##### 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 September 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 filer o
Non-accelerated filer o(Do not check if a smaller reporting company)
Smaller reporting company o o þ




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##### 



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
September 30, 2009 FORM 10-Q
TABLE OF CONTENTS
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of September 30, 2009 (unaudited) and
December 31, 2008
    
    
    1Consolidated Statements of Operations for the three and nine months ended
September 30, 2009 and 2008 (unaudited)
    
    
    2Consolidated Statement of Equity as of and for the nine months ended
September 30, 2009 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the nine months
ended September 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
    
    
    43Item 1A. Risk Factors
    
    
    44Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    44Item 3. Defaults Upon Senior Securities
    
    
    44Item 4. Submission of Matters to a Vote of Security Holders
    
    
    44Item 5. Other Information
    
    
    45Item 6. Exhibits
    
    
    45SIGNATURES
    
    
    46EXHIBIT INDEX
    
    
    47EX-31.1EX-31.2EX-32.1EX-32.2
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##### 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)
 September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    114,889
    
    
    $
    87,942Accounts receivable, net
    
    
    201,613
    
    
    
    236,997Prepaids and other current assets
    
    
    39,466
    
    
    
    31,279Deferred tax assets, net
    
    
    15,091
    
    
    
    30,328Income tax receivables
    
    
    23,687
    
    
    
    18,342Total current assets
    
    
    394,746
    
    
    
    404,888Property, plant and equipment, net
    
    
    132,486
    
    
    
    157,747Goodwill
    
    
    45,148
    
    
    
    44,150Contract acquisition costs, net
    
    
    9,034
    
    
    
    7,591Deferred tax assets, net
    
    
    28,205
    
    
    
    31,504Other noncurrent assets
    
    
    19,133
    
    
    
    23,062Total assets
    
    $
    628,752
    
    
    $
    668,942LIABILITIES AND EQUITYCurrent liabilitiesAccounts payable
    
    $
    19,165
    
    
    $
    26,214Accrued employee compensation and benefits
    
    
    78,252
    
    
    
    71,919Other accrued expenses
    
    
    21,817
    
    
    
    18,887Income taxes payable
    
    
    16,887
    
    
    
    19,168Deferred tax liabilities, net
    
    
    115
    
    
    
    Deferred revenue
    
    
    14,066
    
    
    
    12,867Other current liabilities
    
    
    11,380
    
    
    
    31,044Total current liabilities
    
    
    161,682
    
    
    
    180,099Line of credit
    
    
    
    
    
    
    80,800Grant advances
    
    
    1,129
    
    
    
    1,824Negative investment in deconsolidated subsidiary
    
    
    4,865
    
    
    
    4,865Deferred tax liabilities, net
    
    
    
    
    
    
    Other noncurrent liabilities
    
    
    30,299
    
    
    
    40,460Total liabilities
    
    
    197,975
    
    
    
    308,048Commitments and contingencies (Note 10)EquityPreferred stock  $0.01 par value; 10,000,000 shares authorized;
zero shares outstanding as of September 30, 2009 and December 31, 2008
    
    
    
    
    
    
    Common stock  $0.01 par value; 150,000,000 shares authorized;
62,329,115 and 63,816,379 shares outstanding
as of September 30, 2009 and December 31, 2008, respectively
    
    
    623
    
    
    
    638Treasury stock at cost: 19,725,331 and 18,238,066 shares
as of September 30, 2009 and December 31, 2008, respectively
    
    
    (247,605
    )
    
    
    (228,596
    )Additional paid-in capital
    
    
    343,502
    
    
    
    341,887Accumulated other comprehensive income (loss)
    
    
    2,417
    
    
    
    (33,020
    )Retained earnings
    
    
    326,689
    
    
    
    274,974Total stockholders equity
    
    
    425,626
    
    
    
    355,883Noncontrolling interest
    
    
    5,151
    
    
    
    5,011Total equity
    
    
    430,777
    
    
    
    360,894Total liabilities and equity
    
    $
    628,752
    
    
    $
    668,942
  1




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES  Consolidated Statements of Operations
(Amounts in thousands, except per share amounts)
(Unaudited)
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Revenue
    
    $
    281,524
    
    
    $
    349,110
    
    
    $
    887,066
    
    
    $
    1,074,162Operating expensesCost of services (exclusive of depreciation and
amortization presented separately below)
    
    
    194,609
    
    
    
    252,666
    
    
    
    626,500
    
    
    
    788,599Selling, general and administrative
    
    
    42,565
    
    
    
    51,157
    
    
    
    136,061
    
    
    
    148,387Depreciation and amortization
    
    
    15,664
    
    
    
    14,998
    
    
    
    43,534
    
    
    
    45,782Restructuring charges, net
    
    
    703
    
    
    
    2,015
    
    
    
    5,014
    
    
    
    4,657Impairment losses
    
    
    
    
    
    
    1,033
    
    
    
    4,587
    
    
    
    1,033Total operating expenses
    
    
    253,541
    
    
    
    321,869
    
    
    
    815,696
    
    
    
    988,458Income from operations
    
    
    27,983
    
    
    
    27,241
    
    
    
    71,370
    
    
    
    85,704Other income (expense)Interest income
    
    
    579
    
    
    
    1,327
    
    
    
    2,091
    
    
    
    3,801Interest expense
    
    
    (466
    )
    
    
    (1,595
    )
    
    
    (2,629
    )
    
    
    (4,649
    )Other, net
    
    
    332
    
    
    
    (509
    )
    
    
    2,108
    
    
    
    (1,520
    )Total other income (expense)
    
    
    445
    
    
    
    (777
    )
    
    
    1,570
    
    
    
    (2,368
    )Income before income taxes
    
    
    28,428
    
    
    
    26,464
    
    
    
    72,940
    
    
    
    83,336Provision for income taxes
    
    
    (6,971
    )
    
    
    (5,368
    )
    
    
    (18,479
    )
    
    
    (20,697
    )Net income
    
    
    21,457
    
    
    
    21,096
    
    
    
    54,461
    
    
    
    62,639Net income attributable to noncontrolling interest
    
    
    (935
    )
    
    
    (936
    )
    
    
    (2,746
    )
    
    
    (2,992
    )Net income attributable to TeleTech shareholders
    
    $
    20,522
    
    
    $
    20,160
    
    
    $
    51,715
    
    
    $
    59,647Weighted average shares outstandingBasic
    
    
    62,159
    
    
    
    68,217
    
    
    
    63,051
    
    
    
    69,373Diluted
    
    
    63,832
    
    
    
    69,508
    
    
    
    64,122
    
    
    
    70,922Net income per share attributable to TeleTech shareholdersBasic
    
    $
    0.33
    
    
    $
    0.30
    
    
    $
    0.82
    
    
    $
    0.86Diluted
    
    $
    0.32
    
    
    $
    0.29
    
    
    $
    0.81
    
    
    $
    0.84
  2




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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
    
    controlling
    
    TotalShares
    
    Amount
    
    Shares
    
    Amount
    
    Stock
    
    Capital
    
    Income (Loss)
    
    Earnings
    
    interest
    
    EquityBalance as of December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    63,816
    
    
    $
    638
    
    
    $
    (228,596
    )
    
    $
    341,887
    
    
    $
    (33,020
    )
    
    $
    274,974
    
    
    $
    5,011
    
    
    $
    360,894Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    51,715
    
    
    
    2,746
    
    
    
    54,461Dividends distributed to noncontrolling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,790
    )
    
    
    (2,790
    )Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    13,805
    
    
    
    
    
    
    
    184
    
    
    
    13,989Derivatives valuation, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,632
    
    
    
    
    
    
    
    
    
    
    
    21,632Vesting of restricted stock units
    
    
    
    
    
    
    
    
    
    
    189
    
    
    
    2
    
    
    
    2,370
    
    
    
    (3,033
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (661
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    436
    
    
    
    4
    
    
    
    5,468
    
    
    
    (1,246
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,226Excess tax benefit from equity-based awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,066
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,066
    )Equity-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,960
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    8,960Purchases of common stock
    
    
    
    
    
    
    
    
    
    
    (2,112
    )
    
    
    (21
    )
    
    
    (26,847
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (26,868
    )Balance as of September 30, 2009
    
    
    
    
    
    $
    
    
    
    
    62,329
    
    
    $
    623
    
    
    $
    (247,605
    )
    
    $
    343,502
    
    
    $
    2,417
    
    
    $
    326,689
    
    
    $
    5,151
    
    
    $
    430,777
  3




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Amounts in thousands)
(Unaudited)
 Nine Months EndedSeptember 30,2009
    
    
    2008Cash flows from operating activitiesNet income
    
    $
    54,461
    
    
    $
    62,639Adjustment to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    43,534
    
    
    
    45,782Amortization of contract acquisition costs
    
    
    2,457
    
    
    
    1,625Provision for doubtful accounts
    
    
    1,298
    
    
    
    780Loss on disposal of assets
    
    
    1,558
    
    
    
    65Impairment losses
    
    
    4,587
    
    
    
    1,033Deferred income taxes
    
    
    5,569
    
    
    
    (38
    )Excess tax benefit from equity-based awards
    
    
    (3,066
    )
    
    
    (997
    )Equity-based compensation expense
    
    
    8,960
    
    
    
    7,889(Gain) loss on foreign currency derivatives
    
    
    (189
    )
    
    
    675Other
    
    
    514
    
    
    
    Changes in assets and liabilities:Accounts receivable
    
    
    39,781
    
    
    
    15,034Prepaids and other assets
    
    
    (609
    )
    
    
    (10,472
    )Accounts payable and accrued expenses
    
    
    (4,540
    )
    
    
    15,412Deferred revenue and other liabilities
    
    
    (1,637
    )
    
    
    (14,128
    )Net cash provided by operating activities
    
    
    152,678
    
    
    
    125,299Cash flows from investing activitiesPurchases of property, plant and equipment
    
    
    (19,092
    )
    
    
    (51,728
    )Settlement of foreign currency contracts for net investment hedging
    
    
    (1,727
    )
    
    
    Payment for contract acquisition costs
    
    
    (3,900
    )
    
    
    (763
    )Net cash used in investing activities
    
    
    (24,719
    )
    
    
    (52,491
    )Cash flows from financing activitiesProceeds from line of credit
    
    
    716,060
    
    
    
    779,170Payments on line of credit
    
    
    (796,860
    )
    
    
    (735,870
    )Payments on capital lease obligations and equipment financing
    
    
    (1,229
    )
    
    
    (1,203
    )Payments of debt refinancing fees
    
    
    
    
    
    
    (1,105
    )Dividends distributed to non-controlling interest
    
    
    (2,790
    )
    
    
    (1,428
    )Proceeds from exercise of stock options
    
    
    4,226
    
    
    
    2,933Purchase of treasury stock
    
    
    (26,868
    )
    
    
    (73,842
    )Net cash used in financing activities
    
    
    (107,461
    )
    
    
    (31,345
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    6,449
    
    
    
    (9,546
    )Increase in cash and cash equivalents
    
    
    26,947
    
    
    
    31,917Cash and cash equivalents, beginning of period
    
    
    87,942
    
    
    
    91,239Cash and cash equivalents, end of period
    
    $
    114,889
    
    
    $
    123,156Supplemental disclosuresCash paid for interest
    
    $
    2,269
    
    
    $
    3,822Cash paid for income taxes
    
    $
    18,765
    
    
    $
    19,191Non-cash investing and financing activitiesAcquisition of equipment through installment purchase agreements
    
    $
    3,294
    
    
    $
    Recognition of asset retirement obligations
    
    $
    63
    
    
    $
    
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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (1) OVERVIEW AND BASIS OF PRESENTATION
 Overview
  Basis of Presentation
     Use of Estimates
  5




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Recently Issued Accounting Pronouncements
       6




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
     (2) DECONSOLIDATION OF A SUBSIDIARY
  7




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  September 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
    8




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three
Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenueNorth American BPO
    
    $
    215,949
    
    
    $
    245,945
    
    
    $
    674,827
    
    
    $
    776,856International BPO
    
    
    65,575
    
    
    
    103,165
    
    
    
    212,239
    
    
    
    297,306Database Marketing and Consulting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    281,524
    
    
    $
    349,110
    
    
    $
    887,066
    
    
    $
    1,074,162Income (loss) from operationsNorth American BPO
    
    $
    30,882
    
    
    $
    20,337
    
    
    $
    84,623
    
    
    $
    81,206International BPO
    
    
    (2,899
    )
    
    
    6,969
    
    
    
    (13,253
    )
    
    
    4,922Database Marketing and Consulting
    
    
    
    
    
    
    (65
    )
    
    
    
    
    
    
    (424
    )Total
    
    $
    27,983
    
    
    $
    27,241
    
    
    $
    71,370
    
    
    $
    85,704
 September 30,
    
    
    December 31,2009
    
    
    2008AssetsNorth American BPO
    
    $
    426,557
    
    
    $
    483,187International BPO
    
    
    202,195
    
    
    
    185,755Database Marketing and Consulting
    
    
    
    
    
    
    Total
    
    $
    628,752
    
    
    $
    668,942
  Three
Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008RevenueUnited States
    
    $
    98,504
    
    
    $
    93,794
    
    
    $
    310,055
    
    
    $
    304,012Philippines
    
    
    78,634
    
    
    
    75,802
    
    
    
    235,724
    
    
    
    212,305Latin America
    
    
    47,513
    
    
    
    79,953
    
    
    
    152,378
    
    
    
    239,167Europe
    
    
    25,380
    
    
    
    39,798
    
    
    
    86,127
    
    
    
    115,693Canada
    
    
    18,783
    
    
    
    36,206
    
    
    
    66,610
    
    
    
    123,836Asia Pacific
    
    
    4,581
    
    
    
    22,663
    
    
    
    20,845
    
    
    
    77,687Africa
    
    
    8,129
    
    
    
    894
    
    
    
    15,327
    
    
    
    1,462Total
    
    $
    281,524
    
    
    $
    349,110
    
    
    $
    887,066
    
    
    $
    1,074,162
 (4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS
   9




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (5) GOODWILL
  December 31,
    
    
    
    
    
    
    
    
    
    
    Effect of Foreign
    
    
    September 30,2008
    
    
    Acquisitions
    
    
    Impairments
    
    
    Currency
    
    
    2009North American BPO
    
    $
    35,885
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    35,885International BPO
    
    
    8,265
    
    
    
    
    
    
    
    
    
    
    
    998
    
    
    
    9,263Total
    
    $
    44,150
    
    
    $
    
    
    
    $
    
    
    
    $
    998
    
    
    $
    45,148
  (6) DERIVATIVES
 Cash Flow Hedges
  Three
Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Aggregate unrealized net (loss) gain at beginning of period
    
    $
    (5,754
    )
    
    $
    (1,279
    )
    
    $
    (21,180
    )
    
    $
    21,417Net gain (loss) from change in fair value of cash flow hedges
    
    
    4,074
    
    
    
    (6,042
    )
    
    
    11,467
    
    
    
    (22,398
    )Net gain (loss) reclassified to earnings from effective hedges
    
    
    (2,132
    )
    
    
    881
    
    
    
    (10,165
    )
    
    
    7,221Aggregate unrealized net gain (loss) at end of period
    
    $
    452
    
    
    $
    (8,202
    )
    
    $
    452
    
    
    $
    (8,202
    )
 10




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##### 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 September 30, 2009
    
    Notional Amount
    
    
    Notional Amount
    
    
    Months
    
    
    ThroughCanadian Dollar
    
    
    21,900
    
    
    $
    18,101
    
    
    
    67.1
    %
    
    December 2011Canadian Dollar Call Options
    
    
    27,000
    
    
    
    24,097
    
    
    
    81.1
    %
    
    December 2010Philippine Peso
    
    
    4,480,906
    
    
    
    95,450
    1
    
    
    88.6
    %
    
    February 2011Argentine Peso
    
    
    28,250
    
    
    
    7,881
    2
    
    
    100.0
    %
    
    May 2010Mexican Peso
    
    
    494,000
    
    
    
    37,139
    
    
    
    80.9
    %
    
    September 2011South African Rand
    
    
    57,500
    
    
    
    5,230
    
    
    
    100.0
    %
    
    February 2010British Pound Sterling
    
    
    1,796
    
    
    
    3,195
    3
    
    
    71.4
    %
    
    March 2011$
    191,093Local 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 New Zealand dollars, Australian dollars and British
pound sterling, which are translated into equivalent U.S.
dollars on September 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 September 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 September 30, 2009 and December 31, 2008. Hedge of Net Investment
  11




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Fair Value Hedges
  Embedded Derivatives
  Derivative Valuation and Settlements
  September 30, 2009Designated as hedginginstruments
    
    
    Not designated as hedging instrumentsForeign
    
    
    Foreign
    
    
    Foreign
    
    
    ForeignDerivative contracts:
    
    Exchange
    
    
    Exchange
    
    
    Exchange
    
    
    Exchange
    
    
    LeasesOption andForward
    
    
    
    
    
    
    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
    
    $
    6,733
    
    
    $
    
    
    
    $
    179
    
    
    $
    31
    
    
    $
    15Other noncurrent assets
    
    
    2,257
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other current liabilities
    
    
    (7,170
    )
    
    
    
    
    
    
    (86
    )
    
    
    (184
    )
    
    
    (121
    )Other noncurrent liabilities
    
    
    (90
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (396
    )Total fair value of derivatives, net
    
    $
    1,730
    
    
    $
    
    
    
    $
    93
    
    
    $
    (153
    )
    
    $
    (502
    )
 December 30, 2008Designated as hedginginstruments
    
    
    Not designated as hedging instrumentsForeign
    
    
    Foreign
    
    
    Foreign
    
    
    ForeignDerivative contracts:
    
    Exchange
    
    
    Exchange
    
    
    Exchange
    
    
    Exchange
    
    
    LeasesOption andForward
    
    
    
    
    
    
    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
    
    $
    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
    )
 12




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three Months Ended September 30,2009
    
    2008Designated as hedging instruments
    
    Designated as hedging instrumentsDerivative 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:
    
    $
    4,074
    
    
    $
    
    
    
    $
    (6,042
    )
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  effective portion:Revenue
    
    $
    (3,496
    )
    
    $
    
    
    
    $
    1,445
    
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  ineffective portion
and amount excluded from effectiveness testing:Other, net
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Three Months Ended September 30,2009
    
    2008Not designated as hedging instruments
    
    Not designated as hedging instrumentsDerivative contracts:
    
    Foreign Exchange
    
    Leases
    
    Foreign Exchange
    
    LeasesOption and
    
    
    
    
    
    Embedded
    
    Option and
    
    
    
    
    
    EmbeddedDerivative classification:
    
    Forward Contracts
    
    Fair Value
    
    Derivative
    
    Forward Contracts
    
    Fair Value
    
    DerivativeAmount and location of net gain or (loss) recognized
in the Consolidated Statement of Operations:Cost of services
    
    $
    
    
    
    $
    
    
    
    $
    97
    
    
    $
    
    
    
    $
    
    
    
    $
    (297
    )Other, net
    
    
    60
    
    
    
    319
    
    
    
    
    
    
    
    
    
    
    
    169
    
    
    
    
 13




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Nine Months Ended September 30,2009
    
    2008Designated as hedging instruments
    
    Designated as hedging instrumentsDerivative 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:
    
    $
    11,467
    
    
    $
    (1,727
    )
    
    $
    (22,398
    )
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  effective portion:Revenue
    
    $
    (16,664
    )
    
    $
    
    
    
    $
    11,838
    
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  ineffective portion
and amount excluded from effectiveness testing:Other, net
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Nine Months Ended September 30,2009
    
    2008Not designated as hedging instruments
    
    Not designated as hedging instrumentsDerivative contracts:
    
    Foreign Exchange
    
    Leases
    
    Foreign Exchange
    
    LeasesOption and
    
    
    
    
    
    Embedded
    
    Option and
    
    
    
    EmbeddedDerivative classification:

    Forward Contracts
    
    Fair Value
    
    Derivative
    
    Forward Contracts
    
    Fair Value
    
    DerivativeAmount and location of net gain or (loss) recognized
in the Consolidated Statement of Operations:Cost of services
    
    $
    
    
    
    $
    
    
    
    $
    975
    
    
    $
    
    
    
    $
    
    
    
    $
    (675
    )Other, net
    
    
    (73
    )
    
    
    (638
    )
    
    
    
    
    
    
    
    
    
    
    1,014
    
    
    
    
 (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
 14




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 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
    
    $
    
    
    
    $
    1,730
    
    
    $
    
    
    
    $
    1,730Fair value hedges
    
    
    
    
    
    
    (153
    )
    
    
    
    
    
    
    (153
    )Embedded derivatives
    
    
    
    
    
    
    (502
    )
    
    
    
    
    
    
    (502
    )Option and Forward Contracts
    
    
    
    
    
    
    93
    
    
    
    
    
    
    
    93Total net derivative asset (liability)
    
    $
    
    
    
    $
    1,168
    
    
    $
    
    
    
    $
    1,168
  Money
Market Investments
 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
    
    $
    
    
    
    $
    6,408
    
    
    $
    Derivative instruments
    
    
    
    
    
    
    1,168
    
    
    
    Total assets
    
    $
    
    
    
    $
    7,576
    
    
    $
    LiabilitiesDeferred compensation plan liability
    
    $
    
    
    
    $
    (3,032
    )
    
    $
    Total liabilities
    
    $
    
    
    
    $
    (3,032
    )
    
    $
    
 15




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (8) INCOME TAXES
     (9) RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES
 Restructuring Charges
  16




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008North American BPOReduction in force
    
    $
    552
    
    
    $
    603
    
    
    $
    4,120
    
    
    $
    731Facility exit charges
    
    
    115
    
    
    
    885
    
    
    
    587
    
    
    
    885Revision of prior estimates
    
    
    (239
    )
    
    
    
    
    
    
    (1,374
    )
    
    
    Total
    
    $
    428
    
    
    $
    1,488
    
    
    $
    3,333
    
    
    $
    1,616
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008International BPOReduction in force
    
    $
    263
    
    
    $
    527
    
    
    $
    1,513
    
    
    $
    3,098Facility exit charges
    
    
    12
    
    
    
    
    
    
    
    168
    
    
    
    Revision of prior estimates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total
    
    $
    275
    
    
    $
    527
    
    
    $
    1,681
    
    
    $
    3,098
 Three Months Ended September 30,
    
    
    Nine Months Ended September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Database Marketing and ConsultingReduction in force
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    8Facility exit charges
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Revision of prior estimates
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (65
    )Total
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    (57
    )
    Closure ofDelivery
    
    
    Reduction inCenters
    
    
    Force
    
    
    TotalBalance as of December 31, 2008
    
    $
    2,113
    
    
    $
    
    
    
    $
    2,113Expense
    
    
    755
    
    
    
    5,633
    
    
    
    6,388Payments
    
    
    (715
    )
    
    
    (4,336
    )
    
    
    (5,051
    )Revision of prior estimates
    
    
    (1,324
    )
    
    
    (50
    )
    
    
    (1,374
    )Balance as of September 30, 2009
    
    $
    829
    
    
    $
    1,247
    
    
    $
    2,076
  17




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Impairment Losses
   (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




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##### 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 (LOSS)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net income
    
    $
    21,457
    
    
    $
    21,096
    
    
    $
    54,461
    
    
    $
    62,639Foreign currency translation adjustments
    
    
    6,396
    
    
    
    (26,284
    )
    
    
    13,989
    
    
    
    (20,684
    )Derivatives valuation, net of tax
    
    
    6,207
    
    
    
    (6,922
    )
    
    
    21,632
    
    
    
    (29,618
    )Total comprehensive income (loss)
    
    $
    34,060
    
    
    $
    (12,110
    )
    
    $
    90,082
    
    
    $
    12,337Comprehensive income attributable to noncontrolling interest
    
    
    (812
    )
    
    
    (936
    )
    
    
    (2,930
    )
    
    
    (3,008
    )Comprehensive income (loss) attributable to TeleTech
    
    $
    33,248
    
    
    $
    (13,046
    )
    
    $
    87,152
    
    
    $
    9,329
  Nine Months EndedSeptember 30,2009
    
    
    2008Noncontrolling interest, January 1
    
    $
    5,011
    
    
    $
    3,555Net income attributable to noncontrolling interest
    
    
    2,746
    
    
    
    2,992Dividends distributed to noncontrolling interest
    
    
    (2,790
    )
    
    
    (1,428
    )Foreign currency translation adjustments
    
    
    184
    
    
    
    16Noncontrolling interest, September 30
    
    $
    5,151
    
    
    $
    5,135
 19




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (12) NET INCOME PER SHARE
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Shares used in basic earnings per share calculation
    
    
    62,159
    
    
    
    68,217
    
    
    
    63,051
    
    
    
    69,373Effect of dilutive securities  Stock options
    
    
    987
    
    
    
    1,289
    
    
    
    636
    
    
    
    1,549Effect of dilutive securities  RSUs
    
    
    686
    
    
    
    2
    
    
    
    435
    
    
    
    Shares used in dilutive earnings per share calculation
    
    
    63,832
    
    
    
    69,508
    
    
    
    64,122
    
    
    
    70,922
  (13) EQUITY-BASED COMPENSATION PLANS
  Stock Options
  Restricted Stock Unit Grants
   20




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##### Table of Contents



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




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##### 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, we believe that clients 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




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##### Table of Contents



Our Strategy
   
    
    Capitalize 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;
 
    
    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 diversify revenue into higher-margin offerings such as professional
services, talent acquisition, learning services and our hosted TeleTech OnDemand
capabilities;
    
    Continue to improve our operating margins through selective cost cutting initiatives and
increased asset utilization of our globally diverse delivery centers;
    
    Scale our work-from-home initiative to increase operational flexibility; and
    
    Selectively pursue acquisitions that extend our capabilities, geographic reach and/or
industry expertise.
 23




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##### Table of Contents



Our Third Quarter 2009 Financial Results
    Business Overview
  BPO Services
     24




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25




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##### Table of Contents



September 30, 2009
    
    September 30, 2008Total Production
    
    
    
    
    
    
    
    
    
    Total ProductionWorkstations
    
    In Use
    
    % In Use
    
    Workstations
    
    In Use
    
    % In UseMulti-client centersSites open <1 year
    
    
    1,158
    
    
    
    891
    
    
    
    77
    %
    
    
    6,095
    
    
    
    2,732
    
    
    
    45
    %Sites open >1 year
    
    
    28,272
    
    
    
    19,153
    
    
    
    68
    %
    
    
    24,289
    
    
    
    18,413
    
    
    
    76
    %Total multi-client centers
    
    
    29,430
    
    
    
    20,044
    
    
    
    68
    %
    
    
    30,384
    
    
    
    21,145
    
    
    
    70
    %
  Recent Issued Accounting Pronouncements
  Critical Accounting Policies and Estimates
  Revenue Recognition
  26




---



##### Table of Contents



Production Rate 
 PerformanceBased 
 Hybrid 
   Income Taxes
    27




---



##### Table of Contents



Allowance for Doubtful Accounts
  Impairment of LongLived Assets
  Goodwill
  Restructuring Liability
  EquityBased Compensation
  Contingencies
  28




---



##### Table of Contents



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
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008Net cash provided by operating activities
    
    $
    58,840
    
    
    $
    65,994
    
    
    $
    152,678
    
    
    $
    125,299Purchases of property, plant and equipment
    
    
    4,791
    
    
    
    15,320
    
    
    
    19,092
    
    
    
    51,728Free cash flow
    
    $
    54,049
    
    
    $
    50,674
    
    
    $
    133,586
    
    
    $
    73,571
  30




---



##### Table of Contents



Results of Operations
 Three Months Ended September 30, 2009 As Compared to Three Months Ended September 30, 2008
 Operating Review
  Three Months Ended September 30,%of
    
    
    
    
    
    
    %ofSegment
    
    
    
    
    
    
    Segment2009
    
    
    Revenue
    
    
    2008
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeRevenueNorth American BPO
    
    $
    215,949
    
    
    
    
    
    
    $
    245,945
    
    
    
    
    
    
    $
    (29,996
    )
    
    
    -12.2
    %International BPO
    
    
    65,575
    
    
    
    
    
    
    
    103,165
    
    
    
    
    
    
    
    (37,590
    )
    
    
    -36.4
    %Database Marketing and Consulting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %$
    281,524
    
    
    
    
    
    
    $
    349,110
    
    
    
    
    
    
    $
    (67,586
    )
    
    
    -19.4
    %Cost of servicesNorth American BPO
    
    $
    143,475
    
    
    
    66.4
    %
    
    $
    176,434
    
    
    
    71.7
    %
    
    $
    (32,959
    )
    
    
    -18.7
    %International BPO
    
    
    51,134
    
    
    
    78.0
    %
    
    
    76,217
    
    
    
    73.9
    %
    
    
    (25,083
    )
    
    
    -32.9
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    15
    
    
    
    0.0
    %
    
    
    (15
    )
    
    
    -100.0
    %$
    194,609
    
    
    
    69.1
    %
    
    $
    252,666
    
    
    
    72.4
    %
    
    $
    (58,057
    )
    
    
    -23.0
    %Selling, general and administrativeNorth American BPO
    
    $
    31,403
    
    
    
    14.5
    %
    
    $
    36,381
    
    
    
    14.8
    %
    
    $
    (4,978
    )
    
    
    -13.7
    %International BPO
    
    
    11,162
    
    
    
    17.0
    %
    
    
    14,731
    
    
    
    14.3
    %
    
    
    (3,569
    )
    
    
    -24.2
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    45
    
    
    
    0.0
    %
    
    
    (45
    )
    
    
    -100.0
    %$
    42,565
    
    
    
    15.1
    %
    
    $
    51,157
    
    
    
    14.7
    %
    
    $
    (8,592
    )
    
    
    -16.8
    %Depreciation and amortizationNorth American BPO
    
    $
    9,761
    
    
    
    4.5
    %
    
    $
    10,272
    
    
    
    4.2
    %
    
    $
    (511
    )
    
    
    -5.0
    %International BPO
    
    
    5,903
    
    
    
    9.0
    %
    
    
    4,721
    
    
    
    4.6
    %
    
    
    1,182
    
    
    
    25.0
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    5
    
    
    
    0.0
    %
    
    
    (5
    )
    
    
    -100.0
    %$
    15,664
    
    
    
    5.6
    %
    
    $
    14,998
    
    
    
    4.3
    %
    
    $
    666
    
    
    
    4.4
    %Restructuring charges, netNorth American BPO
    
    $
    428
    
    
    
    0.2
    %
    
    $
    1,488
    
    
    
    0.6
    %
    
    $
    (1,060
    )
    
    
    -71.2
    %International BPO
    
    
    275
    
    
    
    0.4
    %
    
    
    527
    
    
    
    0.5
    %
    
    
    (252
    )
    
    
    -47.8
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %$
    703
    
    
    
    0.2
    %
    
    $
    2,015
    
    
    
    0.6
    %
    
    $
    (1,312
    )
    
    
    -65.1
    %Impairment lossesNorth American BPO
    
    $
    
    
    
    
    0.0
    %
    
    $
    1,033
    
    
    
    0.4
    %
    
    $
    (1,033
    )
    
    
    100.0
    %International BPO
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %$
    
    
    
    
    0.0
    %
    
    $
    1,033
    
    
    
    0.3
    %
    
    $
    (1,033
    )
    
    
    100.0
    %Income (loss) from operationsNorth American BPO
    
    $
    30,882
    
    
    
    14.3
    %
    
    $
    20,337
    
    
    
    8.3
    %
    
    $
    10,545
    
    
    
    51.9
    %International BPO
    
    
    (2,899
    )
    
    
    -4.4
    %
    
    
    6,969
    
    
    
    6.8
    %
    
    
    (9,868
    )
    
    
    -141.6
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    (65
    )
    
    
    0.0
    %
    
    
    65
    
    
    
    100.0
    %$
    27,983
    
    
    
    9.9
    %
    
    $
    27,241
    
    
    
    7.8
    %
    
    $
    742
    
    
    
    2.7
    %Other income (expense), net
    
    $
    445
    
    
    
    0.2
    %
    
    $
    (777
    )
    
    
    -0.2
    %
    
    $
    1,222
    
    
    
    157.3
    %Provision for income taxes
    
    $
    (6,971
    )
    
    
    -2.5
    %
    
    $
    (5,368
    )
    
    
    -1.5
    %
    
    $
    (1,603
    )
    
    
    -29.9
    %
 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



Nine months Ended September 30, 2009 As Compared to Nine months Ended September 30, 2008
 Operating Review
  Nine Months Ended September 30,% of
    
    
    
    
    
    
    % ofSegment
    
    
    
    
    
    
    Segment2009
    
    
    Revenue
    
    
    2008
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeRevenueNorth American BPO
    
    $
    674,827
    
    
    
    
    
    
    $
    776,856
    
    
    
    
    
    
    $
    (102,029
    )
    
    
    -13.1
    %International BPO
    
    
    212,239
    
    
    
    
    
    
    
    297,306
    
    
    
    
    
    
    
    (85,067
    )
    
    
    -28.6
    %Database Marketing and Consulting
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    0.0
    %$
    887,066
    
    
    
    
    
    
    $
    1,074,162
    
    
    
    
    
    
    $
    (187,096
    )
    
    
    -17.4
    %Cost of servicesNorth American BPO
    
    $
    455,287
    
    
    
    67.5
    %
    
    $
    554,931
    
    
    
    71.4
    %
    
    $
    (99,644
    )
    
    
    -18.0
    %International BPO
    
    
    171,213
    
    
    
    80.7
    %
    
    
    233,559
    
    
    
    78.6
    %
    
    
    (62,346
    )
    
    
    -26.7
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    109
    
    
    
    0.0
    %
    
    
    (109
    )
    
    
    -100.0
    %$
    626,500
    
    
    
    70.6
    %
    
    $
    788,599
    
    
    
    73.4
    %
    
    $
    (162,099
    )
    
    
    -20.6
    %Selling, general and administrativeNorth American BPO
    
    $
    100,213
    
    
    
    14.9
    %
    
    $
    106,154
    
    
    
    13.7
    %
    
    $
    (5,941
    )
    
    
    -5.6
    %International BPO
    
    
    35,848
    
    
    
    16.9
    %
    
    
    41,880
    
    
    
    14.1
    %
    
    
    (6,032
    )
    
    
    -14.4
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    353
    
    
    
    0.0
    %
    
    
    (353
    )
    
    
    -100.0
    %$
    136,061
    
    
    
    15.3
    %
    
    $
    148,387
    
    
    
    13.8
    %
    
    $
    (12,326
    )
    
    
    -8.3
    %Depreciation and amortizationNorth American BPO
    
    $
    29,560
    
    
    
    4.4
    %
    
    $
    31,916
    
    
    
    4.1
    %
    
    $
    (2,356
    )
    
    
    -7.4
    %International BPO
    
    
    13,974
    
    
    
    6.6
    %
    
    
    13,847
    
    
    
    4.7
    %
    
    
    127
    
    
    
    0.9
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    19
    
    
    
    0.0
    %
    
    
    (19
    )
    
    
    -100.0
    %$
    43,534
    
    
    
    4.9
    %
    
    $
    45,782
    
    
    
    4.3
    %
    
    $
    (2,248
    )
    
    
    -4.9
    %Restructuring charges, netNorth American BPO
    
    $
    3,333
    
    
    
    0.5
    %
    
    $
    1,616
    
    
    
    0.2
    %
    
    $
    1,717
    
    
    
    106.3
    %International BPO
    
    
    1,681
    
    
    
    0.8
    %
    
    
    3,098
    
    
    
    1.0
    %
    
    
    (1,417
    )
    
    
    -45.7
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    (57
    )
    
    
    0.0
    %
    
    
    57
    
    
    
    100.0
    %$
    5,014
    
    
    
    0.6
    %
    
    $
    4,657
    
    
    
    0.4
    %
    
    $
    357
    
    
    
    7.7
    %Impairment lossesNorth American BPO
    
    $
    1,811
    
    
    
    0.3
    %
    
    $
    1,033
    
    
    
    0.1
    %
    
    $
    778
    
    
    
    75.3
    %International BPO
    
    
    2,776
    
    
    
    1.3
    %
    
    
    
    
    
    
    0.0
    %
    
    
    2,776
    
    
    
    100.0
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %
    
    
    
    
    
    
    0.0
    %$
    4,587
    
    
    
    0.5
    %
    
    $
    1,033
    
    
    
    0.1
    %
    
    $
    3,554
    
    
    
    100.0
    %Income (loss) from operationsNorth American BPO
    
    $
    84,623
    
    
    
    12.5
    %
    
    $
    81,206
    
    
    
    10.5
    %
    
    $
    3,417
    
    
    
    4.2
    %International BPO
    
    
    (13,253
    )
    
    
    -6.2
    %
    
    
    4,922
    
    
    
    1.7
    %
    
    
    (18,175
    )
    
    
    -369.3
    %Database Marketing and Consulting
    
    
    
    
    
    
    0.0
    %
    
    
    (424
    )
    
    
    0.0
    %
    
    
    424
    
    
    
    100.0
    %$
    71,370
    
    
    
    8.0
    %
    
    $
    85,704
    
    
    
    8.0
    %
    
    $
    (14,334
    )
    
    
    -16.7
    %Other income (expense), net
    
    $
    1,570
    
    
    
    0.2
    %
    
    $
    (2,368
    )
    
    
    -0.2
    %
    
    $
    3,938
    
    
    
    166.3
    %Provision for income taxes
    
    $
    (18,479
    )
    
    
    -2.1
    %
    
    $
    (20,697
    )
    
    
    -1.9
    %
    
    $
    2,218
    
    
    
    10.7
    %
 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
  37




---



##### Table of Contents



Cash Flows from Investing Activities
  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
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital lease obligations
    
    
    1,645
    
    
    
    2,346
    
    
    
    
    
    
    
    
    
    
    
    3,991Equipment financing arrangements
    
    
    2,571
    
    
    
    1,226
    
    
    
    320
    
    
    
    
    
    
    
    4,117Purchase obligations
    
    
    24,668
    
    
    
    30,990
    
    
    
    6,095
    
    
    
    
    
    
    
    61,753Operating lease commitments
    
    
    28,645
    
    
    
    40,702
    
    
    
    17,787
    
    
    
    7,754
    
    
    
    94,888Total
    
    $
    57,529
    
    
    $
    75,264
    
    
    $
    24,202
    
    
    $
    7,754
    
    
    $
    164,749
 
    
    Contractual obligations to be paid in a foreign currency are translated at the September
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 liabilities for uncertain tax positions 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
  39




---



##### Table of Contents



Interest Rate Risk
  Foreign Currency Risk
   Cash Flow Hedging Program
   40




---



##### Table of Contents



% Maturing inLocal Currency
    
    
    U.S. Dollar
    
    
    the Next 12
    
    
    Contracts MaturingAs of September 30, 2009
    
    Notional Amount
    
    
    Notional Amount
    
    
    Months
    
    
    ThroughCanadian Dollar
    
    
    21,900
    
    
    $
    18,101
    
    
    
    67.1
    %
    
    December 2011Canadian Dollar Call Options
    
    
    27,000
    
    
    
    24,097
    
    
    
    81.1
    %
    
    December 2010Philippine Peso
    
    
    4,480,906
    
    
    
    95,450
    1
    
    
    88.6
    %
    
    February 2011Argentine Peso
    
    
    28,250
    
    
    
    7,881
    2
    
    
    100.0
    %
    
    May 2010Mexican Peso
    
    
    494,000
    
    
    
    37,139
    
    
    
    80.9
    %
    
    September 2011South African Rand
    
    
    57,500
    
    
    
    5,230
    
    
    
    100.0
    %
    
    February 2010British Pound Sterling
    
    
    1,796
    
    
    
    3,195
    3
    
    
    71.4
    %
    
    March 2011$
    191,093Local 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 New Zealand dollars, Australian dollars
and British pound sterling, which are translated into
equivalent U.S. dollars on September 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 September 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 September 30, 2009 and
December 31, 2008.  Maturing in theSeptember 30, 2009
    
    
    Next 12 MonthsCanadian Dollar
    
    $
    2,169
    
    
    $
    1,200Canadian Dollar Call Options
    
    
    1,763
    
    
    
    1,371Philippine Peso
    
    
    (1,853
    )
    
    
    (2,462
    )Argentine Peso
    
    
    (695
    )
    
    
    (695
    )Mexican Peso
    
    
    (1,649
    )
    
    
    (1,934
    )South African Rand
    
    
    2,310
    
    
    
    2,310British Pound Sterling
    
    
    (315
    )
    
    
    (226
    )$
    1,730
    
    
    $
    (436
    )
  41




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##### Table of Contents



Fair Value of Debt and Equity Securities
  
 ITEM 4. CONTROLS AND PROCEDURES
  Evaluation of Disclosure Controls and Procedures
    42




---



##### Table of Contents



Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  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.
 43




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##### Table of Contents



ITEM 1A. RISK FACTORS
  We face risks related to health epidemics, which could disrupt our business and have a material
adverse effect on our financial condition and results of operations.
  
 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)July 1, 2009  July 31, 2009
    
    
    55,100
    
    
    $
    14.16
    
    
    
    55,100
    
    
    $
    33,548August 1, 2009  August 31, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    33,548September 1, 2009  September 30, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    33,548Total
    
    
    55,100
    
    
    
    
    
    
    
    55,100
 
 (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 September 2009, whereby
the Board increased the program allowance by $25.0 million.
Since inception of the program through September 30, 2009,
the Board has authorized the repurchase of shares up to a
total value of $312.3 million, of which we have purchased
23.4 million shares on the open market for $278.8 million.
As of September 30, 2009 the remaining amount authorized
for repurchases under the program is approximately $33.5
million. The stock repurchase program does not have an
expiration date. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  44




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##### Table of Contents



ITEM 5. OTHER INFORMATION
  
 ITEM 6. EXHIBITS
 Exhibit No.
    
    Exhibit Description31.1
    
    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)
 45




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##### Table of Contents



SIGNATURES
   TELETECH HOLDINGS, INC. 
(Registrant)Date: October 28, 2009
    By:
    /s/Kenneth D. TuchmanKenneth D. TuchmanChairman and Chief Executive OfficerDate: October 28, 2009
    By:
    /s/John R. Troka, Jr.John R. Troka, Jr.Interim Chief Financial Officer 46




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Description31.1
    
    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)
 47