<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___ to
Commission File Number 1-14379
-------------------------
Convergys CMG Retirement Savings Plan
-------------------------
CONVERGYS CORPORATION.
201 East Fourth Street
Cincinnati, Ohio 45202
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
REPORT ON AUDIT OF FINANCIAL STATEMENTS AND SUPPLEMENTAL SCHEDULES AS OF
DECEMBER 31, 1999 AND 1998
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGES
<S> <C>
Report of Independent Accountants 1
Financial Statements:
Statements of Net Assets Available for Benefits as of
December 31, 1999 and 1998 2
Statement of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1999 3
Notes to Financial Statements 4-9
Schedules:
Schedule of Assets Held for Investment Purposes as of
December 31, 1999 10
Schedule of Reportable Transactions for the Year Ended
December 31, 1999 11
</TABLE>
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Convergys Corporation Employee Benefits Committee
In our opinion, the accompanying statements of net assets available for
benefits, and the related statement of changes in net assets available for
benefits present fairly, in all material respects, the net assets available
for benefits of Convergys CMG Retirement Savings Plan (Plan) as of December
31, 1999 and 1998, and the changes in net assets available for benefits for
the year ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States. These financial statements are the
responsibility of the Plan's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these statements in accordance with auditing standards generally
accepted in the United States, which require that we plan and perform the
audit to obtain reasonable assurance about whether the financial statements
are free of material misstatement. An audit includes examining, on a test
basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant
estimates made by management, and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for the
opinion expressed above.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets Held
for Investment Purposes as of December 31, 1999 is presented for the purpose
of additional analysis and is not a required part of the basic financial
statements, but is supplementary information required by the Department of
Labor's Rules and Regulations for Reporting and Disclosure under the Employee
Retirement Income Security Act of 1974. The supplemental schedule is the
responsibility of the Plan's management. The supplemental schedule has been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, is fairly stated in all material
respects in relation to the basic financial statements taken as a whole.
/s/ PricewaterhouseCoopers LLP
Cincinnati, Ohio
June 23, 2000
1
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
AS OF DECEMBER 31,
1999 1998
---------- -----------
<S> <C> <C>
Cash $ 91 $19,520,289
Investments, at fair value 7,695,897 16,537,298
---------- -----------
Net assets available for benefits $7,695,988 $36,057,587
========== ===========
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
STATEMENT OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
for the year ended December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
YEAR ENDED
DECEMBER 31, 1999
-----------------
<S> <C>
Additions:
Additions to net assets attributed to:
Investment Income:
Net appreciation in fair value of investments $ 1,768,077
Dividend and other income 216,922
------------
1,984,999
Contributions:
Participant 901,153
Employer 365,078
------------
1,266,231
Total additions 3,251,230
------------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 476,092
Administrative expenses 11,454
------------
Total deductions 487,546
------------
Net increase 2,763,684
Net assets available for benefits:
Beginning of year $ 36,057,587
Transfers to other Company plans (31,125,283)
------------
End of year $ 7,695,988
============
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the Convergys CMG Retirement Savings Plan
(Plan) provides only general information. Participants should refer to the
Plan agreement for a more complete description of the Plan's provisions.
a. GENERAL: The Plan is a defined contribution plan covering certain
employees at certain domestic locations of Convergys Customer
Management Group Inc. (the Company), formerly MATRIXX Marketing Inc.,
a wholly-owned subsidiary of Convergys Corporation who have one year
of service and are age twenty-one or older. It is subject to the
provisions of the Employee Retirement Income Security Act (ERISA).
Effective January 1, 1999, the name of the Plan was changed from the
MATRIXX Marketing Inc. Profit Sharing/401(k) Plan to the Convergys CMG
Retirement Savings Plan and certain participant balances totaling
$31,125,283 were transferred to the Convergys Corporation Retirement
and Savings Plan.
b. CONTRIBUTIONS: Each year, participants may contribute up to 16 percent
of pretax annual compensation, as defined in the plan (certain highly
compensated employees are limited to a maximum of 6 percent
contributions). Participants may also contribute amounts representing
distributions from other qualified defined benefit or defined
contribution plans. Participants direct the investment of their
contributions into various investment options offered by the Plan. At
December 31, 1999 the Plan offered various mutual funds and individual
stocks as investment options for participants. Participants may also
create a self-directed brokerage account and invest their
contributions in these accounts. The Company contributes 66 2/3
percent of the first 6 percent of base compensation that a participant
contributes to the Plan. The matching Company contributions are
invested directly in Convergys Corporation common stock. Contributions
are subject to certain limitations.
c. PARTICIPANT ACCOUNTS: Each participant's account is credited with the
participant's contribution and allocations of (a) the Company
contributions, (b) Plan earnings, and (c) administrative expenses.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit
that can be provided from the participant's vested account.
d. VESTING: Participants are vested immediately in their contributions
plus actual earnings thereon. Vesting in the Company contributions
portion of their accounts is based on years of service. A participant
is 100 percent vested after three years of credited service.
e. PARTICIPANT LOANS: Participants may borrow from their accounts, a
minimum of $500, up to a maximum of $50,000 or 50 percent of their
vested account balance, whichever is less. The loans are secured by
the balance in the participant's account and bear interest at the
prime lending rate at the time the loan is initiated. Loans generally
must be repaid within five years.
4
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
f. PAYMENT OF BENEFITS: Distribution of a participant's vested account
balance is made in one lump sum payment to the participant, or their
beneficiary, upon termination of employment, permanent disability or
death. Participant accounts that are vested and in excess of $5,000,
will not be distributed to the participant before they attain age 65,
without the written consent of the participant. Participants may apply
for hardship withdrawals, subject to approval by the Plan Committee.
The contributions and earnings are taxable to the participants,
subject to certain exceptions, upon withdrawal from the Plan.
Forfeited amounts related to employees who were not fully vested at
the time of termination serve to reduce employer contributions to the
Plan.
2. SUMMARY OF ACCOUNTING POLICIES:
a. USE OF ESTIMATES: The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and changes therein, and disclosure
of contingent assets and liabilities. Actual results could differ from
those estimates.
b. INVESTMENT VALUATION AND INCOME RECOGNITION: The Plan's investments
are stated at fair value. Quoted market prices are used to value
investments. Shares of mutual funds are valued at the net asset value
of shares held by the Plan at year-end.
Purchases and sales of securities are recorded on a trade-date basis.
Dividends are recorded on the ex-dividend date.
At the close of business on December 31, 1998, Cincinnati Bell Inc.
(CBI) (now Broadwing Inc.) completed the spin-off of Convergys
Corporation. At that time, CBI common shareholders received
Convergys common shares equal to the number of CBI shares held at
date of record for the spin-off. The value reflected in the
Statement of Net Assets Available for Benefits at December 31, 1998
for the Broadwing Shares Fund is based on the closing market price
for CBI shares on December 31, 1998. Effective January 1, 1999, a
Convergys Corporation Shares fund was established and,
subsequently, Plan participants could make no additional
investments in the Broadwing Shares Fund.
5
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
3. INVESTMENTS:
The following presents investments that represent 5 percent or more of the
Plan's net assets:
<TABLE>
<CAPTION>
At December 31,
1999
---------------
<S> <C>
Convergys Corporation common stock, 80,096 shares $2,462,957 *
Broadwing Inc. common stock, 57,042 shares 2,103,411
Fidelity Equity Income Fund, 12,371 shares 661,596
Fidelity Dividend Growth Fund, 22,554 shares 653,837
Fidelity Managed Income Portfolio Fund, 480,739 shares 480,739
</TABLE>
--------------------------------------------------------------------------------
* nonparticipant directed
During 1999, the Plan's investments (including gains and losses on
investments bought and sold, as well as held during the year)
appreciated in value by $1,768,077 as follows:
<TABLE>
<S> <C>
Mutual Funds ($2,030)
Common stock $1,770,107
----------
$1,768,077
==========
</TABLE>
Investments of the Fidelity Managed Income Portfolio Fund consist in part
of guaranteed investment contracts that are reported at estimated fair
value, which approximates contract value (contributions made plus interest
accrued at the current rate, less withdrawals and fees). These investment
contracts provide for benefit responsive withdrawals by the Plan
participants at contract value. The average interest rate on the contracts
was 6.19% for 1999. The average yield on the contracts was 5.69% for 1999.
At the close of business day on December 31, 1998, all investments with the
exception of the Cincinnati Bell Inc. Shares Fund were liquidated in
preparation for the transfer of all Plan assets to a new investment
manager, Fidelity Management Trust Company (Fidelity).
6
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
3. INVESTMENTS, CONTINUED:
Net assets of the Plan at December 31, 1998 have been presented as cash in
transit between T. Rowe Price and Fidelity. The net assets of the Plan were
invested in the following participant directed funds when received by
Fidelity in January 1999:
<TABLE>
<S> <C>
FIDELITY FUNDS
--------------
PIMCO Total Return $ 2,465,655
Baron Asset 581,112
Puritan 988,404
Equity Income 6,516,347
Diversified International 909,387
Dividend Growth 4,946,399
Managed Income Portfolio 1,813,604
-----------
Total Fidelity Funds 18,220,908
OTHER INVESTMENTS
-----------------
Cincinnati Bell Shares 15,377,172
Participants Loans 1,160,126
Other 1,299,381
-----------
Total Assets Transferred $36,057,587
===========
</TABLE>
7
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
4. NON-PARTICIPANT DIRECTED INVESTMENTS:
Information about the net assets and the significant components of the
changes in net assets relating to the non-participant directed investments
is as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31, AT DECEMBER 31,
1999 1998
----------------- ---------------
<S> <C> <C>
Net Assets:
Common stock $2,462,957 $14,938,315
========== ===========
</TABLE>
<TABLE>
<CAPTION>
Year Ended
December 31, 1999
-----------------
<S> <C>
Changes in Net Assets:
Participant contributions $ 101,652
Employer contributions 370,597
Interest and dividends 5,402
Loan repayments, net 28,739
Net appreciation 725,276
Benefits paid to participants (182,678)
Fund transfers, net 1,413,997
Administrative expenses (28)
----------
$2,462,957
==========
</TABLE>
5. RELATED PARTY TRANSACTIONS:
Certain Plan investments are shares of mutual funds managed by Fidelity
Investments, a sister company to Fidelity Management Trust Company.
Fidelity Management Trust Company is the trustee as defined by the Plan
and, therefore, these transactions qualify as party-in-interest
transactions. Fees paid by the Plan for the investment management services
amount to $11,454 for the year ended December 31, 1999.
6. TAX STATUS:
On June 12, 1996, the Internal Revenue Service issued a favorable
determination letter with respect to the qualification of the Plan under
the Internal Revenue Code. The Plan has been amended since receiving the
determination letter. However, the Plan administrator and the Plan's tax
counsel believe that the Plan is currently designed and being operated in
compliance with the applicable requirements of the Internal Revenue Code.
Therefore, no provision for income taxes has been included in the Plan's
financial statements.
8
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
--------------------------------------------------------------------------------
7. PLAN TERMINATION:
Although the Company has not expressed any intent to do so, Convergys
Corporation reserves the right under the Plan to discontinue its
contributions at any time and terminate the Plan subject to the provisions
of ERISA. In the event of Plan termination, participants would become 100
percent vested in their employer contributions.
9
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
As of December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
NUMBER OF MARKET
NAME OF ISSUER AND TITLE OF ISSUE SHARES COST VALUE
--------------------------------- ------ ---- -----
<S> <C> <C> <C>
Convergys Shares Fund + 80,096 1,723,036** $2,462,957
Broadwing Shares Fund 57,042 *** 2,103,411
Fidelity Equity Income + 12,371 *** 661,596
Fidelity Dividend Growth + 22,554 *** 653,837
Fidelity Managed Income Portfolio + 480,739 *** 480,739
PIMCO Total Return Fund 36,334 *** 359,709
Baron Asset Fund 1,116 *** 65,575
First Data Company Stock Fund 2,249 *** 110,923
American Express Company Stock Fund 1,055 *** 175,403
Fidelity Puritan Fund + 4,141 *** 78,805
Fidelity Diversified International Fund + 4,699 *** 120,378
Spartan US Equity Index Fund + 1,308 *** 68,127
Participant Directed Brokerage Accounts *** 3,619
Participant Loans * -- 350,909
----------
Grand Total -- $7,695,988
==========
</TABLE>
* The interest rates on these loans ranged from 7.25% to 9.25% at December
31, 1999.
** Cost information provided for the Convergys Shares Fund is inclusive of
both participant directed and non-participant directed accounts.
*** This information is not required for participant directed accounts.
+ Party-in-interest to the Plan.
10
<PAGE>
CONVERGYS CMG
RETIREMENT SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
For the year ended December 31, 1999
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
PURCHASE SELLING NET
DESCRIPTION OF ASSET PRICE PRICE GAIN
-------------------- ----------- ----------- ----------
<S> <C> <C> <C>
</TABLE>
There are no reportable transactions for 1999.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Convergys Corporation Employee Benefits Committee has duly caused this annual
report to be signed on its behalf by the undersigned hereunto duly authorized.
Convergys CMG Retirement Savings Plan
By: /s/ Thomas P. Mehnert
-----------------------------
Thomas P. Mehnert
June 28, 2000
