Convergys Corp. (CVG, Financial) filed Quarterly Report for the period ended 2010-03-31.
Convergys Corp. has a market cap of $1.55 billion; its shares were traded at around $12.54 with a P/E ratio of 11.4 and P/S ratio of 0.6. CVG is in the portfolios of Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, David Dreman of Dreman Value Management, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.
During the first quarter of 2010, we recognized equity income in the Cellular Partnerships of $13.3 compared to equity income of $10.7 in the prior year. Other income (expense) for the first quarter of 2010 includes a $13.0 benefit from the reduction in a litigation reserve partially offset by foreign currency exchange losses. Interest expense decreased to $5.7 from $6.8 in the prior year reflecting a lower level of debt outstanding throughout the first quarter of 2010. Our effective tax rate on net income from continuing operations was 32.7% for the three months ended March 31, 2010 compared to 20.7% in the same period last year. The higher tax rate for the three months ended March 31, 2010 is primarily due to certain discrete items increasing income tax expense, including additional expense related to the healthcare reform bill passed during the current quarter.
As a result of the above, income from continuing operations and income from continuing operations per common share were $25.6 and $0.20 and $31.2 and $0.25, respectively, for the quarters ended March 31, 2010 and 2009.
The results of discontinued operations reflect the results from the HR Management business. Discontinued operations include revenues of $65.0 and $70.2 in the first quarter of 2010 and 2009, respectively. HR Management results improved $12.9 as prior year results included expensing of implementation costs of approximately $9.
As a result of the foregoing, the income (loss) from discontinued operations, net of tax and the earnings from discontinued operations per common share for the three months ended March 31, 2010 was $9.7 and $0.08, respectively, compared to losses of $3.2 and $0.02 in the same period in the prior year. Total first quarter 2010 net income and earnings per diluted share were $35.3 and $0.28, respectively, compared with net income and earnings per diluted share of $28.0 and $0.23, respectively, in the first quarter of 2009.
In order to assess the underlying operational performance of the continuing operations of the business, we provide non-GAAP measures in the table below that exclude the following: 1) certain costs previously allocated to the HR Management business that are now included in continuing operations as discussed above and in more detail in Note 3 of the Notes to Consolidated Financial Statements. These costs were $6.2 in the first quarter of 2010, compared with $7.8 in the same period of the prior year; 2) the reduction of a previously established litigation reserve by $13.0 during the first quarter of 2010, which is reported within other income (expense), and; 3) the change in the CEO of the company in February 2010, which resulted in a negative impact to first-quarter 2010 results from continuing operations of $6.2.
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Convergys Corp. has a market cap of $1.55 billion; its shares were traded at around $12.54 with a P/E ratio of 11.4 and P/S ratio of 0.6. CVG is in the portfolios of Steven Cohen of SAC Capital Advisors, Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates, David Dreman of Dreman Value Management, George Soros of Soros Fund Management LLC, Jeremy Grantham of GMO LLC.
Highlight of Business Operations:
Consolidated revenues for the first quarter of 2010 were $546.0 compared to $624.5 reflecting revenue decreases from both Customer Management and Information Management. Operating income for the first quarter of 2010 was $22.1 compared to operating income of $40.5 in the prior year, due to these revenue declines.During the first quarter of 2010, we recognized equity income in the Cellular Partnerships of $13.3 compared to equity income of $10.7 in the prior year. Other income (expense) for the first quarter of 2010 includes a $13.0 benefit from the reduction in a litigation reserve partially offset by foreign currency exchange losses. Interest expense decreased to $5.7 from $6.8 in the prior year reflecting a lower level of debt outstanding throughout the first quarter of 2010. Our effective tax rate on net income from continuing operations was 32.7% for the three months ended March 31, 2010 compared to 20.7% in the same period last year. The higher tax rate for the three months ended March 31, 2010 is primarily due to certain discrete items increasing income tax expense, including additional expense related to the healthcare reform bill passed during the current quarter.
As a result of the above, income from continuing operations and income from continuing operations per common share were $25.6 and $0.20 and $31.2 and $0.25, respectively, for the quarters ended March 31, 2010 and 2009.
The results of discontinued operations reflect the results from the HR Management business. Discontinued operations include revenues of $65.0 and $70.2 in the first quarter of 2010 and 2009, respectively. HR Management results improved $12.9 as prior year results included expensing of implementation costs of approximately $9.
As a result of the foregoing, the income (loss) from discontinued operations, net of tax and the earnings from discontinued operations per common share for the three months ended March 31, 2010 was $9.7 and $0.08, respectively, compared to losses of $3.2 and $0.02 in the same period in the prior year. Total first quarter 2010 net income and earnings per diluted share were $35.3 and $0.28, respectively, compared with net income and earnings per diluted share of $28.0 and $0.23, respectively, in the first quarter of 2009.
In order to assess the underlying operational performance of the continuing operations of the business, we provide non-GAAP measures in the table below that exclude the following: 1) certain costs previously allocated to the HR Management business that are now included in continuing operations as discussed above and in more detail in Note 3 of the Notes to Consolidated Financial Statements. These costs were $6.2 in the first quarter of 2010, compared with $7.8 in the same period of the prior year; 2) the reduction of a previously established litigation reserve by $13.0 during the first quarter of 2010, which is reported within other income (expense), and; 3) the change in the CEO of the company in February 2010, which resulted in a negative impact to first-quarter 2010 results from continuing operations of $6.2.
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