Edgar Filing: TELETECH HOLDINGS INC

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UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2014

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-11919

TeleTech Holdings, Inc.

(Exact name of registrant as specified in its charter)

Delaware		84-1291044
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

9197 South Peoria Street

Englewood, Colorado 80112

(Address of principal executive offices)

Registrant’s telephone number, including area code: (303) 397-8100

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o		Accelerated filer x

Non-accelerated filer o (Do not check if a smaller reporting company)		Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No x

As of April 30, 2014, there were 49,433,810 shares of the registrant’s common stock outstanding.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

MARCH 31, 2014 FORM 10-Q

TABLE OF CONTENTS

			Page No.

PART I. FINANCIAL INFORMATION

	Item 1.	Financial Statements

		Consolidated Balance Sheets as of March 31, 2014 (unaudited) and December 31, 2013	1

		Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013 (unaudited)	2

		Consolidated Statement of Equity as of and for the three months ended March 31, 2014 (unaudited)	3

		Consolidated Statements of Cash Flows for the three months ended March 31, 2014 and 2013 (unaudited)	4

		Notes to the Unaudited Consolidated Financial Statements	5

	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	31

	Item 4.	Controls and Procedures	33

PART II. OTHER INFORMATION

	Item 1.	Legal Proceedings	34

	Item 1A.	Risk Factors	34

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	35

	Item 6.	Exhibits	36

SIGNATURES			37

EXHIBIT INDEX			38

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Balance Sheets

(Amounts in thousands, except share amounts)

	March 31, 2014			December 31, 2013
	(Unaudited)
ASSETS
Current assets
Cash and cash equivalents	$	120,377		$	158,017
Accounts receivable, net	249,351			236,099
Prepaids and other current assets	57,602			52,332
Deferred tax assets, net	13,283			11,905
Income tax receivable	8,748			11,198
Total current assets	449,361			469,551

Long-term assets
Property, plant and equipment, net	132,789			126,719
Goodwill	110,553			102,743
Contract acquisition costs, net	1,327			1,642
Deferred tax assets, net	40,069			42,791
Other intangible assets, net	56,394			54,812
Other long-term assets	41,447			44,084
Total long-term assets	382,579			372,791
Total assets	$	831,940		$	842,342

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	40,695		$	32,031
Accrued employee compensation and benefits	63,698			80,130
Other accrued expenses	40,216			31,659
Income taxes payable	1,648			6,066
Deferred tax liabilities, net	38			590
Deferred revenue	27,985			28,799
Other current liabilities	13,940			11,512
Total current liabilities	188,220			190,787

Long-term liabilities
Line of credit	100,000			100,000
Deferred tax liabilities, net	2,103			2,281
Deferred rent	9,040			9,635
Other long-term liabilities	60,799			63,648
Total long-term liabilities	171,942			175,564
Total liabilities	360,162			366,351

Commitments and contingencies (Note 10)

Mandatorily redeemable noncontrolling interest	2,462			2,509

Stockholders’ equity
Preferred stock - $0.01 par value: 10,000,000 shares authorized; zero shares outstanding as of March 31, 2014 and December 31, 2013	—			—
Common stock - $0.01 par value; 150,000,000 shares authorized; 49,714,740 and 50,352,881 shares outstanding as of March 31, 2014 and December 31, 2013, respectively	497			503
Additional paid-in capital	352,568			356,381
Treasury stock at cost: 32,337,513 and 31,699,372 shares as of March 31, 2014 and December 31, 2013, respectively	(494,133		)	(477,399		)
Accumulated other comprehensive income (loss)	(24,602		)	(20,586		)
Retained earnings	626,895			606,502
Noncontrolling interest	8,091			8,081
Total stockholders’ equity	469,316			473,482
Total liabilities and stockholders’ equity	$	831,940		$	842,342

The accompanying notes are an integral part of these consolidated financial statements.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

(Amounts in thousands, except per share amounts)

(Unaudited)

	Three Months Ended March 31,
	2014			2013

Revenue	$	302,221		$	288,383

Operating expenses
Cost of services (exclusive of depreciation and amortization presented separately below)	213,787			208,232
Selling, general and administrative	50,367			45,747
Depreciation and amortization	13,170			10,555
Restructuring charges, net	540			851
Total operating expenses	277,864			265,385

Income from operations	24,357			22,998

Other income (expense)
Interest income	511			669
Interest expense	(1,690		)	(1,865		)
Other income (expense), net	1,001			(808		)
Total other income (expense)	(178		)	(2,004		)

Income before income taxes	24,179			20,994

Provision for income taxes	(2,876		)	(2,391		)

Net income	21,303			18,603

Net income attributable to noncontrolling interest	(1,085		)	(642		)

Net income attributable to TeleTech stockholders	$	20,218		$	17,961

Other comprehensive income (loss)
Net income	$	21,303		$	18,603
Foreign currency translation adjustments	(1,723		)	3,134
Derivative valuation, gross	(3,917		)	3,390
Derivative valuation, tax effect	1,382			(1,210		)
Other, net of tax	276			162
Total other comprehensive (loss) income	(3,982		)	5,476
Total comprehensive income	17,321			24,079

Comprehensive income attributable to noncontrolling interest	(992		)	(552		)

Comprehensive income attributable to TeleTech stockholders	$	16,329		$	23,527

Weighted average shares outstanding
Basic	50,045			52,347
Diluted	50,973			53,217

Net income per share attributable to TeleTech stockholders
Basic	$	0.40		$	0.34
Diluted	$	0.40		$	0.34

The accompanying notes are an integral part of these consolidated financial statements.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statement of Stockholders’ Equity

(Amounts in thousands)

(Unaudited)

	Stockholders’ Equity of the Company
	Preferred Stock			Common Stock					Treasury			Additional Paid-in			Accumulated Other Comprehensive			Retained		Noncontrolling			Total
	Shares	Amount		Shares		Amount			Stock			Capital			Income (Loss)			Earnings		interest			Equity

Balance as of December 31, 2013	—	$	—	50,353		$	503		$	(477,399	)	$	356,381		$	(20,586	)	$	606,502	$	8,081		$	473,482

Net income	—	—		—		—			—			—			—			20,218		957			21,175
Dividends distributed to noncontrolling interest	—	—		—		—			—			—			—			—		(990		)	(990		)
Adjustments to redemption value of mandatorily redeemable noncontrolling interest	—	—		—		—			—			—			—			175		—			175
Foreign currency translation adjustments	—	—		—		—			—			—			(1,758		)	—		35			(1,723		)
Derivatives valuation, net of tax	—	—		—		—			—			—			(2,534		)	—		—			(2,534		)
Vesting of restricted stock units	—	—		246		3			3,678			(7,434		)	—			—		—			(3,753		)
Exercise of stock options	—	—		3		—			45			(33		)	—			—		—			12
Excess tax benefit from equity-based awards	—	—		—		—			—			527			—			—		—			527
Equity-based compensation expense	—	—		—		—			—			3,127			—			—		8			3,135
Purchases of common stock	—	—		(887	)	(9		)	(20,457		)	—			—			—		—			(20,466		)
Other	—	—		—		—			—			—			276			—		—			276

Balance as of March 31, 2014	—	$	—	49,715		$	497		$	(494,133	)	$	352,568		$	(24,602	)	$	626,895	$	8,091		$	469,316

The accompanying notes are an integral part of these consolidated financial statements.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

(Amounts in thousands)

(Unaudited)

	Three Months Ended March 31,
	2014			2013

Cash flows from operating activities
Net income	$	21,303		$	18,603
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	13,170			10,555
Amortization of contract acquisition costs	358			255
Amortization of debt issuance costs	170			175
Imputed interest expense and fair value adjustments to contingent consideration	200			346
Provision for doubtful accounts	113			76
Gain on disposal of assets	—			(107		)
Deferred income taxes	990			3,975
Excess tax benefit from equity-based awards	(788		)	(800		)
Equity-based compensation expense	3,160			3,191
Gain on foreign currency derivatives	(634		)	(433		)

Changes in assets and liabilities, net of acquisitions:
Accounts receivable	(8,092		)	5,012
Prepaids and other assets	1,618			(7,630		)
Accounts payable and accrued expenses	(10,817		)	(19,399		)
Deferred revenue and other liabilities	(7,214		)	(7,325		)
Net cash provided by operating activities	13,537			6,494

Cash flows from investing activities
Proceeds from sale of property, plant and equipment	135			—
Purchases of property, plant and equipment, net of acquisitions	(15,095		)	(4,105		)
Acquisitions, net of cash acquired of $812 and zero, respectively	(8,160		)	—
Net cash used in investing activities	(23,120		)	(4,105		)

Cash flows from financing activities
Proceeds from line of credit	632,900			366,950
Payments on line of credit	(632,900		)	(359,950		)
Proceeds from other debt	—			3,709
Payments on other debt	(1,525		)	(1,338		)
Payments of purchase price payables	(2,189		)	—
Dividends paid to noncontrolling interest	(990		)	(1,109		)
Proceeds from exercise of stock options	12			539
Excess tax benefit from equity-based awards	788			800
Purchase of treasury stock	(20,466		)	(9,850		)
Net cash used in financing activities	(24,370		)	(249		)

Effect of exchange rate changes on cash and cash equivalents	(3,687		)	3,926

(Decrease) increase in cash and cash equivalents	(37,640		)	6,066
Cash and cash equivalents, beginning of period	158,017			164,485
Cash and cash equivalents, end of period	$	120,377		$	170,551

Supplemental disclosures
Cash paid for interest	$	982		$	1,048
Cash paid for income taxes	$	2,834		$	1,751

Non-cash investing and financing activities
Acquisition of equipment through increase in accounts payable	$	941		$	—
Contract acquisition costs credited to accounts receivable	$	1,000		$	—

The accompanying notes are an integral part of these consolidated financial statements.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(1) OVERVIEW AND BASIS OF PRESENTATION

Summary of Business

TeleTech Holdings, Inc. (“TeleTech” or “the Company”) is a leading provider of customer strategy, analytics-driven and technology-enabled customer engagement management solutions with 41,000 employees delivering services across 25 countries from 54 delivery centers on five continents.

We have deep industry expertise and serve more than 250 customer-focused industry leaders in the Global 1000. Our business is structured and reported in four segments: Customer Management Services (“CMS”), Customer Growth Services (“CGS”), Customer Technology Services (“CTS”), and Customer Strategy Services (“CSS”).

Basis of Presentation

The Consolidated Financial Statements are comprised of the accounts of TeleTech, its wholly owned subsidiaries, its 55% equity owned subsidiary Percepta, LLC, its 80% interest in iKnowtion, LLC, and its 80% interest in Peppers & Rogers Group through the third quarter of 2013 when the final 20% interest was repurchased (see additional information in Note 2). All intercompany balances and transactions have been eliminated in consolidation.

The accompanying 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 present 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, 2014.

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, 2013.

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 valuation allowances for deferred tax assets, self-insurance reserves, litigation reserves, restructuring reserves, allowance for doubtful accounts, 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.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Recently Issued Accounting Pronouncements

In April 2014, the Financial Accounting Standards Board (FASB) issued new accounting guidance that changes the criteria for reporting a discontinued operation. According to the new guidance, only disposals of a component that represents a strategic shift that has (or will have) a major effect on an entity’s operations and financial results is a discontinued operation. The new guidance also requires expanded disclosures about discontinued operations and disposals of a significant part of an entity that does not qualify for discontinued operations reporting. The new standard is effective beginning January 1, 2015 with early adoption permitted, but only for disposals (or classifications as held for sale) that have not been reported in previously-issued financial statements. The adoption of this guidance will be dependent on any future disposal transactions.

(2) ACQUISITIONS

Sofica

In the first quarter of 2014, the Company acquired 100% interest in Sofica Group, a Bulgarian joint stock company (“Sofica”). Sofica provides customer lifecycle management and other business process outsourcing services across multiple channels in multiple sites in over 18 languages.

The total purchase price of $14.5 million, consisted of $9.0 million in up-front cash consideration (inclusive of a working capital adjustment) and earn-out payments payable in 2015 and 2016, if Sofica achieves specified earnings before interest, taxes, depreciation and amortization (“EBITDA”) targets, as defined by the stock purchase agreement.

The fair value of the contingent payments was measured based on significant inputs not observable in the market (Level 3 inputs). Key assumptions include a discount rate of 22% and expected future value of payments of $4.0 million. The $4.0 million of expected future payments was calculated using a bell curve probability weighted EBITDA assessment with the highest probability associated with Sofica achieving the targeted EBITDA for each earn-out year. As of the acquisition date, the fair value of the contingent payments was approximately $3.4 million. As of March 31, 2014, the fair value of the contingent consideration was $3.4 million, of which $2.0 million and $1.4 million were included in Other accrued expenses and Other long-term liabilities in the accompanying Consolidated Balance Sheets, respectively.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following summarizes the preliminary estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands). The estimates of fair value of identifiable assets acquired and liabilities assumed are preliminary, pending completion of a valuation, thus are subject to revisions that may result in adjustments to the values presented below:

	Preliminary Estimate of Acquisition Date Fair Value
Cash	$	812
Accounts receivable	3,267
Other assets	599
Property, plant and equipment	491
Customer relationships	3,591
Goodwill	7,329
	16,089

Accounts payable	50
Accrued employee compensation and benefits	630
Accrued expenses	519
Other	393
	1,592

Total purchase price	$	14,497

The Sofica customer relationships have an estimated useful life of five years. The goodwill recognized from the Sofica acquisition was attributable primarily to the acquired workforce of Sofica, expected synergies, and other factors. The tax basis of the acquired intangibles and goodwill are not deductible for income tax purposes. The acquired goodwill and the operating results of Sofica are reported within the Customer Management Services segment from the date of acquisition.

Other Acquisitions

WebMetro

In the third quarter of 2013, the Company acquired 100% of WebMetro, a California corporation (“WebMetro”), a digital marketing agency.

The total purchase price was $17.8 million, including $15.3 million in up-front cash consideration (inclusive of a working capital adjustment) and earn-out payments payable in 2014 and 2015, if WebMetro achieves specified EBITDA targets, as defined by the stock purchase agreement.

The fair value of the contingent payments was measured based on significant inputs not observable in the market (Level 3 inputs). Key assumptions include a discount rate of 5.3% and expected future value of payments of $2.6 million. The $2.6 million of expected future payments was calculated using a bell curve probability weighted EBITDA assessment with the highest probability associated with WebMetro achieving the targeted EBITDA for each earn-out year. As of the acquisition date, the fair value of the contingent payments was approximately $2.5 million. During the first quarter of 2014, the first earn-out payment was completed. As of March 31, 2014, the fair value of the contingent consideration was $1.7 million which was included in Other accrued expenses in the accompanying Consolidated Balance Sheets, respectively. The fair value is higher than the fair value recorded on the acquisition date because WebMetro exceeded expected earnings.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The WebMetro customer relationships and software have an estimated useful life of six years and four years, respectively. The goodwill recognized from the WebMetro acquisition was attributable primarily to the acquired workforce of WebMetro, expected synergies, and other factors. The tax basis of the acquired intangibles and goodwill are deductible for income tax purposes. The acquired goodwill and the operating results of WebMetro are reported within the Customer Growth Services segment from the date of acquisition.

Peppers & Rogers Group

In the third quarter of 2013, the Company acquired the remaining 20% interest in Peppers & Rogers Group (“PRG”) for $425 thousand. The buy-out accelerated TeleTech’s rights pursuant to the sale and purchase agreement to acquire the remaining portion of the business in 2015.

The acquired businesses noted above contributed revenues of $4.8 million and income from operations of $0.3 million, inclusive of $0.6 million of acquired intangible amortization, to the Company for the three months ended March 31, 2014.

(3) SEGMENT INFORMATION

The Company reports the following four segments:

·	the Customer Management Services 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 Customer Growth Services 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 Customer Technology Services segment includes operational and design consulting, systems integration, and cloud and on-premise managed services, the requirements needed to design, deliver and maintain best-in-class multichannel customer engagement platforms; and

·	the Customer Strategy Services segment provides professional services in customer experience strategy, customer intelligence analytics, 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 (amounts in thousands):

Quarter Ended March 31, 2014

	Gross Revenue		Intersegment Sales			Net Revenue		Depreciation & Amortization		Income (Loss) from Operations
Customer Management Services	$	227,924	$	—		$	227,924	$	9,465	$	20,823
Customer Growth Services	28,905		—			28,905		1,556		1,770
Customer Technology Services	32,779		(3		)	32,776		1,715		311
Customer Strategy Services	12,616		—			12,616		434		1,453
Total	$	302,224	$	(3	)	$	302,221	$	13,170	$	24,357

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Quarter Ended March 31, 2013

	Gross Revenue		Intersegment Sales			Net Revenue		Depreciation & Amortization		Income (Loss) from Operations
Customer Management Services	$	222,889	$	(307	)	$	222,582	$	7,862	$	20,731
Customer Growth Services	22,856		—			22,856		697		1,276
Customer Technology Services	33,646		(84		)	33,562		1,516		2,898
Customer Strategy Services	9,930		(547		)	9,383		480		(1,907		)
Total	$	289,321	$	(938	)	$	288,383	$	10,555	$	22,998

	Three Months Ended March 31,
	2014		2013
Capital Expenditures
Customer Management Services	$	9,912	$	2,286
Customer Growth Services	380		316
Customer Technology Services	4,631		1,328
Customer Strategy Services	172		175
Total	$	15,095	$	4,105

	March 31, 2014		December 31, 2013
Total Assets
Customer Management Services	$	546,007	$	554,015
Customer Growth Services	87,897		86,416
Customer Technology Services	152,103		157,040
Customer Strategy Services	45,933		44,871
Total	$	831,940	$	842,342

	March 31, 2014		December 31, 2013
Goodwill
Customer Management Services	$	27,279	$	19,819
Customer Growth Services	30,128		30,128
Customer Technology Services	42,709		42,709
Customer Strategy Services	10,437		10,087
Total	$	110,553	$	102,743

The following table presents revenue based upon the geographic location where the services are provided (amounts in thousands):

	Three Months Ended March 31,
	2014		2013
Revenue
United States	$	146,469	$	131,747
Philippines	86,666		86,108
Latin America	42,046		45,028
Europe / Middle East / Africa	19,217		16,984
Asia Pacific	6,400		4,226
Canada	1,423		4,290
Total	$	302,221	$	288,383

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS

The Company had one client that contributed in excess of 10% of total revenue for the three months ended March 31, 2014. This client operates in the communications industry and is included in the Customer Management Services segment. This client contributed 11.6% and 11.9% of total revenue for the three months ended March 31, 2014 and 2013. This client had an outstanding receivable balance of $30.4 million and $25.0 million as of March 31, 2014 and 2013.

The loss of one or more of its significant clients could have a material adverse effect on the Company’s business, operating results, or financial condition. The Company does not require collateral from its clients. To limit the Company’s credit risk, management performs periodic credit evaluations of its clients and maintains allowances for uncollectible accounts and may require pre-payment for services. Although the Company is impacted by economic conditions in various industry segments, management does not believe significant credit risk existed as of March 31, 2014.

(5) GOODWILL

Goodwill consisted of the following (amounts in thousands):

	December 31, 2013		Acquisitions/ Adjustments		Impairments		Effect of Foreign Currency		March 31, 2014

Customer Management Services	$	19,819	$	7,329	$	—	$	131	$	27,279
Customer Growth Services	30,128		—		—		—		30,128
Customer Technology Services	42,709		—		—		—		42,709
Customer Strategy Services	10,087		350		—		—		10,437
Total	$	102,743	$	7,679	$	—	$	131	$	110,553

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 March 31, 2014, the Company assessed whether any such indicators of impairment existed and concluded there were none.

(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 considers, among other factors, the creditworthiness of these counterparties. Conversely, the fair value of derivative liabilities reflects the Company’s creditworthiness. As of March 31, 2014, 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 months ended March 31, 2014 and 2013 (amounts in thousands and net of tax):

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

	Three Months Ended March 31,
	2014			2013

Aggregate unrealized net gain/(loss) at beginning of year	$	(8,352	)	$	9,559
Add: Net gain/(loss) from change in fair value of cash flow hedges	(3,649		)	4,099
Less: Net (gain)/loss reclassified to earnings from effective hedges	1,115			(1,919		)
Aggregate unrealized net gain/(loss) at end of period	$	(10,886	)	$	11,739

The Company’s foreign exchange cash flow hedging instruments as of March 31, 2014 and December 31, 2013 are summarized as follows (amounts in thousands). All hedging instruments are forward contracts unless noted otherwise.

As of March 31, 2014	Local Currency Notional Amount	U.S. Dollar Notional Amount			% Maturing in the Next 12 Months		Contracts Maturing Through
Canadian Dollar	6,000	$	5,857		87.5	%	June 2015
Philippine Peso	16,416,000	382,668		(1)	37.7	%	December 2018
Mexican Peso	2,356,500	168,458			29.9	%	December 2018
British Pound Sterling	600	926			100.0	%	June 2014
		$	557,909

As of December 31, 2013	Local Currency Notional Amount	U.S. Dollar Notional Amount
Canadian Dollar	7,500	$	7,336
Philippine Peso	17,355,000	404,638		(1)
Mexican Peso	2,305,500	166,132
British Pound Sterling	1,200	1,853		(2)
New Zealand Dollar	150	117
		$	580,076

(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 March 31, 2014 and December 31, 2013.

(2) Includes contracts to purchase British pound sterling in exchange for Euros, which are translated into equivalent U.S. dollars on December 31, 2013.

The Company’s interest rate swap arrangements as of March 31, 2014 and December 31, 2013 were as follows:

Notional
Amount

Variable Rate
Received

Fixed Rate
Paid

Contract

Commencement
Date

Contract

Maturity
Date

As of March 31, 2014

25 million

1 - month LIBOR

2.55

April 2012

April 2016

and December 31, 2013

15 million

1 - month LIBOR

3.14

May 2012

May 2017

40 million

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 March 31, 2014 and December 31, 2013 the total notional amount of the Company’s forward contracts used as fair value hedges were $229.5 million and $204.5 million, respectively.

Embedded Derivatives

In addition to hedging activities, the Company’s foreign subsidiary in Argentina was party to U.S. dollar denominated lease contracts which the Company determined contain embedded derivatives. As such, the Company bifurcated the embedded derivative features of the lease contracts and valued these features as foreign currency derivatives. As of December 31, 2013, the fair value of the embedded derivative was $0.1 million and was included in Other current liabilities in the accompanying Consolidated Balance Sheets as shown in the table below. As of March 31, 2014, the lease had expired and thus the embedded derivative value was reduced to zero.

Derivative Valuation and Settlements

The Company’s derivatives as of March 31, 2014 and December 31, 2013 were as follows (amounts in thousands):

	March 31, 2014
	Designated as Hedging Instruments						Not Designated as Hedging Instruments
	Foreign Exchange			Interest Rate			Foreign Exchange			Leases
Derivative contracts: Derivative classification:	Cash Flow			Cash Flow			Fair Value			Embedded Derivative

Fair value and location of derivative in the Consolidated Balance Sheet:
Prepaids and other current assets	$	2,368		$	—		$	142		$	—
Other long-term assets	2,529			—			—			—
Other current liabilities	(8,346		)	(1,045		)	(319		)	—
Other long-term liabilities	(12,069		)	(943		)	—			—
Total fair value of derivatives, net	$	(15,518	)	$	(1,988	)	$	(177	)	$	—

	December 31, 2013
	Designated as Hedging Instruments						Not Designated as Hedging Instruments
	Foreign Exchange			Interest Rate			Foreign Exchange			Leases
Derivative contracts: Derivative classification:	Cash Flow			Cash Flow			Fair Value			Embedded Derivative

Fair value and location of derivative in the Consolidated Balance Sheet:
Prepaids and other current assets	$	3,379		$	—		$	97		$	—
Other long-term assets	1,439			—			—			—
Other current liabilities	(4,595		)	(1,028		)	(815		)	(116		)
Other long-term liabilities	(11,708		)	(1,124		)	—			—
Total fair value of derivatives, net	$	(11,485	)	$	(2,152	)	$	(718	)	$	(116	)

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013 were as follows (amounts in thousands):

	Three Months Ended March 31,
	2014						2013
	Designated as Hedging Instruments						Designated as Hedging Instruments
Derivative contracts:	Foreign Exchange			Interest Rate			Foreign Exchange		Interest 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:	$	(3,592	)	$	(57	)	$	4,178	$	(79	)

Amount and location of net gain or (loss) reclassified from accumulated OCI to income - effective portion:
Revenue	$	(1,570	)	$	—		$	3,460	$	—
Interest Expense	—			(258		)	—		(257		)

	Three Months Ended March 31,
	2014						2013
	Not Designated as Hedging Instruments						Not Designated as Hedging Instruments
	Foreign Exchange				Leases		Foreign Exchange				Leases
Derivative contracts: Derivative classification:	Option and Forward Contracts		Fair Value		Embedded Derivative		Option and Forward Contracts		Fair Value		Embedded Derivative

Amount and location of net gain or (loss) recognized in the Consolidated Statement of Comprehensive Income:
Costs of services	$	—	$	—	$	—	$	—	$	—	$	(69	)
Other income (expense), net	$	—	$	619	$	—	$	—	$	1,438	$	—

(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 March 31, 2014 and December 31, 2013 of 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.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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 March 31, 2014 and December 31, 2013, the Company had $100.0 million and $100.0 million, respectively, of borrowings outstanding under the Credit Agreement. During the first quarter of 2014 outstanding borrowings accrued interest at an average rate of 1.2% 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.

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 March 31, 2014, 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 March 31, 2014 and December 31, 2013 (amounts in thousands):

As of March 31, 2014

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
	(Level 1)		(Level 2)			(Level 3)		At Fair Value
Cash flow hedges	$	—	$	(15,518	)	$	—	$	(15,518	)
Interest rate swaps	—		(1,988		)	—		(1,988		)
Fair value hedges	—		(177		)	—		(177		)
Total net derivative asset (liability)	$	—	$	(17,683	)	$	—	$	(17,683	)

As of December 31, 2013

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
	(Level 1)		(Level 2)			(Level 3)		At Fair Value
Cash flow hedges	$	—	$	(11,485	)	$	—	$	(11,485	)
Interest rate swaps	—		(2,152		)	—		(2,152		)
Fair value hedges	—		(718		)	—		(718		)
Embedded derivatives	—		(116		)	—		(116		)
Total net derivative asset (liability)	$	—	$	(14,471	)	$	—	$	(14,471	)

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following is a summary of the Company’s fair value measurements as of March 31, 2014 and December 31, 2013 (amounts in thousands):

As of March 31, 2014

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
	(Level 1)		(Level 2)			(Level 3)
Assets
Money market investments	$	—	$	240		$	—
Derivative instruments, net	—		—			—
Total assets	$	—	$	240		$	—

Liabilities
Deferred compensation plan liability	$	—	$	(7,650	)	$	—
Derivative instruments, net			(17,683		)
Purchase price payable	—		—			(22,509		)
Total liabilities	$	—	$	(25,333	)	$	(22,509	)

As of December 31, 2013

	Fair Value Measurements Using
	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs			Significant Unobservable Inputs
	(Level 1)		(Level 2)			(Level 3)
Assets
Money market investments	$	—	$	240		$	—
Derivative instruments, net	—		—			—
Total assets	$	—	$	240		$	—

Liabilities
Deferred compensation plan liability	$	—	$	(6,829	)	$	—
Derivative instruments, net	—		(14,471		)	—
Purchase price payable	—		—			(21,748		)
Total liabilities	$	—	$	(21,300	)	$	(21,748	)

Money Market Investments — The Company invests in various well-diversified money market funds which are managed by financial institutions. These money market funds are not publicly traded, but have historically been highly liquid. The value of the money market funds are determined by the banks based upon the funds’ net asset values (“NAV”). All of the money market funds currently permit daily investments and redemptions at a $1.00 NAV.

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.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Purchase Price Payable — The Company recorded purchase price payables related to the acquisitions of iKnowtion, Guidon, TSG, WebMetro and Sofica. These purchase price payables were recognized at fair value using a discounted cash flow approach and a discount rate of 21.0%, 21.0%, 4.6%, 5.3% or 22.0%, respectively. The discount rates vary dependant 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 will record interest expense each period using the effective interest method until the future value of these purchase price payables reaches their expected future value of $23.9 million. Interest expense related to all recorded purchase price payables is included in Interest expense in the Consolidated Statements of Comprehensive Income.

A rollforward of the activity in the Company’s fair value of the purchase price payable is as follows (amounts in thousands):

	December 31, 2013		Acquisitions		Payments			Imputed Interest / Adjustments			March 31, 2014

iKnowtion	$	3,470	$	—	$	(1,400	)	$	69		$	2,139
Guidon	2,637		—		(1,426		)	39			1,250
TSG	12,933		—		—			79			13,012
WebMetro	2,708		—		—			(35		)	2,673
Sofica	—		3,435		—			—			3,435
Total	$	21,748	$	3,435	$	(2,826	)	$	152		$	22,509

Subsequent to March 31, 2014, an additional $6.3 million of payments were completed in accordance with the acquisition agreements.

(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.

During the first quarter of 2014, a benefit of $1.2 million was recorded due to the closing of statutes of limitations in Canada.

As of March 31, 2014, the Company had $53.3 million of gross deferred tax assets (after a $9.9 million valuation allowance) and net deferred tax assets (after deferred tax liabilities) of $51.2 million related to the U.S. and international tax jurisdictions whose recoverability is dependent upon future profitability.

The effective tax rate for the three months ended March 31, 2014 and 2013 was 11.9% and 11.4%, respectively.

The Company’s U.S. income tax returns filed for the tax years ending December 31, 2009 to present remain open tax years. The Company has been notified of the intent to audit, or is currently under audit, of income taxes in the U.S. for tax years 2009, 2011 and 2012, Canada for tax years 2009 and 2010 and the Netherlands for tax year 2010. 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.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(9) RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES

Restructuring Charges

During the three months ended March 31, 2014 and 2013, the Company undertook restructuring activities primarily associated with reductions in the Company’s capacity and workforce in several of its segments to better align the capacity and workforce with current business needs.

A summary of the expenses recorded in Restructuring, net in the accompanying Consolidated Statements of Comprehensive Income for the three months ended March 31, 2014 and 2013, respectively, is as follows (amounts in thousands):

	Three Months Ended March 31,
	2014		2013
Reduction in force
Customer Management Services	$	511	$	694
Customer Growth Services	29		—
Customer Technology Services	—		—
Customer Strategy Services	—		157
Total	$	540	$	851

A rollforward of the activity in the Company’s restructuring accruals is as follows (amounts in thousands):

	Closure of Delivery Centers		Reduction in Force			Total

Balance as of December 31, 2013	$	—	$	1,353		$	1,353
Expense	—		540			540
Payments	—		(628		)	(628		)
Changes in estimates	—		—			—
Balance as of March 31, 2014	$	—	$	1,265		$	1,265

The remaining restructuring accruals are expected to be paid or extinguished during 2014 and are all classified as current liabilities within Other accrued expenses in the Consolidated Balance Sheets.

Impairment Losses

During each of the periods presented, the Company evaluated the recoverability of its leasehold improvement assets at certain delivery centers. An asset is considered to be impaired when the anticipated undiscounted future cash flows of its asset group are estimated to be less than the asset group’s carrying value. The amount of impairment recognized is the difference between the carrying value of the asset group and its fair value. To determine fair value, the Company used Level 3 inputs in its discounted cash flows analysis. Assumptions included the amount and timing of estimated future cash flows and assumed discount rates. During the three months ended March 31, 2014 and 2013, the Company recognized no losses related to leasehold improvement assets.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(10) COMMITMENTS AND CONTINGENCIES

Credit Facility

In the second quarter of 2013, the Company entered into a $700.0 million, five-year, multi-currency revolving credit facility (the “Credit Agreement”) with a syndicate of lenders which includes an accordion feature that permits the Company to request an increase in total commitments up to $1.0 billion, under certain conditions. Wells Fargo Securities, LLC, KeyBank National Association, Bank of America Merrill Lynch, BBVA Compass and HSBC Bank USA, National Association served as Joint Lead Arrangers. The Credit Agreement amends and restates in its entirety the Company’s prior credit facility entered into during 2010 and amended in 2012.

The Credit Agreement provides for a secured revolving credit facility that matures on June 3, 2018 with an initial maximum aggregate commitment of $700.0 million. At the Company’s discretion, direct borrowing options under the Credit Agreement include (i) Eurodollar loans with one, two, three, and six month terms, and/or (ii) overnight base rate loans. The Credit Agreement also provides for a sub-limit for loans or letters of credit in both U.S. dollars and certain foreign currencies, with direct foreign subsidiary borrowing capabilities up to 50% of the total commitment amount. The Company may increase the maximum aggregate commitment under the Credit Agreement to $1.0 billion if certain conditions are satisfied, including that the Company is not in default under the Credit Agreement at the time of the increase and that the Company obtains the commitment of the lenders participating in the increase.

The Company primarily utilizes its Credit Agreement to fund working capital, general operations, stock repurchases and other strategic activities, such as the acquisitions described in Note 2. As of March 31, 2014 and December 31, 2013, the Company had borrowings of $100.0 million and $100.0 million, respectively, under its Credit Agreement, and its average daily utilization was $270.9 million and $219.6 million for the three months ended March 31, 2014 and 2013, respectively. After consideration for issued letters of credit under the Credit Agreement, totaling $3.5 million, the Company’s remaining borrowing capacity was $596.5 million as of March 31, 2014. As of March 31, 2014, the Company was in compliance with all covenants and conditions under its Credit Agreement.

From time-to-time, the Company has unsecured, uncommitted lines of credit to support working capital for a few foreign subsidiaries. As of March 31, 2014 and 2013, no foreign loans were outstanding.

Letters of Credit

As of March 31, 2014, outstanding letters of credit under the Credit Agreement totaled $3.5 million and primarily guaranteed workers’ compensation and other insurance related obligations. As of March 31, 2014, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $0.9 million.

Guarantees

Indebtedness under the Credit Agreement is guaranteed by certain of the Company’s present and future domestic subsidiaries.

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 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.

In the fourth quarter of 2012, a class action complaint was filed in the State of California against a TeleTech subsidiary and Google Inc. (“Google”), as co-defendants. Pursuant to its contractual commitments, the Company has agreed to indemnify Google for costs and expenses related to the complaint. The Company settled the matter for an immaterial amount during the first quarter of 2014.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Based on currently available information and advice received from counsel, the Company believes that the disposition or ultimate resolution of its 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.

(11) NONCONTROLLING INTEREST

The following table reconciles equity attributable to noncontrolling interest (amounts in thousands):

	Three Months Ended March 31,
	2014			2013
Noncontrolling interest, January 1	$	8,081		$	14,045
Net income attributable to noncontrolling interest	957			642
Dividends distributed to noncontrolling interest	(990		)	(1,109		)
Foreign currency translation adjustments	35			(90		)
Equity based compensation expense	8			8
Noncontrolling interest, March 31	$	8,091		$	13,496

(12) MANDATORILY REDEEMABLE NONCONTROLLING INTEREST

The Company holds an 80% interest in iKnowtion. In the event iKnowtion meets certain EBITDA targets for calendar year 2015, the purchase and sale agreement requires 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 represent a contingent redemption feature which the Company determined is probable of being achieved.

The Company has 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 are recorded in retained earnings. Since the EBITDA multiples as defined in the purchase and sale agreement are below the current market multiple, the Company has determined that there is 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.

	Three months ended March 31,
	2014			2013
Mandatorily redeemable noncontrolling interest, January 1	$	2,509		$	1,067
Net income attributable to mandatorily redeemable noncontrolling interest	128			— 41
Dividends distributed to mandatorily redeemable noncontrolling interest	—			—
Change in redemption value	(175		)	—
Mandatorily redeemable noncontrolling interest, March 31	$	2,462		$	1,108

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

(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) (amounts in thousands):

	Foreign Currency Translation Adjustment			Derivative Valuation, Net of Tax			Other, Net of Tax			Totals

Accumulated other comprehensive income (loss) at December 31, 2013	$	(10,581	)	$	(8,352	)	$	(1,653	)	$	(20,586	)

Other comprehensive (loss) income before reclassifications	(1,758		)	(3,649		)	187			(5,220		)
Amounts reclassified from accumulated other comprehensive income	—			1,115			89			1,204
Net current period other comprehensive income	(1,758		)	(2,534		)	276			(4,016		)

Accumulated other comprehensive income (loss) at March 31, 2014	$	(12,339	)	$	(10,886	)	$	(1,377	)	$	(24,602	)

Accumulated other comprehensive income (loss) at December 31, 2012	$	15,673		$	9,559		$	(2,251	)	$	22,981

Other comprehensive income before reclassifications	3,224			4,099			14			7,337
Amounts reclassified from accumulated other comprehensive income	—			(1,919		)	148			(1,771		)
Net current period other comprehensive income	3,224			2,180			162			5,566

Accumulated other comprehensive income (loss) at March 31, 2013	$	18,897		$	11,739		$	(2,089	)	$	28,547

The following table presents the classification and amount of the reclassifications from accumulated other comprehensive income to the statement of comprehensive income (in thousands):

For the Three Months Ended		Statement of Comprehensive Income
March 31, 2014	March 31, 2013	Classification