Convergys Corporation's Earnings up 43 Percent to $0.30 per Share in the Third Quarter.CINCINNATI Cincinnati (sĭnsənăt`ē, –năt`ə), city (1990 pop. 364,040), seat of Hamilton co., extreme SW Ohio, on the Ohio River opposite Newport and Covington, Ky.; inc. as a city 1819. -- Convergys Convergys (NYSE: CVG) is a multi-national corporation that provides management consulting services, outsourced billing, customer care and employee care, and transaction management software. Corporation (NYSE NYSE See: New York Stock Exchange :CVG CVG Convergys Corp CVG Corporación Venezolana de Guayana CVG Clear Vertical Grain (woodworking) CVG Carrier Group CVG Corporacion Venezolana de Guyana CVG Comprehensive Video Group (South Hackensack, NJ, USA) ) IN THE THIRD QUARTER: --Customer Management Group significantly improved operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: performance to 8.4 percent from 1.7 percent in the second quarter. --Information Management Group continued its strong performance with 4 percent revenue growth and improved operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. margin by 600 basis points from the prior year to 18.1 percent. --Employee Care signed HR BPO BPO Business Process Outsourcing BPO Benevolent & Protective Order (of Elks of the USA) BPO Benzoyl Peroxide BPO Business Process Optimization BPO Broker Price Opinions BPO Buffalo Philharmonic Orchestra agreements with two new clients, Whirlpool whirlpool, revolving current in an ocean, river, or lake. It may be caused by the configuration of the shore, irregularities in the bottom of the body of water, the meeting of opposing currents or tides, or the action of the wind upon the water. and a medical device firm. --Convergys delivered strong improvement in year-to-date Year-to-date (YTD) The period beginning at the start of the calendar year up to the current date. and third quarter free cash flow. Convergys Corporation (NYSE:CVG), a global leader in providing customer care, human resources The fancy word for "people." The human resources department within an organization, years ago known as the "personnel department," manages the administrative aspects of the employees. , and billing services, announced today its financial results for the third quarter of 2005. Total revenues increased to $644.8 million compared to $639.9 million reported in the third quarter of 2004 reflecting growth from the Information Management Group. Operating income of $67.0 million increased 25 percent from $53.6 million in the prior year, while operating margin increased to 10.4 percent versus 8.4 percent. The increase in operating income reflects a continuation of IMG's strong operating performance resulting from a combination of revenue growth and the fourth quarter 2004 restructuring restructuring - The transformation from one representation form to another at the same relative abstraction level, while preserving the subject system's external behaviour (functionality and semantics). actions. Improvement in CMG's cost structure also contributed to the increase in operating income. Net income of $42.4 million was up 41 percent versus $30.1 million in the third quarter of 2004. Earnings per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share increased 43 percent to $0.30 compared to $0.21 in the third quarter of 2004. "I am very pleased with our earnings performance this quarter. Our third quarter results put us on track to deliver our earnings guidance in 2005," said Jim Orr Orr , Robert Gordon Called "Bobby." Born 1948. Canadian-born hockey player. He led the National Hockey League in scoring in 1970 and 1975 and was the first defenseman to score more than 100 points in a season. Noun 1. , Chairman and CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. of Convergys. "Previously we made commitments to improve performance at both IMG IMG International medical graduate, see there and CMG CMG Coastal & Marine Geology (USGS) CMG Chipotle Mexican Grill, Inc. (stock symbol) CMG Companion (of the Order Of) St Michael and St George CMG Computer Measurement Group . We have delivered at IMG with our third consecutive quarter of revenue growth and strong operating margins. With CMG's strong operating improvement from the second quarter, we have begun to deliver on our commitment at CMG as well. Importantly, we believe there are opportunities for even further improvement." Orr continued, "I also want to highlight the important management change Convergys announced this quarter. Dave Dougherty Dougherty may refer to:
The officer of a firm responsible for day-to-day management, usually the president or an executive vice-president. . Dave brings to this new role a strong track record of success at Convergys. In his new role, Dave will focus on driving improved profitability and growth." Operating Performance by Segment Customer Management Group (CMG) - Customer Care and Employee Care Convergys CMG's revenues of $454.1 million were relatively flat compared to prior year. In large part, this reflects increased volume from several customer care clients, and additional revenues associated with a price increase negotiated during the quarter with a customer care client, offset by lower spending from Cingular. Convergys CMG's third quarter 2005 operating income and operating margin were $38.3 million and 8.4 percent, respectively. This compares to prior year operating income and operating margin of $35.7 million and 7.8 percent. The 7 percent increase in operating income reflects operational and profit improvements with several customer care and employee care client programs and savings realized through recent restructuring initiatives. Higher operating expenses Operating expenses The amount paid for asset maintenance or the cost of doing business, excluding depreciation. Earnings are distributed after operating expenses are deducted. caused by the impact of a weakened weak·en tr. & intr.v. weak·ened, weak·en·ing, weak·ens To make or become weak or weaker. weak  en·er n. U.S. versus Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin"loonie dollar - the basic monetary unit in many countries; equal to 100 cents partially offset these items. Information Management Group (IMG) Convergys IMG's revenues increased 4 percent to $190.7 million in the third quarter of 2005 from $183.7 million in the same period last year. Professional and consulting revenues of $69.1 million increased 46 percent compared to the prior year. This increase was mainly due to increased spending from IMG's two largest wireless clients. Data processing data processing or information processing, operations (e.g., handling, merging, sorting, and computing) performed upon data in accordance with strictly defined procedures, such as recording and summarizing the financial transactions of a revenues of $80.4 million decreased 19 percent from the prior year. This decrease is due in large part to the changing dynamics of the billing relationship with Cingular as it migrates subscribers from outsourced to managed service environments. License and other revenues of $41.2 million increased 9 percent from the third quarter of 2004. The increase reflects revenues associated with a license arrangement with an existing Latin Lat·in n. 1. a. The Indo-European language of the ancient Latins and Romans and the most important cultural language of western Europe until the end of the 17th century. b. American American, river, 30 mi (48 km) long, rising in N central Calif. in the Sierra Nevada and flowing SW into the Sacramento River at Sacramento. The discovery of gold at Sutter's Mill (see Sutter, John Augustus) along the river in 1848 led to the California gold rush of client. Convergys IMG's operating income increased 55 percent from the third quarter of 2004 to $34.5 million. Operating margin increased to 18.1 percent versus 12.1 percent in the prior year. The significant improvement in operating margin reflects both revenue growth for IMG and savings realized through the 2004 restructuring initiatives. Other Items --Convergys incurred $6.4 million in non-cash stock compensation expense during the quarter. This compares to $4.6 million in the prior year. --The cellular partnerships contributed pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta equity earnings of $7.4 million. This compares to a loss of $600,000 in the prior year. --Interest expense was $5.9 million versus $3.0 million in the prior year resulting from a higher debt balance and higher interest rates. --Cash flow from operations for the third quarter of 2005 was $39.8 million. Free cash flow of $58.6 million increased by $11.8 million from the prior year. Convergys reduced its accounts receivable accounts receivable n. the amounts of money due or owed to a business or professional by customers or clients. Generally, accounts receivable refers to the total amount due and is considered in calculating the value of a business or the business' problems in paying securitization Securitization The process of creating a financial instrument by combining other financial assets and then marketing them to investors. Notes: Mortgage backed securities are a perfect example of securitization. May also be spelled as "securitisation. by $50 million, which negatively impacted operating cash flow Operating cash flow Earnings before depreciation minus taxes. Measures the cash generated from operations, not counting capital spending or working capital requirements. , but had no impact on free cash flow. --Days sales outstanding (DSO See CSO. ) declined to 74 days at September September: see month. 30, 2005. This compares to 76 days at June June: see month. 30, 2005. --During the second quarter, Convergys repurchased 559,000 shares at a cost of $8.0 million and an average price of $14.28 per share. Business Outlook The following forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. reflect Convergys' expectations as of October October: see month. 20, 2005. Given the various risk factors discussed below, actual results may differ materially. The company intends to continue its practice of not updating forward-looking statements until its next quarterly results announcement, other than in publicly available statements. Financial Guidance CMG's revenue in the fourth quarter will grow approximately 5 percent from the third quarter, and operating income will be roughly in-line In-line Used in the context of general equities. (1) An order or market in a specific security within the inside market; 2) any announcement (earnings) that adheres closely to Wall Street analysts' expectations. with the third quarter. Included in this guidance is an expectation that we will incur To become subject to and liable for; to have liabilities imposed by act or operation of law. Expenses are incurred, for example, when the legal obligation to pay them arises. An individual incurs a liability when a money judgment is rendered against him or her by a court. $8 million in severance The act of dividing, or the state of being divided. The term severance has unique meanings in different branches of the law. Courts use the term in both civil and criminal litigation in two ways: first, when dividing a lawsuit into two or more parts, and second, when expense. These actions, when completed in early 2006, will save Convergys an additional $15 million per year. Convergys is continuing to pursue further improvements to enhance its performance and operations, and streamline streamline, path of a fluid flowing steadily and without appreciable turbulence. A body is said to be streamlined if its shape offers the least possible resistance to a current of air, water, or other fluid. its cost structure. IMG's revenue and operating income in the fourth quarter will be roughly comparable to the previous three quarters. For 2005, EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. is expected to be approximately $1.00. This includes $8.9 million in second quarter severance expense and an expected fourth quarter severance expense of approximately $8 million. It excludes the impact of any potential actions taken related to the American Jobs Creation Act. Convergys expects it will continue its earnings growth in 2006. For 2006, Convergys is comfortable that it will meet or exceed the mean EPS estimate among analysts according to according to prep. 1. As stated or indicated by; on the authority of: according to historians. 2. In keeping with: according to instructions. 3. First Call of $1.07. ABOUT CONVERGYS Convergys Corporation (NYSE:CVG) is a global leader in providing customer care, human resources, and billing services. Convergys combines specialized spe·cial·ize v. spe·cial·ized, spe·cial·iz·ing, spe·cial·iz·es v.intr. 1. To pursue a special activity, occupation, or field of study. 2. knowledge and expertise with solid execution to deliver outsourced solutions, consulting services Noun 1. consulting service - service provided by a professional advisor (e.g., a lawyer or doctor or CPA etc.) service - work done by one person or group that benefits another; "budget separately for goods and services" , and software support. Clients in more than 60 countries speaking nearly 30 languages depend on Convergys to manage the increasing complexity and cost of caring for customers and employees. Convergys serves the world's leading companies in many industries including communications, financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. , technology, and consumer products. Convergys is a member of the S&P 500 and a Fortune Most Admired ad·mire v. ad·mired, ad·mir·ing, ad·mires v.tr. 1. To regard with pleasure, wonder, and approval. 2. To have a high opinion of; esteem or respect. 3. Company. Headquartered in Cincinnati, Ohio “Cincinnati” redirects here. For other uses, see Cincinnati (disambiguation). Cincinnati is a city in the U.S. state of Ohio and the county seat of Hamilton County. , Convergys has more than 62,000 employees in 68 customer contact centers, three data centers, and other facilities in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , Canada Canada (kăn`ədə), independent nation (2001 pop. 30,007,094), 3,851,787 sq mi (9,976,128 sq km), N North America. Canada occupies all of North America N of the United States (and E of Alaska) except for Greenland and the French islands of , Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , Europe Europe (y  r`əp), 6th largest continent, c.4,000,000 sq mi (10,360,000 sq km) including adjacent islands (1992 est. pop. 512,000,000). ,
the Middle East, and Asia. For more information visit www.convergys.com
(Convergys and the Convergys logo are registered trademarks of Convergys Corporation.) NON-GAAP MEASURES: This news release contains non-GAAP financial measures, including free cash flow, pro forma As a matter of form or for the sake of form. Used to describe accounting, financial, and other statements or conclusions based upon assumed or anticipated facts. The phrase pro forma operating income, pro forma net income, and pro forma earnings pro forma earnings Income not necessarily calculated in accordance with generally accepted accounting principles. For example, a company might report pro forma earnings that exclude depreciation expense and nonrecurring expenses such as restructuring costs. per share that are not prepared in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). . A reconciliation of these non-GAAP measures to the comparable GAAP measures is included in the attached financial tables. These non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. They are presented because Convergys' management uses this information when evaluating current results of operations and cash flow, and we believe that this information provides the users of the financial statements with an additional and useful comparison of Convergys' current results of operations and cash flows with past and future periods. CONFERENCE CALL NOTE: Convergys will host a one-hour conference call on Thursday Thursday: see week. , October 20, at 10:00 AM, EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT , to discuss the company's third quarter results. It will feature Jim Orr, Chairman and CEO, and Earl Shanks
The shanks and tattlers are wading bird species in a number of genera characterised by a medium length bill and long, often brightly coloured legs. , CFO See Chief Financial Officer. . This call will be carried live (with scheduled repeats) on the Internet Internet Publicly accessible computer network connecting many smaller networks from around the world. It grew out of a U.S. Defense Department program called ARPANET (Advanced Research Projects Agency Network), established in 1969 with connections between computers at the . A link to the conference call is available at www.convergys.com "SAFE HARBOR Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " NOTE: Information included in this news release may contain forward-looking statements that involve potential risks for Convergys Corporation. The future results of Convergys could differ materially from those discussed. Factors that could cause or contribute to such differences include, but are not limited to, the loss of a significant client or significant business from a client, difficulties in completing a contract or implementing its provisions, difficulties in completing or implementing an acquisition, terrorist activities and the United States' response, changes in the legal and regulatory reg·u·late tr.v. reg·u·lat·ed, reg·u·lat·ing, reg·u·lates 1. To control or direct according to rule, principle, or law. 2. environment in which Convergys and its clients operate, and competitive and other factors disclosed in the Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December December: see month. 31, 2004, and subsequent filings with the SEC by Convergys Corporation. The company has no current intention of updating any forward-looking statements that may be included herein, other than in publicly available statements.
Convergys Corporation
Revenues, Net Income and Earnings Per Common Share
In Millions Except Per Share Amounts
(Unaudited)
Third Quarter Nine Months
------------------------ ------------------------------
Change Change
---------- -----------
2005 2004 Amount % 2005 2004 Amount %
------ ------ ---------- -------- -------- -----------
Revenues:
Customer
Management
Group $454.1 $456.2 $(2.1) - $1,331.3 $1,264.9 $ 66.4 5
Information
Management
Group 190.7 183.7 7.0 4 581.2 550.6 30.6 6
------ ------ ----- -------- -------- ------
Total $644.8 $639.9 $ 4.9 1 $1,912.5 $1,815.5 $ 97.0 5
Operating
Income
(Loss):
Customer
Management
Group $ 38.3 $ 35.7 $ 2.6 7 $ 66.9 $ 96.9 $(30.0)(31)
Information
Management
Group 34.5 22.3 12.2 55 104.3 67.7 36.6 54
Corporate
and Other (5.8) (4.4) (1.4) 32 (14.3) (9.9) (4.4) 44
------ ------ ----- -------- -------- ------
Total $ 67.0 $ 53.6 $13.4 25 $ 156.9 $ 154.7 $ 2.2 1
Net Income $ 42.4 $ 30.1 $12.3 41 $ 99.2 $ 91.3 $ 7.9 9
Earnings Per
Common
Share
- Basic $ 0.30 $ 0.21 $0.09 43 $ 0.71 $ 0.64 $ 0.07 11
- Diluted $ 0.30 $ 0.21 $0.09 43 $ 0.69 $ 0.63 $ 0.06 10
Weighted
Average
Common
Shares
Outstanding
- Basic 139.2 140.6 (1.4) (1) 140.3 141.6 (1.3) (1)
- Diluted 142.2 144.9 (2.7) (2) 143.0 145.5 (2.5) (2)
The above amounts reflect the Company's results of operations, as
reported under U.S. Generally Accepted Accounting Principles (U.S.
GAAP), that will be presented in the Convergys 10-Q for the quarterly
period ended September 30, 2005.
Convergys Corporation
Consolidated Statements of Income
In Millions Except Per Share Amounts
(Unaudited)
For the For the
Three Months Nine Months
Ended Sept. 30, % Ended Sept. 30, %
2005 2004 Change 2005 2004 Change
------ ------ ------ -------- -------- ------
Revenues:
Customer
Management
Group
Communications $225.8 $255.1 (11) $ 675.4 $ 730.0 (7)
Technology 40.0 43.6 (8) 115.8 123.8 (6)
Financial
Services 60.4 52.4 15 191.4 133.6 43
Other 127.9 105.1 22 348.7 277.5 26
------ ------ -------- --------
Total CMG
Revenues 454.1 456.2 - 1,331.3 1,264.9 5
Information
Management
Group
Data Processing 80.4 98.8 (19) 254.8 292.6 (13)
Professional
and Consulting 69.1 47.2 46 202.3 137.0 48
License and
Other 41.2 37.7 9 124.1 121.0 -
------ ------ -------- --------
Total IMG
Revenues 190.7 183.7 4 581.2 550.6 6
------ ------ -------- --------
Total Revenues 644.8 639.9 1 1,912.5 1,815.5 5
------ ------ -------- --------
Costs and
Expenses:
Cost of
Providing
Services and
Products Sold 391.3 394.9 (1) 1,183.3 1,123.6 5
Selling, General
and
Administrative 130.1 132.6 (2) 396.0 374.8 6
Research and
Development
Costs 20.0 21.3 (6) 57.3 58.9 (3)
Depreciation 31.5 31.6 - 93.8 87.6 7
Amortization 4.9 5.9 (17) 16.3 15.9 3
Restructuring
Charges - - - 8.9 - -
------ ------ -------- --------
Total Costs
and Expenses 577.8 586.3 (1) 1,755.6 1,660.8 6
------ ------ -------- --------
Operating Income 67.0 53.6 25 156.9 154.7 1
Equity in
Earnings
(Losses) of
Cellular
Partnerships 7.4 (0.6) - 17.0 1.0 -
Other Expense,
net (0.1) (2.4) (96) (1.1) (4.6) (76)
Interest Expense (5.9) (3.0) 97 (15.6) (6.7) 133
------ ------ -------- --------
Income Before
Income Taxes 68.4 47.6 44 157.2 144.4 9
Income Taxes 26.0 17.5 49 58.0 53.1 9
------ ------ -------- --------
Net Income $ 42.4 $ 30.1 41 $ 99.2 $ 91.3 9
====== ====== ======== ========
Earnings Per
Common Share
-----------------
Basic $ 0.30 $ 0.21 43 $ 0.71 $ 0.64 11
====== ====== ======== ========
Diluted $ 0.30 $ 0.21 43 $ 0.69 $ 0.63 10
====== ====== ======== ========
Weighted Average
Common Shares
Outstanding
-----------------
Basic 139.2 140.6 140.3 141.6
Diluted 142.2 144.9 143.0 145.5
Market Price Per
Share
-----------------
High $15.30 $15.38 $ 15.76 $ 19.96
Low $13.68 $12.30 $ 12.57 $ 12.30
Close $14.37 $13.43 $ 14.37 $ 13.43
The above amounts reflect the Company's results of operations, as
reported under U.S. Generally Accepted Accounting Principles (U.S.
GAAP), that will be presented in the Convergys 10-Q for the quarterly
period ended September 30, 2005.
Convergys Corporation
Consolidated Balance Sheets
In Millions
(Unaudited)
Sept. 30, Dec. 31,
2005 2004
--------- ---------
Assets
------
Cash and Cash Equivalents $ 49.3 $ 58.4
Receivables - Net 521.5 447.3
Other Current Assets 86.7 87.1
Property and Equipment - Net 397.7 416.6
Other Assets 1,214.9 1,198.7
--------- ---------
Total Assets $2,270.1 $2,208.1
========= =========
Liabilities and Shareholders' Equity
------------------------------------
Debt Maturing in One Year $ 96.1 $ 49.5
Other Current Liabilities 464.5 527.9
Other Liabilities 52.6 43.2
Long-Term Debt 298.9 302.2
Common Shareholders' Equity 1,358.0 1,285.3
--------- ---------
Total Liabilities and Shareholders' Equity $2,270.1 $2,208.1
========= =========
Convergys Corporation
Overview of Cash Flows
In Millions
(Unaudited)
Summarized Statement of Cash Flows
------------------------------------------------------------------
------------------ ------------------
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
------------------ ------------------
2005 2004 2005 2004
-------- -------- -------- --------
Cash provided by operating
activities $ 39.8 $ 87.6 $ 81.8 $ 188.6
Cash used in investing
activities (41.7) (43.2) (93.1) (298.7)
Cash provided by financing
activities (7.4) (50.6) 2.2 122.9
-------- -------- -------- --------
Net increase (decrease)
in cash $ (9.3) $ (6.2) $ (9.1) $ 12.8
======== ======== ======== ========
Reconciliation of Operating Cash Flows to Free Cash Flows
----------------------------------------------------------------------
------------------ ------------------
Three Months Ended Nine Months Ended
Sept. 30, Sept. 30,
------------------ ------------------
2005 2004 2005 2004
-------- -------- -------- --------
Cash provided by operating
activities $ 39.8 $ 87.6 $ 81.8 $ 188.6
Decrease (increase) in
securitization 50.0 - 100.0 (15.0)
Capital expenditures (31.2) (40.8) (80.8) (112.6)
-------- -------- -------- --------
Free cash flow $ 58.6 $ 46.8 $ 101.0 $ 61.0
======== ======== ======== ========
The schedule above provides a reconciliation of the Company's cash
flow from operations as reported under U.S. Generally Accepted
Accounting Principles (U.S. GAAP), to free cash flow, which is a non-
GAAP measure. Free cash flow is defined as cash flow from operations
less the change in the balance of the accounts receivable
securitization and capital expenditures. Free cash flow is presented
as an alternative measure of the Company's ability to generate cash
flow.
Convergys Corporation
Customer Management Group
Operating Segment Data
In Millions
(Unaudited)
For the For the
Three Months Nine Months
Ended Sept. 30, % Ended Sept. 30, %
2005 2004 Change 2005 2004 Change
------ ------ ------ -------- -------- ------
Revenues:
Communications $225.8 $255.1 (11) $ 675.4 $ 730.0 (7)
Technology 40.0 43.6 (8) 115.8 123.8 (6)
Financial
Services 60.4 52.4 15 191.4 133.6 43
Other 127.9 105.1 22 348.7 277.5 26
------ ------ -------- --------
Total CMG
Revenues 454.1 456.2 - 1,331.3 1,264.9 5
Costs and Expenses:
Cost of
Providing
Services and
Products Sold 292.0 296.3 (1) 880.7 828.8 6
Selling,
General and
Administrative 97.4 97.3 - 298.5 267.7 12
Research and
Development
Costs 3.2 3.1 3 7.6 7.3 4
Depreciation 19.9 20.8 (4) 59.5 56.2 6
Amortization 3.3 3.0 10 9.8 8.0 23
Restructuring
Charges - - - 8.3 - -
------ ------ -------- --------
Total
Costs
and
Expenses 415.8 420.5 (1) 1,264.4 1,168.0 8
------ ------ -------- --------
Operating
Income $ 38.3 $ 35.7 7 $ 66.9 $ 96.9 (31)
====== ====== ======== ========
The operating segment data for the Customer Management Group (CMG)
shown above reflects the detailed revenue and expense data for CMG, as
reported under U.S. GAAP, that will be presented in the Convergys 10-Q
for the quarterly period ended September 30, 2005.
Convergys Corporation
Information Management Group
Operating Segment Data
In Millions
(Unaudited)
For the For then
Three Months Nine Months
Ended Sept. 30, % Ended Sept. 30, %
2005 2004 Change 2005 2004 Change
------ ------ ------ ------ ------ ------
Revenues:
Data Processing $ 80.4 $ 98.8 (19) $254.8 $292.6 (13)
Professional and
Consulting 69.1 47.2 46 202.3 137.0 48
License and Other 41.2 37.7 9 124.1 121.0 3
------ ------ ------ ------
Total IMG
Revenues 190.7 183.7 4 581.2 550.6 6
Costs and Expenses:
Cost of Providing
Services and
Products Sold 99.3 98.9 - 302.5 295.6 2
Selling, General
and Administrative 30.4 32.6 (7) 94.1 103.7 (9)
Research and
Development Costs 16.8 18.6 (10) 49.7 51.5 (3)
Depreciation 8.1 8.4 (4) 24.1 24.2 -
Amortization 1.6 2.9 (45) 6.5 7.9 (18)
------ ------ ------ ------
Total Costs
and Expenses 156.2 161.4 (3) 476.9 482.9 (1)
------ ------ ------ ------
Operating Income $ 34.5 $ 22.3 55 $104.3 $ 67.7 54
====== ====== ====== ======
The operating segment data for the Information Management Group (IMG)
shown above reflects the detailed revenue and expense data for IMG, as
reported under U.S. GAAP, that will be presented in the Convergys 10-Q
for the quarterly period ended September 30, 2005. Additionally, total
international revenues consisted of $41.8 and $35.3 for the three
months ended September 30, 2005 and September 30, 2004, respectively.
Total international revenues consisted of $118.2 and $116.7 for the
nine months ended September 30, 2005 and September 30, 2004,
respectively.
Convergys Corporation
Reconciliation of Pro Forma Operating Results
(In Millions Except Per Share Amounts)
Consolidated Income
Operating (Loss) Income Tax Net
Income Before (Expense)/ Income Diluted
(Loss) Tax Benefit (Loss) EPS
------------ ------- ----------- ------- -------
Third Quarter 2005
------------------
Results as reported
under U.S. GAAP $ 67.0 $ 68.4 $ (26.0) $ 42.4 $ 0.30
Less:
Reconciling items - - - - -
------------ ------- ----------- ------- -------
Pro forma results
(a non-GAAP measure) $ 67.0 $ 68.4 $ (26.0) $ 42.4 $ 0.30
============ ======= =========== ======= =======
Year to Date 2005
-----------------
Results as reported
under U.S. GAAP $ 156.9 $157.2 $ (58.0) $ 99.2 $ 0.69
Less:
Reconciling items(a) (8.9) (8.9) 3.4 (5.5) (0.04)
------------ ------- ----------- ------- -------
Pro forma results
(a non-GAAP measure) $ 165.8 $166.1 $ (61.4) $104.7 $ 0.73
============ ======= =========== ======= =======
Third Quarter 2004
------------------
Results as reported
under U.S. GAAP $ 53.6 $ 47.6 $ (17.5) $ 30.1 $ 0.21
Less:
Reconciling items - - - - -
------------ ------- ----------- ------- -------
Pro forma results
(a non-GAAP measure) $ 53.6 $ 47.6 $ (17.5) $ 30.1 $ 0.21
============ ======= =========== ======= =======
Year to Date 2004
-----------------
Results as reported
under U.S. GAAP $ 154.7 $144.4 $ (53.1) $ 91.3 $ 0.63
Less:
Reconciling items - - - - -
------------ ------- ----------- ------- -------
Pro forma results
(a non-GAAP measure) $ 154.7 $144.4 $ (53.1) $ 91.3 $ 0.63
============ ======= =========== ======= =======
The schedule above provides a reconciliation of the Company's results
of operations, as reported under U.S. Generally Accepted Accounting
Principles (U.S. GAAP), to the pro forma results of operations (non-
U.S. GAAP).
(a) Reflects the net restructuring charge of $8.9 ($5.5 net of tax)
recorded in the second quarter of 2005.
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