##### Table of Contents





UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-K





(Mark One)

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

For the fiscal year ended December 31, 2010.

OR



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

For the transition period from              to
            .

Commission File Number: 001-33739





STREAM GLOBAL SERVICES, INC.

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 26-0420454                          
|(State or Other Jurisdiction of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)
|                                                               | 
|20 William Street, Suite 310
Wellesley, Massachusetts          |  | 02481                               
|(Address of Principal Executive Offices)                       |  | (Zip Code)                          

(781)
304-1800

(Registrants Telephone Number, Including Area Code)

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



|                               |  |                                          
|------------------------------ |  | -----------------------------------------
|Title of Each Class            |  | Name of Each Exchange on Which
Registered
|Units                          |  | NYSE Amex                                
|Common Stock, $0.001 Par Value |  | NYSE Amex                                
|Warrants                       |  | NYSE Amex                                

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

None



Title of Class

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

Yes
NoX

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
NoX

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.



|     |  |   
|---- |  | --
|YesX |  | No

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 |  | No

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

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. (Check one):



|                                              |  |                                        
|--------------------------------------------- |  | ---------------------------------------
|Large Accelerated Filer                     ̈  |  | Accelerated Filer
                     ̈
|Non-accelerated Filer                        ̈ |  | Smaller reporting company      x       
|(Do not check if a smaller reporting company) |  |                                        

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



|    |  |    
|--- |  | ---
|Yes |  | NoX

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was approximately $25,159,120 based on the last reported sale price of the registrants
Common Stock on the NYSE Amex on June 30, 2010, which was the last business day of the registrants most recently completed second fiscal quarter.

There were 80,486,895 shares of the Registrants common stock, $0.001 par value per share, issued and outstanding as of February 25, 2011.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrants definitive proxy statement for its 2011 annual meeting of stockholders, which the registrant intends to file pursuant to Regulation 14A with the Securities and Exchange
Commission not later than 120 days after the registrants fiscal year end of December 31, 2010, are incorporated herein by reference.









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TABLE OF CONTENTS



|           |  |                                                                                                              |    |      |    | 
|---------- |  | ------------------------------------------------------------------------------------------------------------ | -- | ---- | -- | 
|           |  |                                                                                                              |    | Page |   
|PART I.    |  |                                                                                                              |    |      |    | 
|Item 1.    |  | Business                                                                                                     |    |      | 4  | 
|Item 1A.   |  | Risk Factors                                                                                                 |    |      | 10 | 
|Item 1B.   |  | Unresolved Staff Comments                                                                                    |    |      | 26 | 
|Item 2.    |  | Properties                                                                                                   |    |      | 26 | 
|Item 3.    |  | Legal Proceedings                                                                                            |    |      | 26 | 
|Item 4.    |  | Reserved                                                                                                     |    |      | 26 | 
|           | 
|PART II.   |  |                                                                                                              |    |     
|Item 5.    |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |    |      | 27 | 
|Item 6.    |  | Selected Financial Data                                                                                      |    |      | 28 | 
|Item 7.    |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                        |    |      | 29 | 
|Item 7A.   |  | Quantitative and Qualitative Disclosures about Market Risk                                                   |    |      | 37 | 
|Item 8.    |  | Financial Statements and Supplementary Data                                                                  |    |      | 39 | 
|           |  | Consolidated Balance Sheets as of December 31, 2010 and 2009                                                 |    |      | 40 | 
|           |  | Consolidated Statements of Operations for the years ended December 31, 2010 and 2009                         |    |      | 41 | 
|           |  | Consolidated Statements of Stockholders Equity for the years ended December 31, 2010 and
2009               |    |      | 42 | 
|           |  | Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009                         |    |      | 43 | 
|           |  | Notes to Consolidated Financial Statements                                                                   |    |      | 44 | 
|Item 9.    |  | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure                         |    |      | 70 | 
|Item 9A.   |  | Controls and Procedures                                                                                      |    |      | 70 | 
|           | 
|PART III.  |  |                                                                                                              |    |     
|Item 10.   |  | Directors, Executive Officers and Corporate Governance                                                       |    |      | 71 | 
|Item 11.   |  | Executive Compensation                                                                                       |    |      | 71 | 
|Item 12.   |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters               |    |      | 71 | 
|Item 13.   |  | Certain Relationships and Related Transactions, and Director Independence                                    |    |      | 71 | 
|Item 14.   |  | Principal Accountant Fees and Services                                                                       |    |      | 71 | 
|           | 
|PART IV.   |  |                                                                                                              |    |     
|Item 15.   |  | Exhibits and Financial Statement Schedules                                                                   |    |      | 72 | 
|           | 
|SIGNATURES |  |                                                                                                              | 73 |     

Stream is a registered trademark of
Stream Global Services, Inc.



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##### Table of Contents

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act
of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These
forward-looking statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels
of activity, performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may, should, could,
would, expect, intend, plan, target, goal, anticipate, believe, estimate, continue, or the negative of such terms or other
similar expressions. Factors that might cause or contribute to such a discrepancy include, but are not limited to, those described in Item 1A, Risk Factors, of this report and in our other filings with the Securities and Exchange
Commission (SEC).

Except as required by applicable law, including the securities laws of the United States and
the rules and regulations of the SEC, we explicitly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in factors or
assumptions affecting such forward-looking statements. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.



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PART I



|ITEM 1. | BUSINESS
|------- | --------

Overview

Stream Global Services, Inc. (we, us, Stream, or SGS) is a corporation organized under the
laws of the State of Delaware. We were incorporated on June 26, 2007 as a blank check company for the purpose of acquiring, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar
business combination, one or more domestic or international operating businesses. We consummated our initial public offering in October 2007, receiving total gross proceeds of $250 million, and in July 2008, we acquired Stream Holdings Corporation
for $128 million (which reflected the $200 million purchase price less assumed indebtedness, transaction fees, employee transaction related, restructuring and severance expenses, bonuses, professional fees, stock option payments and payments for
working capital).

In October 2009, pursuant to a Share Exchange Agreement, dated as of August 14, 2009 (the
Exchange Agreement), among Stream, EGS Corp., a Philippine corporation (EGS), the parent company of eTelecare Global Solutions, Inc., a Philippine company (eTelecare), EGS Dutchco B.V., a corporation organized under the
laws of the Netherlands (Dutchco), and NewBridge International Investment Ltd., a British Virgin Islands company (NewBridge and, together with Dutchco, the EGS Stockholders), we acquired EGS in a stock-for-stock
exchange (the Combination). At the closing of the Combination (the Closing), we acquired all of the issued and outstanding capital stock of EGS (the EGS Shares) from the EGS Stockholders, and NewBridge and/or its
affiliate contributed, and we accepted, the rights of such transferor with respect to approximately $35.8 million in principal under a bridge loan of EGS (the Bridge Loan) in consideration for the issuance and delivery of an aggregate of
23,851,561 shares of our common stock and 9,800,000 shares of our non-voting common stock, and the payment of $9,990 in cash. Subsequent to the Closing, all of the 9,800,000 shares of non-voting common stock held by the EGS Stockholders were
converted into shares of our voting common stock on a one-for-one basis. As of the Closing, the pre-Combination Stream stockholders and the EGS Stockholders owned approximately 57.5% and 42.5%, respectively, of the combined entity.

Immediately prior to the Closing, pursuant to a letter agreement, dated as of August 14, 2009, between Stream and Ares Corporate
Opportunities Fund II, L.P. (Ares), all of the issued and outstanding shares of our Series A Convertible Preferred Stock, $.001 par value per share (Series A Preferred Stock), and Series B Convertible Preferred Stock, $.001
par value per share (Series B Preferred Stock), all of which were held by Ares, were converted into 35,085,134 shares of our common stock. The Series A Preferred Stock and Series B Preferred Stock were subsequently cancelled. In
addition, we purchased from Ares a warrant to purchase 7,500,000 shares of our common stock in consideration of the issuance to Ares of 1,000,000 shares of our common stock.

Also in October 2009, pursuant to an indenture, dated as of October 1, 2009, among Stream, certain of our subsidiaries (the Note Guarantors) and Wells Fargo Bank, National Association
(Wells Fargo), as trustee, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the Notes) at an initial offering price of 95.454% of the principal amount. In addition, we and certain of
our subsidiaries entered into a credit agreement, dated as of October 1, 2009 (the Credit Agreement), with Wells Fargo Foothill, LLC, as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as co-arranger, and each of
the lenders party thereto, as lenders, providing for revolving credit financing (the ABL Facility) of up to $100 million, including a $20 million sub-limit for letters of credit. The ABL Facility has a term of four years at an
interest rate of Wells Fargos base rate plus 375 basis points or LIBOR plus 400 basis points at our discretion.

We used
the proceeds from the offering of the Notes, together with approximately $26.0 million of cash on hand, to repay all outstanding indebtedness under the Fifth Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated as of
January 8, 2009, as amended, with PNC Bank, National Association and other parties thereto, the Bridge Loan, and to pay fees and expenses incurred in connection with the Combination, the Note offering and the ABL Facility.



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Our Business

We are a leading global business process outsourcing (BPO) service provider specializing in customer relationship management (CRM), including sales, customer care and technical
support for Fortune 1000 companies. Our clients include leading computing/hardware, telecommunications/service providers, software/networking, entertainment/media, retail, travel, healthcare and financial services companies. Our service
programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce with the ability to support 35 languages across 50 locations in 22 countries. We continue to expand
our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients.

We seek to establish long-term, strategic relationships with our clients by delivering high-value solutions that help improve our clients revenue generation, reduce operating costs, and improve
customer satisfaction. To achieve these objectives, we work closely with our clients in order to understand what drives their economic value, and then implement processes and performance metrics to optimize results for our clients. The success of
our differentiated client value proposition is demonstrated, in part, by the tenure of our client relationships. Several of our top clients have been with us for over a decade and the average duration of our relationship with our top ten clients by
revenue is approximately eight years.

Our clients include leading computing and hardware companies, such as our two largest
clients, Dell Inc. and the Hewlett-Packard Company, which accounted for approximately 16% and 12%, respectively, of our revenues for the year ended December 31, 2010. We target sectors such as the computing/hardware, telecommunications/service
providers, software/networking, entertainment/media, and retail because of their growth potential, their propensity to outsource, their large, global customer bases, and their complex product and service offerings, which often require sophisticated
customer interactions.

For many of our clients, we service multiple customer touch points that may encompass several product
and service lines. In most cases, our services for each client are performed under discrete, renewable, multi-year contracts that are individually negotiated with separate business leaders at the client and define, among other things, the service
level requirements, the tools and technology, the operating metrics, and various pricing grids depending on volume and other requirements. We typically bill our clients on a monthly basis either by the minute, the hour, or the transaction. In some
cases, we also receive incentive based compensation from our clients that is directly connected to our performance and/or our ability to generate sales for our clients.

We are subject to quarterly fluctuations in our revenues and earnings based on the timing of new and expiring client programs and the seasonality of certain client programs. From time to time, clients
seek to shift their CRM programs to lower cost locations, which may negatively affect our results of operations as we seek to shift personnel to the lower cost off-shore locations, resulting in lower revenue but a higher gross margin percentage. A
substantial amount of our operating costs is incurred in foreign currencies. We use derivatives to mitigate risk relating to foreign currency fluctuations. See Item 7, Managements Discussion and Analysis of Financial Condition and
Results of Operations.

Our Industry

According to the May 2010, IDC report, Worldwide and U.S. Outsourced Customer Care Services 2010-2014 Forecast: Reckoning with the Aftermath of a Credit Bubble, the global CRM market, which
IDC refers to as the Worldwide Customer Care Services market, totaled over $54.5 billion in 2010 and is expected to grow to over $69.6 billion by 2014. IDC estimates that the span of years from 2005-2014 will reflect a compound annual
growth rate of 6.1% for this market.

The contact center outsourcing industry is highly fragmented and competitive, with the
largest company representing approximately 7% of the market according to Frost & Sullivan. Despite the increasingly competitive



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nature of the market, we believe outsourcing will continue to grow as a result of higher client demand for cost savings along with the need for high-quality customer interactions and innovative
service solutions that deliver real value. Stream also believes the desire for companies to focus on core competencies remains strong and will continue to drive them to outsource certain non-core functions to experienced outsourcing providers with
the appropriate global scale, processes and technological expertise. Moreover, we believe that the current economic slowdown has increased demand for outsourcing because it offers an incremental channel to increase sales.

As business becomes more global, many companies find they do not possess sufficient capacity or the optimal infrastructure, international
experience or technology tools to service their customers. Therefore, they increasingly look to global BPO service providers like Stream  that have invested in technology and infrastructure and have established a global presence  to
deliver customer facing services in both established and emerging markets. The largest CRM and BPO customers are typically multinational companies that require their service providers to have a global footprint in order to service segments of their
customer base in multiple countries and multiple languages, and also be agile enough to scale quickly as volume requirements change.

In essence, our global clients require (i) global servicing capabilities to fit the needs of particular products or programs in multiple languages; (ii) a sophisticated technology infrastructure
that enables fully integrated customer interaction channels that are analytics enabled and virtually accessible across a global delivery platform; (iii) a solution driven approach that solves multiple customer needs, such as total customer
experience, retention and lower customer churn rates, and creates new or expanded revenue opportunities for our clients; and (iv) a competitive total cost of solution that takes advantage of technology, applications, defined processes and a
diverse global operation.

Our Strategy

Our strategy is to be a leading provider of integrated, global CRM and BPO services that allow our clients to create maximum value for their customers over the long-term. In order to achieve this
strategy, we intend to offer a broad suite of services that leverages an integrated technology platform on a global basis. We expect to increase our revenues and profitability while further growing our market position by implementing our global
business strategy, which includes, among other things, the following key elements:

Expand organic revenue growth.

We expect to increase our revenue through a combination of winning business from new clients and increasing our service
offerings and market share for existing clients. We expect to continue to win new clients in the future as more companies outsource their CRM and BPO services. Additionally, many of our clients are consolidating their CRM and BPO relationships to
vendors who can provide multiple service offerings on a global basis. We expect to capitalize on this trend by increasing our service offerings for existing clients and winning a greater share of services that they currently outsource. We also
expect to generate new business by working with our clients to outsource non-core programs that are currently managed internally.

Enhance margins through global expansion and operating efficiency.

We seek
to enhance our gross and operating margins by improving our systems and infrastructure and by expanding our global operations. We also continue to work to improve our operating metrics, such as utilization and productivity, employee retention, and
workforce management, and take advantage of advanced technology tools, such as voice over internet protocol (VoIP), virtualization of the desktop and server, learning and development platforms and standardized global processes to
increase accessibility and quality of information and data exchange. We also believe that we will continue to improve our margins by continuing to expand our global presence in lower cost high quality off-shore locations.



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Expand our revenue growth and market share through targeted acquisitions.

We plan to grow our revenues and market share both organically and through targeted acquisitions. Our desire to enter new geographies may
be accomplished most efficiently and cost effectively through the acquisition of companies or assets, or through joint venture arrangements with third parties.

Expand current, and develop and implement new, BPO service offerings to increase market share.

We expect to expand our current service offerings, such as sales and revenue generation services, customer lifecycle management, and technical support services, within our existing client base, as well as
expand our service offerings to include new offerings, such as data analytics and social media, to increase returns and profitability. Many of our clients are looking for global service providers that can not only provide multiple service offerings
in an efficient and flexible cost model, but can also generate revenues to help reduce the overall cost of service and enhance customer satisfaction.

Build and implement a multi-year global technology roadmap.

We believe
that technology applications and infrastructure are critical to our business and allow us to offer our clients efficient services on a cost-effective basis. During 2010, we continued our investment in technology applications that enhance efficiency
such as applicant tracking, human resource information management systems, data and information portals, screen consolidation tools, learning and development tools, self-help portals for employees to manage their benefits, and real-time web-based
training. We expect to continue to invest in technology and will continue to evaluate and implement technologies such as complex VoIP, cloud services and virtualization of the desktop and servers, as the need and opportunities arise.

Our Service Offerings

Our fully integrated service offerings enable our clients to increase revenue and enhance overall brand value and customer loyalty at many
customer touch points. Our full breadth of outsourced services includes technical support, customer care and lifecycle management, sales and revenue generation, as well as other professional back-office services, delivered through a variety of
channels, such as voice, email and chat technologies. We blend agility and flexibility with a global, standardized delivery model to create solutions that deliver real value  even in highly specialized industries.

We utilize a proprietary Smart Shore methodology to determine the optimal mix of support locations  onshore, nearshore
or offshore  and delivery mechanisms (voice, email, chat and self-service) to meet our clients complete customer care objectives. We meet the challenge of staffing to complex technical and sales requirements with multilingual skill sets
across our global presence of 50 locations in 22 countries.

Technical support services include transactions executed by end
user customers who contact a solution center after they have purchased a product and/or service and are looking for assistance with its operation or usage. Technical support transactions may be initiated via a voice or via self-help, e-mail,
chat/web collaboration and callback. To provide quality service, we integrate our service mediums so that end users are able to easily choose the medium that best meets their support needs. Our technical support services are designed to provide
clients with a high-quality, cost-effective and efficient service delivery platform to handle transactions from multiple market segments. Using multimedia service delivery channels, we enable our clients to expand their current technical support
service delivery platforms with cost effective and robust solutions for consumer and business customers.



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In addition to technical support solutions, we offer ongoing customer service and customer
care offerings designed to manage customer relationships for our clients on an ongoing basis. We view each customer contact as an opportunity to strengthen brand loyalty and enhance overall brand value, thereby reducing our clients operational
costs while at the same time providing them the opportunity to increase their revenues. We manage our clients vital customer relationships through our standardized best practices that begin with the recruitment, hiring and training of our
service professionals. We employ such practices in order to identify the right customer service support professionals and equip them with the tools and training necessary to provide high levels of customer service.

We utilize our proprietary xStream Seller methodology to design customer retention programs that help our clients build brand
loyalty by utilizing a behavior-centric sales methodology that actively engages and aligns the functional organization in the end to end delivery of sales service. Our operational execution is holistic in its approach focusing on improving response
rates, increasing order values and maximizing revenues and profit. Since it is much more expensive to recruit a new customer than to retain an existing one, we tailor the approach we take with each client to ensure we are delivering a unique
customer experience that secures brand loyalty. Our customer service and retention programs are designed to build ongoing, solid relationships with customers and thereby position us to maximize ongoing sales opportunities through cross-sell and up
sell opportunities and revenue generation services. Our revenue generation services are designed to provide our clients with the tools necessary to meet their corporate strategic goals for profitability and revenue.

Our proprietary Navigator technology platform is a fully integrated desktop solution that streamlines complex processes and
workflows and provides real-time analytics and reporting virtually across our global infrastructure on a real-time basis. Navigator offers a wide variety of features to create a customized client solution that delivers quantifiable value to our
clients.

Sales and Marketing

We have a direct sales force and sales support organization focused on high growth companies in the target industries in North America, Latin America, Asia and Europe. We use a consultative solution
selling approach and generally focus our marketing efforts at our clients or prospective clients senior executive levels where decisions are made with respect to outsourcing critical CRM functions. As we continue to develop relationships
with senior management, such as the chief executive officer, chief technology officer, chief financial officer, chief services officer and business unit leader of our clients, our business model will continue to evolve into a trusted business
advisor to our clients.

We work closely with our clients at all phases of the service delivery process to develop and refine
custom solutions to meet their needs of maximizing customer experience, reducing their operational costs and generating revenue. We practice a consultative approach to our sales process, which involves understanding the intricacies of our potential
clients business and their particular needs and formulating a value proposition that directly speaks to these needs. Our customized solutions are implemented across many different geographic locations using a combination of our and our
clients technology platforms.

Our sales and marketing group also evaluates entry into new end markets, as well as
identifying potential new clients within specific end markets. The factors that are considered in evaluating new market opportunities or winning new clients include potential market size, industry participants, market dynamics and trends, growth
prospects and the propensity for outsourcing services. With respect to an individual client, the sales and marketing group will review its financial strength and market position and its anticipated need for long-term outsourcing services. We
consider the ability to deliver those services, our competitive positioning and the likelihood of winning the contract in making such determinations. Over the past year we have been successful in winning numerous new logo clients in the
entertainment/media, healthcare, software/networking, telecommunications, financial services and travel industries.



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Employees

Our success in recruiting, hiring and training highly skilled employees is key to our ability to provide high-quality CRM and BPO solutions to our clients on a global basis. We generally locate our
service centers in locations that have access to higher education and a major transportation infrastructure. We generally offer a competitive pay scale, hire primarily full-time employees who are eligible to receive a full range of employee
benefits, and seek to provide employees with a clear, viable career path. We also offer a combination of client based training, language training and internal technology certification courses to our employees. The combination of our training
programs with close manager mentoring programs enables our employees to not only provide excellent service to our clients, but also progress into management positions within Stream.

As of December 31, 2010, we had over 30,000 employees providing services to our clients customers and administrative services
in our business. Except for our service centers in some countries within Europe and Africa where approximately 4,300 of our employees are subject to collective bargaining agreements using workers councils (which are typical in these regions),
our employees are not subject to collective bargaining agreements. We believe relations with our employees are good.

Competition

The industry in which we operate is competitive and highly fragmented. Our competitors range in size from very small firms
offering specialized applications or short-term projects, to large independent firms, and the in-house operations of many clients and potential clients. In short, the competitive landscape is wide and diverse. We compete directly and indirectly with
certain companies that provide CRM and other BPO solutions on an outsourced basis. These include, but are not limited to, U.S.-based providers, such as APAC Customer Services, Convergys, Sitel, Startek, Sykes, TechTeam Global, TeleTech, and West;
Europe-based providers, such as Atento, Teleperformance Group, and Transcom Worldwide; South Asia-based providers, such as Aditya Birla Minacs, Genpact, SMT Direct, Wipro, and WNS; local entities in other offshore geographies, such as TIVIT and the
Philippine Long Distance Telephone Company; small niche providers, such as Alpine Access, Arise, VIPDesk, and Working Solutions; and large global companies that offer outsourced services within their portfolios, such as IBM, HP, CapGemini, Accenture
and Fujitsu. The list of potential competitors includes both publicly traded and privately held companies.

Service Professional Tools

We believe in making the necessary investments to ensure that each of our service professionals has the tools required to
provide high quality service to end-users. We leverage a mix of in-house developed and third party software solutions across all of our service centers. Many of these solutions are customized for our enterprise and facilitate data capture and
transfer from the service professional to our various data storage and network systems, and are flexible enough to operate our clients CRM interfaces.

Intellectual Property

As of December 31, 2010, we had 13 registered
trademarks in 7 jurisdictions and 29 active registered domain names.

Corporate Information

Stream Global Services, Inc. is a Delaware corporation. Our principal office is located at 20 William Street, Suite 310, Wellesley,
Massachusetts 02481, and our telephone number is (781) 304-1800. Our website address is www.stream.com.



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|ITEM 1A. | RISK FACTORS
|-------- | ------------

Our
business is subject to numerous risks. The risk factors listed below include any material changes to and supersede the description of the risk factors associated with our business previously disclosed in Item 1A of our Quarterly Report on Form
10-Q for the fiscal quarter ended March 31, 2010 and in Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2009. The risk factors that appear below, among others, could cause our actual results to differ
materially from those expressed in forward-looking statements made by us or on our behalf in filings with the Securities and Exchange Commission, press releases, communications with investors and oral statements. Such forward-looking statements are
discussed under Cautionary Note Regarding Forward-Looking Statements.

Risks Relating to Our Business

We have a history of losses and there can be no assurance that we will become or remain profitable or that losses will not continue to occur.

For the year ended December 31, 2010, we had a net loss of $53.5 million. We may not achieve or sustain
profitability in the future. Our ability to achieve profitability will depend, in part, on our ability to:



| |  |  | attract and retain an adequate client base;
| | - |  | -------------------------------------------



| |  |  | effectively manage a large global business;
| | - |  | -------------------------------------------



| |  |  | react to changes, including technological changes, in the markets we target or operate in;
| | - |  | ------------------------------------------------------------------------------------------



| |  |  | deploy our services in additional markets or industry segments;
| | - |  | ---------------------------------------------------------------



| |  |  | continue to maintain operating efficiencies in our service centers across the globe;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | respond to competitive developments and challenges;
| | - |  | ---------------------------------------------------



| |  |  | attract and retain experienced and talented personnel; and
| | - |  | ----------------------------------------------------------



| |  |  | establish strategic business relationships.
| | - |  | -------------------------------------------

We may not be able to do any of these successfully, and our failure to do so is likely to have a negative impact on our operating results.

A substantial portion of our revenue is generated from a limited number of clients, and the loss of one or more of these clients or a decline in end user acceptance of our clients products
would materially reduce our revenue and cash flow and adversely affect our business.

We have derived, and we believe
that we will continue to derive a substantial portion of our revenue from a limited number of clients. Revenue from our two largest clients, Dell Inc. and the Hewlett-Packard Company, accounted for 16% and 12%, respectively, of our revenues for the
year ended December 31, 2010. Although we generally enter into multi-year contracts with clients, most of which are typically renewable, these contracts generally do not require clients to provide a minimum amount of revenues and allow clients
to terminate earlier for convenience. There can be no assurance that we will be able to retain, renew or extend our contracts with our major clients. Although some of these contracts require the client to pay a contractually agreed upon amount in
the event of early termination, there can be no assurance that we will be able to collect such amount or that such amount, if received, will sufficiently compensate us for any significant investment we may have made to support the cancelled program
or for the revenues we may lose as a result of the early termination.

There can also be no assurance that if we were to lose
one or more of our major clients, we would be able to replace such clients with new clients that generate a comparable amount of revenues. A number of factors could cause us to lose business or revenue from a client, and some of these factors are
not predictable and are beyond our control. For example, a client may demand price reductions, change its outsourcing strategy, move work



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in-house or reduce previously forecasted demand. In addition, the volume of work we perform for specific clients may vary from year to year. In most cases, if a client terminates its contract
with us or does not meet its forecasted demand, we would have no contractual recourse even if we have built-out facilities and/or hired and trained service professionals to provide services to the client. Thus, a major client in one year may not
provide the same level of revenue in any subsequent year. Consequently, the loss of one or more of our major clients, or the inability to generate anticipated revenues from them, would have a material adverse effect on our business, results of
operations, financial condition and cash flows. Our operating results for the foreseeable future will continue to depend on our ability to effect sales to a small number of clients and any revenue growth will depend on our success selling additional
services to our large clients and expanding our client base.

We typically charge our clients based on the number of inbound
calls that we service, or the amount of time, by the minute or by the hour, that our service professionals spend with end-users relating to our clients products. We also provide inbound and outbound sales services to our clients, whereby we
are paid based on our level of sales success and other client driven metrics. To the extent there is a decline in spending for our clients products, whether as a result of a decline in product acceptance or general economic conditions, our
business will be adversely affected. There are a number of factors relating to discretionary consumer and business spending, including economic conditions affecting disposable income (such as employment, business conditions, taxation and interest
rates) which impact the ability of our clients to sell their products, and most of which are outside of our control. There can be no assurance that spending for our clients products will not be affected by adverse economic conditions, thereby
affecting our business, results of operations, financial condition and cash flows.

Our revenue is highly dependent on a few industries
and any decrease in demand for outsourced business processes in these industries could reduce our revenue and seriously harm our business.

Most of our revenue is derived from clients concentrated in the computing/hardware and telecommunications/service providers industries. The success of our business largely depends on continued demand for
our services from clients in these industries, as well as on trends in these industries to outsource business processes on a global basis. A downturn in any of the industries we serve, a slowdown or reversal of the trend to outsource business
processes in any of these industries or the introduction of regulations that restrict or discourage companies from outsourcing, could result in a decrease in the demand for our services, which in turn could materially harm our business, results of
operations, financial condition and cash flows. Despite recent signs of economic recovery in some markets, many of the markets in which we operate are still in an economic downturn that we believe has had and will continue to have a negative effect
on the business of many of our clients, which has, in some cases, resulted in lower volumes of work for us. In the event that the global economy slips back into a recession or the economic downturn in some of the markets in which we serve worsens,
we may experience even lower volumes and pricing pressures, which would negatively affect our business, results of operations, financial condition and cash flows.

Other developments may also lead to a decline in the demand for our services in the industries we serve. Consolidation in any of the industries that we serve, particularly involving our clients, may
decrease the potential number of buyers of our services. Furthermore, many of our existing and new clients have begun or plan to consolidate or reduce the number of service providers that they use for various services in various geographies. To the
extent that we are not successful in becoming the recipient of the consolidation of services by these clients our business and revenues will suffer. Any significant reduction in, or the elimination of, the use of the services we provide within any
of these industries would reduce our revenue and cause our profitability to decline.

We may be unable to successfully execute on any of
our identified business opportunities or other business opportunities that we determine to pursue.

In order to pursue
business opportunities, we will need to continue to build our infrastructure, our client initiatives and operational capabilities. Our ability to do any of these successfully could be affected by one or more of the following factors:



| |  |  | the ability of our technology and hardware, suppliers and service providers to perform as we expect;
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| |  |  | our ability to execute our strategy and continue to operate a large, more diverse business efficiently on a global basis;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to effectively manage our third party relationships;
| | - |  | ----------------------------------------------------------------



| |  |  | our ability to attract and retain qualified personnel;
| | - |  | ------------------------------------------------------



| |  |  | our ability to effectively manage our employee costs and other expenses;
| | - |  | ------------------------------------------------------------------------



| |  |  | our ability to retain and grow our clients and the current portfolio of business with each client;
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | technology and application failures and outages, security breaches or interruption of service, which could adversely affect our reputation and our
relations with our clients;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to accurately predict and respond to the rapid technological changes in our industry and the evolving service and pricing demands of the
markets we serve; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to raise additional capital to fund our growth.
| | - |  | -----------------------------------------------------------

Our failure to adequately address the above factors would have a significant impact on our ability to implement our business plan and our ability to pursue other opportunities that arise, which might
negatively affect our business.

Our business may be impacted by the performance of our clients.

Our revenue and call volume is often highly correlated with units sold, renewals from our clients customers or end users, and
revenue of our clients. Our clients may experience rapid changes in their prospects, substantial price competition and pressure on their results of operations, which may result in lower volumes and/or pressure on us to lower our prices. 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. In some cases we do not currently offer or have
service locations in those geographic locations where our clients are seeking services. Our ability to sustain growth and profitability in the current environment is very dependent upon our ability to maintain and/or gain a greater share of business
within our current clients and attract new clients. There can be no assurance that we will be able to do so in the future. In the event that some of our service centers do not receive sufficient call volume in the future, we may be required to close
them and relocate business in other centers. This would require substantial employee severance, lease termination costs and other re-organization costs.

Moreover, we are exposed to additional risks related to our clients ability to pay and the resulting non-collectability of our accounts receivables. In the event that our clients prospects
deteriorate or the availability of credit tightens, our clients liquidity may be adversely impacted, resulting in delayed or reduced payments to us. Such delays or reductions in payment or the non-payment by our clients of amounts owed to us
may require us to incur a bad debt expense. In the event that one of our major clients should file for bankruptcy protection or otherwise fail, our future business, results of operations, financial condition and cash flows could be materially
adversely affected.

We may not be able to achieve incremental revenue growth or profitability.

Our strategy calls for us to achieve incremental revenue growth and profitability through initiatives, such as opening new or expanding
our existing internationally located service locations in places like China. Other initiatives we may pursue include, (i) the addition or expansion of services, such as sales and warranty services; (ii) the introduction of front-end
technology-driven service solutions for fee-based services, self-help, and other technology driven solutions; and (iii) operational improvements in areas such as employee attrition, site capacity utilization, centralization of certain
administrative services, productivity rates and use of technology. We are also in process of consolidating and rationalizing certain of our service facilities and legacy administrative offices to



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improve our profitability. However, there can be no assurance that we will not encounter difficulties or delays in implementing these initiatives, and any such difficulties or delays would
adversely affect our future operating results and financial performance.

We have, on a consolidated basis, a substantial amount of
debt, which could impact our ability to obtain future financing or pursue our growth strategy.

We have substantial
indebtedness. As of December 31, 2010, we had approximately $244.2 million of indebtedness (including capital leases) and up to an additional $75.5 million of borrowings available under the ABL Credit Facility, before taking into account
outstanding letters of credit, subject to borrowing base limitations and other specified terms and conditions.

Our high level
of indebtedness could have important consequences and significant adverse effects on our business, including the following:



| |  |  | we must use a substantial portion of our cash flow from operations to pay principal and interest on our indebtedness, which will reduce the funds
available to us for operations and other purposes;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to obtain additional financing for working capital, capital expenditures, acquisitions or general corporate purposes may be impaired;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our high level of indebtedness could place us at a competitive disadvantage compared to our competitors that may have proportionately less debt;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate may be limited;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | our high level of indebtedness may make us more vulnerable to economic downturns and adverse developments in our business; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | our ability to fund a change of control offer may be limited.
| | - |  | -------------------------------------------------------------

The instruments governing our ABL Credit Facility contain, and the instruments governing any indebtedness we may incur in the future may
contain, restrictive covenants that limit our ability to engage in activities that may be in our long-term best interests. Our failure to comply with these covenants could result in an event of default which, if not cured or waived, could result in
the acceleration of all or a portion of our outstanding indebtedness.

Payments on our indebtedness will require a significant amount of
cash. Our ability to meet our cash requirements and service our debt is impacted by many factors that are outside of our control.

We expect to obtain the funds to pay our expenses and to pay the amounts due under the Notes primarily from our operations and borrowings under our ABL Credit Facility. Our ability to meet our expenses
and make these payments thus depends on our future performance, which will be affected by financial, business, economic and other factors, many of which we cannot control. Our business may not generate sufficient cash flow from operations in the
future and our currently anticipated growth in revenue and cash flow may not be realized, either or both of which could result in our being unable to repay indebtedness, including the Notes, or to fund other liquidity needs. Our ability to borrow
amounts under our ABL Credit Facility will be subject to borrowing base limitations and other specified terms and conditions, and the ability of certain of our foreign subsidiaries to borrow amounts under our ABL Credit Facility in the future is
also subject, among other conditions, to our provision of security interests in certain assets of those foreign subsidiaries, which we did not provide upon the closing of the ABL Credit Facility and we may not be able to provide in the future. If we
do not have sufficient cash resources in the future, we may be required to refinance all or part of our then existing debt, sell assets or borrow more money. We might not be able to accomplish any of these alternatives on terms acceptable to us or
at all. In addition, the terms of existing or future debt agreements may restrict us from adopting any of these alternatives. Our failure to generate sufficient cash flow or to achieve any of these alternatives could materially adversely affect the
value of the Notes and our ability to pay the amounts due under the Notes.



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We may be able to incur substantial additional indebtedness that could further exacerbate the risks
associated with our indebtedness.

We may incur substantial additional indebtedness in the future. Although the
indenture governing the Notes and the loan agreement governing our ABL Credit Facility contain restrictions on our incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions that permit us to incur
substantial additional indebtedness, including additional secured indebtedness. If we incur additional debt, the risks described above under We have, on a consolidated basis, a substantial amount of debt, which could impact our ability to
obtain future financing or pursue our growth strategy and Payments on our indebtedness will require a significant amount of cash. Our ability to meet our cash requirements and service our debt is impacted by many factors that are outside
of our control would intensify.

Our business may not develop in ways that we currently anticipate due to negative public reaction
to outsourcing and recently proposed legislation.

We have based our growth strategy on certain assumptions regarding
our industry, services and future demand in the market for our services. However, the trend to outsource business processes may not continue and could reverse. Outsourcing is a politically sensitive topic in the United States and elsewhere due to a
perceived association between outsourcing providers and the loss of jobs in the United States. A variety of U.S. federal and state legislation has been proposed that, if enacted, could restrict or discourage U.S. companies from outsourcing services
outside the United States. For example, public figures, such as President Obama, have supported legislation that they contend will generate new jobs in the United States, including limiting income tax benefits for companies that offshore American
jobs. Because most of our clients are U.S. companies headquartered in the United States, any expansion of existing laws or the enactment of new legislation restricting offshore outsourcing could harm our business, results of operations and financial
condition. It is possible that legislation could be adopted that would restrict U.S. private sector companies that have federal or state government contracts from outsourcing their services to off-shore service providers. This would also negatively
affect our ability to attract or retain clients that have these contracts.

In addition, many jurisdictions have enacted or
proposed legislation relating to the protection of sensitive customer data or other consumer protections that has resulted or may result in increases in our operational expenses. Current or prospective clients may elect to perform such services
themselves or may be discouraged from transferring their services from onshore to off-shore providers as a result of the perceived diminishment of operational efficiencies or cost savings. Any slowdown or reversal of existing industry trends towards
off-shore outsourcing would seriously harm our ability to compete effectively with competitors that operate solely out of facilities located in the United States or Canada.

We may be unable to cost-effectively attract and retain qualified personnel, which could materially increase our costs.

Our business is dependent on our ability to attract, retain and motivate key executives and also recruit, hire, train and retain highly
qualified technical and managerial personnel, including individuals with significant experience in the industries that we have targeted. The CRM and BPO service industry is labor intensive and is normally characterized by high monthly employee
turnover. Any increase in our employee turnover rate would increase our recruiting and training costs, decrease our operating effectiveness and productivity and delay or deter us from taking on additional business resulting in lower financial
performance. Also, the introduction of significant new clients or the implementation of new large-scale programs may require us to recruit, hire and train personnel at an accelerated rate. In addition, some of our facilities are located in
geographic areas with relatively low unemployment rates, thus potentially making it more difficult and costly to attract and retain qualified personnel. There can be no assurance that we will be able to continue to hire, train and retain sufficient
qualified personnel to adequately staff our business.



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We may not be able to predict our future tax liabilities. If we become subject to increased levels of
taxation or if tax contingencies are resolved adversely, our results of operations and financial performance could be adversely affected.

Due to the international nature of our operations, we are subject to the complex and varying tax laws and rules of several foreign jurisdictions. We may not be able to predict the amount of future tax
liabilities to which we may become subject due to some of these complexities if our positions are challenged by local tax authorities. Any increase in the amount of taxation incurred as a result of challenges to our tax filing positions or due to
legislative or regulatory changes could result in a material adverse effect on our business, results of operations and financial condition. We are subject to tax audits, including issues related to transfer pricing, in the United States and other
jurisdictions. We have material tax-related contingent liabilities that are difficult to predict or quantify. While we believe that our current tax provisions are reasonable and appropriate, we cannot be assured that these items will be settled for
the amounts accrued or that additional exposures will not be identified in the future or that additional tax reserves will not be provided for any such exposures.

Our financial results may be impacted by significant fluctuations in foreign currency exchange rates.

A substantial amount of our operating costs is incurred in foreign currencies. In many cases, we bill our clients in U.S. Dollar, Canadian dollar, Euro and U.K. pound sterling denominated amounts and
incur costs in the host country in local currency. If the U.S. Dollar drops in value relative to other currencies, our cost of providing services outside the United States will increase accordingly when measured in U.S. Dollars. In addition, a
substantial amount of our revenue is denominated in foreign currencies. If the U.S. Dollar increases in value relative to other currencies, the value of those revenues will decrease accordingly when measured in U.S. Dollars. Any continued
significant fluctuations in the currency exchange rates between the U.S. Dollar, Canadian dollar, Euro and U.K. pounds sterling and the currencies of countries in which we operate may affect our business, results of operations, financial
condition and cash flows.

A substantial portion of our costs are incurred and paid in Philippine pesos. Therefore, we are
exposed to the risk of an increase in the value of the Philippine peso relative to the U.S. Dollar, which would increase the value of those expenses when measured in U.S. Dollars. In addition, a significant amount of our revenue is denominated
in Euro. Therefore, we are exposed to the risk of an increase in the value of the U.S. Dollar relative to the Euro, which would decrease the value of those revenues accordingly when measured in U.S. Dollars.

Although we engage in hedging relating to the Canadian dollar, the Indian rupee and the Philippine peso, our hedging strategy may not
sufficiently protect us from further strengthening of these currencies against the U.S. Dollar. As a result, our expenses could increase and harm our operating results. In the converse, if the U.S. Dollar strengthens against the Canadian
dollar, the Indian rupee or the Philippine peso, our hedging strategy could reduce the potential benefits we would otherwise expect from a strengthening U.S. Dollar. We are also doing business in Latin America but do not yet hedge currencies from
these countries.

Our international operations and sales subject us to additional risks, including risks associated with unexpected
events.

We conduct business in various countries outside of the United States, including Canada, the Netherlands, the
United Kingdom, Italy, Ireland, Spain, Sweden, France, Germany, Poland, Denmark, Bulgaria, India, the Philippines, El Salvador, Egypt, Tunisia, South Africa, Nicaragua, the Dominican Republic and Costa Rica. A key component of our growth strategy is
our entry into new markets or expansion of our existing markets, such as China. There can be no assurance that we will be able to successfully market, sell and deliver our services in these markets, or that we will be able to successfully expand our
international operations. The global reach of our business could cause us to be subject to unexpected, uncontrollable and rapidly changing events and circumstances. The following factors, among others, could adversely affect our business and
earnings:



| |  |  | failure to properly comply with foreign laws and regulations applicable to our foreign activities including, without limitation, employment law
requirements;
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| |  |  | compliance with multiple and potentially conflicting regulations in the countries where we operate now and in the future, including employment laws,
intellectual property requirements, and the Foreign Corrupt Practices Act and other anti-corruption laws;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | difficulties in managing foreign operations and attracting and retaining appropriate levels of senior management and staffing;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------



| |  |  | longer cash collection cycles;
| | - |  | ------------------------------



| |  |  | seasonal reductions in business activities, particularly throughout Europe;
| | - |  | ---------------------------------------------------------------------------



| |  |  | proper compliance with local tax laws which can be complex and may result in unintended adverse tax consequences;
| | - |  | -----------------------------------------------------------------------------------------------------------------



| |  |  | anti-American sentiment due to American policies that may be unpopular in certain countries;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | difficulties in enforcing agreements through foreign legal systems;
| | - |  | -------------------------------------------------------------------



| |  |  | fluctuations in exchange rates that may affect product demand and may adversely affect the profitability in U.S. dollars of services we provide in
foreign markets, where payment for our products and services is made in the local currency and revenues are earned in U.S. dollars or other currency;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in general economic conditions or political strife or upheaval in countries where we operate;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | the ability to efficiently repatriate cash to the United States and transfer cash between foreign jurisdictions;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | changes in transfer pricing policies for income tax purposes in countries where we operate;
| | - |  | -------------------------------------------------------------------------------------------



| |  |  | restrictions on downsizing operations and personnel in Europe and other jurisdictions (i.e. regulatory or works council restrictions) and expenses and
delays associated with any such activities; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes to or elimination of the international tax holiday for our subsidiaries in India or the Philippines.
| | - |  | ------------------------------------------------------------------------------------------------------------

As we continue to expand our business globally, our success will depend, in large part, on our ability to anticipate and effectively
manage these and other risks associated with our international operations. Our failure to manage any of these risks successfully could harm our global operations and reduce our global sales, adversely affecting our business and future financial
performance.

Countries where we do business have recently experienced political and economic instability and civil unrest and
terrorism, which has and may continue to disrupt our operations and may cause our business to suffer.

Certain
countries where we do business, particularly Egypt and Tunisia, and less recently the Philippines, India, and certain Latin American countries, have experienced or are experiencing civil unrest, terrorism and political turmoil, resulting in
temporary work stoppages and telecommunication or other technology outages. If such civil unrest or political turmoil increases or such operational disruptions become prolonged, our existing and potential new clients may hesitate to keep or move
their business into such locations. In addition, we expect to enter into new markets in places such as China which may have similar risks. These conditions could disrupt our operations and cause our business to suffer.

Moreover, countries where we do business, and in particular the Philippines, have experienced significant inflation, currency declines
and shortages of foreign exchange. We are exposed to the risk of cost increases due to inflation in the Philippines, which has historically been at a much higher rate than in the United States.

Current tax holidays in the Philippines will expire within the next two years.

We currently benefit from income tax holiday incentives in the Philippines pursuant to the registrations with the Philippine Economic Zone
Authority, or PEZA, of our various projects and operations. Under such PEZA



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registrations, the income tax holiday of our various PEZA-registered projects in the Philippines expire at staggered dates through 2012. The expiration of these tax holidays will increase our
effective income tax rate.

Our revenues and costs are subject to quarterly variations that may adversely affect quarterly financial
results.

We have experienced, and in the future could experience, quarterly variations in revenues as a result of a
variety of factors, many of which are outside our control, including:



| |  |  | the timing of new client contracts;
| | - |  | -----------------------------------



| |  |  | the timing of new service offerings or modifications in client strategies;
| | - |  | --------------------------------------------------------------------------



| |  |  | our ability to attract and retain and increase sales to existing customers;
| | - |  | ---------------------------------------------------------------------------



| |  |  | the timing of acquisitions of businesses and products by us and our competitors;
| | - |  | --------------------------------------------------------------------------------



| |  |  | our ability to effectively build and start-up new solution centers;
| | - |  | -------------------------------------------------------------------



| |  |  | product and price competition;
| | - |  | ------------------------------



| |  |  | our ability to build an integrated service offering on a common technology platform;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | changes in our operating expenses;
| | - |  | ----------------------------------



| |  |  | software defects or other product quality problems;
| | - |  | ---------------------------------------------------



| |  |  | the ability to implement new technologies on a timely basis;
| | - |  | ------------------------------------------------------------



| |  |  | the expiration or termination of existing contracts;
| | - |  | ----------------------------------------------------



| |  |  | the timing of increased expenses incurred to obtain and support new business;
| | - |  | -----------------------------------------------------------------------------



| |  |  | currency fluctuations; and
| | - |  | --------------------------



| |  |  | changes in our revenue mix among our various service offerings.
| | - |  | ---------------------------------------------------------------

In addition, our planned staffing levels, investments and other operating expenditures are based on revenue forecasts provided by our
clients. If actual revenues are below these forecasts or our own expectations in any given quarter, our business, results of operations, financial condition and cash flows would likely be materially adversely affected for that quarter and
thereafter. In addition, to the extent that we enter into mergers and acquisitions or new business ventures in the future, our quarterly or future results may be impacted.

Our financial results may be adversely affected by increases in labor-related costs.

Because a significant portion of our operating costs relate to labor costs, an increase in U.S. or foreign wages, costs of employee benefits or taxes could have a material adverse effect on our business,
results of operations and financial condition. For example, over the past several years, healthcare costs have increased at a rate much greater than that of general cost or price indices. Increases in our pricing may not fully compensate us for
increases in labor and other costs incurred in providing services. Some of our facilities are located in jurisdictions, such as France, Italy and Germany, where it is difficult or expensive to temporarily or permanently lay off hourly workers due to
both local laws and practices within these jurisdictions. Such laws will make it more expensive for us to respond to adverse economic conditions. There can be no assurance that we will be able to increase our pricing or reduce our workforce to fully
compensate for the increases in the costs to provide services.

We may need to increase the levels of employee compensation
more rapidly than in the past to remain competitive in attracting and retaining the quality and number of employees that our business requires. Wage costs in India, the Philippines and other offshore locations have historically been significantly
lower than wage costs in the North America and Europe for comparably skilled professionals, which has been one of Streams



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competitive advantages. However, because of rapid economic growth in India and the Philippines, increased demand for CRM and BPO services and increased competition for skilled employees in
offshore low cost locations like India and the Philippines, wages for comparably skilled employees in such locations are increasing at a faster rate than in North America and Europe, which may reduce this competitive advantage. As additional
outsourcing companies enter the market and expand their operations, we expect competition for skilled employees at the service professional and middle and upper management levels to increase which would affect the availability and the cost of our
employees and increase our attrition rate.

Wage increases in the long term may reduce our profit margins. Additionally,
because substantially all of our employees based outside the United States are paid in local currency, while our revenues are collected in other currencies (primarily in U.S. dollars, the Euro and U.K. pounds sterling), our employee costs as a
percentage of revenues may increase or decrease significantly if the exchange rates between these currencies fluctuate significantly.

We have not experienced significant union activity or organized labor activity in the past. There can be no assurance that we will not experience increased union organizing activity in the future. Such
organization could increase our cost of labor, limit our ability to modify work schedules and cause work stoppage.

Our profitability
will be adversely affected if we do not maintain sufficient capacity utilization.

Our profitability is influenced
significantly by the capacity utilization of our service centers. Because a majority of our business consists of inbound contacts from end-users, we have no control of when or how many end user customer contacts are made. Moreover, we have
significantly higher utilization during peak (week day) periods than during off-peak (night and weekend) periods and therefore we need to reserve capacity at our service centers to anticipate peak periods. In the future, we may consolidate or close
under-performing service centers in order to maintain or improve targeted utilization and margins. If we close service centers in the future due to insufficient customer demand, we may be required to record restructuring or impairment charges, which
could adversely impact our business, results of operations and financial condition. There can be no assurance that we will be able to achieve or maintain optimal service center capacity utilization.

Many of our existing or emerging competitors are better established and have significantly greater resources, which may make it difficult to
attract and retain clients and grow revenues.

The market in which we compete is highly competitive and fragmented. We
expect competition to persist and intensify in the future. Our competitors include small firms offering specific applications, divisions of large entities, large independent firms and, most significantly, the in-house operations of clients or
potential clients.

Because we compete with the in-house operations of existing or potential clients, our business, results of
operations, financial condition and cash flows could be adversely affected if our existing clients decide to provide CRM and other BPO solutions that currently are outsourced or if potential clients retain or increase their in-house customer service
and product support capabilities. In addition, competitive pressures from current or future competitors or in-house operations could cause our services to lose market acceptance or result in significant price erosion, which would have a material
adverse effect upon our business, results of operations, financial condition and cash flows. Some of our clients may in the future seek to consolidate services that we provide, which may in turn reduce the amount of work we perform for them.

Some of our existing and future competitors have greater financial, human and other resources, longer operating histories,
greater technological expertise, more recognizable brand names and more established relationships than we do in the industries that we currently serve or may serve in the future. Some of our competitors may enter into merger, strategic or commercial
relationships among themselves or with larger, more established companies in order to increase their ability to address client needs. Increased competition, pricing pressure or loss of market share could reduce our operating margin, which could harm
our business, results of operations, financial condition and cash flows.



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We may engage in future acquisitions that could disrupt our business, cause dilution to our
stockholders and harm our financial position and operating results.

We may pursue acquisitions of companies or assets
in order to enhance our market position and/or expand the types of services that we offer to our clients and may enter geographic markets where we do not currently conduct business. We may also acquire minority interest in companies or enter into
joint venture arrangements with other parties, which may include existing clients. We may also pursue certain acquisitions on an unsolicited basis, which may cause management distractions and increased legal costs. We may not be able to find
suitable acquisition candidates and we may not be able to consummate such acquisitions on favorable terms, if at all. If we do complete acquisitions, we cannot be sure that they will ultimately strengthen our competitive position, or that our
clients, employees or investors will not view them negatively. Acquisitions may disrupt our ongoing operations, divert management from day-to-day responsibilities, increase our indebtedness, liabilities, exposure to different legal regimes and/or
regulations, and expenses and harm our operating results or financial condition. We may not be able to successfully integrate these acquisitions into our operations and may lose key clients, employees, members of management or not achieve the
synergies and other benefits expected from the acquisition or investment. Future acquisitions may reduce our cash available for operations and other uses and could result in an increase in amortization expense, potentially dilutive issuances of
equity securities or the incurrence of debt, which could harm our business, results of operations, financial condition and cash flows.

Our business depends on uninterrupted service to our clients. A system failure or labor shortage could cause delays or interruptions of service,
which could cause us to lose clients.

Our operations are dependent upon our ability to protect our service centers,
computer and telecommunications equipment and software systems against damage or interruption from fire, power loss, telecommunications interruption or failure, natural disaster, breaches in data and technology security integrity and other similar
events in order to provide our clients with reliable services. Additionally, we depend on our employees to perform our services on behalf of our clients. If we are unable to staff our service centers due to labor shortages, or employees miss work
due to labor strikes or civil or political unrest, natural disasters and other similar events, our ability to provide our clients with reliable services will be hindered. Some of the events that could adversely affect our ability to deliver reliable
service include physical damage to our network operations centers; disruptions, power surges or outages to our computer and telecommunications technologies which are beyond our control; sabotage or terrorist attacks and cyber attacks or data theft;
software defects; fire or natural disasters such as typhoons, hurricanes, floods and earthquakes; civil unrest and political turmoil; and labor shortages or walk-outs.

Technology is a critical foundation in our service delivery. We utilize and deploy internally developed and third party software solutions that is often customized by us across various hardware and
software environments. We operate an extensive internal voice and data network that links our global sites together in a multi-hub model that enables the rerouting of call volumes. We also rely on multiple public communication channels for
connectivity to our clients. Maintenance of and investment in these foundational components are critical to our success. If the reliability of technology or network operations fall below required service levels, or a systemic fault affects the
organization broadly, business from our existing and potential clients may be jeopardized and cause our revenue to decrease.

If we experience a temporary or permanent interruption at one or more of our service centers and/or data centers, through casualty,
operating malfunction, labor shortage or otherwise, our business could be materially adversely affected and we may be required to pay contractual damages to affected clients or allow some clients to terminate or renegotiate their contracts with us.
Although we maintain property, business interruption and general liability insurance, including coverage for errors and omissions, there can be no assurance that our existing coverage will continue to be available on reasonable terms or will be
available in amounts sufficient to cover one or more large claims, or that the insurer will not disclaim coverage as to any future claim. The occurrence of errors could result in a loss of data to us or our clients, which could cause a loss of
revenues, failure to achieve



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product acceptance, increased insurance costs, product returns, legal claims, including product liability claims, against us, delays in payment to us by clients, increased service and warranty
expenses or financial concessions, diversion of resources, injury to our reputation, or damages to our efforts to build brand awareness, any of which could have a material adverse effect on our market share and, in turn, our business, results of
operations, financial condition and cash flows.

We are subject to U.S. and foreign jurisdiction laws relating to individually
identifiable information, and failure to comply with those laws, whether or not inadvertent, could subject us to legal actions and negatively impact our operations.

We process, transmit and store information relating to identifiable individuals, both in our role as a service provider and as an employer. As a result, we are subject to numerous U.S. (both federal and
state) and foreign jurisdiction laws and regulations, such as the U.S. Health Insurance Portability and Accountability Act and the European Union Data Protection Directive 95/46/EC, governing the protection and processing of individually
identifiable information, including social security numbers, financial and health information. Failure to comply with these types of laws may subject us to, among other things, liability for monetary damages, fines and/or criminal prosecution,
unfavorable publicity, restrictions on our ability to process information and allegations by our clients that we have not performed our contractual obligations, any of which may have a material adverse effect on our profitability and cash flow.

Unauthorized disclosure of sensitive or confidential data could expose us to protracted and costly litigation and penalties and may
cause us to lose clients.

We are dependent on information technology networks and systems to process, transmit and
store electronic information and to communicate among our locations and with our partners and clients. Security breaches of this infrastructure could lead to shutdowns or disruptions of our systems and potential unauthorized disclosure of
confidential information. We are also required at times to manage, utilize, record and store sensitive or confidential data. As a result, we are subject to numerous federal and state laws and regulations designed to protect this information. If any
person, including any of our employees, negligently disregards or intentionally breaches our established controls with respect to such data or otherwise mismanages or misappropriates that data, we could be subject to monetary damages, fines and/or
criminal prosecution. Unauthorized disclosure or recording of sensitive or confidential client or customer data, whether through system failure, employee negligence, fraud or misappropriation, could damage our reputation and cause us to lose
clients. Similarly, unauthorized access to or through our information systems, whether by our employees or third parties, could result in negative publicity, legal liability and damage to our reputation, business, results of operations, financial
condition and cash flows.

We have a long selling cycle for our CRM and BPO services that requires significant funds and management
resources and a long implementation cycle that requires significant resource commitments.

We have a long selling cycle
for our CRM and BPO services for new clients, which requires significant investment of capital, resources and time by both our clients and us. Typically, before committing to use our services, potential clients require us to expend substantial time
and resources educating them as to the value of our services and assessing the feasibility of integrating our systems and processes with theirs. Our clients then evaluate our services before deciding whether to use them. Therefore, our selling
cycle, which generally ranges from six to twelve months, is subject to many risks and delays over which we have little or no control, including our clients decision to choose alternatives to our services (such as other providers or in-house
offshore resources) and the timing of our clients budget cycles and approval processes. In addition, we may not be able to successfully conclude a contract after the selling cycle is complete.

Implementing our services involves a significant commitment of resources over an extended period of time from both our clients and us.
Our clients may also experience delays in obtaining internal approvals or delays



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associated with technology or system implementations, thereby delaying further the implementation process. Our clients and future clients may not be willing or able to invest the time and
resources necessary to implement our services, and we may fail to close sales with potential clients to which we have devoted significant time and resources, which could have a material adverse effect on our business, results of operations,
financial condition and cash flows.

Once we are engaged by a client, it may take us several months before we start to recognize
significant revenues.

When we are engaged by a client after the selling process for our CRM and BPO services, it takes
from four to six weeks to integrate the clients systems with ours and up to three months thereafter to ramp up our services and staff levels, including hiring and training qualified service professionals and technicians, to the clients
requirements. Depending on the complexity of the processes being implemented, these time periods may be significantly longer. Implementing processes can be subject to potential delays similar to certain of those affecting the selling cycle.
Therefore, we do not recognize significant revenues until after we have completed the implementation phase.

If we are unable to adjust
our pricing terms or the mix of products and services we provide to meet the changing demands of our CRM and BPO clients and potential CRM and BPO clients, our business, results of operations and financial condition may be adversely affected.

Industry pricing models are evolving, and we anticipate that clients may increasingly request transaction-based
pricing. This pricing model will place additional pressure on the efficiency of our service delivery so that we can maintain reasonable operating margins. If we are unable to adapt our operations to evolving pricing protocols, our results of
operations may be adversely affected or we may not be able to offer pricing that is attractive relative to our competitors.

In addition, the CRM and BPO services we provide to our clients, and the revenues and income from those services, may decline or vary as
the type and quantity of services we provide under those contracts changes over time, including as a result of a shift in the mix of products and services we provide. Furthermore, our clients, some of which have experienced rapid changes in their
prospects, substantial price competition and pressures on their profitability, have in the past and may in the future demand price reductions, automate some or all of their processes or change their outsourcing strategy by moving more work in-house
or to other providers, any of which could reduce our profitability. Any significant reduction in or the elimination of the use of the services we provide to any of our clients, or any requirement to lower our prices, would harm our business.

We depend on third-party technology that, if it should become unavailable, contain defects, or infringe on another partys
intellectual property rights, could result in increased costs or delays in the production and improvement of our products or result in liability claims.

We license critical third-party technology that we incorporate into our services on a non-exclusive basis. We customize the third-party software in many cases to our specific needs and content
requirements. While we monitor our usage of third-party technology and our compliance with our licenses to use such technology, we may inadvertently violate the terms of our license agreements, which could subject us to liability, including the
termination of our rights to use such software or the imposition of additional license fees. If our relations with any of these third-party technology providers become impaired, or if the cost of licensing any of these third-party technologies
increases, our gross margin levels could significantly decrease and our business could be harmed.

The operation of our
business would also be impaired if errors occur in the third-party software that we utilize or the third-party software infringes upon another partys intellectual property rights. It may be more difficult for us to correct any defects or
viruses in third-party software because the software is not within our control. If we are unable to correct such errors, our business could be adversely affected. There can be no



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assurance that these third parties will continue to invest the appropriate resources in their products and services to maintain and enhance the capabilities of their software. In addition,
although we try to limit our exposure to potential claims and liabilities arising from third-party infringement claims arising out of, and errors, defects or viruses in, such third-party software, in the license agreements that we enter into with
such third-party software providers, such provisions may not effectively protect us against such claims in all cases and in all jurisdictions.

If we are unable to keep pace with technological changes, our business will be harmed.

Our business is highly dependent on our computer and telecommunications equipment, infrastructure and software capabilities. Our failure
to maintain the competitiveness of our technological capabilities or to respond effectively to technological changes could have a material adverse effect on our business, results of operations or financial condition. Our continued growth and future
profitability will be highly dependent on a number of factors, including our ability to:



| |  |  | expand our existing solutions offerings;
| | - |  | ----------------------------------------



| |  |  | achieve cost efficiencies in our existing service center operations;
| | - |  | --------------------------------------------------------------------



| |  |  | introduce new solutions that leverage and respond to changing technological developments; and
| | - |  | ---------------------------------------------------------------------------------------------



| |  |  | remain current with technology advances.
| | - |  | ----------------------------------------

There can be no assurance that technologies, applications or services developed by our competitors or vendors will not render our products or services non-competitive or obsolete, that we can successfully
develop and market any new services or products, that any such new services or products will be commercially successful or that the integration of automated customer support capabilities will achieve intended cost reductions. In addition, the
inability of equipment vendors and service providers to supply equipment and services on a timely basis could harm our operations and financial condition.

Defects or errors within our software could adversely affect our business and results of operations.

Design defects or software errors may delay software introductions or reduce the satisfaction level of clients and may have a materially adverse effect on our business and results of operations. Our
software is highly complex and may, from time to time, contain design defects or software errors that may be difficult to detect and/or correct. Since both our clients and we use our software to perform critical business functions, design defects,
software errors or other potential problems within or outside of our control may arise from the use of our software. It may also result in financial or other damages to our clients, for which we may be held responsible. Although our license
agreements with our clients often contain provisions designed to limit our exposure to potential claims and liabilities arising from client problems, these provisions may not effectively protect us against such claims in all cases and in all
jurisdictions. Claims and liabilities arising from client problems could result in monetary damages to us and could cause damage to our reputation, adversely affecting our business and results of operations.

Failure to comply with internal control attestation requirements could lead to loss of public confidence in our financial statements.

Any future acquisitions and other material changes in our operations likely will require us to expand and possibly
revise our disclosure controls and procedures, internal controls over our financial reporting and related corporate governance policies. In addition, the Sarbanes-Oxley Act of 2002 and associated regulations relating to effectiveness of internal
controls over financial reporting are subject to varying interpretations in many cases due to their lack of specificity and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing
bodies. If we fail to comply with these laws and regulations or our efforts to comply with these laws and regulations differ from the conduct intended by regulatory or governing bodies due to ambiguities or varying interpretations of the law, we
could be subject to regulatory sanctions, the public may lose confidence in our internal controls and the reliability of our financial statements, and our reputation may be harmed.



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The industries in which we operate are continually evolving. Our services may become obsolete, and we
may not be able to develop competitive services on a timely basis or at all.

The CRM and BPO service industry is
characterized by rapid technological change, competitive pricing, frequent new service introductions and evolving industry standards. The success of our company will depend on our ability to anticipate and adapt to these challenges and to offer
competitive services on a timely basis. We face a number of difficulties and uncertainties associated with this reliance on technological development, such as:



| |  |  | competition from service providers using other means to deliver similar or alternative services;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | realizing economies of scale on a global basis;
| | - |  | -----------------------------------------------



| |  |  | responding successfully to advances in competing technologies and network security in a timely and cost-effective manner; and
| | - |  | -----------------------------------------------------------------------------------------------------------------------------



| |  |  | existing, proposed or undeveloped technologies that may render our services less profitable or obsolete.
| | - |  | --------------------------------------------------------------------------------------------------------

If we fail to manage future growth effectively, we may be unable to execute our business plan, maintain high levels of service or address
competitive challenges adequately.

We plan to expand our business. We anticipate that this expansion will require
substantial management effort and significant additional investment in infrastructure, service offerings and service center expansion. In addition, we will be required to continue to improve our operational, financial and management controls and our
reporting procedures. Future growth of our company will place a significant strain on managerial, administrative, operational, financial and other resources. If we are unable to manage growth successfully, our business will be harmed.

Government regulation of our industry and the industries we serve may increase our costs and restrict the operation and growth of our business.

Both the U.S. Federal and various state governments regulate our business and the outsourced business services
industry as a whole. The Federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994 broadly authorizes the Federal Trade Commission (FTC) to issue regulations restricting certain telemarketing practices and prohibiting
misrepresentations in telephone sales. The FTC regulations implementing this Act are commonly referred to as the Telemarketing Sales Rule. Our operations outside the United States are also subject to regulation. In addition to current laws, rules
and regulations that regulate our business, bills are frequently introduced in Congress to regulate the use of credit information. We cannot predict whether additional Federal or state legislation that regulates our business will be enacted.
Additional Federal or state legislation could limit our activities or increase our cost of doing business, which could cause our operating results to suffer.

We could be subject to a variety of regulatory enforcement or private actions for our failure or the failure of our clients to comply with these regulations. Our results of operations could be adversely
impacted if the effect of government regulation of the industries we serve is to reduce the demand for our services or expose us to potential liability.

We may become involved in litigation that may materially adversely affect us.

We are currently, and from time to time in the future we may become involved in various legal proceedings relating to matters incidental to the ordinary course of our business, including patent, software,
commercial, product liability, employment, class action, whistleblower and other litigation and claims, and governmental and other regulatory investigations and proceedings. Such matters can be time-consuming, divert managements attention and
resources and cause us to incur significant expenses. Furthermore, because litigation is inherently unpredictable, there can be no assurance that the results of any of these actions will not have a material adverse effect on our business, results of
operations or financial condition.



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An outbreak of a pandemic, flu or other disease, or the threat of a pandemic, flu or other disease,
may adversely impact our ability to perform our services or may adversely impact client and consumer demand.

We have a
large number of employees across the world in many different countries with different levels of healthcare monitoring. Most of these employees work in relatively close proximity to each other in our service centers. A significant or widespread
outbreak of a pandemic, such as the flu or other contagious illness, or even a perceived threat of such an outbreak, could cause significant disruptions to our employee base and could adversely impact our ability to provide our services and deliver
our products. This could have a significant impact on our business and our results of operations.

Risks Related to Our Equity Securities

There can be no assurance that NYSE Amex will continue to list our securities on its exchange, and any delisting could limit
investors ability to make transactions in our securities and subject us to additional trading restrictions.

Our
units, common stock and warrants are listed on NYSE Amex, a national securities exchange. We cannot assure you that our securities will continue to be listed on NYSE Amex in the future. If NYSE Amex delists our securities from trading on its
exchange and we are unable to list our securities on another exchange, our securities could be quoted on the OTC Bulletin Board, or pink sheets. As a result, we could face significant adverse consequences, including but not limited to
the following:



| |  |  | a limited availability of market quotations for our securities;
| | - |  | ---------------------------------------------------------------



| |  |  | a determination that our common stock is a penny stock which will require brokers trading in our common stock to adhere to more stringent
rules and possibly resulting in a reduced level of trading activity in the secondary trading market for our securities;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | a reduced liquidity for our securities;
| | - |  | ---------------------------------------



| |  |  | a decreased ability to obtain new financing or issue new securities on favorable terms in the future;
| | - |  | -----------------------------------------------------------------------------------------------------



| |  |  | a decreased ability to issue additional securities or obtain additional financing in the future; and
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | a decreased ability of our security holders to sell their securities in certain states.
| | - |  | ---------------------------------------------------------------------------------------

The value of our units, common stock and warrants may be adversely affected by market volatility.

The market price of our units, shares and warrants has been highly volatile and subject to wide fluctuations. In addition, our financial
sponsors hold a large percentage of our outstanding shares, which are subject to certain restrictions on resale, and our relatively low trading volume causes significant price variations to occur. If the market prices of our units, shares and
warrants decline significantly, you may be unable to resell your units, shares and warrants at or above your purchase price, if at all. We cannot assure you that the market price of our units, shares and warrants will not fluctuate or decline
significantly in the future. Some of the factors that could negatively affect the price of our units, shares and warrants or result in fluctuations in the price or trading volume of our units, shares and warrants include:



| |  |  | significant volatility in the market price and trading volume of comparable companies;
| | - |  | --------------------------------------------------------------------------------------



| |  |  | actual or anticipated changes in our earnings or fluctuations in our operating results or in the expectations of securities analysts;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the exercise of participation rights held by certain of our stockholders in connection with the exercise of our warrants;
| | - |  | -------------------------------------------------------------------------------------------------------------------------



| |  |  | announcements of technological innovations, new products, strategic alliances or significant agreements by us or by our competitors;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------



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| |  |  | general economic conditions and trends;
| | - |  | ---------------------------------------



| |  |  | catastrophic events; or
| | - |  | -----------------------



| |  |  | recruitment or departure of key personnel.
| | - |  | ------------------------------------------

The control that our financial sponsors have over us and provisions in our organizational documents and Delaware law might limit your ability to influence the outcome of key transactions, including
a change in control, and, therefore, depress the trading price of our common stock.

Our financial sponsors, Ares
Corporate Opportunities Fund II, L.P., NewBridge International Investment Ltd. and EGS Dutchco B.V., collectively own approximately 87% of our common stock and are parties to a stockholders agreement that restricts our ability to undertake certain
actions. Therefore, our financial sponsors collectively are able to determine the outcome of all matters requiring stockholder approval, are able to cause or prevent a change of control of our company or a change in the composition of our board of
directors, and could preclude any unsolicited acquisition of our company. The market price of our shares could be adversely affected to the extent that this concentration of ownership and stockholders agreement, as well as provisions of our
organizational documents, discourage or impede potential takeover attempts that our other stockholders may favor. Furthermore, our financial sponsors may, in the future, own businesses that directly or indirectly compete with us. Our financial
sponsors may also pursue acquisition opportunities that may be complementary to our business, and as a result, those acquisition opportunities may not be available to us.

Provisions in our organizational documents and Delaware law may also discourage, delay or prevent a merger, acquisition or other change in control that stockholders may consider favorable, including
transactions in which you might otherwise receive a premium for your shares of our common stock. These provisions may also prevent or frustrate attempts by our stockholders to replace or remove our management. For example, our organizational
documents require advance notice for proposals by stockholders and nominations, place limitations on convening stockholder meetings and authorize the issuance of preferred shares that could be issued by our board of directors to thwart a takeover
attempt. Moreover, certain provisions of Delaware law may delay or prevent a transaction that could cause a change in our control.

Our
outstanding warrants have been, and in the future may be, exercised and trigger the exercise of certain participation rights held by our major stockholders, which have increased, and in the future would increase, the number of shares eligible for
future resale in the public market and result in dilution to our stockholders. This might have an adverse effect on the market price of our common stock.

As of December 31, 2010, 7,357,004 publicly traded warrants were outstanding, including 30,323 shares of common stock underlying warrants embedded in our units. To the extent that additional warrants
are exercised, additional shares of our common stock will be issued, which will result in further dilution to our stockholders and increase the number of shares eligible for resale in the public market. In addition, the exercise of any of our
publicly traded warrants triggers contractual participation rights for Ares, NewBridge and Dutchco (collectively, the Participating Stockholders), pursuant to which they would have the right to purchase from us 2.4364 additional shares
of common stock at $6.00 per share for each of our publicly traded warrants that are exercised, up to a maximum of approximately 17,925,000 shares, which will cause further dilution to our stockholders. In addition, sales in the public market of
substantial numbers of shares acquired through either the exercise of these participation rights or the exercise of these warrants could adversely affect the market price of our shares.

We do not expect to pay any dividends on our common stock for the foreseeable future.

You should not rely on an investment in our common stock to provide dividend income. We do not anticipate that we will pay any dividends to holders of our common stock in the foreseeable future. Instead,
we plan to retain any earnings to maintain and expand our existing operations. In addition, we are restricted from paying dividends in certain circumstances under the terms of the indenture governing our Notes and the ABL



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Credit Facility. Accordingly, investors must rely on sales of their common stock after price appreciation, which may never occur, as the only way to realize any return on their investment. As a
result, investors seeking cash dividends should not purchase our common stock.

We may choose to redeem our outstanding warrants at a
time that is disadvantageous to our warrant holders.

We may redeem the warrants issued as a part of our publicly
traded units at any time in whole and not in part, at a price of $0.01 per warrant, upon a minimum of 30 days prior written notice of redemption, if and only if, the last sales price of our common stock equals or exceeds $11.50 per share
for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption. Redemption of the warrants could force the warrant holders (1) to exercise the warrants and pay the exercise price
therefore at a time when it may be disadvantageous for the holders to do so, (2) to sell the warrants at the then current market price when they might otherwise wish to hold the warrants or (3) to accept the nominal redemption price which,
at the time the warrants are called for redemption, is likely to be substantially less than the market value of the warrants.



|ITEM 1B. | UNRESOLVED STAFF COMMENTS
|-------- | -------------------------

None.



|ITEM 2. | PROPERTIES
|------- | ----------

Description of Property

We have 50 locations in 22 countries that are designed to be globally integrated. Our facilities are organized into two
regions: Americas, which includes the United States, Canada, the Philippines, India, Costa Rica, the Dominican Republic, Nicaragua and El Salvador; and EMEA, which includes Europe, the Middle East and Africa.

We do not own offices or properties but rather lease offices in the United States, Canada, the Netherlands, the United Kingdom, Italy,
Ireland, Spain, Sweden, France, Germany, Poland, India, Tunisia, the Dominican Republic, Costa Rica, El Salvador, Nicaragua, the Philippines, Egypt, South Africa, Denmark and Bulgaria. Our headquarters are located in Wellesley, Massachusetts.

We believe that our facilities are adequate for our present needs in all material respects.



|ITEM 3. | LEGAL PROCEEDINGS
|------- | -----------------

We
have been named as a third-party defendant in a putative class action captioned Kambiz Batmanghelich, on behalf of himself and all others similarly situated and on behalf of the general public, v. Sirius XM Radio, Inc., filed in the Los
Angeles County Superior Court on November 10, 2009, and removed to the United States District Court for the Central District of California. The Plaintiff alleges that Sirius XM Radio, Inc. recorded telephone conversations between Plaintiff
and members of the proposed class of Sirius customers, on the one hand, and Sirius and its employees, on the other, without the Plaintiffs and class members consent in violation of Californias telephone recording
laws. The Plaintiff also alleges negligence and violation of the common law right of privacy, and seeks injunctive relief. On December 21, 2009, Sirius XM Radio, Inc. filed a Third-Party Complaint in the action against us seeking
indemnification for any defense costs and damages that result from the putative class action. On March 25, 2010, the Plaintiff filed an amended complaint that added us as a defendant. We believe that we have meritorious defenses to these claims, but
there can be no assurance at this time as to the outcome of this lawsuit.



|ITEM 4. | RESERVED
|------- | --------



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PART II



|ITEM 5. | MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|------- | ------------------------------------------------------------------------------------------------------------

On October 18, 2007, our units began trading on NYSE Amex under the symbol OOO.U. Each of our units consists of one
share of common stock and one warrant. On November 27, 2007, the common stock and warrants underlying our units began to trade separately on NYSE Amex under the symbols OOO and OOO.WS, respectively. On October 26,
2009, we changed our symbols to SGS, SGS.U and SGS.WS, respectively.

The following sets
forth the high and low sales price of our common stock, warrants and units, as reported on NYSE Amex for the periods shown:



|                                     |  |              |      |  |          |   |      |       |  |   |      |  |  |      |      |  |     |   |      |  |  |   |      | 
|------------------------------------ |  | ------------ | ---- |  | -------- | - | ---- | ----- |  | - | ---- |  |  | ---- | ---- |  | --- | - | ---- |  |  | - | ---- | 
|                                     |  | Common Stock |      |  | Warrants |   |      | Units | 
|                                     |  | High         |      |  | Low      |   |      | High  |  |   | Low  |  |  | High |      |  | Low |  
|Fiscal Year Ending December 31, 2009 |  |              |      |  |          |   |      |       |  |   |      |  |  |      |      |  |     |   |      |  |  |   |      | 
|1stQuarter                           |  | $            | 4.35 |  |          | $ | 2.84 |       |  | $ | 0.22 |  |  | $    | 0.06 |  |     | $ | 3.51 |  |  | $ | 4.50 | 
|2ndQuarter                           |  | $            | 5.05 |  |          | $ | 2.95 |       |  | $ | 0.80 |  |  | $    | 0.11 |  |     | $ | 3.75 |  |  | $ | 4.98 | 
|3rdQuarter                           |  | $            | 5.50 |  |          | $ | 3.39 |       |  | $ | 0.35 |  |  | $    | 0.06 |  |     | $ | 4.27 |  |  | $ | 5.43 | 
|4thQuarter                           |  | $            | 7.01 |  |          | $ | 5.30 |       |  | $ | 0.35 |  |  | $    | 0.06 |  |     | $ | 5.25 |  |  | $ | 7.44 | 
|Fiscal Year Ending December 31, 2010 |  |              |      |  |          |   |      |       |  |   |      |  |  |      |      |  |     |   |      |  |  |   |      | 
|1stQuarter                           |  | $            | 6.88 |  |          | $ | 5.71 |       |  | $ | 0.83 |  |  | $    | 0.45 |  |     | $ | 7.65 |  |  | $ | 6.65 | 
|2ndQuarter                           |  | $            | 6.92 |  |          | $ | 5.35 |       |  | $ | 0.82 |  |  | $    | 0.39 |  |     | $ | 7.63 |  |  | $ | 6.10 | 
|3rdQuarter                           |  | $            | 5.70 |  |          | $ | 3.38 |       |  | $ | 0.43 |  |  | $    | 0.15 |  |     | $ | 7.20 |  |  | $ | 4.34 | 
|4thQuarter                           |  | $            | 4.23 |  |          | $ | 3.45 |       |  | $ | 0.20 |  |  | $    | 0.04 |  |     | $ | 4.45 |  |  | $ | 3.90 | 

On February 25,
2011, there were approximately 288 holders of record of our common stock, 1 holder of record of our warrants and 1 holder of record of our units.

Dividend Policy

We have not paid any dividends on our common stock to
date. Our board does not anticipate declaring any dividends on the common stock in the foreseeable future. The payment of dividends on the common stock in the future, if any, will be within the discretion of our then Board of Directors and will be
contingent upon our revenues and earnings, if any, capital requirements and general financial condition. Our Credit Agreement also contains certain limitations on the payment of dividends.



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Equity Compensation Plan Information

Securities Authorized for Issuance under our Equity Compensation Plans

At December 31, 2010, we had only one equity compensation plan, our 2008 Stock Incentive Plan. The following table contains information about our 2008 Stock Incentive Plan. See Note 14 in our Notes
to Consolidated Financial Statements for a description of our 2008 Stock Incentive Plan.



|                                                                          |  |                                                                           |           |     |                                                                |   |      |                                                                                                                            |  |  |           | 
|------------------------------------------------------------------------- |  | ------------------------------------------------------------------------- | --------- | --- | -------------------------------------------------------------- | - | ---- | -------------------------------------------------------------------------------------------------------------------------- |  |  | --------- | 
|Plan Category                                                             |  | Number of Shares tobe Issued uponExercise ofOutstanding Options(Column
A) |           |     | Weighted AverageExercise Price ofOutstanding Options(Column B) |   |      | Number of SharesRemaining Availablefor Future Issuanceunder
EquityCompensation Plans(Excluding SharesReflectedin Column A) | 
|Equity compensation plans that have been approved by our stockholders     |  |                                                                           | 6,307,750 | (1) |                                                                | $ | 6.13 |                                                                                                                            |  |  | 3,293,080 | 
|Equity compensation plans that have not been approved by our stockholders |  |                                                                           |          |     |                                                                |   |     |                                                                                                                            |  |  |          | 
|Total                                                                     |  |                                                                           | 6,307,750 |     |                                                                | $ | 6.13 |                                                                                                                            |  |  | 3,293,080 | 



|(1) | This amount does not include 399,170 shares of outstanding restricted stock granted to our employees.
|--- | -----------------------------------------------------------------------------------------------------

Issuer Purchases of Equity Securities

During the fourth quarter of 2010, our Compensation Committee approved the payment of applicable tax withholding on the vesting of restricted stock and restricted stock units held by certain members of
our senior management team through the surrender by such shareholders and the repurchase by us of that number of the vested shares or units equal to the total tax withholding obligations divided by the fair market value of our common stock on the
trading day preceding the vesting date. Such repurchases by us were not made pursuant to a publicly announced repurchase program. The aggregate number of shares repurchased by us from such executives is set forth in the table below.



|                                       |  |                                         |        |  |                                |   |      |                                                                                |  |  |                                                                           |  |  |  |   | 
|-------------------------------------- |  | --------------------------------------- | ------ |  | ------------------------------ | - | ---- | ------------------------------------------------------------------------------ |  |  | ------------------------------------------------------------------------- |  |  |  | - | 
|Period                                 |  | (a)Total Number ofShares/UnitsPurchased |        |  | (b)Average PricePaid per Share |   |      | (c)Total Number ofSharesPurchased asPart of
PubliclyAnnounced Plansor Programs |  |  | (d)MaximumNumber ofShares thatmay yet bePurchased underthe Plan
orProgram | 
|October 2010                           |  |                                         |        |  |                                |   |      |                                                                                |  |  |                                                                           |  |  |  |   | 
|(October 1, 2010  October 30, 2010)   |  |                                         |       |  |                                |   |     |                                                                                |  |  |                                                                          |  |  |  |  | 
|November 2010                          |  |                                         |        |  |                                |   |      |                                                                                |  |  |                                                                           |  |  |  |   | 
|(November 1, 2010  November 31, 2010) |  |                                         | 11,643 |  |                                | $ | 3.91 |                                                                                |  |  |                                                                          |  |  |  |  | 
|December 2010                          |  |                                         |        |  |                                |   |      |                                                                                |  |  |                                                                           |  |  |  |   | 
|(December 1, 2010  December 31, 2010) |  |                                         |       |  |                                |   |     |                                                                                |  |  |                                                                          |  |  |  |  | 
|                                       |  |                                         |        |  |                                |   |      |                                                                                |  |  |                                                                           |  |  |  |   | 
|Total                                  |  |                                         | 11,643 |  |                                | $ | 3.91 |                                                                                |  |  |                                                                          |  |  |  |  | 



|ITEM 6. | SELECTED FINANCIAL DATA
|------- | -----------------------

Not Applicable



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|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

This Annual Report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933,
as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have based these forward-looking statements on our current expectations and projections about future events. These forward-looking
statements are subject to known and unknown risks, uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity,
performance or achievements expressed or implied by such forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as may, should, could, would,
expect, intend, plan, target, goal, anticipate, believe, estimate, continue, or the negative of such terms or other similar expressions. Factors
that might cause or contribute to such a discrepancy include, but are not limited to, those described in Item 1A, Risk Factors, of this report and in our other filings with the SEC.

Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we
explicitly disclaim any obligation to update or revise any forward-looking statement, whether as a result of new information, future events or otherwise to reflect actual results or changes in factors or assumptions affecting such forward-looking
statements. You are advised, however, to consult any further disclosure we make in our reports filed with the SEC.

Overview

Our Business

We are a leading global business process outsourcing (BPO) service provider specializing in customer relationship management (CRM), including sales, customer care and technical
support for Fortune 1000 companies. Our clients include leading computing/hardware, telecommunications/service providers, software/networking, entertainment/media, retail, travel, healthcare and financial services companies. Our service
programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce with the ability to support 35 languages across 50 locations in 22 countries. We continue to expand
our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients.

We generate revenue based primarily on the amount of time our agents devote to a clients program. Revenue is recognized as services are provided. The majority of our revenue is from multi-year
contracts and we expect that trend to continue. However, we do provide certain client programs on a short-term basis.

Our
industry is highly competitive. We compete primarily with the in-house business processing operations of our current and potential clients. We also compete with certain third-party BPO providers. Our industry is labor-intensive and the majority of
our operating costs relate to wages, employee benefits and employment taxes.

We periodically review our capacity utilization
and projected demand for future capacity. In conjunction with these reviews, we may decide to consolidate or close under-performing service centers, including those impacted by the loss of client programs, in order to maintain or improve targeted
utilization and margins.

This Managements Discussion and Analysis of Financial Condition and Results of Operations
should be read in conjunction with our consolidated financial statements and notes thereto which appear elsewhere in this Annual Report on Form 10-K.



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Critical Accounting Policies

Use of Estimates

The preparation of the Consolidated Financial Statements
in conformity with accounting principles generally accepted in the U.S. (GAAP) requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities at
the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates including those related to derivatives and hedging activities,
income taxes including the valuation allowance for deferred tax assets, valuation of long-lived assets, self-insurance reserves, litigation and restructuring liabilities, and allowance for doubtful accounts. The Company bases its estimates on
historical experience and on various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these
estimates under different assumptions or conditions.

Equipment and Fixtures

Equipment and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets.
Furniture and fixtures are generally depreciated over a five-year life, software over a three- to five-year life and equipment generally over a three- to five-year life. Leasehold improvements are depreciated over the shorter of their estimated
useful life or the remaining term of the associated lease. Assets held under capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease.
Amortization expense is computed using the straight-line method over the shorter of the estimated useful lives of the assets or the period of the related lease and is recorded in depreciation and amortization expense. Repair and maintenance costs
are expensed as incurred.

The carrying value of equipment and fixtures to be held and used is evaluated for impairment
whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to
result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which
is generally determined based on appraisals or sales prices of comparable assets. Occasionally, we redeploy equipment and fixtures from underutilized centers to other locations to improve capacity utilization. We estimate fair value of our asset
retirement obligations, if any, associated with the retirement of tangible long-lived assets such as property and equipment when the long-lived asset is acquired, constructed, developed or through normal operations.

Goodwill and Other Intangible Assets

In accordance with the authoritative guidance goodwill is reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might
be impaired. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value. The impairment, if any, is measured based on the estimated fair value of the reporting unit. We operate in one reporting unit, which is the basis
for impairment testing of all goodwill.

Intangible assets with a finite life are recorded at cost and amortized using their
projected cash flows over their estimated useful life. Client lists and relationships are amortized over periods up to ten years, market adjustments related to facility leases are amortized over the term of the respective lease and developed
software is amortized over five years. Brands and trademarks are not amortized as their life is indefinite. In accordance with the authoritative guidance, indefinite lived intangible assets are reviewed for impairment annually and on an interim
basis if events or changes in circumstances between annual tests indicate that an asset might be impaired.

The carrying value
of finite-lived intangibles is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the authoritative



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guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed
its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable
assets.

Stock-Based Compensation

For share-based payments, the fair value of each grant under our stock-based compensation plan for employees and directors, including both the time-based grants and the performance-based grants, is
estimated on the date of grant using the Black-Scholes-Merton option valuation model. Stock compensation expense is recognized on a straight-line basis over the vesting term, net of an estimated future forfeiture rate.

Income Taxes

We recognize income taxes in accordance with the authoritative guidance, which requires recognition of deferred assets and liabilities for the future income tax consequence of transactions that have
been included in the consolidated financial statements or tax returns. Under this method deferred tax assets and liabilities are determined based on the difference between the carrying amounts of assets and liabilities for financial reporting
purposes, and the amounts used for income tax, using the enacted tax rates for the year in which the differences are expected to reverse. We provide valuation allowances against deferred tax assets whenever we believe it is more likely than not,
based on available evidence, that the deferred tax asset will not be realized. Further we provide for the accounting for uncertainty in income taxes recognized in financial statements and the impact of a tax position in the financial statements if
that position is more likely than not of being sustained by the taxing authority.

Contingencies

We consider the likelihood of various loss contingencies, including non-income tax and legal contingencies arising in the ordinary course
of business, and our ability to reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued in accordance with the authoritative guidance, 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 determine whether such accruals should be adjusted.

Recent Accounting Pronouncements

In January 2010, the Financial Accounting
Standards Board (FASB) issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between
Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the
guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for us with
the reporting period beginning January 1, 2010, except for the requirement to separately disclose purchases, sales, issuances and settlements of recurring Level 3 fair value measurements which is effective January 1, 2011. Other than
requiring additional disclosures, adoption of this new guidance did not have a material impact on our financial statements.

In October 2009, the FASB issued guidance on revenue recognition that will become effective for us beginning January 1, 2011, with
earlier adoption permitted. Under the new guidance, when vendor specific objective evidence or third party evidence for multi-element deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate
deliverables and allocate arrangement consideration using the relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue
recognition. We believe adoption of this new guidance will not have a material impact on our financial statements.



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Unaudited Pro Forma Financial Information

The following unaudited pro forma financial information presents the consolidated results of operations of SGS and EGS as if the
acquisition of EGS had occurred as of the beginning of the periods presented below. The historical financial information has been adjusted to give effect to events that are directly attributable to the combination (including amortization of
purchased intangible assets and debt costs associated with acquisition, debt costs associated with high yield debt offering and conversion of preferred stock to common stock), and in case of the pro forma statements of operations, have a recurring
impact. The unaudited pro forma financial information is not intended, and should not be taken as representative of our future consolidated results of operations or financial condition or the results that would have occurred had the acquisition
occurred as of the beginning of the earliest period.



|                                                      |  |               |         |   |                 |   |         |  
|----------------------------------------------------- |  | ------------- | ------- | - | --------------- | - | ------- | -
|                                                      |  | 2010(Audited) |         |   | 2009(Pro-Forma) |  
|Revenue                                               |  | $             | 800,173 |   |                 | $ | 797,005 |  
|Net income (loss) attributable to common shareholders |  | $             | (53,475 | ) |                 | $ | (40,698 | )
|Basic and diluted net loss per share                  |  | $             | (0.67   | ) |                 | $ | (0.51   | )

EGS was acquired on
October 1, 2009 and thus its results of operations are included in the actual results of SGS for the period October 1, 2009 to December 31, 2009.

The following are actual results of operations for the year ended December 31, 2010 and December 31, 2009, which include the consolidated results of operations of EGS beginning on
October 1, 2009:

Stream Global Services, Inc.

Consolidated Statements of Operations

Amounts as a percentage of revenue:



|                                             |  |              |       |    |      |  |       |   
|-------------------------------------------- |  | ------------ | ----- | -- | ---- |  | ----- | --
|                                             |  | December 31, |      
|                                             |  | 2010         |       |    | 2009 | 
|Revenue                                      |  |              | 100.0 | %  |      |  | 100.0 | % 
|Direct cost of revenue                       |  |              | 58.9  |    |      |  | 58.5  |   
|                                             |  |              |       |    |      |  |       |   
|Gross profit                                 |  |              | 41.1  |    |      |  | 41.5  |   
|Operating expenses:                          |  |              |       |    |      |  |       |   
|Selling, general and administrative expenses |  |              | 32.6  |    |      |  | 33.4  |   
|Stock based compensation expense             |  |              | 0.6   |    |      |  | 0.2   |   
|Severance, restructuring and other charges   |  |              | 1.5   |    |      |  | 2.6   |   
|Depreciation and amortization expense        |  |              | 8.2   |    |      |  | 6.2   |   
|                                             |  |              |       |    |      |  |       |   
|Total operating expenses                     |  |              | 42.9  |    |      |  | 42.4  |   
|                                             |  |              |       |    |      |  |       |   
|Income (loss) from operations                |  |              | (1.8  | )  |      |  | (0.9  | ) 
|Other (income) expenses, net:                |  |              |       |    |      |  |       |   
|Foreign currency transaction loss (gain)     |  |              | (0.2  | )  |      |  | (0.0  | ) 
|Other (income) expense, net                  |  |              | 0.0   |    |      |  | 0.0   |   
|Interest expense, net                        |  |              | 3.8   |    |      |  | 3.2   |   
|                                             |  |              |       |    |      |  |       |   
|Total other (income) expenses, net           |  |              | 3.6   |    |      |  | 3.2   |   
|                                             |  |              |       |    |      |  |       |   
|Loss before income taxes                     |  |              | (5.4  | )  |      |  | (4.1  | ) 
|                                             |  |              |       |    |      |  |       |   
|Provision for income taxes                   |  |              | 1.3   |    |      |  | 0.8   |   
|                                             |  |              |       |    |      |  |       |   
|Net income (loss)                            |  |              | (6.7  | )% |      |  | (4.9  | )%
|                                             |  |              |       |    |      |  |       |   



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Revenue

We derive the majority of our revenue by providing CRM services such as technical support, sales and revenue generation services and customer care services. We bill monthly for our services in a variety
of manners, including per minute, per contact, per hour and per full-time employee equivalent. Certain customer contracts contain provisions under which we can earn bonuses or are required to pay penalties on a monthly basis based upon performance.

Direct Cost of Revenue

We record the costs specifically associated with client billable programs identified in a client statement of work as direct cost of revenue. These costs include direct labor wages and benefits of service
agents in our call centers as well as reimbursable expenses such as telecommunication charges. The most significant portion of our direct cost of revenue is attributable to employee compensation, benefits and payroll taxes. These costs are expensed
as they are incurred. Direct costs are affected by prevailing wage rates in the countries in which they are incurred and are subject to the effects of foreign currency fluctuations.

Selling, general and administrative expenses

Our selling, general and administrative expenses consist of all expenses of operations other than direct costs of revenue, such as information technology, telecommunications, sales and marketing costs,
finance, human resource management and other functions and service center operational expenses such as facilities, operations and training.

Severance, restructuring and other charges

Our severance, restructuring
and other charges include expenses related to acquisitions, non-agent severance charges and expenses related to exiting leased facilities.

Other Income and Expenses

Other income and expenses consists of the
foreign currency transaction gains or losses, other income, interest income and interest expense. Interest expense includes interest expense and amortization of debt issuance costs associated with our indebtedness under our credit lines, senior
secured notes, and capitalized lease obligations.

We generate revenue and incur expenses in several different currencies. We
do not operate in any countries subject to hyper-inflationary accounting treatment. Our most common transaction currencies are the U.S. Dollar, the Euro, the Canadian Dollar, the British Pound, Philippine Peso and the Indian Rupee. Our
customers are most commonly billed in the U.S. Dollar or the Euro. We translate our results from functional currencies to U.S. Dollars using the average exchange rates in effect during the accounting period.

Results of Operations

Year ended December 31, 2010 compared with year ended December 31, 2009

Revenue. Revenues increased $215.4 million, or 36.8%, to $800.2 million for the year ended December 31, 2010, compared to
$584.8 million for the year ended December 31, 2009. The increase is primarily attributable to the full-year revenue effect from the acquisition of EGS on October 1, 2009.

Revenues for services performed in our United States and Canadian service centers increased $216.1 million, or 58.1%, for the year ended
December 31, 2010, compared to the year ended December 31, 2009, as a result of the acquisition of EGS on October 1, 2009 and the full-year inclusion of revenue from the EGS business



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in our results of operations in 2010. Revenues for services performed in European service centers decreased $0.7 million, or 0.3%, for the year ended December 31, 2010, compared to the year
ended December 31, 2009. This decrease is attributable to the shift in 2010 of revenue from our European service centers to Tunisia and Egypt at lower price points. Revenues for services performed in offshore service centers in the Philippines,
India, El Salvador, Costa Rica, the Dominican Republic, Tunisia and Egypt increased $145.5 million, or 80.3%, for the year ended December 31, 2010, compared to the year ended December 31, 2009 due to the acquisition of EGS on
October 1, 2009 and the inclusion of the EGS business prior to its acquisition by Stream (Legacy EGS) in our results of operations subsequent to the acquisition. Revenues in our offshore service centers represented 40.8% of
consolidated revenues for the year ended December 31, 2010, compared to 31.0% in the same period in 2009.

Direct Cost
of Revenue. Direct cost of revenue (exclusive of depreciation and amortization) increased $129.2 million, or 37.8%, to $471.4 million for the year ended December 31, 2010, compared to $342.2 million for the year ended December 31,
2009. The increase is primarily attributable to the acquisition of EGS on October 1, 2009 and the inclusion of the Legacy EGS business in our results of operations subsequent to the acquisition.

Gross Profit. Gross profit increased $86.1 million, or 35.5%, to $328.7 million for the year ended December 31, 2010 from
$242.6 million for the year ended December 31, 2009. The increase is primarily attributable to the acquisition of EGS on October 1, 2009 and the inclusion of the Legacy EGS business in our results of operations subsequent to the
acquisition. Gross profit as a percentage of revenue decreased slightly from the year ended December 31, 2009, as shown in the table above. Gross profit percentage decreased primarily due to the reductions in planned call volumes for a few of
our key clients during the second quarter.

Operating Expenses. Operating expenses increased $95.4 million, or 38.5%,
to $343.5 million for the year ended December 31, 2010, compared to $248.1 million for the year ended December 31, 2009. The increase is primarily attributable to the acquisition of EGS on October 1, 2009 and the inclusion of the
Legacy EGS results in 2010. Selling, general and administrative expense grew from $196.5 million for the year ended December 31, 2009 to $265.7 million, or 35.2% for the year ended December 31, 2010. Severance, restructuring and other
charges of $11.9 million and $15.2 million for the years ended December 31, 2010 and 2009, respectively, relate to non-agent severance, lease exit costs, and facility impairment charges. Depreciation and amortization increased $29.5 million as
a result of the inclusion of the Legacy EGS business in our results of operations subsequent to the acquisition and increased amortization associated with the intangibles acquired in the EGS acquisition. Operating expenses as a percentage of
revenues increased to 42.9% for the year ended December 31, 2010 compared to 42.4% for the year ended December 31, 2009, primarily as a result of increased amortization of intangible assets related to the acquisition of EGS.

Other (Income) Expenses, Net. Other (income) expenses, net increased $9.7 million, or 52.2%, to $28.3 million for the year ended
December 31, 2010, compared to $18.6 million for the year ended December 31, 2009. This increase in interest expense of $12.3 million is primarily due to our issuance of $200 million of the Notes during October 2009 related to the
acquisition of eTelecare.

As discussed under Item 7A, Stream has a foreign exchange hedging program. For the year ended
December 31, 2010, we recorded foreign exchange gains of $2.4 million versus a loss of $0.2 million for the prior year. The majority of the recorded gains relate to hedging activity in the Philippine Peso in connection with our operations in
the Philippines. As discussed in Footnote 4 of the consolidated financial statements contained within this report, in connection with the early termination of our prior credit facility on October 1, 2009, our former bank required cancellation of
existing forward exchange currency contracts in the Canadian dollar. Thereafter we commenced a program to acquire new contracts under our new credit facility. However, due to the Canadian dollar strengthening versus the US Dollar during this time,
our reported operating income was reduced. In addition, on an average annual translation basis, the EURO weakened versus the US Dollar during 2010 versus 2009, which also reduced our reported operating income.



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Provision for Income Taxes. Income taxes increased $6.0 million, or 136.4%, to $10.4
million for the year ended December 31, 2010, compared to $4.4 million for the year ended December 31, 2009. Foreign tax expense comprised of $8.4 million and $5.0 million for the year ended December 31, 2010 and 2009, respectively.
In the U.S., where we operated at a loss for tax purposes, we recorded $2.0 million income tax expense for the year ended December 31, 2010 primarily related to the finalization of purchase accounting. We operate in a number of countries
outside the U.S. that are generally taxed at lower statutory rates than the U.S. and also benefit from tax holidays.

Liquidity and Capital
Resources

Our primary liquidity needs are for financing working capital associated with the expenses we incur in
performing services under our client contracts and capital expenditures for the opening of new service centers, including the purchase of computers and related equipment. We have in place a credit facility that consists of a revolving line of credit
that allows us to manage our cash flows. Our ability to make payments on the credit facility, to replace our indebtedness if desired, and to fund working capital and planned capital expenditures will depend on our ability to generate cash in the
future. We have secured our working capital facility through our accounts receivable and therefore, our ability to continue servicing debt is dependent upon the timely collection of those receivables.

We made capital expenditures of $31.0 million in the year ended December 31, 2010 as compared to $33.1 million for the year ended
December 31, 2009. We expect to continue to make capital expenditures to build new service centers, meet new contract requirements and maintain and upgrade our technology.

On October 1, 2009, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014. The Notes
were issued pursuant to the Indenture, among us, the Note Guarantors, and Wells Fargo, as trustee. The Notes were issued by us at an initial offering price of 95.454% of the principal amount. The Indenture contains restrictions on our
ability to incur additional secured indebtedness under certain circumstances.

The Notes mature on October 1, 2014.
The Notes bear interest at a rate of 11.25% per annum. Interest on the Notes is computed on the basis of a 360-day year composed of twelve 30-day months and is payable semi-annually on April 1 and October 1 of each year,
beginning on April 1, 2010.

The obligations under the Notes are fully and unconditionally guaranteed, jointly and
severally, by the Note Guarantors and will be so guaranteed by any future domestic subsidiaries of ours, subject to certain exceptions.

The Notes and the Note Guarantors guarantees of the Notes are secured by senior liens on our and the Guarantors Primary Notes Collateral and by junior liens on our and the
Guarantors Primary ABL Collateral (each as defined in the Indenture).

On October 1, 2009, we, Stream Holdings
Corporation, Stream International, Inc., Stream New York, Inc., Stream Global Solutions-US, Inc., Stream Global Solutions-AZ, Inc. and Stream International Europe B.V. (collectively, the U.S. Borrowers), and SGS Netherland Investment
Corporation B.V., Stream International Service Europe B.V., and Stream International Canada Inc., (collectively, the Foreign Borrowers and together with the U.S. Borrowers, the Borrowers), entered into the Credit Agreement,
with Wells Fargo Foothill, LLC, as agent and co-arranger, Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders party thereto, as lenders, providing for the ABL Facility of up to $100.0 million, including a $20.0 million
sub-limit for letters of credit, in each case, with certain further sub-limits for certain Foreign Borrowers. The ABL Facility has a term of four years at an interest rate of Wells Fargos base rate plus 375 basis points or LIBOR plus 400 basis
points at our discretion. The ABL Facility has a fixed charge coverage ratio financial covenant that is operative when our availability under the facility is less than $20.0 million. At December 31, 2010, we had $68.6 million available under
the ABL Facility. We were in compliance with the financial covenants as of December 31, 2010.



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Letters of Credit. We have certain standby letters of credit for the benefit of
landlords of certain sites in the United States and Canada. As of December 31, 2010, we had approximately $6.9 million of these letters of credit in place under our ABL Facility. The obligations under the letters of credit decline annually as
the underlying obligations are satisfied.

Contractual Obligations. We have various contractual obligations that will
affect our liquidity. The following table sets forth our contractual obligations as of December 31, 2010:



|                            |  |                        |         |  |                 |   |        |           |  |   |           |  |  |                  |         |  |  |   |        | 
|--------------------------- |  | ---------------------- | ------- |  | --------------- | - | ------ | --------- |  | - | --------- |  |  | ---------------- | ------- |  |  | - | ------ | 
|                            |  | Payments Due by Period |        
|                            |  | Total                  |         |  | Less than1 year |   |        | 1-3 years |  |   | 3-5 years |  |  | More than5 years |        
|                            |  | (in thousands)         |        
|Long-term debt obligations  |  | $                      | 290,147 |  |                 | $ | 22,596 |           |  | $ | 45,051    |  |  | $                | 222,500 |  |  | $ |       | 
|Revolving debt obligations  |  |                        | 27,907  |  |                 |   | 1,134  |           |  |   | 26,773    |  |  |                  |        |  |  |   |       | 
|Operating lease obligations |  |                        | 117,703 |  |                 |   | 40,885 |           |  |   | 43,435    |  |  |                  | 18,403  |  |  |   | 14,980 | 
|Capital lease obligations   |  |                        | 21,886  |  |                 |   | 10,485 |           |  |   | 9,996     |  |  |                  | 1,233   |  |  |   | 172    | 
|                            |  |                        |         |  |                 |   |        |           |  |   |           |  |  |                  |         |  |  |   |        | 
|Total                       |  | $                      | 457,643 |  |                 | $ | 75,100 |           |  | $ | 125,255   |  |  | $                | 242,136 |  |  | $ | 15,152 | 

Unrestricted cash and
cash equivalents totaled $18.3 million for the year ended December 31, 2010 which is a $3.7 million increase compared to $14.6 million for the year ended December 31, 2009. Working capital increased $5.3 million to $117.3 million for the
year ended December 31, 2010, compared to $112.0 million for the year ended December 31, 2009.

Net cash provided by
operating activities totaled $22.4 million for the year ended December 31, 2010, a $47.6 million increase from the $25.2 million used in the year ended December 31, 2009. Non-cash charges were $47.3 million greater in the year ended
December 31, 2010 than those generated in the period ended December 31, 2009 primarily as a result of the $29.5 million increase for the depreciation and amortization of acquired assets related to the purchase of EGS. The
increase in cash inflows from changes in operating assets and liabilities of $25.2 million is primarily due to acquisition related cash outflows in 2009 related to the acquisition of EGS.

Net cash used in investing activities totaled $22.9 million for the year ended December 31, 2010 which is a $34.2 million decrease
from the $11.3 million provided by the period ended December 31, 2009. This is primarily attributable cash acquired in the acquisition of EGS in 2009. We used $22.9 million for additions to equipment and fixtures for the year ended
December 31, 2010 as compared to $22.1 million use of cash for the year ended December 31, 2009.

Net cash provided
by financing activities totaled $3.8 million for the year ended December 31, 2010, a $9.5 million decrease from the $13.3 million of cash provided by financing activities for the period ended December 31, 2009.

Our foreign exchange forward contracts require the exchange of foreign currencies for U.S. Dollars or vice versa, and generally mature in
one to 18 months. We had outstanding foreign exchange forward contracts with aggregate notional amounts of $233.2 million as of December 31, 2010 and $112.0 million as of December 31, 2009.

We believe that our cash generated from operations, existing cash and cash equivalents, and available credit will be sufficient to meet
expected operating and capital expenditures for the next 12 months.

Off-Balance Sheet Arrangements

With the exception of operating leases discussed above, we do not have any off-balance sheet arrangements.



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Seasonality

We are exposed to seasonality in our revenues because of the nature of certain consumer-based clients. We may experience approximately 10% increased volume associated with the peak processing needs in the
fourth quarter coinciding with the holiday period and a somewhat seasonal overflow into the first quarter of the following calendar year.



|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|-------- | ----------------------------------------------------------

We are exposed to a variety of market risks, including the effects of changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in
market rates and prices. Our risk management strategy includes the use of derivative instruments to reduce the effects on our operating results and cash flows from fluctuations caused by volatility in currency exchange and interest rates. In using
derivative financial instruments to hedge exposures to changes in exchange rates we exposes ourselves to counterparty credit risk.

Interest Rate Risk

We
are exposed to interest rate risk primarily through our debt facilities since some of those instruments, including capital leases, bear interest at variable rates. At December 31, 2010, we had outstanding borrowings under variable debt
agreements that totaled approximately $27.1 million. A hypothetical 1% increase in the interest rate would have increased interest expense by approximately $0.3 million and would have decreased annual cash flow by a comparable amount. The carrying
amount of our borrowings reflects fair value due to their short-term and variable interest rate features.

There were no
outstanding interest rate derivatives covering interest rate exposure at December 31, 2010.

Foreign Currency Exchange Rate Risk

We serve many of our U.S.-based clients using our service centers in Canada, India, the Dominican Republic, El Salvador,
Egypt, the Philippines, Nicaragua and Costa Rica. Although the contracts with these clients are typically priced in U.S. dollars, a substantial portion of the costs incurred to render services under these contracts are denominated in the local
currency of the country in which the contracts are serviced which creates foreign exchange exposure. We serve most of our EMEA based clients using our service centers in the Netherlands, the United Kingdom, Italy, Ireland, Spain, Sweden, France,
Germany, Poland, Denmark, Bulgaria, Egypt, Tunisia and South Africa. We typically bill our EMEA based clients in EURO or British Pound Sterling. While a substantial portion of the costs incurred to render services under these contracts are
denominated in EURO, a part is also denominated in the local currency in which the contracts are serviced which creates foreign exchange exposure.

The expenses from these foreign operations create exposure to changes in exchange rates between the local currencies and the contractual currencies  primarily the U.S. dollar and EURO. As a result,
we may experience foreign currency gains and losses, which may positively or negatively affect our results of operations attributed to these subsidiaries. The majority of this exposure is related to work performed from call centers in Canada, India
and the Philippines.

In order to manage the risk of these foreign currencies from strengthening against the currency used for
billing, which thereby decreases the economic benefit of performing work in these countries, we may hedge a portion, though not 100%, of these foreign currency exposures. While our hedging strategy may protect us from adverse changes in foreign
currency rates in the short term, an overall strengthening of the foreign currencies would adversely impact margins over the long term.



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The following summarizes the relative (weakening)/strengthening of the U.S. Dollar
against the local currency during the years presented:



|                                    |  |                        |       |    |      |  |       |   
|----------------------------------- |  | ---------------------- | ----- | -- | ---- |  | ----- | --
|                                    |  | Year
EndedDecember 31, |      
|                                    |  | 2010                   |       |    | 2009 | 
|U.S. Dollar vs. Canadian Dollar     |  |                        | (4.7  | %) |      |  | (14.2 | %)
|U.S. Dollar vs. EURO                |  |                        | 7.5   | %  |      |  | (1.7  | %)
|U.S. Dollar vs. Indian Rupee        |  |                        | 3.1   | %  |      |  | (4.6  | %)
|U.S. Dollar vs. Philippine Peso     |  |                        | (5.4  | %) |      |  | (2.6  | %)
|U.S. Dollar vs. S. African Rand     |  |                        | (10.4 | %) |      |  | (21.7 | %)
|U.S. Dollar vs. U.K. Pound Sterling |  |                        | 2.9   | %  |      |  | (10.0 | %)

Cash Flow Hedging Program

Substantially all of our subsidiaries use the local currency as their functional currency as a result of paying labor and
operating costs in those local currencies. Certain of our subsidiaries in the Philippines use the U.S. dollar as their functional currency while paying their labor and operating cost in local currency. Conversely, revenue for most of these foreign
subsidiaries is derived principally from client contracts that are invoiced and collected in U.S. dollars and other foreign currencies. To mitigate against the risk of principally a weaker U.S. dollar, we purchase forward contracts to acquire the
local currency of the foreign subsidiary at a fixed exchange rate at specific dates in the future. We have designated and account for certain of these derivative instruments as cash flow hedges where applicable, as defined by the authoritative
guidance.

Given the significance of our foreign operations and the potential volatility of the certain of these currencies
versus the U.S. dollar, we use forward purchases of Philippine peso, Canadian dollars, Euros, South African Rand and Indian rupees to minimize the impact of currency fluctuations. As of December 31, 2010, we had entered into forward contracts
with four financial institutions to acquire the following currencies:



|                   |  |                |           |  |                |  |         |              |  |  |             |  |  |  |       | 
|------------------ |  | -------------- | --------- |  | -------------- |  | ------- | ------------ |  |  | ----------- |  |  |  | ----- | 
|Currency           |  | Notional Value |           |  | USD Equivalent |  |         | Highest Rate |  |  | Lowest Rate | 
|Philippine Peso    |  |                | 4,868,000 |  |                |  | 111,415 |              |  |  | 50.14       |  |  |  | 43.56 | 
|Canadian Dollar    |  |                | 78,350    |  |                |  | 78,513  |              |  |  | 1.06        |  |  |  | 1.00  | 
|Indian Rupee       |  |                | 1,035,000 |  |                |  | 22,860  |              |  |  | 47.39       |  |  |  | 44.70 | 
|Euro               |  |                | 12,118    |  |                |  | 16,190  |              |  |  | 1.32        |  |  |  | 1.32  | 
|South African Rand |  |                | 28,000    |  |                |  | 4,206   |              |  |  | 6.78        |  |  |  | 6.78  | 

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 for which actual results may differ from the original estimate.
Failure to successfully hedge or anticipate currency risks properly could affect our consolidated operating results.

Market Risk

Market risk is the sensitivity of income to changes in interest rates, foreign exchanges, commodity prices, equity prices,
and other market-driven rates or prices.

Changes in market rates may impact the banks LIBOR rate or prime rate. For
instance, if either the LIBOR or prime rate were to increase or decrease by one percentage point (1%), our annual interest expense would change by approximately $0.3 million based upon our total credit facility.



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|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|------- | -------------------------------------------

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and
Shareholders of Stream Global Services, Inc.

We have audited the accompanying consolidated balance sheets of Stream Global
Services, Inc. as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders equity, and cash flows for each of the years ended December 31, 2010 and December 31, 2009. 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 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. We were not engaged to perform an audit of the Companys internal control over financial reporting. Our audits included consideration of internal control over
financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Companys internal control over financial reporting.
Accordingly, we express no such opinion. An audit also 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.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of Stream Global Services, Inc. at December 31, 2010 and 2009,
and the consolidated results of operations and its cash flows for each of the years then ended, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young LLP

Boston, Massachusetts

March 2, 2011



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STREAM GLOBAL SERVICES, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)



|                                                                                                                                                                                                                                                         |  |              |         |   |      |   |         |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                                                                                                                                                                                                                         |  | December 31, |        
|                                                                                                                                                                                                                                                         |  | 2010         |         |   | 2009 |  
|Assets                                                                                                                                                                                                                                                   |  |              |         |   |      |   |         |  
|Current assets:                                                                                                                                                                                                                                          |  |              |         |   |      |   |         |  
|Cash and cash equivalents                                                                                                                                                                                                                                |  | $            | 18,489  |   |      | $ | 14,928  |  
|Accounts receivable, net of allowance for bad debts of $714 and $532 at December 31, 2010 and 2009,
respectively                                                                                                                                         |  |              | 180,211 |   |      |   | 175,557 |  
|Income taxes receivable                                                                                                                                                                                                                                  |  |              | 1,154   |   |      |   | 2,988   |  
|Deferred income taxes                                                                                                                                                                                                                                    |  |              | 15,665  |   |      |   | 15,870  |  
|Prepaid expenses and other current assets                                                                                                                                                                                                                |  |              | 20,371  |   |      |   | 18,043  |  
|                                                                                                                                                                                                                                                         |  |              |         |   |      |   |         |  
|Total current assets                                                                                                                                                                                                                                     |  |              | 235,890 |   |      |   | 227,386 |  
|Equipment and fixtures, net                                                                                                                                                                                                                              |  |              | 80,859  |   |      |   | 96,816  |  
|Deferred income taxes                                                                                                                                                                                                                                    |  |              | 3,975   |   |      |   | 5,306   |  
|Goodwill                                                                                                                                                                                                                                                 |  |              | 226,749 |   |      |   | 226,027 |  
|Intangible assets, net                                                                                                                                                                                                                                   |  |              | 83,674  |   |      |   | 104,834 |  
|Other assets                                                                                                                                                                                                                                             |  |              | 16,838  |   |      |   | 20,454  |  
|                                                                                                                                                                                                                                                         |  |              |         |   |      |   |         |  
|Total assets                                                                                                                                                                                                                                             |  | $            | 647,985 |   |      | $ | 680,823 |  
|                                                                                                                                                                                                                                                         |  |              |         |   |      |   |         |  
|Liabilities and Stockholders Equity                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Current liabilities:                                                                                                                                                                                                                                     |  |              |         |   |      |   |         |  
|Accounts payable                                                                                                                                                                                                                                         |  | $            | 10,758  |   |      | $ | 13,532  |  
|Accrued employee compensation and benefits                                                                                                                                                                                                               |  |              | 59,797  |   |      |   | 57,475  |  
|Other accrued expenses                                                                                                                                                                                                                                   |  |              | 29,989  |   |      |   | 28,499  |  
|Income taxes payable                                                                                                                                                                                                                                     |  |              | 1,796   |   |      |   | 2,199   |  
|Current portion of long-term debt                                                                                                                                                                                                                        |  |              | 96      |   |      |   | 90      |  
|Current portion of capital lease obligations                                                                                                                                                                                                             |  |              | 9,100   |   |      |   | 5,529   |  
|Other liabilities                                                                                                                                                                                                                                        |  |              | 7,072   |   |      |   | 8,013   |  
|                                                                                                                                                                                                                                                         |  |              |         |   |      |   |         |  
|Total current liabilities                                                                                                                                                                                                                                |  |              | 118,608 |   |      |   | 115,337 |  
|Long-term debt, net of current portion                                                                                                                                                                                                                   |  |              | 217,199 |   |      |   | 206,880 |  
|Capital lease obligations, net of current portion                                                                                                                                                                                                        |  |              | 10,491  |   |      |   | 11,279  |  
|Deferred income taxes                                                                                                                                                                                                                                    |  |              | 21,838  |   |      |   | 21,050  |  
|Other long-term liabilities                                                                                                                                                                                                                              |  |              | 20,131  |   |      |   | 22,866  |  
|                                                                                                                                                                                                                                                         |  |              |         |   |      |   |         |  
|Total liabilities                                                                                                                                                                                                                                        |  |              | 388,267 |   |      |   | 377,412 |  
|Stockholders equity:                                                                                                                                                                                                                                    |  |              |         |   |      |   |         |  
|Preferred stock, par value $0.001 per share, shares authorized1,000 shares authorized; 0 shares issued and outstanding at
December 31, 2010 and 2009                                                                                                    |  |              |        |   |      |   |        |  
|Voting common stock, par value $0.001 per share, shares authorized200,000 shares and 149,000 authorized at
December 31, 2010 and 2009, respectively, issued and outstanding shares80,101 and 79,616 shares at December 31, 2010 and 2009, respectively |  |              | 80      |   |      |   | 80      |  
|Non-voting common stock, par value $0.001 per share, shares authorized11,000 shares authorized; 0 shares issued and
outstanding at December 31, 2010 and 2009                                                                                           |  |              |        |   |      |   |        |  
|Additional paid-in-capital                                                                                                                                                                                                                               |  |              | 344,192 |   |      |   | 337,035 |  
|Retained deficit                                                                                                                                                                                                                                         |  |              | (83,447 | ) |      |   | (29,972 | )
|Accumulated other comprehensive loss                                                                                                                                                                                                                     |  |              | (1,107  | ) |      |   | (3,732  | )
|                                                                                                                                                                                                                                                         |  |              |         |   |      |   |         |  
|Total stockholders equity                                                                                                                                                                                                                               |  |              | 259,718 |   |      |   | 303,411 |  
|                                                                                                                                                                                                                                                         |  |              |         |   |      |   |         |  
|Total liabilities and stockholders equity                                                                                                                                                                                                               |  | $            | 647,985 |   |      | $ | 680,823 |  
|                                                                                                                                                                                                                                                         |  |              |         |   |      |   |         |  

See accompanying notes to consolidated financial statements.



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STREAM GLOBAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)



|                                                        |  |              |         |   |      |   |         |  
|------------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                                        |  | December 31, |        
|                                                        |  | 2010         |         |   | 2009 |  
|Revenue                                                 |  | $            | 800,173 |   |      | $ | 584,769 |  
|Direct cost of revenue                                  |  |              | 471,428 |   |      |   | 342,193 |  
|                                                        |  |              |         |   |      |   |         |  
|Gross profit                                            |  |              | 328,745 |   |      |   | 242,576 |  
|Operating expenses:                                     |  |              |         |   |      |   |         |  
|Selling, general and administrative expenses            |  |              | 265,705 |   |      |   | 196,508 |  
|Severance, restructuring and other charges              |  |              | 11,899  |   |      |   | 15,191  |  
|Depreciation and amortization expense                   |  |              | 65,903  |   |      |   | 36,422  |  
|                                                        |  |              |         |   |      |   |         |  
|Total operating expenses                                |  |              | 343,507 |   |      |   | 248,121 |  
|                                                        |  |              |         |   |      |   |         |  
|Income (loss) from operations                           |  |              | (14,762 | ) |      |   | (5,545  | )
|Other (income) expenses, net:                           |  |              |         |   |      |   |         |  
|Foreign currency transaction loss (gain)                |  |              | (2,399  | ) |      |   | 236     |  
|Other (income) expense, net                             |  |              | (2      | ) |      |   |        |  
|Interest expense, net                                   |  |              | 30,722  |   |      |   | 18,410  |  
|                                                        |  |              |         |   |      |   |         |  
|Total other (income) expenses, net                      |  |              | 28,321  |   |      |   | 18,646  |  
|                                                        |  |              |         |   |      |   |         |  
|Loss before provision for income taxes                  |  |              | (43,083 | ) |      |   | (24,191 | )
|Provision for income taxes                              |  |              | 10,392  |   |      |   | 4,382   |  
|                                                        |  |              |         |   |      |   |         |  
|Net loss                                                |  | $            | (53,475 | ) |      | $ | (28,573 | )
|Cumulative convertible Preferred Stock dividends        |  |              |        |   |      |   | 58,018  |  
|Preferred Stock accretion                               |  |              |        |   |      |   | 6,397   |  
|                                                        |  |              |         |   |      |   |         |  
|Net loss attributable to common stockholders            |  | $            | (53,475 | ) |      | $ | (92,988 | )
|Net loss attributable to common stockholders per share: |  |              |         |   |      |   |         |  
|Basic                                                   |  | $            | (0.67   | ) |      | $ | (3.46   | )
|Diluted                                                 |  | $            | (0.67   | ) |      | $ | (3.46   | )
|Shares used in computing per share amounts:             |  |              |         |   |      |   |         |  
|Basic                                                   |  |              | 79,905  |   |      |   | 26,887  |  
|Diluted                                                 |  |              | 79,905  |   |      |   | 26,887  |  

See accompanying
notes to consolidated financial statements.



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STREAM GLOBAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY

(In thousands)



|                                                                        |  |                                     |      |   |              |   |          |                          |  |  |                           |   |  |                                            |    |  |       |   |         |   |  |   |         |   |  |   |        |   |  |   |         |  
|----------------------------------------------------------------------- |  | ----------------------------------- | ---- | - | ------------ | - | -------- | ------------------------ |  |  | ------------------------- | - |  | ------------------------------------------ | -- |  | ----- | - | ------- | - |  | - | ------- | - |  | - | ------ | - |  | - | ------- | -
|                                                                        |  | Series A ConvertiblePreferred Stock |      |   | Common Stock |   |          | AdditionalPaid inCapital |  |  | RetainedEarnings(Deficit) |   |  | AccumulatedOtherComprehensiveIncome (Loss) |    |  | Total |  
|                                                                        |  | Shares                              |      |   | ParValue     |   |          | Shares                   |  |  | ParValue                  |   |  |                                            |    | 
|Balances at December 31, 2008                                           |  |                                     |     |   |              | $ |         |                          |  |  | 9,458                     |   |  | $                                          | 9  |  |       | $ | 11,330  |   |  | $ | (1,399  | ) |  | $ | (8,189 | ) |  | $ | 1,751   |  
|Net loss                                                                |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   |        |   |  |   | (28,573 | ) |  |   |       |   |  |   | (28,573 | )
|Currency translation adjustment                                         |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   |        |   |  |   |        |   |  |   | 5,785  |   |  |   | 5,785   |  
|Unrealized loss on derivatives, net of tax of $0                        |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   |        |   |  |   |        |   |  |   | (1,328 | ) |  |   | (1,328  | )
|                                                                        |  |                                     |      |   |              |   |          |                          |  |  |                           |   |  |                                            |    |  |       |   |         |   |  |   |         |   |  |   |        |   |  |   |         |  
|Comprehensive loss                                                      |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   |        |   |  |   |        |   |  |   |       |   |  |   | (24,116 | )
|Cumulative dividends on preferred stock                                 |  |                                     |     |   |              |   | 57,729   |                          |  |  |                          |   |  |                                            |   |  |       |   | (58,018 | ) |  |   |        |   |  |   |       |   |  |   | (289    | )
|Transfer of Preferred A Stock to equity from mezzanine equity           |  |                                     | 150  |   |              |   | 145,394  |                          |  |  |                          |   |  |                                            |   |  |       |   |        |   |  |   |        |   |  |   |       |   |  |   | 145,394 |  
|Accretion of preferred stock discount                                   |  |                                     |     |   |              |   | 6,397    |                          |  |  |                          |   |  |                                            |   |  |       |   | (6,397  | ) |  |   |        |   |  |   |       |   |  |   |        |  
|Preferred stock conversion to common stock                              |  |                                     | (150 | ) |              |   | (209,520 | )                        |  |  | 36,085                    |   |  |                                            | 36 |  |       |   | 210,476 |   |  |   |        |   |  |   |       |   |  |   | 992     |  
|Stock-based compensation expense                                        |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   | 1,242   |   |  |   |        |   |  |   |        |   |  |   | 1,242   |  
|Common shares cancelled                                                 |  |                                     |     |   |              |   |         |                          |  |  | (18                       | ) |  |                                            |   |  |       |   | (1      | ) |  |   |        |   |  |   |       |   |  |   | (1      | )
|Repurchase of public warrants                                           |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   | (7,373  | ) |  |   |        |   |  |   |       |   |  |   | (7,373  | )
|Warrant exercises                                                       |  |                                     |     |   |              |   |         |                          |  |  | 131                       |   |  |                                            |   |  |       |   | 788     |   |  |   |        |   |  |   |       |   |  |   | 788     |  
|Common stock and pre-emptive rights issued for acquisition of eTelecare |  |                                     |     |   |              |   |         |                          |  |  | 33,652                    |   |  |                                            | 34 |  |       |   | 183,068 |   |  |   |        |   |  |   |       |   |  |   | 183,102 |  
|Common stock issued for pre-emptive rights                              |  |                                     |     |   |              |   |         |                          |  |  | 308                       |   |  |                                            | 1  |  |       |   | 1,920   |   |  |   |        |   |  |   |       |   |  |   | 1,921   |  
|                                                                        |  |                                     |      |   |              |   |          |                          |  |  |                           |   |  |                                            |    |  |       |   |         |   |  |   |         |   |  |   |        |   |  |   |         |  
|Balances at December 31, 2009                                           |  |                                     |     |   |              |   |         |                          |  |  | 79,616                    |   |  | $                                          | 80 |  |       | $ | 337,035 |   |  | $ | (29,972 | ) |  | $ | (3,732 | ) |  | $ | 303,411 |  
|Net loss                                                                |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   |        |   |  |   | (53,475 | ) |  |   |       |   |  |   | (53,475 | )
|Currency translation adjustment                                         |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   |        |   |  |   |        |   |  |   | (2,820 | ) |  |   | (2,820  | )
|Unrealized gain on derivatives, net of tax of $0                        |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   |        |   |  |   |        |   |  |   | 5,445  |   |  |   | 5,445   |  
|                                                                        |  |                                     |      |   |              |   |          |                          |  |  |                           |   |  |                                            |    |  |       |   |         |   |  |   |         |   |  |   |        |   |  |   |         |  
|Comprehensive loss                                                      |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   |        |   |  |   |        |   |  |   |       |   |  |   | (50,850 | )
|Common stock issued for pre-emptive rights                              |  |                                     |     |   |              |   |         |                          |  |  | 25                        |   |  |                                            |   |  |       |   | 80      |   |  |   |        |   |  |   |        |   |  |   | 80      |  
|Warrant exercises                                                       |  |                                     |     |   |              |   |         |                          |  |  | 381                       |   |  |                                            |   |  |       |   | 2,306   |   |  |   |        |   |  |   |       |   |  |   | 2,306   |  
|Stock option exercises and vesting of restricted stock                  |  |                                     |     |   |              |   |         |                          |  |  | 119                       |   |  |                                            |   |  |       |   | 192     |   |  |   |        |   |  |   |       |   |  |   | 192     |  
|Stock-based compensation expense                                        |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   | 6,429   |   |  |   |        |   |  |   |       |   |  |   | 6,429   |  
|Taxes withheld on restricted stock                                      |  |                                     |     |   |              |   |         |                          |  |  | (40                       | ) |  |                                            |   |  |       |   | (242    | ) |  |   |        |   |  |   |       |   |  |   | (242    | )
|Repurchase of warrants                                                  |  |                                     |     |   |              |   |         |                          |  |  |                          |   |  |                                            |   |  |       |   | (1,608  | ) |  |   |        |   |  |   |       |   |  |   | (1,608  | )
|                                                                        |  |                                     |      |   |              |   |          |                          |  |  |                           |   |  |                                            |    |  |       |   |         |   |  |   |         |   |  |   |        |   |  |   |         |  
|Balances at December 31, 2010                                           |  |                                     |     |   |              |   |         |                          |  |  | 80,101                    |   |  | $                                          | 80 |  |       | $ | 344,192 |   |  | $ | (83,447 | ) |  | $ | (1,107 | ) |  | $ | 259,718 |  
|                                                                        |  |                                     |      |   |              |   |          |                          |  |  |                           |   |  |                                            |    |  |       |   |         |   |  |   |         |   |  |   |        |   |  |   |         |  

See accompanying notes to consolidated financial statements



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STREAM GLOBAL SERVICES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                                   |  |                        |         |   |      |   |          |  
|-------------------------------------------------------------------------------------------------- |  | ---------------------- | ------- | - | ---- | - | -------- | -
|                                                                                                   |  | Year
endedDecember 31, |        
|                                                                                                   |  | 2010                   |         |   | 2009 |  
|Operating Activities:                                                                              |  |                        |         |   |      |   |          |  
|Net income (loss)                                                                                  |  | $                      | (53,475 | ) |      | $ | (28,573  | )
|Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: |  |                        |         |   |      |   |          |  
|Depreciation and amortization                                                                      |  |                        | 65,903  |   |      |   | 36,422   |  
|Amortization of debt issuance costs                                                                |  |                        | 2,168   |   |      |   | 5,579    |  
|Deferred taxes                                                                                     |  |                        | 3,125   |   |      |   | (3,598   | )
|Market lease reserve                                                                               |  |                        | 4,412   |   |      |   | (1,203   | )
|Amortization of bond discount                                                                      |  |                        | 1,411   |   |      |   | 324      |  
|Impairment of fixed assets                                                                         |  |                        | 2,884   |   |      |   | 203      |  
|Noncash stock compensation                                                                         |  |                        | 6,429   |   |      |   | 1,242    |  
|Changes in operating assets and liabilities, net of the effect of acquisitions:                    |  |                        |         |   |      |   |          |  
|Accounts receivable                                                                                |  |                        | (8,401  | ) |      |   | (10,203  | )
|Income taxes receivable                                                                            |  |                        | 1,732   |   |      |   | (863     | )
|Prepaid expenses and other current assets                                                          |  |                        | 4,050   |   |      |   | 1,767    |  
|Other assets                                                                                       |  |                        | 1,398   |   |      |   | (10,906  | )
|Accounts payable                                                                                   |  |                        | (2,539  | ) |      |   | (93      | )
|Accrued expenses and other liabilities                                                             |  |                        | (6,653  | ) |      |   | (15,285  | )
|                                                                                                   |  |                        |         |   |      |   |          |  
|Net cash provided by (used in) operating activities                                                |  |                        | 22,444  |   |      |   | (25,187  | )
|Investing Activities:                                                                              |  |                        |         |   |      |   |          |  
|Acquisition of businesses, net of cash acquired                                                    |  |                        |        |   |      |   | 33,400   |  
|Additions to equipment and fixtures                                                                |  |                        | (22,904 | ) |      |   | (22,064  | )
|                                                                                                   |  |                        |         |   |      |   |          |  
|Net cash provided by (used in) investing activities                                                |  |                        | (22,904 | ) |      |   | 11,336   |  
|Financing activities:                                                                              |  |                        |         |   |      |   |          |  
|Net borrowings (repayments) on line of credit                                                      |  |                        | 9,004   |   |      |   | (43,924  | )
|Proceeds from issuance of long-term debt                                                           |  |                        |        |   |      |   | 216,187  |  
|Payments from long-term debt                                                                       |  |                        | (90     | ) |      |   | (152,059 | )
|Payment of capital lease obligations                                                               |  |                        | (7,529  | ) |      |   | (3,702   | )
|Proceeds from capital leases                                                                       |  |                        | 1,669   |   |      |   | 1,518    |  
|Proceeds from exercise of warrants                                                                 |  |                        | 2,307   |   |      |   | 788      |  
|Proceeds from issuance of common stock related to pre-emptive rights and stock options             |  |                        | 268     |   |      |   | 1,921    |  
|Tax payments on withholding of restricted stock                                                    |  |                        | (233    | ) |      |   |         |  
|Re-purchase of warrants                                                                            |  |                        | (1,608  | ) |      |   | (7,373   | )
|Repurchases of common stock                                                                        |  |                        |        |   |      |   | (10      | )
|                                                                                                   |  |                        |         |   |      |   |          |  
|Net cash provided by (used in) financing activities                                                |  |                        | 3,788   |   |      |   | 13,346   |  
|Effect of exchange rates on cash and cash equivalents                                              |  |                        | 233     |   |      |   | 4,773    |  
|Net increase (decrease) in cash and cash equivalents                                               |  |                        | 3,561   |   |      |   | 4,268    |  
|Cash and cash equivalents, beginning of period                                                     |  |                        | 14,928  |   |      |   | 10,660   |  
|                                                                                                   |  |                        |         |   |      |   |          |  
|Cash and cash equivalents, end of period                                                           |  | $                      | 18,489  |   |      | $ | 14,928   |  
|Supplemental cash flow information:                                                                |  |                        |         |   |      |   |          |  
|Cash paid for interest                                                                             |  | $                      | 25,664  |   |      | $ | 4,843    |  
|Cash paid for income taxes                                                                         |  |                        | 10,550  |   |      |   | 8,246    |  
|Noncash financing activities:                                                                      |  |                        |         |   |      |   |          |  
|(Gain) loss on foreign exchange forward contracts                                                  |  |                        | (5,445  | ) |      |   | 1,327    |  
|Capital lease financing                                                                            |  |                        | 8,219   |   |      |   | 11,082   |  
|Accrued cumulative dividends on preferred stock                                                    |  |                        |        |   |      |   | 58,018   |  
|Accretion of preferred stock discount                                                              |  |                        |        |   |      |   | 6,397    |  
|Preferred stock conversion to common stock                                                         |  |                        |        |   |      |   | 210,512  |  
|Common stock and pre-emptive rights issued for acquisition of EGS                                  |  | $                      |        |   |      | $ | 183,102  |  

See accompanying notes
to consolidated financial statements.



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STREAM GLOBAL SERVICES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

December 31, 2010

(In thousands, except per share amounts)

Note 1Our History and Summary of Various Transactions

Stream Global Services, Inc. (we, us, Stream, or SGS) is a corporation organized under the
laws of the State of Delaware. We were incorporated on June 26, 2007 as a blank check company for the purpose of acquiring, through a merger, capital stock exchange, asset or stock acquisition, exchangeable share transaction or other similar
business combination, one or more domestic or international operating businesses. We consummated our initial public offering in October 2007, receiving total gross proceeds of $250 million, and in July 2008, we acquired Stream Holdings Corporation
for $128 million (which reflected the $200 million purchase price less assumed indebtedness, transaction fees, employee transaction related, restructuring and severance expenses bonuses, professional fees, stock option payments and payments for
working capital).

In October 2009, pursuant to a Share Exchange Agreement, dated as of August 14, 2009 (the
Exchange Agreement), among Stream, EGS Corp., a Philippine corporation (EGS), the parent company of eTelecare Global Solutions, Inc., a Philippine company (eTelecare), EGS Dutchco B.V., a corporation organized under the
laws of the Netherlands (Dutchco), and NewBridge International Investment Ltd., a British Virgin Islands company (NewBridge and, together with Dutchco, the EGS Stockholders), we acquired EGS in a stock-for-stock
exchange (the Combination). At the closing of the Combination (the Closing), we acquired all of the issued and outstanding capital stock of EGS (the EGS Shares) from the EGS Stockholders, and NewBridge and/or its
affiliate contributed, and we accepted, the rights of such transferor with respect to approximately $35.8 million in principal under a bridge loan of EGS (the Bridge Loan) in consideration for the issuance and delivery of an aggregate of
23,851,561 shares of our common stock and 9,800,000 shares of our non-voting common stock, and the payment of $9,990 in cash. Subsequent to the Closing, all of the 9,800,000 shares of non-voting common stock held by the EGS Stockholders were
converted into shares of our voting common stock on a one-for-one basis. As of the Closing, the pre-Combination Stream stockholders and the EGS Stockholders owned approximately 57.5% and 42.5%, respectively, of the combined entity.

Immediately prior to the Closing, pursuant to a letter agreement, dated as of August 14, 2009, between us and Ares Corporate
Opportunities Fund II, L.P. (Ares), all of the issued and outstanding shares of our Series A Convertible Preferred Stock, $.001 par value per share (Series A Preferred Stock), and Series B Convertible Preferred Stock, $.001
par value per share (Series B Preferred Stock), all of which were held by Ares, were converted into 35,085,134 shares of our common stock. The Series A Preferred Stock and Series B Preferred Stock were subsequently cancelled. In
addition, we purchased from Ares a warrant to purchase 7,500,000 shares of our common stock in consideration for the issuance to Ares of 1,000,000 shares of our common stock.

Also in October 2009, pursuant to an indenture, dated as of October 1, 2009 (the Indenture), among Stream, certain of our subsidiaries (the Note Guarantors) and Wells Fargo
Bank, National Association (Wells Fargo), as trustee, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the Notes) at an initial offering price of 95.454% of the principal amount. In
addition, we and certain of our subsidiaries entered into a credit agreement, dated as of October 1, 2009 (the Credit Agreement), with Wells Fargo Foothill, LLC, as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as
co-arranger, and each of the lenders party thereto, as lenders, providing for revolving credit financing (the ABL Facility) of up to $100 million, including a $20 million sub-limit for letters of credit. The ABL Facility has a
term of four years at an interest rate of Wells Fargos base rate plus 375 basis points or LIBOR plus 400 basis points at our discretion.

We used the proceeds from the offering of the Notes, together with approximately $26.0 million of cash on hand, to repay all outstanding indebtedness under the Fifth Amended and Restated Revolving Credit,
Term Loan



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and Security Agreement, dated as of January 8, 2009, as amended (the PNC Agreement), with PNC Bank, National Association and other parties thereto, the Bridge Loan, and to pay
fees and expenses incurred in connection with the Combination, the Note offering and the ABL Facility.

Note 2Our Business

We are a leading global business process outsourcing (BPO) service provider specializing in customer
relationship management (CRM) including sales, customer care and technical support for Fortune 1000 companies. Our clients include leading technology, computing, telecommunications, retail, entertainment/media, and financial
services companies. Our service programs are delivered through a set of standardized best practices and sophisticated technologies by a highly skilled multilingual workforce with the ability to support 35 languages across 50 locations in 22
countries. We continue to expand our global presence and service offerings to increase revenue, improve operational efficiencies and drive brand loyalty for our clients.

Note 3Basis of Presentation

Our consolidated financial statements of
SGS as of December 31, 2010 and 2009, and for the years ended December 31, 2010 and 2009, respectively, include our accounts and those of our wholly owned subsidiaries. All significant intercompany transactions and balances have been
eliminated in consolidation. In the opinion of management, all normal recurring adjustments considered necessary for a fair presentation have been included.

On October 1, 2009, we acquired EGS, the parent company of eTelecare, in a stock-for-stock exchange. The accompanying consolidated statements of operations and cash flows of SGS present the results
of operations and cash flows for (i) the nine month period preceding the acquisition of EGS on October 1, 2009, exclusive of EGS results of operations and cash flows and (ii) for the periods succeeding the acquisition on
October 1, 2009, the consolidated results of operations including EGS are included in these financial statements. Refer to Note 5 for pro forma results.

Note 4Summary of Significant Accounting Policies

Use of Estimates

The preparation of the Consolidated Financial Statements in conformity with accounting principles generally accepted in the U.S.
(GAAP) requires management to make estimates and assumptions in determining the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the consolidated financial statements and the reported
amounts of revenue and expenses during the reporting period. On an on-going basis, the Company evaluates its estimates including those related to derivatives and hedging activities, income taxes including the valuation allowance for deferred tax
assets, valuation of long-lived assets, self-insurance reserves, litigation and restructuring liabilities, and allowance for doubtful accounts. The Company bases its estimates on historical experience and on various other assumptions that are
believed to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ materially from these estimates under different assumptions or conditions.

Cash Equivalents

We
consider all highly liquid investments with maturities at the date of purchase of three-months or less to be cash equivalents. Cash and cash equivalents of $16,906 and $12,180 December 31, 2010 and 2009, respectively, were held in international
locations and may be subject to additional taxes if repatriated to the United States. Cash balances held in foreign currency are also subject to fluctuation in their exchange rate if and when converted to U.S. dollars.



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Accounts Receivable and Concentration of Credit Risk

Financial instruments that potentially subject us to significant concentrations of credit risk are principally accounts receivable.
Services are provided to clients throughout the world and in various currencies. We generally invoice our clients within thirty days subsequent to the performance of services.

We extend credit to our clients in the normal course of business. We do not require collateral from our clients. We evaluate the collectability of our accounts receivable based on a combination of factors
that include the payment history and financial stability of our clients, our clients future plans and various market conditions. In circumstances where we are aware of a specific clients inability to meet its financial obligations, we
record a specific reserve against amounts due. Historically, we have not experienced significant losses on uncollectible accounts receivable. We have a reserve for doubtful accounts and other of $714 and $532 as of December 31, 2010 and 2009,
respectively. We recorded a bad debt expense of $162 and $191 for the years ended December 31, 2010 and 2009, respectively.

Equipment & Fixtures and Operating Leases

Equipment and fixtures are recorded at cost and depreciated using the straight-line method over the estimated useful lives of the assets. Furniture and fixtures are depreciated over a five-year life,
software over a three- to five-year life and equipment generally over a three- to five-year life. Leasehold improvements are depreciated over the shorter of their estimated useful life or the remaining term of the associated lease. Assets held under
capital leases are recorded at the lower of the net present value of the minimum lease payments or the fair value of the leased asset at the inception of the lease. Amortization expense is computed using the straight-line method over the shorter of
the estimated useful lives of the assets or the period of the related lease and is recorded in depreciation and amortization expense. Repair and maintenance costs are expensed as incurred.

The carrying value of equipment and fixtures to be held and used is evaluated for impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable in accordance with the authoritative guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its
eventual disposition does not exceed its carrying amount. The amount of the impairment loss, if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on
appraisals or sales prices of comparable assets. Occasionally, we redeploy equipment and fixtures from underutilized centers to other locations to improve capacity utilization if it is determined that the related undiscounted future cash flows in
the underutilized centers would not be sufficient to recover the carrying amount of these assets.

Where we have negotiated
rent holidays and landlord or tenant incentives, we record them ratably over the initial term of the operating lease, which commences upon execution of the lease. We estimate fair value of our asset retirement obligations associated with the
retirement of tangible long-lived assets such as property and equipment when the long-lived asset is acquired, constructed, developed or through normal operations. We depreciate leasehold improvements over the initial lease term.

Goodwill and Other Intangible Assets

In accordance with the authoritative guidance goodwill is reviewed for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might
be impaired. Impairment occurs when the carrying amount of goodwill exceeds its estimated fair value. The impairment, if any, is measured based on the estimated fair value of the reporting unit. We operate in one reporting unit, which is the basis
for impairment testing of all goodwill.

Intangible assets with a finite life are recorded at cost and amortized using their
projected cash flows over their estimated useful life. Client lists and relationships are amortized over periods of up to ten years, market adjustments related to facility leases are amortized over the term of the respective lease and developed
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is amortized over five years. Brands and trademarks are not amortized as their life is indefinite. In accordance with the authoritative guidance, indefinite lived intangible assets are reviewed
for impairment annually and on an interim basis if events or changes in circumstances between annual tests indicate that an asset might be impaired.

The carrying value of intangibles is evaluated for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable in accordance with the authoritative
guidance. An asset is considered to be impaired when the sum of the undiscounted future net cash flows expected to result from the use of the asset and its eventual disposition does not exceed its carrying amount. The amount of the impairment loss,
if any, is measured as the amount by which the carrying value of the asset exceeds its estimated fair value, which is generally determined based on appraisals or sales prices of comparable assets.

Financial Information Regarding Segment Reporting

We have one reportable segment and, therefore, all segment-related financial information required by the authoritative guidance is included in the consolidated financial statements. The reportable segment
reflects our operating and reporting structure.

Revenue Recognition

We recognize revenues as the related services are performed if evidence of an arrangement exists, delivery of the service has occurred,
the fee is fixed or determinable, and collection is considered probable. If any of those criteria are not met, revenue recognition is deferred until such time as all of the criteria are met.

Our client contracts generally specify the metrics by which we bill for our services and the service requirements. We may be paid on a
per minute, per hour, per call, per month, per participant, or per transaction basis.

We derive our revenues by providing
various business processing services that include technical support, sales and revenue generation services and customer care services. Our services include the services provided by our service professionals, our hosted technology, our data
management and reporting and other professional services.

Direct Cost of Revenue

We record the costs specifically associated with client programs as direct cost of revenues. These costs include direct labor wages and
benefits of service professionals as well as reimbursable expenses such as telecommunication charges. The most significant portion of our direct cost of revenue is attributable to compensation, benefits and payroll taxes.

Operating Expenses

Our
operating expenses consist of all expenses of operations other than direct costs of revenue, such as information technology, telecommunication sales and marketing costs, finance, human resource management and other functions and service center
operational expenses such as facility, operations and training and depreciation and amortization.

Income Taxes

We recognize income taxes in accordance with the authoritative guidance, which requires recognition of deferred assets and liabilities for
the future income tax consequence of transactions that have been included in the consolidated financial statements or tax returns. Under this method deferred tax assets and liabilities are determined based on the difference between the carrying
amounts of assets and liabilities for financial reporting purposes, and the amounts used for income tax, using the enacted tax rates for the year in which the differences



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are expected to reverse. We provide valuation allowances against deferred tax assets whenever we believe it is more likely than not, based on available evidence, that the deferred tax asset will
not be realized. Further we provide for the accounting for uncertainty in income taxes recognized in financial statements and the impact of a tax position in the financial statements if that position is more likely than not of being sustained by the
taxing authority.

Contingencies

We consider the likelihood of various loss contingencies, including non-income tax and legal contingencies arising in the ordinary course of business, and our ability to reasonably estimate the amount of
loss in determining loss contingencies. An estimated loss contingency is accrued in accordance with the authoritative guidance, 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 determine whether such accruals should be adjusted.

Foreign Currency Translation and Derivative
Instruments

We account for financial derivative instruments utilizing the authoritative guidance. We generally utilize
forward contracts expiring within one to 18 months to reduce our foreign currency exposure due to exchange rate fluctuations on forecasted cash flows denominated in non-functional foreign currencies. Upon proper designation, certain of these
contracts are accounted for as cash-flow hedges, as defined by the authoritative guidance. These contracts are entered into to protect against the risk that the eventual cash flows resulting from such transactions will be adversely affected by
changes in exchange rates. In using derivative financial instruments to hedge exposures to changes in exchange rates, we expose ourselves to counterparty credit risk. We do not believe that we are exposed to a concentration of credit risk with our
derivative financial instruments as the counterparties are well established institutions and counterparty credit risk information is monitored on an ongoing basis.

All derivatives, including foreign currency forward contracts, are recognized in other current assets on the balance sheet at fair value. Fair values for our derivative financial instruments are based on
quoted market prices of comparable instruments or, if none are available, on pricing models or formulas using current market and model assumptions. On the date the derivative contract is entered into, we determine whether the derivative contract
should be designated as a cash flow hedge. Changes in the fair value of derivatives that are highly effective and designated as cash flow hedges are recorded in Accumulated other comprehensive income (loss), until the forecasted
underlying transactions occur. To date we have not experienced any hedge ineffectiveness of our cash flow hedges (except certain cash flow hedges previously determined to be effective, as of October 1, 2009, the date of the Combination, which
have since been designated to be ineffective at that date). Any realized gains or losses resulting from the cash flow hedges are recognized together with the hedged transaction within Other Income (expense). Cash flows from the
derivative contracts are classified within Cash flows from operating activities in the accompanying Consolidated Statement of Cash Flows. Ineffectiveness is measured based on the change in fair value of the forward contracts and the fair
value of the hypothetical derivatives with terms that match the critical terms of the risk being hedged.

We may also enter
into derivative contracts that are intended to economically hedge certain risks, even though we elect not to apply hedge accounting as defined by the authoritative guidance.

Changes in fair value of derivatives not designated as hedges are reported in income. Upon settlement of the derivatives qualifying as hedges, a gain or loss is reported in income.

The assets and liabilities of our foreign subsidiaries, whose functional currency is their local currency, are translated at the exchange
rate in effect on the reporting date, and income and expenses are translated at the average exchange rate during the period. The net effect of translation gains and losses is not included in determining net income (loss), but is reflected in
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component of stockholders equity until the sale or until the liquidation of the net investment in the foreign subsidiary. Foreign currency transaction gains and losses are included in
determining net income (loss), and are categorized as Other income (expense).

We formally document all
relationships between hedging instruments and hedged items, as well as our risk management objective and strategy for undertaking various hedging activities. This process includes linking all derivatives that are designated as cash flow hedges to
forecasted transactions. We also formally assess, both at the hedges inception and on an ongoing basis (as required), whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in cash flows of
hedged items on a prospective and retrospective basis. When it is determined that a derivative is not highly effective as a hedge or that it has ceased to be a highly effective hedge or if a forecasted hedge is no longer probable of occurring, we
discontinue hedge accounting prospectively. At December 31, 2010, all hedges were determined to be highly effective (except certain cash flow hedges previously determined to be effective, as of October 1, 2009, the date of the Combination,
which have since been designated to be ineffective at that date, and certain hedges where we elect not to apply hedge accounting as defined by the authoritative guidance.

Our hedging program has been effective in all periods presented (except for all contracts for the hedge of the Philippine Peso entered into prior to October 1, 2009, and all contracts for the hedge
of the Canadian Dollar which were cancelled on September 30, 2009 by the Companys bank upon the early termination of credit arrangements with the bank), and the amount of hedge ineffectiveness has not been material. The value of the
Canadian dollar contracts cancelled on September 30, 2009 was a gain of $156, which was recognized in Other Income/(Expense) on the Statement of Operations.

Hedge accounting is also discontinued prospectively when (1) the derivative is no longer effective in offsetting changes in cash flow of a hedged item; (2) the derivative expires or is sold,
terminated, or exercised; (3) it is no longer probable that the forecasted transaction will occur; (4) a hedged firm commitment no longer meets the definition of a firm commitment; (5) the derivative as a hedging instrument is no
longer effective; or (6) when assumed in purchase accounting.

As of December 31, 2010 and 2009, we had
approximately $233,183 and $111,994, respectively, of foreign exchange risk hedged using forward exchange contracts. As of December 31, 2010, the $233,183 of forward exchange contracts we held were comprised of $5,377 of contracts previously
determined to be effective cash flow hedges but as of October 1, 2009 subsequently determined to be ineffective, $150,526 of contracts determined to be effective cash flow hedges and $77,280 of contracts for which we elected not to apply hedge
accounting.

As of December 31, 2010 and 2009, the fair market value of these derivative instruments designated as cash
flow hedges was a gain of $5,358 and a loss of $87, respectively. As of December 31, 2010, the fair market value of derivatives previously determined to be effective cash flow hedges but as of October 1, 2009 subsequently determined to be
ineffective was a gain of $468, which was recognized in Other Income/Expense in the Statement of Operations. As of December 31, 2010, the fair market value of derivatives for which we elected not to apply hedge accounting was a gain of $373,
which was recognized in Other Income/Expense in the Statement of Operations. As of December 31, 2010, $5,222 of net gains, net of tax, may be reclassified to earnings within the next 12 months based on current foreign exchange rates.

As of December 31, 2010 and 2009, the company had realized gains of $1,041 and $563 respectively on hedges for which the
company elected to not apply hedge accounting. As of December 31, 2010 and 2009, the company realized gains of $1,986 and $3,083 on hedges which were deemed effective cash flow hedges. As of December 31, 2010 and 2009, the company
realized gains of $5,945 and $1,096 on hedges which were previously determined to be effective cash flow hedges but as of October 1, 2009 subsequently determined to be ineffective. All realized gains for the periods were reflected in Other
Income/Expense in the Statement of Operations.



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Fair Value of Financial Instruments

We implemented the authoritative guidance, for our financial assets and liabilities that are re-measured and reported at fair value at
each reporting period, and non-financial assets and liabilities that are re-measured and reported at fair value at least annually.

The following table presents information about our assets and liabilities and indicates the fair value hierarchy of the valuation techniques we utilized to determine such fair value. In general, fair
values determined by Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities. Fair values determined by Level 2 inputs utilize data points that are observable such as quoted prices, interest rates and
yield curves. Fair values determined by Level 3 inputs are unobservable data points for the asset or liability, and includes situations where there is little, if any, market activity for the asset or liability:



|                           |  |                  |         |  |                                         |   |         |                                             |  |   |                                  |  |  |   |   | 
|-------------------------- |  | ---------------- | ------- |  | --------------------------------------- | - | ------- | ------------------------------------------- |  | - | -------------------------------- |  |  | - | - | 
|                           |  | December 31,2010 |         |  | Quoted Prices inActive Markets(Level 1) |   |         | Significant OtherObservableInputs (Level 2) |  |   | SignificantUnobservable(Level 3) | 
|Description                |  |                  |         |  |                                         |   |         |                                             |  |   |                                  |  |  |   |   | 
|Long-term debt             |  | $                | 201,500 |  |                                         | $ | 201,500 |                                             |  | $ |                                 |  |  | $ |  | 
|Forward exchange contracts |  |                  | 6,764   |  |                                         |   |        |                                             |  |   | 6,764                            |  |  |   |  | 
|                           |  |                  |         |  |                                         |   |         |                                             |  |   |                                  |  |  |   |   | 
|Total                      |  | $                | 208,264 |  |                                         | $ | 201,500 |                                             |  | $ | 6,764                            |  |  | $ |  | 

The fair value of our
long term debt is determined from market quotations obtained from Bloomberg Finance, L.P. The fair values of our forward exchange contracts are determined through market, observable and corroborated sources.

The carrying amounts reflected in the consolidated balance sheets for other current assets, accounts payable, and accrued expenses
approximate fair value due to their short-term maturities. To the extent we have any outstanding borrowings under our revolving credit facility, the fair value would approximate its reported value because the interest rate is variable and reflects
current market rates.

Net Income (Loss) Per Share

In 2009, we calculated net income (loss) per share in accordance with the authoritative guidance which clarifies the use of the two-class method of calculating earnings per share. We
determined that our Series A Preferred Stock represents a participating security for purposes of computing earnings per share and allocated earnings per share to a participating security using the two-class method for computing basic earnings per
share.

Under the two-class method, basic net income (loss) per share is computed by dividing the net income (loss) applicable
to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted net income (loss) per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method. We
allocated net income first to preferred stockholders based on dividend rights under our certificate of incorporation and then to common and preferred stockholders based on ownership interests. Net losses are not allocated to preferred stockholders.
Diluted net income (loss) per share gives effect to all potentially dilutive securities.



|                                                       |  |                             |         |   |                             |   |         |  
|------------------------------------------------------ |  | --------------------------- | ------- | - | --------------------------- | - | ------- | -
|                                                       |  | Year EndedDecember 31, 2010 |         |   | Year EndedDecember 31, 2009 |  
|Net income (loss)                                      |  | $                           | (53,475 | ) |                             | $ | (28,573 | )
|Cumulative Convertible Preferred Stock dividends       |  |                             |        |   |                             |   | 58,018  |  
|Preferred Stock accretion                              |  |                             |        |   |                             |   | 6,397   |  
|                                                       |  |                             |         |   |                             |   |         |  
|Net income (loss) attributable for common stockholders |  | $                           | (53,475 | ) |                             | $ | (92,988 | )



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The following common stock equivalents were excluded from computing diluted net loss per
share attributable to common stockholders because they had an anti-dilutive impact:



|                                                                                 |  |                             |        |  |                             |  |        | 
|-------------------------------------------------------------------------------- |  | --------------------------- | ------ |  | --------------------------- |  | ------ | 
|                                                                                 |  | Year EndedDecember 31, 2010 |        |  | Year EndedDecember 31, 2009 | 
|Options to purchase common stock at $6.00 per share                              |  |                             | 6,308  |  |                             |  | 6,978  | 
|Pre-emptive rights at $6.00 per share                                            |  |                             | 17,852 |  |                             |  | 24,385 | 
|Publicly held warrants at $6.00 per share                                        |  |                             | 7,327  |  |                             |  | 10,009 | 
|Restricted stock units                                                           |  |                             | 320    |  |                             |  | 58     | 
|                                                                                 |  |                             |        |  |                             |  |        | 
|Total options, warrants and restricted stock units exercisable into common stock |  |                             | 31,807 |  |                             |  | 41,430 | 

Accumulated other
comprehensive income (loss) consists of the following:



|                                                     |  |                  |        |   |                  |   |        |  
|---------------------------------------------------- |  | ---------------- | ------ | - | ---------------- | - | ------ | -
|                                                     |  | December 31,2010 |        |   | December 31,2009 |  
|Unrealized (loss) gain on forward exchange contracts |  | $                | 5,358  |   |                  | $ | (87    | )
|Cumulative Translation adjustment                    |  |                  | (6,465 | ) |                  |   | (3,645 | )
|                                                     |  |                  |        |   |                  |   |        |  
|                                                     |  | $                | (1,107 | ) |                  | $ | (3,732 | )

Market Lease Reserve

We assumed facility leases in connection with the acquisition of SHC and EGS. Under the authoritative guidance, the operating leases are
to be recorded at fair value at the date of acquisition. We determined that certain of the facility lease contract rates were in excess of the market rates at the date of acquisition, resulting in an above market lease reserve. The above and below
market lease values for the assumed facility leases were recorded based on the present value (using a discount rate which reflects the risks associated with the leases acquired) of the difference between (i) the contractual amounts to be paid
pursuant to each operating lease and (ii) managements estimate of fair market lease rates for each corresponding operating lease, measured over a period equal to the remaining term of the lease. The market lease reserves are amortized as
a reduction of base rental expense over the remaining term of the respective leases.

For the years ended December 31,
2010 and 2009, the amortization of the market lease reserve, including imputed interest, was $4,412 and $3,007, respectively.

Stock-Based
Compensation

At December 31, 2010 and 2009, we had a stock-based compensation plan for employees and directors. We
adopted the fair value recognition provisions of the financial guidance at our inception. For share-based payments, the fair value of each grant (time-based grants with performance acceleration) is estimated on the date of grant using the
Black-Scholes-Merton option valuation Stock compensation expense is recognized on a straight-line basis over the vesting term, net of an estimated future forfeiture rate. The Company estimates the forfeiture rate annually based on its historical
experience of vested and forfeited awards.

Recent Accounting Pronouncements

In January 2010, the Financial Accounting Standards Board (FASB) issued guidance to amend the disclosure requirements related
to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2
(significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. Additionally, the guidance requires a roll forward of activities on purchases, sales, issuance, and
settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance became effective for us with the reporting



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period beginning January 1, 2010, except for the requirement to separately disclose purchases, sales, issuances and settlements of recurring Level 3 fair value measurements which is
effective January 1, 2011. Other than requiring additional disclosures, adoption of this new guidance did not have a material impact on our financial statements.

In October 2009, the FASB issued guidance on revenue recognition that will become effective for us beginning January 1, 2011, with earlier adoption permitted. Under the new guidance, when vendor
specific objective evidence or third party evidence for multi-element deliverables in an arrangement cannot be determined, a best estimate of the selling price is required to separate deliverables and allocate arrangement consideration using the
relative selling price method. The new guidance includes new disclosure requirements on how the application of the relative selling price method affects the timing and amount of revenue recognition. We believe adoption of this new guidance will not
have a material impact on our financial statements.

Note 5Acquisitions

EGS Acquisition:

On October 1, 2009, we consummated the acquisition
of EGS, pursuant to which we acquired all of the outstanding shares of capital stock of EGS and EGS became a wholly-owned subsidiary of SGS.

SGS acquired EGS to create one of the leading CRM and BPO services companies in the world. With 50 locations in 22 countries and over 30,000 employees worldwide, we are able to offer our clients
customized global capabilities that can deliver integrated services in almost any geographic region across the world. EGS gave SGS the ability to broaden its service offerings to include a full portfolio of sales and revenue generation, warranty
management, customer loyalty and brand management, customer care, technical support, and customer life cycle management services. We believe this broad and integrated portfolio of global services is a key differentiating factor to win new clients
and create cross selling opportunities between clients.

Stream Global Services and EGS entered into a share exchange
agreement pursuant to which Stream issued 33,652 shares of its common stock for all the outstanding shares of EGS. The purchase price calculation was as follows:



|                                |  |   |         | 
|------------------------------- |  | - | ------- | 
|Purchase price in common shares |  | $ | 181,718 | 
|Value of pre-emptive rights     |  |   | 1,384   | 
|                                |  |   |         | 
|Total allocable purchase price  |  | $ | 183,102 | 

The acquisition was
accounted for in accordance with the authoritative guidance. The transaction was valued for accounting purposes at $183,102.

The exercise of our publicly traded warrants trigger certain pre-emptive rights held by: Ares, EGS Dutchco B.V. and NewBridge
International Investment Ltd. (collectively, the Participating Shareholders). Pursuant to their pre-emptive rights, the Participating Shareholders have the right to purchase, for $6.00 per share, an aggregate number of shares of our
common stock equal to 2.4364 multiplied by the number of shares issued upon the exercise of the publicly traded warrants. The Participating Shareholders received these pre-emptive rights in association with the acquisition of EGS and, accordingly,
we have treated the value of these rights as additional purchase consideration.

Under the purchase method of accounting, the
assets and liabilities of EGS were recorded as of the acquisition date at their respective fair values. The excess purchase price over those values was recorded as goodwill. The following table summarizes the preliminary estimated fair value of
assets acquired and the liabilities assumed and related deferred income taxes at October 1, 2009, the date of the acquisition.



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|                          |  |                                                 |          |   |                     |  |        |                                |  |   |          |  
|------------------------- |  | ----------------------------------------------- | -------- | - | ------------------- |  | ------ | ------------------------------ |  | - | -------- | -
|                          |  | Preliminary AmountsAs
ReportedDecember 31, 2009 |          |   | AdjustmentsRecorded |  |        | Final Purchase PriceAllocation | 
|Current assets            |  | $                                               | 99,631   |   |                     |  |        |                                |  | $ | 99,631   |  
|Property and equipment    |  |                                                 | 46,952   |   |                     |  |        |                                |  |   | 46,952   |  
|Goodwill                  |  |                                                 | 177,478  |   |                     |  | 722    |                                |  |   | 178,200  |  
|Trade names               |  |                                                 | 100      |   |                     |  |        |                                |  |   | 100      |  
|Customer relationships    |  |                                                 | 30,300   |   |                     |  |        |                                |  |   | 30,300   |  
|Customer contracts        |  |                                                 | 1,701    |   |                     |  |        |                                |  |   | 1,701    |  
|Other non-current assets  |  |                                                 | 4,898    |   |                     |  |        |                                |  |   | 4,898    |  
|                          |  |                                                 |          |   |                     |  |        |                                |  |   |          |  
|Total assets acquired     |  |                                                 | 361,060  |   |                     |  |        |                                |  |   | 361,782  |  
|Current liabilities       |  |                                                 | (81,866  | ) |                     |  | (1,600 | )                              |  |   | (83,466  | )
|Related party debt        |  |                                                 | (85,254  | ) |                     |  |        |                                |  |   | (85,254  | )
|Other liabilities         |  |                                                 | (10,838  | ) |                     |  | 878    |                                |  |   | (9,960   | )
|                          |  |                                                 |          |   |                     |  |        |                                |  |   |          |  
|Total liabilities assumed |  |                                                 | (177,958 | ) |                     |  |        |                                |  |   | (178,680 | )
|                          |  |                                                 |          |   |                     |  |        |                                |  |   |          |  
|Allocated purchase price  |  | $                                               | 183,102  |   |                     |  |       |                                |  | $ | 183,102  |  

As described, a
preliminary estimate of the allocation of the total allocable purchase price of $183,102 to the net assets of EGS was made as of the date of the acquisition. Pursuant to authoritative guidance, we had up to one year from the acquisition date to
finalize the allocation of the purchase price. During the year ended December 31, 2010, we adjusted the preliminary values assigned to certain assets and liabilities in order to reflect additional information obtained subsequent to the
acquisition date. The opening balance sheet has been adjusted to reflect these changes, the most significant of which were an increase to current liabilities of $1.6 million following a court ruling made in September 2010 relating to a contingent
liability that existed prior to our acquisition of EGS and a decrease to net deferred tax liabilities of $0.6 million. As of December 31, 2010, we have finalized our allocation of the total allocable purchase price.

The following is a roll-forward of goodwill from December 31, 2009:



|                                         |  |   |         |  
|---------------------------------------- |  | - | ------- | -
|Balance at December 31, 2009             |  | $ | 226,027 |  
|Liability for pre-acquisition litigation |  |   | 1,600   |  
|Adjustments to deferred tax liabilities  |  |   | (878    | )
|                                         |  |   |         |  
|Balance at December 31, 2010             |  |   | 226,749 |  

We recognized $12,245
of transaction related costs that were expensed in the year ended December 31, 2009. These costs are included in the consolidated income statement in the line titled severance, restructuring and other charges. We recorded
adjustments of $209 to our transaction related accruals for the year ended December 31, 2010. These costs are included in the consolidated income statement in the line titled severance, restructuring and other charges. The following
unaudited pro forma financial information presents the consolidated results of operations of SGS and EGS as if the acquisition of EGS had occurred as of the beginning of the periods presented below. The historical financial information has been
adjusted to give effect to events that are directly attributable to the Combination (including amortization of purchased intangible assets and debt costs associated with the acquisition, debt costs associated with our high yield debt offering and
conversion of preferred stock to common stock), and upon the pro forma statements of operations, have a recurring impact. The unaudited pro forma financial information is not intended, and should not be taken as representative of our future
consolidated results of operations or financial condition or the results that would have occurred had the acquisition occurred as of the beginning of the earliest period.



|                                             |  |                             |         |  
|-------------------------------------------- |  | --------------------------- | ------- | -
|                                             |  | Year endedDecember 31, 2009 |        
|Revenue                                      |  | $                           | 797,005 |  
|Net loss attributable to common shareholders |  |                             | (40,698 | )
|Basic and diluted net loss per share         |  | $                           | (0.51   | )



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Intangibles and amortization

Intangible assets at December 31, 2010 consist of the following:



|                                   |  |                      |                |  |                              |  |            |           |  |  |                         |  |  |     |        |  |  |  |        | 
|---------------------------------- |  | -------------------- | -------------- |  | ---------------------------- |  | ---------- | --------- |  |  | ----------------------- |  |  | --- | ------ |  |  |  | ------ | 
|                                   |  | Estimateduseful life |                |  | Weightedaverageremaininglife |  |            | Grosscost |  |  | Accumulatedamortization |  |  | Net |       
|Customer relationships             |  |                      | Up to 10 years |  |                              |  | 6.7        |           |  |  | 98,749                  |  |  |     | 32,716 |  |  |  | 66,033 | 
|Technology-based intangible assets |  |                      | 5 years        |  |                              |  | 2.6        |           |  |  | 2,445                   |  |  |     | 904    |  |  |  | 1,541  | 
|Trade names                        |  |                      | indefinite     |  |                              |  | indefinite |           |  |  | 16,197                  |  |  |     | 97     |  |  |  | 16,100 | 
|                                   |  |                      |                |  |                              |  |            |           |  |  |                         |  |  |     |        |  |  |  |        | 
|                                   |  |                      |                |  |                              |  |            |           |  |  | 117,391                 |  |  |     | 33,717 |  |  |  | 83,674 | 

Amortization expense
consists of the following:



|                     |  |                            |        |  |                            |   |        | 
|-------------------- |  | -------------------------- | ------ |  | -------------------------- | - | ------ | 
|                     |  | Year
EndedDecember 31,2010 |        |  | Year
EndedDecember 31,2009 |  
|Amortization expense |  | $                          | 20,838 |  |                            | $ | 10,826 | 

Future amortization
expense of our intangible assets for the next five years is expected to be as follows:



|             |  |      |        |  |      |  |        |      |  |  |        |  |  |      |       |  |  |  |       | 
|------------ |  | ---- | ------ |  | ---- |  | ------ | ---- |  |  | ------ |  |  | ---- | ----- |  |  |  | ----- | 
|             |  | 2011 |        |  | 2012 |  |        | 2013 |  |  | 2014   |  |  | 2015 |      
|Amortization |  |      | 17,003 |  |      |  | 14,331 |      |  |  | 11,497 |  |  |      | 7,571 |  |  |  | 5,652 | 

Note 6Warrants

Pursuant to our IPO, we sold 31,250 units, each consisting of one share of our common stock and one warrant entitling the
holder to purchase one share of our common stock at an exercise price of $6.00 per share.

The warrants became exercisable
beginning on October 17, 2008 and will expire on October 17, 2011, unless redeemed earlier. Beginning October 17, 2008, we may redeem the warrants at a price of $0.01 per warrant upon a minimum of 30 days prior written notice of
redemption if, and only if, the last sales price of our common stock equals or exceeds $11.50 per share for any 20 trading days within a 30 trading day period ending three business days before we send the notice of redemption.

During 2010, we repurchased 2,271 public warrants from holders for $1,608 in privately negotiated transactions. In 2009, we closed our
self-tender offer to purchase up to 17,500 of our public warrants and accepted for purchase 9,957 warrants for a total purchase price of approximately $4,978, excluding fees and expenses related to the lender. Also during the year, holders of our
warrants exercised 381 warrants for proceeds to us of $2,286. As of December 31, 2010 there were 7,357 warrants outstanding, including 30 shares of common stock underlying warrants embedded in our units.

The exercise of our public warrants triggers certain participation rights held by the following shareholders: Ares Management, Ayala
Corporation and Providence Equity Partners (the Participating Shareholders). The Participating Shareholders have participation rights to purchase, for $6.00 per share, an aggregate number of shares of our common stock equal to 2.4364
multiplied by the number of shares actually issued upon exercise of the public warrants. As of December 31, 2010, Stream had 7,357 public warrants outstanding, including shares of common stock underlying warrants embedded in our units, to
acquire common stock at a cash exercise price of $6.00 per share that expire on October 17, 2011. In addition the Participating Shareholders have remaining participation rights to acquire shares of our common stock for $6.00 per share in cash,
at a rate of 2.4364 common shares for each public warrant that is exercised for cash at $6.00 per share, if and when any of the public warrants are exercised, up to an aggregate 17,925 shares. These participation rights expire when the public
warrants expire on October 17, 2011 or are reduced pro rata as the numbers of public warrants outstanding are reduced.



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Note 7 Severance, Restructuring and Other Charges

During the year ended December 31, 2010 and 2009, we incurred significant severance charges primarily associated with changes in
leadership and management positions within the Company. We include in these charges salary continuation and the expense associated with acceleration of stock awards. For the year ended December 31, 2010 and 2009 these charges were $6,502 and
$6,126 respectively.

For the year ended December 31, 2010 and 2009, we recorded exit charges of $3,443 and $2,069
related to call centers where we have ceased the use of and entirely vacated the space in advance of the contractual termination of the lease. Lease exit costs include the present value of future lease payments in facilities and other exit related
costs.

During the year ended December 31, 2010 we recorded facility impairment charges in one of our call center
locations in the amount of $1,746 where we determined that the future undiscounted cash flows will not exceed the book value of the assets. We continue to provide call center services in that facility.

For the year ended December 31, 2010 and 2009, we recorded $209 and $6,996 of transaction related costs primarily related to the
acquisition of EGS on October 1, 2009.

Note 8Equipment and Fixtures, Net

Equipment and fixtures, net, consists of the following:



|                                                 |  |                  |         |   |                  |   |         |  
|------------------------------------------------ |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                                 |  | December 31,2010 |         |   | December 31,2009 |  
|Furniture and fixtures                           |  | $                | 11,161  |   |                  | $ | 10,948  |  
|Building improvements                            |  |                  | 36,196  |   |                  |   | 32,044  |  
|Computer equipment                               |  |                  | 37,200  |   |                  |   | 31,142  |  
|Software                                         |  |                  | 21,935  |   |                  |   | 14,586  |  
|Telecom and other equipment                      |  |                  | 46,519  |   |                  |   | 38,157  |  
|Fixed assets held for sale                       |  |                  |        |   |                  |   | 228     |  
|Equipment and fixtures not yet placed in service |  |                  | 1,232   |   |                  |   | 1,415   |  
|                                                 |  |                  |         |   |                  |   |         |  
|                                                 |  |                  | 154,243 |   |                  |   | 128,520 |  
|Less: accumulated depreciation                   |  |                  | (73,384 | ) |                  |   | (31,704 | )
|                                                 |  |                  |         |   |                  |   |         |  
|                                                 |  | $                | 80,859  |   |                  | $ | 96,816  |  

Depreciation expense
consists of the following:



|                     |  |                            |        |  |                            |   |        | 
|-------------------- |  | -------------------------- | ------ |  | -------------------------- | - | ------ | 
|                     |  | Year
EndedDecember 31,2010 |        |  | Year
EndedDecember 31,2009 |  
|Depreciation expense |  | $                          | 45,065 |  |                            | $ | 25,596 | 

Note 9Accrued Employee
Compensation and Benefits

Accrued employee compensation and benefits consists of the following:



|                                  |  |                  |        |  |                  |   |        | 
|--------------------------------- |  | ---------------- | ------ |  | ---------------- | - | ------ | 
|                                  |  | December 31,2010 |        |  | December 31,2009 |  
|Compensation related amounts      |  | $                | 31,805 |  |                  | $ | 29,213 | 
|Vacation liabilities              |  |                  | 12,646 |  |                  |   | 13,492 | 
|Medical and dental liabilities    |  |                  | 1,860  |  |                  |   | 2,972  | 
|Employer taxes                    |  |                  | 2,825  |  |                  |   | 1,531  | 
|Retirement plans                  |  |                  | 8,146  |  |                  |   | 7,806  | 
|Other benefit related liabilities |  |                  | 2,515  |  |                  |   | 2,461  | 
|                                  |  |                  |        |  |                  |   |        | 
|                                  |  | $                | 59,797 |  |                  | $ | 57,475 | 



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Note 10Other Accrued Expenses and Other Liabilities

Other accrued expenses consist of the following:



|                       |  |                  |        |  |                  |   |        | 
|---------------------- |  | ---------------- | ------ |  | ---------------- | - | ------ | 
|                       |  | December 31,2010 |        |  | December 31,2009 |  
|Professional fees      |  |                  | 7,151  |  |                  |   | 5,447  | 
|Accrued interest       |  |                  | 5,921  |  |                  |   | 6,041  | 
|Occupancy expense      |  |                  | 2,250  |  |                  |   | 3,678  | 
|Technology expense     |  |                  | 3,116  |  |                  |   | 4,050  | 
|Other accrued expenses |  |                  | 11,551 |  |                  |   | 9,283  | 
|                       |  |                  |        |  |                  |   |        | 
|                       |  | $                | 29,989 |  |                  | $ | 28,499 | 

Other liabilities
consist of the following:



|                            |  |                  |        |  |                  |   |        | 
|--------------------------- |  | ---------------- | ------ |  | ---------------- | - | ------ | 
|                            |  | December 31,2010 |        |  | December 31,2009 |  
|Lease exit liability        |  | $                | 1,743  |  |                  | $ | 924    | 
|Deferred revenue            |  |                  | 365    |  |                  |   | 635    | 
|Market lease reserves       |  |                  | 3,930  |  |                  |   | 5,548  | 
|Other                       |  |                  | 1,034  |  |                  |   | 906    | 
|                            |  |                  |        |  |                  |   |        | 
|Total current liabilities   |  | $                | 7,072  |  |                  | $ | 8,013  | 
|Deferred revenue            |  | $                |       |  |                  | $ |       | 
|Deferred rent               |  |                  | 1,433  |  |                  |   | 955    | 
|Accrued income taxes        |  |                  | 12,268 |  |                  |   | 11,976 | 
|Market value lease reserves |  |                  | 2,750  |  |                  |   | 7,418  | 
|Asset retirement obligation |  |                  | 2,053  |  |                  |   | 2,162  | 
|Other                       |  |                  | 1,627  |  |                  |   | 355    | 
|                            |  |                  |        |  |                  |   |        | 
|Total long-term             |  | $                | 20,131 |  |                  | $ | 22,866 | 

Note 11Long-Term Debt and
Revolving Credit Facility

In October 2009, pursuant to an indenture dated as of October 1, 2009 (the
Indenture), among Stream, certain of our subsidiaries and Wells Fargo Bank, National Association, as trustee, we issued $200 million aggregate principal amount of 11.25% Senior Secured Notes due 2014 (the Notes) at an initial
offering price of 95.454% of the principal amount, the proceeds of which were used to pay off the debt from our Fifth Amended and Restated Revolving Credit, Term Loan and Security Agreement, dated as of January 8, 2009, as amended (the
PNC Agreement), with PNC Bank, National Association (PNC) and other signatories thereto along with debt acquired from EGS. In addition, we and certain of our subsidiaries (collectively, the Borrowers) entered into
a credit agreement, dated as of October 1, 2009 (the Credit Agreement), with Wells Fargo Foothill, LLC, as agent and co-arranger, and Goldman Sachs Lending Partners LLC, as co-arranger, and each of the lenders party thereto, as
lenders, providing for revolving credit financing (the ABL Facility) of up to $100 million, including a $20 million sub-limit for letters of credit. The ABL Facility has a maturity of four years at an interest rate of Wells Fargos
base rate plus 375 basis points or LIBOR plus 400 basis points at our discretion. We capitalized fees of $7,815 and $3,929 associated with the Notes and the Credit Agreement, respectively, at the inception of these agreements that are being
amortized over their respective lives. We amortized into expense for the year ended December 31, 2010, $1,211 and $956, respectively, of such capitalized fees.

The ABL facility has a fixed charge coverage ratio financial covenant that is operative when our availability under the facility is less than $20 million. As of December 31, 2010, we had $68,558
available under the ABL Facility. We are in compliance with the financial covenants in the Credit Agreement as of December 31, 2010. Substantially all of the assets of Stream excluding intangible assets secure the Notes and the ABL Facility.
See Note 17 for Guarantor Financial Information.



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Long-term borrowings consist of the following:



|                                |  |                  |         |   |                  |   |         |  
|------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                |  | December 31,2010 |         |   | December 31,2009 |  
|Revolving line of credit        |  | $                | 24,506  |   |                  | $ | 15,501  |  
|11.25% Senior Secured Notes     |  |                  | 200,000 |   |                  |   | 200,000 |  
|Other                           |  |                  | 147     |   |                  |   | 237     |  
|                                |  |                  |         |   |                  |   |         |  
|                                |  |                  | 224,653 |   |                  |   | 215,738 |  
|Less: current portion           |  |                  | (96     | ) |                  |   | (90     | )
|Less: discount on notes payable |  |                  | (7,358  | ) |                  |   | (8,768  | )
|                                |  |                  |         |   |                  |   |         |  
|Long-term debt                  |  | $                | 217,199 |   |                  | $ | 206,880 |  
|                                |  |                  |         |   |                  |   |         |  

Minimum principal payments on long-term debt subsequent to December 31, 2010 are as follows:



|      |  |       |         | 
|----- |  | ----- | ------- | 
|      |  | Total |        
|2011  |  | $     | 96      | 
|2012  |  |       | 51      | 
|2013  |  |       | 24,506  | 
|2014  |  |       | 200,000 | 
|2015  |  |       |        | 
|      |  |       |         | 
|Total |  | $     | 224,653 | 
|      |  |       |         | 

On March 18, 2009, in response to our request under the Reimbursement Agreement, Ares issued three
letters of credit in an aggregate amount of $7,006, and we issued 1 share of Series B Preferred Stock to Ares in consideration of such letters of credit.

We had $6,936 LC Guarantees outstanding at December 31, 2010 and $6,600 at December 31, 2009, respectively.

There was $68,558 available on the ABL Facility at December 31, 2010.

We
have $161 and $359 of restricted cash as of December 31, 2010 and 2009, respectively.

Note 12Defined Contribution and Benefit
Plans

We have defined contribution and benefit plans in various countries. The plans cover all full-time employees other
than excluded employees as defined in the plans. The participants may make pretax contributions to the plans, and we can make both matching and discretionary contributions. In the years ended December 31, 2010 and 2009, we recorded $3,264 and
$3,126 in matching contributions to the plans. Our defined benefit plans are funded primarily through annuity contracts with third party insurance companies. We do not have any material obligations under these plans other than funding the annual
insurance premiums.

Note 13Income Taxes

The change in valuation allowances is net of the effect of foreign currency translation adjustments included in accumulated other comprehensive income (loss).

The domestic and foreign source component of income (loss) before tax is as follows:



|              |  |                  |         |   |                  |   |         |  
|------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|              |  | December 31,2010 |         |   | December 31,2009 |  
|Total US      |  | $                | (68,897 | ) |                  | $ | (45,244 | )
|Total Foreign |  |                  | 25,814  |   |                  |   | 21,053  |  
|              |  |                  |         |   |                  |   |         |  
|Total         |  | $                | (43,083 | ) |                  | $ | (24,191 | )



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The components of the income tax expense (benefit) are as follows:



|               |  |                  |        |  |                  |   |        |  
|-------------- |  | ---------------- | ------ |  | ---------------- | - | ------ | -
|               |  | December 31,2010 |        |  | December 31,2009 |  
|Current        |  |                  |        |  |                  |   |        |  
|Federal        |  | $                | 214    |  |                  | $ | (17    | )
|State          |  |                  | 326    |  |                  |   | 15     |  
|Foreign        |  |                  | 6,083  |  |                  |   | 6,128  |  
|               |  |                  |        |  |                  |   |        |  
|Total Current  |  | $                | 6,623  |  |                  | $ | 6,126  |  
|Deferred       |  |                  |        |  |                  |   |        |  
|Federal        |  | $                | 1,141  |  |                  | $ | (664   | )
|State          |  |                  | 308    |  |                  |   | 26     |  
|Foreign        |  |                  | 2,320  |  |                  |   | (1,106 | )
|               |  |                  |        |  |                  |   |        |  
|Total Deferred |  | $                | 3,769  |  |                  | $ | (1,744 | )
|               |  |                  |        |  |                  |   |        |  
|Total          |  | $                | 10,392 |  |                  | $ | 4,382  |  

A reconciliation of
the provision for income taxes with amounts determined by applying the statutory US Federal rate is as follows:



|                                                                 |  |                  |         |   |                  |   |        |  
|---------------------------------------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------ | -
|                                                                 |  | December 31,2010 |         |   | December 31,2009 |  
|Federal tax rate                                                 |  | $                | (15,079 | ) |                  | $ | (8,467 | )
|State and local income taxes, net of federal income tax benefits |  |                  | 300     |   |                  |   | (20    | )
|Foreign income taxed at different rate to US                     |  |                  | (6,226  | ) |                  |   | 3,340  |  
|Change in valuation allowance                                    |  |                  | 23,393  |   |                  |   | 8,327  |  
|Non deductible expenses related to foreign tax holiday           |  |                  | 5,469   |   |                  |   | 7,936  |  
|Credits and tax holidays                                         |  |                  | (312    | ) |                  |   | (6,709 | )
|Benefit of prior year net operating losses                       |  |                  |        |   |                  |   | (468   | )
|Reserve for uncertain tax positions                              |  |                  | 1,009   |   |                  |   | 819    |  
|Permanent items                                                  |  |                  | 1,787   |   |                  |   | 50     |  
|Other differences                                                |  |                  | 51      |   |                  |   | (426   | )
|                                                                 |  |                  |         |   |                  |   |        |  
|Provision for income taxes                                       |  | $                | 10,392  |   |                  | $ | 4,382  |  

Deferred income taxes
consist of the following:



|                                      |  |                  |         |   |                  |   |         |  
|------------------------------------- |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                      |  | December 31,2010 |         |   | December 31,2009 |  
|Deferred tax assets:                  |  |                  |         |   |                  |   |         |  
|Accruals, allowances, and reserves    |  | $                | 8,585   |   |                  | $ | 8,629   |  
|Tax credits and loss carry forwards   |  |                  | 22,798  |   |                  |   | 19,403  |  
|Tangibles/Intangibles                 |  |                  | 10,982  |   |                  |   | 4,910   |  
|Payables/Receivables                  |  |                  | 28,854  |   |                  |   | 22,252  |  
|Other                                 |  |                  | 757     |   |                  |   | 732     |  
|                                      |  |                  |         |   |                  |   |         |  
|                                      |  |                  | 71,976  |   |                  |   | 55,926  |  
|Valuation allowance                   |  |                  | (40,603 | ) |                  |   | (18,234 | )
|                                      |  |                  |         |   |                  |   |         |  
|Total deferred tax assets             |  |                  | 31,373  |   |                  |   | 37,692  |  
|Deferred tax liabilities:             |  |                  |         |   |                  |   |         |  
|Intangible assets                     |  |                  | 28,337  |   |                  |   | 31,700  |  
|Other liabilities                     |  |                  | 4,671   |   |                  |   | 5,462   |  
|Market leases                         |  |                  | 564     |   |                  |   | 404     |  
|                                      |  |                  |         |   |                  |   |         |  
|Total deferred tax liabilities        |  |                  | 33,572  |   |                  |   | 37,566  |  
|                                      |  |                  |         |   |                  |   |         |  
|Net deferred tax assets (liabilities) |  | $                | (2,199  | ) |                  | $ | 126     |  



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At December 31, 2010 and 2009, we had $33,200 and $28,578, respectively, of U.S.
federal net operating losses, which will expire between 2024 and 2030. At December 31, 2010 and 2009, we had $17,174 and $16,745, respectively of state net operating losses. At December 31, 2010 and 2009 the foreign operating loss carry
forwards includes $5,984 and $4,277 with no expiration date, and $7,816 and $7,959, respectively, of foreign-generated net operating losses, which will expire over various periods through 2016. The net operating losses are evaluated for each foreign
jurisdiction and a full valuation allowance established where we believe that it is more likely than not based on available evidence that the asset will not be realized.

At December 31, 2010, we had $2,774 of credits available for carry forward which will expire between 2014 and 2029, and $2,018 of credits with no expiration date.

We had recorded a valuation allowance of $40,603 and $18,234 for the periods ended December 31, 2010 and 2009, respectively, against
net operating losses and deferred tax assets for which realization of any future benefit is uncertain due to taxable income limitations.

We file income tax returns in the U.S. federal jurisdiction and various state jurisdictions. Currently, we are under federal audit for the year 2007. We operate in a number of international tax
jurisdictions and are subject to audits of income tax returns by tax authorities in those jurisdictions. We have open audit periods after 2002 in India, Canada and Europe, including France, Italy, Ireland, the Netherlands and the United Kingdom and
are currently under audit in India, Canada and Italy.

We have been granted various tax holidays in foreign jurisdictions.
These tax holidays are given as an incentive to attract foreign investment and under agreements relating to such tax holidays we receive certain exemptions from taxation on income from export related activities. The income tax benefit from foreign
tax holidays was $416 and $5,472 for the periods ended December 31, 2010 and December 31, 2009. Certain of the tax holidays are set to expire between 2011 and 2017.

We currently benefit from income tax holiday incentives in the Philippines pursuant to the registrations with the Philippine Economic Zone Authority, or PEZA, of our various projects and operations. Under
such PEZA registrations, the income tax holiday of our various PEZA-registered projects in the Philippines expire at staggered dates through 2012. The expiration of these tax holidays will increase our effective income tax rate.

We have not provided taxes related to the potential repatriation of foreign subsidiary earnings because we believe they will be
indefinitely reinvested outside of the United States. If future events necessitate that these earnings should be repatriated to the United States, an additional tax provision and related liability would be required.

Reconciliation of the beginning and ending total amounts of unrecognized tax benefits (exclusive of interest and penalties) is as
follows:



|                                                       |  |   |        |  
|------------------------------------------------------ |  | - | ------ | -
|Beginning balance January 1, 2010                      |  | $ | 10,297 |  
|Additions to tax positions related to the current year |  |   | 228    |  
|Additions for tax positions related to the prior year  |  |   | 358    |  
|Reductions for tax positions related to prior year     |  |   | (748   | )
|Lapse of statute of limitations                        |  |   | (401   | )
|                                                       |  |   |        |  
|Ending balance December 31, 2010                       |  | $ | 9,734  |  

As of
December 31, 2010 and 2009, the liability for unrecognized tax benefits (including interest and penalties) was $13,227 and $13,319, respectively, of which $959 and $1,344, respectively, was recorded in current liabilities and $12,268 and
$11,975, respectively, was recorded within other long term liabilities in our consolidated financial statements. Included in these amounts are approximately $1,599 and $1,291, respectively, of unbenefitted tax losses, which would be realized if the
related uncertain tax positions were settled. As of



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January 1, 2010, we had reserved $2,472 for accrued interest and penalties, which had increased to $2,635 as at December 31, 2010 and is included in the $13,277 of liability. We
recognize accrued interest and penalties associated with uncertain tax positions as part of the income tax provision. The total amount of net unrealizable tax benefits that would affect the income tax expense, if ever recognized in our consolidated
financial statements is $12,369. This amount includes interest and penalties of $2,635. We estimate that within the next 12 months, our unrecognized tax benefits, and interest and penalties, could decrease as a result of settlements with taxing
authorities or the expiration of the statute of limitations by $1,596 and $949, respectively.

Note 14Stock Options

The 2008 Stock Incentive Plan (the Plan) provides for the grant of incentive and nonqualified stock options. The Plan has
authorized grants of up to 10,000 shares of common stock at an exercise price not less than 100% of the fair value of the common stock at the date of grant. The Plan provides that the options shall be outstanding for a period not to exceed ten years
from the grant date. During the years ended December 31, 2010 and 2009, we granted options to purchase 2,769 and 4,903 shares of our common stock to our employees with an exercise price at the greater of $6.00 per share or fair value of the
underlying common stock at the date of grant. Generally, options vest over a five-year period.

At December 31, 2010 and
2009, 2,066 and 534 stock option grants were vested, 35 and zero had been exercised, and 3,404 and 1,062 had been forfeited.

The per share fair value of options granted was determined using the Black-Scholes-Merton model.

The following assumptions were used for the option grants in the year ended December 31, 2010:



|                                                          |  |                            |           |   |                            |   |           |  
|--------------------------------------------------------- |  | -------------------------- | --------- | - | -------------------------- | - | --------- | -
|                                                          |  | Year EndedDecember 31,2010 |           |   | Year EndedDecember 31,2009 |  
|Option term (years)                                       |  |                            | 6.375     |   |                            |   | 6.375     |  
|Volatility                                                |  |                            | 64%-68    | % |                            |   | 43%-63    | %
|Risk-free interest rate                                   |  |                            | 1.57-3.06 | % |                            |   | 1.91-2.96 | %
|Dividend yield                                            |  |                            | 0         | % |                            |   | 0         | %
|Weighted-average grant date fair value per option granted |  | $                          | 3.46      |   |                            | $ | 3.36      |  

The option term for
2010 and 2009 was calculated under the simplified method for all option grants during for the year ended December 31, 2010 and 2009 as we do not have a long history of granting options. As we are beginning to get a history in our common stock
we transitioned in 2009 to have the expected volatility assumption be based on a weighted average of the historical volatilities for Stream and its peer group. The risk-free interest rate assumption was based upon the implied yields from the U.S.
Treasury zero-coupon yield curve with a remaining term equal to the expected term in options. The expected term of employee stock options granted was based on our estimated life of the options at the grant date.



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Stock options under the Plan during year ended December 31, 2010 were as follows:



|                                 |  |                  |       |  |                              |   |      |                          |  |   |                                                |  |  |  |      | 
|-------------------------------- |  | ---------------- | ----- |  | ---------------------------- | - | ---- | ------------------------ |  | - | ---------------------------------------------- |  |  |  | ---- | 
|                                 |  | Numberof options |       |  | WeightedAverageExercisePrice |   |      | WeightedAverageFairValue |  |   | WeightedAverageRemainingContractualTerm(Years) | 
|Outstanding at December 31, 2009 |  |                  | 6,978 |  |                              | $ | 6.15 |                          |  |   |                                               |  |  |  | 9.39 | 
|Granted                          |  |                  | 2,769 |  |                              |   | 6.14 |                          |  | $ | 3.46                                           |  |  |  |      | 
|Exercised                        |  |                  | 35    |  |                              |   | 6.00 |                          |  |   |                                                |  |  |  |      | 
|Forfeited or canceled            |  |                  | 3,404 |  |                              |   | 6.17 |                          |  |   |                                                |  |  |  |      | 
|                                 |  |                  |       |  |                              |   |      |                          |  |   |                                                |  |  |  |      | 
|Outstanding at December 31, 2010 |  |                  | 6,308 |  |                              | $ | 6.13 |                          |  |   |                                                |  |  |  | 7.64 | 

At December 31,
2010, we had stock options to purchase 1,466 shares that were exercisable. The weighted-average exercise price of options currently exercisable is $6.12 at December 31, 2010. The weighted average remaining contractual term of options currently
exercisable is 5.56 years at December 31, 2010. The total fair value of options vested during the year ended December 31, 2010 was $5,626. There are 4,958 shares outstanding, vested, and expected to vest (including forfeiture adjusted
unvested shares) with a weighted average exercise price of $6.13 and a weighted average remaining contractual term of 7.35 years.

For the years ended December 31, 2010 and 2009, we recognized net stock compensation expense of $5,462 and $1,097 respectively, for the stock options in the table above. Stock option expense includes
$1,809 and $0, respectively, related to the acceleration of equity awards resulting from restructuring activities.

As of
December 31, 2010 and 2009, the aggregate intrinsic value (i.e., the difference in the estimated fair value of our common stock and the exercise price to be paid by the option holder) of stock options outstanding, excluding the effects of
expected forfeitures, were both zero. The aggregate intrinsic value of the shares of exercisable stock at December 31, 2010 and 2009 were both zero. The intrinsic value of options exercised for the years ended December 31, 2010 and 2009,
was $19 and zero, respectively.

As of December 31, 2010 and 2009, there was $7,203 and $10,325, respectively, of
unrecognized compensation cost related to the unvested portion of time-based arrangements granted under the Plan. That cost is expected to be recognized over a weighted-average period of 3.8 years from issue date.

Restricted stock award activity during the year ended December 31, 2010 and 2009 was as follows:



|                              |  |                 |     |  |                                      |   |      | 
|----------------------------- |  | --------------- | --- |  | ------------------------------------ | - | ---- | 
|                              |  | Number ofShares |     |  | WeightedaverageGrant-Date Fair Value |  
|Outstanding December 31, 2009 |  |                 | 632 |  |                                      | $ | 6.28 | 
|Granted                       |  |                 | 200 |  |                                      |   | 6.23 | 
|Vested                        |  |                 | 149 |  |                                      |   | 6.21 | 
|Forfeited                     |  |                 | 284 |  |                                      |   | 6.15 | 
|                              |  |                 |     |  |                                      |   |      | 
|Outstanding December 31, 2010 |  |                 | 399 |  |                                      | $ | 6.37 | 

For the years ended
December 31, 2010 and 2009, we recognized net compensation expense of $967 and $146, respectively, for the restricted stock awards. Restricted stock awards vest either quarterly over four years for grants in 2008 or semi-annually over a five
year for grants in 2009.



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Note 15Commitments and Contingencies

Leases

We lease our operating facilities and equipment under
non-cancelable operating leases, which expire at various dates through 2015, and we have a capital lease obligation related to one facility. In addition, we have capital leases for furniture, computer and telephone equipment. The assets under
capital lease are included in equipment and fixtures, net, on our consolidated balance sheets are as follows:



|                               |  |                  |         |   |                  |   |        |  
|------------------------------ |  | ---------------- | ------- | - | ---------------- | - | ------ | -
|                               |  | December 31,2010 |         |   | December 31,2009 |  
|Furniture and fixtures         |  | $                | 1,846   |   |                  | $ | 1,182  |  
|Building improvements          |  |                  | 8,602   |   |                  |   | 8,588  |  
|Computer equipment             |  |                  | 8,085   |   |                  |   | 3,946  |  
|Telecom and other equipment    |  |                  | 13,149  |   |                  |   | 6,341  |  
|                               |  |                  |         |   |                  |   |        |  
|                               |  |                  | 31,682  |   |                  |   | 20,057 |  
|Less: accumulated depreciation |  |                  | (10,597 | ) |                  |   | (3,221 | )
|                               |  |                  |         |   |                  |   |        |  
|                               |  | $                | 21,085  |   |                  | $ | 16,836 |  

Future minimum
payments under capital and operating leases consist of the following at December 31, 2010:



|                                       |  |               |        |   |                 |   |         | 
|-------------------------------------- |  | ------------- | ------ | - | --------------- | - | ------- | 
|                                       |  | CapitalLeases |        |   | OperatingLeases |  
|2011                                   |  |               | 10,485 |   |                 |   | 40,885  | 
|2012                                   |  |               | 6,879  |   |                 |   | 26,404  | 
|2013                                   |  |               | 3,117  |   |                 |   | 17,031  | 
|2014                                   |  |               | 1,027  |   |                 |   | 11,556  | 
|2015                                   |  |               | 206    |   |                 |   | 6,847   | 
|Thereafter                             |  |               | 172    |   |                 |   | 14,980  | 
|                                       |  |               |        |   |                 |   |         | 
|Total future minimum lease payments    |  |               | 21,886 |   |                 | $ | 117,703 | 
|Less amount representing interest      |  |               | (2,295 | ) |                 |   |         | 
|                                       |  |               |        |   |                 |   |         | 
|                                       |  |               | 19,591 |   |                 |   |         | 
|Less current portion                   |  |               | (9,100 | ) |                 |   |         | 
|                                       |  |               |        |   |                 |   |         | 
|Long-term debt, net of current portion |  | $             | 10,491 |   |                 |   |         | 

Rent expense is included in our consolidated statements of operations in selling, general and
administrative expenses as follows:



|                                  |  |                            |        |   |                            |   |        |  
|--------------------------------- |  | -------------------------- | ------ | - | -------------------------- | - | ------ | -
|                                  |  | YearEndedDecember 
31,2010 |        |   | YearEndedDecember 
31,2009 |  
|Rent expense                      |  | $                          | 50,176 |   |                            | $ | 36,334 |  
|Market lease reserve amortization |  |                            | (4,830 | ) |                            |   | (3,687 | )
|                                  |  |                            |        |   |                            |   |        |  
|Net rent expense                  |  | $                          | 45,346 |   |                            | $ | 32,647 |  

Contingencies

We are self-insured with respect to medical and dental claims by our employees located in the United States, subject to an annual insured
stop-loss limit on per-claim payments of $125. We believe that our self-insurance reserves of $953 at December 31, 2010 and $1,371 at December 31, 2009 are adequate to provide for future payments required related to claims prior to that
date.



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We are also subject to various lawsuits and claims in the normal course of business. In
addition, from time to time, we receive communications from government or regulatory agencies concerning investigations or allegations of non-compliance with laws or regulations in jurisdictions in which we operate. Although the ultimate outcome of
such lawsuits, claims and investigations cannot be ascertained, we believe, on the basis of present information, that the disposition or ultimate resolution of such claims, lawsuits and/or investigations will not have a material adverse effect on
our business, results of operations or financial condition. We establish specific liabilities in connection with regulatory and legal actions that we deem to be probable and estimable, and we believe that our reserves for such liabilities are
adequate.

We have been named as a third-party defendant in a putative class action captioned Kambiz Batmanghelich, on
behalf of himself and all others similarly situated and on behalf of the general public, v. Sirius XM Radio, Inc., filed in the Los Angeles County Superior Court on November 10, 2009, and removed to the United States District Court for the
Central District of California. The Plaintiff alleges that Sirius XM Radio, Inc. recorded telephone conversations between Plaintiff and members of the proposed class of Sirius customers, on the one hand, and Sirius and its employees, on
the other, without the Plaintiffs and class members consent in violation of Californias telephone recording laws. The Plaintiff also alleges negligence and violation of the common law right of privacy, and seeks
injunctive relief. On December 21, 2009, Sirius XM Radio, Inc. filed a Third-Party Complaint in the action against us seeking indemnification for any defense costs and damages that result from the putative class action. On March 25, 2010,
the Plaintiff filed an amended complaint that added us as a defendant. We believe that we have meritorious defenses to these claims, but there can be no assurance at this time as to the outcome of this lawsuit.

Stream International (NI) Limited (Stream NI) exercised its right to terminate its lease for certain premises in Northern
Ireland and vacated such premises on or prior to the termination date of December 31, 2009. The landlord, Peninsula High-Tech Limited (the Landlord), has filed a claim against Stream NI alleging that the termination right under the
lease was not validly exercised because Stream NI failed to reasonably perform and observe the covenants and conditions of the lease, and therefore such lease remains in subsistence and that the rent and service charges continue to accrue. The
Landlord has filed proceedings for £365,273.87 plus interest for rent and service charges owing for the first nine months of 2010. If successful in its proceedings, the Landlord will have claims against Stream NI for unpaid rent and service
charges for the entire five years remaining under the lease, an aggregate of £2,435,159.13, or until such time as another tenant enters into occupation of the premises. Stream NI has refuted the allegations and intends to vigorously
defend against the claims asserted by the Landlord.

Note 16Geographic Operations and Concentrations

We operate in one operating segment and provide services primarily in two regions: Americas, which includes United States,
Canada, the Philippines, India, Costa Rica, Nicaragua, Dominican Republic, and El Salvador; and EMEA, which includes Europe, Derry Northern Ireland, Middle East, and Africa.



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The following table presents geographic information regarding our operations:



|              |  |                            |         |  |                            |   |         | 
|------------- |  | -------------------------- | ------- |  | -------------------------- | - | ------- | 
|              |  | YearEndedDecember 
31,2010 |         |  | YearEndedDecember 
31,2009 |  
|Revenues      |  |                            |         |  |                            |   |         | 
|Americas      |  | $                          | 588,029 |  |                            | $ | 371,944 | 
|EMEA          |  |                            | 212,144 |  |                            |   | 212,825 | 
|              |  |                            |         |  |                            |   |         | 
|              |  | $                          | 800,173 |  |                            | $ | 584,769 | 
|Total assets: |  |                            |         |  |                            |   |         | 
|Americas      |  | $                          | 569,325 |  |                            | $ | 594,116 | 
|EMEA          |  |                            | 78,660  |  |                            |   | 86,707  | 
|              |  |                            |         |  |                            |   |         | 
|              |  | $                          | 647,985 |  |                            | $ | 680,823 | 

We derive significant
revenues from three significant clients. At December 31, 2010, two of our largest clients are global computer companies, and the other client is a satellite radio provider.



|                        |  |                            |    |   |                            |  |    |  
|----------------------- |  | -------------------------- | -- | - | -------------------------- |  | -- | -
|                        |  | YearEndedDecember 
31,2010 |    |   | YearEndedDecember 
31,2009 | 
|Dell                    |  |                            | 16 | % |                            |  | 19 | %
|Hewlett-Packard Company |  |                            | 12 | % |                            |  | 17 | %
|Sirius XM Radio Inc.    |  |                            | 7  | % |                            |  | 10 | %

Related accounts
receivable from these three clients were 20%, 9% and 6%, respectively, of our total accounts receivable at December 31, 2010.



64



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Note 17Guarantor Financial Information (Unaudited)

Our Notes are guaranteed by Stream, which is the parent company, along with certain of our wholly owned subsidiaries. Such guarantees are full,
unconditional and joint and several. Condensed consolidating financial information related to us, our guarantor subsidiaries and our non-guarantor subsidiaries as of December 31, 2010 and 2009 are reflected below:

Condensed Consolidating Statement of Operations

For the year ended December 31, 2010



|                                     |  |        |         |   |                       |   |         |                           |  |   |             |   |  |       |          |   |  |   |         |  
|------------------------------------ |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ----------- | - |  | ----- | -------- | - |  | - | ------- | -
|                                     |  | Parent |         |   | Guarantorsubsidiaries |   |         | Non-Guarantorsubsidiaries |  |   | Elimination |   |  | Total |         
|Net revenue:                         |  |        |         |   |                       |   |         |                           |  |   |             |   |  |       |          |   |  |   |         |  
|Customers                            |  | $      |        |   |                       | $ | 638,444 |                           |  | $ | 161,729     |   |  | $     |         |   |  | $ | 800,173 |  
|Intercompany                         |  |        |        |   |                       |   | (15,877 | )                         |  |   | 292,521     |   |  |       | (276,644 | ) |  |   |        |  
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |   |  |       |          |   |  |   |         |  
|                                     |  |        |        |   |                       |   | 622,567 |                           |  |   | 454,250     |   |  |       | (276,644 | ) |  |   | 800,173 |  
|Direct cost of revenue               |  |        |         |   |                       |   |         |                           |  |   |             |   |  |       |          |   |  |   |         |  
|Customers                            |  |        |        |   |                       |   | 226,696 |                           |  |   | 244,732     |   |  |       |          |   |  |   | 471,428 |  
|Intercompany                         |  |        |        |   |                       |   | 236,228 |                           |  |   | 40,416      |   |  |       | (276,644 | ) |  |   |        |  
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |   |  |       |          |   |  |   |         |  
|                                     |  |        |        |   |                       |   | 462,924 |                           |  |   | 285,148     |   |  |       | (276,644 | ) |  |   | 471,428 |  
|Gross Profit                         |  |        |        |   |                       |   | 159,643 |                           |  |   | 169,102     |   |  |       |         |   |  |   | 328,745 |  
|Operating expenses                   |  |        | 6,972   |   |                       |   | 181,129 |                           |  |   | 155,406     |   |  |       |         |   |  |   | 343,507 |  
|Non-operating expenses               |  |        | 25,959  |   |                       |   | (9,356  | )                         |  |   | 11,718      |   |  |       |         |   |  |   | 28,321  |  
|Equity in Earnings of Subsidiaries   |  |        | 28,148  |   |                       |   |        |                           |  |   |            |   |  |       | (28,148  | ) |  |   |        |  
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |   |  |       |          |   |  |   |         |  
|Income (loss) before income taxes    |  |        | (61,079 | ) |                       |   | (12,130 | )                         |  |   | 1,978       |   |  |       | 28,148   |   |  |   | (43,083 | )
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |   |  |       |          |   |  |   |         |  
|Provision (benefit) for income taxes |  |        | (7,604  | ) |                       |   | 13,768  |                           |  |   | 4,228       |   |  |       |         |   |  |   | 10,392  |  
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |   |  |       |          |   |  |   |         |  
|Net income (loss)                    |  | $      | (53,475 | ) |                       | $ | (25,898 | )                         |  | $ | (2,250      | ) |  | $     | 28,148   |   |  | $ | (53,475 | )
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |   |  |       |          |   |  |   |         |  

Condensed Consolidating Statement of Operations

For the year ended December 31, 2009



|                                     |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         |  
|------------------------------------ |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ----------- |  |  | ----- | -------- | - |  | - | ------- | -
|                                     |  | Parent |         |   | Guarantorsubsidiaries |   |         | Non-Guarantorsubsidiaries |  |   | Elimination |  |  | Total |         
|Net revenue:                         |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         |  
|Customers                            |  | $      |        |   |                       | $ | 517,373 |                           |  | $ | 67,396      |  |  | $     |         |   |  | $ | 584,769 |  
|Intercompany                         |  |        |        |   |                       |   | 88,067  |                           |  |   | 231,805     |  |  |       | (319,872 | ) |  |   |        |  
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         |  
|                                     |  |        |        |   |                       |   | 605,440 |                           |  |   | 299,201     |  |  |       | (319,872 | ) |  |   | 584,769 |  
|Direct cost of revenue               |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         |  
|Customers                            |  |        |        |   |                       |   | 171,587 |                           |  |   | 170,606     |  |  |       |          |   |  |   | 342,193 |  
|Intercompany                         |  |        |        |   |                       |   | 293,155 |                           |  |   | 26,717      |  |  |       | (319,872 | ) |  |   |        |  
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         |  
|                                     |  |        |        |   |                       |   | 464,742 |                           |  |   | 197,323     |  |  |       | (319,872 | ) |  |   | 342,193 |  
|Gross Profit                         |  |        |        |   |                       |   | 140,698 |                           |  |   | 101,878     |  |  |       |         |   |  |   | 242,576 |  
|Operating expenses                   |  |        | 8,526   |   |                       |   | 147,671 |                           |  |   | 91,924      |  |  |       |         |   |  |   | 248,121 |  
|Non-operating expenses               |  |        | 2,165   |   |                       |   | 13,187  |                           |  |   | 3,294       |  |  |       |         |   |  |   | 18,646  |  
|Equity in Earnings of Subsidiaries   |  |        | 18,924  |   |                       |   |        |                           |  |   |            |  |  |       | (18,924  | ) |  |   |        |  
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         |  
|Income (loss) before income taxes    |  |        | (29,615 | ) |                       |   | (20,160 | )                         |  |   | 6,660       |  |  |       | 18,924   |   |  |   | (24,191 | )
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         |  
|Provision (benefit) for income taxes |  |        | (1,042  | ) |                       |   | 4,729   |                           |  |   | 695         |  |  |       |         |   |  |   | 4,382   |  
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         |  
|Net income (loss)                    |  | $      | (28,573 | ) |                       | $ | (24,889 | )                         |  | $ | 5,965       |  |  | $     | 18,924   |   |  | $ | (28,573 | )
|                                     |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         |  



65



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Condensed Consolidating Balance Sheet

As of December 31, 2010



|                                             |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|-------------------------------------------- |  | ------ | ------- | - | --------------------- | - | ------- | ------------------------- |  | - | ----------- |  |  | ----- | -------- | - |  | - | ------- | 
|                                             |  | Parent |         |   | Guarantorsubsidiaries |   |         | Non-Guarantorsubsidiaries |  |   | Elimination |  |  | Total |         
|Assets                                       |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Cash and cash equivalents                    |  | $      | 6       |   |                       | $ | 2,431   |                           |  | $ | 16,052      |  |  | $     |         |   |  | $ | 18,489  | 
|Accounts receivable, net                     |  |        |        |   |                       |   | 149,814 |                           |  |   | 30,397      |  |  |       |         |   |  |   | 180,211 | 
|Other Current Assets                         |  |        | 2,374   |   |                       |   | 22,570  |                           |  |   | 12,246      |  |  |       |         |   |  |   | 37,190  | 
|                                             |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Total current assets                         |  |        | 2,380   |   |                       |   | 174,815 |                           |  |   | 58,695      |  |  |       |         |   |  |   | 235,890 | 
|Equipment and fixtures, net and other assets |  |        | 6,657   |   |                       |   | 46,621  |                           |  |   | 48,394      |  |  |       |         |   |  |   | 101,672 | 
|Investment in Subsidiary                     |  |        | 497,477 |   |                       |   | 70,931  |                           |  |   | 17          |  |  |       | (568,425 | ) |  |   |        | 
|Goodwill and intangible assets, net          |  |        |        |   |                       |   | 189,351 |                           |  |   | 121,072     |  |  |       |         |   |  |   | 310,423 | 
|                                             |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Total assets                                 |  | $      | 506,514 |   |                       | $ | 481,718 |                           |  | $ | 228,178     |  |  | $     | (568,425 | ) |  | $ | 647,985 | 
|                                             |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Liabilities and Stockholders Equity         |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Current liabilities                          |  | $      | (19,611 | ) |                       | $ | 7,242   |                           |  | $ | 130,977     |  |  | $     |         |   |  | $ | 118,608 | 
|Long-term liabilities                        |  |        | 217,148 |   |                       |   | 39,894  |                           |  |   | 12,617      |  |  |       |         |   |  |   | 269,659 | 
|Total shareholders equity (deficit)         |  |        | 308,977 |   |                       |   | 434,582 |                           |  |   | 84,584      |  |  |       | (568,425 | ) |  |   | 259,718 | 
|                                             |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Total liabilities and stockholders equity   |  | $      | 506,514 |   |                       | $ | 481,718 |                           |  | $ | 228,178     |  |  | $     | (568,425 | ) |  | $ | 647,985 | 
|                                             |  |        |         |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 

Condensed Consolidating Balance Sheet

As of December 31, 2009



|                                             |  |        |          |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|-------------------------------------------- |  | ------ | -------- | - | --------------------- | - | ------- | ------------------------- |  | - | ----------- |  |  | ----- | -------- | - |  | - | ------- | 
|                                             |  | Parent |          |   | Guarantorsubsidiaries |   |         | Non-Guarantorsubsidiaries |  |   | Elimination |  |  | Total |         
|Assets                                       |  |        |          |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Cash and cash equivalents                    |  | $      | 126      |   |                       | $ | 3,195   |                           |  | $ | 11,607      |  |  | $     |         |   |  | $ | 14,928  | 
|Accounts receivable, net                     |  |        |         |   |                       |   | 139,025 |                           |  |   | 36,532      |  |  |       |         |   |  |   | 175,557 | 
|Other Current Assets                         |  |        | 2,083    |   |                       |   | 23,440  |                           |  |   | 11,378      |  |  |       |         |   |  |   | 18,043  | 
|                                             |  |        |          |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Total current assets                         |  |        | 2,209    |   |                       |   | 165,660 |                           |  |   | 59,517      |  |  |       |         |   |  |   | 227,386 | 
|Equipment and fixtures, net and other assets |  |        | 8,662    |   |                       |   | 49,466  |                           |  |   | 64,448      |  |  |       |         |   |  |   | 122,576 | 
|Investment in Subsidiary                     |  |        | 390,971  |   |                       |   | 160,798 |                           |  |   | 27          |  |  |       | (551,796 | ) |  |   |        | 
|Goodwill and intangible assets, net          |  |        |         |   |                       |   | 204,941 |                           |  |   | 125,920     |  |  |       |         |   |  |   | 330,861 | 
|                                             |  |        |          |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Total assets                                 |  | $      | 401,842  |   |                       | $ | 580,865 |                           |  | $ | 249,912     |  |  | $     | (551,796 | ) |  | $ | 680,823 | 
|                                             |  |        |          |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Liabilities and Stockholders Equity         |  |        |          |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Current liabilities                          |  | $      | (132,032 | ) |                       | $ | 96,484  |                           |  | $ | 150,885     |  |  | $     |         |   |  | $ | 115,337 | 
|Long-term liabilities                        |  |        | 206,733  |   |                       |   | 40,662  |                           |  |   | 14,680      |  |  |       |         |   |  |   | 262,075 | 
|Total shareholders equity (deficit)         |  |        | 327,141  |   |                       |   | 443,719 |                           |  |   | 84,347      |  |  |       | (551,796 | ) |  |   | 303,411 | 
|                                             |  |        |          |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 
|Total liabilities and stockholders equity   |  | $      | 401,842  |   |                       | $ | 580,865 |                           |  | $ | 249,912     |  |  | $     | (551,796 | ) |  | $ | 680,823 | 
|                                             |  |        |          |   |                       |   |         |                           |  |   |             |  |  |       |          |   |  |   |         | 



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Condensed Statements of Cash Flows

For the year ended December 31, 2010



|                                                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  
|-------------------------------------------------------------------------------------- |  | ------ | -------- | - | --------------------- | - | -------- | ------------------------- |  | - | ----------- | - |  | ----- | - |  |  | - | ------- | -
|                                                                                       |  | Parent |          |   | Guarantorsubsidiaries |   |          | Non-Guarantorsubsidiaries |  |   | Elimination |   |  | Total |  
|Net cash provided by (used in) operating activities                                    |  | $      | (22,321  | ) |                       | $ | 10,653   |                           |  | $ | 34,112      |   |  | $     |  |  |  | $ | 22,444  |  
|Cash Flows from investing activities:                                                  |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Investment in Subsidiary                                                               |  |        | (106,505 | ) |                       |   | 105,038  |                           |  |   | 1,467       |   |  |       |  |  |  |   |        |  
|Additions to equipment and fixtures, net                                               |  |        |         |   |                       |   | (15,081  | )                         |  |   | (7,823      | ) |  |       |  |  |  |   | (22,904 | )
|                                                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Net cash provided by (used in) investing activities                                    |  |        | (106,505 | ) |                       |   | 89,957   |                           |  |   | (6,356      | ) |  |       |  |  |  |   | (22,904 | )
|                                                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Cash Flows from financing activities:                                                  |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Net borrowings (repayments) on line of credit                                          |  |        | 9,004    |   |                       |   |         |                           |  |   |            |   |  |       |  |  |  |   | 9,004   |  
|Net borrowings (repayments) on long term debt                                          |  |        |         |   |                       |   | (90      | )                         |  |   |            |   |  |       |  |  |  |   | (90     | )
|Net borrowings (repayments) on capital leases                                          |  |        |         |   |                       |   | (3,412   | )                         |  |   | (2,448      | ) |  |       |  |  |  |   | (5,860  | )
|Net Intercompany                                                                       |  |        | 118,968  |   |                       |   | (100,003 | )                         |  |   | (18,965     | ) |  |       |  |  |  |   |        |  
|Proceeds from issuance of common stock related to pre-emptive rights and stock options |  |        | 268      |   |                       |   |         |                           |  |   |            |   |  |       |  |  |  |   | 268     |  
|Tax withholding on Restricted Stock                                                    |  |        | (233     | ) |                       |   |         |                           |  |   |            |   |  |       |  |  |  |   | (233    | )
|Proceeds from exercise of warrants                                                     |  |        | 2,307    |   |                       |   |         |                           |  |   |            |   |  |       |  |  |  |   | 2,307   |  
|Re-purchase of warrants                                                                |  |        | (1,608   | ) |                       |   |         |                           |  |   |            |   |  |       |  |  |  |   | (1,608  | )
|                                                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Net cash provided by financing activities                                              |  |        | 128,706  |   |                       |   | (103,505 | )                         |  |   | (21,413     | ) |  |       |  |  |  |   | 3,788   |  
|Effect of exchange rates on cash and cash equivalents                                  |  |        |         |   |                       |   | 2,131    |                           |  |   | (1,898      | ) |  |       |  |  |  |   | 233     |  
|                                                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                                   |  |        | (120     | ) |                       |   | (764     | )                         |  |   | 4,445       |   |  |       |  |  |  |   | 3,561   |  
|                                                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Cash and cash equivalents, beginning of period                                         |  |        | 126      |   |                       |   | 3,195    |                           |  |   | 11,607      |   |  |       |  |  |  |   | 14,928  |  
|                                                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Cash and cash equivalents, end of period                                               |  | $      | 6        |   |                       | $ | 2,431    |                           |  | $ | 16,052      |   |  | $     |  |  |  | $ | 18,489  |  
|                                                                                       |  |        |          |   |                       |   |          |                           |  |   |             |   |  |       |   |  |  |   |         |  



67



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Condensed Statements of Cash Flows

For the year ended December 31, 2009



|                                                                                       |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  
|-------------------------------------------------------------------------------------- |  | ------ | -------- | - | --------------------- | - | ------- | ------------------------- |  | - | ----------- | - |  | ----- | - |  |  | - | ------- | -
|                                                                                       |  | Parent |          |   | Guarantorsubsidiaries |   |         | Non-Guarantorsubsidiaries |  |   | Elimination |   |  | Total |  
|Net cash provided by (used in) operating activities                                    |  | $      | (14,011  | ) |                       | $ | (9,754  | )                         |  | $ | (1,422      | ) |  | $     |  |  |  | $ | (25,187 | )
|Cash Flows from investing activities:                                                  |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Acquisition of businesses, net of cash acquired                                        |  |        |         |   |                       |   | 182     |                           |  |   | 33,218      |   |  |       |  |  |  |   | 33,400  |  
|Investment in Subsidiary                                                               |  |        | (80,721  | ) |                       |   | 79,221  |                           |  |   | 1,500       |   |  |       |  |  |  |   |        |  
|Additions to equipment and fixtures, net                                               |  |        |         |   |                       |   | (9,223  | )                         |  |   | (12,841     | ) |  |       |  |  |  |   | (22,064 | )
|                                                                                       |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Net cash provided by (used in) investing activities                                    |  |        | (80,721  | ) |                       |   | 70,180  |                           |  |   | 21,877      |   |  |       |  |  |  |   | 11,336  |  
|                                                                                       |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Cash Flows from financing activities:                                                  |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Net borrowings (repayments) on line of credit                                          |  |        | 15,501   |   |                       |   | (59,425 | )                         |  |   |            |   |  |       |  |  |  |   | (43,924 | )
|Net borrowings (repayments) on long term debt                                          |  |        | 190,908  |   |                       |   | (6,577  | )                         |  |   | (120,203    | ) |  |       |  |  |  |   | 64,128  |  
|Net borrowings (repayments) on capital leases                                          |  |        |         |   |                       |   | (1,255  | )                         |  |   | (929        | ) |  |       |  |  |  |   | (2,184  | )
|Net Intercompany                                                                       |  |        | (109,967 | ) |                       |   | 3,845   |                           |  |   | 106,122     |   |  |       |  |  |  |   |        |  
|Proceeds from issuance of common stock related to pre-emptive rights and stock options |  |        | 1,921    |   |                       |   |        |                           |  |   |            |   |  |       |  |  |  |   | 1,921   |  
|Tax withholding on restricted stock                                                    |  |        |         |   |                       |   |        |                           |  |   |            |   |  |       |  |  |  |   |        |  
|Proceeds from exercise of warrants                                                     |  |        | 788      |   |                       |   |        |                           |  |   |            |   |  |       |  |  |  |   | 788     |  
|Re-purchase of warrants                                                                |  |        | (7,373   | ) |                       |   |        |                           |  |   |            |   |  |       |  |  |  |   | (7,373  | )
|Re-purchases of common stock                                                           |  |        | (10      | ) |                       |   |        |                           |  |   |            |   |  |       |  |  |  |   | (10     | )
|                                                                                       |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Net cash provided by financing activities                                              |  |        | 91,768   |   |                       |   | (63,412 | )                         |  |   | (15,010     | ) |  |       |  |  |  |   | 13,346  |  
|Effect of exchange rates on cash and cash equivalents                                  |  |        |         |   |                       |   | 3,505   |                           |  |   | 1,268       |   |  |       |  |  |  |   | 4,773   |  
|                                                                                       |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Net increase (decrease) in cash and cash equivalents                                   |  |        | (2,964   | ) |                       |   | 519     |                           |  |   | 6,713       |   |  |       |  |  |  |   | 4,268   |  
|                                                                                       |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Cash and cash equivalents, beginning of period                                         |  |        | 3,090    |   |                       |   | 2,676   |                           |  |   | 4,894       |   |  |       |  |  |  |   | 10,660  |  
|                                                                                       |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  
|Cash and cash equivalents, end of period                                               |  | $      | 126      |   |                       | $ | 3,195   |                           |  | $ | 11,607      |   |  | $     |  |  |  | $ | 14,928  |  
|                                                                                       |  |        |          |   |                       |   |         |                           |  |   |             |   |  |       |   |  |  |   |         |  



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Note 18Quarterly Results of Operations (Unaudited)

SGS quarterly operating results were as follows:



|                                                                                   |  |              |         |   |               |   |         |              |  |   |               |   |  |              |         |   |               |   |         |              |  |   |               |   |  |   |         |   |  |   |         |  
|---------------------------------------------------------------------------------- |  | ------------ | ------- | - | ------------- | - | ------- | ------------ |  | - | ------------- | - |  | ------------ | ------- | - | ------------- | - | ------- | ------------ |  | - | ------------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                   |  | 2010         |         |   | 2009          |  
|                                                                                   |  | FirstQuarter |         |   | SecondQuarter |   |         | ThirdQuarter |  |   | FourthQuarter |   |  | FirstQuarter |         |   | SecondQuarter |   |         | ThirdQuarter |  |   | FourthQuarter |  
|Revenue                                                                            |  | $            | 196,575 |   |               | $ | 183,904 |              |  | $ | 197,146       |   |  | $            | 222,548 |   |               | $ | 135,614 |              |  | $ | 125,670       |   |  | $ | 121,875 |   |  | $ | 201,610 |  
|Gross profit                                                                       |  |              | 83,735  |   |               |   | 72,908  |              |  |   | 83,200        |   |  |              | 88,902  |   |               |   | 57,001  |              |  |   | 52,265        |   |  |   | 49,306  |   |  |   | 84,004  |  
|Operating income (loss)                                                            |  |              | (2,868  | ) |               | $ | (10,946 | )            |  |   | (2,903        | ) |  |              | 1,954   |   |               |   | 6,834   |              |  |   | 3,136         |   |  |   | (3,059  | ) |  |   | (12,456 | )
|Net income (loss) attributable to common stockholders                              |  | $            | (10,475 | ) |               | $ | (21,505 | )            |  | $ | (12,580       | ) |  | $            | (8,916  | ) |               | $ | 180     |              |  | $ | (4,726        | ) |  | $ | (9,358  | ) |  | $ | (79,084 | )
|Net income (loss) attributable to common stockholders per share: Basic and diluted |  | $            | (0.13   | ) |               | $ | (0.27   | )            |  | $ | (0.16         | ) |  | $            | (0.11   | ) |               | $ | 0.02    |              |  | $ | (0.50         | ) |  | $ | (0.99   | ) |  | $ | (0.99   | )

Note 19Subsequent Events

During the first quarter of 2011, as a result of political unrest in northern Africa, the operations of our call centers
in Tunisia and Egypt were impacted by local government imposed curfews and disruption in communication channels. We presently do not believe that our financial results will be materially impacted by these matters. For the year ended
December 31, 2010, the revenue from these locations was less than 10% of our total revenue and long-lived assets. Please refer to our risk factors contained within this Form 10-K for a further description of our risks related to international
operations.



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

None.



|ITEM 9A. | CONTROLS AND PROCEDURES
|-------- | -----------------------

(a)Disclosure Controls and Procedures

Our Chief Executive Officer, Kathryn V. Marinello, and our Chief Financial Officer, Dennis Lacey (our principal executive officer and principal financial officer, respectively), have concluded that our
disclosure controls and procedures (as defined in Exchange Act Rule 13a-15(e) and 15d-15(e)) were effective as of December 31, 2010, to ensure that information required to be disclosed by us in the reports filed or submitted by us under the
Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commissions rules and forms, and include controls and procedures designed to ensure that information required to be
disclosed by Stream in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, or persons performing similar functions, as appropriate to allow timely decisions regarding
required disclosure. In designing and evaluating the disclosure controls and procedures, our management recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurances of achieving the
desired control objectives, and management necessarily was required to apply its judgment in designing and evaluating the controls and procedures. On an on-going basis, we review and document our disclosure controls and procedures, and our internal
control over financial reporting and may from time to time make changes aimed at enhancing their effectiveness and to ensure that our systems evolve with our business.

(b)Managements Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) of the Exchange Act. Because of its inherent
limitations, internal control over financial reporting may not prevent or detect all errors or fraud. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

We assessed the
effectiveness of the Companys internal control over financial reporting as of December 31, 2010. In making this assessment, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in
Internal ControlIntegrated Framework. Based on our assessment using those criteria, we concluded and hereby report that our internal control over financial reporting was effective as of December 31, 2010. Management reviewed its
assessment of our internal control over financial reporting with our Audit Committee of the Board of Directors.

Managements report on internal control over financial reporting contained in this paragraph (b) of Item 9A shall not be
deemed filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing by us under the Securities Act of 1933 or the
Exchange Act, except as expressly set forth by specific reference in such filing.

This Annual Report does not include an
attestation report of the Companys registered public accounting firm regarding internal control over financial reporting. Managements report was not subject to attestation by the Companys independent registered public accounting
firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only managements report in this Annual Report.

(c)Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Rule 13a-15 or Rule 15d-15 of the Exchange Act that
occurred during the period covered by this Annual Report that have materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.



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PART III



|ITEM 10. | DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|-------- | ------------------------------------------------------

The information required by this item is incorporated herein by reference to the information contained in a definitive proxy statement for our 2011 annual meeting of stockholders (the Proxy
Statement), which we intend to file pursuant to Regulation 14A with the Securities and Exchange Commission not later than 120 days after our fiscal year end of December 31, 2010.



|ITEM 11. | EXECUTIVE COMPENSATION
|-------- | ----------------------

The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, which we
intend to file not later than 120 days after our fiscal year end of December 31, 2010.



|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|-------- | ----------------------------------------------------------------------------------------------

The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, which we
intend to file not later than 120 days after our fiscal year end of December 31, 2010.



|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
|-------- | -------------------------------------------------------------------------

The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of
December 31, 2010.



|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES
|-------- | --------------------------------------

The information required by this item is incorporated herein by reference to the information contained in the Proxy Statement, which we intend to file not later than 120 days after our fiscal year end of
December 31, 2010.



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PART IV



|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|-------- | ------------------------------------------

Documents filed as a part of this Report:

1. Financial Statements. We are
filing our Consolidated Financial Statements as part of this Report, which include:

Consolidated Balance Sheets as of
December 31, 2010 and 2009

Consolidated Statements of Operations for the years ended December 31, 2010 and 2009

Consolidated Statements of Stockholders Equity for the years ended December 31, 2010 and 2009

Consolidated Statements of Cash Flows for the years ended December 31, 2010 and 2009

Notes to Consolidated Financial Statements

2. Financial Statement Schedule. No financial statement schedules are provided as all required information is included in the consolidated financial statements.

3. Exhibits. We are filing as part of this Report the Exhibits listed in the Exhibit Index following the signature page to this
Report.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized.



|              |  |  |  |                              |  |                                                                                                               
|------------- |  |  |  | ---------------------------- |  | --------------------------------------------------------------------------------------------------------------
|              |  |  |  | STREAM GLOBAL SERVICES, INC.
|              |  |  | 
|March 2, 2011 |  |  |  | By:                          |  | /s/    Kathryn V. Marinello                                                                                   
|              |  |  |  |                              |  | Kathryn V. Marinello Chairman, Chief Executive Officer and President (Principal Executive
Officer)            
|              |  |  | 
|March 2, 2011 |  |  |  | By:                          |  | /s/    Dennis Lacey                                                                                           
|              |  |  |  |                              |  | Dennis Lacey Executive Vice President and Chief Financial Officer (Principal Financial
and Accounting Officer)

Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.



|                                                 |  |                                                                          |  |              
|------------------------------------------------ |  | ------------------------------------------------------------------------ |  | -------------
|Signature                                        |  | Title                                                                    |  | Date         
|                                                 |  |                                                                         
|/s/    Kathryn V.
Marinello Kathryn V. Marinello |  | Chairman of the Board of Directors,Chief Executive Officer and President |  | March 2, 2011
|                                                 |  |                                                                         
|/s/    Alfredo I.
Ayala Alfredo I. Ayala         |  | Director                                                                 |  | March 2, 2011
|                                                 |  |                                                                         
|/s/    G. Drew
Conway G. Drew Conway             |  | Director                                                                 |  | March 2, 2011
|                                                 |  |                                                                         
|/s/    Matthew
Cwertnia Matthew Cwertnia         |  | Director                                                                 |  | March 2, 2011
|                                                 |  |                                                                         
|/s/    Paul G.
Jourbert Paul G. Jourbert         |  | Director                                                                 |  | March 2, 2011
|                                                 |  |                                                                         
|/s/    David B.
Kaplan David B. Kaplan           |  | Director                                                                 |  | March 2, 2011
|                                                 |  |                                                                         
|/s/    Peter
Maquera Peter Maquera               |  | Director                                                                 |  | March 2, 2011
|                                                 |  |                                                                         
|/s/    R. Davis
Noell R. Davis Noell             |  | Director                                                                 |  | March 2, 2011
|                                                 |  |                                                                         
|/s/    Julie G.
Richardson Julie G. Richardson   |  | Director                                                                 |  | March 2, 2011
|                                                 |  |                                                                         
|/s/    Nathan
Walton Nathan Walton               |  | Director                                                                 |  | March 2, 2011



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EXHIBIT INDEX



|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                             
|2.1         |  | Amended and Restated Agreement and Plan of Merger, dated as of June 2, 2008, among the Registrant, River Acquisition Subsidiary Corp. and Stream Holdings Corporation (filed as
Exhibit 2.1 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on June 5, 2008 and incorporated herein by reference).                                                                                                           
|            | 
|2.2         |  | Share Exchange Agreement, dated as of August 14, 2009, among the Registrant, EGS Corp., EGS Dutchco B.V. and NewBridge International Investment Ltd., (filed as Exhibit 2.1 to
the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference).                                                                                                                        
|            | 
|3.1         |  | Third Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on July 31, 2008 (filed as Exhibit 3.1 to the
Registrants Current Report on Form 8-K (File No. 001-33739), filed with the SEC on August 6, 2008 and incorporated herein by reference).                                                                                                                                             
|            | 
|3.2         |  | Certificate of Amendment to Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on September 29, 2009 (filed as Exhibit 3.1 to the
Registrants Current Report on Form 8-K (File No. 001-33739), filed with the SEC on October 5, 2009 and incorporated herein by reference).                                                                                                                                      
|            | 
|3.3         |  | Certificate of Amendment to Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on September 29, 2009 (filed as Exhibit 3.2 to the
Registrants Current Report on Form 8-K (File No. 001-33739), filed with the SEC on October 5, 2009 and incorporated herein by reference).                                                                                                                                      
|            | 
|3.4         |  | By-Laws of the Registrant (filed as Exhibit 3.2 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and
incorporated herein by reference).                                                                                                                                                                                                                                                    
|            | 
|4.1         |  | Specimen common stock certificate (filed as Exhibit 4.2 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 6, 2008
and incorporated herein by reference).                                                                                                                                                                                                                                             
|            | 
|4.2         |  | Specimen unit certificate (filed as Exhibit 4.1 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 6, 2008 and
incorporated herein by reference).                                                                                                                                                                                                                                                     
|            | 
|4.3         |  | Specimen warrant certificate (filed as Exhibit 4.3 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 6, 2008
and incorporated herein by reference).                                                                                                                                                                                                                                                  
|            | 
|4.4         |  | Form of Warrant Agreement between the Registrant and Continental Stock Transfer & Trust Company (filed as Exhibit 4.5 to the Registrants Registration Statement on
Form S-1 (File No. 333- 144447), effective as of October 17, 2007 and incorporated herein by reference).                                                                                                                                                                            
|            | 
|4.5         |  | Amended and Restated Registration Rights Agreement, dated as of August 14, 2009, among the Registrant, Ares Corporate Opportunities Fund II, L.P., NewBridge International
Investment Ltd., EGS Dutchco B.V., Mr. R. Scott Murray, and certain stockholders of the Registrant (filed as Exhibit 4.2 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and
incorporated herein by reference).
|            | 
|4.6         |  | Indenture, dated as of October 1, 2009, among the Registrant, the Guarantors named therein and Wells Fargo Bank, National Association, as Trustee, governing the 11.25% Senior
Secured Notes due 2014, including the form of 11.25% Senior Secured Notes due 2014 (filed as Exhibit 4.1 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein
by reference).            



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|4.7         |  | Exchange and Registration Rights Agreement, dated as of October 1, 2009, among the Registrant, the Guarantors listed on the signature pages thereto and the Purchasers named
therein (filed as Exhibit 4.2 to the Registrants Current Report on Form 8-K (File No. 001-33-739), as filed with the SEC on October 5, 2009 and incorporated herein by reference).                                                                                             
|            | 
|4.8         |  | Security Agreement, dated as of October 1, 2009, among the Registrant, the other Guarantors listed on the signature pages thereto and Wells Fargo Foothill, LLC (filed as
Exhibit 4.3 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference).                                                                                                                   
|            | 
|4.9         |  | Security Agreement, dated as of October 1, 2009, among the Registrant, the other Guarantors listed on the signature pages thereto and Wilmington Trust FSB (filed as Exhibit 4.4
to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference).                                                                                                                        
|            | 
|4.10        |  | Collateral Trust Agreement, dated as of October 1, 2009, among the Registrant, the Guarantors from time to time party thereto, Wells Fargo Bank, National Association, as
Trustee, the other Secured Debt Representatives from time to time party thereto and Wilmington Trust FSB (filed as Exhibit 4.5 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009
and incorporated herein by reference).
|            | 
|4.11        |  | Lien Subordination and Intercreditor Agreement, dated as of October 1, 2009, among the Registrant, the subsidiaries of the Registrant listed on the signature pages thereto,
Wells Fargo Foothill, LLC and Wilmington Trust FSB (filed as Exhibit 4.6 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference).                                                   
|            | 
|4.12        |  | Letter Agreement, dated as of August 14, 2009, between the Registrant and Ares Corporate Opportunities Fund II, L.P. (filed as Exhibit 4.3 to the Registrants Current
Report on Form 8-K (File No. 001-33739), as filed with the SEC on August 20, 2009 and incorporated herein by reference).                                                                                                                                                              
|            | 
|10.1*       |  | Description of the Registrants 2010 management incentive plan (reported in the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on
February 3, 2010 and incorporated herein by reference).                                                                                                                                                                                                                               
|            | 
|10.2*       |  | Description of the Registrants 2010 executive sales incentive plan (reported in the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the
SEC on February 3, 2010 and incorporated herein by reference).                                                                                                                                                                                                                          
|            | 
|10.3*       |  | Description of the Registrants 2010 executive sales incentive plan, as amended (reported in the Registrants Current Report on Form 8-K (File No. 001-33739), as
filed with the SEC on March 11, 2010 and incorporated herein by reference).                                                                                                                                                                                                                
|            | 
|10.4*       |  | Employment Agreement between the Registrant and R. Scott Murray, dated July 15, 2008 (filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K (File
No. 001-33739), as filed with the SEC on July 17, 2008 and incorporated herein by reference).                                                                                                                                                                                               
|            | 
|10.5*       |  | Letter Amendment to Employment Agreement between the Registrant and R. Scott Murray dated December 29, 2008 (filed as Exhibit 10.4 to the Registrants Annual Report on
Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference).                                                                                                                                  
|            | 
|10.6*       |  | Letter Amendment to Employment Agreement between the Registrant and R. Scott Murray, dated May 6, 2009 (filed as Exhibit 10.1 to the Registrants Quarterly Report on Form
10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference).                                                                                                                                     



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                 
|----------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                     
|10.7*       |  | Letter Amendment to Employment Agreement between the Registrant and R. Scott Murray, dated November 10, 2009 (filed as Exhibit 10.2 to the Registrants Current Report on
Form 8-K (File No. 001-33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference).                                      
|            | 
|10.8*       |  | Separation Agreement between the Registrant and R. Scott Murray, dated August 19, 2010 (filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K (File No.
001-33739), as filed with the SEC on August 20, 2010 and incorporated herein by reference).                                                              
|            | 
|10.9*       |  | Employment Agreement between the Registrant and Kathryn V. Marinello, dated August 19, 2010 (filed as Exhibit 10.2 to the Registrants Current Report on Form 8-K (File No.
001-33739), as filed with the SEC on August 20, 2010 and incorporated herein by reference).                                                         
|            | 
|10.10*      |  | Employment Agreement between the Registrant and Robert Dechant, dated August 7, 2008 (filed as Exhibit 10.5 to the Registrants Annual Report on Form 10-K for the year
ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference).                            
|            | 
|10.11*      |  | Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated December 29, 2008 (filed as Exhibit 10.6 to the Registrants Annual Report on
Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference).     
|            | 
|10.13*      |  | Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated May 6, 2009 (filed as Exhibit 10.2 to the Registrants Quarterly Report on Form
10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference).         
|            | 
|10.14*      |  | Letter Amendment to Employment Agreement between the Registrant and Robert Dechant, dated November 9, 2009 (filed as Exhibit 10.4 to the Registrants Current Report on
Form 8-K (File No. 001-33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference).                                        
|            | 
|10.15*      |  | Employment Agreement between the Registrant and Sheila M. Flaherty, dated July 16, 2008 (filed as Exhibit 10.2 to the Registrants Current Report on Form 8-K
(File No. 001-33739), as filed with the SEC on July 17, 2008 and incorporated herein by reference).                                                               
|            | 
|10.16*      |  | Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated December 29, 2008 (filed as Exhibit 10.10 to the Registrants Annual Report
on Form 10-K for the year ended December 31, 2008 (File No. 001-33739), as filed with the SEC on March 17, 2009 and incorporated herein by reference).
|            | 
|10.17*      |  | Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated May 6, 2009 (filed as Exhibit 10.3 to the Registrants Quarterly Report on
Form 10-Q for the quarter ended June 30, 2009 (File No. 001-33739), as filed with the SEC on August 5, 2009 and incorporated herein by reference).     
|            | 
|10.18*      |  | Letter Amendment to Employment Agreement between the Registrant and Sheila M. Flaherty, dated November 9, 2009 (filed as Exhibit 10.3 to the Registrants Current Report on
Form 8-K (File No. 001-33739), as filed with the SEC on November 13, 2009 and incorporated herein by reference).                                    
|            | 
|10.19*      |  | Employment Agreement between the Registrant and Dennis Lacey, dated December 15, 2009 (filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K (File
No. 001-33739), as filed with the SEC on December 21, 2009 and incorporated herein by reference).                                                             
|            | 
|10.20*      |  | 2008 Stock Incentive Plan (filed as Annex D to the Registrants Definitive Proxy Statement, as filed with the SEC on July 7, 2008 and incorporated herein by
reference).                                                                                                                                                        



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##### Table of Contents

|            |  |                                                                                                                                                                                                                                                                                                                                                                                                        
|----------- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                                                                                                                                                                                                            
|10.21*      |  | Form of Incentive Stock Option Agreement under the 2008 Stock Incentive Plan (filed as Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the quarter
ended September 30, 2009 (File No. 001-33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference).                                                                                                  
|            | 
|10.22*      |  | Form of Non-Statutory Stock Option Agreement under the 2008 Stock Incentive Plan (filed as Exhibit 10.2 to the Registrants Quarterly Report on Form 10-Q for the
quarter ended September 30, 2009 (File No. 001-33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference).                                                                                              
|            | 
|10.23*      |  | Form of Restricted Stock Agreement under the 2008 Stock Incentive Plan (filed as Exhibit 10.3 to the Registrants Quarterly Report on Form 10-Q for the quarter ended
September 30, 2009 (File No. 001-33739), as filed with the SEC on November 6, 2009 and incorporated herein by reference).                                                                                                        
|            | 
|10.24*      |  | Form of Restricted Stock Unit Agreement under the 2008 Stock Incentive Plan (filed as Exhibit 10.4 to the Registrants Current Report on Form 8-K (File No.
001-33739), as filed with the SEC on August 4, 2008 and incorporated herein by reference).                                                                                                                                                 
|            | 
|10.25*      |  | Option Agreement between the Registrant and R. Scott Murray, dated as of November 10, 2009 (filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K
(File No. 001-33739), as filed with the SEC on November 13, 2009).                                                                                                                                                                    
|            | 
|10.26       |  | Form of Management Rights Letter (filed as Exhibit 10.5 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on June 5,
2008 and incorporated herein by reference).                                                                                                                                                                                              
|            | 
|10.27       |  | Preferred Stock Purchase Agreement between the Registrant and Ares Corporate Opportunities Fund II, L.P., dated as of June 2, 2008 (filed as Exhibit 10.1 to the
Registrants Current Report on Form 8-K (File No 001-33739), as filed with the SEC on June 5, 2008 and incorporated herein by reference).                                                                                             
|            | 
|10.28       |  | Amendment No. 2 to Preferred Stock Purchase Agreement between the Registrant and Ares Corporate Opportunities Fund II, L.P., dated as of July 17, 2008 (filed as
Exhibit 10.1 to the Registrants Current Report on Form 8-K File No. 001-33739), as filed with the SEC on July 22, 2008 and incorporated herein by reference).                                                                        
|            | 
|10.29       |  | Stockholders Agreement, dated as of October 1, 2009, among the Registrant, Ares Corporate Opportunities Fund II, L.P., EGS Dutchco B.V., NewBridge International Investment
Ltd., R. Scott Murray and Trillium Capital LLC. (filed as Exhibit 10.2 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference).
|            | 
|10.30       |  | Form of Indemnification Agreement entered into between the Registrant and its directors and officers (filed as Exhibit 10.1 to the Registrants Current Report on
Form 8-K (File No. 001-33739), as filed with the SEC on August 12, 2008 and incorporated herein by reference).                                                                                                                       
|            | 
|10.31       |  | Credit Agreement, dated as of October 1, 2009, among Wells Fargo Foothill, LLC, Goldman Sachs Lending Partners LLC, and each of the other Lenders party thereto, the Registrant
and its subsidiaries identified therein (filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on October 5, 2009 and incorporated herein by reference).    
|            | 
|10.32       |  | Employment Agreement between the Registrant and Brian Delaney, dated January 13, 2011 (filed as Exhibit 10.1 to the Registrants Current Report on Form 8-K (File No.
001-33739), as filed with the SEC on January 14, 2011 and incorporated herein by reference).                                                                                                                                     
|            | 
|12.1#       |  | Statement of Computation of Ratio of Earnings to Fixed Charges.                                                                                                                                                                                                                                                                                                                                        



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##### Table of Contents

|            |  |                                                                                                                                                                                                                   
|----------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit No. |  | Description                                                                                                                                                                                                       
|14.1        |  | Code of Business Conduct and Ethics (filed as Exhibit 14.1 to the Registrants Current Report on Form 8-K (File No. 001-33739), as filed with the SEC on September 26,
2008 and incorporated herein by reference).
|            | 
|21.1#       |  | Subsidiaries of the Registrant.                                                                                                                                                                                   
|            | 
|23.1#       |  | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm.                                                                                                                                      
|            | 
|31.1#       |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)- 14(a)/15d-14(a), by Chief Executive Officer (principal executive officer).                                                   
|            | 
|31.2#       |  | Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, Rule 13(a)-14(a)/15d-14(a), by Chief Financial Officer (principal financial officer).                                                    
|            | 
|32.1#       |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Executive Officer (principal executive
officer).                                 
|            | 
|32.2#       |  | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, by Chief Financial Officer (principal financial
officer).                                 



|* | Management contracts or compensatory plans or arrangements required to be filed as an exhibit hereto pursuant to Item 15(a) of Form 10-K.
|- | -----------------------------------------------------------------------------------------------------------------------------------------

|# | Filed herewith.
|- | ---------------