Convergys Corporation Revenues Up on Strong Growth From the Information Management Group.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 SECOND QUARTER: --Total revenues were up 5 percent reflecting growth from both the Customer Management and Information Management Groups --Information Management Group revenues grew 9 percent and 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. increased 74 percent versus prior year --Diluted earnings per share of $0.18 were 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 guidance --Pro forma forma, adj/n minor elements between the members of a botanical species. earnings per share were $0.22 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 costs 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 second quarter of 2005. Total revenues increased 5 percent to $630.4 million compared to $601.7 million reported in the second quarter of 2004 reflecting growth from both the Customer Management and Information Management Groups. Operating income of $38.0 million was down 18 percent from $46.2 million in the prior year. The Information Management Group generated a strong improvement in operating income. This improvement was offset by $8.9 million in severance; increased costs related to expansion in CMG's capacity, acquisitions, and the company's branding campaign; and the negative impact of the U.S. versus Canadian Canadian (kənā`dēən), river, 906 mi (1,458 km) long, rising in NE New Mexico. and flowing E across N Texas and central Oklahoma into the Arkansas River in E Oklahoma. exchange rate on the Customer Management Group. Excluding the severance charge, 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 of $46.9 million was slightly above prior year operating income. Net income was $25.6 million or $0.18 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 compared with $28.7 million or $0.20 in the second quarter of 2004. Pro forma net income was $31.1 million or $0.22 per diluted share, excluding the impact of the severance charge. In the second quarter, Convergys recorded a pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta severance charge of $8.9 million primarily related to the Customer Management Group's initiatives to position itself better for profitable growth by streamlining its operations. These actions should be substantially complete by the end of the third quarter. When completed, Convergys expects to achieve annual savings exceeding $25 million. "We are encouraged with the performance of our Information Management Group, reflecting our successful Infinys strategy combined with the actions taken last year to improve the cost structure of our business," 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, 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. "Although not satisfied with the recent performance of our Customer Management Group, we are confident that the plan we have adopted and the aggressive actions we are taking will deliver improvement to its operating performance similar to the accomplishments in the Information Management Group. As a result, we will see improved earnings in the upcoming quarters." Operating Performance by Segment Customer Management Group (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 ) - Customer Care and Employee Care Convergys CMG's revenues were $429.7 million, a 3 percent increase from the second quarter of 2004, reflecting growth from both Customer Care and Employee Care. This increase was driven mainly by 2004 acquisitions of Encore Receivable Management, Finali, and DigitalThink. In addition, it reflects increased revenues from several of CMG's financial and other industry clients, offset by reduced spending by several communications clients. Including an $8.3 million severance charge, Convergys CMG's second quarter 2005 operating income and operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: were $7.1 million and 1.7 percent, respectively. This compares to prior year operating income and operating margin of $29.7 million and 7.1 percent. In addition to the severance charge, the decrease in operating margin is largely the result of increased costs related to expansion of capacity, acquisitions, and the company's branding campaign, and 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 . Information Management Group (IMG IMG International medical graduate, see there ) Convergys IMG's revenues increased 9 percent to $200.7 million in the second quarter of 2005 from $183.9 million in the same period last year. Professional and consulting revenues of $72.2 million increased 63 percent compared to the prior year. The increase was broad based among many IMG 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 $84.4 million decreased 11 percent from the prior year. This decrease is due to the changing dynamics of the 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 $44.1 million were slightly below the prior year. Convergys IMG's operating income increased 74 percent from the second quarter of 2004 to $36.4 million. Operating margin increased to 18.1 percent versus 11.4 percent in the prior year. The significant improvement in operating margin reflects both revenue growth for IMG and savings realized through the fourth quarter 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. Other Items --Convergys incurred approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. $7 million in non-cash stock compensation expense during the quarter. This includes $1.2 million incurred with the second quarter severance charge. --The cellular partnerships contributed pre-tax equity earnings of $5.8 million. This compares to $1.7 million from the prior year. --Interest expense was $4.9 million versus $2.0 million in the prior year resulting from a higher debt balance and higher interest rates. --Cash flow from operations for the second quarter of 2005 was $30.9 million. Free cash flow of $4.7 million increased by $12.6 million from the prior year. --Days sales outstanding (DSO See CSO. ) were 76 days at June June: see month. 30, 2005. This compares to 71 days at March 31, 2005. Approximately one half of this increase was caused by the elimination of an early-payment discount option for one of our largest clients. --During the second quarter, Convergys repurchased 2.7 million shares at a cost of $35.3 million and an average price of $13.12 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 July July: 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 For 2005, Convergys expects revenues to grow in the range of 5 percent to 7 percent, and 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. to be approximately $1.00. For the second half of 2005, we expect CMG's revenues to grow in the range of 9 percent to 12 percent from the first half of the year, and CMG's operating margin to be up significantly. We also expect IMG's revenues and operating margin to be roughly in-line with the first half of the year. For the third quarter 2005, we expect CMG's revenues and operating margin to be up from second quarter levels, IMG's revenues and operating margin to be roughly comparable to first and second quarter levels, and EPS to be $0.25 to $0.27. 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 67 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
(Infinys is a trademark and 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 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 Wednesday Wednesday: see week. , July 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 second quarter results. It will feature Jim Orr, Chairman, President, 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 thereto there·to adv. 1. To that, this, or it. 2. Archaic In addition to that; furthermore. thereto Adverb Formal 1. to that or it 2. , 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 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)
Second Quarter
--------------------------
Change
-----------
2005 2004 Amount %
------ ------ -----------
Revenues:
Customer Management Group $429.7 $417.8 $ 11.9 3
Information Management Group 200.7 183.9 16.8 9
------ ------ ------
Total $630.4 $601.7 $ 28.7 5
Operating Income (Loss):
Customer Management Group $ 7.1 $ 29.7 $(22.6)(76)
Information Management Group 36.4 20.9 15.5 74
Corporate and Other (5.5) (4.4) (1.1) 25
------ ------ ------
Total $ 38.0 $ 46.2 $ (8.2)(18)
Net Income $ 25.6 $ 28.7 $ (3.1)(11)
Earnings Per Common Share
- Basic $ 0.18 $ 0.20 $(0.02)(10)
- Diluted $ 0.18 $ 0.20 $(0.02)(10)
Weighted Average Common Shares Outstanding
- Basic 140.4 142.1 (1.7) (1)
- Diluted 142.9 146.3 (3.4) (2)
Convergys Corporation
Revenues, Net Income and Earnings Per Common Share
In Millions Except Per Share Amounts
(Unaudited)
Six Months
------------------------------
Change
-----------
2005 2004 Amount %
-------- -------- -----------
Revenues:
Customer Management Group $ 877.2 $ 808.7 $ 68.5 8
Information Management Group 390.5 366.9 23.6 6
-------- -------- ------
Total $1,267.7 $1,175.6 $ 92.1 8
Operating Income (Loss):
Customer Management Group $ 28.6 $ 61.2 $(32.6)(53)
Information Management Group 69.8 45.4 24.4 54
Corporate and Other (8.5) (5.5) (3.0) 55
-------- -------- ------
Total $ 89.9 $ 101.1 $(11.2)(11)
Net Income $ 56.8 $ 61.2 $ (4.4) (7)
Earnings Per Common Share
- Basic $ 0.40 $ 0.43 $(0.03) (7)
- Diluted $ 0.40 $ 0.42 $(0.02) (5)
Weighted Average Common Shares
Outstanding
- Basic 140.8 142.1 (1.3) (1)
- Diluted 143.4 145.8 (2.4) (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 June 30, 2005.
Convergys Corporation
Consolidated Statements of Income
In Millions Except Per Share Amounts
(Unaudited)
For the For the
Three Months Six Months
Ended June 30, % Ended June 30, %
2005 2004 Change 2005 2004 Change
------- ------- ------- -------- -------- -------
Revenues:
Customer Management
Group
Communications $216.2 $241.8 (11) $449.6 $474.9 (5)
Technology 38.6 41.0 (6) 75.8 80.2 (5)
Financial
Services 62.9 44.9 40 131.0 81.2 61
Other 112.0 90.1 24 220.8 172.4 28
------- ------- -------- --------
Total CMG
Revenues 429.7 417.8 3 877.2 808.7 8
Information
Management Group
Data Processing 84.4 94.8 (11) 174.4 193.8 (10)
Professional and
Consulting 72.2 44.3 63 133.2 89.8 48
License and
Other 44.1 44.8 (2) 82.9 83.3 -
------- ------- -------- --------
Total IMG
Revenues 200.7 183.9 9 390.5 366.9 6
------- ------- -------- --------
Total Revenues 630.4 601.7 5 1,267.7 1,175.6 8
------- ------- -------- --------
Costs and Expenses:
Cost of Providing
Services and
Products Sold 394.7 377.3 5 792.0 728.7 9
Selling, General
and Administrative 132.6 125.2 6 265.9 242.2 10
Research and
Development Costs 19.7 19.1 3 37.3 37.6 (1)
Depreciation 31.0 28.5 9 62.3 56.0 11
Amortization 5.5 5.4 2 11.4 10.0 14
Restructuring
Charges 8.9 - - 8.9 - -
------- ------- -------- --------
Total Costs and
Expenses 592.4 555.5 7 1,177.8 1,074.5 10
------- ------- -------- --------
Operating Income 38.0 46.2 (18) 89.9 101.1 (11)
Equity in Earnings
(Losses) of Cellular
Partnerships 5.8 1.7 - 9.6 1.6 -
Other Expense, net 0.4 (0.5) - (1.0) (2.2) (55)
Interest Expense (4.9) (2.0) - (9.7) (3.7) -
------- ------- -------- --------
Income Before
Income Taxes 39.3 45.4 (13) 88.8 96.8 (8)
Income
Taxes 13.7 16.7 (18) 32.0 35.6 (10)
------- ------- -------- --------
Net Income $ 25.6 $ 28.7 (11) $ 56.8 $ 61.2 (7)
======= ======= ======== ========
Earnings Per Common
Share
-------------------
Basic $ 0.18 $ 0.20 (10) $ 0.40 $ 0.43 (7)
======= ======= ======== ========
Diluted $ 0.18 $ 0.20 (10) $ 0.40 $ 0.42 (5)
======= ======= ======== ========
Weighted Average
Common Shares
Outstanding
----------------
Basic 140.4 142.1 140.8 142.1
Diluted 142.9 146.3 143.4 145.8
Market Price Per
Share
----------------
High $15.09 $17.32 $15.76 $19.96
Low $12.57 $14.01 $12.57 $14.01
Close $14.22 $15.40 $14.22 $15.40
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 June 30, 2005.
Convergys Corporation
Consolidated Balance Sheets
In Millions
(Unaudited)
June 30, Dec. 31,
2005 2004
-------- --------
Assets
------
Cash and Cash Equivalents $ 58.6 $ 58.4
Receivables - Net 475.9 447.3
Other Current Assets 74.4 87.1
Property and Equipment - Net 400.2 416.6
Other Assets 1,193.4 1,198.7
-------- --------
Total Assets $2,202.5 $2,208.1
======== ========
Liabilities and Shareholders' Equity
------------------------------------
Debt Maturing in One Year $ 93.0 $ 49.5
Other Current Liabilities 452.2 527.9
Other Liabilities 50.1 43.2
Long-Term Debt 300.2 302.2
Common Shareholders' Equity 1,307.0 1,285.3
-------- --------
Total Liabilities and Shareholders' Equity $2,202.5 $2,208.1
======== ========
Convergys Corporation
Summarized Statement of Cash Flows
In Millions
(Unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ------------------
2005 2004 2005 2004
------ ------- ------ -------
Cash provided by operating
activities $ 30.9 $ 42.6 $ 41.8 $ 101.0
Cash used in investing
activities (27.0)(a) (222.5)(a) (51.4)(b) (255.5)(b)
Cash provided by financing
activities 17.5 195.8 9.8 173.5
------ ------- ------ -------
Net increase in cash $ 21.4 $ 15.9 $ 0.2 $ 19.0
====== ======= ====== =======
(a) Includes $26.2 and $35.5 of capital expenditures for the three
months ended June 30, 2005 and 2004, respectively.
(b) Includes $49.6 and $71.8 of capital expenditures for the six
months ended June 30, 2005 and 2004, respectively.
Convergys Corporation
Customer Management Group
Operating Segment Data
In Millions
(Unaudited)
For the For the
Three Months Six Months
Ended June 30, % Ended June 30, %
2005 2004 Change 2005 2004 Change
------ ------ ------- ------ ------ -------
Revenues:
Communications $216.2 $241.8 (11) $449.6 $474.9 (5)
Technology 38.6 41.0 (6) 75.8 80.2 (5)
Financial Services 62.9 44.9 40 131.0 81.2 61
Other 112.0 90.1 24 220.8 172.4 28
------ ------ ------ ------
Total CMG Revenues 429.7 417.8 3 877.2 808.7 8
Costs and Expenses:
Cost of Providing
Services and
Products Sold 290.4 276.4 5 588.7 532.5 11
Selling, General and
Administrative 98.5 88.8 11 201.1 170.4 18
Research and
Development Costs 2.7 2.1 29 4.4 4.2 5
Depreciation 19.4 18.0 8 39.6 35.4 12
Amortization 3.3 2.8 18 6.5 5.0 30
Restructuring Charges 8.3 - - 8.3 - -
------ ------ ------ ------
Total Costs and
Expenses 422.6 388.1 9 848.6 747.5 14
------ ------ ------ ------
Operating Income $ 7.1 $ 29.7 (76) $ 28.6 $ 61.2 (53)
====== ====== ====== ======
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 June 30, 2005.
Convergys Corporation
Information Management Group
Operating Segment Data
In Millions
(Unaudited)
For the Three For the Six
Months Ended Months Ended
June 30, % June 30 %
2005 2004 Change 2005 2004 Change
------ ------ ------ ------ ------ ------
Revenues:
Data Processing $ 84.4 $ 94.8 (11) $174.4 $193.8 (10)
Professional and
Consulting 72.2 44.3 63 133.2 89.8 48
License and Other 44.1 44.8 (2) 82.9 83.3 -
------ ------ ------ ------
Total IMG Revenues 200.7 183.9 9 390.5 366.9 6
Costs and Expenses:
Cost of Providing
Services and
Products Sold 104.2 101.3 3 203.2 196.7 3
Selling, General and
Administrative 32.8 34.5 (5) 63.7 71.1 (10)
Research and
Development Costs 17.0 16.5 3 32.9 32.9 -
Depreciation 8.1 8.1 - 16.0 15.8 1
Amortization 2.2 2.6 (15) 4.9 5.0 (2)
------ ------ ------ ------
Total Costs and
Expenses 164.3 163.0 1 320.7 321.5 -
------ ------ ------ ------
Operating Income $ 36.4 $ 20.9 74 $ 69.8 $ 45.4 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 June 30, 2005. Additionally, total
international revenues consisted of $39.0 and $43.6 for the three
months ended June 30, 2005 and June 30, 2004, respectively. Total
international revenues consisted of $76.4 and $81.4 for the six months
ended June 30, 2005 and June 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
------------ ------- ----------- ------- -------
Second Quarter 2005
-------------------
Results as reported
under U.S. GAAP $ 38.0 $39.3 $(13.7) $25.6 $ 0.18
Less:
Reconciling items(a) (8.9) (8.9) 3.4 (5.5) (0.04)
------------ ------- ----------- ------- -------
Pro forma results
(a non-GAAP measure) $ 46.9 $48.2 $(17.1) $31.1 $ 0.22
============ ======= =========== ======= =======
Year to Date 2005
-----------------
Results as reported
under U.S. GAAP $ 89.9 $88.8 $(32.0) $56.8 $ 0.40
Less:
Reconciling items(a) (8.9) (8.9) 3.4 (5.5) (0.04)
------------ ------- ----------- ------- -------
Pro forma results
(a non-GAAP measure) $ 98.8 $97.7 $(35.4) $62.3 $ 0.43
============ ======= =========== ======= =======
Second Quarter 2004
-------------------
Results as reported
under U.S. GAAP $ 46.2 $45.4 $(16.7) $28.7 $ 0.20
Less:
Reconciling items - - - - -
------------ ------- ----------- ------- -------
Pro forma results
(a non-GAAP measure) $ 46.2 $45.4 $(16.7) $28.7 $ 0.20
============ ======= =========== ======= =======
Year to Date 2004
-----------------
Results as reported
under U.S. GAAP $101.1 $96.8 $(35.6) $61.2 $ 0.42
Less:
Reconciling items - - - - -
------------ ------- ----------- ------- -------
Pro forma results
(a non-GAAP measure) $101.1 $96.8 $(35.6) $61.2 $ 0.42
============ ======= =========== ======= =======
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.
CONVERGYS CORPORATION
Reconciliation of Cash Provided by Operating Activities to
Free Cash Flow
In Millions
(Unaudited)
Three Months Six Months
Ended June 30, Ended June 30,
--------------- ---------------
2005 2004 2005 2004
------ ------ ------ ------
Cash provided by operating activities $ 30.9 $ 42.6 $ 41.8 $101.0
Accounts receivable securitization - (15.0) 50.0 (15.0)
Capital expenditures (26.2) (35.5) (49.6) (71.8)
------ ------ ------ ------
Free cash flow $ 4.7 $ (7.9) $ 42.2 $ 14.2
====== ====== ====== ======
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.
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