Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 21, 2006
TeleTech Holdings, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 0-21055 | 84-1291044 | ||
| (State of | (Commission | (I.R.S. Employer | ||
| Incorporation) | File Number) | Identification No.) |
9197 S. Peoria Street, Englewood, Colorado 80112
(Address of principal executive offices, including Zip Code)
(Address of principal executive offices, including Zip Code)
Telephone Number: (303) 397-8100
(Registrant’s telephone number, including area code)
(Registrant’s telephone number, including area code)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy
the filing obligation of the registrant under any of the following provisions:
| o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | |
| o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | |
| o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | |
| o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
TABLE OF CONTENTS
| Item 7.01. Results of Operation and Financial Condition | ||||||||
| Item 9.01 Financial Statements and Exhibits | ||||||||
| SIGNATURE | ||||||||
| EXHIBIT INDEX | ||||||||
| Press Release | ||||||||
Table of Contents
Item 7.01. Results of Operation and Financial Condition
On February 21, 2006 Registrant issued a press release setting forth Registrant’s financial and
operating results for the quarter ended December 31, 2005 and fiscal year ended December 31, 2005.
On February 22, 2006, the Registrant held a conference call, which was open to the public, to
discuss these results. A copy of this press release is attached hereto as Exhibit 99.1 and hereby
incorporated by reference.
Item 9.01 Financial Statements and Exhibits
99.1 Press Release issued by TeleTech on February 21, 2006
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly
caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| TeleTech Holdings, Inc. By: /s/ Kenneth D. Tuchman |
||
| KENNETH D. TUCHMAN Chief Executive Officer |
Dated: February 22, 2006
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Table of Contents
Exhibit 99.1
Investor Contact:
|
Media Contact: | |
Karen Breen
|
KC Higgins | |
303-397-8592
|
303-397-8325 |
TeleTech Reports Fourth Quarter 2005 Financial Results
Highest Quarterly and Annual Revenue in Company History;
2006 Revenue Projected to Grow 8 to 10 Percent over 2005;
Board of Directors Authorizes An Additional $50 Million Share Repurchase Program
Highest Quarterly and Annual Revenue in Company History;
2006 Revenue Projected to Grow 8 to 10 Percent over 2005;
Board of Directors Authorizes An Additional $50 Million Share Repurchase Program
Englewood, Colo., February 21, 2006 — TeleTech Holdings, Inc. (Nasdaq: TTEC), a leading global
business process outsourcing (BPO) provider of customer management and transaction-based processing
solutions, today announced fourth quarter 2005 financial results. The Company also filed its
Annual Report on Form 10-K with the Securities and Exchange Commission for the year ended December
31, 2005.
TeleTech’s fourth quarter revenue grew 16.6% over the year-ago quarter and 10.9% over the third
quarter with record quarterly revenue of $304 million. Net income was $10.1 million, or 14 cents
per diluted share. Approximately ten percent of the fourth quarter 2005’s revenue was from
hurricane relief work. These results compare to quarterly revenue of $261 million and net income
of $9.7 million, or 13 cents per diluted share, for the year-ago quarter. Included in the year-ago
quarter’s operating results was a benefit of $4.8 million, or 4 cents per diluted share, arising
from the reversal of certain employee-related healthcare liabilities. Please refer to the
Company’s “Management’s Discussion & Analysis” section of the Form 10-K for a complete discussion
of items affecting comparability to prior periods.
“We are extremely pleased to have achieved the majority of our planned strategic goals during 2005,
including the implementation of worldwide best operating practices and the global standardization,
centralization and virtualization of our technology platform,” said Ken Tuchman, Chairman and Chief
Executive Officer. “We believe this solid operational foundation and increased demand for our
complex back office outsourcing solutions puts us in a strong position to report record revenue
again in 2006.”
“Going forward, we are focused on continuing to deliver innovative new offerings and driving
profitable revenue growth,” continued Tuchman. “Towards this end, we have made significant
progress having announced significant new, renewed and expanded client relationships since June of
2005. These new business wins and client renewals are the basis for our belief that revenue in
2006 will grow between 8 to 10 percent over 2005.”
SHARE REPURCHASE PROGRAM
During 2005, TeleTech repurchased 7.1 million shares, or approximately 10 percent of its common
stock outstanding, for $67.8 million. In February 2006, the Board of Directors authorized an
additional $50 million share repurchase program.
BUSINESS OUTLOOK
4
For the full year 2006, TeleTech expects organic revenue to grow between 8 to 10 percent over 2005
and believes its fourth quarter 2006 operating margin will approximate 6 to 7 percent, excluding
unusual charges, if any.
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.
CONFERENCE CALL
TeleTech executive management will hold a conference call to discuss fourth quarter 2005 financial
results on Wednesday, February 22, 2006, at 11:00 a.m. Eastern Time. You are invited to join a
live webcast of the 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 of the call
will be available on the TeleTech website through Wednesday, March 8, 2006.
ABOUT TELETECH
TeleTech is a leading global business process outsourcing (BPO) company that provides a full range
of front-to-back office outsourced solutions including customer management, transaction-based
processing, and database marketing services. TeleTech’s comprehensive solutions include fully
managed, OnDemand services including infrastructure, software, and business intelligence.
TeleTech’s ability to deliver innovative solutions globally over a centralized and standardized
delivery platform ensures a high quality, consistent customer experience enabling clients to
increase revenue, improve profitability, and develop stronger customer relationships around the
world. TeleTech is a valued partner for clients that include Global 1000 businesses and
governments. Approximately 60 percent of TeleTech’s revenue is generated internationally with
services offered in 150 languages from nearly every continent on the globe. For additional
information, visit www.TeleTech.com.
FORWARD-LOOKING STATEMENTS
THIS PRESS RELEASE MAY CONTAIN CERTAIN FORWARD-LOOKING STATEMENTS RELATING TO FUTURE RESULTS. THE
PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 PROVIDES A SAFE HARBOR FOR FORWARD-LOOKING
STATEMENTS. THESE FORWARD-LOOKING STATEMENTS ARE SUBJECT TO RISKS AND UNCERTAINTIES THAT MAY CAUSE
TELETECH’S AND ITS SUBSIDIARIES’ ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE EXPRESSED OR
IMPLIED BY SUCH FORWARD-LOOKING STATEMENTS, INCLUDING BUT NOT LIMITED TO THE FOLLOWING: THE
COMPANY’S BELIEF THAT IT’S CONTINUING TO SEE STRONG DEMAND FOR ITS SERVICES; ESTIMATED REVENUE FROM
NEW, RENEWED AND EXPANDED CLIENT BUSINESS; THE BELIEF THAT THE PROSPECTS FOR NEW BUSINESS REMAIN
STRONG; ACHIEVING THE COMPANY’S EXPECTED PROFIT IMPROVEMENT IN ITS INTERNATIONAL OPERATIONS; THE
ABILITY TO CLOSE AND RAMP NEW BUSINESS OPPORTUNITIES THAT ARE CURRENTLY BEING PURSUED WITH EXISTING
CLIENTS AND POTENTIAL CLIENTS; THE ABILITY FOR THE COMPANY TO EXECUTE ITS GROWTH PLANS, INCLUDING
SALES OF NEW PRODUCTS (SUCH AS TELETECH ON DEMANDTM AND TELETECH IN
CULTURETM); TO INCREASE PROFITABILITY VIA THE GLOBALIZATION OF ITS NORTH AMERICAN BEST
OPERATING PRACTICES; TO ACHIEVE ITS YEAR-END 2006 AND 2007 FINANCIAL GOALS AND TARGETED COST
REDUCTIONS; THE POSSIBILITY OF THE COMPANY’S DATABASE MARKETING AND
5
CONSULTING SEGMENT NOT INCREASING REVENUE, LOWERING COSTS, OR RETURNING TO HISTORIC LEVELS OF
PROFITABILITY; THE POSSIBILITY OF LOWER REVENUE OR PRICE PRESSURE FROM THE COMPANY’S CLIENTS
EXPERIENCING A DOWNTURN OR MERGER IN THEIR BUSINESS; GREATER THAN ANTICIPATED COMPETITION IN THE
BPO AND CUSTOMER MANAGEMENT MARKET, CAUSING ADVERSE PRICING AND MORE STRINGENT CONTRACTUAL TERMS;
RISKS ASSOCIATED WITH LOSING OR NOT RENEWING CLIENT RELATIONSHIPS, PARTICULARLY LARGE CLIENT
AGREEMENTS, OR EARLY TERMINATION OF A CLIENT AGREEMENT; THE RISK OF LOSING CLIENTS DUE TO
CONSOLIDATION IN THE INDUSTRIES WE SERVE; CONSUMERS’ CONCERNS OR ADVERSE PUBLICITY REGARDING THE
PRODUCTS OF THE COMPANY’S CLIENTS; HIGHER THAN ANTICIPATED START-UP COSTS OR LEAD TIMES ASSOCIATED
WITH NEW VENTURES OR BUSINESS IN NEW MARKETS; EXECUTION RISKS ASSOCIATED WITH PERFORMANCE-BASED
PRICING METRICS IN CERTAIN CLIENT AGREEMENTS; THE COMPANY’S ABILITY TO FIND COST EFFECTIVE
LOCATIONS, OBTAIN FAVORABLE LEASE TERMS, AND BUILD OR RETROFIT FACILITIES IN A TIMELY AND ECONOMIC
MANNER; RISKS ASSOCIATED WITH BUSINESS INTERRUPTION DUE TO WEATHER OR TERRORIST-RELATED EVENTS;
RISKS ASSOCIATED WITH ATTRACTING AND RETAINING COST-EFFECTIVE LABOR AT THE COMPANY’S CUSTOMER
MANAGEMENT CENTERS; THE POSSIBILITY OF ADDITIONAL ASSET IMPAIRMENTS AND RESTRUCTURING CHARGES;
RISKS ASSOCIATED WITH CHANGES IN FOREIGN CURRENCY EXCHANGE RATES; ECONOMIC OR POLITICAL CHANGES
AFFECTING THE COUNTRIES IN WHICH THE COMPANY OPERATES; CHANGES IN ACCOUNTING POLICIES AND PRACTICES
PROMULGATED BY STANDARD SETTING BODIES; AND, NEW LEGISLATION OR GOVERNMENT REGULATION THAT IMPACTS
THE BPO AND CUSTOMER MANAGEMENT INDUSTRY.
PLEASE REFER TO THE COMPANY’S FILINGS WITH THE SECURITIES AND EXCHANGE COMMISSION, INCLUDING THE
COMPANY’S ANNUAL REPORT ON FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2005, FOR A DETAILED
DISCUSSION OF FACTORS DISCUSSED ABOVE AND OTHER IMPORTANT FACTORS THAT MAY IMPACT THE COMPANY’S
BUSINESS, RESULTS OF OPERATIONS, FINANCIAL CONDITION, AND CASH FLOWS. THE COMPANY ASSUMES NO
OBLIGATION TO UPDATE ITS FORWARD-LOOKING STATEMENTS TO REFLECT ACTUAL RESULTS OR CHANGES IN FACTORS
AFFECTING SUCH FORWARD-LOOKING STATEMENTS.
###
6
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
| Three months ended | Twelve months ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Revenue |
$ | 304,155 | $ | 260,814 | $ | 1,086,673 | $ | 1,052,690 | ||||||||
Operating expenses: |
||||||||||||||||
Costs of services |
232,608 | 187,308 | 813,271 | 774,521 | ||||||||||||
Selling, general & administrative |
45,534 | 43,415 | 182,262 | 165,630 | ||||||||||||
Depreciation and amortization |
12,910 | 14,886 | 53,560 | 59,378 | ||||||||||||
Restructuring charges, net |
1,193 | (58 | ) | 2,673 | 2,052 | |||||||||||
Impairment losses |
2,174 | — | 4,711 | 2,641 | ||||||||||||
Total operating expenses |
294,419 | 245,551 | 1,056,477 | 1,004,222 | ||||||||||||
Operating Income |
9,736 | 15,263 | 30,196 | 48,468 | ||||||||||||
Other income (expense) |
490 | 85 | 2,020 | (3,861 | ) | |||||||||||
Debt restructuring charges |
— | — | — | (10,402 | ) | |||||||||||
Income Before Income Taxes |
10,226 | 15,348 | 32,216 | 34,205 | ||||||||||||
Income tax expense (benefit) |
(688 | ) | 4,639 | 2,516 | 9,464 | |||||||||||
Income before Minority Interest |
10,914 | 10,709 | 29,700 | 24,741 | ||||||||||||
Minority interest |
(829 | ) | (1,054 | ) | (1,542 | ) | (738 | ) | ||||||||
Net Income |
$ | 10,085 | $ | 9,655 | $ | 28,158 | $ | 24,003 | ||||||||
Basic Earnings Per Share |
$ | 0.14 | $ | 0.13 | $ | 0.39 | $ | 0.32 | ||||||||
Diluted Earnings Per Share |
$ | 0.14 | $ | 0.13 | $ | 0.38 | $ | 0.32 | ||||||||
Operating Income Margin |
3.2 | % | 5.9 | % | 2.8 | % | 4.6 | % | ||||||||
Net Income Margin |
3.3 | % | 3.7 | % | 2.6 | % | 2.3 | % | ||||||||
Effective Tax Rate after Minority Interest |
(7.3 | )% | 32.5 | % | 8.2 | % | 28.3 | % | ||||||||
Weighted Average Shares |
||||||||||||||||
Basic |
69,646 | 74,804 | 72,121 | 74,751 | ||||||||||||
Diluted |
70,711 | 76,709 | 73,631 | 76,109 | ||||||||||||
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
SEGMENT DISCLOSURES
(In thousands)
SEGMENT DISCLOSURES
(In thousands)
| Twelve months ended | Three months ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Revenue: |
||||||||||||||||
North American Customer Care |
$ | 678,803 | $ | 638,359 | $ | 203,951 | $ | 157,038 | ||||||||
International Customer Care |
325,038 | 315,938 | 80,881 | 79,705 | ||||||||||||
Database Marketing & Consulting |
82,832 | 98,393 | 19,323 | 24,071 | ||||||||||||
Total |
$ | 1,086,673 | $ | 1,052,690 | $ | 304,155 | $ | 260,814 | ||||||||
Operating Income (Loss) : |
||||||||||||||||
North American Customer Care |
$ | 61,655 | $ | 58,580 | $ | 20,903 | $ | 16,774 | ||||||||
International Customer Care |
(22,134 | ) | (18,414 | ) | (9,946 | ) | (3,615 | ) | ||||||||
Database Marketing & Consulting |
(9,325 | ) | 8,302 | (1,221 | ) | 2,104 | ||||||||||
Total |
$ | 30,196 | $ | 48,468 | $ | 9,736 | $ | 15,263 | ||||||||
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
| December 31, | December 31, | |||||||
| 2005 | 2004 | |||||||
ASSETS |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 32,505 | $ | 75,066 | ||||
Accounts receivable, net |
207,090 | 148,627 | ||||||
Other current assets |
59,558 | 51,238 | ||||||
Total current assets |
299,153 | 274,931 | ||||||
Property and equipment, net |
133,635 | 145,220 | ||||||
Other assets |
85,443 | 76,644 | ||||||
Total assets |
$ | 518,231 | $ | 496,795 | ||||
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
Total current liabilities |
$ | 160,183 | $ | 136,192 | ||||
Other noncurrent liabilities |
58,130 | 30,186 | ||||||
Minority interest |
6,544 | 7,872 | ||||||
Total stockholders’ equity |
293,374 | 322,545 | ||||||
Total liabilities and stockholders’ equity |
$ | 518,231 | $ | 496,795 | ||||
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF CASH FLOWS
(In thousands)
RECONCILIATION OF CASH FLOWS
(In thousands)
| Twelve months ended | Three months ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Cash flow from operating activities: |
||||||||||||||||
Net income |
$ | 28,158 | $ | 24,003 | $ | 10,085 | $ | 9,655 | ||||||||
Adjustments to reconcile net income to net cash
provided by (used in) operating activities: |
||||||||||||||||
Depreciation and amortization |
53,560 | 59,378 | 12,910 | 14,886 | ||||||||||||
Other |
(40,232 | ) | 29,300 | (34,241 | ) | 28,241 | ||||||||||
Net cash provided by (used in) operating activities |
$ | 41,486 | $ | 112,681 | $ | (11,246 | ) | $ | 52,782 | |||||||
Total Capital Expenditures |
$ | 37,606 | $ | 41,677 | $ | 10,843 | $ | 13,285 | ||||||||
Free Cash Flow |
$ | 3,880 | $ | 71,004 | $ | (22,089 | ) | $ | 39,497 | |||||||
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands)
RECONCILIATION OF NON-GAAP FINANCIAL INFORMATION
(In thousands)
| Twelve months ended | Three months ended | |||||||||||||||
| December 31, | December 31, | |||||||||||||||
| 2005 | 2004 | 2005 | 2004 | |||||||||||||
Reconciliation of EBITDA |
||||||||||||||||
Net Income |
$ | 28,158 | $ | 24,003 | $ | 10,085 | $ | 9,655 | ||||||||
Interest income |
$ | (2,790 | ) | $ | (4,045 | ) | $ | (341 | ) | $ | (764 | ) | ||||
Interest expense |
$ | 3,510 | $ | 8,542 | $ | 1,580 | $ | 346 | ||||||||
Provision for income taxes |
$ | 2,516 | $ | 9,464 | $ | (688 | ) | $ | 4,639 | |||||||
Depreciation and amortization |
$ | 53,560 | $ | 59,378 | $ | 12,910 | $ | 14,886 | ||||||||
EBITDA |
$ | 84,954 | $ | 97,342 | $ | 23,546 | $ | 28,762 | ||||||||