TEANECK: Net income for the third quarter increased to $9.7 million, or $0.45 per diluted share, from $6.1 million, or $0.30 per diluted share, in the third quarter of 2001. Net income for the second quarter of 2002 was $8.6 million, or $0.41 per diluted share. Operating margin for the quarter was 19.8%, compared to 19.7% in the second quarter of 2002. Gross margin was 46.2%, compared with 46.0% in the second quarter of 2002, and 49.2% in the year ago quarter. The Company's higher than expected revenue performance increased bonus accruals during the quarter, affecting gross margins. "Once again, we exceeded our own expectations as the trend to move work offshore builds increasing momentum. These strong results clearly reflect the increasing comfort level of new and existing customers with Cognizant's market-leading offshore outsourcing service offerings," said Kumar Mahadeva, Chairman and Chief Executive Officer. "Furthermore, we continue to experience high client satisfaction and retention as roughly 88 percent of our third quarter revenue was attributable to customers employing our services for more than one year. Application management revenue increased 14% sequentially and 47% year over year. Development revenue improved as well, exhibiting our ability to effectively cross-sell to existing customers. We signed six new customers this quarter, the majority of which were blue chip companies with the potential for large revenue outlays. Looking out, our new deal pipeline remains robust." "The strength of Cognizant's business model is evidenced by the continued solid state of our balance sheet, as we generated an additional $19 million in cash flow this quarter, raising our cash position to $123 million," said Gordon Coburn, Chief Financial Officer. "This is in part attributable to our ability to lower DSO, including unbilled receivables, to 59 days, from 64 at the end of June. Financial Services customers represented 35% of our revenue mix compared to 30% last quarter as we continue to receive strong recognition from large insurance companies, transaction processors and commercial banks. Given our client demands, we accelerated our hiring and added close to 1,000 consultants this quarter, bringing our total headcount to 5,200."