DENVER, Apr 25, 2002 /PRNewswire-FirstCall via COMTEX/ --
Year Over Year North American Outsourced Revenue Grows Nearly 12%; Company Maintains Strong Cash Position and Financial Liquidity
TeleTech Holdings,
Inc. (Nasdaq: TTEC), a leading global provider of customer management solutions,
today announced first quarter 2002 results in line with company guidance.
Revenues for the first quarter 2002 were $254.0 million, in line with the
previously announced range of $250 million to $260 million. First quarter 2002
revenues were up $23.8 million or 10.3 percent sequentially from $230.2 million
in the fourth quarter 2001, and up $16.2 million or 6.8 percent from $237.9
million in the year ago quarter. The sequential revenue increase was primarily
attributable to the successful launch of a new client program in the
communications industry, offset in part by the anticipated seasonal declines
from certain U.S. clients, lower revenues in Spain, and the impact of the
currency devaluation in Argentina.
The company reported first quarter 2002 net income of $6.8 million and earnings
per diluted share of 9 cents, before the adoption of SFAS No. 142 -- Accounting
for Goodwill and Other Intangibles. These results were in line with the
company's guidance of 8 cents to 9 cents. This compares to net income of $7.2
million or 9 cents per diluted share in the fourth quarter of 2002, and net
income of $8.4 million or 11 cents per diluted share in the year ago quarter.
The effects of nonrecurring items in the first quarter 2001 are excluded from
these comparisons.
"We are pleased with our first quarter results in light of the continuing
economic uncertainty," said Kenneth Tuchman, TeleTech's Chairman and Chief
Executive Officer. "The business and economic landscape has changed, and
companies are looking for ways to reduce costs and preserve capital while
building increased brand loyalty. TeleTech's customer management solution has
repeatedly demonstrated its ability to not only drive significant cost
reductions but to more importantly increase the value of every customer
relationship."
"As we continue the year, our top priorities include closing large new business
opportunities, expanding existing client relationships, maintaining tight cost
controls, and leveraging our global reach through near- and off- shore labor to
optimize our integrated solution offering. In so doing, we believe we can
deliver a better overall value to our clients and continue to build our market
leadership," said Tuchman.
Selling, general and administrative (SG&A) costs were $51.2 million or 20.2
percent of revenues in the first quarter, and down sequentially as a percentage
of revenue from 21.4% in the fourth quarter 2001 and 24.0% in the year ago
quarter.
Operating margin was 6.0 percent for the first quarter 2002, and as expected
decreased from the fourth quarter 2001 operating margin of 7.5 percent, and was
down from 6.6% in the first quarter 2001. Operating margin in the first quarter
2002 was primarily impacted by underperformance in certain international
operations. The effects of nonrecurring items in the first quarter 2001 are
excluded from these comparisons.
TeleTech's cash and short-term investments were $73.3 million, a decrease of
$30.9 million from $104.2 million at the end of the fourth quarter, and up from
$43.0 million in the first quarter 2001. The sequential decrease was primarily
attributable to working capital used to launch a significant new client program
in early February 2002. TeleTech believes it will generate positive free cash
flow for 2002 through ongoing working capital management along with stringent
cost and capital spending controls.
Capital expenditures for the first quarter 2002 were $9.0 million, up $4.1
million sequentially from the fourth quarter 2001, and down nearly 63 percent
from capital expenditures in the year ago quarter of $24.0 million.
"We will continue our 'back to basics' strategy in 2002 and will work actively
to fill existing capacity, reduce our cost structure, and manage the business
for profitable growth," said Margot O'Dell, TeleTech's Chief Financial Officer.
"Given our cash position and solid balance sheet, TeleTech has the financial
flexibility to pursue new client opportunities while maintaining a conservative
capital structure. We remain committed to achieving the right return on assets
and will continue aggressive cost control measures, taking the necessary actions
to streamline the company and drive greater operating efficiencies."
ACCOUNTING PRONOUNCEMENT
In June 2001, the FASB issued SFAS No. 142 - Accounting for Goodwill and Other
Intangible Assets. Under the new rules, goodwill and intangible assets are no
longer amortized but are reviewed annually for impairment. TeleTech adopted the
new accounting standard beginning January 1, 2002, and the adoption is
considered a change in accounting principle. The cumulative effect of adopting
this standard resulted in a non-cash, after-tax charge of $7.5 million, or 10
cents per diluted share in the first quarter 2002. The charge is related to the
impairment of goodwill in TeleTech's Latin American region due to the ongoing
economic uncertainty in Argentina.
BUSINESS OUTLOOK
The following statements are based on current expectations regarding TeleTech's
outlook for its future financial results.
As stated previously, TeleTech believes 2002 revenues will increase by 12
percent to 15 percent over 2001, while diluted earnings per share are expected
to increase by 20 percent to 25 percent over 2001.
TeleTech believes second quarter 2002 revenues will range between $245 million
and $250 million and earnings per diluted share will range between $0.09 cents
and $0.10 cents per share.
CONFERENCE CALL
TeleTech executive management will host a conference call to discuss first
quarter 2002 financial results today at 5:00 p.m. ET. To participate, please
dial 712-271-0561 (passcode: TeleTech). Replay of the conference call will be
available by dialing 402-220-3537 (no passcode required), starting at
approximately 8:00 p.m. ET and will play until Thursday, May 9, 2002. The
conference call will also be simulcast live on the Internet via TeleTech's web
site at www.teletech.com . Replay will be available at this location for 14
days.
TELETECH PROFILE
For twenty years, TeleTech has managed the customer experience for some of the
world's largest enterprises. TeleTech's innovative customer care services help
companies acquire, serve, grow, and retain customers throughout the entire
relationship lifecycle. TeleTech offers solutions to a variety of industries
including financial services, transportation, communications, government,
healthcare, and travel. With a presence that spans North America, Asia-Pacific,
Europe, and Latin America, TeleTech provides comprehensive customer care
services to global organizations. Additional information on TeleTech can be
found at www.teletech.com .
FORWARD LOOKING STATEMENTS
All statements not based on historical fact are forward-looking statements that
involve substantial risks and uncertainties. In accordance with the Private
Securities Litigation Reform Act of 1995, following are important factors that
could cause TeleTech's actual results to differ materially from those expressed
or implied by such forward-looking statements: including the ability of its
newly appointed officers to further strengthen its industry position and achieve
continued growth in revenues and earnings; lower than anticipated customer
interaction center capacity utilization due to the weak global economic climate;
the loss or delay in implementation of a customer management program; TeleTech's
ability to build-out facilities in a timely and economic manner; greater than
anticipated competition from new entrants into the customer care market, causing
increased price competition or loss of clients; the loss of one or more
significant clients; higher than anticipated start-up costs associated with new
business opportunities and ventures; TeleTech's ability to predict future
revenue and associated costs, as well as the potential volume or profitability
of any future technology or consulting sales; TeleTech's agreements with clients
may be canceled on relatively short notice; and TeleTech's ability to generate a
specific level of revenue is dependent upon customer interest in and use of the
products and services of TeleTech's clients. Readers are encouraged to review
TeleTech's 2001 Annual Report on Form 10-K along with other publicly filed
documents which describe other important factors that may impact TeleTech's
business, results of operations, and financial condition. TeleTech undertakes no
obligation to update its forward-looking statements after the date of this
release.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Three months ended
March 31,
2002 2001
Revenues $254,031 $237,880
Operating expenses:
Costs of services 172,567 150,312
Selling, general & administrative 51,225 57,063
Depreciation and amortization 14,939 14,919
Non-recurring items -- 20,251 (1)
Total operating expenses 238,731 242,545
Operating Income (Loss) 15,300 (4,665)
Other income (expense) (4,044) (1,196)
Income (Loss) Before Income Taxes 11,256 (5,861)
Income tax expense (benefit) 4,444 (2,316)
Income (Loss) before Minority
Interest and Cumulative Effect of
Change in Accounting Principle 6,812 (3,545)
Minority Interest (50) (321)
Income (Loss) before Cumulative
Effect of Change in Accounting
Principle 6,762 (3,866)
Cumulative Effect of Change in
Accounting Principle (7,502) --
Net Loss $(740) $(3,866)
Basic Earnings Per Share before
Cumulative Effect of Change in
Accounting Principle $0.09
Diluted Earnings Per Share before
Cumulative Effect of Change in
Accounting Principle $0.09
Basic Loss Per Share $(0.01) $(0.05)
Diluted Loss Per Share $(0.01) $(0.05)
Operating Margin 6.0% (2.0)%
Net Loss Margin (0.3)% (1.6)%
Effective Tax Rate 39.5% 39.5%
Weighted Average Shares
Basic 76,755 74,753
Diluted 76,755 74,753
Excluding Non-recurring items and
Cumulative Effect of Change in
Accounting Principle:
Operating Income $15,300 $15,586
Operating Margin 6.0% 6.6%
Net Income $6,762 $8,385
Basic Earnings Per Share $0.09 $0.11
Diluted Earnings Per Share $0.09 $0.11
Diluted shares outstanding 78,846 77,459
Effective Tax Rate 39.5% 39.5%
Notes:
1. Represents $20.3 mm of non-recurring, pre-tax charges recorded in
the first quarter of 2001 related to a workforce reduction and the
closure of a customer interaction center.
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31, December 31,
2002 2001
ASSETS
Current assets:
Cash and cash equivalents $65,200 $95,430
Investment in available-for-sale
securities 1,237 2,281
Short-term investments 6,898 6,460
Accounts receivable, net 200,760 162,344
Other current assets 48,765 41,911
Total current assets 322,860 308,426
Property and Equipment, net 169,392 177,959
Other assets 94,326 87,554
Total assets $586,578 $573,939
LIABILITIES AND STOCKHOLDERS' EQUITY
Total current liabilities $141,453 $123,221
Total noncurrent liabilities 86,875 88,449
Minority interest 14,369 14,319
Total stockholders' equity 343,881 347,950
Total liabilities and
stockholders' equity $586,578 $573,939
TELETECH HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED CASH FLOW INFORMATION
(In thousands)
Three months ended
March 31,
2002 2001
Cash flow from operating activities:
Net income (loss) $(740) $(3,866)
Adjustments to reconcile net
income (loss) to net cash (used in)
provided by operating activities:
Cumulative Effect of Change in
Accounting Principle 7,502 --
Depreciation and amortization 14,939 14,919
Other (39,581) (4,336)
Net cash (used in) provided by
operating activities $(17,880) $6,717
Total Capital Expenditures - Note 1 $8,974 $23,980
Notes :
1. This capital expenditure value excludes any investments in real
estate held for sale, which related to the Company's former planned
headquarters building.
SOURCE TeleTech Holdings, Inc.
| CONTACT: | investors, Karen Breen, +1-303-397-8592,
karen.breen@teletech.com, or Dan Campbell, +1-303-397-8634,
dan.campbell@teletech.com, both of TeleTech Holdings, Inc. |
