What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2023-11-08 compared with 2023-08-04 · 140 added, 128 removed, 708 unchanged (27% of the section changed)

4 unchanged sentences

(Amounts in thousands, except share amounts)

September 30,

Current assets

10 unchanged sentences

Other long-term assets

Income and other tax receivables, long-term

Total long-term assets

23 unchanged sentences

10,000,000 shares authorized;

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

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

Common stock;

1 unchanged sentence

150,000,000 shares authorized;

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

47,418,697 and 47,224,074 shares outstanding as of September 30, 2023 and December 31, 2022, respectively

Additional paid-in capital

Treasury stock at cost;

34,776,214 and 34,828,179 shares as of June 30, 2023 and December 31, 2022, respectively

34,633,556 and 34,828,179 shares as of September 30, 2023 and December 31, 2022, 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

14 unchanged sentences

Net income attributable to noncontrolling interest

Net income attributable to TTEC stockholders

Net income (loss) attributable to TTEC stockholders

Other comprehensive income (loss)

8 unchanged sentences

Weighted average shares outstanding

Net income per share attributable to TTEC stockholders

Net income (loss) per share attributable to TTEC stockholders

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

3 unchanged sentences

(Amounts in thousands)

Three months ended June 30, 2022 and 2023

Three months ended September 30, 2022 and 2023

Stockholders’ Equity of the Company

3 unchanged sentences

Income (Loss)

Balance as of March 31, 2022

Balance as of June 30, 2022

Dividends to shareholders ($ 0.52 per common share)

5 unchanged sentences

Other, net of tax

Balance as of June 30, 2022

Balance as of September 30, 2022

Stockholders’ Equity of the Company

3 unchanged sentences

Income (Loss)

Balance as of March 31, 2023

Balance as of June 30, 2023

Dividends to shareholders ($ 0.52 per common share)

5 unchanged sentences

Other, net of tax

Balance as of June 30, 2023

Six months ended June 30, 2022 and 2023

Balance as of September 30, 2023

Nine months ended September 30, 2022 and 2023

Stockholders’ Equity of the Company

11 unchanged sentences

Other, net of tax

Balance as of June 30, 2022

Balance as of September 30, 2022

Stockholders’ Equity of the Company

13 unchanged sentences

Other, net of tax

Balance as of June 30, 2023

Balance as of September 30, 2023

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

3 unchanged sentences

(Amounts in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities

24 unchanged sentences

Cash flows from financing activities

Net proceeds (borrowings) from line of credit

Proceeds from/(repayments of) line of credit, net

Payments on other debt

14 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 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.

TTEC’s 64,400 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, India, Ireland, Mexico, the Netherlands, New Zealand, the Philippines, Poland, South Africa, Thailand, and the United Kingdom.

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

28 unchanged sentences

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.

The Consolidated Financial Statements for the three months ended June 30, 2023 included 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 was to reflect the deferred tax impact of currency translation adjustments, of which $ 0.5 million related to the three months ended March 31, 2023, and the remaining $ 13.3 million related 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.

2 unchanged sentences

Cash, Cash Equivalents and Restricted Cash

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

Cash and cash equivalents consist of cash, primarily held in interest-bearing investments, and liquid short-term investments, which have original maturities of three months or less.

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

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

June 30, 2023

September 30, 2023

December 31, 2022

11 unchanged sentences

Recently Adopted Accounting Pronouncements

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 the London Interbank Offered Rate (”LIBOR”).

1 unchanged sentence

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 the adoption of this guidance did not have a material impact on the Company’s financial position, results of operations or cash flows.

The Company 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

10 unchanged sentences

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

1 unchanged sentence

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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

8 unchanged sentences

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

During the third quarter of 2023, a $0.1 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.

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

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.

As of September 30, 2023, the contingent payment is accrued at $ 0.9 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.

3 unchanged sentences

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.

As of September 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.

3 unchanged sentences

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 payment was received by TTEC in May 2023 and as of June 30, 2023, the receivables were 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).

24 unchanged sentences

Financial Impact of Acquired Businesses

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.

The acquired business purchased in 2022 noted above contributed revenues of $ 45.3 million and net income of $ 0.4 million to the Company for the three months ended September 30, 2023, and revenues of $ 138.2 million and net income of $ 4.3 million to the Company for the nine months ended September 30, 2023.

The unaudited proforma financial results for the three and nine months ended September 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 $ 592.5 million and $ 22.2 million would have been $ 592.5 million and $ 22.2 million for the three months ended September 30, 2022, respectively, on an unaudited proforma basis.

The reported revenue and net income of $ 1,785.4 million and $ 80.9 million would have been $ 1,827.4 million and $ 84.3 million for the nine months ended September 30, 2022, respectively, on an unaudited proforma basis.

TTEC HOLDINGS, INC.

30 unchanged sentences

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

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

Three Months Ended September 30, 2023

Three Months Ended September 30, 2022

Nine months Ended September 30, 2023

Nine Months Ended September 30, 2022

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

June 30, 2023

Three Months Ended

Nine Months Ended

September 30,

Capital Expenditures

September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 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 six months ended June 30, 2023;

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

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

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

This client contributed 10.1 % and 10.5 % of total revenue for the nine months ended September 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.

2 unchanged sentences

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 whose financial stability or payment practices raise concern.

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

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

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

7 unchanged sentences

Accounts Receivable Factoring Agreement

The Company is party to an Uncommitted Receivables Purchase Agreement (“Agreement”) with Bank of the West (“Bank”), whereby from time-to-time the Company may elect to sell, on a revolving basis, U.S.

The Company is party to an Uncommitted Receivables Purchase Agreement (“Agreement”) with BMO Bank, N.A.

(“Bank”), whereby from time-to-time the Company may elect to sell, on a revolving basis, U.S.

accounts receivables of certain clients at a discount to the Bank for cash on a limited recourse basis.

5 unchanged sentences

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

June 30, 2023

September 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 June 30, 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 September 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.

3 unchanged sentences

Acquisitions /

September 30,

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

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

TTEC HOLDINGS, INC.

11 unchanged sentences

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

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):

As of September 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 nine months ended September 30, 2023 and 2022 (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, 2023 and December 31, 2022 are summarized as follows (amounts in thousands).

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

All hedging instruments are forward contracts.

As of June 30, 2023

As of September 30, 2023

Canadian Dollar

December 2023

September 2024

Philippine Peso

6 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, 2023 and December 31, 2022.

dollars on September 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 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.

As of September 30, 2023 and December 31, 2022 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 76.4 million and $ 80.8 million, respectively.

Derivative Valuation and Settlements

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

June 30, 2023

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

September 30, 2023

Not Designated

20 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,

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the three months ended September 30, 2023 and 2022 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

7 unchanged sentences

Notes to Consolidated Financial Statements

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,

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the nine months ended September 30, 2023 and 2022 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

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 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.

The following presents information as of September 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.

6 unchanged sentences

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.

As of September 30, 2023 and December 31, 2022, the Company had $964.0 million and $ 960.0 million, respectively, of borrowings outstanding under the Credit Facility.

During the third quarter of 2023 outstanding borrowings accrued interest at an average rate of 6.9 % 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, 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

As of September 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 September 30, 2023 and December 31, 2022 (in thousands):

As of September 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 June 30, 2023 and December 31, 2022 (in thousands):

As of June 30, 2023

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

As of September 30, 2023

Fair Value Measurements Using

35 unchanged sentences

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.

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.

During the third and fourth quarters of 2022, and the first, second and third quarters of 2023, fair value adjustments of a $ 2.4 million benefit, a $ 0.5 million benefit, $ 0.6 million expense, $ 1.7 million expense and $ 0.1 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).

2 unchanged sentences

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

September 30,

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

September 30,

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(8) IMPAIRMENT OF ASSETS

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, 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.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

During the three and nine months ended September 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 $ 4.1 million and $ 11.1 million, respectively, across the TTEC Digital and TTEC Engage segments.

(9) 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, 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.

As of September 30, 2023, the Company had $ 44.5 million of net deferred tax assets (after a $ 34.0 million valuation allowance) and a net deferred tax asset of $ 41.2 million (after deferred tax liabilities of $ 3.3 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 nine months ended September 30, 2023 was 74.7 % and 42.2 %, respectively.

The effective tax rate for the three and nine months ended September 30, 2022 was 15.2 % and 17.7 %, respectively.

The Company’s U.S.

4 unchanged sentences

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 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.

During the first, second and third quarters of 2023, a $ 1.3 million, a $ 3.1 million and a $ 4.4 million valuation allowance were recorded, respectively, for assets that are not expected to be recovered in future periods.

Additionally, during the third quarter 2023, a valuation allowance in the amount of $ 1.7 million was released for assets now expected to be recovered in future periods.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

2 unchanged sentences

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 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

The aggregate benefit to income tax expense for the three months ended September 30, 2023 and 2022 was approximately $ 0.8 million and $ 0.3 million, respectively, which had an impact on diluted net income per share of $ 0.02 and $ 0.01 , respectively.

The aggregate benefit to income tax expense for the nine months ended September 30, 2023 and 2022 was approximately $ 1.8 million and $ 1.3 million, respectively, which had an impact on diluted net income per share of $ 0.04 and $ 0.03 , respectively.

(10) COMMITMENTS AND CONTINGENCIES

14 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 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 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 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.

1 unchanged sentence

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 September 30, 2023 and December 31, 2022, the Company had borrowings of $ 964.0 million and $ 960.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 1,057.6 million and $ 1,023.6 million for the nine months ended September 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 $ 215 million as of September 30, 2023.

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

Letters of Credit

As of September 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 September 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.

Legal Proceedings

4 unchanged sentences

(11) DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS

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.

Revenue recognized for the nine months ended September 30, 2023 from amounts included in deferred revenue as of December 31, 2022 was $ 230.0 million.

Revenue recognized for the nine months ended September 30, 2022 from amounts included in deferred revenue as of December 31, 2021 was $ 196.5 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 June 30, 2023, the Company’s RPO was $ 326.5 million, which will be delivered and recognized within the next five year s.

As of September 30, 2023, the Company’s RPO was $ 337.0 million, which will be delivered and recognized within the next nine 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.

9 unchanged sentences

Net current period other comprehensive income (loss)

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

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

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

2 unchanged sentences

Net current period other comprehensive income (loss)

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

Accumulated other comprehensive income (loss) at September 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,

For the Three Months Ended September 30,

Comprehensive Income

11 unchanged sentences

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, 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.

For the three months ended September 30, 2023 and 2022, there were Restricted Stock Units (“RSUs”) of 950 thousand and 542 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 nine months ended September 30, 2023 and 2022, there were RSUs of 992 thousand and 377 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 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,

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

Three Months Ended September 30,

Equity-based compensation expense recognized in Cost of services

4 unchanged sentences

Notes to Consolidated Financial Statements

Six Months Ended June 30,

Nine Months Ended September 30,

Equity-based compensation expense recognized in Cost of services

2 unchanged sentences

Restricted Stock Unit Grants

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.

During the nine months ended September 30, 2023 and 2022, the Company granted 587,490 and 365,515 RSUs, respectively, to new and existing employees, which vest over four to five years .

The Company recognized compensation expense related to RSUs of $ 6.5 million and $ 15.8 million for the three and nine months ended September 30, 2023, respectively.

The Company recognized compensation expense related to RSUs of $ 5.0 million and $ 12.4 million for the three and nine months ended September 30, 2022, respectively.

As of September 30, 2023, there was approximately $ 41.2 million of total unrecognized compensation cost (including the impact of expected forfeitures) related to RSUs granted under the Company’s equity plans.

Performance Based Restricted Stock Unit Grants

4 unchanged sentences

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

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.

The Company recognized compensation expense related to the 2020 PRSUs of $ 0.0 million and $0.1 million, respectively, for the three and nine months ended September 30, 2023, The Company recognized compensation expense related to the 2020 PRSUs of $0.3 million and $0.8 million, respectively, for the three and nine months ended September 30, 2022.

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

2 unchanged sentences

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 and $0.4 million for the three and six months ended June 30, 2023.

The Company recognized compensation expense related to the 2021 PRSUs of $ 0.1 million and $0.5 million for the three and nine months ended September 30, 2023, respectively.

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

3 unchanged sentences

The number of shares that will be awarded will be based on the Company’s annual revenue and adjusted EBITDA for the fiscal year 2024 .

F or the one-time stretch financial goals PRSUs, if defined minimum targets at TTEC Engage and TTEC Digital business segments’ levels are met, the number of shares of PRSUs issued will be between 0.0 million shares and 0.5 million shares and will vest immediately in March 2026.

For the one-time stretch financial goals PRSUs, if defined minimum targets at TTEC Engage and TTEC Digital business segments’ levels are met, the number of shares of PRSUs issued will be between 0.0 million shares and 0.5 million shares and will vest immediately in March 2026.

If the defined minimum targets are not met, then no shares will be issued.

13 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, 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.

During the nine months ended September 30, 2023 and 2022, the Company expensed $ 0.8 million and $ 0.4 million, respectively, to Avion and Airmax for services provided to the Company.

There was $ 104 thousand in payments due and outstanding to Avion and Airmax as of September 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 six months ended June 30, 2023 and 2022, the Company expensed $ 1.8 million and $ 1.5 million, respectively, for these services.

During the nine months ended September 30, 2023 and 2022, the Company expensed $ 2.8 million and $ 2.2 million, respectively, for these services.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

8 unchanged sentences

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 that may arise in connection with events outside of our control (e.g.

macroeconomic conditions, geopolitical tensions, outbreaks of infectious diseases);

risks inherent in a disruption and cybersecurity of our information technology systems, including as a result of criminal or other unauthorized 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;

2 unchanged sentences

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;

changes in laws and regulations that impact our and our clients’ businesses, including rapidly changing data privacy and data protection laws, healthcare business regulations, and 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 or our clients’ reluctance to expand the delivery of their services in certain parts of the world due to conflict or other disruptions;

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