42 Notes to Consolidated Financial Statements 12. Segment Information COGNIZANT ANNUAL REPORT 2004 (1) Represents costs related to the wind-down of the Company’s development facility  in Limerick, Ireland. See Note 2. The costs associated with the closure of this facility have been disclosed separately since these costs were not allocated to a reportable segment in management’s internal reporting. During the fourth quarter of 2004, as a result of the completion of organizational changes, the Company changed its basis of segmenta- tion to industry segments from geographic segments. The Company’s reportable segments are: Financial Services, which includes customers providing banking/transaction processing, capital markets and insur- ance services; Healthcare, which includes healthcare providers and payers as well as life sciences customers; Manufacturing/Retail/ Logistics, which includes manufacturers, retailers, travel and other hospitality customers, as well as customers providing logistics servic- es; and Other, which is an aggregation of industry segments which, individually, are less than 10% of consolidated revenues and segment operating profit. The Other reportable segment includes media, infor- mation services, telecommunications and high technology operating segments. The Company’s sales managers, account executives, account managers and project teams, which were previously organ- ized based upon geographical segments, have been realigned in accordance with the specific industries they serve. In accordance with SFAS No. 131, “Disclosures about Segments of an Enterprise and Related Information,” prior periods segment disclo- sure has been restated to reflect industry segments for all periods presented. Revenues from external customers and segment operating profit, before unallocated expenses, for the Financial Services, Healthcare, Manufacturing/Retail/Logistics and Other reportable seg- ments for the years ended December 31, 2004, 2003 and 2002 are as follows: The Company entered into a Distribution Agreement, dated January 7, 2003, with IMS Health (the “Distribution Agreement”), that pro- vides, 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 of 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 connec- tion with the Distribution Agreement, the related indemnification liability could be material to the Company’s results of operations, financial position and cash flows. The Company’s chief operating decision maker evaluates the Company’s performance and allocates resources based on segment revenues and operating profit. Segment operating profit is defined as income from operations before unallocated costs. Expenses included in segment operating profit consist principally of direct selling and delivery costs as well as a per seat charge for use of the Company’s development centers. Certain expenses, such as general and adminis- trative, and a portion of depreciation and amortization, are not specif- ically allocated to specific segments as management does not believe it is practical to allocate such costs to individual segments because they are not directly attributable to any specific segment. Accordingly, these expenses are separately disclosed as “unallocated” and adjust- ed only against the total income from operations of the Company. Additionally, management has determined that it is not practical to allocate identifiable assets, by segment, since such assets are used interchangeably among the segments. 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 cover- age as to any future claim. The successful assertion of one or more large claims against the Company that exceed available insurance coverage or changes in the Company’s insurance policies, including premium increases or the imposition of large deductible or co-insur- ance requirements, would have a material adverse effect on the Company’s business, results of operations and financial condition. (in thousands, except share and per share data) Revenues: Financial services $290,432 $170,370 $ 81,404 Healthcare 116,370 78,420 55,434 Manufacturing/retail/logistics 105,328 64,064 48,788 Other 74,543 55,377 43,460 Total revenue $586,673 $368,231 $ 229,086 Segment operating profit: Financial services $104,074 $ 52,412 $ 27,473 Healthcare 47,294 31,912 22,582 Manufacturing/retail/logistics 38,842 24,569 21,522 Other 30,820 20,964 16,363 Total segment operating profit 221,030 129,857 87,940 Unallocated costs 101,915 57,545 42,742 Other (1) 1,495 -- -- Income from operations $117,620 $ 72,312 $ 45,198 2004 2003 2002