What changed in this filing

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Item 1. Financial Statements

2024-11-06 compared with 2024-08-08 · 219 added, 204 removed, 704 unchanged (38% of the section changed)

4 unchanged sentences

(Amounts in thousands, except share amounts)

September 30,

Current assets

36 unchanged sentences

10,000,000 shares authorized;

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

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

Common stock;

1 unchanged sentence

150,000,000 shares authorized;

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

47,724,298 and 47,427,200 shares outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

Treasury stock at cost;

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

34,328,331 and 34,625,053 shares as of September 30, 2024 and December 31, 2023, 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

33 unchanged sentences

(Amounts in thousands)

Three months ended June 30, 2023 and 2024

Three months ended September 30, 2023 and 2024

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

Balance as of September 30, 2023

Stockholders’ Equity of the Company

3 unchanged sentences

Income (Loss)

Balance as of March 31, 2024

Balance as of June 30, 2024

Net (loss) income

6 unchanged sentences

Other, net of tax

Balance as of June 30, 2024

Six months ended June 30, 2023 and 2024

Balance as of September 30, 2024

Nine months ended September 30, 2023 and 2024

Stockholders’ Equity of the Company

13 unchanged sentences

Other, net of tax

Balance as of June 30, 2023

Balance as of September 30, 2023

Stockholders’ Equity of the Company

12 unchanged sentences

Other, net of tax

Balance as of June 30, 2024

Balance as of September 30, 2024

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

42 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 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.

As of September 30, 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.

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 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.

During the third 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 51,600 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):

June 30, 2024

September 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, but in light of recent economic headwinds the Company is reviewing and tightening its collection processes.

Historically, the losses related to credit risk have been immaterial, but in light of recent economic headwinds the Company has monitored its collection processes to reduce its credit risk.

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

2 unchanged sentences

Recently Adopted Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“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”).

In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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”).

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.

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

In November 2024, the FASB issued ASU 2024-03, “Disaggregation of Income Statement Expenses” in response to longstanding requests from investors for more information about an entity’s expenses, specifically categories of expenses such as (purchases of inventory, employee compensation, depreciation, and amortization, and depletion).

The ASU is effective for fiscal years beginning after December 15, 2026, with retrospective application permitted.

The Company is still evaluating the potential impact of the pronouncement.

(2) ACQUISITIONS AND DIVESTITURES

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(“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.

TTEC HOLDINGS, INC.

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Notes to Consolidated Financial Statements

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

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

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

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

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

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

The Faneuil Transaction includes two contingent payments 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.

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

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

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

During 2022, a $ 2.9 million net gain was recorded related to fair value adjustments for the estimated contingent payments based on changes in estimated EBITDA, the timing of cash flows and market interest rates which resulted in an updated discount factor for one contract, and a complete reduction for the second contract as it was not awarded to the Company.

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

The Faneuil Transaction included contingent payments that were based on the revenue and EBITDA performance of certain contracts with the value of the contingent payments to be determined.

During the second quarter of 2023, the contingent payment obligation was modified to a minimum payment of $ 7.4 million and a maximum payment of $ 10.4 million.

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

1 unchanged sentence

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

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.

For the nine months ended September 30, 2024, a $ 1.5 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 September 30, 2024, the contingent payment is accrued at $ 0.0 million.

TTEC HOLDINGS, INC.

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Notes to Consolidated Financial Statements

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.

A second call option provided the right to purchase a software intangible asset and related support functions based on trailing twelve-month revenue.

These call options were valued based on information including the call right and the exclusivity period and a $ 270 thousand asset was recorded as of the acquisition date which was included in Other long-term assets in the Consolidated Balance Sheets.

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

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, 2024, the fair value is zero.

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

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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In the first quarter of 2023, the Company finalized the valuation of Faneuil for the acquisition date assets acquired and liabilities assumed and determined that no material adjustments to any of the balances were required.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Faneuil customer relationships are being amortized over a useful life of 10 years .

3 unchanged sentences

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.

As of September 30, 2024, the Company had assets classified as held for sale of $ 29.6 million as the Company expects to sell its former headquarters building in Englewood, Colorado within the next twelve months.

This included $ 16.9 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.

2 unchanged sentences

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

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

Subsequent Event

On November 5, 2024, TTEC Holdings, Inc., through its wholly-owned subsidiary, TTEC Services Corporation, entered into a definitive agreement to sell and subsequently closed the sale of a real estate asset in Englewood, Colorado to Catholic Health Initiatives Colorado, a not-for-profit organization, for $ 45.5 million, subject to certain customary adjustments.

The Company expects to record a pre-tax gain of approximately $ 16.0 million upon close of the transaction in the fourth quarter of 2024.

The asset was previously used by TTEC as its principal executive offices and was not used in business operations.

The Company intends to use the proceeds from the sale to reduce its outstanding balance under its revolving line of credit.

(3) SEGMENT INFORMATION

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In 2023, TTEC Digital expanded its Hyderabad Innovation Studio in India with the goal of continuing to expand its offshore delivery capabilities, and currently approximately 40 % of the staff are located in one of several offshore locations.

For the nine months ended September 30, 2023, 40 % of the staff were located in one of several offshore locations.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

TTEC Engage and the CX Business Process Outsourcing Services Industry

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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 September 30, 2024

Three Months Ended September 30, 2023

Nine Months Ended September 30, 2024

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

Nine Months Ended September 30, 2023

Three Months Ended

Six Months Ended

Nine Months Ended

September 30,

Capital Expenditures

June 30, 2024

September 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 June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

United States / Canada

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(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, 2024;

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

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

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

This client contributed 11.1 % and 10.1 % of total revenue for the nine months ended September 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.

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

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

these contracts have different durations and renewal dates and could have a revenue opportunity above the $100 million aggregate.

In the first quarter of 2024, one of our larger financial services clients notified us that it is exiting one of the lines of business that we support.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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, 2024.

Based on currently available information, management does not believe significant credit risk existed as of September 30, 2024 beyond what was already recognized.

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

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Accounts Receivable Factoring Agreement

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

(“Bank”, or “BMO”), under the terms of which the Company may elect to sell, on a revolving basis, U.S.

In the third quarter of 2024, the Company terminated its Uncommitted Receivables Purchase Agreement (“Agreement”) with BMO Bank, N.A.

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

The maximum amount of receivables that the Company may sell to the Bank at any given time shall not exceed $ 100 million.

The sales of accounts receivable in accordance with the Agreement are reflected as a reduction of Accounts Receivable, net on the Consolidated Balance Sheets.

The sales of accounts receivable in accordance with the prior Agreement are reflected as a reduction of Accounts Receivable, net on the Consolidated Balance Sheets.

The Company has retained no interest in the sold receivables but retains all collection responsibilities on behalf of the Bank.

The discount on the accounts receivable sold will be recorded within Other expense, net in the Consolidated Statements of Comprehensive Income (Loss).

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 discount on the accounts receivable sold is recorded within Other expense, net in the Consolidated Statements of Comprehensive Income (Loss).

The cash proceeds from the prior Agreement are included in the change in accounts receivable within the operating activities section of the Consolidated Statements of Cash Flow.

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

June 30, 2024

September 30, 2024

December 31, 2023

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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, 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.

The Agreement transitioned with the acquisition.

On January 2, 2024, the Company amended the arrangement to adjust the discount rate to reflect BMO’s updated market pricing levels and other minor items.

The Company has not recorded any servicing assets or liabilities as of September 30, 2024 as the fair value of the servicing arrangement as well as the fees earned were not material to the financial statements.

Goodwill consisted of the following (in thousands):

Acquisitions /

September 30,

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

During the third quarter of 2024, the Company completed its qualitative assessment of impairment indicators, which included, among other things, an assessment of changes in macro-economic conditions, comparison of the actual results to those forecasted in the most recent second quarter of 2024 quantitative impairment test and performing sensitivity analysis on key assumptions.

The Company assessed whether any such indicators of impairment existed and concluded there were no triggering events.

However, if projected operating results are not met and/or the Company’s market capitalization declines, the Company’s reporting units could be at risk for future impairment.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(6) DERIVATIVES

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

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):

As of September 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 nine months ended September 30, 2024 and 2023 (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

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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).

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

All hedging instruments are forward contracts.

As of June 30, 2024

Canadian Dollar

September 2024

As of September 30, 2024

Philippine Peso

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(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, 2024 and December 31, 2023.

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Fair Value Hedges

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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, 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.

As of September 30, 2024 and December 31, 2023 the total notional amounts of the Company’s forward contracts used as fair value hedges were $ 25.3 million and $ 73.3 million, respectively.

Derivative Valuation and Settlements

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

June 30, 2024

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

September 30, 2024

Not Designated

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Total fair value of derivatives, net

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

December 31, 2023

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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, 2024 and 2023 were as follows (in thousands):

Three Months Ended June 30,

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

Three Months Ended September 30,

Designated as Hedging

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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

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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,

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

Nine Months Ended September 30,

Designated as Hedging

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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

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Other income (expense), net

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(7) FAIR VALUE

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

The following presents information as of 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.

The following presents information as of September 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.

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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 (in each case as defined in the Credit Agreement discussed in Note 10).

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.

As of September 30, 2024 and December 31, 2023, the Company had $ 1,025.0 million and $ 995.0 million, respectively, of borrowings outstanding under the Credit Facility.

During the third quarter of 2024 outstanding borrowings accrued interest at an average rate of 7.8 % 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.

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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, 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

As of September 30, 2024, credit risk did not materially change the fair value of the Company’s derivative contracts.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The following is a summary of the Company’s fair value measurements for its net derivative assets (liabilities) as of September 30, 2024 and December 31, 2023 (in thousands):

As of September 30, 2024

Fair Value Measurements Using

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Total net derivative asset (liability)

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

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

As of September 30, 2024

Fair Value Measurements Using

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Total liabilities

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

As of December 31, 2023

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

September 30,

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(8) IMPAIRMENT OF ASSETS

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

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.

During the three and nine months ended September 30, 2024, TTEC Digital recognized impairment losses related to leasehold improvements assets, right of use lease assets, capitalized software and certain computer equipment of $ 0.4 million and $ 2.9 million, respectively.

During the three and nine months ended September 30, 2024, TTEC Engage recognized impairment losses related to leasehold improvement assets, right of use lease assets, capitalized software and certain computer equipment of $ 4.3 million and $ 5.1 million, respectively.

(9) INCOME TAXES

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The Company’s selection of an accounting policy with respect to both the global intangible low taxed foreign income (“GILTI”) and base erosion and anti-abuse tax (“BEAT”) rules is to compute the related taxes in the period the entity becomes subject to either GILTI or BEAT.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

The Company’s 2024 estimated annual effective tax rate of 26.2 %, before discrete items, is driven by the distribution of forecasted income between the U.S.

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 )%.

The Company’s effective tax rate for the nine months ended September 30, 2024 was ( 26.4 )%.

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 $ 85.8 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 .

income tax returns filed for the tax years ending December 31, 2017, December 31, 2018, and December 31, 2020, to present, remain open tax years .

The Company has been notified of the intent to audit or is currently under audit of income taxes for the United States for tax year 2017 and 2018 , the Philippines for tax years 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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

The Organization for Economic Co-operation and Development (OECD), supported by 140 of their member countries, have agreed to implement a minimum 15 % tax rate on certain multinational enterprises and have released model guidance.

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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 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.

During the first, second and third quarters of 2024, a $ 3.0 million, $ 81.1 million and a $1.7 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 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.

The aggregate benefit to income tax expense for the three months ended September 30, 2024 and 2023 was approximately $ 0.7 million and $ 0.8 million, respectively, which had an impact on diluted net income per share of $ 0.02 and $ 0.02 , respectively.

The aggregate benefit to income tax expense for the nine months ended September 30, 2024 and 2023 was approximately $ 2.1 million and $ 1.8 million, respectively, which had an impact on diluted net income per share of $ 0.04 and $ 0.04 , 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.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(10) COMMITMENTS AND CONTINGENCIES

Credit Facility

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.

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, and therefore affects the interest rates paid for a portion of the Credit Facility starting in the second quarter of 2023.

On February 26, 2024 , the Company entered into an Eighth Amendment to the Credit Agreement to increase the net leverage ratio covenant, the lenders’ commitment fee rate and margin for a period starting with the quarter ending March 31, 2024 through the quarter ending March 31, 2025, from the current 3.5 to 1 to between 4.0 to 1 and 4.5 to 1, as may be applicable in different quarters;

and reduced the total lenders’ commitment from $1.5 billion to $ 1.3 billion.

TTEC may, at its option for any quarter during the amendment period, elect to revert to the net leverage ratio and the corresponding lenders’ commitment fee rate and margin to pre-amendment levels.

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

and to reduce the total lenders’ commitment from $1.5 billion to $ 1.3 billion.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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”).

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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 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 adjust its capital allocation strategy.

In addition, the Company agreed, to certain other 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 term of the Credit Facility will remain unchanged through November 23, 2026.

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 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.

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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.

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 %.

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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.

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.

As of September 30, 2024 and December 31, 2023, the Company had borrowings of $ 1,025.0 million and $ 995.0 million, respectively, under its Credit Facility, and its average daily utilization was $ 1,047.3 million and $ 1,057.6 million for the nine months ended September 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 $ 140 million as of September 30, 2024.

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Letters of Credit

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.

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

As of September 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 the Company’s present and future subsidiaries.

Legal Proceedings

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

In the event of unexpected further developments, however, it is possible that the ultimate resolution of these matters, or other similar matters, if unfavorable, may be materially adverse to the Company’s financial position, cash flows, or results of operations.

(11) DEFERRED REVENUE AND REMAINING PERFORMANCE OBLIGATIONS

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.

Revenue recognized for the nine months ended September 30, 2024 from amounts included in deferred revenue as of December 31, 2023 was $ 213.6 million.

Revenue recognized for the nine months ended September 30, 2023 from amounts included in deferred revenue as of December 31, 2022 was $ 245.8 million.

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

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

As of September 30, 2024, the Company’s RPO was $ 435.2 million, which will be delivered and recognized within the next five years .

The Company expects to recognize approximately 63 % of the RPO over the next 12 months , 23 % of the RPO over the subsequent 13 to 24 months, and the remainder thereafter.

TTEC HOLDINGS, INC.

1 unchanged sentence

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 .

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.

(12) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

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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

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 June 30, 2024

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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

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Net income (loss)

For the Six Months Ended June 30,

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the Nine Months Ended September 30,

Comprehensive Income

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

Three Months Ended 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

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.

For the three months ended September 30, 2024 and 2023, there were 3.0 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 nine months ended September 30, 2024 and 2023, there were 2.6 million and 1.0 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 and six months ended June 30, 2024 and 2023 (in thousands):

Three Months Ended June 30,

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

Three Months Ended September 30,

Equity-based compensation expense recognized in Cost of services

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Total equity-based compensation expense

Six Months Ended June 30,

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

Nine Months Ended September 30,

Equity-based compensation expense recognized in Cost of services

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Restricted Stock Unit Grants

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.

During the nine months ended September 30, 2024 and 2023, the Company granted 250,913 and 587,490 RSUs, respectively, to new and existing employees, which vest over three to five years .

The Company recognized compensation expense related to RSUs of $ 4.3 million and $ 15.2 million for the three and nine months ended September 30, 2024, respectively.

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.

As of September 30, 2024, there was approximately $ 36.9 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

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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.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

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

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:

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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.

For the ordinary course annual PRSUs, no expense was recognized for the nine months ended September 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.

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

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

TTEC HOLDINGS, INC.

AND SUBSIDIARIES

Notes to Consolidated Financial Statements

During the fourth quarter of 2024, the Company awarded PRSUs to senior executives 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 $ 5.9 million that 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 Europe, Middle East and Africa region of TTEC Digital’s annual revenue and adjusted EBITDA for fiscal year 2025.

The number of PRSUs awarded will be based on the Company’s annual revenue and adjusted EBITDA for fiscal year 2026 and on TTEC Digital’s annual revenue and adjusted EBITDA for fiscal year 2026.

Expense for these awards will begin at the start of the requisite service period, beginning January 1, 2026.

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 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.

During the nine months ended September 30, 2024 and 2023, the Company expensed $ 0.3 million and $ 0.8 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 September 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 six months ended June 30, 2024 and 2023, the Company expensed $ 1.5 million and $ 1.8 million, respectively, for these services.

During the nine months ended September 30, 2024 and 2023, the Company expensed $ 2.3 million and $ 2.8 million, respectively, for these services.

CAUTIONARY NOTE REGARDING FORWARD LOOKING STATEMENTS

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Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2023.

Important factors that could cause our actual results to differ materially from those indicated in the forward looking statements include, among others, risks related to our business operations, our strategy and our industry, including risks related to our strategic execution in a competitive market, our ability to innovate and introduce technologies that are sufficiently disruptive to allow us to maintain and grow our market share such as the effective adoption of artificial intelligence into our solutions, revenue risks specific to client concentration in our TTEC Engage business segment and risks related to the product reliability of the technology partners and client transition from on premises to public cloud and SaaS information technology solutions in our TTEC Digital business segment, risks specific to remote work environment, risks related to the challenges inherent in demand and delivery center capacity forecasting, risks specific to labor costs and retention, risks related to operations controls and employees engaging in fraud, long sales cycles and lead time to revenue, risks specific to potential geographic and other expansions, risks that may arise in connection with events outside of our control such as macroeconomic conditions, geopolitical tensions, and outbreaks of infectious diseases, risks of M&A activity including our ability to identify, acquire and properly integrate acquired businesses in accordance with our strategy;

risks related to our use of technology, including risk that could arise due to disruption to our information technology systems, cybersecurity events and unauthorized data access, our reliance on communication and utility services provided to third parties, risks specific to rapid adoption of AI/GenAI technologies, and the growing reliance on third parties for data, cloud and SaaS services;

risks of our financial operations, including ineffective cost-management strategies, our leverage and debt service obligations, risks specific to financial and operating restrictions built into our credit facility, changes in the cost or availability of labor, telecommunication services, and other operational necessities that we cannot pass on to our clients, risks related to foreign currency exchange, changes in income tax rates and laws, and other laws and regulations relevant to our business, interpretations of transfer pricing arrangements, uncertainties tied to goodwill, assets and strategic investments’ impairments;

risks specific to our contracting practices and laws and regulations that impact our business, including uncertainty and inconsistency in privacy and data protection laws, the high cost of compliance with such laws, the high cost and reputational damage of wage and hour class action lawsuits, contract terms that lead to volatility in revenue and profitability, the efforts by clients to transfer contractually cybersecurity, data privacy and emerging technology risks to service providers and our inability to always control or mitigate them, uncertainty in AI/GenAI regulatory environments, risks specific to IP protection and infringement, and our ability to timely secure and maintain licenses needed to support certain regulated lines of business;

risks specific to the remote work environment;

risks related to the challenges inherent in demand and delivery center capacity forecasting;

risks specific to labor costs and retention;

risks related to operations controls and employees engaging in fraud;

risks related to long sales cycles and lead time to revenue;

risks specific to potential geographic and other expansions;

risks that may arise in connection with events outside of our control such as macroeconomic conditions;

geopolitical tensions, and outbreaks of infectious diseases;

risks of M&A activity including our ability to identify, acquire and properly integrate acquired businesses in accordance with our strategy;

risks related to our use of technology, including risks that could arise due to disruption to our information technology systems, cybersecurity events and unauthorized data access, our reliance on communication and utility services provided by third parties;

risks specific to rapid adoption of AI/GenAI technologies, and the growing reliance on third parties for data, cloud and SaaS services;

risks of our financial operations, including ineffective cost-management strategies, our leverage and our debt service obligations;

risks specific to financial and operating restrictions built into our credit facility, changes in the cost or availability of labor, telecommunication services, and other operational necessities that we cannot pass on to our clients;

risks related to foreign currency exchange, changes in income tax rates and laws, and other laws and regulations relevant to our business;

interpretations of transfer pricing arrangements;

uncertainties tied to goodwill, assets and strategic investments’ impairments;

uncertainty in AI/GenAI regulatory environments;

risks specific to IP protection and infringement, and our ability to timely secure and maintain licenses needed to support certain regulated lines of business;

risks specific to operations outside of the U.S.

and in jurisdictions where we have limited experience;

risks related to the ownership of our common stock, including risks inherent in our capital structure, our controlling shareholder risk, risks related to the price and trading volumes of our common stock being affected by factors that we cannot fully impact or control, risks inherent in our dividend

and stock repurchase policies, risks specific to being a Delaware company and provisions in our charter documents that may discourage, delay or prevent a change in control events potentially depressing the price of our common stock, and the fact that our Chairman and Chief Executive Officer has control over matters requiring shareholder action potentially impacting our stock price and making it less attractive to investors.

risks related to the ownership of our common stock, including risks inherent in our capital structure;

our controlling shareholder risk;

risks related to the price and trading volumes of our common stock being affected by factors that we cannot fully impact or control;

inherent in our dividend and stock repurchase policies;

risks specific to being a Delaware company and provisions in our charter documents that may discourage, delay or prevent a change in control events potentially depressing the price of our common stock;

and the fact that our Chairman and Chief Executive Officer has control over matters requiring shareholder action potentially impacting our stock price and making it less attractive to investors.

Our forward-looking statements speak only as of the date that this report is filed with the United States Securities and Exchange Commission (“SEC”).

We undertake no obligation to update them, except as may be required by applicable law.

You should, however, consult any subsequent disclosures we make in our filings with the SEC on Form 8-K.

Although we believe that our forward-looking statements are reasonable, they depend on many factors outside of our control and we can provide no assurance that they will prove to be correct.

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