|TTEC HOLDINGS, INC. filed this Form 10-K on 03/06/2019|
TTEC HOLDINGS, INC. AND SUBSIDIARIES
Notes to the Consolidated Financial Statements
On October 15, 2018, Sears Holding Corporation (“Sears”) announced that it had filed a petition for bankruptcy protection in the United States Bankruptcy Court for the Southern District of New York. As of December 31, 2018, TTEC had approximately $2.7 million in pre-petition accounts receivables outstanding related to Sears and during the fourth quarter of 2018 a $2.7 million allowance for uncollectible accounts was recorded and included in Selling, general and administrative expenses in the Consolidated Statements of Comprehensive Income (Loss). TTEC continues to provide services to Sears and has received assurances that the cost of its post-petition services will be covered by funds that Sears has available to satisfy its obligations to its current service providers through debtor in possession financing.
The Company had one client that contributed in excess of 10% of total revenue for the year ended December 31, 2018. This client operates in the healthcare industry and is included in the CMS segment. The Company had a different client that contributed 10% of total revenue in the year ended 2016. This client operates in the communications industry and is included in the CMS segment. The revenue from these clients as a percentage of total revenue was as follows:
Accounts receivable from these clients was as follows (in thousands):
The loss of one or more of its significant clients could have a material adverse effect on the Company’s business, operating results, or financial condition. The Company does not require collateral from its clients. To limit the Company’s credit risk with its clients, management performs periodic credit evaluations, maintains allowances for uncollectible accounts and may require pre-payment for services from certain clients. Based on currently available information, management does not believe significant credit risk exists as of December 31, 2018.
Accounts Receivable Factoring Agreement
On March 5, 2019, the Company entered into an Uncommitted Receivables Purchase Agreement with a third-party bank (“Bank”), whereby from time-to-time the Company may elect to sell 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 sold by the Company and purchased by the Bank at any given time shall not exceed $75 million. The discount on the accounts receivable sold will be recorded within Other expense, net in the Consolidated Statements of Comprehensive Income (Loss).