Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Oct. 31, 2017 | |
Document and Entity Information [Abstract] | ||
Entity Registrant Name | TELETECH HOLDINGS INC | |
Entity Central Index Key | 1,013,880 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 45,849,114 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets | ||
Cash and cash equivalents | $ 78,842 | $ 55,264 |
Accounts receivable, net | 304,493 | 300,808 |
Prepaids and other current assets | 67,516 | 59,905 |
Income tax receivable | 8,078 | 7,035 |
Total assets held for sale | 9,279 | 10,715 |
Total current assets | 468,208 | 433,727 |
Long-term assets | ||
Property, plant and equipment, net | 162,361 | 151,037 |
Goodwill | 166,584 | 129,648 |
Deferred tax assets, net | 30,953 | 53,585 |
Other intangible assets, net | 61,784 | 30,787 |
Other long-term assets | 59,628 | 47,520 |
Total long-term assets | 481,310 | 412,577 |
Total assets | 949,518 | 846,304 |
Current liabilities | ||
Accounts payable | 45,155 | 38,197 |
Accrued employee compensation and benefits | 85,820 | 66,133 |
Other accrued expenses | 29,405 | 14,830 |
Income taxes payable | 10,194 | 7,040 |
Deferred revenue | 23,416 | 23,318 |
Other current liabilities | 23,497 | 29,154 |
Total liabilities held for sale | 2,491 | 1,357 |
Total current liabilities | 219,978 | 180,029 |
Long-term liabilities | ||
Line of credit | 255,000 | 217,300 |
Deferred tax liabilities, net | 155 | 160 |
Deferred rent | 16,023 | 15,256 |
Other long-term liabilities | 58,568 | 71,664 |
Total long-term liabilities | 329,746 | 304,380 |
Total liabilities | 549,724 | 484,409 |
Commitments and contingencies (Note 10) | ||
Stockholders' equity | ||
Common stock - $0.01 par value; 150,000,000 shares authorized; 45,847,389 and 46,113,693 shares outstanding as of September 30, 2017 and December 31, 2016, respectively | 458 | 462 |
Additional paid-in capital | 348,932 | 348,739 |
Treasury stock at cost: 36,204,864 and 35,938,560 shares as of September 30, 2017 and December 31, 2016, respectively | (615,917) | (603,262) |
Accumulated other comprehensive income (loss) | (103,893) | (126,964) |
Retained earnings | 763,116 | 735,939 |
Noncontrolling interest | 7,098 | 6,981 |
Total stockholders' equity | 399,794 | 361,895 |
Total liabilities and stockholders' equity | $ 949,518 | $ 846,304 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Stockholders' equity | ||
Preferred stock, par value | $ 0.01 | $ 0.01 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 150,000,000 | 150,000,000 |
Common stock, shares outstanding | 45,847,389 | 46,113,693 |
Treasury stock, shares | 36,204,864 | 35,938,560 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income (Loss) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Consolidated Statements of Comprehensive Income | ||||
Revenue | $ 359,036 | $ 312,796 | $ 1,050,742 | $ 930,311 |
Operating expenses | ||||
Cost of services (exclusive of depreciation and amortization presented separately below) | 275,548 | 233,541 | 797,450 | 691,649 |
Selling, general and administrative | 45,167 | 40,628 | 132,372 | 130,902 |
Depreciation and amortization | 16,515 | 16,811 | 47,273 | 51,761 |
Restructuring charges, net | 6,006 | 3,688 | 9,768 | 3,890 |
Impairment losses | 5,602 | 5,602 | ||
Total operating expenses | 343,236 | 300,270 | 986,863 | 883,804 |
Income from operations | 15,800 | 12,526 | 63,879 | 46,507 |
Other income (expense) | ||||
Interest income | 899 | 397 | 2,020 | 826 |
Interest expense | (3,469) | (2,041) | (8,699) | (5,758) |
Other income (expense), net | 4,416 | 6,254 | 6,573 | 7,488 |
Loss on assets held-for-sale | (5,300) | (3,178) | (5,300) | |
Total other income (expense) | 1,846 | (690) | (3,284) | (2,744) |
Income before income taxes | 17,646 | 11,836 | 60,595 | 43,763 |
Benefit from (provision for) income taxes | (2,071) | 813 | (9,059) | (6,667) |
Net income | 15,575 | 12,649 | 51,536 | 37,096 |
Net income attributable to noncontrolling interest | (806) | (1,198) | (2,828) | (2,804) |
Net income (loss) attributable to TeleTech stockholders | 14,769 | 11,451 | 48,708 | 34,292 |
Other comprehensive income (loss) | ||||
Foreign currency translation adjustments | (1,153) | (8,541) | 8,414 | (8,069) |
Derivative valuation, gross | 3,221 | (6,009) | 24,713 | (2,395) |
Derivative valuation, tax effect | (1,288) | 2,462 | (10,117) | 725 |
Other, net of tax | 127 | 802 | 386 | 1,202 |
Total other comprehensive income (loss) | 907 | (11,286) | 23,396 | (8,537) |
Total comprehensive income (loss) | 16,482 | 1,363 | 74,932 | 28,559 |
Less: Comprehensive income attributable to noncontrolling interest | (899) | (1,202) | (3,153) | (2,734) |
Comprehensive income attributable to TeleTech stockholders | $ 15,583 | $ 161 | $ 71,779 | $ 25,825 |
Weighted average shares outstanding | ||||
Basic | 45,838 | 47,081 | 45,816 | 47,771 |
Diluted | 46,367 | 47,315 | 46,348 | 48,089 |
Net income per share attributable to TeleTech stockholders | ||||
Basic | $ 0.32 | $ 0.24 | $ 1.06 | $ 0.72 |
Diluted | 0.32 | 0.24 | 1.05 | 0.71 |
Dividends declared per share outstanding | $ 0.25 | $ 0.20 | $ 0.47 | $ 0.385 |
Consolidated Statement of Stock
Consolidated Statement of Stockholders' Equity - USD ($) $ in Thousands | Stockholders' Equity of the Company Common Stock [Member] | Stockholders' Equity of the Company Treasury Stock [Member] | Stockholders' Equity of the Company Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) | Stockholders' Equity of the Company Retained Earnings [Member] | Noncontrolling Interest [Member] | Total |
Beginning balance, value at Dec. 31, 2015 | $ (101,365) | ||||||
Net income | $ 37,096 | ||||||
Dividends distributed to noncontrolling interest | (2,745) | ||||||
Foreign currency translation adjustments | $ (8,069) | ||||||
Ending balance, value at Sep. 30, 2016 | (109,832) | ||||||
Preferred stock beginning balance, share at Dec. 31, 2016 | 0 | ||||||
Common stock beginning balance, share at Dec. 31, 2016 | 46,114,000 | 46,113,693 | |||||
Beginning balance, value at Dec. 31, 2016 | $ 462 | $ (603,262) | $ 348,739 | (126,964) | $ 735,939 | $ 6,981 | $ 361,895 |
Net income | 48,708 | 2,828 | 51,536 | ||||
Dividends to shareholders | (21,531) | (21,531) | |||||
Dividends distributed to noncontrolling interest | (2,745) | (2,745) | |||||
Foreign currency translation adjustments | 8,089 | 325 | 8,414 | ||||
Derivatives valuation, net of tax | 14,596 | 14,596 | |||||
Vesting of restricted stock units, share | 283,000 | ||||||
Vesting of restricted stock units, value | $ 2 | 4,673 | (9,612) | (4,937) | |||
Exercise of stock options, share | 60,000 | ||||||
Exercise of stock options, value | 994 | 1,156 | 2,150 | ||||
Equity-based compensation expense | 8,649 | (291) | 8,358 | ||||
Purchases of common stock, share | (610,000) | ||||||
Purchases of common stock, value | $ (6) | (18,322) | (18,328) | ||||
Other, net of tax | 386 | $ 386 | |||||
Preferred stock ending balance, share at Sep. 30, 2017 | 0 | ||||||
Common stock ending balance, share at Sep. 30, 2017 | 45,847,000 | 45,847,389 | |||||
Ending balance, value at Sep. 30, 2017 | $ 458 | $ (615,917) | $ 348,932 | $ (103,893) | $ 763,116 | $ 7,098 | $ 399,794 |
Consolidated Statement of Stoc6
Consolidated Statement of Stockholders' Equity (Parenthetical) | 9 Months Ended |
Sep. 30, 2017$ / shares | |
Consolidated statement of stockholders' equity [Abstract] | |
Common Stock, Dividends, Per Share, Declared | $ 0.47 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||
Net income | $ 51,536 | $ 37,096 |
Adjustment to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 47,273 | 51,761 |
Amortization of contract acquisition costs | 1,273 | 499 |
Amortization of debt issuance costs | 521 | 582 |
Imputed interest expense and fair value adjustments to contingent consideration | 39 | (4,320) |
Provision for doubtful accounts | 380 | 542 |
(Gain) loss on disposal of assets | 85 | (65) |
Gain on sale of business | (3,323) | |
Impairment losses | 5,602 | |
Loss on assets held-for-sale | 3,178 | 5,300 |
Deferred income taxes | 8,155 | 5,368 |
Excess tax benefit from equity-based awards | (1,970) | (539) |
Equity-based compensation expense | 8,358 | 7,278 |
(Gain) loss on foreign currency derivatives | 829 | 4,649 |
Changes in assets and liabilities, net of acquisitions: | ||
Accounts receivable | 13,460 | 23,780 |
Prepaids and other assets | (26,814) | (12,652) |
Accounts payable and accrued expenses | 32,597 | (9,347) |
Deferred revenue and other liabilities | 14,066 | (4,696) |
Net cash provided by operating activities | 149,643 | 110,838 |
Cash flows from investing activities | ||
Proceeds from sale of long-live assets | 31 | 93 |
Purchases of property, plant and equipment | (43,932) | (38,863) |
Proceeds from sale of business | 391 | |
Investments in non-marketable equity investments | (1,384) | |
Acquisitions, net of cash acquired of zero and zero, respectively | (81,360) | (400) |
Net cash used in investing activities | (126,254) | (39,170) |
Cash flows from financing activities | ||
Proceeds from line of credit | 1,571,837 | 1,584,800 |
Payments on line of credit | (1,534,137) | (1,555,800) |
Payments on other debt | (4,501) | (2,306) |
Payments of contingent consideration and hold back payments to acquisitions | (674) | (9,467) |
Dividends paid to shareholders | (10,069) | (8,922) |
Payments to noncontrolling interest | (2,745) | (3,237) |
Purchase of mandatorily redeemable noncontrolling interest | (4,105) | |
Proceeds from exercise of stock options | 2,150 | 371 |
Tax payments related to issuance of restricted stock units | (4,937) | (3,692) |
Excess tax benefit from equity-based awards | 539 | |
Payments of debt issuance costs | (38) | (1,888) |
Purchase of treasury stock | (18,328) | (57,279) |
Net cash provided by financing activities | (1,442) | (60,986) |
Effect of exchange rate changes on cash and cash equivalents | 1,631 | (9,678) |
Increase (decrease) in cash and cash equivalents | 23,578 | 1,004 |
Cash and cash equivalents, beginning of period | 55,264 | 60,304 |
Cash and cash equivalents, end of period | 78,842 | 61,308 |
Supplemental disclosures | ||
Cash paid for interest | 8,138 | 4,976 |
Cash paid for income taxes | 11,357 | 16,755 |
Non-cash investing and financing activities | ||
Acquisition of long lived assets through capital leases | 931 | 2,417 |
Acquisition of equipment through increase in accounts payable, net | 405 | (542) |
Contract acquisition costs credited to accounts receivable | 200 | |
Dividends declared but not paid | $ 11,462 | $ 9,342 |
Consolidated Statements of Cas8
Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from investing activities | ||
Acquisitions, net of cash acquired of zero and zero, respectively | $ 0 | $ 0 |
OVERVIEW AND BASIS OF PRESENTAT
OVERVIEW AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2017 | |
OVERVIEW AND BASIS OF PRESENTATION [Abstract] | |
OVERVIEW AND BASIS OF PRESENTATION | (1) OVERVIEW AND BASIS OF PRESENTATION Summary of Business TeleTech Holdings, Inc. and its subsidiaries (“TeleTech” or the “Company”) is a leading global provider of technology enabled customer experience services. The Company helps leading brands improve customer experiences and operational effectiveness through a unique combination of technological innovation and operational expertise. The Company’s portfolio of solutions includes consulting, technology, operations and analytics to enable a seamless customer experience across every interaction channel and phase of the customer lifecycle. TeleTech’s 49,500 employees serve clients in the automotive, communication, financial services, government, healthcare, logistics, media and entertainment, retail, technology, transportation and travel industries across all the segments and via operations in the U.S., Australia, Belgium, Brazil, Bulgaria, Canada, China, Costa Rica, Germany, Hong Kong, Ireland, Lebanon, Macedonia, Mexico, New Zealand, the Philippines, Poland, Singapore, South Africa, Thailand, Turkey, the United Arab Emirates, and the United Kingdom. Basis of Presentation The Consolidated Financial Statements are comprised of the accounts of TeleTech, its wholly owned subsidiaries, and its 55% equity owned subsidiary Percepta, LLC. All intercompany balances and transactions have been eliminated in consolidation. The unaudited Consolidated Financial Statements do not include all of the disclosures required by accounting principles generally accepted in the U.S. (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited Consolidated Financial Statements reflect all adjustments which, in the opinion of management, are necessary to state fairly the consolidated financial position of the Company and the consolidated results of operations and comprehensive income (loss) and the consolidated cash flows of the Company. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. During the three months ended March 31, 2016, the Company recorded an additional tax expense of $1.1 million that should have been recorded in prior periods related to operations by an entity outside its country of incorporation. The total amount of $1.1 million should have been recorded as additional expense in the amount of $180 thousand in 2011, $123 thousand in 2012, $137 thousand in 2013, $358 thousand in 2014 and $301 thousand in 2015. The Company has evaluated the impact of this adjustment and concluded that the adjustment was not material to the previously issued consolidated financial statements. These unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. Use of Estimates The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates including those related to derivatives and hedging activities, income taxes including the valuation allowance for deferred tax assets, self-insurance reserves, litigation reserves, restructuring reserves, allowance for doubtful accounts, contingent consideration, and valuation of goodwill, long-lived and intangible assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers ”. ASU 2014-09 provides new guidance related to how an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, ASU 2014-09 specifies new accounting for costs associated with obtaining or fulfilling contracts with customers and expands the required disclosures related to revenue and cash flows from contracts with customers. While ASU-2014-09 was originally effective for fiscal years and interim periods within those years beginning after December 15, 2016, in August 2015, the FASB issued ASU 2015-14, “Deferral of Effective Date”, deferring the effective date by one year, to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. ASU 2014-09 can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption, with early application not permitted. In June 2017, FASB issued ASU 2017-10, “Service Concession Arrangements”, which will be adopted along with the ASU 2014-09 guidance. The Company has assigned a project manager and team, has selected an external consulting company to assist through the project, has completed the initial project assessment phase, and is finalizing its implementation approach. The Company has determined that it will adopt this new standard using the modified retrospective approach in which a cumulative adjustment to retained earnings will be recorded as of January 1, 2018. The Company is in the process of completing its assessment of the financial statement impact and as such, has not reached any conclusions regarding the potential impact to the financials. In February 2016, the FASB issued ASU 2016-02, “ Leases ”, which amends the existing accounting standards for lease accounting, including requiring lessees, to recognize most leases on their balance sheets related to the rights and obligations created by those leases and making targeted changes to lessor accounting. The ASU also requires new disclosures regarding the amounts, timing, and uncertainty of cash flows arising from leases. The ASU is effective for interim and annual periods beginning on or after December 15, 2018 and early adoption is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently assessing the impact on the consolidated financial statements and related disclosures, evaluating software solutions and other tracking methods, and determining the implementation timeline. In March 2016, the FASB issued ASU 2016-09, “ Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting ”, which amends the existing accounting standards related to stock-based compensation. The ASU simplifies several aspects of accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, as well as classification in the statement of cash flows. The ASU is effective for interim and annual periods beginning on or after December 15, 2016. Beginning with the first quarter of 2017, the Company has adopted the new guidance as applicable and this adoption did not have a material impact on its financial position, results of operation or related disclosures. In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows ”. ASU 2016-15 is intended to reduce diversity in practice regarding how certain cash transactions are presented and classified in the Consolidated Statement of Cash Flows by providing guidance on eight specific cash flow issues. The ASU is effective for interim and annual periods beginning on or after December 15, 2017 and early adoption is permitted. The Company is currently assessing the impact on the consolidated statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other: Simplifying the Accounting for Goodwill Impairment ”. ASU 2017-04 removes the need to complete Step 2 of any goodwill impairment test that has failed Step 1. The goodwill impairment will now be calculated as the amount by which a reporting unit’s carrying value exceeds its fair value. The ASU is effective for interim and annual periods beginning on or after December 15, 2019 and early adoption is permitted. The Company early adopted this standard as of January 1, 2017. In August 2017, the FASB issued ASU 2017-12, “ Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”. ASU 2017-12 amends and simplifies existing guidance for derivatives and hedges including aligning accounting with companies’ risk management strategies and increasing disclosure transparency regarding both the scope and results of hedging programs. The changes include designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The ASU is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently assessing the impact on the consolidated statements and related disclosures. |
ACQUISITIONS AND DIVESTITURES
ACQUISITIONS AND DIVESTITURES | 9 Months Ended |
Sep. 30, 2017 | |
ACQUISITIONS [ABSTRACT] | |
ACQUISITIONS | (2) ACQUISITIONS AND DIVESTITURES Connextions On April 3, 2017, the Company acquired all of the outstanding shares of Connextions, Inc., a health care customer service provider company, from OptumHealth Holdings, LLC. Connextions is being integrated into the health care vertical of the Customer Management Services (“CMS”) segment of the Company. Connextions employed approximately 2,000 at several centers in the U.S. The total cash paid at acquisition was $80 million. The purchase price is subject to customary representations and warranties, indemnities, and net working capital adjustment. In connection with the acquisition, the Company and OptumHealth (directly and through affiliates) also entered into long-term technology and customer services agreements, and into transition services agreements to facilitate the transfer of the business. The Company was required to pay an additional $1.8 million for the working capital adjustment, which was paid during the third quarter of 2017. Additionally, fair value adjustments related to the transition services agreements are expected to reduce the purchase price by $4.1 million resulting in a net estimated purchase price of $77.7 million. The following summarizes the preliminary estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands): Preliminary Estimate of Acquisition Date Fair Value Cash $ — Accounts receivable, net 15,959 Prepaid expenses 241 Other current assets 51 Property, plant and equipment 7,594 Customer relationships 35,000 Goodwill 35,272 $ 94,117 Accounts payable $ 1 Accrued employee compensation and benefits 346 Accrued expenses 386 Deferred tax liabilities 15,273 Deferred revenue 399 $ 16,405 Total purchase price $ 77,712 The estimates of fair value of identifiable assets acquired and liabilities assumed are preliminary, pending finalization of a valuation, thus are subject to revisions that may result in adjustments to the values presented above. The Connextions customer relationships have been estimated based on the initial valuation and are amortized over an estimated useful life of 12 years. The goodwill recognized from the Connextions acquisition is estimated to be attributable, but not limited to, the acquired work force and expected synergies with CMS. None of the tax basis of the acquired intangibles and goodwill will be deductible for income tax purposes. The acquired goodwill and the operating results of Connextions are reported within the CMS segment from the date of acquisition. Atelka On November 9, 2016, the Company acquired all of the outstanding shares of Atelka Enterprise Inc. (“Atelka”), a Canadian customer contact center management and business process outsourcing services company that serves Canadian telecommunications, logistics, and entertainment clients. This acquisition was an addition to the CMS segment. Atelka employed approximately 2,800 in Quebec, Ontario, New Brunswick and Prince Edward Island. The total purchase price was $48.4 million ($65.0 CAD), including certain working capital adjustments, and consisted of $47.5 million in cash at closing and a $1.4 million hold-back for contingencies as defined in the sale and purchase agreement, which will be released to the seller in month 12 and month 24, post acquisition, if not used. The following summarizes the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands): Acquisition Date Fair Value Cash $ 2,655 Accounts receivable, net 18,449 Prepaid expenses 615 Property, plant and equipment 3,161 Deferred tax assets, net 638 Customer relationships 10,500 Goodwill 20,275 $ 56,293 Accounts payable $ 1,199 Accrued employee compensation and benefits 2,418 Accrued expenses 2,597 Other 1,678 $ 7,892 Total purchase price $ 48,401 In the third quarter of 2017, the Company finalized its valuation of Atelka for the acquisition date assets and liabilities assumed and determined that no material adjustments to any of the balances were required. The Atelka customer relationships will be amortized over a useful life of 12 years. The goodwill recognized from the Atelka acquisition is attributable, but not limited to, the acquired work force and expected synergies with CMS. None of the tax basis of the acquired intangibles and goodwill will be deductible for income tax purposes. The acquired goodwill and the operating results of Atelka are reported within the CMS segment from the date of acquisition. rogenSi In the third quarter of 2014, as an addition to the Customer Strategy Services (“CSS”) segment, the Company acquired substantially all operating assets of rogenSi Worldwide PTY, Ltd., a global leadership, change management, sales, performance training and consulting company. The total potential purchase price was $34.4 million, subject to certain working capital adjustments, and consisted of $18.1 million in cash at closing and an estimated $14.5 million in three earn-out payments, contingent on the acquired companies and TeleTech’s CSS segment achieving certain agreed earnings before interest, taxes, depreciation and amortization (“EBITDA”) targets, as defined in the sale and purchase agreement. Additionally, the estimated purchase price included a $1.8 million hold-back for contingencies as defined in the sale and purchase agreement which was released to the sellers in the first quarter of 2016. The total contingent consideration possible per the sale and purchase agreement ranged from zero to $17.6 million and the earn-out payments were payable in early 2015, 2016 and 2017, based on July 1, 2014 through December 31, 2014, and full year 2015 and 2016 performance, respectively. As of December 31, 2016, the contingent consideration has been finalized and a total of $12.0 million was earned and paid. The fair value of the contingent consideration was measured by applying a probability weighted discounted cash flow model based on significant inputs not observable in the market (Level 3 inputs). Key assumptions include a discount rate of 4.6% and expected future value of payments of $15.3 million. The $15.3 million of expected future payments was calculated using a probability weighted EBITDA assessment with the highest probability associated with rogenSi achieving the targeted EBITDA for each earn-out year. As of the acquisition date, the fair value of the contingent consideration was approximately $14.5 million. During the fourth quarter of 2014, the third quarter of 2015, the fourth quarter of 2015, and the third quarter of 2016, the Company recorded fair value adjustments of the contingent consideration of $0.5 million, $0.8 million, $(0.3) million, and $(4.3) million, respectively, based on revised estimates noting higher or lower probability of exceeding the EBITDA targets (see Note 7). As of September 30, 2016, the fair value of the remaining contingent consideration was reduced from $4.3 million to zero given the remote possibility of achieving targeted EBITDA for 2016. As of December 31, 2016, the payment was finalized at a value of zero and thus no additional expense was required. Financial Impact of Acquired Businesses The acquired businesses purchased in 2016 and 2017 noted above contributed revenues of $43.6 million and $101.9 million, and a net loss of $(4.1) million and $(6.3) million, inclusive of $0.9 million and $2.1 million of acquired intangible amortization, to the Company for the three and nine months ended September 30, 2017, respectively. The unaudited proforma financial results for the third quarter and first nine months of 2017 and 2016 combines the consolidated results of the Company, Connextions and Atelka assuming the Connextions acquisition had been completed on January 1, 2016 and the Atelka acquisition on January 1, 2015. The reported revenue and net income of $312.8 million and $11.5 million would have been $362.3 million and $9.4 million for the three months ended September 30, 2016, respectively, on an unaudited proforma basis. The reported revenue and net income of $930.3 million and $34.3 million would have been $1,071.7 million and $27.8 million for the nine months ended September 30, 2016, respectively, on an unaudited proforma basis. For 2017, the reported revenue and net income of $359.0 million and $14.8 million would have been $359.0 million and $14.8 million for the three months ended September 30, 2017, respectively. The reported revenue and net income of $1,050.7 million and $48.7 million would have been $1,090.0 million and $46.9 million for the nine months ended September 30, 2017, respectively, on an unaudited proforma basis. The unaudited pro forma consolidated results are not to be considered indicative of the results if these acquisitions occurred in the periods mentioned above, or indicative of future operations or results. Additionally, the pro forma consolidated results do not reflect any anticipated synergies expected as a result of the acquisition. Assets and Liabilities Held for Sale During the third quarter of 2016, the Company determined that one business unit from the Customer Growth Services (“CGS”) segment and one business unit from the Customer Strategy Services (“CSS”) segment would be divested from the Company’s operations. These business units continue to meet the criteria to be classified as held for sale. The Company had engaged a broker for both business units and is working with potential buyers for both business units. The Company anticipates the transactions will be finalized during the next three to six months. The Company has taken into consideration the discounted cash flow models, management input based on early discussions with brokers and potential buyers, and third-party evidence from similar transactions to complete the fair value analysis as there has not been a selling price determined at this point for either unit. For the two business units in CGS and CSS losses of $2.6 million and $2.7 million, respectively, were recorded as of September 30, 2016 in Loss on assets held for sale in the Consolidated Statements of Comprehensive Income (Loss). As of September 30, 2017, for the business unit in CSS, this loss continues to be the best estimate and no additional charge has been recorded. For the business unit in CGS, based on further discussion and initial offers, management determined that the estimated selling price assumed should be revised. Based on this and further analysis, an additional $3.2 million loss was recorded as of June 30, 2017 and included in Loss on assets held for sale in the Consolidated Statements of Comprehensive Income (Loss). As of September 30, 2017, for the business unit in CGS, the aggregate loss continues to be the best estimate and no additional charge has been recorded. The following table presents information related to the major components of assets and liabilities that were classified as held for sale in the Consolidated Balance Sheet as of September 30, 2017. As of September 30, 2017 Cash $ — Accounts receivable, net 8,240 Allowance for doubtful accounts (51) Other assets 589 Property, plant and equipment 1,229 Customer relationships 3,946 Goodwill 3,033 Other intangible assets 771 Allowance for reduction of assets held for sale (8,478) Total assets $ 9,279 Accounts payable $ 1,046 Accrued employee compensation and benefits 817 Accrued expenses 316 Other 312 Total liabilities $ 2,491 Investments CaféX In the first quarter of 2015, the Company invested $9.0 million in CafeX Communications, Inc. (“CaféX”) through the purchase of a portion of the Series B Preferred Stock of CaféX. CaféX is a provider of omni-channel web-based real time communication (WebRTC) solutions that enhance mobile applications and websites with in-app video communication and screen share technology to increase customer satisfaction and enterprise efficiency. TeleTech has deployed the CaféX technology as part of the TeleTech customer experience offerings within the CMS business segment and as part of its Humanify platform. At December 31, 2015, the Company owned 17.2% of the total equity of CaféX. During the fourth quarter of 2016, the Company invested an additional $4.3 million to purchase a portion of the Series C Preferred Stock; $3.2 million was paid in the fourth quarter of 2016 and $1.1 million was paid in the first quarter of 2017. At September 30, 2017, the Company owns 17.2% of the total equity of CaféX. The investment is accounted for under the cost method of accounting. The Company evaluates its investments for possible other-than-temporary impairment at least annually or whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. The Company tested the investment in CaféX for impairment and concluded that the investment was not impaired at September 30, 2017 or December 31, 2016. Divestitures Technology Solutions Group (“TSG”) Effective June 30, 2017, the Company sold the Technology Solutions Group to SKC Communication Products, LLC (“SKC”) for an upfront payment of $250 thousand and future contingent royalty payments over the next 3 years. TSG had been included in the CTS segment. During the second quarter of 2017, a $30 thousand gain, which included the write-off of $0.7 million of goodwill, was recorded and included in the Consolidated Statements of Comprehensive Income (Loss). During the third quarter of 2017, a $141 thousand gain was recorded as a result of TSG delivering to SKC working capital in excess of the target set forth in the stock purchase agreement, and the gain was included in the Consolidated Statements of Comprehensive Income (Loss). TeleTech Spain Holdings SL In the third quarter of 2017, the Company dissolved TeleTech Spain Holdings SL, a fully owned foreign subsidiary domiciled in Spain. Upon complete liquidation, $3.2 million attributable to the accumulated translation adjustment component of equity has been removed from Accumulated other comprehensive income (loss) and recognized as part of the gain on liquidation. The $3.2 million gain is included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017. Subsequent Event On November 8, 2017, the Company agreed to acquire all of the outstanding shares in Motif, Inc., a California corporation (“Motif”). Motif is a digital trust and safety services company serving eCommerce marketplaces, online retailers, travel agencies and financial services companies. Motif provides omni-channel community moderation services via voice, email and chat from delivery centers in India and the Philippines via approximately 2,800 employees. The acquisition will be implemented through two separate transactions. In November 2017, the Company will complete the acquisition of 70% of all outstanding shares in Motif from private equity and certain individual investors for $46.9 million, subject to customary representations and warranties, and working capital adjustments. The Company also agreed to purchase the remaining 30% interest in Motif from Motif’s founders (“founders’ shares”) by no later than May 2020 (“30% buyout period”). The Company agreed to pay for the founders’ shares at a purchase price contingent on Motif’s fiscal year 2020’s adjusted normalized EBITDA, and 30% of the excess cash present in the business at the time of the buyout; or if the buyout occurs prior to May 2020, the trailing twelve months EBITDA, calculated from the most recently completed full monthly period ending prior to the date of the buyout triggering event and 30% of the excess cash in the business at that point. As a condition to the acquisition, the Motif founders agreed to continue to stay as executives in the acquired business, at least through the 30% buyout period, as part of the Company’s CMS segment, and not to compete with the Company with respect to the acquired business. |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENT INFORMATION [ABSTRACT] | |
SEGMENT INFORMATION | (3) SEGMENT INFORMATION The Company reports the following four segments: · the CMS segment includes the customer experience delivery solutions which integrate innovative technology with highly-trained customer experience professionals to optimize the customer experience across all channels and all stages of the customer lifecycle from an onshore, offshore or work-from-home environment; · the CGS segment provides technology-enabled sales and marketing solutions that support revenue generation across the customer lifecycle, including sales advisory, search engine optimization, digital demand generation, lead qualification, and acquisition sales, growth and retention services; · the CTS segment includes system design consulting, customer experience technology product, implementation and integration consulting services, and management of clients’ cloud and on-premise solutions; and · the CSS segment provides professional services in customer experience strategy and operations, insights, system and operational process optimization, and culture development and knowledge management. The Company allocates to each segment its portion of corporate operating expenses. All intercompany transactions between the reported segments for the periods presented have been eliminated. The following tables present certain financial data by segment (in thousands): Three Months Ended September 30, 2017 Depreciation Income Gross Intersegment Net & (Loss) from Revenue Sales Revenue Amortization Operations Customer Management Services $ 277,373 $ — $ 277,373 $ 13,455 $ 9,133 Customer Growth Services 30,829 — 30,829 717 1,564 Customer Technology Services 34,658 (95) 34,563 1,772 4,158 Customer Strategy Services 16,271 — 16,271 571 945 Total $ 359,131 $ (95) $ 359,036 $ 16,515 $ 15,800 Three Months Ended September 30, 2016 Depreciation Income Gross Intersegment Net & (Loss) from Revenue Sales Revenue Amortization Operations Customer Management Services $ 223,742 $ (78) $ 223,664 $ 11,891 $ 12,255 Customer Growth Services 35,301 — 35,301 1,561 161 Customer Technology Services 36,871 (291) 36,580 2,457 3,776 Customer Strategy Services 17,251 — 17,251 902 (3,666) Total $ 313,165 $ (369) $ 312,796 $ 16,811 $ 12,526 Nine Months Ended September 30, 2017 Depreciation Income Gross Intersegment Net & (Loss) from Revenue Sales Revenue Amortization Operations Customer Management Services $ 798,527 $ (19) $ 798,508 $ 37,843 $ 43,804 Customer Growth Services 96,890 — 96,890 2,249 6,295 Customer Technology Services 105,337 (283) 105,054 5,377 11,034 Customer Strategy Services 50,290 — 50,290 1,804 2,746 Total $ 1,051,044 $ (302) $ 1,050,742 $ 47,273 $ 63,879 Nine Months Ended September 30, 2016 Depreciation Income Gross Intersegment Net & (Loss) from Revenue Sales Revenue Amortization Operations Customer Management Services $ 664,647 $ (255) $ 664,392 $ 36,024 $ 36,189 Customer Growth Services 105,713 — 105,713 4,943 4,138 Customer Technology Services 109,720 (522) 109,198 8,187 9,932 Customer Strategy Services 51,008 — 51,008 2,607 (3,752) Total $ 931,088 $ (777) $ 930,311 $ 51,761 $ 46,507 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Capital Expenditures Customer Management Services $ 12,732 $ 8,515 $ 36,701 $ 29,751 Customer Growth Services 346 375 708 3,546 Customer Technology Services 1,180 1,864 6,025 4,877 Customer Strategy Services 85 366 498 689 Total $ 14,343 $ 11,120 $ 43,932 $ 38,863 September 30, 2017 December 31, 2016 Total Assets Customer Management Services $ 713,377 $ 585,679 Customer Growth Services 60,086 71,540 Customer Technology Services 106,372 115,537 Customer Strategy Services 69,683 73,548 Total $ 949,518 $ 846,304 September 30, 2017 December 31, 2016 Goodwill Customer Management Services $ 79,391 $ 42,589 Customer Growth Services 24,439 24,439 Customer Technology Services 40,839 41,500 Customer Strategy Services 21,915 21,120 Total $ 166,584 $ 129,648 The following table presents revenue based upon the geographic location where the services are provided (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenue United States $ 197,664 $ 166,993 $ 570,305 $ 507,819 Philippines 86,938 90,692 258,360 259,898 Latin America 31,361 30,832 96,301 90,154 Canada 18,937 891 56,035 3,020 Europe / Middle East / Africa 14,892 15,604 45,555 49,100 Asia Pacific 9,244 7,784 24,186 20,320 Total $ 359,036 $ 312,796 $ 1,050,742 $ 930,311 |
SIGNIFICANT CLIENTS AND OTHER C
SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS | 9 Months Ended |
Sep. 30, 2017 | |
SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS [Abstract] | |
SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS | (4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS The Company had no clients that contributed in excess of 10% of total revenue for the nine months ended September 30, 2017. The Company had one client that contributed in excess of 10% of total revenue for the nine months ended September 30, 2016. This client operates in the communications industry and is included in the CMS segment. This client contributed 9.5% and 10.4% of total revenue for the nine months ended September 30, 2017 and 2016, respectively. The Company does have several other clients with revenue exceeding $100 million annually and the loss of one or more of these clients could have a material adverse effect on the Company’s business, operating results, or financial condition. To limit the Company’s credit risk with its clients, management performs periodic credit evaluations, maintains allowances for uncollectible accounts and may require pre-payment for services from certain clients. Based on currently available information, management does not believe significant credit risk existed as of September 30, 2017. |
GOODWILL
GOODWILL | 9 Months Ended |
Sep. 30, 2017 | |
GOODWILL [ABSTRACT] | |
GOODWILL. | (5) GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill consisted of the following (in thousands): Effect of December 31, Acquisitions / Foreign September 30, 2016 Adjustments Impairments Currency 2017 Customer Management Services $ 42,589 $ 34,662 $ — $ 2,140 $ 79,391 Customer Growth Services 24,439 — — — 24,439 Customer Technology Services 41,500 (661) — — 40,839 Customer Strategy Services 21,120 — — 795 21,915 Total $ 129,648 $ 34,001 $ — $ 2,935 $ 166,584 The Company performs a goodwill impairment assessment on at least an annual basis. The Company conducts its annual goodwill impairment assessment during the fourth quarter, or more frequently, if indicators of impairment exist. During the quarter ended September 30, 2017, the Company assessed whether any such indicators of impairment existed and concluded there were none. During the quarter ended September 30, 2016, the Company identified negative indicators such as lower financial performance and the reversal of contingent consideration for the CSS reporting unit and thus the Company updated its quantitative assessment for the CSS reporting unit fair value using an income based approach. The determination of fair value requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term growth rates for the businesses, the useful lives over which the cash flows will occur and determination of appropriate discount rates (based in part on the Company’s weighted average cost of capital). Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. At September 30, 2016, the fair value for the CSS reporting unit exceeded the carrying value, and thus no impairment was required. The Company has also determined that effective September 30, 2016 the assets of one of the business units within the CSS reporting unit will be held for sale (see discussion in Note 2). Therefore the CSS reporting unit was separated into the component that will be held for sale and the components that will be held for use and two separate fair value analyses were completed. At September 30, 2016 the fair value for the CSS held for use component exceeded the carrying value and thus no impairment was required. The fair value for the CSS held for sale component also exceeded the carrying value, and thus no impairment was required. CSS – component held-for-sale The Company calculated the fair value of the trade name using a relief from royalty method based on forecasted revenues sold under the trade name using significant inputs not observable in the market (Level 3 inputs). The valuation assumptions included an estimated royalty rate of 3.75%, a discount rate specific to the trade name of 19.2% and a perpetuity growth rate of 3.0%. Based on the calculated fair value of $2.0 million, the Company recorded impairment expense of $3.3 million in the three months ended September 30, 2016 which was included in Impairment losses in the Consolidated Statements of Comprehensive Income (Loss). Other Intangible Assets In connection with reduced profitability for the Avaya component of the CTS segment an interim impairment analysis was completed during the third quarter of 2016. The Company will modify the sales focus of the Avaya component away from premise product and services towards cloud solutions. The indefinite-lived intangible asset evaluated for impairment consisted of the TSG trade name. The Company calculated the fair value of the trade name using a relief from royalty method based on forecasted revenues sold under the trade name using significant inputs not observable in the market (Level 3 inputs). The valuation assumptions included an estimated royalty rate of 0.5%, a discount rate specific to the trade name of 19.0%, which is equal to the reporting unit’s equity risk premium adjusted for its size and company specific risk factors, and a perpetuity growth rate of 3.0%. Based on the calculated fair value of $0.4 million, the Company recorded impairment expense of $0.7 million in the three months ended September 30, 2016 which was included in Impairment losses in the Consolidated Statements of Comprehensive Income (Loss). In connection with reduced profitability of the rogenSi component of the CSS segment, an interim impairment analysis was completed during the third quarter of 2016. The indefinite-lived intangible asset evaluated for impairment consisted of the trade name. The Company calculated the fair value of the trade name using a relief from royalty method based on forecasted revenues sold under the trade name using significant inputs not observable in the market (Level 3 inputs). The valuation assumptions included an estimated royalty rate of 2.0%, a discount rate specific to the trade name of 18.2%, which is equal to the reporting unit’s equity risk premium adjusted for its size and company specific risk factors. and a perpetuity growth rate of 3.0%. Based on the calculated fair value of $3.1 million, the Company recorded impairment expense of $1.2 million in the three months ended September 30, 2016 which was included in Impairment losses in the Consolidated Statements of Comprehensive Income (Loss). |
DERIVATIVES
DERIVATIVES | 9 Months Ended |
Sep. 30, 2017 | |
DERIVATIVES [ABSTRACT] | |
DERIVATIVES | (6) DERIVATIVES Cash Flow Hedges The Company enters into foreign exchange and interest rate related derivatives. Foreign exchange derivatives entered into consist of forward and option contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations that are associated with forecasted revenue earned in foreign locations. Interest rate derivatives consist of interest rate swaps to reduce the Company’s exposure to interest rate fluctuations associated with its variable rate debt. Upon proper qualification, these contracts are designated as cash flow hedges. It is the Company’s policy to only enter into derivative contracts with investment grade counterparty financial institutions, and correspondingly, the fair value of derivative assets consider, among other factors, the creditworthiness of these counterparties. Conversely, the fair value of derivative liabilities reflects the Company’s creditworthiness. As of September 30, 2017, the Company has not experienced, nor does it anticipate, any issues related to derivative counterparty defaults. The following table summarizes the aggregate unrealized net gain or loss in Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016 (in thousands and net of tax): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Aggregate unrealized net gain/(loss) at beginning of period $ (19,730) $ (25,007) $ (32,393) $ (26,885) Add: Net gain/(loss) from change in fair value of cash flow hedges 5,420 631 25,290 9,519 Less: Net (gain)/loss reclassified to earnings from effective hedges (3,487) (4,179) (10,694) (11,189) Aggregate unrealized net gain/(loss) at end of period $ (17,797) $ (28,555) $ (17,797) $ (28,555) The Company’s foreign exchange cash flow hedging instruments as of September 30, 2017 and December 31, 2016 are summarized as follows (amounts in thousands). All hedging instruments are forward contracts. Local Currency U.S. Dollar % Maturing Contracts Notional Notional in the next Maturing As of September 30, 2017 Amount Amount 12 months Through Philippine Peso 10,490,000 218,413 (1) 53.2 % August 2021 Mexican Peso 1,774,000 104,652 37.2 % May 2021 $ 323,065 Local Currency U.S. Dollar Notional Notional As of December 31, 2016 Amount Amount Philippine Peso 14,315,000 301,134 (1) Mexican Peso 2,089,000 129,375 $ 430,509 (1) Includes contracts to purchase Philippine pesos in exchange for New Zealand dollars and Australian dollars, which are translated into equivalent U.S. dollars on September 30, 2017 and December 31, 2016. The Company’s interest rate swap arrangement expired as of May 31, 2017 and no additional swaps have been entered into. As of December 31, 2016, the outstanding interest rate swap was as follows: Contract Contract Notional Variable Rate Fixed Rate Commencement Maturity December 31, 2016 Amount Received Paid Date Date Swap $ 15 million 1 - month LIBOR 3.14 % May 2012 May 2017 Fair Value Hedges The Company enters into foreign exchange forward contracts to economically hedge against foreign currency exchange gains and losses on certain receivables and payables of the Company’s foreign operations. Changes in the fair value of derivative instruments designated as fair value hedges are recognized in earnings in Other income (expense), net. As of September 30, 2017 and December 31, 2016 the total notional amounts of the Company’s forward contracts used as fair value hedges were $167.1 million and $227.8 million, respectively. Derivative Valuation and Settlements The Company’s derivatives as of September 30, 2017 and December 31, 2016 were as follows (in thousands): September 30, 2017 Designated Not Designated as Hedging as Hedging Designation: Instruments Instruments Foreign Interest Foreign Derivative contract type: Exchange Rate Exchange Derivative classification: Cash Flow Cash Flow Fair Value Fair value and location of derivative in the Consolidated Balance Sheet: Prepaids and other current assets $ 55 $ — $ 355 Other long-term assets 594 — — Other current liabilities (17,071) — (447) Other long-term liabilities (13,051) — — Total fair value of derivatives, net $ (29,473) $ — $ (92) December 31, 2016 Designated Not Designated as Hedging as Hedging Designation: Instruments Instruments Foreign Interest Foreign Derivative contract type: Exchange Rate Exchange Derivative classification: Cash Flow Cash Flow Fair Value Fair value and location of derivative in the Consolidated Balance Sheet: Prepaids and other current assets $ 1,178 $ — $ 1,606 Other long-term assets — — — Other current liabilities (23,503) (147) (866) Other long-term liabilities (31,714) — — Total fair value of derivatives, net $ (54,039) $ (147) $ 740 The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2017 and 2016 were as follows (in thousands): Three Months Ended September 30, 2017 2016 Designated as Hedging Designated as Hedging Designation: Instruments Instruments Foreign Interest Foreign Interest Derivative contract type: Exchange Rate Exchange Rate Derivative classification: Cash Flow Cash Flow Cash Flow Cash Flow Amount of gain or (loss) recognized in Other comprehensive income (loss) - effective portion, net of tax $ (3,487) $ — $ (4,119) $ (60) Amount and location of net gain or (loss) reclassified from Accumulated OCI to income - effective portion: Revenue $ (5,812) $ — $ (7,103) $ — Interest expense — — — (104) Three Months Ended September 30, 2017 2016 Designation: Not Designated as Not Designated as Derivative contract type: Foreign Exchange Foreign Exchange Derivative classification: Forward Contracts Fair Value Forward Contracts Fair Value Amount and location of net gain or (loss) recognized in the Consolidated Statement of Comprehensive Income (Loss): Costs of services $ — $ — $ — $ — Other income (expense), net $ — $ (1,186) $ — $ (3,674) The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the nine months ended September 30, 2017 and 2016 were as follows (in thousands): Nine Months Ended September 30, 2017 2016 Designated as Hedging Designated as Hedging Designation: Instruments Instruments Foreign Interest Foreign Interest Derivative contract type: Exchange Rate Exchange Rate Derivative classification: Cash Flow Cash Flow Cash Flow Cash Flow Amount of gain or (loss) recognized in Other comprehensive income (loss) - effective portion, net of tax $ (10,625) $ (69) $ (10,939) $ (252) Amount and location of net gain or (loss) reclassified from Accumulated OCI to income - effective portion: Revenue $ (17,709) $ — $ (18,860) $ — Interest expense — (115) — (435) Nine Months Ended September 30, 2017 2016 Designation: Not Designated as Not Designated as Derivative contract type: Foreign Exchange Foreign Exchange Derivative classification: Forward Contracts Fair Value Forward Contracts Fair Value Amount and location of net gain or (loss) recognized in the Consolidated Statement of Comprehensive Income (Loss): Costs of services $ — $ — $ — $ — Other income (expense), net $ — $ (1,545) $ — $ (3,616) |
FAIR VALUE
FAIR VALUE | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE [Abstract] | |
FAIR VALUE | (7) FAIR VALUE The authoritative guidance for fair value measurements establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires that the Company maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The following presents information as of September 30, 2017 and December 31, 2016 for the Company’s assets and liabilities required to be measured at fair value on a recurring basis, as well as the fair value hierarchy used to determine their fair value. Accounts Receivable and Payable - The amounts recorded in the accompanying balance sheets approximate fair value because of their short-term nature. Investments – The Company measures investments, including cost and equity method investments, at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include market observable inputs, and discounted cash flow projections. An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary. As of September 30, 2017, the investment in CaféX Communication, Inc., which consists of the Company’s first quarter 2015 $9.0 million investment, the fourth quarter 2016 $3.2 million investment and the first quarter 2017 $1.1 million investment, is recorded at $13.3 million which approximates fair value. Debt - The Company’s debt consists primarily of the Company’s Credit Agreement, which permits floating-rate borrowings based upon the current Prime Rate or LIBOR plus a credit spread as determined by the Company’s leverage ratio calculation (as defined in the Credit Agreement). As of September 30, 2017 and December 31, 2016, the Company had $255.0 million and $217.3 million, respectively, of borrowings outstanding under the Credit Agreement. During the third quarter of 2017 outstanding borrowings accrued interest at an average rate of 2.3% per annum, excluding unused commitment fees. The amounts recorded in the accompanying Balance Sheets approximate fair value due to the variable nature of the debt based on Level 2 inputs. Derivatives - Net derivative assets (liabilities) are measured at fair value on a recurring basis. The portfolio is valued using models based on market observable inputs, including both forward and spot foreign exchange rates, interest rates, implied volatility, and counterparty credit risk, including the ability of each party to execute its obligations under the contract. As of September 30, 2017, credit risk did not materially change the fair value of the Company’s derivative contracts. The following is a summary of the Company’s fair value measurements for its net derivative assets (liabilities) as of September 30, 2017 and December 31, 2016 (in thousands): As of September 30, 2017 Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) At Fair Value Cash flow hedges $ — $ (29,473) $ — $ (29,473) Interest rate swaps — — — — Fair value hedges — (92) — (92) Total net derivative asset (liability) $ — $ (29,565) $ — $ (29,565) As of December 31, 2016 Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) At Fair Value Cash flow hedges $ — $ (54,039) $ — $ (54,039) Interest rate swaps — (147) — (147) Fair value hedges — 740 — 740 Total net derivative asset (liability) $ — $ (53,446) $ — $ (53,446) The following is a summary of the Company’s fair value measurements as of September 30, 2017 and December 31, 2016 (in thousands): As of September 30, 2017 Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Derivative instruments, net $ — $ — $ — Total assets $ — $ — $ — Liabilities Deferred compensation plan liability $ — $ (12,624) $ — Derivative instruments, net — (29,565) — Contingent consideration — — (1,178) Total liabilities $ — $ (42,189) $ (1,178) As of December 31, 2016 Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Derivative instruments, net $ — $ — $ — Total assets $ — $ — $ — Liabilities Deferred compensation plan liability $ — $ (10,841) $ — Derivative instruments, net — (53,446) — Contingent consideration — — (1,808) Total liabilities $ — $ (64,287) $ (1,808) Deferred Compensation Plan — The Company maintains a non-qualified deferred compensation plan structured as a Rabbi trust for certain eligible employees. Participants in the deferred compensation plan select from a menu of phantom investment options for their deferral dollars offered by the Company each year, which are based upon changes in value of complementary, defined market investments. The deferred compensation liability represents the combined values of market investments against which participant accounts are tracked. Contingent Consideration — The Company recorded contingent consideration related to the acquisitions of rogenSi and Atelka. These contingent payables were recognized at fair value using a discounted cash flow approach and a discount rate of 4.6% and 0%, respectively. The discount rates vary dependent on the specific risks of each acquisition including the country of operation, the nature of services and complexity of the acquired business, and other similar factors. These measurements were based on significant inputs not observable in the market. The Company recorded interest expense each period using the effective interest method until the future value of these contingent payables reached their expected future value. Interest expense related to all recorded contingent payables is included in Interest expense in the Consolidated Statements of Comprehensive Income (Loss). The Company recorded contingent consideration related to a revenue servicing agreement with Welltok in the fourth quarter of 2016, in which a maximum of $1.25 million will be paid over eight quarters based on the dollar value of revenue earned by the Company. The contingent payable was recognized at fair value of $1.25 million as of December 31, 2016. As required, the first payment of $435 thousand was completed during the second quarter of 2017. As required, the second payment of $239 thousand was completed during the third quarter of 2017. A rollforward of the activity in the Company’s fair value of the contingent consideration payable is as follows (in thousands): Imputed December 31, Interest / September 30, 2016 Acquisitions Payments Adjustments 2017 Welltok $ 1,250 $ — $ (674) $ — $ 576 Atelka 558 — — 44 602 Total $ 1,808 $ — $ (674) $ 44 $ 1,178 |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
INCOME TAXES [ABSTRACT] | |
INCOME TAXES | (8) INCOME TAXES The Company accounts for income taxes in accordance with the accounting literature for income taxes, which requires recognition of deferred tax assets and liabilities for the expected future income tax consequences of transactions that have been included in the Consolidated Financial Statements. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse. Quarterly, the Company assesses the likelihood that its net deferred tax assets will be recovered. Based on the weight of all available evidence, both positive and negative, the Company records a valuation allowance against deferred tax assets when it is more-likely-than-not that a future tax benefit will not be realized. In accordance with ASC 740, the Company recorded a liability during the first quarter of 2016 of $1.1 million, inclusive of penalties and interest, for uncertain tax positions. See Note 1 for further information on this item. During the second quarter of 2016, $0.3 million of liability was released due to the closing of a statute of limitations. During the third quarter of 2016, $0.8 million of liability was released due to the favorable outcome of communications with a revenue authority related to site compliance for locations with tax advantaged status. During the third quarter of 2016, $0.5 million of liability was released due to the closing of a statute of limitations. As of September 30, 2017, the Company had $31.0 million of gross deferred tax assets (after a $10.5 million valuation allowance) and net deferred tax assets (after deferred tax liabilities) of $30.8 million related to the U.S. and international tax jurisdictions whose recoverability is dependent upon future profitability. The effective tax rate for the three and nine months ended September 30, 2017 was 11.7% and 15.0%, respectively. The effective tax rate for the three and nine months ended September 30, 2016 was (6.9)% and 15.2%, respectively. The Company’s U.S. income tax returns filed for the tax years ending December 31, 2014 to present remain open tax years. The Company has been notified of the intent to audit, or is currently under audit of, income taxes for Canada for tax years 2009 and 2010, the state of Michigan in the United States for tax years 2012 through 2015, for the Philippines branch for tax year 2015, for Belgium for tax years 2014 and 2015, and for eLoyalty in Ireland for tax year 2016. Although the outcome of examinations by taxing authorities are always uncertain, it is the opinion of management that the resolution of these audits will not have a material effect on the Company’s Consolidated Financial Statements. During the third quarter of 2017, the Company closed the audit in Hong Kong for 2014 with no changes. Additionally, during the second quarter of 2016, the Company successfully closed the audit in the U.S. for the acquired entity Technology Solutions Group for the tax year 2012 (prior to acquisition) with no changes. The Company also closed in the fourth quarter of 2016 the audit in New Zealand for tax years 2013 and 2014 with no changes. The Company has been granted “Tax Holidays” as an incentive to attract foreign investment by the government of the Philippines. Generally, a Tax Holiday is an agreement between the Company and a foreign government under which the Company receives certain tax benefits in that country, such as exemption from taxation on profits derived from export-related activities. In the Philippines, the Company has been granted multiple agreements with an initial period of four years and additional periods for varying years, expiring at various times between 2011 and 2020. The aggregate effect on income tax expense for the three months ended September 30, 2017 and 2016 was approximately $2.8 million and $2.0 million, respectively, which had a favorable impact on diluted net income per share of $0.06 and $0.04, respectively. The aggregate effect on income tax expense for the nine months ended September 30, 2017 and 2016 was approximately $8.9 million and $4.5 million, respectively, which had a favorable impact on diluted net income per share of $0.19 and $0.10, respectively. |
RESTRUCTURING CHARGES, INTEGRAT
RESTRUCTURING CHARGES, INTEGRATION CHARGES AND IMPAIRMENT LOSSES | 9 Months Ended |
Sep. 30, 2017 | |
RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES [Abstract] | |
RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES | (9) RESTRUCTURING CHARGES, INTEGRATION CHARGES AND IMPAIRMENT LOSSES Restructuring Charges During the three and nine months ended September 30, 2017 and 2016, the Company continued restructuring activities primarily associated with reductions in the Company’s capacity, workforce and related management in several of the segments to better align the capacity and workforce with current business needs. During the three and nine months ended September 30, 2017, several restructuring activities were completed regarding the purchase of Connextions (see Note 2). Several of the delivery centers that were included in the purchase will be closed over the next few quarters. During the second quarter of 2017, a $1.7 million severance accrual was recorded in relation to these closures and included in the Consolidated Statements of Comprehensive Income (Loss) for the quarter ended June 30, 2017. In conjunction with closing one delivery center, a $0.6 million termination fee was recorded in the third quarter of 2017. During the third quarter of 2017, the severance accrual was reviewed and a reversal of $0.7 million was recorded as of September 30, 2017. These charges and reversals were included in the Consolidated Statements of Comprehensive Income (Loss) during the quarter ended September 30, 2017. A summary of the expenses recorded in Restructuring and integration charges, net in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and 2016, respectively, is as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Reduction in force Customer Management Services $ (213) $ 2,485 $ 1,548 $ 2,482 Customer Growth Services — 108 — 108 Customer Technology Services — 314 93 324 Customer Strategy Services 13 82 13 92 Total $ (200) $ 2,989 $ 1,654 $ 3,006 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Facility exit and other charges Customer Management Services $ 600 $ 699 $ 642 $ 852 Customer Growth Services — — — — Customer Technology Services — — 84 33 Customer Strategy Services 21 — 21 — Total $ 621 $ 699 $ 747 $ 885 A rollforward of the activity in the Company’s restructuring accruals is as follows (in thousands): Reduction Facility Exit and in Force Other Charges Total Balance as of December 31, 2016 $ 1,468 $ 98 $ 1,566 Expense 2,384 747 3,131 Payments (987) (841) (1,828) Change due to foreign currency (23) — (23) Change in estimates (730) — (730) Balance as of September 30, 2017 $ 2,112 $ 4 $ 2,116 The remaining restructuring and other accruals are expected to be paid or extinguished during the next twelve months and are all classified as current liabilities within Other accrued expenses in the Consolidated Balance Sheets. Integration Charges During the three months ended September 30, 2017, as a result of the Connextions acquisition, certain integration activities were completed and $5.6 million of additional expenses were incurred and paid. These integration activities included the hiring, training and licensing of a group of employees at new delivery centers as one of the acquired centers was closed during the third quarter of 2017 and one of the acquired centers will be closed during the fourth quarter of 2017. The Company has also incurred significant expenses related to the integration of the IT systems and has paid duplicative software costs and facilities expenses for several areas during the transition period. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
COMMITMENTS AND CONTINGENCIES [Abstract] | |
COMMITMENTS AND CONTINGENCIES | (10) COMMITMENTS AND CONTINGENCIES Credit Facility On February 11, 2016, the Company entered into a First Amendment to its June 3, 2013 Amended and Restated Credit Agreement and Amended and Restated Security Agreement (collectively the “Credit Agreement”) for a senior secured revolving credit facility (the “Credit Facility”) with a syndicate of lenders led by Wells Fargo Bank, National Association. The Credit Agreement provides for a secured revolving credit facility that matures on February 11, 2021 with an initial maximum aggregate commitment of $900.0 million, and an accordion feature of up to $1.2 billion in the aggregate, if certain conditions are satisfied. On October 30, 2017, the Company entered into a Third Amendment to the Credit Agreement and exercised the Credit Facility’s accordion feature to increase the total commitment under the Credit Facility to $1.2 billion. All other material terms of the Credit Agreement remained unchanged. Base rate loans bear interest at a rate equal to the greatest of (i) Wells Fargo’s prime rate, (ii) one half of 1% in excess of the federal funds effective rate, and (iii) 1.25% in excess of the one month London Interbank Offered Rate (“LIBOR”); plus in each case a margin of 0% to 0.75% based on the Company’s net leverage ratio. Eurodollar loans bear interest at LIBOR plus a margin of 1.0% to 1.75% based on the Company’s net leverage ratio. Alternate currency loans bear interest at rates applicable to their respective currencies. Letter of credit fees are one eighth of 1% of the stated amount of the letter of credit on the date of issuance, renewal or amendment, plus an annual fee equal to the borrowing margin for Eurodollar loans. The Credit Facility commitment fees are payable to the lenders in an amount equal to the unused portion of the Credit Facility at a rate of 0.125% to 0.250% based on the Company’s net leverage ratio. The Company is obligated to maintain a maximum net leverage ratio of 3.25 to 1.00, and a minimum interest coverage ratio of 2.50 to 1.00. The Company primarily utilizes its Credit Agreement to fund working capital, general operations, stock repurchases, dividends and other strategic activities, such as the acquisitions described in Note 2. As of September 30, 2017 and December 31, 2016, the Company had borrowings of $255.0 million and $217.3 million, respectively, under its Credit Agreement, and its average daily utilization was $474.3 million and $359.5 million for the nine months ended September 30, 2017 and 2016, respectively. Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $390.0 million as of September 30, 2017. As of September 30, 2017, the Company was in compliance with all covenants and conditions under its Credit Agreement. Letters of Credit As of September 30, 2017, outstanding letters of credit under the Credit Agreement totaled $3.9 million and primarily guaranteed workers’ compensation and other insurance related obligations. As of September 30, 2017, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $7.6 million. Legal Proceedings From time to time, the Company has been involved in legal actions, both as plaintiff and defendant, which arise in the ordinary course of business. The Company accrues for exposures associated with such legal actions to the extent that losses are deemed both probable and reasonably estimable. To the extent specific reserves have not been made for certain legal proceedings, their ultimate outcome, and consequently, an estimate of possible loss, if any, cannot reasonably be determined at this time. Based on currently available information and advice received from counsel, the Company believes that the disposition or ultimate resolution of any current legal proceedings, except as otherwise specifically reserved for in its financial statements, will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. |
NONCONTROLLING INTEREST
NONCONTROLLING INTEREST | 9 Months Ended |
Sep. 30, 2017 | |
NONCONTROLLING INTEREST [Abstract] | |
Noncontrollling Interest | (11) NONCONTROLLING INTEREST The following table reconciles equity attributable to noncontrolling interest (in thousands): Nine Months Ended September 30, 2017 2016 Noncontrolling interest, January 1 $ 6,981 $ 7,201 Net income attributable to noncontrolling interest 2,828 2,804 Dividends distributed to noncontrolling interest (2,745) (2,745) Foreign currency translation adjustments 325 (70) Equity-based compensation expense (291) 96 Other — 10 Noncontrolling interest, September 30 $ 7,098 $ 7,296 |
MANDATORILY REDEEMABLE NONCONTR
MANDATORILY REDEEMABLE NONCONTROLLING INTEREST | 9 Months Ended |
Sep. 30, 2017 | |
Mandatorily Redeemable Noncontrolling Interest [Abstract] | |
Mandatorily Redeemable Noncontrolling Interest | (12) MANDATORILY REDEEMABLE NONCONTROLLING INTEREST The Company held an 80% interest in iKnowtion until January 1, 2016 when the additional 20% was purchased. In the event iKnowtion met certain EBITDA targets for calendar year 2015, the purchase and sale agreement required TeleTech to purchase the remaining 20% interest in iKnowtion in 2016 for an amount equal to a multiple of iKnowtion’s 2015 EBITDA as defined in the purchase and sale agreement. These terms represented a contingent redemption feature which the Company determined was probable of being achieved. Based on final EBITDA for 2015, the payment for the remaining 20% was completed in April 2016 for the value shown in the table below in accordance with the purchase and sale agreement. The Company recorded the mandatorily redeemable noncontrolling interest at the redemption value based on the corresponding EBITDA multiples as prescribed in the purchase and sale agreement at the end of each reporting period. At the end of each reporting period the changes in the redemption value were recorded in retained earnings. Since the EBITDA multiples as defined in the purchase and sale agreement were below the current market multiple, the Company determined that there was no preferential treatment to the noncontrolling interest shareholders resulting in no impact to earnings per share. A rollforward of the mandatorily redeemable noncontrolling interest is included in the table below (in thousands). Nine Months Ended September 30, 2017 2016 Mandatorily redeemable noncontrolling interest, January 1 $ — $ 4,131 Net income attributable to mandatorily redeemable noncontrolling interest — — Working capital distributed to mandatorily redeemable noncontrolling interest — (492) Change in redemption value — 466 Purchase of mandatorily redeemable noncontrolling interest — (4,105) Mandatorily redeemable noncontrolling interest, September 30 $ — $ — |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 9 Months Ended |
Sep. 30, 2017 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) [ABSTRACT] | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | (13) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) The following table presents changes in the accumulated balance for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive income (loss) (in thousands): Foreign Currency Derivative Translation Valuation, Net Other, Net Adjustment of Tax of Tax Totals Accumulated other comprehensive income (loss) at December 31, 2015 $ (71,196) $ (26,885) $ (3,284) $ (101,365) Other comprehensive income (loss) before reclassifications (7,999) 9,519 2,330 3,850 Amounts reclassified from accumulated other comprehensive income (loss) — (11,189) (1,128) (12,317) Net current period other comprehensive income (loss) (7,999) (1,670) 1,202 (8,467) Accumulated other comprehensive income (loss) at September 30, 2016 $ (79,195) $ (28,555) $ (2,082) $ (109,832) Accumulated other comprehensive income (loss) at December 31, 2016 $ (92,008) $ (32,393) $ (2,563) $ (126,964) Other comprehensive income (loss) before reclassifications 8,089 25,290 738 34,117 Amounts reclassified from accumulated other comprehensive income (loss) — (10,694) (352) (11,046) Net current period other comprehensive income (loss) 8,089 14,596 386 23,071 Accumulated other comprehensive income (loss) at September 30, 2017 $ (83,919) $ (17,797) $ (2,177) $ (103,893) The following table presents the classification and amount of the reclassifications from Accumulated other comprehensive income (loss) to the statement of comprehensive income (loss) (in thousands): Statement of For the Three Months Ended September 30, Comprehensive Income 2017 2016 (Loss) Classification Derivative valuation Loss on foreign currency forwards $ (5,812) $ (7,103) Revenue Loss on interest rate swaps — (104) Interest expense Tax effect 2,325 3,028 Provision for income taxes $ (3,487) $ (4,179) Net income (loss) Other Actuarial loss on defined benefit plan $ (130) $ (804) Cost of services Tax effect 13 80 Provision for income taxes $ (117) $ (724) Net income (loss) Statement of For the Nine Months Ended September 30, Comprehensive Income 2017 2016 (Loss) Classification Derivative valuation Loss on foreign currency forwards $ (17,709) $ (18,860) Revenue Loss on interest rate swaps (115) (435) Interest expense Tax effect 7,130 8,106 Provision for income taxes $ (10,694) $ (11,189) Net income (loss) Other Actuarial loss on defined benefit plan $ (391) $ (1,252) Cost of services Tax effect 39 124 Provision for income taxes $ (352) $ (1,128) Net income (loss) |
NET INCOME PER SHARE
NET INCOME PER SHARE | 9 Months Ended |
Sep. 30, 2017 | |
Net income per share attributable to TeleTech stockholders | |
NET INCOME PER SHARE | (14) NET INCOME PER SHARE The following table sets forth the computation of basic and diluted shares for the periods indicated (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Shares used in basic earnings per share calculation 45,838 47,081 45,816 47,771 Effect of dilutive securities: Stock options 10 6 9 11 Restricted stock units 517 214 513 292 Performance-based restricted stock units 2 14 10 15 Total effects of dilutive securities 529 234 532 318 Shares used in dilutive earnings per share calculation 46,367 47,315 46,348 48,089 For the three months ended September 30, 2017 and 2016, options to purchase 0.0 million and 0.1 million shares of common stock, respectively, were outstanding, but not included in the computation of diluted net income per share because the exercise price exceeded the value of the shares and the effect would have been anti-dilutive. For the nine months ended September 30, 2017 and 2016, options to purchase 0.0 million and 0.1 million shares of common stock, respectively, were outstanding, but not included in the computation of diluted net income per share because the exercise price exceeded the value of the shares and the effect would have been anti-dilutive. For the three months ended September 30, 2017 and 2016, restricted stock units (“RSUs”) of 0.0 million and 0.1 million, respectively, were outstanding, but not included in the computation of diluted net income per share because the effect would have been anti-dilutive. For the nine months ended September 30, 2017 and 2016, RSUs of 0.0 million and 0.1 million, respectively, were outstanding, but not included in the computation of diluted net income per share because the effect would have been anti-dilutive. |
EMPLOYEE COMPENSATION PLANS
EMPLOYEE COMPENSATION PLANS | 9 Months Ended |
Sep. 30, 2017 | |
EMPLOYEE COMPENSATION PLANS [Abstract] | |
EMPLOYEE COMPENSATION PLANS | (15) EQUITY-BASED COMPENSATION PLANS All equity-based awards to employees are recognized in the Consolidated Statements of Comprehensive Income (Loss) at the fair value of the award on the grant date. During the three and nine months ended September 30, 2017 and 2016, the Company recognized total compensation expense of $3.5 million and $8.4 million and $2.7 million and $7.3 million, respectively. Of the total compensation expense, $1.4 million and $2.9 million was recognized in Cost of services and $2.1 million and $5.5 million was recognized in Selling, general and administrative during the three and nine months ended September 30, 2017. During the three and nine months ended September 30, 2016, the Company recognized compensation expense of $1.0 million and $2.3 million in Cost of services and $1.7 million and $5.0 million in Selling, general and administrative, respectively. Restricted Stock Unit Grants During the nine months ended September 30, 2017 and 2016, the Company granted 724,951 and 443,875 RSUs, respectively, to new and existing employees, which vest in equal installments over four or five years. The Company recognized compensation expense related to RSUs of $3.5 million and $8.7 million for the three and nine months ended September 30, 2017, respectively. The Company recognized compensation expense related to RSUs of $2.6 million and $7.2 million for the three and nine months ended September 30, 2016, respectively. As of September 30, 2017, there was approximately $25.0 million of total unrecognized compensation cost (including the impact of expected forfeitures) related to RSUs granted under the Company’s equity plans. Stock Options The Company recognized compensation expense related to subsidiary performance options of zero and $(0.3) million for the three and nine months ended September 30, 2017, respectively. The option benefit for 2017 resulted from the Company concluding that the performance targets of the subsidiary will not be achieved. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2017 | |
RELATED PARTY TRANSACTIONS [ABSTRACT] | |
RELATED PARTY TRANSACTIONS | (16) RELATED PARTY The Company entered into an agreement under which Avion, LLC (“Avion”) and Airmax LLC (“Airmax”) provide certain aviation flight services as requested by the Company. Such services include the use of an aircraft and flight crew. Kenneth D. Tuchman, Chairman and Chief Executive Officer of the Company, has a direct 100% beneficial ownership interest in Avion and Airmax. During the nine months ended September 30, 2017 and 2016, the Company expensed $0.6 million and $0.7 million, respectively, to Avion and Airmax for services provided to the Company. There was $114 thousand in payments due and outstanding to Avion and Airmax as of September 30, 2017. During 2014, the Company entered into a vendor contract with Convercent Inc. to provide learning management and web and telephony based global helpline solutions. This contract was renewed, after an arms-length market pricing review, in the fourth quarter of 2016. The majority owner of Convercent is a company which is owned and controlled by Kenneth D. Tuchman, Chairman and Chief Executive Officer of the Company. During the nine months ended September 30, 2017 and 2016, the Company paid $55 thousand and $75 thousand, respectively. During 2015, the Company entered into a contract to purchase software from CaféX, which is a company that TeleTech holds a 17.2% equity investment in. During the three and nine months ended September 30, 2017, the Company purchased $0.0 million and $0.1 million, respectively, of software from CaféX. See Note 2 for further information regarding this investment. |
OVERVIEW AND SUMMARY OF SIGNIFI
OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (POLICIES) | 9 Months Ended |
Sep. 30, 2017 | |
OVERVIEW AND BASIS OF PRESENTATION [Abstract] | |
Overview | Summary of Business TeleTech Holdings, Inc. and its subsidiaries (“TeleTech” or the “Company”) is a leading global provider of technology enabled customer experience services. The Company helps leading brands improve customer experiences and operational effectiveness through a unique combination of technological innovation and operational expertise. The Company’s portfolio of solutions includes consulting, technology, operations and analytics to enable a seamless customer experience across every interaction channel and phase of the customer lifecycle. TeleTech’s 49,500 employees serve clients in the automotive, communication, financial services, government, healthcare, logistics, media and entertainment, retail, technology, transportation and travel industries across all the segments and via operations in the U.S., Australia, Belgium, Brazil, Bulgaria, Canada, China, Costa Rica, Germany, Hong Kong, Ireland, Lebanon, Macedonia, Mexico, New Zealand, the Philippines, Poland, Singapore, South Africa, Thailand, Turkey, the United Arab Emirates, and the United Kingdom. |
Basis Of Presentation | Basis of Presentation The Consolidated Financial Statements are comprised of the accounts of TeleTech, its wholly owned subsidiaries, and its 55% equity owned subsidiary Percepta, LLC. All intercompany balances and transactions have been eliminated in consolidation. The unaudited Consolidated Financial Statements do not include all of the disclosures required by accounting principles generally accepted in the U.S. (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited Consolidated Financial Statements reflect all adjustments which, in the opinion of management, are necessary to state fairly the consolidated financial position of the Company and the consolidated results of operations and comprehensive income (loss) and the consolidated cash flows of the Company. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2017. During the three months ended March 31, 2016, the Company recorded an additional tax expense of $1.1 million that should have been recorded in prior periods related to operations by an entity outside its country of incorporation. The total amount of $1.1 million should have been recorded as additional expense in the amount of $180 thousand in 2011, $123 thousand in 2012, $137 thousand in 2013, $358 thousand in 2014 and $301 thousand in 2015. The Company has evaluated the impact of this adjustment and concluded that the adjustment was not material to the previously issued consolidated financial statements. These unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016. |
Use of Estimates | Use of Estimates The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates including those related to derivatives and hedging activities, income taxes including the valuation allowance for deferred tax assets, self-insurance reserves, litigation reserves, restructuring reserves, allowance for doubtful accounts, contingent consideration, and valuation of goodwill, long-lived and intangible assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In May 2014, the FASB issued Accounting Standards Update (“ASU”) 2014-09, “ Revenue from Contracts with Customers ”. ASU 2014-09 provides new guidance related to how an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, ASU 2014-09 specifies new accounting for costs associated with obtaining or fulfilling contracts with customers and expands the required disclosures related to revenue and cash flows from contracts with customers. While ASU-2014-09 was originally effective for fiscal years and interim periods within those years beginning after December 15, 2016, in August 2015, the FASB issued ASU 2015-14, “Deferral of Effective Date”, deferring the effective date by one year, to be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017. Earlier adoption is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within that reporting period. ASU 2014-09 can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption, with early application not permitted. In June 2017, FASB issued ASU 2017-10, “Service Concession Arrangements”, which will be adopted along with the ASU 2014-09 guidance. The Company has assigned a project manager and team, has selected an external consulting company to assist through the project, has completed the initial project assessment phase, and is finalizing its implementation approach. The Company has determined that it will adopt this new standard using the modified retrospective approach in which a cumulative adjustment to retained earnings will be recorded as of January 1, 2018. The Company is in the process of completing its assessment of the financial statement impact and as such, has not reached any conclusions regarding the potential impact to the financials. In February 2016, the FASB issued ASU 2016-02, “ Leases ”, which amends the existing accounting standards for lease accounting, including requiring lessees, to recognize most leases on their balance sheets related to the rights and obligations created by those leases and making targeted changes to lessor accounting. The ASU also requires new disclosures regarding the amounts, timing, and uncertainty of cash flows arising from leases. The ASU is effective for interim and annual periods beginning on or after December 15, 2018 and early adoption is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently assessing the impact on the consolidated financial statements and related disclosures, evaluating software solutions and other tracking methods, and determining the implementation timeline. In March 2016, the FASB issued ASU 2016-09, “ Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting ”, which amends the existing accounting standards related to stock-based compensation. The ASU simplifies several aspects of accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, as well as classification in the statement of cash flows. The ASU is effective for interim and annual periods beginning on or after December 15, 2016. Beginning with the first quarter of 2017, the Company has adopted the new guidance as applicable and this adoption did not have a material impact on its financial position, results of operation or related disclosures. In August 2016, the FASB issued ASU No. 2016-15, “ Statement of Cash Flows ”. ASU 2016-15 is intended to reduce diversity in practice regarding how certain cash transactions are presented and classified in the Consolidated Statement of Cash Flows by providing guidance on eight specific cash flow issues. The ASU is effective for interim and annual periods beginning on or after December 15, 2017 and early adoption is permitted. The Company is currently assessing the impact on the consolidated statements and related disclosures. In January 2017, the FASB issued ASU No. 2017-04, “Intangibles – Goodwill and Other: Simplifying the Accounting for Goodwill Impairment ”. ASU 2017-04 removes the need to complete Step 2 of any goodwill impairment test that has failed Step 1. The goodwill impairment will now be calculated as the amount by which a reporting unit’s carrying value exceeds its fair value. The ASU is effective for interim and annual periods beginning on or after December 15, 2019 and early adoption is permitted. The Company early adopted this standard as of January 1, 2017. In August 2017, the FASB issued ASU 2017-12, “ Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities”. ASU 2017-12 amends and simplifies existing guidance for derivatives and hedges including aligning accounting with companies’ risk management strategies and increasing disclosure transparency regarding both the scope and results of hedging programs. The changes include designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. The ASU is effective for interim and annual periods beginning after December 15, 2018 and early adoption is permitted. The Company is currently assessing the impact on the consolidated statements and related disclosures. |
ACQUISITIONS AND DIVESTITURES (
ACQUISITIONS AND DIVESTITURES (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
ACQUISITIONS [ABSTRACT] | |
Schedule of Assets Acquired and Liabilities Assumed | The following summarizes the preliminary estimated fair values of the indentifiable assets acquired and liabilities assumed as of the acquitision date (in thoudands): Preliminary Estimate of Acquisition Date Fair Value Cash $ — Accounts receivable, net 15,959 Prepaid expenses 241 Other current assets 51 Property, plant and equipment 7,594 Customer relationships 35,000 Goodwill 35,272 $ 94,117 Accounts payable $ 1 Accrued employee compensation and benefits 346 Accrued expenses 386 Deferred tax liabilities 15,273 Deferred revenue 399 $ 16,405 Total purchase price $ 77,712 The following summarizes the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands): Acquisition Date Fair Value Cash $ 2,655 Accounts receivable, net 18,449 Prepaid expenses 615 Property, plant and equipment 3,161 Deferred tax assets, net 638 Customer relationships 10,500 Goodwill 20,275 $ 56,293 Accounts payable $ 1,199 Accrued employee compensation and benefits 2,418 Accrued expenses 2,597 Other 1,678 $ 7,892 Total purchase price $ 48,401 |
Assets and Liabilities Held for Sale | The following table presents information related to the major components of assets and liabilities that were classified as held for sale in the Consolidated Balance Sheet as of September 30, 2017. As of September 30, 2017 Cash $ — Accounts receivable, net 8,240 Allowance for doubtful accounts (51) Other assets 589 Property, plant and equipment 1,229 Customer relationships 3,946 Goodwill 3,033 Other intangible assets 771 Allowance for reduction of assets held for sale (8,478) Total assets $ 9,279 Accounts payable $ 1,046 Accrued employee compensation and benefits 817 Accrued expenses 316 Other 312 Total liabilities $ 2,491 |
SEGMENT INFORMATION (TABLES)
SEGMENT INFORMATION (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
SEGMENT INFORMATION [ABSTRACT] | |
Schedule of Segment Selected Financial Data | The following tables present certain financial data by segment (in thousands): Three Months Ended September 30, 2017 Depreciation Income Gross Intersegment Net & (Loss) from Revenue Sales Revenue Amortization Operations Customer Management Services $ 277,373 $ — $ 277,373 $ 13,455 $ 9,133 Customer Growth Services 30,829 — 30,829 717 1,564 Customer Technology Services 34,658 (95) 34,563 1,772 4,158 Customer Strategy Services 16,271 — 16,271 571 945 Total $ 359,131 $ (95) $ 359,036 $ 16,515 $ 15,800 Three Months Ended September 30, 2016 Depreciation Income Gross Intersegment Net & (Loss) from Revenue Sales Revenue Amortization Operations Customer Management Services $ 223,742 $ (78) $ 223,664 $ 11,891 $ 12,255 Customer Growth Services 35,301 — 35,301 1,561 161 Customer Technology Services 36,871 (291) 36,580 2,457 3,776 Customer Strategy Services 17,251 — 17,251 902 (3,666) Total $ 313,165 $ (369) $ 312,796 $ 16,811 $ 12,526 Nine Months Ended September 30, 2017 Depreciation Income Gross Intersegment Net & (Loss) from Revenue Sales Revenue Amortization Operations Customer Management Services $ 798,527 $ (19) $ 798,508 $ 37,843 $ 43,804 Customer Growth Services 96,890 — 96,890 2,249 6,295 Customer Technology Services 105,337 (283) 105,054 5,377 11,034 Customer Strategy Services 50,290 — 50,290 1,804 2,746 Total $ 1,051,044 $ (302) $ 1,050,742 $ 47,273 $ 63,879 Nine Months Ended September 30, 2016 Depreciation Income Gross Intersegment Net & (Loss) from Revenue Sales Revenue Amortization Operations Customer Management Services $ 664,647 $ (255) $ 664,392 $ 36,024 $ 36,189 Customer Growth Services 105,713 — 105,713 4,943 4,138 Customer Technology Services 109,720 (522) 109,198 8,187 9,932 Customer Strategy Services 51,008 — 51,008 2,607 (3,752) Total $ 931,088 $ (777) $ 930,311 $ 51,761 $ 46,507 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Capital Expenditures Customer Management Services $ 12,732 $ 8,515 $ 36,701 $ 29,751 Customer Growth Services 346 375 708 3,546 Customer Technology Services 1,180 1,864 6,025 4,877 Customer Strategy Services 85 366 498 689 Total $ 14,343 $ 11,120 $ 43,932 $ 38,863 September 30, 2017 December 31, 2016 Total Assets Customer Management Services $ 713,377 $ 585,679 Customer Growth Services 60,086 71,540 Customer Technology Services 106,372 115,537 Customer Strategy Services 69,683 73,548 Total $ 949,518 $ 846,304 September 30, 2017 December 31, 2016 Goodwill Customer Management Services $ 79,391 $ 42,589 Customer Growth Services 24,439 24,439 Customer Technology Services 40,839 41,500 Customer Strategy Services 21,915 21,120 Total $ 166,584 $ 129,648 |
Schedule of Revenue by Geographic Area | The following table presents revenue based upon the geographic location where the services are provided (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenue United States $ 197,664 $ 166,993 $ 570,305 $ 507,819 Philippines 86,938 90,692 258,360 259,898 Latin America 31,361 30,832 96,301 90,154 Canada 18,937 891 56,035 3,020 Europe / Middle East / Africa 14,892 15,604 45,555 49,100 Asia Pacific 9,244 7,784 24,186 20,320 Total $ 359,036 $ 312,796 $ 1,050,742 $ 930,311 |
GOODWILL (TABLES)
GOODWILL (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
GOODWILL [ABSTRACT] | |
Schedule of Goodwill Rollforward | Goodwill consisted of the following (in thousands): Effect of December 31, Acquisitions / Foreign September 30, 2016 Adjustments Impairments Currency 2017 Customer Management Services $ 42,589 $ 34,662 $ — $ 2,140 $ 79,391 Customer Growth Services 24,439 — — — 24,439 Customer Technology Services 41,500 (661) — — 40,839 Customer Strategy Services 21,120 — — 795 21,915 Total $ 129,648 $ 34,001 $ — $ 2,935 $ 166,584 |
DERIVATIVES (TABLES)
DERIVATIVES (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
DERIVATIVES [ABSTRACT] | |
Schedule of Cash Flow Hedges OCI Rollforward | The following table summarizes the aggregate unrealized net gain or loss in Accumulated other comprehensive income (loss) for the three and nine months ended September 30, 2017 and 2016 (in thousands and net of tax): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Aggregate unrealized net gain/(loss) at beginning of period $ (19,730) $ (25,007) $ (32,393) $ (26,885) Add: Net gain/(loss) from change in fair value of cash flow hedges 5,420 631 25,290 9,519 Less: Net (gain)/loss reclassified to earnings from effective hedges (3,487) (4,179) (10,694) (11,189) Aggregate unrealized net gain/(loss) at end of period $ (17,797) $ (28,555) $ (17,797) $ (28,555) |
Schedule of Notional Amounts of Outstanding Cash Flow Hedges | The Company’s foreign exchange cash flow hedging instruments as of September 30, 2017 and December 31, 2016 are summarized as follows (amounts in thousands). All hedging instruments are forward contracts. Local Currency U.S. Dollar % Maturing Contracts Notional Notional in the next Maturing As of September 30, 2017 Amount Amount 12 months Through Philippine Peso 10,490,000 218,413 (1) 53.2 % August 2021 Mexican Peso 1,774,000 104,652 37.2 % May 2021 $ 323,065 Local Currency U.S. Dollar Notional Notional As of December 31, 2016 Amount Amount Philippine Peso 14,315,000 301,134 (1) Mexican Peso 2,089,000 129,375 $ 430,509 (1) Includes contracts to purchase Philippine pesos in exchange for New Zealand dollars and Australian dollars, which are translated into equivalent U.S. dollars on September 30, 2017 and December 31, 2016. |
Schedule of Interest Rate Swaps | Contract Contract Notional Variable Rate Fixed Rate Commencement Maturity December 31, 2016 Amount Received Paid Date Date Swap $ 15 million 1 - month LIBOR 3.14 % May 2012 May 2017 |
Schedule of Derivatives Instruments on Balance Sheet | The Company’s derivatives as of September 30, 2017 and December 31, 2016 were as follows (in thousands): September 30, 2017 Designated Not Designated as Hedging as Hedging Designation: Instruments Instruments Foreign Interest Foreign Derivative contract type: Exchange Rate Exchange Derivative classification: Cash Flow Cash Flow Fair Value Fair value and location of derivative in the Consolidated Balance Sheet: Prepaids and other current assets $ 55 $ — $ 355 Other long-term assets 594 — — Other current liabilities (17,071) — (447) Other long-term liabilities (13,051) — — Total fair value of derivatives, net $ (29,473) $ — $ (92) December 31, 2016 Designated Not Designated as Hedging as Hedging Designation: Instruments Instruments Foreign Interest Foreign Derivative contract type: Exchange Rate Exchange Derivative classification: Cash Flow Cash Flow Fair Value Fair value and location of derivative in the Consolidated Balance Sheet: Prepaids and other current assets $ 1,178 $ — $ 1,606 Other long-term assets — — — Other current liabilities (23,503) (147) (866) Other long-term liabilities (31,714) — — Total fair value of derivatives, net $ (54,039) $ (147) $ 740 |
Schedule of Derivative Impact on Statement of Comprehensive Income | The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2017 and 2016 were as follows (in thousands): Three Months Ended September 30, 2017 2016 Designated as Hedging Designated as Hedging Designation: Instruments Instruments Foreign Interest Foreign Interest Derivative contract type: Exchange Rate Exchange Rate Derivative classification: Cash Flow Cash Flow Cash Flow Cash Flow Amount of gain or (loss) recognized in Other comprehensive income (loss) - effective portion, net of tax $ (3,487) $ — $ (4,119) $ (60) Amount and location of net gain or (loss) reclassified from Accumulated OCI to income - effective portion: Revenue $ (5,812) $ — $ (7,103) $ — Interest expense — — — (104) Three Months Ended September 30, 2017 2016 Designation: Not Designated as Not Designated as Derivative contract type: Foreign Exchange Foreign Exchange Derivative classification: Forward Contracts Fair Value Forward Contracts Fair Value Amount and location of net gain or (loss) recognized in the Consolidated Statement of Comprehensive Income (Loss): Costs of services $ — $ — $ — $ — Other income (expense), net $ — $ (1,186) $ — $ (3,674) The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the nine months ended September 30, 2017 and 2016 were as follows (in thousands): Nine Months Ended September 30, 2017 2016 Designated as Hedging Designated as Hedging Designation: Instruments Instruments Foreign Interest Foreign Interest Derivative contract type: Exchange Rate Exchange Rate Derivative classification: Cash Flow Cash Flow Cash Flow Cash Flow Amount of gain or (loss) recognized in Other comprehensive income (loss) - effective portion, net of tax $ (10,625) $ (69) $ (10,939) $ (252) Amount and location of net gain or (loss) reclassified from Accumulated OCI to income - effective portion: Revenue $ (17,709) $ — $ (18,860) $ — Interest expense — (115) — (435) Nine Months Ended September 30, 2017 2016 Designation: Not Designated as Not Designated as Derivative contract type: Foreign Exchange Foreign Exchange Derivative classification: Forward Contracts Fair Value Forward Contracts Fair Value Amount and location of net gain or (loss) recognized in the Consolidated Statement of Comprehensive Income (Loss): Costs of services $ — $ — $ — $ — Other income (expense), net $ — $ (1,545) $ — $ (3,616) |
FAIR VALUE (TABLES)
FAIR VALUE (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
FAIR VALUE [Abstract] | |
Schedule of Fair Value Derivative Assets and Liabilities | The following is a summary of the Company’s fair value measurements for its net derivative assets (liabilities) as of September 30, 2017 and December 31, 2016 (in thousands): As of September 30, 2017 Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) At Fair Value Cash flow hedges $ — $ (29,473) $ — $ (29,473) Interest rate swaps — — — — Fair value hedges — (92) — (92) Total net derivative asset (liability) $ — $ (29,565) $ — $ (29,565) As of December 31, 2016 Fair Value Measurements Using Quoted Prices in Significant Active Markets Other Significant for Identical Observable Unobservable Assets Inputs Inputs (Level 1) (Level 2) (Level 3) At Fair Value Cash flow hedges $ — $ (54,039) $ — $ (54,039) Interest rate swaps — (147) — (147) Fair value hedges — 740 — 740 Total net derivative asset (liability) $ — $ (53,446) $ — $ (53,446) |
Schedule of Fair Value Assets and Liabilities | The following is a summary of the Company’s fair value measurements as of September 30, 2017 and December 31, 2016 (in thousands): As of September 30, 2017 Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Derivative instruments, net $ — $ — $ — Total assets $ — $ — $ — Liabilities Deferred compensation plan liability $ — $ (12,624) $ — Derivative instruments, net — (29,565) — Contingent consideration — — (1,178) Total liabilities $ — $ (42,189) $ (1,178) As of December 31, 2016 Fair Value Measurements Using Quoted Prices in Significant Active Markets for Significant Other Unobservable Identical Assets Observable Inputs Inputs (Level 1) (Level 2) (Level 3) Assets Derivative instruments, net $ — $ — $ — Total assets $ — $ — $ — Liabilities Deferred compensation plan liability $ — $ (10,841) $ — Derivative instruments, net — (53,446) — Contingent consideration — — (1,808) Total liabilities $ — $ (64,287) $ (1,808) |
Schedule of Business Acquisitions by Acquisition Contingent Consideration | A rollforward of the activity in the Company’s fair value of the contingent consideration payable is as follows (in thousands): Imputed December 31, Interest / September 30, 2016 Acquisitions Payments Adjustments 2017 Welltok $ 1,250 $ — $ (674) $ — $ 576 Atelka 558 — — 44 602 Total $ 1,808 $ — $ (674) $ 44 $ 1,178 |
RESTRUCTURING CHARGES, INTEGR31
RESTRUCTURING CHARGES, INTEGRATION CHARGES AND IMPAIRMENT (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES [Abstract] | |
Schedule of Restructuring Liabilities | A summary of the expenses recorded in Restructuring and integration charges, net in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2017 and 2016, respectively, is as follows (in thousands): Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Reduction in force Customer Management Services $ (213) $ 2,485 $ 1,548 $ 2,482 Customer Growth Services — 108 — 108 Customer Technology Services — 314 93 324 Customer Strategy Services 13 82 13 92 Total $ (200) $ 2,989 $ 1,654 $ 3,006 Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Facility exit and other charges Customer Management Services $ 600 $ 699 $ 642 $ 852 Customer Growth Services — — — — Customer Technology Services — — 84 33 Customer Strategy Services 21 — 21 — Total $ 621 $ 699 $ 747 $ 885 |
Schedule of Restructuring Liability Rollforward | A rollforward of the activity in the Company’s restructuring accruals is as follows (in thousands): Reduction Facility Exit and in Force Other Charges Total Balance as of December 31, 2016 $ 1,468 $ 98 $ 1,566 Expense 2,384 747 3,131 Payments (987) (841) (1,828) Change due to foreign currency (23) — (23) Change in estimates (730) — (730) Balance as of September 30, 2017 $ 2,112 $ 4 $ 2,116 |
NONCONTROLLING INTEREST (TABLES
NONCONTROLLING INTEREST (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
NONCONTROLLING INTEREST [Abstract] | |
Noncontrolling Interest Rollforward | The following table reconciles equity attributable to noncontrolling interest (in thousands): Nine Months Ended September 30, 2017 2016 Noncontrolling interest, January 1 $ 6,981 $ 7,201 Net income attributable to noncontrolling interest 2,828 2,804 Dividends distributed to noncontrolling interest (2,745) (2,745) Foreign currency translation adjustments 325 (70) Equity-based compensation expense (291) 96 Other — 10 Noncontrolling interest, September 30 $ 7,098 $ 7,296 |
MANDATORILY REDEEMABLE NONCON33
MANDATORILY REDEEMABLE NONCONTROLLING INTEREST (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
Mandatorily Redeemable Noncontrolling Interest [Abstract] | |
Mandatorily Redeemable Noncontrolling Interest Rollforward | A rollforward of the mandatorily redeemable noncontrolling interest is included in the table below (in thousands). Nine Months Ended September 30, 2017 2016 Mandatorily redeemable noncontrolling interest, January 1 $ — $ 4,131 Net income attributable to mandatorily redeemable noncontrolling interest — — Working capital distributed to mandatorily redeemable noncontrolling interest — (492) Change in redemption value — 466 Purchase of mandatorily redeemable noncontrolling interest — (4,105) Mandatorily redeemable noncontrolling interest, September 30 $ — $ — |
ACCUMULATED OTHER COMPREHENSI34
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) [ABSTRACT] | |
Schedule of accumulated other comprehensive income (loss) | The following table presents changes in the accumulated balance for each component of other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive income (loss) (in thousands): Foreign Currency Derivative Translation Valuation, Net Other, Net Adjustment of Tax of Tax Totals Accumulated other comprehensive income (loss) at December 31, 2015 $ (71,196) $ (26,885) $ (3,284) $ (101,365) Other comprehensive income (loss) before reclassifications (7,999) 9,519 2,330 3,850 Amounts reclassified from accumulated other comprehensive income (loss) — (11,189) (1,128) (12,317) Net current period other comprehensive income (loss) (7,999) (1,670) 1,202 (8,467) Accumulated other comprehensive income (loss) at September 30, 2016 $ (79,195) $ (28,555) $ (2,082) $ (109,832) Accumulated other comprehensive income (loss) at December 31, 2016 $ (92,008) $ (32,393) $ (2,563) $ (126,964) Other comprehensive income (loss) before reclassifications 8,089 25,290 738 34,117 Amounts reclassified from accumulated other comprehensive income (loss) — (10,694) (352) (11,046) Net current period other comprehensive income (loss) 8,089 14,596 386 23,071 Accumulated other comprehensive income (loss) at September 30, 2017 $ (83,919) $ (17,797) $ (2,177) $ (103,893) |
Income Statement Location of Adjustments Reclassified from Accumulated Other Comprehensive Income to Income | The following table presents the classification and amount of the reclassifications from Accumulated other comprehensive income (loss) to the statement of comprehensive income (loss) (in thousands): Statement of For the Three Months Ended September 30, Comprehensive Income 2017 2016 (Loss) Classification Derivative valuation Loss on foreign currency forwards $ (5,812) $ (7,103) Revenue Loss on interest rate swaps — (104) Interest expense Tax effect 2,325 3,028 Provision for income taxes $ (3,487) $ (4,179) Net income (loss) Other Actuarial loss on defined benefit plan $ (130) $ (804) Cost of services Tax effect 13 80 Provision for income taxes $ (117) $ (724) Net income (loss) Statement of For the Nine Months Ended September 30, Comprehensive Income 2017 2016 (Loss) Classification Derivative valuation Loss on foreign currency forwards $ (17,709) $ (18,860) Revenue Loss on interest rate swaps (115) (435) Interest expense Tax effect 7,130 8,106 Provision for income taxes $ (10,694) $ (11,189) Net income (loss) Other Actuarial loss on defined benefit plan $ (391) $ (1,252) Cost of services Tax effect 39 124 Provision for income taxes $ (352) $ (1,128) Net income (loss) |
NET INCOME PER SHARE (TABLES)
NET INCOME PER SHARE (TABLES) | 9 Months Ended |
Sep. 30, 2017 | |
Net income per share attributable to TeleTech stockholders | |
Schedule of Diluted Shares Calculation | The following table sets forth the computation of basic and diluted shares for the periods indicated (in thousands): Three Months Ended Nine Months Ended 2017 2016 2017 2016 Shares used in basic earnings per share calculation 45,838 47,081 45,816 47,771 Effect of dilutive securities: Stock options 10 6 9 11 Restricted stock units 517 214 513 292 Performance-based restricted stock units 2 14 10 15 Total effects of dilutive securities 529 234 532 318 Shares used in dilutive earnings per share calculation 46,367 47,315 46,348 48,089 |
OVERVIEW AND BASIS OF PRESENT36
OVERVIEW AND BASIS OF PRESENTATION (OVERVIEW) (DETAILS) - employee | Sep. 30, 2017 | Dec. 31, 2015 |
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
Number of employees | 49,500 | |
Percepta LLC | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
ownership percentage | 55.00% | |
Iknowtion | ||
Consolidation, Less than Wholly Owned Subsidiary, Parent Ownership Interest, Effects of Changes, Net [Line Items] | ||
ownership percentage | 80.00% |
OVERVIEW AND BASIS OF PRESENT37
OVERVIEW AND BASIS OF PRESENTATION (NARRATIVE) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Mar. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Dec. 31, 2013 | Dec. 31, 2012 | Dec. 31, 2011 | |
Tax Authorities Member | ||||||
Error Corrections and Prior Period Adjustments Restatement [Line Items] | ||||||
Tax Adjustments, Settlements, and Unusual Provisions | $ 1,100 | $ 301 | $ 358 | $ 137 | $ 123 | $ 180 |
ACQUISITIONS (ASSETS ACQUIRED T
ACQUISITIONS (ASSETS ACQUIRED TABLE) (DETAILS) - USD ($) $ in Thousands | Sep. 30, 2017 | Apr. 03, 2017 | Dec. 31, 2016 | Nov. 09, 2016 | Aug. 08, 2014 |
Business Acquisition [Line Items] | |||||
Total deferred tax assets, net | $ 31,000 | ||||
Goodwill | 166,584 | $ 129,648 | |||
Accrued employee compensation and benefits | $ 85,820 | $ 66,133 | |||
Connextions [Member] | |||||
Business Acquisition [Line Items] | |||||
Accounts receivable. | $ 15,959 | ||||
Prepaid Expenses | 241 | ||||
Other assets | 51 | ||||
Property, plant and equipment. | 7,594 | ||||
Goodwill | 35,272 | ||||
Total assets acquired | 94,117 | ||||
Accounts payable | 1 | ||||
Accrued employee compensation and benefits | 346 | ||||
Accrued expenses | 386 | ||||
Deferred revenue. | 399 | ||||
Deferred tax liabilities | 15,273 | ||||
Total liabilities assumed | 16,405 | ||||
Total purchase price | 77,712 | ||||
Connextions [Member] | Customer Relationships | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 35,000 | ||||
Atelka [Member] | |||||
Business Acquisition [Line Items] | |||||
Cash | $ 2,655 | ||||
Accounts receivable. | 18,449 | ||||
Prepaid Expenses | 615 | ||||
Property, plant and equipment. | 3,161 | ||||
Total deferred tax assets, net | 638 | ||||
Goodwill | 20,275 | ||||
Total assets acquired | 56,293 | ||||
Accounts payable | 1,199 | ||||
Accrued employee compensation and benefits | 2,418 | ||||
Accrued expenses | 2,597 | ||||
Other | 1,678 | ||||
Total liabilities assumed | 7,892 | ||||
Total purchase price | 48,401 | ||||
Atelka [Member] | Customer Relationships | |||||
Business Acquisition [Line Items] | |||||
Intangible assets | $ 10,500 | ||||
rogenSi [Member] | |||||
Business Acquisition [Line Items] | |||||
Total purchase price | $ 34,400 |
ACQUISITIONS AND DIVESTITURES39
ACQUISITIONS AND DIVESTITURES (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Assets and Liabilities Held for Sale [Line Items] | ||||
Loss on assets held-for-sale | $ 5,300 | $ 3,178 | $ 5,300 | |
Total assets held for sale | 9,279 | $ 10,715 | ||
Total liabilities held for sale | 2,491 | $ 1,357 | ||
Disposal Group, Held-for-sale, Not Discontinued Operations | Customer Growth Services | ||||
Assets and Liabilities Held for Sale [Line Items] | ||||
Loss on assets held-for-sale | 2,600 | |||
Disposal Group, Held-for-sale, Not Discontinued Operations | Customer Strategy Services | ||||
Assets and Liabilities Held for Sale [Line Items] | ||||
Loss on assets held-for-sale | $ 2,700 | |||
Disposal Group, Held-for-sale, Not Discontinued Operations | Business Unit From Customer Growth Services And Customer Strategy Services Segments | ||||
Assets and Liabilities Held for Sale [Line Items] | ||||
Accounts receivable, net - assets held for sale | 8,240 | |||
Allowance for doubtful accounts of assets held for sale | (51) | |||
Other assets held for sale | 589 | |||
Property, Plant and Equipment - assets held for sale | 1,229 | |||
Goodwill - assets held for sale | 3,033 | |||
Allowance for reduction of assets held for sale | (8,478) | |||
Total assets held for sale | 9,279 | |||
Accounts payable held for sale | 1,046 | |||
Accrued employee compensation and benefits | 817 | |||
Accrued expenses. | 316 | |||
Other liabilities held for sale | 312 | |||
Total liabilities held for sale | 2,491 | |||
Customer Relationships | Disposal Group, Held-for-sale, Not Discontinued Operations | Business Unit From Customer Growth Services And Customer Strategy Services Segments | ||||
Assets and Liabilities Held for Sale [Line Items] | ||||
Intangible assets held for sale | 3,946 | |||
Other Intangible Assets | Disposal Group, Held-for-sale, Not Discontinued Operations | Business Unit From Customer Growth Services And Customer Strategy Services Segments | ||||
Assets and Liabilities Held for Sale [Line Items] | ||||
Intangible assets held for sale | $ 771 |
ACQUISITIONS AND DIVESTITURES40
ACQUISITIONS AND DIVESTITURES (NARRATIVE) (DETAILS) CAD in Millions | Nov. 08, 2017USD ($) | Sep. 30, 2017USD ($) | Apr. 03, 2017USD ($) | Nov. 09, 2016CAD | Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2016USD ($) | Sep. 30, 2016USD ($) | Dec. 31, 2015USD ($) | Mar. 31, 2015USD ($) | Dec. 31, 2014USD ($) | Aug. 08, 2014USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Nov. 09, 2016USD ($) |
Business Acquisition [Line Items] | ||||||||||||||||
Cost of Acquired Entity, Up Front Cash Consideration | $ 80,000,000 | |||||||||||||||
Contingent Consideration, at fair value | $ 1,178,000 | $ 1,178,000 | $ 1,808,000 | $ 1,178,000 | ||||||||||||
Revenue of Acquirees since Acquisition Date, Actual | 43,600,000 | 101,900,000 | ||||||||||||||
Income (loss) from operations of Acquirees since Acquisition Date, Actual | (4,100,000) | (6,300,000) | ||||||||||||||
Proceeds from sale of business | 391,000 | |||||||||||||||
Gain on sale of business | 3,323,000 | |||||||||||||||
Other nonoperating income expense | (4,416,000) | $ (6,254,000) | (6,573,000) | $ (7,488,000) | ||||||||||||
Business Combination Pro Forma Information Amortization Expense of Acquirees Since Acquisition | 900,000 | 2,100,000 | ||||||||||||||
Business Acquisition, Pro Forma Revenue | 359,000,000 | 362,300,000 | 1,090,000,000 | 1,071,700,000 | ||||||||||||
Business Acquisition, Pro Forma Income (Loss) from Continuing Operations, Net of Tax | 14,800,000 | 9,400,000 | 46,900,000 | 27,800,000 | ||||||||||||
Investments in non-marketable equity investments | 1,384,000 | |||||||||||||||
Technology Solutions Group | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Proceeds from sale of business | 141,000 | $ 250,000 | ||||||||||||||
Gain on sale of business | $ 30,000 | |||||||||||||||
TeleTech Spain Holdings SL [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Other nonoperating income expense | 3,200,000 | |||||||||||||||
Connextions [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Total purchase price | $ 77,712,000 | |||||||||||||||
Payments for Previous Acquisition | 1,800,000 | |||||||||||||||
Proceeds from Previous Acquisition | 4,100,000 | |||||||||||||||
Connextions [Member] | Customer Management Services | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Description of Acquired Entity | Connextions, Inc., a health care customer service provider company, from OptumHealth Holdings, LLC. Connextions is being integrated into the health care vertical of the Customer Management Services ("CMS") segment of the Company. Connextions employed approximately 2,000 at several centers in the U.S. | |||||||||||||||
Connextions [Member] | Customer Relationships | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 12 years | |||||||||||||||
Atelka [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Description of Acquired Entity | On November 9, 2016, the Company acquired all of the outstanding shares of Atelka Enterprise Inc. ("Atelka"), a Canadian customer contact center management and business process outsourcing services company that serves Canadian telecommunications, logistics, and entertainment clients. This acquisition was an addition to the CMS segment. Atelka employed approximately 2,800 in Quebec, Ontario, New Brunswick and Prince Edward Island. | |||||||||||||||
Total purchase price | $ 48,401,000 | |||||||||||||||
Cost of Acquired Entity, Up Front Cash Consideration | 47,500,000 | |||||||||||||||
Acquisition hold-back payment | $ 1,400,000 | |||||||||||||||
Discount rate | 0.00% | |||||||||||||||
Contingent Consideration, at fair value | $ 602,000 | 602,000 | 558,000 | $ 602,000 | ||||||||||||
Atelka [Member] | CAD | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Total purchase price | CAD | CAD 65 | |||||||||||||||
Atelka [Member] | Customer Relationships | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 12 years | |||||||||||||||
rogenSi [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Description of Acquired Entity | rogenSi Worldwide PTY, Ltd., a global leadership, change management, sales, performance training and consulting company. | |||||||||||||||
Total purchase price | $ 34,400,000 | |||||||||||||||
Cost of Acquired Entity, Up Front Cash Consideration | 18,100,000 | |||||||||||||||
Future Value of Liabilities Incurred From Business Acquisitions | $ 15,300,000 | |||||||||||||||
Valuation Technique on Contingent Consideration | The fair value of the contingent consideration was measured by applying a probability weighted discounted cash flow model based on significant inputs not observable in the market (Level 3 inputs). Key assumptions include a discount rate of 4.6% and expected future value of payments of $15.3 million. The $15.3 million of expected future payments was calculated using a probability weighted EBITDA assessment with the highest probability associated with rogenSi achieving the targeted EBITDA for each earn-out year | |||||||||||||||
Acquisition hold-back payment | $ 1,800,000 | |||||||||||||||
Discount rate | 4.60% | |||||||||||||||
Contingent Consideration Arrangements, Basis for Amount | The total contingent consideration possible per the sale and purchase agreement ranged from zero to $17.6 million and the earn-out payments were payable in early 2015, 2016 and 2017, based on July 1, 2014 through December 31, 2014, and full year 2015 and 2016 performance, respectively. As of December 31, 2016, the contingent consideration has been finalized and a total of $12.0 million was earned and paid | |||||||||||||||
Contingent Consideration, at fair value | 4,300,000 | $ 14,500,000 | $ 4,300,000 | |||||||||||||
Contingent Consideration, at Fair Value, Current Portion | 0 | |||||||||||||||
Increase (decrease) in contingent consideration payable | $ (4,300,000) | $ 800,000 | $ (300,000) | $ 500,000 | ||||||||||||
CafeX [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Equity Method Investment, Ownership Percentage | 17.20% | 17.20% | 17.20% | 17.20% | ||||||||||||
Investments in non-marketable equity investments | $ 1,100,000 | $ 3,200,000 | $ 9,000,000 | |||||||||||||
Motif [Member] | ||||||||||||||||
Business Acquisition [Line Items] | ||||||||||||||||
Percentage of Voting Interests Acquired | 70.00% | |||||||||||||||
Description of Acquired Entity | Motif, Inc., a California corporation ("Motif"). Motif is a digital trust and safety services company serving eCommerce marketplaces, online retailers, travel agencies and financial services companies. Motif provides omni-channel community moderation services via voice, email and chat from delivery centers in India and the Philippines via approximately 2,800 employees | |||||||||||||||
Total purchase price | $ 46,900,000 | |||||||||||||||
Contingent Consideration Arrangements, Basis for Amount | The Company also agreed to purchase the remaining 30% interest in Motif from Motif's founders ("founders' shares") by no later than May 2020 ("30% buyout period"). The Company agreed to pay for the founders' shares at a purchase price contingent on Motif's fiscal year 2020's adjusted normalized EBITDA, and 30% of the excess cash present in the business at the time of the buyout; or if the buyout occurs prior to May 2020, the trailing twelve months EBITDA, calculated from the most recently completed full monthly period ending prior to the date of the buyout triggering event and 30% of the excess cash in the business at that point. |
SEGMENT INFORMATION (SEGMENT FI
SEGMENT INFORMATION (SEGMENT FINANCIALS) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Segment Reporting Information [Line Items] | |||||
Net Revenue | $ 359,036 | $ 312,796 | $ 1,050,742 | $ 930,311 | |
Depreciation and amortization | 16,515 | 16,811 | 47,273 | 51,761 | |
Income (Loss) from Operations | 15,800 | 12,526 | 63,879 | 46,507 | |
Capital Expenditures | 14,343 | 11,120 | 43,932 | 38,863 | |
Total Assets | 949,518 | 949,518 | $ 846,304 | ||
Goodwill | 166,584 | 166,584 | 129,648 | ||
Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 359,131 | 313,165 | 1,051,044 | 931,088 | |
Intersegment Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | (95) | (369) | (302) | (777) | |
Customer Management Services | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 277,373 | 223,664 | 798,508 | 664,392 | |
Depreciation and amortization | 13,455 | 11,891 | 37,843 | 36,024 | |
Income (Loss) from Operations | 9,133 | 12,255 | 43,804 | 36,189 | |
Capital Expenditures | 12,732 | 8,515 | 36,701 | 29,751 | |
Total Assets | 713,377 | 713,377 | 585,679 | ||
Goodwill | 79,391 | 79,391 | 42,589 | ||
Customer Management Services | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 277,373 | 223,742 | 798,527 | 664,647 | |
Customer Management Services | Intersegment Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 0 | (78) | (19) | (255) | |
Customer Growth Services | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 30,829 | 35,301 | 96,890 | 105,713 | |
Depreciation and amortization | 717 | 1,561 | 2,249 | 4,943 | |
Income (Loss) from Operations | 1,564 | 161 | 6,295 | 4,138 | |
Capital Expenditures | 346 | 375 | 708 | 3,546 | |
Total Assets | 60,086 | 60,086 | 71,540 | ||
Goodwill | 24,439 | 24,439 | 24,439 | ||
Customer Growth Services | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 30,829 | 35,301 | 96,890 | 105,713 | |
Customer Growth Services | Intersegment Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 0 | 0 | |||
Customer Technology Services | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 34,563 | 36,580 | 105,054 | 109,198 | |
Depreciation and amortization | 1,772 | 2,457 | 5,377 | 8,187 | |
Income (Loss) from Operations | 4,158 | 3,776 | 11,034 | 9,932 | |
Capital Expenditures | 1,180 | 1,864 | 6,025 | 4,877 | |
Total Assets | 106,372 | 106,372 | 115,537 | ||
Goodwill | 40,839 | 40,839 | 41,500 | ||
Customer Technology Services | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 34,658 | 36,871 | 105,337 | 109,720 | |
Customer Technology Services | Intersegment Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | (95) | (291) | (283) | (522) | |
Customer Strategy Services | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 16,271 | 17,251 | 50,290 | 51,008 | |
Depreciation and amortization | 571 | 902 | 1,804 | 2,607 | |
Income (Loss) from Operations | 945 | (3,666) | 2,746 | (3,752) | |
Capital Expenditures | 85 | 366 | 498 | 689 | |
Total Assets | 69,683 | 69,683 | 73,548 | ||
Goodwill | 21,915 | 21,915 | $ 21,120 | ||
Customer Strategy Services | Operating Segments | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | 16,271 | $ 17,251 | $ 50,290 | 51,008 | |
Customer Strategy Services | Intersegment Eliminations | |||||
Segment Reporting Information [Line Items] | |||||
Net Revenue | $ 0 | $ 0 |
SEGMENT INFORMATION (REVENUE GE
SEGMENT INFORMATION (REVENUE GEOGRAPHY) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Sales Revenue Services Net | $ 359,036 | $ 312,796 | $ 1,050,742 | $ 930,311 | |
Other long-term assets | 59,628 | 59,628 | $ 47,520 | ||
United States | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Sales Revenue Services Net | 197,664 | 166,993 | 570,305 | 507,819 | |
Philippines [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Sales Revenue Services Net | 86,938 | 90,692 | 258,360 | 259,898 | |
Latin America | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Sales Revenue Services Net | 31,361 | 30,832 | 96,301 | 90,154 | |
Canada | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Sales Revenue Services Net | 18,937 | 891 | 56,035 | 3,020 | |
Europe Middle East Africa [Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Sales Revenue Services Net | 14,892 | 15,604 | 45,555 | 49,100 | |
Asia Pacific[ Member] | |||||
Revenues from External Customers and Long-Lived Assets [Line Items] | |||||
Sales Revenue Services Net | $ 9,244 | $ 7,784 | $ 24,186 | $ 20,320 |
SIGNIFICANT CLIENTS(NARRATIVE)
SIGNIFICANT CLIENTS(NARRATIVE) (DETAILS) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($)customer | Sep. 30, 2016USD ($)customer | |
Entity Wide Revenue Major Customer Line Items | ||||
Revenue | $ 359,036 | $ 312,796 | $ 1,050,742 | $ 930,311 |
Customer Management Services | ||||
Entity Wide Revenue Major Customer Line Items | ||||
Revenue | $ 277,373 | $ 223,664 | $ 798,508 | $ 664,392 |
Customer Concentration Risk | Revenue | ||||
Entity Wide Revenue Major Customer Line Items | ||||
Number of customers | customer | 0 | 1 | ||
Customer Concentration Risk | Revenue | Client A [Member] | Customer Management Services | ||||
Entity Wide Revenue Major Customer Line Items | ||||
Concentration risk percentage | 9.50% | 10.40% | ||
Minimum | Customer Concentration Risk | Revenue | ||||
Entity Wide Revenue Major Customer Line Items | ||||
Revenue | $ 100,000 |
GOODWILL (GOODWILL ROLLFORWARD)
GOODWILL (GOODWILL ROLLFORWARD) (DETAILS) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Goodwill [Line Items] | |
Beginning balance, goodwill | $ 129,648 |
Acquisitions / Adjustments | 34,001 |
Effect of Foreign Currency | 2,935 |
Ending balance, goodwill | 166,584 |
Customer Management Services | |
Goodwill [Line Items] | |
Beginning balance, goodwill | 42,589 |
Acquisitions / Adjustments | 34,662 |
Effect of Foreign Currency | 2,140 |
Ending balance, goodwill | 79,391 |
Customer Growth Services | |
Goodwill [Line Items] | |
Beginning balance, goodwill | 24,439 |
Ending balance, goodwill | 24,439 |
Customer Technology Services | |
Goodwill [Line Items] | |
Beginning balance, goodwill | 41,500 |
Acquisitions / Adjustments | (661) |
Ending balance, goodwill | 40,839 |
Customer Strategy Services | |
Goodwill [Line Items] | |
Beginning balance, goodwill | 21,120 |
Effect of Foreign Currency | 795 |
Ending balance, goodwill | $ 21,915 |
GOODWILL (NARRATIVE) (DETAILS)
GOODWILL (NARRATIVE) (DETAILS) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($) | |
ValuationAllowanceForImpairmentOfRecognizedServicingAssetsLineItems | ||
Impairment losses | $ 5,602 | $ 5,602 |
Customer Strategy Services | Held-for-sale | ||
ValuationAllowanceForImpairmentOfRecognizedServicingAssetsLineItems | ||
Growth rate | 3.00% | |
Estimated royalty rate | 3.75 | |
Impairment losses | $ 3,300 | |
Impairment of Intangible Assets, Finite-lived | $ 2,000 | |
Customer Strategy Services | Trade Names [Member] | Held-for-sale | ||
ValuationAllowanceForImpairmentOfRecognizedServicingAssetsLineItems | ||
Discount rate | 19.20% | |
Customer Technology Services | Other Intangible Assets | ||
ValuationAllowanceForImpairmentOfRecognizedServicingAssetsLineItems | ||
Growth rate | 3.00% | |
Estimated royalty rate | 0.5 | |
Impairment losses | $ 700 | |
Impairment of Intangible Assets, Finite-lived | $ 400 | |
Customer Technology Services | Trade Names [Member] | ||
ValuationAllowanceForImpairmentOfRecognizedServicingAssetsLineItems | ||
Discount rate | 19.00% | |
CSS - rogenSi | ||
ValuationAllowanceForImpairmentOfRecognizedServicingAssetsLineItems | ||
Growth rate | 3.00% | |
Estimated royalty rate | 2 | |
Impairment losses | $ 1,200 | |
Impairment of Intangible Assets, Finite-lived | $ 3,100 | |
CSS - rogenSi | Trade Names [Member] | ||
ValuationAllowanceForImpairmentOfRecognizedServicingAssetsLineItems | ||
Discount rate | 18.20% |
DERIVATIVES (OCI ROLLFORWARD) (
DERIVATIVES (OCI ROLLFORWARD) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
DERIVATIVES [ABSTRACT] | ||||
Aggregate unrealized net gain/(loss) at beginning of year | $ (19,730) | $ (25,007) | $ (32,393) | $ (26,885) |
Add: Net gain/(loss) from change in fair value of cash flow hedges | 5,420 | 631 | 25,290 | 9,519 |
Less: Net (gain)/loss reclassified to earnings from effective hedges | (3,487) | (4,179) | (10,694) | (11,189) |
Aggregate unrealized net gain/(loss) at end of period | $ (17,797) | $ (28,555) | $ (17,797) | $ (28,555) |
DERIVATIVES (NOTIONAL TABLE) (D
DERIVATIVES (NOTIONAL TABLE) (DETAILS) PHP in Thousands, MXN in Thousands, $ in Thousands | Sep. 30, 2017PHP | Sep. 30, 2017MXN | Sep. 30, 2017USD ($) | Dec. 31, 2016PHP | Dec. 31, 2016MXN | Dec. 31, 2016USD ($) |
Derivative [Line Items] | ||||||
Notional Amount | $ 167,100 | $ 227,800 | ||||
Foreign Exchange Forward | ||||||
Derivative [Line Items] | ||||||
Notional Amount | 323,065 | 430,509 | ||||
Foreign Exchange Forward | PHP | ||||||
Derivative [Line Items] | ||||||
Notional Amount | PHP 10,490,000 | $ 218,413 | PHP 14,315,000 | 301,134 | ||
% Maturing in the Next 12 Months | 53.20% | 53.20% | 53.20% | |||
Foreign Exchange Forward | MXN | ||||||
Derivative [Line Items] | ||||||
Notional Amount | MXN 1,774,000 | $ 104,652 | MXN 2,089,000 | $ 129,375 | ||
% Maturing in the Next 12 Months | 37.20% | 37.20% | 37.20% |
DERIVATIVES (INTEREST RATE SWAP
DERIVATIVES (INTEREST RATE SWAPS) (DETAILS) - USD ($) $ in Millions | Dec. 31, 2016 | Sep. 30, 2017 |
Derivative [Line Items] | ||
Notional Amount | $ 227.8 | $ 167.1 |
Interest Rate Swap Two [Member] | ||
Derivative [Line Items] | ||
Notional Amount | $ 15 | |
Variable Rate Received | 1 - month LIBOR | |
Fixed Rate Paid | 3.14% | |
Contract Commencement Date | May 1, 2012 | |
Contract Maturity Date | May 1, 2017 |
DERIVATIVES (BALANCE SHEET CLAS
DERIVATIVES (BALANCE SHEET CLASSIFICATION) (DETAILS) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Derivatives, Fair Value [Line Items] | ||
Notional Amount | $ 167,100 | $ 227,800 |
Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Cash Flow [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | (29,473) | (54,039) |
Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Cash Flow [Member] | Prepaids And Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | 55 | 1,178 |
Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Cash Flow [Member] | Other assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | 594 | |
Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Cash Flow [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | (17,071) | (23,503) |
Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Cash Flow [Member] | Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | (13,051) | (31,714) |
Designated as Hedging Instruments [Member] | Interest Rate | Cash Flow [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | 0 | (147) |
Designated as Hedging Instruments [Member] | Interest Rate | Cash Flow [Member] | Prepaids And Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | 0 | |
Designated as Hedging Instruments [Member] | Interest Rate | Cash Flow [Member] | Other assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | 0 | |
Designated as Hedging Instruments [Member] | Interest Rate | Cash Flow [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | 0 | (147) |
Designated as Hedging Instruments [Member] | Interest Rate | Cash Flow [Member] | Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | 0 | |
Not Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Fair Value [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | (92) | 740 |
Not Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Fair Value [Member] | Prepaids And Other Current Assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | 355 | 1,606 |
Not Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Fair Value [Member] | Other assets [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | 0 | |
Not Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Fair Value [Member] | Other Current Liabilities [Member] | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | (447) | $ (866) |
Not Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Fair Value [Member] | Other long-term liabilities | ||
Derivatives, Fair Value [Line Items] | ||
Total net derivative asset (liability) | $ 0 |
DERIVATIVES (INCOME STATEMENT C
DERIVATIVES (INCOME STATEMENT CLASSIFICATION) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Interest Expense. | $ 3,469 | $ 2,041 | $ 8,699 | $ 5,758 |
Other nonoperating income expense | (4,416) | (6,254) | (6,573) | (7,488) |
Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Cash Flow [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain or (loss) recognized in other comprehensive income (loss) - effective portion, net of tax: | (3,487) | (4,119) | (10,625) | (10,939) |
Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Cash Flow [Member] | Reclassification from accumulated other comprehensive income | Revenue | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Revenues | (5,812) | (7,103) | (17,709) | (18,860) |
Designated as Hedging Instruments [Member] | Interest Rate | Cash Flow [Member] | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Amount of gain or (loss) recognized in other comprehensive income (loss) - effective portion, net of tax: | (60) | (69) | (252) | |
Designated as Hedging Instruments [Member] | Interest Rate | Cash Flow [Member] | Reclassification from accumulated other comprehensive income | Interest Expense | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Interest Expense. | (104) | (115) | (435) | |
Not Designated as Hedging Instruments [Member] | Foreign Exchange [Member] | Fair Value [Member] | Other income (expense), net | ||||
Derivative Instruments, Gain (Loss) [Line Items] | ||||
Other nonoperating income expense | $ (1,186) | $ (3,674) | $ (1,545) | $ (3,616) |
DERIVATIVES (NARRATIVE) (DETAIL
DERIVATIVES (NARRATIVE) (DETAILS) - USD ($) $ in Millions | Sep. 30, 2017 | Dec. 31, 2016 |
DERIVATIVES [ABSTRACT] | ||
Notional Amount | $ 167.1 | $ 227.8 |
FAIR VALUE (DERIVATIVES TABLE)
FAIR VALUE (DERIVATIVES TABLE) (DETAILS) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Fair Value Net Derivative Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash flow hedges | $ 0 | $ 0 |
Interest rate swaps | 0 | 0 |
Fair value hedges | 0 | 0 |
Total net derivative asset (liability) | 0 | 0 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value Net Derivative Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash flow hedges | (29,473) | (54,039) |
Interest rate swaps | (147) | |
Fair value hedges | (92) | 740 |
Total net derivative asset (liability) | (29,565) | (53,446) |
Significant Unobservable Inputs (Level 3) [Member] | ||
Fair Value Net Derivative Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash flow hedges | 0 | 0 |
Interest rate swaps | 0 | 0 |
Fair value hedges | 0 | 0 |
Total net derivative asset (liability) | 0 | 0 |
Fair Value, Measurements, Recurring [Member] | ||
Fair Value Net Derivative Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Cash flow hedges | (29,473) | (54,039) |
Interest rate swaps | (147) | |
Fair value hedges | (92) | 740 |
Total net derivative asset (liability) | $ (29,565) | $ (53,446) |
FAIR VALUE (FAIR VALUE ASSETS A
FAIR VALUE (FAIR VALUE ASSETS AND LIABILITIES) (DETAILS) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Liabilities [Abstract] | ||
Contingent consideration | $ (1,178) | $ (1,808) |
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | ||
Assets [Abstract] | ||
Derivative assets, net | 0 | |
Total assets | 0 | |
Liabilities [Abstract] | ||
Deferred compensation plan liability | 0 | |
Derivative instruments, net | 0 | |
Contingent consideration | 0 | |
Total liabilities | 0 | |
Significant Other Observable Inputs (Level 2) [Member] | ||
Assets [Abstract] | ||
Derivative assets, net | 0 | |
Total assets | 0 | |
Liabilities [Abstract] | ||
Deferred compensation plan liability | (12,624) | (10,841) |
Derivative instruments, net | (29,565) | (53,446) |
Contingent consideration | 0 | |
Total liabilities | (42,189) | (64,287) |
Significant Unobservable Inputs (Level 3) [Member] | ||
Assets [Abstract] | ||
Derivative assets, net | 0 | |
Total assets | 0 | |
Liabilities [Abstract] | ||
Deferred compensation plan liability | 0 | |
Derivative instruments, net | 0 | |
Contingent consideration | (1,178) | (1,808) |
Total liabilities | $ (1,178) | $ (1,808) |
FAIR VALUE (CONTINGENT CONSIDER
FAIR VALUE (CONTINGENT CONSIDERATION TABLE) (DETAILS) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Business acquisitions, Contingent Consideration [Line Items] | |
Beginning balance, contingent consideration payable | $ 1,808 |
Payments | (674) |
Imputed Interest/ Adjustment | 44 |
Ending balance, contingent consideration payable | 1,178 |
Welltok [Member] | |
Business acquisitions, Contingent Consideration [Line Items] | |
Beginning balance, contingent consideration payable | 1,250 |
Payments | (674) |
Ending balance, contingent consideration payable | 576 |
Atelka [Member] | |
Business acquisitions, Contingent Consideration [Line Items] | |
Beginning balance, contingent consideration payable | 558 |
Imputed Interest/ Adjustment | 44 |
Ending balance, contingent consideration payable | $ 602 |
FAIR VALUE (NARRATIVE) (DETAILS
FAIR VALUE (NARRATIVE) (DETAILS) - USD ($) $ in Millions | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | Aug. 08, 2014 |
Business acquisitions, Contingent Consideration [Line Items] | ||||||
Average interest rate on annual borrowings | 2.30% | |||||
rogenSi [Member] | ||||||
Business acquisitions, Contingent Consideration [Line Items] | ||||||
Future Value of Liabilities Incurred From Business Acquisitions | $ 15.3 | |||||
Valuation Technique on Contingent Consideration | The fair value of the contingent consideration was measured by applying a probability weighted discounted cash flow model based on significant inputs not observable in the market (Level 3 inputs). Key assumptions include a discount rate of 4.6% and expected future value of payments of $15.3 million. The $15.3 million of expected future payments was calculated using a probability weighted EBITDA assessment with the highest probability associated with rogenSi achieving the targeted EBITDA for each earn-out year | |||||
Discount rate | 4.60% | |||||
Increase (decrease) in contingent consideration payable | $ (4.3) | $ 0.8 | $ (0.3) | $ 0.5 | ||
Atelka [Member] | ||||||
Business acquisitions, Contingent Consideration [Line Items] | ||||||
Discount rate | 0.00% |
INCOME TAXES (NARRATIVE) (DETAI
INCOME TAXES (NARRATIVE) (DETAILS) - USD ($) $ / shares in Units, $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Tax Narrative [Line Items] | |||||
Total deferred tax assets, net of valuation allowance | $ 31 | $ 31 | |||
Valuation allowance on deferred tax assets | 10.5 | 10.5 | |||
Deferred tax assets, net of valuation allowance and deferred tax liabilities | $ 30.8 | $ 30.8 | |||
Effective income tax rate | 11.70% | (6.90%) | 15.00% | 15.20% | |
Income Tax Holidays Description | The Company has been granted "Tax Holidays" as an incentive to attract foreign investment by the government of the Philippines. Generally, a Tax Holiday is an agreement between the Company and a foreign government under which the Company receives certain tax benefits in that country, such as exemption from taxation on profits derived from export-related activities. In the Philippines, the Company has been granted multiple agreements with an initial period of four years and additional periods for varying years, expiring at various times between 2011 and 2020. | ||||
Income Tax Holiday Termination Date | 2011 and 2020 | ||||
Aggregate Effect on Income Tax Expense for Income Tax Holiday Jurisdictions | $ 2.8 | $ 2 | $ 8.9 | $ 4.5 | |
Diluted Net Income Per Share Effect For Income Tax Holiday Jurisdictions | $ 0.06 | $ 0.04 | $ 0.19 | $ 0.10 | |
Settlement with Taxing Authority [Member] | |||||
Income Tax Narrative [Line Items] | |||||
Tax Adjustments, Settlements, and Unusual Provisions | $ 0.8 | ||||
Expired statute of limitations [Member] | |||||
Income Tax Narrative [Line Items] | |||||
Tax Adjustments, Settlements, and Unusual Provisions | $ 0.5 | $ 0.3 | |||
United States | |||||
Income Tax Narrative [Line Items] | |||||
Income Tax Years under Audit | 2014 to present | ||||
Canada | |||||
Income Tax Narrative [Line Items] | |||||
Income Tax Years under Audit | 2009 and 2010, the state of Michigan in the United States for tax years 2012 through 2015, for the Philippines branch for tax year 2015, for Belgium for tax years 2014 and 2015, and for eLoyalty in Ireland for tax year 2016 |
RESTRUCTURING AND INTEGRATION C
RESTRUCTURING AND INTEGRATION CHARGES AND IMPAIRMENT LOSSES (LIABILITY CLASSIFICATION TABLE) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring Cost and Reserve [Line Items] | ||||
Reduction in force | $ (200) | $ 2,989 | $ 1,654 | $ 3,006 |
Facility exit charges | 621 | 699 | 747 | 885 |
Restructuring charges, net | 6,006 | 3,688 | 9,768 | 3,890 |
Customer Management Services | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Reduction in force | (213) | 2,485 | 1,548 | 2,482 |
Facility exit charges | 600 | 699 | 642 | 852 |
Customer Growth Services | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Reduction in force | 108 | 108 | ||
Customer Technology Services | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Reduction in force | 314 | 93 | 324 | |
Facility exit charges | 84 | 33 | ||
Customer Strategy Services | ||||
Restructuring Cost and Reserve [Line Items] | ||||
Reduction in force | 13 | $ 82 | 13 | $ 92 |
Facility exit charges | $ 21 | $ 21 |
RESTRUCTURING CHARGES AND IMPAI
RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES (LIABLITY ROLLFORWARD TABLE) (DETAILS) $ in Thousands | 9 Months Ended |
Sep. 30, 2017USD ($) | |
Restructuring Cost and Reserve [Line Items] | |
Beginning balance, restructuring reserve | $ 1,566 |
Expense | 3,131 |
Payments | (1,828) |
Changes due to foreign currency | (23) |
Change in estimates | (730) |
Ending balance, restructuring reserve | 2,116 |
Reduction in Force [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Beginning balance, restructuring reserve | 1,468 |
Expense | 2,384 |
Payments | (987) |
Changes due to foreign currency | (23) |
Change in estimates | (730) |
Ending balance, restructuring reserve | 2,112 |
Facility Exit and Other Charges [Member] | |
Restructuring Cost and Reserve [Line Items] | |
Beginning balance, restructuring reserve | 98 |
Expense | 747 |
Payments | (841) |
Ending balance, restructuring reserve | $ 4 |
RESTRUCTURING AND INTEGRATION59
RESTRUCTURING AND INTEGRATION CHARGES AND IMPAIRMENT LOSSES (NARRATIVE) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Jun. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Reduction in force | $ (200) | $ 2,989 | $ 1,654 | $ 3,006 | |
Integration charges | 5,600 | ||||
Facility exit charges | $ 621 | $ 699 | $ 747 | $ 885 | |
Connextions [Member] | |||||
Reduction in force | $ 1,700 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (NARRATIVE) (DETAILS) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
INDEBTEDNESS [ABSTRACT] | ||||
Initial Borrowing Capacity | $ 900,000 | $ 900,000 | ||
Maximum borrowing capacity | 1,200,000 | $ 1,200,000 | ||
Line of Credit Facility, Interest Rate Description | Base rate loans bear interest at a rate equal to the greatest of (i) Wells Fargo's prime rate, (ii) one half of 1% in excess of the federal funds effective rate, and (iii) 1.25% in excess of the one month London Interbank Offered Rate ("LIBOR"); plus in each case a margin of 0% to 0.75% based on the Company's net leverage ratio. Eurodollar loans bear interest at LIBOR plus a margin of 1.0% to 1.75% based on the Company's net leverage ratio. Alternate currency loans bear interest at rates applicable to their respective currencies. | |||
Description of line of credit agreement | The Credit Agreement provides for a secured revolving credit facility that matures on February 11, 2021 with an initial maximum aggregate commitment of $900.0 million, and an accordion feature of up to $1.2 billion in the aggregate, if certain conditions are satisfied. | |||
Line of Credit Facility, Collateral | Letter of credit fees are one eighth of 1% of the stated amount of the letter of credit on the date of issuance, renewal or amendment, plus an annual fee equal to the borrowing margin for Eurodollar loans. The Credit Facility commitment fees are payable to the lenders in an amount equal to the unused portion of the Credit Facility at a rate of 0.125% to 0.250% based on the Company's net leverage ratio.The Company is obligated to maintain a maximum net leverage ratio of 3.25 to 1.00, and a minimum interest coverage ratio of 2.50 to 1.00. | |||
Borrowings outstanding on credit facility | 255,000 | $ 255,000 | $ 217,300 | |
Average daily utilization under credit facility | 474,300 | $ 359,500 | ||
Letters of credit issued under credit facility | 3,900 | 3,900 | ||
Remaining borrowing capacity under credit facility | 390,000 | 390,000 | ||
Letters Of Credit Issued Outside Line Of Credit Facility | $ 7,600 | $ 7,600 |
NONCONTROLLING INTERES (NONCONT
NONCONTROLLING INTERES (NONCONTROLLING INTEREST ROLLFORWARD TABLE) (DETAILS) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Stockholders' Equity Attributable to Noncontrolling Interest | ||
Noncontrolling interest, January 1 | $ 6,981 | $ 7,201 |
Net income attributable to noncontrolling interest | 2,828 | 2,804 |
Dividends distributed to noncontrolling interest | (2,745) | (2,745) |
Foreign currency translation adjustments | 325 | (70) |
Equity based compensation expense | (291) | 96 |
Other | 10 | |
Noncontrolling interest, June 30 | $ 7,098 | $ 7,296 |
MANDATORILY REDEEMABLE NONCON62
MANDATORILY REDEEMABLE NONCONTROLLING INTEREST (ROLLFORWARD TABLE) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jan. 01, 2016 | Dec. 31, 2015 | |
Mandatorily redeemable noncontrolling interest [Line Items] | ||||||
Net income attributable to mandatorily redeemable noncontrolling interest | $ 15,575 | $ 12,649 | $ 51,536 | $ 37,096 | ||
Purchase of mandatorily redeemable noncontrolling interest | (4,105) | |||||
Iknowtion | ||||||
Mandatorily redeemable noncontrolling interest [Line Items] | ||||||
ownership percentage | 80.00% | |||||
Ownership percentage acquired | 20.00% | |||||
Mandatorily redeemable noncontrolling interest, January 1 | 4,131 | |||||
Working capital distributed to mandatorily redeemable noncontrolling interest | (492) | |||||
Purchase of mandatorily redeemable noncontrolling interest | $ (4,105) |
ACCUMULATED OTHER COMPREHENSI63
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (ROLLFORWARD TABLE) (DETAILS) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance, value | $ 361,895 | |
Ending balance, value | 399,794 | |
Accumulated Other Comprehensive Income (Loss) | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance, value | (126,964) | $ (101,365) |
Other comprehensive income (loss) before reclassifications | 34,117 | 3,850 |
Amounts reclassified from accumulated other comprehensive income (loss) | (11,046) | (12,317) |
Net current period other comprehensive income (loss) | 23,071 | (8,467) |
Ending balance, value | (103,893) | (109,832) |
Foreign Currency Translation Adjustment | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance, value | (92,008) | (71,196) |
Other comprehensive income (loss) before reclassifications | 8,089 | (7,999) |
Net current period other comprehensive income (loss) | 8,089 | (7,999) |
Ending balance, value | (83,919) | (79,195) |
Derivative Valuation, Net of Tax | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance, value | (32,393) | (26,885) |
Other comprehensive income (loss) before reclassifications | 25,290 | 9,519 |
Amounts reclassified from accumulated other comprehensive income (loss) | (10,694) | (11,189) |
Net current period other comprehensive income (loss) | 14,596 | (1,670) |
Ending balance, value | (17,797) | (28,555) |
Other, Net of Tax. | ||
AOCI Attributable to Parent, Net of Tax [Roll Forward] | ||
Beginning balance, value | (2,563) | (3,284) |
Other comprehensive income (loss) before reclassifications | 738 | 2,330 |
Amounts reclassified from accumulated other comprehensive income (loss) | (352) | (1,128) |
Net current period other comprehensive income (loss) | 386 | 1,202 |
Ending balance, value | $ (2,177) | $ (2,082) |
ACCUMULATED OTHER COMPREHENSI64
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (INCOME STATEMENT CLASSIFICATION TABLE) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Presentation of Income Statement Reclassifications [Line Items] | ||||
Sales Revenue Services Net | $ 359,036 | $ 312,796 | $ 1,050,742 | $ 930,311 |
Interest Expense. | 3,469 | 2,041 | 8,699 | 5,758 |
Benefit from (provision for) income taxes | (2,071) | 813 | (9,059) | (6,667) |
Net income | 15,575 | 12,649 | 51,536 | 37,096 |
Accumulated Other Comprehensive Income (Loss) | ||||
Presentation of Income Statement Reclassifications [Line Items] | ||||
Net Income (Loss) - Other | 11,046 | 12,317 | ||
Derivative Valuation, Net of Tax | ||||
Presentation of Income Statement Reclassifications [Line Items] | ||||
Net Income (Loss) - Other | 10,694 | 11,189 | ||
Reclassification from accumulated other comprehensive income | ||||
Presentation of Income Statement Reclassifications [Line Items] | ||||
Net income | (10,694) | (11,189) | ||
Cost of services | (130) | (804) | (391) | (1,252) |
Net Income (Loss) - Other | (117) | (724) | (352) | (1,128) |
Reclassification from accumulated other comprehensive income | Derivative Valuation, Net of Tax | ||||
Presentation of Income Statement Reclassifications [Line Items] | ||||
Net income | (3,487) | (4,179) | ||
Reclassification from accumulated other comprehensive income | Tax effect | ||||
Presentation of Income Statement Reclassifications [Line Items] | ||||
Benefit from (provision for) income taxes | 2,325 | 3,028 | 7,130 | 8,106 |
Provision for income taxes - Other | 13 | 80 | 39 | 124 |
Foreign Exchange Forward | Reclassification from accumulated other comprehensive income | ||||
Presentation of Income Statement Reclassifications [Line Items] | ||||
Sales Revenue Services Net | $ (5,812) | (7,103) | (17,709) | (18,860) |
Interest Rate | Reclassification from accumulated other comprehensive income | Loss on interest rate swaps [Member] | ||||
Presentation of Income Statement Reclassifications [Line Items] | ||||
Interest Expense. | $ (104) | $ (115) | $ (435) |
NET INCOME PER SHARE (DILUTED S
NET INCOME PER SHARE (DILUTED SHARES TABLE) (DETAILS) - shares shares in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Weighted Average Number of Shares Outstanding Reconciliation [Abstract] | ||||
Shares used in basic earnings per share calculation | 45,838 | 47,081 | 45,816 | 47,771 |
Effect of dilutive securities: | ||||
Stock options | 10 | 6 | 9 | 11 |
Restricted stock units | 517 | 214 | 513 | 292 |
Performance-based restricted stock units | 2 | 14 | 10 | 15 |
Total effects of dilutive securities | 529 | 234 | 532 | 318 |
Shares used in dilutive earnings per share calculation | 46,367 | 47,315 | 46,348 | 48,089 |
NET INCOME PER SHARE (NARRATIVE
NET INCOME PER SHARE (NARRATIVE) (DETAILS) - shares shares in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Stock Options [Member] | ||||
Anti-dilutive options to purchase common stock [Line Items] | ||||
Anti-dilutive securities | 0 | 0.1 | 0 | 0.1 |
Restricted Stock Units (RSUs) [Member] | ||||
Anti-dilutive options to purchase common stock [Line Items] | ||||
Anti-dilutive securities | 0 | 0.1 | 0 | 0.1 |
EQUITY-BASED COMPENSATION PLANS
EQUITY-BASED COMPENSATION PLANS (NARRATIVE) (DETAILS) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Equity-based compensation expense | $ 3,500 | $ 2,700 | $ 8,358 | $ 7,278 |
Restricted Stock Units (RSUs) [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Equity-based compensation expense | 3,500 | 8,700 | ||
Unrecognized Compensation Expense | 25,000 | $ 25,000 | ||
Non-option Equity Awards Granted | 724,951 | 443,875 | ||
Stock Options [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Equity-based compensation expense | 0 | (300) | ||
Cost of Services | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Equity-based compensation expense | 1,400 | 1,000 | $ 2,900 | $ 2,300 |
Selling General And Administrative Expenses [Member] | ||||
Employee Service Share-based Compensation, Allocation of Recognized Period Costs [Line Items] | ||||
Equity-based compensation expense | $ 2,100 | $ 1,700 | $ 5,500 | $ 5,000 |
RELATED PARTY TRANSACTIONS (NAR
RELATED PARTY TRANSACTIONS (NARRATIVE) (DETAILS) - USD ($) | 3 Months Ended | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | |
Airmax [Member] | |||
Related Party Transaction Line Items | |||
Purchases from Related Party | $ 600,000 | $ 700,000 | |
Accounts Payable Due from Related Party | $ 114,000 | 114,000 | |
Conversent [Member] | |||
Related Party Transaction Line Items | |||
Purchases from Related Party | 55,000 | $ 75,000 | |
CafeX [Member] | |||
Related Party Transaction Line Items | |||
Purchases from Related Party | $ 0 | $ 100,000 |