What changed in this filing

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Item 1. Financial Statements

2024-08-08 compared with 2024-05-08 · 267 added, 163 removed, 641 unchanged (40% of the section changed)

6 unchanged sentences

Cash and cash equivalents

Accounts receivable, net of allowance of $ 2,065 and $ 2,248 , respectively

Accounts receivable, net of allowance of $ 4,757 and $ 2,248

Prepaids and other current assets

3 unchanged sentences

Property, plant and equipment, net

Assets held for sale

Operating lease assets

4 unchanged sentences

Total long-term assets

LIABILITIES AND STOCKHOLDERS’ EQUITY

LIABILITIES, STOCKHOLDERS’ EQUITY

Current liabilities

20 unchanged sentences

10,000,000 shares authorized;

zero shares outstanding as of March 31, 2024 and December 31, 2023

zero shares outstanding as of June 30, 2024 and December 31, 2023

Common stock;

1 unchanged sentence

150,000,000 shares authorized;

47,447,289 and 47,427,200 shares outstanding as of March 31, 2024 and December 31, 2023, respectively

47,608,318 and 47,427,200 shares outstanding as of June 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

Treasury stock at cost;

34,604,964 and 34,625,053 shares as of March 31, 2024 and December 31, 2023, respectively

34,443,935 and 34,625,053 shares as of June 30, 2024 and December 31, 2023, respectively

Accumulated other comprehensive income (loss)

2 unchanged sentences

Total stockholders’ equity

Total liabilities and stockholders’ 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

5 unchanged sentences

Total operating expenses

Income from operations

Income (loss) from operations

Other income (expense)

3 unchanged sentences

Total other income (expense)

Income before income taxes

Income (loss) before income taxes

Provision for income taxes

Net income (loss)

Net income (loss) attributable to noncontrolling interest

Net (loss) income attributable to TTEC stockholders

Net income (loss) attributable to TTEC stockholders

Other comprehensive income (loss)

Net income (loss)

Foreign currency translation adjustments

5 unchanged sentences

Comprehensive income attributable to noncontrolling interest

Comprehensive (loss) income attributable to TTEC stockholders

Comprehensive income (loss) attributable to TTEC stockholders

Weighted average shares outstanding

Net (loss) 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 March 31, 2023 and 2024

Three months ended June 30, 2023 and 2024

Stockholders’ Equity of the Company

3 unchanged sentences

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

Stockholders’ Equity of the Company

Comprehensive

Noncontrolling

Paid-in Capital

Income (Loss)

Balance as of March 31, 2024

Net (loss) income

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, 2024

Six months ended June 30, 2023 and 2024

Stockholders’ Equity of the Company

Comprehensive

Noncontrolling

Paid-in Capital

Income (Loss)

Balance as of December 31, 2022

8 unchanged sentences

Other, net of tax

Balance as of March 31, 2023

Balance as of June 30, 2023

Stockholders’ Equity of the Company

4 unchanged sentences

Balance as of December 31, 2023

Noncontrolling interest adjustment due to buyout

Net (loss) income

6 unchanged sentences

Other, net of tax

Balance as of March 31, 2024

Balance as of June 30, 2024

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

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization

4 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

Loss (gain) on foreign currency derivatives

Loss on foreign currency derivatives

Changes in assets and liabilities, net of acquisitions:

3 unchanged sentences

Deferred revenue and other liabilities

Net cash (used in) provided by operating activities

Net cash provided by operating activities

Cash flows from investing activities

3 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

1 unchanged sentence

Dividends paid to shareholders

Payments of debt issuance costs

Payments to noncontrolling interest

Tax payments related to issuance of restricted stock units

Net cash used in financing activities

Payments of debt issuance costs

Net cash (used in)/provided by financing activities

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

8 unchanged sentences

Acquisition of equipment through increase in accounts payable, net

Dividend declared but not paid

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

9 unchanged sentences

By combining digital solutions with data-driven service capabilities, the Company helps clients improve their customer satisfaction while lowering their total cost to serve.

As of March 31, 2024, TTEC served approximately 750 clients across targeted industry verticals including financial services, healthcare, public sector, telecom, technology, media, travel and hospitality, automotive and retail.

As of June 30, 2024, TTEC served approximately 740 clients across targeted industry verticals including financial services, healthcare, public sector, telecom, technology, media, travel and hospitality, automotive and retail.

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

9 unchanged sentences

This partnership is central to the Company’s ability to deliver comprehensive and transformational customer experience solutions to its clients, including integrated delivery, go-to-market and innovation for truly differentiated, market leading CX solutions.

During the first quarter of 2024, the combined TTEC Digital and TTEC Engage global operating platform delivered onshore, nearshore and offshore services in 22 countries on six continents – 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, South Africa, Thailand, and the United Kingdom – with the help of approximately 58,000 customer care associates, consultants, technologists, and CX professionals.

During the second quarter of 2024, the combined TTEC Digital and TTEC Engage global operating platform delivered onshore, nearshore and offshore services in 22 countries on six continents – 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, South Africa, Thailand, and the United Kingdom – with the help of approximately 54,000 customer care associates, consultants, technologists, and CX professionals.

Basis of Presentation

26 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, 2024

June 30, 2024

December 31, 2023

6 unchanged sentences

The Company is exposed to credit risk in the normal course of business, primarily related to accounts receivable and derivative instruments.

Historically, the losses related to credit risk have been immaterial.

Historically, the losses related to credit risk have been immaterial, but in light of recent economic headwinds the Company is reviewing and tightening its collection processes.

The Company regularly monitors its credit risk to mitigate the possibility of current and future exposures resulting in a loss.

4 unchanged sentences

The ASU is effective from March 12, 2020, may be applied prospectively and could impact the accounting for LIBOR provisions in the Company’s credit facility agreement.

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

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

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.

3 unchanged sentences

The Company is assessing the effect on its annual consolidated financial statement disclosures;

however, adoption is not expected to have a material impact the Company’s financial statements.

however, adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.

In December 2023, the FASB issued ASU 2023-09, “Improvements to Income Tax Disclosures” to enhance the transparency and decision usefulness of income tax disclosures.

1 unchanged sentence

The Company is assessing the effect on its annual consolidated financial statement disclosures;

however, adoption is not expected to have a material impact the Company’s consolidated balance sheets or income statements.

however, adoption is not expected to have a material impact on the Company’s Consolidated Financial Statements.

(2) ACQUISITIONS AND DIVESTITURES

In connection with the acquisition by TTEC Digital, LLC of a 70 % interest in Serendebyte Inc.

(“Serendebyte”), Serendebyte’s founder exercised his put rights on December 8, 2023, which required TTEC to acquire the remaining 30 % interest in Serendebyte.

As part of the exercise, the Serendebyte founder failed to fulfill the agreed provisions of the sale and purchase agreement that parties executed on February 7, 2020.

Pending completion of the put exercise formalities by Serendebyte’s founder, TTEC Digital is not able to determine the final purchase price for the remaining 30% buyout agreement.

(“Serendebyte”), Serendebyte’s founder exercised his put rights with respect to the remaining 30 % interest in Serendebyte on December 8, 2023, but failed to fulfill the agreed exercise prerequisites.

Pending the resolution of the put exercise formalities by Serendebyte’s founder, TTEC Digital is not able to determine the final purchase price for the remaining 30% buyout agreement.

In connection with triggering the option, on December 8, 2023, a $ 0.3 million accrual was reclassified from Redeemable noncontrolling interest to Accrued expenses and the remaining balance was reclassified to Additional paid in capital.

15 unchanged sentences

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 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 Faneuil Transaction includes two contingent payments which were anticipated to be paid in early 2024 and were 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.

7 unchanged sentences

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

As of March 31, 2024, the contingent payment is accrued at $ 0.3 million and is included in Other long-term liabilities in the accompanying Consolidated Balance Sheets.

For the six months ended June 30, 2024, a $ 1.0 million net gain was recorded related to fair value adjustments for the estimated contingent payment based on changes in estimated EBITDA, the timing of cash flows and market interest rate changes.

As of June 30, 2024, the contingent payment is accrued at $ 0.4 million and is included in Other long-term liabilities in the accompanying Consolidated Balance Sheets.

TTEC HOLDINGS, INC.

6 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 March 31, 2024, the fair value is zero.

As of June 30, 2024, the fair value is zero.

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

29 unchanged sentences

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

Assets Held for Sale

In the second quarter of 2024, the Company reclassified $ 29.4 million from Property, plant and equipment, net to Assets held for sale as the Company expects to sell its former headquarters building in Englewood, Colorado within the next twelve months.

This included $ 16.7 million from leasehold improvements, $ 6.7 million from buildings, $ 5.9 million from land, and $ 0.1 million from other Property, plant and equipment categories.

These assets are allocated 85 % to the TTEC Engage segment and 15 % to the TTEC Digital segment.

Funds received will be used to reduce the Company’s existing debt.

The Company ceased depreciation on the assets upon reclassification.

The estimated fair value less costs to sell the assets held for sale exceeded their carrying value as of the quarter ended June 30, 2024 and no impairment was considered necessary.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(3) SEGMENT INFORMATION

4 unchanged sentences

TTEC Digital has entered into strategic partnerships with the leading CX software vendors including Genesys, Microsoft, Cisco, AWS and Google which positions TTEC Digital to support the majority of CX platform requirements.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

TTEC Digital’s solutions are built to respond to market needs for both enterprise and small and medium-sized business clients.

23 unchanged sentences

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

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

Three Months Ended March 31, 2024

Three Months Ended March 31, 2023

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

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

Three Months Ended June 30, 2024

Three Months Ended June 30, 2023

Six Months Ended June 30, 2024

Six Months Ended June 30, 2023

Three Months Ended

Six Months Ended

Capital Expenditures

March 31, 2024

June 30, 2024

December 31, 2023

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

United States / 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, 2024;

The Company had one client that contributed in excess of 10% of total revenue for the six months ended June 30, 2024;

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

This client contributed 10.8 % and 10.0 % of total revenue for the three months ended March 31, 2024 and 2023, respectively.

This client contributed 11.0 % and 10.1 % of total revenue for the six months ended June 30, 2024 and 2023, 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.

3 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 March 31, 2024.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Based on currently available information, management does not believe significant credit risk existed as of June 30, 2024.

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

Accounts Receivable Factoring Agreement

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

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

(“Bank”, or “BMO”), under the terms of which 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.

4 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.

The Agreement will be terminated in the third quarter of 2024.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

March 31, 2024

June 30, 2024

December 31, 2023

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, 2024 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, 2024 as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements.

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

3 unchanged sentences

Acquisitions /

The Company performs an annual goodwill impairment assessment on December 1 st , or more frequently, if indicators of impairment exist.

The Company also monitors its reporting units for any triggering events and performs qualitative assessments of impairment indicators.

During the Company’s annual impairment testing as of December 1, 2023, the Company identified one reporting unit, TTEC Engage, being at risk for future impairment.

The carrying value of Engage was $ 1,092.1 million at December 1, 2023, including approximately $ 308.4 million of goodwill.

During the first quarter of 2024, the Company concluded there were no triggering events and completed its qualitative assessment of impairment indicators, which included, among other things, an assessment of changes in macroeconomic conditions, comparison of the actual results to those forecasted in the most recent annual impairment test and performing sensitivity analysis on key assumptions.

In the second quarter of 2024, the Company identified a triggering event for impairment primarily attributable to the impact of a sustained decline in its market capitalization that was less than the combined carrying value of the Company’s reporting units.

As such, the Company performed a quantitative goodwill impairment analysis.

TTEC HOLDINGS, INC.

1 unchanged sentence

Notes to Consolidated Financial Statements

The Company performs a goodwill impairment assessment on at least an annual basis.

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

During the Company’s annual impairment testing as of December 1, 2023, the Company identified one reporting unit, Engage, being at risk for future impairment if projected operating results are not met or other inputs into the fair value measurement change.

The carrying value of Engage was $ 1,092.1 million at December 1, 2023, including approximately $ 308.4 million of goodwill.

Based on the Company’s assessment, the estimated fair value of the Engage reporting unit exceeded its carrying value by approximately 13.0 %.

If all assumptions are held constant, either a 1.7% increase in the discount rate or a 2.0% annual decrease in the projected revenue over the forecast period , would result in approximately $ 138.0 million decrease in the estimated fair value of the Engage reporting unit.

Such a change in either of these assumptions individually would have resulted in the Engage reporting unit failing Step 1 of the goodwill impairment analysis on December 1, 2023.

As an international outsourcing agent, Engage’s revenue and cash flows are susceptible to global economic conditions and client business volumes.

In performing the Step 1 evaluation, the reporting unit’s current backlog and pipeline of customer business were considered, as well as inflation rates, gross domestic product rates, historical revenue growth and profitability, and state of the CX industry.

The estimate of fair value was based on generally accepted valuation techniques and information available at the date of the assessment, which incorporated management’s assumptions about expected revenues, future cash flows and available market information for comparable companies.

Outside of our annual impairment testing process, the Company monitors its reporting units for any triggering events while also performing qualitative assessments of impairment indicators.

The fair value of each reporting unit was estimated using an equal weighting of the income and market valuation approaches.

The income approach applied a fair value methodology to each reporting unit based on discounted cash flows.

This analysis requires significant judgments, including estimation of future cash flows, which is dependent on internally developed forecasts, estimation of the long-term rate of growth for the Company’s business, estimation of the useful life over which cash flows will occur, and determination of the Company’s weighted average cost of capital, which is risk-adjusted to reflect the specific risk profile of the reporting unit.

The weighted average cost of capital used in the Company’s most recent impairment test ranged from 13.8 % to 16.5 %.

The Company also applied a market approach, which develops a value correlation based on the market capitalization of similar publicly traded companies, referred to as a multiple, to apply to the operating results of the reporting units.

The primary market multiples to which the Company compared are revenue and earnings before interest, taxes, depreciation, and amortization.

The resulting fair value of the TTEC Engage reporting unit decreased below its carrying value, which resulted in recording a $ 196 million non-cash pre-tax impairment charge.

Recognition of this non-cash goodwill impairment charge resulted in a tax benefit that generated an incremental deferred tax asset of $ 37.5 million to the reporting unit’s carrying value.

Accordingly, the Company recorded an additional non-cash charge of $ 37.5 million to reduce the Company’s carrying value to its previously determined fair value in accordance with the applicable goodwill impairment guidance.

In total, a non-cash impairment loss of $ 233.5 million was recognized for the second quarter ended June 30, 2024.

(6) DERIVATIVES

5 unchanged sentences

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

As of March 31, 2024, 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, 2024 and 2023 (in thousands and net of tax):

Three Months Ended March 31,

As of June 30, 2024, 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, 2024 and 2023 (in thousands and net of tax):

Three Months Ended

Six Months Ended

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

5 unchanged sentences

Notes to Consolidated Financial Statements

The Company’s foreign exchange cash flow hedging instruments as of March 31, 2024 and December 31, 2023 are summarized as follows (amounts in thousands).

The Company’s foreign exchange cash flow hedging instruments as of June 30, 2024 and December 31, 2023 are summarized as follows (amounts in thousands).

All hedging instruments are forward contracts.

As of March 31, 2024

As of June 30, 2024

Canadian Dollar

2 unchanged sentences

December 2026

As of December 31, 2023

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, 2024 and December 31, 2023.

dollars on June 30, 2024 and December 31, 2023.

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, 2024 and December 31, 2023 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 46.6 million and $ 73.3 million, respectively.

As of June 30, 2024 and December 31, 2023 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 41.7 million and $ 73.3 million, respectively.

Derivative Valuation and Settlements

The Company’s derivatives as of March 31, 2024 and December 31, 2023 were as follows (in thousands):

March 31, 2024

The Company’s derivatives as of June 30, 2024 and December 31, 2023 were as follows (in thousands):

June 30, 2024

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 March 31, 2024 and 2023 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 three months ended June 30, 2024 and 2023 were as follows (in thousands):

Three 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,

Three Months Ended June 30,

Not Designated as Hedging Instruments

4 unchanged sentences

Other income (expense), net

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The effects of derivative instruments on the Consolidated Statements of Comprehensive Income (Loss) for the six months ended June 30, 2024 and 2023 were as follows (in thousands):

Six Months Ended June 30,

Designated as Hedging

Derivative contract type:

Foreign Exchange

Derivative classification:

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

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

Six Months Ended June 30,

Not Designated as Hedging Instruments

Derivative contract type:

Foreign Exchange

Derivative classification:

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

Other income (expense), net

(7) FAIR VALUE

2 unchanged sentences

The three levels of inputs used to measure fair value are as follows:

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Level 1 — Quoted prices in active markets for identical assets or liabilities.

2 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, 2024 and December 31, 2023 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, 2024 and December 31, 2023 for the Company’s assets and liabilities required to be measured at fair value on a recurring basis, as well as the fair value hierarchy used to determine their fair value.

Accounts Receivable and Payable - The amounts recorded in the accompanying balance sheets approximate fair value because of their short-term nature.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Investments – The Company measures investments, including cost and equity method investments, at fair value on a nonrecurring basis when they are deemed to be other-than-temporarily impaired.

1 unchanged sentence

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

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 March 31, 2024 and December 31, 2023, the Company had $ 953.0 million and $ 995.0 million, respectively, of borrowings outstanding under the Credit Facility.

During the first quarter of 2024 outstanding borrowings accrued interest at an average rate of 7.1 % per annum, excluding unused commitment fees.

As of June 30, 2024 and December 31, 2023, the Company had $ 930.0 million and $ 995.0 million, respectively, of borrowings outstanding under the Credit Facility.

During the second quarter of 2024 outstanding borrowings accrued interest at an average rate of 7.4 % 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, 2024, 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, 2024 and December 31, 2023 (in thousands):

As of March 31, 2024

As of June 30, 2024, 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, 2024 and December 31, 2023 (in thousands):

As of June 30, 2024

Fair Value Measurements Using

6 unchanged sentences

Total net derivative asset (liability)

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of December 31, 2023

7 unchanged sentences

Total net derivative asset (liability)

The following is a summary of the Company’s fair value measurements as of March 31, 2024 and December 31, 2023 (in thousands):

As of March 31, 2024

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following is a summary of the Company’s fair value measurements as of June 30, 2024 and December 31, 2023 (in thousands):

As of June 30, 2024

Fair Value Measurements Using

25 unchanged sentences

The Company manages the risk of the changes in the fair value of the liability for deferred compensation by electing to match its liability under the Plan with investment vehicles that offset a portion of its exposure including a Company owned life insurance policy held in a rabbi trust.

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.

2 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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

During 2022 and 2023, fair value adjustments of a $ 2.9 million benefit and a $ 3.0 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.

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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, 2024 and 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 $ 0.1 million and $ 4.3 million, respectively, across the TTEC Digital and TTEC Engage segments.

During the three and six months ended June 30, 2024, the Company recognized impairment losses, net related to leasehold improvements assets, right of use lease assets, capitalized software and certain computer equipment of $ 3.2 million and $ 3.3 million, respectively, across the TTEC Digital and TTEC Engage segments.

(9) INCOME TAXES

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Notes to Consolidated Financial Statements

As of March 31, 2024, the Company had $ 52.1 million of net deferred tax assets (after a $ 42.9 million valuation allowance) and a net deferred tax asset of $ 48.9 million (after deferred tax liabilities of $ 3.1 million) related to the United States and international tax jurisdictions whose recoverability is dependent upon future profitability.

At the end of each interim period, we are required to estimate our annual effective tax rate for the fiscal year and to use that rate to provide for income taxes for the current year-to-date reporting period.

The Company’s 2024 estimated annual effective tax rate of 21.4 %, before discrete items, is driven by the distribution of income between the U.S.

and international tax jurisdictions, earnings in international jurisdictions currently under an income tax holiday, changes in valuation allowance, the associated U.S.

tax impacts of foreign earnings and United States Federal Tax Credits.

The Company’s first quarter effective tax rate was 82.3 %.

This rate was the result of near breakeven year-to-date income, the exclusion of losses related to entities with a full valuation allowance and includes a $ 0.7 million benefit related to the tax impact of foreign remittances, $ 0.3 million of expense related to stock-based compensation, and $ 0.5 million of expense related to taxes on prior year filings.

and international tax jurisdictions, earnings in international jurisdictions currently under an income tax holiday, and the impact of valuation allowances in the United States and several other jurisdictions.

The Company’s effective tax rate for the six months ended June 30, 2024 was ( 23.5 )%.

This rate was the result of low year-to-date income, the exclusion of losses related to entities with a full valuation allowance and includes a $ 37.5 million benefit related to an impairment charge, and $ 84.1 million of expense related to changes in valuation allowances during the quarter.

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 , the State of Illinois in the United States for tax year 2020 , the State of Wisconsin for tax years 2019 through 2021 , Canada for tax year 2021 , and India for tax years 2017 through 2022 .

The Company has been notified of the intent to audit or is currently under audit of income taxes for the United States for tax year 2017 and 2018 , the Philippines for tax years 2021 to 2023 , the State of Oregon in the United States for tax years 2020 through 2022 , the State of Illinois in the United States for tax year 2020 , the State of Wisconsin in the United States for tax years 2019 through 2021 , Canada for tax year 2021 , and India for tax years 2017 through 2022 .

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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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.

During the first quarter of 2024, a valuation allowance of $ 3.0 million was recorded for assets that are not expected to be recovered in future periods.

During the first and second quarters of 2024, a $ 3.0 million and $ 81.1 million net valuation allowance was 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 Honduras.

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These incentives have varying benefit year over year and expire at various times beginning in 2031.

The aggregate benefit to income tax expense for the three months ended March 31, 2024 and 2023 was approximately $ 0.7 million and $ 0.7 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 three months ended June 30, 2024 and 2023 was approximately $ 0.6 million and $ 0.4 million, respectively, which had an impact on diluted net income per share of $ 0.01 and $ 0.01 , respectively.

The aggregate benefit to income tax expense for the six months ended June 30, 2024 and 2023 was approximately $ 1.3 million and $ 1.1 million, respectively, which had an impact on diluted net income per share of $ 0.03 and $ 0.02 , respectively.

Since 2017, the Company has been making tax payments to the IRS due to the one-time transition tax on untaxed foreign earnings of foreign subsidiaries, as mandated by the Tax Cuts and Jobs Act.

The final payment for this charge will be paid in December of 2024 for a total cash payment of $10.4 million this year, resulting in reduction in cash taxes going forward.

TTEC HOLDINGS, INC.

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Credit Facility

On November 23, 2021 , the Company entered into a Sixth Amendment to the Amended and Restated Credit Agreement (the “Credit Agreement”) originally dated June 3, 2013, (collectively, the “Credit Facility”) to convert the $300 million term loan included in the total Credit Facility commitments, that was previously agreed on March 25, 2021 as part of the Fifth Amendment to the Credit Agreement, into a $ 1.5 billion senior secured revolving Credit Facility with a syndicate of lenders led by Wells Fargo, National Association, as agent, swingline and fronting lender.

The Credit Facility matures on November 23, 2026 .

The Company primarily uses the Credit Facility to fund working capital, general operations, dividends, acquisitions and other strategic activities.

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.

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The term of the Credit Facility will remain unchanged through November 23, 2026 .

On August 8, 2024, the Company entered into a Ninth Amendment to the Credit Agreement (the “Ninth Amendment”) to, among other things, provide for less restrictive financial covenants in respect of the leverage ratio and the interest coverage ratio for the period beginning with the third quarter of 2024 through the first quarter of 2026 (the “Covenant Adjustment Period”).

Specifically, the revisions permit a maximum leverage ratio of up to 5.15 to 1.00 and a minimum interest coverage ratio of not less than 2.00 to 1.00 as of the end the third quarter of 2024, with such levels gradually becoming more restrictive during subsequent quarters of the Covenant Adjustment Period.

Pursuant to the Ninth Amendment, the Company agreed to permanently reduce the total lenders’ commitment from $1.3 billion to $ 1.2 billion and to provide certain additional assets as collateral, with the effect that the facility is now secured by substantially all personal property assets of the Company and its subsidiaries.

In addition, the Company agreed, to certain Credit Agreement changes, including, among others, (i) increased pricing on borrowings and increased facility fees, in each case, determined according to the Company’s leverage ratio, (ii) more restrictive limitations in respect of debt, liens, investments, acquisitions, asset sales and restricted payments, and (iii) requirements to apply certain equity and debt issuances and asset sale proceeds to the prepayment of the facility and permanent reduction of the total facility commitment amount.

The Company’s Credit Agreement includes a number of financial covenants and operating restrictions of which failure to comply could result in a default under the Credit Agreement.

The Company’s ability to comply with the covenants will depend on, among other things, financial, business, market, competitive and other conditions, many of which are beyond its control.

The Company’s ability to comply with the covenants will depend on, among other matters, factors discussed in the section titled “Cautionary Note Regarding Forward Looking Statements” included elsewhere in this report, many of which are beyond the Company’s control.

As of the issuance of these financial statements, the Company believes it has sufficient cash on hand, positive working capital, and availability to access additional cash under the Credit Facility to meet its business operating requirements, its capital expenditures and to continue to comply with the amended debt covenants.

In the event that the Company does not remain in compliance with the financial covenants under the Credit Facility, it may need to negotiate additional amendments to or waivers of the terms of such credit facilities, refinance its debt, or raise additional capital.

The Company could also reduce discretionary spending, capital expenditures and dividends paid.

The Company could also adjust its capital allocation strategy.

The maximum commitment under the Credit Facility is $ 1.2 billion in the aggregate, if certain conditions are satisfied.

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The Credit Agreement contains customary affirmative, negative, and financial covenants.

The Credit Agreement permits accounts receivable factoring up to the greater of $ 100 million or 25 percent of the average book value of all accounts receivable over the most recent twelve-month period.

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.

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 %.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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 %, and (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 0.375 % to 2.5 % based on the Company’s net leverage ratio.

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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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of March 31, 2024 and December 31, 2023, the Company had borrowings of $ 953.0 million and $ 995.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 1,072.0 million and $ 1,061.9 million for the three months ended March 31, 2024 and 2023, respectively.

Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 95 million as of March 31, 2024.

As of March 31, 2024, the Company was in compliance with all covenants and conditions under its Credit Agreement.

As of June 30, 2024 and December 31, 2023, the Company had borrowings of $ 930.0 million and $ 995.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 1,045.3 million and $ 1,057.7 million for the six months ended June 30, 2024 and 2023, respectively.

Based on the current level of availability based on the covenant calculations, the Company’s remaining borrowing capacity was approximately $ 100 million as of June 30, 2024.

As of June 30, 2024, the Company was in compliance with all covenants and conditions under its Credit Agreement.

Letters of Credit

As of March 31, 2024, outstanding letters of credit under the Credit Facility totaled $ 0.2 million.

As of March 31, 2024, letters of credit and contract performance guarantees issued outside of the Credit Agreement totaled $ 0.3 million.

As of June 30, 2024, outstanding letters of credit under the Credit Facility totaled $ 0.2 million.

As of June 30, 2024, 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.

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(11) DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS

Revenue recognized for the three months ended March 31, 2024 from amounts included in deferred revenue as of December 31, 2023 was $ 57.9 million.

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 six months ended June 30, 2024 from amounts included in deferred revenue as of December 31, 2023 was $ 140.2 million.

Revenue recognized for the six months ended June 30, 2023 from amounts included in deferred revenue as of December 31, 2022 was $ 167.1 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, 2024, the Company’s RPO was $ 354.9 million, which will be delivered and recognized within the next five years .

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.

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Notes to Consolidated Financial Statements

As of June 30, 2024, the Company’s RPO was $ 425.4 million, which will be delivered and recognized within the next five years .

(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, 2023

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

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

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Net current period other comprehensive income (loss)

Accumulated other comprehensive income (loss) at March 31, 2024

Accumulated other comprehensive income (loss) at June 30, 2024

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

For the Three Months Ended

For the Three Months Ended June 30,

Comprehensive Income

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Cost of services

Gain on liquidation

Other income (expense), net

Provision for income taxes

Net income (loss)

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Six Months Ended June 30,

Comprehensive Income

(Loss) Classification

Derivative valuation

Gain on foreign currency forward exchange contracts

Provision for income taxes

Net income (loss)

Actuarial loss on defined benefit plan

Cost of services

Gain on liquidation

Other income (expense), net

Provision for income taxes

Net income (loss)

(13) WEIGHTED AVERAGE SHARE COUNTS

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

Three Months Ended March 31,

Three Months Ended June 30,

Six Months Ended June 30,

Shares used in basic earnings per share calculation

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Shares used in dilutive earnings per share calculation

For the three months ended March 31, 2024 and 2023, there were 946 thousand and 463 thousand, respectively, outstanding of Restricted Stock Units (“RSUs”) which were excluded from the computation of diluted net income per share because the effect would have been anti-dilutive.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the three months ended June 30, 2024 and 2023, there were 2.3 million and 1.0 million outstanding Restricted Stock Units (“RSUs”), respectively, that 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, 2024 and 2023, there were 1.7 million and 0.9 million outstanding RSUs, respectively, that 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 for the three months ended March 31, 2024 and 2023 (in thousands):

Three Months Ended March 31,

The following tables present the total equity-based compensation expense for the three and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

Equity-based compensation expense recognized in Cost of services

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Total equity-based compensation expense

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, 2024 and 2023, the Company granted 346,507 and 93,772 RSUs, respectively, to new and existing employees, which vest over four to five years .

The Company recognized compensation expense related to RSUs of $ 5.8 million and $ 3.9 million for the three months ended March 31, 2024 and 2023, respectively.

As of March 31, 2024, there was approximately $ 35.1 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, 2024 and 2023, the Company granted 3,106,297 and 547,254 RSUs, respectively, to new and existing employees, which vest over four to five years .

The Company recognized compensation expense related to RSUs of $ 5.1 million and $ 10.9 million for the three and six months ended June 30, 2024, respectively.

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.

As of June 30, 2024, there was approximately $ 41.8 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 2021, 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 would be between $ 1.2 million and $ 4.9 million and vest immediately in 2024.

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

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 $ 0.0 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively.

During 2021, the Company awarded Performance Restricted Stock Units (“PRSUs”) subject to service and performance vesting conditions.

If defined minimum targets were met, the annual value of the PRSUs issued would be between $ 1.2 million and $ 4.9 million and vest in 2024.

If the defined minimum targets were not met, then no PRSUs will be issued.

The award amounts were based on the Company’s annual revenue and adjusted operating income for fiscal year 2023.

The Company recognized compensation expense related to the 2021 PRSUs of $ 0.0 million and $ 0.0 million for the three and six months ended June 30, 2024, respectively.

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, respectively.

TTEC HOLDINGS, INC.

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ordinary course annual PRSUs and one-time stretch financial goals PRSUs.

For the ordinary course annual PRSUs, if defined minimum targets are met, the annual value of the PRSUs issued will be between $ 0.9 million and $ 3.5 million and vest immediately in March 2025.

For the ordinary course annual PRSUs, if defined minimum targets are met, the annual value of the PRSUs issued will be between $ 0.9 million and $ 3.5 million and vest in March 2025.

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

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 .

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.

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

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

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

The number of shares to be awarded will be based on the TTEC Engage and TTEC Digital business segments’ annual revenue and adjusted EBITDA for the fiscal year 2025.

For the ordinary course annual PRSUs, no expense was recognized for the three months ended March 31, 2024.

The number of shares awarded will be based on the TTEC Engage and TTEC Digital business segments’ annual revenue and adjusted EBITDA for fiscal year 2025.

For the ordinary course annual PRSUs, no expense was recognized for the six months ended June 30, 2024.

Expense for the one-time stretch financial goals PRSUs will begin at the start of the requisite service period, beginning January 1, 2025.

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

If defined minimum targets are met, the annual value of the PRSUs issued will be between zero and $ 8.9 million and vest immediately.

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

The number of shares that will be awarded will be based on the Company’s annual revenue and adjusted EBITDA for the fiscal year 2025.

If defined minimum targets are met, the Company will issue PRSUs with an annual value between zero and $ 8.9 million that will vest in 2026.

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

The number of PRSUs awarded will be based on the Company’s annual revenue and adjusted EBITDA for fiscal year 2025.

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

As of the date of this report, the Company has not yet awarded 2024 PRSUs but it plans to do so during the second quarter of 2024.

The 2024 PRSUs will be subject to service and performance vesting conditions in a manner similar to prior years.

During the second quarter of 2024, the Company awarded PRSUs to one senior executive that are subject to service and performance vesting conditions.

If defined minimum targets are met, the Company will issue PRSUs with an annual value between zero and $ 2.9 million that vest in 2025.

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

The number of PRSUs awarded will be based on the Company’s Europe, Middle East and Africa region of TTEC Digital’s annual revenue and adjusted EBITDA for fiscal year 2025.

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

Additional PRSUs may be issued to other Company executives before the end of the fiscal year 2024 based on performance targets in the measurement period of fiscal year 2026, which PRSUs will vest in 2027;

the terms and conditions for these additional PRSUs have not yet been determined.

(15) NON-QUALIFIED DEFERRED COMPENSATION PLAN

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The Company manages the risk of changes in the fair value of the liability for deferred compensation by electing to match its liability under the plan with investment vehicles that offset a portion of its exposure including a Company owned life insurance policy held in a rabbi trust.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(16) 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, 2024 and 2023, the Company expensed $ 0.1 million and $ 0.3 million, respectively, to Avion and Airmax for services provided to the Company.

There was $ 36 thousand in payments due and outstanding to Avion and Airmax as of March 31, 2024.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

During the six months ended June 30, 2024 and 2023, the Company expensed $ 0.2 million and $ 0.7 million, respectively, to Avion and Airmax for services provided to the Company.

There was $ 36 thousand in payments due and outstanding to Avion and Airmax as of June 30, 2024.

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, 2024 and 2023, the Company expensed $ 0.8 million and $ 0.8 million, respectively, for these services.

During the six months ended June 30, 2024 and 2023, the Company expensed $ 1.5 million and $ 1.8 million, respectively, for these services.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

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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