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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 30, 2010
Sykes Enterprises, Incorporated
(Exact name of registrant as specified in its charter)
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Florida
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0-28274
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56-1383460 |
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(State or other jurisdiction
of incorporation
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(Commission File Number)
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(IRS Employer Identification
No. |
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400 N. Ashley Drive, Tampa, Florida
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33602 |
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(Address of principal executive offices)
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(Zip Code) |
Registrants telephone number, including area code: (813) 274-1000
(Former name or former address if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the
filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR
240.13e-4(c))
Item 2.05 Costs Associated with Exit or Disposal Activities.
During the fourth quarter of 2010, consistent with our long-term goals to manage and optimize
capacity utilization, we decided to close a customer contact management center in the United
Kingdom and a customer contact management center in Ireland, both components of the EMEA segment,
and decided to close a customer contact management center in Argentina, a component of the
Americas segment (the Plan). These actions were in response to the facilities consolidation and
capacity rationalization related to the ICT Group Inc. (ICT) acquisition in February 2010
enabling Sykes Enterprises, Incorporated (the Company) to reduce operating costs by eliminating
redundant space and to optimize capacity utilization rates where overlap exists. We expect to
substantially complete these actions on or before December 31, 2010. While we plan to migrate all
of the call volumes of the Argentina facility to other facilities within Argentina, we do not
anticipate that any of the revenue from the United Kingdom or Ireland facilities, which was
projected to be $0.1 million for the fourth-quarter of 2010 and approximately $1.3 million on an
annualized basis, will be captured and migrated to other facilities within the region. The number
of seats slated for rationalization approximates 400 in the EMEA segment and 400 in the Americas
segment with a total of 41 employees affected by the Plan (all within the EMEA segment); while the
cost savings associated with these actions is anticipated to be approximately $1.6 million annually
($1.0 million in the EMEA segment and $0.6 million in the Americas segment). The Plan was approved
by the Finance Committee of the Board of Directors of the Company on November 30, 2010. In
accordance with our previously discussed 12 to 18 months integration timeline following the ICT
acquisition in February 2010, we expect to continue to evaluate opportunities for further such
actions around facilities consolidation and capacity optimization.
The major costs expected to be incurred as a result of these actions are facility-related
costs (primarily consisting of those costs associated with the real estate leases), impairments of
long-lived assets (primarily leasehold improvements and equipment) and severance related costs
totaling an estimated $2.9 million, or $2.4 million and $0.5 million for the EMEA and Americas
segments, respectively. We estimate $0.5 million of the costs associated with this Plan will be
non-cash impairment charges (as detailed below), while approximately $2.2 million will be cash
expenditures for facility-related costs, primarily rent obligations in the EMEA segment to be paid
through the remainder of the lease terms, the last of which ends in March 2014, and $0.2 million
will be cash expenditures for severance related costs in the Americas segment. The exact timing
and actual amounts of the facility-related payments are dependent upon our ability to sublease
these facilities. If the events and circumstances regarding our ability to sublease the facilities
change, these estimates would change.
Since we ceased using these facilities during the fourth quarter of 2010, we charged $2.9
million to income from operations ($2.4 million and $0.5 million for the EMEA and Americas
segments, respectively), of which $0.5 million was paid in cash for the facility-related costs and
severance related costs.
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Item 2.06 Material Impairments.
In connection with the Plan described above, which is incorporated by reference into this Item
2.06, we recorded non-cash impairment charges of $0.5 million in the fourth quarter of 2010 as
follows:
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(in millions) |
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Asset Type |
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Amount |
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EMEA United Kingdom and Ireland |
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Leasehold improvements and equipment |
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$ |
0.2 |
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Americas Argentina |
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Leasehold improvements |
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0.3 |
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Total |
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$ |
0.5 |
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
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SYKES ENTERPRISES, INCORPORATED
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By: |
/s/ W. Michael Kipphut
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W. Michael Kipphut |
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Senior Vice President and Chief Financial Officer |
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Date: November 30, 2010
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