Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2018	Apr. 19, 2018
Document And Entity Information [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2018
Document Fiscal Year Focus	2018
Document Fiscal Period Focus	Q1
Trading Symbol	SYKE
Entity Registrant Name	SYKES ENTERPRISES INC
Entity Central Index Key	0001010612
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		42,799,382

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2018	Dec. 31, 2017
Current assets:
Cash and cash equivalents	$ 172,590	$ 343,734
Receivables, net	346,920	341,958
Prepaid expenses	22,270	22,132
Other current assets	16,395	19,743
Total current assets	558,175	727,567
Property and equipment, net	153,834	160,790
Goodwill, net	267,936	269,265
Intangibles, net	143,623	140,277
Deferred charges and other assets	32,618	29,193
Total assets	1,156,186	1,327,092
Current liabilities:
Accounts payable	26,244	32,133
Accrued employee compensation and benefits	100,991	102,899
Income taxes payable	2,698	2,606
Deferred revenue	30,217	34,717
Other accrued expenses and current liabilities	35,018	30,888
Total current liabilities	195,168	203,243
Deferred grants	3,089	3,233
Long-term debt	100,000	275,000
Long-term income tax liabilities	27,113	27,098
Other long-term liabilities	24,670	22,039
Total liabilities	350,040	530,613
Commitments and loss contingency (Note 12)
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; 42,799 and 42,899 shares issued, respectively	428	429
Additional paid-in capital	280,840	282,385
Retained earnings	560,810	546,843
Accumulated other comprehensive income (loss)	(33,799)	(31,104)
Treasury stock at cost: 118 and 117 shares, respectively	(2,133)	(2,074)
Total shareholders' equity	806,146	796,479
Total liabilities and shareholders' equity	$ 1,156,186	$ 1,327,092

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Mar. 31, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock, par value	$ 0.01	$ 0.01
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	42,799,000	42,899,000
Treasury stock, shares	118,000	117,000

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Income Statement [Abstract]
Revenues	$ 414,371	$ 384,014
Operating expenses:
Direct salaries and related costs	275,072	247,136
General and administrative	102,440	92,044
Depreciation, net	14,836	13,348
Amortization of intangibles	4,213	5,231
Impairment of long-lived assets	3,526	202
Total operating expenses	400,087	357,961
Income from operations	14,284	26,053
Other income (expense):
Interest income	171	155
Interest (expense)	(1,206)	(1,699)
Other income (expense), net	155	813
Total other income (expense), net	(880)	(731)
Income before income taxes	13,404	25,322
Income taxes	2,456	6,610
Net income	$ 10,948	$ 18,712
Net income per common share:
Basic	$ 0.26	$ 0.45
Diluted	$ 0.26	$ 0.45
Weighted average common shares outstanding:
Basic	41,939	41,654
Diluted	42,232	41,905

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Statement of Comprehensive Income [Abstract]
Net income	$ 10,948	$ 18,712
Other comprehensive income (loss), net of taxes:
Foreign currency translation gain (loss), net of taxes	291	3,898
Unrealized gain (loss) on net investment hedges, net of taxes		(368)
Unrealized gain (loss) on cash flow hedging instruments, net of taxes	(2,893)	532
Unrealized actuarial gain (loss) related to pension liability, net of taxes	(83)	(23)
Unrealized gain (loss) on postretirement obligation, net of taxes	(10)	(13)
Other comprehensive income (loss), net of taxes	(2,695)	4,026
Comprehensive income (loss)	$ 8,253	$ 22,738

Condensed Consolidated Statements of Changes in Shareholders' Equity - 3 months ended Mar. 31, 2018 - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Treasury Stock [Member]
Beginning Balance at Dec. 31, 2017	$ 796,479	$ 429	$ 282,385	$ 546,843	$ (31,104)	$ (2,074)
Beginning Balance, shares at Dec. 31, 2017		42,899
Stock-based compensation expense	2,077		2,077
Issuance of common stock under equity award plans, net of forfeitures			59			(59)
Issuance of common stock under equity award plans, net of forfeitures, Share		18
Shares repurchased for tax withholding on equity awards	(3,682)	$ (1)	(3,681)
Shares repurchased for tax withholding on equity awards, Share		(118)
Comprehensive income (loss)	8,253			10,948	(2,695)
Ending Balance at Mar. 31, 2018	806,146	$ 428	$ 280,840	560,810	$ (33,799)	$ (2,133)
Ending Balance, shares at Mar. 31, 2018		42,799
Cumulative effect of accounting change \| Accounting Standards Update 2014-09 [Member]	$ 3,019			$ 3,019

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2018	Mar. 31, 2017
Cash flows from operating activities:
Net income	$ 10,948	$ 18,712
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	14,964	13,476
Amortization of intangibles	4,213	5,231
Amortization of deferred grants	(181)	(166)
Impairment losses	3,526	202
Unrealized foreign currency transaction (gains) losses, net	194	(1,405)
Stock-based compensation expense	2,077	2,471
Deferred income tax provision (benefit)	584	429
Unrealized (gains) losses and premiums on financial instruments, net	168	620
Amortization of deferred loan fees	67	67
Imputed interest expense and fair value adjustments to contingent consideration		(399)
Other	150	99
Changes in assets and liabilities:
Receivables, net	(2,120)	(506)
Prepaid expenses	(134)	(1,026)
Other current assets	665	107
Deferred charges and other assets	(1,496)	(839)
Accounts payable	(4,413)	679
Income taxes receivable / payable	(1,622)	3,094
Accrued employee compensation and benefits	(1,832)	(2,962)
Other accrued expenses and current liabilities	3,766	(1,698)
Deferred revenue	(2,976)	(66)
Other long-term liabilities	2,071	1,105
Net cash provided by operating activities	28,619	37,225
Cash flows from investing activities:
Capital expenditures	(13,258)	(17,040)
Purchase of intangible assets	(7,505)
Other	2	10
Net cash (used for) investing activities	(20,761)	(17,030)
Cash flows from financing activities:
Payments of long-term debt	(175,000)
Shares repurchased for tax withholding on equity awards	(3,682)	(3,286)
Payments of contingent consideration related to acquisitions		(126)
Other	20	55
Net cash provided by (used for) financing activities	(178,662)	(3,357)
Effects of exchange rates on cash, cash equivalents and restricted cash	(332)	3,358
Net increase (decrease) in cash, cash equivalents and restricted cash	(171,136)	20,196
Cash, cash equivalents and restricted cash - beginning	344,805	267,594
Cash, cash equivalents and restricted cash - ending	173,669	287,790
Supplemental disclosures of cash flow information:
Cash paid during period for interest	1,042	1,464
Cash paid during period for income taxes	4,754	2,923
Non-cash transactions:
Property and equipment additions in accounts payable	4,430	4,835
Unrealized gain (loss) on postretirement obligation, net of taxes in accumulated other comprehensive income (loss)	(10)	(13)
Shares repurchased for tax withholding on equity awards included in current liabilities	$ 357	$ 352

Overview and Basis of Presentation

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Overview and Basis of Presentation

Note 1. Overview and Basis of Presentation

Business — Sykes Enterprises, Incorporated and consolidated subsidiaries (“SYKES” or the “Company”) is a leading provider of multichannel demand generation and global customer engagement services. SYKES provides differentiated full lifecycle customer engagement solutions and services to Global 2000 companies and their end customers primarily within the communications, financial services, technology, transportation and leisure, healthcare, retail and other industries. SYKES primarily provides customer engagement solutions and services with an emphasis on inbound multichannel demand generation, customer service and technical support to its clients’ customers. Utilizing SYKES’ integrated onshore/offshore global delivery model, SYKES provides its services through multiple communication channels including phone, e-mail, social media, text messaging, chat and digital self-service. SYKES also provides various enterprise support services in the United States that include services for its clients’ internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, SYKES also provides fulfillment services, which includes 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.

2017 Tax Reform Act

In December 2017, the President of the United States (“U.S.”) signed into law the Tax Cuts and Jobs Act (the “2017 Tax Reform Act”). In general, the 2017 Tax Reform Act reduces the U.S. federal corporate tax rate from 35% to 21%, effective in 2018. The 2017 Tax Reform Act moves from a worldwide business taxation approach to a participation exemption regime. The 2017 Tax Reform Act also imposes base-erosion prevention measures on non-U.S. earnings of U.S. entities, as well as a one-time mandatory deemed repatriation tax on accumulated non-U.S. earnings which was recorded in the fourth quarter of 2017. The impact of the 2017 Tax Reform Act on the consolidated financial results began with the fourth quarter of 2017, the period of enactment. This impact, along with the transitional taxes discussed in Note 10, Income Taxes, is reflected in the Other segment.

Acquisition

On April 24, 2017, the Company entered into a definitive Asset Purchase Agreement (the “Purchase Agreement”) to acquire certain assets from a Global 2000 telecommunications services provider. The aggregate purchase price of $7.5 million was paid on May 31, 2017, using cash on hand, resulting in $6.0 million of property and equipment and $1.5 million of customer relationship intangibles (the “Telecommunications Asset acquisition”). The Purchase Agreement contains customary representations and warranties, indemnification obligations and covenants. The Telecommunications Asset acquisition was completed to strengthen and create new partnerships for the Company and expand its geographic footprint in North America. The results of the Telecommunications Assets’ operations have been included in the Company’s consolidated financial statements in the Americas segment since its acquisition on May 31, 2017.

The Company accounted for the Telecommunications Asset acquisition in accordance with ASC 805, Business Combinations, whereby the fair value of the purchase price was allocated to the tangible and identifiable intangible assets acquired based on their estimated fair values as of the closing date. The Company completed its analysis of the purchase price allocation during the second quarter of 2017.

Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for any future quarters or the year ending December 31, 2018. 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, 2017, as filed with the Securities and Exchange Commission (“SEC”) on March 1, 2018.

Principles of Consolidation — The condensed consolidated financial statements include the accounts of SYKES and its wholly-owned subsidiaries and controlled majority-owned subsidiaries. Investments in less than majority-owned subsidiaries in which the Company does not have a controlling interest, but does have significant influence, are accounted for as equity method investments. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates — The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Subsequent Events — Subsequent events or transactions have been evaluated through the date and time of issuance of the condensed consolidated financial statements. There were no material subsequent events that required recognition or disclosure in the accompanying condensed consolidated financial statements.

Cash, Cash Equivalents and Restricted cash — Cash and cash equivalents consist of cash and highly liquid short-term investments, primarily held in non-interest bearing investments which have original maturities of less than 90 days. Restricted cash includes cash whereby the Company’s ability to use the funds at any time is contractually limited or is generally designated for specific purposes arising out of certain contractual or other obligations.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets that sum to the amounts reported in the Condensed Consolidated Statements of Cash Flows (in thousands):


	March 31, 2018		December 31, 2017		March 31, 2017		December 31, 2016
Cash and cash equivalents	$	172,590	$	343,734	$	286,830	$	266,675
Restricted cash included in “Other current assets”		154		154		167		160
Restricted cash included in “Deferred charges and other assets”		925		917		793		759

	$	173,669	$	344,805	$	287,790	$	267,594

Investments in Equity Method Investees — The Company uses the equity method to account for investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee. The Company’s proportionate share of the net income or loss of an equity method investment is included in consolidated net income. Judgment regarding the level of influence over an equity method investment includes considering key factors such as the Company’s ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions.

The Company evaluates an equity method investment for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time (duration) and the extent (severity) to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects, and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified. As of March 31, 2018 and December 31, 2017, the Company did not identify any instances where the carrying values of its equity method investments were not recoverable.

In July 2017, the Company made a strategic investment of $10.0 million in XSell Technologies, Inc. (“XSell”) for 32.8% of XSell’s preferred stock. The Company plans to incorporate XSell’s machine learning and artificial intelligence algorithms into its business. The Company believes this will increase the sales performance of its agents to drive revenue for its clients, improve the experience of the Company’s clients’ end customers and enhance brand loyalty, reduce the cost of customer care and leverage analytics and machine learning to source the best agents and improve their performance.

The Company’s net investment in XSell of $9.7 million and $9.8 million was included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017, respectively. The Company paid $5.0 million in July 2017 with the remaining $5.0 million included in “Other accrued expenses and current liabilities” in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017. The Company’s proportionate share of XSell’s income (loss) of $(0.1) million was included in “Other income (expense), net” in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 (none in 2017).

Customer-Acquisition Advertising Costs — The Company utilizes direct-response advertising, the primary purpose of which is to elicit purchases from its clients’ customers. These costs are capitalized when they are expected to result in probable future benefits and are amortized over the period during which future benefits are expected to be received, which is generally less than one month. All other advertising costs are expensed as incurred. As of March 31, 2018 and December 31, 2017, the Company had $0.3 million and less than $0.1 million of capitalized direct-response advertising costs included in “Prepaid expenses” in the accompanying Condensed Consolidated Balance Sheets, respectively. Total advertising costs included in “Direct salaries and related costs” in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017 were $10.0 million and $9.8 million, respectively. Total advertising costs included in “General and administrative” in the accompanying Condensed Consolidated Statement of Operations for the three months ended March 31, 2018 were less than $0.1 million (none in 2017).

Reclassifications — Certain balances in the prior period have been reclassified to conform to current period presentation.

New Accounting Standards Not Yet Adopted

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”). These amendments require the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC 840,Leases. These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Entities are required to apply the amendments at the beginning of the earliest period presented using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and there are certain optional practical expedients that an entity may elect to apply.

The Company’s implementation team has compiled a detailed inventory of leases and a preliminary analysis of the impact to the financial statements. The Company continues to evaluate the critical factors of ASU 2016-02. Based on an assessment of the Company’s business and system requirements, the implementation team is evaluating lease accounting software vendors as an option to assist the Company in complying with all aspects of ASU 2016-02. The Company expects the adoption of ASU 2016-02 to result in a material increase in the assets and liabilities on the consolidated balance sheets as a result of recognizing right-of-use assets and lease liabilities for existing operating leases based on the amount of the Company’s current lease commitments. The Company believes that the majority of its leases will maintain their current lease classification under ASU 2016-02. The Company does not expect these amendments to have a material effect on its expense recognition timing or cash flows and, as a result, the Company expects ASU 2016-02 will result in an insignificant impact on the Company’s consolidated statements of income and on the consolidated statements of cash flows. The Company is continuing to evaluate the magnitude of the impact and related disclosures, as well as the timing and method of adoption, with respect to the optional practical expedients. The Company is also continuing to evaluate the full impact of ASU 2016-02, as well as its impacts on its business processes, systems, and internal controls.

Other Comprehensive Income

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). These amendments allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Reform Act. These amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendment in this update is permitted, including adoption in any interim period. These amendments can be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate tax rate in the 2017 Tax Reform Act is recognized. The Company is currently evaluating the impact the guidance will have on its financial condition, results of operations, cash flows and disclosures, as well as the timing and method of adoption.

Derivatives and Hedging

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedge Activities (“ASU 2017-12”). These amendments help simplify certain aspects of hedge accounting and better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. For cash flow and net investment hedges as of the adoption date, the guidance requires a modified retrospective approach. The amended presentation and disclosure guidance is required only prospectively. These amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early application permitted in any interim period after issuance of this update. The Company is currently evaluating the accounting, transition and disclosure requirements to determine the impact ASU 2017-12 may have on its financial condition, results of operations, cash flows and disclosures.

Financial Instruments – Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). These amendments require measurement and recognition of expected versus incurred credit losses for financial assets held. These amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the guidance will have on its financial condition, results of operations and cash flows.

New Accounting Standards Recently Adopted

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) and subsequent amendments (together, “ASC 606”). ASC 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and indicates 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 performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective transition method. See Note 2, Revenues, for further details.

Financial Instruments

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). These amendments modify how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception applies to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, Fair Value Measurements, and as such, these investments may be measured at cost. These amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of ASU 2016-01 on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). These amendments clarify the presentation of cash receipts and payments in eight specific situations. These amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. These amendments have been applied using a retrospective transition method to each period presented. The adoption of ASU 2016-15 on January 1, 2018 did not have a material impact on the Company’s cash flows.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) – Restricted Cash (A Consensus of the FASB Emerging Issues Task Force (“ASU 2016-18”). These amendments clarify how entities should present restricted cash and restricted cash equivalents in the statement of cash flows, requiring entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. These amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. These amendments have been applied using a retrospective transition method to each period presented. The inclusion of restricted cash increased the beginning balance of the Condensed Consolidated Statements of Cash Flows by $1.1 million for the three months ended March 31, 2018 and increased the beginning and ending balances by $0.9 million and $1.0 million, respectively, for the three months ended March 31, 2017. Other than the change in presentation within the accompanying Condensed Consolidated Statements of Cash Flows, the retrospective adoption of ASU 2016-18 on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements.

Income Taxes

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other than Inventory (“ASU 2016-16”). These amendments require recognition of the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. These amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The adoption of ASU 2016-16 on January 1, 2018 did not have a material impact the Company’s consolidated financial statements and no cumulative-effect adjustment to retained earnings was required.

In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the 2017 Tax Reform Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period costs are both acceptable methods subject to an accounting policy election. The Company evaluated the accounting treatment options related to the GILTI provisions and elected to treat any potential GILTI inclusions as a current period cost. The election did not have a material impact on the Company’s consolidated financial statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”). These amendments add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”). SAB 118 directs taxpayers to consider the implications of the 2017 Tax Reform Act as provisional when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in the tax law. As described in Note 10, Income Taxes, and in accordance with SAB 118, the Company recorded amounts that were considered provisional.

Business Combinations

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) – Clarifying the Definition of a Business (“ASU 2017-01”). These amendments clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. These amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. These amendments were applied prospectively. The adoption of ASU 2017-01 of January 1, 2018 did not have a material impact on the Company’s consolidated financial statements.

Retirement Benefits

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). These amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost are required to be presented in the income statement separately from the service cost component outside of a subtotal of income from operations. If a separate line item is not used, the line items used in the income statement to present other components of net benefit cost must be disclosed. These amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. These amendments were applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements.

The Company adopted the income statement presentation aspects of ASU 2017-07 on a retrospective basis effective January 1, 2018. The following is a reconciliation of the effect of the reclassification of the interest cost and amortization of actuarial gain (loss) from operating expenses to other income (expense) in the Company’s Condensed Consolidated Statement of Operations for the three months ended March 31, 2017 (in thousands):


	As Previously Reported		Adjustments Due to the Adoption of ASU 2017-07			As Revised
Three Months Ended March 31, 2017:
Direct salaries and related costs	$	247,165	$	(29	)	$	247,136
General and administrative		92,054		(10	)		92,044
Income from operations		26,014		39			26,053
Other income (expense), net		852		(39	)		813

Revenues

3 Months Ended

Mar. 31, 2018

Revenue from Contract with Customer [Abstract]

Revenues

Note 2. Revenues

Adoption of ASC 606, Revenue from Contracts with Customers

On January 1, 2018, the Company adopted ASC 606, which includes ASU 2014-09 and all related amendments, using the modified retrospective method applied to those contracts which were not completed as of January 1, 2018. Results for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting for revenues under ASC 605, Revenue Recognition (“ASC 605”).

The Company recorded an increase to opening retained earnings of $3.0 million as of January 1, 2018 due to the cumulative impact of adopting ASC 606. The impact, all in the Americas segment, primarily related to the change in timing of revenue recognition associated with certain customer contracts that provide fees upon renewal, as well as changes in estimating variable consideration with respect to penalties and holdback provisions for failure to meet specified minimum service levels and other performance-based contingencies. Revenue recognized under ASC 606 is expected to be slightly higher during 2018 than revenue would have been under ASC 605. This is primarily attributable to the change in the timing of revenue recognition, as discussed above. The impact on revenue recognized for the first quarter of 2018 is reported below.

The cumulative effect of the adjustments made to the Company’s Condensed Consolidated Balance Sheet as of December 31, 2017 for the line items impacted by the adoption of ASC 606 was as follows (in thousands):


	December 31, 2017		Adjustments Due to the Adoption of ASC 606			January 1, 2018
Receivables, net	$	341,958	$	825		$	342,783
Deferred charges and other assets		29,193		2,045			31,238
Income taxes payable		2,606		697			3,303
Deferred revenue		34,717		(1,048	)		33,669
Other long-term liabilities		22,039		202			22,241
Retained earnings		546,843		3,019			549,862

The financial statement line items impacted by the adoption of ASC 606 in the Company’s Condensed Consolidated Balance Sheet as of March 31, 2018 were as follows (in thousands):


	As Reported		Balances Without the Impact of the ASC 606 Adoption		Effect of Adoption Increase (Decrease)
March 31, 2018:
Receivables, net	$	346,920	$	343,750	$	3,170
Deferred charges and other assets		32,618		29,365		3,253
Income taxes payable		2,698		1,133		1,565
Deferred revenue		30,217		32,697		(2,480	)
Other long-term liabilities		24,670		24,242		428
Retained earnings		560,810		553,900		6,910

The financial statement line items impacted by the adoption of ASC 606 in the Company’s Condensed Consolidated Statement of Operations for the three months ended March 31, 2018 were as follows, along with the impact per share (in thousands, except per share data):


	As Reported		Balances Without the Impact of the ASC 606 Adoption		Effect of Adoption Increase (Decrease)
Three Months Ended March 31, 2018:
Revenues	$	414,371	$	409,320	$	5,051
Income from operations		14,284		9,233		5,051
Income before income taxes		13,404		8,353		5,051
Income taxes		2,456		1,296		1,160
Net income		10,948		7,057		3,891
Net income per common share:
Basic	$	0.26	$	0.17	$	0.09

Diluted	$	0.26	$	0.17	$	0.09

The Company’s net cash provided by operating activities for the three months ended March 31, 2018 did not change due to the adoption of ASC 606.

Practical Expedients

The Company utilized the practical expedient that allows for the application of ASC 606 to a portfolio of contracts (or performance obligations) with similar characteristics if the entity reasonably expects that the effects on the financial statements of applying this guidance to the portfolio would not differ materially from applying this guidance to the individual contracts (or performance obligations) within that portfolio.

Costs of Obtaining Customer Contracts

ASC 606 requires an entity to recognize as an asset the incremental costs of obtaining a contract with a customer if the entity expects to recover those costs. The incremental costs of obtaining a contract are those costs that an entity incurs to obtain a contract with a customer that it would not have incurred if the contract had not been obtained (e.g. a sales commission). Because the Company’s sales commissions are not directly incremental to obtaining customer contracts, they are expensed as incurred.

Recognition of Revenues Accounting Policy

The Company’s “Recognition of Revenues” accounting policy under ASC 606 is outlined below. For the Company’s accounting policy under ASC 605, see Note 1, Overview and Summary of Significant Accounting Policies, of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.

The Company recognizes revenues in accordance with ASC 606, whereby revenues are recognized when control of the promised goods or services is transferred to the Company’s customers, in an amount that reflects the consideration it expects to be entitled to in exchange for those goods or services.

Customer Engagement Solutions and Services

Under ASC 606, the Company accounts for a contract with a client when it has approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. The Company’s customer engagement solutions and services are classified as stand-ready performance obligations. Because the Company’s customers simultaneously receive and consume the benefits of its services as they are delivered, the performance obligations are satisfied over time. The Company recognizes revenue over time using output methods such as a per minute, per hour, per call, per transaction or per time and materials basis. These output methods faithfully depict the satisfaction of the Company’s obligation to deliver the services as requested and represent a direct measurement of value to the customer. The Company’s contracts have a single performance obligation as the promise to transfer the customer solutions and services are not separately identifiable from other promises in the contract, and therefore not distinct.

Revenue recognition is limited to the established transaction price, the amount to which the Company expects to be entitled to under the contract, including the amount of expected fees for those contracts with renewal provisions and the amount that is not contingent upon delivery of any future product or service or meeting other specified performance obligations.

The Company’s contracts include penalties and holdbacks provisions for failure to meet specified minimum service levels and other performance-based contingencies, as well as the right of certain of the Company’s clients to chargeback accounts that do not meet certain requirements for specified periods after a sale has occurred. The portion of the transaction price that is subject to service level, performance-based contingencies, and other chargeback provisions is deferred until such contingency is resolved. Certain customers also receive cash discounts for early payment. These provisions are accounted for as variable consideration and are estimated using historical service and pricing trends, the individual contract provisions, and the Company’s best judgment at the time. None of these variable consideration components are subject to constraint due to the short time period to resolution, the Company’s extensive history with similar transactions, and the limited number of possible outcomes and third-party influence. The transaction price, once determined, is allocated to the single performance obligation on a contract by contract basis.

The Company’s primary billing terms are that payment is due upon receipt of the invoice, payable usually within 30 or 60 days. Invoices are generally issued on a monthly basis as control transfers and/or services are rendered. While the Company’s contracts with customers can range from 30 days to six years, the majority include termination without cause provisions allowing either party to cancel the contract without penalty at any time. Under these circumstances, the contract term ends when control of the services already provided transfers to the customer (e.g., month-to-month service contract) regardless of the contract’s actual term. All of the Company’s contracts include a notification or cancellation period (e.g., the contract can be terminated within 90 days’ notice) that cause the contract term to extend beyond the date when control of the services already provided transferred to the customer. Thus, in these instances the contract term would align with the notice term. A contract with a 90-day notice to cancel represents a three-month contract with a renewal option of additional months of service.

Other Revenues

In the Americas, the Company provides a range of enterprise support services including technical staffing services and outsourced corporate help desk services, primarily in the U.S. Revenue for enterprise support services are recognized over time using output methods such as number of positions filled similar to Company’s outsourced customer engagement services and solutions.

In EMEA, the Company offers fulfillment services that are integrated with its customer care and technical support services. The Company’s fulfillment solutions include order processing, payment processing, inventory control, product delivery and product returns handling. Sales are recognized upon shipment to the customer and satisfaction of all obligations.

The Company also has miscellaneous other revenue in the Other segment.

In total, other revenues are immaterial, representing 0.5% and 0.6% of the Company’s consolidated total revenues for the three months ended March 31, 2018 and 2017, respectively.

Disaggregated Revenues

The Company disaggregates its revenues from contracts with customers by service type and geographic location (see Note 15, Segments and Geographic Information), for each of its reportable segments, as the Company believes it best depicts how the nature, amount, timing and uncertainty of its revenue and cash flows are affected by economic factors.

The following table represents revenues from contracts with customers disaggregated by service type for the three months ended March 31, 2018 and 2017, by the reportable segment for each category (in thousands):


	Three Months Ended March 31,
	2018		2017
Americas:
Customer engagement solutions and services	$	340,422	$	320,663
Other revenues		299		268

Total Americas		340,721		320,931

EMEA:
Customer engagement solutions and services		71,671		61,068
Other revenues		1,956		1,999

Total EMEA		73,627		63,067

Other:
Other revenues		23		16

Total Other		23		16

	$	414,371	$	384,014

Trade Accounts Receivable

The Company’s trade accounts receivable, net, consists of the following (in thousands):


	March 31, 2018		January 1, 2018 ⁽³⁾
Trade accounts receivable, net, current ⁽¹⁾	$	335,255	$	332,014
Trade accounts receivable, net, noncurrent ⁽²⁾		3,353		2,078

	$	338,608	$	334,092

⁽¹⁾ Included in “Receivables, net” in the accompanying Condensed Consolidated Balance Sheets.

⁽²⁾ Included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets.

⁽³⁾ The January 1, 2018 balance includes the $0.8 million adjustment to “Receivables, net” and the $2.1 million adjustment to “Deferred charges and other assets” upon adoption of ASC 606.

The Company’s noncurrent trade accounts receivable result from contracts with customers that include renewal provisions that take effect subsequent to the satisfaction of the associated performance obligations. Payment is expected upon renewal, which occurs in bi-annual and annual increments over the associated expected contract term, the majority of which range from two to five years.

Deferred Revenue

The Company receives up-front fees in connection with certain contracts. Therefore, a contract liability for future services is created in advance of performance. The deferred revenue is earned over the service periods of the respective contracts, which range from 30 days to six years. This type of deferred revenue is included within “Deferred revenue” in the accompanying Condensed Consolidated Balance Sheets for both services to be provided over the ensuing twelve-month period and services to be provided over multiple years since these contracts contain cancellation and refund provisions, whereby the customers can terminate the contracts and demand pro-rata refunds of the up-front fees with short notice.

Deferred revenue from estimated potential penalties and holdbacks results from the failure to meet specified minimum service levels in certain contracts and other performance-based contingencies.

Deferred revenue from estimated chargebacks reflects the right of certain of the Company’s clients to chargeback accounts that do not meet certain requirements for specified periods after a sale has occurred.

Deferred revenue consists of the following (in thousands):


	March 31, 2018		January 1, 2018⁽¹⁾
Future services	$	22,353	$	26,353
Estimated potential penalties and holdbacks		3,462		3,291
Estimated chargebacks		4,402		4,025

	$	30,217	$	33,669

⁽¹⁾ The January 1, 2018 balance includes the $1.0 million adjustment to “Deferred revenue” upon adoption of ASC 606.

The following table reflects the revenue recognized during the three months ended March 31, 2018 that was included in “Deferred revenue” as of January 1, 2018 (in thousands):


	Future Services		Estimated Potential Penalties and Holdbacks		Estimated Chargebacks		Total
Revenue recognized in the period	$	6,840	$	305	$	119	$	7,264

Deferred revenue classified as future services represents the transaction price allocated to the performance obligations that remain unsatisfied at period end. Such obligations are then satisfied over time. While these balances are classified as current due to cancellation and refund provisions whereby the customers can terminate the contracts and demand pro-rata refunds of the up-front fees with short notice, a portion of this revenue is not expected to be recognized for several years. The amount of future services revenue recognized in the current period primarily represents the Company’s satisfaction of the performance obligations associated with up-front fees from its customers that were previously included within deferred revenue as of January 1, 2018.

Of the consolidated deferred future services balance as of March 31, 2018, the Company expects to recognize revenue as outlined below (in thousands):


	Future Services
Within 1 year	$	17,138
1 - 2 years		2,451
2 - 3 years		1,184
3 - 4 years		790
Thereafter		790

	$	22,353

The amount of revenue recognized in the current period associated with estimated potential penalties, holdbacks and chargebacks represents the Company’s satisfaction of service level and other performance-based contingencies, as well as the satisfaction of certain client requirements during the period after sale that were previously unsettled as of January 1, 2018. Of the remaining contract liabilities for estimated potential penalties, holdbacks and chargebacks as of March 31, 2018, the Company expects to recognize the entire balance as revenue within 30 to 120 days if the requisite service levels and client requirements are met in order to settle the contingency. Other changes to the opening and closing balances of these estimated potential penalties, holdbacks, and chargebacks include the establishment of new contingency-based deferrals associated with current period services performed, as well as client settlements for both previously recorded service level requirements and current period requirements that were not met.

With respect to the remaining customer engagement solutions and services contracts accounted for as stand-ready performance obligations each period, there are no unsatisfied performance obligations at period end as the customer simultaneously receives and consumes the benefit of the services as they are delivered over time.

Fair Value

3 Months Ended

Mar. 31, 2018

Fair Value Disclosures [Abstract]

Fair Value

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.

•

Embedded derivatives — Embedded derivatives within certain hybrid lease agreements are bifurcated from the host contract and recognized at fair value based on pricing models or formulas using significant unobservable inputs, including adjustments for credit risk.

•

Long-term debt — The carrying value of long-term debt approximates its estimated fair value as the debt bears interest based on variable market rates, as outlined in the debt agreement.

•

Contingent consideration — The contingent consideration is recognized at fair value based on the discounted cash flow method.

Fair Value Measurements — ASC 820 defines fair value, establishes a framework for measuring fair value in accordance with generally accepted accounting principles and expands disclosures about fair value measurements. ASC 820-10-20 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants.

ASC 825 Financial Instruments (“ASC 825”) permits an entity to measure certain financial assets and financial liabilities at fair value with changes in fair value recognized in earnings each period. The Company has not elected to use the fair value option permitted under ASC 825 for any of its financial assets and financial liabilities that are not already recorded at fair value.

Determination of Fair Value — The Company generally uses quoted market prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access to determine fair value, and classifies such items in Level 1. Fair values determined by Level 2 inputs utilize inputs other than quoted market prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted market prices in active markets for similar assets or liabilities, and inputs other than quoted market prices that are observable for the asset or liability. Level 3 inputs are unobservable inputs for the asset or liability, and include situations where there is little, if any, market activity for the asset or liability.

If quoted market prices are not available, fair value is based upon internally developed valuation techniques that use, where possible, current market-based or independently sourced market parameters, such as interest rates, currency exchange rates, etc. Assets or liabilities valued using such internally generated valuation techniques are classified according to the lowest level input or value driver that is significant to the valuation. Thus, an item may be classified in Level 3 even though there may be some significant inputs that are readily observable.

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.

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.

Embedded Derivatives — The Company uses significant unobservable inputs to determine the fair value of embedded derivatives, which are classified in Level 3 of the fair value hierarchy. These unobservable inputs include expected cash flows associated with the lease, currency exchange rates on the day of commencement, as well as forward currency exchange rates, the results of which are adjusted for credit risk. These items are classified in Level 3 of the fair value hierarchy. See Note 5, Financial Derivatives, for further information.

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 14, Stock-Based Compensation.

Contingent Consideration — The Company uses significant unobservable inputs to determine the fair value of contingent consideration, which is classified in Level 3 of the fair value hierarchy. The contingent consideration recorded related to the acquisition of Qelp B.V. and its subsidiary (together, known as “Qelp”) and liabilities assumed as part of the Clear Link Holdings, LLC (“Clearlink”) acquisition was recognized at fair value using a discounted cash flow methodology and a discount rate of approximately 14.0% and 10.0%, respectively.

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 as of March 31, 2018 (in thousands):


			Fair Value Measurements Using:
	Balance at		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	March 31, 2018		Level 1		Level 2		Level 3
Assets:
Foreign currency forward and option contracts ⁽¹⁾	$	1,239	$	-	$	1,239	$	-
Embedded derivatives ⁽¹⁾		43		-		-		43
Equity investments held in rabbi trust for the Deferred Compensation Plan ⁽²⁾		8,266		8,266		-		-
Debt investments held in rabbi trust for the Deferred Compensation Plan ⁽²⁾		3,407		3,407		-		-

	$	12,955	$	11,673	$	1,239	$	43

Liabilities:
Foreign currency forward and option contracts ⁽¹⁾	$	1,005	$	-	$	1,005	$	-
Embedded derivatives ⁽¹⁾		452		-		-		452

	$	1,457	$	-	$	1,005	$	452

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 as of December 31, 2017 (in thousands):


			Fair Value Measurements Using:
	Balance at		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	December 31, 2017		Level 1		Level 2		Level 3
Assets:
Foreign currency forward and option contracts⁽¹⁾	$	3,848	$	-	$	3,848	$	-
Embedded derivatives⁽¹⁾		52		-		-		52
Equity investments held in rabbi trust for the Deferred Compensation Plan⁽²⁾		8,094		8,094		-		-
Debt investments held in rabbi trust for the Deferred Compensation Plan⁽²⁾		3,533		3,533		-		-

	$	15,527	$	11,627	$	3,848	$	52

Liabilities:
Foreign currency forward and option contracts⁽¹⁾	$	256	$	-	$	256	$	-
Embedded derivatives⁽¹⁾		579		-		-		579

	$	835	$	-	$	256	$	579

⁽¹⁾ See Note 5, Financial Derivatives, for the classification in the accompanying Condensed Consolidated Balance Sheets.

⁽²⁾ Included in “Other current assets” in the accompanying Condensed Consolidated Balance Sheets. See Note 6, Investments Held in Rabbi Trust.

Reconciliations of Fair Value Measurements Categorized within Level 3 of the Fair Value Hierarchy

Embedded Derivatives in Lease Agreements

A rollforward of the net asset (liability) activity in the Company’s fair value of the embedded derivatives is as follows (in thousands):


	Three Months Ended March 31,
	2018			2017
Balance at the beginning of the period	$	(527	)	$	(555	)
Gains (losses) recognized in “Other income (expense), net”		87			139
Settlements		42			45
Effect of foreign currency		(11	)		(4	)

Balance at the end of the period	$	(409	)	$	(375	)

Change in unrealized gains (losses) included in “Other income (expense), net” related to embedded derivatives held at the end of the period	$	87		$	141

Contingent Consideration

A rollforward of the activity in the Company’s fair value of the contingent consideration (liability) is as follows (none in 2018) (in thousands):


	Three Months Ended March 31, 2017
Balance at the beginning of the period	$	(6,100	)
Imputed interest		(34	)
Fair value gain (loss) adjustments ⁽¹⁾		433
Settlements		126
Effect of foreign currency		(58	)

Balance at the end of the period	$	(5,633	)

Change in unrealized gains (losses) included in “General and administrative” related to contingent consideration outstanding at the end of the period	$	-

⁽¹⁾ Included in “General and administrative” costs in the accompanying Condensed Consolidated Statement of Operations.

The Company recorded a fair value gain of $0.4 million in “General and administrative” during the three months ended March 31, 2017 to the Clearlink contingent consideration upon settlement of one of the contingent consideration liabilities. All outstanding Clearlink contingent consideration liabilities were paid prior to December 31, 2017.

The Company paid $4.4 million in May 2017 to settle the outstanding Qelp contingent consideration obligation.

The Company accreted interest expense each period using the effective interest method until the contingent consideration reached the estimated future value. Interest expense related to the contingent consideration was included in “Interest (expense)” in the accompanying Condensed Consolidated Statement of Operations for the three months ended March 31, 2017.

Non-Recurring Fair Value

Certain assets, under certain conditions, are measured at fair value on a nonrecurring basis utilizing Level 3 inputs, including goodwill, other intangible assets, other long-lived assets and equity method investments. 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 March 31, 2018 and December 31, 2017.

The following table summarizes the total impairment losses related to nonrecurring fair value measurements of certain assets (no liabilities) subject to the requirements of ASC 820 (in thousands):


	Total Impairment (Loss)
	Three Months Ended March 31,
	2018			2017
Americas:
Property and equipment, net	$	(3,526	)	$	(202	)

In connection with the closure of certain under-utilized customer contact management centers in the U.S. and Canada, the Company recorded an impairment charge of $3.5 million related to leasehold improvements, equipment, furniture and fixtures which were not recoverable during the three months ended March 31, 2018.

The Company recorded an impairment charge of $0.2 million related to the write-down of a vacant and unused parcel of land in the U.S. to its estimated fair value during the three months ended March 31, 2017.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Goodwill and Intangible Assets

3 Months Ended

Mar. 31, 2018

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

Note 4. Goodwill and Intangible Assets

Intangible Assets

The following table presents the Company’s purchased intangible assets as of March 31, 2018 (in thousands):


	Gross Intangibles		Accumulated Amortization			Net Intangibles		Weighted Average Amortization Period (years)
Intangible assets subject to amortization:
Customer relationships	$	170,550	$	(98,417	)	$	72,133		10
Trade names and trademarks		14,141		(9,228	)		4,913		7
Non-compete agreements		1,820		(1,204	)		616		3
Content library		556		(556	)		-		2
Proprietary software		1,040		(620	)		420		4
Intangible assets not subject to amortization:
Domain names		65,541		-			65,541		N/A

	$	253,648	$	(110,025	)	$	143,623		5

The following table presents the Company’s purchased intangible assets as of December 31, 2017 (in thousands):


	Gross Intangibles		Accumulated Amortization			Net Intangibles		Weighted Average Amortization Period (years)
Intangible assets subject to amortization:
Customer relationships	$	170,853	$	(95,175	)	$	75,678		10
Trade names and trademarks		14,138		(8,797	)		5,341		7
Non-compete agreements		1,820		(1,052	)		768		3
Content library		542		(542	)		-		2
Proprietary software		1,040		(585	)		455		4
Intangible assets not subject to amortization:
Domain names		58,035		-			58,035		N/A

	$	246,428	$	(106,151	)	$	140,277		6

The Company’s estimated future amortization expense for the succeeding years relating to the purchased intangible assets resulting from acquisitions completed prior to March 31, 2018 is as follows (in thousands):


Years Ending December 31,	Amount
2018 (remaining nine months)	$	10,925
2019		14,083
2020		11,405
2021		6,849
2022		5,739
2023		4,882
2024 and thereafter		24,199

Goodwill

Changes in goodwill for the three months ended March 31, 2018 consist of the following (in thousands):


	January 1, 2018		Acquisition		Effect of Foreign Currency			March 31, 2018
Americas	$	258,496	$	-	$	(1,589	)	$	256,907
EMEA		10,769		-		260			11,029

	$	269,265	$	-	$	(1,329	)	$	267,936

Changes in goodwill for the year ended December 31, 2017 consist of the following (in thousands):


	January 1, 2017		Acquisition		Effect of Foreign Currency		December 31, 2017
Americas	$	255,842	$	390	$	2,264	$	258,496
EMEA		9,562		-		1,207		10,769

	$	265,404	$	390	$	3,471	$	269,265

The Company performs its annual goodwill impairment test during the third quarter, or more frequently if indicators of impairment exist.

For the annual goodwill impairment test, the Company elected to forgo the option to first assess qualitative factors and performed its annual quantitative goodwill impairment test as of July 31, 2017. Under ASC 350, the carrying value of assets is calculated at the reporting unit level. The quantitative assessment of goodwill includes comparing a reporting unit’s calculated fair value to its carrying value. The calculation of fair value requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth, the useful life over which cash flows will occur and determination of the Company’s weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. If the fair value of the reporting unit is less than its carrying value, goodwill is considered impaired and an impairment loss is recognized for the amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

The process of evaluating the fair value of the reporting units is highly subjective and requires significant judgment and estimates as the reporting units operate in a number of markets and geographical regions. The Company considered the income and market approaches to determine its best estimates of fair value, which incorporated the following significant assumptions:

•

Revenue projections, including revenue growth during the forecast periods;

•

EBITDA margin projections over the forecast periods;

•

Estimated income tax rates;

•

Estimated capital expenditures; and

•

Discount rates based on various inputs, including the risks associated with the specific reporting units as well as their revenue growth and EBITDA margin assumptions.

As of July 31, 2017, the Company concluded that goodwill was not impaired for all six of its reporting units with goodwill, based on generally accepted valuation techniques and the significant assumptions outlined above. While the fair values of four of the six reporting units were substantially in excess of their carrying value, the Qelp and Clearlink reporting units’ fair value exceeded the respective carrying value, although not substantially.

The Qelp and Clearlink reporting units are at risk of future impairment if projected operating results are not met or other inputs into the fair value measurement change. However, as of March 31, 2018, the Company believes there were no indicators of impairment related to Qelp’s $11.0 million of goodwill or Clearlink’s $71.0 million of goodwill.

- Definition

The entire disclosure for the aggregate amount of goodwill and a description of intangible assets, which may include (a) for amortizable intangible assets (also referred to as finite-lived intangible assets), the carrying amount, the amount of any significant residual value, and the weighted-average amortization period, (b) for intangible assets not subject to amortization (also referred to as indefinite-lived intangible assets), the carrying amount, and (c) the amount of research and development assets acquired and written off in the period, including the line item in the income statement in which the amounts written off are aggregated, if not readily apparent from the income statement. Also discloses (a) for amortizable intangibles assets in total and by major class, the gross carrying amount and accumulated amortization, the total amortization expense for the period, and the estimated aggregate amortization expense for each of the five succeeding fiscal years, (b) for intangible assets not subject to amortization the carrying amount in total and by major class, and (c) for goodwill, in total and for each reportable segment, the changes in the carrying amount of goodwill during the period (including the aggregate amount of goodwill acquired, the aggregate amount of impairment losses recognized, and the amount of goodwill included in the gain (loss) on disposal of a reporting unit). If any part of goodwill has not been allocated to a reportable segment, discloses the unallocated amount and the reasons for not allocating. For each impairment loss recognized related to an intangible asset (excluding goodwill), discloses: (a) a description of the impaired intangible asset and the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method for determining fair value, (c) the caption in the income statement or the statement of activities in which the impairment loss is aggregated, and (d) the segment in which the impaired intangible asset is reported. For each goodwill impairment loss recognized, discloses: (a) a description of the facts and circumstances leading to the impairment, (b) the amount of the impairment loss and the method of determining the fair value of the associated reporting unit, and (c) if a recognized impairment loss is an estimate not finalized and the reasons why the estimate is not final. May also disclose the nature and amount of any significant adjustments made to a previous estimate of an impairment loss.

+ References + Details

Financial Derivatives

3 Months Ended

Mar. 31, 2018

Derivative Instruments and Hedging Activities Disclosure [Abstract]

Financial Derivatives

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 hedge the exposure to variability in the cash flows of a specific asset or liability, or of a forecasted transaction that is attributable to changes in exchange rates.

The deferred gains (losses) and related taxes on the Company’s cash flow hedges recorded in “Accumulated other comprehensive income (loss)” (“AOCI”) in the accompanying Condensed Consolidated Balance Sheets are as follows (in thousands):


	March 31, 2018			December 31, 2017
Deferred gains (losses) in AOCI	$	(466	)	$	2,550
Tax on deferred gains (losses) in AOCI		44			(79	)

Deferred gains (losses) in AOCI, net of taxes	$	(422	)	$	2,471

Deferred gains (losses) expected to be reclassified to “Revenues” from AOCI during the next twelve months	$	(371	)

Deferred gains (losses) and other future reclassifications from AOCI will fluctuate with movements in the underlying market price of the forward contracts and options.

Non-Designated Hedges

Foreign Currency Forward Contracts – The Company also periodically enters into foreign currency hedge contracts that are not designated as hedges as defined under ASC 815. The purpose of these derivative instruments is to protect the Company’s interests against adverse foreign currency moves relating primarily to intercompany receivables and payables, and other assets and liabilities that are denominated in currencies other than the Company’s subsidiaries’ functional currencies. These contracts generally do not exceed 180 days in duration.

Embedded Derivatives – The Company enters into certain lease agreements which require payments not denominated in the functional currency of any substantial party to the agreements. The foreign currency component of these contracts meets the criteria under ASC 815 as embedded derivatives. The Company has determined that the embedded derivatives are not clearly and closely related to the economic characteristics and risks of the host contracts (lease agreements), and separate, stand-alone instruments with the same terms as the embedded derivative instruments would otherwise qualify as derivative instruments, thereby requiring separation from the lease agreements and recognition at fair value. Such instruments do not qualify for hedge accounting under ASC 815.

The Company had the following outstanding foreign currency forward contracts and options, and embedded derivatives (in thousands):

March 31, 2018

December 31, 2017

Contract Type

Notional

Amount in
USD

Settle
Through
Date

Notional
Amount
in USD

Settle
Through
Date

Cash flow hedges:

Options:

US Dollars/Philippine Pesos

$

92,500

March 2019

$

78,000

December 2018

Forwards:

US Dollars/Philippine Pesos

34,000

June 2019

3,000

June 2018

US Dollars/Costa Rican Colones

83,000

June 2019

70,000

March 2019

Euros/Hungarian Forints

2,747

December 2018

3,554

December 2018

Euros/Romanian Leis

10,792

December 2018

13,977

December 2018

Non-designated hedges:

Forwards

9,100

June 2018

9,253

March 2018

Embedded derivatives

13,960

April 2030

13,519

April 2030

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 $1.2 million and $3.8 million as of March 31, 2018 and December 31, 2017, 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 $0.6 million and $3.6 million as of March 31, 2018 and December 31, 2017, respectively, and liability positions of $0.4 million and $0 as of March 31, 2018 and December 31, 2017, 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.

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
	March 31, 2018		December 31, 2017
Derivatives designated as cash flow hedging instruments under ASC 815:
Foreign currency forward and option contracts ⁽¹⁾	$	1,239	$	3,604

Derivatives not designated as hedging instruments under ASC 815:
Foreign currency forward contracts ⁽¹⁾		-		244
Embedded derivatives ⁽¹⁾		8		9
Embedded derivatives ⁽²⁾		35		43

Total derivative assets	$	1,282	$	3,900


	Derivative Liabilities
	March 31, 2018		December 31, 2017
Derivatives designated as cash flow hedging instruments under ASC 815:
Foreign currency forward and option contracts ⁽³⁾	$	701	$	175
Foreign currency forward and option contracts ⁽⁴⁾		95		81

		796		256

Derivatives not designated as hedging instruments under ASC 815:
Foreign currency forward contracts ⁽³⁾		209		-
Embedded derivatives ⁽³⁾		133		189
Embedded derivatives ⁽⁴⁾		319		390

Total derivative liabilities	$	1,457	$	835

⁽¹⁾ Included in “Other current assets” in the accompanying Condensed Consolidated Balance Sheets.

⁽²⁾ Included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets.

⁽³⁾ Included in “Other accrued expenses and current liabilities” in the accompanying Condensed Consolidated Balance Sheets.

⁽⁴⁾ Included in “Other long-term liabilities” in the accompanying Condensed Consolidated Balance Sheets.

The following table presents the effect of the Company’s derivative instruments included in the accompanying Condensed Consolidated Financial Statements for the three months ended March 31, 2018 and 2017 (in thousands):


	Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)						Gain (Loss) Reclassified From AOCI Into “Revenues” (Effective Portion)					Gain (Loss) Recognized in “Revenues” on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	March 31,						March 31,					March 31,
	2018			2017			2018		2017			2018		2017
Derivatives designated as cash flow hedging instruments under ASC 815:
Foreign currency forward and option contracts	$	(2,696	)	$	(234	)	$	237	$	(760	)	$	6	$	-

Derivatives designated as net investment hedging instruments under ASC 815:
Foreign currency forward contracts		-			(599	)		-		-			-		-

	$	(2,696	)	$	(833	)	$	237	$	(760	)	$	6	$	-

The following table presents the gains (losses) recognized in “Other income (expense), net” of the Company’s derivative instruments included in the accompanying Condensed Consolidated Financial Statements for the three months ended March 31, 2018 and 2017 (in thousands):


	Three Months Ended March 31,
	2018			2017
Derivatives not designated as hedging instruments under ASC 815:
Foreign currency forward contracts	$	(1,169	)	$	(839	)
Embedded derivatives		87			139

	$	(1,082	)	$	(700	)

Investments Held in Rabbi Trust

3 Months Ended

Mar. 31, 2018

Investments, Debt and Equity Securities [Abstract]

Investments Held in Rabbi Trust

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):


	March 31, 2018				December 31, 2017
	Cost		Fair Value		Cost		Fair Value
Mutual funds	$	8,221	$	11,673	$	8,096	$	11,627

The mutual funds held in rabbi trust were 71% equity-based and 29% debt-based as of March 31, 2018. Net investment income (losses), included in “Other income (expense), net” in the accompanying Condensed Consolidated Statements of Operations consists of the following (in thousands):


	Three Months Ended March 31,
	2018			2017
Net realized gains (losses) from sale of trading securities	$	5		$	-
Dividend and interest income		25			14
Net unrealized holding gains (losses)		(55	)		393

Net investment income (losses)	$	(25	)	$	407

Deferred Grants

3 Months Ended

Mar. 31, 2018

Text Block [Abstract]

Deferred Grants

Note 7. Deferred Grants

Deferred grants, net of accumulated amortization, consist of the following (in thousands):


	March 31, 2018			December 31, 2017
Property grants	$	2,714		$	2,843
Lease grants		496			507
Employment grants		59			61

Total deferred grants		3,269			3,411
Less: Lease grants - short-term ⁽¹⁾		(121	)		(117	)
Less: Employment grants - short-term ⁽¹⁾		(59	)		(61	)

Total long-term deferred grants	$	3,089		$	3,233

⁽¹⁾ Included in “Other accrued expenses and current liabilities” in the accompanying Condensed Consolidated Balance Sheets.

Borrowings

3 Months Ended

Mar. 31, 2018

Debt Disclosure [Abstract]

Borrowings

Note 8. Borrowings

On May 12, 2015, the Company entered into a $440 million revolving credit facility (the “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 Credit Agreement is subject to certain borrowing limitations and includes certain customary financial and restrictive covenants.

The 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.

The Credit Agreement matures on May 12, 2020, and had outstanding borrowings of $100.0 million and $275.0 million at March 31, 2018 and December 31, 2017, respectively, included in “Long-term debt” in the accompanying Condensed Consolidated Balance Sheets.

Borrowings under the Credit Agreement bear interest at the rates set forth in the Credit Agreement. In addition, the Company is required to pay certain customary fees, including a commitment fee determined quarterly based on the Company’s leverage ratio and due quarterly in arrears as calculated on the average unused amount of the Credit Agreement.

The 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 Credit Agreement, which is deferred and amortized over the term of the loan, along with the deferred loan fees of $0.4 million related to the previous credit agreement.

The following table presents information related to our credit agreements (dollars in thousands):


	Three Months Ended March 31,
	2018			2017
Average daily utilization	$	121,389		$	267,000
Interest expense ^{(1), (2)}	$	1,001		$	1,443
Weighted average interest rate ⁽²⁾		3.4	%		2.2	%

⁽¹⁾ Excludes the amortization of deferred loan fees.

⁽²⁾ Includes the commitment fee.

On January 12, 2018, the Company repaid $175.0 million of long-term debt outstanding under its Credit Agreement, primarily using funds repatriated from its foreign subsidiaries, resulting in a remaining outstanding debt balance of $100.0 million.

Accumulated Other Comprehensive Income (Loss)

3 Months Ended

Mar. 31, 2018

Equity [Abstract]

Accumulated Other Comprehensive Income (Loss)

Note 9. 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 Gain (Loss) on Cash Flow Hedging Instruments			Unrealized Actuarial Gain (Loss) Related to Pension Liability			Unrealized Gain (Loss) on Post Retirement Obligation			Total
Balance at January 1, 2017	$	(72,393	)	$	6,266		$	(2,225	)	$	1,125		$	200		$	(67,027	)
Pre-tax amount		36,101			(8,352	)		2,276			527			(30	)		30,522
Tax (provision) benefit		-			3,132			(54	)		(18	)		-			3,060
Reclassification of (gain) loss to net income		-			-			2,444			(53	)		(50	)		2,341
Foreign currency translation		(23	)		-			30			(7	)		-			-

Balance at December 31, 2017		(36,315	)		1,046			2,471			1,574			120			(31,104	)
Pre-tax amount		144			-			(2,690	)		-			-			(2,546	)
Tax (provision) benefit		-			-			126			3			-			129
Reclassification of (gain) loss to net income		-			-			(250	)		(18	)		(10	)		(278	)
Foreign currency translation		147			-			(79	)		(68	)		-			-

Balance at March 31, 2018	$	(36,024	)	$	1,046		$	(422	)	$	1,491		$	110		$	(33,799	)

The following table summarizes the amounts reclassified to net income from accumulated other comprehensive income (loss) and the associated line item in the accompanying Condensed Consolidated Statements of Operations (in thousands):


	Three Months Ended March 31,					Statements of Operations
	2018		2017			Location
Gain (Loss) on Cash Flow Hedging Instruments: ⁽¹⁾
Pre-tax amount		243		(760	)		Revenues
Tax (provision) benefit		7		41			Income taxes

Reclassification to net income		250		(719	)
Actuarial Gain (Loss) Related to Pension Liability: ⁽²⁾
Pre-tax amount	$	15	$	10			Other income (expense), net
Tax (provision) benefit		3		-			Income taxes

Reclassification to net income		18		10
Gain (Loss) on Post Retirement Obligation:^(2),(3)
Reclassification to net income		10		12			Other income (expense), net

Total reclassification of gain (loss) to net income	$	278	$	(697	)

⁽¹⁾ See Note 5, Financial Derivatives, for further information.

⁽²⁾ See Note 13, Defined Benefit Pension Plan and Postretirement Benefits, for further information.

⁽³⁾ No related tax (provision) benefit.

As discussed in Note 10, Income Taxes, for periods prior to December 31, 2017, any remaining outside basis differences associated with the Company’s investments in its foreign subsidiaries are considered to be indefinitely reinvested and no provision for income taxes on those earnings or translation adjustments has been provided.

Income Taxes	3 Months Ended
Income Taxes	Mar. 31, 2018
Income Tax Disclosure [Abstract]
Income Taxes	Note 10. Income Taxes The Company’s effective tax rates were 18.3% and 26.1% for the three months ended March 31, 2018 and 2017, respectively. The decrease in the effective tax rate is due to a benefit of $0.6 million from the reduction in the U.S. federal corporate tax rate from 35% to 21% as a result of the 2017 Tax Reform Act. This was partially offset by a $0.6 million decrease in the amount of excess tax benefits from stock-based compensation recognized in March 31, 2018 as compared to March 31, 2017. For the three months ended March 31, 2018 and 2017, the Company recognized a discrete tax benefit related to the excess tax benefits from stock-based compensation of $0.3 million and $0.9 million, respectively. The decrease in the effective tax rate was also significantly affected by shifts in earnings among the various jurisdictions in which the Company operates. Several additional factors, none of which are individually material, also impacted the rate. The difference between the Company’s effective tax rate as compared to the U.S. statutory federal tax rate of 21.0% was primarily due to the aforementioned factors as well as the recognition of tax benefits resulting from foreign tax rate differentials, income earned in certain tax holiday jurisdictions and tax credits, partially offset by the tax impact of permanent differences, state income and foreign withholding. The 2017 Tax Reform Act made significant changes to the Internal Revenue Code, including, but not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a participation exemption regime, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. The Company estimated its provision for income taxes in accordance with the 2017 Tax Reform Act and guidance available upon enactment and as a result recorded $32.7 million as additional income tax expense in the fourth quarter of 2017, the period in which the legislation was signed into law. The $32.7 million estimate includes the provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings of $32.7 million based on cumulative foreign earnings of $531.8 million and $1.0 million of foreign withholding taxes on certain anticipated distributions. The provisional tax expense was partially offset by a provisional benefit of $1.0 million related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future. The Company has not recorded any adjustments to this provisional amount as of March 31, 2018. Prior to December 31, 2017, no additional income taxes have been provided for any remaining outside basis differences inherent in the Company’s investments in its foreign subsidiaries as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining outside basis difference in these entities is not practicable due to the inherent complexity of the multi-national tax environment in which the Company operates. On December 22, 2017, the SEC issued SAB 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Reform Act. In accordance with SAB 118, the Company has determined that the deferred tax benefit recorded in connection with the remeasurement of certain deferred tax assets and liabilities and the current tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings was a provisional amount and a reasonable estimate at March 31, 2018 and December 31, 2017. Additional work is necessary for a more detailed analysis of the Company’s deferred tax assets and liabilities and its historical foreign earnings as well as potential correlative adjustments. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of identification, but no later than one year from the enactment date. The 2017 Tax Reform Act instituted a number of new provisions effective January 1, 2018, including GILTI, Foreign Derived Intangible Income (“FDII”) and Base Erosion and Anti-Abuse Tax (“BEAT”). The Company made a reasonable estimate of the impact of each of these provisions of the 2017 Tax Reform Act on its effective tax rate for the three months ended March 31, 2018 and determined that the resulting impact was not material. The Company will continue to refine its provisional estimates related to the GILTI, FDII and BEAT rules as additional information is made available. 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. As of June 30, 2017, the Company determined that all material aspects of the Canadian audit were effectively settled pursuant to ASC 740. As a result, the Company recognized an income tax benefit of $1.2 million, net of the U.S. tax impact, at that time and the deposits were applied against the anticipated liability. With the effective settlement of the Canadian audit, the Company has no significant tax jurisdictions under audit; however, the Company is currently under audit in several tax jurisdictions. The Company believes it is adequately reserved for the remaining audits and their resolution is not expected to have a material impact on its financial conditions and results of operations.

Earnings Per Share

3 Months Ended

Mar. 31, 2018

Earnings Per Share [Abstract]

Earnings Per Share

Note 11. Earnings Per Share

Basic earnings per share are based on the weighted average number of common shares outstanding during the periods. Diluted earnings per share includes the weighted average number of common shares outstanding during the respective periods and the further dilutive effect, if any, from stock appreciation rights, restricted stock, restricted stock units and shares held in rabbi trust using the treasury stock method.

The numbers of shares used in the earnings per share computation are as follows (in thousands):


	Three Months Ended March 31,
	2018		2017
Basic:
Weighted average common shares outstanding		41,939		41,654
Diluted:
Dilutive effect of stock appreciation rights, restricted stock, restricted stock units and shares held in rabbi trust		293		251

Total weighted average diluted shares outstanding		42,232		41,905

Anti-dilutive shares excluded from the diluted earnings per share calculation		9		9

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”). On March 16, 2016, the Board authorized an increase of 5.0 million shares to the 2011 Share Repurchase Program for a total of 10.0 million shares. A total of 5.3 million shares have been repurchased under the 2011 Share Repurchase Program since inception. The shares are purchased, from time to time, through open market purchases or in negotiated private transactions, and the purchases are based on factors, including but not limited to, the stock price, management discretion and general market conditions. The 2011 Share Repurchase Program has no expiration date.

There were no shares repurchased under the Company’s share repurchase program during the three months ended March 31, 2018 and 2017.

Commitments and Loss Contingency

3 Months Ended

Mar. 31, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Loss Contingency

Note 12. Commitments and Loss Contingency

Commitments

During the three months ended March 31, 2018, 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 March 31, 2018 (in thousands):


	Amount
2018 (remaining nine months)	$	336
2019		2,779
2020		2,887
2021		2,949
2022		2,976
2023		2,524
2024 and thereafter		6,778

Total minimum payments required	$	21,229

During the three months ended March 31, 2018, 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 generally are not cancelable, range from one to five year periods and may contain fixed or minimum annual commitments. Certain of these agreements allow for renegotiation of the minimum annual commitments. The following is a schedule of the future minimum purchases remaining under the agreements as of March 31, 2018 (in thousands):


	Amount
2018 (remaining nine months)	$	6,863
2019		3,270
2020		253
2021		-
2022		-
2023		-
2024 and thereafter		-

Total minimum payments required	$	10,386

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, has provided adequate accruals related to those matters such that the ultimate outcome will not have a material adverse effect on the Company’s financial position or results of operations.

Defined Benefit Pension Plan and Postretirement Benefits

3 Months Ended

Mar. 31, 2018

Retirement Benefits [Abstract]

Defined Benefit Pension Plan and Postretirement Benefits

Note 13. Defined Benefit Pension Plan and Postretirement Benefits

Defined Benefit Pension Plans

The following table provides information about the net periodic benefit cost for the Company’s pension plans (in thousands):


	Three Months Ended March 31,
	2018			2017
Service cost	$	114		$	125
Interest cost		50			49
Recognized actuarial (gains)		(15	)		(10	)

Net periodic benefit cost	$	149		$	164

The Company’s service cost for its qualified pension plans was included in “Direct salaries and related costs” and “General and administrative” costs in its Condensed Consolidated Statement of Operations for the three months ended March 31, 3018 and 2017. The remaining components of net periodic benefit cost were included in “Other income (expense), net” in the Company’s Condensed Consolidated Statement of Operations for the three months ended March 31, 2018 and 2017. See Note 1, Overview and Basis of Presentation, for further information related to the adoption of ASU 2016-18.

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 March 31,
	2018		2017
401(k) plan contributions	$	459	$	311

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):


	March 31, 2018		December 31, 2017
Postretirement benefit obligation	$	14	$	15
Unrealized gains (losses) in AOCI ⁽¹⁾		110		120

⁽¹⁾Unrealized gains (losses) are due to changes in discount rates related to the postretirement obligation.

Stock-Based Compensation

3 Months Ended

Mar. 31, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation

Note 14. 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) and income tax benefits related to the stock-based compensation (in thousands):


	Three Months Ended March 31,
	2018			2017
Stock-based compensation (expense) ⁽¹⁾	$	(2,077	)	$	(2,471	)
Income tax benefit ⁽²⁾		498			951

⁽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.

There were no capitalized stock-based compensation costs as of March 31, 2018 and December 31, 2017.

Beginning January 1, 2017, as a result of the adoption of ASU 2016-09, Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting (“ASU 2016-09”), the Company began accounting for forfeitures as they occur, rather than estimating expected forfeitures. The net cumulative effect of this change was recognized as a $0.2 million reduction to retained earnings as of January 1, 2017. Additionally, excess tax benefits (deficiencies) from stock compensation are included in “Income taxes” in the accompanying Condensed Consolidated Statements of Operations subsequent to the adoption of ASU 2016-09.

2011 Equity Incentive Plan — The Company’s Board of Directors (the “Board”) adopted the Sykes Enterprises, Incorporated 2011 Equity Incentive Plan (the “2011 Plan”) on March 23, 2011, as amended on May 11, 2011 to reduce the number of shares of common stock available to 4.0 million shares. The 2011 Plan was approved by the shareholders at the May 2011 Annual Shareholders’ Meeting. The 2011 Plan replaced and superseded the Company’s 2001 Equity Incentive Plan (the “2001 Plan”), which expired on March 14, 2011. The outstanding awards granted under the 2001 Plan will remain in effect until their exercise, expiration or termination. The 2011 Plan permits the grant of restricted stock, stock appreciation rights, stock options and other stock-based awards to certain employees of the Company, members of the Company’s Board 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 SARs activity as of March 31, 2018 and for the three 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, 2018		734		$	-
Granted		-		$	-
Exercised		(43	)	$	-
Forfeited or expired		-		$	-

Outstanding at March 31, 2018		691		$	-		8.3	$	597

Vested or expected to vest at March 31, 2018		691		$	-		8.3	$	597

Exercisable at March 31, 2018		363		$	-		7.8	$	597

The following table summarizes information regarding SARs granted and exercised (in thousands, except per SAR amounts):


	Three Months Ended March 31,
	2018		2017
Number of SARs granted		-		-
Weighted average grant-date fair value per SAR	$	-	$	-
Intrinsic value of SARs exercised	$	305	$	306
Fair value of SARs vested	$	1,950	$	1,846

The following table summarizes nonvested SARs activity as of March 31, 2018 and for the three months then ended:


Nonvested Stock Appreciation Rights	Shares (000s)			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2018		600		$	6.88
Granted		-		$	-
Vested		(272	)	$	7.16
Forfeited or expired		-		$	-

Nonvested at March 31, 2018		328		$	6.64

As of March 31, 2018, there was $2.1 million of total unrecognized compensation cost, net of actual forfeitures, related to nonvested SARs granted under the 2011 Plan. This cost is expected to be recognized over a weighted average period of 1.3 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 actual forfeitures, based on the fair value (which approximates the current market price) of the restricted shares (and RSUs) on the date of grant ratably over the requisite service period based on the probability of achieving the performance goals.

Changes in the probability of achieving the performance goals from period to period will result in corresponding changes in compensation expense. The employment-based restricted shares currently outstanding vest one-third on each of the first three anniversaries of the date of grant, provided the participant is employed by the Company on such date.

The following table summarizes nonvested restricted shares/RSUs activity as of March 31, 2018 and for the three months then ended:


Nonvested Restricted Shares and RSUs	Shares (000s)			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2018		1,109		$	28.50
Granted		-		$	-
Vested		(323	)	$	25.78
Forfeited or expired		(41	)	$	25.78

Nonvested at March 31, 2018		745		$	29.83

The following table summarizes information regarding restricted shares/RSUs granted and vested (in thousands, except per restricted share/RSU amounts):


	Three Months Ended March 31,
	2018		2017
Number of restricted shares/RSUs granted		-		-
Weighted average grant-date fair value per restricted share/RSU	$	-	$	-
Fair value of restricted shares/RSUs vested	$	8,342	$	6,868

As of March 31, 2018, there was $19.9 million of total unrecognized compensation cost, net of actual 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 1.5 years.

Non-Employee Director Fee Plan — The Company’s 2004 Non-Employee Director Fee Plan (the “2004 Fee Plan”), as 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. The annual cash awards for the Chairpersons of the Compensation Committee, Finance Committee and Nominating and Corporate Governance Committee are $15,000, $12,500 and $12,500, respectively, and all other members of such committees are entitled to an annual cash award of $7,500.

The 2004 Fee Plan expired in May 2014, prior to the 2014 annual shareholders’ 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, except the amounts of cash and equity grants shall be determined annually by the Board and that the stock portion of such compensation would be issued under the 2011 Plan.

At the Board’s regularly scheduled meeting on December 10, 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 shareholders’ 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.

At the Board’s regularly scheduled meeting on December 6, 2016, upon the recommendation of the Compensation Committee, the Board determined that the amount of the cash compensation payable to non-employee directors beginning on the date of the 2017 annual shareholders’ meeting would be increased by $15,000 per year to a total of $70,000.

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. Directors who are executive officers of the Company receive no compensation for service as members of either the Board of Directors or any committees of the Board.

The following table summarizes nonvested common stock share award activity as of March 31, 2018 and for the three months then ended:


Nonvested Common Stock Share Awards	Shares (000s)			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2018		8		$	32.21
Granted		-		$	-
Vested		(7	)	$	32.74
Forfeited or expired		-		$	-

Nonvested at March 31, 2018		1		$	29.36

The following table summarizes information regarding common stock share awards granted and vested (in thousands, except per share award amounts):


	Three Months Ended March 31,
	2018		2017
Number of share awards granted		-		-
Weighted average grant-date fair value per share award	$	-	$	-
Fair value of share awards vested	$	210	$	220

As of March 31, 2018, there was less than $0.1 million of total unrecognized compensation cost, net of actual 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 less than one year.

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 15, 2017, effective January 1, 2018. Eligibility is limited to a select group of key management and employees who are expected to receive an annualized base salary (which will not take into account bonuses or commissions) that exceeds the amount taken into account for purposes of determining highly compensated employees under Section 414(q) of the Internal Revenue Code of 1986 based on the current year’s base salary and applicable dollar amounts. The Deferred Compensation Plan provides participants with the ability to defer between 1% and 80% of their compensation (between 1% and 100% prior to June 30, 2016, the effective date of the first amendment) 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 participants on a quarterly basis up to a total of $12,000 per year for the president, chief executive officer and executive vice presidents, $7,500 per year for senior vice presidents, global vice presidents and vice presidents, and, effective January 1, 2017, $5,000 per year for all other participants (there was no match for other participants prior to January 1, 2017, the effective date of the second amendment). Matching contributions and the associated earnings vest over a seven-year service period. Vesting will be accelerated in the event of the participant’s death or disability, a change in control or retirement (defined as separate from service after age 65). In the event of a distribution of benefits as a result of a change in control of the Company, the Company will increase the benefit by an amount sufficient to offset the income tax obligations created by the distribution of benefits. Deferred compensation amounts used to pay benefits, which are held in a rabbi trust, include investments in various mutual funds and shares of the Company’s common stock (see Note 6, Investments Held in Rabbi Trust).

As of March 31, 2018 and December 31, 2017, liabilities of $11.6 million and $11.6 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 $2.1 million and $2.1 million as of March 31, 2018 and December 31, 2017, respectively, is included in “Treasury stock” in the accompanying Condensed Consolidated Balance Sheets.

The following table summarizes nonvested common stock activity as of March 31, 2018 and for the three months then ended:


Nonvested Common Stock	Shares (000s)			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2018		3		$	29.56
Granted		5		$	28.94
Vested		(4	)	$	28.99
Forfeited or expired		-		$	-

Nonvested at March 31, 2018		4		$	29.34

The following table summarizes information regarding shares of common stock granted and vested (in thousands, except per common stock amounts):


	Three Months Ended March 31,
	2018		2017
Number of shares of common stock granted		5		7
Weighted average grant-date fair value per common stock	$	28.94	$	29.40
Fair value of common stock vested	$	117	$	162
Cash used to settle the obligation	$	249	$	9

As of March 31, 2018, there was $0.1 million of total unrecognized compensation cost, net of actual 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 3.7 years.

Segments and Geographic Information

3 Months Ended

Mar. 31, 2018

Segment Reporting [Abstract]

Segments and Geographic Information

Note 15. 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 engagement solutions (with an emphasis on inbound technical support, digital support and demand generation, and customer service) and technical staffing and (2) EMEA, which includes Europe, the Middle East and Africa, and provides outsourced customer engagement 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 engagement needs.

Information about the Company’s reportable segments is as follows (in thousands):


	Americas			EMEA			Other ⁽¹⁾			Consolidated
Three Months Ended March 31, 2018:
Revenues	$	340,721		$	73,627		$	23		$	414,371
Percentage of revenues		82.2	%		17.8	%		0.0	%		100.0	%
Depreciation, net	$	12,683		$	1,411		$	742		$	14,836
Amortization of intangibles	$	3,992		$	221		$	-		$	4,213
Income (loss) from operations	$	25,864		$	4,639		$	(16,219	)	$	14,284
Total other income (expense), net								(880	)		(880	)
Income taxes								(2,456	)		(2,456	)

Net income										$	10,948

Three Months Ended March 31, 2017:
Revenues	$	320,931		$	63,067		$	16		$	384,014
Percentage of revenues		83.6	%		16.4	%		0.0	%		100.0	%
Depreciation, net	$	11,468		$	1,186		$	694		$	13,348
Amortization of intangibles	$	4,978		$	253		$	-		$	5,231
Income (loss) from operations	$	37,972		$	5,580		$	(17,499)		$	26,053
Total other income (expense), net								(731	)		(731	)
Income taxes								(6,610	)		(6,610	)

Net income										$	18,712

⁽¹⁾ Other items (including corporate and other costs, other income and expense, and income taxes) are included for purposes of reconciling to the Company’s consolidated totals as shown in the tables above for the periods shown. Inter-segment revenues are not material to the Americas and EMEA segment results.

The Company’s reportable segments are evaluated regularly by its chief operating decision maker to decide how to allocate resources and assess performance. The chief operating decision maker evaluates performance based upon reportable segment revenue and income (loss) from operations. Because assets by segment are not reported to or used by the Company’s chief operating decision maker to allocate resources, or to assess performance, total assets by segment are not disclosed.

The following table represents a disaggregation of revenue from contracts with customers by geographic location for the three months ended March 31, 2018 and 2017, by the reportable segment for each category (in thousands):


	Three Months Ended March 31,
	2018		2017
Americas:
United States	$	171,446	$	153,643
The Philippines		60,086		58,540
Costa Rica		32,075		33,325
Canada		27,189		29,722
El Salvador		20,011		18,345
People’s Republic of China		9,348		9,260
Australia		7,702		6,649
Mexico		6,318		5,609
Other		6,546		5,838

Total Americas		340,721		320,931

EMEA:
Germany		24,175		20,438
Sweden		14,130		14,301
United Kingdom		13,347		9,735
Romania		8,136		6,393
Other		13,839		12,200

Total EMEA		73,627		63,067

Total Other		23		16

	$	414,371	$	384,014

Revenues are attributed to countries based on location of customer, except for revenues for The Philippines, Costa Rica, the People’s Republic of China and India which are primarily comprised of customers located in the U.S., but serviced by centers in those respective geographic locations.

Other Income (Expense)

3 Months Ended

Mar. 31, 2018

Other Income and Expenses [Abstract]

Other Income (Expense)

Note 16. Other Income (Expense)

Other income (expense), net consists of the following (in thousands):


	Three Months Ended March 31,
	2018			2017
Foreign currency transaction gains (losses)	$	1,448		$	1,179
Gains (losses) on derivative instruments not designated as hedges		(1,082	)		(700	)
Other miscellaneous income (expense)		(211	)		334

	$	155		$	813

Related Party Transactions	3 Months Ended
Related Party Transactions	Mar. 31, 2018
Related Party Transactions [Abstract]
Related Party Transactions	Note 17. Related Party Transactions In January 2008, the Company entered into a lease for a customer engagement 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 former 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. The Company paid $0.1 million to the landlord during both the three months ended March 31, 2018 and 2017 under the terms of the lease.

Overview and Basis of Presentation (Policies)

3 Months Ended

Mar. 31, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Business

Business — Sykes Enterprises, Incorporated and consolidated subsidiaries (“SYKES” or the “Company”) is a leading provider of multichannel demand generation and global customer engagement services. SYKES provides differentiated full lifecycle customer engagement solutions and services to Global 2000 companies and their end customers primarily within the communications, financial services, technology, transportation and leisure, healthcare, retail and other industries. SYKES primarily provides customer engagement solutions and services with an emphasis on inbound multichannel demand generation, customer service and technical support to its clients’ customers. Utilizing SYKES’ integrated onshore/offshore global delivery model, SYKES provides its services through multiple communication channels including phone, e-mail, social media, text messaging, chat and digital self-service. SYKES also provides various enterprise support services in the United States that include services for its clients’ internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, SYKES also provides fulfillment services, which includes 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.

2017 Tax Reform Act

In December 2017, the President of the United States (“U.S.”) signed into law the Tax Cuts and Jobs Act (the “2017 Tax Reform Act”). In general, the 2017 Tax Reform Act reduces the U.S. federal corporate tax rate from 35% to 21%, effective in 2018. The 2017 Tax Reform Act moves from a worldwide business taxation approach to a participation exemption regime. The 2017 Tax Reform Act also imposes base-erosion prevention measures on non-U.S. earnings of U.S. entities, as well as a one-time mandatory deemed repatriation tax on accumulated non-U.S. earnings which was recorded in the fourth quarter of 2017. The impact of the 2017 Tax Reform Act on the consolidated financial results began with the fourth quarter of 2017, the period of enactment. This impact, along with the transitional taxes discussed in Note 10, Income Taxes, is reflected in the Other segment.

Acquisition

On April 24, 2017, the Company entered into a definitive Asset Purchase Agreement (the “Purchase Agreement”) to acquire certain assets from a Global 2000 telecommunications services provider. The aggregate purchase price of $7.5 million was paid on May 31, 2017, using cash on hand, resulting in $6.0 million of property and equipment and $1.5 million of customer relationship intangibles (the “Telecommunications Asset acquisition”). The Purchase Agreement contains customary representations and warranties, indemnification obligations and covenants. The Telecommunications Asset acquisition was completed to strengthen and create new partnerships for the Company and expand its geographic footprint in North America. The results of the Telecommunications Assets’ operations have been included in the Company’s consolidated financial statements in the Americas segment since its acquisition on May 31, 2017.

The Company accounted for the Telecommunications Asset acquisition in accordance with ASC 805, Business Combinations, whereby the fair value of the purchase price was allocated to the tangible and identifiable intangible assets acquired based on their estimated fair values as of the closing date. The Company completed its analysis of the purchase price allocation during the second quarter of 2017.

Basis of Presentation

Basis of Presentation — The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three months ended March 31, 2018 are not necessarily indicative of the results that may be expected for any future quarters or the year ending December 31, 2018. 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, 2017, as filed with the Securities and Exchange Commission (“SEC”) on March 1, 2018.

Principles of Consolidation

Principles of Consolidation — The condensed consolidated financial statements include the accounts of SYKES and its wholly-owned subsidiaries and controlled majority-owned subsidiaries. Investments in less than majority-owned subsidiaries in which the Company does not have a controlling interest, but does have significant influence, are accounted for as equity method investments. All intercompany transactions and balances have been eliminated in consolidation.

Use of Estimates

Use of Estimates — The preparation of condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires the Company to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Subsequent Events

Subsequent Events — Subsequent events or transactions have been evaluated through the date and time of issuance of the condensed consolidated financial statements. There were no material subsequent events that required recognition or disclosure in the accompanying condensed consolidated financial statements.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted cash — Cash and cash equivalents consist of cash and highly liquid short-term investments, primarily held in non-interest bearing investments which have original maturities of less than 90 days. Restricted cash includes cash whereby the Company’s ability to use the funds at any time is contractually limited or is generally designated for specific purposes arising out of certain contractual or other obligations.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported in the Condensed Consolidated Balance Sheets that sum to the amounts reported in the Condensed Consolidated Statements of Cash Flows (in thousands):


	March 31, 2018		December 31, 2017		March 31, 2017		December 31, 2016
Cash and cash equivalents	$	172,590	$	343,734	$	286,830	$	266,675
Restricted cash included in “Other current assets”		154		154		167		160
Restricted cash included in “Deferred charges and other assets”		925		917		793		759

	$	173,669	$	344,805	$	287,790	$	267,594

Investments in Equity Method Investees

Investments in Equity Method Investees — The Company uses the equity method to account for investments in companies if the investment provides the ability to exercise significant influence, but not control, over operating and financial policies of the investee. The Company’s proportionate share of the net income or loss of an equity method investment is included in consolidated net income. Judgment regarding the level of influence over an equity method investment includes considering key factors such as the Company’s ownership interest, representation on the board of directors, participation in policy-making decisions and material intercompany transactions.

The Company evaluates an equity method investment for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time (duration) and the extent (severity) to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects, and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified. As of March 31, 2018 and December 31, 2017, the Company did not identify any instances where the carrying values of its equity method investments were not recoverable.

In July 2017, the Company made a strategic investment of $10.0 million in XSell Technologies, Inc. (“XSell”) for 32.8% of XSell’s preferred stock. The Company plans to incorporate XSell’s machine learning and artificial intelligence algorithms into its business. The Company believes this will increase the sales performance of its agents to drive revenue for its clients, improve the experience of the Company’s clients’ end customers and enhance brand loyalty, reduce the cost of customer care and leverage analytics and machine learning to source the best agents and improve their performance.

The Company’s net investment in XSell of $9.7 million and $9.8 million was included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017, respectively. The Company paid $5.0 million in July 2017 with the remaining $5.0 million included in “Other accrued expenses and current liabilities” in the accompanying Condensed Consolidated Balance Sheets as of March 31, 2018 and December 31, 2017. The Company’s proportionate share of XSell’s income (loss) of $(0.1) million was included in “Other income (expense), net” in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 (none in 2017).

Customer-Acquisition Advertising Costs

Customer-Acquisition Advertising Costs — The Company utilizes direct-response advertising, the primary purpose of which is to elicit purchases from its clients’ customers. These costs are capitalized when they are expected to result in probable future benefits and are amortized over the period during which future benefits are expected to be received, which is generally less than one month. All other advertising costs are expensed as incurred. As of March 31, 2018 and December 31, 2017, the Company had $0.3 million and less than $0.1 million of capitalized direct-response advertising costs included in “Prepaid expenses” in the accompanying Condensed Consolidated Balance Sheets, respectively. Total advertising costs included in “Direct salaries and related costs” in the accompanying Condensed Consolidated Statements of Operations for the three months ended March 31, 2018 and 2017 were $10.0 million and $9.8 million, respectively. Total advertising costs included in “General and administrative” in the accompanying Condensed Consolidated Statement of Operations for the three months ended March 31, 2018 were less than $0.1 million (none in 2017).

Reclassifications

Reclassifications — Certain balances in the prior period have been reclassified to conform to current period presentation.

New Accounting Standards Not Yet Adopted

New Accounting Standards Not Yet Adopted

Leases

In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2016-02, Leases (Topic 842) (“ASU 2016-02”). These amendments require the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases currently classified as operating leases under ASC 840, Leases. These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Entities are required to apply the amendments at the beginning of the earliest period presented using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements, and there are certain optional practical expedients that an entity may elect to apply.

The Company’s implementation team has compiled a detailed inventory of leases and a preliminary analysis of the impact to the financial statements. The Company continues to evaluate the critical factors of ASU 2016-02. Based on an assessment of the Company’s business and system requirements, the implementation team is evaluating lease accounting software vendors as an option to assist the Company in complying with all aspects of ASU 2016-02. The Company expects the adoption of ASU 2016-02 to result in a material increase in the assets and liabilities on the consolidated balance sheets as a result of recognizing right-of-use assets and lease liabilities for existing operating leases based on the amount of the Company’s current lease commitments. The Company believes that the majority of its leases will maintain their current lease classification under ASU 2016-02. The Company does not expect these amendments to have a material effect on its expense recognition timing or cash flows and, as a result, the Company expects ASU 2016-02 will result in an insignificant impact on the Company’s consolidated statements of income and on the consolidated statements of cash flows. The Company is continuing to evaluate the magnitude of the impact and related disclosures, as well as the timing and method of adoption, with respect to the optional practical expedients. The Company is also continuing to evaluate the full impact of ASU 2016-02, as well as its impacts on its business processes, systems, and internal controls.

Other Comprehensive Income

In February 2018, the FASB issued ASU 2018-02, Income Statement – Reporting Comprehensive Income (Topic 220) (“ASU 2018-02”). These amendments allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Reform Act. These amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendment in this update is permitted, including adoption in any interim period. These amendments can be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate tax rate in the 2017 Tax Reform Act is recognized. The Company is currently evaluating the impact the guidance will have on its financial condition, results of operations, cash flows and disclosures, as well as the timing and method of adoption.

Derivatives and Hedging

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedge Activities (“ASU 2017-12”). These amendments help simplify certain aspects of hedge accounting and better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. For cash flow and net investment hedges as of the adoption date, the guidance requires a modified retrospective approach. The amended presentation and disclosure guidance is required only prospectively. These amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early application permitted in any interim period after issuance of this update. The Company is currently evaluating the accounting, transition and disclosure requirements to determine the impact ASU 2017-12 may have on its financial condition, results of operations, cash flows and disclosures.

Financial Instruments – Credit Losses

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). These amendments require measurement and recognition of expected versus incurred credit losses for financial assets held. These amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact the guidance will have on its financial condition, results of operations and cash flows.

New Accounting Standards Recently Adopted

New Accounting Standards Recently Adopted

Revenue from Contracts with Customers

In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) (“ASU 2014-09”) and subsequent amendments (together, “ASC 606”). ASC 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and indicates 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 performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective transition method. See Note 2, Revenues, for further details.

Financial Instruments

In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2016-01”). These amendments modify how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception applies to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, Fair Value Measurements, and as such, these investments may be measured at cost. These amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of ASU 2016-01 on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements.

Statement of Cash Flows

In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230) – Classification of Certain Cash Receipts and Cash Payments (“ASU 2016-15”). These amendments clarify the presentation of cash receipts and payments in eight specific situations. These amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. These amendments have been applied using a retrospective transition method to each period presented. The adoption of ASU 2016-15 on January 1, 2018 did not have a material impact on the Company’s cash flows.

In November 2016, the FASB issued ASU 2016-18, Statement of Cash Flows (Topic 230) – Restricted Cash (A Consensus of the FASB Emerging Issues Task Force (“ASU 2016-18”). These amendments clarify how entities should present restricted cash and restricted cash equivalents in the statement of cash flows, requiring entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. These amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. These amendments have been applied using a retrospective transition method to each period presented. The inclusion of restricted cash increased the beginning balance of the Condensed Consolidated Statements of Cash Flows by $1.1 million for the three months ended March 31, 2018 and increased the beginning and ending balances by $0.9 million and $1.0 million, respectively, for the three months ended March 31, 2017. Other than the change in presentation within the accompanying Condensed Consolidated Statements of Cash Flows, the retrospective adoption of ASU 2016-18 on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements.

Income Taxes

In October 2016, the FASB issued ASU 2016-16, Income Taxes (Topic 740) – Intra-Entity Transfers of Assets Other than Inventory (“ASU 2016-16”). These amendments require recognition of the income tax consequences of an intra-entity transfer of an asset other than inventory when the transfer occurs. These amendments are effective for annual reporting periods beginning after December 15, 2017, including interim reporting periods within those annual reporting periods. The adoption of ASU 2016-16 on January 1, 2018 did not have a material impact the Company’s consolidated financial statements and no cumulative-effect adjustment to retained earnings was required.

In January 2018, the FASB released guidance on the accounting for tax on the global intangible low-taxed income (“GILTI”) provisions of the 2017 Tax Reform Act. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of foreign corporations. The guidance indicates that either accounting for deferred taxes related to GILTI inclusions or to treat any taxes on GILTI inclusions as period costs are both acceptable methods subject to an accounting policy election. The Company evaluated the accounting treatment options related to the GILTI provisions and elected to treat any potential GILTI inclusions as a current period cost. The election did not have a material impact on the Company’s consolidated financial statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740): Amendments to SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 118 (“ASU 2018-05”). These amendments add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118, Income Tax Accounting Implications of the Tax Cuts and Jobs Act (“SAB 118”). SAB 118 directs taxpayers to consider the implications of the 2017 Tax Reform Act as provisional when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in the tax law. As described in Note 10, Income Taxes, and in accordance with SAB 118, the Company recorded amounts that were considered provisional.

Business Combinations

In January 2017, the FASB issued ASU 2017-01, Business Combinations (Topic 805) – Clarifying the Definition of a Business (“ASU 2017-01”). These amendments clarify the definition of a business to help companies evaluate whether transactions should be accounted for as acquisitions or disposals of assets or businesses. These amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those periods. These amendments were applied prospectively. The adoption of ASU 2017-01 of January 1, 2018 did not have a material impact on the Company’s consolidated financial statements.

Retirement Benefits

In March 2017, the FASB issued ASU 2017-07, Compensation – Retirement Benefits (Topic 715) – Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost (“ASU 2017-07”). These amendments require that an employer report the service cost component in the same line item or items as other compensation costs arising from services rendered by the pertinent employees during the period. The other components of net periodic benefit cost are required to be presented in the income statement separately from the service cost component outside of a subtotal of income from operations. If a separate line item is not used, the line items used in the income statement to present other components of net benefit cost must be disclosed. These amendments are effective for annual periods beginning after December 15, 2017, including interim periods within those annual periods. These amendments were applied retrospectively for the presentation of the service cost component and the other components of net periodic pension cost and net periodic postretirement benefit cost in the income statement and prospectively, on and after the effective date, for the capitalization of the service cost component of net periodic pension cost and net periodic postretirement benefit in assets. The amendments allow a practical expedient that permits an employer to use the amounts disclosed in its pension and other postretirement benefit plan note for the prior comparative periods as the estimation basis for applying the retrospective presentation requirements.

The Company adopted the income statement presentation aspects of ASU 2017-07 on a retrospective basis effective January 1, 2018. The following is a reconciliation of the effect of the reclassification of the interest cost and amortization of actuarial gain (loss) from operating expenses to other income (expense) in the Company’s Condensed Consolidated Statement of Operations for the three months ended March 31, 2017 (in thousands):


	As Previously Reported		Adjustments Due to the Adoption of ASU 2017-07			As Revised
Three Months Ended March 31, 2017:
Direct salaries and related costs	$	247,165	$	(29	)	$	247,136
General and administrative		92,054		(10	)		92,044
Income from operations		26,014		39			26,053
Other income (expense), net		852		(39	)		813

Financial Instruments