##### 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, 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
  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




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##### 



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEPTEMBER 30, 2010 FORM 10-Q
TABLE OF CONTENTS
 Page No.PART I. FINANCIAL INFORMATIONItem 1. Financial StatementsConsolidated Balance Sheets as of September 30, 2010 (unaudited) and
December 31, 2009
    
    
    1Consolidated Statements of Operations for the three and nine months
ended September 30, 2010 and 2009 (unaudited)
    
    
    2Consolidated Statement of Equity as of and for the
nine months ended September 30, 2010 (unaudited)
    
    
    3Consolidated Statements of Cash Flows for the nine months
ended September 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
    
    
    21Item 3. Quantitative and Qualitative Disclosures about Market Risk
    
    
    41Item 4. Controls and Procedures
    
    
    44PART II. OTHER INFORMATIONItem 1. Legal Proceedings
    
    
    45Item 1A. Risk Factors
    
    
    46Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    46Item 3. Defaults Upon Senior Securities
    
    
    46Item 4. Reserved
    
    
    46Item 5. Other Information
    
    
    46Item 6. Exhibits
    
    
    47SIGNATURES
    
    
    48EXHIBIT INDEX
    
    
    49EX-10.1EX-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 31,2010
    
    
    2009(Unaudited)ASSETSCurrent assetsCash and cash equivalents
    
    $
    159,151
    
    
    $
    109,424Accounts receivable, net
    
    
    191,822
    
    
    
    216,614Prepaids and other current assets
    
    
    35,805
    
    
    
    39,144Deferred tax assets, net
    
    
    7,533
    
    
    
    5,911Income tax receivable
    
    
    23,097
    
    
    
    31,282Total current assets
    
    
    417,408
    
    
    
    402,375Long-term assetsProperty, plant and equipment, net
    
    
    108,206
    
    
    
    126,995Goodwill
    
    
    45,364
    
    
    
    45,250Contract acquisition costs, net
    
    
    3,243
    
    
    
    8,049Deferred tax assets, net
    
    
    33,295
    
    
    
    36,527Other long-term assets
    
    
    18,746
    
    
    
    20,971Total long-term assets
    
    
    208,854
    
    
    
    237,792Total assets
    
    $
    626,262
    
    
    $
    640,167LIABILITIES AND EQUITYCurrent liabilitiesAccounts payable
    
    $
    16,154
    
    
    $
    17,625Accrued employee compensation and benefits
    
    
    71,804
    
    
    
    67,106Other accrued expenses
    
    
    21,813
    
    
    
    18,481Income taxes payable
    
    
    6,022
    
    
    
    20,327Deferred tax liabilities, net
    
    
    4,044
    
    
    
    3,145Deferred revenue
    
    
    5,139
    
    
    
    13,164Other current liabilities
    
    
    4,598
    
    
    
    6,118Total current liabilities
    
    
    129,574
    
    
    
    145,966Long-term liabilitiesLine of credit
    
    
    
    
    
    
    Negative investment in deconsolidated subsidiary
    
    
    76
    
    
    
    4,865Deferred tax liabilities, net
    
    
    2,669
    
    
    
    Deferred rent
    
    
    11,243
    
    
    
    13,989Other long-term liabilities
    
    
    12,598
    
    
    
    19,446Total long-term liabilities
    
    
    26,586
    
    
    
    38,300Total liabilities
    
    
    156,160
    
    
    
    184,266Commitments and contingencies (Note 10)EquityPreferred stock  $0.01 par value: 10,000,000 shares authorized;
zero shares outstanding as of September 30, 2010 and
December 31, 2009
    
    
    
    
    
    
    Common stock  $0.01 par value; 150,000,000 shares authorized;
59,385,750 and 62,218,238 shares outstanding as of
September 30, 2010 and December 31, 2009, respectively
    
    
    594
    
    
    
    622Additional paid-in capital
    
    
    347,633
    
    
    
    344,251Treasury stock at cost: 22,668,695 and 19,836,208 shares as of
September 30, 2010 and December 31, 2009, respectively
    
    
    (294,462
    )
    
    
    (251,691
    )Accumulated other comprehensive income
    
    
    18,920
    
    
    
    10,513Retained earnings
    
    
    392,087
    
    
    
    346,728Total equity attributable to TeleTech shareholders
    
    
    464,772
    
    
    
    450,423Non-controlling interest
    
    
    5,330
    
    
    
    5,478Total equity
    
    
    470,102
    
    
    
    455,901Total liabilities and equity
    
    $
    626,262
    
    
    $
    640,167
  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 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Revenue
    
    $
    271,005
    
    
    $
    281,524
    
    
    $
    814,458
    
    
    $
    887,066Operating expensesCost of services (exclusive of depreciation and
amortization presented separately below)
    
    
    193,996
    
    
    
    194,609
    
    
    
    586,808
    
    
    
    626,500Selling, general and administrative
    
    
    40,572
    
    
    
    42,565
    
    
    
    123,721
    
    
    
    136,061Depreciation and amortization
    
    
    12,452
    
    
    
    15,664
    
    
    
    38,122
    
    
    
    43,534Restructuring charges, net
    
    
    3,579
    
    
    
    703
    
    
    
    6,352
    
    
    
    5,014Impairment losses
    
    
    327
    
    
    
    
    
    
    
    1,006
    
    
    
    4,587Total operating expenses
    
    
    250,926
    
    
    
    253,541
    
    
    
    756,009
    
    
    
    815,696Income from operations
    
    
    20,079
    
    
    
    27,983
    
    
    
    58,449
    
    
    
    71,370Other income (expense)Interest income
    
    
    571
    
    
    
    579
    
    
    
    1,631
    
    
    
    2,091Interest expense
    
    
    (696
    )
    
    
    (466
    )
    
    
    (2,212
    )
    
    
    (2,629
    )Other, net
    
    
    7,420
    
    
    
    332
    
    
    
    7,997
    
    
    
    2,108Total other income (expense)
    
    
    7,295
    
    
    
    445
    
    
    
    7,416
    
    
    
    1,570Income before income taxes
    
    
    27,374
    
    
    
    28,428
    
    
    
    65,865
    
    
    
    72,940Provision for income taxes
    
    
    (7,586
    )
    
    
    (6,971
    )
    
    
    (17,711
    )
    
    
    (18,479
    )Net income
    
    
    19,788
    
    
    
    21,457
    
    
    
    48,154
    
    
    
    54,461Net income attributable to non-controlling interest
    
    
    (1,118
    )
    
    
    (935
    )
    
    
    (2,795
    )
    
    
    (2,746
    )Net income attributable to TeleTech shareholders
    
    $
    18,670
    
    
    $
    20,522
    
    
    $
    45,359
    
    
    $
    51,715Weighted average shares outstandingBasic
    
    
    59,808
    
    
    
    62,159
    
    
    
    60,926
    
    
    
    63,051Diluted
    
    
    61,028
    
    
    
    63,832
    
    
    
    62,258
    
    
    
    64,122Net income per share attributable to
TeleTech shareholdersBasic
    
    $
    0.31
    
    
    $
    0.33
    
    
    $
    0.74
    
    
    $
    0.82Diluted
    
    $
    0.31
    
    
    $
    0.32
    
    
    $
    0.73
    
    
    $
    0.81
  2




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statement of Equity
 (Amounts in thousands)
 (Unaudited)
 Equity of the CompanyAccumulatedPreferred Stock
    
    Common Stock
    
    
    
    
    
    Additional
    
    Other
    
    
    
    
    
    Non-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
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45,359
    
    
    
    2,795
    
    
    
    48,154Dividends distributed to
non-controlling interest
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,015
    )
    
    
    (3,015
    )Foreign currency translation
adjustments
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,301
    
    
    
    
    
    
    
    72
    
    
    
    6,373Derivatives valuation, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2,257
    
    
    
    
    
    
    
    
    
    
    
    2,257Vesting of restricted stock units
    
    
    
    
    
    
    
    
    
    
    329
    
    
    
    4
    
    
    
    4,202
    
    
    
    (6,540
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,334
    )Exercise of stock options
    
    
    
    
    
    
    
    
    
    
    103
    
    
    
    1
    
    
    
    1,313
    
    
    
    (197
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,117Excess tax benefit from
equity-based awards
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    143
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    143Equity-based compensation expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,976
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,976Purchases of common stock
    
    
    
    
    
    
    
    
    
    
    (3,264
    )
    
    
    (33
    )
    
    
    (48,286
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (48,319
    )Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (151
    )
    
    
    
    
    
    
    
    
    
    
    (151
    )Balance as of September 30, 2010
    
    
    
    
    
    $
    
    
    
    
    59,386
    
    
    $
    594
    
    
    $
    (294,462
    )
    
    $
    347,633
    
    
    $
    18,920
    
    
    $
    392,087
    
    
    $
    5,330
    
    
    $
    470,102
  3




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
 
 Consolidated Statements of Cash Flows
 (Amount in thousands)
 (Unaudited)
 Nine Months Ended September 30,2010
    
    
    2009Cash flows from operating activitiesNet income
    
    $
    48,154
    
    
    $
    54,461Adjustment to reconcile net income
to net cash provided by operating activities:Depreciation and amortization
    
    
    38,122
    
    
    
    43,534Amortization of contract acquisition costs
    
    
    4,806
    
    
    
    2,457Provision for doubtful accounts
    
    
    642
    
    
    
    1,298Gain on foreign currency derivatives
    
    
    (994
    )
    
    
    (189
    )Loss (gain) on disposal of assets
    
    
    (482
    )
    
    
    1,558Impairment losses
    
    
    1,006
    
    
    
    4,587Deferred income taxes
    
    
    2,757
    
    
    
    5,569Excess tax benefit from equity-based awards
    
    
    
    
    
    
    (3,066
    )Equity-based compensation expense
    
    
    9,976
    
    
    
    8,960Gain on Newgen legal settlement, net of tax
    
    
    (3,542
    )
    
    
    Other
    
    
    
    
    
    
    514Changes in assets and liabilities:Accounts receivable
    
    
    24,461
    
    
    
    39,781Prepaids and other assets
    
    
    19,329
    
    
    
    (609
    )Accounts payable and accrued expenses
    
    
    (11,129
    )
    
    
    (4,540
    )Deferred revenue and other liabilities
    
    
    (13,150
    )
    
    
    (1,637
    )Net cash provided by operating activities
    
    
    119,956
    
    
    
    152,678Cash flows from investing activitiesPurchases of property, plant and equipment
    
    
    (17,391
    )
    
    
    (19,092
    )Settlement of foreign currency contracts
    
    
    
    
    
    
    (1,727
    )Payment for contract acquisition costs
    
    
    
    
    
    
    (3,900
    )Investment in deconsolidated subsidiary
    
    
    (3,600
    )
    
    
    Net cash used in investing activities
    
    
    (20,991
    )
    
    
    (24,719
    )Cash flows from financing activitiesProceeds from line of credit
    
    
    745,700
    
    
    
    716,060Payments on line of credit
    
    
    (745,700
    )
    
    
    (796,860
    )Payments on capital lease obligations and equipment financing
    
    
    (3,167
    )
    
    
    (1,229
    )Dividends distributed to non-controlling interest
    
    
    (3,015
    )
    
    
    (2,790
    )Proceeds from exercise of stock options
    
    
    1,117
    
    
    
    4,226Excess tax benefit from equity-based awards
    
    
    143
    
    
    
    Purchases of common stock
    
    
    (48,319
    )
    
    
    (26,868
    )Net cash used in financing activities
    
    
    (53,241
    )
    
    
    (107,461
    )Effect of exchange rate changes on cash and cash equivalents
    
    
    4,003
    
    
    
    6,449Increase in cash and cash equivalents
    
    
    49,727
    
    
    
    26,947Cash and cash equivalents, beginning of period
    
    
    109,424
    
    
    
    87,942Cash and cash equivalents, end of period
    
    $
    159,151
    
    
    $
    114,889Supplemental disclosuresCash paid for interest
    
    $
    1,514
    
    
    $
    2,269Cash paid for income taxes
    
    $
    11,916
    
    
    $
    18,765Non-cash investing and financing activitiesAcquisition of equipment through installment purchase agreements
    
    $
    186
    
    
    $
    3,294Recognition of asset retirement obligations
    
    $
    
    
    
    $
    63
  4




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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
    (2) DECONSOLIDATION OF A SUBSIDIARY
    6




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 September 30,
    
    
    December 31,
    
    
    December 22,2010
    
    
    2009
    
    
    2008Total current assets
    
    $
    127
    
    
    $
    1,700
    
    
    $
    1,700Total long-term assets
    
    
    
    
    
    
    2,379
    
    
    
    3,110Total assets
    
    $
    127
    
    
    $
    4,079
    
    
    $
    4,810Total current liabilities
    
    $
    203
    
    
    $
    7,886
    
    
    $
    3,931Total long-term liabilities
    
    
    
    
    
    
    
    
    
    
    5,744Total liabilities
    
    
    203
    
    
    
    7,886
    
    
    
    9,675Total stockholders equity (deficit)
    
    
    (76
    )
    
    
    (3,807
    )
    
    
    (4,865
    )Total liabilities and stockholders deficit
    
    $
    127
    
    
    $
    4,079
    
    
    $
    4,810
 (3) SEGMENT INFORMATION
     Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenueNorth American BPO
    
    $
    204,978
    
    
    $
    215,949
    
    
    $
    625,426
    
    
    $
    674,827International BPO
    
    
    66,027
    
    
    
    65,575
    
    
    
    189,032
    
    
    
    212,239Total
    
    $
    271,005
    
    
    $
    281,524
    
    
    $
    814,458
    
    
    $
    887,066Income (loss) from operationsNorth American BPO
    
    $
    22,099
    
    
    $
    30,882
    
    
    $
    66,984
    
    
    $
    84,623International BPO
    
    
    (2,020
    )
    
    
    (2,899
    )
    
    
    (8,535
    )
    
    
    (13,253
    )Total
    
    $
    20,079
    
    
    $
    27,983
    
    
    $
    58,449
    
    
    $
    71,370
 7




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009RevenueUnited States
    
    $
    102,476
    
    
    $
    98,504
    
    
    $
    314,843
    
    
    $
    310,055Philippines
    
    
    73,096
    
    
    
    78,634
    
    
    
    210,470
    
    
    
    235,726Latin America
    
    
    51,666
    
    
    
    47,513
    
    
    
    148,848
    
    
    
    152,378Europe
    
    
    24,779
    
    
    
    25,380
    
    
    
    75,673
    
    
    
    86,127Canada
    
    
    11,708
    
    
    
    18,783
    
    
    
    40,105
    
    
    
    66,610Asia Pacific / Africa
    
    
    7,280
    
    
    
    12,710
    
    
    
    24,519
    
    
    
    36,170Total
    
    $
    271,005
    
    
    $
    281,524
    
    
    $
    814,458
    
    
    $
    887,066
 (4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS
   (5) GOODWILL
  Effect ofDecember 31,
    
    
    
    
    
    
    
    
    
    
    Foreign
    
    
    September 30,2009
    
    
    Acquisitions
    
    
    Impairments
    
    
    Currency
    
    
    2010North American BPO
    
    $
    35,885
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    35,885International BPO
    
    
    9,365
    
    
    
    
    
    
    
    
    
    
    
    114
    
    
    
    9,479Total
    
    $
    45,250
    
    
    $
    
    
    
    $
    
    
    
    $
    114
    
    
    $
    45,364
  8




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (6) DERIVATIVES
 Cash Flow Hedges
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Aggregate unrealized net gain (loss) at beginning of period
    
    $
    3,431
    
    
    $
    (5,754
    )
    
    $
    4,468
    
    
    $
    (21,180
    )Net gain/(loss) from change in fair value of cash flow hedges
    
    
    4,814
    
    
    
    4,074
    
    
    
    6,337
    
    
    
    11,467Net (gain)/loss reclassified to earnings from effective hedges
    
    
    (1,520
    )
    
    
    2,132
    
    
    
    (4,080
    )
    
    
    10,165Aggregate unrealized net gain at end of period
    
    $
    6,725
    
    
    $
    452
    
    
    $
    6,725
    
    
    $
    452
  Local Currency
    
    
    U.S. Dollar
    
    
    %Maturing in
    
    
    ContractsNotional
    
    
    Notional
    
    
    the Next 12
    
    
    MaturingAs of September 30, 2010
    
    Amount
    
    
    Amount
    
    
    Months
    
    
    ThroughCanadian Dollar
    
    
    11,700
    
    
    $
    9,883
    
    
    
    84.6
    %
    
    December 2011Canadian Dollar Call Options
    
    
    5,100
    
    
    
    4,571
    
    
    
    100.0
    %
    
    December 2010Philippine Peso
    
    
    5,488,000
    
    
    
    115,661
    1
    
    
    77.3
    %
    
    December 2012Argentine Peso
    
    
    10,000
    
    
    
    2,394
    2
    
    
    100.0
    %
    
    December 2010Mexican Peso
    
    
    406,000
    
    
    
    28,887
    
    
    
    95.6
    %
    
    December 2011British Pound Sterling
    
    
    5,015
    
    
    
    7,911
    3
    
    
    82.1
    %
    
    December 2011$
    169,307Local 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
 9




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 
 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 September 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 September 30, 2010.3
    
    Includes contracts to purchase British pound
sterling in exchange for Euros, which are translated
into equivalent U.S. dollars on September 30, 2010 and
December 31, 2009. Hedge of Net Investment
  Fair Value Hedges
  Embedded Derivatives
  10




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Derivative Valuation and Settlements
  September 30, 2010Designated as HedgingInstruments
    
    Not Designated as Hedging InstrumentsForeign
    
    Foreign
    
    Foreign
    
    ForeignDerivative contracts:
    
    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
    
    $
    10,612
    
    
    $
    
    
    
    $
    
    
    
    $
    1,427
    
    
    $
    Other long-term assets
    
    
    1,731
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Other current liabilities
    
    
    (956
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (97
    )Other long-term liabilities
    
    
    (25
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (100
    )Total fair value of derivatives, net
    
    $
    11,362
    
    
    $
    
    
    
    $
    
    
    
    $
    1,427
    
    
    $
    (197
    )
 December 31, 2009Designated as HedgingInstruments
    
    Not Designated as Hedging InstrumentsForeign
    
    Foreign
    
    Foreign
    
    ForeignDerivative contracts:
    
    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
    )
  Three Months Ended September 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
    
    $
    4,814
    
    
    $
    
    
    
    $
    4,074
    
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  effective portion:Revenue
    
    $
    2,491
    
    
    $
    
    
    
    $
    (3,496
    )
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  ineffective portion
and amount excluded from effectiveness testing:Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 11




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Three Months Ended September 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
    
    $
    
    
    
    $
    
    
    
    $
    96
    
    
    $
    
    
    
    $
    
    
    
    $
    97Other, net
    
    $
    
    
    
    $
    3,256
    
    
    $
    
    
    
    $
    60
    
    
    $
    319
    
    
    $
    
  Nine Months Ended September 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
    
    $
    6,337
    
    
    $
    
    
    
    $
    11,467
    
    
    $
    (1,727
    )Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  effective portion:Revenue
    
    $
    6,688
    
    
    $
    
    
    
    $
    (16,664
    )
    
    $
    Amount and location of net gain or (loss) reclassified
from accumulated OCI to income  ineffective portion
and amount excluded from effectiveness testing:Revenue
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
 Nine Months Ended September 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
    
    $
    
    
    
    $
    
    
    
    $
    172
    
    
    $
    
    
    
    $
    
    
    
    $
    975Other, net
    
    $
    (42
    )
    
    $
    3,222
    
    
    $
    
    
    
    $
    (73
    )
    
    $
    (638
    )
    
    $
    
 12




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 (7) FAIR VALUE
  Level 1 
    
    Quoted prices in active markets for identical assets or liabilities.Level 2 
    
    Observable inputs other than quoted prices included in Level 1, such as
quoted prices for similar assets and liabilities in active markets, similar assets and
liabilities in markets that are not active or can be corroborated by observable market
data.
 Level 3 
    
    Unobservable inputs that are supported by little or no market activity
and that are significant to the fair value of the assets or liabilities. This includes
certain pricing models, discounted cash flow methodologies and similar techniques that
use significant unobservable inputs.
  Accounts Receivable and Payable
 Derivatives
-
 As of September 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
    
    $
    
    
    
    $
    11,362
    
    
    $
    
    
    
    $
    11,362Fair value hedges
    
    
    
    
    
    
    1,427
    
    
    
    
    
    
    
    1,427Embedded derivatives
    
    
    
    
    
    
    (197
    )
    
    
    
    
    
    
    (197
    )Option and forward contracts
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total net derivative asset (liability)
    
    $
    
    
    
    $
    12,592
    
    
    $
    
    
    
    $
    12,592
 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
  13




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 Money Market Investments
 Deferred Compensation Plan
  As of September 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
    
    $
    
    
    
    $
    25,588
    
    
    $
    Derivative instruments, net
    
    
    
    
    
    
    12,592
    
    
    
    Total assets
    
    $
    
    
    
    $
    38,180
    
    
    $
    LiabilitiesDeferred compensation plan liability
    
    $
    
    
    
    $
    (3,692
    )
    
    $
    Total liabilities
    
    $
    
    
    
    $
    (3,692
    )
    
    $
    
 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
    )
    
    $
    
 14




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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
  15




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009North American BPOReduction in force
    
    $
    2,850
    
    
    $
    552
    
    
    $
    4,906
    
    
    $
    4,120Facility exit charges
    
    
    
    
    
    
    115
    
    
    
    
    
    
    
    587Revision of prior estimates
    
    
    (139
    )
    
    
    (239
    )
    
    
    (144
    )
    
    
    (1,374
    )Total
    
    $
    2,711
    
    
    $
    428
    
    
    $
    4,762
    
    
    $
    3,333
 Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009International BPOReduction in force
    
    $
    779
    
    
    $
    263
    
    
    $
    1,509
    
    
    $
    1,513Facility exit charges
    
    
    89
    
    
    
    12
    
    
    
    89
    
    
    
    168Revision of prior estimates
    
    
    
    
    
    
    
    
    
    
    (8
    )
    
    
    Total
    
    $
    868
    
    
    $
    275
    
    
    $
    1,590
    
    
    $
    1,681
   Closure of
    
    
    Reduction inDelivery Centers
    
    
    Force
    
    
    TotalBalance as of December 31, 2009
    
    $
    375
    
    
    $
    13
    
    
    $
    388Expense
    
    
    89
    
    
    
    6,415
    
    
    
    6,504Payments
    
    
    (89
    )
    
    
    (4,442
    )
    
    
    (4,531
    )Reversals
    
    
    
    
    
    
    (152
    )
    
    
    (152
    )Balance as of September 30, 2010
    
    $
    375
    
    
    $
    1,834
    
    
    $
    2,209
  16




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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
  17




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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
 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.
 (11) COMPREHENSIVE INCOME
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net income
    
    $
    19,788
    
    
    $
    21,457
    
    
    $
    48,154
    
    
    $
    54,461Foreign currency translation adjustment
    
    
    12,705
    
    
    
    6,396
    
    
    
    6,373
    
    
    
    13,989Derivatives valuation, net of tax
    
    
    3,294
    
    
    
    6,207
    
    
    
    2,257
    
    
    
    21,632Other
    
    
    48
    
    
    
    
    
    
    
    (151
    )
    
    
    Total comprehensive income
    
    
    35,835
    
    
    
    34,060
    
    
    
    56,633
    
    
    
    90,082Comprehensive income attributable to
non-controlling interest
    
    
    (1,357
    )
    
    
    (812
    )
    
    
    (2,867
    )
    
    
    (2,930
    )Comprehensive income attributable to
TeleTech
    
    $
    34,478
    
    
    $
    33,248
    
    
    $
    53,766
    
    
    $
    87,152
 18




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##### Table of Contents



TELETECH HOLDINGS, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
  Nine Months EndedSeptember 30,2010
    
    
    2009Noncontrolling interest, January 1
    
    $
    5,478
    
    
    $
    5,011Net income attributable to noncontrolling interest
    
    
    2,795
    
    
    
    2,746Dividends distributed to noncontrolling interest
    
    
    (3,015
    )
    
    
    (2,790
    )Foreign currency translation adjustments
    
    
    72
    
    
    
    184Noncontrolling interest, September 30
    
    $
    5,330
    
    
    $
    5,151
 (12) NET INCOME PER SHARE
  Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    
    September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Shares used in basic earnings per share calculation
    
    
    59,808
    
    
    
    62,159
    
    
    
    60,926
    
    
    
    63,051Effect of dilutive securities:Stock options
    
    
    681
    
    
    
    987
    
    
    
    844
    
    
    
    636Restricted stock units
    
    
    539
    
    
    
    686
    
    
    
    488
    
    
    
    435Total effects of dilutive securities
    
    
    1,220
    
    
    
    1,673
    
    
    
    1,332
    
    
    
    1,071Shares used in dilutive earnings per share calculation
    
    
    61,028
    
    
    
    63,832
    
    
    
    62,258
    
    
    
    64,122
  (13) EQUITY-BASED COMPENSATION PLANS
  Stock Options
  19




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##### Table of Contents



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




    
    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.
 22




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##### 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;
 23




---



##### 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 Third Quarter 2010 Financial Results
    Business Overview
  BPO Services
     24




---



##### Table of Contents



25




---



##### Table of Contents



September 30, 2010
    
    September 30, 2009Total
    
    
    
    
    
    
    
    
    
    TotalProduction
    
    
    
    
    
    
    
    
    
    ProductionWorkstations
    
    In Use
    
    % In Use
    
    Workstations
    
    In Use
    
    % In UseMulti-client centersSites open <1 year
    
    
    388
    
    
    
    320
    
    
    
    82
    %
    
    
    1,158
    
    
    
    891
    
    
    
    77
    %Sites open >1 year
    
    
    30,733
    
    
    
    20,362
    
    
    
    66
    %
    
    
    28,272
    
    
    
    19,153
    
    
    
    68
    %Total multi-client centers
    
    
    31,121
    
    
    
    20,682
    
    
    
    66
    %
    
    
    29,430
    
    
    
    20,044
    
    
    
    68
    %
  Recent Developments
    26




---



##### Table of Contents



Recently Issued Accounting Pronouncements
  Critical Accounting Policies and Estimates
  Revenue Recognition
   Production Rate 
 PerformanceBased 
 Hybrid 
   27




---



##### Table of Contents



Income Taxes
      Allowance for Doubtful Accounts
  Impairment of LongLived Assets
  28




---



##### Table of Contents



Goodwill
   Restructuring Liability
  EquityBased Compensation
  Fair Value Measurement
    29




---



##### Table of Contents



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.
 Derivatives
      30




---



##### Table of Contents



Contingencies
  Explanation of Key Metrics and Other Items
 Cost of Services
  Selling, General and Administrative
  Restructuring Charges, Net
  Interest Expense
  Other Income
  Other Expense
  Presentation of NonGAAP Measurements
 Free Cash Flow
  31




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##### Table of Contents



Three Months Ended
    
    
    Nine Months EndedSeptember 30,
    
    

September 30,2010
    
    
    2009
    
    
    2010
    
    
    2009Net cash provided by operating activities
    
    $
    45,321
    
    
    $
    58,840
    
    
    $
    119,956
    
    
    $
    152,678Purchases of property, plant and equipment
    
    
    5,074
    
    
    
    4,791
    
    
    
    17,391
    
    
    
    19,092Free cash flow
    
    $
    40,247
    
    
    $
    54,049
    
    
    $
    102,565
    
    
    $
    133,586
  32




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##### Table of Contents



Results of Operations
 Three months ended September 30, 2010 as compared to three months ended September 30, 2009
 Operating Review
  Three Months Ended September 30,% of
    
    
    
    
    
    
    % ofSegment
    
    
    
    
    
    
    Segment2010
    
    
    Revenue
    
    
    2009
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeRevenueNorth American BPO
    
    $
    204,978
    
    
    
    
    
    
    $
    215,949
    
    
    
    
    
    
    $
    (10,971
    )
    
    
    -5.1
    %International BPO
    
    
    66,027
    
    
    
    
    
    
    
    65,575
    
    
    
    
    
    
    
    452
    
    
    
    0.7
    %$
    271,005
    
    
    
    
    
    
    $
    281,524
    
    
    
    
    
    
    $
    (10,519
    )
    
    
    -3.7
    %Cost of servicesNorth American BPO
    
    $
    141,324
    
    
    
    68.9
    %
    
    $
    143,475
    
    
    
    66.4
    %
    
    $
    (2,151
    )
    
    
    -1.5
    %International BPO
    
    
    52,672
    
    
    
    79.8
    %
    
    
    51,134
    
    
    
    78.0
    %
    
    
    1,538
    
    
    
    3.0
    %$
    193,996
    
    
    
    71.6
    %
    
    $
    194,609
    
    
    
    69.1
    %
    
    $
    (613
    )
    
    
    -0.3
    %Selling, general and administrativeNorth American BPO
    
    $
    29,194
    
    
    
    14.2
    %
    
    $
    31,403
    
    
    
    14.5
    %
    
    $
    (2,209
    )
    
    
    -7.0
    %International BPO
    
    
    11,378
    
    
    
    17.2
    %
    
    
    11,162
    
    
    
    17.0
    %
    
    
    216
    
    
    
    1.9
    %$
    40,572
    
    
    
    15.0
    %
    
    $
    42,565
    
    
    
    15.1
    %
    
    $
    (1,993
    )
    
    
    -4.7
    %Depreciation and amortizationNorth American BPO
    
    $
    9,650
    
    
    
    4.7
    %
    
    $
    9,761
    
    
    
    4.5
    %
    
    $
    (111
    )
    
    
    -1.1
    %International BPO
    
    
    2,802
    
    
    
    4.2
    %
    
    
    5,903
    
    
    
    9.0
    %
    
    
    (3,101
    )
    
    
    -52.5
    %$
    12,452
    
    
    
    4.6
    %
    
    $
    15,664
    
    
    
    5.6
    %
    
    $
    (3,212
    )
    
    
    -20.5
    %Restructuring charges, netNorth American BPO
    
    $
    2,711
    
    
    
    1.3
    %
    
    $
    428
    
    
    
    0.2
    %
    
    $
    2,283
    
    
    
    533.4
    %International BPO
    
    
    868
    
    
    
    1.3
    %
    
    
    275
    
    
    
    0.4
    %
    
    
    593
    
    
    
    215.6
    %$
    3,579
    
    
    
    1.3
    %
    
    $
    703
    
    
    
    0.2
    %
    
    $
    2,876
    
    
    
    409.1
    %Impairment lossesNorth American BPO
    
    $
    
    
    
    
    0.0
    %
    
    $
    
    
    
    
    0.0
    %
    
    $
    
    
    
    
    0.0
    %International BPO
    
    
    327
    
    
    
    0.5
    %
    
    
    
    
    
    
    0.0
    %
    
    
    327
    
    
    
    100.0
    %$
    327
    
    
    
    0.1
    %
    
    $
    
    
    
    
    0.0
    %
    
    $
    327
    
    
    
    100.0
    %Income (loss) from operationsNorth American BPO
    
    $
    22,099
    
    
    
    10.8
    %
    
    $
    30,882
    
    
    
    14.3
    %
    
    $
    (8,783
    )
    
    
    -28.4
    %International BPO
    
    
    (2,020
    )
    
    
    -3.1
    %
    
    
    (2,899
    )
    
    
    -4.4
    %
    
    
    879
    
    
    
    30.3
    %$
    20,079
    
    
    
    7.4
    %
    
    $
    27,983
    
    
    
    9.9
    %
    
    $
    (7,904
    )
    
    
    -28.2
    %Other income (expense), net
    
    $
    7,295
    
    
    
    2.7
    %
    
    $
    445
    
    
    
    0.2
    %
    
    $
    6,850
    
    
    
    1539.3
    %Provision for income taxes
    
    $
    (7,586
    )
    
    
    -2.8
    %
    
    $
    (6,971
    )
    
    
    -2.5
    %
    
    $
    (615
    )
    
    
    -8.8
    %
 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
  35




---



##### Table of Contents



Results of Operations
 Nine months ended September 30, 2010 as compared to nine months ended September 30, 2009
 Operating Review
  Nine Months Ended September 30,% of
    
    
    
    
    
    
    % ofSegment
    
    
    
    
    
    
    Segment2010
    
    
    Revenue
    
    
    2009
    
    
    Revenue
    
    
    $ Change
    
    
    % ChangeRevenueNorth American BPO
    
    $
    625,426
    
    
    
    
    
    
    $
    674,827
    
    
    
    
    
    
    $
    (49,401
    )
    
    
    -7.3
    %International BPO
    
    
    189,032
    
    
    
    
    
    
    
    212,239
    
    
    
    
    
    
    
    (23,207
    )
    
    
    -10.9
    %$
    814,458
    
    
    
    
    
    
    $
    887,066
    
    
    
    
    
    
    $
    (72,608
    )
    
    
    -8.2
    %Cost of servicesNorth American BPO
    
    $
    433,095
    
    
    
    69.2
    %
    
    $
    455,287
    
    
    
    67.5
    %
    
    $
    (22,192
    )
    
    
    -4.9
    %International BPO
    
    
    153,713
    
    
    
    81.3
    %
    
    
    171,213
    
    
    
    80.7
    %
    
    
    (17,500
    )
    
    
    -10.2
    %$
    586,808
    
    
    
    72.0
    %
    
    $
    626,500
    
    
    
    70.6
    %
    
    $
    (39,692
    )
    
    
    -6.3
    %Selling, general and administrativeNorth American BPO
    
    $
    90,235
    
    
    
    14.4
    %
    
    $
    100,213
    
    
    
    14.9
    %
    
    $
    (9,978
    )
    
    
    -10.0
    %International BPO
    
    
    33,486
    
    
    
    17.7
    %
    
    
    35,848
    
    
    
    16.9
    %
    
    
    (2,362
    )
    
    
    -6.6
    %$
    123,721
    
    
    
    15.2
    %
    
    $
    136,061
    
    
    
    15.3
    %
    
    $
    (12,340
    )
    
    
    -9.1
    %Depreciation and amortizationNorth American BPO
    
    $
    29,671
    
    
    
    4.7
    %
    
    $
    29,560
    
    
    
    4.4
    %
    
    $
    111
    
    
    
    0.4
    %International BPO
    
    
    8,451
    
    
    
    4.5
    %
    
    
    13,974
    
    
    
    6.6
    %
    
    
    (5,523
    )
    
    
    -39.5
    %$
    38,122
    
    
    
    4.7
    %
    
    $
    43,534
    
    
    
    4.9
    %
    
    $
    (5,412
    )
    
    
    -12.4
    %Restructuring charges, netNorth American BPO
    
    $
    4,762
    
    
    
    0.8
    %
    
    $
    3,333
    
    
    
    0.5
    %
    
    $
    1,429
    
    
    
    42.9
    %International BPO
    
    
    1,590
    
    
    
    0.8
    %
    
    
    1,681
    
    
    
    0.8
    %
    
    
    (91
    )
    
    
    -5.4
    %$
    6,352
    
    
    
    0.8
    %
    
    $
    5,014
    
    
    
    0.6
    %
    
    $
    1,338
    
    
    
    26.7
    %Impairment lossesNorth American BPO
    
    $
    679
    
    
    
    0.1
    %
    
    $
    1,811
    
    
    
    0.3
    %
    
    $
    (1,132
    )
    
    
    -62.5
    %International BPO
    
    
    327
    
    
    
    0.2
    %
    
    
    2,776
    
    
    
    1.3
    %
    
    
    (2,449
    )
    
    
    -88.2
    %$
    1,006
    
    
    
    0.1
    %
    
    $
    4,587
    
    
    
    0.5
    %
    
    $
    (3,581
    )
    
    
    -78.1
    %Income (loss) from operationsNorth American BPO
    
    $
    66,984
    
    
    
    10.7
    %
    
    $
    84,623
    
    
    
    12.5
    %
    
    $
    (17,639
    )
    
    
    -20.8
    %International BPO
    
    
    (8,535
    )
    
    
    -4.5
    %
    
    
    (13,253
    )
    
    
    -6.2
    %
    
    
    4,718
    
    
    
    35.6
    %$
    58,449
    
    
    
    7.2
    %
    
    $
    71,370
    
    
    
    8.0
    %
    
    $
    (12,921
    )
    
    
    -18.1
    %Other income (expense), net
    
    $
    7,416
    
    
    
    0.9
    %
    
    $
    1,570
    
    
    
    0.2
    %
    
    $
    5,846
    
    
    
    372.4
    %Provision for income taxes
    
    $
    (17,711
    )
    
    
    -2.2
    %
    
    $
    (18,479
    )
    
    
    -2.1
    %
    
    $
    768
    
    
    
    4.2
    %
 36




---



##### Table of Contents



Revenue
    Cost of Services
   Selling, General and Administrative
  37




---



##### Table of Contents



Depreciation and Amortization
  Restructuring Charges
  Impairment Losses
  Other Income (Expense)
  Income Taxes
  38




---



##### Table of Contents



Liquidity and Capital Resources
       Cash and Cash Equivalents
  Cash Flows from Operating Activities
  Cash Flows from Investing Activities
  39




---



##### Table of Contents



Cash Flows from Financing Activities
  Free Cash Flow
  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
    
    
    
    700
    
    
    
    
    
    
    
    
    
    
    
    2,345Equipment financing arrangements
    
    
    1,076
    
    
    
    920
    
    
    
    72
    
    
    
    
    
    
    
    2,068Purchase obligations
    
    
    21,668
    
    
    
    22,841
    
    
    
    36
    
    
    
    
    
    
    
    44,545Operating lease commitments
    
    
    24,656
    
    
    
    27,193
    
    
    
    7,879
    
    
    
    6,079
    
    
    
    65,807Total
    
    $
    49,045
    
    
    $
    51,654
    
    
    $
    7,987
    
    
    $
    6,079
    
    
    $
    114,765
 
    
    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 $0.5 million related to
uncertain tax positions because we cannot reliably estimate the timing of cash payments.
 Future Capital Requirements
   40




---



##### Table of Contents



Debt Instruments and Related Covenants
   Client Concentration
   
 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
  41




---



##### Table of Contents



Interest Rate Risk
  Foreign Currency Risk
   Cash Flow Hedging Program
   42




---



##### Table of Contents



Local Currency
    
    
    U.S. Dollar
    
    
    % Maturing in
    
    
    ContractsNotional
    
    
    Notional
    
    
    the Next 12
    
    
    MaturingAs of September 30, 2010
    
    Amount
    
    
    Amount
    
    
    Months
    
    
    ThroughCanadian Dollar
    
    
    11,700
    
    
    $
    9,883
    
    
    
    84.6
    %
    
    December 2011Canadian Dollar Call Options
    
    
    5,100
    
    
    
    4,571
    
    
    
    100.0
    %
    
    December 2010Philippine Peso
    
    
    5,488,000
    
    
    
    115,661
    1
    
    
    77.3
    %
    
    December 2012Argentine Peso
    
    
    10,000
    
    
    
    2,394
    2
    
    
    100.0
    %
    
    December 2010Mexican Peso
    
    
    406,000
    
    
    
    28,887
    
    
    
    95.6
    %
    
    December 2011British Pound Sterling
    
    
    5,015
    
    
    
    7,911
    3
    
    
    82.1
    %
    
    December 2011$
    169,307Local 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
September 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
September 30, 2010.3
    
    Includes contracts to purchase British pound sterling in exchange
for Euros, which are translated into equivalent U.S. dollars on
September 30, 2010 and December 31, 2009.  September 30,
    
    
    Maturing in the2010
    
    
    Next 12 MonthsCanadian Dollar
    
    $
    1,418
    
    
    $
    1,127Canadian Dollar Call Options
    
    
    406
    
    
    
    406Philippine Peso
    
    
    6,654
    
    
    
    5,314Argentine Peso
    
    
    101
    
    
    
    101Mexican Peso
    
    
    2,837
    
    
    
    2,763British Pound Sterling
    
    
    (54
    )
    
    
    (55
    )$
    11,362
    
    
    $
    9,656
  43




---



##### Table of Contents



Fair Value of Debt and Equity Securities
  
 ITEM 4. CONTROLS AND PROCEDURES
  Evaluation of Disclosure Controls and Procedures
    44




---



##### 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.
 45




---



##### Table of Contents



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.
  
 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)1July 1, 2010 - July 31, 2010
    
    
    249,581
    
    
    $
    12.80
    
    
    
    249,581
    
    
    $
    10,151August 1, 2010 - August 31, 2010
    
    
    322,764
    
    
    $
    13.11
    
    
    
    322,764
    
    
    $
    30,921September 1, 2010 - September 30, 2010
    
    
    255,931
    
    
    $
    14.02
    
    
    
    255,931
    
    
    $
    27,333Total
    
    
    828,276
    
    
    
    
    
    
    
    828,276
 
 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 September 30, 2010, the Board has authorized the repurchase of shares up to a
total value of $362.3 million, of which we have purchased 27.1 million shares on the open market
for $335.0 million. As of September 30, 2010, the remaining amount authorized for repurchases
under the program is approximately $27.3 million. The stock repurchase program does not have an
expiration date. 
 ITEM 3. DEFAULTS UPON SENIOR SECURITIES
  
 ITEM 4. RESERVED
 
 ITEM 5. OTHER INFORMATION
  46




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##### Table of Contents



ITEM 6. EXHIBITS
 Exhibit No.
    
    Exhibit Description10.1
    
    First Amendment to Executive Employment Agreement, dated
September 20, 2010 between TeleTech and Joseph Bellini31.1
    
    Certification of Interim 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




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##### Table of Contents



SIGNATURES
  TELETECH HOLDINGS, INC.

(Registrant)Date: November 3, 2010
    
    By:
    
    /s/ Kenneth D. Tuchman

Kenneth D. TuchmanChairman and Chief Executive OfficerDate: November 3, 2010
    
    By:
    
    /s/ John R. Troka, Jr.

John R. Troka, Jr.Interim Chief Financial Officer
 48




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##### Table of Contents



EXHIBIT INDEX
 Exhibit No.
    
    Exhibit Description10.1
    
    First Amendment to Executive Employment Agreement, dated
September 20, 2010 between TeleTech and Joseph Bellini31.1
    
    Certification of Interim 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)
 49