|TTEC HOLDINGS, INC. filed this Form 10-Q on 11/07/2018|
Other Income (Expense), Net
Included in the nine months ended September 30, 2018 was a $15.6 million impairment of the full value of an equity investment and the related bridge loan.
Included in the nine months ended September 30, 2018 was a $0.7 million gain related to the bargain purchase for the Percepta acquisition closed on March 31, 2018.
Included in the nine months ended September 30, 2018 and 2017 were $2.0 million and $3.2 million of estimated losses related to two business units which have been classified as assets held for sale.
Included in the nine months ended September 30, 2017 was a $3.2 million gain related to dissolution of a foreign entity and a release of its cumulative translation adjustment.
For further information on the above items, see Part I. Item 1. Financial Statements, Note 2 to the Consolidated Financial Statements.
The effective tax rate for the nine months ended September 30, 2018 was 19.7%. This compares to an effective tax rate of 15.0% for the comparable period of 2017. The effective tax rate for the nine months ended September 30, 2018 was influenced by earnings in international jurisdictions currently under an income tax holiday and the distribution of income between the U.S. and international tax jurisdictions. Without a $0.4 million benefit related to return to provision, $1.6 million benefit related to restructuring expenses, $2.1 million of benefit related to the release of tax contingency, $4.2 million of benefit related to impairments, and $0.1 million of other benefits, the Company’s effective tax rate for the nine months ended September 30, 2018 would have been 24.0%.
Liquidity and Capital Resources
Our principal sources of liquidity are our cash generated from operations, our cash and cash equivalents, and borrowings under our Credit Facility. During the nine months ended September 30, 2018, we generated positive operating cash flows of $166.1 million. We believe that our cash generated from operations, existing cash and cash equivalents, and available credit will be sufficient to meet expected operating and capital expenditure requirements for the next 12 months.
We manage a centralized global treasury function in the United States with a focus on concentrating and safeguarding our global cash and cash equivalents. While the majority of our cash is held outside the U.S., we prefer to hold U.S. Dollars in addition to the local currencies of our foreign subsidiaries. We expect to use our offshore cash to support working capital and growth of our foreign operations. While there are no assurances, we believe our global cash is protected given our cash management practices, banking partners and utilization of diversified, high quality investments.
In October 2018, the Company paid a dividend from its foreign operations to its U.S. parent in the amount of $280 million which was used to pay down a portion of the Credit Facility.
We have global operations that expose us to foreign currency exchange rate fluctuations that may positively or negatively impact our liquidity. We are also exposed to higher interest rates associated with our variable rate debt. To mitigate these risks, we enter into foreign exchange forward and option contracts through our cash flow hedging program. Please refer to Item 3. Quantitative and Qualitative Disclosures About Market Risk, Foreign Currency Risk, for further discussion.
The following discussion highlights our cash flow activities during the nine months ended September 30, 2018 and 2017.
Cash and Cash Equivalents
We consider all liquid investments purchased within 90 days of their original maturity to be cash equivalents. Our cash and cash equivalents totaled $93.9 million and $74.4 million as of September 30, 2018 and December 31, 2017, respectively. We diversify the holdings of such cash and cash equivalents considering the financial condition and stability of the counterparty institutions.