What changed in this filing

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Item 1. Financial Statements

2021-11-09 compared with 2021-08-03 · 230 added, 206 removed, 851 unchanged (34% of the section changed)

4 unchanged sentences

(Amounts in thousands, except share amounts)

September 30,

Current assets

35 unchanged sentences

10,000,000 shares authorized;

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

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

Common stock;

1 unchanged sentence

150,000,000 shares authorized;

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

46,988,762 and 46,737,033 shares outstanding as of September 30, 2021 and December 31, 2020, respectively

Additional paid-in capital

Treasury stock at cost;

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

35,063,491 and 35,315,220 shares as of September 30, 2021 and December 31, 2020, respectively

Accumulated other comprehensive income (loss)

8 unchanged sentences

(Amounts in thousands, except per share amounts)

Three months ended June 30,

Six months ended June 30,

Three months ended September 30,

Nine months ended September 30,

Operating expenses

23 unchanged sentences

Comprehensive income attributable to noncontrolling interest

Comprehensive income attributable to TTEC stockholders

Comprehensive income (loss) attributable to TTEC stockholders

Weighted average shares outstanding

6 unchanged sentences

(Amounts in thousands)

Three months ended June 30, 2020 and 2021

Three months ended September 30, 2020 and 2021

Stockholders’ Equity of the Company

3 unchanged sentences

Income (Loss)

Balance as of March 31, 2020

Balance as of June 30, 2020

Dividends to shareholders ($ 0.40 per common share)

Acquisition of noncontrolling interest

Dividends distributed to noncontrolling interest

4 unchanged sentences

Other, net of tax

Balance as of June 30, 2020

Balance as of September 30, 2020

Stockholders’ Equity of the Company

3 unchanged sentences

Income (Loss)

Balance as of March 31, 2021

Balance as of June 30, 2021

Dividends to shareholders ($ 0.47 per common share)

6 unchanged sentences

Other, net of tax

Balance as of June 30, 2021

Six months ended June 30, 2020 and 2021

Balance as of September 30, 2021

Nine months ended September 30, 2020 and 2021

Stockholders’ Equity of the Company

12 unchanged sentences

Other, net of tax

Balance as of June 30, 2020

Balance as of September 30, 2020

Stockholders’ Equity of the Company

12 unchanged sentences

Other, net of tax

Balance as of June 30, 2021

Balance as of September 30, 2021

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

3 unchanged sentences

(Amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

31 unchanged sentences

Payments of debt issuance costs

Net cash provided by financing activities

Net cash provided by (used in) financing activities

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

8 unchanged sentences

Acquisition of equipment through increase in accounts payable, net

Dividend declared but not paid

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

39 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):

June 30, 2021

September 30, 2021

December 31, 2020

16 unchanged sentences

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.

8 unchanged sentences

The Company used cash from operations and drew down on its Credit Facility to fund the acquisition.

The Company finalized the net working capital adjustment for $ 0.1 million during the third quarter of 2021 which was paid by Avtex to the Company in the third quarter of 2021.

TTEC HOLDINGS, INC.

16 unchanged sentences

Accrued income taxes

Deferred tax liability

Right of use liability - noncurrent

5 unchanged sentences

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

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.

On August 5, 2020 , TTEC Digital, LLC closed the first phase of the acquisition of the VoiceFoundry 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 .

VoiceFoundry 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.

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.

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

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 VoiceFoundry during the first quarter of 2021.

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

4 unchanged sentences

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 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.

As of September 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.

11 unchanged sentences

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 goodwill recognized from the VF US Transaction 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.

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

VoiceFoundry ASEAN

On November 4, 2020 , TTEC Europe BV, a subsidiary of the Company, closed the final phase of the acquisition of the VoiceFoundry business by acquiring 100 % of the issued stock of Saasy Ventures Pty Ltd.

(“the VF ASEAN Transaction”).

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.

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 Company finalized the net working capital adjustment for $ 0.2 million which was paid from VoiceFoundry during the third quarter of 2021.

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

4 unchanged sentences

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 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.

As of September 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):

12 unchanged sentences

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.

1 unchanged sentence

Notes to Consolidated Financial Statements

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 Transaction 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.

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”).

9 unchanged sentences

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.

The noncontrolling interest was valued at $ 3.8 million at the acquisition date and is shown as Redeemable noncontrolling interest in the accompanying Consolidated Balance Sheets.

The Company recognizes changes in the redemption value of the Redeemable noncontrolling interest immediately as they occur but does not reduce the carrying value below the carrying value determined in accordance with ASC 810 (that amount being determined based on the allocation of income or loss to the noncontrolling interest as adjusted for distributions).

At each subsequent reporting date, the current redeemable value is calculated and, if necessary, an adjustment is recorded to increase or decrease the noncontrolling interest account to reflect the appropriate balance, with the corresponding adjustment to retained earnings.

As of September 30, 2021, no adjustments have been recorded related to changes in the estimated redemption value.

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.

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):

12 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.

4 unchanged sentences

Financial Impact of Acquired Businesses

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 acquired businesses purchased in 2021 and 2020 noted above contributed revenues of $ 130.4 million and net income of $ 9.9 million, inclusive of $ 11.8 million of acquired intangible amortization, to the Company for the nine months ended September 30, 2021.

The unaudited proforma financial results for the nine months ended September 30, 2021 and 2020, combines the consolidated results of the Company, Avtex, VoiceFoundry US, VoiceFoundry ASEAN and Serendebyte assuming the acquisitions had been completed on January 1, 2020.

The reported revenue and net income of $ 1,660.7 million and $ 112.2 million would have been $ 1,707.8 million and $ 115.0 million for the nine months ended September 30, 2021, respectively, on an unaudited proforma basis.

For 2020, the reported revenue and net income of $ 1,378.3 million and $ 74.2 million would have been $ 1,516.3 million and $ 83.7 million for the nine months ended September 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.

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

6 unchanged sentences

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(3) SEGMENT INFORMATION

13 unchanged sentences

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

● Fraud Prevention Services:

3 unchanged sentences

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

Three Months Ended June 30, 2021

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Three Months Ended June 30, 2020

Six Months Ended June 30, 2021

Six Months Ended June 30, 2020

Three Months Ended September 30, 2021

Three Months Ended September 30, 2020

Nine Months Ended September 30, 2021

Nine Months Ended September 30, 2020

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Capital Expenditures

June 30, 2021

December 31, 2020

June 30, 2021

December 31, 2020

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

September 30, 2021

December 31, 2020

September 30, 2021

December 31, 2020

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

United States

3 unchanged sentences

(4) SIGNIFICANT CLIENTS AND OTHER CONCENTRATIONS

The Company had one client that contributed in excess of 10% of total revenue for the six months ended June 30, 2021;

The Company had one client that contributed in excess of 10% of total revenue for the nine months ended September 30, 2021;

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

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.

This client contributed 13.3 % and 11.8 % of total revenue for the nine months ended September 30, 2021 and 2020, respectively.

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

1 unchanged sentence

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

Based on currently available information, management does not believe significant credit risk existed as of June 30, 2021.

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

3 unchanged sentences

The Company will write-off accounts receivable against this allowance when the Company determines a balance is uncollectible.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Balance, beginning of period

3 unchanged sentences

Balance, end of period

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

As of September 30, 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).

7 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 June 30, 2021, the Company had factored $ 64.3 million of accounts receivable;

As of September 30, 2021, the Company had factored $ 74.5 million of accounts receivable;

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

As of June 30, 2021, the Company had collected $ 10.4 million of cash from customers which had not been remitted to the Bank.

As of September 30, 2021, the Company had collected $ 19.0 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 June 30, 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 September 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

1 unchanged sentence

Acquisitions /

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

September 30,

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

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 September 30, 2021, the Company assessed whether any such indicators of impairment existed and concluded there were none.

(6) DERIVATIVES

5 unchanged sentences

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

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):

As of September 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 three and nine months ended September 30, 2021 and 2020 (in thousands and net of tax):

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

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

2 unchanged sentences

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

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

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

All hedging instruments are forward contracts.

As of June 30, 2021

As of September 30, 2021

Canadian Dollar

Philippine Peso

September 2024

December 2024

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 June 30, 2021 and December 31, 2020.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

Fair Value Hedges

1 unchanged sentence

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

As of June 30, 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.

As of September 30, 2021 and December 31, 2020 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 28.3 million and $ 35.5 million, respectively.

Derivative Valuation and Settlements

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

June 30, 2021

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

September 30, 2021

Not Designated

7 unchanged sentences

Total fair value of derivatives, net

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2020

8 unchanged sentences

Total fair value of derivatives, net

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,

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

Three Months Ended September 30,

Designated as Hedging

4 unchanged sentences

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

Three Months Ended June 30,

Three Months Ended September 30,

Not Designated as Hedging Instruments

4 unchanged sentences

Other income (expense), net

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

Six Months Ended June 30,

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 nine months ended September 30, 2021 and 2020 were as follows (in thousands):

Nine Months Ended September 30,

Designated as Hedging

4 unchanged sentences

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

Six Months Ended June 30,

Nine Months Ended September 30,

Not Designated as Hedging Instruments

4 unchanged sentences

Other income (expense), net

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(7) FAIR VALUE

6 unchanged sentences

This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

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.

The following presents information as of September 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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

1 unchanged sentence

An impairment charge is recorded when the cost of the investment exceeds its fair value and this condition is determined to be other-than-temporary.

As of June 30, 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 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.

As of September 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 LIBOR plus a credit spread as determined by the Company’s leverage ratio calculation (as defined in the Credit Agreement).

As of September 30, 2021 and December 31, 2020, the Company had $ 805.0 million and $ 385.0 million, respectively, of borrowings outstanding under the Credit Facility.

During the third 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.

1 unchanged sentence

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.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

As of September 30, 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 September 30, 2021 and December 31, 2020 (in thousands):

As of September 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 June 30, 2021 and December 31, 2020 (in thousands):

As of June 30, 2021

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

As of September 30, 2021

Fair Value Measurements Using

10 unchanged sentences

Redeemable noncontrolling interest

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of December 31, 2020

14 unchanged sentences

The deferred compensation liability represents the combined values of market investments against which participant accounts are tracked.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

8 unchanged sentences

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.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

September 30,

(8) INCOME TAXES

4 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 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.

As of September 30, 2021, the Company had $ 15.1 million of gross deferred tax assets (after a $ 26.3 million valuation allowance) and a net deferred tax asset of $ 9.5 million (after deferred tax liabilities of $ 5.6 million) related to the United States and international tax jurisdictions whose recoverability is dependent upon future profitability.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

The effective tax rate for the three and 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 effective tax rate for the three and nine months ended September 30, 2021 was 30.6 % and 21.9 %, respectively.

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

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 , the state of California for tax years 2017 through 2018 , New York City for tax years 2017 through 2019 , and the state of Florida for tax years 2017 through 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.

2 unchanged sentences

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

In the first and third quarters of 2021, changes to the valuation allowance were recorded in the amount of $ 2.4 million and $ 6.4 million, respectively, for assets that did not meet the “more-likely-than-not” standard.

The Company has been granted “Tax Holidays” as an incentive to attract foreign investment by the government of the Philippines.

1 unchanged sentence

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 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.

The aggregate effect on income tax expense for the three months ended September 30, 2021 and 2020 was approximately $ 0.5 million benefit and $ 1.1 million benefit, respectively, which had an impact on diluted net income per share of $ 0.01 and $ 0.02 , respectively.

The aggregate effect on income tax expense for the nine months ended September 30, 2021 and 2020 was approximately $ 4.2 million and $ 2.2 million benefit, respectively, which had an impact on diluted net income per share of $ 0.09 and $ 0.05 , respectively.

(9) RESTRUCTURING CHARGES AND IMPAIRMENT LOSSES

3 unchanged sentences

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 six months ended June 30, 2021 and 2020, respectively, is as follows (in thousands):

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Reduction in force

6 unchanged sentences

Change in estimates

Balance as of June 30, 2021

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Balance as of September 30, 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.

3 unchanged sentences

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 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.

During the first, second and third quarters of 2021, a total of $ 0.5 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 three months and thus is classified as current liabilities within Other accrued expenses in the Consolidated Balance Sheets.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Impairment Losses

4 unchanged sentences

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

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.

During the three and nine months ended September 30, 2021 the Company recognized impairment losses, net related to leasehold improvement assets and right of use lease assets of $( 0.3 ) million and $ 0.4 million, respectively, across the TTEC Digital and TTEC Engage segments.

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

On March 25, 2021, the Company entered into a Fifth Amendment to its Amended and Restated Credit Agreement and Amended (the “Credit Agreement”) 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 .

4 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”);

plus in each case a margin of 0 % to 0.875 % based on the Company’s net leverage ratio.

2 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 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.

As of September 30, 2021 and December 31, 2020, the Company had borrowings of $ 805.0 million and $ 385.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 747.9 million and $ 597.9 million for the nine months ended September 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.

1 unchanged sentence

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.

Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 390 million as of September 30, 2021.

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

Letters of Credit

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.

As of September 30, 2021, outstanding letters of credit under the Credit Facility totaled $ 2.6 million and primarily guaranteed workers’ compensation and other insurance related obligations.

As of September 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 and six months ended June 30, 2021 and 2020 are as follows (in thousands):

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

Location in Statements of

Three Months Ended June 30,

Three Months Ended September 30,

Comprehensive Income (Loss)

22 unchanged sentences

Location in Statements of

Six Months Ended June 30,

Nine Months Ended September 30,

Comprehensive Income (Loss)

24 unchanged sentences

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,

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

Three Months Ended September 30,

Finance lease - operating cash flows

4 unchanged sentences

New ROU assets - finance leases

Six Months Ended June 30,

Nine Months Ended September 30,

Finance lease - operating cash flows

4 unchanged sentences

New ROU assets - finance leases

June 30, 2021

September 30, 2021

December 31, 2020

3 unchanged sentences

Weighted average discount rate - operating leases

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):

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

Location in Balance Sheet

June 30, 2021

September 30, 2021

December 31, 2020

12 unchanged sentences

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

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

September 30, 2021

Total minimum lease payments

13 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 June 30, 2021 and December 31, 2020 are as follows (in thousands):

June 30, 2021

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

September 30, 2021

December 31, 2020

2 unchanged sentences

Deferred social security taxes

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(13) NONCONTROLLING INTEREST

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

Six Months Ended June 30,

Nine Months Ended September 30,

Noncontrolling interest, January 1

2 unchanged sentences

Foreign currency translation adjustments

Noncontrolling interest, June 30

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Noncontrolling interest, September 30

(14) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

5 unchanged sentences

Net current period other comprehensive income (loss)

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

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

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 June 30, 2021

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

For the Three Months Ended June 30,

For the Three Months Ended September 30,

Comprehensive Income

8 unchanged sentences

Net income (loss)

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Six Months Ended June 30,

For the Nine Months Ended September 30,

Comprehensive Income

10 unchanged sentences

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

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Shares used in basic earnings per share calculation

4 unchanged sentences

Shares used in dilutive earnings per share calculation

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 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.

1 unchanged sentence

Notes to Consolidated Financial Statements

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

For the nine months ended September 30, 2021 and 2020, there were RSUs of 78 thousand and 167 thousand, respectively, outstanding which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive.

(16) EQUITY-BASED COMPENSATION PLANS

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

During the three and nine months ended September 30, 2021 and 2020, the Company recognized total equity-based compensation expense of $ 4.6 million and $ 12.0 million and $ 3.5 million and $ 9.5 million, respectively.

Of this total compensation expenses, $ 2.0 million and $ 4.4 million were recognized in Cost of services and $ 2.6 million and $ 7.6 million were recognized in Selling, general and administrative during the three and nine months ended September 30, 2021, respectively.

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

Restricted Stock Unit Grants

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.

During the nine months ended September 30, 2021 and 2020, the Company granted 219,883 and 539,697 RSUs, respectively, to new and existing employees, which vest over four to five years .

The Company recognized compensation expense related to RSUs of $ 4.1 million and $ 10.0 million for the three and nine months ended September 30, 2021, respectively.

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

As of September 30, 2021, there was approximately $ 37.3 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 $ 0.5 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.

The Company recognized compensation expense related to PRSUs of $ 0.3 million and $ 0.8 million, respectively, for the three and nine months ended September 30, 2021.

The Company recognized compensation expense related to PRSUs of $ 0.4 million and $ 1.1 million, respectively, for the three and nine months ended September 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 and $ 1.0 million, respectively, for the three and six months ended June 30, 2021.

The Company recognized compensation expense related to PRSUs of $ 0.2 million and $ 1.2 million, respectively, for the three and nine months ended September 30, 2021.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

During 2021, 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 $1.2 million and $4.9 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 year 2023.

Fiscal year’s 2023 revenue and adjusted operating income will determine the award amount.

Expense for these awards will begin at the start of the requisite service period, beginning January 1, 2023.

(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 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.

During the nine months ended September 30, 2021 and 2020, the Company expensed $ 0.5 million and $ 0.3 million, respectively, to Avion and Airmax for services provided to the Company.

There was $ 50 thousand in payments due and outstanding to Avion and Airmax as of September 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 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.

During the nine months ended September 30, 2021 and 2020, the Company recorded revenue of $ 1.2 million and $ 2.4 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.

During the nine months ended September 30, 2021, the Company recorded revenue of $ 0.4 million in connection with services performed for Unisys.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

2 unchanged sentences

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 of this report and in Item 1A.

2 unchanged sentences

our ability to innovate and introduce technologies that are sufficiently disruptive to allow us to maintain and grow our market share;

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 the reliability of our information technology systems;

risks related to our information technology infrastructure’s cybersecurity in general, and criminal activity such as ransomware, other malware and data exfiltration or destruction in particular, which can impact our ability to consistently deliver uninterrupted service to our clients;

our dependence on third parties for our cloud solutions;

risks inherent in our transition to a work from home environment;

1 unchanged sentence

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 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;

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;

the risks related to legal and regulatory impact on our operations, including rapidly changing laws that regulate our and our clients’ business, such as data privacy and data protection laws, regulatory changes impacting our healthcare businesses, financial and public sector specific regulations, our ability to comply with these laws timely and cost effectively;

and the cost of wage and hour litigation in the United States;

the impact of the COVID-19 pandemic and post-pandemic economic and regulatory realities on our business and our clients’ business;

and risks inherent in our equity structure including our controlling shareholder risk, and Delaware choice of dispute resolution risks.

3 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