Exhibit 99.1
FOR IMMEDIATE RELEASE
September 18, 2000
SYKES ENTERPRISES, INCORPORATED ANNOUNCES REVISED EARNINGS FORECAST FOR
SECOND HALF OF 2000, CHANGES TO ITS STRATEGIC ALLIANCE WITH PEROT SYSTEMS
AND RESTATEMENT OF 1998 RESULTS
TAMPA, FL September 18, 2000 - Sykes Enterprises, Incorporated ("Sykes"
or the "Company") (NASDAQ: SYKE), a global leader in providing vertically
integrated, technology-based business solutions and services, today announced
that it anticipates earnings for the third and fourth quarters of 2000 to be
less than current consensus of analysts' estimates. The Company expects to
report third quarter revenues in the range of $128 million to $134 million and a
net loss in the range of ($0.11) to ($0.08) per diluted share compared to $141
million in revenues and $0.10 earnings per diluted share for the same period
last year (or $123 million in revenues and $0.09 earnings per diluted share
after adjusting for the sale of SHPS, Inc.). Further, fourth quarter revenues
are expected to be in the range of $143 million to $148 million and diluted
earnings per share to be in the range of $0.10 to $0.13 compared to revenues of
$164 million and $0.17 earnings per diluted share for the same period last year
(or $144 million in revenues and $0.14 earnings per diluted share after
adjusting for the sale of SHPS, Inc., excluding a $6.0 million pre-tax charge
for the write-down of software and computer equipment last year).
The anticipated earnings shortfall in the third and fourth quarters is
the result of several primary causes, including:
o Shortfalls in anticipated revenues from new AnswerTeam(TM) diagnostic
contracts, which management currently believes will not close in the
forecasted timeframe; lower than anticipated consulting revenues due to
contract delays; lower volumes in non-core areas such as localization,
distribution and fulfillment; as well as an overall decline in
technical support call volume forecasts by original equipment
manufacturers in the U.S. which directly affects the Company's support
center revenues.
-5-
<PAGE>
o An increase in benefits costs, including health and workers'
compensation insurance, primarily related to the Company's direct labor
force.
o Higher SG&A costs primarily related to increases in bad debt expense
and professional fees.
o The negative impact of weaker European currencies on the Company's
financial reporting results.
Based on the third and fourth quarter earnings revisions, 2001 earnings
per share will likely fall short of currently published analysts' estimates. The
Company expects to announce actual results for its third quarter ended September
30, 2000 after the market closes on October 30, 2000.
The Company also announced today that Sykes and Perot Systems
Corporation agreed mutually to modify their strategic relationship. The alliance
is intended to provide clients a complete offering, encompassing the Company's
AnswerTeam diagnostic support tool and technical support capabilities in
conjunction with Perot Systems' consulting and system integration abilities.
Sykes and Perot Systems continue to work together as alliance partners, however
the formal financial structure has been eliminated.
Sykes licensed its AnswerTeam software product to Perot Systems and in
return received $20 million in cash. The Company was to begin recognizing the
$20 million license fee in 2001 after achieving certain performance objectives.
The Company will reverse the transaction during the third quarter of 2000 and
repay to Perot Systems the $20 million in cash plus accrued interest of
approximately $0.7 million, which is expected to reduce after-tax earnings per
share by approximately $0.01 in the third quarter. To secure satisfaction of
performance objectives, the Company provided a $30 million bank letter of credit
to Perot Systems, which has been cancelled.
David L. Grimes, President and Chief Executive Officer of Sykes,
stated, "We fully understand the disappointment of today's announcement and what
it means to our investors and shareholders. We want to emphasize that Sykes has
the tools, employees and their commitment, a strong balance sheet and the
financial flexibility to continue to deliver the high quality customer service
and business solutions that our clients expect and deserve." Grimes concluded,
"With value creation as an overriding goal, Sykes' continues to evolve as a
global company servicing the expanding needs of the digital marketplace. In
doing so, we believe the Company remains in a position to rebound and deliver
solid earnings and subsequent shareholder value from these levels."
The Company also announced today that Kyrus Corporation has filed a
lawsuit against Sykes concerning the license of certain software by Sykes to
Kyrus. In 1998, the Company entered into a transaction whereby Sykes granted to
Kyrus a license for software related to Sykes' former retail division and used
by the retailing industry in exchange for preferred stock of Kyrus valued at $10
million. In the suit, Kyrus asserts, in part, that the software contained
functionality problems that prevented Kyrus from successfully marketing the
software at their projected levels. Based on Kyrus' assertions, the Company was
to return up to $4.5 million of the shares of Kyrus preferred stock if Kyrus was
unable to reach certain sales volumes from the software.
As a result of the litigation, the Company has re-evaluated the
previous accounting treatment for the Kyrus transaction. During the second
quarter of 1998, the Company recognized as revenue the entire $10 million of
preferred stock that it received in the Kyrus transaction. The Company has
announced today that it is restating its previously reported financial results
for the year ended
-6-
<PAGE>
December 31, 1998 to reflect a $4.5 million reduction in revenue from the Kyrus
transaction. Accordingly, Sykes is restating its results for the year ended
December 31, 1998 to reflect revenues of $465.0 million, net income of $5.5
million, and earnings per diluted share of $0.13 compared to previously reported
results of $469.5 million in revenues, net income of $8.3 million, and earnings
per diluted share of $0.20 for the year ended December 31, 1998.
In an effort to ensure complete and accurate accounting treatment, the
Company is also reviewing other of Sykes' service contracts that were entered
into during 1998. At this time, the Company has not determined whether
additional restatements will be necessary as a result of the review. The Company
will disclose the results of its review promptly after it is concluded.
The Company will conduct a conference call regarding the content of
this release tomorrow, September 19, 2000, at 8:00 a.m. Eastern Standard Time.
Parties interested in participating in this call should dial (800) 450-0819 or
(612) 288-0329 five minutes before the scheduled time. A replay will be
available from 11:30 a.m. on September 19, 2000 through 12:00 midnight on
September 20, 2000 by dialing (800) 475-6701 or (320) 365-3844. The access code
is 539710.
About Sykes Enterprises, Incorporated
Sykes is a global leader in providing 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 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. Sykes,
headquartered in Tampa, FL, has approximately 14,700 employees and currently
operates 39 customer interaction centers, five e-commerce fulfillment centers
and 17 branch offices throughout the Unites States, Canada, Europe, Asia,
Africa, and Central America. Visit the Sykes web site at http://www.sykes.com.
Forward-Looking Statements
The statements contained in this press release that are not purely
historical, including statements regarding Sykes' objectives, expectations,
hopes, intentions, beliefs or strategies regarding the future, are
"forward-looking" statements within the meaning of Section 27A of the Securities
Act of 1933 and Section 21E of the Securities Exchange Act of 1934. It is
important to note that Sykes' actual results could differ materially from those
in such forward-looking statements, and undue reliance should not be placed on
such statements. Among the important factors that could cause such actual
results to differ materially are (i) customer resistance to Sykes' standardized
contract for future bundled service offerings, (ii) variations in the term and
the elements of services offered under Sykes' standardized contract for future
bundled service offerings, (iii) changes in applicable accounting principles,
(iv) difficulties or delays in implementing Sykes' bundled service offerings,
(v) failure to achieve sales, marketing and other objectives to Sykes' strategic
alliances, (vi) construction delays of new call centers, (vii) difficulties in
managing growth, (viii) rapid technological change, (ix) loss of significant
customers, (x) risks inherent in conducting business abroad, (xi) currency
fluctuations, (xii) changes in legislation, (xiii) fluctuations in business
conditions and the economy, (xiv) Sykes' ability to attract and retain key
management personnel, (xv) the marketplace's continued receptivity to Sykes'
bundled
-7-
<PAGE>
service offerings, (xvi) Sykes' ability to continue the growth of is
support service revenues through additional technical support centers, (xvii)
Sykes' ability to further penetrate into vertically integrated markets, (xviii)
Sykes' ability to expand its global presence through strategic alliances and
selective acquisitions, (xix) Sykes' ability to expand its e-commerce service
platform revenues, (xx) Sykes' ability to continue to establish a competitive
advantage through sophisticated technological capabilities, and (xxi) other risk
factors listed from time to time in Sykes' registration statements and reports
as filed with the Securities and Exchange Commission. All forward-looking
statements included in this press release are made as of the date hereof, and
Sykes undertakes no obligation to update any such forward-looking statements.
For additional information contact:
Mike Kipphut Kristin L. Wiemer
Vice President and Chief Financial Officer Director, Investor Relations
(813) 233-7151 (813) 233-7143
[email protected] [email protected]
-8-
