Convergys Corp. (CVG, Financial) filed Quarterly Report for the period ended 2009-09-30.
Convergys Corp. is one of the global leaders in the provision of outsourced integrated billing and customer care services. It focuses on developing long-term strategic relationships with clients in customer-intensive industries including telecommunications cable broadband satellite broadcasting Internet services technology and financial services. The company serves its clients through its two operating units: the Information Management Group; and the Customer Management Group. Convergys Corp. has a market cap of $1.34 billion; its shares were traded at around $10.93 with a P/E ratio of 10.1 and P/S ratio of 0.5. Convergys Corp. had an annual average earning growth of 1.8% over the past 10 years. GuruFocus rated Convergys Corp. the business predictability rank of 2-star.
Consolidated revenues for the third quarter of 2009 were $765.4 compared to $676.2 in the prior year. Growth in revenues from HR Management and Customer Management was offset by revenue declines at Information Management. As described more fully under the HR Management section on page 29, revenue for the three months ended September 30, 2009 includes $106.3 of previously deferred implementation revenue recognized in the third quarter of 2009 related to one of the large HR Management contracts. Operating loss for the third quarter of 2009 was $90.3 compared to operating loss of $242.0 in the prior year. As described more fully under the HR Management section, operating loss for the three months ended September 30, 2009 and 2008 include implementation-related and asset impairment charges of $224.6 and $272.9, respectively. The implementation-related and impairment charges noted above that were recorded both during 2009 and 2008 primarily relate to two large HR Management related contracts. Operating results for the three months ended September 30, 2009 also included restructuring charges of $12.8 mostly to align costs to future growth.
During the third quarter of 2009, we recorded equity income in the Cellular Partnerships of $10.2 compared to equity income of $7.7 in the prior year. Interest expense of $7.4 increased from $5.5 in the prior year reflecting a higher level of debt outstanding throughout the third quarter of 2009 compared to the third quarter of 2008. The $10.2 decrease in other income (expense), net, was due to a foreign exchange loss in the current year and a $6.0 gain on the termination of treasury lock derivative instruments recorded in the third quarter 2008. Our effective tax benefit rate was 2.4% for the three months ended September 30, 2009 compared to an effective tax benefit rate 39.2% in the same period last year.
Consolidated revenues for the first nine months of 2009 were $2,142.8 compared to $2,082.1 in the prior year period. Growth in revenues from HR Management and Customer Management was offset by revenue declines at Information Management. As described more fully under the HR Management section, revenue for the first nine months of 2009 includes $106.3 of previously deferred implementation revenue recognized in the third quarter of 2009 related to one of the large HR Management contracts. Operating loss for the first nine months of 2009 was $122.6 compared to an operating loss of $155.7 in the prior year period. As described more fully under the HR Management section, operating loss for the nine months ended September 30, 2009 and 2008 include implementation-related and asset impairment charges of $354.2 and $272.9, respectively. The implementation-related and impairment charges noted above primarily related to two large HR Management contracts.
As a percentage of revenues, the cost of providing services and products sold was 70.3% compared to 69.2% during the corresponding period last year, largely due to the HR Management accelerated implementation revenue and charges. These charges are described more fully under the HR Management section above. Selling, general, and administrative expenses of $478.4 increased 9% compared to the first nine months of 2008. The increase was due to higher selling, general, and administrative expenses at Customer Management, primarily reflecting higher sales and marketing costs to service the expanded client base and extensive global channel partnerships obtained through the Intervoice acquisition. The 56% increase in research and development costs reflects our investments in the automated self-care and technology solutions particularly related to Intervoice platforms and our focused increased spending at Information Management on strategic initiatives to enhance the functionality of our business support system and operational support system offerings. Compared to the prior year, the $3.8 increase in depreciation expense reflects assets that were added due to the Intervoice acquisition during the third quarter of 2008 that were partially offset by decreases at Information Management due to assets that were fully depreciated. As noted under the heading Restructuring Charges, we recorded a restructuring charge of $12.8 during the third quarter of 2009 mostly related to the realignment of resources to expected revenue growth. Restructuring charges of $14.1 were recorded during the first quarter of 2008 to align resources to future business needs and to shift the geographic mix of certain resources.
During the first nine months of 2009, we recorded equity income in the Cellular Partnerships of $31.7 compared to equity income of $25.8 in the prior year period. The $18.1 decrease in other income (expense), net, was due to a foreign exchange loss in the current year and a $6.0 gain on the termination of treasury lock derivative instruments recorded in the third quarter 2008. Interest expense of $21.1 increased from $13.3 in the prior year period primarily reflecting a higher level of debt due to the Intervoice acquisition. Our effective tax benefit rate was 2.9% for the nine months ended September 30, 2009 compared to an effective tax benefit rate of 53.1% in the same period last year. The low tax benefit rate for the first nine months of 2009 is due to the geographic mix of the HR Management-related charges and income.
Read the The complete ReportCVG is in the portfolios of George Soros of Soros Fund Management LLC, David Dreman of Dreman Value Management.
Convergys Corp. is one of the global leaders in the provision of outsourced integrated billing and customer care services. It focuses on developing long-term strategic relationships with clients in customer-intensive industries including telecommunications cable broadband satellite broadcasting Internet services technology and financial services. The company serves its clients through its two operating units: the Information Management Group; and the Customer Management Group. Convergys Corp. has a market cap of $1.34 billion; its shares were traded at around $10.93 with a P/E ratio of 10.1 and P/S ratio of 0.5. Convergys Corp. had an annual average earning growth of 1.8% over the past 10 years. GuruFocus rated Convergys Corp. the business predictability rank of 2-star.
Highlight of Business Operations:
revenue of $196.0. This increase includes accelerated recognition of deferred implementation revenue of $106.3 in the third quarter of 2009 related to one of the large HR Management contracts. HR Management operating loss for the nine months ended September 30, 2009 was $253.8 compared to a loss of $288.9 in the prior year period. In addition to the $106.3 of implementation revenue described above, operating results include implementation-related and asset impairment charges of $354.2 during the nine months ended September 30, 2009 and $272.9 during the nine months ended September 30, 2008. The implementation-related and impairment charges noted above mostly related to two large HR Management contracts. The Company has restructured one of those large HR Management contracts to terminate future implementation obligations related to services not already live and to continue providing services already live in operation. As a result, during the third quarter of 2009, all of the capitalized implementation costs related to this contract were written off and a portion of implementation revenue, as referenced above, was recognized. The implementation remains on hold for the other large contract and we are actively negotiating with the client to change the scope and other terms of the contract. At this time, we are unable to estimate either the timing or the net impact these contract restructurings could have to our financial statements.Consolidated revenues for the third quarter of 2009 were $765.4 compared to $676.2 in the prior year. Growth in revenues from HR Management and Customer Management was offset by revenue declines at Information Management. As described more fully under the HR Management section on page 29, revenue for the three months ended September 30, 2009 includes $106.3 of previously deferred implementation revenue recognized in the third quarter of 2009 related to one of the large HR Management contracts. Operating loss for the third quarter of 2009 was $90.3 compared to operating loss of $242.0 in the prior year. As described more fully under the HR Management section, operating loss for the three months ended September 30, 2009 and 2008 include implementation-related and asset impairment charges of $224.6 and $272.9, respectively. The implementation-related and impairment charges noted above that were recorded both during 2009 and 2008 primarily relate to two large HR Management related contracts. Operating results for the three months ended September 30, 2009 also included restructuring charges of $12.8 mostly to align costs to future growth.
During the third quarter of 2009, we recorded equity income in the Cellular Partnerships of $10.2 compared to equity income of $7.7 in the prior year. Interest expense of $7.4 increased from $5.5 in the prior year reflecting a higher level of debt outstanding throughout the third quarter of 2009 compared to the third quarter of 2008. The $10.2 decrease in other income (expense), net, was due to a foreign exchange loss in the current year and a $6.0 gain on the termination of treasury lock derivative instruments recorded in the third quarter 2008. Our effective tax benefit rate was 2.4% for the three months ended September 30, 2009 compared to an effective tax benefit rate 39.2% in the same period last year.
Consolidated revenues for the first nine months of 2009 were $2,142.8 compared to $2,082.1 in the prior year period. Growth in revenues from HR Management and Customer Management was offset by revenue declines at Information Management. As described more fully under the HR Management section, revenue for the first nine months of 2009 includes $106.3 of previously deferred implementation revenue recognized in the third quarter of 2009 related to one of the large HR Management contracts. Operating loss for the first nine months of 2009 was $122.6 compared to an operating loss of $155.7 in the prior year period. As described more fully under the HR Management section, operating loss for the nine months ended September 30, 2009 and 2008 include implementation-related and asset impairment charges of $354.2 and $272.9, respectively. The implementation-related and impairment charges noted above primarily related to two large HR Management contracts.
As a percentage of revenues, the cost of providing services and products sold was 70.3% compared to 69.2% during the corresponding period last year, largely due to the HR Management accelerated implementation revenue and charges. These charges are described more fully under the HR Management section above. Selling, general, and administrative expenses of $478.4 increased 9% compared to the first nine months of 2008. The increase was due to higher selling, general, and administrative expenses at Customer Management, primarily reflecting higher sales and marketing costs to service the expanded client base and extensive global channel partnerships obtained through the Intervoice acquisition. The 56% increase in research and development costs reflects our investments in the automated self-care and technology solutions particularly related to Intervoice platforms and our focused increased spending at Information Management on strategic initiatives to enhance the functionality of our business support system and operational support system offerings. Compared to the prior year, the $3.8 increase in depreciation expense reflects assets that were added due to the Intervoice acquisition during the third quarter of 2008 that were partially offset by decreases at Information Management due to assets that were fully depreciated. As noted under the heading Restructuring Charges, we recorded a restructuring charge of $12.8 during the third quarter of 2009 mostly related to the realignment of resources to expected revenue growth. Restructuring charges of $14.1 were recorded during the first quarter of 2008 to align resources to future business needs and to shift the geographic mix of certain resources.
During the first nine months of 2009, we recorded equity income in the Cellular Partnerships of $31.7 compared to equity income of $25.8 in the prior year period. The $18.1 decrease in other income (expense), net, was due to a foreign exchange loss in the current year and a $6.0 gain on the termination of treasury lock derivative instruments recorded in the third quarter 2008. Interest expense of $21.1 increased from $13.3 in the prior year period primarily reflecting a higher level of debt due to the Intervoice acquisition. Our effective tax benefit rate was 2.9% for the nine months ended September 30, 2009 compared to an effective tax benefit rate of 53.1% in the same period last year. The low tax benefit rate for the first nine months of 2009 is due to the geographic mix of the HR Management-related charges and income.
Read the The complete ReportCVG is in the portfolios of George Soros of Soros Fund Management LLC, David Dreman of Dreman Value Management.
