Language service brought to the 21st centry???
Did the Idea of Ortsbo have anything to do with the change of heart???????
Company Name |
LANGUAGE LINE SERVICES HOLDINGS, INC. |
| Company Address |
ONE LOWER RAGSDALE DRIVE
MONTEREY, CA 93940 |
| Company Phone |
877-886-3885 |
| Company Website |
www.languageline.com |
| CEO |
Dennis G. Dracup |
| Employees (as of 12/31/2009) |
4470 |
| State of Inc |
-- |
| Fiscal Year End |
-- |
| Status |
Withdrawn (4/29/2013) |
| Proposed Symbol |
-- |
| Exchange |
Nasdaq National Market |
| Share Price |
-- |
| Shares Offered |
-- |
| Offer Amount |
$400,000,000.00 |
| Total Expenses |
-- |
| Shares Over Alloted |
-- |
| Shareholder Shares Offered |
-- |
| Shares Outstanding |
-- |
| Lockup Period (days) |
180 |
| Lockup Expiration |
-- |
| Quiet Period Expiration |
-- |
| CIK |
0001476978 |
We estimate that the net proceeds to us from this offering, after deducting underwriting discounts and commissions and estimated offering expenses, will be approximately $ million, assuming the shares are offered at $ per share, the midpoint of the price range set forth on the cover page of this prospectus. If the underwriters’ over-allotment option to purchase additional shares is exercised, we do not expect to receive any additional proceeds. We will not receive any of the proceeds from the shares of common stock being sold by the selling stockholder. A $1.00 increase or decrease in the assumed initial public offering price of $ per share would increase or decrease the net proceeds we receive from this offering by approximately $ million, assuming the number of shares offered by us remains the same. We intend to use the net proceeds we receive from this offering to (i) pay a dividend to our parent, Language Line Holdings LLC, which it will use to redeem in whole its series A preferred units, which amounts to approximately $ million, approximately $ million of which is owned by affiliates of ABRY Partners and approximately $ of which is owned by an affiliate of Merrill Lynch, Pierce, Fenner & Smith Incorporated, an underwriter of this offering, and (ii) approximately $ million to repay outstanding term loans pursuant to the Citi Loan, approximately $ million of which is to pay ABRY Partners a fee for guaranteeing the Citi Loan. The total payments to be made to ABRY Partners and affiliates of ABRY Partners in connection with this offering will be approximately $ million. As of December 31, 2009, we had approximately $40.8 million of borrowings outstanding under the Citi Loan. The Citi Loan matures on December 31, 2010 and had an interest rate of 4.74% at December 31, 2009, which includes fees payable to ABRY Partners in exchange for guaranteeing this loan. In addition, there were approximately $186.7 million of series A preferred units outstanding as of December 31, 2009. The series A preferred units accrue a yield of 15% per year compounded quarterly on the sum of any unreturned capital value of the units plus the unpaid yield on such units, provided that the accrual will be 17% per year from and after the date of an event of default until such event of default is cured.
We believe that we are the leading outsourced OPI provider in the U.S. with greater scale, scope, expertise and technical capabilities than our other outsourced OPI competitors. We believe that our most significant United States competitors include Lionbridge Technologies, Inc. (Waltham, MA), Pacific Interpreters (Portland, OR), and Cyracom (Tucson, AZ). We believe that our largest competitor in the United Kingdom is TheBigWord, and we believe that our largest competitor in Canada is CanTalk. We believe the following attributes are important to our customers; connection speeds, reliability, breadth of languages and quality of interpreters; that our performance compared to the performance of our competitors is more desirable to our customers. We believe these service attributes are key considerations in the purchase decisions for our customers. This is particularly true for organizations concerned with compliance with Title VI of the Civil Rights Act of 1964 which requires companies to have interpretation services for LEP speakers in order to qualify for federal funding. The primary alternatives to OPI include: • Customer-provided language service through bilingual agents (“in-house”) and face-to-face interpreters; • Customer relationship management (“CRM”) providers with foreign language capabilities; and • Technology such as web self-service, interactive voice response (“IVR”) units and machine translation. When deciding whether to use a language alternative to OPI, we believe our customers’ primary selection criteria are the levels of customer service, the critical nature of a call (e.g., emergency 911 or hospital emergency room), the cost to service the transaction, and the availability of bi-lingual resources. Customer-Provided Language Service While in-house bilingual agents can potentially offer better customer service at a lower cost than OPI service, these benefits are often not realized due to inefficiencies resulting from the need to manage internal productivity levels. Moreover, managing these agents can be a significant distraction in light of the relative minor usage by the LEP client base. As for service quality, customers are typically inexperienced in recruiting, testing, training and managing an ethnically diverse workforce and often lack the resources to service their customers in more than 170 languages, 24 hours a day, seven days a week. Face-to-face interpreters can deliver more personal service, although interpreters represent a fixed cost that may become expensive if not managed efficiently. Moreover, face-to-face interpreters generally are not available on demand when needed and cannot assist in call center applications. CRM Providers Many third party CRM providers offer language solutions as part of their larger outsourcing offering. Generally, the number of languages offered are limited (in many cases, only one). These offerings are usually focused on program- specific, scripted sales offers and lack the flexibility OPI provides to customer service and other critical applications. Many companies choose not to outsource critical customer relationships to third party CRM providers. Technology Web and IVR technology provide low cost language alternatives, although the use of these technologies currently is limited to simple transactions and lacks the flexibility OPI provides for typical customer service and other critical applications. Moreover, customers still need to provide a “zero out” option when LEP speakers cannot continue with menus provided or require additional assistance beyond the basic applications. Machine translation has evolved to handle simple transactions with accuracy in the range of 80% to 90%. Similar to CRM providers and IVR technology, machine translation lacks the flexibility desired by customers for interactions with their own customers. --- Our interpretation services are subject to price competition. Our existing contracts with our clients generally are non-exclusive, terminable after a period of notice and have no requirement for a minimum amount of billed minutes. We generally obtain our clients through a competitive bidding process, usually by responding to a request for proposal, in which a potential client may negotiate among multiple interpretation service providers. In addition, the cost incurred by our clients to switch or use multiple interpretation service providers is minimal. From time to time, we may need to reduce our prices or offer other concessions for some of our services to respond to competitive and client pressures and to maintain market share. These concessions include volume discounts, waiving fees and reduction in the prices we charge for our services. Such pressures also may restrict our ability to offset our costs to provide interpretation services. Any reduction in prices as a result of competitive pressures will negatively impact ARPM and our revenues. Our ARPM has declined over the past six years and is anticipated to continue to decline in the future. We have undertaken a strategy to manage pricing per billed minute as a strategic tool to encourage our clients to purchase more billed minutes and to optimize our market share. This is consistent with industry trends, which are expected to continue for the foreseeable future. If we are unable to attract sufficient volume to offset lower per minute charges, or if average revenue per billed minute decreases beyond our expectations, our revenues will be negatively impacted.
Company Description
We believe we are a global leader in providing on-demand language interpretation services. Supporting over 170 languages, we provide our interpretation services to businesses, government and other public sector clients primarily via telephone interpretation. We also provide video and in-person
interpretation services. Within seconds of receiving an inbound call, 24 hours a day and seven days a week, we provide our clients with an over-the-phone interpreter with the appropriate language and topic-specific skill set who can help facilitate a conversation between our client and our client’s limited English proficiency, which we refer to as LEP, customers. In 2009, we helped more than 41 million people communicate across linguistic barriers by providing over-the-phone interpretation, which we refer to as OPI, services to our clients. We focus on high-value interactions that require immediate availability of our multi-lingual resources, including emergency rooms or 911 calls, or flexible, customized interpretation services to businesses, such as mortgage or insurance claims processing. We offer a wide range of language interpretation services to clients in various markets, including healthcare, government, financial services, insurance, telecommunications and utilities. We have over 10,000 clients, including approximately 60% of the Fortune 500 companies and all of the top 20 emergency 911 response centers in the U.S. For the year ended December 31, 2009, our largest client represented less than 5% of revenue and our largest market, healthcare, represented less than 30% of revenue. Our diverse industry focus and delivery of revenue-enhancing and critical services have driven increased demand and interpreter minutes growth even in challenging economic times. For example, throughout the current recessionary environment, we have provided interpretation services for calls related to mortgage foreclosure, helping our clients’ customers understand terms or negotiate payments. These applications complement our financial services clients’ traditional use of our services, which include resolving credit card problems, increasing collections, opening new accounts, providing home buyer education and producing credit reports. Our insurance industry clients use our services to process claims, improve claim investigations, evaluate questionable claims, enhance help desk service and explain benefits. We assist healthcare clients by facilitating emergency room and critical care situations, accelerating triage and medical advice, simplifying patient admission processes, improving billing and increasing collections. We also support emergency 911 services, disaster relief, citizen support 311 services and other services for governments and municipalities. Given the strong trends for our services and the uniquely low capital requirements of our business model, we have consistently grown our business and delivered strong free cash flow. We have grown our revenue to $298.9 million in 2009 from $185.3 million in 2006, representing a compounded annual growth rate, which we refer to as CAGR, of 17.3%. Our income from operations for 2009 was $40.9 million, and from 2006 to 2009 our ratio of annual capital expenditure to revenue has averaged 1.7%. However, since our acquisition by ABRY Partners in June 2004, we have incurred net losses, including a net loss of $70.0 million for the year ended December 31, 2009. In addition, at each of December 31, 2009 and February 28, 2010, we had approximately $565.8 million of outstanding indebtedness and have historically incurred significant amounts of indebtedness. Over our 27-year operating history, we have established the world’s largest language interpretation workforce consisting of over 4,000 well-trained, dedicated interpreters who deliver quality, accurate and professional interpretation services on a 24/7 basis. Our delivery model is scalable and requires low capital investment to maintain and grow, as the majority of our interpreters work from home in the United States, supplemented by interpreters located in six domestic and international interpretation centers. This model enables our cost structure to be variable, optimizing interpreter availability with fluctuations in demand across multiple languages and skill sets without the fixed costs of facilities-based agent models, which are occupancy costs including rent, utilities and taxes, associated with providing interpreters with office space. We continually invest in our proprietary technology platforms to enhance our outsourcing model and to sustain high barriers to competitive entry. Our scalable call-routing and interpreter scheduling technologies augment our ability to offer superior service at a lower cost than our competitors. Our call routing technology handles thousands of calls simultaneously and, within seconds, sources our highest quality, lowest cost available interpreters with an optimized interpretive skill set, whether they are working at home or in one of our global interpretation centers. Additionally, we developed a fully integrated interpreter scheduling system to forecast and optimize interpreter utilization across multiple languages and skill sets based on a proprietary 10-year call history database.
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