DOCUMENT AND ENTITY INFORMATION
DOCUMENT AND ENTITY INFORMATION - shares | 9 Months Ended | |
Sep. 30, 2015 | Nov. 04, 2015 | |
Document and Entity Information Abstract | ||
Entity Registrant Name | StarTek, Inc. | |
Entity Central Index Key | 1,031,029 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Well-known Seasoned Issuer | No | |
Entity Voluntary Filers | No | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 15,586,936 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenue | $ 72,756 | $ 61,438 | $ 199,874 | $ 185,901 |
Cost of services | 69,597 | 52,393 | 185,284 | 162,946 |
Gross profit | 3,159 | 9,045 | 14,590 | 22,955 |
Selling, general and administrative expenses | 9,335 | 7,503 | 25,981 | 23,052 |
Restructuring charges | 889 | 1,262 | 3,231 | 3,504 |
Operating loss | (7,065) | 280 | (14,622) | (3,601) |
Interest and other income (expense), net | (421) | 362 | (758) | 216 |
Loss before income taxes | (7,486) | 642 | (15,380) | (3,385) |
Income tax expense | 219 | 728 | 569 | 482 |
Net loss | (7,705) | (86) | (15,949) | (3,867) |
Other comprehensive income (loss), net of tax: | ||||
Foreign currency translation adjustments | 47 | (582) | 58 | (657) |
Change in fair value of derivative instruments | (682) | (905) | 78 | 227 |
Comprehensive loss | $ (8,340) | $ (1,573) | $ (15,813) | $ (4,297) |
Net loss per common share - basic and diluted (in usd per share) | $ (0.49) | $ (0.01) | $ (1.03) | $ (0.25) |
Weighted average common shares outstanding - basic and diluted (in shares) | 15,569 | 15,400 | 15,504 | 15,389 |
CONSOLIDATED BALANCE SHEETS (Un
CONSOLIDATED BALANCE SHEETS (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 814 | $ 5,306 |
Trade accounts receivable, net | 51,537 | 46,103 |
Derivative asset | 5 | 48 |
Prepaid expenses | 3,847 | 2,257 |
Other current assets | 1,352 | 794 |
Total current assets | 57,555 | 54,508 |
Property, plant and equipment, net | 33,706 | 28,180 |
Long-term deferred income tax assets | 1,345 | 1,429 |
Intangible assets, net | 8,143 | 2,609 |
Goodwill | 8,995 | 4,136 |
Other long-term assets | 3,000 | 2,931 |
Total assets | 112,744 | 93,793 |
Current liabilities: | ||
Accounts payable | 9,931 | 10,434 |
Accrued liabilities: | ||
Accrued payroll | 10,083 | 5,522 |
Accrued compensated absences | 2,682 | 2,309 |
Other accrued liabilities | 1,696 | 3,040 |
Line of credit | 28,384 | 4,640 |
Derivative liability | 1,132 | 1,250 |
Deferred income tax liabilities | 1,083 | 965 |
Other current liabilities | 5,624 | 3,512 |
Total current liabilities | 60,615 | 31,672 |
Deferred rent | 3,834 | 1,593 |
Long-term obligations under capital leases | 6,701 | 4,264 |
Other liabilities | 652 | 1,583 |
Total liabilities | $ 71,802 | $ 39,112 |
Commitments and contingencies | ||
Stockholders' equity: | ||
Common stock, 32,000,000 non-convertible shares, $0.01 par value, authorized; 15,586,936 and 15,414,803 shares issued and outstanding at September 30, 2015 and December 31, 2014, respectively | $ 156 | $ 154 |
Additional paid-in capital | 78,128 | 76,056 |
Accumulated other comprehensive loss | (689) | (825) |
Accumulated deficit | (36,653) | (20,704) |
Total stockholders' equity | 40,942 | 54,681 |
Total liabilities and stockholders' equity | $ 112,744 | $ 93,793 |
CONSOLIDATED BALANCE SHEETS _Pa
CONSOLIDATED BALANCE SHEETS [Parenthetical] (Unaudited) - $ / shares | Sep. 30, 2015 | Dec. 31, 2014 |
Statement of Financial Position [Abstract] | ||
Common stock, par value (in usd per share) | $ 0.01 | $ 0.01 |
Common stock, non-convertible shares authorized | 32,000,000 | 32,000,000 |
Common stock, shares issued | 15,586,936 | 15,414,803 |
Common stock, shares outstanding | 15,586,936 | 15,414,803 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Operating Activities | ||
Net loss | $ (15,949) | $ (3,867) |
Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 9,803 | 7,629 |
Gains on disposal of assets | (509) | (182) |
Gain on dissolution of subsidiary | (413) | |
Share-based compensation expense | 1,376 | 1,207 |
Amortization of deferred gain on sale leaseback transaction | (168) | (214) |
Deferred income taxes | 132 | 955 |
Changes in operating assets and liabilities: | ||
Trade accounts receivable | 3,778 | (2,328) |
Prepaid expenses and other assets | (1,245) | 1,873 |
Accounts payable | (5,076) | (982) |
Accrued and other liabilities | 4,488 | (723) |
Net cash (used in) provided by operating activities | (3,370) | 2,955 |
Investing Activities | ||
Proceeds from note receivable | 0 | 481 |
Proceeds from sale of assets | 982 | 1,064 |
Purchases of property, plant and equipment | (6,500) | (9,562) |
Cash paid for acquisition of business | (18,326) | |
Cash paid for prior period acquisitions of businesses | (583) | (603) |
Net cash used in investing activities | (24,427) | (8,620) |
Financing Activities | ||
Proceeds from stock option exercises | 552 | 39 |
Proceeds from the issuance of common stock | 146 | 89 |
Proceeds from line of credit | 237,840 | 111,172 |
Principal payments on line of credit | (214,096) | (109,672) |
Principal payments on long-term debt | (276) | (94) |
Principal payments on capital lease obligations | (1,203) | (92) |
Net cash provided by financing activities | 22,963 | 1,442 |
Effect of exchange rate changes on cash | 342 | (214) |
Net decrease in cash and cash equivalents | (4,492) | (4,437) |
Cash and cash equivalents at beginning of period | 5,306 | 10,989 |
Cash and cash equivalents at end of period | 814 | 6,552 |
Supplemental Disclosure of Noncash Investing Activities | ||
Working capital receivable | 834 | 0 |
Assets acquired through capital lease | 4,840 | 0 |
Assets acquired through leasehold incentives | $ 2,600 | $ 0 |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information and instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. These financial statements reflect all adjustments (consisting only of normal recurring entries, except as noted) which, in the opinion of management, are necessary for fair presentation. Operating results for the three and nine months ended September 30, 2015 , are not necessarily indicative of operating results that may be expected during any other interim period of 2015 or the year ending December 31, 2015. During the second quarter of 2015, we revised our business segments in order to better align with our strategic view of the business. Refer to Note 12, "Segment Information," for further information. No changes are needed to historical segment results. The consolidated balance sheet as of December 31, 2014, included herein was derived from the audited financial statements as of that date, but does not include all disclosures including notes required by GAAP. As such, the information included in this quarterly report on Form 10-Q should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2014. Unless otherwise noted in this report, any description of "us," "we," or "our," refers to StarTek, Inc. and its subsidiaries. Financial information in this report is presented in U.S. dollars. Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they are determined to be necessary. Recent Accounting Pronouncements In September 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-16 ("ASU 2015-16"), S implifying the Accounting for Measurement Period Adjustments . ASU 2015-16 replaces the requirement that an acquirer in a business combination account for measurement period adjustments retrospectively with a requirement that an acquirer recognize adjustments to the provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. For public business entities, ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The guidance is to be applied prospectively to adjustments to provisional amounts that occur after the effective date of the guidance, with earlier application permitted for financial statements that have not been issued. ASU 2015-16 is not expected to have a material impact on our consolidated financial statements. In August 2015, the FASB issued ASU No. 2015-15, Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements — Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting ("ASU 2015-15"), which clarifies the treatment of debt issuance costs from line-of-credit arrangements after the adoption of ASU 2015-03. In particular, ASU 2015-15 clarifies that the SEC staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of such arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-15 is not expected to have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016; however, in July 2015, the FASB agreed to delay the effective date by one year. The proposed deferral may permit early adoption, but would not allow adoption any earlier than the original effective date of the standard. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact the adoption of ASU 2014-09, including possible transition alternatives, will have on our consolidated financial statements. |
ACQUISITION
ACQUISITION | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
ACQUISITIONS | ACQUISITION On June 1, 2015, we acquired 100% of the membership interests of Accent Marketing Services, L.L.C. ("ACCENT") pursuant to a Membership Interest Purchase Agreement with MDC Corporate (US) Inc. and MDC Acquisition Inc. ACCENT is a business process outsourcing company providing contact center services and customer engagement solutions across six locations in the U.S. and Jamaica. ACCENT’s data-driven approach helps brands maximize their engagement with consumers and enables brands to influence behavior, all while generating a better return on investment across all customer touch points, including phone, online and social media channels. The results of ACCENT's operations have been included in our consolidated financial statements since the acquisition date. ACCENT's customer engagement agency model and platform complements our Ideal Dialogue practice, significantly enhancing our solution set and commitment to results-driven analytics and customer insights for our clients. Accordingly, we paid a premium for ACCENT, resulting in the recognition of goodwill. On June 1, 2015, consideration in the amount of $18,326 , which included $2,326 of estimated working capital, was funded through borrowings from our secured revolving credit facility. See Note 9, "Debt," for further information. During the third quarter and in accordance with the Purchase Agreement, the working capital calculation was finalized and MDC agreed to refund the Company $834 as a result. This amount is accrued as of September 30, 2015 and has been subsequently collected. The purchase price allocation below reflects the final working capital calculation. We accounted for the acquisition in accordance with ASC 805, Business Combinations , whereby the purchase price paid was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed from ACCENT based on their estimated fair values as of the closing date. Certain amounts are provisional and are subject to change. The following summarizes the estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date. These estimates of fair value of identifiable assets acquired and liabilities assumed are preliminary, pending completion of a valuation, and therefore are subject to revisions that may result in adjustments to the values presented below: Amount Cash $ 16,000 Working capital adjustment 1,492 Total allocable purchase price $ 17,492 Accounts receivable 9,265 Fixed assets 2,860 Prepaid expenses and other assets 334 Customer relationships 5,240 Trade name 850 Goodwill 4,860 Accounts payable (5,590 ) Other accrued expenses and current liabilities (327 ) Total preliminary purchase price allocation $ 17,492 The customer relationships and trade name have estimated useful lives of eight and six years, respectively. The goodwill recognized was attributable primarily to the acquired workforce, increased utilization of our global delivery platform and other synergistic benefits. Goodwill of $4,860 was assigned to our Domestic segment. The amount of ACCENT's revenues and net loss since the acquisition date included in our consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2015 were as follows: From June 1, 2015 Through September 30, 2015 Revenues $ 22,799 Net loss $ (1,012 ) The following table presents the unaudited pro forma information assuming the acquisition of ACCENT occurred on January 1, 2014. The unaudited pro forma information is not necessarily indicative of the results of operations that would have been achieved if the acquisition and related borrowings had taken place on January 1, 2014: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues $ 72,756 $ 78,939 $ 227,009 $ 239,443 Net loss $ (7,705 ) $ (1,875 ) $ (16,968 ) $ (8,923 ) Net loss per common share - basic and diluted $ (0.49 ) $ (0.12 ) $ (1.09 ) $ (0.58 ) Weighted average common shares outstanding - basic and diluted 15,569 15,400 15,504 15,389 These amounts have been calculated to reflect the additional amortization and interest expense that would have been incurred assuming the borrowings occurred on January 1, 2014, together with the consequential tax effects. Acquisition-related costs of approximately $ 715 , and $ 1,040 , comprised of transaction and integration costs, are included in selling, general and administrative expenses in our consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2015, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS Goodwill Total goodwill of $ 8,995 is assigned to our Domestic segment. Pursuant to Federal income tax regulations, the goodwill from the ACCENT acquisition will be deductible for tax purposes. Intangible Assets The following table presents our intangible assets as of September 30, 2015 : Gross Intangibles Accumulated Amortization Net Intangibles Weighted Average Amortization Period (years) Developed technology $ 390 $ 122 $ 268 3.27 Customer relationships 7,550 630 6,920 4.26 Trade names 1,050 95 955 3.32 Noncompete agreement 10 10 — — $ 9,000 $ 857 $ 8,143 4.12 Expected future amortization of intangible assets as of September 30, 2015 is as follows: Year Ending December 31, Amount Remainder of 2015 $ 296 2016 1,150 2017 1,140 2018 1,140 2019 1,131 Thereafter 3,286 |
RESTRUCTURING CHARGES
RESTRUCTURING CHARGES | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
RESTRUCTURING CHARGES | RESTRUCTURING CHARGES Restructuring Charges The table below summarizes the balance of accrued restructuring costs, which is included in other accrued liabilities in our consolidated balance sheets, and the changes during the nine months ended September 30, 2015 : Jonesboro Costa Rica Kansas City Corporate Total Balance as of December 31, 2014 $ 64 $ 9 — $ 32 $ 105 Expense (reversal) (14 ) — 96 1,531 1,613 Payments (36 ) (9 ) — (367 ) (412 ) Balance as of September 30, 2015 $ 14 $ — $ 96 $ 1,196 $ 1,306 In February 2014, we announced the closure of our Jonesboro, Arkansas facility, which ceased operations in the second quarter of 2014 when the business transitioned to another facility. We established a restructuring reserve of $ 192 for employee-related costs and recognized additional charges of $ 609 when the facility closed. The remaining costs are expected to be paid out through 2015. We also recognized a net gain of $ 256 related to the early termination of our lease. In June 2014, we announced the closure of our Heredia, Costa Rica facility, included in our Latin America segment, which ceased operations in the third quarter of 2014. The restructuring plan was complete in the first quarter of 2015 and we do not expect to incur any additional restructuring liabilities in future periods for this location. In May 2015, we closed our Enid, Oklahoma facility. We expect to incur minimal restructuring charges for employee-related and facility-related costs through 2015. In September 2015, we made the decision to close our Kansas City, Missouri facility. We established a restructuring reserve of $96 for employee-related costs. We expect to close the facility and record additional facility-related restructuring expenses during the fourth quarter. During 2014, we continued to pursue operating efficiencies through streamlining our organizational structure and leveraging our shared services centers in low-cost regions. We eliminated several positions as a result and incurred restructuring charges of $ 279 . During the three months ended September 30, 2015, we incurred additional restructuring costs of $ 807 as a result of our integration of ACCENT. We expect to pay these costs through 2015. During 2014, we moved forward with our initiative to improve our IT platform, including outsourcing our data centers and moving to a hosted solutions model. We recognized $ 3,156 of restructuring charges through September 30, 2015. No additional transition costs are expected. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2015 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE Basic net loss per common share is computed on the basis of our weighted average number of common shares outstanding. Diluted net loss per share is computed on the basis of our weighted average number of common shares outstanding plus the effect of dilutive stock options and non-vested restricted stock using the treasury stock method. Securities totaling 2,533,403 and 2,289,041 for the three and nine months ended September 30, 2015 and 2014 , respectively, have been excluded from loss per share because their effect would have been anti-dilutive. |
PRINCIPAL CLIENTS
PRINCIPAL CLIENTS | 9 Months Ended |
Sep. 30, 2015 | |
Risks and Uncertainties [Abstract] | |
PRINCIPAL CLIENTS | PRINCIPAL CLIENTS The following table represents revenue concentration of our principal clients: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue Percentage Revenue Percentage Revenue Percentage Revenue Percentage T-Mobile USA, Inc., a subsidiary of Deutsche Telekom (2) $ 16,330 22.4 % $ 19,594 31.9 % $ 51,453 25.7 % $ 57,018 30.7 % AT&T Services, Inc. and AT&T Mobility, LLC, subsidiaries of AT&T, Inc. (1) $ 7,422 10.2 % $ 13,598 22.1 % $ 26,232 13.1 % $ 42,695 23.0 % Comcast Cable Communications Management, LLC, subsidiary of Comcast Corporation (2) $ 7,590 10.4 % $ 9,087 14.8 % $ 24,399 12.2 % $ 30,824 16.6 % (1) Revenue from this customer is generated through our Domestic and Offshore segments. (2) Revenue from this customer is generated through our Domestic and Offshore segments in 2014 and 2015 and through our Nearshore segment in 2014. We enter into contracts and perform services with our major clients that fall under the scope of master service agreements (MSAs) with statements of work (SOWs) specific to each line of business. These MSAs and SOWs may automatically renew or be extended by mutual agreement and are generally terminable by the customer or us with prior written notice. On July 28, 2011, we entered into a new MSA with T-Mobile effective July 1, 2011, which has an initial term of five years and will automatically renew for additional one -year periods thereafter, but may be terminated by T-Mobile upon 90 days written notice. On January 25, 2013, we entered into a new MSA with AT&T Services, Inc., which expires December 31, 2015 and may be extended upon mutual agreement, but may be terminated by AT&T with written notice. We are currently negotiating an extension of the contract. On January 4, 2014, we entered into a new MSA with Comcast, effective June 22, 2013. The new MSA had an initial term of one year and will automatically renew for additional one -year periods unless either party gives notice of cancellation. Neither party gave notice of termination; therefore, the contract has renewed for the year ending June 22, 2016, but Comcast may terminate the agreement upon 90 days written notice. |
DERIVATIVE INSTRUMENTS
DERIVATIVE INSTRUMENTS | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
DERIVATIVE INSTRUMENTS | DERIVATIVE INSTRUMENTS We use derivatives to partially offset our business exposure to foreign currency exchange risk. We enter into foreign currency exchange contracts to hedge our anticipated operating commitments that are denominated in foreign currencies, including forward contracts. The contracts cover periods commensurate with expected exposure, generally three to twelve months, and are principally unsecured foreign exchange contracts. The market risk exposure is essentially limited to risk related to currency rate movements. The functional currencies in Canada and the Philippines are the Canadian dollar and the Philippine peso, respectively, which are used to pay labor and other operating costs in those countries. We provide funds for these operating costs as our client contracts generate revenues, which are paid in U.S. dollars. We have elected to designate our derivatives as cash flow hedges in order to associate the results of the hedges with forecasted expenses. Unrealized gains and losses are recorded in accumulated other comprehensive income (“AOCI”) and will be re-classified to operations as the forecasted expenses are incurred, typically within one year. During the three and nine months ended September 30, 2015 and 2014, our cash flow hedges were highly effective and hedge ineffectiveness was not material. The following table shows the notional amount of our foreign exchange cash flow hedging instruments as of September 30, 2015 : Local Currency Notional Amount U.S. Dollar Notional Amount Canadian Dollar 6,390 $ 5,233 Philippine Peso 846,330 18,722 $ 23,955 Derivative assets and liabilities associated with our hedging activities are measured at gross fair value as described in Note 8, "Fair Value Measurements," and are reflected as separate line items in our consolidated balance sheets. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS The carrying value of our cash and cash equivalents, accounts receivable, accounts payable and line of credit approximate fair value because of their short-term nature. Derivative Instruments and Hedging Activities The values of our derivative instruments are derived from pricing models using inputs based upon market information, including contractual terms, market prices and yield curves. The inputs to the valuation pricing models are observable in the market, and as such the derivatives are classified as Level 2 in the fair value hierarchy. Restructuring Charges Accrued restructuring costs were valued using a discounted cash flow model. Significant assumptions used in determining the amount of the estimated liability for closing a facility are the estimated liability for future lease payments on vacant facilities and the discount rate utilized to determine the present value of the future expected cash flows. If the assumptions regarding early termination and the timing and amounts of sublease payments prove to be inaccurate, we may be required to record additional losses, or conversely, a future gain, in the consolidated statements of operations and comprehensive loss. In the future, if we sublease for periods that differ from our assumption or if an actual buy-out of a lease differs from our estimate, we may be required to record a gain or loss. Future cash flows also include estimated property taxes through the remainder of the lease term, which are valued based upon historical tax payments. Given that the restructuring charges were valued using our internal estimates using a discounted cash flow model, we have classified the accrued restructuring costs as Level 3 in the fair value hierarchy. Fair Value Hierarchy The following tables set forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Assets and Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2015 Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts $ — $ 5 $ — $ 5 Total fair value of assets measured on a recurring basis $ — $ 5 $ — $ 5 Liabilities: Foreign exchange contracts $ — $ 1,132 $ — $ 1,132 Total fair value of liabilities measured on a recurring basis $ — $ 1,132 $ — $ 1,132 Assets and Liabilities Measured at Fair Value Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts $ — $ 48 $ — $ 48 Total fair value of assets measured on a recurring basis $ — $ 48 $ — $ 48 Liabilities: Foreign exchange contracts $ — $ 1,250 $ — $ 1,250 Total fair value of liabilities measured on a recurring basis $ — $ 1,250 $ — $ 1,250 Liabilities Measured at Fair Value on a Non-Recurring Basis as of September 30, 2015 Level 1 Level 2 Level 3 Total Liabilities: Accrued restructuring costs $ — $ — $ 1,305 $ 1,305 Total fair value of liabilities measured on a non-recurring basis $ — $ — $ 1,305 $ 1,305 Liabilities Measured at Fair Value on a Non-Recurring Basis as of December 31, 2014 Level 1 Level 2 Level 3 Total Liabilities: Accrued restructuring costs $ — $ — $ 105 $ 105 Total fair value of liabilities measured on a non-recurring basis $ — $ — $ 105 $ 105 |
DEBT
DEBT | 9 Months Ended |
Sep. 30, 2015 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT Secured Revolving Credit Facility On April 29, 2015, we entered into a secured revolving credit facility ("Credit Agreement") with BMO Harris Bank N.A. ("Administrative Agent") and terminated our $ 20,000 secured revolving credit facility with Wells Fargo, which was effective through February 28, 2016. All amounts owed under the Wells Fargo credit facility were repaid with borrowings under the Credit Agreement in the amount of approximately $ 9,300 , which included an early termination fee in the amount of $ 100 . The Credit Agreement is effective through April 2020 and the amount we may borrow under the agreement is the lesser of the borrowing base calculation and $ 50,000 , and so long as no default has occurred and with the Administrative Agent’s consent, we may increase the maximum availability to $ 70,000 in $ 5,000 increments. We may request letters of credit under the Credit Agreement in an aggregate amount equal to the lesser of the borrowing base calculation (minus outstanding advances) and $5,000 . The borrowing base is generally defined as 85% of our eligible accounts receivable less certain reserves as defined in the Credit Agreement. Initially, borrowings under the Credit Agreement bore interest at one, two, three or six-month LIBOR , as selected by us, plus 1.75% to 2.50% , depending on current availability under the Credit Agreement and until January 1, 2016, the interest rate would be the selected LIBOR plus 1.75%. On June 1, 2015, we amended certain definitions in the Credit Agreement adjusting the borrowings to bear interest at one-month LIBOR plus 1.75% to 2.50%, depending on current availability under the Credit Agreement. We will pay letter of credit fees equal to the applicable margin (1.75% to 2.50%) times the daily maximum amount available to be drawn under all letters of credit outstanding and a monthly unused fee at a rate per annum of 0.25% on the aggregate unused commitment under the Credit Agreement. We granted the Administrative Agent a security interest in substantially all of our assets, including all cash and cash equivalents, accounts receivable, general intangibles, owned real property, and equipment and fixtures. In addition, under the Credit Agreement, we are subject to certain standard affirmative and negative covenants, including the following financial covenants: 1) maintaining a maximum consolidated fixed charge coverage ratio of 1.10 to 1.00 if a reporting trigger period commences and 2) limiting non-financed capital expenditures during 2015 to $10,500 and during each fiscal year thereafter during the term to $10,000 . We were in compliance with all such covenants as of September 30, 2015 . We had $ 28,384 of outstanding borrowings on our credit facility at September 30, 2015. In November 2015, we entered into a second amendment to the Credit Agreement (see Note 13). Financing Agreement We entered into a financing agreement for the purchase of certain software licenses and related hardware for approximately $ 1,000 , which were delivered and placed into service in April 2014. Monthly payments commenced July 2014. As of September 30, 2015, the current and long-term portion was $ 394 and $ 208 , respectively, and at December 31, 2014, the current and long-term portion was $ 373 and $ 506 , respectively. The amounts are included in other current liabilities and other liabilities on the consolidated balance sheets. Capital Lease Obligations We had long-term obligations under capital leases of $ 6,701 and $ 4,264 as of September 30, 2015 and December 31, 2014, respectively. Long-term obligations under capital leases previously presented for prior periods have been reclassified to conform to the current presentation. The current obligations under capital leases of $ 1,708 and $ 810 as of September 30, 2015 and December 31, 2014, respectively, are included in other current liabilities on the consolidated balance sheets. The related assets are included in property, plant and equipment in the consolidated balance sheets. |
SHARE-BASED COMPENSATION
SHARE-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2015 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE-BASED COMPENSATION | SHARE-BASED COMPENSATION Our share-based compensation arrangements include grants of stock options, restricted stock awards and deferred stock units under the StarTek, Inc. 2008 Equity Incentive Plan and our Employee Stock Purchase Plan. The compensation expense that has been charged against income for stock option awards and restricted stock for the three and nine months ended September 30, 2015 was $463 and $ 1,376 , respectively, and for the three and nine months ended September 30, 2014 was $ 343 and $ 1,207 , respectively, and is included in selling, general and administrative expense. As of September 30, 2015 , there was $1,859 of total unrecognized compensation expense related to nonvested stock options, which is expected to be recognized over a weighted-average period of 1.9 years. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE LOSS | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
ACCUMULATED OTHER COMPREHENSIVE LOSS | ACCUMULATED OTHER COMPREHENSIVE LOSS Accumulated other comprehensive loss consisted of the following items: Foreign Currency Translation Adjustment Derivatives Accounted for as Cash Flow Hedges Total Balance at December 31, 2014 $ 1,486 $ (2,311 ) $ (825 ) Foreign currency translation 59 — 59 Reclassification to operations — 1,825 1,825 Unrealized gains (losses) — (1,748 ) (1,748 ) Balance at September 30, 2015 $ 1,545 $ (2,234 ) $ (689 ) Reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2015 and 2014 were as follows: Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Consolidated Statements of Operations and Comprehensive Loss Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Losses on cash flow hedges Foreign exchange contracts $ 682 $ 324 $ 1,682 $2,215 Cost of services Foreign exchange contracts 62 17 143 152 Selling, general and administrative expenses Total reclassifications for the period $ 744 $ 341 $ 1,825 $ 2,367 |
SEGMENT INFORMATION
SEGMENT INFORMATION | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
SEGMENT INFORMATION | SEGMENT INFORMATION We operate our business within three reportable segments: Domestic, Nearshore, and Offshore, which are based on the geographic regions in which our services are rendered. Commencing in the second quarter of 2015, the Asia Pacific segment was renamed Offshore, which includes our Philippines operations, and the Latin America segment was renamed Nearshore, which includes our Honduras and Jamaica operations. These revised reportable segments better align with our strategic approach to the markets and customers we serve. As of September 30, 2015, our Domestic segment included the operations of fourteen facilities in the U.S. and one facility in Canada. Our Offshore segment included the operations of four facilities in the Philippines and our Nearshore segment included two facilities in Honduras and one facility in Jamaica. Operations at our facility in Costa Rica, which were included in our Nearshore segment, ceased in August 2014. We primarily evaluate segment operating performance in each reporting segment based on revenue and gross profit. Certain operating expenses are not allocated to each reporting segment; therefore, we do not present income statement information by reporting segment below the gross profit level. Information about our reportable segments for the three and nine months ended September 30, 2015 and 2014 is as follows: For the Three Months Ended September 30, 2015 2014 Revenue: Domestic $ 44,552 $ 30,703 Offshore 17,141 22,469 Nearshore 11,063 8,266 Total $ 72,756 $ 61,438 Gross profit: Domestic $ 316 $ 3,041 Offshore 1,236 5,082 Nearshore 1,607 922 Total $ 3,159 $ 9,045 For the Nine Months Ended September 30, 2015 2014 Revenue: Domestic $ 117,281 $ 94,941 Offshore 55,599 64,558 Nearshore 26,994 26,402 Total $ 199,874 $ 185,901 Gross profit: Domestic $ 4,940 $ 10,225 Offshore 5,569 11,316 Nearshore 4,081 1,414 Total $ 14,590 $ 22,955 |
BASIS OF PRESENTATION AND SUM18
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
Accounting Policies [Abstract] | |
Use of Estimates | Use of Estimates The preparation of our consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts included in the financial statements and accompanying notes. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period they are determined to be necessary. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In September 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2015-16 ("ASU 2015-16"), S implifying the Accounting for Measurement Period Adjustments . ASU 2015-16 replaces the requirement that an acquirer in a business combination account for measurement period adjustments retrospectively with a requirement that an acquirer recognize adjustments to the provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined. ASU 2015-16 requires that the acquirer record, in the same period’s financial statements, the effect on earnings of changes in depreciation, amortization, or other income effects, if any, as a result of the change to the provisional amounts, calculated as if the accounting had been completed at the acquisition date. For public business entities, ASU 2015-16 is effective for fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. The guidance is to be applied prospectively to adjustments to provisional amounts that occur after the effective date of the guidance, with earlier application permitted for financial statements that have not been issued. ASU 2015-16 is not expected to have a material impact on our consolidated financial statements. In August 2015, the FASB issued ASU No. 2015-15, Interest — Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line-of-Credit Arrangements — Amendments to SEC Paragraphs Pursuant to Staff Announcement at June 18, 2015 EITF Meeting ("ASU 2015-15"), which clarifies the treatment of debt issuance costs from line-of-credit arrangements after the adoption of ASU 2015-03. In particular, ASU 2015-15 clarifies that the SEC staff would not object to an entity deferring and presenting debt issuance costs related to a line-of-credit arrangement as an asset and subsequently amortizing the deferred debt issuance costs ratably over the term of such arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. ASU 2015-15 is not expected to have a material impact on our consolidated financial statements. In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) ("ASU 2014-09"). ASU 2014-09 amends the guidance for revenue recognition to replace numerous, industry-specific requirements and converges areas under this topic with those of the International Financial Reporting Standards. The ASU implements a five-step process for customer contract revenue recognition that focuses on transfer of control, as opposed to transfer of risk and rewards. The amendment also requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. Other major provisions include the capitalization and amortization of certain contract costs, ensuring the time value of money is considered in the transaction price, and allowing estimates of variable consideration to be recognized before contingencies are resolved in certain circumstances. The amendments in this ASU are effective for reporting periods beginning after December 15, 2016; however, in July 2015, the FASB agreed to delay the effective date by one year. The proposed deferral may permit early adoption, but would not allow adoption any earlier than the original effective date of the standard. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. We are currently assessing the impact the adoption of ASU 2014-09, including possible transition alternatives, will have on our consolidated financial statements. |
ACQUISITION (Tables)
ACQUISITION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Business Combinations [Abstract] | |
Revenues and Net Loss of Acquired Entity Since Acquisition Date | The amount of ACCENT's revenues and net loss since the acquisition date included in our consolidated statements of operations and comprehensive loss for the three and nine months ended September 30, 2015 were as follows: From June 1, 2015 Through September 30, 2015 Revenues $ 22,799 Net loss $ (1,012 ) |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | These estimates of fair value of identifiable assets acquired and liabilities assumed are preliminary, pending completion of a valuation, and therefore are subject to revisions that may result in adjustments to the values presented below: Amount Cash $ 16,000 Working capital adjustment 1,492 Total allocable purchase price $ 17,492 Accounts receivable 9,265 Fixed assets 2,860 Prepaid expenses and other assets 334 Customer relationships 5,240 Trade name 850 Goodwill 4,860 Accounts payable (5,590 ) Other accrued expenses and current liabilities (327 ) Total preliminary purchase price allocation $ 17,492 |
Business Acquisition, Pro Forma Information | The unaudited pro forma information is not necessarily indicative of the results of operations that would have been achieved if the acquisition and related borrowings had taken place on January 1, 2014: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues $ 72,756 $ 78,939 $ 227,009 $ 239,443 Net loss $ (7,705 ) $ (1,875 ) $ (16,968 ) $ (8,923 ) Net loss per common share - basic and diluted $ (0.49 ) $ (0.12 ) $ (1.09 ) $ (0.58 ) Weighted average common shares outstanding - basic and diluted 15,569 15,400 15,504 15,389 |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The following table presents our intangible assets as of September 30, 2015 : Gross Intangibles Accumulated Amortization Net Intangibles Weighted Average Amortization Period (years) Developed technology $ 390 $ 122 $ 268 3.27 Customer relationships 7,550 630 6,920 4.26 Trade names 1,050 95 955 3.32 Noncompete agreement 10 10 — — $ 9,000 $ 857 $ 8,143 4.12 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Expected future amortization of intangible assets as of September 30, 2015 is as follows: Year Ending December 31, Amount Remainder of 2015 $ 296 2016 1,150 2017 1,140 2018 1,140 2019 1,131 Thereafter 3,286 |
RESTRUCTURING CHARGES (Tables)
RESTRUCTURING CHARGES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Related Costs | The table below summarizes the balance of accrued restructuring costs, which is included in other accrued liabilities in our consolidated balance sheets, and the changes during the nine months ended September 30, 2015 : Jonesboro Costa Rica Kansas City Corporate Total Balance as of December 31, 2014 $ 64 $ 9 — $ 32 $ 105 Expense (reversal) (14 ) — 96 1,531 1,613 Payments (36 ) (9 ) — (367 ) (412 ) Balance as of September 30, 2015 $ 14 $ — $ 96 $ 1,196 $ 1,306 |
PRINCIPAL CLIENTS (Tables)
PRINCIPAL CLIENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Risks and Uncertainties [Abstract] | |
Schedule of Revenue by Major Customers | The following table represents revenue concentration of our principal clients: Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenue Percentage Revenue Percentage Revenue Percentage Revenue Percentage T-Mobile USA, Inc., a subsidiary of Deutsche Telekom (2) $ 16,330 22.4 % $ 19,594 31.9 % $ 51,453 25.7 % $ 57,018 30.7 % AT&T Services, Inc. and AT&T Mobility, LLC, subsidiaries of AT&T, Inc. (1) $ 7,422 10.2 % $ 13,598 22.1 % $ 26,232 13.1 % $ 42,695 23.0 % Comcast Cable Communications Management, LLC, subsidiary of Comcast Corporation (2) $ 7,590 10.4 % $ 9,087 14.8 % $ 24,399 12.2 % $ 30,824 16.6 % (1) Revenue from this customer is generated through our Domestic and Offshore segments. (2) Revenue from this customer is generated through our Domestic and Offshore segments in 2014 and 2015 and through our Nearshore segment in 2014. |
DERIVATIVE INSTRUMENTS (Tables)
DERIVATIVE INSTRUMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Notional Amounts of Outstanding Derivative Positions | The following table shows the notional amount of our foreign exchange cash flow hedging instruments as of September 30, 2015 : Local Currency Notional Amount U.S. Dollar Notional Amount Canadian Dollar 6,390 $ 5,233 Philippine Peso 846,330 18,722 $ 23,955 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements, Recurring and Nonrecurring | The following tables set forth our assets and liabilities measured at fair value on a recurring basis and a non-recurring basis by level within the fair value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Assets and Liabilities Measured at Fair Value on a Recurring Basis as of September 30, 2015 Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts $ — $ 5 $ — $ 5 Total fair value of assets measured on a recurring basis $ — $ 5 $ — $ 5 Liabilities: Foreign exchange contracts $ — $ 1,132 $ — $ 1,132 Total fair value of liabilities measured on a recurring basis $ — $ 1,132 $ — $ 1,132 Assets and Liabilities Measured at Fair Value Level 1 Level 2 Level 3 Total Assets: Foreign exchange contracts $ — $ 48 $ — $ 48 Total fair value of assets measured on a recurring basis $ — $ 48 $ — $ 48 Liabilities: Foreign exchange contracts $ — $ 1,250 $ — $ 1,250 Total fair value of liabilities measured on a recurring basis $ — $ 1,250 $ — $ 1,250 Liabilities Measured at Fair Value on a Non-Recurring Basis as of September 30, 2015 Level 1 Level 2 Level 3 Total Liabilities: Accrued restructuring costs $ — $ — $ 1,305 $ 1,305 Total fair value of liabilities measured on a non-recurring basis $ — $ — $ 1,305 $ 1,305 Liabilities Measured at Fair Value on a Non-Recurring Basis as of December 31, 2014 Level 1 Level 2 Level 3 Total Liabilities: Accrued restructuring costs $ — $ — $ 105 $ 105 Total fair value of liabilities measured on a non-recurring basis $ — $ — $ 105 $ 105 |
ACCUMULATED OTHER COMPREHENSI25
ACCUMULATED OTHER COMPREHENSIVE LOSS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Stockholders' Equity Note [Abstract] | |
Schedule of Comprehensive Income (Loss) | Accumulated other comprehensive loss consisted of the following items: Foreign Currency Translation Adjustment Derivatives Accounted for as Cash Flow Hedges Total Balance at December 31, 2014 $ 1,486 $ (2,311 ) $ (825 ) Foreign currency translation 59 — 59 Reclassification to operations — 1,825 1,825 Unrealized gains (losses) — (1,748 ) (1,748 ) Balance at September 30, 2015 $ 1,545 $ (2,234 ) $ (689 ) |
Reclassification out of Accumulated Other Comprehensive Loss | Reclassifications out of accumulated other comprehensive loss for the three and nine months ended September 30, 2015 and 2014 were as follows: Details about Accumulated Other Comprehensive Loss Components Amount Reclassified from Accumulated Other Comprehensive Loss Affected Line Item in the Consolidated Statements of Operations and Comprehensive Loss Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Losses on cash flow hedges Foreign exchange contracts $ 682 $ 324 $ 1,682 $2,215 Cost of services Foreign exchange contracts 62 17 143 152 Selling, general and administrative expenses Total reclassifications for the period $ 744 $ 341 $ 1,825 $ 2,367 |
SEGMENT INFORMATION (Tables)
SEGMENT INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
Segment Reporting [Abstract] | |
Schedule of Segment Reporting Information, by Segment | Information about our reportable segments for the three and nine months ended September 30, 2015 and 2014 is as follows: For the Three Months Ended September 30, 2015 2014 Revenue: Domestic $ 44,552 $ 30,703 Offshore 17,141 22,469 Nearshore 11,063 8,266 Total $ 72,756 $ 61,438 Gross profit: Domestic $ 316 $ 3,041 Offshore 1,236 5,082 Nearshore 1,607 922 Total $ 3,159 $ 9,045 For the Nine Months Ended September 30, 2015 2014 Revenue: Domestic $ 117,281 $ 94,941 Offshore 55,599 64,558 Nearshore 26,994 26,402 Total $ 199,874 $ 185,901 Gross profit: Domestic $ 4,940 $ 10,225 Offshore 5,569 11,316 Nearshore 4,081 1,414 Total $ 14,590 $ 22,955 |
ACQUISITION (Details)
ACQUISITION (Details) $ in Thousands | Jun. 02, 2015USD ($)facility | Jun. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Jun. 01, 2015USD ($) | Dec. 31, 2014USD ($) |
Business Acquisition [Line Items] | |||||||
Refund resulting from finalization of working capital calculation | $ 834 | $ 0 | |||||
Cash | 583 | $ 603 | |||||
Goodwill | $ 8,995 | 8,995 | $ 4,136 | ||||
Acquisition-related costs | 715 | $ 1,040 | |||||
Accent Marketing Services, L.L.C. [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Membership interest acquired (percent) | 100.00% | ||||||
Number of facilities acquired | facility | 6 | ||||||
Estimated working capital | $ 2,326 | ||||||
Refund resulting from finalization of working capital calculation | $ 834 | ||||||
Cash | $ 16,000 | ||||||
Working capital adjustment | 1,492 | ||||||
Total allocable purchase price | 17,492 | ||||||
Accounts receivable | 9,265 | ||||||
Fixed assets | 2,860 | ||||||
Prepaid expenses and other assets | 334 | ||||||
Accounts payable | (5,590) | ||||||
Other accrued expenses and current liabilities | (327) | ||||||
Total preliminary purchase price allocation | 17,492 | ||||||
Goodwill | 4,860 | ||||||
Revenues | $ 22,799 | ||||||
Net loss | $ (1,012) | ||||||
Customer relationships | Accent Marketing Services, L.L.C. [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets | 5,240 | ||||||
Intangible assets, useful life | 8 years | ||||||
Trade name | Accent Marketing Services, L.L.C. [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets | $ 850 | ||||||
Intangible assets, useful life | 6 years | ||||||
Pro Forma [Member] | Accent Marketing Services, L.L.C. [Member] | |||||||
Business Acquisition [Line Items] | |||||||
Total allocable purchase price | $ 18,326 |
ACQUISITION Pro Forma Informati
ACQUISITION Pro Forma Information (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Business Combinations [Abstract] | ||||
Revenues | $ 72,756 | $ 78,939 | $ 227,009 | $ 239,443 |
Net loss | $ (7,705) | $ (1,875) | $ (16,968) | $ (8,923) |
Net loss per common share - basic and diluted (in dollars per share) | $ (0.49) | $ (0.12) | $ (1.09) | $ (0.58) |
Weighted average common shares outstanding - basic and diluted (in shares) | 15,569 | 15,400 | 15,504 | 15,389 |
GOODWILL AND INTANGIBLE ASSET29
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 8,995 | $ 4,136 |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangibles | 9,000 | |
Accumulated Amortization | 857 | |
Net Intangibles | $ 8,143 | 2,609 |
Weighted Average Amortization Period (years) | 4 years 1 month 13 days | |
Remainder of 2015 | $ 296 | |
2,016 | 1,150 | |
2,017 | 1,140 | |
2,018 | 1,140 | |
2,019 | 1,131 | |
Thereafter | 3,286 | |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangibles | 390 | |
Accumulated Amortization | 122 | |
Net Intangibles | $ 268 | |
Weighted Average Amortization Period (years) | 3 years 3 months 7 days | |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangibles | 7,550 | |
Accumulated Amortization | $ 630 | |
Net Intangibles | $ 6,920 | |
Weighted Average Amortization Period (years) | 4 years 3 months 4 days | |
Trade names | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangibles | 1,050 | |
Accumulated Amortization | $ 95 | |
Net Intangibles | $ 955 | |
Weighted Average Amortization Period (years) | 3 years 3 months 26 days | |
Noncompete agreement | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Intangibles | $ 10 | |
Accumulated Amortization | $ 10 | |
Net Intangibles | $ 0 |
RESTRUCTURING CHARGES (Textuals
RESTRUCTURING CHARGES (Textuals) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Restructuring Cost and Reserve [Line Items] | |||||
Expense | $ 1,613 | ||||
Domestic | Jonesboro | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expense | (14) | ||||
Gain on early termination of lease | $ 256 | ||||
Domestic | Jonesboro | Employee-Related Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expense | $ 192 | ||||
Domestic | Jonesboro | Facility Closing Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expense | $ 609 | ||||
Domestic | Corporate | Employee-Related Costs | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expense | $ 807 | 1,531 | $ 279 | ||
Domestic | Corporate | Other Restructuring | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expense | 3,156 | ||||
Nearshore | Costa Rica | |||||
Restructuring Cost and Reserve [Line Items] | |||||
Expense | $ 0 |
RESTRUCTURING CHARGES (Summary
RESTRUCTURING CHARGES (Summary of Activity, Restructuring Plans) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Restructuring Reserve [Roll Forward] | |||||
Balance as of December 31, 2014 | $ 105 | ||||
Expense | 1,613 | ||||
Payments | (412) | ||||
Balance as of September 30, 2015 | $ 1,306 | 1,306 | $ 105 | ||
Domestic | Jonesboro | |||||
Restructuring Reserve [Roll Forward] | |||||
Balance as of December 31, 2014 | 64 | ||||
Expense | (14) | ||||
Payments | (36) | ||||
Balance as of September 30, 2015 | 14 | 14 | 64 | ||
Domestic | Kansas City | |||||
Restructuring Reserve [Roll Forward] | |||||
Expense | 96 | ||||
Balance as of September 30, 2015 | 96 | 96 | |||
Domestic | Facility Closing Costs | Jonesboro | |||||
Restructuring Reserve [Roll Forward] | |||||
Expense | $ 609 | ||||
Domestic | Employee-Related Costs | Jonesboro | |||||
Restructuring Reserve [Roll Forward] | |||||
Expense | $ 192 | ||||
Domestic | Employee-Related Costs | Corporate | |||||
Restructuring Reserve [Roll Forward] | |||||
Balance as of December 31, 2014 | 32 | ||||
Expense | 807 | 1,531 | 279 | ||
Payments | (367) | ||||
Balance as of September 30, 2015 | 1,196 | 1,196 | 32 | ||
Nearshore | Costa Rica | |||||
Restructuring Reserve [Roll Forward] | |||||
Balance as of December 31, 2014 | 9 | ||||
Expense | 0 | ||||
Payments | (9) | ||||
Balance as of September 30, 2015 | $ 0 | $ 0 | $ 9 |
NET LOSS PER SHARE (Details)
NET LOSS PER SHARE (Details) - shares | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Earnings Per Share [Abstract] | ||
Anti-dilutive securities excluded from computation of earnings per share (in shares) | 2,533,403 | 2,289,041 |
PRINCIPAL CLIENTS (Details)
PRINCIPAL CLIENTS (Details) - USD ($) $ in Thousands | Jan. 04, 2014 | Jul. 28, 2011 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | ||
T-Mobile USA, Inc., a subsidiary of Deutsche Telekom | ||||||||
Revenue, Major Customers [Line Items] | ||||||||
Revenue | $ 16,330 | $ 19,594 | $ 51,453 | $ 57,018 | ||||
Revenue concentration, percentage | 22.40% | 31.90% | 25.70% | 30.70% | ||||
Initial term of the master service agreement | 5 years | |||||||
Master services agreement, renewal term | 1 year | |||||||
Notice of termination option of the initial term | 90 days | |||||||
AT&T Services, Inc. and AT&T Mobility, LLC, subsidiaries of AT&T Inc. | ||||||||
Revenue, Major Customers [Line Items] | ||||||||
Revenue | $ 7,422 | [1] | $ 13,598 | [1] | $ 26,232 | $ 42,695 | ||
Revenue concentration, percentage | 10.20% | [1] | 22.10% | [1] | 13.10% | 23.00% | ||
Comcast Cable Communications Management LLC, subsidiary of Comcast Corporation | ||||||||
Revenue, Major Customers [Line Items] | ||||||||
Revenue | $ 7,590 | [2] | $ 9,087 | [2] | $ 24,399 | $ 30,824 | ||
Revenue concentration, percentage | 10.40% | [2] | 14.80% | [2] | 12.20% | 16.60% | ||
Initial term of the master service agreement | 1 year | |||||||
Master services agreement, renewal term | 1 year | |||||||
Notice of termination option of the initial term | 90 days | |||||||
[1] | Revenue from this customer is generated through our Domestic and Offshore segments. | |||||||
[2] | Revenue from this customer is generated through our Domestic and Offshore segments in 2014 and 2015 and through our Nearshore segment in 2014. |
DERIVATIVE INSTRUMENTS (Details
DERIVATIVE INSTRUMENTS (Details) - 9 months ended Sep. 30, 2015 - Foreign exchange contracts PHP in Thousands, CAD in Thousands, $ in Thousands | USD ($) | PHP | CAD |
Derivative [Line Items] | |||
Derivatives, notional amount | $ 23,955 | ||
Minimum | |||
Derivative [Line Items] | |||
Derivatives, contract period | 3 months | ||
Maximum | |||
Derivative [Line Items] | |||
Derivatives, contract period | 12 months | ||
Canadian Dollar | |||
Derivative [Line Items] | |||
Derivatives, notional amount | $ 5,233 | CAD 6,390 | |
Philippine Peso | |||
Derivative [Line Items] | |||
Derivatives, notional amount | $ 18,722 | PHP 846,330 |
FAIR VALUE MEASUREMENTS (Recurr
FAIR VALUE MEASUREMENTS (Recurring and Nonrecurring) (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Recurring | ||
Assets and Liabilities at Fair Value Measured on Recurring Basis | ||
Assets, Foreign exchange contracts | $ 5 | $ 48 |
Total fair value of assets measured on a recurring basis | 5 | 48 |
Nonrecurring | ||
Assets and Liabilities at Fair Value on a Nonrecurring Basis | ||
Accrued restructuring costs | 1,305 | 105 |
Total fair value of liabilities measured on a non-recurring basis | 1,305 | 105 |
Level 2 | Recurring | ||
Assets and Liabilities at Fair Value Measured on Recurring Basis | ||
Assets, Foreign exchange contracts | 5 | 48 |
Total fair value of assets measured on a recurring basis | 5 | 48 |
Level 3 | Nonrecurring | ||
Assets and Liabilities at Fair Value on a Nonrecurring Basis | ||
Accrued restructuring costs | 1,305 | 105 |
Total fair value of liabilities measured on a non-recurring basis | 1,305 | 105 |
Foreign exchange contracts | Recurring | ||
Assets and Liabilities at Fair Value Measured on Recurring Basis | ||
Liabilities, Foreign exchange contracts | 1,132 | 1,250 |
Total fair value of liabilities measured on a recurring basis | 1,132 | 1,250 |
Foreign exchange contracts | Level 2 | Recurring | ||
Assets and Liabilities at Fair Value Measured on Recurring Basis | ||
Liabilities, Foreign exchange contracts | 1,132 | 1,250 |
Total fair value of liabilities measured on a recurring basis | $ 1,132 | $ 1,250 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Jun. 02, 2015 | Apr. 30, 2015 | Sep. 30, 2015 | Apr. 29, 2015 | Dec. 31, 2014 |
Line of Credit Facility [Line Items] | |||||
Line of credit | $ 28,384 | $ 4,640 | |||
Long-term Debt, Current and Noncurrent [Abstract] | |||||
Long-term debt | 1,000 | ||||
Long-term debt, current portion | 394 | 373 | |||
Long-term debt, net of current portion | 208 | $ 506 | |||
Wells Fargo Bank | Revolving Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | $ 20,000 | ||||
Line of credit | 9,300 | ||||
Early termination fee | 100 | ||||
BMO Harris Bank | Revolving Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Line of credit facility, maximum borrowing capacity | 70,000 | ||||
Line of credit | $ 28,384 | ||||
Line of credit facility, current borrowing capacity | 50,000 | ||||
Increments for additional borrowing | 5,000 | ||||
Letters of credit, maximum allowed | 5,000 | ||||
Borrowing base, as percentage of eligible accounts receivables less reserves | 85.00% | ||||
Description of variable rate basis | one-month LIBOR | one, two, three or six-month LIBOR | |||
Monthly unused fee, rate per annum | 0.25% | ||||
Fixed charge coverage ratio | 1.10 | ||||
Maximum limit for non-financed capital expenditures during 2015 | 10,500 | ||||
Maximum limit for non-financed capital expenditures after 2015 | $ 10,000 | ||||
Minimum | BMO Harris Bank | Revolving Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 1.75% | ||||
Maximum | BMO Harris Bank | Revolving Credit Facility | |||||
Line of Credit Facility [Line Items] | |||||
Basis spread on variable rate | 2.50% |
DEBT Capital Leases (Details)
DEBT Capital Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Debt Disclosure [Abstract] | ||
Long-term obligations under capital leases | $ 6,701 | $ 4,264 |
Current obligations under capital leases | $ 1,708 | $ 810 |
SHARE-BASED COMPENSATION (Textu
SHARE-BASED COMPENSATION (Textuals (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Stock Awards Activity [Line Items] | ||||
Total compensation cost | $ 463 | $ 343 | $ 1,376 | $ 1,207 |
Stock Options | ||||
Stock Awards Activity [Line Items] | ||||
Total unrecognized compensation cost | $ 1,859 | $ 1,859 | ||
Weighted-average period that cost is expected to be recognized | 1 year 11 months 12 days |
ACCUMULATED OTHER COMPREHENSI39
ACCUMULATED OTHER COMPREHENSIVE LOSS (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2015USD ($) | |
Accumulated Other Comprehensive Loss [Roll Forward] | |
Foreign Currency Translation Adjustment - Beginning balance | $ 1,486 |
Derivatives Accounted for as Cash Flow Hedges - Beginning balance | (2,311) |
Total - Beginning balance | (825) |
Foreign currency translation | 59 |
Reclassification to operations, derivatives | 1,825 |
Unrealized gains (losses) | (1,748) |
Foreign Currency Translation Adjustment - Ending balance | 1,545 |
Derivatives Accounted for as Cash Flow Hedges - Ending balance | (2,234) |
Total - Ending balance | $ (689) |
ACCUMULATED OTHER COMPREHENSI40
ACCUMULATED OTHER COMPREHENSIVE LOSS Reclassification (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Cost of services | $ 69,597 | $ 52,393 | $ 185,284 | $ 162,946 |
Selling, general and administrative expenses | 9,335 | 7,503 | 25,981 | 23,052 |
Reclassification to operations | 744 | 341 | 1,825 | 2,367 |
Accumulated Net Gain (Loss) from Designated or Qualifying Cash Flow Hedges | Foreign exchange contracts | Amount Reclassified from Accumulated Other Comprehensive Income | ||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Cost of services | 682 | 324 | 1,682 | 2,215 |
Selling, general and administrative expenses | $ 62 | $ 17 | $ 143 | $ 152 |
SEGMENT INFORMATION (Textual) (
SEGMENT INFORMATION (Textual) (Details) | 9 Months Ended |
Sep. 30, 2015facilitysegment | |
Segment Reporting Information [Line Items] | |
Number of reportable segments | segment | 3 |
U.S. | |
Segment Reporting Information [Line Items] | |
Number of operating facilities | 14 |
Canada | |
Segment Reporting Information [Line Items] | |
Number of operating facilities | 1 |
Philippines | |
Segment Reporting Information [Line Items] | |
Number of operating facilities | 4 |
Honduras | |
Segment Reporting Information [Line Items] | |
Number of operating facilities | 2 |
Jamaica | |
Segment Reporting Information [Line Items] | |
Number of operating facilities | 1 |
SEGMENT INFORMATION (Segment Re
SEGMENT INFORMATION (Segment Reporting) (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Segment Reporting Information [Line Items] | ||||
Revenue | $ 72,756 | $ 61,438 | $ 199,874 | $ 185,901 |
Gross profit | 3,159 | 9,045 | 14,590 | 22,955 |
Reportable Geographical Components [Member] | Domestic | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 44,552 | 30,703 | 117,281 | 94,941 |
Gross profit | 316 | 3,041 | 4,940 | 10,225 |
Reportable Geographical Components [Member] | Offshore | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 17,141 | 22,469 | 55,599 | 64,558 |
Gross profit | 1,236 | 5,082 | 5,569 | 11,316 |
Reportable Geographical Components [Member] | Nearshore | ||||
Segment Reporting Information [Line Items] | ||||
Revenue | 11,063 | 8,266 | 26,994 | 26,402 |
Gross profit | $ 1,607 | $ 922 | $ 4,081 | $ 1,414 |