##### Table of Contents



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 Form 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended June 30, 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 001-11919
 
 TeleTech Holdings, Inc.
  Delaware
(State or other jurisdiction of 
incorporation or organization)
    
    84-1291044
(I.R.S. Employer
Identification No.)
 9197 South Peoria Street
Englewood, Colorado 80112
  þ o
 o o
  Large accelerated filer þ
    
    Accelerated filero
    
    Non-accelerated filer   o(Do not check if a smaller reporting company)
    
    Smaller Reporting Company o
 o þ




---



##### 



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
JUNE 30, 2009 FORM 10-Q
TABLE OF CONTENTS
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of June 30, 2009 (unaudited) and December 31, 2008
    
    
    1Consolidated Statements of Operations for the three and six months ended June 30, 2009 and 2008 (unaudited)
    
    
    2Consolidated Statement of Equity as of and for the six months ended June 30, 2009 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the six months ended June 30, 2009 and 2008 (unaudited)
    
    
    4Notes to the Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    21Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    39Item 4. Controls and Procedures
    
    
    42PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    42Item 1A. Risk Factors
    
    
    43Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    43Item 3. Defaults Upon Senior Securities
    
    
    44Item 4. Submission of Matters to a Vote of Security Holders
    
    
    44Item 5. Other Information
    
    
    44Item 6. Exhibits
    
    
    44SIGNATURES
    
    
    45EXHIBIT INDEX
    
    
    46EX-10.1EX-31.1EX-31.2EX-32.1EX-32.2
  i




---



##### Table of Contents



PART I. FINANCIAL INFORMATION
 
 ITEM 1. FINANCIAL STATEMENTS
 TELETECH
HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Balance Sheets


(Amounts in thousands, except share amounts)
 June 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    83,963
    
    
    $
    87,942Accounts receivable, net
    
    
    225,720
    
    
    
    236,997Prepaids and other current assets
    
    
    34,337
    
    
    
    31,279Deferred tax assets, net
    
    
    24,874
    
    
    
    30,328Income tax receivables
    
    
    20,983
    
    
    
    18,342Total current assets
    
    
    389,877
    
    
    
    404,888Property, plant and equipment, net
    
    
    141,719
    
    
    
    157,747Goodwill
    
    
    44,822
    
    
    
    44,150Contract acquisition costs, net
    
    
    6,048
    
    
    
    7,591Deferred tax assets, net
    
    
    30,395
    
    
    
    31,504Other noncurrent assets
    
    
    19,692
    
    
    
    23,062Total assets
    
    $
    632,553
    
    
    $
    668,942LIABILITIES AND EQUITYCurrent liabilitiesAccounts payable
    
    $
    23,872
    
    
    $
    26,214Accrued employee compensation and benefits
    
    
    71,748
    
    
    
    71,919Other accrued expenses
    
    
    21,537
    
    
    
    18,887Income taxes payable
    
    
    19,519
    
    
    
    19,168Deferred revenue
    
    
    18,328
    
    
    
    12,867Other current liabilities
    
    
    18,089
    
    
    
    31,044Total current liabilities
    
    
    173,093
    
    
    
    180,099Line of credit
    
    
    25,000
    
    
    
    80,800Grant advances
    
    
    1,526
    
    
    
    1,824Negative investment in deconsolidated subsidiary
    
    
    4,865
    
    
    
    4,865Other noncurrent liabilities
    
    
    32,297
    
    
    
    40,460Total liabilities
    
    
    236,781
    
    
    
    308,048Commitments and contingencies (Note 10)EquityPreferred stock  $0.01 par value; 10,000,000 shares authorized;zero shares outstanding as of June 30, 2009 and December 31, 2008
    
    
    
    
    
    
    Common stock  $0.01 par value; 150,000,000 shares authorized;62,077,557 and 63,816,379 shares outstanding
as of June 30, 2009 and December 31, 2008, respectively
    
    
    620
    
    
    
    638Treasury stock at cost: 19,976,948 and 18,238,066 shares
as of June 30, 2009 and December 31, 2008, respectively
    
    
    (250,678
    )
    
    
    (228,596
    )Additional paid-in capital
    
    
    344,643
    
    
    
    341,887Accumulated other comprehensive loss
    
    
    (10,309
    )
    
    
    (33,020
    )Retained earnings
    
    
    306,167
    
    
    
    274,974Total stockholders equity
    
    
    390,443
    
    
    
    355,883Noncontrolling interest
    
    
    5,329
    
    
    
    5,011Total equity
    
    
    395,772
    
    
    
    360,894Total liabilities and equity
    
    $
    632,553
    
    
    $
    668,942
  1




---



##### Table of Contents



TELETECH
HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Operations

(Amounts in thousands, except per share amounts)
(Unaudited)
 Three-Months Ended
    
    
    Six-Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    301,512
    
    
    $
    357,416
    
    
    $
    605,542
    
    
    $
    725,052Operating expensesCost of services (exclusive of depreciation and
amortization presented separately below)
    
    
    213,049
    
    
    
    265,833
    
    
    
    431,891
    
    
    
    535,933Selling, general and administrative
    
    
    44,981
    
    
    
    45,858
    
    
    
    93,496
    
    
    
    97,230Depreciation and amortization
    
    
    13,808
    
    
    
    15,624
    
    
    
    27,870
    
    
    
    30,784Restructuring charges, net
    
    
    4,008
    
    
    
    440
    
    
    
    4,311
    
    
    
    2,642Impairment losses
    
    
    2,620
    
    
    
    
    
    
    
    4,587
    
    
    
    Total operating expenses
    
    
    278,466
    
    
    
    327,755
    
    
    
    562,155
    
    
    
    666,589Income from operations
    
    
    23,046
    
    
    
    29,661
    
    
    
    43,387
    
    
    
    58,463Other income (expense)Interest income
    
    
    705
    
    
    
    1,388
    
    
    
    1,512
    
    
    
    2,474Interest expense
    
    
    (1,320
    )
    
    
    (1,489
    )
    
    
    (2,163
    )
    
    
    (3,054
    )Other, net
    
    
    1,014
    
    
    
    (442
    )
    
    
    1,776
    
    
    
    (1,011
    )Total other income (expense)
    
    
    399
    
    
    
    (543
    )
    
    
    1,125
    
    
    
    (1,591
    )Income before income taxes
    
    
    23,445
    
    
    
    29,118
    
    
    
    44,512
    
    
    
    56,872Provision for income taxes
    
    
    (6,328
    )
    
    
    (7,536
    )
    
    
    (11,508
    )
    
    
    (15,329
    )Net income
    
    
    17,117
    
    
    
    21,582
    
    
    
    33,004
    
    
    
    41,543Net income attributable to noncontrolling interest
    
    
    (987
    )
    
    
    (1,220
    )
    
    
    (1,811
    )
    
    
    (2,056
    )Net income attributable to TeleTech shareholders
    
    $
    16,130
    
    
    $
    20,362
    
    
    $
    31,193
    
    
    $
    39,487Weighted average shares outstandingBasic
    
    
    63,098
    
    
    
    69,977
    
    
    
    63,502
    
    
    
    69,957Diluted
    
    
    64,175
    
    
    
    71,729
    
    
    
    64,167
    
    
    
    71,649Net income per share attributable to TeleTech
shareholdersBasic
    
    $
    0.26
    
    
    $
    0.29
    
    
    $
    0.49
    
    
    $
    0.56Diluted
    
    $
    0.25
    
    
    $
    0.28
    
    
    $
    0.49
    
    
    $
    0.55
  2




---



##### Table of Contents



TELETECH
HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statement of Equity
(Amounts in thousands)
(Unaudited)
 AccumulatedAdditional
    
    Other
    
    
    
    
    
    Non-Preferred Stock
    
    Common Stock
    
    Treasury
    
    Paid-in
    
    Comprehensive
    
    Retained
    
    controllingShares
    
    Amount
    
    Shares
    
    Amount
    
    Stock
    
    Capital
    
    Loss
    
    Earnings
    
    interest
    
    Total EquityBalance as of December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    63,816
    
    
    $
    638
    
    
    $
    (228,596
    )
    
    $
    341,887
    
    
    $
    (33,020
    )
    
    $
    274,974
    
    
    $
    5,011
    
    
    $
    360,894Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    31,193
    
    
    
    1,811
    
    
    
    33,004Dividends distributed to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,800
    )
    
    
    (1,800
    )Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,286
    
    
    
    
    
    
    
    307
    
    
    
    7,593Derivatives valuation, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15,425
    
    
    
    
    
    
    
    
    
    
    
    15,425Vesting of restricted stock units
    
    
    
    
    
    
    
    
    
    
    177
    
    
    
    2
    
    
    
    2,212
    
    
    
    (2,779
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (565
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    142
    
    
    
    1
    
    
    
    1,774
    
    
    
    (465
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,310Excess tax benefit from equity-based awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (79
    )Equity-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,079
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,079Purchases of common stock
    
    
    
    
    
    
    
    
    
    
    (2,057
    )
    
    
    (21
    )
    
    
    (26,068
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,089
    )Balance as of June 30, 2009
    
    
    
    
    
    $
    
    
    
    
    62,078
    
    
    $
    620
    
    
    $
    (250,678
    )
    
    $
    344,643
    
    
    $
    (10,309
    )
    
    $
    306,167
    
    
    $
    5,329
    
    
    $
    395,772
  3




---



##### Table of Contents



TELETECH
HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
 Six-Months EndedJune 30,2009
    
    
    2008Cash flows from operating activitiesNet income
    
    $
    33,004
    
    
    $
    41,543Adjustment to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    27,870
    
    
    
    30,784Amortization of contract acquisition costs
    
    
    1,543
    
    
    
    1,053Provision for doubtful accounts
    
    
    953
    
    
    
    502(Gain) loss on foreign currency derivatives
    
    
    (878
    )
    
    
    383Loss on disposal of assets
    
    
    808
    
    
    
    Impairment losses
    
    
    4,587
    
    
    
    Deferred income taxes
    
    
    (2,555
    )
    
    
    124Excess tax benefit from equity-based awards
    
    
    (79
    )
    
    
    (1,125
    )Equity-based compensation expense
    
    
    6,079
    
    
    
    4,734Changes in assets and liabilities:Accounts receivable
    
    
    16,192
    
    
    
    651Prepaids and other assets
    
    
    3,207
    
    
    
    (9,323
    )Accounts payable and accrued expenses
    
    
    (1,699
    )
    
    
    (4,766
    )Deferred revenue and other liabilities
    
    
    4,806
    
    
    
    (5,255
    )Net cash provided by operating activities
    
    
    93,838
    
    
    
    59,305Cash flows from investing activitiesPurchases of property, plant and equipment
    
    
    (14,301
    )
    
    
    (36,408
    )Other
    
    
    (1,727
    )
    
    
    Net cash used in investing activities
    
    
    (16,028
    )
    
    
    (36,408
    )Cash flows from financing activitiesProceeds from line of credit
    
    
    467,660
    
    
    
    587,250Payments on line of credit
    
    
    (523,460
    )
    
    
    (574,250
    )Payments on
capital lease obligations and equipment financing
    
    
    (672
    )
    
    
    (802
    )Payments of debt refinancing fees
    
    
    
    
    
    
    (146
    )Dividends distributed to non-controlling interest
    
    
    (1,800
    )
    
    
    (1,113
    )Proceeds from exercise of stock options
    
    
    1,310
    
    
    
    Purchase of treasury stock
    
    
    (26,089
    )
    
    
    Net cash (used in) provided by financing activities
    
    
    (83,051
    )
    
    
    10,939Effect of exchange rate changes on cash and cash equivalents
    
    
    1,262
    
    
    
    1,839(Decrease) / Increase in cash and cash equivalents
    
    
    (3,979
    )
    
    
    35,675Cash and cash equivalents, beginning of period
    
    
    87,942
    
    
    
    91,239Cash and cash equivalents, end of period
    
    $
    83,963
    
    
    $
    126,914Supplemental disclosuresCash paid for interest
    
    $
    675
    
    
    $
    2,741Cash paid for income taxes
    
    $
    12,398
    
    
    $
    9,352Non-cash investing and financing activitiesAcquisition of equipment through installment purchase agreements
    
    $
    1,456
    
    
    $
    Landlord incentives credited to deferred rent
    
    $
    
    
    
    $
    400Recognition of asset retirement obligations
    
    $
    63
    
    
    $
    
  4




---



##### Table of Contents



TELETECH
HOLDINGS, INC. AND SUBSIDIARIES
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (1) OVERVIEW AND BASIS OF PRESENTATION
 Overview
  Basis of Presentation
 Consolidated Financial
Statements
   Non-controlling Interests in Consolidated Financial Statements, an amendment of
Accounting Research Bulletin No. 51
 5




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Use of Estimates
  Recently Issued Accounting Pronouncements
 Fair
Value Measurements
 Business Combinations  a
replacement of FASB Statement No. 141
 Accounting for
Transfers of Financial Assets and Repurchase Financing Transactions
 Disclosures about Derivative
Instruments and Hedging Activities Accounting for
Derivative Instruments and Hedging Activities, as amended
 6




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Determination of the Useful Life
of Intangible Assets
  Determining Fair Value When the Volume and Level of Activity for the Asset or
Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly
 Interim Disclosures about Fair Value of Financial Instruments
 Recognition and Presentation of Other-Than-Temporary Impairments
 Accounting for Assets Acquired and Liabilities
Assumed in a Business Combination That Arise from Contingencies
 7




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Subsequent Events
 The Hierarchy of Generally
Accepted Accounting Principles FASB Accounting Standards Codification,
  Accounting for Transfers of Financial Assets Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities
 Amendments to FASB Interpretation No. 46(R), Consolidation of Variable Interest
Entities
 (2) DECONSOLIDATION OF A SUBSIDIARY
  8




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Financial Reporting by Entities in Reorganization under the Bankruptcy Code
 June 30,
    
    
    December 31,
    
    
    December 22,2009
    
    
    2008
    
    
    2008Total current assets
    
    $
    1,700
    
    
    $
    1,700
    
    
    $
    1,700Total noncurrent assets
    
    
    2,379
    
    
    
    2,379
    
    
    
    3,110Total assets
    
    
    4,079
    
    
    
    4,079
    
    
    
    4,810Total current liabilities
    
    $
    7,886
    
    
    $
    7,886
    
    
    $
    3,931Total noncurrent liabilities
    
    
    
    
    
    
    
    
    
    
    5,744Total liabilities
    
    
    7,886
    
    
    
    7,886
    
    
    
    9,675Total stockholders deficit
    
    
    (3,807
    )
    
    
    (3,807
    )
    
    
    (4,865
    )Total liabilities and stockholders deficit
    
    $
    4,079
    
    
    $
    4,079
    
    
    $
    4,810
 (3) SEGMENT INFORMATION
    9




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenueNorth American BPO
    
    $
    229,992
    
    
    $
    257,109
    
    
    $
    458,878
    
    
    $
    530,911International BPO
    
    
    71,520
    
    
    
    100,307
    
    
    
    146,664
    
    
    
    194,141Database Marketing and
Consulting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    301,512
    
    
    $
    357,416
    
    
    $
    605,542
    
    
    $
    725,052Income (loss) from operationsNorth American BPO
    
    $
    28,314
    
    
    $
    27,948
    
    
    $
    53,741
    
    
    $
    60,869International BPO
    
    
    (5,268
    )
    
    
    1,703
    
    
    
    (10,354
    )
    
    
    (2,047
    )Database Marketing and
Consulting
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    (359
    )Total
    
    $
    23,046
    
    
    $
    29,661
    
    
    $
    43,387
    
    
    $
    58,463
 June 30,
    
    
    December 31,2009
    
    
    2008AssetsNorth American BPO
    
    $
    441,510
    
    
    $
    483,187International BPO
    
    
    191,043
    
    
    
    185,755Database Marketing and Consulting
    
    
    
    
    
    
    Total
    
    $
    632,553
    
    
    $
    668,942
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenueUnited States
    
    $
    111,489
    
    
    $
    100,690
    
    
    $
    211,551
    
    
    $
    210,218Latin America
    
    
    47,801
    
    
    
    82,667
    
    
    
    104,865
    
    
    
    159,214Philippines
    
    
    78,751
    
    
    
    67,327
    
    
    
    157,092
    
    
    
    136,502Canada
    
    
    21,583
    
    
    
    39,981
    
    
    
    47,827
    
    
    
    87,630Europe
    
    
    29,336
    
    
    
    39,594
    
    
    
    60,747
    
    
    
    75,895Asia Pacific / Africa
    
    
    12,552
    
    
    
    27,157
    
    
    
    23,460
    
    
    
    55,593Total
    
    $
    301,512
    
    
    $
    357,416
    
    
    $
    605,542
    
    
    $
    725,052
 (4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS
   10




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (5) GOODWILL
  Effect ofDecember 31,
    
    
    
    
    
    
    Foreign
    
    
    June 30,2008
    
    
    Impairments
    
    
    Currency
    
    
    2009North American BPO
    
    $
    35,885
    
    
    $
    
    
    
    $
    
    
    
    $
    35,885International BPO
    
    
    8,265
    
    
    
    
    
    
    
    672
    
    
    
    8,937Total
    
    $
    44,150
    
    
    $
    
    
    
    $
    672
    
    
    $
    44,822
 Goodwill and Other Intangible Assets
 (6) DERIVATIVES
 Cash Flow Hedges
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Aggregate
unrealized net
(loss) gain at
beginning of period
    
    $
    (18,141
    )
    
    $
    13,326
    
    
    $
    (21,180
    )
    
    $
    21,417Net gain (loss)
from change in fair
value of cash flow
hedges
    
    
    9,117
    
    
    
    (11,960
    )
    
    
    7,393
    
    
    
    (16,356
    )Net loss (gain)
reclassified to
earnings from
effective hedges
    
    
    3,269
    
    
    
    (2,646
    )
    
    
    8,032
    
    
    
    (6,341
    )Aggregate
unrealized net loss
at end of period
    
    $
    (5,755
    )
    
    $
    (1,280
    )
    
    $
    (5,755
    )
    
    $
    (1,280
    )
 11




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  % MaturingLocal Currency
    
    
    U.S. Dollar
    
    
    in the Next 12
    
    
    Contracts MaturingAs of June 30, 2009
    
    Notional Amount
    
    
    Notional Amount
    
    
    Months
    
    
    ThroughCanadian Dollar
    
    
    55,200
    
    
    $
    47,913
    
    
    
    67.4
    %
    
    December 2011Canadian Dollar Call
Options
    
    
    28,100
    
    
    
    24,901
    
    
    
    63.7
    %
    
    December 2010Philippine Peso
    
    
    4,277,347
    
    
    
    94,491
    1
    
    
    90.6
    %
    
    February 2011Argentine Peso
    
    
    51,050
    
    
    
    14,295
    2
    
    
    100.0
    %
    
    May 2010Mexican Peso
    
    
    645,500
    
    
    
    50,412
    
    
    
    76.3
    %
    
    September 2011South African Rand
    
    
    92,000
    
    
    
    8,416
    
    
    
    100.0
    %
    
    February 2010British Pound Sterling
    
    
    1,344
    
    
    
    2,369
    3
    
    
    57.0
    %
    
    March 2011$
    242,797
 Local Currency
    
    
    U.S. DollarAs of December 31, 2008
    
    Notional Amount
    
    
    Notional AmountCanadian Dollar
    
    
    88,300
    
    
    $
    77,865Canadian Dollar Call Options
    
    
    44,400
    
    
    
    39,305Philippine Peso
    
    
    6,656,909
    
    
    
    150,418
    1Argentine Peso
    
    
    102,072
    
    
    
    29,054
    2Mexican Peso
    
    
    856,500
    
    
    
    70,530South African Rand
    
    
    92,000
    
    
    
    8,399British Pound Sterling
    
    
    1,725
    
    
    
    2,537
    3$
    378,108
 
 (1)
    
    Includes contracts to purchase Philippine pesos in exchange for British pound
sterling and New Zealand dollars, which are translated into equivalent U.S. dollars on June 30,
2009 and December 31, 2008.(2)
    
    Includes contracts to purchase Argentine pesos in exchange for Euros, which are
translated into equivalent U.S. dollars on June 30, 2009 and December 31, 2008.(3)
    
    Includes contracts to purchase British pound sterling in exchange for Euros, which
are translated into equivalent U.S. dollars on June 30, 2009 and December 31, 2008. Hedge of Net Investment
  12




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Fair Value Hedges
  Embedded Derivatives
  Derivative Valuation and Settlements
  June 30, 2009Designated as hedging
    
    Not designated as hedging instruments underinstruments under SFAS 133
    
    SFAS 133Foreign
    
    Foreign
    
    Foreign
    
    ForeignDerivative contracts:
    
    Exchange
    
    Exchange
    
    Exchange
    
    Exchange
    
    LeasesOption
    
    
    
    
    
    EmbeddedDerivative classification:
    
    Cash Flow
    
    Net Investment
    
    Contracts
    
    Fair Value
    
    DerivativeFair value and location of
derivative in the
Consolidated Balance Sheet:Prepaids and other current assets
    
    $
    5,419
    
    
    $
    
    
    
    $
    89
    
    
    $
    33
    
    
    $
    Other noncurrent assets
    
    
    2,343
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    20Other current liabilities
    
    
    (15,492
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (184
    )Other noncurrent liabilities
    
    
    (551
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (435
    )Total fair value of derivatives, net
    
    $
    (8,281
    )
    
    $
    
    
    
    $
    89
    
    
    $
    33
    
    
    $
    (599
    )
 December 31, 2008Designated as hedging
    
    Not designated as hedginginstruments under SFAS 133
    
    instruments under SFAS 133Foreign
    
    Foreign
    
    ForeignDerivative contracts:
    
    Exchange
    
    Exchange
    
    Exchange
    
    LeasesEmbeddedDerivative classification:
    
    Cash Flow
    
    Net Investment
    
    Fair Value
    
    DerivativeFair value and location of
derivative in the
Consolidated Balance Sheet:Prepaids and other current assets
    
    $
    1,926
    
    
    $
    
    
    
    $
    
    
    
    $
    Other noncurrent assets
    
    
    2,297
    
    
    
    
    
    
    
    
    
    
    
    9Other current liabilities
    
    
    (30,757
    )
    
    
    (113
    )
    
    
    (44
    )
    
    
    (130
    )Other noncurrent liabilities
    
    
    (6,555
    )
    
    
    
    
    
    
    
    
    
    
    (1,355
    )Total fair value of derivatives, net
    
    $
    (33,089
    )
    
    $
    (113
    )
    
    $
    (44
    )
    
    $
    (1,476
    )
 13




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three Months Ended June 30,2009
    
    2008Designated as hedging instruments under
    
    Designated as hedging instruments underSFAS 133
    
    SFAS 133Derivative contracts:
    
    Foreign Exchange
    
    Foreign Exchange
    
    Foreign Exchange
    
    Foreign ExchangeDerivative classification:
    
    Cash Flow
    
    Net Investment
    
    Cash Flow
    
    Net InvestmentAmount of gain or (loss) recognized in other
comprehensive income  effective portion, net of tax:
    
    $
    9,117
    
    
    $
    (1,235
    )
    
    $
    (11,960
    )
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  effective portion:Revenue
    
    $
    (5,360
    )
    
    $
    
    
    
    $
    4,337
    
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  ineffective portion
and amount excluded from effectiveness testing:Other, net
    
    $
    (98
    )
    
    $
    
    
    
    $
    
    
    
    $
    Three Months Ended June 30,2009
    
    2008Not designated as hedging instruments under
    
    Not designated as hedging instruments underSFAS 133
    
    SFAS 133Derivative contracts:
    
    Foreign Exchange
    
    Leases
    
    Foreign Exchange
    
    LeasesEmbedded
    
    
    
    
    
    EmbeddedDerivative classification:
    
    Fair Value
    
    Derivative
    
    Fair Value
    
    DerivativeAmount and location of net gain or (loss) recognized
in the Consolidated Statement of Operations:Cost of services
    
    $
    
    
    
    $
    616
    
    
    $
    
    
    
    $
    (300
    )Other, net
    
    
    (1,331
    )
    
    
    
    
    
    
    99
    
    
    
    
  Six Months Ended June 30,2009
    
    2008Designated as hedging instruments under
    
    Designated as hedging instruments underSFAS 133
    
    SFAS 133Derivative contracts:
    
    Foreign Exchange
    
    Foreign Exchange
    
    Foreign Exchange
    
    Foreign ExchangeDerivative classification:
    
    Cash Flow
    
    Net Investment
    
    Cash Flow
    
    Net InvestmentAmount of gain or (loss) recognized in other
comprehensive income  effective portion, net of tax:
    
    $
    7,393
    
    
    $
    (1,727
    )
    
    $
    (16,356
    )
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  effective portion:Revenue
    
    $
    (13,168
    )
    
    $
    
    
    
    $
    10,393
    
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  ineffective portion
and amount excluded from effectiveness testing:Other, net
    
    $
    (133
    )
    
    $
    
    
    
    $
    
    
    
    $
    Six Months Ended June 30,2009
    
    2008Not designated as hedging instruments
    
    Not designated as hedging instrumentsunder SFAS 133
    
    under SFAS 133Derivative contracts:
    
    Foreign Exchange
    
    Leases
    
    Foreign Exchange
    
    LeasesEmbedded
    
    
    
    
    
    EmbeddedDerivative classification:
    
    Fair Value
    
    Derivative
    
    Fair Value
    
    DerivativeAmount and location of net gain or (loss) recognized
in the Consolidated Statement of Operations:Cost of services
    
    $
    
    
    
    $
    878
    
    
    $
    
    
    
    $
    (378
    )Other, net
    
    
    (957
    )
    
    
    
    
    
    
    845
    
    
    
    
 14




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (7) FAIR VALUE
  Level 1
    
    
    
    Quoted prices in active markets for identical assets or liabilities.Level 2
    
    
    
    Observable inputs other than quoted prices included in Level 1, such as
quoted prices for similar assets and liabilities in active markets, similar assets and
liabilities in markets that are not active or can be corroborated by observable market
data.Level 3
    
    
    
    Unobservable inputs that are supported by little or no market activity and
that are significant to the fair value of the assets or liabilities. This includes
certain pricing models, discounted cash flow methodologies and similar techniques that
use significant unobservable inputs.
  Accounts Receivable and Payable
 Debt
 Derivatives 
 Fair Value Measurements UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)
    
    
    At Fair ValueCash flow hedges
    
    $
    
    
    
    $
    (8,281
    )
    
    $
    
    
    
    $
    (8,281
    )Net investment hedges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Fair value hedges
    
    
    
    
    
    
    33
    
    
    
    
    
    
    
    33Embedded derivatives
    
    
    
    
    
    
    (599
    )
    
    
    
    
    
    
    (599
    )Option Contracts
    
    
    
    
    
    
    89
    
    
    
    
    
    
    
    89Total net derivative
asset (liability)
    
    $
    
    
    
    $
    (8,758
    )
    
    $
    
    
    
    $
    (8,758
    )
  Money Market Investments
 15




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Deferred Compensation Plan
  Fair Value Measurements UsingQuoted Prices in
    
    
    
    
    
    
    SignificantActive Markets for
    
    
    Significant Other
    
    
    UnobservableIdentical Assets
    
    
    Observable Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    
    (Level 3)AssetsMoney market investments
    
    $
    
    
    
    $
    5,497
    
    
    $
    Total assets
    
    $
    
    
    
    $
    5,497
    
    
    $
    LiabilitiesDerivative instruments
    
    $
    
    
    
    $
    (8,758
    )
    
    $
    Deferred compensation plan liability
    
    
    
    
    
    
    (2,788
    )
    
    
    Total liabilities
    
    $
    
    
    
    $
    (11,546
    )
    
    $
    
 (8) INCOME TAXES
 Accounting for Income Taxes
 Accounting for Uncertainty in Income Taxes
   16




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (9) RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES
 Restructuring Charges
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008North American BPOReduction in force
    
    $
    2,668
    
    
    $
    18
    
    
    $
    3,568
    
    
    $
    128Facility exit charges
    
    
    360
    
    
    
    
    
    
    
    472
    
    
    
    Revision of prior estimates
    
    
    
    
    
    
    
    
    
    
    (1,135
    )
    
    
    Total
    
    $
    3,028
    
    
    $
    18
    
    
    $
    2,905
    
    
    $
    128
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008International BPOReduction in force
    
    $
    824
    
    
    $
    414
    
    
    $
    1,250
    
    
    $
    2,571Facility exit charges
    
    
    156
    
    
    
    
    
    
    
    156
    
    
    
    Revision of prior estimates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    980
    
    
    $
    414
    
    
    $
    1,406
    
    
    $
    2,571
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Database Marketing and ConsultingReduction in force
    
    $
    
    
    
    $
    8
    
    
    $
    
    
    
    $
    8Facility exit charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Revision of prior estimates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65
    )Total
    
    $
    
    
    
    $
    8
    
    
    $
    
    
    
    $
    (57
    )
   Closure ofDelivery
    
    
    Reduction inCenters
    
    
    Force
    
    
    TotalBalance as of December 31, 2008
    
    $
    2,113
    
    
    $
    
    
    
    $
    2,113Expense
    
    
    628
    
    
    
    4,818
    
    
    
    5,446Payments
    
    
    (715
    )
    
    
    (2,554
    )
    
    
    (3,269
    )Revision of prior estimates
    
    
    (1,135
    )
    
    
    
    
    
    
    (1,135
    )Balance as of June 30, 2009
    
    $
    891
    
    
    $
    2,264
    
    
    $
    3,155
  Impairment Losses
  17




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
    (10) COMMITMENTS AND CONTINGENCIES
 Letters of Credit
  Guarantees
   Legal Proceedings
 Beasley v. TeleTech Holdings, Inc., et al. Brown v. TeleTech Holdings,
Inc., et al., In re: TeleTech Litigation
 18




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Susan M. Gregory v. Kenneth D. Tuchman, et al.
  (11) COMPREHENSIVE INCOME
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    17,117
    
    
    $
    21,582
    
    
    $
    33,004
    
    
    $
    41,543Foreign currency translation adjustments
    
    
    14,799
    
    
    
    1,722
    
    
    
    7,286
    
    
    
    5,616Derivatives valuation, net of tax
    
    
    12,386
    
    
    
    (14,605
    )
    
    
    15,425
    
    
    
    (22,696
    )Total comprehensive income
    
    $
    44,302
    
    
    $
    8,699
    
    
    $
    55,715
    
    
    $
    24,463Comprehensive income attributable to
noncontrolling interest
    
    
    (1,353
    )
    
    
    (1,220
    )
    
    
    (2,118
    )
    
    
    (2,072
    )Comprehensive income attributable to TeleTech
    
    $
    42,949
    
    
    $
    7,479
    
    
    $
    53,597
    
    
    $
    22,391
  Six Months EndedJune 30,2009
    
    
    2008Noncontrolling interest, January 1
    
    $
    5,011
    
    
    $
    3,555Net income attributable to noncontrolling interest
    
    
    1,811
    
    
    
    2,056Dividends distributed to noncontrolling interest
    
    
    (1,800
    )
    
    
    (1,113
    )Foreign currency translation adjustments
    
    
    307
    
    
    
    16Noncontrolling interest, June 30
    
    $
    5,329
    
    
    $
    4,514
 19




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (12) NET INCOME PER SHARE
  Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Shares used in basic earnings per share
calculation
    
    
    63,098
    
    
    
    69,977
    
    
    
    63,502
    
    
    
    69,957Effect of dilutive securities  Stock options
    
    
    641
    
    
    
    1,729
    
    
    
    347
    
    
    
    1,662Effect of dilutive securities  RSUs
    
    
    436
    
    
    
    23
    
    
    
    318
    
    
    
    30Shares used in dilutive earnings per share
calculation
    
    
    64,175
    
    
    
    71,729
    
    
    
    64,167
    
    
    
    71,649
  (13) EQUITY-BASED COMPENSATION PLANS
 ShareBased Payment
 Stock Options
  Restricted Stock Unit Grants
   20




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Introduction
    Executive Summary
  21




---



##### Table of Contents




    
    Integration of front- and back-office business processes to provide increased operating
efficiencies and an enhanced customer experience especially in light of the weakening
global economic environment.Companies have realized that integrated business processes
reduce operating costs and allow customer needs to be met more quickly and efficiently
resulting in higher customer satisfaction and brand loyalty thereby improving their
competitive position. A majority of our historic revenue has been derived from providing
customer-facing front-office solutions to our clients. Given that our global delivery
centers are also fully capable of providing back-office solutions, we are uniquely
positioned to grow our revenue by winning more back-office opportunities and providing the
services during non-peak hours with minimal incremental investment. Furthermore, by
spreading our fixed costs across a larger revenue base and increasing our asset
utilization, we expect our profitability to improve over time.
    
    Increasing percentage of company operations being outsourced to most capable third-party
providers.Having experienced success with outsourcing a portion of their business
processes, companies are increasingly inclined to outsource a larger percentage of this
work. We believe companies will continue to consolidate their business processes with
third-party providers, such as TeleTech, who are financially stable and able to invest in
their business while also demonstrating an extensive global operating history and an
ability to cost effectively scale to meet their evolving needs.
    
    Increasing adoption of outsourcing across broader groups of industries.Early adopters
of the business process outsourcing trend, such as the media and communications industries,
are being joined by companies in other industries, including healthcare, retail and
financial services. These companies are beginning to adopt outsourcing to improve their
business processes and competitiveness. For example, we have seen an increase in interest
of our services for companies in the healthcare, retail and financial services industries.
We believe the number of other industries that will adopt or increase their level of
outsourcing will continue to grow, further enabling us to increase and diversify our
revenue and client base.
    
    Focus on speed-to-market by companies launching new products or entering new geographic
locations.As companies broaden their product offerings and seek to enter new emerging
markets, they are looking for outsourcing providers that can provide speed-to-market while
reducing their capital and operating risk. To achieve these benefits, companies are seeking
BPO providers with an extensive operating history, an established global footprint, the
financial strength to invest in innovation to deliver more strategic capabilities and the
ability to scale and meet customer demands quickly. Given our financial stability,
geographic presence in 17 countries and our significant investment in standardized
technology and processes, clients increasingly select TeleTech because we can quickly ramp
large, complex business processes around the globe in a short period of time while assuring
a high-quality experience for our clients customers.
 
 22




---



##### Table of Contents



Our Strategy
   
    
    Deepen and broaden our relationships with existing clients;
    
    Win business with new clients and focus on targeted industries where we expect
accelerating adoption of business process outsourcing;
    
    Continue to invest in innovative proprietary technology and new business offerings;
    
    Continue to improve our operating margins through selective cost cutting initiatives and
increased asset utilization of our globally diverse delivery centers; and
    
    Selectively pursue acquisitions that extend our capabilities, geographic reach and/or
industry expertise.
 Our Second Quarter 2009 Financial Results
   23




---



##### Table of Contents



Business Overview
  BPO Services
     
    
    Capitalizing on the favorable trends in the global outsourcing environment, which we
believe will include more companies that want to:
 -
    
    Adopt or increase BPO services;-
    
    Consolidate outsourcing providers with those that have a solid financial
position, capital resources to sustain a long-term relationship and globally diverse
delivery capabilities across a broad range of solutions;-
    
    Modify their approach to outsourcing based on total value delivered versus the
lowest priced provider; and-
    
    Better integrate front- and back-office processes.
 
    
    Deepening and broadening relationships with existing clients;
    
    Winning business with new clients and focusing on targeted high growth industry verticals;
    
    Continuing to diversify revenue into higher-margin offerings such as professional
services, talent acquisition, learning services and our hosted TeleTech OnDemand
capabilities;
    
    Increasing capacity utilization during peak and non-peak hours;
    
    Scaling our work-from-home initiative to increase operational flexibility; and
 24




---



##### Table of Contents




    
    Completing select acquisitions that extend our core BPO capabilities or vertical
expertise.
        25




---



##### Table of Contents



June 30, 2009
    
    June 30, 2008Total
    
    
    
    
    
    
    
    
    
    TotalProduction
    
    
    
    
    
    
    
    
    
    ProductionWorkstations
    
    In Use
    
    % In Use
    
    Workstations
    
    In Use
    
    % In UseMulti-client centersSites open <1 year
    
    
    2,721
    
    
    
    1,539
    
    
    
    57
    %
    
    
    7,811
    
    
    
    3,940
    
    
    
    50
    %Sites open >1 year
    
    
    26,400
    
    
    
    18,697
    
    
    
    71
    %
    
    
    21,788
    
    
    
    16,869
    
    
    
    77
    %Total multi-client centers
    
    
    29,121
    
    
    
    20,236
    
    
    
    69
    %
    
    
    29,599
    
    
    
    20,809
    
    
    
    70
    %
 Recent Issued Accounting Pronouncements
  Critical Accounting Policies and Estimates
  Revenue Recognition
  26




---



##### Table of Contents



Production Rate 
 PerformanceBased 
 Hybrid 
   Income Taxes
 Accounting for Income Taxes
  Accounting for Uncertainty in Income Taxes
 27




---



##### Table of Contents



Allowance for Doubtful Accounts
  Impairment of LongLived Assets
 Accounting for the Impairment or Disposal of Long-Lived Assets
 Goodwill
 Goodwill and Other Intangible Assets
 Restructuring Liability
 Employers Accounting for Postemployment Benefits Accounting for Costs Associated with Exit or Disposal Activities
 EquityBased Compensation
 Share-Based
Payment (SFAS 123(R))
 28




---



##### Table of Contents



Contingencies
 Accounting for Contingencies
 Explanation of Key Metrics and Other Items
 Cost of Services
  Selling, General and Administrative
  Restructuring Charges, Net
  Interest Expense
  Other Income
  Other Expense
  Presentation of NonGAAP Measurements
 Free Cash Flow
  29




---



##### Table of Contents



Three Months Ended
    
    
    Six Months EndedJune 30,
    
    
    June 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Free cash flow
    
    $
    33,981
    
    
    $
    11,907
    
    
    $
    79,537
    
    
    $
    22,897Purchases of property, plant and equipment
    
    
    5,846
    
    
    
    21,223
    
    
    
    14,301
    
    
    
    36,408Net cash provided by operating activities
    
    $
    39,827
    
    
    $
    33,130
    
    
    $
    93,838
    
    
    $
    59,305
  Non-GAAP Income from Operations
  Non-GAAP Effective Tax Rate
  30




---



##### Table of Contents



Results of Operations
 Three Months Ended June 30, 2009 As Compared to Three Months Ended June 30, 2008
 Operating Review
  Three Months Ended June 30,% of
    
    
    
    
    
    
    % ofSegment
    
    
    
    
    
    
    Segment2009
    
    
    Revenue
    
    
    2008
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeRevenueNorth American BPO
    
    $
    229,992
    
    
    
    
    
    
    $
    257,109
    
    
    
    
    
    
    $
    (27,117
    )
    
    
    -10.5
    %International BPO
    
    
    71,520
    
    
    
    
    
    
    
    100,307
    
    
    
    
    
    
    
    (28,787
    )
    
    
    -28.7
    %Database Marketing and Consulting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %$
    301,512
    
    
    
    
    
    
    $
    357,416
    
    
    
    
    
    
    $
    (55,904
    )
    
    
    -15.6
    %Cost of servicesNorth American BPO
    
    $
    154,119
    
    
    
    67.0
    %
    
    $
    185,335
    
    
    
    72.1
    %
    
    $
    (31,216
    )
    
    
    -16.8
    %International BPO
    
    
    58,930
    
    
    
    82.4
    %
    
    
    80,441
    
    
    
    80.2
    %
    
    
    (21,511
    )
    
    
    -26.7
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    57
    
    
    
    0.0
    %
    
    
    (57
    )
    
    
    -100.0
    %$
    213,049
    
    
    
    70.7
    %
    
    $
    265,833
    
    
    
    74.4
    %
    
    $
    (52,784
    )
    
    
    -19.9
    %Selling, general and administrativeNorth American BPO
    
    $
    33,111
    
    
    
    14.4
    %
    
    $
    32,999
    
    
    
    12.8
    %
    
    $
    112
    
    
    
    0.3
    %International BPO
    
    
    11,870
    
    
    
    16.6
    %
    
    
    12,939
    
    
    
    12.9
    %
    
    
    (1,069
    )
    
    
    -8.3
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    (80
    )
    
    
    0.0
    %
    
    
    80
    
    
    
    100.0
    %$
    44,981
    
    
    
    14.9
    %
    
    $
    45,858
    
    
    
    12.8
    %
    
    $
    (877
    )
    
    
    -1.9
    %Depreciation and amortizationNorth American BPO
    
    $
    9,609
    
    
    
    4.2
    %
    
    $
    10,809
    
    
    
    4.2
    %
    
    $
    (1,200
    )
    
    
    -11.1
    %International BPO
    
    
    4,199
    
    
    
    5.9
    %
    
    
    4,810
    
    
    
    4.8
    %
    
    
    (611
    )
    
    
    -12.7
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    5
    
    
    
    0.0
    %
    
    
    (5
    )
    
    
    -100.0
    %$
    13,808
    
    
    
    4.6
    %
    
    $
    15,624
    
    
    
    4.4
    %
    
    $
    (1,816
    )
    
    
    -11.6
    %Restructuring charges, netNorth American BPO
    
    $
    3,028
    
    
    
    1.3
    %
    
    $
    18
    
    
    
    0.0
    %
    
    $
    3,010
    
    
    
    16722.2
    %International BPO
    
    
    980
    
    
    
    1.4
    %
    
    
    414
    
    
    
    0.4
    %
    
    
    566
    
    
    
    136.7
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    8
    
    
    
    0.0
    %
    
    
    (8
    )
    
    
    -100.0
    %$
    4,008
    
    
    
    1.3
    %
    
    $
    440
    
    
    
    0.1
    %
    
    $
    3,568
    
    
    
    810.9
    %Impairment lossesNorth American BPO
    
    $
    1,811
    
    
    
    0.8
    %
    
    $
    
    
    
    
    0.0
    %
    
    $
    1,811
    
    
    
    100.0
    %International BPO
    
    
    809
    
    
    
    1.1
    %
    
    
    
    
    
    
    0.0
    %
    
    
    809
    
    
    
    100.0
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %$
    2,620
    
    
    
    0.9
    %
    
    $
    
    
    
    
    0.0
    %
    
    $
    2,620
    
    
    
    100.0
    %Income (loss) from operationsNorth American BPO
    
    $
    28,314
    
    
    
    12.3
    %
    
    $
    27,948
    
    
    
    10.9
    %
    
    $
    366
    
    
    
    1.3
    %International BPO
    
    
    (5,268
    )
    
    
    -7.4
    %
    
    
    1,703
    
    
    
    1.7
    %
    
    
    (6,971
    )
    
    
    -409.3
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    10
    
    
    
    0.0
    %
    
    
    (10
    )
    
    
    -100.0
    %$
    23,046
    
    
    
    7.6
    %
    
    $
    29,661
    
    
    
    8.3
    %
    
    $
    (6,615
    )
    
    
    -22.3
    %Other income (expense), net
    
    $
    399
    
    
    
    0.1
    %
    
    $
    (543
    )
    
    
    -0.2
    %
    
    $
    942
    
    
    
    173.5
    %Provision for income taxes
    
    $
    (6,328
    )
    
    
    -2.1
    %
    
    $
    (7,536
    )
    
    
    -2.1
    %
    
    $
    1,208
    
    
    
    16.0
    %
 31




---



##### Table of Contents



Revenue
    Cost of Services
   Selling, General and Administrative
   32




---



##### Table of Contents



Depreciation and Amortization
  Restructuring Charges
  Impairment Losses
  Other Income (Expense)
  Income Taxes
  33




---



##### Table of Contents



Six Months Ended June 30, 2009 As Compared to Six Months Ended June 30, 2008
 Operating Review
  Six Months Ended June 30,% of
    
    
    
    
    
    
    % ofSegment
    
    
    
    
    
    
    Segment2009
    
    
    Revenue
    
    
    2008
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeRevenueNorth American BPO
    
    $
    458,878
    
    
    
    
    
    
    $
    530,911
    
    
    
    
    
    
    $
    (72,033
    )
    
    
    -13.6
    %International BPO
    
    
    146,664
    
    
    
    
    
    
    
    194,141
    
    
    
    
    
    
    
    (47,477
    )
    
    
    -24.5
    %Database Marketing and Consulting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %$
    605,542
    
    
    
    
    
    
    $
    725,052
    
    
    
    
    
    
    $
    (119,510
    )
    
    
    -16.5
    %Cost of servicesNorth American BPO
    
    $
    311,812
    
    
    
    68.0
    %
    
    $
    378,497
    
    
    
    71.3
    %
    
    $
    (66,685
    )
    
    
    -17.6
    %International BPO
    
    
    120,079
    
    
    
    81.9
    %
    
    
    157,342
    
    
    
    81.0
    %
    
    
    (37,263
    )
    
    
    -23.7
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    94
    
    
    
    0.0
    %
    
    
    (94
    )
    
    
    -100.0
    %$
    431,891
    
    
    
    71.3
    %
    
    $
    535,933
    
    
    
    73.9
    %
    
    $
    (104,042
    )
    
    
    -19.4
    %Selling, general and administrativeNorth American BPO
    
    $
    68,810
    
    
    
    15.0
    %
    
    $
    69,773
    
    
    
    13.1
    %
    
    $
    (963
    )
    
    
    -1.4
    %International BPO
    
    
    24,686
    
    
    
    16.8
    %
    
    
    27,149
    
    
    
    14.0
    %
    
    
    (2,463
    )
    
    
    -9.1
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    308
    
    
    
    0.0
    %
    
    
    (308
    )
    
    
    -100.0
    %$
    93,496
    
    
    
    15.4
    %
    
    $
    97,230
    
    
    
    13.4
    %
    
    $
    (3,734
    )
    
    
    -3.8
    %Depreciation and amortizationNorth American BPO
    
    $
    19,799
    
    
    
    4.3
    %
    
    $
    21,644
    
    
    
    4.1
    %
    
    $
    (1,845
    )
    
    
    -8.5
    %International BPO
    
    
    8,071
    
    
    
    5.5
    %
    
    
    9,126
    
    
    
    4.7
    %
    
    
    (1,055
    )
    
    
    -11.6
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    14
    
    
    
    0.0
    %
    
    
    (14
    )
    
    
    -100.0
    %$
    27,870
    
    
    
    4.6
    %
    
    $
    30,784
    
    
    
    4.2
    %
    
    $
    (2,914
    )
    
    
    -9.5
    %Restructuring charges, netNorth American BPO
    
    $
    2,905
    
    
    
    0.6
    %
    
    $
    128
    
    
    
    0.0
    %
    
    $
    2,777
    
    
    
    2169.5
    %International BPO
    
    
    1,406
    
    
    
    1.0
    %
    
    
    2,571
    
    
    
    1.3
    %
    
    
    (1,165
    )
    
    
    -45.3
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    (57
    )
    
    
    0.0
    %
    
    
    57
    
    
    
    100.0
    %$
    4,311
    
    
    
    0.7
    %
    
    $
    2,642
    
    
    
    0.4
    %
    
    $
    1,669
    
    
    
    63.2
    %Impairment lossesNorth American BPO
    
    $
    1,811
    
    
    
    0.4
    %
    
    $
    
    
    
    
    0.0
    %
    
    $
    1,811
    
    
    
    100.0
    %International BPO
    
    
    2,776
    
    
    
    1.9
    %
    
    
    
    
    
    
    0.0
    %
    
    
    2,776
    
    
    
    100.0
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %$
    4,587
    
    
    
    0.8
    %
    
    $
    
    
    
    
    0.0
    %
    
    $
    4,587
    
    
    
    100.0
    %Income (loss) from operationsNorth American BPO
    
    $
    53,741
    
    
    
    11.7
    %
    
    $
    60,869
    
    
    
    11.5
    %
    
    $
    (7,128
    )
    
    
    -11.7
    %International BPO
    
    
    (10,354
    )
    
    
    -7.1
    %
    
    
    (2,047
    )
    
    
    -1.1
    %
    
    
    (8,307
    )
    
    
    -405.8
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    (359
    )
    
    
    0.0
    %
    
    
    359
    
    
    
    100.0
    %$
    43,387
    
    
    
    7.2
    %
    
    $
    58,463
    
    
    
    8.1
    %
    
    $
    (15,076
    )
    
    
    -25.8
    %Other income (expense), net
    
    $
    1,125
    
    
    
    0.2
    %
    
    $
    (1,591
    )
    
    
    -0.2
    %
    
    $
    2,716
    
    
    
    170.7
    %Provision for income taxes
    
    $
    (11,508
    )
    
    
    -1.9
    %
    
    $
    (15,329
    )
    
    
    -2.1
    %
    
    $
    3,821
    
    
    
    24.9
    %
 34




---



##### Table of Contents



Revenue
    Cost of Services
   Selling, General and Administrative
  35




---



##### Table of Contents



Depreciation and Amortization
  Restructuring Charges
  Impairment Losses
  Other Income (Expense)
  Income Taxes
  36




---



##### Table of Contents



Liquidity and Capital Resources
       Cash and Cash Equivalents
  Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  37




---



##### Table of Contents



Cash Flows from Financing Activities
  Free Cash Flow
  Obligations and Future Capital Requirements
  Less than 1Year
    
    
    1 to 3 Years
    
    
    3 to 5 Years
    
    
    Over 5 Years
    
    
    TotalCredit facility(1)
    
    $
    779
    
    
    $
    25,974
    
    
    $
    
    
    
    $
    
    
    
    $
    26,753Capital lease obligations
    
    
    1,645
    
    
    
    2,757
    
    
    
    
    
    
    
    
    
    
    
    4,402Equipment financing
arrangements
    
    
    1,090
    
    
    
    1,317
    
    
    
    351
    
    
    
    
    
    
    
    2,758Purchase obligations
    
    
    20,059
    
    
    
    31,901
    
    
    
    6,986
    
    
    
    
    
    
    
    58,946Operating lease commitments
    
    
    28,495
    
    
    
    39,250
    
    
    
    16,783
    
    
    
    8,616
    
    
    
    93,144Total
    
    $
    52,068
    
    
    $
    101,199
    
    
    $
    24,120
    
    
    $
    8,616
    
    
    $
    186,003
 
 (1)
    
    Includes estimated interest payments based on the
weighted-average interest rate and debt outstanding as of
June 30, 2009. 
    
    Contractual obligations to be paid in a foreign currency are translated at the June 30,
2009 exchange rate.
    
    Purchase obligations primarily consist of outstanding purchase orders for goods or
services not yet received, which are not recognized as liabilities in our Consolidated
Balance Sheets until such goods and/or services are received.
    
    The contractual obligation table excludes our FIN 48 liabilities of $1.6 million because
we cannot reliably estimate the timing of cash payments.
 Future Capital Requirements
   38




---



##### Table of Contents



Debt Instruments and Related Covenants
  Client Concentration
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
  39




---



##### Table of Contents



Foreign Currency Risk
   Cash Flow Hedging Program
   40




---



##### Table of Contents



% Maturing inLocal Currency
    
    
    U.S. Dollar
    
    
    the Next 12
    
    
    Contracts MaturingAs of June 30, 2009
    
    Notional Amount
    
    
    Notional Amount
    
    
    Months
    
    
    ThroughCanadian Dollar
    
    
    55,200
    
    
    $
    47,913
    
    
    
    67.4
    %
    
    December 2011Canadian Dollar Call Options
    
    
    28,100
    
    
    
    24,901
    
    
    
    63.7
    %
    
    December 2010Philippine Peso
    
    
    4,277,347
    
    
    
    94,491
    1
    
    
    90.6
    %
    
    February 2011Argentine Peso
    
    
    51,050
    
    
    
    14,295
    2
    
    
    100.0
    %
    
    May 2010Mexican Peso
    
    
    645,500
    
    
    
    50,412
    
    
    
    76.3
    %
    
    September 2011South African Rand
    
    
    92,000
    
    
    
    8,416
    
    
    
    100.0
    %
    
    February 2010British Pound Sterling
    
    
    1,344
    
    
    
    2,369
    3
    
    
    57.0
    %
    
    March 2011$
    242,797
 Local Currency
    
    
    U.S. DollarAs of December 31, 2008
    
    Notional Amount
    
    
    Notional AmountCanadian Dollar
    
    
    88,300
    
    
    $
    77,865Canadian Dollar Call Options
    
    
    44,400
    
    
    
    39,305Philippine Peso
    
    
    6,656,909
    
    
    
    150,418
    1Argentine Peso
    
    
    102,072
    
    
    
    29,054
    2Mexican Peso
    
    
    856,500
    
    
    
    70,530South African Rand
    
    
    92,000
    
    
    
    8,399British Pound Sterling
    
    
    1,725
    
    
    
    2,537
    3$
    378,108
 
 (1)
    
    Includes contracts to purchase Philippine pesos in exchange
for British pound sterling and New Zealand dollars, which
are translated into equivalent U.S. dollars on June 30,
2009 and December 31, 2008.(2)
    
    Includes contracts to purchase Argentine pesos in exchange
for Euros, which are translated into equivalent U.S.
dollars on June 30, 2009 and December 31, 2008.(3)
    
    Includes contracts to purchase British pound sterling in
exchange for Euros, which are translated into equivalent
U.S. dollars on June 30, 2009 and December 31, 2008.  Maturing in theJune 30, 2009
    
    
    Next 12 MonthsCanadian Dollar
    
    $
    (317
    )
    
    $
    (677
    )Canadian Dollar Call Options
    
    
    977
    
    
    
    506Philippine Peso
    
    
    (7,188
    )
    
    
    (7,574
    )Argentine Peso
    
    
    (1,693
    )
    
    
    (1,693
    )Mexican Peso
    
    
    (3,139
    )
    
    
    (3,770
    )South African Rand
    
    
    3,221
    
    
    
    3,221British Pound Sterling
    
    
    (142
    )
    
    
    (86
    )$
    (8,281
    )
    
    $
    (10,073
    )
  41




---



##### Table of Contents



Fair Value of Debt and Equity Securities
  
 ITEM 4. CONTROLS AND PROCEDURES
  Evaluation of Disclosure Controls and Procedures
   Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  42




---



##### Table of Contents



Securities Class Action
 Beasley v. TeleTech Holdings, Inc., et al. Brown v. TeleTech Holdings, Inc., et al., In re: TeleTech Litigation
 Derivative Action
 Susan M. Gregory v. Kenneth D. Tuchman, et al.
 
 ITEM 1A. RISK FACTORS
  
 ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  Total Number
    
    
    Approximateof Shares
    
    
    Dollar Value ofPurchased as
    
    
    Shares that MayTotal
    
    
    Average
    
    
    Part of Publicly
    
    
    Yet Be PurchasedNumber of
    
    
    Price Paid
    
    
    Announced
    
    
    Under the PlansShares
    
    
    per Share
    
    
    Plans or
    
    
    or Programs(1)Period
    
    Purchased
    
    
    (or Unit)
    
    
    Programs
    
    
    (in thousands)April 1, 2009  April 30, 2009
    
    
    525,000
    
    
    $
    12.35
    
    
    
    525,000
    
    
    $
    26,927May 1, 2009  May 31, 2009
    
    
    140,000
    
    
    $
    12.69
    
    
    
    140,000
    
    
    $
    25,151June 1, 2009  June 30, 2009
    
    
    1,197,000
    
    
    $
    13.22
    
    
    
    1,197,000
    
    
    $
    9,328Total
    
    
    1,862,000
    
    
    
    
    
    
    
    1,862,000
 
 (1)
    
    In November 2001, our Board of Directors (Board)
authorized a stock repurchase program to repurchase up to
$5.0 million of our common stock with the objective of
increasing stockholder returns. The Board has since
periodically authorized additional increases in the
program. The most recent Board authorization to purchase additional common stock occurred in February 2009, whereby the Board increased the program allowance by $25 million.    Since inception of the program through June 30,
2009, the Board has authorized the repurchase of shares up
to a total value of $287.3 million, of which we have
purchased 23.3 million shares on the open market for $278.0
million. As of June 30, 2009 the remaining amount authorized for
repurchases under
the program is approximately $9.3 million. The stock
repurchase program does not have an expiration date. 43




---



##### Table of Contents



ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  1.
    
    Election of directors to hold office until the next annual meeting of stockholders or
until their successors are duly elected and qualified.
 Director
    
    For
    
    WithheldKenneth D. Tuchman
    
    
    61,380,060
    
    
    
    907,305James E. Barlett
    
    
    61,509,898
    
    
    
    777,467William A. Linnenbringer
    
    
    61,620,703
    
    
    
    666,662Ruth C. Lipper
    
    
    60,268,799
    
    
    
    2,018,566Shrikant Mehta
    
    
    61,568,428
    
    
    
    718,937Robert M. Tarola
    
    
    61,620,143
    
    
    
    667,222Shirley Young
    
    
    61,634,622
    
    
    
    652,743
 2.
    
    Ratification of the appointment of PricewaterhouseCoopers LLP as our independent
registered public accounting firm for 2009.
 For
    
    Against
    
    Abstain62,254,184
    
    16,482
    
    15,809
 
 ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 Exhibit No.
    
    Exhibit Description10.1
    
    Independent Director Compensation Arrangements (effective May 21, 2009)31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)31.2
    
    Certification of Interim Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)32.1
    
    Certification of Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)32.2
    
    Certification of Interim Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
 44




---



##### Table of Contents



SIGNATURES
  TELETECH HOLDINGS, INC.(Registrant)Date: July 29, 2009
    
    By:
    
    /s/Kenneth D. Tuchman

Kenneth D. TuchmanChairman and Chief Executive OfficerDate: July 29, 2009
    
    By:
    
    /s/John R. Troka, Jr.

John R. Troka, Jr.Interim Chief Financial Officer
 45




---



##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Description10.1
    
    Independent Director Compensation Arrangements (effective May 21, 2009)31.1
    
    Certification of Chief Executive Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)31.2
    
    Certification of Interim Chief Financial Officer Pursuant to Section
302 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)32.1
    
    Certification of Chief Executive Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)32.2
    
    Certification of Interim Chief Financial Officer Pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350)
 46