Convergys Corporation Reports Record Second Quarter Financial Results.CINCINNATI--(BUSINESS WIRE)--July 21, 1999-- -0- -- Revenues increased 17 percent and net income increased 47 percent -- Operating income was up 35 percent -- Diluted earnings per share increased 35 percent 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) ), the global leader in providing 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, , integrated, customer care and billing, announced today its financial results for its second quarter. For the three months ended June June: see month. 30, 1999, the company reported revenues of $426.2 million which represents an increase of 17 percent over $363.6 million reported in the second quarter 1998. 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. excluding a special item increased 35 percent to $56.1 million, up from $41.6 million reported in the same period last year. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased to 13.2 percent from 11.4 percent. Net income excluding the special item increased 47 percent to $34.8 million or $0.23 per share (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. ), up from net income of $23.6 million or $0.17 per share (diluted) reported in the second quarter 1998. Convergys' cellular partnership interest contributed $9.1 million of pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta profits or nearly $0.04 per share, compared to $6.8 million reported last year. These results exclude a special item to expense $2 million of in-process research and development costs in connection with Convergys' acquisition of a controlling interest controlling interest The ownership of a quantity of outstanding corporate stock sufficient to control the actions of the firm. Controlling interest often involves ownership of significantly less than 51% of a firm's outstanding stock because many owners fail in Wiztec Solutions, Ltd. (Nasdaq:WIZTF). Including the special item, Convergys reported operating income of $54.1 million and net income of $32.8 million or $0.21 per share (diluted) for the quarter. Commenting on the company's performance, 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. , president 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 said, "I am encouraged by the progress we have made during the first half of 1999 on our strategy for growth and the continued expansion of our core business. Beyond delivering positive financial results, both of our operating units operating unit A type of operating company that engages in transactions with outsiders and that is owned by another business. For example, in 1995 the stockholders of Capital Cities/ABC approved a $19 billion merger with the Walt Disney Company, whereupon continue to add industry-leading clients in high growth segments." Second Quarter 1999 Highlights During the second quarter 1999, Convergys announced a number of strategic initiatives, among them included: -0-
-- Global alliance with IBM to market and deliver integrated and
highly-scalable billing and subscriber management solutions for
the rapidly growing wireless telecommunications industry.
-- Acquisition of Technology Applications, Inc. (TAI), a leading
Internet software development and systems integration company
that creates customer care and billing applications for the
global Internet protocol (IP) marketplace.
-- Contract with AirTouch Cellular under which AirTouch will use
Convergys' Precedent 2000(R), a highly-scalable, client/server
billing solution that performs real-time rating and supports
world class customer care.
-- Signed customer management contracts with Northern Electric and
Gas, plc, an electricity and gas utility which serves some 1.4
million customers in England and Wales.
In the three weeks following the end of the second quarter, Convergys has entered into or extended strategic agreements as follows: -0-
-- An outsourcing agreement with AT&T Wireless Services, Inc.
(NYSE:T) to extend the current contract for inbound customer care
and related services into the year 2006.
-- A five-year agreement with Pfizer Pharmaceuticals (NYSE:PFE) for
outsourced employee care utilizing our call centers.
Orr also said, "We continue to execute our strategy successfully and have generated significant momentum as evidenced by our acquisition of TAI, our global alliance with IBM (International Business Machines Corporation, Armonk, NY, www.ibm.com) The world's largest computer company. IBM's product lines include the S/390 mainframes (zSeries), AS/400 midrange business systems (iSeries), RS/6000 workstations and servers (pSeries), Intel-based servers (xSeries) , and major contract activity. We are developing and implementing additional customer relationship management solutions to meet the expanding needs of our clients, while focusing on the growing demand for IP-related products and service offerings. These efforts reflect our commitment to growth in our core markets while at the same time initiating development of new markets. I believe we have the proper long-term Long-term Three or more years. In the context of accounting, more than 1 year. long-term 1. Of or relating to a gain or loss in the value of a security that has been held over a specific length of time. Compare short-term. strategy in place and have focused our investments on those initiatives which should continue to enhance shareholder value." Operating Performance by Segment Excluding intercompany sales, second quarter 1999 Information Management Group (IMG IMG International medical graduate, see there ) revenues increased 15 percent to $162.4 million, from $141.5 million in the same period last year. 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 increased 13 percent, primarily as a result of increased subscriber subscriber, n the person, usually the employee, who represents the family unit in relation to the prepayment plan. Other family members are dependents. Also called certificate holders or enrollees. growth at Sprint PCS (1) (Personal Communications Services) Refers to wireless services that emerged after the U.S. government auctioned commercial licenses in 1994 and 1995. This radio spectrum in the 1. , AT&T, and PrimeCo PrimeCo Communications was a joint venture of Bell Atlantic and AirTouch Communications, and was the first wireless telecommunications provider to turn up CDMA service on the PCS (1900-MHz) band in late 1995. Hailed as the largest wireless phone service launch in U.S. PCS. While system enhancement revenues increased for PCS clients including AirTouch AirTouch Communications was a U.S.-based wireless service provider that was created when PacTel Cellular was spun off from Pacific Telesis on April 1, 1994, forming both AirTouch Cellular and AirTouch Paging. , professional and consulting revenues were essentially flat. License and other revenues increased due to the MediaOne MediaOne was a cable company created by U S WEST in 1995. The cable service started as a division of U S WEST Media Group. In time the service also included pay-per-view, and a self-branded high-speed cable modem internet service named Hiway1 ("Highway One"). contract signed in the fourth quarter of 1998 and general growth in our cable operations. International revenues increased primarily reflecting the acquisition of a controlling interest in Wiztec in the first quarter of 1999. Operating income for IMG increased 18 percent to $32.7 million, excluding the special item, from $27.6 million reported in the second quarter 1998. This increase primarily reflects profit flow-through from higher revenues. Operating margin excluding the special item in the second quarter increased to 20.1 percent from 19.5 percent in the second quarter last year. 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 revenues were $263.8 million, up 19 percent compared to $222.1 million in the second quarter of 1998, primarily fueled by increased services performed for AT&T and subscriber growth at DIRECTV DirecTV (trademarked as "DIRECTV") is a direct broadcast satellite (DBS) service based in El Segundo, California, USA, that transmits digital satellite television and audio to households in the United States, the Caribbean and Latin America except for Mexico. . Operating income increased 80 percent to $25.2 million, up from $14.0 million in the same period last year. Operating margin improved to 9.6 percent in the second quarter 1999 marking the fourth consecutive quarter of improvement since the 6.3 percent margin in the second quarter of 1998. This improvement is based on a number of factors including the continuing achievement of operating efficiencies related to Transtech For the Finnish railway rolling stock manufacturer, see . Transtech is an unreleased line of toys under the Transformers umbrella. History After the Beast Machines line ended, Hasbro planned a follow-up series called Transtech. . Notably, the Transtech acquisition became accretive during the second quarter, nine months ahead of schedule. ABOUT CONVERGYS Convergys Corporation(SM) is the global leader in providing outsourced, integrated, customer care and billing services, bringing together world-class world-class adj. 1. Ranking among the foremost in the world; of an international standard of excellence; of the highest order: a world-class figure skater. 2. resources and expertise to help clients transform customer relationships into a competitive advantage. Convergys software produces more than one million bills each day, and Convergys call centers handle more than one million customer contacts each day. Convergys serves the top companies in a wide range of industries, including communications, technology, cable and broadband services See broadband and broadband service provider. , consumer products, 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. , utilities, healthcare, hospitality, and direct response. 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 employs over 33,000 people in its 32 call centers and in its data centers and other offices 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 , and 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). .
Convergys is online at www.convergys.com and is pronounced kun VER Ver personification; portrayed as infantile and tender. [Rom. Myth.: LLEI, I: 322] See : Spring jis. Convergys and the Convergys logo are service marks and 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 is a registered service mark of Convergys Corporation. NOTE: Information included in this news release contains 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. that involve potential risks for Convergys Corporation. The future results of Convergys could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, the loss of a significant client, difficulties in completing or integrating acquisitions, Year 2000 compliance, 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 December: see month. 31, 1998, filed with the SEC by Convergys Corporation. -0-
CONVERGYS CORPORATION
Revenues, Net Income and Earnings Per Common Share
In Millions Except Per Share Amounts
(Unaudited)
Second Quarter
Change
1999 1998 Amount %
Revenues:
- Information Mgmt. Grp. $ 171.1 $ 146.1 $ 25.0 17
- Customer Mgmt. Group 263.8 222.1 41.7 19
- Eliminations (8.7) (4.6) (4.1) -
--------- --------- ------- ---
--Total $ 426.2 $ 363.6 $ 62.6 17
Operating Income:
- Information Mgmt. Grp. $ 30.7 (a) $ 27.6 $ 3.1 11
- Customer Mgmt. Group 25.2 14.0 11.2 80
- Eliminations & Other (1.8) - (1.8) -
--------- --------- ------- ---
--Total $ 54.1 (a) $ 41.6 $ 12.5 30
Net Income $ 32.8 (a) $ 23.6 $ 9.2 39
Earnings Per Common Share (c)
- Basic $0.22 (a) $0.17 $ 0.05 29
- Diluted $0.21 (a) $0.17 $ 0.04 24
Weighted Average Common Shares Outstanding (c)
- Basic 151.6 137.0 14.6
- Diluted 154.1 137.0 17.1
Six Months
Change
1999 1998 Amount %
Revenues:
- Information Mgmt. Grp. $ 328.2 $ 290.0 $ 38.2 13
- Customer Mgmt. Group 515.5 389.0 126.5 33
- Eliminations (17.7) (6.8) (10.9) -
--------- --------- ------- ---
--Total $ 826.0 $ 672.2 $153.8 23
Operating Income:
- Information Mgmt. Grp. $ 61.0 (a) $ 54.6 $ 6.4 12
- Customer Mgmt. Group 48.9 (14.3)(b) 63.2 -
- Eliminations & Other (3.0) - (3.0) -
--------- --------- ------- ---
--Total $ 106.9 (a) $ 40.3 (b) $ 66.6 165
Net Income $ 65.2 (a) $ 21.3 (b) $ 43.9 -
Earnings Per Common Share (c)
- Basic $0.43 (a) $0.16 (b) $ 0.27 169
- Diluted $0.42 (a) $0.16 (b) $ 0.26 163
Weighted Average Common Shares Outstanding (c)
- Basic 151.6 137.0 14.6
- Diluted 154.1 137.0 17.1
(a) Includes $2.0 million in acquired research and development costs
which reduced net income by $2.0 million. Excluding this special
item, earnings per diluted common share were $0.23 and $0.44 for
the three and six months ended June 30, 1999, respectively.
(b) Includes $42.6 million in acquired research and development costs
which decreased net income by $26.4 million. Excluding this
special item, earnings per diluted common share were $0.35 for
the six months ended June 30, 1998.
(c) Effective August 4, 1998, the Company approved a share split,
which increased the number of then outstanding common shares to
137.0 million. On August 13, 1998, the Company issued an
additional 14,950,000 common shares to the public in an initial
public offering. Basic and diluted earnings per share for the
periods prior to the initial public offering have been calculated
using the 137.0 million common share total.
Convergys Corporation
Consolidated Statements of Income
In Millions Except Per Share Amounts
(Unaudited)
For the Three Months For the Six Months
Ended Jun. 30, % Ended Jun. 30, %
1999 1998 Chg. 1999 1998 Chg.
Revenues:
Information Mgmt. Grp.
Info. Processing $100.8 $ 89.3 13 $195.1 $178.0 10
Prof. & Consulting 37.5 36.5 3 75.0 70.8 6
License & Other 11.1 6.2 79 17.4 13.1 33
International 13.0 9.5 37 23.0 21.4 7
----- ------ -- ----- ----- --
External Revenues 162.4 141.5 15 310.5 283.3 10
Interco. Svcs. for CMG 8.7 4.6 89 17.7 6.7 164
----- ------ -- ----- ----- --
Total IMG Revenues 171.1 146.1 17 328.2 290.0 13
Customer Management Grp.
Dedicated Services 205.1 169.9 21 391.9 283.3 38
Traditional Services 44.3 43.9 1 94.0 89.6 5
International 14.4 8.3 73 29.6 16.2 83
----- ------ -- ----- ----- --
Total CMG Revenues 263.8 222.1 19 515.5 389.0 33
Eliminations (8.7) (4.6) - (17.7) (6.8) -
----- ------ -- ----- ----- --
Total Revenues 426.2 363.6 17 826.0 672.2 23
Costs & Expenses:
Cost of Providing
Services & Products Sold 243.3 213.6 14 470.8 386.8 22
Selling, General & Admin. 73.0 54.8 33 137.2 105.7 30
Research & Development 20.4 19.5 5 39.9 38.6 3
Deprec. & Amortization 30.6 26.3 16 60.2 44.7 35
Year 2000 Programming 2.8 7.8 (64) 9.0 13.5 (33)
Purchased R&D Costs 2.0 - - 2.0 42.6 (95)
----- ----- -- ----- ----- --
Total Costs and Expenses 372.1 322.0 16 719.1 631.9 14
Operating Income 54.1 41.6 30 106.9 40.3 165
Equity in Earnings of
Cellular Partnership 9.1 6.8 34 16.7 10.8 55
Other Income(Expense), Net (0.5) 0.7 - (1.2) 0.7 -
Interest Expense 8.5 11.2 (24) 16.0 17.6 (9)
----- ----- -- ----- ----- --
Income Before Income Taxes 54.2 37.9 43 106.4 34.2 -
Income Taxes 21.4 14.3 50 41.2 12.9 -
----- ------ -- ----- ----- --
Net Income $ 32.8 $ 23.6 39 $ 65.2 $ 21.3 -
----- ------ -- ----- ----- --
----- ------ -- ----- ----- --
Earnings Per Common Share (a)
-Basic $ 0.22 $ 0.17 29 $ 0.43 $ 0.16 169
-Diluted $ 0.21 $ 0.17 24 $ 0.42 $ 0.16 163
Weighted Average Common Shares Outstanding (millions) (a)
-Basic 151.6 137.0 151.6 137.0
-Diluted 154.1 137.0 154.1 137.0
Other Data
-Operating Margin (b) 13.2% 11.4% 13.2% 12.3%
Market Price Per Share
-High $ 21.813 $ - $ 23.000 $ -
-Low $ 15.938 $ - $ 14.500 $ -
-Close $ 19.375 $ - $ 19.375 $ -
(a) Effective August 4, 1998, the Company approved a share split,
which increased the number of then outstanding common shares to
137.0 million. On August 13, 1998, the Company issued an
additional 14.9 million common shares to the public in an initial
public offering. Basic and diluted earnings per share for the
periods prior to the initial public offering have been calculated
using the 137.0 million common share total.
(b) Excludes purchased research and development costs of $2.0 million
for the three and six months ended June 30, 1999 and of
$42.6 million for the six months ended June 30, 1998 resulting
from acquisitions.
Convergys Corporation
Consolidated Balance Sheets
In Millions
(Unaudited)
Jun 30, Dec. 31, Jun. 30,
1999 1998 1998
Assets
Cash and Cash Equivalents $ 20.3 $ 3.8 $ 1.5
Receivables - Net 339.6 314.3 331.9
Other Current Assets 48.0 42.4 36.5
Property & Equipment-Net 290.5 249.8 215.3
Other Assets 849.2 840.6 824.1
Total Assets $ 1,547.6 $ 1,450.9 $ 1,409.3
Liabilities and Shareowners' Equity
Debt Maturing in One Year $ 464.0 $ 466.8 $ 754.8
Other Current Liabilities 251.4 239.6 195.9
Other Liabilities 13.4 13.0 7.6
Minority Interest 10.6 - -
Common Shareowners' Equity 808.2 731.5 451.0
Total Liabilities
& Shareowners' Equity $ 1,547.6 $ 1,450.9 $ 1,409.3
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