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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 June 28, 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
    
    (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
    
    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 June 28, 2009 and
December 28, 2008
    
    
    5Condensed Consolidated Statements of Operations for the
Thirteen and
Twenty-Six Weeks Ended June 28, 2009 and June 29, 2008
    
    
    6Condensed Consolidated Statements of Cash Flows for the Twenty-Six Weeks Ended June 28, 2009 and June 29, 2008
    
    
    7Notes to Condensed Consolidated Financial Statements
    
    
    8Item 2. Managements Discussion and Analysis of Financial Condition and Results
of Operations
    
    
    18Item 3. Quantitative and Qualitative Disclosures About Market Risk
    
    
    28Item 4. Controls and Procedures
    
    
    28Part II. Other Information
    
    
    29Item 1. Legal Proceedings
    
    
    29Item 1A. Risk Factors
    
    
    29Item 4. Submission of Matters to a Vote of Security Holders
    
    
    29Item 6. Exhibits
    
    
    29Exhibit 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.
  3




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
    
    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.
    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)
 June 28,
    
    
    December 28,2009
    
    
    2008(Unaudited)ASSETSCurrent assets:Cash and cash equivalents
    
    $
    9,605
    
    
    $
    618Accounts receivable, net
    
    
    32,166
    
    
    
    31,547Other current assets
    
    
    4,991
    
    
    
    3,515Total current assets
    
    
    46,762
    
    
    
    35,680Property and equipment, net
    
    
    23,535
    
    
    
    22,664Goodwill
    
    
    13,338
    
    
    
    13,338Other intangible assets, net
    
    
    2,230
    
    
    
    3,434Other assets
    
    
    1,547
    
    
    
    1,448Total assets
    
    $
    87,412
    
    
    $
    76,564LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Short-term debt
    
    $
    
    
    
    $
    6,100Accounts payable
    
    
    1,324
    
    
    
    1,641Income taxes payable
    
    
    535
    
    
    
    253Accrued payroll and related items
    
    
    17,674
    
    
    
    18,727Accrued liabilities
    
    
    8,388
    
    
    
    10,508Total current liabilities
    
    
    27,921
    
    
    
    37,229Other liabilities
    
    
    3,216
    
    
    
    3,915Commitments and contingencies
    
    
    
    
    
    
    Shareholders equity:Common shares, $0.01 per share; authorized 200,000,000 shares;
51,786,702 shares issued and 51,785,743 shares outstanding
at June 28, 2009, and 50,783,312 shares issued and 50,782,353
shares outstanding at December 28, 2008
    
    
    518
    
    
    
    509Additional paid-in capital
    
    
    106,503
    
    
    
    104,517Accumulated deficit
    
    
    (51,385
    )
    
    
    (69,741
    )Accumulated other comprehensive income
    
    
    645
    
    
    
    136Treasury shares: 959 and 959 shares at cost at June 28, 2009, and
December 28, 2008, respectively
    
    
    (6
    )
    
    
    (1
    )Total shareholders equity
    
    
    56,275
    
    
    
    35,420Total liabilities and shareholders equity
    
    $
    87,412
    
    
    $
    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
    
    
    Twenty-Six Weeks EndedJune 28,
    
    
    June 29,
    
    
    June 28,
    
    
    June 29,2009
    
    
    2008
    
    
    2009
    
    
    2008Net revenue
    
    $
    66,042
    
    
    $
    60,710
    
    
    $
    139,288
    
    
    $
    124,227Cost of services
    
    
    50,638
    
    
    
    49,978
    
    
    
    105,334
    
    
    
    105,724Gross profit
    
    
    15,404
    
    
    
    10,732
    
    
    
    33,954
    
    
    
    18,503Operating expenses:Selling, general and administrative
expenses
    
    
    7,596
    
    
    
    7,827
    
    
    
    15,350
    
    
    
    16,395Restructuring and other charges:Restructuring charges (reversals)
    
    
    
    
    
    
    (23
    )
    
    
    (22
    )
    
    
    (20
    )Other severance charges (reversals)
    
    
    7
    
    
    
    460
    
    
    
    (27
    )
    
    
    2,798Total operating expenses
    
    
    7,603
    
    
    
    8,264
    
    
    
    15,301
    
    
    
    19,173Operating income (loss)
    
    
    7,801
    
    
    
    2,468
    
    
    
    18,653
    
    
    
    (670
    )Other income
    
    
    (23
    )
    
    
    (142
    )
    
    
    (30
    )
    
    
    (174
    )Interest (income) expense, net
    
    
    (47
    )
    
    
    2,673
    
    
    
    42
    
    
    
    3,595Income (loss) before income taxes
    
    
    7,871
    
    
    
    (63
    )
    
    
    18,641
    
    
    
    (4,091
    )Income tax provision
    
    
    135
    
    
    
    
    
    
    
    286
    
    
    
    Net income (loss)
    
    $
    7,736
    
    
    $
    (63
    )
    
    $
    18,355
    
    
    $
    (4,091
    )Net income (loss) per share:Basic
    
    $
    0.15
    
    
    $
    (0.00
    )
    
    $
    0.36
    
    
    $
    (0.08
    )Diluted
    
    $
    0.14
    
    
    $
    (0.00
    )
    
    $
    0.34
    
    
    $
    (0.08
    )Weighted average number of shares
outstanding:Basic
    
    
    51,404
    
    
    
    50,393
    
    
    
    51,111
    
    
    
    50,307Diluted
    
    
    54,567
    
    
    
    50,393
    
    
    
    53,241
    
    
    
    50,307
   6




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APAC CUSTOMER SERVICES, INC. AND SUBSIDIARIES
 
 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 (Dollars in thousands)
 (Unaudited)
 Twenty-Six Weeks EndedJune 28,
    
    
    June 29,2009
    
    
    2008Operating activities:Net income (loss)
    
    $
    18,355
    
    
    $
    (4,091
    )Adjustments to reconcile net income (loss) to net cash provided
by operating activities:Depreciation and amortization
    
    
    5,782
    
    
    
    6,422Stock compensation expense
    
    
    219
    
    
    
    844Amortized gain on sale leaseback
    
    
    (47
    )
    
    
    (63
    )Gain on sale of property and equipment
    
    
    (1
    )
    
    
    (1
    )Non-cash warrant issuances
    
    
    
    
    
    
    215Income taxes payable
    
    
    283
    
    
    
    Change in operating assets and liabilities
    
    
    (6,489
    )
    
    
    11,137Net cash provided by operating activities
    
    
    18,102
    
    
    
    14,463Investing activities:Purchases of property and equipment, net
    
    
    (5,467
    )
    
    
    (2,786
    )Net proceeds from sale of property and equipment
    
    
    1
    
    
    
    8Net cash used in investing activities
    
    
    (5,466
    )
    
    
    (2,778
    )Financing activities:Net payments on long-term debt
    
    
    
    
    
    
    (14,000
    )Net (payments) borrowings under revolving credit facility
    
    
    (6,100
    )
    
    
    5,436Payments of financing costs
    
    
    
    
    
    
    (947
    )Stock option transactions, including related excess income tax benefits
    
    
    1,771
    
    
    
    82Net cash used in financing activities
    
    
    (4,329
    )
    
    
    (9,429
    )Effect of exchange rate change on cash
    
    
    680
    
    
    
    (2,049
    )Net increase in cash and cash equivalents
    
    
    8,987
    
    
    
    207Cash and cash equivalents:Beginning balance
    
    
    618
    
    
    
    1,426Ending balance
    
    $
    9,605
    
    
    $
    1,633
   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
  June 28,
    
    
    December 28,2009
    
    
    2008Accrued workers compensation
    
    $
    1,407
    
    
    $
    1,536Deferred rent
    
    
    1,086
    
    
    
    1,071Accrued professional fees
    
    
    976
    
    
    
    767Accrued severance
    
    
    612
    
    
    
    1,372Accrued telecom
    
    
    487
    
    
    
    163Accrued property tax
    
    
    209
    
    
    
    256Recognized / unrecognized loss on derivative contracts
    
    
    106
    
    
    
    954Other
    
    
    3,505
    
    
    
    4,389Total
    
    $
    8,388
    
    
    $
    10,508
 4. Goodwill and Other Intangible Assets
   5. Accounting for Stock-Based Compensation
   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)
   Number of SharesOutstanding on December 28, 2008
    
    
    53,000Granted
    
    
    Issued
    
    
    (28,000
    )Forfeited
    
    
    Expired
    
    
    Outstanding on June 28, 2009
    
    
    25,000
   Weighted AverageNumber of
    
    
    Grant Price Range Per
    

    Exercise Price Per
    
    
    AggregateOptions
    
    
    Share
    
    Share
    
    

Intrinsic ValueOutstanding on December 28, 2008
    
    
    6,066,016
    
    
    $0.79 - $11.63
    
    $
    1.88Granted
    
    
    594,034
    
    
    1.38 - 5.53
    
    
    3.36Exercised
    
    
    (735,519
    )
    
    0.86 - 5.64
    
    
    2.42Forfeited
    
    
    (91,224
    )
    
    1.38 - 3.39
    
    
    1.94Expired
    
    
    (98,350
    )
    
    1.35 - 10.97
    
    
    4.42Outstanding on June 28, 2009
    
    
    5,734,957
    
    
    $0.79 -  $11.63
    
    $
    1.93
    
    
    $
    18,831Exercisable on June 28, 2009
    
    
    2,273,673
    
    
    $0.79 - $11.63
    
    $
    2.18
    
    
    $
    6,959
   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)
 6. Comprehensive Income (Loss)
  Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedJune 28,
    
    
    June 29,
    
    
    June 28,
    
    
    June 29,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income (loss)
    
    $
    7,736
    
    
    $
    (63
    )
    
    $
    18,355
    
    
    $
    (4,091
    )Foreign currency translation adjustment
    
    
    19
    
    
    
    (701
    )
    
    
    (104
    )
    
    
    (753
    )Unrealized gain (loss) on derivative contracts
    
    
    257
    
    
    
    (1,526
    )
    
    
    614
    
    
    
    (2,262
    )Total comprehensive income (loss)
    
    $
    8,012
    
    
    $
    (2,290
    )
    
    $
    18,865
    
    
    $
    (7,106
    )
     7. Legal Proceedings
   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)
   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
 Severance Charges
   10. Income Taxes
    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)
   Net Operating LossExpiration
    
    Carryforward2025
    
    $
    10,1092026
    
    
    9,1872027
    
    
    12,823$
    32,119
 11. Earnings Per Share
  Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedJune 28,
    
    
    June 29,
    
    
    June 28,
    
    
    June 29,2009
    
    
    2008
    
    
    2009
    
    
    2008(In thousands, except earnings per share)Net income
(loss)
    
    $
    7,736
    
    
    $
    (63
    )
    
    $
    18,355
    
    
    $
    (4,091
    )Shares used in basic per share calculation
    
    
    51,404
    
    
    
    50,393
    
    
    
    51,111
    
    
    
    50,307Effects of
dilutive securities:Stock options
    
    
    3,138
    
    
    
    
    
    
    
    2,105
    
    
    
    Non-vested stock
    
    
    25
    
    
    
    
    
    
    
    25
    
    
    
    Shares used in diluted per share calculation
    
    
    54,567
    
    
    
    50,393
    
    
    
    53,241
    
    
    
    50,307Net income (loss) per share:Basic
    
    $
    0.15
    
    
    $
    (0.00
    )
    
    $
    0.36
    
    
    $
    (0.08
    )Diluted
    
    $
    0.14
    
    
    $
    (0.00
    )
    
    $
    0.34
    
    
    $
    (0.08
    )
  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)
 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.
  Fair Value Measurements at June 28, 2009Level 1
    
    
    Level 2
    
    
    Level 3Cash and cash equivalents(1)
    
    $
    9,605
    
    
    $
    
    
    
    $
    Foreign currency contracts, net asset(2)
    
    $
    
    
    
    $
    187
    
    
    $
    
  (1)
    
    Cash and 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.  13. Reclassifications
  14. Subsequent Events
   17




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Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
  Overview
     18




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Critical Accounting Policies and Estimates
    19




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Results of Operations
  Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedJune 28,
    
    
    June 29,
    
    
    Fav (Unfav)
    
    
    June 28,
    
    
    June 29,
    
    
    Fav (Unfav)2009
    
    
    2008
    
    
    %   Change
    
    
    2009
    
    
    2008
    
    
    %    ChangeNet Revenue
    
    $
    66,042
    
    
    $
    60,710
    
    
    
    8.8
    %
    
    $
    139,288
    
    
    $
    124,227
    
    
    
    12.1
    %Cost of Services:Direct labor
    
    
    34,212
    
    
    
    34,449
    
    
    
    0.7
    
    
    
    72,520
    
    
    
    71,979
    
    
    
    (0.8
    )Other facility expenses
    
    
    16,426
    
    
    
    15,529
    
    
    
    (5.8
    )
    
    
    32,814
    
    
    
    33,745
    
    
    
    2.8Total cost of services
    
    
    50,638
    
    
    
    49,978
    
    
    
    (1.3
    )
    
    
    105,334
    
    
    
    105,724
    
    
    
    0.4Percentage of revenue
    
    
    76.7
    %
    
    
    82.3
    %
    
    
    
    
    
    
    75.6
    %
    
    
    85.1
    %
    
    
    Gross profit
    
    
    15,404
    
    
    
    10,732
    
    
    
    43.5
    
    
    
    33,954
    
    
    
    18,503
    
    
    
    83.5Gross profit margin
    
    
    23.3
    %
    
    
    17.7
    %
    
    
    
    
    
    
    24.4
    %
    
    
    14.9
    %
    
    
    Operating Expenses:Selling, general &
administrative expenses
    
    
    7,596
    
    
    
    7,827
    
    
    
    3.0
    
    
    
    15,350
    
    
    
    16,395
    
    
    
    6.4Restructuring and other
charges (reversals)
    
    
    7
    
    
    
    437
    
    
    
    98.4
    
    
    
    (49
    )
    
    
    2,778
    
    
    
    101.8Total operating expenses
    
    
    7,603
    
    
    
    8,264
    
    
    
    8.0
    
    
    
    15,301
    
    
    
    19,173
    
    
    
    20.2Operating income (loss)
    
    
    7,801
    
    
    
    2,468
    
    
    
    216.1
    
    
    
    18,653
    
    
    
    (670
    )
    
    
    *Other income
    
    
    (23
    )
    
    
    (142
    )
    
    
    (83.8
    )
    
    
    (30
    )
    
    
    (174
    )
    
    
    (82.8
    )Interest (income) expense, net
    
    
    (47
    )
    
    
    2,673
    
    
    
    101.8
    
    
    
    42
    
    
    
    3,595
    
    
    
    98.8Income (loss) before income taxes
    
    
    7,871
    
    
    
    (63
    )
    
    
    *
    
    
    
    18,641
    
    
    
    (4,091
    )
    
    
    555.7Income tax provision
    
    
    135
    
    
    
    
    
    
    
    *
    
    
    
    286
    
    
    
    
    
    
    
    *Net income (loss)
    
    $
    7,736
    
    
    $
    (63
    )
    
    
    *
    
    
    $
    18,355
    
    
    $
    (4,091
    )
    
    
    548.7
    %
 
 *
    
    Means that the percentage change is not meaningful Non-GAAP Financial Measures
     20




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Thirteen Weeks Ended (1)
    
    
    Twenty-Six Weeks EndedJune 28,
    
    
    June 29,
    
    
    Fav (Unfav)
    
    
    June 28,
    
    
    June 29,
    
    
    Fav (Unfav)2009
    
    
    2008
    
    
    %   Change
    
    
    2009
    
    
    2008
    
    
    %    Change(Dollars in thousands except statistical data and notes)EBITDA (2)
    
    $
    10,777
    
    
    $
    5,561
    
    
    
    93.8
    %
    
    $
    24,465
    
    
    $
    5,926
    
    
    
    312.8
    %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
    
    
    5,177
    
    
    
    4,655
    
    
    
    
    
    
    
    5,177
    
    
    
    4,655Off-shore
    
    
    3,486
    
    
    
    3,259
    
    
    
    
    
    
    
    3,486
    
    
    
    3,259Total
    
    
    8,663
    
    
    
    7,914
    
    
    
    
    
    
    
    8,663
    
    
    
    7,914
 Notes to Non-GAAP Financial Measures
 (1)

We operate on a thirteen-week fiscal quarter that ends on the Sunday closest to June 30.(2)

We define EBITDA as net income (loss) plus the provision (benefit) for income taxes,
depreciation and amortization, and interest expense.
   21




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##### Table of Contents



Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedJune 28,
    
    
    June 29,
    
    
    June 28,
    
    
    June 29,2009
    
    
    2008
    
    
    2009
    
    
    2008(Dollars in thousands)Net income (loss)
    
    $
    7,736
    
    
    $
    (63
    )
    
    $
    18,355
    
    
    $
    (4,091
    )Interest (income) expense, net
    
    
    (47
    )
    
    
    2,673
    
    
    
    42
    
    
    
    3,595Income tax provision
    
    
    135
    
    
    
    
    
    
    
    286
    
    
    
    Depreciation and amortization
    
    
    2,953
    
    
    
    2,951
    
    
    
    5,782
    
    
    
    6,422EBITDA
    
    $
    10,777
    
    
    $
    5,561
    
    
    $
    24,465
    
    
    $
    5,926
  22




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##### Table of Contents



Comparison of Results of Operations for the Thirteen Weeks Ended June 28, 2009 and June 29, 2008
          23




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##### Table of Contents



Comparison of Results of Operations for the Twenty-six Weeks Ended June 28, 2009 and June 29, 2008
       24




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##### Table of Contents



Liquidity and Capital Resources
  Twenty-Six Weeks EndedJune 28,
    
    
    June 29,2009
    
    
    2008(Dollars in thousands)Net cash provided by operating activities
    
    $
    18,102
    
    
    $
    14,463Net cash used in investing activities
    
    
    (5,466
    )
    
    
    (2,778
    )Net cash used in financing activities
    
    
    (4,329
    )
    
    
    (9,429
    )Effect of exchange rate changes on cash
    
    
    680
    
    
    
    (2,049
    )Net increase in cash and cash equivalents
    
    $
    8,987
    
    
    $
    207
  25




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##### Table of Contents



Operating Activities
  Investing Activities
   Financing Activities
   Bank Financing
    26




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##### Table of Contents



Future Liquidity
    27




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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
    28




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##### Table of Contents



Part II. Other Information
 
 Item 1.
    
    Legal Proceedings
  
 Item 1A.
    
    Risk Factors
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
 (a)
    
    The Annual Meeting of Shareholders of the Company was held on June 3, 2009.
 (b)
    
    The name of each director elected at the Annual Meeting of Shareholders is set forth
under (c) below.
 (c)
    
    Set forth below is the tabulation of the votes for each nominee for election as a
director of the Company. All votes against nominees were recorded by the inspector of
election as withheld.
 Withhold AuthorityName
    
    For
    
    
    (including broker non-vote)Cindy K. Andreotti
    
    
    47,223,432
    
    
    
    1,040,455John C. Kraft
    
    
    47,623,937
    
    
    
    639,950Michael P. Marrow
    
    
    47,696,993
    
    
    
    566,894John J. Park
    
    
    47,672,632
    
    
    
    591,255Theodore G. Schwartz
    
    
    43,644,373
    
    
    
    4,619,514Samuel K. Skinner
    
    
    47,685,268
    
    
    
    578,619John L. Workman
    
    
    47,599,366
    
    
    
    664,521
 
 Item 6.
    
    Exhibits
   29




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##### Table of Contents



SIGNATURES
  APAC Customer Services, Inc.Date: August 5, 2009
    By:
    /s/ Michael P. MarrowMichael P. MarrowPresident and
Chief Executive Officer

(Principal Executive Officer)Date: August 5, 2009
    By:
    /s/ Andrew B. SzafranAndrew B. SzafranSenior Vice President and
Chief Financial Officer

(Principal Financial Officer)Date: August 5, 2009
    By:
    /s/ Joseph R. DoolanJoseph R. DoolanVice President and Controller
(Principal Accounting Officer)  30




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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, 2008.10.1
    
    
    Indemnification Agreement, dated April 28, 2009, incorporated by
reference to APAC Customer Services, Inc.s Current Report on Form
8-K, dated May 4, 2009.10.2
    
    
    Master Agreement For Call Center Services Between Verizon
Corporate Services Group Inc. and APAC Customer Services, Inc.
incorporated by reference to APAC Customer Services, Inc.s
Current Report on Form 8-K, dated July 14, 2009.31.1
    
    
    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.
  31