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8-K - FORM 8-K - SYKES ENTERPRISES INC | d576778d8k.htm |
Exhibit 99.1
News Release
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news release
FOR IMMEDIATE RELEASE | AUGUST 5, 2013 |
SYKES ENTERPRISES, INCORPORATED REPORTS SECOND-QUARTER 2013 FINANCIAL RESULTS
--In-line revenues, productivity gains and a shift in certain ramps to Q3 drive better-than-expected earnings per share relative to business outlook --Facility transfers and rationalization continue --Reiterating full-year 2013 business outlook
TAMPA, FL August 5, 2013 - Sykes Enterprises, Incorporated (SYKES or the Company) (NASDAQ: SYKE), a global leader in providing comprehensive outsourced customer contact management solutions and services in the business process outsourcing (BPO) arena, announced today its financial results for the second quarter ended June 30, 2013. | ||||
SYKES Enterprises, Incorporated
Corporate Headquarters:
400 North Ashley Drive
Tampa, FL USA 33602
1 800 TO SYKES
http://www.sykes.com
EMEA Operations:
599 Calder Road
Edinburgh EH11 4GA
Scotland
+44 (0) 131 458-6500
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Second Quarter 2013 Financial Highlights
Second quarter 2013 revenues from continuing operations of $304.7 million increased $39.9 million, or 15.1%, from $264.8 million in the comparable quarter last year; second quarter 2013 revenues include $25.1 million in revenue contribution from the Alpine Access acquisition
On a constant currency basis and excluding Alpine Access revenue contribution of $25.1 million, second quarter 2013 revenues from continuing operations increased 5.6% comparably, driven largely by the expansion of existing and some new client programs across the communications, financial services, technology and transportation verticals
Second quarter 2013 operating margin from continuing operations was 1.8% versus 3.3% in the same period last year; on a non-GAAP basis (see section titled Non-GAAP Financial Measures for an explanation and see Exhibit 6 for reconciliation), second quarter 2013 operating margin from continuing operations decreased to 3.7% versus 4.7% in the same period last year, with the decrease due to a combination of costs related to seat capacity build out and client program ramp ups, demand softness in the healthcare vertical without a commensurate reduction in labor costs and approximately 60 basis points in unfavorable foreign currency movements resulting from appreciating functional currencies versus the U.S. dollar |
Second quarter 2013 diluted earnings per share from continuing operations were $0.13 versus $0.18 in the comparable quarter last year, with the reduction due principally to the above-mentioned factors, partially mitigated by a tax benefit during the second quarter of 2013
On a non-GAAP basis, second quarter 2013 diluted earnings per share from continuing operations were $0.22 versus $0.24 in the same period last year (see Exhibit 6 for reconciliation) and versus the May 2013 business outlook range of $0.18 to $0.22, with the comparable decrease driven largely by the above-mentioned factors; relative to the May 2013 business outlook range, the diluted earnings per share were in line despite a higher than expected effective tax rate |
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Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Exhibit 1
Three Months Ended | ||||||||||||
June 30, | June 30, | March 31, | ||||||||||
2013 | 2012 | 2013 | ||||||||||
Revenues |
$ | 304,735 | $ | 264,802 | $ | 301,244 | ||||||
Direct salaries and related costs |
(210,141) | (174,630) | (203,706) | |||||||||
General and administrative |
(75,247) | (69,642) | (73,733) | |||||||||
Depreciation, net |
(10,017) | (9,816) | (10,169) | |||||||||
Amortization of intangibles |
(3,713) | (2,009) | (3,759) | |||||||||
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Income from continuing operations |
5,617 | 8,705 | 9,877 | |||||||||
Total other income (expense), net |
(709) | (446) | (159) | |||||||||
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Income from continuing operations before income taxes |
4,908 | 8,259 | 9,718 | |||||||||
Income taxes |
688 | (511) | (3,200) | |||||||||
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Income from continuing operations, net of taxes |
5,596 | 7,748 | 6,518 | |||||||||
(Loss) from discontinued operations, net of taxes |
- | - | - | |||||||||
(Loss) on sale of discontinued operations, net of taxes |
- | - | - | |||||||||
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Net income |
$ | 5,596 | $ | 7,748 | $ | 6,518 | ||||||
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Net income (loss) per share: |
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Basic: |
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Continuing operations |
$ | 0.13 | $ | 0.18 | $ | 0.15 | ||||||
Discontinued operations |
0.00 | 0.00 | 0.00 | |||||||||
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Net income (loss) per share |
$ | 0.13 | $ | 0.18 | $ | 0.15 | ||||||
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Diluted: |
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Continuing operations |
$ | 0.13 | $ | 0.18 | $ | 0.15 | ||||||
Discontinued operations |
0.00 | 0.00 | 0.00 | |||||||||
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Net income (loss) per share |
$ | 0.13 | $ | 0.18 | $ | 0.15 | ||||||
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Weighted average shares: |
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Basic |
42,936 | 43,094 | 43,036 | |||||||||
Diluted |
42,954 | 43,103 | 43,052 |
7
Sykes Enterprises, Incorporated
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(Unaudited)
Exhibit 2
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2013 | 2012 | |||||||
Revenues |
$ | 605,979 | $ | 542,900 | ||||
Direct salaries and related costs |
(413,847) | (353,130) | ||||||
General and administrative |
(148,980) | (141,906) | ||||||
Depreciation, net |
(20,186) | (20,450) | ||||||
Amortization of intangibles |
(7,472) | (3,870) | ||||||
Impairment of long-lived assets |
- | (149) | ||||||
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Income from continuing operations |
15,494 | 23,395 | ||||||
Total other income (expense), net |
(868) | (999) | ||||||
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Income from continuing operations before income taxes |
14,626 | 22,396 | ||||||
Income taxes |
(2,512) | (3,878) | ||||||
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Income from continuing operations, net of taxes |
12,114 | 18,518 | ||||||
(Loss) from discontinued operations, net of taxes |
- | (820) | ||||||
Gain (loss) on sale of discontinued operations, net of taxes |
- | (10,707) | ||||||
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Net income (loss) |
$ | 12,114 | $ | 6,991 | ||||
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Net income (loss) per share: |
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Basic: |
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Continuing operations |
$ | 0.28 | $ | 0.43 | ||||
Discontinued operations |
0.00 | (0.27) | ||||||
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Net income (loss) per share |
$ | 0.28 | $ | 0.16 | ||||
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Diluted: |
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Continuing operations |
$ | 0.28 | $ | 0.43 | ||||
Discontinued operations |
0.00 | (0.27) | ||||||
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Net income (loss) per share |
$ | 0.28 | $ | 0.16 | ||||
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Weighted average shares: |
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Basic |
42,992 | 43,205 | ||||||
Diluted |
43,011 | 43,256 |
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Sykes Enterprises, Incorporated
Segment Results
(in thousands, except per share data)
(Unaudited)
Exhibit 3
Three Months Ended | ||||||||||||
June 30, | June 30, | March 31, | ||||||||||
2013 | 2012 | 2013 | ||||||||||
Revenues: |
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Americas |
$ | 255,163 | $ | 221,214 | $ | 255,214 | ||||||
EMEA |
49,572 | 43,588 | 46,030 | |||||||||
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Total |
$ | 304,735 | $ | 264,802 | $ | 301,244 | ||||||
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Operating Income: |
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Americas |
$ | 19,221 | $ | 20,778 | $ | 19,522 | ||||||
EMEA |
(1,924) | (886) | 1,855 | |||||||||
Corporate G&A expenses |
(11,680) | (11,187) | (11,500) | |||||||||
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Income from continuing operations |
5,617 | 8,705 | 9,877 | |||||||||
Total other income (expense), net |
(709) | (446) | (159) | |||||||||
Income taxes |
688 | (511) | (3,200) | |||||||||
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Income from continuing operations, net of taxes |
$ | 5,596 | $ | 7,748 | $ | 6,518 | ||||||
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Six Months Ended | ||||||||||||
June 30, | June 30, | |||||||||||
2013 | 2012 | |||||||||||
Revenues: |
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Americas |
$ | 510,377 | $ | 451,301 | ||||||||
EMEA |
95,602 | 91,599 | ||||||||||
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Total |
$ | 605,979 | $ | 542,900 | ||||||||
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Operating Income: |
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Americas |
$ | 38,743 | $ | 47,734 | ||||||||
EMEA |
(69) | (498) | ||||||||||
Corporate G&A expenses |
(23,180) | (23,841) | ||||||||||
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Income from continuing operations |
15,494 | 23,395 | ||||||||||
Total other income (expense), net |
(868) | (999) | ||||||||||
Income taxes |
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(2,512)
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(3,878) | ||||||||
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Income from continuing operations, net of taxes |
$ | 12,114 | $ | 18,518 | ||||||||
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Sykes Enterprises, Incorporated
Condensed Consolidated Balance Sheets
(in thousands, except seat data)
(Unaudited)
Exhibit 4
June 30, | December 31, | |||||||||||
2013 | 2012 | |||||||||||
Assets: |
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Current assets |
$ | 494,199 | $ | 467,342 | ||||||||
Property and equipment, net | 105,723 | 101,295 | ||||||||||
Goodwill & intangibles, net | 284,525 | 296,268 | ||||||||||
Other noncurrent assets | 41,113 | 43,784 | ||||||||||
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Total assets |
$ | 925,560 | $ | 908,689 | ||||||||
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Liabilities & Shareholders Equity: |
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Current liabilities |
$ | 164,610 | $ | 164,583 | ||||||||
Noncurrent liabilities |
157,189 | 137,842 | ||||||||||
Shareholders equity |
603,761 | 606,264 | ||||||||||
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Total liabilities and shareholders equity |
$ | 925,560 | $ | 908,689 | ||||||||
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Sykes Enterprises, Incorporated |
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Supplementary Data | ||||||||||||
Q2 2013 |
Q2 2012 | |||||||||||
Geographic Mix (% of Total Revenues): |
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Americas (1) |
84% | 84% | ||||||||||
Europe, Middle East & Africa (EMEA) |
16% | 16% | ||||||||||
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Total |
100% | 100% | ||||||||||
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(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.
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Q2 2013 | Q2 2012 | |||||||||||
Vertical Industry Mix (% of Total Revenues): |
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Communications |
34% | 30% | ||||||||||
Financial Services |
29% | 31% | ||||||||||
Technology / Consumer |
15% | 16% | ||||||||||
Transportation & Leisure |
9% | 10% | ||||||||||
Healthcare |
6% | 8% | ||||||||||
Other |
7% | 5% | ||||||||||
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Total |
100% | 100% | ||||||||||
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Seat Capacity (3) | ||||||||||||
Q2 2013 | Q2 2012 | Q1 2013 | ||||||||||
Americas (2) |
34,500 | 35,800 | 35,100 | |||||||||
EMEA |
5,800 | 5,700 | 5,300 | |||||||||
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Total |
40,300 | 41,500 | 40,400 | |||||||||
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Offshore |
22,000 | 23,600 | 22,900 | |||||||||
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Capacity Utilization | ||||||||||||
Q2 2013 | Q2 2012 | Q1 2013 | ||||||||||
Americas (2) |
74% | 69% | 72% | |||||||||
EMEA |
81% | 70% | 82% | |||||||||
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Total |
75% | 70% | 73% | |||||||||
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Offshore |
77% | 72% | 76% | |||||||||
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(2) Americas data includes offshore as some clients in the U.S. are serviced from offshore geographies, including The Philippines, Costa Rica, etc. |
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(3) The seat capacity and capacity utilization data are related to the Companys brick-and-mortar call centers. At the end of the second quarter 2013, the Company had approximately 2,500 agent FTEs working virtually from home both in the U.S. and Canada, including 2,200 from Alpine Access. |
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Sykes Enterprises, Incorporated
Cash Flow from Operations
(in thousands)
(Unaudited)
Exhibit 5
Three Months Ended | ||||||||
June 30, | June 30, | |||||||
2013 | 2012 | |||||||
Cash Flow From Operating Activities: |
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Net income (loss) |
$ | 5,596 | $ | 7,748 | ||||
Depreciation, net |
10,017 | 9,816 | ||||||
Amortization of intangibles |
3,713 | 2,009 | ||||||
Changes in assets and liabilities and other |
(12,166) | 1,194 | ||||||
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Net cash provided by (used for) operating activities |
$ | 7,160 | $ | 20,767 | ||||
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Capital expenditures |
$ | 12,995 | $ | 6,988 | ||||
Cash interest paid |
$ | 549 | $ | 222 | ||||
Cash taxes paid |
$ | 3,464 | $ | 16,930 | ||||
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2013 | 2012 | |||||||
Cash Flow From Operating Activities: |
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Net income (loss) |
$ | 12,114 | $ | 6,991 | ||||
Depreciation, net |
20,186 | 20,450 | ||||||
Amortization of intangibles |
7,472 | 3,870 | ||||||
Changes in assets and liabilities and other |
(45,425) | (6,426) | ||||||
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Net cash provided by (used for) operating activities |
$ | (5,653) | $ | 24,885 | ||||
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Capital expenditures |
$ | 26,061 | $ | 13,806 | ||||
Cash interest paid |
$ | 1,030 | $ | 528 | ||||
Cash taxes paid |
$ | 8,481 | $ | 22,304 |
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Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
Exhibit 6
Three Months Ended | ||||||||||||
June 30, | June 30, | March 31, | ||||||||||
2013 | 2012 | 2013 | ||||||||||
GAAP income from continuing operations |
$5,617 | $8,705 | $9,877 | |||||||||
Adjustments: |
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Acquisition-related severance & consulting engagement costs |
1,307 | - | 366 | |||||||||
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
4,202 | 3,039 | 4,435 | |||||||||
Merger & integration costs |
51 | 656 | 320 | |||||||||
EMEA restructuring |
3 | 76 | 7 | |||||||||
Other |
- | - | - | |||||||||
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Non-GAAP income from continuing operations |
$11,180 | $12,476 | $15,005 | |||||||||
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Three Months Ended | ||||||||||||
June 30, | June 30, | March 31, | ||||||||||
2013 | 2012 | 2013 | ||||||||||
GAAP income from continuing operations, net of taxes, per diluted share | $0.13 | $0.18 | $0.15 | |||||||||
Adjustments: |
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Acquisition-related severance & consulting engagement costs |
0.02 | - | 0.01 | |||||||||
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
0.07 | 0.05 | 0.07 | |||||||||
Merger & integration costs |
- | 0.01 | - | |||||||||
EMEA restructuring |
- | - | - | |||||||||
Other |
- | - | - | |||||||||
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Non-GAAP income from continuing operations, net of taxes, per diluted share | $0.22 | $0.24 | $0.23 | |||||||||
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Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information By Segment
(in thousands)
(Unaudited)
Exhibit 7
Americas | EMEA | Other (1) | ||||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
GAAP income from continuing operations | $ | 19,221 | $ | 20,778 | ($1,924) | ($886) | ($11,680) | ($11,187) | ||||||||||||||||
Adjustments: |
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Acquisition-related severance & consulting engagement costs |
1,307 | - | - | - | - | - | ||||||||||||||||||
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
4,202 | 3,039 | - | - | - | - | ||||||||||||||||||
Merger & integration costs |
- | 656 | - | - | 51 | - | ||||||||||||||||||
EMEA restructuring |
- | - | 3 | 76 | - | - | ||||||||||||||||||
Other |
- | - | - | - | - | - | ||||||||||||||||||
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Non-GAAP income from continuing operations | $24,730 | $24,473 | ($1,921) | ($810) | ($11,629) | ($11,187) | ||||||||||||||||||
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Americas | EMEA | Other (1) | ||||||||||||||||||||||
Three Months Ended | Three Months Ended | Three Months Ended | ||||||||||||||||||||||
June 30, | March 31, | June 30, | March 31, | June 30, | March 31, | |||||||||||||||||||
2013 | 2013 | 2013 | 2013 | 2013 | 2013 | |||||||||||||||||||
GAAP income from continuing operations | $19,221 | $ | 19,522 | ($1,924) | $1,855 | ($11,680) | ($11,500) | |||||||||||||||||
Adjustments: |
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Acquisition-related severance & consulting engagement costs |
1,307 | 207 | - | - | - | 159 | ||||||||||||||||||
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
4,202 | 4,435 | - | - | - | - | ||||||||||||||||||
Merger & integration costs |
- | - | - | - | 51 | 320 | ||||||||||||||||||
EMEA restructuring |
- | - | 3 | 7 | - | - | ||||||||||||||||||
Other |
- | - | - | - | - | - | ||||||||||||||||||
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Non-GAAP income from continuing operations | $24,730 | $24,164 | ($1,921) | $1,862 | ($11,629) | ($11,021) | ||||||||||||||||||
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(1) Other includes corporate and other costs.
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Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(in thousands, except per share data)
(Unaudited)
Exhibit 8
Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2013 | 2012 | |||||||
GAAP income from continuing operations |
$15,494 | $23,395 | ||||||
Adjustments: |
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Acquisition-related severance & consulting engagement costs |
1,673 | - | ||||||
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
8,638 | 6,053 | ||||||
Merger & integration costs |
371 | 756 | ||||||
EMEA restructuring |
11 | 1,075 | ||||||
Other |
- | - | ||||||
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Non-GAAP income from continuing operations |
$26,187 | $31,279 | ||||||
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Six Months Ended | ||||||||
June 30, | June 30, | |||||||
2013 | 2012 | |||||||
GAAP income from continuing operations, net of taxes, per diluted share |
$0.28 | $0.43 | ||||||
Adjustments: |
||||||||
Acquisition-related severance & consulting engagement costs |
0.03 | - | ||||||
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
0.14 | 0.10 | ||||||
Merger & integration costs |
- | 0.01 | ||||||
EMEA restructuring |
- | 0.02 | ||||||
Other |
- | - | ||||||
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Non-GAAP income from continuing operations, net of taxes, per diluted share |
$0.45 | $0.56 | ||||||
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14
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information By Segment
(in thousands)
(Unaudited)
Exhibit 9
Americas | EMEA | Other (1) | ||||||||||||||||||||||
Six Months Ended | Six Months Ended | Six Months Ended | ||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | June 30, | June 30, | |||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
GAAP income from continuing operations | $ | 38,743 | $ | 47,734 | ($69) | ($498) | ($23,180) | ($23,841) | ||||||||||||||||
Adjustments: |
||||||||||||||||||||||||
Acquisition-related severance & consulting engagement costs |
1,514 | - | - | - | 159 | - | ||||||||||||||||||
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
8,638 | 6,053 | - | - | - | - | ||||||||||||||||||
Merger & integration costs |
- | 656 | - | - | 371 | 100 | ||||||||||||||||||
EMEA restructuring |
- | - | 11 | 1,075 | - | - | ||||||||||||||||||
Other |
- | - | - | - | - | - | ||||||||||||||||||
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Non-GAAP income from continuing operations | $48,895 | $54,443 | ($58) | $577 | ($22,650) | ($23,741) | ||||||||||||||||||
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(1) Other includes corporate and other costs.
15
Sykes Enterprises, Incorporated
Reconciliation of Non-GAAP Financial Information
(Unaudited)
Exhibit 10
Business Outlook | ||||
Third Quarter | ||||
2013 | ||||
GAAP income from continuing operations, net of taxes, per diluted share |
$0.19 - $0.22 | |||
Adjustments: |
||||
Acquisition-related severance & consulting engagement costs |
- | |||
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
0.07 | |||
Merger & integration costs |
- | |||
EMEA restructuring |
- | |||
Other |
- | |||
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|
|||
Non-GAAP income from continuing operations, net of taxes, per diluted share |
$0.26 - $0.29 | |||
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|||
Business Outlook | ||||
Full Year | ||||
2013 | ||||
GAAP income from continuing operations, net of taxes, per diluted share |
$0.89 - $0.98 | |||
Adjustments: |
||||
Acquisition-related severance & consulting engagement costs |
0.03 | |||
Acquisition-related depreciation & amortization of property & equipment and intangible write-ups |
0.27 | |||
Merger & integration costs |
- | |||
EMEA restructuring |
- | |||
Other |
- | |||
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Non-GAAP income from continuing operations, net of taxes, per diluted share |
$1.19 - $1.28 | |||
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16