<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the quarterly period ended June 30, 2000
[ ] 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
--------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Florida 56-1383460
--------------------------------- ----------------------------------
(State or other jurisdiction (IRS Employer Identification No.)
of 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:
As of August 14, 2000, there were 41,366,153 shares of common stock outstanding.
Page 1 of 89
The Exhibit Index Appears on Page 19
<PAGE> 2
PART I
ITEM 1 - FINANCIAL STATEMENTS
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1999 2000
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents .................................................... $ 31,001,354 $ 96,458,337
Restricted cash .............................................................. 15,108,523 --
Receivables .................................................................. 131,903,360 141,668,040
Prepaid expenses and other current assets .................................... 15,252,307 16,694,254
------------ ------------
Total current assets ....................................................... 193,265,544 254,820,631
Property and equipment, net .................................................... 134,755,878 144,035,025
Marketable securities .......................................................... 199,875 199,875
Intangible assets, net ......................................................... 76,830,977 14,492,748
Deferred charges and other assets .............................................. 22,533,880 23,666,652
------------ ------------
$427,586,154 $437,214,931
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Current installments of long-term debt ....................................... $ 3,236,451 $ 165,475
Accounts payable ............................................................. 39,494,955 41,245,724
Income taxes payable ......................................................... 2,804,155 21,850,784
Accrued employee compensation and benefits ................................... 24,205,591 27,859,257
Customer deposits ............................................................ 11,820,739 --
Other accrued expenses and current liabilities ............................... 17,159,191 17,715,069
------------ ------------
Total current liabilities .................................................. 98,721,082 108,836,309
Long-term debt ................................................................. 80,052,717 10,158,491
Deferred grants ................................................................ 21,198,709 24,890,910
Deferred revenue ............................................................... 24,861,639 49,328,384
Other long-term liabilities .................................................... 1,400,466 1,724,391
------------ ------------
Total liabilities .......................................................... 226,234,613 194,938,485
------------ ------------
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;
42,734,284 and 43,036,153 issued ........................................... 427,343 430,362
Additional paid-in capital ................................................... 157,875,285 155,022,390
Retained earnings ............................................................ 51,762,003 113,924,499
Accumulated other comprehensive income ....................................... (5,860,195) (13,754,760)
------------ ------------
201,351,541 258,475,386
Treasury stock at cost; 1,000,000 shares (none in 1999) ..................... -- (16,198,940)
------------ ------------
Total shareholders' equity ................................................. 201,351,541 242,276,446
------------ ------------
$427,586,154 $437,214,931
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE> 3
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF INCOME
SIX AND THREE MONTHS ENDED JUNE 30, 1999 AND 2000
(Unaudited)
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
--------------------------------- ---------------------------------
1999 2000 1999 2000
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Revenues ......................................... $ 270,485,530 $ 318,104,803 $ 134,107,625 $ 156,792,887
------------- ------------- ------------- -------------
Operating expenses
Direct salaries and related costs .............. 172,184,824 200,816,736 88,937,915 98,605,490
General and administrative ..................... 74,043,367 92,303,720 37,766,576 45,388,644
Compensation expense associated with
exercise of options .......................... -- 7,835,679 -- 7,835,679
Restructuring and other charges ................ -- 9,640,000 -- 9,640,000
------------- ------------- ------------- -------------
Total operating expenses ..................... 246,228,191 310,596,135 126,704,491 161,469,813
------------- ------------- ------------- -------------
Income (loss) from operations .................... 24,257,339 7,508,668 7,403,134 (4,676,926)
Other expense
Interest, net .................................. (1,535,254) (2,328,291) (876,410) (1,092,559)
Gain on sale of equity interest in SHPS ........ -- 84,036,465 -- 84,036,465
Other .......................................... 97,080 131,654 13,128 132,554
------------- ------------- ------------- -------------
Total other income (expense).................. (1,438,174) 81,839,828 (863,282) 83,076,460
------------- ------------- ------------- -------------
Income before income taxes ....................... 22,819,165 89,348,496 6,539,852 78,399,534
Provision for income taxes ....................... 8,830,603 27,186,000 2,530,509 22,938,000
------------- ------------- ------------- -------------
Net income ....................................... $ 13,988,562 $ 62,162,496 $ 4,009,343 $ 55,461,534
============= ============= ============= =============
Net income per share
Basic .......................................... $ 0.33 $ 1.47 $ 0.10 $ 1.32
============= ============= ============= =============
Diluted ........................................ $ 0.33 $ 1.46 $ 0.09 $ 1.32
============= ============= ============= =============
Weighted average shares outstanding
Basic .......................................... 41,770,792 42,318,639 42,082,738 42,031,075
Diluted ........................................ 42,960,598 42,522,409 43,096,854 42,098,349
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Accumulated
Common Common Additional Other
Stock Stock Paid-in Retained Comprehensive Treasury
Shares Amount Capital Earnings Income Stock Total
---------- ---------- ------------ ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999 41,451,905 $ 414,519 $136,199,748 $ 29,730,975 $ (1,407,760) -- $ 164,937,482
Issuance of common stock 829,292 8,293 2,886,640 -- -- -- 2,894,933
Net income -- -- -- 13,988,562 -- -- 13,988,562
Foreign currency translation
adjustment -- -- -- -- (5,139,280) -- (5,139,280)
-------------
Comprehensive income 8,849,282
---------- ---------- ------------ ------------ ------------ ------------ -------------
Balance at June 30, 1999
(unaudited) 42,281,197 422,812 139,086,388 43,719,537 (6,547,040) -- 176,681,697
Issuance of common stock 453,087 4,531 8,484,679 -- -- -- 8,489,210
Tax-effect of non-qualified
exercise of stock options -- -- 7,451,323 -- -- -- 7,451,323
Net income -- -- -- 8,042,466 -- -- 8,042,466
Foreign currency translation
adjustment
-- -- -- -- 686,845 -- 686,845
-------------
Comprehensive income 8,729,311
---------- ---------- ------------ ------------ ------------ ------------ -------------
Balance at December 31, 1999 42,734,284 427,343 155,022,390 51,762,003 (5,860,195) -- 201,351,541
Issuance of common stock 301,869 3,019 2,852,895 -- -- -- 2,855,914
Purchase of treasury stock -- -- -- -- -- $(16,198,940) (16,198,940)
Net income -- -- -- 62,162,496 -- -- 62,162,496
Foreign currency translation
adjustment -- -- -- -- (7,894,565) -- (7,894,565)
-------------
Comprehensive income 54,267,931
---------- ---------- ------------ ------------ ------------ ------------ -------------
Balance at June 30, 2000 43,036,153 $ 430,362 $157,875,285 $113,924,499 $(13,754,760) $(16,198,940) $ 242,276,446
(unaudited) ========== ========== ============ ============ ============ ============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
SYKES ENTERPRISES, INCORPORATED
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1999 AND 2000
(Unaudited)
<TABLE>
<CAPTION>
1999 2000
------------ -------------
<S> <C> <C>
Cash flows from operating activities
Net income ................................................................... $ 13,988,562 $ 62,162,496
Depreciation and amortization ................................................ 16,388,254 19,852,667
Deferred income taxes ........................................................ (1,589,808) 124,919
Gain on sale of equity interest in SHPS, Incorporated ........................ -- (84,036,465)
Changes in assets and liabilities
Receivables ................................................................. 2,192,779 (23,010,611)
Prepaid expenses and other current assets ................................... (2,730,341) (2,901,606)
Deferred charges and other assets ........................................... 748,544 (199,916)
Accounts payable ............................................................ (5,920,941) (5,723,754)
Income taxes payable ........................................................ 1,893,106 21,295,969
Accrued employee compensation and benefits .................................. 2,966,286 6,857,227
Customer deposits, net of restricted cash ................................... (2,277,051) 2,652,610
Other accrued expenses and current liabilities .............................. (886,283) 1,444,809
Restructuring and other charges reserve ..................................... -- 7,985,061
Deferred revenue ............................................................ 4,457,712 24,800,532
Other long-term liabilities ................................................. (805,407) (1,385,301)
------------ -------------
Net cash provided by operating activities .................................. 28,425,412 29,918,637
------------ -------------
Cash flows from investing activities
Capital expenditures ......................................................... (30,949,736) (34,054,827)
Proceeds from sale of equity interest in SHPS Incorporated ................... -- 159,775,966
Purchase of marketable securities ............................................ (297,599) --
------------ -------------
Net cash provided by (used for) investing activities ....................... (31,247,335) 125,721,139
------------ -------------
Cash flows from financing activities
Paydowns under revolving line of credit agreements ........................... (40,000,000) (140,500,000)
Borrowings under revolving line of credit agreements ......................... 40,000,000 68,235,436
Payments of long-term debt ................................................... (3,197,672) (1,087,840)
Borrowings under long-term debt .............................................. -- 387,202
Proceeds from issuance of stock .............................................. 2,894,933 2,855,914
Proceeds from grants ......................................................... 4,198,335 4,020,000
Purchases of treasury stock .................................................. -- (16,198,940)
------------ -------------
Net cash provided by (used for) financing activities ....................... 3,895,596 (82,288,228)
------------ -------------
Adjustments for foreign currency translation ................................... (5,139,280) (7,894,565)
------------ -------------
Net increase (decrease) in cash and cash equivalents ........................... (4,065,607) 65,456,983
Cash and cash equivalents - beginning .......................................... 36,348,863 31,001,354
------------ -------------
Cash and cash equivalents - ending ............................................. $ 32,283,256 $ 96,458,337
============ =============
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE> 6
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000
(Unaudited)
Sykes Enterprises, Incorporated and consolidated subsidiaries ("Sykes" or the
"Company") provides vertically integrated technology-based business solutions
and services. Sykes' Business Solutions group provides professional services in
e-Commerce, globalization and Customer Relationship Management (CRM) with a
focus on business strategy development, solution implementation, web design,
development and education, localization and program management. Sykes' Business
Services group provides value-added customer support outsourcing including
technical support, customer service, distribution and fulfillment. These
services are delivered through multiple communication channels encompassing web,
e-mail and telephony support. Sykes' Solutions and Services combination offers
clients value-added end-to-end solutions. The Company's services are provided to
customers on a worldwide basis throughout a wide variety of industries.
The accompanying unaudited 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
six and three-month periods ended June 30, 2000 are not necessarily indicative
of the results that may be expected for the year ending December 31, 2000. For
further information, refer to the consolidated financial statements and notes
thereto as of and for the year ended December 31, 1999 included in the Company's
Form 10-K for the year ended December 31, 1999 as filed with the United States
Securities and Exchange Commission ("SEC") on March 29, 2000.
NOTE 1 - ACQUISITIONS AND DISPOSITIONS
On August 20, 1999, the Company acquired all of the common stock of
CompuHelpline, Inc., (d/b/a PC Answer) for approximately $340,000 consisting of
$40,000 of cash and 11,594 shares of the Company's common stock. PC Answer was
engaged in developing, marketing and selling prepaid technical computer support
cards and services under the trademark names of PC Answer and MAC Answer. The
transaction was accounted for under the purchase method of accounting with
resulting goodwill being amortized over a ten-year life. Pro forma information
is not presented as the operating results of PC Answer are not material to the
Company's consolidated operations.
On August 31, 1999, the Company acquired all of the common stock of Acer
Servicios de Informacion Sociedad Anonima ("AIS") of Heredia, Costa Rica for
$6.0 million in cash. AIS operated an information technology call center that
provided technical support and services to customers in North America and
Central America. The transaction was accounted for under the purchase method of
accounting with resulting goodwill being amortized over a ten-year life. Pro
forma information is not presented as the operating results of AIS are not
material to the Company's consolidated operations.
On October 12, 1999, the Company acquired the AnswerExpress Support Suite for
$2.5 million in cash. The transaction was accounted for under the purchase
method of accounting with resulting goodwill being amortized over a ten-year
life. Pro forma information is not presented as the operating results of
AnswerExpress are not material to the Company's consolidated operations.
On June 30, 2000, the Company sold 93.5% of its ownership interest in SHPS,
Incorporated ("SHPS") for approximately $165.5 million cash. The cash proceeds
reflected in the Statement of Cash Flows for the six months ended June 30, 2000
is net of approximately $0.7 million used to retire other debt and approximately
$5.0 million of cash recorded on SHPS' balance sheet on the date of sale. The
sale of SHPS resulted in a gain for financial accounting purposes of
approximately $84.0 million ($59.9 million net of taxes). The Consolidated
Statements of Income for both the six and three months ended June 30, 2000
include the results of SHPS through June 30, 2000, its disposition date. SHPS
generated revenue and net income exclusive of compensation expense associated
with the exercise of options during 2000, of $35.7 million and $0.2 million for
the six months ended June 30, 2000 compared to $35.5 million and $1.2 million
for the six months ended June 30, 1999 and $17.6 million and $0.2 million for
the
6
<PAGE> 7
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000
(Unaudited)
NOTE 1 - ACQUISITIONS AND DISPOSITIONS (continued)
three months ended June 30, 2000 compared to $17.9 million and $0.2 million for
the three months ended June 30, 1999
NOTE 2 - CREDIT FACILITY
On May 2, 2000, the Company amended and restated its existing syndicated credit
facility with a syndicate of lenders (the "Amended Credit Facility"). Pursuant
to the terms of the Amended Credit Facility, the amount of the Company's
revolving credit facility was maintained at $150.0 million. The $150.0 million
Amended Credit Facility includes a $10.0 million swingline loan to be used for
working capital purposes. In addition, the Company amended and restated its
$15.0 million multi-currency credit facility that provides for multi-currency
lending. Borrowings under the Amended Credit Facility bear interest, at the
Company's option, at (a) the lender's base rate plus an applicable margin of up
to .25% or (b) a Eurodollar rate plus an applicable margin of up to 1.75 %.
Borrowings under the $10.0 million swingline loan bear interest, at the
Company's option, at (a) the lender's base rate plus an applicable margin of up
to .25% or (b) a Quoted Rate for swingline loans. Borrowings under the $15.0
million multi-currency facility bear interest, at the Company's option, at (a)
the lender's base rate plus an applicable margin of up to .25% or (b) a quoted
Euro rate for swingline loans. The Company paid aggregate financing fees of
approximately $0.3 million, which have been deferred and are being amortized
over the term of the Amended Credit Agreement. In addition, a commitment fee up
to .375% will be charged on the unused portion of the Amended Credit Facility on
a quarterly basis. The Amended Credit Facility matures on February 28, 2003, and
the multi-currency facility matures on February 28, 2002.
Borrowings under the Amended Credit Facility are guaranteed by certain of the
Company's subsidiaries as evidenced by a pledge of 66% of the respective
subsidiary's common stock. Under the terms of the Amended Credit Facility, the
Company is required to maintain certain financial ratios and other financial and
non-financial conditions. The Amended Credit Facility prohibits, without the
consent of the syndicated lenders, the Company from incurring additional
indebtedness, limits certain investments, advances or loans and restricts
substantial asset sales, capital expenditures and cash dividends.
NOTE 3 - COMMITMENTS AND CONTINGENCIES
As of August 1, 2000, the Company is aware of 14 purported class action lawsuits
that have been filed against Sykes and certain of its officers alleging
violations of federal securities laws. All of the actions were filed in the
United States District court for the Middle District of Florida, and all of the
actions have been consolidated into one action. The plaintiffs of these lawsuits
purport to assert claims on behalf of a class of purchasers of Sykes common
stock during part of 1999 and through February 4, 2000. The actions claim
violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934
and Rule 10b-5 promulgated thereunder. Among other things, the actions allege
that during 1999 and 2000, the Company and certain of its officers made
materially false statements concerning the Company's financial condition and its
future prospects. The complaints also claim that certain of the Company's
quarterly financial statements during 1999 were not prepared in accordance with
generally accepted accounting principles. The actions seek compensatory and
other damages, and costs and expenses associated with the litigation.
The Company intends to defend the actions vigorously. However, the Company
cannot predict the outcome of this lawsuit or the impact that they may have on
the Company. The Company also cannot predict whether any other suits, claims, or
investigations may arise in the future based on the same claims. The outcome of
this lawsuit or any future lawsuits, claims, or investigations relating to the
same subject matter may have a material adverse impact on the Company's
financial condition and results of operations.
7
<PAGE> 8
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000
(Unaudited)
NOTE 3 - COMMITMENTS AND CONTINGENCIES (continued)
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.
During January 2000, the Company became contingently liable for a letter of
credit in the amount of $30.0 million, which guarantees performance of a
contractual obligation.
NOTE 4 - ACCUMULATED OTHER COMPREHENSIVE INCOME
Sykes presents data in the Consolidated Statements of Changes in Shareholders'
Equity in accordance with Statement of Financial Accounting Standard No. 130
"Reporting Comprehensive Income." This statement establishes rules for the
reporting of comprehensive income and its components. Total comprehensive income
(loss) was approximately $8.8 million and $54.3 million for the six months ended
June 30, 1999 and 2000, respectively, and ($0.4) million and $51.5 million for
the three months ended June 30, 1999 and 2000, respectively. The components of
other unaudited comprehensive income for the six months ended June 30, 2000 are
as follows:
<TABLE>
<CAPTION>
Accumulated
Other
Comprehensive
Income
-------------
<S> <C>
Balance at December 31, 1999 ..................... $ (5,860,195)
Foreign currency translation adjustment .......... (7,894,565)
------------
Balance at June 30, 2000 (unaudited) ............. $(13,754,760)
============
</TABLE>
Earnings associated with the Company's investment in its foreign subsidiaries
are considered permanently invested and no provision for United States federal
and state income taxes on those earnings or translation adjustments has been
provided.
NOTE 5 - RESTRUCTURING AND OTHER CHARGES
During June 2000, management committed to and commenced implementation of a
restructuring plan (the "Restructuring Plan") which was designed to reduce costs
and improve operating efficiencies. The significant activities included in the
Restructuring Plan include (1) consolidation of certain of the Company's
distribution and fulfillment operations, (2) consolidation of certain of the
Company's professional staffing and consulting operations, (3) elimination of
redundant property, leasehold improvements and equipment, and (4) lease
termination costs associated with vacated properties and equipment. Associated
with the Restructuring Plan, a charge of approximately $9.6 million ($6.9
million after tax) has been recorded in the second quarter of 2000. The Company
plans to reduce the number of employees by 130, of which 115 were associated
with the Company's distribution and fulfillment operations and 15 were
associated with the professional staffing and consulting operations. The
consolidation of certain of distribution and fulfillment sites and certain
professional consulting offices began during June 2000 and is expected to be
completed by June 1, 2001.
8
<PAGE> 9
SYKES ENTERPRISES, INCORPORATED
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SIX MONTHS ENDED JUNE 30, 1999 AND JUNE 30, 2000
(Unaudited)
NOTE 5 - RESTRUCTURING AND OTHER CHARGES (continued)
The major components of the restructuring and other charges recorded in the
quarter ended June 30, 2000 as originally estimated are as follows:
<TABLE>
<CAPTION>
DESCRIPTION
-----------
<S> <C>
Severance and related costs......................... $1,110,000
Lease termination costs............................. 3,564,000
Write-down of property and equipment................ 2,530,000
Write-down of intangible assets..................... 1,185,000
Other............................................... 1,251,000
----------
$9,640,000
==========
</TABLE>
NOTE 6 - 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 dilutive effect, if any, from stock options using the
treasury stock method.
The numbers of shares used in the earnings per share computation are as follows:
<TABLE>
<CAPTION>
SIX MONTHS ENDED THREE MONTHS ENDED
-------------------------- --------------------------
JUNE 30, JUNE 30, JUNE 30, JUNE 30,
1999 2000 1999 2000
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic:
Weighted average common shares outstanding ................... 41,770,792 42,318,639 42,082,738 42,031,075
---------- ---------- ---------- ----------
Total weighted average basic shares outstanding ......... 41,770,792 42,318,639 42,082,738 42,031,075
Diluted:
Dilutive effect of stock options ............................. 1,189,806 203,770 1,014,116 67,274
---------- ---------- ---------- ----------
Total weighted average diluted shares outstanding....... 42,960,598 42,522,409 43,096,854 42,098,349
========== ========== ========== ==========
</TABLE>
9
<PAGE> 10
SYKES ENTERPRISES, INCORPORATED
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, 1999, Consolidated Financial
Statements, including the notes thereto. The following discussion and analysis
contains forward-looking statements that involve risks and uncertainties. Words
such as "may", "expects", "anticipates", "intends", "plans", "believes",
"seeks", "estimates", variations of such words, and similar expressions are
intended to identify such forward-looking statements. Similarly, statements that
describe the Company's future plans, objectives, or goals also are
forward-looking statements. 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.
Factors that could cause actual results to differ materially from what is
expressed or forecasted in such forward-looking statements include, but are not
limited to, customer resistance to Sykes' standardized contract for future
bundled service offerings; variations in the term and the elements of services
offered under Sykes' standardized contract for future bundled service offerings;
changes in applicable accounting principles; difficulties or delays in
implementing Sykes' bundled service offerings; failure to achieve sales,
marketing, and other objectives of Sykes' strategic alliance; construction
delays of new call centers; difficulties in managing growth; rapid technological
change; loss of significant customers; risks inherent in conducting business
abroad; currency fluctuations; changes in legislation; fluctuations in business
conditions and the economy; Sykes' ability to attract and retain key management
personnel; the marketplace's continued receptivity to Sykes' bundled service
offering; Sykes' ability to continue the growth of its support service revenues
through additional technical support centers; Sykes' ability to further
penetrate into vertically integrated markets; Sykes' ability to expand its
global presence through strategic alliances and selective acquisitions; Sykes'
ability to expand its e-commerce service platform revenues; Sykes' ability to
continue to establish a competitive advantage through sophisticated
technological capabilities; Sykes' ability to complete its restructuring plan;
and the risk factors listed from time to time in Sykes' registration statements
and reports as filed with the Securities Exchange Commission. All
forward-looking statements are made as of the date hereof, and Sykes undertakes
no obligation to update any such forward-looking statements.
RESULTS OF OPERATIONS
On June 13, 2000, the Company announced its initiatives to strategically focus
its operations into two business units entitled Business Solutions and Business
Services. Sykes' Business Solutions group which represents approximately 10% of
the Company's consolidated revenue, provides professional services in
e-commerce, globalization and Customer Relationship Management (CRM) with a
focus on business strategy development, solution implementation, web design,
development and education, localization and program management. Sykes' Business
Services group represents approximately 90% of the Company's consolidated
revenue and is comprised of the Company's core competencies of technical and
customer support, distribution and fulfillment. These services are delivered
through multiple communication channels encompassing web, e-mail and telephony
support. The revenue comparisons below reflect the Company's strategic focus on
its operations as Business Solutions and Business Services.
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
For the six months ended June 30, 2000, the Company recorded consolidated
revenues of $318.1 million, an increase of $47.6 million or 17.6%, from the
$270.5 million of consolidated revenues for the comparable period during 1999.
Exclusive of SHPS (in which 93.5% of the Company's ownerships interest was sold
on June 30, 2000), revenues increased $47.2 million or 20.1% to $282.4 million
for the six months ended June 30, 2000 from $235.2 million for the comparable
period during 1999. This growth in revenue was the result of a $46.4 million or
19.1% increase in Business Services' revenues ($46.0 million or 22.1% exclusive
of SHPS) and an increase of $1.2 million or 4.5% from Business Solutions'
revenues.
10
<PAGE> 11
SYKES ENTERPRISES, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
(CONTINUED)
The increase in Business Services' revenues for the six months ended June 30,
2000 was primarily attributable to an increase in the number of technical and
customer support centers providing services throughout the period, and the
resultant increase in e-mail requests and telephony call volumes from clients,
the licensing of the Company's diagnostic software, partially offset by a
decrease from distribution and fulfillment services revenues. The new technical
support centers were required as a result of continued growth of technical and
customer support services from both e-commerce and telephony support services.
Subsequent to the second quarter of 1999, the Company opened four domestic and
four international technical support centers, and significantly expanded an
additional four international centers. During the six months ended June 30,
2000, the Company recognized $4.7 million of revenue associated with the
licensing of the Company's AnswerTeam(TM) diagnostic software, of which $3.5
million relates to a one-year licensing agreement that was completed during the
six months ended June 30, 2000, and $1.2 million relates to the pro rata
recognition of revenue associated with a licensing agreement completed during
1999. The decrease in distribution and fulfillment services revenue for the six
months ended June 30, 2000 was primarily attributable to a client's decision to
discontinue its operations within North America. The increase in Business
Solutions' revenues was attributable to a focus on professional e-commerce
services, including web design, development and program management, an increase
in the average bill rate charged for consulting services, an increase in
language translation and localization services, partially offset by a $1.9
million reduction in revenue associated with the sale of the Company's
Manufacturing and Distribution operations during the second quarter of 1999.
Direct salaries and related costs increased $28.6 million or 16.6% to $200.8
million for the six months ended June 30, 2000, from $172.2 million in 1999. As
a percentage of revenues, direct salaries and related costs decreased to 63.1%
in 2000 from 63.7% for the comparable period in 1999. The increase in the dollar
amount was primarily attributable to a $36.1 million increase in salaries and
benefits to support revenue growth and associated training costs, partially
offset by a $7.3 million decrease in direct material costs associated with
distribution and fulfillment services. In addition, during the six months ended
June 30, 1999, the Company capitalized $0.6 million of costs related to
internally developed software with no additional costs capitalized during the
six months ended June 30, 2000. Exclusive of SHPS, direct salaries and related
costs increased $24.6 million or 16.1% to $177.6 million or 62.9% of revenue.
The decrease in direct salaries and related costs as a percentage of revenue
resulted from economies of scale associated with spreading costs over a larger
revenue base.
General and administrative expenses increased $18.3 million or 24.7% to $92.3
million for the six months ended June 30, 2000, from $74.0 million in 1999. As a
percentage of revenues, general and administrative expenses increased to 29.0%
in 2000 from 27.4% for the comparable period in 1999. The increase in both the
dollar amount and percentage of revenue of general and administrative expenses
was primarily attributable to a $6.9 million increase in salaries and benefits
to support the Company's organic growth, a $3.7 million increase in depreciation
expenses associated with facility and capital equipment expenditures incurred in
connection with the integration and expansion of the Company's technical and
customer support services, a $2.0 million increase in telecom costs and a $6.6
million increase of other costs. Grants received in excess of property and
equipment costs are recognized as a reduction of general and administrative
expenses which were $0.9 million higher during the six months ended June 30,
2000 compared to the six months ended June 30, 1999. Exclusive of SHPS, general
and administrative expenses increased $21.0 million or 34.6% to $81.5 million,
or 28.9% of revenue.
Compensation expense associated with the exercise of options was $7.8 million
for the six months ended June 30, 2000. This charge related to payments made to
certain SHPS' option holders as part of the Company's sale of a 93.5% ownership
interest in SHPS that occurred on June 30, 2000.
The Company recorded restructuring and other charges of $9.6 million during the
six months ended June 30, 2000. These charges were associated with (1) the
consolidation of certain of the Company's distribution and fulfillment
operations; (2) the consolidation of certain of the Company's professional
services locations; (3) elimination of
11
<PAGE> 12
SYKES ENTERPRISES, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 2000 COMPARED TO SIX MONTHS ENDED JUNE 30, 1999
(CONTINUED)
redundant property, leasehold improvements and equipment; and (4) lease
termination costs associated with vacated properties and transportation
equipment.
Interest and other expense was $2.2 million during the six months ended June 30,
2000, compared to $1.4 million during the comparable 1999 period. The increase
in interest and other expense for the six-month period was attributable to an
overall increase in interest rates and to an increase in the Company's average
outstanding debt position. The Company's average interest rate for the six
months ended June 30, 2000 was 7.7% compared to 6.5% for the comparable period
of 1999, resulting in an increase of interest expense of $0.5 million. The
Company's average debt balance for the six months ended June 30, 2000, was $83.7
million compared to $76.7 million for the six months ended June 30, 1999. The
increase in the average debt balance is principally due to capital expenditures
and the Company's repurchase of 1.0 million shares of its common stock during
the first quarter of 2000 that is being held as treasury shares.
On June 30, 2000, the Company sold 93.5% of its ownership interest in SHPS for
$165.5 million cash. The sale of SHPS resulted in a gain for financial
accounting purposes of $84.0 million ($59.9 million net of taxes).
The provision for income taxes increased $18.4 million to $27.2 million for the
six months ended June 30, 2000 from $8.8 million for the comparable period in
1999. The increase in the provision for income taxes was primarily attributable
to the gain associated with the sale of SHPS, partially offset by the
compensation expense associated with the exercise of options and the
restructuring and other charges that were incurred during the six months ended
June 30, 2000. The Company's effective tax rate exclusive of the gain and
one-time charges was 38.8% for the six months ended June 30, 2000 compared to
38.7% for the comparable 1999 period.
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
For the three months ended June 30, 2000, the Company recorded consolidated
revenues of $156.8 million, an increase of $22.7 million or 16.9%, from the
$134.1 million of consolidated revenues for the comparable period during 1999.
Exclusive of SHPS, revenues increased $23.0 million or 19.7% to $139.2 million
for the three months ended June 30, 2000, from $116.3 million for the comparable
period during 1999. This growth in revenue was the result of a $20.5 million or
16.9% increase in Business Services' revenues ($20.7 million or 20.0% exclusive
of SHPS) and an increase of $2.2 million or 17.5% from Business Solutions'
revenues.
The increase in Business Services' revenues for the three months ended June 30,
2000 was primarily attributable to an increase in the number of technical and
customer support centers providing services throughout the period and the
resultant increase in e-mail requests and telephony call volumes from clients,
the licensing of the Company's diagnostic software, partially offset by a
decrease from distribution and fulfillment services revenues. The new technical
and customer support centers were required as a result of continued growth of
technical and customer support services from both e-commerce and traditional
telephony support services. Subsequent to the first six months of 1999, the
Company opened four domestic and four international technical and customer
support centers, and significantly expanded an additional four international
centers. During the three months ended June 30, 2000, the Company recognized
$4.7 million of revenue associated with the licensing of the Company's
AnswerTeam(TM) diagnostic software, of which $3.5 million relates to a one-year
licensing agreement that was completed during the three months ended June 30,
2000, and $1.2 million relates to the pro rata recognition of revenue associated
with a licensing agreement completed during 1999. The decrease in distribution
and fulfillment services revenue for the three months ended June 30, 2000 was
primarily attributable to a client's decision to discontinue its operations
within North America.
The increase in Business Solutions' revenues for the three months ended June 30,
2000, was attributable to a focus on professional e-commerce services, including
web design, development and program management, an increase in the average bill
rate charged for consulting services, and an increase in language translation
and localization services. The increase in Business Solutions' revenue for the
three months ended June 30, 2000 is partially offset by
12
<PAGE> 13
SYKES ENTERPRISES, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 2000 COMPARED TO THREE MONTHS ENDED JUNE 30, 1999
(CONTINUED)
a $0.7 million reduction in revenue associated with the sale of the Company's
Manufacturing and Distribution operation during the second quarter of 1999.
Direct salaries and related costs increased $9.7 million or 10.9% to $98.6
million for the three months ended June 30, 2000, from $88.9 million in 1999. As
a percentage of revenues, direct salaries and related costs decreased to 62.9%
in 2000 from 66.3% for the comparable period in 1999. The increase in the dollar
amount was primarily attributable to a $15.5 million increase in salaries and
benefits to support revenue growth and associated training costs, partially
offset by a $5.7 million decrease in direct material costs associated with
distribution and fulfillment services. Exclusive of SHPS, direct salaries and
related costs increased $8.8 million or 11.2% to $87.3 million or 62.7% of
revenue. The decrease as a percentage of revenue resulted from economies of
scale associated with spreading costs over a larger revenue base.
General and administrative expenses increased $7.6 million or 20.1% to $45.4
million for the three months ended June 30, 2000, from $37.8 million in 1999. As
a percentage of revenues, general and administrative expenses increased to 28.9%
in 2000 from 28.2% for the comparable period in 1999. The increase in the dollar
amount of general and administrative expenses was primarily attributable to a
$2.3 million increase in salaries and benefits to support the Company's organic
growth, a $2.6 million increase in depreciation expenses associated with
facility and capital equipment expenditures incurred in connection with the
integration and expansion of the Company's technical and customer support a $1.1
million increase in telecom costs and a $2.5 million increase of other costs.
Grants received in excess of property and equipment costs are recognized as a
reduction of general and administrative expenses which were $0.9 million higher
during the three months ended June 30, 2000 compared to the three months ended
June 30, 1999. Exclusive of SHPS, general and administrative expenses increased
$8.2 million or 25.5% to $40.2 million, or 28.8% of revenue.
Compensation expense associated with the exercise of options was $7.8 million
for the three months ended June 30, 2000. This charge related to payments made
to certain SHPS' option holders as part of the Company's sale of a 93.5%
ownership interest in SHPS that occurred on June 30, 2000.
The Company recorded restructuring and other charges of $9.6 million during the
three months ended June 30, 2000. These charges were associated with (1) the
consolidation of certain of the Company's distribution and fulfillment
operations; (2) the consolidation of certain of the Company's professional
services locations; (3) elimination of redundant property, leasehold
improvements and equipment; and (4) lease termination costs associated with
vacated properties and transportation equipment.
Interest and other expense was $1.0 million during the three months ended June
30, 2000, compared to $0.9 million during the comparable 1999 period. The
increase in interest and other expense for the three-month period was
attributable to an increase in interest rates and to an increase in the
Company's average outstanding debt position. The Company's average interest rate
for the second quarter of 2000 was 7.6% compared to 6.6% for the comparable
period of 1999, resulting in an increase of interest expense of $0.2 million.
The Company's average debt balance for the second quarter of 2000 was $90.3
million compared to $78.0 million for the second quarter of 1999. The increase
in the average debt balance is principally due to capital expenditures and the
Company's repurchase of 1.0 million shares of its common stock during the first
quarter that is being held as treasury shares.
On June 30, 2000, the Company sold 93.5% of its ownership interest in SHPS for
$165.5 million cash. The sale of SHPS resulted in a gain for financial
accounting purposes of $84.0 million ($59.9 million net of taxes).
The provision for income taxes increased $20.4 million to $22.9 million for the
three months ended June 30, 2000 from $2.5 million for the comparable period in
1999. The increase in the provision for income taxes was primarily attributable
to the gain associated with the sale of SHPS, partially offset by the
compensation expense associated with the exercise of options and the
restructuring and other charges that were incurred during the three months ended
June 30, 2000. The Company's effective tax rate exclusive of the gain and
one-time charges was 38.8% for the three months ended June 30, 2000 compared to
38.7% for the comparable 1999 period.
13
<PAGE> 14
SYKES ENTERPRISES, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of liquidity are cash flows from operations and
available borrowings under its credit facilities. The Company has utilized its
capital resources to make capital expenditures associated primarily with its
technical and customer support services, invest in technology applications and
tools to further develop the Company's service offerings, repurchase its shares
in the open market and for working capital and other general corporate purposes.
In addition, the Company intends to use its future sources of liquidity for the
aforementioned items and for possible acquisitions.
During the six-month period ended June 30, 2000, the Company generated
approximately $29.9 million in cash from operations. The Company utilized these
funds and a portion of the cash generated from the sale of 93.5% of its interest
in SHPS to fund repayments under its credit facility, to fund the purchase of
$16.2 million of common stock being held in treasury and $34.1 million of
capital expenditures. The purchase of the shares of the Company's common stock
was in connection with a stock repurchase program announced in February 2000.
During July 2000, the Company announced an additional stock repurchase program
for up to two million shares. The capital expenditures were predominately the
result of the Company's enhancement of its initiatives including the integration
and expansion of the Company's technical and customer support centers.
On May 2, 2000, the Company amended and restated its existing syndicated credit
facility with a syndicate of lenders (the "Amended Credit Facility"). Pursuant
to the terms of the Amended Credit Facility, the amount of the Company's
revolving credit facility was maintained at $150.0 million. The $150.0 million
Amended Credit Facility includes a $10.0 million swingline loan to be used for
working capital purposes. In addition, the Company amended and restated its
$15.0 million multi-currency credit facility that provides for multi-currency
lending. Borrowings under the Amended Credit Facility bear interest, at the
Company's option, at (a) the lender's base rate plus an applicable margin of up
to .25% or (b) a Eurodollar rate plus an applicable margin of up to 1.75 %.
Borrowings under the $10.0 million swingline loan bear interest, at the
Company's option, at (a) the lender's base rate plus an applicable margin of up
to .25% or (b) a Quoted Rate for swingline loans. Borrowings under the $15.0
million multi-currency facility bear interest, at the Company's option, at (a)
the lender's base rate plus an applicable margin of up to .25% or (b) a quoted
Euro rate for swingline loans. The Company paid aggregate financing fees of
approximately $0.3 million, which have been deferred and are being amortized
over the term of the Amended Credit Agreement. In addition, a commitment fee up
to .375% will be charged on the unused portion of the Amended Credit Facility on
a quarterly basis. The Amended Credit Facility matures on February 28, 2003, and
the multi-currency facility matures on February 28, 2002. At June 30, 2000, the
Company had $164.8 million of availability under its credit facilities.
The Company believes that its current cash levels, accessible funds under its
credit facilities and cash flows from future operations will be adequate to meet
its working capital needs, 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.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Company's earnings and cash flows are subject to fluctuations due to changes
in non-U.S. currency exchange rates. The Company is exposed to non-U.S. exchange
rate fluctuations as the financial results of non-U.S. subsidiaries are
translated into U.S. dollars in consolidation. As exchange rates vary, those
results, when translated, may vary from expectations and adversely impact
overall expected profitability. The cumulative translation effects for
subsidiaries using functional currencies other than the U.S. dollar are included
in accumulated other
14
<PAGE> 15
SYKES ENTERPRISES, INCORPORATED
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK (continued)
comprehensive income in shareholders' equity. Movements in non-U.S. currency
exchange rates may affect the Company's competitive position, as exchange rate
changes may affect business practices and/or pricing strategies of non-United
States based competitors. Under its current policy, the Company does not use
non-U.S. exchange derivative instruments to manage its exposure to changes in
non-U.S. currency exchange rates.
The Company's exposure to interest rate risk results from its variable rate debt
outstanding under its credit facilities. At June 30, 2000, the Company had $10.2
million in debt outstanding at variable interest rates, which is generally equal
to the Eurodollar rate plus an applicable margin. Based on the Company's level
of variable rate debt during the first six months of 2000, a one-point increase
in the weighted average interest rate would increase the Company's annual
interest expense by approximately $0.9 million. Under its current policy, the
Company does not use derivative instruments to manage its exposure to changes in
interest rates.
IMPACT OF YEAR 2000
In prior periods, the Company discussed the nature and progress of its plans to
become Year 2000 compliant. During September 1999, the Company completed its
remediation and testing of its systems. As a result of those planning and
implementation efforts, the Company experienced no significant disruptions in
critical information technology and non-information technology systems and
believes those systems successfully responded to the Year 2000 date change.
Sykes is not aware of any material problems resulting from Year 2000 issues,
either with its products and services, its internal systems, or those products
or services of third parties. Sykes will continue to monitor its critical
computer applications and those of its suppliers and vendors throughout the year
2000 to ensure that any delayed Year 2000 matters that may arise are addressed
promptly.
FLUCTUATIONS IN QUARTERLY RESULTS
For the year ended December 31, 1999, quarterly revenues as a percentage of
total annual revenues were approximately 24%, 23%, 25% and 28%, respectively,
for the first through fourth quarters of the year. The Company has experienced
and anticipates that in the future it will continue to experience variations in
quarterly revenues. The variations are due to the timing of new contracts and
renewal of existing contracts, the timing of expenses incurred to support new
business, the timing and frequency of client spending for e-commerce and
e-business activities, non-U.S. currency fluctuations, and the seasonal pattern
of technical and customer support, and distribution and fulfillment services.
15
<PAGE> 16
SYKES ENTERPRISES, INCORPORATED
FORM 10-Q
For the Quarter Ended June 30, 2000
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Reference is made to Part I, Item 3 "Legal Proceedings" of the Registrant's
Annual Report on Form 10-K for the year ended December 31, 1999, filed March 29,
2000. Since March 29, 2000, the Company has not been named as a defendant in any
action which, to the best of the Company's knowledge, could have a material
adverse effect on the financial condition or results of operations of the
Company other than the action described below.
As of August 1, 2000, the Company is aware of 14 purported class action lawsuits
that have been filed against Sykes and certain of its executive officers
alleging violations of federal securities law. All of the actions were filed in
the United States District court for the Middle District of Florida, and all of
the actions have been consolidated into one action. Although the Company intends
to defend this lawsuit vigorously, the Company cannot predict the outcome of
this lawsuit or the impact that this lawsuit or any other suits, claims, or
investigations relating to the same subject matter may have on the Company's
liquidity or financial condition.
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
16
<PAGE> 17
SYKES ENTERPRISES, INCORPORATED
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2000
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
The following documents are filed as an exhibit to this Report:
10.24 Amended and Restated Credit Agreement among Sykes Enterprises,
Incorporated and Bank of America, NA, dated May 2, 2000
10.25 Termination of Aircraft Lease Agreement between JHS Leasing of
Tampa, Inc. as lessor and Sykes Enterprises, Incorporated as
lessee dated June 30, 2000
27.1 Financial Data Schedule (for SEC use only).
(b) Reports on Form 8-K
The Registrant filed a Form 8-K, dated June 30, 2000, on July 17, 2000,
reporting under Item 2 and Item 7 the sale of a 93.5% ownership
interest in SHPS, Incorporated.
17
<PAGE> 18
SYKES ENTERPRISES, INCORPORATED
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2000
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: August 14, 2000 By: /s/ W. Michael Kipphut
------------------------- -------------------------------------------
W. Michael Kipphut
Vice President and Chief Financial Officer
(Principal Financial and Accounting Officer)
18
<PAGE> 19
SYKES ENTERPRISES, INCORPORATED
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2000
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Number
------- ------
<S> <C> <C>
10.24 Amended and Restated Credit Agreement among Sykes 20
Enterprises, Incorporated and Bank of America, NA,
dated as of May 2, 2000
10.25 Termination of Aircraft Lease Agreement between JHS 87
Leasing of Tampa, Inc. as lessor and Sykes
Enterprises, Incorporated as lessee dated June 30,
2000
27.1 Financial Data Schedule (for SEC use only) 89
</TABLE>
19
