UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the quarterly period ended June 30, 2013
¨ | Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 |
For the transition period from to
Commission File No. 0-28274
Sykes Enterprises, Incorporated
(Exact name of Registrant as specified in its charter)
Florida | 56-1383460 | |
(State or other jurisdiction of incorporation or organization) | (IRS Employer Identification No.) |
400 North Ashley Drive, Suite 2800, Tampa, FL 33602
(Address of principal executive offices) (Zip Code)
Registrants telephone number, including area code: (813) 274-1000
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the past 90 days.
Yes x No ¨
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 229.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
Yes x No ¨
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of accelerated filer, large accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer x |
Accelerated filer ¨ |
Non-accelerated filer ¨ | Smaller reporting company ¨ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
Yes ¨ No x
As of August 1, 2013, there were 44,045,603 outstanding shares of common stock.
Sykes Enterprises, Incorporated and Subsidiaries
Form 10-Q
INDEX
2
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)
(in thousands, except per share data) | June 30, 2013 | December 31, 2012 | ||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | 167,412 | $ | 187,322 | ||||
Receivables, net |
282,095 | 247,633 | ||||||
Prepaid expenses |
20,822 | 12,370 | ||||||
Other current assets |
23,870 | 20,017 | ||||||
|
|
|
|
|||||
Total current assets |
494,199 | 467,342 | ||||||
Property and equipment, net |
105,723 | 101,295 | ||||||
Goodwill |
200,929 | 204,231 | ||||||
Intangibles, net |
83,596 | 92,037 | ||||||
Deferred charges and other assets |
41,113 | 43,784 | ||||||
|
|
|
|
|||||
$ | 925,560 | $ | 908,689 | |||||
|
|
|
|
|||||
Liabilities and Shareholders Equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | 21,400 | $ | 24,985 | ||||
Accrued employee compensation and benefits |
71,610 | 73,103 | ||||||
Current deferred income tax liabilities |
921 | 92 | ||||||
Income taxes payable |
1,183 | 800 | ||||||
Deferred revenue |
35,149 | 34,283 | ||||||
Other accrued expenses and current liabilities |
34,347 | 31,320 | ||||||
|
|
|
|
|||||
Total current liabilities |
164,610 | 164,583 | ||||||
Deferred grants |
7,269 | 7,607 | ||||||
Long-term debt |
113,000 | 91,000 | ||||||
Long-term income tax liabilities |
24,786 | 26,162 | ||||||
Other long-term liabilities |
12,134 | 13,073 | ||||||
|
|
|
|
|||||
Total liabilities |
321,799 | 302,425 | ||||||
|
|
|
|
|||||
Commitments and loss contingency (Note 15) |
||||||||
Shareholders equity: |
||||||||
Preferred stock, $0.01 par value, 10,000 shares authorized; no shares issued and outstanding |
- | - | ||||||
Common stock, $0.01 par value, 200,000 shares authorized; 44,046 and 43,790 shares issued, respectively |
440 | 438 | ||||||
Additional paid-in capital |
277,556 | 277,192 | ||||||
Retained earnings |
324,921 | 315,187 | ||||||
Accumulated other comprehensive income |
2,411 | 14,856 | ||||||
Treasury stock at cost: 118 shares and 108 shares, respectively |
(1,567) | (1,409) | ||||||
|
|
|
|
|||||
Total shareholders equity |
603,761 | 606,264 | ||||||
|
|
|
|
|||||
$ | 925,560 | $ | 908,689 | |||||
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
3
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Operations
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(in thousands, except per share data) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenues |
$ | 304,735 | $ | 264,802 | $ | 605,979 | $ | 542,900 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Operating expenses: |
||||||||||||||||
Direct salaries and related costs |
210,141 | 174,630 | 413,847 | 353,130 | ||||||||||||
General and administrative |
75,247 | 69,642 | 148,980 | 141,906 | ||||||||||||
Depreciation, net |
10,017 | 9,816 | 20,186 | 20,450 | ||||||||||||
Amortization of intangibles |
3,713 | 2,009 | 7,472 | 3,870 | ||||||||||||
Impairment of long-lived assets |
- | - | - | 149 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
299,118 | 256,097 | 590,485 | 519,505 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income from continuing operations |
5,617 | 8,705 | 15,494 | 23,395 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Other income (expense): |
||||||||||||||||
Interest income |
208 | 354 | 432 | 718 | ||||||||||||
Interest (expense) |
(578) | (312) | (1,086) | (628) | ||||||||||||
Other (expense) |
(339) | (488) | (214) | (1,089) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other income (expense) |
(709) | (446) | (868) | (999) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income from continuing operations before income taxes |
4,908 | 8,259 | 14,626 | 22,396 | ||||||||||||
Income taxes |
(688) | 511 | 2,512 | 3,878 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Income from continuing operations, net of taxes |
5,596 | 7,748 | 12,114 | 18,518 | ||||||||||||
(Loss) from discontinued operations, net of taxes |
- | - | - | (820) | ||||||||||||
(Loss) on sale of discontinued operations, net of taxes |
- | - | - | (10,707) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income |
$ | 5,596 | $ | 7,748 | $ | 12,114 | $ | 6,991 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) per common share: |
||||||||||||||||
Basic: |
||||||||||||||||
Continuing operations |
$ | 0.13 | $ | 0.18 | $ | 0.28 | $ | 0.43 | ||||||||
Discontinued operations |
- | - | - | (0.27) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) per common share |
$ | 0.13 | $ | 0.18 | $ | 0.28 | $ | 0.16 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Diluted: |
||||||||||||||||
Continuing operations |
$ | 0.13 | $ | 0.18 | $ | 0.28 | $ | 0.43 | ||||||||
Discontinued operations |
- | - | - | (0.27) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net income (loss) per common share |
$ | 0.13 | $ | 0.18 | $ | 0.28 | $ | 0.16 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Weighted average common shares: |
||||||||||||||||
Basic |
42,936 | 43,094 | 42,992 | 43,205 | ||||||||||||
Diluted |
42,954 | 43,103 | 43,011 | 43,256 |
See accompanying Notes to Condensed Consolidated Financial Statements.
4
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Comprehensive Income (Loss)
(Unaudited)
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
(in thousands) | 2013 | 2012 | 2013 | 2012 | ||||||||||||
Net income |
$ | 5,596 | $ | 7,748 | $ | 12,114 | $ | 6,991 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income (loss), net of taxes: |
||||||||||||||||
Foreign currency translation gain (loss), net of taxes |
(4,377) | (4,954) | (10,105) | 2,175 | ||||||||||||
Unrealized gain (loss) on net investment hedge, net of taxes |
(259) | - | 23 | - | ||||||||||||
Unrealized actuarial gain (loss) related to pension liability, net of taxes |
(88) | 12 | (96) | 21 | ||||||||||||
Unrealized gain (loss) on cash flow hedging instruments, net of taxes |
(4,197) | 575 | (2,178) | 2,708 | ||||||||||||
Unrealized gain (loss) on postretirement obligation, net of taxes |
(46) | 34 | (89) | 49 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income (loss), net of taxes |
(8,967) | (4,333) | (12,445) | 4,953 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive income (loss) |
$ | (3,371) | $ | 3,415 | $ | (331) | $ | 11,944 | ||||||||
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
5
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders Equity
Six Months Ended June 30, 2012,
Six Months Ended December 31, 2012 and
Six Months Ended June 30, 2013
(Unaudited)
Common Stock | Accumulated Other |
|||||||||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
(in thousands) | Shares Issued |
Amount | Additional Paid-in Capital |
Retained Earnings |
Comprehensive Income (Loss) |
Treasury Stock |
Total | |||||||||||||||||||||
|
|
|||||||||||||||||||||||||||
Balance at January 1, 2012 |
44,306 | $ | 443 | $ | 281,157 | $ | 291,803 | $ | 4,436 | $ | (4,273) | $ | 573,566 | |||||||||||||||
Stock-based compensation expense |
- | - | 1,861 | - | - | - | 1,861 | |||||||||||||||||||||
Excess tax benefit (deficiency) from stock-based compensation |
- | - | (278) | - | - | - | (278) | |||||||||||||||||||||
Vesting of common stock and restricted stock under equity award plans, net of forfeitures |
306 | 3 | (1,261) | - | - | (154) | (1,412) | |||||||||||||||||||||
Repurchase of common stock |
- | - | - | - | - | (7,461) | (7,461) | |||||||||||||||||||||
Retirement of treasury stock |
(629) | (6) | (5,938) | (3,341) | - | 9,285 | - | |||||||||||||||||||||
Comprehensive income (loss) |
- | - | - | 6,991 | 4,953 | - | 11,944 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2012 |
43,983 | 440 | 275,541 | 295,453 | 9,389 | (2,603) | 578,220 | |||||||||||||||||||||
Stock-based compensation expense |
- | - | 1,606 | - | - | - | 1,606 | |||||||||||||||||||||
Excess tax benefit (deficiency) from stock-based compensation |
- | - | (14) | - | - | - | (14) | |||||||||||||||||||||
Vesting of common stock and restricted stock under equity award plans, net of forfeitures |
(77) | - | 66 | - | - | (66) | - | |||||||||||||||||||||
Repurchase of common stock |
- | - | - | - | - | (447) | (447) | |||||||||||||||||||||
Retirement of treasury stock |
(116) | (2) | (7) | (1,698) | - | 1,707 | - | |||||||||||||||||||||
Comprehensive income (loss) |
- | - | - | 21,432 | 5,467 | - | 26,899 | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at December 31, 2012 |
43,790 | 438 | 277,192 | 315,187 | 14,856 | (1,409) | 606,264 | |||||||||||||||||||||
Issuance of common stock |
10 | - | 59 | - | - | - | 59 | |||||||||||||||||||||
Stock-based compensation expense |
- | - | 2,190 | - | - | - | 2,190 | |||||||||||||||||||||
Excess tax benefit (deficiency) from stock-based compensation |
- | - | (34) | - | - | - | (34) | |||||||||||||||||||||
Vesting of common stock and restricted stock under equity award plans, net of forfeitures |
517 | 5 | 60 | - | - | (158) | (93) | |||||||||||||||||||||
Repurchase of common stock |
- | - | - | - | - | (4,294) | (4,294) | |||||||||||||||||||||
Retirement of treasury stock |
(271) | (3) | (1,911) | (2,380) | - | 4,294 | - | |||||||||||||||||||||
Comprehensive income (loss) |
- | - | - | 12,114 | (12,445) | - | (331) | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance at June 30, 2013 |
44,046 | $ | 440 | $ | 277,556 | $ | 324,921 | $ | 2,411 | $ | (1,567) | $ | 603,761 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
See accompanying Notes to Condensed Consolidated Financial Statements.
6
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
Six Months Ended June 30, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Cash flows from operating activities: |
||||||||
Net income |
$ | 12,114 | $ | 6,991 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
Depreciation, net |
20,186 | 20,450 | ||||||
Amortization of intangibles |
7,472 | 3,870 | ||||||
Impairment losses |
- | 149 | ||||||
Unrealized foreign currency transaction (gains) losses, net |
3,400 | 321 | ||||||
Stock-based compensation expense |
2,190 | 1,861 | ||||||
Deferred income tax provision (benefit) |
(2,702) | (303) | ||||||
Net (gain) loss on disposal of property and equipment |
(17) | (116) | ||||||
Bad debt expense |
276 | 796 | ||||||
Unrealized (gains) losses on financial instruments, net |
785 | 279 | ||||||
Amortization of deferred loan fees |
130 | 238 | ||||||
Net (gain) on insurance settlement |
- | (133) | ||||||
Loss on sale of discontinued operations |
- | 10,707 | ||||||
Other |
46 | 277 | ||||||
Changes in assets and liabilities, net of acquisition: |
||||||||
Receivables |
(37,780) | (4,679) | ||||||
Prepaid expenses |
(8,703) | (2,007) | ||||||
Other current assets |
(1,712) | 1,689 | ||||||
Deferred charges and other assets |
541 | (17,200) | ||||||
Accounts payable |
(3,830) | (2,469) | ||||||
Income taxes receivable / payable |
(2,251) | (781) | ||||||
Accrued employee compensation and benefits |
82 | 2,793 | ||||||
Other accrued expenses and current liabilities |
1,630 | 3,077 | ||||||
Deferred revenue |
2,632 | 182 | ||||||
Other long-term liabilities |
|
(142)
|
|
|
(1,107)
|
| ||
|
|
|
|
|||||
Net cash provided by (used for) operating activities |
(5,653) | 24,885 | ||||||
|
|
|
|
|||||
Cash flows from investing activities: |
||||||||
Capital expenditures |
(26,061) | (13,806) | ||||||
Proceeds from sale of property and equipment |
93 | 196 | ||||||
Investment in restricted cash |
(11) | (62) | ||||||
Release of restricted cash |
- | 356 | ||||||
Cash divested on sale of discontinued operations |
- | (9,100) | ||||||
Proceeds from insurance settlement |
|
-
|
|
|
227
|
| ||
|
|
|
|
|||||
Net cash (used for) investing activities |
(25,979) | (22,189) | ||||||
|
|
|
|
7
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Continued)
Six Months Ended June 30, | ||||||||
(in thousands) | 2013 | 2012 | ||||||
Cash flows from financing activities: |
||||||||
Payments of long-term debt |
(10,000) | - | ||||||
Proceeds from issuance of long-term debt |
32,000 | - | ||||||
Proceeds from issuance of stock |
59 | - | ||||||
Cash paid for repurchase of common stock |
(4,294) | (7,461) | ||||||
Proceeds from grants |
104 | 88 | ||||||
Shares repurchased for minimum tax withholding on equity awards |
(93) | (1,412) | ||||||
Cash paid for loan fees related to debt |
|
-
|
|
|
(857)
|
| ||
|
|
|
|
|||||
Net cash provided by (used for) financing activities |
17,776 | (9,642) | ||||||
|
|
|
|
|||||
Effects of exchange rates on cash |
(6,054) | 489 | ||||||
|
|
|
|
|||||
Net increase (decrease) in cash and cash equivalents |
(19,910) | (6,457) | ||||||
Cash and cash equivalents beginning |
|
187,322
|
|
|
211,122
|
| ||
|
|
|
|
|||||
Cash and cash equivalents ending |
$ | 167,412 | $ | 204,665 | ||||
|
|
|
|
|||||
Supplemental disclosures of cash flow information: |
||||||||
Cash paid during period for interest |
$ | 1,030 | $ | 528 | ||||
Cash paid during period for income taxes |
$ | 8,481 | $ | 22,304 | ||||
Non-cash transactions: |
||||||||
Property and equipment additions in accounts payable |
$ | 4,519 | $ | 1,908 | ||||
Unrealized gain (loss) on postretirement obligation in accumulated other comprehensive income (loss) |
$ | (89) | $ | 49 |
See accompanying Notes to Condensed Consolidated Financial Statements.
8
Sykes Enterprises, Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Six Months Ended June 30, 2013 and 2012
(Unaudited)
Note 1. Overview and Basis of Presentation
Business Sykes Enterprises, Incorporated and consolidated subsidiaries (SYKES or the Company) provides comprehensive outsourced customer contact management solutions and services in the business process outsourcing arena to companies, primarily within the communications, financial services, technology/consumer, transportation and leisure, and healthcare industries. SYKES provides flexible, high-quality outsourced customer contact management services (with an emphasis on inbound technical support and customer service), which includes customer assistance, healthcare and roadside assistance, technical support and product sales to its clients customers. Utilizing SYKES integrated onshore/offshore global delivery model, SYKES provides its services through multiple communication channels encompassing phone, e-mail, Internet, text messaging and chat. SYKES complements its outsourced customer contact management services with various enterprise support services in the United States that encompass services for a companys internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, SYKES also provides fulfillment services including multilingual sales order processing via the Internet and phone, payment processing, inventory control, product delivery and product returns handling. The Company has operations in two reportable segments entitled (1) the Americas, which includes the United States, Canada, Latin America, India and the Asia Pacific Rim, in which the client base is primarily companies in the United States that are using the Companys services to support their customer management needs; and (2) EMEA, which includes Europe, the Middle East and Africa.
Acquisition In August 2012, the Company completed the acquisition of Alpine Access, Inc. (Alpine), a Delaware corporation, pursuant to the Agreement and Plan of Merger, dated July 27, 2012. The Company has reflected the operating results in the Condensed Consolidated Statements of Operations since August 20, 2012. See Note 2, Acquisition of Alpine Access, Inc., for additional information on the acquisition of this business.
Discontinued Operations In March 2012, the Company sold its operations in Spain (the Spanish operations), pursuant to an asset purchase agreement dated March 29, 2012 and a stock purchase agreement dated March 30, 2012. The Company reflected the operating results related to the Spanish operations as discontinued operations in the Condensed Consolidated Statements of Operations for the six months ended June 30, 2012. Cash flows from discontinued operations are included in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012. See Note 3, Discontinued Operations, for additional information on the sale of the Spanish operations.
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 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 and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for any future quarters or the year ending December 31, 2013. For further information, refer to the consolidated financial statements and notes thereto, included in the Companys Annual Report on Form 10-K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission (SEC).
Principles of Consolidation The condensed consolidated financial statements include the accounts of SYKES and its wholly-owned subsidiaries and controlled majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.
Use of Estimates The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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.
9
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.
New Accounting Standards Not Yet Adopted
In March 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-05 Foreign Currency Matters (Topic 830) Parents Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (ASU 2013-05). The amendments in ASU 2013-05 indicate that a cumulative translation adjustment (CTA) is attached to the parents investment in a foreign entity and should be released in a manner consistent with the derecognition guidance on investments in entities. Thus, the entire amount of the CTA associated with the foreign entity would be released when there has been a sale of a subsidiary or group of net assets within a foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity, a loss of a controlling financial interest in an investment in a foreign entity (i.e., the foreign entity is deconsolidated), or a step acquisition for a foreign entity (i.e., when an entity has changed from applying the equity method for an investment in a foreign entity to consolidating the foreign entity). ASU 2013-05 does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. The amendments in ASU 2013-05 are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The amendments should be applied prospectively to derecognition events occurring after the effective date. The Company does not expect the adoption of ASU 2013-05 to materially impact its financial condition, results of operations and cash flows.
In July 2013, the FASB issued ASU 2013-11 Income Taxes (Topic 740) Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (ASU 2013-11). The amendments in ASU 2013-11 indicate that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company does not expect the adoption of ASU 2013-11 to materially impact its financial condition, results of operations and cash flows.
New Accounting Standards Recently Adopted
In December 2011, the FASB issued ASU 2011-11 Balance Sheet (Topic 210) Disclosures about Offsetting Assets and Liabilities (ASU 2011-11). The amendments in ASU 2011-11 enhanced disclosures by requiring improved information about financial and derivative instruments that are either 1) offset (netting assets and liabilities) in accordance with Section 210-20-45 or Section 815-10-45 of the FASB Accounting Standards Codification (ASC) or 2) subject to an enforceable master netting arrangement or similar agreement. The amendments in ASU 2011-11 are effective for fiscal years beginning on or after January 1, 2013, and interim periods within those years. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The adoption of ASU 2011-11 as of January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company.
In July 2012, the FASB issued ASU 2012-02 Intangibles Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment (ASU 2012-02). The amendments in ASU 2012-02 provide entities with the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. Under the amendments in ASU 2012-02, an entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period
10
and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments in ASU 2012-02 are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of ASU 2012-02 on January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company.
In January 2013, the FASB issued ASU 2013-01 Balance Sheet (Topic 210) Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities (ASU 2013-01). The amendments in ASU 2013-01 clarify which instruments and transactions are subject to the offsetting disclosure requirements established by ASU 2011-11. ASU 2013-01 addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to the financial statement users. In choosing to narrow the scope of the offsetting disclosures, the FASB determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under International Financial Reporting Standards (IFRS). The amendments in ASU 2013-01 are effective for fiscal years beginning on or after January 1, 2013. Retrospective application is required for any period presented that begins before the entitys initial application of the new requirements. The adoption of ASU 2013-01 as of January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company.
In February 2013, the FASB issued ASU 2013-02 Comprehensive Income (Topic 220) Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (ASU 2013-02). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amendments in ASU 2013-02 are effective prospectively for reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 as of January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company.
Note 2. Acquisition of Alpine Access, Inc.
On August 20, 2012, the Company acquired 100% of the outstanding common shares and voting interest of Alpine, pursuant to the terms of the merger agreement. Alpine, an industry leader in the at-home agent space, provides award-winning customer contact management services through a secured and proprietary virtual call center environment with its operations located in the United States and Canada. The results of Alpines operations have been included in the Companys consolidated financial statements since its acquisition on August 20, 2012. The Company acquired Alpine to: create significant competitive differentiation for quality, speed to market, scalability and flexibility driven by proprietary, internally-developed software, systems, processes and other intellectual property, which uniquely overcome the challenges of the at-home delivery model; strengthen the Companys current service portfolio and go-to-market offering while expanding the breadth of clients with minimal client overlap; broaden the addressable market opportunity within existing and new verticals as well as clients; expand the addressable pool of skilled labor; leverage operational best practices across the Companys global platform, with the potential to convert more of its fixed cost to variable cost; and further enhance the growth and margin profile of the Company to drive shareholder value. This resulted in the Company paying a substantial premium for Alpine resulting in the recognition of goodwill.
The acquisition date fair value of the consideration transferred totaled $149.0 million, which was funded through cash on hand of $41.0 million and borrowings of $108.0 million under the Companys credit agreement, dated May 3, 2012. See Note 11, Borrowings, for further information.
The Company accounted for the acquisition in accordance with ASC 805 Business Combinations, whereby the purchase price paid was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed from Alpine based on their estimated fair values as of the closing date. During the three months ended December 31, 2012, the final working capital adjustment was approved by the authorized representative of Alpines shareholders. The Company finalized its purchase price allocation during the three months ended December 31, 2012, resulting in no changes from the estimated acquisition date fair values previously reported.
11
The following table summarizes the final purchase price allocation of the fair values of the assets acquired and liabilities assumed, all included in the Americas segment (in thousands):
Amount | ||||
Cash and cash equivalents |
$ | 1,859 | ||
Receivables |
11,831 | |||
Prepaid expenses |
617 | |||
|
|
|||
Total current assets |
14,307 | |||
Property and equipment |
11,326 | |||
Goodwill |
80,766 | |||
Intangibles |
57,720 | |||
Deferred charges and other assets |
916 | |||
Accounts payable |
(880) | |||
Accrued employee compensation and benefits |
(3,774) | |||
Income taxes payable |
(141) | |||
Deferred revenue |
(94) | |||
Other accrued expenses and current liabilities |
(601) | |||
|
|
|||
Total current liabilities |
(5,490) | |||
Other long-term liabilities (1) |
(10,592) | |||
|
|
|||
$ | 148,953 | |||
|
|
|||
(1) Primarily includes long-term deferred tax liabilities. |
|
Fair values are based on managements estimates and assumptions including variations of the income approach, the cost approach and the market approach.
The following table presents the Companys purchased intangible assets as of August 20, 2012, the acquisition date (in thousands):
Amount Assigned | Weighted Average Amortization Period (years) |
|||||||
Customer relationships |
$ | 46,000 | 8 | |||||
Trade names |
10,600 | 8 | ||||||
Non-compete agreements |
670 | 2 | ||||||
Favorable lease agreement |
450 | 2 | ||||||
|
|
|||||||
$ | 57,720 | 8 | ||||||
|
|
The $80.8 million of goodwill was assigned to the Companys Americas operating segment. Pursuant to Federal income tax regulations, no amount of intangibles or goodwill from this acquisition will be deductible for tax purposes.
The fair value of receivables acquired is $11.8 million, with the gross contractual amount of $11.8 million.
12
The following table presents the unaudited pro forma combined revenues and net earnings as if Alpine had been included in the consolidated results of the Company for the entire three and six month periods ended June 30, 2012. The pro forma financial information is not indicative of the results of operations that would have been achieved if the acquisition and related borrowings had taken place on January 1, 2012 (in thousands):
Three Months Ended June 30, 2012 |
Six Months Ended June 30, 2012 |
|||||||
Revenues |
$ | 287,123 | $ | 593,298 | ||||
Income from continuing operations, net of taxes |
$ | 4,137 | $ | 14,674 | ||||
Income from continuing operations per common share: |
||||||||
Basic |
$ | 0.10 | $ | 0.34 | ||||
Diluted |
$ | 0.10 | $ | 0.34 |
These amounts have been calculated to reflect the additional depreciation, amortization and interest expense that would have been incurred assuming the fair value adjustments and borrowings occurred on January 1, 2012, together with the consequential tax effects. In addition, these amounts exclude costs incurred which are directly attributable to the acquisition, and which do not have a continuing impact on the combined companies operating results. Included in these costs are severance, advisory and legal costs, net of the tax effects.
Merger and integration costs associated with Alpine were as follows (none in the comparable periods in 2012) (in thousands):
Three Months Ended June 30, 2013 |
Six Months Ended June 30, 2013 |
|||||||
Severance costs: (1) |
||||||||
Americas |
$ | 533 | $ | 533 | ||||
|
|
|
|
|||||
533 | 533 | |||||||
Severance costs: (2) |
||||||||
Americas |
774 | 981 | ||||||
Corporate |
- | 159 | ||||||
|
|
|
|
|||||
774 | 1,140 | |||||||
Transaction and integration costs: (2) |
||||||||
Corporate |
51 | 371 | ||||||
|
|
|
|
|||||
51 | 371 | |||||||
|
|
|
|
|||||
Total merger and integration costs |
$ | 1,358 | $ | 2,044 | ||||
|
|
|
|
(1) |
Included in Direct salaries and related costs in the accompanying Condensed Consolidated Statements of Operations. | |
(2) |
Included in General and administrative costs in the accompanying Condensed Consolidated Statements of Operations. |
13
Note 3. Discontinued Operations
In November 2011, the Finance Committee of the Board of Directors of the Company approved a plan to sell its Spanish operations, which were operated through its Spanish subsidiary, Sykes Enterprises, Incorporated S.L. (Sykes Spain). Sykes Spain operated customer contact management centers, with annual revenues of approximately $39.3 million in 2011, providing contact center services through a total of three customer contact management centers in Spain to clients in Spain. The decision to sell the Spanish operations was made in 2011 after management completed a strategic review of the Spanish market and determined the operations were no longer consistent with the Companys strategic direction.
On March 29, 2012, Sykes Spain entered into the asset purchase agreement, by and between Sykes Spain and Iberphone, S.A.U., and pursuant thereto, on March 29, 2012, Sykes Spain sold the fixed assets located in Ponferrada, Spain, which were previously written down to zero, cash of $4.1 million, and certain contracts and licenses relating to the business of Sykes Spain, to Iberphone, S.A.U. Under the asset purchase agreement, Ponferrada, Spain employees were transferred to Iberphone S.A.U. which assumed certain payroll liabilities in the approximate amount of $1.7 million, and paid a nominal purchase price for the assets.
On March 30, 2012, the Company entered into a stock purchase agreement with a former member of Sykes Spains management, and pursuant thereto, on March 30, 2012, the Company sold all of the shares of capital stock of Sykes Spain to the purchaser for a nominal price. Pursuant to the stock purchase agreement, immediately prior to closing, the Company made a cash capital contribution of $8.6 million to Sykes Spain to cover a portion of Sykes Spains liabilities and to fund the $4.1 million of cash transferred and sold pursuant to the asset purchase agreement with Iberphone, S.A.U. discussed above. As this was a stock transaction, the Company anticipates no future obligation with regard to Sykes Spain and there are no material post-closing obligations.
The Company reflected the operating results related to the Spanish operations as discontinued operations in the accompanying Condensed Consolidated Statements of Operations for the six months ended June 30, 2012. Cash flows from discontinued operations are included in the accompanying Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012. This business was historically reported by the Company as part of the EMEA segment.
The results of the Spanish operations included in discontinued operations were as follows (none in 2013) (in thousands):
Three Months Ended June 30, 2012 |
Six Months Ended June 30, 2012 |
|||||||
Revenues |
$ | - | $ | 10,102 | ||||
|
|
|
|
|||||
(Loss) from discontinued operations before income taxes |
$ | - | $ | (820) | ||||
Income taxes (1) |
- | - | ||||||
|
|
|
|
|||||
(Loss) from discontinued operations, net of taxes |
$ | - | $ | (820) | ||||
|
|
|
|
|||||
(Loss) on sale of discontinued operations before income taxes |
$ | - | $ | (10,707) | ||||
Income taxes (1) |
- | - | ||||||
|
|
|
|
|||||
(Loss) on sale of discontinued operations, net of taxes |
$ | - | $ | (10,707) | ||||
|
|
|
|
(1) | There were no income taxes as any tax benefit from the losses would be offset by a valuation allowance. |
14
Note 4. Costs Associated with Exit or Disposal Activities
Fourth Quarter 2011 Exit Plan
During 2011, the Company announced a plan to rationalize seats in certain U.S. sites and close certain locations in EMEA (the Fourth Quarter 2011 Exit Plan). The details are described below, by segment.
Americas
During 2011, as part of an on-going effort to streamline excess capacity related to the integration of the ICT Group, Inc. (ICT) acquisition and align it with the needs of the market, the Company announced a plan to rationalize approximately 900 seats in the U.S., some of which were revenue generating, with plans to migrate the associated revenues to other locations within the U.S. Approximately 300 employees were affected and the Company has completed the actions associated with the Americas plan.
The major costs estimated to be incurred as a result of these actions are program transfer costs, facility-related costs (primarily consisting of those costs associated with the real estate leases), and impairments of long-lived assets (primarily leasehold improvements and equipment) estimated at $1.9 million as of June 30, 2013 ($1.9 million at December 31, 2012). The Company recorded $0.5 million of the costs associated with these actions as non-cash impairment charges, while approximately $1.4 million represents cash expenditures for program transfer and facility-related costs, including obligations under the leases, the last of which ends in February 2017. The Company has paid $0.8 million in cash through June 30, 2013 under the Fourth Quarter 2011 Exit Plan in the Americas.
The following tables summarize the accrued liability associated with the Americas Fourth Quarter 2011 Exit Plans exit or disposal activities and related charges for the three months ended June 30, 2013 and 2012 (in thousands):
Beginning Accrual at April 1, 2013 |
Charges (Reversals) for the Three Months Ended June 30, 2013 (1) |
Cash Payments | Other Non-Cash
Changes |
Ending Accrual at June 30, 2013 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 647 | $ | - | $ | (41) | $ | - | $ | 606 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Beginning Accrual
at April 1, 2012 |
Charges (Reversals) for the Three Months Ended June 30, 2012 (1) |
Cash Payments | Other Non-Cash
Changes |
Ending Accrual at June 30, 2012 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | - | $ | 656 | $ | (58) | $ | - | $ | 598 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | During 2012, the Company recorded additional lease obligation costs, which are included in General and administrative costs in the accompanying Condensed Consolidated Statement of Operations. |
15
The following tables summarize the accrued liability associated with the Americas Fourth Quarter 2011 Exit Plans exit or disposal activities and related charges for the six months ended June 30, 2013 and 2012 (in thousands):
Beginning Accrual at January 1, 2013 |
Charges (Reversals) for the Six Months Ended June 30, 2013 (1) |
Cash Payments | Other Non-Cash
Changes |
Ending Accrual at June 30, 2013 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 682 | $ | - | $ | (76) | $ | - | $ | 606 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Beginning Accrual at January 1, 2012 |
Charges (Reversals) for the Six Months Ended June 30, 2012 (1) |
Cash Payments | Other Non-Cash
Changes |
Ending Accrual at June 30, 2012 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | - | $ | 656 | $ | (58) | $ | - | $ | 598 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | During 2012, the Company recorded additional lease obligations and facility exit costs, which are included in General and administrative costs in the accompanying Condensed Consolidated Statement of Operations. |
EMEA
During 2011, to improve the Companys overall profitability in the EMEA region, the Company committed to close a customer contact management center in South Africa and a customer contact management center in Ireland, as well as some capacity rationalization in the Netherlands, all components of the EMEA segment. Through these actions, the Company expects to improve its cost structure in the EMEA region by optimizing its capacity utilization. While the Company migrated approximately $3.2 million of annualized call volumes of the Ireland facility to other facilities within EMEA, the Company did not migrate the remaining call volume in Ireland or any of the annualized revenue from the Netherlands or South Africa facilities, which was $18.8 million for 2011, to other facilities within the region. The number of seats rationalized across the EMEA region approximated 900 with approximately 500 employees affected by the actions. The Company closed these facilities and substantially completed the actions associated with the EMEA plan on September 30, 2012.
The major costs estimated 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 anticipated severance-related costs estimated at $6.7 million as of June 30, 2013 ($6.7 million as of December 31, 2012). The Company recorded $0.5 million of the costs associated with these actions as non-cash impairment charges, while approximately $6.2 million represents cash expenditures for severance and related costs and facility-related costs, primarily rent obligations to be paid through the remainder of the noncancelable term of the leases, the last of which ended in March 2013. The Company has paid $5.9 million in cash through June 30, 2013 under the Fourth Quarter 2011 Exit Plan in EMEA.
16
The following tables summarize the accrued liability associated with EMEAs Fourth Quarter 2011 Exit Plans exit or disposal activities and related charges for the three months ended June 30, 2013 and 2012 (in thousands):
Beginning Accrual at April 1, 2013 |
Charges (Reversals) for the Three Months Ended June 30, 2013 (1) |
Cash Payments | Other Non-Cash
Changes (2) |
Ending Accrual at June 30, 2013 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Severance and related costs |
182 | - | - | 2 | 184 | |||||||||||||||
Legal-related costs |
5 | 3 | (3) | - | 5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 187 | $ | 3 | $ | (3) | $ | 2 | $ | 189 | |||||||||||
|
|
|
|
|
|
|
|
|
|
Beginning Accrual at April 1, 2012 |
Charges (Reversals) for the Three Months Ended June 30, 2012 (1) |
Cash Payments | Other Non-Cash
Changes (2) |
Ending Accrual at June 30, 2012 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 595 | $ | - | $ | - | $ | (30) | $ | 565 | ||||||||||
Severance and related costs |
5,219 | (6) | (1,645) | (248) | 3,320 | |||||||||||||||
Legal-related costs |
14 | 21 | (28) | (2) | 5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 5,828 | $ | 15 | $ | (1,673) | $ | (280) | $ | 3,890 | |||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | During 2013 and 2012, the Company recorded additional legal-related costs, which are included in General and administrative costs in the accompanying Condensed Consolidated Statement of Operations. Additionally, during 2012 the Company reversed accruals related to the final settlement of severance and related costs, which reduced General and administrative costs in the accompanying Condensed Consolidated Statement of Operations for the South Africa site. |
(2) | Effect of foreign currency translation. |
The following tables summarize the accrued liability associated with EMEAs Fourth Quarter 2011 Exit Plans exit or disposal activities and related charges for the six months ended June 30, 2013 and 2012 (in thousands):
Beginning Accrual at January 1, 2013 |
Charges (Reversals) for the Six Months Ended June 30, 2013 (1) |
Cash Payments | Other Non-Cash
Changes (2) |
Ending Accrual at June 30, 2013 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
Severance and related costs |
187 | 6 | (7) | (2) | 184 | |||||||||||||||
Legal-related costs |
10 | 4 | (10) | 1 | 5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 197 | $ | 10 | $ | (17) | $ | (1) | $ | 189 | |||||||||||
|
|
|
|
|
|
|
|
|
|
Beginning Accrual at January 1, 2012 |
Charges (Reversals) for the Six Months Ended June 30, 2012 (1) |
Cash Payments | Other Non-Cash
Changes (2) |
Ending Accrual at June 30, 2012 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 577 | $ | - | $ | - | $ | (12) | $ | 565 | ||||||||||
Severance and related costs |
4,470 | 942 | (2,012) | (80) | 3,320 | |||||||||||||||
Legal related costs |
13 | 71 | (79) | - | 5 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
$ | 5,060 | $ | 1,013 | $ | (2,091) | $ | (92) | $ | 3,890 | |||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | During 2013 and 2012, the Company recorded additional severance and related costs and legal-related costs. |
(2) | Effect of foreign currency translation. |
The Company charged $0.7 million to Direct salaries and related costs for severance and related costs and $0.3 million to General and administrative costs for lease obligations and facility exit costs, severance and related costs and legal-related costs in the accompanying Consolidated Statement of Operations for the six months ended June 30, 2012.
17
Fourth Quarter 2010 Exit Plan
During 2010, in furtherance of the Companys long-term goals to manage and optimize capacity utilization, the Company committed to and closed a customer contact management center in the United Kingdom and a customer contact management center in Ireland, both components of the EMEA segment (the Fourth Quarter 2010 Exit Plan). These actions were substantially completed by January 31, 2011.
The major costs incurred as a result of these actions were 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 $2.2 million as of June 30, 2013 ($2.2 million as of December 31, 2012). The Company recorded $0.2 million of the costs associated with the Fourth Quarter 2010 Exit Plan as non-cash impairment charges. Approximately $1.8 million represents cash expenditures for facility-related costs, primarily rent obligations to be paid through the remainder of the lease terms, the last of which ends in March 2014, and $0.2 million represents cash expenditures for severance-related costs. The Company has paid $1.5 million in cash through June 30, 2013 under the Fourth Quarter 2010 Exit Plan.
The following tables summarize the accrued liability associated with the Fourth Quarter 2010 Exit Plans exit or disposal activities and related charges during the three months ended June 30, 2013 and 2012 (in thousands):
Beginning Accrual at April 1, 2013 |
Charges (Reversals) for the Three Months Ended June 30, 2013 |
Cash Payments |
Other Non-Cash Changes (1) |
Ending Accrual at June 30, 2013 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 449 | $ | - | $ | (100) | $ | 7 | $ | 356 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Beginning Accrual at April 1, 2012 |
Charges (Reversals) for the Three Months Ended June 30, 2012 |
Cash Payments |
Other Non-Cash Changes (1) |
Ending Accrual at June 30, 2012 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 764 | $ | - | $ | (68) | $ | (40) | $ | 656 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Effect of foreign currency translation. |
The following tables summarize the accrued liability associated with the Fourth Quarter 2010 Exit Plans exit or disposal activities and related charges during the six months ended June 30, 2013 and 2012 (in thousands):
Beginning Accrual at January 1, 2013 |
Charges (Reversals) for the Six Months Ended June 30, 2013 |
Cash Payments |
Other Non-Cash Changes (1) |
Ending Accrual at June 30, 2013 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 539 | $ | - | $ | (180) | $ | (3) | $ | 356 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Beginning Accrual at January 1, 2012 |
Charges (Reversals) for the Six Months Ended June 30, 2012 |
Cash Payments |
Other Non-Cash Changes (1) |
Ending Accrual at June 30, 2012 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 835 | $ | - | $ | (163) | $ | (16) | $ | 656 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Effect of foreign currency translation. |
18
Third Quarter 2010 Exit Plan
During 2010, consistent with the Companys long-term goals to manage and optimize capacity utilization, the Company closed or committed to close four customer contact management centers in The Philippines and consolidated or committed to consolidate leased space in our Wilmington, Delaware and Newtown, Pennsylvania locations (the Third Quarter 2010 Exit Plan). These actions were substantially completed by January 31, 2011.
The major costs incurred as a result of these actions were impairments of long-lived assets (primarily leasehold improvements) and facility-related costs (primarily consisting of those costs associated with the real estate leases) estimated at $10.5 million as of June 30, 2013 ($10.5 million as of December 31, 2012), all of which are in the Americas segment. The Company recorded $3.8 million of the costs associated with the Third Quarter 2010 Exit Plan as non-cash impairment charges. The remaining $6.7 million represents cash expenditures for facility-related costs, primarily rent obligations to be paid through the remainder of the lease terms, the last of which ends in February 2017. The Company has paid $4.6 million in cash through June 30, 2013 under the Third Quarter 2010 Exit Plan.
The following tables summarize the accrued liability associated with the Third Quarter 2010 Exit Plans exit or disposal activities and related charges for the three months ended June 30, 2013 and 2012 (in thousands):
Beginning Accrual at April 1, 2013 |
Charges (Reversals) for the Three Months Ended June 30, 2013 |
Cash Payments | Other Non-Cash
Changes |
Ending Accrual at June 30, 2013 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 2,328 | $ | - | $ | (163) | $ | - | $ | 2,165 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Beginning Accrual at April 1, 2012 |
Charges (Reversals) for the Three Months Ended June 30, 2012 |
Cash Payments | Other Non-Cash
Changes |
Ending Accrual at June 30, 2012 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 2,950 | $ | - | $ | (195) | $ | - | $ | 2,755 | ||||||||||
|
|
|
|
|
|
|
|
|
|
The following tables summarize the accrued liability associated with the Third Quarter 2010 Exit Plans exit or disposal activities and related charges for the six months ended June 30, 2013 and 2012 (in thousands):
Beginning Accrual at January 1, 2013 |
Charges (Reversals) for the Six Months Ended June 30, 2013 |
Cash Payments | Other Non-Cash
Changes (1) |
Ending Accrual at June 30, 2013 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 2,551 | $ | - | $ | (385) | $ | (1) | $ | 2,165 | ||||||||||
|
|
|
|
|
|
|
|
|
|
Beginning Accrual at January 1, 2012 |
Charges (Reversals) for the Six Months Ended June 30, 2012 |
Cash Payments | Other Non-Cash
Changes (1) |
Ending Accrual at June 30, 2012 |
||||||||||||||||
Lease obligations and facility exit costs |
$ | 3,427 | $ | - | $ | (672) | $ | - | $ | 2,755 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Effect of foreign currency translation. |
19
Restructuring Liability Classification
The following table summarizes the Companys short-term and long-term accrued liabilities associated with its exit and disposal activities, by plan, as of June 30, 2013 and December 31, 2012 (in thousands):
Americas Fourth Quarter 2011 Exit Plan |
EMEA Fourth Quarter 2011 Exit Plan |
Fourth Quarter 2010 Exit Plan |
Third Quarter 2010 Exit Plan |
Total | ||||||||||||||||
June 30, 2013 |
||||||||||||||||||||
Short-term accrued restructuring liability (1) |
$ | 145 | $ | 189 | $ | 356 | $ | 516 | $ | 1,206 | ||||||||||
Long-term accrued restructuring liability (2) |
461 | - | - | 1,649 | 2,110 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending accrual at June 30, 2013 |
$ | 606 | $ | 189 | $ | 356 | $ | 2,165 | $ | 3,316 | ||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
December 31, 2012 |
||||||||||||||||||||
Short-term accrued restructuring liability (1) |
$ | 138 | $ | 197 | $ | 448 | $ | 618 | $ | 1,401 | ||||||||||
Long-term accrued restructuring liability (2) |
544 | - | 91 | 1,933 | 2,568 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|||||||||||
Ending accrual at December 31, 2012 |
$ | 682 | $ | 197 | $ | 539 | $ | 2,551 | $ | 3,969 | ||||||||||
|
|
|
|
|
|
|
|
|
|
(1) | Included in Other accrued expenses and current liabilities in the accompanying Condensed Consolidated Balance Sheets. |
(2) | Included in Other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets. |
Note 5. Fair Value
ASC 820 Fair Value Measurements and Disclosures (ASC 820) requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which 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 Companys 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:
| Level 1 Quoted prices for identical instruments in active markets. |
| 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. |
| Level 3 Valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
Fair Value of Financial Instruments The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
| Cash, Short-Term and Other Investments, Investments Held in Rabbi Trust and Accounts Payable The carrying values for cash, short-term and other investments, investments held in rabbi trust and accounts payable approximate their fair values. |
| Foreign Currency Forward Contracts and Options Foreign currency forward contracts and options, including premiums paid on options, are recognized at fair value based on 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. |
| Long-Term Debt The carrying value of long-term debt approximates its estimated fair value as it re-prices at varying interest rates. |
Fair Value Measurements ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820-10-20 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.
ASC 825 Financial Instruments (ASC 825) permits an entity to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The Company has not elected to use the fair value option permitted under ASC 825 for any of its financial assets and financial liabilities that are not already recorded at fair value.
20
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 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.
The following section 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.
Money Market and Open-End Mutual Funds The Company uses quoted market prices in active markets to determine the fair value of money market and open-end mutual funds, which are classified in Level 1 of the fair value hierarchy.
Foreign Currency Forward Contracts and Options The Company enters into foreign currency forward contracts and options over the counter and values such contracts 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 14, Investments Held in Rabbi Trust, and Note 27, Stock-Based Compensation.
Guaranteed Investment Certificates Guaranteed investment certificates, with variable interest rates linked to the prime rate, approximate fair value due to the automatic ability to re-price with changes in the market; such items are classified in Level 2 of the fair value hierarchy.
21
The Companys assets and liabilities measured at fair value on a recurring basis subject to the requirements of ASC 820 consist of the following (in thousands):
Fair Value Measurements at June 30, 2013 Using: | ||||||||||||||||||
Balance at | Quoted Prices in Active Markets For Identical Assets |
Significant Other Observable Inputs |
Significant Unobservable Inputs |
|||||||||||||||
June 30, 2013 | Level (1) | Level (2) | Level (3) | |||||||||||||||
Assets: |
||||||||||||||||||
Money market funds and open-end mutual funds included in Cash and cash equivalents |
(1) | $ | 7,506 | $ | 7,506 | $ | - | $ | - | |||||||||
Money market funds and open-end mutual funds in Deferred charges and other assets |
(1) | 11 | 11 | - | - | |||||||||||||
Foreign currency forward and option contracts |
(2) | 2,053 | - | 2,053 | - | |||||||||||||
Foreign currency forward contracts |
(3) | 263 | - | 263 | - | |||||||||||||
Equity investments held in a rabbi trust for the Deferred Compensation Plan |
(4) | 4,132 | 4,132 | - | - | |||||||||||||
Debt investments held in a rabbi trust for the Deferred Compensation Plan |
(4) | 1,089 | 1,089 | - | - | |||||||||||||
Guaranteed investment certificates |
(5) | 80 | - | 80 | - | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
$ | 15,134 | $ | 12,738 | $ | 2,396 | $ | - | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Liabilities: |
||||||||||||||||||
Long-term debt |
(6) | $ | 113,000 | $ | - | $ | 113,000 | $ | - | |||||||||
Foreign currency forward and option contracts |
(7) | 4,249 | - | 4,249 | - | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
$ | 117,249 | $ | - | $ | 117,249 | $ | - | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
(1) In the accompanying Condensed Consolidated Balance Sheet. (2) Included in Other current assets in the accompanying Condensed Consolidated Balance Sheet. See Note 7. (3) Included in Deferred charges and other assets in the accompanying Condensed Consolidated Balance Sheet. See Note 7. (4) Included in Other current assets in the accompanying Condensed Consolidated Balance Sheet. See Note 8. (5) Included in Deferred charges and other assets in the accompanying Condensed Consolidated Balance Sheet. (6) The carrying value of long-term debt, including the current portion thereof, approximates its estimated fair value as it re-prices at varying interest rates. See Note 11. (7) Included in Other accrued expenses and current liabilities in the accompanying Condensed Consolidated Balance Sheet. See Note 7. |
|
The Companys assets and liabilities measured at fair value on a recurring basis subject to the requirements of ASC 820 consist of the following (in thousands):
Fair Value Measurements at December 31, 2012 Using: | ||||||||||||||||||
Balance at | Quoted Prices in Active Markets For Identical Assets |
Significant Other Observable Inputs |
Significant Unobservable Inputs |
|||||||||||||||
December 31, 2012 | Level (1) | Level (2) | Level (3) | |||||||||||||||
Assets: |
||||||||||||||||||
Money market funds and open-end mutual funds included in Cash and cash equivalents |
(1) | $ | 7,598 | $ | 7,598 | $ | - | $ | - | |||||||||
Money market funds and open-end mutual funds in Deferred charges and other assets |
(1) | 11 | 11 | - | - | |||||||||||||
Foreign currency forward and option contracts |
(2) | 2,008 | - | 2,008 | - | |||||||||||||
Equity investments held in a rabbi trust for the Deferred Compensation Plan |
(3) | 3,212 | 3,212 | - | - | |||||||||||||
Debt investments held in a rabbi trust for the Deferred Compensation Plan |
(3) | 2,049 | 2,049 | - | - | |||||||||||||
Guaranteed investment certificates |
(4) | 80 | - | 80 | - | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
$ | 14,958 | $ | 12,870 | $ | 2,088 | $ | - | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
Liabilities: |
||||||||||||||||||
Long-term debt |
(5) | $ | 91,000 | $ | - | $ | 91,000 | $ | - | |||||||||
Foreign currency forward and option contracts |
(6) | 974 | - | 974 | - | |||||||||||||
|
|
|
|
|
|
|
|
|||||||||||
$ | 91,974 | $ | - | $ | 91,974 | $ | - | |||||||||||
|
|
|
|
|
|
|
|
|||||||||||
(1) In the accompanying Condensed Consolidated Balance Sheet. (2) Included in Other current assets in the accompanying Condensed Consolidated Balance Sheet. See Note 7. (3) Included in Other current assets in the accompanying Condensed Consolidated Balance Sheet. See Note 8. (4) Included in Deferred charges and other assets in the accompanying Condensed Consolidated Balance Sheet. (5) The carrying value of long-term debt, including the current portion thereof, approximates its estimated fair value as it re-prices at varying interest rates. See Note 11. (6) Included in Other accrued expenses and current liabilities in the accompanying Condensed Consolidated Balance Sheet. See Note 7. |
|
22
Certain assets, under certain conditions, are measured at fair value on a nonrecurring basis utilizing Level 3 inputs, like those associated with acquired businesses, including goodwill, other intangible assets and other long-lived assets. For these assets, measurement at fair value in periods subsequent to their initial recognition would be applicable if these assets were determined to be impaired. The adjusted carrying values for assets measured at fair value on a nonrecurring basis (no liabilities) subject to the requirements of ASC 820 were not material at December 31, 2012 (none at June 30, 2013).
The following table summarizes the total impairment losses related to nonrecurring fair value measurements of certain assets (no liabilities) subject to the requirements of ASC 820 (in thousands):
Total Impairment (Loss) | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Americas: |
||||||||||||||||
Property and equipment, net |
$ | - | $ | - | $ | - | $ | (149) | ||||||||
|
|
|
|
|
|
|
|
During the six months ended June 30, 2012, as part of an on-going effort to streamline excess capacity related to the integration of the ICT acquisition and align it with the needs of the market, the Company closed one of its customer contact management centers in Costa Rica (a component of the Americas segment), and recorded an impairment charge of $0.1 million for the carrying value of the long-lived assets that could not be redeployed to other locations.
Note 6. Intangible Assets
The following table presents the Companys purchased intangible assets as of June 30, 2013 (in thousands):
Gross Intangibles | Accumulated Amortization |
Net Intangibles | Weighted Average
Amortization Period (years) |
|||||||||||||
Customer relationships |
$ | 103,050 | $ | (29,564) | $ | 73,486 | 8 | |||||||||
Trade name |
11,600 | (2,141) | 9,459 | 8 | ||||||||||||
Non-compete agreements |
1,221 | (845) | 376 | 2 | ||||||||||||
Proprietary software |
850 | (831) | 19 | 2 | ||||||||||||
Favorable lease agreement |
450 | (194) | 256 | 2 | ||||||||||||
|
|
|
|
|
|
|||||||||||
$ | 117,171 | $ | (33,575) | $ | 83,596 | 8 | ||||||||||
|
|
|
|
|
|
The following table presents the Companys purchased intangible assets as of December 31, 2012 (in thousands):
Gross Intangibles | Accumulated Amortization |
Net Intangibles | Weighted Average
Amortization Period (years) |
|||||||||||||
Customer relationships |
$ | 104,483 | $ | (23,552) | $ | 80,931 | 8 | |||||||||
Trade name |
11,600 | (1,451) | 10,149 | 8 | ||||||||||||
Non-compete agreements |
1,229 | (681) | 548 | 2 | ||||||||||||
Proprietary software |
850 | (810) | 40 | 2 | ||||||||||||
Favorable lease agreement |
450 | (81) | 369 | 2 | ||||||||||||
|
|
|
|
|
|
|||||||||||
$ | 118,612 | $ | (26,575) | $ | 92,037 | 8 | ||||||||||
|
|
|
|
|
|
23
The Companys estimated future amortization expense for the succeeding years relating to the purchased intangible assets resulting from acquisitions completed prior to June 30, 2013, is as follows (in thousands):
Years Ending December 31, | Amount | |||
|
||||
2013 (remaining six months) |
$ | 7,321 | ||
2014 |
14,530 | |||
2015 |
14,173 | |||
2016 |
14,173 | |||
2017 |
14,173 | |||
2018 |
7,650 | |||
2019 and thereafter |
11,576 |
Note 7. 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 contracts are entered into to protect against the risk that the eventual cash flows resulting from such transactions will be adversely affected by changes in exchange rates.
The deferred gains (losses) and related taxes on the Companys derivative instruments recorded in Accumulated other comprehensive income (loss) (AOCI) in the accompanying Condensed Consolidated Balance Sheets are as follows (in thousands):
June 30, 2013 | December 31, 2012 | |||||||
Deferred gains (losses) in AOCI |
$ | (3,083) | $ | (512) | ||||
Tax on deferred gains (losses) in AOCI |
335 | (58) | ||||||
|
|
|
|
|||||
Deferred gains (losses) in AOCI, net of taxes |
$ | (2,748) | $ | (570) | ||||
|
|
|
|
|||||
Deferred gains (losses) expected to be reclassified to Revenues from AOCI during the next twelve months | $ | (3,083) | ||||||
|
|
Deferred gains (losses) and other future reclassifications from AOCI will fluctuate with movements in the underlying market price of the forward contracts and options.
Net Investment Hedge During 2013, the Company entered into foreign exchange forward contracts to hedge its net investment in a foreign operation, as defined under ASC 815. The Company did not hedge net investments in foreign operations during 2012. The purpose of these derivative instruments is to protect the Companys interests against the risk that the net assets of certain foreign subsidiaries will be adversely affected by changes in exchange rates and economic exposures related to the Companys foreign currency-based investments in these subsidiaries.
Other Hedges 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 Companys interests against adverse foreign currency moves pertaining to intercompany receivables and payables, and other assets and liabilities that are denominated in currencies other than the Companys subsidiaries functional currencies. These contracts generally do not exceed 180 days in duration.
24
The Company had the following outstanding foreign currency forward contracts and options (in thousands):
As of June 30, 2013 | As of December 31, 2012 | |||||||||||||
Contract Type |
Notional Amount in USD |
Settle Through |
Notional Amount in USD |
Settle Through
Date |
||||||||||
Cash flow hedges: (1) |
||||||||||||||
Options: |
||||||||||||||
Philippine Pesos |
$ | 73,000 | October 2014 | $ | 71,000 | September 2013 | ||||||||
Forwards: |
||||||||||||||
Philippine Pesos |
80,500 | March 2014 | 5,000 | August 2013 | ||||||||||
Costa Rican Colones |
48,250 | June 2014 | 60,750 | December 2013 | ||||||||||
Hungarian Forints |
3,643 | January 2014 | 4,744 | January 2014 | ||||||||||
Romanian Leis |
4,001 | January 2014 | 6,895 | January 2014 | ||||||||||
Net investment hedges: (2) |
||||||||||||||
Forwards: |
||||||||||||||
Euros |
32,657 | September 2014 | - | - | ||||||||||
Non-designated hedges: (3) |
||||||||||||||
Forwards |
38,963 | December 2013 | 41,799 | June 2013 | ||||||||||
(1) Cash flow hedge as defined under ASC 815. Purpose is to protect against the risk that eventual cash flows resulting from such transactions will be adversely affected by changes in exchange rates. (2) Net investment hedge as defined under ASC 815. Purpose is to protect against the risk that the net assets of certain of our international subsidiaries will be adversely affected by changes in exchange rates and economic exposures related to our foreign currency-based investments in these subsidiaries. (3) Foreign currency hedge contract not designated as a hedge as defined under ASC 815. Purpose is to reduce the effects on the Companys operating results and cash flows from fluctuations caused by volatility in currency exchange rates, primarily related to intercompany loan payments and cash held in non-functional currencies. |
|
As of June 30, 2013, the maximum amount of loss due to credit risk that the Company would incur if parties to the financial instruments that make up the concentration failed to perform according to the terms of the contracts was $2.3 million, based on the gross fair value of the financial instruments.
Master netting agreements exist with each respective counterparty used to transact foreign exchange derivatives. These agreements allow the Company to net settle transactions of the same currency in a single transaction. 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 the currency and settlement date. However, 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.
25
The following tables present the fair value of the Companys derivative instruments included in the accompanying Condensed Consolidated Balance Sheets (in thousands):
Derivative Assets | ||||||||
June 30, 2013 | December 31, 2012 | |||||||
Fair Value | Fair Value | |||||||
Derivatives designated as cash flow hedging instruments under ASC 815: |
||||||||
Foreign currency forward and option contracts (1) |
$ | 1,686 | $ | 1,080 | ||||
Foreign currency forward and option contracts (2) |
227 | 14 | ||||||
|
|
|
|
|||||
1,913 | 1,094 | |||||||
Derivatives designated as net investment hedging instruments under ASC 815: |
||||||||
Foreign currency forward contracts (2) |
36 | - | ||||||
Derivatives not designated as hedging instruments under ASC 815: |
||||||||
Foreign currency forward contracts(1) |
367 | 914 | ||||||
|
|
|
|
|||||
Total derivative assets |
$ | 2,316 | $ | 2,008 | ||||
|
|
|
|
|||||
Derivative Liabilities | ||||||||
June 30, 2013 | December 31, 2012 | |||||||
Fair Value | Fair Value | |||||||
Derivatives designated as cash flow hedging instruments under ASC 815: |
||||||||
Foreign currency forward and option contracts (3) |
$ | 4,103 | $ | 904 | ||||
Foreign currency forward and option contracts (4) |
34 | 8 | ||||||
|
|
|
|
|||||
4,137 | 912 | |||||||
Derivatives not designated as hedging instruments under ASC 815: |
||||||||
Foreign currency forward contracts (3) |
112 | 62 | ||||||
|
|
|
|
|||||
Total derivative liabilities |
$ | 4,249 | $ | 974 | ||||
|
|
|
|
(1) Included in Other current assets in the accompanying Condensed Consolidated Balance Sheets. (2) Included in Deferred charges and other assets in the accompanying Condensed Consolidated Balance Sheets. (3) Included in Other accrued expenses and current liabilities in the accompanying Condensed Consolidated Balance Sheets. (4) Included in Other long-term liabilities in the accompanying Condensed Consolidated Balance Sheets. |
26
The following tables present the effect of the Companys derivative instruments included in the accompanying Condensed Consolidated Financial Statements for the three months ended June 30, 2013 and 2012 (in thousands):
Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) |
Gain (Loss)
Reclassified From Accumulated AOCI Into Revenues (Effective Portion) |
Gain (Loss) Recognized
in Revenues on Derivatives (Ineffective Portion) |
||||||||||||||||||||||
June 30, | June 30, | June 30, | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
Derivatives designated as cash flow hedging instruments under ASC 815: | ||||||||||||||||||||||||
Foreign currency forward and option contracts | $ | (4,461) | $ | 1,289 | $ | 68 | $ | 419 | $ | (37) | $ | 3 | ||||||||||||
Derivatives designated as net investment hedging instruments under ASC 815: | ||||||||||||||||||||||||
Foreign currency forward contracts |
(397) | - | - | - | - | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Foreign currency forward and option contracts |
$ | (4,858) | $ | 1,289 | $ | 68 | $ | 419 | $ | (37) | $ | 3 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Recognized
in Other income and (expense) on Derivatives |
||||||||
June 30, | ||||||||
2013 | 2012 | |||||||
Derivatives not designated as hedging instruments under ASC 815: |
||||||||
Foreign currency forward contracts |
$ | 2,755 | $ | 275 | ||||
|
|
|
|
The following tables present the effect of the Companys derivative instruments included in the accompanying Condensed Consolidated Financial Statements for the six months ended June 30, 2013 and 2012 (in thousands):
Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion) |
Gain (Loss)
Reclassified From Accumulated AOCI Into Revenues (Effective Portion) |
Gain (Loss) Recognized
in Revenues on Derivatives (Ineffective Portion) |
||||||||||||||||||||||
June 30, | June 30, | June 30, | ||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||
Derivatives designated as cash flow hedging instruments under ASC 815: | ||||||||||||||||||||||||
Foreign currency forward and option contracts | $ | (1,744) | $ | 3,963 | $ | 799 | $ | 659 | $ | (25) | $ | 17 | ||||||||||||
Derivatives designated as net investment hedging instruments under ASC 815: | ||||||||||||||||||||||||
Foreign currency forward contracts |
36 | - | - | - | - | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Foreign currency forward and option contracts |
$ | (1,708) | $ | 3,963 | $ | 799 | $ | 659 | $ | (25) | $ | 17 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
Gain (Loss) Recognized
in Other income and (expense) on Derivatives |
||||||||
June 30, | ||||||||
2013 | 2012 | |||||||
Derivatives not designated as hedging instruments under ASC 815: |
||||||||
Foreign currency forward contracts |
$ | 2,230 | $ | (197) | ||||
|
|
|
|
27
Note 8. Investments Held in Rabbi Trust
The Companys 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):
June 30, 2013 | December 31, 2012 | |||||||||||||||
Cost | Fair Value | Cost | Fair Value | |||||||||||||
Mutual funds |
$ | 4,229 | $ | 5,221 | $ | 4,812 | $ | 5,261 | ||||||||
|
|
|
|
|
|
|
|
The mutual funds held in the rabbi trusts were 79% equity-based and 21% debt-based as of June 30, 2013. Net investment income (losses), included in Other income (expense) in the accompanying Condensed Consolidated Statements of Operations consists of the following (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Gross realized gains from sale of trading securities |
$ | 16 | $ | - | $ | 112 | $ | 81 | ||||||||
Gross realized (losses) from sale of trading securities |
(5) | - | (8) | (1) | ||||||||||||
Dividend and interest income |
8 | 12 | 18 | 20 | ||||||||||||
Net unrealized holding gains (losses) |
1 | (194) | 196 | 164 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net investment income (losses) |
$ | 20 | $ | (182) | $ | 318 | $ | 264 | ||||||||
|
|
|
|
|
|
|
|
Note 9. Deferred Revenue
The components of deferred revenue consist of the following (in thousands):
June 30, 2013 | December 31, 2012 | |||||||
Future service |
$ | 25,774 | $ | 25,074 | ||||
Estimated potential penalties and holdbacks |
9,375 | 9,209 | ||||||
|
|
|
|
|||||
$ | 35,149 | $ | 34,283 | |||||
|
|
|
|
Note 10. Deferred Grants
The components of deferred grants consist of the following (in thousands):
June 30, 2013 | December 31, 2012 | |||||||
Property grants |
$ | 6,800 | $ | 7,270 | ||||
Employment grants |
469 | 337 | ||||||
|
|
|
|
|||||
Total long-term deferred grants (1) |
$ | 7,269 | $ | 7,607 | ||||
|
|
|
|
(1) Included in Deferred grants in the accompanying Condensed Consolidated Balance Sheets. |
Amortization of the Companys property grants included as a reduction to General and administrative costs and amortization of the Companys employment grants included as a reduction to Direct salaries and related costs in the accompanying Condensed Consolidated Statements of Operations consist of the following (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Amortization of property grants |
$ | 235 | $ | 235 | $ | 470 | $ | 470 | ||||||||
Amortization of employment grants |
85 | 54 | 103 | 72 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | 320 | $ | 289 | $ | 573 | $ | 542 | |||||||||
|
|
|
|
|
|
|
|
28
Note 11. Borrowings
On May 3, 2012, the Company entered into a $245 million revolving credit facility (the 2012 Credit Agreement) with a group of lenders and KeyBank National Association, as Lead Arranger, Sole Book Runner and Administrative Agent (KeyBank). The 2012 Credit Agreement replaced the Companys previous $75 million revolving credit facility (the 2010 Credit Agreement) dated February 2, 2010, as amended, which agreement was terminated simultaneous with entering into the 2012 Credit Agreement. The 2012 Credit Agreement is subject to certain borrowing limitations and includes certain customary financial and restrictive covenants. The Company borrowed $108.0 million under the 2012 Credit Agreements revolving credit facility on August 20, 2012 in connection with the acquisition of Alpine on such date. See Note 2, Acquisition of Alpine Access, Inc., for further information.
The 2012 Credit Agreement includes a $184 million alternate-currency sub-facility, a $10 million swingline sub-facility and a $35 million letter of credit sub-facility, and may be used for general corporate purposes including acquisitions, share repurchases, working capital support and letters of credit, subject to certain limitations. The Company is not currently aware of any inability of its lenders to provide access to the full commitment of funds that exist under the revolving credit facility, if necessary. However, there can be no assurance that such facility will be available to the Company, even though it is a binding commitment of the financial institutions.
Borrowings consist of the following (in thousands):
June 30, 2013 | December 31, 2012 | |||||||
Revolving credit facility |
$ | 113,000 | $ | 91,000 | ||||
Less: Current portion |
- | - | ||||||
|
|
|
|
|||||
Total long-term debt |
$ | 113,000 | $ | 91,000 | ||||
|
|
|
|
The 2012 Credit Agreement matures on May 2, 2017 and has no varying installments due.
Borrowings under the 2012 Credit Agreement will bear interest at either LIBOR or the base rate plus, in each case, an applicable margin based on the Companys leverage ratio. The applicable interest rate will be determined quarterly based on the Companys leverage ratio at such time. The base rate is a rate per annum equal to the greatest of (i) the rate of interest established by KeyBank, from time to time, as its prime rate; (ii) the Federal Funds effective rate in effect from time to time, plus 1/2 of 1% per annum; and (iii) the then-applicable LIBOR rate for one month interest periods, plus 1.00%. Swingline loans will bear interest only at the base rate plus the base rate margin. In addition, the Company is required to pay certain customary fees, including a commitment fee of 0.175%, which is due quarterly in arrears and calculated on the average unused amount of the 2012 Credit Agreement.
The 2012 Credit Agreement is guaranteed by all of the Companys existing and future direct and indirect material U.S. subsidiaries and secured by a pledge of 100% of the non-voting and 65% of the voting capital stock of all the direct foreign subsidiaries of the Company and those of the guarantors.
In May 2012, the Company paid an underwriting fee of $0.9 million for the 2012 Credit Agreement, which is deferred and amortized over the term of the loan. In addition, the Company pays a quarterly commitment fee on the 2012 Credit Agreement.
The 2012 Credit Agreement had $113.0 million of outstanding borrowings as of June 30, 2013, with an average daily utilization of $105.8 million and $98.5 million for the three and six months ended June 30, 2013, respectively (none in the comparable periods in 2012). During the three and six months ended June 30, 2013, the related interest expense, excluding amortization of deferred loan fees, under our credit agreements was $0.4 million and $0.7 million, respectively, which represented a weighted average interest rate of 1.5% and 1.5%, respectively (none in the comparable periods in 2012).
29
Note 12. Accumulated Other Comprehensive Income (Loss)
The Company presents data in the Condensed Consolidated Statements of Changes in Shareholders Equity in accordance with ASC 220 Comprehensive Income (ASC 220). ASC 220 establishes rules for the reporting of comprehensive income (loss) and its components. The components of accumulated other comprehensive income (loss) consist of the following (in thousands):
Foreign Currency Translation Gain (Loss) |
Unrealized Gain (Loss) on Net Investment Hedge |
Unrealized Actuarial Gain (Loss) Related to Pension Liability |
Unrealized Gain (Loss) on Cash Flow Hedging Instruments |
Unrealized Gain (Loss) on Post Retirement Obligation |
Total | |||||||||||||||||||
Balance at January 1, 2012 |
$ | 5,995 | $ | (2,565) | $ | 985 | $ | (438) | $ | 459 | $ | 4,436 | ||||||||||||
Pre-tax amount |
9,516 | - | 499 | 4,417 | 92 | 14,524 | ||||||||||||||||||
Tax (provision) benefit |
- | - | (90) | (306) | - | (396) | ||||||||||||||||||
Reclassification to net income |
570 | - | (48) | (4,174) | (56) | (3,708) | ||||||||||||||||||
Foreign currency translation |
2 | - | 67 | (69) | - | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at December 31, 2012 |
16,083 | (2,565) | 1,413 | (570) | 495 | 14,856 | ||||||||||||||||||
Pre-tax amount |
(10,197) | 36 | - | (1,769) | (59) | (11,989) | ||||||||||||||||||
Tax (provision) benefit |
- | (13) | - | 378 | - | 365 | ||||||||||||||||||
Reclassification to net income |
- | - | (29) | (762) | (30) | (821) | ||||||||||||||||||
Foreign currency translation |
92 | - | (67) | (25) | - | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Balance at June 30, 2013 |
$ | 5,978 | $ | (2,542) | $ | 1,317 | $ | (2,748) | $ | 406 | $ | 2,411 | ||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
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 June 30, 2013 |
Six Months Ended June 30, 2013 |
Income Statement Location | ||||||||
Unrealized Actuarial Gain (Loss) Related to Pension Liability: (1) |
||||||||||
Pre-tax amount |
$ | 19 | $ | 29 | Direct salaries and related costs | |||||
Tax (provision) benefit |
- | - | Income taxes | |||||||
|
|
|
|
|||||||
Reclassification to net income |
19 | 29 | ||||||||
Unrealized Gain (Loss) on Cash Flow Hedging Instruments: (2) |
||||||||||
Pre-tax amount |
31 | 774 | Revenues | |||||||
Tax (provision) benefit |
54 | (12) | Income taxes | |||||||
|
|
|
|
|||||||
Reclassification to net income |
85 | 762 | ||||||||
Unrealized Gain (Loss) on Post Retirement Obligation: (1) |
||||||||||
Pre-tax amount |
14 | 30 | General and administrative | |||||||
Tax (provision) benefit |
- | - | Income taxes | |||||||
|
|
|
|
|||||||
Reclassification to net income |
14 | 30 | ||||||||
|
|
|
|
|||||||
Total reclassification to net income |
$ | 118 | $ | 821 | ||||||
|
|
|
|
(1) See Note 16, Defined Benefit Pension Plan and Postretirement Benefits, for further information.
(2) See Note 7, Financial Derivatives, for further information.
Except as discussed in Note 13, Income Taxes, earnings associated with the Companys investments in its subsidiaries are considered to be indefinitely invested and no provision for income taxes on those earnings or translation adjustments have been provided.
30
Note 13. Income Taxes
The Companys effective tax rate was (14.0)% and 6.2% for the three months ended June 30, 2013 and 2012, respectively. The decrease in the effective tax rate is primarily due to the fluctuation in earnings among the various tax jurisdictions in which the Company operates. The difference between the Companys effective tax rate of (14.0)% as compared to the U.S. statutory federal income tax rate of 35.0% was primarily due to the recognition of tax benefits resulting from income earned in certain tax holiday jurisdictions, foreign tax rate differentials, changes in unrecognized tax positions and tax credits, offset by the tax impact of permanent differences, adjustments of valuation allowances and foreign withholding taxes.
The Companys effective tax rate was 17.2% and 17.3% for the six months ended June 30, 2013 and 2012, respectively. The decrease in the effective tax rate is primarily due to the fluctuation of earnings among the various tax jurisdictions in which the Company operates offset by the retroactive tax impact of The American Taxpayer Relief Act of 2012 that was signed into law on January 2, 2013. The difference between the Companys effective tax rate of 17.2% as compared to the U.S. statutory federal income tax rate of 35.0% was primarily due to the aforementioned legislation and the recognition of tax benefits resulting from income earned in certain tax holiday jurisdictions, foreign tax rate differentials, changes in unrecognized tax positions and tax credits, offset by the tax impact of permanent differences, adjustments of valuation allowances and foreign withholding taxes.
The liability for unrecognized tax benefits is recorded as Long-term income tax liabilities in the accompanying Condensed Consolidated Balance Sheets. The Company has accrued $15.3 million at June 30, 2013 and $16.9 million at December 31, 2012, excluding penalties and interest. The $1.6 million decrease results primarily from fluctuations in foreign exchange rates.
Generally, earnings associated with the investments in the Companys foreign subsidiaries are considered to be indefinitely invested outside of the U.S. Therefore, a U.S. provision for income taxes on those earnings or translation adjustments has not been recorded, as permitted by criterion outlined in ASC 740 Income Taxes. Determination of any unrecognized deferred tax liability for temporary differences related to investments in foreign subsidiaries that are essentially permanent in nature is not practicable.
In 2013, the Company executed offshore cash movements to take advantage of The American Taxpayer Relief Act of 2012 (the Act) passed on January 2, 2013, with retroactive application to January 1, 2012. This Act, which extended the tax provisions of the Internal Revenue Code Section 954(c)(6) through the end of 2013, permits continued tax deferral on such movements that would otherwise be taxable immediately in the U.S. While these cash movements are not taxable in the U.S., related foreign withholding taxes of $2.6 million were included in the provision for income taxes in the accompanying Condensed Consolidated Statements of Operations for the six months ended June 30, 2013.
In addition, the U.S. Department of the Treasury released the General Explanations of the Administrations Fiscal Year 2014 Revenue Proposals in April 2013. These proposals represent a significant shift in international tax policy, which may materially impact U.S. taxation of international earnings. The Company continues to monitor these proposals and is currently evaluating the potential impact on its financial condition, results of operations and cash flows.
The Company is currently under audit in several tax jurisdictions. In April 2012, the Company received an assessment for the Canadian 2003-2006 audit for which the Company filed a Notice of Objection in July 2012. A request for Competent Authority Assistance was filed with the Canadian Revenue Agency in June 2013. As required by the Notice of Objection process, the Company paid mandatory security deposits in the amount of $14.1 million to the Canadian tax authorities in 2012. In January 2013, the Company received a partial assessment for the Canadian 2007-2009 audit. The Company paid the Canadian Revenue Agency an additional security deposit of $0.3 million for the 2007 tax year. These deposits are included in Deferred charges and other assets in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012. Although the outcome of examinations by taxing authorities is always uncertain, the Company believes it is adequately reserved for these audits and that resolution is not expected to have a material impact on its financial condition and results of operations.
31
The significant tax jurisdictions currently under audit are as follows:
Tax Jurisdiction | Tax Year Ended | |
| ||
Canada |
2003 to 2009 | |
Philippines |
2007 and 2009 | |
United States |
2010 to 2012 |
Note 14. Earnings Per Share
Basic earnings per share are based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share includes the weighted average number of common shares outstanding during the respective periods and the further dilutive effect, if any, from stock options, stock appreciation rights, restricted stock, restricted stock units and shares held in a rabbi trust using the treasury stock method.
The numbers of shares used in the earnings per share computation are as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
|
|
|
|
|||||||||||||
Basic: |
||||||||||||||||
Weighted average common shares outstanding |
42,936 | 43,094 | 42,992 | 43,205 | ||||||||||||
Diluted: |
||||||||||||||||
Dilutive effect of stock options, stock appreciation rights, restricted stock, restricted stock units and shares held in a rabbi trust |
18 | 9 | 19 | 51 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total weighted average diluted shares outstanding |
42,954 | 43,103 | 43,011 | 43,256 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Anti-dilutive shares excluded from the diluted earnings per share calculation | 7 | 7 | 4 | 13 | ||||||||||||
|
|
|
|
|
|
|
|
On August 18, 2011, the Companys Board authorized the Company to purchase up to 5.0 million shares of its outstanding common stock (the 2011 Share Repurchase Program). A total of 3.3 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. The Companys Board previously authorized the Company on August 5, 2002 to purchase up to 3.0 million shares of its outstanding common stock, the last of which were repurchased during 2011.
The shares repurchased under the Companys share repurchase programs were as follows (in thousands, except per share amounts):
Total Number of Shares Repurchased |
Range of Prices Paid Per Share |
Total Cost of Shares Repurchased |
||||||||||||||
Low | High | |||||||||||||||
|
|
|
|
|
|
|
||||||||||
Three Months Ended: |
||||||||||||||||
June 30, 2013 |
272 | $ | 15.61 | $ | 16.00 | $ | 4,294 | |||||||||
June 30, 2012 |
85 | $ | 14.90 | $ | 15.00 | $ | 1,261 | |||||||||
Six Months Ended: |
||||||||||||||||
June 30, 2013 |
272 | $ | 15.61 | $ | 16.00 | $ | 4,294 | |||||||||
June 30, 2012 |
508 | $ | 13.85 | $ | 15.00 | $ | 7,461 |
32
Note 15. Commitments and Loss Contingency
Commitments
During the six months ended June 30, 2013, the Company entered into several leases in the ordinary course of business. The following is a schedule of future minimum rental payments required under operating leases that have noncancelable lease terms as of June 30, 2013 (in thousands):
Amount | ||||
|
||||
2013 (remaining six months) |
$ | 982 | ||
2014 |
3,074 | |||
2015 |
2,776 | |||
2016 |
1,684 | |||
2017 |
1,537 | |||
2018 |
1,250 | |||
2019 and thereafter |
1,191 | |||
|
|
|||
Total minimum payments required |
$ | 12,494 | ||
|
|
During the six months ended June 30, 2013, the Company entered into agreements with third-party vendors in the ordinary course of business whereby the Company committed to purchase goods and services used in its normal operations. These agreements, which are not cancelable, generally range from one to five year periods and contain fixed or minimum annual commitments. Certain of these agreements allow for renegotiation of the minimum annual commitments based on certain conditions. The following is a schedule of the future minimum purchases remaining under the agreements as of June 30, 2013 (in thousands):
Amount | ||||
|
||||
2013 (remaining six months) |
$ | 2,612 | ||
2014 |
2,682 | |||
2015 |
2,285 | |||
2016 |
691 | |||
2017 |
- | |||
2018 |
- | |||
2019 and thereafter |
- | |||
|
|
|||
Total minimum payments required |
$ | 8,270 | ||
|
|
Except as outlined above, there have not been any material changes to the outstanding contractual obligations from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2012.
Loss Contingency
The Company from time to time is involved in legal actions arising in the ordinary course of business. With respect to these matters, management believes that the Company has adequate legal defenses and/or provided adequate accruals for related costs such that the ultimate outcome will not have a material adverse effect on the Companys financial position or results of operations.
33
Note 16. Defined Benefit Pension Plan and Postretirement Benefits
Defined Benefit Pension Plans
The following table provides information about the net periodic benefit cost for the Companys pension plans (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Service cost |
$ | 87 | $ | 93 | $ | 175 | $ | 186 | ||||||||
Interest cost |
29 | 30 | 58 | 60 | ||||||||||||
Recognized actuarial (gains) |
(14) | (12) | (29) | (24) | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Net periodic benefit cost |
$ | 102 | $ | 111 | $ | 204 | $ | 222 | ||||||||
|
|
|
|
|
|
|
|
Employee Retirement Savings Plans
The Company maintains a 401(k) plan covering defined employees who meet established eligibility requirements. Under the plan provisions, the Company matches 50% of participant contributions to a maximum matching amount of 2% of participant compensation. The Companys contributions included in the accompanying Condensed Consolidated Statement of Operations were as follows (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
401(k) plan contributions |
$ | 245 | $ | 324 | $ | 478 | $ | 732 | ||||||||
|
|
|
|
|
|
|
|
In connection with the acquisition of Alpine in August 2012, the Company assumed Alpines employee benefit plan (Section 401(k)). Under this employee benefit plan, the Company makes a matching contribution on an annual basis in the amount of 100% of the employee contribution for the first 3% of included compensation plus 50% of the employee contribution for the next 2% of included compensation. Employees are 100% vested in contributions, earnings and matching funds at all times.
Split-Dollar Life Insurance Arrangement
In 1996, the Company entered into a split-dollar life insurance arrangement to benefit the former Chairman and Chief Executive Officer of the Company. Under the terms of the arrangement, the Company retained a collateral interest in the policy to the extent of the premiums paid by the Company. The postretirement benefit obligation included in Other long-term liabilities and the unrealized gains (losses) included in Accumulated other comprehensive income in the accompanying Condensed Consolidated Balance Sheets were as follows (in thousands):
June 30, 2013 | December 31, 2012 | |||||||
Postretirement benefit obligation |
$ | 75 | $ | 72 | ||||
Unrealized gains (losses) in AOCI (1) |
$ | 406 | $ | 495 | ||||
(1) Unrealized gains (losses) are due to changes in discount rates related to the postretirement obligation. |
|
34
Note 17. Stock-Based Compensation
The Companys stock-based compensation plans include the 2011 Equity Incentive Plan, the 2004 Non-Employee Director Fee Plan and the Deferred Compensation Plan. The following table summarizes the stock-based compensation expense (primarily in the Americas), income tax benefits related to the stock-based compensation and excess tax benefits (deficiencies) (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Stock-based compensation (expense) (1) |
$ | (1,526) | $ | (742) | $ | (2,190) | $ | (1,861) | ||||||||
Income tax benefit (2) |
535 | 215 | 767 | 651 | ||||||||||||
Excess tax benefit (deficiency) from stock-based compensation (3) |
- | - | (34) | (278) |
(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. |
(3) | Included in Additional paid-in capital in the accompanying Condensed Consolidated Statements of Changes in Shareholders Equity. |
There were no capitalized stock-based compensation costs as of June 30, 2013 and December 31, 2012.
2011 Equity Incentive Plan The Companys Board of Directors (the Board) adopted the Sykes Enterprises, Incorporated 2011 Equity Incentive Plan (the 2011 Plan) on March 23, 2011, as amended on May 11, 2011 to reduce the number of shares of common stock available to 4.0 million shares. The 2011 Plan was approved by the shareholders at the May 2011 annual shareholders meeting. The 2011 Plan replaced and superseded the Companys 2001 Equity Incentive Plan (the 2001 Plan), which expired on March 14, 2011. The outstanding awards granted under the 2001 Plan will remain in effect until their exercise, expiration or termination. The 2011 Plan permits the grant of restricted stock, stock appreciation rights, stock options and other stock-based awards to certain employees of the Company, and certain non-employees who provide services to the Company in order to encourage them to remain in the employment of or to faithfully provide services to the Company and to increase their interest in the Companys success.
Stock Appreciation Rights Stock appreciation rights (SARs) represent the right to receive, without payment to the Company, a certain number of shares of common stock, as determined by the Compensation and Human Resource Development Committee, equal to the amount by which the fair market value of a share of common stock at the time of exercise exceeds the grant price. The SARs are granted at the fair market value of the Companys common stock on the date of the grant and vest one-third on each of the first three anniversaries of the date of grant, provided the participant is employed by the Company on such date. The SARs have a term of 10 years from the date of grant. The fair value of each SAR is estimated on the date of grant using the Black-Scholes valuation model that uses various assumptions.
The following table summarizes the assumptions used to estimate the fair value of SARs granted:
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
Expected volatility |
45.2% | 47.1% | ||||||
Weighted-average volatility |
45.2% | 47.1% | ||||||
Expected dividend rate |
0.0% | 0.0% | ||||||
Expected term (in years) |
5.0 | 4.7 | ||||||
Risk-free rate |
0.8% | 0.8% |
35
The following table summarizes SARs activity as of June 30, 2013 and for the six months then ended:
Stock Appreciation Rights | Shares (000s) | Weighted Average Exercise Price |
Weighted Average Remaining Contractual Term (in years) |
Aggregate Intrinsic Value (000s) |
||||||||||||
|
||||||||||||||||
Outstanding at January 1, 2013 |
865 | $ | - | |||||||||||||
Granted |
318 | $ | - | |||||||||||||
Exercised |
- | $ | - | |||||||||||||
Forfeited or expired |
- | $ | - | |||||||||||||
|
|
|||||||||||||||
Outstanding at June 30, 2013 |
1,183 | $ | - | 7.5 | $ | 321 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Vested or expected to vest at June 30, 2013 |
1,183 | $ | - | 7.5 | $ | 321 | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Exercisable at June 30, 2013 |
648 | $ | - | 6.2 | $ | 74 | ||||||||||
|
|
|
|
|
|
|
|
The following table summarizes information regarding SARs granted and exercised (in thousands, except per SAR amounts):
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
Number of SARs granted |
318 | 259 | ||||||
Weighted average grant-date fair value per SAR |
$ | 6.08 | $ | 5.97 | ||||
Intrinsic value of SARs exercised |
$ | - | $ | - | ||||
Fair value of SARs vested |
$ | 1,298 | $ | 1,388 |
The following table summarizes nonvested SARs activity as of June 30, 2013 and for the six months then ended:
Nonvested Stock Appreciation Rights | Shares (000s) | Weighted Average Grant- Date Fair Value |
||||||
|
||||||||
Nonvested at January 1, 2013 |
395 | $ | 6.74 | |||||
Granted |
318 | $ | 6.08 | |||||
Vested |
(178) | $ | 7.28 | |||||
Forfeited or expired |
- | $ | - | |||||
|
|
|||||||
Nonvested at June 30, 2013 |
535 | $ | 6.17 | |||||
|
|
As of June 30, 2013, there was $2.9 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested SARs granted under the 2011 Plan and 2001 Plan. This cost is expected to be recognized over a weighted average period of 1.6 years.
Restricted Shares The Companys Board has approved in the past, and may approve in the future, awards of performance and employment-based restricted shares (restricted shares) for eligible participants. In some instances, where the issuance of restricted shares has adverse tax consequences to the recipient, the Board will instead issue restricted stock units (RSUs). The restricted shares are shares of the Companys common stock (or in the case of RSUs, represent an equivalent number of shares of the Companys common stock) which are issued to the participant subject to (a) restrictions on transfer for a period of time and (b) forfeiture under certain conditions. The performance goals, including revenue growth and income from operations targets, provide a range of vesting possibilities from 0% to 100% and will be measured at the end of the performance period. If the performance conditions are met for the performance period, the shares will vest and all restrictions on the transfer of the restricted shares will lapse (or in the case of RSUs, an equivalent number of shares of the Companys common stock will be issued to the recipient). The Company recognizes compensation cost, net of estimated forfeitures, based on the fair value (which approximates the current market price) of the restricted shares (and RSUs) on the date of grant ratably over the requisite service period based on the probability of achieving the performance goals.
Changes in the probability of achieving the performance goals from period to period will result in corresponding changes in compensation expense. The employment-based restricted shares currently outstanding vest one-third on each of the first three anniversaries of the date of grant, provided the participant is employed by the Company on such date.
36
The following table summarizes nonvested restricted shares/RSUs activity as of June 30, 2013 and for the six months then ended:
Nonvested Restricted Shares and RSUs | Shares (000s) | Weighted Average Grant- Date Fair Value |
||||||
|
||||||||
Nonvested at January 1, 2013 |
872 | $ | 18.25 | |||||
Granted |
706 | $ | 15.25 | |||||
Vested |
(20) | $ | 18.11 | |||||
Forfeited or expired |
(191) | $ | 23.55 | |||||
|
|
|||||||
Nonvested at June 30, 2013 |
1,367 | $ | 15.96 | |||||
|
|
The following table summarizes information regarding restricted shares/RSUs granted and vested (in thousands, except per restricted share/RSU amounts):
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
Number of restricted shares/RSUs granted |
706 | 420 | ||||||
Weighted average grant-date fair value per restricted share/RSU |
$ | 15.25 | $ | 15.21 | ||||
Fair value of restricted shares/RSUs vested |
$ | 366 | $ | 3,845 |
As of June 30, 2013, based on the probability of achieving the performance goals, there was $20.5 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested restricted shares/RSUs granted under the 2011 Plan and 2001 Plan. This cost is expected to be recognized over a weighted average period of 1.9 years.
2004 Non-Employee Director Fee Plan The Companys 2004 Non-Employee Director Fee Plan (the 2004 Fee Plan), as amended on May 17, 2012, provides that all new non-employee directors joining the Board will receive an initial grant of shares of common stock on the date the new director is elected or appointed, the number of which will be determined by dividing $60,000 by the closing price of the Companys common stock on the trading day immediately preceding the date a new director is elected or appointed, rounded to the nearest whole number of shares. The initial grant of shares vests in twelve equal quarterly installments, one-twelfth on the date of grant and an additional one-twelfth on each successive third monthly anniversary of the date of grant. The award lapses with respect to all unvested shares in the event the non-employee director ceases to be a director of the Company, and any unvested shares are forfeited.
The 2004 Fee Plan also provides that each non-employee director will receive, on the day after the annual shareholders meeting, an annual retainer for service as a non-employee director (the Annual Retainer). Prior to May 17, 2012, the Annual Retainer was $95,000, of which $50,000 was payable in cash, and the remainder was paid in stock. The annual grant of cash vests in four equal quarterly installments, one-fourth on the day following the annual meeting of shareholders, and an additional one-fourth on each successive third monthly anniversary of the date of grant. The annual grant of shares paid to non-employee directors prior to May 17, 2012 vests in eight equal quarterly installments, one-eighth on the day following the annual meeting of shareholders, and an additional one-eighth on each successive third monthly anniversary of the date of grant. On May 17, 2012, upon the recommendation of the Compensation and Human Resource Development Committee, the Board adopted the Fifth Amended and Restated Non-Employee Director Fee Plan (the Amendment), which increased the common stock component of the Annual Retainer by $30,000, resulting in a total Annual Retainer of $125,000, of which $50,000 is payable in cash and the remainder paid in stock. In addition, the Amendment also changed the vesting period for the annual equity award, from a two-year vesting period, to a one-year vesting period (consisting of four equal quarterly installments, one-fourth on the date of grant and an additional one-fourth on each successive third monthly anniversary of the date of grant). The award lapses with respect to all unpaid cash and unvested shares in the event the non-employee director ceases to be a director of the company, and any unvested shares and unpaid cash are forfeited.
In addition to the Annual Retainer award, the 2004 Fee Plan also provides for any non-employee Chairman of the Board to receive an additional annual cash award of $100,000, and each non-employee director serving on a committee of the Board to receive an additional annual cash award. The additional annual cash award for the
37
Chairperson of the Audit Committee is $20,000 and Audit Committee members are entitled to an annual cash award of $10,000. Prior to May 20, 2011, the annual cash awards for the Chairpersons of the Compensation and Human Resource Development Committee, Finance Committee and Nominating and Corporate Governance Committee were $12,500 and the members of such committees were entitled to an annual cash award of $7,500. On May 20, 2011, the Board increased the additional annual cash award to the Chairperson of the Compensation and Human Resource Development Committee to $15,000. All other additional cash awards remained unchanged.
The Board may pay additional cash compensation to any non-employee director for services on behalf of the Board over and above those typically expected of directors, including but not limited to service on a special committee of the Board.
The following table summarizes nonvested common stock share award activity as of June 30, 2013 and for the six months then ended:
Nonvested Common Stock Share Awards | Shares (000s) | Weighted Average Grant- Date Fair Value |
||||||
|
||||||||
Nonvested at January 1, 2013 |
13 | $ | 17.18 | |||||
Granted |
37 | $ | 16.01 | |||||
Vested |
(22) | $ | 16.68 | |||||
Forfeited or expired |
- | $ | - | |||||
|
|
|||||||
Nonvested at June 30, 2013 |
28 | $ | 16.01 | |||||
|
|
The following table summarizes information regarding common stock share awards granted and vested (in thousands, except per share award amounts):
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
Number of share awards granted |
37 | 42 | ||||||
Weighted average grant-date fair value per share award |
$ | 16.01 | $ | 16.15 | ||||
Fair value of share awards vested |
$ | 369 | $ | 332 |
As of June 30, 2013, there was $0.4 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested common stock share awards granted under the 2004 Fee Plan. This cost is expected to be recognized over a weighted average period of 0.4 years.
Deferred Compensation Plan The Board adopted the Sykes Enterprises, Incorporated non-qualified Deferred Compensation Plan (the Deferred Compensation Plan) on December 17, 1998 and amended on March 29, 2006 and May 23, 2006. The Deferred Compensation Plan, which was not shareholder-approved, provides certain eligible employees the ability to defer any portion of their compensation until the participants retirement, termination, disability or death, or a change in control of the Company. Using the Companys common stock, the Company matches 50% of the amounts deferred by certain senior management participants on a quarterly basis up to a total of $12,000 per year for the president, executive vice presidents and senior vice presidents and $7,500 per year for vice presidents (participants below the level of vice president are not eligible to receive matching contributions from the Company). Matching contributions and the associated earnings vest over a seven year service period. Deferred compensation amounts used to pay benefits, which are held in a rabbi trust, include investments in various mutual funds and shares of the Companys common stock (See Note 8, Investments Held in Rabbi Trust.) As of June 30, 2013 and December 31, 2012, liabilities of $5.2 million and $5.3 million, respectively, of the Deferred Compensation Plan were recorded in Accrued employee compensation and benefits in the accompanying Condensed Consolidated Balance Sheets.
Additionally, the Companys common stock match associated with the Deferred Compensation Plan, with a carrying value of approximately $1.6 million and $1.4 million at June 30, 2013 and December 31, 2012, respectively, is included in Treasury stock in the accompanying Condensed Consolidated Balance Sheets.
38
The following table summarizes nonvested common stock activity as of June 30, 2013 and for the six months then ended:
Nonvested Common Stock | Shares (000s) | Weighted Average Grant- Date Fair Value |
||||||
|
||||||||
Nonvested at January 1, 2013 |
8 | $ | 16.98 | |||||
Granted |
10 | $ | 15.89 | |||||
Vested |
(9) | $ | 16.01 | |||||
Forfeited or expired |
- | $ | - | |||||
|
|
|||||||
Nonvested at June 30, 2013 |
9 | $ | 16.77 | |||||
|
|
The following table summarizes information regarding shares of common stock granted and vested (in thousands, except per common stock amounts):
Six Months Ended June 30, | ||||||||
2013 | 2012 | |||||||
Number of shares of common stock granted |
10 | 10 | ||||||
Weighted average grant-date fair value per common stock |
$ | 15.89 | $ | 15.84 | ||||
Fair value of common stock vested |
$ | 147 | $ | 139 | ||||
Cash used to settle the obligation |
$ | 1,014 | $ | 161 |
As of June 30, 2013, there was $0.1 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested common stock granted under the Deferred Compensation Plan. This cost is expected to be recognized over a weighted average period of 2.5 years.
39
Note 18. Segments and Geographic Information
The Company operates within two regions, the Americas and EMEA. Each region represents a reportable segment comprised of aggregated regional operating segments, which portray similar economic characteristics. The Company aligns its business into two segments to effectively manage the business and support the customer care needs of every client and to respond to the demands of the Companys global customers.
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 contact management solutions (with an emphasis on technical support and customer service) and technical staffing and (2) EMEA, which includes Europe, the Middle East and Africa, and provides outsourced customer contact management solutions (with an emphasis on technical support and customer service) and fulfillment services. The sites within Latin America, India 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 Companys services in these locations to support their customer contact management needs.
Information about the Companys reportable segments is as follows (in thousands):
Americas | EMEA | Other (1) | Consolidated | |||||||||||||
Three Months Ended June 30, 2013: |
||||||||||||||||
Revenues (2) |
$ | 255,163 | $ | 49,572 | $ | 304,735 | ||||||||||
Percentage of revenues |
83.7% | 16.3% | 100.0% | |||||||||||||
Depreciation, net (2) |
$ | 9,079 | $ | 938 | $ | 10,017 | ||||||||||
Amortization of intangibles (2) |
$ | 3,713 | $ | - | $ | 3,713 | ||||||||||
Income (loss) from continuing operations |
$ | 19,221 | $ | (1,924) | $ | (11,680) | $ | 5,617 | ||||||||
Other (expense), net |
(709) | (709) | ||||||||||||||
Income taxes |
688 | 688 | ||||||||||||||
|
|
|||||||||||||||
Income from continuing operations, net of taxes |
5,596 | |||||||||||||||
(Loss) from discontinued operations, net of taxes (3) |
$ | - | $ | - | - | |||||||||||
|
|
|||||||||||||||
Net income |
$ | 5,596 | ||||||||||||||
|
|
|||||||||||||||
Total assets as of June 30, 2013 |
$ | 1,107,110 | $ | 1,363,615 | $ | (1,545,165) | $ | 925,560 | ||||||||
|
|
|
|
|
|
|
|
|||||||||
Three Months Ended June 30, 2012: |
||||||||||||||||
Revenues (2) |
$ | 221,214 | $ | 43,588 | $ | 264,802 | ||||||||||
Percentage of revenues |
83.5% | 16.5% | 100.0% | |||||||||||||
Depreciation, net (2) |
$ | 8,818 | $ | 998 | $ | 9,816 | ||||||||||
Amortization of intangibles (2) |
$ | 2,009 | $ | - | $ | 2,009 | ||||||||||
Income (loss) from continuing operations |
$ | 20,778 | $ | (886) | $ | (11,187) | $ | 8,705 | ||||||||
Other (expense), net |
(446) | (446) | ||||||||||||||
Income taxes |
(511) | (511) | ||||||||||||||
|
|
|||||||||||||||
Income from continuing operations, net of taxes |
7,748 | |||||||||||||||
(Loss) from discontinued operations, net of taxes (3) |
$ | - | $ | - | - | |||||||||||
|
|
|||||||||||||||
Net income |
$ | 7,748 | ||||||||||||||
|
|
|||||||||||||||
Total assets as of June 30, 2012 |
$ | 952,880 | $ | 1,076,304 | $ | (1,262,258) | $ | 766,926 | ||||||||
|
|
|
|
|
|
|
|
40
Americas | EMEA | Other (1) | Consolidated | |||||||||||||
Six Months Ended June 30, 2013: |
||||||||||||||||
Revenues (2) |
$ | 510,377 | $ | 95,602 | $ | 605,979 | ||||||||||
Percentage of revenues |
84.2% | 15.8% | 100.0% | |||||||||||||
Depreciation, net (2) |
$ | 18,257 | $ | 1,929 | $ | 20,186 | ||||||||||
Amortization of intangibles (2) |
$ | 7,472 | $ | - | $ | 7,472 | ||||||||||
Income (loss) from continuing operations |
$ | 38,743 | $ | (69) | $ | (23,180) | $ | 15,494 | ||||||||
Other (expense), net |
(868) | (868) | ||||||||||||||
Income taxes |
(2,512) | (2,512) | ||||||||||||||
|
|
|||||||||||||||
Income from continuing operations, net of taxes |
12,114 | |||||||||||||||
(Loss) from discontinued operations, net of taxes (3) |
$ | - | $ | - | - | |||||||||||
|
|
|||||||||||||||
Net income |
$ | 12,114 | ||||||||||||||
|
|
|||||||||||||||
Six Months Ended June 30, 2012: |
||||||||||||||||
Revenues (2) |
$ | 451,301 | $ | 91,599 | $ | 542,900 | ||||||||||
Percentage of revenues |
83.1% | 16.9% | 100.0% | |||||||||||||
Depreciation, net (2) |
$ | 18,463 | $ | 1,987 | $ | 20,450 | ||||||||||
Amortization of intangibles (2) |
$ | 3,870 | $ | - | $ | 3,870 | ||||||||||
Income (loss) from continuing operations |
$ | 47,734 | $ | (498) | $ | (23,841) | $ | 23,395 | ||||||||
Other (expense), net |
(999) | (999) | ||||||||||||||
Income taxes |
(3,878) | (3,878) | ||||||||||||||
|
|
|||||||||||||||
Income from continuing operations, net of taxes |
18,518 | |||||||||||||||
(Loss) from discontinued operations, net of taxes (3) |
$ | (6,302) | $ | (5,225) | (11,527) | |||||||||||
|
|
|||||||||||||||
Net income |
$ | 6,991 | ||||||||||||||
|
|
(1) | Other items (including corporate costs, impairment costs, other income and expense, and income taxes) are shown for purposes of reconciling to the Companys consolidated totals as shown in the tables above for the three and six months ended June 30, 2013 and 2012. Inter-segment revenues are not material to the Americas and EMEA segment results. The Company evaluates the performance of its geographic segments based on revenue and income (loss) from operations, and does not include segment assets or other income and expense items for management reporting purposes. |
(2) | Revenues and depreciation and amortization include results from continuing operations only. |
(3) | Includes the (loss) from discontinued operations, net of taxes, as well as the (loss) on sale of discontinued operations, net of taxes, if any. |
Note 19. Other Income (Expense)
Gains and losses resulting from foreign currency transactions are recorded in Other income (expense) in the accompanying Condensed Consolidated Statements of Operations during the period in which they occur. Other income (expense) consists of the following (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
Foreign currency transaction gains (losses) |
$ | (2,968) | $ | (940) | $ | (2,734) | $ | (1,578) | ||||||||
Gains (losses) on foreign currency derivative instruments not designated as hedges |
2,755 | 275 | 2,230 | (197) | ||||||||||||
Other miscellaneous income (expense) |
(126) | 177 | 290 | 686 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
$ | (339) | $ | (488) | $ | (214) | $ | (1,089) | |||||||||
|
|
|
|
|
|
|
|
Note 20. Related Party Transactions
In January 2008, the Company entered into a lease for a customer contact management center located in Kingstree, South Carolina. The landlord, Kingstree Office One, LLC, is an entity controlled by John H. Sykes, the founder, former Chairman and Chief Executive Officer and the father of Charles Sykes, President and Chief Executive Officer of the Company. The lease payments on the 20 year lease were negotiated at or below market rates, and the lease is cancellable at the option of the Company. There are significant penalties for early cancellation which decrease over time. The Company paid $0.1 million to the landlord during both the three months ended June 30, 2013 and 2012 and $0.2 million to the landlord during both the six months ended June 30, 2013 and 2012 under the terms of the lease.
41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of
Sykes Enterprises, Incorporated
400 North Ashley Drive
Tampa, Florida
We have reviewed the accompanying condensed consolidated balance sheet of Sykes Enterprises, Incorporated and subsidiaries (the Company) as of June 30, 2013, and the related condensed consolidated statements of operations and comprehensive income for the three- and six-month periods ended June 30, 2013 and 2012, of changes in shareholders equity for the six-month periods ended June 30, 2013 and 2012 and six-month period ended December 31, 2012, and of cash flows for the six-month periods ended June 30, 2013 and 2012. These interim financial statements are the responsibility of the Companys management.
We conducted our reviews in accordance with the standards of the Public Company Accounting Oversight Board (United States). 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 Public Company Accounting Oversight Board (United States), 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.
Based on our reviews, we are not aware of any material modifications that should be made to such condensed consolidated interim financial statements for them 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), the consolidated balance sheet of Sykes Enterprises, Incorporated and subsidiaries as of December 31, 2012, and the related consolidated statements of income and comprehensive income, changes in shareholders equity, and cash flows for the year then ended (not presented herein); and in our report dated March 1, 2013, 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, 2012 is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.
/s/ Deloitte & Touche LLP |
Certified Public Accountants |
Tampa, Florida
August 6, 2013
42
Item 2. Managements 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, 2012, 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. 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. 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 contact 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 contact 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 trend toward outsourcing, (xxii) risk of interruption of technical and customer contact 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 the ICT and Alpine acquisitions not being realized, or not being realized within the anticipated time period, (xxvii) risks related to the integration of the businesses of SYKES, ICT and Alpine and (xxviii) other risk factors which are identified in our most recent Annual Report on Form 10-K, including factors identified under the headings Business, Risk Factors and Managements Discussion and Analysis of Financial Condition and Results of Operations.
Executive Summary
We provide comprehensive customer contact management solutions and services to a wide range of clients including Fortune 1000 companies, medium-sized businesses, and public institutions around the world, primarily in the communications, financial services, technology/consumer, transportation and leisure and healthcare industries. 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 groups primarily provide customer contact management services (with an emphasis on inbound technical support and customer service), which include customer assistance, healthcare and roadside assistance, technical support and product sales to our clients customers. These services, which represented 98% of consolidated revenues during the three and six months ended June 30, 2013, are delivered through multiple communication channels encompassing phone, e-mail, Internet, text messaging and chat. We also provide various enterprise support services in the United
43
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 including multilingual sales order processing via the Internet and phone, payment processing, inventory control, product delivery, and product returns handling. 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 contact management centers throughout the United States, Canada, Europe, Latin America, Asia, India and Africa.
Acquisition of Alpine Access, Inc.
On August 20, 2012, we completed the acquisition of Alpine Access, Inc. (Alpine), a Delaware corporation and an industry leader in the at-home agent space recruiting, training, managing and delivering award-winning customer contact management services through a secured and proprietary virtual call center environment with its operations located in the United States and Canada. We refer to such acquisition herein as the Alpine acquisition.
The Company acquired Alpine to: create significant competitive differentiation for quality, speed to market, scalability and flexibility driven by proprietary, internally-developed software, systems, processes and other intellectual property which uniquely overcome the challenges of the at-home delivery model; strengthen the Companys current service portfolio and go-to-market offering while expanding the breadth of clients with minimal client overlap; broaden the addressable market opportunity within existing and new verticals as well as clients; expand the addressable pool of skilled labor; leverage operational best practices across the Companys global platform, with the potential to convert more of its fixed cost to variable cost; and to further enhance the growth and margin profile of the Company to drive shareholder value. This resulted in the Company paying a substantial premium for Alpine resulting in the recognition of goodwill.
The total purchase price of $149.0 million was funded by $41.0 million in cash on hand and borrowings of $108.0 million under our credit agreement with KeyBank National Association, dated May 3, 2012. See Liquidity & Capital Resources later in this Item 2 and Note 11, Borrowings, of Notes to Condensed Consolidated Financial Statements for further information.
The results of operations of Alpine have been reflected in the accompanying Condensed Consolidated Statements of Operations since August 20, 2012.
Discontinued Operations
In March 2012, we sold our operations in Spain (the Spanish operations) pursuant to an asset purchase agreement dated March 29, 2012 and a stock purchase agreement dated March 30, 2012. We have reflected the operating results related to the operations in Spain as discontinued operations in the accompanying Condensed Consolidated Statements of Operations for the six months ended June 30, 2012. This business was historically reported as part of the EMEA segment.
See Results of Operations Discontinued Operations later in this Item 2 for more information. Unless otherwise noted, discussions below pertain only to our continuing operations.
44
Results of Operations
The following table sets forth, for the periods indicated, certain data derived from our Condensed Consolidated Statements of Operations and certain of such data expressed as a percentage of revenues (in thousands, except percentage amounts):
Three Months Ended June 30, |
Six Months
Ended June 30, |
|||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
|
|
|||||||||||||||
Revenues |
$ | 304,735 | $ | 264,802 | $ | 605,979 | $ | 542,900 | ||||||||
Percentage of revenues |
100.0% | 100.0% | 100.0% | 100.0% | ||||||||||||
Direct salaries and related costs |
$ | 210,141 | $ | 174,630 | $ | 413,847 | $ | 353,130 | ||||||||
Percentage of revenues |
69.0% | 65.9% | 68.3% | 65.0% | ||||||||||||
General and administrative |
$ | 75,247 | $ | 69,642 | $ | 148,980 | $ | 141,906 | ||||||||
Percentage of revenues |
24.7% | 26.3% | 24.6% | 26.1% | ||||||||||||
Depreciation, net |
$ | 10,017 | $ | 9,816 | $ | 20,186 | $ | 20,450 | ||||||||
Percentage of revenues |
3.3% | 3.7% | 3.3% | 3.8% | ||||||||||||
Amortization of intangibles |
$ | 3,713 | $ | 2,009 | $ | 7,472 | $ | 3,870 | ||||||||
Percentage of revenues |
1.2% | 0.8% | 1.2% | 0.7% | ||||||||||||
Impairment of long-lived assets |
$ | - | $ | - | $ | - | $ | 149 | ||||||||
Percentage of revenues |
0.0% | 0.0% | 0.0% | 0.0% | ||||||||||||
Income from continuing operations |
$ | 5,617 | $ | 8,705 | $ | 15,494 | $ | 23,395 | ||||||||
Percentage of revenues |
1.8% | 3.3% | 2.6% | 4.4% |
The following table summarizes our revenues for the periods indicated, by reporting segment (in thousands):
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||
Americas |
$ | 255,163 | 83.7% | $ | 221,214 | 83.5% | $ | 510,377 | 84.2% | $ | 451,301 | 83.1% | ||||||||||||||||||||
EMEA |
49,572 | 16.3% | 43,588 | 16.5% | 95,602 | 15.8% | 91,599 | 16.9% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Consolidated |
$ | 304,735 | 100.0% | $ | 264,802 | 100.0% | $ | 605,979 | 100.0% | $ | 542,900 | 100.0% | ||||||||||||||||||||
|
|
|
|
|
|
|
|
45
The following table summarizes certain amounts and percentages of revenues for the periods indicated, by reporting segment (in thousands):
Three Months
Ended June 30, |
Six Months
Ended June 30, |
|||||||||||||||||||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||||||||
Direct salaries and related costs: |
||||||||||||||||||||||||||||||||
Americas |
$ | 171,474 | 67.2% | $ | 142,443 | 64.4% | $ | 342,545 | 67.1% | $ | 286,044 | 63.4% | ||||||||||||||||||||
EMEA |
38,667 | 78.0% | 32,187 | 73.8% | 71,302 | 74.6% | 67,086 | 73.2% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Consolidated |
$ | 210,141 | 69.0% | $ | 174,630 | 65.9% | $ | 413,847 | 68.3% | $ | 353,130 | 65.0% | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
General and administrative: |
||||||||||||||||||||||||||||||||
Americas |
$ | 51,676 | 20.3% | $ | 47,166 | 21.3% | $ | 103,360 | 20.3% | $ | 95,041 | 21.1% | ||||||||||||||||||||
EMEA |
11,891 | 24.0% | 11,289 | 25.9% | 22,440 | 23.5% | 23,024 | 25.1% | ||||||||||||||||||||||||
Corporate |
11,680 | - | 11,187 | - | 23,180 | - | 23,841 | - | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Consolidated |
$ | 75,247 | 24.7% | $ | 69,642 | 26.3% | $ | 148,980 | 24.6% | $ | 141,906 | 26.1% | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Depreciation, net: |
||||||||||||||||||||||||||||||||
Americas |
$ | 9,079 | 3.6% | 8,818 | 4.0% | $ | 18,257 | 3.6% | $ | 18,463 | 4.1% | |||||||||||||||||||||
EMEA |
938 | 1.9% | 998 | 2.3% | 1,929 | 2.0% | 1,987 | 2.2% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Consolidated |
$ | 10,017 | 3.3% | $ | 9,816 | 3.7% | $ | 20,186 | 3.3% | $ | 20,450 | 3.8% | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Amortization of intangibles: |
||||||||||||||||||||||||||||||||
Americas |
$ | 3,713 | 1.5% | $ | 2,009 | 0.8% | $ | 7,472 | 1.5% | $ | 3,870 | 0.7% | ||||||||||||||||||||
EMEA |
- | 0.0% | - | 0.0% | - | 0.0% | - | 0.0% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Consolidated |
$ | 3,713 | 1.2% | $ | 2,009 | 0.8% | $ | 7,472 | 1.2% | $ | 3,870 | 0.7% | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Impairment of long-lived assets: |
||||||||||||||||||||||||||||||||
Americas |
$ | - | 0.0% | $ | - | 0.0% | $ | - | 0.0% | $ | 149 | 0.0% | ||||||||||||||||||||
EMEA |
- | 0.0% | - | 0.0% | - | 0.0% | - | 0.0% | ||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||
Consolidated |
$ | - | 0.0% | $ | - | 0.0% | $ | - | 0.0% | $ | 149 | 0.0% | ||||||||||||||||||||
|
|
|
|
|
|
|
|
Three Months Ended June 30, 2013 Compared to Three Months Ended June 30, 2012
Revenues
For the three months ended June 30, 2013, we recognized consolidated revenues of $304.7 million, an increase of $39.9 million or 15.1%, from $264.8 million of consolidated revenues for the comparable period in 2012.
On a geographic segment basis, revenues from the Americas region, including the United States, Canada, Latin America, Australia and the Asia Pacific Rim, represented 83.7%, or $255.2 million, for the three months ended June 30, 2013, compared to 83.5%, or $221.2 million, for the comparable period in 2012. Revenues from the EMEA region, including Europe, the Middle East and Africa represented 16.3%, or $49.5 million, for the three months ended June 30, 2013, compared to 16.5%, or $43.6 million, for the comparable period in 2012.
Americas revenues increased $34.0 million, including the negative foreign currency impact of $0.8 million, for the three months ended June 30, 2013 from the comparable period in 2012. The remaining increase of $34.8 million was primarily due to Alpine acquisition revenues of $20.4 million (excluding the migration of Sykes legacy revenue to Alpine of $4.0 million), new contract sales of $16.1 million and higher volumes from existing contracts of $2.7 million, partially offset by end-of-life client programs of $4.4 million. Revenues from our offshore operations represented 44.5% of Americas revenues, compared to 50.0% for the comparable period in 2012. While operating margins generated offshore are generally comparable to those in the United States, our ability to maintain these offshore operating margins longer term is difficult to predict due to potential increased competition for the available workforce, the trend of higher occupancy costs and costs of functional currency fluctuations in offshore markets. We weight these factors in our continual focus to re-price or replace certain sub-profitable target client programs.
EMEAs revenues increased $5.9 million, including the positive foreign currency impact of $0.8 million, for the three months ended June 30, 2013 from the comparable period in 2012. The remaining increase of $5.1 million was primarily due to new contract sales of $4.8 million and higher volumes from existing contracts of $1.1 million, partially offset by end-of-life client programs of $0.8 million.
On a consolidated basis, we had 40,300 brick-and-mortar seats as of June 30, 2013, a decrease of 1,200 seats from the comparable period in 2012. This decrease in seats was driven principally by rationalization of capacity in the Americas. The capacity utilization rate on a combined basis was 75% compared to 70% in the comparable period in 2012. This increase was primarily due to program ramp ups, coupled with a reduction in overall capacity and a shift in timing of certain capacity additions to the third quarter.
46
On a geographic segment basis, 34,500 seats were located in the Americas, a decrease of 1,300 seats from the comparable period in 2012, and 5,800 seats were located in EMEA, an increase of 100 seats from the comparable period in 2012. The consolidated offshore seat count as of June 30, 2013 was 22,000, or 55%, of our total seats, a decrease of 1,600 seats, or 7%, from the comparable period in 2012. Capacity utilization rates as of June 30, 2013 were 74% for the Americas and 81% for EMEA, compared to 69% and 70%, respectively, in the comparable period in 2012, primarily due to seat rationalizations associated with the strategic actions in connection with the Fourth Quarter 2011 Exit Plan. We strive to attain an 85% capacity utilization metric at each of our locations.
The Company plans to add approximately 6,000 seats on a gross basis in 2013. Approximately 3,300 seats are expected to be added in the second half of 2013. Total seat count on a net basis for the full year, however, is expected to increase by approximately 1,000 seats.
Direct Salaries and Related Costs
Direct salaries and related costs increased $35.5 million, or 20.3%, to $210.1 million for the three months ended June 30, 2013 from $174.6 million in the comparable period in 2012.
On a reporting segment basis, direct salaries and related costs from the Americas segment increased $29.1 million, including the negative foreign currency impact of $0.5 million, for the three months ended June 30, 2013 from the comparable period in 2012. Direct salaries and related costs from the EMEA segment increased $6.4 million, including the negative foreign currency impact of $0.7 million, for the three months ended June 30, 2013 from the comparable period in 2012.
In the Americas segment, as a percentage of revenues, direct salaries and related costs increased to 67.2% for the three months ended June 30, 2013 from 64.4% in the comparable period in 2012. This increase of 2.8%, as a percentage of revenues, was primarily attributable to higher compensation costs of 2.2% principally driven by the ramp up for new client programs and lower demand within the healthcare vertical without a commensurate reduction in labor costs, and higher other costs of 0.6%.
In the EMEA segment, as a percentage of revenues, direct salaries and related costs increased to 78.0% for the three months ended June 30, 2013 from 73.8% in the comparable period of 2012. This increase of 4.2%, as a percentage of revenues, was primarily attributable to higher compensation costs of 6.4% principally due to the ramp up for new and existing client programs in anticipation of future demand, partially offset by lower billable supply costs of 1.2%, lower fulfillment materials costs of 0.7% and lower recruiting costs of 0.3%.
General and Administrative
General and administrative expenses increased $5.6 million, or 8.0%, to $75.2 million for the three months ended June 30, 2013 from $69.6 million in the comparable period in 2012.
On a reporting segment basis, general and administrative expenses from the Americas segment increased $4.5 million, including the negative foreign currency impact of $0.2 million, for the three months ended June 30, 2013 from the comparable period in 2012. General and administrative expenses from the EMEA segment increased $0.6 million, including the negative foreign currency impact of $0.2 million, for the three months ended June 30, 2013 from the comparable period in 2012. Corporate general and administrative expenses increased $0.5 million for the three months ended June 30, 2013 from the comparable period in 2012. This increase of $0.5 million was primarily attributable to higher compensation costs of $1.3 million, partially offset by lower legal and professional fees of $0.3 million, lower consulting costs of $0.3 million and lower other costs of $0.2 million.
In the Americas segment, as a percentage of revenues, general and administrative expenses decreased to 20.3% for the three months ended June 30, 2013 from 21.3% in the comparable period in 2012. This decrease of 1.0%, as a percentage of revenues, was primarily attributable to lower facility-related expenses of 0.7%, lower equipment and maintenance costs of 0.4% and lower communication costs of 0.2%, partially offset by higher merger and acquisition costs of 0.3%.
In the EMEA segment, as a percentage of revenues, general and administrative expenses decreased to 24.0% for the three months ended June 30, 2013 from 25.9% in the comparable period in 2012. This decrease of 1.9%, as a percentage of revenues, was primarily attributable to lower facility-related costs of 0.6%, lower communication
47
costs of 0.6%, lower severance-related costs of 0.5%, lower compensation costs of 0.5%, all primarily due to the closure of certain sites in connection with the Fourth Quarter 2011 Exit Plan, partially offset by higher equipment and maintenance costs of 0.3%.
Depreciation, Net
Depreciation, net was $10.0 million for the three months ended June 30, 2013, compared to $9.8 million in the comparable period in 2012.
Amortization of Intangibles
Amortization of intangibles was $3.7 million for the three months ended June 30, 2013, compared to $2.0 million in the same comparable in 2012, primarily due to the additional amortization related to the intangible assets recorded as part of the August 2012 acquisition of Alpine.
Interest Income
Interest income was $0.2 million for the three months ended June 30, 2013, compared to $0.4 million in the comparable period in 2012, reflecting lower average invested balances of interest bearing investments in cash and cash equivalents.
Interest (Expense)
Interest (expense) was $(0.6) million for the three months ended June 30, 2013, compared to $(0.3) million in the comparable period in 2012, reflecting higher average outstanding borrowings primarily due to the August 2012 Alpine acquisition.
Other (Expense)
Other (expense), net, was $(0.3) million for the three months ended June 30, 2013, compared to $(0.5) million in the comparable period in 2012. The net decrease in other (expense), net, of $0.2 million was primarily attributable to an increase of $2.5 million in foreign currency forward contract gains (which were not designated as hedging instruments), partially offset by an increase of $2.0 million in realized and unrealized foreign currency transaction losses, net, and an increase of $0.3 million in other miscellaneous expense, net. Other income (expense), net, excludes the cumulative translation effects and unrealized gains (losses) on financial derivatives that are included in Accumulated other comprehensive income in shareholders equity in the accompanying Condensed Consolidated Balance Sheets.
Income Taxes
Income tax benefit of $0.7 million for the three months ended June 30, 2013, was based upon pre-tax book income of $4.9 million. Income tax expense of $0.5 million for the three months ended June 30, 2012, was based upon pre-tax book income of $8.3 million. The effective tax rate for the three months ended June 30, 2013 was (14.0)% compared to an effective tax rate of 6.2% for the comparable period in 2012. The decrease in the effective tax rate is primarily due to fluctuation in earnings among the various jurisdictions in which we operate.
48
Net Income
As a result of the foregoing, we reported income from continuing operations for the three months ended June 30, 2013 of $5.6 million, a decrease of $3.1 million from the comparable period in 2012. This decrease was principally attributable to a $35.5 million increase in direct salaries and related costs, a $5.6 million increase in general and administrative expenses, a $1.7 million increase in amortization of intangibles and a $0.2 million increase in depreciation, partially offset by a $39.9 million increase in revenues. In addition to the $3.1 million decrease in income from continuing operations, we experienced an increase in interest (expense) of $0.3 million and a decrease in interest income of $0.2 million, partially offset by a $0.2 million decrease in other (expense) and a $1.2 million decrease in income taxes, resulting in net income of $5.6 million for the three months ended June 30, 2013, a decrease of $2.2 million compared to the comparable period in 2012.
Six Months Ended June 30, 2013 Compared to Six Months Ended June 30, 2012
Revenues
For the six months ended June 30, 2013, we recognized consolidated revenues of $606.0 million, an increase of $63.1 million or 11.6%, from $542.9 million of consolidated revenues for the comparable period in 2012.
On a geographic segment basis, revenues from the Americas region, including the United States, Canada, Latin America, Australia and the Asia Pacific Rim, represented 84.2%, or $510.4 million, for the six months ended June 30, 2013, compared to 83.1%, or $451.3 million, for the comparable period in 2012. Revenues from the EMEA region, including Europe, the Middle East and Africa represented 15.8%, or $95.6 million, for the six months ended June 30, 2013, compared to 16.9%, or $91.6 million, for the comparable period in 2012.
Americas revenues increased $59.1 million, including the negative foreign currency impact of $0.4 million, for the six months ended June 30, 2013 from the comparable period in 2012. The remaining increase of $59.5 million was primarily due to Alpine acquisition revenues of $47.1 million (excluding the migration of Sykes legacy revenue to Alpine of $8.0 million), new contract sales of $22.2 million and higher volumes from existing contracts of $2.4 million, partially offset by end-of-life client programs of $12.2 million. Revenues from our offshore operations represented 43.5% of Americas revenues, compared to 49.4% for the comparable period in 2012. While operating margins generated offshore are generally comparable to those in the United States, our ability to maintain these offshore operating margins longer term is difficult to predict due to potential increased competition for the available workforce, the trend of higher occupancy costs and costs of functional currency fluctuations in offshore markets. We weight these factors in our continual focus to re-price or replace certain sub-profitable target client programs.
EMEAs revenues increased $4.0 million, including the positive foreign currency impact of $1.0 million, for the six months ended June 30, 2013 from the comparable period in 2012. The remaining increase of $3.0 million was primarily due to new contract sales of $5.3 million and higher volumes from existing contracts of $0.8 million, partially offset by end-of-life client programs of $3.1 million.
Direct Salaries and Related Costs
Direct salaries and related costs increased $60.7 million, or 17.2%, to $413.8 million for the six months ended June 30, 2013 from $353.1 million in the comparable period in 2012.
On a reporting segment basis, direct salaries and related costs from the Americas segment increased $56.5 million, including the negative foreign currency impact of $2.2 million, for the six months ended June 30, 2013 from the comparable period in 2012. Direct salaries and related costs from the EMEA segment increased $4.2 million, including the negative foreign currency impact of $0.9 million, for the six months ended June 30, 2013 from the comparable period in 2012.
In the Americas segment, as a percentage of revenues, direct salaries and related costs increased to 67.1% for the six months ended June 30, 2013 from 63.4% in the comparable period in 2012. This increase of 3.7%, as a percentage of revenues, was primarily attributable to higher compensation costs of 2.9% principally driven by the ramp up for new client programs and lower demand within the healthcare vertical without a commensurate reduction in labor costs, higher auto tow claim costs of 0.3% due to an increase in the average length of the tows without a commensurate increase in fees at our Canadian roadside assistance operations, higher communication costs of 0.2% and higher other costs of 0.3%.
49
In the EMEA segment, as a percentage of revenues, direct salaries and related costs increased to 74.6% for the six months ended June 30, 2013 from 73.2% in the comparable period of 2012. This increase of 1.4%, as a percentage of revenues, was primarily attributable to higher compensation costs of 3.8% due to the ramp up for new and existing client programs in anticipation of future demand, partially offset by lower billable supply costs of 1.3%, lower severance costs of 0.8% due to the closure of certain sites in connection with the Fourth Quarter 2011 Exit Plan and lower communication costs of 0.3%.
General and Administrative
General and administrative expenses increased $7.1 million, or 5.0%, to $149.0 million for the six months ended June 30, 2013 from $141.9 million in the comparable period in 2012.
On a reporting segment basis, general and administrative expenses from the Americas segment increased $8.4 million, including the negative foreign currency impact of $0.8 million, for the six months ended June 30, 2013 from the comparable period in 2012. General and administrative expenses from the EMEA segment decreased $0.6 million, including the negative foreign currency impact of $0.2 million, for the six months ended June 30, 2013 from the comparable period in 2012. Corporate general and administrative expenses decreased $0.7 million for the six months ended June 30, 2013 from the comparable period in 2012. This decrease of $0.7 million was primarily attributable to lower legal and professional fees of $1.0 million and lower consulting costs of $0.6 million, partially offset by higher compensation costs of $0.9 million.
In the Americas segment, as a percentage of revenues, general and administrative expenses decreased to 20.3% for the six months ended June 30, 2013 from 21.1% in the comparable period in 2012. This decrease of 0.8%, as a percentage of revenues, was primarily attributable to lower facility-related costs of 0.4%, lower equipment and maintenance costs of 0.4%, lower compensation costs of 0.3% and lower communication costs of 0.2%, partially offset by higher software maintenance costs of 0.4% and higher other costs of 0.1%.
In the EMEA segment, as a percentage of revenues, general and administrative expenses decreased to 23.5% for the six months ended June 30, 2013 from 25.1% in the comparable period in 2012. This decrease of 1.6%, as a percentage of revenues, was primarily attributable to lower severance-related costs of 0.5%, lower facility-related costs of 0.5%, lower compensation costs of 0.4% and lower communication costs of 0.4%, all primarily due to the closure of certain sites in connection with the Fourth Quarter 2011 Exit Plan, partially offset by higher travel costs of 0.2%.
Depreciation, Net
Depreciation, net was $20.2 million for the six months ended June 30, 2013, compared to $20.5 million in the comparable period in 2012.
Amortization of Intangibles
Amortization of intangibles was $7.5 million for the six months ended June 30, 2013, compared to $3.9 million in the same comparable in 2012, primarily due to the additional amortization related to the intangible assets recorded as part of the August 2012 acquisition of Alpine.
Impairment of Long-Lived Assets
We recorded a $0.1 million impairment in the Americas segment for the six months ended June 30, 2012. See Note 5, Fair Value, of the Notes to Condensed Consolidated Financial Statements for further information.
Interest Income
Interest income was $0.4 million for the six months ended June 30, 2013, compared to $0.7 million in the comparable period in 2012, reflecting lower average invested balances of interest bearing investments in cash and cash equivalents.
50
Interest (Expense)
Interest (expense) was $(1.1) million for the six months ended June 30, 2013, compared to $(0.6) million in the comparable period in 2012, reflecting higher average outstanding borrowings primarily due to the August 2012 Alpine acquisition.
Other (Expense)
Other (expense), net, was $(0.2) million for the six months ended June 30, 2013, compared to $(1.1) million in the comparable period in 2012. The net decrease in other (expense), net, of $0.9 million was primarily attributable to an increase of $2.4 million in foreign currency forward contract gains (which were not designated as hedging instruments), partially offset by an increase of $1.1 million in realized and unrealized foreign currency transaction losses, net, and a decrease of $0.4 million in other miscellaneous income, net. Other income (expense), net, excludes the cumulative translation effects and unrealized gains (losses) on financial derivatives that are included in Accumulated other comprehensive income in shareholders equity in the accompanying Condensed Consolidated Balance Sheets.
Income Taxes
Income tax expense of $2.5 million for the six months ended June 30, 2013, was based upon pre-tax book income of $14.6 million. Income tax expense of $3.9 million for the six months ended June 30, 2012, was based upon pre-tax book income of $22.4 million. The effective tax rate for the six months ended June 30, 2013 was 17.2% compared to an effective tax rate of 17.3% for the comparable period in 2012. In response to the American Taxpayer Relief Act of 2012 signed into law on January 2, 2013, with retroactive application to January 1, 2012, we executed offshore cash movements resulting in a $2.6 million foreign withholding tax. This withholding tax, which was included in income tax expense for the six months ended June 30, 2013, increased the effective tax rate compared to the six months ended June 30, 2012. This increase was offset by a decrease in the effective tax rate primarily due to fluctuation in earnings among the various jurisdictions in which we operate.
(Loss) from Discontinued Operations
We sold our Spanish operations in March 2012 and accounted for this transaction in accordance with Accounting Standards Codification 205-20 Discontinued Operations. Accordingly, we reclassified the results of operations for the six months ended June 30, 2012 to discontinued operations. The loss from discontinued operations totaled $0.8 million for the six months ended June 30, 2012. The loss on sale of discontinued operations totaled $10.7 million for the six months ended June 30, 2012. There was no tax impact on the loss from discontinued operations or loss on sale of discontinued operations.
Net Income
As a result of the foregoing, we reported income from continuing operations for the six months ended June 30, 2013 of $15.5 million, a decrease of $7.9 million from the comparable period in 2012. This decrease was principally attributable to a $60.7 million increase in direct salaries and related costs, a $7.1 million increase in general and administrative expenses and a $3.6 million increase in amortization of intangibles, partially offset by a $63.1 million increase in revenues, a $0.3 million decrease in depreciation and a $0.1 million decrease in impairment of long-lived assets. In addition to the $7.9 million decrease in income from continuing operations, we experienced an increase in interest (expense) of $0.5 million and a decrease in interest income of $0.3 million, partially offset by a $10.7 million decrease in loss on sale of discontinued operations, a $0.8 million decrease in loss from discontinued operations, a $0.9 million decrease in other (expense) and a $1.4 million decrease in income taxes, resulting in net income of $12.1 million for the six months ended June 30, 2013, an increase of $5.1 million compared to the comparable period in 2012.
51
Client Concentration
Our top ten clients accounted for approximately 46.5% and 46.0% of our consolidated revenues in the three and six months ended June 30, 2013, respectively, down from approximately 49.1% and 48.9% of our consolidated revenues in the three and six months ended June 30, 2012, respectively.
Total consolidated revenues included $38.7 million, or 12.7%, and $74.0 million, or 12.2%, of consolidated revenues, for the three and six months ended June 30, 2013, respectively, from AT&T Corporation, a major provider of communication services for which we provide various customer support services over several distinct lines of AT&T businesses. This included $37.9 million and $72.2 million in revenue from the Americas for the three and six months ended June 30, 2013, respectively, and $0.8 million and $1.8 million in revenue from EMEA for the three and six months ended June 30, 2013, respectively. Our next largest client, which was in the financial services vertical market, accounted for $18.8 million, or 6.2%, and $36.0 million, or 5.9%, of consolidated revenues, for the three and six months ended June 30, 2013, respectively.
The total consolidated revenues for the comparable period as it relates to our largest client were $30.8 million, or 11.6%, and $61.1 million, or 11.3%, of consolidated revenues, for the three and six months ended June 30, 2012, respectively. This included $30.1 million and $59.6 million in revenue from the Americas for the three and six months ended June 30, 2012, respectively, and $0.7 million and $1.5 million in revenue from EMEA for the three and six months ended June 30, 2012, respectively. Our next largest client, which was in the financial services vertical market, accounted for $17.7 million, or 6.7%, and $33.2 million, or 6.1%, of consolidated revenues, for the three and six months ended June 30, 2012, respectively.
We have multiple distinct contracts with AT&T spread across multiple lines of businesses, which expire between 2013 and 2015. We have historically renewed most of these contracts. However, there is no assurance that these contracts will be renewed, or if renewed, will be on terms as favorable as the existing contracts. Each line of business is governed by separate business terms, conditions and metrics. Each line of business also has a separate decision maker such that a loss of one line of business would not necessarily impact our relationship with the client and decision makers on other lines of business. The loss of (or the failure to retain a significant amount of business with) any of our key clients, including AT&T, could have a material adverse effect on our performance. Many of our contracts contain penalty provisions for failure to meet minimum service levels and are cancelable by the client at any time or on short notice. Also, clients may unilaterally reduce their use of our services under our contracts without penalty.
Business Outlook
For the three months ended September 30, 2013, we anticipate the following financial results:
| Revenues in the range of $305.0 million to $310.0 million; |
| Effective tax rate of approximately 36%; |
| Fully diluted share count of approximately 42.8 million; |
| Diluted earnings per share of approximately $0.19 to $0.22; and |
| Capital expenditures in the range of $20.0 million to $25.0 million |
For the twelve months ended December 31, 2013, we anticipate the following financial results:
| Revenues in the range of $1,230.0 million to $1,240.0 million; |
| Effective tax rate of approximately 25%; |
| Fully diluted share count of approximately 42.9 million; |
| Diluted earnings per share of approximately $0.89 to $0.98; and |
| Capital expenditures in the range of $55.0 million to $65.0 million |
Not included in this guidance is the impact of any future acquisitions or share repurchase activities.
52
Liquidity and Capital Resources
Our primary sources of liquidity are generally 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 contact management services, invest in technology applications and tools to further develop our service offerings and for working capital and other general corporate purposes, including repurchase of our common stock in the open market and to fund acquisitions. In future periods, we intend similar uses of these funds.
On August 18, 2011, our Board authorized us to purchase up to 5.0 million shares of our outstanding common stock (the 2011 Share Repurchase Program). During the six months ended June 30, 2013, we repurchased 0.3 million common shares under the 2011 Share Repurchase Program at prices ranging from $15.61 to $16.00 per share for a total cost of $4.3 million. During the six months ended June 30, 2012, we repurchased 0.5 million common shares under the 2011 Share Repurchase Program at prices ranging from $13.85 to $15.00 per share for a total cost of $7.5 million. As of June 30, 2013, a total of 3.3 million shares have been repurchased under the 2011 Share Repurchase Program. 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. We may make additional discretionary stock repurchases under this program in 2013.
During the six months ended June 30, 2013, cash decreased $5.7 million from operating activities and we used $26.1 million for capital expenditures, $10.0 million to repay long-term debt, $4.3 million to repurchase common stock and $0.1 million to repurchase common stock for minimum tax withholding on equity awards. The decrease in cash was partially offset by $32.0 million in proceeds from the issuance of long-term debt, $0.1 million from proceeds from sale of property and equipment, $0.1 million from proceeds from grants, $0.1 million from proceeds from issuance of stock and $0.1 million of other, resulting in a $19.9 million decrease in available cash (including the unfavorable effects of foreign currency exchange rates on cash of $6.1 million).
Net cash flows used by operating activities for the six months ended June 30, 2013 were $5.7 million, compared to $24.9 million provided by operating activities for the comparable 2012 period. The $30.6 million decrease in net cash flows from operating activities was due to a net decrease of $29.1 million in cash flows from assets and liabilities and a $6.6 million decrease in non-cash reconciling items such as depreciation, loss on the sale of discontinued operations and deferred income taxes, partially offset by a $5.1 million increase in net income. The $29.1 million decrease in cash flows from assets and liabilities was principally a result of a $33.1 million increase in accounts receivable, $4.7 million decrease in other liabilities and a $1.4 million decrease in taxes payable, partially offset by a $7.6 million decrease in other assets and a $2.5 million increase in deferred revenue. The increase in accounts receivable is primarily due to the timing of the collection of payments as well as additional billings related to higher volumes within certain clients in the six months ended June 30, 2013 over the comparable period in 2012.
We sold our operations in Spain (the Spanish operations) in March 2012. Cash flows from discontinued operations were as follows (in thousands):
Six Months Ended June 30, 2012 |
||||
Cash (used for) provided by operating activities of discontinued operations |
$ | (4,530) | ||
Cash (used for) investing activities of discontinued operations |
(8,887) |
Cash (used for) operating activities of discontinued operations primarily represents the cash used by the Spanish operations during the six months ended June 30, 2012. Cash (used for) investing activities of discontinued operations during the six months ended June 30, 2012 primarily represents the cash divested upon the sale of the Spanish operations. The sale of the Spanish operations resulted in a loss of $10.7 million. We do not expect the absence of the cash flows from our discontinued operations in Spain to materially affect our future liquidity and capital resources.
Capital expenditures, which are generally funded by cash generated from operating activities, available cash balances and borrowings available under our credit facilities, were $26.1 million for the six months ended June 30, 2013, compared to $13.8 million for the comparable period in 2012, an increase of $12.3 million. In 2013, we anticipate capital expenditures in the range of $55.0 million to $65.0 million, primarily for new seat additions principally in the Americas, maintenance and systems infrastructure.
53
On May 3, 2012, we entered into a $245 million revolving credit facility (the 2012 Credit Agreement). The 2012 Credit Agreement replaced our previous $75 million revolving credit facility dated February 2, 2010, as amended, which agreement was terminated simultaneous with entering into the 2012 Credit Agreement. The 2012 Credit Agreement is subject to certain borrowing limitations and includes certain customary financial and restrictive covenants. At June 30, 2013, we were in compliance with all loan requirements of the 2012 Credit Agreement and had $113.0 million of outstanding borrowings under this facility, with an average daily utilization of $105.8 million and $98.5 million for the three and six months ended June 30, 2013, respectively (none in the comparable periods in 2012). During the three and six months ended June 30, 2013, the related interest expense, excluding amortization of deferred loan fees, under our credit agreements was $0.4 million and $0.7 million, respectively, which represented a weighted average interest rate of 1.5% and 1.5%, respectively (none in the comparable periods in 2012).
The 2012 Credit Agreement includes a $184 million alternate-currency sub-facility, a $10 million swingline sub-facility and a $35 million letter of credit sub-facility, and may be used for general corporate purposes including acquisitions, share repurchases, working capital support and letters of credit, subject to certain limitations. We are not currently aware of any inability of our lenders to provide access to the full commitment of funds that exist under the 2012 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 2012 Credit Agreement will mature on May 2, 2017.
Borrowings under the 2012 Credit Agreement will bear interest at either LIBOR or the base rate plus, in each case, an applicable margin based on our leverage ratio. The applicable interest rate will be determined quarterly based on our leverage ratio at such time. The base rate is a rate per annum equal to the greatest of (i) the rate of interest established by KeyBank, from time to time, as its prime rate; (ii) the Federal Funds effective rate in effect from time to time, plus 1/2 of 1% per annum; and (iii) the then-applicable LIBOR rate for one month interest periods, plus 1.00%. Swingline loans will bear interest only at the base rate plus the base rate margin. In addition, we are required to pay certain customary fees, including a commitment fee of 0.175%, which is due quarterly in arrears and calculated on the average unused amount of the 2012 Credit Agreement.
The 2012 Credit Agreement is guaranteed by all of our existing and future direct and indirect material U.S. subsidiaries and secured by a pledge of 100% of the non-voting and 65% of the voting capital stock of all of our direct foreign subsidiaries and those of the guarantors.
In April 2012, we received an assessment for the Canadian 2003-2006 audit for which we filed a Notice of Objection in July 2012. A request for Competent Authority Assistance was filed with the Canadian Revenue Agency in June 2013. As required by the Notice of Objection process, we paid mandatory security deposits in the amount of $14.1 million to the Canadian taxing authorities during 2012. In January 2013, we received a partial assessment for the Canadian 2007-2009 audit. We paid the Canadian Revenue Agency an additional security deposit of $0.3 million for the 2007 tax year. These deposits are included in Deferred charges and other assets in the accompanying Condensed Consolidated Balance Sheets as of June 30, 2013 and December 31, 2012. Although the outcome of examinations by taxing authorities is always uncertain, we believe we are adequately reserved for these audits and that resolution is not expected to have a material impact on our financial condition and results of operations.
As of June 30, 2013, we had $167.4 million in cash and cash equivalents, of which approximately 97.5% or $163.3 million, was held in international operations and is deemed to be indefinitely reinvested offshore. These funds may be subject to additional taxes if repatriated to the United States, including withholding tax applied by the country of origin and an incremental U.S. income tax, net of allowable foreign tax credits. 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 do not intend nor currently foresee a need to repatriate these funds. We expect our current domestic cash levels and cash flows from operations to be adequate to meet our domestic 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 2012 Credit Agreement as a result of the timing of our working capital needs, including capital expenditures. Additionally, we expect our current foreign cash levels and cash flows from foreign operations to be adequate to meet our foreign anticipated working capital needs, including investment activities such as capital expenditures for the next twelve months and the foreseeable future.
54
If we should require more cash in the U.S. than is provided by our domestic operations for significant discretionary unforeseen activities such as acquisitions of businesses and share repurchases, we could elect to repatriate future foreign earnings and/or raise capital in the U.S through additional borrowings or debt/equity issuances. These alternatives could result in higher effective tax rates, interest expense and/or dilution of earnings. We have borrowed funds domestically and continue to have the ability to borrow additional funds domestically at reasonable interest rates.
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, 2012.
Off-Balance Sheet Arrangements and Other
At June 30, 2013, 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
The following table summarizes the material changes to our contractual cash obligations as of June 30, 2013, and the effect these obligations are expected to have on liquidity and cash flow in future periods (in thousands):
Payments Due By Period | ||||||||||||||||||||||||
Total | Less Than 1 Year |
1 - 3 Years | 3 - 5 Years | After 5 Years |
Other | |||||||||||||||||||
Operating leases(1) |
$ | 12,494 | $ | 982 | $ | 5,850 | $ | 3,221 | $ | 2,441 | $ | - | ||||||||||||
Purchase obligations(2) |
8,270 | 2,612 | 4,967 | 691 | - | - | ||||||||||||||||||
Long-term debt (3) |
22,000 | - | - | 22,000 | - | - | ||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ | 42,764 | $ | 3,594 | $ | 10,817 | $ | 25,912 | $ | 2,441 | $ | - | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
(1) | Amounts represent the expected cash payments under our operating leases. |
(2) | Amounts represent the expected cash payments under our purchase obligations, which include agreements to purchase goods or services that are enforceable and legally binding on us and that specify all significant terms, including: fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. Purchase obligations exclude agreements that are cancelable without penalty. |
(3) | Amount represents additional borrowings under our revolving credit facility since December 31, 2012. (See Note 11 to the accompanying Condensed Consolidated Financial Statements.) |
Except for the contractual obligations mentioned above, there have not been any material changes to the outstanding contractual obligations from the disclosure in our Annual Report on Form 10-K for the year ended December 31, 2012 filed on March 1, 2013.
Critical Accounting Estimates
See Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report and Form 10-K for the year ended December 31, 2012 filed on March 1, 2013 for a discussion of our critical accounting estimates.
There have been no material changes to our critical accounting estimates in 2013.
New Accounting Standards Not Yet Adopted
In March 2013, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2013-05 Foreign Currency Matters (Topic 830) Parents Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (ASU 2013-05). The amendments in ASU 2013-05 indicates that a cumulative translation adjustment (CTA) is attached to the parents investment in a foreign entity and should be released in a manner consistent with the derecognition guidance on investments in entities. Thus, the entire amount of the CTA associated with the foreign entity would be released when there has been a sale of a subsidiary or group of net assets within a
55
foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity, a loss of a controlling financial interest in an investment in a foreign entity (i.e., the foreign entity is deconsolidated), or a step acquisition for a foreign entity (i.e., when an entity has changed from applying the equity method for an investment in a foreign entity to consolidating the foreign entity). ASU 2013-05 does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. The amendments in ASU 2013-05 are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The amendments should be applied prospectively to derecognition events occurring after the effective date. We do not expect the adoption of ASU 2013-05 to materially impact our financial condition, results of operations and cash flows.
In July 2013, the FASB issued ASU 2013-11 Income Taxes (Topic 740) Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (ASU 2013-11). The amendments in ASU 2013-11 indicate that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. We do not expect the adoption of ASU 2013-11 to materially impact our financial condition, results of operations and cash flows.
Unless we need to clarify a point to readers, we will refrain from citing specific section references when discussing the application of accounting principles or addressing new or pending accounting rule changes.
U.S. Healthcare Reform Acts
In March 2010, the President of the United States signed into law comprehensive healthcare reform legislation under the Patient Protection and Affordable Care Act and the Health Care and Education Reconciliation Act (the Acts). The Acts contain provisions that could materially impact our healthcare costs in the future, thus adversely affecting our profitability. The Internal Revenue Service recently announced that the employer mandate provisions of the Acts will be delayed until 2015 and the promised additional guidance has yet to be issued. As a result of this announcement, we are evaluating the potential impact of the Acts on our financial condition, results of operations and cash flows for 2014.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Foreign Currency Risk
Our earnings and cash flows are subject to fluctuations due to changes in currency exchange rates. We are exposed to foreign currency exchange rate fluctuations when subsidiaries with functional currencies other than the U.S. Dollar (USD) are translated into our USD consolidated financial statements. As exchange rates vary, those results, when translated, may vary from expectations and adversely impact profitability. The cumulative translation effects for subsidiaries using functional currencies other than the U.S. Dollar are included in Accumulated other comprehensive income (loss) in shareholders equity. Movements in non-U.S. Dollar currency exchange rates may negatively or positively affect our competitive position, as exchange rate changes may affect business practices and/or pricing strategies of non-U.S. based competitors.
We employ a foreign currency risk management program that periodically utilizes derivative instruments to protect against unanticipated fluctuations in earnings and cash flows caused by volatility in foreign currency exchange (FX) rates. Option and forward derivative contracts are used to hedge intercompany receivables and payables, and other transactions initiated in the United States, that are denominated in a foreign currency. Additionally, we employ FX contracts to hedge net investments in foreign operations.
We serve a number of U.S.-based clients using customer contact management center capacity in The Philippines, Canada and Costa Rica, which are within our Americas segment. Although the contracts with these clients are priced
56
in USDs, a substantial portion of the costs incurred to render services under these contracts are denominated in Philippine Pesos (PHP), Canadian Dollars, and Costa Rican Colones (CRC), which represent FX exposures. Additionally, our EMEA segment services clients in Hungary and Romania where the contracts are priced in Euros (EUR), with a substantial portion of the costs incurred to render services under these contracts denominated in Hungarian Forints (HUF) and Romanian Leis (RON).
In order to hedge a portion of our anticipated cash flow requirements denominated in PHP, CRC, HUF and RON we had outstanding forward contracts and options as of June 30, 2013 with counterparties through October 2014 with notional amounts totaling $209.4 million. As of June 30, 2013, we had net total derivative liabilities associated with these contracts with a fair value of $2.2 million, which will settle within the next 16 months. If the USD was to weaken against the PHP and CRC and the EUR was to weaken against the HUF and RON by 10% from current period-end levels, we would incur a loss of approximately $18.0 million on the underlying exposures of the derivative instruments. However, this loss would be mitigated by corresponding gains on the underlying exposures.
We entered into forward exchange contracts with notional amounts totaling $32.7 million to hedge net investments in our foreign operations. The purpose of these derivative instruments is to protect against the risk that the net assets of certain foreign subsidiaries will be adversely affected by changes in exchange rates and economic exposures related to our foreign currency-based investments in these subsidiaries. As of June 30, 2013, the fair value of these derivatives was a net receivable of $0.1 million. The potential loss in fair value at June 30, 2013, for these contracts resulting from a hypothetical 10% adverse change in the foreign currency exchange rates is approximately $3.2 million. However, this loss would be mitigated by corresponding gains on the underlying exposures.
We also entered into forward exchange contracts with notional amounts totaling $39.0 million that are not designated as hedges. The purpose of these derivative instruments is to protect against FX volatility pertaining to intercompany receivables and payables, and other assets and liabilities that are denominated in currencies other than our subsidiaries functional currencies. As of June 30, 2013, the fair value of these derivatives was a net asset of $0.3 million. The potential loss in fair value at June 30, 2013, for these contracts resulting from a hypothetical 10% adverse change in the foreign currency exchange rates is approximately $4.9 million. However, this loss would be mitigated by corresponding gains on the underlying exposures.
We evaluate the credit quality of potential counterparties to derivative transactions and only enter into contracts with those considered to have minimal credit risk. We periodically monitor changes to counterparty credit quality as well as our concentration of credit exposure to individual counterparties.
We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of changes in foreign exchange rates.
As a general rule, we do not use financial instruments to hedge local currency denominated operating expenses in countries where a natural hedge exists. For example, in many countries, revenue from the local currency services substantially offsets the local currency denominated operating expenses.
Interest Rate Risk
Our exposure to interest rate risk results from variable debt outstanding under our revolving credit facility. We pay interest on outstanding borrowings at interest rates that fluctuate based upon changes in various base rates. As of June 30, 2013, we had $113.0 million in borrowings outstanding under the revolving credit facility. Based on our level of variable rate debt outstanding during the three and six months ended June 30, 2013, a one-point increase in the weighted average interest rate, which generally equals the LIBOR rate plus an applicable margin, would have had an impact of $0.3 million and $0.5 million, respectively, on our results of operations.
We have not historically used derivative instruments to manage exposure to changes in interest rates.
Fluctuations in Quarterly Results
For the year ended December 31, 2012, quarterly revenues as a percentage of total consolidated annual revenues were approximately 25%, 23%, 25% and 27%, 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 contact management services, non-U.S. currency fluctuations, and the seasonal pattern of customer contact management support and fulfillment services.
57
Item 4. Controls and Procedures
As of June 30, 2013, under the direction of our Chief Executive Officer and Chief Financial 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 SECs rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We concluded that, as of June 30, 2013, 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 June 30, 2013 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 August 20, 2012, we acquired Alpine. We have excluded Alpine from our assessment of the effectiveness of our internal control over financial reporting as of June 30, 2013 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 our integration activities.
From time to time, we are involved in legal actions arising in the ordinary course of business. With respect to these matters, we believe that we have adequate legal defenses and/or provided adequate accruals for related costs such that the ultimate outcome will not have a material adverse effect on our future financial position or results of operations.
For risk factors, see Item 1A, Risk Factors, of our Annual Report on Form 10-K for the year ended December 31, 2012 filed on March 1, 2013.
58
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
Below is a summary of stock repurchases for the three months ended June 30, 2013 (in thousands, except average price per share). See Note 14, Earnings Per Share, of Notes to Condensed Consolidated Financial Statements for information regarding our stock repurchase program.
Period | Total Number of Shares Purchased (1) |
Average Price Paid Per Share |
Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs |
Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs |
||||||||||||
|
||||||||||||||||
April 1, 2013 - April 30, 2013 |
- | $ | - | - | 1,969 | |||||||||||
May 1, 2013 - May 31, 2013 |
272 | $ | 15.78 | 272 | 1,697 | |||||||||||
June 1, 2013 - June 30, 2013 |
- | $ | - | - | 1,697 | |||||||||||
|
|
|
|
|
|
|||||||||||
Total |
272 | 272 | 1,697 | |||||||||||||
|
|
|
|
|
|
(1) | All shares purchased as part of the repurchase plan publicly announced on August 18, 2011. Total number of shares approved for repurchase under the 2011 Repurchase Plan was 5.0 million with no expiration date. All of the shares available under the repurchase plan publicly announced on August 5, 2002 have been repurchased. |
Item 3. Defaults Upon Senior Securities
None.
Item 4. Mine Safety Disclosures
Not Applicable.
None.
59
The following documents are filed as an exhibit to this Report:
15 |
Awareness letter. | |||
31.1 |
Certification of Chief Executive Officer, pursuant to Rule 13a-14(a). | |||
31.2 |
Certification of Chief Financial 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 Financial Officer, pursuant to 18 U.S.C. §1350. | |||
101.INS |
XBRL Instance Document | |||
101.SCH |
XBRL Taxonomy Extension Schema Document | |||
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document | |||
101.LAB |
XBRL Taxonomy Extension Label Linkbase Document | |||
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document | |||
101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document |
60
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
SYKES ENTERPRISES, INCORPORATED | ||||||||
(Registrant) | ||||||||
Date: August 6, 2013 |
By: /s/ W. Michael Kipphut | |||||||
W. Michael Kipphut Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
61
EXHIBIT INDEX
Exhibit Number |
||
15 |
Awareness letter. | |
31.1 |
Certification of Chief Executive Officer, pursuant to Rule 13a-14(a). | |
31.2 |
Certification of Chief Financial 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 Financial Officer, pursuant to 18 U.S.C. §1350. | |
101.INS |
XBRL Instance Document | |
101.SCH |
XBRL Taxonomy Extension Schema Document | |
101.CAL |
XBRL Taxonomy Extension Calculation Linkbase Document | |
101.LAB |
XBRL Taxonomy Extension Label Linkbase Document | |
101.PRE |
XBRL Taxonomy Extension Presentation Linkbase Document | |
101.DEF |
XBRL Taxonomy Extension Definition Linkbase Document |
62
Exhibit 15
August 6, 2013
Sykes Enterprises, Incorporated
400 North Ashley Drive
Tampa, FL 33602
We have reviewed, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the unaudited interim financial information of Sykes Enterprises, Incorporated and subsidiaries for the periods ended June 30, 2013, and 2012 and the six-month period ended December 31, 2012, as indicated in our report dated August 6, 2013; because we did not perform an audit, we expressed no opinion on that information.
We are aware that our report referred to above, which is included in your Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, is incorporated by reference in Registration Statement Nos. 333-23681, 333-76629, 333-88359, 333-73260, 333-125178 and 333-178670 on Form S-8.
We also are aware that the aforementioned report, pursuant to Rule 436(c) under the Securities Act of 1933, is not considered a part of the Registration Statement prepared or certified by an accountant or a report prepared or certified by an accountant within the meaning of Sections 7 and 11 of that Act.
/s/ Deloitte & Touche LLP |
Certified Public Accountants |
Tampa, Florida |
EXHIBIT 31.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO RULE 13a-14(a)
I, Charles E. Sykes, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Sykes Enterprises, Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the companys most recent fiscal quarter (the companys fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. The companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.
Date: August 6, 2013 |
||||
/s/ Charles E. Sykes
|
||||
Charles E. Sykes, President, Chief Executive Officer and Director |
EXHIBIT 31.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO RULE 13a-14(a)
I, W. Michael Kipphut, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Sykes Enterprises, Incorporated;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in this report;
4. The companys other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
(b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
(c) | Evaluated the effectiveness of the companys disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
(d) | Disclosed in this report any change in the companys internal control over financial reporting that occurred during the companys most recent fiscal quarter (the companys fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the companys internal control over financial reporting; and |
5. The companys other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the companys auditors and the audit committee of the companys board of directors (or persons performing the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the companys ability to record, process, summarize and report financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the companys internal control over financial reporting.
Date: August 6, 2013 |
||||
/s/ W. Michael Kipphut
|
||||
W. Michael Kipphut, Executive Vice President and Chief Financial Officer |
EXHIBIT 32.1
CERTIFICATION OF CHIEF EXECUTIVE OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of Sykes Enterprises, Incorporated (the Company) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, Charles E. Sykes, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 6, 2013 |
By: |
/s/ Charles E. Sykes |
||||||
|
||||||||
Charles E. Sykes President and Chief Executive Officer and Director |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
EXHIBIT 32.2
CERTIFICATION OF CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350
In connection with the Quarterly Report of Sykes Enterprises, Incorporated (the Company) on Form 10-Q for the period ended June 30, 2013 as filed with the Securities and Exchange Commission on the date hereof (the Report), I, W. Michael Kipphut, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350:
(1) The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
Date: August 6, 2013 |
By: |
/s/ W. Michael Kipphut |
||||||
|
||||||||
W. Michael Kipphut Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |
A signed original of this written statement required by Section 906 has been provided to the Company and will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.
6S/
MN6G,$8SF(;J+=5MJ1B(H[
Accumulated Other Comprehensive Income (Loss) - Amounts Reclassified to Net Income from Accumulated Other Comprehensive Income (Loss) (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Pre-tax amount | $ 210,141 | $ 174,630 | $ 413,847 | $ 353,130 |
Pre-tax amount | 304,735 | 264,802 | 605,979 | 542,900 |
Pre-tax amount | 75,247 | 69,642 | 148,980 | 141,906 |
Tax (provision) benefit | (688) | 511 | 2,512 | 3,878 |
Net income | 5,596 | 7,748 | 12,114 | 6,991 |
Reclassification out of Accumulated Other Comprehensive Income [Member]
|
||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Net income | 118 | 821 | ||
Reclassification out of Accumulated Other Comprehensive Income [Member] | Unrealized Actuarial Gain (Loss) Related to Pension Liability [Member]
|
||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Pre-tax amount | 19 | 29 | ||
Net income | 19 | 29 | ||
Reclassification out of Accumulated Other Comprehensive Income [Member] | Unrealized Gain (Loss) on Cash Flow Hedging Instruments [Member]
|
||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Pre-tax amount | 31 | 774 | ||
Tax (provision) benefit | 54 | (12) | ||
Net income | 85 | 762 | ||
Reclassification out of Accumulated Other Comprehensive Income [Member] | Unrealized Gain (Loss) on Post Retirement Obligation [Member]
|
||||
Reclassification Adjustment out of Accumulated Other Comprehensive Income [Line Items] | ||||
Pre-tax amount | 14 | 30 | ||
Net income | $ 14 | $ 30 |
Income Taxes - Summary of Significant Tax Jurisdictions Currently under Audit (Detail)
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Canada [Member]
|
|
Income Tax Examination [Line Items] | |
Significant tax jurisdictions currently under audit | 2003 to 2009 |
The Philippines [Member]
|
|
Income Tax Examination [Line Items] | |
Significant tax jurisdictions currently under audit | 2007 and 2009 |
United States [Member]
|
|
Income Tax Examination [Line Items] | |
Significant tax jurisdictions currently under audit | 2010 to 2012 |
Stock Based Compensation - Summary of Nonvested Common Stock (Detail) (Common Stock [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified |
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Common Stock [Member]
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested Shares, beginning balance | 8 |
Granted, Shares | 10 |
Vested, Shares | (9) |
Forfeited or expired, Shares | |
Nonvested Shares, ending balance | 9 |
Nonvested, Weighted Average Grant-Date Fair Value, beginning balance | $ 16.98 |
Granted, Weighted Average Grant-Date Fair Value | $ 15.89 |
Vested, Weighted Average Grant-Date Fair Value | $ 16.01 |
Forfeited or expired, Weighted Average Grant-Date Fair Value | |
Nonvested, Weighted Average Grant-Date Fair Value, ending balance | $ 16.77 |
Deferred Grants
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Text Block [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Grants | Note 10. Deferred Grants The components of deferred grants consist of the following (in thousands):
Amortization of the Company’s property grants included as a reduction to “General and administrative” costs and amortization of the Company’s employment grants included as a reduction to “Direct salaries and related costs” in the accompanying Condensed Consolidated Statements of Operations consist of the following (in thousands):
|
Discontinued Operations - Additional Information (Detail) (Spain [Member], USD $)
|
3 Months Ended | 6 Months Ended | 12 Months Ended | |
---|---|---|---|---|
Mar. 30, 2012
|
Jun. 30, 2012
|
Dec. 31, 2011
Facility
|
Mar. 29, 2012
|
|
Spain [Member]
|
||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||
Revenues | $ 10,102,000 | $ 39,300,000 | ||
Number of customer contact management centers | 3 | |||
FMV of fixed assets sold to buyer | 0 | |||
Cash sold to buyer | 4,100,000 | |||
Payroll liabilities assumed by buyer | 1,700,000 | |||
Capital contribution by Company | $ 8,600,000 |
Condensed Consolidated Statements of Operations (USD $)
In Thousands, except Per Share data, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Income Statement [Abstract] | ||||
Revenues | $ 304,735 | $ 264,802 | $ 605,979 | $ 542,900 |
Operating expenses: | ||||
Direct salaries and related costs | 210,141 | 174,630 | 413,847 | 353,130 |
General and administrative | 75,247 | 69,642 | 148,980 | 141,906 |
Depreciation, net | 10,017 | 9,816 | 20,186 | 20,450 |
Amortization of intangibles | 3,713 | 2,009 | 7,472 | 3,870 |
Impairment of long-lived assets | 149 | |||
Total operating expenses | 299,118 | 256,097 | 590,485 | 519,505 |
Income from continuing operations | 5,617 | 8,705 | 15,494 | 23,395 |
Other income (expense): | ||||
Interest income | 208 | 354 | 432 | 718 |
Interest (expense) | (578) | (312) | (1,086) | (628) |
Other (expense) | (339) | (488) | (214) | (1,089) |
Total other income (expense) | (709) | (446) | (868) | (999) |
Income from continuing operations before income taxes | 4,908 | 8,259 | 14,626 | 22,396 |
Income taxes | (688) | 511 | 2,512 | 3,878 |
Income from continuing operations, net of taxes | 5,596 | 7,748 | 12,114 | 18,518 |
(Loss) from discontinued operations, net of taxes | (820) | |||
(Loss) on sale of discontinued operations, net of taxes | (10,707) | |||
Net income | $ 5,596 | $ 7,748 | $ 12,114 | $ 6,991 |
Basic: | ||||
Continuing operations | $ 0.13 | $ 0.18 | $ 0.28 | $ 0.43 |
Discontinued operations | $ (0.27) | |||
Net income (loss) per common share | $ 0.13 | $ 0.18 | $ 0.28 | $ 0.16 |
Diluted: | ||||
Continuing operations | $ 0.13 | $ 0.18 | $ 0.28 | $ 0.43 |
Discontinued operations | $ (0.27) | |||
Net income (loss) per common share | $ 0.13 | $ 0.18 | $ 0.28 | $ 0.16 |
Weighted average common shares: | ||||
Basic | 42,936 | 43,094 | 42,992 | 43,205 |
Diluted | 42,954 | 43,103 | 43,011 | 43,256 |
Discontinued Operations
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations And Disposal Groups [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Discontinued Operations | Note 3. Discontinued Operations In November 2011, the Finance Committee of the Board of Directors of the Company approved a plan to sell its Spanish operations, which were operated through its Spanish subsidiary, Sykes Enterprises, Incorporated S.L. (“Sykes Spain”). Sykes Spain operated customer contact management centers, with annual revenues of approximately $39.3 million in 2011, providing contact center services through a total of three customer contact management centers in Spain to clients in Spain. The decision to sell the Spanish operations was made in 2011 after management completed a strategic review of the Spanish market and determined the operations were no longer consistent with the Company’s strategic direction. On March 29, 2012, Sykes Spain entered into the asset purchase agreement, by and between Sykes Spain and Iberphone, S.A.U., and pursuant thereto, on March 29, 2012, Sykes Spain sold the fixed assets located in Ponferrada, Spain, which were previously written down to zero, cash of $4.1 million, and certain contracts and licenses relating to the business of Sykes Spain, to Iberphone, S.A.U. Under the asset purchase agreement, Ponferrada, Spain employees were transferred to Iberphone S.A.U. which assumed certain payroll liabilities in the approximate amount of $1.7 million, and paid a nominal purchase price for the assets. On March 30, 2012, the Company entered into a stock purchase agreement with a former member of Sykes Spain’s management, and pursuant thereto, on March 30, 2012, the Company sold all of the shares of capital stock of Sykes Spain to the purchaser for a nominal price. Pursuant to the stock purchase agreement, immediately prior to closing, the Company made a cash capital contribution of $8.6 million to Sykes Spain to cover a portion of Sykes Spain’s liabilities and to fund the $4.1 million of cash transferred and sold pursuant to the asset purchase agreement with Iberphone, S.A.U. discussed above. As this was a stock transaction, the Company anticipates no future obligation with regard to Sykes Spain and there are no material post-closing obligations. The Company reflected the operating results related to the Spanish operations as discontinued operations in the accompanying Condensed Consolidated Statements of Operations for the six months ended June 30, 2012. Cash flows from discontinued operations are included in the accompanying Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012. This business was historically reported by the Company as part of the EMEA segment. The results of the Spanish operations included in discontinued operations were as follows (none in 2013) (in thousands):
|
Stock-Based Compensation
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Disclosure Of Compensation Related Costs Sharebased Payments [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-Based Compensation | Note 17. Stock-Based Compensation The Company’s stock-based compensation plans include the 2011 Equity Incentive Plan, the 2004 Non-Employee Director Fee Plan and the Deferred Compensation Plan. The following table summarizes the stock-based compensation expense (primarily in the Americas), income tax benefits related to the stock-based compensation and excess tax benefits (deficiencies) (in thousands):
There were no capitalized stock-based compensation costs as of June 30, 2013 and December 31, 2012. 2011 Equity Incentive Plan — The Company’s Board of Directors (the “Board”) adopted the Sykes Enterprises, Incorporated 2011 Equity Incentive Plan (the “2011 Plan”) on March 23, 2011, as amended on May 11, 2011 to reduce the number of shares of common stock available to 4.0 million shares. The 2011 Plan was approved by the shareholders at the May 2011 annual shareholders meeting. The 2011 Plan replaced and superseded the Company’s 2001 Equity Incentive Plan (the “2001 Plan”), which expired on March 14, 2011. The outstanding awards granted under the 2001 Plan will remain in effect until their exercise, expiration or termination. The 2011 Plan permits the grant of restricted stock, stock appreciation rights, stock options and other stock-based awards to certain employees of the Company, and certain non-employees who provide services to the Company in order to encourage them to remain in the employment of or to faithfully provide services to the Company and to increase their interest in the Company’s success. Stock Appreciation Rights – Stock appreciation rights (“SARs”) represent the right to receive, without payment to the Company, a certain number of shares of common stock, as determined by the Compensation and Human Resource Development Committee, equal to the amount by which the fair market value of a share of common stock at the time of exercise exceeds the grant price. The SARs are granted at the fair market value of the Company’s common stock on the date of the grant and vest one-third on each of the first three anniversaries of the date of grant, provided the participant is employed by the Company on such date. The SARs have a term of 10 years from the date of grant. The fair value of each SAR is estimated on the date of grant using the Black-Scholes valuation model that uses various assumptions. The following table summarizes the assumptions used to estimate the fair value of SARs granted:
The following table summarizes SARs activity as of June 30, 2013 and for the six months then ended:
The following table summarizes information regarding SARs granted and exercised (in thousands, except per SAR amounts):
The following table summarizes nonvested SARs activity as of June 30, 2013 and for the six months then ended:
As of June 30, 2013, there was $2.9 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested SARs granted under the 2011 Plan and 2001 Plan. This cost is expected to be recognized over a weighted average period of 1.6 years. Restricted Shares – The Company’s Board has approved in the past, and may approve in the future, awards of performance and employment-based restricted shares (“restricted shares”) for eligible participants. In some instances, where the issuance of restricted shares has adverse tax consequences to the recipient, the Board will instead issue restricted stock units (“RSUs”). The restricted shares are shares of the Company’s common stock (or in the case of RSUs, represent an equivalent number of shares of the Company’s common stock) which are issued to the participant subject to (a) restrictions on transfer for a period of time and (b) forfeiture under certain conditions. The performance goals, including revenue growth and income from operations targets, provide a range of vesting possibilities from 0% to 100% and will be measured at the end of the performance period. If the performance conditions are met for the performance period, the shares will vest and all restrictions on the transfer of the restricted shares will lapse (or in the case of RSUs, an equivalent number of shares of the Company’s common stock will be issued to the recipient). The Company recognizes compensation cost, net of estimated forfeitures, based on the fair value (which approximates the current market price) of the restricted shares (and RSUs) on the date of grant ratably over the requisite service period based on the probability of achieving the performance goals. Changes in the probability of achieving the performance goals from period to period will result in corresponding changes in compensation expense. The employment-based restricted shares currently outstanding vest one-third on each of the first three anniversaries of the date of grant, provided the participant is employed by the Company on such date.
The following table summarizes nonvested restricted shares/RSUs activity as of June 30, 2013 and for the six months then ended:
The following table summarizes information regarding restricted shares/RSUs granted and vested (in thousands, except per restricted share/RSU amounts):
As of June 30, 2013, based on the probability of achieving the performance goals, there was $20.5 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested restricted shares/RSUs granted under the 2011 Plan and 2001 Plan. This cost is expected to be recognized over a weighted average period of 1.9 years. 2004 Non-Employee Director Fee Plan — The Company’s 2004 Non-Employee Director Fee Plan (the “2004 Fee Plan”), as amended on May 17, 2012, provides that all new non-employee directors joining the Board will receive an initial grant of shares of common stock on the date the new director is elected or appointed, the number of which will be determined by dividing $60,000 by the closing price of the Company’s common stock on the trading day immediately preceding the date a new director is elected or appointed, rounded to the nearest whole number of shares. The initial grant of shares vests in twelve equal quarterly installments, one-twelfth on the date of grant and an additional one-twelfth on each successive third monthly anniversary of the date of grant. The award lapses with respect to all unvested shares in the event the non-employee director ceases to be a director of the Company, and any unvested shares are forfeited. The 2004 Fee Plan also provides that each non-employee director will receive, on the day after the annual shareholders meeting, an annual retainer for service as a non-employee director (the “Annual Retainer”). Prior to May 17, 2012, the Annual Retainer was $95,000, of which $50,000 was payable in cash, and the remainder was paid in stock. The annual grant of cash vests in four equal quarterly installments, one-fourth on the day following the annual meeting of shareholders, and an additional one-fourth on each successive third monthly anniversary of the date of grant. The annual grant of shares paid to non-employee directors prior to May 17, 2012 vests in eight equal quarterly installments, one-eighth on the day following the annual meeting of shareholders, and an additional one-eighth on each successive third monthly anniversary of the date of grant. On May 17, 2012, upon the recommendation of the Compensation and Human Resource Development Committee, the Board adopted the Fifth Amended and Restated Non-Employee Director Fee Plan (the “Amendment”), which increased the common stock component of the Annual Retainer by $30,000, resulting in a total Annual Retainer of $125,000, of which $50,000 is payable in cash and the remainder paid in stock. In addition, the Amendment also changed the vesting period for the annual equity award, from a two-year vesting period, to a one-year vesting period (consisting of four equal quarterly installments, one-fourth on the date of grant and an additional one-fourth on each successive third monthly anniversary of the date of grant). The award lapses with respect to all unpaid cash and unvested shares in the event the non-employee director ceases to be a director of the company, and any unvested shares and unpaid cash are forfeited. In addition to the Annual Retainer award, the 2004 Fee Plan also provides for any non-employee Chairman of the Board to receive an additional annual cash award of $100,000, and each non-employee director serving on a committee of the Board to receive an additional annual cash award. The additional annual cash award for the Chairperson of the Audit Committee is $20,000 and Audit Committee members’ are entitled to an annual cash award of $10,000. Prior to May 20, 2011, the annual cash awards for the Chairpersons of the Compensation and Human Resource Development Committee, Finance Committee and Nominating and Corporate Governance Committee were $12,500 and the members of such committees were entitled to an annual cash award of $7,500. On May 20, 2011, the Board increased the additional annual cash award to the Chairperson of the Compensation and Human Resource Development Committee to $15,000. All other additional cash awards remained unchanged. The Board may pay additional cash compensation to any non-employee director for services on behalf of the Board over and above those typically expected of directors, including but not limited to service on a special committee of the Board. The following table summarizes nonvested common stock share award activity as of June 30, 2013 and for the six months then ended:
The following table summarizes information regarding common stock share awards granted and vested (in thousands, except per share award amounts):
As of June 30, 2013, there was $0.4 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested common stock share awards granted under the 2004 Fee Plan. This cost is expected to be recognized over a weighted average period of 0.4 years. Deferred Compensation Plan — The Board adopted the Sykes Enterprises, Incorporated non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”) on December 17, 1998 and amended on March 29, 2006 and May 23, 2006. The Deferred Compensation Plan, which was not shareholder-approved, provides certain eligible employees the ability to defer any portion of their compensation until the participant’s retirement, termination, disability or death, or a change in control of the Company. Using the Company’s common stock, the Company matches 50% of the amounts deferred by certain senior management participants on a quarterly basis up to a total of $12,000 per year for the president, executive vice presidents and senior vice presidents and $7,500 per year for vice presidents (participants below the level of vice president are not eligible to receive matching contributions from the Company). Matching contributions and the associated earnings vest over a seven year service period. Deferred compensation amounts used to pay benefits, which are held in a rabbi trust, include investments in various mutual funds and shares of the Company’s common stock (See Note 8, Investments Held in Rabbi Trust.) As of June 30, 2013 and December 31, 2012, liabilities of $5.2 million and $5.3 million, respectively, of the Deferred Compensation Plan were recorded in “Accrued employee compensation and benefits” in the accompanying Condensed Consolidated Balance Sheets. Additionally, the Company’s common stock match associated with the Deferred Compensation Plan, with a carrying value of approximately $1.6 million and $1.4 million at June 30, 2013 and December 31, 2012, respectively, is included in “Treasury stock” in the accompanying Condensed Consolidated Balance Sheets.
The following table summarizes nonvested common stock activity as of June 30, 2013 and for the six months then ended:
The following table summarizes information regarding shares of common stock granted and vested (in thousands, except per common stock amounts):
As of June 30, 2013, there was $0.1 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested common stock granted under the Deferred Compensation Plan. This cost is expected to be recognized over a weighted average period of 2.5 years. |
Investments Held in Rabbi Trust - Investments Held in Rabbi Trust, Classified as Trading (Detail) (Mutual Funds [Member], USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Mutual Funds [Member]
|
||
Schedule of Trading Securities and Other Trading Assets [Line Items] | ||
Mutual funds, Cost | $ 4,229 | $ 4,812 |
Mutual funds, Fair Value | $ 5,221 | $ 5,261 |
Borrowings
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Borrowings | Note 11. Borrowings On May 3, 2012, the Company entered into a $245 million revolving credit facility (the “2012 Credit Agreement”) with a group of lenders and KeyBank National Association, as Lead Arranger, Sole Book Runner and Administrative Agent (“KeyBank”). The 2012 Credit Agreement replaced the Company’s previous $75 million revolving credit facility (the “2010 Credit Agreement”) dated February 2, 2010, as amended, which agreement was terminated simultaneous with entering into the 2012 Credit Agreement. The 2012 Credit Agreement is subject to certain borrowing limitations and includes certain customary financial and restrictive covenants. The Company borrowed $108.0 million under the 2012 Credit Agreement’s revolving credit facility on August 20, 2012 in connection with the acquisition of Alpine on such date. See Note 2, Acquisition of Alpine Access, Inc., for further information. The 2012 Credit Agreement includes a $184 million alternate-currency sub-facility, a $10 million swingline sub-facility and a $35 million letter of credit sub-facility, and may be used for general corporate purposes including acquisitions, share repurchases, working capital support and letters of credit, subject to certain limitations. The Company is not currently aware of any inability of its lenders to provide access to the full commitment of funds that exist under the revolving credit facility, if necessary. However, there can be no assurance that such facility will be available to the Company, even though it is a binding commitment of the financial institutions. Borrowings consist of the following (in thousands):
The 2012 Credit Agreement matures on May 2, 2017 and has no varying installments due. Borrowings under the 2012 Credit Agreement will bear interest at either LIBOR or the base rate plus, in each case, an applicable margin based on the Company’s leverage ratio. The applicable interest rate will be determined quarterly based on the Company’s leverage ratio at such time. The base rate is a rate per annum equal to the greatest of (i) the rate of interest established by KeyBank, from time to time, as its “prime rate”; (ii) the Federal Funds effective rate in effect from time to time, plus 1/2 of 1% per annum; and (iii) the then-applicable LIBOR rate for one month interest periods, plus 1.00%. Swingline loans will bear interest only at the base rate plus the base rate margin. In addition, the Company is required to pay certain customary fees, including a commitment fee of 0.175%, which is due quarterly in arrears and calculated on the average unused amount of the 2012 Credit Agreement. The 2012 Credit Agreement is guaranteed by all of the Company’s existing and future direct and indirect material U.S. subsidiaries and secured by a pledge of 100% of the non-voting and 65% of the voting capital stock of all the direct foreign subsidiaries of the Company and those of the guarantors. In May 2012, the Company paid an underwriting fee of $0.9 million for the 2012 Credit Agreement, which is deferred and amortized over the term of the loan. In addition, the Company pays a quarterly commitment fee on the 2012 Credit Agreement. The 2012 Credit Agreement had $113.0 million of outstanding borrowings as of June 30, 2013, with an average daily utilization of $105.8 million and $98.5 million for the three and six months ended June 30, 2013, respectively (none in the comparable periods in 2012). During the three and six months ended June 30, 2013, the related interest expense, excluding amortization of deferred loan fees, under our credit agreements was $0.4 million and $0.7 million, respectively, which represented a weighted average interest rate of 1.5% and 1.5%, respectively (none in the comparable periods in 2012). |
Defined Benefit Pension Plan and Postretirement Benefits - Company's Contributions to Employee Retirement Savings Plans (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Compensation And Retirement Disclosure [Abstract] | ||||
401(k) plan contributions | $ 245 | $ 324 | $ 478 | $ 732 |
Acquisition of Alpine Access, Inc - Additional Information (Detail) (USD $)
|
1 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
Aug. 20, 2012
Alpine Access, Inc [Member]
|
Jun. 30, 2013
Alpine Access, Inc [Member]
|
Aug. 20, 2012
Alpine Access, Inc [Member]
Americas [Member]
|
|
Business Acquisition [Line Items] | |||||
Percentage of common shares and voting rights acquired | 100.00% | ||||
Business acquisition date | Aug. 20, 2012 | ||||
Fair value of the consideration transferred | $ 148,953,000 | ||||
Consideration by cash | 41,000,000 | ||||
Proceeds from draw down under credit agreement | 108,000,000 | ||||
Goodwill | 200,929,000 | 204,231,000 | 80,766,000 | 80,800,000 | |
Fair value of receivables acquired | 11,831,000 | ||||
Gross contractual amount | $ 11,800,000 |
Earnings Per Share - Additional Information (Detail)
|
3 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
2011 Share Repurchase Program [Member]
|
Aug. 18, 2011
2011 Share Repurchase Program [Member]
|
Aug. 05, 2002
2002 Share Repurchase Program [Member]
|
|
Equity, Class of Treasury Stock [Line Items] | |||||||
Maximum amount of shares authorized for repurchase | 5,000,000 | 3,000,000 | |||||
Total number of Shares Repurchased | 272,000 | 85,000 | 272,000 | 508,000 | 3,300,000 |
Fair Value - Assets and Liabilities Measured at Fair Value on Recurring Basis (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Assets: | ||
Total assets | $ 15,134 | $ 14,958 |
Liabilities: | ||
Long-term debt | 113,000 | 91,000 |
Total liabilities | 117,249 | 91,974 |
Money Market Funds and Open-End Mutual Funds [Member]
|
||
Assets: | ||
Money market funds and open-end mutual funds included in "Cash and cash equivalents" | 7,506 | 7,598 |
Money market funds and open-end mutual funds in "Deferred charges and other assets" | 11 | 11 |
Foreign Currency Forward and Option Contracts Included in Other Current Assets [Member]
|
||
Assets: | ||
Foreign currency forward and option contracts | 2,053 | 2,008 |
Forward Currency Forward Contracts Included in Deferred Charges and Other Assets [Member]
|
||
Assets: | ||
Foreign currency forward and option contracts | 263 | |
Equity Investments Held in a Rabbi Trust for the Deferred Compensation Plan [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | 4,132 | 3,212 |
Debt Investments Held in a Rabbi Trust for the Deferred Compensation Plan [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | 1,089 | 2,049 |
Guaranteed Investment Certificates [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | 80 | 80 |
Foreign Currency Forward and Option Contracts Included in Other Accrued Expenses and Current Liabilities [Member]
|
||
Liabilities: | ||
Foreign currency forward and option contracts | 4,249 | 974 |
Fair Value, Inputs, Level 1[Member]
|
||
Assets: | ||
Total assets | 12,738 | 12,870 |
Liabilities: | ||
Long-term debt | ||
Total liabilities | ||
Fair Value, Inputs, Level 1[Member] | Money Market Funds and Open-End Mutual Funds [Member]
|
||
Assets: | ||
Money market funds and open-end mutual funds included in "Cash and cash equivalents" | 7,506 | 7,598 |
Money market funds and open-end mutual funds in "Deferred charges and other assets" | 11 | 11 |
Fair Value, Inputs, Level 1[Member] | Foreign Currency Forward and Option Contracts Included in Other Current Assets [Member]
|
||
Assets: | ||
Foreign currency forward and option contracts | ||
Fair Value, Inputs, Level 1[Member] | Forward Currency Forward Contracts Included in Deferred Charges and Other Assets [Member]
|
||
Assets: | ||
Foreign currency forward and option contracts | ||
Fair Value, Inputs, Level 1[Member] | Equity Investments Held in a Rabbi Trust for the Deferred Compensation Plan [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | 4,132 | 3,212 |
Fair Value, Inputs, Level 1[Member] | Debt Investments Held in a Rabbi Trust for the Deferred Compensation Plan [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | 1,089 | 2,049 |
Fair Value, Inputs, Level 1[Member] | Guaranteed Investment Certificates [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | ||
Fair Value, Inputs, Level 1[Member] | Foreign Currency Forward and Option Contracts Included in Other Accrued Expenses and Current Liabilities [Member]
|
||
Liabilities: | ||
Foreign currency forward and option contracts | ||
Fair Value, Inputs, Level 2 [Member]
|
||
Assets: | ||
Total assets | 2,396 | 2,088 |
Liabilities: | ||
Long-term debt | 113,000 | 91,000 |
Total liabilities | 117,249 | 91,974 |
Fair Value, Inputs, Level 2 [Member] | Money Market Funds and Open-End Mutual Funds [Member]
|
||
Assets: | ||
Money market funds and open-end mutual funds included in "Cash and cash equivalents" | ||
Money market funds and open-end mutual funds in "Deferred charges and other assets" | ||
Fair Value, Inputs, Level 2 [Member] | Foreign Currency Forward and Option Contracts Included in Other Current Assets [Member]
|
||
Assets: | ||
Foreign currency forward and option contracts | 2,053 | 2,008 |
Fair Value, Inputs, Level 2 [Member] | Forward Currency Forward Contracts Included in Deferred Charges and Other Assets [Member]
|
||
Assets: | ||
Foreign currency forward and option contracts | 263 | |
Fair Value, Inputs, Level 2 [Member] | Equity Investments Held in a Rabbi Trust for the Deferred Compensation Plan [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | ||
Fair Value, Inputs, Level 2 [Member] | Debt Investments Held in a Rabbi Trust for the Deferred Compensation Plan [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | ||
Fair Value, Inputs, Level 2 [Member] | Guaranteed Investment Certificates [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | 80 | 80 |
Fair Value, Inputs, Level 2 [Member] | Foreign Currency Forward and Option Contracts Included in Other Accrued Expenses and Current Liabilities [Member]
|
||
Liabilities: | ||
Foreign currency forward and option contracts | 4,249 | 974 |
Fair Value, Inputs, Level 3 [Member]
|
||
Assets: | ||
Total assets | ||
Liabilities: | ||
Long-term debt | ||
Total liabilities | ||
Fair Value, Inputs, Level 3 [Member] | Money Market Funds and Open-End Mutual Funds [Member]
|
||
Assets: | ||
Money market funds and open-end mutual funds included in "Cash and cash equivalents" | ||
Money market funds and open-end mutual funds in "Deferred charges and other assets" | ||
Fair Value, Inputs, Level 3 [Member] | Foreign Currency Forward and Option Contracts Included in Other Current Assets [Member]
|
||
Assets: | ||
Foreign currency forward and option contracts | ||
Fair Value, Inputs, Level 3 [Member] | Forward Currency Forward Contracts Included in Deferred Charges and Other Assets [Member]
|
||
Assets: | ||
Foreign currency forward and option contracts | ||
Fair Value, Inputs, Level 3 [Member] | Equity Investments Held in a Rabbi Trust for the Deferred Compensation Plan [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | ||
Fair Value, Inputs, Level 3 [Member] | Debt Investments Held in a Rabbi Trust for the Deferred Compensation Plan [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | ||
Fair Value, Inputs, Level 3 [Member] | Guaranteed Investment Certificates [Member]
|
||
Assets: | ||
Debt investments held in a rabbi trust for the Deferred Compensation Plan | ||
Fair Value, Inputs, Level 3 [Member] | Foreign Currency Forward and Option Contracts Included in Other Accrued Expenses and Current Liabilities [Member]
|
||
Liabilities: | ||
Foreign currency forward and option contracts |
Borrowings (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Components of Borrowings | Borrowings consist of the following (in thousands):
|
Related Party Transactions
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Related Party Transactions [Abstract] | |
Related Party Transactions | Note 20. Related Party Transactions In January 2008, the Company entered into a lease for a customer contact management center located in Kingstree, South Carolina. The landlord, Kingstree Office One, LLC, is an entity controlled by John H. Sykes, the founder, former Chairman and Chief Executive Officer and the father of Charles Sykes, President and Chief Executive Officer of the Company. The lease payments on the 20 year lease were negotiated at or below market rates, and the lease is cancellable at the option of the Company. There are significant penalties for early cancellation which decrease over time. The Company paid $0.1 million to the landlord during both the three months ended June 30, 2013 and 2012 and $0.2 million to the landlord during both the six months ended June 30, 2013 and 2012 under the terms of the lease. |
Other Income (Expense)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income And Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income (Expense) | Note 19. Other Income (Expense) Gains and losses resulting from foreign currency transactions are recorded in “Other income (expense)” in the accompanying Condensed Consolidated Statements of Operations during the period in which they occur. Other income (expense) consists of the following (in thousands):
|
Stock Based Compensation - Summary of Weighted Average Grant-Date Fair Value of Common Stock Units and Share Awards Granted and Total Fair Value of Common Stock Units and Share Awards Vested (Detail) (Nonvested Common Stock Share Awards [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Nonvested Common Stock Share Awards [Member]
|
||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted, Shares | 37 | 42 |
Weighted average grant-date fair value | $ 16.01 | $ 16.15 |
Fair value of vested | $ 369 | $ 332 |
Other Income (Expense) (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Other Income And Expenses [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Other Income (Expense) |
Other income (expense) consists of the following (in
thousands):
|
Financial Derivatives (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Deferred Gains (Losses) and Related Taxes on Derivative Instruments | The deferred gains (losses) and related taxes on the Company’s derivative instruments recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) in the accompanying Condensed Consolidated Balance Sheets are as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Outstanding Foreign Currency Forward Contracts and Options | The Company had the following outstanding foreign currency forward contracts and options (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Derivative Instruments Fair Value | The following tables present the fair value of the Company’s derivative instruments included in the accompanying Condensed Consolidated Balance Sheets (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Effect of the Company's Derivative Instruments | The following tables present the effect of the Company’s derivative instruments included in the accompanying Condensed Consolidated Financial Statements for the three months ended June 30, 2013 and 2012 (in thousands):
The following tables present the effect of the Company’s derivative instruments included in the accompanying Condensed Consolidated Financial Statements for the six months ended June 30, 2013 and 2012 (in thousands):
|
Income Taxes (Tables)
|
6 Months Ended | ||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||
Summary of Significant Tax Jurisdictions Currently under Audit | The significant tax jurisdictions currently under audit are as follows:
|
Acquisition of Alpine Access, Inc - Summary of Final Purchase Price Allocation of Fair Values of Assets Acquired and Liabilities Assumed (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
Aug. 20, 2012
Alpine Access, Inc [Member]
|
---|---|---|---|
Business Acquisition [Line Items] | |||
Cash and cash equivalents | $ 1,859 | ||
Receivables | 11,831 | ||
Prepaid expenses | 617 | ||
Total current assets | 14,307 | ||
Property and equipment | 11,326 | ||
Goodwill | 200,929 | 204,231 | 80,766 |
Intangibles | 57,720 | ||
Deferred charges and other assets | 916 | ||
Accounts payable | (880) | ||
Accrued employee compensation and benefits | (3,774) | ||
Income taxes payable | (141) | ||
Deferred revenue | (94) | ||
Other accrued expenses and current liabilities | (601) | ||
Total current liabilities | (5,490) | ||
Other long-term liabilities | (10,592) | ||
Purchase price, total | $ 148,953 |
Costs Associated with Exit or Disposal Activities (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Liability Associated with the Company's Exit Plans | The following table summarizes the Company’s short-term and long-term accrued liabilities associated with its exit and disposal activities, by plan, as of June 30, 2013 and December 31, 2012 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fourth Quarter 2011 Exit Plan [Member]
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Liability Associated with the Company's Exit Plans | The following tables summarize the accrued liability associated with the Americas Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the three months ended June 30, 2013 and 2012 (in thousands):
The following tables summarize the accrued liability associated with the Americas Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the six months ended June 30, 2013 and 2012 (in thousands):
The following tables summarize the accrued liability associated with EMEA’s Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the three months ended June 30, 2013 and 2012 (in thousands):
The following tables summarize the accrued liability associated with EMEA’s Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the six months ended June 30, 2013 and 2012 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fourth Quarter 2010 Exit Plan [Member]
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Liability Associated with the Company's Exit Plans | The following tables summarize the accrued liability associated with the Fourth Quarter 2010 Exit Plan’s exit or disposal activities and related charges during the three months ended June 30, 2013 and 2012 (in thousands):
The following tables summarize the accrued liability associated with the Fourth Quarter 2010 Exit Plan’s exit or disposal activities and related charges during the six months ended June 30, 2013 and 2012 (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Third Quarter 2010 Exit Plan [Member]
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Summary of Accrued Liability Associated with the Company's Exit Plans | The following tables summarize the accrued liability associated with the Third Quarter 2010 Exit Plan’s exit or disposal activities and related charges for the three months ended June 30, 2013 and 2012 (in thousands):
The following tables summarize the accrued liability associated with the Third Quarter 2010 Exit Plan’s exit or disposal activities and related charges for the six months ended June 30, 2013 and 2012 (in thousands):
|
Financial Derivatives - Outstanding Foreign Currency Forward Contracts and Options (Detail) (USD $)
In Thousands, unless otherwise specified |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
|
Derivatives Designated as Cash Flow Hedging Instruments under ASC 815 [Member] | Cash Flow Hedges, Options, Philippine Pesos [Member]
|
||
Derivative [Line Items] | ||
Notional Amount | $ 73,000 | $ 71,000 |
Settle Through Date | Oct. 31, 2014 | Sep. 30, 2013 |
Derivatives Designated as Cash Flow Hedging Instruments under ASC 815 [Member] | Cash Flow Hedges, Forwards, Philippine Pesos [Member]
|
||
Derivative [Line Items] | ||
Notional Amount | 80,500 | 5,000 |
Settle Through Date | Mar. 31, 2014 | Aug. 31, 2013 |
Derivatives Designated as Cash Flow Hedging Instruments under ASC 815 [Member] | Cash Flow Hedges, Forwards, Costa Rican Colones [Member]
|
||
Derivative [Line Items] | ||
Notional Amount | 48,250 | 60,750 |
Settle Through Date | Jun. 30, 2014 | Dec. 31, 2013 |
Derivatives Designated as Cash Flow Hedging Instruments under ASC 815 [Member] | Cash Flow Hedges, Forwards, Hungarian Forints [Member]
|
||
Derivative [Line Items] | ||
Notional Amount | 3,643 | 4,744 |
Settle Through Date | Jan. 31, 2014 | Jan. 31, 2014 |
Derivatives Designated as Cash Flow Hedging Instruments under ASC 815 [Member] | Cash Flow Hedges, Forwards, Romanian Leis [Member]
|
||
Derivative [Line Items] | ||
Notional Amount | 4,001 | 6,895 |
Settle Through Date | Jan. 31, 2014 | Jan. 31, 2014 |
Derivatives Designated as Net Investment Hedging Instruments under ASC 815 [Member] | Net Investment Hedges, Forwards, Euros [Member]
|
||
Derivative [Line Items] | ||
Notional Amount | 32,657 | |
Settle Through Date | Sep. 30, 2014 | |
Derivatives Not Designated as Hedging Instruments under ASC 815 [Member] | Non-Designated Hedges, Forwards [Member]
|
||
Derivative [Line Items] | ||
Notional Amount | $ 38,963 | $ 41,799 |
Settle Through Date | Dec. 31, 2013 | Jun. 30, 2013 |
Deferred Grants - Amortization of Deferred Grants (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Deferred Grants [Abstract] | ||||
Amortization of property grants | $ 235 | $ 235 | $ 470 | $ 470 |
Amortization of employment grants | 85 | 54 | 103 | 72 |
Amortization of deferred grants | $ 320 | $ 289 | $ 573 | $ 542 |
Financial Derivatives - Additional Information (Detail) (USD $)
In Millions, unless otherwise specified |
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Derivative Instruments And Hedging Activities Disclosure [Abstract] | |
Maximum period of foreign currency hedge contracts | 180 days |
Maximum amount of loss due to credit risk | $ 2.3 |
Defined Benefit Pension Plan and Postretirement Benefits (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Compensation And Retirement Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net Periodic Benefit Cost for Pension Plans | The following table provides information about the net periodic benefit cost for the Company’s pension plans (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Company's Contributions to Employee Retirement Savings Plans | The Company’s contributions included in the accompanying Condensed Consolidated Statement of Operations were as follows (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Post-Retirement Benefit Obligation and Unrealized Gain (Losses) | The postretirement benefit obligation included
in “Other long-term liabilities” and the unrealized
gains (losses) included in “Accumulated other comprehensive
income” in the accompanying Condensed Consolidated Balance
Sheets were as follows (in thousands):
|
Investments Held in Rabbi Trust - Components of Investment Income (Losses), Included in Other Income (Expense) in Accompanying Consolidated Statements of Operations (Detail) (USD $)
In Thousands, unless otherwise specified |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Investments Debt And Equity Securities [Abstract] | ||||
Gross realized gains from sale of trading securities | $ 16 | $ 112 | $ 81 | |
Gross realized (losses) from sale of trading securities | (5) | (8) | (1) | |
Dividend and interest income | 8 | 12 | 18 | 20 |
Net unrealized holding gains (losses) | 1 | (194) | 196 | 164 |
Net investment income (losses) | $ 20 | $ (182) | $ 318 | $ 264 |
Stock-Based Compensation - Weighted Average Grant Date of SARs Granted and Total Intrinsic Value of SARs Exercised (Detail) (Stock Appreciation Rights (SARs) [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Stock Appreciation Rights (SARs) [Member]
|
||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted, Shares | 318 | 259 |
Weighted average grant-date fair value per SAR | $ 6.08 | $ 5.97 |
Intrinsic value of SARs exercised | ||
Fair value of vested | $ 1,298 | $ 1,388 |
Stock-Based Compensation - Summary of Nonvested Stock Appreciation Rights (Detail) (Nonvested Stock Appreciation Rights (SARs) [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified |
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Nonvested Stock Appreciation Rights (SARs) [Member]
|
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Nonvested Shares, beginning balance | 395 |
Granted, Shares | 318 |
Vested, Shares | (178) |
Forfeited or expired, Shares | |
Nonvested Shares, ending balance | 535 |
Nonvested, Weighted Average Grant-Date Fair Value, beginning balance | $ 6.74 |
Granted, Weighted Average Grant-Date Fair Value | $ 6.08 |
Vested, Weighted Average Grant-Date Fair Value | $ 7.28 |
Forfeited or expired, Weighted Average Grant-Date Fair Value | |
Nonvested, Weighted Average Grant-Date Fair Value, ending balance | $ 6.17 |
Stock-Based Compensation - Summary of Weighted Average Grant-Date Fair Value Granted and Total Fair Value of Restricted Shares and Restricted Stock Units Vested (Detail) (Restricted Shares and Restricted Stock Units [Member], USD $)
In Thousands, except Per Share data, unless otherwise specified |
6 Months Ended | |
---|---|---|
Jun. 30, 2013
|
Jun. 30, 2012
|
|
Restricted Shares and Restricted Stock Units [Member]
|
||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Granted, Shares | 706 | 420 |
Weighted average grant-date fair value | $ 15.25 | $ 15.21 |
Fair value of vested | $ 366 | $ 3,845 |
Segments and Geographic Information
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Segments and Geographic Information | Note 18. Segments and Geographic Information The Company operates within two regions, the Americas and EMEA. Each region represents a reportable segment comprised of aggregated regional operating segments, which portray similar economic characteristics. The Company aligns its business into two segments to effectively manage the business and support the customer care needs of every client and to respond to the demands of the Company’s global customers. 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 contact management solutions (with an emphasis on technical support and customer service) and technical staffing and (2) EMEA, which includes Europe, the Middle East and Africa, and provides outsourced customer contact management solutions (with an emphasis on technical support and customer service) and fulfillment services. The sites within Latin America, India 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 contact management needs. Information about the Company’s reportable segments is as follows (in thousands):
|
Overview and Basis of Presentation
|
6 Months Ended |
---|---|
Jun. 30, 2013
|
|
Accounting Policies [Abstract] | |
Overview and Basis of Presentation | Note 1. Overview and Basis of Presentation Business — Sykes Enterprises, Incorporated and consolidated subsidiaries (“SYKES” or the “Company”) provides comprehensive outsourced customer contact management solutions and services in the business process outsourcing arena to companies, primarily within the communications, financial services, technology/consumer, transportation and leisure, and healthcare industries. SYKES provides flexible, high-quality outsourced customer contact management services (with an emphasis on inbound technical support and customer service), which includes customer assistance, healthcare and roadside assistance, technical support and product sales to its clients’ customers. Utilizing SYKES’ integrated onshore/offshore global delivery model, SYKES provides its services through multiple communication channels encompassing phone, e-mail, Internet, text messaging and chat. SYKES complements its outsourced customer contact management services with various enterprise support services in the United States that encompass services for a company’s internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, SYKES also provides fulfillment services including multilingual sales order processing via the Internet and phone, payment processing, inventory control, product delivery and product returns handling. The Company has operations in two reportable segments entitled (1) the Americas, which includes the United States, Canada, Latin America, India and the Asia Pacific Rim, in which the client base is primarily companies in the United States that are using the Company’s services to support their customer management needs; and (2) EMEA, which includes Europe, the Middle East and Africa. Acquisition — In August 2012, the Company completed the acquisition of Alpine Access, Inc. (“Alpine”), a Delaware corporation, pursuant to the Agreement and Plan of Merger, dated July 27, 2012. The Company has reflected the operating results in the Condensed Consolidated Statements of Operations since August 20, 2012. See Note 2, Acquisition of Alpine Access, Inc., for additional information on the acquisition of this business. Discontinued Operations — In March 2012, the Company sold its operations in Spain (the “Spanish operations”), pursuant to an asset purchase agreement dated March 29, 2012 and a stock purchase agreement dated March 30, 2012. The Company reflected the operating results related to the Spanish operations as discontinued operations in the Condensed Consolidated Statements of Operations for the six months ended June 30, 2012. Cash flows from discontinued operations are included in the Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2012. See Note 3, Discontinued Operations, for additional information on the sale of the Spanish operations. 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 “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 and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for any future quarters or the year ending December 31, 2013. 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, 2012, as filed with the Securities and Exchange Commission (“SEC”). Principles of Consolidation — The condensed consolidated financial statements include the accounts of SYKES and its wholly-owned subsidiaries and controlled majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. Use of Estimates — The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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.
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. New Accounting Standards Not Yet Adopted In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-05 “Foreign Currency Matters (Topic 830) – Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity” (“ASU 2013-05”). The amendments in ASU 2013-05 indicate that a cumulative translation adjustment (“CTA”) is attached to the parent’s investment in a foreign entity and should be released in a manner consistent with the derecognition guidance on investments in entities. Thus, the entire amount of the CTA associated with the foreign entity would be released when there has been a sale of a subsidiary or group of net assets within a foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity, a loss of a controlling financial interest in an investment in a foreign entity (i.e., the foreign entity is deconsolidated), or a step acquisition for a foreign entity (i.e., when an entity has changed from applying the equity method for an investment in a foreign entity to consolidating the foreign entity). ASU 2013-05 does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. The amendments in ASU 2013-05 are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The amendments should be applied prospectively to derecognition events occurring after the effective date. The Company does not expect the adoption of ASU 2013-05 to materially impact its financial condition, results of operations and cash flows. In July 2013, the FASB issued ASU 2013-11 “Income Taxes (Topic 740) – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). The amendments in ASU 2013-11 indicate that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company does not expect the adoption of ASU 2013-11 to materially impact its financial condition, results of operations and cash flows. New Accounting Standards Recently Adopted In December 2011, the FASB issued ASU 2011-11 “Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). The amendments in ASU 2011-11 enhanced disclosures by requiring improved information about financial and derivative instruments that are either 1) offset (netting assets and liabilities) in accordance with Section 210-20-45 or Section 815-10-45 of the FASB Accounting Standards Codification (“ASC”) or 2) subject to an enforceable master netting arrangement or similar agreement. The amendments in ASU 2011-11 are effective for fiscal years beginning on or after January 1, 2013, and interim periods within those years. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The adoption of ASU 2011-11 as of January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company. In July 2012, the FASB issued ASU 2012-02 “Intangibles – Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012-02”). The amendments in ASU 2012-02 provide entities with the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. Under the amendments in ASU 2012-02, an entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments in ASU 2012-02 are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of ASU 2012-02 on January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company. In January 2013, the FASB issued ASU 2013-01 “Balance Sheet (Topic 210) Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”). The amendments in ASU 2013-01 clarify which instruments and transactions are subject to the offsetting disclosure requirements established by ASU 2011-11. ASU 2013-01 addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to the financial statement users. In choosing to narrow the scope of the offsetting disclosures, the FASB determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under International Financial Reporting Standards (“IFRS”). The amendments in ASU 2013-01 are effective for fiscal years beginning on or after January 1, 2013. Retrospective application is required for any period presented that begins before the entity’s initial application of the new requirements. The adoption of ASU 2013-01 as of January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company. In February 2013, the FASB issued ASU 2013-02 “Comprehensive Income (Topic 220) Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amendments in ASU 2013-02 are effective prospectively for reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 as of January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company. |
Costs Associated with Exit or Disposal Activities
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restructuring And Related Activities [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Costs Associated with Exit or Disposal Activities | Note 4. Costs Associated with Exit or Disposal Activities Fourth Quarter 2011 Exit Plan During 2011, the Company announced a plan to rationalize seats in certain U.S. sites and close certain locations in EMEA (the “Fourth Quarter 2011 Exit Plan”). The details are described below, by segment. Americas During 2011, as part of an on-going effort to streamline excess capacity related to the integration of the ICT Group, Inc. (“ICT”) acquisition and align it with the needs of the market, the Company announced a plan to rationalize approximately 900 seats in the U.S., some of which were revenue generating, with plans to migrate the associated revenues to other locations within the U.S. Approximately 300 employees were affected and the Company has completed the actions associated with the Americas plan. The major costs estimated to be incurred as a result of these actions are program transfer costs, facility-related costs (primarily consisting of those costs associated with the real estate leases), and impairments of long-lived assets (primarily leasehold improvements and equipment) estimated at $1.9 million as of June 30, 2013 ($1.9 million at December 31, 2012). The Company recorded $0.5 million of the costs associated with these actions as non-cash impairment charges, while approximately $1.4 million represents cash expenditures for program transfer and facility-related costs, including obligations under the leases, the last of which ends in February 2017. The Company has paid $0.8 million in cash through June 30, 2013 under the Fourth Quarter 2011 Exit Plan in the Americas. The following tables summarize the accrued liability associated with the Americas Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the three months ended June 30, 2013 and 2012 (in thousands):
The following tables summarize the accrued liability associated with the Americas Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the six months ended June 30, 2013 and 2012 (in thousands):
EMEA During 2011, to improve the Company’s overall profitability in the EMEA region, the Company committed to close a customer contact management center in South Africa and a customer contact management center in Ireland, as well as some capacity rationalization in the Netherlands, all components of the EMEA segment. Through these actions, the Company expects to improve its cost structure in the EMEA region by optimizing its capacity utilization. While the Company migrated approximately $3.2 million of annualized call volumes of the Ireland facility to other facilities within EMEA, the Company did not migrate the remaining call volume in Ireland or any of the annualized revenue from the Netherlands or South Africa facilities, which was $18.8 million for 2011, to other facilities within the region. The number of seats rationalized across the EMEA region approximated 900 with approximately 500 employees affected by the actions. The Company closed these facilities and substantially completed the actions associated with the EMEA plan on September 30, 2012. The major costs estimated 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 anticipated severance-related costs estimated at $6.7 million as of June 30, 2013 ($6.7 million as of December 31, 2012). The Company recorded $0.5 million of the costs associated with these actions as non-cash impairment charges, while approximately $6.2 million represents cash expenditures for severance and related costs and facility-related costs, primarily rent obligations to be paid through the remainder of the noncancelable term of the leases, the last of which ended in March 2013. The Company has paid $5.9 million in cash through June 30, 2013 under the Fourth Quarter 2011 Exit Plan in EMEA.
The following tables summarize the accrued liability associated with EMEA’s Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the three months ended June 30, 2013 and 2012 (in thousands):
The following tables summarize the accrued liability associated with EMEA’s Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the six months ended June 30, 2013 and 2012 (in thousands):
The Company charged $0.7 million to “Direct salaries and related costs” for severance and related costs and $0.3 million to “General and administrative” costs for lease obligations and facility exit costs, severance and related costs and legal-related costs in the accompanying Consolidated Statement of Operations for the six months ended June 30, 2012.
Fourth Quarter 2010 Exit Plan During 2010, in furtherance of the Company’s long-term goals to manage and optimize capacity utilization, the Company committed to and closed a customer contact management center in the United Kingdom and a customer contact management center in Ireland, both components of the EMEA segment (the “Fourth Quarter 2010 Exit Plan”). These actions were substantially completed by January 31, 2011. The major costs incurred as a result of these actions were 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 $2.2 million as of June 30, 2013 ($2.2 million as of December 31, 2012). The Company recorded $0.2 million of the costs associated with the Fourth Quarter 2010 Exit Plan as non-cash impairment charges. Approximately $1.8 million represents cash expenditures for facility-related costs, primarily rent obligations to be paid through the remainder of the lease terms, the last of which ends in March 2014, and $0.2 million represents cash expenditures for severance-related costs. The Company has paid $1.5 million in cash through June 30, 2013 under the Fourth Quarter 2010 Exit Plan. The following tables summarize the accrued liability associated with the Fourth Quarter 2010 Exit Plan’s exit or disposal activities and related charges during the three months ended June 30, 2013 and 2012 (in thousands):
The following tables summarize the accrued liability associated with the Fourth Quarter 2010 Exit Plan’s exit or disposal activities and related charges during the six months ended June 30, 2013 and 2012 (in thousands):
Third Quarter 2010 Exit Plan During 2010, consistent with the Company’s long-term goals to manage and optimize capacity utilization, the Company closed or committed to close four customer contact management centers in The Philippines and consolidated or committed to consolidate leased space in our Wilmington, Delaware and Newtown, Pennsylvania locations (the “Third Quarter 2010 Exit Plan”). These actions were substantially completed by January 31, 2011. The major costs incurred as a result of these actions were impairments of long-lived assets (primarily leasehold improvements) and facility-related costs (primarily consisting of those costs associated with the real estate leases) estimated at $10.5 million as of June 30, 2013 ($10.5 million as of December 31, 2012), all of which are in the Americas segment. The Company recorded $3.8 million of the costs associated with the Third Quarter 2010 Exit Plan as non-cash impairment charges. The remaining $6.7 million represents cash expenditures for facility-related costs, primarily rent obligations to be paid through the remainder of the lease terms, the last of which ends in February 2017. The Company has paid $4.6 million in cash through June 30, 2013 under the Third Quarter 2010 Exit Plan. The following tables summarize the accrued liability associated with the Third Quarter 2010 Exit Plan’s exit or disposal activities and related charges for the three months ended June 30, 2013 and 2012 (in thousands):
The following tables summarize the accrued liability associated with the Third Quarter 2010 Exit Plan’s exit or disposal activities and related charges for the six months ended June 30, 2013 and 2012 (in thousands):
Restructuring Liability Classification The following table summarizes the Company’s short-term and long-term accrued liabilities associated with its exit and disposal activities, by plan, as of June 30, 2013 and December 31, 2012 (in thousands):
|
Borrowings - Additional Information (Detail) (USD $)
|
3 Months Ended | 6 Months Ended | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
Dec. 31, 2012
|
Jun. 30, 2013
2012 Credit Agreement [Member]
|
Jun. 30, 2012
2012 Credit Agreement [Member]
|
Jun. 30, 2013
2012 Credit Agreement [Member]
|
Jun. 30, 2012
2012 Credit Agreement [Member]
|
May 31, 2012
2012 Credit Agreement [Member]
|
May 03, 2012
2012 Credit Agreement [Member]
|
Jun. 30, 2013
2012 Credit Agreement [Member]
Non-Voting Capital Stock Direct Foreign Subsidiaries [Member]
|
Jun. 30, 2013
2012 Credit Agreement [Member]
Voting Capital Stock Direct Foreign Subsidiaries [Member]
|
Feb. 02, 2010
2010 Credit Agreement [Member]
|
Aug. 20, 2012
Revolving Credit Facility [Member]
|
May 03, 2012
Alternate-Currency Sub-Facility [Member]
|
May 03, 2012
Swingline Sub-Facility [Member]
|
May 03, 2012
Letter of Credit Sub-Facility [Member]
|
|
Line of Credit Facility [Line Items] | |||||||||||||||
Maximum borrowing capacity | $ 245,000,000 | $ 75,000,000 | $ 184,000,000 | $ 10,000,000 | $ 35,000,000 | ||||||||||
Proceeds from borrowings under credit agreement | 108,000,000 | ||||||||||||||
Line of Credit Facility, Expiration Date | May 02, 2017 | ||||||||||||||
Varying installments due | 0 | ||||||||||||||
Credit agreement interest rate description | Borrowings under the 2012 Credit Agreement will bear interest at either LIBOR or the base rate plus, in each case, an applicable margin based on the Company’s leverage ratio. The applicable interest rate will be determined quarterly based on the Company’s leverage ratio at such time. The base rate is a rate per annum equal to the greatest of (i) the rate of interest established by KeyBank, from time to time, as its “prime rate”; (ii) the Federal Funds effective rate in effect from time to time, plus 1/2 of 1% per annum; and (iii) the then-applicable LIBOR rate for one month interest periods, plus 1.00%. Swingline loans will bear interest only at the base rate plus the base rate margin. | ||||||||||||||
Fixed component added to federal fund effective rate to compute base rate | 0.50% | ||||||||||||||
Fixed component added to LIBOR to compute base rate | 1.00% | ||||||||||||||
Credit agreement customary fees description | the Company is required to pay certain customary fees, including a commitment fee of 0.175%, which is due quarterly in arrears and calculated on the average unused amount of the New 2012 Credit Agreement. | ||||||||||||||
Commitment fee | 0.175% | ||||||||||||||
Percentage of capital stock pledged under credit agreement | 100.00% | 65.00% | |||||||||||||
Underwriting fee for credit agreement | 900,000 | ||||||||||||||
Outstanding borrowings | 113,000,000 | 91,000,000 | 113,000,000 | 113,000,000 | |||||||||||
Average daily utilization of borrowings | 105,800,000 | 0 | 98,500,000 | 0 | |||||||||||
Interest expense, excluding amortization of deferred loan fees | $ 400,000 | $ 700,000 | |||||||||||||
Weighted average interest rate | 1.50% | 0.00% | 1.50% | 0.00% |
Acquisition of Alpine Access, Inc.
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Business Combinations [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Acquisition of Alpine Access, Inc. | Note 2. Acquisition of Alpine Access, Inc. On August 20, 2012, the Company acquired 100% of the outstanding common shares and voting interest of Alpine, pursuant to the terms of the merger agreement. Alpine, an industry leader in the at-home agent space, provides award-winning customer contact management services through a secured and proprietary virtual call center environment with its operations located in the United States and Canada. The results of Alpine’s operations have been included in the Company’s consolidated financial statements since its acquisition on August 20, 2012. The Company acquired Alpine to: create significant competitive differentiation for quality, speed to market, scalability and flexibility driven by proprietary, internally-developed software, systems, processes and other intellectual property, which uniquely overcome the challenges of the at-home delivery model; strengthen the Company’s current service portfolio and go-to-market offering while expanding the breadth of clients with minimal client overlap; broaden the addressable market opportunity within existing and new verticals as well as clients; expand the addressable pool of skilled labor; leverage operational best practices across the Company’s global platform, with the potential to convert more of its fixed cost to variable cost; and further enhance the growth and margin profile of the Company to drive shareholder value. This resulted in the Company paying a substantial premium for Alpine resulting in the recognition of goodwill. The acquisition date fair value of the consideration transferred totaled $149.0 million, which was funded through cash on hand of $41.0 million and borrowings of $108.0 million under the Company’s credit agreement, dated May 3, 2012. See Note 11, Borrowings, for further information. The Company accounted for the acquisition in accordance with ASC 805 “Business Combinations”, whereby the purchase price paid was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed from Alpine based on their estimated fair values as of the closing date. During the three months ended December 31, 2012, the final working capital adjustment was approved by the authorized representative of Alpine’s shareholders. The Company finalized its purchase price allocation during the three months ended December 31, 2012, resulting in no changes from the estimated acquisition date fair values previously reported.
The following table summarizes the final purchase price allocation of the fair values of the assets acquired and liabilities assumed, all included in the Americas segment (in thousands):
Fair values are based on management’s estimates and assumptions including variations of the income approach, the cost approach and the market approach. The following table presents the Company’s purchased intangible assets as of August 20, 2012, the acquisition date (in thousands):
The $80.8 million of goodwill was assigned to the Company’s Americas operating segment. Pursuant to Federal income tax regulations, no amount of intangibles or goodwill from this acquisition will be deductible for tax purposes. The fair value of receivables acquired is $11.8 million, with the gross contractual amount of $11.8 million.
The following table presents the unaudited pro forma combined revenues and net earnings as if Alpine had been included in the consolidated results of the Company for the entire three and six month periods ended June 30, 2012. The pro forma financial information is not indicative of the results of operations that would have been achieved if the acquisition and related borrowings had taken place on January 1, 2012 (in thousands):
These amounts have been calculated to reflect the additional depreciation, amortization and interest expense that would have been incurred assuming the fair value adjustments and borrowings occurred on January 1, 2012, together with the consequential tax effects. In addition, these amounts exclude costs incurred which are directly attributable to the acquisition, and which do not have a continuing impact on the combined companies’ operating results. Included in these costs are severance, advisory and legal costs, net of the tax effects. Merger and integration costs associated with Alpine were as follows (none in the comparable periods in 2012) (in thousands):
|
Earnings Per Share (Tables)
|
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Earnings Per Share [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Number of Shares Used in Earnings Per Share Computation | The numbers of shares used in the earnings per share computation are as follows (in thousands):
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares Repurchased | The shares repurchased under the Company’s share repurchase programs were as follows (in thousands, except per share amounts):
|
Overview and Basis of Presentation (Policies)
|
6 Months Ended | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||
Accounting Policies [Abstract] | |||||||||||||||||||||||||
Business | Business — Sykes Enterprises, Incorporated and consolidated subsidiaries (“SYKES” or the “Company”) provides comprehensive outsourced customer contact management solutions and services in the business process outsourcing arena to companies, primarily within the communications, financial services, technology/consumer, transportation and leisure, and healthcare industries. SYKES provides flexible, high-quality outsourced customer contact management services (with an emphasis on inbound technical support and customer service), which includes customer assistance, healthcare and roadside assistance, technical support and product sales to its clients’ customers. Utilizing SYKES’ integrated onshore/offshore global delivery model, SYKES provides its services through multiple communication channels encompassing phone, e-mail, Internet, text messaging and chat. SYKES complements its outsourced customer contact management services with various enterprise support services in the United States that encompass services for a company’s internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, SYKES also provides fulfillment services including multilingual sales order processing via the Internet and phone, payment processing, inventory control, product delivery and product returns handling. The Company has operations in two reportable segments entitled (1) the Americas, which includes the United States, Canada, Latin America, India and the Asia Pacific Rim, in which the client base is primarily companies in the United States that are using the Company’s services to support their customer management needs; and (2) EMEA, which includes Europe, the Middle East and Africa. Acquisition — In August 2012, the Company completed the acquisition of Alpine Access, Inc. (“Alpine”), a Delaware corporation, pursuant to the Agreement and Plan of Merger, dated July 27, 2012. The Company has reflected the operating results in the Condensed Consolidated Statements of Operations since August 20, 2012. See Note 2, Acquisition of Alpine Access, Inc., for additional information on the acquisition of this business. Discontinued Operations — In March 2012, the Company sold its operations in Spain (the “Spanish operations”), pursuant to an asset purchase agreement dated March 29, 2012 and a stock purchase agreement dated March 30, 2012. The Company reflected the operating results related to the Spanish operations as discontinued operations in the Condensed Consolidated Statements of Operations for the six months ended June 30, 2012. Cash flows from discontinued operations are included in the Condensed Consolidated Statements of Cash Flows for the three and six months ended June 30, 2012. See Note 3, Discontinued Operations, for additional information on the sale of the Spanish operations. |
||||||||||||||||||||||||
Basis of Presentation | 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 “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 and six months ended June 30, 2013 are not necessarily indicative of the results that may be expected for any future quarters or the year ending December 31, 2013. 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, 2012, as filed with the Securities and Exchange Commission (“SEC”). |
||||||||||||||||||||||||
Principles of Consolidation | Principles of Consolidation — The condensed consolidated financial statements include the accounts of SYKES and its wholly-owned subsidiaries and controlled majority-owned subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation. |
||||||||||||||||||||||||
Use of Estimates | Use of Estimates — The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America 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. |
||||||||||||||||||||||||
Subsequent Events | 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. |
||||||||||||||||||||||||
New Accounting Standards Not Yet Adopted | New Accounting Standards Not Yet Adopted In March 2013, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2013-05 “Foreign Currency Matters (Topic 830) – Parent’s Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity” (“ASU 2013-05”). The amendments in ASU 2013-05 indicate that a cumulative translation adjustment (“CTA”) is attached to the parent’s investment in a foreign entity and should be released in a manner consistent with the derecognition guidance on investments in entities. Thus, the entire amount of the CTA associated with the foreign entity would be released when there has been a sale of a subsidiary or group of net assets within a foreign entity and the sale represents the substantially complete liquidation of the investment in the foreign entity, a loss of a controlling financial interest in an investment in a foreign entity (i.e., the foreign entity is deconsolidated), or a step acquisition for a foreign entity (i.e., when an entity has changed from applying the equity method for an investment in a foreign entity to consolidating the foreign entity). ASU 2013-05 does not change the requirement to release a pro rata portion of the CTA of the foreign entity into earnings for a partial sale of an equity method investment in a foreign entity. The amendments in ASU 2013-05 are effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The amendments should be applied prospectively to derecognition events occurring after the effective date. The Company does not expect the adoption of ASU 2013-05 to materially impact its financial condition, results of operations and cash flows. In July 2013, the FASB issued ASU 2013-11 “Income Taxes (Topic 740) – Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists” (“ASU 2013-11”). The amendments in ASU 2013-11 indicate that an unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward if such settlement is required or expected in the event the uncertain tax position is disallowed. In situations where a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction or the tax law of the jurisdiction does not require, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. The Company does not expect the adoption of ASU 2013-11 to materially impact its financial condition, results of operations and cash flows. |
||||||||||||||||||||||||
New Accounting Standards Recently Adopted | New Accounting Standards Recently Adopted In December 2011, the FASB issued ASU 2011-11 “Balance Sheet (Topic 210) – Disclosures about Offsetting Assets and Liabilities” (“ASU 2011-11”). The amendments in ASU 2011-11 enhanced disclosures by requiring improved information about financial and derivative instruments that are either 1) offset (netting assets and liabilities) in accordance with Section 210-20-45 or Section 815-10-45 of the FASB Accounting Standards Codification (“ASC”) or 2) subject to an enforceable master netting arrangement or similar agreement. The amendments in ASU 2011-11 are effective for fiscal years beginning on or after January 1, 2013, and interim periods within those years. An entity should provide the disclosures required by those amendments retrospectively for all comparative periods presented. The adoption of ASU 2011-11 as of January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company. In July 2012, the FASB issued ASU 2012-02 “Intangibles – Goodwill and Other (Topic 350) Testing Indefinite-Lived Intangible Assets for Impairment” (“ASU 2012-02”). The amendments in ASU 2012-02 provide entities with the option to first assess qualitative factors to determine whether the existence of events and circumstances indicates that it is more likely than not that the indefinite-lived intangible asset is impaired. If, after assessing the totality of events and circumstances, an entity concludes that it is not more likely than not that the indefinite-lived intangible asset is impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the indefinite-lived intangible asset and perform the quantitative impairment test by comparing the fair value with the carrying amount. Under the amendments in ASU 2012-02, an entity also has the option to bypass the qualitative assessment for any indefinite-lived intangible asset in any period and proceed directly to performing the quantitative impairment test. An entity will be able to resume performing the qualitative assessment in any subsequent period. The amendments in ASU 2012-02 are effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012. The adoption of ASU 2012-02 on January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company. In January 2013, the FASB issued ASU 2013-01 “Balance Sheet (Topic 210) Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities” (“ASU 2013-01”). The amendments in ASU 2013-01 clarify which instruments and transactions are subject to the offsetting disclosure requirements established by ASU 2011-11. ASU 2013-01 addresses preparer concerns that the scope of the disclosure requirements under ASU 2011-11 was overly broad and imposed unintended costs that were not commensurate with estimated benefits to the financial statement users. In choosing to narrow the scope of the offsetting disclosures, the FASB determined that it could make them more operable and cost effective for preparers while still giving financial statement users sufficient information to analyze the most significant presentation differences between financial statements prepared in accordance with U.S. GAAP and those prepared under International Financial Reporting Standards (“IFRS”). The amendments in ASU 2013-01 are effective for fiscal years beginning on or after January 1, 2013. Retrospective application is required for any period presented that begins before the entity’s initial application of the new requirements. The adoption of ASU 2013-01 as of January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company. In February 2013, the FASB issued ASU 2013-02 “Comprehensive Income (Topic 220) Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income” (“ASU 2013-02”). The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income in financial statements. However, the amendments require an entity to provide information about the amounts reclassified out of accumulated other comprehensive income by component. In addition, an entity is required to present, either on the face of the statement where net income is presented or in the notes, significant amounts reclassified out of accumulated other comprehensive income by the respective line items of net income but only if the amount reclassified is required under U.S. GAAP to be reclassified to net income in its entirety in the same reporting period. For other amounts that are not required under U.S. GAAP to be reclassified in their entirety to net income, an entity is required to cross-reference to other disclosures required under U.S. GAAP that provide additional detail about those amounts. The amendments in ASU 2013-02 are effective prospectively for reporting periods beginning after December 15, 2012. The adoption of ASU 2013-02 as of January 1, 2013 did not have a material impact on the financial condition, results of operations and cash flows of the Company. |
||||||||||||||||||||||||
Fair Value Measurements | ASC 820 “Fair Value Measurements and Disclosures” (“ASC 820”) requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for which 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:
Fair Value of Financial Instruments — The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Fair Value Measurements — ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820-10-20 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.
|
||||||||||||||||||||||||
Financial Instruments | ASC 825 “Financial Instruments” (“ASC 825”) permits an entity to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The Company has not elected to use the fair value option permitted under ASC 825 for any of its financial assets and financial liabilities that are not already recorded at fair value.
|
||||||||||||||||||||||||
Earnings Per Share | Basic earnings per share are based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share includes the weighted average number of common shares outstanding during the respective periods and the further dilutive effect, if any, from stock options, stock appreciation rights, restricted stock, restricted stock units and shares held in a rabbi trust using the treasury stock method. |
||||||||||||||||||||||||
Segments and Geographic Information | The Company operates within two regions, the Americas and EMEA. Each region represents a reportable segment comprised of aggregated regional operating segments, which portray similar economic characteristics. The Company aligns its business into two segments to effectively manage the business and support the customer care needs of every client and to respond to the demands of the Company’s global customers. |
Fair Value (Tables)
|
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Jun. 30, 2013
|
|||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Assets and Liabilities Measured at Fair Value on a Recurring Basis | The Company’s assets and liabilities measured at fair value on a recurring basis subject to the requirements of ASC 820 consist of the following (in thousands):
The Company’s assets and liabilities measured at fair value on a recurring basis subject to the requirements of ASC 820 consist of the following (in thousands):
|
||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Impairment Losses Related to Nonrecurring Fair Value Measurements of Certain Assets | The following table summarizes the total impairment losses related to nonrecurring fair value measurements of certain assets (no liabilities) subject to the requirements of ASC 820 (in thousands):
|
Deferred Grants - Schedule of Deferred Grants (Detail) (USD $)
In Thousands, unless otherwise specified |
Jun. 30, 2013
|
Dec. 31, 2012
|
---|---|---|
Deferred Grants [Abstract] | ||
Property grants | $ 6,800 | $ 7,270 |
Employment grants | 469 | 337 |
Total long-term deferred grants | $ 7,269 | $ 7,607 |
Segments and Geographic Information - Additional Information (Detail)
|
6 Months Ended |
---|---|
Jun. 30, 2013
Segment
Region
|
|
Segment Reporting [Abstract] | |
Number of operating regions | 2 |
Number of reportable segments | 2 |
&4?SD\:O35 ]KV@@'*.?M&EX8RWX4)53D-8U@%N%9#SP;='CPOL7(2Q(408G*YT*1
M;=7G28[;%ZG)R*E+I_`$;J._P/B^@)"66-@Z)88\!_B_%[_8CJJ
MW/"C4QR.-8V"^(\5N)VPL!'+C
M^BI12"563EN^-BF08T>GQU].%`..\,[K((:IV?<&UV3D#:8'"'\$@[[I];ZU
MZC;"6D83'`7,KJWQV.)79'7>@E6@S&N6("B<*RAE"@2+`GW5ZFZ$7S&=W$D,
M"\AIR=@.4*.X2:G,33>BZZ+17@#KOS')4L`N`(!45?(-Y_`:S\D&ZQBK09[U2'XHA._`BE95-
MU<)3"I@U!%C$N"!ODFS9FJ-)%2T6%"V[Q;25,B>KE&BG]I-4FI?.ZW4KO.Q<
MD2K(LZI(CJ5(8'=T5G%T#A1),5D-VPS+,F\YDLI)RNS\JCCR4=T?1:I1/FM#
M^2E6G:JS\:VBV5QM+*F\).]*$&%'S$7SI;&D\M)8W#[:CJ2>5)7M,&S3
M%O4U<7>#D/B/HV0ETWO%4*G0Z\7TC*BQ$VM*!UD!.O"2+E8U=ZIW@%U:L7HE
M0F1--'=/HXIVL75I5!R-43[)[ACEZH:;=0E0TC7C/0E);E?(NC0JKF2]D9!$
MLTC-UQ;PEK%A7A.RD91[KYW!L@FN':%6$Z9$*,WWZ:B8-&]0DB8T/Y;0;&Y:
MDAKQFPE-*E*E!1056-I4EL&O@Z)8VDZ$SWJBY3C5":;K/"D*/5-5UI<2B.HB
MN'6Y6*N[?5W2E)RR[(V4M$28=R8S=*K9D!C%?>_*K>7.Y.!MR&ZV`;A5=FX^
M^XEE;7.ZR&X8N%N,W9OD=AG)C=$J4N3\(P8J
MQ7EE!^::[;SXN+RP_6@<1-[`Z($Q3`Z7@FC3.3]5?$/EETM05$3*Z:*FV1P/
ME.`<$2M]2ZRN*4`)4315DW-L&_/H2QG,S\O=OQ7]+A)QM:)/3MUO0W0?J[4$ZIW6:B+E9$\,''#R5II11T?XX$?8Z9/[@0$NG3XDZ:/)J7ZGI\9`9>
MV$>RSM)2(^84;7-:XND]:>'^`)Y+,*9IH7#K[>LW`B,Y&*
<@-Z[%!)C-8NEX3POFAJV)&4"[?CJZ9B/@PU.N,F*N
M?\Y^5X)\O@[\>//S6YZ^QX`#-BKCTO1#V[)A/&'0;C;>N[!P6"!U6.W30IE\
MY"*/I-I!$'&J@,B-/G#HS88Y!1D*X''S.TB@&["_(H;-H/!A$YAFM;1A*%R5
MXDE[!"WB/3)SBB(;1&RE?9ZC%;EVN#;.SU_^6!T:BC[;-CWP3T(FJBH\M)6'
MH*\+T%31X15,D^`@*#+,.[Z)/:*6+J$E&`2P1X$1VF`0\9.;7AI?Z:M`8/*=
MO859MJTYIY./?YI,6(X_,)IH\E_09?SMRLSM/"
M?"'$)FEBD6I/I=\D97-"+Y1U3E>&B@#KJU.-"3>M%-9;@NZOR$TKJ(
M\<1XB@LJ'!<<5OBJ0M)-.RA$;Q7II1T4&7=0J+85C8A&5-=POJZ;(Q3T$+V5
MH'>/,.1RX*BI1-7YXKJ]*U,9TL=]E?;`HYZA#H?%U3PJY(.)_2_`VU*U05_M
M:`3R>Z$"<*6K1M]0C=ZPPDE;Q/@7++WZ?75DU!)S1M;%U\4$VS1S-',T
?^"(_3?=,-9A`Y
MFND)W1.?$)>?RS,?9H`_(P[OH>'P$=,]$H=D^K`VM&'XSVV@+;?8@ITGU'N?
M,J\>3M]PD>`GVKX]B9#H3X[IWBZ6CO?$_-_-T)K#O*W\SGP$#/@XXS^^_-!Z
MRBQ0
?Q,9GHLH$\LD@&E$#&=6`>&_
ML3Z)4\?0.!6\