UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM
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Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended
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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.
(Exact name of Registrant as specified in its charter)
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(State or other jurisdiction of incorporation or organization) |
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(I.R.S. Employer Identification No.) |
(Address of principal executive offices) (Zip Code)
Registrant’s telephone number, including area code: (
Securities registered pursuant to Section 12(b) of the Act:
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Title of each class |
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Trading Symbol(s) |
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Name of each exchange on which registered |
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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.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
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Accelerated filer |
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Non-accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes
As of April 15, 2021, there were
Sykes Enterprises, Incorporated and Subsidiaries
Form 10-Q
INDEX
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Item 1. |
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3 |
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Condensed Consolidated Balance Sheets – March 31, 2021 and December 31, 2020 (Unaudited) |
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3 |
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4 |
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5 |
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6 |
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7 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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9 |
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Item 2. |
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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28 |
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Item 3. |
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36 |
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Item 4. |
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37 |
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37 |
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Item 1. |
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37 |
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Item 1A. |
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37 |
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Item 2. |
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37 |
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Item 3. |
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37 |
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Item 4. |
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38 |
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Item 5. |
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38 |
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Item 6. |
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38 |
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39 |
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2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
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(in thousands, except per share data) |
March 31, 2021 |
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December 31, 2020 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
$ |
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$ |
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Receivables, net of allowance of $ |
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Prepaid expenses |
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Other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Goodwill, net |
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Intangibles, net |
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Deferred charges and other assets |
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$ |
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$ |
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Liabilities and Shareholders' Equity |
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Current liabilities: |
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Accounts payable |
$ |
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$ |
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Accrued employee compensation and benefits |
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Income taxes payable |
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Deferred revenue and customer liabilities |
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Operating lease liabilities |
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Other accrued expenses and current liabilities |
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Total current liabilities |
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Long-term debt |
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Long-term income tax liabilities |
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Long-term operating lease liabilities |
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Other long-term liabilities |
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Total liabilities |
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Commitments and loss contingencies (Note 11) |
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Shareholders' equity: |
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Preferred stock, $ |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive income (loss) |
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( |
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( |
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Treasury stock at cost: |
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( |
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Total shareholders' equity |
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$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements.
3
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
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Three Months Ended March 31, |
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(in thousands, except per share data) |
2021 |
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2020 |
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Revenues |
$ |
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$ |
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Operating expenses: |
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Direct salaries and related costs |
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General and administrative |
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Depreciation, net |
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Amortization of intangibles |
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Impairment of long-lived assets |
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— |
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Total operating expenses |
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Income from operations |
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Other income (expense): |
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Interest income |
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Interest (expense) |
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( |
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Other income (expense), net |
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( |
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( |
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Total other income (expense), net |
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( |
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( |
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Income before income taxes |
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Income taxes |
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Net income |
$ |
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$ |
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Net income per common share: |
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Basic |
$ |
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$ |
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Diluted |
$ |
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$ |
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Weighted average common shares outstanding: |
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Basic |
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Diluted |
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See accompanying Notes to Condensed Consolidated Financial Statements.
4
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
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Three Months Ended March 31, |
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(in thousands) |
2021 |
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2020 |
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Net income |
$ |
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$ |
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Other comprehensive income (loss), net of taxes: |
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Foreign currency translation adjustments |
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( |
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( |
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Unrealized gain (loss) on cash flow hedging instruments, net of taxes |
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( |
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Unrealized actuarial gain (loss) related to pension liability, net of taxes |
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( |
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( |
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Unrealized gain (loss) on postretirement obligation, net of taxes |
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— |
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( |
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Other comprehensive income (loss), net of taxes |
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( |
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( |
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Comprehensive income (loss) |
$ |
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$ |
( |
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See accompanying Notes to Condensed Consolidated Financial Statements.
5
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders’ Equity
(Unaudited)
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Common Stock |
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Additional |
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Accumulated Other |
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(in thousands) |
Shares Issued |
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Amount |
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Paid-in Capital |
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Retained Earnings |
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Comprehensive Income (Loss) |
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Treasury Stock |
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Total |
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Balance at December 31, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under equity award plans, net of forfeitures |
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— |
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— |
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( |
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— |
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Shares withheld for taxes paid related to net share settlement of equity awards |
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( |
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( |
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( |
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— |
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— |
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— |
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( |
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Comprehensive income (loss) |
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— |
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— |
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— |
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( |
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— |
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Balance at March 31, 2021 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Balance at December 31, 2019 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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Stock-based compensation expense |
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— |
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— |
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— |
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— |
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— |
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Issuance of common stock under equity award plans, net of forfeitures |
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( |
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( |
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— |
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— |
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( |
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— |
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Shares withheld for taxes paid related to net share settlement of equity awards |
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( |
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— |
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( |
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— |
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— |
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— |
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( |
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Repurchase of common stock |
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— |
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— |
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— |
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— |
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— |
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( |
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( |
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Retirement of treasury stock |
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( |
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( |
) |
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( |
) |
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( |
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— |
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— |
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Comprehensive income (loss) |
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— |
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— |
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— |
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( |
) |
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— |
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( |
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Balance at March 31, 2020 |
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$ |
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$ |
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$ |
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$ |
( |
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$ |
( |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements.
6
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
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Three Months Ended March 31, |
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(in thousands) |
2021 |
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2020 |
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Cash flows from operating activities: |
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Net income |
$ |
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$ |
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Adjustments to reconcile net income to net cash provided by operating activities: |
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Depreciation |
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Amortization of intangibles |
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Amortization of deferred grants |
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( |
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( |
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Impairment losses |
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— |
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Unrealized foreign currency transaction (gains) losses, net |
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Stock-based compensation expense |
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Deferred income tax provision (benefit) |
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( |
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Bad debt expense (reversals) |
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Unrealized (gains) losses and premiums on financial instruments, net |
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( |
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(Earnings) losses from equity method investees |
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Other |
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Changes in assets and liabilities, net of acquisitions: |
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Receivables, net |
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Prepaid expenses |
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( |
) |
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( |
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Other current assets |
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( |
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Deferred charges and other assets |
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( |
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Accounts payable |
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( |
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( |
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Income taxes receivable / payable |
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Accrued employee compensation and benefits |
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( |
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Other accrued expenses and current liabilities |
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( |
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( |
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Deferred revenue and customer liabilities |
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( |
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Other long-term liabilities |
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( |
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Operating lease assets and liabilities |
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( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Capital expenditures |
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( |
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( |
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Cash paid for business acquisitions, net of cash acquired |
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( |
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— |
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Purchase of intangible assets |
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( |
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— |
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Other |
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Net cash (used for) investing activities |
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( |
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( |
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7
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Continued)
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Three Months Ended March 31, |
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(in thousands) |
2021 |
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2020 |
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Cash flows from financing activities: |
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Payments of long-term debt |
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( |
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( |
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Proceeds from issuance of long-term debt |
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— |
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Cash paid for repurchase of common stock |
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— |
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( |
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Taxes paid related to net share settlement of equity awards |
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( |
) |
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( |
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Net cash (used for) financing activities |
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( |
) |
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( |
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Effects of exchange rates on cash, cash equivalents and restricted cash |
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( |
) |
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( |
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Net increase (decrease) in cash, cash equivalents and restricted cash |
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( |
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Cash, cash equivalents and restricted cash – beginning |
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Cash, cash equivalents and restricted cash – ending |
$ |
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$ |
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Supplemental disclosures of cash flow information: |
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Cash paid for amounts included in the measurement of operating lease liabilities |
$ |
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$ |
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Cash paid during period for interest |
$ |
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$ |
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Cash paid during period for income taxes |
$ |
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$ |
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Non-cash transactions: |
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Net right-of-use assets arising from new or remeasured operating lease liabilities |
$ |
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$ |
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Capital expenditures incurred but not yet paid |
$ |
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$ |
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Unrealized gain (loss) on postretirement obligation, net of taxes, in accumulated other comprehensive income (loss) |
$ |
— |
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$ |
( |
) |
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Property and equipment acquired under grant agreement |
$ |
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$ |
— |
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Shares repurchased for tax withholding on equity awards included in current liabilities |
$ |
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$ |
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See accompanying Notes to Condensed Consolidated Financial Statements.
8
Sykes Enterprises, Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Three Months Ended March 31, 2021 and 2020
(Unaudited)
Note 1. Overview and Basis of Presentation
Business — Sykes Enterprises, Incorporated and consolidated subsidiaries (“SYKES” or the “Company”) is a leading full lifecycle provider of global customer experience management services, multichannel demand generation and digital transformation. The Company provides differentiated full lifecycle customer experience management solutions and services primarily to Global 2000 companies and their end customers principally in the financial services, technology, communications, transportation & leisure and healthcare industries. The Company’s differentiated full lifecycle services platform effectively engages customers at every touchpoint within the customer journey, including digital media and acquisition, sales expertise, customer service, technical support and retention, many of which can be optimized through a suite of digital transformation capabilities under its SYKES Digital Services (“SDS”) group, which spans robotic process automation (“RPA”), self-service, insight analytics and digital learning. In addition to digital transformation, the Company also provides artificial intelligence (“AI”) solutions that can be embedded and leveraged across its lifecycle offerings. Utilizing SYKES’ integrated onshore/offshore global delivery model, the Company provides its services through multiple communication channels including phone, e-mail, social media, text messaging, chat and digital self-service. The Company also provides various enterprise support services in the United States that include services for its clients’ internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, SYKES also provides fulfillment services, which include order processing, payment processing, inventory control, product delivery and product returns handling. Additionally, through the Company’s acquisition of RPA provider Symphony Ventures Ltd (“Symphony”) coupled with its investment in AI through XSell Technologies, Inc. (“XSell”), the Company also provides a suite of solutions such as consulting, implementation, hosting and managed services that optimizes its differentiated full lifecycle management services platform. The Company has operations in
Coronavirus
On March 11, 2020, the World Health Organization characterized the novel coronavirus (“COVID-19”) a pandemic. The global nature, rapid spread and continually evolving response by governments throughout the world to combat the spread has had a negative impact on the global economy. Certain of the Company’s customer experience management centers have been impacted by local government actions restricting facility access or are operating at lower capacity utilization levels to achieve social distancing. The Company is committed to the health and safety of its workforce and ensuring business continuity for the brands it serves. In response, the Company has shifted as many employees as possible to a work-at-home model.
The Company continues to closely monitor the prevalence of COVID-19 and the vaccination rates in the communities where its centers are located as well as guidance from public health authorities, federal and local agencies and municipalities. The Company will work with employees and clients to transition agents back to its centers based on that guidance, but risk further disruption to the business as a result of COVID-19 and government-imposed restrictions. Over time, the Company anticipates a permanent transition to a work-at-home or hybrid model for a portion of its workforce.
Exit of Leased Space
The Company continues to reevaluate its real estate footprint in connection with the transition of a portion of its workforce to a permanent remote working environment in both the Americas and EMEA. Since April 2020, the Company has decided to terminate, sublease or abandon leases prior to the end of their lease terms at certain of its sites as approximately
9
million of ROU assets and $
Taylor Media Corp. Acquisition
On
The Company accounted for the TMC acquisition in accordance with ASC 805, Business Combinations (“ASC 805”), whereby the purchase price paid was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the closing date. Certain amounts are provisional and are subject to change, including the tax analysis of the assets acquired and liabilities assumed, and goodwill. The Company expects to complete this analysis by June 30, 2021 and any resulting adjustments will be recorded in accordance with ASC 805. The initial purchase price allocation resulted in $
The Company has reflected TMC’s assets and liabilities in its consolidated balance sheet as of December 31, 2020 and the results of TMC’s operations have been reflected in its consolidated financial statements in the Americas segment since January 1, 2021.
Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. 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 months ended March 31, 2021 are not necessarily indicative of the results that may be expected for any future quarters or the year ending December 31, 2021. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission (“SEC”) on February 26, 2021.
Principles of Consolidation — The condensed consolidated financial statements include the accounts of SYKES and its wholly-owned subsidiaries and controlled majority-owned subsidiaries. Investments in less than majority-owned subsidiaries in which the Company does not have a controlling interest, but does have significant influence, are accounted for as equity method investments. All intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates — The preparation of condensed consolidated financial statements in conformity with U.S. GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Due to the novel coronavirus (“COVID-19”) pandemic, there has been uncertainty and disruption in the global economy and financial markets. Other than where noted, the Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of the date and time of issuance of the condensed consolidated financial statements. These estimates may change, as new events occur, and additional information is obtained. Actual results could differ materially from these estimates under different assumptions or conditions.
10
Subsequent Events — Subsequent events or transactions have been evaluated through the date and time of issuance of the condensed consolidated financial statements. There were no material subsequent events that required recognition or disclosure in the accompanying condensed consolidated financial statements.
Cash, Cash Equivalents and Restricted Cash — Cash and cash equivalents consist of cash and highly liquid short-term investments, primarily held in non-interest-bearing investments which have original maturities of less than 90 days. Restricted cash includes cash whereby the Company’s ability to use the funds at any time is contractually limited or is generally designated for specific purposes arising out of certain contractual or other obligations.
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets that sum to the amounts reported in the Condensed Consolidated Statements of Cash Flows (in thousands):
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March 31, 2021 |
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December 31, 2020 |
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March 31, 2020 |
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December 31, 2019 |
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Cash and cash equivalents |
$ |
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$ |
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$ |
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$ |
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Restricted cash included in "Other current assets" |
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Restricted cash included in "Deferred charges and other assets" |
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$ |
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$ |
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$ |
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$ |
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Allowance for Doubtful Accounts — The Company recorded a $
Customer-Acquisition Advertising Costs — The Company’s advertising costs are expensed as incurred.
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Three Months Ended March 31, |
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2021 |
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2020 |
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Customer-acquisition advertising costs |
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New Accounting Standards Not Yet Adopted
Reference Rate Reform
In March 2020, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-04, Compensation – Reference Rate Reform (Topic 848) – Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”), which provides companies with optional guidance, including expedients and exceptions for applying generally accepted accounting principles to contracts and other transactions affected by reference rate reform, such as the London Interbank Offered Rate (“LIBOR”). These amendments are effective for all entities as of March 12, 2020 and an entity may elect to apply the amendments prospectively through December 31, 2022. The Company is currently evaluating the impact of the transition from LIBOR to alternative reference interest rates but does not expect a material impact on its financial position, results of operations or cash flows.
New Accounting Standards Recently Adopted
Income Taxes
In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740) – Simplifying the Accounting for Income Taxes (“ASU 2019-12”). These amendments simplify the accounting for income taxes by eliminating certain exceptions and also clarifying and amending certain aspects of existing guidance. These amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. Most of the amendments are required to be applied on a prospective basis, while certain amendments must be applied on a
11
retrospective or modified retrospective basis. Early adoption was permitted, including adoption in any interim period for which financial statements had not yet been issued. The Company’s adoption of ASU 2019-12 on
Significant Accounting Policies
There have been no new or material changes to the significant accounting policies disclosed in Note 1, Overview and Summary of Significant Accounting Policies, in the “Notes to the Consolidated Financial Statements” section of the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.
Note 2. Revenues
Revenues from Contracts with Customers
Revenues for customer experience management solutions and services are recognized over time using output methods such as a per minute, per hour, per call, per transaction or per time and materials basis. RPA services revenues are primarily recognized over time using output methods such as per time and materials basis. Revenues from fulfillment services are recognized upon shipment to the customer and satisfaction of all obligations. Revenues from enterprise support services are recognized over time using output methods such as number of positions filled.
Disaggregated Revenues
The Company disaggregates its revenues from contracts with customers by service type and delivery location (see Note 14, Segments and Geographic Information), for each of its reportable segments, as the Company believes it best depicts how the nature, amount, timing and uncertainty of its revenues and cash flows are affected by economic factors.
The following table represents revenues from contracts with customers disaggregated by service type and by the reportable segment for each category for the periods indicated (in thousands):
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Three Months Ended March 31, |
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2021 |
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2020 |
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Amount |
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% of Revenue |
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Amount |
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% of Revenue |
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Americas: |
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Customer experience management solutions and services |
$ |
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$ |
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Other revenues |
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Total Americas |
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EMEA: |
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Customer experience management solutions and services |
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Other revenues |
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Total EMEA |
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Other: |
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Other revenues |
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— |
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Total Other |
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— |
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$ |
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$ |
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||
12
Trade Accounts Receivable
The Company’s noncurrent trade accounts receivable result from contracts with customers that include renewal provisions and contracts with customers under multi-year arrangements. The Company’s trade accounts receivable, net, consisted of the following (in thousands):
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March 31, 2021 |
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December 31, 2020 |
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Trade accounts receivable, net, current (1) |
$ |
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$ |
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Trade accounts receivable, net, noncurrent (2) |
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$ |
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$ |
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(1) Included in “Receivables, net” in the accompanying Condensed Consolidated Balance Sheets.
(2) Included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets.
Deferred Revenue and Customer Liabilities
Deferred revenue and customer liabilities consisted of the following (in thousands):
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March 31, 2021 |
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December 31, 2020 |
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Deferred revenue |
$ |
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$ |
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Customer arrangements with termination rights |
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Estimated refund liabilities |
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$ |
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$ |
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|
The Company expects to recognize the majority of the customer arrangements with termination rights into revenue as the Company has not historically experienced a high rate of contract terminations.
Note 3. Leases
The Company leases facilities for its corporate headquarters, many of its customer experience management centers, several regional support offices and data centers. These leases are classified as operating leases in accordance with ASC 842, Leases, and are included in “Operating lease right-of-use assets,” “Operating lease liabilities” and “Long-term operating lease liabilities” in the accompanying Condensed Consolidated Balance Sheet as of March 31, 2021. The Company has
Lease costs, net of sublease income, of $
Additional supplemental information related to leases was as follows:
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March 31, 2021 |
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December 31, 2020 |
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Weighted average remaining lease term of operating leases |
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Weighted average discount rate of operating leases |
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% |
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% |
13
Maturities of operating lease liabilities as of March 31, 2021 were as follows (in thousands):
|
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Amount |
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2021 (remainder of the year) |
$ |
|
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2022 |
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2023 |
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2024 |
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2025 |
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2026 and thereafter |
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Total future lease payments |
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Less: Imputed interest |
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Present value of future lease payments |
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Less: Operating lease liabilities |
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Long-term operating lease liabilities |
$ |
|
|
Exit of Leased Space
The Company continues to reevaluate its real estate footprint in connection with a transition of a portion of its workforce to a permanent remote working environment in both the Americas and EMEA. Since April 2020, the Company decided to terminate, sublease or abandon leases prior to the end of their lease terms at certain of its sites and recorded impairments of ROU assets as a result. See Note 4, Fair Value, for further information.
Note 4. Fair Value
ASC 820, Fair Value Measurements and Disclosures (“ASC 820”) defines fair value and establishes a framework for measuring fair value. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Additionally, ASC 820 requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for how these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair value hierarchy:
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• |
Level 1 — Quoted prices for identical instruments in active markets. |
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• |
Level 2 — Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
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• |
Level 3 — Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Determination of Fair Value — The Company generally uses quoted market prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access to determine fair value and classifies such items in Level 1. Fair values determined by Level 2 inputs utilize inputs other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted market prices in active markets for similar assets or liabilities, and inputs other than quoted market prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.
If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest rates, currency exchange rates, etc. Assets or liabilities valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.
14
The following describes the valuation methodologies used by the Company to measure assets and liabilities at fair value on a recurring basis, including an indication of the level in the fair value hierarchy in which each asset or liability is generally classified, if applicable.
Cash, Short-Term and Other Investments and Accounts Payable — The carrying values for cash, short-term and other investments and accounts payable approximate their fair values.
Long-Term Debt — The carrying value of long-term debt approximates its estimated fair value as the debt bears interest based on variable market rates, as outlined in the debt agreement.
Foreign Currency Contracts — The Company enters into foreign currency forward contracts and options over the counter and values such contracts, including premiums paid on options, at fair value using quoted market prices of comparable instruments or, if none are available, on pricing models or formulas using current market and model assumptions, including adjustments for credit risk. The key inputs include forward or option foreign currency exchange rates and interest rates. These items are classified in Level 2 of the fair value hierarchy.
Investments Held in Rabbi Trust — The investment assets of the rabbi trust are valued using quoted market prices in active markets, which are classified in Level 1 of the fair value hierarchy. For additional information about the deferred compensation plan, refer to Note 7, Investments Held in Rabbi Trust.
The Company's assets and liabilities measured at fair value on a recurring basis subject to the requirements of ASC 820 consisted of the following (in thousands):
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Fair Value Measurements Using: |
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Balance at |
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Quoted Prices in Active Markets For Identical Assets |
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Significant Other Observable Inputs |
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Significant Unobservable Inputs |
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March 31, 2021 |
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Level 1 |
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Level 2 |
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Level 3 |
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Assets: |
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Foreign currency contracts (1) |
$ |
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$ |
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$ |
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$ |
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Equity investments held in rabbi trust for the Deferred Compensation Plan (2) |
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Debt investments held in rabbi trust for the Deferred Compensation Plan (2) |
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$ |
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$ |
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$ |
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$ |
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Liabilities: |
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Foreign currency contracts (1) |
$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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$ |
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Fair Value Measurements Using: |
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Balance at |
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Quoted Prices in Active Markets For Identical Assets |
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Significant Other Observable Inputs |
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Significant Unobservable Inputs |
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December 31, 2020 |
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Level 1 |
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Level 2 |
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Level 3 |
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Assets: |
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Foreign currency contracts (1) |
$ |
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$ |
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$ |
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$ |
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Equity investments held in rabbi trust for the Deferred Compensation Plan (2) |
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Debt investments held in rabbi trust for the Deferred Compensation Plan (2) |
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$ |
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$ |
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$ |
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$ |
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Liabilities: |
|
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|
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Foreign currency contracts (1) |
$ |
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$ |
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$ |
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$ |
|
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|
|
$ |
|
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|
$ |
|
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|
$ |
|
|
|
$ |
|
|
(1) See Note 6, Financial Derivatives, for the classification in the accompanying Condensed Consolidated Balance Sheets.
(2) Included in “Other current assets” in the accompanying Condensed Consolidated Balance Sheets. See Note 7, Investments Held in Rabbi Trust.
15
Non-Recurring Fair Value
Certain assets are not required to be measured at fair value on a recurring basis and are reported at their carrying values, including goodwill, other intangible assets, other long-lived assets, ROU assets and equity method investments. The carrying value of these assets is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable (and at least annually for goodwill and indefinite-lived intangible assets), and if applicable, written down to fair value.
The following table summarizes the total impairment losses in the accompanying Condensed Consolidated Statements of Operations related to nonrecurring fair value measurements of certain assets (none in 2020) (in thousands):
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Three Months Ended March 31, 2021 |
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Americas: |
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Property and equipment, net |
$ |
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Operating lease right-of-use assets |
|
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EMEA: |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other: |
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Property and equipment, net |
|
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|
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$ |
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|
The Company continues to reevaluate its real estate footprint in connection with a shift of a portion of its workforce to a permanent remote working environment in both the Americas and EMEA and transitioned approximately
The Company also recorded an impairment charge of $
16
Note 5. Goodwill and Intangible Assets
Intangible Assets
The following table presents the Company’s purchased intangible assets as of March 31, 2021 (in thousands):
|
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Gross Intangibles |
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Accumulated Amortization |
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Net Intangibles |
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Weighted Average Amortization Period (years) |
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Intangible assets subject to amortization: |
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Customer relationships |
$ |
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$ |
( |
) |
|
$ |
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Trade names and trademarks |
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( |
) |
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Non-compete agreements |
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( |
) |
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Content library |
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( |
) |
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Proprietary software |
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( |
) |
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— |
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( |
) |
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Intangible assets not subject to amortization: |
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Domain names |
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— |
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N/A |
|
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|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
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|
|
The following table presents the Company’s purchased intangible assets as of December 31, 2020 (in thousands):
|
|
Gross Intangibles |
|
|
Accumulated Amortization |
|
|
Net Intangibles |
|
|
Weighted Average Amortization Period (years) |
|
||||
|
Intangible assets subject to amortization: |
|
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|
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|
|
|
|
|
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Customer relationships |
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
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|
|
Trade names and trademarks |
|
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( |
) |
|
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Non-compete agreements |
|
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( |
) |
|
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Content library |
|
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( |
) |
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Proprietary software |
|
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( |
) |
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|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
Intangible assets not subject to amortization: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Domain names |
|
|
|
|
|
— |
|
|
|
|
|
|
N/A |
|
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
|
|
|
The Company’s estimated future amortization expense for the succeeding years relating to the purchased intangible assets resulting from acquisitions completed prior to March 31, 2021 is as follows (in thousands):
|
|
Amount |
|
|
|
2021 (remainder of the year) |
$ |
|
|
|
2022 |
|
|
|
|
2023 |
|
|
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
2026 |
|
|
|
|
2027 and thereafter |
|
|
|
Goodwill
Changes in goodwill for the three months ended March 31, 2021 consisted of the following (in thousands):
|
|
January 1, 2021 |
|
|
Acquisition- Related (1) |
|
|
Impairment |
|
|
Effect of Foreign Currency |
|
|
March 31, 2021 |
|
|||||
|
Americas |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
EMEA |
|
|
|
|
|
|
|
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
17
Changes in goodwill for the year ended December 31, 2020 consisted of the following (in thousands):
|
|
January 1, 2020 |
|
|
Acquisition- Related (1) |
|
|
Impairment (2) |
|
|
Effect of Foreign Currency |
|
|
December 31, 2020 |
|
|||||
|
Americas |
$ |
|
|
|
$ |
|
|
|
$ |
— |
|
|
$ |
|
|
|
$ |
|
|
|
EMEA |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
(1) The three months ended March 31, 2021 includes the impact of adjustments to acquired goodwill upon refinements of the purchase price allocation of TMC’s assets acquired and liabilities assumed. The year ended December 31, 2020 includes the goodwill recorded related to the TMC acquisition.
(2) The year ended December 31, 2020 includes the impairment of a portion of the Symphony reporting unit’s goodwill.
The Company performs its annual goodwill impairment test during the third quarter, or more frequently if indicators of impairment exist.
For the annual goodwill impairment test, the Company elected to forgo the option to first assess qualitative factors and performed its annual quantitative goodwill impairment test as of July 31, 2020. Under ASC 350, Intangibles – Goodwill and Other, the carrying value of assets is calculated at the reporting unit level. The quantitative assessment of goodwill includes comparing a reporting unit’s calculated fair value to its carrying value. The calculation of fair value requires significant judgments, including estimation of future cash flows, which is dependent on internal forecasts, estimation of the projected long-term growth rate and determination of the Company’s weighted average cost of capital (“WACC”), which are classified as Level 3 inputs. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. If the fair value of the reporting unit is less than its carrying value, goodwill is considered impaired and an impairment loss is recognized for the amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit.
The process of evaluating the fair value of the reporting units is highly subjective and requires significant judgment and estimates as the reporting units operate in a number of markets and geographical regions. The Company considered the income and market approaches to determine its best estimates of fair value, which incorporated the following significant assumptions:
|
• |
Revenue projections, including revenue growth during the forecast periods; |
|
• |
EBITDA margin projections over the forecast periods; |
|
• |
Estimated income tax rates; |
|
• |
Estimated capital expenditures; and |
|
• |
Discount rates based on various inputs, including the risks associated with the specific reporting units as well as their revenue growth and EBITDA margin assumptions. |
As of July 31, 2020, the Company had
The Symphony reporting unit’s carrying value exceeded its fair value as of the July 31, 2020 annual impairment analysis, which resulted in a non-cash goodwill impairment of $
18
of its operations or a significant shift in client demand results from the economic downturn. As of March 31, 2021, the Company believes there was
As of March 31, 2021, the Company believes there were
Note 6. Financial Derivatives
Cash Flow Hedges — The Company has derivative assets and liabilities relating to outstanding forward contracts and options, designated as cash flow hedges, as defined under ASC 815, Derivatives and Hedging (“ASC 815”), consisting of Philippine Peso, Costa Rican Colon, Hungarian Forint and Romanian Leu contracts. These foreign currency contracts are entered into to hedge the exposure to variability in the cash flows of a specific asset or liability, or of a forecasted transaction that is attributable to changes in exchange rates.
The deferred gains (losses) and related taxes on the Company’s cash flow hedges recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) in the accompanying Condensed Consolidated Balance Sheets were as follows (in thousands):
|
|
March 31, 2021 |
|
|
December 31, 2020 |
|
||
|
Deferred gains (losses) in AOCI |
$ |
( |
) |
|
$ |
( |
) |
|
Tax on deferred gains (losses) in AOCI |
|
|
|
|
|
( |
) |
|
Deferred gains (losses) in AOCI, net of taxes |
$ |
( |
) |
|
$ |
( |
) |
|
Deferred gains (losses) expected to be reclassified to "Revenues" from AOCI during the next twelve months |
$ |
( |
) |
|
|
|
|
Deferred gains (losses) and other future reclassifications from AOCI will fluctuate with movements in the underlying market price of the forward contracts and options as well as the related settlement of forecasted transactions.
Non-Designated Hedges
Foreign Currency Contracts — The Company also periodically enters into foreign currency hedge contracts that are not designated as hedges as defined under ASC 815. The purpose of these derivative instruments is to protect the Company’s interests against adverse foreign currency moves relating primarily to intercompany receivables and payables, and other assets and liabilities that are denominated in currencies other than the Company’s subsidiaries’ functional currencies.
The Company had the following outstanding foreign currency forward contracts and options (in thousands):
|
|
March 31, 2021 |
|
December 31, 2020 |
|
|||||||||
|
Contract Type |
Notional Amount in USD |
|
|
Settle Through Date |
|
Notional Amount in USD |
|
|
Settle Through Date |
|
|||
|
Cash flow hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Options: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Dollars/Philippine Pesos |
$ |
|
|
|
|
|
$ |
|
|
|
|
|
|
|
Forwards: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
US Dollars/Costa Rican Colones |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Euros/Hungarian Forints |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
Euros/Romanian Leis |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
Non-designated hedges: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Forwards |
|
|
|
|
|
|
|
|
|
|
|
|
|
Master netting agreements exist with each respective counterparty to reduce credit risk by permitting net settlement of derivative positions. In the event of default by the Company or one of its counterparties, these agreements include a set-off clause that provides the non-defaulting party the right to net settle all derivative transactions, regardless of
19
the currency and settlement date. The maximum amount of loss due to credit risk that, based on gross fair value, the Company would incur if parties to the derivative transactions that make up the concentration failed to perform according to the terms of the contracts was $
Although legally enforceable master netting arrangements exist between the Company and each counterparty, the Company has elected to present the derivative assets and derivative liabilities on a gross basis in the accompanying Condensed Consolidated Balance Sheets. Additionally, the Company is not required to pledge, nor is it entitled to receive, cash collateral related to these derivative transactions.
The following tables present the fair value of the Company’s derivative instruments included in the accompanying Condensed Consolidated Balance Sheets (in thousands):
|
|
|
|
|
Derivative Assets |
|
|||||
|
|
|
Balance Sheet Location |
|
March 31, 2021 |
|
|
December 31, 2020 |
|
||
|
Derivatives designated as cash flow hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
Other current assets |
|
$ |
|
|
|
$ |
|
|
|
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
Other current assets |
|
|
|
|
|
|
|
|
|
Total derivative assets |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities |
|
|||||
|
|
|
Balance Sheet Location |
|
March 31, 2021 |
|
|
December 31, 2020 |
|
||
|
Derivatives designated as cash flow hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
Other accrued expenses and current liabilities |
|
$ |
|
|
|
$ |
|
|
|
Foreign currency contracts |
|
Other long-term liabilities |
|
|
|
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
Other accrued expenses and current liabilities |
|
|
|
|
|
|
|
|
|
Total derivative liabilities |
|
|
|
$ |
|
|
|
$ |
|
|
The following table presents the effect of the Company’s derivative instruments included in the accompanying condensed consolidated financial statements (in thousands):
|
|
|
Location of Gains |
|
Three Months Ended March 31, |
|
|||||
|
|
|
(Losses) in Net Income |
|
2021 |
|
|
2020 |
|
||
|
Revenues |
|
|
|
$ |
|
|
|
$ |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivatives designated as cash flow hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) recognized in AOCI: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
Gains (losses) reclassified from AOCI: |
|
|
|
|
|
|
|
|
|
|
|
Foreign currency contracts |
|
Revenues |
|
$ |
( |
) |
|
$ |
|
|
|
Derivatives not designated as hedging instruments: |
|
|
|
|
|
|
|
|
|
|
|
Gains (losses) recognized from foreign currency contracts |
|
Other income (expense), net |
|
$ |
|
|
|
$ |
( |
) |
20
Note 7. Investments Held in Rabbi Trust
The Company’s investments held in rabbi trust, classified as trading securities and included in “Other current assets” in the accompanying Condensed Consolidated Balance Sheets, at fair value, consist of the following (in thousands):
|
|
March 31, 2021 |
|
|
December 31, 2020 |
|
||||||||||
|
|
Cost |
|
|
Fair Value |
|
|
Cost |
|
|
Fair Value |
|
||||
|
Mutual funds |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
The mutual funds held in rabbi trust were
|
|
Three Months Ended March 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
|
Net realized gains (losses) from sale of trading securities |
$ |
|
|
|
$ |
|
|
|
Dividend and interest income |
|
|
|
|
|
|
|
|
Net unrealized holding gains (losses) |
|
|
|
|
|
( |
) |
|
|
$ |
|
|
|
$ |
( |
) |
Note 8. Accumulated Other Comprehensive Income (Loss)
The components of accumulated other comprehensive income (loss) consist of the following (in thousands):
|
|
Foreign Currency Translation Adjustments |
|
|
Unrealized Gain (Loss) on Net Investment Hedge |
|
|
Unrealized Gain (Loss) on Cash Flow Hedging Instruments |
|
|
Unrealized Actuarial Gain (Loss) Related to Pension Liability |
|
|
Unrealized Gain (Loss) on Postretirement Obligation |
|
|
Total |
|
||||||
|
Balance at January 1, 2020 |
$ |
( |
) |
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
Pre-tax amount |
|
|
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
Tax (provision) benefit |
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
Reclassification of (gain) loss to net income |
|
— |
|
|
|
— |
|
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
|
( |
) |
|
Foreign currency translation |
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
Balance at December 31, 2020 |
|
( |
) |
|
|
|
|
|
|
( |
) |
|
|
|
|
|
|
— |
|
|
|
( |
) |
|
Pre-tax amount |
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
( |
) |
|
Tax (provision) benefit |
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
Reclassification of (gain) loss to net income |
|
— |
|
|
|
— |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
|
|
|
Foreign currency translation |
|
( |
) |
|
|
— |
|
|
|
|
|
|
|
( |
) |
|
|
— |
|
|
|
— |
|
|
Balance at March 31, 2021 |
$ |
( |
) |
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
$ |
— |
|
|
$ |
( |
) |
21
The following table summarizes the amounts reclassified to net income from accumulated other comprehensive income (loss) and the associated line item in the accompanying Condensed Consolidated Statements of Operations (in thousands):
|
|
Three Months Ended March 31, |
|
|
Statements of Operations |
|||||
|
|
2021 |
|
|
2020 |
|
|
Location |
||
|
Gain (loss) on cash flow hedging instruments: (1) |
|
|
|
|
|
|
|
|
|
|
Pre-tax amount |
$ |
( |
) |
|
$ |
|
|
|
Revenues |
|
Tax (provision) benefit |
|
|
|
|
|
( |
) |
|
Income taxes |
|
Reclassification to net income |
|
( |
) |
|
|
|
|
|
|
|
Actuarial gain (loss) related to pension liability: (2) |
|
|
|
|
|
|
|
|
|
|
Pre-tax amount |
|
|
|
|
|
|
|
|
Other income (expense), net |
|
Tax (provision) benefit |
|
— |
|
|
|
|
|
|
Income taxes |
|
Reclassification to net income |
|
|
|
|
|
|
|
|
|
|
Gain (loss) on postretirement obligation: (2)(3) |
|
|
|
|
|
|
|
|
|
|
Reclassification to net income |
|
— |
|
|
|
|
|
|
Other income (expense), net |
|
|
$ |
( |
) |
|
$ |
|
|
|
|
(1) See Note 6, Financial Derivatives, for further information.
(2) See Note 12, Defined Benefit Pension Plan and Postretirement Benefits, for further information.
(3) No related tax (provision) benefit.
The Company has accrued income taxes on earnings which it plans to repatriate to the U.S. Any remaining earnings as well as other outside basis differences associated with the Company’s investments in its foreign subsidiaries are considered to be indefinitely reinvested and no provision for income taxes on those earnings or translation adjustments has been provided. See Note 9, Income Taxes, for further information.
Note 9. Income Taxes
The Company’s effective tax rates were as follows:
|
|
Three Months Ended March 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
|
Effective tax rate |
|
|
% |
|
|
|
% |
The decrease in the effective tax rate for the three months ended March 31, 2021 as compared to 2020 was primarily due to $
The Company provides U.S. income taxes on the earnings of foreign subsidiaries unless they are exempted from taxation. No additional income taxes have been provided for any indefinitely reinvested earnings or outside basis differences. Determining the amount of unrecognized deferred tax liability related to any remaining outside basis difference in these entities is not practicable due to the inherent complexity of the multi-jurisdictional tax environment in which the Company operates.
The Company is currently under audit in several tax jurisdictions. The Company believes it has adequate reserves related to all matters pertaining to these audits. Should the Company experience unfavorable outcomes from these audits, such outcomes could have a significant impact on its financial condition, results of operations and cash flows.
22
Note 10. 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 appreciation rights, restricted stock, restricted stock units and shares held in rabbi trust using the treasury stock method.
The numbers of shares used in the earnings per share computation were as follows (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
|
Basic: |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
Diluted: |
|
|
|
|
|
|
|
|
Dilutive effect of stock appreciation rights, restricted stock, restricted stock units and shares held in rabbi trust |
|
|
|
|
|
|
|
|
Total weighted average diluted shares outstanding |
|
|
|
|
|
|
|
|
Anti-dilutive shares excluded from the diluted earnings per share calculation |
|
|
|
|
|
|
|
On August 18, 2011, the Company’s Board of Directors (the “Board”) authorized the Company to purchase up to
The shares repurchased under the Company’s 2011 Share Repurchase Program were as follows (none in 2021) (in thousands, except per share amounts):
|
|
|
Total Number of |
|
|
|
|
|
Total Cost of |
|
|||||||
|
|
|
Shares |
|
|
Range of Prices Paid Per Share |
|
|
Shares |
|
|||||||
|
|
|
Repurchased |
|
|
Low |
|
|
High |
|
|
Repurchased |
|
||||
|
Three Months Ended: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31, 2020 |
|
|
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
Note 11. Commitments and Loss Contingencies
Purchase Commitments
The Company enters into various purchase commitment agreements with third-party vendors in the ordinary course of business whereby the Company commits to purchase goods and services used in its normal operations. These agreements generally are not cancelable, range from periods and may contain fixed or minimum annual commitments. Certain of these agreements allow for renegotiation of the minimum annual commitments.
Loss Contingencies
Contingencies are recorded in the consolidated financial statements when it is probable that a liability will be incurred and the amount of the loss is reasonably estimable, or otherwise disclosed, in accordance with ASC 450, Contingencies (“ASC 450”). Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosures related to such matter as appropriate and in compliance with ASC 450.
The Company received a state audit assessment and is currently rebutting the position. The Company has determined that the likelihood of a liability is reasonably possible and developed a range of possible loss up to $
23
The Company, from time to time, is involved in legal actions arising in the ordinary course of business.
With respect to any such other currently pending matters, management believes that the Company has adequate legal defenses and/or, when possible and appropriate, has provided adequate accruals related to those matters such that the ultimate outcome will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.
Note 12. Defined Benefit Pension Plan and Postretirement Benefits
Defined Benefit Pension Plans
The following table provides information about the net periodic benefit cost for the Company’s pension plans (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
|
Service cost (1) |
$ |
|
|
|
$ |
|
|
|
Interest cost (2) |
|
|
|
|
|
|
|
|
Recognized actuarial (gains) (2) |
|
( |
) |
|
|
( |
) |
|
|
$ |
|
|
|
$ |
|
|
(1) Included in "Direct salaries and related costs" and “General and administrative” costs in the accompanying Condensed Consolidated Statements of Operations.
(2) Included in "Other income (expense), net" in the accompanying Condensed Consolidated Statements of Operations.
Employee Retirement Savings Plans
The Company maintains a 401(k) plan covering defined employees who meet established eligibility requirements.
|
|
Three Months Ended March 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
|
401(k) plan contributions |
$ |
|
|
|
$ |
|
|
Note 13. Stock-Based Compensation
|
|
Three Months Ended March 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
|
Stock-based compensation (expense) (1) |
$ |
( |
) |
|
$ |
( |
) |
|
Income tax benefit (2) |
|
|
|
|
|
|
|
(1) Included in "General and administrative" costs in the accompanying Condensed Consolidated Statements of Operations.
(2) Included in "Income taxes" in the accompanying Condensed Consolidated Statements of Operations.
During the three months ended March 31, 2021, the Company granted
Note 14. Segments and Geographic Information
The Company operates within
The reportable segments consist of (1) the Americas, which includes the United States, Canada, Latin America, Australia and the Asia Pacific Rim, and provides outsourced customer experience management solutions and services (with an emphasis on inbound technical support, digital support and demand generation, and customer
24
service) and technical staffing and (2) EMEA, which includes Europe, the Middle East and Africa, and provides outsourced customer experience management solutions and services (with an emphasis on technical support and customer service) and fulfillment services. The sites within Latin America, Australia and the Asia Pacific Rim are included in the Americas segment given the nature of the business and client profile, which is primarily made up of U.S.-based companies that are using the Company’s services in these locations to support their customer experience management needs.
Information about the Company’s reportable segments is as follows (in thousands):
|
|
Americas |
|
|
EMEA |
|
|
Other (1) |
|
|
Consolidated |
|
||||
|
Three Months Ended March 31, 2021: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
|
|
|
$ |
|
|
|
$ |
— |
|
|
$ |
|
|
|
Percentage of revenues |
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
Depreciation, net |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Amortization of intangibles |
$ |
|
|
|
$ |
|
|
|
$ |
— |
|
|
$ |
|
|
|
Income (loss) from operations |
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
Total other income (expense), net |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Income taxes |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net income (loss) |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
|
Three Months Ended March 31, 2020: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Percentage of revenues |
|
|
% |
|
|
|
% |
|
|
|
% |
|
|
|
% |
|
Depreciation, net |
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
$ |
|
|
|
Amortization of intangibles |
$ |
|
|
|
$ |
|
|
|
$ |
— |
|
|
$ |
|
|
|
Income (loss) from operations |
$ |
|
|
|
$ |
|
|
|
$ |
( |
) |
|
$ |
|
|
|
Total other income (expense), net |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Income taxes |
|
|
|
|
|
|
|
|
|
( |
) |
|
|
( |
) |
|
Net income |
|
|
|
|
|
|
|
|
|
|
|
|
$ |
|
|
(1) Other items (including corporate and other costs, other income and expense, and income taxes) are included for purposes of reconciling to the Company’s consolidated totals as shown in the tables above for the periods shown. Inter-segment revenues are not material to the Americas and EMEA segment results.
The Company’s reportable segments are evaluated regularly by its chief operating decision maker to decide how to allocate resources and assess performance. The chief operating decision maker evaluates performance based upon reportable segment revenue and income (loss) from operations. Because assets by segment are not reported to or used by the Company’s chief operating decision maker to allocate resources, or to assess performance, total assets by segment are not disclosed.
The following table represents a disaggregation of revenue from contracts with customers by delivery location and by the reportable segment (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
|
Americas: |
|
|
|
|
|
|
|
|
United States |
$ |
|
|
|
$ |
|
|
|
The Philippines |
|
|
|
|
|
|
|
|
Costa Rica |
|
|
|
|
|
|
|
|
Canada |
|
|
|
|
|
|
|
|
El Salvador |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total Americas |
|
|
|
|
|
|
|
|
EMEA: |
|
|
|
|
|
|
|
|
Germany |
|
|
|
|
|
|
|
|
Other |
|
|
|
|
|
|
|
|
Total EMEA |
|
|
|
|
|
|
|
|
Total Other |
|
— |
|
|
|
|
|
|
|
$ |
|
|
|
$ |
|
|
25
Note 15. Other Income (Expense)
Other income (expense), net consists of the following (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2021 |
|
|
2020 |
|
||
|
Foreign currency transaction gains (losses) |
$ |
( |
) |
|
$ |
( |
) |
|
Gains (losses) on derivative instruments not designated as hedges |
|
|
|
|
|
( |
) |
|
Net investment gains (losses) on investments held in rabbi trust |
|
|
|
|
|
( |
) |
|
Other miscellaneous income (expense) |
|
( |
) |
|
|
( |
) |
|
|
$ |
( |
) |
|
$ |
( |
) |
Note 16. Related Party Transactions
26
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Shareholders and the Board of Directors of Sykes Enterprises, Incorporated
400 North Ashley Drive
Tampa, Florida
Results of Review of Interim Financial Information
We have reviewed the accompanying condensed consolidated balance sheet of Sykes Enterprises, Incorporated and subsidiaries (the "Company") as of March 31, 2021, the related condensed consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for the three-month periods ended March 31, 2021 and 2020, and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.
We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, 2020, and the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 26, 2021, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2020, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
Basis for Review Results
This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.
/s/ Deloitte & Touche LLP
Tampa, Florida
May 5, 2021
27
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This discussion should be read in conjunction with the condensed consolidated financial statements and notes included elsewhere in this report and the consolidated financial statements and notes in the Sykes Enterprises, Incorporated (“SYKES,” “our,” “we” or “us”) Annual Report on Form 10-K for the year ended December 31, 2020, as filed with the Securities and Exchange Commission (“SEC”).
Our discussion and analysis may contain forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates, forecasts, and projections about SYKES, our beliefs, and assumptions made by us, including our belief that our operations have not been materially impacted by the April 2020 cyber incident, as discussed in our Form 10-Q for the three months ended March 31, 2020, as filed with the SEC, or the October 2020 cyber incident, as discussed in Note 18, Subsequent Event, in our Form 10-Q for the three and nine months ended September 30, 2020, as filed with the SEC. In addition, we may make other written or oral statements, which constitute forward-looking statements, from time to time. Words such as "believe," "estimate," "project," "expect," “intend,” “may," "anticipate," "plan," "seek," variations of such words, and similar expressions are intended to identify such forward-looking statements. Similarly, statements that describe our future plans, objectives, or goals also are forward-looking statements. Further, statements about the effects of the novel coronavirus (“COVID-19”) pandemic on our business, operations, financial performance and prospects may constitute forward-looking statements and are subject to the risk that the actual impacts may differ, possibly materially, from what is reflected in those forward-looking statements due to factors and future developments that are uncertain, unpredictable and in many cases beyond our control, including the scope and duration of the pandemic, actions taken by governmental authorities in response to the pandemic, and the direct and indirect impact of the pandemic on our clients, third parties and us. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties, including those discussed below and elsewhere in this report. Our actual results may differ materially from what is expressed or forecasted in such forward-looking statements, and undue reliance should not be placed on such statements. All forward-looking statements are made as of the date hereof, and we undertake no obligation to update any such forward-looking statements, whether as a result of new information, future events or otherwise.
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: (i) the impact of economic recessions in the U.S. and other parts of the world, (ii) fluctuations in global business conditions and the global economy, (iii) currency fluctuations, (iv) the timing of significant orders for our products and services, (v) variations in the terms and the elements of services offered under our standardized contract including those for future bundled service offerings, (vi) changes in applicable accounting principles or interpretations of such principles, (vii) difficulties or delays in implementing our bundled service offerings, (viii) failure to achieve sales, marketing and other objectives, (ix) construction delays of new or expansion of existing customer experience management centers, (x) delays in our ability to develop new products and services and market acceptance of new products and services, (xi) rapid technological change, (xii) loss or addition of significant clients, (xiii) political and country-specific risks inherent in conducting business abroad, (xiv) our ability to attract and retain key management personnel, (xv) our ability to continue the growth of our support service revenues through additional technical and customer experience management centers, (xvi) our ability to further penetrate into vertically integrated markets, (xvii) our ability to expand our global presence through strategic alliances and selective acquisitions, (xviii) our ability to continue to establish a competitive advantage through sophisticated technological capabilities, (xix) the ultimate outcome of any lawsuits, (xx) our ability to recognize deferred revenue through delivery of products or satisfactory performance of services, (xxi) our dependence on the demand for outsourcing, (xxii) risk of interruption of technical and customer experience management center operations due to such factors as fire, earthquakes, inclement weather and other disasters, power failures, telecommunication failures, unauthorized intrusions, computer viruses and other emergencies, (xxiii) the existence of substantial competition, (xxiv) the early termination of contracts by clients, (xxv) the ability to obtain and maintain grants and other incentives (tax or otherwise), (xxvi) the potential of cost savings/synergies associated with acquisitions not being realized, or not being realized within the anticipated time period, (xxvii) risks related to the integration of the acquisitions and the impairment of any related goodwill, and (xxviii) other risk factors that are identified in our most recent Annual Report on Form 10-K for the year ended December 31, 2020, including factors identified under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Executive Summary
We are a leading full lifecycle provider of global customer experience management services, multichannel demand generation and digital transformation. We provide differentiated full lifecycle customer experience management
28
solutions and services primarily to Global 2000 companies and their end customers principally in the financial services, technology, communications, transportation & leisure and healthcare industries. Our differentiated full lifecycle services platform effectively engages customers at every touchpoint within the customer journey, including digital media and acquisition, sales expertise, customer service, technical support and retention, many of which can be optimized by a suite of digital transformation capabilities under our SYKES Digital Services (“SDS”) group, which spans robotic process automation (“RPA”), self-service, insight analytics and digital learning. In addition to digital transformation, we also provide artificial intelligence (“AI”) solutions that can be embedded and leveraged across our lifecycle offerings. We serve our clients through two geographic operating regions: the Americas (United States, Canada, Latin America, Australia and the Asia Pacific Rim) and EMEA (Europe, the Middle East and Africa). Our Americas and EMEA regions primarily provide customer experience management solutions and services with an emphasis on inbound multichannel demand generation, customer service and technical support to our clients’ customers. These services, which represented 98.9% and 98.6% of consolidated revenues during the three months ended March 31, 2021 and 2020, respectively, are delivered through multiple communication channels including phone, e-mail, social media, text messaging, chat and digital self-service. We also provide various enterprise support services in the United States (“U.S.”) that include services for our clients’ internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, we also provide fulfillment services, which include order processing, payment processing, inventory control, product delivery and product returns handling. Additionally, through our acquisition of RPA provider Symphony Ventures Ltd (“Symphony”) coupled with our investment in AI through XSell Technologies, Inc. (“XSell”), we also provide a suite of digital transformation capabilities that optimizes our differentiated full lifecycle management services platform. Our complete service offering helps our clients acquire, retain and increase the lifetime value of their customer relationships. We have developed an extensive global reach with customer experience management centers across six continents, including North America, South America, Europe, Asia, Australia and Africa. We deliver cost-effective solutions that generate demand, enhance the customer service experience, promote stronger brand loyalty, and bring about high levels of performance and profitability.
Recent Developments
Coronavirus
On March 11, 2020, the World Health Organization characterized the novel coronavirus (“COVID-19”) a pandemic. The global nature, rapid spread and continually evolving response by governments throughout the world to combat the spread has had a negative impact on the global economy. Certain of our customer experience management centers have been impacted by local government actions restricting facility access or are operating at lower capacity utilization levels to achieve social distancing. We are committed to the health and safety of our workforce and ensuring business continuity for the brands we serve. In response, we have shifted as many employees as possible to a work-at-home model. As of the middle of April 2021, approximately 70% of agents assigned to our brick-and-mortar have temporarily transitioned to a work-at-home model, 25% are working in our centers and 5% of our agents are idle primarily due to the lack of technical infrastructure to work from home. Our operations in the Philippines, El Salvador and Mexico have been most impacted by the governmental restrictions.
We continue to closely monitor the prevalence of COVID-19 and the vaccination rates in the communities where our centers are located as well as guidance from public health authorities, federal and local agencies and municipalities. We will work with employees and clients to transition agents back to our centers based on that guidance, but risk further disruption to our business as a result of COVID-19 and government-imposed restrictions. Over time, we anticipate a permanent transition to a work-at-home or hybrid model for a portion of our workforce.
Exit of Leased Space
We continues to reevaluate our real estate footprint in connection with the transition of a portion of our workforce to a permanent remote working environment in both the Americas and EMEA. Since April 2020, we have decided to terminate, sublease or abandon leases prior to the end of their lease terms at certain of our sites as approximately 3,500 seats transitioned from brick and mortar to at home agents. As such, we recorded impairments of right-of-use (“ROU”) assets of $13.4 million and impairments of property and equipment of $7.2 million since the initiation of our reevaluation in April 2020, of which $0.7 million of ROU assets and $0.1 million of property and equipment impairments were recorded during the three months ended March 31, 2021. See Note 4, Fair Value, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information. Annualized lease expense savings of $0.7 million is expected from the actions in 2021, of which approximately 70% is anticipated to be realized as cash savings.
29
Taylor Media Corp. Acquisition
On December 31, 2020, through our wholly-owned subsidiary, Clear Link Technologies, LLC, we completed the acquisition of Taylor Media Corp. (“TMC”), a personal finance digital media company and owner of The Penny Hoarder. Of the total initial purchase price of $104.9 million, $87.2 million was paid upon closing using $63.0 million of additional borrowings under our credit agreement as well as cash on hand. Of the remaining $17.7 million of the purchase price, $0.2 million was used to repay outstanding debt and $17.5 million of the purchase price was deferred and is payable on December 31, 2027, the seventh anniversary of the closing. In the event TMC’s previous owner remains employed by the Company or one of its subsidiaries on December 31, 2022, the second anniversary of the closing, the deferred payment will be accelerated and due at that time. TMC’s assets and liabilities have been reflected in our consolidated balance sheet as of December 31, 2020 in the Americas segment and the results of TMC’s operations have been reflected in our consolidated financial statements since January 1, 2021.
Results of Operations
The following table sets forth, for the periods indicated, the amounts presented in the accompanying Condensed Consolidated Statements of Operations as well as the change between the periods:
|
|
Three Months Ended March 31, |
|
|||||||||
|
(in thousands) |
2021 |
|
|
2020 |
|
|
$ Change |
|
|||
|
Revenues |
$ |
457,886 |
|
|
$ |
411,166 |
|
|
$ |
46,720 |
|
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Direct salaries and related costs |
|
299,477 |
|
|
|
266,945 |
|
|
|
32,532 |
|
|
General and administrative |
|
109,627 |
|
|
|
103,247 |
|
|
|
6,380 |
|
|
Depreciation, net |
|
13,115 |
|
|
|
12,461 |
|
|
|
654 |
|
|
Amortization of intangibles |
|
2,987 |
|
|
|
4,119 |
|
|
|
(1,132 |
) |
|
Impairment of long-lived assets |
|
1,150 |
|
|
|
— |
|
|
|
1,150 |
|
|
Total operating expenses |
|
426,356 |
|
|
|
386,772 |
|
|
|
39,584 |
|
|
Income from operations |
|
31,530 |
|
|
|
24,394 |
|
|
|
7,136 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest income |
|
98 |
|
|
|
263 |
|
|
|
(165 |
) |
|
Interest (expense) |
|
(423 |
) |
|
|
(720 |
) |
|
|
297 |
|
|
Other income (expense), net |
|
(322 |
) |
|
|
(4,793 |
) |
|
|
4,471 |
|
|
Total other income (expense), net |
|
(647 |
) |
|
|
(5,250 |
) |
|
|
4,603 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes |
|
30,883 |
|
|
|
19,144 |
|
|
|
11,739 |
|
|
Income taxes |
|
5,905 |
|
|
|
5,226 |
|
|
|
679 |
|
|
Net income |
$ |
24,978 |
|
|
$ |
13,918 |
|
|
$ |
11,060 |
|
Three Months Ended March 31, 2021 Compared to Three Months Ended March 31, 2020
Revenues
|
|
Three Months Ended March 31, |
|
|
|
|
|
|||||||||||
|
|
2021 |
|
|
2020 |
|
|
|
|
|
||||||||
|
(in thousands) |
Amount |
|
|
% of Revenues |
|
|
Amount |
|
|
% of Revenues |
|
|
$ Change |
|
|||
|
Americas |
$ |
363,719 |
|
|
79.4% |
|
|
$ |
332,926 |
|
|
81.0% |
|
|
$ |
30,793 |
|
|
EMEA |
|
94,167 |
|
|
20.6% |
|
|
|
78,233 |
|
|
19.0% |
|
|
|
15,934 |
|
|
Other |
|
— |
|
|
0.0% |
|
|
|
7 |
|
|
0.0% |
|
|
|
(7 |
) |
|
Consolidated |
$ |
457,886 |
|
|
100.0% |
|
|
$ |
411,166 |
|
|
100.0% |
|
|
$ |
46,720 |
|
Consolidated revenues increased $46.7 million, or 11.4%, for the three months ended March 31, 2021 from the comparable period in 2020.
The increase in Americas’ revenues was due to higher volumes from existing clients of $30.6 million, new clients of $18.9 million and a favorable foreign currency impact of $3.4 million, partially offset by end-of-life client programs of $22.1 million primarily in the communications and financial services verticals. Revenues from our offshore operations represented 42.6% of Americas’ revenues in 2021, compared to 42.8% for the comparable period in 2020.
30
The increase in EMEA’s revenues was due to higher volumes from existing clients of $8.0 million, new clients of $2.6 million and a favorable foreign currency impact of $8.1 million, partially offset by end-of-life client programs of $2.8 million primarily in the communications vertical.
On a consolidated basis, we had 45,100 brick-and-mortar seats as of March 31, 2021, a decrease of 3,500 seats from the comparable period in 2020, driven by decisions made by certain clients to permanently alter their delivery mix away from brick and mortar to a home agent solution due to COVID-19, coupled with the consolidation of underutilized facilities in both the Americas and EMEA. On a segment basis, 37,600 seats were located in the Americas, a decrease of 3,000 seats from the comparable period in 2020, and 7,500 seats were located in EMEA, a decrease of 500 seats from the comparable period in 2020.
On a consolidated basis, the capacity utilization rate was 74%, compared to 73% in the comparable period in 2020. As of the middle of April 2021, approximately 70% of agents who typically work in our brick-and-mortar facilities have temporarily transitioned to work at home, 25% are working in our centers and the remaining 5% of agents are at home but idle.
The capacity utilization rate for the Americas in 2021 was 74%, compared to 74% in the comparable period in 2020. The capacity utilization rate for EMEA in 2021 was 71%, compared to 69% in the comparable period in 2020. We strive to attain a capacity utilization rate of 85% at each of our locations. Capacity utilization is measured by taking the number of agents and indirect support headcount and dividing it by the number of seats provisioned for utilization. Agents assigned to brick-and-mortar facilities but temporarily working from home to meet social distancing requirements resulting from the COVID-19 pandemic are included as if they were working in a center. Capacity utilization is a critical metric for us as it is used as an input to the pricing, revenue and margin drivers of our business as well as capital allocation.
Direct Salaries and Related Costs
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
||||||||
|
(in thousands) |
Amount |
|
|
% of Revenues |
|
|
Amount |
|
|
% of Revenues |
|
|
$ Change |
|
|
Change in % of Revenues |
|
||||
|
Americas |
$ |
234,497 |
|
|
64.5% |
|
|
$ |
212,628 |
|
|
63.9% |
|
|
$ |
21,869 |
|
|
0.6% |
|
|
|
EMEA |
|
64,980 |
|
|
69.0% |
|
|
|
54,317 |
|
|
69.4% |
|
|
|
10,663 |
|
|
-0.4% |
|
|
|
Consolidated |
$ |
299,477 |
|
|
65.4% |
|
|
$ |
266,945 |
|
|
64.9% |
|
|
$ |
32,532 |
|
|
0.5% |
|
|
The increase of $32.5 million in direct salaries and related costs included an unfavorable foreign currency impact of $2.5 million in the Americas and an unfavorable foreign currency impact of $5.6 million in EMEA.
The increase in Americas’ direct salaries and related costs, as a percentage of revenues, was primarily attributable to higher customer-acquisition advertising costs of 2.2% driven primarily by the activity at TMC in the current period, partially offset by lower recruiting costs of 0.5%, lower travel costs of 0.4%, lower communication costs of 0.2% and lower other costs of 0.5%.
The decrease in EMEA’s direct salaries and related costs, as a percentage of revenues, was primarily attributable to lower software purchased for resale of 0.5%, lower rebillable costs of 0.2%, lower auto and parking costs of 0.2%, lower travel costs of 0.2% and lower other costs of 0.2%, partially offset by higher fulfillment materials costs of 0.6% and higher compensation costs of 0.3%.
General and Administrative
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
|
|||||||||||
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
||||||||
|
(in thousands) |
Amount |
|
|
% of Revenues |
|
|
Amount |
|
|
% of Revenues |
|
|
$ Change |
|
|
Change in % of Revenues |
|
||||
|
Americas |
$ |
71,676 |
|
|
19.7% |
|
|
$ |
71,200 |
|
|
21.4% |
|
|
$ |
476 |
|
|
-1.7% |
|
|
|
EMEA |
|
18,997 |
|
|
20.2% |
|
|
|
18,198 |
|
|
23.3% |
|
|
|
799 |
|
|
-3.1% |
|
|
|
Other |
|
18,954 |
|
|
- |
|
|
|
13,849 |
|
|
- |
|
|
|
5,105 |
|
|
- |
|
|
|
Consolidated |
$ |
109,627 |
|
|
23.9% |
|
|
$ |
103,247 |
|
|
25.1% |
|
|
$ |
6,380 |
|
|
-1.2% |
|
|
The increase of $6.4 million in general and administrative expenses included an unfavorable foreign currency impact of $0.6 million in the Americas and an unfavorable foreign currency impact of $1.5 million in EMEA.
31
The decrease in Americas’ general and administrative expenses, as a percentage of revenues, was primarily attributable to lower facility-related costs of 0.8%, lower travel costs of 0.4%, lower recruiting costs of 0.2%, lower merger and integration costs of 0.2% and lower other costs of 0.1%.
The decrease in EMEA’s general and administrative expenses, as a percentage of revenues, was primarily attributable to lower facility-related costs of 1.1% driven by the exit of leased space, lower compensation costs of 0.8%, lower travel costs of 0.8%, lower recruiting costs of 0.2% and lower other costs of 0.2%.
The increase in Other general and administrative expenses, which includes corporate and other costs, was primarily attributable to higher compensation costs of $6.1 million driven by higher long-term and annual performance-based compensation and mark-to-market adjustment of executive deferred compensation in the current period, partially offset by lower travel costs of $0.4 million, lower insurance costs of $0.3 million, lower legal and professional fees of $0.2 million and lower other costs of $0.1 million.
Depreciation, Amortization and Impairment of Long-Lived Assets
|
|
Three Months Ended March 31, |
|
|
|
|
|
|
|
|
|
|||||||||||||
|
|
2021 |
|
|
2020 |
|
|
|
|
|
|
|
|
|
||||||||||
|
(in thousands) |
Amount |
|
|
% of Revenues |
|
|
Amount |
|
|
% of Revenues |
|
|
$ Change |
|
|
Change in % of Revenues |
|
||||||
|
Depreciation, net: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
10,221 |
|
|
2.8% |
|
|
$ |
10,033 |
|
|
3.0% |
|
|
$ |
188 |
|
|
-0.2% |
|
|||
|
EMEA |
|
2,156 |
|
|
2.3% |
|
|
|
1,705 |
|
|
2.2% |
|
|
|
451 |
|
|
0.1% |
|
|||
|
Other |
|
738 |
|
|
- |
|
|
|
723 |
|
|
- |
|
|
|
15 |
|
|
- |
|
|||
|
Consolidated |
$ |
13,115 |
|
|
2.9% |
|
|
$ |
12,461 |
|
|
3.0% |
|
|
$ |
654 |
|
|
-0.1% |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of intangibles: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
2,096 |
|
|
0.6% |
|
|
$ |
3,286 |
|
|
1.0% |
|
|
$ |
(1,190 |
) |
|
-0.4% |
|
|||
|
EMEA |
|
891 |
|
|
0.9% |
|
|
|
833 |
|
|
1.1% |
|
|
|
58 |
|
|
-0.2% |
|
|||
|
Other |
|
— |
|
|
- |
|
|
|
— |
|
|
- |
|
|
|
— |
|
|
- |
|
|||
|
Consolidated |
$ |
2,987 |
|
|
0.7% |
|
|
$ |
4,119 |
|
|
1.0% |
|
|
$ |
(1,132 |
) |
|
-0.3% |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Impairment of long-lived assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Americas |
$ |
357 |
|
|
0.1% |
|
|
$ |
— |
|
|
0.0% |
|
|
$ |
357 |
|
|
0.1% |
|
|||
|
EMEA |
|
475 |
|
|
0.5% |
|
|
|
— |
|
|
0.0% |
|
|
|
475 |
|
|
0.5% |
|
|||
|
Other |
|
318 |
|
|
- |
|
|
|
— |
|
|
- |
|
|
|
318 |
|
|
- |
|
|||
|
Consolidated |
$ |
1,150 |
|
|
0.3% |
|
|
$ |
— |
|
|
0.0% |
|
|
$ |
1,150 |
|
|
0.3% |
|
|||
The increase in depreciation was primarily due to new depreciable fixed assets placed into service supporting site expansions and infrastructure upgrades as well as accelerated depreciation related to certain site exits, partially offset by the impact since the prior period of certain fully depreciated fixed assets as well as assets that were impaired.
The decrease in amortization was primarily due to the impact since the prior period of certain fully amortized intangible assets.
See Note 4, Fair Value, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information on the impairment of long-lived assets.
32
Other Income (Expense)
|
|
Three Months Ended March 31, |
|
|
|
|
|
|||||
|
(in thousands) |
2021 |
|
|
2020 |
|
|
$ Change |
|
|||
|
Interest income |
$ |
98 |
|
|
$ |
263 |
|
|
$ |
(165 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest (expense) |
$ |
(423 |
) |
|
$ |
(720 |
) |
|
$ |
297 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income (expense), net: |
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency transaction gains (losses) |
$ |
(185 |
) |
|
$ |
(1,606 |
) |
|
$ |
1,421 |
|
|
Gains (losses) on derivative instruments not designated as hedges |
|
35 |
|
|
|
(246 |
) |
|
|
281 |
|
|
Gains (losses) on investments held in rabbi trust |
|
525 |
|
|
|
(2,057 |
) |
|
|
2,582 |
|
|
Other miscellaneous income (expense) |
|
(697 |
) |
|
|
(884 |
) |
|
|
187 |
|
|
Total other income (expense), net |
$ |
(322 |
) |
|
$ |
(4,793 |
) |
|
$ |
4,471 |
|
The decrease in interest income was primarily due to lower invested balances and interest rates than in the comparable period.
The decrease in interest (expense) was primarily due to lower average outstanding borrowings and interest rates than in the comparable period.
The change in other income (expense), net, was primarily due to an increase in foreign currency transaction gains and an increase in value of investments held in rabbi trust. See Note 7, Investments Held in Rabbi Trust, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information.
Income Taxes
|
|
Three Months Ended March 31, |
|
|
|
|
|
|||||
|
(in thousands) |
2021 |
|
|
2020 |
|
|
$ Change |
|
|||
|
Income before income taxes |
$ |
30,883 |
|
|
$ |
19,144 |
|
|
$ |
11,739 |
|
|
Income taxes |
|
5,905 |
|
|
|
5,226 |
|
|
|
679 |
|
|
|
|
|
|
|
|
|
|
|
% Change |
|
|
|
Effective tax rate |
|
19.1 |
% |
|
|
27.3 |
% |
|
|
-8.2 |
% |
The decrease in the effective tax rate in 2021 compared to 2020 was primarily due to $1.2 million discrete tax benefits relating to Philippines tax law changes and stock compensation recognized in the current period. The decrease was also affected by shifts in earnings among the various jurisdictions in which we operate. Several additional factors, none of which are individually material, also impacted the rate.
Client Concentration
Our top ten clients accounted for 40.3% and 44.8% of our consolidated revenues in the three months ended March 31, 2021 and 2020, respectively.
Total revenues by segment from our largest client in each of the periods, which was in the financial services vertical for the three ended March 31, 2021 and 2020, were as follows (in thousands):
|
|
Three Months Ended March 31, |
|
|||||||||||
|
|
2021 |
|
|
2020 |
|
||||||||
|
|
Amount |
|
|
% of Revenues |
|
|
Amount |
|
|
% of Revenues |
|
||
|
Americas |
$ |
32,336 |
|
|
8.9% |
|
|
$ |
32,539 |
|
|
9.8% |
|
|
EMEA |
|
— |
|
|
0.0% |
|
|
|
— |
|
|
0.0% |
|
|
|
$ |
32,336 |
|
|
7.1% |
|
|
$ |
32,539 |
|
|
7.9% |
|
33
Total revenues by segment of our clients that each individually represents 10% or greater of that segment’s revenues in each of the periods were as follows (in thousands):
|
|
Three Months Ended March 31, |
|
|||||||||||
|
|
2021 |
|
|
2020 |
|
||||||||
|
|
Amount |
|
|
% of Revenues |
|
|
Amount |
|
|
% of Revenues |
|
||
|
Americas |
$ |
— |
|
|
0.0% |
|
|
$ |
— |
|
|
0.0% |
|
|
EMEA |
|
34,314 |
|
|
36.4% |
|
|
|
17,473 |
|
|
22.3% |
|
|
|
$ |
34,314 |
|
|
7.5% |
|
|
$ |
17,473 |
|
|
4.2% |
|
Business Outlook
For the three months ended June 30, 2021, we anticipate the following financial results:
|
|
• |
Revenues in the range of $443.0 million to $448.0 million; |
|
|
• |
Effective tax rate of approximately 23.0%; |
|
|
• |
Fully diluted share count of approximately 39.9 million; |
|
|
• |
Diluted earnings per share in the range of $0.46 to $0.50; and |
|
|
• |
Capital expenditures in the range of $15.0 million to $20.0 million. |
For the twelve months ended December 31, 2021, we anticipate the following financial results:
|
|
• |
Revenues in the range of $1,843.0 million to $1,858.0 million; |
|
|
• |
Effective tax rate of approximately 21.0%; |
|
|
• |
Fully diluted share count of approximately 40.1 million; |
|
|
• |
Diluted earnings per share in the range of $2.67 to $2.77; and |
|
|
• |
Capital expenditures in the range of $47.0 million to $53.0 million. |
We are increasing our full year 2021 revenue and diluted earnings per share outlook relative to what was initially provided in February 2021. The increase in the revenue outlook is being driven by a broad base of existing clients across our vertical markets, while the increase in diluted earnings per share is primarily due to a lower than projected effective tax rate.
We continue to work with our clients in determining the future view of their delivery strategy between home agent and brick and mortar facility driven by COVID-19. As such, we will continue to adjust our capacity footprint – similar to actions taken on facility leases in 2020 – as we get greater clarity around those decisions.
Our revenues and earnings per share assumptions for the second quarter and full year 2021 are based on foreign exchange rates as of April 2021. Therefore, the continued volatility in foreign exchange rates between the U.S. Dollar and the functional currencies of the markets we serve could have a further impact, positive or negative, on revenues and earnings per share relative to the business outlook for the second quarter and full year discussed above.
We anticipate total other interest income (expense), net of approximately $(1.4) million and $(4.8) million for the second quarter and full year 2021, respectively. In the second quarter, roughly $(1.0) million of the $(1.4) million reflects the anticipated impact of our equity method investment in XSell, which is poised to accelerate growth investments in its business. The remainder reflects other expense related to the acquisition of TMC. The amounts in the other interest income (expense), net, however, exclude the potential impact of any future foreign exchange gains or losses.
Liquidity and Capital Resources
Our primary sources of liquidity are typically cash flows generated by operating activities and from available borrowings under our revolving credit facility. We utilize these capital resources to make capital expenditures associated primarily with our customer experience management services, invest in technology applications and tools to further develop our service offerings and for working capital and other general corporate purposes, including the repurchase of our common stock in the open market and to fund acquisitions. In future periods, we intend similar uses of these funds.
34
Our Board of Directors authorized us to purchase up to 10.0 million shares of our outstanding common stock (the “2011 Share Repurchase Program”) on August 18, 2011, as amended on March 16, 2016. A total of 8.3 million shares have been repurchased under the 2011 Share Repurchase Program since inception. The shares are purchased, from time to time, through open market purchases or in negotiated private transactions, and the purchases are based on factors, including but not limited to, the stock price, management discretion and general market conditions. The 2011 Share Repurchase Program has no expiration date.
During the three months ended March 31, 2021, cash increased due to an increase of $40.2 million from operating activities and $0.1 million of other miscellaneous cash inflows, partially offset by $15.0 million used to repay long-term debt, $9.4 million used for capital expenditures, $3.4 million used to pay taxes related to net share settlement of equity awards, $0.3 million to purchase intangible assets and $0.2 million related to paying for an acquisition, resulting in a $9.6 million increase in available cash, cash equivalents and restricted cash (including the unfavorable effects of foreign currency exchange rates on cash, cash equivalents and restricted cash of $2.4 million).
Net cash flows provided by operating activities for the three months ended March 31, 2021 were $40.2 million, compared to $28.5 million for the comparable period in 2020. The $11.7 million increase in net cash flows from operating activities was due to an $11.1 million increase in net income and a net increase of $1.9 million in non-cash reconciling items, such as stock compensation, net impairment, depreciation, amortization, deferred income taxes, unrealized foreign currency transaction gains (losses), and net unrealized gains (losses) and premiums on financial instruments, partially offset by a $1.3 million decrease in cash flows from assets and liabilities. The $1.3 million decrease in 2021 from 2020 in cash flows from assets and liabilities was principally a result of a $4.7 million decrease in other liabilities and a $2.0 million change in operating lease assets and liabilities, partially offset by a $2.4 million decrease in other assets, a $1.5 million increase in deferred revenue and customer liabilities and a $1.5 million change in net taxes payable. The $4.7 million decrease in the change in other liabilities was primarily due to a $5.3 million decrease related to the timing of accrued employee compensation and benefits. The $2.4 million decrease in the change in other assets was primarily due to a $3.5 million decrease in prepaid assets driven by a $3.8 million increase in prepaid insurance in the prior year.
Capital expenditures, which are generally funded by cash generated from operating activities, available cash balances and borrowings available under our credit facilities, were $9.4 million for the three months ended March 31, 2021, compared to $11.8 million for the comparable period in 2020, a decrease of $2.4 million. In 2021, we anticipate capital expenditures in the range of $47.0 million to $53.0 million, primarily for systems infrastructure upgrades and additions as well as new seat additions.
On February 14, 2019, we entered into a $500 million senior revolving credit facility (the “2019 Credit Agreement”) with a group of lenders, KeyBank National Association, as Administrative Agent, Swing Line Lender and Issuing Lender (“KeyBank”), the lenders named therein, and KeyBanc Capital Markets Inc. as Lead Arranger and Sole Book Runner. The 2019 Credit Agreement is subject to certain borrowing limitations and includes certain customary financial and restrictive covenants. We are not currently aware of any inability of our lenders to provide access to the full commitment of funds that exist under the 2019 Credit Agreement, if necessary. However, there can be no assurance that such facility will be available to us, even though it is a binding commitment of the financial institutions. The 2019 Credit Agreement will mature on February 14, 2024. As of March 31, 2021, we were in compliance with all loan requirements of the 2019 Credit Agreement and had $48.0 million of outstanding borrowings under this facility. For additional discussion of our credit agreements, see Note 18, Borrowings in the “Notes to the Consolidated Financial Statements” section of our Annual Report on Form 10-K for the year ended December 31, 2020.
Our credit agreements had an average daily utilization of $54.0 million and $63.8 million during the three months ended March 31, 2021 and 2020, respectively. During the three months ended March 31, 2021 and 2020, the related interest expense, excluding the commitment fee and the amortization of deferred loan fees, was $0.2 million and $0.4 million, respectively, which represented weighted average interest rates of 1.2% and 2.7%, respectively.
We repaid $15.0 million, net, of long-term debt outstanding under the 2019 Credit Agreement during the three months ended March 31, 2021. Our future interest expense for the remainder of 2021 will vary based on our usage of the 2019 Credit Agreement and market interest rates.
We are currently under audit in several tax jurisdictions. We believe we have adequate reserves related to all matters pertaining to these audits. Should we experience unfavorable outcomes from these audits, such outcomes could have a significant impact on our financial condition, results of operations and cash flows.
35
As part of the July 1, 2018 WhistleOut Pty Ltd acquisition, an AUD 14.0 million three-year retention bonus is payable in installments on or around July 1, 2019, 2020 and 2021. We paid the first installment of AUD 6.0 million ($4.2 million) in July 2019. We accelerated the 2021 installment of the retention bonus and paid AUD 8.0 million ($5.6 million) in July 2020, which represented both the 2020 and 2021 installments. No further amounts are due. Also, as part of the Symphony acquisition on November 1, 2018, a portion of the purchase price, with an acquisition date present value of GBP 7.9 million ($10.0 million), was deferred and is payable in equal installments over three years, on or around November 1, 2019, 2020 and 2021. We paid the first installment of GBP 2.7 million ($3.3 million) in October 2019 and the second installment of GBP 2.7 million ($3.4 million) in October 2020. The Symphony deferred purchase price was included in “Other accrued expenses and current liabilities” in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020.As part of the December 31, 2020 TMC acquisition, $17.4 million of the purchase price was deferred and is payable on December 31, 2027, the seventh anniversary of the closing. In the event TMC’s previous owner remains employed by us or one of our subsidiaries on December 31, 2022, the second anniversary of the closing, the deferred payment will be accelerated and due at that time. The TMC deferred purchase price was included in “Other long-term liabilities” in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020.
As of March 31, 2021, we had $112.8 million in cash and cash equivalents, of which approximately 87.2%, or $98.3 million, was held in international operations. Most of these funds will not be subject to additional taxes in the United States if repatriated; however, certain jurisdictions may impose additional withholding taxes. There are circumstances where we may be unable to repatriate some of the cash and cash equivalents held by our international operations due to country restrictions.
We expect our current cash levels and cash flows from operations to be adequate to meet our anticipated working capital needs, including investment activities such as capital expenditures and debt repayment for the next twelve months and the foreseeable future. However, from time to time, we may borrow funds under our 2019 Credit Agreement as a result of the timing of our working capital needs, including capital expenditures.
Our cash resources could also be affected by various risks and uncertainties, including but not limited to, the risks described in our Annual Report on Form 10-K for the year ended December 31, 2020.
Off-Balance Sheet Arrangements
As of March 31, 2021, we did not have any material commercial commitments, including guarantees or standby repurchase obligations, or any relationships with unconsolidated entities or financial partnerships, including entities often referred to as structured finance or special purpose entities or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.
Contractual Obligations
There have not been any material changes to the outstanding contractual obligations outside of the ordinary course of business from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2020.
Critical Accounting Estimates
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, 2020 for a discussion of our critical accounting estimates, including a description of the methods and key assumptions used and how the key assumptions were determined.
New Accounting Standards Not Yet Adopted
See Note 1, Overview and Basis of Presentation, in the accompanying “Notes to Condensed Consolidated Financial Statements” for information related to recent accounting pronouncements.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
We are exposed to market risk in the normal course of business due primarily to our borrowings and cash-management activities, which are subject to interest rate risk, and to our foreign business operations, which are subject to foreign exchange rate risk. Our market risk disclosures set forth in our Annual Report on Form 10-K for the year ended December 31, 2020 have not otherwise changed significantly.
36
For a discussion of current market conditions resulting from the COVID-19 pandemic, refer to Part I, Item 2, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and to Part II, Item 1A, “Risk Factors.”
Fluctuations in Quarterly Results
For the year ended December 31, 2020, quarterly revenues as a percentage of total consolidated annual revenues were approximately 24%, 25%, 25% and 26%, respectively, for each of the respective quarters of the year. We have experienced and anticipate that in the future we will experience variations in quarterly revenues. The variations are due to the timing of new contracts and renewal of existing contracts, the timing and frequency of client spending for customer experience management services, non-U.S. currency fluctuations, and the seasonal pattern of customer experience management support and fulfillment services.
Item 4. Controls and Procedures
As of March 31, 2021, under the direction of our Chief Executive Officer and Chief Finance Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a – 15(e) under the Securities Exchange Act of 1934, as amended. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time period specified by the SEC’s rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Finance Officer, as appropriate to allow timely decisions regarding required disclosure. We concluded that, as of March 31, 2021, our disclosure controls and procedures were effective at the reasonable assurance level.
There were no changes in our internal controls over financial reporting during the quarter ended March 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting, except for the change discussed under “Change in Internal Control over Financial Reporting” below.
Change in Internal Control over Financial Reporting
On December 31, 2020, we acquired TMC. We have excluded TMC from our assessment of the effectiveness of our internal control over financial reporting as of March 31, 2021 as we are currently integrating policies, processes, people, technology and operations for the combined companies. Management will continue to evaluate our internal control over financial reporting as we execute on our integration activities.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, we are involved in legal actions arising in the ordinary course of business. With respect to any such currently pending matters, we believe that we have adequate legal defenses and/or, when possible and appropriate, have provided adequate accruals related to those matters such that the ultimate outcome will not have a material adverse effect on our future financial position or results of operations.
Item 1A. Risk Factors
For risk factors, see Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2020.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
On August 18, 2011, as amended on March 16, 2016, the Company’s Board of Directors approved the 2011 Share Repurchase program with no stated expiration date. The Company is authorized to repurchase 10.0 million shares, of which 8.3 million shares have been repurchased to date. There were no share repurchases during the three months ended March 31, 2021.
Item 3. Defaults Upon Senior Securities
None.
37
Item 4. Mine Safety Disclosures
Not Applicable.
Item 5. Other Information
None.
Item 6. Exhibits
The following documents are filed as an exhibit to this Report:
|
No. |
|
Description |
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|
15 |
|
|
|
|
|
|
|
31.1 |
|
Certification of Chief Executive Officer, pursuant to Rule 13a-14(a). |
|
|
|
|
|
31.2 |
|
Certification of Chief Finance Officer, pursuant to Rule 13a-14(a). |
|
|
|
|
|
32.1* |
|
Certification of Chief Executive Officer, pursuant to 18 U.S.C. §1350. |
|
|
|
|
|
32.2* |
|
Certification of Chief Finance Officer, pursuant to 18 U.S.C. §1350. |
|
|
|
|
|
101.INS+ |
|
Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. |
|
|
|
|
|
101.SCH+ |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
101.CAL+ |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
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|
|
|
|
101.LAB+ |
|
Inline XBRL Taxonomy Extension Label Linkbase Document |
|
|
|
|
|
101.PRE+ |
|
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|
|
|
|
|
101.DEF+ |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
104+ |
|
The cover page from the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021, formatted in Inline XBRL (included in Exhibit 101) |
|
|
|
|
|
* |
|
Furnished herewith as an Exhibit. |
|
+ |
|
Submitted electronically with this Quarterly Report. |
38
SIGNATURE
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: May 5, 2021 |
By: |
/s/ John Chapman |
|
|
John Chapman |
|
|
|
Chief Finance Officer |
|
|
|
(Principal Financial and Accounting Officer) |
|
39