Overview of the european business from the recent quarterly statement:
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Company Press Release
Convergys Corporation Reports Record Second Quarter Financial Results
CINCINNATI--(BUSINESS WIRE)--July 21, 1999--
-- Revenues increased 17 percent and net income increased 47 percent
-- Operating income was up 35 percent
-- Diluted earnings per share increased 35 percent
Convergys Corporation (NYSE:CVG - news), the global leader in providing outsourced, integrated, customer care and billing, announced today its financial results for its second quarter.
For the three months ended June 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 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 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), 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 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 in Wiztec Solutions, Ltd. (Nasdaq:WIZTF - news). 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, president and CEO 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 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:
-- 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®, 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 - news) 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 - news) 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, 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 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) revenues increased 15 percent to $162.4 million, from $141.5 million in the same period last year. Data processing revenues increased 13 percent, primarily as a result of increased subscriber growth at Sprint PCS, AT&T, and PrimeCo PCS. While system enhancement revenues increased for PCS clients including AirTouch, professional and consulting revenues were essentially flat. License and other revenues increased due to the MediaOne 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 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. 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. 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 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, consumer products, financial services, utilities, healthcare, hospitality, and direct response. Headquartered in Cincinnati, Ohio, Convergys employs over 33,000 people in its 32 call centers and in its data centers and other offices in the United States, Canada, and Europe.
Convergys is online at www.convergys.com and is pronounced kun VER jis. Convergys and the Convergys logo are service marks and Precedent 2000 is a registered service mark of Convergys Corporation.
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 loss of a significant client, difficulties in completing or integrating acquisitions, Year 2000 compliance, and other factors disclosed in the Form 10-K for the year ended December 31, 1998, filed with the SEC by Convergys Corporation.
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