UNITED STATES
SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549  FORM 10-K 
  ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(D) OF THE SECURITIES EXCHANGE ACT OF 1934  For the fiscal year ended DECEMBER 31, 2001  Commission
  File Number
  
  Exact
  name of registrant as specified in its charter
  
  IRS
  Employer
  Identification No.1-12577
  
  SITEL
  CORPORATION
  
  47-0684333
  MINNESOTA(State
  or Other Jurisdiction of Incorporation or Organization)111 S. CALVERT
  STREET, SUITE 1900 
  BALTIMORE, MARYLAND
  
  21202(Address of principal
  executive offices)
  
  (Zip Code)(410) 246-1505(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 RegisteredCommon
  Stock, $.001 Par Value
  
  The
  New York Stock Exchange
  SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT: Not
Applicable  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. YESýNOo  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.o  The aggregate market value of the voting stock held by
non-affiliates of the registrant as of March 6, 2002 was $122,896,467 based
upon the closing price of $2.74 for
such stock as reported by the New York Stock Exchange on such date. Solely for
purposes of this calculation, persons holding of record more than 5% of the
Companys stock have been included as affiliates.  COMMON STOCK, $.001 PAR VALUE  74,357,431 SHARES OUTSTANDING
AS OF MARCH 6, 2002  DOCUMENTS INCORPORATED BY REFERENCE  Part of Form 10-K
  
  Document Incorporated by ReferenceIII
  
  Certain sections of the Proxy
  Statement for the Annual Meeting of Stockholders to be held May 3, 2002. 
   SITEL CORPORATION AND SUBSIDIARIES  TABLE OF CONTENTS  Forward Looking Statements
  1PART IItem 1
  
  BusinessGeneral
  1Industry Overview
  1Our Business
  2The Services We Offer
  2The Communication
  Channels We Use
  3The Industries We Serve
  4Our Clients
  5Information Technology
  5Human Resource Management
  5Competition
  6Government Regulation
  6Quarterly Results
  and Seasonality
  8Item 2
  
  Properties
  9Item 3
  
  Legal Proceedings
  9Item 4
  
  Submission
  of Matters to a Vote of Security Holders
  9Executive Officers
  of the Registrant (Instruction 3 to Item 401(b) of Regulation S-K)
  10PART IIItem 5
  
  Market
  for Registrants Common Equity and Related Stockholder Matters
  10Item 6
  
  Selected Financial Data
  11Item 7
  
  Managements
  Discussion and Analysis of Financial Condition and Results of OperationsGeneral
  12General
  Business Risks, Critical Accounting Policies and Estimates
  12Results of Operations
  14Financial Condition
  and Liquidity
  17Other Matters
  19Item
  7A
  
  Quantitative
  and Qualitative Disclosures About Market Risk
  20Item
  8
  
  Financial
  Statements and Supplementary Data
  20Item 9
  
  Changes
  in and Disagreements with Accountants
  20PART IIIItem
  10
  
  Directors
  and Executive Officers of the Registrant
  20Item
  11
  
  Executive Compensation
  20Item
  12
  
  Security
  Ownership of Certain Beneficial Owners and Management
  20Item
  13
  
  Certain
  Relationships and Related Transactions
  20PART IVItem
  14
  
  Exhibits,
  Financial Statement Schedules and Reports on Form 8-K
  21Signatures
  
  24TABLE OF CONTENTS Financial
  Statements and Financial Statement Schedule
  F-1 
   Forward-Looking
Statements  We make statements in this report that are considered forward-looking
statements within the meaning of the Securities Exchange Act of 1934. Sometimes
these statements will contain words such as believes, expects, intends,
should, will, plans, and other similar words. These statements are not
guarantees of our future performance and are subject to risks, uncertainties,
and other important factors that could cause our actual performance or achievements
to be materially different from those we project. These risks, uncertainties,
and factors include, but are not limited to:  reliance
on major clients, conditions
affecting clients industries, clients
budgets and plans, unanticipated
labor, contract or technical difficulties, delays
in ramp up of services under contracts, reliance
on major subcontractors and strategic partners, risks
associated with managing a global business, fluctuations
in operating results, reliance
on telecommunications and computer technology, dependence
on labor force, industry
regulation, general
and local economic conditions, competitive
pressures in our industry, foreign
currency risks, the
effects of leverage, dependency
on credit availability, restrictions
imposed by the terms of indebtedness, and dependence
on key personnel and control by management.  Given these uncertainties, you should not place undue reliance on these
forward-looking statements. Please see the other sections of  this report and our other periodic reports
filed with the Securities and Exchange Commission for more information on these
factors.  PART I Item 1. Business  General  References in this report to we and our are to SITEL Corporation
and its subsidiaries, collectively.  We are a leading global provider of outsourced customer support
services. We specialize in the design, implementation, and operation of
complex, multi-channel contact centers. We support the Customer Relationship
Management (CRM) strategies of many of the worlds leading brands primarily in
the consumer products, financial services, insurance, telecommunications,
technology, and utilities industries. By providing customer acquisition,
customer care, technical support, and risk management services on an outsourced
basis, we help our clients attain greater levels of customer satisfaction and
loyalty. We additionally provide operational and information technology
professional services for both outsourced and internal contact centers focused
on delivering productivity improvements and cost efficiencies.  Founded in 1985, we have grown to include
operations in North America, Europe, Asia Pacific, and Latin America. We have
approximately 25,000 committed employees worldwide that actively represent many
of the worlds leading brand names. We operate from over 18,000 workstations in
84 contact centers located in 20 countries, and offer services in more than 25
languages and dialects.  We operate our contact centers based on the core
belief that people do business with people, a reality that persists even in the
age of anonymous online communications and one-click shopping. Our customer
support services are designed to enhance the quality of interaction at every
stage in the customer lifecycle, from identification and acquisition of new
customers, to customer service for existing customers, to the provision of
technical support, help desks and assistance in managing receivables. Our
operational and technology professional services are designed to optimize every
aspect of the day-to-day operation of both outsourced and internal contact
centers. Our value added services allow customers to select their preferred
channel of communication, including voice, web, e-mail, fax, and wireless
interactions.  Industry
Overview  Over the last 10 years our industry has evolved from outsourcers
providing customer services from primarily a low-technology, single-facility
environment to supporting multi-national corporations CRM strategies from
large, full service, multi-channel contact centers located around the world.
Today, companies are increasingly focused on optimizing the value of their
relationships with their customers. Fueling this trend is the explosive growth
in consumer use of the Internet and e-mail, and the increasingly remote nature
of customer interactions. Companies now face the business imperative to deliver
consistent levels of quality customer service regardless of the channel of
communication chosen.  1 
   With new technologies, each customer interaction
via e-mail, the web or directly with a customer service professional, allows
companies to learn more about their customers profile, decision-making
process, and channel preference. This data can then be used to update a
companys customer information database, enabling true one-to-one marketing. As
a result of these advantages, contact center-based customer relationship
management activity is becoming central to the way leading organizations choose
to build and maintain customer relationships.  The contact center outsourcing market is large and is estimated to grow
rapidly over the next three years.  IDC,
a respected industry analysis group, estimates that the worldwide contact
outsource business will grow from $30 billion in the year 2000 to $76 billion
by the year 2005, or an average increase of 20% per year. Corporations are
increasingly shifting key business processes from internal operations to
outsourced partners. This trend has been further fueled by the growing
complexity of integrating technology and communication. We expect to see the
market increase as companies focus on their core competencies and rely on
service providers like SITEL to deliver comprehensive contact center solutions.  Our Business  We design, implement, and operate contact centers in support of
clients CRM strategies that allow our clients to enhance the value of their
customer contacts, relationships, and information. At every stage of the
customer or product lifecycle, we endeavor to give our clients customers an
experience that will:  reinforce
their trust in the brand, compel
them to stay loyal, and encourage
their advocacy and support regardless of how they communicate with our clients
and their brands.  Whether that is an individual customer or a business customer, and
whether they phone, e-mail or browse the clients website, our mission is to
create customer loyalty and value, to increase sales, and to differentiate the
clients brand in a positive manner.  We operate from 84 facilities in 20 countries throughout the four major
regions of the globe, and offer services in more than 25 languages and
dialects. We bring industry focus and expertise in the consumer products,
financial services, insurance, telecommunications, technology, and utilities
sectors.  The Services We Offer  We view every customer contact as an opportunity to build our clients
brand equity and strengthen relationships with our clients customers. We offer
a suite of added-value customer support services addressing every stage of the
customer or product lifecycle, as well as operational and technology
professional services that are designed to optimize every aspect of the
day-to-day operation of both outsourced and internal contact centers. Each of
our services leverages our contact center expertise and is tailored to meet the
clients unique business requirements. We offer the following services:  Customer Acquisition Our
customer acquisition services include prospect identification, campaign
management, lead generation, and fulfillment. In coordination with our clients
sales objectives, we implement and execute marketing campaigns using
multi-channel communications in coordination with advertising and promotional
sales programs. By tracking customer value over time against the cost of
acquisition, we help our clients improve the quality and value of new customers
while reducing the total cost of acquisition. We help clients find and win
customers through:  list
building, outbound
sales, inbound
sales or order taking, lead
generation, direct
response television/bureau, product
information requests related to potential sales, subscription
renewals, and database
cleaning and updating.  Customer Care Focused on enhancing the customer experience, our customer care
services range from utilizing self-service products for frequently asked
questions, to using web chat sessions for complex installation problems, to
employing highly trained technicians for product support. We specialize in the
design and delivery of complex, multi-channel solutions, including the use of
cost competitive offshore locations. We act as the voice of the customer to our
clients, providing valuable, real time feedback on new products or campaigns.
Our customer care services include:  complaint
and issue resolution, change
of personal details and billing information, thank-you
or other client-initiated information contacts, reservations,  2 
   loyalty
initiatives, investor account
inquiries, government
information, dealer
location contacts, insurance claims
processing, fraud
detection/prevention calls, back office requests,
such as connecting a new line, disconnecting service and requesting maintenance
support, warranty call
handling, and administrative
support regarding a customers policy, lease or account.  Technical Support Targeted at industries with dynamic product lifecycles, like high
technology, we provide a broad range of technical support services focused on
achieving measurable, total customer satisfaction. We employ technically
trained and dedicated teams on an integrated, multi-channel platform, to
provide comprehensive technical product support. We tailor the technical
support processes to our clients needs, including required activities,
escalation procedures, and system level reporting. By analyzing product-related
call patterns gathered from the technical support function, we are able to
provide additional insight into future product development initiatives. In
providing technical support services, we:  handle
troubleshooting calls, respond
to software and hardware problems, provide
support for Internet service problems, manage
corporate help desks, and provide
warranty or post-warranty support.  Risk Management We provide international receivables management programs for large
corporations. We believe in a consultative approach, sharing industry-wide best
practices to tailor a unique solution for each of our clients specific needs. We
design programs to ensure optimal loss mitigation while emphasizing customer
retention. Our risk management services include:  pre-
and post-charge-off collections, early
fraud identification, credit
card activations, property
recovery programs, skip
tracing, and disaster
prevention and recovery.  Professional Services Designed to optimize every aspect of the day-to-day operation of both
outsourced and internal contact centers, we offer operational and technology
professional services to clients worldwide. We help clients align their
business with their customers by helping them plan and execute appropriate
customer relationship management strategies. Our expertise also includes the
ability to deliver complex information technology services, as well as ongoing
management services related to the successful operation of large-scale contact
centers. Our professional services include:  analysis
and segmentation of customer databases, instructional
design and training delivery, development
and implementation of customer contact strategies, systems
design and development, analysis
of current customer sales/support environments, requirements
analysis and process development, analysis
and planning for contact center consolidation/centralization, process
modeling/workflow mapping, contact
center efficiency analysis, best
practice analysis and work instruction development, contact
center implementation planning.  The Communication Channels We Use  We use the telephone, fax, and the Internet as means of communication
to provide the services we offer. Each of these communication channels is
described below:  Telephone-Based Services We handle approximately 400 million customer calls annually via the
telephone.  We have been making and taking
telephone calls on behalf of Global 1000 companies since our founding more than
sixteen years ago.  We have
progressively grown our telephone capabilities from operating simple outbound
dialing campaigns, to offering robust customer contact strategies to our
long-term partners. Our customer service professionals use the telephone as the
main communication tool in support of all of our service offerings.  Internet-Based Services As the Internet has become an increasingly important communications
medium between our clients and their customers, we have integrated the Internet
into our contact center solutions. Our Internet strategy is to bring human
interaction to Internet-based contacts and to use technology enabled by the
Internet to handle customer contacts more efficiently and effectively.  We believe that every remote customer contact, whether by telephone,
fax, the Internet, or regular mail should be handled in an integrated fashion,
leveraging the same customer service professional training and  3 
   systems integration. We see it as a key goal within our clients CRM
strategies to deliver a high level of integration and to provide a unified view
of the customer. We see this as essential to building strong one-to-one
customer relationships. Our Internet-based services are described below.  E-mail Handling Our customer service professionals provide timely, knowledgeable, and
comprehensive replies to incoming e-mails that request customer service and
technical support. Our contact center platform also provides automated e-mail
response based on key word recognition.  Voice and
Text-Based Chat Web Site Support We provide voice chat support  enabling customers to simultaneously
talk to a customer service professional while visiting a clients web site 
using the Internet Call Center that we co-developed with Lucent Technologies in
1998. Text-based chat allows for proactive or responsive communications with
any web site visitor to provide sales support or customer service. These chat
services are further enabled by capabilities to push web pages to web visitors
and the ability of the web agent to work collaboratively with the web visitor.  Self-Service and
Browsing Support The Internet can enable customers in certain situations to resolve
their problems without human assistance. We are actively working with our
clients to incorporate self-service capabilities into our solutions to improve
customer satisfaction and reduce cost. Examples of self-service support are
customers accessing the answers to frequently asked questions via an
intelligent search of a data or knowledge base or prospective customers
completing online insurance applications that are subsequently reviewed by our
licensed insurance service professionals.  Telephone Support Telephone support, the largest revenue generator, includes technical
support and customer service call handling for Internet services and products,
as well as closed loop calling in support of electronic processes. For example,
we make and receive phone calls inside a client organization ensuring that
cases have been successfully closed when web site visitors ask the client
organization to contact them or provide a service or information.  The
Industries We Serve  We provide contact center solutions primarily across the following
industries:  Consumer Products We service leading consumer products, retail, manufacturing, and
publishing companies, including automotive companies, in the following ways:  resolving
customer problems, responding
to customer inquiries, developing
and launching new product/sales campaigns, resolving
technical problems with products or services, acting
as the voice of subscriber-based services, managing
product recalls, and performing
quality surveys and market analyses.  Financial Services We work with financial services companies worldwide, including:  banks, leasing
companies, credit
card issuers, mutual
fund companies, auto
finance companies/subsidiaries, retail
financing companies, brokerage
firms, service
providers, mortgage
companies, and other
financial institutions.  We provide service activities such as:  answering
questions regarding lease terms, handling
service requests, arranging
credit card balance transfers, taking
and processing loan applications, resolving
technical problems with online services, and making
accounts receivable management and fraud prevention calls.  We also conduct integrated sales activities on behalf of clients such
as:  merchant
and customer acquisition, account
retention and renewal, lead
generation, and appointment
scheduling.  Insurance We provide a broad range of services to the insurance industry,
including direct marketing of non-underwritten insurance products such as:  hospital
accident protection, hospital
indemnity protection, health
care discount plans, and mechanical
breakdown and credit protection.  We also direct market fully underwritten Property & Casualty and
Life & Health products. We also support  4 
   the accidental death and disability, credit life, and supplemental
health insurance markets.  In addition to the direct sale of insurance products for our clients,
we provide the following services:  sales
support, after-hours
agent support, emergency
roadside assistance, claims
processing, and full
back-office support.  Telecommunications, ISP and Cable We provide a full range of sales and customer service activities to
domestic and international long distance providers, local exchange carriers,
cellular and PCS providers, Internet Service Providers, telecommunications
equipment manufacturers, and cable and satellite TV companies, including:  account
management, customer
acquisition, fulfillment, directory
assistance, receivables
management, technical
support, sales
support and order taking, facilities
management, new
product launch, and database
management.  We provide these services for product lines such as access lines,
vertical services, Internet access, long distance, cellular PCS and ISDN data
services.  Technology We provide technical sales, technical support and customer support
services for Technology sector companies including computer hardware
manufacturers, software publishers, and PDA and other wireless device
suppliers. These services include:  product
launches, complete
sales and account management programs, strategic
product support, corporate
help desk, warranty
or post-warranty support, and sunset
product support.  Energy and Utilities We provide services to public and private energy and utility companies,
including electric power, natural gas, water and integrated energy providers.
We provide the following services to these clients:  customer
acquisition, customer
service, direct
sale and cross-sale activities, brand
development, appointment
setting and schedule management, loyalty
campaigns, database
management, and development
and professional services.  Our
Clients  We serve over 300 clients in 20 countries. Our top 20 clients accounted
for 62.0% of our revenues in 2001, and include four independently managed
business units of General Motors Corporation. These General Motors business
units were responsible for 25.4% of our total revenues in 2001. We did not have
any other clients under common control that generated more than 10% of our
revenues.  Information
Technology  We use industry-standard software from Microsoft, Oracle, and others
across the administrative functions of our business units. Within industry
sectors, we use industry-specific contact processing application systems. We
have designed and implemented client (or industry) specific applications to
provide highly customized solutions to clients specific requirements.  We also utilize a state-of-the-art
technology platform (UNIX and NT architecture) with Windows 95/98/2000 and
NT-based Compaq, Dell and IBM workstations, predictive dialers and automated
call distributors. Our customer service professionals have the tools to
initiate and receive effectively and efficiently millions of service
transactions per month.  We have designated Siebel e-Business Applications as our preferred
technology platform. Siebel interfaces with Oracle as the database engine and
Avaya for the Computer Telephony Integration. This provides flexibility and
continued return from our investment in existing switch and dialer platforms.  Human
Resource Management  Efficient management and operation of large-scale contact center
solutions is a highly people intensive business. One of our core competencies
is managing a diverse, worldwide workforce. We place great emphasis on our
integrated human resource management strategies, including the recruitment,
training, development, and retention of our employees at all levels of the
organization.  5 
   We seek to locate customer contact centers in
communities and cities with favorable workforce demographics and populations
with necessary language skills. We are committed to equal employment
opportunity in every market we serve.  To build rewarding careers for our employees and
enable effective planning for future growth:  we have
developed training and education programs, as well as performance management
and career planning processes, designed to enable people to learn (both in
classrooms as well as on-the job) and perform at optimum levels on the diverse
range of daily e-media customer contacts, on behalf of our multiple-industry
clients, we
encourage employee self-development, and have developed our own corporate
e-Learning university (SITEL University), and we aim
to develop and promote individuals from within the organization as much as
possible.  As of December 31, 2001, we had approximately
25,000 employees. In our European region, employees in Belgium, Germany,
Sweden, and Spain are within the scope of government sponsored collective
bargaining agreements and are represented by either a labor union or a
statutory work council arrangement. In countries with labor unions or work
councils, our ability to reduce our workforce or wage rates is subject to
agreement or consultation with the appropriate labor union or works council. We
consider relations with our employees to be good.  Competition  We are one of the largest independent companies executing contact
center solutions. Our largest direct competitors include:  TeleTech
Holdings, Inc., Convergys
Corporation, EDSs
Business Process Management division, Sykes
Enterprises, Incorporated, SR.
Teleperformance Group, APAC
Customer Services, Inc., and West
Corporation.  With the growth of consumer online usage, there are a number of new,
smaller competitors focusing on providing e-mail and interactive chat services.
We also compete with in-house customer service departments throughout the
world. In-house departments continue to comprise the largest segment of contact
center expenditures. Additional competitors with greater resources than we have
may enter the customer relationship management industry.  Like us, most of the major outsourcing companies are positioning
themselves as providers of contact center solutions. However, we believe we are
in a leadership position in terms of global presence, large-scale project
implementation and operational experience, solutions provided, and industries
served. We have implemented and now manage integrated programs using all
e-media across the broad range of contact center solutions designed to support
the entire customer lifecycle.  Government Regulation  Our business is subject to laws and regulations concerning
teleservices, web-services, collection agencies, consumer protection, and the
collection and use of consumer data.  United States In the United States, the Federal Trade Commission (FTC) and many
states regulate teleservices, web-services, consumer privacy and the collection
and use of consumer data.  The Federal Telephone Consumer Protection Act of 1991 (TCPA) prohibits
teleservices firms from initiating telephone solicitations to residential telephone
subscribers during certain times, prohibits the use of automated telephone
dialing equipment to call certain telephone numbers, and requires teleservices
firms to maintain a do not call list of residential customers.  FTC regulations issued pursuant to the federal Telemarketing and
Consumer Fraud and Abuse Prevention Act of 1994 prohibit misrepresentation
regarding products or services offered by telephone solicitation and address
other perceived telemarketing abuses in the offering of prizes and the sale of
business opportunities or investments.  There are many federal and state laws and
regulations governing web-services, consumer privacy, and the collection and
use of consumer data. Key federal laws include the:  Gramm-Leach-Bliley
Act, Health
Insurance Portability and Accountability Act of 1996, Childrens
Online Privacy Protection Act, and Federal
Drivers Privacy Protection Act of 1994.  More than 3,000 state laws and regulations govern different aspects of
collection, distribution and use of information about individuals, such as
voter registration, driver license information, and consumer credit
information. Numerous privacy bills are currently pending in the U.S. Congress,
and we expect privacy 6 
   bills to be introduced this year in a number of states having a
legislative session.  Our international risk management business is required to be licensed
under various federal, state and provincial collection agency laws and
regulations and to comply with fair debt collection practices and consumer
credit laws and regulations.  International Countries outside the United States where we have substantial
operations generally have not enacted detailed regulatory frameworks for
teleservices. Many countries, including those in the European Union (EU), have
enacted or proposed laws that regulate consumer privacy and the collection and
use of consumer data.  EU member countries have begun issuing regulations
to implementDirective97/7/EC of 20
May 1997 (the Distance Selling Directive) for the protection of consumers
concerning distance contracts. So far nine of the 15 EU member countries have
passed legislation implementing the principles of the Directive.  These regulations give protections to consumers
who shop by phone, mail order, on the Internet, or digital TV, including:  the right to
receive clear information about goods and services before deciding to buy, confirmation
of this information in writing, a cooling off
period of seven working days in which the consumer can withdraw from the
contract, and protection
from credit card fraud.  Many countries have enacted laws regulating the
collection, processing, keeping, use, and disclosure of personal information,
including: Argentine Republic, Australia, Austria, Belgium, Brazil, Canada,
Chile, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece,
Peoples Republic of China, Hungary, Iceland, Ireland, Israel, Italy, Latvia,
Lithuania, Luxembourg, Mexico, the Netherlands, New Zealand, Norway, Paraguay,
Peru, Poland, Portugal, the Russian Federation, the Slovak Republic, Slovenia,
Republic of South Africa, Spain, Sweden, Switzerland, the Republic of China
(Taiwan), and the United Kingdom.  Many of these laws are based on the privacy principles established by
the Organisation for Economic Co-operation and Development (OCED) in its Guidelines
on the Protection of Privacy and Transborder Flows of Personal Data.
These laws generally provide individuals with a right to access and correct
inaccurate information and many provide that personally identifiable
information can only be used or disclosed for specified and lawful purposes.
Many of these laws provide for civil and criminal penalties for violations.  On December 27, 2001, the EC Commission published
a set of standard contractual clauses to be used by data controllers in the EU
who wish to transfer an individuals personal data to processors established in
countries outside the EU not currently recognized by the EU as having adequate
technical and organizational security measures in place to protect individuals
personal data (currently only Canada, Hungary, Switzerland and the U.S. are
recognized). The requirements are due to take effect on April 3, 2002 and
supplement the Data Privacy Directive 95/46/EC, which is the basis for many of
the personal data laws that have been enacted by the EU member countries. The
standard clauses are designed for inclusion in contracts between such data
controllers and processors. The clauses grant rights to both parties as well as
the individuals whose personal data is held by the data controllers. The
clauses principally oblige the controller and processor to observe and
implement certain measures to protect the personal data, and thus allow the legal
transmission of such data outside the EU.  The E-Commerce Directive 00/31/EC, published in
July 2000, is in the process of being implemented by EU member countries. The
chief aim of the Directive is to ensure that the EU reaps the full benefits of
e-commerce by boosting consumer confidence and giving information service
providers legal certainty without excessive over-regulation. The Directive
includes:  transparency
requirements for web advertising, principles
relating to contracting online, limitations
on the liability of Internet intermediaries, and requirements
for disclosure of any codes of conduct such as online-dispute settlement
governing a service provider.  The Telecoms Directive 97/66/EC, adopted in 1997, establishes
guidelines for the processing of personal data in the telecommunications
sector. It is in various stages of implementation in EU member countries, and
to date has been implemented in eight of those countries. The Directive sets
out principles for:      the
regulation of direct marketing to individuals by telephone and fax,     limitations on the processing of traffic and
billing data,     calling or connected line identification,
and     the right of individuals to be excluded from
telephone and fax directories of subscribers.  Industry Regulation The industries we serve are subject to varying degrees of government
regulation. For example, our employees who complete the sale of certain U.S.
insurance products are required to be variously licensed by some state
insurance commissions and may also be required  7 
   to participate in regular continuing education programs, which we
currently provide in-house.  We generally rely on our clients and their advisors to develop the
scripts and client information we use in making or receiving customer contacts.
We generally require our clients to indemnify us against claims and expenses
arising from their products or services, scripts, and directives.  The teleservices and web-service industries,
consumer groups, and regulatory and legislative bodies are increasingly
concerned about right of privacy issues as technological advances have
dramatically increased the availability of information about consumers. Various
technology and direct-marketing industry groups have been addressing the issue
of consumer privacy. The Online Privacy Alliance, a broad coalition of
high-technology companies, is examining fair information practices and may
offer proposals for industry acceptance. The U.S. Direct Marketing Association,
the leading trade association of direct marketers, recommends industry
participants follow its guidelines for the fair use of information.  Complying with applicable laws, regulations
and industry guidelines to date has not had a material adverse effect on our
business. Governments, trade associations, and industry self-regulatory groups
may enact more burdensome laws, regulations and guidelines, which might
directly affect our business, or affect our clients businesses and thus
indirectly our business, in material and adverse ways.  Many of the proposed laws and regulations are
in early stages of consideration and no consensus has been reached on privacy
and data usage, so we cannot yet determine the impact these proposed laws and
regulations may have on our business. Future laws and regulations may require
our clients to change their products or services in ways that could diminish
the commercial viability of those products or services or require us to modify
our contact center solutions to continue effectively meeting our clients CRM
needs.  Quarterly
Results and Seasonality  We have experienced, and expect to continue to experience, quarterly
variations in our results of operations mostly due to:  the
timing of our clients customer relationship management initiatives and
customer acquisition and loyalty campaigns, the
commencement and terms of new contracts, revenue
mix, the
timing of additional operating, selling, and administrative expenses to support
new business, and the timing
of recognition of incentive fees.  We experience periodic fluctuations in our results of operations
related to both the start-up costs associated with expansion and the
implementation of clients CRM activities. In addition, our business generally
tends to be slower in the third quarter due to summer holidays in Europe, and
in the first quarter due to the changeover of client marketing strategies that
often occurs at the beginning of the year.  8 
   Item 2. Properties  Our executiveofficesare located in Baltimore, Maryland.  Asof December 31, 2001, we
operated CompanyCenters in various
facilities that we lease and Client Centers that are on client premises, and we
used the services of a Remote Operations Site (ROPS), which is owned and
operated by an independent third party, as shown in the table below. In
addition, we were in the process of starting operations at a client center in
Panama at December 31, 2001.  Facility Location
  
  Company
  Centers
  
  Client Centers
  
  ROPS
  
  Total
  Facilities
  
  Number of
  WorkstationsAustralia
  
  1
  
  
  
  
  
  1
  
  304Belgium
  
  2
  
  
  
  
  
  2
  
  544Brazil
  
  3
  
  
  
  
  
  3
  
  454Canada
  
  4
  
  2
  
  
  
  6
  
  1,088Colombia
  
  1
  
  2
  
  
  
  3
  
  188France
  
  3
  
  2
  
  
  
  5
  
  349Germany
  
  1
  
  
  
  
  
  1
  
  597India
  
  1
  
  
  
  
  
  1
  
  282Ireland
  
  1
  
  
  
  
  
  1
  
  328Jamaica
  
  1
  
  
  
  
  
  1
  
  320Mexico
  
  2
  
  4
  
  
  
  6
  
  1,318Netherlands
  
  1
  
  
  
  
  
  1
  
  223New Zealand
  
  1
  
  2
  
  
  
  3
  
  397Portugal
  
  1
  
  
  
  
  
  1
  
  117Singapore
  
  1
  
  
  
  
  
  1
  
  143Spain
  
  5
  
  6
  
  
  
  11
  
  1,801Sweden
  
  2
  
  1
  
  
  
  3
  
  286United Kingdom
  
  5
  
  
  
  
  
  5
  
  1,640United States
  
  24
  
  4
  
  1
  
  29
  
  7,814Totals:
  
  60
  
  23
  
  1
  
  84
  
  18,193
  We use a Remote Operations Site to meet a portion of our customer
service needs, and we contract and operate out of several Client Centers to
support specific client initiatives.  We believe our current facilities are adequate for
our current operations, but additional facilities will be required to support
growth. We believe suitable additional or alternative space will be available
as needed on commercially reasonable terms. Our policy is to rentcontact
center space, but at times we have built or
purchased facilities and, in certain cases, subsequently sold them in
sale-leaseback transactions.  Item 3. Legal Proceedings  From time to time, we are involved in litigation incidental to our
business. We cannot predict the ultimate outcome of such litigation with
certainty, but management believes, after consultation with counsel, that the
resolution of such matters will not have a material adverse effect on our
consolidated financial position or results of operations.  Item 4. Submission
of Matters to a Vote of Security Holders  Not applicable.  9 
   Executive Officers of the Registrant  Executive officers of SITEL Corporation at the date of this report are:  Name
  
  Age
  
  Present Office
  
  Other Offices or Positions HeldDuring Past Five YearsJames F. Lynch
  
  52
  
  Chairman
  of the Board (since 1985),Chief Executive Officer (since 
  April 2001) and Director
  
  Chief
  Executive Officer, SITEL Corporation(1985  January 1997)Bill L.
  Fairfield
  
  55
  
  Executive Vice President, 
  Business Development 
  (since March 2002) and Director
  
  Chairman,DreamFieldPartners, Inc.; Chairman, Chief ExecutiveOfficer, and President, Inacom Corp.Dale W.
  Saville
  
  57
  
  Executive
  Vice President, 
  Corporate Development(since October 2000)
  
  Senior
  Vice President and Chief TechnologyOfficer,
  Vice President  Product Development, Vice President  EMEA Customer Support
  Operations, and Vice President  US CustomerSupport Operations, Sykes
  Enterprises, IncorporatedDale R. Schuster
  
  50
  
  Executive Vice President,Strategic Clients(since January 2001)
  
  Senior
  Vice President, SITEL Corporation; Vice
  President  Sales &Marketing, NorthernAurora, Inc.; Vice President  Administrationand Vice President  Development, CalEnergyJames E. Stevenson, Jr.
  
  46
  
  Executive
  Vice President and 
  Chief Financial Officer 
  (since April 2001)
  
  Senior
  Vice PresidentFinance, SITEL Corporation; PrincipalInvestment Banking Division Finance, Deutsche Banc Alex.Brown Inc.; Principal
  and Controller, Alex.Brown Incorporated  PART II  Item 5.Market for
Registrants Common Equity and Related Stockholder Matters  Our common stock is traded on the New York Stock
Exchange under the symbol SWW. The following table sets forth the high and low
sale prices of our common stock for the quarters indicated, as reported by the
New York Stock Exchange.  2001
  
  2000High
  
  Low
  
  High
  
  LowFirst
  Quarter
  
  $
  3.94
  
  $
  2.10
  
  $
  9.75
  
  $
  5.75Second
  Quarter
  
  $
  2.82
  
  $
  1.57
  
  $
  7.63
  
  $
  3.81Third
  Quarter
  
  $
  2.00
  
  $
  0.85
  
  $
  6.94
  
  $
  2.44Fourth Quarter
  
  $
  2.48
  
  $
  0.72
  
  $
  3.31
  
  $
  2.13  Shares
Outstanding and Holders of Common Stock As of March 6, 2002, we had 74,357,431 shares of
common stock outstanding and 600 record holders of our common stock.  Dividend
Policy We have not declared or paid any cash dividends on
our common stock since our inception. The Board of Directors currently intends
to retain all earnings for use in the business for the foreseeable future.
Furthermore, our revolving credit facility and Senior Subordinated Notes
contain restrictions on the payment of cash dividends.  10 
   Item 6. Selected Financial Data  The following Selected Financial Data should be
read in conjunction with Managements Discussion and Analysis of Financial
Condition and Results of Operations beginning on the following page, the
Consolidated Financial Statements beginning on page F-3, and the Notes to
Consolidated Financial Statements beginning on page F-7.  Years Ended December 31,2001
  
  2000
  
  1999
  
  1998
  
  1997(in
  thousands, except per share data)Income Statement Data:Revenues
  
  $
  725,048
  
  $
  764,447
  
  $
  737,522
  
  $
  586,318
  
  $
  491,474Operating expenses
  
  708,565
  
  722,151
  
  709,626
  
  567,486
  
  456,531Asset impairment andrestructuringexpenses (a)
  
  26,185
  
  3,520
  
  9,596
  
  6,607
  
  15,681Operating income (loss)
  
  (9,702
  )
  38,776
  
  18,300
  
  12,225
  
  19,262Interest expense, net
  
  (11,642
  )
  (12,067
  )
  (12,785
  )
  (12,747
  )
  (5,096
  )Other income (expense), net
  
  (2,606
  )
  (311
  )
  316
  
  263
  
  126Income (loss) before income taxesand minority interest
  
  (23,950
  )
  26,398
  
  5,831
  
  (259
  )
  14,292Income tax expense (benefit)
  
  (2,317
  )
  12,570
  
  6,336
  
  966
  
  11,306Minority interest
  
  947
  
  1,087
  
  304
  
  (651
  )
  174Net income (loss) from continuing operations
  
  (22,580
  )
  12,741
  
  (809
  )
  (574
  )
  2,812Extraordinary loss on refinancing of debt, net of taxes
  
  
  
  
  
  
  
  (514
  )
  Net income (loss)
  
  $
  (22,580
  )
  $
  12,741
  
  $
  (809
  )
  $
  (1,088
  )
  $
  2,812Weighted average common shares outstanding:Basic
  
  73,424
  
  71,052
  
  66,550
  
  63,888
  
  61,764Diluted
  
  73,424
  
  75,201
  
  66,550
  
  63,888
  
  68,811Income
  (loss) from continuing operations per common share:Basic
  
  $
  (0.31
  )
  $
  0.18
  
  $
  (0.01
  )
  $
  (0.01
  )
  $
  0.05Diluted
  
  $
  (0.31
  )
  $
  0.17
  
  $
  (0.01
  )
  $
  (0.01
  )
  $
  0.04  At December 31,2001
  
  2000
  
  1999
  
  1998
  
  1997(in thousands)Balance Sheet Data:Working capital
  
  $
  72,677
  
  $
  93,583
  
  $
  87,384
  
  $
  41,660
  
  $
  39,545Total assets
  
  355,466
  
  380,222
  
  432,909
  
  405,610
  
  385,880Long-term debt, net of current portion
  
  107,040
  
  108,341
  
  148,330
  
  116,237
  
  115,488Stockholders equity
  
  140,040
  
  169,582
  
  160,698
  
  161,854
  
  158,388  
 (a)          We discuss assetimpairmentand restructuring expenses in Note 10 to the
Consolidated Financial Statements.  11 
   Item 7. Managements
Discussion and Analysis of Financial Condition and Results of Operations  General  References in this report to we and our are to SITEL Corporation
and its subsidiaries, collectively.  We are a leading global provider of outsourced
customer support services. We specialize in the design, implementation, and
operation of complex, multi-channel contact centers. We support the Customer
Relationship Management (CRM) strategies of large corporations in North
America, Europe, Asia Pacific, and Latin America. We provide customer
acquisition, customer care, technical support and risk management services on
an outsourced basis, as well as operational and information technology
professional services for both outsourced and internal contact centers. We
serve clients primarily in the consumer products, financial services,
insurance, telecommunications, technology, and utilities industries.  In Managements Discussion and Analysis, we provide information about
our general business risks, critical accounting policies and estimates, results
of operations, financial condition and liquidity, and certain other matters
affecting our operating results for the periods covered by this report.  As you read this discussion and analysis, refer to our Consolidated
Statements of Income (Loss), which present the results of our operations for
2001, 2000, and 1999, and are summarized on the following pages. We analyze and
explain the differences between periods for the components of net income (loss)
in the following sections. Our analysis is important in making decisions about
your investment in SITEL Corporation.  General Business
Risks, Critical Accounting Policies and Estimates  General Business
Risks Our business success depends on our ability to
efficiently deploy our human and capital resources in the delivery of services
to our clients. Consequently, the needs of our clients may significantly impact
our results of operations, financial condition, and liquidity.  Our results of operations and operating cash flows
may vary with periodic wins and losses of client contracts and with changes in
the scope of client requirements. Ourtop 20 clients
accounted for 62.0% of our revenues in 2001, andinclude four independently managed business units of General Motors
Corporation. These General Motors business units were responsible for 25.4% of
our total revenues in 2001. We did not have any other clients under common
control that generated more than 10% of our revenues.The financial failure of any of these clients or
the loss of any or all of their business could have an adverse impact on our
operating results.  Our liquidity, including our ability to comply
with restrictive debt covenants, may be adversely affected if we were to lose a
significant client or as a result of significant changes in client demand if we
are unable to efficiently re-deploy our human and capital resources.  In the following sections, we also discuss the
importance of our critical accounting policies and the use of accounting
estimates, and their potential impacts on our results of operations.  Critical
Accounting Policies Our significant accounting policies and practices are described in Note
1 to the Consolidated Financial Statements. Of those policies, we have
identified the following to be critical accounting policies because they are
the most important to the portrayal of our results of operations and financial
condition, and they require managements most difficult, subjective, or complex
judgments:      estimates of uncollectible trade accounts
receivable to determine an allowance for doubtful accounts,     estimates of the useful lives for property,
equipment, and goodwill, and estimates
of future taxable income that is required to support the carrying value of
deferred tax assets and estimates of the related valuation allowance.  Trade Accounts Receivable We report our trade accounts receivable net of an allowance for
doubtful accounts, which represents managements estimates of the amount of our
receivables that may not be collectible, net of recoveries of amounts
previously written off. These estimates are based on a detailed aging analysis
of accounts receivable, historical bad debts, client credit-worthiness, and
changes in our client payment terms. The financial condition of our clients may
deteriorate, which may require us to increase our allowance for doubtful
accounts. We would record an increase in the allowance for doubtful accounts as
operating, selling,  12 
   and administrative expense in our Consolidated Statements of Income,
which would reduce our results of operations. Our
accounts receivable balance at December 31, 2001 was $129.2 million, net of an
allowance for doubtful accounts of $5.2 million.  Property, Equipment, and Goodwill We record property and equipment at cost, and
calculate depreciation using the straight-line method over the estimated useful
lives of the assets, which range from 3 to 20 years. We amortize leasehold
improvements and assets under capital leases on a straight-line basis over the
shorter of the lease term or the estimated useful life of the asset.  Goodwill represents the difference between the purchase price we paid
in acquisitions, using the purchase method of accounting, and the fair value of
the net assets we acquired. We amortize goodwill on a straight-line basis over
25 years. Goodwill as of December 31, 2001 was $73.2 million, net of
accumulated amortization of $18.8 million.  We monitor events and changes in circumstances
which may require us to review the carrying value of our long-lived assets. We
review the recoverability of our goodwill at each consolidated balance sheet
date. We assess the recoverability of our long-lived assets and goodwill based
on estimated undiscounted future operating cash flows. We measure impairment,
if any, by comparing the carrying value of the asset to its fair value. We
recognize an impairment loss if the carrying value exceeds the fair value. Our
assessment of the recoverability of our long-lived assets, including goodwill,
will be impacted if estimated future operating cash flows are not achieved.  In June 2001, the Financial Accounting Standards
Board issued SFAS No. 142, Goodwill and Other Intangible Assets. This
statement:  replaces
the requirement to amortize goodwill and certain other intangible assets with
an annual impairment test, and requires
an evaluation of the useful lives of intangible assets and an impairment test
for goodwill upon adoption.  The provisions of this statement are effective for
fiscal years beginning after December 15, 2001, so we must adopt the provisions
of SFAS No. 142 in our financial statements for the quarter ended March 31,
2002. Beginning January 1, 2002, we stopped amortizing our goodwill, which
means that we will not record any goodwill amortization expense in our
Consolidated Statements of Income in 2002 and future years. Total goodwill
amortization expense in 2001 was $3.6 million.  We have not yet evaluated whether or not we will
have any impairment charges in our consolidated financial statements in 2002
that may result from the impairment test that is required upon adoption of this
statement.  Deferred Income Taxes We must report some of our revenues and expenses
differently for our financial statements than we do for income tax purposes.
The future tax effects of the differences in these items, as well as operating
loss and tax credit carryforwards, are reported as deferred tax assets or
liabilities in our Consolidated Balance Sheets.  We assess the likelihood that our deferred tax
assets will be recovered from future estimated taxable income. To the extent we
believe that recovery is not likely, we establish valuation allowances to
reduce the deferred tax assets to the amount that is more likely than not to be
realized. The net deferred tax asset as of December 31, 2001 was $15.8 million,
net of a valuation allowance of $38.9 million.  Significant management judgment is required in
determining any valuation allowance recorded against our deferred tax assets.
We have recorded a valuation allowance of $38.9 million as of December 31, 2001,
due to uncertainties related to our ability to utilize some of our deferred tax
assets before they expire. These assets consist of tax amortization in excess
of book amortization related to the acquisition of a business and certain net
operating losses and foreign tax credits carried forward. The valuation
allowance is based on our estimates of future taxable income by jurisdiction in
which we operate and the period over which our deferred tax assets can be
recovered. In the event that actual results differ from these estimates or we
revise these estimates in future periods, we may need to adjust the valuation
allowance which could materially impact our financial position and results of
operations.  Use of
Accounting Estimates Management makes estimates and assumptions when
preparing financial statements under generally accepted accounting principles
that affect:  our reported amounts of assets and liabilities at
the dates of the financial statements, our disclosure of contingent assets and liabilities
at the dates of the financial statements, and our reported amounts of revenues and expenses
during the reporting periods.  These estimates involve judgments with respect to,
among other things, future economic factors that are difficult to predict and are
beyond managements control. As a result, actual amounts could differ from
these estimates.  13 
   Results
of Operations  In this section, we discuss our operating results
and the factors affecting them. We begin with a general overview, then
separately discuss the components of net income (loss) in more detail. We
describe our general business risks, critical accounting policies, and
estimates that are important to our operating results on the previous page.
Please refer to that discussion as you read this section.  Overview  We summarize our net income (loss) and net income (loss) per common
share  diluted, and the impacts of asset impairment and restructuring expenses
and other items, in the following tables:  Net Income (Loss)  Years
  Ended December 31,2001
  
  2000
  
  1999(in
  millions)Net income (loss),
  before restructuring expenses and other items
  
  $
  0.9
  
  $
  14.7
  
  $
  7.5Asset impairment and
  restructuring expenses, after tax
  
  (24.6
  )
  (2.0
  )
  (8.3
  )Losses on disposals of
  fixed assets, after tax
  
  (0.8
  )
  
  
  Write-off of credit
  acquisition costs
  
  (0.8
  )
  
  
  Valuation allowance on
  U.K. deferred tax assets
  
  (3.3
  )
  
  
  Tax benefit expected to
  to be realized in future years
  
  6.0
  
  
  
  Net income (loss)
  
  $
  (22.6
  )
  $
  12.7
  
  $
  (0.8
  )  Net Income (Loss) Per Common
ShareDiluted  Years
  Ended December 31,2001
  
  2000
  
  1999Net income (loss) per
  share, before restructuring expenses and other items
  
  $
  0.01
  
  $
  0.20
  
  $
  0.10Asset impairment and
  restructuring expenses, after tax
  
  (0.33
  )
  (0.03
  )
  (0.11
  )Losses on disposals of
  fixed assets, after tax
  
  (0.01
  )
  
  
  Write-off of credit
  acquisition costs
  
  (0.01
  )
  
  
  Valuation allowance on
  U.K. deferred tax assets
  
  (0.05
  )
  
  
  Tax benefit expected to
  be realized in future years
  
  0.08
  
  
  
  Net income (loss) per share
  
  $
  (0.31
  )
  $
  0.17
  
  $
  (0.01
  )  2001 Compared to
2000 We had a net loss of $22.6 million, or ($0.31) per
share, in 2001, compared to net income of $12.7 million, or $0.17 per share, in
2000. Results in 2001 were primarily impacted by asset impairment and
restructuring expenses and other items that we recorded in the second and third
quarters of the year. These charges were offset partially by a $6.0 million net
income tax benefit that we recorded as a result of our election to treat
certain of our foreign operations as branches of our U.S. company for U.S.
income tax purposes. All of these items are summarized in the table above.  Excludingthe asset impairment and
restructuring expenses and other items described above in 2001 and $2.0 million
of after-tax asset impairment and restructuring expenses in 2000, we had net income of $0.9 million, or $0.01 per
share, in 2001 compared to net income of $14.7 million, or $0.20 per share, in
2000. This decline resulted mostly from a 5.2% decrease in revenues and lower
gross profit margins in 2001.  2000 Compared to
1999 We had net income of $12.7 million, or $0.17 per share, in 2000,
compared to a net loss of $0.8 million, or ($0.01) per share, in 1999. Results
in 2000 included a $2.0 million after-tax asset impairment and restructuring
expense, compared to an $8.3 million after-tax expense in 1999, and Operating,
Selling, and Administrative Expenses were $5.2 million lower in 2000 than in
1999.  Excluding asset impairment and restructuring
expenses in 2000 and 1999, we had net income of $14.7 million, or $0.20 per
share, in 2000 compared to net income of $7.5 million, or $0.10 per share, in
1999. This increase resulted mostly from a 3.7% decrease in revenues and lower
Operating, Selling, and Administrative Expenses in 2000.  We describe the factors affecting our 2001, 2000,
and 1999 operating results in more detail in the following section.  14 
   Components of Net Income (Loss)  As you read this section, please refer to the following table that
summarizes our income statement data on a percentage-of-revenue basis  Years Ended December 31,2001
  
  2000
  
  1999$
  
  %
  
  $
  
  %
  
  $
  
  %(in thousands)Revenues
  
  $
  725,048
  
  100.0
  %
  $
  764,447
  
  100.0
  %
  $
  737,522
  
  100.0
  %Direct labor and
  telecommunications expenses
  
  411,066
  
  56.7
  %
  398,809
  
  52.2
  %
  373,518
  
  50.6
  %Subcontracted and other services expenses
  
  36,949
  
  5.1
  %
  51,452
  
  6.7
  %
  59,024
  
  8.0
  %Operating,
  selling, and administrative expenses
  
  260,550
  
  35.9
  %
  271,890
  
  35.6
  %
  277,084
  
  37.6
  %Asset impairment
  and restructuring expenses
  
  26,185
  
  3.6
  %
  3,520
  
  0.4
  %
  9,596
  
  1.3
  %Operating
  income (loss)
  
  (9,702
  )
  (1.3
  )%
  38,776
  
  5.1
  %
  18,300
  
  2.5
  %Interest
  expense, net
  
  (11,642
  )
  (1.6
  )%
  (12,067
  )
  (1.6
  )%
  (12,785
  )
  (1.7
  )%Other income
  (expense), net
  
  (2,606
  )
  (0.4
  )%
  (311
  )
  (0.1
  )%
  316
  
  0.0
  %Income
  (loss) before income taxesand
  minority interest
  
  (23,950
  )
  (3.3
  )%
  26,398
  
  3.4
  %
  5,831
  
  0.8
  %Income tax
  expense (benefit)
  
  (2,317
  )
  (0.3
  )%
  12,570
  
  1.6
  %
  6,336
  
  0.9
  %Minority
  interest
  
  947
  
  0.1
  %
  1,087
  
  0.1
  %
  304
  
  0.0
  %Net
  income (loss)
  
  $
  (22,580
  )
  (3.1
  )%
  $
  12,741
  
  1.7
  %
  $
  (809
  )
  (0.1
  )%  2001 Compared to
2000  Revenues Revenues decreased $39.4 million, or 5.2%, in 2001
compared to 2000. The changes in revenues by geographic region are shown in the
following table:  $
  
  %(in millions)North America
  
  $
  (3.0
  )
  (0.6
  )%Europe
  
  (40.6
  )
  (17.1
  )%Asia Pacific
  
  (8.6
  )
  (25.6
  )%Latin America
  
  12.8
  
  43.2
  %  Revenuesdecreased in Europe mostly
due to the loss of two large clients in the United Kingdom, which took their
customer acquisition businesses in-house, and lower revenues in Spain.The
strength of the U.S. dollar versus the British pound and Euro accounted for
about $9.4 million, or 23%, of this decrease. The decrease in Asia Pacific
primarily related to restructuring our operations in Japan and transferring our
existing Japanese business to Bellsystem24 in the second quarter of 2000. The
decrease in North America was primarily attributable to a reduction in customer
acquisition revenues that was due, in part, to the September 11th,
2001 attack on the United States. The increase in Latin America was
attributable to new work we performed for clients in Brazil and Mexico.  Direct Labor and Telecommunications
Expenses Direct Labor and Telecommunications Expenses
include the compensation of our customer service professionals and their first
line supervisors and telephone usage expenses directly related to the
production of revenues.  Direct labor and telecommunications expenses as a
percentage of revenues can vary based on the nature of the contract, the nature
of the work, and the market in which the services are provided. Accordingly,
direct labor and telecommunications expenses as a percentage of revenues can
vary, sometimes significantly, from year to year.  Direct Labor and Telecommunications Expenses
increased $12.3 million, or 3.1%, in 2001 compared to 2000. As a percentage of
revenues, Direct Labor and Telecommunications Expenses increased from 52.2% in
2000 to 56.7% in 2001. This increase was primarily due to reduced labor
efficiency caused by:  an
unanticipated decline in revenues, a
higher than normal number of client programs ramping up and ramping down during
the year, and some
reductions in pricing.  Subcontracted and Other Services Expenses Subcontracted and Other Services Expenses include
services provided to clients through subcontractors and other out-of-pocket
expenses. Subcontracted and Other Services Expenses decreased $14.5 million, or
28.2%, in 2001 compared to 2000. The decline in these expenses was due mostly
to a reduction in the use of third party contact  15 
   centers in the U.S. due to a reduction in customer
acquisition services and lower reimbursable expenses in the U.S. and Europe.  Operating, Selling and Administrative
Expenses Operating, Selling and Administrative Expenses represent expenses
incurred to directly support and manage the business, including costs of
management, administration, technology, facilities, depreciation and
amortization, maintenance, sales and marketing, and client support services.  Operating, Selling and Administrative Expenses
decreased $11.3 million, or 4.2%, in 2001 compared to 2000. The decline in
these expenses was mostly due to our restructuring plan that began at the end
of the second quarter of 2001. As a percentage of revenues, Operating, Selling
and Administrative Expenses were about the same in 2001 as they were in 2000.  Asset Impairment and Restructuring Expenses In 2001, we announced a
restructuring plan designed to intensify our focus on core competencies,
accelerate revenue growth, and improve profitability. The key components of the
restructuring plan include several major organizational changes and the
streamlining of contact center operations and corporate support services to
improve effectiveness and drive revenue growth.  As part of our
restructuring plan, we reduced fixed overhead to improve profitability by
substantially completing the following by December 31, 2001:  eliminating
approximately 350 operating, selling, and administrative positions globally,
and reducing excess capacity
by closing nine contact centers plus three administrative offices, and
downsizing another five contact centers plus two administrative offices, resulting
in the elimination of approximately 2,100 workstations.  In connection with this restructuring, we recorded
$26.2 million of asset impairment and restructuring charges in 2001. We
estimate that the ongoing annual savings from the restructuring will exceed $20
million.  We evaluate the recoverability of our long-lived
assets, including goodwill, based on estimated undiscounted future operating
cash flows. While management currently believes that estimated future operating
cash flows will be sufficient to recover such assets, there can be no assurance
that such estimates will be achieved. If estimated future operating cash flows
are not achieved, we may need to record impairment losses on these assets in
future periods.  In 2000, we formed a strategic partnership with
Bellsystem24, Inc., Japans largest comprehensive marketing agency. Under the
terms of the partnership, Bellsystem24 provides services and support for our
clients in Japan and we provide services and support for Bellsystem24s clients
in the United States. In connection with the formation of the partnership, we
restructured our operations in Japan and transferred our existing Japanese
business to Bellsystem24. In connection with this restructuring, we recorded a
$3.5 million asset impairment and restructuring charge, or $2.0 million after
tax, in 2000.  Operating Income (Loss) We had an operating loss of $9.7 million in 2001,
compared to operating income of $38.8 million in 2000. Excluding the asset
impairment and restructuring expenses discussed earlier, operating income as a
percentage of revenues was 2.3% in 2001 compared to 5.5% in 2000. This change
resulted from all of the factors affecting revenues and expenses discussed
earlier in this section.  Interest Expense, Net Interest expense, net of interest income, was
about the same in 2001 as it was in 2000.  Other Expense, Net Other expense, net of other income, increased $2.3 million in 2001
compared to 2000 mostly because we recorded $1.3 million of losses on disposals
of certain assets, and we wrote off $0.8 million of credit acquisition costs in
connection with the amendment of our credit facility in 2001.  Income Tax Expense (Benefit) We recorded an income tax benefit of $2.3 million
in 2001 compared to income tax expense of $12.6 million in 2000. The 2001
benefit reflects:  a $6.0
million net deferred income tax benefit we recorded as a result of our election
to treat certain of our foreign operations as branches of our U.S. company for
U.S. income tax purposes, and a $2.2
million tax benefit we recorded on asset impairment and restructuring charges
and losses on disposals of assets in the second quarter of 2001.  Thesebenefitswere offset by a $3.3 million deferred income tax expense we recorded
to establish a valuation allowance on deferred tax assets that were recorded in
prior years related to our United Kingdom operations.  In 2001, income tax expense as a percentage of
income before income taxes and minority interest, excluding asset impairment
and restructuring expenses and the above special items, was 57.7%. The
difference between income tax expense and the expense which would result from
applying the statutory U.S. Federal rate of 34% was primarily due to
non-deductible goodwill, net operating losses in certain subsidiaries for which
no tax benefit was recognized, higher international tax rates in certain
jurisdictions, and U.S. state and local income taxes.  16 
   2000 Compared to
1999  Revenues Revenues increased $26.9 million, or 3.7%, in 2000
compared to 1999. The changes in revenues by geographic region are shown in the
following table:  $
  
  %(in millions)North America
  
  $
  52.1
  
  12.7
  %Europe
  
  (28.9
  )
  (10.8
  )%Asia Pacific
  
  (7.4
  )
  (17.9
  )%Latin America
  
  11.1
  
  58.9
  %  Revenues increased in North America mostly due to
additional services we provided to our largest client and a number of our large
global clients. The increase in Latin America was attributable to new work we
performed for several large clients in Brazil and Mexico. The strength of the
U.S. dollar versus the British pound and Euro accounted for $27.8 million of
the decrease in reported revenues from our European operations. The decrease in
Asia Pacific was due to the reorganization of our Japanese business and a
stronger dollar compared to currencies in the region.  Direct Labor and Telecommunications
Expenses Direct Labor and Telecommunications Expenses
increased $25.3 million, or 6.8%, in 2000 compared to 1999. As a percentage of
revenues, Direct Labor and Telecommunications Expenses increased from 50.6% in
1999 to 52.2% in 2000. This increase was primarily due to higher labor costs,
which were offset partially by lower telecommunications costs.  Subcontracted and Other Services Expenses Subcontracted and Other Services Expenses
decreased $7.6 million, or 12.8%, in 2000 compared to 1999. The decline in
these expenses is due mostly to lower subcontractor costs associated with a
contract we implemented for an existing client in 1999.  Operating, Selling and Administrative
Expenses Operating, Selling and Administrative Expenses
decreased $5.2 million, or 1.9%, in 2000 compared to 1999. As a percentage of
revenues, Operating, Selling, and Administrative Expenses decreased from 37.6%
in 1999 to 35.6% in 2000. The decrease was primarily due to improved expense
control, the combination of smaller business units into larger ones, and the
elimination of smaller and unprofitable clients.  Asset Impairment and Restructuring Expenses In the second quarter of 2000, we recorded a $3.5
million asset impairment and restructuring charge, or $2.0 million after tax,
related to a strategic partnership we formed in May 2000 with Bellsystem24,
Inc., as previously discussed.  In 1999, we recorded a $9.6 million asset
impairment and restructuring charge primarily related to the write-down of
capitalized software and related technology assets. We reviewed our capitalized
software and related technology assets for impairment in connection with the
change in our technology strategy as it related to the adoption of a new
platform for our CRM software applications.  Operating Income (Loss) Operating income increased $20.5 million in 2000
compared to 1999. Excluding the asset impairment and restructuring expenses
previously discussed, operating income increased $14.4 million, or 51.6%, from
$27.9 million in 1999 to $42.3 million in 2000. This change resulted from all
of the factors affecting revenues and expenses discussed earlier in this
section.  Interest Expense, Net Interest expense, net of interest income,
decreased $0.7 million or 5.6% in 2000 compared to 1999, mostly due to a lower
level of debt outstanding during 2000.  Income Tax Expense (Benefit) Income tax expense increased $6.2 million in 2000
compared to 1999, due primarily to higher level of operating income in 2000.  Income tax expense as a percentage of income
before income taxes and minority interest was 47.6%. The difference between
income tax expense and the expense which would result from applying the
statutory U.S. Federal rate of 34% was primarily due to non-deductible
goodwill, net operating losses in certain subsidiaries for which no tax benefit
was recognized, higher international tax rates in certain jurisdictions, and
U.S. state and local income taxes.  Financial Condition and Liquidity  In this section, we discuss our financial condition
and liquidity and the factors affecting them. We separately discuss cash flows,
capital resources, and contractual obligations and commitments. We describe our
general business risks, critical accounting policies, and estimates that are
important to our financial condition and liquidity earlier in this report.
Please refer to that discussion as you read this section.  Cash Flows Thefollowing table sets forth summary cash flow data for the periods indicated.
Please refer to this summary as you read our discussion of the sources and uses
of cash in each year.  17 
   Years Ended December 31,2001
  
  2000
  
  1999(in millions)Net cash provided by (used in):Operating activities
  
  $
  48.6
  
  $
  65.2
  
  $
  39.3Investing activities
  
  (43.8
  )
  (25.9
  )
  (34.5
  )Financing activities
  
  (3.9
  )
  (44.6
  )
  1.1
  2001 In2001,
cash provided by operating activities came from income before asset impairment
and restructuring expenses, depreciation and amortization, and other charges of
$45.0 million and a $15.3 million decrease in trade accounts receivable, which
were partially offset by a $10.2 million decrease in other liabilities.
Although accounts receivable decreased during the period, we anticipate
accounts receivable will increase as we continue to grow, which may require
additional financing.  In 2001, we used cash for investing activities
mostly to purchase $40.4 million of property and equipment, and we invested
$2.3 million in a joint venture in India.  In2001,
we used cash for financing activities mostly to repay $3.8 million of capital
lease obligations.  2000 In2000,
cash provided by operating activities consisted mostly of income before
non-cash expenses of $60.6 million and a decrease in accounts receivable of
$11.1 million, partially offset by a $14.8 million decrease in accounts payable
and other liabilities.  In 2000, we used cash for investing activities
mostly to purchase $33.1 million of property and equipment. This was partially
offset by $7.2 million of cash proceeds we received from sales of property and
equipment.  In 2000, we used cash for financing activities to
repay $82.3 million of debt and capital lease obligations, net of additional
borrowings of $35.0 million under our revolving credit facility, resulting in
net repayments of $47.3 million.  1999 In 1999, cash provided by operating activities
consisted mostly of income before non-cash expenses of $54.8 million and a
$28.1 million increase in accrued expenses and trade payables, partially offset
by a $38.9 million increase in accounts receivable.  In 1999, we used cash for investing activities
mostly to purchase $38.6 million of property and equipment. This was partially
offset by $3.5 million of cash proceeds we received from sale-leasebacks of
facilities and equipment. We also acquired $9.0 million of property and
equipment under capital leases.  In 1999, cash provided by financing activities was
$1.2 million, as payments we made on debt and capital lease obligations were
offset by additional borrowings.  CapitalResources We have historically used funds generated from
operations, leases of property and equipment, equity capital, senior
subordinated notes, and borrowings under credit facilities with banks to
finance business acquisitions, capital expenditures, and working capital
requirements.  We have a senior secured credit facility that
expires in April 2003, under which we may borrow in U.S. dollars, British pounds
sterling, and Euros, which allows us to consolidate our U.S. and European bank
lines into a single multi-borrower, multi-currency facility.  Ourobligations under the facility
have been guaranteed by our domestic subsidiaries and certain foreign subsidiaries
and are secured by liens on substantially all of the assets of SITEL
Corporation and such subsidiaries, including a pledge of our shares in such
subsidiaries and certain other foreign subsidiaries. The facility contains
certain financial covenants and certain restrictions on, among other things,
our ability to:  incur
additional indebtedness, pay
dividends, repurchase stock, or make other restricted payments, purchase
property and equipment, make
certain investments, sell
assets, or merge with
another company.  The facility becomes due andpayableupon a change of control of the Company as
defined in the credit agreement.  At June 30, 2001, we were not incompliancewith some of the original financial covenants of
the facility, which are determined quarterly based on the trailing four
quarters ended on each determination date. In August 2001, we obtained an
amendment to the credit facility that was effective as of June 30, 2001, which
waived the noncompliance with those covenants and amended our financial
covenants for future periods. The amendment also:  reduced the size of the facilityfrom$75 million to $50 million and removed our option
to request an increase in the size of the facility to $100 million, changed
the expiration date of the facility from April 2005 to April 2003, increased
the interest rates on borrowings 50 to 75 basis points and the unused
commitment fee 50 basis points, and further
restricted our ability to make certain acquisitions, restricted payments,
capital expenditures, and investments.  18 
   As a result of the
amendment, we wrote off $0.8 million of credit acquisition costs related to the
original facility in 2001.  At December 31, 2001, we had $50 million of available borrowings under
the amended facility, and were in compliance with all financial covenants of
the facility.  We expect to finance our current operations,
planned capital expenditures, and internal growth for the foreseeable future
using funds generated from operations, existing cash, leases of property and
equipment, and the funds available under our credit facility. We estimate that
our 2002 capital expenditures will range from $25 to $32 million. Future
acquisitions, if any, may require additional debt or equity financing.  Under a stock repurchase program that was
authorized by our Board of Directors in February 2001, we may repurchase up to
$10 million of our shares from time to time in the open market or in privately
negotiated transactions, depending on general business and market conditions.
Through the date of this report, we had repurchased a total of 171,800 shares
at a total cost of $0.3 million. Our amended credit facility limits the amount
of aggregate restricted payments, including stock repurchases, to $1.0 million
plus certain equity transaction proceeds not currently applicable.  Contractual
Obligations and Commitments We have various contractual obligations andcommitmentsthat are described in the Notes to Consolidated
Financial Statements. We summarize our contractual obligations and commitments
at December 31, 2001 in the following table:  Year
  
  Long-Term Debt
  
  Capital Leases
  
  Operating Leases
  
  Total(in thousands)2002
  
  $
  
  
  $
  2,965
  
  $
  19,013
  
  $
  21,9782003
  
  
  
  1,793
  
  15,665
  
  17,4582004
  
  
  
  1,235
  
  13,160
  
  14,3952005
  
  
  
  673
  
  10,521
  
  11,1942006
  
  100,000
  
  568
  
  8,487
  
  109,055Thereafter
  
  
  
  4,733
  
  25,445
  
  30,178Total
  
  $
  100,000
  
  $
  11,967
  
  $
  92,291
  
  $
  204,258  Other Matters  Quarterly Results and Seasonality We have experienced, and expect to continue to
experience, quarterly variations in our results of operations mostly due to:  the
timing of our clients customer relationship management initiatives and
customer acquisition and loyalty campaigns, the
commencement and terms of new contracts, revenue
mix, the
timing of additional operating, selling, and administrative expenses to support
new business, and the
timing of recognition of incentive fees.  We experience periodic fluctuations in our results of operations
related to both the start-up costs associated with expansion and the
implementation of clients CRM activities. In addition, our business generally
tends to be slower in the third quarter due to summer holidays in Europe, and
in the first quarter due to the changeover of client marketing strategies that
often occurs at the beginning of the year.  Effects of Inflation Inflation has not had a significant effect on our
operations. However, there can be no assurance that inflation will not have a
material effect on our operations in the future.  Accounting
Pronouncements In June 2000, the Financial Accounting Standards
Board issued Statement of Financial Accounting Standards (SFAS) No. 138, Accounting
for Certain Derivative Investments and Certain Hedging Activities.
The standard amends certain provisions of SFAS No. 133, Accounting for Derivative Investments
and Hedging Activities, which was issued in June 1998 to establish
accounting standards for derivative instruments and for hedging activities. We
adopted these accounting pronouncements effective January 1, 2001. The adoption
of these standards, including the valuation of derivative instruments
outstanding on the effective date, and the related cumulative effect of adoption,
did not significantly impact our consolidated financial statements. We had no
derivative financial instruments at December 31, 2001.  In June 2001, the Financial Accounting Standards
Board issued SFAS No. 141, Business Combinations, which requires all
business combinations initiated after June 30, 2001 to be accounted for using
the purchase method.  In June 2001, the Financial Accounting Standards
Board also issued SFAS No. 142, Goodwill and Other Intangible Assets. This
statement:  replaces
the requirement to amortize goodwill and certain other intangible assets with
an annual impairment test, and requires
an evaluation of the useful lives of intangible assets and an impairment test
for goodwill upon adoption.  The provisions of this statement are effective for
fiscal years beginning after December 15, 2001, so we must adopt the provisions
of SFAS No. 142 in our financial statements for the quarter ended March 31,
2002. Beginning January 1, 2002, we stopped amortizing our  19 
   goodwill, which means that we will not record any
goodwill amortization expense in our Consolidated Statements of Income in 2002
and future years. Total goodwill amortization expense in 2001 was $3.6 million.
We have not yet evaluated whether or not we will have any impairment charges in
our consolidated financial statements in 2002 that may result from the
impairment test that is required upon adoption of this statement.  In October 2001, the Financial Accounting
Standards Board also issued SFAS No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. The provisions of this statement are effective
for fiscal years beginning after December 15, 2001, so we must adopt the
provisions of SFAS No. 144 in our financial statements for the quarter ended
March 31, 2002. We do not expect the adoption of this statement to
significantly impact our consolidated financial statements.  Item 7A. Quantitative
and Qualitative Disclosures about Market Risk  We are exposed to market risks associated
primarily with changes in foreign currency exchange rates. We have operations
in many parts of the world; however, both revenues and expenses of those
operations are typically denominated in the currency of the country of
operations, providing a natural hedge. From time to time, we enter into certain
hedging transactions designed to hedge foreign currency exchange risk related
to short-term intercompany loans and specific foreign currency transactions,
however the amounts involved have not been material.  We are also exposed to changes in interest rates
on our variable rate borrowings. Interest rates on our Senior Subordinated
Notes and capital lease obligations are fixed, but rates on borrowings under
our bank credit facility are variable. During the year ended December 31, 2001,
our average borrowings under our bank credit facility were $10.7 million. Based
on our projected cash needs for the foreseeable future, we do not expect that
our exposure to changes in interest rates will have a material impact on our
interest expense.  Item 8.Financial
Statements and Supplementary Data  The information called for by this item is
incorporated by reference from our Consolidated Financial Statements and the
related Notes to Consolidated Financial Statements beginning on page F-3.  Item 9. Changes
in and Disagreements with Accountants  None.  PART III  Item 10. Directors
and Executive Officers of the Registrant  The information required by this item with respect
to directors is set forth in the Proxy Statement under the captions Item 1:
Board of Directors and Election and Section 16(a) Beneficial Ownership
Reporting Compliance, and is incorporated herein by reference.  The information required by this item with respect
to executive officers of SITEL Corporation, pursuant to instruction 3 of
paragraph (b) of Item 401 of Regulation S-K, is set forth following Item 4 of
Part I of this Form 10-K under the caption Executive Officers of the
Registrant and in the Proxy Statement under the caption Section 16(a)
Beneficial Ownership Reporting Compliance, and is incorporated herein by
reference.  Item 11. Executive Compensation  The information required by this item is set forth
in the Proxy Statement under the captions Annual Compensation, Employment
Agreements, Benefit Plans, Option Grants and Holdings, Compensation
Committee Report on Executive Compensation, and Performance Graph, and is
incorporated herein by reference.  Item 12. Security
Ownership of Certain Beneficial Owners and Management  The information required by this item regarding
security ownership of certain beneficial owners and management is set forth in
the Proxy Statement under the caption Common Stock Owned by Certain Beneficial
Owners and by Executive Officers and Directors, and is incorporated herein by
reference.  Item 13. Certain
Relationships and Related Transactions  The information required by this item is set forth
in the Proxy Statement under the caption Compensation Committee Interlocks and
Insider Participation; Certain Transactions, and is incorporated herein by
reference.  20 
   PART IV  Item 14. Exhibits,
Financial Statement Schedules and Reports on Form 8-K  (a)     The following documents are filed as a part of this report:  1.  Financial
Statements  beginning on page F-1 of this report.  Report of
Independent Auditors Consolidated
Statements of Income (Loss) For The Years Ended December 31, 2001, 2000, and
1999 Consolidated
Balance Sheets at December 31, 2001 and 2000 Consolidated
Statements of Stockholders Equity For The Years Ended December 31, 2001, 2000,
and 1999 Consolidated
Statements of Cash Flows For The Years Ended December 31, 2001, 2000, and 1999 Notes to
Consolidated Financial Statements  2.  Financial
Statement Schedule
beginning on page S-1 of this report.  Report of
Independent Auditors on the Financial Statement Schedule Schedule II 
Valuation and Qualifying Accounts  Schedules other than Schedule II
are omitted as not applicable or not required.  3.Exhibits required by Item 601 of Regulation S-K:  Exhibit No.3.1
  
  Amended and Restated Articles
  of Incorporation (see Exhibit 3.1 to Registration Statement on Form S-1 No.
  33-91092).3.1(a)
  
  Articles of Amendment filed
  September 10, 1996 to the Amended and Restated Articles of Incorporation (see
  Exhibit 4.1(a) to the Companys Registration Statement on Form S-3 No.
  333-13403).3.4
  
  Amended and Restated Bylaws
  (see Exhibit 3.4 to Registration Statement on Form S-1 No. 33-91092).3.4(a)
  
  Amended and Restated Bylaws 
  conformed copy including Amendment No. 1 (see Exhibit 4.2 to the Companys
  Registration Statement on Form S-3 No. 333-28131).3.4(b)
  
  Amendment No. 2 to Amended and
  Restated Bylaws (see Exhibit 3.2 to the Companys Form 10-Q for the quarter
  ended September 30, 1998).3.4(c)
  
  Amendment No. 3 to Amended and
  Restated Bylaws (see Exhibit 3.1 to the Companys Form 10Q for the quarter
  ended June 30, 2001).3.4(d)
  
  Amended and Restated Bylaws 
  conformed copy including all amendments through March 2, 2001 (see Exhibit
  3.2 to the Companys Form 10-Q for the quarter ended June 30, 2001).3.5
  
  Certificate of Designation of
  Series A Participating Preferred Stock (see Exhibit A to the Rights Agreement
  included as Exhibit 1 to the Companys Registration Statement on Form 8-A
  filed August 24, 1998).4.2
  
  Specimen Common Stock
  Certificate (see Exhibit 4.2 to the Companys Annual Report on Form 10-K for
  the year ended December 31, 1996).4.3
  
  Rights Agreement (see Exhibit 1
  to the Companys Registration Statement on Form 8-A filed August 24, 1998).9.1
  
  Form of General Voting
  Agreement (see Exhibit 9.1 to Registration Statement on Form S-1 No.
  33-91092).10.1
  
  SITEL Corporation Stock Option Plan
  for Replacement of Existing Options (see Exhibit 10.1 to Registration
  Statement on Form S-1 No. 33-91092).10.1(a)
  
  Amendment No. 1 to SITEL
  Corporation Stock Option Plan for Replacement of Existing Options (see
  Exhibit 10.1(a) to the Companys Annual Report on Form 10-K for the year
  ended December 31, 1996).10.2
  
  SITEL Corporation Stock Option
  Plan for Replacement of EEBs (see Exhibit 10.2 to Registration Statement on
  Form S-1 No. 33-91092).
  21 
   Exhibit No.10.2(a)
  
  Amendment No. 1 to SITEL
  Corporation Stock Option Plan for 
  Replacement of EEBs (see Exhibit 10.2(a) to the Companys Annual
  Report on Form 10-K for the year ended December 31, 1996).10.3
  
  Amended and Restated SITEL Corporation
  1995 Employee Stock Option Plan (Appendix B to the Companys definitive Proxy
  Statement for Annual Meeting of Stockholders, filed September 27, 1996).10.3(a)
  
  Amendment No. 1 to Amended and
  Restated SITEL Corporation 1995 Employee Stock Option Plan (see Exhibit
  10.3(a) to the Companys Annual Report on Form 10-K for the year ended
  December 31, 1996).10.3(b)
  
  Amendment No. 2 to Amended and Restated SITEL
  Corporation 1995 Employee Stock Option Plan (see Appendix C to the Companys
  definitive Proxy Statement for the Annual Meeting of Stockholders, filed
  April 30, 1997).10.3(c)
  
  Amendment No. 3 to Amended and
  Restated SITEL Corporation 1995 Employee Stock Option Plan (see Exhibit
  10.3(c) to the Companys Form 10-Q for the quarter ended March 31, 1998).10.4
  
  Amended and Restated SITEL
  Corporation 1995 Non-Employee Directors Stock Option Plan (see Appendix B to
  the Companys definitive Proxy Statement for the Annual Meeting of
  Stockholders, filed April 30, 1997).10.4(a)
  
  Amendment No. 1 to Amended and
  Restated SITEL Corporation 1995 Non-Employee Directors Stock Option Plan (see
  Exhibit 10.1 to the Companys Form 10-Q for the quarter ended March 31,
  1999).10.5
  
  SITEL Corporation Executive
  Wealth Accumulation Plan (see Exhibit 10.5 to Registration Statement on Form
  S-1 No. 33-91092).10.5(a)
  
  Second Amendment to SITEL
  Corporation Executive Wealth Accumulation Plan (see Exhibit 10.5(a) to the
  Companys Form 10-Q for the quarter ended March 31, 1998).10.5(b)
  
  Third Amendment to SITEL
  Corporation Executive Wealth Accumulation Plan (see Exhibit 10.2 to the
  Companys Form 10-Q for the quarter ended June 30, 1999).10.6
  
  SITEL Corporation 1999 Stock
  Incentive Plan (see Exhibit 4.1 to the Companys Registration Statement on
  Form S-8 No. 333-78241).10.6(a)
  
  Amendment No. 1 to SITEL
  Corporation 1999 Stock Incentive Plan (see Exhibit 4.2 to the Companys
  Registration Statement on Form S-8 No. 333-78241).10.6(b)
  
  Amendment No. 2 to SITEL
  Corporation 1999 Stock Incentive Plan (see Exhibit 10.2 to the Companys Form
  10-Q for the quarter ended September 30, 2000).10.7
  
  Form of Right of First Refusal
  (see Exhibit 10.7 to Registration Statement on Form S-1 No. 33-91092).10.8
  
  Form of Indemnification Agreement
  with Outside Directors (see Exhibit 10.8 to the Companys Form 10-Q for the
  quarter ended August 31, 1995).10.9
  
  Form of Indemnification
  Agreement with Executive Officers (see Exhibit 10.9 to the Companys
  Registration Statement on Form S-8 No. 33-99434).10.10
  
  Amended and Restated SITEL
  Corporation Employee Stock Purchase Plan (see Exhibit 10.12 to the Companys
  Form 10-Q for the quarter ended March 31, 1998).10.11
  
  Credit Agreement with Bankers
  Trust Company as Agent (see Exhibit 10.1 to the Companys Form 10-Q for the
  quarter ended June 30, 2000).10.11(a)
  
  First Amendment to Credit
  Agreement with Bankers Trust Company as Agent (see Exhibit 10.1 to the
  Companys Form 10-Q for the quarter ended June 30, 2001).10.12
  
  Indenture governing
  $100,000,000 9 1/4% Senior Subordinated Notes due 2006 (see Exhibit 10.2 to
  the Companys Form 8-K filed March 16, 1998).10.12(a)
  
  First Supplemental Indenture
  (see Exhibit 4.2 to the Companys Amendment No. 1 to Form S-4 filed August 21,
  1998).10.12(b)
  
  Registration Rights Agreement
  (see Exhibit 4.2 to the Companys Registration Statement on Form S-4 filed
  April 24, 1998).10.13
  
  Separation Agreement and
  General Release with Phillip A. Clough (see Exhibit 10.2 to the Companys
  Form 10-Q for the quarter ended March 31, 2001).10.14
  
  Separation Agreement and
  General Release with W. Gar Richlin (see Exhibit 10.3 to the Companys Form
  10-Q for the quarter ended March 31, 2001).
  22 
   Exhibit No.10.15
  
  Employment Agreement with
  Antoon Vanparys (see Exhibit 10.14 to the Companys Form 10-K for the year
  ended December 31, 1999).10.15(a)*
  
  Separation Agreement and
  General Release with Antoon Vanparys.10.16*
  
  Amended and Restated Employment
  Agreement with Dale W. Saville.10.17*
  
  Employment letter agreement
  with Sheena E. Wilson.10.18*
  
  Amended and Restated Employment
  Agreement with Dale R. Schuster.10.19
  
  Consulting Agreement with
  DreamField Partners, Inc. (see Exhibit 10.1 to the Companys Form 10-Q for
  the quarter ended September 30, 2000).10.19(a)
  
  Consulting Arrangement with
  DreamField Partners, Inc. (see Exhibit 10.4 to the Companys Form 10-Q for
  the quarter ended March 31, 2001).10.20*
  
  2001 Nonemployee Director
  Compensation Plan.21*
  
  Subsidiaries.23*
  
  Consent of Independent
  Auditors.
  
 *      Filed
herewith.  (b)     Reports on Form 8-K: None  23 
   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.  SITEL Corporation(Registrant)Date:
  March 28, 2002
  By
  /s/
  James F. LynchJames F. LynchChief
  Executive 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
  
  DateBy
  /s/
  James F. Lynch
  
  Chairman of the Board,
  
  March 28, 2002James F. Lynch
  
  Chief Executive Officer and
  DirectorBy
  /s/
  James E. Stevenson, Jr.
  
  Executive Vice President and
  Chief
  Financial Officer
  
  March 28, 2002James E.
  Stevenson, Jr.
  
  (Principal Financial Officer)By
  /s/
  Elizabeth K. Sidell
  
  Vice President and Controller
  
  March 28, 2002Elizabeth K.
  Sidell
  
  (Principal Accounting Officer)By
  /s/
  Kelvin C. Berens
  
  Director
  
  March 28, 2002Kelvin C.
  BerensBy
  /s/
  Rohit M. Desai
  
  Director
  
  March 28, 2002Rohit M. DesaiBy
  /s/
  Mathias J. DeVito
  
  Director
  
  March 28, 2002Mathias J.
  DeVitoBy
  /s/
  Bill L. Fairfield
  
  Executive Vice President,
  Business
  Development and Director
  
  March 28, 2002Bill L.
  FairfieldBy
  /s/
  George J. Kubat
  
  Director
  
  March 28, 2002George J.
  Kubat  24 
   EXHIBIT INDEX  Exhibit No.3.1
  
  Amended and Restated Articles
  of Incorporation (see Exhibit 3.1 to Registration Statement on Form S-1 No.
  33-91092).3.1(a)
  
  Articles of Amendment filed
  September 10, 1996 to the Amended and Restated Articles of Incorporation (see
  Exhibit 4.1(a) to the Companys Registration Statement on Form S-3 No.
  333-13403).3.4
  
  Amended and Restated Bylaws
  (see Exhibit 3.4 to Registration Statement on Form S-1 No. 33-91092).3.4(a)
  
  Amended and Restated Bylaws 
  conformed copy including Amendment No. 1 (see Exhibit 4.2 to the Companys
  Registration Statement on Form S-3 No. 333-28131).3.4(b)
  
  Amendment No. 2 to Amended and
  Restated Bylaws (see Exhibit 3.2 to the Companys Form 10-Q for the quarter
  ended September 30, 1998).3.4(c)
  
  Amendment No. 3 to Amended and
  Restated Bylaws (see Exhibit 3.1 to the Companys Form 10Q for the quarter
  ended June 30, 2001).3.4(d)
  
  Amended and Restated Bylaws 
  conformed copy including all amendments through March 2, 2001 (see Exhibit
  3.2 to the Companys Form 10-Q for the quarter ended June 30, 2001).3.5
  
  Certificate of Designation of
  Series A Participating Preferred Stock (see Exhibit A to the Rights Agreement
  included as Exhibit 1 to the Companys Registration Statement on Form 8-A
  filed August 24, 1998).4.2
  
  Specimen Common Stock
  Certificate (see Exhibit 4.2 to the Companys Annual Report on Form 10-K for
  the year ended December 31, 1996).4.3
  
  Rights Agreement (see Exhibit 1
  to the Companys Registration Statement on Form 8-A filed August 24, 1998).9.1
  
  Form of General Voting
  Agreement (see Exhibit 9.1 to Registration Statement on Form S-1 No.
  33-91092).10.1
  
  SITEL Corporation Stock Option
  Plan for Replacement of Existing Options (see Exhibit 10.1 to Registration
  Statement on Form S-1 No. 33-91092).10.1(a)
  
  Amendment No. 1 to SITEL
  Corporation Stock Option Plan for Replacement of Existing Options (see
  Exhibit 10.1(a) to the Companys Annual Report on Form 10-K for the year
  ended December 31, 1996).10.2
  
  SITEL Corporation Stock Option
  Plan for Replacement of EEBs (see Exhibit 10.2 to Registration Statement on
  Form S-1 No. 33-91092).10.2(a)
  
  Amendment No. 1 to SITEL
  Corporation Stock Option Plan for 
  Replacement of EEBs (see Exhibit 10.2(a) to the Companys Annual
  Report on Form 10-K for the year ended December 31, 1996).10.3
  
  Amended and Restated SITEL
  Corporation 1995 Employee Stock Option Plan (Appendix B to the Companys
  definitive Proxy Statement for Annual Meeting of Stockholders, filed
  September 27, 1996).10.3(a)
  
  Amendment No. 1 to Amended and
  Restated SITEL Corporation 1995 Employee Stock Option Plan (see Exhibit
  10.3(a) to the Companys Annual Report on Form 10-K for the year ended
  December 31, 1996).10.3(b)
  
  Amendment No. 2 to Amended and
  Restated SITEL Corporation 1995 Employee Stock Option Plan (see Appendix C to
  the Companys definitive Proxy Statement for the Annual Meeting of
  Stockholders, filed April 30, 1997).10.3(c)
  
  Amendment No. 3 to Amended and
  Restated SITEL Corporation 1995 Employee Stock Option Plan (see Exhibit
  10.3(c) to the Companys Form 10-Q for the quarter ended March 31, 1998).10.4
  
  Amended and Restated SITEL
  Corporation 1995 Non-Employee Directors Stock Option Plan (Appendix B to the
  Companys definitive Proxy Statement for the Annual Meeting of Stockholders,
  filed April 30, 1997).10.4(a)
  
  Amendment No. 1 to Amended and
  Restated SITEL Corporation 1995 Non-Employee Directors Stock Option Plan (see
  Exhibit 10.1 to the Companys Form 10-Q for the quarter ended March 31,
  1999).10.5
  
  SITEL Corporation Executive
  Wealth Accumulation Plan. (see Exhibit 10.5 to Registration Statement on Form
  S-1 No. 33-91092).10.5(a)
  
  Second Amendment to SITEL
  Corporation Executive Wealth Accumulation Plan (see Exhibit 10.5(a) to the
  Companys Form 10-Q for the quarter ended March 31, 1998).10.5(b)
  
  Third Amendment to SITEL
  Corporation Executive Wealth Accumulation Plan (see Exhibit 10.2 to the
  Companys Form 10-Q for the quarter ended June 30, 1999).  25 
   Exhibit No.10.6
  
  SITEL Corporation 1999 Stock
  Incentive Plan (see Exhibit 4.1 to the Companys Registration Statement on
  Form S-8 No. 333-78241).10.6(a)
  
  Amendment No. 1 to SITEL
  Corporation 1999 Stock Incentive Plan (see Exhibit 4.2 to the Companys
  Registration Statement on Form S-8 No. 333-78241).10.6(b)
  
  Amendment No. 2 to SITEL
  Corporation 1999 Stock Incentive Plan (see Exhibit 10.2 to the Companys Form
  10-Q for the quarter ended September 30, 2000).10.7
  
  Form of Right of First Refusal.
  (see Exhibit 10.7 to Registration Statement on Form S-1 No. 33-91092).10.8
  
  Form of Indemnification
  Agreement with Outside Directors (see Exhibit 10.8 to the Companys Form 10-Q
  for the quarter ended August 31, 1995).10.9
  
  Form of Indemnification
  Agreement with Executive Officers (see Exhibit 10.9 to the Companys
  Registration Statement on Form S-8 No. 33-99434).10.10
  
  Amended and Restated SITEL
  Corporation Employee Stock Purchase Plan (see Exhibit 10.12 to the Companys
  Form 10-Q for the quarter ended March 31, 1998).10.11
  
  Credit Agreement with Bankers
  Trust Company as Agent (see Exhibit 10.1 to the Companys Form 10-Q for the
  quarter ended June 30, 2000).10.11(a)
  
  First Amendment to Credit
  Agreement with Bankers Trust Company as Agent (see Exhibit 10.1 to the
  Companys Form 10-Q for the quarter ended June 30, 2001).10.12
  
  Indenture governing
  $100,000,000 9 1/4% Senior Subordinated Notes due 2006 (see Exhibit 10.2 to
  the Companys Form 8-K filed March 16, 1998).10.12(a)
  
  First Supplemental Indenture
  (see Exhibit 4.2 to the Companys Amendment No. 1 to Form S-4 filed August
  21, 1998).10.12(b)
  
  Registration Rights Agreement
  (see Exhibit 4.2 to the Companys Registration Statement on Form S-4 filed
  April 24, 1998).10.13
  
  Separation Agreement and
  General Release with Phillip A. Clough (see Exhibit 10.2 to the Companys
  Form 10-Q for the quarter ended March 31, 2001).10.14
  
  Separation Agreement and
  General Release with W. Gar Richlin (see Exhibit 10.3 to the Companys Form
  10-Q for the quarter ended March 31, 2001).10.15
  
  Employment Agreement with
  Antoon Vanparys (see Exhibit 10.14 to the Companys Form 10-K for the year
  endedDecember 31, 1999).10.15(a)*
  
  Separation Agreement and
  General Release with Antoon Vanparys10.16*
  
  Amended and Restated Employment
  Agreement with Dale W. Saville.10.17*
  
  Employment letter agreement
  with Sheena E. Wilson.10.18*
  
  Amended and Restated Employment
  Agreement with Dale R. Schuster.10.19
  
  Consulting Agreement with
  DreamField Partners, Inc. (see Exhibit 10.1 to the Companys Form 10-Q for
  the quarter ended September 30, 2000).10.19(a)
  
  Consulting Arrangement with
  DreamField Partners, Inc. (see Exhibit 10.4 to the Companys Form 10-Q for
  the quarter ended March 31, 2001).10.20*
  
  2001 Nonemployee Director
  Compensation Plan.21*
  
  Subsidiaries.23*
  
  Consent of Independent
  Auditors.  
 *      Filed
herewith.  26 
   SITEL CORPORATION AND SUBSIDIARIES  TABLE OF CONTENTS Financial Statements and Financial
Statement Schedule  Consolidated Financial Statements  Report of Independent
  Auditors
  F-2Consolidated
  Statements of Income (Loss) For The Years Ended December 31, 2001, 2000, and
  1999
  F-3Consolidated Balance Sheets
  at December 31, 2001 and 2000
  F-4Consolidated
  Statements of Stockholders Equity For The Years Ended December 31, 2001,
  2000, and 1999
  F-5Consolidated
  Statements of Cash Flows For The Years Ended December 31, 2001, 2000, and
  1999
  F-6Notes to
  Consolidated Financial Statements
  F-7  Financial Statement Schedule  Report
  of Independent Auditors on the Financial Statement Schedule
  S-1Schedule II  Valuation and Qualifying
  Accounts
  S-2  F-1 
   Report
of Independent Auditors    To the Stockholders and Board of
Directors
of SITEL Corporation  We have audited the accompanying consolidated
balance sheets of SITEL Corporation and subsidiaries as of December 31, 2001
and 2000, and the related consolidated statements of income (loss), stockholders
equity and cash flows for each of the years in the three-year period ended
December 31, 2001. These consolidated financial statements are the
responsibility of the Companys management. Our responsibility is to express an
opinion on these consolidated financial statements based on our audits.  We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.  In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of SITEL
Corporation and subsidiaries as of December 31, 2001 and 2000, and the results
of their operations and their cash flows for each of the years in the
three-year period ended December 31, 2001, in conformity with accounting
principles generally accepted in the United States of America.  /s/ KPMG LLPKPMG
  LLPBaltimore, MarylandFebruary 1, 2002  F-2 
   SITEL CORPORATION AND SUBSIDIARIES CONSOLIDATEDSTATEMENTSOF INCOME
(LOSS)  Years Ended December 31,2001
  
  2000
  
  1999(in
  thousands, except per share data)Revenues
  
  $
  725,048
  
  $
  764,447
  
  $
  737,522Operating
  expenses:Direct labor and
  telecommunications expenses
  
  411,066
  
  398,809
  
  373,518Subcontracted
  and other services expenses
  
  36,949
  
  51,452
  
  59,024Operating,
  selling, and administrative expenses
  
  260,550
  
  271,890
  
  277,084Asset impairment
  and restructuring expenses
  
  26,185
  
  3,520
  
  9,596Total operating
  expenses
  
  734,750
  
  725,671
  
  719,222Operating
  income (loss)
  
  (9,702
  )
  38,776
  
  18,300Other
  income (expense):Interest income
  
  924
  
  781
  
  523Interest expense
  
  (12,566
  )
  (12,848
  )
  (13,308
  )Other income
  (expense), net
  
  (2,606
  )
  (311
  )
  316Total other
  expense, net
  
  (14,248
  )
  (12,378
  )
  (12,469
  )Income
  (loss) before income taxes and minority interest
  
  (23,950
  )
  26,398
  
  5,831Income tax
  expense (benefit)
  
  (2,317
  )
  12,570
  
  6,336Minority
  interest
  
  947
  
  1,087
  
  304Net
  income (loss)
  
  $
  (22,580
  )
  $
  12,741
  
  $
  (809
  )Weighted
  average common shares outstanding:Basic
  
  73,424
  
  71,052
  
  66,550Diluted
  
  73,424
  
  75,201
  
  66,550Income
  (loss) per common share:Basic
  
  $
  (0.31
  )
  $
  0.18
  
  $
  (0.01
  )Diluted
  
  $
  (0.31
  )
  $
  0.17
  
  $
  (0.01
  )  See
Notes to Consolidated Financial Statements.  F-3 
  SITEL CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS  At December 31,2001
  
  2000(in
  thousands, except share data)AssetsCurrent
  assets:Cash and cash
  equivalents
  
  $
  22,156
  
  $
  19,897Trade accounts
  receivable (net of allowance for doubtful accounts of $5,208 and $6,456,
  respectively)
  
  129,180
  
  146,662Prepaid expenses
  
  6,200
  
  8,376Deferred income
  taxes
  
  6,358
  
  3,769Other assets
  
  7,133
  
  7,968Total current
  assets
  
  171,027
  
  186,672Property
  and equipment, net
  
  91,293
  
  99,793Other
  assets:Goodwill, net
  
  73,216
  
  78,443Deferred income
  taxes
  
  9,398
  
  7,338Other assets
  
  10,532
  
  7,976Total
  assets
  
  $
  355,466
  
  $
  380,222Liabilities
  and Stockholders EquityCurrent
  liabilities:Notes payable
  
  $
  
  
  $
  302Current portion
  of long-term debt
  
  
  
  1,120Current portion
  of capital lease obligations
  
  2,366
  
  3,964Trade accounts
  payable
  
  25,068
  
  27,906Income taxes
  payable
  
  4,087
  
  4,099Deferred income
  taxes
  
  717
  
  307Accrued wages,
  salaries and bonuses
  
  26,014
  
  26,728Accrued
  operating expenses
  
  34,953
  
  23,446Deferred revenue
  and other
  
  5,145
  
  5,217Total current
  liabilities
  
  98,350
  
  93,089Long-term
  debt and other liabilities:Long-term debt,
  excluding current portion
  
  100,000
  
  100,000Capital lease
  obligations, excluding current portion
  
  7,040
  
  8,341Deferred
  compensation
  
  1,755
  
  2,448Deferred income
  taxes
  
  533
  
  461Total
  liabilities
  
  207,678
  
  204,339Minority
  interests
  
  7,748
  
  6,301Commitments
  and contingencies (see Note 9)Stockholders
  equity:Common stock,
  voting, $.001 par value 200,000,000 shares authorized, 74,357,579 and
  72,075,229 shares issued and outstanding, respectively
  
  74
  
  72Paid-in capital
  
  168,731
  
  168,640Accumulated
  other comprehensive loss
  
  (26,148
  )
  (19,388
  )Retained
  earnings (accumulated deficit)
  
  (2,369
  )
  20,258Less treasury stock, at cost, 145,396 common shares
  
  (248
  )
  Total stockholders
  equity
  
  140,040
  
  169,582Total
  liabilities and stockholders equity
  
  $
  355,466
  
  $
  380,222  See
Notes to Consolidated Financial Statements.  F-4 
  SITEL CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF STOCKHOLDERS EQUITY  Years Ended
  December 31, 2001, 2000, and 1999CommonStock
  
  Additional
  Paid-in Capital
  
  Accumulated
  Other ComprehensiveIncome (Loss)
  
  Retained
  Earnings (Accumulated Deficit)
  
  Treasury Stock
  
  Total
  Stockholders'Equity(in thousands, except share data)Balance,
  December 31, 1998
  
  $
  64
  
  $
  157,892
  
  $
  (4,428
  )
  $
  8,326
  
  $
  
  
  $
  161,854Issuance of
  1,616,087 shares of common stock for options exercised
  
  2
  
  769
  
  
  
  
  
  
  
  771Tax benefit of
  stock options exercised
  
  
  
  541
  
  
  
  
  
  
  
  541Issuance of
  2,205,333 shares of common stockfor acquisition of minority interest
  
  2
  
  6,614
  
  
  
  
  
  
  
  6,616Other
  
  
  
  54
  
  
  
  
  
  
  
  54Comprehensive
  loss:Net loss
  
  
  
  
  
  
  
  (809
  )
  
  
  (809
  )Currency
  translation adjustment
  
  
  
  
  
  (8,329
  )
  
  
  
  
  (8,329
  )Total
  comprehensive loss
  
  
  
  
  
  
  
  
  
  
  
  (9,138
  )Balance,
  December 31, 1999
  
  68
  
  165,870
  
  (12,757
  )
  7,517
  
  
  
  160,698Issuance of
  3,904,401 shares of common stock for options exercised
  
  4
  
  2,742
  
  
  
  
  
  
  
  2,746Other
  
  
  
  28
  
  
  
  
  
  
  
  28Comprehensive
  income:Net income
  
  
  
  
  
  
  
  12,741
  
  
  
  12,741Currency
  translation adjustment
  
  
  
  
  
  (6,631
  )
  
  
  
  
  (6,631
  )Total
  comprehensive income
  
  
  
  
  
  
  
  
  
  
  
  6,110Balance,
  December 31, 2000
  
  72
  
  168,640
  
  (19,388
  )
  20,258
  
  
  
  169,582Purchase of 171,800 shares of treasury stock
  
  
  
  
  
  
  
  
  
  (338
  )
  (338
  )Issuance of 2,282,350 shares of common stock for options exercised and
  26,404 shares of treasury stock
  
  2
  
  119
  
  
  
  (47
  )
  90
  
  164Other
  
  
  
  (28
  )
  
  
  
  
  
  
  (28
  )Comprehensive income:Net loss
  
  
  
  
  
  
  
  (22,580
  )
  
  
  (22,580
  )Currency translation adjustment
  
  
  
  
  
  (6,760
  )
  
  
  
  
  (6,760
  )Total comprehensive loss
  
  
  
  
  
  
  
  
  
  
  
  (29,340
  )Balance,
  December 31, 2001
  
  $
  74
  
  $
  168,731
  
  $
  (26,148
  )
  $
  (2,369
  )
  $
  (248
  )
  $
  140,040  See Notes to Consolidated Financial
Statements.  F-5 
  SITEL CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF CASH FLOWS  Years Ended December 31,2001
  
  2000
  
  1999(in
  thousands)Cash
  flows from operating activities:Net income
  (loss)
  
  $
  (22,580
  )
  $
  12,741
  
  $
  (809
  )Adjustments to
  reconcile net income (loss) to net cash provided by operating activities:Asset impairment
  and restructuring provision
  
  26,185
  
  3,520
  
  9,596Depreciation and
  amortization
  
  39,346
  
  44,132
  
  45,996Loss on disposal of assets
  
  1,254
  
  221
  
  Write off of
  credit acquisition fees
  
  837
  
  
  
  Provision for
  deferred income taxes
  
  (4,164
  )
  7,260
  
  (516
  )Deferred
  compensation
  
  (754
  )
  543
  
  314Changes in
  operating assets and liabilities:Trade accounts
  receivable
  
  15,321
  
  11,144
  
  (38,915
  )Other assets
  
  5,642
  
  407
  
  (4,423
  )Trade accounts
  payable
  
  (2,281
  )
  (8,388
  )
  7,623Other
  liabilities
  
  (10,197
  )
  (6,385
  )
  20,449Net cash
  provided by operating activities
  
  48,609
  
  65,195
  
  39,315Cash
  flows from investing activities:Purchases of
  property and equipment
  
  (40,444
  )
  (33,129
  )
  (38,585
  )Proceeds from
  sale-leasebacks of facilities and equipment
  
  
  
  
  
  3,467Proceeds from sales of property and equipment
  
  55
  
  7,229
  
  639Increase in
  other assets
  
  (3,384
  )
  
  
  Net cash used in
  investing activities
  
  (43,773
  )
  (25,900
  )
  (34,479
  )Cash
  flows from financing activities:Borrowings on
  notes payable
  
  
  
  
  
  3,706Repayments of
  notes payable
  
  (302
  )
  (6,876
  )
  (26,174
  )Borrowings on
  debt
  
  73,372
  
  35,000
  
  57,789Repayments of
  debt
  
  (73,501
  )
  (71,939
  )
  (29,823
  )Payments on
  capital lease obligations
  
  (3,788
  )
  (3,522
  )
  (5,056
  )Common stock issued,
  net of expenses
  
  121
  
  2,746
  
  771Purchases of treasury stock, net of reissuances
  
  (248
  )
  
  
  Capital
  contribution from minority interest
  
  537
  
  
  
  Other
  
  (64
  )
  (46
  )
  (63
  )Net cash provided by (used in) financing activities
  
  (3,873
  )
  (44,637
  )
  1,150Effect of
  exchange rates on cash
  
  1,296
  
  2,934
  
  1,847Net
  increase (decrease) in cash
  
  2,259
  
  (2,408
  )
  7,833Cash
  and cash equivalents, beginning of year
  
  19,897
  
  22,305
  
  14,472Cash
  and cash equivalents, end of year
  
  $
  22,156
  
  $
  19,897
  
  $
  22,305Other
  cash flow information:Interest paid
  
  $
  12,518
  
  $
  12,836
  
  $
  12,170Income taxes
  paid
  
  $
  4,012
  
  $
  5,757
  
  $
  2,654Non-cash
  investing and financing activities:Tax benefit of
  stock options exercised
  
  $
  
  
  $
  
  
  $
  541Capital leases
  incurred
  
  $
  689
  
  $
  787
  
  $
  9,015Value of stock
  issued in connection with acquisition of businesses and minority interest
  
  $
  
  
  $
  
  
  $
  6,616  See
Notes toConsolidatedFinancial Statements.  F-6 
  SITEL CORPORATION AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  Note 1. Significant Accounting Policies and Practices  Description
of Our Business References in the Notes to Consolidated Financial
Statements to we and our are to SITEL Corporation and its subsidiaries,
collectively.  We are a leading global provider of outsourced
customer support services. We specialize in the design, implementation, and
operation of complex, multi-channel contact centers. We support the Customer
Relationship Management (CRM) strategies of large corporations in North
America, Europe, Asia Pacific, and Latin America. We provide customer
acquisition, customer care, technical support and risk management services on
an outsourced basis, as well as operational and information technology
professional services for both outsourced and internal contact centers. We
serve clients primarily in the consumer products, financial services,
insurance, telecommunications, technology, and utilities industries.  Principles of
Consolidation Our
consolidated financial statements include the financial statements of SITEL
Corporation and its subsidiaries. We use three different accounting methods to
report our investments in our subsidiaries or other companies: consolidation,
the equity method, and the cost method.  Consolidation We
use the consolidation method when we can exercise control over the operations
and policies of a company. When we consolidate, we combine the accounts of our subsidiaries
with our accounts, and we eliminate intercompany balances and transactions. We
consolidate all of our subsidiaries, except those that are reported using the
equity and cost methods described below.  The
Equity Method We
use the equity method to report investments where we can exercise significant
influence, but cannot exercise control, over the investees operations and
policies, which is generally in situations where we hold a 20% to 50% voting
interest. Under the equity method, we report:  our interest in the entity as an investment in our
Consolidated Balance Sheets, and our percentage share of the earnings from the
entity in our Consolidated Statements of Income.  We
report our investment in a joint venture in India using this method.  The Cost Method We
use the cost method if we hold less than a 20% voting interest in an investment
and cannot exercise significant influence over the investees operations and
policies. Under the cost method, we report our investment at cost in our
Consolidated Balance Sheets. We report our investment in Context Connect, Inc.,
a leading provider of fixed line and wireless directory and connectivity
services, using this method.  Translation of Foreign
Currencies Our
non-U.S. subsidiaries use as their functional currency the local currency of
the countries in which they operate. They translate their assets and
liabilities into U.S. dollars at the exchange rates in effect at the balance
sheet date. They translate their revenues and expenses at the average exchange
rates during the period.  We
include translation gains and losses as a component of stockholders equity,
and transaction gains and losses related to short-term intercompany accounts in
the determination of net income (loss).  Revenue Recognition We recognize revenues as
we perform services for our clients. In some cases, we are able to invoice and
receive payment for our services prior to performing those services. We record
such payments as deferred revenue in our Consolidated Balance Sheets and recognize
the revenues when the services are performed. We recognize revenues that are
based on defined performance criteria when the criteria are met. We have not
recorded any revenue that is at risk due to future performance contingencies.  Cash Equivalents For
purposes of reporting our cash flows, we define cash equivalents as highly
liquid investments that mature in three months or less.  Trade Accounts
Receivable Trade
accounts receivable included unbilled revenues that we expect to bill,
generally within thirty days, and collect in the normal course of business, as
follows:  $18.7 million
at December 31, 2001, and $33.4 million
at December 31, 2000.  We
report our trade accounts receivable net of an allowance for doubtful accounts,
which represents managements estimates of the amount of our receivables that
may not be collectible, net of recoveries of amounts previously written off.
These estimates are based on a  F-7 
   detailed
aging analysis of accounts receivable, historical bad debts, client
credit-worthiness, and changes in our client payment terms.  Property and
Equipment, net We
record property and equipment at cost, and we calculate depreciation using the
straight-line method over the estimated useful lives of the assets, which range
from 3 to 20 years.  We
record equipment under capital leases at the present value of the minimum lease
payments. We amortize leasehold improvements and assets under capital leases on
a straight-line basis over the shorter of the lease term or the estimated
useful life of the asset.  Deferred Income Taxes We
must report some of our revenues and expenses differently for our financial
statements than we do for income tax purposes. The future tax effects of the
differences in these items, as well as operating loss and tax credit
carryforwards, are reported as deferred tax assets or liabilities in our
Consolidated Balance Sheets.  We
measure deferred tax assets and liabilities using income tax rates that we
expect to apply to taxable income in the years when we expect those differences
to be recovered or settled. We recognize the effect of a change in tax rates on
deferred tax assets and liabilities in income in the period that the rate
change is effective.  We
establish valuation allowances when necessary to reduce deferred tax assets to
the amount that is more likely than not to be realized. We do not accrue for
income taxes for unremitted earnings of international operations that have
been, or are intended to be, reinvested indefinitely.  Goodwill, net Goodwill
represents the difference between the purchase price we paid in acquisitions,
using the purchase method of accounting, and the fair value of the net assets
we acquired. We amortize goodwill on a straight-line basis over 25 years.
Accumulated amortization of goodwill was:  $18.8
million at December 31, 2001, and $15.5
million at December 31, 2000.  Asset Impairment We
monitor events and changes in circumstances which may require us to review the
carrying value of our long-lived assets. We review the recoverability of our
goodwill at each consolidated balance sheet date. We assess the recoverability
of our long-lived assets and goodwill basedon estimated undiscounted future operating cash flows. We measure
impairment, if any, by comparing the carrying value of the asset to its fair
value. We recognize an impairment loss if the carrying value exceeds the fair
value. Our assessment of the recoverability of our long-lived assets, including
goodwill, will be impacted if estimated future operating cash flows are not
achieved.  In
June 2001, the Financial Accounting Standards Board issued SFAS No. 142, Goodwill and
Other Intangible Assets. This statement:  replaces the requirement to amortize goodwill and certain other intangible
assets with an annual impairment test, and requires an
evaluation of the useful lives of intangible assets and an impairment test for
goodwill upon adoption.  The
provisions of this statement are effective for fiscal years beginning after
December 15, 2001, so we must adopt the provisions of SFAS No. 142 in our
financial statements for the quarter ended March 31, 2002. Beginning January 1,
2002, we stopped amortizing our goodwill, which means that we will not record
any goodwill amortization expense in our Consolidated Statements of Income in
2002 and future years. Total goodwill amortization expense in 2001 was $3.6
million. We have not yet evaluated whether or not we will have any impairment
charges in our consolidated financial statements in 2002 that may result from
the impairment test that is required upon adoption of this statement.  Income (Loss) Per
Common Share We
calculate income (loss) per common share by dividing our reported net income
(loss) by the weighted average number of common shares and common equivalent
shares outstanding during each period. Our reported net income (loss) is used
in the computation of both basic and diluted income (loss) per share.  The
difference between the number of shares used to calculate basic and diluted earnings
per share represents the number of shares assumed to be issued from the  F-8 
   exercise of dilutive stock options under our stock
option plans, less hares assumed to be purchased with proceeds from the exercise
of the stock options and the related tax benefit credited to additional paid-in
capital.  Use of AccountingEstimates Management makesestimatesand assumptions when
preparing financial statements under generally accepted accounting principles
that affect:  our reported amounts ofassetsand liabilities at the dates of the financial
statements, our disclosure ofcontingentassets and
liabilities at the dates of the financial statements, and ourreported amounts of
revenues and expenses during the reporting periods.  These estimates involve judgments with respect to,
among other things, future economic factors that are difficult to predict and
are beyond managements control. As a result, actual amounts could differ from
these estimates.  Stock Compensation We recognize stock-based compensation expense
using the intrinsic value method. Under that method, we do not record any
compensation expense if the exercise price of employee stock options equals or
exceeds the market price of the underlying stock on the date of grant. For
disclosure purposes, we have provided pro forma net income (loss) and income
(loss) per share as if the fair value method had been applied in Note 6.  Financial Instruments We estimate that the fair values of cash and cash equivalents, trade
accounts receivable, notes payable, trade accounts payable, long-term debt
(other than our Senior Subordinated Notes due 2006), and capital lease
obligations approximate their carrying values due to the short maturities or
other characteristics of these financial instruments. The fair values of our
Senior Subordinated Notes, based on market transactions near these dates, were
approximately:  77.0 million at December 31, 2001, and 85.0 million at December 31, 2000.  During 2000 and 1999, we entered into forward
exchange contracts designed to manage our exposure to fluctuations in the value
of currencies of certain foreign countries where we had foreign-currency
denominated short-term intercompany loans. We marked the forward contracts to
market, and recognized gains or losses in our Consolidated Statements of Income
(Loss) as other income (expense). Such amounts were not material.  EffectiveJanuary1, 2001, we adopted Statements of Financial Accounting Standards (SFAS)
No. 133, Accounting for Derivative
Investments and Hedging Activities, and No. 138, Accounting for Certain Derivative Investments and
Certain Hedging Activities, which establish accounting standards for
derivative instruments and for hedging activities. The adoption of these
standards, including the valuation of derivative instruments outstanding on the
effective date, and the related cumulative effect of adoption, did not
significantly impact our consolidated financial statements. We had no
derivative financial instruments at December 31, 2001.  ComprehensiveIncome (Loss) Comprehensiveincome (loss) is
presented in our Consolidated Statements of Stockholders Equity. The
difference between our reported net income (loss) and comprehensive income
(loss) for each period presented is primarily the change in the foreign
currency translation adjustment. Accumulated other comprehensive income (loss)
included in our Consolidated Balance Sheets at December 31, 2001 and 2000
represents the accumulated foreign currency translation adjustment.  Note 2.Propertyand Equipment  Property and equipment consists of the following:  AtDecember312001
  
  2000(in thousands)Computer equipment and
  software
  
  $
  112,242
  
  $
  148,930Furniture, equipment
  and other
  
  69,339
  
  44,106Leasehold improvements
  
  35,230
  
  31,965Buildings
  
  11,075
  
  11,010Other
  
  3,245
  
  800231,131
  
  236,811Accumulated
  depreciation
  
  (139,838
  )
  (137,018
  )Property and equipment,
  net
  
  $
  $91,293
  
  $
  99,793
  Note 3. Notes
Payable and Long-Term Debt  Notes
Payable Notes payable mature within one year from the date
of issuance. We had no notes payable outstanding at December 31, 2001.  F-9 
   Long-Term
Debt Long-term debt consists of the following:  At
  December 31,2001
  
  2000(in
  thousands)9.25% Senior
  Subordinated Notes, due March 2006
  
  $
  100,000
  
  $
  100,000Borrowings under
  long-term revolving credit facilities
  
  
  
  1,120$
  100,000
  
  101,120Current portion
  of long-term debt
  
  
  
  (1,120
  )Total long-term
  debt
  
  $
  100,000
  
  $
  100,000
  9.25%
Senior Subordinated Notes In March 1998, we completed the private placement
of $100 million of 9.25% Senior Subordinated Notes due March 2006 (the Notes).
The proceeds from the offering were used to repay other debt outstanding at
that time.  The Notes, which include interest payable semiannually, are our general
unsecured obligations and are subordinated in right of payment to all our
existing and future senior debt. The Notes are guaranteed by some of our
subsidiaries and contain covenants that limit our ability and the ability of
some of our subsidiaries to, among other things:  incur additional indebtedness, pay dividends or make certain other restricted
payments, consummate certain asset sales, enter into certain transactions with affiliates, incur liens, merge or consolidate with another company, and sell or otherwise dispose of all or substantially
all of our assets.  The Notes are redeemable, at our option, in whole or in part from time
to time on or after March 15, 2002. If we redeem the Notes during the
twelve-month period commencing on March 15 of the year set forth in the
following table, the following redemption prices will be in effect, plus in
each case, accrued and unpaid interest thereon, if any, to the date of
redemption:  Year
  
  Percentage2002
  
  104.63
  %2003
  
  103.08
  %2004
  
  101.54
  %2005 and
  thereafter
  
  100.00
  %
  If we undergo a change of control, as defined, we
may be required to repurchase the Notes at a price equal to 101% of the
principal amount thereof, plus accrued interest to the date of repurchase.  Long-Term
Revolving Credit Facility We have a long-term senior secured credit
facility, under which we may borrow in U.S. dollars, British pounds sterling,
and Euros, which allows us to consolidate our U.S. and European bank lines into
a single multi-borrower, multi-currency facility. The weighted-average interest
rates for this facility were:  4.6% at December 31, 2001, and    7.5% at December 31, 2000.  Our obligations under the facility have been
guaranteed by our domestic subsidiaries and certain foreign subsidiaries and
are secured by liens on substantially all of the assets of SITEL Corporation
and such subsidiaries, including a pledge of our shares in such subsidiaries
and certain other foreign subsidiaries. The facility contains certain financial
covenants and certain restrictions similar to those contained in the Notes,
described earlier. The facility becomes due and payable upon a change of control
of the Company as defined in the credit agreement.  AtJune 30, 2001, we were not in
compliance with some of the original financial covenants of the facility, which
are determined quarterly based on the trailing four quarters ended on each
determination date. In August 2001, we obtained an amendment to the credit
facility that was effective as of June 30, 2001, which waived the noncompliance
with those covenants and amended our financial covenants for future periods.
The amendment also:  reduced the size of
the facility from $75 million to $50 million and removed our option to request
an increase in the size of the facility to $100 million, changed
the expiration date of the facility from April 2005 to April 2003, increased
the interest rates on borrowings 50 to 75 basis points and the unused
commitment fee 50 basis points, and further
restricted our ability to make certain acquisitions, restricted payments,
capital expenditures, and investments.  As a result of the amendment, we wrote off $0.8 million of credit
acquisition costs related to the original facility in 2001.  F-10 
   At December 31, 2001, we had $50
million of available borrowings under the facility, and we were in compliance
with all financial covenants of the facility.  Maturities
of Long-Term Debt At December 31, 2001, all of our long-term debt
was scheduled to mature in 2006.  Note 4. Income Taxes  ComponentsofPretax Income (Loss) For financialreportingpurposes, income (loss) before income taxes and
minority interest includes the following components:  Years
  Ended December 31,2001
  
  2000
  
  1999(in
  thousands)United States
  
  $
  (11,980
  )
  $
  16,300
  
  $
  12,001Foreign
  
  (11,970
  )
  10,098
  
  (6,170
  )Total
  
  $
  (23,950
  )
  $
  26,398
  
  $
  5,831
  Provisionfor Income Tax Expense (Benefit) Thecomponentsof the provision for income tax expense (benefit) were:  Years
  Ended December 31,2001
  
  2000
  
  1999(in
  thousands)Current:Federal
  
  $
  (823
  )
  $
  902
  
  $
  2,740Foreign
  
  2,775
  
  3,233
  
  3,699State
  
  (105
  )
  1,175
  
  413Total current
  
  1,847
  
  5,310
  
  6,852Deferred:Federal
  
  (6,977
  )
  5,111
  
  1,716Foreign
  
  3,713
  
  2,425
  
  (2,232
  )State
  
  (900
  )
  (276
  )
  Total deferred
  
  (4,164
  )
  7,260
  
  (516
  )Provision for
  income tax expense (benefit)
  
  $
  (2,317
  )
  $
  12,570
  
  $
  6,336
  Certain of the income tax benefits related to the
exercise of stock options reduce taxes currentlypayableand are credited to additional paid-in capital,
as presented in our Consolidated Statements of Stockholders Equity.  Deferred
Tax Assets and Liabilities The following table sets forth the tax effects of
temporary differences that give rise to significantportionsof the deferred tax assets and deferred tax liabilities
that are reported in our Consolidated Balance Sheets:  At
  December 31,2001
  
  2000(in thousands)Deferred tax
  assets:Accrued
  compensation and other liabilities
  
  $
  119
  
  $
  2,658Goodwill
  
  26,381
  
  Net operating
  loss and other credit carryforwards
  
  14,965
  
  2,092Net operating
  loss carryforwards related to international operations
  
  8,829
  
  5,474Depreciation
  timing differences related to international operations
  
  4,365
  
  2,143Other
  
  
  
  1,821Total deferred
  tax assets
  
  54,659
  
  14,188Valuation
  allowance
  
  (38,903
  )
  (1,602
  )Net deferred tax
  assets
  
  15,756
  
  12,586Deferred tax liabilities:Leased assets and depreciation
  
  533
  
  2,247Other
  
  717
  
  Total deferred
  tax liabilities
  
  1,250
  
  2,247Net deferred tax
  assets
  
  $
  14,506
  
  $
  10,339
  During 2001, we recorded a net deferred income tax
benefit of $6.0 million resulting from an election to treat certain of our
foreign operations as branches of our U.S. company for U.S. income tax purposes.
This benefit was comprised of a $22.9 million deferred income tax asset,
resulting from current and future tax-deductible goodwill, net of a $16.9
million valuation allowance. We estimate that the $6.0 million net asset will
be realized in 2002 and future years.  Based upon our current and historical earnings,
adjusted for significant deductionsestimatedto be available from the exercise of nonqualified stock options,
management believes that it is more likely than not that we will generate
sufficient taxable income to fully realize the benefits of our recorded net
deferred tax assets.  Net
Operating Loss and Alternative Minimum Tax Credit Carryforwards At December 31, 2001, we had approximately:  $44.7
million in U.S. Federal net operating loss carryforwards, which expire in 2020
and 2021, $27.5 million in
foreign net operating loss carryforwards, of which $17.9 million expire between
2003 and 2011 and $9.6 million can be carried forward indefinitely, $0.5 million of U.S.
Federal general business credit carryforwards, which expire between 2014 and
2018, and $2.9 million of U.S.
Federal alternative minimum tax credit carryforwards, which can be carried
forward indefinitely.  F-11 
   Reconciliation
of Reported Income Tax Expense (Benefit) to Expected Income TaxExpense The following table shows the reconciliation
between income tax expense reported in our Consolidated Statements of Income
(Loss) and the income tax expense that would have resulted from applying the
U.S. Federal income tax rate of 34% to pretax income (loss):  Years Ended December 31,2001
  
  2000
  
  1999(in thousands)Expected Federal income tax expense (benefit)
  
  $
  (8,143
  )
  $
  8,975
  
  $
  1,983State taxes, net of Federal effect
  
  (663
  )
  593
  
  325Tax credits
  
  (1,611
  )
  
  
  Goodwill on foreign operations, net of valuation allowance of $16.9
  million
  
  (5,970
  )
  
  
  Amortization of goodwill
  
  (5,311
  )
  467
  
  350Impact of foreign operations, including goodwill
  
  (1,622
  )
  623
  
  1,199Valuation allowance
  
  20,482
  
  1,602
  
  Impairment losses on intangible assets
  
  
  
  
  
  2,181Other
  
  521
  
  310
  
  298Total
  
  $
  (2,317
  )
  $
  12,570
  
  $
  6,336  Note 5. Lease
Obligations  Capital
Leases We are obligated under various capital leases for
property and certain equipment that expire at various dates through 2015.
Capitalized leased property and equipment, net of accumulated amortization,
included in property and equipment was approximately:  $9.1 million at December 31, 2001 and $15.5 million at December 31, 2000.  Operating
Leases We also lease property and certain equipment under
noncancelable operating lease arrangements, which expire at various dates
through 2015. Certain leases of real property provide options to extend the
lease terms. Rent expense was approximately:  $19.6 million in 2001 $23.9 million in 2000, and $26.3 million in 1999.  Future
Minimum Lease Payments At December 31, 2001, our future minimum payments
under capital and operating leases were as follows:  Year
  
  Capital
  Leases
  
  Operating
  Leases(in thousands)2002
  
  $
  2,965
  
  $
  19,0132003
  
  1,793
  
  15,6652004
  
  1,235
  
  13,1602005
  
  673
  
  10,5212006
  
  568
  
  8,487Thereafter
  
  4,733
  
  25,445$
  11,967
  
  $
  92,291Amount representing interest
  
  (2,561
  )Net
  
  $
  9,406
  Note 6.
Stock-Based Compensation  Stock Options The 1999 Stock Incentive Plan (1999 Plan) provides
for the granting of various types of incentive awards (including incentive
stock options, nonqualified options, stock appreciation rights, restricted
shares, and performance shares or units) for the issuance of up to an aggregate
of 7,000,000 shares of common stock to our employees, consultants and
non-employee directors.  Vesting terms vary with each grant, and option
terms may not exceed ten years. Option prices, set by the Compensation
Committee of the Board of Directors, may not be less than the fair market value
at date of grant for incentive stock options or less than par value for
nonqualified stock options. At December 31, 2001, there were approximately
3.3 million shares available for issuance pursuant to future grants under the
1999 Plan.  Prior to the adoption of the 1999 Plan, we granted
options under several different plans. As of December 31, 2001, options granted
under these plans aggregating 4,019,755 remained outstanding. The last of these
options will expire on February 1, 2009. We granted these options at prices
ranging from $.0025 to $19.50. We will not grant additional options under these
plans.  F-12 
   The following table sets forth shares subject to
options:  Year
  
  Number
  of Options
  
  Weighted-
  Average
  Exercise
  Price per ShareBalance January 1, 1999
  
  13,904,389
  
  $
  1.96Granted
  
  2,038,469
  
  4.20Exercised
  
  (1,616,087
  )
  0.48Canceled
  
  (480,819
  )
  3.83Balance December 31, 1999
  
  13,845,952
  
  2.40Granted
  
  2,170,670
  
  6.08Exercised
  
  (3,904,401
  )
  0.69Canceled
  
  (1,815,421
  )
  3.69Balance December 31, 2000
  
  10,296,800
  
  3.64Granted
  
  2,007,055
  
  2.51Exercised
  
  (2,276,618
  )
  0.05Canceled
  
  (2,376,352
  )
  4.44Balance, December 31, 2001
  
  7,650,885
  
  $
  4.17
  The options exercisable
at the end of each period were:  Year
  
  Number
  of Options
  
  Weighted-
  Average
  Exercise
  Price per ShareDecember 31, 1999
  
  4,493,502
  
  $
  1.34December 31, 2000
  
  3,712,703
  
  $
  1.93December 31, 2001
  
  1,876,480
  
  $
  4.92
  The following table summarizes stock options outstanding at December31, 2001:  Range of 
  Exercise Prices
  
  Number
  Outstanding
  
  Weighted-
  Average
  Remaining
  Life
  
  Weighted-
  Average
  Exercise
  Price$  0.00 to $  1.75
  
  339,980
  
  7.7
  
  $
  1.73$  1.76 to $  2.64
  
  372,896
  
  6.8
  
  $
  2.47$  2.65 to $  3.98
  
  4,134,696
  
  6.9
  
  $
  3.21$  3.99 to $  5.99
  
  1,570,143
  
  7.2
  
  $
  4.71$  6.00 to $  9.00
  
  943,278
  
  7.3
  
  $
  6.68$  9.01 to $13.52
  
  209,782
  
  6.1
  
  $
  9.81$13.53 to $19.50
  
  80,110
  
  5.1
  
  $
  16.89
  The following table summarizes stock options
exercisable at December 31, 2001:  Range of
  Exercise Prices
  
  Number
  Exercisable
  
  Weighted-
  Average
  Exercise
  Price$  1.76 to
  $  2.64
  
  80,412
  
  $
  2.42$  2.65 to
  $  3.98
  
  883,653
  
  $
  3.43$  3.99 to
  $  5.99
  
  540,553
  
  $
  4.67$  6.00 to
  $  9.00
  
  191,862
  
  $
  6.68$  9.01 to
  $13.52
  
  120,000
  
  $
  9.75$13.53 to $19.50
  
  60,000
  
  $
  17.35
  The per share weighted-average fair value of stock
options granted was determined on the date of grant using the Black-Scholes
option-pricing model with an expected dividend yield of 0.0%, and the following
weighted-average assumptions:  Year
  
  Volatility Factor
  
  Risk-Free 
  Interest Rate
  
  Expected
  Life (Years)2001
  
  77.5
  %
  3.7
  %
  8.92000
  
  100.7
  %
  6.5
  %
  6.51999
  
  30.0
  %
  5.2
  %
  8.3
  The per share weighted-average fair value of stock options granted was:  $1.83 in 2001, $5.07 in 2000, and $0.90 in 1999.  If we had determined compensation cost based on the fair value at the
grant date for our stock options, our net income (loss) and income (loss) per
common share would have been reduced to the pro forma amounts indicated in the
following table:  Years Ended December 31,2001
  
  2000
  
  1999(in thousands)Net income (loss):As reported
  
  $
  (22,580
  )
  $
  12,741
  
  $
  (809
  )Pro forma
  
  (24,549
  )
  7,459
  
  (3,346
  )Income (loss) per common share:As reported:Basic
  
  $
  (0.31
  )
  $
  0.18
  
  $
  (0.01
  )Diluted
  
  (0.31
  )
  0.17
  
  (0.01
  )Pro forma:Basic
  
  $
  (0.33
  )
  $
  0.10
  
  $
  (0.05
  )Diluted
  
  (0.33
  )
  0.10
  
  (0.05
  )
  F-13 
   Employee
Stock Purchase Plan (ESPP) During 1998, we implemented an ESPP which enables
eligible employees to purchase our stock at 85% of the current market value on
a quarterly basis. We have not recognized any compensation expense in connection
with this plan. Total purchases and shares purchased under the ESPP were:  $188,535 and 92,777 shares for 2001, $193,384 and 35,401 shares for 2000, and $206,000 and 52,262 shares for 1999.  Note 7. Benefit Plans  We sponsor a 401(k) plan, which covers
substantially all domestic employees who are 18 years of age with 6 months or
more of service. Participants may elect to contribute 1% to 17% of
compensation. We may elect to make a year-end contribution to the 401(k) plan.
We did not contribute to the plan in 2001, 2000, or 1999.  We also make contributions to certain executive
and other employee personal retirement programs, primarily in Europe. We
contributed the following amounts to those plans:  $1.2 million in 2001, $1.1 million in 2000, and $1.2 million in 1999.  We also sponsor a deferred compensation plan for
certain executive employees who elect to contribute to the plan. We may
voluntarily match all or a portion of the participants contributions.
Participants are 100% vested in their contributions and our contributions vest
over a 15-year period. We did not contribute to the plan in 2001, 2000, or
1999.  Note 8. Segment Data  Business Segments Our operations are conducted in one reportable
segment that includes operating segments which all provide customer
relationship management services via electronic media including telephone, fax,
and the Internet, and, to a lesser extent, traditional mail.  Our services are provided through a number of
operating subsidiaries in a variety of locations around the world. However, the
nature of services, the nature of the processes involved in providing those
services, the types of clients, and the expected long-term operating income
from these subsidiaries are similar.  Revenues are primarily attributed to countries
based upon the location where the services are performed. Following are
summaries of our revenues and long-lived assets by geographic area:  Years Ended December 31,2001
  
  2000
  
  1999(in thousands)Revenue:United States
  
  $
  426,979
  
  $
  441,035
  
  $
  389,523United Kingdom
  
  64,315
  
  91,222
  
  114,053Spain
  
  37,247
  
  53,943
  
  69,403Other foreign countries
  
  196,507
  
  178,247
  
  164,543Total revenues
  
  $
  725,048
  
  $
  764,447
  
  $
  737,522
  At December 31,2001
  
  2000(in thousands)Long-lived assets:United States
  
  $
  60,002
  
  $
  78,044United Kingdom
  
  24,900
  
  22,367Spain
  
  23,409
  
  29,318Other foreign countries
  
  66,730
  
  56,483Total long-lived assets
  
  $
  175,041
  
  $
  186,212
  Major Clients The combined total revenue of four independently
managed business units of one client with operations primarily in the United
States totaled:      25.4% of our revenues for the year ended
December 31, 2001,     20.2% of our revenues for the year ended
December 31, 2000, and     12.2% of our revenues for the year ended
December 31, 1999.  Note 9. Contingencies  From time to time, we are involved in litigation
incidental to our business. We cannot predict the ultimate outcome of such
litigation with certainty, but management believes, after consultation with
counsel, that the resolution of such matters will not have a material adverse
effect on our consolidated financial position or results of operations.  Note 10. Asset Impairment and Restructuring Expenses  2001 In 2001, we announced a restructuring plan designed to intensify our
focus on core competencies, accelerate revenue growth, and improve
profitability. The key components of the restructuring plan include several
major  F-14 
   organizational changes and the streamlining
of contact center operations and corporate support services to improve
effectiveness and drive revenue growth.  As part of our
restructuring plan, we reduced fixed overhead to improve profitability by
substantially completing the following by December 31, 2001:  eliminating
approximately 350 operating, selling, and administrative positions globally,
and reducing excess capacity
by closing nine contact centers plus three administrative offices, and
downsizing another five contact centers plus two administrative offices,
resulting in the elimination of approximately 2,100 workstations.  In connection with this
restructuring, we recorded $26.2 million of asset impairment and restructuring
charges, or $24.6 million after tax. Approximately $16.9 million of these
charges are liabilities that we have paid or will pay in cash. At December 31,
2001, we had paid approximately $6.8 million of the liabilities. We have
recorded the remaining $10.1 million of unpaid liabilities as accrued operating
expenses in our December 31, 2001 Consolidated Balance Sheet.  The
charges also included $9.3 million of asset write-downs that we recorded as a
reduction of fixed assets. The fixed asset reduction consists of the following:  in facilities that are
being closed or reduced immediately, we wrote off leasehold improvements and
equipment that will no longer be used, and in facilities that will
continue to operate for a period prior to closure or space reduction, we wrote
down assets to their estimated fair values considering estimated future cash
flows from operations.  The components of the restructuring charges
are:  2001Charges
  
  2001Payments
  
  Accrual
  Balance atDecember 31, 2001(in millions)Severance
  
  $
  5.0
  
  $
  4.1
  
  $
  0.9Facility closure or reduction
  
  11.0
  
  2.5
  
  8.5Other
  
  0.9
  
  0.2
  
  0.7Subtotal
  
  $
  16.9
  
  $
  6.8
  
  $
  10.1Asset write-downs
  
  9.3Total
  
  $
  26.2
  The restructuring plan calls for:  a reorganization of our
U.S. and Canadian businesses, excluding SITEL Risk Management and certain
client-specific business units, by establishing six industry focused Business
Units, the continued
organization of our businesses outside of North America on a geographic basis
with five Business Units, as follows: UK and Ireland, Nordic, Central Europe
(Germany, France, Netherlands and Belgium), Asia Pacific (Australia, New
Zealand, and Singapore), and IBERLAT (Brazil, Mexico, Colombia, Portugal, and
Spain), establishment of a new
Multi-National Client and Design Business Unit, recently renamed the Enterprise
Solutions Group, that will have responsibility for selling, designing,
building, and running complex contact center services for our multi-national
clients. This unit will ensure that these complex programs deliver performance
consistency across all sites and countries, SITEL Risk Management to
continue to provide receivables management services in North America and
leverage our global footprint to grow the business internationally, and streamlined and
realigned corporate support functions to provide efficient and cost effective
services to the Business Units.  2000 In
2000, we formed a strategic partnership with Bellsystem24, Inc., Japans
largest comprehensive marketing agency. Under the terms of the partnership,
Bellsystem24 will provide services and support for our clients in Japan and we
will provide services and support for Bellsystem24s clients in the United
States. In connection with the formation of the partnership, we restructured
our operations in Japan and transferred our existing Japanese business to
Bellsystem24. In connection with this restructuring, we recorded $3.5 million
of asset impairment and restructuring expenses which included a $3.3 million
loss on the sale of the assets and the transfer of the business, and $0.2
million of severance for 12 employees.  1999 In 1999, we recorded asset
impairment expenses of $10.1 million related to capitalized software and
related technology assets. We
reduced that amount by a $0.5 million reversal of our 1998 restructuring
accrual. The $10.1 million of impairment expenses were precipitated by our
decision to select an outside vendor to provide our call center software and a
detailed assessment made by management of the utility and plans for future
deployment  F-15 
   of existing software assets.
These impairment expenses consisted of the following:      A write-down of $1.4 million was recorded for
a software platform that we will continue to use, although on a much more
limited basis. The amount of the impairment loss was determined by estimating
future discounted cash flows that would be provided from utilizing the
software.      A
write-off of $6.4 million was recorded for the abandonment of internally
developed software and software licenses that will not be deployed as a result
of managements decision to deploy the third party software.     A write-off of $2.3 million was recorded for an
other-than-temporary decline of the fair value of our investment in a software
development firm. The deteriorating financial condition of the investee and
managements decision to abandon plans to purchase its software contributed to
the determination of the impairment loss.  Note 11. Shareholder Rights Plan  We have a Shareholder Rights Plan that provides for the issuance of
preferred share purchase rights that expire in August 2008. The rights
generally will be exercisable and transferable apart from the common stock in the
following cases:  only after the tenth day following public
disclosure that a person or group of affiliated or associated persons has
acquired 20% or more of the outstanding shares of common stock (thereby
becoming an Acquiring Person), and on such date as the Board of Directors determines
after the commencement or announcement of a tender or exchange offer by a
person or group for 20% or more of the outstanding shares of common stock.  If any person or group of
affiliated or associated persons acquires 20% or more of the outstanding shares
of common stock and our redemption right has expired, each holder of a right
(except those held by the Acquiring Person) will have the right to purchase
shares of our common stock (or in certain circumstances, our shares of
preferred stock or similar securities) having a value equal to two times the
exercise price of the right.  Alternatively, if, in a transaction not approved
by the Board of Directors, we are acquired in a merger or other business
combination or 50% or more of our assets or earnings power are sold, and our
redemption right has expired, each holder of a right will have the right to
purchase that number of shares of common stock of the acquiring company having
the market value of two times the exercise price of the right.  The rights may not be exercisable while they are
redeemable. We can redeem the rights, which have a $30 exercise price, at a
price of $.001 per right at any time up to and including the tenth day after
the time that a person or group has become an Acquiring Person.  Note 12. Sale
and Reacquisition of Stock of Subsidiaries  During 1998, we sold newly issued stock of certain
subsidiaries located in the Asia Pacific region to Lend Lease Corporation
Limited, Sydney, Australia and certain of its subsidiaries (Lend Lease). Lend
Lease paid approximately $6.6 million for a 20% interest in these subsidiaries,
which provide outsourced call center solutions throughout the region.  In June 1999, we reacquired the minority interest
in these subsidiaries from Lend Lease in exchange for 2.2 million shares
of our common stock. Additionally, Lend Lease purchased 1.5 million shares
of our common stock for $4.5 million in cash from two of our shareholders in a
related transaction. The shares we issued were valued at $6.6 million, based on
quoted market prices of our stock.  Note 13.
Supplemental Guarantor Financial Information  Our 9.25% Senior Subordinated
Notes are guaranteed, on a full, unconditional and joint and several basis, by
substantially all of our wholly owned domestic subsidiaries. Separate financial
statements for each of the guarantor subsidiaries are not presented because
they would not be material to investors. However, on the following pages we
have presented the following unaudited statements of (a) SITEL Corporation, the
parent, (b) the guarantor subsidiaries, (c) the nonguarantor subsidiaries, and
(d) SITEL Corporation on a consolidated basis:  Condensed Consolidating Statements of Income
(Loss) and Comprehensive Income (Loss) for the years ended December 31, 2001,
2000, and 1999, Condensed Consolidating Balance Sheets at December
31, 2001 and 2000, and Condensed Consolidating Statements of Cash Flows
for the years ended December 31, 2001, 2000, and 1999.  F-16 
   Condensed Consolidating Statement of Income (Loss) and
Comprehensive Income (Loss)  Year Ended December 31, 2001Parent
  
  Guarantor
  Subsidiaries
  
  Nonguarantor
  Subsidiaries
  
  Eliminations
  
  Consolidated(in thousands)Revenues
  
  $
  390,322
  
  $
  40,669
  
  $
  297,481
  
  $
  (3,424
  )
  $
  725,048Operating expenses:Direct labor and telecommunications expenses
  
  220,455
  
  22,688
  
  167,923
  
  
  
  411,066Subcontracted and other services expenses
  
  29,621
  
  2,193
  
  5,135
  
  
  
  36,949Operating, selling, and administrative expenses
  
  127,841
  
  11,839
  
  124,294
  
  (3,424
  )
  260,550Asset impairment and restructuring expenses
  
  12,922
  
  25
  
  13,238
  
  
  
  26,185Total operating expenses
  
  390,839
  
  36,745
  
  310,590
  
  (3,424
  )
  734,750Operating income (loss)
  
  (517
  )
  3,924
  
  (13,109
  )
  
  
  (9,702
  )Other income (expense):Equity in earnings (losses) of subsidiaries, after tax
  
  (21,445
  )
  (23,949
  )
  
  
  45,394
  
  Interest income (expense), net
  
  (10,979
  )
  80
  
  (743
  )
  
  
  (11,642
  )Other income (expense), net
  
  56
  
  
  
  (2,662
  )
  
  
  (2,606
  )Total other income (expense)
  
  (32,368
  )
  (23,869
  )
  (3,405
  )
  45,394
  
  (14,248
  )Income (loss) before income taxes and minority
  interest
  
  (32,885
  )
  (19,945
  )
  (16,514
  )
  45,394
  
  (23,950
  )Income tax expense (benefit)
  
  (10,305
  )
  1,500
  
  6,488
  
  
  
  (2,317
  )Minority interest
  
  
  
  
  
  947
  
  
  
  947Net income (loss)
  
  $
  (22,580
  )
  $
  (21,445
  )
  $
  (23,949
  )
  $
  45,394
  
  $
  (22,580
  )Currency translation adjustment
  
  (6,760
  )
  (4,800
  )
  (5,678
  )
  10,478
  
  (6,760
  )Comprehensive income (loss)
  
  $
  (29,340
  )
  $
  (26,245
  )
  $
  (29,627
  )
  $
  55,872
  
  $
  (29,340
  )  F-17 
   Year Ended December 31, 2000Parent
  
  Guarantor
  Subsidiaries
  
  Nonguarantor
  Subsidiaries
  
  Eliminations
  
  Consolidated(in thousands)Revenues
  
  $
  407,576
  
  $
  33,459
  
  $
  324,560
  
  $
  (1,148
  )
  $
  764,447Operating expenses:Direct labor and telecommunications expenses
  
  206,683
  
  16,564
  
  175,562
  
  
  
  398,809Subcontracted and other services expenses
  
  39,855
  
  2,836
  
  8,761
  
  
  
  51,452Operating, selling, and administrative expenses
  
  134,104
  
  10,554
  
  128,380
  
  (1,148
  )
  271,890Asset impairment and restructuring expenses
  
  2,019
  
  
  
  1,501
  
  
  
  3,520Total operating expenses
  
  382,661
  
  29,954
  
  314,204
  
  (1,148
  )
  725,671Operating income
  
  24,915
  
  3,505
  
  10,356
  
  
  
  38,776Other income (expense):Equity in earnings (losses) of subsidiaries, after tax
  
  4,804
  
  2,343
  
  
  
  (7,147
  )
  Intercompany charges
  
  1,302
  
  429
  
  (1,731
  )
  
  
  Interest expense, net
  
  (10,831
  )
  (130
  )
  (1,106
  )
  
  
  (12,067
  )Other income (expense), net
  
  (1,862
  )
  (17
  )
  1,568
  
  
  
  (311
  )Total other income (expense)
  
  (6,587
  )
  2,625
  
  (1,269
  )
  (7,147
  )
  (12,378
  )Income (loss) before income taxes and minority
  interest
  
  18,328
  
  6,130
  
  9,087
  
  (7,147
  )
  26,398Income tax expense
  
  5,587
  
  1,326
  
  5,657
  
  
  
  12,570Minority interest
  
  
  
  
  
  1,087
  
  
  
  1,087Net income (loss)
  
  $
  12,741
  
  $
  4,804
  
  $
  2,343
  
  $
  (7,147
  )
  $
  12,741Currency translation adjustment
  
  (6,631
  )
  (4,210
  )
  (5,055
  )
  9,265
  
  (6,631
  )Comprehensive income (loss)
  
  $
  6,110
  
  $
  594
  
  $
  (2,712
  )
  $
  2,118
  
  $
  6,110  F-18 
   Year Ended December 31, 1999Parent
  
  Guarantor
  Subsidiaries
  
  Nonguarantor
  Subsidiaries
  
  Eliminations
  
  Consolidated(in thousands)Revenues
  
  $
  258,905
  
  $
  130,619
  
  $
  347,998
  
  $
  
  
  $
  737,522Operating expenses:Direct labor and telecommunications expenses
  
  112,064
  
  74,659
  
  186,795
  
  
  
  373,518Subcontracted and other services expenses
  
  45,930
  
  2,344
  
  10,750
  
  
  
  59,024Operating, selling, and administrative expenses
  
  90,799
  
  40,464
  
  145,821
  
  
  
  277,084Asset impairment and restructuring expenses
  
  3,585
  
  
  
  6,011
  
  
  
  9,596Total operating expenses
  
  252,378
  
  117,467
  
  349,377
  
  
  
  719,222Operating income (loss)
  
  6,527
  
  13,152
  
  (1,379
  )
  
  
  18,300Other income (expense):Equity in earnings (losses) of subsidiaries, after tax
  
  1,840
  
  (7,942
  )
  
  
  6,102
  
  Intercompany charges
  
  220
  
  2,727
  
  (2,947
  )
  
  
  Interest expense, net
  
  (10,001
  )
  (829
  )
  (1,955
  )
  
  
  (12,785
  )Other income, net
  
  205
  
  
  
  111
  
  
  
  316Total other income (expense)
  
  (7,736
  )
  (6,044
  )
  (4,791
  )
  6,102
  
  (12,469
  )Income (loss) before income taxes and minority
  interest
  
  (1,209
  )
  7,108
  
  (6,170
  )
  6,102
  
  5,831Income tax expense (benefit)
  
  (400
  )
  5,268
  
  1,468
  
  
  
  6,336Minority interest
  
  
  
  
  
  304
  
  
  
  304Net income (loss)
  
  $
  (809
  )
  $
  1,840
  
  $
  (7,942
  )
  $
  6,102
  
  $
  (809
  )Currency translation adjustment
  
  (8,329
  )
  (4,199
  )
  (6,264
  )
  10,463
  
  (8,329
  )Comprehensive income (loss)
  
  $
  (9,138
  )
  $
  (2,359
  )
  $
  (14,206
  )
  $
  16,565
  
  $
  (9,138
  )  F-19 
   Condensed Consolidating Balance Sheet  At  December 31,
  2001Parent
  
  Guarantor
  Subsidiaries
  
  Nonguarantor
  Subsidiaries
  
  Eliminations
  
  Consolidated(in thousands)AssetsCurrent assets:Cash and cash equivalents
  
  $
  6,814
  
  $
  2,202
  
  $
  13,140
  
  $
  
  
  $
  22,156Trade accounts receivable, net
  
  90,744
  
  4,061
  
  54,466
  
  (20,091
  )
  129,180Prepaid expenses and other current assets
  
  8,237
  
  13
  
  11,441
  
  
  
  19,691Total current assets
  
  105,795
  
  6,276
  
  79,047
  
  (20,091
  )
  171,027Property and equipment, net
  
  31,729
  
  2,266
  
  57,298
  
  
  
  91,293Other
  assets:Goodwill, net
  
  19,576
  
  
  
  53,640
  
  
  
  73,216Deferred income taxes
  
  6,099
  
  
  
  3,299
  
  
  
  9,398Other assets
  
  7,771
  
  72
  
  2,689
  
  
  
  10,532Investments in subsidiaries
  
  127,978
  
  110,511
  
  
  
  (238,489
  )
  Notes receivable, intercompany
  
  
  
  14,086
  
  10,804
  
  (24,890
  )
  Total assets
  
  $
  298,948
  
  $
  133,211
  
  $
  206,777
  
  $
  (283,470
  )
  $
  355,466Liabilities and Stockholders EquityCurrent liabilities:Current portion of capital lease obligations
  
  $
  1,668
  
  $
  
  
  $
  698
  
  $
  
  
  $
  2,366Trade accounts payable
  
  5,176
  
  3,745
  
  36,238
  
  (20,091
  )
  25,068Accrued expenses and other current liabilities
  
  30,345
  
  1,488
  
  39,083
  
  
  
  70,916Total current liabilities
  
  37,189
  
  5,233
  
  76,019
  
  (20,091
  )
  98,350Long-term debt and other liabilities:Long-term debt, excluding current portion
  
  100,000
  
  
  
  
  
  
  
  100,000Capital lease obligations, excluding current portion
  
  1,412
  
  
  
  5,628
  
  
  
  7,040Notes payable, intercompany
  
  10,804
  
  
  
  14,086
  
  (24,890
  )
  Deferred compensation
  
  1,755
  
  
  
  
  
  
  
  1,755Deferred income taxes
  
  
  
  
  
  533
  
  
  
  533Total liabilities
  
  151,160
  
  5,233
  
  96,266
  
  (44,981
  )
  207,678Minority interests
  
  
  
  
  
  7,748
  
  
  
  7,748Stockholders equity
  
  147,788
  
  127,978
  
  102,763
  
  (238,489
  )
  140,040Total liabilities and stockholders' equity
  
  $
  298,948
  
  $
  133,211
  
  $
  206,777
  
  $
  (283,470
  )
  $
  355,466  F-20 
   At December 31, 2000Parent
  
  Guarantor
  Subsidiaries
  
  Nonguarantor
  Subsidiaries
  
  Eliminations
  
  Consolidated(in thousands)AssetsCurrent assets:Cash and cash equivalents
  
  $
  4,970
  
  $
  1,730
  
  $
  13,197
  
  $
  
  
  $
  19,897Trade accounts receivable, net
  
  80,979
  
  3,114
  
  68,221
  
  (5,652
  )
  146,662Prepaid expenses and other current assets
  
  6,543
  
  25
  
  13,545
  
  
  
  20,113Total current assets
  
  92,492
  
  4,869
  
  94,963
  
  (5,652
  )
  186,672Property and equipment, net
  
  46,062
  
  3,303
  
  50,428
  
  
  
  99,793Other assets:Goodwill, net
  
  20,571
  
  
  
  57,872
  
  
  
  78,443Deferred income taxes
  
  781
  
  
  
  6,557
  
  
  
  7,338Other assets
  
  7,804
  
  78
  
  94
  
  
  
  7,976Investments in subsidiaries
  
  158,086
  
  137,491
  
  
  
  (295,577
  )
  Notes receivable, intercompany
  
  
  
  14,914
  
  11,400
  
  (26,314
  )
  Total assets
  
  $
  325,796
  
  $
  160,655
  
  $
  221,314
  
  $
  (327,543
  )
  $
  380,222Liabilities and Stockholders
  EquityCurrent liabilities:Notes payable
  
  $
  
  
  $
  
  
  $
  302
  
  $
  
  
  $
  302Current portion of long-term debt
  
  
  
  
  
  1,120
  
  
  
  1,120Current portion of capitalized lease obligations
  
  2,570
  
  
  
  1,394
  
  
  
  3,964Trade accounts payable
  
  9,312
  
  914
  
  23,332
  
  (5,652
  )
  27,906Accrued expenses and other current liabilities
  
  27,990
  
  1,655
  
  30,152
  
  
  
  59,797Total current liabilities
  
  39,872
  
  2,569
  
  56,300
  
  (5,652
  )
  93,089Long-term debt and other
  liabilities:Long-term debt, excluding current portion
  
  100,000
  
  
  
  
  
  
  
  100,000Capitalized lease obligations, excluding current portion
  
  2,494
  
  
  
  5,847
  
  
  
  8,341Notes payable, intercompany
  
  11,400
  
  
  
  14,914
  
  (26,314
  )
  Deferred compensation
  
  2,448
  
  
  
  
  
  
  
  2,448Deferred income taxes
  
  
  
  
  
  461
  
  
  
  461Total liabilities
  
  156,214
  
  2,569
  
  77,522
  
  (31,966
  )
  204,339Minority interests
  
  
  
  
  
  6,301
  
  
  
  6,301Stockholders equity
  
  169,582
  
  158,086
  
  137,491
  
  (295,577
  )
  169,582Total liabilities and stockholders
  equity
  
  $
  325,796
  
  $
  160,655
  
  $
  221,314
  
  $
  (327,543
  )
  $
  380,222  F-21 
   Condensed Consolidating Statement of Cash
Flows  Year Ended December 31, 2001Parent
  
  Guarantor
  Subsidiaries
  
  Nonguarantor
  Subsidiaries
  
  Eliminations
  
  Consolidated(in thousands)Net cash provided by operating
  activities
  
  $
  21,455
  
  $
  10,253
  
  $
  16,901
  
  $
  
  
  $
  48,609Cash flows from investing
  activities:Investments in subsidiaries
  
  2,251
  
  (7,285
  )
  
  
  5,034
  
  Purchases of property and equipment
  
  (7,330
  )
  (245
  )
  (32,869
  )
  
  
  (40,444
  )Proceeds from sales of property and equipment
  
  15
  
  
  
  40
  
  
  
  55Increase in other assets
  
  (850
  )
  
  
  (2,534
  )
  
  
  (3,384
  )Net cash provided by (used in) investing activities
  
  (5,914
  )
  (7,530
  )
  (35,363
  )
  5,034
  
  (43,773
  )Cash flows from financing
  activities:Repayments of notes payable
  
  
  
  
  
  (302
  )
  
  
  (302
  )Borrowings on debt
  
  52,500
  
  
  
  20,872
  
  
  
  73,372Repayments of debt and capital lease obligations
  
  (55,143
  )
  
  
  (22,146
  )
  
  
  (77,289
  )Net capital contribution from parent
  
  
  
  (2,251
  )
  7,285
  
  (5,034
  )
  Net borrowings and payments on intercompany balances
  
  (10,927
  )
  
  
  10,927
  
  
  
  Common stock issued, net of expenses
  
  121
  
  
  
  
  
  
  
  121Purchases of treasury stock, net of reissuances
  
  (248
  )
  
  
  
  
  
  
  (248
  )Capital contribution from minority interest
  
  
  
  
  
  537
  
  
  
  537Other
  
  
  
  
  
  (64
  )
  
  
  (64
  )Net cash provided by (used in) financing activities
  
  (13,697
  )
  (2,251
  )
  17,109
  
  (5,034
  )
  (3,873
  )Effect of exchange rates on cash
  
  
  
  
  
  1,296
  
  
  
  1,296Net increase (decrease) in cash
  
  1,844
  
  472
  
  (57
  )
  
  
  2,259Cash and cash equivalents,
  beginning of period
  
  4,970
  
  1,730
  
  13,197
  
  
  
  19,897Cash and equivalents, end of period
  
  $
  6,814
  
  $
  2,202
  
  $
  13,140
  
  $
  
  
  $
  22,156  F-22 
   Year Ended December 31, 2000Parent
  
  Guarantor
  Subsidiaries
  
  Nonguarantor
  Subsidiaries
  
  Eliminations
  
  Consolidated(in thousands)Net cash provided by operating
  activities
  
  $
  46,334
  
  $
  7,329
  
  $
  11,532
  
  $
  
  
  $
  65,195Cash flows from investing activities:Investments in subsidiaries
  
  5,739
  
  (965
  )
  
  
  (4,774
  )
  Purchases of property and equipment
  
  (18,358
  )
  (997
  )
  (13,774
  )
  
  
  (33,129
  )Proceeds from sales of property and equipment
  
  10
  
  
  
  7,219
  
  
  
  7,229Net cash used in investing activities
  
  (12,609
  )
  (1,962
  )
  (6,555
  )
  (4,774
  )
  (25,900
  )Cash flows from financing
  activities:Repayments of notes payable
  
  
  
  
  
  (6,876
  )
  
  
  (6,876
  )Borrowings on debt
  
  35,000
  
  
  
  
  
  
  
  35,000Repayments of debt and capital lease obligations
  
  (66,687
  )
  
  
  (8,774
  )
  
  
  (75,461
  )Net capital contribution from parent
  
  
  
  (5,739
  )
  965
  
  4,774
  
  Net borrowings and payments on intercompany balances
  
  (7,245
  )
  
  
  7,245
  
  
  
  Common stock issued, net of expenses
  
  2,746
  
  
  
  
  
  
  
  2,746Other
  
  (46
  )
  
  
  
  
  
  
  (46
  )Net cash provided by (used in) financing activities
  
  (36,232
  )
  (5,739
  )
  (7,440
  )
  4,774
  
  (44,637
  )Effect of exchange rates on cash
  
  
  
  
  
  2,934
  
  
  
  2,934Net increase (decrease) in cash
  
  (2,507
  )
  (372
  )
  471
  
  
  
  (2,408
  )Cash and cash equivalents,
  beginning of period
  
  7,477
  
  2,102
  
  12,726
  
  
  
  22,305Cash and equivalents, end of period
  
  $
  4,970
  
  $
  1,730
  
  $
  13,197
  
  $
  
  
  $
  19,897  F-23 
   Year Ended December 31, 1999Parent
  
  Guarantor
  Subsidiaries
  
  Nonguarantor
  Subsidiaries
  
  Eliminations
  
  Consolidated(in thousands)Net cash provided by operating
  activities
  
  $
  21,791
  
  $
  6,545
  
  $
  10,979
  
  $
  
  
  $
  39,315Cash flows from investing
  activities:Investments in subsidiaries
  
  6,592
  
  3,528
  
  
  
  (10,120
  )
  Purchases of property and equipment
  
  (18,351
  )
  (2,569
  )
  (17,665
  )
  
  
  (38,585
  )Proceeds from sale-leasebacks of facilities
  
  3,467
  
  
  
  
  
  
  
  3,467Proceeds from sales of property and equipment
  
  14
  
  
  
  625
  
  
  
  639Net cash provided by (used in) investing activities
  
  (8,278
  )
  959
  
  (17,040
  )
  (10,120
  )
  (34,479
  )Cash flows from financing
  activities:Borrowings on notes payable
  
  
  
  
  
  3,706
  
  
  
  3,706Repayments of notes payable
  
  
  
  
  
  (26,174
  )
  
  
  (26,174
  )Borrowings on debt
  
  50,150
  
  
  
  7,639
  
  
  
  57,789Repayments of debt and capital lease obligations
  
  (26,349
  )
  
  
  (8,530
  )
  
  
  (34,879
  )Net capital contribution from parent
  
  
  
  (6,592
  )
  (3,528
  )
  10,120
  
  Net borrowings and payments on intercompany balances
  
  (32,955
  )
  
  
  32,955
  
  
  
  Common stock issued, net of expenses
  
  771
  
  
  
  
  
  
  
  771Other
  
  (63
  )
  
  
  
  
  
  
  (63
  )Net cash provided by (used in) financing activities
  
  (8,446
  )
  (6,592
  )
  6,068
  
  10,120
  
  1,150Effect of exchange rates on cash
  
  
  
  
  
  1,847
  
  
  
  1,847Net increase in cash
  
  5,067
  
  912
  
  1,854
  
  
  
  7,833Cash and cash equivalents,
  beginning of period
  
  2,410
  
  1,190
  
  10,872
  
  
  
  14,472Cash and equivalents, end of period
  
  $
  7,477
  
  $
  2,102
  
  $
  12,726
  
  $
  
  
  $
  22,305  F-24 
   14.
Quarterly Financial Data (Unaudited)  Our quarterly financial information has not been
audited but, in managements opinion, includes all adjustments necessary for a
fair presentation. We experience periodic fluctuations in our results of operations
related to both the start-up costs associated with expansion and the
implementation of clients customer relationship management activities. In
addition, our business generally tends to be slower in the third quarter due to
summer holidays in Europe, and in the first quarter due to the changeover of
client marketing strategies that often occurs at the beginning of the year.
Accordingly, comparisons among quarters of a year may not represent overall
trends and changes in operations.  2001 Quarterly Data  Year Ended
  December 31, 2001First
  Quarter
  
  Second
  Quarter
  
  Third
  Quarter
  
  Fourth
  Quarter(in
  thousands, except per share data)Revenues
  
  $
  184,004
  
  $
  177,787
  
  $
  173,793
  
  $
  189,464Operating income (loss)
  
  4,492
  
  (26,289
  )
  3,736
  
  8,359Net income (loss)
  
  10,630
  
  (30,241
  )
  (5,889
  )
  2,920Income (loss) per common
  share:Basic
  
  $
  0.15
  
  $
  (0.41
  )
  $
  (0.08
  )
  $
  0.04Diluted
  
  0.14
  
  (0.41
  )
  (0.08
  )
  0.04  First quarter results
include a $9.8million income tax
benefit that we recorded as a result of our election to treat certain of our
foreign operations as branches of our U.S. company for U.S. income tax
purposes.  Second quarter results
include the following items:  $23.8
million, or $22.1 million after tax, of asset impairment and restructuring
charges, as discussed in Note 10, $1.3 million, or $0.8 million after tax, of losses
on disposals of fixed assets, and a $3.3 million valuation allowance on U.K.
deferred tax assets, as discussed in Note 4.  Third quarter results
include the following items:  $2.4 million of asset impairment and restructuring
charges, as discussed in Note 10, a $0.8 million charge to write off deferred credit
acquisition costs in connection with the amendment of our credit facility, as
discussed in Note 3, and a $3.8 million increase in the allowance for
deferred tax assets.  2000 Quarterly Data  Year Ended
  December 31, 2000First
  Quarter
  
  Second
  Quarter
  
  Third
  Quarter
  
  Fourth
  Quarter(in
  thousands, except per share data)Revenues
  
  $
  198,611
  
  $
  193,805
  
  $
  185,289
  
  $
  186,742Operating income
  
  9,252
  
  7,906
  
  10,196
  
  11,422Net income
  
  3,018
  
  2,426
  
  3,655
  
  3,642Income per common share:Basic
  
  $
  0.04
  
  $
  0.03
  
  $
  0.05
  
  $
  0.05Diluted
  
  0.04
  
  0.03
  
  0.05
  
  0.05  Second quarter results
include an asset impairment and restructuring charge of $3.5 million, or $2.0
million after tax, as discussed in Note 10.  The sum of
the quarterly amounts may not equal the totals for the year due to the effects
of rounding.  F-25 
   Report of Independent Auditors on the Financial Statement
Schedule  To the Stockholders and Board of
Directors
of SITEL Corporation  Under date of February 1, 2002, we reported on the
consolidated balance sheets of SITEL Corporation and subsidiaries as of
December 31, 2001 and 2000, and the related consolidated statements of income
(loss), stockholders equity, and cash flows for each of the years in the
three-year period ended December 31, 2001, which are included in the Form 10-K
for the year ended December 31, 2001. In connection with our audits of the
aforementioned consolidated financial statements, we also audited the related
consolidated financial statement schedule of valuation and qualifying accounts
in the Form 10-K. This financial statement schedule is the responsibility
of the Companys management. Our responsibility is to express an opinion on
this financial statement schedule based on our audits.  In our opinion, such financial statement schedule,
when considered in relation to the basic consolidated financial statements
taken as a whole, presents fairly, in all material respects the information set
forth therein.  /s/ KPMG LLPKPMG
  LLPBaltimore, MarylandFebruary 1, 2002  S-1 
   Schedule II Valuation
and Qualifying Accounts  Column A
  
  Column B
  
  Column C
  
  Column D
  
  Column EAdditionsDescription
  
  Balance
  at
  beginning
  of period
  
  Charged
  to costs
  and
  expenses
  
  Charged
  to other
  accounts
  (describe)
  
  Deductions
  (describe)
  
  Balance
  at end
  of
  period(in thousands)Allowance for doubtful accounts:Year ended
  December 31, 2001
  
  $
  6,456
  
  $
  2,585
  
  $
  
  
  $
  (3,833
  )(a)
  $
  5,208Year ended
  December 31, 2000
  
  $
  5,622
  
  $
  1,668
  
  $
  
  
  $
  (834
  )(a)
  $
  6,456Year ended
  December 31, 1999
  
  $
  3,970
  
  $
  3,170
  
  $
  
  
  $
  (1,518
  )(a)
  $
  5,622  
 (a)     Represents principally net amounts charged
off as uncollectible.  See accompanying Report of
Independent Auditors on the Financial Statement Schedule.  S-2