DENVER, July 10 /PRNewswire-FirstCall/ -- TeleTech Holdings, Inc.
(Nasdaq: TTEC), a leading global provider of customer management solutions,
today announced plans to expand its cost reduction initiatives to position the
company for improved profitability. The company's goal is to reduce its
current cost structure by $40 million on an annualized basis.
TeleTech is expanding its profit improvement and cost reduction
initiatives to drive operational excellence through increased service delivery
standardization and greater workforce utilization, and has continued
developing new customer solutions to broaden its service offerings.
Additionally, the company is sharply focused on reducing certain non-customer
service employee and facility related costs as well as corporate expenses such
as telecommunications, travel, insurance and consulting expenditures.
As part of the above initiatives and an ongoing review of its global
operations, TeleTech expects to incur a charge in the second quarter 2003
ranging between $47 million and $50 million, and a pre-tax charge in the third
quarter 2003 ranging between $2 million and $3 million. Of the total second
and third quarter charges, between $7 million and $9 million is estimated to
be cash-related charges. The charges are primarily related to the following
items:
-- Recording a non-cash valuation allowance of approximately $35 million
as an increase to second quarter 2003 tax expense based on a review of
the company's deferred tax assets in accordance with SFAS No. 109.
-- A reduction in the company's global workforce of approximately 300 non-
agent positions during the second and third quarters.
-- A non-cash reduction in the carrying value of certain facilities in its
worldwide operations.
-- A lease termination charge related to the anticipated closure
of its Kansas City facility given the ramp down of the United States
Postal Service relationship, and
-- The minimum estimated liability related to the applicability of sales
or use tax for services provided by its database marketing and
consulting segment.
As a result of the above-mentioned charges, TeleTech will not be in
compliance with certain financial covenants in its revolving credit and senior
note agreements. TeleTech is working with the lender groups to obtain the
necessary waivers and amendments, and believes it will be successful in these
efforts prior to filing its second quarter Form 10-Q in August 2003. As of
June 30, 2003 TeleTech had total debt of approximately $120 million and cash
and cash equivalents of approximately $115 million.
In addition to the above-mentioned charges, the company expects to report
a loss from operations for the second quarter 2003 arising from, among other
matters, the ramp down of the United States Postal Service project.
CEO COMMENTARY
"Over the last ninety days we have been sharply focused on streamlining
the organization to better serve our clients and improve profitability. I
believe the initiatives we are pursuing will strengthen the company's position
in the customer management marketplace," said Kenneth Tuchman, TeleTech's
Chairman and Chief Executive Officer. "Going forward, we plan to further our
history of customer management excellence and continue to deliver high levels
of client satisfaction. The opportunities in our sales pipeline are
progressing, and I am confident TeleTech will win new business during the
remainder of 2003."
TIMING OF SECOND QUARTER 2003 EARNINGS RELEASE
TeleTech expects to release second quarter 2003 results on or before
August 14, 2003 by issuing a summary press release after market close, and
simultaneously filing its Form 10-Q with the Securities and Exchange
Commission. A conference call with management will be held the following day
to discuss actual results. Notification of the earnings release date and
information regarding the conference call will be provided during July 2003.
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 and its subsidiaries' actual results to
differ materially from those expressed or implied by such forward-looking
statements, including: economic or political changes affecting the countries
in which the company operates; greater than anticipated competition in the
customer care market, causing increased price competition or loss of clients;
the reliance on a few major clients; the risks associated with losing one or
more significant client relationships; the renewal of client or vendor
relationships on favorable terms; the ability to transition work from higher
cost centers to lower cost markets; the company's ability to develop and
successfully manage new technology or database marketing and consulting sales;
the company's ability to collect monies owed from clients per contract terms
and conditions in a timely manner; higher than anticipated start-up costs
associated with new business opportunities and ventures; the company's ability
to find cost effective locations, obtain favorable lease terms and build or
retrofit facilities in a timely and economic manner; lower than anticipated
customer management center capacity utilization; consumers' concerns or
adverse publicity regarding the products of the company's clients; the
company's ability to close new business in 2003; execution risks associated
with achieving the targeted $40 million in annualized cost savings; the
possibility of additional asset impairments and restructuring charges; the
ability to successfully obtain waivers on the Company's debt agreements; the
ultimate liability associated with the amount of past sales or use tax
obligations for its database marketing and consulting and North American
outsourcing segments; changes in workers' compensation and general liability
premiums; changes in accounting policies and practices pronounced by standard
setting bodies; and new legislation or government regulation that impacts the
customer care industry. Readers are encouraged to review TeleTech's 2002 Form
10-K, first quarter 2003 Form 10-Q and other publicly filed documents, which
describe in greater detail these and other important factors that may impact
the company's business, results of operations, financial condition and cash
flows. TeleTech undertakes no obligation to update its forward-looking
statements after the date of this release.
SOURCE TeleTech Holdings, Inc.
