Welcome to the Fourth Quarter and Full Year 2012 Earnings Conference Call. [Operator Instructions] I would now l to turn the call over to Karen Breen, TeleTech's Vice President of Investor Relations. Thank you, ma'am, you may begin.

Thank you. Good morning, and thank you to everyone joining us today. TeleTech is hosting this call to discuss its fourth quarter and full year 2012 results ended December 31. Participating on today's call will be Ken Tuchman, our Chairman and CEO; and Regina Paolillo, our Chief Financial Officer. Yesterday, TeleTech issued a press release announcing its financial results for the fourth quarter and full year 2012, and we also filed our annual report on form 10-K with the SEC. This call will reflect items discussed within those documents, and we will make reference to them on today's call. We encourage all listeners to also read our annual report on Form 10-K. Before we begin, I want to remind you that matters discussed on today's call may include forward-looking statements relating to our operating performance, financial goals and business outlook, which are based on management's current beliefs and expectations. Please note that these forward-looking statements reflect our opinions only as of the date of this call, and we undertake no obligation to revise this information as a result of new data that may become available. Forward-looking statements are subject to various risks, uncertainties and other factors that could cause our actual results to differ materially from those described. Such factors include, but are not limited to, reliance on several major clients, the risks associated with lower profitability from or the loss of one or more significant client relationships, execution risks associated with ramping new business or integrating acquired companies and the possibility of additional asset impairments and/or restructuring charges. For a more detailed description of our risk factors, please review our most recent SEC filings, along with our annual report on Form 10-K. A replay of this call will be available on our website through March 13. I will now turn the call over to Ken Tuchman, our Chairman and CEO.

Thank you, Karen, and good morning to everyone. It's a pleasure to be with you today to review our financial performance, along with the progress we've made on key imperatives. As I reflect on both 2012 and our past 30 years, I realize that our continued success has stemmed from unwavering clarity of purpose, and that is to build stronger brands for our clients through the delivery of extraordinary customer experiences. This focus is enabled by relentless commitment to innovation in everything that we do. This has led us to further diversify our revenues into a fully integrated offering that spans strategy to execution. Last year, 21% of our revenues came from these technology-enabled services, up from -- excuse me, 17% in 2011 and from 8.5% in 2010. Technology has clearly revolutionized every aspect of our lives, and we undeniably live in the age of the customer. We firmly believe that success of every company will be determined by how they respond to the heightened challenge. What is most exciting about our future is the customer experience is squarely at the forefront of every board and every CEO's agenda. Numerous studies have validated that companies who sustain a long-term competitive advantage are those that differentiate via the customer experience versus those that benefit from a short-lived price or product advantage. Having managed billions of interactions in 2012 alone, we have a unique insight into the experiences that customers want, and more importantly, how to deliver it. Let me now reflect on our 2012 accomplishments and key priorities in 2013. I'm pleased that we delivered on all of our 2012 financial commitments that were first outlined a year ago when we announced our 2011 results. I'm proud to say that we achieved both our revenue and profitability targets for 2012 despite…

Thank you, Ken, and good morning, everyone. Let me start with some comments on the full year, after which I'll discuss our fourth quarter and 2013 business outlook in more detail. Revenue of $1,163,000,000 was in the middle of our originally guided range of $1,150,000,000 to $1,200,000,000. The decline from 2011 was attributable to $64 million in lost revenue from exiting certain unprofitable programs, combined with a nearly $15 million negative currency impact. Excluding these items, revenue grew $63 million or 5.3% over the same period a year ago. Adjusted operating margin reached a 3-year high of 9% and at the high end of our originally guided range of 8.5% to 9%. The charges associated with exiting unprofitable markets were $15.5 million and at the low end of our originally guided range of $15 million to $18 million. We returned $81 million to shareholders or 9% of our net market cap via the repurchases of 5 million shares. We generated nearly $66 million of free cash flow for a near 7% yield on our market cap. Let me now review our fourth quarter results in more detail. Revenue for the quarter was $295.3 million compared to $300.5 million in the year-ago quarter. The $5.2 million decline was related to the loss of $21.7 million in revenue from exiting certain unprofitable markets, offset in part by a $2.9 million favorable foreign currency impact. Excluding these items, revenue grew $13.6 million or 4.5% over the year-ago quarter. Our diversified businesses comprised approximately $60 million or slightly more than 20% of fourth quarter revenue. Our fourth quarter GAAP operating income was $26 million or 8.8% of revenue compared to 6.9% in the year-ago quarter. Adding back the $2.2 million of restructuring charges, our non-GAAP operating income was $28.2 million or 9.5% compared to…

Thank you. As we open the call to your questions, we would ask that you limit them to one at a time, so we have the opportunity to take everyone's inquiry. Operator, you may now open the line.

[Operator Instructions] Our first question comes from Ashwin Shirvaikar of Citi.

I guess my question is on -- from a segment basis, as I look at margins, either -- in all of the -- in the non-call center businesses, they were down except for Technology. I wanted to understand, as these businesses grow at a faster pace, is there a scale impact -- I mean, are these fundamentally lower-margin businesses compared to call center? Or is there expectation that margins improve at some point?

Ashwin, it's ken. Our expectation is that the margins, in fact, will be higher. And we communicated that we set forth on our strategy. And we're very confident that we will deliver on higher margins, as well as a significantly higher growth rate.

Could you quantify what you might mean by higher margins? Is there other milestones we should be looking for?

Well, I think over the -- I think, over the medium term, I think that our expectation is that, that business typically will put forth a margin that's going to range on the very low end of 15% to 21%. And so you can kind of just do an average, if you want, and we'd be comfortable with that. But what I would just simply say is that I don't think you should judge that segment with the amount of acquisitions that we've done going forward. I think that it's safe to say that we're pretty good at rationalization, and that we're aggressively going through that process and feel very confident in what we're seeing, as well as the pipeline.

If I can ask one more. Can you talk about sort of the strategic imperative in the integration of TSG and Guidon into your current operations?

I'm sorry, you faded out on the very end.

Strategy around TSG into Guidon.

And Guidon integration. How will you integrate TSG into Guidon?

So I'm still not sure I fully understand question, but let me just do -- try to take a crack at your question. What we're finding is that although the Street thinks that we're in the call center business, the fact of the matter is, is that our clients now understand that they need something that's going to drive and dramatically change their customer experience. In order for us to do that, we have to be able to be able to provide strategic consulting for them. But to just provide strategic consulting and to provide a 3-ring binder of the what and what has to be done is not enough. And what they're looking for is they're looking for an organization that they can hold responsible to outcomes. The only way we can deliver to outcomes is to basically manage the ecosystem that drives whether our customer experience is good or bad, or whether revenue is growing or shrinking, or whether retention is staying or loyalty is maintaining or declining. And we believe that the assets that we've pulled together and the capabilities that we've pulled together are allowing us to work with very large companies that have very legacy processes, very much legacies in their technology area, et cetera, and they're looking for an end-to-end solution. So what I would just say to you is, is that we're getting very significant -- clients resonating to what it is that we're offering. And we're selling in that manner. We are not selling a staff augmentation capability, which is something that we think longer term is not our overall businesses that's going to have the types of margins that have traditionally been afforded in the past. Instead, clients are looking for outcomes where they can predict what in fact is going to take place with their customer base. And so, we have a myriad of case studies, of clients where we've had these types of impacts. And offline, I'd be happy to talk more with you on how we're impacting this, but that is exactly what we're doing. TSG is merely now become part of eLoyalty. And the difference is, is that it just simply gives eLoyalty that much more overall scale than what eLoyalty already had. eLoyalty has been growing at a very fast clip and is going to continue to grow at a very fast clip, with more acquisitions planned, so that we can continue to drive a more technological solution. So sorry for the long-winded answer, I hope that answered your question.

Our next question is from Mike Malouf of Craig-Hallum.

A question to -- it's kind of a 2-part question. Can you talk a little bit about foreign exchange, specifically, the Philippine peso, and how that's affecting you guys? What kind of impact that's going to have going forward, and how you're trying to -- how you're mitigating that?

Yes, let me just -- let me address the FX piece. So it's not affecting us. I would say, we've got a very mature program relative to the risk that we have around the world with regard to FX. That program really is twofold. One is that we risk mitigate a fair amount of this, especially with our larger clients, through contractual terms and conditions, which allow us to true up that FX on a fairly frequent basis. And then second to that, we have a very active hedging program, both short term but very much long term. For example, specifically your question on the Philippine peso, we're -- for a part of our portfolio, we're hedged out almost 4 years. So we have, I think, done a very good job over the last number of years. It's been a long-term program of very actively, and I think, successfully managing that risk and expect to continue to do that on both those fronts that I mentioned. As we bring new clients in, clearly, we're pricing our contracts at that moment relative and immediately at the gate establishing hedges where relevant.

Great, that's really helpful. And maybe can you talk a little bit about how the sort of the traditional call center business is right now? I know you kind of do a good job of -- as you sit here at the end of the end of 2012 and looking out over the next couple of years, your results and some of the other companies in your industry seem to be experiencing a little bit of a strengthening in demand. And I'd love to sort of get some color on where we think we are with the outsourcing trend? And specifically, around maybe if there's any -- been any structural changes, for instance, @Home? And how that's affecting the industry?

I think just to kind of layer on to what I was just saying to Ashwin, that the business, in our opinion, in order to really be differentiated in the space, we have to be become the leader that is driving the outcomes. And therefore, what we're focused on is having differentiated technological capabilities that allow us to help our clients deliver a capability that ultimately, their customers are saying is differentiating their brand. In doing so, what we're seeing is that there's really kind of 2 types of clients in the marketplace. There's a client that wants to be prescriptive and tends to have the lowest Net Promoter Scores, tends to want to be focused on the lowest price in the Excel spreadsheet and is very focused on more of a staff augmentation, lift and shift, much for less. We're going the exact opposite direction. And if you actually look at who our clients are, it's safe to say that the majority of them have some of the highest CSAT scores, J.D. Power scores, and MPS scores. And they actually understand the fact that investing in a customer, being able to be predictive with the customer, being able to almost have a psychic ability, and I don't mean to be corny by saying this, of knowing and understanding what the customer is looking for is very important. And that's why we've been making significant investments in the data analytics space. It's why we're building platforms in that area, et cetera. And so I think again, the Street focuses on our name because of its legacy of how long we've been in this business as a call center company, when in fact, what we're seeing, to your point, is a dramatic shift in the types of interactions that are taking…

Our next question comes from Steven Shui of Stifel, Nicolaus. Steven Shui - Stifel, Nicolaus & Co., Inc., Research Division: It looks like CapEx has taken a healthy step up in 2013, and we see now the competitors as well. Can you give us some color into what you'll be spending on? And whether some of your newer businesses are just more capital intensive?

Yes, just -- I'd first start by saying that, that $50 million to $60 million is a range that will be tied to bookings. So the infrastructure required around the world, either for CMS or for CTS, which are really the 2 businesses that consume the bulk of that capital. But the lion's share of the step up would be new sites based on the pipeline that we have, the bookings that we're seeing in Q1. We still expect over the long-term to be within that 4% to 5% of revenue. Our CapEx was $40 million last year. I think within that, we spent probably about 25% on site buildout. And as you see, our capacity has moved up from 72% to 79% and will continue to improvement in Q1, as we come off of Q1 and book new business in CMS. Globally, we expect that we will start to buildout new sites. So the bulk of that is really, as I said, site buildout as well as in CTS, the buildout of our cloud platform for -- which backs up our recently kind of achieved certification in Cisco cloud. And then just one other comment that for the most part, our CapEx continues to be around 70% new and 30% maintenance. Steven Shui - Stifel, Nicolaus & Co., Inc., Research Division: And a separate question, what was TSG's revenue in the 2012? And how fast do you expect that business to grow in 2013?

TSG's revenue was in the mid $30 million. And we expect that business to be between $35 million and $40 million on a forward basis.

[Operator Instructions] Our next question comes from Kevin McVeigh of Macquarie.

This is actually Derek Sbrogna in for Kevin. I just -- with kind of the new operating margin guidance for 2013, the 9.25% to 9.5%, given that new range, do you guys still see the 11% to 12% that you'd previously outlined in 2014 as attainable?

Definitely.

Great. And is -- should we be thinking about...

And I want to just stress, so if you're wondering, where is the delta, the amount of investment that we're making in sales and marketing and R&D is significant. And I would just suggest that you take a look at what that investment is and what our margins would be without that investment. So we're very comfortable with the future guidance.

Got it. And we should be thinking about that as a run rate for the entire year, not an exit rate, correct?

Yes, that's correct.

Okay. And I then know you're not probably going to provide too much color, but given all these investments that you spoke about, what does that kind of imply for the margin profile of the kind of the core CMS business? I mean, do you expect that to continue to expand? Or is it -- I wonder if you can just talk about it directionally?

What I would just the say to you that on an aggregate, when you look at onshore, nearshore and offshore, I think that, that business is going to range probably in the 8% to 9% range. And I think that what's going to bring the margin over-the-top is all the emerging capabilities that we've been putting together, and that we're now getting excellent traction on.

And at this time, there are no other questions. Do you have any closing remarks?

We do not at this time.

Thank you. This does conclude the Fourth Quarter and Full Year 2012 Earnings Conference Call. You may disconnect your phones at this time.