Convergys Corporation Delivers Strong Operating Performance and Important Wins in the Fourth 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) ): --Convergys' 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. on a GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). basis more than doubled over the prior year, up 29 percent excluding restructuring charges restructuring charge The expense of reorganizing a company's operations. A restructuring charge is an infrequent expense that generally results from asset writedowns or facility closings. . --Customer Management Group improved its operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: to 7.8 percent from 7.3 percent in the prior year. Excluding 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 , operating margin improved to 9.3 percent from 7.1 percent. --Employee Care signed a $1.1 billion contract with DuPont Dupont, DuPont, Du Pont, or du Pont may refer to: Companies
BPO Benevolent & Protective Order (of Elks of the USA) BPO Benzoyl Peroxide BPO Business Process Optimization BPO Broker Price Opinions BPO Buffalo Philharmonic Orchestra agreement in the market today. --Information Management Group improved its operating margin to 20.7 percent, its highest level in three years, and announced wins with four large clients. --Convergys delivered very strong fourth quarter and full year free cash flow, almost doubling prior year levels. 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 fourth quarter of 2005. Revenues of $669.6 million were relatively flat compared to the fourth quarter of 2004. Revenues were up 7 percent due to growth in both 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 and IMG IMG International medical graduate, see there , excluding the impact of lower revenues from Cingular. GAAP operating income more than doubled to $66.7 million compared with $30.8 million in the prior year. Excluding restructuring charges in both years, operating income increased 29 percent to $79.0 million versus $61.2 million in the fourth quarter of 2004. The improvement resulted from successful implementation of 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). initiatives in both IMG and CMG. Net income increased 16 percent to $23.4 million or $0.16 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 versus $20.2 million or $0.14 per diluted share in the prior year. In addition to the improvement in core operating performance from both segments, the increase was driven by the impact of lower year-over-year restructuring expenses. Convergys recorded a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta restructuring charge of $12.3 million ($7.8 million after tax or $0.05 per diluted share) in the fourth quarter of 2005 versus $30.4 million ($21.0 million after tax or $0.14 per diluted share) in the fourth quarter of 2004. The operating improvements were partially offset by higher year-over-year income taxes. Income taxes included $11.4 million in additional tax expense ($0.08 per diluted share) resulting from the repatriation Repatriation The process of converting a foreign currency into the currency of one's own country. Notes: If you are American, converting British Pounds back to U.S. dollars is an example of repatriation. of foreign cash, inclusive of inclusive of prep. Taking into consideration or account; including. dividends distributed under the 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 Jobs Creation Act of 2004. Also impacting earnings was a pre-tax equity loss of $4.5 from Convergys' investments in the cellular partnerships versus pre-tax equity earnings of $1.0 million in the prior year. "Despite Sprint Nextel's decision last week to migrate its subscribers from the legacy Precedent A court decision that is cited as an example or analogy to resolve similar questions of law in later cases. The Anglo-American common-law tradition is built on the doctrine of Stare Decisis ("stand by decided 2000(R) billing system, we have confidence that we can deliver continued revenue and earnings growth across Convergys," 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. "I am encouraged by our improved operating performance and the continuing diversification Diversification A risk management technique that mixes a wide variety of investments within a portfolio. It is designed to minimize the impact of any one security on overall portfolio performance. Notes: Diversification is possibly the greatest way to reduce the risk. of our revenue sources. We anticipate strengthening margins as we begin to realize the annual effect of organizational changes made during 2005. Additionally, we have built a strong backlog Backlog The total value of sales orders waiting to be fulfilled. Notes: This figure is used mainly in the manufacturing industry. Increases or decreases in a company's backlog indicate the future direction of sales and earnings. , including the important wins we announced in the fourth quarter, which positions Convergys well for continued growth." For the full year 2005, Convergys' revenues of $2,582.1 million were up 4 percent. Growth was balanced between both IMG and CMG. Operating income in 2005 was up 21 percent. Excluding restructuring charges in both years, operating income was up 13 percent. IMG delivered strong operating performance. CMG's operating performance improved in the second half of 2005 as both Customer Care and Employee Care results improved. On a GAAP basis, diluted 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. for the year was up 12 percent to $0.86. Operating Performance by Segment Customer Management Group (CMG) - Customer Care and Employee Care CMG's revenues of $472.7 million were relatively flat compared to prior year. Reduced revenue from Cingular was offset by growth from several existing clients and revenues generated from recently implemented customer care and employee care client programs including the State of Texas. CMG's fourth quarter 2005 GAAP operating income and operating margin were $37.0 million and 7.8 percent, respectively, compared with $34.5 and 7.3 percent in the prior year. Excluding restructuring charges, CMG's operating income increased 30 percent to $43.8 million versus $33.6 million in the prior year, while operating margin increased to 9.3 percent from 7.1 percent in the prior year. This reflects operational improvements with several client programs and savings realized through 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 improvements. Information Management Group (IMG) IMG's revenues were relatively flat at $196.9 million in the fourth quarter of 2005 versus $197.9 million in the same period last year. Professional and consulting revenues of $65.3 million increased 20 percent compared to the prior year. Increased spending by IMG's largest wireless client as well as a large 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 client largely drove this increase. 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 $85.7 million decreased 12 percent from the prior year, primarily reflecting the changing billing relationship with Cingular as it migrates subscribers from outsourced Outsourced is a modern day comedy of cross-cultural conflict and romance, directed by John Jeffcoat, released in 2007. Synopsis Todd Anderson (Josh Hamilton) spends his days managing a customer call center for American Novelty Products in Seattle, until his job, to managed service environments. License and other revenues of $45.9 million were in line with prior year. IMG's GAAP fourth quarter 2005 operating income was $40.8 million versus $5.3 million in the prior year. Excluding the $25.8 million restructuring charge recorded in the fourth quarter of 2004, operating income increased 31 percent from the prior year, while operating margin increased to 20.7 percent from 15.7 percent in the prior year. This reflects savings realized through the restructuring initiatives as well as other operational improvements. Other Items --Interest expense was $5.6 million versus $3.6 million in the prior year resulting from a higher debt balance and higher interest rates. --Convergys recorded $7.0 million in non-cash stock compensation expense during the quarter. This includes $1.3 million incurred with the fourth quarter 2005 restructuring. During the fourth quarter of 2004, these amounts were $7.8 million and $3.3 million, respectively. --Cash flow from operations for the fourth quarter of 2005 was $155 million. Free cash flow of $110 million in the fourth quarter increased by $57 million from the prior year. For the full year 2005, cash flow from operations Cash flow from operations A firm's net cash inflow resulting directly from its regular operations (disregarding extraordinary items such as the sale of fixed assets or transaction costs associated with issuing securities), calculated as the sum of net income plus noncash expenses was $237 million. Free cash flow for 2005 of $211 million increased by 85 percent from 2004. This is the eighth consecutive year Convergys has generated positive free cash flow. --Days sales outstanding (DSO See CSO. ) declined to 72 days at December December: see month. 31, 2005. This compares to 74 days at September September: see month. 30, 2005. --During the fourth quarter, Convergys repurchased 391,000 shares at a cost of $6.3 million and an average price of $16.06 per share. During 2005, Convergys repurchased a total of 3,643,000 shares at an average price of $13.59. Financial Guidance --For 2006, GAAP EPS is expected to be at least $1.07 per share. Excluding non-cash stock compensation expense, EPS is expected to be at least $1.20. --For the first quarter 2006, Convergys' CMG revenue is expected to be up over 5 percent and operating margin will be up from the prior year levels. --For the first quarter 2006, Convergys' IMG revenue will be relatively flat and operating margin will be down from the prior year levels. --For the first quarter 2006, GAAP EPS is expected to be $0.24 to $0.25, up 10 to 15 percent from the prior year level. Excluding non-cash stock compensation expense, EPS is expected to be $0.27 to $0.28. 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. DISCLOSURE AND "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: This news release contains forward-looking statements that reflect Convergys' expectations as of January January: see month. 24, 2006. Actual results of Convergys could differ materially from those discussed herein. Potential risk factors that could cause or contribute to actual results being materially different from those in the forward-looking statements 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 dis·close tr.v. dis·closed, dis·clos·ing, dis·clos·es 1. To expose to view, as by removing a cover; uncover. 2. To make known (something heretofore kept secret). 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 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. NON-GAAP FINANCIAL MEASURES: This news release contains non-GAAP financial measures including free cash flow and other 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 financial results 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. 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 believes 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 conference call on Tuesday Tuesday: see week. , January 24, at 10:00 AM, EST EST electroshock therapy. EST abbr. electroshock therapy , to discuss the company's fourth 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 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, Precedent 2000, and the Convergys logo are registered trademarks of Convergys Corporation.
Convergys Corporation
Revenues, Net Income and Earnings Per Common Share
In Millions Except Per Share Amounts
(Unaudited)
Fourth Quarter Twelve Months
-------------------------- ------------------------------
Change Change
---------- -----------
2005 2004 Amount % 2005 2004 Amount %
------- ------- ---------- -------- --------- -----------
Revenues:
Customer
Management
Group $472.7 $474.3 $(1.6) - $1,804.0 $1,739.2 $64.8 4
Information
Management
Group 196.9 197.9 (1.0) (1) 778.1 748.5 29.6 4
------- ------- ------ --------- --------- -------
Total $669.6 $672.2 $(2.6) - $2,582.1 $2,487.7 $94.4 4
Operating
Income
(Loss):
Customer
Management
Group $37.0 $34.5 $2.5 7 $103.9 $131.4 $(27.5)(21)
Information
Management
Group 40.8 5.3 35.5 - 145.1 73.0 72.1 99
Corporate
and Other (11.1) (9.0) (2.1) 23 (25.4) (18.9) (6.5) 34
------- ------- ------ --------- --------- -------
Total $66.7 $30.8 $35.9 117 $223.6 $185.5 $38.1 21
Net Income $23.4 $20.2 $3.2 16 $122.6 $111.5 $11.1 10
Earnings Per
Common Share
- Basic $0.17 $0.14 $0.03 21 $0.88 $0.79 $0.09 11
- Diluted $0.16 $0.14 $0.02 14 $0.86 $0.77 $0.09 12
Weighted
Average
Common Shares
Outstanding
- Basic 139.2 140.6 (1.4) (1) 140.0 141.4 (1.4) (1)
- Diluted 142.6 144.9 (2.3) (2) 142.9 145.4 (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-K for the annual
period ended December 31, 2005.
Convergys Corporation
Consolidated Statements of Income
In Millions Except Per Share Amounts
(Unaudited)
For the For the
Three Months Twelve Months
Ended Dec. 31, % Ended Dec. 31, %
2005 2004 Change 2005 2004 Change
------- ------- ------- -------- -------- -------
Revenues:
Customer Management
Group
Communications $226.2 $256.6 (12) $902.1 $986.6 (9)
Technology 40.7 45.0 (10) 157.0 168.8 (7)
Financial
Services 67.1 63.9 5 262.9 197.5 33
Other 138.7 108.8 27 482.0 386.3 25
------- ------- -------- --------
Total CMG
Revenues 472.7 474.3 - 1,804.0 1,739.2 4
Information
Management Group
Data Processing 85.7 97.3 (12) 340.5 389.9 (13)
Professional and
Consulting 65.3 54.3 20 267.6 191.3 40
License and
Other 45.9 46.3 (1) 170.0 167.3 2
------- ------- -------- --------
Total IMG
Revenues 196.9 197.9 (1) 778.1 748.5 4
------- ------- -------- --------
Total Revenues 669.6 672.2 - 2,582.1 2,487.7 4
------- ------- -------- --------
Costs and Expenses:
Cost of Providing
Services and
Products Sold 399.7 418.4 (4) 1,583.0 1,542.0 3
Selling, General
and Administrative 134.1 136.3 (2) 530.1 511.1 4
Research and
Development Costs 19.6 18.6 5 76.9 77.5 (1)
Depreciation 32.3 31.5 3 126.1 119.1 6
Amortization 4.9 6.2 (21) 21.2 22.1 (4)
Restructuring
Charges 12.3 30.4 (60) 21.2 30.4 (30)
------- ------- -------- --------
Total Costs and
Expenses 602.9 641.4 (6) 2,358.5 2,302.2 2
------- ------- -------- --------
Operating Income 66.7 30.8 117 223.6 185.5 21
Equity in Earnings
(Losses) of Cellular
Partnerships (4.5) 1.0 - 12.5 2.0 -
Other Expense, net (0.4) 0.8 - (1.5) (3.8) (61)
Interest Expense (5.6) (3.6) 56 (21.2) (10.3) -
------- ------- -------- --------
Income Before
Income Taxes 56.2 29.0 94 213.4 173.4 23
Income Taxes 32.8 8.8 - 90.8 61.9 47
------- ------- -------- --------
Net Income $23.4 $20.2 16 $122.6 $111.5 10
======= ======= ======== ========
Earnings Per Common
Share
---------------------
Basic $0.17 $0.14 21 $0.88 $0.79 11
======= ======= ======== ========
Diluted $0.16 $0.14 14 $0.86 $0.77 12
======= ======= ======== ========
Weighted Average
Common Shares
Outstanding
---------------------
Basic 139.2 140.6 140.0 141.4
Diluted 142.6 144.9 142.9 145.4
Market Price Per
Share
---------------------
High $17.90 $15.31 $17.90 $19.96
Low $13.58 $12.42 $12.57 $12.30
Close $15.85 $14.99 $15.85 $14.99
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-K for the annual
period ended December 31, 2005.
Convergys Corporation
Consolidated Balance Sheets
In Millions
(Unaudited)
Dec. 31, Dec. 31,
2005 2004
--------- ---------
Assets
------
Cash and Cash Equivalents $200.2 $58.4
Receivables - Net 521.1 447.3
Other Current Assets 88.8 87.1
Property and Equipment - Net 404.7 416.6
Other Assets 1,158.9 1,198.7
--------- ---------
Total Assets $2,373.7 $2,208.1
========= =========
Liabilities and Shareholders' Equity
------------------------------------
Debt Maturing in One Year $134.7 $49.5
Other Current Liabilities 489.5 527.9
Other Liabilities 96.9 43.2
Long-Term Debt 297.5 302.2
Common Shareholders' Equity 1,355.1 1,285.3
--------- ---------
Total Liabilities and Shareholders' Equity $2,373.7 $2,208.1
========= =========
Convergys Corporation
Overview of Cash Flows
In Millions
(Unaudited)
Summarized Statement of Cash Flows
----------------------------------------------------------------------
--------------- ---------------
Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31,
--------------- ---------------
2005 2004 2005 2004
-------- ------ ------- -------
Cash provided by operating activities $155.0 $6.8 $236.8 $195.4
Cash used in investing activities (45.1) (66.2) (138.2) (364.9)
Cash provided by financing activities 41.0 67.8 43.2 190.7
-------- ------ ------- -------
Net increase in cash $150.9 $8.4 $141.8 $21.2
======== ====== ======= =======
Reconciliation of Operating Cash Flows to Free Cash Flows
----------------------------------------------------------------------
Three Months Twelve Months
Ended Dec. 31, Ended Dec. 31,
--------------- ---------------
2005 2004 2005 2004
-------- ------ ------- -------
Cash provided by operating activities $155.0 $6.8 $236.8 $195.4
Decrease in securitization - 90.0 100.0 75.0
Capital expenditures, net of
proceeds from disposals (45.1) (43.6) (125.9) (156.2)
-------- ------ ------- -------
Free cash flow $109.9 $53.2 $210.9 $114.2
======== ====== ======= =======
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 Twelve Months
Ended Dec. 31, % Ended Dec. 31, %
2005 2004 Change 2005 2004 Change
------- ------- ------- -------- -------- -------
Revenues:
Communications $226.2 $256.6 (12) $902.1 $986.6 (9)
Technology 40.7 45.0 (10) 157.0 168.8 (7)
Financial Services 67.1 63.9 5 262.9 197.5 33
Other 138.7 108.8 27 482.0 386.3 25
------- ------- -------- --------
Total CMG
Revenues 472.7 474.3 - 1,804.0 1,739.2 4
Costs and Expenses:
Cost of Providing
Services and
Products Sold 301.9 311.2 (3) 1,182.6 1,140.0 4
Selling,
General and
Administrative 100.3 103.1 (3) 398.8 370.8 8
Research and
Development Costs 2.7 2.9 (7) 10.3 10.2 1
Depreciation 20.6 20.1 2 80.1 76.3 5
Amortization 3.4 3.4 - 13.2 11.4 16
Restructuring
Charges 6.8 (0.9) - 15.1 (0.9) -
------- ------- -------- --------
Total Costs and
Expenses 435.7 439.8 (1) 1,700.1 1,607.8 6
------- ------- -------- --------
Operating Income $37.0 $34.5 7 $103.9 $131.4 (21)
======= ======= ======== ========
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-K
for the annual period ended December 31, 2005.
Convergys Corporation
Information Management Group
Operating Segment Data
In Millions
(Unaudited)
For the For the
Three Months Twelve Months
Ended Dec. 31, % Ended Dec. 31, %
2005 2004 Change 2005 2004 Change
------- ------ ------- ------- ------- -------
Revenues:
Data Processing $85.7 $97.3 (12) $340.5 $389.9 (13)
Professional and
Consulting 65.3 54.3 20 267.6 191.3 40
License and Other 45.9 46.3 (1) 170.0 167.3 2
------- ------ ------- -------
Total IMG Revenues 196.9 197.9 (1) 778.1 748.5 4
Costs and Expenses:
Cost of Providing
Services and
Products Sold 97.7 107.4 (9) 400.2 403.0 (1)
Selling, General and
Administrative 31.8 32.2 (1) 125.9 135.9 (7)
Research and
Development Costs 16.9 15.7 8 66.6 67.2 (1)
Depreciation 8.2 8.7 (6) 32.3 32.9 (2)
Amortization 1.5 2.8 (46) 8.0 10.7 (25)
Restructuring Charges - 25.8 - - 25.8 -
------- ------ ------- -------
Total Costs and
Expenses 156.1 192.6 (19) 633.0 675.5 (6)
------- ------ ------- -------
Operating Income $40.8 $5.3 - $145.1 $73.0 99
======= ====== ======= =======
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-K
for the annual period ended December 31, 2005. Additionally, total
international revenues consisted of $46.8 and $43.0 for the three
months ended December 31, 2005 and December 31, 2004, respectively.
Total international revenues consisted of $165.0 and $159.7 for the
twelve months ended December 31, 2005 and December 31, 2004,
respectively.
Convergys Corporation
Reconciliation of Pro Forma Operating Results
In Millions Except Per Share Amounts
(Unaudited)
CMG IMG Corporate Consolidated
Operating Operating Operating Operating
Income Income Income Income
(Loss) (Loss) (Loss) (Loss)
--------- --------- --------- ------------
Fourth Quarter 2005
---------------------------
Results as reported under
U.S. GAAP $37.0 $40.8 $(11.1) $66.7
Adjustments:
Reconciling items (a) (6.8) - (5.5) (12.3)
--------- --------- --------- ------------
Pro forma results (a non-
GAAP measure) $43.8 $40.8 $(5.6) $79.0
========= ========= ========= ============
Year to Date 2005
---------------------------
Results as reported under
U.S. GAAP $103.9 $145.1 $(25.4) $223.6
Adjustments:
Reconciling items (b) (15.1) - (6.1) (21.2)
--------- --------- ----------------------
Pro forma results (a non-
GAAP measure) $119.0 $145.1 $(19.3) $244.8
========= ========= ========= ============
Fourth Quarter 2004
---------------------------
Results as reported under
U.S. GAAP $34.5 $5.3 $(9.0) $30.8
Adjustments:
Reconciling items (c) 0.9 (25.8) (5.5) (30.4)
--------- --------- --------- ------------
Pro forma results (a non-
GAAP measure) $33.6 $31.1 $(3.5) $61.2
========= ========= ========= ============
Year to Date 2004
---------------------------
Results as reported under
U.S. GAAP $131.4 $73.0 $(18.9) $185.5
Adjustments:
Reconciling items (c) 0.9 (25.8) (5.5) (30.4)
--------- --------- --------- ------------
Pro forma results (a non-
GAAP measure) $130.5 $98.8 $(13.4) $215.9
========= ========= ========= ============
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 $12.3 recorded in the
fourth quarter of 2005.
(b) Reflects the net restructuring charge of $8.9 recorded in the
second quarter of 2005 as well as the $12.3 recorded in the
fourth quarter of 2005.
(c) Reflects the net restructuring charge of $30.4 recorded in the
fourth quarter of 2004.
Convergys Corporation
Reconciliation of GAAP Revenues to Revenues Excluding Cingular
In Millions Except Per Share Amounts
(Unaudited)
Consolidated
------------
Fourth Quarter 2005
-------------------
Revenues as reported $669.6
Adjustments:
Revenues from Cingular 87.0
------------
Revenues excluding Cingular (a non-GAAP measure) $582.6
============
Year to Date 2005
-----------------
Revenues as reported $2,582.1
Adjustments:
Revenues from Cingular 418.3
------------
Revenues excluding Cingular (a non-GAAP measure) $2,163.8
============
Fourth Quarter 2004
-------------------
Revenues as reported $672.2
Adjustments:
Revenues from Cingular 127.8
------------
Revenues excluding Cingular (a non-GAAP measure) $544.4
============
Year to Date 2004
-----------------
Revenues as reported $2,487.7
Adjustments:
Revenues from Cingular 500.8
------------
Revenues excluding Cingular (a non-GAAP measure) $1,986.9
============
The schedule above provides a reconciliation of the Company's
revenues, as reported under U.S. Generally Accepted Accounting
Principles (U.S. GAAP), to revenues excluding Cingular (non-U.S.
GAAP).
Convergys Corporation
Reconciliation of Pro Forma Net Income and Diluted Earnings Per Share
In Millions Except Per Share Amounts
(Unaudited)
Income
(Loss) Income Tax Net
Before (Expense)/ Income Diluted
Tax Benefit (Loss) EPS
------- ---------- ------- -------
Full Year 2005
--------------
Results as reported under U.S. GAAP $213.4 $(90.8) $122.6 $0.86
Adjustments:
Additional tax resulting from
repatriation of foreign funds - 11.4 11.4 0.08
Restructuring Expense 21.2 (7.9) 13.3 0.09
Stock Compensation (excluding
amounts included in
restructuring) 21.0 (7.7) 13.3 0.09
------- ---------- ------- -------
Pro forma results (a non-GAAP
measure) $255.6 $(95.0) $160.6 $1.12
======= ========== ======= =======
Full Year 2004
--------------
Results as reported under U.S. GAAP $173.4 $(61.9) $111.5 $0.77
Adjustments:
Restructuring Expense 30.4 (9.4) 21.0 0.14
Stock Compensation (excluding
amounts included in
restructuring) 15.9 (5.9) 10.0 0.07
------- ---------- ------- -------
Pro forma results (a non-GAAP
measure) $219.7 $(77.2) $142.5 $0.98
======= ========== ======= =======
The schedule above provides a reconciliation of the Company's net
income and diluted earnings per share, as reported under U.S.
Generally Accepted Accounting Principles (U.S. GAAP), to the pro forma
results net income and diluted earnings per share (non-U.S. GAAP).
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