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Sykes Enterprises, Incorporated Reports Second-Quarter 2010 Financial Results

About Sykes Enterprises, Incorporated

SYKES is a global leader in providing customer contact management solutions and services in the business process outsourcing (BPO) arena. SYKES provides an array of sophisticated customer contact management solutions to Fortune 1000 companies around the world, primarily in the communications, financial services, healthcare, technology and transportation and leisure industries. SYKES specializes in providing flexible, high quality customer support outsourcing solutions with an emphasis on inbound technical support and customer service. Headquartered in Tampa, Florida, with customer contact management centers throughout the world, SYKES provides its services through multiple communication channels encompassing phone, e-mail, web and chat. Utilizing its integrated onshore/offshore global delivery model, SYKES serves its clients through two geographic operating segments: the Americas (United States, Canada, Latin America, India and the Asia Pacific region) and EMEA (Europe, Middle East and Africa). SYKES also provides various enterprise support services in the Americas and fulfillment services in EMEA, which include multi-lingual sales order processing, payment processing, inventory control, product delivery and product returns handling. For additional information please visit www.sykes.com .

Forward-Looking Statements

This press release may contain "forward-looking statements," including SYKES' estimates of future business outlook, prospects or financial results, statements regarding SYKES' objectives, expectations, intentions, beliefs or strategies, or statements containing words such as "believe," "estimate," "project," "expect," "intend," "may," "anticipate," "plans," "seeks," or similar expressions. It is important to note that SYKES' actual results could differ materially from those in such forward-looking statements, and undue reliance should not be placed on such statements. Among the important factors that could cause such actual results to differ materially are (i) the impact of economic recessions in the U.S. and other parts of the world, (ii) fluctuations in global business conditions and the global economy, (iii) SYKES' ability to continue the growth of its support service revenues through additional technical and customer contact centers, (iv) currency fluctuations, (v) the timing of significant orders for SYKES' products and services, (vi) loss or addition of significant clients, (vii) the early termination of contracts by clients, (viii) SYKES' ability to recognize deferred revenue through delivery of products or satisfactory performance of services, (ix) construction delays of new or expansion of existing customer support centers, (x) difficulties or delays in implementing SYKES' bundled service offerings, (xi) failure to achieve sales, marketing and other objectives, (xii) variations in the terms and the elements of services offered under SYKES' standardized contract including those for future bundled service offerings, (xiii) changes in applicable accounting principles or interpretations of such principles, (xiv) delays in the Company's ability to develop new products and services and market acceptance of new products and services, (xv) rapid technological change, (xvi) political and country-specific risks inherent in conducting business abroad, (xvii) SYKES' ability to attract and retain key management personnel, (xviii) SYKES' ability to further penetrate into vertically integrated markets, (xix) SYKES' ability to expand its global presence through strategic alliances and selective acquisitions, (xx) SYKES' ability to continue to establish a competitive advantage through sophisticated technological capabilities, (xxi) the ultimate outcome of any lawsuits or penalties (regulatory or otherwise), (xxii) SYKES' dependence on trends toward outsourcing, (xxiii) risk of interruption of technical and customer contact management center operations due to such factors as fire, earthquakes, inclement weather and other disasters, power failures, telecommunications failures, unauthorized intrusions, computer viruses and other emergencies, (xxiv) the existence of substantial competition, (xxv) the ability to obtain and maintain grants and other incentives, including tax holidays or otherwise, (xxvi) the potential of cost savings/synergies associated with the ICTG acquisition not being realized, or not being realized within the anticipated time period, (xxvii) the potential loss of key clients related to the ICTG acquisition, (xxviii) risks related to the integration of the businesses of SYKES and ICTG and (xxix) other risk factors listed from time to time in SYKES' registration statements and reports as filed with the Securities and Exchange Commission. All forward-looking statements included in this press release are made as of the date hereof, and SYKES undertakes no obligation to update any such forward-looking statements, whether as a result of new information, future events, or otherwise.

Sykes Enterprises, Incorporated 
Condensed Consolidated Statements of Operations
(in thousands, except per share data) 
(Unaudited)
Exhibit 1
     
  Three Months Ended
  SYKES + ICT June 30, 2010 SYKES June 30, 2009
     
Revenues  $ 299,177  $ 208,839
Direct salaries and related costs (197,244) (133,727)
General and administrative (93,287) (56,477)
Canada's KLA Impairment  --  (1,584)
Income from operations 8,646 17,051
Other income (expense), net (5,135) 643
SHPS Impairment  --  (2,089)
Income before benefit (provision) for income taxes 3,511 15,605
(Provision) for income taxes (966) (1,257)
Net income  $ 2,545  $ 14,348
     
 Net income per basic share  $ 0.05  $ 0.35
 Shares outstanding, basic  46,601  40,654
     
 Net income per diluted share  $ 0.05  $ 0.35
 Shares outstanding, diluted  46,648  40,953
 
Sykes Enterprises, Incorporated 
Condensed Consolidated Statements of Operations
(in thousands, except per share data) 
(Unaudited)
Exhibit 2
     
  Six Months Ended
  SYKES + ICT June 30, 2010 SYKES June 30, 2009
     
Revenues  $ 574,394  $ 412,080
Direct salaries and related costs (375,765) (263,980)
General and administrative (196,140) (111,965)
Canada's KLA Impairment  --  (1,584)
Income from operations 2,489 34,551
Other income (expense), net (8,958) 2,200
SHPS Impairment  --  (2,089)
Income (loss) before (provision) for income taxes (6,469) 34,662
(Provision) for income taxes (499) (5,544)
Net income (loss)  $ (6,968)  $ 29,118
     
 Net income (loss) per basic share  $ (0.15)  $ 0.72
 Shares outstanding, basic  45,604 40,632
     
 Net income (loss) per diluted share  $ (0.15)  $ 0.71
 Shares outstanding, diluted  45,712 40,999
 
Sykes Enterprises, Incorporated 
Segment Results
(in thousands)
(Unaudited)
Exhibit 3
   
  Three Months Ended
  SYKES + ICT June 30, 2010 SYKES June 30, 2009
     
Revenues:    
 Americas  $ 245,957  $ 148,935
 EMEA 53,220 59,904
 Total  $ 299,177  $ 208,839
     
Operating Income:    
 Americas  $ 24,603  $ 24,998
 EMEA (3,908) 1,752
 Corporate G&A expenses (12,049) (9,699)
 Income from operations 8,646 17,051
     
 SHPS Impairment  --  (2,089)
 Other income (expense), net (5,135) 643
 (Provision) for income taxes (966) (1,257)
 Net Income  $ 2,545  $ 14,348
     
     
  Six Months Ended
  SYKES + ICT June 30, 2010 SYKES June 30, 2009
     
Revenues:    
 Americas  $ 461,495  $ 291,742
 EMEA 112,899 120,338
 Total  $ 574,394  $ 412,080
     
Operating Income:    
 Americas  $ 50,849  $ 48,376
 EMEA (4,614) 6,411
 Corporate G&A expenses (43,746) (20,236)
 Income from operations 2,489 34,551
     
 SHPS Impairment  --  (2,089)
 Other income (expense), net (8,958) 2,200
 (Provision) for income taxes (499) (5,544)
 Net income (loss)  $ (6,968)  $ 29,118
 
Sykes Enterprises, Incorporated 
Condensed Consolidated Statements of Operations
(in thousands, except per share data) 
Exhibit 4
           
  Three Months Ended June 30, 2010
         
    Acquisition related Costs  
           
  SYKES + ICT Reported ICT Severance & Consulting Engagement  ICT Depreciation and Amortization of Property & Equipment and Intangibles Write-Ups ICT Merger & Integration Costs SYKES + ICT Adjusted
           
Revenues  $ 299,177        $ 299,177
Direct salaries and related costs (197,244) 19     (197,225)
General and administrative (93,287) 1,718 3,243 1,022 (87,304)
Income from operations 8,646 1,737 3,243 1,022 14,648
Other (expense), net (5,135)       (5,135)
Income before (provision) for income taxes 3,511 1,737 3,243 1,022 9,513
(Provision) for income taxes (966) (557) (1,038) (327) (2,888)
Net income  $ 2,545  $ 1,180  $ 2,205  $ 695  $ 6,625
           
 Net income (loss) per basic share  $ 0.05  $ 0.03  $ 0.05  $ 0.01  $ 0.14
 Shares outstanding, basic  46,601  46,601  46,601  46,601  46,601
           
 Net income (loss) per diluted share  $ 0.05  $ 0.03  $ 0.05  $ 0.01  $ 0.14
 Shares outstanding, diluted  46,648  46,648  46,648  46,648  46,648
           
         
    Acquisition related Costs  
           
  SYKES + ICT Reported ICT Severance & Consulting Engagement  ICT Depreciation and Amortization of Property & Equipment and Intangibles Write-Ups ICT Merger & Integration Costs SYKES + ICT Adjusted
           
Revenues:          
 Americas  $ 245,957        $ 245,957
 EMEA 53,220       53,220
 Total  $ 299,177  $ --  $ --  $ --  $ 299,177
           
Operating Income:          
 Americas  $ 24,603 407 3,235    $ 28,245
 EMEA (3,908)   8   (3,900)
 Corporate G&A expenses (12,049) 1,330   1,022 (9,697)
 Income from operations 8,646 1,737 3,243 1,022 14,648
 Other (expense), net (5,135)       (5,135)
 (Provision) for income taxes (966) (557) (1,038) (327) (2,888)
           
 Net Income  $ 2,545  $ 1,180  $ 2,205  $ 695  $ 6,625
 
Sykes Enterprises, Incorporated 
Condensed Consolidated Statements of Operations
(in thousands, except per share data) 
Exhibit 5
           
  Six Months Ended June 30, 2010
         
    Acquisition related Costs  
         
  SYKES + ICT Reported ICT Severance & Consulting Engagement  ICT Depreciation and Amortization of Property & Equipment and Intangibles Write-Ups ICT Merger & Integration Costs SYKES + ICT Adjusted
           
Revenues  $ 574,394        $ 574,394
Direct salaries and related costs (375,765) 34     (375,731)
General and administrative (196,140) 15,171 5,381 8,676 (166,912)
Income from operations 2,489 15,205 5,381 8,676 31,751
Other (expense), net (8,958)       (8,958)
Income (loss) before (Provision) for income taxes (6,469) 15,205 5,381 8,676 22,793
(Provision) for income taxes (499) (4,056) (1,436) (2,314) (8,305)
Net income (loss)  $ (6,968)  $ 11,149  $ 3,945  $ 6,362 14,488
           
 Net income (loss) per basic share  $ (0.15)  $ 0.24  $ 0.09  $ 0.14  $ 0.32
 Shares outstanding, basic  45,604  45,604  45,604  45,604  45,604
           
 Net income (loss) per diluted share  $ (0.15)  $ 0.24  $ 0.09  $ 0.14  $ 0.32
 Shares outstanding, diluted  45,712  45,712  45,712  45,712  45,712
           
         
    Acquisition related Costs  
         
  SYKES + ICT June 30, 2010 ICT Severance & Consulting Engagement  ICT Depreciation and Amortization of Property & Equipment and Intangibles Write-Ups ICT Merger & Integration Costs SYKES + ICT Adjusted
           
Revenues:          
 Americas  $ 461,495        $ 461,495
 EMEA 112,899       112,899
 Total  $ 574,394  $ --  $ --  $ --  $ 574,394
           
Operating Income:          
 Americas  $ 50,849 1,260  $ 5,366    $ 57,475
 EMEA (4,614)   15   (4,599)
 Corporate G&A expenses (43,746) 13,945   8,676 (21,125)
 Income from operations 2,489 15,205 5,381 8,676 31,751
           
 Other (expense), net (8,958)       (8,958)
 (Provision) for income taxes (499) (4,056) (1,436) (2,314) (8,305)
           
 Net income (loss)  $ (6,968)  $ 11,149  $ 3,945  $ 6,362  $ 14,488
 
Sykes Enterprises, Incorporated 
Segment Results
(in thousands)
(Unaudited)
Exhibit 6
     
  Three Months Ended
  SYKES + ICT Adjusted June 30, 2010 SYKES + ICT Adjusted March 31, 2010
     
Revenues  $ 299,177  $ 275,217
Direct salaries and related costs (197,225) (178,506)
General and administrative (87,304) (79,608)
Income from operations 14,648 17,103
Other (expense), net (5,135) (3,823)
Income before provision for income taxes 9,513 13,280
(Provision) for income taxes (2,888) (5,417)
Net income  $ 6,625  $ 7,863
     
 Net income per basic share  $ 0.14  $ 0.18
 Shares outstanding, basic  46,601  44,590
     
 Net income per diluted share  $ 0.14  $ 0.18
 Shares outstanding, diluted  46,648  44,766
     
     
  Three Months Ended
  SYKES + ICT Adjusted June 30, 2010 SYKES + ICT Adjusted March 31, 2010
     
Revenues:    
 Americas  $ 245,957  $ 215,537
 EMEA 53,220 59,680
 Total  $ 299,177  $ 275,217
     
Operating Income:    
 Americas  $ 28,245  $ 29,230
 EMEA (3,900) (699)
 Corporate G&A expenses (9,697) (11,428)
 Income from operations 14,648 17,103
     
 Other (expense), net (5,135) (3,823)
 Provision for income taxes (2,888) (5,417)
     
 Net income  $ 6,625  $ 7,863
     
 
Sykes Enterprises, Incorporated 
Condensed Consolidated Balance Sheets
(in thousands)
Exhibit 7
     
     
  June 30, 2010 December 31, 2009
     
Assets:    
Current assets  $ 493,610  $ 547,854
Property and equipment, net 126,019 80,264
Goodwill & Intangibles, net 169,444 23,300
Other noncurrent assets 44,173 21,053
 Total assets  $ 833,246  $ 672,471
     
Liabilities & Shareholders' Equity:    
Current liabilities  $ 181,582  $ 200,418
Noncurrent liabilities 90,215 21,379
Shareholders' equity 561,449 450,674
 Total liabilities and shareholders' equity  $ 833,246  $ 672,471
     
     
     
Sykes Enterprises, Incorporated 
Supplementary Data
     
  Q2 2010 Q2 2009
     
Geographic Mix (% of Total Revenues):    
     
 Americas (1) 82.2% 71.3%
 Europe, Middle East & Africa (EMEA) 17.8% 28.7%
 Total: 100.0% 100.0%
     
(1) Includes the United States, Canada, Latin America, South Asia and the Asia Pacific (APAC) Region. Latin America, South Asia and APAC are included in the Americas due to the nature of the business and client profile, which is primarily made up of U.S. based clients. 
     
     
  Q2 2010 Q2 2009
     
Vertical Industry Mix (% of Total Revenues):  
     
 Communications 34% 36%
 Financial Services 25% 15%
 Technology / Consumer 20% 30%
 Healthcare 7% 6%
 Transportation & Leisure 6% 9%
 Other 8% 4%
 Total: 100% 100%
 
Sykes Enterprises, Incorporated 
Cash Flow from Operations
(in thousands)
(Unaudited)
Exhibit 8
     
     
  Three Months Ended
  June 30, 2010 June 30, 2009
     
Cash Flow From Operating Activities:    
 Net income  $ 2,545  $ 14,348
 Depreciation and amortization 15,252 7,162
 Changes in assets and liabilities and other 9,323 3,933
 Net cash provided by operating activities  $ 27,120  $ 25,443
     
Capital expenditures  $ 7,342  $ 7,251
Cash interest paid  $ 876  $ 560
Cash taxes paid  $ 6,362  $ 2,722
     
     
     
  Six Months Ended
  June 30, 2010 June 30, 2009
     
Cash Flow From Operating Activities:    
 Net income (loss)  $ (6,968)  $ 29,118
 Depreciation and amortization 28,015 13,938
 Changes in assets and liabilities and other       (10,727) (9,567)
 Net cash provided by operating activities  $ 10,320  $ 33,489
     
Capital expenditures  $ 13,470  $ 18,308
Cash interest paid  $ 1,968  $ 630
Cash taxes paid  $ 13,107  $ 6,274
 
Sykes Enterprises, Incorporated 
Business Outlook Reconciliation*
Exhibit 9
   
  Business Outlook
   
  Third Quarter 2010
Adjusted Diluted Earnings Per Share $0.24 - $0.26
 Severance & Consulting Engagement Costs $0.00
 Merger and Integration Costs ($0.01) - $0.00
 Depreciation & Amortization of Property & Equipment and Intangibles Write-Ups       ($0.05) - $(0.04)
Earnings (loss) Per Share $0.18 - $0.22
   
   
  Business Outlook
   
  Full Year 2010
Adjusted Diluted Earnings Per Share $0.81 - $0.83
 Severance & Consulting Engagement Costs ($0.24)
 Merger and Integration Costs ($0.15) - ($0.14)
 Depreciation & Amortization of Property & Equipment and Intangibles Write-Ups ($0.19) - ($0.17)
Diluted Earnings Per Share $0.23 - $0.28
CONTACT:  Sykes Enterprises, Incorporated
          Subhaash Kumar
          (813) 233-7143

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