UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

                    For the quarterly period ended September 30, 2004

                    For the transition period from                     to                    

Commission File Number 0-24429

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

     Indicate by check mark whether the Registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

     Indicate by check mark whether the Registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act.)

     Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of November 1, 2004:

COGNIZANT TECHNOLOGY SOLUTIONS CORPORATION

TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

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

Note 1 — Interim Condensed Consolidated Financial Statements

     The accompanying unaudited condensed consolidated financial statements included herein have been prepared by Cognizant Technology Solutions Corporation (“Cognizant” or the “Company”) in accordance with generally accepted accounting principles in the United States of America and Article 10 of Regulation S-X under the Securities and Exchange Act of 1934, as amended, and should be read in conjunction with the Company’s consolidated financial statements (and notes thereto) included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003. In the opinion of the Company’s management, all adjustments considered necessary for a fair presentation of the accompanying unaudited condensed consolidated financial statements have been included, and all adjustments are of a normal and recurring nature. Operating results for the interim periods are not necessarily indicative of results that may be expected to occur for the entire year. Certain prior period amounts have been restated to conform to the presentation of the Company’s financial statements for fiscal year 2004.

     On April 12, 2004, the Board of Directors declared a conditional two-for-one stock split to be effected by a 100% stock dividend payable on or about June 17, 2004 to stockholders of record as of May 27, 2004. The stock split was subject to stockholder approval at the Company’s May 26, 2004 Annual Meeting of Stockholders of an amendment to the Restated Certificate of Incorporation to increase the number of authorized shares of Class A common stock. On May 26, 2004, the Company’s stockholders approved such amendment to the Restated Certificate of Incorporation and as a result, a 100% stock dividend was paid on June 17, 2004 to stockholders of record as of May 27, 2004. The stock split has been reflected in the accompanying unaudited condensed consolidated financial statements, and all applicable references as to the number of outstanding common shares and per share information have been restated to reflect the stock split as if it occurred at the beginning of the earliest period presented. Stockholders’ equity accounts have been restated to reflect a $653 reclassification of an amount equal to the par value of the increase in issued shares of Class A common stock from the additional paid-in-capital account to the Class A common stock account. The amendment to the Restated Certificate of Incorporation increased the number of authorized shares of Class A common stock to 325,000,000 and eliminated the authorization of Class B common stock.

Note 2 — Split-Off from IMS Health and Related Party Transactions

     On February 13, 2003 (the “Split-Off Date”), IMS Health Incorporated (“IMS Health”) distributed all of the Cognizant Class B common stock that IMS Health owned (a total of 67,745,400 shares) in an exchange offer to IMS Health stockholders (the “Split-Off”). In connection with the Split-Off, Cognizant was obligated under the provisions of an Intercompany Agreement with IMS Health to pay certain costs associated with the Split-Off. During the nine months ended September 30, 2003, Cognizant incurred direct and incremental costs of $2,010 related to the Split-Off. This amount was in addition to the approximately $1,700, which was

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recorded in the fourth quarter of 2002. Such costs included direct legal, accounting, printing and other costs. In addition, costs incurred in the first quarter of 2003 include a non-cash charge of approximately $488 calculated in accordance with Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees and Related Interpretations” (“APB No. 25”) related to the retention, acceleration and extended life of Cognizant common stock options by two former Directors of Cognizant who resigned on the Split-Off Date as a condition of the Split-Off. As of the Split-Off Date, such former Directors were Officers of IMS Health. Cognizant did not receive any proceeds from the IMS Health exchange offer.

     As a result of the Split-Off, IMS Health and its affiliates are no longer related parties of Cognizant as of the Split-Off Date. Only services rendered to or received from IMS Health and its affiliates during the period from January 1, 2003 to the Split-Off Date are classified as related party transactions. During the period from January 1, 2003 through the Split-Off Date, the Company recognized related party revenue of $2,575 and incurred costs of $28 for services provided by IMS Health to the Company.

     The Company has a strategic relationship with The Trizetto Group Inc. (“Trizetto”) that includes helping its healthcare customers integrate Trizetto’s products with their existing information systems and, within Trizetto, supporting further development of these software applications. As of the Split-Off Date, IMS Health owned approximately 26.4% of the outstanding common stock of Trizetto. The Company recorded revenues from Trizetto of approximately $831 from January 1, 2003 through the Split-Off Date and recorded expenses related to Trizetto commissions of approximately $9 from January 1, 2003 through the Split-Off Date.

Note 3 — Acquisition

     On February 27, 2004, the Company acquired Ygyan Consulting Private Ltd. (“Ygyan”), an India-based SAP services provider, for approximately $1,720 (including approximately $62 of estimated direct deal costs). Ygyan was acquired to increase the Company’s SAP service capabilities.

     The Company has accounted for the acquisition as a business combination under the provisions of Statement of Financial Accounting Standards (“SFAS”) No. 141, “Business Combinations” and has made a preliminary assessment of the allocation of the purchase price to the tangible and intangible assets and liabilities acquired. Based upon that preliminary assessment, the Company expects that the amortization of such intangible assets will not have a material effect on the Company’s results of operations. The operating results of Ygyan have been included in the unaudited condensed consolidated financial statements since the acquisition date. The Ygyan acquisition was not material to the Company’s consolidated results of operations, cash flows or financial condition.

Note 4 — Investment in Short-Term Bank Deposits

     The Company’s investments in bank deposits mature in less than one year. These short-term cash investments are valued at cost, which approximates fair value.

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Note 5 — Income Taxes

     The Company’s Indian subsidiary, Cognizant India, is an export-oriented company, which under the Indian Income Tax Act of 1961, is entitled to claim tax holidays for a period of ten years with respect to its export profits. Substantially all of the earnings of Cognizant India are attributable to export profits and are therefore currently substantially exempt from Indian income tax. These tax holidays began to expire in April 2004 and under current law will be completely phased out by March of 2009. The incremental Indian taxes related to the portion of the Indian tax holiday that expired in 2004 have been incorporated into the Company’s 2004 effective income tax rate. Such income taxes are estimated to be less than $10 million for 2004. The principal difference between the effective rates during the 2004 and 2003 periods and the Company’s United States federal statutory rate is the effect of the tax holiday in India.

Note 6 — Employee Stock-Based Employee Compensation Plans

     On May 26, 2004, the Company adopted the 2004 Employee Stock Purchase Plan (the “Purchase Plan”) that provides for the issuance of up to 3,000,000 shares of Class A common stock to eligible employees. The Purchase Plan provides for eligible employees to designate, in advance of specified purchase periods, a percentage of compensation to be withheld from their pay and applied toward the purchase of such number of whole shares of Class A common stock as can be purchased at a price of 90% of the lesser of (a) the fair market value of a share of Class A common stock on the first date of the purchase period; or (b) the fair market value of a share of Class A common stock on the last date of the purchase period. No employee can purchase more than $25 worth of stock annually, and no stock can be purchased by any person which would result in the purchaser owning more than five percent or more of the total combined voting power or value of all classes of stock of the Company.

     At September 30, 2004, the Company had four stock-based employee compensation plans. The Company accounts for these plans under the recognition and measurement principles of APB No. 25. Except as noted below, no stock-based employee compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant. The following table illustrates the effect on net income and earnings per share for the three months and nine months ended September 30, 2004 and 2003, if the Company had applied the fair value recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation”, to stock-based employee compensation.

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Note 7 — Commitments and Contingencies

     The Company has expanded its plans to construct additional fully-owned development centers to now include over 900,000 square feet as compared to previous plans, announced in December 2003, to add 600,000 square feet of space. The new facilities will be located in Chennai, Pune, Calcutta and Bangalore, India. The total construction expenditure related to this expanded program is estimated to be approximately $76,000, an increase of approximately $34,000, when compared to the expansion program announced in December 2003. As of September 30, 2004, the Company has entered into fixed capital commitments of $2,168 related to this India development center expansion program, of which $1,330 has been spent to date.

     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, is not expected to have a material adverse effect on the Company’s quarterly or annual operating results, cash flows, or consolidated financial position. Additionally, 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

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or co-insurance requirements, could have a material adverse effect on the Company’s business, results of operations, cash flows and financial condition.

     In connection with the Split-Off, the Company entered into a Distribution Agreement, dated January 7, 2003, with IMS Health (the “Distribution Agreement”), that provides, among other things, that IMS Health and the Company will comply with, and not take any action during the relevant time period that is inconsistent with, the representations made to and relied upon by McDermott, Will & Emery in connection with rendering its opinion regarding the U.S. federal income tax consequences of the exchange offer. In addition, pursuant to the Distribution Agreement, the Company indemnified IMS Health for any tax liability to which they may be subject as a result of the exchange offer but only to the extent that such tax liability resulted solely from a breach in the representations the Company made to and were relied upon by McDermott, Will & Emery in connection with rendering its opinion regarding the U.S. federal income tax consequences of the exchange offer. If the Company breaches any of its representations in connection with the Distribution Agreement, the related indemnification liability could be material to the Company’s results of operations, financial position and cash flows.

Note 8 — Segment Information

     The Company, operating globally, provides IT services for medium and large businesses. North American operations consist primarily of IT services in the United States and Canada. European operations consist of IT services principally in the United Kingdom, The Netherlands, Germany, Switzerland and Ireland. Asian operations consist of IT services principally in India, Singapore, Japan and Australia. The Company is managed on a geographic basis. Accordingly, regional sales managers, sales managers, account managers, project teams and facilities are segmented geographically and decisions by the Company’s chief operating decision maker regarding the allocation of assets and assessment of performance are based on such geographic segmentation. In accordance with SFAS No. 131, “Disclosures About Segments of an Enterprise and Related Information”, information about the Company’s operations and total assets in North America, Europe and Asia for the three and nine month periods ended September 30, 2004 and September 30, 2003 are as follows:

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     During the three-month period ended September 30, 2004, JPMorgan Chase and another customer, each individually accounted for more than 10.0% of revenues and during the nine-month period ended September 30, 2004, JPMorgan Chase was the only customer to account for more than 10.0% of revenues. No customer accounted for more than 10.0% of revenues for the three and nine-month periods ended September 30, 2003.

Note 9 — Foreign Currency Forward Contract

     During July 2004, the Company entered into a foreign currency forward contract, with a six-month term and notional amount of $12,500, to sell the Indian Rupee for U.S. dollars. We have entered into this forward contract to manage a portion of the Company’s foreign currency risk related to Indian Rupee denominated asset balances, primarily cash investments, at our

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Indian subsidiary, Cognizant India. Movement in the exchange rate for the Indian Rupee results in foreign currency gains or losses upon remeasurement of Cognizant India’s financial statements into its functional currency, the U.S. dollar. Our objective is to reduce foreign currency exposure to appreciation or depreciation in the value of the Indian Rupee by offsetting a portion of such exposure with gains or losses on the forward contract, referred to above.

     At the end of each accounting period, the foreign currency forward contract will be marked-to-market and recorded at fair value with unrealized gains and losses reported along with foreign currency gains or losses in the caption “other income (expense), net” on the Company’s unaudited condensed consolidated statement of income. At September 30, 2004, the fair value of the foreign currency forward contract was a liability of $149. For the three and nine-month periods ended September 30, 2004, the unrealized loss on the foreign currency forward contract has been recorded as part of aggregate foreign currency transaction losses of $259 and $39, respectively.

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Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Overview

     We are a leading provider of custom IT services related to IT design, development, integration and maintenance services primarily for Fortune 1000 companies located in the United States and Europe. Our core competencies include web-centric applications, data warehousing, component-based development and legacy and client-server systems. We provide IT services using an integrated on-site/offshore business model. This seamless on-site/offshore business model combines technical and account management teams located on-site at the customer location and offshore at dedicated development centers located in India and Ireland.

     During the three and nine months ended September 30, 2004, our revenue increased to $155.4 million and $413.9 million, respectively, compared to $98.1 million and $260.1 million for the three and nine months ended September 30, 2003. Net income increased to $26.1 million and $69.6 million, respectively or $0.18 and $0.49 per diluted share during the three and nine months ended September 30, 2004 compared to $16.0 million and $39.6 million, respectively or $0.12 and $0.30 per diluted share during the three and nine months ended September 30, 2003. Our revenue growth was driven by continued strong demand for our application management, and application development and integration services. Application management revenue increased by 45.6%, or approximately $25.8 million, from approximately $56.5 million during the three months ended September 30, 2003 to approximately $82.3 million during the three months ended September 30, 2004 and increased by 45.3%, or approximately $70.3 million, from approximately $155.1 million during the nine months ended September 30, 2003 to approximately $225.4 million during the nine months ended September 30, 2004. Application development and integration services increased by 75.8% and 79.6%, or approximately $31.5 million and $83.5 million, from approximately $41.6 million and $105.0 million during the three and nine months ended September 30, 2003 to approximately $73.1 million and $188.5 million during the three and nine months ended September 30, 2004. As of September 30, 2004, our number of active clients increased to 219 compared to 213 at June 30, 2004 and 153 at December 31, 2003. We anticipate that a significant portion of our revenue growth for the remainder of 2004 will come from an increased level of work at existing clients. We continue to see an increased level of interest for offshore services in Northern Europe. During the three months ended September 30, 2004, our operating margin increased to 19.9% compared to 19.6% for the three months ended September 30, 2003. This was consistent with our targeted operating margin range of 19% to 20% of total revenues. Currently, it is our intent to reinvest earnings in excess of our targeted operating margin range back into the business principally to expand our service capabilities and sales and marketing efforts.

     At September 30, 2004, we had cash and cash equivalents and short-term bank deposits of $270.4 million, an increase of $76.2 million compared to December 31, 2003. Our most recent building plans provide for construction of approximately 900,000 square feet of space in new fully-owned development centers located in Chennai, Pune, Calcutta and Bangalore, India. This supercedes our previous plans, announced in December 2003, which included 600,000 square feet of new space. Total construction costs related to this program are currently estimated to be approximately $76.0 million, which we expect to fund from current operations. We believe

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our financial condition will remain strong. In addition, we will continue to consider acquisitions of companies that can improve our capabilities in certain market niches or geographic areas.

     On June 29, 2004, we announced our plans to wind-down operations at our development center located in Limerick, Ireland and close the facility by March 31, 2005. We decided to close this facility due to the increased cost structure resulting from the significant appreciation in the value of the Euro against the US dollar since the facility was acquired in 2002. All work currently performed in this facility will be transferred to Cognizant’s operations in North America and India. Currently, we expect to incur during 2004 and 2005 incremental costs of approximately $1.5 million associated with the closure of this facility. For the nine months ended September 30, 2004, we have recorded expenses of approximately $1.3 million primarily for severance, retention bonuses and an obligation to repay funds previously received through local job grant programs and made payments of approximately $0.4 million for severance and retention bonuses. Approximately 50 employees are affected by the closure.

     On April 12, 2004, our Board of Directors declared a conditional two-for-one stock split to be effected by a 100% stock dividend payable on or about June 17, 2004 to stockholders of record as of May 27, 2004. The stock split was subject to stockholder approval at the May 26, 2004 Annual Meeting of Stockholders of an amendment to our Restated Certificate of Incorporation to increase the number of authorized shares of Class A common stock. On May 26, 2004, our stockholders approved such amendment to our Restated Certificate of Incorporation and as a result, a 100% stock dividend was paid on June 17, 2004 to stockholders of record as of May 27, 2004. The stock split has been reflected in the accompanying consolidated financial statements, and all applicable references as to the number of outstanding common shares and per share information have been restated to reflect the stock split as if it occurred at the beginning of the earliest period presented. Stockholders’ equity accounts have been restated to reflect a reclassification of approximately $0.7 million of an amount equal to the par value of the increase in issued shares of Class A common stock from the additional paid-in-capital account to the Class A common stock account.

Critical Accounting Estimates and Risks

     Management’s discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires management to make estimates and assumptions that affect the amounts reported for assets and liabilities, including the recoverability of tangible and intangible assets, 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. On an on-going basis, we evaluate our estimates. The most significant estimates relate to the recognition of revenue and profits based on the percentage of completion method of accounting for certain fixed-bid contracts, the allowance for doubtful accounts, income taxes, valuation of goodwill and other long-lived assets and contingencies. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The actual amounts will differ from the estimates used in the preparation of the accompanying

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unaudited condensed consolidated financial statements. Our significant accounting policies are described in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2003.

     We believe the following critical accounting policies require higher level of management judgments and estimates than others in preparing the unaudited condensed consolidated financial statements:

      Revenue Recognition . Revenues related to our fixed-price contracts are recognized as the service is performed using the percentage-of-completion method of accounting, under which the total contract revenue during the term of an agreement is recognized on the basis of the percentage that each contract’s cost to date bears to the total estimated cost. Estimates of total contract revenues and costs are continuously monitored during the term of the contract, and recorded revenues and costs are subject to revision as the contract progresses. Such revisions may result in increases or decreases to revenues and income and are reflected in the consolidated financial statements in the periods in which they are first identified.

      Allowance for Doubtful Accounts. We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our customers to make required payments. The allowance for doubtful accounts is determined by evaluating the relative credit-worthiness of each customer based upon market capitalization and other information, including the aging of the receivables. If the financial condition of our customers were to deteriorate, resulting in an impairment of their ability to make payments, additional allowances may be required.

      Income Taxes. Determining the consolidated provision for income tax expense, deferred tax assets and liabilities and related valuation allowance, if any, involves judgment. As a global company, we are required to calculate and provide for income taxes in each of the jurisdictions where we operate. This involves estimating current tax exposures in each jurisdiction as well as making judgments regarding the recoverability of deferred tax assets. Tax exposures can involve complex issues and may require an extended period to resolve. In the period of resolution, adjustments may need to be recorded that result in increases or decreases to income. Changes in the geographic mix or estimated level of annual pre-tax income can also affect the overall effective income tax rate.

     On an on-going basis, we evaluate whether a valuation allowance is needed to reduce our deferred tax assets to the amount that is more likely than not to be realized. While we have considered future taxable income and on-going prudent and feasible tax planning strategies in assessing the need for the valuation allowance, in the event we determine that we will be able to realize deferred tax assets in the future in excess of the net recorded amount, an adjustment to the deferred tax asset would increase income in the period such determination was made. Likewise, should we determine that we will not be able to realize all or part of the net deferred tax asset in the future, an adjustment to the deferred tax asset would be charged to income or equity (if the deferred tax asset is related to tax benefits from stock option benefits that have not been realized) in the period such determination was made.

     Our Indian subsidiary, Cognizant India, is an export-oriented company, which, under the Indian Income Tax Act of 1961, is entitled to claim tax holidays for a period of ten years with

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respect to Cognizant India’s export profits. Substantially all of the earnings of Cognizant India are attributable to export profits and are therefore currently entitled to a 100% exemption from Indian income tax. These tax holidays began to expire in April 2004 and, under current law, will be completely phased out by March of 2009. Prior to 2002, it was management’s intent to repatriate all accumulated earnings from India to the United States; accordingly, we provided for deferred income taxes on all such undistributed earnings through December 31, 2001. During the first quarter of 2002, we made a strategic decision to pursue an international strategy that includes expanded infrastructure investments in India and geographic expansion in Europe and Asia. As a component of this strategy, we intend to use 2002 and future Indian earnings to expand operations outside of the United States instead of repatriating these earnings to the United States. Accordingly, effective January 1, 2002, pursuant to Accounting Principles Board Opinion No. 23, “Accounting for Income Taxes – Special Areas” we no longer accrue incremental U.S. taxes on all foreign earnings recognized in 2002 and subsequent periods as these earnings are considered to be indefinitely reinvested outside of the United States. As of September 30, 2004, the amount of unrepatriated Indian earnings upon which no incremental U.S. taxes have been recorded is approximately $137.7 million. While we have no plans to do so, if such earnings are repatriated in the future or are no longer deemed to be indefinitely reinvested, we will accrue the applicable amount of taxes associated with such earnings and may pay taxes at a substantially higher rate than the effective rate in 2004. Due to the various methods by which such earnings could be repatriated in the future, it is not currently practicable to determine the amount of applicable taxes that would result from such repatriation or whether the amount of previously accrued deferred taxes on earnings recognized prior to 2002 will require adjustment.

      Goodwill. We evaluate goodwill for impairment at least annually, or as circumstances warrant. When determining the fair value of our reporting units, we utilize various assumptions, including projections of future cash flows. Any adverse changes in key assumptions about our businesses and their prospects or an adverse change in market conditions may cause a change in the estimation of fair value and could result in an impairment charge.

      Long-lived Assets . In accordance with Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”, which was adopted in 2002, we review for impairment long-lived assets and certain identifiable intangibles whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. In general, we will recognize an impairment loss when the sum of undiscounted expected future cash flows is less than the carrying amount of such asset. The measurement for such an impairment loss is then based on the fair value of the asset.

      Risks. Most of our IT development centers, including a substantial majority of our employees, are located in India. As a result, we 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 or political conditions. Additional risks associated with international operations include difficulties in enforcing intellectual property rights, the burdens of complying with a wide variety of foreign laws, potential geo-political and other risks associated with terrorist activities and local and cross border conflicts, potentially adverse tax

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consequences, tariffs, quotas and other barriers. We are also subject to risks associated with our overall compliance with Section 404 of the Sarbanes-Oxley Act of 2002. The inability of our independent auditor to provide us with an unqualified report as to the adequacy of our internal controls over financial reporting as of December 31, 2004 and for future year ends could result in adverse consequences to us, including, but not limited to, a loss of investor confidence in the reliability of our financial statements, which could cause the market price of our stock to decline. See Item 1 “Business - Additional Factors That May Affect Future Results” in our Annual Report on Form 10-K for the year ended December 31, 2003 for discussion of additional risks that may affect our business, operations or financial results.

Forward Looking Statements

     The statements contained in this Quarterly Report on Form 10-Q that are not historical facts are forward-looking statements (within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended) that involve risks and uncertainties. Such forward-looking statements may be identified by, among other things, the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should” or “anticipates” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. From time to time, we or our representatives have made or may make forward-looking statements, orally or in writing. Such forward-looking statements may be included in various filings made by us with the Securities and Exchange Commission, or press releases or oral statements made by or with the approval of one of our authorized executive officers. These forward-looking statements, such as statements regarding anticipated future revenues, contract percentage completions, capital expenditures, and other statements regarding matters that are not historical facts, involve predictions. Our actual results, performance or achievements could differ materially from the results expressed in, or implied by, these forward-looking statements. There are a number of important factors that could cause our results to differ materially from those indicated by such forward-looking statements, which include general economic conditions, and the factors discussed in our Annual Report on Form 10-K for the year ended December 31, 2003 and other filings with the Securities and Exchange Commission. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

Results of Operations

      Three Months Ended September 30, 2004 Compared to Three Months Ended September 30, 2003

     The following table sets forth, for the periods indicated, certain financial data expressed for the three months ended September 30:

(Dollars in thousands)

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      Revenue. Revenue increased by 58.4%, or approximately $57.3 million, from approximately $98.1 million during the three months ended September 30, 2003 to approximately $155.4 million during the three months ended September 30, 2004. This increase resulted primarily from increased revenue from existing customers and revenue from new customers added since September 30, 2003, including acquisitions. Specifically, demand for application development and integration services increased significantly due to continued strength in our customers’ discretionary spending. In the third quarter of 2004, JPMorgan Chase and a second customer each individually accounted for sales in excess of 10% of revenues, while in the corresponding period of 2003 no customer accounted for sales in excess of 10% of revenues. This second customer is not expected to account for more than 10% of sales on a full-year basis for the year ended December 31, 2004.

      Gross Profit. Our cost of revenues consists primarily of the cost of salaries, payroll taxes, benefits, immigration and travel for technical personnel, and the cost of sales commissions related to revenues. Our cost of revenues increased by 59.7%, or approximately $31.6 million, from approximately $53.0 million during the three months ended September 30, 2003 to approximately $84.6 million during the three months ended September 30, 2004. The increase was due primarily to costs resulting from an increase in the number of our technical professionals from approximately 7,000 employees at September 30, 2003 to approximately 13,000 employees at September 30, 2004. The increased number of our technical professionals is a direct result of greater demand for our services. Our gross profit increased by 56.9%, or approximately $25.7 million, from approximately $45.1 million during the three months ended September 30, 2003 to approximately $70.8 million during the three months ended September 30, 2004.

     Gross profit margin decreased from 46.0% of revenues during the three months ended September 30, 2003 to 45.6% of revenues during the three months ended September 30, 2004. The decrease in gross profit margin was due primarily to the effect of a higher incentive compensation accrual in 2004 as compared to 2003.

      Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of salaries, employee benefits, travel, promotion, communications, management, finance, administrative and occupancy costs as well as depreciation and amortization expense. Selling, general and administrative expenses, including depreciation and

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amortization, increased by 54.5%, or approximately $14.1 million, from approximately $25.9 million during the three months ended September 30, 2003 to approximately $40.0 million during the three months ended September 30, 2004, and decreased as a percentage of revenue from 26.4% to 25.7%. The percentage decrease in such expenses was due primarily to leveraging of prior investment on our sales and marketing activities resulting in increased revenue growth partially offset by the effect of a higher incentive compensation accrual in 2004 as compared to 2003.

      Income from Operations. Income from operations increased 60.2%, or approximately $11.6 million, from approximately $19.3 million during the three months ended September 30, 2003 to approximately $30.9 million during the three months ended September 30, 2004, representing operating margins of 19.6% and 19.9% of revenues, respectively. The increase in operating margin was due primarily to the decrease in selling, general and administrative expenses, including depreciation and amortization, as a percentage of total revenues discussed above.

      Other Income/Expense, Net. Other income/expense, net consists primarily of interest income and foreign currency transaction gains or losses. Interest income increased from $0.6 million during the three months ended September 30, 2003 to approximately $1.3 million during the three months ended September 30, 2004 due primarily to higher invested cash balances and an increased portion of this balance held in foreign currencies which earn slightly higher interest rates.

      Provision for Income Taxes . The provision for income taxes increased from approximately $3.9 million during the three months ended September 30, 2003 to approximately $5.8 million during the three months ended September 30, 2004. The effective tax rate of 19.7% for the three months ended September 30, 2003 decreased to 18.3% for the three months ended September 30, 2004 primarily due to the non-deductible split-off costs recorded in 2003 and the effect of India’s replacement in 2003 of a dividend withholding tax on the shareholder with a corporate level dividend tax partially offset by the expiration in 2004 of the Indian tax holiday on export profits generated from one of our software development centers in India and the increase during 2004 of the corporate tax rate in India to approximately 36.6% from approximately 35.9%.

      Net Income. Net income increased from approximately $16.0 million for the three months ended September 30, 2003 to approximately $26.1 million for the three months ended September 30, 2004, representing 16.3% and 16.8% of revenues, respectively. The increase in net income as a percentage of revenues compared to the prior period was primarily due to the leveraging of our selling, general and administrative expenses and decrease in the effective income tax rate in 2004.

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      Nine months Ended September 30, 2004 Compared to Nine months Ended September 30, 2003

     The following table sets forth, for the periods indicated, certain financial data expressed for the nine months ended September 30:

(Dollars in thousands)

      Revenue. Revenue increased by 59.1%, or approximately $153.8 million, from approximately $260.1 million during the nine months ended September 30, 2003 to approximately $413.9 million during the nine months ended September 30, 2004. This increase resulted primarily from increased revenue from existing customers and revenue from new customers added since September 30, 2003, including acquisitions. Specifically, demand for application development and integration services increased significantly due to continued strength in our customers’ discretionary spending. During the nine months ended September 30, 2004, JPMorgan Chase accounted for sales in excess of 10% of revenues, while in the corresponding period of 2003 no customer accounted for sales in excess of 10% of revenues.

      Gross Profit. Our cost of revenues consists primarily of the cost of salaries, payroll taxes, benefits, immigration and travel for technical personnel, and the cost of sales commissions related to revenues. Our cost of revenues increased by 59.5%, or approximately $84.0 million, from approximately $141.1 million during the nine months ended September 30, 2003 to approximately $225.2 million during the nine months ended September 30, 2004. The increase was due primarily to costs resulting from an increase in the number of our technical professionals from approximately 7,000 employees at September 30, 2003 to approximately 13,000 employees at September 30, 2004. The increased number of our technical professionals is a direct result of greater demand for our services. Our gross profit increased by 58.7%, or approximately $69.8 million, from approximately $119.0 million during the nine months ended September 30, 2003 to approximately $188.7 million during the nine months ended September 30, 2004.

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     Gross profit margin decreased from 45.7% of revenues during the nine months ended September 30, 2003 to 45.6% of revenues during the nine months ended September 30, 2004. The decrease in gross profit margin was primarily due to the effect of a higher incentive compensation accrual in 2004 as compared to 2003.

      Selling, General and Administrative Expenses. Selling, general and administrative expenses consist primarily of salaries, employee benefits, travel, promotion, communications, management, finance, administrative and occupancy costs as well as depreciation and amortization expense. Selling, general and administrative expenses, including depreciation and amortization, increased by 56.4%, or approximately $38.4 million, from approximately $68.0 million during the nine months ended September 30, 2003 to approximately $106.4 million during the nine months ended September 30, 2004, and decreased as a percentage of revenue from 26.2% to 25.7%. The percentage decrease in such expenses was due to a decrease in depreciation and amortization expense as a percentage of revenues partially offset by the effect of a higher incentive compensation accrual in 2004 as compared to 2003.

      Income from Operations. Income from operations increased 61.7%, or approximately $31.4 million, from approximately $50.9 million during the nine months ended September 30, 2003 to approximately $82.3 million during the nine months ended September 30, 2004, representing operating margins of 19.6% and 19.9% of revenues, respectively. The increase in operating margin was due primarily to the decrease in depreciation and amortization expense discussed above.

      Other Income/Expense, Net. Other income/expense, net consists primarily of interest income and foreign currency transaction gains or losses and for the nine months ended September 30, 2003, non-recurring split-off costs of $2.0 million related to direct and incremental expenses ( e.g. , legal and accounting fees, printing and registration costs) incurred by us directly related to our split-off from IMS Health. Interest income increased from $1.4 million during the nine months ended September 30, 2003 to approximately $2.9 million during the nine months ended September 30, 2004. The increase in interest income is due primarily to higher invested cash balances and an increased portion of this balance held in foreign currencies which earn slightly higher interest rates.

      Provision for Income Taxes . The provision for income taxes increased from approximately $10.5 million during the nine months ended September 30, 2003 to approximately $15.6 million during the nine months ended September 30, 2004. The effective tax rate of 21.0% for the nine months ended September 30, 2003 decreased to 18.3% for the nine months ended September 30, 2004 primarily due to the non-deductible split-off costs recorded in 2003 and the effect of India’s replacement in 2003 of a dividend withholding tax on the shareholder with a corporate level dividend tax partially offset by the expiration in 2004 of the Indian tax holiday on export profits generated from one of our software development centers in India and the increase during 2004 of the corporate tax rate in India to approximately 36.6% from approximately 35.9%.

      Net Income. Net income increased from approximately $39.6 million for the nine months ended September 30, 2003 to approximately $69.6 million for the nine months ended September 30, 2004, representing 15.2% and 16.8% of revenues, respectively. The increase in

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net income as a percentage of revenues as compared to the prior period was primarily due to the absence in 2004 of the one-time non-recurring split-off costs referred to above and a lower effective income tax rate for 2004 compared to 2003.

Results by Business Segment

     Cognizant, operating globally, provides IT services for medium and large businesses. North American operations consist primarily of IT services in the United States and Canada. European operations consist of IT services principally in the United Kingdom, The Netherlands, Germany, Switzerland and Ireland. Asian operations consist of IT services principally in India, Singapore, Japan and Australia. We manage the company on a geographic basis. Accordingly, regional sales managers, sales managers, account managers, project teams and facilities are segmented geographically and decisions by our chief operating decision maker regarding the allocation of assets and assessment of performance are based on such geographic segmentation. In this regard, revenues are allocated to each geographic area based on the location of the customer.

      Three Months Ended September 30, 2004 Compared to Three Months Ended September 30, 2003

     The following table sets forth, for the periods indicated, operating results by geographic segment:

(Dollars in thousands)

North American Segment

      Revenue . Revenue increased by 52.9%, or approximately $46.2 million, from approximately $87.3 million during the third quarter of 2003 to approximately $133.5 million

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during the third quarter of 2004. The increase in revenue was attributable primarily to greater acceptance of the on-site/offshore consulting services delivery model as a means of reducing a customer’s internal IT costs, as well as sales and marketing activities directed at the U.S. market for our services.

      Income from Operations . Income from operations increased 55.0%, or approximately $9.4 million from approximately $17.2 million during the third quarter of 2003 to approximately $26.6 million during the third quarter of 2004. The increase in operating income was attributable primarily to increased revenues and achieving leverage on prior sales and marketing investments.

European Segment

      Revenue. Revenue increased by 104.4%, or approximately $10.6 million, from approximately $10.2 million during the third quarter of 2003 to approximately $20.8 million during the third quarter of 2004. The increase in revenue was attributable to the increased acceptance of our services, particularly in the United Kingdom and additional revenues related to the acquisition of Infopulse Nederland B.V, or Infopulse in the fourth quarter of 2003.

      Income from Operations. Income from operations increased 107.3%, or approximately $2.1 million, from approximately $2.0 million during the third quarter of 2003 as compared to approximately $4.1 million during the third quarter of 2004. The increase in operating income was attributable primarily to increased revenues and achieving leverage on prior sales and marketing investments partially offset by weaker than expected performance at Infopulse.

Asian Segment

      Revenue . Revenue increased by 78.0%, or approximately $0.5 million, from approximately $0.7 million during the third quarter of 2003 to approximately $1.2 million during the third quarter of 2004. The increase in revenue was attributable to the increased acceptance of our services, particularly in Japan and Singapore, and the acquisition of Ygyan.

      Income from Operations. Income from operations increased 80%, or approximately $0.1 million, from approximately $0.1 million during the third quarter of 2003 as compared to approximately $0.2 million during the third quarter of 2004. The increase in operating income was attributable primarily to increased revenues and achieving leverage on prior sales and marketing investments .

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      Nine months Ended September 30, 2004 Compared to Nine months Ended September 30, 2003

     The following table sets forth, for the periods indicated, operating results by geographic segment:

(Dollars in thousands)

North American Segment

      Revenue . Revenue increased by 55.3%, or approximately $127.6 million, from approximately $230.6 million during the nine months ended September 30, 2003 to approximately $358.2 million during the nine months ended September 30, 2004. The increase in revenue was attributable primarily to greater acceptance of the on-site/offshore consulting services delivery model as a means of reducing a customer’s internal IT costs, as well as sales and marketing activities directed at the U.S. market for our services.

      Income from Operations . Income from operations increased 60.2%, or approximately $27.2 million, from approximately $45.2 million during the nine months ended September 30, 2003 to approximately $72.4 million during the nine months ended September 30, 2004. The increase in operating income was attributable primarily to increased revenues and achieving leverage on prior sales and marketing investments.

European Segment

      Revenue. Revenue increased by 90.8%, or approximately $25.0 million, from approximately $27.5 million during the nine months ended September 30, 2003 to approximately $52.5 million during the nine months ended September 30, 2004. The increase in revenue was attributable to the increased acceptance of our services, particularly in the United Kingdom and additional revenues related to the acquisition of Infopulse in the fourth quarter of 2003.

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      Income from Operations. Income from operations increased 96.7%, or approximately $5.2 million, from approximately $5.4 million during the nine months ended September 30, 2003 as compared to approximately $10.6 million during the nine months ended September 30, 2004. The increase in operating income was attributable primarily to increased revenues and achieving leverage on prior sales and marketing investments partially offset by weaker than expected performance at Infopulse.

Asian Segment

      Revenue . Revenue increased by 62.1%, or approximately $1.2 million, from approximately $2.0 million during the nine months ended September 30, 2003 to approximately $3.2 million during the nine months ended September 30, 2004. The increase in revenue was attributable to the increased acceptance of our services, particularly in Japan and Singapore, and the acquisition of Ygyan.

      Income from Operations. Income from operations increased 66.6%, or approximately $0.3 million, from approximately $0.4 million during the nine months ended September 30, 2003 as compared to approximately $0.6 million during the nine months ended September 30, 2004. The increase in operating income was attributable primarily to increased revenues and achieving leverage on prior sales and marketing investments .

Liquidity and Capital Resources

     At September 30, 2004, we had cash and cash equivalents and short-term bank deposits of approximately $270.4 million. We have used, and plan to use, such cash for (i) expansion of existing operations, including our offshore software development centers; (ii) continued development of new service lines; (iii) possible acquisitions of related businesses; (iv) formation of joint ventures; and (v) general corporate purposes, including working capital. As of September 30, 2004, we had no third party debt and our working capital increased to $315.7 million compared to $215.9 million as of December 31, 2003. Accordingly, we do not anticipate any near-term liquidity issues.

     During 2004, the Indian income tax holiday related to one of our software development centers expired. Accordingly, in 2004, we began to accrue Indian income taxes on export profits generated by this one software development center. Such income taxes are expected to be less than $10 million for 2004.

     Net cash provided by operating activities was approximately $75.5 million during the nine months ended September 30, 2004 as compared to net cash provided by operating activities of approximately $42.0 million during the nine months ended September 30, 2003. This increase is primarily attributed to the higher level of net income during 2004 as compared to 2003 and the increase in accrued and other liabilities, partially offset by the increase in the trade accounts receivable as of September 30, 2004. Trade accounts receivable, net of allowance, increased from $52.3 million at December 31, 2003 to $86.8 million at September 30, 2004. The increase in trade accounts receivable during 2004 was due primarily to increased revenue, higher number of days sales outstanding and the timing of billings during the calendar year. We monitor turnover, aging and the collection of accounts receivable through the use of management reports,

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which are prepared on a customer basis and evaluated by our finance staff. At September 30, 2004, our days’ sales outstanding, including unbilled receivables, was approximately 61 days compared to approximately 53 days at December 31, 2003.

     Our investing activities used net cash of approximately $43.6 million for the nine months ended September 30, 2004 as compared to net cash used of approximately $24.1 million for the same period in 2003. The increase in 2004 as compared to 2003 primarily relates to the investment of a portion of our cash balances in short-term bank deposits to achieve a higher return on invested balances.

     Our financing activities generated net cash of approximately $23.7 million for the nine months ended September 30, 2004 as compared to $15.2 million for the same period in 2003. The increase in net cash provided by financing activities was primarily related to increased cash proceeds from the exercise of stock options as compared to the prior year and the absence in 2004 of the payments of non-recurring split-off costs.

     We believe that our available funds and the cash flows expected to be generated from operations will be adequate to satisfy our current and planned operations and needs for at least the next 12 months. Our ability to expand and grow our business in accordance with current plans, to make acquisitions and form joint ventures and to meet our long-term capital requirements beyond this 12-month period will depend on many factors, including the rate, if any, at which our cash flow increases, our ability and willingness to accomplish acquisitions and joint ventures with capital stock, our continued intent not to repatriate earnings from India, our ability not to breach the Distribution Agreement, as discussed below, between IMS Health and us, especially as it relates to our tax indemnities, and the availability of public and private debt and equity financing. We cannot be certain that additional financing, if required, will be available on terms favorable to us, if at all.

     During July 2004, we entered into a foreign currency forward contract, with a six-month term and notional amount of $12.5 million, to sell the Indian Rupee for U.S. dollars. We have entered into this forward contract to manage a portion of our foreign currency risk related to Indian Rupee denominated asset balances, primarily cash investments, at our Indian subsidiary, Cognizant India. Movement in the exchange rate for the Indian Rupee results in foreign currency gains or losses upon remeasurement of the Cognizant India’s financial statements into its functional currency, the U.S. dollar. Our objective is to reduce foreign currency exposure to appreciation or depreciation in the value of the Indian Rupee by offsetting a portion of such exposure with gains or losses on the forward contract, referred to above. The forward contract is marked to market and recorded at fair value with unrealized gains and losses reported along with foreign currency gains or losses in the caption “other income (expense), net” on our unaudited condensed consolidated statement of income.

     Other than the aforementioned forward contract, we have not engaged in hedging activities nor have we entered into off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of or requirements for capital resources.

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Commitments and Contingencies

     We have expanded our plans to construct additional fully-owned developments centers to now include over 900,000 square feet of new space as compared to previous plans, announced in December 2003, to add 600,000 square feet of space. The new facilities will be located in Chennai, Pune, Calcutta and Bangalore, India. Total construction costs related to this program are expected to be approximately $76.0 million, which we expect to fund internally. As of September 30, 2004, we have entered into fixed capital commitments of approximately $2.2 million related to this India development center expansion program, of which approximately $1.3 million has been spent to date.

     We are 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, is not expected to have a material adverse effect on our quarterly or annual operating results, cash flows, or consolidated financial position. Additionally, many of our engagements involve projects that are critical to the operations of our customers’ business and provide benefits that are difficult to quantify. Any failure in a customer’s computer system could result in a claim for substantial damages against us, regardless of our responsibility for such failure. Although we attempt to contractually limit our liability for damages arising from negligent acts, errors, mistakes, or omissions in rendering our application design, development and maintenance services, there can be no assurance that the limitations of liability set forth in our contracts will be enforceable in all instances or will otherwise protect us from liability for damages. Although we have general liability insurance coverage, including coverage for errors or omissions, there can be no assurance that such coverage will continue to be available on reasonable terms or will be available in sufficient amounts to cover one or more large claims, or that the insurer will not disclaim coverage as to any future claim. The successful assertion of one or more large claims against us that exceed available insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our quarterly and annual operating results, financial position and cash flows.

     In connection with the split-off from IMS Health, we entered into a Distribution Agreement, dated January 7, 2003, with IMS Health, referred to as the Distribution Agreement. The Distribution Agreement provides, among other things, that IMS Health and we will comply with, and not take any action during the relevant time period that is inconsistent with, the representations made to and relied upon by McDermott, Will & Emery in connection with rendering its opinion regarding the U.S. federal income tax consequences of the exchange offer. In addition, pursuant to the Distribution Agreement, we indemnified IMS Health for any tax liability to which they may be subject as a result of the exchange offer but only to the extent that such tax liability resulted solely from a breach in the representations we made to and were relied upon by McDermott, Will & Emery in connection with rendering its opinion regarding the U.S. federal income tax consequences of the exchange offer. If we breach any of our representations in connection with the Distribution Agreement, the related indemnification liability could be material to our quarterly and annual operating results, financial position and cash flows.

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Related Party Transactions

     As described in Note 2 to the unaudited condensed consolidated financial statements, on February 13, 2003, referred to as the Split-Off Date, IMS Health distributed all of the Cognizant Class B common stock that IMS Health owned in an exchange offer to IMS Health stockholders, referred to as the Split-Off. As a result of the Split-Off, IMS Health is no longer a related party as of the Split-Off Date. Accordingly, our revenues from IMS Health subsequent to the Split-Off Date are classified as third party revenues. During the nine months ended September 30, 2003, we recognized related party revenues from IMS Health totaling approximately $2.6 million and incurred costs of approximately $28,000 related to services provided to us by IMS Health.

Foreign Currency Translation

     A portion of our costs in India and cash balances are denominated in local currency and subject to exchange fluctuations, which has not historically had any material effect on our results of operations or financial position.

Effects of Inflation

     Our most significant costs are the salaries and related benefits for our programming staff and other professionals. Competition in India, the United States and Europe for professionals with advanced technical skills necessary to perform our services offered have caused wages to increase at a rate greater than the general rate of inflation. As with other IT service providers, we must adequately anticipate wage increases, particularly on our fixed-price contracts. There can be no assurance that we will be able to recover cost increases through increases in the prices that we charge for our services in the United States and elsewhere.

Item 3.	Quantitative and Qualitative Disclosures About Market Risk.

     We are exposed to foreign currency exchange rate risk in the ordinary course of doing business as we transact or hold a portion of our funds in foreign currencies, particularly the Indian Rupee. Accordingly, we periodically evaluate the need for hedging strategies to mitigate the effect of foreign currency fluctuations. During July 2004, we entered into a foreign currency forward contract, with a six-month term and notional amount of $12.5 million, to sell the Indian Rupee for U.S. dollars. We may continue to enter into such instruments in the future to reduce foreign currency exposure to appreciation or depreciation in the value of certain foreign currencies. Other than the aforementioned forward contract, we have not engaged in hedging activities nor have we entered into off-balance sheet transactions, arrangements or other relationships with unconsolidated entities or other persons that are likely to affect liquidity or the availability of or requirements for capital resources.

     We believe that we do not have exposure to material market risks associated with changes in interest rates, as we have no variable interest rate debt outstanding. We do not believe that we have any other material exposure to market risks associated with interest rates.

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Item 4.	Controls and Procedures.

      Evaluation of disclosure controls and procedures . Our management, with the participation of our Chief Executive Officer, or CEO, and Chief Financial Officer, or CFO, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act) as of September 30, 2004. In designing and evaluating our disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and our management necessarily applied its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on this evaluation, our CEO and CFO concluded that, as of September 30, 2004, our disclosure controls and procedures were (1) designed to ensure that material information relating to us, including our consolidated subsidiaries, is made known to our CEO and CFO by others within those entities, particularly during the period in which this report was being prepared and (2) effective, in that they provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

      Changes in internal controls. No change in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) occurred during the fiscal quarter ended September 30, 2004 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 6.	Exhibits.

(a)

Exhibits.

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