BACKGROUND

Convergys Corporation (the Company or Convergys) is a global leader in relationship management. We provide solutions that drive value from the relationships our clients have with their customers and employees. Convergys turns these everyday interactions into a source of profit and strategic advantage for our clients. For over 25 years, our unique combination of domain expertise, operational excellence and innovative technologies has delivered process improvement and actionable business insight to clients to enhance their relationships with customers and employees.

We report three segments: (i) Customer Management, which provides agent-assisted services, automated self-service, and technology solutions; (ii) Information Management, which provides business support system and operational support system (BSS/OSS) solutions; and (iii) Human Resource (HR) Management, which provides global human resource business process outsourcing solutions.

These segments are consistent with the Company's management of the business and reflect its internal financial reporting structure and operating focus.

The Board continually monitors the Company's businesses and, as appropriate, evaluates various strategies to enhance shareholder value, including by means of strategic transactions involving one or more of its businesses. Any such transactions could occur in the future and could be material, although there can be no assurance that such transactions will occur.

Customer Management

Our Customer Management segment partners with clients to deliver solutions that enhance the value of their customer relationships, turning the customer experience into a strategic differentiator. As an end-to-end single-source provider of self-service, agent-assisted and proactive care, we combine consulting, innovative technology and agent-assisted services to optimize the customer experience and strengthen customer relationships. Whether contact center operations are on-premises, fully outsourced or blended, we customize our solutions to meet our clients' needs.

On September 3, 2008, we acquired 100 percent of the outstanding common shares of Intervoice, Inc. (Intervoice), a developer of automated voice response systems, for cash consideration of $338.8. Intervoice is a market leader in the delivery of personalized, multi-channel automated information solutions that connect people with information, empowering them to control the way they interact with a business. Integration of Intervoice's speech automation and mobile applications with the Company's agent-assisted services has enabled us to build upon our leadership position in relationship management solutions. Our solutions result in improved operational efficiencies, new revenue streams and, most importantly, enhanced differentiation in the large and growing automated services market. The operating results of Intervoice have been included within the Customer Management segment from the date of the acquisition.

Agent-related revenues, which account for approximately 90% of Customer Management revenues for the first nine months of 2009, are typically recognized as services are performed based on staffing hours or the number of contacts handled by service agents using contractual rates. In a limited number of engagements where the client pays a fixed fee, we recognize revenues based on the specific facts and circumstances of the engagement, using the proportional performance method or upon final completion of the engagement. Customer Management remaining revenues are derived from the sale of premise-based and hosted automated self-care and technology solutions. License, professional and consulting and maintenance & software support services revenues recognized from sale of these advanced speech recognition solutions are recognized pursuant to authoritative guidance for software revenue recognition.

During the first nine months of 2009, Customer Management revenues increased 5% to $1,503.1 compared to the prior year. The increase in revenue from the Intervoice acquisition was partially offset by lower agent-related revenue. Intervoice revenues were approximately $123.9 in the first nine months of 2009 compared to $14.2 for the same period in the prior year due to the timing of the completion of that acquisition. Customer Management operating income and

operating margin were $110.7 and 7.4%, respectively, compared with $64.6 and 4.5% in the prior year. Year-over-year margin improvement was largely driven by effective contact center workforce management.

Information Management

Our Information Management segment serves clients principally by providing and managing complex BSS/OSS services.

License and related support and maintenance fees, which accounted for 35% of Information Management revenues for the first nine months of 2009, are earned under perpetual and term license arrangements. The Company invoices its clients for licenses either up-front or monthly based on the number of subscribers, events or units processed using the software. Fees for support and maintenance normally are charged in advance either on an annual, quarterly or monthly basis. Professional and consulting services for installation, implementation, customization, migration, training and managed services accounted for 36% of Information Management revenues for the nine months ended September 30, 2009. The professional and consulting fees are either invoiced monthly to the Company's clients based on time and material costs incurred at contractually agreed upon rates or, in some instances, for a fixed fee. Information Management remaining revenues consist of monthly fees for processing client transactions in Information Management data centers and, in some cases, the clients' data centers. These data processing revenues are recognized based on the number of invoices, subscribers or events that are processed by Information Management using contractual rates.

During the first nine months of 2009, Information Management revenue was $321.9, a 30% decline compared to the same period last year due to the negative impact of North American client migrations as well as international project completions partially offset by revenues from a new client. Information Management operating income and operating margin for the first nine months of 2009 were $32.8 and 10.2%, respectively, compared with $84.8 and 18.5%, respectively, in the prior year period. The decline in operating income during the first nine months of 2009 was due to the decline in revenues.

Information Management continues to face competition as well as consolidation within the communications industry. AT&T, our largest client, is in the process of migrating its subscribers from the legacy wireless billing system that we currently support through a managed services agreement onto AT&T's other wireless billing system. In addition, AT&T acquired several other Convergys clients. We anticipate the loss of revenue resulting from the AT&T related migrations to be approximately $30 in 2009 compared to our 2008 Information Management revenues and $40 in 2010 compared to our 2009 Information Management revenues. The impact of this migration on our first nine months of 2009 revenues was approximately $18 compared to the first nine months of 2008 Information Management revenues.

In September 2005, Sprint PCS, a large data processing outsourcing client, completed its acquisition of Nextel Communications. In 2006, Sprint Nextel informed us that it intended to consolidate its billing systems onto a competitor's system. The migration began in 2006 and was substantially completed by June 30, 2008. Revenues from Sprint Nextel were down approximately $48 for the first nine months of 2009 compared to the corresponding period last year. We expect revenue from Sprint Nextel to be down by approximately $50 for the full year 2009 compared to our 2008 Information Management revenues and down by approximately $10 in 2010 compared to our 2009 Information Management revenues.

These revenue declines are incorporated in our 2009 guidance discussed in the "Business Outlook" section, and we do not expect these migrations to have a material impact on our liquidity and capital resources.

HR Management

Our HR Management segment provides a full range of human resource outsourcing solutions including benefits administration, compensation, human resource administration, learning, payroll administration, performance management, recruiting and sourcing services to large companies and governmental entities. We take advantage of our economies of scale in order to standardize human resource processes across departments, business lines, language differences and national borders.

During the first nine months of 2009, HR Management revenues increased to $317.8 compared to the prior year

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.

We have begun a series of actions intended to improve the future earnings in HR Management. Actions we are taking include not signing any new HR Management outsourcing business with significant implementation risk, streamlining existing operations, continuing to use additional automation, standardization and leveraging of off-shore labor and using partners to implement projects.

FORWARD-LOOKING STATEMENTS

This report contains "forward-looking" statements, as defined in the Private Securities Litigation Reform Act of 1995, which are based on current expectations, estimates and projections. Statements that are not historical facts, including statements about the beliefs and expectations of the Company, are forward-looking statements. Sometimes these statements will contain words such as "believes," "expects," "intends," "could," "should," "will," "plans," "anticipates" and other similar words. These statements discuss potential risks and uncertainties; and, therefore, actual results may differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they were made. The Company expressly states that it has no current intention to update any forward-looking statements, whether as a result of new information, future events or otherwise. See the discussion under Part II, Item 1A of this report and the "Risks Relating to Convergys and Its Business" section of Management Discussion and Analysis in the Company's Annual Report on Form 10-K for the year ended December 31, 2008.

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the condensed Consolidated Financial Statements and segment data. Detailed comparisons of revenue and expenses are presented in the discussions of the operating segments, which follow the consolidated results discussion. Results for interim periods may not be indicative of the results for the full years.

CONSOLIDATED RESULTS



                                               Three Months                                        Nine Months
                                            Ended September 30,                                Ended September 30,
                                     2009          2008         Change        %         2009           2008         Change        %
Revenues                            $ 765.4      $  676.2      $   89.2       13      $ 2,142.8      $ 2,082.1      $  60.7        3
Cost of providing services and
products sold                         558.5         510.1          48.4        9        1,507.4        1,441.7         65.7        5
Selling, general and
administrative                        156.6         150.3           6.3        4          478.4          440.2         38.2        9
Research and development costs         18.7          15.1           3.6       24           58.2           37.4         20.8       56
Depreciation                           30.0          29.2           0.8        3           90.8           87.0          3.8        4
Amortization                            3.0           6.0          (3.0 )    (50 )          9.2            9.9         (0.7 )     (7 )
Restructuring charges                  12.8            -           12.8       -            12.8           14.1         (1.3 )     (9 )
Asset impairment                       76.1         207.5        (131.4 )    (63 )        108.6          207.5        (98.9 )    (48 )

Total costs and expenses              855.7         918.2         (62.5 )     (7 )      2,265.4        2,237.8         27.6        1

Operating Loss                        (90.3 )      (242.0 )       151.7      (63 )       (122.6 )       (155.7 )       33.1      (21 )
Equity in Earnings of Cellular
Partnerships                           10.2           7.7           2.5       32           31.7           25.8          5.9       23
Other Income (Expense), net            (0.6 )         9.6         (10.2 )     -           (10.4 )          7.7        (18.1 )     -
Interest Expense                       (7.4 )        (5.5 )        (1.9 )     35          (21.1 )        (13.3 )       (7.8 )     59

Loss Before Income Taxes              (88.1 )      (230.2 )       142.1      (62 )       (122.4 )       (135.5 )       13.1      (10 )
Income Tax Benefit                     (2.1 )       (90.2 )        88.1      (98 )         (3.5 )        (71.9 )       68.4      (95 )

Net Loss                            $ (86.0 )    $ (140.0 )    $   54.0      (39 )    $  (118.9 )    $   (63.6 )    $ (55.3 )     87
Diluted loss per common share       $ (0.70 )    $  (1.15 )    $   0.45      (39 )    $   (0.97 )    $   (0.51 )    $ (0.46 )     90

Three Months Ended September 30, 2009 versus Three Months Ended September 30, 2008

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.

As a percentage of revenues, the cost of providing services and products sold was 73.0% compared to 75.4% during the corresponding period last year, largely due to the HR Management implementation revenue and charges. These charges are described more fully under the "HR Management" section. Selling, general, and administrative expenses of $156.6 increased 4% from the third quarter 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 24% increase in research and development costs primarily reflects our investments in the automated self-care and technology solutions particularly related to the acquired Intervoice platforms. Compared to the prior year, the $3.0 decrease in amortization expense reflects costs incurred within the Information Management segment in the third quarter of 2008 to write-off certain customer relationship assets. 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.

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.

The low tax benefit rate for the three months ended September 30, 2009 is due to the geographic mix of the HR Management-related charges and income.

As a result of the foregoing, third quarter 2009 net loss and loss per diluted share were $86.0 and $0.70, respectively, compared with net loss and loss per diluted share of $140.0 and $1.15, respectively, in the third quarter of 2008.

Nine Months Ended September 30, 2009 versus Nine Months Ended September 30, 2008

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.

As a result of the foregoing, net loss and loss per diluted share for the first nine months of 2009 were $118.9 and $0.97, respectively, compared with a net loss and loss per diluted share of $63.6 and $0.51, respectively, in the first nine months of 2008.

CUSTOMER MANAGEMENT



                                              Three Months                                       Nine Months
                                           Ended September 30,                               Ended September 30,
                                     2009         2008        Change        %         2009           2008         Change        %
Revenues:
Communications                      $ 296.4      $ 285.4      $  11.0        4      $   891.2      $   837.4      $  53.8        6
Technology                             36.8         41.8         (5.0 )    (12 )        117.0          118.6         (1.6 )     (1 )
Financial services                     71.9         61.8         10.1       16          223.6          180.3         43.3       24
Other                                  86.5         94.2         (7.7 )     (8 )        271.3          291.9        (20.6 )     (7 )

Total revenues                        491.6        483.2          8.4        2        1,503.1        1,428.2         74.9        5
Cost of providing services and
products sold                         305.2        325.6        (20.4 )     (6 )        935.1          974.6        (39.5 )     (4 )
Selling, general and
administrative                        125.1        115.5          9.6        8          380.8          333.2         47.6       14
Research and development costs          5.5          2.4          3.1       -            16.9            4.3         12.6       -
Depreciation                           16.8         15.0          1.8       12           50.5           43.7          6.8       16
Amortization                            2.0          1.4          0.6       43            5.6            2.4          3.2       -
Restructuring charges                   3.5           -           3.5       -             3.5            5.4         (1.9 )    (35 )

Total costs and expenses              458.1        459.9         (1.8 )     -         1,392.4        1,363.6         28.8        2

Operating Income                    $  33.5      $  23.3      $  10.2       44      $   110.7      $    64.6      $  46.1       71
Operating Margin                        6.8 %        4.8 %                                7.4 %          4.5 %

Three Months Ended September 30, 2009 versus Three Months Ended September 30, 2008

Revenues

Customer Management revenues for the third quarter of 2009 were $491.6, a 2% increase from the third quarter of 2008. This included $41.9 in revenue from Intervoice compared to $14.2 in Intervoice revenue for the third quarter of 2008 from the acquisition that closed on September 3, 2008. The increase in revenues from the Intervoice acquisition was partially offset by a decline in agent-related call volumes.

Revenues from the communications vertical increased 4% from the third quarter of 2008, primarily reflecting growth from the Intervoice acquisition. Revenues from the technology vertical decreased 12% compared to the three months ended September 30, 2008, largely reflecting volume declines from two customers. Revenues from the financial services vertical increased 16% from the third quarter of 2008, primarily reflecting growth from the Intervoice acquisition. Other revenues, which are comprised of clients outside of Customer Management's three largest verticals, decreased 8% from the third quarter of 2008, reflecting declines in revenues from several retail and manufacturing clients that were partially offset by growth from the Intervoice acquisition.

Costs and Expenses

Customer Management total costs and expenses of $458.1 were relatively flat compared to the prior year period. Customer Management cost of providing services and products sold during the third quarter of 2009 decreased 6% to $305.2 from the third quarter of 2008. As a percentage of revenues, cost of providing services and products sold was 62.1%, down 530 basis points from 67.4% in the prior year period, due to effective live-agent workforce management, as well as positive contribution from the Intervoice acquisition. Selling, general and administrative expenses of $125.1 in the third quarter of 2009 increased 8% compared to the prior year period. This largely reflects higher sales and marketing costs to service the expanded client base and extensive global channel partnerships obtained through the Intervoice acquisition. As a percentage of revenues, selling, general and administrative expenses were 25.4% in the third quarter of 2009 compared to 23.9% in the same period last year. The $3.1 increase in research and development costs reflects our investments in the automated self-care and technology solutions related to the acquired Intervoice platforms. Compared to the prior year period, the $1.8 increase in depreciation expense reflects assets that were added due to the Intervoice acquisition during the third quarter of 2008. As noted under the heading, "Restructuring Charges," we recorded a restructuring charge of $3.5 during the third quarter of 2009 to align costs to expected future revenue growth.

. . .