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Sykes Enterprises, Incorporated Reports Second-Quarter 2010 Financial Results

-- Anticipate early retirement of acquisition-related term loan

-- Solid progress on operational integration of ICT acquisition

-- Increasing 2010 and long-term anticipated cost synergy target

-- Updating 2010 business outlook

TAMPA, Fla., Aug. 2, 2010 (GLOBE NEWSWIRE) -- Sykes Enterprises, Incorporated ("SYKES" or the "Company") (Nasdaq:SYKE), a global leader in providing outsourced customer contact management solutions and services in the business process outsourcing (BPO) arena, announced today second-quarter 2010 financial results.             

Second quarter 2010 Highlights

  • Second quarter 2010 revenues of $299.2 million increased $90.3 million, or 43.3%, over the comparable quarter last year; second quarter 2010 revenues included $98.5 million in contribution from the ICT acquisition  
  • Second quarter 2010 operating margin was 2.9% versus 8.2% on a comparable basis; on an adjusted basis, a non-GAAP measure, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 4 for reconciliation), second quarter 2010 operating margin was 4.9% versus 8.9%, which excludes the KLA impairment loss in the year-ago quarter, comparably due to previously-discussed program expirations beginning in the second-half of 2009, lower-than-forecasted client demand without a commensurate reduction in labor costs and costs related to migration of demand to near-shore locations in Egypt, Romania and Germany  
  • Excluding the ICT acquisition and on a constant currency basis, second quarter 2010 revenues decreased 5.9% comparably due to tougher year-ago comparisons driven principally by previously-discussed program expirations, migration of demand to near-shore locations as well as softness in the technology and communications verticals, which more than offset increased demand from the financial services and transportation verticals and new client wins  
  • Excluding the ICT acquisition, second quarter 2010 operating margins declined 400 basis points (4.9% vs. 8.9%) comparably due principally to previously-discussed client program expirations, lower-than-forecasted client demand without a commensurate reduction in labor costs, wage increases in certain geographies and migration costs  
  • Second quarter 2010 diluted earnings per share was $0.05 versus $0.35 in the comparable quarter last year and below the Company's second quarter 2010 business outlook earnings per share range of $0.20 to $0.22. The decrease in the Company's second quarter 2010 diluted earnings per share on a comparable basis and relative to the business outlook was due to a combination of foreign currency transaction and other expense net losses, lower-than- forecasted-demand and a higher tax rate  
  • On an adjusted basis, second quarter 2010 diluted earnings per share was $0.14 versus $0.41 per share in the comparable quarter last year, which excludes the impact of the impairment loss on KLA and SHPS in the year-ago quarter, and versus an adjusted diluted earnings per share range of $0.28 to $0.32 provided in the Company's second quarter 2010 business outlook. Assuming a forecasted tax rate of 13% as projected in the Company's second quarter 2010 business outlook and assuming the projected net interest expense of approximately $1.0 million for the second quarter of 2010, the adjusted diluted earnings per share would have been $0.25. The decrease in second quarter 2010 adjusted earnings per share was due to principally to lower-than-forecasted client demand

Americas Region

Revenues generated from the Company's Americas segment, including operations in North America and offshore (Latin America, South Asia and the Asia Pacific region), increased 65.1% to $246.0 million, or 82.2% of total revenues, for the second quarter of 2010. Revenues for the prior year period totaled $149.0 million, or 71.3% of total revenues. The ICT acquisition contributed approximately $98.1 million to the Americas second quarter 2010 revenues. Excluding the ICT acquisition and on a constant currency basis, second quarter 2010 Americas revenues decreased 5.0% comparably due principally to expiration of previously-discussed client programs and lower-than-forecasted demand, which more than offset increased demand from the financial services and transportation verticals as well as new client wins.

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