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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the quarterly period ended April 4, 2010
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
 For the Transition Period From ____________ to ____________
 Commission file number: 0-26786
 APAC Customer Services, Inc.
  Illinois
    
    36-2777140(State or other jurisdiction of
    
    (I.R.S. Employer Identification No.)incorporation or organization)
 Bannockburn Lake Office Plaza 1, 2333 Waukegan Road, Suite 100, Bannockburn, Illinois 60015
 (847) 374-4980
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer* o
(*Do not check if a smaller reporting company)
    
    Smaller reporting company o
 o þ




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##### 



INDEX
 PageForward-Looking Statements and Factors That May Affect Future Results
    
    
    3Part I. Financial Information
    
    
    5Item 1. Condensed Consolidated Financial Statements (Unaudited)
    
    
    5Condensed Consolidated Balance Sheets as of April 4, 2010 and
January 3, 2010
    
    
    5Condensed Consolidated Statements of Operations for the Thirteen
Weeks Ended April 4, 2010 and March 29, 2009
    
    
    6Condensed Consolidated Statements of Cash Flows for the Thirteen
Weeks Ended April 4, 2010 and March 29, 2009
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    16Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    24Item 4. Controls and Procedures
    
    
    24Part II. Other Information
    
    
    25Item 1 Legal Proceedings
    
    
    25Item 1A. Risk Factors
    
    
    25Item 6. Exhibits
    
    
    25Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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Forward-Looking Statements and Factors That May Affect Future Results
      
    
    A large portion of our revenue is generated from a limited number
of clients and the loss of one or more of them, or a reduction in
their demand for our services, could materially affect our
financial results.
    
    Our operating results and financial condition may be affected by
the performance of our clients and unfavorable general economic
conditions.
    
    The failure to effectively manage our production capacity and our
workforce could negatively impact our financial results.
    
    Our success is subject to the terms of our client contracts and if
we are unable to continue operating under existing client
contracts or renew existing client contracts with terms favorable
to the Company, our results of operations and financial condition
may be adversely affected by the loss of clients or by the less
favorable terms.
    
    Our business may be affected by our cash flows from operations and
our ability to comply with our debt covenants and funding
requirements under our credit facility.
    
    Our financial results may be affected by risks associated with
international operations and expansion, including, but not limited
to foreign currency fluctuations and changes to laws in other
countries.
    
    Our principal shareholder can exercise significant control over
the company and, as a result of such control may be able to exert
considerable influence over our future direction and operations.
    
    Our success depends on our ability to recruit and retain a
sufficient number of qualified key personnel and the loss of the
services of key personnel without adequate replacement or the
inability to attract new qualified personnel could have a material
adverse effect on us.
  3




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
    
    We operate in a highly competitive industry and our financial
results may suffer if we are unable to adequately address
potential downward pricing pressures and other competitive
factors.
    
    Circumstances outside our control such as typhoons, hurricanes,
earthquakes, floods and other acts of God, political instability,
equipment malfunction, telephone or data service interruptions,
changes in the telecommunications market, war and terrorism could
seriously harm our domestic or international business operations.
    
    Unauthorized disclosure of sensitive or confidential client and
customer data could expose us to protracted and costly litigation,
penalties and may cause us to lose clients.
    
    Our business and our clients businesses are subject to federal
and state regulation and industry standards and the costs of
compliance with, or liability for violation of, existing or future
regulations or standards could significantly increase our costs of
doing business.
    
    The costs and management time and attention associated with
litigation could result in a negative impact to financial results.
    
    Our business is subject to rapid changes in technology and if our
technology is rendered obsolete or we are unable to compete
effectively, our operating results and financial condition could
be materially and adversely affected.
    
    Volatility in our stock price may result in loss of investment for
shareholders as well as litigation, substantial cost and diversion
of managements attention.
    4




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PART I. FINANCIAL INFORMATION
 
 Item 1.
    
    Condensed Consolidated Financial Statements
 APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
 (Dollars in thousands)
 April 4,
    
    
    January 3,2010
    
    
    2010(Unaudited)ASSETSCurrent
assets:Cash and cash equivalents
    
    $
    40,666
    
    
    $
    20,557Accounts receivable, net
    
    
    35,802
    
    
    
    45,358Deferred tax assets, current
    
    
    14,455
    
    
    
    14,593Other current assets
    
    
    7,733
    
    
    
    6,323Total current assets
    
    
    98,656
    
    
    
    86,831Property and equipment, net
    
    
    25,936
    
    
    
    25,653Goodwill
    
    
    13,338
    
    
    
    13,338Other intangible assets, net
    
    
    427
    
    
    
    1,028Deferred tax assets, non-current
    
    
    10,170
    
    
    
    10,170Other assets
    
    
    1,716
    
    
    
    1,585Total assets
    
    $
    150,243
    
    
    $
    138,605LIABILITIES AND SHAREHOLDERS EQUITYCurrent
liabilities:Capital leases  current portion
    
    $
    501
    
    
    $
    397Accounts payable
    
    
    2,971
    
    
    
    2,770Income taxes payable
    
    
    3,661
    
    
    
    365Accrued payroll and related items
    
    
    20,633
    
    
    
    21,964Accrued liabilities
    
    
    11,043
    
    
    
    9,190Total current liabilities
    
    
    38,809
    
    
    
    34,686Other non-current liabilities
    
    
    4,154
    
    
    
    4,171Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Common shares, $0.01 per share; authorized 200,000,000 shares;
52,322,726 shares issued and outstanding at April 4, 2010, and
52,318,726 shares issued and outstanding at January 3, 2010
    
    
    523
    
    
    
    523Additional paid-in capital
    
    
    110,329
    
    
    
    109,818Accumulated deficit
    
    
    (5,127
    )
    
    
    (11,688
    )Accumulated other comprehensive income
    
    
    1,555
    
    
    
    1,095Total shareholders equity
    
    
    107,280
    
    
    
    99,748Total liabilities and shareholders equity
    
    $
    150,243
    
    
    $
    138,605
   5




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 (Dollars in thousands, except per share data)
 (Unaudited)
 Thirteen Weeks EndedApril 4,
    
    
    March 29,2010
    
    
    2009Net revenue
    
    $
    85,254
    
    
    $
    73,246Cost of services
    
    
    64,808
    
    
    
    54,696Gross profit
    
    
    20,446
    
    
    
    18,550Operating expenses:Selling, general and administrative expenses
    
    
    8,147
    
    
    
    7,694Legal settlement
    
    
    2,400
    
    
    
    4Total operating expenses
    
    
    10,547
    
    
    
    7,698Operating income
    
    
    9,899
    
    
    
    10,852Other income
    
    
    (109
    )
    
    
    (7
    )Interest (income) expense
    
    
    (8
    )
    
    
    89Income before income taxes
    
    
    10,016
    
    
    
    10,770Income tax expense
    
    
    3,456
    
    
    
    151Net income
    
    $
    6,560
    
    
    $
    10,619Net income per share:Basic
    
    $
    0.13
    
    
    $
    0.21Diluted
    
    $
    0.12
    
    
    $
    0.20Weighted average number of shares outstanding:Basic
    
    
    52,309
    
    
    
    50,818Diluted
    
    
    54,630
    
    
    
    53,163
   6




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (Unaudited)
 Thirteen Weeks EndedApril 4,
    
    
    March 29,2010
    
    
    2009Operating activities:Net income
    
    $
    6,560
    
    
    $
    10,619Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    3,112
    
    
    
    2,829Deferred income taxes
    
    
    138
    
    
    
    Stock compensation expense
    
    
    500
    
    
    
    7Amortized gain on sale leaseback
    
    
    (23
    )
    
    
    (23
    )Gain on sale of property and equipment
    
    
    (1
    )
    
    
    Income taxes payable
    
    
    3,296
    
    
    
    149Change in operating assets and liabilities
    
    
    8,661
    
    
    
    (10,392
    )Net cash provided by operating activities
    
    
    22,243
    
    
    
    3,189Investing activities:Purchases of property and equipment, net
    
    
    (2,231
    )
    
    
    (3,370
    )Net proceeds from sale of property and equipment
    
    
    1
    
    
    
    Net cash used in investing activities
    
    
    (2,230
    )
    
    
    (3,370
    )Financing activities:Net payments under revolving credit facility
    
    
    
    
    
    
    (37
    )Payment of capital lease obligations
    
    
    (124
    )
    
    
    (6
    )Stock option transactions
    
    
    11
    
    
    
    Net cash used in financing activities
    
    
    (113
    )
    
    
    (43
    )Effect of exchange rate change on cash
    
    
    209
    
    
    
    407Net increase in cash and cash equivalents
    
    
    20,109
    
    
    
    183Cash and cash equivalents:Beginning balance
    
    
    20,557
    
    
    
    618Ending balance
    
    $
    40,666
    
    
    $
    801
   7




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
 (Dollars in thousands, except per share data)
 1. Basis of Presentation and Principles of Consolidation
  http://www.sec.gov
 
 2. New Accounting Pronouncements
 Fair Value
 Fair Value Measurements and Disclosures
 Revenue Recognition
 Revenue Recognition
  8




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except per share data)
 Subsequent Events
 Subsequent Events
 3. Accrued Liabilities
  April 4,
    
    
    January 3,2010
    
    
    2010Accrued legal settlement
    
    $
    2,400
    
    
    $
    Non-qualified retirement plan
liability
    
    
    2,082
    
    
    
    1,931Deferred rent
    
    
    1,099
    
    
    
    1,134Accrued workers compensation
    
    
    875
    
    
    
    929Accrued professional fees
    
    
    863
    
    
    
    719Accrued telecom
    
    
    474
    
    
    
    961Accrued capital expenditures
    
    
    258
    
    
    
    890Accrued severance
    
    
    137
    
    
    
    261Other accrued liabilities
    
    
    2,855
    
    
    
    2,365Total
    
    $
    11,043
    
    
    $
    9,190
 4. Goodwill and Other Intangible Assets
   5. Accounting for Stock-Based Compensation
    9




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
 (Dollars in thousands, except per share data)
  Number of SharesOutstanding on January 3, 2010
    
    
    25,000Granted
    
    
    Issued
    
    
    (25,000
    )Forfeited
    
    
    Expired
    
    
    Outstanding on April 4, 2010
    
    
    
   WeightedAverageNumber of
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Exercise Price
    
    
    AggregateOptions
    
    
    Grant Price Range Per Share
    
    
    Per Share
    
    
    Intrinsic ValueOutstanding on
January 3, 2010
    
    
    6,136,677
    
    
    $
    0.79
    
    
    
    
    
    $
    11.63
    
    
    $
    2.24Granted
    
    
    98,720
    
    
    
    5.96
    
    
    
    
    
    
    5.96
    
    
    
    5.96Exercised
    
    
    (4,000
    )
    
    
    2.82
    
    
    
    
    
    
    2.82
    
    
    
    2.82Forfeited
    
    
    (3,500
    )
    
    
    5.31
    
    
    
    
    
    
    5.31
    
    
    
    5.31Expired
    
    
    (15,000
    )
    
    
    11.63
    
    
    
    
    
    
    11.63
    
    
    
    11.63Outstanding on
April 4, 2010
    
    
    6,212,897
    
    
    $
    0.79
    
    
    
    
    
    $
    7.36
    
    
    $
    2.27
    
    
    $
    22,570Exercisable on
April 4, 2010
    
    
    3,054,869
    
    
    $
    0.79
    
    
    
    
    
    $
    7.36
    
    
    $
    2.03
    
    
    $
    11,840
  6. Comprehensive Income
  Thirteen Weeks EndedApril 4,
    
    
    March 29,2010
    
    
    2009Net income
    
    $
    6,560
    
    
    $
    10,619Foreign currency translation adjustment
    
    
    190
    
    
    
    (123
    )Unrealized gain on derivative contracts
    
    
    270
    
    
    
    357Total comprehensive income
    
    $
    7,020
    
    
    $
    10,853
  10




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except per share data)
 7. Legal Proceedings
     8. Debt
     11




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except per share data)
    9. Income Taxes
    12




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except per share data)
 10. Earnings Per Share
 :
 Thirteen Weeks EndedApril 4,
    
    
    March 29,2010
    
    
    2009(In thousands, except earnings per share)Net income
    
    $
    6,560
    
    
    $
    10,619Shares used in basic per
share calculation
    
    
    52,309
    
    
    
    50,818Effects of dilutive securities:Stock options
    
    
    2,312
    
    
    
    2,317Non-vested stock
    
    
    9
    
    
    
    28Shares used in diluted per
share calculation
    
    
    54,630
    
    
    
    53,163Net income per share:Basic
    
    $
    0.13
    
    
    $
    0.21Diluted
    
    $
    0.12
    
    
    $
    0.20
 11. Fair Value Measurements
  
    
    Level 1  Quoted prices in active markets for identical assets or liabilities.
 
    
    Level 2  Inputs, other than the quoted prices in active markets, that are observable
either directly or indirectly.
 
    
    Level 3  Unobservable inputs based on the Companys own assumptions.
  Fair Value Measurements as of April 4, 2010Level 1
    
    
    Level 2
    
    
    Level 3Assets:Cash equivalents(1)
    
    $
    30,263
    
    
    $
    
    
    
    $
    Non-qualified retirement
plan(2)
    
    
    2,082
    
    
    
    
    
    
    
    Foreign currency
derivative contracts(3)
    
    
    
    
    
    
    1,012
    
    
    
    Non-current investments(4)
    
    
    130
    
    
    
    
    
    
    
    Liabilities:Non-qualified retirement
plan obligation(2)
    
    $
    2,082
    
    
    $
    
    
    
    $
    
 
 (1)
    
    Cash equivalents: The carrying amount of these items approximates fair value at period end.  13




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except per share data)
 (2)
    
    Non-qualified retirement plan: The Company maintains a non-qualified retirement plan (Select
Plan) for highly compensated employees who are limited in the amount of contributions that they
can make in the Companys 401-K plan. As of April 4, 2010, the fair value of investments in the
Select Plan totaled $2.1 million and is reflected on the Companys balance sheet in other current
assets. The related obligation to employees participating in the Select Plan, which will always
equal the fair value of the investments, are recorded on the Companys balance sheet in other
current liabilities.(3)
    
    Foreign currency derivative contracts: The carrying amount of these items is based on
valuations provided by the counter-party institution, but there are no guaranteed selling prices
for these forward currency contracts.(4)
    
    Non-current investments: The carrying amount of these items, which represent Philippine
treasury bills, approximates fair value at as of April 4, 2010 and is recorded as a component of
other assets on the Companys balance sheet.   12. Derivative Instruments
     14




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except per share data)
  Asset DerivativesFair ValueBalance Sheet
    
    
    April 4,
    
    
    January 3,Location
    
    
    2010
    
    
    2010Derivatives designated as hedging instruments:Foreign currency contracts
    
    Other Current Assets
    
    $
    1,012
    
    
    $
    657Total derivatives
    
    
    
    
    
    $
    1,012
    
    
    $
    657
 Liability DerivativesFair ValueBalance Sheet
    
    
    April 4,
    
    
    January 3,Location
    
    
    2010
    
    
    2010Derivatives designated as hedging instruments:Foreign currency contracts
    
    Accrued Liabilities
    
    $
    
    
    
    $
    15Total derivatives
    
    
    
    
    
    $
    
    
    
    $
    15
  Amount of Gain (Loss)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gain (Loss) Recognized in IncomeRecognized in OCI on
    
    
    Gain (Loss) Reclassified from
    
    
    on Derivatives (Ineffective PortionDerivatives
    
    Derivatives (Effective
    
    
    Accumulated OCI into Income
    
    
    and Amount Excluded fromDesignated as
    
    Portion)
    
    
    (Effective Portion)
    
    
    Effectiveness Testing)Cash Flow
    
    Thirteen Weeks EndedHedging
    
    April 4,
    
    
    March 29,
    
    
    
    
    
    
    April 4,
    
    
    March 29,
    
    
    
    
    
    
    April 4,
    
    
    March 29,Instruments
    
    2010
    
    
    2009
    
    
    Location
    
    
    2010
    
    
    2009
    
    
    Location
    
    
    2010
    
    
    2009Foreign
currency contracts
    
    $
    270
    
    
    $
    357
    
    
    Cost of Services
    
    $
    205
    
    
    $
    (545
    )
    
    na
    
    $
    
    
    
    $
    
 13. Reclassifications
  14. Subsequent Events
   15




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
   at 
   16




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Critical Accounting Policies and Estimates
    17




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Results of Operations
  Thirteen Weeks EndedApril 4,
    
    
    March 29,
    
    
    Fav (Unfav)2010
    
    
    2009
    
    
    % ChangeNet Revenue
    
    $
    85,254
    
    
    $
    73,246
    
    
    
    16.4
    %Cost of Services:Direct labor
    
    
    45,202
    
    
    
    38,308
    
    
    
    (18.0
    )Other facility expenses
    
    
    19,606
    
    
    
    16,388
    
    
    
    (19.6
    )Total cost of services
    
    
    64,808
    
    
    
    54,696
    
    
    
    (18.5
    )Percentage of revenue
    
    
    76.0
    %
    
    
    74.7
    %
    
    
    Gross profit
    
    
    20,446
    
    
    
    18,550
    
    
    
    10.2Gross profit margin
    
    
    24.0
    %
    
    
    25.3
    %
    
    
    Operating Expenses:Selling, general and
administrative expenses
    
    
    8,147
    
    
    
    7,694
    
    
    
    (5.9
    )Legal settlement
    
    
    2,400
    
    
    
    4
    
    
    
    *Total operating expenses
    
    
    10,547
    
    
    
    7,698
    
    
    
    (37.0
    )Operating income
    
    
    9,899
    
    
    
    10,852
    
    
    
    (8.8
    )Other income
    
    
    (109
    )
    
    
    (7
    )
    
    
    1457.1Interest (income) expense
    
    
    (8
    )
    
    
    89
    
    
    
    109.0Income before income taxes
    
    
    10,016
    
    
    
    10,770
    
    
    
    (7.0
    )Income tax expense
    
    
    3,456
    
    
    
    151
    
    
    
    *Net income
    
    $
    6,560
    
    
    $
    10,619
    
    
    
    (38.2
    )%
 
 *
    
    Means that the percentage change is not meaningful Non-GAAP Financial Measures
     18




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Thirteen Weeks Ended (1)April 4,
    
    
    March 29,
    
    
    Fav (Unfav)2010
    
    
    2009
    
    
    % Change(Dollars in thousands except statistical data and notes)EBITDA (2)
    
    $
    13,120
    
    
    $
    13,688
    
    
    
    (4.1
    )%Statistical information:Number of customer care centers:Domestic
    
    
    10
    
    
    
    9International
    
    
    5
    
    
    
    4Total
    
    
    15
    
    
    
    13Number of workstations, end of period:Domestic
    
    
    6,260
    
    
    
    5,050International
    
    
    4,201
    
    
    
    3,594Total
    
    
    10,461
    
    
    
    8,644
 Notes to Non-GAAP Financial Measures
 (1)
    
    We operate on a thirteen-week fiscal quarter that ends on the Sunday closest to March 31.(2)
    
    We define EBITDA as net income plus income tax expense (benefit), depreciation and
amortization, and interest expense.    19




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Thirteen Weeks EndedApril 4,
    
    
    March 29,2010
    
    
    2009(Dollars in thousands)Net income
    
    $
    6,560
    
    
    $
    10,619Interest (income) expense
    
    
    (8
    )
    
    
    89Income tax expense
    
    
    3,456
    
    
    
    151Depreciation and amortization
    
    
    3,112
    
    
    
    2,829EBITDA
    
    $
    13,120
    
    
    $
    13,688
  20




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##### Table of Contents



Comparison of Results of Operations for the Thirteen Weeks Ended April 4, 2010 and March 29, 2009
         21




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##### Table of Contents



Liquidity and Capital Resources
  Thirteen Weeks EndedApril 4,
    
    
    March 29,2010
    
    
    2009(Dollars in thousands)Net cash provided by operating
activities
    
    $
    22,243
    
    
    $
    3,189Net cash used in investing activities
    
    
    (2,230
    )
    
    
    (3,370
    )Net cash used in financing activities
    
    
    (113
    )
    
    
    (43
    )Effect of exchange rate changes on
cash
    
    
    209
    
    
    
    407Net increase in cash and cash
equivalents
    
    $
    20,109
    
    
    $
    183
 Operating Activities
  Investing Activities
   22




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##### Table of Contents



Financing Activities
  Bank Financing
    Future Liquidity
    23




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##### Table of Contents



Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
   
 Item 4.
    
    Controls and Procedures
 Disclosure Controls and Procedures
  Internal Control Over Financial Reporting
  Inherent Limitations on the Effectiveness of Controls
    24




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##### Table of Contents



Part II. Other Information
 
 Item 1.
    
    Legal Proceedings
    
 Item 1A.
    
    Risk Factors
  
 Item 6.
    
    Exhibits
   25




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##### Table of Contents



SIGNATURES
  APAC Customer Services, Inc.Date: May 12, 2010
    By:
    /s/ Michael P. MarrowMichael P. MarrowPresident and Chief Executive Officer
(Principal Executive Officer)Date: May 12, 2010
    By:
    /s/ Andrew B. SzafranAndrew B. SzafranSenior Vice President and
Chief Financial Officer
(Principal Financial Officer)Date: May 12, 2010
    By:
    /s/ Joseph R. DoolanJoseph R. DoolanVice President and Controller
(Principal Accounting Officer)  26




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##### Table of Contents



Exhibit Index
 ExhibitNumber
    
    Description3.1
    
    
    Articles of Incorporation of APAC Customer Services, Inc.,
incorporated by reference to APAC Customer Services, Inc.s Annual
Report on Form 10-K for the fiscal year ended December 31, 2006.3.2
    
    
    Second Amended and Restated Bylaws of APAC Customer Services,
Inc., dated August 20, 2007, incorporated by reference to APAC
Customer Services, Inc.s Current Report on Form 8-K, dated August
22, 2007.4.1
    
    
    Specimen Common Stock Certificate, incorporated by reference to
APAC Customer Services, Inc.s Annual Report on Form 10-K for the
fiscal year ended December 28, 2008.31.1
    
    
    Certification of Chief Executive Officer, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.31.2
    
    
    Certification of Chief Financial Officer, as adopted pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002.32.1
    
    
    Certification of the Chief Executive Officer and Chief Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002.
  27