<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 CORPORATION RETIREMENT AND SAVINGS PLAN
--------------------------
CONVERGYS CORPORATION
201 East Fourth Street
Cincinnati, Ohio 45202
<PAGE>
INDEX
<TABLE>
<CAPTION>
PAGE
----
<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 the Convergys Corporation Retirement and 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 and the Schedule of Reportable
Transactions for the year ended December 31, 1999 are presented for the purpose
of additional analysis and are not a required part of the basic financial
statements but are 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. These supplemental schedules are the
responsibility of the Plan's management. The supplemental schedules have been
subjected to the auditing procedures applied in the audits of the basic
financial statements and, in our opinion, are 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 CORPORATION RETIREMENT AND SAVINGS PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
AS OF DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
at December 31,
1999 1998
---- ----
<S> <C> <C>
Cash $ 1,008,520 $ 94,488,160
Investments, at fair value 364,581,173 103,291,987
Employer contribution receivable -- 101,737
------------ ------------
Net assets available for benefits $365,589,693 $197,881,884
============ ============
</TABLE>
The accompanying notes are an integral part of the financial statements.
2
<PAGE>
CONVERGYS CORPORATION
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 $104,741,325
Dividend and other income 10,024,231
------------
114,765,556
Contributions:
Participant 20,031,620
Employer 7,961,974
------------
27,993,594
Total additions 142,759,150
------------
Deductions:
Deductions from net assets attributed to:
Benefits paid to participants 11,071,343
Administrative expenses 76,491
------------
Total deductions 11,147,834
------------
Net increase $131,611,316
------------
Net assets available for benefits:
Beginning of year $197,881,884
Transfers from other Company plans 31,125,283
Transfers from Cincinnati Bell Inc. plan 4,971,210
------------
End of year $365,589,693
============
</TABLE>
The accompanying notes are an integral part of the financial statements.
3
<PAGE>
CONVERGYS CORPORATION
RETIREMENT AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
-------------------------------------------------------------------------------
1. DESCRIPTION OF PLAN
The following description of the Convergys Corporation Retirement and
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 available to all
eligible employees of Convergys Corporation (CVG), Convergys
Information Management Group Inc. (IMG), formerly Cincinnati Bell
Information Systems Inc. (CBIS), and Convergys Customer Management
Group Inc. (CMG), formerly MATRIXX Marketing Inc., who have one year
of service and are twenty-one years of age 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
CBIS Retirement and Savings Plan 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 participating Companies contribute 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 contribution
portion of their accounts is based on years of service. A participant
is 100 percent vested after three years of credited service.
4
<PAGE>
CONVERGYS CORPORATION RETIREMENT & SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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.
f. PAYMENT OF BENEFITS: Distribution of a participant's vested account
balance is made in one lump sum payment to the participant, or to 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 the 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 RETIREMENT AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. INVESTMENTS:
The following presents investments that represent 5 percent or more of the
Plan's net assets:
<TABLE>
<CAPTION>
December 31,
1999
------------
<S> <C>
Convergys Corporation common stock; 3,430,566 shares $105,489,900*
Broadwing Inc. common stock; 2,858,750 shares 105,416,412
Fidelity Dividend Growth Fund; 1,973,917 shares 57,223,866
</TABLE>
-------------------------------------------------------------------------------
* non-participant 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 $104,741,325 as follows:
<TABLE>
<S> <C>
Mutual funds $ 6,010,352
Common stock 98,730,973
------------
$104,741,325
============
</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 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 RETIREMENT AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
3. INVESTMENTS, CONTINUED:
Net assets of the Plan at December 31, 1998 have been presented as cash in
transit between SunTrust 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 $ 1,220,487
Baron Asset 7,849,132
Puritan 10,065,138
Equity Income 6,091,435
Diversified International 4,701,903
Dividend Growth 45,033,665
Managed Income Portfolio 11,840,958
Spartan US Equity Index 7,787,178
-----------
Total Fidelity Funds 94,589,896
OTHER INVESTMENTS
-----------------
Cincinnati Bell Shares 99,123,792
Participants Loans 4,168,196
------------
Total Assets Transferred $197,881,884
============
</TABLE>
7
<PAGE>
CONVERGYS RETIREMENT AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
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 $ 105,489,900 $ 99,123,792
============= =============
Year Ended
December 31, 1999
-----------------
Changes in Net Assets:
Participant contributions $ 1,924,621
Employer contributions 8,038,684
Loan repayments, net 470,118
Interest and dividends 109,443
Net appreciation 33,200,170
Benefits paid to participants (3,042,520)
Administrative and other expenses (778)
Transfers from other Company or Parent Company plans 2,431,014
Fund transfers, net 62,359,148
-------------
Net change $ 105,489,900
=============
</TABLE>
5. PARTICIPANT BALANCE TRANSFERS:
Effective January 1, 1999, the name of the Plan was changed to the
Convergys Corporation Retirement and Savings Plan and certain participant
balances totaling $31,125,283 were transferred into the Plan from the
Convergys CMG Retirement Savings Plan. Also effective January 1, 1999,
certain participant balances totaling $4,971,210 were transferred into the
Plan from a retirement plan sponsored by CBI.
6. 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 $76,491 for the year ended December 31, 1999.
8
<PAGE>
CONVERGYS RETIREMENT AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS, CONTINUED
7. DISCRIMINATION TESTS:
Contributions to the Plan for 1999 exceeded the limits contained in
sections 401(k) and 401(m) of the Internal Revenue Code. Convergys has
stated that appropriate corrective action will be taken prior to
December 31, 2000 to maintain the qualified status of the Plan. Because
the type of corrective action has not yet been determined, no amounts have
been reflected in the financial statements as contributions receivable or
liabilities of the Plan.
8. TAX STATUS:
On May 14, 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.
9. PLAN TERMINATION:
Although CVG has not expressed any intent to do so, CVG 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 CORPORATION RETIREMENT AND 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+ 3,430,566 72,166,491** $105,489,900
Broadwing Inc. Shares Fund 2,858,750 *** 105,416,412
Participant Self-Directed Brokerage Accounts *** 5,215,273
PIMCO Total Return Fund 402,870 *** 3,988,416
Baron Asset Fund 191,272 *** 11,241,084
American Express Company Stock Fund 6,244 *** 1,038,096
First Data Company Stock Fund 7,775 *** 383,431
Fidelity Puritan Fund+ 676,676 *** 12,877,145
Fidelity Equity Income Fund+ 269,153 *** 14,394,300
Fidelity Cash Reserve Fund+ 355 *** 355
Fidelity Diversified International Fund+ 398,229 *** 10,074,515
Fidelity Managed Income Portfolio+ 16,432,811 *** 16,432,811
Spartan US Equity Index Fund+ 287,679 *** 14,985,224
Fidelity Dividend Growth Fund+ 1,973,917 *** 57,223,866
Participant Loan Fund * *** 6,828,865
------------
GRAND TOTAL $365,589,693
============
</TABLE>
* The interest rates on these loans range from 7% to 10.25% 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 CORPORATION RETIREMENT AND SAVINGS PLAN
SCHEDULE OF REPORTABLE TRANSACTIONS
FOR THE YEAR ENDED DECEMBER 31, 1999
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Identity of Description Purchase Selling Cost of Current Value on Net Gain
Party Involved of Asset Price Price Asset Date of Transactions or (Loss)
---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Convergys Shares Fund Company 32,358,723 -- 32,358,723 32,358,723 --
Stock
</TABLE>
* The above totals reflect the net activity of 123 purchase transactions during
the plan year.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the members
of the Convergys Corporation Employee Benefits Committee have duly caused this
annual report to be signed on its behalf by the undersigned hereunto duly
authorized.
CONVERGYS CORPORATION RETIREMENT AND SAVINGS PLAN
By: /s/ Thomas P. Mehnert
---------------------
Thomas P. Mehnert
June 28, 2000
