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Costs Associated with Exit or Disposal Activities

3 Months Ended

Mar. 31, 2012

Costs Associated with Exit or Disposal Activities [Abstract]

Costs Associated with Exit or Disposal Activities

Note 3. 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 1,200 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 500 employees are expected to be affected and the Company expects to complete the actions associated with the Americas plan on or before October 31, 2012.

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 $1.0 million. The Company recorded $0.5 million of the costs associated with these actions as non-cash impairment charges, while approximately $0.5 million represents cash expenditures for program transfer and facility-related costs, including obligations under the leases, the last of which ends in January 2013. There is no accrual as no actions have taken place to transfer programs or close the facilities as of March 31, 2012. No cash has been paid through March 31, 2012 for the program transfer costs or facility-related costs.

EMEA

During 2011, in an effort 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 plans to migrate approximately $3.2 million of annualized call volumes of the Ireland facility to other facilities within EMEA, the Company does not anticipate the remaining call volume in Ireland or any of the annualized revenue from the Netherlands or South Africa facilities, which was $18.8 million, will be captured and migrated to other facilities within the region. The number of seats anticipated for rationalization across the EMEA region approximates 900 with an anticipated total of approximately 500 employees affected by the actions. The Company expects to close these facilities by July 2012 and substantially complete the actions associated with the EMEA plan on or before 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. 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 $1.1 million in cash through March 31, 2012 for severance-related and legal-related costs.

The following tables summarize the accrued liability associated with EMEA’s Fourth Quarter 2011 Exit Plan’s exit or disposal activities and related charges (none in 2011) (in thousands):


	Beginning Accrual at January 1, 2012		Charges (Reversals) for the Three Months Ended March 31, 2012 ⁽¹⁾		Cash Payments			Other Non- Cash Changes ⁽²⁾		Ending Accrual at March 31, 2012		Short-term ⁽³⁾		Long-term
Lease obligations and facility exit costs	$	577	$	—	$	—		$	18	$	595	$	595	$	—
Severance and related costs		4,470		948		(367	)		168		5,219		5,219		—
Legal-related costs		13		51		(51	)		1		14		14		—

	$	5,060	$	999	$	(418	)	$	187	$	5,828	$	5,828	$	—

⁽¹⁾	During the three months ended March 31, 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.

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 March 31, 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 $1.2 million in cash through March 31, 2012 for facility-related and severance-related costs.

The following tables summarize the accrued liability associated with the Fourth Quarter 2010 Exit Plan’s exit or disposal activities and related charges (in thousands):


	Beginning Accrual at January 1, 2012		Charges (Reversals) for the Three Months Ended March 31, 2012		Cash Payments			Other Non- Cash Changes ⁽²⁾		Ending Accrual at March 31, 2012		Short-term ⁽³⁾		Long-term ⁽⁴⁾
Lease obligations and facility exit costs	$	835	$	—	$	(96	)	$	25	$	764	$	402	$	362


	Beginning Accrual at January 1, 2011		Charges (Reversals) for the Three Months Ended March 31, 2011 ⁽¹⁾		Cash Payments			Other Non- Cash Changes ⁽²⁾		Ending Accrual at March 31, 2011		Short-term		Long-term
Lease obligations and facility exit costs	$	1,711	$	70	$	(387	)	$	58	$	1,452	$	567	$	885

⁽¹⁾	During the three months ended March 31, 2011, the Company recorded additional lease termination costs related to the Ireland customer contact management center, which is 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.

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 March 31, 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 three months ended March 31, 2011 (see Note 4, 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 $3.8 million in cash through March 31, 2012 related to these facility-related costs.

The following tables summarize the accrued liability associated with the Third Quarter 2010 Exit Plan’s exit or disposal activities and related charges (in thousands):


	Beginning Accrual at January 1, 2012		Charges (Reversals) for the Three Months Ended March 31, 2012		Cash Payments			Other Non- Cash Changes ⁽²⁾		Ending Accrual at March 31, 2012		Short-term ⁽³⁾		Long-term ⁽⁴⁾
Lease obligations and facility exit costs	$	3,427	$	—	$	(477	)	$	—	$	2,950	$	523	$	2,427


	Beginning Accrual at January 1, 2011		Charges (Reversals) for the Three Months Ended March 31, 2011 ⁽¹⁾		Cash Payments			Other Non-Cash Changes ⁽²⁾		Ending Accrual at March 31, 2011		Short-term		Long-term
Lease obligations and facility exit costs	$	6,141	$	220	$	(742	)	$	—	$	5,619	$	1,953	$	3,666

⁽¹⁾	During the three months ended March 31, 2011, the Company recorded additional lease termination costs related to one of the Philippine customer contact management centers, which is 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.

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 (none in 2012) (in thousands):


	Beginning Accrual at January 1, 2011		Charges (Reversals) for the Three Months Ended March 31, 2011 ⁽¹⁾			Cash Payments			Other Non- Cash Changes ⁽²⁾		Ending Accrual at March 31, 2011		Short-term		Long-term
Lease obligations and facility exit costs	$	1,462	$	(262	)	$	(426	)	$	43	$	817	$	817		—

⁽¹⁾	During the three months ended March 31, 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.

- Definition

The entire disclosure for restructuring and related activities. Description of restructuring activities such as exit and disposal activities, include facts and circumstances leading to the plan, the expected plan completion date, the major types of costs associated with the plan activities, total expected costs, the accrual balance at the end of the period, and the periods over which the remaining accrual will be settled.

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