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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 September 27, 2009
 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 
incorporation or organization)
    
    (I.R.S. Employer Identification No.)
 Bannockburn Lake Office Plaza 1, 2333 Waukegan Road, Suite 100, Bannockburn, Illinois 60015
 (847) 374-4980
  þ o
  o o
  Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer* o
    
    Smaller reporting company o(*Do not check if a smaller reporting company)
  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 September 27, 2009 and
December 28, 2008
    
    
    
    
    
    
    5Condensed Consolidated Statements of Operations for the Thirteen and
Thirty-Nine Weeks Ended September 27, 2009 and September 28, 2008
    
    
    
    
    
    
    6Condensed Consolidated Statements of Cash Flows for the Thirty-Nine
Weeks Ended September 27, 2009 and September 28, 2008
    
    
    
    
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    
    
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    
    
    
    
    19Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    
    
    
    
    29Item 4. Controls and Procedures
    
    
    
    
    
    
    29Part II. Other Information
    
    
    
    
    
    
    30Item 1. Legal Proceedings
    
    
    
    
    
    
    30Item 1A. Risk Factors
    
    
    
    
    
    
    30Item 6. Exhibits
    
    
    
    
    
    
    30Exhibit 31.1Exhibit 31.2Exhibit 32.1
   2




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Forward-Looking Statements and Factors That May Affect Future Results
      
    
    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 business may be affected by the performance of our clients and general economic conditions.
    
    Our financial results depend on our ability to effectively manage our production capacity and our workforce.
    
    Our success is subject to the terms of our client contracts.
    
    Our success depends on our ability to sustain profitability.
    
    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
foreign currency fluctuations.
    
    Our principal shareholder can exercise significant control over us.
    
    Our success depends on key personnel.
    
    We operate in a highly competitive environment.
    
    Circumstances outside our control such as typhoons, 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 off-shore business.
    
    Our inability to attract and retain a sufficient number of qualified employees could negatively impact our business.
    
    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.
  3




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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)
 September 27,
    
    
    December 28,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    16,176
    
    
    $
    618Accounts receivable, net
    
    
    36,648
    
    
    
    31,547Other current assets
    
    
    5,027
    
    
    
    3,515Total current assets
    
    
    57,851
    
    
    
    35,680Property and equipment, net
    
    
    23,855
    
    
    
    22,664Goodwill
    
    
    13,338
    
    
    
    13,338Other intangible assets, net
    
    
    1,630
    
    
    
    3,434Other assets
    
    
    1,520
    
    
    
    1,448Total assets
    
    $
    98,194
    
    
    $
    76,564LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Short-term debt
    
    $
    
    
    
    $
    6,100Accounts payable
    
    
    2,321
    
    
    
    1,641Income taxes payable
    
    
    623
    
    
    
    253Accrued payroll and related items
    
    
    20,150
    
    
    
    18,727Accrued liabilities
    
    
    7,619
    
    
    
    10,508Total current liabilities
    
    
    30,713
    
    
    
    37,229Other liabilities
    
    
    3,220
    
    
    
    3,915Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Common shares, $0.01 per share; authorized 200,000,000 shares;
52,028,563 shares issued and outstanding at September 27, 2009,
and 50,783,312 shares issued and 50,782,353 shares outstanding
at December 28, 2008
    
    
    520
    
    
    
    509Additional paid-in capital
    
    
    107,277
    
    
    
    104,517Accumulated deficit
    
    
    (44,797
    )
    
    
    (69,741
    )Accumulated other comprehensive income
    
    
    1,261
    
    
    
    136Treasury shares: 0 and 959 shares at cost at September 27, 2009, and
December 28, 2008, respectively
    
    
    
    
    
    
    (1
    )Total shareholders equity
    
    
    64,261
    
    
    
    35,420Total liabilities and shareholders equity
    
    $
    98,194
    
    
    $
    76,564
   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 Ended
    
    
    Thirty-Nine Weeks EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenue
    
    $
    68,360
    
    
    $
    59,243
    
    
    $
    207,648
    
    
    $
    183,470Cost of services
    
    
    54,195
    
    
    
    49,172
    
    
    
    159,529
    
    
    
    154,896Gross profit
    
    
    14,165
    
    
    
    10,071
    
    
    
    48,119
    
    
    
    28,574Operating expenses:Selling, general and administrative
expenses
    
    
    7,518
    
    
    
    7,187
    
    
    
    22,868
    
    
    
    23,582Restructuring and other charges:Restructuring charges (reversals)
    
    
    (29
    )
    
    
    54
    
    
    
    (51
    )
    
    
    34Other severance charges
(reversals)
    
    
    20
    
    
    
    562
    
    
    
    (7
    )
    
    
    3,360Total operating expenses
    
    
    7,509
    
    
    
    7,803
    
    
    
    22,810
    
    
    
    26,976Operating income
    
    
    6,656
    
    
    
    2,268
    
    
    
    25,309
    
    
    
    1,598Other income
    
    
    (15
    )
    
    
    (129
    )
    
    
    (45
    )
    
    
    (303
    )Interest (income) expense, net
    
    
    (60
    )
    
    
    359
    
    
    
    (18
    )
    
    
    3,954Income (loss) before income taxes
    
    
    6,731
    
    
    
    2,038
    
    
    
    25,372
    
    
    
    (2,053
    )Income tax expense
    
    
    143
    
    
    
    33
    
    
    
    429
    
    
    
    33Net income (loss)
    
    $
    6,588
    
    
    $
    2,005
    
    
    $
    24,943
    
    
    $
    (2,086
    )Net income (loss) per share:Basic
    
    $
    0.13
    
    
    $
    0.04
    
    
    $
    0.49
    
    
    $
    (0.04
    )Diluted
    
    $
    0.12
    
    
    $
    0.04
    
    
    $
    0.46
    
    
    $
    (0.04
    )Weighted average number of shares
outstanding:Basic
    
    
    51,835
    
    
    
    50,486
    
    
    
    51,352
    
    
    
    50,367Diluted
    
    
    55,199
    
    
    
    51,160
    
    
    
    53,962
    
    
    
    50,367
   6




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (Unaudited)
 Thirty-Nine Weeks EndedSeptember 27,
    
    
    September 28,2009
    
    
    2008Operating activities:Net income (loss)
    
    $
    24,943
    
    
    $
    (2,086
    )Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Depreciation and amortization
    
    
    8,711
    
    
    
    9,239Non-cash restructuring charges
    
    
    
    
    
    
    14Stock compensation expense
    
    
    509
    
    
    
    1,082Amortized gain on sale leaseback
    
    
    (70
    )
    
    
    (95
    )Loss on sale of property and equipment
    
    
    7
    
    
    
    193Non-cash warrant issuances
    
    
    
    
    
    
    215Income taxes payable
    
    
    370
    
    
    
    33Change in operating assets and liabilities
    
    
    (8,239
    )
    
    
    8,646Net cash provided by operating activities
    
    
    26,231
    
    
    
    17,241Investing activities:Purchases of property and equipment, net
    
    
    (7,965
    )
    
    
    (3,137
    )Net proceeds from sale of property and equipment
    
    
    1
    
    
    
    57Net cash used in investing activities
    
    
    (7,964
    )
    
    
    (3,080
    )Financing activities:Net payments on long-term debt
    
    
    
    
    
    
    (14,000
    )Net (payments) borrowings under revolving credit facility
    
    
    (6,100
    )
    
    
    1,499Payments of financing costs
    
    
    
    
    
    
    (984
    )Stock option transactions, including related excess income tax
benefits
    
    
    2,264
    
    
    
    197Net cash used in financing activities
    
    
    (3,836
    )
    
    
    (13,288
    )Effect of exchange rate changes on cash
    
    
    1,127
    
    
    
    (1,847
    )Net increase (decrease) in cash and cash equivalents
    
    
    15,558
    
    
    
    (974
    )Cash and cash equivalents:Beginning balance
    
    
    618
    
    
    
    1,426Ending balance
    
    $
    16,176
    
    
    $
    452
   7




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APAC
CUSTOMER SERVICES, INC. AND SUBSIDIARIES
 
 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 (Unaudited)
(Dollars in thousands, except as otherwise indicated)
 1. Basis of Presentation and Principles of Consolidation
  http://www.sec.gov
  2. New Accounting Pronouncements
   8




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
       9




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
    3. Accrued Liabilities
  September 27,
    
    
    December 28,2009
    
    
    2008Accrued professional fees
    
    $
    1,213
    
    
    $
    767Deferred rent
    
    
    1,061
    
    
    
    1,071Accrued workers compensation
    
    
    978
    
    
    
    1,536Accrued telecom
    
    
    606
    
    
    
    163Accrued severance
    
    
    409
    
    
    
    1,372Accrued property tax
    
    
    132
    
    
    
    256Recognized / unrecognized loss on derivative contracts
    
    
    11
    
    
    
    954Other
    
    
    3,209
    
    
    
    4,389Total
    
    $
    7,619
    
    
    $
    10,508
  10




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
 4. Goodwill and Other Intangible Assets
   5. Accounting for Stock-Based Compensation
    Number of SharesOutstanding on December 28, 2008
    
    
    53,000Granted
    
    
    Issued
    
    
    (28,000
    )Forfeited
    
    
    Expired
    
    
    Outstanding on September 27, 2009
    
    
    25,000
   11




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
  Weighted AverageNumber of
    
    
    Grant Price Range
    
    Exercise Price
    
    
    AggregateOptions
    
    

Per
Share
    

Per Share
    
    
    Intrinsic ValueOutstanding on December 28, 2008
    
    
    6,514,639
    
    
    $0.79  $11.63
    
    $
    1.98Granted
    
    
    890,824
    
    
    1.38    5.82
    
    
    3.99Exercised
    
    
    (978,339
    )
    
    0.86    5.84
    
    
    2.32Forfeited
    
    
    (91,224
    )
    
    1.38    3.39
    
    
    1.94Expired
    
    
    (98,350
    )
    
    1.35   10.97
    
    
    4.42Outstanding on September 27, 2009
    
    
    6,237,550
    
    
    $0.79  $11.63
    
    $
    2.17
    
    
    $
    24,455Exercisable on September 27, 2009
    
    
    2,658,866
    
    
    $0.79  $11.63
    
    $
    2.33
    
    
    $
    10,063
  6. Comprehensive Income (Loss)
  Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    6,588
    
    
    $
    2,005
    
    
    $
    24,943
    
    
    $
    (2,086
    )Foreign currency translation adjustment
    
    
    121
    
    
    
    (374
    )
    
    
    17
    
    
    
    (1,127
    )Unrealized gain (loss) on derivative
contracts
    
    
    494
    
    
    
    160
    
    
    
    1,108
    
    
    
    (2,102
    )Total comprehensive income (loss)
    
    $
    7,203
    
    
    $
    1,791
    
    
    $
    26,068
    
    
    $
    (5,315
    )
     12




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
  7. Legal Proceedings
    8. Debt
   13




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
         14




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
     9. Restructuring and Other Charges
   15




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
    10. Income Taxes
     16




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
  Net Operating LossExpiration
    
    Carryforward2025
    
    $
    10,3652026
    
    
    9,2272027
    
    
    12,7522028
    
    
    208$
    32,552
 11. Earnings Per Share
  Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except earnings per share)Net income (loss)
    
    $
    6,588
    
    
    $
    2,005
    
    
    $
    24,943
    
    
    $
    (2,086
    )Shares used in basic per share calculation
    
    
    51,835
    
    
    
    50,486
    
    
    
    51,352
    
    
    
    50,367Effects of dilutive securitiesStock options
    
    
    3,339
    
    
    
    605
    
    
    
    2,585
    
    
    
    Non-vested stock
    
    
    25
    
    
    
    69
    
    
    
    25
    
    
    
    Shares used in diluted per share calculation
    
    
    55,199
    
    
    
    51,160
    
    
    
    53,962
    
    
    
    50,367Net income (loss) per share:Basic
    
    $
    0.13
    
    
    $
    0.04
    
    
    $
    0.49
    
    
    $
    (0.04
    )Diluted
    
    $
    0.12
    
    
    $
    0.04
    
    
    $
    0.46
    
    
    $
    (0.04
    )
 12. 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.
  17




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
(Dollars in thousands, except as otherwise indicated)
  Fair Value Measurements at June 28, 2009Level 1
    
    
    Level 2
    
    
    Level 3Cash equivalents(1)
    
    $
    16,176
    
    
    $
    
    
    
    $
    Foreign currency contracts, net asset(2)
    
    $
    
    
    
    $
    661
    
    
    $
    Non-current investments(3)
    
    $
    126
    
    
    $
    
    
    
    $
    
  (1)
    
    Cash equivalents: The carrying amount of these items approximates fair value at period end.(2)
    
    Foreign currency 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.(3)
    
    Non-current investments: The carrying amount of these items, which represent Philippine
treasury bills, approximates fair value at period end and is recorded as a component of other
assets on the Companys balance sheet.  13. Reclassifications
  14. Subsequent Events
   18




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
      19




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Critical Accounting Policies and Estimates
    20




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Results of Operations
  Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedSeptember 27,
    
    
    September 28,
    
    
    Fav (Unfav)
    
    
    September 27,
    
    
    September 28,
    
    
    Fav (Unfav)2009
    
    
    2008
    
    

% Change
    
    
    2009
    
    
    2008
    
    

% ChangeNet Revenue
    
    $
    68,360
    
    
    $
    59,243
    
    
    
    15.4
    %
    
    $
    207,648
    
    
    $
    183,470
    
    
    
    13.2
    %Cost of Services:Direct labor
    
    
    37,648
    
    
    
    34,239
    
    
    
    (10.0
    )
    
    
    110,168
    
    
    
    106,218
    
    
    
    (3.7
    )Other facility expenses
    
    
    16,547
    
    
    
    14,933
    
    
    
    (10.8
    )
    
    
    49,361
    
    
    
    48,678
    
    
    
    (1.4
    )Total cost of services
    
    
    54,195
    
    
    
    49,172
    
    
    
    (10.2
    )
    
    
    159,529
    
    
    
    154,896
    
    
    
    (3.0
    )Percentage of revenue
    
    
    79.3
    %
    
    
    83.0
    %
    
    
    
    
    
    
    76.8
    %
    
    
    84.4
    %
    
    
    Gross profit
    
    
    14,165
    
    
    
    10,071
    
    
    
    40.7
    
    
    
    48,119
    
    
    
    28,574
    
    
    
    68.4Gross profit margin
    
    
    20.7
    %
    
    
    17.0
    %
    
    
    
    
    
    
    23.2
    %
    
    
    15.6
    %
    
    
    Operating Expenses:Selling, general &
administrative expenses
    
    
    7,518
    
    
    
    7,187
    
    
    
    (4.6
    )
    
    
    22,868
    
    
    
    23,582
    
    
    
    3.0Restructuring and other
charges (reversals)
    
    
    (9
    )
    
    
    616
    
    
    
    101.5
    
    
    
    (58
    )
    
    
    3,394
    
    
    
    101.7Total operating expenses
    
    
    7,509
    
    
    
    7,803
    
    
    
    3.8
    
    
    
    22,810
    
    
    
    26,976
    
    
    
    15.4Operating income
    
    
    6,656
    
    
    
    2,268
    
    
    
    193.5
    
    
    
    25,309
    
    
    
    1,598
    
    
    
    *Other income
    
    
    (15
    )
    
    
    (129
    )
    
    
    (88.4
    )
    
    
    (45
    )
    
    
    (303
    )
    
    
    (85.1
    )Interest (income) expense, net
    
    
    (60
    )
    
    
    359
    
    
    
    116.7
    
    
    
    (18
    )
    
    
    3,954
    
    
    
    100.5Income (loss) before income
taxes
    
    
    6,731
    
    
    
    2,038
    
    
    
    230.3
    
    
    
    25,372
    
    
    
    (2,053
    )
    
    
    *Income tax expense
    
    
    143
    
    
    
    33
    
    
    
    (333.3
    )
    
    
    429
    
    
    
    33
    
    
    
    *Net income (loss)
    
    $
    6,588
    
    
    $
    2,005
    
    
    
    228.6
    %
    
    $
    24,943
    
    
    $
    (2,086
    )
    
    
    *
 
 *
    
    Means that the percentage change is not meaningful Non-GAAP Financial Measures
     21




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##### Table of Contents



Thirteen Weeks Ended (1)
    
    
    Thirty-Nine Weeks EndedSeptember 27,
    
    
    September 28,
    
    
    Fav (Unfav)
    
    
    September 27,
    
    
    September 28,
    
    
    Fav (Unfav)2009
    
    
    2008
    
    

% Change
    
    
    2009
    
    
    2008
    
    
    % Change(Dollars in thousands except statistical data and notes)EBITDA (2)
    
    $
    9,600
    
    
    $
    5,214
    
    
    
    84.1
    %
    
    $
    34,065
    
    
    $
    11,140
    
    
    
    205.8
    %Statistical information:Number of customer care centers:Domestic
    
    
    9
    
    
    
    9
    
    
    
    
    
    
    
    9
    
    
    
    9Off-shore
    
    
    4
    
    
    
    3
    
    
    
    
    
    
    
    4
    
    
    
    3Total
    
    
    13
    
    
    
    12
    
    
    
    
    
    
    
    13
    
    
    
    12Number of workstations,
end of period:Domestic
    
    
    5,174
    
    
    
    4,486
    
    
    
    
    
    
    
    5,174
    
    
    
    4,486Off-shore
    
    
    3,647
    
    
    
    3,275
    
    
    
    
    
    
    
    3,647
    
    
    
    3,275Total
    
    
    8,821
    
    
    
    7,761
    
    
    
    
    
    
    
    8,821
    
    
    
    7,761
 Notes to Non-GAAP Financial Measures
 (1)
    
    We operate on a thirteen-week fiscal quarter that ends on the Sunday closest to September 30.(2)
    
    We define EBITDA as net income (loss) plus income tax expense (benefit), depreciation and
amortization, and interest expense.    22




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##### Table of Contents



Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedSeptember 27,
    
    
    September 28,
    
    
    September 27,
    
    
    September 28,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Net income (loss)
    
    $
    6,588
    
    
    $
    2,005
    
    
    $
    24,943
    
    
    $
    (2,086
    )Interest (income) expense, net
    
    
    (60
    )
    
    
    359
    
    
    
    (18
    )
    
    
    3,954Income tax expense
    
    
    143
    
    
    
    33
    
    
    
    429
    
    
    
    33Depreciation and amortization
    
    
    2,929
    
    
    
    2,817
    
    
    
    8,711
    
    
    
    9,239EBITDA
    
    $
    9,600
    
    
    $
    5,214
    
    
    $
    34,065
    
    
    $
    11,140
  23




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##### Table of Contents



Comparison of Results of Operations for the Thirteen Weeks Ended September 27, 2009 and
September 28, 2008
         24




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##### Table of Contents



Comparison of Results of Operations for the Thirty-nine Weeks Ended September 27, 2009 and
September 28, 2008
      25




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26




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##### Table of Contents



Liquidity and Capital Resources
  Thirty-Nine Weeks EndedSeptember 27,
    
    
    September 28,2009
    
    
    2008(Dollars in thousands)Net cash provided by operating activities
    
    $
    26,231
    
    
    $
    17,241Net cash used in investing activities
    
    
    (7,964
    )
    
    
    (3,080
    )Net cash used in financing activities
    
    
    (3,836
    )
    
    
    (13,288
    )Effect of exchange rate changes on cash
    
    
    1,127
    
    
    
    (1,847
    )Net increase
(decrease) in cash and cash equivalents
    
    $
    15,558
    
    
    $
    (974
    )
 Operating Activities
  Investing Activities
   Financing Activities
    27




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Bank Financing
      Future Liquidity
    28




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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
    29




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##### Table of Contents



Part II. Other Information
 
 Item 1. Legal Proceedings
  
 Item 1A. Risk Factors
  
 Item 6. Exhibits
   30




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##### Table of Contents



SIGNATURES
  APAC Customer Services, Inc.Date: November 4, 2009
    By:
    /s/ Michael P. MarrowMichael P. MarrowPresident and
Chief Executive Officer
(Principal Executive Officer)Date: November 4, 2009
    By:
    /s/ Andrew B. SzafranAndrew B. SzafranSenior Vice President and
Chief Financial Officer
(Principal Financial Officer)Date: November 4, 2009
    By:
    /s/ Joseph R. DoolanJoseph R. DoolanVice President and Controller
(Principal Accounting Officer)  31




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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.
  32