Convergys Corporation Revenues Up 13 Percent On Strong Growth In Customer Management Group

Convergys Corporation (NYSE: CVG), a global leader in integrated billing, employee care, and customer care services, announced today its financial results for the fourth quarter of 2004.

Total revenues increased 13 percent to $672.2 million compared to $594.5 million reported in the fourth quarter of 2003. GAAP net income was $20.2 million or $0.14 per diluted share compared with $48.4 million or $0.33 in the fourth quarter of 2003. Pro forma net income, excluding a net restructuring charge, was $41.2 million or $0.28 per diluted share compared with $47.8 million or $0.33 per diluted share in the prior year. Convergys’ results reflect significant improvement in overall revenue growth as a result of solid performance in the Customer Management Group, which generated a 21 percent increase in revenue. This was partially offset by a 3 percent decline in Information Management Group revenue.

“Convergys delivered strong revenue growth in the fourth quarter as our Customer Management Group grew substantially from prior year levels. We see significant outsourcing opportunities in the pipeline and strong market acceptance of our service offerings. The Information Management Group continued to experience strong acceptance of our Infinys [tm] technology with four new contract wins this quarter, including an expanded relationship with Sprint,” said Jim Orr, Chairman, President, and CEO of Convergys. “As we enter 2005, we expect our growth momentum to continue.”

In the fourth quarter, Convergys recorded a net, pre-tax restructuring charge of $30.4 million. This included a severance charge of $36.7 million related to the reduction in force initiated during the fourth quarter. The focus of this initiative is to reduce the number of management positions in Convergys’ Information Management Group and to further streamline Convergys’ Customer Management Group and corporate operations. In addition, Convergys reversed $6.3 million of facility closure costs accrued in a previous restructuring, to support a new, large outsourcing agreement.

“Our restructuring efforts should be substantially concluded by June 30, 2005. When complete, we expect to generate annual savings in excess of $50 million. Beyond the restructuring, we continue to look for opportunities to improve our cost structure and operating margins,” said Orr.

Highlights Since Last Quarterly Report

Convergys made a significant announcement with Sprint during the quarter. Sprint is consolidating its wireless wholesale billing solution from an in-house system based on a competitor’s platform to an outsourced Convergys billing platform. Convergys also announced that Sprint will license Infinys software to enable Sprint to combine rating activities across all lines of business.

Convergys signed a new, large, outsourced, customer care agreement supporting a communications company. The five-year agreement, valued at $300 million, encompasses a wide range of customer support services.

Convergys announced its first customer care agreement with an Australian-based company. The four-year outsourced services contract is with Optus, a leading integrated communications provider. Convergys will supplement Optus? domestic contact center operations from a facility in India.

Convergys expanded its service capabilities with the acquisition of Finali. Finali transforms customer care operations through a unique blend of analytics, consulting, and automation, enabling Convergys to address the specific needs of the $130 billion in-house contact center market.

During the fourth quarter, Qatar Telecom launched one of the world?s most advanced billing applications. Leveraging Infinys’ technology from Convergys, Qatar now has a billing system that supports the Quadruple Play [tm] – fixed and mobile telephony, video, and data.

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