EX-99.1 2 d33293exv99w1.htm PRESS RELEASE exv99w1
 

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
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

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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

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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.
###

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES
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)
                                 
    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)
                 
    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)
                                 
    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)
                                 
    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