TeleTech Announces Fourth Quarter and Full Year 2008 Financial Results

ENGLEWOOD, CO — TeleTech Holdings, Inc. (Nasdaq: TTEC) one of the largest and most geographically diverse global providers of business process outsourcing ("BPO") solutions, today announced financial results for the fourth quarter and fiscal year ended December 31, 2008. The Company also filed its Annual Report on Form 10-K with the Securities and Exchange Commission for the fourth quarter and year ended December 31, 2008.

FOURTH QUARTER 2008 FINANCIAL RESULTS
TeleTech reported fourth quarter 2008 revenue of $326.0 million, a $45.6 million decrease from fourth quarter 2007 revenue of $371.6 million. Nearly 80 percent, or $35.2 million, of the decline is attributable to significant strengthening of the U.S. dollar relative to currencies of certain foreign subsidiaries. The balance of the reduction is primarily due to the challenging economic environment resulting in lower seasonal client volumes in the fourth quarter 2008 when compared to the year-ago quarter.

TeleTech’s fourth quarter 2008 income from operations grew 84 percent over the year-ago quarter to $23.3 million and represented 7.1 percent of revenue. Income from operations for the quarter included $2.4 million of restructuring and impairment charges and $3.9 million of expenses primarily related to legal and payroll tax fees associated with the Audit Committee’s completed review of the Company’s equity-based compensation practices and the subsequent financial restatement.

Excluding the $6.3 million of unusual charges mentioned above, TeleTech’s fourth quarter 2008 non-GAAP income from operations was $29.5 million, or 9.1 percent of revenue. This represents a 150 basis point or 20 percent improvement over 7.6 percent, excluding unusual charges, in the year-ago quarter.

Fourth quarter 2008 fully diluted earnings per share increased 29 percent over the year-ago quarter to 22 cents on net income of $14.1 million. Excluding the $6.3 million of unusual pre-tax charges discussed above, fourth quarter 2008 non-GAAP earnings per share were 28 cents, compared to 32 cents non-GAAP earnings per share in the year-ago quarter.

2008 FINANCIAL RESULTS
Full year 2008 revenue increased 2.2 percent over 2007 to a record $1.4 billion.

TeleTech’s 2008 income from operations grew 33 percent to $109.0 million and represented 7.8 percent of revenue. Income from operations for the year included $8.1 million of restructuring and impairment charges and $14.6 million of expenses primarily related to legal and payroll tax fees associated with the Audit Committee’s completed review of the Company’s equity-based compensation practices and the subsequent financial restatement.

Excluding the $22.7 million of unusual charges mentioned above, TeleTech’s 2008 non-GAAP income from operations was $131.7 million, or 9.4 percent of revenue. This represents a 90 basis point or 11 percent improvement over 8.5 percent in 2007, excluding unusual charges.

2008 non-GAAP EBITDA was $194.9 million, or 13.9 percent of revenue. This represents a 70 basis point or 5 percent increase over 2007 non-GAAP EBITDA margin of 13.2 percent.

2008 fully diluted earnings per share increased 45 percent to $1.06 on net income of $73.7 million, compared to 73 cents on net income of $53.1 million in 2007 Excluding the $22.7 million of unusual pre-tax charges discussed above and certain tax benefits, 2008 non-GAAP earnings per share increased 15 percent to $1.21 from $1.05 non-GAAP earnings per share in 2007.

OTHER BUSINESS HIGHLIGHTS
Strong Balance Sheet Continues to Fund Organic Growth

• As of December 31, 2008, TeleTech had cash and cash equivalents of $87.9 million and total debt of $89.1 million.
• Cash flow from operations grew $57.1 million or 55 percent to $160.6 million from $103.5 million in 2007.
• Free cash flow in 2008 was a record $98.9 million, representing a 133% increase from $42.4 million in 2007.
• Free cash flow for the fourth quarter 2008 was $25.3 million, representing a 280% increase from negative free cash flow of ($14.1 million) in the year-ago quarter.
• Capital expenditures, net of grant proceeds, in the fourth quarter 2008 were $10.0 million, totaling $61.7 million for the full year. Approximately 80 percent of capital expenditures in 2008 were for growth- related needs, primarily related to the expansion of TeleTech’s global footprint, with the balance for improving TeleTech’s embedded infrastructure.
• Return on invested capital was 29 percent as of December 31, 2008, up from 27 percent in the year-ago quarter.

New Business

• During the fourth quarter 2008, TeleTech signed an estimated $100 million in new, annualized long-term revenue primarily from expanded client relationships.

Share Repurchases

• TeleTech’s strong balance sheet has given the Company the flexibility to fund organic growth while also repurchasing common stock. During 2008, the Company repurchased 6.5 million shares of common stock for $89.6 million and is continuing its stock repurchase program.
• TeleTech’s Board of Directors has approved an incremental $25 million for additional share repurchases, bringing the total amount currently authorized for future repurchases to approximately $35 million.

EXECUTIVE COMMENTARY ON TELETECH’S FINANCIAL RESULTS
"During 2008, TeleTech continued to deliver solid financial results despite a dynamic global economic environment in the latter half of the year," said Kenneth Tuchman, chairman and chief executive officer. "Our revenue and profitability gains in 2008 enabled us to deliver a 39% increase in net income and record free cash flow of nearly $100 million. Our capital-efficient delivery model, high client satisfaction, solid balance sheet and ample liquidity make us a strong and trusted business partner to our clients. Our outsourced business process solutions provide clients with the agility they need to compete effectively in both good and challenging economic times."

BUSINESS OUTLOOK
The current economic environment has made forecasting difficult for our clients and therefore for TeleTech. As a result, TeleTech remains comfortable with the current analyst consensus numbers for 2009 annualized revenue and operating margin given the following business trends:

• The strengthening U.S. dollar relative to currencies of certain foreign subsidiaries including those that operate in Asia Pacific countries, Brazil, Spain and the United Kingdom, is expected to adversely impact 2009 revenue by $90 to $110 million versus 2008.
• While TeleTech continues to sign and ramp new business, the revenue growth from these programs may be offset by lower volumes with certain existing clients resulting from the challenging economic environment.

Despite the economic climate, TeleTech continues to further diversify its client base and strengthen its balance sheet via ongoing free cash flow generation and proactive working capital management. Further, the Company intends to continue repurchasing its stock under the current program authorization.

CONFERENCE CALL
A conference call and webcast with management will be held on Tuesday, February 24, 2009 at 8:30 a.m. Eastern Time. You are invited to join the live webcast of the conference call by visiting the "Investors" section of the TeleTech website at www.teletech.com. If you are unable to participate during the live webcast, a replay will be available on the TeleTech website through Tuesday, March 10, 2009.

ABOUT TELETECH
TeleTech is one of the largest and most geographically diverse global providers of business process outsourcing solutions. We have a 27-year history of designing, implementing, and managing critical business processes for Global 1000 companies to help them improve their customers’ experience, expand their strategic capabilities, and increase their operating efficiencies. By delivering a high-quality customer experience through the effective integration of customer-facing front-office processes with internal back-office processes, we enable our clients to better serve, grow, and retain their customer base. We use Six Sigma-based quality methods continually to design, implement, and enhance the business processes we deliver to our clients and we also apply this methodology to our own internal operations. We have developed deep domain expertise and support more than 250 business process outsourcing programs serving approximately 100 global clients in the automotive, communications and media, financial services, government, healthcare, retail, technology and travel and leisure industries. Our integrated global solutions are provided by approximately 55,000 employees utilizing 39,900 workstations across 83 delivery centers in 17 countries. For additional information, visit www.teletech.com.