Sykes Enterprises, Incorporated Reports Second-Quarter 2010 Financial Results
Revenues from the Company's Europe, Middle East and Africa (EMEA) region decreased 11.2% to $53.2 million, representing 17.8% of SYKES' total revenues for the second quarter of 2010 compared to $59.9 million, or 28.7%, in the prior year's second quarter. The ICT acquisition contributed approximately $0.4 million in revenues to EMEA in the second quarter of 2010. Excluding the ICT acquisition and on a constant currency basis, EMEA revenues decreased 8.0% due largely to previously-discussed client program expirations, near-shore migration and sustained weakness within the technology vertical as well as a decline in demand with certain clients within the communications vertical, which more than offset new client and program wins. The Company continues to enhance its near-shore delivery solution for the EMEA market and is encouraged by the interest it has received from prospective clients for its recently-announced beach heads in Egypt, Romania and Germany.
Sequentially, revenues from the Company's EMEA region decreased 10.8% to $53.2 million, representing 17.8% of SYKES' total revenues for the second quarter of 2010 compared to $59.7 million, or 21.7% of SYKES' total revenues in the first quarter of 2010, which included only two-months of revenue contribution from the ICT acquisition. Excluding the ICT acquisition and on a constant currency basis, EMEA revenues decreased 4.6% sequentially due largely to above-mentioned factors.
The EMEA loss from operations for the second quarter of 2010 was $3.9 million versus an income of $1.8 million, with an operating margin of negative 7.3% versus a positive 2.9% in the comparable quarter last year. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 4 for reconciliation), the comparable operating margins remained unchanged. Excluding the ICT acquisition, the EMEA operating margin was a negative 6.4% versus a positive 2.9% due principally to soft client demand related to economic weakness, migration of demand to near-shore locations and the corresponding termination and duplicative ramp costs, including facilities and recruiting.
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