Sykes Enterprises Inc – ‘10-K/A’ for 12/31/00

On:  Tuesday, 8/14/01, at 3:38pm ET   ·   For:  12/31/00   ·   Accession #:  950144-1-505910   ·   File #:  0-28274

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Amendment to Annual Report   —   Form 10-K
Filing Table of Contents

Document/Exhibit                   Description                      Pages   Size 

 1: 10-K/A      Sykes Enterprises, Incorporated                       64    426K 
 2: EX-21.1     List of Subsidiaries                                   2±    11K 
 3: EX-23.1     Ernst & Young Consent                                  1      6K 

10-K/A   —   Sykes Enterprises, Incorporated
Document Table of Contents

10-K/A
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 UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 FORM 10-K/A

   [x]      Annual Report Pursuant To Section 13 Or 15(D) Of The
Securities Exchange Act Of 1934         

 For the fiscal year ended December 31, 2000

OR

       [  ]     Transition Report Pursuant To Section 13 Or 15(D) Of The
Securities Exchange Act Of 1934         
             For The Transition Period From _________ To _________

Commission File Number 0-28274

 SYKES ENTERPRISES, INCORPORATED
(Exact name of registrant as specified in its charter)

                                                                [Download Table]
                                                                               
                    Florida                                      56-1383460    
        (State or other jurisdiction of                        (IRS Employer   
         incorporation or organization)                     Identification No.)

100 N. Tampa Street, Suite 3900, Tampa, Florida                    33602       
    (Address of principal executive offices)                     (Zip Code)    

(813) 274-1000
(Registrant's telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to Section 12(g) of the Act: 

 Title of Each Class
Voting Common Stock $.01 Par Value

Indicate by check mark whether the registrant (1) has filed all reports 
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of  
1934 during the preceding 12 months (or for such shorter period that the        
registrant was required to file such reports), and (2) has been subject to such 
filing requirements for the past 90 days. Yes [x] No [ ]                        

  Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements   
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]                                                                  

As of March 15, 2001, there were 40,103,221 shares of Common Stock      
outstanding. The aggregate market value of the voting stock held by             
non-affiliates of the registrant based on the last sale price reported on the   
Nasdaq National Market as of March 15, 2001 was $117,025,644.                   

DOCUMENTS INCORPORATED BY REFERENCE:

Documents ..........................................       Form 10-K/A Reference
Portions of the Proxy Statement dated March 27, 2001       Part III Items 10-13 

Page 1 of 63 Pages
Exhibit Index is on Page 58.

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EXPLANATORY NOTE

After the Company filed its Annual Report on Form 10-K for the year ended       
December 31, 2000 with the United States Securities and Exchange Commission     
("SEC"), the Company determined that the accounting for the recognition of cash 
grants received in excess of building costs for the development of new technical
and customer support centers required revision, as explained below.             

During the fourth quarter of 2000, the Company adopted retroactive to January 1,
2000, Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial      
Statements" ("SAB 101") which resulted in a cumulative effect of change in      
accounting principle. The cumulative effect of the change related to prior years
resulted in a charge to income of $2.1 million (net of income taxes of $1.3     
million), or $0.05 per diluted share, which was deducted from income for the    
year ended December 31, 2000. In adopting SAB 101, the Company had modified its 
accounting treatment for the recognition of revenue as it related to, among     
other things, the accounting for cash grants received in excess of building     
costs for the development of new technical and customer support centers which   
represented approximately $1.2 million (net of income taxes of $0.7 million) of 
the cumulative effect of the $2.1 million change, or $0.03 per diluted share.   
Prior to the adoption of SAB 101, the Company recognized the excess of cash     
grants received over the costs of construction of the related facility ("excess 
cash grants") as a reduction of general and administrative costs commencing on  
the date the funds were placed in escrow and construction of the facility began.
In connection with the adoption of SAB 101, the Company changed its method of   
accounting for excess cash grants to delay their recognition until the funds    
were released from escrow and construction of the facility was complete, at     
which time they were recognized as a reduction of salaries and other direct     
costs related to training of personnel at the facility involved.                

Subsequent to the issuance of its consolidated financial statements for the year
ended December 31, 2000, the Company determined that the excess cash grants     
should not be offset against direct salaries and related costs to the extent    
training costs were incurred and recognized at the time the funds were released 
from escrow and construction of the facility was complete. Instead the excess   
cash grants should have been deferred and recognized as a reduction of          
depreciation expense over the weighted average useful life of the equipment     
utilized at the new facility (which generally approximates five years) with the 
amortization beginning when construction of the facility is complete and the    
facility is occupied.                                                           

Accordingly, the Company reversed the portion of the cumulative effect of change
in accounting principle related to the excess cash grants of $1.2 million (net  
of income taxes of $0.7 million), or $0.03 per diluted share, previously        
recorded by the Company as of January 1, 2000. As a result, the accompanying    
consolidated financial statements for the years ended December 31, 2000, 1999   
and 1998 have been restated from the amounts previously reported. The impact of 
the change in accounting for excess cash grants on income before cumulative     
effect of change in accounting principle for the year ended December 31, 2000   
was not material.                                                               

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EXPLANATORY NOTE (continued)

A summary of the significant effects of the restatement is as follows:          

                                                        [Enlarge/Download Table]

                                                           Year Ended                Year Ended                Year Ended       
In thousands (except per share data)                    December 31, 2000         December 31, 1999         December 31, 1998   
                                                      ---------------------     ---------------------     --------------------- 
                                                         As                        As                        As                 
                                                     Previously       As       Previously       As       Previously       As    
                                                      Reported     Restated     Reported     Restated     Reported     Restated 
                                                      --------     --------     --------     --------     --------     -------- 
                                                                                                                                
Condensed Consolidated Statement of Income:                                                                                     
Revenues ..........................................   $603,606     $603,606     $572,742     $572,742     $460,102     $460,102 
Operating expenses ................................    615,914      615,914      533,473      535,705      427,430      428,688 
                                                      --------     --------     --------     --------     --------     -------- 
Income (loss) from operations .....................    (12,308)     (12,308)      39,269       37,037       32,672       31,414 
Total other income (expense) ......................     81,205       81,205       (3,517)      (3,517)     (12,270)     (12,270)
                                                      --------     --------     --------     --------     --------     -------- 
Income before provision for income taxes and                                                                                    
  cumulative effect of change in accounting                                                                                     
  principle .......................................     68,897       68,897       35,752       33,520       20,402       19,144 
Provision for income taxes ........................     21,191       21,191       13,850       12,986       17,960       17,488 
                                                      --------     --------     --------     --------     --------     -------- 
Income before cumulative effect of change in                                                                                    
  accounting principle ............................     47,706       47,706       21,902       20,534        2,442        1,656 
Cumulative effect of change in accounting principle     (2,068)        (919)          --           --           --           -- 
                                                      --------     --------     --------     --------     --------     -------- 
Net income ........................................   $ 45,638     $ 46,787     $ 21,902     $ 20,534     $  2,442     $  1,656 
                                                      ========     ========     ========     ========     ========     ======== 

Net income per basic share:                                                                                                     
Income before cumulative effect of change in                                                                                    
  accounting principle ............................   $   1.15     $   1.15     $   0.52     $   0.49     $   0.06     $   0.04 
Cumulative effect of change in accounting principle      (0.05)       (0.02)       (0.00)       (0.00)       (0.00)       (0.00)
Net income per basic share ........................   $   1.10     $   1.13     $   0.52     $   0.49     $   0.06     $   0.04 

Net income per diluted share:                                                                                                   
Income before cumulative effect of change in                                                                                    
  accounting principle ............................   $   1.15     $   1.15     $   0.51     $   0.48     $   0.06     $   0.04 
Cumulative effect of change in accounting principle      (0.05)       (0.02)       (0.00)       (0.00)       (0.00)       (0.00)
Net income per diluted share ......................   $   1.10     $   1.13     $   0.51     $   0.48     $   0.06     $   0.04 

                                                     As of December 31, 2000  As of December 31, 1999   As of December 31, 1998 
                                                     -----------------------  -----------------------   ----------------------- 
Consolidated Balance Sheet Data:                                                                                                
Deferred charges and other assets .................   $ 13,212     $ 13,822     $ 19,770     $ 21,106     $ 10,720     $ 11,192 
Total assets ......................................   $357,344     $357,954     $419,396     $420,732     $361,798     $362,270 
Deferred grants ...................................   $ 30,143     $ 31,758     $ 21,199     $ 24,689     $ 15,435     $ 16,693 
Retained earnings .................................   $ 91,435     $ 90,430     $ 45,797     $ 43,643     $ 23,895     $ 23,109 
Shareholders' equity ..............................   $196,897     $195,892     $195,387     $193,233     $159,102     $158,316 

This Form 10-K/A includes such restated consolidated financial statements and   
related notes thereto for the years ended December 31, 2000, 1999 and 1998 and  
other information related to such restated financial statements, including      
revisions to Item 7, Management's Discussion and Analysis of Financial Condition
and Results of Operations. Except for Items 6, 7 and 8 of Part II and Item 14 of
Part IV, no other information included in the original report on Form 10-K is   
amended by this Form 10-K/A.                                                    

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 Sykes Enterprises, Incorporated

 Form 10-K/A Annual Report

 TABLE OF CONTENTS

                                                                [Download Table]

                                                                        Page No.
                                                                       -------- 
                                                                                
PART I                                                                          
  Item 1      Business...............................................       1   
  Item 2      Properties.............................................      13   
  Item 3      Legal Proceedings......................................      15   
  Item 4      Submission of Matters to a Vote of Security Holders....      15   

PART II                                                                         
  Item 5      Market for Registrant's Common Equity and                         
              Related Stockholder Matters............................      16   
  Item 6      Selected Financial Data................................      17   
  Item 7      Management's Discussion and Analysis of Financial                 
              Conditions and Results of Operations...................      18   
  Item 7a     Quantitative and Qualitative Disclosures About Market             
              Risk...................................................      25   
  Item 8      Financial Statements and Supplementary Data............      26   
  Item 9      Changes in and Disagreements with Accountants on                  
              Accounting and Financial Disclosure....................      51   

PART III                                                                        
  Item 10     Directors and Executive Officers of the Registrant.....      51   
  Item 11     Executive Compensation.................................      51   
  Item 12     Security Ownership of Certain Beneficial                          
              Owners and Management..................................      51   
  Item 13     Certain Relationships and Related Transactions.........      51   

PART IV                                                                         
  Item 14     Exhibits, Financial Statement Schedules,                          
              and Reports on Form 8-K................................      51   

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PART I

Item 1.   BUSINESS                                                              

GENERAL                                                                         

 Sykes Enterprises, Incorporated and consolidated subsidiaries ("Sykes" or
the "Company") is a global leader in providing customer management solutions and
services to technology-enabled companies primarily within the technology,       
communications and financial services markets. Sykes' Business Solutions group  
provides consultative professional services in e-commerce and customer          
relationship management with a focus on business strategy, project management,  
business process redesign, change management, knowledge management, education,  
training and web development. Sykes' Business Services group provides customer  
care outsourcing with emphasis on technical support and customer service. These 
services are delivered through multiple communications channels encompassing    
phone, e-mail, web and chat. Sykes also provides distribution and fulfillment   
services throughout Europe including multi-lingual sales order processing via   
the Internet and phone, full multi-currency financial management, inventory     
control and storage, vendor management, product delivery and product returns    
handling. Sykes has developed an extensive global reach with 42 state-of-the-art
technical and customer support centers throughout North America, Europe, Latin  
America, Asia and Africa.                                                       

 The Company believes that outsourcing by technology-enabled companies for
customer management solutions and services will continue to grow as pressures of
the new economy place greater emphasis on customer-facing activities to enhance 
customer relationships and build brand loyalty. Rapid changes in technology,    
pricing pressures, growth rates and global competition are making it            
increasingly difficult for companies to cost-effectively maintain quality,      
long-term relationships with their customers.                                   

 Sykes was founded in 1977 in North Carolina and moved its headquarters to
Florida in 1993. In March 1996, Sykes changed its state of incorporation from   
North Carolina to Florida. Sykes headquarters are located at 100 North Tampa    
Street, Suite 3900, Tampa, Florida 33602, and its telephone number is (813)     
274-1000.                                                                       

DIVESTITURE ACTIVITY IN 2000                                                    

   On June 30, 2000, the Company sold 93.5% of its ownership interest in
SHPS, Incorporated ("SHPS") for approximately $165.5 million cash. The cash     
proceeds reflected in the Statement of Cash Flows for 2000, included elsewhere  
in this Form 10-K/A, is net of approximately $0.7 million used to retire other  
debt and approximately $5.0 million of cash recorded on SHPS' balance sheet on  
the date of the sale. The sale of SHPS resulted in a gain for financial         
reporting purposes of approximately $84.0 million ($59.9 million net of taxes). 
The 2000 results of operations includes the results of SHPS through June 30,    
2000, its disposition date. SHPS generated revenue and income from operations of
$35.7 million and $1.7 million, respectively, for the six month period ended    
June 30, 2000 compared to $73.0 million and $5.9 million for the year ended     
1999, exclusive of compensation expense associated with the exercise of options 
during 2000.                                                                    

    The Company recorded restructuring and other charges during the second and
fourth quarters of 2000 totaling $30.5 million. Related to the second quarter   
restructuring and other charges totaling $9.6 million, the Company consolidated 
several European and one U.S. distribution and fulfillment center and closed or 
consolidated six professional services offices. As a result of the second       
quarter restructuring, the Company reduced the number of employees by 157 during
2000 and expects the remaining lease obligations related to the closed          
facilities to be completed by June 2001. Included in the second quarter         
restructuring and other charges is a $3.5 million lease termination payment     
related to the corporate aircraft.                                              

     The Company also announced, after a comprehensive review of operations, its
decision to exit certain non-core lower margin businesses to reduce costs,      
improve operating efficiencies and focus on its core competencies of technical  
support, customer service and consulting solutions. As a result, the Company    
recorded $20.9 million in restructuring and other charges during the fourth     
quarter of 2000 related to the closure of its U.S. fulfillment and distribution 
operations, the consolidation of its Tampa, Florida technical support center    
into its Charlotte, North Carolina center and the exit of its worldwide         
localization operations. In connection with the fourth quarter restructuring,   
the Company plans to reduce the number of employees by 250. The Company expects 
to substantially complete the workforce reduction by March 2001 and any         
remaining lease obligations related to the closed facilities by December 2001.  
Included in the restructuring and other charges is a $2.4 million severance     
payment related to the employment contract of the Company's former President.   

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The Company estimates it may achieve up to approximately $12.0 million in       
annualized savings related to the closed operations included in the second and  
fourth quarter restructurings.                                                  

INDUSTRY BACKGROUND                                                             

    In today's digital economy, companies require innovative customer management
solutions that allow them to enhance the end user's experience with their       
products and services, strengthen and enhance company brands, maximize the      
lifetime value of customers, efficiently and effectively deliver human          
interaction when customers value it most, and deploy best-in-class Customer     
Relationship Management (CRM) strategies, processes and technologies.           

Technological changes, pricing pressures, fast growth rates and global  
competition are making it increasingly difficult for companies to               
cost-effectively maintain in-house the necessary personnel to handle all of     
their customer management needs. Companies are increasingly turning to          
outsourcers to perform specialized functions and services in CRM due to the     
following factors:                                                              

-    Increasing importance of companies to focus on customer-facing activities; 

-    Increasing need for companies to focus on core competencies rather than    
non-revenue producing activities;                                     

-    Rapid changes in technology requiring personnel with specialized technical 
expertise;                                                            

-    Growing capital requirements for sophisticated technology needed to        
maintain the necessary infrastructure to provide timely technical and 
customer support service;                                             

-    Increasing need to integrate and continually update complex systems        
incorporating a variety of hardware and software components spanning a
number of technology generations;                                     

-    Extensive and ongoing staff training and associated costs required to      
 maintain responsive, up-to-date in-house technical and customer support
services; and                                                         

-    Cost savings from converting fixed employee costs to flexible, variable    
costs.                                                                

STRATEGY                                                                        

The Company's objective is to continue to grow and expand its global    
customer base as a leading provider of outsourced customer management solutions 
and services while focusing on its core competencies of technical support,      
customer service and consulting capabilities. The Company's principal strategies
for its Business Services and Business Solutions groups are as follows:         

Continue Growing the Company's Customer Care Outsourcing Encompassing   
Technical Support and Customer Service. Sykes has grown its Customer Care       
operations utilizing a strategy of both internal growth and external            
acquisitions. This plan has resulted in an increase from three technical and    
customer support centers in 1994 to 42 worldwide as of February 15, 2001, with  
an additional 2 domestic facilities scheduled to open in 2001. The Company's    
technical and customer support centers currently have the capacity to handle    
millions of customer contacts per year depending on the mix of contact media.   
Sykes has standardized the establishment and ongoing operation of its domestic  
technical and customer support centers by: (i) locating the centers in smaller  
communities, near a college or university, with a relatively low cost structure 
and a technically proficient, stable work force; (ii) constructing the technical
and customer support centers modeled after the same prototype; (iii) utilizing  
standardized procedures to hire and train customer care agents; and (iv)        
maintaining consistently responsive, high quality services through call         
monitoring and tracking technology and other quality assurance procedures. The  
Company's systematic approach and procedures are part of its strategy of        
providing responsive, high quality and cost efficient support.                  

   Leverage Customer Relationship Management Practice. The Company's expertise
in change management, knowledge management, education and training, coupled with
Sykes' customer care outsourcing capabilities, enable the Company to deliver    
broad based customer management solutions on a global basis. Sykes works with   
large and medium size companies to review, plan and build their CRM strategies  
by conducting assessments, audits, strategy definitions, process redesigns as   
well as the selection and implementation of technology.                         

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Expand Vertical Market Reach. The Company markets its services on a     
worldwide basis primarily to technology-enabled companies within the technology,
communications and financial services markets. The Company built its industry   
knowledge by initially focusing on software publishers, personal computer       
manufacturers and peripheral hardware manufacturers within the technology       
market, providing Sykes with a competitive advantage in technical support. In   
2000, the Company's growth strategy targeted the communications market, where   
Sykes has leveraged its technical support capabilities to capitalize on dial-up 
Internet, broadband Internet and wireless services opportunities. Sykes'        
established presence in these markets provides tremendous opportunities for     
outsourced services and growth in new target markets such as financial services.

Establish a Competitive Advantage Through Sophisticated Technology. The 
Company seeks to establish a competitive advantage by continuing to capitalize  
on its sophisticated and specialized technological capabilities, including its  
current private asynchronous transfer mode (ATM) network between North America  
and Latin America that provides the Company the ability to redirect inquiries   
and to also carry voice and data over the same network. Sykes flexible and      
scalable network infrastructure allows the Company to rapidly respond to changes
in client voice and data traffic and quickly establish support operations for   
new and existing clients. Through strategic partnerships, the Company is able to
provide fully integrated communication services encompassing e-mail, chat and   
web, coupled with a self-healing, self-service technical e-support platform.    
Additional technological capabilities include automatic call distributors,      
sophisticated call routing and workforce management capabilities, call tracking 
software, quality management systems and computer-telephony integration (CTI)   
that enable Sykes' technical and customer support centers to serve as the       
transparent extension of the Company's clients, receive telephone calls and data
directly from our clients' systems, and report detailed information concerning  
the status and results of the Company's services on a daily basis. The Company's
European deployment of Global Direct, Sykes' CRM/e-commerce application,        
establishes a platform whereby our clients can manage all customer profile and  
contact information from every communication channel making it a viable         
customer-facing infrastructure solution to support our clients' CRM initiatives.

    Growth Through Selective Acquisitions and Mergers. The Company has completed
numerous strategic combinations since its initial public offering in April 1996.
The Company believes there are further opportunities to expand the scope and    
quality of its support services by acquiring or combining with companies with   
technical and customer support centers in international markets, which provide  
quality call center activities within the technology, communications, and       
financial services markets, as well as companies which enhance its ability to   
provide such services. The Company will evaluate these opportunities to acquire 
or combine with organizations, which provide these services within the Company's
strategic focus of technology, communications and financial services markets.   
Many of these companies may be attractive acquisition or merger candidates      
because they would enable Sykes to expand existing service offerings or open new
geographic locations.                                                           

SERVICES                                                                        

   The Company provides innovative customer management solutions and services.
The following is a description of Sykes' outsourcing solutions and services:    

Business Services                                                               

    Customer Care Outsourcing. Sykes provides customer care management solutions
that support its clients' customers through the partial or complete outsourcing 
or in-sourcing of people, processes and technologies. Sykes specializes in      
providing technical support and customer service through multiple communication 
channels encompassing phone, e-mail, web and chat through its 18 stand-alone    
technical and customer support centers in the United States, 3 centers in       
Canada, 2 centers in Costa Rica, and 19 international technical and customer    
support centers located in Europe, South Africa, Peoples Republic of China and  
The Philippines. Client customers contact a Sykes' customer care agent through  
telephony support, e-mail, web or chat who is specially trained in the          
applicable product and/or service. The agent acts as a transparent extension of 
the client in diagnosing problems and providing a solution. The international   
technical and customer support centers provide global support capabilities in   
over 18 languages.                                                              

Technical support and customer service provided through the Company's   
support centers are generally billed to the client based on a fee per e-mail or 
call, rate per minute or time and material basis. As a result of the significant
infrastructure costs required for each support center, the Company requires a   
minimum billing amount to facilitate planning and capital needs.                

  Distribution and Fulfillment Services. Fully integrated with customer care
services, the Company provides Pan-European fulfillment solutions including     
multi-lingual sales order processing via the Internet and phone, full           
multi-currency financial management, inventory control and storage, vendor      
management, product delivery and product returns handling.                      

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Business Solutions                                                              

CRM Consulting. The Company's Customer Relationship Management (CRM)    
practice provides the full range of capabilities required for effectively       
performing assessments and audits, defining CRM/eCRM strategies, selecting      
appropriate technologies, defining training and knowledge management            
methodologies and managing full implementation programs.                        

    Enterprise Support Services. The Company provides a wide range of enterprise
support services for a company's internal support operations ranging from       
training development, knowledge management and technical staffing services, to  
the partial or complete outsourcing or in-sourcing of a company's internal help 
desk. Help desk services are provided to major companies, either at their       
facilities or through Sykes' support centers. Employees of Sykes' clients       
telephone the help desk number provided to them by their employer for technical 
assistance. Trained technicians dedicated to a specific client, answer questions
and diagnose and resolve technical problems ranging from a simplistic error     
message to a wide area network failure.                                         

OPERATIONS                                                                      

CRM Consulting and Enterprise Support Services Offices. Consultative    
professional personnel from Sykes' CRM Consulting and Enterprise Support        
Services teams are assigned to one of the Company's 9 offices, which are located
in metropolitan areas throughout the United States. The Company's CRM consulting
practice provides the full range of capabilities required for effectively       
performing assessments and audits, defining CRM/eCRM strategies, selecting      
appropriate technologies, defining training and knowledge management            
methodologies and managing full implementation programs. In addition, the       
Company provides a wide range of enterprise support services for a company's    
internal support operations ranging from training development, knowledge        
management and technical staffing services, to the partial or complete          
outsourcing or in-sourcing of a company's internal help desk. These CRM         
Consulting and Enterprise Support Services offices provide a strong recruiting  
platform for high-end knowledge workers and establish a local presence to       
service major accounts. Each office is responsible for staffing the consultative
professional personnel needs of clients or managing program implementations     
within its geographic region. These offices give Sykes the ability to (i) offer 
a broad range of consultative professional services to existing clients, and    
(ii) deliver flexible, innovative solutions to new and existing clients in each 
market. The number of consultative professionals assigned to each office ranges 
from 40 to 150.                                                                 

   Each office is staffed with one or more account executives whose goal is to
become the client's partner in evaluating and meeting their customer care needs.
The account executive's primary responsibilities include: client development;   
understanding and identifying clients' customer management needs; working       
closely with recruiters to staff assignments appropriately; setting billing     
rates for each assignment; and monitoring ongoing assignments. Each account     
executive is responsible for between four and ten active corporate accounts,    
some of which may involve several projects with multiple operating units of a   
particular company. The account executive cultivates and maintains relationships
with the executive officers and numerous department and project managers within 
the client's organization.                                                      

The account executive has responsibility for staffing an assignment on a
timely basis. Upon receiving a new assignment, the account executive prepares a 
proposal with assignment specifications and distributes the proposal to a       
recruiter who is familiar with the professionals who have the expertise required
for the assignment. The account executive reviews the recruiter's recommended   
candidates, submits the resumes of qualified employees and other available      
candidates to the client and schedules client interviews of the candidates.     
Typically, an assignment is staffed within five working days.                   

    Technical and Customer Support Centers. The Company's strategy in the United
States is to locate its technical and customer support centers in smaller       
communities with similar demographic characteristics, typically near a college  
or university. The Company believes these characteristics tend to provide a     
well-educated, technically proficient employee pool from which to attract       
qualified candidates. These locations also tend to have lower labor and         
infrastructure costs than large metropolitan areas.                             

 New technical and customer support centers are established to accommodate
anticipated growth in the Company's business or in response to a specific       
customer need. The Company believes there are opportunities to establish        
additional technical and customer support centers in the United States and      
Europe and potentially in Asia, the Pacific Rim region and South America.       

 A typical domestic technical and customer support center is approximately
42,000 square feet, has 432 work stations and can handle in excess of 12,000    
user transactions per day. The technical and customer support centers employ    
current technology in PBX switches, call tracking software, telephone-computer  
integration, interactive voice response and relational database management      
systems that are integrated into centrally managed local area networks and wide 
area networks. The Company's equipment and                                      

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technology enable it to serve as the transparent extension of its clients at a  
low cost per transaction and provide its clients with immediate access to the   
status and results of the Company's services. Due to its modular, open system   
architecture, the Company's computer system allows timely system updates and    
modifications.                                                                  

    The Company utilizes call-tracking software and systems to provide efficient
scheduling of personnel to accommodate fluctuations in call volume. Automated   
call distributors and digital switches identify each call by the number dialed  
and automatically route the call to a customer care agent with the applicable   
knowledge and training. The customer care calls are routed directly from the end
user to the technical and customer support center or are routed from the        
client's place of business.                                                     

Technical and customer support center systems capture and download to   
permanent databases a variety of information concerning each call for reporting 
on a daily basis to clients, including number and duration of calls which are   
important for billing purposes, response time and results of the call. Summary  
data and complete databases are made available to the client to enable it to    
monitor the level of service provided by the Company, as well as to determine   
whether end users of its products are encountering recurring problems that      
require modification. The databases also provide Sykes' clients with            
considerable marketing information concerning end users, such as whether the    
user is a home or business user and regional differences in purchasing patterns 
or usage. The Company maintains tape backups and offsite storage to assure the  
integrity of its reporting systems and databases.                               

The technical and customer support centers are protected by a fire      
extinguishing system and backup generators and short-term battery backup in the 
event of a power outage, reduced voltage or a power surge. Rerouting of         
telephone calls to one of the other technical support centers is also available 
in the event of a telecommunications failure, natural disaster or other         
emergency. Security measures are imposed to prevent unauthorized access.        
Software and related data files are backed up daily and stored off site at      
multiple locations. The Company carries business interruption insurance covering
interruptions that might occur as a result of damage to its business. In        
addition, the Company believes that it has adequate arrangements with its       
equipment vendors pursuant to which damaged equipment can be replaced promptly. 

Distribution and Fulfillment Centers. Sykes had originally expanded its 
distribution and fulfillment services through acquisitions, and through its     
ability to utilize the Internet. During 2000, Sykes consolidated several        
European distribution and fulfillment centers and announced the closure of its  
U.S. distribution and fulfillment centers. Sykes currently has 5 distribution   
and fulfillment centers located in Europe.                                      

QUALITY ASSURANCE                                                               

Sykes trains, monitors and supervises its employees to enhance the      
efficiency and the quality of its services. Representatives of the Company's    
clients conduct the training of new customer care agents in-house at the        
technical and customer support centers through certified trainers or Sykes      
actively recruits highly skilled professionals to staff specific assignment     
needs of its clients. Generally, employees also receive ongoing training        
throughout the year to respond to changes in technology.                        

A support center manager supervises project leaders, team leaders,      
technicians and customer support representatives dedicated to individual client 
accounts. Each team leader at the support centers monitors approximately ten    
customer care agents. A project leader supervises a particular client's account 
by monitoring calls and reviewing quality standards. Using call tracking        
software, the project leader monitors the number of calls each technician       
handles, the duration of each call, time between calls, response time, number of
queries resolved after the first call and other statistics important in         
measuring and enhancing productivity and service levels. Remote and on-site call
monitoring systems and on-line performance tracking are used to enhance high    
quality services. Clients have daily access to a variety of measures of service 
performance tracked by the Company's technology and can monitor calls directly  
through the Company's remote call monitoring systems.                           

The Company emphasizes a team approach in order to provide high quality,
customized solutions to meet its clients' customer management needs. The        
Company's account executives and recruiters who work together to achieve a      
successful relationship between the client and the Company provide the central  
role in this team approach. The team shares information on active and           
prospective clients, reviews the availability of the staff and discusses general
market conditions. Such forums enable the teams to remain informed and          
knowledgeable on the latest technologies and to identify business development   
opportunities as they emerge.                                                   

In November 2000, the Company announced that one of its Bismarck, North 
Dakota technical and customer support centers received certification for the    
COPC-2000(R) Standard (Customer Operations Performance Center Inc.) for         
technical support and help desk services. The COPC-2000(R) Standard was         
developed in 1996 by representatives from American Express, Dell, L.L. Bean,    
Microsoft, Motorola, Novell and other customer focused companies that wanted    
measurable standards to improve the level of service                            

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quality their customers received from external customer service providers. The  
development team used the criteria and framework of the Malcolm Baldrige        
National Quality Award as the foundation of the standard, and adapted the       
Baldrige criteria to accommodate the practical realities of the customer support
industry. In addition to the Bismarck center, which marks the Company's first   
step towards global COPC certification, the Company is also in the process of   
certifying one of its Pan-European, multi-lingual customer support centers as   
well as several other centers in the United States. The Company is committed to 
the COPC 2000 standard and anticipates that it will eventually replace the      
current ISO 9002 standard within the support industry. The Company's commitment 
to quality has resulted in receiving the STAR Award for the years 1995 through  
1999 in the highest call volume category and received a lifetime achievement    
award during 2000. This award has been presented annually since 1988 by the     
Software Support Professionals Association (SSPA) to the software support       
company that achieves superior customer satisfaction and call metrics.          

SALES AND MARKETING                                                             

    The Company's marketing objective is to develop long-term relationships with
existing and potential clients to become the preferred vendor for their customer
management outsourcing services. Sykes believes that its significant client base
provides excellent opportunities for further marketing and cross selling of its 
broad range of capabilities. The Company markets its services through a variety 
of methods, including client referrals, personal sales calls, advertising in    
industry publications, attending trade shows, direct mailings to targeted       
customers, telemarketing and cross selling additional services to existing      
clients. The Company currently employs 110 people in its sales force.           

    As part of its marketing efforts, the Company invites potential and existing
customers to visit the technical and customer support centers, where the Company
demonstrates its sophisticated telecommunications and call tracking technology, 
quality procedures and the knowledge of its technicians. The Company also       
demonstrates its ability to quickly accommodate a new customer or a significant 
increase in business from an existing customer by emphasizing its systematic    
approach to establishing and managing support centers.                          

  The Company emphasizes account development to strengthen its relationships
with its customers. Sales representatives and account executives are assigned to
a limited number of accounts in order to develop a complete understanding of    
each customer's particular needs, to form strong customer relationships and     
encourage cross selling of other services offered by the Company. Account       
executives also receive incentives for cross selling the Company's services.    

The Company's sales force is composed of field sales representatives and
major account executives that manage relationships with existing accounts. In   
addition, the Company has inside customer sales representatives who receive     
customer inquiries and provide outbound lead generation for the field sales     
force.                                                                          

CLIENTS                                                                         

The Company serves clients in the United States, Canada, Latin America, 
Europe, The Philippines, Peoples Republic of China and South Africa. The Company
primarily markets to Fortune 500 corporations within the technology,            
communications and financial services industries. The Company believes its      
globally recognized client base presents opportunities for further cross        
marketing of its services.                                                      

   No single client accounted for 10% or more of consolidated revenues for the
years ended December 31, 2000, 1999, and 1998, respectively. The Company's loss 
of (or the failure to retain a significant amount of business with) its key     
clients could have a material adverse effect on the Company. The Company's      
largest ten clients accounted for approximately 49% of the consolidated revenues
in 2000, exclusive of SHPS revenue. Many of the Company's contracts are         
cancelable by the client at any time or on short-term notice, and clients may   
unilaterally reduce their use of the Company's services under such contracts    
without penalty. Sykes provided services to over 1,000 clients during 2000.     

COMPETITION                                                                     

The industry in which the Company competes is extremely competitive and 
highly fragmented. While many companies provide customer management solutions   
and services, management believes no one company is dominant. There are numerous
and varied providers of such services, including firms specializing in various  
CRM consulting, support center operations, product distribution, general        
management consulting firms, major accounting firms, divisions of large hardware
and software companies and niche providers of customer management solutions and 
services, many of whom compete in only certain markets. The Company's           
competitors include many companies who may possess substantially greater        
resources, greater name recognition and a more                                  

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established customer base than the Company. In addition, in-house personnel have
provided the services offered by the Company historically.                      

 The Company believes that the most significant competitive factors in the
sale of its services include quality, reliability, scalability, flexibility,    
experience, price and tailored service offerings. As a result of intense        
competition, customer management solutions and services frequently are subject  
to pricing pressure. Customers also require vendors to be able to provide       
services in multiple locations. Competition for contracts for many of Sykes'    
services takes the form of competitive bidding in response to requests for      
proposals.                                                                      

INTELLECTUAL PROPERTY                                                           

The Company relies upon a combination of contract provisions and trade  
secret laws to protect the proprietary technology it uses at its technical and  
customer support centers and facilities, and relies on a combination of         
copyright, trademark and trade secret laws to protect its proprietary software. 
The Company attempts to further protect its trade secrets and other proprietary 
information through agreements with employees and consultants. The Company does 
not hold any patents and does not have any patent applications pending. There   
can be no assurance that the steps taken by the Company to protect its          
proprietary technology will be adequate to deter misappropriation of its        
proprietary rights or third party development of similar proprietary software.  
Sykes(R), SEI(R), REAL PEOPLE. REAL SOLUTIONS.(R) are registered service marks  
of the Company. Sykes holds a number of registered trademarks, including        
QAPLUS(R), ETSC(R), FS PRO(R) and FS PRO MARKETPLACE(R), QA+(R) and             
ANSWEREXPRESS(R).                                                               

EMPLOYEES                                                                       

As of February 15, 2001, the Company had 17,300 employees (full-time and
part-time), consisting of 15,200 customer care agents at the technical and      
customer support centers, 470 in CRM consulting, 320 in distribution and        
fulfillment services, 110 in sales and marketing and 1,200 in management,       
administration and finance.                                                     

The technical and service nature of the Company's business makes its    
employees an important corporate asset. While the market for qualified personnel
is extremely competitive, the Company believes its relationship with its        
employees is good. The Company's employees, with the exception of three         
employees in Scotland, are not represented by any labor union.                  

   The Company recruits its personnel through a continually updated recruiting
network. This network includes a seasoned team of technical recruiters, a       
Company-wide candidate database, internet/newspaper advertising, candidate      
referral programs and job fairs. However, demand for qualified professionals    
conversant with certain technologies may outstrip supply, as new skills are     
needed to keep pace with the requirements of customer engagements. Competition  
for such personnel is intense and employee turnover in this industry is high.   

FACTORS INFLUENCING FUTURE RESULTS AND ACCURACY OF FORWARD-LOOKING STATEMENTS   

  This report contains forward-looking statements (within the meaning of the
Private Securities Litigation Reform Act of 1995) that are based on current     
expectations, estimates, forecasts, and projections about the Company,          
management's beliefs, and assumptions made by management. In addition, other    
written or oral statements, which constitute forward-looking statements, may be 
made from time to time by or on behalf of Sykes. Words such as "may," "expects,"
"anticipates," "intends," "plans," "believes," "seeks," "estimates," variations 
of such words, and similar expressions are intended to identify such            
forward-looking statements. Similarly, statements that describe the Company's   
future plans, objectives, or goals also are forward-looking statements. These   
statements are not guarantees of future performance and are subject to a number 
of risks and uncertainties, including those discussed below and elsewhere in    
this report. The Company's actual results may differ materially from what is    
expressed or forecasted in such forward-looking statements. The Company         
undertakes no obligation to update publicly any forward-looking statements,     
whether as a result of new information, future events or otherwise.             

Factors that could cause actual results to differ materially from what is       
expressed or forecasted in such forward-looking statements include, but are not 
limited to: the marketplace's continued receptivity to Sykes' terms and elements
of services offered under Sykes' standardized contract for future bundled       
service offerings; Sykes' ability to continue the growth of its support service 
revenues through additional technical and customer support centers; Sykes'      
ability to leverage its customer relationship practice; Sykes' ability to       
further                                                                         

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penetrate into vertically integrated markets; Sykes' ability to expand revenues 
within the global markets; Sykes' ability to continue to establish a competitive
advantage through sophisticated technological capabilities, and the following   
risk factors:                                                                   

The Company Faces Uncertainties Relating To Pending Litigation                  

 Sykes faces uncertainties relating to the pending litigation described in
"Item 3. Legal Proceedings." Although the Company intends to vigorously defend  
these lawsuits, it cannot predict the outcome or the impact they may have on the
Company. Sykes also cannot predict whether any other suits, claims, or          
investigations may arise in the future based on the same or other claims.       
Regardless of the outcome of any of these lawsuits or any future lawsuits,      
claims, or investigations relating to the same or any other subject matter, the 
Company may incur substantial defense costs and such actions may cause a        
diversion of management time and attention. Also, it is possible that Sykes may 
be required to pay substantial damages or settlement costs which could have a   
material adverse effect on its financial condition or results of operations.    

Dependence on Key Clients                                                       

Sykes derives a substantial portion of its revenues from a few clients. 
Sykes' largest ten clients accounted for approximately 49%, 52%, and 44% of its 
consolidated revenue for the years ended December 31, 2000, 1999, and 1998,     
respectively, exclusive of SHPS revenue. No single client accounted for 10% or  
more of consolidated revenues for the years ended December 31, 2000, 1999, and  
1998, respectively. Sykes' loss of, or the failure to retain a significant      
amount of business with, any of its key clients could have a material adverse   
effect on Sykes' business, financial condition and results of operations.       
Generally, Sykes' contracts with its clients are cancelable by the client at any
time or on short-term notice, and clients may unilaterally reduce their use of  
Sykes' services under such contracts without penalty. Thus, Sykes' contracts    
with its clients do not ensure that Sykes will generate a minimum level of      
revenues.                                                                       

Inability to Attract and Retain Experienced Personnel May Adversely Impact      
Sykes' Business                                                                 

  Sykes business is labor intensive and places significant importance on its
ability to recruit, train, and retain qualified technical and consultative      
professional personnel. Sykes generally experiences high turnover of its        
personnel and is continuously required to recruit and train replacement         
personnel as a result of a changing and expanding work force. Additionally,     
demand for qualified consultative professionals conversant with certain         
technologies is intense and may outstrip supply, as new and additional skills   
are required to keep pace with evolving computer technology. Sykes' ability to  
locate and train employees is critical to Sykes' achieving its growth objective.
Sykes' inability to attract and retain qualified personnel or an increase in    
wages or other costs of attracting, training, or retaining qualified personnel  
could have a material adverse effect on Sykes' business, financial condition and
results of operations.                                                          

The Company Faces Potential Difficulties In Continuing To Expand And Manage     
Growth                                                                          

  Sykes has grown rapidly. The Company cannot guarantee that it will be able
to continue to expand or successfully manage its growth. This growth has placed,
and is expected to continue to place, significant demands on Sykes' management. 
The Company also cannot guarantee that it will achieve levels of revenue and    
profitability or otherwise perform as expected.                                 

The Company's Strategy of Growing through Selective Acquisitions and Mergers    
Involves Potential Risks                                                        

The Company evaluates opportunities to expand the scope of its services 
through acquisitions and mergers. The Company may be unable to identify         
companies that complement its strategy, and even if it identifies a company that
complements its strategy, Sykes may be unable to acquire or merge with the      
company. In addition, the decrease in the price of the Company's common stock   
could hinder Sykes' growth strategy, including growth through acquisitions.     

The Company's acquisition strategy involves other potential risks. These
risks include:                                                                  

-    the inability to obtain the capital required to finance potential          
acquisitions on satisfactory terms; and                               

-    the diversion of management's attention to the integration of the          
businesses to be acquired;                                            

-    the risk that the acquired businesses will fail to maintain the quality of 
services that Sykes has historically provided;                        

-    the need to implement financial and other systems and add management       
resources;                                                            

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-    the risk that key employees of the acquired business will leave after the  
acquisition;                                                          

-    potential liabilities of the acquired business;                            

-    unforeseen difficulties in the acquired operations;                        

-    adverse short-term effects on Sykes' operating results;                    

-    lack of success in assimilating or integrating the operations of acquired  
businesses with those of Sykes;                                       

-    the dilutive effect of the issuance of additional equity securities;       

-    the incurrence of additional debt or issuing additional equity securities  
as a result of future acquisitions;                                   

-    the impairment of goodwill and other intangible assets involved in any     
acquisitions that are accounted for using the purchase method of      
accounting;                                                           

-    the businesses we acquire not proving profitable; and potentially incurring
additional indebtedness.                                              

Rapid Technological Change                                                      

Rapid technological advances, frequent new product introductions and    
enhancements, and changes in client requirements characterize the market for    
information technology services. Sykes' future success will depend in large part
on its ability to service new products, platforms, and rapidly changing         
technology. These factors will require Sykes to provide adequately trained      
personnel to address the increasingly sophisticated, complex and evolving needs 
of its clients. In addition, Sykes' ability to capitalize on its acquisitions   
will depend on its ability to continually enhance software and services and     
adapt such software to new hardware and operating system requirements. Any      
failure by Sykes to anticipate or respond rapidly to technological advances, new
products and enhancements, or changes in client requirements could have a       
material adverse effect on Sykes' business, financial condition and results of  
operations.                                                                     

Reliance on Technology and Computer Systems                                     

Sykes has invested significantly in sophisticated and specialized       
communications and computer technology and has focused on the application of    
this technology to meet its clients' needs. Sykes anticipates that it will be   
necessary to continue to invest in and develop new and enhanced technology on a 
timely basis to maintain its competitiveness. Significant capital expenditures  
may be required to keep Sykes' technology up-to-date. There can be no assurance 
that any of Sykes' information systems will be adequate to meet its future needs
or that Sykes will be able to incorporate new technology to enhance and develop 
its existing services. Moreover, investments in technology, including future    
investments in upgrades and enhancements to software, may not necessarily       
maintain Sykes' competitiveness. Sykes' future success will also depend in part 
on its ability to anticipate and develop information technology solutions that  
keep pace with evolving industry standards and changing client demands.         

Dependence on Trend Toward Outsourcing                                          

    Sykes' business and growth depend in large part on the industry trend toward
outsourcing customer management. Outsourcing means that an entity contracts with
a third party, such as Sykes, to provide support services rather than perform   
such services in house. There can be no assurance that this trend will continue,
as organizations may elect to perform such services themselves. A significant   
change in this trend could have a material adverse effect on Sykes' business,   
financial condition and results of operations. Additionally, there can be no    
assurance that Sykes' cross-selling efforts will cause its clients to purchase  
additional services from Sykes or adopt a single-source outsourcing approach.   

Risk of Emergency Interruption of Technical and Customer Support Center         
Operations                                                                      

 Sykes' operations are dependent upon its ability to protect its technical
and customer support centers and its information databases against damages that 
may be caused by fire and other disasters, power failure, telecommunications    
failures, unauthorized intrusion, computer viruses and other emergencies. The   
temporary or permanent loss of such systems could have a material adverse effect
on Sykes' business, financial condition, and results of operations.             
Notwithstanding precautions taken by the Company to protect itself and          

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its clients from events that could interrupt delivery of its services, there can
be no assurance that a fire, natural disaster, human error, equipment           
malfunction or inadequacy, or other event would not result in a prolonged       
interruption in Sykes' ability to provide support services to its clients. Such 
an event could have a material adverse effect on Sykes' business, financial     
condition and results of operations.                                            

Risks Associated with International Operations and Expansion                    

 The Company intends to continue to pursue growth opportunities in markets
outside the United States. At December 31, 2000, Sykes' international operations
were conducted from 19 technical and customer support centers located in Sweden,
The Netherlands, France, Germany, South Africa, Scotland, Ireland, Hungary,     
Turkey, Peoples Republic of China, and The Philippines. Revenues from these     
operations for the years ended December 31, 2000, 1999, and 1998, were 38%, 36%,
and 38%, of consolidated revenues, respectively, exclusive of SHPS revenue. The 
Company also conducts business in Canada and Costa Rica, which are included in  
the Americas geographic region. International operations are subject to certain 
risks common to international activities, such as changes in foreign            
governmental regulations, tariffs and taxes, import/export license requirements,
the imposition of trade barriers, difficulties in staffing and managing foreign 
operations, political uncertainties, longer payment cycles, foreign exchange    
restrictions that could limit the repatriation of earnings, possible greater    
difficulties in accounts receivable collection, potentially adverse tax         
consequences, and economic instability.                                         

Sykes conducts business in various foreign currencies and is therefore  
exposed to market risk from changes in foreign currency exchange rates and      
interest rates, which could impact its results of operations and financial      
condition. Sykes is also subject to certain exposures arising from the          
translation and consolidation of the financial results of its foreign           
subsidiaries. Sykes has from time to time taken limited actions to attempt to   
mitigate Sykes' foreign transaction exposure. However, there can be no assurance
that the Company will take any actions to mitigate such exposure in the future, 
and if taken that such actions taken will be successful or that future changes  
in currency exchange rates will not have a material impact on Sykes' future     
operating results. A significant change in the value of the dollar against the  
currency of one or more countries where Sykes operates may materially adversely 
affect Sykes' results. Sykes has historically not entered into a hedge contract 
for either its translation risk or its economic risk.                           

Existence of Substantial Competition                                            

The markets for Sykes' services are highly competitive, subject to rapid
change, and highly fragmented. While many companies provide information         
technology services, Sykes believes no one company is dominant. There are       
numerous and varied providers of such services, including firms specializing in 
call center operations, temporary staffing and personnel placement companies,   
general management consulting firms, divisions of large hardware and software   
companies and niche providers of information technology services, many of whom  
compete in only certain markets. Sykes' competitors include many companies who  
may possess substantially greater resources, greater name recognition and a more
established customer base than it does. In contrast to Sykes' competitors,      
in-house personnel often provide the services offered by Sykes. Increased       
competition, the failure of Sykes to compete successfully, pricing pressures,   
loss of market share and loss of clients could have a material adverse effect on
Sykes' business, financial condition, and results of operations.                

Many of Sykes' large clients purchase customer management solutions and 
services primarily from a limited number of preferred vendors. Sykes has        
experienced and continues to anticipate significant pricing pressure from these 
clients in order to remain a preferred vendor. These companies also require     
vendors to be able to provide services in multiple locations. Although Sykes    
believes it can effectively meet its clients' demands, there can be no assurance
that it will be able to compete effectively with other information technology   
services companies. Sykes believes that the most significant competitive factors
in the sale of its services include quality, reliability, scalability,          
flexibility, experience, price and tailored service offerings.                  

Dependence on Senior Management                                                 

The success of Sykes is largely dependent upon the efforts, direction and       
guidance of its senior management. Sykes' continued growth and success also     
depend in part on its ability to attract and retain skilled employees and       
managers and on the ability of its executive officers and key employees to      
manage its operations successfully. Sykes has entered into employment and       
non-competition agreements with its executive officers. The loss of any of      
Sykes' senior management or key personnel, or its inability to attract, retain  
or replace key management personnel in the future, could have a material adverse
effect on Sykes' business, financial condition and results of operations.       

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Control by Principal Shareholder and Anti-Takeover Considerations               

   As of the date of this report, John H. Sykes, Sykes' Chairman of the Board,
President and Chief Executive Officer, beneficially owned more than 43% of      
Sykes' outstanding common stock. As a result, Mr. Sykes will have substantial   
influence in the election of the Company's directors and in determining the     
outcome of other matters requiring shareholder approval.                        

 Sykes' Board of Directors is divided into three classes serving staggered
three-year terms. The staggered Board of Directors and the anti-takeover effects
of certain provisions contained in the Florida Business Corporation Act and in  
Sykes' Articles of Incorporation and Bylaws, including the ability of the Board 
of Directors of Sykes to issue shares of preferred stock and to fix the rights  
and preferences of those shares without shareholder approval, may have the      
effect of delaying, deferring or preventing an unsolicited change in the control
of Sykes. This may adversely affect the market price of Sykes' common stock or  
the ability of shareholders to participate in a transaction in which they might 
otherwise receive a premium for their shares.                                   

Volatility of Stock Price May Result in Loss of Investment                      

The trading price of Sykes' common stock has been and may continue to be
subject to wide fluctuations over short and long periods of time. Sykes believes
that market prices of information technology stocks in general have experienced 
volatility, which could affect the market price of Sykes' common stock          
regardless of Sykes' financial results or performance. Sykes further believes   
that various factors such as general economic conditions, changes or volatility 
in the financial markets, changing market conditions in the information         
technology industry, quarterly variations in Sykes' financial results, the      
announcement of acquisitions, strategic partnerships, or new product offerings, 
and changes in financial estimates and recommendations by securities analysts   
could cause the market price of Sykes' common stock to fluctuate substantially  
in the future.                                                                  

EXECUTIVE OFFICERS OF THE REGISTRANT                                            

  The following table provides the names and ages of the Company's executive
officers, and the positions and offices with the Company currently held by each 
of them:                                                                        

                                                        [Enlarge/Download Table]

        NAME                 AGE                      PRINCIPAL POSITION                                   
-----------------------------------------------------------------------------------------------------------
                                                                                                           
John H. Sykes                 64      Chairman and Chief Executive Officer                                 
James E. Lamar                54      Group Executive and Executive Vice President -  Business Services    
Mitchell I. Nelson            32      Group Executive and Senior Vice President - Business Solutions       
Gerry L. Rogers               55      Group Executive, Senior Vice President and Chief Information Officer 
Charles E. Sykes              38      Senior Vice President - Marketing                                    
Jenna R. Nelson               37      Group Executive and Vice President, Human Resources                  
W. Michael Kipphut            47      Vice President and Chief Financial Officer                           
James T. Holder               42      General Counsel and Corporate Secretary                              

    John H. Sykes has held the titles and responsibilities of Chairman and Chief
Executive Officer of the Company since December 1998. He has been President of  
the Company from inception in 1977 until December 1998. Previously, Mr. Sykes   
was Senior Vice President of CDI Corporation, a publicly held technical services
firm.                                                                           

    James E. Lamar joined the Company in May 1999 as Vice President and Managing
Director of EMEA and was named Group Executive and Executive Vice President -   
Business Services during July 2000. From March 2000 until July 2000, Mr. Lamar  
was named Group Executive and Senior Vice President - International. From 1994  
to 1999, Mr. Lamar held various management positions with Lucent Technologies, a
publicly held telecommunications firm, most recently as Managing Director of    
Licensing for Europe, the Middle East and Africa.                               

Mitchell I. Nelson joined the Company in August 1999 and was named Group
Executive and Senior Vice President - Business Solutions during July 2000. From 
January 1999 to July 1999, Mr. Nelson was Vice President of Professional        
Services Worldwide with IMRglobal, an IT strategy consulting and e-business     
solutions organization. Mr. Nelson was a partner with EC Werks, an              
e-business/e-commerce consulting firm, from October 1997 until December 1999    
when IMRglobal acquired it. From January 1996 to September 1997, Mr. Nelson held
the position of President and Chief Executive Officer for Technology Architects 
until it was sold to                                                            

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EC Werks. Previously, Mr. Nelson was General Manager and Director of            
Professional Services of Waldec Group, a consulting and technology systems      
integration company.                                                            

    Gerry L. Rogers joined the Company in February 1999 as Group Vice President,
North America and was named Group Executive, Senior Vice President and Chief    
Information Officer during July 2000. From March 2000 until July 2000, Mr.      
Rogers was named Group Executive and Senior Vice President - The Americas. From 
1968 to 1999, Mr. Rogers held various management positions with AT&T, a publicly
held telecommunications firm, most recently as General Manager for the Business 
Growth Markets.                                                                 

Charles E. Sykes joined the Company in 1986 and was named Senior Vice   
President - Marketing during March 2000. In December 1996, Mr. Sykes was        
appointed Vice President Sales and held the position of Regional Manager of the 
Midwest Region for Professional Services from 1992 until 1996. Mr. Charles E.   
Sykes is the son of Mr. John H. Sykes.                                          

Jenna R. Nelson joined the Company in August 1993 and was named Group   
Executive and Vice President, Human Resources during January 2001. In August    
1998, Ms. Nelson was appointed Vice President, Human Resources and held the     
position of Director, Human Resources and Administration from August 1996 to    
July 1998. From August 1993 until July 1996, Ms. Nelson served in various       
management positions within the Company, including Director of Administration.  

 W. Michael Kipphut joined the Company in March 2000 as Vice President and
Chief Financial Officer. From September 1998 to February 2000, Mr. Kipphut held 
the position of Chief Financial Officer for USA Floral Products, Inc., a        
publicly held worldwide perishable products distributor. From September 1994    
until September 1998, Mr. Kipphut held the position of Vice President and       
Treasurer for Spalding & Evenflo Companies, Inc., a global manufacturer of      
consumer products.                                                              

  James T. Holder joined the Company in December 2000 as General Counsel and
was named Corporate Secretary in January 2001. From November 1999 until November
2000, Mr. Holder served in a consulting capacity as Special Counsel to Checkers 
Drive-In Restaurants, Inc., a publicly held restaurant operator and franchisor. 
From November 1993 until November 1999, Mr. Holder served in various capacities 
at Checkers including Corporate Secretary, Chief Financial Officer and Senior   
Vice President and General Counsel.                                             

ITEM 2.  PROPERTIES                                                     

The Company's principal executive offices are located in Tampa, Florida.
This facility currently serves as the headquarters for senior management, the   
financial and administrative departments and the Tampa office. The following    
table sets forth additional information concerning the Company's facilities:    

                                                        [Enlarge/Download Table]

                                                                      SQUARE      LEASE     
              PROPERTIES                 GENERAL USAGE                 FEET     EXPIRATION  
              ----------                 -------------                 ----     ----------  
                                                                                            
UNITED STATES LOCATIONS                                                                     

Tampa, Florida             Corporate headquarters                      18,000  December 2002
Tampa, Florida             Office                                      56,900  June 2002    

Ada, Oklahoma              Technical and customer support center       42,000  Company owned
Bismarck, North Dakota     Technical and customer support centers(2)   84,000  Company owned
Charlotte, North Carolina  Technical and customer support center       52,000  October 2001 
Greeley, Colorado          Technical and customer support center       42,000  Company owned
Hays, Kansas               Technical and customer support center       42,000  Company owned
Klamath Falls, Oregon      Technical and customer support center       42,000  Company owned
Manhattan, Kansas          Technical and customer support center       42,000  Company owned
Milton-Freewater, Oregon   Technical and customer support center       42,000  Company owned
Morganfield, Kentucky      Technical and customer support center       42,000  Company owned
Perry County, Kentucky     Technical and customer support center       42,000  Company owned
Minot, North Dakota        Technical and customer support center       42,000  Company owned
Pikesville, Kentucky       Technical and customer support center       42,000  Company owned
Ponca City, Oklahoma       Technical and customer support center       42,000  Company owned
Scottsbluff, Nebraska      Technical and customer support center       42,000  Company owned
Sterling, Colorado         Technical and customer support center       34,000  Company owned
Eveleth, Minnesota         Technical and customer support center       42,000  Company owned

Nashville, Tennessee       Distribution center                         91,200  October 2001 

Atlanta, Georgia           Office                                       4,900  June 2003    
Cary, North Carolina       Office                                       3,700  March 2003   
Charlotte, North Carolina  Office                                       2,900  June 2001    

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                                                        [Enlarge/Download Table]

                                                                        SQUARE       LEASE     
PROPERTIES                   GENERAL USAGE                               FEET      EXPIRATION  
----------                   -------------                               ----      ----------  
                                                                                               
Charlotte, North Carolina    Office                                      37,800  October 2003  
Dallas, Texas                Office                                       3,000  June 2003     
Denver, Colorado             Office                                       2,000  April 2001    
Poughkeepsie, New York       Office                                       1,000  January 2002  
St. Louis, Missouri          Office                                       5,700  September 2001

INTERNATIONAL LOCATIONS                                                                        

Amsterdam, The Netherlands   Technical and customer support center/                            
                             International headquarters                  70,500  July 2004     

Budapest, Hungary            Technical and customer support center       15,700  June 2002     
Edinburgh, Scotland          Technical and customer support              36,000  September 2019
                             center/office                                                     
Heredia, Costa Rica          Technical and customer support centers(2)   23,800  June 2001     
London, Ontario, Canada      Technical and customer support center       45,000  Company owned 
Toronto, Ontario, Canada     Technical and customer support center       14,600  December 2006 
Moncton, New Brunswick       Technical and customer support center        8,200  December 2001 
Les Ulis, France             Technical and customer support center       36,200  January 2007  
Bochum, Germany              Technical and customer support center       29,100  June 2001     
Hannover, Germany            Technical and customer support center       12,500  November 2008 
Hamburg, Germany             Technical and customer support center        6,400  June 2001     
Esslingen, Germany           Technical and customer support center        9,200  December 2005 
Pasewalk, Germany            Technical and customer support center       41,900  July 2001     
Wilhelmshaven, Germany       Technical and customer support centers(2)   36,800  March 2003    
Manila, The Philippines      Technical and customer support center       26,100  October 2002  
Sunninghill, South Africa    Technical and customer support center       12,500  June 2001     
Ed, Sweden                   Technical and customer support center       44,000  November 2002 
Sveg, Sweden                 Technical and customer support center       35,100  June 2001     
Istanbul, Turkey             Technical and customer support center       20,700  June 2001     
Shanghai, PRC                Technical and customer support center       41,900  May 2002      
Florence, Italy              Technical and customer support center       32,300  September 2002
Shannon, Ireland             Technical and customer support center and                         
                             distribution center                         66,000  April 2013    

Aachen, Germany              Distribution center                         49,400  September 2002
Sevran, France               Distribution center                         19,400  August 2002   
Galashiels, Scotland         Distribution center                        126,700  Company owned 
Upplands Vasby, Sweden       Distribution center                         21,300  December 2001 

Stockholm, Sweden            Sales office                                 5,000  December 2001 
London, Ontario, Canada      Sales office                                 2,000  August 2002   
Ottawa, Ontario, Canada      Sales office                                 5,400  March 2002    
Vancouver, British Columbia  Sales office                                   400  June 2002     

    The Company owns each of its domestic technical and customer support centers
as identified and anticipates that additional support centers may be required   
due to growth and expansion. In addition to the above list, the Company has     
established technical and customer support centers at its customer's production 
facilities in Germany, Peoples Republic of China and Turkey.                    

   The Company currently has two domestic facilities scheduled to open in 2001
and may operate from time-to-time in temporary facilities to accommodate growth 
before new support centers are available. The Company is currently utilizing one
such temporary facility totaling 27,800 square feet.                            

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ITEM 3.   LEGAL PROCEEDINGS                                                     

A.  CLASS ACTION LITIGATION                                                     

 The Company is aware of 16 purported class action lawsuits that have been
filed against Sykes and certain of its officers alleging violations of federal  
securities laws. All of the actions have been consolidated into one case which  
is pending in the United States District Court for the Middle District of       
Florida. The plaintiffs purport to assert claims on behalf of a class of        
purchasers of Sykes common stock during the period from July 27, 1998 through   
September 18, 2000. The consolidated action claims violations of Sections 10(b) 
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated     
thereunder. Among other things, the consolidated action alleges that during     
2000, 1999 and 1998, the Company and certain of its officers made materially    
false statements concerning the Company's financial condition and its future    
prospects. The consolidated complaint also claims that certain of the Company's 
quarterly financial statements during 1999 and 1998 were not prepared in        
accordance with generally accepted accounting principles. The consolidated      
action seeks compensatory and other damages, and costs and expenses associated  
with the litigation. The Company believes these claims are without merit and    
intends to defend the actions vigorously.                                       

The Company is also aware of a lawsuit filed by Kyrus that asserts      
functionality issues associated with software that Kyrus had licensed from the  
Company. At the time of the software license, the Company and Kyrus entered into
an agreement which provided for a return of a portion of the convertible        
preferred stock transferred to the Company in consideration of the license in   
the event that revenues generated by Kyrus from the software did not reach      
agreed upon levels. In this lawsuit, Kyrus claims that revenues from the        
software did not meet the minimum levels agreed upon and that Kyrus is therefore
entitled to a return of the convertible preferred stock having a fair value of  
$4.5 million at the time of the software license. The Company has not recorded  
the convertible preferred stock subject to the contingency in the accompanying  
Consolidated Balance Sheets as of December 31, 2000 and 1999. Therefore, in the 
event the Company is required to return the preferred stock to Kyrus, the return
will not impact the Company's financial position or results of operations. This 
litigation is currently pending in the Court of Common Pleas for Greenville     
County, South Carolina. This lawsuit is in the very early stages and formal     
discovery has not yet begun. The Company intends to vigorously defend this      
lawsuit.                                                                        

     Although the Company intends to vigorously defend these lawsuits, it cannot
predict their outcome or the impact they may have on the Company. The Company   
also cannot predict whether any other suits, claims, or investigations may arise
in the future based on the same claims. The outcome of any of these lawsuits or 
any future lawsuits, claims, or investigations relating to the same subject     
matter may have a material adverse impact on the Company's financial condition  
and results of operations.                                                      

B.  OTHER LITIGATION                                                            

   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 it has adequate legal defenses and/or provided adequate accruals for       
related costs such that the ultimate outcome will not have a material adverse   
effect on the Company's future financial position.                              

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                    

No matter was submitted to a vote of security-holders during the fourth 
quarter of the year covered by this report.                                     

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 PART II

ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED SHAREHOLDER      
MATTERS                                                       

    Sykes' common stock is quoted on the NASDAQ National Market under the symbol
SYKE. The following table sets forth, for the periods indicated, certain        
information as to the high and low sale prices per share of Sykes' common stock 
as quoted on the NASDAQ National Market.                                        

                                                                [Download Table]

Year ended December 31, 2000:           High           Low  
                                       -------       -------
                                                            
First Quarter...................       $52.250       $13.375
Second Quarter..................        23.250        12.250
Third Quarter...................        16.000         4.375
Fourth Quarter..................         7.000         3.313

Year ended December 31, 1999:                               

First Quarter...................       $32.875       $24.250
Second Quarter..................        34.750        20.438
Third Quarter...................        33.750        21.625
Fourth Quarter..................        51.500        22.750

   Holders of Sykes' common stock are entitled to receive dividends out of the
funds legally available when and if declared by the Board of Directors. Sykes   
has not declared or paid any cash dividends on its common stock in the past.    
Sykes currently anticipates that all of its earnings will be retained for       
development and expansion of the Company's business and does not anticipate     
paying any cash dividends in the foreseeable future.                            

   As of March 1, 2001, the last sale price of the registrant's common stock
was $4.63 on the NASDAQ National Market, and there were approximately 1,607     
holders of record of the common stock. The Company believes that there were     
approximately 12,000 beneficial owners of its common stock.                     

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ITEM 6. SELECTED FINANCIAL DATA                                                 

SELECTED FINANCIAL DATA                                                         

 The following selected financial data has been derived from the Company's
consolidated financial statements, as restated. The information below should be 
read in conjunction with "Management's Discussion and Analysis of Financial     
Condition and Results of Operations," and the Company's Consolidated Financial  
Statements and related notes.                                                   

                                                        [Enlarge/Download Table]

                                              Year Ended    Year Ended    Year Ended     Year Ended    Year Ended  
                                              December 31,  December 31,  December 31,   December 31,  December 31,
(In thousands, except per share data)             2000          1999          1998           1997          1996    
                                                ---------     ---------     ---------      ---------     --------- 
                                              Restated (1)   Restated(1)   Restated (1)                            
                                                                                                                   
INCOME STATEMENT DATA:                                                                                             
Revenues ....................................   $ 603,606     $ 572,742     $ 460,102      $ 351,593     $ 248,699 
Income (loss) from operations ...............     (12,308)       37,037        31,414         24.392        21,611 
Net income ..................................      46,787        20,534         1,656          7,631        11,685 
Net income per basic share ..................        1.13          0.49          0.04           0.19          0.32 
Net income per diluted share ................        1.13          0.48          0.04           0.18          0.31 

PRO FORMA INFORMATION ASSUMING ACCOUNTING                                                                          
CHANGE IS APPLIED RETROACTIVELY (2)                                                                                
Revenues ....................................   $ 603,606     $ 571,243     $ 460,102      $ 351,593     $ 248,699 
Income (loss) from operations ...............     (12,308)       35,538        31,414         24,392        21,611 
Net income ..................................      47,706        19,615         1,656          7,631        11,685 
Net income per basic share ..................        1.15          0.47          0.04           0.19          0.32 
Net income per diluted share ................        1.15          0.46          0.04           0.18          0.31 

PRO FORMA INFORMATION EXCLUDING ONE-TIME                                                                           
ITEMS ASSUMING ACCOUNTING CHANGE IS APPLIED                                                                        
RETROACTIVELY (2):                                                                                                 
Revenues ....................................   $ 603,606     $ 571,243     $ 460,102      $ 351,593     $ 248,699 
Income from operations (3,4,5,6) ............      25,996        41,517        47,761         36,605        21,611 
Net income (3,4,5,6,7,8,9) ..................      13,771        23,277        29,202         23,877        11,685 
Net income per basic share (3,4,5,6,7,8,9)...        0.33          0.55          0.71           0.58          0.32 
Net income per diluted share (3,4,5,6,7,8,9).        0.33          0.54          0.69           0.56          0.31 

BALANCE SHEET DATA:                                                                                                
Working capital .............................   $  92,964     $  93,075     $  84,632      $ 116,661     $ 116,687 
Total assets ................................     357,954       420,732       362,270        268,197       238,318 
Long-term debt, less current installments ...       8,759        80,053        75,448         35,990         8,571 
Shareholders' equity ........................     195,892       193,233       158,316        152,560       147,402 

(1)  See Note 1 of the notes to the Consolidated Financial Statements regarding 
    the restatement of the Company's 2000, 1999 and 1998 financial statements.

(2)  Effective January 1, 2000, the Company changed its policy regarding the    
  recognition of revenue based on criteria established by Staff Accounting
Bulletin No. 101, "Revenue Recognition in Financial Statements" ("SAB 
101").                                                                

(3)  The balance for 2000 is exclusive of $7.8 million of compensation expense  
related to payments made to certain SHPS, Incorporated ("SHPS") option
     holders as part of the Company's sale of a 93.5% ownership interest in SHPS
     that occurred on June 30, 2000 and $30.5 million of restructuring and other
charges.                                                              

(4)  The balance for 1999 is exclusive of $6.0 million of charges associated    
with the impairment of long-lived assets.                             

(5)  The balance for 1998 is exclusive of $0.5 million of expense associated    
   with accrued severance costs, $1.4 million of one-time merger and related
charges associated with acquisitions and $14.5 million of acquisition 
related in-process research and development costs.                    

(6)  The balance for 1997 is exclusive of $12.2 million of charges associated   
  with the impairment of long-lived assets and one-time merger and related
charges associated with an acquisition.                               

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(7)  The balance for 2000 is exclusive of an $84.0 million gain from the sale of
 a 93.5% ownership interest in SHPS that occurred on June 30, 2000 and a
     gain of $0.7 million related to the sale of a small Canadian operation that
sold roadside assistance memberships for which the Company provides   
    customer support and $38.3 million of one-time items as identified in note
(3) above.                                                            

(8)  The balance for 1998 is exclusive of $3.9 million of acquisition related   
in-process research and development costs incurred by a joint venture 
entity, $7.3 million of charges associated with the write-down of     
   marketable securities and $16.4 million of one-time charges as identified
in note (5) above.                                                    

(9)  The balance for 1997 is exclusive of $2.8 million of expense associated    
     with acquisition related in-process research and development costs incurred
by a joint venture entity, $1.2 million of one-time merger and related
charges associated with an acquisition and $12.2 million of one-time  
charges as identified in note (6) above.                              

ITEM 7.   MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND       
RESULTS OF OPERATIONS                                       

   Subsequent to the issuance of its consolidated financial statements for the
year ended December 31, 2000, the Company revised its method of accounting for  
excess cash grants. As a result, the consolidated financial statements for the  
years ended December 31, 2000, 1999 and 1998 have been restated from the amounts
previously reported. The effects of the restatement are presented in Note 1 to  
the consolidated financial statements and have been reflected herein. The       
following should be read in conjunction with the restated Consolidated Financial
Statements, including the notes thereto. The following discussion compares the  
restated financial condition and results of operations for the year ended       
December 31, 2000 ("2000") to the year ended December 31, 1999 ("1999"), and    
1999 to the year ended December 31, 1998 ("1998").                              

The following discussion and analysis and other sections of this report 
contain forward-looking statements that involve risks and uncertainties. Words  
such as "may," "expects," "anticipates," "intends," "plans," "believes,"        
"seeks," "estimates," variations of such words, and similar expressions are     
intended to identify such forward-looking statements. Similarly, statements that
describe the Company's future plans, objectives, or goals also are              
forward-looking statements. Future events and the Company's actual results could
differ materially from the results reflected in these forward-looking           
statements, as a result of certain of the factors set forth below and elsewhere 
in this analysis and in this Form 10-K/A for the year ended December 31, 2000 in
Item 1 in the section entitled "Factors Influencing Future Results And Accuracy 
Of Forward-Looking Statements."                                                 

OVERVIEW                                                                        

The Company derives its revenue from providing outsourced customer    
management solutions and services through two business segments - Business      
Solutions and Business Services.                                                

Business Solutions provides professional services in e-commerce and   
customer relationship management (CRM) with a focus on business strategy        
development, project management, business process redesign, change management,  
knowledge management, education, training and web development. Revenues from    
Business Solutions usually are billed on a time and material basis, generally by
the hour, and revenues generally are recognized as the services are provided.   
Revenues from fixed price contracts, generally with terms of less than one year,
are recognized using the percentage-of-completion method. A significant majority
of the Company's revenue is derived from non-fixed price contracts. The Company 
has not experienced material losses due to fixed price contracts and does not   
anticipate a significant increase in revenue derived from such contracts in the 
future.                                                                         

Business Services provides customer care outsourcing services with an   
emphasis on technical support and customer service, delivered through multiple  
communication channels encompassing phone, e-mail, web and chat. Revenue from   
technical support and customer service, provided through the Company's support  
centers, is recognized as services are rendered. These services are billed on an
amount per e-mail, a fee per call, a rate per minute or on a time and material  
basis. Revenue from distribution and fulfillment services is generally billed on
a per unit basis.                                                               

  Direct salaries and related costs include direct personnel compensation,
statutory and other benefits associated with such personnel and other direct    
costs associated with providing services to customers. General and              
administrative expenses include administrative, sales and marketing, occupancy, 
depreciation and amortization, and other indirect costs.                        

    Other expense, excluding the effect of one-time items, consists primarily of
interest expense, net of interest income and foreign currency transaction gains 
and losses. Foreign currency transaction gains and losses generally result from 
exchange rate fluctuations on intercompany transactions. During 1997, the       
Company entered into a joint venture and the results of this entity are included
in the other income (expense) section of the Consolidated Statements of Income  
for the time period the entity operated as a 50% joint venture. Effective       
September 1, 1998, the Company acquired the remaining portion of this joint     
venture.                                                                        

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    Recognition of income associated with grants from local or state governments
of land and the acquisition of property and equipment are deferred and          
recognized as a reduction in general and administrative costs over the          
corresponding useful lives of the related property and equipment. Deferred      
property and equipment grants, net of amortization, totaled $31.8 million and   
$24.7 million at December 31, 2000 and 1999, respectively.                      

The Company's effective tax rate for the periods presented reflects the 
effects of foreign taxes, net of foreign income not taxed in the United States, 
nondeductible expenses for income tax purposes and a tax basis difference on the
sale of an equity interest in SHPS.                                             

RESULTS OF OPERATIONS                                                   

  The following table sets forth for the periods indicated the percentage of
revenues represented by certain items reflected in the Company's statements of  
income:                                                                         

                                                                [Download Table]

                                        Year Ended    Year Ended    Year Ended  
                                        December 31,  December 31,  December 31,
                                            2000          1999         1998     
                                           ------        ------       ------    
                                        Restated (1)  Restated (1)  Restated (1)

                                                                                
PERCENTAGES OF REVENUES:                                                        

Revenues .............................      100.0%        100.0%       100.0%   
Direct salaries and related costs ....       63.3          64.6         63.0    
General and administrative (2) .......       32.4          27.9         27.0    
Compensation expense associated with                                            
   exercise of options ...............        1.3            --           --    
Restructuring and other charges ......        5.0            --           --    
Impairment of long-lived assets ......         --           1.0           --    
Acquired in-process research                                                    
   and development (3) ...............         --            --          3.1    
                                           ------        ------       ------    
Income (loss) from operations ........       (2.0)          6.5          6.9    
Other income (expense) (4)(5)(6) .....       13.4          (0.6)        (2.7)   
                                           ------        ------       ------    
Income before provision for income                                              
 taxes and cumulative effect of change                                          
 in accounting principle .............       11.4           5.9          4.2    
Provision for income taxes ...........        3.5           2.4          3.8    
                                           ------        ------       ------    
Income before cumulative effect of                                              
 change in accounting principle ......        7.9           3.5          0.4    

Cumulative effect of change in                                                  
 accounting principle ................       (0.2)           --           --    
                                           ------        ------       ------    
   Net income (2)(3)(4)(5)(6) ........        7.7%          3.5%         0.4%   
                                           ======        ======       ======    

(1)  See Note 1 of the notes to the Consolidated Financial Statements regarding 
    the restatement of the Company's 2000, 1999 and 1998 financial statements.

(2)  Includes charges associated with accrued severance pay and one-time merger 
    and related charges of 0.4% related to the acquisitions completed in 1998.

(3)  Includes expense associated with the write-off of acquisition related      
    in-process research and development costs of 3.1% related to the Company's
    original ownership and subsequent acquisition of the remaining outstanding
shares of SHPS.                                                       

(4)  Includes expense associated with the write-off of acquisition related      
   in-process research and development costs of 0.8% related to acquisitions
completed by SHPS in 1998.                                            

(5)  Includes expense associated with the write-down of marketable securities of
1.6% in 1998.                                                         

(6)  Includes gain on sale of SHPS of 13.9% in 2000.                            

2000 COMPARED TO 1999                                                           

Revenues. For 2000, the Company recorded consolidated revenues of $603.6
million, an increase of $30.9 million or 5.4%, from the $572.7 million of       
consolidated revenues for the comparable period during 1999. Exclusive of SHPS  
(in which 93.5% of the                                                          

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Company's ownership interest was sold on June 30, 2000), revenues increased     
$68.2 million or 13.6% to $567.9 million for 2000 from $499.7 million for the   
comparable period during 1999. This growth in revenue was the result of a $29.0 
million or 5.5% increase in Business Services' revenues ($66.3 million or 14.8% 
exclusive of SHPS) and an increase of $1.9 million or 3.8% from Business        
Solutions' revenues.                                                            

The increase in Business Services' revenues for 2000 was primarily      
attributable to an increase in the number of technical and customer support     
centers providing services throughout the period, and the resulting increase in 
e-mail requests and telephony call volumes from clients, the licensing of the   
Company's diagnostic software, partially offset by a decrease from distribution 
and fulfillment services revenues. The new support centers were required as a   
result of continued organic growth of technical and customer support services   
from both e-commerce and telephony support services. The Company had an         
additional four domestic and two international technical and customer support   
centers fully operational in 2000 and significantly expanded an additional four 
international centers. During 2000, the Company recognized $8.0 million of      
revenue associated with the licensing of the Company's diagnostic software, of  
which $3.5 million related to a one-year AnswerTeam(TM) licensing agreement     
and $3.6 million related to the pro rata recognition of revenue associated with 
a multi-year AnswerTeam(TM) licensing agreement completed during 1999. The      
decrease in distribution and fulfillment services revenue for 2000 was primarily
attributable to the closing of three international and two domestic distribution
and fulfillment centers as part of the Company's restructuring plans and a      
client's decision to discontinue its operations within North America.           

   The increase in Business Solutions' revenues was attributable to a focus on
professional e-commerce services, including web design, development and program 
management and an increase in the average bill rate charged for consulting      
services. The increase in Business Solutions' revenue for 2000 is partially     
offset by a $0.7 million decline in worldwide translation and localization      
services and a $1.9 million reduction in revenue associated with the sale of the
Company's Manufacturing and Distribution operations during the second quarter of
1999.                                                                           

Direct Salaries and Related Costs. Direct salaries and related costs    
increased $12.3 million or 3.3% to $382.2 million for 2000, from $369.9 million 
in 1999. As a percentage of revenues, direct salaries and related costs         
decreased to 63.3% in 2000 from 64.6% for the comparable period in 1999. The    
increase in the dollar amount was primarily attributable to a $43.4 million     
increase in salaries and benefits to support revenue growth and associated      
training costs, partially offset by a $27.3 million decrease in direct material 
costs associated with distribution and fulfillment services. Exclusive of SHPS, 
direct salaries and all related costs increased $35.1 million or 10.8% to $359.0
million or 63.2% of revenue. The decrease in direct salaries and all related    
costs as a percentage of revenue resulted from economies of scale associated    
with spreading costs over a larger revenue base.                                

 General and Administrative. General and administrative expenses increased
$35.5 million or 22.2% to $195.4 million for 2000, from $159.9 million in 1999. 
As a percentage of revenues, general and administrative expenses increased to   
32.4% in 2000 from 27.9% for the comparable period in 1999. The increase in both
the dollar amount and percentage of revenue of general and administrative       
expense was primarily attributable to a $15.2 million increase in salaries and  
benefits to support the Company's organic growth, an $8.2 million increase in   
telecom costs, a $4.0 million increase in lease and rent expense, a $2.5 million
increase in depreciation expense associated with facility and capital equipment 
expenditures all generally incurred in connection with the expansion of the     
Company's technical and customer support services, and a $6.9 million increase  
in bad debt expense due principally to weaker economic conditions for dot.com   
clients. Exclusive of SHPS, general and administrative expenses increased $45.8 
million or 33.0% to $184.5 million, or 32.5% of revenue.                        

  Compensation Expense. Compensation expense associated with the exercise of
options was $7.8 million for 2000. This charge related to payments made to      
certain SHPS' option holders as part of the Company's sale of a 93.5% ownership 
interest in SHPS that occurred on June 30, 2000.                                

Restructuring and Other Charges. The Company recorded restructuring and 
other charges of $30.5 million during 2000. These charges were associated with  
(1) the consolidation of certain of the Company's distribution and fulfillment  
operations in Europe; (2) the closure of the U.S. distribution and fulfillment  
operations; (3) the elimination of the worldwide translation and localization   
business; (4) the consolidation of certain of the Company's professional        
services locations; (5) elimination of redundant property, leasehold            
improvements and equipment; (6) lease termination costs associated with vacated 
properties and transportation equipment; and (7) severance payments to the      
Company's former President.                                                     

Other Income and Expense. Other income was $81.2 million during 2000,   
compared to other expense of $3.5 million during 1999. Excluding the $84.0      
million gain associated with the sale of SHPS, the Company reported other       
expense of $2.8 million for 2000. The decrease in other expense for 2000,       
excluding the gain for the sale of SHPS, was attributable to a decrease in      
interest expense                                                                

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associated with a decrease in the Company's average outstanding debt position,  
partially offset by additional interest expense of $0.7 million related to the  
cancellation of a contractual obligation. The Company's average debt balance for
2000 was $44.8 million compared to $78.8 million for 1999. The decrease in the  
average debt balance is principally due to the repayment of debt from the       
proceeds generated from the sale of SHPS, partially offset by increases in debt 
from capital expenditures and the Company's repurchase of 3.0 million shares of 
its common stock during 2000 that are being held as treasury shares.            

  On June 30, 2000, the Company sold 93.5% of its ownership interest in SHPS
for $165.5 million cash. The sale of SHPS resulted in a gain for financial      
accounting purposes of $84.0 million ($59.9 million net of taxes).              

    Income Taxes. The provision for income taxes increased $8.2 million to $21.2
million for 2000 from $13.0 million for the comparable period in 1999. The      
increase in the provision for income taxes was primarily attributable to the    
gain associated with the sale of SHPS, partially offset by the compensation     
expense associated with the exercise of options and the restructuring and other 
charges that were incurred during 2000. The Company's effective tax rate        
exclusive of the gain and one-time items was 38.7% for 2000 compared to 38.7%   
for the comparable 1999 period.                                                 

Net Income. As a result of the foregoing, inclusive of one-time items   
identified above, net income increased to $46.8 million in 2000 from $20.5      
million in 1999. Exclusive of one-time items, including a gain of $84.0 million 
for the sale of SHPS, $7.8 million related to payouts made to SHPS' options     
holders and $30.5 million in restructuring and other charges, net income for    
2000 would have been $12.9 million.                                             

1999 COMPARED TO 1998                                                           

   Revenues. Revenues increased $112.6 million, or 24.5%, to $572.7 million in
1999 from $460.1 million in 1998. Exclusive of SHPS, revenues increased $66.5   
million, or 15.3%, to $499.8 million from $433.3 million in 1998. The growth in 
revenues reflected an increase of $133.3 million, or 34.3% in Business Services'
revenues ($87.1 million, or 24.0%, exclusive of SHPS) and a decrease of $20.6   
million in Business Solutions' revenues.                                        

The increase in Business Services' revenues for 1999 was primarily      
attributable to an increase in the number of technical and customer support     
centers providing services throughout the period and the resulting increase in  
e-mail requests and telephony call volumes from clients. The new support centers
were required as a result of continued growth of technical and customer support 
services from both e-mail and telephony support services. During 1999, the      
Company opened three domestic and four international technical and customer     
support centers, significantly expanded an additional four international centers
and announced the construction of an additional five domestic centers. An       
increase in distribution and fulfillment services revenue was attributable to   
the Company's e-commerce initiatives in 1999.                                   

   The decrease in Business Solutions' revenues for 1999 was attributable to a
decline in hours billed to customers for consulting services, partially offset  
by an increase in the average bill rate, the sale of the Company's Manufacturing
and Distribution operation, and to a decline in worldwide translation and       
localization services due to a delay in the commencement of certain projects    
when compared to 1998.                                                          

Direct Salaries and Related Costs. Direct salaries and related costs    
increased $80.0 million, or 27.6%, to $369.8 million in 1999 from $289.8 million
in 1998. As a percentage of revenues, direct salaries and related costs         
increased to 64.6% in 1999 from 63.0% in the comparable 1998 year. The increase 
was primarily attributable to the addition of personnel to support revenue      
growth and associated employee benefit and training costs.                      

 General and Administrative. General and administrative expenses increased
$41.5 million, or 33.4%, to $165.9 million in 1999, inclusive of a $6.0 million 
one-time charge associated with the impairment of long-lived assets. As a       
percentage of revenues and inclusive of the one-time charge, general and        
administrative expenses increased to 29.0% in 1999 from 27.0% in 1998. The      
increase in the amount of general and administrative expenses was primarily     
attributable to a $17.7 million increase in salaries and benefits, a $10.6      
million increase in depreciation expense associated with facility and capital   
equipment expenditures incurred in connection with the expansion of the         
Company's technical and customer support centers and distribution and           
fulfillment services, the $6.0 million one-time charge associated with the      
impairment of long-lived assets, and to a $4.3 million increase in amortization 
expense, primarily associated with goodwill incurred as part of the SHPS        
acquisition. General and administrative expenses, exclusive of the $6.0 million 
charge associated with the impairment of long-lived assets, increased $35.5     
million, or 28.5%, to $159.9 million in 1999, or 27.9% of revenue.              

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Impairment of Long-Lived Assets. As part of the original ownership and  
subsequent acquisition of the remaining outstanding shares of SHPS, the Company 
determined that the technical feasibility of SHPS' in-process technology had not
been established and a portion of the technology had no alternative use.        
Therefore, the Company recorded a charge of approximately $14.5 million related 
to the write-off of the acquired in-process research and development during     
1998.                                                                           

   Other Expense. Other expense was $3.5 million during 1999 compared to $12.3
million during 1998. The other expense balance for 1998 is inclusive of a $3.9  
million loss from joint venture and a $7.3 million write-down of a marketable   
security. The loss from the joint venture was attributable to acquisition       
related in-process research and development costs associated with acquisitions  
completed by the joint venture, which were recorded as other expense. The       
increase in other expense for 1999 exclusive of the loss from the joint venture 
and the write-down of a marketable security was primarily attributable to an    
increase in the Company's debt position as a result of the acquisition of SHPS  
completed during 1998.                                                          

Income Taxes. The provision for income taxes decreased $4.5 million, or 
25.7%, to $13.0 million during 1999 from $17.5 million during 1998. The dollar  
decrease was attributable to a lower amount of income before provision for      
income taxes, exclusive of one-time charges. Sykes' effective tax rate decreased
to 38.7% during 1999, versus 91.3% for 1998. The effective tax rate for 1998 was
affected by approximately $14.5 million of non-deductible charges associated    
with the write-off of in-process research and development costs.                

Net Income. As a result of the foregoing, net income inclusive of the   
one-time charge identified above increased to $20.5 million in 1999 from $1.7   
million in 1998. Net income for 1999, exclusive of the $6.0 million charge      
associated with the impairment of long-lived assets would have been $24.2       
million.                                                                        

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QUARTERLY RESULTS                                                               

The following information presents unaudited quarterly operating results, as    
restated, for the Company for 2000 and 1999. The data has been prepared by the  
Company on a basis consistent with the Consolidated Financial Statements, as    
restated, included elsewhere in this Form 10-K/A, and include all adjustments,  
consisting of normal recurring accruals, that the Company considers necessary   
for a fair presentation thereof. The operating results for the quarters ended   
September 30, 2000, June 30, 2000 and March 31, 2000 have been adjusted to give 
effect to Staff Accounting Bulletin No. 101, "Revenue Recognition in Financial  
Statements" ("SAB 101"), which was adopted in the fourth quarter of 2000,       
retroactive to January 1, 2000 in accordance with Statement of Financial        
Accounting Standards No. 3, "Reporting Accounting Changes in Interim Financial  
Statements", and certain quarters in the two-year period ended December 31, 2000
have been restated to give effect to the restatement related to the Company's   
method of accounting for cash grants, as discussed in Note 1 to the Consolidated
Financial Statements. These operating results are not necessarily indicative of 
the Company's future performance.                                               

(In thousands, except per share data)                                           

                                                        [Enlarge/Download Table]

AS ADJUSTED FOR SAB 101,                                                                            
EFFECTIVE JANUARY 1, 2000                             12/31/00    9/30/00     6/30/00     3/31/00   
                                                      ---------   ---------   ---------   --------- 
                                                                                          Restated  
                                                                                            (1)     

                                                                                                    
Revenues ...........................................  $ 148,144   $ 136,954   $ 155,798   $ 162,710 
Direct salaries and related costs ..................     94,003      87,940      98,422     101,871 
General and administrative (2) .....................     48,609      52,064      47,787      46,914 
Compensation expense associated with exercise                                                       
 of options ........................................         --          --       7,836          -- 
Restructuring and other charges ....................     20,828          --       9,640          -- 
                                                      ---------   ---------   ---------   --------- 

Income (loss) from operations ......................    (15,296)     (3,050)     (7,887)     13,925 
Other income (expense) (3) .........................        800      (1,434)     83,076      (1,237)
                                                      ---------   ---------   ---------   --------- 

Income (loss) before provision for income taxes                                                     
 and cumulative effect of change in accounting                                                      
 principle .........................................    (14,496)     (4,484)     75,189      12,688 
Provision for income taxes .........................     (3,765)     (1,660)     21,693       4,923 
                                                      ---------   ---------   ---------   --------- 
Income (loss) before cumulative effect of                                                           
 change in accounting principle ....................    (10,731)     (2,824)     53,496       7,765 
Cumulative effect of change in accounting principle,                                                
 net of income taxes of $580 .......................         --          --          --        (919)
                                                      ---------   ---------   ---------   --------- 
Net income (loss) ..................................  $ (10,731)  $  (2,824)  $  53,496   $   6,846 
                                                      =========   =========   =========   ========= 

Net income (loss) per basic share:                                                                  
   Income (loss) before cumulative effect of change                                                 
    in accounting principle ........................  $   (0.27)  $   (0.07)  $    1.27   $    0.18 

   Cumulative effect of change in accounting                                                        
    principle ......................................         --          --          --       (0.02)
                                                      ---------   ---------   ---------   --------- 
   Net income (loss) per basic share ...............  $   (0.27)  $   (0.07)  $    1.27   $    0.16 
                                                      =========   =========   =========   ========= 
Total weighted average basic shares ................     40,373      41,134      42,031      42,606 

Net income (loss) per diluted share:                                                                
   Income (loss)  before cumulative effect of change                                                
    in accounting principle ........................  $  (0.27)   $   (0.07)  $    1.27   $    0.18 

   Cumulative effect of change in accounting                                                        
    principle ......................................         --          --          --       (0.02)
                                                      ---------   ---------   ---------   --------- 
   Net income (loss) per diluted share .............  $   (0.27)  $   (0.07)  $    1.27   $    0.16 
                                                      =========   =========   =========   ========= 

Total weighted average diluted shares ..............     40,373      41,134      42,098      42,902 

                                                        [Enlarge/Download Table]

AS ADJUSTED FOR SAB 101,                                                                            
EFFECTIVE JANUARY 1, 2000                             12/31/99     9/30/99     6/30/99     3/31/99  
                                                      ---------   ---------   ---------   --------- 
                                                      Restated    Restated    Restated    Restated  
                                                        (1)          (1)         (1)         (1)    

                                                                                                    
Revenues ...........................................  $ 159,433   $ 140,967   $ 135,964   $ 136,378 
Direct salaries and related costs ..................    105,142      92,523      88,938      83,247 
General and administrative (2) .....................     50,123      40,227      38,693      36,812 
Compensation expense associated with exercise of                                                    
 options ...........................................         --          --          --          -- 
Restructuring and other charges ....................         --          --          --          -- 
                                                      ---------   ---------   ---------   --------- 

Income from operations .............................      4,168       8,217       8,333      16,319 
Other income (expense) (3) .........................     (1,092)       (987)       (863)       (575)
                                                      ---------   ---------   ---------   --------- 

Income before provision for income taxes and                                                        
 cumulative effect of change in accounting                                                          
 principle .........................................      3,076       7,230       7,470      15,744 
Provision for income taxes .........................      1,194       2,809       2,891       6,092 
                                                      ---------   ---------   ---------   --------- 
Income before cumulative effect of change                                                           
 in accounting principle ...........................      1,882       4,421       4,579       9,652 
Cumulative effect of change in accounting principle,                                                
 net of income taxes of $580 .......................         --          --          --          -- 
                                                      ---------   ---------   ---------   --------- 
Net income .........................................  $   1,882   $   4,421   $   4,579   $   9,652 
                                                      =========   =========   =========   ========= 

Net income per basic share:                                                                         
   Income before cumulative effect of change                                                        
    in accounting principle ........................  $    0.04   $    0.11   $    0.11   $    0.23 

   Cumulative effect of change in accounting                                                        
    principle ......................................         --          --          --          -- 
                                                      ---------   ---------   ---------   --------- 
   Net income per basic share ......................  $    0.04   $    0.11   $    0.11   $    0.23 
                                                      =========   =========   =========   ========= 
Total weighted average basic shares ................     42,356      42,281      42,083      41,459 

Net income per diluted share:                                                                       
   Income before cumulative effect of change                                                        
    in accounting principle ........................  $    0.04   $    0.10   $    0.11   $    0.23 

   Cumulative effect of change in accounting                                                        
    principle ......................................         --          --          --          -- 
                                                      ---------   ---------   ---------   --------- 
   Net income per diluted share ....................  $    0.04   $    0.10   $    0.11   $    0.23 
                                                      =========   =========   =========   ========= 

Total weighted average diluted shares ..............     43,063      43,032      43,097      42,824 

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(In thousands, except per share data)                                           

                                                        [Enlarge/Download Table]

AS PREVIOUSLY REPORTED                  12/31/00   9/30/00    6/30/00    3/31/00    12/31/99   9/30/99    6/30/99    3/31/99  
                                        -------    -------    -------    -------    -------    -------    -------    -------  
                                                                                                                              
  Revenues ...........................  $148,144   $137,570   $155,867   $161,312   $159,433   $140,967   $135,964   $136,378 
  Direct salaries and related costs ..    94,003     88,254     98,606    102,211    105,142     92,523     88,938     83,247 
  General and administrative (2) .....    48,609     52,124     45,389     46,915     49,229     40,350     37,767     36,277 
  Compensation expense associated                                                                                             
     with exercise of options ........        --         --      7,836         --         --         --         --         -- 
  Restructuring and other charges ....    20,828         --      9,640         --         --         --         --         -- 
                                         -------    -------    -------    -------    -------    -------    -------    ------- 

  Income (loss) from operations ......   (15,296)    (2,808)    (5,604)    12,186      5,062      8,094      9,259     16,854 
  Other income (expense) (3) .........       800     (1,434)    83,076     (1,237)    (1,092)      (987)      (863)      (575)
                                         -------    -------    -------    -------    -------    -------    -------    ------- 

  Income (loss) before provision for                                                                                          
     income taxes ....................   (14,496)    (4,242)    77,472     10,949      3,970      7,107      8,396     16,279 
  Provision for income taxes .........    (3,765)    (1,569)    22,579      4,248      1,540      2,761      3,249      6,300 
                                         -------    -------    -------    -------    -------    -------    -------    ------- 

  Net income (loss) ..................  $(10,731)  $ (2,673)   $54,893    $ 6,701    $ 2,430    $ 4,346    $ 5,147    $ 9,979 
                                         =======    =======    =======    =======    =======    =======    =======    ======= 

  Net income (loss) per basic share .. $  (0.27)   $ (0.06)   $  1.31    $  0.16    $  0.06    $  0.10    $  0.12    $  0.24  
                                         =======    =======    =======    =======    =======    =======    =======    ======= 

  Total weighted average basic shares     40,373     41,134     42,031     42,606     42,356     42,281     42,083     41,459 

  Net income (loss) per diluted share   $  (0.27)   $ (0.06)   $  1.30    $  0.16    $  0.06    $  0.10    $  0.12    $  0.23 
                                         =======    =======    =======    =======    =======    =======    =======    ======= 

  Total weighted average diluted                                                                                              
     shares ..........................    40,373     41,134     42,098     42,902     43,063     43,032     43,097     42,824 

(1)  See Note 1 of the notes to the Consolidated Financial Statements regarding 
    the restatement of the Company's 2000, 1999 and 1998 financial statements.
  Net income for the quarter ended March 31, 2000, as adjusted for SAB 101
  before restatement, was $5.7 million, or $0.13 per basic share and $0.13
per diluted share.                                                    

(2)  The quarter ended December 31, 1999 includes $6.0 million of charges       
associated with the write-down of software and computer equipment.    

(3)  The quarter ended June 30, 2000 includes an $84.0 million gain associated  
with the sale of SHPS.                                                

LIQUIDITY AND CAPITAL RESOURCES                                                 

 The Company's primary sources of liquidity are cash flows from operations
and available borrowings under its credit facilities. The Company has utilized  
its capital resources to make capital expenditures associated primarily with its
technical and customer support services, invest in technology applications and  
tools to further develop the Company's service offerings, repurchase its shares 
in the open market, and for working capital and general corporate purposes. In  
future periods, the Company intends similar uses of any such funds, including   
possible additional acquisitions.                                               

During 2000, the Company generated $23.3 million in cash from operating 
activities. The Company utilized these funds as well as $159.8 million of cash  
generated from the sale of 93.5% of its equity interest in SHPS, $8.4 million in
proceeds from grants and $3.2 million from issuance of Company stock to pay down
approximately $74.4 million in debt, invest $72.3 million in capital            
expenditures and to purchase $40.6 million of the Company's common stock. The   
purchase of the shares of the Company's common stock was in connection with     
stock repurchase programs announced in February 2000 and July 2000.             

    The Company's capital expenditures for the year ended December 31, 2000 were
$72.3 million, which are generally funded by cash generated from operating      
activities and borrowings available under its credit facilities. Approximately  
58% of the capital expenditures were the result of investing in new and existing
technical and customer support centers, 37% was expended for systems            
infrastructure, and 5% of the capital expenditures were SHPS related prior to   
its June 30, 2000 sale.                                                         

On May 2, 2000, the Company amended and restated its existing syndicated
credit facility with a syndicate of lenders (the "Amended Credit Facility").    
Pursuant to the terms of the Amended Credit Facility, the amount of the         
Company's revolving credit facility was maintained at $150.0 million. The $150.0
million Amended Credit Facility includes a $10.0 million swingline loan to be   
used for working capital purposes. In addition, the Company amended and restated
its $15.0 million multi-currency credit facility that provides for              
multi-currency lending. Borrowings under the Amended Credit Facility bear       
interest, at the Company's option, at (a) the                                   

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lender's base rate plus an applicable margin of up to 0.25% or (b) a Euro rate  
plus an applicable margin of up to 1.75%. Borrowings under the $10.0 million    
swingline loan bear interest, at the Company's option, at (a) the lender's base 
rate plus an applicable margin of up to 0.25% or (b) a Quoted Rate for swingline
loans. Borrowings under the $15.0 million multi-currency facility bear interest,
at the Company's option, at (a) the lender's base rate plus an applicable margin
of up to 0.25% or (b) a quoted Euro rate for swingline loans. The Company paid  
aggregate financing fees of approximately $0.3 million, which have been deferred
and are being amortized over the term of the Amended Credit Facility. In        
addition, a commitment fee up to 0.375 % will be charged on the unused portion  
of the Amended Credit Facility on a quarterly basis. The Amended Credit Facility
matures on February 28, 2003, and the multi-currency facility matures on        
February 28, 2002. At December 31, 2000, the Company had approximately $156.2   
million of availability under its credit facilities.                            

 The Company believes that its current cash levels, accessible funds under
its credit facilities and cash flows from future operations, will be adequate to
meet its debt repayment requirements, continued expansion objectives and        
anticipated levels of capital expenditures for the foreseeable future.          

IMPACT OF YEAR 2000                                                             

  In prior years, the Company discussed the nature and progress of its plans
to become Year 2000 compliant. During September 1999, the Company completed its 
remediation and testing of its systems. As a result of those planning and       
implementation efforts, the Company experienced no significant disruptions in   
critical information technology and non-information technology systems and      
believes those systems successfully responded to the Year 2000 date change.     
Sykes is not aware of any material problems resulting from Year 2000 issues,    
either with its products and services, its internal systems, or those products  
and services of third parties. Sykes will continue to monitor its critical      
computer applications and those of its suppliers and vendors to ensure that any 
delayed Year 2000 matters that may arise are addressed promptly.                

IMPACT OF NEW ACCOUNTING STANDARDS                                              

   In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities." This statement establishes accounting and  
reporting standards for derivative financial instruments and requires           
recognition of derivatives in the statement of financial position to be measured
at fair value. Gains or losses resulting from changes in the value of           
derivatives would be accounted for depending on the intended use of the         
derivative and whether it qualifies for hedge accounting. This statement is     
effective for financial statements beginning in 2001. The Company is currently  
studying the future effects of adopting this statement. However, due to our     
limited use of derivative financial instruments, adoption of Statement No. 133  
is not expected to have a significant effect on our financial position or       
results of operation.                                                           

ITEM 7a.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK            

QUANTITATIVE AND QUALITATIVE DISCLOSURES                                        

The Company's earnings and cash flows are subject to fluctuations due to
changes in non-U.S. currency exchange rates. The Company is exposed to non-U.S. 
exchange rate fluctuations as the financial results of non-U.S. subsidiaries are
translated into U.S. dollars in consolidation. As exchange rates vary, those    
results, when translated, may vary from expectations and adversely impact       
overall expected profitability. The cumulative translation effects for          
subsidiaries using functional currencies other than the U.S. dollar are included
in accumulated other comprehensive income in shareholders' equity. Movements in 
non-U.S. currency exchange rates may affect the Company's competitive position, 
as exchange rate changes may affect business practices and/or pricing strategies
of non-United States based competitors. Under its current policy, the Company   
does not use non-U.S. exchange derivative instruments to manage its exposure to 
changes in non-U.S. currency exchange rates.                                    

   The Company's exposure to interest rate risk results from its variable rate
debt outstanding under its credit facilities. At December 31, 2000, the Company 
had $8.9 million in debt outstanding at variable interest rates, which is       
generally equal to the Eurodollar rate plus an applicable margin. Based on the  
Company's level of variable rate debt during 2000, a one-point increase in the  
weighted average interest rate would increase the Company's annual interest     
expense by approximately $0.5 million. Under its current policy, the Company    
does not use derivative instruments to manage its exposure to changes in        
interest rates.                                                                 

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ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA                           

REPORT OF INDEPENDENT AUDITORS

Board of Directors and Stockholders Sykes Enterprises, Incorporated             

We have audited the accompanying consolidated balance sheets, as restated, of   
Sykes Enterprises, Incorporated as of December 31, 2000 and 1999, and the       
related consolidated statements of income, shareholders' equity, and cash flows,
all as restated, for each of the three years in the period ended December 31,   
2000. Our audits also included the financial statement schedule listed in the   
Index at Item 14(a). These financial statements and schedule are the            
responsibility of the Company's management. Our responsibility is to express an 
opinion on these financial statements and schedule based on our audits.         

We conducted our audits in accordance with auditing standards generally accepted
in the United States. Those standards require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are free  
of material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit    
also includes assessing the accounting principles used and significant estimates
made by management, as well as evaluating the overall financial statement       
presentation. We believe that our audits provide a reasonable basis for our     
opinion.                                                                        

In our opinion, the consolidated financial statements, as restated, referred to 
above present fairly, in all material respects, the consolidated financial      
position of Sykes Enterprises, Incorporated at December 31, 2000 and 1999, and  
the consolidated results of its operations and its cash flows for each of the   
three years in the period ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States. Also, in our opinion, the   
related financial statement schedule when considered in relation to the basic   
financial statements taken as a whole, presents fairly in all material respects 
the information set forth therein.                                              

As discussed in Note 2, the Company changed its method of accounting for certain
revenues.                                                                       

The accompanying consolidated financial statements for the years ended December 
31, 2000, 1999 and 1998 have been restated as discussed in Note 1.              

                                                           /s/ Ernst & Young LLP

Tampa, Florida                                                                  
February 15, 2001, except for                                                   
Note 1, as to which the date is                                                 
July 26, 2001                                                                   

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 CONSOLIDATED BALANCE SHEETS

In thousands (except per share data)

                                                        [Enlarge/Download Table]

                                                                        DECEMBER 31,  DECEMBER 31,
                                                                           2000          1999     
                                                                         ---------     ---------  
                                                                         Restated      Restated   
                                                                        (See Note 1)  (See Note 1)
                                                                                                  
ASSETS                                                                                            
Current assets:                                                                                   

 Cash and cash equivalents ............................................  $  30,141     $  31,001  
 Restricted cash ......................................................         --        15,109  
 Receivables ..........................................................    135,609       126,477  
 Prepaid expenses and other current assets ............................     17,679        15,252  
                                                                         ---------     ---------  

  Total current assets ................................................    183,429       187,839  

Property and equipment, net ...........................................    151,842       134,756  
Marketable securities .................................................         --           200  
Intangible assets, net ................................................      8,861        76,831  
Deferred charges and other assets .....................................     13,822        21,106  
                                                                         ---------     ---------  

                                                                         $ 357,954     $ 420,732  
                                                                         =========     =========  
LIABILITIES AND SHAREHOLDERS' EQUITY                                                              
Current liabilities:                                                                              
 Current installments of long-term debt ...............................  $     100     $   3,236  
 Accounts payable .....................................................     34,636        37,410  
 Income taxes payable .................................................      5,502           932  
 Accrued employee compensation and benefits ...........................     32,746        24,206  
 Customer deposits ....................................................         --        11,821  
 Other accrued expenses and current liabilities .......................     17,481        17,159  
                                                                         ---------     ---------  

  Total current liabilities ...........................................     90,465        94,764  

Long-term debt ........................................................      8,759        80,053  
Deferred grants .......................................................     31,758        24,689  
Deferred revenue ......................................................     31,072        26,593  
Other long-term liabilities ...........................................          8         1,400  
                                                                         ---------     ---------  

  Total liabilities ...................................................    162,062       227,499  
                                                                         ---------     ---------  

Commitments and contingencies (Note 16)                                                           

Shareholders' equity:                                                                             
 Preferred stock, $0.01 par value, 10,000 shares                                                  
  authorized; no shares issued and outstanding ........................         --            --  
 Common stock, $0.01 par value; 200,000 shares authorized; 43,084 and                             
  42,734 issued .......................................................        431           427  
 Additional paid-in capital ...........................................    159,696       155,023  
 Retained earnings ....................................................     90,430        43,643  
 Accumulated other comprehensive income ...............................    (14,082)       (5,860) 
                                                                         ---------     ---------  
                                                                           236,475       193,233  
 Treasury stock at cost; 2,981 shares (none in 1999) ..................    (40,583)           --  
                                                                         ---------     ---------  
  Total shareholders' equity ..........................................    195,892       193,233  
                                                                         ---------     ---------  

                                                                         $ 357,954     $ 420,732  
                                                                         =========     =========  

See accompanying notes to consolidated financial statements.

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 SYKES ENTERPRISES, INCORPORATED

 CONSOLIDATED STATEMENTS OF INCOME

In thousands (except per share data)

                                                        [Enlarge/Download Table]

                                                                 YEARS ENDED DECEMBER 31,         
                                                                 ------------------------         
                                                            2000           1999           1998    
                                                            ----           ----           ----    
                                                          Restated       Restated       Restated  
                                                        (See Note 1)   (See Note 1)   (See Note 1)

                                                                                                  
Revenues .............................................   $ 603,606      $ 572,742      $ 460,102  
                                                         ---------      ---------      ---------  

Operating expenses:                                                                               
 Direct salaries and related costs ...................     382,236        369,850        289,802  
 General and administrative ..........................     195,374        159,876        124,417  
 Compensation expense associated                                                                  
   with exercise of options ..........................       7,836             --             --  
 Restructuring and other charges .....................      30,468             --             --  
 Impairment of long-lived assets .....................          --          5,979             --  
 Acquired in-process research and                                                                 
   development .......................................          --             --         14,469  
                                                         ---------      ---------      ---------  
  Total operating expenses ...........................     615,914        535,705        428,688  
                                                         ---------      ---------      ---------  

Income (loss) from operations ........................     (12,308)        37,037         31,414  
                                                         ---------      ---------      ---------  

Other income (expense):                                                                           
 Interest, net .......................................      (2,942)        (3,669)          (959) 
 Gain on sale of equity interest in SHPS .............      84,036             --             --  
 Loss from joint venture .............................          --             --         (3,947) 
 Write-down of marketable securities .................          --             --         (7,335) 
 Other ...............................................         111            152            (29) 
                                                         ---------      ---------      ---------  
  Total other income (expense) .......................      81,205         (3,517)       (12,270) 
                                                         ---------      ---------      ---------  

Income before provision for income taxes                                                          
   and cumulative effect of change in                                                             
   accounting principle ..............................      68,897         33,520         19,144  
                                                         ---------      ---------      ---------  

Provision for income taxes:                                                                       
 Current .............................................      24,794         20,387         25,592  
 Deferred ............................................      (3,603)        (7,401)        (8,104) 
                                                         ---------      ---------      ---------  
  Total provision for income taxes ...................      21,191         12,986         17,488  
                                                         ---------      ---------      ---------  

 Income before cumulative effect of                                                               
  change in accounting principle .....................      47,706         20,534          1,656  

 Cumulative effect of change in accounting principle,                                             
  net of income taxes of $580 ........................        (919)            --             --  
                                                         ---------      ---------      ---------  
Net income ...........................................   $  46,787      $  20,534      $   1,656  
                                                         =========      =========      =========  
Net income per basic share:                                                                       
 Income before cumulative effect of                                                               
  change in accounting principle .....................   $    1.15      $    0.49      $    0.04  

 Cumulative effect of change in accounting principle..       (0.02)            --             --  
                                                         ---------      ---------      ---------  
 Net income per basic share ..........................   $    1.13      $    0.49      $    0.04  
                                                         =========      =========      =========  
Weighted average shares outstanding - basic ..........      41,518         42,045         41,258  

Net income per diluted share:                                                                     
 Income before cumulative effect of change in                                                     
  accounting principle ...............................   $    1.15      $    0.48      $    0.04  

 Cumulative effect of change in accounting principle..       (0.02)            --             --  
                                                         ---------      ---------      ---------  

 Net income per diluted share ........................   $    1.13      $    0.48      $    0.04  
                                                         =========      =========      =========  
Weighted average shares outstanding - diluted.........      41,645         42,995         42,288  

Proforma amounts assuming accounting change is applied                                            
   retroactively:                                                                                 

 Net income ..........................................   $  47,706      $  19,615      $   1,656  
 Net income per basic share ..........................   $    1.15      $    0.47      $    0.04  
 Net income per diluted share ........................   $    1.15      $    0.46      $    0.04  

 See accompanying notes to consolidated financial statements

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CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

In thousands

                                                        [Enlarge/Download Table]

                                                                                  ACCUMULATED                          
                                        COMMON STOCK      ADDITIONAL                 OTHER                             
                                   ---------------------   PAID-IN     RETAINED   COMPREHENSIVE   TREASURY             
                                   SHARES        AMOUNT    CAPITAL     EARNINGS   INCOME (LOSS)     STOCK      TOTAL   
                                   -------     ---------  ---------   ---------   -------------   ---------  --------- 

                                                                                                                       
Balance at January 1, 1998 ..       41,120     $     411  $ 133,592   $  22,151    $  (3,594)    $      --   $ 152,560 
 Issuance of common stock ...          332             3      1,074          --           --            --       1,077 
 Tax effect of non-qualified                                                                                           
  exercise of stock options .           --            --      1,534          --           --            --       1,534 
 Distributions ..............           --            --         --        (698)          --            --        (698)

 Net income (restated) ......           --            --         --       1,656           --            --       1,656 
 Recognition of write-down                                                                                             
  on marketable securities ..           --            --         --          --          735            --         735 
 Foreign currency translation                                                                                          
  adjustment ................           --            --         --          --        1,452            --       1,452 
                                                                                                             --------- 
 Comprehensive income(restated)                                                                                  3,843 
                                 ---------     ---------  ---------   ---------    ---------     ---------   --------- 

Balance at December 31, 1998,                                                                                          
  (restated) ................       41,452           414    136,200      23,109       (1,407)           --     158,316 
 Issuance of common stock ...        1,282            13     11,371          --           --            --      11,384 
 Tax effect of non-qualified                                                                                           
  exercise of stock options .           --            --      7,452          --           --            --       7,452 

 Net income (restated) ......           --            --         --      20,534           --            --      20,534 
 Foreign currency translation                                                                                          
  adjustment ................           --            --         --          --       (4,453)           --      (4,453)
                                                                                                             --------- 
 Comprehensive income(restated)                                                                                 16,081 
                                 ---------     ---------  ---------   ---------    ---------     ---------   --------- 

Balance at December 31, 1999,                                                                                          
  (restated) ................       42,734           427    155,023      43,643       (5,860)           --     193,233 
 Issuance of common stock ...          350             4      3,208          --           --            --       3,212 
 Tax effect of non-qualified                                                                                           
  exercise of stock options .           --            --      1,465          --           --            --       1,465 
 Purchase of treasury stock .           --            --         --          --           --       (40,583)    (40,583)

 Net income (restated) ......           --            --         --      46,787           --            --      46,787 
 Foreign currency translation                                                                                          
  adjustment ................           --            --         --          --       (8,222)           --      (8,222)
                                                                                                             --------- 
 Comprehensive                                                                                                         
   income(restated)..........                                                                                   38,565 
                                 ---------     ---------  ---------   ---------    ---------     ---------   --------- 

Balance at December 31, 2000,                                                                                          
  (restated) ................       43,084     $     431  $ 159,696   $  90,430    $ (14,082)    $ (40,583)  $ 195,892 
                                 =========     =========  =========   =========    =========     =========   ========= 

See accompanying notes to consolidated financial statements.

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 CONSOLIDATED STATEMENTS OF CASH FLOWS

In thousands

                                                        [Enlarge/Download Table]

                                                                            YEARS ENDED DECEMBER 31,         
                                                                    ---------------------------------------  
                                                                       2000           1999           1998    
                                                                    ---------      ---------      ---------  
                                                                     Restated       Restated       Restated  
                                                                   (See Note 1)   (See Note 1)   (See Note 1)
                                                                                                             
CASH FLOWS FROM OPERATING ACTIVITIES                                                                         
 Net income ......................................................  $  46,787      $  20,534      $   1,656  
 Depreciation and amortization ...................................     36,829         37,570         23,089  
 Impairment of long-lived assets .................................         --          5,979             --  
 Cumulative effect of accounting change, net of tax ..............        919             --             --  
 Gain on sale of equity interest in SHPS, Incorporated ...........    (84,036)            --             --  
 Acquired in-process research and development costs ..............         --             --         14,469  
 Write-down of intangible assets .................................      6,000             --             --  
 Write-down of marketable securities .............................         --             --          7,335  
 Deferred income taxes ...........................................     (3,603)        (7,401)        (8,104) 
 (Gain) loss on disposal of property and equipment ...............     13,275             15           (525) 
 Changes in assets and liabilities:                                                                          
  Receivables ....................................................    (30,515)       (16,762)       (25,588) 
  Prepaid expenses and other current assets ......................      3,761          1,599         (2,912) 
  Intangible assets ..............................................        926         (1,113)          (738) 
  Deferred charges and other assets ..............................      3,154         (1,638)        (1,033) 
  Accounts payable ...............................................     (3,487)         5,246          2,841  
  Income taxes payable ...........................................      7,480         (2,166)            --  
  Accrued employee compensation and benefits .....................     11,744          4,508          7,270  
  Customer deposits ..............................................     10,921         (3,176)        11,373  
  Other accrued expenses and current liabilities .................      1,250            (36)         6,090  
  Deferred revenue ...............................................      3,314          9,386          5,954  
  Other long-term liabilities ....................................     (1,392)        (1,268)           (48) 
                                                                    ---------      ---------      ---------  
    Net cash provided by operating activities ....................     23,327         51,277         41,129  
                                                                    ---------      ---------      ---------  

CASH FLOWS FROM INVESTING ACTIVITIES                                                                         
 Capital expenditures ............................................    (72,334)       (66,657)       (37,293) 
 Investment in joint venture .....................................         --             --        (10,723) 
 Acquisition of businesses .......................................         --         (8,346)       (28,131) 
 Proceeds from sale of equity interest in SHPS,                                                              
   Incorporated ..................................................    159,776             --             --  
 Proceeds from sale of marketable securities .....................         --             --          1,000  
 Proceeds from sale of property and equipment ....................         --            191          3,462  
                                                                    ---------      ---------      ---------  
    Net cash provided by (used for) investing activities .........     87,442        (74,812)       (71,685) 
                                                                    ---------      ---------      ---------  
CASH FLOWS FROM FINANCING ACTIVITIES                                                                         
 Paydowns under revolving line of credit agreements ..............   (198,301)       (84,540)       (16,932) 
 Borrowings under revolving line of credit agreements ............    124,607         88,398         93,810  
 Payments of long-term debt ......................................     (1,103)            --        (89,688) 
 Borrowings under long-term debt .................................        367             --             --  
 Proceeds from issuance of stock .................................      3,212         11,084          1,077  
 Proceeds from grants ............................................      8,394          7,698          2,575  
 Purchase of treasury stock ......................................    (40,583)            --             --  
 Distributions ...................................................         --             --           (698) 
                                                                    ---------      ---------      ---------  
    Net cash provided by (used for) financing activities .........   (103,407)        22,640         (9,856) 
                                                                    ---------      ---------      ---------  
Adjustments for foreign currency translation .....................     (8,222)        (4,453)         1,452  
                                                                    ---------      ---------      ---------  
Net decrease in cash and cash equivalents ........................       (860)        (5,348)       (38,960) 
CASH AND CASH EQUIVALENTS - BEGINNING ............................     31,001         36,349         75,309  
                                                                    ---------      ---------      ---------  
CASH AND CASH EQUIVALENTS - ENDING ...............................  $  30,141      $  31,001      $  36,349  
                                                                    =========      =========      =========  

Supplemental disclosures of cash flow information                                                            
 Cash paid during  the year for:                                                                             

   Interest ......................................................  $   4,254      $   6,809      $   1,553  
   Income taxes ..................................................  $  17,130      $  22,426      $  13,402  

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Sykes Enterprises, Incorporated and consolidated subsidiaries (the    
"Company" or "Sykes") provides outsourced customer management solutions and     
services. Sykes' Business Solutions group provides professional services in     
e-commerce and customer relationship management (CRM) with a focus on business  
strategy development, project management, business process redesign, change     
management, knowledge management, education, training and web development.      
Sykes' Business Services group provides customer care outsourcing services with 
an emphasis on technical support and customer service. These services are       
delivered through multiple communication channels encompassing phone, e-mail,   
web and chat. Sykes' Business Solutions and Business Services combination offers
clients value-added end-to-end solutions. The Company's services are provided to
customers on a worldwide basis primarily within the technology, communications  
and financial services markets.                                                 

NOTE 1.  RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS                       

After the Company filed its Annual Report on Form 10-K for the year ended       
December 31, 2000 with the United States Securities and Exchange Commission     
("SEC"), the Company determined that the accounting for the recognition of cash 
grants received in excess of building costs for the development of new technical
and customer support centers required revision, as explained below.             

During the fourth quarter of 2000, the Company adopted retroactive to January 1,
2000, Staff Accounting Bulletin No. 101, " Revenue Recognition in Financial     
Statements" ("SAB 101") which resulted in a cumulative effect of change in      
accounting principle. The cumulative effect of the change related to prior years
resulted in a charge to income of $2.1 million (net of income taxes of $1.3     
million), or $0.05 per diluted share, which was deducted from income for the    
year ended December 31, 2000. In adopting SAB 101, the Company had modified its 
accounting treatment for the recognition of revenue as it related to, among     
other things, the accounting for cash grants received in excess of building     
costs for the development of new technical and customer support centers which   
represented approximately $1.2 million (net of income taxes of $1.7 million) of 
the cumulative effect of the $2.1 million change, or $0.03 per diluted share.   
Prior to the adoption of SAB 101, the Company recognized the excess of cash     
grants received over the costs of construction of the related facility ("excess 
cash grants") as a reduction of general and administrative costs commencing on  
the date the funds were placed in escrow and construction of the facility began.
In connection with the adoption of SAB 101, the Company changed its method of   
accounting for excess cash grants to delay their recognition until the funds    
were released from escrow and construction of the facility was complete, at     
which time they were recognized as a reduction of salaries and other direct     
costs related to training of personnel at the facility involved.                

Subsequent to the issuance of its consolidated financial statements for the year
ended December 31, 2000, the Company determined that the excess cash grants     
should not be offset against direct salaries and related costs to the extent    
training costs were incurred and recognized at the time the funds were released 
from escrow and construction of the facility was complete. Instead the excess   
cash grants should have been deferred and recognized as a reduction of          
depreciation expense over the weighted average useful life of the equipment     
utilized at the new facility (which generally approximates five years) with the 
amortization beginning when construction of the facility is complete and the    
facility is occupied.                                                           

Accordingly, the Company reversed the portion of the cumulative effect of change
in accounting principle related to the excess cash grants of $1.2 million (net  
of income taxes of $0.7 million), or $0.03 per diluted share, previously        
recorded by the Company as of January 1, 2000. As a result, the accompanying    
consolidated financial statements for the years ended December 31, 2000, 1999   
and 1998 have been restated from the amounts previously reported. The impact of 
the change in accounting for excess cash grants on income before cumulative     
effect of change in accounting principle for the year ended December 31, 2000   
was not material.                                                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.  RESTATEMENT OF CONSOLIDATED FINANCIAL STATEMENTS (continued)           

A summary of the significant effects of the restatement is as follows:          

                                                        [Enlarge/Download Table]

                                                           Year Ended                Year Ended               Year Ended     
In thousands (except per share data)                    December 31, 2000        December 31, 1999        December 31, 1998  
                                                        -----------------        -----------------        -----------------  
                                                         As                       As                      As                 
                                                     Previously      As       Previously      As      Previously      As     
                                                      Reported     Restated    Reported    Restated    Reported     Restated 
                                                      --------     --------    --------    --------    --------     -------- 
                                                                                                                             
Condensed Consolidated Statement of Income:                                                                                  

Revenues ..........................................  $ 603,606    $ 603,606   $ 572,742   $ 572,742   $ 460,102    $ 460,102 
Operating expenses ................................    615,914      615,914     533,473     535,705     427,430      428,688 
                                                     ---------    ---------   ---------   ---------   ---------    --------- 
Income (loss) from operations .....................    (12,308)     (12,308)     39,269      37,037      32,672       31,414 
Total other income (expense) ......................     81,205       81,205      (3,517)     (3,517)    (12,270)     (12,270)
                                                     ---------    ---------   ---------   ---------   ---------    --------- 
Income before provision for income taxes and                                                                                 
  cumulative effect of change in accounting                                                                                  
  principle .......................................     68,897       68,897      35,752      33,520      20,402       19,144 
Provision for income taxes ........................     21,191       21,191      13,850      12,986      17,960       17,488 
                                                     ---------    ---------   ---------   ---------   ---------    --------- 
Income before cumulative effect of change in                                                                                 
  accounting principle ............................     47,706       47,706      21,902      20,534       2,442        1,656 
Cumulative effect of change in accounting principle     (2,068)        (919)         --          --          --           -- 
                                                     ---------    ---------   ---------   ---------   ---------    --------- 
Net income ........................................  $  45,638    $  46,787   $  21,902   $  20,534   $   2,442    $   1,656 
                                                     =========    =========   =========   =========   =========    ========= 

Net income per basic share:                                                                                                  
Income before cumulative effect of change in                                                                                 
  accounting principle ............................  $    1.15    $    1.15   $    0.52   $    0.49   $    0.06    $    0.04 
Cumulative effect of change in accounting principle      (0.05)       (0.02)      (0.00)      (0.00)      (0.00)       (0.00)
Net income per basic share ........................  $    1.10    $    1.13   $    0.52   $    0.49   $    0.06    $    0.04 

Net income per diluted share:                                                                                                
Income before cumulative effect of change in                                                                                 
  accounting principle ............................  $    1.15    $    1.15   $    0.51   $    0.48   $    0.06    $    0.04 
Cumulative effect of change in accounting principle      (0.05)       (0.02)      (0.00)      (0.00)      (0.00)       (0.00)
Net income per diluted share ......................  $    1.10    $    1.13   $    0.51   $    0.48   $    0.06    $    0.04 

                                                             As of                    As of                  As of           
                                                        December 31, 2000       December 31, 1999       December 31, 1998    
Consolidated Balance Sheet Data:                     ----------------------   ---------------------   ---------------------- 
Deferred charges and other assets .................  $  13,212    $  13,822   $  19,770   $  21,106   $  10,720    $  11,192 
Total assets ......................................  $ 357,344    $ 357,954   $ 419,396   $ 420,732   $ 361,798    $ 362,270 
Deferred grants ...................................  $  30,143    $  31,758   $  21,199   $  24,689   $  15,435    $  16,693 
Retained earnings .................................  $  91,435    $  90,430   $  45,797   $  43,643   $  23,895    $  23,109 
Shareholders' equity ..............................  $ 196,897    $ 195,892   $ 195,387   $ 193,233   $ 159,102    $ 158,316 

NOTE 2.  SUMMARY OF ACCOUNTING POLICIES                                         

     Principles of Consolidation - The consolidated financial statements include
the accounts of Sykes and its wholly-owned subsidiaries. All significant        
intercompany transactions and balances have been eliminated in consolidation.   

    Use of Estimates - The preparation of consolidated financial statements in
conformity with generally accepted accounting principles requires management 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;  
however, management does not believe these differences would have a material    
effect on operating results.                                                    

    Recognition of Revenue - The Company primarily recognizes its revenue from
services as those services are performed under a fully executed contractual     
agreement. Royalty revenue is recognized at the time royalties are earned and   
the remaining revenue is recognized on fixed price contracts using the          
percentage-of-completion method of accounting. Adjustments to fixed price       
contracts and estimated losses, if any, are recorded in the period when such    
adjustments or losses are known. Product sales are recognized upon shipment to  
the customer and satisfaction of all obligations.                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  SUMMARY OF ACCOUNTING POLICIES (continued)                             

 The Company recognizes revenue from software and contractually provided
rights in accordance with the American Institute of Certified Public Accountants
("AICPA") Statement of Position 97-2, "Software Revenue Recognition" ("SOP      
97-2"), as amended by Statement of Position 98-4, "Deferral of the Effective    
Date of a Provision of SOP 97-2" ("SOP 98-4"), Statement of Position 98-9,      
"Modification of SOP 97-2, Software Revenue Recognition, With Respect to Certain
Transactions" ("SOP 98-9"), and Staff Accounting Bulletin No. 101, "Revenue     
Recognition in Financial Statements" ("SAB 101"). Revenue is recognized from    
licenses of the Company's software products and rights when the agreement has   
been executed, the product or right has been delivered or provided,             
collectibility is probable and the software license fees or rights are fixed and
determinable. Contracts that provide for multiple elements are accounted for    
pursuant to the above standards. If any portion of the license fees or rights is
subject to forfeiture, refund or other contractual contingencies, the Company   
will postpone revenue recognition until these contingencies have been removed.  
Sykes generally accounts for consulting services separate from software license 
fees for those multi-element arrangements where consulting services are a       
separate element and are not essential to the customer's functionality          
requirements and there is vendor-specific objective evidence of fair value for  
these services. Revenue from support and maintenance activities is recognized   
ratably over the term of the maintenance period and the unrecognized portion is 
recorded as deferred revenue.                                                   

  Accounting Change for Revenue Recognition - During the fourth quarter of
2000, the Company adopted SAB 101, which provides guidance on the recognition,  
presentation and disclosure of revenue in financial statements filed with the   
Securities and Exchange Commission. Based on criteria established by SAB 101,   
adopted retroactive to January 1, 2000, the Company modified its accounting     
treatment for the recognition of revenue as it related to contract services.    
Revenues, in certain limited situations, that were recognized as services were  
performed and as the related fees became collectible under agreements between   
the Company and its customers are deferred until either a final contract or     
purchase order has been fully executed.                                         

    The cumulative effect of the change on prior years resulted in a charge to
income of $0.9 million (net of income taxes of $0.6 million) or $0.02 per       
diluted share, which has been deducted in the determination of income for the   
year ended December 31, 2000. The effect of this change for the year ended      
December 31, 2000 was to increase income before cumulative effect of the change 
in accounting principle by $0.9 million or $0.02 per diluted share. The pro     
forma amounts presented in the income statement were presented as if the change 
in accounting principle had been made retroactively to prior periods.           

  The cumulative effect adjustment of $0.9 million (net of income taxes of
$0.6 million) as of January 1, 2000 was recognized in income during the         
three-month period ended in March 31, 2000.                                     

 Cash and Cash Equivalents - Cash and cash equivalents consist of highly
liquid short-term investments classified as available for sale as defined under 
Statement of Financial Accounting Standards No. 115, "Accounting for Certain    
Investments in Debt and Equity Securities." Cash in the amount of approximately 
$9.8 million and $7.3 million was held in taxable interest bearing investments  
at December 31, 2000 and 1999, respectively, which are classified as available  
for sale and have an average maturity of approximately 30 days.                 

   Restricted Cash - The financial statements include restricted cash, which
is held in conjunction with deposits by customers at December 31, 1999. Included
in current liabilities at December 31, 1999 is the related payable.             

 Property and Equipment - Property and equipment is recorded at cost and
depreciated using the straight-line method over the estimated useful lives of   
the respective assets. Improvements to leased premises are amortized over the   
shorter of the related lease term or the useful lives of the improvements. Cost 
and related accumulated depreciation on assets retired or disposed of are       
removed from the accounts and any gains or losses resulting therefrom are       
credited or charged to income. Depreciation expense was approximately $35.4     
million, $30.6 million and $21.0 million, for the years ended December 31, 2000,
1999 and 1998, respectively. Property and equipment includes approximately $40.0
thousand and $2.0 million of additions included in accounts payable at December 
31, 2000 and 1999, respectively. Accordingly, these non-cash transactions have  
been excluded from the accompanying consolidated statements of cash flows for   
the years ended December 31, 2000 and 1999, respectively.                       

   During 1999 and 1998, the Company capitalized certain costs incurred to
internally develop software upon the establishment of technological feasibility.
Costs incurred prior to the establishment of technological feasibility were     
expensed as incurred. Capitalized                                               

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  SUMMARY OF ACCOUNTING POLICIES (continued):                            

internally developed software costs, net of accumulated amortization, were      
approximately $1.6 million and $2.9 million at December 31, 2000 and 1999,      
respectively.                                                                   

Land received from various local and state governmental agencies under
grants is recorded at fair value at date of grant. During the years ended       
December 31, 2000, 1999 and 1998, the Company recorded approximately $1.3       
million, $1.1 million and $0.3 million, respectively, in land acquisitions as a 
result of such grants. Accordingly, these non-cash transactions have been       
excluded from the accompanying Consolidated Statements of Cash Flows for the    
years ended December 31, 2000, 1999 and 1998.                                   

 Investment in Joint Venture - The Company had a 50% interest in a joint
venture (SHPS) that was accounted for using the equity method of accounting.    
Accordingly, the Company recorded its proportionate share of the gains and      
losses of the joint venture in the results of operations for the first eight    
months of 1998. Effective September 1, 1998, the Company acquired the remaining 
50% equity interest in this joint venture (See Note 3).                         

  Intangible Assets - Intangible assets primarily consist of the excess of
costs over fair market value of the net assets of the acquired business of $8.7 
million and $65.5 million at December 31, 2000 and 1999, respectively, net of   
accumulated amortization of $4.7 million and $17.6 million, respectively. Also  
included in intangible assets are existing technologies and covenants not to    
compete arising from business acquisitions of $0.2 million and $11.3 million at 
December 31, 2000 and 1999, respectively, net of accumulated amortization of    
$0.7 million and $5.1 million, respectively. The intangible assets are stated at
cost and are being amortized on a straight-line basis over periods ranging from 
10 to 20 years for the excess of costs over fair value of the net assets of the 
acquired business, and two to five years for the existing technologies and      
covenants not to compete. Amortization expense was approximately $4.0 million,  
$6.0 million and $1.7 million for the years ended December 31, 2000, 1999 and   
1998, respectively.                                                             

     Impairment of Long-lived Assets - The Company reviews long-lived assets and
certain identifiable intangibles for impairment whenever events or changes in   
circumstances indicate that the carrying value of an asset may not be           
recoverable. Recoverability of property and equipment is measured by comparison 
of its carrying amount to undiscounted future net cash flows the property and   
equipment are expected to generate. If such assets are considered to be         
impaired, the impairment to be recognized is measured by the amount that the    
carrying amount of the property and equipment exceeds its fair market value, as 
determined by discounted cash flows. Sykes assesses the recoverability of       
goodwill by determining whether the unamortized goodwill balance can be         
recovered through undiscounted future results of the acquired operation. The    
amount of goodwill impairment, if any, is measured based on projected discounted
future results using a discount rate reflecting the Company's average cost of   
funds. During 1999, the Company recorded an impairment loss of approximately    
$6.0 million related to software and computer equipment.                        

    Income Taxes - Sykes uses the asset and liability method of accounting for
income taxes. Deferred income taxes are recorded to reflect the tax consequences
on future years of differences between the tax basis of assets and liabilities  
and their financial reporting amounts at each year end based on enacted tax laws
and statutory tax rates applicable to the periods in which the differences are  
expected to affect taxable income.                                              

    Deferred Grants - Recognition of income associated with grants of land and
the acquisition of property, buildings and equipment is deferred until after the
completion and occupancy of the building and title has passed to the Company and
the funds have been released from escrow. The deferred amounts for both land and
building are amortized and recognized as a reduction of depreciation expense    
included within general and administrative costs over the corresponding useful  
lives of the related assets. Any excess amounts over the cost of the building   
are allocated to the cost of equipment and, only after the grants are released  
from escrow, recognized as a reduction of depreciation expense over the weighted
average useful life of the related equipment, which approximates five years.    
Amortization of the deferred grants that is included in income was approximately
$2.6 million, $1.2 million and $0.6 million for the years ended December 31,    
2000, 1999 and 1998, respectively.                                              

   Deferred Revenue - The Company invoices certain contracts in advance. The
deferred revenue is earned over the life of the respective contract, which range
from six months to three years.                                                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 2.  SUMMARY OF ACCOUNTING POLICIES (continued):                            

Comprehensive Income - Effective January 1, 1998, the Company adopted 
Statement of Financial Accounting Standards No. 130 "Reporting Comprehensive    
Income" ("SFAS No. 130"), which requires all items that are required to be      
recognized under accounting standards as components of other comprehensive      
income be reported in the financial statements.                                 

     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, accounts receivable and accounts payable. The carrying amount
       reported in the balance sheet for cash, accounts receivable and
accounts payable approximates their fair value.         

 -     Long-term Debt. The fair value of the Company's long-term debt,
        including the current portion thereof, is estimated based on the
      quoted market price for the same or similar types of borrowing
        arrangements. The carrying value of the Company's long-term debt
        approximates fair value because the debt bears variable interest
rates.                                                  

     Non-monetary Transaction - During 1998, the Company sold a software license
in exchange for convertible preferred stock in a privately held corporation     
("Kyrus"). The convertible preferred stock has a fair market value of $5.5      
million, which represented the sales price recorded by the Company (See Note    
16). The cost of this security is included in the Consolidated Balance Sheet    
under the caption "Deferred charges and other assets" at December 31, 2000 and  
1999, respectively.                                                             

    Foreign Currency Translation - The assets and liabilities of the Company's
foreign subsidiaries, whose functional currency is other than the U.S. Dollar,  
are translated at the exchange rates in effect on the reporting date, and income
and expenses are translated at the weighted average exchange rate during the    
period. The net effect of translation gains and losses is not included in       
determining net income, but is included in accumulated other comprehensive      
income, which is reflected as a separate component of shareholders' equity.     
Foreign currency transactional gains and losses are included in determining net 
income. Such gains and losses are not material for any period presented.        

   Recent Accounting Pronouncements - In June 1998, the Financial Accounting
Standards Board (the "FASB") issued Statement of Financial Standards No. 133,   
"Accounting for Derivative Instruments and Hedging Activities" ("SFAS No. 133").
SFAS No. 133 establishes accounting and reporting standards for derivative      
financial instruments and hedging activities and requires the Company to        
recognize all derivatives as either assets or liabilities on the balance sheet  
and measure them at fair value. Gains and losses resulting from changes in fair 
value would be accounted for depending on the use of the derivative and whether 
it is designated and qualifies for hedge accounting. This statement is effective
for financial statements beginning in 2001. Sykes does not anticipate that the  
adoption of this SFAS No. 133 will have a significant effect on its results of  
operations or financial position.                                               

     Reclassifications - Certain amounts from prior years have been reclassified
to conform to the current year's presentation.                                  

NOTE 3.  ACQUISITIONS AND DISPOSITIONS                                          

On August 20, 1999, the Company acquired all of the common stock of   
CompuHelpline, Inc., (d/b/a PC Answer) for approximately $340 thousand          
consisting of $40 thousand of cash and approximately 12 thousand shares of the  
Company's common stock. PC Answer was engaged in developing, marketing and      
selling prepaid technical computer support cards and services under the         
trademark names of PC Answer and MAC Answer. The transaction was accounted for  
under the purchase method of accounting with resulting goodwill being amortized 
over a ten-year life. Pro forma information is not presented as the operating   
results of PC Answer are not material to the Company's consolidated operations. 

    Effective August 31, 1999, the Company acquired all of the common stock of
Acer Servicios de Informacion Sociedad Anonima ("AIS") of Heredia, Costa Rica   
for $6.0 million in cash. AIS operated an information technology call center    
that provided technical support and services to customers in North America and  
Central America. The transaction was accounted for under the purchase method of 
accounting with resulting goodwill being amortized over a ten-year life. Pro    
forma information is not presented, as the operating results of AIS are not     
material to the Company's consolidated operations.                              

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NOTE 3.  ACQUISITIONS AND DISPOSITIONS (continued)                              

    Effective October 12, 1999, the Company acquired the AnswerExpress Support
Suite for $2.5 million in cash. The transaction was accounted for under the     
purchase method of accounting with resulting goodwill being amortized over a    
ten-year life. Pro forma information is not presented as the operating results  
of AnswerExpress are not material to the Company's consolidated operations.     

    Effective September 1, 1998, the Company acquired the remaining 50% of the
outstanding common stock of SHPS, Incorporated ("SHPS") for $28.1 million plus  
the assumption of SHPS' debt. The transaction was accounted for under the       
purchase method of accounting and accordingly, the results of operations for the
period September 1, 1998 to December 31, 1998, have been included in the        
accompanying financial statements. The unaudited pro forma combined historical  
results, as if SHPS had been acquired on January 1, 1998, are estimated to be   
revenues of $491.8 million, net loss of $11.5 million and basic and diluted loss
per share of $0.27 for the year ended December 31, 1998. The purchase price was 
allocated to the assets and liabilities of SHPS based on fair values at the date
of acquisition. In connection with the acquisition of SHPS, the Company         
determined the acquired in-process technology had no present or future          
technological feasibility. Accordingly, the Company recorded a charge for the   
amount of the purchase price allocated to the acquired in-process research and  
development of $14.5 million. This charge is reflected in the accompanying      
Consolidated Statement of Income for the year ended December 31, 1998.          

       On June 30, 2000, the Company sold 93.5% of its ownership interest in
SHPS for approximately $165.5 million cash. The cash proceeds reflected in the  
Statement of Cash Flows for 2000 is net of approximately $0.7 million used to   
retire other debt and approximately $5.0 million of cash recorded on SHPS'      
balance sheet on the date of the sale. The sale of SHPS resulted in a gain for  
financial reporting purposes of approximately $84.0 million ($59.9 million net  
of taxes). The Consolidated Statement of Income for 2000 includes the results of
SHPS through June 30, 2000, its disposition date. SHPS generated revenue and    
income from operations during 2000 of $35.7 million and $1.7 million,           
respectively, for the year ended December 31, 2000 compared to $73.0 million and
$5.9 million for the year ended 1999, exclusive of compensation expense         
associated with the exercise of options.                                        

NOTE 4.  CONCENTRATIONS OF CREDIT RISK                                          

Financial instruments that potentially subject the Company to         
concentrations of credit risk consist principally of trade receivables. With the
exception of $5.5 million of convertible preferred stock, included in other     
assets, the Company's credit concentrations are limited due to the wide variety 
of customers and markets in which the Company's services are sold.              

NOTE 5.  RECEIVABLES                                                            

Receivables consist of the following (in thousands):                  

                                                                [Download Table]

                                            December 31,      
                                            ------------      
                                          2000         1999   
                                         --------     --------

                                                              
Trade accounts receivable ..........     $135,380     $110,551
Unbilled accounts receivable .......          983        9,470
Notes from officers ................          412          542
Other ..............................        6,094        8,354
                                         --------     --------
                                          142,869      128,917
Less allowance for doubtful accounts        7,260        2,440
                                         --------     --------
                                         $135,609     $126,477
                                         ========     ========

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 6.  PROPERTY AND EQUIPMENT                                                 

Property and equipment consist of the following (in thousands):       

                                                                [Download Table]

                                               December 31,     
                                               ------------     
                                            2000         1999   
                                           --------     --------

                                                                
Land .................................     $  6,365     $  5,114
Buildings and leasehold improvements .       54,132       41,171
Equipment, furniture and fixtures ....      178,630      172,270
Capitalized software development costs        1,644        2,896
Transportation equipment .............          135          448
Construction in progress .............       12,188       16,291
                                           --------     --------
                                            253,094      238,190
Less accumulated depreciation ........      101,252      103,434
                                           --------     --------
                                           $151,842     $134,756
                                           ========     ========

NOTE 7.  MARKETABLE SECURITIES                                                  

During 1997, the Company purchased SystemSoft Corp. common stock in   
conjunction with a strategic technology exchange agreement between the parties  
that had an original cost basis of $8.0 million. In accordance with Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments in  
Debt and Equity Securities," the investment is classified as available-for-sale 
securities. During 1998, the Company wrote-down its investment in SystemSoft    
Corp. by approximately $7.3 million due to a significant reduction in its market
value, which was determined to be other than temporary. The remaining investment
was written off in 2000.                                                        

NOTE 8.  DEFERRED CHARGES AND OTHER ASSETS                                      

    Deferred charges and other assets consist of the following (in thousands):

                                                                [Download Table]

                                           December 31,    
                                           ------------    
                                         2000        1999  
                                        -------     -------

                                                           
Convertible preferred stock .......     $ 5,500     $ 5,500
Non-current deferred tax asset, net       4,911      11,688
Other .............................       3,411       3,918
                                        -------     -------
                                        $13,822     $21,106
                                        =======     =======

NOTE 9.  ACCRUED EMPLOYEE COMPENSATION AND BENEFITS                             

 Accrued employee compensation and benefits consist of the following (in
thousands):                                                                     

                                                                [Download Table]

                                    December 31,     
                                    ------------     
                                   2000        1999  
                                  -------     -------

                                                     
Accrued compensation ...          $22,650     $12,763
Accrued employment taxes            2,762       7,229
Accrued vacation .......            4,012       2,742
Other ..................            3,322       1,472
                                  -------     -------
                                  $32,746     $24,206
                                  =======     =======

NOTE 10.  OTHER ACCRUED EXPENSES AND CURRENT LIABILITIES                        

     Other accrued expenses and current liabilities consist of the following (in
thousands):                                                                     

                                                                [Download Table]

                                              December 31,      
                                              ------------      
                                              2000        1999  
                                             -------     -------

                                                                
Deferred revenue, current .............      $ 2,655     $ 3,839
Accrued roadside assistance claim costs        2,161       1,427
Accrued telephone charges .............        2,093       2,213
Accrued legal and professional fees ...        1,490         811
Accrued interest ......................           56         213
Other .................................        9,026       8,656
                                             -------     -------
                                             $17,481     $17,159
                                             =======     =======

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NOTE 11.  LONG-TERM DEBT                                                        

Long-term debt consists of the following (in thousands):        

                                                                [Download Table]

                                                                 December 31,   
                                                              ------------------
                                                               2000        1999 
                                                              ------     -------
                                                                                
Syndicated credit facility, $150.0 million maximum, due                         
February 2003, interest payable quarterly, the facility                         
is guaranteed by a pledge of 66% of common stock                                
of certain subsidiaries .................................     $   --     $80,000

Syndicated multi-currency credit facility, $15.0 million                        
maximum, due February 2002, interest payable in                                 
accordance with the terms of the individual promissory                          
notes outstanding; the facility is guaranteed by a pledge                       
of 66% of common stock of certain subsidiaries ..........      8,759       2,284

Notes payable and capital leases, principal and interest                        
payable in monthly installments through December 2002,                          
interest at varying rates up to prime plus 1 percent,                           
collateralized by certain equipment .....................        100       1,005
                                                              ------     -------
Total debt ..............................................      8,859      83,289
Less current portion ....................................        100       3,236
                                                              ------     -------
Long-term debt ..........................................     $8,759     $80,053
                                                              ======     =======

 Principal maturities of total debt as of December 31, 2000 are as
follows (in thousands):                                                         

                                                                [Download Table]

                             Total 
Year                         Amount
----                         ------

                                   
2001                         $  100
2002                          8,759
                             ------
                             $8,859
                             ======

  On May 2, 2000, the Company amended and restated its existing syndicated
credit facility with a syndicate of lenders (the "Amended Credit Facility").    
Pursuant to the terms of the Amended Credit Facility, the amount of the         
Company's revolving credit facility was maintained at $150.0 million. The $150.0
million Amended Credit Facility includes a $10.0 million swingline loan to be   
used for working capital purposes. In addition, the Company amended and restated
its $15.0 million multi-currency credit facility that provides for              
multi-currency lending. Borrowings under the Amended Credit Facility bear       
interest, at the Company's option, at (a) the lender's base rate plus an        
applicable margin of up to 0.25% or (b) a Euro rate plus an applicable margin of
up to 1.75%. Borrowings under the $10.0 million swingline loan bear interest, at
the Company's option, at (a) the lender's base rate plus an applicable margin of
up to 0.25% or (b) a Quoted Rate for swingline loans. Borrowings under the $15.0
million multi-currency facility bear interest, at the Company's option, at (a)  
the lender's base rate plus an applicable margin of up to 0.25% or (b) a quoted 
Euro rate for swingline loans. The Company paid aggregate financing fees of     
approximately $0.3 million, which have been deferred and are being amortized    
over the term of the Amended Credit Facility. In addition, a commitment fee up  
to 0.375% will be charged on the unused portion of the Amended Credit Facility  
on a quarterly basis. The Amended Credit Facility matures on February 28, 2003, 
and the multi-currency facility matures on February 28, 2002. Borrowings under  
the Amended Credit Facility are guaranteed by certain of the Company's          
subsidiaries as evidenced by a pledge of 66% of the respective subsidiary's     
common stock. Under the terms of the Amended Credit Facility, the Company is    
required to maintain certain financial ratios and other financial and           
non-financial conditions. The Amended Credit Facility prohibits, without the    
consent of the syndicated lenders, the Company from incurring additional        
indebtedness, limits certain investments, advances or loans and restricts       
substantial asset sales, capital expenditures and cash dividends. At December   
31, 2000, the Company was in compliance with all loan requirements.             

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NOTE 12.  ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)                         

Sykes presents data in the Consolidated Statements of Changes in    
Shareholders' Equity in accordance with SFAS No. 130, "Reporting Comprehensive  
Income." SFAS No. 130 establishes rules for the reporting of comprehensive      
income and its components. The components of other accumulated comprehensive    
income are as follows (in thousands):                                           

                                                        [Enlarge/Download Table]

                                                                                Accumulated  
                                                       Unrealized   Foreign        Other     
                                                        Loss on     Currency    Comprehensive
                                                       Securities  Translation  Income (Loss)
                                                       ----------  -----------  -------------

                                                                                             
Balance at January 1, 1998 ........................... $  (735)     $ (2,859)    $ (3,594)   
Foreign currency translation adjustment ..............      --         1,452        1,452    
Unrealized loss on securities ........................  (6,600)           --       (6,600)   
Less: Reclassification adjustment for loss realized                                          
  in net income.......................................   7,335            --        7,335    
                                                       -------      --------     --------    

Balance at December 31, 1998 .........................      --        (1,407)      (1,407)   
Foreign currency translation adjustment ..............      --        (4,453)      (4,453)   
                                                       -------      --------     --------    

Balance at December 31, 1999 .........................      --        (5,860)      (5,860)   
Foreign currency translation adjustment ..............      --        (8,222)      (8,222)   
                                                       -------      --------     --------    

Balance at December 31, 2000 ......................... $    --      $(14,082)    $(14,082)   
                                                       =======      ========     ========    

Earnings associated with the Company's investment in its foreign      
subsidiaries are considered to be permanently invested and no provision for     
United States federal and state income taxes on those earnings or translation   
adjustments has been provided.                                                  

NOTE 13.  INCOME TAXES                                                          

   The components of income before provision for income taxes are as follows
(in thousands):                                                                 

                                                                [Download Table]

                                           Years Ended December 31,    
                                        -------------------------------
                                         2000        1999        1998  
                                        -------     -------     -------

                                                                       
Domestic ..........................     $43,797     $14,816     $ 2,751
Foreign ...........................      25,100      18,704      16,393
                                        -------     -------     -------

   Total income before income taxes     $68,897     $33,520     $19,144
                                        =======     =======     =======

Provision for income taxes consists of the following (in thousands):  

                                                                [Download Table]

                                                     Years Ended December 31,       
                                               ------------------------------------ 
                                                 2000          1999          1998   
                                               --------      --------      -------- 
                                                                                    
Current:                                                                            
    Federal .................................  $ 14,507      $  6,856      $ 14,365 
    State ...................................     2,412         1,225         2,338 
    Foreign .................................     7,875        12,306         8,889 
                                               --------      --------      -------- 
    Total current provision for income taxes     24,794        20,387        25,592 
                                               --------      --------      -------- 

Deferred:                                                                           
    Federal .................................    (4,306)       (1,088)       (5,564)
    State ...................................      (716)         (420)         (883)
    Foreign .................................     1,419        (5,893)       (1,657)
                                               --------      --------      -------- 
    Total deferred provision for income taxes    (3,603)       (7,401)       (8,104)
                                               --------      --------      -------- 

          Total provision for income taxes ..  $ 21,191      $ 12,986      $ 17,488 
                                               ========      ========      ======== 

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NOTE 13.  INCOME TAXES (continued)                                              

       The components of the net deferred tax asset (liability) are as follows
(in thousands):                                                                 

                                                                [Download Table]

                                                          December 31,       
                                                      ---------------------- 
                                                        2000          1999   
                                                      --------      -------- 
                                                                             
Domestic current:                                                            
Deferred tax asset:                                                          
   Accrued expenses .............................     $ 10,225      $  1,589 
   Deferred compensation ........................           --            96 
   Bad debt reserve .............................        1,543           700 
   Valuation allowance ..........................       (1,819)           -- 
   Other ........................................           11             8 
                                                      --------      -------- 
     Total current deferred tax asset ...........        9,960         2,393 
                                                      --------      -------- 

Deferred tax liability:                                                      
   Prepaid expenses .............................         (240)         (290)
   Other ........................................         (925)         (925)
                                                      --------      -------- 
     Total current deferred tax liability .......       (1,165)       (1,215)
                                                      --------      -------- 
     Net domestic current deferred tax asset ....        8,795         1,178 
                                                      --------      -------- 

Foreign current:                                                             
Deferred tax asset:                                                          
   Net operating loss carry-forward .............        1,815         1,470 
   Valuation allowance ..........................       (1,815)       (1,240)
                                                      --------      -------- 
     Total foreign current deferred tax asset ...           --           230 
                                                      --------      -------- 

Net current deferred tax asset, included in                                  
   prepaid expenses and other current assets ....     $  8,795      $  1,408 
                                                      ========      ======== 

Domestic non-current:                                                        
Deferred tax asset:                                                          
  Unrealized loss on security ...................     $  1,736      $  3,009 
  Intangible assets .............................          920         5,171 
  Deferred revenue ..............................          864         3,072 
  Net operating loss carry-forward ..............           83            83 
  Valuation allowance ...........................         (348)       (2,894)
  Other .........................................          265           265 
                                                      --------      -------- 
   Total non-current deferred tax asset .........        3,520         8,706 
                                                      --------      -------- 

Deferred tax liability:                                                      
  Property and equipment ........................       (2,477)       (1,188)
  Intangible assets .............................           --        (1,919)
  Other .........................................         (734)           -- 
                                                      --------      -------- 
    Total non-current deferred tax liability ....       (3,211)       (3,107)
                                                      --------      -------- 
      Net domestic non-current deferred tax asset                            
         (liability) ............................          309         5,599 
                                                      --------      -------- 

Foreign non-current:                                                         
Deferred tax asset:                                                          
  Intangible assets .............................        1,312         4,058 
  Deferred revenue ..............................        5,628         3,391 
                                                      --------      -------- 
    Total non-current deferred tax asset ........        6,940         7,449 
                                                      --------      -------- 

Deferred tax liability:                                                      
  Property and equipment ........................       (1,342)         (866)
  Untaxed reserve ...............................         (996)         (494)
                                                      --------      -------- 
    Total non-current deferred tax liability ....       (2,338)       (1,360)
                                                      --------      -------- 
      Net foreign non-current deferred tax asset         4,602         6,089 
                                                      --------      -------- 

Net non-current deferred tax asset, included                                 
   in deferred charges and other assets .........     $  4,911      $ 11,688 
                                                      ========      ======== 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 13.  INCOME TAXES (continued)                                              

The Company has not recorded deferred income taxes applicable to      
undistributed earnings of foreign subsidiaries that are indefinitely reinvested 
in foreign operations. Undistributed earnings amounted to approximately $59.5   
million at December 31, 2000, excluding amounts, which, if remitted, generally  
would result in minimal additional U.S. income taxes because of available       
foreign tax credits. If the earnings of such foreign subsidiaries were not      
indefinitely reinvested, a deferred tax liability of approximately $7.5 million 
would have been required.                                                       

     At December 31, 2000, the Company's French subsidiary had an operating loss
carryforward of approximately $4.2 million that expires through the year 2006.  

    The following summarizes the principal differences between income taxes at
the federal statutory rate and the effective income tax amounts reflected in the
financial statements (in thousands):                                            

                                                        [Enlarge/Download Table]

                                                            Years Ended December 31,        
                                                       ------------------------------------ 
                                                         2000          1999          1998   
                                                       --------      --------      -------- 

                                                                                            
Statutory tax .......................................  $ 24,113      $ 11,732      $  6,700 
State income taxes, net of federal tax benefit ......       877           521           638 
Effect of foreign income not subject to federal and                                         
     state income tax ...............................    (3,017)            9          (162)

In-process research and development .................        --            --         5,064 
Valuation on unrealized loss on marketable security .    (2,546)           --         3,000 
Valuation on net operating loss carry-forward .......     3,412           430           704 
Non-deductible amortization .........................       410           514            63 
Loss from joint venture .............................        --            --         1,382 
Foreign taxes, net of foreign income not taxed in the                                       
     United States ..................................     5,647        (1,468)         (565)
Tax basis difference on sale of equity interest in                                          
     SHPS, Incorporated .............................    (7,280)           --            -- 

Permanent differences ...............................       296           440           359 
Other ...............................................      (721)          808           305 
                                                       --------      --------      -------- 
     Total provision for income taxes ...............  $ 21,191      $ 12,986      $ 17,488 
                                                       ========      ========      ======== 

    The Company is currently under examination by the Internal Revenue Service
for the tax years ended July 31, 1999 and 1998. In the opinion of management,   
any liability that may arise from the prior period as a result of the           
examination will not have a material effect on the Company's financial          
condition, results of operations, or cash flows.                                

NOTE 14.  RESTRUCTURING AND OTHER CHARGES                                       

    The Company recorded restructuring and other charges during the second and
fourth quarters of 2000 totaling $30.5 million. Related to the second quarter   
restructuring and other charges totaling $9.6 million, the Company consolidated 
several European and one U.S. distribution and fulfillment center and closed or 
consolidated six professional services offices. As a result of the second       
quarter restructuring, the Company reduced the number of employees by 157 during
2000 and expects the remaining lease obligations related to the closed          
facilities to be completed by June 2001. Included in the second quarter         
restructuring and other charges is a $3.5 million lease termination payment     
related to the corporate aircraft.                                              

     The Company also announced, after a comprehensive review of operations, its
decision to exit certain non-core lower margin businesses to reduce costs,      
improve operating efficiencies and focus on its core competencies of technical  
support, customer service and consulting solutions. As a result, the Company    
recorded $20.9 million in restructuring and other charges during the fourth     
quarter of 2000 related to the closure of its U.S. fulfillment and distribution 
operations, the consolidation of its Tampa, Florida technical support center    
into its Charlotte, North Carolina center and the exit of its worldwide         
localization operations. In connection with the fourth quarter restructuring,   
the Company plans to reduce the number of employees by 250. The Company expects 
to substantially complete the workforce reduction by March 2001 and any         
remaining lease obligations related to the closed facilities by December 2001.  
Included in the restructuring and other charges is a $2.4 million severance     
payment related to the employment contract of the Company's former President.   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 14.  RESTRUCTURING AND OTHER CHARGES (continued)                           

   The Company estimates it may achieve up to approximately $12.0 million in
annualized savings related to the closed operations included in the second and  
fourth quarter restructurings.                                                  

    The major components of restructuring and other charges for the year ended
December 31, 2000 are as follows (in thousands):                                

                                                        [Enlarge/Download Table]

                                                          Restructuring   Other    Total 
                                                          -------------   -----    ----- 

                                                                                         
Severance and related costs .............................    $ 1,614     $ 2,360  $ 3,974
Lease termination costs .................................      1,765       3,639    5,404
Write-down of property and equipment ....................     14,088         103   14,191
Write-down of intangible assets .........................      6,086          --    6,086
Other ...................................................        813          --      813
                                                             -------     -------  -------
                                                             $24,366     $ 6,102  $30,468
                                                             =======     =======  =======

     A summary of the restructuring and other charges activity is as follows (in
thousands):                                                                     

                                                        [Enlarge/Download Table]

                                                           Restructuring    Other     Total  
                                                           -------------    -----     -----  
                                                                                             
Balance established in 2000 .............................     $ 24,366    $ 6,102   $ 30,468 
Reduction in workforce cash outflows ....................         (912)        --       (912)
Lease termination cash payments .........................         (477)    (3,639)    (4,116)
Non-cash write-down and reserve of property and equipment      (14,088)      (103)   (14,191)
Non-cash write-down and reserve of intangible assets ....       (6,086)        --     (6,086)
Other cash outflows .....................................          (95)        --        (95)
                                                              --------    -------   -------- 
Balance remaining at December 31, 2000 ..................     $  2,708    $ 2,360   $  5,068 
                                                              ========    =======   ======== 

NOTE 15.  EARNINGS PER SHARE                                                    

     Basic earnings per share are based on the weighted average number of common
shares outstanding during the periods. Diluted earnings per share includes the  
weighted average number of common shares outstanding during the respective      
periods and the further dilutive effect, if any, from stock options using the   
treasury stock method.                                                          

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

                                                        [Enlarge/Download Table]

                                                            Years Ended December 31,  
                                                          ----------------------------
                                                           2000       1999       1998 
                                                          ------     ------     ------

                                                                                      
Basic:                                                                                
Weighted average common shares outstanding .............. 41,518     42,045     41,258
                                                          ------     ------     ------
      Total weighted average basic shares                                             
      outstanding ....................................... 41,518     42,045     41,258

Diluted:                                                                              
   Dilutive effect of stock options .....................   127        950      1,030 
                                                          ------     ------     ------
      Total weighted average diluted shares outstanding   41,645     42,995     42,288
                                                          ======     ======     ======

NOTE 16.  COMMITMENTS AND CONTINGENCIES                                         

   The Company leases certain equipment and buildings under operating leases
having terms ranging from one to twenty-two years. The building leases contain  
up to two five-year renewal options. Rental expense under operating leases for  
the years ended December 31, 2000, 1999 and 1998 was approximately $17.4        
million, $16.7 million, and $11.2 million, respectively.                        

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 16.  COMMITMENTS AND CONTINGENCIES (continued)                             

The following is a schedule of future minimum rental payments under   
operating leases having a remaining non-cancelable term in excess of one year   
subsequent to December 31, 2000 (in thousands):                                 

                                                                [Download Table]

                                                            Total   
                        Year                                Amount  
                        ----                                ------  

                                                                    
2001...............................................      $    10,826
2002...............................................            7,706
2003...............................................            5,600
2004...............................................            3,724
2005...............................................            2,510
Thereafter.........................................           23,374
                                                         -----------
     Total minimum payments required...............      $    53,740
                                                         ===========

 The Company is aware of sixteen purported class action lawsuits that have
been filed against Sykes and certain of its officers alleging violations of     
federal securities laws. All of the actions have been consolidated into one case
which is pending in the United States District Court for the Middle District of 
Florida. The plaintiffs purport to assert claims on behalf of a class of        
purchasers of Sykes common stock during the period from July 27, 1998 through   
September 18, 2000. The consolidated action claims violations of Sections 10(b) 
and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated     
thereunder. Among other things, the consolidated action alleges that during     
2000, 1999 and 1998, the Company and certain of its officers made materially    
false statements concerning the Company's financial condition and its future    
prospects. The consolidated complaint also claims that certain of the Company's 
quarterly financial statements during 1999 and 1998 were not prepared in        
accordance with generally accepted accounting principles. The consolidated      
action seeks compensatory and other damages, and costs and expenses associated  
with the litigation. The Company believes these claims are without merit and    
intends to defend the actions vigorously.                                       

The Company is also aware of a lawsuit filed by Kyrus that asserts      
functionality issues associated with software that Kyrus had licensed from the  
Company. At the time of the software license, the Company and Kyrus entered into
an agreement which provided for a return of a portion of the convertible        
preferred stock transferred to the Company in consideration of the license in   
the event that revenues generated by Kyrus from the software did not reach      
agreed upon levels. In this lawsuit, Kyrus claims that revenues from the        
software did not meet the minimum levels agreed upon and that Kyrus is therefore
entitled to a return of the convertible preferred stock having a fair value of  
$4.5 million at the time of the software license. The Company has not recorded  
the convertible preferred stock subject to the contingency in the accompanying  
Consolidated Balance Sheets as of December 31, 2000 and 1999. Therefore, in the 
event the Company is required to return the preferred stock to Kyrus, the return
will not impact the Company's financial position or results of operations. This 
litigation is currently pending in the Court of Common Pleas for Greenville     
County, South Carolina. This lawsuit is in the very early stages and formal     
discovery has not yet begun. The Company intends to vigorously defend this      
lawsuit.                                                                        

     Although the Company intends to vigorously defend these lawsuits, it cannot
predict their outcome or the impact they may have on the Company. The Company   
also cannot predict whether any other suits, claims, or investigations may arise
in the future based on the same claims. The outcome of any of these lawsuits or 
any future lawsuits, claims, or investigations relating to the same subject     
matter may have a material adverse impact on the Company's financial condition  
and results of operations.                                                      

   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 it has adequate legal defenses and/or provided adequate accruals for       
related costs such that the ultimate outcome will not have a material adverse   
effect on the Company's future financial position.                              

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 17.  EMPLOYEE BENEFIT PLAN                                                 

 The Company maintains a 401(k) plan covering defined employees who meet
established eligibility requirements. Under the original plan provisions, the   
Company matched 25% of participant contributions to a maximum matching amount of
1% of participant compensation. During 1997, the Company increased the 401(k)   
matching provision to 50% of participating contributions to a maximum matching  
amount of 2% of participant compensation. The Company contribution was          
approximately $0.9 million, $0.8 million and $0.6 million for the years ended   
December 31, 2000, 1999 and 1998, respectively. In addition, two of the         
Company's subsidiaries maintained separate defined contribution plans, one of   
which was merged into the Company's 401(k) plan effective January 1, 1998 and   
the second one was terminated with the Company's sale of SHPS, Incorporated. The
combined contributions made to these plans were approximately $0.2 million, $0.1
million, and $0.2 million for the years ended December 31, 2000, 1999 and 1998, 
respectively.                                                                   

NOTE 18.  STOCK OPTIONS                                                         

    1996 Employee Stock Option Plan - The Company's 1996 Employee Stock Option
Plan (the "Employee Plan") permits the granting of incentive or non-qualified   
stock options to purchase up to approximately 2.625 million shares of the       
Company's common stock at not less than the fair value at the time the options  
are granted. All options granted under the Employee Plan expire if not exercised
by the tenth anniversary of their grant date with the exception of outstanding  
options converted pursuant to the acquisition of McQueen consistent with        
pooling-of-interests rules and expire five years from grant date. Certain other 
officers and employees hold options to purchase additional shares of common     
stock at a range of $0.03 to $30.76 per share that vest ratably over the        
three-year period following the date of grant, except for approximately 360     
thousand options associated with the outstanding options from the acquisition of
McQueen which are immediately exercisable. Transactions related to the 1996     
Employee Stock Option Plan are summarized as follows (in thousands):            

                                                                [Download Table]

                                                  Weighted
                                                   Average
                                                  Exercise
                                    Shares          Price 
                                    ------          ----- 

                                                          
Outstanding at January 1, 1998.       1,374        $ 16.67
 (Exercisable: 391 at $11.02)                             
    Granted....................         682        $ 21.46
    Exercised..................        (329)       $  3.14
    Expired or terminated......        (313)       $ 23.91
                                  ---------               
Outstanding at December 31, 1998      1,414        $ 20.05
 (Exercisable: 344 at $19.49)                             
    Granted....................         860        $ 23.50
    Exercised..................        (677)       $ 17.71
    Expired or terminated......        (320)       $ 22.70
                                  ---------               
Outstanding at December 31, 1999      1,277        $ 22.90
 (Exercisable: 365 at $20.99)                             
    Granted....................         373        $ 18.84
    Exercised..................         (75)       $ 21.18
    Expired or terminated......        (933)       $ 21.21
                                  ---------               
Outstanding at December 31, 2000        642        $ 23.19
                                  =========               
 (Exercisable: 326 at $23.66)                             

Options available for future                              
  grant........................         712               
                                  =========               

    The following table further summarizes information about the 1996 Employee
Stock Option Plan at December 31, 2000:                                         

                                                        [Enlarge/Download Table]

                             Number          Weighted     Weighted         Number        Weighted 
                           Outstanding        Average      Average       Exercisable      Average 
      Range Of                 At            Remaining    Exercise           At          Exercise 
   Exercise Prices        Dec. 31, 2000        Life         Price       Dec. 31, 2000      Price  
--------------------    ----------------  ------------- ------------  -----------------  ---------
                         (in thousands)                               (in thousands)              

                                                                                                  
       $ 0.03 to $1.24             1           2.0         $  0.90               1       $  0.90  
                 $8.00             8           5.3         $  8.00               8       $  8.00  
      $13.23 to $30.76           633           8.0         $ 23.44             317       $ 24.16  
                                 ---                                           ---                
                 Total           642           7.9         $ 23.19             326       $ 23.66  
                                 ===                                           ===                

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18.  STOCK OPTIONS (continued)                                             

1996 Non-Employee Director Stock Option Plan - The Company's 1996     
Non-Employee Director Stock Option Plan (the "Non-Employee Plan") permits the   
granting of non-qualified stock options to purchase up to 431 thousand shares of
the Company's common stock to members of the Board of Directors who are not     
employees of the Company. Each outside director will receive options to purchase
5 thousand shares of common stock on the first day of each calendar year. Also, 
on the date on which a new outside director is first elected or appointed, he or
she automatically will be granted options to purchase 5 thousand shares of      
common stock. All options granted will have an exercise price equal to the then 
fair market value of the common stock. All options granted under the            
Non-Employee Plan expire if not exercised by the tenth anniversary of their     
grant date.                                                                     

  Transactions related to the 1996 Non-Employee Director Stock Option Plan
are summarized as follows (in thousands):                                       

                                                                [Download Table]

                                                Weighted
                                                 Average
                                                Exercise
                                     Shares        Price
                                     ------        -----

                                                        
Outstanding at January 1, 1998.          73      $ 16.56
 (Exercisable: none)                                    
    Granted....................          40      $ 20.44
    Exercised..................          (7)     $  8.00
    Expired or terminated......          --      $    --
                                   --------             
Outstanding at December 31, 1998        106      $ 18.53
 (Exercisable: 39 at $16.67)                            
    Granted....................          35      $ 23.81
    Exercised..................          (8)     $  8.00
    Expired or terminated......          --      $    --
                                   --------             
Outstanding at December 31, 1999        133      $ 20.58
 (Exercisable: 66 at $18.79)                            
    Granted....................          67      $ 15.01
    Exercised..................         (15)     $ 19.03
    Expired or terminated......          (5)     $ 23.81
                                   --------             
Outstanding at December 31, 2000        180      $ 18.53
                                   ========             
 (Exercisable: 81 at $19.90)                            

Options available for future                            
   grant.......................         195             
                                   ========             

The following table further summarizes information about the 1996     
Non-Employee Director Stock Option Plan at December 31, 2000:                   

                                                        [Enlarge/Download Table]

                           Number          Weighted     Weighted         Number        Weighted 
                         Outstanding        Average      Average       Exercisable      Average 
      Range Of               At            Remaining    Exercise           At          Exercise 
   Exercise Prices      Dec. 31, 2000        Life         Price       Dec. 31, 2000      Price  
--------------------  ----------------  ------------- ------------  -----------------  ---------
                       (in thousands)                               (in thousands)              

                                                                                                
       $  4.48                 15            9.8         $  4.48             --         $  ---  
       $  8.00                 12            5.3         $  8.00             13         $  8.00 
       $ 13.53                  8            9.5         $ 13.53             --         $  ---  
       $ 18.39                  5            7.2         $ 18.39              3         $ 18.39 
       $ 18.76                 45            9.3         $ 18.76             --         $  ---  
       $ 20.74                 30            7.3         $ 20.74             20         $ 20.74 
       $ 22.23                 30            6.4         $ 22.23             30         $ 22.23 
       $ 23.81                 30            8.3         $ 23.81             10         $ 23.81 
       $ 25.42                  5            6.4         $ 25.42              5         $ 25.42 
                           ------                                        ------                 
        Total                 180            8.0         $ 18.53             81         $ 19.90 
                           ======                                        ======                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18.  STOCK OPTIONS (continued)                                             

     1997 Management Incentive Stock Option Plan - The Company's 1997 Management
Incentive Stock Option Plan (the "Management Incentive Plan") permits the       
granting of non-qualified stock options to purchase up to approximately 4.0     
million shares of the Company's common stock at not less than the fair value at 
the time the options are granted. At December 31, 2000, 1999 and 1998, no       
options granted were exercisable. All options granted under the Management      
Incentive Plan expire if not exercised by the tenth anniversary of their grant  
date.                                                                           

     Transactions related to the 1997 Management Incentive Stock Option Plan are
summarized as follows (in thousands):                                           

                                                                [Download Table]

                                                                        Weighted
                                                                         Average
                                                                        Exercise
                                                               Shares     Price 
                                                               ------     ----- 
                                                                                
Outstanding at January 1, 1998..............................       --   $    -- 
   Granted..................................................      770   $ 21.19 
   Exercised................................................       --   $    -- 
   Expired or terminated....................................       --   $    -- 
                                                             --------           
Outstanding at December 31, 1998...........................       770   $ 21.19 
   Granted..................................................      155   $ 29.96 
   Exercised................................................       --   $    -- 
   Expired or terminated....................................     (405)  $ 20.00 
                                                             --------           
Outstanding at December 31, 1999............................      520   $ 24.73 
   Granted..................................................    1,594   $ 18.29 
   Exercised................................................       --   $    -- 
   Expired or terminated....................................     (526)  $ 20.83 
                                                             --------           
Outstanding at December 31, 2000............................    1,588   $ 19.56 
                                                             ========           
Options available for future grant..........................    2,412           
                                                             ========           


The following table further summarizes information about the 1997     
Management Incentive Stock Option Plan at December 31, 2000:                    

                                                        [Enlarge/Download Table]

                           Number          Weighted     Weighted         Number        Weighted 
                         Outstanding        Average      Average       Exercisable      Average 
      Range Of               At            Remaining    Exercise           At          Exercise 
   Exercise Prices      Dec. 31, 2000        Life         Price       Dec. 31, 2000      Price  
--------------------  ----------------  ------------- ------------  -----------------  ---------
                       (in thousands)                               (in thousands)              

                                                                                                
       $ 16.24                 60            9.2         $ 16.24           --             $--   
       $ 18.00              1,163            9.2         $ 18.00           --             $--   
       $ 18.93                 20            7.7         $ 18.93           --             $--   
       $ 19.88                 50            7.9         $ 19.88           --             $--   
       $ 20.00                 70            7.3         $ 20.00           --             $--   
       $ 23.50                 40            8.7         $ 23.50           --             $--   
       $ 26.58                 30            8.0         $ 26.58           --             $--   
       $ 29.21                 80            8.4         $ 29.21           --             $--   
       $ 30.76                 75            8.1         $ 30.76           --             $--   
                           ------                                    --------                   
        Total               1,588            8.9         $ 19.56           --             $--   
                           ======                                    ========                   

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18.  STOCK OPTIONS (continued)                                             

  2000 Stock Option Plan - The Company's 2000 Stock Option Plan (the "2000
Plan") permits the granting of incentive stock options to purchase up to 4.0    
million shares of the Company's common stock to certain employees of the Company
at not less than the fair market value at the time the options are granted. All 
options granted under the 2000 Plan expire if not exercised by a fixed          
expiration date, which is no later than the tenth anniversary of their grant    
date.                                                                           

Transactions related to the 2000 Plan are summarized as follows (in   
thousands):                                                                     

                                                                [Download Table]

                                                 Weighted
                                                  Average
                                                 Exercise
                                   Shares         Price  
                                   ------         -----  

                                                         
Outstanding at January 1, 2000.        --         $   -- 
   Granted.....................     1,081         $  6.85
   Exercised...................        --         $    --
   Expired or terminated.......       (16)        $ 13.46
                                ---------                
Outstanding at December 31,                              
2000...........................     1,065         $  6.75
   Exercisable:  None           =========                

Options available for future                             
grant..........................     2,935                
                                =========                

 The following table further summarizes information about the 2000 Stock
Option Plan at December 31, 2000:                                               

                                                        [Enlarge/Download Table]

                            Number          Weighted     Weighted         Number        Weighted 
                          Outstanding        Average      Average       Exercisable      Average 
      Range Of                At            Remaining    Exercise           At          Exercise 
   Exercise Prices       Dec. 31, 2000        Life         Price       Dec. 31, 2000      Price  
--------------------   ----------------  ------------- ------------  -----------------  ---------
                        (in thousands)                               (in thousands)              

                                                                                                 
     $ 4.05                    715            9.8         $  4.05              --          $--   
     $ 4.32 to $5.94            65            9.9         $  4.95              --          $--   
     $11.28 to $14.31          271            9.6         $ 13.68              --          $--   
     $17.68 to $20.17           14            9.4         $ 18.92              --          $--   
                       -----------                                   ------------                
          Total              1,065            9.8         $  6.75              --          $--   
                       ===========                                   ============                

 Employee Stock Purchase Plan - Sykes' Employee Stock Purchase Plan (the
"ESPP") allows eligible employee participants to purchase shares of the         
Company's common stock at a discount through payroll deductions. The ESPP, which
qualifies under Code Section 423 of the Internal Revenue Code of 1986, was      
adopted by the Company's Board of Directors on April 1, 1999 and approved by the
shareholders. Pursuant to the ESPP, Sykes reserved 1.0 million shares of its    
common stock for issuance.                                                      

     Under the ESPP, eligible employees may purchase the Company common stock at
87.5% of the market price on the last day of the offering period. The maximum   
each employee may purchase within an offering period shall not exceed $6.25     
thousand in market value of Company common stock. The Company will typically    
have four three-month offering periods each year.                               

    The weighted average fair value share price of the purchase rights granted
under the ESPP during the year ended December 31, 2000 was $7.29. For the years 
ended December 31, 2000 and 1999, 85 thousand and 16 thousand, respectively, of 
such shares were purchased and 899 thousand shares remain available for future  
issuance.                                                                       

The Company has adopted the disclosure only provisions of Statement of
Financial Accounting Standards No. 123, "Accounting for Stock Based             
Compensation" but applies Accounting Principles Board Opinion No. 25 and related
interpretations in accounting for its plans. Therefore, no compensation expense 
has been recognized for stock options granted at fair market value under its    
plans.                                                                          

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 18.  STOCK OPTIONS (continued)                                             

If the Company had elected to recognize compensation expense for stock
options based on the fair value at grant date, consistent with the method       
prescribed by SFAS No. 123, net income and earnings per share would have been   
reduced to the pro forma amounts as follows (in thousands except per share      
amounts):                                                                       

                                                        [Enlarge/Download Table]

                                                                   Years Ended December 31,          
                                                            ---------------------------------------- 
                                                               2000           1999           1998    
                                                            ----------     ----------     ---------- 

                                                                                                     
Net income as reported .................................... $   46,787     $   20,534     $    1,656 
Pro forma net income (loss) as prescribed by SFAS 123 .....     41,729         13,091         (4,125)
Net income per diluted share as reported ..................       1.13           0.48           0.04 
Pro forma net income (loss) per diluted share as                                                     
prescribed by SFAS 123 ....................................       1.00           0.30          (0.10)

 The pro forma amounts were determined using the Black-Scholes valuation
model with the following key assumptions: (i) a discount rate of 6.2 percent for
2000, a discount rate of 6.1 percent for 1999, and a discount rate of 6.0       
percent for 1998; (ii) a volatility factor of 82.67 percent based upon the      
average trading price of the Company's common stock since it began trading on   
the Nasdaq National Market; (iii) no dividend yield; and (iv) an average        
expected option life of five years (three years for the ESPP) for 2000 and an   
average expected option life of four years (two years for the ESPP) for 1999 and
1998. In addition, the pro forma amount for 2000 and 1999 includes approximately
$189 thousand and $88 thousand, respectively, related to purchase discounts     
offered under the ESPP (none for 1998).                                         

NOTE 19. SEGMENTS AND GEOGRAPHIC INFORMATION                                    

  On June 13, 2000, the Company announced its initiatives to strategically
focus its operations into two business segments entitled Business Services and  
Business Solutions. These segments are consistent with the Company's management 
of these businesses and generally reflect its financial reporting structure and 
operating focus. The Business Services group represents approximately 91% of the
Company's consolidated revenue for 2000 and is comprised of the Company's       
technical and customer support and distribution and fulfillment segments. These 
services are delivered through multiple communication channels encompassing     
phone, e-mail, web, and chat. The Business Solutions group, which represents    
approximately 9% of the Company's consolidated revenue for 2000, provides       
professional services in e-commerce and customer relationship management (CRM)  
with a focus on business strategy development, project management, business     
process redesign, change management, knowledge management, education, training  
and web development.                                                            

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19.  SEGMENTS AND GEOGRAPHIC INFORMATION (continued)                       

 The following table presents information about the Company's reportable
segments, as revised to reflect the change from a single segment in 1999 and    
1998 to two (2) segments (in thousands):                                        

                                                        [Enlarge/Download Table]

                                                                                                       Consolidated
                                                  Business Services(2)  Business Solutions  Other(1)       Total   
                                                  --------------------  ------------------  --------   ------------
                                                                                                                   
For the Year Ended December 31, 2000 (restated):                                                                   
Revenue ..................................               $550,920            $52,686        $     --    $603,606   
Depreciation and amortization.............               $ 35,828            $ 1,001        $     --    $ 36,829   

Income (loss) from operations, before                                                                              
  compensation expense associated with                                                                             
  exercise of options and restructuring                                                                            
  and other charges.......................               $ 26,522            $  (526)       $     --    $ 25,996   
Compensation expense associated with                                                                               
   exercise of options....................                                                    (7,836)     (7,836)  
Restructuring and other charges...........                                                   (30,468)    (30,468)  
Other income (expense)....................                                                    81,205      81,205   
Provision for income taxes................                                                   (21,191)    (21,191)  
Cumulative effect of change in accounting                                                                          
   principle..............................                                                      (919)       (919)  
                                                                                                        --------   
Net income................................                                                              $ 46,787   
                                                                                                        ========   

For the Year Ended December 31, 1999 (restated):                                                                   
Revenue ..................................             $521,967              $50,775        $     --    $572,742   
Depreciation and amortization.............             $ 36,841              $   729        $     --    $ 37,570   

Income (loss) from operations, before                                                                              
  impairment of long-lived assets ........             $ 44,386              $(1,370)       $     --    $ 43,016   

Impairment of long-lived assets...........                                                    (5,979)     (5,979)  
Other income (expense)....................                                                    (3,517)     (3,517)  
Provision for income taxes................                                                   (12,986)    (12,986)  
                                                                                                        --------   
Net income................................                                                              $ 20,534   
                                                                                                        ========   

For the Year Ended December 31, 1998 (restated):                                                                   
Revenue ..................................             $388,746              $71,356        $     --    $460,102   
Depreciation and amortization.............             $ 22,230              $   859        $     --    $ 23,089   

Income from operations, before acquired                                                                            
   in-process research and development....             $ 42,490              $ 3,393        $     --    $ 45,883   
Acquired in-process research and development                                                 (14,469)    (14,469)  
Other income (expense)....................                                                   (12,270)    (12,270)  
Provision for income taxes................                                                   (17,488)    (17,488)  
                                                                                                        --------   
Net income................................                                                              $  1,656   
                                                                                                        ========   

(1)  Other items are shown for purposes of reconciling to the Company's         
   consolidated totals as shown in the table above for the three years ended
   December 31, 2000. The accounting policies of the reportable segments are
the same as those described in the summary of accounting policies.    
Inter-segment revenues are not material to the Business Services and  
  Business Solutions segment results. Total assets are not disclosed since
they are not identified and reported by segment to the Company's      
management.                                                           

(2)  Business Services revenue includes $35.7 million, $73.0 million and $26.8  
     million for the years ended December 31, 2000, 1999 and 1998, respectively,
from SHPS, Incorporated, a previously wholly-owned subsidiary of the  
Company, which was sold in June 2000.                                 

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 19.  SEGMENTS AND GEOGRAPHIC INFORMATION (continued)                       

     No single customer accounted for 10% of consolidated revenues for the years
ended December 31, 2000, 1999, and 1998.                                        

 Information about the Company's operations by geographic location is as
follows (in thousands):                                                         

                                                                [Download Table]

                                                    Years Ended December 31,    
                                              ----------------------------------
                                                2000         1999         1998  
                                              --------     --------     --------
                                                                                
Revenue:                                                                        
   Americas .............................     $390,268     $391,341     $295,729
   International ........................      213,338      181,401      164,373
                                              --------     --------     --------
                                              $603,606     $572,742     $460,102
                                              ========     ========     ========
Income before provision for income taxes:                                       
   Americas .............................     $ 56,087     $ 19,093     $  5,248
   International ........................       12,810       14,427       13,896
                                              --------     --------     --------
                                              $ 68,897     $ 33,520     $ 19,144
                                              ========     ========     ========
Total assets:                                                                   
   Americas .............................     $221,743     $302,091     $260,014
   International ........................      136,211      118,641      102,256
                                              --------     --------     --------
                                              $357,954     $420,732     $362,270
                                              ========     ========     ========

NOTE 20.  RELATED PARTY TRANSACTIONS                                            

    During 2000, the Company terminated its ten-year operating lease agreement
with the Company's Chairman (and majority shareholder) for its corporate        
aircraft and paid a lease termination fee of $3.5 million. This lease           
termination payment is included in restructuring and other charges in the       
accompanying Consolidated Statement of Income for the year ended December 31,   
2000. After the lease termination, the Company paid the Chairman (and majority  
shareholder) $213 thousand for the use of the corporate aircraft in 2000. The   
lease expense for each of the years ended December 31, 2000, 1999 and 1998,     
exclusive of lease termination payments, was $0.3 million, $0.6 million, and    
$0.6 million, respectively.                                                     

 During the period from September 1, 2000 through December 31, 2000, the
Company also paid a company, in which the Chairman (and majority shareholder)   
has an 80% equity interest, $247 thousand for management and site development   
services.                                                                       

A member of the board of directors of the Company received broker     
commissions from the Company's 401(k) investment firm of $25 thousand for each  
of the years ended December 31, 2000, 1999, and 1998, respectively, and         
insurance commissions for the placement of the Company's various corporate      
insurance programs of $75 thousand for each of the years ended December 31, 2000
and 1999, respectively (none in 1998).                                          

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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND         
FINANCIAL DISCLOSURE                                            

None                                                                    

PART III

ITEMS 10. THROUGH 13. All information required by Items 10 through 13, with the 
exception of information on Executive Officers which appears in the report under
the caption "Executive Officers of the Registrant," is incorporated by reference
to the Company's Proxy Statement for its Year 2001 Annual Meeting of            
Shareholders.                                                                   

 PART IV

ITEM 14.     EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K   

(a)(1)       Consolidated Financial Statements Report of Independent Auditors.  

    The following information is contained in Item 8 "Financial Statements and
Supplementary Data", and is incorporated herein by reference:                   

       Consolidated Balance Sheets as of December 31, 2000 and 1999.

            Consolidated Statements of Income for the years ended December 31,
2000, 1999 and 1998.                                  

            Consolidated Statements of Changes in Shareholders' Equity for the
years ended December 31, 2000, 1999 and 1998.         

            Consolidated Statements of Cash Flows for the years ended December
31, 2000, 1999 and 1998.                              

Notes to Consolidated Financial Statements.           

(a)(2)       Financial Statement Schedule                                       

Schedule II - Valuation and Qualifying Accounts       

(a)(3)       Exhibits                                                           

The following documents are filed as exhibits to this report:         

                                                                [Download Table]

Exhibit                                                       
Number      Exhibit Description                               

                                                              
2.1         Articles of Merger between Sykes Enterprises,     
            Incorporated, a North Carolina Corporation, and   
            Sykes Enterprises, Incorporated, a Florida        
            Corporation, dated March 1, 1996. (1)             

2.2         Articles of Merger between Sykes Enterprises,     
            Incorporated and Sykes Realty, Inc. (1)           

2.3         Stock Purchase Agreement dated July 1, 1996 among 
            Sykes Enterprises, Incorporated and Johan Holm,   
            Arne Weinz and Norhold Invest AB. (2)             

2.4         Stock Purchase Agreement dated August 30, 1996    
            among Sykes Enterprises, Incorporated and Gordon  
            H. Kraft. (3)                                     

2.5         Merger Agreement dated as of January 10, 1997     
            among Sykes Enterprises, Incorporated, Info       
            Systems of North Carolina, Inc. and ISNC          
            Acquisition Co. (4)                               

2.6         Stock Purchase Agreement date March 28, 1997 among
            Sykes Enterprises, Incorporated, Sykes Holdings of
            Belgium, B.V.B.A., Cycle B.V.B.A. and Michael     
            McMahon. (5)                                      

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                                                                [Download Table]
                                                              
2.7         Joint Marketing and Distribution Agreement dated  
            April 30, 1997 by and between Sykes Enterprises,  
            Incorporated and SystemSoft Corporation. (10)     

2.8         Common Stock Purchase Agreement dated May 6, 1997 
            by and between Sykes Enterprises, Incorporated and
            SystemSoft Corporation. (10)                      

2.9         Acquisition Agreement, dated May 30, 1997, by and 
            among the holders of all of the capital interests 
            of Telcare Gesellschaft fur                       
            Telekommunikations-Mehrwertdienste mbH, Sykes     
            Enterprises GmbH, and Sykes Enterprises,          
            Incorporated. (7)                                 

2.10        Acquisition Agreement, dated September 19, 1997,  
            by and among the holders of all of the capital    
            interests of TAS Telemarketing Gesellschaft fur   
            Kommunikation und Dialog mbH, Sykes Enterprises,  
            GmbH, and Sykes Enterprises, Incorporated. (8)    

2.11        Acquisition Agreement, dated September 25, 1997,  
            by and among the holders of all of the capital    
            interests of TAS Hedi Fabinyi GmbH, Sykes         
            Enterprises, GmbH, and Sykes Enterprises,         
            Incorporated. (8)                                 

2.12        Shareholder Agreement dated December 18, 1997, by 
            and among Sykes Enterprises, Incorporated and     
            HealthPlan Services Corporation. (14)             

2.13        Acquisition Agreement, dated December 31, 1997, by
            and among the holders of all of the capital       
            interests of McQueen International Limited and    
            Sykes Enterprises, Incorporated. (11)             

2.14        Stock Purchase Agreement, dated September 11,     
            1998, between HealthPlan Services Corporation and 
            Sykes Enterprises, Incorporated. (17)             

2.15        Acquisition Agreement, dated November 23, 1998, by
            and among the holders of all of the capital       
            interests of TAS GmbH Nord Telemarketing und      
            Vertriebsberatung, Sykes Enterprises, GmbH, and   
            Sykes Enterprises, Incorporated (19).             

2.16        Combination Agreement, dated December 29, 1998, by
            and among the holders of all of the capital       
            interests of Oracle Service Networks Corporation  
            and Sykes Enterprises, Incorporated. (18)         

2.17        Merger Agreement, dated as of June 9, 2000, among 
            Sykes Enterprises, Incorporated, SHPS,            
            Incorporated, Welsh Carson Anderson and Stowe,    
            VIII, LP ("WCAS") and Slugger Acquisition Corp.   
            (24)                                              

3.1         Articles of Incorporation of Sykes Enterprises,   
            Incorporated, as amended. (19)                    

3.2         Bylaws of Sykes Enterprises, Incorporated, as     
            amended. (19)                                     

4.1         Specimen certificate for the Common Stock of Sykes
            Enterprises, Incorporated. (1)                    

4.2         Credit Agreement between NationsBank N.A. and     
            Sykes Enterprises, Incorporated dated as of       
            February 27, 1998. (16)                           

4.3         Amendment No. 1 to Credit Agreement between       
            NationsBank N.A. and Sykes Enterprises,           
            Incorporated dated as of March 20, 1998. (16)     

4.4         Guaranty Agreement between Sykes Enterprises,     
            Incorporated and HealthPlan Services Corp. to     
            NationsBank N.A. dated March 16, 1998. (16)       

10.1        Loan Agreement between NationsBank, N.A. and Sykes
            Enterprises, Incorporated dated as of December 31,
            1996. (6)                                         

10.2        Employment Agreement dated as of March 6, 2000    
            between John H. Sykes and Sykes Enterprises,      
            Incorporated (20).                                

10.3        Employment Agreement dated as of March 6, 2000    
            between David L. Grimes and Sykes Enterprises,    
            Incorporated (20).                                

10.4        Employment Agreement dated as of March 6, 2000    
            between Scott J. Bendert and Sykes Enterprises,   
            Incorporated (20).                                

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                                                                [Download Table]
                                                              
10.5        Employment Agreement dated as of March 6, 2000    
            between W. Michael Kipphut and Sykes Enterprises, 
            Incorporated (20).                                

10.6        Employment Agreement dated as of March 6, 2000    
            between Dale W. Saville and Sykes Enterprises,    
            Incorporated (20).                                

10.7        Employment Agreement dated as of March 6, 2000    
            between Gerry L. Rogers and Sykes Enterprises,    
            Incorporated (20).                                

10.8        Employment Agreement dated as of March 6, 2000    
            between James E. Lamar and Sykes Enterprises,     
            Incorporated (20).                                

10.9        Employment Agreement dated as of March 6, 2000    
            between Charles E. Sykes and Sykes Enterprises,   
            Incorporated (20).                                

10.10       Stock Option Agreement between Sykes Enterprises, 
            Incorporated and David E. Garner dated as of      
            December 31, 1995. (1)                            

10.11       1996 Employee Stock Option Plan. (1)              

10.12       1996 Non-Employee Director Stock Option Plan. (1) 

10.13       1996 Non-Employee Directors' Fee Plan. (1)        

10.14       Form of Split Dollar Plan Documents. (1)          

10.15       Form of Split Dollar Agreement. (1)               

10.16       Form of Indemnity Agreement between directors and 
            executive officers and Sykes Enterprises,         
            Incorporated. (1)                                 

10.17       Aircraft Lease Agreement between JHS Leasing of   
            Tampa, Inc. as lessor and Sykes Enterprises,      
            Incorporated as lessee, dated December 1, 1995.   
            (1)                                               

10.18       Single Tenant Property Lease Agreement between    
            Sykes Investments as landlord and Sykes           
            Enterprises, Incorporated as tenant dated October 
            31, 1989, for building in Charlotte, North        
            Carolina. (1)                                     

10.19       Tax Indemnification Agreement between Sykes       
            Enterprises, Incorporated and John H. Sykes. (1)  

10.20       Consultant Agreement between Sykes Enterprises,   
            Incorporated and E.J. Milani Consulting Corp.     
            dated April 1, 1996. (1)                          

10.21       1997 Management Stock Incentive Plan. (15)        

10.22       1999 Employees' Stock Purchase Plan. (19)         

10.23       2000 Stock Option Plan. (20).                     

10.24       Amended and Restated Credit Agreement among Sykes 
            Enterprises, Incorporated and Bank of America, NA,
            dated May 2, 2000. (21)                           

10.25       Termination of aircraft Lease Agreement between   
            JHS Leasing of Tampa, Inc., as lessor and Sykes   
            Enterprises, Incorporated as lessee dated June 30,
            2000. (21)                                        

10.26       Employment Agreement dated July 31, 2000 between  
            James E. Lamar and Sykes Enterprises,             
            Incorporated. (22)                                

10.27       Employment Separation Agreement dated as of       
            September 20, 2000 between Dale W. Saville and    
            Sykes Enterprises, Incorporated. (22)             

10.28       Employment Separation Agreement dated as of       
            September 22, 2000 between Scott J. Bendert and   
            Sykes Enterprises, Incorporated. (22)             

10.29       Employment Separation Agreement dated November 10,
            2000 between David L. Grimes and Sykes            
            Enterprises, Incorporated (23)                    

10.30       Employment Agreement dated July 31, 2000 between  
            Mitchell I. Nelson and Sykes Enterprises,         
            Incorporated. (23)                                

10.31       Employment Agreement dated March 6, 2000, amended 
            November 8, 2000, between W. Michael Kipphut and  
            Sykes Enterprises, Incorporated. (23)             

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                                                                [Download Table]
                                                              
21.1        List of subsidiaries of Sykes Enterprises,        
            Incorporated (filed herewith).                    

23.1        Consent of Ernst & Young LLP                      

24.1        Power of Attorney relating to subsequent          
            amendments (included on the signature page of this
            report).                                          

(1)  Filed as the same numbered Exhibit to the Registrant's Registration        
   Statement on Form S-1 (Registration No. 333-2324) and incorporated herein
by reference.                                                         

(2)  Filed as an Exhibit to the Registrant's Form 8-K dated July 31, 1996, and  
incorporated herein by reference.                                     

(3)  Filed as an Exhibit to the Registrant's Form 8-K dated September 16, 1996, 
and incorporated herein by reference.                                 

(4)  Included as Appendix A to the Proxy Statement/Prospectus contained in the  
Registrant's Registration Statement on Form S-4 (Registration No.     
333-20465) and incorporated herein by reference.                      

(5)  Filed as an Exhibit to the Registrant's Form 10-K dated March 30, 1997, and
incorporated herein by reference.                                     

(6)  Filed as Exhibit 2.5 to the Registrant's Registration Statement on Form S-4
(Registration No. 333-20465) and incorporated herein by reference.    

(7)  Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
June 16, 1997, and incorporated herein by reference.                  

(8)  Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
September 26, 1997, and incorporated herein by reference.             

(9)  Filed as the same numbered Exhibit to the Registrant's Registration        
    Statement on Form S-3 (Registration No. 333-38513) and incorporated herein
by reference.                                                         

(10) Filed as an Exhibit to the Registrant's Form 10-Q dated June 29, 1997, and 
incorporated herein by reference.                                     

(11) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
January 15, 1998, and incorporated herein by reference.               

(12) Filed as an Exhibit to the Registrant's Registration Statement on Form S-3 
(Registration No. 333-38513) and incorporated herein by reference.    

(13) Filed as an Exhibit to the Registrant's Registration Statement on Form S-3 
(Registration No. 333-46569) and incorporated herein by reference.    

(14) Filed as an Exhibit to the Registrant's Form 10-K dated December 31, 1997, 
and incorporated herein by reference.                                 

(15) Filed as an Exhibit to the Registrant's Proxy Statement on Form 14A, dated 
April 1, 1998, and incorporated herein by reference.                  

(16) Filed as an Exhibit to the Registrant's Form 10-Q dated March 31, 1998, and
incorporated herein by reference.                                     

(17) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
September 11, 1998, and incorporated herein by reference.             

(18) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
December 29, 1998, and incorporated herein by reference.              

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(19) Filed as an Exhibit to the Registrant's Form 10-K dated December 31, 1998, 
and incorporated herein by reference.                                 

(20) Filed as an Exhibit to the Registrant's Form 10-K dated December 31, 1999, 
and incorporated herein by reference.                                 

(21) Filed as an Exhibit to the Registrant's Form 10-Q dated June 30, 2000, and 
incorporated herein by reference.                                     

(22) Filed as an Exhibit to the Registrant's Form 10-Q dated September 30, 2000,
and incorporated herein by reference.                                 

(23) Filed as an Exhibit to the Registrant's Form 10-K dated December 31, 2000, 
and incorporated herein by reference.                                 

(24) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
June 30, 2000, and incorporated herein by reference.                  

(b)      Reports on Form 8-K                                                    

The following reports on Form 8-K were filed during the period
beginning October 2, 2000 through March 21, 2001:                               

        Registrant filed a current report on Form 8-K, dated October 30, 2000,
with the Commission on November 1, 2000, which announced its financial results  
for the third quarter and nine months ended September 30, 2000 and its          
completion of its previously announced accounting review.                       

      Registrant filed a current report on Form 8-K, dated March 14, 2001,
with the Commission on March 21, 2001, which announced the engagement of        
Deloitte & Touche LLP as its principal accountant to audit the consolidated     
financial statements of the Registrant for the year ended December 31, 2001 and 
the dismissal of Ernst & Young LLP, effective upon its completion of its audit  
of the Registrant's consolidated financial statements for the year ended        
December 31, 2000.                                                              

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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities   
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized, in the City of Tampa, 
and State of Florida, on this 14th day of August, 2001.                         

                                 SYKES ENTERPRISES, INCORPORATED
              (Registrant)

                         By:   /s/    W. Michael Kipphut
                                         ---------------------------------------
                               W. Michael Kipphut,
                                     Senior Vice President and
                                   Chief Financial Officer

   Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons in the capacities and on  
the dates indicated. Each person whose signature appears below constitutes and  
appoints W. Michael Kipphut his true and lawful attorney-in-fact and agent, with
full power of substitution and revocation, for him and in his name, place and   
stead, in any and all capacities, to sign any and all amendments to this report 
and to file the same, with all exhibits thereto, and other documents in         
connection therewith, with the Securities and Exchange Commission, granting unto
said attorney-in-fact and agents, and each of them, full power and authority to 
do and perform each and every act and thing requisite and necessary to be done  
in connection therewith, as fully to all intents and purposes as he might or    
should do in person, thereby ratifying and confirming all that said             
attorneys-in-fact and agents, or either of them, may lawfully do or cause to be 
done by virtue hereof.                                                          

                                                        [Enlarge/Download Table]

       Signature                            Title                                    Date      

                                                                                               
/s/ John H. Sykes                     Chairman of the Board, President,         August 14, 2001
------------------------------------    and Chief Executive Officer (Principal                 
John H. Sykes                           Executive Officer)                                     

/s/ Gordon H. Loetz                   Vice Chairman of the Board and Director   August 14, 2001
------------------------------------                                                           
Gordon H. Loetz                                                                                

/s/ Furman P. Bodenheimer, Jr.        Director                                  August 14, 2001
------------------------------------                                                           
Furman P. Bodenheimer, Jr.                                                                     

/s/ H. Parks Helms                    Director                                  August 14, 2001
------------------------------------                                                           
H. Parks Helms                                                                                 

/s/ Linda F. McClintock-Greco         Director                                  August 14, 2001
------------------------------------                                                           
Linda F. McClintock-Greco                                                                      

/s/ William J. Meurer                 Director                                  August 14, 2001
------------------------------------                                                           
William J.Meurer                                                                               

/s/ Ernest J. Milani                  Director                                  August 14, 2001
------------------------------------                                                           
Ernest J. Milani                                                                               

/s/ Thomas F. Skelly                  Director                                  August 14, 2001
------------------------------------                                                           
Thomas F. Skelly                                                                               


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 SYKES ENTERPRISES, INCORPORATED

 SCHEDULE II - VALUATION AND QUALIFYING ACCOUNTS
Years ended December 31, 2000, 1999 and 1998
(in thousands)

                                                        [Enlarge/Download Table]

                                                                          Additions                                              
                                                              Balance at  Charged to                                   Balance at
                                                              Beginning   Costs and  Reclassifications                     End   
                                                              Of Period   Expenses         (1)          Deductions(2)  Of Period 
                                                              ---------   --------   -----------------  -------------  --------- 
                                                                                                                                 
Allowance for doubtful accounts:                                                                                                 
    Year ended December 31, 2000                               $2,440      $ 7,621       $  --            $ 2,801        $7,260  

    Year ended December 31, 1999                                  796        2,202          --                558         2,440  

    Year ended December 31, 1998                                  537          262          --                  3           796  

Domestic current deferred tax asset valuation allowance:                                                                         

    Year ended December 31, 2000                               $   --      $ 1,819       $  --            $    --        $1,819  

    Year ended December 31, 1999                                   --           --          --                 --            --  

    Year ended December 31, 1998                                   --           --          --                 --            --  

Foreign current deferred tax asset valuation allowance:                                                                          

    Year ended December 31, 2000                               $1,240      $ 1,593       $  --            $ 1,018        $1,815  

    Year ended December 31, 1999                                   --          626         704                 90         1,240  

    Year ended December 31, 1998                                  135           --          --                135            --  

Restructuring reserve:                                                                                                           
    Year ended December 31, 2000                               $   --      $24,366       $  --            $21,658        $2,708  

    Year ended December 31, 1999                                   --           --          --                 --            --  

    Year ended December 31, 1998                                   --           --          --                 --            --  

Domestic non-current deferred tax asset valuation allowance:                                                                     

    Year ended December 31, 2000                               $2,894      $    --       $  --            $ 2,546        $  348  

    Year ended December 31, 1999                                3,000           --          --                106         2,894  

    Year ended December 31, 1998                                   --        3,000          --                 --         3,000  

Foreign non-current deferred tax valuation allowance:                                                                            

    Year ended December 31, 2000                               $   --      $    --       $  --            $    --        $   --  

    Year ended December 31, 1999                                  704           --        (704)                --            --  

    Year ended December 31, 1998                                   --          704          --                 --           704  

(1)  Amounts have been reclassified for reporting purposes.                     

(2)  Write-offs and recoveries.                                                 

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EXHIBIT INDEX                                                                   

                                                                [Download Table]

Exhibit                                                                      
 Number               Exhibit Description                                    
-------               -------------------                                    

                                                                             
   2.1   Articles of Merger between Sykes Enterprises, Incorporated, a North 
         Carolina Corporation, and Sykes Enterprises, Incorporated, a Florida
         Corporation, dated March 1, 1996. (1)                               

   2.2   Articles of Merger between Sykes Enterprises, Incorporated and Sykes
         Realty, Inc. (1)                                                    

   2.3   Stock Purchase Agreement dated July 1, 1996 among Sykes Enterprises,
         Incorporated and Johan Holm, Arne Weinz and Norhold Invest AB. (2)  

   2.4   Stock Purchase Agreement dated August 30, 1996 among Sykes          
         Enterprises, Incorporated and Gordon H. Kraft. (3)                  

   2.5   Merger Agreement dated as of January 10, 1997 among Sykes           
         Enterprises, Incorporated, Info Systems of North Carolina, Inc. and 
         ISNC Acquisition Co. (4)                                            

   2.6   Stock Purchase Agreement date March 28, 1997 among Sykes            
         Enterprises, Incorporated, Sykes Holdings of Belgium, B.V.B.A.,     
         Cycle B.V.B.A. and Michael McMahon. (5)                             

   2.7   Joint Marketing and Distribution Agreement dated April 30, 1997 by  
         and between Sykes Enterprises, Incorporated and SystemSoft          
         Corporation. (10)                                                   

   2.8   Common Stock Purchase Agreement dated May 6, 1997 by and between    
         Sykes Enterprises, Incorporated and SystemSoft Corporation. (10)    

   2.9   Acquisition Agreement, dated May 30, 1997, by and among the holders 
         of all of the capital interests of Telcare Gesellschaft fur         
         Telekommunikations-Mehrwertdienste mbH, Sykes Enterprises GmbH, and 
         Sykes Enterprises, Incorporated. (7)                                

   2.10  Acquisition Agreement, dated September 19, 1997, by and among the   
         holders of all of the capital interests of TAS Telemarketing        
         Gesellschaft fur Kommunikation und Dialog mbH, Sykes Enterprises,   
         GmbH, and Sykes Enterprises, Incorporated. (8)                      

   2.11  Acquisition Agreement dated September 25, 1997, by and among the    
         holders of all of the capital interests of TAS Hedi Fabinyi GmbH,   
         Sykes Enterprises, GmbH, and Sykes Enterprises, Incorporated. (8)   

   2.12  Shareholder Agreement dated December 18, 1997, by and among Sykes   
         Enterprises, Incorporated and HealthPlan Services Corporation. (14) 

   2.13  Acquisition Agreement, dated December 31, 1997, by and among the    
         holders of all of the capital interests of McQueen International    
         Limited and Sykes Enterprises, Incorporated. (11)                   

   2.14  Stock Purchase Agreement, dated September 11, 1998, between         
         HealthPlan Services Corporation and Sykes Enterprises, Incorporated.
         (17)                                                                

   2.15  Acquisition Agreement, dated November 27, 1998, by and among the    
         holders of all of the capital interests of TAS GmbH Nord            
         Telemarketing und Vertriebsberatung, Sykes Enterprises, GmbH, and   
         Sykes Enterprises, Incorporated. (19)                               

   2.16  Combination Agreement, dated December 29, 1998, by and among the    
         holders of all of the capital interests of Oracle Service Networks  
         Corporation and Sykes Enterprises, Incorporated. (18)               

   2.17  Merger Agreement, dated as of June 9, 2000, among Sykes Enterprises,
         Incorporated, SHPS, Incorporated, Welsh Carson Anderson and Stowe,  
         VIII, LP ("WCAS") and Slugger Acquisition Corp. (24)                

   3.1   Articles of Incorporation of Sykes Enterprises, Incorporated, as    
         amended. (12)                                                       

   3.2   Bylaws of Sykes Enterprises, Incorporated, as amended. (12)         

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                                                                [Download Table]
                                                                           
4.1    Specimen certificate for the Common Stock of Sykes Enterprises,     
       Incorporated. (1)                                                   

4.2    Credit Agreement between NationsBank N.A. and Sykes Enterprises,    
       Incorporated dated as of February 27, 1998. (16)                    

4.3    Amendment No. 1 to Credit Agreement between NationsBank N.A. and    
       Sykes Enterprises, Incorporated dated as of March 20, 1998. (16)    

4.4    Guaranty Agreement between Sykes Enterprises, Incorporated and      
       HealthPlan Services Corp. to NationsBank N.A. dated March 16, 1998. 
       (16)                                                                

10.1   Loan Agreement between NationsBank, N.A. and Sykes Enterprises,     
       Incorporated dated as of December 31, 1996. (6)                     

10.2   Employment Agreement dated as of March 6, 2000 between John H. Sykes
       and Sykes Enterprises, Incorporated (20).                           

10.3   Employment Agreement dated as of March 6, 2000 between David L.     
       Grimes and Sykes Enterprises, Incorporated (20).                    

10.4   Employment Agreement dated as of March 6, 2000 between Scott J.     
       Bendert and Sykes Enterprises, Incorporated (20).                   

10.5   Employment Agreement dated as of March 6, 2000 between W. Michael   
       Kipphut and Sykes Enterprises, Incorporated (20).                   

10.6   Employment Agreement dated as of March 6, 2000 between Dale W.      
       Saville and Sykes Enterprises, Incorporated (20).                   

10.7   Employment Agreement dated as of March 6, 2000 between Gerry L.     
       Rogers and Sykes Enterprises, Incorporated (20).                    

10.8   Employment Agreement dated as of March 6, 2000 between James E.     
       Lamar and Sykes Enterprises, Incorporated (20).                     

10.9   Employment Agreement dated as of March 6, 2000 between Charles E.   
       Sykes and Sykes Enterprises, Incorporated (20).                     

10.10  Stock Option Agreement between Sykes Enterprises, Incorporated and  
       David E. Garner dated as of December 31, 1995. (1)                  

10.11  1996 Employee Stock Option Plan. (1)                                

10.12  1996 Non-Employee Director Stock Option Plan. (1)                   

10.13  1996 Non-Employee Directors' Fee Plan. (1)                          

10.14  Form of Split Dollar Plan Documents. (1)                            

10.15  Form of Split Dollar Agreement. (1)                                 

10.16  Form of Indemnity Agreement between directors and executive officers
       and Sykes Enterprises, Incorporated. (1)                            

10.17  Aircraft Lease Agreement between JHS Leasing of Tampa, Inc. as      
       lessor and Sykes Enterprises, Incorporated as lessee, dated December
       1, 1995. (1)                                                        

10.18  Single Tenant Property Lease Agreement between Sykes Investments as 
       landlord and Sykes Enterprises, Incorporated as tenant dated October
       31, 1989, for building in Charlotte, North Carolina. (1)            

10.19  Tax Indemnification Agreement between Sykes Enterprises,            
       Incorporated and John H. Sykes. (1)                                 

10.20  Consultant Agreement between Sykes Enterprises, Incorporated and    
       E.J. Milani Consulting Corp. dated April 1, 1996. (1)               

10.21  1997 Management Stock Incentive Plan. (15)                          

10.22  1999 Employees' Stock Purchase Plan. (19)                           

10.23  2000 Stock Option Plan. (20)                                        

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10.24  Amended and Restated Credit Agreement among Sykes Enterprises,      
       Incorporated and Bank of America, NA, dated May 2, 2000. (21)       

10.25  Termination of aircraft Lease Agreement between JHS Leasing of      
       Tampa, Inc., as lessor and Sykes Enterprises, Incorporated as lessee
       dated June 30, 2000. (21)                                           

10.26  Employment Agreement dated July 31, 2000 between James E. Lamar and 
       Sykes Enterprises, Incorporated. (22)                               

10.27  Employment Separation Agreement dated as of September 20, 2000      
       between Dale W. Saville and Sykes Enterprises, Incorporated. (22)   

10.28  Employment Separation Agreement dated as of September 22, 2000      
       between Scott J. Bendert and Sykes Enterprises, Incorporated. (22)  

10.29  Employment Separation Agreement dated November 10, 2000 between     
       David L. Grimes and Sykes Enterprises, Incorporated (23)            

10.30  Employment Agreement dated July 31, 2000 between Mitchell I. Nelson 
       and Sykes Enterprises, Incorporated. (23)                           

10.31  Employment Agreement dated March 6, 2000, amended November 8, 2000, 
       between W. Michael Kipphut and Sykes Enterprises, Incorporated. (23)

21.1   List of subsidiaries of Sykes Enterprises, Incorporated (filed      
       herewith).                                                          

23.1   Consent of Ernst & Young LLP                                        

24.1   Power of Attorney relating to subsequent amendments (included on the
       signature page of this report).                                     

(1)  Filed as the same numbered Exhibit to the Registrant's Registration        
   Statement on Form S-1 (Registration No. 333-2324) and incorporated herein
by reference.                                                         

(2)  Filed as an Exhibit to the Registrant's Form 8-K dated July 31, 1996, and  
incorporated herein by reference.                                     

(3)  Filed as an Exhibit to the Registrant's Form 8-K dated September 16, 1996, 
and incorporated herein by reference.                                 

(4)  Included as Appendix A to the Proxy Statement/Prospectus contained in the  
Registrant's Registration Statement on Form S-4 (Registration No.     
333-20465) and incorporated herein by reference.                      

(5)  Filed as an Exhibit to the Registrant's Form 10-K dated March 30, 1997, and
incorporated herein by reference.                                     

(6)  Filed as Exhibit 2.5 to the Registrant's Registration Statement on Form S-4
(Registration No. 333-20465) and incorporated herein by reference.    

(7)  Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
June 16, 1997, and incorporated herein by reference.                  

(8)  Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
September 26, 1997, and incorporated herein by reference.             

(9)  Filed as the same numbered Exhibit to the Registrant's Registration        
    Statement on Form S-3 (Registration No. 333-38513) and incorporated herein
by reference.                                                         

(10) Filed as an Exhibit to the Registrant's Form 10-Q dated June 29, 1997, and 
incorporated herein by reference.                                     

(11) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
January 15, 1998, and incorporated herein by reference.               

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(12) Filed as an Exhibit to the Registrant's Registration Statement on Form S-3 
(Registration No. 333-38513) and incorporated herein by reference.    

(13) Filed as an Exhibit to the Registrant's Registration Statement on Form S-3 
(Registration No. 333-46569) and incorporated herein by reference.    

(14) Filed as an Exhibit to the Registrant's Form 10-K dated December 31, 1997, 
and incorporated herein by reference.                                 

(15) Filed as an Exhibit to the Registrant's Proxy Statement on Form 14A dated  
April 1, 1998, and incorporated herein by reference.                  

(16) Filed as an Exhibit to the Registrant's Form 10-Q dated March 31, 1998, and
incorporated herein by reference.                                     

(17) Filed as an Exhibit to Registrant's Current Report on Form 8-K dated       
September 11, 1998, and incorporated herein by reference.             

(18) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
December 29, 1998, and incorporated herein by reference.              

(19) Filed as an Exhibit to the Registrant's Form 10-K dated December 31, 1998, 
and incorporated herein by reference.                                 

(20) Filed as an Exhibit to the Registrant's Form 10-K dated December 31, 1999, 
and incorporated herein by reference.                                 

(21) Filed as an Exhibit to the Registrant's Form 10-Q dated June 30, 2000, and 
incorporated herein by reference.                                     

(22) Filed as an Exhibit to the Registrant's Form 10-Q dated September 30, 2000,
and incorporated herein by reference.                                 

(23) Filed as an Exhibit to the Registrant's Form 10-K dated December 31, 2000, 
and incorporated herein by reference.                                 

(24) Filed as an Exhibit to the Registrant's Current Report on Form 8-K dated   
June 30, 2000, and incorporated herein by reference.                  

61

Dates Referenced Herein   and   Documents Incorporated by Reference

				Referenced-On Page
This ‘10-K/A’ Filing		Date		First		Last			Other Filings
		2/28/03		28		41
		2/28/02		28		41
		12/31/01		58					10-K405
Filed on:		8/14/01		59					10-Q,  10-Q/A
		7/26/01		29
		3/27/01		1					10-K
		3/21/01		58					8-K
		3/15/01		1
		3/14/01		58					8-K
		3/1/01		19
		2/15/01		6		29
For Period End:		12/31/00		1		64			10-K
		11/10/00		56		63
		11/8/00		56		63
		11/1/00		58					8-K
		10/30/00		58					8-K
		10/2/00		58
		9/30/00		26		64			10-Q,  NT 10-Q
		9/22/00		56		63			8-K
		9/20/00		56		63
		9/18/00		18		46			8-K
		9/1/00		53
		7/31/00		56		63
		6/30/00		5		64			10-Q,  10-Q/A,  8-K
		6/13/00		51
		6/9/00		55		61
		5/2/00		27		63
		3/31/00		26		36			10-Q,  10-Q/A
		3/6/00		55		63
		1/1/00		2		50
		12/31/99		2		64			10-K/A,  10-K405,  5
		10/12/99		39
		8/31/99		38
		8/20/99		38
		7/31/99		44
		4/1/99		50
		12/31/98		2		64			10-K405
		12/29/98		55		64			8-K,  8-K/A
		11/27/98		61
		11/23/98		55
		9/11/98		55		64			8-K,  8-K/A
		9/1/98		21		39
		7/31/98		44
		7/27/98		18		46
		4/1/98		57		64			DEF 14A
		3/31/98		57		64			10-Q
		3/20/98		55		62			PRE 14A
		3/16/98		55		62			10-K405
		2/27/98		55		62
		1/15/98		57		63			8-K
		1/1/98		32		47
		12/31/97		55		64			10-K405,  8-K
		12/18/97		55		61
		9/26/97		57		63			8-K
		9/25/97		55		61
		9/19/97		55		61
		6/29/97		57		63			10-Q,  NT 10-Q
		6/16/97		57		63			8-K
		5/30/97		55		61
		5/6/97		55		61
		4/30/97		55		61
		3/30/97		57		63			10-Q
		3/28/97		54		61			PRE 14A
		1/10/97		54		61
		12/31/96		55		62			10-K405
		9/16/96		57		63			8-K
		8/30/96		54		61
		7/31/96		57		63			8-K
		7/1/96		54		61
		4/1/96		56		62
		3/1/96		54		61
		12/31/95		56		62
		12/1/95		56		62
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