10-K
TTEC HOLDINGS, INC. filed this Form 10-K on 03/06/2019
Entire Document
 

Table of Contents

TTEC HOLDINGS, INC. AND SUBSIDIARIES

Notes to the Consolidated Financial Statements

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.

 

(15)LEASES

The Company has various operating leases primarily for customer engagement centers, equipment, and office space, which generally contain renewal options. Rent expense under operating leases was approximately $43.7 million, $46.3 million and $39.5 million for the years ended December 31, 2018,  2017 and 2016, respectively.

In 2008, the Company sub-leased one of its customer engagement centers to a third party for the remaining term of the original lease. The sub-lease began on January 1, 2009 and rental income is recognized on a straight-line basis over the term of the sub-lease through 2021. In 2017, the Company sub-leased one of its office spaces for the remaining term of the original lease. The sub-lease began on November 6, 2017 and ends May 31, 2021.

The future minimum rental payments and receipts required under non-cancelable operating leases as of December 31, 2018 are as follows (in thousands):

 

 

 

 

 

 

 

 

 

 

    

Operating

    

Sub-Lease

 

 

 

Leases

 

Income

 

2019

 

$

47,379

 

$

(2,624)

 

2020

 

 

36,045

 

 

(2,631)

 

2021

 

 

30,678

 

 

(276)

 

2022

 

 

26,584

 

 

 —

 

2023

 

 

17,226

 

 

 —

 

Thereafter

 

 

25,362

 

 

 —

 

Total

 

$

183,274

 

$

(5,531)

 

 

The Company records operating lease expense on a straight-line basis over the life of the lease as described in Note 1. The deferred lease liability as of December 31, 2018 and 2017 was $16.6 million and $15.7 million, respectively.

Asset Retirement Obligations

The Company records asset retirement obligations (“ARO”) for several of its customer engagement center leases. Capitalized costs related to ARO’s are included in Other long-term assets in the accompanying Consolidated Balance Sheets while the ARO liability is included in Other long-term liabilities in the accompanying Consolidated Balance Sheets. Following is a summary of the amounts recorded (in thousands):

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Balance at

    

 

 

    

 

 

    

 

 

    

Balance at

 

 

 

December 31,

 

Additions and

 

 

 

 

 

 

 

December 31,

 

 

 

2017

 

Modifications

 

Accretion

 

Settlements

 

2018

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARO liability total

 

$

1,938

 

$

1,153

 

$

14

 

$

(623)

 

$

2,482

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

Balance at

    

 

 

    

 

 

    

 

 

    

Balance at

 

 

 

December 31,

 

Additions and

 

 

 

 

 

 

 

December 31,

 

 

 

2016

 

Modifications

 

Accretion

 

Settlements

 

2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARO liability total

 

$

1,861

 

$

317

 

$

 7

 

$

(247)

 

$

1,938

 

 

Increases to ARO result from a new lease agreement or modifications on an ARO from a preexisting lease agreement. Modifications to ARO liabilities and accumulated accretion occur when lease agreements are amended or when assumptions change, such as the rate of inflation. Modifications are accounted for prospectively as changes in estimates. Settlements occur when leased premises are vacated and the actual

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