What changed in this filing

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Item 1. Financial Statements

2021-08-03 compared with 2021-05-04 · 316 added, 180 removed, 741 unchanged (40% of the section changed)

6 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance of $ 4,997 and $ 5,067 , respectively

Accounts receivable, net of allowance of $ 5,940 and $ 5,067

Prepaids and other current assets

8 unchanged sentences

Total long-term assets

LIABILITIES AND STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY

LIABILITIES, STOCKHOLDERS’ EQUITY AND MEZZANINE EQUITY

Current liabilities

21 unchanged sentences

10,000,000 shares authorized;

zero shares outstanding as of March 31, 2021 and December 31, 2020

zero shares outstanding as of June 30, 2021 and December 31, 2020

Common stock;

1 unchanged sentence

150,000,000 shares authorized;

46,819,468 and 46,737,033 shares outstanding as of March 31, 2021 and December 31, 2020, respectively

46,893,465 and 46,737,033 shares outstanding as of June 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Treasury stock at cost;

35,232,785 and 35,315,220 shares as of March 31, 2021 and December 31, 2020, respectively

35,158,788 and 35,315,220 shares as of June 30, 2021 and December 31, 2020, respectively

Accumulated other comprehensive income (loss)

2 unchanged sentences

Total stockholders’ equity

Total liabilities and stockholders’ equity and mezzanine equity

Total liabilities, stockholders’ equity and mezzanine equity

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

3 unchanged sentences

(Amounts in thousands, except per share amounts)

Three months ended March 31,

Three months ended June 30,

Six months ended June 30,

Operating expenses

23 unchanged sentences

Comprehensive income attributable to noncontrolling interest

Comprehensive income (loss) attributable to TTEC stockholders

Comprehensive income attributable to TTEC stockholders

Weighted average shares outstanding

6 unchanged sentences

(Amounts in thousands)

Three months ended March 31, 2021 and 2020

Three months ended June 30, 2020 and 2021

Stockholders’ Equity of the Company

Preferred Stock

Comprehensive

2 unchanged sentences

Income (Loss)

Balance as of December 31, 2019

Balance as of March 31, 2020

Dividends to shareholders ($0.00 per common share)

6 unchanged sentences

Other, net of tax

Balance as of June 30, 2020

Stockholders’ Equity of the Company

Comprehensive

Noncontrolling

Paid-in Capital

Income (Loss)

Balance as of March 31, 2021

Dividends to shareholders ($0.00 per common share)

Acquisition of noncontrolling interest

Dividends distributed to noncontrolling interest

Foreign currency translation adjustments

Derivatives valuation, net of tax

Vesting of restricted stock units

Equity-based compensation expense

Other, net of tax

Balance as of June 30, 2021

Six months ended June 30, 2020 and 2021

Stockholders’ Equity of the Company

Preferred Stock

Comprehensive

4 unchanged sentences

Dividends to shareholders ($ 0.34 per common share)

Acquisition of noncontrolling interest

Dividends distributed to noncontrolling interest

4 unchanged sentences

Other, net of tax

Balance as of March 31, 2021

Balance as of June 30, 2020

Stockholders’ Equity of the Company

Comprehensive

Noncontrolling

Paid-in Capital

Income (Loss)

Balance as of December 31, 2020

Dividends to shareholders ($ 0.43 per common share)

Acquisition of noncontrolling interest

Dividends distributed to noncontrolling interest

Foreign currency translation adjustments

Derivatives valuation, net of tax

Vesting of restricted stock units

Equity-based compensation expense

Other, net of tax

Balance as of June 30, 2021

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

3 unchanged sentences

(Amounts in thousands)

Three Months Ended March 31,

Six Months Ended June 30,

Cash flows from operating activities

6 unchanged sentences

(Gain) loss on disposal of assets

Loss on dissolution of subsidiary

Impairment losses

12 unchanged sentences

Purchases of property, plant and equipment, net of acquisitions

Acquisitions, net of cash acquired of zero and $ 3,123 , respectively

Acquisitions, net of cash acquired of $ 18,638 and $ 3,123 , respectively

Net cash used in investing activities

7 unchanged sentences

Payments of debt issuance costs

Net cash (used in) provided by financing activities

Net cash provided by financing activities

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

8 unchanged sentences

Acquisition of equipment through increase in accounts payable, net

Dividend declared but not paid

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

5 unchanged sentences

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”, or “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.

31 unchanged sentences

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

June 30, 2021

December 31, 2020

12 unchanged sentences

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.

In December 2019, the FASB issued ASU 2019-12, “Simplifying the Accounting for Income Taxes” (ASC 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.

6 unchanged sentences

(2) ACQUISITIONS AND DIVESTITURES

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 is operated as part of the TTEC Digital segment and is being fully consolidated into the financial statements of TTEC.

Total cash paid at acquisition was $ 500.0 million ($ 490.0 million base purchase price plus cash, less debt and working capital estimate).

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

Acquisition Date

Accounts receivable, net

Prepaid expenses

Current income tax receivables

Net fixed assets

Right of use assets

Intellectual property intangible

Customer relationships

Accounts payable

Accrued employee compensation

Accrued expenses

Right of use liability - current

Deferred revenue

Accrued income taxes

Right of use liability - noncurrent

Total purchase price

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

The Avtex customer relationships, intellectual property intangible, and tradename have been estimated based on the initial valuation and will be amortized over estimated useful lives of 9 , 3 , and 1 years , respectively.

The goodwill recognized from the Avtex 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 be deductible for income tax purposes.

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

Voice Foundry

1 unchanged sentence

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.

Voice Foundry is a preferred Amazon Connect cloud contact center service and implementation partner .

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

3 unchanged sentences

The Company finalized the net working capital adjustment for $ 0.3 million which was paid to Voice Foundry during the first quarter of 2021.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

1 unchanged sentence

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.

During the fourth quarter of 2020, the first quarter of 2021 and the second quarter of 2021, a $ 3.2 million expense, a $ 0.5 million expense and a $ 0.2 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.

As of June 30, 2021, the value of the accrual is $ 7.4 million and is included in Other accrued expenses 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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

1 unchanged sentence

Accounts receivable, net

Prepaid and other expenses

Prepaid and other assets

Customer relationships

12 unchanged sentences

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Total cash paid at acquisition was $ 15.2 million.

1 unchanged sentence

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 Company finalized the net working capital adjustment for $ 0.2 million which will be paid from Voice Foundry during the third quarter of 2021.

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

1 unchanged sentence

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 fourth quarter of 2020, the first quarter of 2021 and the second quarter of 2021, a $ 1.2 million expense, a $ 0.4 million expense and a $ 0.1 million benefit, 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/benefits 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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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):

As of June 30, 2021, the value of the accrual is $ 2.1 million and is included in Other accrued expenses in the accompanying Consolidated Balance Sheets.

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

Acquisition Date

10 unchanged sentences

Total purchase price

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.

In the second quarter of 2021, the Company finalized the valuation for VF ASEAN for the acquisition date assets acquired and liabilities assumed and determined that no material adjustments to any of the balances were required.

The VF ASEAN customer relationships and tradename are being amortized over useful lives of 4 and 2 years , respectively.

The goodwill recognized from the VF ASEAN 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 VF ASEAN are reported within the TTEC Digital segment from the date of acquisition.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 .

Serendebyte is an autonomous customer experience and intelligent automation solutions provider 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.

2 unchanged sentences

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

19 unchanged sentences

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

3 unchanged sentences

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 acquired businesses purchased in 2021 and 2020 noted above contributed revenues of $ 68.7 million and net income of $ 5.2 million, inclusive of $ 6.2 million of acquired intangible amortization, to the Company for the six months ended June 30, 2021.

The unaudited proforma financial results for the six months ended June 30, 2021 and 2020, combines the consolidated results of the Company, Avtex, 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 $ 1,094.0 million and $ 97.8 million would have been $ 1,141.0 million and $ 100.6 million for the six months ended June 30, 2021, respectively, on an unaudited proforma basis.

For 2020, the reported revenue and net income of $ 885.3 million and $ 52.9 million would have been $ 977.3 million and $ 58.3 million for the six months ended June 30, 2020, respectively, on an unaudited 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.

8 unchanged sentences

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.

TTEC HOLDINGS, INC.

21 unchanged sentences

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

Three Months Ended March 31, 2021

Three Months Ended June 30, 2021

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

Three Months Ended March 31, 2020

Three Months Ended June 30, 2020

Six Months Ended June 30, 2021

Six Months Ended June 30, 2020

Three Months Ended

Six Months Ended

Capital Expenditures

March 31, 2021

June 30, 2021

December 31, 2020

March 31, 2021

June 30, 2021

December 31, 2020

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

United States

2 unchanged sentences

Asia Pacific / India

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(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;

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

This client contributed 14.2 % and 8.3 % of total revenue for the six months ended June 30, 2021 and 2020, respectively.

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

1 unchanged sentence

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

Based on currently available information, management does not believe significant credit risk existed as of March 31, 2021.

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

4 unchanged sentences

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

Three Months Ended March 31,

Balance, beginning of year

Three Months Ended June 30,

Six Months Ended June 30,

Balance, beginning of period

Provision for credit losses

1 unchanged sentence

Effect of foreign currency

Balance, end of year

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.

Balance, end of period

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

As of June 30, 2021 and December 31, 2020, TTEC had approximately $ 2.7 million in pre-petition accounts receivables outstanding related to Sears;

Accounts Receivable Sales Agreement

6 unchanged sentences

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;

As of June 30, 2021, the Company had factored $ 64.3 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.

As of June 30, 2021, the Company had collected $ 10.4 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.

The Company has not recorded any servicing assets or liabilities as of June 30, 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

3 unchanged sentences

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

During the quarter ended March 31, 2021, the Company assessed whether any such indicators of impairment existed and concluded there were none.

During the quarter ended June 30, 2021, the Company assessed whether any such indicators of impairment existed and concluded there were none.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(6) DERIVATIVES

5 unchanged sentences

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):

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Three Months Ended March 31,

As of June 30, 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 six months ended June 30, 2021 and 2020 (in thousands and net of tax):

Three Months Ended

Six Months Ended

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

2 unchanged sentences

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

The Company’s foreign exchange cash flow hedging instruments as of March 31, 2021 and December 31, 2020 are summarized as follows (amounts in thousands).

The Company’s foreign exchange cash flow hedging instruments as of June 30, 2021 and December 31, 2020 are summarized as follows (amounts in thousands).

All hedging instruments are forward contracts.

As of March 31, 2021

As of June 30, 2021

Canadian Dollar

1 unchanged sentence

December 2024

December 2023

As of December 31, 2020

2 unchanged sentences

(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.

dollars on June 30, 2021 and December 31, 2020.

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

Fair Value Hedges

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

As of June 30, 2021 and December 31, 2020 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 26.7 million and $ 35.5 million, respectively.

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

The Company’s derivatives as of June 30, 2021 and December 31, 2020 were as follows (in thousands):

June 30, 2021

Not Designated

17 unchanged sentences

Total fair value of derivatives, net

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2021 and 2020 were as follows (in thousands):

Three Months Ended March 31,

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended June 30, 2021 and 2020 were as follows (in thousands):

Three Months Ended June 30,

Designated as Hedging

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Three Months Ended March 31,

Three Months Ended June 30,

Not Designated as Hedging Instruments

4 unchanged sentences

Other income (expense), net

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the six months ended June 30, 2021 and 2020 were as follows (in thousands):

Six Months Ended June 30,

Designated as Hedging

Derivative contract type:

Foreign Exchange

Derivative classification:

Amount of gain or (loss) recognized in Other comprehensive income (loss) - effective portion, net of tax

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

Six Months Ended June 30,

Not Designated as Hedging Instruments

Derivative contract type:

Foreign Exchange

Derivative classification:

Amount and location of net gain or (loss) recognized in the Consolidated Statement of Comprehensive Income (Loss):

Other income (expense), net

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(7) FAIR VALUE

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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.

The following presents information as of June 30, 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.

2 unchanged sentences

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.

As of June 30, 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.

As of June 30, 2021 and December 31, 2020, the Company had $ 834.0 million and $ 385.0 million, respectively, of borrowings outstanding under the Credit Facility.

During the second quarter of 2021 outstanding borrowings accrued interest at an average rate of 1.3 % per annum, excluding unused commitment fees.

The amounts recorded in the accompanying Balance Sheets approximate fair value due to the variable nature of the debt based on Level 2 inputs.

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 June 30, 2021, credit risk did not materially change the fair value of the Company’s derivative contracts.

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

Derivatives - Net derivative assets (liabilities) are measured at fair value on a recurring basis.

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

The following is a summary of the Company’s fair value measurements for its net derivative assets (liabilities) as of June 30, 2021 and December 31, 2020 (in thousands):

As of June 30, 2021

Fair Value Measurements Using

15 unchanged sentences

Total net derivative asset (liability)

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

The following is a summary of the Company’s fair value measurements as of June 30, 2021 and December 31, 2020 (in thousands):

As of June 30, 2021

Fair Value Measurements Using

37 unchanged sentences

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.

During the fourth quarter of 2020, the first quarter of 2021 and the second 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, $ 0.9 million increase and $ 0.2 million increase, to the payables were recorded as of December 31, 2020, March 31, 2021 and June 30, 2021, respectively, and were included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss).

As of June 30, 2021, the expected future contingent consideration for the VF US and VF ASEAN acquisitions is $ 9.5 million.

TTEC HOLDINGS, INC.

8 unchanged sentences

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.

As of June 30, 2021, the Company had $ 19.6 million of gross deferred tax assets (after a $ 20.5 million valuation allowance) and a net deferred tax asset of $ 13.5 million (after deferred tax liabilities of $ 6.0 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 effective tax rate for the three and six months ended June 30, 2021 was 17.8 % and 20.3 %, respectively.

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

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 , the Philippines for tax years 2017, 2018 and 2020 , Ireland for 2018 through 2020 and the state of Florida for tax years 2017 to 2019 .

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.

9 unchanged sentences

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.

The aggregate effect on income tax expense for the three months ended June 30, 2021 and 2020 was approximately $ 2.6 million benefit and $( 0.3 ) million expense, respectively, which had an impact on diluted net income per share of $ 0.05 and $( 0.01 ), respectively.

The aggregate effect on income tax expense for the six months ended June 30, 2021 and 2020 was approximately $ 3.7 million and $ 1.2 million benefit, respectively, which had an impact on diluted net income per share of $ 0.08 and $ 0.02 , 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.

During 2021 and 2020, the Company continued restructuring activities primarily associated with reductions in the Company’s capacity, the workforce in certain locations, 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,

A summary of the expenses recorded in Restructuring charges, net in the accompanying Consolidated Statements of Comprehensive Income (Loss) for the six months ended June 30, 2021 and 2020, respectively, is as follows (in thousands):

Three Months Ended

Six Months Ended

Reduction in force

Three Months Ended March 31,

Facility exit and other charges

5 unchanged sentences

Change in estimates

Balance as of March 31, 2021

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.

Balance as of June 30, 2021

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

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.

In the normal course of business, the Company will pay severance to terminated employees related to programs that are ending when such employees 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.

During the first and second quarters of 2021, a total of $ 0.4 million was paid and a $ 0.6 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.

5 unchanged sentences

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.

During the three and six months ended June 30, 2021 the Company recognized impairment losses, net related to leasehold improvement assets and right of use lease assets of $ 0.2 million and $ 0.7 million, respectively, across the TTEC Digital and TTEC Engage segments.

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

(10) COMMITMENTS AND CONTINGENCIES

7 unchanged sentences

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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”);

3 unchanged sentences

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

As of June 30, 2021 and December 31, 2020, the Company had borrowings of $ 834.0 million and $ 385.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 662.8 million and $ 548.8 million for the six months ended June 30, 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).

During early April 2021, the Company increased borrowings by approximately $ 500 million in connection with the acquisition of Avtex (see Note 2).

Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 360 million as of June 30, 2021.

As of June 30, 2021, the Company was in compliance with all covenants and conditions under its Credit Agreement.

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.

As of June 30, 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 June 30, 2021, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $ 0.4 million.

Legal Proceedings

19 unchanged sentences

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

The components of lease expense for the three months ended March 31, 2021 and 2020 are as follows (in thousands):

The components of lease expense for the three and six months ended June 30, 2021 and 2020 are as follows (in thousands):

Location in Statements of

Three Months Ended March 31,

Three Months Ended June 30,

Comprehensive Income (Loss)

9 unchanged sentences

Restructuring

Operating lease cost

Operating lease cost (cost resulting from lease payments)

Other income (expense), net

Short-term lease cost

Cost of services

Variable lease cost (cost excluded from lease payments)

Cost of services

Sublease income

Selling, general and administrative

Sublease income

Other income (expense), net

Total lease cost

Location in Statements of

Six Months Ended June 30,

Comprehensive Income (Loss)

Amortization of ROU assets - finance leases

Depreciation and amortization

Interest on lease liabilities - finance leases

Interest expense

Operating lease cost (cost resulting from lease payments)

Cost of services

Operating lease cost (cost resulting from lease payments)

Selling, general and administrative

Operating lease cost (cost resulting from lease payments)

Restructuring

Operating lease cost

Operating lease cost (cost resulting from lease payments)

Other income (expense), net

8 unchanged sentences

Total lease cost

Other supplementary information for the three months ended March 31, 2021 and 2020 are as follows (dollar values in thousands):

Three Months Ended March 31,

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Other supplementary information for the three and six months ended June 30, 2021 and 2020 are as follows (dollar values in thousands):

Three Months Ended June 30,

Finance lease - operating cash flows

4 unchanged sentences

New ROU assets - finance leases

March 31, 2021

Six Months Ended June 30,

Finance lease - operating cash flows

Finance lease - financing cash flows

Operating lease - operating cash flows (fixed payments)

New ROU assets - operating leases

Modified ROU assets - operating leases

New ROU assets - finance leases

June 30, 2021

December 31, 2020

3 unchanged sentences

Weighted average discount rate - operating leases

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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):

Operating and financing lease right-of-use assets and lease liabilities within the Consolidated Balance Sheet as of June 30, 2021 and December 31, 2020 are as follows (in thousands):

Location in Balance Sheet

March 31, 2021

June 30, 2021

December 31, 2020

9 unchanged sentences

Total lease liabilities

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The future minimum operating lease and finance lease payments required under non-cancelable leases as of June 30, 2021 and December 31, 2020 are as follows (in thousands):

June 30, 2021

Total minimum lease payments

5 unchanged sentences

Total lease liability

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

1 unchanged sentence

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 .

The sub-lease began on November 6, 2017 and ended on May 31, 2021 .

In 2019, the Company sub-leased one of its office spaces for the remaining term of the original lease.

2 unchanged sentences

The sub-lease began on February 6, 2020 and ends June 14, 2023 .

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(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

The components of Other long-term liabilities as of June 30, 2021 and December 31, 2020 are as follows (in thousands):

June 30, 2021

December 31, 2020

1 unchanged sentence

Deferred compensation plan

Deferred social security taxes

(13) NONCONTROLLING INTEREST

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

Three Months Ended March 31,

Six Months Ended June 30,

Noncontrolling interest, January 1

2 unchanged sentences

Foreign currency translation adjustments

Noncontrolling interest, March 31

Noncontrolling interest, June 30

TTEC HOLDINGS, INC.

8 unchanged sentences

Net current period other comprehensive income (loss)

Accumulated other comprehensive income (loss) at March 31, 2020

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

Accumulated other comprehensive income (loss) at December 31, 2020

2 unchanged sentences

Net current period other comprehensive income (loss)

Accumulated other comprehensive income (loss) at March 31, 2021

Accumulated other comprehensive income (loss) at June 30, 2021

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

For the Three Months Ended June 30,

Comprehensive Income

1 unchanged sentence

Derivative valuation

Gain (loss) on foreign currency forward exchange contracts

Gain on foreign currency forward exchange contracts

Provision for income taxes

7 unchanged sentences

Notes to Consolidated Financial Statements

For the Six Months Ended June 30,

Comprehensive Income

(Loss) Classification

Derivative valuation

Gain on foreign currency forward exchange contracts

Provision for income taxes

Net income (loss)

Actuarial loss on defined benefit plan

Cost of services

Provision for income taxes

Net income (loss)

(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,

Three Months Ended June 30,

Six Months Ended June 30,

Shares used in basic earnings per share calculation

4 unchanged sentences

Shares used in dilutive earnings per share calculation

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.

For the three months ended June 30, 2021 and 2020, there were Restricted Stock Units (“RSUs”) of one thousand and 64 thousand, respectively, outstanding which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive.

For the six months ended June 30, 2021 and 2020, there were RSUs of two thousand and 64 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.

During the three and six months ended June 30, ended 2021 and 2020, the Company recognized total equity-based compensation expense of $ 3.3 million and $ 7.4 million and $ 3.1 million and $ 6.0 million, respectively.

Of this total compensation expenses, $ 1.1 million and $ 2.5 million were recognized in Cost of services and $ 2.2 million and $ 4.9 million were recognized in Selling, general and administrative during the three and six months ended June 30, 2021, respectively.

During the three and six months ended June 30, 2020, the Company recognized compensation expense of $ 1.1 million and $ 2.0 million in Cost of services and $ 2.0 million and $ 4.0 million in Selling, general and administrative, respectively.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

During the six months ended June 30, 2021 and 2020, the Company granted 11,656 and 130,885 RSUs, respectively, to new and existing employees, which vest over four to five years .

The Company recognized compensation expense related to RSUs of $ 2.6 million and $ 5.9 million for the three and six months ended June 30, 2021, respectively.

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

As of June 30, 2021, there was approximately $ 27.2 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

4 unchanged sentences

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.

The Company recognized compensation expense related to PRSUs of $ 0.3 million and $ 0.5 million, respectively, for the three and six months ended June 30, 2021.

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

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

3 unchanged sentences

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company recognized compensation expense related to PRSUs of $ 0.5 million and $ 1.0 million, respectively, for the three and six months ended June 30, 2021.

(17) RELATED PARTY TRANSACTIONS

2 unchanged sentences

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.

During the six months ended June 30, 2021 and 2020, the Company expensed $ 0.5 million and $ 0.2 million, respectively, to Avion and Airmax for services provided to the Company.

There was $ 77 thousand in payments due and outstanding to Avion and Airmax as of June 30, 2021.

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.

1 unchanged sentence

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.

During the six months ended June 30, 2021 and 2020, the Company recorded revenue of $ 0.9 million and $ 1.8 million, respectively, in connection with work performed through the joint venture.

Paolillo is a member of the board of directors of Unisys, a global information technology company.

During the six months ended June 30, 2021, the Company recorded revenue of $ 0.3 million in connection with services performed for Unisys.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

3 unchanged sentences

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 of this report and 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;

Important factors that could cause our actual results to differ materially from those indicated in the forward looking statements include, among others, 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 dependence on 3 rd parties for our cloud solutions;

the impact of COVID-19 on our business and our clients’ business;

risks inherent in our 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 risks related to our technology, including the reliability of our information technology infrastructure and risks related to cybersecurity in general and criminal activity such as ransomware and other malware, in particular, which may impact our ability to consistently deliver uninterrupted service to our clients;

the risk related to our international operations;

5 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements