TTEC Holdings, Inc. 10-Q

ITEM 1. FINANCIAL STATEMENTS ​ TTEC HOLDINGS, INC. AND SUBSIDIARIES Consolidated Balance Sheets (Amounts in thousands, except share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, ​ 2021 2020 ASSETS ​ ​ ​ ​ ​ ​ ​ Current assets ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 144,213 ​ $ 132,914 ​ Accounts receivable, net of allowance of $ 4,997 and $ 5,067 , respectively ​ 350,307 ​ 378,397 ​ Prepaids and other current assets ​ 125,849 ​ 104,597 ​ Income and other tax receivables ​ ​ 43,489 ​ ​ 40,894 ​ Total current assets ​ 663,858 ​ 656,802 ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term assets ​ ​ ​ ​ ​ ​ ​ Property, plant and equipment, net ​ 168,697 ​ 178,706 ​ Operating lease assets ​ ​ 112,129 ​ ​ 120,820 ​ Goodwill ​ 362,862 ​ 363,502 ​ Deferred tax assets, net ​ 15,534 ​ 15,081 ​ Other intangible assets, net ​ 107,525 ​ 112,059 ​ Other long-term assets ​ 65,048 ​ 69,438 ​ Total long-term assets ​ 831,795 ​ 859,606 ​ Total assets ​ $ 1,495,653 ​ $ 1,516,408 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY ​ ​ ​ ​ ​ ​ ​ Current liabilities ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 49,343 ​ $ 66,658 ​ Accrued employee compensation and benefits ​ 161,792 ​ 163,658 ​ Other accrued expenses ​ 72,004 ​ 55,915 ​ Income tax payable ​ 36,503 ​ 19,709 ​ Deferred revenue ​ 34,220 ​ 39,956 ​ Current operating lease liabilities ​ ​ 43,043 ​ ​ 43,651 ​ Other current liabilities ​ ​ 6,041 ​ ​ 6,623 ​ Total current liabilities ​ 402,946 ​ 396,170 ​ ​ ​ ​ ​ ​ ​ ​ ​ Long-term liabilities ​ ​ ​ ​ ​ ​ ​ Line of credit ​ 339,000 ​ 385,000 ​ Deferred tax liabilities, net ​ 6,400 ​ 7,747 ​ Non-current income tax payable ​ ​ 22,271 ​ ​ 22,291 ​ Non-current operating lease liabilities ​ ​ 89,967 ​ ​ 98,277 ​ Other long-term liabilities ​ 100,154 ​ 96,185 ​ Total long-term liabilities ​ 557,792 ​ 609,500 ​ Total liabilities ​ 960,738 ​ 1,005,670 ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 10) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interest ​ 54,674 ​ 52,976 ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity ​ ​ ​ ​ ​ ​ ​ Preferred stock; $ 0.01 par value; 10,000,000 shares authorized; zero shares outstanding as of March 31, 2021 and December 31, 2020 ​ — ​ — ​ Common stock; $ 0.01 par value; 150,000,000 shares authorized; 46,819,468 and 46,737,033 shares outstanding as of March 31, 2021 and December 31, 2020, respectively ​ 468 ​ 467 ​ Additional paid-in capital ​ 359,030 ​ 360,293 ​ Treasury stock at cost: 35,232,785 and 35,315,220 shares as of March 31, 2021 and December 31, 2020, respectively ​ ( 599,851 ) ​ ( 601,214 ) ​ Accumulated other comprehensive income (loss) ​ ( 80,713 ) ​ ( 72,156 ) ​ Retained earnings ​ 787,598 ​ 757,312 ​ Noncontrolling interest ​ 13,709 ​ 13,060 ​ Total stockholders’ equity ​ 480,241 ​ 457,762 ​ Total liabilities and stockholders’ equity and mezzanine equity ​ $ 1,495,653 ​ $ 1,516,408 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 1 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Loss) (Amounts in thousands, except per share amounts) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended March 31, ​ 2021 2020 Revenue ​ $ 539,219 ​ $ 432,213 ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses ​ ​ ​ ​ ​ ​ ​ Cost of services (exclusive of depreciation and amortization presented separately below) ​ 388,660 ​ 321,557 ​ Selling, general and administrative ​ 52,757 ​ 49,834 ​ Depreciation and amortization ​ 20,459 ​ 18,872 ​ Restructuring charges, net ​ ​ 402 ​ ​ 538 ​ Impairment losses ​ 3,517 ​ 696 ​ Total operating expenses ​ 465,795 ​ 391,497 ​ ​ ​ ​ ​ ​ ​ ​ ​ Income from operations ​ 73,424 ​ 40,716 ​ ​ ​ ​ ​ ​ ​ ​ ​ Other income (expense) ​ ​ ​ ​ ​ ​ ​ Interest income ​ 179 ​ 364 ​ Interest expense ​ ( 1,802 ) ​ ( 9,592 ) ​ Other income (expense), net ​ ( 798 ) ​ 3,396 ​ Total other income (expense) ​ ( 2,421 ) ​ ( 5,832 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Income before income taxes ​ 71,003 ​ 34,884 ​ ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes ​ ( 15,979 ) ​ ( 10,199 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income ​ 55,024 ​ 24,685 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to noncontrolling interest ​ ( 4,606 ) ​ ( 3,151 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income attributable to TTEC stockholders ​ $ 50,418 ​ $ 21,534 ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 55,024 ​ $ 24,685 ​ Foreign currency translation adjustments ​ ( 5,753 ) ​ ( 29,814 ) ​ Derivative valuation, gross ​ ( 3,665 ) ​ ( 10,549 ) ​ Derivative valuation, tax effect ​ 951 ​ 2,746 ​ Other, net of tax ​ 36 ​ 127 ​ Total other comprehensive income (loss) ​ ( 8,431 ) ​ ( 37,490 ) ​ Total comprehensive income (loss) ​ 46,593 ​ ( 12,805 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Less: Comprehensive income attributable to noncontrolling interest ​ ( 3,034 ) ​ ( 1,700 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Comprehensive income (loss) attributable to TTEC stockholders ​ $ 43,559 ​ $ ( 14,505 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares outstanding ​ ​ ​ ​ ​ ​ ​ Basic ​ 46,743 ​ 46,498 ​ Diluted ​ ​ 47,355 ​ 46,813 ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income per share attributable to TTEC stockholders ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 1.08 ​ $ 0.46 ​ Diluted ​ $ 1.06 ​ $ 0.46 ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividends declared and not paid per share outstanding ​ $ 0.43 ​ $ 0.34 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 2 Table of Contents ​ TTEC HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statement of Stockholders’ Equity and Mezzanine Equity (Amounts in thousands) (Unaudited) Three months ended March 31, 2021 and 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity of the Company ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ Common Stock ​ Treasury ​ Additional ​ Comprehensive ​ Retained ​ Noncontrolling ​ ​ ​ ​ Mezzanine ​ ​ Shares ​ Amount ​ Shares ​ Amount ​ Stock ​ Paid-in Capital ​ Income (Loss) ​ Earnings ​ interest ​ Total Equity ​ Equity Balance as of December 31, 2019 — ​ $ — 46,489 ​ $ 465 ​ $ ( 605,314 ) ​ $ 356,409 ​ $ ( 106,234 ) ​ $ 773,218 ​ $ 13,186 ​ $ 431,730 ​ $ 48,923 ​ Net income — ​ — — ​ — ​ — ​ — ​ — ​ ​ 21,534 ​ 2,216 ​ 23,750 ​ ​ 935 ​ Dividends to shareholders ($ 0.34 per common share) ​ — ​ — — ​ — ​ — ​ — ​ — ​ ​ ( 15,843 ) ​ ​ — ​ ​ ( 15,843 ) ​ ​ — ​ Acquisition of noncontrolling interest ​ — ​ ​ — ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ 3,750 ​ Dividends distributed to noncontrolling interest — ​ — — ​ — ​ — ​ — ​ — ​ — ​ ( 1,850 ) ​ ( 1,850 ) ​ ​ ( 241 ) ​ Foreign currency translation adjustments — ​ — — ​ — ​ — ​ — ​ ( 29,298 ) ​ — ​ ( 516 ) ​ ( 29,814 ) ​ ​ — ​ Derivatives valuation, net of tax — ​ — — ​ — ​ — ​ — ​ ( 7,803 ) ​ — ​ — ​ ( 7,803 ) ​ ​ — ​ Vesting of restricted stock units — ​ — 108 ​ 1 ​ 1,783 ​ ( 3,594 ) ​ — ​ — ​ — ​ ( 1,810 ) ​ ​ — ​ Equity-based compensation expense — ​ — — ​ — ​ — ​ 2,919 ​ — ​ — ​ — ​ 2,919 ​ ​ — ​ Other, net of tax — ​ — — ​ — ​ — ​ — ​ 127 ​ — ​ — ​ 127 ​ ​ — ​ Balance as of March 31, 2020 — ​ $ — 46,597 ​ $ 466 ​ $ ( 603,531 ) ​ $ 355,734 ​ $ ( 143,208 ) ​ $ 778,909 ​ $ 13,036 ​ $ 401,406 ​ $ 53,367 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ Equity of the Company ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Preferred Stock ​ Common Stock ​ Treasury ​ Additional ​ Comprehensive ​ Retained ​ Noncontrolling ​ ​ ​ ​ Mezzanine ​ ​ Shares ​ Amount ​ Shares ​ Amount ​ Stock ​ Paid-in Capital ​ Income (Loss) ​ Earnings ​ interest ​ Total Equity ​ Equity Balance as of December 31, 2020 — ​ $ — 46,737 ​ $ 467 ​ $ ( 601,214 ) ​ $ 360,293 ​ $ ( 72,156 ) ​ $ 757,312 ​ $ 13,060 ​ $ 457,762 ​ $ 52,976 ​ Net income — ​ — — ​ — ​ — ​ — ​ — ​ 50,418 ​ 2,908 ​ 53,326 ​ ​ 1,698 ​ Dividends to shareholders ($ 0.43 per common share) ​ — ​ — — ​ — ​ — ​ — ​ — ​ ​ ( 20,132 ) ​ ​ — ​ ​ ( 20,132 ) ​ ​ — ​ Dividends distributed to noncontrolling interest — ​ — — ​ — ​ — ​ — ​ — ​ — ​ ( 2,385 ) ​ ( 2,385 ) ​ ​ — ​ Foreign currency translation adjustments — ​ — — ​ — ​ — ​ — ​ ( 5,879 ) ​ — ​ 126 ​ ( 5,753 ) ​ ​ — ​ Derivatives valuation, net of tax — ​ — — ​ — ​ — ​ — ​ ( 2,714 ) ​ — ​ — ​ ( 2,714 ) ​ ​ — ​ Vesting of restricted stock units — ​ — 82 ​ 1 ​ 1,363 ​ ( 5,291 ) ​ — ​ — ​ — ​ ( 3,927 ) ​ ​ — ​ Equity-based compensation expense — ​ — — ​ — ​ — ​ 4,028 ​ — ​ — ​ — ​ 4,028 ​ ​ — ​ Other, net of tax — ​ — — ​ — ​ — ​ — ​ 36 ​ — ​ — ​ 36 ​ ​ — ​ Balance as of March 31, 2021 — ​ $ — 46,819 ​ $ 468 ​ $ ( 599,851 ) ​ $ 359,030 ​ $ ( 80,713 ) ​ $ 787,598 ​ $ 13,709 ​ $ 480,241 ​ $ 54,674 ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 3 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows (Amounts in thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2021 2020 Cash flows from operating activities ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 55,024 ​ $ 24,685 ​ Adjustments to reconcile net income to net cash provided by operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization ​ 20,459 ​ 18,872 ​ Amortization of contract acquisition costs ​ 176 ​ 130 ​ Amortization of debt issuance costs ​ 175 ​ 183 ​ Imputed interest expense and fair value adjustments to contingent consideration ​ 877 ​ 3,220 ​ Provision for credit losses ​ 21 ​ 162 ​ (Gain) loss on disposal of assets ​ 46 ​ 14 ​ Impairment losses ​ ​ 3,517 ​ ​ 696 ​ Deferred income taxes ​ ( 1,090 ) ​ 4,589 ​ Excess tax benefit from equity-based awards ​ ( 1,775 ) ​ ( 195 ) ​ Equity-based compensation expense ​ 4,028 ​ 2,919 ​ (Gain) loss on foreign currency derivatives ​ 61 ​ 485 ​ Changes in assets and liabilities, net of acquisitions: ​ ​ ​ ​ ​ ​ ​ Accounts receivable ​ 27,053 ​ 11,611 ​ Prepaids and other assets ​ ( 22,669 ) ​ 19,219 ​ Accounts payable and accrued expenses ​ 15,972 ​ ( 933 ) ​ Deferred revenue and other liabilities ​ ( 32,088 ) ​ ( 23,492 ) ​ Net cash provided by operating activities ​ 69,787 ​ 62,165 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from investing activities ​ ​ ​ ​ ​ ​ ​ Proceeds from sale of long-lived assets ​ 25 ​ 15 ​ Purchases of property, plant and equipment, net of acquisitions ​ ( 11,565 ) ​ ( 16,813 ) ​ Acquisitions, net of cash acquired of zero and $ 3,123 , respectively ​ ( 267 ) ​ ( 5,243 ) ​ Net cash used in investing activities ​ ( 11,807 ) ​ ( 22,041 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash flows from financing activities ​ ​ ​ ​ ​ ​ ​ Net proceeds (borrowings) from line of credit ​ ( 46,000 ) ​ 410,000 ​ Payments on other debt ​ ( 1,871 ) ​ ( 2,400 ) ​ Payments of contingent consideration and hold-back payments to acquisitions ​ — ​ — ​ Dividends paid to shareholders ​ ​ — ​ ​ — ​ Payments to noncontrolling interest ​ ​ ( 2,385 ) ​ ​ ( 2,091 ) ​ Tax payments related to issuance of restricted stock units ​ ​ ( 3,927 ) ​ ​ ( 1,810 ) ​ Payments of debt issuance costs ​ — ​ ( 35 ) ​ Net cash (used in) provided by financing activities ​ ( 54,183 ) ​ 403,664 ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of exchange rate changes on cash, cash equivalents and restricted cash ​ ( 2,576 ) ​ ( 7,374 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ Increase in cash, cash equivalents and restricted cash ​ 1,221 ​ 436,414 ​ Cash, cash equivalents and restricted cash, beginning of period ​ 159,015 ​ 105,591 ​ Cash, cash equivalents and restricted cash, end of period ​ $ 160,236 ​ $ 542,005 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 1,576 ​ $ 2,864 ​ Cash paid for income taxes ​ $ 4,275 ​ $ 3,248 ​ Non-cash investing and financing activities ​ ​ ​ ​ ​ ​ ​ Acquisition of long-lived assets through finance leases ​ $ 137 ​ $ 837 ​ Acquisition of equipment through increase in accounts payable, net ​ $ ( 3,431 ) ​ $ ( 3,511 ) ​ Dividend declared but not paid ​ $ 20,132 ​ $ 15,843 ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ ​ 4 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (1) OVERVIEW AND BASIS OF PRESENTATION Summary of Business TTEC Holdings, Inc. (“TTEC”, “the Company”) is a leading global customer experience as a service (“CXaaS”) partner for many of the world’s iconic brands, Fortune 1000 companies, government agencies, and disruptive growth companies. TTEC helps its clients deliver frictionless customer experiences, strengthen customer relationships, brand recognition and loyalty through personalized interactions, improve their Net Promoter Score, customer satisfaction and quality assurance, and lower their total cost to serve by combining innovative digital solutions with best-in-class service capabilities to enable and deliver simplified, consistent and seamless customer experience across channels and phases of the customer lifecycle. TTEC’s 58,500 employees serve clients in the automotive, communication, financial services, national/federal and state and local governments, healthcare, logistics, media and entertainment, e-tail/retail, technology, travel and transportation industries via operations in the United States, Australia, Belgium, Brazil, Bulgaria, Canada, Costa Rica, Germany, Greece, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, Singapore, South Africa, Thailand, and the United Kingdom. The Company reports its financial information based on two segments: TTEC Digital and TTEC Engage. ● TTEC Digital provides the CX technology services and platforms to support the Company’s clients’ customer interaction delivery infrastructure. The segment designs, builds and operates the omnichannel ecosystem in a cloud, on premise, or hybrid environment, and fully integrates, orchestrates, and administers highly scalable, feature-rich CX technology applications. ● TTEC Engage provides the CX managed services to support the Company’s clients’ end-to-end customer interaction delivery, by providing the essential CX omnichannel and application technologies, human resources, recruiting, training and production, at-home or facility-based delivery infrastructure on a global scale, and engagement processes. This segment provides full-service digital, omnichannel customer engagement, supporting customer care, customer acquisition, growth and retention, and fraud detection and prevention services. TTEC Digital and TTEC Engage strategically come together under the Company’s unified offering, Humanify ® Customer Experience as a Service, which drives measurable customer results for clients through the delivery of personalized, omnichannel experiences. The Company’s Humanify ® cloud platform provides a fully integrated ecosystem of CX offerings, including messaging, artificial intelligence, machine learning, robotic process automation, analytics, cybersecurity, customer relationship management, knowledge management, journey orchestration, and traditional voice solutions. The Company’s end-to-end platform differentiates the Company from many competitors by combining design, strategic consulting, best-in-class technology, data analytics, process optimization, system integration and operational excellence. Basis of Presentation The Consolidated Financial Statements are comprised of the accounts of TTEC, its wholly owned subsidiaries, its 55 % equity owned subsidiary Percepta, LLC, its 70 % equity owned subsidiary First Call Resolution, LLC and its 70 % equity owned subsidiary Serendebyte, Inc. (see Note 2). All intercompany balances and transactions have been eliminated in consolidation. 5 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 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. All such adjustments are of a normal, recurring nature. Operating results for the periods presented are not necessarily indicative of the results that may be expected for the year ending December 31, 2021. 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, 2020. 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 ongoing basis, the Company evaluates its estimates including those related to derivatives and hedging activities, income taxes including the valuation allowance for deferred tax assets, litigation reserves, restructuring reserves, allowance for credit losses, contingent consideration, redeemable noncontrolling interest, 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. Cash, Cash Equivalents and Restricted Cash Cash and cash equivalents consist of cash, primarily held in interest-bearing investments, 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2021 December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ ​ $ 144,213 $ 132,914 ​ Restricted cash included in "Prepaid and other current assets" ​ ​ 16,023 ​ 26,101 ​ Restricted cash included in "Other noncurrent assets" ​ ​ — ​ — ​ Total ​ ​ $ 160,236 $ 159,015 ​ ​ Concentration of Credit Risk The Company is exposed to credit risk in the normal course of business, primarily related to accounts receivable and derivative instruments. Historically, the losses related to credit risk have been immaterial. The Company regularly monitors its credit risk to mitigate the possibility of current and future exposures resulting in a loss. 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 eight investment-grade financial institutions. 6 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Recently Adopted Accounting Pronouncements In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (ASU 740), which is intended to simplify various aspects related to income tax accounting. The ASU is effective for interim and annual periods beginning on or after December 15, 2020, with early adoption permitted. The Company adopted the new guidance effective January 1, 2021 and the adoption had no effect on the financial statements or related disclosures during the quarter. Other Accounting Pronouncements In March 2020, the FASB issued ASU 2020-04, “Reference Rate Reform” (Topic 848), which provides optional expedients and exceptions for contracts, hedging relationships, and other transactions affected by reference rate reform due to the anticipated cessation of LIBOR on or before December 31, 2021. The ASU is effective from March 12, 2020, through December 31, 2022 and could impact the accounting for LIBOR provisions in the Company’s credit facility agreement. In addition, in January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform – Scope,” which clarified the scope of ASC 848 relating to contract modifications. The Company has not yet adopted the standard but does not expect that the adoption of this guidance will have a material impact on the Company’s financial position, results of operations or cash flows. ​ ​ ​ ​ ​ (2) ACQUISITIONS AND DIVESTITURES 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. and U.K. 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 Company finalized the net working capital adjustment for $ 0.3 million which was paid to Voice Foundry during the first quarter of 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 the acquisition date. During the fourth quarter of 2020 and the first quarter of 2021, a $ 3.2 million expense and a $ 0.5 million expense, respectively, were recorded related to fair value adjustments of the estimated contingent consideration based on revised estimates of EBITDA performance for 2021. These expenses were included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss). During the first quarter of 2021, the contingent payment related to 2020 was finalized at a value of $ 7.4 million and was paid in April 2021. As of March 31, 2021, the value of the accrual is $ 14.6 million, with $ 7.4 million included in Other accrued expenses and $ 7.2 million included in Other long-term liabilities in the accompanying Consolidated Balance Sheets. A multi-period excess earnings method under the income approach was used to estimate the fair value of the customer relationships intangible asset. The significant assumption utilized in calculating the fair value of the customer relationships intangible asset was the customer attrition rate. 7 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The following summarizes the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands): ​ ​ ​ ​ ​ ​ ​ Acquisition Date ​ ​ Fair Value Accounts receivable, net ​ $ 3,758 ​ Prepaid and other expenses ​ 345 ​ Tradename ​ 400 ​ Non-compete ​ 150 ​ Customer relationships ​ 6,550 ​ Goodwill ​ ​ 35,881 ​ ​ ​ $ 47,084 ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 289 ​ Accrued employee compensation ​ 741 ​ Deferred revenue ​ 170 ​ ​ ​ $ 1,200 ​ ​ ​ ​ ​ ​ Total purchase price ​ $ 45,884 ​ ​ In the first quarter of 2021, the Company finalized the valuation of VF US for the acquisition date assets acquired and liabilities assumed and determined that no material adjustments to any of the balances were required. The VF US customer relationships and tradename are being amortized over useful lives of 4 and 2 years , respectively. The goodwill recognized from the VF US acquisition is attributable, but not limited to, the acquired workforce and expected synergies with the 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. Voice Foundry ASEAN On November 4, 2020 , TTEC Europe BV, a subsidiary of the Company, closed the final phase of the acquisition of the Voice Foundry business by acquiring 100 % of the issued stock of Saasy Ventures Pty Ltd. (“VF ASEAN”). 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 $ 15.2 million. The VF ASEAN Transaction is subject to customary representations and warranties, holdbacks, and working capital adjustments. The VF ASEAN Transaction includes two contingent payments over the next two years with each payment having a maximum value of $ 2.2 million based on VF ASEAN’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 18.4 %, a volatility rate of 50 %, and an adjusted risk-free rate of 1.6 %. Based on the model, a $ 2.8 million expected future payment was calculated and recorded as of the acquisition date. During the fourth quarter of 2020 and the first quarter of 2021, a $ 1.2 million expense and a $ 0.4 million expense, respectively, were recorded related to fair value adjustments of the estimated contingent consideration based on estimates of EBITDA performance for 2020 and 2021. These expenses were included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss). During the first quarter of 2021, the contingent payment related to 2020 was finalized at a value of $ 2.2 million and was paid in April 2021. As of March 31, 2021, the value of the accrual is $ 4.3 million, with $ 2.2 million included in Other accrued expenses and $ 2.1 million included in Other long-term liabilities in the accompanying Consolidated Balance Sheets. 8 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) A multi-period excess earnings method under the income approach was used to estimate the fair value of the customer relationships intangible asset. The significant assumption utilized in calculating the fair value of the customer relationships intangible asset was the customer attrition rate. The following summarizes the estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands): ​ ​ ​ ​ ​ ​ Preliminary ​ ​ Estimate of ​ ​ Acquisition Date ​ ​ Fair Value Cash ​ $ 1,300 ​ Accounts receivable, net ​ ​ 937 ​ Prepaid and other expenses ​ 115 ​ Income tax receivable ​ ​ 30 ​ Property, plant and equipment ​ ​ 274 ​ Tradename ​ 300 ​ Customer relationships ​ 3,100 ​ Goodwill ​ ​ 14,418 ​ ​ ​ $ 20,474 ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 960 ​ Accrued employee compensation ​ 113 ​ Deferred revenue ​ ​ 236 ​ Deferred tax liability ​ ​ 1,013 ​ Other accrued liabilities ​ ( 78 ) ​ ​ ​ $ 2,244 ​ ​ ​ ​ ​ ​ Total purchase price ​ $ 18,230 ​ ​ 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 ASEAN 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 ASEAN acquisition is estimated to be attributable, but not limited to, the acquired workforce and expected synergies with the TTEC Digital segment. The tax basis of the acquired intangibles and goodwill will not be deductible for income tax purposes. The acquired goodwill and intangibles and operating results of VF ASEAN are reported within the TTEC Digital segment from the date of acquisition. Serendebyte 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 . 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, for 70 % of the outstanding shares of capital stock, was $ 9.0 million. 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 the Company in the second quarter of 2020. 9 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) 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, 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. The fair value was based on significant inputs not observable in the market (Level 3 inputs) including forecasted earnings, discount rate of 35% , working capital requirements and applicable tax rates. The noncontrolling interest was valued at $ 3.8 million and is shown as Redeemable noncontrolling interest in the accompanying Consolidated Balance Sheets. As a condition to closing, Serendebyte’s founder and certain members of the management team agreed to continue their affiliation with Serendebyte at least through 2023, and the founder agreed not to compete with TTEC for a period of four years after the disposition of the Remaining Interest. The following summarizes the fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands): ​ ​ ​ ​ ​ ​ ​ Acquisition Date ​ ​ Fair Value Cash ​ $ 3,123 ​ Accounts receivable, net ​ 1,243 ​ Prepaid and other assets ​ 1,327 ​ Property, plant and equipment ​ ​ 20 ​ Deferred tax assets ​ ​ 14 ​ Tradename ​ ​ 400 ​ Customer relationships ​ ​ 1,920 ​ Goodwill ​ ​ 9,033 ​ ​ ​ $ 17,080 ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 120 ​ Accrued employee compensation and benefits ​ 1,025 ​ Accrued income taxes ​ 170 ​ Accrued expenses ​ ​ 2,208 ​ Deferred tax liabilities - long-term ​ 629 ​ ​ ​ $ 4,152 ​ ​ ​ ​ ​ ​ Total purchase price ​ $ 12,928 ​ ​ In the fourth quarter of 2020, the Company finalized the valuation of Serendebyte for the acquisition date assets acquired and liabilities assumed and determined no material adjustments to any of the balances were required. At the date of the purchase, an additional $ 2.2 million of cash was retained in the entity that was withdrawn by the holders of the Remaining Interest during the second quarter of 2020. The Serendebyte customer relationships and tradename are being amortized over useful lives of 5 and 3 years , respectively. The goodwill recognized from the Serendebyte acquisition is attributable, but not limited to, the acquired workforce and expected synergies with the TTEC Digital segment. The tax basis of the acquired intangibles and goodwill will not be deductible for income tax purposes. The acquired goodwill and intangibles and operating results of Serendebyte are reported within the TTEC Digital segment from the date of acquisition. 10 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Financial Impact of Acquired Businesses The acquired businesses purchased in 2020 noted above contributed revenues of $ 11.6 million and net income of $ 1.0 million, inclusive of $ 0.8 million of acquired intangible amortization, to the Company for the quarter ended March 31, 2021. The unaudited proforma financial results for the three months ended March 31, 2020 combines the consolidated results of the Company, Voice Foundry US, Voice Foundry ASEAN and Serendebyte assuming the acquisitions had been completed on January 1, 2020. The reported revenue and net income of $ 432.2 million and $ 21.5 million would have been $ 438.0 million and $ 23.0 million for the three months ended March 31, 2020, 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. Dissolutions 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 non-cash $ 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 ceased operations and were removed from the consolidated financial statements as of the reporting period ended September 30, 2020. As a result of the deconsolidation, a non-cash $ 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. Subsequent Event On April 8, 2021 , the Company acquired, through its subsidiary TTEC Digital, LLC, 100 % of the outstanding stock of Avtex Solutions, Holdings LLC (“Avtex”). Avtex is an end-to-end customer experience and CXaaS solutions provider with offerings in Genesys and Microsoft cloud solutions . The business will be integrated into the TTEC Digital segment and will be fully consolidated into the financial statements of TTEC. Total cash paid at acquisition was $ 490.0 million, less customary amounts held in escrow for sellers’ indemnity obligations. The Avtex Transaction is subject to customary representations and warranties, holdbacks, and a net working capital adjustment. The Company used cash from operations and drew down on its Credit Facility to fund the acquisition. ​ ​ ​ 11 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (3) SEGMENT INFORMATION The Company reports the following two segments: TTEC Digital provides the CX technology services and platforms to support the Company’s clients’ customer interaction delivery infrastructure. The segment designs, builds and operates the omnichannel ecosystem in a cloud, on premise, or hybrid environment, and fully integrates, orchestrates, and administers highly scalable, feature-rich CX technology applications. These solutions are critical to enabling and accelerating digital transformation for the Company’s clients. ● Technology Services: the Company’s technology services design, integrate and operate highly scalable, digital omnichannel technology solutions in the cloud, on premise, or hybrid environment, including journey orchestration, automation and AI, knowledge management, and workforce productivity. ● Professional Services: the Company’s management consulting practices deliver customer experience strategy, analytics, process optimization, and learning and performance services. TTEC Engage delivers the CX managed services to support the Company’s clients’ end-to-end customer interaction delivery, by providing the essential CX omnichannel and application technologies, human resources, recruiting, training and production, at-home or facility-based delivery infrastructure on a global scale, and engagement processes. This segment provides full-service digital, omnichannel customer engagement, supporting customer care, customer acquisition, growth and retention, and fraud detection and prevention services. ● Customer Acquisition Services: the Company’s customer growth and acquisition services optimize the buying journeys for acquiring new customers by leveraging technology and analytics to deliver personal experiences that increase the quantity and quality of leads and customers. ● Customer Care Services: the Company’s customer care services provide turnkey contact center solutions, including digital omnichannel technologies, associate recruiting and training, facilities, and operational expertise to create exceptional customer experiences across all touchpoints. ● Fraud Prevention Services: the Company’s digital fraud detection and prevention services proactively identify and prevent fraud and provide community content moderation and compliance. The Company allocates to each segment its portion of corporate operating expenses. All intercompany transactions between the reported segments for the periods presented have been eliminated. The following tables present certain financial data by segment (in thousands): Three Months Ended March 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation Income ​ ​ Gross ​ Intersegment ​ Net ​ & ​ from ​ ​ Revenue ​ Sales ​ Revenue ​ Amortization ​ Operations TTEC Digital ​ $ 63,609 ​ $ ( 22 ) ​ $ 63,587 ​ $ 3,887 ​ $ 4,202 ​ TTEC Engage ​ 475,632 ​ — ​ 475,632 ​ 16,572 ​ 69,222 ​ Total ​ $ 539,241 ​ $ ( 22 ) ​ $ 539,219 ​ $ 20,459 ​ $ 73,424 ​ ​ 12 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Three Months Ended March 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation Income ​ ​ ​ Gross ​ Intersegment ​ Net ​ & ​ from ​ ​ ​ Revenue ​ Sales ​ Revenue ​ Amortization ​ Operations ​ TTEC Digital ​ $ 77,781 ​ $ ( 225 ) ​ $ 77,556 ​ $ 3,288 ​ $ 10,258 ​ TTEC Engage ​ 354,657 ​ ​ — ​ 354,657 ​ 15,584 ​ 30,458 ​ Total ​ $ 432,438 ​ $ ( 225 ) ​ $ 432,213 ​ $ 18,872 ​ $ 40,716 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ ​ 2021 2020 Capital Expenditures ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ $ 1,532 $ 2,438 TTEC Engage ​ 10,033 ​ 14,375 ​ Total ​ $ 11,565 $ 16,813 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2021 December 31, 2020 ​ Total Assets ​ ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ ​ $ 268,063 $ 277,365 ​ TTEC Engage ​ ​ 1,227,590 ​ 1,239,043 ​ Total ​ ​ $ 1,495,653 $ 1,516,408 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2021 December 31, 2020 ​ Goodwill ​ ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ ​ $ 127,717 $ 128,211 ​ TTEC Engage ​ ​ 235,145 ​ 235,291 ​ Total ​ ​ $ 362,862 $ 363,502 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The following table presents revenue based upon the geographic location where the services are provided (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ 2021 2020 ​ Revenue ​ ​ ​ ​ ​ ​ ​ ​ United States ​ $ 358,326 ​ $ 277,676 ​ Philippines ​ 102,252 ​ 91,105 ​ ​ Latin America ​ 29,439 ​ 25,098 ​ ​ Europe / Middle East / Africa ​ 25,917 ​ 16,944 ​ ​ Asia Pacific / India ​ 16,167 ​ 15,168 ​ ​ Canada ​ 7,118 ​ 6,222 ​ ​ Total ​ $ 539,219 $ 432,213 ​ ​ ​ ​ ​ ​ ​ ​ 13 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS The Company had one client that contributed in excess of 10% of total revenue for the three months ended March 31, 2021; this client operates in the financial services industry and is included in the TTEC Engage segment. This client contributed 15.7 % and 2.9 % of total revenue for the three months ended March 31, 2021 and 2020, respectively. The Company had no clients that contributed in excess of 10% of total revenue for the three months ended March 31, 2020. 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. To mitigate this risk, the Company has multiple contracts with these larger clients, where each individual contract is for an amount below the $100 million aggregate. 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 March 31, 2021. 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 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. The Company will write-off accounts receivable against this allowance when the Company determines a balance is uncollectible. Activity in the Company’s Allowance for credit losses consists of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2021 2020 Balance, beginning of year ​ $ 5,067 ​ $ 5,452 ​ Provision for credit losses ​ 21 ​ 162 ​ Uncollectible receivables written-off ​ ( 83 ) ​ ( 208 ) ​ Effect of foreign currency ​ ( 8 ) ​ ( 4 ) ​ Balance, end of year ​ $ 4,997 ​ $ 5,402 ​ ​ 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 March 31, 2021 and December 31, 2020, TTEC had approximately $ 2.7 million in pre-petition accounts receivables outstanding 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). TTEC continues to provide post-petition services to Sears and has assessed these receivables for collection risk and has determined that these will be collectible. 14 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Accounts Receivable Sales Agreement The Company is party to an Uncommitted Receivables Purchase Agreement (“Agreement”) with Bank of the West (“Bank”), whereby from time-to-time the Company may elect to sell, on a revolving basis, U.S. accounts receivables of certain clients at a discount to the Bank for cash on a limited recourse basis. The maximum amount of receivables that the Company may sell to the Bank at any given time shall not exceed $ 75 million. The sales of accounts receivable in accordance with the Agreement are reflected as a reduction of Accounts Receivable, net on the Consolidated Balance sheets. The Company has retained no interest in the sold receivables but retains all collection responsibilities on behalf of the Bank. The discount on the accounts receivable sold will be recorded within Other expense, net in the Consolidated Statements of Comprehensive Income (Loss). 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 Flow. As of March 31, 2021, the Company had factored $ 72.0 million of accounts receivable; under the Agreement discounts on these receivables were not material during the quarter. As of March 31, 2021, the Company had collected $ 16.0 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 March 31, 2021 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 ​ Goodwill consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Effect of ​ ​ ​ ​ December 31, ​ Acquisitions / ​ ​ ​ ​ Foreign ​ March 31, ​ ​ 2020 ​ Adjustments ​ Impairments ​ Currency ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ $ 128,211 ​ $ 10 ​ $ — ​ $ ( 504 ) ​ $ 127,717 ​ TTEC Engage ​ 235,291 ​ — ​ ​ — ​ ​ ( 146 ) ​ 235,145 ​ Total ​ $ 363,502 ​ $ 10 ​ $ — ​ $ ( 650 ) ​ $ 362,862 ​ ​ The Company performs a goodwill impairment assessment on at least an annual basis. The Company conducts its annual goodwill impairment assessment during the fourth quarter, or more frequently, if indicators of impairment exist. During the quarter ended March 31, 2021, the Company assessed whether any such indicators of impairment existed and concluded there were none. ​ ​ ​ ​ (6) DERIVATIVES Cash Flow Hedges The Company enters into foreign exchange related derivatives. Foreign exchange derivatives entered into consist of forward and option contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations that are associated with forecasted revenue earned in foreign locations. Upon proper qualification, these contracts are designated as cash flow hedges. It is the Company’s policy to only enter into derivative contracts with investment grade counterparty financial institutions, and correspondingly, the fair value of derivative assets considers, among other factors, the creditworthiness of these counterparties. Conversely, the fair value of derivative liabilities reflects the Company’s creditworthiness. As of March 31, 2021, the Company has not experienced, nor does it anticipate, any issues related to derivative counterparty defaults. The following table summarizes the aggregate unrealized net gain or loss in Accumulated other comprehensive income (loss) for the three months ended March 31, 2021 and 2020 (in thousands and net of tax): 15 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ ​ 2021 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate unrealized net gain/(loss) at beginning of period ​ $ 8,431 ​ $ 4,182 ​ ​ Add: Net gain/(loss) from change in fair value of cash flow hedges ​ ​ ( 3,773 ) ​ ​ ( 7,913 ) ​ ​ Less: Net (gain)/loss reclassified to earnings from effective hedges ​ ​ 1,059 ​ ​ 110 ​ ​ Aggregate unrealized net gain/(loss) at end of period ​ $ 5,717 ​ $ ( 3,621 ) ​ ​ ​ The Company’s foreign exchange cash flow hedging instruments as of March 31, 2021 and December 31, 2020 are summarized as follows (amounts in thousands). All hedging instruments are forward contracts. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ U.S. Dollar ​ ​ % Maturing ​ ​ Contracts ​ ​ Notional ​ Notional ​ ​ in the next ​ ​ Maturing As of March 31, 2021 ​ Amount ​ Amount ​ ​ 12 months ​ ​ Through Canadian Dollar 1,400 ​ $ 1,059 ​ ​ 100 % ​ July 2021 ​ Philippine Peso 5,645,000 ​ 109,143 (1) ​ 58.3 % ​ December 2023 ​ Mexican Peso 1,009,500 ​ 45,454 ​ ​ 56.2 % ​ December 2023 ​ ​ ​ ​ ​ $ 155,656 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Local ​ ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ U.S. Dollar ​ ​ ​ ​ ​ ​ ​ ​ Notional ​ Notional ​ ​ ​ ​ As of December 31, 2020 ​ Amount ​ Amount ​ ​ ​ ​ ​ ​ Canadian Dollar 2,450 ​ $ 1,853 ​ ​ ​ ​ ​ ​ ​ Philippine Peso 6,725,000 ​ 130,468 (1) ​ ​ ​ ​ ​ ​ Mexican Peso 1,159,500 ​ 52,398 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 184,719 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (1) Includes contracts to purchase Philippine pesos in exchange for New Zealand dollars and Australian dollars, which are translated into equivalent U.S. dollars on March 31, 2021 and December 31, 2020. ​ Fair Value Hedges The Company enters into foreign exchange forward contracts to economically hedge against foreign currency exchange gains and losses on certain receivables and payables of the Company’s foreign operations. Changes in the fair value of derivative instruments designated as fair value hedges are recognized in earnings in Other income (expense), net. As of March 31, 2021 and December 31, 2020 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 27.8 million and $ 35.5 million, respectively. 16 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Derivative Valuation and Settlements ​ The Company’s derivatives as of March 31, 2021 and December 31, 2020 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2021 ​ ​ Designated Not Designated ​ ​ as Hedging as Hedging ​ Designation: ​ Instruments Instruments ​ Foreign Foreign Derivative contract type: ​ Exchange ​ Exchange Derivative classification: ​ Cash Flow ​ Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value and location of derivative in the Consolidated Balance Sheet: ​ ​ ​ ​ ​ ​ ​ Prepaids and other current assets ​ $ 5,430 ​ $ 40 ​ Other long-term assets ​ 2,657 ​ — ​ Other current liabilities ​ ( 156 ) ​ ( 106 ) ​ Other long-term liabilities ​ ( 206 ) ​ — ​ Total fair value of derivatives, net ​ $ 7,725 ​ $ ( 66 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, 2020 ​ ​ Designated Not Designated ​ ​ as Hedging as Hedging ​ Designation: ​ Instruments Instruments ​ Foreign Foreign Derivative contract type: ​ Exchange ​ Exchange Derivative classification: ​ Cash Flow ​ Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair value and location of derivative in the Consolidated Balance Sheet: ​ ​ ​ ​ ​ ​ ​ Prepaids and other current assets ​ $ 6,939 ​ $ 103 ​ Other long-term assets ​ 4,528 ​ — ​ Other current liabilities ​ ( 73 ) ​ ( 118 ) ​ Other long-term liabilities ​ ( 4 ) ​ — ​ Total fair value of derivatives, net ​ $ 11,390 ​ $ ( 15 ) ​ ​ The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020 were as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2021 ​ 2020 ​ ​ Designated as Hedging Designation: ​ Instruments Derivative contract type: ​ Foreign Exchange Derivative classification: Cash Flow ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount of gain or (loss) recognized in Other comprehensive income (loss) - effective portion, net of tax ​ $ 1,059 ​ $ 110 ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount and location of net gain or (loss) reclassified from Accumulated OCI to income - effective portion: ​ ​ ​ ​ ​ ​ ​ Revenue ​ $ 1,431 ​ $ 151 ​ ​ 17 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2021 ​ 2020 Designation: Not Designated as Hedging Instruments ​ Derivative contract type: Foreign Exchange ​ Derivative classification: Fair Value ​ ​ ​ ​ ​ ​ ​ ​ ​ Amount and location of net gain or (loss) recognized in the Consolidated Statement of Comprehensive Income (Loss): ​ ​ ​ ​ ​ ​ ​ Other income (expense), net $ ( 337 ) $ ( 330 ) ​ ​ ​ ​ ​ ​ ​ ​ (7) FAIR VALUE The authoritative guidance for fair value measurements establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires that the Company maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows: Level 1 — Quoted prices in active markets for identical assets or liabilities. Level 2 — Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets, similar assets and liabilities in markets that are not active or can be corroborated by observable market data. Level 3 — Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs. The following presents information as of March 31, 2021 and December 31, 2020 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. Investments – The Company measures investments, including cost and equity method investments, at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired. The fair values of these investments are determined based on valuation techniques using the best information available, and may include market observable inputs, and discounted cash flow projections. 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 March 31, 2021, 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 Facility, 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 March 31, 2021 and December 31, 2020, the Company had $ 339.0 million and $ 385.0 million, respectively, of borrowings outstanding under the Credit Facility. During the first quarter of 2021 outstanding borrowings accrued interest at an average rate of 1.1 % 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. 18 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Derivatives - Net derivative assets (liabilities) are measured at fair value on a recurring basis. The portfolio is valued using models based on market observable inputs, including both forward and spot foreign exchange rates, interest rates, implied volatility, and counterparty credit risk, including the ability of each party to execute its obligations under the contract. As of March 31, 2021, credit risk did not materially change the fair value of the Company’s derivative contracts. The following is a summary of the Company’s fair value measurements for its net derivative assets (liabilities) as of March 31, 2021 and December 31, 2020 (in thousands): As of March 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using ​ ​ ​ ​ Quoted Prices in Significant ​ ​ ​ ​ ​ Active Markets ​ Other ​ Significant ​ ​ ​ ​ ​ for Identical ​ Observable ​ Unobservable ​ ​ ​ ​ ​ Assets ​ Inputs ​ Inputs ​ ​ ​ ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ At Fair Value Cash flow hedges ​ $ — ​ $ 7,725 ​ $ — ​ $ 7,725 ​ Fair value hedges ​ — ​ ( 66 ) ​ — ​ ( 66 ) ​ Total net derivative asset (liability) ​ $ — ​ $ 7,659 ​ $ — ​ $ 7,659 ​ ​ As of December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using ​ ​ ​ ​ Quoted Prices in Significant ​ ​ ​ ​ ​ Active Markets ​ Other ​ Significant ​ ​ ​ ​ ​ for Identical ​ Observable ​ Unobservable ​ ​ ​ ​ ​ Assets ​ Inputs ​ Inputs ​ ​ ​ ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ At Fair Value Cash flow hedges ​ $ — ​ $ 11,390 ​ $ — ​ $ 11,390 ​ Fair value hedges ​ — ​ ( 15 ) ​ — ​ ( 15 ) ​ Total net derivative asset (liability) ​ $ — ​ $ 11,375 ​ $ — ​ $ 11,375 ​ ​ The following is a summary of the Company’s fair value measurements as of March 31, 2021 and December 31, 2020 (in thousands): ​ As of March 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using ​ Quoted Prices in ​ ​ Significant ​ ​ Active Markets for ​ Significant Other ​ Unobservable ​ ​ Identical Assets ​ Observable Inputs ​ Inputs ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments, net ​ $ — ​ $ 7,659 ​ $ — ​ Total assets ​ $ — ​ $ 7,659 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred compensation plan liability ​ $ — ​ $ ( 25,781 ) ​ $ — ​ Derivative instruments, net ​ ​ — ​ ​ — ​ ​ — ​ Contingent consideration ​ — ​ — ​ ( 18,909 ) ​ Total liabilities ​ $ — ​ $ ( 25,781 ) ​ $ ( 18,909 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interest ​ $ — ​ $ — ​ $ ( 54,674 ) ​ ​ 19 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) As of December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Fair Value Measurements Using ​ Quoted Prices in ​ ​ Significant ​ ​ Active Markets for ​ Significant Other ​ Unobservable ​ ​ Identical Assets ​ Observable Inputs ​ Inputs ​ ​ (Level 1) ​ (Level 2) ​ (Level 3) Assets ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Derivative instruments, net ​ $ — ​ $ 11,375 ​ $ — ​ Total assets ​ $ — ​ $ 11,375 ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred compensation plan liability ​ $ — ​ $ ( 23,858 ) ​ $ — ​ Derivative instruments, net ​ — ​ — ​ — ​ Contingent consideration ​ — ​ — ​ ( 18,032 ) ​ Total liabilities ​ $ — ​ $ ( 23,858 ) ​ $ ( 18,032 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Redeemable noncontrolling interest ​ $ — ​ $ — ​ $ ( 52,976 ) ​ ​ Deferred Compensation Plan — The Company maintains a non-qualified deferred compensation plan structured as a Rabbi trust for certain eligible employees. Participants in the deferred compensation plan select from a menu of phantom investment options for their deferral dollars offered by the Company each year, which are based upon changes in value of complementary, defined market investments. The deferred compensation liability represents the combined values of market investments against which participant accounts are tracked. Contingent Consideration - The Company recorded contingent consideration related to the acquisitions of VF US and VF ASEAN. The contingent payable for VF US was calculated using a Monte Carlo simulation including a discount rate of 23.1 %. The contingent payable for VF ASEAN was calculated using a Monte Carlo simulation including a discount rate of 18.4 %. 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 these contingent payments reaches the expected total future value. During the first, second and fourth quarters of 2020, the Company recorded fair value adjustments to the contingent consideration associated with the acquisition of FCR LLC based on decreased estimates of EBITDA which caused the estimated payable to decrease. Accordingly, a $ 3.3 million decrease, a $ 1.1 million decrease and a $1.8 million decrease to the payable were recorded as of March 31, 2020, June 30, 2020 and December 31, 2020, respectively, and were included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss). As of December 31, 2020, the final calculated contingent consideration for FCR was zero. During the fourth quarter of 2020 and the first quarter of 2021, the Company recorded fair value adjustments to the contingent consideration associated with the VF US and VF ASEAN acquisitions based on increased actual results and estimates of EBITDA for 2021 which caused the payables to increase. Accordingly, a combined $ 4.3 million increase and $ 0.9 million increase, to the payables were recorded as of December 31, 2020 and March 31, 2021, respectively, and were included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss). As of March 31, 2021, the expected future contingent consideration for the VF US and VF ASEAN acquisitions is $ 18.9 million. 20 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) A rollforward of the activity in the Company’s fair value of the contingent consideration payable is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Imputed ​ ​ ​ ​ December 31, ​ ​ ​ ​ ​ ​ ​ Interest / ​ March 31, ​ ​ 2020 ​ Acquisitions ​ Payments ​ Adjustments ​ 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ VF US ​ $ 14,085 ​ $ — ​ $ — ​ ​ 481 ​ $ 14,566 ​ VF ASEAN ​ 3,947 ​ — ​ — ​ 396 ​ 4,343 ​ Total ​ $ 18,032 ​ $ — ​ $ — ​ $ 877 ​ $ 18,909 ​ ​ ​ ​ ​ ​ (8) INCOME TAXES The Company accounts for income taxes in accordance with the accounting literature for income taxes, which requires recognition of deferred tax assets and liabilities for the expected future income tax consequences of transactions that have been included in the Consolidated Financial Statements. Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement and tax basis of assets and liabilities using tax rates in effect for the year in which the differences are expected to reverse. Quarterly, the Company assesses the likelihood that its net deferred tax assets will be recovered. Based on the weight of all available evidence, both positive and negative, the Company records a valuation allowance against deferred tax assets when it is more-likely-than-not that a future tax benefit will not be realized. The Company’s selection of an accounting policy with respect to both the global intangible low taxed foreign income (“GILTI”) and base erosion and anti-abuse tax (“BEAT”) rules is to compute the related taxes in the period the entity becomes subject to either GILTI or BEAT. As of March 31, 2021, the Company had $ 15.5 million of gross deferred tax assets (after a $ 20.3 million valuation allowance) and a net deferred tax asset of $ 9.1 million (after deferred tax liabilities of $ 6.4 million) related to the United States and international tax jurisdictions whose recoverability is dependent upon future profitability. 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 months ended March 31, 2021 and 2020 was 22.5 % and 29.2 %, respectively. The Company’s U.S. income tax returns filed for the tax years ending December 31, 2017 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 and 2018 , and the Philippines for tax years 2017 and 2018 . 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. When there is a change in judgment concerning the recovery of deferred tax assets in future periods, a valuation allowance is recorded into earnings during the quarter in which the change in judgment occurred. In the first quarter of 2020, changes to the valuation allowance were recorded in the amounts of $ 0.3 million, for deferred tax assets that did not meet the “more-likely-than-not” standard. In the second quarter of 2020, changes to the valuation allowance were recorded in the amount of $ 0.9 million for assets that were redetermined to meet the “more-likely-than-not” standard. In the first quarter of 2021, a change to the valuation allowance was recorded in the amount of $ 2.4 million for assets that did not meet the “more-likely-than-not” standard. 21 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The Company has been granted “Tax Holidays” as an incentive to attract foreign investment by the government of the Philippines. Generally, a Tax Holiday is an agreement between the Company and a foreign government under which the Company receives certain tax benefits in that country, such as exemption from taxation on profits derived from export-related activities. 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 2021 and 2022 . The aggregate effect on income tax expense for the three months ended March 31, 2021 and 2020 was approximately $ 1.1 million and $ 1.4 million benefit, respectively, which had an impact on diluted net income per share of $ 0.02 and $ 0.03 , respectively. ​ ​ (9) RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES Restructuring Charges During 2021 and 2020, 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. TTEC determined it would close several delivery centers servicing the Engage segment and the expenses related to early termination fees and cease use lease accruals were recorded. This expense was included in the Restructuring charges, net in the Consolidated Statements of Comprehensive Income (Loss). A summary of the expenses recorded in Restructuring charges, net in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020, respectively, is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ 2021 2020 Reduction in force ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ $ — $ 207 TTEC Engage ​ — ​ 236 ​ Total ​ $ — $ 443 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ ​ 2021 2020 Facility exit and other charges ​ ​ ​ ​ ​ ​ ​ TTEC Digital ​ $ 8 $ — ​ TTEC Engage ​ 394 ​ 95 ​ Total ​ $ 402 $ 95 ​ ​ A rollforward of the activity in the Company’s restructuring accrual is as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Reduction ​ Facility Exit and ​ ​ ​ ​ ​ in Force ​ Other Charges ​ Total ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2020 ​ $ 156 $ 543 $ 699 ​ Expense ​ — ​ ​ 402 ​ 402 ​ Payments ​ — ​ ​ ( 502 ) ​ ( 502 ) ​ Change due to foreign currency ​ ​ — ​ ​ 1 ​ ​ 1 ​ Change in estimates ​ — ​ ​ — ​ — ​ Balance as of March 31, 2021 ​ $ 156 $ 444 $ 600 ​ ​ 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. 22 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Severance Charges In the normal course of business, the Company will pay severance to terminated employees related to programs that are ending who are no longer needed and cannot be repurposed to a new program. During the second quarter of 2020, a $ 3.0 million accrual was recorded with the expense included in Cost of services during the quarter ended June 30, 2020. During the third and fourth quarters of 2020, a total of $ 1.6 million was paid and a $ 0.3 million reduction in expense was recorded. During the first quarter of 2021, a total of $ 0.3 million was paid and a $ 0.1 million reduction in 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. Impairment Losses During each of the periods presented, the Company evaluated the recoverability of its leasehold improvement assets at certain customer engagement centers. An asset is considered to be impaired when the anticipated undiscounted future cash flows of its asset group are estimated to be less than the asset group’s carrying value. The amount of impairment recognized is the difference between the carrying value of the asset group and its fair value. To determine fair value, the Company used Level 3 inputs in its discounted cash flows analysis. Assumptions included the amount and timing of estimated future cash flows and assumed discount rates. During the three months ended March 31, 2021 and 2020, the Company recognized impairment losses, net related to leasehold improvement assets and right of use lease assets of $ 2.4 million and $ 0.7 million, respectively, across the TTEC Digital and TTEC Engage segments. ​ (10) COMMITMENTS AND CONTINGENCIES Credit Facility On March 25, 2021, the Company entered into a Fifth Amendment to its Amended and Restated Credit Agreement and Amended and Restated Security Agreement originally dated as of June 3, 2013, (collectively, the “Credit Facility”) to increase the total commitments by $ 300 million to $ 1.2 billion by exercising the accordion feature that was included in the senior secured revolving credit facility with a syndicate of lenders led by Wells Fargo Bank, National Association, as agent, swingline and fronting lender. The Credit Facility matures on February 14, 2024 . The $300 million increase is in the form of a term loan, which can be prepaid anytime and will become due February 14, 2024, contemporaneously with the expiration of the revolving line of credit. The maximum commitment under the Credit Facility is $ 1.2 billion in the aggregate, if certain conditions are satisfied. The Credit Facility commitment fees are payable to the lenders in an amount equal to the unused portion of the Credit Facility multiplied by a rate per annum as determined by reference to the Company’s net leverage ratio. The Credit Agreement contains customary affirmative, negative, and financial covenants, which remained unchanged from the 2016 Credit Facility, except that the Company is now obligated to maintain a maximum net leverage ratio of 3.50 to 1.00, and a minimum interest coverage ratio of 2.50 to 1.00. The Credit Agreement permits accounts receivable factoring up to the greater of $ 75 million or 25 percent of the average book value of all accounts receivable over the most recent twelve-month period. Base rate loans bear interest at a rate equal to the greatest of (i) Wells Fargo’s prime rate, (ii) one half of 1% in excess of the federal funds effective rate, and (iii) 1.25 % in excess of the one month London Interbank Offered Rate (“LIBOR”); plus in each case a margin of 0 % to 0.875 % based on the Company’s net leverage ratio. Eurodollar loans bear interest at LIBOR plus a margin of 1.0 % to 1.875 % based on the Company’s net leverage ratio. Alternate currency loans bear interest at rates applicable to their respective currencies. Letter of credit fees are one eighth of 1% of the stated amount of the letter of credit on the date of issuance, renewal or amendment, plus an annual fee equal to the borrowing margin for Eurodollar loans. 23 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The Company primarily utilizes its Credit Facility to fund working capital, general operations, dividends and other strategic activities, such as the acquisitions described in Note 2. As of March 31, 2021 and December 31, 2020, the Company had borrowings of $ 339.0 million and $ 385.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 446.1 million and $ 397.7 million for the three months ended March 31, 2021 and 2020, respectively. The Company had increased borrowings under the Credit Facility from late March 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 had been repaid. Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 855 million as of March 31, 2021. As of March 31, 2021, the Company was in compliance with all covenants and conditions under its Credit Agreement. In early April 2021, the Company drew down approximately $ 500 million of the availability on the Credit Facility in order to provide funding for the Company’s acquisition of Avtex Solutions, Holdings LLC. (See Note 2). Letters of Credit As of March 31, 2021, outstanding letters of credit under the Credit Facility totaled $ 2.8 million and primarily guaranteed workers’ compensation and other insurance related obligations. As of March 31, 2021, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $ 0.5 million. Legal Proceedings From time to time, the Company has been involved in legal actions, both as plaintiff and defendant, which arise in the ordinary course of business. The Company accrues for exposures associated with such legal actions to the extent that losses are deemed both probable and reasonably estimable. To the extent specific reserves have not been made for certain legal proceedings, their ultimate outcome, and consequently, an estimate of possible loss, if any, cannot reasonably be determined at this time. Based on currently available information and advice received from counsel, the Company believes that the disposition or ultimate resolution of any current legal proceedings, except as otherwise specifically reserved for in its financial statements, will not have a material adverse effect on the Company’s financial position, cash flows or results of operations. ​ (11) LEASES ​ Operating leases are included in the Consolidated Balance Sheet as Operating lease assets, Current operating lease liabilities and Non-current operating lease liabilities. Finance leases are included in Property, plant and equipment, Other current liabilities and Other long-term liabilities in the Consolidated Balance Sheet. The Company primarily leases real estate and equipment under various arrangements that provide the Company the right of use for the underlying asset that require lease payments over the lease term. The Company determines the value of each lease by computing the present value of each lease payment using the interest rate implicit in the lease, if available; otherwise the Company estimates its incremental borrowing rate over the lease term. The Company determines its incremental borrowing rate based on its estimated credit risk with adjustments for each individual leases’ geographical risk and lease term. Operating lease assets also include prepaid rent and initial direct costs less any tenant improvements. 24 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) The Company’s real estate portfolio typically includes one or more options to renew , with renewal terms that generally can extend the lease term from one to 10 years . The exercise of these lease renewal options is at the Company’s discretion and is included in the lease term only if the Company is reasonably certain to exercise. The Company also has service arrangements whereby it controls specific space provided by a third-party service provider. These arrangements meet the definition of a lease and are accounted for under ASC 842. Lease expense for operating leases is recognized on a straight-line basis over the lease term and is included in the Consolidated Statements of Comprehensive Income (Loss). The Company’s lease agreements do not contain any material residual value guarantees or restrictive guarantees. The components of lease expense for the three months ended March 31, 2021 and 2020 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Location in Statements of ​ Three Months Ended March 31, ​ Description ​ Comprehensive Income (Loss) 2021 2020 Amortization of ROU assets - finance leases ​ Depreciation and amortization ​ $ 1,804 ​ $ 1,916 ​ Interest on lease liabilities - finance leases ​ Interest expense ​ ​ 40 ​ ​ 56 Operating lease cost (cost resulting from lease payments) ​ Cost of services ​ 10,439 ​ 12,038 ​ Operating lease cost (cost resulting from lease payments) ​ Selling, general and administrative ​ ​ 606 ​ ​ 542 ​ Operating lease cost (cost resulting from lease payments) ​ Restructuring ​ ​ 240 ​ ​ — ​ Operating lease cost (cost resulting from lease payments) ​ Impairment ​ ​ 1,697 ​ ​ — ​ Operating lease cost (cost resulting from lease payments) ​ Other income (expense), net ​ ​ 310 ​ ​ 242 ​ Short-term lease cost ​ Cost of services ​ 966 ​ 997 ​ Variable lease cost (cost excluded from lease payments) ​ Cost of services ​ ​ 318 ​ ​ — ​ Less: Sublease income ​ Selling, general and administrative ​ ​ ( 228 ) ​ ​ ( 182 ) ​ Less: Sublease income ​ Other income (expense), net ​ ( 676 ) ​ ( 496 ) ​ Total lease cost ​ ​ ​ $ 15,516 $ 15,113 ​ ​ Other supplementary information for the three months ended March 31, 2021 and 2020 are as follows (dollar values in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ ​ 2021 2020 Finance lease - operating cash flows ​ $ 14 ​ $ 19 ​ Finance lease - financing cash flows ​ $ 1,792 ​ $ 2,132 ​ Operating lease - operating cash flows (fixed payments) ​ $ 13,498 ​ $ 14,137 ​ New ROU assets - operating leases ​ $ 3,362 ​ $ 6,548 ​ Modified ROU assets - operating leases ​ $ — ​ $ — ​ New ROU assets - finance leases ​ $ 95 ​ $ 508 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2021 ​ December 31, 2020 ​ Weighted average remaining lease term - finance leases ​ ​ 2.34 years ​ ​ 2.46 years ​ Weighted average remaining lease term - operating leases ​ ​ 3.60 years ​ ​ 3.73 years ​ Weighted average discount rate - finance leases ​ ​ 1.72 % ​ ​ 1.64 % ​ Weighted average discount rate - operating leases ​ ​ 6.88 % ​ ​ 6.95 % ​ ​ 25 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) Operating and financing lease right-of-use assets and lease liabilities within the Consolidated Balance Sheet as of March 31, 2021 and December 31, 2020 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Description Location in Balance Sheet ​ March 31, 2021 ​ December 31, 2020 Assets ​ ​ ​ ​ ​ ​ ​ ​ Operating lease assets Operating lease assets ​ $ 112,129 ​ $ 120,820 ​ Finance lease assets Property, plant and equipment, net ​ 10,947 ​ 12,659 ​ Total leased assets ​ ​ $ 123,076 ​ $ 133,479 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities ​ ​ ​ ​ ​ ​ ​ ​ Current ​ ​ ​ ​ ​ ​ ​ ​ Operating Current operating lease liabilities ​ $ 43,043 ​ $ 43,651 ​ Finance Other current liabilities ​ ​ 5,558 ​ ​ 6,193 ​ Non-current ​ ​ ​ ​ ​ ​ ​ ​ Operating Non-current operating lease liabilities ​ ​ 89,967 ​ ​ 98,277 ​ Finance Other long-term liabilities ​ ​ 3,766 ​ ​ 4,763 ​ Total lease liabilities ​ ​ $ 142,334 ​ $ 152,884 ​ ​ The future minimum operating lease and finance lease payments required under non-cancelable leases as of March 31, 2021 and December 31, 2020 are as follows (in thousands): March 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Sub-lease Finance ​ ​ Leases ​ Income ​ Leases Year 1 ​ $ 49,738 ​ $ ( 3,500 ) ​ $ 5,609 ​ Year 2 ​ 45,668 ​ ( 3,488 ) ​ 2,150 ​ Year 3 ​ 26,224 ​ ( 2,947 ) ​ 1,402 ​ Year 4 ​ 16,167 ​ ( 2,940 ) ​ 355 ​ Year 5 ​ 6,467 ​ ( 2,695 ) ​ — ​ Thereafter ​ 7,581 ​ — ​ — ​ Total minimum lease payments ​ $ 151,845 ​ $ ( 15,570 ) ​ $ 9,516 ​ Less imputed interest ​ ​ ( 18,835 ) ​ ​ ​ ​ ​ ( 192 ) ​ Total lease liability ​ $ 133,010 ​ ​ ​ ​ $ 9,324 ​ ​ December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating Sub-lease Finance ​ ​ Leases ​ Income ​ Leases Year 1 ​ $ 51,120 ​ $ ( 3,500 ) ​ $ 6,237 ​ Year 2 ​ 46,913 ​ ( 3,489 ) ​ 2,740 ​ Year 3 ​ 31,085 ​ ( 3,123 ) ​ 1,631 ​ Year 4 ​ 17,338 ​ ( 2,905 ) ​ 579 ​ Year 5 ​ 8,288 ​ ( 2,940 ) ​ — ​ Thereafter ​ 8,397 ​ ( 490 ) ​ — ​ Total minimum lease payments ​ $ 163,141 ​ $ ( 16,447 ) ​ $ 11,187 ​ Less imputed interest ​ ​ ( 21,213 ) ​ ​ ​ ​ ​ ( 231 ) ​ Total lease liability ​ $ 141,928 ​ ​ ​ ​ $ 10,956 ​ ​ 26 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) In 2008, the Company sub-leased one of its customer engagement 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 . In 2017, the Company sub-leased one of its office spaces for the remaining term of the original lease. The sub-lease began on November 6, 2017 and ends May 31, 2021 . In 2019, the Company sub-leased one of its office spaces for the remaining term of the original lease. The sub-lease began on March 1, 2019 and ends July 31, 2023 . In 2020, the Company sub-leased one of its office spaces for the remaining term of the original lease. The sub-lease began on February 6, 2020 and ends June 14, 2023 . ​ ​ ​ ​ ​ ​ (12) OTHER LONG-TERM LIABILITIES ​ The components of Other long-term liabilities as of March 31, 2021 and December 31, 2020 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, 2021 December 31, 2020 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Deferred revenue ​ ​ $ 19,203 $ 17,434 ​ Deferred compensation plan ​ ​ ​ 25,781 ​ ​ 23,858 ​ Other ​ ​ 55,170 ​ 54,893 ​ Total ​ ​ $ 100,154 $ 96,185 ​ ​ ​ ​ (13) NONCONTROLLING INTEREST ​ The following table reconciles equity attributable to noncontrolling interest in the Company’s subsidiary (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2021 2020 Noncontrolling interest, January 1 $ 13,060 $ 13,186 ​ Net income attributable to noncontrolling interest ​ 2,908 ​ 2,216 ​ Dividends distributed to noncontrolling interest ​ ( 2,385 ) ​ ( 1,850 ) ​ Foreign currency translation adjustments ​ 126 ​ ( 516 ) ​ Noncontrolling interest, March 31 $ 13,709 $ 13,036 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 27 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (14) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) ​ The following table presents changes in the accumulated balance for each component of Other comprehensive income (loss), including current period other comprehensive income (loss) and reclassifications out of accumulated other comprehensive income (loss) (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Foreign ​ ​ ​ ​ ​ ​ ​ ​ Currency ​ Derivative ​ ​ ​ ​ ​ ​ ​ ​ Translation ​ Valuation, Net ​ Other, Net ​ ​ ​ ​ ​ Adjustment ​ of Tax ​ of Tax ​ Totals ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at December 31, 2019 ​ $ ( 107,480 ) $ 4,182 $ ( 2,936 ) $ ( 106,234 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) before reclassifications ​ ( 29,298 ) ​ ( 7,913 ) ​ 258 ​ ( 36,953 ) ​ Amounts reclassified from accumulated other comprehensive income (loss) ​ — ​ 110 ​ ( 131 ) ​ ( 21 ) ​ Net current period other comprehensive income (loss) ​ ( 29,298 ) ​ ( 7,803 ) ​ 127 ​ ( 36,974 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at March 31, 2020 ​ $ ( 136,778 ) $ ( 3,621 ) $ ( 2,809 ) $ ( 143,208 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at December 31, 2020 ​ $ ( 78,139 ) $ 8,431 $ ( 2,448 ) $ ( 72,156 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other comprehensive income (loss) before reclassifications ​ ( 5,879 ) ​ ​ ( 3,773 ) ​ ​ 108 ​ ( 9,544 ) ​ Amounts reclassified from accumulated other comprehensive income (loss) ​ — ​ ​ 1,059 ​ ​ ( 72 ) ​ 987 ​ Net current period other comprehensive income (loss) ​ ( 5,879 ) ​ ( 2,714 ) ​ 36 ​ ( 8,557 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated other comprehensive income (loss) at March 31, 2021 ​ $ ( 84,018 ) $ 5,717 $ ( 2,412 ) $ ( 80,713 ) ​ ​ 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 ​ Statement of ​ ​ ​ March 31, ​ Comprehensive Income ​ ​ 2021 2020 (Loss) Classification ​ Derivative valuation ​ ​ ​ ​ ​ ​ ​ ​ ​ Gain (loss) on foreign currency forward exchange contracts ​ $ 1,431 ​ $ 151 Revenue ​ Tax effect ​ ( 372 ) ​ ( 41 ) Provision for income taxes ​ ​ ​ $ 1,059 ​ $ 110 Net income (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Other ​ ​ ​ ​ ​ ​ ​ ​ ​ Actuarial loss on defined benefit plan ​ $ ( 80 ) ​ $ ( 146 ) Cost of services ​ Tax effect ​ 8 ​ 15 Provision for income taxes ​ ​ ​ $ ( 72 ) ​ $ ( 131 ) Net income (loss) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 28 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (15) WEIGHTED AVERAGE SHARE COUNTS ​ The following table sets forth the computation of basic and diluted shares for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended March 31, ​ 2021 2020 ​ ​ ​ ​ ​ ​ Shares used in basic earnings per share calculation ​ 46,743 46,498 Effect of dilutive securities: ​ ​ ​ ​ ​ Restricted stock units ​ 612 315 Performance-based restricted stock units ​ — — Total effects of dilutive securities ​ 612 315 Shares used in dilutive earnings per share calculation ​ 47,355 46,813 ​ For the three months ended March 31, 2021 and 2020, there were Restricted Stock Units (“RSUs“) of zero and 66 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 months ended March 31, 2021 and 2020, the Company recognized total equity-based compensation expense of $ 4.0 million and $ 2.9 million, respectively. Of this total compensation expense, $ 1.3 million and $ 1.0 million were recognized in Cost of services and $ 2.7 million and $ 1.9 million were recognized in Selling, general and administrative during the three months ended March 31, 2021 and 2020, respectively. Restricted Stock Unit Grants During the three months ended March 31, 2021 and 2020, the Company granted 44,471 and 112,915 RSUs, respectively, to new and existing employees, which vest over four to five years . The Company recognized compensation expense related to RSUs of $ 3.3 million and $ 2.6 million for the three months ended March 31, 2021 and 2020, respectively. As of March 31, 2021, there was approximately $ 28.5 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 During 2019, the Company awarded performance restricted stock units (“PRSUs”) that are subject to service and performance vesting conditions. If defined minimum targets are met, the annual value of the PRSUs issued will be between $ 0.4 million and $ 1.4 million and vest immediately. If the defined minimum targets are not met, then no shares will be issued. The award amounts are based on the Company’s annual adjusted operating income for the fiscal years 2019, 2020 and 2021. Each fiscal year’s adjusted operating income will determine the award amount. The Company recognized compensation expense related to PRSUs of $ 0.3 million and $ 0.4 million, respectively, for the three months ended March 31, 2021 and 2020. During 2020, the Company awarded PRSUs that are subject to service and performance vesting conditions. If defined minimum targets are met, the annual value of the PRSUs issued will be between $ 0.2 million and $ 2.0 million and vest immediately. If the defined minimum targets are not met, then no shares will be issued. The number of shares awarded are based on the Company’s annual revenue and adjusted operating income for the fiscal years 2021 and 2022. Each fiscal year’s revenue and adjusted operating income will determine the award amount. The Company recognized compensation expense related to PRSUs of $ 0.5 million for the three months ended March 31, 2021. ​ 29 Table of Contents TTEC HOLDINGS, INC. AND SUBSIDIARIES Notes to Consolidated Financial Statements (Unaudited) (17) RELATED PARTY TRANSACTIONS The Company entered into an agreement under which Avion, LLC (“Avion”) and Airmax LLC (“Airmax”) provide certain aviation flight services as requested by the Company. Such services include the use of an aircraft and flight crew. Kenneth D. Tuchman, Chairman and Chief Executive Officer of the Company, has an indirect 100% beneficial ownership interest in Avion and Airmax. During the three months ended March 31, 2021 and 2020, the Company expensed $ 0.3 million and $ 0.1 million, respectively, to Avion and Airmax for services provided to the Company. There was $ 255 thousand in payments due and outstanding to Avion and Airmax as of March 31, 2021. Ms. Regina M. 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. Welltok, Inc. is a partner with the Company in a joint venture Welltok TTEC Communications, LLC. During the three months ended March 31, 2021 and 2020, the Company recorded revenue of $ 0.5 million and $ 0.9 million, respectively, in connection with work performed through the joint venture. ​ ​ ​ 30 Table of Contents CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS ​ This Quarterly Report on Form 10-Q contains “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934, and the Private Securities Litigation Reform Act of 1995, relating to our operations, expected financial position, results of operation, and other business matters that are based on our current expectations, assumptions, and projections with respect to the future, and are not a guarantee of performance. In this report, when we use words such as “may,” “believe,” “plan,” “will,” “anticipate,” “estimate,” “expect,” “intend,” “project,” “would,” “could,” “target,” or similar expressions, or when we discuss our strategy, plans, goals, initiatives, or objectives, we are making forward-looking statements. We caution you not to rely unduly on any forward-looking statements. Actual results may differ materially from those expressed in the forward-looking statements, and you should review and consider carefully the risks, uncertainties and other factors that affect our business and may cause such differences as outlined in Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2020. Important factors that could cause our actual results to differ materially from those indicated in the forward looking statements include, among others, are the risks related to our business operations and strategy, including the risks related to our strategy execution in a competitive market; our ability to innovate and introduce technologies that are sufficiently disruptive to allow us to maintain and grow our market share; our dependance on 3 rd parties for our cloud solutions, the impact of COVID-19 on our business and our clients’ business, risks inherent in our rapid transition to a work from home environment; our ability to attract and retain qualified and skilled personnel at a price point that we can afford and our clients are willing to pay; our M&A activity, including our ability to identify, acquire and properly integrate acquired businesses in accordance with our strategy; the risks related to our technology, including cybersecurity, the reliability of our information technology infrastructure and our ability to consistently deliver uninterrupted service to our clients; the risk related to our international operations; the risks related to legal impact on our operations, including rapidly changing laws that regulate our and our clients’ business, such as data privacy and data protection laws and healthcare, financial and public sector specific regulations, our ability to comply with these laws timely, and cost of wage and hour litigation in the United States; and risks inherent in our equity structure including our controlling shareholder risk, and Delaware choice of dispute resolution risks. Our forward-looking statements speak only as of the date that this report is filed with the United States Securities and Exchange Commission (“SEC”). We undertake no obligation to update them, except as may be required by applicable law. Although we believe that our forward-looking statements are reasonable, they depend on many factors outside of our control and we can provide no assurance that they will prove to be correct. ​ ​ ​ 31 Table of Contents