Convergys Reports Third Quarter & Nine Month Financial Results.Business Editors NOTE: Multimedia assets relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc this story will be available for journalists to download To receive a file transmitted over a network. In any communications session, "download" means receive, and "upload" means send. The download/upload often implies a big/little scenario, in which data is being downloaded from the "big" server into the "little" user's computer. beginning today at www.newstream.com and at www.businesswire.com CINCINNATI--(BUSINESS WIRE)--Oct. 24, 2001 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) ) -- Revenues increased 2 percent to $567.2 million -- Excluding special items: -- Operating income increased 14 percent to $90.6 million -- Net income increased 12 percent to $53.4 million and diluted earnings per share increased 15 percent to $0.31 -- Cash earnings per share of $0.35 Convergys Corporation (NYSE:CVG), the global leader in integrated billing and customer care, announced today its financial results for the third quarter and nine months ended September September: see month. 30, 2001. During the third quarter 2001, total revenues increased 2 percent to $567.2 million compared to $553.5 million reported in the third quarter of 2000. 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 special items, increased 14 percent to $90.6 million from $79.7 million. Operating margin Operating Margin A ratio used to measure a company's pricing strategy and operating efficiency. Calculated by: increased to 16.0 percent from 14.4 percent, excluding special items. The company's cellular partnership investment contributed pre-tax pre-tax adj → anterior al impuesto pre-tax adj → avant impôt(s) pre-tax adj → al lordo d'imposta earnings of $1.3 million or less than $0.01 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, down from $6.0 million or about $0.02 per diluted share in the third quarter of 2000. Despite the low level of third quarter partnership earnings, Convergys did receive a $21 million cash distribution from the partnership during the quarter. Excluding special items, net income increased 12 percent to $53.4 million or $0.31 per diluted share, up from $47.6 million or $0.27 per diluted share in the third quarter of 2000. Cash earnings per share excluding goodwill amortization and special items increased 13 percent to $0.35 from $0.31 in the third quarter of 2000. As expected, Convergys initiated the process of rationalizing capacity to meet the needs of its 2002 business plans. This includes our continuing efforts to maintain contact centers equipped with the latest technology. The plans to reduce contact center capacity resulted in a restructuring charge 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. of $53.3 million in the Customer Management Group. The $53.3 million consists of $29.0 million in costs associated with the closing of centers, $16.2 million in write-offs of software that will not be deployed, and $8.1 million to write-down Write-Down Reducing the book value of an asset because it is overvalued compared to the market value. Notes: This is usually reflected in the company's income statement as an expense, thereby reducing net income. investments in the company's European contact European contact may refer to discovery:
adj. Relating to or being that which remains after payment, especially of income taxes: after-tax profits. ). Including these special items, reported net income was $3.0 million or $0.02 per diluted share for the third quarter. "In spite of in opposition to all efforts of; in defiance or contempt of; notwithstanding. See also: Spite continuing economic softness leading to revenues that were less than expected, and a negative, short-term Short-term Any investments with a maturity of one year or less. short-term 1. Of or relating to a gain or loss on the value of an asset that has been held less than a specified period of time. business impact from the September 11 tragedy, our overall results are still strong," 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. "We continue to believe that, over time, the economic slowdown For articles with similar titles, see Slow Down (disambiguation). A slowdown is an industrial action in which employees perform their duties but seek to reduce productivity or efficiency in their performance of these duties. will stimulate accelerated movement toward outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. as companies realize it is the most cost-effective cost-effective, n the minimal expenditure of dollars, time, and other elements necessary to achieve the health care result deemed necessary and appropriate. method of delivering quality service to their customers." Third Quarter 2001 Highlights ----------------------------- During the third quarter of 2001, Convergys: -- Signed TeleCorp 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. , Inc. (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on :TLCP TLCP Thermotropic Liquid Crystalline Polymer TLCP Toxicity Characteristic Leaching Procedure ), using the Atlys(R) billing and customer care solution. Atlys will support simplified sim·pli·fy tr.v. sim·pli·fied, sim·pli·fy·ing, sim·pli·fies To make simple or simpler, as: a. To reduce in complexity or extent. b. To reduce to fundamental parts. c. , more flexible billing for TeleCorp's SunCom SunCom is a wireless carrier that has operated in the southeastern United States since 1999 and in parts of the Caribbean since 2004. SunCom provides digital wireless communications services to more than 1,000,000 customers, employs more than 1,900 people and offers international, digital wireless services. TeleCorp operates in a market of more than 35 million people. -- Continued to gain market share with new client contract wins utilizing the Geneva Geneva, canton and city, Switzerland Geneva (jənē`və), Fr. Genève, canton (1990 pop. 373,019), 109 sq mi (282 sq km), SW Switzerland, surrounding the southwest tip of the Lake of Geneva. (TM) software: -- Telenor Telenor (OSE: TEL, NASDAQ: TELN) is the incumbent telecommunications company in Norway, with headquarters located at Fornebu, close to Oslo. Today, Telenor is mostly an international wireless carrier with operations in Scandinavia, Eastern Europe and Asia. Mobil (NASDAQ:TELN), the largest mobile telecommunications Communicating information, including data, text, pictures, voice and video over long distance. See communications. operator in Norway Norway, Nor. Norge, officially Kingdom of Norway, constitutional monarchy (2005 est. pop. 4,593,000), 125,181 sq mi (324,219 sq km), N Europe, occupying the western part of the Scandinavian peninsula. , serving approximately ap·prox·i·mate adj. 1. Almost exact or correct: the approximate time of the accident. 2. 72 percent of the Norwegian Norwegian associated in some way with Norway. Norwegian buhund, Norwegian sheepdog a medium-sized (26-40 lb), spitz-type dog with a short, dense coat in wheaten, black, red or sable, sometimes with black markings on the face, ears market; -- Telia Telecom A/S in Denmark Denmark (dĕn`märk), Dan. Danmark, officially Kingdom of Denmark, kingdom (2005 est. pop. 5,432,000), 16,629 sq mi (43,069 sq km), N Europe. , a subsidiary of the leading Nordic telecoms provider, Telia Sweden Sweden, Swed. Sverige, officially Kingdom of Sweden, constitutional monarchy (2005 est. pop. 9,002,000), 173,648 sq mi (449,750 sq km), N Europe, occupying the eastern part of the Scandinavian peninsula. , supplies a range of telephone, IP, and ADSL See DSL. ADSL - Asymmetric Digital Subscriber Line broadband services See broadband and broadband service provider. to both residential and business customers across Denmark -- ONE, which services approximately 97 percent of the Austrian market; -- Further established its presence in the convergent voice, video, and data billing and customer care market, with important regional client wins: -- Altrio Communications, a network provider in southern California California (kăl'ĭfôr`nyə), most populous state in the United States, located in the Far West; bordered by Oregon (N), Nevada and, across the Colorado River, Arizona (E), Mexico (S), and the Pacific Ocean (W). ; -- CableDirect, a Missouri-based company offering an innovative hybrid entertainment package combining cable and satellite TV programming. -- Received notification that the State of Florida Florida, state, United States Florida (flôr`ĭdə, flŏr`–), state in the extreme SE United States. A long, low peninsula between the Atlantic Ocean (E) and the Gulf of Mexico (W), Florida is bordered by Georgia and intends to award Convergys a major employee care contract to provide 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. , benefits, and payroll payroll a list of employees, their salary rates, tax deductions, amounts paid, payroll tax, long service leave entitlements. services to the state's 120,000 employees. -- Took advantage of the temporary relaxation re·lax·a·tion n. 1. The act of relaxing or the state of being relaxed. 2. Refreshment of body or mind. 3. A loosening or slackening. 4. The lengthening of inactive muscle or muscle fibers. of share buy back restrictions authorized au·thor·ize tr.v. au·thor·ized, au·thor·iz·ing, au·thor·iz·es 1. To grant authority or power to. 2. To give permission for; sanction: by the SEC after September 11 and repurchased 2.5 million shares. The share prices ranged from $25 - $28 for a total cost of about $66 million. Mr. Orr continued, "During these challenging economic times, our top and bottom lines continue to grow. We are winning new business and, in a relatively short period of time, we have successfully established a growing footprint The amount of geographic space covered by an object. A computer footprint is the desk or floor surface it occupies. A satellite's footprint is the earth area covered by its downlink. See form factor. 1. in 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 'intent to
award' a contract from the State of Florida to our employee care
business adds to the momentum."
For the nine months ended September 30, 2001, revenues increased 8 percent over the same period last year to $1.73 billion. Operating income increased 17 percent to $270.3 million and net income increased 16 percent to $159.1 million, excluding special items. The company's cellular partnership contributed earnings of $5.9 million, down from $17.3 million in the first nine months of 2000. Diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of , excluding special items, increased 15 percent to $0.91. Including special items, operating income was $180.5 million, net income was $82.4 million, and diluted earnings per share were $0.47. October October: see month. 2001 Highlights ----------------------- In addition to the many announcements made throughout the third quarter, during October Convergys: -- Announced it has signed one new and one expanded customer care contract with AT&T Broadband broadband Term describing the radiation from a source that produces a broad, continuous spectrum of frequencies (contrasted with a laser, which produces a single frequency or very narrow range of frequencies). (NYSE:T), the nation's largest broadband service company and leading provider of local phone service over hybrid fiber-coaxial networks. Convergys will provide telephony Meaning "sound over distance," it refers to electronically transmitting the human voice. In the beginning, telephony dealt only with analog signals in the circuit-switched networks of the telephone companies. support services support services Psychology Non-health care-related ancillary services–eg, transportation, financial aid, support groups, homemaker services, respite services, and other services including order management, account servicing, retention, and repair/maintenance, as well as Tier I and Tier II technical support via telephone, e-mail, and web chat. These two contracts combined will utilize over 2,600 employees in five cities located 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. and 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 to support AT&T Broadband's growing customer base. This is an increase of 1,300 employees over the original contract, which was expanded. -- Announced a customer care contract renewal with Schering For the American pharmaceutical company created by seizure of assets from Schering AG during World War II, see . Schering AG was a research-centered pharmaceutical company founded in 1851 that merged with Bayer in December 2006. Laboratories, the U.S. prescription pharmaceutical marketing arm of Schering-Plough Schering-Plough Corporation (NYSE: SGP) is a pharmaceutical company which traces its history back to 1851 when Ernst Schering founded Schering AG in Germany. Following the entry of the United States into World War II in 1941, U.S. Corporation (NYSE:SGP SGP Singapore (ISO Country code) SGP Schering-Plough (stock symbol) SGP Stability and Growth Pact SGP Southern Great Plains SGP Staatkundig Gereformeerde Partij SGP Speedway Grand Prix ). -- Announced enhanced customer service and technical support programs designed to support the unique customer care needs of e-service providers available as stand-alone (jargon) stand-alone - Capable of operating without other programs, libraries, computers, hardware, networks, etc. Exactly what is absent is presumed to be obvious from context. "We only run Windows on stand-alone PCs because it's too dangerous to run it on networked ones." programs or pre-integrated with Convergys' Catalys(TM) IP billing solution. -- Announced a new contract with Aliatel, the Czech telecommunications operator, to implement Convergys' Geneva Active Revenue Management (ARM) software. Operating Performance --------------------- Information Management Group (IMG IMG International medical graduate, see there ) ---------------------------------- Excluding intercompany sales, third quarter 2001 IMG revenues increased 12 percent to $235.6 million, from $210.8 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 12 percent to $139.8 million from $125.3 million, resulting from strong 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 its wireless clients. Professional and consulting revenues increased 11 percent to $49.5 million from $44.4 million, reflecting an increase in enhancement projects for two large wireless clients. License and other revenues increased 9 percent to $13.9 million from $12.8 million due to growth in revenues from cable and broadband clients. International revenues, which includes the former Geneva Technology, increased 14 percent to $32.4 million, reflecting increased revenues from new Geneva and Atlys product sales and services, partially offset by the completion of the implementation of Atlys for Telesp Telesp - Telecomunicações de São Paulo S.A. (NYSE: TSP) is a telecommunications company in São Paulo state, Brazil. The company was originally formed as part of Telebrás, the state-owned telecom monopoly at the time. Celular. Excluding special items, third quarter operating income for IMG increased 28 percent to $50.7 million from $39.5 million. This increase reflects earnings associated with higher revenues which more than offset increased investments in sales, marketing, and research and development. Operating margin for IMG in the third quarter was 21.5 percent, up from 18.7 percent in the third quarter last year. 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 ) ------------------------------- CMG revenues were $331.6 million, a 3 percent decrease compared to $342.7 million in the third quarter of 2000, reflecting general weakness in the economy and also service level reductions and volume cutbacks by several clients in the wake of the September 11 attacks September 11 attacks Series of airline hijackings and suicide bombings against U.S. targets perpetrated by 19 militants associated with the Islamic extremist group al-Qaeda. on the United States. CMG's revenues for communications clients decreased $16 million but were partially offset by a $10 million increase in revenues from technology clients. Excluding special items, operating income for CMG decreased 5 percent to $40.0 million from $42.1 million in last year's third quarter. CMG reported a 12.1 percent operating margin in the third quarter of 2001, down from the 12.3 percent reported in the third quarter of 2000. Business Outlook ---------------- The following forward looking-statements reflect Convergys Corporation's expectations as of October 24, 2001. 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 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. until its next quarterly results announcement, other than in publicly available statements. Fiscal 2001 Expectations -- IMG revenue growth should increase approximately 16 percent for all of 2001 and CMG revenue is expected to be flat when compared to last year. -- Both CMG and IMG operating margins are expected to increase slightly when compared to last year. -- 2001 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. should end the year in the $1.24 to $1.26 range including goodwill amortization expense. Fiscal 2002 Expectations -- IMG revenue should increase between 13 and 15 percent for all of 2002 and CMG revenue is expected to increase between 7 and 10 percent when compared to 2001. -- Operating margin for IMG should increase slightly; however, CMG's operating margin is expected to remain relatively flat. Total operating margin for Convergys is also expected to be relatively flat. This margin guidance reflects the new accounting rules that exclude goodwill amortization expense applied to both 2001 and 2002. -- Excluding the highest and lowest sell side analysts' forecasts, we are comfortable with the range of 2002 EPS estimates of $1.57 to $1.65. Mr. Orr added, "Moving forward, we have outlined a well-defined well-de·fined adj. 1. Having definite and distinct lines or features: a well-defined silhouette. 2. strategy aimed at delivering value to our clients and enhancing shareholder value. Factors we believe should support our growth in revenues and profits focus on large markets outside the U.S. The build-out Build-out is an urban planner’s estimate of the amount and location of potential development for an area. Build-out is one step of the land use planning process. Evaluation of potential development impacts begins with a build-out analysis. in the international GPRS (General Packet Radio Service) The first high-speed digital data service provided by cellular carriers that used the GSM technology. GPRS added a packet-switched channel to GSM, which uses dedicated, circuit-switched channels for voice conversations. market as well as wireless and cable/video subscriber growth, increasing demand for outsourced human resources services management, and recent advances in our integrated, Web-based customer care should fuel both top and bottom-line bot·tom-line adj. 1. Concerned exclusively with costs and profits: bottom-line issues. 2. Ruthlessly realistic; pragmatic: a bottom-line political strategy. growth. We believe the initiatives we have undertaken over the past year have positioned us well for success in 2002. Longer term, further GPRS expansion and the eventual build-out of 3G will add significantly to our growth potential." About Convergys --------------- Convergys Corporation (NYSE:CVG), a member of the S&P 500 and the Forbes' Platinum platinum (plăt`ənəm), metallic chemical element; symbol Pt; at. no. 78; at. wt. 195.08; m.p. 1,772°C;; b.p. 3,827±100°C;; sp. gr. 21.45 at 20°C;; valence +2 or +4. 400, is the global leader in integrated billing and customer care services provided through outsourcing or licensing. We serve top companies in telecommunications, 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 , cable and broadband services, technology, 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. , and other industries in more than 30 countries. We also provide integrated, outsourced, human resource services to leading companies across a broad range of industries. We bring 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, software, and expertise to help create valuable relationships between our clients and their customers. This commitment is validated val·i·date tr.v. val·i·dat·ed, val·i·dat·ing, val·i·dates 1. To declare or make legally valid. 2. To mark with an indication of official sanction. 3. by the more than 1.3 million individual bills our software produces each day to support more than 100 million subscribers, and by the more than 1.2 million separate customer contacts we manage each day, both live and via electronic interaction. Convergys(TM) employs nearly 44,000 people in 46 customer contact centers and in our data centers and other offices in the United States, Canada, 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. , Israel Israel, in the Bible Israel (ĭz`rēəl, ĭz`rāəl) [as understood by Hebrews,=he strives with God], according to the book of Genesis, name given to Jacob as eponymous ancestor of the Hebrews, the chosen people of God. , and Europe. Convergys is on the net at www.convergys.com, and has world headquarters in 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, the Convergys logo, Geneva, and Catalys are trademarks and Atlys is a registered trademark of Convergys Corporation.) CONFERENCE CALL NOTE: --------------------- Convergys will host a 60-minute conference call on Wednesday Wednesday: see week. , October 24 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, president, & CEO, and Steve v. t. 1. To pack or stow, as cargo in a ship's hold. See Steeve. Rolls, CFO See Chief Financial Officer. . This call will be carried live (with scheduled repeats) on the Internet on www.streetfusion.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 contains forward-looking statements 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 consequences of the September 11, 2001, attacks on the United States and the U.S. response to those attacks, the loss of a significant client, difficulties in completing or integrating acquisitions, 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, 2000, filed with the SEC by Convergys Corporation. 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.
For more information: Convergys Corporation
Investor Contacts:
Steve Rolls, 513/723-3440 or 888/284-9900
or Ron Harris, 513/723-2449 or 888/284-9900
Media Contacts:
John Pratt, 513/723-3333 or 888/284-9900
or Kathryn Corbett, 212/704-8292
(Financial Tables Follow)
CONVERGYS CORPORATION
Revenues, Net Income and Earnings Per Common Share
EXCLUDING SPECIAL ITEMS
In Millions Except Per Share Amounts
(Unaudited)
Third Quarter
Change
2001 2000 Amount %
Revenues:
- Information Mgmt. Grp. $ 238.5 $ 214.4 $ 24.1 11
- Customer Mgmt. Group 331.6 342.7 (11.1) (3)
- Eliminations (2.9) (3.6) 0.7 (19)
--------- --------- ------- ---
--Total $ 567.2 $ 553.5 $ 13.7 2
Operating Income:
- Information Mgmt. Grp. $ 50.7 $ 39.5 $ 11.2 28
- Customer Mgmt. Group 40.0 42.1 (2.1) (5)
- Corporate & Other (0.1) (1.9) 1.8 (95)
--------- --------- ------- ---
--Total $ 90.6 $ 79.7 $ 10.9 14
Net Income $ 53.4 $ 47.6 $ 5.8 12
Earnings Per Common Share
- Basic $0.31 $0.28 $0.03 11
- Diluted $0.31 $0.27 $0.04 15
Weighted Average Common
Shares Outstanding
- Basic 169.9 167.9 2.0
- Diluted 174.2 174.8 (0.6)
Nine Months
Change
2001 2000 Amount %
Revenues:
- Information Mgmt. Grp. $ 693.4 $ 596.2 $ 97.2 16
- Customer Mgmt. Group 1,045.6 1,020.4 25.2 2
- Eliminations (9.1) (14.0) 4.9 (35)
--------- --------- ------- ---
--Total $1,729.9 $1,602.6 $127.3 8
Operating Income:
- Information Mgmt. Grp. $ 142.0 $ 112.6 $ 29.4 26
- Customer Mgmt. Group 131.2 124.1 7.1 6
- Corporate & Other (2.9) (5.7) 2.8 (49)
--------- --------- ------- ---
--Total $ 270.3 $ 231.0 $ 39.3 17
Net Income $ 159.1 $ 137.0 $ 22.1 16
Earnings Per Common Share
- Basic $0.94 $0.82 $ 0.12 15
- Diluted $0.91 $0.79 $ 0.12 15
Weighted Average Common
Shares Outstanding
- Basic 169.7 167.4 2.3
- Diluted 175.1 173.9 1.2
NOTE: The above results exclude special items. In the third quarter of
2001, the Company recorded restructuring charges at CMG and IMG of
$53.3 and $4.7, respectively. Combined these charges reduced operating
income for the third quarter of 2001 by $58.0. The Company also
recorded a one-time write-down of equity investments of $6.5 in the
third quarter of 2001. The equity investment write-down, combined with
the restructuring charges, totaled $64.5 pre-tax ($50.4 after tax) or
$0.29 per diluted share. Additionally, in the second quarter of 2001,
a charge of $31.8 ($26.3 after tax) was recorded in the Corporate and
Other line above related to the Geneva acquisition and integration
costs. Accordingly, the special items recorded in the nine months
ended September 30, 2001 totaled $96.3 pre-tax ($76.7 after tax) or
$0.44 per diluted share.
Convergys Corporation
Consolidated Statements of Income
EXCLUDING SPECIAL ITEMS
In Millions Except Per Share Amounts
(Unaudited)
For the Three Months For the Nine Months
Ended Sept. 30, % Ended Sept. 30, %
2001 2000 Chg. 2001 2000 Chg.
Revenues:
Information Mgmt. Grp.
Data Processing $139.8 $125.3 12 $ 396.1 $ 354.5 12
Prof. & Consulting 49.5 44.4 11 141.8 112.4 26
License & Other 13.9 12.8 9 45.5 39.0 17
International 32.4 28.3 14 100.9 76.3 32
----- ------ -- ------- ------- --
External Revenues 235.6 210.8 12 684.3 582.2 18
Interco. Svcs. for CMG 2.9 3.6 (19) 9.1 14.0 (35)
----- ------ -- ------- ------- --
Total IMG Revenues 238.5 214.4 11 693.4 596.2 16
Customer Management Grp.
Communications 216.6 232.4 (7) 658.6 686.7 (4)
Technology 53.4 43.0 24 175.9 126.0 40
Financial Services 16.1 19.5 (17) 56.2 66.8 (16)
Other 45.5 47.8 (5) 154.9 140.9 10
----- ------ -- ------- ------- --
Total CMG Revenues 331.6 342.7 (3) 1,045.6 1,020.4 2
Eliminations & Other (2.9) (3.6) (19) (9.1) (14.0)(35)
----- ------ -- ------- ------- --
Total Revenues 567.2 553.5 2 1,729.9 1,602.6 8
Costs & Expenses:
Cost of Providing
Services & Products 309.2 313.3 (1) 940.1 909.1 3
Selling, General & Admin. 91.7 94.1 (3) 300.0 269.8 11
Research & Development 32.4 25.3 28 86.8 73.7 18
Depreciation 30.5 28.5 7 94.5 81.0 17
Amortization 12.8 12.6 2 38.2 37.7 1
Year 2000 Programming - - - - 0.3 -
----- ------ -- ------- ------- --
Total Costs & Expenses 476.6 473.8 1 1,459.6 1,371.6 6
Operating Income 90.6 79.7 14 270.3 231.0 17
Equity in Earnings of
Cellular Partnership 1.3 6.0 (78) 5.9 17.3 (66)
Other Income (Exp.), Net (1.1) 1.2 - (0.4) 1.4 -
Interest Expense (4.0) (8.2) (51) (16.5) (25.1)(34)
----- ------ -- ------- ------- --
Income Before Inc. Taxes 86.8 78.7 10 259.3 224.6 15
Income Taxes 33.4 31.1 7 100.2 87.6 14
----- ------ -- ------- ------- --
Net Income $ 53.4 $ 47.6 12 $ 159.1 $ 137.0 16
===== ====== == ======= ======= ==
Earnings Per Common Share
-Basic $ 0.31 $ 0.28 11 $ 0.94 $ 0.82 15
-Diluted $ 0.31 $ 0.27 15 $ 0.91 $ 0.79 15
Weighted Average Common
Shares Outstanding (millions)
-Basic 169.9 167.9 169.7 167.4
-Diluted 174.2 174.8 175.1 173.9
Other Data
-Operating Margin 16.0% 14.4% 15.6% 14.4%
Market Price Per Share
High $ 32.870 $ 55.438 $ 50.250 $ 55.438
Low $ 25.140 $ 35.688 $ 25.140 $ 26.625
Close $ 27.750 $ 38.875 $ 27.750 $ 38.875
Convergys Corporation
Consolidated Balance Sheets
In Millions
(Unaudited)
Sept. 30, Dec. 31,
2001 2000
Assets
Cash and Cash Equivalents $ 36.9 $ 49.3
Receivables - Net 391.3 395.7
Other Current Assets 84.0 71.2
Property & Equipment - Net 338.1 397.6
Other Assets 873.2 890.3
--------- ---------
Total Assets $ 1,723.5 $ 1,804.1
Liabilities and Shareholders' Equity
Debt Maturing in One Year $ 1.8 $ 0.6
Other Current Liabilities 351.2 370.8
Other Liabilities 19.0 17.3
Long-Term Debt 184.5 291.4
Common Shareholders' Equity 1,167.0 1,124.0
--------- ---------
Total Liabilities
& Shareholders' Equity $ 1,723.5 $ 1,804.1
Convergys Corporation
Information Management Group
Operating Segment Data
In Millions
(Unaudited)
For the Three Months For the Nine Months
Ended Sept. 30, % Ended Sept. 30, %
2001 2000 Chg. 2001 2000 Chg.
Revenues:
Data Processing $139.8 $125.3 12 $396.1 $354.5 12
Prof. & Consulting 49.5 44.4 11 141.8 112.4 26
License & Other 13.9 12.8 9 45.5 39.0 17
International 32.4 28.3 14 100.9 76.3 32
----- ------ -- ----- ----- --
External Revenues 235.6 210.8 12 684.3 582.2 18
Interco. Svcs. for CMG 2.9 3.6 (19) 9.1 14.0 (35)
----- ------ -- ----- ----- --
Total IMG Revenues 238.5 214.4 11 693.4 596.2 16
Costs & Expenses:
Cost of Providing
Services & Products 112.7 109.4 3 328.9 303.8 8
Selling, General & Admin. 31.3 28.6 9 102.9 73.7 40
Research & Development 29.6 21.8 36 77.4 62.2 24
Depreciation 9.6 10.4 (8) 28.6 29.6 (3)
Amortization 4.6 4.7 (2) 13.6 14.0 (3)
Impairment Charge 4.7 - - 4.7 - -
Year 2000 Programming - - - - 0.3 -
------ ------ -- ------ ----- --
Total Costs & Expenses 192.5 174.9 10 556.1 483.6 15
------ ------ -- ------ ----- --
Operating Income $ 46.0 $ 39.5 16 $137.3 $112.6 22
====== ====== ====== =====
Note: The operating segment data for the Information Management Group
(IMG) shown above reflects the detailed revenue and expense
data for IMG that will be presented in the Convergys 10-Q for
the quarterly period ended September 30, 2001.
Convergys Corporation
Customer Management Group
Operating Segment Data
In Millions
(Unaudited)
For the Three Months For the Nine Months
Ended Sept. 30, % Ended Sept. 30, %
2001 2000 Chg. 2001 2000 Chg.
Revenues:
Communications $216.6 $232.4 (7) $ 658.6 $ 686.7 (4)
Technology 53.4 43.0 24 175.9 126.0 40
Financial Services 16.1 19.5 (17) 56.2 66.8 (16)
Other 45.5 47.8 (5) 154.9 140.9 10
------ ------ -- ------- ------- --
Total CMG Revenues 331.6 342.7 (3) 1,045.6 1,020.4 2
Costs & Expenses:
Cost of Providing
Services & Products 199.4 207.5 (4) 620.3 619.3 -
Selling, General & Admin. 62.2 64.7 (4) 199.4 192.8 3
Research & Development 2.8 3.5 (20) 9.4 11.5 (18)
Depreciation 19.0 17.0 12 60.8 49.0 24
Amortization 8.2 7.9 4 24.5 23.7 3
Restructuring & Impair. 53.3 - - 53.3 - -
------ ------ -- ------- ------- --
Total Costs & Expenses 344.9 300.6 15 967.7 896.3 8
------ ------ -- ------- ------- --
Operating Income $(13.3) $ 42.1 (132) $ 77.9 $ 124.1 (37)
====== ====== ======== =======
Note: The operating segment data for the Customer Management Group
(CMG) shown above reflects the detailed revenue and expense
data for CMG that will be presented in the Convergys 10-Q for
the quarterly period ended September 30, 2001.
Convergys Corporation
Supplemental Pro Forma Schedule of Operating Results
Excluding Goodwill Amortization
In Millions
(Unaudited)
Operating Income
------------------------------------------
IMG CMG Corporate Total
------ ------ --------- ------
2001
First Quarter $ 47.8 $ 53.7 ($1.6) $ 99.9
Second Quarter $ 50.0 $ 49.7 ($1.2) (a) $ 98.5 (a)
Third Quarter $ 53.8 (b) $ 46.0 (c) ($0.1) $ 99.7 (c)
------ ------ ---- ------
Total 2001 $151.6 $149.4 ($2.9) $298.1
====== ====== ====== ======
2000
First Quarter $ 37.9 $ 46.5 ($1.9) $ 82.5
Second Quarter $ 41.7 $ 47.1 ($1.9) $ 86.9
Third Quarter $ 42.7 $ 47.9 ($1.9) $ 88.7
Fourth Quarter $ 47.5 $ 53.1 ($1.6) $ 99.0
------ ------ ------ ------
Total 2000 $169.8 $194.6 ($7.3) $357.1
====== ====== ====== ======
Diluted
Net Earnings
Income Per Share
2001 ------ ---------
First Quarter $ 59.7 $0.34
Second Quarter $ 61.0 (a) $0.35 (a)
Third Quarter $ 60.8 (d) $0.35 (d)
----- -----
Total 2001 $181.5 $1.04
====== =====
2000
First Quarter $ 50.5 $0.29
Second Quarter $ 53.1 $0.31
Third Quarter $ 54.8 $0.31
Fourth Quarter $ 59.8 $0.34
------ -----
Total 2000 $218.2 $1.25
====== =====
(a) Excludes one-time transaction and integration costs related to the
Geneva acquisition totaling $31.8 ($26.3 after tax) or $0.15 per
diluted share.
(b) Excludes a one-time restructuring charge of $4.7 ($2.9 after
tax) or $0.02 per diluted share.
(c) Excludes one-time charges for restructuring activities of $53.3
($41.0 after tax) or $0.23 per diluted share.
(d) Excludes the items noted in (b) and (c) plus a one-time write-
down of equity investments of $6.5 ($6.5 after tax) or $0.04
per diluted share.
NOTE: In June 2001, the Financial Accounting Standards Board (FASB)
approved prospective changes to the accounting for acquisitions and
goodwill resulting from acquisitions. Under this new accounting,
beginning January 1, 2002, goodwill resulting from Convergys'
acquisitions will no longer be amortized. The above pro forma schedule
provides summary segment and consolidated results for Convergys for
2000 and the first nine months of 2001 assuming the new accounting had
been effective at the beginning of 2000.
CONVERGYS CORPORATION
Revenues, Net Income and Earnings Per Common Share
INCLUDING SPECIAL ITEMS
In Millions Except Per Share Amounts
(Unaudited)
Third Quarter
Change
2001 2000 Amount %
Revenues:
- Information Mgmt. Grp. $ 238.5 $ 214.4 $ 24.1 11
- Customer Mgmt. Group 331.6 342.7 (11.1) (3)
- Eliminations (2.9) (3.6) 0.7 (19)
--------- --------- ------- ---
--Total $ 567.2 $ 553.5 $ 13.7 2
Operating Income:
- Information Mgmt. Grp. $ 46.0 (a) $ 39.5 $ 6.5 16
- Customer Mgmt. Group (13.3)(b) 42.1 (55.4) (132)
- Corporate & Other (0.1) (1.9) 1.8 (95)
--------- --------- ------- ---
--Total $ 32.6 (a,b) $ 79.7 $(47.1) (59)
Net Income $ 3.0 (c) $ 47.6 $(44.6) (94)
Earnings Per Common Share
- Basic $0.02 (c) $0.28 $(0.26) (93)
- Diluted $0.02 (c) $0.27 $(0.25) (93)
Weighted Average Common
Shares Outstanding
- Basic 169.9 167.9 2.0
- Diluted 174.2 174.8 (0.6)
Nine Months
Change
2001 2000 Amount %
Revenues:
- Information Mgmt. Grp. $ 693.4 $ 596.2 $ 97.2 16
- Customer Mgmt. Group 1,045.6 1,020.4 25.2 2
- Eliminations (9.1) (14.0) 4.9 (35)
--------- --------- ------- ---
--Total $1,729.9 $1,602.6 $127.3 8
Operating Income:
- Information Mgmt. Grp. $ 137.3 (a) $ 112.6 $ 24.7 22
- Customer Mgmt. Group 77.9 (b) 124.1 (46.2) (37)
- Corporate & Other (34.7)(d) (5.7) (29.0) -
--------- --------- ------- ---
--Total $ 180.5(a,b,d)$ 231.0 $(50.5) (22)
Net Income $ 82.4 (e) $ 137.0 $(54.6) (40)
Earnings Per Common Share
- Basic $0.49 (e) $0.82 $(0.33) (40)
- Diluted $0.47 (e) $0.79 $(0.32) (41)
Weighted Average Common
Shares Outstanding
- Basic 169.7 167.4 2.3
- Diluted 175.1 173.9 1.2
(a) Includes a $4.7 one-time restructuring charge.
(b) Includes $53.3 in one-time charges for restructuring activities.
(c) Includes the items discussed in (a) and (b) above as well as a
$6.5 one-time charge to write-down equity investments. Combined
these charges reduced net income by $50.4 or $0.29 per diluted
share.
(d) Includes $31.8 in one-time charges recorded in the second quarter
of 2001 for transaction and integration costs from the Geneva
acquisition.
(e) Includes the items discussed in (a) - (d) above. Combined these
items reduced net income by $76.7 or $0.44 per diluted share.
Convergys Corporation
Consolidated Statements of Income
INCLUDING SPECIAL ITEMS
In Millions Except Per Share Amounts
(Unaudited)
For the Three Months For the Nine Months
Ended Sept. 30, % Ended Sept. 30, %
2001 2000 Chg. 2001 2000 Chg.
Revenues:
Information Mgmt. Grp.
Data Processing $139.8 $125.3 12 $ 396.1 $ 354.5 12
Prof. & Consulting 49.5 44.4 11 141.8 112.4 26
License & Other 13.9 12.8 9 45.5 39.0 17
International 32.4 28.3 14 100.9 76.3 32
----- ------ -- ------- ------- --
External Revenues 235.6 210.8 12 684.3 582.2 18
Interco. Svcs. for CMG 2.9 3.6 (19) 9.1 14.0 (35)
----- ------ -- ------- ------- --
Total IMG Revenues 238.5 214.4 11 693.4 596.2 16
Customer Management Grp.
Communications 216.6 232.4 (7) 658.6 686.7 (4)
Technology 53.4 43.0 24 175.9 126.0 40
Financial Services 16.1 19.5 (17) 56.2 66.8 (16)
Other 45.5 47.8 (5) 154.9 140.9 10
----- ------ -- ------- ------- --
Total CMG Revenues 331.6 342.7 (3) 1,045.6 1,020.4 2
Eliminations & Other (2.9) (3.6) (19) (9.1) (14.0)(35)
----- ------ -- ------- ------- --
Total Revenues 567.2 553.5 2 1,729.9 1,602.6 8
Costs & Expenses:
Cost of Providing
Services & Products 309.2 313.3 (1) 940.1 909.1 3
Selling, General & Admin. 91.7 94.1 (3) 300.0 269.8 11
Research & Development 32.4 25.3 28 86.8 73.7 18
Depreciation 30.5 28.5 7 94.5 81.0 17
Amortization 12.8 12.6 2 38.2 37.7 1
Restructuring & Impair. 58.0 - - 58.0 - -
Acquisition & Integration - - - 31.8 - -
Year 2000 Programming - - - - 0.3 -
----- ------ -- ------- ------- --
Total Costs & Expenses 534.6 473.8 13 1,549.4 1,371.6 13
Operating Income 32.6 79.7 (59) 180.5 231.0 (22)
Equity in Earnings of
Cellular Partnership 1.3 6.0 (78) 5.9 17.3 (66)
Other Income (Exp.), Net (7.6) 1.2 - (6.9) 1.4 -
Interest Expense (4.0) (8.2) (51) (16.5) (25.1)(34)
----- ------ -- ------- ------- --
Income Before Inc. Taxes 22.3 78.7 (72) 163.0 224.6 (27)
Income Taxes 19.3 31.1 (38) 80.6 87.6 (8)
----- ------ -- ------- ------- --
Net Income $ 3.0 $ 47.6 (94) $ 82.4 $ 137.0 (40)
===== ====== == ======= ======= ==
Earnings Per Common Share
-Basic $ 0.02 $ 0.28 (93) $ 0.49 $ 0.82 (40)
-Diluted $ 0.02 $ 0.27 (93) $ 0.47 $ 0.79 (41)
Weighted Average Common Shares Outstanding (millions)
-Basic 169.9 167.9 169.7 167.4
-Diluted 174.2 174.8 175.1 173.9
Market Price Per Share
High $ 32.870 $ 55.438 $ 50.250 $ 55.438
Low $ 25.140 $ 35.688 $ 25.140 $ 26.625
Close $ 27.750 $ 38.875 $ 27.750 $ 38.875
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