UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~______________________~~_______________________________

Form 10-Q

~~______________________~~_______________________________



☑	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~September~~March 3031, ~~2017~~2018



☐	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to .

Commission ~~File~~file ~~Number~~number 1-14379

______________________

CONVERGYS CORPORATION

(Exact name of registrant as specified in its charter)

______________________

Incorporated under the laws of the State of Ohio

201 East Fourth Street, Cincinnati, Ohio 45202

I.R.S. Employer Identification Number 31-1598292

Telephone - Area Code (513) 723-7000

______________________

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☑ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☑ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.



Large accelerated filer	☑		Accelerated filer	☐

Non-accelerated filer	☐	(Do not check if a smaller reporting company)	Smaller reporting company	☐

			Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☑

At ~~September~~March 3031, ~~2017~~2018, there were 9291,~~412~~499,~~178~~038 common shares, ~~without par value,~~ outstanding, excluding amounts held in ~~Treasury~~treasury of 991,~~102~~351,~~838~~300.

TABLE OF CONTENTS

PART I		Page
Item 1.	Financial Statements	2
	Consolidated Statements of Income - Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)	2
	Consolidated Statements of Income - Three Months Ended March, 31, 2018 and 2017 (Unaudited)	2
	Consolidated Statements of Comprehensive Income - Three and Nine Months Ended September 30, 2017 and 2016 (Unaudited)	3
	Consolidated Statements of Comprehensive Income - Three Months Ended March 31, 2018 and 2017 (Unaudited)	3
	Consolidated Balance Sheets - September 30, 2017 (Unaudited) and December 31, 2016	4
	Consolidated Balance Sheets - March 31, 2018 (Unaudited) and December 31, 2017	4
	Consolidated Statements of Cash Flow - Nine Months Ended September 30, 2017 and 2016 (Unaudited)	5
	Consolidated Statements of Cash Flow - Three Months Ended March 31, 2018 and 2017 (Unaudited)	5
	Notes to Condensed Consolidated Financial Statements (Unaudited)	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	6
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	7
Item 4.	Controls and Procedures	7
PART II
Item 1.	Legal Proceedings	8
Item 1A.	Risk Factors	8
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	8
Item 5.	Other Information	8
Item 6.	Exhibits	9
Item 6.	Exhibits	8
	Signatures	10
	Signatures	9

PART I - FINANCIAL INFORMATION

ITEM 1. ~~FINANCIAL~~FINCIAL STATEMENTS

CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(Amounts in millions except per share amounts)	~~2017~~2018			~~2016~~2017			~~2017~~			~~2016~~
Revenues		$~~688~~674.32			$~~741~~727.26			~~$2,102.8~~			~~$2,155.6~~
Costs and Expenses:
Cost of providing services and products sold (1)	~~428~~417.17			~~479~~450.82			~~1,305.1~~			~~1,365.3~~
Selling, general and administrative	~~175~~172.54			~~170~~177.5			~~527.1~~			~~511.1~~
Depreciation	2623.28			3027.34			~~80.6~~			~~93.3~~
Amortization	76.29			7.12			~~21.7~~			~~20.9~~
Restructuring charges	218.49			015.20			~~19.1~~			~~2.7~~
Transaction and integration costs	~~0.8~~—			21.75			~~3.4~~			~~5.0~~
Total costs and expenses	~~640~~639.27			~~690~~678.68			~~1,957.0~~			~~1,998.3~~
Operating Income	4834.15			5048.68			~~145.8~~			~~157.3~~
Other (expense) income, net	(10.65		)	(1.23		)	~~1.2~~			~~(3.2~~		)
Interest expense	(4.5		)	(45.63		)	~~(14.0~~		)	~~(13.6~~		)
Income before Income Taxes	4229.05			44.8			~~133.0~~			~~140.5~~
Income tax expense	7.2			7.1			20.5			25.0
Income tax (benefit) expense	(0.3		)	6.9
Income from Continuing Operations, net of tax	34.8			37.7			112.5			115.5
Net Income		$29.8			$37.9
Income from Discontinued Operations, net of tax	—			10.0			—			10.0
Basic Earnings per Common Share		$0.33			$0.40
Net Income		$34.8			$47.7			$112.5			$125.5
Diluted Earnings per Common Share		$0.30			$0.38
Basic Earnings per Common Share
Weighted Average Common Shares Outstanding:
Continuing Operations		$0.38			$0.39			$1.20			$1.20
Basic	91.6			94.4
Discontinued Operations	—			0.11			—			0.11
Diluted	98.2			100.5
Basic Earnings per Common Share		$0.38			$0.50			$1.20			$1.31
Cash dividends declared per share		$0.11			$0.09
Diluted Earnings per Common Share
Continuing Operations		$0.35			$0.36			$1.12			$1.11
Discontinued Operations	—			0.10			—			0.10
Diluted Earnings per Common Share		$0.35			$0.46			$1.12			$1.21
Weighted Average Common Shares Outstanding:
Basic	92.8			95.6			93.6			96.1
Diluted	99.8			103.1			100.7			103.6
Cash dividends declared per share		$0.10			$0.09			$0.29			$0.26


(1)	Exclusive of depreciation and amortization, with the exception of amortization of deferred charges.

The accompanying notes are an integral part of the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
(Amounts in millions)	2017			2016			2017		2016
(In millions)	2018			2017
Net Income		$3429.8			$4737.79			~~$112.5~~		~~$125.5~~
Other Comprehensive Income, net of tax:
Other Comprehensive (Loss) Income, net of tax:
Foreign currency translation adjustments	56.74			(23.0		)	~~18.2~~		~~(3.2~~		)
Change related to pension liability	(04.15		)	1.0.9			~~1.6~~		~~3.0~~
Unrealized gain (loss) on hedging activities	2.1			(5.3		)	17.8		9.8
Unrealized (loss) gain on hedging activities	(20.1		)	10.7
Total other comprehensive gain (loss)	7.7			(6.3		)	37.6		9.6
Total other comprehensive (loss) income	(18.2		)	14.6
Total Comprehensive Income		$4211.56			$4152.45			~~$150.1~~		~~$135.1~~

The accompanying notes are an integral part of the Consolidated Financial Statements.

CONSOLIDATED BALANCE SHEETS

	(Unaudited)
	At September 30,			At December 31,
(Amounts in millions)	At March 31, 2018			At December 31, 2017
(Amounts in millions)	2017			2016
ASSETS
Current Assets:
Cash and cash equivalents		$~~167~~186.83			$~~138~~193.87
Short-term investments	13.01			1213.45
Receivables, net of allowances of $3.7 and $5.8	555.8			555.0
Receivables, net of allowances of $4.4 and $4.8	567.7			567.2
Prepaid expenses	4439.05			3835.69
Other current assets	3849.49			4047.04
Total current assets	~~819~~856.05			~~784~~857.87
Property and equipment, net	~~270~~240.40			~~304~~260.10
Goodwill	~~935~~942.78			~~916~~937.9
Other intangibles, net	~~293~~282.28			~~307~~287.63
Deferred income tax assets	2419.26			1721.73
Other assets	44.96			4050.75
Total Assets		$2,~~387~~386.43			$2,~~371~~414.87
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Debt and capital lease obligations maturing within one year		$050.93			$10.89
Payables and other current liabilities	~~314~~309.16			~~345~~322.81
Total current liabilities	~~315~~359.09			~~347~~323.60
Long-term debt and capital lease obligations	~~279~~230.20			~~297~~267.07
Deferred income tax liabilities	~~202~~213.14			~~197~~222.86
Accrued pension liabilities	8092.35			8094.37
Other long-term liabilities	7157.01			7169.95
Total liabilities	~~947~~952.69			~~994~~977.65
Convertible debentures conversion feature	59.90			6159.35
Shareholders’ Equity:
Preferred shares—without par value, 5.0 authorized; none issued or outstanding	—			—
Common shares—without par value, 500.0 authorized; 191.5 and 191.0 issued, 92.4 and 94.7 outstanding, as of September 30, 2017 and December 31, 2016, respectively	1,118.8			1,110.0
Common shares—without par value, 500.0 authorized; 92.9 and 92.5 issued, 91.5 and 91.8 outstanding, as of March 31, 2018 and December 31, 2017, respectively	3.3			2.5
Treasury stock—99.1 and 96.3 shares as of September 30, 2017 and December 31, 2016, respectively	(1,702.0		)	(1,635.3		)
Treasury stock—1.4 and 0.6 shares as of March 31, 2018 and December 31, 2017, respectively	(32.2		)	(16.0		)
Retained earnings	21,~~039~~488.31			1,~~955~~457.08
Accumulated other comprehensive loss	(7684.28		)	(~~113~~66.86		)
Total shareholders’ equity	1,~~379~~374.94			1,~~315~~377.97
Total Liabilities and Shareholders’ Equity		$2,~~387~~386.43			$2,~~371~~414.87

The accompanying notes are an integral part of the Consolidated Financial Statements.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

	Nine Months Ended September 30,
	Three Months Ended March 31,
(Amounts in millions)	~~2017~~2018			~~2016~~2017
CASH FLOWS FROM OPERATING ACTIVITIES
Net income		$~~112~~29.58			$~~125~~37.59
Income from discontinued operations, net of tax	—			10.0
Adjustments to reconcile net income to net cash provided by operating activities
Income from continuing operations, net of tax	112.5			115.5
Depreciation and amortization	30.7			34.6
Adjustments to reconcile net income from continuing operations to net cash provided by operating activities of continuing operations
Deferred income tax expense (benefit)	4.1			(0.6		)
Depreciation and amortization	102.3			114.2
Stock compensation expense	5.2			4.4
Deferred income tax benefit	(13.2		)	(6.0		)
Stock compensation expense	12.5			12.8
Changes in assets and liabilities, net of acquisitions:
Change in receivables	(80.28		)	~~23.~~1.3
Change in other current assets	2(8.62		)	(91.34		)
Change in deferred charges, net	0.31			0.61
Change in other assets and liabilities	(130.30		)	(111.2		)
Change in payables and other current liabilities	(2118.42		)	(1235.90		)
Net cash provided by operating activities	~~186~~12.17			~~236~~32.89
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditures	(445.9		)	(638.69		)
Purchase of short-term and other investments	—			(0.8		)
Net cash used in investing activities	(5.9		)	(8.9		)
Acquisition, net of cash acquired	—			(129.9		)
Net proceeds from sale of joint venture interest previously acquired in the buw acquisition	0.7			—
Net cash used in investing activities	(44.2		)	(194.3		)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of other long-term debt (term loan)	~~100.0~~—			—100.0
Repayments of other long-term debt (term loan and capital lease obligations)	(~~216~~51.41		)	(2215.47		)
Proceeds from Asset Securitization Facility	~~643~~215.73			~~699~~333.06
Repayment of Asset Securitization Facility	(~~548~~153.73		)	(~~738~~173.06		)
Repurchase of common shares	(6515.9		)	(5421.35		)
Proceeds from exercise of stock options	0.8			0.6
Payments of dividends	(9.2		)	(8.5		)
Payments of dividends	(26.4		)	(24.1		)
Net cash (used in) provided by financing activities	(14.2		)	14.3
Excess tax benefit from share-based payment arrangements	—			1.1
Net (decrease) increase in cash and cash equivalents	(7.4		)	38.3
Net cash used in financing activities	(112.9		)	(118.1		)
Cash and cash equivalents at beginning of period	193.7			138.8
Net increase (decrease) in cash and cash equivalents	29.0			(75.6		)
Cash and cash equivalents at end of period		$186.3			$177.1
Cash and cash equivalents at beginning of period	138.8			204.7
Cash and cash equivalents at end of period		$167.8			$129.1

The accompanying notes are an integral part of the Consolidated Financial Statements.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in millions except per share amounts)

1. BACKGROUND AND BASIS OF PRESENTATION

Convergys Corporation ~~(Convergys or the Company)~~ is a global leader in customer experience outsourcing, focused on bringing value to its clients through every customer interaction. As of ~~September 30~~ March 31, ~~2017~~2018, Convergys had approximately ~~120~~110,000 employees in 33 countries, interacting with our clients’ customers in 58 languages. In order to help clients serve their customers, Convergys operates ~~149~~136 contact centers. Convergys leverages its geographic footprint and comprehensive capabilities to help leading companies create quality customer experiences across multiple interaction channels, such as voice, chat, email and interactive voice response.

The accompanying Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial reporting (U.S. GAAP) and U.S. Securities and Exchange Commission (SEC) regulations, and, in the opinion of management, include all adjustments necessary for a fair presentation of the results of operations, financial position and cash flows for each period shown. All adjustments are of a normal and recurring nature. Certain information and footnote disclosures normally included in Financial Statements prepared in accordance with generally accepted accounting principles in the United States have been condensed or omitted. Interim Consolidated Financial Statements are not necessarily indicative of the financial position or operating results for an entire year. These interim Consolidated Financial Statements should be read in conjunction with the audited Financial Statements and the Notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2016~~2017, filed with the SEC on February 2221, ~~2017~~2018. ~~Certain balances within the prior year Consolidated Financial Statements have been reclassified to conform to current year presentation.~~

2. RECENT ACCOUNTING PRONOUNCEMENTS

In ~~January~~February ~~2017~~2018, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) ~~2017~~2018-0402, ~~“Simplifying~~Reclassification ~~the~~of ~~Test~~Certain ~~for~~Tax ~~Goodwill~~Effects ~~Impairment.”~~from ~~This~~Accumulated ~~ASU~~Other ~~eliminates~~Comprehensive ~~the~~Income. ~~two-step~~This ~~process~~ASU ~~that~~permits ~~required~~companies ~~identification~~to ofreclassify ~~potential~~disproportionate ~~impairment~~tax ~~and~~effects ain ~~separate~~accumulated ~~measure~~other ofcomprehensive ~~the~~income ~~actual~~(AOCI) ~~impairment.~~caused ~~Goodwill impairment charges, if any, would be determined~~ by the ~~difference~~Tax ~~between~~Cuts ~~a reporting unit's carrying value~~ and ~~its~~Jobs ~~fair~~Act ~~value~~of 2017 (~~impairment~~the ~~loss~~2017 isTax ~~limited~~Act) to ~~the~~retained ~~carrying value)~~earnings. ~~This~~The ~~standard~~Company iselected ~~effective~~to ~~for~~early ~~annual~~adopt orthis ~~any~~standard ~~interim~~as ~~goodwill~~of ~~impairment~~January ~~tests~~1, ~~beginning after December 15~~2018, ~~2019.~~on ~~The~~a ~~adoption~~prospective ofbasis, ~~this~~resulting ~~standard~~in isa ~~not~~$6.0 ~~expected~~reclassification toadjustment, ~~have~~using a ~~material~~specific ~~impact~~identification onmethod, ~~the~~that ~~Company’s~~increased ~~consolidated~~retained ~~financial~~earnings ~~statements~~and decreased AOCI.

In ~~March~~May 2017, the FASB issued ASU 2017-0709, ~~“Improving~~Stock ~~the~~Compensation ~~Presentation~~- Scope of ~~Net~~Modification ~~Periodic Pension Cost and Net Periodic Postretirement Benefit Costs~~Accounting.” This ASU ~~requires~~clarifies ~~the~~which ~~service~~changes ~~component of pension and other postretirement benefit costs~~ to ~~be presented in~~ the ~~same~~terms ~~line~~or ~~item~~conditions asof ~~other~~a ~~employee~~share-based ~~compensation~~payment ~~costs~~award onrequire the ~~consolidated~~application ~~statement~~ of ~~income;~~modification ~~however,~~accounting ~~the~~under ~~other~~ASC ~~components of net benefit cost are required to be presented outside of operating income within the consolidated statements of income~~718. The Company ~~retrospectively~~ adopted this ~~ASU~~standard onas of January 1, ~~2017~~2018. The ~~impact~~adoption of ~~the~~this ~~adoption~~standard ondid ~~balances~~not ~~previously~~have ~~reported~~an asimpact ofon ~~September~~the ~~30,~~Company’s ~~2016~~consolidated ~~were~~financial ~~as follows:~~statements.

	Three Months Ended September 30, 2016
Consolidated Statement of Income Caption	Previously Reported		Change			Currently Reported
Cost of providing services and products sold		$480.5		($0.7	)		$479.8
Selling, general and administrative		$171.0		($0.5	)		$170.5
Total costs and expenses		$691.8		($1.2	)		$690.6
Operating Income		$49.4		$1.2			$50.6
Other income (expense), net		$—		($1.2	)		($1.2	)

In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment. This ASU eliminates the two-step process that required identification of potential impairment and a separate measure of the actual impairment. Goodwill impairment charges, if any, would be determined by the difference between a reporting unit's carrying value and its fair value (impairment loss is limited to the carrying value). This standard is effective for annual or any interim goodwill impairment tests beginning after December 15, 2019. The adoption of this standard is not expected to have a material impact on the Company’s consolidated financial statements.

	Nine Months Ended September 30, 2016
Consolidated Statement of Income Caption	Previously Reported		Change			Currently Reported
Cost of providing services and products sold		$1,367.5		($2.2	)		$1,365.3
Selling, general and administrative		$512.7		($1.6	)		$511.1
Total costs and expenses		$2,002.1		($3.8	)		$1,998.3
Operating Income		$153.5		$3.8			$157.3
Other income (expense), net		$0.6		($3.8	)		($3.2	)

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230). The objective of this update is to provide additional guidance and reduce diversity in practice when classifying certain transactions within the statement of cash flows. In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This new standard requires that the statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. These standards are effective for financial statements issued for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company adopted these standards as of January 1, 2018 utilizing the retrospective transition method. The adoption of this standard did not have a material impact on the Company’s consolidated financial statements.

In ~~March~~February 2016, the FASB issued ASU 2016-0902, ~~“Improvements to Employee Share-Based Payment Accounting~~Leases.” This ASU iswill ~~intended~~require lessees to ~~simplify~~recognize ~~accounting~~almost ~~for~~all ~~share-based~~leases ~~payments~~on ~~and~~the ~~requires~~balance ~~that~~sheet ~~excess tax benefits for share-based payments be recorded~~ as a ~~reduction~~ right-of-use ~~income~~asset ~~tax expense~~ and ~~reflected~~a ~~within~~lease ~~operating~~liability. ~~cash~~For ~~flows~~income ~~rather~~statement ~~than~~purposes, ~~being~~the ~~recorded~~FASB ~~within~~retained ~~equity~~a ~~and~~dual ~~reflected~~model, ~~within~~requiring ~~financing~~leases ~~cash flows. The ASU also provides the option~~ to ~~recognize~~be ~~forfeitures~~classified as ~~they~~finance ~~occur~~leases ~~rather~~or ~~than~~operating ~~estimating the number of awards expected to be forfeited~~leases. The Company ~~adopted~~will adopt this ~~ASU~~standard ason of January 1, ~~2017~~2019 and is ~~applying~~currently assessing the ~~new~~effect ~~guidance~~that ~~related~~adoption toof ~~excess~~the ~~tax~~new ~~benefits~~standard onwill ahave ~~prospective~~on ~~basis.~~its ~~The~~consolidated ~~Company~~financial ~~has~~statements ~~elected~~and torelated ~~account~~disclosures, ~~for~~as ~~forfeitures~~well ~~of share-based payments~~ as ~~they~~its ~~occur~~processes, systems and ~~will~~internal ~~not~~controls. ~~apply~~The ~~estimated~~Company ~~forfeiture~~currently ~~rates.~~expects Asadoption ~~a result~~ of this ~~election,~~standard ~~the~~will ~~Company~~result ~~recorded~~in a ~~$0.6~~material ~~cumulative-effect~~increase ~~adjustment~~ to the ~~retained~~assets ~~earnings~~and ~~balance~~liabilities asreported ~~of January 1, 2017 for outstanding awards based~~ on the ~~difference~~Company’s ~~between~~Consolidated ~~the~~Balance ~~fair value of awards historically expected to be forfeited and the fair value of awards actually forfeited~~Sheets.

In ~~February~~May ~~2016~~2014, the FASB issued ASU ~~2016~~2014-0209, ~~“Leases~~Revenue from Contracts with Customers.” ~~This~~The ~~ASU~~standard ~~will~~applies ~~require~~one ~~lessees~~comprehensive torevenue ~~recognize~~recognition ~~almost~~model across all ~~leases~~contracts, onentities ~~the~~and ~~balance~~sectors. ~~sheet~~The ascore aprincipal ~~right-~~of~~-use~~ ~~asset~~the ~~and~~new astandard ~~lease~~is ~~liability.~~that ~~For~~revenue ~~income~~should ~~statement~~be ~~purposes,~~recognized to depict the ~~FASB~~transfer ~~retained~~of apromised ~~dual~~goods ~~model,~~or ~~requiring~~services ~~leases~~to customers in an amount that reflects the consideration to which the entity expects to be ~~classified~~entitled asin ~~finance~~exchange ~~leases~~for orthose ~~operating~~goods ~~leases~~or services. ~~This~~The ~~update~~standard isincludes ~~effective~~cost ~~for~~guidance, ~~interim~~whereby all direct and ~~annual~~incremental ~~periods~~costs ~~beginning~~to ~~after~~obtain ~~December~~or ~~15,~~fulfill ~~2018~~a contract with ~~early~~a ~~adoption~~customer ~~permitted~~are capitalized and amortized over the corresponding period of benefit. The Company ~~will~~adopted ~~adopt~~ this standard for all contracts with customers outstanding on January 1, ~~2019~~2018 using the modified retrospective adoption method, which resulted in a $3.2 adjustment to the opening balance of retained earnings. Results for reporting periods after January 1, 2018 are presented under ASU 2014-09, while prior period amounts are not adjusted and iscontinue ~~currently~~to ~~assessing~~be reported in accordance with the accounting standards in effect ~~that~~for those periods. The largest adoption impacts to the Company’s consolidated financial statements resulted from the new qualitative and quantitative disclosures provided in Note 3, and the capitalization of certain direct and incremental contract costs that are now being capitalized and amortized over the estimated period of benefit of the corresponding contracts. The new standard ~~will~~does not have an impact on ~~its~~the ~~consolidated~~timing ~~financial~~or ~~statements~~revenue recognition pattern of any of our identified revenue streams. The cumulative effect of the changes made to our January 1, 2018 Consolidated Balance Sheet for the adoption of ASU 2014-09 were as follows:

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers.” The standard will apply one comprehensive revenue recognition model across all contracts, entities and sectors. The core principal of the new standard is that revenue should be recognized to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. Once effective, this ASU will replace most of the existing revenue recognition requirements of U.S. GAAP. The Company will adopt this standard on January 1, 2018. The Company’s implementation activities related to this standard are aligned to meeting the required adoption date. The largest impacts to the Company’s financial statements will result from the new qualitative and quantitative disclosures that will be required upon adoption of the new standard, and the capitalization of certain direct and incremental contract costs that will be required to be capitalized and amortized over the life of the corresponding contract. The Company has concluded that it will apply the modified retrospective adoption alternative for this standard. Processes and controls are currently being implemented to identify and quantify the cumulative effect adjustment to retained earnings as of January 1, 2018.



	Balance at		Adjustments Due to		Balance at
Consolidated Balance Sheet Caption	December 31, 2017		ASU 2014-09		January 1, 2018
Assets
Other current assets		$47.4		$2.0		$49.4
Total current assets		$857.7		$2.0		$859.7
Other assets		$50.5		$2.3		$52.8
Total Assets		$2,414.7		$4.3		$2,419.0

Liabilities and Shareholders' Equity
Deferred income tax liabilities		$222.6		$1.1		$223.7
Total liabilities		$977.5		$1.1		$978.6
Retained Earnings		$1,457.8		$3.2		$1,461.0
Total shareholders' equity		$1,377.7		$3.2		$1,380.9
Total Liabilities and Shareholders' Equity		$2,414.7		$4.3		$2,419.0

3.The ~~BUSINESS~~impacts ~~COMBINATIONS~~to the Company’s Consolidated Statement of Income for the three months ended March 31, 2018 and Consolidated Balance Sheet as of March 31, 2018, as a result of the adoption of ASU 2014-09 were as follows:

buw Acquisition



	Three Months Ended March 31, 2018
Consolidated Statement of Income Caption	As Reported			Amounts Without Adoption of ASU 2014-09			Effect of Change
Selling, general and administrative		$172.4			$172.8			($0.4	)
Total costs and expenses		$639.7			$640.1			($0.4	)
Operating Income		$34.5			$34.1			$0.4
Income before Income Taxes		$29.5			$29.1			$0.4
Income tax benefit		($0.3	)		($0.2	)		($0.1	)
Net Income		$29.8			$29.5			$0.3

On August 1, 2016, the Company acquired buw, a leader in the German customer care industry. The acquisition added 16 sites and approximately 6,000 employees in Germany, Hungary and Romania into Convergys’ global operations. The total purchase price, net of cash acquired, was $137.9, which was funded using available cash and cash equivalents.



	Three Months Ended March 31, 2018
Consolidated Balance Sheet Caption	As Reported		Balances Without Adoption of ASU 2014-09		Effect of Change
Assets
Other current assets		$49.9		$47.6		$2.3
Total current assets		$856.5		$854.2		$2.3
Other assets		$44.6		$42.1		$2.5
Total Assets		$2,386.3		$2,381.5		$4.8

Liabilities and Shareholders' Equity
Deferred income tax liabilities		$213.4		$212.2		$1.2
Total liabilities		$952.9		$951.7		$1.2
Retained earnings		$1,488.1		$1,484.5		$3.6
Total shareholders' equity		$1,374.4		$1,370.8		$3.6
Total Liabilities and Shareholders' Equity		$2,386.3		$2,381.5		$4.8

~~Purchase~~3. ~~Price~~REVENUE ~~Allocation~~FROM CONTRACTS WITH CUSTOMERS

~~The~~Revenue ~~Company~~Recognition accounted for its acquisition of buw using the acquisition method of accounting in accordance with applicable U.S. GAAP whereby the total purchase price was allocated to tangible and intangible assets acquired and liabilities assumed based on respective fair values. The following table summarizes the values of the assets acquired and liabilities assumed at the date of acquisition:Policy

	August 1, 2016
Assets:
Receivables		$35.3
Other current assets	2.5
Property and equipment	6.9
Goodwill	98.5
Intangible assets	22.7
Other assets	0.3
Liabilities:
Accounts payable	(0.8		)
Accrued expenses	(15.0		)
Deferred tax - net	(6.7		)
Other long-term liabilities	(5.8		)
Total purchase price		$137.9

More than 95% of the Company’s revenues are derived from fees for customer experience outsourcing services provided to the Company’s clients. Revenues from our contracts to provide these services relate to a single performance obligation to stand ready to provide services to the customer. The Company recognizes these revenues over time as services are performed based on the volumes of services provided and contractual rates. The Company’s remaining revenues, which represent less than 5% of the Company’s total revenues, are derived from the sale of premise-based and hosted self-care and technology solutions and provision of professional services. Revenues from the sale of these solutions and provision of these services are recognized over time as solutions or services are provided over the duration of the contract, using contractual rates. These contracts are typically one year or less in duration.

AsCertain of ~~September 30~~our contracts, ~~2017~~primarily for agent-related services, include pricing terms and conditions that include components of variable consideration. The variable consideration is typically in the ~~purchase~~form ~~price~~of ~~allocation~~performance-related bonus and penalty provisions that are determined based upon our meeting, or not meeting, agreed-upon service levels and performance metrics specified within the contract. Some contracts also contain discounts that the client can earn through the achievement of specified volume levels or through early payment for services provided by Convergys. Each component of variable consideration is earned based on the ~~acquisition~~Company’s ~~was~~actual ~~final~~performance during the measurement period specified within the contract (typically monthly for bonus and penalty provisions and either quarterly or annually for volume discounts). ~~Goodwill~~In ~~was~~order ~~calculated~~to asdetermine the ~~excess~~transaction ofprice, the Company estimates the variable consideration ~~transferred~~using ~~over~~the most likely amount method, based on the ~~net~~specific ~~assets~~contract ~~recognized~~provisions and ~~represents~~known performance results during the ~~synergistic~~relevant ~~benefits~~measurement ~~that~~period. ~~are~~When ~~expected~~determining toif bevariable ~~realized~~consideration ~~from~~should be constrained, the ~~acquisition.~~Company ~~The~~considers ~~benefits~~whether ~~primarily~~factors ~~include~~outside anits ~~expanded~~control ~~geographic~~could ~~footprint~~result in ~~Germany~~a ~~and~~significant ~~Eastern~~reversal ~~Europe~~of revenue. ~~None~~In ofmaking these assessments, the ~~goodwill~~Company isconsiders ~~expected~~the tolikelihood beand ~~deductible~~magnitude ~~for~~of ~~income~~a ~~tax~~potential ~~purposes~~reversal. The Company’s performance period generally corresponds with the monthly invoice period. Given our historical experiences and ~~was~~relatively ~~entirely~~short ~~allocated~~duration of periods subject to variable consideration adjustments, no constraints on our revenue recognition were applied during the ~~Customer~~first ~~Management~~quarter -of ~~Agent~~2018. ~~Services~~The Company reassesses these estimates during each reporting ~~unit~~period.

~~Intangible~~Disaggregation ~~Assets~~of ~~Identified~~Revenue

We provide services to companies across a variety of industries including communications, technology, retail, financial services, healthcare and other. The following ~~details~~table presents our disaggregated revenue from customers by key industry vertical for the ~~total~~three ~~intangible~~months ~~assets~~ended ~~identified:~~March 31, 2018 and 2017.

			Life
	Three Months Ended March 31,
Intangible asset type	Value		(years)
	2018		2017
Customer relationship		$22.0	10
Revenues:
Trade name	0.7		1
Communications		$287.2		$336.8
Total		$22.7
Technology	148.9		156.5
Retail	76.4		66.4
Financial Services	74.7		77.9
Healthcare	51.4		51.4
Other	35.6		38.6
Total Revenues		$674.2		$727.6

~~The~~While ~~fair~~most ~~value~~ of ~~the~~our ~~customer~~contracts ~~relationship~~are ~~asset~~priced ~~was~~in ~~determined~~U.S. ~~using the income approach through an excess earnings analysis~~dollars, ~~with~~we ~~projected~~also ~~earnings~~recognize ~~being~~revenue ~~discounted~~under atcontracts athat ~~rate~~are ~~of 13.2%.~~denominated ~~The~~in ~~customer~~euros, ~~relationship~~British ~~intangible~~pounds, ~~asset~~Australian ~~represents~~dollars ~~relationships~~or ~~between~~Canadian ~~buw and its customers~~dollars. ~~Convergys~~The ~~applied~~following ~~the~~table ~~income~~presents ~~approach through a relief-from-royalty analysis to determine~~ the ~~fair~~Company’s ~~value~~U.S. ofdollar ~~the~~equivalent ~~buw~~revenue ~~trade~~by ~~name~~currency ~~asset.~~for ~~The determination of~~ the ~~useful~~three ~~lives~~months ~~was~~ended ~~based~~March 31, ~~upon~~2018 ~~consideration of market participant assumptions~~ and ~~transaction specific factors~~2017.

4. DIVESTITURES AND DISCONTINUED OPERATIONS



	Three Months Ended March 31,
	2018		2017
U.S. Dollar Revenue by Currency:
U.S. dollar		$494.2		$570.1
Euro	92.3		77.7
British pound	52.7		39.8
Australian dollar	11.5		15.3
Canadian dollar	9.6		8.8
Other	13.9		15.9
Total Revenues		$674.2		$727.6

~~Information~~Costs ~~Management~~to Obtain a Contract

OnThe ~~May~~Company ~~16,~~capitalizes ~~2012,~~commission ~~the~~expenses ~~Company~~paid ~~completed~~to our sales personnel when the ~~sale~~commissions ofare ~~its~~deemed ~~Information~~to ~~Management~~be incremental for obtaining new agent-related services contracts. The deferred commissions are amortized on a straight-line basis over the expected period of ~~business~~benefit. toWe ~~NEC~~review ~~Corporation~~the deferred commission balances for impairment on an ongoing basis. ~~During~~Deferred commissions are classified as current or noncurrent based on the ~~three~~timing of when we expect to recognize the expense. The current and ~~nine~~noncurrent ~~months~~portions ~~ended~~are ~~September~~included 30in Other current assets and Other assets, ~~2016~~respectively, on the Company’s ~~recorded~~Consolidated ~~income~~Balance ~~from~~Sheets. ~~discontinued~~As ~~operations~~of March 31, ~~net~~2018, ofthe current and noncurrent assets related to deferred commissions totaled $102.03 asand ~~certain~~$2.5, ~~contingencies~~respectively. ~~and~~During ~~tax~~the ~~positions~~three months ended March 31, 2018, we recorded $0.7 of amortization expense related to ~~Information~~deferred ~~Management~~commissions. ~~were~~This ~~settled~~expense oris ~~adjusted~~classified in Selling, general and administrative expense on the Consolidated Statement of Income.

5.Receivables ~~EARNINGS~~and ~~PER~~Allowance ~~SHARE~~for ~~AND~~Doubtful ~~SHAREHOLDERS’ EQUITY~~Accounts

Trade receivables are comprised of amounts owed to the Company by clients and are presented net of an allowance for doubtful accounts. Contracts with individual clients determine when receivables are due, generally within 30 to 60 days, and whether interest is accrued on late payments. The allowance for doubtful accounts is the Company’s best estimate of the amount of probable credit losses in the Company’s existing accounts receivable balance. The Company regularly reviews the adequacy of its allowance for doubtful accounts. The Company determines the allowance based on historical write-off experience and current economic conditions and also considers factors such as customer credit, past transaction history with the customer and changes in customer payment terms when determining whether the collection of a receivable is reasonably assured. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Volume Discounts

Certain contracts with customers contain discounts that the client can earn through the achievement of specified volume levels or through early payment for services provided by Convergys. The Company maintains a liability for these discounts within Payables and other current liabilities on its Consolidated Balance Sheets. The liabilities for these discounts totaled $5.9 as of March 31, 2018.

4. EARNINGS PER SHARE AND SHAREHOLDERS’ EQUITY

Earnings per Share

The following is a reconciliation of the numerator and denominator of the basic and diluted earnings per share (EPS) computations:

		Continuing Operations					Discontinued Operations					Total
Shares (in millions)	Shares	NetIncome		PerShareAmount
Shares (in millions)	Shares	NetIncome		PerShareAmount			NetIncome		PerShareAmount			Per Share Amount
Three Months Ended March 31, 2018
Three Months Ended September 30, 2017
Basic EPS	91.6		$29.8		$0.33
Basic EPS	92.8		$34.8		$0.38		—			$—			$0.38
Effect of dilutive securities:
Effect of dilutive securities:
Stock-based compensation arrangements	0.9	—		(0.01		)
Stock-based compensation arrangements	0.7	—		—			—		—			—
Convertible Debt	5.7	—		(0.02		)
Convertible Debt	6.3	—		(0.03		)	—		—			(0.03		)
Diluted EPS	98.2		$29.8		$0.30
Diluted EPS	99.8		$34.8		$0.35		—			$—			$0.35
Three Months Ended March 31, 2017
Nine Months Ended September 30, 2017
Basic EPS	94.4		$37.9		$0.40
Basic EPS	93.6		$112.5		$1.20		—			$—			$1.20
Effect of dilutive securities:
Effect of dilutive securities:
Stock-based compensation arrangements	0.9	—		—
Stock-based compensation arrangements	0.8	—		(0.01		)	—		—			(0.01		)
Convertible Debt	5.2	—		(0.02		)
Convertible Debt	6.3	—		(0.07		)	—		—			(0.07		)
Diluted EPS	100.5		$37.9		$0.38
Diluted EPS	100.7		$112.5		$1.12		—			$—			$1.12
Three Months Ended September 30, 2016
Basic EPS	95.6		$37.7		$0.39			$10.0		$0.11			$0.50
Effect of dilutive securities:
Stock-based compensation arrangements	0.7	—		—			—		—			—
Convertible Debt	6.8	—		(0.03		)	—		(0.01		)	(0.04		)
Diluted EPS	103.1		$37.7		$0.36			$10.0		$0.10			$0.46
Nine Months Ended September 30, 2016
Basic EPS	96.1		$115.5		$1.20			$10.0		$0.11			$1.31
Effect of dilutive securities:
Stock-based compensation arrangements	0.7			(0.01		)	—		—			(0.01		)
Convertible Debt	6.8			(0.08		)	—		(0.01		)	(0.09		)
Diluted EPS	103.6		$115.5		$1.11			$10.0		$0.10			$1.21

The diluted EPS calculation for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 excludes 0.3 performance-based restricted stock units granted in ~~2015~~2016, as the performance criteria has not yet been achieved, as well as 0.64 performance-based restricted stock units (0.1 and 0.3 granted in ~~2017~~2018 and ~~2016~~2017, respectively), as ~~the~~ performance criteria for the third year of the ~~2016~~2017 grants and the second and third years of the ~~2017~~2018 grants have not yet been fully defined, thereby precluding a grant for accounting purposes due to a lack of a mutual understanding of the terms of the stock-based awards.

The diluted EPS calculation for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 includes 65.37 shares associated with the Company’s convertible debt. As described more fully in Note 76, during 2009, the Company issued approximately $125.0 aggregate principal amount of 5.75% Junior Subordinated Convertible Debentures due 2029 (2029 Convertible Debentures). The 2029 Convertible Debentures were convertible, subject to certain conditions, into shares of the Company’s common stock at an initial implied conversion price of approximately $12.07 per share, or eighty-two and eighty-two hundredths shares per one thousand dollars in principal amount of debentures. The conversion rate is subject to adjustment for certain events outlined in the indenture governing the 2029 Convertible Debentures (the Indenture), including payment of dividends. As of ~~September~~March 3031, ~~2017~~2018, the implied conversion price for the 2029 Convertible Debentures was approximately $11.2111 per share, or eighty-nine and ~~twenty~~ninety-~~two~~seven hundredths shares per one thousand dollars in principal amount of debentures.

Shareholders’ Equity

The Company repurchased 0.97 ~~and 2.8~~ of its common shares during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 at an average ~~prices~~price of $2322.96 ~~and $23.40~~ per share for a total of $2116.~~9 and $65~~2.6. Based upon the timing of transactions, $0.93 of the shares repurchased induring December ~~2016~~2017 settled during the first quarter of ~~2017~~2018. Additionally, $0.6 of the shares repurchased during ~~September~~March ~~2017~~2018 had not settled as of ~~September~~March 3031, ~~2017~~2018. These shares are excluded from outstanding shares at the end of the ~~third~~current quarter and were settled in cash during the ~~fourth~~second quarter of ~~2017~~2018.

As of ~~September~~March 3031, ~~2017~~2018, the Company had the authority to repurchase $7745.53 of outstanding common shares pursuant to the Board of Directors’ August 2015 ~~increase~~authorization ofto ~~its~~increase ~~then-existing~~the ~~authorization~~remaining ofauthorized share repurchases to $250.0 in the aggregate. The timing and terms of any future ~~share~~transactions ~~repurchases~~ will depend on a number of considerations including market conditions, our available liquidity and capital needs, and limits on share repurchases that may be applicable under the covenants in our ~~existing~~Credit ~~credit agreement~~Agreement.

Dividends

During ~~2016~~2017 and ~~2017~~2018, the Company’s Board of Directors declared the following dividends per common share, which were paid by the Company on the payment dates listed below:

Announcement Date	Record Date	Dividend Amount	Payment Date
February 23, 2016	March 24, 2016	$0.08	April 8, 2016
May 9, 2016	June 24, 2016	$0.09	July 8, 2016
August 8, 2016	September 23, 2016	$0.09	October 7, 2016
November 8, 2016	December 23, 2016	$0.09	January 6, 2017
February 22, 2017	March 24, 2017	$0.09	April 7, 2017
May 8, 2017	June 23, 2017	$0.10	July 7, 2017
August 8, 2017	September 22, 2017	$0.10	October 6, 2017
November 7, 2017	December 22, 2017	$0.10	January 5, 2018
February 21, 2018	March 23, 2018	$0.10	April 6, 2018

On ~~November 7~~May 8, ~~2017~~2018, the Company announced that its Board of Directors declared a quarterly cash dividend of $0.1011 per common share to be paid on ~~January 5~~July 6, ~~2017~~2018 to shareholders of record as of ~~December~~ June 22, ~~2017~~2018.

65. GOODWILL AND OTHER INTANGIBLE AND LONG-LIVED ASSETS

Goodwill

Goodwill was $~~935~~942.7 8 at ~~September~~ 30March 31, ~~2017~~ 2018 compared to $~~916~~937.9 at December 31, ~~2016~~2017. This increase was ~~primarily~~ due to foreign currency translation. The Company tests goodwill for impairment annually as of October 1 and at other times if events have occurred or circumstances exist that indicate the carrying value of goodwill may no longer be recoverable. Goodwill impairment testing is performed at the reporting unit level, one level below the business segment. The Company’s reporting units are Customer Management - Agent Services and Customer Management - Customer Interaction Technology (CIT). As of ~~September~~ 30March 31, ~~2017~~ 2018 and December 31, ~~2016~~2017, all goodwill was held by the Customer Management - Agent Services reporting unit.

The annual impairment test performed as of October 1, ~~2016~~2017 indicated that the fair value of the Customer Management - Agent Services reporting unit was substantially in excess of its carrying value. However, impairment charges could be required if a divestiture decision is made or other significant economic events occur with respect to the reporting unit. Subsequent to our October 1, ~~2016~~2017 annual impairment test, no indications of an impairment were identified.

Other Intangible Assets

The Company’s other intangible assets, primarily acquired through business combinations, are evaluated periodically if events or circumstances indicate a possible inability to recover their carrying amounts. No impairment charges were recognized in any period presented. As of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017, the Company’s other intangible assets consisted of the following:

September 30, 2017	GrossCarryingAmount		AccumulatedAmortization			Net
March 31, 2018	GrossCarryingAmount		AccumulatedAmortization			Net
Customer relationships and other intangibles		$~~483~~487.18		($~~191~~205.50	)		$~~291~~282.68
Trademarks	2627.91		(2527.31		)	~~1.6~~—
Software (classified within Property and equipment, net)	41.3		(41.3		)	—
Total		$~~551~~556.32		($~~258~~273.14	)		$~~293~~282.28
December 31, 2016	GrossCarryingAmount		AccumulatedAmortization			Net
December 31, 2017
Customer relationships and other intangibles		$~~474~~484.06		($~~171~~198.40	)		$~~302~~286.6
Trademarks	2627.50		(2126.53		)	5.0.7
Software (classified within Property and equipment, net)	41.3		(41.3		)	—
Total		$~~541~~552.89		($~~234~~265.26	)		$~~307~~287.63

The customer relationship and other intangible assets are being amortized ~~using the following amortizable lives: 1 to 4 years~~ for ~~trademarks and~~ 1 to 17 years ~~for customer relationships and other intangibles~~. The remaining weighted average amortization period for customer relationships and other intangibles is approximately 1312.0 years. Amortization of software is included within depreciation expense as the underlying assets are classified within property and equipment.

Amortization expense for intangibles was $216.~~7 and $20.~~9 for the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016, respectively, and~~ is estimated to be approximately $2825.86 for the year ended December 31, ~~2017~~2018. The related estimated expense for the five subsequent fiscal years is as follows:

For the year ended 2018		$24.8
For the year ended 2019		$24.9
For the year ended 2019	24.1
For the year ended 2020	24.2
For the year ended 2020	23.4
For the year ended 2021	22.5
For the year ended 2021	21.7
For the year ended 2022	22.2
For the year ended 2022	21.5
For the year ended 2023	22.2
Thereafter	~~170~~148.61

76. DEBT AND CAPITAL LEASE OBLIGATIONS

Debt and capital lease obligations consisted of the following:

	September 30, 2017		December 31, 2016
	March 31, 2018		December 31, 2017
Term Loan, due 2019		$9949.26		$~~212~~99.93
Convertible Debentures, due 2029	6566.10		6365.75
Capital Lease Obligations	21.20		32.61
Accounts Receivable Securitization	~~115~~165.0		20103.0
Total debt	281.56		~~300~~269.29
Less debt issuance costs	1.43		1.43
Total debt, net	280.13		~~298~~268.86
Less current maturities	050.93		10.89
Long-term debt		$~~279~~230.20		$~~297~~267.07

Credit Facility

On January 11, 2017 (the Effective Date), the Company entered into a new credit agreement (~~New~~ Credit Agreement) and repaid all amounts outstanding and terminated all commitments under its previously existing credit agreement (Prior Credit Agreement) using initial borrowings under the ~~New~~ Credit Agreement as well as borrowings under the Company’s asset securitization facility. The ~~New~~ Credit Agreement consists of a $215.0 unsecured term loan facility (~~New~~ Term Loan), maturing on March 3, 2019, and a $300.0 unsecured revolving credit facility (~~New~~ Revolving Credit Facility), maturing on January 11, 2022. On the Effective Date, the Company drew $100.0 in initial borrowings under the ~~New~~ Term Loan. A $1.0 extinguishment loss was recognized on the Effective Date and is included in ~~interest~~Interest expense on the Consolidated Statement of Income for the ~~nine~~three months ended ~~September~~March 3031, 2017.

The ~~New~~ Revolving Credit Facility may be extended for two additional one-year periods, subject to the satisfaction of certain conditions set forth in the ~~New~~ Credit Agreement. In addition, aggregate borrowing capacity under the ~~New~~ Credit Agreement may be increased by up to an additional $250.0 million by increasing the amount of the Revolving Credit Facility or by incurring additional term loans, in each case subject to the satisfaction of certain conditions set forth in the ~~New~~ Credit Agreement, including the receipt of additional commitments for such increase. Borrowings outstanding under the ~~New~~ Credit Agreement may be repaid from time to time without premium or penalty, other than customary breakage costs, if any. Borrowings outstanding under the ~~New~~ Credit Agreement bear interest at a fluctuating rate per annum equal to, at the Company’s option, either (a) the applicable adjusted LIBOR plus a spread based on the Company’s total net leverage ratio, or (b) a base rate (equal to the higher of the Administrative Agent’s prime rate, the federal fund rate plus 0.50%, and the one-month adjusted LIBOR plus 1.0%) plus a spread based on the Company’s total net leverage ratio. The Company is also obligated to pay a commitment fee on a quarterly basis on the unused portion of the commitments under the ~~New~~ Revolving Credit Facility based on the Company’s total net leverage ratio, which fee is currently 25 basis points. While amounts borrowed and repaid under the ~~New~~ Revolving Credit Facility can be re-borrowed, amounts repaid under the ~~New~~ Term Loan cannot be borrowed again under the ~~New~~ Credit Agreement. The ~~New~~ Credit Agreement contains certain affirmative and negative covenants, as well as terms and conditions that are customary for credit facilities of this type, including financial covenants for leverage and interest coverage ratios. The Company was in compliance with all covenants at ~~September~~March 3031, ~~2017~~2018. Total borrowing capacity remaining under the ~~New~~ Revolving Credit Facility was $300.0, with $~~100~~50.0 outstanding on the ~~New~~ Term Loan, and recorded as ofa ~~September~~current obligation at March 3031, ~~2017~~2018. The carrying value of the ~~New~~ Term Loan at ~~September~~ 30March 31, ~~2017~~2018 reflects a discount of $0.8 4 related to fees paid directly to the lenders at issuance. This discount is being amortized over the life of the ~~New~~ Term Loan using the effective interest rate method (34.30% as of ~~September~~ 30March 31, ~~2017~~2018), and is included in interest expense in the Consolidated Statements of Income. Subsequent to March 31, 2018, the Company fully repaid the $50.0 outstanding balance on the Term Loan.

The Company established the Credit Agreement on February 28, 2014 in the aggregate amount of $650.0. The Credit Agreement consisted of unsecured term loans (Term Loan) in the initial aggregate amount of $350.0, and an unsecured revolving credit facility (Revolving Credit Facility) in the amount of $300.0. The Term Loan and the Revolving Credit Facility were scheduled to mature on March 3, 2019. Outstanding amounts were subject to interest at the applicable rate described in the Credit Agreement.

Convertible Debentures

During 2009, Convergys issued $125.0 aggregate principal amount of 5.75% Junior Subordinated Convertible Debentures due September 2029 (2029 Convertible Debentures) in exchange for $122.5 of 4.875% Unsecured Senior Notes due December 15, 2009, pursuant to an exchange offer. At the date of issuance, the Company recognized the liability component of the 2029 Convertible Debenture at its fair value of $56.3. The liability component was recognized as the fair value of a similar instrument that did not have a conversion feature at issuance. The equity component, which is the value of the conversion feature at issuance, was recognized as the difference between the proceeds from the issuance of the debentures and the fair value of the liability component, after adjusting for the deferred tax impact of $32.7. The 2029 Convertible Debentures were issued at a coupon rate of 5.75%, which was below that of a similar instrument that did not have a conversion feature. Therefore, the valuation of the debt component, using the income approach, resulted in a debt discount. The debt discount is being amortized over the life of a similar debt instrument without a conversion feature, which the Company determined to equal the contractual maturity of the 2029 Convertible Debentures. ~~Amortization is based upon the effective interest rate method and is included in interest expense in the Consolidated Statements of Income.~~

~~The~~Amortization ~~2029~~is ~~Convertible~~based ~~Debentures,~~upon ~~which pay a fixed rate of interest semi-annually, have a contingent interest component that will require~~ the ~~Company~~effective ~~to pay additional~~ interest ifrate ~~the~~method ~~trading~~and ~~price~~is ofincluded ~~the 2029 Convertible Debentures exceeds a specified threshold at specified times, commencing on September 15, 2019, as outlined~~ in ~~the Indenture. The maximum amount of contingent~~ interest ~~that~~expense ~~will accrue is 0.75% per annum of the average trading price of the 2029 Convertible Debentures during the periods specified~~ in the ~~Indenture.~~Consolidated ~~The~~Statements ~~fair value~~ of ~~this embedded derivative was not significant at September 30, 2017 or December 31, 2016~~Income.

The 2029 Convertible Debentures, which pay a fixed rate of interest semi-annually, have a contingent interest component that will require the Company to pay additional interest if the trading price of the 2029 Convertible Debentures exceeds a specified threshold at specified times, commencing on September 15, 2019, as outlined in the Indenture. The maximum amount of contingent interest that will accrue is 0.75% per annum of the average trading price of the 2029 Convertible Debentures during the periods specified in the Indenture. The fair value of this embedded derivative was not significant at March 31, 2018 or December 31, 2017.

The Company is not entitled to redeem the 2029 Convertible Debentures prior to September 15, 2019. On or after September 15, 2019, the Company may redeem for cash all or part of the 2029 Convertible Debentures at par value plus accrued but unpaid interest if certain trading conditions of the Company’s common shares are satisfied. The holders of the 2029 Convertible Debentures have the option to require redemption at par value plus accrued but unpaid interest upon the occurrence of a fundamental change, a defined term in the Indenture.

The 2029 Convertible Debentures are convertible at the option of the holders on or after September 15, 2028 and prior to that date only under the following circumstances: (1) during any calendar quarter if the last reported sales price of the Company’s common shares for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the preceding calendar quarter is greater than or equal to 130% of the applicable conversion price (currently $14.5745) for the 2029 Convertible Debentures on each applicable trading day (hereinafter referred to as the Sales Price Condition); (2) during the five business day period immediately following any five consecutive trading day period (the Measurement Period) in which, as determined following a request by a holder of 2029 Convertible Debentures as provided in the Indenture, the trading price per $1,000 principal amount of 2029 Convertible Debentures for each trading day of such Measurement Period was less than 98% of the product of the last reported sale price of the Company’s common shares and the applicable conversion rate for the 2029 Convertible Debentures on each such trading day; (3) if the Company elects to redeem any or all of the 2029 Convertible Debentures; or (4) upon the occurrence of specified corporate events pursuant to the terms of the Indenture. Upon conversion, the Company will pay cash up to the aggregate principal amount of the 2029 Convertible Debentures to be converted and pay or deliver, as the case may be, cash, common shares of the Company or a combination of cash and common shares of the Company, at the Company’s election, in respect of the remainder, if any, of the Company’s conversion obligation in excess of the aggregate principal amount of the 2029 Convertible Debentures being converted.

The 2029 Convertible Debentures were convertible, subject to certain conditions, into common shares of the Company at an initial implied conversion price of approximately $12.07 per share, or eighty-two and eighty-two hundredths shares per one thousand dollars in principal amount of debentures. As of ~~September~~March 3031, ~~2017~~2018, the implied conversion price for the 2029 Convertible Debentures was approximately $11.2111 per share, or eighty-nine and ~~twenty~~ninety-~~two~~seven hundredths shares per one thousand dollars in principal amount of debentures. The conversion rate is subject to adjustment for certain events outlined in the Indenture, including payment of dividends.

As of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017, the 2029 Convertible Debentures were convertible at the option of the holders. This conversion right was triggered upon satisfaction of the Sales Price Condition (the closing price of the Company’s common shares was greater than or equal to $14.5745, 130% of the conversion price of the 2029 Convertible Debentures at ~~September~~March 3031, ~~2017~~2018, for at least 20 of the 30 consecutive trading days ending on ~~September~~March 3031, ~~2017~~2018). As a result, the equity component of the 2029 Convertible Debentures equal to $59.90 (the difference between the par value and carrying value of the 2029 Convertible Debentures at ~~September~~March 3031, ~~2017~~2018) has been classified as temporary equity within the ~~September~~March 3031, ~~2017~~2018 Consolidated Balance Sheet since this amount was considered redeemable. The Company will reassess the convertibility of the 2029 Convertible Debentures and the related balance sheet classification on a prospective basis. There have been no conversions of the 2029 Convertible Debentures through the date of this filing.

Based on quoted market prices at ~~September~~March 3031, ~~2017~~2018, the fair value of the $125.0 aggregate principal amount of the Company’s 2029 Convertible Debentures is $~~297~~264.61.

Asset Securitization Facility

During January 2017, the Company amended the terms of its asset securitization facility collateralized by accounts receivable of certain of the Company’s subsidiaries. The amendment resulted in an increased purchase limit of $225.0, with $90.0 and $135.0 expiring in January 2018 and January 2020, respectively. AsThe ofasset ~~December~~securitization ~~31,~~facility ~~2016,~~was ~~the~~further ~~asset~~amended ~~securitization~~in ~~facility~~January ~~had~~2018 ato ~~purchase~~extend ~~limit~~the ofexpiration date for the $~~150~~90.0 ~~expiring~~purchase inlimit to January ~~2017~~2019. The asset securitization program is conducted through Convergys Funding Inc., a wholly-owned bankruptcy remote subsidiary of the Company. As of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017, Convergys had drawn $~~115~~165.0 and $20103.0, respectively, in available funding from qualified receivables. Amounts drawn under this facility have been classified as long-term debt within the Consolidated Balance Sheets, based on the Company’s ability and intent to refinance on a long-term basis as of ~~September~~March 3031, ~~2017~~2018.

At ~~September~~March 3031, ~~2017~~2018, future minimum payments of the Company’s debt and capital lease arrangements (exclusive of any debt discounts) are as follows:

2017		$0.3
2018	$	0.6
2018	46.9
2019	116.3
2019	100.6
2020	99.1
2020	69.4
2021	—
2022	—
Thereafter	125.0
Total	$	~~$342~~341.20

87. RESTRUCTURING

2018 Restructuring

Company-wide restructuring program

During the first quarter of 2018, the Company initiated a restructuring plan to reduce headcount and consolidate certain contact centers to streamline the Company’s operations. This resulted in a total charge of $10.7, comprised of $5.0 of severance expense associated with headcount reductions and $5.7 of facility-related charges. This expense is included in Restructuring charges on the Consolidated Statements of Income.

The headcount reductions impacted approximately 350 employees and the related severance is expected to be substantially paid in cash by September 30, 2018. The remaining severance liability resulting from these restructuring actions, which is included in Payables and other current liabilities on the Consolidated Balance Sheet, was $3.8 as of March 31, 2018.

The facility-related charges are associated with five site closures and primarily represent the present value of contractually obligated future minimum lease payments and the full impairment of certain abandoned property and equipment. The fair value of these facility obligations was determined using the income approach through a discounted cash flow analysis, based on estimated future contractual costs associated with the impacted facilities, net of proceeds from any probable future sublease agreements. The Company utilized market data to determine the estimated proceeds from any future sublease agreements. The Company will continue to evaluate the estimates used in recording the facilities abandonment charge over the remaining lease period. Consequently, there may be additional reversals or charges relating to these facility closures in the future. The remaining liability related to these facility restructuring actions, which is included in Payables and other current liabilities on the Consolidated Balance Sheet, was $1.8 as of March 31, 2018.

CEO transition costs

On January 25, 2018, the Company announced that Andrea Ayers will transition from her role as President and Chief Executive Officer (CEO) of Convergys. The Company and Ms. Ayers subsequently executed a Separation and Consulting Agreement, effective February 20, 2018. During the three months ended March 31, 2018, the Company recorded CEO transition costs of $7.3 associated with certain components of cash and equity-based compensation payable to Ms. Ayers in connection with her separation from the Company, as well as consulting fees associated with the Company’s search process to identify a successor CEO. This expense is included in Restructuring charges on the Consolidated Statements of Income. The compensation payments related to this expense are subject to the terms and conditions of the Separation and Consulting Agreement and the timing of such payments will, in some cases, depend on the timing of Ms. Ayers’ separation from the Company.

Other severance

During the first quarter of 2018, the Company recorded other severance expense of $0.9 primarily related to headcount reductions resulting from certain client program completions. These actions impacted approximately 345 employees. This severance expense is included in Restructuring charges on the Consolidated Statements of Income and was fully paid in cash by March 31, 2018.

2017 Restructuring

Company-wide restructuring program

~~The~~During the first quarter of 2017, the Company recorded restructuring expenses of $12.8 ~~for the nine months ended September 30, 2017,~~ related to a company-wide initiative to reduce headcount and better align the Company’s resources, principally for corporate functions. The 2017 restructuring actions impacted approximately 315 employees. This expense is included in Restructuring charges on the Consolidated Statements of Income and is expected to be substantially paid in cash by ~~March~~December 31, 2018. The total remaining liability under these restructuring actions, which is included in Payables and other current liabilities on the Consolidated Balance Sheet, was $73.03 as of ~~September~~March 3031, ~~2017,~~2018 ~~$8.2 as of June 30, 2017~~ and $105.28 as of ~~March~~December 31, 2017.

Other ~~Severance~~severance

~~The~~During 2017, the Company recorded other severance expense of $2.~~3 and $6.~~2, ~~respectively, for the three and nine months ended September 30, 2017,~~ primarily related to headcount reductions resulting from certain client program completions. These actions impacted approximately ~~250~~ 150 employees. This severance expense is included in Restructuring charges on the Consolidated Statements of Income. ~~These~~and ~~severance-related~~was ~~charges were~~ fully paid in cash byduring ~~September 30,~~ 2017.

buw integration

~~The~~During 2017, the Company recorded severance ~~expense~~charges ~~totaling~~of $0.19 ~~and $1.1, respectively, for the three and nine months ended September 30, 2017,~~ related to the elimination of certain redundant positions as a result of the integration of the buw business. This severance expense was included in Transaction and integration costs on the Consolidated Statements of Income and iswas ~~expected~~fully ~~to be substantially~~ paid in cash by December 31, 2017. The total remaining liability under these severance-related actions, which is included in Payables and other current liabilities on the Consolidated Balance Sheet, was $0.4 as of September 30, 2017 and $0.5 as of both June 30, 2017 and March 31, ~~2017~~2018.

~~2016~~8. ~~Restructuring~~EMPLOYEE BENEFIT PLANS

During 2016, the Company recorded severance charges of $3.7 related to the Company’s ongoing efforts to refine its operating model and reduce costs, as well as headcount reductions resulting from certain client program completions. The 2016 actions impacted approximately 760 employees. These severance-related charges have been fully paid in cash.

9. EMPLOYEE BENEFIT PLANS

Pensions

The Company sponsors a frozen defined benefit pension plan, which includes both a qualified and non-qualified portion, for all eligible employees in the U.S. (the cash balance plan) and unfunded defined benefit plans for certain eligible employees in the Philippines, Malaysia and France (together with the cash balance plan, the defined benefit plans).The pension benefit formula for the cash balance plan is determined by a combination of compensation, age-based credits and annual guaranteed interest credits. The qualified portion of the cash balance plan has been funded through contributions made to a trust fund. The Company’s measurement date for all plans is December 31. The plan assumptions are evaluated annually and are updated as deemed necessary.

Components of pension cost and other amounts recognized in other comprehensive income for the Company’s defined benefit plans are as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016			2017			2016
	2018			2017
Service cost		$1.41			$1.64			~~$4.1~~			~~$4.8~~
Interest cost on projected benefit obligation	12.81			2.1.9			~~5.5~~			~~6.4~~
Expected return on plan assets	(2.42		)	(2.65		)	~~(7.4~~		)	~~(7.6~~		)
Amortization and deferrals—net	12.72			1.75			~~4.6~~			~~5.2~~
Settlement charge	2.0			—			2.0			—
Total net pension cost		$3.2			$2.3
Total net pension cost		$4.5			$2.8			$8.8			$8.8

During the three and nine months ended September 30, 2017, the Company recognized a non-cash pension settlement charge of $2.0 resulting from a high volume of lump sum distributions from the cash balance plan. This pension settlement charge was included in Other (expense) income, net on the Consolidated Statements of Income.

The Company also sponsors a non-qualified, unfunded executive deferred compensation plan (the EDCP), which permits eligible participants, including executive officers, to defer receipt of certain income. The Company matches up to 100% of the first 3% of a participant’s deferred amounts and 50% of a participant’s next 2% of deferred amounts. The Company match under the EDCP is reduced by the Company match eligible to be received under the Company’s Retirement and Savings Plan.

Components of pension cost and other amounts recognized in other comprehensive ~~income~~loss for the EDCP are as follows:

	Three Months Ended September 30,				Nine Months Ended September 30,
	Three Months Ended March 31,
	2017		2016		2017		2016
	2018		2017
Service cost		$0.4		$0.34		~~$1.3~~		~~$0.9~~
Interest cost on projected benefit obligation	0.1		0.1		~~0.3~~		~~0.3~~
Total pension cost		$0.5		$0.45		~~$1.6~~		~~$1.2~~

109. STOCK-BASED COMPENSATION PLANS

The Company’s operating results for the three ~~and nine~~ months ended ~~September~~March 3031, 2018 and 2017, included stock-based compensation expense of $~~4.6 and $13.1, respectively, compared to $~~5.23 and $~~14.~~4.3, respectively~~, for the same periods in 2016~~. Expense for the three ~~and nine~~ months ended ~~September~~March 3031, 2018 and 2017 included expense of $0.61 inand ~~each~~an ~~period~~income adjustment of $0.1, respectively, related to awards classified as liabilities that will ultimately settle in cash,. ~~compared~~The toincome ~~$0.7~~adjustment ~~and~~in ~~$1.6,~~the ~~respectively,~~prior ~~for~~year reflected a revaluation of the ~~same~~awards ~~periods~~classified inas liabilities based on the ~~prior~~trading ~~year~~price of the Company’s common stock.

Restricted Stock Units

Time-based Restricted Stock Units

During the three ~~and nine~~ months ended ~~September~~March 3031, 2018 and 2017, the Company granted 0.4 and 0.62 shares, respectively, of time-based restricted stock units. The weighted average grant date fair values of these grants were $23.8132 and $2322.5970, respectively. These ~~During~~time-based ~~the~~grants ~~nine~~are ~~months~~scheduled ~~ended~~to ~~September 30,~~vest ~~2016,~~25% at the ~~Company~~first ~~granted~~anniversary ~~0.5 shares~~ of ~~time-based~~the ~~restricted~~grant ~~stock~~date, ~~units~~25% at athe ~~weighted~~second ~~average~~anniversary ~~grant~~and ~~date~~50% ~~fair~~at ~~value~~the third anniversary, with the exception of ~~$26~~0.~~53.~~2 ~~These~~granted ~~time-based~~in ~~grants~~2018 that are scheduled to vest 2550% at the ~~first anniversary of the grant date, 25% at the~~ second anniversary and 50% at the third anniversary.

The total compensation cost related to non-vested time-based restricted stock units not yet recognized as of ~~September~~March 3031, ~~2017~~2018 was approximately $2324.54, which is expected to be recognized over a weighted average period of 2.24 years. Changes to non-vested time-based restricted stock units for the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018 were as follows:

Shares (in millions)	NumberofShares		WeightedAverage FairValue at Dateof Grant
Non-vested at December 31, 2016	1.3			$23.23
Non-vested at December 31, 2017	1.3		23.46
Granted	0.64		23.5932
Vested	(0.54	)	2223.8125
Forfeited	—		—
Non-vested at September 30, 2017	1.4			$23.49
Non-vested at March 31, 2018	1.3			$23.45

Performance-based Restricted Stock Units

During the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017, the Company granted 0.31 and 0.31 shares, respectively, of performance-based restricted stock units. These grants provide for payout based upon the extent to which the Company achieves certain EPS targets, as determined by the Compensation and Benefits Committee of the Board of Directors, over three-year periods. Payout levels for earned shares range from 50% to 200% of award shares. No payout is earned if performance is below the ~~performance~~ minimum threshold performance level. At ~~September~~March 3031, ~~2017~~2018, the targets for the third year of the ~~2016~~2017 grants and the second and third years of the ~~2017~~2018 grants had not yet been set, the key terms had not been effectively communicated to the recipients, and as such the expense related to these grants had not yet been recognized. These grants have been excluded from the table below.

During ~~2017~~the first quarter of 2018, the Company established and communicated to participants the final key terms of the ~~2015~~2016 grants, resulting in grants for accounting purposes ~~of 0.3 shares~~ with a grant date fair value of $2123.2758 per share. The total compensation cost related to the ~~2015~~2016 non-vested performance-based restricted stock units not yet recognized as of ~~September~~March 3031, ~~2017~~2018 was approximately $24.25, which is expected to be recognized ratably over the remaining vesting period ending in February ~~2018~~2019. ~~The performance metric for the 2015 grants had not yet been achieved at September 30, 2017.~~

Changes to non-vested performance-based restricted stock units for the ~~nine~~three months ended ~~September~~March 3031, ~~2017~~2018 were as follows:

Shares (in millions)	NumberofShares		WeightedAverage FairValue at Dateof Grant
Non-vested at December 31, 2016	0.3			$26.48
Non-vested at December 31, 2017	0.3		21.28
Granted	0.32		2123.2758
Vested	(0.3	)	2621.1929
Forfeited	—		—
Non-vested at September 30, 2017	0.3			$21.28
Non-vested at March 31, 2018	0.2			$23.58

Stock Options

Presented below is a summary of Company stock option activity. Prior to ~~2017~~2016, all outstanding stock options were fully vested and the related expense had been fully recognized.

Shares (in millions)	Shares	WeightedAverageExercisePrice		Weighted Average Remaining Contractual Term (in years)	Weighted Average ~~Fair~~ Value at Date of Grant (per ~~share~~shares)
Options outstanding at December 31, 2016	0.4		$13.34	4.5		$3.78
Options outstanding at December 31, 2017	0.3		$13.45	3.4		$3.86
Options exercisable at December 31, 2016	0.4		$13.34	4.5		$3.78
Options exercisable at December 31, 2017	0.3		$13.45	3.4		$3.86
Granted	—	—
Exercised	—	—
Forfeited	—	—
Options outstanding at September 30, 2017	0.4		$13.34	3.7		$3.83
Options outstanding at March 31, 2018	0.3		$13.45	3.2	$	3.86
Options exercisable at September 30, 2017	0.4		$13.34	3.7		$3.83
Options exercisable at March 31, 2018	0.3		$13.45	3.2	$	3.86

1110. COMMITMENTS AND CONTINGENCIES

Commitments

At ~~September~~ 30March 31, ~~2017~~2018, the Company had outstanding letters of credit and bond obligations of $2213.3 7 related to performance guarantees. The Company believes that any guarantee obligation that may arise will not be material. The Company also has future purchase commitments with telecommunication and transportation providers of $412.2 5 for the remainder of ~~2017~~2018.

Contingencies

The Company, from time to time, is subject to various loss contingencies, including tax and legal contingencies that arise in the ordinary course of business. The Company accrues for a loss contingency when it is probable that a liability has been incurred and the amount of such loss can be reasonably estimated. At this time, the Company believes that any such contingencies, either individually or in the aggregate, will not have a materially adverse effect on the Company’s results of operations or financial condition. However, the outcome of litigation cannot be predicted with certainty, and unfavorable resolution of one or more pending matters could have a materially adverse impact on the Company’s results of operations or financial condition in the future.

1211. FINANCIAL INSTRUMENTS

Derivative Instruments

The Company is exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. The Company’s risk management strategy includes the use of derivative instruments to reduce the effects on its operating results and cash flows from fluctuations caused by volatility in currency exchange rates.

The Company serves many of its U.S.-based clients using contact center capacity outside of the U.S. Although the contracts with these clients are typically priced in U.S. dollars, a substantial portion of the costs incurred to deliver services under these contracts are denominated in the local currency of the country where services are provided, which represents a foreign exchange exposure. The Company has hedged a portion of its exposure related to the anticipated cash flow requirements denominated in some of the aforementioned foreign currencies by entering into hedging contracts with several financial institutions to acquire a total of PHP 3531,~~940~~440.0 at a fixed price of $~~718~~615.10 at various dates through ~~June~~December 2020, INR 119,~~925~~645.0 at a fixed price of $~~164~~133.64 at various dates through ~~June~~December 2020, CAD 4656.41 at a fixed price of $3542.18 at various dates through ~~December~~June ~~2019~~2020 and COP 4756,~~700~~400.0 at a fixed price of $1518.05 at various dates through ~~June~~March ~~2019~~2020, and to sell a total of AUD 3430.76 at a fixed price of $2623.9 at various dates through ~~October~~September ~~2018~~2019. These instruments mature within the next 33 months and had a notional value of $~~947~~819.56 at ~~September~~March 3031, ~~2017~~2018 and $~~959~~835.05 at December 31, ~~2016~~2017. The derivative instruments discussed above are designated and are effective as cash flow hedges. The following table reflects the fair values of these derivative instruments:

	September 30, 2017		December 31, 2016
	March 31, 2018		December 31, 2017
Forward exchange contracts and options designated as hedging instruments:
Included within other current assets		$9.79		$314.05
Included within other non-current assets	42.97		28.37
Included within other current liabilities	18.78		317.37
Included within other long-term liabilities	86.56		151.47

The Company recorded a deferred tax benefit of $43.82 and deferred tax expense of $153.96 related to these derivatives at ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017, respectively. A total of $79.7 ~~and $25.5~~ of deferred losses, net of tax, related to these cash flow hedges atwere ~~September 30,~~included ~~2017~~in ~~and~~accumulated ~~December~~other comprehensive loss (OCL) at March 31, ~~2016~~2018, ~~respectively~~compared to $10.4 of deferred gains, net of tax, that were included in accumulated other comprehensive ~~loss~~income (~~OCL~~OCI) at December 31, 2017. As of ~~September~~March 3031, ~~2017~~2018, deferred losses of $9.0 ($56.57 net of tax) on derivative instruments included in accumulated OCL are expected to be reclassified into earnings during the next 12 months. The following tables provide the effect of these derivative instruments on the Company’s Consolidated Financial Statements during the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017, respectively:

Derivatives in Cash Flow Hedging Relationships	Gain (Loss)Recognizedin OCL onDerivative(Effective Portion)			Gain (Loss)Reclassifiedfrom AccumulatedOCL into Income(Effective Portion)			Location ofGain (Loss)Reclassified fromAccumulated OCLinto Income(Effective Portion)
Three Months Ended September 30, 2017
Foreign exchange contracts		($2.0	)		($5.3	)	Cost of providing services and products sold and Selling, general and administrative
Nine Months Ended September 30, 2017
Foreign exchange contracts		$10.8			($18.1	)	Cost of providing services and products sold and Selling, general and administrative
Three Months Ended September 30, 2016
Foreign exchange contracts		($13.2	)		($4.6	)	Cost of providing services and products sold and Selling, general and administrative
Nine Months Ended September 30, 2016
Foreign exchange contracts		($2.1	)		($18.0	)	Cost of providing services and products sold and Selling, general and administrative

Three Months Ended March 31, 2018:

The gain or loss recognized related to the ineffective portion of the derivative instruments was immaterial for the three months ended September 30, 2017 and 2016.



Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCL on Derivative (Effective Portion)			Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion)			Location of Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion)
Foreign exchange contracts		($29.0	)		($2.2	)	Cost of providing services and products sold and Selling, general and administrative

~~The~~Three ~~Company~~Months ~~also~~Ended ~~enters~~March into derivative instruments (forwards) to economically hedge the foreign currency impact of assets and liabilities denominated in nonfunctional currencies. During the three and nine months ended September 3031, 2017, losses of $5.3 and $17.3, respectively, were recognized related to changes in fair value of these derivative instruments not designated as hedges, compared to losses of $5.5 and $3.7 in the same periods in 2016. The gains and losses largely offset the currency gains and losses that resulted from changes in the assets and liabilities denominated in nonfunctional currencies. These gains and losses are classified within other income, net in the accompanying Consolidated Statements of Income. The fair value of these derivative instruments not designated as hedges at September 30, 2017 was a $6.3 payable.:



Derivatives in Cash Flow Hedging Relationships	Gain (Loss) Recognized in OCL on Derivative (Effective Portion)		Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion)			Location of Gain (Loss) Reclassified from Accumulated OCL into Income (Effective Portion)
Foreign exchange contracts		$9.8		($7.7	)	Cost of providing services and products sold and Selling, general and administrative

The gain or loss recognized related to the ineffective portion of the derivative instruments was immaterial for the three months ended March 31, 2018 and 2017.

The Company also enters into derivative instruments (forwards) to economically hedge the foreign currency impact of assets and liabilities denominated in nonfunctional currencies. During the three months ended March 31, 2018, a loss of $3.9 was recognized related to changes in fair value of these derivative instruments not designated as hedges, compared to a loss of $2.6 in the same period in 2017. The gains and losses largely offset the currency gains and losses that resulted from changes in the assets and liabilities denominated in nonfunctional currencies. These gains and losses are classified within other income, net in the accompanying Consolidated Statements of Income. The fair value of these derivative instruments not designated as hedges at March 31, 2018, was a $0.2 receivable.

Short-term Investments

As of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017, the Company held investment securities with a fair value of $13.01 and $1213.45, respectively, that are held in a grantor trust for the benefit of participants in the EDCP and reflect the hypothetical investment balances of EDCP participants. The securities are classified as trading securities and included within short-term investments in the Consolidated Balance Sheets. The investment securities include exchange-traded mutual funds and money market accounts. These securities are carried at fair value, with gains and losses, both realized and unrealized, reported in other ~~income~~ (expense) income, net in the Consolidated Statements of Income. The cost of securities sold is based upon the specific identification method. Interest and dividends on securities classified as trading are included in other (expense) income, net.

1312. FAIR VALUE MEASUREMENTS

U.S. GAAP defines a hierarchy which prioritizes the inputs in measuring fair value. The three levels of the fair value hierarchy are as follows: Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the financial instrument; and Level 3 inputs are unobservable inputs based on the Company’s assumptions used to measure assets and liabilities at fair value. A financial asset or liability’s classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

At ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017, the Company had foreign currency forward contracts measured at fair value. The fair values of these instruments were measured using valuations based upon quoted prices for similar assets and liabilities in active markets (Level 2) and are valued by reference to similar financial instruments, adjusted for terms specific to the contracts. There were no transfers between the three levels of the fair value hierarchy during the ~~nine~~years ~~months~~ ended ~~September~~March 3031, ~~2017~~2018 and ~~September~~March 3031, ~~2016~~2017. The derivative assets and liabilities measured at fair value on a recurring basis as of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017 were as follows:

	September 30, 2017		Quoted PricesIn ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
	March 31, 2018		Quoted PricesIn ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
Derivatives:
Foreign currency forward contracts (asset position)		$1513.20		$—		$1513.20		$—
Foreign currency forward contracts (liability position)		$3425.18		$—		$3425.18		$—

	December 31, 2016		Quoted PricesIn ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
	December 31, 2017		Quoted PricesIn ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
Derivatives:
Foreign currency forward contracts (asset position)		$524.62		$—		$524.62		$—
Foreign currency forward contracts (liability position)		$4919.02		$—		$4919.02		$—

The Company also had investment securities held in a grantor trust for the benefit of participants of the EDCP measured at fair value at ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017. These investments are recorded as short-term investments on the Consolidated Balance Sheets. The fair value of these instruments was measured using the quoted prices in active markets for identical assets (Level 1). There were no transfers between the three levels of the fair value hierarchy during the ~~nine~~years ~~months~~ ended ~~September~~March 3031, ~~2017~~2018 and ~~September~~March 3031, ~~2016~~2017. The assets measured at fair value on a recurring basis as of ~~September~~March 3031, ~~2017~~2018 and December 31, ~~2016~~2017 were as follows:

	September 30, 2017		Quoted PricesIn ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
	March 31, 2018		Quoted PricesIn ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
Investment securities:
Mutual funds		$12.41		$12.41		$—		$—
Money market accounts	01.60		01.60		—		—
Total		$13.01		$13.01		$—		$—

	December 31, 2016		Quoted PricesIn ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
	December 31, 2017		Quoted PricesIn ActiveMarkets forIdentical Assets(Level 1)		SignificantOtherObservableInputs(Level 2)		SignificantUnobservableInputs(Level 3)
Investment securities:
Mutual funds		$1012.54		$1012.54		$—		$—
Convergys common stock	1.3		1.3		—		—
Money market accounts	1.1		1.1		—		—
Money market accounts	0.6		0.6		—		—
Total		$13.5		$13.5		$—		$—
Total		$12.4		$12.4		$—		$—

1413. INCOME TAXES

The effective tax rate on net income from continuing operations was ~~17.1%~~a ~~and~~benefit 15of 1.40% for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 compared to ~~15.8%~~expense ~~and~~of 1715.84%, ~~respectively,~~ in the same ~~periods~~period last year. The effective tax ~~rates~~rate for ~~both~~the ~~periods~~three ~~were~~months ~~largely~~ended March 31, 2018 was favorably impacted by a net benefit of $8.6 resulting from the resolution of certain tax audits. The effective tax rate for the three months ended March 31, 2018 was also impacted by the geographic mix of worldwide income and ~~certain~~the ~~discrete~~accrual ~~items~~of withholding taxes on the repatriation of current period earnings. In the fourth quarter of 2017, ~~including~~the Company recorded an estimated net discrete tax ~~expense~~charge of $134.31 ~~for~~related to the ~~three~~Tax Cuts and ~~nine~~Jobs Act (the 2017 Tax Act) that was accounted for as a provisional charge in accordance with Staff Accounting Bulletin No. 118. During the three months ended ~~September~~March 31, 302018, ~~2016~~the ~~associated~~Company ~~with~~recorded an adjustment of $1.4 to recognize the ~~repatriation~~imposition of ~~certain~~the ~~foreign~~new ~~earnings~~minimum intax ~~conjunction~~on ~~with~~global intangible income, which the Company’s ~~acquisition~~accounts for as a period cost. The Company continues to analyze the impacts of ~~buw~~the 2017 Tax Act; therefore, the 2017 charge continues to be provisional.

~~The~~As of March 31, 2018 and December 31, 2017, the liability for unrecognized tax benefits was $2110.41 and $2021.~~8 at September 30~~3, ~~2017 and December 31, 2016,~~ respectively, and is included in other long-term liabilities in the accompanying Consolidated Balance Sheets. As of ~~September 30~~March 31, ~~2017~~2018, the total amount of unrecognized tax benefits that would affect income tax expense if recognized in the Consolidated Financial Statements is $188.76. This amount includes net interest and penalties of $93.68. It is reasonably possible that the total amount of unrecognized tax benefits will decrease between approximately $2.1.3 and $175.05 in the next twelve months; however, actual developments in this area could differ from those currently expected.

1514. PAYABLES AND OTHER CURRENT LIABILITIES

	At September 30, 2017		At December 31, 2016
	At March 31, 2018		At December 31, 2017
Payables and other current liabilities:
Accounts payable		$3853.28		$5341.93
Accrued income and other taxes	2927.1		4441.19
Accrued payroll-related expenses	~~137~~119.17		~~132~~131.06
Derivative liabilities	2519.61		3317.6
Accrued expenses, other	6461.47		63.75
Restructuring and exit costs	714.45		0.8.7
Deferred revenue and government grants	1213.37		17.75
		$314.1		$345.8
		$309.6		$322.1

1615. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ~~INCOME~~

The following table summarizes the changes in the accumulated balances for each component of accumulated other comprehensive income (loss) ~~income~~:

		Foreign Currency			Derivative Financial Instruments			Pension Liability			Total
Balance at December 31, 2015			($38.2	)		($26.1	)		($37.5	)		($101.8	)
	Other comprehensive income before reclassifications, net of tax	10.0			16.7			—			26.7
	Amounts reclassified from accumulated other comprehensive income, net of tax	—			5.3			1.0			6.3
Net current-period other comprehensive income		10.0			22.0			1.0			33.0
Balance at March 31, 2016			($28.2	)		($4.1	)		($36.5	)		($68.8	)
	Other comprehensive loss before reclassifications	(11.2		)	(9.8		)	—			(21.0		)
	Amounts reclassified from accumulated other comprehensive income, net of tax	—			2.9			1.0			3.9
Net current-period other comprehensive (loss) income		(11.2		)	(6.9		)	1.0			(17.1		)
Balance at June 30, 2016			($39.4	)		($11.0	)		($35.5	)		($85.9	)
	Other comprehensive (loss) income before reclassifications	(2.0		)	(8.1		)	—			(10.1		)
	Amounts reclassified from accumulated other comprehensive income, net of tax	—			2.8			1.0			3.8
Net current-period other comprehensive income (loss)		(2.0		)	(5.3		)	1.0			(6.3		)
Balance at September 30, 2016			($41.4	)		($16.3	)		($34.5	)		($92.2	)
Balance at December 31, 2016			($56.6	)		($25.5	)		($31.7	)		($113.8	)
	Other comprehensive income before reclassifications, net of tax	3.0			6.0			—			9.0
	Amounts reclassified from accumulated other comprehensive income, net of tax	—			4.7			0.9			5.6
Net current-period other comprehensive income		3.0			10.7			0.9			14.6
Balance at March 31, 2017			($53.6	)		($14.8	)		($30.8	)		($99.2	)
	Other comprehensive income before reclassifications, net of tax	9.5			1.9			—			11.4
Balance at December 31, 2017			($35.4	)		$10.4			($41.6	)		($66.6	)
	Amounts reclassified from accumulated other comprehensive income, net of tax	—			3.1			0.8			3.9
	Other comprehensive income (loss) before reclassifications, net of tax	6.4			(21.7		)	(6.0		)	(21.3		)
Net current-period other comprehensive income		9.5			5.0			0.8			15.3
	Amounts reclassified from accumulated other comprehensive income, net of tax	—			1.6			1.5			3.1
Balance at June 30, 2017			($44.1	)		($9.8	)		($30.0	)		($83.9	)
Net current-period other comprehensive income (loss)		6.4			(20.1		)	(4.5		)	(18.2		)
	Other comprehensive income (loss) before reclassifications, net of tax	5.7			(1.2		)	(3.3		)	1.2
Balance at March 31, 2018			($29.0	)		($9.7	)		($46.1	)		($84.8	)
	Settlement of pension obligation, net of tax	—			—			1.2			1.2
	Amounts reclassified from accumulated other comprehensive income, net of tax	—			3.3			2.0			5.3
Net current-period other comprehensive income		5.7			2.1			(0.1		)	7.7
Balance at September 30, 2017			($38.4	)		($7.7	)		($30.1	)		($76.2	)

The following table summarizes the reclassification out of accumulated other comprehensive income (loss):

Details about Accumulated Other Comprehensive Income (Loss) Components	Amount Reclassified from Accumulated Other Comprehensive Income (Loss)						Affected Line Item in the Consolidated Statements of Income
	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017
	Three Months Ended March 31,
Loss on derivative instruments		($5.3	)		($18.1	)	Cost of providing services and products sold and Selling, general and administrative
	2018			2017
Tax benefit	2.0			6.9			Income tax expense
Loss on derivative instruments		($2.2	)		($7.7	)	Cost of providing services and products sold and Selling, general and administrative
Loss on derivative instruments, net of tax	(3.3		)	(11.2		)	Income from Continuing Operations, net of tax
Tax benefit	0.6			3.0			Income tax expense
Adjustments of pension and other post employment obligations	(3.3		)	(6.2		)	Selling, general and administrative
Loss on derivative instruments, net of tax	(1.6		)	(4.7		)	Income from Continuing Operations, net of tax
Tax benefit	1.3			2.6			Income tax expense
Adjustments of pension and other post employment obligations	(2.0		)	(1.5		)	Selling, general and administrative
Adjustment of pension and other post employment obligations, net of tax	(2.0		)	(3.6		)	Income from Continuing Operations, net of tax
Tax benefit	0.5			0.6			Income tax expense
Total reclassifications for the period		($5.3	)		($14.8	)
Adjustment of pension and other post employment obligations, net of tax	(1.5		)	(0.9		)	Income from Continuing Operations, net of tax
	Three Months Ended September 30, 2016			Nine Months Ended September 30, 2016
Total reclassifications for the period		($3.1	)		($5.6	)
Loss on derivative instruments		($4.6	)		($18.0	)	Cost of providing services and products sold and Selling, general and administrative
Tax benefit	1.8			7.0			Income tax expense
Loss on derivative instruments, net of tax	(2.8		)	(11.0		)	Income from Continuing Operations, net of tax
Adjustments of pension and other post employment obligations	(1.6		)	(4.8		)	Selling, general and administrative
Tax benefit	0.6			1.8			Income tax expense
Adjustment of pension and other post employment obligations, net of tax	(1.0		)	(3.0		)	Income from Continuing Operations, net of tax
Total reclassifications for the period		($3.8	)		($14.0	)

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS

OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Amounts in millions except per share amounts)

BACKGROUND

Convergys Corporation (Convergys, the Company or we) is a global leader in customer experience outsourcing, focused on bringing value to our clients through every customer interaction. We provide ~~global,~~integrated ~~multi-channel~~ agent, analytics and technology solutions with operational excellence that we believe deliver superior business ~~outcomes~~growth, care and support for our clients on a global scale. Convergys has approximately ~~120~~110,000 employees working in 33 countries, interacting with our clients’ customers in 58 languages. As a global provider in the industry, Convergys has a history of commitment and dedication to excellence in serving many of the world’s largest brands. Our business model allows us to deliver consistent, quality service, at scale in the geographies that meet our clients’ business needs. We proactively partner to solve client business challenges through our account management model. Our geographic footprint and comprehensive capabilities help leading companies create brand-differentiated customer experiences across all interaction channels to generate revenue and reduce their cost to serve. We are a well-capitalized leader in our market and are able to invest in the services, technology, and analytics that matter to our clients and their customers.

Operations and Structure

On August 1, 2016, Convergys acquired buw, a leader in the German customer care industry. The acquisition added 16 sites and approximately 6,000 employees from Germany, Hungary and Romania into Convergys’ global operations.

We believe our global clients benefit from our worldwide workforce located in key geographies, including the United States, the Philippines, India, Germany, the United Kingdom, Canada, Tunisia, Costa Rica, the Dominican Republic, Colombia, Egypt, France, Ireland, Italy, Poland, Romania, China, Malaysia, El Salvador, Honduras, Nicaragua, Bulgaria, Hungary, the Netherlands, Spain, Sweden, Australia, Brazil, Indonesia, Mauritius, Singapore, South Africa, and the United Arab Emirates.

~~Agent-related~~More ~~revenues, which accounted for more~~ than 95% of ~~our~~the Company’s revenues are derived from fees for customer experience outsourcing services provided to the ~~nine~~Company’s ~~months~~clients. ~~ended~~The ~~September~~Company ~~30,~~recognizes ~~2017,~~these ~~are~~revenues ~~typically~~over ~~recognized~~time as services are performed based on ~~staffing~~the ~~hours~~volumes orof ~~the~~services ~~number~~provided ofand ~~contacts~~contractual ~~handled~~rates. byThe ~~service~~Company’s ~~agents~~remaining ~~using~~revenues, ~~contractual~~which ~~rates.~~represent ~~Remaining~~less than 5% of the Company’s total revenues, are derived from the sale of premise-based and hosted self-care and technology solutions and provision of professional services. Revenues from the sale of these solutions and provision of these services are ~~typically~~ recognized over time as solutions or services are provided over the duration of the contract, using contractual rates. These contracts are typically one year or less in duration.

Additional Information

The Company files annual, quarterly and current reports and proxy statements with the SEC. These filings are available to the public over the Internet on the SEC’s website at http://www.sec.gov and on the Company’s website at http://www.convergys.com. The Company’s website and the information contained therein are not incorporated by reference into this quarterly report. You may also read and copy any document we file with the SEC at its public reference room located at 100 F Street, N.E., Washington, DC 20549. You may call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference room.

FORWARD-LOOKING STATEMENTS

This report contains statements, estimates, or projections that constitute “forward-looking statements” as defined under U.S. federal securities laws. In some cases, one can identify forward looking statements by terminology such as “will,” “expect,” “estimate,” “think,” “forecast,” “guidance,” “outlook,” “plan,” “lead,” “project” or other comparable terminology. Forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from our historical experience and our present expectations or projections. These risks include, but are not limited to: (i) adverse effects of our Board of Directors’ search for a new Chief Executive Officer, including the risk that a protracted search could affect our ability to attract and retain clients and employees; (ii) the loss of a significant client or significant business from a client; (iiiii) the future financial performance or outsourcing trends of our largest clients and the major industries that we serve, including continued volatility in volumes with our largest communications and technology clients; (~~iii~~iv) contractual provisions that may limit our profitability or enable our clients to reduce or terminate services; (ivv) our failure to successfully acquire and integrate businesses; (vvi) our inability to protect proprietary or personally identifiable data against unauthorized access or unintended release; (vivii) the effects of complying with the European Union’s General Data Protection Regulation, the Philippines’ Data Privacy Act and other jurisdiction-specific data privacy requirements, including increased expenses, operational and contractual changes, and diversion of resources; (~~vii~~viii) our inability to maintain and upgrade our technology and network equipment in a timely and cost effective manner; (~~viii~~ix) business and political risks related to our global operations, including ongoing political developments in the Philippines, uncertainty regarding the impact of Britain’s vote to leave the European Union (“Brexit”) or other similar actions by European Union member states, and economic weakness and operational disruption as a result of natural events, political unrest, war, terrorist attacks or other civil disruption; (ixx) the effects of foreign currency exchange rate fluctuations; (xxi) the failure to ~~meet~~establish ~~expectations~~appropriate ~~regarding~~tax ~~our~~provisions ~~future~~for uncertain tax liabilities, changes in tax laws, regulations or ~~regulations~~regulatory guidance that increase our future tax liabilities, including regulations implementing the 2017 Tax Act, or the unfavorable resolution of tax contingencies; (xixii) adverse effects of regulatory requirements or changes thereto, investigative and legal actions, and other commitments and contingencies; (~~xii~~xiii) costs associated with conversions of our convertible debentures that may occur from time to time; (xiv) our inability to effectively manage our contact center capacity or attract and retain employees at competitive wages and (~~xiii~~xv) those factors contained in our periodic reports filed with the SEC, included in the “Risk Factors” section of our most recent Annual Report on Form 10-K. The forward-looking information in this document is given as of the date of the particular statement and we assume no duty to update this information.

RESULTS OF OPERATIONS

Revenues

	Three Months Ended September 30,								Nine Months Ended September 30,
	Three Months Ended March 31,
	2017		2016		Change		%		2017		2016		Change		%
	2018		2017		Change		%
Revenues:
Communications		$~~323~~287.12		$~~377~~336.98	(5449.86	)	(15	)		~~$972.9~~		~~$1,091.6~~	~~(118.7~~	)	~~(11~~	)
Technology	~~141~~148.59		~~154~~156.35		(127.86	)	(85	)	~~431.0~~		~~472.5~~		~~(41.5~~	)	(9	)
Financial Services	54.6		51.8		2.8		5		181.3		157.6		23.7		15
Retail	76.4		66.4		10.0		15
Other	169.1		157.2		11.9		8		517.6		433.9		83.7		19
Financial Services	74.7		77.9		(3.2	)	(4	)
Total Revenues		$688.3		$741.2	(52.9	)	(7	)		$2,102.8		$2,155.6	(52.8	)	(2	)
Healthcare	51.4		51.4		—		—
Other	35.6		38.6		(3.0	)	(8	)
Total Revenues		$674.2		$727.6	(53.4	)	(7	)

~~Three~~Consolidated ~~Months~~revenues ~~Ended~~for ~~September~~the first quarter 30of 2018 were $674.2, a 7% decrease from $727.6 in the same period in the prior year. Changes in currency exchange rates increased revenues by approximately 2.5% in the current quarter as the U.S. dollar weakened relative to the euro and British pound. Revenues from communications clients decreased 15% from the first quarter of 2017, ~~versus~~reflecting ~~Three~~a ~~Months~~shift ~~Ended~~to ~~September~~lower-cost 30geographies and volume decreases with several of our largest clients. These decreases were partially offset by favorable currency exchange rate impacts and increased volume with other certain clients, ~~2016~~particularly in Europe. Revenues from technology clients decreased 5% from the first quarter of 2017, reflecting volume decreases with certain existing clients, partially offset by favorable currency exchange rate impacts and volume increases with certain existing clients. Revenues from retail clients increased 15% from the first quarter of 2017, reflecting volume increases with several existing clients and revenues from new clients. Revenues from financial services clients decreased 4% from the first quarter of 2017, reflecting volume decreases with certain clients, partially offset by revenues from a new client and volume increases with an existing client. Revenues from healthcare clients were consistent with the first quarter of 2017. Revenues from all other clients decreased 8% from the first quarter of 2017, primarily as a result of the loss of an automotive client.

Consolidated revenues for the third quarter of 2017 were $688.3, a 7% decrease from $741.2 in the same period prior year. Revenues from the acquired buw operations increased revenue by approximately 2%. Changes in currency exchange rates resulted in increased revenues of less than 1% in the third quarter of 2017 as the U.S. dollar weakened relative to the euro. Revenues from communications clients decreased 15% from the third quarter of 2016, reflecting a shift of volumes to lower-cost geographies and consolidation of certain programs with our two largest clients, as well as volume decreases with other existing clients. These decreases were partially offset by revenues from a new client and one additional month of revenue from the acquired buw operations. Revenues from technology clients decreased 8% from the third quarter of 2016, primarily reflecting volume reductions with existing clients. Revenues from financial services clients increased 5% from the third quarter of 2016, reflecting revenues from new clients and volume increases with several existing clients, as well as one additional month of revenue from the acquired buw operations. Revenues from all other clients increased 8% from the third quarter of 2016 as a result of volume increases with several existing clients, revenues from new clients, and one additional month of revenue from the acquired buw operations.

Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016

Consolidated revenues for the nine months ended September 30, 2017 were $2,102.8, a 2% decrease from $2,155.6 in the same period in the prior year. Revenues related to the acquired buw operations increased revenues by approximately 5%. Changes in currency exchange rates resulted in decreased revenues of approximately 1% in the current year as the U.S. dollar strengthened relative to the British pound. Revenues from communications clients decreased 11% from the prior year, reflecting a shift of volumes to lower-cost geographies and consolidation of certain programs with our two largest clients, as well as volume reductions and program completions with certain existing clients and unfavorable currency exchange rate impacts. These decreases were partially offset by revenues from a new client and revenues from the acquired buw operations. Revenues from technology clients decreased 9% from the prior year due to volume reductions with certain clients and unfavorable currency exchange rate impacts, partially offset by volume increases with other existing clients. Revenues from financial services clients increased 15% from the prior year, reflecting revenues from new clients and volume increases with existing clients, as well as revenue from the acquired buw operations, partially offset by volume decreases with other clients. Other revenues increased 19% from the prior year. This increase is attributable to volume increases and new programs with existing clients, as well as revenues from the acquired buw operations and revenues from new clients.

Operating Costs and Expenses

	Three Months Ended September 30,								Nine Months Ended September 30,
	Three Months Ended March 31,
	2017		2016		Change		%		2017		2016		Change		%
	2018		2017		Change		%
Operating Costs:
Cost of providing services and products sold		$~~428~~417.17		$~~479~~450.82	(5132.75	)	(117	)		~~$1,305.1~~		~~$1,365.3~~	~~(60.2~~	)	(4	)
Selling, general and administrative	~~175~~172.54		~~170~~177.5		(5.01	)	(3	)	~~527.1~~		~~511.1~~		~~16.0~~		3
Depreciation	2623.28		3027.34		(43.16	)	(1413	)	~~80.6~~		~~93.3~~		~~(12.7~~	)	~~(14~~	)
Amortization	76.29		7.12		(0.13	)	1(4	)	~~21.7~~		~~20.9~~		~~0.8~~		4
Restructuring	218.49		015.20		23.29		NM26		~~19.1~~		~~2.7~~		~~16.4~~		NM
Transaction related expenses	—		1.9		(1.9	)	(100	)	—		3.1		(3.1	)	(100	)
Transaction and integration costs	—		1.5		(1.5	)	(100	)
Integration related expenses	0.8		0.8		—		—		3.4		1.9		1.5		79
Total costs and expenses		$639.7		$678.8	(39.1	)	(6	)
Total costs and expenses		$640.2		$690.6	(50.4	)	(7	)		$1,957.0		$1,998.3	(41.3	)	(2	)

~~Three~~Total ~~Months~~operating ~~Ended~~costs ~~September~~and 30expenses for the first quarter of 2018 of $639.7 decreased 6% from $678.8 in the same period in the prior year. Changes in currency exchange rates increased operating costs and expenses by approximately 2% in the current quarter. As a percentage of revenues, the cost of providing services and products sold was 62.0% in the first quarter of 2018, consistent with 61.9% in the prior year quarter. Selling, general and administrative expenses of $172.4 in the first quarter of 2018 decreased by 3% compared to the prior year quarter as a result of savings realized from the Company’s restructuring initiatives over the past year, partially offset by unfavorable currency exchange impacts. As a percentage of revenues, selling, general, and administrative cost was 25.6% in the first quarter of 2018 compared to 24.4% in the prior year period. Depreciation expense of $23.8 decreased $3.6 from the prior year quarter, while amortization expense of $6.9 decreased $0.3. The decrease in depreciation expense resulted from the timing of certain assets becoming fully depreciated, as well as lower depreciation from the fair value write-up of property and equipment acquired through business combinations. The Company incurred restructuring expense of $18.9 during the first quarter of 2018, primarily related to CEO transition costs as well as company-wide initiatives to reduce headcount and consolidate certain contact centers to streamline the Company’s operations. Restructuring expense during the first quarter of 2017 ~~versus~~primarily ~~Three~~related ~~Months~~to ~~Ended~~a ~~September~~$12.8 30charge associated with a company-wide initiative to reduce headcount and better align the Company’s resources, ~~2016~~principally for corporate functions.

Total operating costs and expenses for the third quarter of 2017 of $640.2 decreased 7% from $690.6 in the same period in the prior year. Operating costs associated with the acquired buw operations increased total costs and expenses by approximately 2%, due to an additional month of ownership in the third quarter of 2017. Changes in currency exchange rates reduced operating costs and expenses by approximately 1% in the third quarter of 2017. Operating costs for the prior year quarter included charges for transaction related expenses of $1.9 related to the acquisition of buw that were not recurring in the third quarter of 2017. As a percentage of revenues, the cost of providing services and products sold was 62.2% in the third quarter of 2017 compared to 64.7% in the prior year period, primarily as a result of the timing of certain program implementations, changes in the mix of geographies where services are provided, and favorable currency exchange impacts. Selling, general and administrative expenses of $175.5 in the third quarter of 2017 increased by 3% compared to the prior year period as a result of an additional month of expenses from the acquired buw operations, partially offset by favorable currency exchange impacts and savings realized from our 2017 company-wide restructuring program. As a percentage of revenues, selling, general, and administrative expenses were 25.5% in the third quarter of 2017 compared to 23.0% in the prior year period. Depreciation expense of $26.2 decreased $4.1 from the prior year period, while amortization expense of $7.2 increased $0.1. The decrease in depreciation expense resulted from the timing of certain assets becoming fully depreciated, as well as lower depreciation from the fair value write-up of property and equipment acquired through business combinations.

Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016

Total operating costs and expenses for the nine months ended September 30, 2017 of $1,957.0 decreased 2% from $1,998.3 in the prior year. Operating costs associated with the acquired buw operations increased total costs and expenses by approximately 5%, due to an additional seven months of ownership in the nine months ended September 30, 2017. Changes in currency exchange rates reduced operating costs and expenses by approximately 2% for the nine months ended September 30, 2017. Total operating costs and expenses for the nine months ended September 30, 2017 and 2016 also included charges for integration related expenses of $3.4 and $1.9, respectively, associated with business acquisitions. Operating costs for 2016 also included charges for transaction related expenses of $3.1 related to the acquisition of buw. As a percentage of revenues, the cost of providing services and products sold was 62.1% for the first nine months ended September 30, 2017, compared to 63.3% in the prior year period, largely due to the timing of certain program implementations, changes in the mix of geographies where services are provided, and favorable currency exchange impacts. Selling, general and administrative expenses of $527.1 in the nine months ended September 30, 2017 increased by 3% compared to the prior year period as a result of expenses from the acquired buw operations, partially offset by favorable currency exchange impacts and savings realized from our 2017 company-wide restructuring program. As a percentage of revenue, selling, general and administrative expense was 25.1% for the first nine months of 2017 compared to 23.7% in the prior year period. Depreciation expense of $80.6 decreased $12.7 from the prior year period, while amortization expense of $21.7 increased $0.8. The decrease in depreciation expense resulted from the timing of certain assets becoming fully depreciated, as well as lower depreciation from the fair value write-up of property and equipment acquired through business combinations. The increase in amortization expense resulted from acquired intangible assets from the buw acquisition. The increase in restructuring expense is a result of the $12.8 charge in the nine months ended September 30, 2017 associated with a company-wide initiative to reduce headcount and better align the Company’s resources, principally for corporate functions.

Operating Income and Adjusted Operating Income (a non-GAAP measure)

In order to assess the underlying operational performance of the continuing operations of the business and to have a basis to compare underlying results to prior and future periods, we provide the non-GAAP measures, Adjusted Operating Income and Adjusted Operating Margin (Adjusted Operating Income divided by Total Revenues), in the table below. For the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018 and ~~2016~~2017, Adjusted Operating Income and Adjusted Operating Margin exclude the following operating charges:

1. ~~Restructuring~~Amortization ~~charges~~of acquired intangible assets of $126.89 and $7.2 for the ~~nine~~three months ended ~~September~~March 3031, ~~2017,~~2018 ~~associated with a company-wide initiative to reduce headcount~~ and ~~better align the Company’s resources~~2017, ~~principally for corporate functions~~respectively;

2. ~~Depreciation~~Restructuring charges of $010.87 ~~and $2.6~~ for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2017~~2018, ~~respectively,~~related ~~and~~to ~~$2.0~~company-wide initiatives to reduce headcount and ~~$7.5,~~consolidate ~~respectively,~~certain incontact centers to streamline the ~~prior~~Company’s ~~year~~operations; ~~periods,~~restructuring ~~resulting~~charges ~~from~~of $12.8 for the ~~fair~~three ~~value~~months ~~write~~ended March 31, 2017, associated with a company-upwide ofinitiative ~~property~~to reduce headcount and ~~equipment~~better ~~acquired~~align ~~through~~the ~~business~~Company’s ~~combinations~~resources, principally for corporate functions;

3. ~~Transaction~~CEO ~~expenses~~transition costs of $17.~~9 and~~ 3.1 for the three ~~and nine~~ months ended ~~September~~March 3031, ~~2016, associated with the acquisition of buw, primarily related to fees paid for third-party consulting services~~2018;

4. Acquisition integration expenses of $01.85 ~~and $3.4~~ for the three ~~and nine~~ months ended ~~September~~March 3031, 2017, ~~respectively, and $0.8 and $1.9 for the three and nine months ended September 30, 2016, respectively,~~ primarily related to fees for third-party consulting services and severance expense;

5. ~~Amortization~~Depreciation of ~~acquired intangible assets of~~ $70.26 and $211.70 for the three ~~and nine~~ months ended ~~September~~March 3031, 2018 and 2017, respectively, ~~and~~resulting ~~$7.1~~from ~~and~~the ~~$20.9,~~fair ~~respectively,~~value inwrite-up ~~the~~of ~~prior~~property ~~year~~and ~~periods~~equipment acquired through business combinations.

Adjustments for these items are relevant in evaluating the overall performance of the business. Limitations associated with the use of these non-GAAP measures include that these measures do not present all of the amounts associated with our results as determined in accordance with GAAP. Management compensates for this limitation by using both the non-GAAP measures and the GAAP measures in its evaluation of performance. These non-GAAP measures should be considered supplemental in nature and should not be construed as being more important than comparable GAAP measures.

	Three Months Ended September 30,										Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016			Change		%		2017			2016			Change		%
	2018			2017			Change		%
Operating Income		$4834.15			$5048.68		(214.53	)	(529	)		~~$145.8~~			~~$157.3~~		~~(11.5~~	)	(7	)
Operating Margin	75.01		%	6.87		%					~~6.9~~		%	~~7.3~~		%
Company-wide restructuring	—			—			—		—		12.8			—			12.8		100
Amortization of acquired intangible assets	6.9			7.2			(0.3	)	(4	)
Depreciation of property & equipment write-up	0.8			2.0			(1.2	)	(60	)	2.6			7.5			(4.9	)	(65	)
Company-wide restructuring	10.7			12.8			(2.1	)	(16	)
Transaction related expenses	—			1.9			(1.9	)	(100	)	—			3.1			(3.1	)	(100	)
CEO transition costs	7.3			—			7.3		100
Integration related expenses	0.8			0.8			—		—		3.4			1.9			1.5		79
Integration-related expenses	—			1.5			(1.5	)	(100	)
Amortization of acquired intangible assets	7.2			7.1			0.1		1		21.7			20.9			0.8		4
Depreciation of property & equipment write-up	0.6			1.0			(0.4	)	(40	)
Adjusted Operating Income (a non-GAAP measure)		$5660.90			$6271.43		(511.53	)	(916	)		~~$186.3~~			~~$190.7~~		~~(4.4~~	)	(2	)
Adjusted Operating Margin	8.39		%	89.48		%					~~8.9~~		%	~~8.8~~		%

~~Three~~Operating ~~Months~~income ~~Ended~~was $34.5 for ~~September~~the first quarter ~~30,~~of 2018 compared ~~2017~~to ~~versus~~operating ~~Three~~income ~~Months~~of $48.8 in ~~Ended~~the ~~September~~prior 30year period. Excluding the impacts of the operating charges discussed above, ~~2016~~adjusted operating income for the first quarter of 2018 was $60.0 compared to $71.3 in the same period in the prior year.

Operating income was $48.1 for the third quarter of 2017 compared to operating income of $50.6 in the prior year period. Excluding the impacts of the operating charges discussed above, adjusted operating income for the third quarter of 2017 was $56.9 compared to $62.4 in the same period in the prior year.

Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016

Operating income was $145.8 for the first nine months of 2017 compared to operating income of $157.3 in the prior year period. Excluding the impacts of the operating charges discussed above, adjusted operating income for the first nine months of 2017 was $186.3 compared to $190.7 in the same period in the prior year.

Non-Operating Items

	Three Months Ended September 30,										Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016			Change		%		2017			2016			Change		%
	2018			2017			Change		%
Operating Income		$4834.15			$5048.68		(214.53	)	(529	)		~~$145.8~~			~~$157.3~~		~~(11.5~~	)	(7	)
Other (expense) income, net	(10.65		)	(1.23		)	(01.48	)	33NM		~~1.2~~			~~(3.2~~		)	~~4.4~~		NM
Interest expense	(4.5		)	(45.63		)	0.18		(215	)	~~(14.0~~		)	~~(13.6~~		)	~~(0.4~~	)	3
Income before Income Taxes		$4229.05			$44.8		(215.83	)	(634	)		~~$133.0~~			~~$140.5~~		~~(7.5~~	)	(5	)

~~Three~~Other ~~Months~~income ~~Ended~~decreased ~~September~~by $1.8 compared ~~30,~~to the same period in the prior year primarily due to a $1.7 foreign currency exchange gain in the first quarter of 2017. ~~versus~~Interest ~~Three~~expense ~~Months~~decreased ~~Ended~~by $0.8 compared ~~September~~to 30the same period in the prior year, ~~2016~~primarily due to a $1.0 extinguishment loss incurred during the first quarter of 2017.

Other expense increased by $0.4 compared to prior year primarily due to the $2.0 non-cash pension settlement charge in the third quarter, partially offset by interest income and foreign currency exchange gains. Interest expense decreased by $0.1 compared to the same period in the prior year primarily due to a decrease in the total debt outstanding.

Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016

Other income increased by $4.4 compared to the same period in the prior year primarily due to $4.0 of foreign currency exchange gains and higher interest income in the first nine months of 2017, partially offset by the $2.0 non-cash pension settlement charge in 2017. Interest expense increased by $0.4 compared to the same period in the prior year due to a $1.0 extinguishment loss resulting from the repayment of the outstanding borrowings under the Credit Agreement.

Income Taxes

	Three Months Ended September 30,									Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016		Change		%		2017		2016		Change		%
	2018			2017		Change		%
Income before Income Taxes		$4229.05			$44.8	(215.83	)	(634	)		~~$133.0~~		~~$140.5~~	~~(7.5~~	)	(5	)
Income tax expense	7.2			7.1		0.1		1		20.5		25.0		(4.5	)	(18	)
Income tax (benefit) expense	(0.3		)	6.9		(7.2	)	NM
Income from Continuing Operations, net of tax		$34.8			$37.7	(2.9	)	(8	)		$112.5		$115.5	(3.0	)	(3	)
Net Income		$29.8			$37.9	(8.1	)	(21	)

~~Three~~The ~~Months~~effective ~~Ended~~tax ~~September~~rate 30on net income from continuing operations was a benefit of 1.0% for the three months ended March 31, ~~2017~~2018 compared ~~versus~~to ~~Three~~expense ~~Months~~of 15.4% in ~~Ended~~the ~~September~~same 30period last year. The effective tax rate for the first quarter of 2018 was primarily impacted by a net benefit of $8.6 resulting from the resolution of certain tax audits. The effective tax rate for the first quarter of 2018 was also impacted by the geographic mix of worldwide income, ~~2016~~the accrual of withholding taxes on the repatriation of current period earnings and the new minimum tax on global intangible income. The effective tax rate for the first quarter of 2017 was primarily impacted by the geographic mix of worldwide income.

~~The~~Net ~~effective~~Income ~~tax rate on net income~~ from ~~continuing~~Continuing ~~operations~~Operations; ~~was 17.1% for~~Earnings ~~the three~~per ~~months~~Diluted ~~ended September~~Share ~~30,~~from ~~2017 compared~~Continuing toOperations; anAdjusted ~~effective~~Net ~~tax~~Income ~~rate~~from ~~of 15.8% in~~Continuing ~~the~~Operations ~~same~~(a ~~period~~non-GAAP ~~last~~measure); ~~year.~~Adjusted ~~The~~Earnings ~~effective~~per ~~tax~~Diluted ~~rates~~Share ~~for~~from ~~both~~Continuing ~~periods~~Operations ~~were~~(a ~~largely~~non-GAAP impacted by the geographic mix of worldwide income and certain discrete items. The prior year effective tax rate was also impacted by tax expense of $1.3 associated with the repatriation of certain foreign earnings in conjunction with the Company’s acquisition of buw. measure)

~~Nine~~In ~~Months~~order ~~Ended~~to ~~September~~assess 30the underlying operational performance of the continuing operations of the business, ~~2017~~we ~~versus~~provide ~~Nine~~non-GAAP ~~Months~~measures ~~Ended~~in ~~September~~the 30tables below that exclude, ~~2016~~in addition to the operating charges discussed above, the following:

~~The~~1. ~~effective~~Net tax ~~rate~~benefit onof ~~net income from continuing operations was 15~~$8.4% 6 for the ~~nine~~ three months ended ~~September~~ 30March 31, ~~2017 compared~~2018, toresulting anfrom ~~effective tax rate of 17.8% in~~ the ~~same~~favorable ~~period~~resolution ~~last year. The effective tax rates for both periods were largely impacted by the geographic mix~~ of ~~worldwide income and~~ certain ~~discrete items. The prior year effective~~ tax ~~rate was also impacted by tax expense of $1~~audits.~~3 associated with the repatriation of certain foreign earnings in conjunction with the Company’s acquisition of buw.~~

~~Income~~We use income from ~~Continuing~~continuing ~~Operations~~operations, net of tax; ~~Diluted~~and ~~Earnings~~earnings per ~~Share~~share ~~from~~data ~~Continuing~~excluding ~~Operations;~~the ~~Adjusted~~operating ~~Income~~charges ~~from~~and ~~Continuing~~discrete ~~Operations,~~tax ~~net~~items discussed above to assess the underlying operational performance of ~~tax~~the (continuing operations of the business and to have a basis to compare underlying results to prior and future periods. Adjustments for these items are relevant in evaluating the overall performance of the business. Limitations associated with the use of these non-GAAP ~~measure);~~measures ~~Adjusted~~include ~~Diluted~~that ~~Earnings~~these measures do not present all of the amounts associated with our results as determined in accordance with GAAP. Management compensates for these limitations by using the non-GAAP measures, income from continuing operations, net of tax and diluted earnings per ~~Share~~share excluding these items, and the GAAP measures, income from ~~Continuing~~continuing ~~Operations~~operations, (anet of tax and diluted earnings per share, in its evaluation of performance. These non-GAAP ~~measure)~~measures should be considered supplemental in nature and should not be construed as being more important than comparable GAAP measures.

In order to assess the underlying operational performance of the continuing operations of the business, we provide non-GAAP measures in the tables below that exclude, in addition to the operating charges previously discussed, the following:



	Three Months Ended March 31,
	2018			2017			Change		%
Net Income		$29.8			$37.9		(8.1	)	(21	)
Total operating charges from above	25.5			22.5			3.0		13
Income tax impact from total operating charges	(6.3		)	(8.3		)	2.0		(24	)
Release of uncertain tax positions	(8.6		)	—			(8.6	)	100
Adjusted Net Income (a non-GAAP measure)		$40.4			$52.1		(11.7	)	(22	)

Diluted Earnings per Common Share:
Diluted Earnings per Common Share		$0.30			$0.38		(0.08	)	(21	)
Impact of net charges above, net of tax	0.11			0.14			(0.03	)	(21	)
Adjusted diluted earnings per common share (a non-GAAP measure)		$0.41			$0.52		(0.11	)	(21	)

1.Income ~~Non-cash~~from ~~pension~~continuing ~~settlement~~operations, ~~charge~~net of tax for the first quarter of 2018 was $229.8 compared to $37.9 for the same period in 2017, while income from continuing operations per diluted share for the first quarter in 2018 was $0.30 compared to $0.38 for the ~~three~~same period in 2017. Excluding the operating charges discussed above and ~~nine~~the ~~months~~income ~~ended~~tax ~~September~~impact 30from these charges, as well as the tax benefit resulting from the release of uncertain tax positions in the first quarter of 2018, adjusted income from continuing operations, net of tax for the first quarter of 2018 was $40.4, or $0.41 per diluted share, compared to $52.1, or $0.52 per diluted share for the same period in 2017;.

2. Tax expense of $1.3 for the three and nine months ended September 30, 2016 associated with the repatriation of certain foreign earnings in conjunction with the Company’s acquisition of buw.

We use income from continuing operations, net of tax, and earnings per share data excluding the operating charges discussed above and the income tax impact from these charges to assess the underlying operational performance of the continuing operations of the business and to have a basis to compare underlying results to prior and future periods. Adjustments for these items are relevant in evaluating the overall performance of the business. Limitations associated with the use of these non-GAAP measures include that these measures do not present all of the amounts associated with our results as determined in accordance with GAAP. Management compensates for these limitations by using the non-GAAP measures, income from continuing operations, net of tax and diluted earnings per share excluding these items, and the GAAP measures, income from continuing operations, net of tax and diluted earnings per share, in its evaluation of performance. These non-GAAP measures should be considered supplemental in nature and should not be construed as being more important than comparable GAAP measures.

	Three Months Ended September 30,										Nine Months Ended September 30,
	2017			2016			Change		%		2017			2016			Change		%
Income from Continuing Operations, net of tax		$34.8			$37.7		(2.9	)	(8	)		$112.5			$115.5		(3.0	)	(3	)
Total operating charges from above	8.8			11.8			(3.0	)	(25	)	40.5			33.4			7.1		21
Income tax impact from total operating charges	(2.9		)	(3.0		)	0.1		(3	)	(14.2		)	(9.1		)	(5.1	)	56
Pension settlement charge	2.0			—			2.0		100		2.0			—			2.0		100
Income tax impact from pension settlement charge	(0.8		)	—			(0.8	)	100		(0.8		)	—			(0.8	)	100
Tax provision (benefit) related to unremitted non-U.S. earnings	—			1.3			(1.3	)	(100	)	—			1.3			(1.3	)	(100	)
Adjusted income from Continuing Operations, net of tax (a non-GAAP measure)		$41.9			$47.8		(5.9	)	(12	)		$140.0			$141.1		(1.1	)	(1	)
Diluted Earnings per Common Share:
Continuing Operations		$0.35			$0.36		(0.01	)	(3	)		$1.12			$1.11		0.01		1
Impact of net charges above included in Continuing Operations, net of tax	0.07			0.10			(0.03	)	(30	)	0.27			0.25			0.02		8
Adjusted diluted earnings per common share from Continuing Operations (a non-GAAP measure)		$0.42			$0.46		(0.04	)	(9	)		$1.39			$1.36		0.03		2

Three Months Ended September 30, 2017 versus Three Months Ended September 30, 2016

Income from continuing operations, net of tax, for the third quarter of 2017 was $34.8 compared to $37.7 for the same period in 2016, while income from continuing operations per diluted share for the third quarter in 2017 was $0.35 compared to $0.36 for the same period in 2016. Excluding the operating charges discussed above and the income tax impact from these charges, adjusted income from continuing operations, net of tax, for the third quarter of 2017 was $41.9, or $0.42 per diluted share, compared to $47.8, or $0.46 per diluted share for the same period in 2016.

Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016

Income from continuing operations, net of tax, for the first nine months of 2017 was $112.5 compared to $115.5 for the same period in 2016, while income from continuing operations per diluted share for the first nine months of 2017 was $1.12 compared to $1.11 for the same period in 2016. Excluding the operating charges discussed above and the income tax impact from these charges, adjusted income from continuing operations, net of tax, for the first nine months of 2017 was $140.0, or $1.39 per diluted share, compared to $141.1, or $1.36 per diluted share for the same period in 2016.

Results of Discontinued Operations, Results of Discontinued Operations per Diluted Share, Net Income and Net Income per Diluted Share

	Three Months Ended September 30,								Nine Months Ended September 30,
	2017		2016		Change		%		2017		2016		Change		%
Income from Continuing Operations, net of tax		$34.8		$37.7	(2.9	)	(8	)		$112.5		$115.5	(3.0	)	(3	)
Income from Discontinued Operations, net of tax benefit of $10.0 for the three and nine months ended September 30, 2016, respectively.	—		10.0		(10.0	)	(100	)	—		10.0		(10.0	)	(100	)
Net Income		$34.8		$47.7	(12.9	)	(27	)		$112.5		$125.5	(13.0	)	(10	)
Diluted Earnings per Common Share:
Continuing Operations		$0.35		$0.36	(0.01	)	(3	)		$1.12		$1.11	0.01		1
Discontinued Operations	—		0.10		(0.10	)	(100	)	—		0.10		(0.10	)	(100	)
Net Diluted Earnings Per Common Share		$0.35		$0.46	(0.11	)	(24	)		$1.12		$1.21	(0.09	)	(7	)

Three Months Ended September 30, 2017 versus Three Months Ended September 30, 2016

Third quarter 2016 results from discontinued operations include a gain of $10.0, net of tax, related to the settlement or adjustment of certain contingencies and tax positions related to the sale of the Information Management business.

Including the results of discontinued operations, third quarter 2016 net income and diluted earnings per share were $47.7 and $0.46, respectively.

Nine Months Ended September 30, 2017 versus Nine Months Ended September 30, 2016

For the first nine months of 2016, results from discontinued operations included a gain of $10.0, net of tax, which related to the settlement or adjustment of certain contingencies and tax positions in connection with the sale of the Information Management business.

Including the results of discontinued operations, net income and diluted earnings per share were $125.5 and $1.21, respectively, for the first nine months of 2016.

EBITDA and Adjusted EBITDA (non-GAAP measures)

Management uses EBITDA, EBITDA margin (EBITDA divided by Total Revenues), Adjusted EBITDA, Adjusted EBITDA margin (Adjusted EBITDA divided by Total Revenues) and the GAAP measure, income from continuing operations, net of tax, to monitor and evaluate the underlying performance of the business and believes the presentation of these measures enhances investors’ ability to analyze trends in the business and evaluate our underlying performance relative to other companies in the industry. EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for income from continuing operations, net of tax, or other income statement data prepared in accordance with GAAP, and our presentation of EBITDA and adjusted EBITDA may not be comparable to similarly-titled measures used by other companies. These non-GAAP measures should be considered supplemental in nature and should not be construed as being more important than comparable GAAP measures.

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016			2017			2016
	2018			2017
Income from Continuing Operations, net of tax		$3429.8			$37.79			~~$112.5~~			~~$115.5~~
Depreciation and Amortization	3330.47			3734.46			~~102.3~~			~~114.2~~
Interest expense	4.5			45.63			~~14.0~~			~~13.6~~
Income tax expense	7.2			7.1			20.5			25.0
Income tax (benefit) expense	(0.3		)	6.9
EBITDA (a non-GAAP measure)	7964.97			8684.87			~~249.3~~			~~268.3~~
Pension settlement charge	2.0			—			2.0			—
Company-wide restructuring	10.7			12.8
Company-wide restructuring	—			—			12.8			—
CEO transition costs	7.3			—
Transaction related expenses	—			1.9			—			3.1
Integration-related expenses	—			1.5
Integration related expenses	0.8			0.8			3.4			1.9
Adjusted EBITDA (a non-GAAP measure)		$82.7			$99.0
Adjusted EBITDA (a non-GAAP measure)		$82.7			$89.5			$267.5			$273.3
EBITDA Margin	9.6		%	11.6		%
EBITDA Margin	11.6		%	11.7		%	11.9		%	12.4		%
Adjusted EBITDA Margin	12.3		%	13.6		%
Adjusted EBITDA Margin	12.0		%	12.1		%	12.7		%	12.7		%

RESTRUCTURING CHARGES

As discussed in Note 87 of the Notes to Consolidated Financial Statements, we recorded the following restructuring charges:

2018 Restructuring

Company-wide restructuring program

CEO transition costs

Other severance

2017 Restructuring

Company-wide restructuring program

Other ~~Severance~~severance

buw integration

2016 Restructuring

Savings from Restructuring Plans

The ~~2017~~2018 company-wide restructuring program is expected to result in cost reductions and cash savings of approximately $11.0 on an annualized basis. Savings associated with the 2017 restructuring programs were estimated to be cost reductions of approximately $21.0 and cash savings of approximately $19.0 on an annualized basis. The impact of ~~these~~the cost reductions for all of these programs will be spread across our operating expenses, primarily in ~~the~~ selling, general and administrative expense ~~caption~~on ofthe ~~our~~ Consolidated Statements of Income. The impact on liquidity was not material for any of our restructuring plans. ~~Savings associated with the 2016 severance actions were not material.~~

CLIENT CONCENTRATION

During the first ~~nine~~ three months of ~~2017~~ 2018, our three largest clients accounted for 3026.60% of our consolidated revenues, compared to 3631.2% in the same period of ~~2016~~ 2017. Our largest client, AT&T, accounted for 1713.57% of our consolidated revenues in the first ~~nine~~ three months of ~~2017~~ 2018 and 2118.2% of revenue in the same period in the prior year. No other client accounted for more than 10% of our consolidated revenues for the first ~~nine~~ three months of ~~2017~~2018 and ~~2016~~2017. Revenues with our three largest clients are earned under multiple contracts and are subject to variation based on, among other things, general economic conditions, client outsourcing trends, geographical mix of where services are provided and seasonal patterns in our clients’ businesses.

FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Cash Flows

We believe that we have adequate liquidity from cash on hand and expected future cash flows to fund operations, invest in the business, make required debt payments, ~~and~~ pay dividends at the discretion of the Board of Directors, ~~for~~and pay the ~~next~~one-time ~~twelve~~transition ~~months~~tax imposed by the 2017 Tax Act. We also believe that available borrowings under existing credit facilities provide additional liquidity that can be used to invest in the business.

Cash flows from operating activities generally provide us with a significant source of funding for our investing and financing activities. Cash flows from operating activities totaled $~~186~~12.1 7 in the first ~~nine~~ three months of ~~2017~~ 2018, compared to $~~236~~32.8 9 in the same period last year. The ~~first~~current ~~nine~~quarter ~~months~~included payments of ~~2017~~$9.7 ~~and~~related ~~2016~~to ~~reflected $4~~non-U.0S. ~~and~~taxes $5for the repatriation of certain non-U.7,S. ~~respectively,~~cash balances as of December 31, 2017. The prior year quarter included payments ~~for~~of ~~transaction~~$1.7 ~~and~~for integration -related expenses. Excluding these items, cash flows provided by operating activities totaled $~~190~~22.14 and $~~242~~34.56 for the ~~nine~~three months ended ~~September 30~~March 31, ~~2017~~2018 and ~~2016~~2017, respectively. ~~This~~The decrease in cash flows was primarily a result of ~~decreased~~a ~~cash~~$12.7 ~~flow~~increase ~~from working capital~~ in ~~2017,~~U.S. ~~largely~~federal ~~due~~taxes topaid during the ~~timing~~first ofquarter ~~collections~~ of ~~accounts~~2018 ~~receivable~~compared ~~and~~to the ~~payment~~first quarter of ~~accounts payable~~2017.

Cash flows used in investing activities were $445.~~2 during~~9 ~~the~~and ~~first nine months of 2017, resulting from~~ $448.9 ~~of capital expenditures~~ during ~~that~~the ~~period~~first ~~partially~~three ~~offset~~months ~~by $0.7~~ of ~~net~~2018 ~~proceeds~~and ~~from~~2017, ~~the sale of a joint venture interest previously acquired in the buw acquisition. Cash flows used in investing activities were $194.3 during the first nine months of 2016~~respectively, resulting from ~~cash outflows of $129.9 (net of cash acquired) for the purchase of buw’s operations, $63.6 of~~ capital expenditures ~~and $0.8 for the purchase of short-term and other investments~~ during ~~that~~those ~~period~~periods.

Cash flows used in financing activities were $~~112~~14.92 during the first ~~nine~~ three months of 2018, ~~2017~~ compared to $~~118~~14.13 ~~during~~of cash provided in the ~~first nine months~~same ~~of 2016~~period in 2017. Activity in the current year included net ~~repayments~~repayment of long-term debt of $~~116~~51.4 1 and net proceeds of amounts drawn under the asset securitization facility of $9562.0. Additionally, we settled in cash the repurchase of 20.87 of the Company’s common shares for $6515.9~~, paid $26~~.~~4 in~~ ~~cash~~We ~~dividends~~also ~~and~~paid ~~received proceeds of~~ $09.82 ~~from~~in ~~the~~cash ~~exercise of stock options~~dividends. During the first ~~nine~~three months of ~~2016~~2017, we ~~had~~repaid long-term debt ~~repayments~~ of $2115.4 7 and net ~~repayments~~proceeds of amounts drawn under the asset securitization facility of totaled $39160.0. Additionally, we settled in cash the repurchase of 20.19 of the Company'’s common shares for ~~$54.3,~~ ~~paid~~ $2421.~~1 in~~5 ~~cash dividends~~ and ~~received $1.1 of~~paid ~~excess tax benefits from share-based payment arrangements and~~ $08.~~6 from~~5 ~~the~~in ~~exercise~~cash ~~of stock options~~dividends.

Free Cash Flow and Adjusted Free Cash Flow (non-GAAP measures)

We use free cash flow and adjusted free cash flow, which are non-GAAP measures, to assess the financial performance of the Company. We define free cash flow as cash flows from operating activities less capital expenditures, and adjusted free cash flow as free cash flow less ~~acquisition~~expenditures ~~related~~associated ~~items~~with investment activity to expand or improve our business. A reconciliation of the GAAP measure, net cash provided by operating activities, to the non-GAAP measures, free cash flow and adjusted free cash flow, is as follows:

	Three Months Ended September 30,						Nine Months Ended September 30,
	Three Months Ended March 31,
	2017			2016			2017			2016
	2018			2017
Net cash flow provided by operating activities under U.S. GAAP		$6312.7			$8032.59			~~$186.1~~			~~$236.8~~
Capital expenditures, net of proceeds from disposal of assets	(175.09		)	(298.39		)	~~(44.9~~		)	~~(63.6~~		)
Free cash flow (a non-GAAP measure)		$466.78			$5124.20			~~$141.2~~			~~$173.2~~
Acquisition - cash paid for transaction and integration related expenses (A)	1.2			2.9			4.0			5.7
Non-U.S. tax paid related to repatriation of non-U.S. cash as of December 31, 2017 (A)	9.7			—
Adjusted free cash flow (a non-GAAP measure)		$47.9			$54.1			$145.2			$178.9
Acquisition - cash paid for transaction and integration-related expenses (B)	—			1.7
Adjusted free cash flow (a non-GAAP measure)		$16.5			$25.7

(A) ~~Payments~~Cash payments associated with ~~investment~~non-U.S. ~~activity~~withholding ~~for~~taxes ~~acquisition~~resulting ~~related~~from ~~items~~the Company's repatriation of certain non-U.S. cash balances accumulated as of December 31, 2017.

~~Adjusted~~(B) ~~free~~Payments ~~cash~~associated ~~flow~~with ~~was~~investment ~~$47.9~~activity ~~and $145.2~~ for ~~the three~~acquisition ~~and~~related ~~nine months ended September 30, 2017, compared to $54~~items.1 and $178.9 for the corresponding periods in 2016. The decrease of $33.7 from the nine month period in the prior year is primarily a result of decreased cash flow from working capital in 2017, largely due to the timing of collections of accounts receivable and the payment of accounts payable.

WeAdjusted ~~believe that~~ free cash flow ~~and~~was ~~adjusted~~$16.5 ~~free~~for ~~cash flow are useful to investors because they present~~ the ~~operating~~three ~~cash~~months ~~flow~~ended ofMarch 31, ~~the Company~~2018, ~~excluding~~compared ~~the capital that is spent~~ to ~~continue to improve business operations, such as investment in the Company’s existing business~~$25.7 ~~Further, free cash flow and adjusted free cash flow provide an indication of the ongoing cash that is available~~ for ~~debt repayment, returning capital to shareholders and other opportunities. We also believe~~ the ~~presentation~~same ofperiod ~~these measures enhances investors’ ability to analyze trends~~ in ~~the business and evaluate the Company’s underlying performance relative to other companies in the industry~~2017. ~~Limitations~~The ~~associated~~decrease ~~with the use~~ of ~~free~~$9.2 ~~cash~~from ~~flow and adjusted free cash flow include that they do not represent~~ the ~~residual~~prior ~~cash~~year ~~flow~~is ~~available~~primarily ~~for~~a ~~discretionary~~result ~~expenditures~~of asa ~~they~~$12.7 doincrease ~~not~~in ~~incorporate certain cash payments, including payments made on capital lease obligations or cash payments for business acquisitions~~U.S. ~~Management~~federal ~~compensates~~taxes ~~for~~paid ~~these~~during ~~limitations by utilizing~~ the ~~non-GAAP~~first ~~measures,~~quarter ~~free~~of ~~cash~~2018 ~~flow~~compared ~~and~~to ~~adjusted free cash flow, and~~ the ~~GAAP~~first ~~measure,~~quarter ~~cash flows from operating activities, in its evaluation~~ of ~~performance~~2017.

We believe that free cash flow and adjusted free cash flow are useful to investors because they present the operating cash flow of the Company, excluding the capital that is spent to continue and improve business operations, such as investment in the Company’s existing business. Further, free cash flow and adjusted free cash flow provide an indication of the ongoing cash that is available for debt repayment, returning capital to shareholders and other opportunities. We also believe the presentation of these measures enhances investors’ ability to analyze trends in the business and evaluate the Company’s underlying performance relative to other companies in the industry. Limitations associated with the use of free cash flow and adjusted free cash flow include that they do not represent the residual cash flow available for discretionary expenditures as they do 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 the non-GAAP measures, free cash flow and adjusted free cash flow, and the GAAP measure, cash flows from operating activities, in its evaluation of performance.

Capital Resources, Off-Balance Sheet Arrangements and Contractual Commitments

At ~~September~~March 3031, ~~2017~~2018, total capitalization was $1,~~719~~713.97, consisting of $280.13 of short-term and long-term debt and capital lease obligations, $1,~~379~~374.94 of equity and $59.90 of temporary equity associated with the convertible debentures conversion feature. At December 31, ~~2016~~2017, total capitalization was $1,~~676~~705.08, consisting of $~~298~~268.86 of short-term and long-term debt and capital lease obligations, $1,~~315~~377.97 of equity and $6159.35 of temporary equity associated with the convertible debentures conversion feature. The total debt-to-capital ratio at ~~September~~March 3031, ~~2017~~2018 was 16.34%, compared to 1715.87% at December 31, ~~2016~~2017. ~~This decrease is primarily due to a decrease in total debt outstanding as a result of decreased borrowings under the Company’s term loan.~~

The ~~New~~ Revolving Credit Facility may be extended for two additional one-year periods, subject to the satisfaction of certain conditions set forth in the ~~New~~ Credit Agreement. In addition, aggregate borrowing capacity under the ~~New~~ Credit Agreement may be increased by up to an additional $250 .0 million by increasing the amount of the Revolving Credit Facility or by incurring additional term loans, in each case subject to the satisfaction of certain conditions set forth in the ~~New~~ Credit Agreement, including the receipt of additional commitments for such increase. Borrowings outstanding under the ~~New~~ Credit Agreement may be repaid from time to time without premium or penalty, other than customary breakage costs, if any. Borrowings outstanding under the ~~New~~ Credit Agreement bear interest at a fluctuating rate per annum equal to, at the Company’s option, either (a) the applicable adjusted LIBOR plus a spread based on the Company’s total net leverage ratio, or (b) a base rate (equal to the higher of the Administrative Agent’s prime rate, the federal fund rate plus 0.50%, and the one-month adjusted LIBOR plus 1.0%) plus a spread based on the Company’s total net leverage ratio. The Company is also obligated to pay a commitment fee on a quarterly basis on the unused portion of the commitments under the ~~New~~ Revolving Credit Facility based on the Company’s total net leverage ratio, which fee is currently 25 basis points. While amounts borrowed and repaid under the ~~New~~ Revolving Credit Facility can be re-borrowed, amounts repaid under the ~~New~~ Term Loan cannot be borrowed again under the ~~New~~ Credit Agreement. The ~~New~~ Credit Agreement contains certain affirmative and negative covenants, as well as terms and conditions that are customary for credit facilities of this type, including financial covenants for leverage and interest coverage ratios. The Company was in compliance with all covenants at ~~September~~March 3031, ~~2017~~2018. Total borrowing capacity remaining under the ~~New~~ Revolving Credit Facility was $300.0, with $~~100~~50.0 outstanding on the ~~New~~ Term Loan, as of ~~September~~ 30March 31, ~~2017~~2018. The carrying value of the ~~New~~ Term Loan at ~~September~~ 30March 31, ~~2017~~2018 reflects a discount of $0.8 4 related to fees paid directly to the lenders at issuance. This discount is being amortized over the life of the ~~New~~ Term Loan using the effective interest rate method (34.30% as of ~~September~~ 30March 31, ~~2017~~2018), and is included in interest expense in the Consolidated Statements of Income. Subsequent to March 31, 2018, the Company fully repaid the $50.0 outstanding balance on the Term Loan.

The Company established the Prior Credit Agreement on February 28, 2014 in the aggregate amount of $650.0. The Prior Credit Agreement consisted of unsecured term loans (Prior Term Loan) in the initial aggregate amount of $350.0, and an unsecured revolving credit facility (Prior Revolving Credit Facility) in the amount of $300.0. The Prior Term Loan and the Prior Revolving Credit Facility were scheduled to mature on March 3, 2019. Outstanding amounts were subject to interest at the applicable rate described in the Prior Credit Agreement.

~~The~~During ~~Company~~the first quarter of 2018, we repurchased 0.97 of ~~and~~our 2common shares for $16.82 ofpursuant ~~its~~to ~~common~~a ~~shares~~share ~~during~~repurchase authorization approved by the ~~three~~Company’s ~~and~~Board ~~nine~~of ~~months~~Directors ~~ended~~in ~~September 30~~August 2015, ~~2017~~which ~~for~~increased athe ~~total~~share ofrepurchase ~~$21.9~~authorization ~~and~~to $65250.~~6, respectively~~0. Based upon the timing of transactions, $0.93 of the shares repurchased induring December ~~2016~~2017 settled during the first quarter of ~~2017~~2018. Additionally, $0.6 of the shares repurchased during ~~September 30,~~March ~~2017~~2018 had not settled as of ~~September~~March 3031, ~~2017~~2018. ~~These~~At ~~shares are excluded from outstanding shares at the end of the second quarter and were settled in cash during the third quarter of 2017. As of September~~March 3031, ~~2017~~2018, the Company had the authority to repurchase $7745.53 of outstanding common shares ~~pursuant~~under to the Board ~~of Directors~~’s August 2015 ~~increase of its then-existing~~ authorization ~~of share repurchases to $250~~.0 ~~in the aggregate.~~ The timing and terms of any future ~~share~~transactions ~~repurchases~~ will depend on a number of considerations including market conditions, our available liquidity and capital needs, and limits on share repurchases that may be applicable under the covenants in our ~~existing~~Credit ~~credit agreement~~Agreement.

At ~~September~~March 3031, ~~2017~~2018, we had outstanding letters of credit and bond obligations of approximately $2213.37 related to performance guarantees. We believe that any guarantee obligation that may arise related to performance and payment guarantees of continuing operations will not be material. The Company also has future purchase commitments with telecommunications and transportation providers of $412.25 at ~~September~~March 3031, ~~2017~~2018.

During ~~2016~~2017 and ~~2017~~2018, our Board of Directors declared the following dividends per common share, which were paid by the Company on the payment dates listed below:

Announcement Date	Record Date	Dividend Amount	Payment Date
February 23, 2016	March 24, 2016	$0.08	April 8, 2016
May 9, 2016	June 24, 2016	$0.09	July 8, 2016
August 8, 2016	September 23, 2016	$0.09	October 7, 2016
November 8, 2016	December 23, 2016	$0.09	January 6, 2017
February 22, 2017	March 24, 2017	$0.09	April 7, 2017
May 8, 2017	June 23, 2017	$0.10	July 7, 2017
August 8, 2017	September 22, 2017	$0.10	October 6, 2017
November 7, 2017	December 22, 2017	$0.10	January 5, 2018
February 21, 2018	March 23, 2018	$0.10	April 6, 2018

The Board expects that future cash dividends will be paid on a quarterly basis. However, any decision to pay future cash dividends will be subject to Board approval, and will depend on our future earnings, cash flow, financial condition, financial covenants and other relevant factors. We intend to continue to use cash dividends as a means of returning capital to our shareholders, subject to our Board’s determination that cash dividends are in the best interests of our shareholders.

MARKET RISK

We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices. Our risk management strategy includes the use of derivative instruments to reduce the effects on our operating results and cash flows from fluctuations caused by volatility in currency exchange rates. In using derivative financial instruments to hedge exposures to changes in exchange rates, we expose ourselves to counterparty credit risk. We manage exposure to counterparty credit risk by entering into derivative financial instruments with investment grade-rated institutions that can be expected to perform fully under the terms of the agreements and by diversifying the number of financial institutions with which we enter into such agreements.

Interest Rate Risk

At ~~September~~March 3031, ~~2017~~2018, Convergys had $215.0 of variable rate debt outstanding under the ~~New~~ Term Loan and Asset Securitization Facility, which exposes Convergys to changes in interest rates. Holding other variables constant, including the total amount of outstanding indebtedness, a one hundred basis point increase in interest rates on our variable-rate debt would cause an estimated increase in interest expense of approximately $2.2 per year.

Foreign Currency Exchange Rate Risk

While most of our contracts are priced in U.S. dollars, we also recognize ~~a substantial amount of~~ revenue under contracts that are denominated in ~~Australian dollars~~euros, British pounds, Australian dollars and ~~euros~~Canadian dollars. A significant increase in the value of the U.S. dollar relative to these currencies may have a material adverse impact on the value of those revenues when translated to U.S. dollars.

We serve many of our U.S.-based clients using contact center capacity outside of the U.S. Although the contracts with these clients are typically priced in U.S. dollars, a substantial portion of the costs incurred to deliver services under these contracts are denominated in the local currency of the country where services are provided, which represents a foreign exchange exposure. Additionally, we have certain client contracts that are priced in Australian dollars, for which a substantial portion of the costs to deliver services are denominated in other currencies. As of ~~September~~March 3031, ~~2017~~2018, we have hedged a portion of our exposure related to the anticipated cash flow requirements denominated in certain foreign currencies by entering into hedging contracts with several financial institutions to acquire a total of PHP 3531,~~940~~440.0 at a fixed price of $~~718~~615.10 at various dates through ~~June~~December 2020, INR 119,~~925~~645.0 at a fixed price of $~~164~~133.64 at various dates through ~~June~~December 2020 ~~and~~, CAD 4656.41 at a fixed price of $3542.18 at various dates through ~~December~~June ~~2019~~2020 and COP 4756,~~700~~400.0 at a fixed price of $1518.05 at various dates through ~~June~~March ~~2019~~2020, and to sell a total of AUD 3430.76 at a fixed price of $2623.9 at various dates through ~~October~~September ~~2018~~2019. The fair value of these derivative instruments as of ~~September~~March 3031, ~~2017~~2018 is presented in Note 12 of the Notes to Consolidated Financial Statements. The potential loss in fair value at ~~September~~March 3031, ~~2017~~2018 for such contracts resulting from a hypothetical 10% adverse change in the underlying foreign currency exchange rates is approximately $9482.70. This loss would be substantially mitigated by corresponding gains on the underlying foreign currency exposures.

Other foreign currency exposures arise from transactions denominated in a currency other than the functional currency. We periodically enter into hedging contracts that are not designated as hedges. The purpose of these derivative instruments is to protect the Company against foreign currency exposure pertaining to receivables, payables and intercompany transactions that are denominated in currencies different from the functional currencies of the Company or ~~its~~the respective subsidiaries. As of ~~September~~March 3031, ~~2017~~2018, the fair value of these derivatives not designated as hedges was a $60.32 ~~payable~~receivable.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

See “ITEM 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our annual report for the year ended December 31, ~~2016~~2017 on Form 10-K for a discussion of our critical accounting policies and estimates.

There have been no material changes to our critical accounting policies and estimates in ~~2017~~2018.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information required by Item 3 is included in Item 2 of this Form 10-Q.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer, together with the Company’s General Counsel, Chief Accounting Officer and other key members of management, evaluated the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the Act)) as of the end of the quarter ended ~~September~~March 3031, ~~2017~~2018 (Evaluation Date). Based on this evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were effective as of the Evaluation Date to provide reasonable assurance that the information required to be disclosed by the Company in the reports that it files or submits under the Act is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure, and that such information is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms.

Changes in Internal Control

There were no changes in the Company’s internal control over financial reporting during the period covered by this quarterly report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II

ITEM 1. LEGAL PROCEEDINGS

For a discussion of certain legal proceedings, see Note 1110 of the Notes to the Consolidated Financial Statements of this Form 10-Q, which is incorporated by reference herein.

ITEM 1A. RISK FACTORS

See “ITEM 1A. Risk Factors” in our annual report on Form 10-K for the year ended December 31, ~~2016~~ 2017 for a discussion of our risk factors. There have been no material changes to our risk factors in ~~2017~~2018.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

We repurchased 20.87 of our common shares for $6516.62 during the ~~nine~~first ~~months~~quarter ~~ended~~of ~~September 30~~2018, ~~2017,~~ as summarized in the following table:

	Shares repurchased	Average price per share
January 2017	254,598		$25.43
January 2018	227,900		$22.95
February 2017	257,000	24.22
February 2018	209,100	22.63
March 2017	430,300	21.10
March 2018	271,400	23.21
April 2017	337,600	21.68
Total	708,400		$22.96
May 2017	319,300	23.63
June 2017	293,100	24.26
July 2017	291,614	23.94
August 2017	354,300	23.49
September 2017	266,100	24.61
Total	2,803,912		$23.40

All share repurchases were made pursuant to a publicly announced ~~program~~programs. At ~~September~~March 3031, ~~2017~~2018, the Company had the authority to repurchase $7745.53 of outstanding common shares pursuant to the Board of Directors’ most recent share repurchase authorization of $250.0 in August 2015. The timing and terms of any future transactions will depend on a number of considerations including market conditions, our available liquidity and capital needs, and limits on share repurchases that may be applicable under the covenants in our ~~New~~ Credit Agreement.

~~ITEM 5.~~ ~~OTHER INFORMATION~~8

As previously disclosed, Marjorie M. Connelly, the Company’s Chief Operating Officer, will separate from the Company on December 15, 2017. Upon Ms. Connelly’s separation, Andre S. Valentine, the Company’s Chief Financial Officer, will assume oversight responsibility for the Company’s contact center operations. In connection with this expected transition, on November 2, 2017, the Board designated Mr. Valentine as the Company’s principal operating officer, effective December 15, 2017.

ITEM 6. EXHIBITS

(a) Exhibits

The following are filed as Exhibits to Part II of this Form 10-Q:

Exhibit Number

3.1	Amended Articles of Incorporation of the Company. (Incorporated by reference from Exhibit 3.1 to Form 10-Q filed on May 5, 2010.)
3.2	Amended and Restated Code of Regulations of Convergys Corporation. (Incorporated by reference from Exhibit 3.1 to Form 8-K filed on May 2, 2011.)
10.1	2012 Convergys Corporation Senior Executive Severance Pay Plan dated February 14, 2018. (Incorporated by reference from Exhibit 10.19 to Form 10-K filed on February 21, 2018.)
10.2	Amendment to Service Agreement, dated February 14, 2018, between Convergys CMG UK Limited and Cormac Twomey. (Incorporated by reference from Exhibit 10.33 to Form 10-K filed on February 21, 2018.)
10.3	Separation and Consulting Agreement, dated February 20, 2018, between Convergys Corporation and Andrea Ayers. (Incorporated by reference from Exhibit 10.34 to Form 10-K filed on February 21, 2018.)
10.4	Amendment No. 11 to Receivables Purchase Agreement, dated as of January 3, 2018. (Incorporated by reference from Exhibit 10.48 to Form 10-K filed on February 21, 2018.)
10.5	Convergys Corporation 2018 Long-Term Incentive Plan. (Incorporated by reference from Exhibit 10.1 to Form 8-K filed on April 30, 2018.)
21	Subsidiaries of Convergys Corporation.
31.1	Rule 13a - 14(a) Certification by Chief Executive Officer.
31.2	Rule 13a - 14(a) Certification by Chief Financial Officer.
32.1	Certification by Chief Executive Officer of Periodic Financial Reports Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification by Chief Financial Officer of Periodic Financial Reports Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101	The following financial statements from the Company’s Quarterly Report on Form 10-Q for the quarter ended ~~September~~March 3031, ~~2017~~2018, filed on ~~November~~May 78, ~~2017~~2018, formatted in XBRL (Extensible Business Reporting Language): (i) Consolidated Statements of Income and Comprehensive Income, (ii) Consolidated ~~Statements~~Balance ~~of Comprehensive Income~~Sheets, (iii) Consolidated ~~Balance~~Statements ~~Sheets~~of Cash Flows, (iv) Consolidated Statements of ~~Cash~~Shareholders’ ~~Flows~~Equity, and (v) the Notes to Consolidated Financial Statements.

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	CONVERGYS CORPORATION
November 7, 2017	By	/s/ Andre S. Valentine
May 8, 2018	By	/s/ Andre S. Valentine
		Andre S. ValentineChief Financial Officer
		(on behalf of the Registrant and as principal financial officer)

Pursuant 9to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the date indicated.

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