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 (HR BPO) 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 six 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 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 SOP 97-2, "Software Revenue Recognition."

During the first six months of 2009, Customer Management revenues increased 7% to $1,011.5 compared to the prior year. Intervoice revenues were approximately $82 in the first half of 2009. Customer Management operating income and operating margin were $77.2 and 7.6%, respectively, compared with $41.3 and 4.4% in the prior year. Year-over-year margin improvement was largely driven by effective contact center workforce management and disciplined

cost management. Prior year results included $5.4 of restructuring charges to streamline operations and reduce headcount.

Information Management

Our Information Management segment serves clients principally by providing and managing complex business support system and operational support system (BSS/OSS) services.

License and related support and maintenance fees, which accounted for 34% of Information Management revenues for the first six 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 35% of Information Management revenues for the six months ended June 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 six months of 2009, Information Management revenue was $222.7, a 31% decline compared to the same period last year due to the negative impact of North American client migrations as well as international project completions. Information Management operating income and operating margin for the first six months of 2009 were $29.5 and 13.2%, respectively, compared with $67.4 and 20.8%, respectively, in the prior year. Results for the six months of 2008 also included $6.9 restructuring charges to streamline operations and reduce headcount. The decline in operating income during the first six months of 2009 was primarily due to the decline in revenues.

Information Management continues to face competition as well as consolidation within the communications industry. In January 2008, AT&T, our largest client, informed us that it intended to migrate 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 over the next two years. While the migration is subject to change, we anticipate that this will result in a loss of revenue of approximately $25 and $60 in 2009 and 2010, respectively, compared to our 2008 Information Management revenues. The impact of this migration on our first six months of 2009 revenues was approximately $5 compared to the first six 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 83%, or approximately $40, for the first six months of 2009 compared to the corresponding period last year. We expect revenue from Sprint Nextel to be down by approximately $50 for 2009, compared to 2008. This revenue decline is 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 six months of 2009, HR Management revenues increased 5% to $143.2 compared to the prior year. Revenue growth in 2009 from live operations of two large contracts was partially offset by a contract termination payment recorded in the prior year as well as elimination of pass-through revenues with a large HR Management outsourcing client beginning the third quarter of 2008. HR Management operating loss for the six months ended June 30, 2009 was $128.9 compared to a loss of $9.1 in the prior year. Operating results for the six months ended June 30,

2009 include implementation-related and asset impairment charges of $129.6 (of which $121.0 was recorded during the second quarter of 2009 and $8.6 was recorded during the first quarter of 2009) related to two HR Management contract implementations.

We are currently in the implementation phase of two HR Management outsourcing contracts. Due to the complexity of the implementations and changes in customer requirements, we are experiencing implementation cost overruns and delays in completing these implementations. During the three months ended June 30, 2009, the costs of implementing one large HR Management outsourcing client contract exceeded the amount recoverable under the contract at June 30, 2009 primarily reflecting a decision by the client to delay go-live with the next phase of the project on the expected schedule. Additionally, we recorded a charge related to the other client contract as we work towards negotiating a restructured agreement. We are currently negotiating with the clients to reach mutually acceptable plans and financial outcomes and have taken actions to reduce the rate of spend. As we are currently in the negotiating process, we are not able to estimate the timing or the potential impact these contract restructurings could have to the income statement in 2009 and potentially beyond 2009. Our cash flows could also be negatively impacted. Additionally, cost overruns could adversely affect the profitability of the contracts over their terms or cause them not to be profitable. These potential future charges could be material to our consolidated financial results as well as the Consolidated Balance Sheet.

As of June 30, 2009, we had deferred implementation costs of approximately $200 and deferred implementation revenue of approximately $170 related to these two contracts. Deferred amounts are periodically evaluated for impairment or when circumstances indicate a possible inability to recover their carrying amounts. In the event these costs are not deemed recoverable, we follow the guidance in SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets," to determine if an impairment exists. We evaluate the probability of recovery by considering profits to be earned during the term of the related contract, the creditworthiness of the client and, if applicable, termination for convenience fee payable by the client in the event that the client terminates the contract early. Based on our evaluation as of June 30, 2009, we believe the $200 of deferred charges related to these two HR Management contracts is recoverable.

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

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 the "Risk Factors" section of Management Discussion and Analysis.

RESULTS OF OPERATIONS

The following discussion should be read in conjunction with the 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                                       Six Months
                                               Ended June 30,                                    Ended June 30,
                                      2009         2008         Change       %         2009           2008          Change        %
Revenues                             $ 682.7      $ 689.5      $   (6.8 )    (1 )    $ 1,377.4      $ 1,405.9      $  (28.5 )      (2 )
Cost of providing services and
products sold                          505.9        459.6          46.3      10          948.9          931.6          17.3         2
Selling, general and
administrative                         161.6        139.7          21.9      16          321.8          289.9          31.9        11
Research and development costs          20.3         11.7           8.6      74           39.5           22.3          17.2        77
Depreciation                            30.5         29.1           1.4       5           60.8           57.8           3.0         5
Amortization                             3.0          2.0           1.0      50            6.2            3.9           2.3        59
Restructuring charges                     -            -             -       -              -            14.1         (14.1 )    (100 )
Asset impairment                        32.5           -           32.5      -            32.5             -           32.5        -

Total costs and expenses               753.8        642.1         111.7      17        1,409.7        1,319.6          90.1         7

Operating (Loss) Income                (71.1 )       47.4        (118.5 )    -           (32.3 )         86.3        (118.6 )      -
Equity in Earnings of Cellular
Partnerships                            10.8         11.3          (0.5 )    (4 )         21.5           18.1           3.4        19
Other Expense, net                      (4.4 )       (0.8 )        (3.6 )    -            (9.8 )         (1.9 )        (7.9 )      -
Interest Expense                        (6.9 )       (4.0 )        (2.9 )    73          (13.7 )         (7.8 )        (5.9 )      76

(Loss) Income Before Income Taxes      (71.6 )       53.9        (125.5 )    -           (34.3 )         94.7        (129.0 )      -
Income Tax (Benefit) Expense           (10.7 )       13.4         (24.1 )    -            (1.4 )         18.3         (19.7 )      -

Net (Loss) Income                    $ (60.9 )    $  40.5      $ (101.4 )    -       $   (32.9 )    $    76.4      $ (109.3 )      -
Diluted (loss) earnings per common
share                                $ (0.50 )    $  0.32      $  (0.82 )    -       $   (0.27 )    $    0.60         (0.87 )      -
Operating Margin                          NA          6.9 %                                 NA            6.1 %

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

Consolidated revenues for the second quarter of 2009 were $682.7 compared to $689.5 in the prior year. Growth in revenues from Customer Management and HR Management was offset by revenue declines at Information Management. Customer Management revenues for the second quarter of 2009 include revenue of $39.2 from the Intervoice acquisition that closed on September 3, 2008. Operating loss for the second quarter of 2009 was $71.1 compared to operating income of $47.4 in the prior year. As described more fully under the "HR Management" section on page 27, operating income for the three months ended June 30, 2009 includes implementation-related and asset impairment charges of $121.0 related to two large HR Management contracts. Customer Management operating income improved 90% or $17.5 compared to the same period last year, largely driven by effective workforce management and disciplined cost management. Information Management operating income declined 55% or $20.9 primarily due to revenue declines.

As a percentage of revenues, cost of providing services and products sold were 74.1% compared to 66.7% during the corresponding period last year. This reflects an increase in cost of providing services and products sold as a percentage of revenues at HR Management, partially offset by lower cost of providing services and products sold as a percentage of revenues both at Customer Management and Information Management. HR Management costs of providing services and products sold for the three months ended June 30, 2009 includes charges of $88.5 related to excess implementation costs that were expensed rather than capitalized in accordance with the Company's accounting policy and anticipated costs related to restructure a contract. These charges are described more fully under the "HR Management" section on page 27. Selling, general, and administrative expenses of $161.6 increased 16% from the second quarter of 2008. The increase was largely 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 74% increase in research and development costs reflects our investments in the automated self-care and technology solutions particularly related to the recently acquired 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 $1.4 and $1.0 increase in depreciation and amortization expense, respectively, largely reflects assets that were added due to the Intervoice acquisition during the third quarter of 2008. The second quarter of 2009 asset impairment charge of $32.5 represents impairment of previously deferred costs related to the HR Management contracts we anticipate restructuring. See "HR Management" section on page 27 for additional discussions related to these client implementations.

During the second quarter of 2009, we recorded equity income in the Cellular Partnerships of $10.8 compared to equity income of $11.3 in the prior year. Interest expense of $6.9 increased from $4.0 in the prior year reflecting a higher level of debt due to the Intervoice acquisition. The $3.6 increase in other expense, net, was due to increase in our foreign exchange transaction losses. Our effective tax benefit rate was 15.0% for the three months ended June 30, 2009 compared to an effective tax rate 24.9% in the same period last year. The tax benefit rate for the three months ended June 30, 2009 is due to the $121.0 HR Management-related charges described more fully under the "HR Management" section on page 27 and mix of income between jurisdictions.

As a result of the forgoing, second quarter 2009 net loss and loss per diluted share were $60.9 and $0.50, respectively, compared with net income and earnings per diluted share of $40.5 and $0.32, respectively, in the second quarter of 2008.

Six Months Ended June 30, 2009 versus Six Months Ended June 30, 2008

Consolidated revenues for the first six months of 2009 were $1,377.4 compared to $1,405.9 in the prior year. Growth in revenues from HR Management and Customer Management partially offset a decline in Information Management. Operating loss for the first half of 2009 was $32.3 compared with an operating income of $86.3 in the prior year. As described more fully under the "HR Management" section on page 27, operating income for the six months ended June 30, 2009 includes implementation-related and asset impairment charges of $129.6 related to two large HR Management contracts. Customer Management operating income improved 87% or $35.9 compared to the same period last year, largely driven by effective workforce management and disciplined cost management. Information Management operating income declined 56% or $37.9 primarily due to revenue declines.

As a percentage of revenues, cost of providing services and products sold were 68.9% compared to 66.3% during the corresponding period last year. This reflects an increase in cost of providing services and products sold as a percentage of revenues at HR Management, partially offset by lower cost of providing services and products sold as a percentage of revenues both at Customer Management and Information Management. HR Management costs of providing services and products sold for the six months ended June 30, 2009 includes charges of $97.1 related to excess implementation costs that were expensed rather than capitalized in accordance with the Company's accounting policy and anticipated costs related to restructure a contract. These charges are described more fully under the "HR Management" section on page 27. Selling, general, and administrative expenses of $321.8 increased 11% compared to the first half of 2008. The increase was largely 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 77% increase in research and development costs reflects our investments in the automated self-care and technology solutions particularly related to the recently acquired 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 $3.0 and $2.3 increase in depreciation and amortization expense, respectively, largely 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 $14.1 during the first quarter of 2008. The 2009 asset impairment charge of $32.5 represents impairment of previously deferred costs related to the two HR Management contracts the Company anticipates restructuring. See "HR Management" section on page 27 for additional discussions related to these client implementations.

During the first half of 2009, we recorded equity income in the Cellular Partnerships of $21.5 compared to equity income of $18.1 in the prior year. The $7.9 increase in other expense, net, was largely due to increase in our foreign exchange transaction losses. Interest expense of $13.7 increased from $7.8 in the prior year primarily reflecting a higher level of debt due to the Intervoice acquisition. Our effective tax benefit rate was 4.1% for the six months ended June 30, 2009 compared to an effective tax rate 19.3% in the same period last year. The lower tax rate for the first half of 2009 is due to the $129.6 HR Management-related charges described more fully under the "HR Management" section on page 27 and mix of income between jurisdictions.

As a result of the forgoing, net loss and loss per diluted share for the first half of 2009 were $32.9 and $0.27 compared with net income and earnings per diluted share of $76.4 and $0.60 in the first half of 2008.

CUSTOMER MANAGEMENT



                                                Three Months                                      Six Months
                                               Ended June 30,                                   Ended June 30,
                                       2009         2008        Change        %         2009          2008        Change        %
Revenues:
Communications                        $ 293.0      $ 275.3      $  17.7        6      $   594.8      $ 552.0      $  42.8         8
Technology                               40.3         38.3          2.0        5           80.2         76.8          3.4         4
Financial services                       75.2         57.2         18.0       31          151.7        118.5         33.2        28
Other                                    86.1         98.2        (12.1 )    (12 )        184.8        197.7        (12.9 )      (7 )

Total revenues                          494.6        469.0         25.6        5        1,011.5        945.0         66.5         7
Cost of providing services and
products sold                           307.8        326.6        (18.8 )     (6 )        629.9        649.0        (19.1 )      (3 )
Selling, general and administrative
expenses                                125.3        107.2         18.1       17          255.7        217.7         38.0        17
Research and development costs            6.0          0.9          5.1       -            11.4          1.9          9.5        -
Depreciation                             16.9         14.4          2.5       17           33.7         28.7          5.0        17
Amortization                              1.7          0.5          1.2       -             3.6          1.0          2.6        -
Restructuring charges                      -            -            -        -              -           5.4         (5.4 )    (100 )

Total costs                             457.7        449.6          8.1        2          934.3        903.7         30.6         3

Operating Income                      $  36.9      $  19.4      $  17.5       90      $    77.2      $  41.3      $  35.9        87
Operating Margin                          7.5 %        4.1 %                                7.6 %        4.4 %

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

Revenues

Customer Management revenues were $494.6, a 5% increase from the second quarter of 2008. This includes $39.2 in revenues from the Intervoice acquisition that closed on September 3, 2008.

Revenues from the communication services vertical increased 6% from the second quarter of 2008, largely reflecting growth from the Intervoice acquisition. . . .