Discontinued Operations

12 Months Ended

Dec. 31, 2013

Discontinued Operations And Disposal Groups [Abstract]

Discontinued Operations

Note 3. Discontinued Operations

The results of discontinued operations, which consist of the operations in Spain and Argentina, were as follows (none in 2013) (in thousands):

	Years Ended December 31,
	2012			2011
Revenues	$	10,102		$	39,341
(Loss) from discontinued operations before income taxes	$	(820	)	$	(4,532	)
Income taxes (1)		—			—
(Loss) from discontinued operations, net of taxes	$	(820	)	$	(4,532	)
(Loss) on sale of discontinued operations before income taxes	$	(10,707	)	$	559
Income taxes (1)		—			—
(Loss) on sale of discontinued operations, net of taxes	$	(10,707	)	$	559

⁽¹⁾  There were no income taxes as any tax benefit from the losses would be offset by a valuation allowance.

Sale of Spanish Operations in 2012

In November 2011, the Finance Committee of the Board of Directors (the “Board”) of the Company approved a plan to sell its Spanish operations, which were operated through its Spanish subsidiary, Sykes Enterprises, Incorporated S.L. (“Sykes Spain”). Sykes Spain operated customer contact management centers, with annual revenues of approximately $39.3 million in 2011, providing contact center services through a total of three customer contact management centers in Spain to clients in Spain. The decision to sell the Spanish operations was made in 2011 after management completed a strategic review of the Spanish market and determined the operations were no longer consistent with the Company’s strategic direction.

On March 29, 2012, Sykes Spain entered into the asset purchase agreement, by and between Sykes Spain and Iberphone, S.A.U., and pursuant thereto, on March 29, 2012, Sykes Spain sold the fixed assets located in Ponferrada, Spain, which were previously written down to zero, cash of $4.1 million, and certain contracts and licenses relating to the business of Sykes Spain, to Iberphone, S.A.U. Under the asset purchase agreement, Ponferrada, Spain employees were transferred to Iberphone S.A.U. which assumed certain payroll liabilities in the approximate amount of $1.7 million, and paid a nominal purchase price for the assets.

On March 30, 2012, the Company entered into a stock purchase agreement with a former member of Sykes Spain’s management, and pursuant thereto, on March 30, 2012, the Company sold all of the shares of capital stock of Sykes Spain to the purchaser for a nominal price. Pursuant to the stock purchase agreement, immediately prior to closing, the Company made a cash capital contribution of $8.6 million to Sykes Spain to cover a portion of Sykes Spain’s liabilities and to fund the $4.1 million of cash transferred and sold pursuant to the asset purchase agreement with Iberphone, S.A.U. discussed above. As this was a stock transaction, the Company anticipates no future obligation with regard to Sykes Spain and there are no material post-closing obligations.

During 2011, the Company recorded an impairment of $0.8 million related to the write-down of property and equipment, primarily leasehold improvements and software, in conjunction with the classification of the Spanish operations as held for sale. The impairment charges represented the amount by which the carrying value exceeded the fair value of these assets, as defined in ASC 820, and are included in discontinued operations in the accompanying Consolidated Statement of Operations for the year ended December 31, 2011.

The Company reflected the operating results related to the Spanish operations as discontinued operations in the accompanying Consolidated Statements of Operations for the years ended December 31, 2012 and 2011. Cash flows from discontinued operations are included in the accompanying Consolidated Statements of Cash Flows for the years ended December 31, 2012 and 2011. This business was historically reported by the Company as part of the EMEA segment.

Sale of Argentine Operations in 2010

In December 2010, the Board, upon the recommendation of its Finance Committee, sold its operations in Argentina (the “Argentine operations”). During the year ended December 31, 2011, the Company reversed the accrued liability related to the expiration of the indemnification to the purchaser for the possible loss of a specific client business, which reduced the net loss on sale of the Argentine operations by $0.6 million. There was no related income tax effect.