Copyright Darden Graduate Business School Foundation, Charlottesville VA.

This Spreadsheet supports STUDENT analysis of the case, "Teletech Corporation, 2005"
(Case 15)

Copyright Darden Graduate Business School Foundation, Charlottesville VA.

Exhibit 1
Teletech Corporation, 2005
Summary of WACC Calculation for Teletech Corporation, and Segment Worksheet

Telecommunications
Corporate Services
MV asset weights 100% 75%
Bond rating A-/BBB+ A
Pretax cost of debt 5.88% 5.74%
Tax rate 40% 40%
After-tax cost of debt 3.53% 3.44%

Equity beta 1.15

Rf 4.62%
RM 10.12%
RM-Rf 5.50%
Cost of equity 10.95%

Weight of debt 22.2%

Weight of equity 77.8%
WACC 9.30%

Sources of data: Bloomberg LP, S&P Research Insight, case writer's analysis.
gment Worksheet

Products
and Systems
25.00%
BB
7.47%
40%
4.48%
Exhibit 3
Teletech Corporation, 2005
Samples of Comparable Firms
Price-
Book Val. Mkt. Val. Mkt. Val. Close
2004 Equity Bond Debt/Total Price to Debt/ Debt/ Price/ Fiscal Com Shares LT Debt- Mkt. Value
Company Name Revenues Beta Rating Capital Book Capital Equity Earnings Year Outstanding Total Equity

Teletech Corporation 16,000 1.15 A-/BBB+ 40% 3.0 22% 78% 12.9

Telecommunuications Services Industry

Alltel Corp. 8,246 1.00 A 44.7 2.4 23.2% 30.1% 15.4 $ 58.76 302 5,352 17,761
AT&T Corp. 30,537 1.10 BB+ 67.5 2.0 36.6% 57.7% (2.4) $ 19.06 799 8,779 15,221
BellSouth Corp. 20,350 1.00 A 53.9 2.1 22.9% 29.7% 16.7 $ 27.79 1,831 15,108 50,883
Centurytel Corp. 2,411 1.05 BBB+ 48.7 1.3 37.0% 58.8% 13.3 $ 35.47 132 2,762 4,695
Citizens Communications Co. 2,193 1.00 BB+ 75.9 3.5 47.7% 91.1% 65.0 $ 13.79 340 4,267 4,684
IDT Corp. 2,217 1.05 NA 4.6 1.2 2.1% 2.1% (19.3) $ 15.75 96 32 1,513
SBC Communications Inc. 40,787 1.05 A 43.7 1.9 20.0% 25.0% 19.6 $ 25.77 3,301 21,231 85,065
Sprint Corp. 27,428 1.15 A- 58.0 2.4 30.3% 43.4% (43.1) $ 24.85 1,475 15,916 36,649
Verizon Communications Inc. 71,283 1.00 A+ 40.0 2.6 24.1% 31.8% 12.5 $ 40.51 2,770 35,674 112,199
Average 1.04 48.55 2.15 27.1% 41.1% 8.65

Telecommunications Equipment Industry

Avaya Inc. 4,057 1.35 BB 54.5 3.5 4.4% 4.6% 18.3 $ 13.94 456 294 6,354
Belden CDT Inc. 966 1.45 NA 23.6 1.2 17.5% 21.3% 38.7 $ 23.20 47 233 1,095
Commscope Inc. 1,153 1.10 BB 41.6 2.0 22.4% 28.9% 10.3 $ 18.90 54 297 1,030
Corning Inc. 3,854 1.45 BBB- 44.4 5.4 11.8% 13.4% (11.1) $ 11.77 1,408 2,214 16,572
Harris Corp. 2,519 1.05 BBB- 24.5 2.7 10.7% 11.9% 21.9 $ 25.38 133 401 3,367
Lucent Technologies Inc. 9,045 1.75 B 129.0 (26.0) 30.1% 43.0% 6.0 $ 3.17 4,395 5,989 13,932
Nortel Networks Corp. 9,828 1.75 NA 45.7 3.0 20.7% 26.0% (51.8) $ 3.47 4,273 3,862 14,826
Plantronics Inc. 560 1.20 NA 0.7 4.2 0.2% 0.2% 17.0 $ 38.08 48 3 1,844
Scientific-Atlanta Inc. 1,708 1.45 NA 0.5 2.6 0.1% 0.1% 20.7 $ 34.50 153 8 5,292
Average 1.39 40.50 (0.15) 13.1% 16.6% 7.77

Computer and Network Equipment Industry

EMC Corp. 8,229 1.55 BBB 1.1 2.9 0.4% 0.4% 34.3 $ 14.87 2,405 128 35,762
Gateway Inc. 3,650 1.35 NA 64.2 5.5 11.8% 13.4% (4.2) $ 6.01 372 300 2,237
Hewlett-Packard Corp. 79,905 1.45 A- 16.9 1.7 7.8% 8.5% 18.5 $ 18.66 2,911 4,623 54,315
Int'l. Business Machines Corp. 96,293 1.10 A+ 51.4 4.1 8.4% 9.1% 15.2 $ 98.58 1,646 14,828 162,222
Lexmark Int'l. Inc. 5,314 1.15 NA 6.8 4.2 1.4% 1.4% 15.5 $ 85.00 128 150 10,846
NCR Corp. 5,984 1.20 NA 12.8 3.3 4.5% 4.8% 21.1 $ 34.62 187 307 6,459
Seagate Technology 6,224 1.20 NA 28.6 4.4 10.0% 11.1% 25.0 $ 14.43 460 739 6,632
Storage Technology Corp. 2,224 1.15 NA 0.9 2.4 0.3% 0.3% 18.2 $ 31.61 107 11 3,396
Western Digital Corp. 3,047 1.80 NA 12.6 4.8 2.9% 3.0% 16.7 $ 8.66 206 53 1,785
Average 1.33 21.70 3.70 5.3% 5.8% 17.81

Sources of data: Value Line Investment Survey, S&P Research Insight.

Exhibit 4
Teletech Corporation, 2005
Debt Capital Market Conditions, October 2005

Corporate Bond Yields U.S. Treasury Securities

Industrials
AAA 5.44% 3-month 3.56%
AA 5.51% 6-month 3.99%
A 5.74% 2-year 4.23%
3-year 4.23%
BBB 6.23% 5-year 4.25%
BB 7.47% 10-year 4.39%
B 8.00% 30-year 4.62%

Phones
A 6.17%
BBB 6.28%

Utilities
A 5.69%
BBB 6.09%

Source of data: Bloomberg LP.