................................... $ 838 $ 1,128 $ 1,685 $ 3,596
Europe........................................... 181 303 400 678
Asia............................................. -- 35 44 35
--------- --------- --------- -----------
Consolidated..................................... $ 1,019 $ 1,466 $ 2,129 $ 4,309
--------- --------- --------- -----------
--------- --------- --------- -----------
IDENTIFIABLE ASSETS
North America.................................... $ 2,114 $ 3,110 $ 9,930 $ 10,551
Europe........................................... -- -- 60 1,702
Asia............................................. 3,337 4,717 8,308 7,199
--------- --------- --------- -----------
Consolidated..................................... $ 5,451 $ 7,827 $ 18,298 $ 19,452
--------- --------- --------- -----------
--------- --------- --------- -----------
</TABLE>

The Company, operating globally, provides software development and
maintenance services for medium and large businesses. North American operations
consist primarily of software development and maintenance services in the United
States and Canada. European operations consist primarily of software development
and maintenance services principally in the United Kingdom and Germany. Asian
operations consist primarily of software development and maintenance services
principally in India.

In the three months ended March 31, 1998, sales to one related party
customer accounted for 36.2% of revenue and two third-party customers accounted
for 26.6% of revenue. In 1997, sales to one related party customer accounted for
43.8% of revenues and one third party customer accounted for 13.9% of revenues.
In 1996 one related party customer accounted for 76.9% of revenues. In 1995 one
related party customer accounted for 95.8% of revenues.

12. CONTINGENCIES

The Company is involved in various claims and legal actions arising in the
ordinary course of business. In the opinion of management, the outcome of such
claims and legal actions, if decided adversely, will not have a material adverse
effect on the Company's business, financial condition and results of operations.

F-20
<PAGE>
COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(in thousands, except share and per share data)

13. SUBSEQUENT EVENTS

AFFILIATED AGREEMENTS. Subsequent to December 31, 1997, the Company has
agreed to enter into various agreements with Cognizant effective upon the
Company's initial public offering. The agreements will include an Intercompany
Services Agreement for services provided by Cognizant such as payroll and
payables processing, tax, finance, personnel administration, real estate and
risk management services, a License Agreement to use the "Cognizant" trade name
and an Intercompany Agreement.

REORGANIZATION OF COGNIZANT. On January 15, 1998, Cognizant announced that
it would, subject to certain conditions, reorganize itself, by splitting the
Nielsen Media Research business from the rest of its businesses, creating two
publicly traded companies, IMS Health Corporation ("IMS HEALTH") and Nielsen
Media Research. Subject to certain conditions, including obtaining a ruling on
the reorganization from the IRS, and final Cognizant board approval, Cognizant
expects the reorganization to be consummated in mid-1998. The shares of the
Company held by Cognizant will be held by IMS HEALTH following the
reorganization and all services previously provided to the Company by Cognizant
will be provided by IMS HEALTH. Following the reorganization, Nielsen Media
Research will no longer be affiliated with the Company.

PUBLIC OFFERING. On April 8, 1998, the Company filed a Registration
Statement on Form S-1. The Company intends to use a portion of the net proceeds
to repay the amount due to Cognizant.

SUPPLEMENTAL NET INCOME PER SHARE (UNAUDITED)

<TABLE>
<CAPTION>
THREE MONTHS
DECEMBER 31, 1997 ENDED MARCH 31, 1998
------------------- -----------------------
<S> <C> <C>
Supplemental net income per share, basic and diluted...... $ 0.14 $ 0.10
----- -----
----- -----
</TABLE>

Supplemental net income per share is presented to reflect the impact on net
income per share when proceeds from 647,400 shares of common stock from the
offering are used to repay amounts due to Cognizant. The supplemental basic
shares of 7,194,796 and diluted shares of 7,251,925 as of December 31, 1997 were
computed by adding 647,400 shares of Class A common stock offered by the Company
hereby to the 6,547,396 basic weighted average shares outstanding and to the
6,604,525 diluted weighted average shares outstanding as of December 31, 1997.
The supplemental basic shares of 7,261,150 and diluted shares of 7,465,796 as of
March 31, 1998 were computed by adding 647,400 shares of Class A Common Stock
offered by the Company hereby to 6,613,750 basic weighted average shares
outstanding and to the 6,818,396 diluted weighted average shares outstanding as
of March 31, 1998.

F-21
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