What changed in this filing

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Item 1. Financial Statements

2020-11-04 compared with 2020-08-05 · 222 added, 167 removed, 833 unchanged (32% of the section changed)

4 unchanged sentences

(Amounts in thousands, except share amounts)

September 30,

Current assets

35 unchanged sentences

10,000,000 shares authorized;

zero shares outstanding as of June 30, 2020 and December 31, 2019

zero shares outstanding as of September 30, 2020 and December 31, 2019

Common stock;

1 unchanged sentence

150,000,000 shares authorized;

46,682,482 and 46,488,938 shares outstanding as of June 30, 2020 and December 31, 2019, respectively

46,734,704 and 46,488,938 shares outstanding as of September 30, 2020 and December 31, 2019, respectively

Additional paid-in capital

Treasury stock at cost;

35,369,771 and 35,563,315 shares as of June 30, 2020 and December 31, 2019, respectively

35,317,549 and 35,563,315 shares as of September 30, 2020 and December 31, 2019, respectively

Accumulated other comprehensive income (loss)

2 unchanged sentences

Total stockholders’ equity

Total liabilities and stockholders’ equity and mezzanine equity

Total liabilities, stockholders’ equity and mezzanine equity

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

3 unchanged sentences

(Amounts in thousands, except per share amounts)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Operating expenses

26 unchanged sentences

Net income per share attributable to TTEC stockholders

Dividends declared per share outstanding

Dividends declared and not paid per share outstanding

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

3 unchanged sentences

(Amounts in thousands)

Three months ended June 30, 2020 and 2019

Three months ended September 30, 2020 and 2019

Stockholders’ Equity of the Company

4 unchanged sentences

Income (Loss)

Balance as of March 31, 2020

Balance as of June 30, 2020

Dividends to shareholders ($0.40 per common share)

6 unchanged sentences

Other, net of tax

Balance as of June 30, 2020

Balance as of September 30, 2020

Stockholders’ Equity of the Company

4 unchanged sentences

Income (Loss)

Balance as of March 31, 2019

Cumulative effect of adopting accounting standard updates

Balance as of June 30, 2019

Dividends to shareholders ($ 0.32 per common share)

Capital contribution from noncontrolling interest

Dividends distributed to noncontrolling interest

4 unchanged sentences

Other, net of tax

Balance as of June 30, 2019

Six months ended June 30, 2020 and 2019

Balance as of September 30, 2019

Nine months ended September 30, 2020 and 2019

Stockholders’ Equity of the Company

13 unchanged sentences

Other, net of tax

Balance as of June 30, 2020

Balance as of September 30, 2020

Stockholders’ Equity of the Company

14 unchanged sentences

Other, net of tax

Balance as of June 30, 2019

Balance as of September 30, 2019

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

3 unchanged sentences

(Amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

24 unchanged sentences

Cash flows from financing activities

Proceeds from line of credit

Payments on line of credit

Net proceeds (borrowings) from line of credit

Payments on other debt

5 unchanged sentences

Payments of debt issuance costs

Net cash provided by (used in) financing activities

Net cash used in financing activities

Effect of exchange rate changes on cash, cash equivalents and restricted cash

8 unchanged sentences

Acquisition of equipment through increase in accounts payable, net

Dividend declared but not paid

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

6 unchanged sentences

(“TTEC”, “the Company”) is a leading global customer experience technology and services company focused on the design, implementation and delivery of transformative customer experience outcomes for many of the world’s most iconic and disruptive brands.

Since its inception in 1982, the Company has been helping clients deliver frictionless customer experiences, strengthen their customer relationships, brand recognition and loyalty through personalized interactions, significantly improve their Net Promoter Score (“NPS”), and lower their total cost to serve by enabling and delivering simplified, consistent and seamless customer experience across channels and phases of the customer lifecycle.

Since its inception in 1982, the Company has been helping clients deliver frictionless customer experiences, strengthen their customer relationships, brand recognition and loyalty through personalized interactions, significantly improve their Net Promoter Score, and lower their total cost to serve by enabling and delivering simplified, consistent and seamless customer experience across channels and phases of the customer lifecycle.

TTEC’s 56,200 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 United States, Australia, Belgium, Brazil, Bulgaria, Canada, Costa Rica, Germany, Greece, Hong Kong, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, Singapore, South Africa, Thailand, and the United Kingdom.

4 unchanged sentences

● TTEC Engage provides the essential technologies, human resources, infrastructure and processes to operate customer care, acquisition, and fraud detection and prevention services.

TTEC Digital and TTEC Engage come together under our unified offering, Humanify TM Customer Experience as a Service (“CXaas”), which drives measurable customer results for clients through the delivery of personalized, omnichannel experiences.

Our Humanify TM cloud platform provides a fully integrated ecosystem of Customer Experience (“CX”) offerings, including omnichannel, messaging, AI, ML, RPA, analytics, cybersecurity, customer relationship management (“CRM”), knowledge management and journey orchestration.

TTEC Digital and TTEC Engage come together under our unified offering, Humanify ® Customer Experience as a Service (“CXaas”), which drives measurable customer results for clients through the delivery of personalized, omnichannel experiences.

Our Humanify ® cloud platform provides a fully integrated ecosystem of Customer Experience (“CX”) offerings, including omnichannel, messaging, artificial intelligence, machine learning, robotic process automation, analytics, cybersecurity, customer relationship management (“CRM”), knowledge management and journey orchestration.

Basis of Presentation

10 unchanged sentences

Notes to Consolidated Financial Statements

Reclassifications

The Company has elected to modify the presentation of the proceeds and borrowings on the line of credit within the financing section of the Cash Flow Statement from a two-line presentation to a one-line net presentation.

Prior period presentation has been modified to ensure consistency.

Use of Estimates

4 unchanged sentences

Cash, Cash Equivalents and Restricted Cash

Cash and cash equivalents consist of cash and highly liquid short-term investments, primarily held in interest-bearing investments which have original maturities of less than 90 days.

Cash and cash equivalents consist of cash, primarily held in interest-bearing investment accounts, and liquid short-term investments which have original maturities of less than 90 days.

Restricted cash includes cash whereby the Company’s ability to use the funds at any time is contractually limited or is generally designated for specific purposes arising out of certain contractual or other obligations.

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets that sum to the amounts reported in the Condensed Consolidated Statement of Cash Flows (in thousands):

June 30, 2020

September 30, 2020

December 31, 2019

7 unchanged sentences

The Company evaluates the creditworthiness of its clients prior to entering into an agreement to provide services and as necessary through the life of the client relationship.

The Company does not believe it is exposed to more than a nominal amount of credit risk in its derivative hedging activities, as the Company diversifies its activities across nine investment-grade financial institutions.

The Company does not believe it is exposed to more than a nominal amount of credit risk in its derivative hedging activities, as the Company diversifies its activities across eight investment-grade financial institutions.

TTEC HOLDINGS, INC.

2 unchanged sentences

Recently Adopted Accounting Pronouncements

In January 2016, the FASB issued ASU 2016-13, “Financial Instruments – Credit Losses” (ASC 326), which amends the methodology of how and when companies measure credit losses on financial instruments.

In January 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, “Financial Instruments – Credit Losses” (ASC 326), which amends the methodology of how and when companies measure credit losses on financial instruments.

The objective of the ASU is to provide financial statement users more useful information regarding expected credit losses on financial instruments and other commitments.

14 unchanged sentences

(2) ACQUISITIONS AND DIVESTITURES

On February 7, 2020 , the Company acquired, through its subsidiary TTEC Digital, LLC (“TTEC Digital”), 70 % of the outstanding shares of capital stock of Serendebyte Inc., a Delaware corporation (“the Transaction”).

Voice Foundry

On August 5, 2020 , TTEC Digital, LLC, a subsidiary of the Company, closed the first phase of the acquisition of the Voice Foundry business by acquiring 100 % of the business’s net assets in the U.S.

and U.K., (the “VF US Transaction”).

Voice Foundry is a preferred Amazon Connect cloud contact center service and implementation partner with approximately 60 employees in the U.S.

The business has been integrated into the TTEC Digital segment and is being fully consolidated into the financial statements of TTEC.

Total cash paid at acquisition was $ 34.3 million.

The VF US Transaction is subject to customary representations and warranties, holdbacks, and working capital adjustments.

The VF US Transaction includes two contingent payments over the next two years with each payment having a maximum value of $ 7.4 million based on VF US’s EBITDA performance for 2020 and 2021.

The fair value of the contingent consideration has been estimated using a Monte Carlo model.

The model was based on current expected EBITDA performance, a discount rate of 23.1 %, a volatility rate of 47 %, and an adjusted risk-free rate of 2.6 %.

Based on the model, a $ 10.9 million expected future payment was calculated and recorded as of September 30, 2020, with $ 7.4 million included in Other accrued expenses and $ 3.5 million included in Other long-term liabilities in the accompanying Consolidated Balance Sheets.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following summarizes the estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands):

Acquisition Date

Accounts receivable, net

Prepaid and other assets

Customer relationships

Accounts payable

Accrued employee compensation

Deferred revenue

Total purchase price

The estimates of fair value of identifiable assets acquired and liabilities assumed are preliminary, pending finalization of the valuation and tax returns, thus are subject to revisions that may result in adjustments to the values presented above.

The VF US customer relationships and tradename have been estimated based on the initial valuation and will be amortized over estimated useful lives of 4 and 2 years , respectively.

The goodwill recognized from the VF US acquisition is estimated to be attributable, but not limited to, the acquired workforce and expected synergies with TTEC Digital segment.

The tax basis of the acquired intangibles and goodwill will be deductible for income tax purposes.

The acquired goodwill and intangibles and operating results of VF US are reported within the TTEC Digital segment from the date of acquisition.

A second phase of the Voice Foundry acquisition involves acquiring the Voice Foundry Australian and ASEAN businesses.

The acquisition was cleared by the Australian Foreign Investment Review Board and is expected to close in early November 2020.

TTEC Digital LLC expects to pay approximately $ 13.0 million at closing for the Australian and ASEAN business and up to an additional $ 4.4 million in contingent consideration over the next two years.

On February 7, 2020 , the Company acquired, through its subsidiary TTEC Digital LLC, 70 % of the outstanding shares of capital stock of Serendebyte Inc., a Delaware corporation (“the Serendebyte Transaction”).

Serendebyte is an autonomous customer experience and intelligent automation solutions provider with 125 employees based in India, the United States, and Canada .

1 unchanged sentence

Total cash paid at acquisition, for 70 % of the outstanding shares of capital stock, was $ 9.0 million.

The Transaction is subject to customary representations and warranties, holdbacks, and a net working capital adjustment.

The Company finalized the net working capital adjustment for $ 0.8 million during the second quarter of 2020 which was paid from Serendebyte to TTEC Digital in the second quarter of 2020.

The Serendebyte Transaction is subject to customary representations and warranties, holdbacks, and a net working capital adjustment.

The Company finalized the net working capital adjustment for $ 0.8 million during the second quarter of 2020 which was paid by Serendebyte to TTEC Digital LLC in the second quarter of 2020.

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

As of the closing of the Transaction, Serendebyte’s founder and certain members of its management will continue to hold the remaining 30 % interest in Serendebyte, Inc.

As of the closing of the Serendebyte Transaction, Serendebyte’s founder and certain members of its management continued to hold the remaining 30 % interest in Serendebyte, Inc.

(“Remaining Interest”).

Between January 31, 2023 and December 31, 2023, Serendebyte’s founder and the management team shall have an option to sell to TTEC Digital and TTEC Digital shall have an option to purchase the Remaining Interest at a purchase price equal to a multiple of Serendebyte’s adjusted trailing twelve month EBITDA for this particular acquisition.

Between January 31, 2023 and December 31, 2023, Serendebyte’s founder and the management team shall have an option to sell to TTEC Digital LLC and TTEC Digital LLC shall have an option to purchase the Remaining Interest at a purchase price equal to a multiple of Serendebyte’s adjusted trailing twelve month EBITDA for this particular acquisition.

The noncontrolling interest was recorded at fair value on the date of acquisition.

25 unchanged sentences

First Call Resolution

On October 26, 2019 , the Company acquired, through its subsidiary TTEC Services Corporation (“TSC”), 70 % of the outstanding membership interest in First Call Resolution, LLC (“FCR”), an Oregon limited liability company (“the Transaction”).

FCR is a customer care, social networking and business process solutions service provider with approximately 2,000 employees based in the U.S .

1 unchanged sentence

Total cash paid at acquisition was $ 107.0 million, inclusive of $ 4.5 million related to cash balances, for the 70 % membership interest in FCR.

The Transaction was subject to customary representations and warranties, holdbacks, and a net working capital adjustment.

The Transaction included a potential contingent payment with a maximum value of $ 10.9 million based on FCR’s 2020 EBITDA performance.

The Company finalized the working capital adjustment for $ 0.7 million during the first quarter of 2020 which was paid from FCR to TSC in March 2020.

As of the closing of the Transaction, Ortana Holdings, LLC, an Oregon limited liability company (“Ortana”), owned by the FCR founders, will continue to hold the remaining 30 % membership interest in FCR (“Remaining Interest”).

The FCR Transaction was subject to customary representations and warranties, holdbacks, and a net working capital adjustment.

The FCR Transaction included a contingent payment with a maximum value of $ 10.9 million based on FCR’s 2020 EBITDA performance.

The Company finalized the working capital adjustment for $ 0.7 million during the first quarter of 2020 which was paid by FCR to TSC in March 2020.

As of the closing of the FCR Transaction, Ortana Holdings, LLC, an Oregon limited liability company (“Ortana”), owned by the FCR founders, continued to hold the remaining 30 % membership interest in FCR (“Remaining Interest”).

Between January 31, 2023 and December 31, 2023, Ortana shall have an option to sell to TSC and TSC shall have an option to purchase from Ortana the Remaining Interest at a purchase price equal to a multiple of FCR’s adjusted trailing twelve month EBITDA for this particular acquisition, and not to compete with the Company for a period of four years after the disposition of the Remaining Interest.

8 unchanged sentences

The benefits were included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss).

As of June 30, 2020, the value of the contingent consideration was $ 1.8 million and was included in Other current liabilities in the accompanying Consolidated Balance Sheets.

As of September 30, 2020, the value of the contingent consideration was $ 1.8 million and was included in Other current liabilities in the accompanying Consolidated Balance Sheets.

TTEC HOLDINGS, INC.

20 unchanged sentences

The acquired goodwill and intangibles and operating results of FCR are reported within the TTEC Engage segment from the date of acquisition.

TeleTech Customer Management (Ghana) Limited

In the second quarter of 2020, the Company dissolved TeleTech Customer Management (Ghana) Limited, a wholly owned subsidiary domiciled in Ghana.

Upon the completed dissolution, a $ 2.5 million loss was included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss) during the quarter ended June 30, 2020.

The majority of the loss related to the removal of the Accumulated other comprehensive income (loss) balance.

Financial Impact of Acquired Businesses

The acquired businesses purchased in 2020 and 2019 noted above contributed revenues of $ 52.2 million and net income of $ 3.7 million, inclusive of $ 3.2 million of acquired intangible amortization, to the Company for the six months ended June 30, 2020.

The acquired businesses purchased in 2020 and 2019 noted above contributed revenues of $ 82.2 million and net income of $ 5.1 million, inclusive of $ 5.2 million of acquired intangible amortization, to the Company for the 2020.

The unaudited proforma financial results for the nine months ended September 30, 2020 and 2019 combines the consolidated results of the Company, FCR, Serendebyte and Voice Foundry, assuming the acquisitions had been completed on January 1, 2019.

The reported revenue and net income of $ 1,378.3 million and $ 74.2 million would have been $ 1,386.6 million and $ 76.7 million for the nine months ended September 30, 2020, respectively, on an unaudited proforma basis.

For 2019, the reported revenue and net income of $ 1,182.4 million and $ 48.9 million would have been $ 1,255.2 million and $ 62.1 million for the nine months ended September 30, 2019, respectively, on an unaudited proforma basis.

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

The unaudited proforma financial results for the six months ended June 30, 2020 and 2019 combines the consolidated results of the Company, FCR and Serendebyte, assuming the acquisitions had been completed on January 1, 2019.

The reported revenue and net income of $ 885.3 million and $ 52.9 million would have been $ 886.3 million and $ 53.1 million for the six months ended June 30, 2020, respectively, on an unaudited proforma basis.

For 2019, the reported revenue and net income of $ 786.9 million and $ 30.8 million would have been $ 830.7 million and $ 39.4 million for the six months ended June 30, 2019, respectively, on an unaudited proforma basis.

The unaudited proforma consolidated results are not to be considered indicative of the results if these acquisitions occurred in the periods mentioned above, or indicative of future operations or results.

Additionally, the proforma consolidated results do not reflect any anticipated synergies expected as a result of the acquisition.

Subsequent Event

On August 5, 2020 , TTEC Digital, LLC (“TTEC Digital”), a subsidiary of the Company, agreed to acquire 100 % of VoiceFoundry, a preferred Amazon Connect cloud contact center services partner (the “VF Transaction”).

The VF Transaction will close in two phases, with the acquisition of VoiceFoundry’s U.S.

and European operations closing contemporaneously with the signing of the purchase agreement and the acquisition of the Australian and ASEAN operations closing as soon as practicable following clearance by the Australian Foreign Investment Review Board.

TTEC Digital agreed to pay up to $ 67.2 million, in aggregate, for the VF Transaction, including aggregate cash consideration at closing of $ 48.0 million and potential earn-out payments over the next two years with a maximum value of up to $ 19.2 million, based on VoiceFoundry’s post-closing performance against agreed 2020 and 2021 EBITDA targets.

The VF Transaction is subject to customary representations and warranties, holdbacks, and working capital adjustments.

In the ordinary course of business, the Company operates different legal entities around the globe that have functional currencies other than USD.

From time to time, the Company liquidates some of the entities when they are no longer needed to operate its business, and also forms new entities to support the needs of the business.

The liquidation proceedings may take different forms, take considerable amount of time, and may also result in losses or gains unrelated to operations.

In the second quarter ended June 30, 2020, the Company exited a foreign subsidiary that resulted in a $ 2.5 million loss included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss) from the realization of the Accumulated Other Comprehensive Income (Loss), which represents the Currency Translation Adjustment of the investment in the foreign subsidiary.

Similarly, in the third quarter ended September 30, 2020, the Company exited two foreign subsidiaries that have ceased operations and therefore will be removed from the consolidated financial statements as of the reporting period ended September 30, 2020.

As a result of the deconsolidation, a $ 17.4 million loss was included in Other income (expense), net in the Consolidated Statement of Comprehensive Income (Loss).

The majority of this loss related to the realization of the Accumulated Other Comprehensive Income (Loss) balance which represents the Currency Translation Adjustment of the investment in the foreign subsidiaries.

The operating income of these subsidiaries prior to dissolution was not material to the year-to-date consolidated results of the Company.

(3) SEGMENT INFORMATION

11 unchanged sentences

Our customer care services provide turnkey contract center solutions, including digital omnichannel technologies, associate recruiting and training, facilities, and operational expertise to create exceptional customer experiences across all touchpoints.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

o Fraud Prevention Services:

2 unchanged sentences

All intercompany transactions between the reported segments for the periods presented have been eliminated.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

Three Months Ended June 30, 2020

Three Months Ended June 30, 2019

Six Months Ended June 30, 2020

Six Months Ended June 30, 2019

Three Months Ended September 30, 2020

Three Months Ended September 30, 2019

Nine Months Ended September 30, 2020

Nine Months Ended September 30, 2019

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Capital Expenditures

2 unchanged sentences

Notes to Consolidated Financial Statements

June 30, 2020

September 30, 2020

December 31, 2019

June 30, 2020

September 30, 2020

December 31, 2019

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

United States

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(4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS

The Company had no clients that contributed in excess of 10% of total revenue for the six months ended June 30, 2020 or 2019.

The Company had one client that contributed in excess of 10% of total revenue for the nine months ended September 30, 2020.

This client operates in the financial services industry and is included in the TTEC Engage segment.

This client contributed 11.8 % and 3.4 % of total revenue for the nine months ended September 30, 2020 and 2019, respectively.

The Company had no clients that contributed in excess of 10% of total revenue for the nine months ended September 30, 2019.

The Company does have clients with aggregate revenue exceeding $ 100 million annually and the loss of one or more of these clients could have a material adverse effect on the Company’s business, operating results, or financial condition.

1 unchanged sentence

To limit the Company’s credit risk with its clients, management performs periodic credit evaluations, maintains allowances for credit losses and may require pre-payment for services from certain clients.

Based on currently available information, management does not believe significant credit risk existed as of June 30, 2020.

Based on currently available information, management does not believe significant credit risk existed as of September 30, 2020.

In connection with the implementation of ASC 326 as of January 1, 2020, the Company analyzed the prior history of credit losses on revenue for TTEC as a whole and separately for each of the two segments.

Based on this evaluation, no modification to the allowance for credit losses balance was necessary as of the implementation date.

At the end of each quarter beginning on March 31, 2020, an allowance for credit losses will be calculated based on the current quarterly revenue multiplied by the historical loss percentage of the prior three year period and recorded in the income statement.

At the end of each quarter beginning with March 31, 2020, an allowance for credit losses will be calculated based on the current quarterly revenue multiplied by the historical loss percentage of the prior three year period and recorded in the income statement.

In addition to the evaluation of historical losses, the Company considers current and future economic conditions and events such as changes in customer credit quality and liquidity.

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Activity in the Company’s Allowance for credit losses consists of the following (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Balance, beginning of period

4 unchanged sentences

On October 15, 2018, Sears Holding Corporation (“Sears”) announced that it had filed a petition for bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York.

As of June 30, 2020 and December 31, 2019, TTEC had approximately $ 2.7 million in pre-petition accounts receivables exposure related to Sears;

As of September 30, 2020 and December 31, 2019, TTEC had approximately $ 2.7 million in pre-petition accounts receivables exposure related to Sears;

during the fourth quarter of 2018 a $ 2.7 million allowance for uncollectible accounts was recorded and included in Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income (Loss).

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The cash proceeds from this agreement are included in the change in accounts receivable within the operating activities section of the Consolidated Statements of Cash Flows.

As of June 30, 2020, the Company had factored $ 40.0 million of accounts receivable;

As of September 30, 2020, the Company had factored $ 51.5 million of accounts receivable;

under the Agreement discounts on these receivables were not material during the quarter.

As of June 30, 2020, the Company had collected $ 20.4 million of cash from customers which had not been remitted to the Bank.

As of September 30, 2020, the Company had collected $ 21.5 million of cash from customers which had not been remitted to the Bank.

The unremitted cash is Restricted Cash and is included within Prepaid and Other Current Assets with the corresponding liability included in Accrued Expenses on the Consolidated Balance Sheet.

The Company has not recorded any servicing assets or liabilities as of June 30, 2020 as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements.

The Company has not recorded any servicing assets or liabilities as of September 30, 2020 as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements.

(5) GOODWILL AND OTHER INTANGIBLE ASSETS

1 unchanged sentence

Acquisitions /

September 30,

TTEC HOLDINGS, INC.

3 unchanged sentences

The Company conducts its annual goodwill impairment assessment during the fourth quarter, or more frequently, if indicators of impairment exist.

During the quarter ended June 30, 2020, the Company assessed whether any such indicators of impairment existed and concluded there were none.

During the Company’s annual impairment testing as of December 1, 2019, the Company identified triggering events that could lead to impairment of goodwill for the Digital Consulting reporting unit, including lower revenues and profits than had been anticipated over the past two years.

The carrying value of Digital Consulting was $ 39.7 million at December 1, 2019, including approximately $ 24.3 million of goodwill.

Based on the Company’s assessment, the estimated fair value of the Digital Consulting reporting unit exceeded its carrying value by approximately 26 %, but based on additional sensitivity analysis, the amount of cushion could fall to 0% or below if the performance of the business does not improve as expected.

The estimate of fair value was based on generally accepted valuation techniques and information available at the date of the assessment, which incorporated management’s assumptions about expected revenues and future cash flows and available market information for comparable companies.

During the first six months of 2020, the reporting unit has delivered actual results slightly better than the estimate included in the analysis above.

During the quarter ended September 30, 2020, the Company assessed whether any such indicators of impairment existed and concluded there were none.

During the third quarter of 2020, the Company reassessed the reporting units within the TTEC Digital segment based on a reorganization of the reporting structure within this segment.

The Company has changed how it views the components within the segment as the business has evolved and multiple recent acquisitions have been incorporated.

After evaluation, the Company will maintain two reporting units within TTEC Digital but these include different components than previously included.

Given the change in reporting units, the Company conducted an impairment test before and after the change, and it was concluded that the fair value of the reporting units exceeded the carrying value on both testing dates.

With the change in reporting units, the Company performed a relative fair value valuation calculation to allocate the Company’s historical goodwill between the two reporting units based on the shift in components.

The resulting reallocation of goodwill was not material.

Other Intangible Assets

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As part of the $ 2.0 million impairment $ 0.4 million was assigned to the customer relationship intangible asset and $ 0.2 million to the IP intangible asset.

At December 31, 2019 and June 30, 2020, the Company reviewed the evaluation completed as of June 30, 2019, and noted no material changes, thus no additional impairment was required.

At December 31, 2019 and September 30, 2020, the Company reviewed the evaluation completed as of June 30, 2019, and noted no material changes, thus no additional impairment was required.

(6) DERIVATIVES

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Conversely, the fair value of derivative liabilities reflects the Company’s creditworthiness.

As of June 30, 2020, 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 and six months ended June 30, 2020 and 2019 (in thousands and net of tax):

As of September 30, 2020, 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 and nine months ended September 30, 2020 and 2019 (in thousands and net of tax):

TTEC HOLDINGS, INC.

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Aggregate unrealized net gain/(loss) at beginning of period

2 unchanged sentences

Aggregate unrealized net gain/(loss) at end of period

The Company’s foreign exchange cash flow hedging instruments as of June 30, 2020 and December 31, 2019 are summarized as follows (amounts in thousands).

The Company’s foreign exchange cash flow hedging instruments as of September 30, 2020 and December 31, 2019 are summarized as follows (amounts in thousands).

All hedging instruments are forward contracts.

As of June 30, 2020

As of September 30, 2020

Canadian Dollar

Philippine Peso

December 2022

As of December 31, 2019

1 unchanged sentence

(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 June 30, 2020 and December 31, 2019.

dollars on September 30, 2020 and December 31, 2019.

Fair Value Hedges

1 unchanged sentence

Changes in the fair value of derivative instruments designated as fair value hedges are recognized in earnings in Other income (expense), net.

As of June 30, 2020 and December 31, 2019 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 7.4 million and $ 64.5 million, respectively.

As of September 30, 2020 and December 31, 2019 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 32.8 million and $ 64.5 million, respectively.

TTEC HOLDINGS, INC.

2 unchanged sentences

Derivative Valuation and Settlements

The Company’s derivatives as of June 30, 2020 and December 31, 2019 were as follows (in thousands):

June 30, 2020

The Company’s derivatives as of September 30, 2020 and December 31, 2019 were as follows (in thousands):

September 30, 2020

Not Designated

17 unchanged sentences

Total fair value of derivatives, net

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended June 30, 2020 and 2019 were as follows (in thousands):

Three Months Ended June 30,

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2020 and 2019 were as follows (in thousands):

Three Months Ended September 30,

Designated as Hedging

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Notes to Consolidated Financial Statements

Three Months Ended June 30,

Three Months Ended September 30,

Not Designated as Hedging Instruments

4 unchanged sentences

Other income (expense), net

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the six months ended June 30, 2020 and 2019 were as follows (in thousands):

Six Months Ended June 30,

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the nine months ended September 30, 2020 and 2019 were as follows (in thousands):

Nine Months Ended September 30,

Designated as Hedging

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Amount and location of net gain or (loss) reclassified from Accumulated OCI to income - effective portion:

Six Months Ended June 30,

Nine Months Ended September 30,

Not Designated as Hedging Instruments

15 unchanged sentences

Notes to Consolidated Financial Statements

The following presents information as of June 30, 2020 and December 31, 2019 for 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.

The following presents information as of September 30, 2020 and December 31, 2019 for 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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An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary.

As of June 30, 2020, the investment in CaféX Communication, Inc., which consisted of the Company’s total $ 15.6 million investment, is fully impaired to zero .

As of September 30, 2020, the investment in CaféX Communication, Inc., which consisted of the Company’s total $ 15.6 million investment, is fully impaired to zero .

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 the London Interbank Offered Rate (“LIBOR”) plus a credit spread as determined by the Company’s leverage ratio calculation (as defined in the Credit Agreement).

As of June 30, 2020 and December 31, 2019, the Company had $ 700.0 million and $ 290.0 million, respectively, of borrowings outstanding under the Credit Agreement.

During the second quarter of 2020 outstanding borrowings accrued interest at an average rate of 1.6 % per annum, excluding unused commitment fees.

As of September 30, 2020 and December 31, 2019, the Company had $ 325.0 million and $ 290.0 million, respectively, of borrowings outstanding under the Credit Agreement.

During the third quarter of 2020 outstanding borrowings accrued interest at an average rate of 1.3 % 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 based on Level 2 inputs.

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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 June 30, 2020, 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 June 30, 2020 and December 31, 2019 (in thousands):

As of June 30, 2020

As of September 30, 2020, 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 September 30, 2020 and December 31, 2019 (in thousands):

As of September 30, 2020

Fair Value Measurements Using

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Total net derivative asset (liability)

The following is a summary of the Company’s fair value measurements as of June 30, 2020 and December 31, 2019 (in thousands):

As of June 30, 2020

The following is a summary of the Company’s fair value measurements as of September 30, 2020 and December 31, 2019 (in thousands):

As of September 30, 2020

Fair Value Measurements Using

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Notes to Consolidated Financial Statements

Contingent Consideration - The Company recorded contingent consideration related to the acquisition of FCR.

This contingent payable was recognized at fair value using a discounted cash flow approach and a discount rate of 16.7%.

Contingent Consideration - The Company recorded contingent consideration related to the acquisition of FCR and VF US.

The contingent payable for FCR was recognized at fair value using a discounted cash flow approach and a discount rate of 16.7 %.

The contingent payable for VF US was calculated using a Monte Carlo simulation including a discount rate of 23.1 %.

The measurements were based on significant inputs not observable in the market.

The Company will record interest expense each quarter using the effective interest method until the future value of this contingent payment reaches the expected total future value.

The Company will record interest expense each quarter using the effective interest method until the future value of these contingent payments reaches the expected total future value.

During the first and second quarters of 2020, the Company recorded fair value adjustments to the contingent consideration associated with the FCR acquisition based on decreased estimates of EBITDA which caused the estimated payable to decrease.

Accordingly, a $ 3.3 million decrease and a $ 1.1 million decrease to the payable were recorded as of March 31, 2020 and June 30, 2020, respectively, and were included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss).

As of June 30, 2020, the expected future contingent consideration is $1.8 million.

As of September 30, 2020, the expected future contingent consideration for FCR is $ 1.8 million.

A rollforward of the activity in the Company’s fair value of the contingent consideration payable is as follows (in thousands):

September 30,

(8) INCOME TAXES

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The CARES Act includes various provisions designed to support corporations and reduce the impact of COVID-19 pandemic on their liquidity including provisions relating to payroll tax credits, deferment of employer side social security payments, modifications to the net interest deduction limitations, allowing companies to carryback certain Net Operating Losses (“NOLs”) and increasing the amount of NOLs that corporations can use to offset income.

The CARES Act did not materially affect our second quarter income tax provision, deferred tax assets and liabilities, or related taxes payable.

The CARES Act did not materially affect our third quarter income tax provision, deferred tax assets and liabilities, or related taxes payable.

We are continuing to assess the future implications of these provisions within the CARES Act but do not expect there to be a material impact on our financial statements at this time.

As of June 30, 2020, the Company had $ 10.5 million of gross deferred tax assets (after a $ 17.0 million valuation allowance) and a net deferred tax asset of $ 0.5 million (after deferred tax liabilities of $ 10.0 million) related to the United States and international tax jurisdictions whose recoverability is dependent upon future profitability.

The effective tax rate for the three and six months ended June 30, 2020 was 24.8 % and 26.7 %, respectively.

The effective tax rate for the three and six months ended June 30, 2019 was 35.0 % and 30.3 %, respectively.

As of September 30, 2020, the Company had $ 14.6 million of gross deferred tax assets (after a $ 17.2 million valuation allowance) and a net deferred tax asset of $ 5.3 million (after deferred tax liabilities of $ 9.3 million) related to the United States and international tax jurisdictions whose recoverability is dependent upon future profitability.

TTEC HOLDINGS, INC.

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Notes to Consolidated Financial Statements

In accordance with ASC 740, during the third quarter of 2020 the Company recorded a liability of $ 1.7 million related to an uncertain tax position.

The effective tax rate for the three and nine months ended September 30, 2020 was 25.9 % and 26.5 %, respectively.

The effective tax rate for the three and nine months ended September 30, 2019 was 20.6 % and 27.0 %, respectively.

The Company’s U.S.

income tax returns filed for the tax years ending December 31, 2016 to present, remain open tax years .

The Company has been notified of the intent to audit or is currently under audit of income taxes for the United States for tax year 2017 , Canada for tax years 2009, 2010 and 2018 , the Philippines for tax year 2018 ;

and the state of New York for tax years 2015 through 2017 .

The Company has been notified of the intent to audit or is currently under audit of income taxes for the United States for tax year 2017 and 2018 , Canada for tax years 2009, 2010 and 2018 , the Philippines for tax year 2018, and the state of New York for tax years 2015 through 2017 .

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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In the Philippines, the Company has been granted multiple agreements with an initial period of four years and additional periods for varying years, expiring at various times between 2020 and 2022 .

The aggregate effect on income tax expense for the three months ended June 30, 2020 and 2019 was approximately $( 0.3 ) million expense and $ 1.9 million benefit, respectively, which had an impact on diluted net income per share of $( 0.01 ) and $ 0.04 , respectively.

The aggregate effect on income tax expense for the six months ended June 30, 2020 and 2019 was approximately $ 1.2 million and $ 4.0 million, respectively, which had a favorable impact on diluted net income per share of $ 0.02 and $ 0.09 , respectively.

The aggregate effect on income tax expense for the three months ended September 30, 2020 and 2019 was approximately $ 1.1 million and $ 2.4 million benefit, respectively, which had an impact on diluted net income per share of $ 0.02 and $ 0.05 , respectively.

The aggregate effect on income tax expense for the nine months ended September 30, 2020 and 2019 was approximately $ 2.2 million and $ 6.4 million, respectively, which had a favorable impact on diluted net income per share of $ 0.05 and $ 0.14 , respectively.

(9) RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES

Restructuring Charges

During the three and six months ended June 30, 2020 and 2019, the Company continued restructuring activities primarily associated with reductions in the Company’s capacity, workforce and related management in both segments to better align the capacity and workforce with current business needs.

A summary of the expenses recorded in Restructuring charges, net in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the three and six months ended June 30, 2020 and 2019, respectively, is as follows (in thousands):

During 2020 and 2019, the Company continued restructuring activities primarily associated with reductions in the Company’s capacity, workforce and related management in both segments to better align the capacity and workforce with current business needs.

A summary of the expenses recorded in Restructuring charges, net in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the three and nine months ended September 30, 2020 and 2019, respectively, is as follows (in thousands):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Reduction in force

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Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Facility exit and other charges

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Change in estimates

Balance as of June 30, 2020

Balance as of September 30, 2020

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

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During the second quarter of 2020, a $ 2.9 million accrual was recorded with the expense included in Cost of services during the quarter ended June 30, 2020.

During the third quarter, $ 0.5 million was paid and $ 0.1 million of additional expense was recorded.

The accrual is expected to be paid or extinguished during the next six months and thus is classified as current liabilities within Other accrued expenses in the Consolidated Balance Sheets.

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Assumptions included the amount and timing of estimated future cash flows and assumed discount rates.

During the three and six months ended June 30, 2020, the Company recognized impairment losses related to leasehold improvement assets and right of use lease assets of zero and $ 0.7 million, respectively, for the TTEC Digital segment.

During the three and six months ended June 30, 2019, the Company recognized impairment losses related to leasehold improvement assets and right of use lease assets of $ 1.1 million and $ 2.6 million, respectively, across the TTEC Digital and TTEC Engage segments.

During the three and nine months ended September 30, 2020 the Company recognized impairment losses, net related to leasehold improvement assets and right of use lease assets of $ 0.9 million and $ 1.6 million, respectively, for the TTEC Digital segment.

During the three and nine months ended September 30, 2019, the Company recognized impairment losses related to leasehold improvement assets and right of use lease assets of zero and $ 2.6 million, respectively, across the TTEC Digital and TTEC Engage segments.

TTEC HOLDINGS, INC.

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The Company primarily utilizes its Credit Agreement to fund working capital, general operations, dividends and other strategic activities, such as the acquisitions described in Note 2.

As of June 30, 2020 and December 31, 2019, the Company had borrowings of $700.0 million and $290.0 million, respectively, under its Credit Agreement, and its average daily utilization was $ 548.8 million and $ 324.0 million for the six months ended June 30, 2020 and 2019, respectively.

The increased borrowings under the Credit Agreement at June 30, 2020 relate to precautionary measures taken to proactively strengthen the Company’s cash reserves and financial flexibility in response to COVID-19 related uncertainties.

Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 195 million as of June 30, 2020.

As of June 30, 2020, the Company was in compliance with all covenants and conditions under its Credit Agreement.

As of September 30, 2020 and December 31, 2019, the Company had borrowings of $325.0 million and $290.0 million, respectively, under its Credit Agreement, and its average daily utilization was $ 597.9 million and $ 314.9 million for the nine months ended September 30, 2020 and 2019, respectively.

The Company had increased borrowings under the Credit Agreement from March 30, 2020 through late September 2020, related to precautionary measures taken to proactively strengthen the Company’s cash reserves and financial flexibility in response to COVID-19 related uncertainties.

As of September 30, 2020, those additional borrowings have been repaid.

Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 570 million as of September 30, 2020.

As of September 30, 2020, the Company was in compliance with all covenants and conditions under its Credit Agreement.

Letters of Credit

As of June 30, 2020, outstanding letters of credit under the Credit Agreement totaled $ 2.6 million and primarily guaranteed workers’ compensation and other insurance related obligations.

As of June 30, 2020, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $ 0.4 million.

As of September 30, 2020, outstanding letters of credit under the Credit Agreement totaled $ 2.6 million and primarily guaranteed workers’ compensation and other insurance related obligations.

As of September 30, 2020, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $ 0.4 million.

Legal Proceedings

19 unchanged sentences

The Company’s lease agreements do not contain any material residual value guarantees or restrictive guarantees.

The components of lease expense for the three and six months ended June 30, 2020 and 2019 are as follows (in thousands):

The components of lease expense for the three and nine months ended September 30, 2020 and 2019 are as follows (in thousands):

Location in Statements of

Three Months Ended June 30,

Three Months Ended September 30,

Comprehensive Income (Loss)

8 unchanged sentences

Operating lease cost (cost resulting from lease payments)

Restructuring

Operating lease cost

Operating lease cost (cost resulting from lease payments)

Other income (expense), net

12 unchanged sentences

Location in Statements of

Six Months Ended June 30,

Nine Months Ended September 30,

Comprehensive Income (Loss)

8 unchanged sentences

Operating lease cost (cost resulting from lease payments)

Restructuring

Operating lease cost

Operating lease cost (cost resulting from lease payments)

Other income (expense), net

8 unchanged sentences

Total lease cost

Other supplementary information for the three and six months ended June 30, 2020 and 2019 are as follows (dollar values in thousands):

Three Months Ended June 30,

Other supplementary information for the three and nine months ended September 30, 2020 and 2019, are as follows (dollar values in thousands):

Three Months Ended September 30,

Finance lease - operating cash flows

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New ROU assets - finance leases

Six Months Ended June 30,

Nine Months Ended September 30,

Finance lease - operating cash flows

4 unchanged sentences

New ROU assets - finance leases

June 30, 2020

September 30, 2020

December 31, 2019

6 unchanged sentences

Notes to Consolidated Financial Statements

Operating and financing lease right-of-use assets and lease liabilities within the Consolidated Balance Sheet as of June 30, 2020 and December 31, 2019 are as follows (in thousands):

Operating and financing lease right-of-use assets and lease liabilities within the Consolidated Balance Sheet as of September 30, 2020 and December 31, 2019 are as follows (in thousands):

Location in Balance Sheet

June 30, 2020

September 30, 2020

December 31, 2019

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Total lease liabilities

The future minimum operating lease and finance lease payments required under non-cancelable leases as of June 30, 2020 and December 31, 2019 are as follows (in thousands):

June 30, 2020

The future minimum operating lease and finance lease payments required under non-cancelable leases as of September 30, 2020 and December 31, 2019 are as follows (in thousands):

September 30, 2020

Total minimum lease payments

8 unchanged sentences

Notes to Consolidated Financial Statements

In 2008, the Company sub-leased one of its customer engagement centers to a third party for the remaining term of the lease.

In 2008, the Company sub-leased one of its customer delivery centers to a third party for the remaining term of the lease.

The sub-lease began on January 1, 2009 and rental income will be recognized on a straight-line basis over the term of the sub-lease through 2026 .

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(12) OTHER LONG-TERM LIABILITIES

The components of Other long-term liabilities as of June 30, 2020 and December 31, 2019 are as follows (in thousands):

June 30, 2020

The components of Other long-term liabilities as of September 30, 2020 and December 31, 2019 are as follows (in thousands):

September 30, 2020

December 31, 2019

3 unchanged sentences

The following table reconciles equity attributable to noncontrolling interest in the Company’s subsidiary (in thousands):

Six Months Ended June 30,

Nine Months Ended September 30,

Noncontrolling interest, January 1

3 unchanged sentences

Foreign currency translation adjustments

Noncontrolling interest, June 30

Noncontrolling interest, September 30

TTEC HOLDINGS, INC.

8 unchanged sentences

Net current period other comprehensive income (loss)

Accumulated other comprehensive income (loss) at June 30, 2019

Accumulated other comprehensive income (loss) at September 30, 2019

Accumulated other comprehensive income (loss) at December 31, 2019

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Net current period other comprehensive income (loss)

Accumulated other comprehensive income (loss) at June 30, 2020

Accumulated other comprehensive income (loss) at September 30, 2020

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

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Comprehensive Income

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Notes to Consolidated Financial Statements

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Comprehensive Income

10 unchanged sentences

The following table sets forth the computation of basic and diluted shares for the periods indicated (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Shares used in basic earnings per share calculation

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Shares used in dilutive earnings per share calculation

For the three months ended June 30, 2020 and 2019, there were restricted stock units (“RSUs”) of 64 thousand and 10 thousand, respectively, outstanding which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive.

For the six months ended June 30, 2020 and 2019, there were RSUs of 64 thousand and 20 thousand, respectively, outstanding which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive.

For the three months ended September 30, 2020 and 2019, there were no restricted stock units (“RSUs”) outstanding which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive.

For the nine months ended September 30, 2020 and 2019, there were RSUs of 167 thousand and 20 thousand, respectively, outstanding which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive.

(16) EQUITY-BASED COMPENSATION PLANS

All equity-based awards to employees are recognized in the Consolidated Statements of Comprehensive Income (Loss) at the fair value of the award on the grant date.

During the three and six months ended June 30, 2020 and 2019, the Company recognized total equity-based compensation expense of $ 3.1 million and $ 6.0 million and $ 3.3 million and $ 6.5 million, respectively.

Of this total compensation expense, $ 1.1 million and $ 2.0 million were recognized in Cost of services and $ 2.0 million and $ 4.0 million were recognized in Selling, general and administrative during the three and six months ended June 30, 2020, respectively.

During the three and six months ended June 30, 2019, the Company recognized compensation expense of $ 1.4 million and $ 2.6 million in Cost of services and $ 1.9 million and $ 3.9 million in Selling, general and administrative, respectively.

During the three and nine months ended September 30, 2020 and 2019, the Company recognized total equity-based compensation expense of $ 3.5 million and $ 9.5 million and $ 3.1 million and $ 9.7 million, respectively.

Of this total compensation expense, $ 1.3 million and $ 3.4 million were recognized in Cost of services and $ 2.2 million and $ 6.1 million were recognized in Selling, general and administrative during the three and nine months ended September 30, 2020, respectively.

During the three and nine months ended September 30, 2019, the Company recognized compensation expense of $ 1.0 million and $ 3.7 million in Cost of services and $ 2.1 million and $ 6.0 million in Selling, general and administrative, respectively.

TTEC HOLDINGS, INC.

2 unchanged sentences

Restricted Stock Unit Grants

During the six months ended June 30, 2020 and 2019, the Company granted 130,885 and 40,246 RSUs, respectively, to new and existing employees, which vest over four to five years .

The Company recognized compensation expense related to RSUs of $ 2.7 million and $ 5.3 million for the three and six months ended June 30, 2020, respectively.

The Company recognized compensation expense related to RSUs of $ 3.1 million and $ 6.3 million for the three and six months ended June 30, 2019, respectively.

As of June 30, 2020, there was approximately $ 13.9 million of total unrecognized compensation cost (including the impact of expected forfeitures) related to RSUs granted under the Company’s equity plans.

During the nine months ended September 30, 2020 and 2019, the Company granted 539,697 and 101,909 RSUs, respectively, to new and existing employees, which vest over four to five years .

The Company recognized compensation expense related to RSUs of $ 3.1 million and $ 8.5 million for the three and nine months ended September 30, 2020, respectively.

The Company recognized compensation expense related to RSUs of $ 2.5 million and $ 8.9 million for the three and nine months ended September 30, 2019, respectively.

As of September 30, 2020, there was approximately $ 26.7 million of total unrecognized compensation cost (including the impact of expected forfeitures) related to RSUs granted under the Company’s equity plans.

Performance Based Restricted Stock Unit Grants

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Each fiscal year’s adjusted operating income will determine the award amount.

The Company recognized compensation expense related to PRSUs of $ 0.35 million and $0.70 million for the three and six months ended June 30, 2020.

The Company recognized compensation expense related to PRSUs of $ 0.4 million and $ 1.1 million for the three and nine months ended September 30, 2020.

The Company recognized compensation expense related to PRSUs of $0.6 million and $0.8 million for the three and nine months ended September 30, 2019, respectively.

During 2020, the Company awarded PRSUs that are subject to service and performance vesting conditions.

8 unchanged sentences

Tuchman, Chairman and Chief Executive Officer of the Company, has an indirect 100% beneficial ownership interest in Avion and Airmax.

During the six months ended June 30, 2020 and 2019, the Company expensed $ 0.2 million and $ 0.6 million, respectively, to Avion and Airmax for services provided to the Company.

There were $ 50 thousand in payments due and outstanding to Avion and Airmax as of June 30, 2020.

During the nine months ended September 30, 2020 and 2019, the Company expensed $ 0.3 million and $ 0.8 million, respectively, to Avion and Airmax for services provided to the Company.

There were $ 50 thousand in payments due and outstanding to Avion and Airmax as of September 30, 2020.

During 2015, the Company entered into a contract to purchase software from CaféX, in which the Company holds a 17.8 % equity investment.

During the six months ended June 30, 2020 and 2019, the Company purchased zero and $ 33 thousand, respectively, of software from CaféX.

During the nine months ended September 30, 2020 and 2019, the Company purchased zero and $ 50 thousand, respectively, of software from CaféX.

Paolillo, Chief Financial and Administrative Officer of the Company, is a member of the board of directors of Welltok, Inc., a consumer health SaaS company, and partner of the Company in a joint venture.

During the six months ended June 30, 2020 and 2019, the Company recorded revenue of $ 1.8 million and $ 2.8 million, respectively, in connection with work performed through the joint venture.

During the nine months ended September 30, 2020 and 2019, the Company recorded revenue of $ 2.4 million and $ 4.0 million, respectively, in connection with work performed through the joint venture.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements