Cognizant is one of the world's leading professional services companies,
engineering modern business for the digital era. Our services include digital
services and solutions, consulting, application development, systems
integration, application testing, application maintenance, infrastructure
services and business process services. Digital services have become an
increasingly important part of our portfolio, aligning with our clients' focus
on becoming data-enabled, customer-centric and differentiated businesses. We are
continuing to invest in digital services with a focus on four key areas: IoT,
digital engineering, data and cloud. We tailor our services and solutions to
specific industries with an integrated global delivery model that employs client
service and delivery teams based at client locations and dedicated global and
regional delivery centers. We help clients modernize technology, reimagine
processes and transform experiences so they can stay ahead in a fast-changing
world.

2021 Financial Results

Revenue


Income from Operations


Operating Margin


Diluted EPS






GAAP


Adjusted



GAAP


Adjusted



GAAP


Adjusted
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GAAP                           GAAP                 Adjusted1              GAAP                 Adjusted1             GAAP                Adjusted1
Revenue up                     Income from          Income from            Operating            Operating             Diluted EPS         Diluted EPS up
$1,855 million or 11.1%        Operations up        Operations up          margin up 260        margin up 100         up $1.48 or         $0.70 or 20.5%
from 2020; 10.0% in            $712 million         $452 million or        bps from 2020        bps from 2020         57.6% from          from 2020
constant currency1             or 33.7% from        18.9% from 2020                                                   2020
                               2020




During the year ended December 31, 2021, revenues increased by $1,855 million as
compared to the year ended December 31, 2020, representing growth of 11.1%, or
10.0% on a constant currency basis1. Our recently completed acquisitions
contributed 320 basis points to our revenue growth. Revenue growth also
reflected our clients' continued adoption and integration of digital
technologies and was aided by the negative impact on 2020 revenues of the
COVID-19 pandemic. Revenue growth in the Healthcare segment was driven by
increased demand for our services from our pharmaceutical clients while
continued adoption and integration of digital technologies across our
manufacturing, logistics, energy and utilities clients drove revenue growth in
the Products and Resources segment. Revenues in the Communications, Media and
Technology segment benefited from our technology clients' growing demand for
services related to digital content. Our 2020 revenue was negatively affected by
the Samlink Impact, which contributed approximately 70 basis points to our 2021
revenue growth. We continue to experience pricing pressure on our non-digital
services as our clients, particularly those in the Financial Services segment,
optimize the cost of supporting their legacy systems and operations.

Our operating margin and Adjusted Operating Margin1 increased to 15.3% and
15.4%, respectively, for the year ended December 31, 2021 from 12.7% and 14.4%,
respectively, for the year ended December 31, 2020. Our 2021 GAAP and Adjusted
Operating Margins benefited from savings generated by the implementation of the
delivery cost optimization initiatives of our 2020 Fit for Growth Plan and a
decrease in travel and entertainment costs. These benefits were partially offset
by investments intended to drive and support organic revenue growth, including
additions to our sales organization and initiatives to reposition our brand, as
well as the negative impact on margin of our recently completed acquisitions,
increased subcontractor and compensation costs as a result of significantly
elevated attrition and costs related to the modernization of our

1 Adjusted Income From Operations, Adjusted Operating Margin, Adjusted Diluted
EPS and constant currency revenue growth are not measurements of financial
performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures"
for more information and reconciliations to the most directly comparable GAAP
financial measures.
                     Cognizant    22    December 31, 2021 Form 10-K


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core IT systems. Our 2020 operating margins were adversely impacted by the
decline in revenues brought on by the COVID-19 pandemic, the Samlink Impact and
the April 2020 ransomware attack. Our 2020 GAAP operating margin was also
negatively impacted by costs related to our restructuring program that concluded
at the end of 2020 and COVID-19 Charges.

During the fourth quarter of 2021, we reached a settlement agreement with the
final customer involved in our previously disclosed proposed exit from a large
customer engagement of our Samlink subsidiary and additionally entered into an
agreement to sell this subsidiary. We reached settlement agreements with the
other two customers to this engagement in the second quarter of 2021. The
financial terms of the final settlement agreements with the three customers did
not materially differ from our original 2020 offer and, accordingly, the impact
to our 2021 consolidated statement of operations was immaterial. In 2020, in
connection with our settlement offer, we recorded a reduction of revenues of
$118 million and additional expenses of $33 million, or, jointly, the Samlink
Impact. This negatively impacted both our 2020 GAAP and Adjusted Diluted EPS2 by
$0.27. The sale of our Samlink subsidiary closed on February 1, 2022. In 2021,
our Samlink subsidiary had $113 million in revenues.

In the third quarter of 2021, the parties to the consolidated putative
securities class action suit filed a settlement agreement that resolved the
consolidated putative securities class action against us and certain of our
former officers. As a result, we recorded a $20 million Class Action Settlement
Loss in "Selling, general and administrative expenses" in our consolidated
financial statements. The loss is excluded from Adjusted Operating Margin2 and
Adjusted Diluted EPS2. For further information see   Note 15   to our
consolidated financial statements.

Business Outlook

As we seek to increase our commercial momentum and accelerate growth, our four strategic priorities are:

•Accelerating digital - growing our digital business organically and inorganically;

•Globalizing Cognizant - accelerating the growth of our business in key international markets and diversifying our leadership, capabilities and delivery footprint;

•Repositioning our brand - improving our global brand recognition and becoming better known as a global digital partner to the entire C-suite; and

•Increasing our relevance to our clients - leading with thought leadership and capabilities to address clients' business needs.



We continue to expect the long-term focus of our clients to be on their digital
transformation into software-driven, data-enabled, customer-centric and
differentiated businesses. The COVID-19 pandemic accelerated our clients' need
to modernize their business, which has led to increased demand for digital
capabilities. In 2021, we completed seven acquisitions intended to expand our
talent, experience and capabilities in key digital areas or in particular
geographies or industries.

As our clients seek to optimize the cost of supporting their legacy systems and
operations, our non-digital services have been and may continue to be subject to
pricing pressure. In addition, our clients will likely continue to contend with
industry-specific changes driven by evolving digital technologies, uncertainty
in the regulatory environment, industry consolidation and convergence as well as
international trade policies and other macroeconomic factors, which could affect
their demand for our services.

As a global professional services company, we compete on the basis of the
knowledge, experience, insights, skills and talent of our employees and the
value they can provide to our clients. Our success is dependent, in large part,
on our ability to keep our supply of skilled employees, in particular those with
experience in key digital areas, in balance with client demand. Competition for
skilled employees in the current labor market is intense, and we experienced
significantly elevated voluntary attrition during 2021. For the three months
ended December 31, 2021, our annualized attrition rate, including both voluntary
and involuntary, was 34.6% as compared to 19.0% for the three months ended
December 31, 2020. For the year ended December 31, 2021, our attrition rate,
including both voluntary and involuntary, was 30.8% as compared to 20.6% for the
year ended December 31, 2020. Challenges attracting and retaining highly
qualified personnel have negatively impacted our ability to satisfy client
demand and achieve our full revenue potential. We expect this impact to continue
in 2022. Further, our ongoing and anticipated future efforts with respect to
recruitment, talent management and employee engagement may not be successful and
may result in increased delivery costs during 2022. Our most significant costs
are the salaries and related benefits for our employees. In certain regions,
competition for employees with the advanced technical skills necessary to
perform our services has caused wages to increase at a rate greater than the
general rate of inflation. While we strive to adjust pricing to reduce the

2 Adjusted Operating Margin and Adjusted Diluted EPS are not measurements of
financial performance prepared in accordance with GAAP. See "Non-GAAP Financial
Measures" for more information and reconciliations to the most directly
comparable GAAP financial measures.
                     Cognizant    23    December 31, 2021 Form 10-K


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impact of compensation increases on our operating margin, we may not be successful in fully recovering these increases, which could adversely affect our profitability and operating margin.

Our future results may be affected by potential tax law changes and other potential regulatory changes, including possible U.S. corporate income tax reform and potentially increased costs for employment and post-employment benefits in India as a result of the Code on Social Security, 2020. For additional information, see Part I, Item 1A. Risk Factors.

Environmental, Social and Corporate Governance



We believe environmental and social considerations are increasingly important to
our clients and the talent we seek to attract and retain. As a company committed
to improving everyday life, ESG is an important part of our business and that of
our clients. Cognizant's vision is to become the preeminent technology services
provider to the leaders of the world's Global 2000 companies. Our ESG program is
designed to support that vision and aligns with our clients' increasing focus on
ESG. In 2021, we took the following steps to advance our ESG agenda:

•In February 2021, we announced an initiative to advance economic mobility,
educational opportunity, diversity, equity, and inclusion, and health and
well­being in communities around the world through new philanthropic funding and
in-kind contributions;

•In April 2021, as the second wave of the COVID-19 pandemic gripped India, we
launched Operation C3. This initiative facilitated vaccination for our Indian
employees and their dependents, and set up vaccination drives across the country
to help senior citizens, physically challenged dependents, and mothers with
infants. Operation C3 also provided critical medical equipment to hospitals,
helped to boost oxygen supplies and more;

•In June 2021, we issued our first ESG report with assured greenhouse gas emissions data;



•In October 2021, we announced our commitment to achieve net zero emissions by
2030. This pledge calls for reducing emissions by 50% from the Company's global
operations and supply chain by 2030, and by 90% by 2040; and

•In October 2021, we launched "All Belong," an initiative led by our executive committee and global D&I team designed to strengthen employee engagement, showcase our affinity groups, and recognize employees who exemplify inclusion.


                     Cognizant    24    December 31, 2021 Form 10-K


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  Table of Contents
Results of Operations


For a discussion of our results of operations for the year ended December 31,
2019, including a year-to-year comparison between 2020 and 2019, refer to Part
II, Item 7, "Management's Discussion and Analysis of Financial Condition and
Results of Operations" in our Annual Report Form 10-K for the year ended
December 31, 2020.

The Year Ended December 31, 2021 Compared to The Year Ended December 31, 2020

The following table sets forth certain financial data for the years ended December 31:



                                                                 % of                                % of                    Increase / Decrease
(Dollars in millions, except per
share data)                                    2021            Revenues            2020            Revenues                 $                   %
Revenues                                    $ 18,507             100.0          $ 16,652             100.0             $   1,855                11.1
Cost of revenues(1)                           11,604             62.7             10,671             64.1                    933                 8.7
Selling, general and administrative
expenses(1)                                    3,503             18.9              3,100             18.6                    403                13.0
Restructuring charges                              -               -                 215              1.3                   (215)             (100.0)
Depreciation and amortization expense            574              3.1                552              3.3                     22                 4.0
Income from operations                         2,826             15.3              2,114             12.7                    712                33.7
Other income (expense), net                        1                                 (18)                                     19              (105.6)
Income before provision for income
taxes                                          2,827             15.3              2,096             12.6                    731                34.9
Provision for income taxes                      (693)                               (704)                                     11                (1.6)
Income (loss) from equity method
investments                                        3                                   -                                       3                      *
Net income                                  $  2,137             11.5           $  1,392              8.4              $     745                53.5
Diluted EPS                                 $   4.05                            $   2.57                               $    1.48                57.6
Other Financial Information 3
Adjusted Income From Operations and
Adjusted Operating Margin                   $  2,846             15.4           $  2,394             14.4              $     452                18.9
Adjusted Diluted EPS                        $   4.12                            $   3.42                               $    0.70                20.5



(1) Exclusive of depreciation and amortization expense.



*  Not meaningful


Revenues - Overall


During 2021, revenues increased by $1,855 million as compared to 2020,
representing growth of 11.1%, or 10.0% on a constant currency basis3. Our
recently completed acquisitions contributed 320 basis points to our revenue
growth. Our revenue growth also reflected our clients' continued adoption and
integration of digital technologies and was aided by the negative impact on 2020
revenues of the COVID-19 pandemic. Our 2020 revenue was negatively affected by
the Samlink Impact, which contributed approximately 70 basis points to our 2021
revenue growth. We continue to experience pricing pressure on our non-digital
services as our clients, particularly those in the Financial Services segment,
optimize the cost of supporting their legacy systems and operations. Revenues
from clients added during 2021, including those related to acquisitions, were
$341 million.

3 Adjusted Income From Operations, Adjusted Operating Margin, Adjusted Diluted
EPS and constant currency revenue growth are not measurements of financial
performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures"
for more information and reconciliations to the most directly comparable GAAP
financial measures, as applicable.
                     Cognizant    25    December 31, 2021 Form 10-K


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Revenues - Reportable Business Segments


The following charts set forth revenues and change in revenues by business segment and geography for the year ended December 31, 2021 as compared to the year ended December 31, 2020:



                                                                 Financial Services                                                                    Healthcare
                                                                          Increase / (Decrease)                                                             Increase / (Decrease)
Dollars in millions                      Revenues              $                    %                 CC %4               Revenues              $                    %                  CC %4
North America                         $     4,204             191                  4.8                 4.4             $     4,571             390                   9.3                  9.3
United Kingdom                                547              84                 18.1                12.5                     168              11                   7.0                  2.3
Continental Europe                            745             116                 18.4                14.4                     477              43                   9.9                  7.0
Europe - Total                              1,292             200                 18.3                13.6                     645              54                   9.1                  5.7
Rest of World                                 555              39                  7.6                 5.2                     121              41                  51.3                 50.9
Total                                 $     6,051             430                  7.6                 6.3             $     5,337             485                  10.0                  9.6

                                                               Products and Resources                                                    

Communications, Media and Technology


                                                                          Increase / (Decrease)                                                             Increase / (Decrease)
Dollars in millions                      Revenues              $                    %                 CC %4               Revenues              $                    %                  CC %4
North America                         $     2,937             287                 10.8                10.5             $     1,924             187                  10.8                 10.7
United Kingdom                                471             100                 27.0                19.0                     456             112                  32.6                 26.1
Continental Europe                            539             126                 30.5                25.7                     158             (19)                (10.7)               (14.5)
Europe - Total                              1,010             226                 28.8                22.5                     614              93                  17.9                 12.3
Rest of World                                 329              67                 25.6                22.7                     305              80                  35.6                 34.3
Total                                 $     4,276             580                 15.7                13.9             $     2,843             360                  14.5                 13.2


Financial Services - revenues increased 7.6%, or 6.3% on a constant currency basis4


                    [[Image Removed: ctsh-20211231_g8.jpg]]
                                Banking     é    $307M

                                Insurance   é    $123M



Revenue growth in this segment benefited from the 2020 Samlink Impact, which
contributed approximately 220 basis points to our 2021 revenue growth, recently
completed acquisitions and the negative impact on 2020 revenues of the COVID-19
pandemic. Revenue growth also reflects the growing demand for our digital
services partially offset by clients' continued focus on cost optimization of
supporting their legacy systems and operations. Revenues from clients added,
including those related to acquisitions, since December 31, 2020 were $77
million.4

Healthcare - revenues increased 10.0%, or 9.6% on a constant currency basis4




Revenue growth among our life sciences clients was driven by increased demand
for our services among pharmaceutical companies while revenue growth among our
healthcare customers benefited from increased demand by health insurance
customers for our integrated software solutions. Additionally, revenue growth
reflected the negative impact on 2020 revenues of the COVID-19 pandemic.
Revenues from clients added since December 31, 2020 were $45 million.

                    [[Image Removed: ctsh-20211231_g9.jpg]]
                              Healthcare      é    $231M

                              Life Sciences   é    $254M



4 Constant currency revenue growth is not a measurement of financial performance
prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more
information.
                     Cognizant    26    December 31, 2021 Form 10-K

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Products and Resources - revenues increased 15.7%, or 13.9% on a constant currency
basis5


                    [[Image Removed: ctsh-20211231_g10.jpg]]
            Manufacturing, Logistics, Energy and Utilities        é    $383M

            Retail and Consumer Goods                             é    $155M

            Travel and Hospitality                                é     $42M


Revenues from our manufacturing, logistics, energy and utilities clients
benefited from our clients' adoption and integration of digital technologies.
Revenue growth in this segment included approximately 500 basis points related
to recently completed acquisitions. Additionally, revenue growth reflected the
negative impact of the COVID-19 pandemic on our 2020 revenue in this segment.
Revenues from clients added, including those related to acquisitions, since
December 31, 2020 were $113 million.5

Communications, Media and Technology - revenues increased 14.5%, or 13.2% on a constant currency basis5




Revenues reflected growing demand from our technology clients for services
related to digital content, primarily driven by our largest clients in this
segment, and were negatively impacted by 190 basis points due to our exit from
certain content-related services. Revenue growth in this segment included
approximately 650 basis points related to recently completed acquisitions and
also reflected the negative impact to our 2020 revenue of the COVID-19 pandemic.
Revenues from clients added, including those related to acquisitions, since
December 31, 2020 were $106 million.

                    [[Image Removed: ctsh-20211231_g11.jpg]]
                        Communications and Media         é    $150M

                        Technology                       é    $210M

Revenues - Geographic Markets

Revenues of $18,507 million by geographic market were as follows for the year ended December 31, 2021:


                    [[Image Removed: ctsh-20211231_g12.jpg]]


2021 as compared to 2020                                   Increase / (Decrease)
(Dollars in millions)             $      %                           CC %5
North America                               $               1,055              8.4        8.2
United Kingdom                                                307             23.0       16.6
Continental Europe                                            266             16.1       12.2
Europe - Total                                                573             19.2       14.2
Rest of World                                                 227             21.0       18.8
Total revenues                              $               1,855             11.1       10.0


North America continues to be our largest market, representing 73.7% of total
revenues and 56.9% of total growth for the year ended December 31, 2021. Revenue
growth across all regions benefited from our recently completed acquisitions and
was also aided by the negative impact on our 2020 revenues of the COVID-19
pandemic. All regions also benefited from favorable foreign currency exchange
rate movements. A significant portion of revenue growth in our Continental
Europe and Rest of World regions was driven by our German and Australian
markets, respectively, which both benefited from recent acquisitions. In
addition, revenue growth in Continental Europe benefited 770 basis points from
the 2020 Samlink Impact.






5 Constant currency revenue growth is not a measurement of financial performance
prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more
information.
                     Cognizant    27    December 31, 2021 Form 10-K


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Cost of Revenues (Exclusive of Depreciation and Amortization Expense)


                    [[Image Removed: ctsh-20211231_g13.jpg]]
                           é    $933M

                           ê   1.4% as a % of revenue

                           ¡ % of Revenues


Our cost of revenues consists primarily of salaries, incentive-based
compensation, stock-based compensation expense, employee benefits,
project-related immigration and travel for technical personnel, subcontracting
and equipment costs relating to revenues. The decrease in cost of revenues, as a
percentage of revenues, was due primarily to savings from the implementation of
the delivery cost optimization initiatives of our 2020 Fit for Growth Plan, the
adverse Samlink Impact in 2020, a decrease in travel and entertainment costs as
a result of a reduction in travel due to the COVID-19 pandemic as well as the
negative impact on our 2020 results from the pandemic and the April 2020
ransomware attack, partially offset by increased subcontractor and compensation
costs as a result of significantly elevated employee attrition levels.
SG&A Expenses (Exclusive of Depreciation and Amortization Expense)


SG&A expenses consist primarily of salaries, incentive-based compensation,
stock-based compensation expense, employee benefits, immigration, travel,
marketing, communications, management, finance, administrative and occupancy
costs. The increase, as a percentage of revenues, was due primarily to
investments intended to drive and support organic revenue growth, including
additions to our sales organization and initiatives to reposition our brand, as
well as increased costs as a result of our recently completed acquisitions and
costs related to the modernization of our core IT systems, partially offset by a
reduction in expenses attributable to the COVID-19 pandemic and the April 2020
ransomware attack.
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                           é   $403M

                           é   0.3% as a % of revenue

                           ¡ % of Revenues


Depreciation and Amortization Expense




Depreciation and amortization expense increased by 4.0% during 2021 as compared
to 2020 primarily due to amortization of intangibles from recently completed
acquisitions.
Operating Margin and Adjusted Operating Margin6 - Overall


[[Image Removed: ctsh-20211231_g15.jpg]][[Image Removed: ctsh-20211231_g16.jpg]]




Our 2021 GAAP and Adjusted Operating Margins6 benefited from savings generated
by the implementation of the delivery cost optimization initiatives of our 2020
Fit for Growth Plan and a decrease in travel and entertainment costs. These
benefits were partially offset by investments intended to drive and support
organic revenue growth, including additions to our sales organization and
initiatives to reposition our brand, as well as the negative impact on margin of
our recently completed acquisitions, increased subcontractor and compensation
costs as a result of significantly elevated employee attrition and costs related
to the modernization of our core IT systems. Our 2020 operating margins were
adversely impacted by the decline in revenues brought on by the COVID-19
pandemic, the Samlink Impact and the April 2020 ransomware attack. Our 2020 GAAP
operating margin was also negatively impacted by costs related to our
restructuring program that concluded at the end of 2020 and COVID-19 Charges.

6 Adjusted Income From Operations and Adjusted Operating Margin are not measurements of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information and reconciliations to the most directly comparable GAAP financial measures, as applicable.


                     Cognizant    28    December 31, 2021 Form 10-K


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Excluding the impact of applicable designated cash flow hedges, the appreciation
of the Indian rupee against the U.S. dollar negatively impacted our operating
margin by approximately 5 basis points in 2021, while in 2020 the depreciation
of the Indian rupee against the U.S. dollar positively impacted our operating
margin by approximately 92 basis points. Each additional 1.0% change in exchange
rate between the Indian rupee and the U.S. dollar will have the effect of moving
our operating margin by approximately 18 basis points, excluding the impact of
our cash flow hedges.

We enter into foreign exchange derivative contracts to hedge certain Indian
rupee denominated payments in India. These hedges are intended to mitigate the
volatility of the changes in the exchange rate between the U.S. dollar and the
Indian rupee. In 2021, the settlement of our cash flow hedges positively
impacted our operating margin by approximately 35 basis points. The impact of
the settlement of our cash flow hedges was immaterial in 2020.

We finished the year ended December 31, 2021 with approximately 330,600
employees as compared to 289,500 employees for the year ended December 31, 2020.
Annualized attrition, including both voluntary and involuntary, was
approximately 34.6% for the three months ended December 31, 2021. Attrition,
including both voluntary and involuntary, was approximately 30.8% for the year
ended December 31, 2021. In 2021, voluntary attrition was significantly elevated
and constituted the vast majority of our attrition for the period. By
comparison, voluntary attrition in the year ended December 31, 2020 represented
only approximately half of our attrition for the period as our personnel actions
taken under our Fit for Growth Plan increased involuntary attrition while
voluntary attrition was suppressed due to the COVID-19 pandemic. Attrition in
all periods presented is weighted towards our more junior level employees.


                    [[Image Removed: ctsh-20211231_g17.jpg]]

* Annualized attrition


Segment Operating Profit

Segment operating profit and operating margin percentage were as follows:



                    [[Image Removed: ctsh-20211231_g18.jpg]]

                    [[Image Removed: ctsh-20211231_g19.jpg]]

                    [[Image Removed: ctsh-20211231_g20.jpg]]

                    [[Image Removed: ctsh-20211231_g21.jpg]]

Across all our business segments, operating margins benefited from savings from
the implementation of the delivery cost optimization initiatives of our 2020 Fit
for Growth Plan, the decrease in travel and entertainment costs due to COVID-19
related reductions in travel and the negative impact on our 2020 results of the
COVID-19 pandemic and the April 2020 ransomware attack. In 2021, segment
operating margins were negatively impacted by increased subcontractor and
compensation costs as a result of significantly elevated employee attrition
levels. The 2020 operating margin in our Financial Services segment includes the
2020 adverse Samlink Impact.

Total segment operating profit was as follows for the year ended December 31:
                                                                                                                                 Increase /
(Dollars in millions)                          2021            % of Revenues            2020            % of Revenues            (Decrease)
Total segment operating profit              $ 5,557                30.0              $ 4,704                28.2              $         853
Less: unallocated costs                       2,731                                    2,590                                            141
Income from operations                      $ 2,826                15.3              $ 2,114                12.7              $         712


The increase of $141 million in unallocated costs for the year ended
December 31, 2021 as compared to the year ended December 31, 2020 was primarily
due to increased costs as a result of our recently completed acquisitions and
costs related to initiatives to reposition our brand and the modernization of
our core IT systems. Unallocated costs in 2020 included restructuring costs,
COVID-19 Charges and costs related to the April 2020 ransomware attack.
                     Cognizant    29    December 31, 2021 Form 10-K


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Other Income (Expense), Net


Total other income (expense), net consists primarily of foreign currency
exchange gains and losses, interest income and interest expense. The following
table sets forth total other income (expense), net for the years ended December
31:

                                                                                                      Increase /
(in millions)                                                2021              2020                    Decrease
Foreign currency exchange (losses)                        $   (33)          $   (53)                $        20

Gains (losses) on foreign exchange forward contracts not designated as hedging instruments

                              13               (63)                         76
Foreign currency exchange (losses), net                       (20)             (116)                         96
Interest income                                                30               119                         (89)
Interest expense                                               (9)              (24)                         15
Other, net                                                      -                 3                          (3)
Total other income (expense), net                         $     1           $   (18)                $        19


The foreign currency exchange gains and losses were primarily attributed to the
remeasurement of the Indian rupee denominated net monetary assets and
liabilities in our U.S. dollar functional currency India subsidiaries and, to a
lesser extent, the remeasurement of other net monetary assets and liabilities
denominated in currencies other than the functional currencies of our
subsidiaries. The gains and losses on our foreign exchange forward contracts not
designated as hedging instruments related to the realized and unrealized gains
and losses on foreign exchange forward contracts entered into to offset foreign
currency exposure to non-U.S. dollar denominated net monetary assets and
liabilities. As of December 31, 2021, the notional value of our undesignated
hedges was $847 million. The decrease in interest income of $89 million was
primarily attributable to lower invested balances in India, which generate
higher yields. Our invested balances in India are lower in 2021 as a result of
our repatriation of cash from India in the fourth quarter of 2020.

Provision for Income Taxes




                    [[Image Removed: ctsh-20211231_g22.jpg]]
                    ê                                      $11M

                    ¡ Effective Income Tax Rate ê 9.1%


The effective tax rate decreased primarily as a result of:

•our decision in 2020 to reverse our indefinite reinvestment assertion on Indian earnings accumulated in prior years which resulted in a $140 million Tax on Accumulated Indian Earnings recorded as income tax expense in 2020;

•the 2020 Samlink Impact, which was not deductible for tax purposes;

•the discrete benefit in 2021 of the settlement of the IRS examination for tax years 2012 through 2016 as described in Note 11 to our consolidated financial statements; and

•lower non-deductible foreign currency exchange losses in our consolidated statement of operations in 2021.

Net Income




The increase in net income was driven by higher income from operations and lower
foreign currency exchange losses, partially offset by lower interest income.

                    [[Image Removed: ctsh-20211231_g23.jpg]]
                               é              $745M

                               ¡ % of Revenues


Non-GAAP Financial Measures

Portions of our disclosure include non-GAAP financial measures. These non-GAAP
financial measures are not based on any comprehensive set of accounting rules or
principles and should not be considered a substitute for, or superior to,
financial measures calculated in accordance with GAAP, and may be different from
non-GAAP financial measures used by other companies. In addition, these non-GAAP
financial measures should be read in conjunction with our financial statements
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prepared in accordance with GAAP. The reconciliations of our non-GAAP financial
measures to the corresponding GAAP measures, set forth below, should be
carefully evaluated.
Our non-GAAP financial measures, Adjusted Operating Margin, Adjusted Income From
Operations and Adjusted Diluted EPS exclude unusual items. Additionally,
Adjusted Diluted EPS excludes net non-operating foreign currency exchange gains
or losses and the tax impact of all the applicable adjustments. The income tax
impact of each item is calculated by applying the statutory rate and local tax
regulations in the jurisdiction in which the item was incurred. Constant
currency revenue growth is defined as revenues for a given period restated at
the comparative period's foreign currency exchange rates measured against the
comparative period's reported revenues. Free cash flow is defined as cash flows
from operating activities net of purchases of property and equipment.

We believe providing investors with an operating view consistent with how we
manage the Company provides enhanced transparency into our operating results.
For our internal management reporting and budgeting purposes, we use various
GAAP and non-GAAP financial measures for financial and operational
decision-making, to evaluate period-to-period comparisons, to determine portions
of the compensation for our executive officers and for making comparisons of our
operating results to those of our competitors. Therefore, it is our belief that
the use of non-GAAP financial measures excluding certain costs provides a
meaningful supplemental measure for investors to evaluate our financial
performance. We believe that the presentation of our non-GAAP financial measures
along with reconciliations to the most comparable GAAP measure, as applicable,
can provide useful supplemental information to our management and investors
regarding financial and business trends relating to our financial condition and
results of operations.

A limitation of using non-GAAP financial measures versus financial measures
calculated in accordance with GAAP is that non-GAAP financial measures do not
reflect all of the amounts associated with our operating results as determined
in accordance with GAAP and may exclude costs that are recurring such as our net
non-operating foreign currency exchange gains or losses. In addition, other
companies may calculate non-GAAP financial measures differently than us, thereby
limiting the usefulness of these non-GAAP financial measures as a comparative
tool. We compensate for these limitations by providing specific information
regarding the GAAP amounts excluded from our non-GAAP financial measures to
allow investors to evaluate such non-GAAP financial measures.

The following table presents a reconciliation of each non-GAAP financial measure to the most comparable GAAP measure for the years ended December 31:



                                                                           % of                                     % of
(Dollars in millions, except per share data)           2021              Revenues               2020              Revenues
GAAP income from operations and operating margin    $ 2,826                   15.3  %        $ 2,114                   12.7  %
Class Action Settlement Loss (1)                         20                    0.1                 -                      -
Realignment charges (2)                                   -                      -                42                    0.3
2020 Fit for Growth Plan restructuring charges (3)        -                      -               173                    1.0
COVID-19 Charges (4)                                      -                      -                65                    0.4
Adjusted Income From Operations and Adjusted
Operating Margin                                      2,846                   15.4             2,394                   14.4

GAAP diluted EPS                                    $  4.05                                  $  2.57
Effect of above adjustments, pre-tax                   0.04                                     0.52
Effect of non-operating foreign currency exchange
losses (gains), pre-tax (5)                            0.03                                     0.22
Tax effect of above adjustments (6)                       -                                    (0.15)
Tax on Accumulated Indian Earnings (7)                    -                                     0.26

Adjusted Diluted EPS                                $  4.12                                  $  3.42

Net cash provided by operating activities           $ 2,495                                  $ 3,299
Purchases of property and equipment                    (279)                                    (398)
Free cash flow                                      $ 2,216                                  $ 2,901

(1) During 2021, we recorded the Class Action Settlement Loss in "Selling, general and administrative expenses" in our consolidated financial statements. See Note 15 to our consolidated financial statements for additional information.

(2) As part of our realignment program, during 2020, we incurred employee retention costs and certain professional fees. See Note 4 to our consolidated financial statements for additional information.


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(3)  As part of our 2020 Fit for Growth plan, during 2020, we incurred certain
employee separation, employee retention and facility exit costs and other
charges. See   Note 4   to our consolidated financial statements for additional
information.

(4)  During 2020, we incurred costs in response to the COVID-19 pandemic
including a one-time bonus to our employees at the designation of associate and
below in both India and the Philippines, certain costs to enable our employees
to work remotely and costs to provide medical staff and extra cleaning services
for our facilities. Most of the costs related to the pandemic are reported in
"Cost of revenues" in our consolidated statement of operations.

(5)  Non-operating foreign currency exchange gains and losses, inclusive of
gains and losses on related foreign exchange forward contracts not designated as
hedging instruments for accounting purposes, are reported in "Foreign currency
exchange gains (losses), net" in our consolidated statements of operations.

(6)  Presented below are the tax impacts of each of our non-GAAP adjustments to
pre-tax income:

                                                                  For the years ended December 31,
(in millions)                                                       2021                      2020
Non-GAAP income tax benefit (expense) related to:
Class Action Settlement Loss                                $                6          $            -
Realignment charges                                                          -                      11
2020 Fit for Growth Plan restructuring charges                               -                      45
COVID-19 Charges                                                             -                      17
Foreign currency exchange gains and losses                                  (5)                      6


(7) In 2020, we reversed our indefinite reinvestment assertion on Indian earnings accumulated in prior years and recorded $140 million in income tax expense.

Liquidity and Capital Resources




Cash generated from operations has historically been our primary source of
liquidity to fund operations and investments to grow our business. As of
December 31, 2021, we had cash, cash equivalents and short-term investments of
$2,719 million. Additionally, as of December 31, 2021, we had available capacity
under our credit facilities of approximately $1,925 million.

The following table provides a summary of our cash flows for the years ended
December 31:

(in millions)                            2021         2020              Increase / Decrease
Net cash provided by (used in):
Operating activities                   $ 2,495      $ 3,299            $               (804)
Investing activities                    (2,164)      (1,238)                           (926)
Financing activities                    (1,203)      (2,009)                            806
Other Cash Flow Information7
Free cash flow                           2,216        2,901                            (685)


Operating activities7

The decrease in cash provided by operating activities in 2021 compared to 2020
was primarily driven by the deferrals of certain non-income tax payments due to
COVID-19 pandemic regulatory relief in 2020, a portion of which was remitted in
2021, and higher incentive-based compensation payouts in 2021.

We monitor turnover, aging and the collection of trade accounts receivable by
client. Our DSO calculation includes trade accounts receivable, net of allowance
for credit losses, and contract assets, reduced by the uncollected portion of
our deferred revenue. DSO was 69 days as of December 31, 2021 and 70 days as of
December 31, 2020.

Investing activities

The increase in cash used in investing activities in 2021 compared to 2020 was
primarily driven by net purchases of investments as compared to sales in 2020,
partially offset by lower payments for acquisitions and capital expenditures.

7 Free cash flow is not a measurement of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information.


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Financing activities

The decrease in cash used in financing activities in 2021 compared to 2020 is primarily due to lower repurchases of common stock in 2021.



We have a Credit Agreement providing for a $750 million Term Loan and a $1,750
million unsecured revolving credit facility, which are due to mature in November
2023. We are required under the Credit Agreement to make scheduled quarterly
principal payments on the Term Loan. See   Note 10   to our consolidated
financial statements. We believe that we currently meet all conditions set forth
in the Credit Agreement to borrow thereunder, and we are not aware of any
conditions that would prevent us from borrowing part or all of the remaining
available capacity under the revolving credit facility as of December 31, 2021
and through the date of this filing. As of December 31, 2021, we had no
outstanding balance on our revolving credit facility.

In February 2021, our India subsidiary renewed its one-year 13 billion Indian
rupee ($175 million at the December 31, 2021 exchange rate) working capital
facility, which requires us to repay any balances drawn down within 90 days from
the date of disbursement. There is a 1.0% prepayment penalty applicable to
payments made within 30 days of disbursement. This working capital facility
contains affirmative and negative covenants and may be renewed annually in
February. As of December 31, 2021, there was no balance outstanding under the
working capital facility.

Capital Allocation Framework


                    [[Image Removed: ctsh-20211231_g24.jpg]]
                                  Acquisitions

                                  Share Repurchases

                                  Dividend payments


Our capital allocation framework anticipates the deployment of approximately 50%
of our free cash flow8 for acquisitions, 25% for share repurchases and 25% for
dividend payments. We review our capital allocation framework on an ongoing
basis, considering the potential impacts of COVID-19 pandemic, our financial
performance and liquidity position, investments required to execute our
strategic plans and initiatives, acquisition opportunities, the economic
outlook, regulatory changes and other relevant factors. As these factors may
change over time, the actual amounts expended on stock repurchase activity,
dividends, and acquisitions, if any, during any particular period cannot be
predicted and may fluctuate from time to time.

Other Liquidity and Capital Resources Information
We seek to ensure that our worldwide cash is available in the locations in which
it is needed. As part of our ongoing liquidity assessments, we regularly monitor
the mix of our domestic and international cash flows and cash balances. We
evaluate on an ongoing basis what portion of the non-U.S. cash, cash equivalents
and short-term investments is needed locally to execute our strategic plans and
what amount is available for repatriation back to the United States.

We expect our operating cash flows, cash and short-term investment balances,
together with our available capacity under our revolving credit facilities, to
be sufficient to meet our operating requirements, pay our purchase commitments
and Tax Reform Act transition tax payments and service our debt for the next
twelve months. Our Tax Reform Act transition tax payments are due in annual
installments of $50 million, $94 million, $126 million and $157 million through
2025. We also have purchase commitments of approximately $263 million which will
be paid over the next two years. See   Note 7   to our consolidated financial
statements for a description of our operating lease obligations.

Our ability to expand and grow our business in accordance with current plans,
make acquisitions, meet our long-term capital requirements beyond a twelve-month
period and execute our capital allocation framework will depend on many factors,
including the rate, if any, at which our cash flow increases, our ability and
willingness to pay for acquisitions with capital stock 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 and conditions
acceptable to us, if at all.

8 Free cash flow is not a measurement of financial performance prepared in accordance with GAAP. See "Non-GAAP Financial Measures" for more information.


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Critical Accounting Estimates


Management's discussion and analysis of our financial condition and results of
operations is based on our accompanying consolidated financial statements that
have been prepared in accordance with GAAP. We base our estimates on historical
experience, current trends and on various other assumptions that are believed to
be relevant at the time our consolidated financial statements are prepared. We
evaluate our estimates on a continuous basis. However, the actual amounts may
differ from the estimates used in the preparation of our consolidated financial
statements.

We believe the following accounting estimates are the most critical to aid in
fully understanding and evaluating our consolidated financial statements as they
require the most difficult, subjective or complex judgments, resulting from the
need to make estimates about the effect of matters that are inherently
uncertain. Changes to these estimates could have a material effect on our
results of operations and financial condition. Our significant accounting
policies are described in   Note 1   to our consolidated financial statements.

Revenue Recognition. Revenues related to fixed-price contracts for application
development and systems integration services, consulting or other technology
services are recognized as the service is performed using the cost to cost
method, under which the total value of revenues is recognized on the basis of
the percentage that each contract's total labor cost to date bears to the total
expected labor costs. Revenues related to fixed-price application maintenance,
testing and business process services are recognized using the cost to cost
method, if the right to invoice is not representative of the value being
delivered. The cost to cost method requires estimation of future costs, which is
updated as the project progresses to reflect the latest available information.
Such estimates and changes in estimates involve the use of judgment. The
cumulative impact of any revision in estimates is reflected in the financial
reporting period in which the change in estimate becomes known. Net changes in
estimates of such future costs and contract losses were immaterial to the
consolidated results of operations for the periods presented.

Income Taxes. Determining the consolidated provision for income tax expense,
deferred income tax assets (and related valuation allowance, if any) and
liabilities requires significant judgment. We are required to calculate and
provide for income taxes in each of the jurisdictions where we operate. Changes
in the geographic mix of income before taxes or estimated level of annual
pre-tax income can affect our overall effective income tax rate. In addition,
transactions between our affiliated entities are arranged in accordance with
applicable transfer pricing laws, regulations and relevant guidelines. As a
result, and due to the interpretive nature of certain aspects of these laws and
guidelines, we have pending applications for APAs before the taxing authorities
in some of our most significant jurisdictions. It could take years for the
relevant taxing authorities to negotiate and conclude these applications. The
consolidated provision for income taxes may change period to period based on
changes in facts and circumstances, such as settlements of income tax audits or
finalization of our applications for APAs.

Our provision for income taxes also includes the impact of reserves established
for uncertain income tax positions, as well as the related interest, which may
require us to apply judgment to complex issues and may require an extended
period of time to resolve. Although we believe we have adequately reserved for
our uncertain tax positions, no assurance can be given that the final outcome of
these matters will not differ from our recorded amounts. We adjust these
reserves in light of changing facts and circumstances, such as the closing of a
tax audit. To the extent that the final outcome of these matters differs from
the amounts recorded, such differences will impact the provision for income
taxes in the period in which such determination is made.

Business Combinations, Goodwill and Intangible Assets. Goodwill and intangible
assets, including indefinite-lived intangible assets, arise from the accounting
for business combinations. We account for business combinations using the
acquisition method which requires us to estimate the fair value of identifiable
assets acquired, liabilities assumed, including any contingent consideration,
and any noncontrolling interest in the acquiree to properly allocate purchase
price to the individual assets acquired and liabilities assumed. The allocation
of the purchase price utilizes estimates and assumptions in determining the fair
values of identifiable assets acquired and liabilities assumed, especially with
respect to intangible assets, including the timing and amount of forecasted
revenues and cash flows, anticipated growth rates, client attrition rates and
the discount rate reflecting the risk inherent in future cash flows.

We exercise judgment to allocate goodwill to the reporting units expected to
benefit from each business combination. Goodwill is tested for impairment at the
reporting unit level on an annual basis and between annual tests if an event
occurs or circumstances change that would more likely than not reduce the fair
value of a reporting unit below its carrying value. These events or
circumstances could include a significant change in the business climate,
regulatory environment, established business plans, operating performance
indicators or competition. Evaluation of goodwill for impairment requires
judgment, including the identification of reporting units, assignment of assets,
liabilities and goodwill to reporting units and determination of the fair value
of each reporting unit.
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We estimate the fair value of our reporting units using a combination of an
income approach, utilizing a discounted cash flow analysis, and a market
approach, using market multiples. Under the income approach, we estimate
projected future cash flows, the timing of such cash flows and long-term growth
rates, and determine the appropriate discount rate that reflects the risk
inherent in the projected future cash flows. The discount rate used is based on
a market participant weighted-average cost of capital and may be adjusted for
the relevant risk associated with business-specific characteristics and the
uncertainty related to the reporting unit's ability to execute on the projected
future cash flows. Under the market approach, we estimate fair value based on
market multiples of revenues and earnings derived from comparable
publicly-traded companies with characteristics similar to the reporting unit.
The estimates used to calculate the fair value of a reporting unit change from
year to year based on operating results, market conditions and other factors.
Changes in these estimates and assumptions could materially affect the
determination of fair value for each reporting unit.

Based on our most recent evaluation of goodwill performed during the fourth
quarter of 2021, we concluded that the goodwill in each of our reporting units
were not at risk of impairment. As of December 31, 2021, our goodwill balance
was $5,620 million.

We review our finite-lived assets, including our finite-lived intangible assets,
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset group may not be recoverable. The carrying amount
may not be recoverable when the sum of undiscounted expected future cash flows
is less than the carrying amount of such asset groups. The impairment loss is
determined as the amount by which the carrying amount of the asset group exceeds
its fair value. Assessing the fair value of asset groups involves significant
estimates and assumptions including estimation of future cash flows, the timing
of such cash flows and discount rates reflecting the risk inherent in future
cash flows.

Recently Adopted and New Accounting Pronouncements

See Note 1 to our consolidated financial statements for additional information.



Forward Looking Statements



The statements contained in this Annual Report on Form 10-K that are not
historical facts are forward-looking statements (within the meaning of Section
21E of the Exchange Act) that involve risks and uncertainties. Such
forward-looking statements may be identified by, among other things, the use of
forward-looking terminology such as "believe," "expect," "may," "could,"
"would," "plan," "intend," "estimate," "predict," "potential," "continue,"
"should" or "anticipate" 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 SEC, in press releases or in oral statements made by or with the
approval of one of our authorized executive officers. These forward-looking
statements, such as statements regarding our anticipated future revenues or
operating margin, earnings, capital expenditures, impacts to our business,
financial results and financial condition as a result of the COVID-19 pandemic,
the competitive marketplace for talent and future attrition trends, anticipated
effective income tax rate and income tax expense, liquidity, access to capital,
capital return strategy, investment strategies, cost management, plans and
objectives, including those related to our digital practice areas, investment in
our business, potential acquisitions, industry trends, client behaviors and
trends, the outcome of and costs associated with regulatory and litigation
matters, the appropriateness of the accrual related to the India Defined
Contribution Obligation and other statements regarding matters that are not
historical facts, are based on our current expectations, estimates and
projections, management's beliefs and certain assumptions made by management,
many of which, by their nature, are inherently uncertain and beyond our control.
Actual results, performance, achievements and outcomes could differ materially
from the results expressed in, or anticipated 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, including:

•economic and political conditions globally and in particular in the markets in which our clients and operations are concentrated;

•the continuing impact of the COVID-19 pandemic, or other future pandemics, on our business, results of operations, liquidity and financial condition;



•our ability to attract, train and retain skilled employees, including highly
skilled technical personnel to satisfy client demand and senior management to
lead our business globally;

•challenges related to growing our business organically as well as inorganically through acquisitions, and our ability to achieve our targeted growth rates;

•our ability to achieve our profitability goals and maintain our capital return strategy;


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•our ability to meet specified service levels or milestones required by certain of our contracts;



•intense and evolving competition and significant technological advances that
our service offerings must keep pace with in the rapidly changing markets we
compete in;

•legal, reputation and financial risks if we fail to protect client and/or our data from security breaches and/or cyber attacks;



•the effectiveness of our risk management, business continuity and disaster
recovery plans and the potential that our global delivery capabilities could be
impacted;

•restrictions on visas, in particular in the United States, United Kingdom and
EU, or immigration more generally or increased costs of such visas or the wages
we are required to pay employees on visas, which may affect our ability to
compete for and provide services to our clients;

•risks related to anti-outsourcing legislation, if adopted, and negative perceptions associated with offshore outsourcing, both of which could impair our ability to serve our clients;



•risks and costs related to complying with numerous and evolving legal and
regulatory requirements and client expectations in the many jurisdictions in
which we operate;

•potential changes in tax laws, or in their interpretation or enforcement,
failure by us to adapt our corporate structure and intercompany arrangements to
achieve global tax efficiencies or adverse outcomes of tax audits,
investigations or proceedings;

•potential exposure to litigation and legal claims in the conduct of our business; and

•the factors set forth in Part I, in the section entitled " Item 1A. Risk Factors " in this report.



You are advised to consult any further disclosures we make on related subjects
in the reports we file with the SEC, including this report in the sections
titled "  Part I, Item 1. Business  ," "  Part I, Item 1A. Risk Factors  " and
"  Part II, Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations  ." We undertake no obligation to update or revise any
forward-looking statements, whether as a result of new information, future
events or otherwise, except as may be required under applicable securities laws.
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