DENVER, Sept 19, 2005 /PRNewswire-FirstCall via COMTEX News Network/ -- TeleTech Holdings, Inc.
(Nasdaq: TTEC), a global provider of customer management and transaction-based
business process outsourcing (BPO) solutions, today provided a business
update.
As stated in the Company's Business Update dated July 19, 2005, TeleTech
has plans to enhance its future profitability, including obtaining new clients
and further streamlining operations. This Business Update reports progress on
certain aspects of those plans.
Profit Improvement Plans
TeleTech's management discussed at its January 2005 Investor Day its
strategy of: 1) obtaining new clients, 2) building and expanding its account
management function to provide outstanding client service with the goal of
expanding relationships with existing clients, and 3) implementing its cost
improvement plans.
New Clients
In mid-September 2005, TeleTech Government Solutions began work on behalf
of a large branch of the U.S. federal government to assist in Hurricane
Katrina relief efforts for 28 days, extendable at the government's
option.
Expanding Client Relationships
TeleTech discussed during its first and second quarter 2005 earnings
conference calls that it expected its operating results to improve during
the latter half of 2005 due to execution of its strategy to grow existing
client programs and improve capacity utilization. Also, as previously
discussed, several anticipated client awards were delayed, some of which
have since been awarded to TeleTech. As such, TeleTech is now realizing
the benefits of its strategy and, accordingly, expects to report a
meaningful increase in its operating margin percentage from that reported
for the second quarter 2005.
Repatriation of Foreign Earnings and Income Taxes
TeleTech's Board of Directors approved a plan to repatriate an estimated
$43 million of foreign earnings in the form of a cash dividend under the
American Jobs Creation Act of 2004. The $43 million in foreign cash will be
repatriated during the third quarter 2005 and will be reinvested principally
for the hiring and training of employees in the U.S. Further, as a result of
filing certain amended tax returns, TeleTech will transfer an additional
$15 million in foreign monies to the U.S. during the third quarter 2005, for a
total transfer of $58 million. TeleTech will utilize the funds from the
amended tax return filings to reduce borrowings under the Company's revolving
credit facility.
The Company disclosed in its first and second quarter reports on Form 10-Q
the possibility that after a future review of the facts and circumstances
surrounding the deferred tax valuation allowance, the preponderance of
evidence might suggest that the U.S. deferred tax valuation allowance was no
longer required and would be reversed into income. As a result of TeleTech's
profitability over the last two years and its anticipated continued
profitability, the Company will reverse the majority of its U.S. deferred tax
valuation allowance during the third quarter 2005 and record a one-time
reduction to tax expense currently estimated to be approximately $9 million.
This one-time benefit will be partially reduced by a one-time increase to tax
expense estimated to be $3.5 million for the repatriation of foreign funds
discussed above. During the fourth quarter 2005 and thereafter, the Company
expects its effective tax rate will approximate 40 percent.
Share Repurchase Program
TeleTech's Board of Directors approved an additional $40 million for the
continuation of its share repurchase program.
ABOUT TELETECH
TeleTech is a global business services company that provides a full range
of front- to back-office outsourced solutions including customer management,
BPO, and database marketing services to measurably enhance clients' core
customer management processes. TeleTech's ability to create innovative
strategies, combined with its global technology platform and delivery
infrastructure, helps clients increase revenue, lower costs, and retain their
customers around the world. TeleTech's products and services, standardized
processes, and recognized capabilities to implement complex global projects
make the Company a valued partner for clients that include Global 1000
businesses and governments. TeleTech partners with clients to offer
150 languages, through its more than 34,000 employees, in 17 countries. 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: risks associated with ramping the Hurricane Katrina relief
program; meaningfully increasing the Company's operating margin during the
third quarter 2005; the Company's anticipated future profitability; achieving
the Company's expected profit improvement in its United Kingdom 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 Demand(TM) and TeleTech In Culture(TM)); to increase profitability
via the globalization of its North American best operating practices; to
achieve its three-year financial goals and targeted cost reductions; the
possibility of the Company's Database Marketing and Consulting segment not
increasing revenue, lowering costs, achieving profitability, before corporate
allocation, in the fourth quarter of 2005, or returning to historic levels of
profitability; the possibility of lower revenue or price pressure from clients
experiencing a downturn in their business; greater than anticipated
competition in the customer care 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 customer care 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, 2004 and Quarterly Report on Form 10-Q for the three months
ended June 30, 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.
Media
Susan Koehler
+1-303-397-8313
Investors
Karen Breen
+1-303-397-8592
Dan Campbell
+1-303-397-8634
All of TeleTech Holdings, Inc.
