TeleTech Q3 Earnings Rise

TeleTech Holdings, Inc., a leading global business process outsourcing (BPO) provider, today announced third quarter 2006 financial results. The Company also filed its Quarterly Report on Form 10-Q with the Securities and Exchange Commission for the third quarter ended September 30, 2006.

TeleTech reported record third quarter revenue of $304 million, an 11 percent increase over the year-ago quarter. Revenue in TeleTech's North American and International BPO segments grew 17 percent over the year-ago quarter and represented 98 percent of consolidated revenue.

Income from operations increased 71 percent to $20.4 million from the year-ago quarter. Operating margin was 6.7 percent compared to 4.3 percent in the year-ago quarter. TeleTech achieved its fourth quarter 2006 operating margin goal of 6 to 7 percent one quarter earlier than expected.

Earnings before interest, taxes, depreciation and amortization (EBITDA) was $34 million or 11 percent of revenue, a 38 percent increase over the year-ago quarter. Please refer to the discussion of Non-GAAP financial measures below.

Fully diluted earnings per share was 18 cents, up from 16 cents in the year ago quarter. Included in the 16 cents in the year-ago quarter was an 8 cent net benefit from certain tax items.

EXECUTIVE COMMENTARY

"We are very pleased to have achieved the fourth consecutive quarter of double-digit revenue growth while increasing income from operations by 71 percent," said Kenneth Tuchman, chairman and chief executive officer. "Our continued strong performance is the result of solid top-line growth, operational excellence, and our commitment to increased profitability as we progress towards achieving our year-end 2007 financial goals."

"Our offshore BPO operations that serve U.S. and European clients have organically grown 40 percent year-to-date. We believe this makes TeleTech one of the fastest growing BPO companies of its size," Tuchman continued. "During the fourth quarter, we are looking forward to the largest sequential revenue ramp in our company's history. To support this growth we have more than 3,700 employees moving from training into production during the fourth quarter."

THIRD QUARTER 2006 BUSINESS HIGHLIGHTS

Strong Revenue and Operating Margin

• TeleTech's improved financial results were attributable to strong performance in its North American and International BPO segments resulting from growth in new and existing client programs, continued expansion of business in offshore locations, the acquisition of Direct Alliance Corporation (DAC) and ongoing profit improvement initiatives.
• Revenue in TeleTech's North American BPO segment grew 21 percent to $207 million over the prior year quarter. Operating income in this segment grew 61 percent to $25 million and operating margin was 12.2 percent.
• Revenue in TeleTech's International BPO segment grew 9 percent to $90 million over the prior-year quarter. The operating results in this segment were profitable for the first time in four years with operating income of $0.2 million compared to an operating loss of $1.9 million in the year-ago quarter.

Solid Balance Sheet Continues to Fund Organic Growth and Share Repurchase Program

• As of quarter-end, TeleTech had cash and cash equivalents of $55 million and total debt to equity of 26 percent. The increase in total debt from the year-ago quarter is primarily related to the acquisition of DAC and the Company's share repurchase program.
• TeleTech generated $26 million of free cash flow in the third quarter compared to $7 million in the year-ago quarter.
• Capital expenditures were $23 million, up from $11 million a year-ago. Approximately 70 percent of this quarter's capital expenditures were growth related with the balance for maintenance.
• TeleTech repurchased nearly $15 million of common stock through the first nine months of 2006, leaving approximately $51 million remaining under the repurchase program as of quarter-end.

Business Outlook

• For the 2006 fiscal year, TeleTech estimates revenue will grow approximately 11 to 12 percent over 2005. Furthermore, TeleTech believes fourth quarter 2006 operating margin will increase to between 7 and 8 percent, higher than its previously stated goal of between 6 and 7 percent, excluding any unusual charges.

SEC FILINGS

The Company's filings with the Securities and Exchange Commission are available in the "Investors" section of TeleTech's website, which can be found at www.teletech.com.

NON-GAAP FINANCIAL MEASURES

To supplement the Company's consolidated financial statements presented in accordance with generally accepted accounting principles (GAAP) in the United States, the Company uses the following non-GAAP financial measures: non-GAAP EPS, EBITDA and Free Cash Flow. TeleTech believes that providing these non- GAAP measures provides investors with greater transparency to the information used by TeleTech's management in its financial and operational decision-making and allows investors to see TeleTech's results "through the eyes" of management. TeleTech also believes that providing this information better enables TeleTech's investors to understand its operating performance and information used by management to evaluate and measure such performance. The presentation of these financial measures are not intended to be used in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. A reconciliation of these non-GAAP financial measures can be found in the financial tables attached to this press release.