10-Q
TTEC HOLDINGS, INC. filed this Form 10-Q on 11/07/2018
Entire Document
 

Recently Issued Accounting Pronouncements

Refer to Part I, Item I, Financial Statements, Note 1 to the Consolidated Financial Statements for a discussion of recently issued accounting pronouncements.

Critical Accounting Policies and Estimates

Management’s Discussion and Analysis of our financial condition and results of operations are based upon our Consolidated Financial Statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, as well as the disclosure of contingent assets and liabilities. We regularly review our estimates and assumptions. These estimates and assumptions, which are based upon historical experience and on various other factors believed to be reasonable under the circumstances, form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Reported amounts and disclosures may have been different had management used different estimates and assumptions or if different conditions had occurred in the periods presented. For further information, please refer to the discussion of all critical accounting policies in Note 1 of the Notes to the Consolidated Financial Statements in our Annual Report on Form 10-K for the year ended December 31, 2017.

Revenue changes for ASC 606

In connection with the adoption of ASC 606, certain of the Company’s revenue and related policies have been modified. See Part I. Item 1. Financial Statements, Note 1 to the Consolidated Financial Statements for these policies. 

Results of Operations

Three months ended September 30, 2018 compared to three months ended September 30, 2017

The tables included in the following sections are presented to facilitate an understanding of Management’s Discussion and Analysis of Financial Condition and Results of Operations and present certain information by segment for the three months ended September 30, 2018 and 2017 (amounts in thousands). All inter-company transactions between the reported segments for the periods presented have been eliminated.

Customer Management Services

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended September 30,

 

 

 

 

 

 

 

    

2018

    

2017

    

$ Change

    

% Change

 

Revenue

 

$

262,360

 

$

277,373

 

$

(15,013)

 

(5.4)

%

Operating Income

 

 

3,639

 

 

9,133

 

 

(5,494)

 

(60.2)

%

Operating Margin

 

 

1.4

%  

 

3.3

%  

 

 

 

 

 

 

The decrease in revenue for the Customer Management Services segment was attributable to a $24.4 million net increase in client programs including the Motif acquisition, offset by a  $10.1 million reduction due to the adoption of ASC 606 related to revenue, a  $5.4 million decrease due to foreign currency fluctuations and program completions of $23.9 million. 

The operating income as a percentage of revenue decreased to 1.4% in the third quarter of 2018 as compared to 3.3% in the prior period. The operating margin decreased on a combination of positive and negative factors. From a positive perspective, operating margin improved due to the acquisitions and  a $1.0 million positive benefit due to foreign currency fluctuations. Operating margin was negatively impacted by the aforementioned program completions,  overall higher labor related costs in the U.S. including healthcare, increased launch costs related to high level of seasonal client ramps and new program launches, a net decrease of $4.1 million related to the adoption of ASC 606 related to revenue and related expense recognition and a $0.8 million increase in amortization related to the acquisitions. Included in the operating income was amortization expense related to acquired intangibles of $2.0 million and $1.2 million for the quarters ended September 30, 2018 and 2017, respectively.

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