Note 4. Costs Associated with Exit or Disposal Activities

Fourth Quarter 2011 Exit Plan

During 2011, the Company announced a plan to rationalize seats in certain U.S. sites and close certain locations in EMEA (the “Fourth Quarter 2011 Exit Plan”). The details are described below, by segment.

Americas

During 2011, as part of an on-going effort to streamline excess capacity related to the integration of the ICT Group, Inc. (“ICT”) acquisition and align it with the needs of the market, the Company announced a plan to rationalize approximately 900 seats in the U.S., some of which are revenue generating, with plans to migrate the associated revenues to other locations within the U.S. Approximately 300 employees were affected and the Company has substantially completed the actions associated with the Americas plan.

The major costs estimated to be incurred as a result of these actions are program transfer costs, facility-related costs (primarily consisting of those costs associated with the real estate leases), and impairments of long-lived assets (primarily leasehold improvements and equipment) estimated at $1.9 million ($1.0 million at December 31, 2011). This increase of $0.4 million and $0.9 million included in “General and administrative” costs included in the accompanying Condensed Consolidated Statement of Operations during the three and nine months ended September 30, 2012, respectively, is primarily due to a change in estimate in lease obligations and additional lease obligation costs. The Company recorded $0.5 million of the costs associated with these actions as non-cash impairment charges, while approximately $1.4 million represents cash expenditures for program transfer and facility-related costs, including obligations under the leases, the last of which ends in January 2013. The Company has paid $0.3 million in cash through September 30, 2012 under the Fourth Quarter 2011 Exit Plan in the Americas.

The following table summarizes the accrued liability associated with the Americas Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the three months ended September 30, 2012 (none in the comparable period in 2011) (in thousands):


	Beginning Accrual at July 1, 2012		Charges (Reversals) for the Three Months Ended September 30, 2012 ⁽¹⁾		Cash Payments			Other Non-Cash Changes ⁽²⁾		Ending Accrual at September 30, 2012		Short-term ⁽³⁾		Long-term ⁽⁴⁾
Lease obligations and facility exit costs	$	598	$	418	$	(281	)	$	—	$	735	$	148	$	587

⁽¹⁾	During the three months ended September 30, 2012, the Company recorded additional charges due to a change in estimate in lease obligations and facility exit costs, which are included in “General and administrative” costs in the accompanying Condensed Consolidated Statement of Operations.

⁽²⁾	Effect of foreign currency translation.

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

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

The following table summarizes the accrued liability associated with the Americas Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the nine months ended September 30, 2012 (none in the comparable period in 2011) (in thousands):


	Beginning Accrual at January 1, 2012		Charges (Reversals) for the Nine Months Ended September 30, 2012 ⁽¹⁾		Cash Payments			Other Non-Cash Changes ⁽²⁾		Ending Accrual at September 30, 2012
Lease obligations and facility exit costs	$	—	$	1,074	$	(339	)	$	—	$	735

⁽¹⁾	During the nine months ended September 30, 2012, the Company recorded additional lease obligations and facility exit costs, which are included in “General and administrative” costs in the accompanying Condensed Consolidated Statement of Operations.

⁽²⁾	Effect of foreign currency translation.

EMEA

During 2011, to improve the Company’s overall profitability in the EMEA region, the Company committed to close a customer contact management center in South Africa and a customer contact management center in Ireland, as well as some capacity rationalization in the Netherlands, all components of the EMEA segment. Through these actions, the Company expects to improve its cost structure in the EMEA region by optimizing its capacity utilization. While the Company migrated approximately $3.2 million of annualized call volumes of the Ireland facility to other facilities within EMEA, the Company did not migrate the remaining call volume in Ireland or any of the annualized revenue from the Netherlands or South Africa facilities, which was $18.8 million for 2011, to other facilities within the region. The number of seats rationalized across the EMEA region approximated 900 with approximately 500 employees affected by the actions. The Company closed these facilities and substantially completed the actions associated with the EMEA plan on September 30, 2012.

The major costs estimated to be incurred as a result of these actions are facility-related costs (primarily consisting of those costs associated with the real estate leases), impairments of long-lived assets (primarily leasehold improvements and equipment) and anticipated severance-related costs estimated at $7.6 million as of September 30, 2012 ($7.6 million as of December 31, 2011). The Company recorded $0.5 million of the costs associated with these actions as non-cash impairment charges, while approximately $7.1 million will be cash expenditures for severance-related costs and facility-related costs, primarily rent obligations to be paid through the remainder of the noncancelable term of the leases, the last of which ends in March 2013. The Company has paid $5.7 million in cash through September 30, 2012 under the Fourth Quarter 2011 Exit Plan in EMEA.

The following table summarizes the accrued liability associated with EMEA’s Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the three months ended September 30, 2012 (none in the comparable period in 2011) (in thousands):


	Beginning Accrual at July 1, 2012		Charges (Reversals) for the Three Months Ended September 30, 2012 ⁽¹⁾		Cash Payments			Other Non-Cash Changes ⁽²⁾			Ending Accrual at September 30, 2012		Short-term ⁽³⁾		Long-term ⁽⁴⁾
Lease obligations and facility exit costs	$	565	$	—	$	(5	)	$	8		$	568	$	568	$	—
Severance and related costs		3,320		151		(2,886	)		(17	)		568		568		—
Legal-related costs		5		12		(16	)		(1	)		—		—		—

	$	3,890	$	163	$	(2,907	)	$	(10	)	$	1,136	$	1,136	$	—

⁽¹⁾	During the three months ended September 30, 2012, the Company recorded additional severance and related costs and legal-related costs, which are included in “General and administrative” costs in the accompanying Condensed Consolidated Statement of Operations.

⁽²⁾	Effect of foreign currency translation.

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

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

The Company charged $0.7 million to “Direct salaries and related costs” for severance and related costs and $0.5 million to “General and administrative” costs for severance and related costs and legal-related costs in the accompanying Consolidated Statement of Operations for the nine months ended September 30, 2012. The following table summarizes the accrued liability associated with EMEA’s Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges for the nine months ended September 30, 2012 (none in the comparable period in 2011) (in thousands):


	Beginning Accrual at January 1, 2012		Charges (Reversals) for the Nine Months Ended September 30, 2012 ⁽¹⁾		Cash Payments			Other Non-Cash Changes ⁽²⁾			Ending Accrual at September 30, 2012
Lease obligations and facility exit costs	$	577	$	—	$	(5	)	$	(4	)	$	568
Severance and related costs		4,470		1,093		(4,898	)		(97	)		568
Legal-related costs		13		83		(95	)		(1	)		—

	$	5,060	$	1,176	$	(4,998	)	$	(102	)	$	1,136

⁽¹⁾	During the nine months ended September 30, 2012, the Company recorded additional severance and related costs and legal-related costs.

⁽²⁾	Effect of foreign currency translation.

Fourth Quarter 2010 Exit Plan

During 2010, in furtherance of the Company’s long-term goals to manage and optimize capacity utilization, the Company committed to and closed a customer contact management center in the United Kingdom and a customer contact management center in Ireland, both components of the EMEA segment (the “Fourth Quarter 2010 Exit Plan”). These actions were substantially completed by January 31, 2011.

The major costs incurred as a result of these actions were facility-related costs (primarily consisting of those costs associated with the real estate leases), impairments of long-lived assets (primarily leasehold improvements and equipment) and severance-related costs totaling $2.2 million as of September 30, 2012 ($2.2 million as of December 31, 2011). The Company recorded $0.2 million of the costs associated with the Fourth Quarter 2010 Exit Plan as non-cash impairment charges. Approximately $1.8 million represents cash expenditures for facility-related costs, primarily rent obligations to be paid through the remainder of the lease terms, the last of which ends in March 2014, and $0.2 million represents cash expenditures for severance-related costs. The Company has paid $1.3 million in cash through September 30, 2012 under the Fourth Quarter 2010 Exit Plan.

The following tables summarize the accrued liability associated with the Fourth Quarter 2010 Exit Plan’s exit or disposal activities and related charges during the three months ended September 30, 2012 and 2011 (in thousands):


	Beginning Accrual at July 1, 2012		Charges (Reversals) for the Three Months Ended September 30, 2012		Cash Payments			Other Non-Cash Changes ⁽¹⁾			Ending Accrual at September 30, 2012		Short-term ⁽²⁾		Long-term ⁽³⁾
Lease obligations and facility exit costs	$	656	$	—	$	(66	)	$	5		$	595	$	419	$	176


	Beginning Accrual at July 1, 2011		Charges (Reversals) for the Three Months Ended September 30, 2011		Cash Payments			Other Non-Cash Changes⁽¹⁾			Ending Accrual at September 30, 2011		Short-term		Long-term
Lease obligations and facility exit costs	$	1,652	$	—	$	(8	)	$	(93	)	$	1,551	$	1,010	$	541

⁽¹⁾	Effect of foreign currency translation.

⁽²⁾	Included in “Other accrued expenses and current liabilities” in the accompanying Condensed Consolidated Balance Sheet.

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

The following tables summarize the accrued liability associated with the Fourth Quarter 2010 Exit Plan’s exit or disposal activities and related charges during the nine months ended September 30, 2012 and 2011 (in thousands):


	Beginning Accrual at January 1, 2012		Charges (Reversals) for the Nine Months Ended September 30, 2012		Cash Payments			Other Non-Cash Changes ⁽²⁾			Ending Accrual at September 30, 2012
Lease obligations and facility exit costs	$	835	$	—	$	(229	)	$	(11	)	$	595


	Beginning Accrual at January 1, 2011		Charges (Reversals) for the Nine Months Ended September 30, 2011 ⁽¹⁾		Cash Payments			Other Non-Cash Changes ⁽²⁾			Ending Accrual at September 30, 2011
Lease obligations and facility exit costs	$	1,711	$	523	$	(671	)	$	(12	)	$	1,551

⁽¹⁾	During the nine months ended September 30, 2011, the Company recorded additional lease termination costs, which are included in “General and administrative” costs in the accompanying Condensed Consolidated Statement of Operations.

⁽²⁾	Effect of foreign currency translation.

Third Quarter 2010 Exit Plan

During 2010, consistent with the Company’s long-term goals to manage and optimize capacity utilization, the Company closed or committed to close four customer contact management centers in The Philippines and consolidated or committed to consolidate leased space in our Wilmington, Delaware and Newtown, Pennsylvania locations (the “Third Quarter 2010 Exit Plan”). These actions were substantially completed by January 31, 2011.

The major costs incurred as a result of these actions were impairments of long-lived assets (primarily leasehold improvements) and facility-related costs (primarily consisting of those costs associated with the real estate leases) estimated at $10.5 million as of September 30, 2012 ($10.5 million as of December 31, 2011), all of which are in the Americas segment. The Company recorded $3.8 million of the costs associated with the Third Quarter 2010 Exit Plan as non-cash impairment charges, of which $0.7 million is included in “Impairment of long-lived assets” in the accompanying Condensed Consolidated Statement of Operations for the nine months ended September 30, 2011 (see Note 5, Fair Value, for further information). The remaining $6.7 million represents cash expenditures for facility-related costs, primarily rent obligations to be paid through the remainder of the lease terms, the last of which ends in February 2017. The Company has paid $4.1 million in cash through September 30, 2012 under the Third Quarter 2010 Exit Plan.

The following tables summarize the accrued liability associated with the Third Quarter 2010 Exit Plan’s exit or disposal activities and related charges for the three months ended September 30, 2012 and 2011 (in thousands):


	Beginning Accrual at July 1, 2012		Charges (Reversals) for the Three Months Ended September 30, 2012		Cash Payments			Other Non-Cash Changes ⁽¹⁾		Ending Accrual at September 30, 2012		Short-term ⁽²⁾		Long-term ⁽³⁾
Lease obligations and facility exit costs	$	2,755	$	—	$	(146	)	$	—	$	2,609	$	510	$	2,099


	Beginning Accrual at July 1, 2011		Charges (Reversals) for the Three Months Ended September 30, 2011		Cash Payments			Other Non-Cash Changes ⁽¹⁾		Ending Accrual at September 30, 2011		Short-term		Long-term
Lease obligations and facility exit costs	$	5,049	$	—	$	(627	)	$	—	$	4,422	$	1,589	$	2,833

⁽¹⁾	Effect of foreign currency translation.

⁽²⁾	Included in “Other accrued expenses and current liabilities” in the accompanying Condensed Consolidated Balance Sheet.

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

The following tables summarize the accrued liability associated with the Third Quarter 2010 Exit Plan’s exit or disposal activities and related charges for the nine months ended September 30, 2012 and 2011 (in thousands):


	Beginning Accrual at January 1, 2012		Charges (Reversals) for the Nine Months Ended September 30 2012		Cash Payments			Other Non-Cash Changes ⁽²⁾		Ending Accrual at September 30, 2012
Lease obligations and facility exit costs	$	3,427	$	—	$	(818	)	$	—	$	2,609


	Beginning Accrual at January 1, 2011		Charges (Reversals) for the Nine Months Ended September 30, 2011 ⁽¹⁾		Cash Payments			Other Non-Cash Changes ⁽²⁾		Ending Accrual at September 30, 2011
Lease obligations and facility exit costs	$	6,141	$	249	$	(1,973	)	$	5	$	4,422

⁽¹⁾	During the nine months ended September 30, 2011, the Company recorded additional lease termination costs, which are included in “General and administrative” costs in the accompanying Condensed Consolidated Statement of Operations.

⁽²⁾	Effect of foreign currency translation.

ICT Restructuring Plan

As of February 2, 2010, the Company assumed the liabilities of ICT, including restructuring accruals in connection with ICT’s plans to reduce its overall cost structure and adapt to changing economic conditions by closing various customer contact management centers in Europe and Canada prior to the end of their existing lease terms (the “ICT Restructuring Plan”). These remaining restructuring accruals, which related to ongoing lease and other contractual obligations, were paid in December 2011. Since acquiring ICT in February 2010, the Company paid $1.9 million in cash related to the ICT Restructuring Plan through December 31, 2011, the date at which the ICT Restructuring Plan concluded.

The following table summarizes the accrued liability associated with the ICT Restructuring Plan’s exit or disposal activities for the three months ended September 30, 2011 (none in the comparable period in 2012) (in thousands):


	Beginning Accrual at July 1, 2011		Charges (Reversals) for the Three Months Ended September 30, 2011		Cash Payments			Other Non-Cash Changes ⁽¹⁾			Ending Accrual at September 30, 2011		Short-term		Long-term
Lease obligations and facility exit costs	$	507	$	—	$	(28	)	$	(13	)	$	466	$	466	$	—

⁽¹⁾	Effect of foreign currency translation.

The following table summarizes the accrued liability associated with the ICT Restructuring Plan’s exit or disposal activities for the nine months ended September 30, 2011 (none in the comparable period in 2012) (in thousands):


	Beginning Accrual at January 1, 2011		Charges (Reversals) for the Nine Months Ended September 30, 2011 ⁽¹⁾			Cash Payments			Other Non-Cash Changes ⁽²⁾			Ending Accrual at September 30, 2011
Lease obligations and facility exit costs	$	1,462	$	(262	)	$	(721	)	$	(13	)	$	466

⁽¹⁾	During the nine months ended September 30, 2011, the Company reversed accruals related to the final settlement of termination costs, which reduced “General and administrative” costs in the accompanying Condensed Consolidated Statement of Operations.

⁽²⁾	Effect of foreign currency translation.