What changed in this filing

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Item 1. Financial Statements

2023-08-04 compared with 2023-05-05 · 250 added, 165 removed, 586 unchanged (41% of the section changed)

6 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance of $ 5,078 and $ 3,524 , respectively

Accounts receivable, net of allowance of $ 2,347 and $ 3,524

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, 2023 and December 31, 2022

zero shares outstanding as of June 30, 2023 and December 31, 2022

Common stock;

1 unchanged sentence

150,000,000 shares authorized;

47,253,110 and 47,224,074 shares outstanding as of March 31, 2023 and December 31, 2022, respectively

47,276,039 and 47,224,074 shares outstanding as of June 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

Treasury stock at cost;

34,799,143 and 34,828,179 shares as of March 31, 2023 and December 31, 2022, respectively

34,776,214 and 34,828,179 shares as of June 30, 2023 and December 31, 2022, 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 attributable to TTEC stockholders

Comprehensive income (loss) attributable to TTEC stockholders

Weighted average shares outstanding

5 unchanged sentences

(Amounts in thousands)

Three months ended March 31, 2022 and 2023

Three months ended June 30, 2022 and 2023

Stockholders’ Equity of the Company

3 unchanged sentences

Income (Loss)

Balance as of December 31, 2021

Balance as of March 31, 2022

Dividends to shareholders ($ 0.00 per common share)

5 unchanged sentences

Other, net of tax

Balance as of June 30, 2022

Stockholders’ Equity of the Company

Comprehensive

Noncontrolling

Paid-in Capital

Income (Loss)

Balance as of March 31, 2023

Dividends to shareholders ($ 0.00 per common share)

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, 2023

Six months ended June 30, 2022 and 2023

Stockholders’ Equity of the Company

4 unchanged sentences

Balance as of December 31, 2021

Dividends to shareholders ($ 0.50 per common share)

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, 2022

Stockholders’ Equity of the Company

Comprehensive

Noncontrolling

Paid-in Capital

Income (Loss)

Balance as of December 31, 2022

Noncontrolling interest adjustment due to buyout

7 unchanged sentences

Other, net of tax

Balance as of March 31, 2023

Balance as of June 30, 2023

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

Loss on disposal of assets

Impairment losses

Loss on dissolution of subsidiary

Impairment losses

Deferred income taxes

1 unchanged sentence

Equity-based compensation expense

(Gain) loss on foreign currency derivatives

Loss on foreign currency derivatives

Changes in assets and liabilities, net of acquisitions:

16 unchanged sentences

Tax payments related to issuance of restricted stock units

Net cash used in financing activities

Net cash (used in)/provided by financing activities

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

Decrease in cash, cash equivalents and restricted cash

(Decrease)/increase in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

6 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.

9 unchanged sentences

The Company helps clients improve their customer satisfaction while lowering their total cost to serve by combining innovative digital solutions with service capabilities that deliver a frictionless CX across numerous real-time digital and live interaction channels and different phases of the customer lifecycle.

TTEC’s 65,000 employees serve clients in the automotive, communication, financial services, national/federal and state and local governments, healthcare, logistics, media and entertainment, e-tail/retail, technology, and travel and transportation industries via operations in the United States, Australia, Belgium, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Germany, Greece, Honduras, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, Singapore, South Africa, Thailand, and the United Kingdom.

TTEC’s 63,900 employees serve clients in the automotive, communication, financial services, national/federal and state and local governments, healthcare, logistics, media and entertainment, e-tail/retail, technology, and travel and transportation industries via operations in the United States, Australia, Belgium, Brazil, Bulgaria, Canada, Colombia, Costa Rica, Egypt, Germany, Greece, Honduras, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, Singapore, South Africa, Thailand, and the United Kingdom.

The Company operates and reports its financial results of operation through two business segments:

10 unchanged sentences

Basis of Presentation

The Consolidated Financial Statements are comprised of the accounts of TTEC, its wholly owned subsidiaries, its 55 % equity owned subsidiary Percepta, LLC, its 70 % equity owned subsidiary First Call Resolution, LLC and its 70 % equity owned subsidiary Serendebyte, Inc.

The Consolidated Financial Statements are comprised of the accounts of TTEC, its wholly owned subsidiaries, its 55 % equity owned subsidiary Percepta, LLC, its 70 % equity owned subsidiary First Call Resolution, LLC through March 31, 2023 and then 100 % owned subsequently, and its 70 % equity owned subsidiary Serendebyte, Inc.

(see Note 2).

9 unchanged sentences

These unaudited Consolidated Financial Statements should be read in conjunction with the Company’s audited Consolidated Financial Statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.

Reclassifications

Certain prior year amounts have been reclassified to conform to the current year presentation.

Use of Estimates

3 unchanged sentences

Actual results may differ materially from these estimates under different assumptions or conditions.

Out -of-period Adjustment

The Consolidated Financial Statements for the three months ended June 30, 2023 include an adjustment of $ 13.8 million to other comprehensive income and deferred tax assets, to correct for an error identified by management during the preparation of the financial statements.

This adjustment is to reflect the deferred tax impact of currency translation adjustments, of which $ 0.5 million relates to the three months ended March 31, 2023, and the remaining $ 13.3 million relates to prior annual fiscal periods.

Management has determined that this error was not material to the historical financial statements in any individual period or in the aggregate and did not result in the previously issued financial statements being materially misstated.

The impact to the three and six month periods ended June 30, 2023 is not material.

As such, management recorded the correction as an out-of-period adjustment in the three months ended June 30, 2023.

Cash, Cash Equivalents and Restricted Cash

2 unchanged sentences

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

March 31, 2023

June 30, 2023

December 31, 2022

15 unchanged sentences

In addition, in January 2021, the FASB issued ASU 2021-01, “Reference Rate Reform – Scope,” which clarified the scope of ASC 848 relating to contract modifications.

The Company has adopted the standard effective April 1, 2023 and does not expect that the adoption of this guidance will have a material impact on the Company’s financial position, results of operations or cash flows.

The Company has adopted the standard effective April 1, 2023 and the adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.

(2) ACQUISITIONS AND DIVESTITURES

Pursuant to the Membership Interest Purchase Agreement of October 26, 2019 between Ortana Holdings, Inc.

and TTEC Services Corporation for the acquisition by TTEC of 70 % interest in First Call Resolution, LLC (“FCR” and “FCR MIPA”, respectively), Ortana Holdings exercised its put rights in January 2023, which required TTEC to acquire Ortana Holdings’ remaining 30 % interest in FCR.

The purchase price for the remaining 30% interest was determined based on the express provisions of the FCR MIPA and was based on FCR’s performance during 2022.

The buyout agreement was signed on April 4, 2023 and reflected a buyout purchase of $22.4 million.

In connection with the triggering of the option, as of March 31, 2023, the $ 22.4 million purchase price was reclassified from Redeemable noncontrolling interest to Accrued expenses and the remaining balance of $ 20.5 million was reclassified to Additional paid in capital.

In February 2023, a $ 9.2 million payment related to excess cash distribution was completed and in April 2023 the final payment of $ 22.4 million was completed.

Certain Assets of Faneuil

1 unchanged sentence

(“the Faneuil Transaction”).

The business is operated as part of the TTEC Engage segment and was fully consolidated into the financial statements of TTEC.

The acquired business is operated as part of the TTEC Engage segment and was fully consolidated into the financial statements of TTEC.

The Faneuil Transaction was recorded as a business combination under ASC 805, Business Combinations, with identifiable assets acquired and liabilities assumed recorded at their estimated fair values as of the acquisition date.

Total cash paid at acquisition was $ 142.4 million.

In addition, Faneuil granted to TTEC Government Solutions LLC a three-year call right and right of first offer to purchase certain other assets of Faneuil in its utilities and commercial healthcare verticals as well as certain proprietary technology.

The Faneuil Transaction includes two contingent payments anticipated to be paid in early 2024 which are based on the revenue and EBITDA performance of one contract and one potential contract.

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

Total cash paid at the time of acquisition was $ 142.4 million.

The Faneuil Transaction includes two contingent payments which were anticipated to be paid in early 2024 which are based on the revenue and EBITDA performance of one contract and one potential contract.

The fair value of the two contingent payments was estimated using a Monte Carlo model.

The model was based on current expected EBITDA performance for the two specific client programs, a discount rate of 7.6 % related to revenue and a discount rate of 19.3 % related to EBITDA, a volatility rate of 20 %, and an adjusted risk-free rate of 1.7 %.

The potential payments range from a minimum of zero to an unlimited maximum.

The potential payments ranged from a minimum of zero to an unlimited maximum.

Based on the model, a combined $ 8.8 million expected future payment was calculated and recorded as of the acquisition date.

2 unchanged sentences

During the first quarter of 2023, a $ 0.6 million net expense was recorded related to a fair value adjustment for the estimated contingent payment based on the timing of cash flows and market interest rate changes.

During the second quarter of 2023, an amendment to the agreement was signed which modified the contingent payment for a minimum payment of $7.4 million and a maximum payment of $10.4 million.

Based on this modification, an updated estimated EBITDA and the revised timing of cash flows, a $1.7 million expense was recorded as of June 30, 2023.

An initial payment of $7.4 million was completed in May 2023.

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

As of March 31, 2023, the contingent payment is accrued at $ 6.5 million and is included in Other long-term liabilities in the accompanying Consolidated Balance Sheets.

As of June 30, 2023, the contingent payment is accrued at $ 0.8 million and is included in Other long-term liabilities in the accompanying Consolidated Balance Sheets.

The Faneuil Transaction included a call option providing the right but not the obligation to purchase additional assets in the utilities and commercial healthcare verticals based on trailing twelve-month revenue plus an additional earn-out payment based on newly added contracts.

2 unchanged sentences

During the fourth quarter of 2022 and the first quarter of 2023, reductions in fair value of $ 52 thousand and $ 140 thousand, respectively, were recorded due to changes in estimated revenue, which were included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss).

As of March 31, 2023, the fair value is $ 78 thousand and is included in Other long-term assets in the accompanying Consolidated Balance Sheets.

During the second quarter of 2023, an amendment to the agreement was signed which cancelled the option to purchase the additional assets in certain verticals, and thus the remaining $ 78 thousand accrual was removed and included in Other income.

As of June 30, 2023, the fair value is zero.

The Faneuil Transaction included an indemnity escrow which was disbursed as a holdback payment on the acquisition date.

2 unchanged sentences

During the third and fourth quarters of 2022 and the first quarter of 2023, reductions in the fair value were calculated and a $ 4.4 million expense, a $ 0.2 million expense and a $ 2.5 million expense, respectively, were recorded related to fair value adjustments for the receivable based on current information reflecting a better outcome with the contract negotiations and lower anticipated IT and facilities spending.

During the second quarter of 2023, the payout value related to the IT and Facilities reimbursement was finalized at $ 1.3 million, and an expense of $ 1.9 million was recorded.

The payment was received by TTEC in May 2023 and as of June 30, 2023, the receivables have been reduced to zero on the Consolidated Balance Sheet.

The reductions in fair value related expenses were included in Other income (expense) in the Consolidated Statements of Comprehensive Income (Loss).

As of March 31, 2023, the fair value of the receivable is $ 3.2 million and is included in Other current assets 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 assets.

The significant assumptions utilized in calculating the fair value of the customer relationships intangible assets were the customer attrition rate, revenue growth rates, forecasted EBITDA, contributory asset charge, and the discount rate.

TTEC HOLDINGS, INC.

1 unchanged sentence

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 assets.

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

18 unchanged sentences

Financial Impact of Acquired Businesses

The acquired business purchased in 2022 noted above contributed revenues of $ 46.2 million and net income of $ 1.1 million to the Company for the three months ended March 31, 2023.

The unaudited proforma financial results for the three months ended March 31, 2022 combines the consolidated results of the Company and Faneuil assuming the acquisition had been completed on January 1, 2021.

The reported revenue and net income of $ 588.7 million and $ 33.4 million would have been $ 630.7 million and $ 36.8 million for the three months ended March 31, 2022, respectively, on an unaudited proforma basis.

The acquired business purchased in 2022 noted above contributed revenues of $ 46.7 million and net income of $ 2.8 million to the Company for the three months ended June 30, 2023 and revenues of $ 92.9 million and net income of $ 3.9 million to the Company for the six months ended June 30, 2023, respectively.

The unaudited proforma financial results for the three and six months ended June 30, 2022 combines the consolidated results of the Company and Faneuil assuming the acquisition had been completed on January 1, 2021.

The reported revenue and net income of $ 604.3 million and $ 25.2 million would have been $ 646.3 million and $ 28.6 million for the three months ended June 30, 2022, respectively, on an unaudited proforma basis.

The reported revenue and net income of $ 1,193.0 million and $ 58.6 million would have been $ 1,235.0 million and $ 62.0 million for the six months ended June 30, 2022, respectively, on an unaudited proforma basis.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Company did not have any material, nonrecurring proforma adjustments directly attributable to the business combination included in the reported proforma revenue earnings.

2 unchanged sentences

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

Subsequent Event

Pursuant to the Membership Interest Purchase Agreement of October 26, 2019 between Ortana Holdings, Inc.

and TTEC Services Corporation for the acquisition by TTEC of 70 % interest in First Call Resolution, LLC (“FCR MIPA”), Ortana Holdings exercised its put rights in January 2023, which required TTEC to acquire Ortana Holdings’ remaining 30 % interest in First Call Resolution, LLC.

The purchase price for the remaining 30% interest was determined based on the express provisions of the FCR MIPA, was based on First Call Resolution’s performance during 2022, and was finalized at $22.4 million.

The final agreement was signed on April 4, 2023.

In February 2023, a $ 9.2 million payment related to excess cash distribution was completed and in April 2023 the final payment of $ 22.4 million was completed.

(3) SEGMENT INFORMATION

13 unchanged sentences

The customer care, technology support, and order fulfillment 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

● Digitally Enabled Back Office and Specialty Services:

2 unchanged sentences

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Effective January 1, 2023, the Company completed a small reorganization of the internal reporting structure and one component from the TTEC Digital segment was reclassified and will now be included in the TTEC Engage segment.

1 unchanged sentence

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

Three Months Ended March 31, 2023

Three Months Ended March 31, 2022

Three Months Ended June 30, 2023

Three Months Ended June 30, 2022

Six months Ended June 30, 2023

Six Months Ended June 30, 2022

Three Months Ended

Six Months Ended

Capital Expenditures

March 31, 2023

December 31, 2022

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

June 30, 2023

December 31, 2022

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 / Canada

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 three months ended March 31, 2023 and 2022;

The Company had one client that contributed in excess of 10% of total revenue for the six months ended June 30, 2023;

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

This client contributed 10.0 % and 10.4 % of total revenue for the three months ended March 31, 2023 and 2022, 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.

To mitigate this risk, the Company has multiple contracts with these larger clients, where each individual contract is for an amount below the $100 million aggregate.

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

Based on currently available information, management does not believe significant credit risk existed as of March 31, 2023.

This client contributed 10.1 % and 10.5 % of total revenue for the six months ended June 30, 2023 and 2022, respectively.

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

To mitigate this risk, the Company’s business arrangements with these larger clients are structured as multiple contracts with different statements of work that are specific to a different line of business or service;

each of these contracts have different durations and renewal dates and a revenue opportunity below the $100 million aggregate.

Based on currently available information, management does not believe significant credit risk existed as of June 30, 2023.

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

Balance, end of period

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Accounts Receivable Factoring 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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The balances related to the Agreement are as follows (in thousands):

March 31, 2023

June 30, 2023

December 31, 2022

2 unchanged sentences

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, 2023 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, 2023 as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements.

Effective November 1, 2022, the Company amended the arrangement to modify the list of eligible clients whose accounts receivable may be sold pursuant to the Agreement, and to memorialize the transition from LIBOR to SOFR for discount calculation purposes.

On July 21, 2023, BMO Financial Group completed its acquisition of the Bank from PNB Bank Paribas.

The Agreement transitioned with the acquisition and TTEC has no reason to believe that the new owner of the Bank would not wish to continue its business arrangements with the Company.

Goodwill consisted of the following (in thousands):

2 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, 2023, the Company assessed whether any such indicators of impairment existed and concluded there were none.

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

With the change in reporting units, the Company performed a relative fair value valuation calculation to allocate a portion of the Company’s historical goodwill to this specific component, which was then reallocated from the TTEC Digital segment to the TTEC Engage segment.

During the quarter ended June 30, 2023, the Company assessed whether any such indicators of impairment existed and concluded there were none.

TTEC HOLDINGS, INC.

1 unchanged sentence

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, 2023, 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, 2023 and 2022 (in thousands and net of tax):

Three Months Ended March 31,

As of June 30, 2023, the Company has not experienced, nor does it anticipate, any issues related to derivative counterparty defaults.

The following table summarizes the aggregate unrealized net gain or loss in Accumulated other comprehensive income (loss) for the three and six months ended June 30, 2023 and 2022 (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, 2023 and December 31, 2022 are summarized as follows (amounts in thousands).

The Company’s foreign exchange cash flow hedging instruments as of June 30, 2023 and December 31, 2022 are summarized as follows (amounts in thousands).

All hedging instruments are forward contracts.

As of March 31, 2023

As of June 30, 2023

Canadian Dollar

1 unchanged sentence

Philippine Peso

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of December 31, 2022

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, 2023 and December 31, 2022.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

dollars on June 30, 2023 and December 31, 2022.

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 March 31, 2023 and December 31, 2022 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 92.5 million and $ 80.8 million, respectively.

As of June 30, 2023 and December 31, 2022 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 66.3 million and $ 80.8 million, respectively.

Derivative Valuation and Settlements

The Company’s derivatives as of March 31, 2023 and December 31, 2022 were as follows (in thousands):

March 31, 2023

The Company’s derivatives as of June 30, 2023 and December 31, 2022 were as follows (in thousands):

June 30, 2023

Not Designated

7 unchanged sentences

Total fair value of derivatives, net

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2022

8 unchanged sentences

Total fair value of derivatives, net

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended June 30, 2023 and 2022 were as follows (in thousands):

Three 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:

Three 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.

1 unchanged sentence

Notes to Consolidated Financial Statements

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended March 31, 2023 and 2022 were as follows (in thousands):

Three Months Ended March 31,

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the six months ended June 30, 2023 and 2022 were as follows (in thousands):

Six Months Ended June 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 March 31,

Six Months Ended June 30,

Not Designated as Hedging Instruments

12 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 March 31, 2023 and December 31, 2022 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, 2023 and December 31, 2022 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.

5 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.

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 March 31, 2023 and December 31, 2022, the Company had $ 930.0 million and $ 960.0 million, respectively, of borrowings outstanding under the Credit Facility.

During the first quarter of 2023 outstanding borrowings accrued interest at an average rate of 6.0 % per annum, excluding unused commitment fees.

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

As of June 30, 2023 and December 31, 2022, the Company had $ 915.0 million and $ 960.0 million, respectively, of borrowings outstanding under the Credit Facility.

During the second quarter of 2023 outstanding borrowings accrued interest at an average rate of 6.6 % 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 March 31, 2023, 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, 2023 and December 31, 2022 (in thousands):

As of March 31, 2023

As of June 30, 2023, credit risk did not materially change the fair value of the Company’s derivative contracts.

The following is a summary of the Company’s fair value measurements for its net derivative assets (liabilities) as of June 30, 2023 and December 31, 2022 (in thousands):

As of June 30, 2023

Fair Value Measurements Using

18 unchanged sentences

Notes to Consolidated Financial Statements

The following is a summary of the Company’s fair value measurements as of March 31, 2023 and December 31, 2022 (in thousands):

As of March 31, 2023

The following is a summary of the Company’s fair value measurements as of June 30, 2023 and December 31, 2022 (in thousands):

As of June 30, 2023

Fair Value Measurements Using

28 unchanged sentences

The deferred compensation asset represents the combined fair value of all the funds based on quoted values and market observable inputs.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Contingent Consideration - The Company recorded contingent consideration payable related to the acquisition of Faneuil that closed in 2022.

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

During the third and fourth quarters of 2022, and the first quarter of 2023, fair value adjustments of a $ 2.4 million benefit, a $ 0.5 million benefit, and a $ 0.6 million expense, respectively, were recorded related to fair value adjustments of the estimated contingent payments associated with the Faneuil acquisition based on updated discount factors, the passage of time, and EBITDA estimates for one contract and a complete reduction for the second contract as it was not awarded to the Company.

During the third and fourth quarters of 2022, and the first and second quarters of 2023, fair value adjustments of a $ 2.4 million benefit, a $ 0.5 million benefit, a $ 0.6 million expense and $ 1.7 million expense, respectively, were recorded related to fair value adjustments of the estimated contingent payments associated with the Faneuil acquisition based on updated discount factors, the passage of time, updated EBITDA estimates and a modification to the agreement (see Note 2) for one contract, and a complete reduction for the second contract as it was not awarded to the Company.

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

Contingent Receivables – The Company recorded a contingent receivable related to the Faneuil acquisition.

During the third and fourth quarters of 2022, and the first quarter of 2023, the Company recorded fair value adjustments for the receivable based on current information which caused the receivable to decrease, and a $ 4.4 million expense, a $ 0.2 million expense, and a $ 2.5 million expense, respectively, were included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss).

During the third and fourth quarters of 2022, and the first and second quarters of 2023, the Company recorded fair value adjustments for the receivable based on current information which caused the receivable to decrease, and a $ 4.4 million expense, a $ 0.2 million expense, a $ 2.5 million expense, and a $ 1.9 million expense, respectively, were included in Other income (expense), net in the Consolidated Statements of Comprehensive Income (Loss).

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

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(8) IMPAIRMENT OF ASSETS

During each of the periods presented, the Company evaluated the recoverability of its leasehold improvement assets at certain customer engagement centers as well as all internally developed software projects.

During each of the periods presented, the Company evaluated the recoverability of its leasehold improvement assets at certain customer engagement centers, building and land assets, as well as all internally developed software projects.

An asset group is considered to be impaired when the anticipated undiscounted future cash flows of its asset group is estimated to be less than the asset group’s carrying value.

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

During the three months ended March 31, 2023 and 2022, the Company recognized impairment losses, net related to leasehold improvements assets, right of use lease assets, internally developed software and certain computer equipment of $ 4.3 million and $ 1.1 million, respectively, across the TTEC Digital and TTEC Engage segments.

During the three and six months ended June 30, 2023, the Company recognized impairment losses, net related to leasehold improvements assets, right of use lease assets, internally developed software and certain computer equipment of $ 2.7 million and $ 7.0 million, respectively, across the TTEC Digital and TTEC Engage segments.

TTEC HOLDINGS, INC.

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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, 2023, the Company had $ 21.4 million of net deferred tax assets (after a $ 27.2 million valuation allowance) and a net deferred tax asset of $ 17.7 million (after deferred tax liabilities of $ 3.7 million) related to the United States and international tax jurisdictions whose recoverability is dependent upon future profitability.

The effective tax rate for the three months ended March 31, 2023 and 2022 was 27.5 % and 17.5 %, respectively.

As of June 30, 2023, the Company had $ 39.7 million of net deferred tax assets (after a $ 31.0 million valuation allowance) and a net deferred tax asset of $ 36.3 million (after deferred tax liabilities of $ 3.5 million) related to the United States and international tax jurisdictions whose recoverability is dependent upon future profitability.

The effective tax rate for the three and six months ended June 30, 2023 was 61.9 % and 36.2 %, respectively.

The effective tax rate for the three and six months ended June 30, 2022 was 20.2 % and 18.7 %, 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 , the Philippines for tax year 2020 , the state of California in the United States for tax years 2017 and 2018 , and India for tax years 2017 through 2020 .

Although the outcome of examinations by taxing authorities are always uncertain, it is the opinion of management that the resolution of these audits will not have a material effect on the Company’s Consolidated Financial Statements.

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In the first, second and third quarters of 2022, $ 1.3 million, $ 0.6 million and $ 2.5 million, respectively, were released from the valuation allowance for assets that are expected to be recognized in the future.

During the first quarter of 2023, a $ 1.3 million valuation was recorded for assets that are not expected to be recovered in future periods.

During the first and second quarters of 2023, a $ 1.3 million and a $ 3.1 million valuation allowance were recorded, respectively, for assets that are not expected to be recovered in future periods.

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

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These incentives have varying benefit year over year and expire at various times beginning in 2030.

The aggregate benefit to income tax expense for the three months ended March 31, 2023 and 2022 was approximately $ 0.7 million and $ 0.9 million, respectively, which had an impact on diluted net income per share of $ 0.01 and $ 0.02 , respectively.

The aggregate benefit to income tax expense for the three months ended June 30, 2023 and 2022 was approximately $ 0.4 million and $ 0.0 million, respectively, which had an impact on diluted net income per share of $ 0.01 and $ 0.00 , respectively.

The aggregate benefit to income tax expense for the six months ended June 30, 2023 and 2022 was approximately $ 1.1 million and $ 1.0 million, respectively, which had an impact on diluted net income per share of $ 0.02 and $ 0.02 , respectively.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(10) COMMITMENTS AND CONTINGENCIES

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The Credit Facility matures on November 23, 2026.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

On April 3, 2023, the Company entered into a Seventh Amendment to the Credit Agreement which replaces the use of LIBOR with Spread Adjusted SOFR as of the date of the amendment, thus will affect the interest rates paid for a portion of the Credit Facility starting in the second quarter of 2023.

On April 3, 2023, the Company entered into a Seventh Amendment to the Credit Agreement which replaces the use of LIBOR with SOFR as of the date of the amendment, thus will affect the interest rates paid for a portion of the Credit Facility starting in the second quarter of 2023.

The maximum commitment under the Credit Facility is $ 1.5 billion in the aggregate, if certain conditions are satisfied.

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The Credit Agreement also permits the utilization of up to $100 million of limits within the Credit Facility for letters of credit to be used in the business.

Base rate loans bear interest at a rate equal to the greatest of (i) prime rate, (ii) the federal funds rate plus 0.50% , and (iii) 1.00 % in excess of the one month LIBOR;

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

Eurodollar loans bear interest at LIBOR plus a margin of 1.0 % to 1.875 % based on the Company’s net leverage ratio.

Alternate currency loans bear interest at rates applicable to their respective currencies.

Letter of credit fees are one eighth of 1% of the stated amount of the letter of credit on the date of issuance, renewal or amendment, plus an annual fee equal to the borrowing margin for Eurodollar loans.

As defined in the Credit Agreement, base rate loans bear interest at a rate equal to the highest of (a) the prime rate, (b) the federal funds rate plus 0.50% , or (c) SOFR in effect on such day plus 1.0 %.

Base rate loans shall be based on the base rate, plus the applicable credit margin which ranges from 0 % to 0.875 % based on the Company’s net leverage ratio.

SOFR loans bear interest at a rate equal to the applicable spread adjusted SOFR plus applicable credit margin which ranges from 1.0 % to 1.875 % based on the Company’s net leverage ratio.

Alternative currency loans (not denominated in U.S.

Dollars) bear interest at rates applicable to their respective currencies.

Letter of credit fees are one eighth of 1% of the stated amount of the letter of credit on the date of issuance, renewal or amendment, plus an annual fee equal to the borrowing margin for SOFR loans.

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, 2023 and December 31, 2022, the Company had borrowings of $ 930.0 million and $ 960.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 1,061.9 million and $ 917.8 million for the three months ended March 31, 2023 and 2022, respectively.

Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 335 million as of March 31, 2023.

As of March 31, 2023, the Company was in compliance with all covenants and conditions under its Credit Agreement.

As of June 30, 2023 and December 31, 2022, the Company had borrowings of $ 915.0 million and $ 960.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 1,057.7 million and $ 966.3 million for the six months ended June 30, 2023 and 2022, respectively.

Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 265 million as of June 30, 2023.

As of June 30, 2023, the Company was in compliance with all covenants and conditions under its Credit Agreement.

Letters of Credit

As of March 31, 2023, outstanding letters of credit under the Credit Facility totaled $ 0.2 million and primarily guaranteed workers’ compensation and other insurance related obligations.

As of March 31, 2023, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $ 0.3 million.

As of June 30, 2023, outstanding letters of credit under the Credit Facility totaled $ 0.2 million and primarily guaranteed workers’ compensation and other insurance related obligations.

As of June 30, 2023, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $ 0.3 million.

Indebtedness under the Credit Agreement is guaranteed by certain of the Company’s present and future domestic subsidiaries.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Legal Proceedings

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Based on currently available information and advice received from counsel, the Company believes that the disposition or ultimate resolution of any current legal proceedings, except as otherwise specifically reserved for in its financial statements, will not have a material adverse effect on the Company’s financial position, cash flows or results of operations.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(11) DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS

Revenue recognized for the three months ended March 31, 2023 from amounts included in deferred revenue as of December 31, 2022 was $ 76.2 million.

Revenue recognized for the three months ended March 31, 2022 from amounts included in deferred revenue as of December 31, 2021 was $ 78.2 million.

Revenue recognized for the six months ended June 30, 2023 from amounts included in deferred revenue as of December 31, 2022 was $ 56.1 million.

Revenue recognized for the six months ended June 30, 2022 from amounts included in deferred revenue as of December 31, 2021 was $ 134.8 million.

Remaining performance obligations (RPO) represent the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods.

The Company’s RPO excludes performance obligations from on-demand arrangements as there are no minimum purchase commitments associated with these arrangements, and certain time and materials contracts that are billed in arrears.

As of March 31, 2023, the Company’s RPO was $ 301.5 million, which will be delivered and recognized within the next five year s.

As of June 30, 2023, the Company’s RPO was $ 326.5 million, which will be delivered and recognized within the next five year s.

However, the amount and timing of revenue recognition are generally driven by customer consumption, which can extend beyond the original contract term in cases where customers are permitted to roll over unused capacity to future periods, generally upon the purchase of additional capacity at renewal.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(12) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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Net current period other comprehensive income (loss)

Accumulated other comprehensive income (loss) at March 31, 2022

Accumulated other comprehensive income (loss) at June 30, 2022

Accumulated other comprehensive income (loss) at December 31, 2022

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Net current period other comprehensive income (loss)

Accumulated other comprehensive income (loss) at March 31, 2023

Accumulated other comprehensive income (loss) at June 30, 2023

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,

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)

TTEC HOLDINGS, INC.

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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

For the Six Months Ended June 30,

Comprehensive Income

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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

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Shares used in dilutive earnings per share calculation

For the three months ended March 31, 2023 and 2022, there were Restricted Stock Units (“RSUs”) of 463 thousand and 193 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, 2023 and 2022, there were Restricted Stock Units (“RSUs”) of 958 thousand and 281 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, 2023 and 2022, there were RSUs of 902 thousand and 239 thousand, respectively, outstanding which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive.

(14) 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.

The following table presents the total equity-based compensation expense (stock options and RSUs) for the three months ended March 31, 2023 and 2022 (in thousands):

Three Months Ended March 31,

The following tables present the total equity-based compensation expense (stock options and RSUs) for the three and six months ended June 30, 2023 and 2022 (in thousands):

Three Months Ended June 30,

Equity-based compensation expense recognized in Cost of services

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Notes to Consolidated Financial Statements

Six Months Ended June 30,

Equity-based compensation expense recognized in Cost of services

Equity-based compensation expense recognized in Selling, general and administrative

Total equity-based compensation expense

Restricted Stock Unit Grants

During the three months ended March 31, 2023 and 2022, the Company granted 93,772 and 20,643 RSUs, respectively, to new and existing employees, which vest over four to five years .

The Company recognized compensation expense related to RSUs of $ 3.9 million and $3.6 million for the three months ended March 31, 2023 and 2022, respectively.

As of March 31, 2023, there was approximately $ 39.7 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, 2023 and 2022, the Company granted 547,254 and 155,897 RSUs, respectively, to new and existing employees, which vest over four to five years .

The Company recognized compensation expense related to RSUs of $ 5.5 million and $ 9.3 million for the three and six months ended June 30, 2023, respectively.

The Company recognized compensation expense related to RSUs of $ 3.8 million and $ 7.4 million for the three and six months ended June 30, 2022, respectively.

As of June 30, 2023, there was approximately $ 46.3 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

During 2019, the Company awarded performance restricted stock units (“PRSUs”) that were subject to service and performance vesting conditions.

If defined minimum targets were met, the annual value of the PRSUs issued would be between $ 0.4 million and $ 1.4 million and vest immediately.

If the defined minimum targets were not met, then no shares would be issued.

The award amounts were based on the Company’s annual adjusted operating income for the fiscal years 2019, 2020 and 2021.

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

The Company recognized compensation expense related to the 2019 PRSUs of zero for the three months ended March 31, 2022.

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

During 2020, the Company awarded Performance Restricted Stock Units (“PRSUs“) that are subject to service and performance vesting conditions.

If defined minimum targets are met, the annual value of the PRSUs issued will be between $ 0.2 million and $ 2.0 million and vest immediately.

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

The Company recognized compensation expense related to the 2020 PRSUs of $ 0.1 million and $0.4 million, respectively, for the three months ended March 31, 2023 and 2022

The Company recognized compensation expense related to the 2020 PRSUs of $ 0.0 million and $0.1 million, respectively, for the three and six months ended June 30, 2023.

The Company recognized compensation expense related to the 2020 PRSUs of $0.4 million and $0.5 million, respectively, for the three and six months ended June 30, 2022.

During 2021, the Company awarded PRSUs that are subject to service and performance vesting conditions.

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The number of shares that will be awarded will be based on the Company’s annual revenue and adjusted operating income for the fiscal year 2023.

The Company recognized compensation expense related to the 2021 PRSUs of $ 0.2 million for the three months ended March 31, 2023.

The Company recognized compensation expense related to the 2021 PRSUs of $ 0.2 million and $0.4 million for the three and six months ended June 30, 2023.

During 2022, the Company made awards of two different PRSU programs that are subject to service and performance vesting conditions:

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Expense for these awards will begin at the start of the requisite service period, beginning January 1, 2024 and January 1, 2025, respectively.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

During 2023, the Company awarded PRSUs that are subject to service and performance vesting conditions.

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Expense for these awards will begin at the start of the requisite service period, beginning January 1, 2025.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(15) RELATED PARTY TRANSACTIONS

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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, 2023 and 2022, the Company expensed $ 0.3 million and $ 0.1 million, respectively, to Avion and Airmax for services provided to the Company.

There was $ 143 thousand in payments due and outstanding to Avion and Airmax as of March 31, 2023.

During the six months ended June 30, 2023 and 2022, the Company expensed $ 0.7 million and $ 0.3 million, respectively, to Avion and Airmax for services provided to the Company.

There was $ 276 thousand in payments due and outstanding to Avion and Airmax as of June 30, 2023.

Michelle Swanback, President of the Company, is a member of the board of directors of WTW (NYSE:

WTW) (fka “Willis Towers Watson”), that provides compensation consulting and insurance brokerage services to the Company.

During the three months ended March 31, 2023 and 2022, the Company expensed $ 0.8 million and $ 0.8 million, respectively, for these services.

During the six months ended June 30, 2023 and 2022, the Company expensed $ 1.8 million and $ 1.5 million, respectively, for these services.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

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Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2022.

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, including the effective adoption of artificial intelligence into our solutions;

risks that may arise in connection with events outside of our control, such as macroeconomic conditions, geopolitical tensions, and outbreaks of infectious diseases;

risks inherent in a disruption of our information technology systems, our technology infrastructure’s cybersecurity in general, and cyber-related criminal activity such as ransomware, other malware and data breach in particular, which can impact our ability to consistently deliver uninterrupted service to our clients and may result in government enforcement actions, regulatory investigations, fines, penalties, and private legal actions;

risks inherent in the delivery of client services by employees working from home;

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;

our reliance on a relatively small number of clients to generate the majority of our revenue and our reliance on technology partners to generate a large portion of TTEC Digital’s revenue;

the risks related to legal and regulatory impact on our operations, including rapidly changing and at times inconsistent 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;

the cost of wage and hour litigation and other class action litigation in the United States;

the risk related to our international operations including the stress that geographic expansion may have on our business and the impacts if we are unable to expand geographically to meet our clients’ demand;

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 in a competitive market;

our ability to innovate and introduce disruptive technologies that would allow us to maintain and grow our market share (e.g., effective adoption of artificial intelligence into our solutions);

risks that may arise in connection with events outside of our control (macroeconomic conditions, geopolitical tensions, outbreaks of infectious diseases);

risks inherent in a disruption and cybersecurity of our information technology systems, including cybersecurity criminal activity, which can impact our ability to consistently deliver uninterrupted service to our clients or unauthorized access to data, any of which may result in government investigations and enforcement actions, and private legal actions;

risks inherent in the delivery of services by employees working from home;

our ability to attract and retain qualified personnel at a price point that we can afford and our clients are willing to pay;

our M&A activity, including our ability to properly integrate acquired businesses;

our reliance on a relatively small number of TTEC Engage clients to generate the majority of our revenue and our reliance on technology partners to generate a large portion of TTEC Digital’s revenue;

the changes in laws and regulations that impact our and our clients’ businesses, including the rapidly changing data privacy and data protection laws, healthcare business regulations, financial and public sector specific regulations;

the cost of labor and data privacy litigation and other class action litigation;

the risks related to our international operations including the stress that geographic expansion may have on our business, the impact if we are unable to expand geographically to meet our clients’ demand;

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

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

What changed 10-Q

Item 1. Financial Statements