10-Q
TTEC HOLDINGS, INC. filed this Form 10-Q on 11/07/2018
Entire Document
 

Table of Contents

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

(Unaudited)

 

 

(6)DERIVATIVES

Cash Flow Hedges

The Company enters into foreign exchange related derivatives. Foreign exchange derivatives entered into consist of forward and option contracts to reduce the Company’s exposure to foreign currency exchange rate fluctuations that are associated with forecasted revenue earned in foreign locations. Upon proper qualification, these contracts are designated as cash flow hedges. It is the Company’s policy to only enter into derivative contracts with investment grade counterparty financial institutions, and correspondingly, the fair value of derivative assets considers, among other factors, the creditworthiness of these counterparties. Conversely, the fair value of derivative liabilities reflects the Company’s creditworthiness. As of September 30, 2018, 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, 2018 and 2017 (in thousands and net of tax):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended 

 

Nine Months Ended 

 

 

 

September 30,

 

September 30,

 

 

 

2018

    

2017

    

2018

    

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

$

(17,259)

 

$

(19,730)

 

$

(15,746)

 

$

(32,393)

 

Add: Net gain/(loss) from change in fair value of cash flow hedges

 

 

8,429

 

 

5,420

 

 

14,374

 

 

25,290

 

Less: Net (gain)/loss reclassified to earnings from effective hedges

 

 

(2,981)

 

 

(3,487)

 

 

(10,439)

 

 

(10,694)

 

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

 

$

(11,811)

 

$

(17,797)

 

$

(11,811)

 

$

(17,797)

 

 

The Company’s foreign exchange cash flow hedging instruments as of September 30, 2018 and December 31, 2017 are summarized as follows (amounts in thousands). All hedging instruments are forward contracts.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Local

    

 

 

    

 

 

    

 

 

 

 

 

Currency

 

U.S. Dollar

 

 

% Maturing

 

 

Contracts

 

 

 

Notional

 

Notional

 

 

in the next

 

 

Maturing

 

As of September 30, 2018

 

Amount

 

Amount

 

 

12 months

 

 

Through

 

Philippine Peso

 

6,344,375

 

 

126,360

(1)  

 

59.9

%  

 

August 2021

 

Mexican Peso

 

1,114,000

 

 

61,911

 

 

55.7

%  

 

May 2021

 

 

 

 

 

$

188,271

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Local

    

 

 

    

 

 

    

 

 

 

 

 

Currency

 

U.S. Dollar

 

 

 

 

 

     

 

 

 

Notional

 

Notional

 

 

      

 

 

 

 

As of December 31, 2017

 

Amount

 

Amount

 

 

 

 

 

 

 

Philippine Peso

 

10,685,000

 

 

219,917

(1)  

 

 

 

 

 

 

Mexican Peso

 

1,609,000

 

 

93,589

 

 

 

 

 

 

 

 

 

 

 

$

313,506

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 


(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 September 30, 2018 and December 31, 2017.

 

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