Table of Contents
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, 2015
 
¨	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)
Registrant’s 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 July 23, 2015, there were 43,521,251 outstanding shares of common stock.

Table of Contents
Sykes Enterprises, Incorporated and Subsidiaries
Form 10-Q
 INDEX

PART I. FINANCIAL INFORMATION	  	 	3	  	
Item 1. Financial Statements	  	 	3	  	
Condensed Consolidated Balance Sheets – June 30, 2015 and December 31, 2014 (Unaudited)	  	 	3	  	
Condensed Consolidated Statements of Operations – Three and Six Months Ended June  30, 2015 and 2014 (Unaudited)	  	 	4	  	
Condensed Consolidated Statements of Comprehensive Income (Loss) – Three and Six Months Ended June  30, 2015 and 2014 (Unaudited)	  	 	5	  	
Condensed Consolidated Statements of Changes in Shareholders’ Equity – Six Months Ended June  30, 2015 (Unaudited)	  	 	6	  	
Condensed Consolidated Statements of Cash Flows – Six Months Ended June 30, 2015 and 2014 (Unaudited)	  	 	7	  	
Notes to Condensed Consolidated Financial Statements (Unaudited)	  	 	9	  	
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	  	 	37	  	
Item 3. Quantitative and Qualitative Disclosures About Market Risk	  	 	50	  	
Item 4. Controls and Procedures	  	 	51	  	
Part II. OTHER INFORMATION	  	 	51	  	
Item 1. Legal Proceedings	  	 	51	  	
Item 1A. Risk Factors	  	 	51	  	
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	  	 	52	  	
Item 3. Defaults Upon Senior Securities	  	 	52	  	
Item 4. Mine Safety Disclosures	  	 	52	  	
Item 5. Other Information	  	 	52	  	
Item 6. Exhibits	  	 	52	  	
SIGNATURE	  	 	53	  	
 
2

Table of Contents
 PART I. FINANCIAL INFORMATION
 
 Item 1.	Financial Statements	
 Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Balance Sheets
(Unaudited)

(in thousands, except per share data)	  	June 30, 2015	 	 	December 31, 2014	 	
			
Assets	  				 				
Current assets:	  				 				
Cash and cash equivalents	  	$	222,350	  	 	$	215,137	  	
Receivables, net	  	 	272,430	  	 	 	290,397	  	
Prepaid expenses	  	 	15,865	  	 	 	14,896	  	
Other current assets	  	 	41,807	  	 	 	29,656	  	
	  	 	 	 	 	 	 	 	
Total current assets	  	 	552,452	  	 	 	550,086	  	
Property and equipment, net	  	 	104,219	  	 	 	109,880	  	
Goodwill, net	  	 	190,866	  	 	 	193,831	  	
Intangibles, net	  	 	53,095	  	 	 	60,620	  	
Deferred charges and other assets	  	 	27,937	  	 	 	30,083	  	
	  	 	 	 	 	 	 	 	
	  	$	928,569	  	 	$	944,500	  	
	  	 	 	 	 	 	 	 	
Liabilities and Shareholders’ Equity	  				 				
Current liabilities:	  				 				
Accounts payable	  	$	20,384	  	 	$	25,523	  	
Accrued employee compensation and benefits	  	 	80,891	  	 	 	82,072	  	
Current deferred income tax liabilities	  	 	311	  	 	 	144	  	
Income taxes payable	  	 	2,425	  	 	 	3,662	  	
Deferred revenue	  	 	29,940	  	 	 	34,245	  	
Other accrued expenses and current liabilities	  	 	23,733	  	 	 	22,216	  	
	  	 	 	 	 	 	 	 	
Total current liabilities	  	 	157,684	  	 	 	167,862	  	
Deferred grants	  	 	5,144	  	 	 	5,110	  	
Long-term debt	  	 	65,000	  	 	 	75,000	  	
Long-term income tax liabilities	  	 	22,282	  	 	 	20,630	  	
Other long-term liabilities	  	 	17,689	  	 	 	17,680	  	
	  	 	 	 	 	 	 	 	
Total liabilities	  	 	267,799	  	 	 	286,282	  	

Commitments and loss contingency (Note 14)	  				 				
			
Shareholders’ equity:	  				 				
Preferred stock, $0.01 par value per share, 10,000 shares authorized; no shares issued and outstanding	  	 	—  	  	 	 	—  	  	
Common stock, $0.01 par value per share, 200,000 shares authorized; 43,521 and 43,291 shares issued, respectively	  	 	435	  	 	 	433	  	
Additional paid-in capital	  	 	281,631	  	 	 	279,288	  	
Retained earnings	  	 	429,065	  	 	 	400,514	  	
Accumulated other comprehensive income (loss)	  	 	(36,775	) 	 	 	(20,561	) 	
Treasury stock at cost: 639 and 132 shares, respectively	  	 	(13,586	) 	 	 	(1,456	) 	
	  	 	 	 	 	 	 	 	
Total shareholders’ equity	  	 	660,770	  	 	 	658,218	  	
	  	 	 	 	 	 	 	 	
	  	$	928,569	  	 	$	944,500	  	
	  	 	 	 	 	 	 	 	
See accompanying Notes to Condensed Consolidated Financial Statements.
 
3

Table of Contents
 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)	  	2015	 	 	2014	 	 	2015	 	 	2014	 	
					
Revenues	  	$	307,453	  	 	$	320,498	  	 	$	631,138	  	 	$	644,927	  	

Operating expenses:	  				 				 				 				
Direct salaries and related costs	  	 	202,143	  	 	 	221,085	  	 	 	416,070	  	 	 	442,710	  	
General and administrative	  	 	72,651	  	 	 	74,005	  	 	 	145,378	  	 	 	147,382	  	
Depreciation, net	  	 	11,007	  	 	 	11,322	  	 	 	22,066	  	 	 	22,620	  	
Amortization of intangibles	  	 	3,435	  	 	 	3,659	  	 	 	6,866	  	 	 	7,310	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	289,236	  	 	 	310,071	  	 	 	590,380	  	 	 	620,022	  	

Income from operations	  	 	18,217	  	 	 	10,427	  	 	 	40,758	  	 	 	24,905	  	

Other income (expense):	  				 				 				 				
Interest income	  	 	151	  	 	 	237	  	 	 	317	  	 	 	468	  	
Interest (expense)	  	 	(610	) 	 	 	(552	) 	 	 	(1,049	) 	 	 	(1,051	) 	
Other income (expense)	  	 	(167	) 	 	 	(399	) 	 	 	(996	) 	 	 	264	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total other income (expense)	  	 	(626	) 	 	 	(714	) 	 	 	(1,728	) 	 	 	(319	) 	

Income before income taxes	  	 	17,591	  	 	 	9,713	  	 	 	39,030	  	 	 	24,586	  	
Income taxes	  	 	4,679	  	 	 	1,376	  	 	 	10,479	  	 	 	5,936	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	12,912	  	 	$	8,337	  	 	$	28,551	  	 	$	18,650	  	

Net income per common share:	  				 				 				 				
Basic	  	$	0.31	  	 	$	0.20	  	 	$	0.68	  	 	$	0.44	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Diluted	  	$	0.31	  	 	$	0.19	  	 	$	0.67	  	 	$	0.44	  	

Weighted average common shares outstanding:	  				 				 				 				
Basic	  	 	42,008	  	 	 	42,711	  	 	 	42,095	  	 	 	42,726	  	
Diluted	  	 	42,216	  	 	 	42,810	  	 	 	42,328	  	 	 	42,845	  	
See accompanying Notes to Condensed Consolidated Financial Statements.
 
4

Table of Contents
 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)	  	2015	 	 	2014	 	  	2015	 	 	2014	 	
Net income	  	$	12,912	  	 	$	8,337	  	  	$	28,551	  	 	$	18,650	  	

Other comprehensive income (loss), net of taxes:	  				 				  				 				
Foreign currency translation gain (loss), net of taxes	  	 	7,058	  	 	 	3,480	  	  	 	(20,066	) 	 	 	(2,079	) 	
Unrealized gain (loss) on net investment hedges, net of taxes	  	 	(1,135	) 	 	 	70	  	  	 	2,768	  	 	 	105	  	
Unrealized actuarial gain (loss) related to pension liability, net of taxes	  	 	(20	) 	 	 	42	  	  	 	(28	) 	 	 	21	  	
Unrealized gain (loss) on cash flow hedging instruments, net of taxes	  	 	(347	) 	 	 	4,029	  	  	 	1,068	  	 	 	1,287	  	
Unrealized gain (loss) on postretirement obligation, net of taxes	  	 	59	  	 	 	12	  	  	 	44	  	 	 	18	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Other comprehensive income (loss), net of taxes	  	 	5,615	  	 	 	7,633	  	  	 	(16,214	) 	 	 	(648	) 	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Comprehensive income (loss)	  	$	18,527	  	 	$	15,970	  	  	$	12,337	  	 	$	18,002	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
See accompanying Notes to Condensed Consolidated Financial Statements.
 
5

Table of Contents
 Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Changes in Shareholders’ Equity
Six Months Ended June 30, 2015
(Unaudited)

 	  	 
Common Stock	 	  	Additional
Paid-in Capital	 	 	Retained
Earnings	 	  	Accumulated
Other
Comprehensive
Income (Loss)	 	 	Treasury
Stock	 	 	Total	 	
(in thousands)	  	Shares
Issued	 	  	Amount	 	  			 			  			 			 			
Balance at December 31, 2014	  	 	43,291	  	  	$	433	  	  	$	279,288	  	 	$	400,514	  	  	$	(20,561	) 	 	$	(1,456	) 	 	$	658,218	  	
Issuance of common stock	  	 	30	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	 	 	—  	  	
Stock-based compensation expense	  	 	—  	  	  	 	—  	  	  	 	3,284	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	 	 	3,284	  	
Excess tax benefit (deficiency) from stock-based compensation	  	 	—  	  	  	 	—  	  	  	 	169	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	 	 	169	  	
Net vesting (forfeitures) of common stock and restricted stock under equity award plans	  	 	200	  	  	 	2	  	  	 	(1,110	) 	 	 	—  	  	  	 	—  	  	 	 	(161	) 	 	 	(1,269	) 	
Repurchase of common stock	  	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	(11,969	) 	 	 	(11,969	) 	
Comprehensive income (loss)	  	 	—  	  	  	 	—  	  	  	 	—  	  	 	 	28,551	  	  	 	(16,214	) 	 	 	—  	  	 	 	12,337	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
Balance at June 30, 2015	  	 	43,521	  	  	$	435	  	  	$	281,631	  	 	$	429,065	  	  	$	(36,775	) 	 	$	(13,586	) 	 	$	660,770	  	
	  	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
See accompanying Notes to Condensed Consolidated Financial Statements.
 
6

Table of Contents
 Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)

 	  	Six Months Ended June 30,	 	
(in thousands)	  	2015	 	 	2014	 	
Cash flows from operating activities :	  				 				
Net income	  	$	28,551	  	 	$	18,650	  	
Adjustments to reconcile net income to net cash provided by operating activities:	  				 				
Depreciation	  	 	22,458	  	 	 	23,090	  	
Amortization of intangibles	  	 	6,866	  	 	 	7,310	  	
Amortization of deferred grants	  	 	(441	) 	 	 	(829	) 	
Unrealized foreign currency transaction (gains) losses, net	  	 	(1,093	) 	 	 	(449	) 	
Stock-based compensation expense	  	 	3,284	  	 	 	1,691	  	
Excess tax (benefit) from stock-based compensation	  	 	(169	) 	 	 	—  	  	
Deferred income tax provision (benefit)	  	 	3,127	  	 	 	2,619	  	
Net (gain) loss on disposal of property and equipment	  	 	105	  	 	 	59	  	
Bad debt expense (reversals)	  	 	(207	) 	 	 	(389	) 	
Unrealized (gains) losses on financial instruments, net	  	 	88	  	 	 	2,503	  	
Amortization of deferred loan fees	  	 	269	  	 	 	130	  	
Other	  	 	15	  	 	 	(360	) 	
			
Changes in assets and liabilities:	  				 				
Receivables	  	 	13,029	  	 	 	(13,322	) 	
Prepaid expenses	  	 	(1,212	) 	 	 	(2,754	) 	
Other current assets	  	 	(11,895	) 	 	 	(5,542	) 	
Deferred charges and other assets	  	 	1,753	  	 	 	7,852	  	
Accounts payable	  	 	(3,487	) 	 	 	2,481	  	
Income taxes receivable / payable	  	 	(3,992	) 	 	 	(3,536	) 	
Accrued employee compensation and benefits	  	 	363	  	 	 	2,789	  	
Other accrued expenses and current liabilities	  	 	1,777	  	 	 	(176	) 	
Deferred revenue	  	 	(2,341	) 	 	 	780	  	
Other long-term liabilities	  	 	256	  	 	 	(3,255	) 	
	  	 	 	 	 	 	 	 	
Net cash provided by operating activities	  	 	57,104	  	 	 	39,342	  	

Cash flows from investing activities:	  				 				
Capital expenditures	  	 	(19,476	) 	 	 	(24,236	) 	
Proceeds from sale of property and equipment	  	 	53	  	 	 	81	  	
Investment in restricted cash	  	 	(5	) 	 	 	(3	) 	
Release of restricted cash	  	 	—  	  	 	 	168	  	
Proceeds from insurance settlement	  	 	500	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net cash (used for) investing activities	  	 	(18,928	) 	 	 	(23,990	) 	

7

Table of Contents
Sykes Enterprises, Incorporated and Subsidiaries
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(Continued)

 	  	Six Months Ended June 30,	 	
(in thousands)	  	2015	 	 	2014	 	
Cash flows from financing activities:	  				 				
Payments of long-term debt	  	 	(10,000	) 	 	 	(19,000	) 	
Excess tax benefit from stock-based compensation	  	 	169	  	 	 	—  	  	
Cash paid for repurchase of common stock	  	 	(11,969	) 	 	 	(2,605	) 	
Proceeds from grants	  	 	472	  	 	 	107	  	
Shares repurchased for minimum tax withholding on equity awards	  	 	(1,269	) 	 	 	(422	) 	
Cash paid for loan fees related to long-term debt	  	 	(962	) 	 	 	—  	  	
	  	 	 	 	 	 	 	 	
Net cash (used for) financing activities	  	 	(23,559	) 	 	 	(21,920	) 	

Effects of exchange rates on cash and cash equivalents	  	 	(7,404	) 	 	 	(919	) 	

Net increase (decrease) in cash and cash equivalents	  	 	7,213	  	 	 	(7,487	) 	
			
Cash and cash equivalents – beginning	  	 	215,137	  	 	 	211,985	  	
	  	 	 	 	 	 	 	 	
Cash and cash equivalents – ending	  	$	222,350	  	 	$	204,498	  	

Supplemental disclosures of cash flow information:	  				 				
Cash paid during period for interest	  	$	735	  	 	$	904	  	
Cash paid during period for income taxes	  	$	14,231	  	 	$	9,341	  	
			
Non-cash transactions:	  				 				
Property and equipment additions in accounts payable	  	$	4,324	  	 	$	2,804	  	
Unrealized gain (loss) on postretirement obligation in accumulated other comprehensive income (loss)	  	$	44	  	 	$	18	  	
Shares repurchased for minimum tax withholding on common stock and restricted stock under equity awards included in other accrued expenses and current liabilities	  	$	126	  	 	$	—  	  	
See accompanying Notes to Condensed Consolidated Financial Statements.
 
8

Table of Contents
 Sykes Enterprises, Incorporated and Subsidiaries
Notes to Condensed Consolidated Financial Statements
Six Months Ended June 30, 2015 and 2014
(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, social media, 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 order processing, 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, Australia 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.
Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2015 are not necessarily indicative of the results that may be expected for any future quarters or the year ending December 31, 2015. 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, 2014, as filed with the Securities and Exchange Commission (“SEC”) on February 19, 2015.
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. On July 2, 2015, the Company acquired 100% of the outstanding capital stock of Qelp B.V. and Qelp Do Brasil Software E Conteudo Digital LTDA. See Note 20, Subsequent Event, for further information. There were no other material subsequent events that required recognition or disclosure in the accompanying condensed consolidated financial statements.
New Accounting Standards Not Yet Adopted
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 “ Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The amendments in ASU 2014-09 outline a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and indicate that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for
 
9

Table of Contents
those goods or services. To achieve this, an entity should identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. The amendments are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period; early adoption is not permitted. An entity should apply the amendments using either the full retrospective approach or retrospectively with a cumulative effect of initially applying the amendments recognized at the date of initial application. On July 9, 2015, the FASB agreed to defer the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017 and the interim periods within that year. The Company is currently evaluating the methods of adoption and the impact that the adoption of ASU 2014-09 may have on its financial condition, results of operations and cash flows.
In June 2014, the FASB issued ASU 2014-12 “ Compensation – Stock Compensation (Topic 718) Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014-12”). The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Accounting Standards Codification (“ASC”) Topic 718, “ Compensation — Stock Compensation ” (“ASC 718”), as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015; early adoption is permitted. Entities may apply the amendments either (1) prospective to all awards granted or modified after the effective date or (2) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The Company does not expect the adoption of ASU 2014-12 on January 1, 2016 to materially impact its financial condition, results of operations and cash flows.
In January 2015, the FASB issued ASU 2015-01 “ Income Statement – Extraordinary and Unusual Items (Subtopic 225-20) Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”). This amendment eliminates from U.S. GAAP the concept of extraordinary items as part of the FASB’s initiative to reduce complexity in accounting standards. These amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015; early adoption is permitted. Entities may apply the amendments either prospectively or retrospectively to all prior periods presented in the financial statements. The Company does not expect the adoption of ASU 2015-01 on January 1, 2016 to materially impact its financial condition, results of operations and cash flows.
In February 2015, the FASB issued ASU 2015-02 “ Consolidation (Topic 810) Amendments to the Consolidation Analysis ) ” (“ASU 2015-02”). These amendments are intended to improve targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations and securitization structures. These amendments affect the consolidation evaluation for reporting organizations. In addition, the amendments simplify and improve current U.S. GAAP by reducing the number of consolidation models. The amendments are effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015; early adoption is permitted. Entities may apply the amendments using either a modified retrospective approach or retrospectively. The Company does not expect the adoption of ASU 2015-02 on January 1, 2016 to materially impact its financial condition, results of operations and cash flows.
In April 2015, the FASB issued ASU 2015-03 “ Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. These amendments are effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Entities should apply the amendments retrospectively. The Company does not expect the adoption of ASU 2015-03 on January 1, 2016 to materially impact its financial condition, results of operations and cash flows.
In April 2015, the FASB issued ASU 2015-05  “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”). These amendments provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance does not change the accounting for a customer’s accounting for service
 
10

Table of Contents
contracts. These amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015; early adoption is permitted. Entities can adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. The Company does not expect the adoption of ASU 2015-05 on January 1, 2016 to materially impact its financial condition, results of operations and cash flows.
New Accounting Standards Recently Adopted
In April 2014, the Financial Accounting Standards Board (“FASB”) issued ASU 2014-08 “ Presentation of Financial Statements (Topic 205) and Property, Plant, and Equipment (Topic 360) – Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity” (“ASU 2014-08”). The amendments in ASU 2014-08 indicate that only those disposals of components of an entity that represent a strategic shift that has (or will have) a major effect on an entity’s operations and financial results will be reported as discontinued operations in the financial statements. Currently, a component of an entity that is a reportable segment, an operating segment, a reporting unit, a subsidiary, or an asset group is eligible for discontinued operations presentation. The amendments will be applied to all disposals (or classifications as held for sale) of components of an entity that occur within annual periods beginning on or after December 15, 2014, and interim periods within those years. The adoption of ASU 2014-08 on January 1, 2015 did not have a material impact on the financial condition, results of operations and cash flows of the Company.
Note 2. Costs Associated with Exit or Disposal Activities
During 2011 and 2010, the Company announced several initiatives to streamline excess capacity through targeted seat reductions (the “Exit Plans”) in an on-going effort to manage and optimize capacity utilization. These Exit Plans included, but were not limited to, closing customer contact management centers in The Philippines, the United Kingdom, Ireland and South Africa and consolidating leased space in various locations in the U.S. and the Netherlands. These Exit Plans impacted approximately 800 employees. The Company has paid $14.9 million in cash through June 30, 2015 under these Exit Plans.
The cumulative costs expected and incurred as a result of the Exit Plans were as follows as of June 30, 2015 (in thousands):

 	  	Americas
Fourth
Quarter 2011
Exit Plan	 	  	EMEA
Fourth
Quarter 2011
Exit Plan	 	  	EMEA
Fourth
Quarter 2010
Exit Plan	 	  	Americas
Third
Quarter 2010
Exit Plan	 	  	Total	 	
Lease obligations and facility exit costs	  	$	1,365	  	  	$	19	  	  	$	1,914	  	  	$	6,729	  	  	$	10,027	  	
Severance and related costs	  	 	—  	  	  	 	5,857	  	  	 	185	  	  	 	—  	  	  	 	6,042	  	
Legal-related costs	  	 	—  	  	  	 	110	  	  	 	—  	  	  	 	—  	  	  	 	110	  	
Non-cash impairment charges	  	 	480	  	  	 	474	  	  	 	159	  	  	 	3,847	  	  	 	4,960	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total	  	$	1,845	  	  	$	6,460	  	  	$	2,258	  	  	$	10,576	  	  	$	21,139	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The following table summarizes the accrued liability associated with the Exit Plans’ exit or disposal activities and related charges for the three and six months ended June 30, 2015 and 2014 (in thousands):

 	  	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	  	2015	 	 	2014	 	 	2015	 	 	2014	 	
Beginning accrual	  	$	1,346	  	 	$	2,731	  	 	$	1,558	  	 	$	2,974	  	
Lease obligations and facility exit costs (1)	  	 	—  	  	 	 	(185	) 	 	 	—  	  	 	 	(185	) 	
Severance and related costs	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Legal-related costs	  	 	—  	  	 	 	—  	  	 	 	—  	  	 	 	—  	  	
Cash payments (2)	  	 	(196	) 	 	 	(428	) 	 	 	(408	) 	 	 	(673	) 	
Other non-cash changes (3)	  	 	—  	  	 	 	(7	) 	 	 	—  	  	 	 	(5	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Ending accrual	  	$	1,150	  	 	$	2,111	  	 	$	1,150	  	 	$	2,111	  	

(1)  	During 2014, the Company reversed accruals related to the final settlement of lease obligations and facility exit costs for one of the Ireland sites, included in the EMEA segment, which reduced “General and administrative” costs in the accompanying Condensed Consolidated Statements of Operations.	
(2)  	Related to lease obligations and facility exit costs.	
(3)  	Effect of foreign currency translation.	
 
11

Table of Contents
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, 2015 and December 31, 2014 (in thousands):

 	  	Americas
Fourth
Quarter 2011
Exit Plan	 	  	Americas
Third
Quarter 2010
Exit Plan	 	  	Total	 	
June 30, 2015	  				  				  				
Short-term accrued restructuring liability (1)	  	$	140	  	  	$	487	  	  	$	627	  	
Long-term accrued restructuring liability (2)	  	 	115	  	  	 	408	  	  	 	523	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Ending accrual at June 30, 2015	  	$	255	  	  	$	895	  	  	$	1,150	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
December 31, 2014	  				  				  				
Short-term accrued restructuring liability (1)	  	$	109	  	  	$	521	  	  	$	630	  	
Long-term accrued restructuring liability (2)	  	 	203	  	  	 	725	  	  	 	928	  	
	  	 	 	 	  	 	 	 	  	 	 	 	
Ending accrual at December 31, 2014	  	$	312	  	  	$	1,246	  	  	$	1,558	  	

(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.	
The remaining restructuring liability relates to future rent obligations to be paid through the remainder of the lease terms, the last of which ends in February 2017. The EMEA Fourth Quarter 2011 and EMEA Fourth Quarter 2010 Exit Plans were settled during 2014.
Note 3. 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 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:
 
 	•	 	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.
 
12

Table of Contents
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.
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. These items 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 6, Investments Held in Rabbi Trust, and Note 16, 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.
 
13

Table of Contents
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):

 	  	 	  	 	 	  	Fair Value Measurements at June 30, 2015 Using:	 	
  	  	 	  	Balance at
June 30, 2015	 	  	Quoted Prices
in Active
Markets For
Identical Assets	 	  	Significant
Other
Observable
Inputs	 	  	Significant
Unobservable
Inputs	 	
 	  	 	  			  	Level (1)	 	  	Level (2)	 	  	Level (3)	 	
Assets:	  		  				  				  				  				
Foreign currency forward and option contracts included in “Other current assets”	  	(1)	  	$	10,704	  	  	$	—  	  	  	$	10,704	  	  	$	—  	  	
Equity investments held in a rabbi trust for the Deferred Compensation Plan	  	(2)	  	 	6,184	  	  	 	6,184	  	  	 	—  	  	  	 	—  	  	
Debt investments held in a rabbi trust for the Deferred Compensation Plan	  	(2)	  	 	1,555	  	  	 	1,555	  	  	 	—  	  	  	 	—  	  	
Guaranteed investment certificates	  	(3)	  	 	86	  	  	 	—  	  	  	 	86	  	  	 	—  	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  		  	$	18,529	  	  	$	7,739	  	  	$	10,790	  	  	$	—  	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Liabilities:	  		  				  				  				  				
Long-term debt	  	(4)	  	$	65,000	  	  	$	—  	  	  	$	65,000	  	  	$	—  	  	
Foreign currency forward and option contracts included in “Other accrued expenses and current liabilities”	  	(1)	  	 	471	  	  	 	—  	  	  	 	471	  	  	 	—  	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  		  	$	65,471	  	  	$	—  	  	  	$	65,471	  	  	$	—  	  	

 	  	 	  	 	 	  	Fair Value Measurements at December 31, 2014 Using:	 	
  	  	 	  	Balance at
December 31, 2014	 	  	Quoted Prices
in Active
Markets For
Identical Assets	 	  	Significant
Other
Observable
Inputs	 	  	Significant
Unobservable
Inputs	 	
 	  	 	  			  	Level (1)	 	  	Level (2)	 	  	Level (3)	 	
Assets:	  		  				  				  				  				
Money market funds and open-end mutual funds included in “Cash and cash equivalents”	  	(5)	  	$	100,915	  	  	$	100,915	  	  	$	—  	  	  	$	—  	  	
Money market funds and open-end mutual funds included in “Deferred charges and other assets”	  	(5)	  	 	10	  	  	 	10	  	  	 	—  	  	  	 	—  	  	
Foreign currency forward and option contracts included in “Other current assets”	  	(1)	  	 	1,489	  	  	 	—  	  	  	 	1,489	  	  	 	—  	  	
Foreign currency forward contracts included in “Deferred charges and other assets”	  	(1)	  	 	4,060	  	  	 	—  	  	  	 	4,060	  	  	 	—  	  	
Equity investments held in a rabbi trust for the Deferred Compensation Plan	  	(2)	  	 	5,589	  	  	 	5,589	  	  	 	—  	  	  	 	—  	  	
Debt investments held in a rabbi trust for the Deferred Compensation Plan	  	(2)	  	 	1,363	  	  	 	1,363	  	  	 	—  	  	  	 	—  	  	
Guaranteed investment certificates	  	(3)	  	 	79	  	  	 	—  	  	  	 	79	  	  	 	—  	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  		  	$	113,505	  	  	$	107,877	  	  	$	5,628	  	  	$	—  	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Liabilities:	  		  				  				  				  				
Long-term debt	  	(4)	  	$	75,000	  	  	$	—  	  	  	$	75,000	  	  	$	—  	  	
Foreign currency forward and option contracts included in “Other accrued expenses and current liabilities”	  	(1)	  	 	1,261	  	  	 	—  	  	  	 	1,261	  	  	 	—  	  	
	  		  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  		  	$	76,261	  	  	$	—  	  	  	$	76,261	  	  	$	—  	  	

(1)  	In the accompanying Condensed Consolidated Balance Sheets. See Note 5, Financial Derivatives.	
(2)  	Included in “Other current assets” in the accompanying Condensed Consolidated Balance Sheets. See Note 6, Investments Held in Rabbi Trust.	
(3)	Included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets.	
(4)  	The carrying value of long-term debt approximates its estimated fair value as it re-prices at varying interest rates. See Note 10, Borrowings.	
(5)	In the accompanying Condensed Consolidated Balance Sheets.	
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 June 30, 2015 and December 31, 2014.
 
14

Table of Contents
Note 4. Intangible Assets
The following table presents the Company’s purchased intangible assets as of June 30, 2015 (in thousands):

 	  	Gross Intangibles	 	  	Accumulated
Amortization	 	 	Net Intangibles	 	  	Weighted Average
Amortization
Period (years)	 	
Customer relationships	  	$	99,268	  	  	$	(52,982	) 	 	$	46,286	  	  	 	8	  	
Trade name	  	 	11,600	  	  	 	(4,791	) 	 	 	6,809	  	  	 	8	  	
Non-compete agreements	  	 	1,201	  	  	 	(1,201	) 	 	 	—  	  	  	 	2	  	
Proprietary software	  	 	850	  	  	 	(850	) 	 	 	—  	  	  	 	2	  	
Favorable lease agreement	  	 	449	  	  	 	(449	) 	 	 	—  	  	  	 	2	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  				
	  	$	113,368	  	  	$	(60,273	) 	 	$	53,095	  	  	 	8	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  				
The following table presents the Company’s purchased intangible assets as of December 31, 2014 (in thousands):

 	  	Gross Intangibles	 	  	Accumulated
Amortization	 	 	Net Intangibles	 	  	Weighted Average
Amortization
Period (years)	 	
Customer relationships	  	$	100,719	  	  	$	(47,571	) 	 	$	53,148	  	  	 	8	  	
Trade name	  	 	11,600	  	  	 	(4,128	) 	 	 	7,472	  	  	 	8	  	
Non-compete agreements	  	 	1,209	  	  	 	(1,209	) 	 	 	—  	  	  	 	2	  	
Proprietary software	  	 	850	  	  	 	(850	) 	 	 	—  	  	  	 	2	  	
Favorable lease agreement	  	 	449	  	  	 	(449	) 	 	 	—  	  	  	 	2	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  				
	  	$	114,827	  	  	$	(54,207	) 	 	$	60,620	  	  	 	8	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  				
The Company’s estimated future amortization expense for the succeeding years relating to the purchased intangible assets resulting from acquisitions completed prior to June 30, 2015, is as follows (in thousands):

Years Ending December 31,	  	Amount	 	
2015 (remaining six months)	  	$	6,836	  	
2016	  	 	13,702	  	
2017	  	 	13,702	  	
2018	  	 	7,509	  	
2019	  	 	6,917	  	
2020	  	 	4,429	  	
2021 and thereafter	  	 	—  	  	
 
15

Table of Contents
Note 5. 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 Company’s cash flow hedges recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) in the accompanying Condensed Consolidated Balance Sheets are as follows (in thousands):

 	  	June 30, 2015	 	  	December 31, 2014	 	
Deferred gains (losses) in AOCI	  	$	946	  	  	$	(157	) 	
Tax on deferred gains (losses) in AOCI	  	 	11	  	  	 	46	  	
	  	 	 	 	  	 	 	 	
Deferred gains (losses) in AOCI, net of taxes	  	$	957	  	  	$	(111	) 	
	  	 	 	 	  	 	 	 	
Deferred gains (losses) expected to be reclassified to “Revenues” from AOCI during the next twelve months	  	$	946	  	  				
	  	 	 	 	  				
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 the six months ended June 30, 2015 and 2014, the Company entered into foreign exchange forward contracts to hedge its net investment in a foreign operation, as defined under ASC 815. The purpose of these derivative instruments is to protect the Company’s 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 Company’s foreign currency-based investments in these subsidiaries.
Non-Designated 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 Company’s interests against adverse foreign currency moves relating primarily to intercompany receivables and payables, and other assets and liabilities that are denominated in currencies other than the Company’s subsidiaries’ functional currencies. These contracts generally do not exceed 180 days in duration.
 
16

Table of Contents
The Company had the following outstanding foreign currency forward contracts and options (in thousands):

 	  	As of June 30, 2015	  	As of December 31, 2014	
Contract Type	  	Notional
Amount in
USD	 	  	Settle Through
Date	  	Notional
Amount in
USD	 	  	Settle Through
Date	
Cash flow hedges: (1)	  				  		  				  		
Options:	  				  		  				  		
Philippine Pesos	  	$	81,000	  	  	June 2016	  	$	73,000	  	  	December 2015	
Forwards:	  				  		  				  		
Philippine Pesos	  	 	1,000	  	  	October 2015	  	 	9,000	  	  	March 2015	
Costa Rican Colones	  	 	45,900	  	  	March 2016	  	 	51,600	  	  	October 2015	
Hungarian Forints	  	 	1,377	  	  	December 2015	  	 	—  	  	  	—	
Romanian Leis	  	 	5,194	  	  	December 2015	  	 	10,414	  	  	December 2015	
Net investment hedges: (2)	  				  		  				  		
Forwards:	  				  		  				  		
Euros	  	 	63,470	  	  	March 2016	  	 	51,648	  	  	March 2016	
Non-designated hedges: (3)	  				  		  				  		
Forwards	  	 	58,243	  	  	December 2015	  	 	64,541	  	  	March 2015	
 
(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 Company’s operating results and cash flows from fluctuations caused by volatility in currency exchange rates, primarily related to intercompany receivables and payables, and cash held in non-functional currencies.	
Master netting agreements exist with each respective counterparty to reduce credit risk by permitting net settlement of derivative positions. In the event of default by the Company or one of its counterparties, these agreements include a set-off clause that provides the non-defaulting party the right to net settle all derivative transactions, regardless of the currency and settlement date. The maximum amount of loss due to credit risk that, based on gross fair value, the Company would incur if parties to the derivative transactions that make up the concentration failed to perform according to the terms of the contracts was $10.7 million and $5.5 million as of June 30, 2015 and December 31, 2014, respectively. After consideration of these netting arrangements and offsetting positions by counterparty, the total net settlement amount as it relates to these positions are asset positions of $10.4 million and $4.4 million as of June 30, 2015 and December 31, 2014, respectively, and liability positions of $0.2 million and $0.1 million as of June 30, 2015 and December 31, 2014, respectively.
Although legally enforceable master netting arrangements exist between the Company and each counterparty, the Company has elected to present the derivative assets and derivative liabilities on a gross basis in the accompanying Condensed Consolidated Balance Sheets. Additionally, the Company is not required to pledge, nor is it entitled to receive, cash collateral related to these derivative transactions.
 
17

Table of Contents
The following tables present the fair value of the Company’s derivative instruments included in the accompanying Condensed Consolidated Balance Sheets (in thousands):

 	  	Derivative Assets	 	
 	  	June 30, 2015	 	  	December 31, 2014	 	
 	  	Fair Value	 	  	Fair Value	 	
Derivatives designated as cash flow hedging instruments under ASC 815:	  				  				
			
Foreign currency forward and option contracts (1)	  	$	1,872	  	  	$	974	  	
			
Derivatives designated as net investment hedging instruments under ASC 815:	  				  				
			
Foreign currency forward contracts (1)	  	 	8,570	  	  	 	—  	  	
			
Foreign currency forward contracts (2)	  	 	—  	  	  	 	4,060	  	
	  	 	 	 	  	 	 	 	
	  	 	10,442	  	  	 	5,034	  	
Derivatives not designated as hedging instruments under
ASC 815:	  				  				
			
Foreign currency forward contracts (1)	  	 	262	  	  	 	515	  	
	  	 	 	 	  	 	 	 	
Total derivative assets	  	$	10,704	  	  	$	5,549	  	

 	  	Derivative Liabilities	 	
 	  	June 30, 2015	 	  	December 31, 2014	 	
 	  	Fair Value	 	  	Fair Value	 	
Derivatives designated as cash flow hedging instruments
under ASC 815:	  				  				
			
Foreign currency forward and option contracts (3)	  	$	123	  	  	$	406	  	
			
Derivatives not designated as hedging instruments under
ASC 815:	  				  				
			
Foreign currency forward contracts (3)	  	 	348	  	  	 	855	  	
	  	 	 	 	  	 	 	 	
Total derivative liabilities	  	$	471	  	  	$	1,261	  	

(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.	
 
18

Table of Contents
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, 2015 and 2014 (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 and
Amount Excluded  from
Effectiveness Testing)	 	
 	  	June 30,	 	  	June 30,	 	 	June 30,	 	
 	  	2015	 	 	2014	 	  	2015	 	  	2014	 	 	2015	 	  	2014	 	
Derivatives designated as cash flow hedging instruments under ASC 815:	  				 				  				  				 				  				
Foreign currency forward and option contracts	  	$	357	  	 	$	2,475	  	  	$	739	  	  	$	(1,755	) 	 	$	1	  	  	$	(1	) 	
Derivatives designated as net investment hedging instruments under ASC 815:	  				 				  				  				 				  				
Foreign currency forward contracts	  	 	(1,848	) 	 	 	108	  	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	
	  	$	(1,491	) 	 	$	2,583	  	  	$	739	  	  	$	(1,755	) 	 	$	1	  	  	$	(1	) 	

 	  	 	 	 	 	 	  	Statement of
Operations Location	 	 	Gain (Loss) Recognized
on Derivatives	 	
	  			 			  			 	June 30,	 	
	  			 			  			 	2015	 	  	2014	 	
Derivatives not designated as hedging instruments under ASC 815:	  				 				  				  				 				  				
Foreign currency forward contracts	  				 				  	 
 	Other income
and (expense)	  
  	 	$	67	  	  	$	(1,331	) 	
Foreign currency forward contracts	  				 				  	 	Revenues	  	 	 	4	  	  	 	—  	  	
	  				 				  				  				 	 	 	 	  	 	 	 	
	  				 				  				  				 	$	      71	  	  	$	(1,331	) 	

19

Table of Contents
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, 2015 and 2014 (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 and
Amount Excluded from
Effectiveness Testing)	 	
 	  	June 30,	 	 	June 30,	 	 	June 30,	 	
 	  	2015	 	  	2014	 	 	2015	 	  	2014	 	 	2015	 	 	2014	 	
Derivatives designated as cash flow hedging instruments under ASC 815:	  				  				 				  				 				 				
Foreign currency forward and option contracts	  	$	2,412	  	  	$	(2,543	) 	 	$	1,328	  	  	$	(4,129	) 	 	$	2	  	 	$	(4	) 	
Derivatives designated as net investment hedging instruments under ASC 815:	  				  				 				  				 				 				
Foreign currency forward contracts	  	 	4,510	  	  	 	162	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	 	 	 	 	
	  	$	6,922	  	  	$	(2,381	) 	 	$	1,328	  	  	$	(4,129	) 	 	$	     2	  	 	$	(4	) 	

 	  	 	 	  	 	 	 	Statement of
Operations Location	 	 	Gain (Loss) Recognized
on Derivatives	 	
	  			  			 			 	June 30,	 	
	  			  			 			 	2015	 	 	2014	 	
Derivatives not designated as hedging instruments under ASC 815:	  				  				 				  				 				 				
Foreign currency forward contracts	  				  				 	 
 	Other income
and (expense)	  
  	 	$	(97	) 	 	$	(608	) 	
Foreign currency forward contracts	  				  				 	 	Revenues	  	 	 	4	  	 	 	—  	  	
	  				  				 				  				 	$	(93	) 	 	$	(608	) 	
	  				  				 				  				 	 	 	 	 	 	 	 	
Note 6. Investments Held in Rabbi Trust
The Company’s investments held in rabbi trust, classified as trading securities and included in “Other current assets” in the accompanying Condensed Consolidated Balance Sheets, at fair value, consist of the following (in thousands):

 	  	June 30, 2015	 	  	December 31, 2014	 	
 	  	Cost	 	  	Fair Value	 	  	Cost	 	  	Fair Value	 	
Mutual funds	  	$	5,853	  	  	$	7,739	  	  	$	5,160	  	  	$	6,952	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
The mutual funds held in rabbi trust were 80% equity-based and 20% debt-based as of June 30, 2015. 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,	 	
 	  	2015	 	 	2014	 	  	2015	 	 	2014	 	
Gross realized gains from sale of trading securities	  	$	17	  	 	$	—  	  	  	$	20	  	 	$	3	  	
Gross realized (losses) from sale of trading securities	  	 	—  	  	 	 	—  	  	  	 	(1	) 	 	 	—  	  	
Dividend and interest income	  	 	13	  	 	 	9	  	  	 	18	  	 	 	18	  	
Net unrealized holding gains (losses)	  	 	(50	) 	 	 	204	  	  	 	73	  	 	 	279	  	
	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Net investment income (losses)	  	$	(20	) 	 	$	213	  	  	$	110	  	 	$	300	  	

20

Table of Contents
Note 7. Property and Equipment
In February 2015, customer contact management centers (the “facilities”) located in Perry County, Kentucky, Buchanan County, Virginia and Wise, Virginia experienced damage to the buildings and contents as a result of winter storms. The Company filed an insurance claim with its property insurance company to recover losses of $1.6 million. In April 2015, the insurance company paid $0.5 million to the Company for costs to clean up and repair the facility. The Company received $1.1 million from the insurance company in July 2015 and finalized the claim during the third quarter of 2015. The Company is in the process of completing the repairs to the facilities.
Note 8. Deferred Revenue
The components of deferred revenue consist of the following (in thousands):

 	  	June 30, 2015	 	  	December 31, 2014	 	
Future service	  	$	23,525	  	  	$	25,222	  	
Estimated potential penalties and holdbacks	  	 	6,415	  	  	 	9,023	  	
	  	 	 	 	  	 	 	 	
	  	$	                29,940	  	  	$	34,245	  	
	  	 	 	 	  	 	 	 	
Note 9. Deferred Grants
The components of deferred grants, net of accumulated amortization, consist of the following (in thousands):

 	  	June 30, 2015	 	  	December 31, 2014	 	
Property grants	  	$	4,717	  	  	$	5,110	  	
Lease grants	  	 	427	  	  	 	—  	  	
Employment grants	  	 	190	  	  	 	207	  	
Total deferred grants	  	 	5,334	  	  	 	5,317	  	
Less: Property grants - short-term (1)	  	 	—  	  	  	 	—  	  	
Less: Lease grants - short-term (1)	  	 	—  	  	  	 	—  	  	
Less: Employment grants - short-term (1)	  	 	(190	) 	  	 	(207	) 	
	  	 	 	 	  	 	 	 	
Total long-term deferred grants (2)	  	$	                  5,144	  	  	$	5,110	  	

(1)  	Included in “Other accrued expenses and current liabilities” in the accompanying Condensed Consolidated Balance Sheets.	
(2)	Included in “Deferred grants” in the accompanying Condensed Consolidated Balance Sheets.	
Note 10. Borrowings
On May 12, 2015, the Company entered into a $440 million revolving credit facility (the “2015 Credit Agreement”) with a group of lenders and KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender and Issuing Lender (“KeyBank”). The 2015 Credit Agreement replaced the Company’s previous $245 million revolving credit facility dated May 3, 2012 (the “2012 Credit Agreement”), as amended, which agreement was terminated simultaneous with entering into the 2015 Credit Agreement. The 2015 Credit Agreement is subject to certain borrowing limitations and includes certain customary financial and restrictive covenants.
The 2015 Credit Agreement includes a $200 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.
 
21

Table of Contents
Borrowings consist of the following (in thousands):

 	  	June 30, 2015	 	  	December 31, 2014	 	
Revolving credit facility	  	$	65,000	  	  	$	75,000	  	
Less: Current portion	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	
Total long-term debt	  	$	                65,000	  	  	$	75,000	  	
	  	 	 	 	  	 	 	 	
The 2015 Credit Agreement matures on May 12, 2020 and has no varying installments due.
Borrowings under the 2015 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 0.125%, which is due quarterly in arrears and calculated on the average unused amount of the 2015 Credit Agreement.
The 2015 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 2015, the Company paid an underwriting fee of $0.9 million for the 2015 Credit Agreement, which was deferred and will be amortized over the term of the loan. The Company then expensed $0.1 million of the deferred loan fees related to the 2012 Credit Agreement and the remaining $0.4 million will be amortized over the term of the 2015 Credit Agreement.
The following table presents information related to our credit agreements (dollars in thousands):

 	  	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	  	2015	 	 	2014	 	 	2015	 	 	2014	 	
Average daily utilization	  	$	70,198	  	 	$	90,242	  	 	$	72,249	  	 	$	93,271	  	
Interest expense, including commitment fee (1)	  	$	320	  	 	$	368	  	 	$	638	  	 	$	749	  	
Weighted average interest rate	  	 	1.8	% 	 	 	1.6	% 	 	 	1.8	% 	 	 	1.6	% 	
 
(1)  	Excludes the amortization of deferred loan fees.	
 
22

Table of Contents
Note 11. 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, 2014	  	$	12,751	  	 	$	(3,683	) 	 	$	1,150	  	 	$	(2,535	) 	 	$	314	  	 	$	7,997	  	
Pre-tax amount	  	 	(34,947	) 	 	 	6,344	  	 	 	(50	) 	 	 	(2,790	) 	 	 	77	  	 	 	(31,366	) 	
Tax (provision) benefit	  	 	—  	  	 	 	(2,385	) 	 	 	57	  	 	 	(17	) 	 	 	—  	  	 	 	(2,345	) 	
Reclassification of (gain) loss to net income	  	 	—  	  	 	 	—  	  	 	 	(35	) 	 	 	5,237	  	 	 	(49	) 	 	 	5,153	  	
Foreign currency translation	  	 	120	  	 	 	—  	  	 	 	(114	) 	 	 	(6	) 	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at December 31, 2014	  	 	(22,076	) 	 	 	276	  	 	 	1,008	  	 	 	(111	) 	 	 	342	  	 	 	(20,561	) 	
Pre-tax amount	  	 	(20,055	) 	 	 	4,510	  	 	 	—  	  	 	 	2,414	  	 	 	72	  	 	 	(13,059	) 	
Tax (provision) benefit	  	 	—  	  	 	 	(1,742	) 	 	 	—  	  	 	 	(23	) 	 	 	—  	  	 	 	(1,765	) 	
Reclassification of (gain) loss to net income	  	 	—  	  	 	 	—  	  	 	 	(21	) 	 	 	(1,341	) 	 	 	(28	) 	 	 	(1,390	) 	
Foreign currency translation	  	 	(11	) 	 	 	—  	  	 	 	(7	) 	 	 	18	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Balance at June 30, 2015	  	$	(42,142	) 	 	$	3,044	  	 	$	980	  	 	$	957	  	 	$	386	  	 	$	(36,775	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
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,	 	 	Six Months Ended
June 30,	 	 	Statements of Operations
Location	
 	  	2015	 	  	2014	 	 	2015	 	  	2014	 	 		
Actuarial Gain (Loss) Related to Pension Liability: (1)	  				  				 				  				 		
Pre-tax amount	  	$	10	  	  	$	13	  	 	$	21	  	  	$	25	  	 	Direct salaries and related costs	
Tax (provision) benefit	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	Income taxes	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 		
Reclassification to net income	  	 	10	  	  	 	13	  	 	 	21	  	  	 	25	  	 		
Gain (Loss) on Cash Flow Hedging Instruments: (2)	  				  				 				  				 		
Pre-tax amount	  	 	740	  	  	 	(1,756	) 	 	 	1,330	  	  	 	(4,133	) 	 	Revenues	
Tax (provision) benefit	  	 	5	  	  	 	17	  	 	 	11	  	  	 	113	  	 	Income taxes	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 		
Reclassification to net income	  	 	745	  	  	 	(1,739	) 	 	 	1,341	  	  	 	(4,020	) 	 		
Gain (Loss) on Post Retirement Obligation:  (1)	  				  				 				  				 		
Pre-tax amount	  	 	14	  	  	 	12	  	 	 	28	  	  	 	23	  	 	General and administrative	
Tax (provision) benefit	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	Income taxes	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 		
Reclassification to net income	  	 	14	  	  	 	12	  	 	 	28	  	  	 	23	  	 		
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 		
Total reclassification of gain (loss) to net income	  	$	769	  	  	$	(1,714	) 	 	$	1,390	  	  	$	(3,972	) 	 		

(1)  	See Note 15, Defined Benefit Pension Plan and Postretirement Benefits, for further information.	
(2)  	See Note 5, Financial Derivatives, for further information.	
Except as discussed in Note 12, Income Taxes, earnings associated with the Company’s investments in its foreign subsidiaries are considered to be indefinitely reinvested and no provision for income taxes on those earnings or translation adjustments have been provided.
 
23

Table of Contents
Note 12. Income Taxes
The Company’s effective tax rate was 26.6% and 14.2% for the three months ended June 30, 2015 and 2014, respectively. The increase in the effective tax rate is predominately due to a shift in earnings to higher tax rate jurisdictions as well as several factors that are not individually material. The difference between the Company’s effective tax rate of 26.6% 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 foreign tax rate differentials, income earned in certain tax holiday jurisdictions, changes in uncertain tax positions, adjustments of valuation allowances and tax credits, partially offset by the tax impact of permanent differences and foreign withholding taxes.
The Company’s effective tax rate was 26.8% and 24.1% for the six months ended June 30, 2015 and 2014, respectively. The increase in the effective tax rate is due to several factors, including fluctuations in earnings among the various jurisdictions in which the Company operates, none of which are individually material. The difference between the Company’s effective tax rate of 26.8% 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 foreign tax rate differentials, income earned in certain tax holiday jurisdictions, changes in uncertain tax positions, adjustments of valuation allowances and tax credits, partially offset by the tax impact of permanent differences and foreign withholding taxes.
The Company has accrued $12.0 million and $13.3 million as of June 30, 2015 and December 31, 2014, respectively, excluding penalties and interest, for the liability for unrecognized tax benefits. As of December 31, 2014, $2.7 million of unrecognized tax benefits was recorded to “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheet in accordance with 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.” The $12.0 million and the remaining $10.6 million of the unrecognized tax benefits at June 30, 2015 and December 31, 2014, respectively, are recorded in “Long-term income tax liabilities” in the accompanying Condensed Consolidated Balance Sheets.
Earnings associated with the investments in the Company’s foreign subsidiaries are considered to be indefinitely reinvested 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 duration is not practicable due to the inherent complexity of the multi-national tax environment in which the Company operates.
The Company is currently under audit in several tax jurisdictions. The Company received assessments for the Canadian 2003-2009 audit. Requests for Competent Authority Assistance were filed with both the Canadian Revenue Agency and the U.S. Internal Revenue Service and the Company paid mandatory security deposits to Canada as part of this process. The total amount of deposits, net of fluctuations in the foreign exchange rate, are $14.9 million and $15.9 million as of June 30, 2015 and December 31, 2014, respectively, and are included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets. Although the outcome of examinations by taxing authorities is always uncertain, the Company believes it is adequately reserved for these audits and resolution is not expected to have a material impact on its financial condition and results of operations.
The significant tax jurisdictions currently under audit are as follows:

Tax Jurisdiction	  	Tax Year Ended	
Canada	  	2003 to 2009	
The Philippines	  	2010	
 
24

Table of Contents
Note 13. Earnings Per Share
Basic earnings per share are based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share includes the weighted average number of common shares outstanding during the respective periods and the further dilutive effect, if any, from stock appreciation rights, restricted stock, restricted stock units and shares held in 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,	 	
 	  	      2015      	 	  	      2014      	 	  	      2015      	 	  	      2014      	 	
Basic:	  				  				  				  				
Weighted average common shares outstanding	  	 	42,008	  	  	 	42,711	  	  	 	42,095	  	  	 	42,726	  	
Diluted:	  				  				  				  				
Dilutive effect of stock appreciation rights, restricted stock, restricted stock units and shares held in a rabbi trust	  	 	208	  	  	 	99	  	  	 	233	  	  	 	119	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Total weighted average diluted shares outstanding	  	 	42,216	  	  	 	42,810	  	  	 	42,328	  	  	 	42,845	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
Anti-dilutive shares excluded from the diluted earnings per share calculation	  	 	27	  	  	 	49	  	  	 	24	  	  	 	70	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
On August 18, 2011, the Company’s Board of Directors (the “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 4.5 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 shares repurchased under the Company’s 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, 2015	  	 	279	  	  	$	24.14	  	  	$	24.79	  	  	$	6,833	  	
June 30, 2014	  	 	—  	  	  	$	—  	  	  	$	—  	  	  	$	—  	  	
Six Months Ended:	  				  				  				  				
June 30, 2015	  	 	500	  	  	$	22.81	  	  	$	24.79	  	  	$	11,969	  	
June 30, 2014	  	 	130	  	  	$	19.92	  	  	$	19.98	  	  	$	2,605	  	
 
25

Table of Contents
Note 14. Commitments and Loss Contingency
Commitments
During the six months ended June 30, 2015, 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, 2015 (in thousands):

 	  	Amount	 	
2015 (remaining six months)	  	$	2,153	  	
2016	  	 	9,527	  	
2017	  	 	9,320	  	
2018	  	 	9,271	  	
2019	  	 	9,530	  	
2020	  	 	8,677	  	
2021 and thereafter	  	 	18,932	  	
	  	 	 	 	
Total minimum payments required	  	$	67,410	  	
	  	 	 	 	
During the six months ended June 30, 2015, 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, 2015 (in thousands):

 	  	Amount	 	
2015 (remaining six months)	  	$	2,681	  	
2016	  	 	787	  	
2017	  	 	633	  	
2018	  	 	—  	  	
2019	  	 	—  	  	
2020	  	 	—  	  	
2021 and thereafter	  	 	—  	  	
	  	 	 	 	
Total minimum payments required	  	$	4,101	  	
	  	 	 	 	
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, 2014.
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 when possible and appropriate, provided adequate accruals related to those matters such that the ultimate outcome will not have a material adverse effect on the Company’s financial position or results of operations.
 
26

Table of Contents
Note 15. Defined Benefit Pension Plan and Postretirement Benefits
Defined Benefit Pension Plans
The following table provides information about the net periodic benefit cost for the Company’s pension plans (in thousands):

 	  	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	  	2015	 	 	2014	 	 	2015	 	 	2014	 	
Service cost	  	$	113	  	 	$	101	  	 	$	228	  	 	$	201	  	
Interest cost	  	 	35	  	 	 	31	  	 	 	71	  	 	 	61	  	
Recognized actuarial (gains)	  	 	(10	) 	 	 	(13	) 	 	 	(21	) 	 	 	(25	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net periodic benefit cost	  	$	138	  	 	$	119	  	 	$	278	  	 	$	237	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
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 Company’s contributions included in the accompanying Condensed Consolidated Statements of Operations were as follows (in thousands):

 	  	Three Months Ended June 30,	 	  	Six Months Ended June 30,	 	
 	  	2015	 	  	2014	 	  	2015	 	  	2014	 	
401(k) plan contributions	  	$	188	  	  	$	221	  	  	$	471	  	  	$	480	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
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, 2015	 	 	December 31, 2014	 	
Postretirement benefit obligation	  	$	25	  	 	$	46	  	
Unrealized gains (losses) in AOCI (1)	  	$	386	  	 	$	342	  	
 
(1)  	Unrealized gains (losses) are impacted by changes in discount rates related to the postretirement obligation.	
 
27

Table of Contents
Note 16. Stock-Based Compensation
The Company’s stock-based compensation plans include the 2011 Equity Incentive Plan, the 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,	 	
 	  	      2015      	 	  	      2014      	 	  	      2015      	 	  	      2014      	 	
Stock-based compensation (expense) (1)	  	$	(1,288	) 	  	$	(937	) 	  	$	(3,284	) 	  	$	(1,691	) 	
Income tax benefit (2)	  	 	486	  	  	 	328	  	  	 	1,215	  	  	 	592	  	
Excess tax benefit (deficiency) from stock-based compensation  (3)	  	 	—  	  	  	 	(84	) 	  	 	169	  	  	 	(30	) 	
 
(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, 2015 and December 31, 2014.
2011 Equity Incentive Plan — The Company’s 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, members of the Company’s Board of Directors 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 — The Board, at the recommendation of the Compensation and Human Resources Development Committee (the “Compensation Committee”), has approved in the past, and may approve in the future, awards of stock-settled stock appreciation rights (“SARs”) for eligible participants. SARs represent the right to receive, without payment to the Company, a certain number of shares of common stock, as determined by the Compensation 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:

 	  	Six Months Ended June 30,	 	
 	  	      2015      	 	 	      2014      	 	
Expected volatility	  	 	34.1	% 	 	 	38.9	% 	
Weighted-average volatility	  	 	34.1	% 	 	 	38.9	% 	
Expected dividend rate	  	 	0.0	% 	 	 	0.0	% 	
Expected term (in years)	  	 	5.0	  	 	 	5.0	  	
Risk-free rate	  	 	1.6	% 	 	 	1.7	% 	
 
28

Table of Contents
The following table summarizes SARs activity as of June 30, 2015 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, 2015	  	 	959	  	 	$	—  	  	  				  				
Granted	  	 	217	  	 	$	—  	  	  				  				
Exercised	  	 	(81	) 	 	$	—  	  	  				  				
Forfeited or expired	  	 	—  	  	 	$	—  	  	  				  				
	  	 	 	 	 				  				  				
Outstanding at June 30, 2015	  	 	1,095	  	 	$	—  	  	  	 	7.1	  	  	$	5,158	  	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Vested or expected to vest at June 30, 2015	  	 	1,095	  	 	$	—  	  	  	 	7.1	  	  	$	5,158	  	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
Exercisable at June 30, 2015	  	 	670	  	 	$	—  	  	  	 	5.8	  	  	$	3,895	  	
	  	 	 	 	 	 	 	 	  	 	 	 	  	 	 	 	
The following table summarizes information regarding SARs granted and exercised (in thousands, except per SAR amounts):

 	  	Six Months Ended June 30,	 	
 	  	      2015      	 	  	      2014      	 	
Number of SARs granted	  	 	217	  	  	 	246	  	
Weighted average grant-date fair value per SAR	  	$	8.17	  	  	$	7.20	  	
Intrinsic value of SARs exercised	  	$	734	  	  	$	333	  	
Fair value of SARs vested	  	$	1,302	  	  	$	1,553	  	
The following table summarizes nonvested SARs activity as of June 30, 2015 and for the six months then ended:

Nonvested Stock Appreciation Rights	  	Shares (000s)	 	 	Weighted
Average Grant-
Date Fair Value	 	
Nonvested at January 1, 2015	  	 	411	  	 	$	    6.61	  	
Granted	  	 	217	  	 	$	    8.17	  	
Vested	  	 	(203	) 	 	$	    6.41	  	
Forfeited or expired	  	 	—  	  	 	$	     —  	  	
	  	 	 	 	 				
Nonvested at June 30, 2015	  	 	425	  	 	$	    7.50	  	
	  	 	 	 	 				
As of June 30, 2015, there was $2.8 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested SARs granted under the 2011 Plan. This cost is expected to be recognized over a weighted average period of 1.5 years.
Restricted Shares – The Board, at the recommendation of the Compensation Committee, 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 may 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.
 
29

Table of Contents
The following table summarizes nonvested restricted shares/RSUs activity as of June 30, 2015 and for the six months then ended:

Nonvested Restricted Shares and RSUs	  	Shares (000s)	 	 	Weighted
Average Grant-
Date Fair Value	 	
Nonvested at January 1, 2015	  	 	1,194	  	 	$	16.80	  	
Granted	  	 	441	  	 	$	25.06	  	
Vested	  	 	(125	) 	 	$	16.10	  	
Forfeited or expired	  	 	(264	) 	 	$	15.71	  	
	  	 	 	 	 				
Nonvested at June 30, 2015	  	 	1,246	  	 	$	20.03	  	
	  	 	 	 	 				
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,	 	
 	  	2015	 	  	2014	 	
Number of restricted shares/RSUs granted	  	 	441	  	  	 	500	  	
Weighted average grant-date fair value per restricted share/RSU	  	$	25.06	  	  	$	19.77	  	
Fair value of restricted shares/RSUs vested	  	$	2,019	  	  	$	895	  	
As of June 30, 2015, based on the probability of achieving the performance goals, there was $18.8 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested restricted shares/RSUs granted under the 2011 Plan. This cost is expected to be recognized over a weighted average period of 2.0 years.
Non-Employee Director Fee Plan — The Company’s 2004 Non-Employee Director Fee Plan (the “2004 Fee Plan”), as last amended on May 17, 2012, provided that all new non-employee directors joining the Board would 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 vested 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 provided that each non-employee director would 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 vested 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 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 was 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 provided 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 Committee, Finance Committee and Nominating and Corporate Governance Committee were $12,500 and the
 
30

Table of Contents
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 Committee to $15,000. All other additional cash awards remained unchanged.
The 2004 Fee Plan expired in May 2014, prior to the 2014 Annual Shareholder Meeting. In March 2014, upon the recommendation of the Compensation Committee, the Board determined that, following the expiration of the 2004 Fee Plan, the compensation of non-employee Directors should continue on the same terms as provided in the Fifth Amended and Restated Non-Employee Director Fee Plan, and that the stock portion of such compensation would be issued under the 2011 Plan.
At the Board’s regularly scheduled meeting on December 9, 2014, upon the recommendation of the Compensation Committee, the Board determined that the amount of the cash and equity compensation payable to non-employee directors beginning on the date of the 2015 annual shareholder meeting would be increased as follows: cash compensation would be increased by $5,000 per year to a total of $55,000 and equity compensation would be increased by $25,000 per year to a total of $100,000. No change would be made in the additional amounts payable to the Chairman of the Board or the Chairs or members of the various Board committees for their service on such committees, and no changes would be made in the payment terms described above for such cash and equity compensation.
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, 2015 and for the six months then ended:

Nonvested Common Stock Share Awards	  	Shares (000s)	 	 	Weighted
Average Grant-
Date Fair Value	 	
Nonvested at January 1, 2015	  	 	12	  	 	$	20.24	  	
Granted	  	 	32	  	 	$	24.70	  	
Vested	  	 	(16	) 	 	$	22.36	  	
Forfeited or expired	  	 	—  	  	 	$	—  	  	
	  	 	 	 	 				
Nonvested at June 30, 2015	  	 	28	  	 	$	24.19	  	
	  	 	 	 	 				
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,	 	
 	  	      2015      	 	  	      2014      	 	
Number of share awards granted	  	 	32	  	  	 	36	  	
Weighted average grant-date fair value per share award	  	$	24.70	  	  	$	20.15	  	
Fair value of share awards vested	  	$	370	  	  	$	310	  	
As of June 30, 2015, there was $0.6 million of total unrecognized compensation cost, net of estimated forfeitures, related to nonvested common stock share awards granted under the Fee Plan. This cost is expected to be recognized over a weighted average period of 0.5 years.
Deferred Compensation Plan — The Company’s non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”), which is not shareholder-approved, was adopted by the Board effective December 17, 1998, It was last amended and restated on August 20, 2014, effective as of January 1, 2014. It 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, chief executive officer and executive vice presidents and $7,500 per year for senior vice presidents, global vice presidents and 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
 
31

Table of Contents
in a rabbi trust, include investments in various mutual funds and shares of the Company’s common stock (see Note 6, Investments Held in Rabbi Trust). As of June 30, 2015 and December 31, 2014, liabilities of $7.7 million and $7.0 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 $1.5 million at June 30, 2015 and December 31, 2014, 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, 2015 and for the six months then ended:

Nonvested Common Stock	  	Shares (000s)	 	 	Weighted
Average Grant-
Date Fair Value	 	
Nonvested at January 1, 2015	  	 	5	  	 	$	17.88	  	
Granted	  	 	6	  	 	$	24.69	  	
Vested	  	 	(7	) 	 	$	23.56	  	
Forfeited or expired	  	 	—  	  	 	$	—  	  	
	  	 	 	 	 				
Nonvested at June 30, 2015	  	 	4	  	 	$	18.81	  	
	  	 	 	 	 				
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,	 	
 	  	2015	 	  	2014	 	
Number of shares of common stock granted	  	 	6	  	  	 	8	  	
Weighted average grant-date fair value per common stock	  	$	24.69	  	  	$	20.43	  	
Fair value of common stock vested	  	$	169	  	  	$	146	  	
Cash used to settle the obligation	  	$	65	  	  	$	21	  	
As of June 30, 2015, there was less than $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 2.1 years.
 
32

Table of Contents
Note 17. 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, Australia and the Asia Pacific Rim are included in the Americas segment given the nature of the business and client profile, which is primarily made up of U.S.-based companies that are using the Company’s services in these locations to support their customer contact management needs.
Information about the Company’s reportable segments is as follows (in thousands):

 	  	Americas	 	 	EMEA	 	 	Other (1)	 	 	Consolidated	 	
Three Months Ended June 30, 2015:	  				 				 				 				
Revenues	  	$	249,682	  	 	$	57,752	  	 	$	19	  	 	$	307,453	  	
Percentage of revenues	  	 	81.2	% 	 	 	18.8	% 	 	 	0.0	% 	 	 	100.0	% 	
					
Depreciation, net	  	$	9,605	  	 	$	1,084	  	 	$	318	  	 	$	11,007	  	
Amortization of intangibles	  	$	3,435	  	 	$	—  	  	 	$	—  	  	 	$	3,435	  	
					
Income (loss) from operations	  	$	28,669	  	 	$	2,969	  	 	$	(13,421	) 	 	$	18,217	  	
Other (expense), net	  				 				 	 	(626	) 	 	 	(626	) 	
Income taxes	  				 				 	 	(4,679	) 	 	 	(4,679	) 	
	  				 				 				 	 	 	 	
Net income	  				 				 				 	$	12,912	  	

Total assets as of June 30, 2015	  	$	1,067,801	  	 	$	1,394,836	  	 	$	(1,534,068	) 	 	$	928,569	  	

Three Months Ended June 30, 2014:	  				 				 				 				
Revenues	  	$	256,663	  	 	$	63,835	  	 	$	—  	  	 	$	320,498	  	
Percentage of revenues	  	 	80.1	% 	 	 	19.9	% 	 	 	0.0	% 	 	 	100.0	% 	
					
Depreciation, net	  	$	10,107	  	 	$	1,215	  	 	$	—  	  	 	$	11,322	  	
Amortization of intangibles	  	$	3,659	  	 	$	—  	  	 	$	—  	  	 	$	3,659	  	
					
Income (loss) from operations	  	$	21,135	  	 	$	1,561	  	 	$	(12,269	) 	 	$	10,427	  	
Other (expense), net	  				 				 	 	(714	) 	 	 	(714	) 	
Income taxes	  				 				 	 	(1,376	) 	 	 	(1,376	) 	
	  				 				 				 	 	 	 	
Net income	  				 				 				 	$	8,337	  	

Total assets as of June 30, 2014	  	$	1,093,003	  	 	$	1,444,643	  	 	$	(1,591,697	) 	 	$	945,949	  	

33

Table of Contents

 	  	Americas	 	 	EMEA	 	 	Other (1)	 	 	Consolidated	 	
Six Months Ended June 30, 2015:	  				 				 				 				
Revenues	  	$	513,855	  	 	$	117,247	  	 	$	36	  	 	$	631,138	  	
Percentage of revenues	  	 	81.4	% 	 	 	18.6	% 	 	 	0.0	% 	 	 	100.0	% 	
					
Depreciation, net	  	$	19,185	  	 	$	2,227	  	 	$	           654	  	 	$	22,066	  	
Amortization of intangibles	  	$	6,866	  	 	$	—  	  	 	$	—  	  	 	$	6,866	  	
					
Income (loss) from operations	  	$	61,210	  	 	$	6,757	  	 	$	(27,209	) 	 	$	40,758	  	
Other (expense), net	  				 				 	 	(1,728	) 	 	 	(1,728	) 	
Income taxes	  				 				 	 	(10,479	) 	 	 	(10,479	) 	
	  				 				 				 	 	 	 	
Net income	  				 				 				 	$	28,551	  	

Six Months Ended June 30, 2014:	  				 				 				 				
Revenues	  	$	   517,909	  	 	$	   127,018	  	 	$	—  	  	 	$	644,927	  	
Percentage of revenues	  	 	80.3	% 	 	 	19.7	% 	 	 	0.0	% 	 	 	100.0	% 	
					
Depreciation, net	  	$	20,248	  	 	$	2,372	  	 	$	—  	  	 	$	22,620	  	
Amortization of intangibles	  	$	7,310	  	 	$	—  	  	 	$	—  	  	 	$	7,310	  	
					
Income (loss) from operations	  	$	43,782	  	 	$	4,445	  	 	$	(23,322	) 	 	$	24,905	  	
Other (expense), net	  				 				 	 	(319	) 	 	 	(319	) 	
Income taxes	  				 				 	 	(5,936	) 	 	 	(5,936	) 	
	  				 				 				 	 	 	 	
Net income	  				 				 				 	$	18,650	  	

(1)  	Other items (including corporate and other costs, impairment costs, other income and expense, and income taxes) are shown for purposes of reconciling to the Company’s consolidated totals as shown in the tables above for the three and six months ended June 30, 2015 and 2014. Inter-segment revenues are not material to the Americas and EMEA segment results. The Company evaluates the performance of its geographic segments based on revenues and income (loss) from operations, and does not include segment assets or other income and expense items for management reporting purposes.	
Note 18. Other Income (Expense)
Other income (expense) consists of the following (in thousands):

 	  	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	  	2015	 	 	2014	 	 	2015	 	 	2014	 	
Foreign currency transaction gains (losses)	  	$	(90	) 	 	$	759	  	 	$	(1,025	) 	 	$	631	  	
Gains (losses) on foreign currency derivative instruments not designated as hedges	  	 	67	  	 	 	(1,331	) 	 	 	(97	) 	 	 	(608	) 	
Other miscellaneous income (expense)	  	 	(144	) 	 	 	173	  	 	 	126	  	 	 	241	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
	  	$	(167	) 	 	$	(399	) 	 	$	(996	) 	 	$	264	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Note 19. 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 of the Company 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, 2015 and 2014 and $0.2 million during both the six months ended June 30, 2015 and 2014 under the terms of the lease.
 
34

Table of Contents
Note 20. Subsequent Event
On July 2, 2015, the Company’s wholly-owned subsidiaries, Sykes Enterprises Incorporated B.V. and Sykes Enterprises Incorporated Holdings B.V., both Netherlands companies, entered into a definitive Share Sale and Purchase Agreement (the “Purchase Agreement”) with MobileTimes B.V., Yarra B.V., From The Mountain Consultancy B.V. and Sticting Administratiekantoor Qelp (the “Sellers”), all of which are Netherlands companies, to acquire all of the outstanding shares of Qelp B.V. and Qelp Do Brasil Software E Conteudo Digital LTDA (together, known as “Qelp”.) The strategic acquisition of Qelp is to further broaden and strengthen the Company’s service portfolio around digital customer support and extend its reach into adjacent, but complementary, markets.
The consideration consists of an initial purchase price and a contingent purchase price. The initial purchase price of $9.9 million, paid at the closing of the transaction on July 2, 2015, is subject to certain post-closing adjustments relating to Qelp’s working capital. Approximately $0.9 million of the initial purchase price has been placed in an escrow account as security for the indemnification obligations of the Sellers under the Purchase Agreement. The contingent purchase price, which in total will not exceed EUR 10.0 million (U.S. Dollar equivalent of $11.1 million as of July 2, 2015), is based on achieving targets tied to revenues and EBITDA for the years ended December 31, 2016, 2017 and 2018, as defined by the Purchase Agreement. The initial purchase price was funded through cash on hand.
The Purchase Agreement contains customary representations and warranties, indemnification obligations and covenants.
The Purchase Agreement was approved by the Board of Directors of the Company, the Board of Directors of Qelp and the requisite shareholders of Qelp.
 
35

Table of Contents
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, 2015, and the related condensed consolidated statements of operations and comprehensive income for the three- and six-month periods ended June 30, 2015 and 2014, of changes in shareholders’ equity for the six-month period ended June 30, 2015, and of cash flows for the three- and six-month periods ended June 30, 2015 and 2014. These interim financial statements are the responsibility of the Company’s 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, 2014, and the related consolidated statements of operations, comprehensive income, shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated February 19, 2015, 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, 2014 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 4, 2015
 
36

Table of Contents
 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations
This discussion should be read in conjunction with the condensed consolidated financial statements and notes included elsewhere in this report and the consolidated financial statements and notes in the Sykes Enterprises, Incorporated (“SYKES,” “our,” “we” or “us”) Annual Report on Form 10-K for the year ended December 31, 2014, 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 acquisitions not being realized, or not being realized within the anticipated time period, (xxvii) risks related to the integration of the acquisitions and the impairment of any related goodwill, and (xxviii) other risk factors which are identified in our most recent Annual Report on Form 10-K, including factors identified under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
Executive Summary
We 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 97.8% and 98.0% of consolidated revenues during the three months ended June 30, 2015 and 2014, respectively, and 98.2% and 98.1% of consolidated revenues during the six months ended June 30, 2015 and 2014, respectively, are delivered through multiple
 
37

Table of Contents
communication channels encompassing phone, e-mail, social media, text messaging and chat. We also provide various enterprise support services in the United States (“U.S.”) that include services for our client’s internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, we also provide fulfillment services including order processing, 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, Australia, the Asia Pacific Rim and Africa.
Results of Operations
The following table sets forth, for the periods indicated, the amounts presented in the accompanying Condensed Consolidated Statements of Operations as well as the changes between the respective periods:

 	  	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
(in thousands)	  	2015	 	 	2014	 	 	2015
$ Change	 	 	2015	 	 	2014	 	 	2015
$ Change	 	
Revenues	  	$	307,453	  	 	$	320,498	  	 	$	(13,045	) 	 	$	631,138	  	 	$	644,927	  	 	$	(13,789	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Operating expenses:	  				 				 				 				 				 				
Direct salaries and related costs	  	 	202,143	  	 	 	221,085	  	 	 	(18,942	) 	 	 	416,070	  	 	 	442,710	  	 	 	(26,640	) 	
General and administrative	  	 	72,651	  	 	 	74,005	  	 	 	(1,354	) 	 	 	145,378	  	 	 	147,382	  	 	 	(2,004	) 	
Depreciation, net	  	 	11,007	  	 	 	11,322	  	 	 	(315	) 	 	 	22,066	  	 	 	22,620	  	 	 	(554	) 	
Amortization of intangibles	  	 	3,435	  	 	 	3,659	  	 	 	(224	) 	 	 	6,866	  	 	 	7,310	  	 	 	(444	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total operating expenses	  	 	289,236	  	 	 	310,071	  	 	 	(20,835	) 	 	 	590,380	  	 	 	620,022	  	 	 	(29,642	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Income from operations	  	 	18,217	  	 	 	10,427	  	 	 	7,790	  	 	 	40,758	  	 	 	24,905	  	 	 	15,853	  	

Other income (expense):	  				 				 				 				 				 				
Interest income	  	 	151	  	 	 	237	  	 	 	(86	) 	 	 	317	  	 	 	468	  	 	 	(151	) 	
Interest (expense)	  	 	(610	) 	 	 	(552	) 	 	 	(58	) 	 	 	(1,049	) 	 	 	(1,051	) 	 	 	2	  	
Other income (expense)	  	 	(167	) 	 	 	(399	) 	 	 	232	  	 	 	(996	) 	 	 	264	  	 	 	(1,260	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Total other income (expense)	  	 	(626	) 	 	 	(714	) 	 	 	88	  	 	 	(1,728	) 	 	 	(319	) 	 	 	(1,409	) 	

Income before income taxes	  	 	17,591	  	 	 	9,713	  	 	 	7,878	  	 	 	39,030	  	 	 	24,586	  	 	 	14,444	  	
Income taxes	  	 	4,679	  	 	 	1,376	  	 	 	3,303	  	 	 	10,479	  	 	 	5,936	  	 	 	4,543	  	
	  	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	
Net income	  	$	12,912	  	 	$	8,337	  	 	$	4,575	  	 	$	28,551	  	 	$	18,650	  	 	$	9,901	  	

38

Table of Contents
Three Months Ended June 30, 2015 Compared to Three Months Ended June 30, 2014
Revenues

 	  	Three Months Ended June 30,	 	 	 	 	
 	  	2015	 	 	2014	 	 	 	 	
(in thousands)	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	$ Change	 	
Americas	  	$	249,682	  	  	 	81.2	% 	 	$	256,663	  	  	 	80.1	% 	 	$	(6,981	) 	
EMEA	  	 	57,752	  	  	 	18.8	% 	 	 	63,835	  	  	 	19.9	% 	 	 	(6,083	) 	
Other	  	 	19	  	  	 	0.0	% 	 	 	—  	  	  	 	0.0	% 	 	 	19	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Consolidated		$	307,453	  		 	100.0	% 		$	320,498	  		 	100.0	% 		$	(13,045	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Consolidated revenues decreased $13.0 million, or (4.1)%, for the three months ended June 30, 2015 from the comparable period in 2014.
The decrease in Americas’ revenues was due to end-of-life client programs of $24.5 million and a negative foreign currency impact of $4.1 million, partially offset by higher volumes from existing clients of $17.2 million and new clients of $4.4 million. Revenues from our offshore operations represented 46.4% of Americas’ revenues, compared to 38.8% for the comparable period in 2014.
The decrease in EMEA’s revenues was due to a negative foreign currency impact of $12.4 million and end-of-life client programs of $0.3 million, partially offset by higher volumes from existing clients of $5.7 million and new clients of $0.9 million.
On a consolidated basis, we had 40,200 brick-and-mortar seats as of June 30, 2015, a decrease of 900 seats from the comparable period in 2014. This decrease in seats was primarily due to on-going capacity rationalization. The capacity utilization rate on a combined basis was 80% compared to 79% in the comparable period in 2014. This increase was primarily due to capacity rationalization.
On a geographic segment basis, 33,500 seats were located in the Americas, a decrease of 1,300 seats from the comparable period in 2014, and 6,700 seats were located in EMEA, an increase of 400 seats from the comparable period in 2014. Capacity utilization rates as of June 30, 2015 were 79% for the Americas and 86% for EMEA, compared to 77% and 89%, respectively, in the comparable period in 2014, primarily due to capacity rationalization in the Americas and seat additions in EMEA. We strive to attain an 85% capacity utilization metric at each of our locations.
We plan to add approximately 3,400 seats on a gross basis in 2015 to support higher demand, primarily in the financial services vertical. Approximately 800 seats were added during the six months ended June 30, 2015. Total seat count on a net basis for the full year is expected to increase by 1,700 seats relative to 2014.
 
39

Table of Contents
Direct Salaries and Related Costs

 	  	Three Months Ended June 30,	 	 	 	 	 	 	 	
 	  	2015	 	 	2014	 	 	 	 	 	 	 	
(in thousands)	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	$ Change	 	 	Change in % of
Revenues	 	
Americas	  	$	159,942	  	  	 	64.1	% 	 	$	172,854	  	  	 	67.3	% 	 	$	(12,912	) 	 	 	-3.2	% 	
EMEA	  	 	42,201	  	  	 	73.1	% 	 	 	48,231	  	  	 	75.6	% 	 	 	(6,030	) 	 	 	-2.5	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Consolidated	  	$	202,143	  	  	 	65.7	% 	 	$	221,085	  	  	 	69.0	% 	 	$	(18,942	) 	 	 	-3.3	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
The decrease of $18.9 million in direct salaries and related costs included a positive foreign currency impact of $4.9 million in the Americas and a positive foreign currency impact of $9.2 million in EMEA.
The decrease in Americas’ direct salaries and related costs, as a percentage of revenues, was primarily attributable to lower compensation costs of 3.3% driven by increased agent productivity within the communications and technology verticals in the current period and the ramp up in the prior period for new and existing client programs principally in the communications vertical without the commensurate increase in revenues, and auto tow claim costs of 0.2%, partially offset by higher other costs of 0.3%.
The decrease in EMEA’s direct salaries and related costs, as a percentage of revenues, was primarily attributable to lower compensation costs of 3.9% driven by the ramp up in the prior period for new and existing client programs principally in the communications vertical, lower billable supply costs of 0.9%, lower communication costs of 0.2%, lower postage costs of 0.2% and lower other costs of 0.1%, partially offset by higher fulfillment materials costs of 2.8% driven by higher demand in a new client program.
General and Administrative

 	  	Three Months Ended June 30,	 	 	 	 	 	 	 	
 	  	2015	 	 	2014	 	 	 	 	 	 	 	
(in thousands)	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	$ Change	 	 	Change in % of
Revenues	 	
Americas	  	$	48,031	  	  	 	19.2	% 	 	$	48,908	  	  	 	19.1	% 	 	$	(877	) 	 	 	0.1	% 	
EMEA	  	 	11,498	  	  	 	19.9	% 	 	 	12,828	  	  	 	20.1	% 	 	 	(1,330	) 	 	 	-0.2	% 	
Other	  	 	13,122	  	  	 	—  	  	 	 	12,269	  	  	 	—  	  	 	 	853	  	 	 	—  	  	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Consolidated	  	$	72,651	  	  	 	23.6	% 	 	$	74,005	  	  	 	23.1	% 	 	$	(1,354	) 	 	 	0.5	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
The decrease of $1.4 million in general and administrative expenses included a positive foreign currency impact of $1.0 million in the Americas and a positive foreign currency impact of $2.4 million in EMEA.
The increase in Americas’ general and administrative expenses, as a percentage of revenues, was primarily attributable to higher facility-related costs of 0.3% and higher other costs of 0.4%, partially offset by lower communication costs of 0.3% and lower equipment and maintenance costs of 0.3%.
The decrease in EMEA’s general and administrative expenses, as a percentage of revenues, was primarily attributable to lower compensation costs of 0.3%, lower communication costs of 0.2% and lower recruiting costs of 0.2%, partially offset by higher facility-related costs of 0.5%.
The increase of $0.9 million in Other general and administrative expenses, which includes corporate and other costs, was primarily attributable to higher merger and integration costs of $0.4 million, higher compensation costs of $0.3 million, higher travel costs of $0.3 million, higher consulting costs of $0.2 million and higher other costs of $0.3 million, partially offset by lower legal and professional fees of $0.4 million and lower facility-related costs of $0.2 million.
 
40

Table of Contents
Depreciation and Amortization

 	  	Three Months Ended June 30,	 	 	 	 	 	 	 	
 	  	2015	 	 	2014	 	 	 	 	 	 	 	
(in thousands)	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	$ Change	 	 	Change in % of
Revenues	 	
Depreciation, net:	  				  				 				  				 				 				
Americas	  	$	9,605	  	  	 	3.8	% 	 	$	10,107	  	  	 	3.9	% 	 	$	(502	) 	 	 	-0.1	% 	
EMEA	  	 	1,084	  	  	 	1.9	% 	 	 	1,215	  	  	 	1.9	% 	 	 	(131	) 	 	 	0.0	% 	
Other	  	 	318	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	318	  	 	 	—  	  	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Consolidated	  	$	11,007	  	  	 	3.6	% 	 	$	11,322	  	  	 	3.5	% 	 	$	(315	) 	 	 	0.1	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Amortization of intangibles:	  				  				 				  				 				 				
Americas	  	$	3,435	  	  	 	1.4	% 	 	$	3,659	  	  	 	1.4	% 	 	$	(224	) 	 	 	0.0	% 	
EMEA	  	 	—  	  	  	 	0.0	% 	 	 	—  	  	  	 	0.0	% 	 	 	—  	  	 	 	0.0	% 	
Other	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Consolidated	  	$	3,435	  	  	 	1.1	% 	 	$	3,659	  	  	 	1.1	% 	 	$	(224	) 	 	 	0.0	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
The decrease in depreciation was primarily due to fully depreciated net fixed assets.
The decrease in amortization was primarily due to certain fully amortized intangible assets.
Other Income (Expense)

 	  	Three Months Ended June 30,	 	 	 	 	
(in thousands)	  	2015	 	 	2014	 	 	$ Change	 	
Interest income	  	$	151	  	 	$	237	  	 	$	(86	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Interest (expense)	  	$	(610	) 	 	$	(552	) 	 	$	(58	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other income (expense):	  				 				 				
Foreign currency transaction gains (losses)	  	$	(90	) 	 	$	759	  	 	$	(849	) 	
Gains (losses) on foreign currency derivative instruments not designated as hedges	  	 	67	  	 	 	(1,331	) 	 	 	1,398	  	
Other miscellaneous income (expense)	  	 	(144	) 	 	 	173	  	 	 	(317	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total other income (expense)	  	$	(167	) 	 	$	(399	) 	 	$	232	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Interest income and interest (expense) remained consistent with the comparable period in 2014.
Other income (expense) excludes the cumulative translation effects and unrealized gains (losses) on financial derivatives that are included in “Accumulated other comprehensive income (loss)” in shareholders’ equity in the accompanying Condensed Consolidated Balance Sheets.
Income Taxes

 	  	Three Months Ended June 30,	 	 	 	 	
(in thousands)	  	2015	 	 	2014	 	 	$ Change	 	
Income before income taxes	  	$	17,591	  	 	$	9,713	  	 	$	7,878	  	
Income taxes	  	$	4,679	  	 	$	1,376	  	 	$	3,303	  	
				
 	  	 	 	 	 	 	 	% Change	 	
Effective tax rate	  	 	26.6	% 	 	 	14.2	% 	 	 	12.4	% 	
The increase in income taxes in 2015 compared to 2014 is due to several factors, including fluctuations in earnings among the various jurisdictions in which we operate, none of which are individually material.
 
41

Table of Contents
Six Months Ended June 30, 2015 Compared to Six Months Ended June 30, 2014
Revenues

 	  	Six Months Ended June 30,	 	 	 	 	
 	  	2015	 	 	2014	 	 	 	 	
(in thousands)	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	$ Change	 	
Americas	  	$	513,855	  	  	 	81.4	% 	 	$	517,909	  	  	 	80.3	% 	 	$	(4,054	) 	
EMEA	  	 	117,247	  	  	 	18.6	% 	 	 	127,018	  	  	 	19.7	% 	 	 	(9,771	) 	
Other	  	 	36	  	  	 	0.0	% 	 	 	—  	  	  	 	0.0	% 	 	 	36	  	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Consolidated	  	$	631,138	  	  	 	100.0	% 	 	$	644,927	  	  	 	100.0	% 	 	$	(13,789	) 	
	  	 	 	 	  	 	 	 	 	 	 	 	  	 	 	 	 	 	 	 	
Consolidated revenues decreased $13.8 million, or (2.1)%, for the six months ended June 30, 2015 from the comparable period in 2014.
The decrease in Americas’ revenues was due to end-of-life client programs of $48.7 million and a negative foreign currency impact of $7.7 million, partially offset by higher volumes from existing clients of $45.0 million and new clients of $7.3 million. Revenues from our offshore operations represented 44.3% of Americas’ revenues, compared to 37.8% for the comparable period in 2014.
The decrease in EMEA’s revenues was due to a negative foreign currency impact of $24.9 million and end-of-life client programs of $0.8 million, partially offset by higher volumes from existing clients of $14.3 million and new clients of $1.6 million.
Direct Salaries and Related Costs

 	  	Six Months Ended June 30,	 	 	 	 	 	 	 	
 	  	2015	 	 	2014	 	 	 	 	 	 	 	
(in thousands)	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	$ Change	 	 	Change in % of
Revenues	 	
Americas	  	$	331,041	  	  	 	64.4	% 	 	$	348,388	  	  	 	67.3	% 	 	$	(17,347	) 	 	 	-2.9	% 	
EMEA	  	 	85,029	  	  	 	72.5	% 	 	 	94,322	  	  	 	74.3	% 	 	 	(9,293	) 	 	 	-1.8	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Consolidated	  	$	416,070	  	  	 	65.9	% 	 	$	442,710	  	  	 	68.6	% 	 	$	(26,640	) 	 	 	-2.7	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
The decrease of $26.6 million in direct salaries and related costs included a positive foreign currency impact of $10.5 million in the Americas and a positive foreign currency impact of $18.2 million in EMEA.
The decrease in Americas’ direct salaries and related costs, as a percentage of revenues, was primarily attributable to lower compensation costs of 2.7% driven by increased agent productivity within the communications and technology verticals in the current period and the ramp up in the prior period for new and existing client programs principally in the communications vertical without the commensurate increase in revenues, and lower communication costs of 0.2%.
The decrease in EMEA’s direct salaries and related costs, as a percentage of revenues, was primarily attributable to lower compensation costs of 2.6% driven by the ramp up in the prior period for new and existing client programs principally in the communications vertical, lower billable supply costs of 0.9% and lower postage costs of 0.3%, partially offset by higher fulfillment materials costs of 1.7% driven by higher demand in a new client program, higher communication costs of 0.2% and higher other costs of 0.1%.
 
42

Table of Contents
General and Administrative

 	  	Six Months Ended June 30,	 	 	 	 	 	 	 	
 	  	2015	 	 	2014	 	 	 	 	 	 	 	
(in thousands)	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	$ Change	 	 	Change in % of
Revenues	 	
Americas	  	$	95,553	  	  	 	18.6	% 	 	$	98,181	  	  	 	19.0	% 	 	$	(2,628	) 	 	 	-0.4	% 	
EMEA	  	 	23,234	  	  	 	19.8	% 	 	 	25,879	  	  	 	20.4	% 	 	 	(2,645	) 	 	 	-0.6	% 	
Other	  	 	26,591	  	  	 	—  	  	 	 	23,322	  	  	 	—  	  	 	 	3,269	  	 	 	—  	  	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Consolidated	  	$	145,378	  	  	 	23.0	% 	 	$	147,382	  	  	 	22.9	% 	 	$	(2,004	) 	 	 	0.1	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
The decrease of $2.0 million in general and administrative expenses included a positive foreign currency impact of $2.2 million in the Americas and a positive foreign currency impact of $4.9 million in EMEA.
The decrease in Americas’ general and administrative expenses, as a percentage of revenues, was primarily attributable to lower other taxes of 0.2% and lower communication costs of 0.2%.
The decrease in EMEA’s general and administrative expenses, as a percentage of revenues, was primarily attributable to lower compensation costs of 0.5%, lower communication costs of 0.2% and lower other costs of 0.2%, partially offset by higher facility-related costs of 0.3%.
The increase of $3.3 million in Other general and administrative expenses, which includes corporate and other costs, was primarily attributable to higher compensation costs of $2.0 million, higher consulting costs of $0.5 million, higher software maintenance costs of $0.4 million, higher merger and integration costs of $0.4 million and higher travel costs of $0.3 million, partially offset by lower facility-related costs of $0.2 million and lower other costs of $0.1 million.
Depreciation and Amortization

 	  	Six Months Ended June 30,	 	 	 	 	 	 	 	
 	  	2015	 	 	2014	 	 	 	 	 	 	 	
(in thousands)	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	$ Change	 	 	Change in % of
Revenues	 	
Depreciation, net:	  				  				 				  				 				 				
Americas	  	$	19,185	  	  	 	3.7	% 	 	$	20,248	  	  	 	3.9	% 	 	$	(1,063	) 	 	 	-0.2	% 	
EMEA	  	 	2,227	  	  	 	1.9	% 	 	 	2,372	  	  	 	1.9	% 	 	 	(145	) 	 	 	0.0	% 	
Other	  	 	654	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	654	  	 	 	—  	  	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Consolidated	  	$	22,066	  	  	 	3.5	% 	 	$	22,620	  	  	 	3.5	% 	 	$	(554	) 	 	 	0.0	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Amortization of intangibles:	  				  				 				  				 				 				
Americas	  	$	6,866	  	  	 	1.3	% 	 	$	7,310	  	  	 	1.4	% 	 	$	(444	) 	 	 	-0.1	% 	
EMEA	  	 	—  	  	  	 	0.0	% 	 	 	—  	  	  	 	0.0	% 	 	 	—  	  	 	 	0.0	% 	
Other	  	 	—  	  	  	 	—  	  	 	 	—  	  	  	 	—  	  	 	 	—  	  	 	 	—  	  	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
Consolidated	  	$	6,866	  	  	 	1.1	% 	 	$	7,310	  	  	 	1.1	% 	 	$	(444	) 	 	 	0.0	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	 				
The decrease in depreciation was primarily due to fully depreciated net fixed assets.
The decrease in amortization was primarily due to certain fully amortized intangible assets.
 
43

Table of Contents
Other Income (Expense)

 	  	Six Months Ended June 30,	 	 	 	 	
(in thousands)	  	2015	 	 	2014	 	 	$ Change	 	
Interest income	  	$	317	  	 	$	468	  	 	$	(151	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Interest (expense)	  	$	(1,049	) 	 	$	(1,051	) 	 	$	2	  	
	  	 	 	 	 	 	 	 	 	 	 	 	
Other income (expense):	  				 				 				
Foreign currency transaction gains (losses)	  	$	(1,025	) 	 	$	631	  	 	$	(1,656	) 	
Gains (losses) on foreign currency derivative instruments not designated as hedges	  	 	(97	) 	 	 	(608	) 	 	 	511	  	
Other miscellaneous income (expense)	  	 	126	  	 	 	241	  	 	 	(115	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
Total other income (expense)	  	$	(996	) 	 	$	264	  	 	$	(1,260	) 	
	  	 	 	 	 	 	 	 	 	 	 	 	
The decrease in interest income reflects lower average interest rates on invested balances of interest bearing investments in cash and cash equivalents in 2015 compared to 2014.
Interest (expense) remained consistent with the comparable period in 2014.
Other income (expense) excludes the cumulative translation effects and unrealized gains (losses) on financial derivatives that are included in “Accumulated other comprehensive income (loss)” in shareholders’ equity in the accompanying Condensed Consolidated Balance Sheets.
Income Taxes

 	  	Six Months Ended June 30,	 	 	 	 	
(in thousands)	  	2015	 	 	2014	 	 	$ Change	 	
Income before income taxes	  	$	39,030	  	 	$	24,586	  	 	$	14,444	  	
Income taxes	  	$	10,479	  	 	$	5,936	  	 	$	4,543	  	
				
 	  	 	 	 	 	 	 	% Change	 	
Effective tax rate	  	 	26.8	%  	 	 	24.1	% 	 	 	2.7	% 	
The increase in income taxes in 2015 compared to 2014 is due to several factors, including fluctuations in earnings among the various jurisdictions in which we operate, none of which are individually material.
Client Concentration
Our top ten clients accounted for approximately 49.0% and 46.5% of our consolidated revenues in the three months ended June 30, 2015 and 2014, respectively, and 49.2% and 46.3% of our consolidated revenues in the six months ended June 30, 2015 and 2014, respectively.
Total revenues by segment from AT&T Corporation (“AT&T”), a major provider of communication services for which we provide various customer support services over several distinct lines of AT&T businesses, were as follows (in thousands):

 	  	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	  	2015	 	 	2014	 	 	2015	 	 	2014	 	
 	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	
Americas	  	$	53,422	  	  	 	21.4	% 	 	$	47,164	  	  	 	18.4	% 	 	$	113,445	  	  	 	22.1	% 	 	$	95,062	  	  	 	18.4	% 	
EMEA	  	 	813	  	  	 	1.4	% 	 	 	904	  	  	 	1.4	% 	 	 	1,563	  	  	 	1.3	% 	 	 	1,801	  	  	 	1.4	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
	  	$	54,235	  	  	 	17.6	% 	 	$	48,068	  	  	 	15.0	% 	 	$	115,008	  	  	 	18.2	% 	 	$	96,863	  	  	 	15.0	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
We have multiple distinct contracts with AT&T spread across multiple lines of businesses, which expire at varying dates between 2015 and 2017. 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.
 
44

Table of Contents
Total revenues by segment from our next largest client, which was in the financial services vertical in each of the periods, were as follows (in thousands):

 	  	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	  	2015	 	 	2014	 	 	2015	 	 	2014	 	
 	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	
Americas	  	$	14,423	  	  	 	  5.8	% 	 	$	17,822	  	  	 	  6.9	% 	 	$	  29,218	  	  	 	  5.7	% 	 	$	36,797	  	  	 	7.1	% 	
EMEA	  	 	—  	  	  	 	0.0	% 	 	 	—  	  	  	 	0.0	% 	 	 	—  	  	  	 	0.0	% 	 	 	—  	  	  	 	0.0	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
	  	$	14,423	  	  	 	4.7	% 	 	$	17,822	  	  	 	5.6	% 	 	$	29,218	  	  	 	4.6	% 	 	$	36,797	  	  	 	  5.7	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
Other than AT&T, total revenues by segment of our clients that each individually represents 10% or greater of that segment’s revenues in each of the periods were as follows (in thousands):

 	  	Three Months Ended June 30,	 	 	Six Months Ended June 30,	 	
 	  	2015	 	 	2014	 	 	2015	 	 	2014	 	
 	  	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	 	Amount	 	  	% of
Revenues	 	
Americas	  	$	—  	  	  	 	0.0	% 	 	$	—  	  	  	 	0.0	% 	 	$	—  	  	  	 	0.0	% 	 	$	—  	  	  	 	0.0	% 	
EMEA	  	 	16,567	  	  	 	28.7	% 	 	 	20,099	  	  	 	31.5	% 	 	 	34,005	  	  	 	29.0	% 	 	 	39,936	  	  	 	31.4	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
	  	$	16,567	  	  	 	5.4	% 	 	$	20,099	  	  	 	6.3	% 	 	$	  34,005	  	  	 	5.4	% 	 	$	39,936	  	  	 	6.2	% 	
	  	 	 	 	  				 	 	 	 	  				 	 	 	 	  				 	 	 	 	  				
Business Outlook
For the three months ended September 30, 2015, we anticipate the following financial results:
 
 	•	 	Revenues in the range of $315.0 million to $320.0 million;	
 
 	•	 	Effective tax rate of approximately 29.0%;	
 
 	•	 	Fully diluted share count of approximately 42.2 million;	
 
 	•	 	Diluted earnings per share in the range of $0.29 to $0.32; and	
 
 	•	 	Capital expenditures in the range of $25.0 million to $28.0 million	
For the twelve months ended December 31, 2015, we anticipate the following financial results:
 
 	•	 	Revenues in the range of $1,275.0 million to $1,285.0 million;	
 
 	•	 	Effective tax rate of approximately 27.0%;	
 
 	•	 	Fully diluted share count of approximately 42.6 million;	
 
 	•	 	Diluted earnings per share in the range of $1.35 to $1.41; and	
 
 	•	 	Capital expenditures in the range of $60.0 million to $65.0 million	
We are updating our full-year 2015 revenues and diluted earnings per share outlook given the better-than-expected financial results for the second quarter. Our revenues and earnings per share assumptions for the third quarter and full-year 2015 are based on foreign exchange rates as of July 2015. Therefore, the continued volatility in foreign exchange rates between the U.S. Dollar and the functional currencies of the markets we serve could have a further impact, positive or negative, on revenues and earnings per share relative to the business outlook for the third quarter and full-year as disclosed above.
We anticipate total other income (expense) of approximately $0.8 million for the third quarter and $3.2 million for the full year 2015. These amounts exclude the potential impact of any future foreign exchange gains or losses in other income (expense).
We anticipate a slightly higher effective tax rate for full-year 2015 relative to the business outlook provided previously, driven chiefly by a shift in the geographic mix of earnings to higher tax rate jurisdictions.
Not included in this guidance is the impact of any future acquisitions, share repurchase activities or a potential sale of previously exited customer contact management centers.
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, the Board authorized us to purchase up to 5.0 million shares of our outstanding common stock (the “2011 Share Repurchase Program”). A total of 4.5 million shares have been repurchased under the 2011 Share
 
45

Table of Contents
Repurchase Program since inception. The shares are purchased, from time to time, through open market purchases or in negotiated private transactions, and the purchases are based on factors, including but not limited to, the stock price, management discretion and general market conditions. The 2011 Share Repurchase Program has no expiration date.
During the six months ended June 30, 2015, cash increased $57.1 million from operating activities, $0.5 million from proceeds from insurance settlement, $0.1 million from the sale of property and equipment, $0.2 million from excess tax benefits from stock-based compensation and $0.5 million from the proceeds from grants. The increase in cash was offset by $19.5 million used for capital expenditures, $10.0 million to repay long-term debt, $12.0 million to repurchase common stock, $1.3 million to repurchase common stock for minimum tax withholding on equity awards and $1.0 million for loan fees related to long-term debt, resulting in a $7.2 million increase in available cash (including the unfavorable effects of foreign currency exchange rates on cash and cash equivalents of $7.4 million).
Net cash flows provided by operating activities for the six months ended June 30, 2015 were $57.1 million, compared to $39.3 million for the comparable period in 2014. The $17.8 million increase in net cash flows from operating activities was due to a $9.9 million increase in net income and a net increase of $8.9 million in cash flows from assets and liabilities, partially offset by a $1.0 million decrease in non-cash reconciling items such as depreciation, amortization, unrealized foreign currency transaction (gains) losses and deferred income taxes. The $8.9 million increase in 2015 from 2014 in cash flows from assets and liabilities was principally a result of a $26.3 million decrease in accounts receivable, partially offset by a $10.9 million increase in other assets, a $3.1 million decrease in deferred revenue, a $2.9 million decrease in other liabilities and a $0.5 million decrease in taxes payable. The $26.3 million decrease in the change in accounts receivable was primarily due to lower volumes within certain clients as well as the timing of billings and collections in the six months ended June 30, 2015 over the comparable period in 2014. The $10.9 million increase in other assets was primarily due to a change in the net investment hedge of $4.4 million and a change in deferred tax assets of $6.3 million in the six months ended June 30, 2015 over the comparable period in 2014.
Capital expenditures, which are generally funded by cash generated from operating activities, available cash balances and borrowings available under our credit facilities, were $19.5 million for the six months ended June 30, 2015, compared to $24.2 million for the comparable period in 2014, a decrease of $4.7 million. In 2015, we anticipate capital expenditures in the range of $60.0 million to $65.0 million, primarily for new seat additions, Enterprise Resource Planning upgrades, facility upgrades, maintenance and systems infrastructure.
On May 12, 2015, we entered into a $440 million revolving credit facility (the “2015 Credit Agreement”) with a group of lenders and KeyBank National Association, as Lead Arranger, Sole Book Runner and Administrative Agent, Swing Line Lender and Issuing Lender (“KeyBank”). The 2015 Credit Agreement replaced our previous $245 million revolving credit facility dated May 3, 2012, as amended, which agreement was terminated simultaneous with entering into the 2015 Credit Agreement. The 2015 Credit Agreement is subject to certain borrowing limitations and includes certain customary financial and restrictive covenants. At June 30, 2015, we were in compliance with all loan requirements of the 2015 Credit Agreement and had $65.0 million of outstanding borrowings under this facility as of June 30, 2015.
Our credit agreements had an average daily utilization of $70.2 million and $90.2 million during the three months ended June 30, 2015 and 2014, respectively, and $72.2 million and $93.3 million during the six months ended June 30, 2015 and 2014, respectively. During the three months ended June 30, 2015 and 2014, the related interest expense, including the commitment fee and excluding the amortization of deferred loan fees, was $0.3 million and $0.4 million, respectively, which represented weighted average interest rates of 1.8% and 1.6%, respectively. During the six months ended June 30, 2015 and 2014, the related interest expense, including the commitment fee and excluding the amortization of deferred loan fees, was $0.6 million and $0.7 million, respectively, which represented weighted average interest rates of 1.8% and 1.6%, respectively.
The 2015 Credit Agreement includes a $200 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 2015 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 2015 Credit Agreement will mature on May 12, 2020.
 
46

Table of Contents
Borrowings under the 2015 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, we are required to pay certain customary fees, including a commitment fee of 0.125%, which is due quarterly in arrears and calculated on the average unused amount of the 2015 Credit Agreement.
The 2015 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.
We are currently under audit in several tax jurisdictions. We received assessments for the Canadian 2003-2009 audit. Requests for Competent Authority Assistance were filed with both the Canadian Revenue Agency and the U.S. Internal Revenue Service and we paid mandatory security deposits to Canada as part of this process. The total amount of deposits, net of fluctuations in the foreign exchange rate, are $14.9 million and $15.9 million as of June 30, 2015 and December 31, 2014, respectively, and are included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets. Although the outcome of examinations by taxing authorities is always uncertain, we believe we are adequately reserved for these audits and resolution is not expected to have a material impact on our financial condition and results of operations.
As of June 30, 2015, we had $222.4 million in cash and cash equivalents, of which approximately 90.8%, or $201.9 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 2015 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.
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, 2014.
Off-Balance Sheet Arrangements and Other
As of June 30, 2015, 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.
From time to time, during the normal course of business, we may make certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. These include, but are not limited to: (i) indemnities to clients, vendors and service providers pertaining to claims based on negligence
 
47

Table of Contents
or willful misconduct and (ii) indemnities involving breach of contract, the accuracy of representations and warranties, or other liabilities assumed by us in certain contracts. In addition, we have agreements whereby we will indemnify certain officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these indemnification agreements is unlimited; however, we have director and officer insurance coverage that limits our exposure and enables us to recover a portion of any future amounts paid. We believe the applicable insurance coverage is generally adequate to cover any estimated potential liability under these indemnification agreements. The majority of these indemnities, commitments and guarantees do not provide for any limitation of the maximum potential for future payments we could be obligated to make. We have not recorded any liability for these indemnities, commitments and other guarantees in the accompanying Condensed Consolidated Balance Sheets. In addition, we have some client contracts that do not contain contractual provisions for the limitation of liability, and other client contracts that contain agreed upon exceptions to limitation of liability. We have not recorded any liability in the accompanying Condensed Consolidated Balance Sheets with respect to any client contracts under which we have or may have unlimited liability.
Contractual Obligations
The following table summarizes the material changes to our contractual cash obligations as of June 30, 2015, 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)	  	$	67,410	  	  	$	2,153	  	  	$	18,847	  	  	$	18,801	  	  	$	27,609	  	  	$	—  	  	
Purchase obligations (2)	  	 	4,101	  	  	 	2,681	  	  	 	1,420	  	  	 	—  	  	  	 	—  	  	  	 	—  	  	
	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	  	 	 	 	
	  	$	71,511	  	  	$	4,834	  	  	$	20,267	  	  	$	18,801	  	  	$	27,609	  	  	$	—  	  	

(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.	
As a result of entering into the 2015 Credit Agreement on May 12, 2015, the maturity date of our outstanding long-term debt of $65.0 million as of June 30, 2015 is now May 12, 2020 rather than May 2, 2017 under the 2012 Credit Agreement. See Note 10, Borrowings, of “Notes to Condensed Consolidated Financial Statements” for further information.
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 as of and for the year ended December 31, 2014 filed on February 19, 2015.
Critical Accounting Estimates
See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report and Form 10-K for the year ended December 31, 2014 filed on February 19, 2015 for a discussion of our critical accounting estimates.
There have been no material changes to our critical accounting estimates in 2015.
New Accounting Standards Not Yet Adopted
In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 “ Revenue from Contracts with Customers (Topic 606)” (“ASU 2014-09”). The amendments in ASU 2014-09 outline a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and indicate that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this, an entity should identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the
 
48

Table of Contents
performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. The amendments are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period; early adoption is not permitted. An entity should apply the amendments using either the full retrospective approach or retrospectively with a cumulative effect of initially applying the amendments recognized at the date of initial application. On July 9, 2015, the FASB agreed to defer the effective date of ASU 2014-09 to annual reporting periods beginning after December 15, 2017 and the interim periods within that year. We are currently evaluating the methods of adoption and the impact that the adoption of ASU 2014-09 may have on our financial condition, results of operations and cash flows.
In June 2014, the FASB issued ASU 2014-12 “ Compensation – Stock Compensation (Topic 718) Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period” (“ASU 2014-12”). The amendments in ASU 2014-12 require that a performance target that affects vesting and that could be achieved after the requisite service period be treated as a performance condition. A reporting entity should apply existing guidance in Accounting Standards Codification (“ASC”) Topic 718, “ Compensation — Stock Compensation ” (“ASC 718”), as it relates to awards with performance conditions that affect vesting to account for such awards. The amendments are effective for annual periods and interim periods within those annual periods beginning after December 15, 2015; early adoption is permitted. Entities may apply the amendments either (1) prospective to all awards granted or modified after the effective date or (2) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. We do not expect the adoption of ASU 2014-12 on January 1, 2016 to materially impact our financial condition, results of operations and cash flows.
In January 2015, the FASB issued ASU 2015-01 “ Income Statement – Extraordinary and Unusual Items (Subtopic 225-20) Simplifying Income Statement Presentation by Eliminating the Concept of Extraordinary Items” (“ASU 2015-01”). This amendment eliminates from U.S. GAAP the concept of extraordinary items as part of the FASB’s initiative to reduce complexity in accounting standards. These amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015; early adoption is permitted. Entities may apply the amendments either prospectively or retrospectively to all prior periods presented in the financial statements. We do not expect the adoption of ASU 2015-01 on January 1, 2016 to materially impact our financial condition, results of operations and cash flows.
In February 2015, the FASB issued ASU 2015-02 “ Consolidation (Topic 810) Amendments to the Consolidation Analysis ) ” (“ASU 2015-02”). These amendments are intended to improve targeted areas of the consolidation guidance for legal entities such as limited partnerships, limited liability corporations and securitization structures. These amendments affect the consolidation evaluation for reporting organizations. In addition, the amendments simplify and improve current U.S. GAAP by reducing the number of consolidation models. The amendments are effective for fiscal years, and for interim periods within those fiscal years, beginning after December 15, 2015; early adoption is permitted. Entities may apply the amendments using either a modified retrospective approach or retrospectively. We do not expect the adoption of ASU 2015-02 on January 1, 2016 to materially impact our financial condition, results of operations and cash flows.
In April 2015, the FASB issued ASU 2015-03 “ Interest – Imputation of Interest (Subtopic 835-30) Simplifying the Presentation of Debt Issuance Costs” (“ASU 2015-03”). These amendments require that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt discounts. These amendments are effective for fiscal years beginning after December 15, 2015, and interim periods within those fiscal years. Entities should apply the amendments retrospectively. We do not expect the adoption of ASU 2015-03 on January 1, 2016 to materially impact our financial condition, results of operations and cash flows.
In April 2015, the FASB issued ASU 2015-05  “Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) Customer’s Accounting for Fees Paid in a Cloud Computing Arrangement” (“ASU 2015-05”). These amendments provide guidance to customers about whether a cloud computing arrangement includes a software license. If a cloud computing arrangement includes a software license, the customer should account for the software license element of the arrangement consistent with the acquisition of other software licenses. If a cloud computing arrangement does not include a software license, the customer should account for the arrangement as a service contract. The new guidance does not change the accounting for a customer’s accounting for service contracts. These amendments are effective for annual periods, including interim periods within those annual periods, beginning after December 15, 2015; early adoption is permitted. Entities can adopt the amendments either (1) prospectively to all arrangements entered into or materially modified after the effective date or (2) retrospectively. We do not expect the adoption of ASU 2015-05 on January 1, 2016 to materially impact our financial condition, results of operations and cash flows.
 
49

Table of Contents

 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 USD are included in “Accumulated other comprehensive income (loss)” in shareholders’ equity. Movements in non-USD 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 certain earnings and cash flows caused by volatility in foreign currency exchange (“FX”) rates. We also utilize derivative contracts to hedge intercompany receivables and payables that are denominated in a foreign currency and 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 and Costa Rica, which are within our Americas segment. Although the contracts with these clients are priced in USDs, a substantial portion of the costs incurred to render services under these contracts are denominated in Philippine Pesos (“PHP”) 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, 2015 with counterparties through June 2016 with notional amounts totaling $134.5 million. As of June 30, 2015, we had net total derivative assets associated with these contracts with a fair value of $1.7 million, which will settle within the next 12 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 $10.9 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 $63.5 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, 2015, the fair value of these derivatives was a net asset of $8.6 million. The potential loss in fair value at June 30, 2015, for these contracts resulting from a hypothetical 10% adverse change in the foreign currency exchange rates is approximately $5.5 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 $58.2 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, 2015, the fair value of these derivatives was a net liability of $0.1 million. The potential loss in fair value at June 30, 2015, for these contracts resulting from a hypothetical 10% adverse change in the foreign currency exchange rates is approximately $2.8 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.
 
50

Table of Contents
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, 2015, we had $65.0 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, 2015, a 1.0% increase in the weighted average interest rate, which generally equals the LIBOR rate plus an applicable margin, would have had an impact of $0.2 million and $0.4 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, 2014, quarterly revenues as a percentage of total consolidated annual revenues were approximately 24%, 24%, 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.
 
 Item 4.	Controls and Procedures	
As of June 30, 2015, 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 SEC’s 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, 2015, 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, 2015 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.
 Part II.       OTHER INFORMATION
 
 Item 1.	Legal Proceedings	
From time to time, we are involved in legal actions arising in the ordinary course of business. With respect to 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.
 
 Item 1A.	Risk Factors	
For risk factors, see Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, 2014 filed on February 19, 2015.
 
51

Table of Contents

 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, 2015 (in thousands, except average price per share). See Note 13, 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, 2015 - April 30, 2015	  	 	—  	  	  	$	—  	  	  	 	—  	  	  	 	778	  	
May 1, 2015 - May 31, 2015	  	 	234	  	  	$	24.52	  	  	 	234	  	  	 	544	  	
June 1, 2015 - June 30, 2015	  	 	45	  	  	$	24.28	  	  	 	45	  	  	 	499	  	
	  	 	 	 	  				  	 	 	 	  	 	 	 	
Total	  	 	279	  	  				  	 	279	  	  	 	499	  	

(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.	
 
 Item 3.	Defaults Upon Senior Securities	
None.
 
 Item 4.	Mine Safety Disclosures	
Not Applicable.
 
 Item 5.	Other Information	
None.
 
 Item 6.	Exhibits	
The following documents are filed as an exhibit to this Report:

  10.1	  	Credit Agreement, dated May 12, 2015, between Sykes Enterprises, Incorporated, the lenders party thereto and KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender and Issuing Lender (filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2015, and incorporated herein by reference).	
		
  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	
 
52

Table of Contents
 SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	 		 	SYKES ENTERPRISES, INCORPORATED	
	 		 	(Registrant)	
				
    Date: August 4, 2015	 		 	By:	 	/s/ John Chapman	
	 		 	John Chapman	
	 		 	Executive Vice President and Chief Financial Officer	
	 		 	(Principal Financial and Accounting Officer)	
 
53

Table of Contents
EXHIBIT INDEX

Exhibit
Number	  	 	
		
  10.1	  	Credit Agreement, dated May 12, 2015, between Sykes Enterprises, Incorporated, the lenders party thereto and KeyBank National Association, as Lead Arranger, Sole Book Runner, Administrative Agent, Swing Line Lender and Issuing Lender (filed as an Exhibit to the Registrant’s Current Report on Form 8-K filed with the Commission on May 13, 2015, and incorporated herein by reference).	
		
  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	
 
54

Exhibit 15
August 4, 2015
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, 2015, and 2014, as indicated in our report dated August 4, 2015; 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, 2015, 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 company’s 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 company’s 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 company’s internal control over financial reporting that occurred during the company’s most recent fiscal quarter (the company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and	
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s 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 company’s 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 company’s internal control over financial reporting.

Date: August 4, 2015	
	
/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, John Chapman, 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 company’s 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 company’s 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 company’s internal control over financial reporting that occurred during the company’s most recent fiscal quarter (the company’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the company’s internal control over financial reporting; and	
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the company’s auditors and the audit committee of the company’s 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 company’s 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 company’s internal control over financial reporting.

Date: August 4, 2015	
	
/s/ John Chapman	
John Chapman, 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, 2015 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, that:
(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 4, 2015	 		 	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, 2015 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, John Chapman, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, that:
(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 4, 2015	 		 	By:	 	/s/ John Chapman	
	 		 	John Chapman	
	 		 	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.