FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended March 31, 1999
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________________ to __________________
Commission File No. 0-28274
SYKES ENTERPRISES, INCORPORATED
-------------------------------
(Exaction name of Registrant as specified in its charter)
Florida 56-1383460
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
100 North Tampa Street, Suite 3900, Tampa, FL 33602
---------------------------------------------------
Registrant's telephone number, including area code: (813) 274-1000
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for at least the past 90 days.
[X] Yes [ ] No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
[ ] Yes [ ] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
Common stock, $0.01 Par Value, 42,089,569 shares as of April 20, 1999
Page 1 of 17
The Exhibit Index Appears on Page 16
<PAGE>
PART I
Item 1 - Financial Statements
<TABLE>
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED BALANCE SHEETS
<CAPTION>
December 31, March 31,
1998 1999
------------ -----------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents............................... $ 36,348,863 $ 29,273,328
Restricted cash......................................... 11,090,890 16,726,981
Receivables............................................. 113,840,262 123,286,782
Prepaid expenses and other current assets............... 15,861,742 18,947,858
------------ ------------
Total current assets.................................. 177,141,757 188,234,949
Property and equipment, net............................... 99,176,512 111,672,436
Marketable securities..................................... 199,875 202,629
Intangible assets, net.................................... 75,132,011 73,530,938
Deferred charges and other assets......................... 13,484,146 15,615,973
------------ ------------
$ 365,134,301 $ 389,256,925
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current installments of long-term debt.................. $ 3,983,239 $ 2,250,008
Accounts payable........................................ 30,086,549 30,708,735
Income taxes payable.................................... 10,549,623 15,665,365
Accrued employee compensation and benefits.............. 19,144,242 21,070,615
Customer deposits....................................... 10,978,868 17,351,307
Other accrued expenses and current liabilities.......... 17,194,752 17,798,029
------------ ------------
Total current liabilities............................. 91,937,273 104,844,059
Long-term debt............................................ 75,448,202 72,632,817
Deferred grants........................................... 15,434,676 19,075,475
Deferred revenue.......................................... 14,707,773 15,851,026
Other long-term liabilities............................... 2,668,895 2,100,282
------------ ------------
Total liabilities..................................... 200,196,819 214,503,659
------------ ------------
Commitments and contingencies
Shareholders' equity
Preferred stock, $0.01 par value, 10,000,000 shares
authorized; no shares issued and outstanding.......... - -
Common stock, $0.01 par value, 200,000,000 shares
authorized; 41,451,905 and 42,087,069 issued and
outstanding........................................... 414,519 420,871
Additional paid-in capital.............................. 136,199,748 136,736,704
Retained earnings....................................... 29,730,975 39,710,194
Accumulated other comprehensive income.................. (1,407,760) (2,114,503)
------------ ------------
Total shareholders' equity............................ 164,937,482 174,753,266
------------ ------------
$ 365,134,301 $ 389,256,925
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended March 31, 1998 and March 31, 1999
(Unaudited)
<CAPTION>
1998 1999
------------ -------------
<S> <C> <C>
Revenues.................................................. $ 98,087,957 $ 136,377,905
----------- ------------
Operating expenses
Direct salaries and related costs....................... 61,160,367 83,246,909
General and administrative.............................. 26,318,977 36,276,791
----------- ------------
Total operating expenses.............................. 87,479,344 119,523,700
----------- ------------
Income from operations.................................... 10,608,613 16,854,205
Other income (expense)
Interest, net........................................... 38,696 (658,844)
Net loss from joint venture............................. (3,865,149) -
Other................................................... (12,484) 83,952
----------- ------------
Total other expense................................... (3,838,937) (574,892)
----------- ------------
Income before income taxes................................ 6,769,676 16,279,313
Provision for income taxes................................ 3,867,010 6,300,094
----------- ------------
Net income................................................ $ 2,902,666 $ 9,979,219
=========== ============
Basic net income per share................................ $ 0.07 $ 0.24
=========== ============
Diluted net income per share.............................. $ 0.07 $ 0.23
=========== ============
Shares outstanding
Basic................................................... 41,120,422 41,458,845
Diluted................................................. 42,218,812 42,824,342
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<CAPTION>
Accumulated
Common Common Additional Other
Stock Stock Paid-in Retained Comprehensive
Shares Amount Capital Earnings Income Total
------ ------ ---------- --------- -------------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1997 41,119,626 $ 411,196 $ 133,592,337 $ 22,151,352 $ (3,594,665) $152,560,220
Distributions - - - (351,268) - (351,268)
Net income - - - 2,902,666 - 2,902,666
Unrealized loss on securities - - - - (2,868,594) (2,868,594)
Foreign currency translation
adjustment - - - - (648,477) (648,477)
----------
Comprehensive income (loss) (614,405)
----------
----------------------------------------------------------------------------------------------
Balance at March 31, 1998 41,119,626 411,196 133,592,337 24,702,750 (7,111,736) 151,594,547
(unaudited)
Issuance of common stock 332,279 3,323 1,073,411 - - 1,076,734
Tax-effect of non-qualified
exercise of stock options - - 1,534,000 - - 1,534,000
Distributions - - - (347,108) - (347,108)
Net income - - - 5,375,333 - 5,375,333
Recognition of write-down on
marketable securities - - - - 3,603,112 3,603,112
Foreign currency translation
adjustment - - - - 2,100,864 2,100,864
-----------
Comprehensive income 11,079,309
-----------
----------------------------------------------------------------------------------------------
Balance at December 31, 1998 41,451,905 414,519 136,199,748 29,730,975 (1,407,760) 164,937,482
Issuance of common stock 635,164 6,352 536,956 - - 543,308
Net income - - - 8,879,219 - 9,979,219
Foreign currency translation
adjustment - - - - (709,497) (709,497)
Unrealized gain on securities - - - - 2,754 2,754
-----------
Comprehensive income 9,272,476
-----------
----------------------------------------------------------------------------------------------
Balance at March 31, 1999
(unaudited) 42,087,069 $420,871 $136,736,704 $ 39,710,194 $ (2,114,503) $174,753,266
==============================================================================================
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended March 31, 1998 and March 31, 1999
(Unaudited)
<CAPTION>
1998 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income.................................................... $ 2,902,666 $ 9,979,219
Depreciation and amortization................................. 4,217,784 8,567,604
Acquired in-process research and development cost............. 3,892,500 -
Deferred income taxes......................................... (406,637) (1,494,501)
Gain on disposal of property and equipment.................... (2,230) -
Changes in assets and liabilities - net of effects
of acquisitions
Receivables................................................... (6,794,836) (7,523,003)
Prepaid expenses and other current assets..................... (2,247,653) (3,232,245)
Intangible assets............................................. - (90,139)
Deferred charges and other assets............................. (82,778) (493,952)
Accounts payable.............................................. (593,390) 622,186
Income taxes payable.......................................... 1,686,203 1,913,996
Accrued employee compensation and benefits.................... 2,336,800 1,926,373
Customer deposits, net of restricted cash..................... - 736,348
Other accrued expenses and current liabilities................ 4,194,277 603,277
Deferred revenue.............................................. - 1,143,255
Other long-term liabilities................................... - (568,612)
- ------------
Net cash provided by operating activities................... 9,102,706 12,089,806
------------ ------------
Cash flows from investing activities
Capital expenditures.......................................... (6,253,410) (19,731,518)
Investment in joint venture................................... (12,016,127) -
Proceeds from sale of marketable securities................... 1,000,000 -
Proceeds from sale of property and equipment.................. 21,205 -
------------ ------------
Net cash used for investing activities...................... (17,248,332) (19,731,518)
------------ ------------
Cash flows from financing activities
Paydowns under revolving line of credit agreements............ - (17,000,000)
Borrowings under revolving line of credit agreements.......... - 14,500,000
Proceeds from issuance of stock............................... - 543,308
Proceeds from grants.......................................... 31,572 5,280,976
Payment of long-term debt..................................... (33,507,892) (2,048,615)
Distributions................................................. (351,268) -
------------ ------------
Net cash provided by (used for) financing activities........ (33,827,588) 1,275,669
------------ ------------
Adjustments for foreign currency translation.................... (648,477) (709,497)
------------ ------------
Net decrease in cash and cash equivalents....................... (42,621,691) (7,075,540)
Cash and cash equivalents - beginning........................... 75,308,505 36,348,868
------------ ------------
Cash and cash equivalents - ending.............................. $ 32,686,814 $ 29,273,328
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three months ended March 31, 1998 and March 31, 1999
(Unaudited)
Sykes Enterprises, Incorporated and consolidated subsidiaries (the "Company")
provides integrated information technology outsourcing services including
information technology support services, information technology development
services and solutions, on-line clinical managed care services, medical protocol
products, employee benefit administration and support services, and customer
product services. The Company's services are provided to a wide variety of
industries.
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q. Accordingly, they
do not include all of the information and notes required by generally accepted
accounting principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three-month period ended March 31, 1999 are not necessarily indicative of the
results that may be expected for the year ending December 31, 1999. For further
information, refer to the consolidated financial statements and notes thereto as
of and for the year ended December 31, 1998 included in the Company's Form 10-K
dated December 31, 1998 as filed with the United States Securities and Exchange
Commission ("SEC") on March 29, 1999.
Note 1 - Acquisitions and Mergers
Effective September 1, 1998 the Company acquired the remaining 50% of outstand-
ing common stock of SHPS, Incorporated ("SHPS") (formally known as Sykes
HealthPlan Services, Inc.) for approximately $28.1 million plus the assumption
of SHPS' debt. This purchase price was primarily financed through borrowings
under the Company's credit facility.
This acquisition was accounted for utilizing the purchase method of accounting
and accordingly, SHPS' results of operations for the three months ended
March 31, 1999 have been included in the accompanying financial statements. The
purchase price has been allocated to the assets and liabilities of SHPS based
upon fair values at the date of acquisition. The allocations were based on
appraisals, evaluations, estimations and other studies.
The Company adjusted the amounts originally allocated to net loss from joint
venture to reflect the methodology set forth in the September 15, 1998 letter
from the SEC Staff to the American Institute of Certified Public Accountants
("AICPA"). The letter sets forth the SEC's views regarding the valuation
methodology to be used in allocating a portion of the purchase price to
acquired, in-process research and development at the date of acquisition. As
a result of the revised valuation, the Company's financial statements for the
quarter ended March 31, 1998 have been restated to reduce the amount of
acquired, in-process research and development charges incurred by SHPS and the
resulting impact on the Company's proportionate share of the adjustment.
On November 27, 1998, the Company acquired all of the stock of TAS GmbH Nord
Telemarketing und Vertriebsberatung ("TAS III") of Hannover, Germany, in
exchange for
<PAGE>
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three months ended March 31, 1999 and March 31, 1998
(Unaudited)
Note 1 - Acquisitions and Mergers, continued
587,000 shares of the Company's common stock. The Company accounted for the
acquisition utilizing the pooling-of-interests method of accounting. TAS III
provides technical call center support and customer care services, database
development and consulting services to customers in Germany.
On December 29, 1998, the Company acquired all of the stock of Oracle Service
Networks Corporation ("Oracle") in exchange for 1,475,000 shares of the
Company's common stock. The Company accounted for the acquisition utilizing the
pooling-of-interests method of accounting. Oracle provides call center support
and customer care services to various customers in North America, as well as
demand-management services for the Canadian provincial health care system.
The above transactions, excluding SHPS, have been accounted for as pooling-of-
interests and, accordingly, the consolidated financial statements for the
periods presented have been restated to include the accounts of TAS III and
Oracle. Separate results of operations for the period prior to the mergers with
TAS III and Oracle are outlined below.
Three
months ended
March 31,
1998
------------
Revenue:
Sykes.................................................. $ 89,149,324
TAS III................................................ 1,764,314
Oracle................................................. 7,174,319
-----------
Combined ............................................... $ 98,087,957
===========
Net income:
Sykes (1).............................................. $ 2,678,343
TAS III................................................ 70,705
Oracle................................................. 153,618
-----------
Combined ............................................... $ 2,902,666
===========
Other changes in shareholders' equity:
Sykes.................................................. $ 31,572
TAS III ............................................... -
Oracle................................................. (351,268)
------------
Combined................................................ $ (319,696)
============
(1) The Company has restated its financial statements to reflect the
methodology regarding acquired in-process research and development charges as
set forth in the September 15, 1998 letter from the SEC Staff to the AICPA.
<PAGE>
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three months ended March 31, 1999 and March 31, 1998
(Unaudited)
Note 2 - Commitments and Contingencies
The Company from time to time is involved in legal actions arising in the
ordinary course of business. With respect to these matters, management
believes that it has adequate legal defenses and/or provided adequate accruals
for related costs such that the ultimate outcome will not have a material
adverse effect on the Company's future financial position.
Note 3 - Accumulated Other Comprehensive Income
Effective January 1, 1998 the Company adopted Statement of Financial Accounting
Standard No. 130 "Reporting Comprehensive Income" which requires all items that
are required to be recognized under accounting standards as components of
comprehensive income be reported in the financial statements. The components of
other comprehensive income are as follows:
<TABLE>
<CAPTION>
Accumulated
Unrealized Foreign Other
Gain on Currency Comprehensive
Securities Translation Income
---------- ----------- -------------
<S> <C> <C> <C>
Balance at December 31, 1998............... $ - $ (1,407,760) $ (1,407,760)
Foreign currency translation adjustment.... - (709,497) (709,497)
Unrealized gain on securities,
net of income taxes...................... 2,754 - 2,754
--------- ----------- -----------
Balance at March 31, 1999 (unaudited)...... $ 2,754 $ (2,117,257) $ (2,114,503)
========= =========== ===========
</TABLE>
Earnings associated with the Company's investment in its foreign subsidiaries
are considered to be permanently invested and no provision for United States
federal and state income taxes on those earnings or translation adjustments has
been provided.
<PAGE>
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three months ended March 31, 1999 and March 31, 1998
(Unaudited)
Note 4 - Earnings Per Share
Basic earnings per share are based on the weighted average number of common
shares outstanding during the periods. Diluted earnings per share includes the
weighted average number of common shares outstanding during the respective
periods and the further dilution, if not anti-dilutive, from stock options using
the treasury stock method.
The numbers of shares used in the earnings per share computation are as follows:
Three Months Ended
------------------
March 31, March 31,
1998 1999
--------- ----------
Basic:
Weighted average common outstanding........... 41,120,422 41,458,845
---------- ----------
Total basic shares outstanding............. 41,120,422 41,458,845
Diluted:
Dilution of stock options..................... 1,098,390 1,365,497
---------- ----------
Total diluted shares outstanding............ 42,218,812 42,824,342
========== ==========
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
The following should be read in conjunction with the Sykes Enterprises,
Incorporated (the "Company") December 31, 1998 Consolidated Financial
Statements, including the notes thereto. The following discussion and analysis
contains forward-looking statements that involve risks and uncertainties. Future
events and the Company's actual results could differ materially from the results
reflected in these forward-looking statements, as a result of certain of the
factors set forth below and elsewhere in this analysis.
Financial Condition
The Company's primary sources of liquidity are equity offerings, cash flows from
operations and available borrowings under its credit facility. The Company has
utilized these sources to make additional capital expenditures associated
primarily with its technical support services, to repay debt associated with
entities it has acquired subsequent to the public offerings, and for working
capital and general corporate purposes. In addition, the Company intends future
uses of its sources of liquidity to include the aforementioned and possible
additional acquisitions. The Company invests any excess funds in short-term,
investment-grade securities or money market instruments.
During the three-month period ended March 31, 1999, the Company generated
approximately $12.1 million in cash from operations. The Company utilized these
funds and certain of its available cash and credit facility to fund $2.5 million
of debt repayment, net of additional borrowings, and $19.7 million of capital
expenditures. The debt repayments were associated with assumed debt levels
resulting from an acquisition the Company completed during 1998. The capital
expenditures were predominately the result of the Company's continued expansion,
both domestically and internationally, in providing technical product support
services. The Company has recently announced the construction of additional call
centers in Scottsbluff, Nebraska, and Ed, Sweden, and anticipates that these
new facilities will become operational during 1999.
The Company believes that its accessible funds under its credit facilities and
cash flows from operations will be adequate to meet its continued expansion
objectives, anticipated levels of capital expenditures and debt repayment
requirements, including those that may be required pursuant to the integration
of its acquisitions, for the foreseeable future.
Results of Operations
Three Months Ended March 31, 1999, Compared to Three Months Ended March 31, 1998
For the three months ended March 31, 1999, the Company recorded consolidated
revenues of $136.4 million, an increase of $38.3 million or 39.0%, from the
$98.1 million of consolidated revenues for the comparable period during 1998.
This growth in revenue was the result of a $44.9 million or 83.1% increase
in technical support services, offset by a decrease of $5.7 million from
information technology services and solutions and a decrease of $0.9 million
from customer product services.
The increase in information technology support services revenues was primarily
attributable to an increase in the number of IT call centers providing services
throughout the period and the resultant increase in call volumes from clients,
and the inclusion of SHPS' revenue generated for the first quarter of 1999.
Subsequent to the first quarter of 1998, the Company opened four domestic
and one international IT call centers, and expanded its call center in Sveg,
Sweden. The decrease in information technology services and solutions revenues
was attributable to a decrease in license fees and royalties associated with the
Company's technology applications when compared to the comparable period in
1998. The decrease in customer product services revenue for the three months
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and
Results of Operations, continued
ended March 31, 1999 was primarily attributable to a reduction of selective
clients which were inconsistent with the Company's business objectives.
Direct salaries and related costs increased approximately $22.1 million or 36.1%
to $83.2 million for the three-month period in 1999 from the comparable
period in 1998. As a percentage of revenues, however, direct salaries and
related costs decreased to approximately 61.0% in 1999 from approximately 62.4%
for the comparable period in 1998. The increase in the amount of direct salaries
and related costs was primarily attributable to the addition of personnel to
support revenue growth. The decrease as a percentage of revenues resulted from
economies of scale associated with spreading costs over a larger revenue base
and the continued change in the Company's mix of business reflecting the growth
of technical support services as a percentage of consolidated results.
General and administrative expenses increased approximately $10.0 million or
37.8% to $36.3 million for the three month period in 1999 from the comparable
period in 1998. As a percentage of revenues, however, general and administrative
expenses decreased to 26.6% in 1999 from 26.8% for the comparable period in
1998. The increase in the amount of general and administrative expenses was
primarily attributable to the addition of management, sales and administrative
personnel to support the Company's growth. The decrease as a percentage of
revenues resulted from economies of scale associated with spreading costs over a
larger revenue base.
Interest and other expense was $0.6 million during the first three months of
1999, compared to interest and other expense of $3.8 million during the
comparable 1998 period, inclusive of an $3.9 million net loss from joint
venture. The net loss from the joint venture was attributable to
acquisition-related, in-process research and development costs associated with
acquisitions completed by the joint venture, which was recorded as other
expense. The increase in interest and other expense for the three-month period
was primarily attributable to an increase in the Company's debt position as a
result of the acquisition of SHPS completed during 1998.
The provision for income taxes increased $2.4 million to $6.3 million for the
three-month period in 1999 from the comparable period in 1998. As a percentage
of revenue, the provision for income taxes increased to 4.6% during the 1999
period when contrasted to approximately 3.9% for the comparable 1998 period.
The increase was attributable to the increase of income before income
taxes and to an increase in income before income taxes as a percentage of
revenue. The Company's effective tax rate was 38.7% for 1999 compared to 36.4%
for the comparable 1998 period, excluding the effect of one-time charges,
primarily as a result of non-deductible expenses which consisted primarily of
goodwill amortization.
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Year 2000
The Year 2000 issue is the result of computer software programs being written
using two digits rather than four to define the applicable year. To the extent
the Company's software applications contain source codes that are unable
to appropriately interpret the calendar year 2000, some level of modification or
even possibly replacement of such applications may be necessary. During late
1997, the Company initiated the process of reviewing its existing software
programs to determine the potential exposure and amount of resources that may be
needed to become Year 2000 compliant. Based on this review, the Company has
experienced very few problems related to Year 2000 testing and those identified
have been resolved in the Company's day-to-day operations.
The Company has and will continue to utilize both internal and external
resources to reprogram, or replace, and test its internal use software for Year
2000 modifications. The Company anticipates completing its Year 2000 testing and
modifications no later than August 1999, which is prior to any anticipated
impact on its operating systems. The total cost of the Year 2000 project is
estimated at approximately $1.2 million and is being funded through operating
cash flows. To date, the Company has incurred approximately $0.6 million related
to this project. Such cost is not expected to have a material effect on the
Company's results of operations.
The remaining costs to become Year 2000 compliant and the date on which the
Company believes it will complete all Year 2000 modifications are based on
management's best estimates, which were derived utilizing numerous assumptions
of future events, including the continued availability of certain resources,
third party modification plans and other factors. However, there can be no
assurance that these estimates will be achieved and actual results could differ
materially from those anticipated. Specific factors that might cause such
material differences include, but are not limited to, the availability and cost
of personnel trained in this area, availability of corrective software provided
by external suppliers, the ability to locate and correct all relevant computer
codes and similar uncertainties.
The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure to remediate
their own Year 2000 issues. In the event any third parties cannot timely provide
the Company with contents, products, services or systems that meet Year 2000
requirements, the Company's services could be materially adversely affected.
In a recent Securities and Exchange Commission release regarding Year 2000
disclosure, the Securities and Exchange Commission stated that public
companies must disclose the most reasonable likely worst case Year 2000
scenario. Although it is not possible to assess the likelihood of any of the
following events, each must be included in a consideration of worst case
scenarios: widespread failure of electrical and similar supplies serving the
Company; widespread disruption of the services provided by common
communications' carriers; similar disruption to the means and modes of
transportation for the Company and its employees, suppliers, and customers;
significant disruption to the Company's ability to gain access to, and remain
working in, office buildings and other facilities; the failure of substantial
numbers of the Company's customers' and its suppliers' critical computer
hardware and software systems, and the failure of outside entities' systems,
including systems related to banking and finance.
<PAGE>
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations, continued
Although the Company expects its systems to be Year 2000 compliant on or before
December 31, 1999, it cannot predict the outcome or the success of its efforts
to become Year 2000 compliant, or that third party systems are or will be Year
2000 compliant, or that the costs required to address the Year 2000 issue, or
that the impact of a failure to achieve substantial Year 2000 compliance, will
not have a material adverse effect on the Company's business, financial condi-
tion or results of operations. The Company is in the process of developing
contingency plans to ensure continued operation of its systems.
<PAGE>
Part II - OTHER INFORMATION
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
The following document is filed as an exhibit to this Report:
Financial Data Schedule
(b) Reports on Form 8-K
Item 2 - Acquisition or Disposition of Assets, filed January 12, 1999
Acquisition of Oracle Service Networks Corporation
Item 4 - Change in Accountants, filed January 21, 1999
Item 4 - Change in Accountants, filed February 3, 1999
Item 2 - Acquisition or Disposition of Assets, filed March 12, 1999
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SYKES ENTERPRISES, INCORPORATED
(Registrant)
Date: April 27, 1999 By: /s/ Scott J. Bendert
--------------------------------------
Scott J. Bendert
Senior Vice President-Finance,
Treasurer and Chief Financial
Officer
(Principal Financial and Accounting
Officer)
<PAGE>
SYKES ENTERPRISES, INCORPORATED
FORM 10-Q
(For The Three Months Ended March 31, 1999)
EXHIBIT INDEX
-------------
Exhibit Page
Number Number
------- ------
27.1 Financial Data Schedule 17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary consolidated financial information extracted from
the Company's Form 10-Q for the three-month period ended March 31, 1999 and is
qualified in its entirety by reference to such Form 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 29,273,328
<SECURITIES> 0
<RECEIVABLES> 124,069,745
<ALLOWANCES> 782,963
<INVENTORY> 0
<CURRENT-ASSETS> 188,234,949
<PP&E> 111,672,436
<DEPRECIATION> 0
<TOTAL-ASSETS> 389,256,925
<CURRENT-LIABILITIES> 104,844,059
<BONDS> 0
0
0
<COMMON> 420,871
<OTHER-SE> 174,332,395
<TOTAL-LIABILITY-AND-EQUITY> 389,256,925
<SALES> 136,377,905
<TOTAL-REVENUES> 136,377,905
<CGS> 0
<TOTAL-COSTS> 119,523,700
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 658,844
<INCOME-PRETAX> 16,279,313
<INCOME-TAX> 6,300,094
<INCOME-CONTINUING> 9,979,219
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,979,219
<EPS-PRIMARY> .24
<EPS-DILUTED> .23
</TABLE>
