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Sykes Enterprises, Incorporated Reports Second-Quarter 2010 Financial Results

Sequentially, the EMEA loss from operations for the second quarter of 2010 was $3.9 million versus a loss of $0.7 million in the first quarter of 2010, with an operating margin of negative 7.3% versus a negative 1.2%. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 6 for reconciliation), the EMEA operating margins remained unchanged. Excluding the ICT acquisition, the EMEA operating margin was a negative 6.4% versus a negative 0.6% due principally to the above-mentioned factors.

Corporate G&A Expenses

Corporate costs increased to $12.0 million, or 4.0% of revenues, in the second quarter of 2010, compared to $9.7 million, or 4.6% of revenues, 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), corporate costs remained unchanged at $9.7 million, but declined as a percent of revenues to 3.2% in the second quarter of 2010 from 4.6% in comparable period last year. Excluding the ICT acquisition, corporate costs remained essentially unchanged at $9.7 million, or 4.8% of second quarter 2010 revenues.

Sequentially, corporate costs decreased to $12.0 million, or 4.0% of revenues, in the second quarter of 2010, from $31.7 million, or 11.5% of revenues, in the first quarter of 2010. On an adjusted basis, which includes the ICT acquisition but excludes ICT acquisition-related costs (see Exhibit 6 for reconciliation), corporate costs declined to $9.7 million, or 3.2% of revenues, from $11.4 million, or 4.2% of revenues, in the first quarter of 2010. Excluding the ICT acquisition, corporate costs declined to $9.7 million, or 4.8% of revenues, from $11.4 million, or 5.4% of revenues, in the first quarter of 2010 due to a reduction in payroll related expenses.

Interest & O ther Income and Taxes

Interest and other expense for the second quarter of 2010 totaled approximately $5.1 million compared to other income of $0.6 million for the same period in the prior year. Of the $5.7 million negative swing in interest and other expense, approximately $3.6 million was attributable to realized and unrealized foreign currency transaction losses which resulted primarily from U.S. dollar denominated assets and liabilities held by the Company's international subsidiaries. Approximately $1.7 million of the swing was net interest expense due to a combination of higher interest expense and related underwriting fees associated with the acquisition-related term loan as well as lower average interest rates on lower cash balances. The remaining $0.4 million was other miscellaneous expenses.  

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