TeleTech Holdings Inc. (TTEC, Financial) filed Annual Report for the period ended 2011-12-31.
Teletech Hldgs has a market cap of $985.9 million; its shares were traded at around $17.64 with a P/E ratio of 15.8 and P/S ratio of 0.9. Teletech Hldgs had an annual average earning growth of 7.8% over the past 10 years.
The effective tax rate for 2011 was 14.5% as compared to an effective tax rate of 34.7% in 2010. The 2011 effective tax rate was negatively influenced by an adverse decision by the Canada Revenue Agency regarding the Companys request for relief from double taxation, and benefitted from a mediated settlement with the IRS related to U.S. tax refund claims, a reduction in the incremental U.S. tax expense (versus the estimate recorded in the fourth quarter of 2010) related to the Companys 2010 repatriation of $105 million of foreign earnings, earnings reported in international jurisdictions currently under an income tax holiday, and the distribution of income between the U.S. and international tax jurisdictions. Without the $8.7 million expense related to the adverse decision by the Canada Revenue Agency regarding the Companys request for relief from double taxation, the $11.7 million benefit related to the Companys mediated settlement with the IRS related to U.S. tax refund claims, the $1.4 million benefit related to the foreign earnings repatriation, and $0.3 million benefit for other discrete items recognized during the period, the Companys effective tax rate for 2011 would have been 19.7%.
Cost of services for the North American BPO segment for 2010 compared to 2009 was $572.4 million and $598.0 million, respectively. Cost of services as a percentage of revenue in the North American BPO segment increased compared to the prior year. In absolute dollars the decrease was due to a $35.3 million decrease in employee related expenses due to lower volumes in existing client programs and the completion of client programs, and a $3.0 million decrease in technology costs. This decrease was offset in part by a $4.2 million increase in telecommunications expenses primarily associated with a short-term government program, a $3.0 million decrease in training grant reimbursements, a $1.9 million increase for facility and occupancy expenses, a $1.1 million increase in contract labor, and a $2.5 million net increase in other expenses.
Selling, general and administrative expenses for the International BPO segment for 2010 compared to 2009 were $46.0 million and $47.6 million, respectively. The expenses decreased in absolute dollars while increasing slightly as a percentage of revenue. The decrease in absolute dollars was due to a decrease of $2.3 million for employee expenses and incentive compensation expense, a $1.3 million decrease in telecommunication expenses, and a $0.8 million decrease in facility and occupancy expenses, offset by a $1.3 million net increase in other expenses, a $0.9 million increase in litigation settlements, and a $0.6 million increase in bad debts.
The effective tax rate for 2010 was 34.7%. This compared to an effective tax rate of 26.7% in 2009. The 2010 effective tax rate increased due to $5.6 million in incremental income taxes owed to the U.S. associated with our decision to repatriate $104.8 million in foreign earnings which had previously been considered permanently invested outside the United States. In addition, income taxes increased because we recorded a $2.5 million deferred tax liability in the U.S. related to foreign tax assets that will no longer be able to offset tax in more than one jurisdiction. Income taxes also increased due to a $6.6 million increase to the deferred tax valuation allowance, $3.7 million of this increase arising in the fourth quarter due to our change in judgment concerning the recoverability of tax assets in one European jurisdiction. Income taxes also increased by $2.3 million related to the $5.9 million gain recorded in Other income (expense), net as discussed above and $0.7 million of other charges. Offsetting these increases is a $4.0 million reduction to income taxes for foreign tax planning strategies associated with our international operations. Without these items our effective tax rate for 2010 would have been 19.3%.
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Teletech Hldgs has a market cap of $985.9 million; its shares were traded at around $17.64 with a P/E ratio of 15.8 and P/S ratio of 0.9. Teletech Hldgs had an annual average earning growth of 7.8% over the past 10 years.
Highlight of Business Operations:
In 2011, our revenue increased 7.7% to $1,179 million over the 2010 year, which included an increase of 2.2% or $23.6 million due to fluctuations in foreign currency rates. This revenue increase was due to an increase in existing client programs, the addition of 41 new clients, and the 2010 acquisition of Peppers & Rogers Group and the 2011 acquisition of eLoyalty Corporation. Our income from operations increased 26.7% to $93.5 million or 7.9% of revenue in 2011 from $73.7 million or 6.7% of revenue in 2010. Income from operations in 2011 included $3.7 million and $0.2 million of restructuring charges and asset impairments, respectively.The effective tax rate for 2011 was 14.5% as compared to an effective tax rate of 34.7% in 2010. The 2011 effective tax rate was negatively influenced by an adverse decision by the Canada Revenue Agency regarding the Companys request for relief from double taxation, and benefitted from a mediated settlement with the IRS related to U.S. tax refund claims, a reduction in the incremental U.S. tax expense (versus the estimate recorded in the fourth quarter of 2010) related to the Companys 2010 repatriation of $105 million of foreign earnings, earnings reported in international jurisdictions currently under an income tax holiday, and the distribution of income between the U.S. and international tax jurisdictions. Without the $8.7 million expense related to the adverse decision by the Canada Revenue Agency regarding the Companys request for relief from double taxation, the $11.7 million benefit related to the Companys mediated settlement with the IRS related to U.S. tax refund claims, the $1.4 million benefit related to the foreign earnings repatriation, and $0.3 million benefit for other discrete items recognized during the period, the Companys effective tax rate for 2011 would have been 19.7%.
Cost of services for the North American BPO segment for 2010 compared to 2009 was $572.4 million and $598.0 million, respectively. Cost of services as a percentage of revenue in the North American BPO segment increased compared to the prior year. In absolute dollars the decrease was due to a $35.3 million decrease in employee related expenses due to lower volumes in existing client programs and the completion of client programs, and a $3.0 million decrease in technology costs. This decrease was offset in part by a $4.2 million increase in telecommunications expenses primarily associated with a short-term government program, a $3.0 million decrease in training grant reimbursements, a $1.9 million increase for facility and occupancy expenses, a $1.1 million increase in contract labor, and a $2.5 million net increase in other expenses.
Selling, general and administrative expenses for the International BPO segment for 2010 compared to 2009 were $46.0 million and $47.6 million, respectively. The expenses decreased in absolute dollars while increasing slightly as a percentage of revenue. The decrease in absolute dollars was due to a decrease of $2.3 million for employee expenses and incentive compensation expense, a $1.3 million decrease in telecommunication expenses, and a $0.8 million decrease in facility and occupancy expenses, offset by a $1.3 million net increase in other expenses, a $0.9 million increase in litigation settlements, and a $0.6 million increase in bad debts.
The effective tax rate for 2010 was 34.7%. This compared to an effective tax rate of 26.7% in 2009. The 2010 effective tax rate increased due to $5.6 million in incremental income taxes owed to the U.S. associated with our decision to repatriate $104.8 million in foreign earnings which had previously been considered permanently invested outside the United States. In addition, income taxes increased because we recorded a $2.5 million deferred tax liability in the U.S. related to foreign tax assets that will no longer be able to offset tax in more than one jurisdiction. Income taxes also increased due to a $6.6 million increase to the deferred tax valuation allowance, $3.7 million of this increase arising in the fourth quarter due to our change in judgment concerning the recoverability of tax assets in one European jurisdiction. Income taxes also increased by $2.3 million related to the $5.9 million gain recorded in Other income (expense), net as discussed above and $0.7 million of other charges. Offsetting these increases is a $4.0 million reduction to income taxes for foreign tax planning strategies associated with our international operations. Without these items our effective tax rate for 2010 would have been 19.3%.
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