UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K

(Mark One)



þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2013~~2014



o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 333-172952

SITEL WORLDWIDE CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware		16-1556476
(State or Other Jurisdiction ofIncorporation or Organization)		(I.R.S. Employer Identification No.)
3102 West End AvenueTwo American Center, Suite 1000Nashville, Tennessee		37203
3102 West End AvenueTwo American Center, Suite 900Nashville, Tennessee		37203
(Address of Principal Executive Offices)		(Zip Code)

Registrant's Telephone Number, Including Area Code: (615) 301-7100

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

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

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES o NO þ

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.

YES þ NO o

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES o NO þ

The Registrant is a voluntary filer of reports required of companies with public securities under Section 13 or 15(d) of the Securities Exchange Act of 1934 and has filed all reports which would have been required of the Registrant during the preceding 12 months had it been subject to such provisions.

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Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit and post such files).

YES þ NO o

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of Registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of "large accelerated filer," "accelerated filer", and "smaller reporting company" in Rule 12b-2 of the Exchange Act:



Large accelerated filer o		Accelerated filer o

Non-accelerated filer þ	(Do not check if a smaller reporting company)	Smaller reporting company o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act.)

YES o NO þ

As of June 30, ~~2013~~2014, there was no established public trading market for any of the common stock of the Registrant.

Indicate the number of shares outstanding of each of the issuer’s classes of common stock as of the latest practicable date.

	Outstanding
Class	January 31, ~~2014~~2015
Class A, $0.01 par value	3938,~~051~~256,~~643~~844
Class B, $0.01 par value	88,281,647
Class C, $0.01 par value	23,990

Documents Incorporated by Reference: None

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TABLE OF CONTENTS

Item		Page No.
PART I
1.	Business	4
1A.	Risk Factors	8
1B.	Unresolved Staff Comments	20
2.	Properties	20
3.	Legal Proceedings	21
4.	Mine Safety Disclosure	21
PART II
5.	Market for the Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	22
6.	Selected Financial Data	23
7.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
7A.	Quantitative and Qualitative Disclosures about Market Risk	46
8.	Financial Statements and Supplementary Data	48
9.	Changes in and Disagreements with Accountants on Accounting and Finance Disclosures	~~112~~109
9A.	Controls and Procedures	~~112~~109
9B.	Other Information	~~112~~109
PART III
10.	Directors, Executive Officers and Corporate Governance	~~114~~110
11.	Executive Compensation	~~118~~114
12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	~~132~~128
13.	Certain Relationships and Related Transactions, and Director Independence	~~135~~132
14.	Principal Accounting Fees and Services	~~140~~137
PART IV
15.	Exhibits, Financial Statement Schedule	~~144~~141
	Signatures	~~142~~139

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Forward-Looking Statements

This report contains forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, which are based on the beliefs and assumptions of our management regarding, among other things, our plans, strategies and prospects, both business and financial. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning our possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words "believes," "expects," "anticipates," "intends," "plans," "estimates" or similar expressions. These statements discuss potential risks and uncertainties; therefore, our actual future results may be materially different than those expressed in our forward-looking statements. These statements should be read in conjunction with the other cautionary factors identified under the heading "Risk Factors."

We caution you not to place undue reliance on these forward-looking statements. Forward-looking statements speak only as of the date they were made. We do not undertake any obligation to make any revisions to these forward-looking statements to reflect events or circumstances after the date of this report or to reflect the occurrence of unanticipated events, except as required by law, including the securities laws of the United States and rules and regulations of the United States Securities and Exchange Commission (the "SEC"). This Report on Form 10-K includes important information as to risk factors in "Item 1. Business," "Item 1A. Risk Factors," and "Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations." You should evaluate all forward-looking statements made in this report in the context of these risks and uncertainties.

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PART I

ITEM 1. BUSINESS

Our Company

SITEL Worldwide Corporation ("we"," "our"," "Sitel"," or "the Company") is one of the world’s largest and most diversified providers of customer care outsourcing services. We offer our clients a wide array of services, including customer service, technical support, customer acquisition, retention and revenue generation services, and back office support. The majority of our customer care services are inbound and delivered telephonically, but we are increasingly asked to provide services through other communication channels, including email, online chat, interactive voice response ("IVR"), and social media channels. We serve a broad range of industry end–markets, including financial services, technology, wireless, retail and consumer products, telecommunications, media and entertainment, energy and utilities, travel and transportation, ~~internet~~Internet service providers, insurance, public sector, and healthcare. WeSitel ~~currently~~maintains ~~operate~~global ~~one~~standards of ~~the~~excellence ~~industry’s~~providing ~~most~~service ~~geographically~~through ~~diverse~~108 ~~operating~~customer ~~platforms~~experience ~~through~~centers ~~approximately~~and ~~110~~other ~~customer~~facilities ~~contact~~located ~~centers~~in 21 countries and ~~related~~supporting ~~facilities~~client customers located in 2362 countries. Asacross ofNorth ~~December 31~~America, ~~2013~~South America, weEurope, ~~serviced~~Africa ~~our~~and ~~clients’~~Asia ~~customers~~Pacific in 40 languages. Home-based agents complement our global network of facilities and provide rapidly scalable services and access to unique skill sets, making Sitel a pioneer in customer experience innovation. We believe that our operating ~~platforms~~platform ~~handle~~handles an estimated 32.51 million customer interactions per day. In ~~2013~~2014, our largest single client and our top 10 client relationships represented approximately 56.90% and 36.73% of our Revenues, respectively, and no single industry end-market represented more than 1921.53% of Revenues, which we believe makes us one of the most diversified providers in our industry by client and end-market.

Due to the depth of our client relationships and expertise, we are well positioned to help clients holistically improve the experience of their customer with their brand, using the most appropriate channels and communication methods. We further strive to deliver value to our clients by reducing their operating costs, as well as increasing their revenue through improved customer satisfaction, increased retention, ~~and~~ more effective sales interactions. ~~Many~~and ofturning ~~our~~cost ~~clients~~centers, ~~seek~~such ~~providers~~as ~~who~~technical ~~offer a complete suite of customer care services tailored to the needs of their particular end-market. Our top ten clients utilize~~support, oninto ~~average,~~profit ~~four of our services~~centers.

Our geographic footprint and multi-lingual support capability aligns with growing demand from our clients that have global customer bases. Our offering of domestic, nearshore, and ~~off-shore~~offshore ~~customer~~ contact centers and our Work@Home ~~initiatives~~program allows us to provide customized client solutions, ~~whether~~ to service customers in a single country or across many different countries and at various price points. Our Global Operating System enables us to deliver consistent, high quality service throughout the world. ~~Our~~while our regionalized operating model allows us to quickly respond to customer needs.

We are organized geographically and have two reporting segments: (1) "Americas," which refers to North America, Latin America, and Asia Pacific; and (2) "EMEA," which refers to Europe, the Middle East, and Africa. Each reporting segment performs substantially the same services for clients. See Note 18 to the Consolidated Financial Statements included in Item 8 of this Report for additional information regarding our reporting segments.

For the year ended December 31, ~~2013~~2014, we reported $1,~~438~~440.32 million of Revenues, $6649.3 million of Operating income, and $~~130~~117.17 million of Adjusted EBITDA. See Management's Discussion and Analysis within Item 7 of this Report for a reconciliation of Net income to Adjusted EBITDA.

Our Services

With almost three decades of industry experience, we are a leading global business process outsourcing provider of customer care and complementary back-office processes. Our services encompass the entire customer lifecycle, from the acquisition of customers for our clients, to the service, growth, and retention of those customers. Our services are delivered through multiple communication channels, including over telephone, social media, online chat, email, and IVR. These service offerings are complemented by a select range of back-office services.

Our Strategy

~~Thematically,~~Our ~~our~~ strategy revolves around the concept of "~~meaning~~improving ~~more~~experiences" toof our clients, ~~our~~of ~~people,~~ our ~~stockholders,~~customer’s clients and of our ~~lenders~~people. ~~Our~~We ~~goal~~want is to be the vendor and employer of choice in the customer care outsourcing industry, offering our clients consistent, high -quality, cost-effective, and comprehensive customer care services across multiple regions and business lines. We want our clients and prospective clients to select us over our competitors or their in-house capabilities. We want our employees to select us over our competitors or even opportunities in other industries. Moreover, we want our stockholders and lenders to invest in us over other choices. We believe this strategy will allow us to grow revenues, improve margins, and enhance return on capital. ~~We believe we can work toward achieving our goals by executing the following four strategies:~~

Our strategy focuses on the following four strategy principles:

Operational Excellence. We have a large and globally diverse base of approximately 225 clients, with exposure to a broad variety of end-markets and limited client concentration. We focus on enhancing our clients’ strategy and business by not

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Expand Relationships with Existing Clients and Develop New Client Relationships. We have a large and globally diverse base of approximately 250 clients, with exposure to a broad variety of end–markets and limited client concentration. We focus on enhancing our clients’ strategy and business by not only reducing their costs per call/contact, but by deploying comprehensive strategies to improve their return on customer investment, improve customer relationships, and enhance their revenue opportunities. We accomplish this through investment in account management, leveraging best practices established through our Global Operating System and ~~consistent~~ investment in new sites, technologies and expanded product offerings. We believe this combination of client-focused initiatives and strong operational performance has resulted in the long-tenured relationships we hold with our clients. As we continue to demonstrate the value ~~that~~of our services ~~provide~~, we are frequently able to expand the size and scope of our existing client relationships, specifically as many of our clients consolidate their vendor relationships. Additionally, as more companies outsource their customer care service requirements, we believe our track record of solid operational execution will enable us to grow and to add long-term client relationships in diverse industries. We further believe this trend will enhance the stability and growth potential of our revenue base.

~~Maximize~~Additionally, ~~Return~~as onmore ~~Invested~~companies ~~Capital.~~outsource Wetheir ~~actively~~customer ~~manage~~care ~~our~~service ~~capacity~~requirements, ~~investments,~~we ~~human~~believe ~~resources,~~our ~~clients~~expertise and ~~infrastructure,~~execution ~~allowing~~in uscustomer tosupport ~~drive~~will ~~better~~enable ~~utilization of our assets. This allows~~ us to ~~maximize~~grow ~~our return on capital~~ and ~~compete~~to ~~effectively~~add atlong-term ~~different~~client ~~market~~relationships ~~price~~in ~~points.~~diverse ~~Over the past five years, we have aggressively pursued rationalization and optimization efforts~~industries. We ~~have~~further ~~also~~believe ~~reduced~~this ~~indirect~~trend ~~costs~~will ~~and~~enhance closed or consolidated approximately 25 underperforming or underutilized sites since 2010, creating a leaner and more focused and flexible company. Additionally, we have reduced our annual Selling, general, and administrative expense approximately $57.0 million over the ~~last~~stability ~~five years,~~ and ~~expect~~growth-potential toof ~~continue to rationalize and leverage~~ our ~~fixed~~revenue ~~operating costs going forward~~base. ~~Further, our substantial tax operating loss carry forwards enhance our future cash flow by reducing potential cash tax obligations.~~

~~Develop~~Maximize ~~New~~Return ~~Customer-Centric~~on ~~Service~~Invested ~~Solutions~~Capital. AsWe aactively ~~global~~manage ~~industry~~our ~~leader~~capacity, ~~with~~investments, ahuman ~~recognized~~resources, ~~brand~~clients, and ~~extensive distribution network~~infrastructure, weallowing ~~seek~~us to ~~grow~~drive effective utilization of our ~~market~~assets. ~~share~~This ~~with~~allows ~~existing~~us ~~and~~to ~~new~~maximize ~~clients~~our byreturn ~~introducing~~on ~~new~~capital and ~~innovative~~compete ~~products~~at todifferent ~~enhance~~market price points. Over the ~~effectiveness~~past five years, we have aggressively pursued rationalization and ~~efficiency~~optimization ofefforts ~~our~~reducing ~~customer~~indirect ~~interactions.~~costs ~~Our~~and ~~philosophy~~closing ~~involves~~or ~~partnering~~consolidating ~~with~~approximately ~~industry~~28 ~~leading~~underperforming ~~technology~~or ~~providers~~underutilized ~~and~~sites, ~~driving~~creating ~~scale~~a leaner and ~~execution~~more onfocused aand ~~global~~flexible ~~basis~~operating platform. Additionally, we ~~believe~~have byreduced ~~introducing~~our ~~higher~~annual ~~return~~selling, general, and ~~flexible~~administrative ~~solutions~~expenses toby ~~our~~approximately ~~clients~~$18.0 ~~with~~million ~~minimal~~over ~~capital~~the ~~investments,~~last ~~such~~three asyears, ~~our~~and ~~industry-leading~~expect ~~approach~~to continue to ~~work-at-home~~rationalize ~~security~~and ~~within~~leverage our ~~Work@Home~~fixed ~~solutions,~~operating ~~cloud-based~~costs ~~services~~going ~~and~~forward. ~~social~~Further, ~~media-based~~our ~~products,~~substantial wetax ~~will~~operating ~~continue~~loss tocarry ~~provide~~forwards enhance our ~~clients~~future ~~enhanced~~cash ~~revenues~~flow ~~and~~by ~~lower~~reducing ~~operating~~potential ~~costs~~cash tax obligations.

~~Invest~~People ~~in our Talent~~First. Recognizing that talent is extremely important to our success, we ~~strive~~continue to ~~continue~~strive to attract, develop and retain a strong team of diverse and high-performing professionals. We believe our emphasis on continual development of ~~our~~ in-house talent has positioned us well for growth and better enables us to expand in existing markets and ~~into~~ new markets without having to recruit and train new managers. Furthermore, development of our talent allows us to quickly adapt to changing geographic demands of our clients, while still maintaining a consistent service offering. Significant investments in our SITEL Leadership Academy and SITEL University learning platforms ~~ensure~~help ~~each~~to ~~and~~give ~~every~~our ~~manager~~managers ~~at SITEL has~~ the knowledge, ability, and skills needed to succeed at their ~~job~~jobs.

Knowledge Sharing. As a global industry leader with a recognized brand and extensive global footprint, we seek to grow our market share with existing and new clients by introducing new and innovative solutions to enhance the effectiveness and efficiency of our customer interactions. Our knowledge sharing culture utilizes processes, organizational structures, and technology applications that help people share and leverage their knowledge to deliver better experiences to our clients' customers and to our people, driving sustainable growth and value creation to our stockholders.

Our History

We were founded in April 1998 by Onex Corporation with the acquisition of a single contact center in Toronto, Canada. Through 2006, we undertook a number of organic growth initiatives and made several acquisitions that helped us build our infrastructure and develop our process capabilities under the trade name ClientLogic. Throughout our history, our goal has been to provide professional managed, cost efficient and consistent customer care of the highest quality to our clients.

On January 30, 2007, we acquired SITEL Corporation, a business tracing its industry origins back to 1985, to form SITEL Worldwide Corporation. We believe the SITEL Corporation acquisition provided us with expanded technology infrastructure and the increased scale to serve high-growth end-markets within the customer care outsourcing industry. Since the SITEL Corporation acquisition, we have achieved synergies and cost reductions through elimination of facility and corporate overhead redundancies, consolidation of operating units, changes in benefits programs and operational efficiencies.

Our Employees

At January 31, ~~2014~~2015, we had approximately 5661,~~000~~100 employees, with approximately 4043,~~000~~200 employees in Americas and approximately 1617,~~000~~900 in EMEA. We operate in a number of jurisdictions with established works councils and unions. Accordingly, we are subject to laws and regulations, and we are party to collective bargaining and other agreements which stipulate work rules and restrict our ability to hire and fire employees without recourse, severance or adherence to certain due process and grievance procedures. We consider our relations with our employees to be good.

Our employees are critical to the success of our business. Accordingly, we have developed an end-to-end approach that enables us to attract, train, develop, motivate, reward and retain talented employees at all levels throughout our organization. To build rewarding careers for our employees and enable effective planning for continued success and growth, we facilitate an environment that yields strong employee satisfaction and performance.

Information Technology

Strategy Overview. Our information technology ("IT") strategy is to capitalize on stable technology suppliers and Sitel technology offerings to create a balanced portfolio of technology and service offerings that maximizes our value

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~~Information~~proposition ~~Technology~~to our clients. We strive to develop global relationships with best-of-breed technology providers and use our combined global expertise to provide innovative, flexible and secure solutions for our clients. Our infrastructure allows us to implement our suppliers’ solutions in scalable, on-demand models to effectively manage both client expansion and capital expense.

~~Strategy~~A ~~Overview.~~key ~~Our~~aspect ~~information~~of ~~technology~~our ("IT") ~~strategy~~operational model is the ability to ~~capitalize~~route onvoice, ~~stable~~using ~~technology~~Voice ~~suppliers~~over ~~and~~IP ~~Sitel~~("VoIP") ~~technology~~and ~~offerings~~data totraffic, ~~create~~on a ~~balanced~~common ~~portfolio~~global ofprivate ~~technology~~network. ~~and~~This ~~service~~network ~~offerings~~allows ~~that~~us ~~maximizes our value proposition~~ to ~~our~~route ~~clients.~~contact Wecenter ~~strive~~work tothrough ~~develop~~a ~~global~~wide ~~relationships~~variety ~~with best-~~of~~-breed~~ ~~technology~~channels ~~providers~~to ~~and~~multiple ~~use~~locations ~~our~~to ~~combined~~respond ~~global expertise~~ to ~~provide~~changes ~~innovative,~~in ~~flexible~~client requirements and ~~secure~~provide ~~solutions~~business ~~for our clients~~continuity. ~~Our~~Additionally, ~~infrastructure~~this allows us to ~~implement~~support ~~our~~other ~~suppliers’~~emerging ~~solutions~~service indelivery ~~scalable~~models, ~~on-demand~~such ~~models~~as toour ~~effectively~~Work@Home, ~~manage~~Premium ~~both~~Technical ~~client~~Support, ~~expansion~~ and ~~capital~~Technology ~~expense.~~Solutions ~~Not~~programs, ~~being~~as ~~tied to~~ a ~~single~~complement ~~in-house technology supplier allows us~~ to ~~provide solutions customized to~~ our ~~clients’~~traditional ~~needs~~brick-and-mortar ~~which~~customer incontact ~~turn drives greater client retention and satisfaction~~centers.

AWe ~~key~~also ~~aspect~~endeavor ofto ~~our~~deliver ITcontinuous ~~operational~~availability ~~model is the ability~~ to ~~route~~our ~~voice,~~clients ~~using~~across ~~Voice~~our ~~over~~network ~~IP ("VoIP")~~ and ~~data traffic, on a common global private network~~facilities. ~~This~~We ~~network~~do ~~allows~~this usby toworking ~~route~~with ~~contact~~our ~~center~~suppliers ~~work through a wide variety of channels~~ to ~~multiple~~develop ~~locations~~appropriate tobackup ~~respond~~plans ~~to changes in client requirements~~ and ~~provide~~by ~~business~~spreading ~~continuity. Additionally, this allows us to support other emerging service delivery models, such as~~ our ~~agents~~facilities inacross ~~our~~geographies ~~Work@Home, Premium Technical Support, and Technology Solutions programs, as a complement~~ to ~~our~~minimize ~~traditional~~any ~~brick-and-mortar~~natural ~~customer~~or ~~contact~~regional ~~centers~~threats.

WeIn ~~endeavor~~addition to ~~deliver~~owning ~~continuous~~or ~~availability~~leasing tosystems hardware, we license the software programs that form the basis of our ~~clients~~IT ~~across~~systems. Due to our ~~network~~scale, ~~and~~we ~~facilities.~~are Weable doto ~~this~~maintain byfavorable ~~working~~relationships with ~~our~~quality ~~suppliers~~software toproviders ~~develop~~of ~~appropriate~~off-the-shelf ~~backup~~software ~~plans~~products. ~~and~~We byalso ~~spreading~~utilize ~~our~~software ~~facilities~~programs ~~across~~that ~~geographies~~are specific to ~~minimize~~our ~~any~~industry, ~~natural~~including orfor ~~regional~~workforce ~~threats.~~management, scripting and computer–telephone integration.

InSecurity ~~addition~~and toData ~~owning~~Privacy. orWe ~~leasing~~have ~~systems~~developed ~~hardware,~~and weimplemented ~~license~~a ~~the~~global ~~software~~security ~~programs~~program, ~~that~~supporting ~~form~~policies ~~the~~and ~~basis~~related ofprocedures ~~our~~to ITpromote ~~systems.~~uniform ~~Due~~management toand ~~our~~deployment ~~scale,~~of wesecurity ~~are~~controls ~~able~~and tosolutions. ~~maintain~~Executive ~~favorable~~team ~~relationships~~members ~~with~~from ~~quality~~our ~~software~~internal ~~providers~~functions, ofincluding ~~off-the-shelf~~operations, ~~software~~IT, ~~products.~~finance, Wehuman ~~also~~resources ~~utilize~~and ~~software~~legal, ~~programs~~govern ~~that~~the ~~are~~policy ~~specific~~process toso ~~our~~that ~~industry~~security and data risks, including ~~for~~regulatory ~~workforce management~~requirements, ~~collections,~~are ~~scripting~~identified and ~~computer–telephone integration~~mitigated.

Our strategy is to deploy and operate our baseline security policy to manage security and data privacy risk at a level suitable for our business. For many of our clients, our baseline security policy meets their needs and enables risks to be managed appropriately for their outsourced solution requirements. Where clients desire higher levels of security, due to the nature of their business risk profile or sector-specific legislation, we evaluate their requirements against our baseline policy and assist clients to identify and implement appropriate and heightened security controls for their outsource solution.

In addition, our agents generally deliver services to our clients’ customers while connected to our clients’ IT systems and enter customer data directly into those clients’ systems. Other than recordings of our agents’ calls with customers, we generally do not store any customer data on our systems. As we are generally liable for potential agent fraud, we work with our clients to mitigate fraud risks and/or the risk of misappropriation of customer data posed by the configuration of client systems. To date, incidents of agent fraud or misappropriation of data generally have been localized.

Operational Technologies. As a provider of customer care services, we promote flexibility in our solutions by blending commercially available components with our internal competencies into solutions meeting each client’s unique business requirements. Our system integration capabilities enable us to develop tailored solutions utilizing both our systems and our clients’ systems.

The core elements of our IT infrastructure that support our customer contact center operations include systems for automatic call distribution, IVR, computer telephony integration, database systems to support client knowledge bases and applications to support specific client requirements. In addition, to support our back office operations, we use technologies such as imaging and scanning systems, workflow management systems, order management systems and customer data warehouses. We utilize systems for digital call recording, workforce scheduling and adherence, employee training and standardized reporting to ensure our operations are working at optimal efficiency. Our systems are monitored through a global incident response team that coordinates the rapid resolution of any service incident and coordinates planned changes to maintain high system availability. The global change management team integrates our operational activities with those of our clients to maintain service levels.

Security and Data Privacy. We have developed and implemented a global security policy, supporting policies and related procedures to promote uniform management and deployment of security controls and solutions. Executive team members from our internal functions, including operations, IT, finance, human resources and legal, govern the policy process so that security and data risks, including regulatory requirements, are identified and mitigated.

Our strategy is to deploy and operate our baseline security policy to manage security and data privacy risk at a level suitable for our business. For many of our clients, our baseline security policy meets their needs and enables risks to be managed appropriately for their outsource solution requirements. Where clients desire higher levels of security, due to the nature of their business risk profile or sector-specific legislation, we evaluate their requirements against our baseline policy and assist clients to identify and implement appropriate security controls for their outsource solution.

In addition, our agents generally deliver services to our clients’ customers while connected to our clients’ IT systems and enter customer data directly into those clients’ systems. Other than recordings of our agents’ calls with customers, we generally do not store any customer data on our systems. As we are generally liable for our agents' fraud, we work with our clients to mitigate fraud risks and/or the risk of misappropriation of customer data posed by the configuration of client systems. To date, incidents of agent fraud or misappropriation of data generally have been localized.

Seasonality

Our business has been generally subject to seasonality, with revenues and profits strongest in the fall ~~and winter~~ months due to the high level of sales activity between our clients and their customers during the holiday season, with slower business during the spring and summer months.

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Competition

The customer care outsourcing industry is a highly fragmented and competitive industry. We face our principal competition from the following:

• ~~existing~~Existing and prospective clients with the resources to provide services in-house;

• customer care outsourcing companies such as Arvato AG, Convergys Corporation, Expert Global Solutions, Inc., Stream Global Services, Inc., Sykes Enterprises, Incorporated, Teleperformance SA, TeleTech Holdings, Inc., and WNS (Holdings) Ltd.;6

•Table ~~large~~of ~~multinational information technology services providers, such as ACS, a Xerox Company, Hewlett-Packard Company, and IBM Corporation; and~~Contents

• ~~smaller~~Customer care outsourcing companies such as Arvato AG, ~~niche~~Convergys ~~service~~Corporation, ~~providers~~Expert ~~that~~Global ~~provide~~Solutions, ~~services~~Inc., inSykes aEnterprises, ~~specific~~Inc., ~~geographic~~Alorica ~~market~~Incorporated, ~~industry~~Teleperformance ~~segment~~SA, orTeleTech ~~service~~Holdings, ~~area~~Inc., ATENTO SA, and WNS (Holdings) Ltd.;


•	Large multinational information technology services providers, such as Xerox, Hewlett-Packard Company, and IBM Corporation; and


•	Smaller, niche service providers that provide services in a specific geographic market, industry segment or service area.

Competition for contracts for many of our services takes the form of bidding in response to requests for proposals.

We believe the most significant competitive factors in our business include service quality, price, geographic delivery footprint, range of service offering (including implementation of customized solutions to meet client needs), technological expertise, security, and industry experience.

Government Regulations

We are subject to regulation in many jurisdictions around the world as a result of the complexity of our operations and services, particularly in the countries where we have operations and deliver services. We are also subject to regulation by regional bodies such as the European Union.

In addition, the terms of our service contracts typically require us to comply with applicable laws, rules and regulations and industry standards, including payment card industry rules applicable to our clients for whom we transact credit card transactions and requirements applicable to telecommunications service providers. In some contracts, we are required to comply even if such laws and regulations apply to our clients, but not directly to us.

If we fail to comply with any applicable laws, rules, standards or regulations, we may be restricted in our ability to provide services and may also be the subject of civil or criminal actions involving penalties, any of which could have a material adverse effect on our operations.

Available Information

Our Website is www.sitel.com. Our periodic reports and all amendments to those reports required to be filed or furnished pursuant to Section 13(a) or 15(d) of the Securities and Exchange Act of 1934 are available free of charge on the SEC's Internet site at http://www.sec.gov. There is a link to all reports SITEL Worldwide Corporation has filed with the SEC on our website. Information is also available at the SEC's Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.

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ITEM 1A. RISK FACTORS

The following factors, among others, could cause our future results to differ from those contained in forward-looking statements made in this report and presented elsewhere by management from time to time. Such factors, among others, may have a material adverse effect on our business, financial condition, results of operations and cash flows. The risks identified in this section are not exhaustive. We operate in a dynamic and competitive environment. New risk factors affecting us emerge from time to time and it is not possible for management to predict all such risk factors. Further, it is not possible to assess the impact of all risk factors on our business or the extent to which any single factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Given these inherent risks and uncertainties, investors are cautioned not to place undue reliance on forward-looking statements as a prediction of actual results. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also materially and adversely affect our business or results of operations in the future. In addition, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following discussion of our risk factors speaks only as of the date on which they were made and should be read in conjunction with the ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements and related notes included herein. Because of these and other factors, past financial performance should not be considered an indication of future performance. Any of the following risks could materially adversely affect our business, financial condition, results of operations or cash flows.

RISKS RELATING TO OUR BUSINESS

Volatility in the global economy has an adverse effect on our clients’ business and our business and uncertainty in global economic conditions could have a material adverse effect on our business.

The global economy continues to experience economic uncertainty with wide-ranging effects, including volatility in overall economic activity in various parts of the world and in particular industries. Global economic conditions affect our clients’ businesses and the markets they serve. Our revenues and call volumes are often highly correlated with the revenues and sales volumes of our clients as well as with renewals by our clients’ customers. In addition, many of our clients are seeking to consolidate their current group of service providers to a smaller more manageable group that is able to provide integrated service offerings on a global basis. Moreover, when client call volumes decrease due to deteriorating economic conditions, some clients decide to take the services provided by us and our competitors in-house, further reducing our revenues.

Our ability to sustain growth and profitability in the current environment is dependent upon our ability to maintain or gain a greater share of business among our current clients and to attract new clients. There can be no assurance we will be able to do so in the future. Continued economic uncertainty could adversely affect our clients’ financial condition and the levels of business activity of our clients and the industries we serve. In particular, depressed consumer spending levels may cause clients to reduce demand for our services or depress pricing of those services and therefore could have a material adverse effect on our business, results of operations and financial condition, including our ability to refinance maturing debt instruments and to access the capital markets. In the event that some of our customer contact centers do not receive sufficient call volume in the future, we may be required to close them and relocate business to other centers. This would require substantial employee severance, lease termination costs and other reorganization costs.

The countries in which our EMEA reporting segment operates in particular continue to experience significant economic turmoil. Several countries within the EMEA reporting segment are our highest cost locations due to competitive employee pay and benefit rates. When services are moved from one country to another country or we lose client volume and business, there are certain exit costs including lease termination, employee severance and other restructuring costs. In several countries, works councils and unions have agreements in place which require calculated severances. These exit costs could be substantial.

Finally, we are exposed to additional risks related to our clients' ability to pay, which may result in uncollectable accounts receivables. Economic volatility and a prolonged recovery, coupled with tightened credit availability, could adversely affect our clients' liquidity and cause them to delay or reduce their payments to us. Such delays or reductions or the non-payment by our clients of amounts owed to us could require us to increase our allowance for doubtful accounts, negatively impact our cash flow and adversely affect our results of operations.

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Wage increases in the countries, regions, or locations in which we have operations may reduce our profit margin.

Salaries and related benefits of our employees are our most significant costs. A majority of our employees work in our off-shore facilities in which wage levels have historically been significantly lower than wage levels in our domestic facilities for comparably skilled professionals. However, wage levels for comparably skilled employees in most of our off-shore facilities have increased and further increases are expected at a faster rate than in our domestic facilities because of, among other reasons, faster economic growth, increased competition for skilled employees and increased demand for business process services. In addition, labor shortages in some of the regions in which we operate could impact our ability to hire workers, increase the wages necessary to attract such workers or prompt us to re-locate some of our customer contact centers to domestic areas having greater labor availability or higher wages. We may not be able to increase pricing to offset wage increases, which may impact our margins and profitability.

Our inability to attract, hire and retain qualified employees could adversely affect our growth and depress our profit margins.

We operate in a labor-intensive industry and our business depends in part on our ability to attract, hire and retain qualified employees. Some of our customer support services activities require highly trained employees. High rates of turnover are common in our industry, and, as a result, we are continuously required to recruit and train qualified personnel. If our attrition rate increases, our recruiting and training costs could rise and our operating efficiency and productivity may decrease. In addition, failure to hire or retain necessary personnel may adversely impact our ability to perform under our contracts or to implement our growth strategies.

We are exposed to exchange rate fluctuations in the international markets in which we operate. A movement in the value of any of these currencies relative to the U.S. dollar could reduce profits from certain client contracts.

We conduct operations in many areas of the world involving transactions denominated in a variety of functional currencies, which are other than our reporting currency. We are subject to currency exchange rate risk to the extent that our costs may be denominated in currencies other than those in which we earn and report revenues and vice versa. As a consequence, movements in exchange rates could cause our expenses to fluctuate, affecting our profitability and cash flows. In addition, since our financial statements are denominated in U.S. dollars, changes in currency exchange rates between the U.S. dollar and our various functional currencies have had, and will continue to have, an impact on our earnings.

We also face risks arising from the imposition of exchange controls and currency devaluations. Exchange controls may limit our ability to convert foreign currencies into U.S. dollars or to remit dividends and other payments by our foreign subsidiaries or businesses located in or conducted within a country imposing controls. Currency devaluations result in a diminished value of funds denominated in the currency of the country instituting the devaluation. Actions of this nature, if they occur or continue for significant periods of time, could have an adverse effect on our results of operations and financial condition in any given period.

Our reporting currency is the U.S. dollar. Gains and losses from the re-measurement of assets and liabilities that are receivable or payable in a currency other than functional currency are included in the accompanying Consolidated Statements of Comprehensive Loss. The re-measurement has caused the U.S. dollar value of our international results of operations to vary with exchange rate fluctuations, and the U.S. dollar value of our international results of operations will continue to vary with exchange rate fluctuations.

A fluctuation in the value of any of these currencies relative to the U.S. dollar could reduce our profits from non-U.S. operations and the translated value of the net assets of our non-U.S. operations when reported in U.S. dollars in our financial statements. This could have a negative impact on our business, financial condition or results of operations as reported in U.S. dollars. In addition, fluctuations in currencies relative to currencies in which the earnings are generated may make it more difficult to perform period-to-period comparisons of our reported results of operations.

Although we have historically entered into hedging transactions to reduce our exposure to this type of currency exchange risk with respect to certain, but not all, currency pairings, such transactions typically cover only 12 to 18 months forward and as such cannot eliminate all of the risks or potential negative impact on earnings or net assets associated with currency fluctuations, and there is no assurance we will hedge, or be able to hedge, these risks in the future. Further, the markets in which we operate could restrict the removal or conversion of the local or foreign currency, resulting in our inability to hedge against these risks.

The presentation of our financial results may be impacted by the translation of foreign currencies.

We hold assets, incur liabilities, earn revenues and pay expenses in a variety of currencies other than the U.S. dollar, including primarily the Euro, British pound sterling, Canadian dollar, Indian rupee, Mexican peso and Philippine peso. Because our ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements are presented in U.S. dollars, we must translate our assets, liabilities, revenues and expenses into U.S. dollars at then-applicable exchange rates. Consequently, increases and decreases in the value of the U.S.

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dollar ~~may~~ affect the value of these items in our ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements, even if their value has not changed in their original currency. These translations could significantly affect the comparability of our results between financial periods or result in significant changes to the carrying value of our assets, liabilities and stockholders’ equity.

We process, transmit and store personally identifiable information, and the unintended release of this information or a breach of our security measures could result in a claim for damage or loss of business and create unfavorable publicity.

We process, transmit and store personally identifiable information, both in our role as a service provider and as an employer. Additionally, databases used in our operations contain personally identifiable information concerning our clients and their customers. We and our clients each take measures to protect against unauthorized access to this information. Circumvention of these security measures, whether caused by a third party or by employee error or malfeasance, could lead to the misappropriation and dissemination of sensitive or proprietary information such as names, addresses, credit and debit card numbers and other personal information, or interrupt our operations or cause a system denial of service. As a result, we are subject to certain contractual terms, as well as federal, state, and foreign laws and regulations designed to protect personally identifiable information. Many of our contracts do not limit our potential liability for breaches of confidentiality or employee fraud or misconduct. Unauthorized access to information or failure to comply with data privacy laws and regulations may subject us to contractual liability and damages, loss of business, damages from individual claimants, fines, penalties, criminal prosecution, unfavorable publicity and harm to our brand, any of which could negatively affect our operating results and financial condition.

Increases in the cost of voice, data and other technology services or significant interruptions in these services could adversely affect our business, results of operations and financial condition.

We depend on voice and data services and other intellectual property rights provided by and licensed from various telecommunications providers. Because of this dependence, any change to the telecommunications market that would disrupt these services or limit our ability to obtain services at favorable rates could adversely affect our business, results of operations and financial condition. While we have entered into long-term contracts with many of our telecommunications providers, there is no obligation for these vendors to renew their contracts with us or to offer the same or lower rates in the future. In addition, these contracts are subject to termination or modification for various reasons outside of our control. Furthermore, the consolidation of voice and data services to a limited number of telecommunication providers could expose us to risks associated with being dependent upon a limited number of service providers. An adverse change in the pricing of voice, data or other technology services that we are unable to recover through a corresponding change in the price of our services, or any significant interruption in voice, data or other technology services, including a termination or modification of our contracts and licenses with these providers, could adversely affect our business, results of operations and financial condition.

Our business could be adversely affected by a systems or equipment failure or other emergency interruption.

Our operations are dependent upon our ability to protect our customer contact centers, computer and telecommunications equipment, software and other systems against damage and failures. Damage or failures could result from fire, power loss, equipment malfunctions, system failures, problems with Internet access or usage, natural disasters, intentional acts of others and other causes outside of our control. If our business is interrupted for any reason, we may be unable to provide the services we are required to deliver under our client contracts or may incur significant expense in reallocating resources and employees to provide coverage for a business interruption. As a result, we may experience a reduction in revenues or be required to pay contractual damages to some clients or allow some clients to terminate or renegotiate their contracts. In addition, our relationship with these clients may be damaged and our reputation and ability to compete for new clients may be impaired. Our business interruption and property insurance may not adequately cover or compensate us for any losses we may incur. As a result, these interruptions to our business could adversely affect our business, results of operations and financial condition.

Our business is dependent on our information technology and communications platforms.

We have invested in specialized information technology and communications capabilities to service our clients' needs. We expect we will be required to invest continually in new and enhanced technology to manage the increasingly specialized needs of our clients and to maintain our competitiveness. There can be no assurance that any of our information technology platforms will be adequate to maintain our competitiveness or that we will be able to develop or purchase new technology to enhance, develop or maintain our existing platforms.

We are often also dependent on the information technology and communication platforms of our clients. Our contracts typically require us to interface directly with our clients' systems and our agents perform the large majority of their work behind client system firewalls and are given access directly to client customer information. If these client systems do not employ appropriate anti-fraud and other preventative capabilities or are otherwise subject to exploitable weaknesses, we could be exposed to system risks or be held responsible for our agents' actions or omissions in the course of our service renderings.

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Our business could be adversely affected by a cyber incident.

Our operations are dependent upon our ability to rely on our computer networks and the networks of our clients. Our networks and the networks of our clients are subject to many types of cyber attacks, including but not limited to the gaining of unauthorized access to steal or corrupt sensitive data or to disrupt operations, sophisticated electronic circumvention of network security, and social engineering techniques such as "phishing" to extract passwords or other information that will enable the gaining of access. If our business or our clients' business is interrupted for any reason, we may be unable to provide the services we are required to deliver under our client contracts, or we may incur significant expense in reallocating resources and employees to make up for a business interruption related to the cyber attack. As a result, we may experience a reduction in revenues or be required to pay contractual damages to some clients or allow some clients to terminate or renegotiate their contracts. In addition, our relationship with these clients may be damaged and our reputation and ability to compete for new clients may be impaired. As a result, these interruptions to our business could adversely affect our business, results of operations and financial condition.

We enter into long-term and fixed rate contracts with our clients. Our failure to correctly price these contracts may negatively affect our profitability.

The pricing of our services is usually included in contracts entered into with our clients, most of which are for terms of one to three years. In many cases, we commit to fixed rate pricing over the contract term with only limited sharing of risk regarding inflation, currency exchange rates and costs of labor, office space and technology. If we fail to accurately estimate future inflation rates, currency exchange rates or other costs, or if we fail to accurately estimate the productivity benefits we can achieve under our contracts or fail to meet certain operating metrics, it could have a material adverse effect on our business, results of operations and financial condition.

Most of our clients have contracts with us that are non-exclusive, are terminable by the clients without cause, and do not provide for revenue commitments.

While we sign multi-year contracts with our clients, our contracts are terminable by our clients without cause, and, in many cases, do not provide for revenue commitments. In addition, most of our contracts are not exclusive, and many of our clients retain other service providers with whom we compete. We may lose business as a result of clients moving business in-house, using our competitors’ services, or otherwise choosing to terminate us for performance issues or lack of demand.

The loss of a key client could adversely affect our business, results of operations and financial condition.

We derive significant revenues in certain countries in which we operate from a few key clients. The loss of all or a significant portion of our business with these key clients could have a material adverse effect on our business, financial condition and results of operations. Many of our contracts are terminable by the client at their convenience often with only short-term notice. Our contracts further contain few minimum volume commitments and allow clients to reduce their use of our services under these contracts without penalty.

Mergers and acquisitions involving certain of our clients could result in a loss of clients or contract changes that could have a material adverse effect on our business and financial results.

We do business with clients in end-markets that have historically experienced significant merger and acquisition activity and consolidating market share. If any of our key clients is acquired, the client or its acquirer may seek to renegotiate or terminate our contract which could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our business is dependent on increasing client demand for outsourcing and may not develop in ways that we currently anticipate due to negative public reaction.

Our business and growth depend in large part on the industry trend toward outsourced customer care management services. However, the trend to outsource business processes may not continue and could reverse. Outsourcing is a politically sensitive topic in the U.S. and abroad. For example, several organizations in the U.S. have publicly expressed concern about a perceived association between outsourcing providers and the loss of jobs in the U.S. In response to such expressions, federal legislative measures have been proposed in the past, such as limiting income tax credits for companies that off-shore American jobs.

In addition, there is ongoing publicity about some negative experiences that organizations have had with outsourcing, such as theft and misappropriation of sensitive client data. Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services from onshore to off-shore providers to avoid negative perceptions that may be associated with using an off-shore provider. Any slowdown or reversal of existing industry trends toward off-shore outsourcing could harm our ability to compete effectively with competitors that operate solely out of facilities located in the United States or Canada.

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We typically face a long selling cycle to secure a new contract as well as long implementation periods requiring significant resource commitments, which may delay our realization of revenues from the establishment of new relationships.

We typically face a long selling cycle to secure a new client and incur significant business development expenses during this selling cycle. Typically, before committing to utilize our services, clients or potential clients require us to expend substantial time and resources demonstrating the value of our services and the feasibility of successfully integrating our processes and resources with their operations. Our selling cycle, which generally ranges from four to six months, is subject to many risks and delays over which we have no control, including a potential client’s decision to choose a competitor or retain the work in-house. In the event we are unsuccessful in winning a new client’s business, we receive no revenues and may receive no reimbursement for expenses incurred during the selling cycle.

If we are successful in obtaining an engagement, a long implementation period typically follows before we begin receiving revenues. Our clients may also experience delays in obtaining internal approvals or delays associated with technology or system implementations, thereby further lengthening the implementation period. We generally hire new employees to provide services to a new client once a contract is signed and we may face significant difficulties in hiring such employees and incur significant costs associated with these hires before we receive corresponding revenues.

If we are not successful in obtaining contractual commitments after the selling cycle, in maintaining contractual commitments after the implementation period or in maintaining or reducing the duration of unprofitable initial periods in our contracts, it may have a material adverse effect on our business, results of operations and financial condition.

We face competition from many sources that could adversely affect our business and create pricing pressures that could reduce our profit margins.

Our industry is highly fragmented and competitive. Our principal competition stems from existing and prospective clients with the resources and ability to provide the same or similar services in-house. We also face competition from customer care outsourcing companies, large multi-national information technology services providers and smaller, niche service providers that provide services in a specific geographic market, industry segment or service area. Many of these providers offer one or more of the same services we do. We expect the intensity of competition to continue to increase in the future as existing competitors enhance and expand their service offerings and as new participants enter the market.

Our success depends, in part, on our ability to respond adequately to pricing pressures from our competitors and clients, license or internally develop leading technologies to enhance our existing services and develop new services, and adapt to changing market conditions, client requirements and emerging industry standards. Some of our competitors have, or could acquire, greater financial, personnel, technological, capacity and other resources than we have. As a result, our competitors may be better able to create or withstand pricing pressures in our industry, and may be in a stronger position to respond quickly to potential acquisitions and other market opportunities, new or emerging technologies and changes in client requirements. Competitors with greater financial resources may be able to offer lower prices, additional services or other incentives we cannot match or do not offer. Our failure to maintain and enhance our competitive position would limit our ability to maintain or increase our market share, which could adversely affect our business, results of operations and financial condition. Increased competition also may result in price reductions, reduced gross margins and loss of market share. The prices we are able to charge for our services and our ability to retain current or secure new clients may be affected by our clients’ or potential clients’ perceptions of the financial strength of our company compared to that of our competitors.

Risks associated with our international operations may decrease our revenues and increase our costs.

We operate or rely upon customer contact centers located in 2362 countries. A majority of our revenues are serviced outside the U.S. As part of our business strategy, we intend to further increase our global presence off-shore by following our clients’ expansion into new international markets. We also provide services to our domestic clients through customer contact centers located abroad. Our operations in foreign countries present additional risks, including risks associated with unexpected events, which may result in increased operational difficulties, lower revenues, higher costs and reduced profitability.

These risks include but are not limited to the following:


•	compliance with numerous, and sometimes varied, legal or regulatory requirements (including data privacy regulation, employment laws and laws regulating corrupt activity such as the Foreign Corrupt Practices Act ("FCPA") and the U.K. Bribery Act of 2010 (the "U.K. Bribery Act") and other anti-bribery laws);


•	restrictions on the transfer of funds into or out of a particular country;


•	domestic and foreign customs, tariffs and trade barriers;


•	potential adverse tax consequences, including the expiration of tax holidays or the failure by foreign governments to renew tax holidays or unfavorable resolution of tax controversies;


•	nationalization of foreign assets and other forms of government protectionism;

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•	political and economic instability;


•	labor or other disruptions;


•	fluctuations in the exchange rate;


•	delays in collecting accounts receivable;


•	restrictions on our ability to adjust the size of our workforce;


•	acts of war or terrorism or natural disasters, and limits on the ability of regional governments to respond to such acts; and


•	restrictions on our ability to own or operate subsidiaries, make investments, or acquire new businesses in these jurisdictions.

As noted above, because we operate internationally we are required to comply with numerous legal and regulatory requirements, including the FCPA and the U.K. Bribery Act. The FCPA generally prohibits U.S. companies and their employees from offering, promising, authorizing or making payments to foreign officials for the purpose of obtaining or retaining business or otherwise obtaining favorable treatment. It also includes certain provisions relating to accounting matters. Our employees are subject to a code of conduct which prohibits, among other matters, violations of law, including the FCPA and the U.K. Bribery Act. We monitor compliance with our code of conduct by requiring executives to certify, on a quarterly basis, that such executive is not aware of any acts or omissions which would constitute a violation of our code of conduct. We have updated our corporate policies and implemented a comprehensive, stand-alone Anti-Bribery and Corruption policy. If for any reason our internal controls relating to bribery and corruption are found to be ineffective, such a determination in and of itself might be construed to be a violation of the FCPA.

The U.K. Bribery Act criminalizes (i) commercial bribery and bribery of domestic and foreign government officials; (ii) receipt of a bribe; and (iii) failure by a corporate entity to prevent bribery. Unlike the FCPA, it does not contain a "books and records" provision. The corporate offense of failure to prevent bribery applies not only to U.K. companies, but to any company that conducts part of its business in the U.K., even if no part of the conduct constituting the bribery took place in the U.K. The U.K. Bribery Act does, however, provide for a defense to liability for failure to prevent bribery if the corporate entity can show that it has "adequate procedures" in place to detect and deter such conduct.

Civil penalties under the anti-bribery provisions of the FCPA could range up to $10 thousand per violation, with a criminal fine up to the greater of $2 million per violation or twice the gross pecuniary gain to us or twice the gross pecuniary loss to others, if larger. A company that knowingly commits a violation of the accounting provisions can be fined up to $25 million per violation. Additionally, resolutions of anti-corruption matters may result in modifications to company compliance programs and the selection of a monitor to ensure anti-corruption compliance by the company. Authorities in relevant foreign jurisdictions may also seek to impose fines and other penalties relating to anti-corruption violations. Moreover, a potential investigation could have adverse effects upon our reputation and, among other things, the ability to attract and retain clients and employees.

Any of the above factors could impair our current or future international operations and, as a result, harm our overall business.

Pending and future litigation may divert management’s time and attention and result in substantial costs of defense, damages or settlement, which could adversely affect our business, results of operations and financial condition.

In the ordinary course of our business, we are subject to legal proceedings and claims regarding a variety of matters, including contract, intellectual property, regulatory, tax and employment claims. For detailed information, see Note 14 to the Consolidated Financial Statements included in Item 8 of this Report.

We may not successfully defend against or otherwise satisfactorily resolve current or future litigation to which we are or may become subject. Furthermore, regardless of the outcome of any current or future lawsuits, actions, claims or investigations, we may incur substantial defense costs and these actions may cause a diversion of management’s time and attention. Also, we may be required to alter our business practices or pay substantial damages or settlement costs as a result of these proceedings, which could adversely affect our business, results of operations and financial condition. Further, litigation with any one of our clients could harm our reputation and adversely affect our ability to obtain and retain other clients.

Certain countries (including some where we do business) have experienced political and economic instability and periodically experience civil unrest and terrorism, which could disrupt our operations and have a material adverse effect on our business, results of operations, and financial condition.

Certain countries (including some where we do business) have experienced inflationary markets and have fluctuating currencies. Certain countries where we do business also periodically experience civil unrest, terrorism, and political turmoil,

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and U.S. companies operating therein may experience greater risk. The political event risk in the Middle East and the policy response could undermine the economies in the Middle East, and have other collateral impacts on the world economy, including reduced economic activity due to ~~increases~~movements in the price of oil. These conditions could disrupt our operations and have a material adverse effect on our business, results of operations, and financial condition.

Terrorist attacks, other acts of violence or war, and political instability may adversely affect worldwide financial markets and could potentially lead to economic recession or a weakened or lengthened recovery, which could adversely affect our business, results of operations, and financial condition. These events also pose significant risks to our employees and to our operations around the world.

Our financial results depend on our ability to forecast accurately client contact volumes and to make timely decisions regarding employee staffing, capital investments and ordinary course operating expenses.

Our forecasting accuracy directly impacts the costs of staffing and operating our customer contact centers. If we fail to forecast accurately and maintain too many or too few employees to efficiently handle received call volumes, our profitability decreases due to excess operational costs or in some cases penalties assessed by clients for failure to achieve certain performance metrics.

Moreover, efficient utilization of our facility capacity is impacted by the following:


•	our ability to maintain, increase, and decrease employment during the course of a day, week or month as call volumes fluctuate; and


•	our ability to hire and train new employees and manage employee turnover.

Because we must make advance capital investments to support expected client demand, we have often experienced periods of inefficient capacity utilization in our customer contact centers particularly in new sites or in existing sites that support clients whose historical business with us has decreased or been terminated altogether. We rationalize or close sites when utilization rates remain inefficient for significant periods of time to improve our profitability and margins. In the event we consolidate or close sites, we may be required to record restructuring or impairment charges, which could adversely impact our results of operations. There can be no assurance that we will be able to achieve or maintain desired levels of efficiency in our sites.

We could cause disruptions to our clients’ business from inadequate service, and our insurance coverage may be inadequate to cover this risk.

If we fail to deliver the service required under a particular client contract or cause harm to a client’s business or operations, our client’s business could be disrupted significantly and we may be subject to damage claims for breach of contract or other causes of action. While we maintain general liability and errors and omissions insurance policies, this insurance coverage may be inadequate to cover one or more large claims, or our insurers may deny coverage. Further, most of our contracts with our clients contain key service level and performance requirements, including requirements relating to customer retention rates, sales rates and other similar performance metrics. Failure to meet service requirements subjects us to penalties under the terms of the contracts, which are reflected as a reduction in our revenues under that contract.

We are subject to extensive regulation that could limit or restrict our activities and impose financial requirements or other limitations on the conduct of our business.

Our business is subject to extensive regulation in each jurisdiction in which we have physical operations as well as in jurisdictions in which we make contact with customers of our clients. Many of these jurisdictions have promulgated and enacted various laws and regulations that govern the methods, timing and processes of making and completing certain types of calls and telephone sales (including sales of insurance) or require us to obtain or make various regulatory registrations, approvals or licenses.

Additionally, new federal, state, local or international legislation, or changes in regulatory implementation, could further limit our activities or those of our clients in the future or significantly increase the cost of regulatory compliance. Future consumer protection and privacy protection laws or regulations are likely to impose additional requirements on telephonic sales, internet communications and other portions of our business and our clients' business.

Our clients’ business operations are subject to certain rules and regulations and our clients generally contractually require that we perform our services in a manner that would enable them to comply with such rules and regulations. Failure to perform our services in compliance with these laws could result in breaches of contract with our clients and, in some limited circumstances, civil fines and criminal penalties for us.

While we believe we can continue to operate our business in substantial compliance with these requirements, there can be no assurance we will satisfy all laws in a timely manner or compliance with all such requirements would not be costly or time consuming. Any failure on our part to comply with laws and regulations applicable to our or our clients’ businesses could

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have an adverse impact on our business, may damage our reputation and may result in civil or criminal sanctions, penalties, court injunctions or administrative enforcement.

Our clients may adopt technologies that decrease the demand for our services, which could reduce our revenues and harm our business.

Our clients may adopt new or existing technologies that decrease the need for live client interactions, such as IVR, web-based or social media facilitated self-help and other technologies used to automate or reduce dedicated interactions with clients. The adoption of such technologies could reduce the demand for our services, put downward pressure on our pricing, cause a reduction in our revenues and harm our business.

If others claim we or our clients are infringing on their intellectual property, we could incur significant expenses or be prevented from providing our services.

Others may assert claims alleging we infringe, dilute, misappropriate or otherwise violate their intellectual property rights. If someone asserts a claim our systems, services, trademarks, software or other technologies or materials infringe on their intellectual property rights, any resulting litigation could be costly and time consuming and would divert the attention of management and key personnel from other business issues. The complexity of the technology involved and the uncertainty of intellectual property litigation increase these risks. Claims of intellectual property infringement also might require us to enter into costly royalty or license agreements. However, we may be unable to obtain royalty or license agreements on terms acceptable to us or at all. We also may be subject to significant damages or an injunction against use of our systems. A successful claim of patent or other intellectual property infringement against us could adversely affect our business, results of operations and financial condition. Further, we generally receive contractual indemnities from our vendors in the event our use of their systems, services, or software infringes, misappropriates or otherwise violates the intellectual property rights of others. In turn, we generally indemnify our customers against claims alleging their use of our systems, services or software infringes, misappropriates or otherwise violates the intellectual property rights of others. In the event any such claims are asserted against us or our customers, our vendors may challenge their obligation to indemnify us, and any contractual indemnities we do receive from our vendors may not be sufficient to cover the costs that could arise as a result of any such claims, either of which could adversely affect our business, results of operations and financial condition.

Existing and future legislation could significantly affect the ability of our clients to utilize our services and significantly increase our costs.

The issue of companies outsourcing services to organizations operating in other countries has been and continues to be a topic of political discussion in many countries. There has been publicity about negative experiences associated with off-shore outsourcing, such as theft and misappropriation of sensitive client data. Current or prospective clients may elect to perform such services themselves or may be discouraged from transferring these services from domestic to off-shore providers to avoid negative perceptions that may be associated with using an off-shore provider. In the United States, measures aimed at limiting or restricting off-shore outsourcing have been proposed and in some states, enacted. The measures that have been enacted to date generally have restricted the ability of governmental entities to outsource work to off-shore business process service providers and have not materially adversely affected our business. Certain recent legislative proposals have focused on banning companies that offshore U.S. jobs from receiving governmental grants and subsidies and requiring such companies to report offshoring activity to regulators. There can be no assurance that pending or future legislation, either in the United States or abroad, will not be proposed or enacted that would significantly and adversely affect our business, results of operations and financial condition.

Further, legislation enacted in certain European jurisdictions and any future legislation in Europe, Asia or any other region in which we have clients restricting the performance of business process services from an off-shore location could also have a material adverse effect on our business, results of operations and financial condition. For example, legislation enacted in the United Kingdom, based on the 1977 EC Acquired Rights Directive which has been adopted in some form by many European Union ("EU") countries, provides that if a company outsources all or part of its business to a service provider or changes its current service provider, the affected employees of the company or of the previous service provider are entitled to become employees of the new service provider, generally on the same terms and conditions as their original employment. In addition, dismissals of employees who were employed by the company or the previous service provider immediately prior to that transfer are automatically considered unfair dismissals that entitle such employees to compensation. As a result, to avoid unfair dismissal claims we may have to offer, and become liable for, voluntary redundancy payments to the employees of our clients in the United Kingdom and other EU countries who have adopted similar laws who outsource business to us. This legislation may materially affect our ability to obtain new business from companies in the EU and, after including the cost of the potential compensation paid for unfair dismissal claims or redundancies, to provide outsourced services to our current and future clients in the EU in a cost-effective manner.

We may incur non-cash impairment charges on our goodwill and other intangible assets with indefinite lives, which could negatively impact our business, financial condition and results of operations.

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We test goodwill and other intangible assets for impairment during the fourth quarter of each year and on an interim date should factors or indicators become apparent that would require an interim test.

As discussed in Note 16 to the Consolidated Financial Statements included in Item 8 of this Report, we performed our annual impairment test as of December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012. We did not recognize any impairment charges relating to goodwill and other intangible assets with indefinite lives during the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012. As of December 31, ~~2013~~2014, goodwill and other intangible assets with indefinite lives represented 2423.87% of our total assets. If in the future we determine that there has been an impairment, our financial results for the relevant period would be reduced by the amount of the impairment, net of any income tax effects, which could have an adverse effect on our financial condition and results of operations.

Our ability to use existing net operating losses to offset future taxable income may be subject to certain limitations.

At December 31, ~~2013~~2014, we had U.S. federal net operating loss carryforwards ("NOLs") of $~~422~~425.38 million, which may be used to offset future taxable income. Of this amount, $131.3 million may only be used to offset future taxable income of up to $13.6 million in any calendar year, including carryover of amounts not used in prior years as a result of a prior ownership change under Section 382 of the Internal Revenue Code of 1986, as amended (the "Code"). U.S. federal NOLs began to expire in 2010 with the majority of federal NOLs set to begin expiring in 2020. In addition, at December 31, ~~2013~~2014, we had NOLs relating to foreign jurisdictions of $~~205~~188.5 million, which may be used to offset future foreign taxable income that will begin to expire in ~~2014~~2015.

Under Section 382 of the Code, a corporation that undergoes an "ownership change" generally may utilize its pre-change NOLs only to the extent of an annual amount determined by multiplying the applicable long-term tax exempt rate by the equity value of such corporation. A corporation generally undergoes an ownership change if the percentage of stock of the corporation owned by one or more 5% stockholders has increased by more than 50 percentage points over a three-year period. It is impossible for us to ensure that an ownership change will not occur in the future as changes in our stock ownership, some of which are outside of our control, could result in an ownership change under Section 382 of the Code. For example, the sale by one or more 5% stockholders of our common stock and changes in the beneficial ownership of such stock could result in an ownership change under Section 382 of the Code. Similarly, the exercise of outstanding stock options by our employees would count for purposes of determining whether we had an ownership change.

If we undergo an ownership change, our ability to utilize NOLs could be limited by Section 382 of the Code. The extent to which our use of our NOLs would be limited depends on a number of legal and factual determinations, some of which may be subject to varying interpretations, including the date on which an ownership change occurs, the long-term tax exempt rate, whether the equity value of the entire company or only one or more of its subsidiaries would be used in the application of the Section 382 limitation and the equity value of the company or such subsidiaries, as applicable. If the limitation were significant, our limited ability to use these NOLs to offset future taxable income could materially increase our future U.S. federal income tax liability.

Some of our employees are affiliated with organized labor groups, and we could face work disruptions due to strikes, slowdowns or other labor disputes.

Some of our employees are affiliated with organized labor groups, such as works councils and unions. Most of our employees affiliated with organized labor groups are located in EMEA or Latin American countries. Although our management believes that our relationship with our union employees is good, we cannot ensure that we will never experience a labor disruption. Such disruptions could occur in response to our actions but could also be due to the actions of other union employers. Significant labor disruptions could adversely affect our ability to provide acceptable levels of service to our customers, which could result in customer dissatisfaction and a loss of business.

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RISKS RELATING TO OUR INDEBTEDNESS

Our substantial debt and lease obligations could adversely affect our financial condition and prevent us from fulfilling certain obligations.

As of December 31, ~~2013~~2014, our total outstanding long-term debt (including long-term capital leases) was $~~737~~749.73 million, which will require significant interest and principal payments. In addition, we had $4227.26 million of unused availability under the Revolvers as of December 31, ~~2013~~2014. Subject to the limits contained in the indentures governing the 11.0% Senior Secured Notes due 2017 ("Senior Secured Notes"), the 11.5% Senior Notes due 2018 ("Senior Notes"), and the senior secured credit facility ("Senior Secured Credit Facility"), we may be able to incur additional debt from time to time to finance working capital, capital expenditures, investments or acquisitions, or for other purposes. If we do so, the risks related to our high level of debt could intensify. We also lease certain property and equipment under long-term leases. As of December 31, ~~2013~~2014, our minimum rental expense under non-cancelable operating leases for ~~2014~~2015 was $4643.52 million. As of December 31, ~~2013~~2014, our total lease obligations totaled $~~135~~127.7 million. See Note 13 to the Consolidated Financial Statements included in Item 8 of this Report for further lease commitment information.

Our high level of debt and lease obligations could have important consequences, including the following:


•	making it more difficult for us to satisfy our obligations with respect to the Senior Secured Notes, Senior Notes, and our other debt;


•	requiring a substantial portion of our cash flows to be dedicated to debt service payments and lease obligations instead of other purposes;


•	increasing our vulnerability to general adverse economic and industry conditions;


•	limiting our flexibility in planning for and reacting to changes in the industry in which we compete;


•	exposing us to the risk of increased interest rates under certain of our borrowings, including borrowings under our Revolvers, which are at variable rates of interest;


•	limiting our ability to borrow additional amounts for working capital, capital expenditures, debt service requirements, execution of our growth strategy or other purposes, including incurring additional indebtedness;


•	limiting our ability to hedge foreign currency exposures;


•	placing us at a disadvantage compared to other, less leveraged competitors; and


•	increasing our cost of borrowing.

In addition, the agreement governing our Senior Secured Credit Facility contains financial and other covenants and the indentures governing the Senior Secured Notes and the Senior Notes contain other restrictive covenants that limit our ability to engage in activities that may be in our best interests. We believe that we will be able to comply with the restrictive covenants in our Senior Secured Credit Facility. In the event of unforeseen adverse circumstances, however, we could be forced to undertake additional restructuring activities, including further cost reductions, further management of working capital or capital expenditures, or additional financing, to remain compliant with these covenants. There is no assurance we would be able to implement such additional actions or obtain additional financing with acceptable terms and conditions. Our failure to comply with those covenants could result in an event of default which, if not cured or waived, could result in the acceleration of all of our debt, including the Senior Secured Notes and Senior Notes.

To service our indebtedness, we will require a significant amount of cash flow. Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could harm our business, financial condition and results of operations.

Our cash interest expense for the year ended December 31, ~~2013~~2014 was $7980.30 million. Our ability to make payments on and to refinance our indebtedness, and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future. This, to a certain extent, is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control.

IfOur ~~our~~Revolvers ~~business~~mature ~~does~~in ~~not~~January ~~generate~~2016. As ~~sufficient~~of ~~cash~~December 31, ~~flow~~2014, ~~from~~we ~~operations~~had oroutstanding ~~if future~~ borrowings ~~are~~of ~~not~~$31,700 ~~available~~under toour usRevolvers inwhich anprovide ~~amount~~for ~~sufficient~~aggregate toborrowings ~~enable~~of usup to ~~pay~~$61,250 ~~our~~less ~~indebtedness~~$1,982 orof toletters ~~fund~~of ~~our~~credit ~~other~~outstanding ~~liquidity~~for ~~needs~~a total availability of $27,568 weas ~~may~~of ~~need~~December 31, to2014. We ~~refinance~~intend ~~all~~to restructure or arefinance ~~portion~~the ofRevolvers ~~our~~prior ~~indebtedness,~~to ontheir ormaturity. ~~before~~The ~~the~~refinancing ~~maturity~~of ~~thereof,~~the ~~sell~~Revolvers ~~assets,~~is ~~reduce~~outside orof ~~delay~~our ~~capital~~control ~~investments~~and orthere ~~seek~~can tobe ~~raise~~no ~~additional~~assurance ~~capital,~~that ~~any~~such oftransaction ~~which~~will ~~could~~occur, ~~have~~or aif ~~material~~it ~~adverse~~does ~~effect~~occur, on ~~our~~what ~~operations~~terms. In addition, weif ~~may~~our ~~not~~business bedoes ~~able~~not togenerate ~~affect~~sufficient ~~any~~cash offlow ~~these~~from ~~actions,~~operations or if ~~necessary,~~future onborrowings ~~commercially~~are ~~reasonable~~not ~~terms~~available orto atus ~~all.~~in ~~Our~~an ~~ability~~amount sufficient to ~~restructure~~enable orus ~~refinance~~to pay our indebtedness, ~~will~~or ~~depend~~to onfund ~~the~~our ~~condition~~other ofliquidity ~~the~~needs, ~~capital~~we ~~markets~~may ~~and~~need ~~our~~to ~~financial~~refinance ~~condition~~all ator ~~such~~a ~~time.~~portion ~~Any refinancing~~ of our ~~debt~~indebtedness, ~~could~~on beor atbefore ~~higher~~the ~~interest~~maturity ~~rates~~thereof, ~~and~~sell ~~may~~assets, ~~require~~reduce usor todelay ~~comply~~capital ~~with~~investments ~~more~~or ~~onerous~~seek ~~covenants,~~to ~~which~~raise ~~could~~additional ~~further~~capital, ~~restrict~~any ~~our business operations. The terms~~ of ~~existing~~which orcould ~~future~~have ~~debt~~a ~~instruments,~~material ~~including~~adverse ~~the~~effect ~~indentures~~on ~~governing~~our ~~the Senior~~

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operations. In addition, we may not be able to affect any of these actions, if necessary, on commercially reasonable terms or at all. Our ability to restructure or refinance our indebtedness will depend on the condition of the capital markets and our financial condition at such time. Any refinancing of our debt could be at higher interest rates and may require us to comply with more onerous covenants, which could further restrict our business operations. The terms of existing or future debt instruments, including the indentures governing the Senior Secured Notes, Senior Notes, and Senior Secured Credit Facility, may limit or prevent us from taking any of these actions. In addition, any failure to make scheduled payments of interest and principal on our outstanding indebtedness would likely result in a reduction of our credit rating, which could harm our ability to incur additional indebtedness on commercially reasonable terms or at all. Our inability to generate sufficient cash flow to satisfy our debt service obligations, or to refinance or restructure our obligations on commercially reasonable terms or at all, would have an adverse effect, which could be material, on our business, financial condition and results of operations, as well as on our ability to satisfy our obligations in respect of the Senior Secured Notes, Senior Notes, and Senior Secured Credit Facility.

In addition, if the issuers are unable to meet their debt service obligations under the Senior Secured Notes, Senior Notes, and Senior Secured Credit Facility, the holders of the notes would have the right to cause the entire principal amount of the Senior Secured Notes, Senior Notes, and Senior Secured Credit Facility to become immediately due and payable. If the amounts outstanding under these instruments are accelerated, our assets may not be sufficient to repay in full the money owed to our debt holders, including holders of the Senior Secured Notes, Senior Notes, and Senior Secured Credit Facility.

The indentures governing the Senior Secured Notes and Senior Notes and the agreement governing the Senior Secured Credit Facility impose significant operating and financial restrictions on our company and our subsidiaries, which may prevent us from capitalizing on business opportunities.

The indentures governing the Senior Secured Notes and the Senior Notes and the agreement governing our Senior Secured Credit Facility impose significant operating and financial restrictions on us and our restricted subsidiaries. For example, these restrictions limit our ability, among other things, to:


•	incur additional indebtedness;


•	pay dividends on or make distributions in respect of capital stock or make certain other restricted payments or investments;


•	enter into agreements that restrict distributions from restricted subsidiaries;


•	sell or otherwise dispose of assets, including capital stock of restricted subsidiaries;


•	enter into transactions with affiliates;


•	create or incur liens; and


•	merge, consolidate or sell substantially all of our assets.

As a result of these covenants and restrictions, we are limited in how we conduct our business, and we may be unable to raise additional debt or equity financing to compete effectively or to take advantage of new business opportunities. The terms of any future indebtedness we may incur could include more restrictive covenants. We may not be able to maintain compliance with these covenants in the future and, if we fail to do so, we may not be able to obtain waivers from the lenders or amend the covenants.

Our failure to comply with the restrictive covenants described above as well as the terms of any future indebtedness we may incur from time to time could result in an event of default, which, if not cured or waived, could result in our being required to repay these borrowings before their due date. If we are forced to refinance these borrowings or amend our Senior Secured Credit Facility on less favorable terms, our results of operations and financial condition could be adversely affected.

In addition, the Senior Secured Notes and our Senior Secured Credit Facility are secured, among other things, by interests granted on a substantial portion of our worldwide assets. If we are unable to repay our indebtedness under the Senior Secured Notes or our Senior Secured Credit Facility when due, the lenders could seek to foreclose on these assets. Any of these outcomes could have a material adverse effect on our business, financial condition and results of operations.

Our failure to comply with the agreements relating to our outstanding indebtedness, including as a result of events beyond our control, could result in an event of default that could materially and adversely affect our results of operations and our financial condition.

If there were an event of default under any of the agreements relating to our outstanding indebtedness, the holders of the defaulted debt could cause all amounts outstanding with respect to that debt to be due and payable immediately. Upon acceleration of our other indebtedness in excess of $25 million, holders of the Senior Secured Notes and Senior Notes could declare all amounts outstanding under the Senior Notes immediately due and payable. We cannot assure you that our assets or cash flow would be sufficient to fully repay borrowings under our outstanding debt instruments if accelerated upon an event of default. Further, if we are unable to repay, refinance or restructure any of our secured indebtedness, the holders of such debt could proceed against the collateral securing that indebtedness. In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments.

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default. Further, if we are unable to repay, refinance or restructure any of our secured indebtedness, the holders of such debt could proceed against the collateral securing that indebtedness. In addition, any event of default or declaration of acceleration under one debt instrument could also result in an event of default under one or more of our other debt instruments.

The issuers of the Senior Secured Notes and Senior Notes may be unable to repurchase the Senior Secured Notes and Senior Notes upon a change of control.

Upon the occurrence of specified kinds of change of control events, the issuers of the Senior Secured Notes and Senior Notes will be required to offer to repurchase all outstanding notes at a price equal to 101% of the principal amount of the notes, together with accrued and unpaid interest to the date of repurchase.

However, it is possible that the issuers will not have sufficient funds at the time of the change of control to make the required repurchase of the Senior Secured Notes and Senior Notes. If the issuers are required to repurchase the notes, the issuers would probably require third party financing. We cannot be sure that the issuers would be able to obtain third party financing on acceptable terms, or at all.

One of the circumstances under which a change of control may occur is upon the sale or disposition of all or substantially all of our assets. However, the phrase "all or substantially all" will likely be interpreted under applicable state law and will be dependent upon particular facts and circumstances. As a result, there may be a degree of uncertainty in ascertaining whether a sale or disposition of "all or substantially all" of our capital stock or assets has occurred, in which case, the ability of a holder of the Senior Secured Notes and Senior Notes to obtain the benefit of an offer to repurchase all of a portion of the notes held by such holder may be impaired.

It is also possible that the events that constitute a change of control may also be events of default under the Senior Secured Credit Facility. These events may permit the lenders under such facility to accelerate the indebtedness outstanding thereunder. If the issuers are required to repurchase the Senior Secured Notes and/or Senior Notes pursuant to a change of control offer and the issuers are required to repay certain amounts outstanding under the Senior Secured Credit Facility if such indebtedness is accelerated, the issuers would probably require third-party financing. We cannot be sure that the issuers would be able to obtain third-party financing on acceptable terms, or at all. If the indebtedness under our Revolvers is not paid, the lenders thereunder may seek to enforce security interests in the collateral securing such indebtedness, thereby limiting our ability to raise cash to purchase the Senior Secured Notes and Senior Notes, and reducing the practical benefit of the offer to purchase provisions to the holders of the notes.

Our principal equityholder's interests may conflict with the interest of the holders of the Senior Secured Notes and Senior Notes.

Onex has voting ownership of approximately 8889% of the fully-diluted equity of SITEL Worldwide. As a result of its equity ownership, Onex is effectively able to control the outcome of votes on all matters submitted to a vote of SITEL Worldwide's equityholders, including the adoption of amendments to its certificate of incorporation and by-laws and approval of significant corporate transactions. Onex can also appoint up to five members of our Board of Directors ("Board"). As a result of their equity ownership, Onex may also be able to substantially influence our operations and business strategy.

Onex and its affiliates may invest in entities that directly or indirectly compete with us or companies in which they currently invest may begin competing with us. The interests of Onex could conflict with the interests of the holders of the Senior Secured Notes and Senior Notes. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of Onex might conflict with the interests of a holder of the notes. Onex may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their respective judgment, could enhance their equity investment, even though such transactions might involve risks to the holders of the Senior Secured Notes and Senior Notes. See "Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" and "Certain Relationships and Related Transactions, and Director Independence."

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ITEM 1B. UNRESOLVED STAFF COMMENTS

None.

ITEM 2. PROPERTIES

Our principal executive offices are located in Nashville, Tennessee. This facility currently serves as the headquarters for several of our senior executives and our global and North America finance, legal, human resources, information technology and general administrative functions. The following table sets forth information concerning all of our facilities. We believe our existing facilities are adequate to meet current requirements, and suitable additional or substitute space will be available as needed to accommodate any physical expansion. In addition, we operate from time to time in temporary facilities to accommodate growth before new customer contact centers are available. ~~Less~~Approximately ~~than 13~~12.0% of our customer contact centers are currently owned by us. We have locations with approximately 2.65 million square feet in the Americas reporting segment and approximately 1.21 million square feet in the EMEA reporting segment.

The table below summarizes our customer contact centers and related facilities (excluding sites that are owned or leased by customers but operated by us) as of December 31, ~~2013~~2014:

Country	Locations	Owned/Leased
Americas:
Australia	1	0/1
Brazil	3	0/3
Canada	32	0/32
Columbia	2	0/2
India	54	0/54
Mexico	1	0/1
New Zealand	2	0/2
Nicaragua	2	0/2
Panama	3	1/2
Philippines	12	1/11
United States	2726	87/19
Total Americas	6157	109/5148
EMEA:
Bulgaria	12	0/12
Denmark	21	0/21
France	3	0/3
Germany	8	0/8
Serbia	1	0/1
Italy	1	0/1
Morocco	4	0/4
Netherlands	2	0/2
Poland	1	0/1
Portugal	2	0/2
Spain	65	0/65
United Kingdom	6	1/5
Total EMEA	3735	1/3634
Total	9892	1110/8782

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From time to time, we evaluate our portfolio of sites against client demand, the macro-economic environment, profitability and various other factors and restructure our sites as appropriate, either through lease renegotiations, termination, acquisition at term, disposition, sublease or inactivating a facility.

ITEM 3. LEGAL PROCEEDINGS

Information regarding legal proceedings involving us is set forth in Note 14 to the Consolidated Financial Statements included in Item 8 of this Report.

ITEM 4. MINE SAFETY DISCLOSURE

Not applicable.

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PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

Market and other information

We are a privately-owned company with no established public trading market for our common stock.

Holders

As of January 31, ~~2014~~2015, there were ~~338~~332 holders of our Class A Common Stock, 2 holders of our Class B Common Stock and 7 holders of our Class C Common Stock. See "Item 12 - Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters" for additional information about the ownership of our common stock.

Dividends

We are currently restricted in our ability to pay dividends under various covenants of our debt agreements, including our Senior Secured Credit Facility and the indenture governing our Senior Secured Notes and Senior Notes. We do not expect for the foreseeable future to pay dividends on our common stock. Any future determination to pay dividends will depend upon, among other factors, our results of operations, financial condition, cash flows, capital requirements, any contractual restrictions and any other considerations our Board of Directors deems relevant.

Recent Sales of Unregistered Securities

None.

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ITEM 6. SELECTED FINANCIAL DATA

(in thousands of U.S. dollars, except where otherwise noted)

The following table sets forth our selected historical consolidated financial data which are derived from our Consolidated Financial Statements for 2014, 2013, 2012, 2011, ~~2010,~~ and ~~2009~~2010. The financial data set forth below should be read in conjunction with, and are qualified by reference to, "Item 7 - Management's Discussion and Analysis of Financial Condition and Results of Operations," our Consolidated Financial Statements, and the related notes to those Consolidated Financial Statements, included elsewhere in this report.

	Year Ended December 31,
	2013			2012			2011			2010			2009
	2014			2013			2012			2011			2010
Statement of Operations Data:
Revenues	$	1,~~438~~440,~~338~~245		$	1,~~429~~438,~~133~~338		$	1,~~415~~429,~~969~~133		$	1,~~340~~415,~~545~~969		$	1,~~558~~340,~~167~~545
Operating expenses:
Costs of services*	~~946~~972,~~293~~545			~~934~~946,~~547~~293			~~921~~934,~~137~~547			~~856~~921,~~463~~137			~~998~~856,~~584~~463
Selling, general, and administrative expenses*	~~367~~354,~~617~~404			~~372~~367,~~528~~617			~~370~~372,~~611~~528			~~363~~370,~~177~~611			~~424~~363,~~381~~177
Depreciation and amortization of property and equipment	3436,~~578~~222			3534,~~997~~578			3835,~~902~~997			3738,~~346~~902			5337,~~643~~346
Amortization of intangible assets	~~6,383~~589			76,~~035~~383			137,~~272~~035			1513,~~523~~272			1715,~~074~~523
Restructuring and exit charges	1420,~~241~~407			1514,~~693~~241			2015,~~048~~693			3820,~~065~~048			2338,~~763~~065
(Gain) loss on foreign currency transactions	(984		)	2,596			2,112			4,628			5,301
Loss (gain) on foreign currency transactions	5,148			(984		)	2,596			2,112			4,628
Loss on sale of subsidiary	~~4,558~~—			—4,558			—			—			—
Impairment and (gain) loss on disposal of assets, net	71			1,484			634			179			1,728
Impairment and loss on disposal of assets, net	1,598			71			1,484			634			179
Impairment of goodwill and trade name	—			—			—			—			46,199
Other expense (income), net	75			(743		)	97			1,169			(285		)
Other (income) expense, net	(743		)	97			1,169			(285		)	240
Operating income	49,257			66,324			59,156			48,084			25,449
Operating income (loss)	66,324			59,156			48,084			25,449			(12,746		)
Interest and other financing costs, net	83,934			80,554			84,307			70,690			65,775
Interest and other financing costs, net	80,554			84,307			70,690			65,775			50,872
Loss before income taxes	(34,677		)	(14,230		)	(25,151		)	(22,606		)	(43,345		)
Loss on extinguishment of debt, net	—			—			—			3,019			—
Income tax provision (benefit)	13,683			(15,216		)	(1,283		)	9,179			(4,488		)
Loss before income taxes	(14,230		)	(25,151		)	(22,606		)	(43,345		)	(63,618		)
Net (loss) income	$	(48,360	)	$	986		$	(23,868	)	$	(31,785	)	$	(38,857	)
Income tax (benefit) provision	(15,216		)	(1,283		)	9,179			(4,488		)	13,371
Net income (loss)	$	986		$	(23,868	)	$	(31,785	)	$	(38,857	)	$	(76,989	)
Other Financial Data:
Capital expenditures(1)	$	3135,~~001~~304		$	31,~~503~~001		$	4031,~~258~~503		$	2940,~~187~~258		$	2329,~~912~~187
Ratio of earnings to fixed charges(2)	—			—			—			—			—
Balance Sheet Data (at end of period):
Cash and cash equivalents	$	78,~~366~~857		$	127,~~245~~366		$	1912,~~337~~245		$	2919,~~894~~337		$	2629,~~915~~894
Adjusted working capital(3)	~~105~~145,~~965~~176			~~131~~105,965			~~107~~131,~~482~~965			91107,~~155~~482			~~118~~91,~~999~~155
Total assets	~~620~~649,~~221~~669			~~642~~620,~~349~~221			~~649~~642,~~204~~349			~~682~~649,~~417~~204			~~707~~682,~~008~~417
Property and equipment, net	8987,~~662~~354			9189,~~592~~662			~~100~~91,~~468~~592			~~106~~100,~~359~~468			~~103~~106,~~146~~359
Total debt	~~739~~752,~~744~~240			~~737~~739,~~121~~744			~~700~~737,~~784~~121			~~656~~700,~~274~~784			~~623~~656,~~449~~274
Preferred stock(4)	~~126~~226,~~038~~245			~~109~~126,~~919~~038			~~108~~109,~~933~~919			94108,~~560~~933			8294,~~561~~560
Stockholders’ deficit(5)	~~490~~566,~~143~~960			~~454~~490,~~699~~143			~~433~~454,~~615~~699			~~369~~433,~~022~~615			~~323~~369,~~356~~022

*Exclusive of Depreciation and amortization of property and equipment


(1)	Capital expenditures are presented on a cash basis consistent with the Consolidated Statements of Cash Flows.

(2) Earnings for the years ended December 31, 2014, 2013, 2012, 2011, ~~2010,~~ and ~~2009~~2010 were inadequate to cover fixed charges. The coverage deficiency for these years was $59,542, $29,854, $38,849, $43,614, and $55,328, ~~and $80,150,~~ respectively. For purposes of calculating the ratio of earnings to fixed charges, earnings consist of earnings before provision for income taxes, non-controlling interest, plus fixed charges. Fixed charges consist of interest expense, amortized discounts and capitalized expenses related to indebtedness, an estimate of interest within rental expense and preference security dividend requirements.


(3)	Adjusted working capital is a non-GAAP measure that we define as current assets (excluding cash and cash equivalents and restricted cash) less current liabilities (excluding current portion of long-term debt and book overdrafts). See Part II Item 7 of this Report for a reconciliation on this non-GAAP measure.

(4) At December 31, ~~2013~~2014, there were 39,947, ~~and~~ 28,881, and 75,000 shares of our redeemable series B, ~~preferred~~C, ~~stock~~ and ~~series~~D C preferred stock outstanding with an aggregate liquidation value of $6675,~~982~~103, $69,273, and ~~$59~~81,~~056~~869, respectively. Our redeemable series B, C, and ~~series~~D C preferred stock accrue cumulative dividends at a rate of 12.0%, 16.0%, and 16.0%, respectively, of the liquidation preference per share per annum. Our redeemable series B, C, and ~~series~~D C preferred stock can be redeemed for cash at our option any time prior to maturity, but are mandatorily redeemable for cash 91 days following the maturity of the notes. However, we may only make redemption payments to the extent we have the funds legally available and if permitted by the terms of our Senior Secured Credit Facility as amended, supplemented or refinanced. Our Senior Secured Credit Facility does not currently permit any such redemption payments.

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(5) As of December 31, ~~2013~~2014, there were 1,713,321 of exchangeable preferred shares of a subsidiary of SITEL Worldwide Corporation issued to the three stockholders of 1293220 Ontario Inc. under the terms of a support agreement between Customerone Holding Corporation (now SITEL Worldwide Corporation) and 1293220 Ontario Inc., dated December 17, 1998. The exchangeable preferred shares have no voting rights or other rights of redemption but are exchangeable for SITEL Worldwide class A voting shares, plus any dividends declared thereon at any time. We have agreed to repurchase the exchangeable preferred shares at the underlying fair market value of the common stock for which they are exchangeable in the event that we are unable to issue the class A common stock upon conversion of the exchangeable preferred shares.

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

(in thousands of U.S. dollars, except share and per share data)

The following discussion and analysis of our financial condition and results of operations contains forward-looking statements, which are subject to numerous risks and uncertainties, including, but not limited to, those described in "Risk Factors" and "Forward-Looking Statements" of this annual report. Actual results may differ materially from those contained in any forward-looking statements.

Overview

We are one of the world'’s largest and most diversified providers of customer care outsourcing services. We offer our clients a wide array of services, including customer service, technical support, customer acquisition, retention and revenue generation services, and back office support. The majority of our customer care services are inbound and delivered telephonically, but we are increasingly asked to provide services through other communication channels, including email, online chat, interactive voice response ("IVR"), and social media channels. We serve ~~clients across~~ a broad range of industry end-–markets, ~~comprising~~including ~~technology,~~ financial services, technology, wireless, retail and consumer products, telecommunications, media and entertainment, energy and utilities, ~~internet~~travel ~~service~~and ~~providers~~transportation, ~~travel~~Internet ~~and~~service ~~transportation~~providers, insurance, ~~healthcare~~public sector, and ~~government~~healthcare.

WeSitel ~~strive~~maintains toglobal ~~deliver~~standards ~~value~~of toexcellence ~~our~~providing ~~clients~~service bythrough ~~reducing~~108 ~~their~~customer ~~operating~~experience ~~costs,~~centers asand ~~well~~other asfacilities ~~increasing~~located ~~their~~in ~~revenue~~21 ~~through~~countries ~~improved~~and ~~customer~~supporting ~~satisfaction~~client customers located in 62 countries across North America, ~~increased~~South ~~retention~~America, Europe, Africa and ~~more~~Asia ~~effective~~Pacific ~~sales~~in ~~interactions~~40 languages. ~~This~~We ~~value~~have ~~proposition~~approximately is61,100 ~~evidenced~~employees, bywith ~~our~~approximately ~~strong~~43,200 ~~client~~employees ~~relationships.~~in ~~Many~~Americas ofand ~~our~~approximately ~~clients~~17,900 ~~seek~~in ~~providers~~EMEA. ~~who~~Home-based ~~offer~~agents acomplement ~~complete~~our ~~suite~~global network of ~~customer~~facilities ~~care~~and provide rapidly scalable services ~~tailored~~and access to ~~the~~unique ~~needs~~skill ofsets, ~~their~~making ~~particular~~Sitel ~~end-market.~~a ~~Our~~world ~~top~~leader ~~ten~~in ~~clients~~customer ~~utilize,~~experience oninnovation. ~~average,~~We ~~four~~believe ofthat our ~~services~~operating platform handles an estimated 2.1 million customer interactions per day.

~~Our~~Due ~~worldwide~~to ~~operations~~the ~~are~~depth ~~organized~~of ~~geographically~~our client relationships and expertise, we are ~~grouped~~well ~~into~~positioned ~~two~~to ~~reporting~~help ~~segments:~~clients ~~(1)~~improve ~~North~~the ~~America,~~experience ~~Latin~~of ~~America~~their customer with their brand, ~~and~~using ~~Asia~~the ~~Pacific~~most ~~("Americas")~~appropriate channels and ~~(2)~~communication ~~Europe~~methods. We further strive to deliver value to our clients by reducing their operating costs, ~~the~~as ~~Middle~~well ~~East~~as increasing their revenue through improved customer satisfaction, ~~and~~increased ~~Africa~~retention, ~~("EMEA").~~more ~~Each~~effective ~~reporting~~sales ~~segment~~interactions ~~performs~~and ~~substantially~~turning ~~the~~cost ~~same~~centers, ~~services~~such ~~for~~as ~~clients~~technical support, into profit centers.

Our ~~global~~geographic footprint and ~~flexible~~multi-lingual ~~operating~~support ~~platform~~capability isaligns ~~one of the industry’s most geographically diverse,~~ with ~~services~~growing ~~delivered~~demand infrom 40our ~~languages~~clients ~~through~~that ahave ~~network~~global ~~of approximately 110~~ customer ~~contact centers and related facilities in 23 countries~~bases. WeOur ~~have~~offering ~~approximately~~of 40domestic,~~000~~ ~~employees~~nearshore, ~~based in the Americas~~ and ~~approximately~~offshore ~~16,000~~contact ~~employees~~centers ~~based in EMEA. Our blend of domestic, near-shore,~~ and ~~off-shore~~our ~~locations~~Work@Home program allows us to provide customized client solutions, ~~whether~~ to service customers in a single country or across many different countries and at various price points. Our ~~standardized~~Global ~~practices~~Operating ~~and~~System ~~regionalized~~enables ~~support~~us ~~functions are designed~~ to ~~achieve~~deliver consistent, high quality service throughout the world while our regionalized operating model allows us to quickly respond to customer needs.

Components of Revenues and Expenses

Revenues

Revenues are recognized only when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collection is reasonably assured. We recognize revenues at the time services are performed based on the rate detailed in the client contract, such as per: minute, hour, month, employee, subscriber or user, or item basis for each transaction processed. A small percentage of our total Revenues may be subject to performance standards, such as sales per hour, average handle time, occupancy rate, abandonment rate, call quality, and customer satisfaction. Our performance against such standards may result in bonuses or penalties, which are recognized as earned or incurred. Reward and penalty provisions rarely result in material changes to contract revenues.

We determine the price for our services based on a variety of factors including the complexity of the service, the contractual service levels and the cost of the labor to provide the service. The nature of our business is such that we generally compete with other outsourced service providers as well as the retained in-house operations of our clients. This can create pricing pressures and impact the rates we can charge in our contracts. We generally price our bids with a long-term view of ~~profitability and, accordingly, we consider all of our fixed and variable costs in developing our bids, including inflation and foreign exchange assumptions.~~

During the years ended December 31, 2013, 2012 and 2011, our largest 10 clients represented approximately 36.7%, 36.2%, and 37.3% of Revenues, respectively. No client represented more than 10% of our total 2013, 2012, or 2011 Revenues.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

profitability and, accordingly, we consider all of our fixed and variable costs in developing our bids, including inflation and foreign exchange assumptions.

During the years ended December 31, 2014, 2013 and 2012, our largest 10 clients represented approximately 36.3%, 36.7%, and 36.2% of Revenues, respectively. No client represented more than 10% of our total 2014, 2013, or 2012 Revenues.

Operating Expenses

Our operating expenses primarily consist of:


•	costs of services;


•	SG&A expenses;


•	depreciation and amortization of property and equipment;


•	amortization of intangible assets;

• restructuring and exit charges; and

• gains or losses on foreign currency transactions~~; and~~.

•Of ~~impairment~~the foregoing, Costs of ~~goodwill~~services and ~~trade~~SG&A ~~name~~expenses ~~charges~~are our primary operating expenses, accounting collectively for over 90% of our Revenues during 2014, 2013, and 2012. Each component of our operating expenses is described in further detail below.

OfCosts ~~the~~of ~~foregoing,~~ Services. Costs of services ~~and~~represent ~~SG&A~~operating ~~expenses~~costs ~~are~~specifically ~~our~~associated ~~primary~~with ~~operating~~client ~~expenses,~~programs. ~~accounting~~These ~~collectively~~costs, ~~for~~which ~~over~~include ~~90%~~direct oflabor ~~our~~wages ~~Revenues~~and ~~during 2013~~benefits, ~~2012~~telecommunication charges, and ~~2011~~sales commissions, are primarily variable in nature. ~~Each~~Costs ~~component~~of services represent 67.5%, 65.8%, and 65.4% of our ~~operating~~Revenues ~~expenses~~for isthe ~~described~~years inended ~~further~~December 31, ~~detail~~2014, ~~below~~2013 and 2012, respectively.

~~Costs~~Direct oflabor ~~Services. Costs of services represent operating~~ costs ~~specifically~~(including ~~associated~~payroll ~~with~~taxes ~~client programs. These costs, which include direct labor wages~~ and benefits,) ~~telecommunication charges, and sales commissions,~~ are ~~primarily~~the ~~variable~~primary indriver ~~nature.~~of our Costs of services, ~~represent~~representing 65approximately 94.8%, 6595.40%, and 6594.16% of our ~~Revenues~~costs of services for the years ended December 31, ~~2013~~2014, ~~2012~~2013 and ~~2011~~2012, respectively. As such, customer service representative wages have been a key component of operating expenses.

~~Direct~~SG&A ~~labor~~Expenses. SG&A ~~costs~~expenses ~~(including~~represent ~~payroll~~overhead ~~taxes~~costs ~~and~~associated ~~benefits)~~with ~~are~~support ~~the~~functions, ~~primary~~such ~~driver~~as offinance, ~~our~~human ~~Costs~~resources, oflegal, ~~services~~IT, ~~representing~~sales ~~approximately~~and ~~95.0%~~marketing, ~~94.6%,~~ and 95senior management.3% ofTypically, ~~our~~ costs of ~~services~~these ~~for~~support ~~the~~functions ~~years~~are ~~ended~~wages ~~December 31~~and benefits, ~~2013~~systems costs, ~~2012~~trade ~~and~~costs, ~~2011~~insurance, ~~respectively.~~certain Astelecommunications ~~such~~costs, ~~customer~~professional ~~service~~services, ~~representative~~and ~~wages~~facilities ~~have~~costs. ~~been~~SG&A expenses are fixed in nature but a ~~key~~significant ~~component~~portion of ~~operating~~these costs typically shift with revenues over time. The percentage of SG&A expenses to Revenues was 24.6%, 25.6%, and 26.1% for the years ended December 31, 2014, 2013 and 2012, respectively.

SG&A Expenses. SG&A expenses represent overhead costs associated with support functions, such as finance, human resources, legal, IT, sales and marketing, and senior management. Typically, costs of these support functions are wages and benefits, systems costs, trade costs, insurance, certain telecommunications costs, professional services, and facilities costs. SG&A expenses are fixed in nature but a significant portion of these costs typically shift with revenues over time. The percentage of SG&A expenses to Revenues was 25.6%, 26.1%, and 26.2% for the years ended December 31, 2013, 2012 and 2011, respectively.

Depreciation and Amortization of Property and Equipment. Our Depreciation and amortization of property and equipment relates to capital expenditures, including leasehold improvements for customer contact centers, and computers and related software that we own or license. We depreciate property and equipment on a straight-line basis over their estimated useful life.

Depreciation and amortization of Property and equipment represent 2.45%, 2.54%, and 2.75% of our Revenues for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively.

Amortization of Intangible Assets. Our intangible assets are primarily comprised of non-amortizable goodwill, trademarks, and trade names. ~~and~~During 2014, our amortizable customer relationships, ~~primarily~~ related to our January 30, 2007 acquisition of Legacy SITEL. ~~Our~~became ~~remaining~~fully ~~amortizable~~amortized, ~~customer~~and ~~relationships~~the ~~have~~Company ~~useful~~acquired ~~lives~~additional ofcustomer ~~seven~~relationships ~~years~~of $957. Amortization of intangible assets represents 0.40%, 0.54%, and 0.95% of our Revenues for the years ended December 31, ~~2013~~2014, ~~2012~~2013 and ~~2011~~2012, respectively.

Restructuring and Exit Charges. Restructuring and exit charges consist of costs incurred in conjunction with reductions in our work force or decisions to exit facilities, including employee severance benefits and lease liabilities net of expected sublease rentals. Restructuring and exit charges represent 1.04%, 1.10%, and 1.41% of our Revenues for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively.

Loss (Gain) ~~Loss~~ on Foreign Currency Transactions. We are exposed to market risk from fluctuations in foreign currencies. Foreign currency transaction gains and losses primarily result from exchange rate fluctuations on intercompany transactions denominated in different currencies and the resulting revaluation of cash and other assets and liabilities. Although these settlements occur in multiple currencies, our most common fluctuations result from the translation of Philippine pesos, Euros, Indian rupees, Brazilian Real, or Canadian dollars into U.S. dollars, as well as intra-European settlements translated to U.S. dollars.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

~~Impairment~~these ofsettlements ~~Goodwill~~occur ~~and Trade Name. At least annually or more frequently, as changes~~ in ~~circumstances~~multiple ~~indicate~~currencies, ~~we evaluate the estimated fair value of~~ our ~~goodwill~~most ~~and~~common ~~indefinite-lived~~fluctuations ~~intangibles.~~result Tofrom the ~~extent~~translation ~~that the carrying value~~ of ~~the~~Philippine ~~net~~pesos, ~~assets~~Euros, ofIndian ~~any of our reporting units having goodwill is greater than their estimated fair value~~rupees, weBrazilian ~~may be required to take goodwill impairment charges. In addition~~Real, anor ~~impairment~~Canadian ~~charge~~dollars isinto ~~recorded if the carrying value of the intangible asset exceeds its estimated fair value~~U.S. ~~We did not record goodwill and trade name impairment charges for the years ended December 31~~dollars, ~~2013,~~as ~~2012,~~well ~~and 2011. Our combined goodwill and other intangible assets~~ as ofintra-European ~~December 31,~~settlements ~~2013~~translated ~~and~~to ~~2012 totaled $154,256 and $160,650, respectively~~U.S. ~~We will continue to monitor the economic situations that could impact fair value of goodwill and/or other indefinite-lived intangibles and finite-lived intangibles~~dollars.

Impairment of Goodwill and Trade Name. At least annually or more frequently, as changes in circumstances indicate, we evaluate the estimated fair value of our goodwill and indefinite-lived intangibles. To the extent that the carrying value of the net assets of any of our reporting units with goodwill is greater than their estimated fair value, we may be required to take goodwill impairment charges. In addition, an impairment charge is recorded if the carrying value of the intangible asset exceeds its estimated fair value. We did not record goodwill and trade name impairment charges for the years ended December 31, 2014, 2013, and 2012. Our combined goodwill and other intangible assets as of December 31, 2014 and 2013 totaled $154,623 and $154,256, respectively. We will continue to monitor the economic situations that could impact fair value of goodwill and/or other indefinite-lived intangibles and finite-lived intangibles.

Interest and Other Financing Costs, net

Interest and other financing costs, net consist primarily of interest charges under our Senior Notes, Senior Secured Notes, and Senior Secured Credit Facility, as well as costs incurred in connection with the execution of and amendments to these items. We recognized interest and other financing costs of 5.68%, 5.96%, and 5.09% of our Revenues for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively.

Provision for Income Taxes

Our income tax provision includes U.S. federal, state, local, and foreign income taxes that are currently payable or recoverable, as well as, income taxes that are deferred. We record deferred tax assets and liabilities using enacted tax rates in the jurisdictions in which we operate for the effect of temporary differences between the book and tax basis of assets and liabilities. If enacted tax rates change, we would adjust the deferred tax assets and liabilities, through the provision for income taxes in the period of change, to reflect the enacted tax rate expected to be in effect when the deferred tax items reverse. To the extent that we believe that recovery is not likely, we establish a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The valuation allowance is based on our estimates of future taxable income by jurisdiction in which we operate and the period over which the deferred tax assets can be recovered. A review of all available positive and negative evidence is considered, including our current and past performance, the market environment in which we operate, the utilization of past tax credits, length of carryback and carryforward periods, and existing or prospective contracts that will result in future profits.

Forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence, such as cumulative losses in recent years in certain tax jurisdictions. We weigh cumulative losses heavily in the overall assessment. We have established valuation allowances for future tax benefits related to net operating losses incurred in certain federal, state, and foreign tax jurisdictions. We expect to continue to record a valuation allowance on future tax benefits in certain tax jurisdictions until an appropriate level of profitability is sustained.

U.S. GAAP defines the threshold for recognizing the tax benefits of a tax return filing position in the financial statements as "more-likely-than-not" to be sustained by the taxing authority. A tax position that meets the more-likely-than-not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that ishas a greater than 50 percent ~~likely~~likelihood of being realized. A tax position that does not meet the recognition threshold is an uncertain tax position. We record interest and penalties related to uncertain tax positions as components of income tax expense. Determining the existence and amount of an uncertain tax position involves judgment as to the interpretation of tax laws and the application of those tax laws to the particular facts. We regularly evaluate current information available to us to determine whether such accruals for uncertain tax positions should be adjusted. Given the judgment involved and inherent uncertainty in the resolution of uncertain tax positions, our actual income tax liability for such positions may be different than the accruals established.

Results of Operations

In our Overview above, and in our analysis of the results of operations below, we have referred to the impact of changes in foreign currency exchange rates, which references the differences between the foreign currency exchange rates we use to convert our international operating results from local currencies into U.S. dollars for reporting purposes. We have also referred to non-GAAP financial measures for Revenues, Costs of services, and SG&A, which represent U.S. GAAP measures that have been adjusted to exclude the impact of foreign exchange translation. We believe these non-GAAP financial measures provide a better framework for management and investors to understand and analyze our performance by providing meaningful information relevant to amounts that impact the comparability of underlying business results from period to period. These supplemental measures should be considered in addition to, and not as a substitute for, measures that are determined in accordance with U.S. GAAP. See Non-GAAP Measures for reconciliations of the non-GAAP measures to their corresponding U.S. GAAP measures.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

~~Year~~supplemental ~~Ended~~measures ~~December 31,~~should ~~2013~~be ~~Compared~~considered in addition to, ~~Year~~and ~~Ended~~not ~~December 31~~as a substitute for, ~~2012~~measures that are determined in accordance with U.S. GAAP. See Non-GAAP Measures for reconciliations of the non-GAAP measures to their corresponding U.S. GAAP measures.

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

The table below presents statement of operations data, including the amount and percentage changes for the periods indicated, as well as the impact from foreign exchange translation:

	Year Ended December 31,
	2013			2012			DollarChange			PercentageChange		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact
	2014			2013			DollarChange			PercentageChange		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact
Statement of Operations Data:
Revenues:
Americas	$	~~895~~878,~~253~~715		$	~~870~~895,~~079~~253		$	25(16,~~174~~538	)	2(1.98	)%	3(0.84	)%	$	(712,~~946~~825	)
EMEA	~~543~~561,~~093~~422			~~559~~543,~~554~~093			~~(16~~18,~~461~~329		)	(23.94	)%	(52.39	)%	132,~~368~~454
Other	(8108		)	(~~500~~8		)	~~492~~116			~~98.4~~n/m	%	~~132.0~~n/m	%	(~~168~~57		)
Total revenues	1,~~438~~440,~~338~~245			1,~~429~~438,~~133~~338			91,~~205~~907			0.61	%	0.39	%	5(10,~~254~~428		)
Operating expenses:
Costs of services:
Americas	~~559~~563,~~042~~553			~~540~~559,~~418~~042			184,~~624~~511			30.48	%	53.10	%	(812,~~745~~289		)
EMEA	~~386~~409,~~612~~620			~~394~~386,~~509~~612			(723,~~897~~008		)	(26.0	)%	~~(4.~~5.4	)%	92,~~879~~324
Other	~~639~~(628		)	~~(380~~639		)	(1,~~019~~267		)	~~268~~(198.23	)%	~~109~~1.21	%	~~604~~(1,274		)
Total costs of services	~~946~~972,~~293~~545			~~934~~946,~~547~~293			1126,~~746~~252			12.38	%	14.10	%	1(11,~~738~~239		)
Selling, general and administrative expenses:
Selling, general, and administrative expenses:
Americas	~~199~~190,~~132~~479			~~202~~200,~~318~~321			(39,~~186~~842		)	(14.69	)%	0(3.21	)%	(3,~~614~~714		)
EMEA	~~115~~119,~~874~~137			~~126~~117,~~479~~364			~~(10~~1,~~605~~773		)	(81.45	)%	~~(10~~0.24	)%	21,~~250~~284
Other	5244,~~611~~788			4349,~~731~~932			8(5,~~880~~144		)	20(10.3	)%	20(8.8	)%	(~~200~~752		)
Total selling, general and administrative expenses	367,617			372,528			(4,911		)	(1.3	)%	(0.9	)%	(1,564		)
Total selling, general, and administrative expenses	354,404			367,617			(13,213		)	(3.6	)%	(2.7	)%	(3,182		)
Depreciation and amortization of property and equipment	3436,~~578~~222			3534,~~997~~578			(1,~~419~~644		)	(34.98	)%	na		na
Amortization of intangible assets	~~6,383~~589			76,~~035~~383			(~~652~~5,794		)	(990.38	)%	na		na
Restructuring and exit charges	1420,~~241~~407			1514,~~693~~241			(16,~~452~~166		)	(943.3	)%	na		na
(Gain) loss on foreign currency transactions	(984		)	2,596			(3,580		)	(137.9	)%	na		na
Loss (gain) on foreign currency transactions	5,148			(984		)	6,132			623.2	%	na		na
Loss on sale of subsidiary	~~4,558~~—			—4,558			(4,558		)	nan/m		na		na
Impairment and (gain) loss on disposal of assets, net	71			1,484			(1,413		)	(95.2	)%	na		na
Impairment and loss on disposal of assets, net	1,598			71			1,527			2,150.7	%	na		na
Other (income) expense, net	(743		)	97			(840		)	(866.0	)%	na		na
Other expense (income), net	75			(743		)	818			110.1	%	na		na
Operating income	6649,~~324~~257			5966,~~156~~324			7(17,~~168~~067		)	12(25.17	)%	na		na
Interest and other financing costs, net	8083,~~554~~934			8480,~~307~~554			(3,~~753~~380		)	(4.52	)%	na		na
Loss before income taxes	(1434,~~230~~677		)	(2514,~~151~~230		)	10(20,~~921~~447		)	43(143.47	)%	na		na
Income tax benefit	(15,216		)	(1,283		)	(13,933		)	(1,086.0	)%	na		na
Income tax provision (benefit)	13,683			(15,216		)	28,899			189.9	%	na		na
Net income (loss)	$	986		$	(23,868	)	$	24,854		104.1	%	na		na
Net (loss) income	$	(48,360	)	$	986		$	(49,346	)	(5,004.7	)%	na		na

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Revenues

We reported Revenues of $1,~~438~~440,~~338~~245 for the year ended December 31, ~~2013~~2014, an increase of $91,~~205~~907, compared to $1,~~429~~438,~~133~~338 for the year ended December 31, ~~2012~~2013. Excluding the $510,~~254~~428 impact of foreign exchange translation ~~(primarily consists of $13~~,~~368~~ ~~related to EMEA, partially offset by $7,946 related to the Americas),~~ Revenues increased by $312,~~951~~335, from ~~2012~~2013 to ~~2013~~2014. Revenue increases in ~~2013~~2014 (excluding the impact of foreign exchange translation) were primarily attributable to ~~new~~growth ~~business,~~of ~~which~~existing ~~increased~~client campaigns of approximately $~~101~~67,~~900~~800, ~~with~~which ~~$78,600~~was ~~attributable~~primarily todriven ~~the~~by ~~Americas~~increases of $39,400 in EMEA and $2328,~~300~~400 ~~attributable~~in tothe ~~EMEA~~Americas. The increase in Revenues was also due to ~~growth~~new ofbusiness ~~existing client campaigns~~ of approximately $664,~~800~~700, ~~which~~with ~~was~~$44,600 ~~primarily~~attributable ~~driven~~to ~~by increases in~~ the Americas ofand $2220,~~200,~~100 ~~partially~~attributable ~~offset~~to ~~by a decrease of $15,400 in~~ EMEA. These increases in Revenues were partially offset by approximately $~~104~~120,~~700~~400 of attrition, of which $6776,~~100~~700 related to the Americas and $3743,~~600~~700 related to EMEA.

Operating Expenses

Costs of Services

Costs of services were $~~946~~972,~~293~~545 for the year ended December 31, ~~2013~~2014, an increase of $1126,~~746~~252, compared to $~~934~~946,~~547~~293 for the year ended December 31, ~~2012~~2013. Excluding the impact of foreign exchange translation of $111,~~738~~239, of which $912,~~879~~ 289 related to ~~EMEA~~the Americas offset by $82,~~745~~324 related to ~~the Americas~~EMEA, Costs of services increased by $1037,~~008~~491, during ~~2013~~2014 as compared to ~~2012~~2013. ~~Costs~~Excluding the impact of ~~services~~foreign ~~increases~~exchange ~~were~~translation ~~primarily~~of ~~due~~$811, togross ~~the~~margin ~~aforementioned~~decreased ~~increase~~$25,156 induring ~~Revenues.~~2014 ~~Cost~~as ofcompared ~~services~~to asthe asame ~~percent~~period ofduring ~~Revenues~~2013. ~~were~~The ~~proportionately~~decrease ~~higher~~in gross margin is due to acommercial ~~change~~and inexecution ~~geographic~~issues ~~mix~~with ~~primarily~~certain ~~in Americas~~customers.

SG&A

SG&A expenses were $~~367~~354,~~617~~404 for the year ended December 31, ~~2013~~2014, a decrease of $413,~~911~~213, compared to $~~372~~367,~~528~~617 for the year ended December 31, ~~2012~~2013. Excluding the impact of foreign currency translation of $13,~~564~~182, primarily due to $3,~~614~~714 related to Americas offset by $21,~~250~~284 related to EMEA, SG&A expenses decreased $310,~~347~~031, during ~~2013~~2014 as compared to ~~2012~~2013. The decrease in SG&A was primarily due to cost savings initiatives ~~during~~including ~~2013~~personnel reductions, telecommunication, and travel expenses.

Depreciation and Amortization of Property and Equipment

Depreciation and amortization of property and equipment was $3436,~~578~~222 for the year ended December 31, ~~2013~~2014, a ~~decrease~~increase of $1,~~419~~644, as compared to $3534,~~997~~578 for the year ended December 31, ~~2012~~2013. The ~~decrease~~increase was primarily due to ~~asset~~computer ~~retirements~~software being place into service during ~~2013,~~the ~~partially~~fourth ~~offset~~quarter byof 2014 in addition to an increase in ~~assets~~ capital expenditures ~~during~~throughout ~~the same period~~2014.

Amortization of Intangible Assets

Amortization of intangible assets was $~~6,383~~589 for the year ended December 31, ~~2013~~2014, a decrease of $~~652~~5,794, compared to $76,~~035~~383 for the year ended December 31, ~~2012~~2013. The decrease was primarily due to ~~certain~~ customer relationship intangible assets inbecoming ~~the Americas that became~~ fully amortized during ~~2012~~2014.

Restructuring and Exit Charges

Restructuring and exit charges were $1420,~~241~~407 for the year ended December 31, ~~2013~~2014, aan ~~decrease~~increase of $16,~~452~~166 compared to $1514,~~693~~241 for the year ended December 31, ~~2012~~2013. Restructuring expense for ~~2013~~2014 included $1117,~~232~~674 of severance costs and $32,~~009~~733 of facility exit and other costs, while restructuring expense for ~~2012~~2013 included severance costs of $1211,~~217~~232 and facility exit and other costs of $3,~~476~~009. Refer to Note 7 in the accompanying Consolidated Financial Statements for a discussion of our restructuring plans.

Facility exit and other costs primarily relate to ongoing lease and other contractual obligations. We estimate that approximately $41,~~006~~280 of cash payments related to these obligations will be made from ~~2014~~2015 through ~~2017~~2018 as the related leases expire.

Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

The restructuring activities implemented during 2014 and the restructuring and exit charges for the year ended December 31, 2014 are summarized below.

Headcount reduction	23,~~325~~068
Sites eliminated	—3
Estimated annualized cash savings	$	35,~~469~~630
Restructuring and exit charges related to restructuring activities initiated in 2013	$	12,462
Restructuring and exit charges related to restructuring activities initiated in 2014	$	17,660
Restructuring and exit charges related to restructuring plans from earlier years	$	12,~~779~~747
Total restructuring and exit charges for the year ended December 31, 2013	$	14,241
Total restructuring and exit charges for the year ended December 31, 2014	$	20,407

(Gain) Loss on Foreign Currency Transactions

We recognized a ~~gain~~loss on foreign currency transactions of $~~984~~5,148 for the year ended December 31, ~~2013~~2014, compared to a ~~loss~~gain of $~~2,596~~984 for the year ended December 31, ~~2012~~2013. The ~~2013~~2014 ~~gain~~loss was primarily attributable to the revaluation between the ~~U.S.~~Euro ~~Dollar~~ and the British Pound Sterling. The ~~2012~~2013 ~~loss~~gain was primarily attributable to the revaluation between the ~~Euro~~U.S. Dollar and the British Pound Sterling.

Impairment and Loss on ~~Sale~~Disposal of ~~Subsidiary~~Assets, Net

WeImpairment ~~incurred~~and a loss on disposal of assets was $41,~~558~~598 ~~during~~for the year ended December 31, ~~2013~~2014, ~~relating~~an increase of $1,527, compared to $71 for the ~~sale~~year ended December 31, 2013. The increase was primarily related to impairment charges of ~~our~~$1,171 ~~Belgium~~recognized ~~subsidiary.~~during ~~See~~2014 ~~Note~~on 12certain inof the ~~accompanying~~Company's ~~Consolidated~~property ~~Financial~~and ~~Statements~~equipment, ~~for~~of ~~additional~~which ~~details~~$478 ~~regarding~~related to software in the ~~subsidiary~~Americas ~~sale~~and $693 related to fixed assets in EMEA.

Impairment and (Gain) Loss on Disposal of Assets, Net

Impairment and loss on disposal of assets was $71 for the year ended December 31, 2013, a decrease of $1,413, compared to $1,484 for the year ended December 31, 2012. The decrease was primarily related to impairment charges of $1,633 recognized during 2012 on certain of the Company's annuity contracts located in the Americas. During 2013, we recorded impairment charges of $753 related to property and equipment, partially offset by $182 in gains on disposal of property and equipment. Additionally, $500 in liquidation payments received during 2013 related to the aforementioned annuity contracts, was recorded as a gain to Impairment and loss on disposal of assets.

Interest and Other Financing Costs, net

Interest and other financing costs were $8083,~~554~~934 for the year ended December 31, ~~2013~~2014, aan ~~decrease~~increase of $3,~~753~~380, compared to $8480,~~307~~554 for the year ended December 31, ~~2012~~2013. The ~~decrease~~increase was primarily attributable to non-cash interest related to a mark-to-market ~~gain~~fluctuations ~~during 2013, compared to a loss in 2012~~ associated with the interest rate swap., ~~The~~financing ~~decrease~~costs ~~was partially offset by higher interest expense~~ related to ~~the~~our ~~Senior~~Sixth ~~Secured~~Amendment, ~~Notes~~and asincreases ~~compared~~in tointerest ~~the~~related ~~Term~~to ~~Loans~~capital ~~that were repaid during 2012~~leases.

Income Tax Provision (Benefit)

We recognized an income tax ~~benefit~~expense of $1513,~~216~~683 for the year ended December 31, ~~2013~~2014, compared to a benefit of $115,~~283~~216 for the year ended December 31, ~~2012~~2013. The effective tax rate for the year ended December 31, ~~2013~~2014 was (39.5)% and 106.9% for the year ended December 31, 2013. The effective tax rate for the year ended December 31, ~~2013~~2014 differed from the statutory rate due to ~~releases~~current year losses of subsidiaries with full valuation allowances, ~~and~~nondeductible ~~tax~~expenditures, ~~rate~~and ~~differences~~foreign ofdividends ~~foreign~~and ~~subsidiaries~~interest offset by ~~foreign~~tax ~~dividends~~rate ~~and~~differences ~~interest~~of ~~and~~foreign ~~nondeductible expenditures~~subsidiaries.

We have significant deferred tax assets in many of the jurisdictions in which we operate. ~~Management~~We will continue to assess our ability to realize the deferred tax benefits in jurisdictions which currently have valuation allowances. During the second quarter of 2013, we released valuation allowance on U.S. state deferred tax assets totaling $744. During the third quarter of 2013, we released valuation allowance on the deferred tax assets of our French subsidiary in the amount of $10,419 after management concluded that the indefinite lived nature of its net operating losses coupled with its recent operating results and forecasted income substantiated the release. During the fourth quarter of 2013, we released valuation allowance on our German subsidiary in the amount of $7,639 and two of our United Kingdom subsidiaries in the amounts of $8,735 and $1,115 given their recent cumulative profit positions coupled with profitable outlooks. These releases were offset by valuation allowance established on our Italian subsidiary totaling $170 given the expected future operating results could no longer sustain recognition of the deferred tax assets. During the fourth quarter of 2012, we released the valuation allowance on operating losses and other tax attributes with unlimited carryforward periods in certain jurisdictions to the extent that the deferred tax

During the second quarter of 2013, we released valuation allowance on U.S. state deferred tax assets totaling $744. During the third quarter of 2013, we released valuation allowance on the deferred tax assets of our French subsidiary in the amount of $10,419 after we concluded that the indefinite lived nature of its net operating losses coupled with its recent operating results and forecasted income substantiated the release. During the fourth quarter of 2013, we released valuation allowance on our German subsidiary in the amount of $7,639 and two of our United Kingdom subsidiaries in the amounts of $8,735 and $1,115 given their recent cumulative profit positions coupled with profitable outlooks. These releases were offset by valuation allowance established on our Italian subsidiary totaling $170 given the expected future operating results could no longer sustain recognition of the deferred tax assets.

Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

~~liabilities~~the ~~related~~first toquarter ~~indefinite~~of ~~lived~~2014, ~~intangibles~~the ~~created~~2013 ahedge ~~source~~portfolio ofwas ~~income~~fully tosettled ~~support~~resulting in the ~~release.~~reversal ~~This~~of ~~release~~previously ~~resulted~~recorded tax benefits in anon-cash income tax ~~benefit~~expense of $53,~~139~~799.

We ~~consider~~have ~~all~~not recorded deferred U.S. income ~~sources,~~tax ~~including~~liabilities ~~other~~of ~~comprehensive~~$12,455 ~~income~~and $12,162 inapplicable ~~determining~~to ~~the~~undistributed ~~amount~~earnings of ~~tax~~$36,779 ~~benefit~~and ~~allocated~~$34,977 toat ~~continuing~~December 31, ~~operations~~2014 ~~(the~~and ~~"Income~~2013, ~~Tax~~respectively, ~~Allocation").~~related ~~During~~to ~~the~~certain ~~first~~foreign ~~quarter~~subsidiaries ofas ~~2013,~~these asundistributed aearnings ~~result~~are ofindefinitely reinvested in foreign operations. During the ~~Income~~fourth ~~Tax~~quarter ~~Allocation~~of 2014, we ~~recorded~~changed aour ~~non-cash~~assertion ~~deferred~~with ~~income~~respect ~~tax~~to ~~expense~~a ofcertain ~~$598~~foreign ~~against~~subsidiary ~~other~~however ~~comprehensive~~did ~~income~~not asrecord a ~~result~~deferred oftax ~~year-~~liability applicable to~~-date~~ ~~gains~~the ~~from~~undistributed ~~mark-~~earnings due to~~-market~~ ~~fluctuations~~an onexcess ~~foreign~~tax ~~currency~~basis. ~~hedges~~During ~~which~~the ~~are~~fourth ~~designated~~quarter asof ~~accounting~~2013, ~~hedges~~we ~~and~~changed anour ~~offsetting~~assertions ~~non-cash~~with ~~income~~respect ~~tax~~to ~~benefit~~certain of ~~$598~~our inforeign ~~continuing~~subsidiaries. ~~operations~~We asrecorded ~~compared to~~ a ~~non-cash~~ deferred ~~income~~ tax ~~expense~~liability ~~against~~applicable ~~other~~to ~~comprehensive~~the ~~income~~undistributed ~~and~~earnings ~~offsetting~~of ~~non-cash~~our ~~income~~Nicaraguan ~~tax~~subsidiary ~~benefit~~for of $~~3,237~~584 inas ~~continuing~~a ~~operations~~result ~~during~~of ~~the~~its ~~third~~strong ~~quarter~~performance ofcombined ~~2012.~~with ~~During~~repatriation ~~the~~opportunities ~~fourth~~and ~~quarter~~our ofIndian ~~2012,~~subsidiary wefor ~~recorded~~$1,683 agiven ~~non-cash~~that ~~deferred~~future ~~income~~distributions ~~tax~~could ~~expense~~exceed ofcurrent ~~$948~~earnings. ~~against~~We ~~Foreign~~reduced ~~currency~~the ~~translation~~deferred ~~adjustment~~tax liabilities as a result of ~~year~~reversing toour ~~date~~assertions ~~gains~~related ~~from~~to ~~foreign~~our ~~currency~~Polish ~~fluctuations~~subsidiary ~~primarily~~for ~~related~~$1,055 toas ~~our~~future ~~establishment~~distributions ofare anot ~~deferred~~expected ~~tax~~to ~~liability~~exceed oncurrent ~~unrepatriated foreign~~ earnings. ofWe ~~our~~continuously ~~Philippines~~review ~~subsidiary~~the ~~and~~assertion anfor ~~offsetting~~indefinitely ~~non-cash~~reinvested ~~income~~earnings ~~tax~~in ~~benefit~~line ofwith ~~$948~~our inglobal ~~continuing~~cash ~~operations~~strategy.

WeThe ~~have~~provision ~~not~~for ~~recorded deferred U.S.~~ income ~~tax~~taxes ~~liabilities~~increased ~~of $12,162 and $19,085 applicable~~ to ~~undistributed~~expense ~~earnings~~ of $3413,~~977~~683 ~~and~~for ~~$54,724~~the atyear ended December 31, ~~2013~~2014 ~~and~~from ~~2012,~~an ~~respectively,~~income related to certain foreign subsidiaries as these undistributed earnings are indefinitely reinvested in foreign operations. During the fourth quarter of 2013, we changed our assertions with respect to certain of our foreign subsidiaries. We recorded a deferred tax ~~liability~~benefit ~~applicable to the undistributed earnings~~ of ~~our Nicaraguan subsidiary for~~ $~~584~~15,216 ~~as a result of its strong performance combined with repatriation opportunities and our Indian subsidiary~~ for ~~$1,683 given that future distributions could exceed current earnings. We reduced~~ the ~~deferred~~year ~~tax~~ended ~~liabilities as a result of reversing our assertions related to our Polish subsidiary for $1~~December 31,~~055~~ as2013 ~~future~~primarily ~~distributions~~due ~~are not expected~~ to ~~exceed current earnings. During~~ the ~~fourth~~additional ~~quarter of 2012, we changed our assertions with respect to certain of our foreign subsidiaries. We recorded a deferred~~ tax ~~liability~~expense of $928,~~271,~~432 ~~recognizing~~resulting ~~$425~~from ~~of income tax expense, applicable to~~ the ~~undistributable~~release ~~earnings~~ of ~~our~~valuation ~~Philippines~~allowances ~~subsidiary~~on ~~and reduced~~ the deferred tax ~~liability~~assets ~~for~~of ~~$534~~certain ~~related to the reversal~~ of our ~~assertion~~foreign ~~with~~subsidiaries ~~respect to our Portuguese subsidiary, recognizing $28 of income tax benefit. We continuously review the assertion for indefinitely reinvested earnings~~ in ~~line~~2013 ~~with~~when ~~our~~compared ~~global~~to ~~cash strategy~~2014.

~~The~~For ~~provision~~the ~~for~~year ~~income~~ended ~~taxes~~December 31, ~~decreased~~2013, towe recognized a ~~benefit of~~ $15,216 benefit for ~~the~~income ~~year~~taxes. ~~ended~~The ~~December 31,~~effective ~~2013 from an income~~ tax ~~benefit~~rate ~~of $1,283~~ for the year ended December 31, ~~2012 primarily due to the additional tax benefit of $23,414 related to the release of valuation allowances on the deferred tax assets of certain of our foreign subsidiaries in~~ 2013 ~~when~~was ~~compared to 2012~~106.9%. The ~~tax~~income ~~benefit was offset by additional~~ tax ~~expense~~provision ofdiffered ~~$3,587~~from inthe ~~2013~~statutory ~~when~~rate ~~compared~~due to ~~2012~~releases ~~resulting~~in ~~from~~valuation ~~the~~allowances ~~Income~~primarily ~~Tax~~related ~~Allocation~~to ~~along~~operating ~~with~~losses, anforeign ~~increase~~dividends inand ~~tax reserves of $2~~interest,~~817~~ ~~over~~and ~~the~~nondeductible ~~same period~~expenditures.

For the year ended December 31, 2012, we recognized a $1,283 benefit for income taxes. The effective tax rate for the year ended December 31, 2012 was 5.1%. The income tax provision differed from the statutory rate due to releases in valuation allowances primarily related to operating losses, foreign dividends and interest, and nondeductible expenditures.

Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Year Ended December 31, ~~2012~~2013 Compared to Year Ended December 31, ~~2011~~2012

The table below presents statement of operations data, including the amount and percentage changes for the periods indicated, as well as the impact from foreign exchange translation:

	Year Ended December 31,
	2012			2011			DollarChange			PercentageChange		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact
	2013			2012			DollarChange			PercentageChange		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact
Statement of Operations Data:
Revenues:
Americas	$	~~870~~895,~~079~~253		$	~~812~~870,~~043~~079		$	5825,~~036~~174		72.19	%	83.58	%	$	(107,~~772~~946	)
EMEA	~~559~~543,~~554~~093			~~596~~559,~~670~~554			(3716,~~116~~461		)	(6.2.9	)%	0(5.43	)%	~~(39~~13,~~710~~368		)
Other	(~~500~~8		)	~~7,256~~(500		)	~~(7,756~~492		)	~~(106~~98.94	)%	~~(106~~132.90	)%	—(168		)
Total revenues	1,~~429~~438,~~133~~338			1,~~415~~429,~~969~~133			139,~~164~~205			0.96	%	40.53	%	~~(50~~5,~~482~~254		)
Operating expenses:
Costs of services:
Americas	~~540~~559,~~418~~042			~~489~~540,~~688~~418			5018,~~730~~624			103.4	%	105.91	%	(28,~~629~~745		)
EMEA	~~394~~386,~~509~~612			~~424~~394,~~747~~509			(307,~~238~~897		)	(72.10	)%	(04.65	)%	~~(27~~9,~~901~~879		)
Other	~~(380~~639		)	~~6,702~~(380		)	(71,~~082~~019		)	~~(105~~268.72	)%	~~(105~~109.42	)%	~~(20~~604		)
Total costs of services	~~934~~946,~~547~~293			~~921~~934,~~137~~547			1311,~~410~~746			1.53	%	41.81	%	~~(30~~1,~~550~~738		)
Selling, general and administrative expenses:
Selling, general, and administrative expenses:
Americas	~~202~~200,~~318~~321			~~185~~201,~~809~~208			~~16,509~~(887		)	8(0.94	)%	91.04	%	(~~230~~3,614		)
EMEA	~~126~~117,~~479~~364			~~140~~129,~~753~~554			(1412,~~274~~190		)	(109.14	)%	(411.21	)%	(82,~~352~~249		)
Other	4349,~~731~~932			4441,~~049~~766			~~(318~~8,166		)	(019.76	)%	(120.70	)%	~~441~~(198		)
Total selling, general and administrative expenses	372,528			370,611			1,917			0.5	%	2.7	%	(8,141		)
Total selling, general, and administrative expenses	367,617			372,528			(4,911		)	(1.3	)%	(0.9	)%	(1,563		)
Depreciation and amortization of property and equipment	3534,~~997~~578			3835,~~902~~997			(21,~~905~~419		)	(73.59	)%	na		na
Amortization of intangible assets	76,~~035~~383			137,~~272~~035			(~~6,237~~652		)	(479.03	)%	na		na
Restructuring and exit charges	1514,~~693~~241			2015,~~048~~693			(41,~~355~~452		)	(219.73	)%	na		na
Loss on foreign currency transactions	2,596			2,112			484			22.9	%	na		na
(Gain) loss on foreign currency transactions	(984		)	2,596			(3,580		)	(137.9	)%	na		na
Impairment and (gain) loss on disposal of assets, net	1,484			634			850			134.1	%	na		na
Loss on sale of subsidiary	4,558			—			4,558			n/m		na		na
Other expense, net	97			1,169			(1,072		)	(91.7	)%	na		na
Impairment and loss on disposal of assets, net	71			1,484			(1,413		)	(95.2	)%	na		na
Operating income	59,156			48,084			11,072			23.0	%	na		na
Other (income) expense, net	(743		)	97			(840		)	(866.0	)%	na		na
Interest and other financing costs, net	84,307			70,690			13,617			19.3	%	na		na
Operating income	66,324			59,156			11,726			19.8	%	na		na
Loss before income taxes	(25,151		)	(22,606		)	(2,545		)	(11.3	)%	na		na
Interest and other financing costs, net	80,554			84,307			(3,753		)	(4.5	)%	na		na
Income tax (benefit) provision	(1,283		)	9,179			(10,462		)	(114.0	)%	na		na
Loss before income taxes	(14,230		)	(25,151		)	15,479			61.5	%	na		na
Net loss	$	(23,868	)	$	(31,785	)	$	7,917		24.9	%	na		na
Income tax benefit	(15,216		)	(1,283		)	(13,933		)	(1,086.0	)%	na		na
Net income (loss)	$	986		$	(23,868	)	$	29,412		123.2	%	na		na

Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Revenues

We reported Revenues of $1,~~429~~438,~~133~~338 for the year ended December 31, ~~2012~~2013, an increase of $139,~~164~~205, compared to $1,~~415~~429,~~969~~133 for the year ended December 31, ~~2011~~2012. Excluding the $505,~~482~~254 impact of foreign exchange translation, of(primarily ~~which~~consists of $3913,~~710~~368 related to EMEA, ~~and~~partially offset by $107,~~772~~946 related to the Americas), Revenues increased by $633,~~646~~951, from ~~2011~~2012 to ~~2012~~2013. Revenue increases in ~~2012~~2013 (excluding the impact of foreign exchange translation) were primarily attributable to new business, which increased approximately $63101,~~200~~900, with $3578,~~700~~600 attributable to the Americas and $2723,~~500~~300 attributable to EMEA. The increase in Revenues was also due to growth of existing client campaigns of approximately $426,~~200~~800, which was primarily driven by anincreases ~~increase~~ in the Americas of $4922,~~700~~200, partially offset by a decrease of $715,~~500~~400 in EMEA. These increases in Revenues were partially offset by approximately $41104,~~800~~700 of attrition, of which $2367,~~200~~100 related to the Americas and $1837,600 related to EMEA. The increase in Revenues was also partially offset by the decrease in Other revenues, which were $(500) for the year ended December 31, 2012, a decrease of $7,756, compared to $7,256 for the year ended December 31, 2011. The decrease in Other revenues was primarily due to the sale of the National Action Financial Services, Inc. ("NAFS") third party collections business based in Buffalo, New York (the "NAFS Business") in August 2011.

Operating Expenses

Costs of Services

Costs of services were $~~934~~946,~~547~~293 for the year ended December 31, ~~2012~~2013, an increase of $1311,~~410~~746, compared to $~~921~~934,~~137~~547 for the year ended December 31, ~~2011~~2012. Excluding the impact of foreign exchange translation of $301,~~550~~738, of which $279,~~901~~879 related to EMEA ~~and~~offset by $28,~~629~~745 related to the Americas, Costs of services increased by $4310,~~960~~008, during ~~2012~~2013 as compared to ~~2011~~2012. Costs of services increases ~~in 2012~~ were primarily due to the aforementioned increase in Revenues, ~~growth~~but slightly lower margins due to a shift in ~~2012.~~customer mix.

SG&A

SG&A expenses were $~~372~~367,~~528~~617 for the year ended December 31, ~~2012~~2013, ana ~~increase~~decrease of $14,~~917~~911, compared to $~~370~~372,~~611~~528 for the year ended December 31, ~~2011~~2012. Excluding the impact of foreign currency translation of $81,~~141~~563, primarily due to $83,~~352~~614 related to ~~EMEA~~Americas ~~and~~offset by $~~230~~2,249 related to ~~Americas~~EMEA, SG&A expenses ~~increased~~decreased $103,~~058~~348, during ~~2012~~2013 as compared to ~~2011~~2012. The ~~increase~~decrease in SG&A was primarily due to ~~increases~~cost insavings ~~Revenues,~~initiatives ~~facilities~~during ~~costs, and labor costs~~2013.

Depreciation and Amortization of Property and Equipment

Depreciation and amortization of property and equipment was $3534,~~997~~578 for the year ended December 31, ~~2012~~2013, a decrease of $21,~~905~~419, as compared to $3835,~~902~~997 for the year ended December 31, ~~2011~~2012. The decrease was primarily due to asset retirements during ~~2012~~2013, ~~combined~~partially ~~with~~offset aby ~~lower~~an ~~level~~increase ofin assets capital expenditures during the same period.

Amortization of Intangible Assets

Amortization of intangible assets was $76,~~035~~383 for the year ended December 31, ~~2012~~2013, a decrease of $6652,~~237,~~ compared to $137,~~272~~035 for the year ended December 31, ~~2011~~2012. The decrease was primarily due to certain customer relationship intangible assets in the Americas that became fully amortized during 2012.

Restructuring and Exit Charges

Management initiated a restructuring plan for the year ended December 31, ~~2011~~2012 (the "~~2011~~2012 Plan") in response to reduced volumes stemming from the global economic downturn and the likelihood of a prolonged and sluggish recovery period, primarily in EMEA. A restructuring plan for the year ended December 31, ~~2012~~2013 (the "~~2012~~2013 Plan") was also initiated in response to reduced volumes caused by the continued economic instability. Both plans consisted of workforce reductions and site closures.

Restructuring and exit charges were $1514,~~693~~241 for the year ended December 31, ~~2012~~2013, a decrease of $41,~~355~~452, compared to $2015,~~048~~693 for the year ended December 31, ~~2011~~2012. Restructuring expense included severance costs of $1211,~~217~~232 and $1512,~~203~~217 for the years ended December 31, ~~2012~~2013 and ~~2011~~2012, respectively. Facility exit and other costs, which primarily related to ongoing lease and other contractual obligations, were $3,~~476~~009 and $43,~~845~~476 for the years ended December 31, ~~2012~~2013 and ~~2011~~2012, respectively.

Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Information regarding the 2013 Plan and the restructuring and exit charges for the year ended December 31, 2013 is summarized below:



Headcount reduction	2,325
Sites eliminated	—
Estimated annualized cash savings	$	3,469

Restructuring and exit charges related to the 2013 Plan	$	12,462
Restructuring and exit charges related to restructuring plans from earlier years	$	1,779
Total restructuring and exit charges for the year ended December 31, 2013	$	14,241

Information regarding the 2012 Plan and the restructuring and exit charges for the year ended December 31, 2012 is summarized below:



Headcount reduction	1,392
Sites eliminated	2
Estimated annualized cash savings	$	9,772

Restructuring and exit charges related to the 2012 Plan	$	12,716
Restructuring and exit charges related to restructuring plans from earlier years	$	2,977
Total restructuring and exit charges for the year ended December 31, 2012	$	15,693

~~Information~~(Gain) ~~regarding~~Loss ~~the~~on ~~2011~~Foreign ~~Plan~~Currency ~~and~~Transactions ~~the restructuring and exit charges for the year ended December 31, 2011 is summarized below:~~

Headcount reduction	1,826
Sites eliminated	6
Estimated annualized cash savings	$	24,177
Restructuring and exit charges related to the 2011 Plan	$	14,721
Restructuring and exit charges related to restructuring plans from earlier years	$	5,327
Total restructuring and exit charges for the year ended December 31, 2011	$	20,048

We recognized a gain on foreign currency transactions of $984 for the year ended December 31, 2013, compared to a loss of $2,596 for the year ended December 31, 2012. The 2013 gain was primarily attributable to the revaluation between the U.S. Dollar and the British Pound Sterling. The 2012 loss was primarily attributable to revaluation between the Euro and the British Pound Sterling.

Loss on ~~Foreign~~Sale ~~Currency~~of ~~Transactions~~ Subsidiary

We ~~recognized~~incurred a loss ~~on foreign currency transactions~~ of $24,~~596~~558 ~~for~~during the year ended December 31, ~~2012,~~2013 anrelating ~~increase~~to the sale of ~~$484,~~our ~~compared~~Belgium tosubsidiary. ~~$2,112~~See ~~for~~Note 12 in the ~~year~~accompanying ~~ended~~Consolidated ~~December 31,~~Financial ~~2011.~~Statements for additional details regarding the subsidiary sale.

Impairment and (Gain) Loss on Disposal of Assets, Net

Impairment and loss on disposal of assets was $~~1,484~~71 for the year ended December 31, ~~2012~~2013, ana ~~increase~~decrease of $~~850~~1,413, compared to $~~634~~1,484 for the year ended December 31, ~~2011~~2012. The ~~loss~~decrease was primarily related to impairment charges of $1,633 recognized during 2012 on certain of the Company's annuity contracts located in the Americas. During 2013, we recorded impairment charges of $753 related to property and equipment, partially offset by $182 in gains on disposal of property and equipment. Additionally, $500 in liquidation payments received during 2013 related to the aforementioned annuity contracts, was recorded as a gain to Impairment and loss on disposal of assets.

Interest and Other Financing Costs, net

Interest and other financing costs were $8480,~~307~~554 for the year ended December 31, ~~2012~~2013, ana ~~increase~~decrease of $133,~~617~~753, compared to $7084,~~690~~307 for the year ended December 31, ~~2011~~2012. The ~~increase~~decrease was primarily attributable to ~~an increase in~~ non-cash interest ~~expense of $11,482~~ related to a mark-to-market gain during 2013, compared to a loss in 2012 associated with the interest rate swap. ~~and~~The adecrease was partially offset by higher interest ~~rate~~expense onrelated to the Senior Secured Notes as compared to the ~~term loans ("~~Term Loans") that were ~~partially~~repaid ~~paid~~during ~~down with the proceeds~~2012. ~~These increases were partially offset by lower interest payments associated with the amendment of our interest rate swap.~~

Income Tax ~~Provision (~~Benefit)

We recognized an income tax benefit of $115,~~283~~216 for the year ended December 31, ~~2012~~2013, compared to a ~~provision~~benefit of $91,~~179~~283 for the year ended December 31, ~~2011~~2012. The effective tax rate for the year ended December 31, ~~2012~~2013 was 5106.19%. The ~~effective tax rate for the year ended December 31, 2012 differed from the statutory rate due to releases of valuation allowances, foreign dividends and interest and nondeductible expenditures.~~

In 2012, we released valuation allowances on the deferred tax assets of one of our Canadian subsidiaries and our Colombian subsidiary during the fourth quarter of 2012, resulting in a tax benefit of $3,522. Management concluded that releases were warranted in the current quarter given recent cumulative profit positions coupled with profitable outlooks. During the fourth quarter of 2012, we also established a valuation allowance on the deferred tax assets of our Brazilian subsidiary as management concluded that cumulative losses and lack of future expected sustained profitability could no longer support the recognition of the deferred tax assets, resulting in tax expense of $3,593.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

~~Allocation,~~effective ~~we recorded a non-cash deferred income~~ tax ~~expense~~rate offor ~~$3,237~~the ~~against other comprehensive income as a result of~~ year~~-to-date~~ ~~gains~~ended ~~from mark-to-market fluctuations on foreign currency hedges which are designated as accounting hedges and an offsetting non-cash income tax benefit of $3~~December 31,~~237~~ in2013 ~~continuing~~differed ~~operations.~~from ~~During~~ the ~~fourth~~statutory ~~quarter,~~rate wedue ~~recorded~~to areleases ~~non-cash deferred income tax expense~~ of ~~$948~~valuation ~~against~~allowances ~~Foreign~~and ~~currency~~tax ~~translation~~rate ~~adjustment~~differences ~~as a result~~ of ~~year-to-date gains from~~ foreign ~~currency~~subsidiaries ~~fluctuations~~offset ~~primarily~~by ~~related to our establishment of a deferred tax liability on unrepatriated~~ foreign ~~earnings~~dividends ~~of our Philippines subsidiary~~ and aninterest ~~offsetting non-cash income tax benefit of $948 in continuing operations. We also released the valuation allowance on operating losses~~ and ~~other~~nondeductible tax attributes with unlimited carryforward periods in certain jurisdictions to the extent that deferred tax liabilities related to indefinite lived intangibles created a source of income to support the releaseexpenditures. ~~This release resulted in a tax benefit of $5,139 during the fourth quarter of 2012.~~

We have significant deferred tax assets in many of the jurisdictions in which we operate. Management will continue to assess our ability to realize the deferred tax benefits in jurisdictions which currently have valuation allowances. ~~There~~During ~~are~~the ~~certain~~second ~~foreign~~quarter ~~and~~of 2013, we released valuation allowance on U.S. state ~~and~~deferred ~~local~~tax ~~jurisdictions~~assets ~~where~~totaling ~~management~~$744. ~~feels~~During itthe isthird ~~necessary~~quarter toof ~~see~~2013, ~~further~~we ~~evidence~~released valuation allowance on the deferred tax assets of ~~sustained~~our ~~achievement~~French ~~towards~~subsidiary ~~financial~~in ~~targets~~the ~~before~~amount ~~any~~of ~~valuation~~$10,419 ~~allowance~~after ~~can~~management beconcluded ~~released~~that ~~with~~the ~~respect~~indefinite tolived ~~these~~nature ~~operations.~~of Ifits ~~such~~net ~~goals~~operating ~~can~~losses becoupled ~~achieved~~with its recent operating results and ~~sustained~~forecasted ~~throughout~~income substantiated the release. During the fourth quarter of 2013, we ~~may~~released ~~release~~valuation ~~all~~allowance oron aour ~~portion~~German subsidiary in the amount of $7,639 and two of our United Kingdom subsidiaries in the ~~remaining~~amounts of $8,735 and $1,115 given their recent cumulative profit positions coupled with profitable outlooks. These releases were offset by valuation allowance asestablished ~~early~~on asour Italian subsidiary totaling $170 given the ~~second~~expected ~~half~~future ofoperating ~~2013~~results ~~with~~could ~~respect~~no tolonger ~~these~~sustain ~~operations~~recognition of the deferred tax assets. ~~Such~~During ~~release~~the ~~would~~fourth ~~have~~quarter aof ~~positive~~2012, ~~impact~~we released the valuation allowance on ~~our~~operating ~~income~~losses and other tax ~~expense~~attributes ~~and~~with ~~net~~unlimited ~~income~~carryforward periods in certain jurisdictions to the ~~period~~extent that the deferred tax liabilities related to indefinite lived intangibles created a source of income to support the release. This release resulted in a tax benefit of $5,139.

We ~~have~~consider ~~not~~all ~~recorded~~income ~~deferred~~sources, ~~U.S.~~including other comprehensive income, ~~tax~~in ~~liabilities~~determining ofthe ~~$19,085~~amount ~~and~~of ~~$26,686~~tax ~~applicable~~benefit allocated to ~~undistributed~~continuing ~~earnings~~operations (the "Income Tax Allocation"). During the first quarter of ~~$54~~2013,~~724~~ ~~and~~as ~~$76,257~~a atresult ~~December 31,~~of ~~2012~~the ~~and~~Income ~~2011,~~Tax ~~respectively~~Allocation, we recorded a non-cash deferred income tax expense of $598 related to ~~certain~~the ~~foreign~~2013 ~~subsidiaries~~hedge portfolio against other comprehensive income as ~~these~~a ~~undistributed~~result ~~earnings~~of ~~are~~year-to-date ~~indefinitely~~gains ~~reinvested~~from inmark-to-market fluctuations on foreign ~~operations.~~currency ~~During~~hedges ~~the~~which ~~fourth~~are ~~quarter~~designated ofas ~~2012,~~accounting wehedges ~~changed~~and ~~our~~an ~~assertions~~offsetting ~~with~~non-cash ~~respect~~income totax ~~certain~~benefit of ~~our~~$598 ~~foreign~~in ~~subsidiaries.~~continuing Weoperations ~~recorded~~as compared to a non-cash deferred income tax ~~liability~~expense ofagainst ~~$9,271,~~other ~~recognizing~~comprehensive ~~$425~~income ofand offsetting non-cash income tax ~~expense~~benefit of $3,237 ~~applicable~~related to the ~~undistributed~~2013 ~~earnings~~hedge ofportfolio ~~our~~in ~~Philippines~~continuing ~~subsidiary~~operations ~~and~~during ~~reduced~~the third quarter of 2012. During the fourth quarter of 2012, we recorded a non-cash deferred income tax ~~liability~~expense ~~for~~of $~~534~~948 ~~related~~against toForeign ~~the~~currency ~~reversal~~translation ofadjustment ~~our~~as ~~assertion~~a ~~with~~result ~~respect~~of year to ~~our~~date ~~Portuguese~~gains ~~subsidiary,~~from ~~recognizing~~foreign ~~$28~~currency offluctuations ~~income~~primarily ~~tax~~related ~~benefit.~~to Weour ~~continuously~~establishment ~~review~~of ~~the~~a ~~assertion~~deferred ~~for~~tax ~~indefinitely~~liability ~~reinvested~~on ~~earnings~~unrepatriated inforeign ~~line~~earnings ~~with~~of our ~~global~~Philippines subsidiary and an offsetting non-cash ~~strategy.~~income tax benefit of $948 in continuing operations.

~~For~~We ~~the~~have ~~year~~not ~~ended~~recorded deferred U.S. income tax liabilities of $12,162 and $19,085 applicable to undistributed earnings of $34,977 and $54,724 at December 31, ~~2011~~2013 and 2012, werespectively, ~~recognized~~related ato ~~$9,179~~certain ~~provision~~foreign ~~for~~subsidiaries ~~income~~as ~~taxes.~~these ~~The~~undistributed ~~effective~~earnings ~~tax~~are ~~rate~~indefinitely ~~for~~reinvested in foreign operations. During the ~~year~~fourth ~~ended~~quarter ~~December 31~~of 2013, ~~2011~~we ~~was~~changed ~~(40~~our assertions with respect to certain of our foreign subsidiaries.~~6)%.~~ ~~The~~We ~~income~~recorded a deferred tax ~~provision~~liability ~~differed~~applicable ~~from~~to the ~~statutory~~undistributed ~~rate~~earnings ~~due~~of toour ~~increases~~Nicaraguan insubsidiary ~~valuation~~for ~~allowances~~$584 ~~primarily~~as ~~related~~a toresult ~~operating~~of ~~losses,~~its ~~foreign~~strong ~~dividends,~~performance ~~and~~combined ~~interest~~with repatriation opportunities and ~~nondeductible~~our ~~expenditures~~Indian subsidiary for $1,683 given that future distributions could exceed current earnings. We ~~have~~reduced ~~recognized~~the deferred tax ~~expense~~liabilities onas a ~~consolidated~~result ~~book~~of ~~loss~~reversing ~~because~~our assertions related to our Polish subsidiary for $1,055 as future distributions are not expected to exceed current earnings. During the fourth quarter of 2012, we ~~recognize~~changed ~~tax~~our ~~expense~~assertions inwith respect to certain ~~profitable~~of ~~jurisdictions~~our ~~which~~foreign ~~cannot~~subsidiaries. beWe ~~offset~~recorded bya deferred tax ~~benefit~~liability inof ~~loss~~$9,271, ~~jurisdictions~~recognizing ~~due~~$425 of income tax expense, applicable to the ~~existence~~undistributable earnings of ~~valuation~~our ~~allowances~~Philippines subsidiary and reduced the deferred tax liability for $534 related to the reversal of our assertion with respect to our Portuguese subsidiary, recognizing $28 of income tax benefit. We continuously review the assertion for indefinitely reinvested earnings in ~~these~~line ~~jurisdictions~~with our global cash strategy.

The provision for income taxes decreased to a benefit of $115,~~283~~216 for the year ended December 31, ~~2012~~2013 from an income tax ~~expense~~benefit of $91,~~179~~283 for the year ended December 31, ~~2011~~2012 primarily due to the additional tax benefit of $523,~~139~~414 related to the release of valuation allowances on ~~operating~~the ~~losses~~deferred ~~and~~tax ~~other~~assets ~~tax~~of ~~attributes~~certain ~~with~~of ~~unlimited~~our ~~carryforward~~foreign ~~periods~~subsidiaries in ~~jurisdictions~~2013 ~~where~~when ~~deferred~~compared ~~tax~~to ~~liabilities~~2012. ~~for~~The ~~indefinite~~tax ~~lived~~benefit ~~intangibles~~was ~~create~~offset aby ~~source~~additional ~~of income and the~~ tax ~~benefit~~expense of $43,~~185~~587 ~~recorded~~ in ~~continuing~~2013 ~~operations~~when ~~for~~compared ~~year-~~to~~-date~~ ~~gains~~2012 resulting from ~~mark-to-market~~the ~~fluctuations~~Income onTax ~~foreign~~Allocation ~~currency~~along ~~hedges~~with ~~and~~an ~~foreign~~increase ~~currency~~in ~~fluctuations on deferred~~ tax ~~liabilities~~reserves ~~related~~of to$2,817 ~~unrepatriated~~over ~~foreign~~the ~~earnings~~same ~~recorded in other comprehensive income~~period.

Liquidity and Capital Resources

Our principal sources of liquidity are ~~net~~ cash provided by operating activities, borrowings under our Senior Secured Credit Facility, and proceeds from the issuances of our Senior Secured Notes, Senior Notes, and equity. We expect that these will continue to be our principal sources of cash in the future. Our principal uses of cash have included debt service, capital ~~expenditures, restructuring activities, and the financing of working capital. We expect that these will continue to be our principal uses of cash in the future.~~

We manage a centralized global treasury function in the United States with a particular focus on concentrating and safeguarding our global cash and cash equivalent reserves. While we generally prefer to hold U.S. dollars, we maintain adequate cash in the functional currency of our foreign subsidiaries to support local operating costs. We protect our cash reserves by maintaining sound cash management practices, relationships with reputable banking partners, and highly liquid investments. We continuously review our assertion for indefinitely reinvested earnings in line with our global cash strategy.

We believe that cash generated from operations, existing cash balances, and borrowings under our Senior Secured Credit Facility or other financing arrangements will be sufficient to meet our working capital requirements, anticipated capital expenditures, and scheduled debt payments.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

~~working~~expenditures, ~~capital~~restructuring activities, and ~~capital expenditure requirements could also increase materially in~~ the ~~event~~financing ~~cash is required to fund new strategic initiatives, the resolution~~ of ~~certain~~working ~~litigation or administrative disputes, or other unexpected business expenses~~capital. ~~These~~We ~~factors~~expect ~~could require~~ that wethese ~~raise~~will ~~additional~~continue ~~capital~~to ~~through~~be ~~future~~our ~~debt~~principal oruses ~~equity~~of ~~financing~~cash orin ~~reduce~~the ~~certain capital and other expenditures~~future.

We ~~expect~~manage ~~our~~a ~~operations~~centralized toglobal ~~continue~~treasury tofunction ~~require~~in ~~capital~~the ~~expenditures~~United ~~consistent~~States with ~~prior~~a ~~years~~particular tofocus ~~support~~on ~~the~~concentrating ~~growth~~and ofsafeguarding our ~~business~~global cash and cash equivalent reserves. WeWhile ~~expect~~we generally prefer to ~~continue~~hold U.S. dollars, we maintain adequate cash in the functional currency of our foreign subsidiaries to ~~finance~~support ~~equipment~~local ~~purchases~~operating ~~through~~costs. ~~proceeds~~We ~~from~~protect our ~~operations~~cash reserves by maintaining sound cash management practices, ~~our~~relationships ~~Senior~~with ~~Secured~~reputable ~~Credit~~banking ~~Facility~~partners, and ~~our~~highly ~~ability~~liquid toinvestments. ~~acquire~~We ~~equipment~~continuously ~~through~~review ~~operating~~our ~~and~~assertion ~~capital~~for ~~lease~~indefinitely ~~obligations~~reinvested ~~with~~earnings ~~various~~in ~~equipment~~line ~~vendors~~with ~~and~~our ~~lending~~global ~~institutions.~~cash strategy.

~~During~~We ~~the~~believe ~~year~~that ~~ended~~cash generated from operations, existing cash balances, and borrowings under our Senior Secured Credit Facility or other financing arrangements will be sufficient to meet our working capital requirements, anticipated capital expenditures, and scheduled debt payments. Our Revolvers mature in January 2016. As of December 31, ~~2013~~2014, ~~cash~~we ~~paid~~had outstanding borrowings of $31,700 under our Revolvers which provide for ~~fixed~~aggregate ~~asset~~borrowings ~~capital~~of ~~expenditures~~up ~~and~~to ~~other~~$61,250 ~~related~~less ~~investments~~$1,982 ~~totaled~~of letters of credit outstanding for a total availability of $27,568 as of December 31,~~001~~ 2014. ~~The~~We ~~capital~~intend ~~expenditure~~to ~~line~~restructure ~~item~~or ~~includes~~refinance the ~~following~~Revolvers ~~categories:~~prior ~~facilities~~to ~~and~~their ~~information~~maturity. ~~technology~~The ~~repair~~refinancing of the Revolvers is outside of our control and ~~maintenance,~~there ~~growth,~~can ~~retention~~be no assurance that such transaction will occur, ~~and~~or ~~incremental~~if ~~new~~it ~~sites~~does occur, on what terms.

The amount of capital required over the next 12 months will also depend on our levels of investment in infrastructure necessary to maintain, upgrade, or replace existing assets or to develop new customer contact centers. Our working capital and capital expenditure requirements could also increase materially in the event cash is required to fund new strategic initiatives, the resolution of certain litigation or administrative disputes, or other unexpected business expenses. These factors could require that we raise additional capital through future debt or equity financing or reduce certain capital and other expenditures.

We expect our operations to continue to require capital expenditures at or above prior years to support expected growth of our business and various cost savings initiatives. We expect to continue to finance equipment purchases through proceeds from our operations, our Senior Secured Credit Facility, and our ability to acquire equipment through operating and capital lease obligations with various equipment vendors and lending institutions.

During the year ended December 31, 2014, cash paid for fixed asset capital expenditures and other related investments totaled $35,304. The capital expenditure line item includes the following categories: facilities and information technology repair and maintenance, growth, retention, and incremental new sites.

The maximum capital expenditures covenant in our Senior Secured Credit Facility limits our annual capital spending, cash restructuring in excess of $10,000 and our acquisition expenses in excess of $10,000, to a pre-established limit for each year and allows for carryover of unused spend.

As of December 31, ~~2013~~2014, our total Cash and cash equivalents were $78,~~366~~857, and our indebtedness was $~~739~~752,~~744~~240. This compares with $127,~~245~~366 in total Cash and cash equivalents and $~~737~~739,~~121~~744 of indebtedness as of December 31, ~~2012~~2013. Adjusted working capital was $~~105~~145,~~965~~176 at December 31, ~~2013~~2014, compared to $~~131~~105,965 at December 31, ~~2012~~2013, a ~~decrease~~increase of $2639,~~000~~211. Adjusted working capital is a non-GAAP measure that we define as current assets (excluding cash and cash equivalents and restricted cash) less current liabilities (excluding current portion of long-term debt and book overdrafts). See Part II Item 7 of this Report for a reconciliation of this non-GAAP measure.

These fluctuations are explained in the Cash Flows comparisons below.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

Cash Flows

Year Ended December 31, 2014 Compared to Year Ended December 31, 2013

The following summarizes our primary sources and uses of cash in the periods presented (in thousands):



	Year Ended December 31,						Increase (Decrease) to Net Cash Flow
	2014			2013			Amount
Cash provided by (used in):
Operating activities	$	(44,851	)	$	33,866		$	(78,717	)
Investing activities	(34,535		)	(30,723		)	(3,812		)
Financing activities	81,465			(7,572		)	89,037

Operating Activities. Cash flow from operations was a use of cash of $44,851 in 2014, compared to a source of cash of $33,866 in 2013. Cash flow from operations decreased primarily due to the $49,346 decrease in Net income from 2013 to 2014, as well as unfavorable changes in our Accounts receivable of $60,111. The decrease in Accounts receivable was primarily driven by the timing of our Accounts receivable collections during 2014 compared to 2013.

Investing Activities. Cash used in investing activities was $34,535 in 2014, compared to $30,723 in 2013. The increase was primarily driven by an increase in capital expenditures during 2014, partially offset by the proceeds from the disposition of our Port Aurthur location during the first quarter of 2014.

Financing Activities. Cash provided by financing activities was $81,465 in 2014, compared to a use of cash of $7,572 in 2013. The increase in cash provided by financing activities was primarily due to the issuance of Preferred D stock during the second quarter of 2014. In addition, we had borrowings on the Revolvers during 2014 compared to paydowns during 2013.

Year Ended December 31, 2013 Compared to Year Ended December 31, 2012

The following summarizes our primary sources and uses of cash in the periods presented (in thousands):



	Year Ended December 31,						Increase (Decrease) to Net Cash Flow
	2013			2012			Amount
Cash provided by (used in):
Operating activities	$	33,866		$	6,600		$	27,266
Investing activities	(30,723		)	(31,184		)	461
Financing activities	(7,572		)	18,771			(26,343		)

Operating Activities. Cash flow from operations was a source of cash of $33,866 in 2013, compared to $6,600 in 2012. Cash flow from operations increased primarily due to the $24,854 increase in Net income from 2012 to 2013, as well as favorable changes in our operating working capital accounts of approximately $14,071, which was due to decreases in Accounts receivable partially offset by decreases in Accrued liabilities and other. The decrease in Accounts receivable was primarily driven by initiatives to reduce the average time our receivables are outstanding, such as initiatives around improving the billing cycle. The decrease in Accrued liabilities and other was primarily related to payments on foreign currency hedge liabilities.

Investing Activities. Cash used in investing activities was $30,723 in 2013, compared to $31,184 in 2012. The decrease was primarily driven from certain software licensing purchases during 2012 that the Company did not incur during 2013, partially offset by an increase in other capital expenditures.

Financing Activities. Cash used by financing activities was $7,572 in 2013, compared to source of cash of $18,771 in 2012. The decrease in cash provided by financing activities was primarily due to higher pay downs and less

Table of Contents

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

borrowings against the Revolvers over the course of 2013 as compared to 2012, partially offset by a reduction in debt issuance costs incurred during 2013.

Year Ended December 31, 2012 Compared to Year Ended December 31, 2011

The following summarizes our primary sources and uses of cash in the periods presented (in thousands):

	Year EndedDecember 31,						Increase(Decrease) toNet Cash Flow
	2012			2011			Amount
Cash provided by (used in):
Operating activities	$	6,600		$	(9,968	)	$	16,568
Investing activities	(31,184		)	(39,465		)	8,281
Financing activities	18,771			39,727			(20,956		)

Operating Activities. Cash flow from operations was a source of cash of $6,600 in 2012, compared to a use of cash of $9,968 in 2011. The increase in cash flow from operations was primarily due to decreases in cash payments on restructuring charges of approximately $11,400, interest charges of $8,151, and taxes of $7,996 from 2011 to 2012. Cash flow from operations also increased due to the $7,917 decrease in net loss from 2011 to 2012. These increases in cash flows from operations were partially offset by an increase of $24,476 in our operating assets and liabilities, which was primarily driven by lower accounts payable and accrued liabilities balances.

Investing Activities. Cash used in investing activities was $31,184 in 2012, compared to $39,465 in 2011. The decrease in cash used in investing activities was due to lower capital expenditures on property and equipment, which was primarily due to lower capital expenditure requirements in 2012 compared to 2011. During 2012, we invested $31,503 in property and equipment, compared to $40,258 in 2011.

Financing Activities. Cash provided by financing activities was $18,771 in 2012, compared to $39,727 in 2011. The decrease in cash provided by financing activities was primarily due to lower net borrowings against the Revolvers over the course of 2012 as compared to 2011, combined with higher payments on debt issue costs and interest rate swaps. During 2012, we paid $10,957 in debt issue costs and interest rate swaps, compared to $3,618 in 2011.

Contractual Obligations and Commercial Commitments

The following table represents our contractual commitments associated with our debt and other contractual obligations as of December 31, 2013:

	Payments Due By Period
Commitments	Less than 1Year		1-3 Years		3-5 Years		More than5 Years		Totals
	(dollars in thousands)
Long-term debt obligations(1)	$	—	$	18,000	$	727,496	$	—	$	745,496
Interest obligation(2)	77,648		153,852		50,256		—		281,756
Capital lease obligations(3)	2,839		3,736		678		—		7,253
Operating lease obligations(4)	46,547		56,167		23,682		2,010		128,406
Purchase commitments(5)	27,091		21,360		200		192		48,843
Total(6)	$	154,125	$	253,115	$	802,312	$	2,202	$	1,211,754

(1) Represents principal on our Senior Notes, the Senior Secured Notes, and Senior Secured Credit Facility. For further information on our long-term debt obligations, see Note 8 to our Consolidated Financial Statements for the year ended December 31, 2013. As of December 31, 2013, we had outstanding borrowings of $18,000 under our Revolvers which provide for aggregate borrowings of up to $61,250 less $1,008 of letters of credit outstanding for a total availability of $42,242 as of December 31, 2013. The actual amounts of interest and payments under our Revolvers will ultimately depend on the amount of debt and letters of credit outstanding and the interest rates in effect during each period.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

~~(2)~~Financing ~~Represents~~Activities. Cash ~~interest~~used ~~payments~~by onfinancing ~~our~~activities ~~Senior~~was ~~Secured Credit Facility~~$7,572 ~~Senior~~in ~~Secured Notes~~2013, ~~and~~compared ~~Senior~~to ~~Notes.~~source ~~Because~~of wecash ~~have hedged~~ of $~~175~~18,~~000~~771 ofin ~~our~~2012. ~~outstanding~~The ~~term~~decrease ~~loan~~in ~~borrowings~~cash ~~through~~provided anby ~~interest~~financing ~~rate~~activities ~~swap~~was ~~agreement~~primarily ~~expiring~~due ~~December~~to ~~2016,~~higher ~~the~~pay ~~interest~~downs ~~payments~~and ~~reflected~~less ~~above~~borrowings ~~for~~against ~~that $175,000 are based on~~ the ~~swap~~Revolvers ~~rate~~over ~~of 2.315% through~~ the ~~expiration~~course ~~date~~ of ~~that~~2013 ~~agreement,~~as ~~rather~~compared ~~than the interest rate of the Term Loans. Variable interest rates under our Senior Secured Credit Facility have been assumed~~ to ~~remain constant through the end of the term. For further information~~2012, ~~see~~partially ~~Notes~~offset 8by ~~and~~a 15reduction toin ~~our~~debt ~~Consolidated~~issuance ~~Financial~~costs ~~Statements~~incurred ~~for~~during ~~the year ended December 31,~~ 2013~~, included in Item 8 of this report~~.

~~(3)~~Contractual ~~Consists~~Obligations ofand ~~payments~~Commercial ~~under our capital leases for certain equipment. For further information, see Note 13 to our Consolidated Financial Statements for the year ended December 31, 2013, included in Item 8 of this report.~~Commitments

~~(4)~~The ~~Represents~~following ~~payments~~table ~~under~~represents our ~~non-cancelable~~contractual ~~operating~~commitments ~~leases~~associated ~~for~~with ~~various~~our ~~property~~debt and ~~equipment.~~other ~~For~~contractual ~~further~~obligations ~~information,~~as ~~see~~of ~~Note 13 to our Consolidated Financial Statements for the year ended~~ December 31, ~~2013.~~2014:



	Payments Due By Period
Commitments	Less than 1 Year		1-3 Years		3-5 Years		More than 5 Years		Totals
	(dollars in thousands)
Long-term debt obligations(1)	$	—	$	454,540	$	300,000	$	—	$	754,540
Interest obligation(2)	79,763		118,705		8,625		—		207,093
Capital lease obligations(3)	3,821		3,784		384		—		7,989
Operating lease obligations(4)	43,172		51,858		21,361		3,357		119,748
Purchase commitments(5)	27,477		14,787		10,075		—		52,339
Total(6)	$	154,233	$	643,674	$	340,445	$	3,357	$	1,141,709

(1)

Represents principal on our Senior Notes, the Senior Secured Notes, and Senior Secured Credit Facility. For further information on our long-term debt obligations, see Note 8 to our Consolidated Financial Statements for the year ended December 31, 2014. As of December 31, 2014, we had outstanding borrowings of $31,700 under our Revolvers which provide for aggregate borrowings of up to $61,250 less $1,982 of letters of credit outstanding for a total availability of $27,568 as of December 31, 2014. The actual amounts of interest and payments under our Revolvers will ultimately depend on the amount of debt and letters of credit outstanding and the interest rates in effect during each period.

(2)

Represents interest payments on our Senior Secured Credit Facility, Senior Secured Notes, and Senior Notes. Because we have hedged $175,000 of our outstanding term loan borrowings through an interest rate swap agreement expiring December 2016, the interest payments reflected above for that $175,000 are based on the swap rate of 2.315% through the expiration date of that agreement, rather than the interest rate of the Term Loans. Variable interest rates under our Senior Secured Credit Facility have been assumed to remain constant through the end of the term. For further information, see Notes 8 and 15 to our Consolidated Financial Statements for the year ended December 31, 2014, included in Item 8 of this report.


(3)	Consists of payments under our capital leases for certain equipment. For further information, see Note 13 to our Consolidated Financial Statements for the year ended December 31, 2014, included in Item 8 of this report.


(4)	Represents payments under our non-cancelable operating leases for various property and equipment. For further information, see Note 13 to our Consolidated Financial Statements for the year ended December 31, 2014.


(5)	Consists primarily of contractual obligations to purchase goods or services, primarily telecommunications services, which are enforceable and legally binding on us.

(6) Because we are uncertain as to when and if cash settlement may occur, this table does not reflect our net long-term liability of $2721,~~434~~461 related to uncertain tax positions. See Note 10 of the Consolidated Financial Statements for the year ended December 31, ~~2013~~2014, included in Item 8 of this report.

Debt

Senior Notes

On March 18, 2010, SITEL, LLC and SITEL Finance Corp. (together with SITEL, LLC, the "Issuers") issued the 11.5% Senior Notes due April 1, 2018 having an aggregate principal amount of $300,000 with an original issuance discount of $7,638. The Senior Notes are general unsecured obligations of SITEL Worldwide Corporation and are senior in right of payment to all existing and future indebtedness, if any, that is by its terms expressly subordinated to the Senior Notes. The Senior Notes are guaranteed by our domestic subsidiaries and will mature on April 1, 2018. Interest accrues on the Senior Notes at a rate of 11.5% annually, and is payable semi-annually in arrears on April 1 and October 1. Proceeds from the Senior Notes offering were used to pay down approximately $231,600 of the Term Loans and 100% of the outstanding balance on the Revolvers, both of which are discussed further below.

We are not required to make mandatory redemptions or sinking fund payments with respect to the Senior Notes; however at any time prior to April 1, 2014, the Senior Notes may be redeemed in part or in full at a redemption price equal to 100% of the principal amount of the Senior Notes, plus a make-whole premium calculated in accordance with the indenture governing the Senior Notes and accrued and unpaid interest. On or after April 1, 2014, the Senior Notes may be redeemed in part or in full at the following percentages of the outstanding principal amount prepaid: 105.750% prior to April 1, 2015; 102.875% on or after April 1, 2015, but prior to April 1, 2016; and 100% on or after April 1, 2016.

Senior Secured Notes

On April 20, 2012, the Issuers issued the 11.0% Senior Secured Notes due August 1, 2017, having an aggregate principal amount of $200,000 with an original issuance discount of $8,000. The Senior Secured Notes are guaranteed by our domestic subsidiaries and will mature on August 1, 2017. The Senior Secured Notes and the guarantees are the senior obligations of the Issuers and the guarantors and are secured on a first-priority basis by a lien on substantially all of the assets of the Issuers and the guarantors, subject to certain exceptions. The obligations of the Issuers and the guarantors under the Senior Secured Notes and the guarantees are secured on an equal and ratable basis with all obligations of the Issuers and the guarantors under the Senior Secured Credit Facility. The Senior Secured Notes and guarantees thereof rank effectively senior in right of payment to all of the Issuers' and guarantors' existing and future senior unsecured debt, including the Senior Notes to the extent of the collateral securing the Senior Secured Notes, and rank senior to all of the Issuers' and guarantors' existing and future subordinated debt. Interest accrues on the Senior Secured Notes at a rate of 11.0% annually, and is payable semi-annually in arrears on February 1 and August 1. Proceeds from the Senior Secured Notes offering were used to pay down approximately $128,900 of the Term Loans and 100% of the outstanding balance on the Revolvers, both of which are discussed further below.

We are not required to make mandatory redemptions or sinking fund payments with respect to the Senior Secured Notes; however at any time prior to August 1, 2014, the issuers of the Senior Notes may, on any one or more occasions, redeem up to 35% of the aggregate principal amount of Senior Secured Notes with the net proceeds of certain equity offerings at 111%. Prior to August 1, 2014, the Senior Secured Notes may be redeemed in part or in full at a redemption price equal to 100% of the principal amount of the Senior Secured Notes, plus a make-whole premium calculated in accordance with the indenture governing the Senior Secured Notes and accrued and unpaid interest. On or after August 1, 2014, the Senior Secured Notes may be redeemed in part or in full at the following percentages of the outstanding principal amount prepaid: 105.5% prior to August 1, 2015; 102.75% on or after August 1, 2015, but prior to August 1, 2016; and 100% on or after August 1, 2016.

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(in thousands of U.S. dollars, except share and per share data)

part or in full at the following percentages of the outstanding principal amount prepaid: 105.750% prior to April 1, 2015; 102.875% on or after April 1, 2015, but prior to April 1, 2016; and 100% on or after April 1, 2016.

Senior Secured Notes

We are not required to make mandatory redemptions or sinking fund payments with respect to the Senior Secured Notes. On or after August 1, 2014, the Senior Secured Notes may be redeemed in part or in full at the following percentages of the outstanding principal amount prepaid: 105.5% prior to August 1, 2015; 102.75% on or after August 1, 2015, but prior to August 1, 2016; and 100% on or after August 1, 2016.

The indentures governing the Senior Notes and the Senior Secured Notes contains customary covenants and restrictions on the activities of SITEL, LLC, Sitel Finance and SITEL, LLC's restricted subsidiaries, including, but not limited to, the incurrence of additional indebtedness; dividends or distributions in respect of capital stock or certain other restricted payments or investments; entering into agreements that restrict distributions from restricted subsidiaries; the sale or disposal of assets, including capital stock of restricted subsidiaries; transactions with affiliates; the incurrence of liens; and mergers, consolidations or the sale of substantially all of SITEL, LLC's assets. Certain of these covenants will be suspended if the Senior Notes or Senior Secured Notes are assigned an investment grade rating by both Standard & Poor's Rating Services and Moody's Investor Service, Inc. and no default has occurred or is continuing. If either rating on the Senior Notes or Senior Secured Notes should subsequently decline to below investment grade, the suspended covenants will be reinstated.

Senior Secured Credit Facility

Overview

On January 30, 2007, we entered into a Senior Secured Credit Facility among a syndicate of banks with Goldman Sachs Credit Partners L.P. as joint lead arranger, joint bookrunner, administrative agent and collateral agent and GE Capital Markets, Inc. as joint lead arranger and joint bookrunner. The Senior Secured Credit Facility originally provided for total available borrowings in an aggregate principal amount of approximately $760,000, which ~~includes~~included $85,000 of Revolvers maturing on January 30, 2013, consisting of a $50,000 U.S. revolver, a $7,000 Canadian revolver (made available in Canadian dollars) and a $28,000 U.K. revolver (made available in Euro and British pound sterling), and $675,000 of Term Loans maturing on January 30, 2014, consisting of a $550,000 U.S. term loan, a €51,447 Euro term loan, and a £30,000 British pound sterling term loan. SITEL, LLC iswas the borrower under the U.S. term loan and the U.S. revolver, ClientLogic Holding Limited iswas the borrower under the Euro term loan, the British pound sterling term loan and the U.K. revolver, and SITEL Canada Corporation (formerly known as ClientLogic Canada Corporation) iswas the borrower under the Canadian revolver.

As of December 31, ~~2013~~2014, we had an aggregate of $~~245~~254,~~496~~540 of outstanding indebtedness under our Senior Secured Credit Facility, which consisted of $~~227~~222,~~496~~840 of term loan borrowings. Our Term Loans consisted of approximately $177,973 outstanding on the U.S. term loan, $3026,~~191~~657 outstanding on the Euro term loan, and $1918,~~332~~210 outstanding on the British pound sterling term loan. As of December 31, ~~2013~~2014, we had $1831,~~000~~700 of borrowings outstanding and $4227,~~242~~568 available for additional borrowings under our Revolvers.

First Amendment

On December 9, 2008, we entered into the first amendment to our Senior Secured Credit Facility (the "First Amendment") which, among other matters, modified applicable interest rates, certain negative covenants and financial covenant thresholds. In addition, the First Amendment permitted us to offer to purchase the outstanding Term Loans at a discount to par using a portion of the net proceeds we received from the sales of our series C preferred stock we completed in 2008. We received approximately $29,600 through the issuance of series C preferred stock which was a condition to entering into the First Amendment. As required under the First Amendment, we offered to purchase Term Loans under the Senior Secured Credit Facility, and in December 2008, we purchased $27,047 of outstanding principal under the Term Loans for $15,000, which Term Loans were subsequently cancelled and retired.

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(in thousands of U.S. dollars, except share and per share data)

discount to par using a portion of the net proceeds we received from the sales of our series C preferred stock we completed in 2008. We received approximately $29,600 through the issuance of series C preferred stock which was a condition to entering into the First Amendment. As required under the First Amendment, we offered to purchase Term Loans under the Senior Secured Credit Facility, and in December 2008, we purchased $27,047 of outstanding principal under the Term Loans for $15,000, which Term Loans were subsequently cancelled and retired.

Second Amendment

In April 2009, we entered into the second amendment to our Senior Secured Credit Facility which effected a technical amendment clarifying certain terms governing minimum borrowing amounts under certain interest rates including London Interbank Offer Rate ("LIBOR").

Third Amendment

In February 2010, we entered into a third amendment to the Senior Secured Credit Facility (the "Third Amendment") to, among other things, permit the issuance of the Senior Notes, improve the terms of mandatory prepayment requirements, and modify our ~~leverage~~Senior ~~covenant~~Secured Leverage Ratio and ~~interest~~Minimum ~~coverage~~Interest ~~covenant~~Coverage Ratio.

Fourth Amendment

During the second quarter of 2011, we entered into the fourth amendment to the Senior Secured Credit Facility (the "Fourth Amendment") to, among other things, allow flexibility to refinance or prepay the non-extended portions of the Term Loans prior to the extended portions, and to refinance, extend or replace the Revolvers and Term Loans; increase the Senior Secured Leverage Ratio covenant levels; and decrease the Minimum Interest Coverage Ratio covenant levels.

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(in thousands of U.S. dollars, except share and per share data)

Fifth Amendment

In April 2012, we entered into the fifth amendment to the Senior Secured Credit Facility (the "Fifth Amendment") which allowed for the issuance and sale of the Senior Secured Notes, modified our ~~leverage~~Senior ~~covenant~~Secured Leverage Ratio and ~~interest~~Minimum ~~coverage~~Interest ~~covenant~~Coverage Ratio, and changed the currency mix of our lenders' revolver commitments to consist only of U.S. dollar and Canadian dollar amounts and terminated the British pound sterling revolver commitment. During the second quarter of 2012, a portion of the proceeds received from the issuance of the Senior Secured Notes were used to prepay the outstanding balances on the non-extended Term Loans, which were due in January 2014.

Sixth Amendment

In February 2014, we entered into the sixth amendment to the Senior Secured Credit Facility (the "Sixth Amendment") which increased our Senior Secured Leverage Ratio and decreased our Minimum Interest Coverage Ratio covenant levels.

Interest

The Term Loans mature in January 2017. All Term Loans amortize in equal quarterly installments in an aggregate annual amount equal to 0.325% of the original principal amount with the balance payable at maturity. Payments on the principal amount have exceeded the cumulative amortization schedule, thus no amount is due until maturity. Interest on the U.S. term loan is based, at our option, on LIBOR plus the applicable margin of 67.7525% or the higher of the federal funds rate plus 0.50% or the banks’ prime rate plus the applicable margin of 56.7525%. Interest on the Euro term loan is based on EURIBOR plus the applicable margin of 67.7525%. Interest on the British pound sterling term loan is based on LIBOR plus the applicable margin of 67.7525%. We have an interest rate swap agreement for the notional amount of $175,000 against our Term Loans that is based on a rate of 2.315% versus three month LIBOR. In November 2011, we amended our interest rate swap agreement to reduce the ~~rate to 2.315% from 4.91%, effective September 30, 2011, and to reduce the~~ notional amount to $175,000 from $350,000 as of March 31, 2012.

The Revolvers mature in January 2016. In January 2013, the non-extended portion of our U.S. Revolver expired, reducing the borrowing capacity under the Revolvers to $61,250 from $85,000. A commitment fee is payable quarterly at 01.5000% per annum of the undrawn portion of the Revolvers. Interest on the U.S. revolver is based, at our option, on LIBOR plus the applicable margin of 67.7525%, or the higher of the federal funds rate plus 0.50% or the prime rate plus the applicable margin of 56.7525%. Interest on the Canadian revolver is based, at our option, on the Canadian banker's acceptance rate plus the applicable margin of 67.7525% or the higher of the one month BA Rate 0.75% or the Canadian prime rate plus the applicable margin of 56.7525%.

For the ~~year~~years ended December 31, 2014, 2013, and 2012, including the impact of our interest rate swap, the weighted average interest rate on the Term Loans was 8.6181%~~. For the year ended December 31~~, ~~2013~~8.61%, ~~the~~and ~~weighted average rate on the Revolvers was~~ 8.4357%, respectively. ~~Specified~~For ~~interest rates for~~ the ~~Euro~~years ~~term~~ended ~~loan and Canadian term loan are as described in the Senior Secured Credit Facility.~~

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(in thousands of U.S. dollars, except share and per share data)

December 31, 2014, 2013, and 2012, the weighted average rate on the Revolvers was 8.55%, 8.43%, and 8.06%, respectively. Specified interest rates for the Euro term loan and Canadian term loan are as described in the Senior Secured Credit Facility.

Prepayments

Beginning on April 2, 2007, our Term Loans began amortizing in equal quarterly installments of $1,700 with the balance payable at maturity. We may be required to prepay certain amounts under the Senior Secured Credit Facility should we initiate specified transactions, including certain issuances of equity, sale of certain assets or receipt of certain insurance proceeds, or additional debt issuances if not otherwise extended as well as from certain percentages of any excess cash flow. We may voluntarily prepay all or part of the term loan under certain conditions. Amounts borrowed under the Term Loans that are repaid or prepaid may not be re-borrowed. Amounts repaid under our Revolvers may be re-borrowed, as long as the total commitment under the Revolvers is not permanently reduced.

Covenants

We are required under the terms of the Senior Secured Credit Facility to maintain certain financial covenants on a quarterly and annual basis, specifically:

Senior Secured Leverage Ratio. The senior secured leverage ratio is the ratio of our total funded debt that is secured by a lien on any of our assets or equity interests or any of our subsidiaries to our Adjusted EBITDA (as defined in the amended Senior Secured Credit Facility) for each period of four consecutive quarters ending during the term of the Senior Secured Credit Facility.

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(in thousands of U.S. dollars, except share and per share data)

Minimum Interest Coverage Ratio. The minimum interest coverage ratio is the ratio of Adjusted EBITDA to cash interest expense (net of interest income) for each period of four consecutive quarters ending during the term of the Senior Secured Credit Facility.

Maximum Capital Expenditures. The maximum capital expenditures covenant in our Senior Secured Credit Facility limits our annual capital spending, cash restructuring in excess of $10,000 and our acquisition expenses in excess of $10,000 to a pre-established limit each year and allows for carryover of unused spend.

The Senior Secured Credit Facility also contains customary affirmative and negative covenants such as restricting certain corporate actions, including asset dispositions, acquisitions, the payment of dividends, changes of control, the incurrence of indebtedness, providing financing and investments and transactions with affiliates.

We were in compliance with all debt covenants under the Senior Secured Credit Facility as of December 31, ~~2013~~2014. We believe that we will continue to be able to comply with the restrictive covenants in our Senior Secured Credit Facility throughout ~~2014~~2015. ~~Subsequent to December 31, 2013, the Senior Secured Leverage Ratio and Minimum Interest Coverage Ratios were amended to adjust the covenant thresholds.~~

Off Balance Sheet Arrangements

Our off balance sheet arrangements primarily consist of our operating leases and standby letters of credit. We lease property and equipment under non-cancelable operating lease arrangements with initial or remaining lease terms in excess of one year. At December 31, ~~2013~~2014, the future lease commitments relating to our operating leases were $~~128~~119,~~406~~748. Refer to Note 13 in the accompanying Consolidated Financial Statements for a discussion of our operating leases. We utilize standby letters of credit to support primarily workers’ compensation policy requirements, performance obligations, tax obligations, and certain operating leases. These obligations will expire at various dates through ~~October~~June ~~2014~~2015, and are renewed as required. The outstanding commitment on these obligations at December 31, ~~2013~~2014 was $1,~~008~~982.

Inflation

We believe inflation has not had a material effect on our financial condition or results of operations in recent years. We are generally aware of increasing inflationary pressure in emerging markets in which we operate but have not yet identified any specific trends that will have a material effect on our financial condition or results of operations. However, there can be no assurance that we will not be affected by inflation in the future.

Seasonality

Our business has been generally subject to seasonality, with revenues and profits strongest in the fall ~~and winter~~ months due to the high level of sales activity between our clients and their customers during the fall holiday season, with slower business during the spring and summer months.

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(in thousands of U.S. dollars, except share and per share data)

Non-GAAP Measures

Our primary financial measure not calculated in accordance with U.S. GAAP is Adjusted EBITDA. We also use Adjusted working capital and Revenues, Costs of services, and SG&A that have been adjusted to exclude the impact of foreign exchange translation as additional non-GAAP measures.

The computation of Adjusted EBITDA is as follows:

(in thousands of U.S. dollars)	December 31, ~~2013~~2014			December 31, ~~2012~~2013			December 31, ~~2011~~2012
Net income (loss)	$	986		$	(23,868	)	$	(31,785	)
Net (loss) income	$	(48,360	)	$	986		$	(23,868	)
Adjustments:
Income taxes	(15,216		)	(1,283		)	9,179
Income tax provision (benefit)	13,683			(15,216		)	(1,283		)
Interest expense	80,554			84,307			70,690
Interest and other financing costs, net	83,934			80,554			84,307
Impairment and (gain) loss on disposal of assets and subsidiary	4,629			1,484			634
Impairment and loss on disposal of assets, net	1,598			4,629			1,484
Amortization of intangibles	6,383			7,035			13,272
Amortization of intangible assets	589			6,383			7,035
Depreciation	34,578			35,997			38,902
Depreciation and amortization of property and equipment	36,222			34,578			35,997
Restructuring and exit charges	1420,~~241~~407			1514,~~693~~241			2015,~~048~~693
Non-cash loss on FX	19,~~739~~039			41,~~558~~739			34,~~334~~558
Non-cash (gain) loss on FX hedges	~~708~~(1,452		)	~~(917~~708		)	~~1,727~~(917		)
Non-cash stock compensation	256			518			203
Stock compensation	152			256			518
Other	1,~~215~~910			1,~~654~~215			21,~~352~~654
Total Adjustments	~~129~~166,~~087~~082			~~149~~129,~~046~~087			~~160~~149,~~341~~046
Adjusted EBITDA	$	~~130~~117,~~073~~722		$	~~125~~130,~~178~~073		$	~~128~~125,~~556~~178

The computation of Adjusted working capital is as follows:

(in thousands of U.S. dollars)	December 31, ~~2013~~2014			December 31, ~~2012~~2013			December 31, ~~2011~~2012
Working capital (a)	$	~~112~~152,~~113~~272		$	~~143~~112,~~359~~113		$	~~123~~143,~~534~~359
Adjustments:
Cash and cash equivalents	(78,~~366~~857		)	(127,~~245~~366		)	(1912,~~337~~245		)
Restricted cash	(4,~~312~~159		)	(34,~~758~~312		)	(3,~~804~~758		)
Current portion of capital lease obligations	2,~~005~~952			32,~~023~~005			3,~~571~~023
Book overdrafts	32,~~525~~968			13,~~586~~525			31,~~518~~586
Total Adjustments	(67,~~148~~096		)	(116,~~394~~148		)	(1611,~~052~~394		)
Adjusted working capital	$	~~105~~145,~~965~~176		$	~~131~~105,965		$	~~107~~131,~~482~~965

(a) Defined as current assets less current liabilities from the Consolidated Balance Sheets.

We believe that Adjusted working capital provides a meaningful measure of our operational results and underlying performance because it reflects working capital related to core operations, which we find helpful in evaluating performance.

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(in thousands of U.S. dollars, except share and per share data)

The computation of Revenues, Costs of services, and SG&A that have been adjusted to exclude the impact of foreign exchange translation is as follows:

(in thousands of U.S. dollars)	Year Ended December 31,
	2014		2013		DollarChange			PercentageChange		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact			$ Change without Foreign exchange impact
Total revenues	$	1,440,245	$	1,438,338	$	1,907		0.1	%	0.9	%	$	(10,428	)	$	12,335
Total costs of services	972,545		946,293		26,252			2.8	%	4.0	%	(11,239		)	37,491
Total selling, general, and administrative expenses	354,404		367,617		(13,213		)	(3.6	)%	(2.7	)%	(3,182		)	(10,031		)
	Year Ended December 31,
	2013		2012		DollarChange			PercentageChange		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact			$ Change without Foreign exchange impact
Total revenues	$	1,438,338	$	1,429,133	$	9,205		0.6	%	0.3	%	$	5,254		$	3,951
Total costs of services	946,293		934,547		11,746			1.3	%	1.1	%	1,738			10,008
Total selling, general and administrative expenses	367,617		372,528		(4,911		)	(1.3	)%	(0.9	)%	(1,564		)	(3,347		)
Total selling, general, and administrative expenses	367,617		372,528		(4,911		)	(1.3	)%	(0.9	)%	(1,563		)	(3,348		)
	Year Ended December 31,
	2012		2011		DollarChange			PercentageChange		Percentage Change Excluding Foreign Exchange		Foreign Exchange Impact			$ Change without Foreign exchange impact
Total revenues	$	1,429,133	$	1,415,969	$	13,164		0.9	%	4.5	%	$	(50,482	)	$	63,646
Total costs of services	934,547		921,137		13,410			1.5	%	4.8	%	(30,550		)	43,960
Total selling, general and administrative expenses	372,528		370,611		1,917			0.5	%	2.7	%	(8,141		)	10,058

The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. GAAP and may not be comparable to other companies' non-GAAP measures with similar titles.

Adjusted EBITDA is our primary non-GAAP financial measure. We use Adjusted EBITDA to enhance our understanding of our operating performance in the ordinary, ongoing, and customary course of our operations. We historically have found it helpful, and believe that investors have found it helpful.

We also provide information relating to Adjusted EBITDA so that analysts, investors and other interested persons have the same data that we use to assess our core operating performance. We believe that Adjusted EBITDA should be viewed only as a supplement to the U.S. GAAP financial information. We also believe, however, that providing this information in addition to, and together with, U.S. GAAP financial information permits analysts, investors and other interested persons to obtain a better understanding of our core operating performance and to evaluate the efficiency of the methodology and information used by our management to evaluate and measure such performance on a standalone and a comparative basis.

The use of Adjusted EBITDA has certain limitations. Restructuring, depreciation and amortization expense for various long-term assets, income tax expense or benefit, interest expense, interest income, non-cash gain or loss on foreign exchange, and non-cash gain or loss on foreign exchange hedges have been and will be incurred and are not reflected in the presentation of Adjusted EBITDA. Each of these items should also be considered in the overall evaluation of the results. We compensate for these limitations by providing the relevant disclosure of the depreciation and amortization, interest expense, income tax expense and other relevant items both in the reconciliations to the U.S. GAAP financial measures and in the ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements, all of which should be considered when evaluating performance.

Critical Accounting Policies and Estimates

Our Consolidated Financial Statements have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements requires us to make estimates and judgments that affect the amounts reported in those ~~consolidated~~Consolidated ~~financial~~Financial ~~statements~~Statements. On an ongoing basis, we evaluate estimates. We base our estimates on historical experiences and assumptions believed to be reasonable under the circumstances. Those estimates form the basis for our judgments that affect the amounts reported in the Consolidated Financial Statements. Actual results could differ from our estimates under different assumptions or conditions.

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(in thousands of U.S. dollars, except share and per share data)

These policies are those that we consider to be the most critical. This should be read in conjunction with Note 1 of the Notes to Consolidated Financial Statements in Item 8 of this report.

Revenue Recognition

We generate revenues from our clients through the provision of a wide array of services. Our services include the provision of customer service and technical support services to our clients’ customers as well as services that assist our clients in acquiring or retaining customers and generating revenue from customers. The majority of our customer care services are inbound and delivered telephonically, but we are increasingly asked to provide services through other communication channels, including email, online chat, IVR, and social media channels. Revenues are recognized only when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collection is reasonably assured. We recognize revenues at the time service is performed based on the rate detailed in the client contract, such as per: minute, hour, month, employee, subscriber or user, or item basis for each transaction processed. A portion of revenues may be subject to performance standards, such as sales per hour, average handle time, occupancy rate, abandonment rate, call quality, and customer satisfaction. Our performance against such standards may result in bonuses or penalties, which are recognized as earned or incurred. In certain circumstances, we receive payment in advance of providing service.

We may incur certain upfront project start-up costs specific to each customer contract. In certain instances, our contracts allow us to bill the customer for these costs; however, because these upfront start-up services (mostly employee training services) do not have stand-alone value to the customer, revenues from upfront start-up services are deferred (and included in accrued liabilities and other for the current portion and in other noncurrent liabilities) and are recognized in revenues as services are provided over the estimated customer relationship life.

We are reimbursed by clients for certain pass-through out-of-pocket expenses, consisting principally of telecommunication, employee performance incentive, and postage and shipping costs. The reimbursement and related costs are reflected in the accompanying Consolidated Statements of Comprehensive Loss as revenues and costs of services, respectively. Revenue-related taxes collected from customers and remitted to governmental authorities are netted and not included in revenues.

Accounts Receivable and Allowance for Doubtful Accounts

Trade receivables are comprised primarily of amounts owed to us by clients and are presented net of an allowance for doubtful accounts, which represents management's estimate of the amount of its receivables that may not be collectible. This estimate is based on a detailed aging analysis of accounts receivable, historical bad debts, client credit-worthiness, and changes in client payment patterns. The financial condition of our clients may deteriorate, which may require us to increase its allowance for doubtful accounts. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

Financial Instruments

We have cash and cash equivalents, short-term investments, short-term trade receivables and payables, and long-term debt instruments, including capital leases.

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We allow for the use of derivative financial instruments to prudently manage foreign currency exchange rate and interest rate exposure, but do not allow derivatives to be used for speculative purposes. Derivatives used are primarily foreign currency forward contracts and interest rate swaps. Derivative activities are subject to the management, direction, and control of our senior financial officers. Risk management practices, including the use of financial derivative instruments, are presented to the Board of Directors at least annually. All derivatives are recognized on the Consolidated Balance Sheets at their fair value. On the date the derivative contract is entered, the derivative is either (1) designated as a hedge of a forecasted transaction or (2) undesignated. Changes in the fair value of a derivative that is qualified, designated, and highly effective as a hedge are recorded in other comprehensive income (loss) until earnings are affected by the forecasted transaction and are then reported in current earnings (in the same line items as the gain or loss on the item hedged). Changes in the fair value of undesignated derivative instruments and the ineffective portion of designated derivative instruments are reported in current earnings (in the same line item as the gain or loss on the item hedged). We formally document all relationships between hedging instruments and hedged items, as well as the risk management objective and strategy for undertaking various hedge transactions. This process includes linking cash flow hedges to specific forecasted transactions. For derivatives designated as a hedge for accounting purposes, we also formally assess, both at the hedge's inception and on an ongoing basis, whether the derivatives

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)

(in thousands of U.S. dollars, except share and per share data)

that are used in hedging transactions are highly effective in offsetting changes in the exposure of the hedged items. If it is determined that a derivative is not highly effective as a hedge, or that it has ceased to be a highly effective hedge, we discontinue hedge accounting prospectively. For financial instruments that no longer qualify for hedge accounting, changes in fair value are recognized in loss (gain) on foreign currency transactions in the accompanying Consolidated Statements of Comprehensive Loss.

Impairment of Goodwill and Other Indefinite-Lived Intangibles

At least annually or more frequently, as changes in circumstances indicate, we evaluate the estimated fair value of our goodwill and indefinite-lived intangibles. Regarding goodwill, to the extent that the carrying value of the net assets of any of our reporting units having goodwill is greater than their estimated fair value, we may be required to take goodwill impairment charges. Regarding indefinite-lived intangibles, an impairment charge is recorded if the carrying value of the intangible exceeds its estimated fair value. We are required to make certain assumptions and estimates regarding the fair value of goodwill and indefinite-lived intangibles when assessing for impairment. Changes in the fact patterns underlying such assumptions and estimates could ultimately result in the recognition of additional impairment losses.

Income Taxes

Our income tax provision includes U.S. federal, state, local and foreign income taxes that are currently payable or recoverable, as well as, income taxes that are deferred.

We record deferred tax assets and liabilities using enacted tax rates in the jurisdictions in which we operate for the effect of temporary differences between the book and tax basis of assets and liabilities. If enacted tax rates change, we would adjust the deferred tax assets and liabilities, through the provision for income taxes in the period of change, to reflect the enacted tax rate expected to be in effect when the deferred tax items reverse. To the extent that we believe that recovery is not likely, we establish a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized. The valuation allowance is based on our estimates of future taxable income by jurisdiction in which we operate and the period over which the deferred tax assets can be recovered. A review of all available positive and negative evidence is considered, including our current and past performance, the market environment in which we operate, the utilization of past tax credits, length of carryback and carryforward periods, and existing or prospective contracts that will result in future profits.

Forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence, such as cumulative losses in recent years in certain tax jurisdictions. We consider cumulative losses which weigh heavily in the overall assessment. We have established valuation allowances for future tax benefits related to net operating losses incurred in certain federal, state, and foreign tax jurisdictions. We expect to continue to record a valuation allowance on future tax benefits in certain tax jurisdictions until an appropriate level of profitability is sustained.

See Note 10 of the Consolidated Financial Statements for the year ended December 31, ~~2013~~2014 included in Item 8 of this Report for additional discussion regarding income taxes.

Recent Accounting Pronouncements

See Note 1 of the Consolidated Financial Statements for the year ended December 31, ~~2013~~2014 included in Item 8 of this Report for discussion of the potential impact of recent accounting pronouncements.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

(in thousands of U.S. dollars)

Our operations are exposed to market risks primarily as a result of changes in interest and foreign currency exchange rates. We primarily use foreign currency forward contracts and interest rate swaps to minimize the impact of these market risks. Our derivative activities are subject to the management, direction, and control of our senior financial officers. Risk management practices, including the use of financial derivative instruments, are reviewed by the Audit Committee of our Board of Directors at least annually.

We perform a sensitivity analysis to determine the effects that market risk exposures may have on our debt and other financial instruments. Information provided by the sensitivity analysis does not necessarily represent the actual changes in fair value that would be incurred under normal market conditions because, due to practical limitations, all variables other than the specific market risk factor are held constant.

Interest Rate Risk

We are exposed to market risk from fluctuations in interest rates. At December 31, ~~2013~~2014, we had $~~245~~254,~~496~~540 of variable rate debt. Holding other variables constant (such as foreign exchange rates and debt levels), a one percentage point change in interest rates would be expected to increase interest expense by approximately $2,~~455~~545, for the year ended December 31, ~~2013~~2014 before giving effect to the interest rate swap agreement described below. Approximately 7678.95% of our term loan debt at December 31, ~~2013~~2014 was covered by an interest rate swap derivative instrument. The interest rate swap agreement described below reduces our exposure to interest rate risk associated with our variable rate debt for the periods in which the agreement is in effect.

In March 2007, we entered into an interest rate swap derivative instrument, which we refer to as the interest rate swap, to minimize the risk associated with fluctuations in interest rates on our variable rate debt. The objective of the swap is to more effectively balance our borrowing costs and interest rate risk. The interest rate swap was originally set to expire in March 2012. Under the original terms of the interest rate swap, we made payments to a counterparty at a fixed rate of 4.91% on a $400,000 notional amount of the interest rate swap, and we received a variable rate of three-month LIBOR. The notional amount was reduced to $350,000 in March 2009 for the remainder of the term. On November 28, 2011, we amended the interest rate swap to extend the term through December 31, 2016. The fixed rate decreased to 2.315% as of September 30, 2011. The notional amount decreased to $175,000 on March 31, 2012, and will remain constant through the remainder of the revised term.

Foreign Currency Risk

We are exposed to market risk from fluctuations in foreign currencies. As a result, our financial results could be affected by factors such as changes in foreign currency exchange rates or weak economic conditions in Europe, Asia, and other foreign markets in which we have operations.

Foreign Currency Translation. We experience foreign currency translation exposure upon translation of foreign denominated revenues and profit into U.S. dollars. Material portions of our revenues and expenses have been generated by our European operations, and we expect that our European operations will account for a material portion of our revenues and expenses in the future. Substantially all of our expenses and revenues in our European operations are denominated in foreign currencies, principally the British pound sterling and the Euro. We do not hedge the Euro and British pound sterling as our costs are generally in the same currency as our revenues and therefore our exposure is only in translation and does not impact cash.

Cash Flow Hedges. We conduct a significant portion of our business in currencies other than the U.S. dollar, the currency in which the Consolidated Financial Statements are reported. Our subsidiaries generally use the local currency as their functional currency for paying labor and other operating costs. Significant costs are incurred in our foreign locations where we service a number of our U.S. and European based clients using non-U.S. and non-European based customer care centers, such as customer care centers in the Philippines, India, Mexico, New Zealand and others. Conversely, related revenues from the client contracts are invoiced and collected in a different currency, principally in U.S. dollars as well as other currencies such as the Euro, British pound sterling ("GBP"), and Australian and New Zealand dollars. To hedge against the risk of fluctuations in the invoiced currency, we have contracted with financial institutions to set (utilizing forward contracts) the functional currency of the foreign subsidiary at a fixed counterparty exchange rate at specific dates in the future. As of December 31, ~~2013~~2014, we had forward contracts maturing within the next 12 months. The principal currency exposures hedged are in relation to the Philippine peso ("PHP") ~~and~~ the Indian rupee ("INR"), the New Zealand dollar ("NZD"), and the Mexican peso ("MXN").

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Currency to be Acquired	USDEquivalentAmount ofForeignCurrency to beAcquired, inthousands		ExchangeRate	ContractTerm
PHP	$	91,613	41.69	2014
INR	$	28,427	59.03	2014

To help minimize variability and exposure to changes in these currencies on a year over year basis, we have a hedging program in place that enters into hedges throughout the preceding year of the exposure. Under this program we have entered into forward contracts with two financial institutions to acquire these foreign currencies set forth in the table below:



Currency to be Acquired	USD Equivalent Amount of Foreign Currency to be Acquired, in thousands		Exchange Rate	Contract Term
PHP	$	132,230	44.32	2015
INR	$	21,798	63.60	2015
NZD	$	9,767	1.35	2015
MXN	$	8,168	13.22	2015

We do not use derivative foreign exchange instruments for trading or other speculative purposes.

Holding other variables constant (such as interest rates and debt levels), if the U.S. dollar had a 10% depreciation against our non-U.S. dollar denominated business in ~~2013~~2014, revenues would have been increased by approximately $8279,000 and operating income would have been decreased by approximately $1614,000, respectively, before giving effect to the forward contracts described above.

While we have implemented certain strategies to mitigate risks related to the impact of fluctuations in currency exchange rates, we cannot ensure that we will not recognize gains or losses from international transactions, as this is part of transacting business in an international environment. Not every exposure is or can be hedged and, where hedges are put in place based on expected foreign exchange exposure, they are based on forecasts which may vary or which may later prove to be inaccurate. Failure to successfully hedge or anticipate currency risks properly could adversely affect our consolidated operating results. Further, there is no assurance that we will hedge, or be able to hedge, against these types of risks in the future.

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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Beginning on the next page are the Consolidated Financial Statements with applicable notes and the related Report of Independent Registered Public Accounting Firm, and the supplementary financial information specified by Item 302 of Regulation S-K.

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Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of SITEL Worldwide Corporation:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of comprehensive loss, changes in stockholders' deficit, and cash flows present fairly, in all material respects, the financial position of SITEL Worldwide Corporation and its subsidiaries (the "Company") at December 31, 2013 and 2012, and the results of their operations and their cash flows for each of the three years in the period ended December 31, 2013 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

comprehensive loss, changes in stockholders' deficit, and cash flows present fairly, in all material respects,

the financial position of SITEL Worldwide Corporation and its subsidiaries (the "Company") at December

31, 2014 and 2013, and the results of their operations and their cash flows for each of the three years in the

period ended December 31, 2014 in conformity with accounting principles generally accepted in the

United States of America. These financial statements are the responsibility of the Company's management.

Our responsibility is to express an opinion on these financial statements based on our audits.We

conducted our audits of these statements in accordance with the standards of the Public Company

Accounting Oversight Board (United States). Those standards require that we plan and perform the audit

to obtain reasonable assurance about whether the financial statements are free of material misstatement.

An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the

financial statements, assessing the accounting principles used and significant estimates made by

management, and evaluating the overall financial statement presentation. We believe that our audits

provide a reasonable basis for our opinion.

/s/PricewaterhouseCoopers LLP

Nashville, Tennessee

February 1918, ~~2014~~2015

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SITEL Worldwide Corporation

Consolidated Balance Sheets

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share data)

	2013		2012
	2014		2013
Assets
Current assets
Cash and cash equivalents	$	78,~~366~~857	$	127,~~245~~366
Accounts receivable (net of allowance for doubtful accounts of $2,081 and $2,990, respectively)	242,472		264,849
Accounts receivable (net of allowance for doubtful accounts of $2,562 and $2,081, respectively)	279,227		242,472
Prepaids and other current assets	5356,~~832~~711		5653,~~642~~832
Total current assets	~~303~~344,~~670~~795		~~333~~303,~~736~~670
Property and equipment, net	8987,~~662~~354		9189,~~592~~662
Goodwill	117,~~709~~708		117,~~720~~709
Other intangible assets, net	36,~~547~~915		4236,~~930~~547
Deferred income taxes	3528,~~975~~951		1435,~~213~~975
Other noncurrent assets	3633,~~658~~946		4236,~~158~~658
Total assets	$	~~620~~649,~~221~~669	$	~~642~~620,~~349~~221
Liabilities and Stockholders’ Deficit
Current liabilities
Accounts payable	$	2022,~~161~~300	$	1920,~~880~~161
Accrued payroll and benefits	7675,~~646~~037		7776,~~243~~646
Accrued liabilities and other	85,~~235~~713		85,~~960~~235
Income taxes payable	76,~~510~~521		47,~~271~~510
Current portion of capital lease obligations	2,~~005~~952		32,~~023~~005
Total current liabilities	~~191~~192,~~557~~523		~~190~~191,~~377~~557
Long-term debt	~~734~~746,~~614~~016		~~732~~734,~~335~~614
Capital lease obligations	3,~~125~~272		13,~~763~~125
Deferred income taxes	35,~~828~~919		3,~~932~~828
Other noncurrent liabilities	5142,~~202~~654		5851,~~722~~202
Total liabilities	~~984~~990,~~326~~384		~~987~~984,~~129~~326
Commitments and contingencies (see Note 14)

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SITEL Worldwide Corporation

Consolidated Balance Sheets (Continued)

December 31, 2013 and 2012

(in thousands of U.S. dollars, except share and per share data)

	2013			2012
	2014			2013
Redeemable preferred stock, 20,000,000 convertible shares authorized, issuable in series:
Series B, $0.01 par value; 39,947 shares issued and outstanding at December 31, 2013 and 2012	66,982			59,728
Series B, $0.01 par value; 39,947 shares issued and outstanding at December 31, 2014 and 2013	75,103			66,982
Series C, $0.01 par value; 28,881 shares issued and outstanding at December 31, 2013 and 2012	59,056			50,191
Series C, $0.01 par value; 28,881 shares issued and outstanding at December 31, 2014 and 2013	69,273			59,056
Series D, $0.01 par value; 75,000 shares issued and outstanding at December 31, 2014 and none issued at December 31, 2013	81,869			—
Stockholders’ deficit
Subsidiary exchangeable preferred stock, no par value; 1,713,321 shares authorized, issued, and outstanding at December 31, 2013 and December 31, 2012	2,665			2,665
Subsidiary exchangeable preferred stock, no par value; 1,713,321 shares authorized, issued, and outstanding at December 31, 2014 and December 31, 2013	2,665			2,665
Common stock, 361,000,000 shares authorized; 225,000,000 Class A shares, 128,500,000 Class B convertible shares, and 7,500,000 Class C shares
Class A, $0.01 par value; 40,699,602 (including 8,268,358 restricted) and 33,547,331 (including 1,773,975 restricted) shares issued at December 31, 2013 and 2012, respectively; 38,234,495 and 31,082,224 shares outstanding at December 31, 2013 and 2012, respectively	325			318
Class A, $0.01 par value; 41,766,222 (including 9,060,858 restricted) and 40,699,602 (including 8,268,358 restricted) shares issued at December 31, 2014 and 2013, respectively; 38,223,599 and 38,234,495 shares outstanding at December 31, 2014 and 2013, respectively	327			325
Class B, $0.01 par value; convertible into Class A common stock on 1:1 basis; 88,281,647 shares issued and outstanding at December 31, 2013 and 2012	882			882
Class B, $0.01 par value; convertible into Class A common stock on 1:1 basis; 88,281,647 shares issued and outstanding at December 31, 2014 and 2013	882			882
Class C, $0.01 par value; 6,751,263 shares issued and 23,990 shares outstanding at December 31, 2013 and 2012, respectively	68			68
Class C, $0.01 par value; 6,751,263 shares issued and 23,990 shares outstanding at December 31, 2014 and 2013, respectively	68			68
Additional paid-in capital	~~357~~334,~~518~~657			~~373~~357,~~391~~518
Accumulated deficit	(~~788~~836,~~390~~750		)	(~~789~~788,~~376~~390		)
Accumulated other comprehensive loss	(5357,~~964~~186		)	(3353,~~400~~964		)
Treasury shares, at cost	(911,~~247~~623		)	(9,247		)
Total stockholders’ deficit	(~~490~~566,~~143~~960		)	(~~454~~490,~~699~~143		)
Total liabilities and stockholders’ deficit	$	~~620~~649,~~221~~669		$	~~642~~620,~~349~~221

See accompanying Notes to Consolidated Financial Statements.

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SITEL Worldwide Corporation

Consolidated Statements of Comprehensive Loss

Years Ended December 31, ~~2013~~2014, ~~2012~~2013 and ~~2011~~ 2012

(in thousands of U.S. dollars)

	2013			2012			2011
	2014			2013			2012
Revenues	$	1,~~438~~440,~~338~~245		$	1,~~429~~438,~~133~~338		$	1,~~415~~429,~~969~~133
Operating expenses
Costs of services*	~~946~~972,~~293~~545			~~934~~946,~~547~~293			~~921~~934,~~137~~547
Selling, general, and administrative expenses*	~~367~~354,~~617~~404			~~372~~367,~~528~~617			~~370~~372,~~611~~528
Depreciation and amortization of property and equipment	3436,~~578~~222			3534,~~997~~578			3835,~~902~~997
Amortization of intangible assets	~~6,383~~589			76,~~035~~383			137,~~272~~035
Restructuring and exit charges	1420,~~241~~407			1514,~~693~~241			2015,~~048~~693
(Gain) loss on foreign currency transactions	(984		)	2,596			2,112
Loss (gain) on foreign currency transactions	5,148			(984		)	2,596
Loss on sale of subsidiary	~~4,558~~—			—4,558			—
Impairment and (gain) loss on disposal of assets, net	71			1,484			634
Impairment and loss on disposal of assets, net	1,598			71			1,484
Other (income) expense, net	(743		)	97			1,169
Other expense (income), net	75			(743		)	97
Operating income	6649,~~324~~257			5966,~~156~~324			4859,~~084~~156
Interest and other financing costs, net	8083,~~554~~934			8480,~~307~~554			7084,~~690~~307
Loss before income taxes	(1434,~~230~~677		)	(2514,~~151~~230		)	(2225,~~606~~151		)
Income tax (benefit) provision	(15,216		)	(1,283		)	9,179
Income tax provision (benefit)	13,683			(15,216		)	(1,283		)
Net income (loss)	986			(23,868		)	(31,785		)
Net (loss) income	(48,360		)	986			(23,868		)
Other comprehensive (loss) income
Foreign currency translation adjustments, net of tax of $(3), $948, and $0, respectively	(12,119		)	1,203			(7,976		)
Foreign currency translation adjustments, net of tax (benefit) expense of $(46), $(3), and $948, respectively	(8,451		)	(12,119		)	1,203
Unrealized (loss) gain on derivative valuation, net of tax of $659, $3,106, and $0, respectively	(6,897		)	5,325			(11,413		)
Unrealized gain (loss) on derivative valuation, net of tax (benefit) expense of $(3,400), $659, and $3,106, respectively	6,209			(6,897		)	5,325
Change related to pension liability, net of tax of $43, $0, and $0, respectively	(1,548		)	(1,602		)	752
Change related to pension liability, net of tax (benefit) expense of $(239), $43, and $0, respectively	(980		)	(1,548		)	(1,602		)
Total other comprehensive (loss) income	(203,~~564~~222		)	4(20,~~926~~564		)	~~(18~~4,~~637~~926		)
Comprehensive loss	$	(1951,~~578~~582	)	$	(1819,~~942~~578	)	$	(5018,~~422~~942	)

*Exclusive of Depreciation and amortization of property and equipment

See accompanying Notes to Consolidated Financial Statements.

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SITEL Worldwide Corporation

Consolidated Statements of Changes in Stockholders’ Deficit - Schedule 1

Years Ended December 31, ~~2013~~2014, ~~2012~~2013 and ~~2011~~2012

(in thousands of U.S. dollars, except per share amounts)

	Shares Issued				Par Value
	Class ACommonStock		Class BCommonStock	Class CCommonStock	Class ACommonStock		Class BCommonStock		Class CCommonStock		AdditionalPaid-inCapital			AccumulatedDeficit			Subtotal
Balances at January 1, 2011	31,174,824		88,281,647	6,751,263	$	301	$	882	$	68	$	388,644		$	(733,723	)	$	(343,828	)
Balances at January 1, 2012	31,965,438		88,281,647	6,751,263	$	302	$	882	$	68	$	374,777		$	(765,508	)	$	(389,479	)
Restricted shares granted	750,000		—	—	—		—		—		—			—			—
Restricted shares forfeited	(73,500	)	—	—	—		—		—		—			—			—
Stock issued for cash and notes	—		—	—	—		—		—		801			—			801
Purchase of treasury stock	—		—	—	—		—		—		(498		)	—			(498		)
Non-cash stock granted	114,114		—	—	1		—		—		202			—			203
Preferred B and C stock accretion and BCF	—		—	—	—		—		—		(14,372		)	—			(14,372		)
Net loss	—		—	—	—		—		—		—			(31,785		)	(31,785		)
Balances at December 31, 2011	31,965,438		88,281,647	6,751,263	$	302	$	882	$	68	$	374,777		$	(765,508	)	$	(389,479	)
Restricted shares forfeited	(36,500	)	—	—	—		—		—		—			—			—
Stock issued for cash and notes	1,296,359		—	—	13		—		—		480			—			493
Non-cash stock granted	322,034		—	—	3		—		—		247			—			250
Stock granted	322,034		—	—	3		—		—		247			—			250
Preferred B and C stock accretion and BCF	—		—	—	—		—		—		(2,113		)	—			(2,113		)
Net loss	—		—	—	—		—		—		—			(23,868		)	(23,868		)
Balances at December 31, 2012	33,547,331		88,281,647	6,751,263	$	318	$	882	$	68	$	373,391		$	(789,376	)	$	(414,717	)
Restricted shares granted	7,318,000		—	—	—		—		—		—			—			—
Restricted shares forfeited	(823,617	)	—	—	—		—		—		—			—			—
Non-cash stock granted	657,888		—	—	7		—		—		246			—			253
Stock granted	657,888		—	—	7		—		—		246			—			253
Preferred B and C stock accretion and BCF	—		—	—	—		—		—		(16,119		)	—			(16,119		)
Net income	—		—	—	—		—		—		—			986			986
Balances at December 31, 2013	40,699,602		88,281,647	6,751,263	$	325	$	882	$	68	$	357,518		$	(788,390	)	$	(429,597	)
Restricted shares granted	900,000		—	—	—		—		—		—			—			—
Restricted shares forfeited	(107,500	)	—	—	—		—		—		—			—			—
Treasury stock acquired	—		—	—	—		—		—		2,376			—			2,376
Stock granted	274,120		—	—	2		—		—		150			—			152
Preferred B, C, and D stock accretion and BCF	—		—	—	—		—		—		(25,387		)	—			(25,387		)
Net loss	—		—	—	—		—		—		—			(48,360		)	(48,360		)
Balances at December 31, 2014	41,766,222		88,281,647	6,751,263	$	327	$	882	$	68	$	334,657		$	(836,750	)	$	(500,816	)

See accompanying Notes to Consolidated Financial Statements.

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SITEL Worldwide Corporation

Consolidated Statements of Changes in Stockholders’ Deficit - Schedule 2

Years Ended December 31, ~~2013~~2014, ~~2012~~2013 and ~~2011~~2012

(in thousands of U.S. dollars, except per share amounts)

				Accumulated Other Comprehensive (Loss) Income
	Totals from Schedule 1			Foreign Currency Translation			Defined Benefit Pension/Other			Unrealized (Loss) Gain on Derivatives Valuation			Subsidiary Exchangeable Stock		Treasury Stock Shares	Treasury Stock Capital			Total
Balances at January 1, 2011	$	(343,828	)	$	(21,115	)	$	766		$	660		$	2,665	2,293,769	$	(8,170	)	$	(369,022	)
Balances at January 1, 2012	$	(389,479	)	$	(29,091	)	$	1,518		$	(10,753	)	$	2,665	2,465,107	$	(8,475	)	$	(433,615	)
Stock issued for cash and notes	801			—			—			—			—		—	—			801
Purchase of treasury stock	(498		)	—			—			—			—		171,338	(305		)	(803		)
Non-cash stock granted	203			—			—			—			—		—	—			203
Preferred B and C stock accretion and BCF	(14,372		)	—			—			—			—		—	—			(14,372		)
Change related to pension liability, net of tax of $0	—			—			752			—			—		—	—			752
Unrealized loss on derivative, net of tax of $0	—			—			—			(11,413		)	—		—	—			(11,413		)
Net loss	(31,785		)	—			—			—			—		—	—			(31,785		)
Foreign currency translation adjustment, net of tax of $0	—			(7,976		)	—			—			—		—	—			(7,976		)
Balances at December 31, 2011	$	(389,479	)	$	(29,091	)	$	1,518		$	(10,753	)	$	2,665	2,465,107	$	(8,475	)	$	(433,615	)
Stock issued for cash and notes	493			—			—			—			—		—	—			493
Purchase of treasury stock	—			—			—			—			—		6,727,273	(772		)	(772		)
Non-cash stock granted	250			—			—			—			—		—	—			250
Stock granted	250			—			—			—			—		—	—			250
Preferred B and C stock accretion and BCF	(2,113		)	—			—			—			—		—	—			(2,113		)
Change related to pension liability, net of tax of $0	—			—			(1,602		)	—			—		—	—			(1,602		)
Unrealized gain on derivative, net of tax of $3,106	—			—			—			5,325			—		—	—			5,325
Unrealized gain on derivative, net of tax expense of $3,106	—			—			—			5,325			—		—	—			5,325
Net loss	(23,868		)	—			—			—			—		—	—			(23,868		)
Foreign currency translation adjustment, net of tax of $948	—			1,203			—			—			—		—	—			1,203
Foreign currency translation adjustment, net of tax expense of $948	—			1,203			—			—			—		—	—			1,203
Balances at December 31, 2012	$	(414,717	)	$	(27,888	)	$	(84	)	$	(5,428	)	$	2,665	9,192,380	$	(9,247	)	$	(454,699	)
Stock granted	253			—			—			—			—		—	—			253
Preferred B and C stock accretion and BCF	(16,119		)	—			—			—			—		—	—			(16,119		)
Change related to pension liability, net of tax expense of $43	—			—			(1,548		)	—			—		—	—			(1,548		)
Unrealized loss on derivative, net of tax expense of $659	—			—			—			(6,897		)	—		—	—			(6,897		)
Net income	986			—			—			—			—		—	—			986
Foreign currency translation adjustment, net of tax (benefit) of $(3)	—			(12,119		)	—			—			—		—	—			(12,119		)
Balances at December 31, 2013	$	(429,597	)	$	(40,007	)	$	(1,632	)	$	(12,325	)	$	2,665	9,192,380	$	(9,247	)	$	(490,143	)

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SITEL Worldwide Corporation

Consolidated Statements of Changes in Stockholders’ Deficit - Schedule 2 (Continued)

Years Ended December 31, 2013, 2012 and 2011

(in thousands of U.S. dollars, except per share amounts)

				Accumulated Other Comprehensive (Loss) Income
	Totals from Schedule 1			Foreign Currency Translation			Defined Benefit Pension/Other			Unrealized (Loss) Gain on Derivatives Valuation			Subsidiary Exchangeable Stock		Treasury Stock Shares	Treasury Stock Capital			Total
Balances at December 31, 2012	(414,717		)	(27,888		)	(84		)	(5,428		)	2,665		9,192,380	(9,247		)	(454,699		)
Balances at December 31, 2013	(429,597		)	(40,007		)	(1,632		)	(12,325		)	2,665		9,192,380	(9,247		)	(490,143		)
Non-cash stock granted	253			—			—			—			—		—	—			253
Treasury stock acquired	2,376			—			—			—			—		1,077,516	(2,376		)	—
Preferred B and C stock accretion and BCF	(16,119		)	—			—			—			—		—	—			(16,119		)
Stock granted	152			—			—			—			—		—	—			152
Change related to pension liability, net of tax of $43	—			—			(1,548		)	—			—		—	—			(1,548		)
Preferred B, C, and D stock accretion and BCF	(25,387		)	—			—			—			—		—	—			(25,387		)
Unrealized loss on derivative, net of tax of $659	—			—			—			(6,897		)	—		—	—			(6,897		)
Change related to pension liability, net of tax (benefit) of $(239)	—			—			(980		)	—			—		—	—			(980		)
Net income	986			—			—			—			—		—	—			986
Unrealized gain on derivative, net of tax (benefit) of $(3,400)	—			—			—			6,209			—		—	—			6,209
Foreign currency translation adjustment, net of tax of $(3)	—			(12,119		)	—			—			—		—	—			(12,119		)
Net loss	(48,360		)	—			—			—			—		—	—			(48,360		)
Balances at December 31, 2013	$	(429,597	)	$	(40,007	)	$	(1,632	)	$	(12,325	)	$	2,665	9,192,380	$	(9,247	)	$	(490,143	)
Foreign currency translation adjustment, net of tax (benefit) of $(46)	—			(8,451		)	—			—			—		—	—			(8,451		)
Balances at December 31, 2014	$	(500,816	)	$	(48,458	)	$	(2,612	)	$	(6,116	)	$	2,665	10,269,896	$	(11,623	)	$	(566,960	)

See accompanying Notes to Consolidated Financial Statements.

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SITEL Worldwide Corporation

Consolidated Statements of Cash Flows

Years Ended December 31, ~~2013~~2014, ~~2012~~2013 and ~~2011~~ 2012

(in thousands of U.S. dollars)

	2013			2012			2011
	2014			2013			2012
Cash flows from operating activities
Net income (loss)	$	986		$	(23,868	)	$	(31,785	)
Net (loss) income	$	(48,360	)	$	986		$	(23,868	)
Adjustments to reconcile Net income (loss) to net cash flows relating to operating activities:
Adjustments to reconcile Net (loss) income to net cash flows relating to operating activities:
Depreciation and amortization (including intangible assets)	4036,~~961~~811			4340,~~032~~961			5243,~~174~~032
Deferred income taxes	~~(25~~8,~~849~~134		)	(125,~~744~~849		)	(1,~~384~~744		)
Non-cash derivative activity	96,~~653~~345			29,~~596~~653			42,~~322~~596
Non-cash stock compensation expense	~~256~~155			~~518~~256			~~152~~518
Amortization of debt issue costs and original issue discount	45,~~867~~288			34,~~786~~867			23,~~466~~786
Amortization of deferred training revenue, net of costs	(32,~~845~~436		)	(3,~~247~~845		)	(3,~~297~~247		)
(Gain) loss on disposal of capital assets	(182		)	(149		)	29
Loss (gain) on disposal of capital assets	427			(182		)	(149		)
Impairment of property and equipment and other long-term assets	~~753~~1,171			~~1,633~~753			~~605~~1,633
Loss on sale of subsidiary	~~4,558~~—			—4,558			—
Other non-cash items, net	~~(1,772~~390		)	(1,~~495~~772		)	~~391~~(1,495		)
Change in book overdrafts	~~1,939~~(557		)	(1,~~932~~939		)	~~597~~(1,932		)
Changes in operating assets and liabilities
Accounts receivable	8(51,~~142~~969		)	(98,~~837~~142		)	(149,~~224~~837		)
Prepaids and other current assets	(110,~~563~~398		)	(1,~~588~~563		)	6(1,~~058~~588		)
Other noncurrent assets	(34,~~454~~585		)	(93,~~725~~454		)	(89,~~831~~725		)
Accounts payable and accrued liabilities and taxes	(314,~~057~~538		)	8(3,~~526~~057		)	~~(22~~8,~~759~~526		)
Other noncurrent liabilities	~~1,473~~195			941,473			~~2,750~~94
Net cash provided by (used in) operating activities	33(44,~~866~~851		)	633,~~600~~866			(96,~~968~~600		)
Cash flows from investing activities
Purchases of property and equipment	(3135,~~001~~304		)	(31,~~503~~001		)	(4031,~~258~~503		)
Proceeds from disposition of property and equipment	~~278~~1,752			~~319~~278			~~793~~319
Net cash used in investing activities	(30,723		)	(31,184		)	(39,465		)
Purchases of intangible assets	(983		)	—			—
Net cash used in investing activities	(34,535		)	(30,723		)	(31,184		)

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SITEL Worldwide Corporation

Consolidated Statements of Cash Flows (Continued)

Years Ended December 31, 2012, 2011 and 2010

(in thousands of U.S. dollars)

	2013			2012			2011
	2014			2013			2012
Cash flows from financing activities
Proceeds related to stock transactions	—			227			—
Proceeds from issuance of Series D Preferred Stock, net	74,820			—			—
Purchases of preferred and treasury shares	—			(1,900		)	—
Proceeds related to stock transactions	—			—			227
Payments on long-term debt and capital lease obligations	(733,345		)	(699,239		)	(493,962		)
Purchases of preferred and treasury shares	—			—			(1,900		)
Proceeds from issuance of Senior Secured Notes	—			192,000			—
Payments on long-term debt and capital lease obligations	(405,949		)	(733,345		)	(699,239		)
Proceeds from other long-term debt	729,402			538,640			537,307
Proceeds from issuance of Senior Secured Notes	—			—			192,000
Payment of interest rate swap, net	(3,612		)	(4,065		)	(1,722		)
Proceeds from other long-term debt	417,001			729,402			538,640
Payments of debt issue costs	(17		)	(6,892		)	(1,896		)
Payment of interest rate swap	(3,688		)	(3,612		)	(4,065		)
Net cash (used in) provided by financing activities	(7,572		)	18,771			39,727
Payments of debt issue costs	(719		)	(17		)	(6,892		)
Effect of exchange rate on cash and cash equivalents	(450		)	(1,279		)	(851		)
Net cash provided by (used in) financing activities	81,465			(7,572		)	18,771
Net change in cash and cash equivalents	(4,879		)	(7,092		)	(10,557		)
Effect of exchange rate on cash and cash equivalents	(588		)	(450		)	(1,279		)
Net change in cash and cash equivalents	1,491			(4,879		)	(7,092		)
Cash and cash equivalents:
Beginning of year	127,~~245~~366			1912,~~337~~245			2919,~~894~~337
End of year	$	78,~~366~~857		$	127,~~245~~366		$	1912,~~337~~245
Cash paid for interest	$	7980,~~254~~016		$	6879,~~702~~254		$	7668,~~853~~702
Cash paid for income taxes	$	59,~~942~~003		$	~~(208~~5,942	)	$	~~7,788~~(208	)
Non-cash activities:
Purchases of assets under capital leases	$	43,~~566~~709		$	~~473~~4,566		$	~~2,590~~473
Property and equipment additions unpaid	$	~~895~~426		$	~~156~~895		$	~~1,548~~156

See accompanying Notes to Consolidated Financial Statements.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements

December 31, ~~2013~~2014 and ~~2012~~ 2013

(in thousands of U.S. dollars, except share and per share amounts)

1. Nature of Business and Summary of Significant Accounting Policies

References in the Notes to Consolidated Financial Statements to "we", "our", "Sitel", or "the Company" are to SITEL Worldwide Corporation and its subsidiaries, collectively.

The Company is a majority-owned subsidiary of Onex Corporation ("Onex") and is one of the world’s largest and most diversified providers of customer care outsourcing services. We offer our clients a wide array of services, including customer service, technical support, customer acquisition, retention and revenue generation services, and back office support. The majority of our customer care services are inbound and delivered telephonically, but we are increasingly asked to provide services through other communication channels, including email, online chat, IVR, and social media channels. We provide services to a broad range of industry end-markets, including technology, financial services, wireless, retail and consumer products, telecommunications, media and entertainment, energy and utilities, internet service providers, travel and transportation, insurance, healthcare, and government.

Our worldwide operations are organized geographically and are grouped into two reporting segments: (1) North America, Latin America, and Asia Pacific ("Americas") and (2) Europe, the Middle East, and Africa ("EMEA"). Each reporting segment performs substantially the same services for clients.

Basis of Presentation and Preparation

The accompanying Consolidated Financial Statements of the Company are presented in accordance with U.S. GAAP and include the accounts of the Company and its majority owned subsidiaries after elimination of intercompany transactions. Certain items have been reclassified from their prior year classifications to conform to the current year presentation. These reclassifications had no effect on net income or stockholders' equity as previously reported.

Use of Estimates

Management makes estimates and assumptions when preparing financial statements under U.S. GAAP that affect our reported amounts of assets and liabilities at the dates of the Consolidated Financial Statements, our disclosure of contingent assets and liabilities at the dates of the Consolidated Financial Statements, and our reported amounts of revenues and expenses during the reporting periods. Significant items subject to such estimates and assumptions include revenue recognition, income taxes, allowance for doubtful accounts, impairment of long-lived assets, impairment of goodwill and other indefinite-lived intangibles, projected compliance with debt covenants, contingencies, restructuring charges, ~~assets held for sale,~~ asset retirement obligations, stock-based compensation, derivatives, and employee benefit plans. These estimates involve judgments with respect to, among other things, future economic factors that are difficult to predict and are beyond management’s control. As a result, actual amounts could differ from these estimates.

Summary of Significant Accounting Policies

Cash and Cash Equivalents

Cash and cash equivalents consist of highly liquid investments, such as disbursement accounts, term deposits, money market instruments, and commercial paper carried with original maturities of three months or less. Legally restricted cash of $4,~~312~~159 and $34,~~758~~312 as of December 31, ~~2013~~2014 and ~~2012~~2013, respectively, are included in Prepaids and other current assets in the Consolidated Balance Sheets.

Accounts Receivable and Allowance for Doubtful Accounts

Trade receivables are comprised primarily of amounts owed to the Company by clients and are presented net of an allowance for doubtful accounts, which represents management’s estimate of the amount of its receivables that may not be collectible. This estimate is based on a detailed aging analysis of accounts receivable, historical bad debts, client credit-worthiness, and changes in client payment patterns. The financial condition of our clients may deteriorate, which may require the Company to increase its allowance for doubtful accounts. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

The transactions in the allowance for doubtful accounts for the years ended December 31, 2014, 2013, and 2012 are as follows:

	2013			2012			2011
	2014			2013			2012
Balance, beginning of year	$	2,~~990~~081		$	32,~~129~~990		$	63,~~142~~129
Charges to costs and expenses	~~159~~—			14159			~~1,526~~14
Write-offs, net of recoveries	(~~1,855~~357		)	(~~138~~1,855		)	(~~4,559~~138		)
Currency translation and other	~~787~~838			~~(15~~787		)	20(15		)
Balance, end of year	$	2,~~081~~562		$	2,~~990~~081		$	32,~~129~~990

Financial Instruments

We have Cash and cash equivalents, short-term investments, short-term trade receivables and payables, and long-term debt instruments, including capital leases.

Our earnings and cash flow are subject to fluctuations due to changes in foreign currency exchange rates and interest rates. We allow for the use of derivative financial instruments to prudently manage foreign currency exchange rate and interest rate exposure, but do not allow derivatives to be used for speculative purposes. Derivatives used are primarily foreign currency forward contracts and interest rate swaps. Derivative activities are subject to the management, direction, and control of our senior financial officers. Risk management practices, including the use of financial derivative instruments, are presented to the Board of Directors at least annually. All derivatives are recognized on the Consolidated Balance Sheets at their fair value. On the date the derivative contract is entered, the derivative is either (1) designated as a hedge of a forecasted transaction or (2) undesignated. Changes in the fair value of a derivative that is qualified, designated, and highly effective as a hedge are recorded in Other comprehensive loss until earnings are affected by the forecasted transaction, and are then reported in current earnings (in the same line items as the gain or loss on the item hedged). Changes in the fair value of undesignated derivative instruments and the ineffective portion of designated derivative instruments are reported in current earnings (in the same line item as the gain or loss on the item hedged). We formally document all relationships between hedging instruments and hedged items, as well as the risk-management objective and strategy for undertaking various hedge transactions. This process includes linking cash flow hedges to specific forecasted transactions. For derivatives designated as a hedge for accounting purposes, we also formally assess, both at the hedge’s inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in the exposure of the hedged items. If it is determined that a derivative is not highly effective as a hedge, or that it has ceased to be a highly effective hedge, we discontinue hedge accounting prospectively. For financial instruments that no longer qualify for hedge accounting, changes in fair value are recognized in (gain) loss on foreign currency transactions in the Consolidated Statements of Comprehensive Loss.

Significant Customers and Concentrated Credit Risk

The Company is exposed to credit risk in the normal course of business, primarily related to accounts receivable and derivative instruments. Historically, the losses related to credit risk have been minimal. The Company regularly monitors its credit risk to mitigate the possibility of current and future exposures resulting in a loss. The Company evaluates the creditworthiness of its clients prior to entering into an agreement to provide services and on an on-going basis as part of the processes for revenue recognition and accounts receivable. The Company does not believe it is exposed to more than a nominal amount of credit risk in its derivative hedging activities, as the counter parties are established, well-capitalized financial institutions.

No customer represented greater than 10% of ~~2013~~2014, ~~2012~~2013, or ~~2011~~2012 Revenues or 10% of Accounts receivable, net, at December 31, ~~2013,~~2014 ~~2012,~~ or ~~2011~~2013.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

Property and Equipment

Property and equipment are carried at cost and depreciated over their estimated useful lives on a straight-line basis. Estimated useful lives for the principal asset categories are as follows:



Buildings — structure	40 years
Buildings — interior / mechanical	15 years
Buildings — roof	20 years
Leasehold improvements	Shorter of useful life or term of lease
Computer software	3 to 7 years
Equipment	3 to 7 years
Furniture and fixtures	5 years

Cost and related accumulated depreciation on assets retired or disposed of are removed from the accounts and any gains or losses resulting thereon are credited or charged to operating income. Maintenance and repairs are charged to operations as incurred; major overhauls that extend the useful lives of existing assets are capitalized.

Fixed asset costs, including leasehold improvements, include actual costs plus capitalized interest accruing during the construction process.

Internal-use software costs incurred during the application development stage are capitalized as incurred. The application development stage does not begin until both (a) technological feasibility has been established for the software and (b) all research and development activities for the other components of the product or process have been completed. Those costs related to the development of internal-use software, other than those incurred during the application development stage, are expensed as incurred. Capitalized internal-use software costs are amortized using the straight-line method over the remaining estimated economic life of the software.

Intangible Assets

The Company’s intangible assets are primarily comprised of non-amortizable goodwill, trademark/trade name, and amortizable customer relationships, primarily related to the January 30, 2007 acquisition of SITEL Corporation ("Legacy SITEL"). All customer relationships related to the Legacy SITEL acquisition became fully amortized during 2014. The remaining customer ~~relationships~~relationship ~~have~~has a useful ~~lives~~life of ~~seven~~42 ~~years~~months.

Impairment or Disposal of Long-lived Assets

We evaluate long-lived assets (Property and equipment and definite-lived intangible assets) for impairment whenever events or changes in circumstances indicate the carrying amount may not be recoverable. Triggering events include a significant change in the extent or manner in which long-lived assets are being used or in their physical condition, in legal factors, or in the business climate that could affect the value of the long-lived assets. The interpretation of such events requires judgment from management as to whether such an event has occurred.

Upon the occurrence of a triggering event, the carrying amount of a long-lived asset is reviewed to assess whether the recoverable amount has declined below its carrying amount. The recoverable amount is the estimated net future cash flows that we expect to recover from the future use of the asset, undiscounted and without interest, plus the asset’s residual value on disposal. Where the recoverable amount of the long-lived asset is less than the carrying value, an impairment loss would be recognized to write down the asset to its fair value, which is based on discounted estimated cash flows from the future use of the asset.

Due to the business climate in some of our countries, the Company reviewed certain long-lived assets for possible impairment during the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012. Based on the results of our review, during 2012 the Company recorded impairment charges of $1,633 to write down the carrying value of certain annuity contracts included within Other noncurrent assets. During 2013, we received approximately $500 in liquidation payments related to these annuity contracts, which was recorded as a gain during the year ended December 31, 2013. ~~No impairment charges were recorded during 2011 related to these annuity contracts.~~ During ~~2013~~2014 and ~~2011~~2013, the Company recorded impairment charges of $~~212~~1,171 and $~~605~~212, respectively, to write off the remaining carrying value of certain fixed assets. No such impairment charges were recorded during 2012. These charges are included in Impairment and loss on disposal of assets, net on our Consolidated Statements of Comprehensive Loss.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

The estimated cash flows that are used in the impairment analysis requires judgment. Any changes in the estimates of cash flows based on changes in the market conditions, changes in the use of the assets, management’s plans, and the determination of the useful life of the assets could significantly change the recoverable amount of the asset or the calculation of the fair value and the resulting impairment loss, which could significantly affect the results of operations.

Long-lived assets are classified as held for sale and presented within other current assets if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. Assets are classified as held for sale only when the sale is highly probable and the asset is available for immediate sale in its present condition subject to terms that are usual and customary. Long-lived assets held for sale are measured at the lower of carrying amount or fair value, and any differences between carrying amount and fair value are recognized in the Consolidated Statements of Comprehensive Loss during the period in which a long-lived asset is classified as held for sale. During the year ended December 31, 2010, the Company closed its Port Arthur, Texas site (included within the Americas segment) and reclassified the fair value, which approximated the carrying value, of the office building of $1,~~741~~200 from Property and equipment to Other current assets. This property was sold ~~during January 2014~~, and the Company recorded a charge of $541 within Impairment and loss on disposal of assets during the year ended December 31, 2013 to reflect the net sales price. No amounts related to assets held for sale were recognized in the Consolidated Statements of Comprehensive Loss during the years ended December 31, ~~2012~~2014 or ~~2011~~2012.

Impairment of Goodwill and Other Indefinite-Lived Intangibles

The goodwill impairment test consists of two steps. The first step, which compares a reporting unit's fair value to its carrying amount, is used as a screening process to identify potential goodwill impairment. If the carrying amount of a reporting unit exceeds the reporting unit's fair value, the second step of the impairment test must be completed to measure the amount of the reporting unit's goodwill impairment loss, if any. To perform step one of the goodwill impairment test, we had to perform the following steps:


1.	Identify our reporting units;


2.	Assign assets and liabilities to our reporting units;


3.	Assign all recorded goodwill to one or more of our reporting units; and,


4.	Determine the fair value of those reporting units to which goodwill has been assigned.

If a reporting unit fails step one, step two requires an assignment of the reporting unit's fair value to the reporting unit's assets and liabilities, using the initial acquisition accounting guidance, to determine the implied fair value of the reporting unit's goodwill. The implied fair value of the reporting unit's goodwill is then compared with the carrying amount of the reporting unit's goodwill to determine the goodwill impairment loss to be recognized, if any.

For purposes of testing goodwill, we estimated the fair value utilizing multiple measurement techniques. The estimation was primarily determined based on an estimate of future cash flows (income approach) discounted at a market derived weighted average cost of capital. The income approach has been determined to be the most representative because we do not have an active trading market for our equity or debt. A guideline public companies model, which uses peer group metrics to value a company, was then utilized to confirm the measurement.

No impairment charges were recorded to goodwill or our other indefinite-lived intangible assets during the years ended December 31, ~~2013~~2014, ~~2012~~2013, or ~~2011~~2012.

Contingencies

An estimated loss contingency is accrued when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. We regularly evaluate current information available to us to determine the appropriate amount to be recorded for such accruals. See Note 14 for additional discussion regarding our contingencies.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

Revenue Recognition

The Company generates revenues from its clients through the provision of a wide array of services. Our services include the provision of customer service and technical support services to our clients’ customers as well as services that assist our clients in acquiring or retaining customers and generating revenue from customers. The majority of our customer care services are inbound and delivered telephonically, but we are increasingly asked to provide services through other communication channels, including email, online chat, IVR, and social media channels. Revenues are recognized only when there is persuasive evidence that an arrangement exists, delivery has occurred or services have been rendered, the price is fixed and determinable, and collection is reasonably assured. The Company recognizes revenues at the time services are performed based on the rate detailed in the client contract, such as per: minute, hour, month, employee, subscriber or user, or item basis for each transaction processed. A portion of revenues may be subject to performance standards, such as sales per hour, average handle time, occupancy rate, abandonment rate, call quality, and customer satisfaction. The Company’s performance against such standards may result in bonuses or penalties, which are recognized as earned or incurred. In certain circumstances, the Company receives payment in advance of providing service. Amounts billed but not earned under these contracts are excluded from revenues and included in Accounts payable in the Consolidated Balance Sheets. The Company had $~~2,419~~646 and $~~989~~2,419 of unearned revenues recorded on the Consolidated Balance Sheets at December 31, ~~2013~~2014 and ~~2012~~2013, respectively.

The Company may incur certain upfront project start-up costs specific to each customer contract. In certain instances, our contracts allow us to bill the customer for these costs; however, because these upfront start-up services (mostly employee training services) do not have stand-alone value to the customer, revenues from upfront start-up services are deferred (and included in accrued liabilities and other for the current portion and in other noncurrent liabilities) and are recognized in revenues as services are provided over the ~~expected~~ term of the ~~estimated~~expected client relationship. The Company recognized $1011,~~604~~025, $1110,~~281~~604, and $811,~~564~~281 of cost and $1110,~~389~~549, $1211,~~267~~389, and $1112,~~861~~267 of revenues for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively, relating to these deferrals.

The Company is reimbursed by clients for pass-through out-of-pocket expenses, consisting principally of telecommunication, employee performance incentive, and postage and shipping costs. The reimbursement and related costs are reflected in the accompanying Consolidated Statements of Comprehensive Loss as revenues and costs of services, respectively. Telecommunication, postage and shipping, and other costs were $24,~~069~~817, $2524,~~783~~069, and $2425,~~483~~783 for ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively.

Revenue-related taxes collected from customers and remitted to governmental authorities are netted and not included in revenues.

Deferred Costs and Deferred Revenues

As more fully described under the heading "Revenue Recognition," the Company ~~follows guidance on how to account for multiple element contracts. The Company~~ capitalizes direct and incremental training costs to the extent recovery of these costs is probable. Both the training revenues and related costs are amortized straight-line over the term of the expected client relationship as a component of revenues and costs of services, respectively. The deferred costs are recorded as a component of Prepaids and other current assets or Other noncurrent assets, while the deferred revenues are recorded as a component of Accrued liabilities and other or Other noncurrent liabilities in the accompanying Consolidated Balance Sheets based upon the remaining term of the underlying client contracts.

Deferred amounts are periodically evaluated for impairment or when circumstances indicate a possible inability to recover their carrying amounts. In the event these costs are not deemed recoverable, the costs are immediately expensed. The Company evaluates probability of recovery by considering remaining profits to be earned during the term of the related contract, including any related deferred revenues, the creditworthiness of the client, and, if applicable, contract termination penalties payable by the client in the event that the client terminates the contract early. We recorded an impairment ~~charge~~charges related to deferred training costs of $427 during 2013, respectively. No such impairment charges were recorded during ~~2012~~2014 orand ~~2011~~2012.

The balance of short and long-term deferred training revenues was $910,~~719~~769 and $9,~~379~~719 at December 31, ~~2013~~2014 and ~~2012~~2013, respectively. The balance of deferred training costs was $98,~~641~~569 and $89,~~531~~641 at December 31, ~~2013~~2014 and ~~2012~~2013, respectively.

Advertising Costs

Advertising costs are expensed as incurred. Advertising costs were $1,~~322~~507, $1,~~411~~322, and $1,~~486~~411 for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

Costs of Restructuring and Exit Activities

The Company has incurred various costs in an effort to reposition its business in order to lower its cost structure and improve its long-term competitive position. The costs are mainly comprised of employee severance and facility exit costs. Refer to ~~Footnote~~Note 7 for a discussion of our Restructuring activities.

Debt Issue Costs

Capitalized costs related to the acquisition of long-term debt are amortized using the effective interest method over the expected life of the related debt instrument. Amortization of ~~the~~ debt issue costs amounted to $45,~~867~~288, $34,~~786~~867, and $23,~~466~~786 during the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively, and is included in Interest and other financing costs, net, in the Consolidated Statements of Comprehensive Loss. The unamortized balance of $97,~~966~~723 and $129,~~736~~966 at December 31, ~~2013~~2014 and ~~2012~~2013, respectively, is included in Other noncurrent assets on the Consolidated Balance Sheets. Refer to Note 8 for a discussion of our long-term debt transactions associated with the debt issue costs.

Employee Benefit Plans

The Company has defined benefit pension plans covering certain employees outside of the U.S. We estimate the projected benefit obligations using an assumed discount rate, expected return on plan assets, and a rate of compensation increase. As of December 31, ~~2013~~2014 and ~~2012~~2013, our projected benefit obligations were $1011,~~455~~924 and $810,~~676~~455, respectively.

Income Taxes

Our income tax provision includes U.S. federal, state, local, and foreign income taxes that are currently payable or recoverable, as well as, income taxes that are deferred.

Forming a conclusion that a valuation allowance is not needed is difficult when there is negative evidence, such as cumulative losses in recent years in certain tax jurisdictions. The Company considers cumulative losses which weigh heavily in the overall assessment. We have established valuation allowances for future tax benefits related to net operating losses incurred in certain federal, state, and foreign tax jurisdictions. We expect to continue to record a valuation allowance on future tax benefits in certain tax jurisdictions until an appropriate level of profitability is sustained.

See Note 10 for additional discussion regarding income taxes.

Stock Awards

All equity-based payments to employees (stock awards) are recognized in the Consolidated Statements of Comprehensive Loss based on the grant date fair value of the award. See Note 9 for additional discussion regarding stock-based compensation.

Treasury Stock

The Company accounts for treasury stock under the cost method, which requires the Company to record the value of the shares at the purchased amount.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

Incentive Grants

The Company has received grants from various local government entities as incentives for the creation of jobs and training credits. These grants generally take the form of forgivable loan or lease obligations or cash subsidies of current wages paid. In the instance of forgivable loans or leases, the Company’s obligations under the arrangements are forgiven as certain employment or payroll dollar criteria are achieved, and in some cases, maintained. With respect to cash grants, the amount of grant monies that may be received by the Company over the term of the grant agreement is a function of eligible payroll dollars paid or employment levels achieved.

Forgiveness of loan or lease obligations is recognized as other income in the Consolidated Statements of Comprehensive Loss when the terms of the forgiveness are met and when continued compliance with the grant terms is reasonably assured. Cash grant subsidies relating to operating expenditures are recorded as a reduction of the related expense in the period in which the expenditure is recorded.

Unforgiven loan balances, lease obligations, and deferred grant income of $~~812~~485 and $~~1,951~~812 at December 31, ~~2013~~2014 and ~~2012~~2013, respectively are reflected in the accompanying Consolidated Balance Sheets as a component of Other current and Other noncurrent liabilities. In the case of forgivable loan and lease obligations, interest expense is not recognized on the obligations to the extent management believes there is reasonable assurance that the grant criteria will be met over the term of the agreement. Training grants receivable of $~~934~~439 and $~~349~~934 at December 31, ~~2013~~2014 and ~~2012~~2013, respectively, are recorded in Prepaids and other current assets in the Consolidated Balance Sheets.

The Company recognized ~~$11,~~income of $0106 and ~~$151~~expense of $11 in Other expense (income), ~~and~~net ~~$1,249,~~for ~~$960~~the years ended December 31, 2014 and ~~$697~~2013. ofNo ~~reductions~~such costs were recognized during 2012. Reductions to operating expense of $732, $1,249, and $960 were recognized for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively, relating to the various incentive grants.

Foreign Currency

The reporting currency of the Company is the U.S. dollar. Subsidiaries utilize their various local currencies as their functional currency and convert to U.S. dollars for reporting purposes.

The accounts of the Company’s foreign operations are translated into U.S. dollars using the current rate method. Assets and liabilities are translated at the year-end exchange rate and revenues and expenses are translated at average exchange rates. Gains and losses arising from the translation of the financial statements of foreign operations are deferred and recognized as a separate component of stockholders’ deficit. Transactional currency gains or losses are recorded in the Consolidated Statements of Comprehensive Loss as gain or loss on foreign currency transactions.

Asset Retirement Obligations

We have contractual obligations with respect to the retirement of certain leasehold improvements at maturity of facility leases and the restoration of facilities back to their original state at the end of the lease term. Accruals are made based on management’s estimates of current market restoration costs, inflation rates, and discount rates. At the inception of a lease, the present value of the expected cash payment is recognized as an asset retirement obligation with a corresponding amount recognized in property assets. The property asset amount is depreciated, and the liability is accreted, over the period from lease inception to the time we expect to vacate the premises resulting in both depreciation and interest charges in the Consolidated Statements of Comprehensive Loss. Discount rates used are based on incremental borrowing rates. During ~~2013~~2014, liabilities incurred and settled were $~~107~~855 and $~~454~~36 respectively. Liabilities incurred and settled during ~~2012~~2013 were $0107 and $~~147~~454, respectively. Accretion expense totaled $~~259~~112, $~~104~~259, and $~~117~~104 for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively. As of December 31, ~~2013~~2014 and ~~2012~~2013, the Company’s asset retirement obligations totaled $34,~~584~~150 and $3,~~574~~584, respectively.

Newly Issued Accounting Pronouncements

In ~~December~~July ~~2011~~2013, the ~~Financial Accounting Standards Board ("~~FASB") issued ASU ~~2011~~No. 2013-11, "~~Disclosures~~Presentation ~~about~~of ~~Offsetting~~an ~~Assets~~Unrecognized ~~and~~Tax ~~Liabilities,"~~Benefit ~~which~~When ~~mandates~~a ~~that~~Net ~~entities~~Operating ~~disclose~~Loss ~~both~~Carryforward, ~~gross~~a ~~and~~Similar ~~net~~Tax ~~information~~Loss, ~~about~~or ~~instruments~~a ~~and~~Tax ~~transactions~~Credit ~~eligible~~Carryforward ~~for~~Exists ~~offset~~(Topic in740)", which provides explicit guidance on the financial statement presentation of ~~financial~~an ~~position~~unrecognized astax ~~well~~benefit aswhen ~~instruments~~a ~~and~~net ~~transactions~~operating ~~subject~~loss tocarryforward, ana ~~agreement~~ similar totax loss, or a ~~master~~tax ~~netting~~credit ~~arrangement~~carryforward exists. InAn ~~January~~unrecognized ~~2013~~tax benefit, ~~the~~or ~~FASB~~a ~~issued~~portion ~~ASU~~of ~~2013-01~~an unrecognized tax benefit, ~~"Clarifying~~should be presented in the ~~Scope~~financial ofstatements ~~Disclosures~~as ~~about~~a ~~Offsetting~~reduction ~~Assets~~to ~~and~~a ~~Liabilities~~deferred tax asset for a net operating loss carryforward," ~~which~~a ~~provides~~similar ~~scope~~tax ~~clarifications~~loss, ~~related~~or toa ~~the~~tax ~~previously~~credit ~~issued~~carryforward, ~~ASU~~except ~~2011-~~as 11follows. ~~These~~To ~~ASU's~~the ~~were~~extent ~~effective~~a ~~for~~net ~~annual~~operating ~~reporting~~loss ~~periods~~carryforward, ~~beginning~~a onsimilar tax loss, or ~~after~~a ~~January~~tax 1,credit ~~2013~~carryforward ~~and~~is ~~interim~~not ~~periods~~available ~~within~~at ~~those~~the ~~annual~~reporting ~~periods.~~date ~~The~~under ~~adoption~~the tax law of ~~this~~the ~~guidance~~applicable ~~did~~jurisdiction ~~not~~to ~~have~~settle anany ~~impact~~additional onincome ~~our~~taxes ~~financial~~that ~~statements~~would ~~and~~result ~~related~~from ~~disclosures.~~the disallowance of a tax position or the tax law of the applicable

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

Injurisdiction ~~July~~does ~~2012,~~not require the ~~FASB~~entity ~~issued~~to ~~ASU 2012-02~~use, ~~"Intangibles~~and -the ~~Goodwill~~entity ~~and~~does ~~Other~~not ~~(Topic~~intend ~~350)~~to -use, ~~Testing~~the ~~Indefinite-Lived~~deferred ~~Intangible~~tax ~~Assets~~asset for ~~Impairment~~such purpose," tothe ~~establish~~unrecognized antax ~~optional~~benefit ~~two-step~~should ~~analysis~~be ~~for~~presented ~~impairment~~in ~~testing~~the offinancial ~~indefinite-lived~~statements ~~intangible~~as ~~assets~~a ~~other~~liability ~~than~~and ~~goodwill.~~should ~~Under~~not ~~the~~be ~~two-step~~combined ~~analysis,~~with andeferred ~~entity~~tax ~~would~~assets. ~~perform~~The assessment of whether a ~~qualitative~~deferred ~~analysis~~tax ~~first,~~asset ~~whereby~~is ~~evaluating~~available is based on the ~~totality~~unrecognized oftax ~~qualitative~~benefit ~~factors~~and ~~that~~deferred ~~impact~~tax ~~whether~~asset anthat ~~indefinite-lived~~exist ~~intangible~~at ~~asset~~the ~~has~~reporting adate ~~carrying~~and ~~amount~~should ~~that~~be ismade ~~more~~presuming ~~likely~~disallowance ~~than~~of ~~not~~the totax ~~exceed~~position ~~its~~at ~~fair~~the ~~value~~reporting date. The ~~entity~~amendments ~~would~~in ~~then~~ASU ~~proceed~~2013-11 todo ~~conducting~~not ~~the~~require ~~quantitative~~new ~~assessment~~recurring disclosures. The ~~standard~~amendments ~~was~~in ASU 2013-11 are effective for ~~annual~~fiscal years, and interim ~~impairment~~periods ~~tests~~within ~~performed~~those ~~for fiscal~~ years, beginning after ~~September~~December 15, ~~2012,~~2013. ~~with~~Early ~~early~~ adoption is permitted. The ~~adoption~~amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. Adoption of ~~this~~ASU ~~guidance~~No. ~~did~~2013-11 ~~not~~during ~~have~~2014 anresulted ~~impact~~in ona ~~our~~decrease ~~financial~~in ~~statements~~both Deferred tax assets and ~~related~~Other ~~disclosures~~noncurrent liabilities of $2,834.

In ~~October~~May ~~2012~~2014, the FASB issued ASU ~~2012~~No. 2014-0409, "~~Technical~~Revenue ~~Corrections~~from ~~and~~Contracts ~~Improvements".~~with ~~The~~Customers ~~amendments~~(Topic in606)", ~~this~~which ~~update~~applies ~~cover~~to acustomer ~~wide~~contracts ~~range~~for the transfer of ~~Topics~~goods inor services or nonfinancial assets, unless those contracts are within the ~~Accounting~~scope ~~Standards~~of ~~Codification~~other standards. ~~These~~The ~~amendments~~core ~~include~~principle ~~technical~~of ~~corrections~~the ~~and~~guidance ~~improvements~~is that an entity should recognize revenue to depict the ~~Accounting~~transfer ~~Standards~~of ~~Codification~~promised ~~and~~goods ~~conforming~~or ~~amendments~~services ~~related~~to customers in an amount that reflects the consideration to ~~fair~~which ~~value~~the ~~measurements~~entity expects to be entitled in exchange for those goods or services. The amendments in ~~this~~ASU ~~update~~2014-09 ~~were~~are effective for ~~fiscal~~annual and interim reporting periods beginning after December 15, ~~2012~~2016. Early application is not permitted. The ~~adoption~~amendments should be applied retrospectively to each prior reporting period presented or retrospectively with the cumulative effect of initially applying this Update recognized at the date of initial application. If an entity elects the transition method, it should provide additional disclosures in the reporting periods that include the date of initial application of the amount by which each financial statement line item is affected in the current reporting period compared to the guidance ~~did~~that ~~not~~was ~~have~~in aeffect ~~material~~before ~~impact~~the change. In addition, an explanation of the reasons for significant changes are required in the disclosure. The Company is currently evaluating the effect of ASU 2014-09 on our financial statements ~~and related disclosures~~.

In February 2013, the FASB issued ASU 2013-02, "Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income", which established the effective date for the requirement to present components of reclassifications out of accumulated other comprehensive income on the face of the income statement. The standard was effective for prospective application for annual periods, and interim periods within those annual periods, beginning after December 15, 2012. The adoption of this guidance did not have a material impact on our financial statements and related disclosures. See Note 17 for a summary of amounts reclassified out of Accumulated other comprehensive income for the year ended December 31, 2013.

In February 2013, the FASB issued ASU No. 2013-04, "Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date", which provides guidance for the recognition, measurement and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this ASU is fixed at the reporting date. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors as well as any additional amount the reporting entity expects to pay on behalf of its co-obligors. ASU 2013-04 also requires an entity to disclose the nature and amount of those obligations. The amendments in this ASU are effective for reporting periods beginning after December 15, 2013, with early adoption permitted. Retrospective application is required. The adoption of this guidance did not have an impact on our financial statements and related disclosures.

In March 2013, the FASB issued ASU No. 2013-05, "Foreign Currency Matters (Topic 830): Parent's Accounting for the Cumulative Translation Adjustment upon Derecognition of Certain Subsidiaries or Groups of Assets within a Foreign Entity or of an Investment in a Foreign Entity (a consensus of the FASB Emerging Issues Task Force) ", which applies to the release of the cumulative translation adjustment into net income when a parent either sells a part or all of its investment in a foreign entity or no longer holds a controlling financial interest in a subsidiary or group of assets that is a business (other than a sale of in substance real estate or conveyance of oil and gas mineral rights) within a foreign entity. ASU No. 2013-05 is effective prospectively for fiscal years (and interim reporting periods within those years) beginning after December 15, 2013. The adoption of this guidance is not expected to have a material effect on our financial statements and related disclosures.

In July 2013, the FASB issued ASU 2013-10, "Inclusion of the Fed Funds Effective Swap Rate (or Overnight Index Swap Rate) as a Benchmark Interest Rate for Hedge Accounting Purposes", which provides for the inclusion of certain interest rate benchmarks for hedge accounting purposes. ASU No. 2013-10 was effective for the Company for qualifying new or redesignated hedging relationships entered into on or after July 17, 2013. ASU 2013-10 did not have an impact on the financial statements and related disclosures.

In July 2013, the FASB issued ASU No. 2013-11, "Presentation of an Unrecognized Tax Benefit When a Net Operating Loss Carryforward, a Similar Tax Loss, or a Tax Credit Carryforward Exists (Topic 740)", which provides explicit guidance on the financial statement presentation of an unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. An unrecognized tax benefit, or a portion of an unrecognized tax benefit, should be presented in the financial statements as a reduction to a deferred tax asset for a net operating loss carryforward, a similar tax loss, or a tax credit carryforward, except as follows. To the extent a net operating loss carryforward, a similar tax loss, or a tax credit carryforward is not available at the reporting date under the tax law of the applicable jurisdiction to settle any additional income taxes that would result from the disallowance of a tax position or the tax law of the applicable

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, 2013 and 2012

(in thousands of U.S. dollars, except share and per share amounts)

jurisdiction does not require the entity to use, and the entity does not intend to use, the deferred tax asset for such purpose, the unrecognized tax benefit should be presented in the financial statements as a liability and should not be combined with deferred tax assets. The assessment of whether a deferred tax asset is available is based on the unrecognized tax benefit and deferred tax asset that exist at the reporting date and should be made presuming disallowance of the tax position at the reporting date. The amendments in ASU 2013-11 do not require new recurring disclosures. The amendments in ASU 2013-11 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2013. Early adoption is permitted. The amendments should be applied prospectively to all unrecognized tax benefits that exist at the effective date. Retrospective application is permitted. It is estimated that resulting from the adoption of this guidance, the financial statements will reflect a decrease in both Deferred tax assets and Other noncurrent liabilities of $2,692 during the first quarter of 2014.

No other new accounting pronouncement issued or effective during the fiscal year has had or is expected to have a material impact on the Consolidated Financial Statements, included in Item 8 of this report.

Out of Period Adjustments

During the ~~quarter and~~ year ended December 31, ~~2013~~2014, anwe ~~adjustment~~identified toprior ~~correct~~period ~~items~~accounting ~~identified~~errors ~~during~~related to the ~~year~~understatement ~~that~~of ~~related~~an toaccrued ~~prior~~liability, ~~years~~the ~~increased~~overstatement ~~net~~of ~~income~~certain bydeposits, ~~approximately~~and ~~$361,~~the ~~net~~overstatement of ~~tax~~foreign ofcurrency ~~$155~~transaction losses. ~~This~~Adjustments ~~error~~to ~~related~~correct tothese anitems ~~over-recognition~~in of2014 ~~depreciation~~decreased ~~expense~~Net onloss ~~certain~~by ~~property~~approximately ~~and~~$775, ~~equipment~~net of tax of $336. Because ~~this~~these ~~error~~errors ~~was~~were not material to the prior year's financial statements and the impact of correcting ~~this~~these ~~error~~errors in the current year is not material to the ~~2013~~2014 financial statements or results, we recorded the correction of the ~~error~~errors in the year ended December 31, ~~2013~~2014 Consolidated Financial Statements.

During the quarter and year ended December 31, ~~2012~~2013, ~~adjustments~~an adjustment to correct items identified during the year that related to prior years, ~~in the aggregate,~~ increased ~~net~~Net ~~loss~~income by approximately $2361,~~096,~~ net of tax of $~~475~~155. ~~These~~This ~~errors~~error related to an ~~under~~over-recognition of depreciation expense on certain property and equipment of $971, net of tax of $155, the ineffective portion of certain foreign currency hedging instruments of $336, net of tax of $181, an under-accrual of vacation expense of $365, net of tax of $139, and an over-recognition of foreign currency gains of $424. Because ~~these~~this ~~errors,~~error ~~both~~was ~~individually and in the aggregate, were~~ not material to ~~any of~~ the prior ~~years~~year's financial statements and the impact of correcting ~~these~~this ~~errors~~error in ~~2012~~the ~~was~~current year is not material to the ~~2012~~2013 financial statements or results, we recorded the correction of ~~these~~the ~~errors~~error in the year ended December 31, ~~2012~~2013 Consolidated Financial Statements.

During the year ended December 31, ~~2011~~2012, adjustments to correct items identified during the year that related to prior years, in the aggregate, increased Net loss ~~before~~by ~~taxes~~approximately ~~and~~$2,096, net ~~loss~~of bytax ~~approximately~~of $~~2,523~~475. ~~The~~These errors related to an under-~~accrual~~recognition of ~~restructuring~~depreciation ~~charges~~expense on certain property and equipment of $1971,~~275~~ net of tax of $155, the ineffective portion of certain foreign currency hedging instruments of $336, net of tax of $181, an under-~~recognition~~accrual of ~~amortization~~vacation expense onof ~~leasehold~~$365, ~~improvements~~net of tax of $2139,~~288,~~ and an ~~under~~over-recognition of ~~net gains on~~ foreign currency ~~transactions~~gains of $~~1,608~~424. Because these errors, both individually and in the aggregate, were not material to any of the prior years' financial statements and the impact of correcting these errors in ~~2011~~2012 was not material to the ~~2011~~2012 financial statements or results, we recorded the correction of these errors in the year ended December 31, ~~2011~~2012 Consolidated Financial Statements.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

2. Prepaids and Other Current Assets

The composition of Prepaids and other current assets is as follows:

	2013		2012
	2014		2013
Prepaid expenses	$	9,927	$	12,615
Value-added tax receivables	$	10,724	$	8,975
Value-added tax receivables	8,975		6,779
Prepaid expenses	9,192		9,927
Deferred training costs	6,495		5,442
Income tax receivable	6,487		4,390
Other tax receivable	5,608		5,702
Deferred training costs	5,833		6,495
Income tax receivable	4,390		4,026
Other tax receivable	5,117		5,608
Restricted cash	4,~~312~~159		34,~~758~~312
Refundable deposits	1,814		305
Taxes recoverable	2,002		1,711
Deferred income taxes — current	1,~~797~~925		1,~~518~~797
Taxes recoverable	1,711		3,117
Refundable deposits	1,695		1,814
Assets held for sale	1,200		1,741
Derivatives	1,576		403
Derivatives	403		3,322
Assets held for sale	—		1,200
Other receivables	2,~~137~~232		12,~~894~~137
Other current assets	5,~~063~~769		65,~~423~~063
	$	5356,~~832~~711	$	5653,~~642~~832

At December 31, ~~2013~~2014, Other current assets and Other receivables consisted primarily of grants receivable, ~~payroll withholding taxes receivables,~~ vendor receivables, employee advances, deposits, and other deferred costs. At December 31, ~~2012~~2013, Other current assets and Other receivables consisted primarily of grants receivable, payroll withholding taxes receivables, vendor receivables, employee advances, and other deferred costs.

3. Property and Equipment

The composition of Property and equipment is as follows:

	2013			2012
	2014			2013
Land	$	3,554		$	3,554
Buildings and improvements	26,~~219~~353			2926,~~739~~219
Leasehold improvements	6471,~~506~~087			6164,~~934~~506
Computer software	4650,~~850~~376			4446,~~659~~850
Equipment	~~171~~183,~~259~~897			~~161~~171,~~784~~259
Furniture and fixtures	2930,~~834~~951			2829,~~382~~834
Total original cost	~~342~~366,~~222~~218			~~330~~342,~~052~~222
Less: Accumulated depreciation and amortization	(~~261~~282,635		)	(~~241~~261,~~586~~635		)
Net, excluding construction in progress	8083,~~587~~583			8880,~~466~~587
Construction in progress	93,~~075~~771			39,~~126~~075
Property and equipment, net	$	8987,~~662~~354		$	9189,~~592~~662

Depreciation and amortization of ~~Property~~property and equipment was $3436,~~578~~222, $3534,~~997~~578, and $3835,~~902~~997 for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively.

We recorded net ~~(gain)~~losses ~~loss~~of on$427, ~~disposal~~gains of ~~Property~~$182, and ~~equipment~~gains of $~~(182), $(~~149), related to disposals of Property and ~~$29~~equipment for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively. During the years ended December 31, ~~2013~~2014 and ~~2011~~2013, the Company also recorded impairment charges of $1,171 and $212, respectively, related to certain property and equipment. No

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

~~recorded impairment charges of $212 and $605, respectively, related to certain property and equipment. No~~ such charges were recorded during the year ended December 31, 2012. These amounts are included in Impairment and loss on disposal of assets on our Consolidated Statements of Comprehensive Loss.

Capitalized computer software costs are comprised of internal-use software acquired direct from vendors. Amortization of computer software amounted to $5,~~957~~792, $65,~~092~~957, and $56,~~010~~092 for the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively. Unamortized computer software costs were $1614,~~671~~839, $1916,~~822~~671, and $2019,~~902~~822 at December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively.

Included in Property and equipment are the following assets under capital leases:

	2013			2012
	2014			2013
Buildings and improvements	$	51,~~388~~009		$	45,~~859~~388
Leasehold improvements	2,~~263~~044			2,~~189~~263
Computer software	24,~~468~~426			2,~~552~~468
Equipment	1519,~~149~~766			1615,~~151~~149
	25,268			25,751
	27,245			25,268
Less: Accumulated amortization	(20,~~046~~671		)	(1920,~~884~~046		)
	$	56,~~222~~574		$	5,~~867~~222

4. Goodwill and Other Intangible Assets

The total consolidated Goodwill balance is recorded in the Americas reporting segment. The Goodwill balance related to the EMEA reporting segment was fully impaired in 2009. The change in the carrying amount of Goodwill during ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012 is as follows:

	2013			2012			2011
	2014			2013			2012
Balances at January 1
Goodwill	$	261,~~761~~750		$	261,~~751~~761		$	261,~~752~~751
Accumulated impairment losses	(144,041		)	(144,041		)	(144,041		)
	117,720			117,710			117,711
	117,709			117,720			117,710
Currency translation adjustments	(111		)	10(11		)	(110		)
Balances at December 31
Goodwill	261,~~750~~749			261,~~761~~750			261,~~751~~761
Accumulated impairment losses	(144,041		)	(144,041		)	(144,041		)
	$	117,~~709~~708		$	117,~~720~~709		$	117,~~710~~720

6867

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

	2013
	GrossIntangibles		AccumulatedAmortizationand ImpairmentCharges			Net Intangibles
Customer relationships	$	89,686	$	(89,159	)	$	527
Trademark and trade name (indefinite lived)	40,200		(4,180		)	36,020
	$	129,886	$	(93,339	)	$	36,547

The following tables present our Other intangible assets as of December 31, 2014 and 2013:

	2012
	2014
	GrossIntangibles		AccumulatedAmortizationand ImpairmentCharges			~~Net Intangibles~~CurrencyTranslationAdjustment			Net Intangibles
Customer relationships	$	8990,~~686~~643	$	(8289,~~776~~751	)	$	~~6,910~~(1	)	$	891
Trademark and trade name (indefinite lived)	40,200		(4,180		)	36,020
Trademark and trade name (indefinite-lived)	40,200		(4,176		)	—			36,024
	$	~~129~~130,~~886~~843	$	(8693,~~956~~927	)	$	~~42,930~~(1	)	$	36,915

We amortize intangible assets with definite lives over their estimated useful lives, using the straight-line method. Amortization of intangible assets for the years ended December 31, 2013, 2012, and 2011 was $6,383, $7,035, and $13,272, respectively. Our estimated future amortization expense is as follows:



	2013
	Gross Intangibles		Accumulated Amortization and Impairment Charges			Currency Translation Adjustment		Net Intangibles
Customer relationships	$	89,686	$	(89,163	)	$	—	$	523
Trademark and trade name (indefinite-lived)	40,200		(4,176		)	—		36,024
	$	129,886	$	(93,339	)	$	—	$	36,547

Years Ending
2014	$	527
2015	—
2016	—
2017	—
2018	—

We amortize intangible assets with definite lives over their estimated useful lives, using the straight-line method. Amortization of intangible assets for the years ended December 31, 2014, 2013, and 2012 was $589, $6,383, and $7,035, respectively. Our estimated future amortization expense is as follows:

No impairment charges were recorded related to Goodwill or Other intangible assets for the years ended December 31, 2013, 2012, or 2011. See Note 16 for a discussion of the valuation techniques and inputs used to determine the fair value of these assets.



Years Ending
2015	$	274
2016	274
2017	274
2018	69
2019	—

No impairment charges were recorded related to Goodwill or Other intangible assets for the years ended December 31, 2014, 2013, or 2012. See Note 16 for a discussion of the valuation techniques and inputs used to determine the fair value of these assets.

We cannot predict the occurrence of certain events that might adversely affect the carrying value of Goodwill and Other intangible assets. Deterioration in global economic conditions and/or changes in assumptions or circumstances could result in impairment charges in Goodwill or other indefinite-lived intangibles in future periods in which the change occurs.

6968

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

5. Accrued Liabilities and Other

The composition of Accrued liabilities and other is as follows:

	2013		2012
	2014		2013
Accrued expenses	$	2324,~~236~~608	$	2423,~~691~~236
Accrued interest	21,~~323~~455		21,~~370~~323
Derivatives	11,787		6,014
Deferred revenues	12,577		7,420
Deferred revenues	7,420		7,957
Derivatives	8,685		11,787
Accrued value-added tax	67,~~981~~077		6,~~559~~981
Book overdrafts	32,~~525~~968		13,~~586~~525
Restructuring — current	2,~~804~~946		72,~~179~~804
Deferred income taxes	2,340		4,545
Sales and use tax liability	1,856		1,924
Sales and use tax liability	1,924		2,678
Deferred income taxes	997		2,340
Software license liabilities	~~616~~553		~~593~~616
Other	31,~~279~~991		23,~~788~~279
	$	85,~~235~~713	$	85,~~960~~235

At December 31, ~~2013~~2014, Other consisted primarily of deferred rent, and certain foreign government tax-related liabilities~~, and other deferred items~~. At December 31, ~~2012~~2013, Other consisted primarily of deferred rent, ~~and~~ certain foreign government tax-related liabilities, and other deferred items.

6. Other Noncurrent Liabilities

The composition of Other noncurrent liabilities is as follows:

	2013		2012
	2014		2013
Unrecognized tax benefits	$	2721,~~435~~423	$	2827,~~756~~435
Pension liability	56,~~988~~728		45,~~779~~988
Derivatives	4,061		8,922
Asset retirement obligation	4,150		3,584
Asset retirement obligation	3,584		3,574
Deferred revenues	3,509		3,253
Deferred revenues	3,253		3,484
Deferred rent — noncurrent	2,696		2,085
Deferred rent — noncurrent	2,085		2,577
Derivatives	1,680		4,061
Restructuring — noncurrent	~~1,724~~534		21,~~464~~724
Software license liabilities	594		156
Deferred grant income	331		485
Deferred grant income	485		1,564
Deferred lease premiums	168		306
Deferred lease premiums	306		427
Software license liabilities	41		594
Other	1,~~687~~394		21,~~019~~687
	$	5142,~~202~~654	$	5851,~~722~~202

At December 31, ~~2013~~2014 and ~~2012~~2013, Other consisted primarily of unclaimed property and client retainers.

7069

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

7. Restructuring and Exit Activities

We evaluate and assess our worldwide operations in an effort to rationalize facility and labor costs, further streamline our operations in order to align resources to support growth, and appropriately shift the geographic mix of Company resources. Total costs relating to restructuring activities initiated in ~~2013~~2014 were $1217,~~462~~660. For activities initiated in ~~2013~~2014, the remaining accrual as of December 31, ~~2013~~2014 of $~~874~~593 related to severance is expected to be paid during ~~2014~~2015, and the remaining accrual for facility exit costs of $~~706~~497 is expected to be paid in ~~2014~~2015 ~~through 2017~~ as the related leases expire. Total costs relating to restructuring activities initiated in 2013 and prior years were $2,747. For restructuring activities initiated in ~~2012~~2013 and prior years, the remaining accrual for severance-related activities of $~~508~~673 is expected to be paid during ~~2014~~2015, and the remaining accrual for facility exit costs of $21,~~125~~717 is expected to be paid in ~~2014~~2015 through ~~2017~~2018 as the related leases expire.

Restructuring expense recorded in the years ended December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012 were $1420,~~241~~407, $1514,~~693~~241, and $2015,~~048~~693, respectively.

	Severance			Facility Exit and Other			Total
December 31, 2012	$	—		$	—		$	—
Costs accrued (offset was to expense)	9,373			1,439			10,812
Cash payments	(8,673		)	(735		)	(9,408		)
Foreign exchange and other	174			2			176
December 31, 2013	$	874		$	706		$	1,580
Current portion of restructuring included in Accrued liabilities and other	$	874		$	327		$	1,201
Long-term portion of restructuring included in Other noncurrent liabilities	$	—		$	379		$	379
Activity not reflected within the restructuring liability:
Costs expensed	$	1,650		$	—		$	1,650
Cash payments	$	(1,630	)	$	—		$	(1,630	)

The liability for Restructuring and exit activity initiated in 2014 consisted of the following:

Restructuring expense during the year ended December 31, 2013 for activities initiated in 2013 was $6,620 for EMEA and $5,842 for the Americas.



	Severance			Facility Exit and Other			Total
December 31, 2013	$	—		$	—		$	—
Costs accrued (offset was to expense)	15,664			1,834			17,498
Cash payments	(14,561		)	(1,213		)	(15,774		)
Foreign exchange and other	(510		)	(124		)	(634		)
December 31, 2014	$	593		$	497		$	1,090

Current portion of restructuring included in Accrued liabilities and other	$	593		$	497		$	1,090
Long-term portion of restructuring included in Other noncurrent liabilities	$	—		$	—		$	—

Activity not reflected within the restructuring liability:
Costs expensed	$	142		$	20		$	162
Foreign exchange and other	$	3		$	1		$	4
Cash payments	$	(145	)	$	(21	)	$	(166	)

71Restructuring expense during the year ended December 31, 2014 for activities initiated in 2014 was $14,213 for EMEA and $3,447 for the Americas.

Table of Contents

SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

The liability for Restructuring and exit activity initiated in 2013 and prior years consisted of the following:

	Severance			Facility Exit and Other			Total
December 31, 2012	$	5,789		$	3,626		$	9,415
December 31, 2013	$	1,293		$	3,235		$	4,528
Costs accrued (offset was to expense)	~~177~~1,482			~~1,304~~879			12,~~481~~361
Cash payments	(51,~~226~~987		)	(2,~~498~~255		)	(74,~~724~~242		)
Foreign exchange and other	(~~232~~115		)	(~~307~~142		)	(~~539~~257		)
December 31, 2013	$	508		$	2,125		$	2,633
December 31, 2014	$	673		$	1,717		$	2,390
Current portion of restructuring included in Accrued liabilities and other	$	~~508~~673		$	~~780~~1,183		$	1,~~288~~856
Long-term portion of restructuring included in Other noncurrent liabilities	$	—		$	~~1,345~~534		$	~~1,345~~534
Activity not reflected within the restructuring liability:
Costs expensed	$	5386		$	—		$	5386
Cash payments	$	(530	)	$	—		$	(530	)

Restructuring expense during the year ended December 31, ~~2013~~2014 for activities initiated in ~~2012~~2013 and prior years was $~~634~~1,501 for EMEA and $~~852~~1,246 for the Americas. Cumulative restructuring costs related to such activities are $1415,~~202~~209 as of December 31, ~~2013~~2014, of which $108,~~357~~121 relates to EMEA and $37,~~845~~088 relates to the Americas. No significant additional costs are expected to be incurred.

In January 2007, we approved a plan (“Plan”) to restructure certain operations during 2007 related to the acquisition of Legacy SITEL (which refers to SITEL Corporation, a Minnesota corporation, prior to its acquisition by SITEL Worldwide on January 30, 2007)8. ~~The~~Long-Term Plan included downsizing space in certain customer care centers and eliminating certain administrative and operational positions. Restructuring expense during the years ended December 31, 2013, 2012, and 2011 related to the Plan was $293, $0, and $119, respectively. Cash payments during the year ended December 31, 2013 related to the Plan were $100. The remaining accrual for all restructuring and exit activities related to the Plan was $315 and $228 at December 31, 2013 and December 31, 2012, respectively, and is recorded in Accrued liabilities and other in the accompanying Consolidated Balance Sheets.Debt

72The composition of Long-term debt is as follows:



	2014		2013
Senior Notes	$	296,018	$	295,073
Senior Secured Notes	195,458		194,045
Senior Secured Credit Facility:
Revolvers:
U.S. revolver	31,700		18,000
Canadian revolver	—		—
Term Loans:
U.S. dollar term loan	177,973		177,973
Euro term loan	26,657		30,191
British pound sterling term loan	18,210		19,332
Total debt	746,016		734,614
Less: Debt maturing within one year	—		—
Total Long-term debt	$	746,016	$	734,614

Senior Notes

On March 18, 2010, SITEL, LLC and SITEL Finance Corp. (together with SITEL, LLC, the "Issuers") issued in a private placement, 11.5% Senior Notes due 2018 having an aggregate principal amount of $300,000. There is an original issue discount associated with the Senior Notes of $7,638, and the Company deferred debt issuance costs relating to the Senior Notes of $8,203, both of which are amortized over the term of the Senior Notes. The Senior Notes are general unsecured obligations

Table of Contents

SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

8of the Company and are senior in right of payment to all existing and future indebtedness, if any, that is by its terms expressly subordinated to the Senior Notes. ~~Long~~The Senior Notes are guaranteed by the Company’s domestic subsidiaries and will mature on April 1, 2018. Interest accrues on the Senior Notes at a rate of 11.5% annually, and is payable semi-~~Term~~annually ~~Debt~~in arrears on April 1 and October 1.

The composition of Long-term debt is as follows:

	2013		2012
Senior Notes	$	295,073	$	294,234
Senior Secured Notes	194,045		192,790
Senior Secured Credit Facility:
Revolvers:
U.S. revolver	18,000		19,400
Canadian revolver	—		—
Term Loans:
U.S. dollar term loan	177,973		177,973
Euro term loan	30,191		28,984
British pound sterling term loan	19,332		18,954
Total debt	734,614		732,335
Less: Debt maturing within one year	—		—
Total Long-term debt	$	734,614	$	732,335

Senior Notes

On March 18, 2010, the Issuers issued in a private placement, 11.5% Senior Notes due 2018 having an aggregate principal amount of $300,000. There is an original issue discount associated with the Senior Notes of $7,638, and the Company deferred debt issuance costs relating to the Senior Notes of $8,203, both of which are amortized over the term of the Senior Notes. The Senior Notes are general unsecured obligations of the Company and are senior in right of payment to all existing and future indebtedness, if any, that is by its terms expressly subordinated to the Senior Notes. The Senior Notes are guaranteed by the Company’s domestic subsidiaries and will mature on April 1, 2018. Interest accrues on the Senior Notes at a rate of 11.5% annually, and is payable semi-annually in arrears on April 1 and October 1.

Senior Secured Notes

On April 20, 2012, the Issuers issued in a private placement, 11.0% Senior Secured Notes due 2017 having an aggregate principal amount of $200,000 with an original issue discount of $8,000. The Company deferred debt issuance costs relating to the Senior Secured Notes of $4,675. The original issue discount and deferred debt issuance costs are being amortized over the term of the Senior Secured Notes. The Senior Secured Notes are guaranteed by the Company and its domestic subsidiaries, are secured on an equal and ratable basis with all obligations of the Issuers and the guarantors under the existing Senior Secured Credit Facility, and will mature on April 1, 2017. Interest accrues on the Senior Secured Notes at a rate of 11.0% annually and is payable semi-annually in arrears on February 1 and August 1. Proceeds from the Senior Secured Notes were used to pay down approximately $128,900 of the Term Loans and 100% of the outstanding balance on the Revolvers at that time.

Both the Senior Notes and the Senior Secured Notes contain customary covenants and restrictions on the activities of SITEL, LLC, Sitel Finance Corp. and SITEL, LLC's restricted subsidiaries, including, but not limited to, the incurrence of additional indebtedness; dividends or distributions in respect of capital stock or certain other restricted payments or investments; entering into agreements that restrict distributions from restricted subsidiaries; the sale or disposal of assets, including capital stock of restricted subsidiaries; transactions with affiliates; the incurrence of liens; and mergers, consolidations or the sale of substantially all of SITEL, LLC's assets.

Senior Secured Credit Facility

The Company's Senior Secured Credit Facility initially provided for available borrowings in an aggregate amount of $760,000. Components of the Senior Secured Credit Facility ~~are~~were (1) the $675,000 aggregate principal amount ~~Term~~term ~~Loans~~loans, including a $550,000 U.S. dollar loan, a €51,447 Euro loan, and a £30,000 British pound sterling loan (collectively, the "Term Loans"), and (2) the $85,000 aggregate principal amount revolvers, consisting of a $75,000 U.S. revolver and a $10,000 Canadian revolver (made available in Canadian dollars) (collectively, the "Revolvers"). In January 2013, the non-extended portion of our U.S. revolver expired, reducing the borrowing capacity under the Revolvers to $61,250.

73All Term Loans mature on January 30, 2017 and amortize in equal quarterly installments in an aggregate annual amount equal to 0.25% of the original principal amount with the balance payable at maturity. Payments on the principal amount have exceeded the cumulative amortization schedule, thus no amount is due until maturity. Interest on the U.S. term loan is based, at our option, on LIBOR plus the applicable margin of 7.25%, or the higher of the federal funds rate plus 0.50% or the prime rate plus the applicable margin of 6.25%. Interest on the Euro term loan is based on EURIBOR plus the applicable margin of 7.25%. Interest on the British pound sterling term loan is based on LIBOR plus the applicable margin of 7.25%. We have an interest rate swap agreement for the notional amount of $175,000 against our Term Loans that is based on a rate of 2.315% versus three month LIBOR. In November 2011, we amended our interest rate swap agreement to, among other things, reduce the notional amount from $350,000 to $175,000 as of March 31, 2012. For the years ended December 31, 2014, 2013, and 2012, including the impact of our interest rate swap, the weighted average interest rate on the Term Loans was 8.81%, 8.61%, and 8.57%, respectively.

The Revolvers mature on January 30, 2016. A commitment fee is payable quarterly at 1.00% per annum of the undrawn portion of the Revolvers. Interest on the U.S. revolver is based, at our option, on LIBOR plus the applicable margin of 7.25%, or the higher of the federal funds rate plus 0.50% or the prime rate plus the applicable margin of 6.25%. Interest on the Canadian revolver is based, at our option, on the Canadian banker's acceptance rate (the "BA Rate") plus the applicable margin of 7.25%, or the higher of the one month BA Rate plus 0.75% or the Canadian prime rate plus the applicable margin of 6.25%. For the years ended December 31, 2014, 2013, and 2012, the weighted average rate on the Revolvers was 8.55%, 8.43%, and 8.06%, respectively. At December 31, 2014, and December 31, 2013, we had $27,568 and $42,242 available under the Revolvers after utilizing $1,982 and $1,008, respectively, for letters of credit outstanding. In January 2013, a portion of our U.S. revolver expired, reducing the borrowing capacity under the Revolvers to $61,250 from $85,000.

Table of Contents

SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

~~aggregate~~We ~~principal~~paid ~~amount~~total ~~Revolvers.~~debt Inissuance ~~January~~costs of $719, $17, and $6,892 during 2014, 2013, and 2012, respectively, relating to the ~~non-extended~~Senior ~~portion~~Secured ofCredit ~~our~~Facility, ~~U.S.~~Senior ~~revolver~~Secured ~~expired~~Notes, ~~reducing~~and ~~the~~Senior ~~borrowing~~Notes. ~~capacity~~The ~~under~~unamortized ~~the~~balance ~~Revolvers~~of todebt issuance costs is reflected in Other noncurrent assets and was $617,~~250~~723, $9,966 and $12,736 at December 31, 2014, 2013 and 2012, respectively.

~~During~~We ~~2012,~~are required to prepay certain amounts under the Senior Secured Credit Facility ~~was~~should ~~amended~~we ~~to,~~initiate ~~among~~specified ~~other things~~transactions, ~~allow~~including ~~for~~ the issuance ~~and~~of equity, sale of ~~the~~certain ~~Senior~~assets, ~~Secured~~or ~~Notes;~~additional todebt ~~allow~~issuance. ~~for~~As ~~the~~a ~~flexibility~~result toof ~~prepay~~voluntary ~~the~~repayments ~~amounts~~on ~~outstanding under~~ the ~~non-extended~~ Term Loans ~~and~~made toduring ~~refinance~~2008, ~~extend~~we orwill ~~replace~~not ~~the~~incur ~~Revolvers;~~any ~~and~~quarterly toprincipal ~~modify~~installments ~~our~~before ~~leverage~~maturity ~~covenant~~in ~~and~~January ~~interest~~2017. ~~coverage~~During ~~covenant~~2012, ~~ratios.~~a Asportion ~~part~~of the proceeds received from the issuance of ~~this~~the ~~amendment,~~Senior weSecured ~~also~~Notes ~~modified~~were used to prepay the ~~currency~~outstanding ~~mix~~balances on the ~~revolver~~non-extended ~~commitments~~Term toLoans, ~~consist~~which ~~only~~were ofdue Uin January 2014.S. ~~Dollar~~Borrowings ~~and~~under ~~Canadian~~the ~~Dollar~~Senior ~~amounts~~Secured ~~and~~Credit ~~terminated~~Facility ~~the~~are ~~British~~collateralized ~~Pound~~by ~~Sterling~~interests ~~revolver~~granted ~~commitment.~~on ~~Certain~~a ~~remaining~~substantial ~~tranches~~portion of our ~~Revolvers~~worldwide ~~were~~assets ~~also~~and ~~extended~~are inguaranteed ~~exchange~~by ~~for~~certain ~~paying~~subsidiary ~~an increased interest rate~~guarantors.

All Term Loans mature on January 30, 2017 and amortize in equal quarterly installments in an aggregate annual amount equal to 0.25% of the original principal amount with the balance payable at maturity. Payments on the principal amount have exceeded the cumulative amortization schedule, thus no amount is due until maturity. Interest on the U.S. term loan is based, at our option, on LIBOR plus the applicable margin of 6.75%, or the higher of the federal funds rate plus 0.50% or the prime rate plus the applicable margin of 5.75%. Interest on the Euro term loan is based on EURIBOR plus the applicable margin of 6.75%. Interest on the British pound sterling term loan is based on LIBOR plus the applicable margin of 6.75%. We have an interest rate swap agreement for the notional amount of $175,000 against our Term Loans that is based on a rate of 2.315% versus three month LIBOR. In November 2011, we amended our interest rate swap agreement to reduce the rate from 4.910% to 2.315%, effective September 30, 2011, and to reduce the notional amount from $350,000 to $175,000 as of March 31, 2012. For the year ended December 31, 2013, including the impact of our interest rate swap, the weighted average interest rate on the Term Loans was 8.61%.

The Revolvers mature on January 30, 2016. A commitment fee is payable quarterly at 0.50% per annum of the undrawn portion of the Revolvers. Interest on the U.S. revolver is based, at our option, on LIBOR plus the applicable margin of 6.75%, or the higher of the federal funds rate plus 0.50% or the prime rate plus the applicable margin of 5.75%. Interest on the Canadian revolver is based, at our option, on the Canadian banker's acceptance rate (the "BA Rate") plus the applicable margin of 6.75%, or the higher of the one month BA Rate plus 0.75% or the Canadian prime rate plus the applicable margin of 5.75%. For the year ended December 31, 2013, the weighted average rate on the Revolvers was 8.43%. At December 31, 2013, and December 31, 2012, we had $42,242 and $64,456 available under the Revolvers after utilizing $1,008 and $1,144, respectively, for letters of credit outstanding. In January 2013, a portion of our U.S. revolver expired, reducing the borrowing capacity under the Revolvers to $61,250 from $85,000.

We paid debt issuance costs of $17, $6,892, and $1,896 during 2013, 2012, and 2011, respectively, relating to the Senior Secured Credit Facility, Senior Secured Notes, and Senior Notes. The unamortized balance of debt issuance costs is reflected in Other noncurrent assets and was $9,966, $12,736 and $9,004 at December 31, 2013, 2012 and 2011, respectively.

We are required to prepay certain amounts under the Senior Secured Credit Facility should we initiate specified transactions, including the issuance of equity, sale of certain assets, or additional debt issuance. As a result of voluntary repayments on the Term Loans made during 2008, we will not incur any quarterly principal installments before maturity in January 2017. During the second quarter of 2012, a portion of the proceeds received from the issuance of the Senior Secured Notes were used to prepay the outstanding balances on the non-extended Term Loans, which were due in January 2014. Borrowings under the Senior Secured Credit Facility are collateralized by interests granted on a substantial portion of our worldwide assets and are guaranteed by certain subsidiary guarantors.

Senior Secured Leverage Ratio. The senior secured leverage ratio is a maximum ratio of our total funded debt that is secured by a lien on any assets or equity interests of the Company or any of our subsidiaries to our Adjusted EBITDA (as defined in our Senior Secured Credit Facility) for each period of four consecutive quarters during the term of the Senior Secured Credit Facility. ~~This ratio was amended by the Sixth Amendment subsequent to year end to increase the covenant threshold.~~

74Minimum Interest Coverage Ratio. The minimum interest coverage ratio is the ratio of Adjusted EBITDA to cash interest expense (net of interest income) for each period of four consecutive quarters during the term of the Senior Secured Credit Facility.

Maximum Capital Expenditures. The maximum capital expenditures covenant in our Senior Secured Credit Facility limits our annual capital spending, cash restructuring in excess of $10,000, and our acquisition expenses in excess of $10,000 to a pre-established limit each year and allows for carryover of unused spend.

Future maturities of the Company’s outstanding Long-term debt as of December 31, 2014 are summarized as follows:



2015	$	—
2016	31,700
2017	422,840
2018	300,000
2019	—
2020 and thereafter	—
Total debt payments	754,540
Less amount representing unamortized debt discount	(8,524		)
Total debt balance at December 31, 2014	$	746,016

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

Minimum Interest Coverage Ratio. The minimum interest coverage ratio is the ratio of Adjusted EBITDA to cash interest expense (net of interest income) for each period of four consecutive quarters during the term of the Senior Secured Credit Facility. This ratio was amended by the Sixth Amendment subsequent to year end to decrease the covenant threshold.

Maximum Capital Expenditures. The maximum capital expenditures covenant in our Senior Secured Credit Facility limits our annual capital spending, cash restructuring in excess of $10,000, and our acquisition expenses in excess of $10,000 to a pre-established limit each year and allows for carryover of unused spend.

2014	$	—
2015	—
2016	18,000
2017	427,496
2018	300,000
2019 and thereafter	—
Total debt payments	745,496
Less amount representing unamortized debt discount	(10,882		)
Total debt balance at December 31, 2013	$	734,614

9. Capital Stock

~~Authorized~~Redeemable Preferred Stock

20.00 million redeemable preferred shares, par value $0.01 per share issuable in series. ~~The~~To date, we have authorized the issuance of three series of preferred shares—Series B, Series C, and Series D. Our Board of Directors determines the voting rights, dividend policy, and conversion rights of each series of these preferred shares. The majority of each series of these preferred shares are held by Onex and other related parties. Each series has a mandatory redemption date of July 2, 2018 for cash and the right to be converted, at any time through the redemption date at the option of the holder, into the Company's Class A Voting Common Stock (initially at $4.85 per share for Series B, $1.50 per share for Series C, and $0.77 per share for Series D), in settlement of these obligations (including all accumulated and unpaid dividends through the redemption date). The net value of the preferred shares is recorded as Redeemable preferred stock (outside of permanent equity).

•The OnSeries ~~December 10~~B, ~~2008~~C, ~~the~~and ~~Company~~D ~~authorized the issuance of 125,000 shares of Series C~~ Preferred Stock. Atcontain ~~December~~an ~~31,~~optional ~~2013~~cash ~~and~~redemption ~~2012,~~call ~~the~~option ~~number~~that ofis ~~Series~~only Cexercisable ~~Preferred~~by ~~shares~~the ~~issued and outstanding was 28,881~~Company. ~~These~~Since ~~preferred~~Onex ~~shares,~~controls the majority ~~held~~of bythe ~~Onex~~Board ~~and~~of ~~other related parties~~Directors, ~~have~~accounting aguidance ~~mandatory~~requires ~~redemption~~that ~~date~~we ofaccount ~~July 2, 2018~~ for ~~cash,~~this ~~and~~as ~~also~~an ~~have~~in-substance ~~the~~put ~~right to be converted~~option, atsince ~~any~~it ~~time~~assumes ~~through~~that ~~the~~Onex ~~redemption~~could ~~date~~force at the ~~option~~execution of the ~~holder,~~call ~~into the Company’s Class A Voting Common Stock (initially at $1~~option.50 ~~per~~The ~~share),~~ in-substance ~~settlement~~put ofoption ~~the~~meets ~~Company’s obligations (including all accumulated and unpaid dividends through~~ the ~~redemption~~qualifications ~~date.~~of ~~The~~a ~~liquidation value~~derivative, ~~including~~requiring ~~accrued~~it ~~dividends~~to ~~payable,~~be atseparated ~~December~~from ~~31,~~the ~~2013,~~host ~~2012,~~instrument and ~~2011~~recorded ofas ~~$59,056,~~a ~~$50,191,~~liability ~~and~~at ~~$44,641,~~fair ~~respectively~~value, iswith ~~net~~subsequent ofchanges ~~deferred~~in ~~financing costs of $174, $212, and $269, respectively, and~~ the ~~Beneficial~~fair ~~Conversion Feature ("BCF") of $1,793, $2,192, and $3,720, respectively. The net~~ value is recorded asto ~~redeemable securities (outside of permanent equity) on~~ the ~~accompanying~~income ~~Consolidated Balance Sheets~~statement.We ~~The~~have ~~Series~~determined Cthat ~~Preferred Stock ranks senior to each other class of~~ the ~~Company’s~~value ~~stock~~is inimmaterial ~~liquidation~~as ~~rights. Holders~~ of ~~the~~December 31, ~~Series~~2014, C2013, ~~Preferred~~and ~~Stock~~2012, ~~are~~thus ~~entitled~~no adjustment to ~~receive cumulative dividends at~~ the ~~rate~~carrying ofvalue ~~16.0%~~ of the ~~liquidation~~stock ~~preference~~has ~~per~~been ~~share~~recorded ~~per annum, which accrue from inception and are payable at the mandatory redemption date or upon declaration by the Board of Directors. Dividends accrued~~ in ~~2013,~~relation ~~2012 and 2011 amounted~~ to ~~$8,429,~~the ~~$7,264, and $6,717, respectively, and are recorded to Additional paid-~~in-substance ~~capital~~put option.

~~• When the conversion option of the~~ Series CD Preferred Stock into Class A Voting Common Stock at $1.50 per share is less than the fair value of the common stock on the issuance dates, there is a BCF associated with this preferred stock. The value of the BCF has been recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value to additional paid-in capital. For the Series C Preferred Stock owned by certain other related parties, this discount is then being accreted from the date of issuance to the stated redemption date of July 2, 2018. For the Series C Preferred Stock owned by Onex, the BCF is immediately amortized to temporary equity at the date of issuance due to the existence of an in-substance put on the stock (see below). The BCF discount at December 31, 2013, 2012, and 2011 is $1,793, $2,192, and $3,720, respectively. The Company recognized $398, $1,528, and $605 of accretion within equity related to the BCF during 2013, 2012 and 2011, respectively.

On May 8, 2014, we authorized the issuance of 125,000 shares of 16.0% Cumulative Participating Preferred Stock, Series D (the "Series D Preferred Stock"). On May 8, 2014, we executed a subscription agreement with Onex Clientlogic Holdings LLC to issue up to 75,000 shares of the Series D Preferred Stock at a rate of $1,000 per share. Pursuant to this offer, we received net proceeds of $74,820 from Onex Clientlogic Holdings LLC and other existing shareholders during the year ended December 31, 2014, which the Company used to fund sales growth, invest in our clients, and execute ongoing cost initiatives. The Series D Preferred Stock ranks senior to each other class of the Company's stock in liquidation rights. Holders of the Series D Preferred Stock are entitled to receive cumulative dividends at the rate of 16.0% of the liquidation preference per share per annum, which accrue from inception and are payable at the mandatory redemption date or upon declaration by our Board of Directors. Accrued dividends are recorded to Additional paid-in capital.

At December 31, 2014, the number of shares of Series D Preferred Stock issued and outstanding was 75,000. During the year ended December 31, 2014, we incurred fees associated with the issuance of the Series D Preferred Stock totaling $180 related to a fairness opinion issued by a third party. These fees were deferred and recorded outside of permanent equity as a reduction of the related proceeds, to be accreted to Additional paid-in capital from the date of issuance to the stated redemption date. The liquidation value of the Series D Preferred Stock, including accrued dividends payable, at December 31, 2014 of $81,869 is net of deferred financing costs of $154. Dividends accrued in 2014 amounted to $7,024 and are recorded to Additional paid-in capital.

Series C Preferred Stock

On December 10, 2008, we authorized the issuance of 125,000 shares of Series C Preferred Stock. At December 31, 2014 and 2013, the number of Series C Preferred shares issued and outstanding was 28,881. The liquidation value, including accrued dividends payable, at December 31, 2014, 2013, and 2012 of $69,273, $59,056, and $50,191, respectively, is net of deferred financing costs of $135, $174, and $212, respectively, and the Beneficial Conversion Feature ("BCF") of $1,395, $1,793, and $2,192, respectively. The Series C Preferred Stock ranks senior to the Series B Preferred Stock and to each class of common stock in liquidation rights. Holders of the Series C Preferred Stock are entitled to receive cumulative dividends at the rate of 16.0% of the liquidation preference per share per annum, which accrue from inception and are payable at the mandatory redemption date or upon declaration by the Board of Directors. Dividends accrued in 2014, 2013 and 2012 amounted to $9,779, $8,429, and $7,264, respectively, and are recorded to Additional paid-in capital.

When the conversion option of the Series C Preferred Stock into Class A Voting Common Stock at $1.50 per share is less than the fair value of the common stock on the issuance dates, there is a BCF associated with this preferred stock. The value of the BCF has been recognized separately at issuance by allocating a portion of the proceeds equal to the intrinsic value to additional paid-in capital. For the Series C Preferred Stock owned by certain other related parties, this discount is then being accreted from the date of issuance to the stated redemption date of July 2, 2018. For the Series C Preferred Stock owned by

Table of Contents

SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

~~• On April 3~~Onex, ~~2008,~~ the ~~Company~~BCF ~~authorized the issuance of 125,000 shares of Series B Preferred Stock. At December 31, 2013 and 2012, the number of shares of Series B Preferred Stock issued and outstanding~~ was ~~39,947.~~immediately ~~These~~amortized ~~preferred shares, the majority held by Onex and other related parties, have a mandatory redemption date of July 2, 2018 for cash, and also have the right~~ to betemporary ~~converted,~~equity at ~~any time through~~ the ~~redemption~~ date ~~at the option~~ of ~~the~~issuance ~~holder,~~due ~~into~~to the ~~Company’s~~existence ~~Class~~of Aan ~~Voting Common Stock (initially at $4.85 per share),~~ in-substance ~~settlement~~put ofon the ~~Company’s~~stock ~~obligations~~ (~~including~~see ~~all accumulated and unpaid dividends through the redemption date~~below). The ~~liquidation~~BCF ~~value,~~discount ~~including accrued dividends payable,~~ at December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012 ofis $661,~~982~~395, $591,~~728~~793, and $642,~~292~~192, respectively,. isThe ~~net~~Company ofrecognized ~~deferred financing costs of~~ $~~265~~398, $~~324~~398, and $~~462~~1,528 ~~respectively. The net value is recorded as redeemable securities (outside~~ of ~~permanent~~accretion within equity) onrelated ~~the accompanying Consolidated Balance Sheets. The Series B Preferred Stock ranks senior~~ to ~~each class of common stock in liquidation rights. Holders of~~ the ~~Series~~BCF Bduring ~~Preferred Stock are entitled to receive cumulative dividends at the rate of 12.0% of the liquidation preference per share per annum~~2014, ~~which~~2013 ~~accrue from inception~~ and ~~are payable at the mandatory redemption date or upon declaration by the Board of Directors. Dividends accrued in 2013,~~ 2012, ~~and 2011 amounted to $7,196, $6,434, and $6,938,~~ respectively~~, and are recorded to Additional paid-in capital~~.

~~• The~~ Series B ~~and C~~ Preferred Stock contain an optional cash redemption call option that is only exercisable by the Company. Since Onex controls the majority of the Board of Directors, accounting guidance requires the Company to account for this as an in-substance put option, since it assumes that Onex could force the execution of the call option. The in-substance put option meets the qualifications of a derivative, requiring it to be separated from the host instrument and recorded as a liability at fair value, with subsequent changes in the fair value recorded to the income statement. The Company has determined that the value is immaterial as of December 31, 2013, 2012, and 2011, thus no adjustment to the carrying value of the stock has been recorded in relation to the in-substance put option.

~~205.00~~On ~~million Class~~April ~~A voting common shares~~3, ~~par value $0.01 per share~~2008, ~~entitled~~the toCompany ~~one~~authorized ~~vote~~the ~~per~~issuance ~~share~~of ~~and~~125,000 toshares ~~receive~~of ~~dividends~~Series asB ~~declared~~Preferred Stock. At December 31, ~~2013,~~2014 ~~2012,~~ and ~~2011~~2013, the number of ~~Class A~~shares ~~voting~~of ~~common~~Series ~~shares~~B Preferred Stock issued and outstanding was 4039,~~699,602,~~947. 33The liquidation value,~~547,331,~~ ~~and~~including 31accrued dividends payable,~~977,536.~~ Atat December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011,~~2012 ~~there~~of ~~were 38~~$75,~~234~~103,~~495,~~ 31$66,~~082~~982,~~224,~~ and 29$59,~~512~~728,~~429~~ ~~Class A voting common shares outstanding,~~ respectively, is net of ~~Class~~deferred Afinancing ~~treasury~~costs ~~shares~~ of 2$206,~~465,107.~~ ~~Also~~$265, ~~the~~and ~~Company~~$324, isrespectively. ~~required~~The toSeries atB ~~all~~Preferred ~~times~~Stock ~~reserve~~ranks ~~and~~senior ~~keep~~to ~~available~~each ~~out~~class of ~~its~~common ~~authorized~~stock ~~but~~in ~~unissued~~liquidation ~~shares~~rights. Holders of ~~Class A~~the ~~voting~~Series ~~common~~B ~~stock,~~Preferred ~~solely~~Stock ~~for~~are ~~the~~entitled ~~purpose~~to ofreceive ~~issuance~~cumulative ~~upon~~dividends at the ~~conversion~~rate of ~~the~~12.0% ~~Series~~of Bthe ~~and~~liquidation ~~Series~~preference Cper ~~Preferred~~share ~~Stock~~per annum, ~~such~~which ~~number~~accrue offrom ~~shares~~inception ofand ~~Class A~~are ~~voting~~payable ~~common~~at ~~stock~~the asmandatory ~~are~~redemption ~~issuable~~date or upon declaration by the ~~conversion~~Board of ~~all~~Directors. ~~outstanding~~Dividends ~~shares~~accrued ofin ~~Series~~2014, B2013, and ~~Series~~2012 Camounted ~~Preferred~~to ~~Stock~~$8,062, $7,196, and $6,434, respectively, and are recorded to Additional paid-in capital.

~~During~~Common 2013, 657,888 shares of Class A voting common stock were issued related to director compensation. During 2012, 1,606,295 Class A voting common shares were issued, primarily related to purchases by certain of the Company's executives. During 2011, 114,114 Class A voting common shares were issued, primarily related to director and executive compensation. Stock

205.00 million Class A voting common shares, par value $0.01 per share, entitled to one vote per share and to receive dividends as declared. At December 31, 2014, 2013, and 2012, the number of Class A voting common shares issued was 41,766,222, 40,699,602, and 33,547,331. At December 31, 2014, 2013, and 2012, there were 38,223,599, 38,234,495, and 31,082,224 Class A voting common shares outstanding, respectively, net of Class A treasury shares of 3,542,623, 2,465,107, and 2,465,107, respectively. Also, the Company is required to at all times reserve and keep available out of its authorized but unissued shares of Class A voting common stock, solely for the purpose of issuance upon the conversion of the Series B, C, and D Preferred Stock, such number of shares of Class A voting common stock as are issuable upon the conversion of all outstanding shares of Series B, C, and D Preferred Stock.

During 2014 and 2013, 274,120 and 657,888 Class A voting common shares were issued related to director compensation. During 2012, 1,606,295 Class A voting common shares were issued, primarily related to purchases by certain of the Company's executives.

20.00 million Class A nonvoting common shares, par value $0.01 per share. No Class A nonvoting common shares have been issued.

120.00 million Class B voting common shares, par value $0.01 per share, entitled to 25 votes per share and to receive dividends as declared, and convertible into the same number of shares of Class A voting common stock at any time. At December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, the number of Class B voting common shares issued and outstanding was 88,281,647.

8.50 million Class B nonvoting common shares, par value $0.01 per share. No Class B nonvoting common shares have been issued.

7.50 million Class C voting common shares authorized, par value $0.01 per share, entitled to one vote per share and to receive dividends as declared. At December 31, ~~2013~~2014 and ~~2012~~2013, 6,751,263 Class C voting common shares were issued and 23,990 were outstanding.

Stock Repurchase

On October 5, 2012, the Company entered into a stock repurchase agreement ("Repurchase Agreement") with JANA Piranha Master Fund, Ltd., JANA Nirvana Fund, L.P. and JANA Nirvana Master Fund, L.P. (collectively, "JANA"), whereby the Company acquired all of the outstanding Company common and preferred shares owned by JANA for a total cost of $1,900. The purchase included 6,727,273 shares of Class C common stock, 12,123 shares of Series B Preferred Stock, and 3,696 of Series C Preferred Stock.

76The common shares were acquired for $722 and were recorded as Treasury shares at cost. The preferred shares were acquired for $1,128. The difference between the $13,417 carrying value of the preferred shares and the $1,128 acquisition price was recorded to Additional paid-in-capital. In addition, $87 of deferred financing fees related to the preferred shares was written off during the year ended December 31, 2012.

Table of Contents

SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

$1,900. The purchase included 6,727,273 shares of Class C common stock, 12,123 shares of Series B Preferred Stock, and 3,696 of Series C Preferred Stock.

The common shares were acquired for $722 and were recorded as Treasury shares at cost. The preferred shares were acquired for $1,128. The difference between the $13,417 carrying value of the preferred shares and the $1,128 acquisition price was recorded to Additional paid-in-capital. In addition, $87 of deferred financing fees related to the preferred shares was written off during the year ended December 31, 2012.

Exchangeable Preferred Stock

Pursuant to a charter and related support agreement, as of December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, 1,713,321 shares of exchangeable preferred stock held in a subsidiary of the Company have the right to exchange their shares for Class A voting common shares, plus any dividends declared on the Class A voting common shares. These exchangeable preferred shares have no voting rights or other rights of redemption. If exchanged, the preferred shares will be exchanged for Class A voting common shares on a 1 to 1 basis. We have agreed to repurchase the exchangeable preferred shares at the underlying fair market value of the common stock for which they are exchangeable in the event that we are unable to issue the class A common stock upon conversion of the exchangeable preferred shares. None of these exchangeable preferred shares were converted into shares of Class A voting common shares during ~~2013~~2014, ~~2012~~2013, or ~~2011~~2012. The exchangeable preferred shares are recorded at $2,665 at December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012 in the accompanying Consolidated Balance Sheets.

Treasury Shares

~~The~~During 2014, the Company ~~purchased~~re-acquired ~~171~~1,~~338~~077,516 Class A common shares ~~for~~from ~~$305,~~a ~~the~~former ~~estimated~~executive, ~~fair~~and, ~~value~~in atconnection ~~the~~therewith, ~~time~~recognized ~~of purchase~~$2,376 ~~during~~of ~~2011~~treasury stock. No Class A common shares were purchased during 2013 or 2012. From March 2001 through December 31, ~~2013~~2014, the Company purchased a total of 910,~~192~~269,~~380~~896 treasury shares for $911,~~247~~623, which includes the aforementioned repurchase of Class C common shares from JANA. Currently, the Company does not have an authorized stock repurchase plan.

Stockholders’ Agreement

Pursuant to the Company’s Stockholders’ Agreement, as amended and restated, the Company has a contingent call option on all common shares of the Company held by any management stockholder (as defined). Upon termination of employment for any reason (other than retirement, death, or disability), the Company has the option to purchase the common shares held by the management stockholder at the then fair market value of such common shares. The Company has not elected to exercise this contingent call option since inception of the Stockholders’ Agreement.

Stock-Based Compensation

The Company maintains several equity compensation plans, which are described below.

Stock Option Plan

The Company’s 1998 Stock Option Plan (the "1998 Option Plan"), which is stockholder approved, permits the grant of stock options to directors, officers, and key employees. Option awards are generally granted with an exercise price not less than 100% of the fair value of the Company’s stock at the date of the grant, generally vest over a four-year period, and are generally exercisable for 10 years from the date of the grant. Upon the termination of the option holder’s employment with the Company, or upon a change in control, the Company has the option (but not the obligation) to purchase the original stock options from the option holder, or if the option had been exercised, the stock resulting from such exercise. The option purchase price to be paid by the Company, if such contingent call option is exercised, is the current fair market value of the Company’s Class A voting common shares less the applicable per share option price. For option shares, the purchase price is the current fair market value of the Company's Class A voting common shares. ~~An aggregate of 10,197,000 shares of the Company’s Class A common stock have been reserved for issuance under the 1998 Option Plan.~~

Since January 2005, following the decision of the Company to issue restricted stock and restricted stock units pursuant to individual employee restricted stock and restricted stock unit grant plans and agreements (the "Restricted Plans") described more fully below, the Company has not granted any stock options. All options granted under the 1998 Option Plan were vested as of December 31, 2008; thus, no compensation cost was recognized related to these previously granted stock options during ~~2013~~2014, ~~2012~~2013, or ~~2011~~2012. ~~Compensation~~There ~~cost~~were no related toincome ~~the~~tax ~~unvested~~benefits ~~portion~~recognized ~~of stock options is included~~ in ~~SG&A expenses in~~ the ~~accompanying~~ Consolidated Statements of Comprehensive Loss, and isno ~~determined~~realization ~~on a straight-line basis. The fair values~~ of ~~unvested stock options granted by~~ the ~~Company~~benefit ~~are~~of ~~determined~~tax ~~using~~deductions ~~the~~in ~~Black-Scholes~~excess ~~valuation~~of ~~model~~recognized ~~that~~tax ~~uses~~benefits ~~various~~from ~~assumptions. The risk-free interest rate is based on~~ the ~~U.S.~~exercise ~~Treasury~~of ~~yield~~stock ~~curve~~options atfor ~~the~~2014, ~~time~~2013, ofand ~~the grant~~2012. ~~The~~

7776

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

expected term of stock options granted represents the period of time that stock options granted are expected to be outstanding. The expected volatility is based on the S&P 500’s 100-day historical price volatility over a period of time commensurate with the expected life of the option grant. There were no related income tax benefits recognized in the Consolidated Statements of Comprehensive Loss, and no realization of the benefit of tax deductions in excess of recognized tax benefits from the exercise of stock options for 2013, 2012, and 2011.

A summary of nonqualified and incentive stock option activity under the 1998 Option Plan is presented below:

	Shares		WeightedAverageExercisePrice PerShare		~~WeightedAverageRemainingContractualTerm (in Years)~~	~~AggregateIntrinsicValue~~
Options outstanding at January 1, 2011	24,700		$	4.62
Options outstanding at January 1, 2012	21,200		$	3.44
Exercised	—		—
Forfeited	(6,200	)	3.45
Forfeited	(3,500	)	11.75
Options outstanding at December 31, 2012	15,000		3.43
Options outstanding at December 31, 2011	21,200		3.44
Forfeited	(10,000	)	4.00
Exercised	—		—
Options outstanding at December 31, 2013	5,000		2.30
Forfeited	(65,~~200~~000	)	32.4530
Options outstanding at December 31, 2012	15,000		3.43
Options outstanding at December 31, 2014	—		$	—
Exercised	—		—
Exercisable at December 31, 2014	—		$	—
Forfeited	(10,000	)	4.00
Options outstanding at December 31, 2013	5,000		$	2.30	0.34	$	—
Exercisable at December 31, 2013	5,000		$	2.30	0.34	$	—

~~Options~~No ~~outstanding~~options atwere ~~December 31~~granted, ~~2013~~exercised, ~~consist~~or ofvested ~~the~~during ~~following:~~2014, 2013, or 2012.

Exercise Price	OptionsOutstanding	WeightedAverageRemaining Contractual Term (in Years)	OptionsExercisable
$2.30	5,000	0.34	5,000
	5,000		5,000

No options were granted, exercised, or vested during 2013, 2012, or 2011.

Restricted Stock and Restricted Stock Unit Plans

The restricted shares vest over a two-year period commencing upon a change in control, initial public offering, or liquidation (a liquidity event). A portion of the restricted shares vest if a liquidity event occurs within six months of the date an employee is involuntarily terminated due to death, disability or reduction in force within six months of the liquidity event. These grants fully vest upon the employee's termination or constructive termination in connection with a change in control. The Company has a right of first refusal to acquire the restricted shares held by an employee at the current fair value, even after the restriction period lapses.

During the ~~year~~years ended December 31, 2014 and 2013, we issued 900,000 and 7,318,000 restricted shares of Class A Common Stock, respectively, pursuant to agreements with each of the Company's executives under terms of a (“Restricted Stock Grant Plan and Agreements”). The restricted shares will generally be earned based on the attainment of specified goals achieved over a performance period. See Item 11 of this Report for additional information regarding the Restricted Stock Grant Plan and Agreements. No shares were issued under the Restricted Stock Grant Plan and Agreements during 2012 ~~or 2011~~.

The summary of restricted stock activity is set forth below:



	Shares		Weighted Average Grant Date Fair Value
Unvested at January 1, 2012	1,810,475		$	5,161
Forfeited	(36,500	)	(123		)
Unvested at December 31, 2012	1,773,975		5,038
Granted	7,318,000		2,908
Forfeited	(823,617	)	(335		)
Unvested at December 31, 2013	8,268,358		7,611
Granted	900,000		513
Forfeited	(107,500	)	(148		)
Unvested at December 31, 2014	9,060,858		$	7,976

Table of Contents

SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

	Shares		WeightedAverageGrant Date Fair Value
Unvested at January 1, 2011	1,133,975		$	4,031
Granted	750,000		1,335
Vested	—		—
Converted	—		—
Forfeited	(73,500	)	(205		)
Unvested at December 31, 2011	1,810,475		5,161
Granted	—		—
Vested	—		—
Converted	—		—
Forfeited	(36,500	)	(123		)
Unvested at December 31, 2012	1,773,975		5,038
Granted	7,318,000		2,908
Vested	—		—
Converted	—		—
Forfeited	(823,617	)	(335		)
Unvested at December 31, 2013	8,268,358		$	7,611

Additionally, there are unvested restricted stock units, covered under the Restricted Plans, which are similar to restricted shares except that actual shares of Class A voting common stock are only issued to individuals upon vesting and exercise. These restricted stock units vest over a three-year period upon the stock becoming freely tradable and fully vest upon a change in control. In addition, a portion of the stock units vest following an employee's termination for specified reasons if a change in control or an initial public offering occurs within six months of the employee's termination. The summary of activity related to restricted stock units is set forth below:

	StockUnits		WeightedAverageGrant Date Fair Value
Unvested at January 1, 2011	1,641,000		$	4,711
Unvested at January 1, 2012	1,871,500		$	4,881
Granted	406,500		724
Forfeited	(176,000	)	(554		)
Unvested at December 31, 2011	1,871,500		4,881
Granted	40,000		49
Forfeited	(187,500	)	(477		)
Unvested at December 31, 2012	1,724,000		4,453
Granted	150,000		76
Forfeited	(257,500	)	(575		)
Unvested at December 31, 2013	1,616,500		$3,954	~~3,954~~
Granted	20,000		11
Forfeited	(174,500	)	(527		)
Unvested at December 31, 2014	1,462,000		$	3,438

79As of December 31, 2014, 2013, and 2012, there was approximately $8,919, $9,050, and $7,795, respectively, of total unrecognized compensation cost (including the effect of expected forfeitures) related to unvested restricted stock and restricted stock units that the Company had not recorded. We will recognize that cost over a period of two and three years for restricted shares and restricted stock units, respectively, following the occurrence of a change in control, initial public offering, or liquidity event, as defined in the Restricted Plans.

Table of Contents

SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, 2013 and 2012

(in thousands of U.S. dollars, except share and per share amounts)

As of December 31, 2013, 2012, and 2011, there was approximately $9,050, $7,795, and $8,156, respectively, of total unrecognized compensation cost (including the effect of expected forfeitures) related to unvested restricted stock and restricted stock units that the Company had not recorded. We will recognize that cost over a period of two and three years for restricted shares and restricted stock units, respectively, following the occurrence of a change in control, initial public offering, or liquidity event, as defined in the Restricted Plans.

Deferred Compensation Plan

The Company has a deferred compensation plan pursuant to which certain employees and directors have been given the option to defer compensation. Compensation deferred is in the form of phantom stock units, which are held in the plan for the benefit of the individual until such compensation is distributed in accordance with the terms of the agreement. A total of 22,500, 3522,~~357~~500, and 35,357 phantom stock units were outstanding at December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012 respectively.

With respect to the remaining 22,500 phantom stock units, the Company has the option of settling the obligation in either cash or Class A voting common shares. These phantom stock units are classified as a liability, as the Company may settle these awards in cash. Accordingly, $1211 and $1312 is recorded in Other noncurrent liabilities at December 31, ~~2013~~2014 and ~~2012~~2013, respectively. Compensation ~~expense (~~income) of $42, expense of $24, and expense of $~~(52)~~2 was recorded in ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively, based on the stock price at the end of the applicable period.

10. Income Taxes

(Loss) income before income taxes consists of the following:

	2013			2012			2011
	2014			2013			2012
Domestic	$	(3847,~~104~~771	)	$	(4938,~~363~~104	)	$	(3849,~~176~~363	)
Foreign	2313,~~874~~094			2423,~~212~~874			1524,~~570~~212
Total	$	(1434,~~230~~677	)	$	(2514,~~151~~230	)	$	(2225,~~606~~151	)

~~The (benefit) provision for income taxes attributable to continuing operations consists of the following:~~78

	2013			2012			2011
Current tax provision
U.S. federal	$	2,129		$	—		$	—
State and local	885			1,209			1,140
Foreign	7,619			2,346			6,655
Total current tax provision	10,633			3,555			7,795
Deferred tax provision
U.S. federal	(2,585		)	(6,882		)	260
State and local	(569		)	(53		)	(73		)
Foreign	(22,695		)	2,097			1,197
Total deferred tax provision	(25,849		)	(4,838		)	1,384
Total (benefit) provision for income taxes	$	(15,216	)	$	(1,283	)	$	9,179

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

	2013			2012			2011
Tax benefit at statutory U.S. tax rate (35%)	$	(4,981	)	$	(8,803	)	$	(7,912	)
State and local taxes, net of federal benefit	193			740			796
Valuation allowance	(28,316		)	(8,997		)	(1,888		)
Impact of foreign operations	1,736			7,067			10,651
Change in tax reserves	368			(2,449		)	1,052
Nondeductible expenditures	7,864			8,214			5,725
Foreign dividends and interest	17,544			11,539			9,803
Tax rate differences of foreign subsidiaries	(9,606		)	(8,652		)	(8,819		)
Jobs tax credits	—			398			—
AMT credits	(187		)	—			—
Other	169			(340		)	(229		)
	$	(15,216	)	$	(1,283	)	$	9,179

The (benefit) provision for income taxes attributable to continuing operations consists of the following:



	2014			2013			2012
Current tax provision
U.S. federal	$	(148	)	$	2,129		$	—
State and local	(91		)	885			1,209
Foreign	5,788			7,619			2,346
Total current tax provision	5,549			10,633			3,555
Deferred tax provision
U.S. federal	5,117			(2,585		)	(6,882		)
State and local	1,140			(569		)	(53		)
Foreign	1,877			(22,695		)	2,097
Total deferred tax provision	8,134			(25,849		)	(4,838		)
Total (benefit) provision for income taxes	$	13,683		$	(15,216	)	$	(1,283	)

The (benefit) provision for income taxes differs from the amount of income tax determined by applying the applicable U.S. statutory federal income tax rate to pretax income (loss) from continuing operations, before noncontrolling interests, as a result of the following:



	2014			2013			2012
Tax benefit at statutory U.S. tax rate (35%)	$	(12,137	)	$	(4,981	)	$	(8,803	)
State and local taxes, net of federal benefit	823			193			740
Valuation allowance	7,967			(28,316		)	(8,997		)
Impact of foreign operations	4,702			1,736			7,067
Change in tax reserves	(325		)	368			(2,449		)
Nondeductible expenditures	9,046			7,864			8,214
Foreign dividends and interest	12,107			17,544			11,539
Tax rate differences of foreign subsidiaries	(8,503		)	(9,606		)	(8,652		)
Jobs tax credits	—			—			398
AMT credits	—			(187		)	—
Other	3			169			(340		)
	$	13,683		$	(15,216	)	$	(1,283	)

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

Deferred Taxes

Deferred tax assets (liabilities) included in the accompanying Consolidated Balance Sheets consists of the following:

	2013			2012
	2014			2013
Operating loss carryforwards	$	~~177~~170,~~291~~875		$	~~185~~177,~~142~~291
Accrued liabilities	83,~~815~~353			8,~~635~~815
Property, equipment, and amortization	2628,~~690~~729			2526,~~296~~690
Federal, state, and foreign tax credits	1312,~~712~~566			1413,~~303~~712
Accrued and unearned compensation	3,~~946~~272			23,~~614~~946
Customer and grant assets	—2,278			~~191~~—
Restructuring liabilities	~~632~~610			~~1,629~~632
Unrealized foreign exchange gain	~~193~~6,346			~~553~~193
Other	21,~~523~~481			12,~~320~~523
Total deferred tax assets	~~233~~229,~~802~~510			~~239~~233,~~683~~802
Definite and indefinite lived intangibles	(12,~~748~~727		)	(1412,~~844~~748		)
Unrepatriated foreign earnings	(34,~~686~~821		)	(113,~~170~~686		)
Customer and grant assets	~~(229~~—		)	—(229		)
Total deferred tax liabilities	(1617,~~663~~548		)	(2616,~~014~~663		)
Net deferred tax assets	~~217~~211,~~139~~962			~~213~~217,~~669~~139
Valuation allowance	(~~185~~188,~~535~~002		)	(~~206~~185,~~415~~535		)
Net deferred tax assets	$	3123,~~604~~960		$	731,~~254~~604

The balance sheet classification of the net deferred tax assets (liabilities) is as follows:

	2013			2012
	2014			2013
Net current deferred tax assets	$	1,~~797~~925		$	1,~~518~~797
Net noncurrent deferred tax assets	3528,~~975~~951			1435,~~213~~975
Net current deferred tax liabilities	(~~2,340~~997		)	(42,~~545~~340		)
Net noncurrent deferred tax liabilities	(35,~~828~~919		)	(3,~~932~~828		)
Total net deferred tax assets	$	3123,~~604~~960		$	731,~~254~~604

The Company has not recorded deferred U.S. income tax liabilities of $12,~~162~~455 and $1912,~~085~~162 applicable to undistributed earnings of $3436,~~977~~779 and $5434,~~724~~977 at December 31, ~~2013~~2014 and ~~2012~~2013, respectively, related to certain foreign subsidiaries as these undistributed earnings are indefinitely reinvested in foreign operations. If earnings of such subsidiaries were not reinvested, the resulting U.S. tax liability would be substantially offset by the utilization of U.S. net operating loss carryforwards. Furthermore, foreign withholding taxes may be imposed on actual distributions. During the fourth quarter of 2014, we changed our assertion with respect to a certain foreign subsidiary however did not record a deferred tax liability applicable to the undistributed earnings due to an excess tax basis. During the fourth quarter of 2013, we changed our assertions with respect to certain of our foreign subsidiaries. We recorded a deferred tax liability applicable to the undistributed earnings of our Nicaraguan subsidiary for $584 as a result of its strong performance combined with repatriation opportunities and our Indian subsidiary for $1,683 given that future distributions could exceed current earnings. We reduced the deferred tax liabilities as a result of reversing our assertions related to our Polish subsidiary for $1,055 as future distributions are not expected to exceed current earnings. The Company has deferred tax liabilities in the amount of $4,821 and $3,686 for anticipated repatriations of earnings from foreign subsidiaries in Nicaragua, India, and New Zealand, ~~Spain, and Philippines~~ for the ~~year~~years ~~ended~~ending December 31, ~~2013.~~2014 ~~For~~and ~~the year ended~~ December 31, ~~2012~~2013, ~~the deferred tax liabilities for anticipated repatriation of earnings was $11,170 from foreign subsidiaries in Poland, Philippines, Portugal, New Zealand, and Spain~~respectively. ~~The deferred tax liabilities were established as the Company does not consider the earnings to be indefinitely reinvested.~~

8280

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

Valuation Allowances

U.S. GAAP requires that a valuation allowance be established when it is more likely than not that all or a portion of a deferred tax asset will not be realized. A review of all available positive and negative evidence needs to be considered, including a company’s current and past performance, the market environment in which the company operates, the utilization of past tax credits, length of carryback and carryforward periods, existing contracts that will result in future profits, etc.

As a result of historical operating losses, the Company has established a valuation allowance of $~~185~~188,~~535~~002, $~~206~~185,~~415~~535, and $~~215~~206,~~720~~415 at December 31, ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively. The valuation allowance ~~decreased~~increased $202,~~880~~467 during ~~2013~~2014, decreased $920,~~305~~880 during ~~2012~~2013, and ~~increased~~decreased $29,~~957~~305 during ~~2011~~2012.

~~During~~In the second quarter of 2013, we released valuation allowance on U.S. state deferred tax assets totaling $744. ~~During~~We ~~the third quarter of 2013, we~~ released ~~valuation allowance on~~ the deferred tax assets of our French subsidiary in the amount of $10,419 in the third quarter of 2013 after management concluded that the indefinite lived nature of its net operating losses coupled with its recent operating results and forecasted income substantiated the release. During the fourth quarter of 2013, we also released valuation allowance for our German subsidiary in the amount of $7,639 and two of our United Kingdom subsidiaries in the amounts of $8,735 and $1,115, given recent cumulative profit positions coupled with profitable outlooks. These releases were offset by valuation allowance established on our Italian subsidiary totaling $170 given the expected future operating results could no longer sustain recognition of the deferred tax assets.

WeIn the fourth quarter of 2012, we released valuation allowances on the deferred tax assets of one of our Canadian subsidiaries and our Colombian subsidiary ~~during the fourth quarter of 2012~~, resulting in a tax benefit of $3,522. Management concluded that releases were warranted in the fourth quarter of 2012 given recent cumulative profit positions coupled with profitable outlooks. ~~During~~We ~~the fourth quarter of 2012, we~~ also established a valuation allowance on the deferred tax assets of our Brazilian subsidiary in the fourth quarter of 2012 as management concluded that cumulative losses and lack of future expected sustained profitability could no longer support recognition of the deferred tax assets, resulting in tax expense of $3,593. We also released the valuation allowance on operating losses and other tax attributes with unlimited carryforward periods in certain jurisdictions to the extent that deferred tax liabilities related to indefinite lived intangibles created a source of income to support the release. This release resulted in a tax benefit of $5,139 during the fourth quarter of 2012.

We consider all income sources, including other comprehensive income, in determining the amount of tax benefit allocated to continuing operations (the "Income Tax Allocation"). During the ~~third~~fourth quarter of ~~2012~~2014, as a result of the Income Tax Allocation, we recorded a non-cash deferred income tax expense of $~~3,237~~33 against other comprehensive income as a result of year-to-date gains from mark-to-market fluctuations on the 2015 portfolio of foreign currency hedges which are designated as accounting hedges and an offsetting non-cash income tax benefit of $~~3,237~~33 in continuing operations. ~~During~~compared ~~the~~to ~~fourth~~$598 ~~quarter~~and $3,237 werelated ~~recorded~~to athe ~~non-cash~~2013 ~~deferred~~hedge ~~income~~portfolio ~~tax~~recorded ~~expense~~in of2013 ~~$948~~and ~~against~~2012, ~~Foreign~~respectively. ~~currency~~The ~~translation~~2014 ~~adjustment~~hedge asportfolio awas ~~result~~fully ofsettled ~~year-to-date~~during ~~gains~~the ~~from~~fourth ~~foreign~~quarter, ~~currency~~resulting ~~fluctuations~~in ~~primarily~~the ~~related~~reversal ~~to our establishment~~ of apreviously ~~deferred~~recorded tax ~~liability~~benefits onin ~~unrepatriated foreign earnings of our Philippines subsidiary and an offsetting~~ non-cash income tax ~~benefit~~expense of $~~948 in continuing operations~~1,676. WeDuring ~~also released~~ the ~~valuation~~first ~~allowance~~quarter onof ~~operating~~2014, ~~losses~~the ~~and~~2013 ~~other~~hedge ~~tax~~portfolio ~~attributes~~was ~~with~~fully ~~unlimited~~settled ~~carryforward~~resulting ~~periods~~ in ~~certain jurisdictions to~~ the ~~extent~~reversal ~~that deferred tax liabilities related to indefinite lived intangibles created a source~~ of ~~income~~previously torecorded ~~support~~tax ~~the~~benefits ~~release. This release resulted~~ in anon-cash income tax ~~benefit~~expense of $53,~~139 during the fourth quarter of 2012~~799.

InDuring ~~2011,~~ the ~~Company~~fourth ~~released~~quarter ~~valuation allowances on the deferred tax assets~~ of ~~our Australian~~2012, ~~Denmark~~we ~~and~~recorded ~~Brazilian~~a ~~subsidiaries~~non-cash ~~during~~deferred ~~the~~income ~~first,~~tax ~~second~~expense ~~and~~of ~~third~~$948 ~~quarters~~against ofForeign ~~2011,~~currency ~~respectively,~~translation ~~resulting~~adjustment inas a ~~discrete~~result ~~benefit~~ of ~~$9,145.~~year-to-date ~~Management~~gains ~~concluded~~from ~~that~~foreign ~~strong~~currency ~~first~~fluctuations ~~quarter~~primarily ~~performance~~related ~~coupled with cumulative profitability overcame historic inconsistent financial performance~~ to ~~warrant~~our ~~the~~establishment ~~release~~ of ~~the~~a ~~valuation allowance on the~~ deferred tax ~~assets~~liability of our Australian subsidiary while our Denmark and Brazilian subsidiaries demonstrated the same facts during the second and third quarters, respectively. During the third quarter of 2011, the Company also established a valuation allowance on ~~the~~unrepatriated ~~deferred~~foreign ~~tax~~earnings ~~assets~~ of our ~~German~~Philippines subsidiary asand ~~management~~an ~~concluded~~offsetting ~~that~~non-cash ~~the~~income ~~historic~~tax ~~results~~benefit of ~~the~~$948 ~~subsidiary could no longer justify the recognition of the deferred tax assets, resulting~~ in ~~discrete~~continuing ~~expense of $8,836~~operations.

WeA ~~consider~~summary ~~all~~of ~~income~~transactions ~~sources,~~impacting ~~including other comprehensive income, in determining~~ the ~~amount~~valuation ofallowance ~~tax~~for ~~benefit allocated to continuing operations (~~the ~~"Income~~years ~~Tax~~ended ~~Allocation").~~December 31, ~~During~~2014, 2013, asand a2012 result of the Income Tax Allocation, we recorded a non-cash deferred income tax expense of $598 against other comprehensive income as a result of year-to-date gains from mark-to-market fluctuations on foreign currency hedges which are ~~designated~~ as ~~accounting hedges and an offsetting non-cash income tax benefit of $598 in continuing operations.~~follows:



	2014			2013			2012
Balance, beginning of year	$	(185,535	)	$	(206,415	)	$	(215,720	)
(Additions) deductions charged to tax expense	(9,063		)	28,316			8,997
(Additions) deductions charged to other accounts ⁽¹⁾	6,596			(7,436		)	308
Balance, end of year	$	(188,002	)	$	(185,535	)	$	(206,415	)


(1)	Adjustments to other comprehensive loss and adjustments to valuation allowance where we continue to maintain a full valuation allowance.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

A summary of transactions impacting the valuation allowance for the years ended December 31, 2013, 2012, and 2011 are as follows:

	2013			2012			2011
Balance, beginning of year	$	(206,415	)	$	(215,720	)	$	(212,763	)
(Additions) deductions charged to tax expense	28,316			8,997			1,888
(Additions) deductions charged to other accounts (1)	(7,436		)	308			(4,845		)
Balance, end of year	$	(185,535	)	$	(206,415	)	$	(215,720	)

(1) Adjustments to other comprehensive loss and adjustments to valuation allowance where we continue to maintain a full valuation allowance.

Tax Attributes (Net Operating Losses, Tax Credits, and Tax Holidays)

At December 31, ~~2013~~2014, the Company had $~~422~~425,~~260~~803 of U.S. federal net operating loss carryforwards and $1,~~044~~126,~~135~~834 of state net operating loss carryforwards, which began to expire in 2010 and will continue through ~~2032~~2034. At December 31, ~~2013~~2014, the Company had $131,305 of U.S. federal net operating loss carryforwards, which are limited to $13,600 in any calendar year, and $3,445 of U.S. federal tax credits, both of which are subject to limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended.

The Company has foreign net operating loss carryforwards in the following jurisdictions, which expire at the dates indicated:

	Amount		Expiration period
United Kingdom	$	5861,~~116~~406	Indefinite carryforward
Netherlands	4036,~~314~~111		~~2014~~2015 - ~~2022~~2023
Spain	3029,~~635~~402		~~2016~~Indefinite ~~- 2031~~carryforward
France	2521,~~339~~011		Indefinite carryforward
Germany	2315,~~425~~540		Indefinite carryforward
Chile	10,662		Indefinite carryforward
Brazil	8,532		Indefinite carryforward
Brazil	10,059		Indefinite carryforward
Italy	5,938		Indefinite carryforward
Other foreign net operating losses with expiration dates	3,293		2029 - 2030
Singapore	3,948		Indefinite carryforward
Other foreign net operating losses with indefinite carryforward	3,680		Indefinite carryforward
Australia	2,868		Indefinite carryforward
Chile	2,773		Indefinite carryforward
Other foreign net operating losses with indefinite carryforward	929		Indefinite carryforward

At December 31, ~~2013~~2014, the Company has $7,~~378~~230 of U.S. federal tax credit carryforwards, which begin to expire in 2020, and $21,~~271~~578 of state tax credit carryforwards, which will begin to expire in 2016. A portion of the state tax credits are being used yearly and are expected to be fully utilized by 2027. In addition, the Company has tax credits in foreign jurisdictions of $3,~~882~~711, which will begin to expire in 2017.

In ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012 for U.S. federal income tax purposes, the Company recognized certain unrepatriated dividends and other interest income due to financing terms under third party and intercompany financing arrangements totaling approximately $4831,~~570~~432, $3348,~~016~~570, and $2533,~~184~~016, respectively.

The Company has been granted tax holidays in certain countries or takes advantage of tax benefits in certain tax-favored zones. The tax benefit is generated from the Company's operations in the Philippines, India and Nicaragua. The majority of the Philippines tax holidays have expired and the Company has applied to extend the tax holidays at an income tax rate of 0% for multiple sites up to July 31, 2014. The Company currently has tax holidays at an income tax rate of 0% for other sites set to expire on dates up to February 28, 2016, with possible extensions thereafter. After the 0% income tax rate expires, a reduced income tax rate of 5% will apply. The tax benefit received by the Company related to the tax holidays in the Philippines is approximately $~~939~~1,171, $~~893~~939, and $~~2,490~~893 for ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively.

The Software Technology Parks of India (STPI) tax holidays expired on March 31, 2011 and we were taxed at the regular income tax rates of 33.99% commencing April 1, 2011, except at our Chennai location where we have an income tax rate of 0%, which will continue until 2021 under the Special Economic Zone. The tax benefit related to the tax holidays in India is approximately $301, $361, and $505, respectively, for 2014, 2013, and 2012.

84The Company operates in a Free Trade Zone in Nicaragua and enjoys a 0% income tax rate until 2022. The tax benefits related to Nicaragua were $922, $691, and $636, respectively, for 2014, 2013, and 2012.

Unrecognized Tax Benefits

U.S. GAAP defines the threshold for recognizing the tax benefits of a tax return filing position in the financial statements as more likely than not to be sustained by the taxing authority. A tax position that meets the more likely than not recognition threshold is initially and subsequently measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized. U.S. GAAP provides guidance on how to determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits.

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SITEL Worldwide Corporation

Notes to Consolidated Financial Statements (Continued)

December 31, ~~2013~~2014 and ~~2012~~2013

(in thousands of U.S. dollars, except share and per share amounts)

The following table summarizes the activity related to our gross unrecognized tax benefits:

rate of 0%, which will continue until 2021 under the Special Economic Zone. The tax benefit related to the tax holidays in India is approximately $361, $505, and $751, respectively, for 2013, 2012, and 2011.



	2014			2013			2012
Beginning balance	$	30,717		$	36,658		$	37,921
(Decreases) increases related to prior year tax positions	613			2,547			(193		)
(Decreases) increases related to current year tax positions	(377		)	3,917			886
(Decreases) related to settlements with taxing authorities	(350		)	(9,715		)	(270		)
(Decreases) related to lapsing of statute of limitations	(713		)	(1,994		)	(2,868		)
Currency translation adjustment	(1,683		)	(696		)	1,182
Ending balance	$	28,207		$	30,717		$	36,658

~~The~~We ~~Company~~record ~~operates~~interest inand apenalties ~~Free~~related ~~Trade~~to ~~Zone~~uncertain intax ~~Nicaragua~~positions ~~and~~as ~~enjoys~~components aof 0% income tax ~~rate~~expense. ~~until~~We ~~2022.~~recorded ~~The~~interest ~~tax~~expense ~~benefits~~(income) ~~related~~on touncertain ~~Nicaragua~~tax ~~were~~positions of $~~691~~(147), $~~636~~220, and $~~565~~290 and penalties of $(824), ~~respectively~~$(607), and ($569) for ~~2013~~2014, ~~2012~~2013, and ~~2011~~2012, respectively.

~~Unrecognized~~As ~~Tax~~of ~~Benefits~~December 31, 2014 and 2013, in addition to the balance above, we had accrued $5,413 and $5,686 for payment of interest and $5,412 and $6,378 for payment of penalties respectively. At this time, we are unable to determine when ultimate payment will be made for any of these items. If cash settlement for all of these items occurred in the same year, there would be a material impact to cash flow. Upon future recognition of the unrecognized tax benefits as of December 31, 2014, including interest and penalties, $28,748 will have a favorable impact on the effective tax rate.

We are no longer subject to U.S. ~~GAAP~~federal, ~~defines~~state, ~~the~~or ~~threshold~~non ~~for~~U.S. ~~recognizing~~income ~~the~~ tax ~~benefits~~examinations ofor aassessment ~~tax~~of ~~return~~taxes ~~filing~~by ~~position~~tax inauthorities ~~the~~with ~~financial~~respect ~~statements~~to asyears ~~more~~ending ~~likely~~on, ~~than~~or ~~not~~prior to, beDecember 31, ~~sustained~~2004, byexcept ~~the~~that ~~taxing~~our ~~authority.~~net Aoperating ~~tax~~loss ~~position~~carryforwards ~~that~~in ~~meets~~several ~~the~~jurisdictions ~~more~~are ~~likely~~subject ~~than~~to ~~not~~adjustment ~~recognition~~generally ~~threshold~~until isthe ~~initially~~expiration ~~and~~of ~~subsequently~~applicable ~~measured~~statutes asof limitation for the ~~largest~~years ~~amount~~in ofwhich ~~tax~~such ~~benefit~~loss ~~that~~carryforwards isare ~~greater~~utilized. ~~than~~We ~~50 percent~~are ~~likely~~currently ofunder ~~being~~audit ~~realized.~~in ~~U.S.~~the ~~GAAP~~United ~~provides~~Kingdom, ~~guidance~~Canada, onGermany, ~~how~~Philippines, toIndia, ~~determine~~and ~~whether~~Colombia. aWe ~~tax~~do ~~position~~not isexpect ~~effectively~~these ~~settled~~tax ~~for~~audits ~~the~~to ~~purpose~~have ofa ~~recognizing~~material ~~previously~~impact ~~unrecognized~~to ~~tax~~our ~~benefits.~~Consolidated Financial Statements.

	2013			2012			2011
Beginning balance	$	36,658		$	37,921		$	37,179
(Decreases) increases related to prior year tax positions	2,547			(193		)	(170		)
Increases related to current year tax positions	3,917			886			3,069
Decreases related to settlements with taxing authorities	(9,715		)	(270		)	—
Decreases related to lapsing of statute of limitations	(1,994		)	(2,868		)	(1,104		)
Currency translation adjustment	(696		)	1,182			(1,053		)
Ending balance	$	30,717		$	36,658		$	37,921

It is reasonably possible that within the next 12-month period, the amount of unrecognized tax benefits for certain foreign tax positions might be reduced by $174 as a result of statute expirations or a final determination.

We record interest and penalties related to uncertain tax positions as components of income tax expense. We recorded interest expense (income) on uncertain tax positions of $220, $290, and $657 and penalties of $(607), $(569), and $165 for 2013, 2012, and 2011, respectively. 83

As of December 31, 2013 and 2012, in addition to the balance above, we had accrued $5,686 and $5,289 for payment of interest and $6,378 and $6,760 for payment of penalties respectively. At this time, we are unable to determine when ultimate payment will be made for any of these items. If cash settlement for all of these items occurred in the same year, there would be a material impact to cash flow. Upon future recognition of the unrecognized tax benefits as of December 31, 2013, including interest and penalties, $34,111 will have a favorable impact on the effective tax rate.

We are no longer subject to U.S. federal, state, or non U.S. income tax examinations or assessment of taxes by tax authorities with respect to years ending on, or prior to, December 31, 2003, except that our net operating loss carryforwards in several jurisdictions are subject to adjustment generally until the expiration of applicable statutes of limitation for the years in which such loss carryforwards are utilized. We are currently under audit in the United Kingdom, Canada, Germany, Philippines, India, and Colombia. We do not expect these tax audits to have a material impact to our Consolidated Financial Statements.

It is reasonably possible that within the next 12-month period, the amount of unrecognized tax benefits for certain foreign tax positions might be reduced by $1,047 as a result of statute expirations or a final determination.

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SITEL Worldwide Corporation

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