8-K

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report: October 25, 2006

CONVERGYS CORPORATION

(Exact name of registrant as specified in its charter)

Ohio	1-4379	31-1598292
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

201 East Fourth Street Cincinnati, Ohio	45202
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (513) 723-7000

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Form 8-K Convergys Corporation

Item 2.02. Results of Operations and Financial Conditions

On October 25, 2006 Convergys Corporation reported its results for the third quarter ended September 30, 2006. The earnings release for the third quarter ended September 30, 2006 is attached as Exhibit 99.1. The attached exhibit is furnished pursuant to Item 2.02 of Form 8-K.

Item 9.01. Financial Statements and Exhibits

(c) Exhibits:

99.1 Earnings Release of Convergys Corporation dated September 30, 2006.

2

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CONVERGYS CORPORATION
By:	/s/ William H. Hawkins II
	William H. Hawkins II
	Senior Vice President, General Counsel
	and Secretary

Date: October 25, 2006

3

EXHIBIT INDEX

Exhibit No.
99.1	Earnings Release of Convergys Corporation dated September 30, 2006

EX-99.1

Exhibit 99.1

NEWS RELEASE

Convergys’ Strong Execution Yields Best Quarterly Performance In Three Years

(Cincinnati; October 25, 2006) — Convergys Corporation (NYSE: CVG), a global leader in providing customer care, human resources, and billing services, announced today its financial results for the third quarter of 2006.

HIGHLIGHTS

• Record Convergys quarterly revenue of $702.7 million, up 9 percent over prior year

• Convergys earnings of $0.32 per diluted share, up from $0.30 in the prior year

• 10 percent revenue growth in Customer Care with operating income up 12 percent

• Information Management revenues increased 3 percent on continued strength of international operations

• Employee Care revenue increased 25 percent with operating loss reduced 18 percent

• 2006 EPS guidance increased to $1.15

Revenues of $702.7 million were up 9 percent compared to the third quarter of 2005 reflecting growth from all three Convergys segments: Customer Care, Information Management, and Employee Care. Operating income increased 4 percent to $69.7 million compared with a strong performance in the prior year of $67.0 million. Revenue growth with existing clients, increased productivity, utilization, and efficiency contributed to the improvement in results. Net income increased 7 percent to $45.2 million, or $0.32 per diluted share, versus $42.4 million or $0.30 per diluted share in the prior year. Non-cash stock based compensation expense in the third quarter was $7.2 million, or $0.03 per diluted share, compared to $6.4 million in the prior year.

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“I am pleased that Convergys’ continuing strong execution and organic growth have yielded our best quarterly performance in three years,” said Jim Orr, Chairman and Chief Executive of Convergys. “Continued revenue growth and operating improvements in Customer Care reflect strong client demand and our more intensive management of performance metrics. We also delivered strong growth in Information Management’s international operations and achieved solid progress in Employee Care. Our strong results combined with a healthy pipeline give us increased confidence in our prospects for continued revenue and earnings growth.”

Operating Performance by Segment

Customer Care

Customer Care revenues of $454.8 million were up 10 percent compared to prior year. Strong growth from several existing clients in the Communication, Financial Services, Technology, and Other verticals contributed to the revenue growth. Customer Care operating income and operating margin were $54.5 million and 12.0 percent, respectively, compared with $48.8 million and 11.8 percent in the prior year. The operating income improvement reflects both revenue growth and operational efficiencies. Increased costs of $8.5 million caused by the impact of a weakened U.S. dollar partially offset these items.

Information Management

Information Management revenues of $197.1 million were up 3 percent compared to prior year. Strong growth in international operations more than offset declines in North America. Information Management operating income of $31.3 million was down 9 percent compared to prior year. Operating income margin of 15.9 percent was down 220 basis points from the prior year. The decrease from last year was due to the timing of the recognition of revenue and costs related to several projects, and increased investment in new product development.

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Employee Care

Employee Care revenues of $50.8 million were up 25 percent compared to $40.7 million in the same period last year. Revenue increased as a result of recent client implementations. Employee Care operating loss improved 18 percent to $8.6 million compared to an operating loss of $10.5 million in the prior year. Improvements resulted from cost reductions and on-going operating efficiencies.

Other Items

• The cellular partnerships contributed pre-tax equity earnings of $4.2 million during the quarter. This is down from $7.4 million during the same period last year.

• Cash flow from operating activities was $114.0 million. Free cash flow was $89.7 million compared to $58.6 million in the prior year.

• The increase in deferred charges in the quarter, net of amortization and deferred implementation revenue, was $19.0 million.

• During the third quarter, Convergys repurchased 1.2 million shares at a cost of $24.0 million and an average price of $19.29 per share. Total shares repurchased during the first nine months were 3.4 million at an average price of $18.74 per share.

Financial Guidance

• Convergys is increasing full year 2006 guidance and now expects EPS of $1.15 per share.

• Convergys remains comfortable with its previous guidance for 2007 EPS to exceed $1.20. Further updates to this annual guidance will be provided in 2007.

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FORWARD-LOOKING STATEMENTS DISCLOSURE AND “SAFE HARBOR” NOTE:

This news release contains forward-looking statements that reflect Convergys’ expectations as of October 25, 2006. Actual results of Convergys could differ materially from those discussed herein. Potential risk factors that could cause or contribute to actual results being materially different from those in the forward-looking statements include, but are not limited to, the loss of a significant client or significant business from a client, difficulties in completing a contract or implementing its provisions, difficulties in completing or implementing an acquisition, continued consolidation in the markets we serve, terrorist activities and responses of the United States and other nations to such activities, changes in the legal and regulatory environment in which Convergys and its clients operate, and competitive and other factors disclosed in the Form 10-K for the year ended December 31, 2005, and subsequent filings with the SEC by Convergys Corporation. The company has no current intention of updating any forward-looking statements that may be included herein, other than in publicly available statements.

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.

Convergys provides non-GAAP free cash flow, revenues excluding Cingular, and earnings excluding non-cash stock-based compensation expense.

Convergys’ management believes that these non-GAAP financial measures provide management and investors with (1) a more comprehensive understanding of the company’s underlying performance, (2) a useful comparison of current results with past and future results, and (3) an enhanced understanding of the company’s prospects for the future. However, Convergys recognizes that there are limitations associated with the use of these non-GAAP financial measures as they do not reflect all of the amounts associated with our results as determined in accordance with GAAP. These non-GAAP measures 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.

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As described above, Convergys uses the following non-GAAP measures:

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 stock 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.

Revenues excluding Cingular — The company uses revenues excluding Cingular to assess the revenue growth of the business excluding the impact of Cingular’s migration of acquired subscribers off of AT&T Wireless’s billing and customer care systems that was announced in 2004. Before the acquisition of AT&T Wireless by Cingular in 2004, AT&T Wireless was Convergys’ largest client. For the first year after the merger, the company experienced a decline in customer care revenue primarily as a result of business changes instituted by Cingular related to former AT&T Wireless operations. Over the past year, the company has been assisting Cingular with migrating subscribers off the AT&T Wireless billing systems that Convergys supports onto Cingular’s in-house systems, one of which Convergys continues to support. As a result of this migration, data processing revenues from Cingular have declined. Limitations associated with the use of this non-GAAP measure include that this measure does not include all of the amounts associated with our results as determined in accordance with GAAP. Management compensates for these limitations by using both the non-GAAP measure, revenues excluding Cingular, and the GAAP measure, revenues, in its evaluation of performance. There are no material purposes for which we use this non-GAAP measure beyond the purposes described above.

Page 5 of 20

Earnings excluding non-cash stock-based compensation expense — Management uses earnings excluding non-cash stock-based compensation expense to compare operating results to competitors, without regard to the impact of various long-term incentive plans, including stock option and restricted stock compensation approaches. Management believes the stock-based compensation plans of competitors vary and therefore, comparison of the company’s results to those of its competitors on a GAAP EPS basis alone would not be as useful, particularly during the transition to SFAS 123(R) reporting. Management also believes excluding these expenses facilitates comparison to the company’s historical operating performance. For this latter reason, management does not allocate these expenses to the company’s segment results, and excludes these expenses from internal analysis of business segment results. Limitations associated with the use of this non-GAAP measure include that this measure does not include all of the amounts associated with our results as determined in accordance with GAAP. Management compensates for these limitations by utilizing both the non-GAAP measures, earnings excluding non-cash stock-based compensation expense, and the GAAP measures, income before tax, net income and diluted earnings per share, in its evaluation of performance. There are no material purposes for which we use this non-GAAP measure beyond the purpose described above.

CONFERENCE CALL NOTE:

Convergys will host a conference call on Wednesday, October 25, at 10:00 AM, EDT, to discuss the company’s third quarter results. It will feature Jim Orr, Chairman and CEO, and Earl Shanks, CFO. This call will be carried live (with scheduled repeats) on the Internet. A link to the conference call is available at www.convergys.com

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ABOUT CONVERGYS

Convergys Corporation (NYSE: CVG) is a global leader in providing customer care, human resources, and billing services. Convergys combines specialized knowledge and expertise with solid execution to deliver outsourced solutions, consulting services, and software support. Clients in more than 70 countries speaking nearly 35 languages depend on Convergys to manage the increasing complexity and cost of caring for customers and employees. Convergys serves the world’s leading companies in many industries including communications, financial services, technology, and consumer products.

Convergys is a member of the S&P 500 and a Fortune Most Admired Company. Headquartered in Cincinnati, Ohio, Convergys has more than 68,000 employees in 75 customer contact centers, three data centers, and other facilities in the United States, Canada, Latin America, Europe, the Middle East, and Asia. For more information visit www.convergys.com

Convergys and the Convergys logo are registered trademarks of Convergys Corporation.

Investor Contact:

David Stein, Vice President of Investor Relations

+1 513 723 7768 or investor@convergys.com

Media Contact:

John Pratt, Convergys Corporate Communications

+1 513 723 3333 or john.pratt@convergys.com

##

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Convergys Corporation

Revenues, Net Income and Earnings Per Common Share

In Millions Except Per Share Amounts

(Unaudited)

	Third Quarter											Nine Months
							Change											Change
	2006			2005			Amount			%		2006			2005			Amount			%
Revenues:
Customer Care	$	454.8		$	413.4		$	41.4		10		$	1,335.0		$	1,217.0		$	118.0		10
Information Management		197.1			190.7			6.4		3			581.3			581.2			0.1		0
Employee Care		50.8			40.7			10.1		25			153.5			114.3			39.2		34
Total	$	702.7		$	644.8		$	57.9		9		$	2,069.8		$	1,912.5		$	157.3		8
Operating Income (Loss):
Customer Care	$	54.5		$	48.8		$	5.7		12		$	148.9		$	107.2		$	41.7		39
Information Management		31.3			34.5			(3.2	)	(9	)		93.3			104.3			(11.0	)	(11	)
Employee Care		(8.6	)		(10.5	)		1.9		18			(26.4	)		(40.3	)		13.9		34
Corporate and Other		(7.5	)		(5.8	)		(1.7	)	29			(21.3	)		(14.3	)		(7.0	)	49
Total	$	69.7		$	67.0		$	2.7		4		$	194.5		$	156.9		$	37.6		24
Net Income	$	45.2		$	42.4		$	2.8		7		$	121.7		$	99.2		$	22.5		23
Earnings Per Common Share
- Basic	$	0.33		$	0.30		$	0.03		10		$	0.88		$	0.71		$	0.17		24
- Diluted	$	0.32		$	0.30		$	0.02		7		$	0.86		$	0.69		$	0.17		25
Weighted Average Common Shares Outstanding
- Basic		138.0			139.2			(1.2	)	(1	)		138.8			140.3			(1.5	)	(1	)
- Diluted		141.4			142.2			(0.8	)	(1	)		142.0			143.0			(1.0	)	(1	)

The above amounts reflect the Company’s results of operations, as reported under U.S. Generally Accepted Accounting Principles (U.S. GAAP), that will be presented in the Convergys 10-Q for the quarterly period ended September 30, 2006.

Page 8 of 20

Convergys Corporation

Consolidated Statements of Income

In Millions Except Per Share Amounts

(Unaudited)

(In millions except per share amounts)	For the Three Months Ended Sept. 30,								For the Nine Months Ended Sept. 30,
	2006			2005			% Change		2006			2005			% Change
Revenues:
Customer Care
Communications	$	247.6		$	222.8		11		$	702.3		$	665.1		6
Technology		39.7			35.9		11			117.6			103.1		14
Financial Services		67.8			61.1		11			193.8			183.0		6
Other		99.7			93.6		7			321.3			265.8		21
Total Customer Care Revenues		454.8			413.4		10			1,335.0			1,217.0		10
Information Management
Data Processing		74.0			80.4		(8	)		227.4			254.8		(11	)
Professional and Consulting		75.3			69.1		9			221.4			202.3		9
License and Other		47.8			41.2		16			132.5			124.1		7
Total Information Management Revenues		197.1			190.7		3			581.3			581.2		0
Employee Care		50.8			40.7		25			153.5			114.3		34
Total Revenues		702.7			644.8		9			2,069.8			1,912.5		8
Costs and Expenses:
Cost of Providing Services and Products Sold		439.9			391.3		12			1,301.9			1,183.3		10
Selling, General and Administrative		135.8			130.1		4			400.6			396.0		1
Research and Development Costs		22.0			20.0		10			63.8			57.3		11
Depreciation		33.3			31.5		6			98.4			93.8		5
Amortization		2.0			4.9		(59	)		10.6			16.3		(35	)
Restructuring Charges		—			—		—			—			8.9		(100	)
Total Costs and Expenses		633.0			577.8		10			1,875.3			1,755.6		7
Operating Income		69.7			67.0		4			194.5			156.9		24
Equity in Earnings (Losses) of Cellular Partnerships		4.2			7.4		(43	)		7.1			17.0		(58	)
Other Income (Expense), net		0.8			(0.1	)	—			1.9			(1.1	)	—
Interest Expense		(5.7	)		(5.9	)	(3	)		(17.2	)		(15.6	)	10
Income Before Income Taxes		69.0			68.4		1			186.3			157.2		19
Income Taxes		23.8			26.0		(8	)		64.6			58.0		11
Net Income	$	45.2		$	42.4		7		$	121.7		$	99.2		23
Earnings Per Common Share
Basic	$	0.33		$	0.30		10		$	0.88		$	0.71		24
Diluted	$	0.32		$	0.30		7		$	0.86		$	0.69		25
Weighted Average Common Shares Outstanding
Basic		138.0			139.2					138.8			140.3
Diluted		141.4			142.2					142.0			143.0
Other Data
Operating Margin		9.9	%		10.4	%				9.4	%		8.2	%
Market Price Per Share
High	$	21.26		$	15.30				$	21.26		$	15.76
Low	$	18.09		$	13.68				$	15.43		$	12.57
Close	$	20.65		$	14.37				$	20.65		$	14.37

The above amounts reflect the Company’s results of operations, as reported under U.S. Generally Accepted Accounting Principles (U.S. GAAP), that will be presented in the Convergys 10-Q for the quarterly period ended September 30, 2006.

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Convergys Corporation

Consolidated Balance Sheets

In Millions

(Unaudited)

	Sept. 30, 2006		Dec. 31, 2005
Assets
Cash and Cash Equivalents	$	250.4	$	196.0
Receivables - Net		560.7		521.1
Other Current Assets		129.1		131.9
Property and Equipment - Net		376.7		404.7
Other Assets		1,222.6		1,157.7
Total Assets	$	2,539.5	$	2,411.4
Liabilities and Shareholders’ Equity
Debt Maturing in One Year	$	76.0	$	134.7
Other Current Liabilities		506.5		483.1
Other Liabilities		205.7		141.0
Long-Term Debt		297.6		297.5
Common Shareholders’ Equity		1,453.7		1,355.1
Total Liabilities and Shareholders’ Equity	$	2,539.5	$	2,411.4

Page 10 of 20

Convergys Corporation

Summarized Statement of Cash Flows

In Millions

(Unaudited)

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
(In millions)	2006			2005			2006			2005
Cash provided by operating activities	$	114.0		$	39.8		$	234.2		$	81.8
Cash used in investing activities		(31.1	)(a)		(41.7	)(a)		(75.4	)(b)		(93.1	)(b)
Cash provided (used) in financing activities		(33.6	)		(7.4	)		(104.4	)		2.2
Net increase (decrease) in cash	$	49.3		$	(9.3	)	$	54.4		$	(9.1	)

(a) Includes $24.3 and $31.2 of capital expenditures, net, for the three months ended September 30, 2006 and 2005, respectively.

(b) Includes $74.4 and $80.8 of capital expenditures, net, for the nine months ended September 30, 2006 and 2005, respectively.

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Convergys Corporation

Customer Care

Operating Segment Data

In Millions

(Unaudited)

	For the Three Months Ended Sept. 30,								For the Nine Months Ended Sept. 30,
	2006			2005			% Change		2006			2005			% Change
Revenues:
Communications	$	247.6		$	222.8		11		$	702.3		$	665.1		6
Technology		39.7			35.9		11			117.6			103.1		14
Financial Services		67.8			61.1		11			193.8			183.0		6
Other		99.7			93.6		7			321.3			265.8		21
Total Customer Care Revenues		454.8			413.4		10			1,335.0			1,217.0		10
Costs and Expenses:
Cost of Providing Services and Products Sold		296.7			267.2		11			874.9			803.7		9
Selling, General and Administrative		84.2			75.1		12			252.2			232.3		9
Research and Development Costs		2.0			2.6		(23	)		6.4			6.2		3
Depreciation		16.8			17.1		(2	)		49.3			51.3		(4	)
Amortization		0.6			2.6		(77	)		3.3			8.0		(59	)
Restructuring Charges		—			—		—			—			8.3		(100	)
Total Costs and Expenses		400.3			364.6		10			1,186.1			1,109.8		7
Operating Income	$	54.5		$	48.8		12		$	148.9		$	107.2		39
Operating Margin		12.0	%		11.8	%				11.2	%		8.8	%

The operating segment data for Customer Care shown above reflects the detailed revenue and expense data for Customer Care, as reported under U.S. GAAP, that will be presented in the Convergys 10-Q for the quarterly period ended September 30, 2006.

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Convergys Corporation

Information Management

Operating Segment Data

In Millions

(Unaudited)

	For the Three Months Ended Sept. 30,								For the Nine Months Ended Sept. 30,
	2006			2005			% Change		2006			2005			% Change
Revenues:
Data Processing	$	74.0		$	80.4		(8	)	$	227.4		$	254.8		(11	)
Professional and Consulting		75.3			69.1		9			221.4			202.3		9
License and Other		47.8			41.2		16			132.5			124.1		7
Total Information Management Revenues		197.1			190.7		3			581.3			581.2		0
Costs and Expenses:
Cost of Providing Services and Products Sold		106.1			99.3		7			315.6			302.5		4
Selling, General and Administrative		30.2			30.4		(1	)		84.4			94.1		(10	)
Research and Development Costs		19.8			16.8		18			56.4			49.7		13
Depreciation		8.6			8.1		6			25.6			24.1		6
Amortization		1.1			1.6		(31	)		6.0			6.5		(8	)
Total Costs and Expenses		165.8			156.2		6			488.0			476.9		2
Operating Income	$	31.3		$	34.5		(9	)	$	93.3		$	104.3		(11	)
Operating Margin		15.9	%		18.1	%				16.1	%		17.9	%

The operating segment data for Information Management shown above reflects the detailed revenue and expense data for Information Management, as reported under U.S. GAAP, that will be presented in the Convergys 10-Q for the quarterly period ended September 30, 2006.

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Convergys Corporation

Employee Care

Operating Segment Data

In Millions

(Unaudited)

	For the Three Months Ended Sept. 30,								For the Nine Months Ended Sept. 30,
	2006			2005			% Change		2006			2005			% Change
Revenues	$	50.8		$	40.7		25		$	153.5		$	114.3		34
Costs and Expenses:
Cost of Providing Services and Products Sold		37.0			24.8		49			111.3			77.0		45
Selling, General and Administrative		18.6			22.3		(17	)		56.7			66.2		(14	)
Research and Development Costs		0.2			0.6		(67	)		1.0			1.4		(29	)
Depreciation		3.3			2.8		18			9.6			8.2		17
Amortization		0.3			0.7		(57	)		1.3			1.8		(28	)
Total Costs and Expenses		59.4			51.2		16			179.9			154.6		16
Operating Income	$	(8.6	)	$	(10.5	)	18		$	(26.4	)	$	(40.3	)	34

The operating segment data for Employee Care shown above reflects the detailed revenue and expense data for Employee Care, as reported under U.S. GAAP, that will be presented in the Convergys 10-Q for the quarterly period ended September 30, 2006.

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CONVERGYS CORPORATION

Reconciliation of Cash Provided by

Operating Activities to Free Cash Flow

In Millions

(Unaudited)

	Three Months Ended Sept. 30,						Nine Months Ended Sept. 30,
	2006			2005			2006			2005
Cash provided by operating activities	$	114.0		$	39.8		$	234.2		$	81.8
Accounts receivable securitization		—			50.0			—			100.0
Capital expenditures, net		(24.3	)		(31.2	)		(74.4	)		(80.8	)
Free cash flows (a non-GAAP measure)	$	89.7		$	58.6		$	159.8		$	101.0

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 stock 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 utilizing 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.

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Convergys Corporation

Reconciliation of GAAP Revenues to Revenues Excluding Cingular

In Millions

(Unaudited)

	Consolidated
Third Quarter 2006
Revenues as reported	$	702.7
Adjustments:
Revenues from Cingular		84.4
Revenues excluding Cingular (a non-GAAP measure)	$	618.3
Year to Date 2006
Revenues as reported	$	2,069.8
Adjustments:
Revenues from Cingular		257.7
Revenues excluding Cingular (a non-GAAP measure)	$	1,812.1
Third Quarter 2005
Revenues as reported	$	644.8
Adjustments:
Revenues from Cingular		98.5
Revenues excluding Cingular (a non-GAAP measure)	$	546.3
Year to Date 2005
Revenues as reported	$	1,912.5
Adjustments:
Revenues from Cingular		323.6
Revenues excluding Cingular (a non-GAAP measure)	$	1,588.9

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The Company uses revenues excluding Cingular to assess the revenue growth of the business excluding the impact of Cingular’s migration of acquired subscribers off of AT&T Wireless’ billing and customer care systems that was announced in 2004. Prior to the acquisition of AT&T Wireless by Cingular in 2004, AT&T Wireless was Convergys’ largest client. For the first year after the merger, the Company experienced a decline in customer care revenue primarily as a result of business changes instituted by Cingular related to former AT&T Wireless operations. Over the past year, the Company has been assisting Cingular with migrating subscribers off of the AT&T Wireless billing system that Convergys supports onto Cingular’s in- house systems, one of which Convergys continues to support. As a result of this migration, data processing revenues from Cingular have declined. Limitations associated with the use of this non-GAAP measure include that this measure does not include all of the amounts associated with our results as determined in accordance with GAAP. Management compensates for these limitations by utilizing both the non-GAAP measure, revenues excluding Cingular, and the GAAP measure, revenues, in its evaluation of performance. There are no material purposes for which we use this non-GAAP measure beyond the purposes described above.

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Convergys Corporation

Reconciliation of GAAP Earnings to Earnings Excluding Non-cash

Stock-based Compensation Expense

In Millions Except Per Share Amounts

(Unaudited)

	Income (Loss) Before Tax		Income Tax (Expense)/ Benefit			Net Income (Loss)		Diluted EPS
Third Quarter 2006
Results as reported under U.S. GAAP	$	69.0	$	(23.8	)	$	45.2	$	0.32
Adjustments:
Non-cash stock-based compensation expense		7.2		(2.5	)		4.7		0.03
Results excluding non-cash stock- based compensation expense (a non-GAAP measure)	$	76.2	$	(26.3	)	$	49.9	$	0.35
Year to Date 2006
Results as reported under U.S. GAAP	$	186.3	$	(64.6	)	$	121.7	$	0.86
Adjustments:
Non-cash stock-based compensation expense		20.9		(7.3	)		13.6		0.10
Results excluding non-cash stock- based compensation expense (a non-GAAP measure)	$	207.2	$	(71.9	)	$	135.3	$	0.96
Third Quarter 2005
Results as reported under U.S. GAAP	$	68.4	$	(26.0	)	$	42.4	$	0.30
Adjustments:
Non-cash stock-based compensation expense		6.4		(2.4	)		4.0		0.03
Results excluding non-cash stock- based compensation expense (a non-GAAP measure)	$	74.8	$	(28.4	)	$	46.4	$	0.33

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Year to Date 2005
Results as reported under U.S. GAAP	$	157.2	$	(58.0	)	$	99.2	$	0.69
Adjustments:
Non-cash stock-based compensation expense		16.5		(6.1	)		10.4		0.07
Results excluding non-cash stock- based compensation expense (a non-GAAP measure)	$	173.7	$	(64.1	)	$	109.6	$	0.76

Earnings excluding non-cash stock-based compensation expense - Management uses earnings excluding non-cash stock-based compensation expense to compare operating results to competitors, without regard to the impact of various long-term incentive plans, including stock option and restricted stock compensation approaches. Management believes the stock-based compensation plans of competitors vary, and, therefore, comparison of the Company’s results to those of its competitors on a GAAP EPS basis alone would not be as useful, particularly during the transition to SFAS 123(R) reporting. Management also believes excluding these expenses facilitates comparison to the Company’s historical operating performance. For this latter reason, Management does not allocate these expenses to the Company’s segment results, and excludes these expenses from internal analysis of business segment results. Limitations associated with the use of this non-GAAP measure include that this measure does not include all of the amounts associated with our results as determined in accordance with GAAP. Management compensates for these limitations by utilizing both the non-GAAP measures, earnings excluding non-cash stock-based compensation expense, and the GAAP measures, income before tax, net income and diluted earnings per share, in its evaluation of performance. There are no material purposes for which we use this non-GAAP measure beyond the purpose described above.

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Convergys Corporation

Reconciliation of Expected Diluted Earnings Per Share

(Unaudited)

	(Per share amounts) Full Year 2006
Expected diluted EPS under U.S. GAAP	$	1.15
Adjustments:
Expected non-cash stock-based compensation	$	0.13
Expected diluted EPS excluding non-cash stock-based compensation (a non-GAAP measure)	$	1.28

Earnings excluding non-cash stock-based compensation expense - Management uses earnings excluding non-cash stock-based compensation expense to compare operating results to competitors, without regard to the impact of various long-term incentive plans, including stock option and restricted stock compensation approaches. Management believes the stock-based compensation plans of competitors vary, and, therefore, comparison of the Company’s results to those of its competitors on a GAAP EPS basis alone would not be as useful, particularly during the transition to SFAS 123(R) reporting. Management also believes excluding these expenses facilitates comparison to the Company’s historical performance. For this latter reason, Management does not allocate these expenses to the Company’s segment results, and excludes these expenses from internal analysis of business segment results. Limitations associated with the use of this non-GAAP measure include that this measure does not include all of the amounts associated with our results as determined in accordance with GAAP. Management compensates for these limitations by utilizing both the non-GAAP measures, earnings excluding non-cash stock-based compensation expense, and the GAAP measures, income before tax, net income and diluted earnings per share, in its evaluation of performance. There are no material purposes for which we use this non-GAAP measure beyond the purpose described above.

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