##### 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, 2010
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the transition period from       to
 
 Commission File Number 001-11919
 
 TeleTech Holdings, Inc.
  Delaware
    
    84-1291044(State or other jurisdiction of
    
    (I.R.S. Employerincorporation or organization)
    
    Identification No.)
 9197 South Peoria Street
Englewood, Colorado 80112
  þ o
 o o
 Rule 12b-2
 Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o(Do not check if a smaller reporting company)

Smaller reporting company o
 o þ




---



##### 



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
JUNE 30, 2010 FORM 10-Q
TABLE OF CONTENTS
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of June 30, 2010 (unaudited) and
December 31, 2009
    
    
    1Consolidated Statements of Operations for the three and six months
ended June 30, 2010 and 2009 (unaudited)
    
    
    2Consolidated Statement of Equity as of and for the
six months ended June 30, 2010 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the six months
ended June 30, 2010 and 2009 (unaudited)
    
    
    4Notes to the Unaudited Consolidated Financial Statements
    
    
    5Item 2. Managements Discussion and Analysis of Financial Condition and
Results of Operations
    
    
    19Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    38Item 4. Controls and Procedures
    
    
    40PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    41Item 1A. Risk Factors
    
    
    42Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    43Item 3. Defaults Upon Senior Securities
    
    
    43Item 4. Reserved
    
    
    43Item 5. Other Information
    
    
    43Item 6. Exhibits
    
    
    43SIGNATURES
    
    
    44EXHIBIT INDEX
    
    
    45EX-31.1EX-31.2EX-32.1EX-32.2




---



##### 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 31,2010
    
    
    2009(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    131,484
    
    
    $
    109,424Accounts receivable, net
    
    
    197,111
    
    
    
    216,614Prepaids and other current assets
    
    
    34,996
    
    
    
    39,144Deferred tax assets, net
    
    
    9,247
    
    
    
    5,911Income tax receivable
    
    
    31,908
    
    
    
    31,282Total current assets
    
    
    404,746
    
    
    
    402,375Long-term assetsProperty, plant and equipment, net
    
    
    113,358
    
    
    
    126,995Goodwill
    
    
    45,113
    
    
    
    45,250Contract acquisition costs, net
    
    
    5,352
    
    
    
    8,049Deferred tax assets, net
    
    
    35,607
    
    
    
    36,527Other long-term assets
    
    
    17,565
    
    
    
    20,971Total long-term assets
    
    
    216,995
    
    
    
    237,792Total assets
    
    $
    621,741
    
    
    $
    640,167LIABILITIES AND EQUITYCurrent liabilitiesAccounts payable
    
    $
    21,299
    
    
    $
    17,625Accrued employee compensation and benefits
    
    
    64,185
    
    
    
    67,106Other accrued expenses
    
    
    26,408
    
    
    
    18,481Income taxes payable
    
    
    19,262
    
    
    
    20,327Deferred tax liabilities, net
    
    
    3,991
    
    
    
    3,145Deferred revenue
    
    
    5,254
    
    
    
    13,164Other current liabilities
    
    
    3,818
    
    
    
    6,118Total current liabilities
    
    
    144,217
    
    
    
    145,966Long-term liabilitiesLine of credit
    
    
    
    
    
    
    Negative investment in deconsolidated subsidiary
    
    
    4,865
    
    
    
    4,865Deferred tax liabilities, net
    
    
    1,732
    
    
    
    Deferred rent
    
    
    12,168
    
    
    
    13,989Other long-term liabilities
    
    
    16,090
    
    
    
    19,446Total long-term liabilities
    
    
    34,855
    
    
    
    38,300Total liabilities
    
    
    179,072
    
    
    
    184,266Commitments and contingencies (Note 10)EquityPreferred stock  $0.01 par value: 10,000,000 shares authorized;
zero shares outstanding as of June 30, 2010 and
December 31, 2009
    
    
    
    
    
    
    Common stock  $0.01 par value; 150,000,000 shares authorized;
60,176,232 and 62,218,238 shares outstanding as of
June 30, 2010 and December 31, 2009, respectively
    
    
    602
    
    
    
    622Additional paid-in capital
    
    
    344,564
    
    
    
    344,251Treasury stock at cost: 21,878,213 and 19,836,208 shares as of
June 30, 2010 and December 31, 2009, respectively
    
    
    (283,945
    )
    
    
    (251,691
    )Accumulated other comprehensive income
    
    
    3,113
    
    
    
    10,513Retained earnings
    
    
    373,417
    
    
    
    346,728Total equity attributable to TeleTech shareholders
    
    
    437,751
    
    
    
    450,423Non-controlling interest
    
    
    4,918
    
    
    
    5,478Total equity
    
    
    442,669
    
    
    
    455,901Total liabilities and equity
    
    $
    621,741
    
    
    $
    640,167
  1




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Operations
 (Amounts in thousands, except per share amounts)
 (Unaudited)
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue
    
    $
    271,927
    
    
    $
    301,512
    
    
    $
    543,453
    
    
    $
    605,542Operating expensesCost of services (exclusive of depreciation and
amortization presented separately below)
    
    
    198,194
    
    
    
    213,049
    
    
    
    392,812
    
    
    
    431,891Selling, general and administrative
    
    
    39,741
    
    
    
    44,981
    
    
    
    83,149
    
    
    
    93,496Depreciation and amortization
    
    
    12,946
    
    
    
    13,808
    
    
    
    25,670
    
    
    
    27,870Restructuring charges, net
    
    
    1,304
    
    
    
    4,008
    
    
    
    2,773
    
    
    
    4,311Impairment losses
    
    
    679
    
    
    
    2,620
    
    
    
    679
    
    
    
    4,587Total operating expenses
    
    
    252,864
    
    
    
    278,466
    
    
    
    505,083
    
    
    
    562,155Income from operations
    
    
    19,063
    
    
    
    23,046
    
    
    
    38,370
    
    
    
    43,387Other income (expense)Interest income
    
    
    486
    
    
    
    705
    
    
    
    1,060
    
    
    
    1,512Interest expense
    
    
    (699
    )
    
    
    (1,320
    )
    
    
    (1,516
    )
    
    
    (2,163
    )Other, net
    
    
    545
    
    
    
    1,014
    
    
    
    577
    
    
    
    1,776Total other income (expense)
    
    
    332
    
    
    
    399
    
    
    
    121
    
    
    
    1,125Income before income taxes
    
    
    19,395
    
    
    
    23,445
    
    
    
    38,491
    
    
    
    44,512Provision for income taxes
    
    
    (5,071
    )
    
    
    (6,328
    )
    
    
    (10,125
    )
    
    
    (11,508
    )Net income
    
    
    14,324
    
    
    
    17,117
    
    
    
    28,366
    
    
    
    33,004Net income attributable to non-controlling interest
    
    
    (922
    )
    
    
    (987
    )
    
    
    (1,677
    )
    
    
    (1,811
    )Net income attributable to TeleTech shareholders
    
    $
    13,402
    
    
    $
    16,130
    
    
    $
    26,689
    
    
    $
    31,193Weighted average shares outstandingBasic
    
    
    61,117
    
    
    
    63,098
    
    
    
    61,495
    
    
    
    63,502Diluted
    
    
    62,317
    
    
    
    64,175
    
    
    
    62,907
    
    
    
    64,167Net income per share attributable to TeleTech shareholdersBasic
    
    $
    0.22
    
    
    $
    0.26
    
    
    $
    0.43
    
    
    $
    0.49Diluted
    
    $
    0.22
    
    
    $
    0.25
    
    
    $
    0.42
    
    
    $
    0.49
  2




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statement of Equity
 (Amounts in thousands)
 (Unaudited)
 Equity of the CompanyAccumulatedAdditional
    
    
    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, 2009
    
    
    
    
    
    $
    
    
    
    
    62,218
    
    
    $
    622
    
    
    $
    (251,691
    )
    
    $
    344,251
    
    
    $
    10,513
    
    
    $
    346,728
    
    
    $
    5,478
    
    
    $
    455,901Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,689
    
    
    
    1,677
    
    
    
    28,366Dividends distributed to
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,070
    )
    
    
    (2,070
    )Foreign currency translation adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (6,164
    )
    
    
    
    
    
    
    (167
    )
    
    
    (6,331
    )Derivatives valuation, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,037
    )
    
    
    
    
    
    
    
    
    
    
    (1,037
    )Vesting of restricted stock units
    
    
    
    
    
    
    
    
    
    
    314
    
    
    
    3
    
    
    
    4,014
    
    
    
    (6,270
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,253
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    80
    
    
    
    1
    
    
    
    1,013
    
    
    
    (140
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    874Excess tax benefit from equity-based
awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    128Equity-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,595
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,595Purchases of common stock
    
    
    
    
    
    
    
    
    
    
    (2,436
    )
    
    
    (24
    )
    
    
    (37,281
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (37,305
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (199
    )
    
    
    
    
    
    
    
    
    
    
    (199
    )Balance as of June 30, 2010
    
    
    
    
    
    $
    
    
    
    
    60,176
    
    
    $
    602
    
    
    $
    (283,945
    )
    
    $
    344,564
    
    
    $
    3,113
    
    
    $
    373,417
    
    
    $
    4,918
    
    
    $
    442,669
  3




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
 (Amount in thousands)
 (Unaudited)
 Six Months Ended June 30,2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    28,366
    
    
    $
    33,004Adjustment to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    25,670
    
    
    
    27,870Amortization of contract acquisition costs
    
    
    2,697
    
    
    
    1,543Provision for doubtful accounts
    
    
    643
    
    
    
    953Loss (gain) on foreign currency derivatives
    
    
    328
    
    
    
    (878
    )Loss (gain) on disposal of assets
    
    
    (211
    )
    
    
    808Impairment losses
    
    
    679
    
    
    
    4,587Deferred income taxes
    
    
    (1,564
    )
    
    
    (2,555
    )Excess tax benefit from equity-based awards
    
    
    
    
    
    
    (79
    )Equity-based compensation expense
    
    
    6,595
    
    
    
    6,079Changes in assets and liabilities:Accounts receivable
    
    
    14,044
    
    
    
    16,192Prepaids and other assets
    
    
    1,964
    
    
    
    3,207Accounts payable and accrued expenses
    
    
    7,826
    
    
    
    (1,699
    )Deferred revenue and other liabilities
    
    
    (12,402
    )
    
    
    4,806Net cash provided by operating activities
    
    
    74,635
    
    
    
    93,838Cash flows from investing activitiesPurchases of property, plant and equipment
    
    
    (12,316
    )
    
    
    (14,301
    )Other
    
    
    
    
    
    
    (1,727
    )Net cash used in investing activities
    
    
    (12,316
    )
    
    
    (16,028
    )Cash flows from financing activitiesProceeds from line of credit
    
    
    490,700
    
    
    
    467,660Payments on line of credit
    
    
    (490,700
    )
    
    
    (523,460
    )Payments on capital lease obligations and equipment financing
    
    
    (1,911
    )
    
    
    (672
    )Dividends distributed to non-controlling interest
    
    
    (2,070
    )
    
    
    (1,800
    )Proceeds from exercise of stock options
    
    
    874
    
    
    
    1,310Excess tax benefit from equity-based awards
    
    
    128
    
    
    
    Purchases of common stock
    
    
    (37,305
    )
    
    
    (26,089
    )Net cash used in financing activities
    
    
    (40,284
    )
    
    
    (83,051
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    25
    
    
    
    1,262Increase (decrease) in cash and cash equivalents
    
    
    22,060
    
    
    
    (3,979
    )Cash and cash equivalents, beginning of period
    
    
    109,424
    
    
    
    87,942Cash and cash equivalents, end of period
    
    $
    131,484
    
    
    $
    83,963Supplemental disclosuresCash paid for interest
    
    $
    1,165
    
    
    $
    675Cash paid for income taxes
    
    $
    5,961
    
    
    $
    12,398Non-cash investing and financing activitiesAcquisition of equipment through installment purchase agreements
    
    $
    186
    
    
    $
    1,456Recognition 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
     Use of Estimates
  5




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 Recently Issued Accounting Pronouncements
    (2) DECONSOLIDATION OF A SUBSIDIARY
  (3) SEGMENT INFORMATION
    6




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenueNorth American BPO
    
    $
    212,506
    
    
    $
    229,992
    
    
    $
    420,448
    
    
    $
    458,878International BPO
    
    
    59,421
    
    
    
    71,520
    
    
    
    123,005
    
    
    
    146,664Total
    
    $
    271,927
    
    
    $
    301,512
    
    
    $
    543,453
    
    
    $
    605,542Income (loss) from operationsNorth American BPO
    
    $
    25,097
    
    
    $
    28,314
    
    
    $
    44,885
    
    
    $
    53,741International BPO
    
    
    (6,034
    )
    
    
    (5,268
    )
    
    
    (6,515
    )
    
    
    (10,354
    )Total
    
    $
    19,063
    
    
    $
    23,046
    
    
    $
    38,370
    
    
    $
    43,387
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenueUnited States
    
    $
    111,262
    
    
    $
    111,489
    
    
    $
    212,367
    
    
    $
    211,551Philippines
    
    
    66,404
    
    
    
    78,751
    
    
    
    137,374
    
    
    
    157,092Latin America
    
    
    49,180
    
    
    
    47,801
    
    
    
    97,182
    
    
    
    104,865Europe
    
    
    23,757
    
    
    
    29,336
    
    
    
    50,894
    
    
    
    60,747Canada
    
    
    13,618
    
    
    
    21,583
    
    
    
    28,397
    
    
    
    47,827Asia Pacific / Africa
    
    
    7,706
    
    
    
    12,552
    
    
    
    17,239
    
    
    
    23,460Total
    
    $
    271,927
    
    
    $
    301,512
    
    
    $
    543,453
    
    
    $
    605,542
 (4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS
   7




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
 (5) GOODWILL
  Effect ofDecember 31,
    
    
    
    
    
    
    
    
    
    
    Foreign2009
    
    
    Acquisitions
    
    
    Impairments
    
    
    Currency
    
    
    June 30, 2010North American BPO
    
    $
    35,885
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    35,885International BPO
    
    
    9,365
    
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    9,228Total
    
    $
    45,250
    
    
    $
    
    
    
    $
    
    
    
    $
    (137
    )
    
    $
    45,113
  (6) DERIVATIVES
 Cash Flow Hedges
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Aggregate unrealized net gain (loss) at beginning of period
    
    $
    7,430
    
    
    $
    (18,141
    )
    
    $
    4,468
    
    
    $
    (21,180
    )Net gain/(loss) from change in fair value of cash flow hedges
    
    
    (2,366
    )
    
    
    9,117
    
    
    
    1,523
    
    
    
    7,393Net (gain)/loss reclassified to earnings from effective hedges
    
    
    (1,633
    )
    
    
    3,269
    
    
    
    (2,560
    )
    
    
    8,032Aggregate unrealized net gain (loss) at end of period
    
    $
    3,431
    
    
    $
    (5,755
    )
    
    $
    3,431
    
    
    $
    (5,755
    )
 8




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 (UNAUDITED)
  Local Currency
    
    
    U.S. Dollar
    
    
    % Maturing in
    
    
    ContractsNotional
    
    
    Notional
    
    
    the Next 12
    
    
    MaturingAs of June 30, 2010
    
    Amount
    
    
    Amount
    
    
    Months
    
    
    ThroughCanadian Dollar
    
    
    13,200
    
    
    $
    11,273
    
    
    
    72.7
    %
    
    December 2011Canadian Dollar Call Options
    
    
    10,200
    
    
    
    9,135
    
    
    
    100.0
    %
    
    December 2010Philippine Peso
    
    
    6,575,000
    
    
    
    136,623
    1
    
    
    74.0
    %
    
    December 2012Argentine Peso
    
    
    22,000
    
    
    
    5,122
    2
    
    
    100.0
    %
    
    December 2010Mexican Peso
    
    
    475,000
    
    
    
    33,391
    
    
    
    84.2
    %
    
    December 2011British Pound Sterling
    
    
    6,436
    
    
    
    10,017
    3
    
    
    72.0
    %
    
    December 2011$
    205,561
 Local Currency
    
    
    U.S. DollarNotional
    
    
    NotionalAs of December 31, 2009
    
    Amount
    
    
    AmountCanadian Dollar
    
    
    14,400
    
    
    $
    11,782Canadian Dollar Call Options
    
    
    19,400
    
    
    
    17,301Philippine Peso
    
    
    4,615,000
    
    
    
    96,354
    1Argentine Peso
    
    
    9,000
    
    
    
    2,454Mexican Peso
    
    
    491,500
    
    
    
    34,880South African Rand
    
    
    23,000
    
    
    
    2,081British Pound Sterling
    
    
    3,876
    
    
    
    6,565
    3$
    171,417
 
 1
    
    Includes contracts to purchase Philippine pesos in exchange for New Zealand dollars, Australian dollars and, in 2009
only, British pound sterling, which are translated into equivalent U.S. dollars on June 30, 2010 and December 31, 2009.2
    
    Includes contracts to purchase Argentine pesos in exchange for Euros, which were translated into equivalent U.S.
dollars on June 30, 2010.3
    
    Includes contracts to purchase British pound sterling in exchange for Euros, which are translated into equivalent U.S.
dollars on June 30, 2010 and December 31, 2009. Hedge of Net Investment
  9




---



##### 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, 2010Designated as HedgingInstruments
    
    Not Designated as Hedging InstrumentsForeign
    
    Foreign
    
    ForeignDerivative contracts:
    
    Foreign Exchange
    
    Exchange
    
    Exchange
    
    Exchange
    
    LeasesOption andNet
    
    Forward
    
    
    
    
    
    EmbeddedDerivative classification:
    
    Cash Flow
    
    Investment
    
    Contracts
    
    Fair Value
    
    DerivativeFair value and location of derivative in the Consolidated Balance Sheet:Prepaids and other current assets
    
    $
    6,161
    
    
    $
    
    
    
    $
    
    
    
    $
    13
    
    
    $
    Other long-term assets
    
    
    773
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other current liabilities
    
    
    (479
    )
    
    
    
    
    
    
    
    
    
    
    (25
    )
    
    
    (125
    )Other long-term liabilities
    
    
    (408
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (168
    )Total fair value of derivatives, net
    
    $
    6,047
    
    
    $
    
    
    
    $
    
    
    
    $
    (12
    )
    
    $
    (293
    )
 December 31, 2009Designated as HedgingInstruments
    
    Not Designated as Hedging InstrumentsForeign
    
    Foreign
    
    ForeignDerivative contracts:
    
    Foreign Exchange
    
    Exchange
    
    Exchange
    
    Exchange
    
    LeasesOption andNet
    
    Forward
    
    
    
    
    
    EmbeddedDerivative classification:
    
    Cash Flow
    
    Investment
    
    Contracts
    
    Fair Value
    
    DerivativeFair value and location of derivative in
the Consolidated Balance Sheet:Prepaids and other current assets
    
    $
    8,022
    
    
    $
    
    
    
    $
    42
    
    
    $
    29
    
    
    $
    Other long-term assets
    
    
    1,996
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other current liabilities
    
    
    (1,884
    )
    
    
    
    
    
    
    
    
    
    
    (137
    )
    
    
    (139
    )Other long-term liabilities
    
    
    (30
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (230
    )Total fair value of derivatives, net
    
    $
    8,104
    
    
    $
    
    
    
    $
    42
    
    
    $
    (108
    )
    
    $
    (369
    )
 10




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three Months Ended June 30,2010
    
    2009Designated as Hedging
    
    Designated as HedgingInstruments
    
    InstrumentsDerivative contracts:
    
    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
    
    $
    (2,366
    )
    
    $
    
    
    
    $
    9,117
    
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  effective
portion:Revenue
    
    $
    2,677
    
    
    $
    
    
    
    $
    (5,360
    )
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  ineffective
portion
and amount excluded from effectiveness testing:Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Three Months Ended June 30,2010
    
    2009Not Designated as Hedging Instruments
    
    Not Designated as Hedging InstrumentsDerivative contracts:
    
    Foreign Exchange
    
    Leases
    
    Foreign Exchange
    
    LeasesOption and
    
    
    
    
    
    
    
    
    
    Option andForward
    
    
    
    
    
    Embedded
    
    Forward
    
    
    
    
    
    EmbeddedDerivative classification:
    
    Contracts
    
    Fair Value
    
    Derivative
    
    Contracts
    
    Fair Value
    
    DerivativeAmount and location of net gain or (loss) recognized
in the Consolidated Statement of Operations:Costs of services
    
    $
    
    
    
    $
    
    
    
    $
    (31
    )
    
    $
    
    
    
    $
    
    
    
    $
    616Other, net
    
    $
    (46
    )
    
    $
    (1,117
    )
    
    $
    
    
    
    $
    (98
    )
    
    $
    (1,331
    )
    
    $
    
  Six Months Ended June 30,2010
    
    2009Designated as Hedging 
Instruments
    
    Designated as Hedging 
InstrumentsDerivative contracts:
    
    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
    
    $
    1,523
    
    
    $
    
    
    
    $
    7,393
    
    
    $
    (1,727
    )Amount and location of net gain or (loss) reclassified
from 
accumulated OCI to income  effective
portion:Revenue
    
    $
    4,197
    
    
    $
    
    
    
    $
    (13,168
    )
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  ineffective
portion and amount excluded from effectiveness testing:Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 11




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Six Months Ended June 30,2010
    
    2009Not Designated as Hedging Instruments
    
    Not Designated as Hedging InstrumentsDerivative contracts:
    
    Foreign Exchange
    
    Leases
    
    Foreign Exchange
    
    LeasesOption and
    
    
    
    
    
    
    
    
    
    Option andForward
    
    
    
    
    
    Embedded
    
    Forward
    
    
    
    
    
    EmbeddedDerivative classification:
    
    Contracts
    
    Fair Value
    
    Derivative
    
    Contracts
    
    Fair Value
    
    DerivativeAmount and location of net gain or (loss) recognized
in the Consolidated Statement of Operations:Costs of services
    
    $
    
    
    
    $
    
    
    
    $
    76
    
    
    $
    
    
    
    $
    
    
    
    $
    878Other, net
    
    $
    (42
    )
    
    $
    (46
    )
    
    $
    
    
    
    $
    (133
    )
    
    $
    (957
    )
    
    $
    
 (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
 Derivatives 
 As of June 30, 2010
 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
    
    $
    
    
    
    $
    6,047
    
    
    $
    
    
    
    $
    6,047Fair value hedges
    
    
    
    
    
    
    (12
    )
    
    
    
    
    
    
    (12
    )Embedded derivatives
    
    
    
    
    
    
    (293
    )
    
    
    
    
    
    
    (293
    )Option and forward contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total net derivative asset (liability)
    
    $
    
    
    
    $
    5,742
    
    
    $
    
    
    
    $
    5,742
 12




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 As of December 31, 2009
 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
    
    $
    
    
    
    $
    8,104
    
    
    $
    
    
    
    $
    8,104Fair value hedges
    
    
    
    
    
    
    (108
    )
    
    
    
    
    
    
    (108
    )Embedded derivatives
    
    
    
    
    
    
    (369
    )
    
    
    
    
    
    
    (369
    )Option and forward contracts
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    42Total net derivative asset (liability)
    
    $
    
    
    
    $
    7,669
    
    
    $
    
    
    
    $
    7,669
  Money Market Investments
 Deferred Compensation Plan
  As of June 30, 2010
 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
    
    $
    
    
    
    $
    25,543
    
    
    $
    Derivative instruments, net
    
    
    
    
    
    
    5,742
    
    
    
    Total assets
    
    $
    
    
    
    $
    31,285
    
    
    $
    LiabilitiesDeferred compensation plan liability
    
    $
    
    
    
    $
    (3,443
    )
    
    $
    Total liabilities
    
    $
    
    
    
    $
    (3,443
    )
    
    $
    
 13




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 As of December 31, 2009
 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
    
    $
    
    
    
    $
    
    
    
    $
    Derivative instruments, net
    
    
    
    
    
    
    7,669
    
    
    
    Total assets
    
    $
    
    
    
    $
    7,669
    
    
    $
    LiabilitiesDeferred compensation plan liability
    
    $
    
    
    
    $
    (3,399
    )
    
    $
    Total liabilities
    
    $
    
    
    
    $
    (3,399
    )
    
    $
    
 (8) INCOME TAXES
     (9) RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES
 Restructuring Charges
  14




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009North American BPOReduction in force
    
    $
    699
    
    
    $
    2,668
    
    
    $
    2,056
    
    
    $
    3,568Facility exit charges
    
    
    
    
    
    
    360
    
    
    
    
    
    
    
    472Revision of prior estimates
    
    
    
    
    
    
    
    
    
    
    (5
    )
    
    
    (1,135
    )Total
    
    $
    699
    
    
    $
    3,028
    
    
    $
    2,051
    
    
    $
    2,905
 Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009International BPOReduction in force
    
    $
    613
    
    
    $
    824
    
    
    $
    730
    
    
    $
    1,250Facility exit charges
    
    
    
    
    
    
    156
    
    
    
    
    
    
    
    156Revision of prior estimates
    
    
    (8
    )
    
    
    
    
    
    
    (8
    )
    
    
    Total
    
    $
    605
    
    
    $
    980
    
    
    $
    722
    
    
    $
    1,406
   Closure of
    
    
    Reduction inDelivery Centers
    
    
    Force
    
    
    TotalBalance as of December 31, 2009
    
    $
    375
    
    
    $
    13
    
    
    $
    388Expense
    
    
    
    
    
    
    2,786
    
    
    
    2,786Payments
    
    
    
    
    
    
    (1,428
    )
    
    
    (1,428
    )Reversals
    
    
    
    
    
    
    (13
    )
    
    
    (13
    )Balance as of June 30, 2010
    
    $
    375
    
    
    $
    1,358
    
    
    $
    1,733
  Impairment Losses
  15




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
   (10) COMMITMENTS AND CONTINGENCIES
 Letters of Credit
  Guarantees
   Legal Proceedings
  Securities Class Action
 Beasley v. TeleTech Holdings, Inc., et al. Brown v. TeleTech Holdings,
Inc., et al., In re: TeleTech Litigation
 16




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Derivative Action
 Susan M. Gregory v. Kenneth D. Tuchman, et al.
 (11) COMPREHENSIVE INCOME
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    14,324
    
    
    $
    17,117
    
    
    $
    28,366
    
    
    $
    33,004Foreign currency translation adjustment
    
    
    (7,787
    )
    
    
    14,799
    
    
    
    (6,331
    )
    
    
    7,286Derivatives valuation, net of tax
    
    
    (3,999
    )
    
    
    12,386
    
    
    
    (1,037
    )
    
    
    15,425Other
    
    
    54
    
    
    
    
    
    
    
    (199
    )
    
    
    Total comprehensive income
    
    
    2,592
    
    
    
    44,302
    
    
    
    20,799
    
    
    
    55,715Comprehensive income attributable to
non-controlling interest
    
    
    (877
    )
    
    
    (1,353
    )
    
    
    (1,510
    )
    
    
    (2,118
    )Comprehensive income attributable to
TeleTech
    
    $
    1,715
    
    
    $
    42,949
    
    
    $
    19,289
    
    
    $
    53,597
  Six Months Ended2010
    
    
    2009Noncontrolling interest, January 1
    
    $
    5,478
    
    
    $
    5,011Net income attributable to noncontrolling interest
    
    
    1,677
    
    
    
    1,811Dividends distributed to noncontrolling interest
    
    
    (2,070
    )
    
    
    (1,800
    )Foreign currency translation adjustments
    
    
    (167
    )
    
    
    307Noncontrolling interest, June 30
    
    $
    4,918
    
    
    $
    5,329
 (12) NET INCOME PER SHARE
  Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Shares used in basic earnings per share calculation
    
    
    61,117
    
    
    
    63,098
    
    
    
    61,495
    
    
    
    63,502Effect of dilutive securities:Stock options
    
    
    801
    
    
    
    641
    
    
    
    914
    
    
    
    347Restricted stock units
    
    
    399
    
    
    
    436
    
    
    
    498
    
    
    
    318Total effects of dilutive securities
    
    
    1,200
    
    
    
    1,077
    
    
    
    1,412
    
    
    
    665Shares used in dilutive earnings per share calculation
    
    
    62,317
    
    
    
    64,175
    
    
    
    62,907
    
    
    
    64,167
 17




---



##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  (13) EQUITY-BASED COMPENSATION PLANS
  Stock Options
  Restricted Stock Unit Grants
   18




---



##### Table of Contents



ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
 Introduction
    Executive Summary
  19




---



##### Table of Contents




    
    Focus on providers who can offer fully integrated revenue generation solutions.A focus
on providers who can offer fully integrated revenue generation solutions to target new
markets and improve revenue and profitability through customer acquisition, retention and
growth by leveraging the profitability potential of each customer.
    
    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 see increasing interest in 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.
 20




---



##### Table of Contents




    
    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 16 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.
 Our Future Growth Goals and 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, adequate 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;-
    
    Create focused revenue generation capabilities in targeted market segments;-
    
    Better integrate front- and back-office processes; and-
    
    Take advantage of cost efficiencies through the adoption of cloud based technology solutions.
 
    
    Deepen and broaden our relationships with existing clients;
    
    Win business with new clients and focus on end-to-end offerings in 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;
 21




---



##### Table of Contents




    
    Continue to improve our operating margins through selected profit improvement
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 2010 Financial Results
    Business Overview
  BPO Services
     22




---



##### Table of Contents



23




---



##### Table of Contents



June 30, 2010
    
    June 30, 2009Total
    
    
    
    
    
    
    
    
    
    TotalProduction
    
    
    
    
    
    
    
    
    
    ProductionWorkstations
    
    In Use
    
    % In Use
    
    Workstations
    
    In Use
    
    % In UseMulti-client centersSites open <1 year
    
    
    408
    
    
    
    242
    
    
    
    59
    %
    
    
    2,721
    
    
    
    1,539
    
    
    
    57
    %Sites open >1 year
    
    
    30,993
    
    
    
    20,926
    
    
    
    68
    %
    
    
    26,400
    
    
    
    18,697
    
    
    
    71
    %Total multi-client centers
    
    
    31,401
    
    
    
    21,168
    
    
    
    67
    %
    
    
    29,121
    
    
    
    20,236
    
    
    
    69
    %
  Recently Issued Accounting Pronouncements
  Critical Accounting Policies and Estimates
  Revenue Recognition
  24




---



##### Table of Contents



Production Rate 
 PerformanceBased 
 Hybrid 
   Income Taxes
    25




---



##### Table of Contents



Allowance for Doubtful Accounts
  Impairment of LongLived Assets
  Goodwill
   Restructuring Liability
  26




---



##### Table of Contents



EquityBased Compensation
  Fair Value Measurement
    Level 1
    
    Quoted prices are available in active markets for identical assets
or liabilities as of the reporting date. Active markets are those
in which transactions for the asset or liability occur in
sufficient frequency and volume to provide pricing information on
an ongoing basis. Level 1 primarily consists of financial
instruments such as exchange-traded derivatives, listed equities
and U.S. government treasury securities.Level 2
    
    Pricing inputs are other than quoted prices in active markets
included in Level 1, which are either directly or indirectly
observable as of the reporting date. Level 2 includes those
financial instruments that are valued using models or other
valuation methodologies. These models are primarily
industry-standard models that consider various assumptions,
including quoted forward prices for commodities, time value,
volatility factors, and current market and contractual prices for
the underlying instruments, as well as other relevant economic
measures. Substantially all of these assumptions are observable in
the marketplace throughout the full term of the instrument, can be
derived from observable data or are supported by observable levels
at which transactions are executed in the marketplace. Instruments
in this category include non-exchange-traded derivatives such as
over-the-counter forwards, options and repurchase agreements.Level 3
    
    Pricing inputs include significant inputs that are generally less
observable from objective sources. These inputs may be used with
internally developed methodologies that result in managements
best estimate of fair value from the perspective of a market
participant. Level 3 instruments include those that may be more
structured or otherwise tailored to customers needs. At each
balance sheet date, we perform an analysis of all instruments
subject to fair value measurements and include within Level 3 all
of those whose fair value is based on significant unobservable
inputs.
 27




---



##### Table of Contents



Derivatives
      Contingencies
  Explanation of Key Metrics and Other Items
 Cost of Services
  Selling, General and Administrative
  28




---



##### Table of Contents



Restructuring Charges, Net
  Interest Expense
  Other Income
  Other Expense
  Presentation of NonGAAP Measurements
 Free Cash Flow
   Three Months Ended June 30,
    
    
    Six Months Ended June 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net cash provided by operating activities
    
    $
    23,203
    
    
    $
    39,827
    
    
    $
    74,635
    
    
    $
    93,838Purchases of property, plant and equipment
    
    
    5,708
    
    
    
    5,846
    
    
    
    12,316
    
    
    
    14,301Free cash flow
    
    $
    17,495
    
    
    $
    33,981
    
    
    $
    62,319
    
    
    $
    79,537
  29




---



##### Table of Contents



Results of Operations
 Three months ended June 30, 2010 as compared to three months ended June 30, 2009
 Operating Review
  Three Months Ended June 30,% ofSegment
    
    
    
    
    
    
    % of Segment2010
    
    
    Revenue
    
    
    2009
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeRevenueNorth American BPO
    
    $
    212,506
    
    
    
    
    
    
    $
    229,992
    
    
    
    
    
    
    $
    (17,486
    )
    
    
    -7.6
    %International BPO
    
    
    59,421
    
    
    
    
    
    
    
    71,520
    
    
    
    
    
    
    
    (12,099
    )
    
    
    -16.9
    %$
    271,927
    
    
    
    
    
    
    $
    301,512
    
    
    
    
    
    
    $
    (29,585
    )
    
    
    -9.8
    %Cost of servicesNorth American BPO
    
    $
    146,994
    
    
    
    69.2
    %
    
    $
    154,119
    
    
    
    67.0
    %
    
    $
    (7,125
    )
    
    
    -4.6
    %International BPO
    
    
    51,200
    
    
    
    86.2
    %
    
    
    58,930
    
    
    
    82.4
    %
    
    
    (7,730
    )
    
    
    -13.1
    %$
    198,194
    
    
    
    72.9
    %
    
    $
    213,049
    
    
    
    70.7
    %
    
    $
    (14,855
    )
    
    
    -7.0
    %Selling, general and administrativeNorth American BPO
    
    $
    28,966
    
    
    
    13.6
    %
    
    $
    33,111
    
    
    
    14.4
    %
    
    $
    (4,145
    )
    
    
    -12.5
    %International BPO
    
    
    10,775
    
    
    
    18.1
    %
    
    
    11,870
    
    
    
    16.6
    %
    
    
    (1,095
    )
    
    
    -9.2
    %$
    39,741
    
    
    
    14.6
    %
    
    $
    44,981
    
    
    
    14.9
    %
    
    $
    (5,240
    )
    
    
    -11.6
    %Depreciation and amortizationNorth American BPO
    
    $
    10,071
    
    
    
    4.7
    %
    
    $
    9,609
    
    
    
    4.2
    %
    
    $
    462
    
    
    
    4.8
    %International BPO
    
    
    2,875
    
    
    
    4.8
    %
    
    
    4,199
    
    
    
    5.9
    %
    
    
    (1,324
    )
    
    
    -31.5
    %$
    12,946
    
    
    
    4.8
    %
    
    $
    13,808
    
    
    
    4.6
    %
    
    $
    (862
    )
    
    
    -6.2
    %Restructuring charges, netNorth American BPO
    
    $
    699
    
    
    
    0.3
    %
    
    $
    3,028
    
    
    
    1.3
    %
    
    $
    (2,329
    )
    
    
    -76.9
    %International BPO
    
    
    605
    
    
    
    1.0
    %
    
    
    980
    
    
    
    1.4
    %
    
    
    (375
    )
    
    
    -38.3
    %$
    1,304
    
    
    
    0.5
    %
    
    $
    4,008
    
    
    
    1.3
    %
    
    $
    (2,704
    )
    
    
    -67.5
    %Impairment lossesNorth American BPO
    
    $
    679
    
    
    
    0.3
    %
    
    $
    1,811
    
    
    
    0.8
    %
    
    $
    (1,132
    )
    
    
    -62.5
    %International BPO
    
    
    
    
    
    
    0.0
    %
    
    
    809
    
    
    
    1.1
    %
    
    
    (809
    )
    
    
    -100.0
    %$
    679
    
    
    
    0.2
    %
    
    $
    2,620
    
    
    
    0.9
    %
    
    $
    (1,941
    )
    
    
    -74.1
    %Income (loss) from operationsNorth American BPO
    
    $
    25,097
    
    
    
    11.8
    %
    
    $
    28,314
    
    
    
    12.3
    %
    
    $
    (3,217
    )
    
    
    -11.4
    %International BPO
    
    
    (6,034
    )
    
    
    -10.2
    %
    
    
    (5,268
    )
    
    
    -7.4
    %
    
    
    (766
    )
    
    
    -14.5
    %$
    19,063
    
    
    
    7.0
    %
    
    $
    23,046
    
    
    
    7.6
    %
    
    $
    (3,983
    )
    
    
    -17.3
    %Other income (expense), net
    
    $
    332
    
    
    
    0.1
    %
    
    $
    399
    
    
    
    0.1
    %
    
    $
    (67
    )
    
    
    -16.8
    %Provision for income taxes
    
    $
    (5,071
    )
    
    
    -1.9
    %
    
    $
    (6,328
    )
    
    
    -2.1
    %
    
    $
    1,257
    
    
    
    19.9
    %
 30




---



##### Table of Contents



Revenue
    Cost of Services
   Selling, General and Administrative
   31




---



##### Table of Contents



Depreciation and Amortization
  Restructuring Charges
  Impairment Losses
  Other Income (Expense)
  Income Taxes
  32




---



##### Table of Contents



Results of Operations
 Six months ended June 30, 2010 as compared to six months ended June 30, 2009
 Operating Review
  Six Months Ended June 30,% ofSegment
    
    
    
    
    
    
    % of Segment2010
    
    
    Revenue
    
    
    2009
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeRevenueNorth American BPO
    
    $
    420,448
    
    
    
    
    
    
    $
    458,878
    
    
    
    
    
    
    $
    (38,430
    )
    
    
    -8.4
    %International BPO
    
    
    123,005
    
    
    
    
    
    
    
    146,664
    
    
    
    
    
    
    
    (23,659
    )
    
    
    -16.1
    %$
    543,453
    
    
    
    
    
    
    $
    605,542
    
    
    
    
    
    
    $
    (62,089
    )
    
    
    -10.3
    %Cost of servicesNorth American BPO
    
    $
    291,771
    
    
    
    69.4
    %
    
    $
    311,812
    
    
    
    68.0
    %
    
    $
    (20,041
    )
    
    
    -6.4
    %International BPO
    
    
    101,041
    
    
    
    82.1
    %
    
    
    120,079
    
    
    
    81.9
    %
    
    
    (19,038
    )
    
    
    -15.9
    %$
    392,812
    
    
    
    72.3
    %
    
    $
    431,891
    
    
    
    71.3
    %
    
    $
    (39,079
    )
    
    
    -9.0
    %Selling, general and administrativeNorth American BPO
    
    $
    61,041
    
    
    
    14.5
    %
    
    $
    68,810
    
    
    
    15.0
    %
    
    $
    (7,769
    )
    
    
    -11.3
    %International BPO
    
    
    22,108
    
    
    
    18.0
    %
    
    
    24,686
    
    
    
    16.8
    %
    
    
    (2,578
    )
    
    
    -10.4
    %$
    83,149
    
    
    
    15.3
    %
    
    $
    93,496
    
    
    
    15.4
    %
    
    $
    (10,347
    )
    
    
    -11.1
    %Depreciation and amortizationNorth American BPO
    
    $
    20,021
    
    
    
    4.8
    %
    
    $
    19,799
    
    
    
    4.3
    %
    
    $
    222
    
    
    
    1.1
    %International BPO
    
    
    5,649
    
    
    
    4.6
    %
    
    
    8,071
    
    
    
    5.5
    %
    
    
    (2,422
    )
    
    
    -30.0
    %$
    25,670
    
    
    
    4.7
    %
    
    $
    27,870
    
    
    
    4.6
    %
    
    $
    (2,200
    )
    
    
    -7.9
    %Restructuring charges, netNorth American BPO
    
    $
    2,051
    
    
    
    0.5
    %
    
    $
    2,905
    
    
    
    0.6
    %
    
    $
    (854
    )
    
    
    -29.4
    %International BPO
    
    
    722
    
    
    
    0.6
    %
    
    
    1,406
    
    
    
    1.0
    %
    
    
    (684
    )
    
    
    -48.6
    %$
    2,773
    
    
    
    0.5
    %
    
    $
    4,311
    
    
    
    0.7
    %
    
    $
    (1,538
    )
    
    
    -35.7
    %Impairment lossesNorth American BPO
    
    $
    679
    
    
    
    0.2
    %
    
    $
    1,811
    
    
    
    0.4
    %
    
    $
    (1,132
    )
    
    
    -62.5
    %International BPO
    
    
    
    
    
    
    0.0
    %
    
    
    2,776
    
    
    
    1.9
    %
    
    
    (2,776
    )
    
    
    -100.0
    %$
    679
    
    
    
    0.1
    %
    
    $
    4,587
    
    
    
    0.8
    %
    
    $
    (3,908
    )
    
    
    -85.2
    %Income (loss) from operationsNorth American BPO
    
    $
    44,885
    
    
    
    10.7
    %
    
    $
    53,741
    
    
    
    11.7
    %
    
    $
    (8,856
    )
    
    
    -16.5
    %International BPO
    
    
    (6,515
    )
    
    
    -5.3
    %
    
    
    (10,354
    )
    
    
    -7.1
    %
    
    
    3,839
    
    
    
    37.1
    %$
    38,370
    
    
    
    7.1
    %
    
    $
    43,387
    
    
    
    7.2
    %
    
    $
    (5,017
    )
    
    
    -11.6
    %Other income (expense), net
    
    $
    121
    
    
    
    0.0
    %
    
    $
    1,125
    
    
    
    0.2
    %
    
    $
    (1,004
    )
    
    
    -89.2
    %Provision for income taxes
    
    $
    (10,125
    )
    
    
    -1.9
    %
    
    $
    (11,508
    )
    
    
    -1.9
    %
    
    $
    1,383
    
    
    
    12.0
    %
 33




---



##### Table of Contents



Revenue
    Cost of Services
   Selling, General and Administrative
  34




---



##### Table of Contents



Depreciation and Amortization
  Restructuring Charges
  Impairment Losses
  Other Income (Expense)
  Income Taxes
  Liquidity and Capital Resources
   35




---



##### Table of Contents



Cash and Cash Equivalents
  Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  Cash Flows from Financing Activities
  Free Cash Flow
  36




---



##### Table of Contents



Obligations and Future Capital Requirements
  Less than
    
    
    1 to 3
    
    
    3 to 5
    
    
    Over 51 Year
    
    
    Years
    
    
    Years
    
    
    Years
    
    
    TotalCredit Facility
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital lease obligations
    
    
    1,645
    
    
    
    1,192
    
    
    
    
    
    
    
    
    
    
    
    2,837Equipment financing arrangements
    
    
    1,651
    
    
    
    1,116
    
    
    
    128
    
    
    
    
    
    
    
    2,895Purchase obligations
    
    
    19,918
    
    
    
    17,077
    
    
    
    10,692
    
    
    
    1,695
    
    
    
    49,382Operating lease commitments
    
    
    26,066
    
    
    
    31,216
    
    
    
    10,587
    
    
    
    6,335
    
    
    
    74,204Total
    
    $
    49,280
    
    
    $
    50,601
    
    
    $
    21,407
    
    
    $
    8,030
    
    
    $
    129,318
 
    
    Contractual obligations to be paid in a foreign currency are translated at the period
end 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 of $2.0 million related to
uncertain tax positions because we cannot reliably estimate the timing of cash payments.
 Future Capital Requirements
    Debt Instruments and Related Covenants
  37




---



##### Table of Contents



Client Concentration
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  Interest Rate Risk
  Foreign Currency Risk
  38




---



##### Table of Contents



Cash Flow Hedging Program
    Local Currency
    
    
    U.S. Dollar
    
    
    % Maturing in
    
    
    ContractsNotional
    
    
    Notional
    
    
    the Next 12
    
    
    MaturingAs of June 30, 2010
    
    Amount
    
    
    Amount
    
    
    Months
    
    
    ThroughCanadian Dollar
    
    
    13,200
    
    
    $
    11,273
    
    
    
    72.7
    %
    
    December 2011Canadian Dollar Call Options
    
    
    10,200
    
    
    
    9,135
    
    
    
    100.0
    %
    
    December 2010Philippine Peso
    
    
    6,575,000
    
    
    
    136,623
    1
    
    
    74.0
    %
    
    December 2012Argentine Peso
    
    
    22,000
    
    
    
    5,122
    2
    
    
    100.0
    %
    
    December 2010Mexican Peso
    
    
    475,000
    
    
    
    33,391
    
    
    
    84.2
    %
    
    December 2011British Pound Sterling
    
    
    6,436
    
    
    
    10,017
    3
    
    
    72.0
    %
    
    December 2011$
    205,561
 Local Currency
    
    
    U.S. DollarNotional
    
    
    NotionalAs of December 31, 2009
    
    Amount
    
    
    AmountCanadian Dollar
    
    
    14,400
    
    
    $
    11,782Canadian Dollar Call Options
    
    
    19,400
    
    
    
    17,301Philippine Peso
    
    
    4,615,000
    
    
    
    96,354
    1Argentine Peso
    
    
    9,000
    
    
    
    2,454Mexican Peso
    
    
    491,500
    
    
    
    34,880South African Rand
    
    
    23,000
    
    
    
    2,081British Pound Sterling
    
    
    3,876
    
    
    
    6,565
    3$
    171,417
 39




---



##### Table of Contents



1
    
    Includes contracts to purchase Philippine pesos in exchange for
New Zealand dollars, Australian dollars and, in 2009 only, British
pound sterling, which are translated into equivalent U.S. dollars on
June 30, 2010 and December 31, 2009.2
    
    Includes contracts to purchase Argentine pesos in exchange for
Euros, which were translated into equivalent U.S. dollars on June 30,
2010.3
    
    Includes contracts to purchase British pound sterling in exchange
for Euros, which are translated into equivalent U.S. dollars on June
30, 2010 and December 31, 2009.  Maturing in theJune 30, 2010
    
    
    Next 12 MonthsCanadian Dollar
    
    $
    1,078
    
    
    $
    592Canadian Dollar Call Options
    
    
    608
    
    
    
    608Philippine Peso
    
    
    1,965
    
    
    
    2,230Argentine Peso
    
    
    352
    
    
    
    352Mexican Peso
    
    
    2,439
    
    
    
    2,172British Pound Sterling
    
    
    (395
    )
    
    
    (272
    )$
    6,047
    
    
    $
    5,682
    Fair Value of Debt and Equity Securities
  
 ITEM 4. CONTROLS AND PROCEDURES
  40




---



##### Table of Contents



Evaluation of Disclosure Controls and Procedures
    Changes in Internal Control over Financial Reporting
  
 PART II. OTHER INFORMATION
 
 ITEM 1. LEGAL PROCEEDINGS
  41




---



##### 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
 The adoption and implementation of new statutory and regulatory requirements for derivative
transactions could have an adverse impact on our ability to hedge risks associated with our
business.
  42




---



##### Table of Contents



ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
 Issuer Purchases of Equity Securities
  Total Number of
    
    
    ApproximateShares
    
    
    Dollar Value ofPurchased as
    
    
    Shares that MayTotal
    
    
    
    
    
    
    Part of Publicly
    
    
    Yet Be PurchasedNumber of
    
    
    Average Price
    
    
    Announced
    
    
    Under the Plans orShares
    
    
    Paid per Share
    
    
    Plans or
    
    
    Programs (inPeriod
    
    Purchased
    
    
    (or Unit)
    
    
    Programs
    
    
    thousands)1April 1, 2010 - April 30, 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    31,082May 1, 2010 - May 31, 2010
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    31,082June 1, 2010 - June 30, 2010
    
    
    1,366,100
    
    
    $
    12.98
    
    
    
    1,366,100
    
    
    $
    13,346Total
    
    
    1,366,100
    
    
    
    
    
    
    
    1,366,100
 
 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 August 2010,
whereby the Board increased the program allowance by $25.0 million. Since inception of the
program through June 30, 2010, the Board has authorized the repurchase of shares up to a total
value of $337.3 million, of which we have purchased 26.2 million shares on the open market for
$324.0 million. As of June 30, 2010 the remaining amount authorized for repurchases under the
program was approximately $13.3 million. As of August 4, 2010,
based on the approval of an additional $25.0 million allowance, the
remaining amount authorized for repurchase was approximately $38.3
million. The stock repurchase program does not have an
expiration date. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. RESERVED
 
 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)
 43




---



##### Table of Contents



SIGNATURES
  TELETECH HOLDINGS, INC.
(Registrant)Date: August 4, 2010
    By:
    /s/ Kenneth D. TuchmanKenneth D. TuchmanChairman and Chief Executive OfficerDate: August 4, 2010
    By:
    /s/John R. Troka, Jr.John R. Troka, Jr.Interim Chief Financial Officer 44




---



##### 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)
 45