Edgar Filing: TELETECH HOLDINGS INC

ttec_Current folio_10Q

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q


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

For the quarterly period ended March 31, 2016


☐	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 ☑ No ☐

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 ☑ No ☐

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 ☐		Accelerated filer ☑

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

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

As of May 2, 2016, there were 48,117,478 shares of the registrant’s common stock outstanding.

Table of Contents

TELETECH HOLDINGS, INC. AND SUBSIDIARIES

MARCH 31, 2016 FORM 10-Q

TABLE OF CONTENTS


		Page No.

PART I. FINANCIAL INFORMATION

Item 1.	Financial Statements

	Consolidated Balance Sheets as of March 31, 2016 and December 31, 2015 (unaudited)	1

	Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2016 and 2015 (unaudited)	2

	Consolidated Statement of Equity as of and for the three months ended March 31, 2016 (unaudited)	3

	Consolidated Statements of Cash Flows for the three months ended March 31, 2016 and 2015 (unaudited)	4

	Notes to the Unaudited Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33

Item 4.	Controls and Procedures	35

PART II. OTHER INFORMATION

Item 1.	Legal Proceedings	38

Item 1A.	Risk Factors	38

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	38

Item 6.	Exhibits	39

SIGNATURES		40

EXHIBIT INDEX		41

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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)

(unaudited)


	March 31,		December 31,
	2016		2015
ASSETS
Current assets
Cash and cash equivalents	$	75,422	$	60,304
Accounts receivable, net		286,165		283,474
Prepaids and other current assets		71,008		64,180
Income tax receivable		8,730		7,114
Total current assets		441,325		415,072

Long-term assets
Property, plant and equipment, net		169,551		168,289
Goodwill		114,506		114,183
Deferred tax assets, net		45,312		52,082
Other intangible assets, net		49,950		51,215
Other long-term assets		45,249		42,486
Total long-term assets		424,568		428,255
Total assets	$	865,893	$	843,327

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable	$	39,247	$	43,323
Accrued employee compensation and benefits		69,034		71,634
Other accrued expenses		37,246		33,160
Income tax payable		4,096		9,125
Deferred revenue		25,799		26,184
Other current liabilities		20,575		23,480
Total current liabilities		195,997		206,906

Long-term liabilities
Line of credit		133,000		100,000
Deferred tax liabilities, net		3,179		3,333
Deferred rent		12,083		11,791
Other long-term liabilities		66,012		76,349
Total long-term liabilities		214,274		191,473
Total liabilities		410,271		398,379

Commitments and contingencies (Note 10)

Mandatorily redeemable noncontrolling interest		4,105		4,131

Stockholders’ equity
Preferred stock; $0.01 par value; 10,000,000 shares authorized; zero shares outstanding as of March 31, 2016 and December 31, 2015		—		—
Common stock; $0.01 par value; 150,000,000 shares authorized; 48,231,632 and 48,481,323 shares outstanding as of March 31, 2016 and December 31, 2015, respectively		483		485
Additional paid-in capital		347,637		347,251
Treasury stock at cost: 33,820,621 and 33,570,930 shares as of March 31, 2016 and December 31, 2015, respectively		(541,187)		(533,744)
Accumulated other comprehensive income (loss)		(85,815)		(101,365)
Retained earnings		723,317		720,989
Noncontrolling interest		7,082		7,201
Total stockholders’ equity		451,517		440,817
Total liabilities and stockholders’ equity	$	865,893	$	843,327

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 (Loss)

(Amounts in thousands, except per share amounts)

(Unaudited)


	Three months ended March 31,
	2016		2015
Revenue	$	312,410	$	325,521

Operating expenses
Cost of services (exclusive of depreciation and amortization presented separately below)		231,340		232,984
Selling, general and administrative		45,500		50,237
Depreciation and amortization		17,729		15,363
Restructuring charges, net		88		809
Total operating expenses		294,657		299,393

Income from operations		17,753		26,128

Other income (expense)
Interest income		166		317
Interest expense		(1,964)		(1,698)
Other income (expense), net		478		(307)
Total other income (expense)		(1,320)		(1,688)

Income before income taxes		16,433		24,440

Provision for income taxes		(4,528)		(4,405)

Net income		11,905		20,035

Net income attributable to noncontrolling interest		(680)		(1,263)

Net income attributable to TeleTech stockholders	$	11,225	$	18,772

Other comprehensive income (loss)
Net income	$	11,905	$	20,035
Foreign currency translation adjustments		9,956		(11,283)
Derivative valuation, gross		9,579		(1,645)
Derivative valuation, tax effect		(4,100)		1,493
Other, net of tax		175		(2,595)
Total other comprehensive income (loss)		15,610		(14,030)
Total comprehensive income (loss)		27,515		6,005

Less: Comprehensive income attributable to noncontrolling interest		(740)		(806)

Comprehensive income (loss) attributable to TeleTech stockholders	$	26,775	$	5,199

Weighted average shares outstanding
Basic		48,368		48,370
Diluted		48,746		49,158

Net income per share attributable to TeleTech stockholders
Basic	$	0.23	$	0.39
Diluted	$	0.23	$	0.38

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
											Accumulated
											Other
	Preferred Stock			Common Stock			Treasury		Additional		Comprehensive		Retained		Noncontrolling
	Shares	Amount		Shares	Amount		Stock		Paid-in Capital		Income (Loss)		Earnings		interest		Total Equity
Balance as of December 31, 2015	—	$	—	48,481	$	485	$	(533,744)	$	347,251	$	(101,365)	$	720,989	$	7,201	$	440,817
Net income	—		—	—		—		—		—		—		11,225		680		11,905
Dividends to shareholders ($0.185 per common share)	—		—	—		—		—		—		—		(8,923)		—		(8,923)
Dividends distributed to noncontrolling interest	—		—	—		—		—		—		—		—		(900)		(900)
Adjustments to redemption value of mandatorily redeemable noncontrolling interest	—		—	—		—		—		—		—		26		—		26
Foreign currency translation adjustments	—		—	—		—		—		—		9,896		—		60		9,956
Derivatives valuation, net of tax	—		—	—		—		—		—		5,479		—		—		5,479
Vesting of restricted stock units	—		—	82		1		1,276		(2,525)		—		—		—		(1,248)
Exercise of stock options	—		—	1		—		8		(2)		—		—		—		6
Excess tax benefit from equity-based awards, net	—		—	—		—		—		154		—		—		—		154
Equity-based compensation expense	—		—	—		—		—		2,759		—		—		31		2,790
Purchases of common stock	—		—	(332)		(3)		(8,727)		—		—		—		—		(8,730)
Other, net of tax	—		—	—		—		—		—		175		—		10		185
Balance as of March 31, 2016	—	$	—	48,232	$	483	$	(541,187)	$	347,637	$	(85,815)	$	723,317	$	7,082	$	451,517

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,
	2016		2015
Cash flows from operating activities
Net income	$	11,905	$	20,035
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		17,729		15,363
Amortization of contract acquisition costs		169		281
Amortization of debt issuance costs		235		178
Imputed interest expense and fair value adjustments to contingent consideration		145		209
Provision for doubtful accounts		218		53
(Gain) loss on disposal of assets		(10)		(35)
Deferred income taxes		5,083		(1,479)
Excess tax benefit from equity-based awards		(196)		(409)
Equity-based compensation expense		2,759		2,690
(Gain) loss on foreign currency derivatives		(4,052)		87
Changes in assets and liabilities, net of acquisitions:
Accounts receivable		329		(24,821)
Prepaids and other assets		(9,525)		1,849
Accounts payable and accrued expenses		(11,506)		(7,583)
Deferred revenue and other liabilities		(1,745)		(2,598)
Net cash provided by operating activities		11,538		3,820

Cash flows from investing activities
Proceeds from sale of long-lived assets		1		—
Purchases of property, plant and equipment, net of acquisitions		(14,949)		(13,038)
Investments in non-marketable equity investments		—		(9,000)
Acquisitions, net of cash acquired of zero and zero, respectively		(200)		(102)
Net cash used in investing activities		(15,148)		(22,140)

Cash flows from financing activities
Proceeds from line of credit		581,500		573,800
Payments on line of credit		(548,500)		(547,800)
Payments on other debt		(550)		(778)
Payments of contingent consideration and hold back payments to acquisitions		(7,628)		(1,000)
Dividends paid to shareholders		—		(8,710)
Payments to noncontrolling interest		(900)		(990)
Proceeds from exercise of stock options		6		234
Excess tax benefit from equity-based awards		196		409
Payments of debt issuance costs		(1,883)		—
Purchase of treasury stock		(8,730)		(5,915)
Net cash provided by financing activities		13,511		9,250

Effect of exchange rate changes on cash and cash equivalents		5,217		(2,532)

Increase (decrease) in cash and cash equivalents		15,118		(11,602)
Cash and cash equivalents, beginning of period		60,304		77,316
Cash and cash equivalents, end of period	$	75,422	$	65,714

Supplemental disclosures
Cash paid for interest	$	1,627	$	1,340
Cash paid for income taxes	$	7,659	$	2,803
Non-cash investing and financing activities
Acquisition of long-lived assets through capital leases	$	1,002	$	—
Acquisition of equipment through increase in accounts payable, net	$	(1,257)	$	1,704
Contract acquisition costs credited to accounts receivable	$	200	$	—

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. and its subsidiaries (“TeleTech” or the “Company”) is a customer engagement management services provider, delivering integrated consulting, technology, growth and customer care solutions on a global scale. Our suite of products and services allows us to design and deliver engaging, outcome-based customer experiences across numerous interaction channels. TeleTech’s 43,000 employees serve clients in the automotive, communication, financial services, government, healthcare, logistics, media and entertainment, retail, technology, transportation and travel industries via operations in the U.S., Australia, Belgium, Brazil, Bulgaria, Canada, China, Costa Rica, Germany, Hong Kong, Ireland, Israel, Lebanon, Macedonia, Mexico, New Zealand, the Philippines, Poland, Singapore, South Africa, Thailand, Turkey, the United Arab Emirates, and the United Kingdom.

Basis of Presentation

The Consolidated Financial Statements are comprised of the accounts of TeleTech, its wholly owned subsidiaries, its 55% equity owned subsidiary Percepta, LLC, and its 80% interest in iKnowtion, LLC. All intercompany balances and transactions have been eliminated in consolidation.

The unaudited Consolidated Financial Statements do not include all of the disclosures required by accounting principles generally accepted in the U.S. (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The unaudited Consolidated Financial Statements reflect all adjustments which, in the opinion of management, are necessary to state fairly the consolidated financial position of the Company and the consolidated results of operations and comprehensive income (loss) and the consolidated cash flows of the Company. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2016.

During the three months ended March 31, 2016, the Company recorded an additional tax expense of $1.1 million that should have been recorded in prior periods related to operations by an entity outside its country of incorporation. The total amount of $1.1 million should have been recorded as additional expense in the amount of $180 thousand in 2011, $123 thousand in 2012, $137 thousand in 2013, $358 thousand in 2014 and $301 thousand in 2015.

During the three months ended June 30, 2015, an additional expense of $1.75 million was recorded as an additional estimated tax liability that should have been recorded in prior periods related to ongoing discussions with relevant government authorities related to site compliance with tax advantaged status. The total amount of $1.75 million should have been recorded as additional tax expense in the amount of $466 thousand in 2012, $406 thousand in 2013, $645 thousand in 2014 and $234 thousand in the first quarter of 2015.

During the three months ended June 30, 2015, the Company recorded an additional $3.2 million loss related to foreign currency translation within Other comprehensive income (loss) that should have been recorded in 2014 and the three months ended March 31, 2015 to correct for an error in translating the financial results of Sofica Group AD, which the Company acquired on February 28, 2014. Of the $3.2 million recorded, approximately $1.7 million and $1.5 million should have been recorded in the year ended December 31, 2014 and the three months ended March 31, 2015, respectively. The Company also recorded an additional $2.7 million loss to “Other, net of tax” within Other comprehensive income (loss) in the three months ended March 31, 2015 related to the annual actuarial analysis for the Company’s Philippines pension liability that should have been recorded in the fourth quarter of 2014.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

During the three months ended December 31, 2015, the Company recorded an additional $2.9 million impairment to correct for an error in the goodwill impairment annual assessment and quarterly assessment for the WebMetro reporting unit. The Company should have recorded a $2.3 million impairment in the three months ended December 31, 2014 and an additional $0.6 million impairment in the three months ended September 30, 2015.

The Company has evaluated the aggregate impact of these adjustments and concluded that these adjustments were not material to the previously issued or current period consolidated financial statements.

These unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

Use of Estimates

The preparation of the Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the Consolidated Financial Statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates including those related to derivatives and hedging activities, income taxes including the valuation allowance for deferred tax assets, self-insurance reserves, litigation reserves, restructuring reserves, allowance for doubtful accounts, contingent consideration, and valuation of goodwill, long-lived and intangible assets. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions.

Recently Issued Accounting Pronouncements

In May 2014, the FASB issued ASU 2014-09, “Revenue from Contracts with Customers”. ASU 2014-09 provides new guidance related to how an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. In addition, ASU 2014-09 specifies new accounting for costs associated with obtaining or fulfilling contracts with customers and expands the required disclosures related to revenue and cash flows from contracts with customers. This new guidance was effective for fiscal years, and interim periods within those years, beginning after December 15, 2016, and can be adopted either retrospectively to each prior reporting period presented or as a cumulative-effect adjustment as of the date of adoption, with early application not permitted. The Company is currently determining its implementation approach and assessing the impact on the consolidated financial statements.

In August 2015, the FASB issued ASU 2015-14, “Deferral of Effective Date”. ASU 2015-14 defers the effective date of ASU 2014-09 for revised revenue recognition by one year which means it will be effective for fiscal years, and interim periods within those years, beginning after December 15, 2017.

In April 2015, the FASB issued ASU No. 2015-03, “Simplifying the Presentation of Debt Issuance Costs”. ASU 2015-03 requires all costs incurred in connection with the issuance of debt to be presented in the balance sheet as a direct deduction from the carrying value of the associated debt liability. This ASU is effective for interim and annual periods beginning on or after December 15, 2015 and early adoption is permitted. Beginning in 2016, the Company has applied the new guidance as applicable and the adoption of this standard did not have a material impact on its financial position, results of operations or related disclosures.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

In February 2016, the FASB issued ASU 2016-02 “Leases”, which amends the existing accounting standards for lease accounting, including requiring lessees to recognize most leases on their balance sheets related to the rights and obligations created by those leases and making targeted changes to lessor accounting. The ASU also requires new disclosures to regarding the amounts, timing, and uncertainty of cash flows arising from leases. The ASU is effective for interim and annual periods beginning on or after December 15, 2018 and early adoption is permitted. The new leases standard requires a modified retrospective transition approach for all leases existing at, or entered into after, the date of initial application, with an option to use certain transition relief. The Company is currently determining its implementation approach and assessing the impact on the consolidated financial statements and related disclosures.

In March 2016, the FASB issued ASU 2016-09 “Compensation – Stock Compensation: Improvements to Employee Share-Based Payment Accounting”, which amends the existing accounting standards related to stock-based compensation. The ASU simplifies several aspects of accounting for share-based payment transactions, including the accounting for income taxes, forfeitures, statutory tax withholding requirements, as well as classification in the statement of cash flows. The ASU is effective for interim and annual periods beginning on or after December 15, 2016 and early adoption is permitted. The Company is currently determining its implementation approach and assessing the impact on the consolidated statements and related disclosures.

(2)ACQUISITIONS

rogenSi

In the third quarter of 2014, as an addition to the Customer Strategy Services (“CSS”) segment, the Company acquired substantially all operating assets of rogenSi Worldwide PTY, Ltd., a global leadership, change management, sales, performance training and consulting company.

The total purchase price was $34.4 million, subject to certain working capital adjustments, and consists of $18.1 million in cash at closing and an estimated $14.5 million in three earn-out payments, contingent on the acquired companies and TeleTech’s CSS segment achieving certain agreed earnings before interest, taxes, depreciation and amortization (“EBITDA”) targets, as defined in the sale and purchase agreement. Additionally, the estimated purchase price included a $1.8 million hold-back payment for contingencies as defined in the sale and purchase agreement which was paid in the first quarter of 2016. The total contingent consideration possible per the sale and purchase agreement ranges from zero to $17.6 million and the earn-out payments are payable in early 2015, 2016 and 2017, based on July 1, 2014 through December 31, 2014, and full year 2015 and 2016 performance, respectively.

The fair value of the contingent consideration was measured by applying a probability weighted discounted cash flow model based on significant inputs not observable in the market (Level 3 inputs). Key assumptions include a discount rate of 4.6% and expected future value of payments of $15.3 million. The $15.3 million of expected future payments was calculated using a probability weighted EBITDA assessment with the highest probability associated with rogenSi achieving the targeted EBITDA for each earn-out year. As of the acquisition date, the fair value of the contingent consideration was approximately $14.5 million. During the fourth quarter of 2014, the third quarter of 2015 and the fourth quarter of 2015, the Company recorded fair value adjustments of the contingent consideration of $0.5 million, $0.8 million and $(0.3) million, respectively, based on revised estimates noting higher or lower probability of exceeding the EBITDA targets (see Note 7). As of March 31, 2016, the fair value of the remaining contingent consideration was $4.2 million, of which $4.2 million was included in Other accrued expenses in the accompanying Consolidated Balance Sheets.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

Sofica

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

The purchase price of $14.2 million included $9.4 million in cash consideration (including working capital adjustments) and an estimated $3.8 million in earn-out payments, payable in 2015 and 2016, contingent on Sofica achieving specified EBITDA targets, as defined by the stock purchase agreement. The total contingent consideration possible per the stock purchase agreement ranges from zero to $7.5 million. Additionally, the purchase price included a $1.0 million hold-back payment for contingencies as defined in the stock purchase agreement which was paid in the first quarter of 2016.

The fair value of the contingent consideration was measured based on significant inputs not observable in the market (Level 3 inputs). Key assumptions include a discount rate of 5.0% and expected future value of payments of $4.0 million. The $4.0 million of expected future payments was calculated using a 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 consideration was approximately $3.8 million. During the third and fourth quarters of 2014, the Company recorded fair value adjustments of the contingent consideration of $1.8 million and $0.6 million, respectively, based on revised estimates noting higher probability of exceeding the EBITDA targets (see Note 7). During the second quarter of 2015, the Company recorded a negative fair value adjustment for contingent consideration of $0.5 million based on revised estimates noting lower profitability than initially estimated. As of March 31, 2016, the fair value of the remaining contingent consideration was $3.1 million which was included in Other accrued expenses in the accompanying Consolidated Balance Sheets.

(3)SEGMENT INFORMATION

The Company reports the following four segments:

the CMS segment includes the customer experience delivery solutions which integrate innovative technology with highly-trained customer experience professionals to optimize the customer experience across all channels and all stages of the customer lifecycle from an onshore, offshore or work-from-home environment;

the CGS segment provides technology-enabled sales and marketing solutions that support revenue generation across the customer lifecycle, including sales advisory, search engine optimization, digital demand generation, lead qualification, and acquisition sales, growth and retention services;

the CTS segment includes 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 CSS 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.

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

The following tables present certain financial data by segment (in thousands):

Three Months Ended March 31, 2016


							Depreciation		Income
	Gross		Intersegment		Net		&		(Loss) from
	Revenue		Sales		Revenue		Amortization		Operations
Customer Management Services	$	228,019	$	(98)	$	227,921	$	12,254	$	15,595
Customer Growth Services		33,519		—		33,519		1,743		495
Customer Technology Services		35,370		(102)		35,268		2,875		2,780
Customer Strategy Services		15,702		—		15,702		857		(1,117)
Total	$	312,610	$	(200)	$	312,410	$	17,729	$	17,753

Three Months Ended March 31, 2015


							Depreciation		Income
	Gross		Intersegment		Net		&		(Loss) from
	Revenue		Sales		Revenue		Amortization		Operations
Customer Management Services	$	243,009	$	—	$	243,009	$	10,797	$	21,702
Customer Growth Services		25,956		—		25,956		1,485		26
Customer Technology Services		35,721		(7)		35,714		2,164		2,009
Customer Strategy Services		20,842		—		20,842		917		2,391
Total	$	325,528	$	(7)	$	325,521	$	15,363	$	26,128


	Three Months Ended
	March 31,
	2016		2015
Capital Expenditures
Customer Management Services	$	11,978	$	9,447
Customer Growth Services		1,187		1,305
Customer Technology Services		1,733		2,282
Customer Strategy Services		51		4
Total	$	14,949	$	13,038


	March 31, 2016		December 31, 2015
Total Assets
Customer Management Services	$	546,610	$	512,100
Customer Growth Services		72,460		75,291
Customer Technology Services		154,770		159,850
Customer Strategy Services		92,053		96,086
Total	$	865,893	$	843,327

	March 31, 2016		December 31, 2015
Goodwill
Customer Management Services	$	22,218	$	22,009
Customer Growth Services		24,439		24,439
Customer Technology Services		42,709		42,709
Customer Strategy Services		25,140		25,026
Total	$	114,506	$	114,183

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TELETECH HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

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



	Three Months Ended March 31,
	2016		2015
Revenue
United States	$	174,577	$	171,653
Philippines		84,296		84,987
Latin America		30,158		40,554
Europe / Middle East / Africa		16,492		19,313
Asia Pacific		5,650		7,674
Canada		1,237		1,340
Total	$	312,410	$	325,521

(4)SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS

The Company had no clients that contributed in excess of 10% of total revenue for the three months ended March 31, 2016. The Company had one client that contributed in excess of 10% of total revenue for the three months ended March 31, 2015. This client operates in the communications industry and is included in the CMS segment. This client contributed 9.6% and 10.9% of total revenue for the three months ended March 31, 2016 and 2015, respectively. This client had an outstanding receivable balance of $28.8 million and $37.6 million as of March 31, 2016 and 2015, respectively.

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, 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, 2016.

(5)GOODWILL AND OTHER INTANGIBLE ASSETS

Goodwill consisted of the following (in thousands):