Company Estimates Future Annualized Pre-Tax Interest Expense Savings of $5 Million
DENVER, June 21, 2004 – TeleTech Holdings, Inc. (Nasdaq: TTEC), a leading global provider of customer solutions, today announced the company completed its previously announced debt reduction plan, including structuring a new $100 million revolving credit facility in May, and recently paying off its $75 million senior notes.
As previously announced, the above actions will result in an estimated pre-tax charge in the second quarter 2004 of approximately $8 million, of which just over $6 million will be a cash charge related to the senior notes ‘make-whole' payment, and the remainder will be a non-cash charge to write-off previously capitalized debt issuance costs. The estimated pre-tax charge is lower than the company's original estimate of $9 million as a result of recent increases in long-term treasury rates. The company expects to recover the $8 million pre-tax charge from the estimated future savings associated with reduced interest expense.
The company used approximately $60 million of existing cash to pay off the senior notes, and drew approximately $65 million on the new revolving credit agreement, consisting of $39 million to terminate the previous revolving credit facility and $25 million to terminate the senior notes, including the ‘make-whole' payment. As a result, the company's total long-term debt decreased by approximately $50 million, and future annualized pre-tax interest expense is estimated to decrease by approximately $5 million.
“We believe our new capital structure is in the best, long-term interest of the shareholders and gives us the flexibility to continue growing the business, while also lowering future interest expense,” said Dennis Lacey, TeleTech's chief financial officer. “Our debt reduction plan is one element of our previously announced cost reduction initiatives, and we remain committed to successfully executing the plan we outlined to further improve the company's long-term profitability.”
TeleTech is a global leader of integrated customer solutions designed to help clients acquire, grow, and retain profitable relationships with their customers. TeleTech strengthens customer relationships for its clients by providing a combination of technologies, processes, and professional services. Headquartered in Denver, Colo., TeleTech's worldwide capabilities are supported by more than 33,000 professionals in North America, Latin America, Asia-Pacific, and Europe. For additional information, visit www.teletech.com.
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: under generally accepted accounting principles, the revenues, expenses, and profits associated with the launch of new client agreements may be expensed up front or deferred over the life of the client contract, and, accordingly, the profitability of these agreements may be disproportionately skewed toward later periods; the possibility of the company's Database Marketing and Consulting segment not returning to historic levels of profitability; the impact to future earnings related to refinancing the company's debt agreements, including owing a make-whole provision associated with the company's senior note agreements, among others; economic or political changes affecting the countries in which the company operates; greater than anticipated competition in the customer care market, causing adverse pricing and more stringent contractual terms; the risks associated with losing one or more significant client relationships, or early termination of a client agreement; execution risks associated with operating individual client programs to avoid incurring penalties; the renewal of client or vendor relationships on favorable terms; 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; risks associated with attracting and retaining cost-effective labor at the company's customer management centers; consumers' concerns or adverse publicity regarding the products of the company's clients; the company's ability to close new business in 2004 and fill excess capacity; execution risks associated with achieving the targeted annualized cost reductions; the possibility of additional asset impairments and restructuring charges; the ultimate liability associated with the amount of past sales or use tax obligations; risks associated with changes in foreign currency exchange rates; changes in accounting policies and practices promulgated by standard setting bodies; and, new legislation or government regulation that impacts the customer care industry. Readers should review the company's Annual Report on Form 10-K for the year ended December 31, 2003, Quarterly Report on Form 10-Q for the quarter ended March 31, 2004, and other documents filed with the Securities and Exchange Commission (SEC). These SEC filings describe in greater detail the items 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.