Sykes Enterprises, Incorporated Reports Second-Quarter 2010 Financial Results
The Company's second quarter 2010 effective tax rate was 27.5% versus 8.1% in the same period last year and above the estimated 8% provided in the Company's second quarter 2010 business outlook. The increase in the Company's second quarter 2010 tax rate was due chiefly to a tax expense resulting from foreign exchange rate fluctuation between a stronger U.S. dollar and a weaker Euro on the planned cash repatriation of $85 million and the recording of a valuation allowance on foreign tax credits, more-than-offsetting the recognition of a tax benefit related to a favorable audit settlement. On an adjusted basis, second quarter 2010 tax rate was 30.4% versus 12.2% in the same period last year and above the estimated 13% provided in the Company's second quarter 2010 business outlook. The increase in tax rate on an adjusted basis both relative to last year and the business outlook was due largely to the above-mentioned factors and a shift in the geographic mix of earnings to higher tax rate jurisdictions.
Earnings Per Diluted Share
The Company's second quarter 2010 earnings per diluted share were $0.05 versus $0.35 in the comparable quarter last year and a range of $0.20 to $0.22 provided in the Company's second quarter 2010 business outlook. The decrease in the Company's second quarter 2010 earnings per share relative to the business outlook was due to foreign currency transaction and other expense net losses (approximately $0.09 per diluted share impact), lower-than-forecasted demand (approximately $0.06 earnings per share impact), and a higher-than-anticipated tax rate (approximately $0.01 earnings per share impact).
On an adjusted basis, second quarter 2010 diluted earnings per share was $0.14 versus a $0.41 per share in the comparable quarter last year, which excludes the impact of the impairment loss on KLA and SHPS, and versus the 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 diluted share would have been $0.25. The decrease in second quarter 2010 earnings per share was due principally to lower-than-forecasted client demand without a commensurate reduction in labor costs.
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