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

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ ~~229.405~~232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~October~~April 18, ~~2018,~~2019, there were ~~42,781,399~~42,564,853 outstanding shares of common stock.

(in thousands, except per share data)	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Assets
Current assets:
Cash and cash equivalents	$	157,268		$	343,734		$	148,242		$	128,697
Receivables, net		353,909			341,958			349,400			347,425
Prepaid expenses		23,047			22,132			19,339			23,754
Other current assets		17,792			19,743			18,591			16,761
Assets held for sale		1,173			-
Total current assets		553,189			727,567			535,572			516,637
Property and equipment, net		138,812			160,790			128,775			135,418
Operating lease right-of-use assets								218,057			—
Goodwill, net		268,075			269,265			303,920			302,517
Intangibles, net		152,310			140,277			170,277			174,031
Deferred charges and other assets		33,946			29,193			46,505			43,364
	$	1,146,332		$	1,327,092		$	1,403,106		$	1,171,967
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable	$	26,709		$	32,133		$	28,809		$	26,923
Accrued employee compensation and benefits		104,979			102,899			103,751			95,813
Income taxes payable		355			2,606			2,794			1,433
Deferred revenue and customer liabilities		31,322			34,717			27,077			30,176
Operating lease liabilities								45,636			—
Other accrued expenses and current liabilities		38,175			30,888			27,359			31,235
Total current liabilities		201,540			203,243			235,426			185,580
Deferred grants		2,353			3,233
Long-term debt		82,000			275,000			93,000			102,000
Long-term income tax liabilities		23,771			27,098			23,975			23,787
Long-term operating lease liabilities								186,079			—
Other long-term liabilities		24,832			22,039			22,585			33,991
Total liabilities		334,496			530,613			561,065			345,358

Commitments and loss contingency (Note 13)

Shareholders' equity:
Preferred stock, $0.01 par value per share, 10,000 shares authorized; no shares issued and outstanding		-			-			—			—
Common stock, $0.01 par value per share, 200,000 shares authorized; 42,781 and 42,899 shares issued, respectively		428			429
Common stock, $0.01 par value per share, 200,000 shares authorized; 42,565 and 42,778 shares issued, respectively								426			428
Additional paid-in capital		284,275			282,385			287,347			286,544
Retained earnings		581,740			546,843			610,585			598,788
Accumulated other comprehensive income (loss)		(52,275	)		(31,104	)		(53,761	)		(56,775	)
Treasury stock at cost: 125 and 117 shares, respectively		(2,332	)		(2,074	)
Treasury stock at cost: 133 and 126 shares, respectively								(2,556	)		(2,376	)
Total shareholders' equity		811,836			796,479			842,041			826,609
	$	1,146,332		$	1,327,092		$	1,403,106		$	1,171,967

	Three Months Ended March 31,
(in thousands, except per share data)	2019			2018
Revenues	$	402,925		$	414,371
Operating expenses:
Direct salaries and related costs		261,728			275,072
General and administrative		104,680			102,440
Depreciation, net		13,897			14,836
Amortization of intangibles		4,286			4,213
Impairment of long-lived assets		1,582			3,526
Total operating expenses		386,173			400,087
Income from operations		16,752			14,284

Other income (expense):
Interest income		185			171
Interest (expense)		(1,178	)		(1,206	)
Other income (expense), net		610			155
Total other income (expense), net		(383	)		(880	)

Income before income taxes		16,369			13,404
Income taxes		4,682			2,456
Net income	$	11,687		$	10,948

Net income per common share:
Basic	$	0.28		$	0.26
Diluted	$	0.28		$	0.26

Weighted average common shares outstanding:
Basic		42,169			41,939
Diluted		42,299			42,232

	Common Stock						Additional					Accumulated Other
(in thousands)	Shares Issued			Amount			Paid-in Capital			Retained Earnings		Comprehensive Income (Loss)			Treasury Stock			Total
Balance at December 31, 2018		42,778		$	428		$	286,544		$	598,788	$	(56,775	)	$	(2,376	)	$	826,609
Cumulative effect of accounting change – adoption of ASC 842, Leases (Note 3)		—			—			—			110		—			—			110
Stock-based compensation expense		—			—			1,890			—		—			—			1,890
Issuance of common stock under equity award plans, net of forfeitures		(168	)		(2	)		182			—		—			(180	)		—
Shares repurchased for tax withholding on equity awards		(45	)		—			(1,269	)		—		—			—			(1,269	)
Comprehensive income (loss)		—			—			—			11,687		3,014			—			14,701
Balance at March 31, 2019		42,565		$	426		$	287,347		$	610,585	$	(53,761	)	$	(2,556	)	$	842,041

Balance at December 31, 2017		42,899		$	429		$	282,385		$	546,843	$	(31,104	)	$	(2,074	)	$	796,479
Cumulative effect of accounting change – adoption of ASC 606, Revenues (Note 2)		—			—			—			3,019		—			—			3,019
Stock-based compensation expense		—			—			2,077			—		—			—			2,077
Issuance of common stock under equity award plans, net of forfeitures		18			—			59			—		—			(59	)		—
Shares repurchased for tax withholding on equity awards		(118	)		(1	)		(3,681	)		—		—			—			(3,682	)
Comprehensive income (loss)		—			—			—			10,948		(2,695	)		—			8,253
Balance at March 31, 2018		42,799		$	428		$	280,840		$	560,810	$	(33,799	)	$	(2,133	)	$	806,146

	Three Months Ended March 31,
(in thousands)	2019			2018
Cash flows from operating activities:
Net income	$	11,687		$	10,948
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		13,957			14,964
Amortization of intangibles		4,286			4,213
Amortization of deferred grants		(95	)		(181	)
Impairment losses		1,582			3,526
Unrealized foreign currency transaction (gains) losses, net		573			194
Stock-based compensation expense		1,890			2,077
Deferred income tax provision (benefit)		530			584
Unrealized (gains) losses and premiums on financial instruments, net		(494	)		168
Amortization of deferred loan fees		69			67
Other		263			150
Changes in assets and liabilities, net of acquisitions:
Receivables, net		(2,320	)		(2,120	)
Prepaid expenses		1,103			(134	)
Other current assets		(359	)		665
Deferred charges and other assets		(1,961	)		(1,496	)
Accounts payable		(15	)		(4,413	)
Income taxes receivable / payable		1,664			(1,622	)
Accrued employee compensation and benefits		6,866			(1,832	)
Other accrued expenses and current liabilities		2,179			3,766
Deferred revenue and customer liabilities		(3,507	)		(2,976	)
Other long-term liabilities		198			2,071
Operating lease assets and liabilities		1,207			—
Net cash provided by operating activities		39,303			28,619
Cash flows from investing activities:
Capital expenditures		(5,696	)		(13,258	)
Cash paid for business acquisitions, net of cash acquired		(61	)		—
Purchase of intangible assets		—			(7,505	)
Other		26			2
Net cash (used for) investing activities		(5,731	)		(20,761	)

	Three Months Ended March 31,
(in thousands)	2019			2018
Cash flows from financing activities:
Payments of long-term debt		(9,000	)		(175,000	)
Shares repurchased for tax withholding on equity awards		(1,269	)		(3,682	)
Cash paid for loan fees related to long-term debt		(1,091	)		—
Other		(6	)		20
Net cash (used for) financing activities		(11,366	)		(178,662	)
Effects of exchange rates on cash, cash equivalents and restricted cash		(862	)		(332	)
Net increase (decrease) in cash, cash equivalents and restricted cash		21,344			(171,136	)
Cash, cash equivalents and restricted cash – beginning		130,231			344,805
Cash, cash equivalents and restricted cash – ending	$	151,575		$	173,669

Supplemental disclosures of cash flow information:
Cash paid during period for interest	$	946		$	1,042
Cash paid during period for income taxes	$	2,862		$	4,754
Non-cash transactions:
Property and equipment additions in accounts payable	$	3,669		$	4,430
Unrealized gain (loss) on postretirement obligation, net of taxes, in accumulated other comprehensive income (loss)	$	(5	)	$	(10	)
Shares repurchased for tax withholding on equity awards included in current liabilities	$	102		$	357

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands, except per share data)
2018

2017

2018

2017

Revenues
$
399,333

$
407,309

$
1,210,489

$
1,166,761

Operating expenses:

Direct salaries and related costs

261,474

267,489

801,470

763,240

General and administrative

105,148

93,355

309,625

277,635

Depreciation, net

14,072

14,227

43,468

41,395

Amortization of intangibles

3,638

5,293

11,480

15,774

Impairment of long-lived assets

555

680

9,256

5,071

Total operating expenses

384,887

381,044

1,175,299

1,103,115

Income from operations

14,446

26,265

35,190

63,646

Other income (expense):

Interest income

183

169

529

468

Interest (expense)

(1,168
)

(2,021
)

(3,523
)

(5,585
)
Other income (expense), net

919

28

537

1,634

Total other income (expense), net

(66
)

(1,824
)

(2,457
)

(3,483
)

Income before income taxes

14,380

24,441

32,733

60,163

Income taxes

628

2,746

855

10,911

Net income
$
13,752

$
21,695

$
31,878

$
49,252

Net income per common share:

Basic
$
0.33

$
0.52

$
0.76

$
1.18

Diluted
$
0.33

$
0.52

$
0.76

$
1.17

Weighted average common shares outstanding:

Basic

42,136

41,879

42,070

41,800

Diluted

42,204

42,033

42,201

42,006

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands)
2018

2017

2018

2017

Net income
$
13,752

$
21,695

$
31,878

$
49,252

Other comprehensive income (loss), net of taxes:

Foreign currency translation adjustments, net of taxes

(2,177
)

11,502

(15,483
)

31,884

Unrealized gain (loss) on net investment hedges, net
   of taxes

-

(1,916
)

-

(5,220
)
Unrealized gain (loss) on cash flow hedging
   instruments, net of taxes

(2,097
)

1,326

(5,471
)

1,462

Unrealized actuarial gain (loss) related to pension
   liability, net of taxes

16

(19
)

(113
)

(58
)
Unrealized gain (loss) on postretirement obligation, net
   of taxes

(84
)

(13
)

(104
)

(38
)
Other comprehensive income (loss), net of taxes

(4,342
)

10,880

(21,171
)

28,030

Comprehensive income (loss)
$
9,410

$
32,575

$
10,707

$
77,282

Common Stock

Additional

Accumulated
Other

(in thousands)
Shares
Issued

Amount

Paid-in
Capital

Retained
Earnings

Comprehensive
Income (Loss)

Treasury
Stock

Total

Balance at December 31, 2017

42,899

$
429

$
282,385

$
546,843

$
(31,104
)

$
(2,074
)

$
796,479

Cumulative effect of accounting change

-

-

-

3,019

-

-

3,019

Stock-based compensation expense

-

-

5,317

-

-

-

5,317

Issuance of common stock under equity award
plans, net of forfeitures

-

-

258

-

-

(258
)

-

Shares repurchased for tax withholding on
equity awards

(118
)

(1
)

(3,685
)

-

-

-

(3,686
)
Comprehensive income (loss)

-

-

-

31,878

(21,171
)

-

10,707

Balance at September 30, 2018

42,781

$
428

$
284,275

$
581,740

$
(52,275
)

$
(2,332
)

$
811,836

Nine Months Ended September 30,

(in thousands)
2018

2017

Cash flows from operating activities:

Net income
$
31,878

$
49,252

Adjustments to reconcile net income to net cash provided by operating
activities:

Depreciation

43,852

41,778

Amortization of intangibles

11,480

15,774

Amortization of deferred grants

(533
)

(550
)
Impairment losses

9,256

5,071

Unrealized foreign currency transaction (gains) losses, net

(686
)

(1,714
)
Stock-based compensation expense

5,317

4,429

Deferred income tax provision (benefit)

229

7,395

Unrealized (gains) losses and premiums on financial instruments, net

661

126

Amortization of deferred loan fees

201

201

Imputed interest expense and fair value adjustments to contingent
consideration

-

(529
)
Other

375

173

Changes in assets and liabilities, net of acquisitions:

Receivables, net

(12,756
)

(3,844
)
Prepaid expenses

(1,164
)

1,048

Other current assets

(1,101
)

(4,523
)
Deferred charges and other assets

(3,731
)

(667
)
Accounts payable

(1,490
)

2,937

Income taxes receivable / payable

(6,429
)

(7,285
)
Accrued employee compensation and benefits

3,426

12,038

Other accrued expenses and current liabilities

10,447

(697
)
Deferred revenue and customer liabilities

(1,612
)

2,476

Other long-term liabilities

1,830

(4,515
)
Net cash provided by operating activities

89,450

118,374

Cash flows from investing activities:

Capital expenditures

(36,853
)

(48,430
)
Cash paid for business acquisitions, net of cash acquired

(21,845
)

(9,075
)
Net investment hedge settlement

-

(5,122
)
Purchase of intangible assets

(8,106
)

(4,825
)
Investment in equity method investees

(5,000
)

(5,012
)
Other

698

49

Net cash (used for) investing activities

(71,106
)

(72,415
)

Nine Months Ended September 30,

(in thousands)
2018

2017

Cash flows from financing activities:

Payments of long-term debt

(220,000
)

-

Proceeds from issuance of long-term debt

27,000

-

Shares repurchased for tax withholding on equity awards

(3,686
)

(3,859
)
Payments of contingent consideration related to acquisitions

-

(4,760
)
Other

42

139

Net cash (used for) financing activities

(196,644
)

(8,480
)
Effects of exchange rates on cash, cash equivalents and restricted cash

(8,186
)

24,133

Net increase (decrease) in cash, cash equivalents and restricted cash

(186,486
)

61,612

Cash, cash equivalents and restricted cash – beginning

344,805

267,594

Cash, cash equivalents and restricted cash – ending
$
158,319

$
329,206

Supplemental disclosures of cash flow information:

Cash paid during period for interest
$
2,893

$
4,852

Cash paid during period for income taxes
$
15,423

$
21,169

Non-cash transactions:

Property and equipment additions in accounts payable
$
2,450

$
5,165

Unrealized gain (loss) on postretirement obligation, net of taxes in
accumulated other comprehensive income (loss)
$
(104
)

$
(38
)
Shares repurchased for tax withholding on equity awards included in
current liabilities
$
-

$
123

~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~

Business — Sykes Enterprises, Incorporated and consolidated subsidiaries (“SYKES” or the “Company”) is a leading provider of multichannel demand generation and global customer engagement services. SYKES provides differentiated full lifecycle customer engagement solutions and services primarily to Global 2000 companies and their end customers, ~~primarily~~principally within the ~~communications,~~ financial services, communications, technology, transportation ~~and~~& leisure, healthcare ~~retail~~ and other industries. SYKES primarily provides customer engagement solutions and services with an emphasis on inbound multichannel demand generation, customer service and technical support to its clients’ customers. Utilizing SYKES’ integrated onshore/offshore global delivery model, SYKES provides its services through multiple communication channels including phone, e-mail, social media, text messaging, chat and digital self-service. SYKES also provides various enterprise support services in the United States that include services for its clients’ internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, SYKES also provides fulfillment services, which ~~includes~~include order processing, payment processing, inventory control, product delivery and product returns handling. Additionally, through the Company’s acquisition of robotic processing automation (“RPA”) provider Symphony Ventures Ltd (“Symphony”) coupled with our investment in artificial intelligence (“AI”) through XSell Technologies, Inc. (“XSell”), the Company also provides a suite of solutions such as consulting, implementation, hosting and managed services that optimizes its differentiated full lifecycle management services platform. The Company has operations in two reportable segments entitled (1) the Americas, in which the client base is primarily companies in the United States that are using the Company’s services to support their customer management needs, which includes the United States, Canada, Latin America, Australia and the Asia Pacific Rim; and (2) EMEA, which includes Europe, the Middle East and Africa.

InOn December 20, 2017, ~~the President of the United States (“U.S.”) signed into law~~ the Tax Cuts and Jobs Act (the “2017 Tax Reform Act”). was approved by Congress and received presidential approval on December 22, 2017. In general, the 2017 Tax Reform Act ~~reduces~~reduced the U.S. federal corporate tax rate from 35% to 21%, effective in 2018. The 2017 Tax Reform Act ~~moves~~moved from a worldwide business taxation approach to a participation exemption regime. The 2017 Tax Reform Act also ~~imposes~~imposed base-erosion prevention measures on non-U.S. earnings of U.S. entities, as well as a one-time mandatory deemed repatriation tax on accumulated non-U.S. ~~earnings which was recorded in the fourth quarter of 2017.~~earnings. The impact of the 2017 Tax Reform Act on the Company’s consolidated financial results began with the fourth quarter of 2017, the period of enactment. ~~This impact, along with the transitional taxes discussed in~~See Note 11, Income Taxes, ~~is reflected in the Other segment.~~for further information.

~~In April 2017,~~On October 18, 2018, the Company, as guarantor, and its wholly-owned subsidiary, SEI International Services S.a.r.l, a Luxembourg company, entered into ~~a definitive Asset~~the Symphony Purchase Agreement ~~(the “Purchase Agreement”~~with Pascal Baker, Ian Barkin, David Brain, David Poole, FIS Nominee Limited, Baronsmead Venture Trust plc and Baronsmead Second Venture Trust plc (together, the “Symphony Sellers”) to acquire ~~certain assets from a Global 2000 telecommunications~~all of the outstanding shares of Symphony.

Symphony, headquartered in London, England, provides RPA services, ~~provider.~~ offering RPA consulting, implementation, hosting and managed services for front, middle and back-office processes. Symphony serves numerous industries globally, including financial services, healthcare, business services, manufacturing, consumer products, communications, media and entertainment.

The aggregate purchase price was GBP 52.5 million ($67.6 million), of ~~$7.5~~which the Company paid GBP 44.6 million ~~was paid~~($57.6 million) at the closing of the transaction on ~~May 31, 2017,~~November 1, 2018 using cash on hand ~~resulting in $6.0~~as well as $31.0 million of ~~property~~additional borrowings under the Company’s credit agreement. The acquisition date present value of the remaining GBP 7.9 million ($10.0 million) of purchase price has been deferred and ~~equipment~~will be paid in equal installments over three years, on or around November 1, 2019, 2020 and ~~$1.5~~2021. The Symphony Purchase Agreement also provides for a three-year, retention based earnout payable in restricted stock units (“RSUs”) with a value of GBP 3.0 million.

Subsequent to the finalization of the working capital adjustments during the three months ended March 31, 2019, the purchase price was adjusted to GBP 52.4 million ($67.5 million). The acquisition resulted in $26.1 million of intangible assets, primarily customer ~~relationship intangibles (the “Telecommunications Asset acquisition”).~~ relationships and trade names, $2.2 million of fixed assets and $36.2 million of goodwill.

The Symphony Purchase Agreement ~~contained~~contains customary representations and warranties, indemnification obligations and covenants. ~~The results of the Telecommunications Assets’ operations have been included in the Company’s consolidated financial statements in the Americas segment since its acquisition on May 31, 2017.~~

The Company accounted for the ~~Telecommunications Asset~~Symphony acquisition in accordance with ~~ASC~~Accounting Standards Codification (“ASC”) 805, Business Combinations (“ASC 805”), whereby the purchase price paid was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the closing date. Certain amounts are provisional and are subject to change, including the tax analysis of the assets acquired and liabilities assumed and goodwill. The Company ~~completed~~expects to complete its analysis of the purchase price allocation during the ~~second~~fourth quarter of ~~2017.~~2019 and any resulting adjustments will be recorded in accordance with ASC 805.

On July 9, 2018, the Company, as guarantor, and its wholly-owned subsidiaries, Sykes Australia Pty Ltd, an Australian company, and Clear Link Technologies, LLC, a Delaware limited liability company, entered into and closed ~~a definitive Share~~the WhistleOut Sale Agreement ~~(the “WhistleOut Sale Agreement”)~~ with WhistleOut Nominees Pty Ltd as trustee for the WhistleOut Holdings Unit Trust, CPC Investments USA Pty Ltd, JJZL Pty Ltd, Kenneth Wong as trustee for Wong Family Trust and C41 Pty Ltd as trustee for the Ottery Family Trust (together, the “WhistleOut Sellers”) to acquire all of the outstanding shares of ~~WhistleOut Pty Ltd and WhistleOut Inc. (together, known as “WhistleOut”).~~WhistleOut.

The aggregate purchase price of AUD 30.2 million ($22.4 million), was paid at the closing of the transaction on July 9, ~~2018, resulting~~2018. Subsequent to the finalization of the working capital adjustments during the three months ended March 31, 2019, the purchase price was adjusted to AUD 30.3 million ($22.5 million). The acquisition resulted in $16.5 million of intangible assets, primarily indefinite-lived domain names, $2.4 million of fixed

assets and ~~$2.2~~$2.5 million of goodwill. ~~The aggregate purchase price is subject to certain post-closing adjustments related to WhistleOut’s working capital.~~ The purchase price was funded through $22.0 million of additional borrowings under the Company’s ~~Credit Agreement.~~credit agreement. The WhistleOut Sale Agreement provides for a three-year, retention based earnout of AUD 14.0 million.

The WhistleOut Sale Agreement ~~contains~~contained customary representations and warranties, indemnification obligations and covenants.

The Company accounted for the WhistleOut acquisition in accordance with ASC 805, whereby the purchase price paid was allocated to the tangible and identifiable intangible assets acquired and liabilities assumed based on their estimated fair values as of the closing date. Certain amounts are provisional and are subject to change, including the ~~finalization of the working capital adjustment,~~ tax analysis of the assets acquired and liabilities assumed and goodwill. The Company expects to complete its analysis of the purchase price allocation during the second quarter of 2019 and any resulting adjustments will be recorded in accordance with ~~ASU 2015-16,~~ ~~Business Combination (Topic 805) Simplifying the Accounting for Measurement-Period Adjustments~~.ASC 805.

Basis of Presentation—The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“generally accepted accounting principles” or “U.S. GAAP”) for interim financial information, the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 are not necessarily indicative of the results that may be expected for any future quarters or the year ending December 31, ~~2018.~~2019. For further information, refer to the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, as filed with the Securities and Exchange Commission (“SEC”) on ~~March 1, 2018.~~February 26, 2019.

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

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

Subsequent Events — Subsequent events or transactions have been evaluated through the date and time of issuance of the condensed consolidated financial statements. On October 17, 2018, the Company entered into a verbal agreement to settle an outstanding legal action for $1.2 million. See Note 13, Commitments and Loss Contingency, for further information. On October 18, 2018, the Company entered into a definitive Share Purchase Agreement (the “Symphony Purchase Agreement”) to acquire all the outstanding shares of Symphony Ventures Ltd (“Symphony”) for GBP 52.6 million ($67.9 million). The transaction closed on November 1, 2018. See Note 19, Subsequent Event, for further information. There were no ~~other~~ material subsequent events that required recognition or disclosure in the accompanying condensed consolidated financial statements.

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

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

	September 30, 2018		December 31, 2017		September 30, 2017		December 31, 2016		March 31, 2019		December 31, 2018		March 31, 2018		December 31, 2017
Cash and cash equivalents	$	157,268	$	343,734	$	328,166	$	266,675	$	148,242	$	128,697	$	172,590	$	343,734
Restricted cash included in "Other current assets"		158		154		107		160		1,960		149		154		154
Restricted cash included in "Deferred charges and other assets"		893		917		933		759		1,373		1,385		925		917
	$	158,319	$	344,805	$	329,206	$	267,594	$	151,575	$	130,231	$	173,669	$	344,805

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

The Company evaluates an equity method investment for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment might not be recoverable. Factors considered by the Company when reviewing an equity method investment for impairment include the length of time (duration) and the extent (severity) to which the fair value of the equity method investment has been less than cost, the investee’s financial condition and near-term prospects, and the intent and ability to hold the investment for a period of time sufficient to allow for anticipated recovery. An impairment that is other-than-temporary is recognized in the period identified. As of September 30, 2018 and December 31, 2017, the Company did not identify any instances where the carrying values of its equity method investments were not recoverable.

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

The Company’s net investment in XSell of ~~$9.4~~$9.0 million and ~~$9.8~~$9.2 million was included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively. The ~~Company~~Company’s investment was paid in two installments of $5.0 million, one in July 2017 and ~~the remaining $5.0 million~~one in August 2018. The Company’s proportionate share of XSell’s ~~income~~net (loss) of $(0.2) million and ~~less than~~ $(0.1) million for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and $(0.4) million and less than $(0.1) million for the nine months ended September 30, 2018 and 2017,~~ respectively, was included in “Other income (expense), net” in the accompanying Condensed Consolidated Statements of Operations.

As of March 31, 2019 and December 31, 2018, the Company did not identify any instances where the carrying values of its equity method investments were not recoverable.

Customer-Acquisition Advertising Costs — The Company’s advertising costs are expensed as incurred. Total advertising costs included in the accompanying Condensed Consolidated Statements of Operations were as follows (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Customer-acquisition advertising costs included in "Direct salaries and related costs"	$	13,907	$	9,188	$	35,835	$	27,599	$	12,104	$	9,967
Customer-acquisition advertising costs included in "General and administrative"		24		18		35		79		18		27

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

In ~~February 2016,~~August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement (“ASU 2018-13”). These amendments remove, modify or add certain disclosure requirements for fair value measurements. These amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Certain of the amendments will be applied prospectively in the initial year of adoption while the remainder are required to be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. The Company does not expect its adoption of ASU 2018-13 to have a material impact on its disclosures and does not expect to early adopt the standard.

In August 2018, the FASB issued ASU 2018-14, Compensation – Retirement Benefits – Defined Benefit Plans - General (Subtopic 715-20) – Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans (“ASU 2018-14”). These amendments remove, modify or add certain disclosure requirements for defined benefit plans. These amendments are effective for fiscal years ending after December 15, 2020, with early adoption permitted. The Company does not expect its adoption of ASU 2018-14 to have a material impact on its financial condition, results of operations, cash flows or disclosures and does not expect to early adopt the standard.

In August 2018, the FASB issued ASU 2018-15, Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract (“ASU 2018-15”). These amendments align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. These amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early application permitted in any interim period after issuance of this update. The amendments should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company does not expect its adoption of ASU 2018-15 to have a material impact on its financial condition, results of operations, cash flows or disclosures and does not expect to early adopt the standard.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) – Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). These amendments require measurement and recognition of expected versus incurred credit losses for financial assets held. In November 2018, the FASB issued ASU 2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses (“ASU 2018-19”). These amendments clarify that receivables arising from operating leases are accounted for using the lease guidance in ASC 842, Leases, and not as financial instruments. These amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years. Early adoption is permitted. The Company expects ASU 2016-13 to apply to its trade receivables but does not expect the adoption of the amendments to have a material impact on its financial condition, results of operations or cash flows because credit losses associated from trade receivables have historically been insignificant. Additionally, the Company does not anticipate early adopting ASU 2016-13.

Codification Improvements – Financial Instruments – Credit Losses, Derivatives and Hedging, and Financial Instruments

In April 2019, the FASB issued ASU 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Derivatives and Hedging, and Topic 825, Financial Instruments (“ASU 2019-04”). These amendments clarify new standards on credit losses, hedging and recognizing and measuring financial instruments and address implementation issues stakeholders have raised. The credit losses and hedging amendments have the same effective dates as the respective standards, unless an entity has already adopted the standards. The amendments related to recognizing and measuring financial instruments are effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is

evaluating the timing of its adoption of ASU 2019-04 but does not expect a material impact on its financial condition, results of operations, cash flows or disclosures.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) (“ASU 2016-02”) and subsequent amendments (together, “ASC 842”). These amendments require the recognition of lease assets and lease liabilities on the balance sheet by lessees for those leases ~~currently~~ classified as operating leases under ASC 840, Leases(“ASC 840”). These amendments also require qualitative disclosures along with specific quantitative disclosures. These amendments are effective for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. Entities have the option to either apply the amendments (1) at the beginning of the earliest period presented using a modified retrospective approach for leases that exist or are entered into after the beginning of the earliest comparative period in the financial statements or (2) at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of ~~adoption.~~adoption without the need to restate prior periods. There are also certain optional practical expedients that an entity may elect to apply.

~~The Company’s implementation team has compiled a detailed inventory of leases and a preliminary analysis of the impact to the financial statements.~~ The Company continues to evaluate the critical factors of ASC 842. Based on an assessment of the Company’s business and system requirements, the implementation team is implementing a lease accounting software solution to assist the Company in complying with ASC. The Company expects the adoption ofadopted ASC 842 onas of January 1, 2019 using a modified retrospective transition, with the cumulative-effect adjustment to ~~result in a material increase in~~ the ~~assets and liabilities on the consolidated~~opening balance ~~sheets~~of retained earnings as ~~a result of recognizing right-of-use assets and lease liabilities for existing operating leases based on the amount~~ of the ~~Company’s current lease commitments. The Company believes that the majority of its leases will maintain their current lease classification under ASC 842. The Company does~~effective date. Periods prior to January 1, 2019 have not expect these amendments to have a material effect on its expense recognition timing or cash flows and, as a result, the Company expects the adoption of ASC 842 will result in an insignificant impact on the Company’s consolidated statements of income and on the consolidated statements of cash flows. The Company is continuing to evaluate the magnitude of the impact on financial statement presentation and related disclosures,been restated.

See Note 3, Leases, for further details as well as the ~~optional practical expedients. The Company is also continuing to evaluate the full impact of ASC 842, as well as its impacts on its business processes, systems, and internal controls.~~Company’s significant accounting policy for leases.

~~In August 2018, the FASB issued~~ ~~ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820) – Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement~~ ~~(“ASU 2018-13”). These amendments~~ ~~remove, modify or add certain disclosure requirements for fair value measurements.~~ These amendments are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Certain of the amendments will be applied prospectively in the initial year of adoption while the remainder are required to be applied retrospectively to all periods presented upon their effective date. Early adoption is permitted. The Company is evaluating the timing of its adoption of ASU 2018-13 but does not expect a material impact on its disclosures.

~~In August 2018, the FASB issued~~ ~~ASU 2018-14,~~ ~~Compensation – Retirement Benefits – Defined Benefit Plans - General (Subtopic 715-20) – Disclosure Framework – Changes to the Disclosure Requirements for Defined Benefit Plans~~ ~~(“ASU 2018-14”). These amendments~~ ~~remove, modify or add certain disclosure requirements for defined benefit plans.~~ These amendments are effective for fiscal years ending after December 15, 2020, with early adoption permitted. The Company is evaluating the timing of its adoption of ASU 2018-14 but does not expect a material impact on its disclosures.

~~In August 2018, the FASB issued~~ ~~ASU 2018-15,~~ ~~Intangibles – Goodwill and Other – Internal-Use Software (Subtopic 350-40) – Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract~~ ~~(“ASU 2018-15”). These amendments~~ align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. These amendments are effective for fiscal years beginning after December 15, 2019, and interim periods within those fiscal years, with early application permitted in any interim period after issuance of this update. The amendments should be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption. The Company is evaluating the timing of its adoption of

~~ASU 2018-15 but does not expect a material impact on its financial condition, results of operations, cash flows and disclosures.~~

In August 2017, the FASB issued ASU 2017-12, Derivatives and Hedging (Topic 815) – Targeted Improvements to Accounting for Hedge Activities (“ASU 2017-12”). These amendments help simplify certain aspects of hedge accounting and better align an entity’s risk management activities and financial reporting for hedging relationships through changes to both the designation and measurement guidance for qualifying hedging relationships and the presentation of hedge results. For cash flow and net investment hedges as of the adoption date, the guidance requires a modified retrospective approach. The amended presentation and disclosure guidance is required only prospectively. These amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years, with early application permitted in any interim period after issuance of this update. The ~~Company does not expect the~~ adoption of ASU 2017-12 ~~to materially impact its financial condition, results of operations, cash flows and disclosures.~~

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

~~In May 2014, the FASB issued ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606)~~ (“ASU 2014-09”) and subsequent amendments (together, “ASC 606”). ASC 606 outlines a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and indicates that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. To achieve this, an entity should identify the contract(s) with a customer, identify the performance obligations in the contract, determine the transaction price, allocate the transaction price to the performance obligations in the contract and recognize revenue when (or as) the entity satisfies a performance obligation. The Company adopted ASC 606 as of January 1, 2018 using the modified retrospective transition method. See Note 2, Revenues, for further details.

~~In January 2016, the FASB issued ASU 2016-01,~~ ~~Financial Instruments - Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities~~ (“ASU 2016-01”). These amendments modify how entities measure equity investments and present changes in the fair value of financial liabilities. Under the new guidance, entities will measure equity investments that do not result in consolidation and are not accounted for under the equity method at fair value and recognize any changes in fair value in net income unless the investments qualify for the new practicality exception. A practicality exception applies to those equity investments that do not have a readily determinable fair value and do not qualify for the practical expedient to estimate fair value under ASC 820, ~~Fair Value Measurements~~, and as such, these investments may be measured at cost. These amendments are effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The adoption of ASU 2016-01 on January 1, ~~2018~~2019 did not have a material impact on the ~~Company’s~~financial condition, results of operations, cash flows or disclosures of the Company. No cumulative-effect adjustment was recorded to opening retained earnings on the date of adoption as there was no ineffectiveness previously recorded in retained earnings that would have been included in other comprehensive income if the new guidance had been applied since hedge inception. Upon adoption of ASU 2017-12, the Company elected the spot method for assessing the effectiveness of net investment hedges and will record the amortization of excluded components of net investment hedges in “Other income (expense), net” in its consolidated financial statements.

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

~~In November 2016, the FASB issued~~ ~~ASU 2016-18,~~ ~~Statement of Cash Flows (Topic 230) – Restricted Cash (A Consensus of the FASB Emerging Issues Task Force~~ (“ASU 2016-18”). These amendments clarify how entities should present restricted cash and restricted cash equivalents in the statement of cash flows, requiring entities to show the changes in the total of cash, cash equivalents, restricted cash and restricted cash equivalents. These amendments are effective for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. These amendments have been applied using a retrospective transition method to each period presented. The inclusion of restricted cash increased the beginning balance of cash in the Condensed Consolidated Statements of Cash Flows by $1.1 million for the nine months ended September 30, 2018 and increased the beginning and ending balances of cash by $0.9 million and $1.0 million, respectively, for the nine months ended September 30, 2017. Other than the change in presentation within the accompanying Condensed Consolidated Statements of Cash Flows, the retrospective adoption of ASU 2016-18 on January 1, 2018 did not have a material impact on the Company’s consolidated financial statements.

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

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

~~In March 2018, the FASB issued ASU 2018-05,~~ ~~Income Taxes (Topic 740): Amendments to SEC paragraphs pursuant to SEC Staff Accounting Bulletin No. 118~~ ~~(“ASU 2018-05”). These amendments add various SEC paragraphs pursuant to the issuance of SEC Staff Accounting Bulletin No. 118,~~ ~~Income Tax Accounting Implications of the Tax Cuts and Jobs Act~~ (“SAB 118”). SAB 118, issued in December 2017, directs taxpayers to consider the implications of the 2017 Tax Reform Act as provisional when it does not have the necessary information available, prepared, or analyzed in reasonable detail to complete its accounting for the change in the tax law. As described in Note 11, Income Taxes, and in accordance with SAB 118, the Company recorded amounts that were considered provisional.

~~In February 2018, the FASB issued ASU 2018-02,~~ ~~Income Statement – Reporting Comprehensive Income (Topic 220)~~ (“ASU 2018-02”). These amendments allow a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the 2017 Tax Reform Act. These amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within those fiscal years. Early adoption of the amendment in this update is permitted, including adoption in any interim period. These amendments can be applied either in the period of adoption or retrospectively to each period (or periods) in which the effect of the change in the U.S. federal corporate tax rate in the 2017 Tax Reform Act is recognized. The early adoption of ASU 2018-02 on June 30, 2018 had no impact on the Company’s consolidated financial statements or disclosures.

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

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

The Company adopted the income statement presentation aspects of ASU 2017-07 on a retrospective basis effective January 1, 2018. The following is a reconciliation of the effect of the reclassification of the interest cost and amortization of actuarial gain (loss) from operating expenses to other income (expense) in the Company’s Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2017 (in thousands):

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

The Company recorded an increase to opening retained earnings of $3.0 million as of January 1, 2018 due to the cumulative impact of adopting ASC 606. The impact, all in the Americas segment, primarily related to the change in timing of revenue recognition associated with certain customer contracts that provide fees upon renewal, as well as changes in estimating variable consideration with respect to penalties and holdback provisions for failure to meet specified minimum service levels and other performance-based contingencies. Revenues recognized under ASC 606 are expected to be slightly higher during 2018 than revenues would have been under ASC 605. This is primarily attributable to the change in the timing of revenue recognition, as discussed above. The impact on revenues recognized for the three and nine months ended September 30, 2018 is reported below.

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

~~The financial statement line items impacted by the adoption of ASC 606 in the Company’s Condensed Consolidated Balance Sheet as of September 30, 2018 were as follows (in thousands):~~

The financial statement line items impacted by the adoption of ASC 606 in the Company’s Condensed Consolidated Statement of Operations for the three months ended September 30, 2018 were as follows, alongRevenue from Contracts with ~~the impact per share (in thousands, except per share data):~~

The financial statement line items impacted by the adoption of ASC 606 in the Company’s Condensed Consolidated Statement of Operations for the nine months ended September 30, 2018 were as follows, along with the impact per share (in thousands, except per share data):

~~The Company’s net cash provided by operating activities for the nine months ended September 30, 2018 did not change due to the adoption of ASC 606.~~

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

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

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

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

~~Under ASC 606, the~~The Company ~~accounts~~provides customer engagement solutions and services with an emphasis on inbound multichannel demand generation, customer service and technical support to its clients’ customers. These services are delivered through multiple communication channels including phone, e-mail, social media, text messaging, chat and digital self-service. Revenues for a contract with a client when it has approval, the contract is committed, the rights of the parties, including payment terms, are identified, the contract has commercial substance and consideration is probable of collection. The Company’s customer engagement solutions and services are classified as stand-ready performance obligations. Because the Company’s customers simultaneously receive and consume the benefits of its services as they are delivered, the performance obligations are satisfied over time. The Company recognizes revenuesrecognized over time using output methods such as a per minute, per hour, per call, per transaction or per time and materials basis. These output methods faithfully depict the satisfaction of the Company’s obligation to deliver the services as requested and represent a direct measurement of value to the customer. The Company’s contracts have a single performance obligation as the promise to transfer the customer solutions and services are not separately identifiable from other promises in the contract, and therefore not distinct.

The stated term of the Company’s contracts with customers range from 30 days to six years. The majority of these contracts include termination for convenience or without cause provisions allowing either party to cancel the contract

without substantial cost or penalty within a defined notification period (“termination rights”), varying periods typically up to 180 days. Because of the termination rights, only the noncancelable portion qualifies as a legally enforceable contract under Step 1, Identify the Contract with a Customer, of ASC 606 (“Step 1”) and is accounted for as such, even if the customer is unlikely to exercise its termination right. Furthermore, the amounts excluded from assessment under Step 1 are, in effect, optional customer purchases of additional services.

If the termination right is only provided to the customer, the unsatisfied performance obligations will be evaluated as a customer option. The Company typically does not include options in customer contracts that would result in a material right. If options to purchase additional services or options to renew are included in customer contracts, the Company evaluates the option in order to determine if the arrangement includes promises that may represent a material right and needs to be accounted for as a performance obligation in the contract with the customer.

The Company’s primary billing terms are that payment is due within 30 or 60 days of the invoice date. Invoices are generally issued on a monthly basis as control transfers and/or as services are rendered. Revenue recognition is limited to the established transaction price, the amount to which the Company expects to be entitled to under the contract, including the amount of expected fees for those contracts with renewal provisions, and the amount that is not contingent upon delivery of any future product or service or meeting other specified performance obligations. The transaction price, once determined, is allocated to the single performance obligation on a contract by contract basis.

The Company’s customer contracts include penalties and holdbacks provisions for failure to meet specified minimum service levels and other performance-based contingencies, as well as the right of certain of the Company’s clients to chargeback accounts that do not meet certain requirements for specified periods after a sale has occurred. Certain customers also receive cash discounts for early payment. These provisions are accounted for as variable consideration and are estimated using the expected value method based on historical service and pricing trends, the individual contract provisions, and the Company’s best judgment at the time. None of these variable consideration components are subject to constraint due to the short time period to resolution, the Company’s extensive history with similar transactions, and the limited number of possible outcomes and third-party influence. The portion of the consideration received under the contract that the Company expects to ultimately refund to the customer is excluded from the transaction price and is recorded as a refund liability.

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

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

In total, other revenues are immaterial, representing ~~0.5%~~1.8% and 0.5% of the Company’s consolidated total revenues for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and 0.5% and 0.5% of the Company’s consolidated total revenues for the nine months ended September 30, 2018 and 2017,~~ respectively.

The Company disaggregates its revenues from contracts with customers by service type and geographic location (see Note 16, Segments and Geographic Information), for each of its reportable segments, as the Company believes it best depicts how the nature, amount, timing and uncertainty of its revenues and cash flows are affected by economic factors.

The following table represents revenues from contracts with customers disaggregated by service type and by the reportable segment for each category (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Americas:
Customer engagement solutions and services	$	328,535	$	341,077	$	995,723	$	976,342	$	324,562	$	340,422
Other revenues		227		257		801		794		215		299
Total Americas		328,762		341,334		996,524		977,136		324,777		340,721
EMEA:
Customer engagement solutions and services		68,859		64,230		208,302		184,135		70,997		71,671
Other revenues		1,684		1,727		5,588		5,429		7,131		1,956
Total EMEA		70,543		65,957		213,890		189,564		78,128		73,627
Other:
Other revenues		28		18		75		61		20		23
Total Other		28		18		75		61		20		23
	$	399,333	$	407,309	$	1,210,489	$	1,166,761	$	402,925	$	414,371

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

	September 30, 2018		January 1, 2018		March 31, 2019		December 31, 2018
Trade accounts receivable, net, current ⁽¹⁾	$	340,391	$	332,014	$	337,502	$	335,377
Trade accounts receivable, net, noncurrent ⁽²⁾		6,066		2,078		18,270		15,948
	$	346,457	$	334,092	$	355,772	$	351,325

⁽¹⁾ Included in “Receivables, net” in the accompanying Condensed Consolidated Balance Sheets. ~~The January 1, 2018 balance includes the $0.8 million adjustment recorded upon adoption of ASC 606.~~

⁽²⁾ Included in “Deferred charges and other assets” in the accompanying Condensed Consolidated Balance Sheets. ~~The January 1, 2018 balance includes a $2.1 million adjustment recorded upon adoption of ASC 606.~~

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

Deferred revenue and customer liabilities consists of the following (in thousands):

	September 30, 2018		January 1, 2018		March 31, 2019		December 31, 2018
Deferred revenue	$	4,507	$	4,598	$	3,381	$	3,655
Customer arrangements with termination rights		17,789		21,755		15,992		16,404
Estimated refund liabilities ⁽¹⁾		9,026		7,316		7,704		10,117
	$	31,322	$	33,669	$	27,077	$	30,176

⁽¹⁾ ~~The January 1, 2018 balance includes the $1.0 million adjustment recorded upon adoption of ASC 606.~~Deferred Revenue

The Company receives up-front fees in connection with certain contracts. In accordance with ASC 606, the up-front fees are recorded as a contract liability only to the extent a legally enforceable contract ~~exists, typically varying periods~~

~~up to 180 days.~~exists. Accordingly, the up-front fees allocated to the notification period, typically varying periods up to 180 days, are recorded as deferred revenue, while the fees that extend beyond the notification period are classified as a customer arrangement with termination rights. These up-front fees do not represent a significant financing component since they were structured primarily to reduce the administrative burden in managing the operations of certain contracts, to provide the customer with un-interrupted service, and to assist in managing the overall risk and profitability of providing the services.

Revenues of ~~$0.1~~$3.1 million and ~~$4.3~~$3.9 million were recognized during the three ~~and nine~~ months ended ~~September 30,~~March 31, 2019 and 2018, respectively, from amounts included in deferred revenue at December 31, 2018 and January 1, ~~2018.~~2018, respectively. The Company expects to recognize the majority of its deferred revenue as of ~~September 30, 2018~~March 31, 2019 over the next 180 days.

The majority of the Company’s contracts include termination for convenience or without cause provisions allowing either party to cancel the contract without substantial cost or penalty within a defined notification period (“termination rights”). Customer arrangements with termination rights represent the amount of up-front fees received for unsatisfied performance obligations for periods that extend beyond the legally enforceable contract period. All customer arrangements with termination rights are classified as current as the customer can terminate the contracts and demand pro-rata refunds of the up-front fees over varying periods, typically up to 180 days. The Company expects to recognize the majority of the customer arrangements with termination rights into revenue as the Company has not historically experienced a high rate of contract terminations.

~~Refund~~Estimated refund liabilities represent consideration received under the contract that the Company expects to ultimately refund to the customer and primarily relates to estimated penalties, holdbacks and chargebacks. Penalties and holdbacks result from the failure to meet specified minimum service levels in certain contracts and other performance-based contingencies. Chargebacks reflect the right of certain of the Company’s clients to chargeback accounts that do not meet certain requirements for specified periods after a sale has occurred.

~~Refund~~Estimated refund liabilities are generally resolved in 180 days, once it is determined whether the requisite service levels and client requirements were achieved to settle the contingency.

On January 1, 2019, the Company adopted ASC 842, which includes ASU 2016-02 and all related amendments, using the modified retrospective method and recognized a cumulative-effect adjustment to the opening balance of retained earnings at the date of adoption. Results for reporting periods beginning after January 1, 2019 are presented under ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with the Company’s historic accounting for leases under ASC 840.

The adoption of ASC 842 on January 1, 2019 had a material impact on the Company’s Condensed Consolidated Balance Sheet, resulting in the recognition of $225.3 million of right-of-use ("ROU") assets, $239.3 million of operating lease liabilities, a $0.1 million increase to opening retained earnings, as well as $14.1 million primarily

related to the derecognition of net straight-line lease liabilities. The retained earnings adjustment was due to the cumulative impact of adopting ASC 842, primarily resulting from the derecognition of embedded lease derivatives, the difference between deferred rent balances and the net of ROU assets and lease liabilities and the deferred tax impact.

The impact of the adoption of ASC 842 to the Company’s Condensed Consolidated Statement of Operations for the three months ended March 31, 2019 was not material. The Company’s net cash provided by operating activities for the three months ended March 31, 2019 did not change due to the adoption of ASC 842.

In determining whether a contract contains a lease, the Company assesses whether the arrangement meets all three of the following criteria: 1) there is an identified asset; 2) the Company has the right to obtain substantially all the economic benefits from use of the identified asset; and 3) the Company has the right to direct the use of the identified asset. This involves evaluating whether the Company has the right to operate the asset or to direct others to operate the asset in a manner that it determines without the supplier having the right to change those operating instructions, as well as evaluating the Company’s involvement in the design of the asset.

The Company capitalizes operating lease obligations with terms in excess of twelve months as ROU assets with corresponding lease liabilities on its balance sheet. Operating lease ROU assets represent the Company’s right to use an underlying asset for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the commencement date based on the present value of lease payments over the lease term. Additionally, the ROU asset is adjusted for lease incentives, prepaid lease payments and initial direct costs. Operating lease expense is recognized on a straight-line basis over the lease term.

The Company has lease agreements with lease and non-lease components, such as real estate taxes, insurance, common area maintenance and other operating costs. Lease and non-lease components are generally accounted for as a single component to the extent that the costs are fixed per the arrangement. The Company has applied this accounting policy to all asset classes. To the extent that the non-lease components are not fixed per the arrangement, these costs are treated as variable lease costs and expensed as incurred.

Certain of the Company’s lease agreements include rental payments that adjust periodically based on an index or rate, generally the applicable Consumer Price Index (“CPI”). The operating lease liability is measured using the prevailing index or rate at the measurement date (i.e., the commencement date); however, the most recent CPI in effect as of January 1, 2019 was used to effectuate the adoption of ASC 842. Incremental payments due to changes to the index- and rate-based lease payments are treated as variable lease costs and expensed as incurred.

For purposes of calculating operating lease liabilities, the lease term includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. The primary factors used to estimate whether an option to extend a lease term will be exercised or not generally include the extent of the Company’s capital investment, employee recruitment potential and operational cost and flexibility.

In determining the present value of lease payments, the Company typically uses incremental borrowing rates based on information available at the lease commencement date. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term an amount equal to the lease payments in a similar economic environment. The Company’s incremental borrowing rate is estimated using a synthetic credit rating model and forward currency exchange rates, as applicable.

Payments on leases with an initial term of 12 months or less are recognized in the accompanying Condensed Consolidated Statements of Operations on a straight-line basis over the lease term.

The ROU asset is evaluated for impairment whenever events or circumstances indicate that the carrying amount may not be recoverable in accordance with ASC 360, Property, Plant and Equipment. A loss is recognized when the ROU asset is impaired in connection with the impairment of a site’s assets due to economic or other factors. When the ROU asset is impaired, it is typically amortized on a straight-line basis over the shorter of the remaining lease term or its useful life, and the related operating lease would no longer qualify for straight-line treatment of total lease expense.

The Company primarily leases facilities for its corporate headquarters, many of its customer engagement centers, several regional support offices and data centers. These leases are classified as operating leases and are included in “Operating lease right-of-use assets,” “Operating lease liabilities” and “Long-term operating lease liabilities” in the accompanying Condensed Consolidated Balance Sheet as of March 31, 2019. The Company has no finance leases.

Lease terms for the Company’s leases are generally three to 20 years with renewal options typically ranging from one month to five years and largely require the Company to pay a proportionate share of real estate taxes, insurance, common area maintenance, and other operating costs in addition to a base or fixed rent. The Company's operating leases have remaining lease terms of one month to 13 years as of March 31, 2019.

The Company’s leases do not contain any material residual value guarantees or material restrictive covenants.

The Company subleases certain of its facilities that have been abandoned before the expiration of the lease term. Operating lease costs on abandoned facilities is reduced by sublease income and included in “General and administrative” costs in the accompanying Condensed Consolidated Statements of Operations. The Company’s sublease arrangements do not contain renewal options or restrictive covenants. The Company’s subleases have varying remaining lease terms extending through 2025, and future contractual sublease income is expected to be $10.6 million over the remaining lease terms.

Lease expense for lease payments is recognized on a straight-line basis over the lease term. The components of lease expense were as follows (in thousands):

Supplemental cash flow information related to leases was as follows (in thousands):

Maturities of operating lease liabilities as of March 31, 2019 were as follows (in thousands):

As of March 31, 2019, the Company had additional operating leases for customer engagement centers that had not yet commenced with future lease payments of $2.0 million. These operating leases will commence during the second quarter of 2019 with lease terms between 2 and 5 years.

Rental expense under operating leases, primarily included in “General and administrative” in the accompanying Condensed Consolidated Statement of Operations, for the three months ended March 31, 2018 was $16.0 million.

The following is a schedule of future minimum rental payments required under operating leases that had noncancelable lease terms as of December 31, 2018 under ASC 840 (in thousands):

During the first quarter of 2019, the Company initiated a restructuring plan to simplify and refine its operating model in the U.S. (the “Americas 2019 Exit Plan”), in part to improve agent attrition and absenteeism. The Americas 2019 Exit Plan includes, but is not limited to, closing customer contact management centers, consolidating leased space in various locations in the U.S. and management reorganization. The Company anticipates finalizing these actions by December 31, 2019.

During the second quarter of 2018, the Company initiated a restructuring plan to ~~streamline excess capacity through targeted seat reductions (the “Americas 2018 Exit Plan”) in an on-going effort to~~ manage and optimize capacity ~~utilization. The Americas 2018 Exit Plan includes, but is not limited to,~~utilization, which included closing customer contact management centers and consolidating leased space in various locations in the U.S. and ~~Canada.~~Canada (the “Americas 2018 Exit Plan”). The Company ~~anticipates finalizing~~finalized the remainder of the site closures under the Americas 2018 Exit Plan byas of December ~~2018.~~2018, resulting in a reduction of 5,000 seats.

The Company’s actions ~~will~~under both the Americas 2018 and 2019 Exit Plans are anticipated to result in ~~a reduction in seats as well as anticipated~~ general and administrative cost savings, and lower depreciation ~~expense resulting from the 2018 site closures.~~expense.

The cumulative costs expected and incurred to date related to cash and non-cash expenditures ~~as a result of~~resulting from the Americas 2018 Exit Plan and the Americas 2019 Exit Plan are outlined below as of ~~September 30, 2018~~March 31, 2019 (in thousands):

							Americas 2018 Exit Plan		Americas 2019 Exit Plan
	Costs Expected To Be Incurred		Cumulative Costs Incurred To Date		Expected Remaining Costs		Cumulative Costs Incurred To Date		Costs Expected To Be Incurred		Cumulative Costs Incurred To Date		Expected Remaining Costs
Lease obligations and facility exit costs ⁽¹⁾	$	7,344	$	6,860	$	484	$	7,073	$	85	$	—	$	85
Severance and related costs ⁽²⁾		3,434		3,417		17
Severance and related costs ⁽¹⁾⁽²⁾		665		550		115		3,429		213		7		206
Severance and related costs ⁽¹⁾								1,054		1,744		1,090		654
Non-cash impairment charges		5,730		5,730		-		5,875		1,582		1,582		—
Other non-cash charges								—		80		—		80
	$	17,173	$	16,557	$	616	$	17,431	$	3,704	$	2,679	$	1,025

The Company has paid a total ~~costs expected~~of $10.0 million in cash through March 31, 2019, of which $9.9 million related to ~~be incurred under~~ the Americas 2018 Exit Plan ~~increased $1.1~~and $0.1 million ~~during~~related to the three months ended September 30, 2018 as the Company progressed with its plan and actual costs became known. The expected remaining lease obligations, facility exit costs and severance charges are anticipated to be incurred during the fourth quarter of 2018. The Company has paid $5.2 million in cash through September 30, 2018.Americas 2019 Exit Plan.

The following table summarizes the accrued liability and related charges for the three months ended ~~September 30, 2018~~March 31, 2019 (none in ~~2017)~~2018) (in thousands):

										Americas 2018 Exit Plan									Americas 2019 Exit Plan
	Lease Obligations and Facility Exit Costs			Severance and Related Costs			Total			Lease Obligations and Facility Exit Costs			Severance and Related Costs			Total			Severance and Related Costs
Balance at the beginning of the period	$	2,815		$	490		$	3,305		$	1,769		$	817		$	2,586		$	—
Charges included in "Direct salaries and related costs"		-			3,015			3,015			—			—			—			7
Charges included in "General and administrative"		3,832			331			4,163
Charges (reversals) included in "General and administrative"											(4	)		19			15			1,090
Cash payments		(1,440	)		(3,209	)		(4,649	)		(265	)		(341	)		(606	)		(57	)
Balance sheet reclassifications ⁽¹⁾		119			-			119			(1,338	)		—			(1,338	)		—
Balance at the end of the period	$	5,326		$	627		$	5,953		$	162		$	495		$	657		$	1,040

⁽¹⁾ Consists of the reclassification ~~of deferred rent balances to~~from the restructuring liability ~~for locations subject~~ to ~~closure.~~“Operating lease liabilities” and “Long-term operating lease liabilities” upon adoption of ASC 842 on January 1, 2019.

~~The following table summarizes the accrued liability and related charges for the nine months ended September 30, 2018 (none in 2017) (in thousands):~~

⁽¹⁾ ~~Consists of the reclassification of deferred rent balances to the restructuring liability for locations subject to closure.~~

The following table summarizes the Company’s short-term and long-term accrued liabilities associated with the Americas 2018 Exit Plan ~~as of September 30, 2018 (none in 2017)~~ (in thousands):

Americas 2018
Exit Plan

Short-term accrued restructuring liability ⁽¹⁾
$
4,491

Short-term accrued restructuring liability ⁽²⁾

627

Long-term accrued restructuring liability ⁽³⁾

835

Ending accrual at September 30, 2018
$
5,953

	Americas 2018 Exit Plan				Americas 2019 Exit Plan
	March 31, 2019		December 31, 2018		March 31, 2019
Lease obligations and facility exit costs:
Included in "Accounts payable"	$	—	$	100	$	—
Included in "Other accrued expenses and current liabilities"		93		952		—
Included in "Other long-term liabilities"		69		717		—
		162		1,769		—
Severance and related costs:
Included in "Accrued employee compensation and benefits"		489		793		1,038
Included in "Other accrued expenses and current liabilities"		6		24		2
		495		817		1,040
	$	657	$	2,586	$	1,040

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

⁽²⁾ ~~Included in “Accrued employee compensation and benefits” in the accompanying Condensed Consolidated Balance Sheet.~~

⁽³⁾ ~~Included in “Other long-term liabilities” in the accompanying Condensed Consolidated Balance Sheet.~~

The long-term accrued restructuring liability relates to variable costs associated with future rent obligations to be paid through the remainder of the lease terms, the last of which ends in June 2021.

ASC 820, Fair Value Measurements and Disclosures (“(“ASC 820”) defines fair value and establishes a framework for measuring fair value. ASC 820 clarifies that fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. Additionally, ASC 820 requires disclosure about how fair value is determined for assets and liabilities and establishes a hierarchy for ~~which~~how these assets and liabilities must be grouped, based on significant levels of observable or unobservable inputs. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company’s market assumptions. This hierarchy requires the use of observable market data when available. These two types of inputs have created the following fair value hierarchy:

~~Fair Value of Financial Instruments~~ — ~~The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:~~

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

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

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

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

The following ~~section~~ describes the valuation methodologies used by the Company to measure assets and liabilities at fair value on a recurring basis, including an indication of the level in the fair value hierarchy in which each asset or liability is generally ~~classified.~~classified, if applicable.

Cash, Short-Term and Other Investments and Accounts Payable— The carrying values for cash, short-term and other investments and accounts payable approximate their fair values.

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

Foreign Currency ~~Forward~~ Contracts ~~and Options~~—The Company enters into foreign currency forward contracts and options over the counter and values such contracts, including premiums paid on options, at fair value using quoted market prices of comparable instruments or, if none are available, on pricing models or formulas using current market and model assumptions, including adjustments for credit risk. The key inputs include forward or option foreign currency exchange rates and interest rates. These items are classified in Level 2 of the fair value hierarchy.

Embedded Derivatives— ~~The~~Prior to the adoption of ASC 842, the Company ~~uses~~had embedded derivatives within certain hybrid lease agreements that were bifurcated from the host contract and valued such contracts at fair value using significant unobservable inputs, ~~to determine the fair value of embedded derivatives,~~ which are classified in Level 3 of the fair value hierarchy. These unobservable inputs ~~include~~included expected cash flows associated with the lease, currency exchange rates on the day of commencement, as well as forward currency exchange rates, the results of which ~~are~~were adjusted for credit risk. These items ~~are~~were classified in Level 3 of the fair value hierarchy. See Note 6,3, Leases, and Note 7, Financial Derivatives, for further information.

Investments Held in Rabbi Trust—The investment assets of the rabbi trust are valued using quoted market prices in active markets, which are classified in Level 1 of the fair value hierarchy. For additional information about the deferred compensation plan, refer to Note 7,8, Investments Held in Rabbi ~~Trust, and Note 15, Stock-Based Compensation.~~

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

The Company's assets and liabilities measured at fair value on a recurring basis subject to the requirements of ASC 820 consist of the following ~~as of September 30, 2018~~ (in thousands):

			Fair Value Measurements Using:								Fair Value Measurements Using:
	Balance at		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Balance at		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	September 30, 2018		Level 1		Level 2		Level 3		March 31, 2019		Level 1		Level 2		Level 3
Assets:
Foreign currency forward and option contracts ⁽¹⁾	$	307	$	-	$	307	$	-
Embedded derivatives ⁽¹⁾		2		-		-		2
Foreign currency contracts ⁽¹⁾									$	1,320	$	—	$	1,320	$	—
Equity investments held in rabbi trust for the Deferred Compensation Plan ⁽²⁾		9,116		9,116		-		-		8,580		8,580		—		—
Debt investments held in rabbi trust for the Deferred Compensation Plan ⁽²⁾		3,453		3,453		-		-		4,495		4,495		—		—
	$	12,878	$	12,569	$	307	$	2	$	14,395	$	13,075	$	1,320	$	—
Liabilities:
Foreign currency forward and option contracts ⁽¹⁾	$	3,185	$	-	$	3,185	$	-
Embedded derivatives ⁽¹⁾		404		-		-		404
Foreign currency contracts ⁽¹⁾									$	938	$	—	$	938	$	—
	$	3,589	$	-	$	3,185	$	404	$	938	$	—	$	938	$	—

~~The Company's assets and liabilities measured at fair value on a recurring basis subject to the requirements of ASC 820 consist of the following as of December 31, 2017 (in thousands):~~

			Fair Value Measurements Using:								Fair Value Measurements Using:
	Balance at		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs		Balance at		Quoted Prices in Active Markets For Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
	December 31, 2017		Level 1		Level 2		Level 3		December 31, 2018		Level 1		Level 2		Level 3
Assets:
Foreign currency forward and option contracts ⁽¹⁾	$	3,848	$	-	$	3,848	$	-
Foreign currency contracts ⁽¹⁾									$	1,068	$	—	$	1,068	$	—
Embedded derivatives ⁽¹⁾		52		-		-		52		10		—		—		10
Equity investments held in rabbi trust for the Deferred Compensation Plan ⁽²⁾		8,094		8,094		-		-		8,075		8,075		—		—
Debt investments held in rabbi trust for the Deferred Compensation Plan ⁽²⁾		3,533		3,533		-		-		3,367		3,367		—		—
	$	15,527	$	11,627	$	3,848	$	52	$	12,520	$	11,442	$	1,068	$	10
Liabilities:
Foreign currency forward and option contracts ⁽¹⁾	$	256	$	-	$	256	$	-
Foreign currency contracts ⁽¹⁾									$	2,895	$	—	$	2,895	$	—
Embedded derivatives ⁽¹⁾		579		-		-		579		369		—		—		369
	$	835	$	-	$	256	$	579	$	3,264	$	—	$	2,895	$	369

⁽¹⁾ See Note 6,7, Financial Derivatives, for the classification in the accompanying Condensed Consolidated Balance Sheets.

⁽²⁾ Included in “Other current assets” in the accompanying Condensed Consolidated Balance Sheets. See Note 7,8, Investments Held in Rabbi Trust.

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

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

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

							Three Months Ended March 31,
	Three Months Ended September 30, 2017			Nine Months Ended September 30, 2017			2019			2018
Balance at the beginning of the period	$	(1,127	)	$	(6,100	)	$	(359	)	$	(527	)
Imputed interest		(8	)		(76	)
Fair value gain (loss) adjustments ⁽¹⁾		(96	)		605
Derecognition of embedded derivatives ⁽¹⁾								359			—
Gains (losses) recognized in "Other income (expense), net"								—			87
Settlements		232			4,760			—			42
Effect of foreign currency		(1	)		(189	)		—			(11	)
Balance at the end of the period	$	(1,000	)	$	(1,000	)	$	—		$	(409	)
Change in unrealized gains (losses) included in "General and administrative" related to contingent consideration outstanding at the end of the period	$	-		$	-
Change in unrealized gains (losses) included in "Other income (expense), net" related to embedded derivatives held at the end of the period							$	—		$	87

⁽¹⁾ ~~Included in “General and administrative” costs in the accompanying Condensed Consolidated Statements~~ Decrecognition upon adoption of ~~Operations.~~

The Company recorded a fair value loss of $0.1 million and net fair value gain of $0.6 million in “General and administrative” during the three and nine months ended September 30, 2017, respectively, related to the Clearlink contingent consideration. All outstanding Clearlink contingent consideration liabilities remaining as of September 30, 2017 were paid prior to December 31, 2017.

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

The Company accreted interest expense each period using the effective interest method until the contingent consideration reached the estimated future value. Interest expense related to the contingent consideration was included in “Interest (expense)” in the accompanying Condensed Consolidated Statements of OperationsASC 842 on January 1, 2019. See Note 3, Leases, for ~~the three and nine months ended September 30, 2017.~~more information.

Certain assets, under certain conditions, are measured at fair value on a nonrecurring basis utilizing Level 3 inputs, including goodwill, ~~other~~ intangible assets, ~~other~~ long-lived assets, ROU assets and equity method investments. For these assets, measurement at fair value in periods subsequent to their initial recognition would be applicable if these assets were determined to be impaired. The adjusted carrying values for assets measured at fair value on a nonrecurring basis (no liabilities) subject to the requirements of ASC 820 were not material at ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017.~~2018.

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

	Total Impairment (Loss)
	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Americas:
Property and equipment, net	$	(555	)	$	(680	)	$	(9,256	)	$	(5,071	)	$	(343	)	$	(3,526	)
Operating lease right-of-use assets														(1,239	)		—
													$	(1,582	)	$	(3,526	)

In connection with the closure of certain under-utilized customer contact management centers and the consolidation of leased space in the U.S. and Canada, the Company recorded impairment charges of ~~$0.6~~$1.6 million and ~~$0.7~~$3.5 million during the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and $9.3 million and $4.9 million during the nine months ended September 2018 and 2017,~~ respectively, related to the exit of leased facilities as well as leasehold improvements, equipment, furniture and fixtures which were not recoverable. ~~See Note 3, Costs Associated with Exit or Disposal Activities, for further information.~~

The Company recorded an impairment charge of $0.2 million related to the write-down of a vacant and unused parcel of land in the U.S. to its estimated fair value during the nine months ended September 30, 2017.

The following table presents the Company’s purchased intangible assets as of ~~September 30, 2018~~March 31, 2019 (in thousands):

	Gross Intangibles		Accumulated Amortization			Net Intangibles		Weighted Average Amortization Period (years)		Gross Intangibles		Accumulated Amortization			Net Intangibles		Weighted Average Amortization Period (years)
Intangible assets subject to amortization:
Customer relationships	$	170,449	$	(104,144	)	$	66,305		10	$	190,343	$	(110,232	)	$	80,111		10
Trade names and trademarks		14,135		(10,070	)		4,065		7		19,313		(11,175	)		8,138		8
Non-compete agreements		2,037		(1,520	)		517		3		2,760		(1,950	)		810		3
Content library		524		(524	)		-		2		506		(506	)		—		2
Proprietary software		1,040		(690	)		350		4		1,040		(760	)		280		4
Intangible assets not subject to amortization:
Domain names		81,073		-			81,073	N/A			80,938		—			80,938	N/A
	$	269,258	$	(116,948	)	$	152,310		4	$	294,900	$	(124,623	)	$	170,277		5

The following table presents the Company’s purchased intangible assets as of December 31, ~~2017~~2018 (in thousands):

	Gross Intangibles		Accumulated Amortization			Net Intangibles		Weighted Average Amortization Period (years)		Gross Intangibles		Accumulated Amortization			Net Intangibles		Weighted Average Amortization Period (years)
Intangible assets subject to amortization:
Customer relationships	$	170,853	$	(95,175	)	$	75,678		10	$	189,697	$	(106,502	)	$	83,195		10
Trade names and trademarks		14,138		(8,797	)		5,341		7		19,236		(10,594	)		8,642		8
Non-compete agreements		1,820		(1,052	)		768		3		2,746		(1,724	)		1,022		3
Content library		542		(542	)		-		2		517		(517	)		—		2
Proprietary software		1,040		(585	)		455		4		1,040		(725	)		315		4
Intangible assets not subject to amortization:
Domain names		58,035		-			58,035	N/A			80,857		—			80,857	N/A
	$	246,428	$	(106,151	)	$	140,277		6	$	294,093	$	(120,062	)	$	174,031		5

The Company’s estimated future amortization expense for the succeeding years relating to the purchased intangible assets resulting from acquisitions completed prior to ~~September 30, 2018~~March 31, 2019 is as follows (in thousands):

Years Ending December 31,	Amount		Amount
2018 (remaining three months)		3,662
2019		14,153
2019 (remaining nine months)				12,436
2020		11,475		14,052
2021		6,921		9,468
2022		5,811		8,169
2023		4,955		7,325
2024 and thereafter		24,260
2024				7,080
2025 and thereafter				30,809

Changes in goodwill for the ~~nine~~three months ended ~~September 30,~~March 31, 2019 consisted of the following (in thousands):

Changes in goodwill for the year ended December 31, 2018 consisted of the following (in thousands):

	January 1, 2018		Acquisition		Effect of Foreign Currency			September 30, 2018		January 1, 2018		Acquisition- Related ⁽¹⁾		Effect of Foreign Currency			December 31, 2018
Americas	$	258,496	$	2,162	$	(2,874	)	$	257,784	$	258,496	$	2,175	$	(5,235	)	$	255,436
EMEA		10,769		-		(478	)		10,291		10,769		36,361		(49	)		47,081
	$	269,265	$	2,162	$	(3,352	)	$	268,075	$	269,265	$	38,536	$	(5,284	)	$	302,517

~~Changes in goodwill~~(1) See Note 1, Overview and Basis of Presentation, for ~~the~~further information. The year ended December 31, ~~2017 consisted~~2018 includes the goodwill recorded upon acquisition, while the three months ended March 31, 2019 includes the impact of ~~the following (in thousands):~~adjustments to acquired goodwill upon finalization of working capital adjustments.

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

For the annual goodwill impairment test, the Company elected to forgo the option to first assess qualitative factors and performed its annual quantitative goodwill impairment test as of July 31, 2018. Under ASC 350, Intangibles – Goodwill and Other, the carrying value of assets is calculated at the reporting unit level. The quantitative assessment of goodwill includes comparing a reporting unit’s calculated fair value to its carrying value. The calculation of fair value requires significant judgments including estimation of future cash flows, which is dependent on internal forecasts, estimation of the long-term rate of growth ~~the useful life over which cash flows will occur~~ and determination of the Company’s weighted average cost of capital. Changes in these estimates and assumptions could materially affect the determination of fair value and/or conclusions on goodwill impairment for each reporting unit. If the fair value of the reporting unit is less than its carrying value, goodwill is considered impaired and an impairment loss is recognized for the amount by which the carrying value exceeds the reporting unit’s fair value, not to exceed the total amount of goodwill allocated to that reporting unit.

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

As of July 31, 2018, the Company concluded that goodwill was not impaired for all six of its reporting units with goodwill, based on generally accepted valuation techniques and the significant assumptions outlined above. While the fair values of four of the six reporting units were substantially in excess of their carrying value, the Qelp B.V.(“Qelp”) and ~~Clearlink~~Clear Link Holdings, LLC (“Clearlink”) reporting units’ fair values exceeded the respective carrying values, although not substantially. Qelp and Clearlink were acquired by the Company in 2015 and 2016, respectively.

The Qelp and Clearlink reporting units are at risk of future impairment if projected operating results are not met or other inputs into the fair value measurement change. However, as of ~~September 30, 2018,~~March 31, 2019, the Company believes there were no indicators of impairment related to Qelp’s ~~$10.3~~$10.0 million of goodwill and Clearlink’s ~~$71.2~~$71.3 million of goodwill. Additionally, as of March 31, 2019, the Company noted no indicators of impairment related to Symphony’s $37.2 million of goodwill, recorded as a result of the acquisition on November 1, 2018.

Cash Flow Hedges – The Company has derivative assets and liabilities relating to outstanding forward contracts and options, designated as cash flow hedges, as defined under ASC 815, Derivatives and Hedging (“ASC 815”), consisting of Philippine Peso and Costa Rican Colon ~~Hungarian Forint and Romanian Leu~~ contracts. These foreign currency contracts are entered into to

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

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

	September 30, 2018			December 31, 2017			March 31, 2019			December 31, 2018
Deferred gains (losses) in AOCI	$	(3,086	)	$	2,550		$	(163	)	$	(1,825	)
Tax on deferred gains (losses) in AOCI		86			(79	)		(29	)		(39	)
Deferred gains (losses) in AOCI, net of taxes	$	(3,000	)	$	2,471		$	(192	)	$	(1,864	)
Deferred gains (losses) expected to be reclassified to "Revenues" from AOCI during the next twelve months	$	(2,906	)				$	(163	)

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

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

Embedded Derivatives – The Company enters into certain lease agreements which require payments not denominated in the functional currency of any substantial party to the agreements. ~~The~~Prior to the adoption of ASC 842 on January 1, 2019, the foreign currency component of these contracts ~~meets~~met the criteria under ASC 815 as embedded derivatives. The Company has determined that the embedded derivatives ~~are~~were not clearly and closely related to the economic characteristics and risks of the host contracts (lease agreements), and separate, stand-alone instruments with the same terms as the embedded derivative instruments would otherwise qualify as derivative instruments, thereby requiring separation from the lease agreements and recognition at fair value. Such instruments dodid not qualify for hedge accounting under ASC 815. The Company’s embedded derivatives were derecognized on January 1, 2019.

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

September 30, 2018

December 31, 2017

March 31, 2019

December 31, 2018

Contract Type

Notional

Amount

in USD

Settle

Through

Date

Notional

Amount

in USD

Settle

Through

Date

Notional

Amount

in USD

Settle

Through

Date

Notional

Amount

in USD

Settle

Through

Date

Cash flow hedges:

Options:

US Dollars/Philippine Pesos

50,500

December 2019

78,000

December 2018

17,250

December 2019

26,250

December 2019

Forwards:

US Dollars/Philippine Pesos

48,900

September 2019

3,000

June 2018

21,000

September 2019

39,000

September 2019

US Dollars/Costa Rican Colones

81,500

December 2019

70,000

March 2019

46,000

December 2019

67,000

December 2019

Euros/Hungarian Forints

859

December 2018

3,554

December 2018

Euros/Romanian Leis

3,471

December 2018

13,977

December 2018

Non-designated hedges:

Forwards

5,894

December 2018

9,253

March 2018

17,000

November 2021

19,261

November 2021

Embedded derivatives

12,050

April 2030

13,519

April 2030

—

14,069

April 2030

Master netting agreements exist with each respective counterparty to reduce credit risk by permitting net settlement of derivative positions. In the event of default by the Company or one of its counterparties, these agreements include a set-off clause that provides the non-defaulting party the right to net settle all derivative transactions, regardless of the currency and settlement date. The maximum amount of loss due to credit risk that, based on gross fair value, the Company would incur if parties to the derivative transactions that make up the concentration failed to perform according to the terms of the contracts was ~~$0.3~~$1.3 million and ~~$3.8~~$1.1 million as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively. After consideration of these netting arrangements and offsetting positions by counterparty, the

total net settlement amount as it relates to these positions are asset positions of $0$1.3 million and ~~$3.6~~$1.1 million as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively, and liability positions of $0.9 million and $2.9 million ~~and $0~~ as of ~~September 30, 2018~~March 31, 2019 and December 31, ~~2017,~~2018, respectively.

Although legally enforceable master netting arrangements exist between the Company and each counterparty, the Company has elected to present the derivative assets and derivative liabilities on a gross basis in the accompanying Condensed Consolidated Balance Sheets. Additionally, the Company is not required to pledge, nor is it entitled to receive, cash collateral related to these derivative transactions.

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

Derivative Assets

September 30, 2018

December 31, 2017

Derivatives designated as cash flow hedging
   instruments under ASC 815:

Foreign currency forward and option
   contracts ⁽¹⁾
$
306

$
3,604

Foreign currency forward and option
   contracts ⁽²⁾

1

-

307

3,604

Derivatives not designated as hedging
   instruments under ASC 815:

Foreign currency forward contracts ⁽¹⁾

-

244

Embedded derivatives ⁽¹⁾

2

9

Embedded derivatives ⁽²⁾

-

43

Total derivative assets
$
309

$
3,900

Derivative Liabilities

September 30, 2018

December 31, 2017

Derivatives designated as cash flow hedging
   instruments under ASC 815:

Foreign currency forward and option
   contracts ⁽³⁾
$
2,716

$
175

Foreign currency forward and option
   contracts ⁽⁴⁾

181

81

2,897

256

Derivatives not designated as hedging
   instruments under ASC 815:

Foreign currency forward contracts ⁽³⁾

288

-

Embedded derivatives ⁽³⁾

46

189

Embedded derivatives ⁽⁴⁾

358

390

Total derivative liabilities
$
3,589

$
835

⁽¹⁾ ~~Included in "Other current assets" in the accompanying Condensed Consolidated Balance Sheets.~~

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

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

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

~~The following table presents the effect of the Company’s derivative instruments~~ ~~included in the accompanying Condensed Consolidated Financial Statements for the three months ended September 30, 2018 and 2017 (in thousands)~~:

Gain (Loss)
Recognized in AOCI
on Derivatives
(Effective Portion)

Gain (Loss)
Reclassified From
AOCI Into
"Revenues"
(Effective Portion)

Gain (Loss)
Recognized in
"Revenues" on
Derivatives
(Ineffective Portion
and Amount
Excluded from
Effectiveness Testing)

September 30,

September 30,

September 30,

2018

2017

2018

2017

2018

2017

Derivatives designated as cash flow hedging
instruments under ASC 815:

Foreign currency forward and option contracts
$
(1,839
)

$
585

$
206

$
(766
)

$
(23
)

$
-

Derivatives designated as net investment
hedging instruments under ASC 815:

Foreign currency forward contracts

-

(2,979
)

-

-

-

-

$
(1,839
)

$
(2,394
)

$
206

$
(766
)

$
(23
)

$
-

~~The following table presents the gains (losses) recognized in “Other income (expense), net” of the Company’s derivative instruments~~ ~~included in the accompanying Condensed Consolidated Financial Statements for the three months ended September 30, 2018 and 2017 (in thousands)~~:

Three Months Ended September 30,

2018

2017

Derivatives not designated as hedging instruments under ASC 815:

Foreign currency forward contracts
$
(539
)

$
(252
)
Embedded derivatives

159

(193
)

$
(380
)

$
(445
)

		Derivative Assets
	Balance Sheet Location	March 31, 2019		December 31, 2018
Derivatives designated as cash flow hedging instruments:
Foreign currency contracts	Other current assets	$	872	$	1,038
Derivatives not designated as hedging instruments:
Foreign currency contracts	Other current assets		161		30
Foreign currency contracts	Deferred charges and other assets		287		—
Embedded derivatives	Other current assets		—		10
Total derivative assets		$	1,320	$	1,078

		Derivative Liabilities
	Balance Sheet Location	March 31, 2019		December 31, 2018
Derivatives designated as cash flow hedging instruments:
Foreign currency contracts	Other accrued expenses and current liabilities	$	864	$	2,604
Derivatives not designated as hedging instruments:
Foreign currency contracts	Other accrued expenses and current liabilities		74		247
Foreign currency contracts	Other long-term liabilities		—		44
Embedded derivatives	Other accrued expenses and current liabilities		—		8
Embedded derivatives	Other long-term liabilities		—		361
Total derivative liabilities		$	938	$	3,264

The following table presents the effect of the Company’s derivative instruments included in the accompanying ~~Condensed Consolidated Financial Statements for the nine months ended September 30, 2018 and 2017~~condensed consolidated financial statements (in thousands):

Gain (Loss)
Recognized in AOCI
on Derivatives
(Effective Portion)

Gain (Loss)
Reclassified From
AOCI Into
"Revenues"
(Effective Portion)

Gain (Loss)
Recognized in
"Revenues" on
Derivatives
(Ineffective Portion
and Amount
Excluded from
Effectiveness Testing)

September 30,

September 30,

September 30,

2018

2017

2018

2017

2018

2017

Derivatives designated as cash flow hedging
instruments under ASC 815:

Foreign currency forward and option contracts
$
(4,840
)

$
(881
)

$
634

$
(2,346
)

$
(15
)

$
-

Derivatives designated as net investment
hedging instruments under ASC 815:

Foreign currency forward contracts

-

(8,352
)

-

-

-

-

$
(4,840
)

$
(9,233
)

$
634

$
(2,346
)

$
(15
)

$
-

		Three Months Ended March 31,
	Location of Gains (Losses) in Income	2019			2018
Revenues		$	402,925		$	414,371

Derivatives designated as cash flow hedging instruments:
Gains (losses) recognized in AOCI:
Foreign currency contracts			1,183			(2,696	)
Gains (losses) reclassified from AOCI:
Foreign currency contracts	Revenues		(501	)		243
Derivatives not designated as hedging instruments:
Gains (losses) recognized from foreign currency contracts	Other income (expense), net		(33	)		(1,169	)
Gains (losses) recognized from embedded derivatives	Other income (expense), net		—			87
		$	(33	)	$	(1,082	)

~~The following table presents the gains (losses) recognized in “Other income (expense), net” of the Company’s derivative instruments~~ ~~included in the accompanying Condensed Consolidated Financial Statements for the nine months ended September 30, 2018 and 2017 (in thousands)~~:

The Company’s investments held in rabbi trust, classified as trading securities and included in “Other current assets” in the accompanying Condensed Consolidated Balance Sheets, at fair value, consist of the following (in thousands):

The mutual funds held in rabbi trust were ~~73%~~66% equity-based and ~~27%~~34% debt-based as of ~~September 30, 2018.~~March 31, 2019. Net investment ~~income~~gains (losses), included in “Other income (expense), net” in the accompanying Condensed Consolidated Statements of Operations consists of the following (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Net realized gains (losses) from sale of trading securities	$	10	$	13	$	42	$	162	$	61	$	5
Dividend and interest income		31		28		99		67		29		25
Net unrealized holding gains (losses)		366		401		383		943		1,090		(55	)
Net investment income (losses)	$	407	$	442	$	524	$	1,172
									$	1,180	$	(25	)

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

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

⁽²⁾~~Represents deferred grants related to property included in “Assets held-for-sale” that met the held-for-sale criteria as of September 30, 2018.~~

On ~~May 12, 2015,~~February 14, 2019, the Company entered into a ~~$440~~$500 million senior revolving credit facility (the ~~“Credit~~“2019 Credit Agreement”) with a group of lenders, ~~and~~ KeyBank National Association, as ~~Lead Arranger, Sole Book Runner,~~ Administrative Agent, Swing Line Lender and Issuing Lender (“KeyBank”)., the lenders named therein, and KeyBanc Capital Markets Inc. as Lead Arranger and Sole Book Runner. The 2019 Credit Agreement replaced the Company’s previous $440 million revolving credit facility dated May 12, 2015 (the “2015 Credit Agreement”), which agreement was terminated simultaneous with entering into the 2019 Credit Agreement. The 2019 Credit Agreement is subject to certain borrowing limitations and includes certain customary financial and restrictive covenants.

The 2019 Credit Agreement includes a $200 million alternate-currency sub-facility, a ~~$10~~$15 million swingline sub-facility and a ~~$35~~$15 million letter of credit sub-facility, and may be used for general corporate purposes including acquisitions, share repurchases, working capital support and letters of credit, subject to certain limitations. The Company is not

currently aware of any inability of its lenders to provide access to the full commitment of funds that exist under the revolving credit facility, if necessary. However, there can be no assurance that such facility will be available to the Company, even though it is a binding commitment of the financial institutions.

The 2019 Credit Agreement matures on ~~May 12, 2020,~~February 14, 2024, and had outstanding borrowings of ~~$82.0 million and $275.0~~$93.0 million at ~~September 30, 2018~~March 31, 2019 and the 2015 Credit Agreement had outstanding borrowings of $102.0 million at December 31, ~~2017, respectively,~~2018, included in “Long-term debt” in the accompanying Condensed Consolidated Balance Sheets.

Borrowings under the 2019 Credit Agreement bear interest at the rates set forth in the 2019 Credit Agreement. In addition, the Company is required to pay certain customary fees, including a commitment fee determined quarterly based on the Company’s leverage ratio and due quarterly in arrears as calculated on the average unused amount of the 2019 Credit Agreement.

The 2019 Credit Agreement is guaranteed by all the Company’s existing and future direct and indirect material U.S. subsidiaries and secured by a pledge of 100% of the non-voting and 65% of the voting capital stock of all the direct foreign subsidiaries of the Company and those of the guarantors.

In ~~May 2015,~~February 2019, the Company paid ~~an underwriting fee~~debt issuance costs of ~~$0.9~~$1.1 million for the 2019 Credit Agreement, which is deferred and amortized over the term of the loan, along with the ~~deferred loan fees~~debt issuance costs of ~~$0.4~~$0.3 million related to the ~~previous credit agreement.~~2015 Credit Agreement.

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Average daily utilization	$	101,087		$	267,000		$	107,454		$	267,000		$	96,000		$	121,389
Interest expense ^{(1), (2)}	$	923		$	1,772		$	2,839		$	4,815
Interest expense ⁽¹⁾													$	962		$	1,001
Weighted average interest rate ⁽²⁾⁽¹⁾		3.6	%		2.6	%		3.6	%		2.4	%		4.1	%		3.4	%

In January 2018, the Company repaid $175.0 million of long-term debt outstanding under its 2015 Credit Agreement, primarily using funds repatriated from its foreign subsidiaries.

The components of accumulated other comprehensive income (loss) consist of the following (in thousands):

	Foreign Currency Translation Adjustments			Unrealized Gain (Loss) on Net Investment Hedge			Unrealized Gain (Loss) on Cash Flow Hedging Instruments			Unrealized Actuarial Gain (Loss) Related to Pension Liability			Unrealized Gain (Loss) on Postretirement Obligation			Total			Foreign Currency Translation Adjustments			Unrealized Gain (Loss) on Net Investment Hedge		Unrealized Gain (Loss) on Cash Flow Hedging Instruments			Unrealized Actuarial Gain (Loss) Related to Pension Liability			Unrealized Gain (Loss) on Postretirement Obligation			Total
Balance at January 1, 2017	$	(72,393	)	$	6,266		$	(2,225	)	$	1,125		$	200		$	(67,027	)
Balance at January 1, 2018																			$	(36,315	)	$	1,046	$	2,471		$	1,574		$	120		$	(31,104	)
Pre-tax amount		36,101			(8,352	)		2,276			527			(30	)		30,522			(22,158	)		—		(4,287	)		783			—			(25,662	)
Tax (provision) benefit		-			3,132			(54	)		(18	)		-			3,060			—			—		84			47			—			131
Reclassification of (gain) loss to net income		-			-			2,444			(53	)		(50	)		2,341			—			—		6			(66	)		(80	)		(140	)
Foreign currency translation		(23	)		-			30			(7	)		-			-			220			—		(138	)		(82	)		—			—
Balance at December 31, 2017		(36,315	)		1,046			2,471			1,574			120			(31,104	)
Balance at December 31, 2018																				(58,253	)		1,046		(1,864	)		2,256			40			(56,775	)
Pre-tax amount		(15,757	)		-			(4,855	)		-			-			(20,612	)		1,346			—		1,183			—			—			2,529
Tax (provision) benefit		-			-			201			57			-			258			—			—		—			3			—			3
Reclassification of (gain) loss to net income		-			-			(662	)		(51	)		(104	)		(817	)		—			—		511			(24	)		(5	)		482
Foreign currency translation		274			-			(155	)		(119	)		-			-			16			—		(22	)		6			—			—
Balance at September 30, 2018	$	(51,798	)	$	1,046		$	(3,000	)	$	1,461		$	16		$	(52,275	)
Balance at March 31, 2019																			$	(56,891	)	$	1,046	$	(192	)	$	2,241		$	35		$	(53,761	)

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

	Three Months Ended September 30,					Nine Months Ended September 30,					Statements of Operations	Three Months Ended March 31,					Statements of Operations
	2018		2017			2018		2017			Location	2019			2018		Location
Gain (loss) on cash flow hedging instruments: ⁽¹⁾
Pre-tax amount	$	183	$	(766	)	$	619	$	(2,346	)	Revenues	$	(501	)	$	243	Revenues
Tax (provision) benefit		19		25			43		83		Income taxes		(10	)		7	Income taxes
Reclassification to net income		202		(741	)		662		(2,263	)			(511	)		250
Actuarial gain (loss) related to pension liability: ⁽²⁾
Pre-tax amount		13		10			42		31		Other income (expense), net		21			15	Other income (expense), net
Tax (provision) benefit		3		-			9		-		Income taxes		3			3	Income taxes
Reclassification to net income		16		10			51		31				24			18
Gain (loss) on postretirement obligation:^(2),(3)
Reclassification to net income		84		12			104		37		Other income (expense), net		5			10	Other income (expense), net
Total reclassification of gain (loss) to net income	$	302	$	(719	)	$	817	$	(2,195	)
												$	(482	)	$	278

⁽²⁾ See Note 14, Defined Benefit Pension Plan and Postretirement Benefits, for further information.

As discussed in Note 11, Income Taxes, for periods prior to December 31, 2017, any remaining outside basis differences associated with the Company’s investments in its foreign subsidiaries are considered to be indefinitely reinvested and no provision for income taxes on those earnings or translation adjustments has been provided.

The Company’s effective tax rates were ~~4.4%~~28.6% and ~~11.2%~~18.3% for the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ respectively. The ~~decrease~~increase in the effective tax rate in ~~2018~~2019 compared to ~~2017~~2018 was primarily due to a $0.9 million increase in benefit associated with the resolution of uncertain tax positions and ancillary issues as well as a $0.5 million benefit related to the decrease in the provisional estimate recorded at December 31, 2017 as a result of the 2017 Tax Reform Act. The effective rate impact of these benefits was partially offset by the 2017 recognition of a $0.8 million benefit related to the increase in anticipated tax credits and reductions in estimated non-deferred foreign income, as well as a $0.3 million benefit for the release of a valuation allowance. In addition, the Company recognized a benefit of $0.3 million from the reduction in the U.S. federal corporate tax rate from 35% to 21% as a result of the 2017 Tax Reform Act. The decrease in the effective tax rate was also affected by shifts in earnings among the various jurisdictions in which the Company operates. Additionally, there was an overall unfavorable impact of $0.5 million from discrete adjustments, the majority of which related to the decrease in the amount of excess tax benefits from stock-based compensation recognized during the three months ended March 31, 2019 as compared to March 31, 2018. Several additional factors, none of which ~~are~~were individually material, also impacted the rate. The difference between the Company’s effective tax rate as compared to the U.S. statutory federal tax rate of 21.0% was primarily due to the aforementioned factors as well as the recognition of net tax benefits resulting from foreign tax rate differentials, income earned in certain tax holiday jurisdictions and tax credits, partially offset by the tax impact of permanent differences, state income and foreign ~~withholding.~~

The Company’s effective tax rates were 2.6% and 18.1% for the nine months ended September 30, 2018 and 2017, respectively. The decrease in the effective tax rate was primarily due to a net $3.1 million increase in benefit associated with the resolution of uncertain tax positions as well as the aforementioned $0.5 million decrease in the provisional estimate. This increase in benefit was partially offset by the recognition in 2017 of $1.1 million of discrete items mentioned above. In addition, the Company recognized a benefit of $1.4 million from the reduction in the U.S. federal corporate tax rate from 35% to 21% as a result of the 2017 Tax Reform Act. These net benefits were partially offset by a $0.6 million decrease in the amount of excess tax benefits from stock-based compensation recognized in the nine months ended September 30, 2018 as compared to September 30, 2017. The decrease in the effective tax rate was also affected by shifts in earnings among the various jurisdictions in which the Company operates. Several additional factors, none of which are individually material, also impacted the rate. The difference between the Company’s effective tax rate as compared to the U.S. statutory federal tax rate of 21.0% was primarily due to the aforementioned

factors as well as the recognition of tax benefits resulting from foreign tax rate differentials, income earned in certain tax holiday jurisdictions and tax credits, partially offset by the tax impact of permanent differences, state income and foreign withholding.withholding taxes.

The 2017 Tax Reform Act made significant changes to the Internal Revenue Code, including, but not limited to, a federal corporate tax rate decrease from 35% to 21% for tax years beginning after December 31, 2017, the transition of U.S. international taxation from a worldwide tax system to a participation exemption regime, and a one-time transition tax on the mandatory deemed repatriation of foreign earnings. The Company estimated its provision for income taxes in accordance with the 2017 Tax Reform Act and guidance available upon enactment, and as a result recorded $32.7 million as additional income tax expense in the fourth quarter of 2017, the period in which the legislation was signed into law. The $32.7 million estimate ~~includes~~included the provisional amount related to the one-time transition tax on the mandatory deemed repatriation of foreign earnings of $32.7 million based on cumulative foreign earnings of $531.8 million and $1.0 million of foreign withholding taxes on certain anticipated distributions. The provisional tax expense was partially offset by a provisional benefit of $1.0 million related to the remeasurement of certain deferred tax assets and liabilities, based on the rates at which they are expected to reverse in the future. The Company ~~recorded a $0.5 million adjustment to~~finalized the ~~provisional amounts as of September 30, 2018. The Company anticipates finalizing these provisional amounts no later than~~computation during the fourth quarter of ~~2018.~~2018 and recorded a $0.2 million decrease during the year ended December 31, 2018 to the original provisional amount recorded.

Prior to December 31, 2017, no additional income taxes have been provided for any remaining outside basis differences inherent in the Company’s investments in its foreign subsidiaries as these amounts continue to be indefinitely reinvested in foreign operations. Determining the amount of unrecognized deferred tax liability related to any remaining outside basis difference in these entities is not practicable due to the inherent complexity of the multi-national tax environment in which the Company operates.

On December 22, 2017, the SEC issued SAB 118 to address the application of U.S. GAAP in situations when a registrant does not have the necessary information available, prepared, or analyzed (including computations) in reasonable detail to complete the accounting for certain income tax effects of the 2017 Tax Reform Act. In accordance with SAB 118, the Company has determined that the deferred tax benefit recorded in connection with the remeasurement of certain deferred tax assets and liabilities and the current tax expense recorded in connection with the transition tax on the mandatory deemed repatriation of foreign earnings was a provisional amount and a reasonable estimate at September 30, 2018 and December 31, 2017. The Company recorded a $0.5 million adjustment to the provisional amount as of September 30, 2018. Any subsequent adjustment to these amounts will be recorded to current tax expense in the quarter of identification, but no later than one year from the enactment date.

The 2017 Tax Reform Act instituted a number of new provisions effective January 1, 2018, including GILTI, Foreign Derived Intangible Income (“FDII”) and Base Erosion and Anti-Abuse Tax (“BEAT”). The Company made a reasonable estimate of the impact of each of these provisions of the 2017 Tax Reform Act on its effective tax rate for the three and nine months ended September 30, 2018 and determined that the resulting impact was not material. The Company will continue to refine its provisional estimates related to the GILTI, FDII and BEAT rules as additional information is made available.

The Company received assessments for the Canadian 2003-2009 audit. Requests for Competent Authority Assistance were filed with both the Canadian Revenue Agency and the U.S. Internal Revenue Service and the Company paid mandatory security deposits to Canada as part of this process. As of June 30, 2017, the Company determined that all material aspects of the Canadian audit were effectively settled pursuant to ASC 740. As a result, the Company recognized an income tax benefit of $1.2 million, net of the U.S. tax impact, at that time and the deposits were applied against the anticipated liability. During the nine months ended September 30, 2018, the Company finalized procedures ancillary to the Canadian audit and recognized an additional $2.8 million income tax benefit due to the elimination of certain assessed penalties, interest and withholding taxes.

~~With the effective settlement of the Canadian audit, the~~ Company has no significant tax jurisdictions under audit; however, the Company is currently under audit in several tax jurisdictions. The Company believes it is adequately reserved for the remaining audits and their resolution is not expected to have a material impact on its financial conditions and results of operations.

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

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

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Basic:
Weighted average common shares outstanding		42,136		41,879		42,070		41,800		42,169		41,939
Diluted:
Dilutive effect of stock appreciation rights, restricted stock, restricted stock units and shares held in rabbi trust		68		154		131		206		130		293
Total weighted average diluted shares outstanding		42,204		42,033		42,201		42,006		42,299		42,232
Anti-dilutive shares excluded from the diluted earnings per share calculation		23		14		11		16		115		9

On August 18, 2011, the Company’s Board of Directors (the “Board”) authorized the Company to purchase up to 5.0 million shares of its outstanding common stock (the “2011 Share Repurchase Program”). On March 16, 2016, the Board authorized an increase of 5.0 million shares to the 2011 Share Repurchase Program for a total of 10.0 million shares. A total of 5.3 million shares have been repurchased under the 2011 Share Repurchase Program since inception. The shares are purchased, from time to time, through open market purchases or in negotiated private transactions, and the purchases are based on factors, including but not limited to, the stock price, management discretion and general market conditions. The 2011 Share Repurchase Program has no expiration date.

There were no shares repurchased under the Company’s 2011 Share Repurchase Program during the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017.~~2018.

During the nine months ended September 30, 2018, the Company entered into several leases in the ordinary course of business. The following is a schedule of future minimum rental payments required under operating leases that have noncancelable lease terms as of September 30, 2018, including the impact of the leases assumed in connection with the acquisition of WhistleOut (in thousands):

~~During the nine months ended September 30, 2018, the~~The Company ~~entered~~enters into various purchase commitment agreements with third-party vendors in the ordinary course of business whereby the Company ~~committed~~commits to purchase goods and services used in its normal operations. These agreements generally are not cancelable, range from one to five-year periods and may contain fixed or minimum annual commitments. Certain of these agreements allow for renegotiation of the minimum annual ~~commitments. The following is a schedule of the future minimum purchases remaining under the agreements as of September 30, 2018, including the impact of purchase~~ commitments ~~assumed in connection with the acquisition of WhistleOut (in thousands):~~.

Contingencies are recorded in the consolidated financial statements when it is probable that a liability will be incurred and the amount of the loss is reasonably estimable, or otherwise disclosed, in accordance with ASC 450, Contingencies (“ASC 450”). Significant judgment is required in both the determination of probability and the determination as to whether a loss is reasonably estimable. In the event the Company determines that a loss is not probable, but is reasonably possible, and it becomes possible to develop what the Company believes to be a reasonable range of possible loss, then the Company will include disclosures related to such matter as appropriate and in compliance with ASC 450.

The Company received a state audit assessment and is currently rebutting the position. The Company has determined that the likelihood of a liability is reasonably possible and developed a range of possible loss up to ~~$1.1~~$1.3 million, net of federal benefit.

The Company, from time to time, is involved in legal actions arising in the ordinary course of business.

On August 24, 2017, a collective action lawsuit was filed against the Company in the United States District Court for the District of Colorado (the “Court”), Slaughter v. Sykes Enterprises, Inc., Case No. 17 Civ. 2038. The lawsuit claimed that the Company failed to pay certain employees overtime compensation for the hours they worked over forty in a workweek, as required by the Fair Labor Standards Act. On October 17, 2018, the parties entered into a verbal agreement to fully resolve all claims and the fees for the plaintiffs’ attorneys for a total payment of $1.2 million. The settlement agreement must still be approved by the Court. A charge of $1.2 million was included in “General and administrative” in the accompanying Condensed Consolidated Statements of Operations for the three and nine months ended September 30, 2018. As of September 30, 2018, the settlement had not been paid, and the $1.2 million has been included in “Other accrued expenses and current liabilities” in the accompanying Condensed Consolidated Balance Sheets as of September 30, 2018.

With respect to any such other currently pending matters, management believes that the Company has adequate legal defenses and/or, when possible and appropriate, has provided adequate accruals related to those matters such that the

ultimate outcome will not have a material adverse effect on the Company’s financial position, results of operations or cash flows.

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Service cost	$	106		$	118		$	329		$	371		$	98		$	114
Interest cost		46			46			144			144			62			50
Recognized actuarial (gains)		(13	)		(10	)		(42	)		(31	)		(21	)		(15	)
	$	139		$	154		$	431		$	484		$	139		$	149

The Company’s service cost for its qualified pension plans was included in “Direct salaries and related costs” and “General and administrative” costs in its Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 3018~~March 31, 3019 and ~~2017.~~2018. The remaining components of net periodic benefit cost were included in “Other income (expense), net” in the Company’s Condensed Consolidated Statements of Operations for the three ~~and nine~~ months ended ~~September 30, 2018~~March 31, 2019 and ~~2017. See Note 1, Overview and Basis of Presentation, for further information related to the adoption of ASU 2016-18.~~2018.

The Company maintains a 401(k) plan covering defined employees who meet established eligibility requirements. Under the plan provisions, the Company matches 50% of participant contributions to a maximum matching amount of 2% of participant compensation. The Company’s contributions included in the accompanying Condensed Consolidated Statements of Operations were as follows (in thousands):

In 1996, the Company entered into a split-dollar life insurance arrangement to benefit the former Chairman and Chief Executive Officer of the Company. Under the terms of the arrangement, the Company retained a collateral interest in the policy to the extent of the premiums paid by the Company. The postretirement benefit obligation included in “Other long-term liabilities” and the unrealized gains (losses) included in “Accumulated other comprehensive income” in the accompanying Condensed Consolidated Balance Sheets were as follows (in thousands):

	September 30, 2018		December 31, 2017		March 31, 2019		December 31, 2018
Postretirement benefit obligation	$	15	$	15	$	10	$	12
Unrealized gains (losses) in AOCI ⁽¹⁾		16		120		35		40

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

The Company’s stock-based compensation plans include the 2011 Equity Incentive Plan (the “2011 Plan”) for employees and certain non-employees, the Non-Employee Director Fee Plan for non-employee directors and the Deferred Compensation ~~Plan.~~ Plan for certain eligible employees. Stock-based award under these plans may consist of common stock, stock options, cash-settled or stock-settled stock appreciation rights, restricted stock and other stock-based awards. The Company issues stock and uses treasury stock to satisfy stock option exercises or vesting stock awards. The methods and assumptions used in the determination of the fair value of stock-based awards are consistent with those described in the consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

The following table summarizes the stock-based compensation expense (primarily in the Americas) and income tax benefits related to the stock-based compensation, both plan and non-plan related (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Stock-based compensation reversal (expense) ⁽¹⁾	$	(1,567	)	$	303		$	(5,317	)	$	(4,429	)
Stock-based compensation (expense) ⁽¹⁾													$	(1,890	)	$	(2,077	)
Income tax benefit ⁽²⁾		376			(161	)		1,276			1,661			454			498

⁽¹⁾ Included in "General and administrative" costs in the accompanying Condensed Consolidated Statements of Operations.

⁽²⁾ Included in "Income taxes" in the accompanying Condensed Consolidated Statements of ~~Operations.~~Operations.

~~There were no capitalized stock-based compensation costs as of September 30, 2018 and December~~During the three months ended March 31, ~~2017.~~

~~Beginning January 1, 2017, as a result of the adoption of ASU 2016-09,~~ ~~Compensation – Stock Compensation (Topic 718) – Improvements to Employee Share-Based Payment Accounting~~ ~~(“ASU 2016-09”),~~2019, the Company began accounting for forfeitures as they occur, rather than estimating expected forfeitures. The net cumulative effect of this change was recognized as a $0.2 million reduction to retained earnings as of January 1, 2017. Additionally, excess tax benefits (deficiencies) fromgranted 338,732 performance-based restricted shares and 169,367 employment-based restricted stock ~~compensation are included in “Income taxes” in~~units under the ~~accompanying Condensed Consolidated Statements of Operations subsequent to the adoption of ASU 2016-09.~~

~~2011 Equity Incentive Plan~~ — ~~The~~ Company’s Board of Directors (the “Board”) adopted the Sykes Enterprises, Incorporated 2011 Equity Incentive Plan (the "2011 Plan”) on March 23, 2011, as amended on May 11, 2011 to reduce the number of shares of common stock available to 4.0 million shares. The 2011 Plan, ~~was approved by the shareholders~~all at the May 2011 Annual Shareholders’ Meeting. The 2011 Plan replaced and superseded the Company’s 2001 Equity Incentive Plan (the “2001 Plan”), which expired on March 14, 2011. The outstanding awards granted under the 2001 Plan will remain in effect until their exercise, expiration or termination. The 2011 Plan permits the grant of restricted stock, stock appreciation rights, stock options and other stock-based awards to certain employees of the Company, members of the Company’s Board and certain non-employees who provide services to the Company in order to encourage them to remain in the employment of, or to faithfully provide services to, the Company and to increase their interest in the Company’s success.

~~Stock Appreciation Rights~~ — The Board, at the recommendation of the Compensation and Human Resources Development Committee (the “Compensation Committee”), has approved in the past, and may approve in the future, awards of stock-settled stock appreciation rights (“SARs”) for eligible participants. SARs represent the right to receive, without payment to the Company, a certain number of shares of common stock, as determined by the Compensation Committee, equal to the amount by which the fair market value of a share of common stock at the time of exercise exceeds the grant price. The SARs are granted at the fair market value of the Company’s common stock on the date of the grant and vest one-third on each of the first three anniversaries of the date of grant, provided the participant is employed by the Company on such date. The SARs have a term of 10 years from the date of grant. Theweighted average grant-date fair value of ~~each SAR is estimated on the date of grant using the Black-Scholes valuation model that uses various assumptions.~~

~~The following table summarizes the assumptions used to estimate the fair value of SARS granted:~~

~~The following table summarizes SARs activity as of September 30, 2018 and for the nine months then ended:~~

~~The following table summarizes information regarding SARs granted and exercised (in thousands, except~~$28.43 per ~~SAR amounts):~~share.

~~The following table summarizes nonvested SARs activity as of September 30, 2018 and for the nine months then ended:~~

As of September 30, 2018, there was $3.1 million of total unrecognized compensation cost, net of actual forfeitures, related to nonvested SARs granted under the 2011 Plan. This cost is expected to be recognized over a weighted average period of 1.4 years.

~~Restricted Shares~~ – The Board, at the recommendation of the Compensation Committee, has approved in the past, and may approve in the future, awards of performance and employment-based restricted shares (“restricted shares”) for eligible participants. In some instances, where the issuance of restricted shares has adverse tax consequences to the recipient, the Board may instead issue restricted stock units (“RSUs”). The restricted shares are shares of the Company’s common stock (or in the case of RSUs, represent an equivalent number of shares of the Company’s common stock) which are issued to the participant subject to (a) restrictions on transfer for a period of time and (b) forfeiture under certain conditions. The performance goals, including revenue growth and income from operations targets, provide a range of vesting possibilities from 0% to 100% and will be measured at the end of the performance period. If the performance conditions are met for the performance period, the shares will vest and all restrictions on the transfer of the restricted shares will lapse (or in the case of RSUs, an equivalent number of shares of the Company’s common stock will be issued to the recipient). The Company recognizes compensation cost, net of actual forfeitures, based on the fair value (which approximates the current market price) of the restricted shares (and RSUs) on the date of grant ratably over the requisite service period based on the probability of achieving the performance goals.

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

~~The following table summarizes nonvested restricted shares/RSUs activity as of September 30, 2018 and for the nine months then ended:~~

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

As of September 30, 2018, there was $29.8 million of total unrecognized compensation cost, net of actual forfeitures, related to nonvested restricted shares/RSUs granted under the 2011 Plan. This cost is expected to be recognized over a weighted average period of ~~1.6~~ ~~years.~~

~~Non-Employee Director Fee Plan~~ — The Company’s 2004 Non-Employee Director Fee Plan (the “2004 Fee Plan”), as amended on May 17, 2012, provided that all new non-employee directors joining the Board would receive an initial grant of shares of common stock on the date the new director is elected or appointed, the number of which will be determined by dividing $60,000 by the closing price of the Company’s common stock on the trading day immediately preceding the date a new director is elected or appointed, rounded to the nearest whole number of shares. The initial grant of shares vested in twelve equal quarterly installments, one-twelfth on the date of grant and an additional one-twelfth on each successive third monthly anniversary of the date of grant. The award lapses with respect to all unvested shares in the event the non-employee director ceases to be a director of the Company, and any unvested shares are forfeited.

The 2004 Fee Plan also provided that each non-employee director would receive, on the day after the annual shareholders’ meeting, an annual retainer for service as a non-employee director (the “Annual Retainer”). Prior to May 17, 2012, the Annual Retainer was $95,000, of which $50,000 was payable in cash, and the remainder was paid in stock. The annual grant of cash vested in four equal quarterly installments, one-fourth on the day following the annual meeting of shareholders, and an additional one-fourth on each successive third monthly anniversary of the date of grant. The annual grant of shares paid to non-employee directors prior to May 17, 2012 vests in eight equal quarterly installments, one-eighth on the day following the annual meeting of shareholders, and an additional one-eighth on each successive third monthly anniversary of the date of grant. On May 17, 2012, upon the recommendation of the Compensation Committee, the Board adopted the Fifth Amended and Restated Non-Employee Director Fee Plan (the “Amendment”), which increased the common stock component of the Annual Retainer by $30,000, resulting in a total Annual Retainer of $125,000, of which $50,000 was payable in cash and the remainder paid in stock. In addition, the Amendment also changed the vesting period for the annual equity award, from a two-year vesting period, to a one-year vesting period (consisting of four equal quarterly installments, one-fourth on the date of grant and an additional one-fourth on each successive third monthly anniversary of the date of grant). The award lapses with respect to all unpaid cash and unvested shares in the event the non-employee director ceases to be a director of the Company, and any unvested shares and unpaid cash are forfeited.

In addition to the Annual Retainer award, the 2004 Fee Plan also provided for any non-employee Chairman of the Board to receive an additional annual cash award of $100,000, and each non-employee director serving on a committee of the Board to receive an additional annual cash award. The additional annual cash award for the Chairperson of the Audit Committee is $20,000 and Audit Committee members are entitled to an annual cash award of $10,000. The annual cash awards for the Chairpersons of the Compensation Committee, Finance Committee and Nominating and Corporate Governance Committee are $15,000, $12,500 and $12,500, respectively, and all other members of such committees are entitled to an annual cash award of $7,500.

The 2004 Fee Plan expired in May 2014, prior to the 2014 annual shareholders’ meeting. In March 2014, upon the recommendation of the Compensation Committee, the Board determined that, following the expiration of the 2004 Fee Plan, the compensation of non-employee Directors should continue on the same terms as provided in the Fifth Amended and Restated Non-Employee Director Fee Plan, except the amounts of cash and equity grants shall be determined annually by the Board and that the stock portion of such compensation would be issued under the 2011 Plan.

At the Board’s regularly scheduled meeting on December 10, 2014, upon the recommendation of the Compensation Committee, the Board determined that the amount of the cash and equity compensation payable to non-employee directors beginning on the date of the 2015 annual shareholders’ meeting would be increased as follows: cash compensation would be increased by $5,000 per year to a total of $55,000 and equity compensation would be increased by $25,000 per year to a total of $100,000. No change would be made in the additional amounts payable to the

Chairman of the Board or the Chairs or members of the various Board committees for their service on such committees, and no changes would be made in the payment terms described above for such cash and equity compensation.

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

The Board may pay additional cash compensation to any non-employee director for services on behalf of the Board over and above those typically expected of directors, including but not limited to service on a special committee of the Board. Directors who are executive officers of the Company receive no compensation for service as members of either the Board of Directors or any committees of the Board.

~~The following table summarizes nonvested common stock share award activity as of September 30, 2018 and for the nine months then ended:~~

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

As of September 30, 2018, there was $0.4 million of total unrecognized compensation cost, net of actual forfeitures, related to nonvested common stock share awards granted under the Fee Plan. This cost is expected to be recognized over a weighted average period of less than one year.

~~Deferred Compensation Plan~~ — The Company’s non-qualified Deferred Compensation Plan (the “Deferred Compensation Plan”), which is not shareholder-approved, was adopted by the Board effective December 17, 1998. It was last amended and restated on August 15, 2017, effective January 1, 2018. Eligibility is limited to a select group of key management and employees who are expected to receive an annualized base salary (which will not take into account bonuses or commissions) that exceeds the amount taken into account for purposes of determining highly compensated employees under Section 414(q) of the Internal Revenue Code of 1986 based on the current year’s base salary and applicable dollar amounts. The Deferred Compensation Plan provides participants with the ability to defer between 1% and 80% of their compensation (between 1% and 100% prior to June 30, 2016, the effective date of the first amendment) until the participant’s retirement, termination, disability or death, or a change in control of the Company. Using the Company’s common stock, the Company matches 50% of the amounts deferred by participants on a quarterly basis up to a total of $12,000 per year for the president, chief executive officer and executive vice presidents, $7,500 per year for senior vice presidents, global vice presidents and vice presidents, and, effective January 1, 2017, $5,000 per year for all other participants (there was no match for other participants prior to January 1, 2017, the effective date of the second amendment). Matching contributions and the associated earnings vest over a seven-year service period. Vesting will be accelerated in the event of the participant’s death or disability, a change in control or retirement (defined as separate from service after age 65). In the event of a distribution of benefits as a result of a change in control of the Company, the Company will increase the benefit by an amount sufficient to offset the income tax obligations created by the distribution of benefits. Deferred compensation amounts used to pay benefits, which are held in a rabbi trust, include investments in various mutual funds and shares of the Company’s common stock (see Note 7, Investments Held in Rabbi Trust).

As of September 30, 2018 and December 31, 2017, liabilities of $12.5 million and $11.6 million, respectively, of the Deferred Compensation Plan were recorded in “Accrued employee compensation and benefits” in the accompanying Condensed Consolidated Balance Sheets. Additionally, the Company’s common stock match associated with the Deferred Compensation Plan, with a carrying value of approximately $2.3 million and $2.1 million as of September 30, 2018 and December 31, 2017, respectively, is included in “Treasury stock” in the accompanying Condensed Consolidated Balance Sheets.

~~The following table summarizes nonvested common stock activity as of September 30, 2018 and for the nine months then ended:~~

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

As of September 30, 2018, there was $0.1 million of total unrecognized compensation cost, net of actual forfeitures, related to nonvested common stock granted under the Deferred Compensation Plan. This cost is expected to be recognized over a weighted average period of 3.6 years.

The Company operates within two regions, the Americas and EMEA. Each region represents a reportable segment comprised of aggregated regional operating segments, which portray similar economic characteristics. The Company aligns its business into two segments to effectively manage the business and support the customer care needs of every client and to respond to the demands of the Company’s global customers.

The reportable segments consist of (1) the Americas, which includes the United States, Canada, Latin America, Australia and the Asia Pacific Rim, and provides outsourced customer engagement solutions (with an emphasis on inbound technical support, digital support and demand generation, and customer service) and technical staffing and (2) EMEA, which includes Europe, the Middle East and Africa, and provides outsourced customer engagement solutions (with an emphasis on technical support and customer service) and fulfillment services. The sites within Latin America, Australia and the Asia Pacific Rim are included in the Americas segment given the nature of the business and client profile, which is primarily made up of U.S.-based companies that are using the Company’s services in these locations to support their customer engagement needs.

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

	Americas			EMEA			Other ⁽¹⁾			Consolidated			Americas			EMEA			Other ⁽¹⁾			Consolidated
Three Months Ended September 30, 2018:
Three Months Ended March 31, 2019:
Revenues	$	328,762		$	70,543		$	28		$	399,333		$	324,777		$	78,128		$	20		$	402,925
Percentage of revenues		82.3	%		17.7	%		0.0	%		100.0	%		80.6	%		19.4	%		0.0	%		100.0	%
Depreciation, net	$	11,838		$	1,473		$	761		$	14,072		$	11,507		$	1,626		$	764		$	13,897
Amortization of intangibles	$	3,439		$	199		$	-		$	3,638		$	3,438		$	848		$	—		$	4,286
Income (loss) from operations	$	25,666		$	5,098		$	(16,318	)	$	14,446		$	30,068		$	1,491		$	(14,807	)	$	16,752
Total other income (expense), net								(66	)		(66	)								(383	)		(383	)
Income taxes								(628	)		(628	)								(4,682	)		(4,682	)
Net income										$	13,752											$	11,687
Three Months Ended September 30, 2017:
Three Months Ended March 31, 2018:
Revenues	$	341,334		$	65,957		$	18		$	407,309		$	340,721		$	73,627		$	23		$	414,371
Percentage of revenues		83.8	%		16.2	%		0.0	%		100.0	%		82.2	%		17.8	%		0.0	%		100.0	%
Depreciation, net	$	12,064		$	1,375		$	788		$	14,227		$	12,683		$	1,411		$	742		$	14,836
Amortization of intangibles	$	5,081		$	212		$	-		$	5,293		$	3,992		$	221		$	—		$	4,213
Income (loss) from operations	$	35,932		$	4,523		$	(14,190	)	$	26,265		$	25,864		$	4,639		$	(16,219	)	$	14,284
Total other income (expense), net								(1,824	)		(1,824	)								(880	)		(880	)
Income taxes								(2,746	)		(2,746	)								(2,456	)		(2,456	)
Net income										$	21,695											$	10,948
Nine Months Ended September 30, 2018:
Revenues	$	996,524		$	213,890		$	75		$	1,210,489
Percentage of revenues		82.3	%		17.7	%		0.0	%		100.0	%
Depreciation, net	$	36,856		$	4,360		$	2,252		$	43,468
Amortization of intangibles	$	10,846		$	634		$	-		$	11,480
Income (loss) from operations	$	71,354		$	11,957		$	(48,121	)	$	35,190
Total other income (expense), net								(2,457	)		(2,457	)
Income taxes								(855	)		(855	)
Net income										$	31,878
Nine Months Ended September 30, 2017:
Revenues	$	977,136		$	189,564		$	61		$	1,166,761
Percentage of revenues		83.8	%		16.2	%		0.0	%		100.0	%
Depreciation, net	$	35,374		$	3,815		$	2,206		$	41,395
Amortization of intangibles	$	15,048		$	726		$	-		$	15,774
Income (loss) from operations	$	100,031		$	12,266		$	(48,651	)	$	63,646
Total other income (expense), net								(3,483	)		(3,483	)
Income taxes								(10,911	)		(10,911	)
Net income										$	49,252

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

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

The following table represents a disaggregation of revenue from contracts with customers by geographic location and by the reportable segment for each category (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,				Three Months Ended March 31,
	2018		2017		2018		2017		2019		2018
Americas:
United States	$	161,429	$	166,527	$	498,523	$	471,825	$	162,032	$	171,446
The Philippines		57,953		62,958		174,610		178,277		56,078		60,086
Costa Rica		33,120		32,882		96,168		99,131		30,717		32,075
Canada		25,549		28,423		77,566		85,165		25,564		27,189
El Salvador		20,732		19,792		61,327		56,506		20,476		20,011
People's Republic of China		8,337		9,659		25,834		28,201		8,903		9,348
Australia		8,619		7,634		24,021		20,724		7,629		7,702
Mexico		6,221		6,540		18,171		17,981		6,557		6,318
Other		6,802		6,919		20,304		19,326		6,821		6,546
Total Americas		328,762		341,334		996,524		977,136		324,777		340,721
EMEA:
Germany		22,448		20,396		69,027		59,290		23,864		24,175
United Kingdom										16,885		13,347
Sweden		13,422		14,639		41,226		42,983		13,640		14,130
United Kingdom		12,333		10,166		37,640		29,306
Romania		8,704		7,157		25,031		20,235		8,512		8,136
Other		13,636		13,599		40,966		37,750		15,227		13,839
Total EMEA		70,543		65,957		213,890		189,564		78,128		73,627
Total Other		28		18		75		61		20		23
	$	399,333	$	407,309	$	1,210,489	$	1,166,761	$	402,925	$	414,371

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
Foreign currency transaction gains (losses)	$	1,066		$	(77	)	$	3,155		$	567		$	(176	)	$	1,448
Gains (losses) on derivative instruments not designated as hedges		(380	)		(445	)		(1,807	)		(48	)		(33	)		(1,082	)
Net investment gains (losses) on investments held in rabbi trust														1,180			(25	)
Other miscellaneous income (expense)		233			550			(811	)		1,115			(361	)		(186	)
	$	919		$	28		$	537		$	1,634		$	610		$	155

In January 2008, the Company entered into a lease for a customer engagement center located in Kingstree, South Carolina. The landlord, Kingstree Office One, LLC, is an entity controlled by John H. Sykes, the founder, former Chairman and former Chief Executive Officer of the Company and the father of Charles Sykes, President and Chief Executive Officer of the Company. The lease payments on the 20-year lease were negotiated at or below market rates, and the lease is cancellable at the option of the Company. The Company paid $0.1 million to the landlord during both the three months ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017 and $0.3 million during both the nine months ended September 30, 2018 and 2017~~ under the terms of the lease.

During the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, the Company contracted to receive services from XSell, an equity method investee, for less than $0.1 million ~~and $0.1 million, respectively. There were no such transactions~~(none in ~~2017.~~ 2018). These related party transactions occurred in the normal course of business on terms and conditions that are similar to those of transactions with unrelated parties and, therefore, were measured at the exchange amount.

On October 18, 2018, the Company as guarantor and its wholly-owned subsidiary, SEI International Services S.a.r.l, a Luxembourg company, entered into the Symphony Purchase Agreement with Pascal Baker, Ian Barkin, David Brain, David Poole, FIS Nominee Limited, Baronsmead Venture Trust plc and Baronsmead Second Venture Trust plc (together, the “Symphony Sellers”) to acquire all of the outstanding shares of Symphony Ventures Ltd.

Symphony, headquartered in London, England, provides robotic process automation (“RPA”) services, offering RPA consulting, implementation, hosting and managed services for front, middle and back-office processes. Symphony serves numerous industries globally, including financial services, healthcare, business services, manufacturing, consumer products, communications, media and entertainment.

The aggregate purchase price of GBP 52.6 million ($67.9 million) is subject to certain post-closing adjustments related to Symphony’s working capital. The Company paid GBP 44.6 million ($57.6 million) at the closing of the transaction on November 1, 2018 using cash on hand as well as $31.0 million of additional borrowings under the Company’s Credit Agreement. The remaining GBP 8.0 million ($10.3 million) of purchase price has been deferred and will be paid in equal installments over the next three years. The Symphony Purchase Agreement also provides for a three-year, retention based earnout payable in RSUs with a value of GBP 3.0 million.

~~The Symphony Purchase Agreement contains customary representations and warranties, indemnification obligations and covenants.~~

We have reviewed the accompanying condensed consolidated balance sheet of Sykes Enterprises, Incorporated and subsidiaries (the "Company") as of ~~September 30, 2018,~~March 31, 2019, the related condensed consolidated statements of operations, ~~and~~ comprehensive income (loss) ~~for the three-month and nine-month periods ended September 30, 2018 and 2017,~~, changes in shareholders’ equity, ~~for the nine-month period ended September 30, 2018,~~ and of cash flows for the ~~nine-month~~three-month periods ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017,~~ and the related notes (collectively referred to as the "interim financial information"). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of December 31, ~~2017,~~2018, and the related consolidated statements of operations, comprehensive income (loss), changes in shareholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated ~~March 1, 2018,~~February 26, 2019, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, ~~2017,~~2018, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

This interim financial information is the responsibility of the Company's management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Item 2. Management’s ~~Discussion~~Discussion and Analysis ofof Financial Condition and Results of Operations

This discussion should be read in conjunction with the condensed consolidated financial statements and notes included elsewhere in this report and the consolidated financial statements and notes in the Sykes Enterprises, Incorporated (“SYKES,” “our,” “we” or “us”) Annual Report on Form 10-K for the year ended December 31, ~~2017,~~2018, as filed with the Securities and Exchange Commission (“SEC”).

Our discussion and analysis may contain forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995) that are based on current expectations, estimates, forecasts, and projections about SYKES, our beliefs, and assumptions made by us. In addition, we may make other written or oral statements, which constitute forward-looking statements, from time to time. Words such as "believe," "estimate," "project," "expect," “intend,” “may," "anticipate," "plan," "seek,"variations of such words, and similar expressions are intended to identify such forward-looking statements. Similarly, statements that describe our future plans, objectives, or goals also are forward-looking statements. These statements are not guarantees of future performance and are subject to a number of risks and uncertainties, including those discussed below and elsewhere in this report. Our actual results may differ materially from what is expressed or forecasted in such forward-looking statements, and undue reliance should not be placed on such statements. All forward-looking statements are made as of the date hereof, and we undertake no obligation to update any such forward-looking statements, whether as a result of new information, future events or otherwise.

Factors that could cause actual results to differ materially from what is expressed or forecasted in such forward-looking statements include, but are not limited to: (i) the impact of economic recessions in the U.S. and other parts of the world, (ii) fluctuations in global business conditions and the global economy, (iii) currency fluctuations, (iv) the timing of significant orders for our products and services, (v) variations in the terms and the elements of services offered under our standardized contract including those for future bundled service offerings, (vi) changes in applicable accounting principles or interpretations of such principles, (vii) difficulties or delays in implementing our bundled service offerings, (viii) failure to achieve sales, marketing and other objectives, (ix) construction delays of new or expansion of existing customer engagement centers, (x) delays in our ability to develop new products and services and market acceptance of new products and services, (xi) rapid technological change, (xii) loss or addition of significant clients, (xiii) political and country-specific risks inherent in conducting business abroad, (xiv) our ability to attract and retain key management personnel, (xv) our ability to continue the growth of our support service revenues through additional technical and customer engagement centers, (xvi) our ability to further penetrate into vertically integrated markets, (xvii) our ability to expand our global presence through strategic alliances and selective acquisitions, (xviii) our ability to continue to establish a competitive advantage through sophisticated technological capabilities, (xix) the ultimate outcome of any lawsuits, (xx) our ability to recognize deferred revenue through delivery of products or satisfactory performance of services, (xxi) our dependence on the demand for outsourcing, (xxii) risk of interruption of technical and customer engagement center operations due to such factors as fire, earthquakes, inclement weather and other disasters, power failures, telecommunication failures, unauthorized intrusions, computer viruses and other emergencies, (xxiii) the existence of substantial competition, (xxiv) the early termination of contracts by clients, (xxv) the ability to obtain and maintain grants and other incentives (tax or otherwise), (xxvi) the potential of cost savings/synergies associated with acquisitions not being realized, or not being realized within the anticipated time period, (xxvii) risks related to the integration of the acquisitions and the impairment of any related goodwill, and (xxviii) other risk factors that are identified in our most recent Annual Report on Form 10-K, including factors identified under the headings “Business,” “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We are a leading provider of multichannel demand generation and global comprehensive customer engagement services. We provide differentiated full lifecycle customer engagement solutions and services primarily to Global 2000 companies and their end customers, ~~primarily~~principally in the ~~communications,~~ financial services, communications, technology, transportation ~~and~~& leisure, healthcare ~~retail~~ and other industries. Our differentiated full lifecycle management services platform effectively engages customers at every touchpoint within the customer journey, including digital marketing and acquisition, sales expertise, customer service, technical support and ~~retention.~~retention, many of which can be optimized by a suite of robotic process optimization (“RPA”) and artificial intelligence (“AI”) solutions. We serve our clients through two geographic operating regions: the Americas (United States, Canada, Latin America, Australia and the Asia Pacific Rim) and EMEA (Europe, the Middle East and Africa). Our Americas and EMEA regions primarily provide customer engagement solutions and services with an emphasis on inbound multichannel demand generation, customer service and technical support to our clients’ customers. These services, which represented ~~99.5%~~98.2% and 99.5% of consolidated revenues during the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and 99.5% and 99.5% of consolidated revenues during the nine months ended September 30, 2018 and 2017,~~ respectively, are delivered ~~through~~

through multiple communication channels including phone, e-mail, social media, text messaging, chat and digital self-service. We also provide various enterprise support services in the United States (“U.S.”) that include services for our clients’ internal support operations, from technical staffing services to outsourced corporate help desk services. In Europe, we also provide fulfillment services, which ~~includes~~include order processing, payment processing, inventory control, product delivery and product returns handling. Additionally, through our acquisition of RPA provider Symphony Ventures Ltd (“Symphony”) coupled with our investment in AI through XSell Technologies, Inc. (“XSell”), we also provide a suite of solutions such as consulting, implementation, hosting and managed services that optimizes our differentiated full lifecycle management services platform. Our complete service offering helps our clients acquire, retain and increase the lifetime value of their customer relationships. We have developed an extensive global reach with customer engagement centers across six continents, including North America, South America, Europe, Asia, Australia and Africa. We deliver cost-effective solutions that generate demand, enhance the customer service experience, promote stronger brand loyalty, and bring about high levels of performance and profitability.

During the first quarter of 2019, we initiated a restructuring plan to simplify and refine our operating model in the U.S. (the “Americas 2019 Exit Plan”), in part to improve agent attrition and absenteeism. The Americas 2019 Exit Plan includes, but is not limited to, closing customer contact management centers, consolidating leased space in various locations in the U.S. and management reorganization. We expect to finalize the actions under the Americas 2019 Exit Plan by December 2019. Annualized savings of $6.2 million are expected as a result of these actions, primarily related to reduced general and administrative costs and lower depreciation.

During the second quarter of 2018, we initiated a restructuring plan to ~~streamline excess capacity through targeted seat reductions (the “Americas 2018 Exit Plan”) in an on-going effort to~~ manage and optimize capacity ~~utilization. The Americas 2018 Exit Plan includes, but is not limited to,~~utilization, which included closing customer contact management centers and consolidating leased space in various locations in the U.S. and ~~Canada.~~Canada (the “Americas 2018 Exit Plan”). We ~~anticipate finalizing the remainder of~~finalized the site closures under the Americas 2018 Exit Plan byas of December ~~2018.~~

~~The actions are expected to impact~~2018, which resulted in a decrease of approximately 5,000 seats, of which 4,200 seats have been rationalized as of September 30, 2018. We anticipate annualized gross general and administrative cost savings, and lower depreciation expense of approximately $26.0 million as a result of the 2018 site closures.seats.

See Note 3,4, Costs Associated with Exit and Disposal Activities, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information.

InOn December 20, 2017, ~~the President of the United States (“U.S.”) signed into law~~ the Tax Cuts and Jobs Act (the “2017 Tax Reform Act”). was approved by Congress and received presidential approval on December 22, 2017. In general, the 2017 Tax Reform Act ~~reduces~~reduced the U.S. federal corporate tax rate from 35% to 21%, effective in 2018. The 2017 Tax Reform Act ~~moves~~moved from a worldwide business taxation approach to a participation exemption regime. The 2017 Tax Reform Act also ~~imposes~~imposed base-erosion prevention measures on non-U.S. earnings of U.S. entities, as well as a one-time mandatory deemed repatriation tax on accumulated non-U.S. ~~earnings which was recorded in the fourth quarter of 2017.~~earnings. The impact of the 2017 Tax Reform Act on our consolidated financial results began with the fourth quarter of 2017, the period of enactment. ~~This impact, along with the transitional taxes discussed in~~See Note 11, Income Taxes, in the accompanying “Notes to Condensed Consolidated Financial ~~Statements” is reflected in the Other segment.~~Statements.”

~~In May 2017,~~On November 1, 2018, we completed the acquisition of ~~certain assets of a Global 2000 telecommunications service provider (the “Telecommunications Asset acquisition”) to strengthen~~Symphony. Symphony provides RPA services, offering RPA consulting, implementation, hosting and ~~create new partnerships~~managed services for front, middle and ~~expand our geographic footprint in North America. The~~back-office processes. Of the total purchase price of ~~$7.5~~GBP 52.4 million ($67.5 million), GBP 44.6 million ($57.6 million) was ~~funded through~~paid upon closing using cash on ~~hand.~~hand as well as $31.0 million of additional borrowings under our credit agreement, while the acquisition date present value of the remaining GBP 7.9 million ($10.0 million) of the purchase price has been deferred and will be paid in equal installments over three years, on or around November 1, 2019, 2020 and 2021. The results of Symphony’s operations ~~of the Telecommunications Asset acquisition~~ have been reflected in our consolidated financial statements since ~~May 31, 2017.~~

On July 9, 2018, we completed the acquisition of WhistleOut Pty Ltd and WhistleOut Inc. (together, “WhistleOut”). WhistleOut is a consumer comparison platform focused on mobile, broadband and pay TV services, principally

across Australia and the U.S. The acquisition broadens our digital marketing capabilities geographically and extends our home services product portfolio. The total purchase price of AUD ~~30.2~~30.3 million ($~~22.4~~22.5 million) was funded by borrowings under our ~~existing~~ credit agreement. The results of WhistleOut’s operations have been reflected in our consolidated financial statements since July 9, 2018.

The following table sets forth, for the periods indicated, the amounts presented in the accompanying Condensed Consolidated Statements of Operations as well as the change between the respective periods:

	Three Months Ended September 30,									Nine Months Ended September 30,									Three Months Ended March 31,
(in thousands)	2018			2017			$ Change			2018			2017			$ Change			2019			2018			$ Change
Revenues	$	399,333		$	407,309		$	(7,976	)	$	1,210,489		$	1,166,761		$	43,728		$	402,925		$	414,371		$	(11,446	)
Operating expenses:
Direct salaries and related costs		261,474			267,489			(6,015	)		801,470			763,240			38,230			261,728			275,072			(13,344	)
General and administrative		105,148			93,355			11,793			309,625			277,635			31,990			104,680			102,440			2,240
Depreciation, net		14,072			14,227			(155	)		43,468			41,395			2,073			13,897			14,836			(939	)
Amortization of intangibles		3,638			5,293			(1,655	)		11,480			15,774			(4,294	)		4,286			4,213			73
Impairment of long-lived assets		555			680			(125	)		9,256			5,071			4,185			1,582			3,526			(1,944	)
Total operating expenses		384,887			381,044			3,843			1,175,299			1,103,115			72,184			386,173			400,087			(13,914	)
Income from operations		14,446			26,265			(11,819	)		35,190			63,646			(28,456	)		16,752			14,284			2,468

Other income (expense):
Interest income		183			169			14			529			468			61			185			171			14
Interest (expense)		(1,168	)		(2,021	)		853			(3,523	)		(5,585	)		2,062			(1,178	)		(1,206	)		28
Other income (expense), net		919			28			891			537			1,634			(1,097	)		610			155			455
Total other income (expense), net		(66	)		(1,824	)		1,758			(2,457	)		(3,483	)		1,026			(383	)		(880	)		497

Income before income taxes		14,380			24,441			(10,061	)		32,733			60,163			(27,430	)		16,369			13,404			2,965
Income taxes		628			2,746			(2,118	)		855			10,911			(10,056	)		4,682			2,456			2,226
Net income	$	13,752		$	21,695		$	(7,943	)	$	31,878		$	49,252		$	(17,374	)	$	11,687		$	10,948		$	739

Three Months Ended ~~September 30, 2018~~March 31, 2019 Compared to Three Months Ended ~~September 30, 2017~~March 31, 2018

	Three Months Ended September 30,									Three Months Ended March 31,
	2018			2017						2019			2018
(in thousands)	Amount		% of Revenues	Amount		% of Revenues	$ Change			Amount		% of Revenues	Amount		% of Revenues	$ Change
Americas	$	328,762	82.3%	$	341,334	83.8%	$	(12,572	)	$	324,777	80.6%	$	340,721	82.2%	$	(15,944	)
EMEA		70,543	17.7%		65,957	16.2%		4,586			78,128	19.4%		73,627	17.8%		4,501
Other		28	0.0%		18	0.0%		10			20	0.0%		23	0.0%		(3	)
Consolidated	$	399,333	100.0%	$	407,309	100.0%	$	(7,976	)	$	402,925	100.0%	$	414,371	100.0%	$	(11,446	)

Consolidated revenues decreased ~~$8.0~~$11.4 million, or ~~2.0%~~2.8%, for the three months ended ~~September 30, 2018~~March 31, 2019 from the comparable period in ~~2017.~~2018.

The decrease in Americas’ revenues was due to end-of-life client programs of ~~$19.1~~$13.7 million, lower volumes from existing clients of ~~$2.3~~$9.3 million and ~~a negative~~an unfavorable foreign currency impact of ~~$1.9~~$4.6 million, partially offset by new clients of ~~$10.7~~$11.7 million. Revenues from our offshore operations represented ~~40.5%~~39.9% of Americas’ revenues in ~~2018,~~2019, compared to ~~40.6%~~39.4% for the comparable period in ~~2017.~~2018.

The increase in EMEA’s revenues was due to new clients of $6.5 million and higher volumes from existing clients of ~~$6.7 million and new clients of $1.0~~$6.5 million, partially offset by end-of-life client programs of ~~$1.3~~$1.9 million and ~~a negative~~an unfavorable foreign currency impact of ~~$1.8~~$6.6 million.

~~We adopted ASU 2014-09,~~ ~~Revenue from Contracts with Customers (Topic 606),~~ ~~and subsequent amendments (together, “ASC 606”) on January 1, 2018. See Note 2, Revenues, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information.~~

On a consolidated basis, we had ~~49,600~~47,900 brick-and-mortar seats as of ~~September 30, 2018,~~March 31, 2019, a decrease of ~~2,800~~5,700 seats from the comparable period in ~~2017.~~2018. We rationalized ~~4,200~~7,000 seats in the Americas, ~~as part~~ of which 5,000 seats resulted from the 2018 Americas Exit ~~Plan, which~~Plan. The seat rationalization impact was partially offset by 1,300 seat additions internationally

for demand. The capacity utilization rate on a combined basis was ~~70%~~72% compared to ~~71%~~68% in the comparable period in ~~2017.~~2018.

On a segment basis, ~~42,100~~40,200 seats were located in the Americas, a decrease of ~~3,100~~6,200 seats from the comparable period in ~~2017,~~2018, and ~~7,500~~7,700 seats were located in EMEA, an increase of ~~300~~500 seats from the comparable period in ~~2017. Capacity~~2018. The capacity utilization ~~rates as of September 30, 2018 were 69%~~rate for the Americas ~~and 76% for EMEA,~~in 2019 was 71%, compared to ~~70% and 80%, respectively,~~66% in the comparable period in ~~2017.~~2018, up primarily due to our capacity rationalization. The ~~decrease~~capacity utilization rate for EMEA in 2019 was 73%, compared to 79% in the ~~Americas~~comparable period in 2018, down primarily due to expansion and the utilization ~~was driven by lower demand and operational inefficiencies, while the reduction in EMEA was driven by lower demand in the communications vertical.~~of our at-home platform as a complement to our brick-and-mortar facilities. We strive to attain a capacity utilization rate of 85% at each of our locations.

	Three Months Ended September 30,										Three Months Ended March 31,
	2018			2017							2019			2018
(in thousands)	Amount		% of Revenues	Amount		% of Revenues	$ Change			Change in % of Revenues	Amount		% of Revenues	Amount		% of Revenues	$ Change			Change in % of Revenues
Americas	$	212,457	64.6%	$	221,365	64.9%	$	(8,908	)	-0.3%	$	207,599	63.9%	$	223,153	65.5%	$	(15,554	)	-1.6%
EMEA		49,017	69.5%		46,124	69.9%		2,893		-0.4%		54,129	69.3%		51,919	70.5%		2,210		-1.2%
Consolidated	$	261,474	65.5%	$	267,489	65.7%	$	(6,015	)	-0.2%	$	261,728	65.0%	$	275,072	66.4%	$	(13,344	)	-1.4%

The decrease of ~~$6.0~~$13.3 million in direct salaries and related costs included a ~~positive~~favorable foreign currency impact of ~~$2.9~~$4.1 million in the Americas and a ~~positive~~favorable foreign currency impact of ~~$1.5~~$4.7 million in EMEA.

The decrease in Americas’ direct salaries and related costs, as a percentage of revenues, was primarily attributable to lower compensation costs of ~~2.8%~~3.1% driven by an increase in agent productivity principally within the ~~communications~~financial services and ~~financial services~~communications verticals in the current period,, lower communications costs of ~~0.2%~~ 0.3% and lower ~~auto tow claim~~other costs of 0.2%, partially offset by higher customer-acquisition advertising costs of ~~1.8%~~1.0% principally due to an increased reliance on paid search results over organic search results, higher recruiting costs of 0.4%, higher ~~severance~~auto tow claim costs ~~related to the Americas 2018 Exit Plan~~ of ~~0.9%~~0.4% and higher dues and subscription costs of 0.2%.

The decrease in EMEA’s direct salaries and related costs, as a percentage of revenues, was primarily attributable to lower compensation costs of ~~1.2% primarily due to~~ 1.7% driven by an increase in agent productivity principally within the ~~financial services vertical~~technology, communications and retail verticals in the current period and lower recruiting costs of 0.2%, partially offset by higher ~~communications~~fulfillment materials costs of ~~0.5%~~ ~~and higher other costs of 0.3%~~0.7%.

	Three Months Ended September 30,									Three Months Ended March 31,
	2018			2017						2019			2018
(in thousands)	Amount		% of Revenues	Amount		% of Revenues	$ Change		Change in % of Revenues	Amount		% of Revenues	Amount		% of Revenues	$ Change			Change in % of Revenues
Americas	$	74,807	22.8%	$	66,212	19.4%	$	8,595	3.4%	$	70,583	21.7%	$	71,503	21.0%	$	(920	)	0.7%
EMEA		14,756	20.9%		13,723	20.8%		1,033	0.1%		20,034	25.6%		15,437	21.0%		4,597		4.6%
Other		15,585	-		13,420	-		2,165	-		14,063	-		15,500	-		(1,437	)	-
Consolidated	$	105,148	26.3%	$	93,355	22.9%	$	11,793	3.4%	$	104,680	26.0%	$	102,440	24.7%	$	2,240		1.3%

The increase of ~~$11.8~~$2.2 million in general and administrative expenses included a ~~positive~~favorable foreign currency impact of ~~$1.0~~$1.2 million in the Americas and a ~~positive~~favorable foreign currency impact of ~~$0.5~~$1.4 million in EMEA.

The increase in Americas’ general and administrative expenses, as a percentage of revenues, was primarily attributable to higher merger and integration costs of 0.4%, higher compensation costs of 0.4% and higher software and maintenance costs of 0.3%, partially offset by lower facility-related costs of ~~1.3% resulting from the Americas 2018 Exit Plan (see~~ ~~Note 3, Costs Associated with Exit~~0.2% and ~~Disposal Activities, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information), higher~~lower legal and professional fees of ~~0.7%, higher merger and integration costs of 0.6%, higher compensations costs of 0.6% and higher other costs of 0.5%, partially offset by lower software and maintenance costs of 0.3%~~0.2%.

The increase in EMEA’s general and administrative expenses, as a percentage of revenues, was primarily attributable to higher compensation costs of ~~0.7%~~2.2% driven by Symphony’s operations which has higher general and administrative labor costs relative to our mix of business in the prior period, higher merger and integration costs of 2.0%, higher software and maintenance costs of 0.3% and higher travel costs of 0.3%, partially offset by lower ~~advertising and marketing~~communications costs of ~~0.3% and lower other costs~~0.2%.

~~The increase of $2.2~~$1.4 million in Other general and administrative expenses, which includes corporate and other costs, was primarily attributable to ~~higher compensation costs of $2.7 million and higher~~lower merger and integration costs of ~~$0.8 million, partially offset by lower severance costs of $0.9~~$1.1 million, lower legal and professional fees of $0.3 million, lower severance costs of $0.2 million and lower other costs of ~~$0.1~~$0.4 million, partially offset by higher compensation costs of $0.4 million and higher software and maintenance costs of $0.2 million.

	Three Months Ended September 30,										Three Months Ended March 31,
	2018			2017							2019			2018
(in thousands)	Amount		% of Revenues	Amount		% of Revenues	$ Change			Change in % of Revenues	Amount		% of Revenues	Amount		% of Revenues	$ Change			Change in % of Revenues
Depreciation, net:
Americas	$	11,838	3.6%	$	12,064	3.5%	$	(226	)	0.1%	$	11,507	3.5%	$	12,683	3.7%	$	(1,176	)	-0.2%
EMEA		1,473	2.1%		1,375	2.1%		98		0.0%		1,626	2.1%		1,411	1.9%		215		0.2%
Other		761	-		788	-		(27	)	-		764	-		742	-		22		-
Consolidated	$	14,072	3.5%	$	14,227	3.5%	$	(155	)	0.0%	$	13,897	3.4%	$	14,836	3.6%	$	(939	)	-0.2%

Amortization of intangibles:
Americas	$	3,439	1.0%	$	5,081	1.5%	$	(1,642	)	-0.5%	$	3,438	1.1%	$	3,992	1.2%	$	(554	)	-0.1%
EMEA		199	0.3%		212	0.3%		(13	)	0.0%		848	1.1%		221	0.3%		627		0.8%
Other		-	-		-	-		-		-		—	-		—	-		—		-
Consolidated	$	3,638	0.9%	$	5,293	1.3%	$	(1,655	)	-0.4%	$	4,286	1.1%	$	4,213	1.0%	$	73		0.1%

Impairment of long-lived assets:
Americas	$	555	0.2%	$	680	0.2%	$	(125	)	0.0%	$	1,582	0.5%	$	3,526	1.0%	$	(1,944	)	-0.5%
EMEA		-	0.0%		-	0.0%		-		0.0%		—	0.0%		—	0.0%		—		0.0%
Other		-	-		-	-		-		-		—	-		—	-		—		-
Consolidated	$	555	0.1%	$	680	0.2%	$	(125	)	-0.1%	$	1,582	0.4%	$	3,526	0.9%	$	(1,944	)	-0.5%

The decrease in depreciation was primarily due to the impact since the prior period of certain fully depreciated fixed assets and fixed assets that were impaired and disposed of as part of the Americas 2018 Exit Plan, partially offset by new depreciable fixed assets placed into service supporting site expansions, acquisitions and infrastructure upgrades.

The ~~decrease~~increase in amortization was primarily due to intangibles acquired since the comparable period in 2018, partially offset by certain fully amortized intangible assets.

See Note 3,4, Costs Associated with Exit and Disposal Activities, and Note 4,5, Fair Value, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information regarding the impairment of long-lived assets.

	Three Months Ended September 30,									Three Months Ended March 31,
(in thousands)	2018			2017			$ Change			2019			2018			$ Change
Interest income	$	183		$	169		$	14		$	185		$	171		$	14

Interest (expense)	$	(1,168	)	$	(2,021	)	$	853		$	(1,178	)	$	(1,206	)	$	28

Other income (expense), net:
Foreign currency transaction gains (losses)	$	1,066		$	(77	)	$	1,143		$	(176	)	$	1,448		$	(1,624	)
Gains (losses) on derivative instruments not designated as hedges		(380	)		(445	)		65			(33	)		(1,082	)		1,049
Gains (losses) on investments held in rabbi trust											1,180			(25	)		1,205
Other miscellaneous income (expense)		233			550			(317	)		(361	)		(186	)		(175	)
Total other income (expense), net	$	919		$	28		$	891		$	610		$	155		$	455

Interest income and interest (expense) remained ~~relatively~~ consistent with the comparable period.

The decrease in interest (expense) was primarily due to a decrease in the outstanding borrowings under the Credit Agreement as a result of $193.0 million of repayments, net, in 2018, partially offset by an increase in weighted average interest rates on outstanding borrowings.

The change in other miscellaneous income (expense) was primarily due to the Patient Protection and Affordable Care Act (“Affordable Care Act”) compliance costs, and losses from our equity method investee, XSell, partially offset by a reversal of certain payroll tax compliance costs.

The decrease in the effective tax rate in 2018 compared to 2017 was primarily due to a $0.9 million increase in benefit associated with the resolution of uncertain tax positions and ancillary issues as well as a $0.5 million benefit related to the decrease in the provisional estimates recorded at December 31, 2017 as a result of the 2017 Tax Reform Act. The effective rate impact of these benefits is partially offset by the 2017 recognition of a $0.8 million benefit related to the increase in anticipated tax credits and reductions in estimated non-deferred foreign income, as well as a $0.3 million benefit for the release of a valuation allowance. In addition, we recognized a benefit of $0.3 million from the reduction in the U.S. federal corporate tax rate from 35% to 21% as a result of the 2017 Tax Reform Act. The increase in the effective tax rate was also affected by shifts in earnings among the various jurisdictions in which we operate. Several additional factors, none of which are individually material, also impacted the rate.

~~Nine Months Ended September 30, 2018 Compared to Nine Months Ended September 30, 2017~~

~~Consolidated revenues increased $43.7 million, or 3.7%, for the nine months ended September 30, 2018 from the comparable period in 2017.~~

The increase in Americas’ revenues was due to higher volumes from existing clients of $50.7 million, new clients of $21.6 million and a positive foreign currency impact of $4.6 million, partially offset by end-of-life client programs of $57.5 million. Revenues from our offshore operations represented 39.8% of Americas’ revenues in 2018, compared to 40.9% for the comparable period in 2017.

~~The increase in EMEA’s revenues~~ was due to higher volumes from existing clients of $15.1 million, new clients of $1.9 million and a positive foreign currency impact of $11.4 million, partially offset by end-of-life client programs of $4.1 million.

See Note ~~2, Revenues, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information regarding the adoption of ASC 606.~~

The increase of $38.2 million in direct salaries and related costs included a positive foreign currency impact of $2.4 million in the Americas and a negative foreign currency impact of $7.5 million in EMEA.

~~The increase in Americas’ direct salaries and related costs, as a percentage of revenues, was primarily attributable to~~ ~~higher customer-acquisition advertising costs of 0.8%, higher severance costs related to the Americas 2018 Exit Plan~~

~~of 0.3% and higher other costs of 0.3%, partially offset by lower auto tow claim costs of 0.3%, lower compensation costs of 0.2% and lower communications costs of 0.2%.~~

~~The increase in EMEA’s direct salaries and related costs, as a percentage of revenues, was primarily attributable to~~ ~~higher communications costs of 0.3%~~ ~~and higher other costs of 0.4%, partially offset by~~ ~~lower compensation costs of 0.2%.~~

The increase of $32.0 million in general and administrative expenses included a positive foreign currency impact of $1.1 million in the Americas and a negative foreign currency impact of $2.3 million in EMEA.

The increase in Americas’ general and administrative expenses, as a percentage of revenues, was primarily attributable to higher compensations costs of 0.7%, higher facility-related costs of 0.7% resulting from the Americas 2018 Exit Plan, higher legal and professional fees of 0.4%, higher merger and integration costs of 0.3% and higher other costs of 0.2%.

The increase in EMEA’s general and administrative expenses, as a percentage of revenues, was primarily attributable to higher compensation costs of 0.4%, higher recruiting costs of 0.3% and higher other costs of 0.2%, partially offset by lower advertising and marketing costs of 0.3% and lower legal and professional fees of 0.2%.

The decrease of $0.6 million in Other general and administrative expenses, which includes corporate and other costs, was primarily attributable to lower legal and professional fees of $1.2 million, lower severance costs of $0.6 million, lower travel costs of $0.2 million and lower other costs of $0.2 million, partially offset by higher compensation costs of $0.7 million, higher merger and integration costs of $0.6 million, higher software and maintenance costs of $0.3 million.

Nine Months Ended September 30,

2018

2017

(in thousands)
Amount

% of Revenues

Amount

% of Revenues

$ Change

Change in % of Revenues

Depreciation, net:

Americas
$
36,856

3.7%

$
35,374

3.6%

$
1,482

0.1%

EMEA

4,360

2.0%

3,815

2.0%

545

0.0%

Other

2,252

-

2,206

-

46

-

Consolidated
$
43,468

3.6%

$
41,395

3.5%

$
2,073

0.1%

Amortization of intangibles:

Americas
$
10,846

1.1%

$
15,048

1.5%

$
(4,202
)

-0.4%

EMEA

634

0.3%

726

0.4%

(92
)

-0.1%

Other

-

-

-

-

-

-

Consolidated
$
11,480

0.9%

$
15,774

1.4%

$
(4,294
)

-0.5%

Impairment of long-lived
assets:

Americas
$
9,256

0.9%

$
5,071

0.5%

$
4,185

0.4%

EMEA

-

0.0%

-

0.0%

-

0.0%

Other

-

-

-

-

-

-

Consolidated
$
9,256

0.8%

$
5,071

0.4%

$
4,185

0.4%

The increase in depreciation was primarily due to new depreciable fixed assets placed into service supporting site expansions and infrastructure upgrades, partially offset by the impact since the prior period of certain fully depreciated fixed assets and fixed assets that were impaired and disposed of as part of the Americas 2018 Exit Plan.

~~The decrease in amortization was primarily due to certain fully amortized intangible assets.~~

See Note 3, Costs Associated with Exit and Disposal Activities, and Note 4, Fair Value, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information regarding the impairment of long-lived assets.

The change in other miscellaneous income (expense) was primarily due to net investment income (losses) related to the investments held in a rabbi trust, Affordable Care Act compliance costs, losses from our equity method investee, XSell, and payroll tax compliance costs. See Note 7,8, Investments Held in Rabbi Trust, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information.

	Nine Months Ended September 30,									Three Months Ended March 31,
(in thousands)	2018			2017			$ Change			2019			2018			$ Change
Income before income taxes	$	32,733		$	60,163		$	(27,430	)	$	16,369		$	13,404		$	2,965
Income taxes		855			10,911			(10,056	)		4,682			2,456			2,226
							% Change									% Change
Effective tax rate		2.6	%		18.1	%		-15.5	%		28.6	%		18.3	%		10.3	%

The ~~decrease~~increase in the effective tax rate in ~~2018~~2019 compared to ~~2017~~2018 was primarily ~~due to a net $3.1~~affected by shifts in earnings among the various jurisdictions in which the Company operates. Additionally, there was an overall unfavorable impact of $0.5 million ~~increase in benefit~~from discrete adjustments, the majority of which related to the resolution of uncertain tax positions as well as the aforementioned $0.5 million decrease in the provisional estimate related to the 2017 Tax Reform Act. This increase in benefit was partially offset by the recognition in 2017 of the $1.1 million 2017 discrete items previously mentioned. In addition, we recognized a benefit of $1.4 million from the reduction in the U.S. federal corporate tax rate from 35% to 21% as a result of the 2017 Tax Reform Act. These net benefits were partially offset by a $0.6 million decrease in the amount of excess tax benefits from stock-based compensation recognized ~~in 2018~~during the three months ended March 31, 2019 as compared to ~~2017. The decrease in the effective tax rate was also affected by shifts in earnings among the various jurisdictions in which we operate.~~March 31, 2018. Several additional factors, none of which ~~are~~were individually material, also impacted the rate.

Our top ten clients accounted for approximately ~~44.3%~~42.4% and ~~47.6%~~45.9% of our consolidated revenues in the three months ended ~~September 30,~~March 31, 2019 and 2018, ~~and 2017, respectively, and approximately 45.3% and 48.1% of our consolidated revenues in the nine months ended September 30, 2018 and 2017,~~ respectively.

Total revenues by segment from AT&T Corporation (“AT&T”), a major provider of communication services for which we provide various customer support services over several distinct lines of AT&T businesses, were as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues
Americas	$	43,923	13.4%	$	56,448	16.5%	$	126,858	12.7%	$	173,609	17.8%	$	30,625	9.4%	$	41,988	12.3%
EMEA		89	0.1%		-	0.0%		89	0.0%		-	0.0%		37	0.0%		—	0.0%
	$	44,012	11.0%	$	56,448	13.9%	$	126,947	10.5%	$	173,609	14.9%	$	30,662	7.6%	$	41,988	10.1%

We have multiple distinct contracts with AT&T spread across multiple lines of businesses, which expire at varying dates between ~~2018~~2019 and ~~2020.~~2021. We have historically renewed most of these contracts. However, there is no assurance that these contracts will be renewed, or if renewed, will be on terms as favorable as the existing contracts. Each line of business is governed by separate business terms, conditions and metrics. Each line of business also has a separate decision maker such that a loss of one line of business would not necessarily impact our relationship with the client and decision makers on other lines of business. The loss of (or the failure to retain a significant amount of business with) any of our key clients, including AT&T, could have a material adverse effect on our performance. Many of our contracts contain penalty provisions for failure to meet minimum service levels and are cancelable by the client at any time or on short notice. Also, clients may unilaterally reduce their use of our services under our contracts without penalty.

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

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues
Americas	$	23,172	7.0%	$	28,644	8.4%	$	83,703	8.4%	$	76,388	7.8%	$	27,115	8.3%	$	30,609	9.0%
EMEA		-	0.0%		-	0.0%		-	0.0%		-	0.0%		—	0.0%		—	0.0%
	$	23,172	5.8%	$	28,644	7.0%	$	83,703	6.9%	$	76,388	6.5%	$	27,115	6.7%	$	30,609	7.4%

Other than AT&T, total revenues by segment of our clients that each individually represents 10% or greater of that segment’s revenues in each of the periods were as follows (in thousands):

	Three Months Ended September 30,						Nine Months Ended September 30,						Three Months Ended March 31,
	2018			2017			2018			2017			2019			2018
	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues	Amount		% of Revenues
Americas	$	-	0.0%	$	-	0.0%	$	-	0.0%	$	-	0.0%	$	—	0.0%	$	—	0.0%
EMEA		18,402	26.1%		20,684	31.4%		79,007	36.9%		58,813	31.0%		18,024	23.1%		27,645	37.5%
	$	18,402	4.6%	$	20,684	5.1%	$	79,007	6.5%	$	58,813	5.0%	$	18,024	4.5%	$	27,645	6.7%

For the three months ended ~~December 31, 2018,~~June 30, 2019, we anticipate the following financial results:

For the twelve months ended December 31, ~~2018,~~2019, we anticipate the following financial results:

We are ~~revising~~adjusting our ~~full-year 2018~~full year 2019 business outlook slightly by trimming the top-end of our revenue ~~outlook downward by approximately $7.0 million relative~~range to reflect the ~~outlook provided in August 2018. Roughly $4.0 million~~first quarter’s reported revenues at the low end of the revenue revision is related to foreign exchange rate flux, with the remaining $3.0 million being driven principally by the communications vertical, which being driven primarily by staffing inefficiencies. Although the communications vertical remains soft, we recently won some potentially significant long-term opportunities that could drive growth in that vertical in the latter half of 2019. Additionally,range. Furthermore, we are ~~raising~~adjusting our ~~full-year 2018~~ diluted earnings per share ~~outlook relative~~range to reflect heavier front-end loaded costs in the second quarter, and to some extent in the third quarter, associated with an accelerated ramp schedule of higher-than-forecasted new business wins. At the same time, we anticipate demand stabilization in our largest client in the communications vertical to occur close to the ~~outlook provided in August 2018 due to a lower than expected tax rate as well as lower other expenses. We expect the benefits~~end of the ~~capacity rationalization initiatives~~year as opposed to ~~continue flowing through~~at the ~~fourth quarter~~start of ~~2018,~~the second half of the year, the revenue reduction from which ~~should yield significant improvement in year-over-year operating margins relative to~~is being offset by the ~~fourth quarter~~ramp of ~~2017.~~

~~On November 1, 2018, we consummated~~new business wins, but the ~~acquisition~~cost of ~~Symphony Ventures Ltd (“Symphony”),~~ which is expected to ~~contribute approximately $4.0 million (the remaining two-months of revenues) to fourth quarter 2018 revenues~~impact margins and ~~is reflected in the full-year revenue revision. However, we still anticipate the impact of the acquisition to full year 2018 diluted~~ earnings per ~~share to be dilutive.~~

Our fourth quarter 2018 business outlook anticipates a pre-tax charge of approximately $0.7 million, or $0.01 on an after-tax basis, related to capacity rationalization. The pre-tax charge is expected to be in cash. The full-year outlook reflects a pre-tax charge of approximately $22.0 million, or $0.40 on an after-tax basis, split roughly evenly between non-cash and cash.share.

Our revenues and earnings per share assumptions for the ~~fourth~~second quarter and full year ~~2018~~2019 are based on foreign exchange rates as of ~~October 2018.~~April 2019. Therefore, the continued volatility in foreign exchange rates between the U.S. Dollar and the functional currencies of the markets we serve could have a further impact, positive or negative, on revenues and earnings per share relative to the business outlook for the ~~fourth~~second quarter and ~~full-year as discussed above.~~full-year.

We anticipate total other interest income (expense), net of approximately $(1.2) million for the ~~fourth~~second quarter and ~~$(3.7)~~$(4.0) million for the full year ~~2018.~~2019. The amounts in ~~the~~ other interest income (expense), net, however, exclude the potential impact of any future foreign exchange gains or losses.

We expect ~~a further reduction~~an increase in our ~~full-year 2018~~full year 2019 effective tax rate compared to ~~what was provided in our August~~ 2018 ~~outlook~~ due largely to discrete benefits in 2018 and expected mix-shift in the ~~third quarter~~geographic of ~~2018.~~mix of earnings to higher tax rate jurisdictions in 2019.

Not included in this guidance is the impact of any future acquisitions, share repurchase activities or a potential sale of previously exited customer engagement centers.

Our primary sources of liquidity are generally cash flows generated by operating activities and from available borrowings under our revolving credit facility. We utilize these capital resources to make capital expenditures associated primarily with our customer engagement services, invest in technology applications and tools to further develop our service offerings and for working capital and other general corporate purposes, including repurchase of our common stock in the open market and to fund acquisitions. In future periods, we anticipate similar uses of these funds.

Our Board of Directors authorized us to purchase up to 10.0 million shares of our outstanding common stock (the “2011 Share Repurchase Program”) on August 18, 2011, as amended on March 16, 2016. A total of 5.3 million shares have been repurchased under the 2011 Share Repurchase Program since inception. The shares are purchased, from time to time, through open market purchases or in negotiated private transactions, and the purchases are based on factors, including but not limited to, the stock price, management discretion and general market conditions. The 2011 Share Repurchase Program has no expiration date.

During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, cash increased ~~$89.5~~$39.3 million from operating activities ~~$27.0 million from proceeds from issuance of long-term debt~~ and ~~$0.7 million from other investing and financing activities. This increase~~ was partially offset by ~~$220.0~~$9.0 million used to repay long-term debt, $~~36.9~~5.7 million used for capital expenditures, ~~$21.8 million of cash paid for acquisitions,~~ ~~an $8.1 million purchase of intangible assets, a $5.0 million investment in equity method investees and $3.7~~$1.3 million to repurchase common stock for tax withholding on equity awards and $1.1 million of loan fees related to the 2019 Credit Agreement, resulting in a ~~$186.5~~$21.3 million ~~decrease~~increase in available cash, cash equivalents and restricted cash (including the unfavorable effects of foreign currency exchange rates on cash, cash equivalents and restricted cash of ~~$8.2~~$0.9 million).

Net cash flows provided by operating activities for the ~~nine~~three months ended ~~September 30, 2018~~March 31, 2019 were ~~$89.5~~$39.3 million, compared to ~~$118.4~~$28.6 million for the comparable period in ~~2017.~~2018. The ~~$28.9~~$10.7 million ~~decrease~~increase in net cash flows from operating activities was due to a ~~$17.4~~$0.7 million decrease in net income and a net ~~decrease~~increase of ~~$9.5~~$13.1 million in cash flows from assets and liabilities, ~~and~~partially offset by a ~~$2.0~~$3.1 million decrease in non-cash reconciling items such as depreciation, amortization, impairment and ~~deferred income tax provision (benefit).~~unrealized (gains) losses and premiums on financial instruments, net. The ~~$9.5~~$13.1 million ~~decrease~~increase in ~~2018~~2019 from ~~2017~~2018 in cash flows from assets and liabilities was principally a result of ~~an $8.9~~a $9.6 million increase in ~~accounts receivable,~~other liabilities, a ~~$4.1~~$3.3 million increase in taxes payable, net, and a $1.2 million increase in deferred lease assets and liabilities, partially offset by a $0.5 million decrease in deferred revenue, ~~and~~ a ~~$1.9~~$0.3 million increase in other assets ~~partially offset by~~and a ~~$4.5~~$0.2 million increase in ~~other liabilities and a $0.9 million decrease in taxes receivable, net.~~accounts receivable. The ~~$8.9~~$9.6 million increase in the change in other liabilities was primarily due to an $8.7 million increase principally related to the timing of accrued employee compensation and benefits and a $4.4 million increase in accounts ~~receivable~~payable principally resulting from the timing of invoices and the related payments. The $3.3 million increase in the ~~nine months ended September 30, 2018 over the comparable period~~change in ~~2017~~taxes payable, net, was primarily due to the timing of ~~billings~~income taxes payable and ~~collections.~~receivable.

Capital expenditures, which are generally funded by cash generated from operating activities, available cash balances and borrowings available under our credit facilities, were ~~$36.9~~$5.7 million for the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, compared to ~~$48.4~~$13.3 million for the comparable period in ~~2017,~~2018, a decrease of ~~$11.5~~$7.6 million. In ~~2018,~~2019, we anticipate capital expenditures in the range of $45.0 million to ~~$47.0~~$50.0 million, primarily for maintenance, new seat additions, facility upgrades and systems infrastructure.

On ~~May 12, 2015,~~February 14, 2019, we entered into a ~~$440~~$500 million senior revolving credit facility (the ~~“Credit~~“2019 Credit Agreement”) with a group of lenders, ~~and~~ KeyBank National Association, as ~~Lead Arranger, Sole Book Runner and~~ Administrative Agent, Swing Line Lender and Issuing Lender (“KeyBank”). , the lenders named therein, and KeyBanc Capital Markets Inc. as Lead Arranger and Sole Book Runner. The 2019 Credit Agreement replaced our previous $440 million revolving credit facility dated May 12, 2015 (the “2015 Credit Agreement”), which agreement was terminated simultaneous with entering into the 2019 Credit Agreement. The 2019 Credit Agreement is subject to certain borrowing limitations and includes certain customary financial and restrictive covenants. ~~At September 30, 2018, we were in compliance with all loan requirements of the Credit Agreement and had $82.0 million of outstanding borrowings under this facility.~~

Our Credit Agreement had an average daily utilization of $101.1 million and $267.0 million during the three months ended September 30, 2018 and 2017, respectively, and $107.5 million and $267.0 million during the nine months ended September 30, 2018 and 2017, respectively. During the three months ended September 30, 2018 and 2017, the related interest expense, including the commitment fee and excluding the amortization of deferred loan fees, was $0.9 million and $1.8 million, respectively, which represented weighted average interest rates of 3.6% and 2.6%, respectively. During the nine months ended September 30, 2018 and 2017, the related interest expense, including the commitment fee and excluding the amortization of deferred loan fees, was $2.8 million and $4.8 million, respectively, which represented weighted average interest rates of 3.6% and 2.4%, respectively.

The Credit Agreement includes a $200 million alternate-currency sub-facility, a $10 million swingline sub-facility and a $35 million letter of credit sub-facility, and may be used for general corporate purposes including acquisitions, share repurchases, working capital support and letters of credit, subject to certain limitations. We are not currently aware of any inability of our lenders to provide access to the full commitment of funds that exist under the 2019 Credit Agreement, if necessary. However, there can be no assurance that such facility will be available to us, even though it is a binding commitment of the financial institutions. The 2019 Credit Agreement will mature on ~~May 12, 2020.~~

~~Borrowings under~~February 14, 2024. At March 31, 2019, we were in compliance with all loan requirements of the 2019 Credit Agreement ~~bear~~and had $93.0 million of outstanding borrowings under this facility.

Our credit agreements had an average daily utilization of $96.0 million and $121.4 million during the three months ended March 31, 2019 and 2018, respectively. During the three months ended March 31, 2019 and 2018, the related interest atexpense, including the ~~rates set forth in the Credit Agreement. In addition, we are required to pay certain customary fees, including a~~ commitment fee ~~determined quarterly based on our leverage ratio~~ and ~~due quarterly in arrears as calculated on~~excluding the ~~average unused amount~~amortization of ~~the Credit Agreement.~~

The Credit Agreement is guaranteed by all our existing and future direct and indirect material U.S. subsidiaries and secured by a pledge of 100% of the non-voting and 65% of the voting capital stock of all of our direct foreign subsidiaries and those of the guarantors.

We received assessments for the Canadian 2003-2009 audit. Requests for Competent Authority Assistance were filed with both the Canadian Revenue Agency and the U.S. Internal Revenue Service and we paid mandatory security deposits to Canada as part of this process of approximately $13.8 million. As of June 30, 2017, we determined that all material aspects of the Canadian audit were effectively settled pursuant to ASC 740, ~~Income Taxes. As a result, we recognized a net income tax benefit of $1.2~~deferred loan fees, was $1.0 million and ~~the deposits were netted against the anticipated liability at that~~

~~time. During the nine months ended September 30, 2018, we finalized procedures ancillary to the Canadian audit~~$1.0 million, respectively, which represented weighted average interest rates of 4.1% and ~~recognized an additional $2.8 million income tax benefit due to the elimination of certain penalties, interest and assessed withholding taxes.~~3.4%, respectively.

~~With the effective settlement of the Canadian audit, we~~We have no significant tax jurisdictions under audit; however, we are currently under audit in several tax jurisdictions. We believe we are adequately reserved for the remaining audits and their resolution is not expected to have a material impact on our financial condition and results of operations.

The 2017 Tax Reform Act provides for a one-time transition tax based on our undistributed foreign earnings on which we previously had deferred U.S. income taxes. We recorded a $28.3 million provisional liability in 2017, which iswas net of $5.0 million of available tax credits, for our one-time transition tax. As of ~~September 30,~~both March 31, 2019

and December 31, 2018, $2.0 million of the ~~provisional~~ liability ~~was netted in “Income taxes receivable” and $3.8 million~~ was included in “Income taxes payable” ~~as of December 31, 2017~~ in the accompanying Condensed Consolidated Balance Sheets. As of ~~September 30, 2018~~both March 31, 2019 and December 31, ~~2017,~~2018, $20.4 million ~~and $24.5 million, respectively,~~ of the long-term ~~provisional~~ liability ~~were~~was included in “Long-term income tax liabilities” in the accompanying Condensed Consolidated Balance Sheets. This transition tax liability will be paid ~~over the next eight years. As of December 31, 2017, no~~in yearly installments until 2025. No additional income taxes have been provided for any remaining outside basis difference inherent in our investments in our foreign subsidiaries as these amounts continue to be indefinitely reinvested in foreign operations.

On November 1, 2018, we closed a definitive Share Purchase Agreement to acquire all the outstanding shares of Symphony for GBP 52.6 million ($67.9 million). The Company paid GBP 44.6 million ($57.6 million) at the closingAs part of the ~~transaction~~Symphony acquisition on November 1, 2018, ~~using cash on hand as well as $31.0~~a portion of the purchase price, with an acquisition date present value of GBP 7.9 million ~~of additional borrowings under our Credit Agreement. The remaining GBP 8.0~~or $10.0 million, ~~($10.3 million) of purchase price~~ has been deferred and will be paid in equal installments over ~~the next~~ three ~~years. Symphony, headquartered in London, England, is a leading global pure-play~~years, on or around November 1, 2019, 2020 and best-of-breed provider of robotic process automation (“RPA”) services. Symphony is a premier provider to blue chip clients, offering RPA consulting, implementation, hosting and managed services. Approximately 200 people strong, Symphony has one of the largest independent global teams of Intelligent Automation experts. With a proven track record of success in automating thousands of front, middle and back-office processes at marquee brands, Symphony serves numerous industries globally, including financial services, healthcare, business services, manufacturing, consumer products, communications, media and entertainment.2021.

As of ~~September 30, 2018,~~March 31, 2019, we had ~~$157.3~~$148.2 million in cash and cash equivalents, of which approximately ~~86.4%~~88.5%, or ~~$135.9~~$131.2 million, was held in international operations. As a result of the 2017 Tax Reform Act, most of these funds will not be subject to additional taxes if repatriated to the United States. There are circumstances where we may be unable to repatriate some of the cash and cash equivalents held by our international operations due to country restrictions.

We expect our current cash levels and cash flows from operations to be adequate to meet our anticipated working capital needs, including investment activities such as capital expenditures and debt repayment for the next twelve months and the foreseeable future. However, from time to time, we may borrow funds under our 2019 Credit Agreement as a result of the timing of our working capital needs, including capital expenditures.

Our cash resources could also be affected by various risks and uncertainties, including but not limited to, the risks described in our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

As of ~~September 30, 2018,~~March 31, 2019, we did not have any material commercial commitments, including guarantees or standby repurchase obligations, or any relationships with unconsolidated entities or financial partnerships, including entities often referred to as structured finance or special purpose entities or variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements or other contractually narrow or limited purposes.

From time to time, during the normal course of business, we may make certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. These include, but are not limited to: (i) indemnities to clients, vendors and service providers pertaining to claims based on negligence or willful misconduct and (ii) indemnities involving breach of contract, the accuracy of representations and warranties, or other liabilities assumed by us in certain contracts. In addition, we have agreements whereby we will indemnify certain officers and directors for certain events or occurrences while the officer or director is, or was, serving at our request in such capacity. The indemnification period covers all pertinent events and occurrences during the officer’s or director’s lifetime. The maximum potential amount of future payments we could be required to make under these

indemnification agreements is unlimited; however, we have director and officer insurance coverage that limits our exposure and enables us to recover a portion of any future amounts paid. We believe the applicable insurance coverage is generally adequate to cover any estimated potential liability under these indemnification agreements. The majority of these indemnities, commitments and guarantees do not provide for any limitation of the maximum potential for future payments we could be obligated to make. We have not recorded any liability for these indemnities, commitments and other guarantees in the accompanying Condensed Consolidated Balance Sheets. In addition, we have some client contracts that do not contain contractual provisions for the limitation of liability and other client contracts that contain agreed upon exceptions to limitation of liability. We have not recorded any liability in the accompanying Condensed Consolidated Balance Sheets with respect to any client contracts under which we have or may have unlimited liability.

During the ~~nine~~three months ended ~~September 30, 2018,~~March 31, 2019, we repaid ~~$193.0~~$9.0 million, net, of long-term debt outstanding under our Credit Agreement ~~primarily using funds repatriated from our foreign subsidiaries,~~ resulting in a remaining outstanding debt balance of ~~$82.0~~$93.0 million.

See Note ~~1, Overview and Basis of Presentation,~~3, Leases, in the accompanying “Notes to Condensed Consolidated Financial Statements” for information ~~related to the WhistleOut acquisition completed on July 9, 2018.~~

~~See Note 13, Commitments and Loss Contingency, in the accompanying “Notes to Condensed Consolidated Financial Statements” for~~about our operating leases ~~and purchase obligations entered into in the normal course~~as of ~~business during the nine months ended September 30, 2018.~~March 31, 2019.

~~See Note 19, Subsequent Event, to the accompanying “Notes to Condensed Consolidated Financial Statements” for information related to the Symphony acquisition completed on November 1, 2018.~~

Except for the contractual obligations mentioned above, there have not been any material changes outside of the ordinary course of business to the outstanding contractual obligations from the disclosure in our Annual Report on Form 10-K as of and for the year ended December 31, ~~2017.~~2018.

See “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the year ended December 31, ~~2017~~2018 for a discussion of our critical accounting estimates.

~~The adoption of ASC 606 did not result in a material change to our “Recognition of Revenues” critical accounting estimate.~~ See Note ~~2, Revenues,~~3, Leases, in the accompanying “Notes to Condensed Consolidated Financial Statements” for further information on the adoption of ASC ~~606.~~842, Leases.

See Note 1, Overview and Basis of Presentation, in the accompanying “Notes to Condensed Consolidated Financial Statements” for information related to recent accounting pronouncements.

Our earnings and cash flows are subject to fluctuations due to changes in currency exchange rates. We are exposed to foreign currency exchange rate fluctuations when subsidiaries with functional currencies other than the U.S. Dollar (“USD”) are translated into our USD consolidated financial statements. As exchange rates vary, those results, when translated, may vary from expectations and adversely impact profitability. The cumulative translation effects for subsidiaries using functional currencies other than USD are included in “Accumulated other comprehensive income (loss)” in shareholders’ equity. Movements in non-USD currency exchange rates may negatively or positively affect our competitive position, as exchange rate changes may affect business practices and/or pricing strategies of non-U.S. based competitors.

We employ a foreign currency risk management program that periodically utilizes derivative instruments to protect against unanticipated fluctuations in certain earnings and cash flows caused by volatility in foreign currency exchange

(“FX”) rates. We also utilize derivative contracts to hedge intercompany receivables and payables that are denominated in a foreign currency and to hedge net investments in foreign operations.

We serve a number of U.S.-based clients using customer engagement center capacity in The Philippines and Costa Rica, which are within our Americas segment. Although a substantial portion of the costs incurred to render services under these contracts are denominated in Philippine Pesos (“PHP”) and Costa Rican Colones (“CRC”), the contracts with these clients are priced in USDs, which represent FX exposures. Additionally, our EMEA segment services clients in Hungary and Romania with a substantial portion of the costs incurred to render services under these contracts denominated in Hungarian Forints (“HUF”) and Romanian Leis (“RON”), where the contracts are priced in Euros (“EUR”).

In order to hedge a portion of our anticipated revenues denominated in USD, ~~and EUR,~~ we had outstanding forward contracts and options as of ~~September 30, 2018~~March 31, 2019 with counterparties through December 2019 with notional amounts totaling ~~$185.2~~$84.3 million. As of ~~September 30, 2018,~~March 31, 2019, we had net total derivative ~~liabilities~~assets associated with these contracts with a fair value of ~~$2.6~~less than $0.1 million. If the USD was to weaken against the PHP and CRC ~~and the EUR was to weaken against the HUF and RON~~ by 10% from current period-end levels, we would incur a loss of approximately ~~$16.2~~$7.1 million on the underlying exposures of the derivative instruments. However, this loss would be mitigated by corresponding gains on the underlying exposures.

We had outstanding forward exchange contracts as of ~~September 30, 2018~~March 31, 2019 with notional amounts totaling ~~$5.9~~$17.0 million that are not designated as hedges. The purpose of these derivative instruments is to protect against FX volatility pertaining to intercompany receivables and payables, and other assets and liabilities that are denominated in currencies other than our subsidiaries’ functional currencies. As of ~~September 30, 2018,~~March 31, 2019, the fair value of these derivatives was a net ~~liability~~asset of ~~$0.3~~$0.4 million. The potential loss in fair value at ~~September 30, 2018,~~March 31, 2019, for these contracts resulting from a hypothetical 10% adverse change in the foreign currency exchange rates is approximately $1.3 million. However, this loss would be mitigated by corresponding gains on the underlying exposures.

~~We had embedded derivative contracts with notional amounts~~ ~~totaling $12.1 million~~ that are not designated as hedges. As of September 30, 2018, the fair value of these derivatives was a net liability of $0.4 million. The potential loss in fair value at September 30, 2018, for these contracts resulting from a hypothetical 10% adverse change in the foreign currency exchange rates is approximately $1.9 million. ~~However, this loss would be mitigated by corresponding gains on the underlying exposures.~~

We evaluate the credit quality of potential counterparties to derivative transactions and only enter into contracts with those considered to have minimal credit risk. We periodically monitor changes to counterparty credit quality as well as our concentration of credit exposure to individual counterparties.

We do not use derivative financial instruments for speculative trading purposes, nor do we hedge our foreign currency exposure in a manner that entirely offsets the effects of changes in foreign exchange rates. As a general rule, we do not use financial instruments to hedge local currency denominated operating expenses in countries where a natural hedge exists. For example, in many countries, revenue from the local currency services substantially offsets the local currency denominated operating expenses.

Our exposure to interest rate risk results from variable rate debt outstanding under our revolving credit facility. We pay interest on outstanding borrowings at interest rates that fluctuate based upon changes in various base rates. As of ~~September 30, 2018,~~March 31, 2019, we had ~~$82.0~~$93.0 million in borrowings outstanding under the ~~revolving credit facility.~~2019 Credit Agreement. Based on our level of variable rate debt outstanding during the three ~~and nine~~ months ended ~~September 30, 2018,~~March 31, 2019, a 1.0% increase in the weighted average interest rate, which generally equals the LIBOR rate plus an applicable margin, would have had an impact of ~~$0.3~~$0.2 million ~~and $0.8 million, respectively,~~ on our results of operations.

We have not historically used derivative instruments to manage exposure to changes in interest rates.

For the year ended December 31, ~~2017,~~2018, quarterly revenues as a percentage of total consolidated annual revenues were approximately ~~24%~~25%, 24%, ~~26%~~25% and 26%, respectively, for each of the respective quarters of the year. We have experienced and anticipate that in the future we will experience variations in quarterly revenues. The variations are due to the timing of new contracts and renewal of existing contracts, the timing and frequency of client spending for customer engagement services, non-U.S. currency fluctuations, and the seasonal pattern of customer engagement support and fulfillment services.

As of ~~September 30, 2018,~~March 31, 2019, under the direction of our Chief Executive Officer and Chief ~~Financial~~Finance Officer, we evaluated the effectiveness of the design and operation of our disclosure controls and procedures, as defined in Rule 13a – 15(e) under the Securities Exchange Act of 1934, as amended. Our disclosure controls and procedures are designed to provide reasonable assurance that the information required to be disclosed in our SEC reports is recorded, processed, summarized and reported within the time period specified by the SEC’s rules and forms, and is accumulated and communicated to management, including our Chief Executive Officer and Chief ~~Financial~~Finance Officer, as appropriate to allow timely decisions regarding required disclosure. We concluded that, as of ~~September 30, 2018,~~March 31, 2019, our disclosure controls and procedures were effective at the reasonable assurance level.

There were no changes in our internal controls over financial reporting during the quarter ended ~~September 30, 2018~~March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting, except for the change discussed under “Changes in Internal Control Over Financial Reporting” below.

Beginning January 1, 2019, we implemented ASC 842, Leases. Although the new lease standard is expected to have an immaterial impact on our ongoing net income, we did implement changes to our processes related to leases and the control activities within them. These included the development of new policies and controls, training, ongoing contract review requirements, and gathering of information provided for disclosures. There were no other changes in our internal controls over financial reporting during the quarter ended March 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

From time to time, we are involved in legal actions arising in the ordinary course of business. With respect to any such currently pending matters, we believe that we have adequate legal defenses and/or, when possible and appropriate, ~~has~~have provided adequate accruals related to those matters such that the ultimate outcome will not have a material adverse effect on our future financial position or results of operations.

For risk factors, see Item 1A, “Risk Factors,” of our Annual Report on Form 10-K for the year ended December 31, ~~2017.~~2018.

Below is a summary of stock repurchases for the three months ended ~~September 30, 2018~~March 31, 2019 (in thousands, except average price per share). See Note 12, Earnings Per Share, of “Notes to Condensed Consolidated Financial Statements” for information regarding our stock repurchase program.

⁽¹⁾ The total number of shares approved for repurchase under the 2011 Share Repurchase Program dated August 18, 2011, as amended on March 16, 2016, is 10.0 million. The 2011 Share Repurchase Program has no expiration date.

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

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 par value	SYKE	NASDAQ Stock Market, LLC

PART I. FINANCIAL INFORMATION		3

Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets – March 31, 2019 and December 31, 2018 (Unaudited)	3
	~~Condensed Consolidated Balance Sheets – September 30, 2018 and December 31, 2017 (Unaudited)~~	3
	Condensed Consolidated Statements of Operations – Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (Unaudited)	4
	Condensed Consolidated Statements of Comprehensive Income (Loss) – Three ~~and Nine~~ Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (Unaudited)	5
	Condensed Consolidated ~~Statement~~Statements of Changes in Shareholders’ Equity – ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019 and 2018 (Unaudited)	6
	Condensed Consolidated Statements of Cash Flows – ~~Nine~~Three Months Ended ~~September 30,~~March 31, 2019 and 2018 ~~and 2017~~ (Unaudited)	7
	Notes to Condensed Consolidated Financial Statements (Unaudited)	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	4736
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	5945
Item 4.	Controls and Procedures	6146

Part II. OTHER INFORMATION		6247

Item 1.	Legal Proceedings	6247
Item 1A.	Risk Factors	6247
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	6247
Item 3.	Defaults Upon Senior Securities	6247
Item 4.	Mine Safety Disclosures	6247
Item 5.	Other Information	6247
Item 6.	Exhibits	6348
	SIGNATURE	6449

	As Reported		Balances Without the Impact of the ASC 606 Adoption			Effect of Adoption Increase (Decrease)
Receivables, net	$	353,909	$	351,299		$	2,610
Deferred charges and other assets		33,946		28,025			5,921
Income taxes payable		355		(1,727	)		2,082
Deferred revenue and customer liabilities		31,322		33,984			(2,662	)
Other long-term liabilities		24,832		24,415			417
Retained earnings		581,740		573,046			8,694

	As Reported		Balances Without the Impact of the ASC 606 Adoption			Effect of Adoption Increase (Decrease)
Revenues	$	1,210,489	$	1,203,102		$	7,387
Income from operations		35,190		27,803			7,387
Income before income taxes		32,733		25,346			7,387
Income taxes		855		(857	)		1,712
Net income		31,878		26,203			5,675
Net income per common share:
Basic	$	0.76	$	0.62		$	0.14
Diluted	$	0.76	$	0.62		$	0.14

Large accelerated filer	☒	~~Smaller reporting company~~	☐
Accelerated filer	☐	~~Emerging growth company~~	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

	As Previously Reported		Adjustments Due to the Adoption of ASU 2017-07			As Revised
Three Months Ended September 30, 2017:
Direct salaries and related costs	$	267,516	$	(27	)	$	267,489
General and administrative		93,364		(9	)		93,355
Income from operations		26,229		36			26,265
Other income (expense), net		64		(36	)		28

Nine Months Ended September 30, 2017:
Direct salaries and related costs	$	763,324	$	(84	)	$	763,240
General and administrative		277,664		(29	)		277,635
Income from operations		63,533		113			63,646
Other income (expense), net		1,747		(113	)		1,634

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

	Statement of Operations Location	Three Months Ended March 31, 2019
Operating lease cost	Direct salaries and related costs	$	75
Operating lease cost	General and administrative		14,807
Short-term lease cost	General and administrative		423
Variable lease cost	Direct salaries and related costs		2
Variable lease cost	General and administrative		1,037
Sublease income	General and administrative		(428	)
		$	15,916

	March 31, 2019
Weighted average remaining lease term of operating leases	5.6 years
Weighted average discount rate of operating leases		3.8	%

	Amount
2019 (remaining nine months)	$	39,922
2020		54,912
2021		48,369
2022		37,324
2023		24,170
2024 and thereafter		54,043
Total future lease payments		258,740
Less: Imputed interest		27,025
Present value of future lease payments		231,715
Less: Operating lease liabilities		45,636
Long-term operating lease liabilities	$	186,079

	Amount
2019	$	53,071
2020		48,770
2021		43,324
2022		34,063
2023		22,583
2024 and thereafter		51,456
	$	253,267

	Americas 2018 Exit Plan
Short-term accrued restructuring liability ⁽¹⁾	$	4,491
Short-term accrued restructuring liability ⁽²⁾		627
Long-term accrued restructuring liability ⁽³⁾		835
Ending accrual at September 30, 2018	$	5,953

	January 1, 2019		Acquisition- Related ⁽¹⁾			Effect of Foreign Currency		March 31, 2019
Americas	$	255,436	$	291		$	953	$	256,680
EMEA		47,081		(124	)		283		47,240
	$	302,517	$	167		$	1,236	$	303,920

	January 1, 2017		Acquisition		Effect of Foreign Currency		December 31, 2017
Americas	$	255,842	$	390	$	2,264	$	258,496
EMEA		9,562		-		1,207		10,769
	$	265,404	$	390	$	3,471	$	269,265

	Gain (Loss) Recognized in AOCI on Derivatives (Effective Portion)						Gain (Loss) Reclassified From AOCI Into "Revenues" (Effective Portion)					Gain (Loss) Recognized in "Revenues" on Derivatives (Ineffective Portion and Amount Excluded from Effectiveness Testing)
	September 30,						September 30,					September 30,
	2018			2017			2018		2017			2018			2017
Derivatives designated as cash flow hedging instruments under ASC 815:
Foreign currency forward and option contracts	$	(1,839	)	$	585		$	206	$	(766	)	$	(23	)	$	-
Derivatives designated as net investment hedging instruments under ASC 815:
Foreign currency forward contracts		-			(2,979	)		-		-			-			-
	$	(1,839	)	$	(2,394	)	$	206	$	(766	)	$	(23	)	$	-

	September 30, 2018				December 31, 2017
	Cost		Fair Value		Cost		Fair Value
Mutual funds	$	8,588	$	12,569	$	8,096	$	11,627

	September 30, 2018			December 31, 2017
Property grants	$	2,460		$	2,843
Lease grants		397			507
Employment grants		39			61
Total deferred grants		2,896			3,411
Less: Property grants - short-term ^(1),(2)		(393	)		-
Less: Lease grants - short-term ⁽¹⁾		(111	)		(117	)
Less: Employment grants - short-term ⁽¹⁾		(39	)		(61	)
Total long-term deferred grants	$	2,353		$	3,233

	Amount
2018 (remaining three months)	$	7,856
2019		9,434
2020		3,730
2021		193
2022		-
2023		-
2024 and thereafter		-
	$	21,213

Stock Appreciation Rights	Shares (000s)			Weighted Average Exercise Price		Weighted Average Remaining Contractual Term (in years)		Aggregate Intrinsic Value (000s)
Outstanding at January 1, 2018		734		$	-
Granted		333		$	-
Exercised		(50	)	$	-
Forfeited or expired		(43	)	$	-
Outstanding at September 30, 2018		974		$	-		8.4	$	1,909
Vested or expected to vest at September 30, 2018		974		$	-		8.4	$	1,909
Exercisable at September 30, 2018		356		$	-		7.3	$	914

Nonvested Stock Appreciation Rights	Shares (000s)			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2018		600		$	6.88
Granted		333		$	6.84
Vested		(272	)	$	7.16
Forfeited or expired		(43	)	$	6.75
Nonvested at September 30, 2018		618		$	6.74

Nonvested Restricted Shares and RSUs	Shares (000s)			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2018		1,109		$	28.50
Granted		492		$	28.16
Vested		(323	)	$	25.78
Forfeited or expired		(123	)	$	28.15
Nonvested at September 30, 2018		1,155		$	29.15

Nonvested Common Stock Share Awards	Shares (000s)			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2018		8		$	32.21
Granted		34		$	27.68
Vested		(23	)	$	29.15
Forfeited or expired		(2	)	$	27.68
Nonvested at September 30, 2018		17		$	27.73

Nonvested Common Stock	Shares (000s)			Weighted Average Grant-Date Fair Value
Nonvested at January 1, 2018		3		$	29.56
Granted		13		$	29.23
Vested		(9	)	$	28.92
Forfeited or expired		-		$	-
Nonvested at September 30, 2018		7		$	29.85

Period	Total Number of Shares Purchased		Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs		Maximum Number of Shares That May Yet Be Purchased Under Plans or Programs ⁽¹⁾
~~July~~January 1, ~~2018~~2019 - ~~July~~January 31, ~~2018~~2019		-—	$	-—		-—		4,748
~~August~~February 1, ~~2018~~2019 - ~~August 31, 2018~~February 28, 2019		-—	$	-—		-—		4,748
~~September~~March 1, ~~2018~~2019 - ~~September 30, 2018~~March 31, 2019		-—	$	-—		-—		4,748
Total		-—				-—		4,748

No.		Description

15*		Awareness letter.

31.1*		Certification of Chief Executive Officer, pursuant to Rule 13a-14(a).

31.2*		Certification of Chief ~~Financial~~Finance Officer, pursuant to Rule 13a-14(a).

32.1**		Certification of Chief Executive Officer, pursuant to 18 U.S.C. §1350.

32.2**		Certification of Chief ~~Financial~~Finance Officer, pursuant to 18 U.S.C. §1350.

101.INS*+		XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH*+		XBRL Taxonomy Extension Schema Document

101.CAL*+		XBRL Taxonomy Extension Calculation Linkbase Document

101.LAB*+		XBRL Taxonomy Extension Label Linkbase Document

101.PRE*+		XBRL Taxonomy Extension Presentation Linkbase Document

101.DEF*+		XBRL Taxonomy Extension Definition Linkbase Document

*		Filed herewith as an Exhibit.
**		Furnished herewith as an Exhibit.
+		Submitted electronically with this Quarterly Report.

	SYKES ENTERPRISES, INCORPORATED
	(Registrant)

Date: ~~November~~ 6May 7, ~~2018~~2019	By:	/s/ John Chapman
	John Chapman
	~~Executive Vice President and~~ Chief ~~Financial~~Finance Officer
	(Principal Financial and Accounting Officer)