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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

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

For the fiscal year endedDECEMBER 31, 2002

|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. YES X NO

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

Indicate
by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Act).
YES X NO

The
aggregate market value of the voting stock held by non-affiliates of the registrant as of June 28, 2002 was $140,236,888 based upon the $3.16 closing
price of 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  74,363,431 SHARES OUTSTANDING AS OF MARCH 6, 2003

DOCUMENTS INCORPORATED BY REFERENCE

|Part of Form 10-K |  | Document Incorporated by Reference                                                                    
|----------------- |  | ------------------------------------------------------------------------------------------------------
|II and III        |  | Certain sections of the Proxy Statement for the Annual Meeting of Stockholders to be held May 2, 2003.

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SITEL CORPORATION AND SUBSIDIARIES        TABLE OF CONTENTS

|                                                                          |   |     |                                                                                       |  | Page
|------------------------------------------------------------------------- | - | --- | ------------------------------------------------------------------------------------- |  | ----
|Forward Looking Statements                                                |   | 1  
|PART I                                                                    |   |     |                                                                                       |  |     
|Item 1                                                                    |  |     | Business                                                                              |  |     
|                                                                          |   |     | General                                                                               |  | 1   
|                                                                          |   |     | Industry Overview                                                                     |  | 1   
|                                                                          |   |     | Our Business                                                                          |  | 2   
|                                                                          |   |     | Organizational Structure                                                              |  | 2   
|                                                                          |   |     | The Services We Offer                                                                 |  | 2   
|                                                                          |   |     | The Communication Channels We Use                                                     |  | 3   
|                                                                          |   |     | Markets and Clients                                                                   |  | 4   
|                                                                          |   |     | The Industries We Serve                                                               |  | 4   
|                                                                          |   |     | Information Technology                                                                |  | 5   
|                                                                          |   |     | Human Resource Management                                                             |  | 5   
|                                                                          |   |     | Offshore                                                                              |  | 6   
|                                                                          |   |     | Competition                                                                           |  | 6   
|                                                                          |   |     | Government Regulation                                                                 |  | 6   
|                                                                          |   |     | Quarterly Results and Seasonality                                                     |  | 7   
|Item 2                                                                    |  |     | Properties                                                                            |  | 8   
|Item 3                                                                    |  |     | Legal Proceedings                                                                     |  | 8   
|Item 4                                                                    |  |     | Submission of Matters to a Vote of Security Holders                                   |  | 8   
|                                                                          |   |     | Executive Officers of the Registrant (Instruction 3 to Item 401(b) of Regulation S-K) |  | 9   
|PART II                                                                   |   |     |                                                                                       |  |     
|Item 5                                                                    |  |     | Market for Registrant's Common Equity and Related Stockholder Matters                 |  | 9   
|Item 6                                                                    |  |     | Selected Financial Data                                                               |  | 10  
|Item 7                                                                    |  |     | Management's Discussion and Analysis of Financial Condition and Results of Operations |  |     
|                                                                          |   |     | General                                                                               |  | 11  
|                                                                          |   |     | General Business Risks, Critical Accounting Policies and Estimates                    |  | 11  
|                                                                          |   |     | Results of Operations                                                                 |  | 13  
|                                                                          |   |     | Financial Condition and Liquidity                                                     |  | 17  
|                                                                          |   |     | Other Matters                                                                         |  | 19  
|Item 7A                                                                   |  |     | Quantitative and Qualitative Disclosures About Market Risk                            |  | 20  
|Item 8                                                                    |  |     | Financial Statements and Supplementary Data                                           |  | 20  
|Item 9                                                                    |  |     | Changes in and Disagreements with Accountants                                         |  | 20  
|PART III                                                                  |   |     |                                                                                       |  |     
|Item 10                                                                   |  |     | Directors and Executive Officers of the Registrant                                    |  | 20  
|Item 11                                                                   |  |     | Executive Compensation                                                                |  | 20  
|Item 12                                                                   |  |     | Security Ownership of Certain Beneficial Owners and Management                        |  | 20  
|Item 13                                                                   |  |     | Certain Relationships and Related Transactions                                        |  | 20  
|Item 14                                                                   |  |     | Controls and Procedures                                                               |  | 20  
|PART IV                                                                   |   |     |                                                                                       |  |     
|Item 15                                                                   |  |     | Exhibits, Financial Statement Schedules and Reports on Form 8-K                       |  | 21  
|Signatures                                                                |   | 23 
|Certifications                                                            |   | 24 
|TABLE OF CONTENTS  Financial Statements and Financial Statement Schedule |   | F-1

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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:

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.

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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 to assist
our clients service, grow, and increase the value of their customers. We support the Customer Relationship Management (CRM) strategies of many of the world's leading brands primarily in the
automotive, consumer products, financial services, insurance, technology, telecommunications, ISP and cable, and utilities sectors. By leveraging world-class operations across our global platform of
people, processes, and technology, SITEL provides customer acquisition, customer care, technical support, and risk management services on an outsourced basis to help clients service their customers
and build greater brand loyalty. In addition, SITEL offers value-added services designed to optimize the experience of each customer and maximize the value of every interaction. We also provide
operational and information technology professional services for both outsourced and in-house 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. Operating from a decentralized business model structure wherein
twenty-six separate business units serve over 300 clients around the world, the Company sells and operates locally while utilizing our global experience and expertise. We have
approximately 23,000 committed employees worldwide that actively represent many of the world's leading brand names. We operate from over 19,000 workstations in 77 contact centers located in 21
countries. We serve clients' customers in 52 countries communicating 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 account receivables. Capitalizing on our experience in operating
contact centers, our operational and technology professionals provide design, implementation and operation services to both outsourced and in-house contact center operators to optimize
every aspect of their day-to-day contact center operations. 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,

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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.

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 $35 billion in the year 2001 to $90 billion by the year 2006, or an average increase of 21% per year. Corporations are increasingly shifting key
business processes from internal
operations to outsourced partners. The business process outsourcing momentum is creating opportunities for the contact center outsourcing market. The industry is showing corporations that processes
can be improved resulting in higher outcomes for the corporations. 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:

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 77 facilities in 21 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 automotive, consumer products, financial services, insurance, technology, telecommunications, ISP and cable, and utilities sectors.

Organizational Structure

SITEL is unique within the outsource contact center industry by providing customer support services through a decentralized organization.
Twenty-six business units, organized geographically outside North America and by industry, client and function within North America, provide client centric customer support services using
best practices gained from our global experience. By leveraging our global expertise and serving clients locally, we are able to pay attention to detail, therefore, perform better for our clients.
Individual business units know their markets, their geographies, the local rules and regulations and are best positioned to, not only perform for existing clients, but to sell to companies in their
market. Clients served across business units are managed by a global accounts management team, but served by the individual business units. More and more companies are consolidating the number of
outsource contact center vendors and contracting with a company that can services them across geographies. SITEL's decentralized business model is meeting those needs especially in the
pan-European market. Our global sales team is responsible for developing and implementing customized industry-specific customer management solutions to prospective multi-national clients.

The Services We Offer

The Company provides innovative customer support services and solutions. 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 in-house contact
centers. SITEL, through our twenty-six individually managed business units, specializes in providing customer acquisition, customer care, technical support and risk management services
using multiple communication channels encompassing phone, e-mail, web and chat to assist clients support and grow their customers. SITEL's business units operates 27
customer support centers in the United States, 5 centers in Canada, 27 centers in Europe, 5 in Asia Pacific, 11 in Latin America, and 2 offshore facilities in Jamaica and India. SITEL's
customer service professionals (CSPs) are

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specially trained in the applicable product and/or service they are supporting. The CSPs act as a transparent
extension of the client in acquiring and serving the clients' customer. Each of our services leverage our contact center expertise and are 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, 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 in-house 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.

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 seventeen 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.

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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 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.

Markets and Clients

Our business units implement and operate customized industry-specific customer support solutions by geography and by specific vertical markets.
They have primary responsibility for operations, sales and marketing efforts in their defined area. Within this framework, we focus on large and medium size corporations in the automotive, consumer
products, financial services, insurance, technology, telecommunications, ISP and cable, and utilities sectors. These industries accounted for approximately 15%, 13%, 21%, 11%, 10%, 20% and 8%,
respectively, of our 2002 revenue. Sales in other industries, including travel, healthcare and various others, accounted for 2% of 2002 revenues. We serve over 300 clients in 21 countries.
Note 9 of our Notes to Consolidated Financial Statements provides information about our revenues by geographic region. Our top 20 clients accounted for 68.4% of our revenues in 2002, and
include multiple independently managed business units of General Motors Corporation. These General Motors business units were responsible for 23.5% of our total revenues in 2002. We did not have any
other clients under common control that generated 10% or more of our revenues.

The Industries We Serve

We provide contact center solutions primarily across the following industries:

Automotive

We provide customer support services for several automotive manufacturers including the largest automotive company in the world. Our services
support our clients' brands and promote customer satisfaction and loyalty. Services are performed through all communication channels and include general inquiries, dealer questions, warranty questions
and support.

Consumer Products

The consumer products industry encompasses a large variety of companies including retail, manufacturing, service, and publishing companies. In
addition to traditional product and service support solutions, we also provide specialized service processes such as lead generation, managing product recalls, and performing quality surveys and
market analysis.

Energy and Utilities

With the deregulation of the utility industry, companies are expanding their services and emphasizing the growth of their customer base. We provide
services to public and private energy and utility companies, including electric power, natural gas, water and integrated energy providers. In addition to traditional customer support services, we have
developed several processes to support the industry including: lead generation, loyalty campaign programs, appointment setting and scheduling, database management programs, and
end-to-end solutions for supporting the customer from connection to payment.

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Financial Services

Regulatory changes have opened up opportunities for the financial service industry. New product and service offerings have expanded our
opportunities in this fast paced industry. We work with financial services companies worldwide to provide a wide range of customer support services including responding to credit card inquiries,
transferring balances, taking and processing loan applications. Specialty processes we provide our clients in the financial services industry include managing loyalty programs, generating leads for
new customers, and managing customer retention programs.

Insurance

We are a leader in providing a broad range of services to the insurance industry. With over 350 in-house agents holding in excess of
17,000 licenses we have written over $8 billion of premiums over the last five years. We direct market fully underwritten Property & Casualty and Life & Health products. We also
support the accidental death and disability, credit life, and supplemental health insurance markets. Our customer support services for the insurance industry include all of the traditional services,
such as customer inquiries, policy changes, claims processing and full back-office support.

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. We have developed processes supporting the technology industry including processes for product launches, complete sales
and account management programs, corporate help desk, and warranty or post-warranty sales and support programs.

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. In addition to traditional product and service support
solutions, we deliver advanced order management, provisioning, and B2B support, and have developed specific end-to-end solutions for Internet service providers and wireless
service providers.

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.

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:

As
of December 31, 2002, we had approximately 23,000 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

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consultation with the appropriate labor union or works council. We consider relations with our employees to be good.

Offshore

The use of offshore facilities to service clients' customers from a location that offers reliable cost efficient labor is a growing trend in the
industry. We intend to continue to expand and pursue growth opportunities in offshore markets. Our offshore locations include Jamaica, India, Panama, and Canada which service English speaking
customers, and various Latin American countries that provide offshore services for Spanish language customers in the United States and Spain.

Competition

We are one of the largest independent companies executing contact center solutions. Our largest direct competitors include:

The
industry in which we compete is extremely competitive and fragmented. We compete with a variety of companies from small firms offering specific applications to companies listed above
to divisions of large enterprises. 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, solutions provided, industries served and large-scale project implementation and operational experience. 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.

The
FTC issued its original Telemarketing Sales Rule in 1995 pursuant to the federal Telemarketing and Consumer Fraud and Abuse Prevention Act of 1994. The original rule prohibited
misrepresentation regarding products or services offered by telephone solicitation and addressed other perceived telemarketing abuses in the offering of prizes and the sale of business opportunities
or investments.

The
FTC amended its Telemarketing Sales Rule in December 2002. The amended rule:

Most
provisions of the amended rule are effective in March 2003. The national do not call registry will be phased-in during 2003. The transmission to caller
identification phone service takes effect in March 2004.

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:

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.

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International

Countries outside the United States where we have substantial operations generally have not enacted detailed regulatory frameworks for
teleservices. The European Union (EU) has adopted various directives impacting the teleservices industry, which EU member countries are in various stages of implementing. Many countries, including
those in the EU, have enacted or proposed laws that regulate consumer privacy and the collection and use of consumer data.

Many
of these laws are based on the privacy principles established by the Organization 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. Many of these laws provide that personally identifiable information can only be used or disclosed for specified and lawful purposes and include civil and criminal
penalties for violations.

Key
EU actions include the:

Industry Regulation

The industries we serve are subject to varying degrees of government regulation. For example, our employees who sell certain U.S. insurance
products are typically required to be licensed by state insurance commissions and may also be required 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 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. However, in the US alone, compliance with the newly
amended FTC rule and the increasing regulation of our industry at the state level is imposing significant additional costs and burdens upon our business. Many proposed laws and regulations are in
early stages of consideration, and we cannot yet determine the impact these might have on our business. Governments, trade associations, and industry self-regulatory groups may enact even
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.

Existing
and 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' needs.

Quarterly Results and Seasonality

We have experienced, and expect to continue to experience, quarterly variations in our results of operations mostly due to:

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.

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Item 2. Properties

Our executive offices are located in Baltimore, Maryland.

As
of December 31, 2002, we operated Company Centers in various facilities that we lease and Client Centers that are on client premises as shown in the table below. In addition,
we were in the process of starting operations at a Company Center in Italy at December 31, 2002.

|Facility Location |  | Company
Centers |  | Client
Centers |  | Total
Facilities |  | Number of
Workstations
|----------------- |  | --------------- |  | -------------- |  | ---------------- |  | ----------------------
|
|Australia         |  | 1               |  |               |  | 1                |  | 186                   
|Belgium           |  | 1               |  |               |  | 1                |  | 578                   
|Brazil            |  | 4               |  |               |  | 4                |  | 660                   
|Canada            |  | 4               |  | 1              |  | 5                |  | 1,177                 
|Colombia **       |  | 1               |  | 3              |  | 4                |  | 437                   
|Denmark           |  | 1               |  |               |  | 1                |  | 50                    
|France            |  | 3               |  | 1              |  | 4                |  | 417                   
|Germany           |  | 2               |  |               |  | 2                |  | 799                   
|India **          |  | 1               |  |               |  | 1                |  | 750                   
|Ireland           |  | 1               |  |               |  | 1                |  | 304                   
|Jamaica **        |  | 1               |  |               |  | 1                |  | 214                   
|Mexico **         |  | 2               |  |               |  | 2                |  | 1,130                 
|Netherlands       |  | 1               |  |               |  | 1                |  | 223                   
|New Zealand       |  | 1               |  | 2              |  | 3                |  | 503                   
|Panama **         |  | 1               |  |               |  | 1                |  | 304                   
|Portugal          |  | 1               |  |               |  | 1                |  | 117                   
|Singapore         |  | 1               |  |               |  | 1                |  | 143                   
|Spain             |  | 5               |  | 4              |  | 9                |  | 2,129                 
|Sweden            |  | 1               |  | 1              |  | 2                |  | 238                   
|United Kingdom    |  | 5               |  |               |  | 5                |  | 1,703                 
|United States     |  | 22              |  | 5              |  | 27               |  | 7,642                 
|                 
|Totals:           |  | 60              |  | 17             |  | 77               |  | 19,704                
|                 

**
centers operated by our joint ventures

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 rent contact 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.

One
of our clients has received letters from time to time containing an offer to license and suggesting that the client might be infringing certain patents related to computerized
telephonic voice response systems without the license. The client has indicated that if any infringement occurred the client would seek contractual indemnity from us. In such an event, we would expect
to seek contractual indemnity from certain of our vendors. Any such contractual indemnity we might obtain likely would not be sufficient to cover all of the costs of investigating and resolving such
matter. We might also seek a license under the patents. Any such license may not be available under commercially reasonable terms. Any license costs would increase the cost of doing business in the
future and may or may not be fully reflected in our pricing. To our knowledge, no litigation has been initiated against our client or us concerning this matter. At this stage, due to the inherent
uncertainties, we are unable to predict whether this matter may have a material adverse effect on our business or on our financial condition or results of operation.

Item 4. Submission of Matters to a Vote of Security Holders

Not applicable.

8

---

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 Held
During Past Five Years                                                                                                                                                                           
|----------------------- |  | --- |  | ------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|                        |  |     |  |                                                                                             |  |                                                                                                                                                                                                                                  
|James F. Lynch          |  | 53  |  | 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       |  | 56  |  | Executive Vice President, Business Development (since March 2002) and Director              |  | Chairman, DreamField Partners, Inc.; Chairman, Chief Executive Officer, and President, Inacom Corp.                                                                                                                              
|Dale W. Saville         |  | 58  |  | Executive Vice President, Corporate Development (since October 2000)                        |  | Senior Vice President and Chief Technology Officer, Vice President  Product Development, Vice President  EMEA Customer Support Operations, and Vice President  US Customer Support Operations, Sykes Enterprises,
Incorporated
|Dale R. Schuster        |  | 51  |  | Executive Vice President, Global Sales (since January 2001)                                 |  | Senior Vice President, SITEL Corporation; Vice President  Sales & Marketing, Northern Aurora, Inc.; Vice President  Administration and Vice President  Development, CalEnergy                                                 
|James E. Stevenson, Jr. |  | 47  |  | 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.

|               |  | 2002 |      | 2001
|-------------- |  | ---- | ---- | ----
|
|First Quarter  |  | $    | 3.30 |     
|Second Quarter |  | $    | 3.28 |     
|Third Quarter  |  | $    | 3.19 |     
|Fourth Quarter |  | $    | 1.99 |     

Shares Outstanding and Holders of Common Stock

As of March 6, 2003, we had 74,363,431 shares of common stock outstanding and 609 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 Senior Subordinated Notes and revolving credit facility contain certain restrictions on the payment of cash dividends.

Equity Compensation Plan Information

The information required by this item with respect to equity compensation plans is set forth in the Proxy Statement under the caption "Equity Compensation Plans"
and is incorporated herein by reference.

9

---

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,                                                                   |         | 2002 |         | 2001   |   | 2000    |        | 1999 |         | 1998   |  
|------------------------------------------------------------------------------------------ | ------- | ---- | ------- | ------ | - | ------- | ------ | ---- | ------- | ------ | -
|
|
|Income Statement Data:                                                                     |         |      |         |        |   |         |        |      |         |        |  
|Revenues                                                                                   |         | $    | 770,211 |        | $ | 725,048 |        | $    | 764,447 |        | $
|                                                                                           |        
|Operating expenses                                                                         |         |      | 739,457 |        |   | 708,565 |        |      | 722,151 |        |  
|Asset impairment and restructuring expenses (a)                                            |         |      | 1,444   |        |   | 26,185  |        |      | 3,520   |        |  
|                                                                                           |        
|Operating income (loss)                                                                    |         |      | 29,310  |        |   | (9,702  | )      |      | 38,776  |        |  
|Interest expense, net                                                                      |         |      | (11,250 | )      |   | (11,642 | )      |      | (12,067 | )      |  
|Equity in earnings (loss) of affiliates                                                    |         |      | 3,441   |        |   | (297    | )      |      |        |        |  
|Other income (expense), net                                                                |         |      | (636    | )      |   | (2,309  | )      |      | (311    | )      |  
|                                                                                           |        
|Income (loss) before income taxes, minority interest
and change in accounting method       |         |      | 20,865  |        |   | (23,950 | )      |      | 26,398  |        |  
|Income tax expense (benefit)                                                               |         |      | 10,437  |        |   | (2,317  | )      |      | 12,570  |        |  
|Minority interest                                                                          |         |      | 1,812   |        |   | 947     |        |      | 1,087   |        |  
|                                                                                           |        
|Income (loss) before extraordinary items and change in accounting method                   |         |      | 8,616   |        |   | (22,580 | )      |      | 12,741  |        |  
|Extraordinary loss on refinancing of debt, net of taxes                                    |         |      |        |        |   |        |        |      |        |        |  
|Cumulative effect of a change in accounting for goodwill (b)                               |         |      | (18,399 | )      |   |        |        |      |        |        |  
|                                                                                           |        
|Net income (loss) (c)                                                                      |         | $    | (9,783  | )      | $ | (22,580 | )      | $    | 12,741  |        | $
|                                                                                           |        
|Weighted average common shares outstanding:                                                |         |      |         |        |   |         |        |      |         |        |  
|                                                                                           | Basic   |      |         | 74,225 |   |         | 73,424 |      |         | 71,052 |  
|                                                                                           | Diluted |      |         | 74,335 |   |         | 73,424 |      |         | 75,201 |  
|Income (loss) before extraordinary items and change in accounting method per common share: |         |      |         |        |   |         |        |      |         |        |  
|                                                                                           | Basic   |      | $       | 0.12   |   | $       | (0.31  | )    | $       | 0.18   |  
|                                                                                           | Diluted |      | $       | 0.12   |   | $       | (0.31  | )    | $       | 0.17   |  
|Net income (loss) per common share:                                                        |         |      |         |        |   |         |        |      |         |        |  
|                                                                                           | Basic   |      | $       | (0.13  | ) | $       | (0.31  | )    | $       | 0.18   |  
|                                                                                           | Diluted |      | $       | (0.13  | ) | $       | (0.31  | )    | $       | 0.17   |  

|At December 31,                        |  | 2002 |         | 2001 |   | 2000    |  | 1999 |         | 1998
|-------------------------------------- |  | ---- | ------- | ---- | - | ------- |  | ---- | ------- | ----
|
|
|Balance Sheet Data:                    |  |      |         |      |   |         |  |      |         |     
|Working capital                        |  | $    | 80,618  |      | $ | 72,677  |  | $    | 93,583  |     
|Total assets                           |  |      | 351,977 |      |   | 355,466 |  |      | 380,222 |     
|Long-term debt, net of current portion |  |      | 107,307 |      |   | 107,040 |  |      | 108,341 |     
|Stockholders' equity                   |  |      | 139,162 |      |   | 140,040 |  |      | 169,582 |     

10

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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 in-house contact centers. We serve
clients primarily in the automotive, consumer products, financial services, insurance, technology, telecommunications, ISP and cable, and utilities sectors.

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 2002, 2001, and 2000, 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. Our top 20 clients
accounted for 68.4% of our revenues in 2002, and include multiple independently managed business units of General Motors Corporation. These General Motors business units were responsible for 23.5% of
our total revenues in 2002. We did not have any other clients under common control that generated 10% or more of our revenues. Two of the primary General Motors contracts expire in
January 2004. We are currently in negotiations regarding the continuation of services for these clients beyond the expiration date. 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 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:

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, and administrative expense in our Consolidated Statements of Income (Loss), which would

11

---

reduce our results of operations. Our accounts receivable balance at December 31, 2002 was $128.6 million, net of an allowance for doubtful accounts of $4.0 million.

Property and Equipment

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. If the actual useful lives of these assets are less than the estimated depreciable lives, we would record additional depreciation expense or losses on disposal to the extent
the net book value of such asset is not recovered upon sale.

Asset Impairment

In October 2001, the Financial Accounting Standards Board issued SFAS No. 144,Accounting for the Impairment or Disposal of
Long-Lived Assets. We adopted the provisions of SFAS No. 144 effective January 1, 2002. Under this standard, we monitor events and changes in
circumstances that may require us to review the carrying value of our long-lived assets. We assess the recoverability of our long-lived assets based on estimated undiscounted
future operating cash flows. Our assessment of the recoverability of our long-lived assets will be impacted if estimated future operating cash flows are not achieved.

Goodwill

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
adopted the provisions of SFAS No. 142,Goodwill and Other Intangible Assets,as of January 1, 2002. As a result of the
adoption of this standard, we stopped amortizing our goodwill effective January 1, 2002, which means that we have not recorded any goodwill amortization expense in our Consolidated Statements
of Income (Loss) for the year ended December 31, 2002 and we will not record such amortization in future years.

During
2002, we performed a transitional goodwill impairment review in two phases to determine if goodwill that was stated in our Consolidated Balance Sheet at January 1, 2002 was
impaired. During the second quarter of 2002, we completed the first phase of the required impairment review, and determined that the goodwill in certain reporting units was impaired at
January 1, 2002. We completed the second phase of the transitional impairment review during the fourth quarter of 2002. As a result of these reviews, we recorded a pre-tax goodwill
impairment loss of $18.4 million as a cumulative effect of an accounting change in the 2002 financial statements. Effective as of October 1, 2002, we completed a further analysis of our
goodwill and determined no additional impairment was required.

As
of December 31, 2002, we have goodwill of $49.7 million. At least annually or more frequently as changes in circumstance indicate, we will evaluate the estimated fair
value of our goodwill. On these evaluation dates, to the extent that the carrying value of the net assets of any of our reporting units having goodwill is greater than their estimated fair value, we
will be required to take additional goodwill impairment charges.

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, 2002 was $11.3 million, net of a
valuation allowance of $43.4 million.

Significant
management judgment is required in determining any valuation allowance recorded against our deferred tax assets. We have recorded a valuation allowance of
$43.4 million as of December 31, 2002, 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 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:

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.

12

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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, change in
accounting method, and other items, in the following tables: Net Income (Loss)

|Years Ended December 31,                                         |  | 2002 |               | 2001 |   | 2000  |  
|---------------------------------------------------------------- |  | ---- | ------------- | ---- | - | ----- | -
|                                                                 | 
|                                                                 |  |      | (in millions) |     
|Net income (loss), before restructuring expenses and other items |  | $    | 11.8          |      | $ | 0.9   |  
|Goodwill impairment charge under SFAS 142                        |  |      | (18.4         | )    |   |      |  
|Asset impairment and restructuring expenses, after tax           |  |      | (0.9          | )    |   | (24.6 | )
|Losses on disposals of fixed assets, after tax                   |  |      |              |      |   | (0.8  | )
|Write-off of credit acquisition costs                            |  |      |              |      |   | (0.8  | )
|Valuation allowance on deferred tax assets                       |  |      | (2.3          | )    |   | (3.3  | )
|Tax benefit expected to to be realized in future years           |  |      |              |      |   | 6.0   |  
|                                                                 | 
|Net income (loss)                                                |  | $    | (9.8          | )    | $ | (22.6 | )
|                                                                 | 

2002 Compared to 2001

We had a net loss of $9.8 million, or ($0.13) per share, in 2002, compared to a net loss of $22.6 million, or ($0.31) per share, in 2001. Results in
2002 were primarily impacted by the $18.4 million goodwill write-off that was recorded as of January 1, 2002, a $1.4 million asset impairment and restructuring charge
in the third quarter, and a $2.3 million valuation allowance on deferred tax assets recorded in the fourth quarter. All of these items are summarized in the table above.

Excluding
the goodwill write-off and other items described above in 2002 and the asset impairment, restructuring expenses, and other items described above in 2001, we had net
income of $11.8 million, or $0.16 per share, in 2002 compared to net income of $0.9 million, or $0.01 per share, in 2001. This increase resulted mostly from a 6.2% increase in revenues
and higher operating margins in 2002.

Net Income (Loss) Per Common ShareDiluted

|Years Ended December 31,                                                   |  | 2002 |       | 2001 |   | 2000  |  
|-------------------------------------------------------------------------- |  | ---- | ----- | ---- | - | ----- | -
|                                                                           | 
|                                                                           |  |      |       |      |   |       |  
|Net income (loss) per share, before restructuring expenses and other items |  | $    | 0.16  |      | $ | 0.01  |  
|Goodwill impairment charge under SFAS 142                                  |  |      | (0.25 | )    |   |      |  
|Asset impairment and restructuring expenses, after tax                     |  |      | (0.01 | )    |   | (0.33 | )
|Losses on disposals of fixed assets, after tax                             |  |      |      |      |   | (0.01 | )
|Write-off of credit acquisition costs                                      |  |      |      |      |   | (0.01 | )
|Valuation allowance on deferred tax assets                                 |  |      | (0.03 | )    |   | (0.05 | )
|Tax benefit expected to be realized in future years                        |  |      |      |      |   | 0.08  |  
|                                                                           | 
|Net income (loss) per share                                                |  | $    | (0.13 | )    | $ | (0.31 | )
|                                                                           | 

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.

Excluding
the 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.

13

---

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.

|                                                                                     |  | 2002 |         | 2001 |      | 2000 |  
|------------------------------------------------------------------------------------ |  | ---- | ------- | ---- | ---- | ---- | -
|
|
|
|Revenues                                                                             |  | $    | 770,211 |      | 100  | %    | $
|Direct labor and telecommunications expenses                                         |  |      | 433,456 |      | 56.3 | %    |  
|Subcontracted and other services expenses                                            |  |      | 55,027  |      | 7.1  | %    |  
|Operating, selling, and administrative expenses                                      |  |      | 250,974 |      | 32.6 | %    |  
|Asset impairment and restructuring expenses                                          |  |      | 1,444   |      | 0.2  | %    |  
|                                                                                     | 
|Operating income (loss)                                                              |  |      | 29,310  |      | 3.8  | %    |  
|Interest expense, net                                                                |  |      | (11,250 | )    | (1.4 | %)   |  
|Equity in earnings (loss) of affiliates                                              |  |      | 3,441   |      | 0.4  | %    |  
|Other expense, net                                                                   |  |      | (636    | )    | (0.1 | %)   |  
|                                                                                     | 
|Income (loss) before income taxes, minority interest and change in accounting method |  |      | 20,865  |      | 2.7  | %    |  
|Income tax expense (benefit)                                                         |  |      | 10,437  |      | 1.4  | %    |  
|Minority interest                                                                    |  |      | 1,812   |      | 0.2  | %    |  
|                                                                                     | 
|Income (loss) before change in accounting method                                     |  |      | 8,616   |      | 1.1  | %    |  
|Cumulative effective of a change in accounting for goodwill                          |  |      | (18,399 | )    | 2.4  | %    |  
|                                                                                     | 
|Net income (loss) (a)                                                                |  | $    | (9,783  | )    | (1.3 | %)   | $
|                                                                                     | 

2002 Compared to 2001

Revenues

Revenues increased $45.2 million, or 6.2%, in 2002 compared to 2001. The increases in revenues by geographic region are shown in the following table:

|              |  | $ |      | %
|------------- |  | - | ---- | -
|
|
|              |  |   |      |  
|North America |  | $ | 24.5 |  
|Europe        |  |   | 15.1 |  
|Asia Pacific  |  |   | 3.0  |  
|Latin America |  |   | 2.6  |  

The increase in North America revenues was mostly due to additional customer care and customer acquisition services we provided to a number of our
large global clients and to new work performed by our risk management business. These increases were partially offset by a reduction in technical support services. The weakening of the U.S. dollar
versus the British pound and Euro accounted for about $10.6 million, or 70%, of the increase in Europe along with the ramp of new customer programs. The increase in Latin America revenues was
due mostly to new work we performed for clients in Mexico and to revenues from our Panama site, as we began serving clients from that facility during the fourth quarter of 2001.

As
a result of certain revisions in the governance of a joint venture, we reported our investment in certain Latin America affiliates using the equity method of accounting, rather than
the consolidation method, effective October 1, 2002. As a result of this change, our Latin America revenues will no longer include the revenues associated with the joint venture. Our 2002
revenues were approximately $10 million lower due to the change in accounting.

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.

14

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Direct
labor and telecommunications expenses increased $22.4 million, or 5.5%, in 2002 compared to 2001. As a percentage of revenues, direct labor and telecommunications expenses
decreased from 56.7% in 2001 to 56.3% in 2002.

However,
as we discuss in the following section, we subcontract certain client services to our India joint venture. We do not incur direct labor and telecommunication expenses for these
subcontracted services, as such costs are incurred by the joint venture. Excluding the revenues we have recorded from clients where we have subcontracted the services to our India joint venture,
direct labor and telecommunications expenses as a percentage of revenues increased from 56.7% in 2001 compared to 57.5% in 2002, primarily due to lower unit prices from our clients.

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 increased $18.1 million, or 48.9%, in 2002 compared to 2001. The increase in these expenses was mostly due to subcontracted expenses of
$14.3 million paid to our India joint venture as we began serving clients from that facility during the third quarter of 2001.

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 $9.6 million, or 3.7%, in 2002 compared to 2001. Excluding goodwill amortization expense of $3.6 million from the
year ended December 31, 2001, operating, selling and administrative expenses decreased $6.0 million, or 2.3%. The decline in these expenses was mostly due to our restructuring plan that
began at the end of the third quarter of 2001, partially offset by the ramp up of new customer programs in Europe in the third quarter of 2002. As a percentage of revenues, operating, selling and
administrative expenses decreased from 35.4% in 2001, excluding goodwill amortization expense, to 32.6% in 2002.

Asset Impairment and Restructuring Expenses

During 2002, in connection with the restructuring plan announced in 2001, we recorded additional restructuring charges of $1.4 million associated with the
write-off of contact center operations and corporate support services identified in 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 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:

In
the second quarter of 2001, we recorded $23.8 million of asset impairment and restructuring charges, or $22.1 million net of tax, related to the restructuring plan we
announced in June 2001 as described above. In the third quarter of 2001, we recorded $2.4 million of additional charges related to the plan.

Operating Income (Loss)

We had operating income of $29.3 million in 2002, compared to an operating loss of $9.7 million in 2001. Excluding the asset impairment and
restructuring expenses in both years and goodwill amortization expense in 2001, operating income increased $10.7 million from $20.1 million in 2001 to $30.8 million in 2002. As a
percentage of revenues, operating income was 4.0% in 2002 compared to 2.8% in 2001. 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 slightly lower in 2002 compared to 2001.

Equity in Earnings (Loss) of Affiliates

Equity in earnings (loss) of affiliates represents our percentage share of the earnings (loss) from our investment in a joint venture in India. As discussed
previously, effective October 1, 2002, we revised our joint venture agreement and the results of our operations in certain Latin America affiliates are now being accounted for under the equity
method.

As
a result, equity in earnings (loss) of affiliates increased by $3.7 million in 2002 as compared to 2001 primarily due to us beginning to serve clients from the India facility
in the third quarter of 2001.

Other Expense, Net

Other expense, net of other income, decreased $1.7 million in 2002 compared to 2001 mostly because we recorded $1.3 million of losses on disposals of
certain assets recognized in 2001.

Income Tax Expense (Benefit)

We recorded income tax expense of $10.4 million in 2002 compared to an income tax benefit of $2.3 million in 2001.

15

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The
2002 income tax expense reflects a $2.3 million deferred income tax expense we recorded in the fourth quarter to increase the valuation allowance on deferred tax assets that
were recorded in prior years related to an Asia Pacific subsidiary.

In
2002, income tax expense as a percentage of income before income taxes, minority interest and change in accounting method, excluding the charge in our deferred tax valuation allowance
was 39%. The difference between this rate and the statutory U.S. Federal rate of 35% was primarily due to net operating losses in certain European and Asia Pacific subsidiaries for which no tax
benefit was recognized and U.S. state and local income taxes offset by lower international tax rates in certain jurisdictions.

The
2001 benefit reflects:

These
benefits were offset by a $3.3 million deferred income tax expense we recorded in the second quarter to establish a valuation allowance on deferred tax assets that were
recorded in prior years related to our United Kingdom subsidiaries.

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:

|              |  | $ |       | % |      
|------------- |  | - | ----- | - | -----
|
|
|              |  |   |       |   |      
|North America |  | $ | (3.0  | ) | (0.6 
|Europe        |  |   | (40.6 | ) | (17.1
|Asia Pacific  |  |   | (8.6  | ) | (25.6
|Latin America |  |   | 12.8  |   | 43.2 

Revenues decreased 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:

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 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.

16

---

As
part of our restructuring plan, we reduced fixed overhead to improve profitability by substantially completing the following by December 31, 2001:

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.

Equity in Earnings (Loss) of Affiliates

We recognized a loss of $0.3 million associated with the operating results of affiliates accounted for under the equity method. This loss was attributed
primarily to the establishment of operations in India which did not exist 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:

These
benefits were 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 subsidiaries.

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.

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

The following 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.

|Years Ended December 31,        |                      | 2002 |   | 2001  |   | 2000 |      
|------------------------------- | -------------------- | ---- | - | ----- | - | ---- | -----
|
|
|                                |                      |      |   |       |   |      |      
|Net cash provided by (used in): |                      |      |   |       |   |      |      
|                                | Operating activities |      | $ | 38.1  |   | $    | 48.6 
|                                | Investing activities |      |   | (28.5 | ) |      | (43.8
|                                | Financing activities |      |   | 3.3   |   |      | (3.9 

17

---

2002

In 2002, cash provided by operating activities came from income before asset impairment and restructuring expenses, depreciation and amortization, and other
charges of $43.9 million and a $2.9 million decrease in trade accounts payable, which were partially offset by a $7.4 million increase in trade accounts receivable and other
assets.

In
2002, we used cash for investing activities mostly to purchase $30.4 million of property and equipment. We received $1.5 million from the sale of property and equipment
associated with our joint ventures.

In
2002, we received cash from financing activities mostly from borrowings under our credit facility.

2001

In 2001, 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.

In
2001, we used cash for financing activities mostly to repay $3.8 million of capital lease obligations.

2000

In 2000, 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.

Capital Resources

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.

Effective
December 27, 2002, we closed a three-year $50 million revolving credit facility. This new facility replaced our previous $50 million
long-term senior secured credit facility which was due to expire in April 2003.

The
new credit facility is secured by accounts receivable in the United States, Canada and the United Kingdom. We intend to utilize the facility, as needed, for ongoing working capital
requirements and general corporate purposes.

At
December 31, 2002, we had $44.6 million of available borrowings under the new credit facility, and we 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 2003 capital expenditures will range from $25 to $35 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.

Contractual Obligations and Commitments

We have various contractual obligations and commitments that are described in the Notes to Consolidated Financial Statements. We summarize our contractual
obligations and commitments at December 31, 2002 in the following table:

|Year       |  | Long-Term
Debt |         | Capital
Leases |   | Operating
Leases |  | Purchase *
Obligations |        | Total
|---------- |  | -------------- | ------- | -------------- | - | ---------------- |  | ---------------------- | ------ | -----
|
|
|           |  |                |         |                |   |                  |  |                        |        |      
|2003       |  | $              | 5,404   |                | $ | 2,578            |  | $                      | 19,263 |      
|2004       |  |                |        |                |   | 1,838            |  |                        | 15,992 |      
|2005       |  |                |        |                |   | 1,021            |  |                        | 12,901 |      
|2006       |  |                | 100,000 |                |   | 725              |  |                        | 10,487 |      
|2007       |  |                |        |                |   | 662              |  |                        | 8,385  |      
|Thereafter |  |                |        |                |   | 4,854            |  |                        | 21,811 |      
|          
|Total      |  | $              | 105,404 |                | $ | 11,678           |  | $                      | 88,839 |      
|          

* We generally do not make unconditional, non-cancelable purchase commitments. We enter into purchase orders in the normal course of
business, but these purchase obligations do not exceed one year.

18

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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:

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.

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 2001, the FASB issued SFAS No. 143,Accounting for Asset Retirement Obligations.SFAS
No. 143 requires us to record the fair value of an asset retirement obligation as a liability in the period in which we incur a legal obligation associated with the retirement of tangible
long-lived assets. We are required to adopt SFAS No. 143 on January 1, 2003. The adoption of SFAS No. 143 is not expected to have a material effect on our consolidated
financial statements.

In
June 2002, the FASB issued SFAS No. 146,Accounting for Costs Associated with Exit or Disposal Activities. SFAS
No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity. The provisions of this Statement are effective for
exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. The adoption of SFAS No. 146 is not expected to have a material effect on our
consolidated financial statements.

In
October 2002, the Emerging Issues Task Force of the Financial Accounting Standards Board reached a consensus on the accounting for revenues in transactions that involve
multiple deliverables. The guidance governs how to identify whether goods or services or both, that are to be delivered separately in a bundled sales arrangement, should be accounted for separately.
This guidance is effective for fiscal years beginning after December 15, 2003, so we expect to adopt the guidance in our financial statements for the quarter ended March 31, 2004. We
have not yet determined the impact of this conclusion on our consolidated financial statements.

In
November 2002, the FASB issued Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others,an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation
No. 34. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations under guarantees
issued. The Interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The initial recognition
and measurement provisions of the Interpretation are not expected to have a material effect on our consolidated financial statements.

In
December 2002, the FASB issued SFAS No. 148, Accounting for Stock-Based Compensation -Transition and Disclosure, an amendment of FASB Statement No. 123. This
Statement amends FASB Statement No. 123, Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value method of accounting for
stock-based employee compensation. In addition, this Statement amends the disclosure requirements of Statement No. 123 to require prominent disclosures in both annual and interim financial
statements. Certain of the disclosure modifications are required for fiscal years ending after December 15, 2002 and are included in the notes to these consolidated financial statements.

In
January 2003, the FASB issued Interpretation No. 46,Consolidation of Variable Interest Entities, an interpretation of ARB
No. 51.This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation applies
immediately to variable interests in variable interest entities created after January 31, 2003, and to variable interests in variable interest entities obtained after January 31, 2003.
The application of this Interpretation is not expected to have a material effect on our consolidated financial statements.

Reclassifications

We have reclassified certain prior-period amounts for comparative purposes. These reclassifications did not affect consolidated net income for the periods
presented.

---

19

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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, 2002, our average borrowings under our bank credit facility were $2.1 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 on Accounting and Financial Disclosure

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 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," "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.

Item 14. Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as
defined under Rules 13a-14 and 15d-14 of the Securities Exchange Act of 1934, as amended) as of a date within ninety days of the filing date of this report. Based upon
that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are adequate and effective.

There
were no significant changes in our internal controls or in other factors that could significantly affect our internal controls subsequent to the date of such evaluation, including
any corrective actions with regard to significant deficiencies and material weaknesses.

20

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PART IV

Item 15. Exhibits, Financial Statement Schedules and Reports on Form 8-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).                                                                           
|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).                       
|            |  |                                                                                                                                                                                                              

21

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|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*            |  | Loan and Security Agreement with Fleet Capital Corporation individually as Agent.                                                                                                                                   
|10.12             |  | Indenture governing $100,000,000 91/4% 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).                                                                                           
|10.20             |  | 2001 Nonemployee Director Compensation Plan.                                                                                                                                                                        
|21*               |  | Subsidiaries.                                                                                                                                                                                                       
|23*               |  | Independent Auditors' Consent.                                                                                                                                                                                      
|99.1*             |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                              
|99.2*             |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                              
|* Filed herewith.

22

---



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 27, 2003 |  | 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                                                                              |  | Date          
|-- |  | --- | ---------------------------------------------- |  | ---------------------------------------------------------------------------------- |  | --------------
|   |  |     |                                                |  |                                                                                    |  |               
|By |  | /s/ | James F. LynchJames F. Lynch                   |  | Chairman of the Board,
Chief Executive Officer and Director                        |  | March 27, 2003
|By |  | /s/ | James E. Stevenson, Jr.James E. Stevenson, Jr. |  | Executive Vice President and Chief
Financial Officer
(Principal Financial Officer) |  | March 27, 2003
|By |  | /s/ | Donald J.VranaDonald J.Vrana                   |  | Vice President and Controller
(Principal Accounting Officer)                       |  | March 27, 2003
|By |  | /s/ | Kelvin C. BerensKelvin C. Berens               |  | Director                                                                           |  | March 27, 2003
|By |  | /s/ | Rohit M. DesaiRohit M. Desai                   |  | Director                                                                           |  | March 27, 2003
|By |  | /s/ | Mathias J. DeVitoMathias J. DeVito             |  | Director                                                                           |  | March 27, 2003
|By |  | /s/ | Bill L. FairfieldBill L. Fairfield             |  | Executive Vice President, Business
Development and Director                        |  | March 27, 2003
|By |  | /s/ | George J. KubatGeorge J. Kubat                 |  | Director                                                                           |  | March 27, 2003

23

---



CERTIFICATIONS

I,
James F. Lynch, certify that:



Date:
March 27, 2003

| |  | By | /s/JAMES F. LYNCHJames F. LynchChief Executive Officer
| |  | -- | ------------------------------------------------------

24

---

I,
James E. Stevenson, Jr., certify that:



Date:
March 27, 2003

| |  | By | /s/JAMES E. STEVENSON, JR.James E. Stevenson, Jr.Chief Financial Officer
| |  | -- | ------------------------------------------------------------------------

25

---



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).                                                          
|            |  |                                                                                                                                                                                                                     

26

---

|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*   |  | Loan and Security Agreement with Fleet Capital Corporation individually as Agent.                                                                       
|10.12    |  | Indenture governing $100,000,000 91/4% 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).                               
|10.20    |  | 2001 Nonemployee Director Compensation Plan.                                                                                                            
|21*      |  | Subsidiaries.                                                                                                                                           
|23*      |  | Independent Auditors' Consent.                                                                                                                          
|99.1*    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                  
|99.2*    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                  

*
Filed herewith.

27

---



SITEL CORPORATION AND SUBSIDIARIES        TABLE OF CONTENTS  Financial Statements and Financial Statement Schedule

|Consolidated Financial Statements                                                                     |  |    
|----------------------------------------------------------------------------------------------------- |  | ---
|Independent Auditors' Report                                                                          |  | F-2
|Consolidated Statements of Income (Loss) For The Years Ended December 31, 2002, 2001, and 2000        |  | F-3
|Consolidated Balance Sheets at December 31, 2002 and 2001                                             |  | F-4
|Consolidated Statements of Stockholders' Equity For The Years Ended December 31, 2002, 2001, and 2000 |  | F-5
|Consolidated Statements of Cash Flows For The Years Ended December 31, 2002, 2001, and 2000           |  | F-6
|Notes to Consolidated Financial Statements                                                            |  | F-7
|Financial Statement Schedule                                                                          |  |    
|Independent Auditors' Report on the Financial Statement Schedule                                      |  | S-1
|Schedule II  Valuation and Qualifying Accounts                                                       |  | S-2

F-1

---



Independent Auditors' Report

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, 2002 and 2001, 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, 2002. 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, 2002 and 2001, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2002, in conformity
with accounting principles generally accepted in the United States of America.

As
discussed in Note 1 to the consolidated financials statements, the Company adopted the provisions of SFAS No. 142,Goodwill and Other Intangible
Assets, as of January 1, 2002.

|/s/ KPMG LLP                         |  | 
|------------------------------------ |  | 
|KPMG LLP                             |  | 
|Baltimore, Maryland
January 31, 2003 |  | 

F-2

---



SITEL CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF INCOME (LOSS)

|Years Ended December 31,                                                             |                                                 | 2002 |         | 2001    |   | 2000    |        
|------------------------------------------------------------------------------------ | ----------------------------------------------- | ---- | ------- | ------- | - | ------- | -------
|
|
|Revenues                                                                             |                                                 | $    | 770,211 |         | $ | 725,048 |        
|                                                                                     |                                                
|Operating expenses:                                                                  |                                                 |      |         |         |   |         |        
|                                                                                     | Direct labor and telecommunications expenses    |      |         | 433,456 |   |         | 411,066
|                                                                                     | Subcontracted and other services expenses       |      |         | 55,027  |   |         | 36,949 
|                                                                                     | Operating, selling, and administrative expenses |      |         | 250,974 |   |         | 260,550
|                                                                                     | Asset impairment and restructuring expenses     |      |         | 1,444   |   |         | 26,185 
|                                                                                     |                                                
|                                                                                     | Total operating expenses                        |      |         | 740,901 |   |         | 734,750
|                                                                                     |                                                
|Operating income (loss)                                                              |                                                 |      | 29,310  |         |   | (9,702  | )      
|                                                                                     |                                                
|Other income (expense):                                                              |                                                 |      |         |         |   |         |        
|                                                                                     | Interest income                                 |      |         | 475     |   |         | 924    
|                                                                                     | Interest expense                                |      |         | (11,725 | ) |         | (12,566
|                                                                                     | Equity in earnings (loss) of affiliates         |      |         | 3,441   |   |         | (297   
|                                                                                     | Other expense, net                              |      |         | (636    | ) |         | (2,309 
|                                                                                     |                                                
|                                                                                     | Total other expense, net                        |      |         | (8,445  | ) |         | (14,248
|                                                                                     |                                                
|Income (loss) before income taxes, minority interest and change in accounting method |                                                 |      | 20,865  |         |   | (23,950 | )      
|Income tax expense (benefit)                                                         |                                                 |      | 10,437  |         |   | (2,317  | )      
|Minority interest                                                                    |                                                 |      | 1,812   |         |   | 947     |        
|                                                                                     |                                                
|Income (loss) before change in accounting method                                     |                                                 |      | 8,616   |         |   | (22,580 | )      
|Cumulative effect of a change in accounting for goodwill                             |                                                 |      | (18,399 | )       |   |        |        
|                                                                                     |                                                
|Net income (loss)                                                                    |                                                 | $    | (9,783  | )       | $ | (22,580 | )      
|                                                                                     |                                                
|Weighted average common shares outstanding:                                          |                                                 |      |         |         |   |         |        
|                                                                                     | Basic                                           |      |         | 74,225  |   |         | 73,424 
|                                                                                     | Diluted                                         |      |         | 74,335  |   |         | 73,424 
|Earnings per share:                                                                  |                                                 |      |         |         |   |         |        
|Basic:                                                                               |                                                 |      |         |         |   |         |        
|Income (loss) before change in accounting method                                     |                                                 | $    | 0.12    |         | $ | (0.31   | )      
|Cumulative effect of a change in accounting for goodwill                             |                                                 |      | (0.25   | )       |   |        |        
|                                                                                     |                                                
|Net income (loss)                                                                    |                                                 | $    | (0.13   | )       | $ | (0.31   | )      
|                                                                                     |                                                
|Diluted:                                                                             |                                                 |      |         |         |   |         |        
|Income (loss) before change in accounting method                                     |                                                 | $    | 0.12    |         | $ | (0.31   | )      
|Cumulative effect of a change in accounting for goodwill                             |                                                 |      | (0.25   | )       |   |        |        
|                                                                                     |                                                
|Net income (loss)                                                                    |                                                 | $    | (0.13   | )       | $ | (0.31   | )      
|                                                                                     |                                                

See Notes to Consolidated Financial Statements.

F-3

---

SITEL CORPORATION AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS

|At December 31,                            |                                             | 2002                                                                                                                                     |         | 2001   |        
|------------------------------------------ | ------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | ------- | ------ | -------
|
|
|Assets                                     |                                             |                                                                                                                                          |         |        |        
|                                           | Current assets:                             |                                                                                                                                          |         |        |        
|                                           |                                             | Cash and cash equivalents                                                                                                                |         | $      | 34,142 
|                                           |                                             | Trade accounts receivable (net of allowance for doubtful accounts of$4,011and $5,208, respectively)                                      |         |        | 128,643
|                                           |                                             | Prepaid expenses                                                                                                                         |         |        | 7,173  
|                                           |                                             | Deferred income taxes                                                                                                                    |         |        | 5,141  
|                                           |                                             | Other assets                                                                                                                             |         |        | 8,557  
|                                           |                                            
|                                           |                                             | Total current assets                                                                                                                     |         |        | 183,656
|                                           |                                            
|                                           | Property and equipment, net                 |                                                                                                                                          |         | 86,883 |        
|                                           |                                            
|                                           | Other assets:                               |                                                                                                                                          |         |        |        
|                                           |                                             | Goodwill, net                                                                                                                            |         |        | 49,724 
|                                           |                                             | Deferred income taxes                                                                                                                    |         |        | 6,191  
|                                           |                                             | Investment in affiliates                                                                                                                 |         |        | 17,461 
|                                           |                                             | Other assets                                                                                                                             |         |        | 8,062  
|                                           |                                            
|Total assets                               |                                             | $                                                                                                                                        | 351,977 |        | $      
|                                           |                                            
|Liabilities and Stockholders' Equity       |                                             |                                                                                                                                          |         |        |        
|                                           | Current liabilities:                        |                                                                                                                                          |         |        |        
|                                           |                                             | Current portion of long-term debt                                                                                                        |         | $      | 5,404  
|                                           |                                             | Current portion of capital lease obligations                                                                                             |         |        | 1,951  
|                                           |                                             | Trade accounts payable                                                                                                                   |         |        | 28,612 
|                                           |                                             | Income taxes payable                                                                                                                     |         |        | 1,788  
|                                           |                                             | Deferred income taxes                                                                                                                    |         |        |       
|                                           |                                             | Accrued wages, salaries and bonuses                                                                                                      |         |        | 28,283 
|                                           |                                             | Accrued operating expenses                                                                                                               |         |        | 30,129 
|                                           |                                             | Deferred revenue and other                                                                                                               |         |        | 6,871  
|                                           |                                            
|                                           |                                             | Total current liabilities                                                                                                                |         |        | 103,038
|                                           | Long-term debt and other liabilities:       |                                                                                                                                          |         |        |        
|                                           |                                             | Long-term debt, excluding current portion                                                                                                |         |        | 100,000
|                                           |                                             | Capital lease obligations, excluding current portion                                                                                     |         |        | 7,307  
|                                           |                                             | Deferred compensation                                                                                                                    |         |        | 1,394  
|                                           |                                             | Deferred income taxes                                                                                                                    |         |        | 296    
|                                           |                                            
|                                           |                                             | Total liabilities                                                                                                                        |         |        | 212,035
|                                           |                                            
|Minority interests                         |                                             |                                                                                                                                          | 780     |        |        
|                                           |                                            
|                                           | Commitments and contingencies (see Note 10) |                                                                                                                                          |         |        |        
|                                           | Stockholders' equity:                       |                                                                                                                                          |         |        |        
|                                           |                                             | Common stock, voting, $.001 par value 200,000,000 shares authorized,74,363,431and 74,357,579 shares issued and outstanding, respectively |         |        | 74     
|                                           |                                             | Additional paid-in capital                                                                                                               |         |        | 168,706
|                                           |                                             | Accumulated other comprehensive loss                                                                                                     |         |        | (17,262
|                                           |                                             | Retained earnings (accumulated deficit)                                                                                                  |         |        | (12,193
|                                           |                                             | Less treasury stock, at cost,120,663and 145,396 common shares, respectively                                                              |         |        | (163   
|                                           |                                            
|                                           |                                             | Total stockholders' equity                                                                                                               |         |        | 139,162
|                                           |                                            
|Total liabilities and stockholders' equity |                                             | $                                                                                                                                        | 351,977 |        | $      
|                                           |                                            

See Notes to Consolidated Financial Statements.

F-4

---



SITEL CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

|                                                                                                        |                                 |   |    | Additional
Paid-in
Capital |   | Accumulated
Other
Comprehensive
Income (Loss) |   | Retained
Earnings
(Accumulated
Deficit) |         |        |   | Total
Stockholders'
Equity |        
|------------------------------------------------------------------------------------------------------- | ------------------------------- | - | -- | -------------------------- | - | --------------------------------------------- | - | --------------------------------------- | ------- | ------ | - | -------------------------- | -------
|
|                                                                                                        |                                
|
|Balance, December 31, 1999                                                                              |                                 | $ | 68 |                            | $ | 165,870                                       |   | $                                       | (12,757 | )      | $ | 7,517                      |        
|Issuance of 3,904,401 shares of common stock for options exercised                                      |                                 |   | 4  |                            |   | 2,742                                         |   |                                         |        |        |   |                           |        
|Other                                                                                                   |                                 |   |   |                            |   | 28                                            |   |                                         |        |        |   |                           |        
|Comprehensive income:                                                                                   |                                 |   |    |                            |   |                                               |   |                                         |         |        |   |                            |        
|                                                                                                        | Net income                      |   |    |                           |   |                                               |  |                                         |         |       |   |                            | 12,741 
|                                                                                                        | Currency translation adjustment |   |    |                           |   |                                               |  |                                         |         | (6,631 | ) |                            |       
|                                                                                                        |                                 |   |    |                            |   |                                               |   |                                         |         |        |   |                            |        
|                                                                                                        | Total comprehensive income      |   |    |                           |   |                                               |  |                                         |         |       |   |                            |       
|                                                                                                        |                                
|Balance, December 31, 2000                                                                              |                                 |   | 72 |                            |   | 168,640                                       |   |                                         | (19,388 | )      |   | 20,258                     |        
|Purchase of 171,800 shares of treasury stock                                                            |                                 |   |   |                            |   |                                              |   |                                         |        |        |   |                           |        
|Issuance of 2,282,350 shares of common stock for options exercised, and 26,404 shares of treasury stock |                                 |   | 2  |                            |   | 119                                           |   |                                         |        |        |   | (47                        | )      
|Other                                                                                                   |                                 |   |   |                            |   | (28                                           | ) |                                         |        |        |   |                           |        
|Comprehensive income:                                                                                   |                                 |   |    |                            |   |                                               |   |                                         |         |        |   |                            |        
|                                                                                                        | Net loss                        |   |    |                           |   |                                               |  |                                         |         |       |   |                            | (22,580
|                                                                                                        | Currency translation adjustment |   |    |                           |   |                                               |  |                                         |         | (6,760 | ) |                            |       
|                                                                                                        |                                 |   |    |                            |   |                                               |   |                                         |         |        |   |                            |        
|                                                                                                        | Total comprehensive loss        |   |    |                           |   |                                               |  |                                         |         |       |   |                            |       
|                                                                                                        |                                
|Balance, December 31, 2001                                                                              |                                 | $ | 74 |                            | $ | 168,731                                       |   | $                                       | (26,148 | )      | $ | (2,369                     | )      
|Issuance of 6,000 shares of common stock for options exercised, and 24,733 shares of treasury stock     |                                 |   |   |                            |   |                                              |   |                                         |        |        |   | (41                        | )      
|Other                                                                                                   |                                 |   |   |                            |   | (25                                           | ) |                                         |        |        |   |                           |        
|Comprehensive income:                                                                                   |                                 |   |    |                            |   |                                               |   |                                         |         |        |   |                            |        
|                                                                                                        | Net loss                        |   |    |                           |   |                                               |  |                                         |         |       |   |                            | (9,783 
|                                                                                                        | Currency translation adjustment |   |    |                           |   |                                               |  |                                         |         | 8,886  |   |                            |       
|                                                                                                        |                                 |   |    |                            |   |                                               |   |                                         |         |        |   |                            |        
|                                                                                                        | Total comprehensive loss        |   |    |                           |   |                                               |  |                                         |         |       |   |                            |       
|                                                                                                        |                                
|Balance, December 31, 2002                                                                              |                                 | $ | 74 |                            | $ | 168,706                                       |   | $                                       | (17,262 | )      | $ | (12,193                    | )      
|                                                                                                        |                                

See Notes to Consolidated Financial Statements.

F-5

---

SITEL CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                             |                                                                                          |                                              |                           |         |        |        |        
|-------------------------------------------- | ---------------------------------------------------------------------------------------- | -------------------------------------------- | ------------------------- | ------- | ------ | ------ | -------
|
|                                             |                                                                                         
|
|Cash flows from operating activities:        |                                                                                          |                                              |                           |         |        |        |        
|                                             | Net income (loss)                                                                        |                                              | $                         | (9,783  | )      | $      | (22,580
|                                             | Adjustments to reconcile net income (loss) to net cash provided by operating activities: |                                              |                           |         |        |        |        
|                                             |                                                                                          | Asset impairment and restructuring provision |                           |         | 1,444  |        |        
|                                             |                                                                                          | Depreciation and amortization                |                           |         | 33,664 |        |        
|                                             |                                                                                          | Loss on disposal of assets                   |                           |         | 164    |        |        
|                                             |                                                                                          | Write-off of credit acquisition fees         |                           |         |       |        |        
|                                             |                                                                                          | Impairment of goodwill                       |                           |         | 18,399 |        |        
|                                             |                                                                                          | Provision for deferred income taxes          |                           |         | 3,475  |        |        
|                                             |                                                                                          | Equity in (earnings) loss of affiliates      |                           |         | (3,441 | )      |        
|                                             |                                                                                          | Deferred compensation                        |                           |         | (493   | )      |        
|                                             |                                                                                          | Changes in operating assets and liabilities: |                           |         |        |        |        
|                                             |                                                                                          |                                              | Trade accounts receivable |         |        | (5,339 | )      
|                                             |                                                                                          |                                              | Other assets              |         |        | (2,111 | )      
|                                             |                                                                                          |                                              | Trade accounts payable    |         |        | 2,889  |        
|                                             |                                                                                          |                                              | Other liabilities         |         |        | (740   | )      
|                                             |                                                                                         
|                                             | Net cash provided by operating activities                                                |                                              |                           | 38,128  |        |        | 48,609 
|                                             |                                                                                         
|Cash flows from investing activities:        |                                                                                          |                                              |                           |         |        |        |        
|                                             | Purchases of property and equipment                                                      |                                              |                           | (30,427 | )      |        | (40,444
|                                             | Proceeds from sales of property and equipment                                            |                                              |                           | 2,488   |        |        | 55     
|                                             | Increase in other assets                                                                 |                                              |                           | (523    | )      |        | (3,384 
|                                             |                                                                                         
|                                             | Net cash used in investing activities                                                    |                                              |                           | (28,462 | )      |        | (43,773
|                                             |                                                                                         
|Cash flows from financing activities:        |                                                                                          |                                              |                           |         |        |        |        
|                                             | Repayments of notes payable                                                              |                                              |                           |        |        |        | (302   
|                                             | Borrowings on debt                                                                       |                                              |                           | 38,424  |        |        | 73,372 
|                                             | Repayments of debt                                                                       |                                              |                           | (33,020 | )      |        | (73,501
|                                             | Payments on capital lease obligations                                                    |                                              |                           | (700    | )      |        | (3,788 
|                                             | Common stock issued, net of expenses                                                     |                                              |                           |        |        |        | 121    
|                                             | Purchases of treasury stock, net of reissuances                                          |                                              |                           | 85      |        |        | (248   
|                                             | Capital contribution from (distributions to) minority interest                           |                                              |                           | (1,501  | )      |        | 537    
|                                             | Other                                                                                    |                                              |                           | 18      |        |        | (64    
|                                             |                                                                                         
|                                             | Net cash provided by (used in) financing activities                                      |                                              |                           | 3,306   |        |        | (3,873 
|                                             |                                                                                         
|Effect of exchange rates on cash             |                                                                                          |                                              | (986                      | )       |        | 1,296  |        
|                                             |                                                                                         
|Net increase (decrease) in cash              |                                                                                          |                                              | 11,986                    |         |        | 2,259  |        
|Cash and cash equivalents, beginning of year |                                                                                          |                                              | 22,156                    |         |        | 19,897 |        
|                                             |                                                                                         
|Cash and cash equivalents, end of year       |                                                                                          | $                                            | 34,142                    |         | $      | 22,156 |        
|                                             |                                                                                         
|Other cash flow information:                 |                                                                                          |                                              |                           |         |        |        |        
|                                             | Interest paid                                                                            |                                              | $                         | 10,637  |        | $      | 12,518 
|                                             | Income taxes paid                                                                        |                                              | $                         | 6,448   |        | $      | 4,012  
|Non-cash investing and financing activities: |                                                                                          |                                              |                           |         |        |        |        
|                                             | Capital leases incurred                                                                  |                                              | $                         | 859     |        | $      | 689    

See Notes to Consolidated Financial 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 automotive, consumer products, financial services, insurance, technology, telecommunications, ISP and cable, and utilities sectors.

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.

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:

We
use the equity method to report the results of our 50% investment in a joint venture in India. As of December 31, 2002 and 2001, the investment in our India joint venture was
approximately $5.8 million and $2.3 million, respectively. Furthermore, for the years ended December 31, 2002, 2001 and 2000, the equity in earnings (loss) in our India joint
venture was approximately $3.1 million, $(0.3) million and $0, respectively. As of, and for the year ended December 31, 2002, we recognized subcontracted and other services expense of
$14.3 million from our India affiliate. Also, as of December 31, 2002, we had accounts payable to our India affiliate of $2.5 million.

As
of and for the year ended December 31, 2002, our India joint venture had summarized financial data as follows: Current assets of $8.6 million; non-current
assets of $5.0 million; current liabilities of $1.1 million; non-current liabilities of $1.0 million; shareholder's equity of $11.5 million; revenues of
$14.3 million; and net income of $6.2 million.

Effective
as of October 1, 2002, we also use the equity method to account for our approximately 49% investment in our joint venture with certain Latin America affiliates. Our
change in the accounting for these Latin America affiliates resulted from certain revisions in the governance of a joint venture implemented effective October 1, 2002. As of December 31,
2002, the investment in certain Latin America affiliates was approximately $11.7 million and the equity in earnings was approximately $0.3 million. Of the $11.7 million investment
in certain Latin America affiliates, approximately $7.7 million is equity method goodwill. This equity method goodwill is not amortized. We would recognize a loss when there is other than a
temporary decline in value of our equity method investments.

Our
consolidated revenues no longer include the revenues and costs associated with the joint venture after October 1, 2002. Rather, the results for the three months ended
December 31, 2002 are reflected in equity in earnings (loss) of affiliates. Therefore, our earnings per share are not affected. Our 2002 revenues were approximately $10 million lower due
to the change in accounting for the joint venture.

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 as "Other Assets". We report our $1 million investment in Context Connect, Inc., a provider of fixed line and
wireless directory and connectivity services, using this method.

F-7

---

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:

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.

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.

In
June 2001, the Financial Accounting Standards Board (FASB) issued SFAS No. 142,Goodwill and Other Intangible Assets. This
statement:

We
adopted the provisions of SFAS No. 142 as of January 1, 2002. As a result of the adoption of this standard, we stopped amortizing our goodwill effective
January 1, 2002, which means that we have not recorded any goodwill amortization expense in our Consolidated Statements of Income (Loss) for the year ended December 31, 2002 and we will
not record such amortization in future years.

Our
goodwill amortization expense was $3.3 million and $3.6 million for the years ended December 31, 2000 and 2001, respectively. Had we adopted the provisions of

F-8

---

SFAS No. 142 on January 1, 2000, our net income (loss) would have been $15,753 and $(19,138) for years ended December 31, 2000 and 2001, respectively.

During
2002, we performed a transitional goodwill impairment review in two phases to determine if the carrying value of goodwill in our Consolidated Balance Sheet at January 1,
2002 was impaired. During the second quarter of 2002, we completed the first phase of the required impairment review, and determined that the goodwill in certain reporting units was impaired at
January 1, 2002. We completed the second phase of the transitional impairment review during the fourth quarter of 2002. As a result of these reviews, we have recorded a goodwill impairment loss
of $18.4 million as a cumulative effect in the 2002 financial statements. Effective as of October 1, 2002, we completed a further analysis of our goodwill and determined that no
additional impairment charges were required.

Asset Impairment

In October 2001, the FASB issued SFAS No. 144,Accounting for the Impairment or Disposal of Long-Lived
Assets. We adopted the provisions of SFAS No. 144 effective January 1, 2002. Under this standard, we monitor events and changes in circumstances that may require
us to review the carrying value of our long-lived assets. We assess the recoverability of our long-lived assets based on estimated undiscounted future operating cash flows. Our
assessment of the recoverability of our long-lived assets will be impacted if estimated future operating cash flows are not achieved. No impairments were recorded in 2002 as a result of
SFAS No. 144.

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 exercise of dilutive
stock options under our stock option plans, less shares assumed to be purchased with proceeds from the exercise of the stock options and the related tax benefits. At December 31, 2002, 2001,
and 2000, we had 8.7, 7.7, and 6.1 million options, respectively, which have been excluded from the diluted net income (loss) per share computation because their exercise price exceeds the fair
market value.

Use of Accounting Estimates

Management makes estimates and assumptions when preparing financial statements under generally accepted accounting principles that affect:

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 Option Plan

We apply the intrinsic-value-based method of accounting prescribed by Accounting Principles Board (APB) Opinion No. 25,Accounting
for Stock Issued to Employees,and related interpretations to account for our fixed-plan stock options. Under this method, compensation expense is recorded on the
date of grant only if the current market price of the underlying stock exceeded the exercise price. SFAS No. 123,Accounting for Stock-Based
Compensation,established accounting and disclosure requirements using a fair-value-based method of accounting for stock-based employee compensation plans.

In
December 2002, the FASB issued SFAS No. 148,Accounting for Stock-Based CompensationTransition and Disclosure,
an amendment of FASB Statement No. 123. This Statement amends FASB Statement No. 123,Accounting for Stock-Based Compensation, to require
prominent disclosures in both annual and interim financial statements. Certain of the disclosure modifications are required for fiscal years ending after December 15, 2002.

We
have elected to continue to apply the intrinsic- value-based method of accounting. The following table illustrates the effect on our net income (loss) if the

F-9

---

fair-value-based method had been applied to all outstanding and unvested awards in each period.

|                                |              |         |   |         |       |  
|------------------------------- | ------------ | ------- | - | ------- | ----- | -
|
|                               
|
|                                |              |         |   |         |       |  
|Net income (loss):              |              |         |   |         |       |  
|                                | As reported  |         | $ | (9,783  | )     | $
|                                | Pro forma    |         |   | (12,177 | )     |  
|                                |              |         |   |         |       |  
|Income (loss) per common share: |              |         |   |         |       |  
|                                | As reported: |         |   |         |       |  
|                                |              | Basic   |   | $       | (0.13 | )
|                                |              | Diluted |   |         | (0.13 | )
|                                | Pro forma:   |         |   |         |       |  
|                                |              | Basic   |   | $       | (0.16 | )
|                                |              | Diluted |   |         | (0.16 | )

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:

During
2000, 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.

Effective
January 1, 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 established
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, 2002 or 2001.

Comprehensive Income (Loss)

Comprehensive income (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, 2002 and 2001 represents the accumulated foreign currency translation adjustment.

Recently Issued Accounting Standards

In June 2001, the FASB issued SFAS No. 143,Accounting for Asset Retirement Obligations.SFAS
No. 143 requires us to record the fair value of an asset retirement obligation as a liability in the period in which we incur a legal obligation associated with the retirement of tangible
long-lived assets. We are required to adopt SFAS No. 143 on January 1, 2003. The adoption of SFAS No. 143 is not expected to have a material effect on our consolidated
financial statements.

In
June 2002, the FASB issued SFAS No. 146,Accounting for Costs Associated with Exit or Disposal Activities. SFAS
No. 146 addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force (EITF) Issue 94-3, Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity. The provisions of this Statement are effective for
exit or disposal activities that are initiated after December 31, 2002, with early application encouraged. The adoption of SFAS No. 146 is not expected to have a material effect on our
consolidated financial statements.

In
October 2002, the EITF reached a consensus on the accounting for revenues in transactions that involve multiple deliverables. The guidance governs how to identify whether goods
or services or both, that are to be delivered separately in a bundled sales arrangement, should be accounted for separately. This guidance is effective for fiscal years beginning after
December 15, 2003, so we expect to adopt the guidance in our financial statements for the quarter ended March 31, 2004. We have not yet determined the impact of this conclusion on our
consolidated financial statements.

In
November 2002, the FASB issued Interpretation No. 45,Guarantor's Accounting and Disclosure Requirements for Guarantees, Including Indirect
Guarantees of Indebtedness to Others,an interpretation of FASB Statements No. 5, 57 and 107 and a rescission of FASB Interpretation
No. 34. This Interpretation elaborates on the disclosures to be made by a guarantor in its interim and annual financial statements about its obligations

F-10

---

under guarantees issued. The Interpretation also clarifies that a guarantor is required to recognize, at inception of a guarantee, a liability for the fair value of the obligation undertaken. The
initial recognition and measurement provisions of the Interpretation are not expected to have a material effect on our consolidated financial statements.

In
January 2003, the FASB issued Interpretation No. 46,Consolidation of Variable Interest Entities, an interpretation of ARB
No. 51.This Interpretation addresses the consolidation by business enterprises of variable interest entities as defined in the Interpretation. The Interpretation applies
immediately to variable interests in variable interest entities created after January 31, 2003, and to variable interests in variable interest entities obtained after January 31, 2003.
The application of this Interpretation is not expected to have a material effect on our consolidated financial statements.

Reclassifications

We have reclassified certain prior-period amounts for comparative purposes. These reclassifications did not affect consolidated net income for the periods
presented.

Note 2. Property and Equipment

Property and equipment consists of the following:

|                                |  |   |          |   |  
|------------------------------- |  | - | -------- | - | -
|
|                                | 
|
|                                |  |   |          |   |  
|Computer equipment and software |  | $ | 116,315  |   | $
|Furniture, equipment and other  |  |   | 79,232   |   |  
|Leasehold improvements          |  |   | 37,339   |   |  
|Buildings                       |  |   | 13,803   |   |  
|Other                           |  |   | 2,851    |   |  
|                                | 
|                                |  |   | 249,540  |   |  
|Accumulated depreciation        |  |   | (162,657 | ) |  
|                                | 
|Property and equipment, net     |  | $ | 86,883   |   | $
|                                | 

Note 3. Goodwill

The following represents a summary of changes in our goodwill for the years ended December 31:

|                  |                   |   |        |         |   |        |       
|----------------- | ----------------- | - | ------ | ------- | - | ------ | ------
|
|                  |                  
|
|                  |                   |   |        |         |   |        |       
|Beginning of Year |                   | $ | 73,216 |         | $ | 78,443 |       
|                  | Amortization      |   |        |        |   |        | (3,650
|                  | Impairment Charge |   |        | (18,399 | ) |        |      
|                  | Other             |   |        | (5,093  | ) |        | (1,567
|                  |                  
|End of Year       |                   | $ | 49,724 |         | $ | 73,216 |       
|                  |                  

Other includes the impact of foreign currency translation and, in 2002, also includes the impact of changing our accounting for our joint venture
with certain Latin America affiliates.

Note 4. Long-Term Debt

Long-term debt consists of the following:

|                                                       |  |   |         |  
|------------------------------------------------------ |  | - | ------- | -
|
|                                                      
|
|9.25% Senior Subordinated Notes, due March 2006        |  | $ | 100,000 |  
|Borrowings under long-term revolving credit facilities |  |   | 5,404   |  
|                                                      
|                                                       |  | $ | 105,404 |  
|Current portion of long-term debt                      |  |   | (5,404  | )
|                                                      
|Total long-term debt                                   |  | $ | 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 substantially all of our wholly owned domestic subsidiaries and contain covenants that limit our ability and the ability of these subsidiaries to, among other things:

F-11

---

The
Notes are redeemable, at our option, in whole or in part at any time. 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:

|                    |  |        |  
|------------------- |  | ------ | -
|
|                    | 
|                    |  |        |  
|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

Effective December 27, 2002, we closed a three-year $50 million revolving credit facility. This new facility replaced our previous
$50 million long-term senior secured credit facility which was due to expire in April 2003.

The
new credit facility is secured by accounts receivable in the United States, Canada and the United Kingdom. We intend to utilize the facility, as needed, for ongoing working capital
requirements and general corporate purposes.

At
December 31, 2002, we had $44.6 million of available borrowings under the new credit facility, and we were in compliance with all financial covenants of the facility.
The weighted-average interest rate for this facility was 4.5% at December 31, 2002,

Prior
to December 27, 2002, we had a long-term senior secured credit facility, under which we could borrow in U.S. dollars, British pounds sterling, and Euros, which
allowed us to consolidate our U.S. and European bank lines into a single multi-borrower, multi-currency facility. The weighted-average interest rate for this facility was 4.6% at December 31,
2001.

As
a result of an amendment to our previous facility in June 2001, we wrote off $0.8 million of credit acquisition costs.

Maturities of Long-Term Debt

At December 31, 2002, all of our long-term debt was scheduled to mature in 2006.

Note 5. Income Taxes

Components of Pretax Income (Loss)

For financial reporting purposes, income (loss) before income taxes, minority interest and change in accounting method includes the following components:

|              |  |   |        |  |   |        
|------------- |  | - | ------ |  | - | -------
|
|             
|
|              |  |   |        |  |   |        
|United States |  | $ | 10,900 |  | $ | (11,980
|Foreign       |  |   | 9,965  |  |   | (11,970
|             
|Total         |  | $ | 20,865 |  | $ | (23,950
|             

Provision for Income Tax Expense (Benefit)

The components of the provision for income tax expense (benefit) were:

|                                           |                |   |        |       |   |        |       
|------------------------------------------ | -------------- | - | ------ | ----- | - | ------ | ------
|
|                                           |               
|
|                                           |                |   |        |       |   |        |       
|Current:                                   |                |   |        |       |   |        |       
|                                           | Federal        |   | $      |      |   | $      | (823  
|                                           | Foreign        |   |        | 6,597 |   |        | 2,775 
|                                           | State          |   |        | 365   |   |        | (105  
|                                           |               
|                                           | Total current  |   |        | 6,962 |   |        | 1,847 
|                                           |               
|Deferred:                                  |                |   |        |       |   |        |       
|                                           | Federal        |   |        | 1,175 |   |        | (6,977
|                                           | Foreign        |   |        | 2,205 |   |        | 3,713 
|                                           | State          |   |        | 95    |   |        | (900  
|                                           |               
|                                           | Total deferred |   |        | 3,475 |   |        | (4,164
|                                           |               
|Provision for income tax expense (benefit) |                | $ | 10,437 |       | $ | (2,317 | )     
|                                           |               

When applicable, certain of the income tax benefits related to the exercise of stock options reduce taxes currently payable and 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 significant portions

F-12

---

of the deferred tax assets and deferred tax liabilities that are reported in our Consolidated Balance Sheets:

|                          |                                                                      |   |        |         |  
|------------------------- | -------------------------------------------------------------------- | - | ------ | ------- | -
|
|                          |                                                                     
|
|                          |                                                                      |   |        |         |  
|Deferred tax assets:      |                                                                      |   |        |         |  
|                          | Accrued compensation and other liabilities                           |   | $      | 312     |  
|                          | Goodwill                                                             |   |        | 23,366  |  
|                          | Net operating loss and other credit carryforwards                    |   |        | 20,839  |  
|                          | Net operating loss carryforwards related to international operations |   |        | 11,054  |  
|                          | Depreciation timing differences related to international operations  |   |        | 3,445   |  
|                          |                                                                     
|                          | Total deferred tax assets                                            |   |        | 59,016  |  
|                          | Valuation allowance                                                  |   |        | (43,428 | )
|                          |                                                                     
|                          | Net deferred tax assets                                              |   |        | 15,588  |  
|                          |                                                                     
|Deferred tax liabilities: |                                                                      |   |        |         |  
|                          | Leased assets and depreciation                                       |   |        | 296     |  
|                          | Other                                                                |   |        | 4,256   |  
|                          |                                                                     
|                          | Total deferred tax liabilities                                       |   |        | 4,552   |  
|                          |                                                                     
|Net deferred tax assets   |                                                                      | $ | 11,036 |         | $
|                          |                                                                     

During 2001, we recorded a net deferred income tax benefit of $6.0 million resulting from an election to treat certain of our foreign
subsidiaries 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.

Based
upon our current and historical earnings, 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, 2002, we had approximately:

Reconciliation of Reported Income Tax Expense (Benefit) to Expected Income Tax Expense

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 35% to pretax income (loss):

|                                                                            |  |   |        |   |   |       
|--------------------------------------------------------------------------- |  | - | ------ | - | - | ------
|
|                                                                           
|
|                                                                            |  |   |        |   |   |       
|Expected Federal income tax expense (benefit)                               |  | $ | 7,303  |   | $ | (8,383
|State taxes, net of Federal effect                                          |  |   | 299    |   |   | (663  
|Tax credits                                                                 |  |   |       |   |   | (1,611
|Goodwill on foreign operations, net of valuation allowance of $16.9 million |  |   |       |   |   | (5,970
|Amortization of goodwill                                                    |  |   |       |   |   | (5,311
|Impact of foreign operations, including goodwill                            |  |   | (1,812 | ) |   | (1,622
|Valuation allowance                                                         |  |   | 4,525  |   |   | 20,482
|Other                                                                       |  |   | 122    |   |   | 761   
|                                                                           
|Total                                                                       |  | $ | 10,437 |   | $ | (2,317
|                                                                           

Note 6. 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:

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:

F-13

---

Future Minimum Lease Payments

At December 31, 2002, our future minimum payments under capital and operating leases were as follows:

|                             |  | Capital
Leases |        | Operating
Leases
|---------------------------- |  | -------------- | ------ | ----------------
|
|                            
|
|                             |  |                |        |                 
|2003                         |  | $              | 2,578  |                 
|2004                         |  |                | 1,838  |                 
|2005                         |  |                | 1,021  |                 
|2006                         |  |                | 725    |                 
|2007                         |  |                | 662    |                 
|Thereafter                   |  |                | 4,854  |                 
|                            
|                             |  | $              | 11,678 |                 
|                             |  |                |        |                 
|Amount representing interest |  |                | (2,420 | )               
|                             |  |                |       
|Net                          |  | $              | 9,258  |                 
|                             |  |                |       

Note 7. 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, 2002, there were approximately 1.5 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, 2002, options granted under these plans aggregating 3,351,816 remained
outstanding. The last of these options will expire on February 1, 2009. We granted these options at prices ranging from $2.34 to $19.50. We will not grant additional options under these plans.
The following table sets forth shares subject to options:

|                           |  |            |   | Weighted-
Average
Exercise
Price per Share
|-------------------------- |  | ---------- | - | ------------------------------------------
|
|
|                          
|                           |  |            |   |                                           
|Balance January 1, 2000    |  | 13,845,952 |   | $                                         
|Granted                    |  | 2,170,670  |   |                                           
|Exercised                  |  | (3,904,401 | ) |                                           
|Canceled                   |  | (1,815,421 | ) |                                           
|                          
|Balance December 31, 2000  |  | 10,296,800 |   |                                           
|Granted                    |  | 2,007,055  |   |                                           
|Exercised                  |  | (2,276,618 | ) |                                           
|Canceled                   |  | (2,376,352 | ) |                                           
|                          
|Balance, December 31, 2001 |  | 7,650,885  |   |                                           
|Granted                    |  | 2,628,932  |   |                                           
|Exercised                  |  | (6,000     | ) |                                           
|Canceled                   |  | (1,468,536 | ) |                                           
|                          
|Balance, December 31, 2002 |  | 8,805,281  |   | $                                         
|                          

Also under the 1999 Plan, we have issued approximately 42,000 phantom stock units in connection with the 2001 Nonemployee Director Compensation
Plan. The units are to be settled in stock when the individuals cease to be directors.

The
options exercisable at the end of each period were:

|                  |  |           |  | Weighted-
Average
Exercise
Price per Share
|----------------- |  | --------- |  | ------------------------------------------
|
|
|                 
|                  |  |           |  |                                           
|December 31, 2000 |  | 3,712,703 |  | $                                         
|December 31, 2001 |  | 1,876,480 |  | $                                         
|December 31, 2002 |  | 2,611,204 |  | $                                         

F-14

---

The following table summarizes stock options outstanding at December 31, 2002:

|                 |  |           |  | Weighted-
Average
Remaining
Life |  | Weighted-
Average
Exercise
Price
|---------------- |  | --------- |  | -------------------------------- |  | --------------------------------
|
|                
|                 |  |           |  |                                  |  |                                 
|$1.75            |  | 222,102   |  | 8.5                              |  | $                               
|$1.76 to $2.64   |  | 492,176   |  | 8.1                              |  | $                               
|$2.65 to $3.98   |  | 5,662,237 |  | 7.3                              |  | $                               
|$3.99 to $5.99   |  | 1,436,734 |  | 6.4                              |  | $                               
|$6.00 to $9.00   |  | 702,140   |  | 6.8                              |  | $                               
|$9.01 to $13.52  |  | 209,782   |  | 5.1                              |  | $                               
|$13.53 to $19.50 |  | 80,110    |  | 4.1                              |  | $                               

The following table summarizes stock options exercisable at December 31, 2002:

|                 |  |           |  | Weighted-
Average
Exercise
Price
|---------------- |  | --------- |  | --------------------------------
|
|                
|                 |  |           |  |                                 
|$1.75            |  | 44,420    |  | $                               
|$1.76 to $2.64   |  | 89,088    |  | $                               
|$2.65 to $3.98   |  | 1,102,295 |  | $                               
|$3.99 to $5.99   |  | 845,229   |  | $                               
|$6.00 to $9.00   |  | 310,172   |  | $                               
|$9.01 to $13.52  |  | 160,000   |  | $                               
|$13.53 to $19.50 |  | 60,000    |  | $                               

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:

|     |  | Volatility Factor |   | Risk-Free
Interest Rate |   | Expected
Life (Years)
|---- |  | ----------------- | - | ----------------------- | - | ---------------------
|
|    
|     |  |                   |   |                         |   |                      
|2002 |  | 69.2              | % | 2.0                     | % | 5.0                  
|2001 |  | 77.5              | % | 3.7                     | % | 8.9                  
|2000 |  | 100.7             | % | 6.5                     | % | 6.5                  

The per share weighted-average fair value of stock options granted was:

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:

Note 8. 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 2002, 2001, or 2000.

We
also make contributions to certain executive and other employee personal retirement programs, primarily in Europe. We contributed the following amounts to those plans:

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 2002, 2001, or 2000.

Note 9. 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.

F-15

---

Following are summaries of our revenues and long-lived assets by geographic area:

|               |                         |   |         |         |   |        
|-------------- | ----------------------- | - | ------- | ------- | - | -------
|
|              
|
|               |                         |   |         |         |   |        
|Revenue:       |                         |   |         |         |   |        
|               | United States           |   | $       | 424,746 |   | $      
|               | United Kingdom          |   |         | 74,728  |   |        
|               | Spain                   |   |         | 43,298  |   |        
|               | Other foreign countries |   |         | 227,439 |   |        
|              
|Total revenues |                         | $ | 770,211 |         | $ | 725,048
|              

|                        |                         |   |         |       
|----------------------- | ----------------------- | - | ------- | ------
|
|                       
|
|                        |                         |   |         |       
|Long-lived assets:      |                         |   |         |       
|                        | United States           |   | $       | 54,634
|                        | United Kingdom          |   |         | 19,926
|                        | Spain                   |   |         | 13,501
|                        | Other foreign countries |   |         | 62,799
|                       
|Total long-lived assets |                         | $ | 150,860 |       
|                       

Major Clients

The combined total revenue of multiple independently managed business units of General Motors Corporation with operations primarily in the United States totaled:

Note 10. 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.

One
of our clients has received letters from time to time containing an offer to license and suggesting that the client might be infringing certain patents related to computerized
telephonic voice response systems without the license. The client has indicated that if any infringement occurred the client would seek contractual indemnity from us. In such an event, we would expect
to seek contractual indemnity from certain of our vendors. Any such contractual indemnity we might obtain likely would not be sufficient to cover all of the costs of investigating and resolving such
matter. We might also seek a license under the patents. Any such license may not be available under commercially reasonable terms. Any license costs would increase the cost of doing business in the
future and may or may not be fully reflected in our pricing. To our knowledge, no litigation has been initiated against our client or us concerning this matter. At this stage, due to the inherent
uncertainties, we are unable to predict whether this matter may have a material adverse effect on our business or on our financial condition or results of operation.

Note 11. Asset Impairment and Restructuring Expenses

2002

During 2002, in connection with the restructuring plan announced in 2001, we recorded additional restructuring expense in the amount of $1.4 million
associated with the write-off of contact center operations and corporate support services identified in 2001.

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 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:

In
connection with the restructuring, we recorded:

F-16

---

Approximately
$18.3 million of these charges are liabilities that we have paid or will pay in cash. At December 31, 2002, we had paid approximately $11.3 million of
the liabilities of which $4.5 million was paid during 2002. We have classified the remaining $7.0 million of unpaid liabilities as accrued operating expenses in our December 31,
2002 Consolidated Balance Sheet. The 2001 charges also included $9.3 million of asset write-downs that we recorded as a reduction of fixed assets.

We
summarize the components of the restructuring charges that we recorded as asset impairment and restructuring expenses in 2001 and 2002 in the following tables:

|                              |  | Second
Quarter
2001 |      | Third
Quarter
2001 |   | Third
Quarter
2002 |  | Adjust-
ments |     | Total
Expense
|----------------------------- |  | ------------------- | ---- | ------------------ | - | ------------------ |  | ------------- | --- | -------------
|                             
|
|                              |  |                     |      |                    |   |                    |  |               |     |              
|Severance                     |  | $                   | 5.3  |                    | $ | 0.1                |  | $             | 0.1 |              
|Facility closure or reduction |  |                     | 9.1  |                    |   | 1.3                |  |               | 1.3 |              
|Other                         |  |                     | 0.7  |                    |   | 0.1                |  |               |    |              
|                             
|Subtotal                      |  |                     | 15.1 |                    |   | 1.5                |  |               | 1.4 |              
|Asset write-downs             |  |                     | 8.7  |                    |   | 0.9                |  |               |    |              
|                             
|Total                         |  | $                   | 23.8 |                    | $ | 2.4                |  | $             | 1.4 |              
|                             

We summarize the components of the accrued operating expenses in our Consolidated Balance Sheets in the following table:

|                              |  | Accrual
Balance
December 31,
2001 |      | Expensed
in
2002 |   | Paid
in
2002 |  | Adjust-
ments |      | Accrual
Balance
December 31,
2002
|----------------------------- |  | --------------------------------- | ---- | ---------------- | - | ------------ |  | ------------- | ---- | ---------------------------------
|                             
|
|                              |  |                                   |      |                  |   |              |  |               |      |                                  
|Severance                     |  | $                                 | 0.9  |                  | $ | 0.1          |  | $             | (0.9 | )                                
|Facility closure or reduction |  |                                   | 8.5  |                  |   | 1.3          |  |               | (3.4 | )                                
|Other                         |  |                                   | 0.7  |                  |   |             |  |               | (0.2 | )                                
|                             
|Total                         |  | $                                 | 10.1 |                  | $ | 1.4          |  | $             | (4.5 | )                                
|                             

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.

Note 12. 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:

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 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

F-17

---

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:

F-18

---

Condensed Consolidating Statement of Income (Loss) and Comprehensive Income (Loss)

|Year Ended December 31, 2002                                                         |                                                            | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated |  
|------------------------------------------------------------------------------------ | ---------------------------------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | ------- | ------------ | ------- | ------------ | -
|
|
|                                                                                     |                                                            |        |         |                        |   |                           |         |              |         |              |  
|Revenues                                                                             |                                                            | $      | 382,923 |                        | $ | 41,788                    |         | $            | 350,350 |              | $
|                                                                                     |                                                           
|Operating expenses:                                                                  |                                                            |        |         |                        |   |                           |         |              |         |              |  
|                                                                                     | Direct labor and telecommunications expenses               |        |         | 202,625                |   |                           | 23,407  |              |         | 207,424      |  
|                                                                                     | Subcontracted and other services expenses                  |        |         | 49,236                 |   |                           | 2,881   |              |         | 7,227        |  
|                                                                                     | Operating, selling, and administrative expenses            |        |         | 115,752                |   |                           | 11,118  |              |         | 124,637      |  
|                                                                                     | Asset impairment and restructuring expenses                |        |         | 1,495                  |   |                           |        |              |         | (51          | )
|                                                                                     |                                                           
|Total operating expenses                                                             |                                                            |        | 369,108 |                        |   | 37,406                    |         |              | 339,237 |              |  
|                                                                                     |                                                           
|Operating income                                                                     |                                                            |        | 13,815  |                        |   | 4,382                     |         |              | 11,113  |              |  
|                                                                                     |                                                           
|Other income (expense):                                                              |                                                            |        |         |                        |   |                           |         |              |         |              |  
|                                                                                     | Equity in earnings (losses) of subsidiaries and affiliates |        |         | (13,897                | ) |                           | (19,171 | )            |         | 3,441        |  
|                                                                                     | Interest income (expense), net                             |        |         | (10,335                | ) |                           | 91      |              |         | (1,006       | )
|                                                                                     | Other income (expense), net                                |        |         | 3,423                  |   |                           | 801     |              |         | (4,860       | )
|                                                                                     |                                                           
|Total other income (expense)                                                         |                                                            |        | (20,809 | )                      |   | (18,279                   | )       |              | (2,425  | )            |  
|                                                                                     |                                                           
|Income (loss) before income taxes, minority interest and change in accounting method |                                                            |        | (6,994  | )                      |   | (13,897                   | )       |              | 8,688   |              |  
|Income tax expense (benefit)                                                         |                                                            |        | 2,789   |                        |   |                          |         |              | 7,648   |              |  
|Minority interest                                                                    |                                                            |        |        |                        |   |                          |         |              | 1,812   |              |  
|                                                                                     |                                                           
|Income (loss) before change in accounting method                                     |                                                            |        | (9,783  | )                      |   | (13,897                   | )       |              | (772    | )            |  
|Cumulative effect of a change in accounting for goodwill                             |                                                            |        |        |                        |   |                          |         |              | (18,399 | )            |  
|                                                                                     |                                                           
|Net income (loss)                                                                    |                                                            | $      | (9,783  | )                      | $ | (13,897                   | )       | $            | (19,171 | )            | $
|                                                                                     |                                                           
|Currency translation adjustment                                                      |                                                            |        | 8,886   |                        |   | 1,860                     |         |              | 726     |              |  
|                                                                                     |                                                           
|Comprehensive income (loss)                                                          |                                                            | $      | (897    | )                      | $ | (12,037                   | )       | $            | (18,445 | )            | $
|                                                                                     |                                                           

F-19

---

Condensed Consolidating Statement of Income (Loss) and Comprehensive Income (Loss)

|Year Ended December 31, 2001                            |                                                            | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated |  
|------------------------------------------------------- | ---------------------------------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | ------- | ------------ | ------- | ------------ | -
|
|
|                                                        |                                                            |        |         |                        |   |                           |         |              |         |              |  
|Revenues                                                |                                                            | $      | 390,322 |                        | $ | 40,669                    |         | $            | 297,481 |              | $
|                                                        |                                                           
|Operating expenses:                                     |                                                            |        |         |                        |   |                           |         |              |         |              |  
|                                                        | Direct labor and telecommunications expenses               |        |         | 220,455                |   |                           | 22,688  |              |         | 167,923      |  
|                                                        | Subcontracted and other services expenses                  |        |         | 29,621                 |   |                           | 2,193   |              |         | 5,135        |  
|                                                        | Operating, selling, and administrative expenses            |        |         | 127,841                |   |                           | 11,839  |              |         | 124,294      |  
|                                                        | Asset impairment and restructuring expenses                |        |         | 12,922                 |   |                           | 25      |              |         | 13,238       |  
|                                                        |                                                           
|Total operating expenses                                |                                                            |        | 390,839 |                        |   | 36,745                    |         |              | 310,590 |              |  
|                                                        |                                                           
|Operating income (loss)                                 |                                                            |        | (517    | )                      |   | 3,924                     |         |              | (13,109 | )            |  
|                                                        |                                                           
|Other income (expense):                                 |                                                            |        |         |                        |   |                           |         |              |         |              |  
|                                                        | Equity in earnings (losses) of subsidiaries and affiliates |        |         | (21,445                | ) |                           | (23,949 | )            |         | (297         | )
|                                                        | Interest income (expense), net                             |        |         | (10,979                | ) |                           | 80      |              |         | (743         | )
|                                                        | Other income (expense), net                                |        |         | 56                     |   |                           |        |              |         | (2,365       | )
|                                                        |                                                           
|Total other income (expense)                            |                                                            |        | (32,368 | )                      |   | (23,869                   | )       |              | (3,405  | )            |  
|                                                        |                                                           
|Income (loss) before income taxes
and minority interest |                                                            |        | (32,885 | )                      |   | (19,945                   | )       |              | (16,514 | )            |  
|Income tax expense (benefit)                            |                                                            |        | (10,305 | )                      |   | 1,500                     |         |              | 6,488   |              |  
|Minority interest                                       |                                                            |        |        |                        |   |                          |         |              | 947     |              |  
|                                                        |                                                           
|Net income (loss)                                       |                                                            | $      | (22,580 | )                      | $ | (21,445                   | )       | $            | (23,949 | )            | $
|                                                        |                                                           
|Currency translation adjustment                         |                                                            |        | (6,760  | )                      |   | (4,800                    | )       |              | (5,678  | )            |  
|                                                        |                                                           
|Comprehensive income (loss)                             |                                                            | $      | (29,340 | )                      | $ | (26,245                   | )       | $            | (29,627 | )            | $
|                                                        |                                                           

F-20

---

Condensed Consolidating Statement of Income (Loss) and Comprehensive Income (Loss)

|Year Ended December 31, 2000                            |                                                 | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |        | Eliminations |         | Consolidated |  
|------------------------------------------------------- | ----------------------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | ------ | ------------ | ------- | ------------ | -
|
|
|                                                        |                                                 |        |         |                        |   |                           |        |              |         |              |  
|Revenues                                                |                                                 | $      | 407,576 |                        | $ | 33,459                    |        | $            | 324,560 |              | $
|                                                        |                                                
|Operating expenses:                                     |                                                 |        |         |                        |   |                           |        |              |         |              |  
|                                                        | Direct labor and telecommunications expenses    |        |         | 206,683                |   |                           | 16,564 |              |         | 175,562      |  
|                                                        | Subcontracted and other services expenses       |        |         | 39,855                 |   |                           | 2,836  |              |         | 8,761        |  
|                                                        | Operating, selling, and administrative expenses |        |         | 134,104                |   |                           | 10,554 |              |         | 128,380      |  
|                                                        | Asset impairment and restructuring expenses     |        |         | 2,019                  |   |                           |       |              |         | 1,501        |  
|                                                        |                                                
|Total operating expenses                                |                                                 |        | 382,661 |                        |   | 29,954                    |        |              | 314,204 |              |  
|                                                        |                                                
|Operating income                                        |                                                 |        | 24,915  |                        |   | 3,505                     |        |              | 10,356  |              |  
|                                                        |                                                
|Other income (expense):                                 |                                                 |        |         |                        |   |                           |        |              |         |              |  
|                                                        | Equity in earnings (losses) of subsidiaries     |        |         | 4,804                  |   |                           | 2,343  |              |         |             |  
|                                                        | Intercompany charges                            |        |         | 1,302                  |   |                           | 429    |              |         | (1,731       | )
|                                                        | Interest expense, net                           |        |         | (10,831                | ) |                           | (130   | )            |         | (1,106       | )
|                                                        | Other income (expense), net                     |        |         | (1,862                 | ) |                           | (17    | )            |         | 1,568        |  
|                                                        |                                                
|Total other income (expense)                            |                                                 |        | (6,587  | )                      |   | 2,625                     |        |              | (1,269  | )            |  
|                                                        |                                                
|Income (loss) before income taxes and minority interest |                                                 |        | 18,328  |                        |   | 6,130                     |        |              | 9,087   |              |  
|Income tax expense                                      |                                                 |        | 5,587   |                        |   | 1,326                     |        |              | 5,657   |              |  
|Minority interest                                       |                                                 |        |        |                        |   |                          |        |              | 1,087   |              |  
|                                                        |                                                
|Net income (loss)                                       |                                                 | $      | 12,741  |                        | $ | 4,804                     |        | $            | 2,343   |              | $
|                                                        |                                                
|Currency translation adjustment                         |                                                 |        | (6,631  | )                      |   | (4,210                    | )      |              | (5,055  | )            |  
|                                                        |                                                
|Comprehensive income (loss)                             |                                                 | $      | 6,110   |                        | $ | 594                       |        | $            | (2,712  | )            | $
|                                                        |                                                

F-21

---

Condensed Consolidating Balance Sheet

|Year Ended December 31, 2002               |                                       | Parent                                               |         | Guarantor
Subsidiaries |         | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated
|------------------------------------------ | ------------------------------------- | ---------------------------------------------------- | ------- | ---------------------- | ------- | ------------------------- | ------- | ------------ | ------- | ------------
|
|
|Assets                                     |                                       |                                                      |         |                        |         |                           |         |              |         |             
|                                           | Current assets:                       |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Cash and cash equivalents                            |         | $                      | 16,615  |                           | $       | 2,855        |         | $           
|                                           |                                       | Trade accounts receivable, net                       |         |                        | 90,679  |                           |         | 21,512       |         |             
|                                           |                                       | Prepaid expenses and other current assets            |         |                        | 6,954   |                           |         | 138          |         |             
|                                          
|                                           |                                       | Total current assets                                 |         |                        | 114,248 |                           |         | 24,505       |         |             
|                                          
|                                           | Property and equipment, net           |                                                      |         | 25,768                 |         |                           | 1,875   |              |         | 59,240      
|                                          
|                                           | Other assets:                         |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Goodwill, net                                        |         |                        | 19,576  |                           |         |             |         |             
|                                           |                                       | Deferred income taxes                                |         |                        | 6,100   |                           |         |             |         |             
|                                           |                                       | Investments in affiliates                            |         |                        |        |                           |         |             |         |             
|                                           |                                       | Other assets                                         |         |                        | 7,205   |                           |         | 70           |         |             
|                                           |                                       | Investments in subsidiaries                          |         |                        | 123,826 |                           |         | 100,588      |         |             
|                                          
|Total assets                               |                                       | $                                                    | 296,723 |                        | $       | 127,038                   |         | $            | 205,240 |             
|                                          
|Liabilities and Stockholders' Equity       |                                       |                                                      |         |                        |         |                           |         |              |         |             
|                                           | Current liabilities:                  |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Current portion of long-term debt                    |         | $                      | 5,404   |                           | $       |             |         | $           
|                                           |                                       | Current portion of capital lease obligations         |         |                        | 1,065   |                           |         |             |         |             
|                                           |                                       | Trade accounts payable                               |         |                        | 11,835  |                           |         | 890          |         |             
|                                           |                                       | Accrued expenses and other current liabilities       |         |                        | 29,271  |                           |         | 2,322        |         |             
|                                          
|                                           |                                       | Total current liabilities                            |         |                        | 47,575  |                           |         | 3,212        |         |             
|                                           | Long-term debt and other liabilities: |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Long-term debt, excluding current portion            |         |                        | 100,000 |                           |         |             |         |             
|                                           |                                       | Capital lease obligations, excluding current portion |         |                        | 520     |                           |         |             |         |             
|                                           |                                       | Deferred compensation                                |         |                        | 1,394   |                           |         |             |         |             
|                                           |                                       | Deferred income taxes                                |         |                        |        |                           |         |             |         |             
|                                          
|                                           |                                       | Total liabilities                                    |         |                        | 149,489 |                           |         | 3,212        |         |             
|                                          
|                                           | Minority interests                    |                                                      |         |                       |         |                           |        |              |         | 780         
|                                          
|                                           | Stockholders' equity                  |                                                      |         | 147,234                |         |                           | 123,826 |              |         | 92,437      
|                                          
|Total liabilities and stockholders' equity |                                       | $                                                    | 296,723 |                        | $       | 127,038                   |         | $            | 205,240 |             
|                                          

F-22

---

Condensed Consolidating Balance Sheet

|Year Ended December 31, 2001               |                                       | Parent                                               |         | Guarantor
Subsidiaries |         | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated
|------------------------------------------ | ------------------------------------- | ---------------------------------------------------- | ------- | ---------------------- | ------- | ------------------------- | ------- | ------------ | ------- | ------------
|
|
|Assets                                     |                                       |                                                      |         |                        |         |                           |         |              |         |             
|                                           | Current assets:                       |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Cash and cash equivalents                            |         | $                      | 6,814   |                           | $       | 2,202        |         | $           
|                                           |                                       | Trade accounts receivable, net                       |         |                        | 90,744  |                           |         | 18,147       |         |             
|                                           |                                       | Prepaid expenses and other current assets            |         |                        | 8,237   |                           |         | 13           |         |             
|                                          
|                                           |                                       | Total current assets                                 |         |                        | 105,795 |                           |         | 20,362       |         |             
|                                          
|                                           | Property and equipment, net           |                                                      |         | 31,729                 |         |                           | 2,266   |              |         | 57,298      
|                                          
|                                           | Other assets:                         |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Goodwill, net                                        |         |                        | 19,576  |                           |         |             |         |             
|                                           |                                       | Deferred income taxes                                |         |                        | 6,099   |                           |         |             |         |             
|                                           |                                       | Investments in affiliates                            |         |                        |        |                           |         |             |         |             
|                                           |                                       | Other assets                                         |         |                        | 7,771   |                           |         | 72           |         |             
|                                           |                                       | Investments in subsidiaries                          |         |                        | 127,978 |                           |         | 110,511      |         |             
|                                          
|Total assets                               |                                       | $                                                    | 298,948 |                        | $       | 133,211                   |         | $            | 206,777 |             
|                                          
|Liabilities and Stockholders' Equity       |                                       |                                                      |         |                        |         |                           |         |              |         |             
|                                           | Current liabilities:                  |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Current portion of capital lease obligations         |         | $                      | 1,668   |                           | $       |             |         | $           
|                                           |                                       | Trade accounts payable                               |         |                        | 15,980  |                           |         | 3,745        |         |             
|                                           |                                       | Accrued expenses and other current liabilities       |         |                        | 30,345  |                           |         | 1,488        |         |             
|                                          
|                                           |                                       | Total current liabilities                            |         |                        | 47,993  |                           |         | 5,233        |         |             
|                                           | Long-term debt and other liabilities: |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Long-term debt, excluding current portion            |         |                        | 100,000 |                           |         |             |         |             
|                                           |                                       | Capital lease obligations, excluding current portion |         |                        | 1,412   |                           |         |             |         |             
|                                           |                                       | Deferred compensation                                |         |                        | 1,755   |                           |         |             |         |             
|                                           |                                       | Deferred income taxes                                |         |                        |        |                           |         |             |         |             
|                                          
|                                           |                                       | Total liabilities                                    |         |                        | 151,160 |                           |         | 5,233        |         |             
|                                          
|                                           | Minority interests                    |                                                      |         |                       |         |                           |        |              |         | 7,748       
|                                          
|                                           | Stockholders' equity                  |                                                      |         | 147,788                |         |                           | 127,978 |              |         | 102,763     
|                                          
|Total liabilities and stockholders' equity |                                       | $                                                    | 298,948 |                        | $       | 133,211                   |         | $            | 206,777 |             
|                                          

F-23

---

Condensed Consolidating Statement of Cash Flows

|Year Ended December 31, 2002                   |                                                               | Parent |        | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |        | Eliminations |        | Consolidated |  
|---------------------------------------------- | ------------------------------------------------------------- | ------ | ------ | ---------------------- | - | ------------------------- | ------ | ------------ | ------ | ------------ | -
|
|
|Net cash provided by operating activities      |                                                               | $      | 8,795  |                        | $ | 10,276                    |        | $            | 19,057 |              | $
|                                               |                                                              
|Cash flows from investing activities:          |                                                               |        |        |                        |   |                           |        |              |        |              |  
|                                               | Investments in subsidiaries                                   |        |        | (107                   | ) |                           | (9,104 | )            |        |             |  
|                                               | Purchases of property and equipment                           |        |        | (7,330                 | ) |                           | (626   | )            |        | (22,471      | )
|                                               | Proceeds from sales of property and equipment                 |        |        |                        |   |                           |       |              |        | 2,488        |  
|                                               | Increase in other assets                                      |        |        | (527                   | ) |                           |       |              |        | 4            |  
|                                               |                                                              
|                                               | Net cash provided by (used in) investing activities           |        |        | (7,964                 | ) |                           | (9,730 | )            |        | (19,979      | )
|                                               |                                                              
|Cash flows from financing activities:          |                                                               |        |        |                        |   |                           |        |              |        |              |  
|                                               | Borrowings on debt                                            |        |        | 36,259                 |   |                           |       |              |        | 2,165        |  
|                                               | Repayments of debt and capital lease obligations              |        |        | (31,756                | ) |                           |       |              |        | (1,964       | )
|                                               | Net capital contribution from parent                          |        |        |                       |   |                           | 107    |              |        | 9,104        |  
|                                               | Net borrowings and payments on intercompany balances          |        |        | 4,383                  |   |                           |       |              |        | (4,383       | )
|                                               | Purchases of treasury stock, net of reissuances               |        |        | 85                     |   |                           |       |              |        |             |  
|                                               | Capital contribution from (distribution to) minority interest |        |        |                       |   |                           |       |              |        | (1,501       | )
|                                               | Other                                                         |        |        |                       |   |                           |       |              |        | 18           |  
|                                               |                                                              
|                                               | Net cash provided by (used in) financing activities           |        |        | 8,971                  |   |                           | 107    |              |        | 3,439        |  
|                                               |                                                              
|Effect of exchange rates on cash               |                                                               |        |       |                        |   |                          |        |              | (986   | )            |  
|                                               |                                                              
|Net increase in cash                           |                                                               |        | 9,802  |                        |   | 653                       |        |              | 1,531  |              |  
|Cash and cash equivalents, beginning of period |                                                               |        | 6,814  |                        |   | 2,202                     |        |              | 13,140 |              |  
|                                               |                                                              
|Cash and equivalents, end of period            |                                                               | $      | 16,616 |                        | $ | 2,855                     |        | $            | 14,671 |              | $
|                                               |                                                              

F-24

---

Condensed Consolidating Statement of Cash Flows

|Year Ended December 31, 2001                   |                                                      | Parent |        | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |        | Eliminations |        | Consolidated |  
|---------------------------------------------- | ---------------------------------------------------- | ------ | ------ | ---------------------- | - | ------------------------- | ------ | ------------ | ------ | ------------ | -
|
|
|                                               |                                                      |        |        |                        |   |                           |        |              |        |              |  
|Net cash provided by operating activities      |                                                      | $      | 21,455 |                        | $ | 10,253                    |        | $            | 16,901 |              | $
|                                               |                                                     
|Cash flows from investing activities:          |                                                      |        |        |                        |   |                           |        |              |        |              |  
|                                               | Investments in subsidiaries                          |        |        | 2,251                  |   |                           | (7,285 | )            |        |             |  
|                                               | Purchases of property and equipment                  |        |        | (7,330                 | ) |                           | (245   | )            |        | (32,869      | )
|                                               | Proceeds from sales of property and equipment        |        |        | 15                     |   |                           |       |              |        | 40           |  
|                                               | Increase in other assets                             |        |        | (850                   | ) |                           |       |              |        | (2,534       | )
|                                               |                                                     
|                                               | Net cash provided by (used in) investing activities  |        |        | (5,914                 | ) |                           | (7,530 | )            |        | (35,363      | )
|                                               |                                                     
|Cash flows from financing activities:          |                                                      |        |        |                        |   |                           |        |              |        |              |  
|                                               | Repayments of notes payable                          |        |        |                       |   |                           |       |              |        | (302         | )
|                                               | Borrowings on debt                                   |        |        | 52,500                 |   |                           |       |              |        | 20,872       |  
|                                               | Repayments of debt and capital lease obligations     |        |        | (55,143                | ) |                           |       |              |        | (22,146      | )
|                                               | Net capital contribution from parent                 |        |        |                       |   |                           | (2,251 | )            |        | 7,285        |  
|                                               | Net borrowings and payments on intercompany balances |        |        | (10,927                | ) |                           |       |              |        | 10,927       |  
|                                               | Common stock issued, net of expenses                 |        |        | 121                    |   |                           |       |              |        |             |  
|                                               | Purchases of treasury stock, net of reissuances      |        |        | (248                   | ) |                           |       |              |        |             |  
|                                               | Capital contribution from minority interest          |        |        |                       |   |                           |       |              |        | 537          |  
|                                               | Other                                                |        |        |                       |   |                           |       |              |        | (64          | )
|                                               |                                                     
|                                               | Net cash provided by (used in) financing activities  |        |        | (13,697                | ) |                           | (2,251 | )            |        | 17,109       |  
|                                               |                                                     
|Effect of exchange rates on cash               |                                                      |        |       |                        |   |                          |        |              | 1,296  |              |  
|                                               |                                                     
|Net increase (decrease) in cash                |                                                      |        | 1,844  |                        |   | 472                       |        |              | (57    | )            |  
|Cash and cash equivalents, beginning of period |                                                      |        | 4,970  |                        |   | 1,730                     |        |              | 13,197 |              |  
|                                               |                                                     
|Cash and equivalents, end of period            |                                                      | $      | 6,814  |                        | $ | 2,202                     |        | $            | 13,140 |              | $
|                                               |                                                     

F-25

---

Condensed Consolidating Statement of Cash Flows

|Year Ended December 31, 2000                   |                                                      | Parent |        | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |        | Eliminations |        | Consolidated |  
|---------------------------------------------- | ---------------------------------------------------- | ------ | ------ | ---------------------- | - | ------------------------- | ------ | ------------ | ------ | ------------ | -
|
|
|                                               |                                                      |        |        |                        |   |                           |        |              |        |              |  
|Net cash provided by operating activities      |                                                      | $      | 46,334 |                        | $ | 7,329                     |        | $            | 11,532 |              | $
|                                               |                                                     
|Cash flows from investing activities:          |                                                      |        |        |                        |   |                           |        |              |        |              |  
|                                               | Investments in subsidiaries                          |        |        | 5,739                  |   |                           | (965   | )            |        |             |  
|                                               | Purchases of property and equipment                  |        |        | (18,358                | ) |                           | (997   | )            |        | (13,774      | )
|                                               | Proceeds from sales of property and equipment        |        |        | 10                     |   |                           |       |              |        | 7,219        |  
|                                               |                                                     
|                                               | Net cash used in investing activities                |        |        | (12,609                | ) |                           | (1,962 | )            |        | (6,555       | )
|                                               |                                                     
|Cash flows from financing activities:          |                                                      |        |        |                        |   |                           |        |              |        |              |  
|                                               | Repayments of notes payable                          |        |        |                       |   |                           |       |              |        | (6,876       | )
|                                               | Borrowings on debt                                   |        |        | 35,000                 |   |                           |       |              |        |             |  
|                                               | Repayments of debt and capital lease obligations     |        |        | (66,687                | ) |                           |       |              |        | (8,774       | )
|                                               | Net capital contribution from parent                 |        |        |                       |   |                           | (5,739 | )            |        | 965          |  
|                                               | Net borrowings and payments on intercompany balances |        |        | (7,245                 | ) |                           |       |              |        | 7,245        |  
|                                               | Common stock issued, net of expenses                 |        |        | 2,746                  |   |                           |       |              |        |             |  
|                                               | Other                                                |        |        | (46                    | ) |                           |       |              |        |             |  
|                                               |                                                     
|                                               | Net cash provided by (used in) financing activities  |        |        | (36,232                | ) |                           | (5,739 | )            |        | (7,440       | )
|                                               |                                                     
|Effect of exchange rates on cash               |                                                      |        |       |                        |   |                          |        |              | 2,934  |              |  
|                                               |                                                     
|Net increase (decrease) in cash                |                                                      |        | (2,507 | )                      |   | (372                      | )      |              | 471    |              |  
|Cash and cash equivalents, beginning of period |                                                      |        | 7,477  |                        |   | 2,102                     |        |              | 12,726 |              |  
|                                               |                                                     
|Cash and equivalents, end of period            |                                                      | $      | 4,970  |                        | $ | 1,730                     |        | $            | 13,197 |              | $
|                                               |                                                     

F-26

---

Note 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.

2002 Quarterly Data

|Year Ended
December 31, 2002 |         | First
Quarter |         | Second
Quarter |   | Third
Quarter |      | Fourth
Quarter
|---------------------------- | ------- | ------------- | ------- | -------------- | - | ------------- | ---- | --------------
|
|
|Revenues                     |         | $             | 193,032 |                | $ | 196,747       |      | $             
|Operating income             |         |               | 7,663   |                |   | 8,863         |      |               
|Net income *                 |         |               | 2,738   |                |   | 3,511         |      |               
|Income percommon share:      |         |               |         |                |   |               |      |               
|                             | Basic   |               | $       | 0.04           |   | $             | 0.05 |               
|                             | Diluted |               |         | 0.04           |   |               | 0.05 |               

* Net income excludes impairment charge of $18.4 million related to change in accounting method of
accounting for goodwill.

Third quarter results include $1.4 million of asset impairment and restructuring charges, as discussed in Note 11.

Fourth
quarter results include a $2.3 million valuation allowance on Asia Pacific deferred tax assets.

2001 Quarterly Data

|Year Ended
December 31, 2001    |         | First
Quarter |         | Second
Quarter |   | Third
Quarter |       | Fourth
Quarter
|------------------------------- | ------- | ------------- | ------- | -------------- | - | ------------- | ----- | --------------
|
|
|Revenues                        |         | $             | 184,004 |                | $ | 177,787       |       | $             
|Operating income (loss)         |         |               | 4,492   |                |   | (26,289       | )     |               
|Net income (loss)               |         |               | 10,630  |                |   | (30,241       | )     |               
|Income (loss) per common share: |         |               |         |                |   |               |       |               
|                                | Basic   |               | $       | 0.15           |   | $             | (0.41 | )             
|                                | Diluted |               |         | 0.14           |   |               | (0.41 | )             

First quarter results include a $9.8 million 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:

Third
quarter results include the following items:

The sum of the quarterly amounts may not equal the totals for the year due to the effects of rounding.

F-27

---

Independent Auditors' Report on the Financial Statement Schedule

To the Stockholders and Board of Directors
of SITEL Corporation

Under
date of January 31, 2003, we reported on the consolidated balance sheets of SITEL Corporation and subsidiaries as of December 31, 2002 and 2001, 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, 2002, which are included in the
Form 10-K for the year ended December 31, 2002. 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.

As
discussed in Note 1 to the consolidated financial statements, the Company adopted the provisions of SFAS No. 142,Goodwill and Other Intangible
Assets, as of January 1, 2002.

|/s/ KPMG LLP |  | 
|------------ |  | 
|KPMG LLP     |  | 

Baltimore, Maryland
January 31, 2003

S-1

---



SITEL CORPORATION AND SUBSIDIARIES

Schedule II  Valuation and Qualifying Accounts

|                                 |                              |  |   | Additions |  |   |       | 
|-------------------------------- | ---------------------------- |  | - | --------- |  | - | ----- | 
|
|
|Allowance for doubtful accounts: |                              |  |   |           |  |   |       | 
|                                 | Year ended December 31, 2002 |  | $ | 5,208     |  | $ | 523   | 
|                                 | Year ended December 31, 2001 |  | $ | 6,456     |  | $ | 2,585 | 
|                                 | Year ended December 31, 2000 |  | $ | 5,622     |  | $ | 1,668 | 

See accompanying Independent Auditors' Report on the Financial Statement Schedule.

S-2

---

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