Convergys Reports First Quarter EPS of $0.23, Confirms 2009 EPS Guidance

CINCINNATI--(Business Wire)--
Convergys Corporation (NYSE: CVG), a global leader in relationship management,
today announced its financial results for the first quarter of 2009.

First Quarter Highlights

* Consolidated revenue of $695 million with net income of $28 million, or $0.23
per diluted share.
* $33 million free cash flow, up from $7 million in the same period last year,
with $278 million cash balance at the end of the first quarter, up from $240
million at year end.
* Customer Management revenue increased 9 percent and operating margin improved
320 basis points compared with the same period last year.
* Confirming 2009 earnings guidance of $0.90 to $1.10 per diluted share.

"In a challenging environment, we met revenue and exceeded earnings expectations
and are affirming our earnings guidance," said David Dougherty, President and
CEO of Convergys. "Our largest segment, Customer Management drove better
year-over-year and sequential profitability. Our pipeline remains robust and we
continue to sign substantial new business, although we are seeing some softness
in call volumes. We are expanding our delivery footprint and are further
improving the efficiency and cost structure of the operation."

"In HR Management, our clients are benefiting from our service quality and
capability. We are in live operations with over half the employees under our two
remaining implementations. We continue to be challenged by implementation costs
and are focused on reducing the remaining risk," Dougherty continued.

"In Information Management, we are investing in enhanced capabilities and the
pipeline is growing for our broad set of business and operations support
offerings. With these offerings, we are positioned to return to growth as
communications industry capital spending rebounds."

First Quarter Performance

Revenues - Revenues were $695 million in the first quarter of 2009 compared with
$716 million in the same period last year. Growth in revenues from Customer
Management was offset by revenue declines both at Information Management and HR
Management.

Operating Income - Operating income in the first quarter of 2009 was $39
million, essentially the same as the prior year period. Prior year operating
income included a $14 million restructuring charge and $7 million in charges
related to retirement benefit plans. Operating improvements at Customer
Management were more than offset by operating income declines both at
Information Management and HR Management.

Tax Rate - The effective tax rate was 25 percent compared with 12 percent in the
same period last year. The lower tax rate for the first quarter of 2008 was due
to favorable impact from resolution of tax audits.

Net Income - Net income was $28 million, or $0.23 per diluted share compared
with $36 million, or $0.28 per diluted share, in the same period a year ago.

Cash Flow - First quarter 2009 cash flow from operating activities and free cash
flow were $56 million and $33 million, respectively, compared with $26 million
and $7 million in the same period a year ago. This improvement was largely due
to a 6-day reduction in DSO to 66 days from 72 days in the prior year period.
Cash balance increased to $278 million at the end of the first quarter from $240
million at the end of 2008.

Customer Management - Customer Management revenues in the 2009 first quarter
increased 9 percent to $517 million, including $43 million from Intervoice [R],
compared with $476 million in the same period last year. First quarter 2009
operating income and operating margins were $40 million and 7.8 percent,
respectively, compared with $22 million and 4.6 percent, respectively, in the
same period last year. Year-over-year margin improvement was largely driven by
effective contact center workforce management and disciplined cost management.
Current year results include approximately $5 million of additional expense due
to the weakened US dollar and prior year results included $5 million of
restructuring charges.

Information Management - Information Management revenues in the 2009 first
quarter were $108 million compared with $163 million in the same period last
year, largely due to expected client migrations in North America and
international project completions. First quarter 2009 operating income was $13
million compared with $30 million in the same period last year primarily due to
the revenue declines. Operating margin was 11.6 percent in the 2009 first
quarter, compared with 18.1 percent in the same period last year. Prior year
results included $7 million of restructuring charges.

HR Management - HR Management revenues in the 2009 first quarter were $70
million compared with $77 million in the same period last year. Revenue growth
in the 2009 first quarter from early-stage live operations of two large
contracts was offset by a contract termination payment recorded in the prior
year as well as elimination of pass-through revenue with a large HR outsourcing
client during the second quarter of 2008. The first quarter 2009 operating loss
was $10 million compared to $5 million in the same period last year. Results for
the first quarter of 2009 include $9 million of implementation costs related to
one contract which were expensed rather than capitalized. This contract remains
profitable. The company is taking actions intended to limit risks and reduce
costs of the future phases of its two remaining implementations. While there is
a range of outcomes to these actions, the company expects the likely outcomes to
be within guidance. Prior year operating loss included $2 million of
restructuring charges.

Business Outlook

Convergys and its clients continue to face a challenging environment. For
purposes of providing guidance, the company assumes the economic environment
throughout 2009 will be generally consistent with current conditions and the
company will make satisfactory progress with its two large HRM implementations.
Within this uncertain environment and based on these assumptions, Convergys
continues to expect earnings per diluted share within the range of $0.90 to
$1.10, and free cash flow of approximately $200 million.

Forward-Looking Statements Disclosure and "Safe Harbor" Note:

This news release contains forward-looking statements that reflect Convergys'
expectations as of April 28, 2009. Actual results of Convergys could differ
materially from those discussed herein. For us, particular uncertainties that
could adversely or positively affect our future results include: the behavior of
financial markets including fluctuations in interest or exchange rates;
continued volatility and further deterioration of the capital markets; the
impact of regulation and regulatory, investigative, and legal actions; strategic
actions, including acquisitions and dispositions; future integration of acquired
businesses; future financial performance of major industries which we serve; the
loss of a significant client or significant business from a client; difficulties
in completing a contract or implementing its provisions; and numerous other
matters of national, regional, and global scale including those of the
political, economic, business, and competitive nature. These uncertainties may
cause our actual future results to be materially different than those expressed
in our forward-looking statements. Please refer to Convergys` most recent news
releases and filings with the SEC for additional information including risk
factors. We do not undertake to update our forward-looking statements as a
result of new information or future events or developments.

Non-GAAP Financial Measures:

This news release contains non-GAAP financial measures as defined by the
Securities and Exchange Commission Regulation G. Pursuant to the requirements of
this regulation, reconciliations of these non-GAAP measures to their comparable
GAAP measures are included in the attached financial tables.

Management uses free cash flow to assess the financial performance of the
company. Convergys` management believes that free cash flow is useful to
investors because it relates the operating cash flow of the company to the
capital that is spent to continue and improve business operations, such as
investment in the company`s existing businesses. Further, free cash flow
facilitates management`s ability to strengthen the company`s balance sheet, to
repurchase the company`s common shares and to repay the company`s debt
obligations. Limitations associated with the use of free cash flow include that
it does not represent the residual cash flow available for discretionary
expenditures, as it does not incorporate certain cash payments including
payments made on capital lease obligations or cash payments for business
acquisitions. Management compensates for these limitations by using both the
non-GAAP measure, free cash flow, and the GAAP measure, cash from operating
activities, in its evaluation of performance. There are no material purposes for
which we use this non-GAAP measure beyond the purposes described above. This
non-GAAP measure should be considered supplemental in nature and should not be
considered in isolation or be construed as being more important than comparable
GAAP measures. The non-GAAP financial information that we provide may be
different from that provided by our competitors or other companies.

Webcast Presentation:

Convergys will hold its First Quarter Financial Results webcast presentation at
10:00 A.M., Eastern Daylight Time, Tuesday, April 28, 2009. It will feature
President and CEO David F. Dougherty and Earl C. Shanks, CFO. The webcast
presentation will take place live and will then be available for replay via the
following link:
http://investor.shareholder.com/convergys/eventdetail.cfm?eventid=67372 The
replay will be available through May 27, 2009.

About Convergys

Convergys Corporation (NYSE: CVG) is a global leader in relationship management.
We provide solutions that drive more 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 more than 30 years, our unique combination of domain expertise, operational
excellence, and innovative technologies has delivered process improvement and
actionable business insight to clients that now span more than 70 countries and
35 languages.

Convergys is a member of the S&P 500 and has been voted a Fortune Most Admired
Company for nine consecutive years. We have approximately 75,000 employees in 84
customer contact centers and other facilities in the United States, Canada,
Latin America, Europe, the Middle East, and Asia, and our global headquarters in
Cincinnati, Ohio. For more information, visit www.convergys.com

(Convergys, Intervoice, and the Convergys logo are registered trademarks of
Convergys Corporation.)

To receive Convergys news releases by email, click on
http://www.convergys.com/news_email.html

Convergys Corporation
Consolidated Statements of Income
(Unaudited)

For the Three Months
Ended Mar. 31, %
(In millions except per share amounts) 2009 2008 Change

Revenues $ 694.7 $ 716.4 (3 )

Costs and Expenses:
Cost of Providing Services and Products Sold 443.0 472.0 (6 )
Selling, General and Administrative 160.2 150.2 7
Research and Development Costs 19.2 10.6 81
Depreciation 30.3 28.7 6
Amortization 3.2 1.9 68
Restructuring Charges 0.0 14.1 (100 )
Total Costs and Expenses 655.9 677.5 (3 )

Operating Income 38.8 38.9 (0 )

Equity in Earnings of Cellular Partnerships 10.7 6.8 57
Other Expense, net (5.4 ) (1.1 ) NA
Interest Expense (6.8 ) (3.8 ) 79

Income Before Income Taxes 37.3 40.8 (9 )

Income Tax Expense 9.3 4.9 90

Net Income $ 28.0 $ 35.9 (22 )

Earnings Per Common Share
Basic $ 0.23 $ 0.28 (18 )
Diluted $ 0.23 $ 0.28 (18 )

Weighted Average Common Shares Outstanding
Basic 122.4 126.9
Diluted 124.0 129.2

Market Price Per Share
High $ 9.05 $ 16.60
Low $ 5.49 $ 13.66
Close $ 8.08 $ 15.06

Convergys Corporation
Consolidated Balance Sheets

(Unaudited)
Mar. 31, Dec. 31,
(In millions) 2009 2008

Assets

Cash and Cash Equivalents $ 277.6 $ 240.0
Receivables - Net 506.3 523.8
Other Current Assets 232.1 214.2
Property and Equipment - Net 411.5 420.9
Other Assets 1,483.9 1,442.5
Total Assets $ 2,911.4 $ 2,841.4

Liabilities and Shareholders' Equity

Debt Maturing in One Year $ 257.4 $ 259.5
Other Current Liabilities 545.0 538.7
Other Liabilities 528.2 486.7
Long-Term Debt 406.3 406.4
Common Shareholders' Equity 1,174.5 1,150.1
Total Liabilities and Shareholders' Equity $ 2,911.4 $ 2,841.4

Convergys Corporation
Summarized Statement of Cash Flow
(Unaudited)

For the Three Months
Ended Mar. 31,
(In millions) 2009 2008

Cash provided by operating activities $ 55.8 $ 25.5

Cash used in investing activities (15.9 ) (a) (11.0 ) (a)

Cash used in financing activities (2.3 ) (54.8 )

Net increase (decrease) in cash $ 37.6 ($ 40.3 )

(a) Includes$22.8 and $18.9 of capital expenditures, net, for the three months ended Mar.
31, 2009 and 2008, respectively.

Convergys Corporation
Segment Revenues and Operating Income
(Unaudited)

For the Three Months
(In millions) Ended Mar. 31, %
2009 2008 Change

Revenues:
Customer Management $ 516.9 $ 476.0 9
Information Management 107.6 163.2 (34 )
HR Management 70.2 77.2 (9 )
Total $ 694.7 $ 716.4 (3 )

Operating Income (Loss):
Customer Management $ 40.3 $ 21.9 84
Information Management 12.5 29.5 (58 )
HR Management (9.5 ) (4.9 ) 94
Corporate and Other (4.5 ) (7.6 ) (41 )
Total $ 38.8 $ 38.9 (0 )

CONVERGYS CORPORATION
Reconciliation of Cash Provided by Operating Activities to Free Cash Flow
(Unaudited)

For the Three Months
Ended Mar. 31,
(In millions) 2009 2008

Cash provided by operating activities $ 55.8 $ 25.5

Capital expenditures, net (22.8 ) (18.9 )

Free cash flow (a non-GAAP measure) $ 33.0 $ 6.6

Free cash flow - Management uses free cash flow to assess the financial
performance of the Company. Convergys' Management believes that free cash flow is
useful to investors because it relates the operating cash flow of the Company to
the capital that is spent to continue and improve business operations, such as
investment in the Company`s existing businesses. Further, free cash flow
facilitates Management`s ability to strengthen the Company`s balance sheet, to
repurchase the Company`s common shares and to repay the Company`s debt
obligations. Limitations associated with the use of free cash flow include that it
does not represent the residual cash flow available for discretionary expenditures
as it does not incorporate certain cash payments including payments made on
capital lease obligations or cash payments for business acquisitions. Management
compensates for these limitations by using both the non-GAAP measure, free cash
flow, and the GAAP measure, cash from operating activities, in its evaluation of
performance. There are no material purposes for which we use this non-GAAP measure
beyond the purposes described above. This non-GAAP measure should be considered
supplemental in nature and should not be considered in isolation or be construed
as being more important than comparable GAAP measures.

Convergys Corporation
David Stein, Investor Relations
+1 513 723 7768 or investor@convergys.com
or
John Pratt, Corporate Communications
+1 513 723 3333 or john.pratt@convergys.com

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