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, 2003

|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) |  |                                
|7277 WORLD COMMUNICATIONS DRIVE                OMAHA,
NEBRASKA                                68122
|                                                                                                    |  | (Address of Principal Executive Offices)                                |  | (Zip Code)                     
|                                                                                                    |  | (402) 963-6810(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. X

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 30, 2003 was $66,650,122 based upon the closing price
of $1.55 for such stock as reported by the New York Stock Exchange on such date. Solely for purposes of this calculation, persons holding of record more than 5% of the Company's stock have been
included as "affiliates."

COMMON STOCK, $.001 PAR VALUE  73,625,322 SHARES OUTSTANDING AS OF FEBRUARY 27, 2004

DOCUMENTS INCORPORATED BY REFERENCE

|Part of Form 10-K |  | Document Incorporated by Reference                                                                      
|----------------- |  | --------------------------------------------------------------------------------------------------------
|III               |  | Certain sections of the Proxy Statement for the Annual Meeting of Stockholders to be held April 30, 2004



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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                                                                          |  | 3   
|                                                                          |   |     | The Communication Channels We Use                                                              |  | 3   
|                                                                          |   |     | Markets and Clients                                                                            |  | 4   
|                                                                          |   |     | The Industries We Serve                                                                        |  | 4   
|                                                                          |   |     | Information Technology                                                                         |  | 5   
|                                                                          |   |     | Human Resource Management                                                                      |  | 5   
|                                                                          |   |     | Offshore                                                                                       |  | 5   
|                                                                          |   |     | Competition                                                                                    |  | 5   
|                                                                          |   |     | Reporting Segments and Geographical Information                                                |  | 6   
|                                                                          |   |     | Available Information                                                                          |  | 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 on Accounting and Financial Disclosure           |  | 20  
|Item 9A                                                                   |  |     | Controls and Procedures                                                                        |  | 21  
|PART III                                                                  |   |     |                                                                                                |  |     
|Item 10                                                                   |  |     | Directors and Executive Officers of the Registrant                                             |  | 21  
|Item 11                                                                   |  |     | Executive Compensation                                                                         |  | 21  
|Item 12                                                                   |  |     | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |  | 21  
|Item 13                                                                   |  |     | Certain Relationships and Related Transactions                                                 |  | 21  
|Item 14                                                                   |  |     | Principal Accountant Fees and Services                                                         |  | 21  
|PART IV                                                                   |   |     |                                                                                                |  |     
|Item 15                                                                   |  |     | Exhibits, Financial Statement Schedules and Reports on Form 8-K                                |  | 22  
|Signatures                                                                |   | 23 
|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: reliance on major clients, conditions affecting clients' industries, clients' budgets and plans, unanticipated labor, contract or technical
difficulties, delays in ramp up of services under contracts, reliance on major subcontractors and strategic partners, risks associated with managing a global business, fluctuations in operating
results, reliance on telecommunications and computer technology, dependence on labor force, industry regulation, general and local economic conditions, competitive pressures in our industry, foreign
currency risks, the effects of leverage, dependency on credit availability, restrictions imposed by the terms of indebtedness, and dependence on key personnel and control by management.

Given
these uncertainties, you should not place undue reliance on these forward-looking statements. Please see the other sections of this report and our other periodic reports filed with
the Securities and Exchange Commission for more information on these factors.

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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 to acquire, serve, 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, cable, consumer products, financial services, insurance, internet service provider, technology, telecommunications, 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 serve
their customers and build greater brand loyalty. 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 business model structure where
thirty-one business units serve over 250 clients around the world, the Company sells and operates locally while leveraging our global experience and expertise on behalf of multinational
clients. We have approximately 31,000 employees worldwide that represent many of the world's leading brand names. We operate over 22,000 workstations in 81 contact centers located in 23 countries. We
serve clients' customers in 53 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. 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 accounts receivable. 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

Our industry has evolved from outsourcers providing customer services for outbound U.S. customer acquisition to world-wide inbound
customer support services, including technical help-desk services and business process solutions. The industry has also evolved from primarily a low-technology, single-facility
environment to supporting multi-national corporations' customer and back office processing from large, full service, multi-channel often inter-connected contact centers located around the world.
Today, companies are increasingly focused on optimizing their brands through better, differentiated customer service as well as the value of their customer relationships through cross-sales of
additional products. Fueling this trend is the continued growth in consumer use of the Internet and e-mail, and

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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.

Contact
center-based customer relationship management activity is becoming central to the way leading organizations choose to enhance customer loyalty and retention. IDC, a respected
industry analysis group, estimates that the worldwide contact outsource business will grow from $39 billion in the year 2003 to $71 billion by the year 2007 or an average increase of
12.7% 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. The contact center outsourcing industry continues to establish offshore and nearshore locations to serve clients seeking diversified labor markets. This trend
is expected to continue.

Our Business

SITEL designs, builds, and operates contact centers to deliver integrated customer interaction solutions. Our strategy for aligning with our
clients involves mature methodologies centering around these three key phases of program development and operation. And because some clients require different levels of support during each of these
phases, we are able to leverage our global experience and expertise in local markets to tailor a solution and delivery model as needed.

SITEL
offers a variety of outsourced customer interaction solutions covering each stage of the customer lifecycle  acquisition and sales; care and retention;
technical support; risk management (collections); and back office processing. Our methodology provides solutions that are market-ready yet customized, based upon the specific requirements of our
clients. We have developed industry-specific competencies that allow us to respond to unique demands and opportunities in specific vertical markets. Our multi-tiered approach to client engagement for
both business-to-customer and business-to-business (B2B) programs enables us to align our solution as closely as possible with our clients' unique
business goals.

Each
of our solutions showcases our ability to add value to our clients' primary business objectives by:

Organizational Structure

SITEL is unique within the outsource contact center industry by providing customer support services through an organization focused locally on our
clients and their customers for sales and operational delivery. Thirty-one business units 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 perform better for our clients. Individual business units know their markets, their geographies, the local
rules and regulations and are best positioned to perform and relate to companies in their local 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 serve them across geographies. Our global sales team is responsible for developing and implementing customized
industry-specific customer management solutions to prospective multi-national clients.

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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. We specialize 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 to support and grow their customers. SITEL's business units operate 25 customer support centers in the United States, 7 in Canada, 30 in Europe, 5 in Asia Pacific, 12 in
Latin America, and 2 facilities in Jamaica and India. SITEL's customer service professionals (CSPs) are 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 client's 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 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 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.

Customer Acquisition

Our customer acquisition services include prospect identification, campaign management, lead generation, and fulfilment. 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.

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.

The Communication Channels We Use

We use the telephone, fax, white mail and the Internet as means of communication to provide the services we offer. Each of these communication
channels is described below:

We
handle approximately 525 million customer interactions annually via the telephone, email, webchat and other channels. We have been making and taking customer contacts on behalf
of Global 1000 companies since our founding more than eighteen years ago.

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.

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Our
customer service professionals provide timely, knowledgeable, and comprehensive replies to all incoming contacts whether by phone, e-mail or web chats in support of our
clients' customer service and technical support. Our contact center platform can also provides automated e-mail response based on key word recognition.

Using
a combination of content creation, knowledge management and carefully tailoring client web-sites, the Internet can enable customers 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.

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 and ISP and cable, and utilities sectors. These industries accounted for approximately 15%, 12%, 18%, 9%, 20%, 15%, and 7%,
respectively, of our 2003 revenue. Sales in other industries, including travel, healthcare, government and various others, accounted for 4% of 2003 revenue. We serve over 250 clients in 23 countries.
Note 9 to the Consolidated Financial Statements provides information about our revenue by geographic region. Our top 20 clients accounted for 71.2% of our revenue in 2003, and include multiple
independently managed business units of General Motors Corporation. These General Motors business units were responsible for 21.2% of our total revenue in 2003. We did not have any other clients under
common control that generated more than 10% of our total revenue for the year ended December 31, 2003.

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.

Financial Services

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, and 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. We have over 385 in-house agents holding in excess of
12,000 licenses. 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.

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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.

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
utilize state-of-the-art technology (UNIX and NT architecture) with Windows 95/98/2000/XP and NT-based HP/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.

SITEL's
telephony platforms (Avaya and Nortel), partnered with a strong carrier network (AT&T and BT) and local telephony providers provide a multitude of options when routing contacts
(voice and data) over the globe and supporting business continuity plans. These platforms support such features as VoIP, Best Services Routing (Avaya), skills-based routing and schedule adherence
(IEX & TCS workforce management suites), Digital Voice Recording (Nice and Tantacom), and Quality Monitoring and Assurance (IEX).

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, 2003, we had approximately 31,000 employees. In our European region, employees in Belgium, Germany, Sweden, and Spain are within the scope of government
sponsored collective bargaining agreements and are represented by either a labor union or a statutory work council arrangement. In countries with labor unions or work councils, our ability to reduce
our workforce or wage rates is subject to agreement or
consultation with the appropriate labor union or works council. We consider relations with our employees to be good.

Offshore

The use of offshore facilities to serve clients' customers from a location that offers reliable cost efficient labor is a growing trend in the
industry. Our global locations include Jamaica, India, Panama, and Canada which serve English speaking customers, Mexico, Colombia and Panama serve Spanish-speaking customers and centers in Morocco
and Canada serve French-speaking customers.

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 competitive and fragmented. In addition to the companies listed above, we compete with a variety of companies that include niche providers, large
conglomerates and consulting companies. 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.

We
believe we are in a leadership position in terms of global presence, operational experience, solutions

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provided,
industries served and large-scale project implementation.

Reporting Segments and Geographical Information

Information regarding reporting segment and geographical information is set forth in Note 9 to the Consolidated Financial Statements.

Available Information

We make available, free of charge through our Internet website athttp://www.sitel.com, our annual
report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after such material is electronically filed with or furnished to the Securities and Exchange
Commission.

Government Regulation

The nature of our business makes us subject to various laws and regulations that primarily concern teleservices, web-services,
insurance agencies,
collection agencies, and the collection and use of private consumer data.

In
the United States, various federal and state statutes and regulation impact each of these areas.

At
the federal level, outbound and inbound telephone sales practices are subject to the Federal Telephone Consumer Protection Act of 1991 and the Federal Telemarketing Consumer Fraud and
Abuse Protection Act of 1994. The Federal Trade Commission (FTC) and the Federal Communications Commission (FCC) have also each promulgated regulations affecting outbound telephone sales practices
and, to a lesser extent, the upselling portion of inbound calls.

During
2003, both the FTC and FCC substantially broadened their respective regulations governing telephone sales practices. In addition to continuing prior regulations such as those
prohibiting misrepresentations and restricting calling times, certain uses of automated telephone dialing equipment and calls to consumers requesting not to be called by particular companies, the new
FTC and FCC regulations affecting our business adopted the following key provisions:

In
addition to the FTC and FCC, state attorney generals also are permitted to file enforcement actions against sellers and telemarketers for violations of these regulations. Consumers
may also file civil actions for violations adversely affecting them. Many states have enacted or are considering enacting similar or more restrictive provisions affecting telephone sales practices.

There
are many federal and state laws and regulations in the U.S. that govern web-services, collection agency licensing and practices, and the collection and use of private
consumer data. Some key federal laws affecting our business include the Gramm-Leach-Bliley Act, Health Insurance Portability and Accountability Act of 1996, Fair Debt Collection Practices Act and Fair
Credit Reporting Act. Concerns about "right of privacy" issues have frequently been at the forefront of regulatory developments due to the dramatic increase in the availability of information about
consumers as a result of technological advances.

Outside
the United States, the other countries where we have substantial operations generally have not yet enacted detailed regulatory frameworks for teleservices, although a number of
countries are considering doing so. 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 typically limit the use and disclosure of personally identifiable information to specified, lawful purposes; impose rules on the transfer and processing of personal data; and provide
individuals with a right to access and correct inaccurate personal information.

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The
various industries we serve within the U.S. or internationally are subject to differing degrees and types of government regulations. Although compliance with these regulations is
generally the legal or contractual responsibility of our clients, we are sometimes directly affected as well. 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.

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 typically require our clients by
contract to indemnify us against claims and expenses arising from their products or services, scripts and directives.

Compliance
with applicable laws, regulations and industry guidelines to date has not had a material adverse effect on our global business. In the U.S., compliance with the newly amended
FTC and FCC regulations and the increasing regulation of our teleservices industry at the state level has imposed significant additional costs and burdens, especially upon our outbound telephone sales
business. However, our North American outbound telephone sales business represents only a relatively small percentage of our overall worldwide business, about 6.7% of our 2003 global revenues, down
from 9.9% in 2002.

Other
proposed laws and regulations are in early stages of consideration, and we cannot yet determine the impact those 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 also 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 Omaha, Nebraska.

As
of December 31, 2003, we operated company centers in various facilities that we lease and client centers that are on client premises as shown in the table below.

|Facility Location |  | Company
Centers |  | Client
Centers |  | Off-site |  | Total
Facilities |  | Number of
Workstations
|----------------- |  | --------------- |  | -------------- |  | -------- |  | ---------------- |  | ----------------------
|
|Australia         |  | 1               |  |               |  |         |  | 1                |  | 202                   
|Belgium           |  | 1               |  |               |  |         |  | 1                |  | 563                   
|Brazil            |  | 4               |  |               |  |         |  | 4                |  | 779                   
|Canada            |  | 6               |  | 1              |  |         |  | 7                |  | 1,831                 
|Colombia *        |  | 1               |  | 3              |  |         |  | 4                |  | 410                   
|Denmark           |  | 1               |  |               |  |         |  | 1                |  | 15                    
|France            |  | 3               |  | 1              |  |         |  | 4                |  | 826                   
|Germany           |  | 4               |  |               |  |         |  | 4                |  | 1,119                 
|India *           |  | 1               |  |               |  |         |  | 1                |  | 750                   
|Ireland           |  | 1               |  |               |  |         |  | 1                |  | 325                   
|Italy             |  | 1               |  |               |  |         |  | 1                |  | 135                   
|Jamaica *         |  | 1               |  |               |  |         |  | 1                |  | 187                   
|Mexico *          |  | 2               |  |               |  |         |  | 2                |  | 1,130                 
|Morocco **        |  |                |  |               |  | 1        |  | 1                |  | 91                    
|Netherlands       |  | 1               |  |               |  |         |  | 1                |  | 349                   
|New Zealand       |  | 1               |  | 2              |  |         |  | 3                |  | 429                   
|Panama *          |  | 1               |  |               |  |         |  | 1                |  | 304                   
|Portugal          |  | 1               |  |               |  |         |  | 1                |  | 117                   
|Singapore         |  | 1               |  |               |  |         |  | 1                |  | 143                   
|Spain             |  | 5               |  | 3              |  |         |  | 8                |  | 3,209                 
|Sweden            |  | 1               |  | 1              |  |         |  | 2                |  | 205                   
|United Kingdom    |  | 5               |  |               |  |         |  | 5                |  | 1,895                 
|United States     |  | 22              |  | 5              |  |         |  | 27               |  | 7,582                 
|                 
|Totals:           |  | 65              |  | 16             |  | 1        |  | 82               |  | 22,596                
|                 

*  centers
in our joint ventures

**
centers operated by subcontractors

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.

---

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 may 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

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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         |  | 54  |  | Chairman of the Board (since 1985), Chief Executive Officer (since April 2001, and from 1985  January 1997) and Director |  |                                                                                                                                                                                                                                  
|Jorge A. Celaya        |  | 38  |  | Executive Vice President and Chief Financial Officer (since October 2003)                                                 |  | Chief Financial Officer, NPTest, Inc.; Vice President Finance, Schlumberger Network Solutions.                                                                                                                                   
|Bill L. Fairfield      |  | 57  |  | Executive Vice President, Business Development (since March 2002) and Director                                            |  | Chairman, DreamField Partners, Inc.; Chairman, Chief Executive Officer, and President, Inacom Corp.                                                                                                                              
|Robert Scott Moncrieff |  | 47  |  | Executive Vice President, Marketing and Account Management (since August 2003)                                            |  | Senior Vice President  Global Strategic Clients, Senior Vice President  Marketing SITEL Corporation                                                                                                                            
|Dale W. Saville        |  | 59  |  | 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

---

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.

|               |  | 2003 |      | 2002
|-------------- |  | ---- | ---- | ----
|
|First Quarter  |  | $    | 1.37 |     
|Second Quarter |  | $    | 1.86 |     
|Third Quarter  |  | $    | 1.59 |     
|Fourth Quarter |  | $    | 2.81 |     

Shares Outstanding and Holders of Common Stock

As of February 27, 2004, we had 73,625,322 shares of common stock outstanding and 594 record holders of our common stock.

Dividend Policy

We have not declared or paid any cash dividends on our common stock since our inception. The Board of Directors currently intends to retain all earnings for use in
the business for the foreseeable future. Furthermore, our revolving credit facility and Senior Subordinated Notes contain restrictions on the payment of cash dividends.

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,                                                             |         | 2003 |         | 2002   |   | 2001    |        | 2000 |         | 1999   |  
|------------------------------------------------------------------------------------ | ------- | ---- | ------- | ------ | - | ------- | ------ | ---- | ------- | ------ | -
|
|
|Income Statement Data:                                                               |         |      |         |        |   |         |        |      |         |        |  
|Revenue                                                                              |         |      | 846,513 |        |   | 770,211 |        |      | 725,048 |        |  
|                                                                                     |        
|Operating expenses                                                                   |         |      | 832,255 |        |   | 739,457 |        |      | 708,565 |        |  
|Asset impairment and restructuring expenses (a)                                      |         |      | 3,004   |        |   | 1,444   |        |      | 26,185  |        |  
|                                                                                     |        
|Operating income (loss)                                                              |         |      | 11,254  |        |   | 29,310  |        |      | (9,702  | )      |  
|Interest expense, net                                                                |         |      | (11,826 | )      |   | (11,250 | )      |      | (11,642 | )      |  
|Equity in earnings (loss) of affiliates                                              |         |      | 1,417   |        |   | 3,441   |        |      | (297    | )      |  
|Other income (expense), net                                                          |         |      | (193    | )      |   | (636    | )      |      | (2,309  | )      |  
|                                                                                     |        
|Income (loss) before income taxes, minority interest
and change in accounting method |         |      | 652     |        |   | 20,865  |        |      | (23,950 | )      |  
|Income tax expense (benefit)                                                         |         |      | 4,798   |        |   | 10,437  |        |      | (2,317  | )      |  
|Minority interest                                                                    |         |      | 666     |        |   | 1,812   |        |      | 947     |        |  
|                                                                                     |        
|Income (loss) before change in accounting method                                     |         |      | (4,812  | )      |   | 8,616   |        |      | (22,580 | )      |  
|Cumulative effect of a change in accounting for goodwill (b)                         |         |      |        |        |   | (18,399 | )      |      |        |        |  
|                                                                                     |        
|Net income (loss) (c)                                                                |         |      | (4,812  | )      |   | (9,783  | )      |      | (22,580 | )      |  
|                                                                                     |        
|Weighted average common shares outstanding:                                          |         |      |         |        |   |         |        |      |         |        |  
|                                                                                     | Basic   |      |         | 73,877 |   |         | 74,225 |      |         | 73,424 |  
|                                                                                     | Diluted |      |         | 73,877 |   |         | 74,335 |      |         | 73,424 |  
|Income (loss) before change in accounting method
per common share:                   |         |      |         |        |   |         |        |      |         |        |  
|                                                                                     | Basic   |      | $       | (0.07  | ) | $       | 0.12   |      | $       | (0.31  | )
|                                                                                     | Diluted |      | $       | (0.07  | ) | $       | 0.12   |      | $       | (0.31  | )
|Net income (loss) per common share:                                                  |         |      |         |        |   |         |        |      |         |        |  
|                                                                                     | Basic   |      | $       | (0.07  | ) | $       | (0.13  | )    | $       | (0.31  | )
|                                                                                     | Diluted |      | $       | (0.07  | ) | $       | (0.13  | )    | $       | (0.31  | )

|At December 31,                        |  | 2003    |  | 2002    |  | 2001    |  | 2000    |  | 1999   
|-------------------------------------- |  | ------- |  | ------- |  | ------- |  | ------- |  | -------
|
|
|Balance Sheet Data:                    |  |         |  |         |  |         |  |         |  |        
|Working capital                        |  | 84,386  |  | 80,618  |  | 72,677  |  | 93,583  |  | 87,384 
|Total assets                           |  | 404,755 |  | 351,977 |  | 355,466 |  | 380,222 |  | 432,909
|Long-term debt, net of current portion |  | 108,684 |  | 107,307 |  | 107,040 |  | 108,341 |  | 148,330
|Stockholders' equity                   |  | 150,949 |  | 139,162 |  | 140,040 |  | 169,582 |  | 160,698

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, cable, consumer products, financial services, insurance, internet service provider, technology, telecommunications, 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 2003, 2002, and 2001, 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 71.2%, 68.4%, and 62.0% of our revenue in 2003, 2002, and 2001 and includes multiple independently managed business units of General Motors Corporation. These General Motors business
units were responsible for 21.2%, 23.5% and 25.4% of our total revenue in 2003, 2002 and 2001. We signed agreements to extend until January 2005, two of our primary contracts with General
Motors. We did not have any other clients under common control that generated more than 10% of our total revenue in 2003, 2002 and 2001. 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.

We
have operations in many parts of the world and therefore our financial statements can be impacted by foreign exchange fluctuations. Fluctuations of currencies against the U.S. dollar
can be substantial and therefore significantly impact comparisons with prior periods.

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 and Estimates

The process of preparing financial statements requires the use of estimates on the part of management. 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 results could differ from these estimates.

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

11

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management's
most difficult, subjective, or complex judgments:

Revenue Recognition

We recognize revenue as services are performed for our clients in accordance with Staff Accounting Bulletin (SAB) No. 101 "Revenue Recognition." We
recognize revenue at the time services are performed based on an hourly, monthly, per call or per employee rate detailed in the client contract. A portion of our revenue is often subject to
performance standards, such as sales per hour, average handle time, occupancy rate and abandonment rate. Our performance against such standards may result in bonuses or penalties, which are recognized
as earned or incurred. In certain circumstances, we receive payment in advance of providing service. Accordingly, amounts billed but not earned under these contracts are excluded from revenue and
included in deferred revenue and other in the consolidated balance sheet. Revenue for services performed under certain collection service agreements are recognized as the related consumer debts are
collected and are calculated based upon a percentage of cash collected or other agreed upon contractual parameters.

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 reduce our results of
operations.

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

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

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

The
estimated cash flows arising from future use of the asset that are used in the impairment analysis requires judgment regarding what we would expect to recover from future use of the
asset. Any changes in the estimates of cash flows arising from future use of the asset or the residual value of the asset on disposal based on changes in the market conditions, changes in the use of
the assets, management's plans, and the determination of the useful life of the assets could significantly change the recoverable amount of the asset or the calculation of the fair value and the
resulting impairment loss, which could significantly affect the results of operations.

Goodwill

We adopted the provisions of SFAS No. 142, "Goodwill and Other Intangible Assets" (SFAS 142),as of
January 1, 2002. As a result of the adoption of this standard, we stopped amortizing our goodwill, including equity method goodwill, and completed the required impairment review. As a result of
the impairment review, we determined that the goodwill in certain reporting units was impaired and we recorded a goodwill impairment loss of $18.4 million as a cumulative effect of an
accounting change as of January 1, 2002.

At
least annually or more frequently, as changes in circumstances 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. We are
required to make certain assumptions and estimates regarding the fair value of goodwill when assessing for impairment. Changes in the fact patterns underlying such assumptions and estimates could
ultimately result in the recognition of additional impairment losses. Effective as of October 1, 2003, we completed the annual evaluation of

12

---

our
goodwill and determined no impairment charge was required.

Deferred Income Taxes

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

Forming
a conclusion that a valuation allowance is not needed is difficult when there is negative evidence such as cumulative losses in recent years in certain tax jurisdictions.
Cumulative losses weigh heavily in the overall assessment. We have established valuation allowances for future tax benefits related to net operating losses incurred in certain federal, state and
foreign tax jurisdictions for the year ended December 31, 2003. We expect to continue to record a valuation allowance on future tax benefits in certain tax jurisdictions until an appropriate
level of profitability is sustained. Until an appropriate level of profitability is reached, we do not expect to recognize any significant tax benefits in future results of operations. If future
taxable income is lower than expected or if expected tax planning strategies are not available as anticipated, we may record additional valuation allowance through income tax expense in the period
such determination is made.

Contingencies

We consider the likelihood of various loss contingencies, including tax and legal contingencies arising in the ordinary course of business, and our ability to
reasonably estimate the amount of loss in determining loss contingencies. An estimated loss contingency is accrued when it is probable that a liability has been incurred and the amount of loss can be
reasonably estimated. We regularly evaluate current information available to us to determine whether such accruals should be adjusted.

Results of Operations

In this section, we discuss our operating results and the factors affecting them. We describe our general business risks, critical accounting
policies, and estimates that are important to our operating results on the previous pages. Please refer to that discussion as you read this section.

13

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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.

|                                                                                     |  | 2003 |         | 2002 |       | 2001 |  
|------------------------------------------------------------------------------------ |  | ---- | ------- | ---- | ----- | ---- | -
|
|
|
|Revenue                                                                              |  | $    | 846,513 |      | 100.0 | %    | $
|Direct labor and telecommunications expenses                                         |  |      | 497,275 |      | 58.7  | %    |  
|Subcontracted and other services expenses                                            |  |      | 54,121  |      | 6.4   | %    |  
|Operating, selling and administrative expenses                                       |  |      | 280,859 |      | 33.2  | %    |  
|Asset impairment and restructuring expenses                                          |  |      | 3,004   |      | 0.4   | %    |  
|                                                                                     | 
|Operating income (loss)                                                              |  |      | 11,254  |      | 1.3   | %    |  
|Interest expense, net                                                                |  |      | (11,826 | )    | (1.4  | %)   |  
|Equity in earnings (loss) of affiliates                                              |  |      | 1,417   |      | 0.2   | %    |  
|Other expense, net                                                                   |  |      | (193    | )    | 0.0   | %    |  
|                                                                                     | 
|Income (loss) before income taxes, minority interest and change in accounting method |  |      | 652     |      | 0.1   | %    |  
|Income tax expense (benefit)                                                         |  |      | 4,798   |      | 0.6   | %    |  
|Minority interest                                                                    |  |      | 666     |      | 0.1   | %    |  
|                                                                                     | 
|Income (loss) before change in accounting method                                     |  |      | (4,812  | )    | (0.6  | %)   |  
|Cumulative effect of change in accounting                                            |  |      |        |      | 0.0   | %    |  
|                                                                                     | 
|Net income (loss) (a)                                                                |  | $    | (4,812  | )    | (0.6  | %)   | $
|                                                                                     | 

2003 Compared to 2002

Revenue

Revenue increased $76.3 million, or 9.9%, in 2003 compared to 2002. The changes in revenue by geographic region are shown in the following table:

|              |  | 2003 |       | 2002 |   | $
Change |  | %
Change |      
|------------- |  | ---- | ----- | ---- | - | -------- |  | -------- | -----
|
|
|              |  |      |       |      |   |          |  |          |      
|North America |  | $    | 479.6 |      | $ | 484.2    |  | $        | (4.5 
|Europe        |  |      | 318.7 |      |   | 212.6    |  |          | 106.1
|Asia Pacific  |  |      | 32.9  |      |   | 28.1     |  |          | 4.8  
|Latin America |  |      | 15.3  |      |   | 45.3     |  |          | (30.1
|              | 
|Totals        |  | $    | 846.5 |      | $ | 770.2    |  | $        | 76.3 
|              | 

The decrease in North America revenue in 2003 compared to 2002 was due primarily to a $14.8 million decline in customer care and customer
acquisition services we provided to a number of our clients partially offset by a $10.3 million increase in revenue by our technical support services and risk management business. The primary
reason for the decrease in revenue is due to pricing pressure resulting from excess capacity in North America, created primarily by the movement of business offshore. The transfer of certain business
to lower cost labor markets offshore results in lower revenue for the same volume of business.

European
revenue increased $106.1 million in 2003 compared to the same period in 2002. Higher sales volumes from new and existing clients and the implementation of multiple
pan-European client accounts that commenced in early 2003 resulted in an increase in revenue of $61.3 million in 2003 compared to 2002. The weakening of the U.S. dollar versus the
British pound and Euro accounted for the remaining $44.8 million of the increase.

Asia
Pacific revenue increased $4.8 million in 2003 compared to 2002. Excluding the impact of changes in foreign currency, revenue decreased $1.4 million compared to 2002
as a result of lower volumes.

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 the change in accounting, Latin America revenue declined $33.0 million in 2003 compared to 2002. The strengthening of
the U.S. dollar accounted for a $0.7 million decrease in Latin American revenue in 2003 compared to 2002. Excluding

14

---

the
impact of the change in accounting and the impact of changes in foreign currency, Latin American revenue increased $3.7 million in 2003 compared to 2002 as a result of higher sale volumes.

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 revenue.

Direct
labor and telecommunications expenses as a percentage of revenue 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 revenue can vary, sometimes significantly, from year to year.

As
a percentage of revenue, direct labor and telecommunications expenses increased to 58.7% in 2003 compared to 56.3% in 2002. Pricing pressure resulting from continuing excess capacity
created primarily by movement of business offshore and the ramp costs of new programs in North America and Europe were the primary reasons for the increase in 2003 compared to 2002.

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 in 2003 remained consistent compared to 2002.

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 increased $29.9 million, or 11.9%, in 2003 compared to 2002. The change in accounting of certain Latin American affiliates as
described previously, reduced operating, selling and administrative expenses $6.9 million in 2003 compared to 2002. The weakening of the U.S. dollar compared to the primary currency in the
jurisdictions in which we operate accounted for a $16.2 million increase in 2003 compared to 2002. Excluding the impact of the change in accounting and the impact of changes in foreign
currency, operating, selling and administrative expenses increased $20.6 million in 2003 compared to 2002. As a percentage of revenue, operating, selling and administrative expenses increased
to 33.2% in 2003 compared to 32.6% in 2002 primarily as a result of increased investments in infrastructure to support European expansions and increased costs associated with expanded sales programs.

Asset Impairment and Restructuring Expenses

During 2003, in connection with the closure of our former headquarters facility and the closure of a contact center, we recorded asset impairment and restructuring
expenses of $1.6 million, which consisted of the write-off of abandoned leasehold improvements of $0.4 million and for $1.2 million of scheduled payments of operating
leases for which we will receive no future economic benefit. In addition, we recorded asset impairment and restructuring expenses of $1.4 million as a result of a revision to our estimate for
non-cancelable lease payments associated with a previously announced facility closure.

During
2002, we recorded additional restructuring charges of $1.4 million primarily associated with a revision to our estimate for non-cancelable lease payments
associated with a facility closure in connection with the 2001 restructuring plan.

Operating Income

Operating income decreased $18.1 million in 2003 compared to 2002 due to the factors discussed above.

Interest Expense, Net

Interest expense, net of interest income, increased $0.6 million in 2003 compared to 2002 as a result of higher average borrowings.

Equity in Earnings of Affiliates

The decrease in equity in earnings of affiliates in 2003 compared to 2002 primarily relates to reduced earnings from our India joint venture due to changes in
client mix and higher ramp-up costs.

Other Expense, Net

Other expense, net, decreased $0.4 million in 2003 compared to 2002. The decrease was primarily a result of foreign currency remeasurement gains arising
from monetary assets and liabilities denominated in currencies other than a business unit's functional currency offset by impairment charges of $1.5 million to reduce our basis in investments
to fair value. Based upon our review of our investee's financial condition, results of operations and operating trends and the implied value from recent rounds of financing completed by the investee,
we determined that an other-than-temporary impairment existed for two of our investments.

Income Tax Expense

The effective tax rate for 2003 was significantly more than the U.S. statutory rate which was primarily the result of not reflecting any significant tax benefits
for the current net operating losses in certain federal, state and foreign tax jurisdictions. In 2002, income tax expense as a percentage of income before income taxes, minority

15

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interest
and change in accounting method, excluding a $2.3 million increase 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.

2002 Compared to 2001

Revenue

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

|              |  | 2002 |       | 2001 |   | $
Change |  | %
Change |     
|------------- |  | ---- | ----- | ---- | - | -------- |  | -------- | ----
|
|
|North America |  | $    | 484.2 |      | $ | 459.7    |  | $        | 24.5
|Europe        |  |      | 212.6 |      |   | 197.5    |  |          | 15.1
|Asia Pacific  |  |      | 28.1  |      |   | 25.1     |  |          | 3.0 
|Latin America |  |      | 45.3  |      |   | 42.7     |  |          | 2.6 
|              | 
|Totals        |  | $    | 770.2 |      | $ | 725.0    |  | $        | 45.2
|              | 

The increase in North America revenue 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 revenue was
due mostly to new work we performed for clients in Mexico and to revenue 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 revenue will no longer include the revenue associated with the joint venture. Our 2002 revenue
was 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 revenue.

Direct
labor and telecommunications expenses as a percentage of revenue 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 revenue can vary, sometimes significantly, from year to year.

Direct
labor and telecommunications expenses increased $22.4 million, or 5.5%, in 2002 compared to 2001. As a percentage of revenue, 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 revenue 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 revenue 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 revenue, 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

16

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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 revenue, operating income was 4.0% in 2002 compared to 2.8% in 2001. This change resulted from all of the factors affecting revenue 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.

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 a $6.0 million net deferred income tax benefit we recorded in the first quarter that resulted from an election to treat certain of our foreign operations
as branches of our U.S. company for U.S. income tax purposes, and the $2.2 million tax benefit we recorded on the asset impairment and restructuring charges and the losses on disposals of
assets in the second quarter. 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.

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

17

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you
read our discussion of the sources and uses of cash in each year.

|Years Ended December 31,        |                      | 2003 |   | 2002  |   | 2001 |      
|------------------------------- | -------------------- | ---- | - | ----- | - | ---- | -----
|
|
|                                |                      |      |   |       |   |      |      
|Net cash provided by (used in): |                      |      |   |       |   |      |      
|                                | Operating activities |      | $ | 9.1   |   | $    | 38.1 
|                                | Investing activities |      |   | (24.1 | ) |      | (28.5
|                                | Financing activities |      |   | 11.9  |   |      | 3.3  

2003

In 2003, cash provided by operating activities resulted primarily from income before asset impairment and restructuring expenses, depreciation and amortization,
and other charges of $32.0 million and a $6.5 million increase in other liabilities, which were partially offset by a $30.9 million increase in trade accounts receivable and
$1.3 million decrease in trade accounts payable.

In
2003, we used cash for investing activities mostly to purchase $24.8 million of property and equipment and used $1 million to increase investments in affiliates. This
was partially offset by $1.8 million of proceeds from dividends received from an equity method investee.

In
2003, we received cash from financing activities mostly from $3.7 million of net borrowings under our credit facility and $11.6 million of net borrowings under other
local lines of credit. In 2003, we used cash for financing activities to repay $2.3 million of capital lease obligations. In addition, we used cash to purchase a total of $1.0 million of
common stock under our existing stock purchase program.

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.

Capital Resources

We have historically used funds generated from operations, leases of property and equipment, senior subordinated notes, and borrowings under credit facilities with
banks to finance business acquisitions, capital expenditures, and working capital requirements.

We
have a three-year $50 million revolving credit facility which expires in December 2005. The 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, 2003, we had
$41.0 million of available borrowings under the 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 and
available funds under our credit facility in addition to lease financing for property and equipment. We estimate that our 2004 capital expenditures will range from $20 million to
$40 million to cover technology upgrades, asset replacement and new business initiatives. 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 881,700 shares at a total cost
of $1.5 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

18

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contractual
obligations and commitments at December 31, 2003 in the following table:

|Year       |  | Long-Term
Debt |         | Capital
Leases |   | Operating
Leases |  | Other
Debt |        | Total
|---------- |  | -------------- | ------- | -------------- | - | ---------------- |  | ---------- | ------ | -----
|
|
|           |  |                |         |                |   |                  |  |            |        |      
|2004       |  | $              |        |                | $ | 3,358            |  | $          | 22,540 |      
|2005       |  |                |        |                |   | 1,990            |  |            | 18,721 |      
|2006       |  |                | 100,000 |                |   | 1,483            |  |            | 14,679 |      
|2007       |  |                |        |                |   | 1,242            |  |            | 10,284 |      
|2008       |  |                |        |                |   | 805              |  |            | 6,973  |      
|Thereafter |  |                |        |                |   | 5,386            |  |            | 18,751 |      
|          
|Total      |  | $              | 100,000 |                | $ | 14,264           |  | $          | 91,948 |      
|          

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 Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard (SFAS) No. 143, "Accounting for Asset
Retirement Obligations" (SFAS 143). SFAS 143 requires that we 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 that result from the acquisition, construction, development and/or normal use of assets. We are also required to record a
corresponding asset that is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period
to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. We adopted SFAS 143 on January 1, 2003. The adoption of SFAS 143 resulted
in a cumulative effect adjustment of $0.1 million of expense and is recorded in other income (expense), net in the consolidated statements of income (loss).

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" (SFAS 146), which is effective for fiscal years beginning
after December 31, 2002. SFAS 146 supercedes Emerging Issues Task Force (EITF) Issue No. 94-3, "Liabilities Recognized for Certain Employee Termination Benefits and
Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." We adopted SFAS 146 on January 1, 2003. See Note 11 to the consolidated financial
statements for disclosure of asset impairment and restructuring expenses recorded during the first quarter of 2003.

In
November 2002, the EITF reached a consensus on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables" (EITF 00-21).
EITF 00-21 addresses certain aspects of the accounting by a vendor for arrangements under which the vendor will perform multiple revenue generating activities. EITF
00-21 was effective prospectively for new or modified contracts beginning July 1, 2003. The adoption of EITF 00-21 did not have a material impact 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" (FIN 45). FIN 45 elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations under guarantees issued. FIN 45 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 FIN 45 are applicable to guarantees issued or modified after December 31, 2002
and have not had a material effect on our consolidated financial statements.

In
January 2003, the FASB released Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" (FIN 46) which
requires that all primary beneficiaries of Variable Interest Entities (VIE) consolidate that entity. FIN 46 is effective immediately for VIE's created after January 31, 2003 and to VIE's in
which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003 to VIE's in which an enterprise holds a variable
interest it acquired before February 1, 2003. In December 2003, the FASB published a revision to FIN 46 ("FIN 46R") to clarify some of the

19

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provisions
of the interpretation and to defer the effective date of implementation for certain entities. Under the guidance of FIN 46R, entities that do not have interests in structures that are
commonly referred to as special purpose entities are required to apply the provisions of the interpretation in financials statements for periods ending after March 15, 2004. We do not have
interests in special purpose entities and will apply the provisions of FIN 46R with our first quarter 2004 financial statements. We have not completed our assessment of the impact of FIN 46,
but do not anticipate a material impact on our consolidated financial statements.

In
April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" (SFAS 149). SFAS 149 amends and
clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). Except for the provisions of SFAS 149 that relate to SFAS 133 Implementation Issues that have been
effective for fiscal quarters that began prior to June 15, 2003, SFAS 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003. The application of SFAS 149 did not have a material effect on our consolidated financial statements.

In
May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS 150). The
provisions of SFAS 150, which also include a number of new disclosure requirements, are effective for instruments entered into or modified after May 31, 2003 and for
pre-existing instruments as of July 1, 2003. The adoption of SFAS 150 did not have a material effect on our consolidated financial statements.

In
May 2003, the EITF reached a consensus on Issue 01-8,Determining Whether an Arrangement Contains a Lease("EITF
01-8"). Under the provisions of EITF 01-8, arrangements conveying the right to control the use of specific property, plant or equipment must be evaluated to determine whether
they contain a lease. The new rules will be applied prospectively to such contracts entered into or modified after July 1, 2003. The adoption of EITF 01-8 did not have a material
impact on our consolidated financial statements.

---

Item 7A. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency 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
revenue and expenses of those operations are typically denominated in the currency of the country of operations, providing a natural hedge.

Our
financial statements are presented in U.S. dollars and can be impacted by foreign exchange fluctuations through both (i) translation risk, which is the risk that the financial
statements for a particular period or as of a certain date depend on the prevailing exchange rates of the various currencies against the U.S. dollar, and (ii) transaction risk, which is the
risk that the functional currency of costs and liabilities fluctuates in relation to the currency of our revenue and assets, which fluctuation may adversely affect operating margins.

With
respect to translation risk, even though the fluctuations of currencies against the U.S. dollar can be substantial and therefore significantly impact comparisons with prior periods,
the translation impact is recorded as a component of stockholders' equity and does not affect the underlying results of operations. Gains and losses related to transactions denominated in a currency
other than the functional currency of the countries in which we operate including short-term intercompany accounts are included in the determination of net income (loss).

Interest Rate Risk

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 years ended December 31, 2003, 2002 and 2001, our average borrowings under our bank credit facility were
$5.2 million, $2.1 million, and $10.7 million, respectively. Based on our projected cash needs for the foreseeable future, we do not expect that our exposure to changes in
interest rates for these borrowings 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 beginning on page F-3 and the related
Notes to Consolidated Financial Statements beginning on page F-7.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

20

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Item 9A. Controls and Procedures

Our management evaluated, with the participation of our Chief Executive Officer and our Chief Financial Officer, the effectiveness of our disclosure controls and
procedures as of the end of the period covered by this Annual Report on Form 10-K. Based on this evaluation, our Chief Executive Officer and our Chief Financial Officer have
concluded that our disclosure controls and procedures are effective to ensure that information we are required to disclose in reports that we file or submit under the Securities Exchange Act of 1934
is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms.

There
was no change in our internal control over financial reporting that occurred during the fourth fiscal quarter of the fiscal year covered by this Annual Report on
Form 10-K that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

---

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 "Proposal: Board of Directors and Election"
and "Section 16(a) Beneficial Ownership Reporting Compliance," and is incorporated herein by reference.

The
information required by this item with respect to executive officers of SITEL Corporation, pursuant to instruction 3 of paragraph (b) of Item 401 of
Regulation S-K, is set forth following Item 4 of Part I of this Form 10-K under the caption "Executive Officers of the Registrant" and in the Proxy
Statement under the caption "Section 16(a) Beneficial Ownership Reporting Compliance," and is incorporated herein by reference.

Audit Committee and Audit Committee Financial Expert

The Company has established a separate Audit Committee of the Board of Directors, comprised of directors Desai, DeVito, Gourlay, Hanger and Kubat. The Company's
Board of Directors has determined that Mr. Kubat qualifies as an audit committee financial expert and is independent.

Code of Ethics

The Company has adopted a code of ethics that applies to its chief executive officer, chief financial officer and controller. The code of ethics is filed as
Exhibit 14 to this Annual Report on Form 10-K and may also be accessed through the Investors section of our Internet website listed under Item 1 of this Annual Report on
Form 10-K under the caption "Available Information" (beginning no later than our 2004 annual stockholders meeting).

Item 11. Executive Compensation

The information required by this item is set forth in the Proxy Statement under the captions "Annual Compensation," "Arrangements with Executive Officers,"
"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 and Related Stockholder Matters

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. Principal Accountant Fees and Services

The information required by this item is set forth in the Proxy Statement under the caption "Independent Public Accountants" and is incorporated herein by
reference.

21

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PART IV

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





22

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SIGNATURES

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

|                        |  |        | SITEL Corporation (Registrant)                                                                              
|----------------------- |  | ------ | ------------------------------------------------------------------------------------------------------------
|Date:    March 12, 2004 |  | By /s/ | James F. LynchJames F. LynchChief Executive Officer(Duly Authorized Officer and
Principal 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 12, 2004
|By |  | /s/ | Jorge A. CelayaJorge A. Celaya     |  | Executive Vice President and Chief Financial Officer
(Principal Financial Officer) |  | March 12, 2004
|By |  | /s/ | Donald J.VranaDonald J.Vrana       |  | Senior Vice President and Controller
(Principal Accounting Officer)                |  | March 12, 2004
|By |  | /s/ | Kelvin C. BerensKelvin C. Berens   |  | Director                                                                           |  | March 12, 2004
|By |  | /s/ | Rohit M. DesaiRohit M. Desai       |  | Director                                                                           |  | March 12, 2004
|By |  | /s/ | Mathias J. DeVitoMathias J. DeVito |  | Director                                                                           |  | March 12, 2004
|By |  | /s/ | Bill L. FairfieldBill L. Fairfield |  | Executive Vice President, Business
Development and Director                        |  | March 12, 2004
|By |  | /s/ | Nigel T. GourlayNigel T. Gourlay   |  | Director                                                                           |  | March 12, 2004
|By |  | /s/ | David J. HangerDavid J. Hanger     |  | Director                                                                           |  | March 12, 2004
|By |  | /s/ | George J. KubatGeorge J. Kubat     |  | Director                                                                           |  | March 12, 2004

23

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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 10-Q 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 (see 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).                                                          
|            |  |                                                                                                                                                                                                                     

24

---

|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).                                   
|10.6(c)  |  | Amendment No. 3 to SITEL Corporation 1999 Stock Incentive Plan (see Appendix A to the Company's definitive Proxy Statement for the Annual Meeting of Stockholders, filed March 31, 2003).
|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 (see Exhibit 10.11 to the Company's Form 10-K for the year ended December 31, 2002)                     
|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).                                                                
|10.13    |  | 2001 Nonemployee Director Compensation Plan (see Exhibit 10.20 to the Company's Form 10-K for the year ended December 31, 2001)                                                          
|10.14*   |  | Jorge A. Celaya Employment Offer Letter.                                                                                                                                                 
|10.15*   |  | Robert Scott Moncrieff Employment Agreement.                                                                                                                                             
|14*      |  | Code of Ethics for CEO and Senior Financial Officers.                                                                                                                                    
|21*      |  | Subsidiaries.                                                                                                                                                                            
|23*      |  | Independent Auditors' Consent.                                                                                                                                                           
|31.1*    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                   
|31.2*    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                   
|32.1*    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                   
|32.2*    |  | Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                   

*
Filed herewith.

25

---



SITEL CORPORATION AND SUBSDIRIES        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, 2003, 2002, and 2001        |  | F-3
|Consolidated Balance Sheets at December 31, 2003 and 2002                                             |  | F-4
|Consolidated Statements of Stockholders' Equity For The Years Ended December 31, 2003, 2002, and 2001 |  | F-5
|Consolidated Statements of Cash Flows For The Years Ended December 31, 2003, 2002, and 2001           |  | 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, 2003 and 2002, 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, 2003. 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, 2003 and 2002, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2003, in conformity
with accounting principles generally accepted in the United States of America.

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                      |  | 
|Omaha, Nebraska
March 5, 2004 |  | 

F-2

---



SITEL CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF INCOME (LOSS)

|Years Ended December 31,                                                             |                                                | 2003 |         | 2002    |   | 2001    |        
|------------------------------------------------------------------------------------ | ---------------------------------------------- | ---- | ------- | ------- | - | ------- | -------
|
|
|Revenues                                                                             |                                                | $    | 846,513 |         | $ | 770,211 |        
|                                                                                     |                                               
|Operating expenses:                                                                  |                                                |      |         |         |   |         |        
|                                                                                     | Direct labor and telecommunications expenses   |      |         | 497,275 |   |         | 433,456
|                                                                                     | Subcontracted and other services expenses      |      |         | 54,121  |   |         | 55,027 
|                                                                                     | Operating, selling and administrative expenses |      |         | 280,859 |   |         | 250,974
|                                                                                     | Asset impairment and restructuring expenses    |      |         | 3,004   |   |         | 1,444  
|                                                                                     |                                               
|                                                                                     | Total operating expenses                       |      |         | 835,259 |   |         | 740,901
|                                                                                     |                                               
|Operating income (loss)                                                              |                                                |      | 11,254  |         |   | 29,310  |        
|                                                                                     |                                               
|Other income (expense):                                                              |                                                |      |         |         |   |         |        
|                                                                                     | Interest income                                |      |         | 427     |   |         | 475    
|                                                                                     | Interest expense                               |      |         | (12,253 | ) |         | (11,725
|                                                                                     | Equity in earnings of affiliates               |      |         | 1,417   |   |         | 3,441  
|                                                                                     | Other income (expense), net                    |      |         | (193    | ) |         | (636   
|                                                                                     |                                               
|                                                                                     | Total other expense, net                       |      |         | (10,602 | ) |         | (8,445 
|                                                                                     |                                               
|Income (loss) before income taxes, minority interest and change in accounting method |                                                |      | 652     |         |   | 20,865  |        
|Income tax expense                                                                   |                                                |      | 4,798   |         |   | 10,437  |        
|Minority interest                                                                    |                                                |      | 666     |         |   | 1,812   |        
|                                                                                     |                                               
|Income (loss) before change in accounting method                                     |                                                |      | (4,812  | )       |   | 8,616   |        
|Cumulative effect of a change in accounting for goodwill                             |                                                |      |        |         |   | (18,399 | )      
|                                                                                     |                                               
|Net income (loss)                                                                    |                                                | $    | (4,812  | )       | $ | (9,783  | )      
|                                                                                     |                                               
|Weighted average common shares outstanding:                                          |                                                |      |         |         |   |         |        
|                                                                                     | Basic                                          |      |         | 73,877  |   |         | 74,225 
|                                                                                     | Diluted                                        |      |         | 73,877  |   |         | 74,335 
|Earnings per share:                                                                  |                                                |      |         |         |   |         |        
|Basic:                                                                               |                                                |      |         |         |   |         |        
|Income (loss) before change in accounting method                                     |                                                | $    | (0.07   | )       | $ | 0.12    |        
|Cumulative effect of change in accounting for goodwill                               |                                                |      |        |         |   | (0.25   | )      
|                                                                                     |                                               
|Net income (loss)                                                                    |                                                | $    | (0.07   | )       | $ | (0.13   | )      
|                                                                                     |                                               
|Diluted:                                                                             |                                                |      |         |         |   |         |        
|Income (loss) before change in accounting method                                     |                                                | $    | (0.07   | )       | $ | 0.12    |        
|Cumulative effect of change in accounting for goodwill                               |                                                |      |        |         |   | (0.25   | )      
|                                                                                     |                                               
|Net income (loss)                                                                    |                                                | $    | (0.07   | )       | $ | (0.13   | )      
|                                                                                     |                                               

See Notes to Consolidated Financial Statements.

F-3

---

SITEL CORPORATION AND SUBSIDIARIES  CONSOLIDATED BALANCE SHEETS

|At December 31,                            |                                       | 2003                                                                                                                                     |         | 2002   |        
|------------------------------------------ | ------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------- | ------- | ------ | -------
|
|
|Assets                                     |                                       |                                                                                                                                          |         |        |        
|                                           |                                       | Current assets:                                                                                                                          |         |        |        
|                                           |                                       | Cash and cash equivalents                                                                                                                |         | $      | 29,850 
|                                           |                                       | Trade accounts receivable (net of allowance for doubtful accounts of$3,088and $4,011, respectively)                                      |         |        | 175,542
|                                           |                                       | Prepaid expenses                                                                                                                         |         |        | 10,072 
|                                           |                                       | Deferred income taxes                                                                                                                    |         |        | 2,367  
|                                           |                                       | Other assets                                                                                                                             |         |        | 7,364  
|                                           |                                      
|                                           |                                       | Total current assets                                                                                                                     |         |        | 225,195
|                                           |                                      
|                                           | Property and equipment, net           |                                                                                                                                          |         | 90,233 |        
|                                           |                                      
|                                           | Other assets:                         |                                                                                                                                          |         |        |        
|                                           |                                       | Goodwill                                                                                                                                 |         |        | 53,553 
|                                           |                                       | Deferred income taxes                                                                                                                    |         |        | 8,724  
|                                           |                                       | Investment in affiliates                                                                                                                 |         |        | 18,911 
|                                           |                                       | Other assets                                                                                                                             |         |        | 8,139  
|                                           |                                      
|Total assets                               |                                       | $                                                                                                                                        | 404,755 |        | $      
|                                           |                                      
|Liabilities and Stockholders' Equity       |                                       |                                                                                                                                          |         |        |        
|                                           | Current liabilities:                  |                                                                                                                                          |         |        |        
|                                           |                                       | Revolving credit facility and other current debt                                                                                         |         | $      | 22,894 
|                                           |                                       | Current portion of capital lease obligations                                                                                             |         |        | 3,181  
|                                           |                                       | Trade accounts payable                                                                                                                   |         |        | 30,582 
|                                           |                                       | Income taxes payable                                                                                                                     |         |        | 628    
|                                           |                                       | Accrued wages, salaries and bonuses                                                                                                      |         |        | 38,817 
|                                           |                                       | Accrued operating expenses                                                                                                               |         |        | 37,823 
|                                           |                                       | Deferred revenue and other                                                                                                               |         |        | 6,884  
|                                           |                                      
|                                           |                                       | Total current liabilities                                                                                                                |         |        | 140,809
|                                           | Long-term debt and other liabilities: |                                                                                                                                          |         |        |        
|                                           |                                       | Long-term debt, excluding current portion                                                                                                |         |        | 100,000
|                                           |                                       | Capital lease obligations, excluding current portion                                                                                     |         |        | 8,684  
|                                           |                                       | Deferred compensation                                                                                                                    |         |        | 1,389  
|                                           |                                       | Deferred income taxes                                                                                                                    |         |        | 1,055  
|                                           |                                      
|                                           |                                       | Total liabilities                                                                                                                        |         |        | 251,937
|                                           |                                      
|Minority interests                         |                                       |                                                                                                                                          | 1,869   |        |        
|                                           |                                      
|                                           | Stockholders' equity:                 |                                                                                                                                          |         |        |        
|                                           |                                       | Common stock, voting, $.001 par value 200,000,000 shares authorized,74,368,135and 74,363,431 shares issued and outstanding, respectively |         |        | 74     
|                                           |                                       | Additional paid-in capital                                                                                                               |         |        | 168,726
|                                           |                                       | Accumulated other comprehensive income (loss)                                                                                            |         |        | 329    
|                                           |                                       | Accumulated deficit                                                                                                                      |         |        | (17,044
|                                           |                                       | Less treasury stock, at cost,755,300and 120,663 common shares, respectively                                                              |         |        | (1,136 
|                                           |                                      
|                                           |                                       | Total stockholders' equity                                                                                                               |         |        | 150,949
|                                           |                                      
|Total liabilities and stockholders' equity |                                       | $                                                                                                                                        | 404,755 |        | $      
|                                           |                                      

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, 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                    | )      
|Purchase of 709,900 shares of treasury stock                                                           |                                 |   |   |                            |   |                                              |   |                                         |        |        |   |                           |        
|Issuance of 4,704 shares of common stock for options exercised and 71,023 shares of treasury stock     |                                 |   |   |                            |   | 27                                            |   |                                         |        |        |   | (39                        | )      
|Other                                                                                                  |                                 |   |   |                            |   | (7                                            | ) |                                         |        |        |   |                           |        
|Comprehensive income:                                                                                  |                                 |   |    |                            |   |                                               |   |                                         |         |        |   |                            |        
|                                                                                                       | Net loss                        |   |    |                           |   |                                               |  |                                         |         |       |   |                            | (4,812 
|                                                                                                       | Currency translation adjustment |   |    |                           |   |                                               |  |                                         |         | 17,591 |   |                            |       
|                                                                                                       |                                 |   |    |                            |   |                                               |   |                                         |         |        |   |                            |        
|                                                                                                       | Total comprehensive income      |   |    |                           |   |                                               |  |                                         |         |       |   |                            |       
|                                                                                                       |                                
|Balance, December 31, 2003                                                                             |                                 | $ | 74 |                            | $ | 168,726                                       |   | $                                       | 329     |        | $ | (17,044                    | )      
|                                                                                                       |                                

See Notes to Consolidated Financial Statements.

F-5

---

SITEL CORPORATION AND SUBSIDIARIES  CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                               |                                                                                |                                                  |                           |         |        |         |        
|---------------------------------------------- | ------------------------------------------------------------------------------ | ------------------------------------------------ | ------------------------- | ------- | ------ | ------- | -------
|
|                                               |                                                                               
|
|Cash flows from operating activities:          |                                                                                |                                                  |                           |         |        |         |        
|                                               | Net loss                                                                       |                                                  | $                         | (4,812  | )      | $       | (9,783 
|                                               | Adjustments to reconcile net loss to net cash flows from operating activities: |                                                  |                           |         |        |         |        
|                                               |                                                                                | Cumulative effect of change in accounting method |                           |         |       |         |        
|                                               |                                                                                | Asset impairment and restructuring provision     |                           |         | 3,004  |         |        
|                                               |                                                                                | Depreciation and amortization                    |                           |         | 35,663 |         |        
|                                               |                                                                                | (Gain)/ loss on disposal of assets               |                           |         | (58    | )       |        
|                                               |                                                                                | Write-off of credit acquisition fees             |                           |         |       |         |        
|                                               |                                                                                | Provision for deferred income taxes              |                           |         | 427    |         |        
|                                               |                                                                                | Equity in (earnings) loss of affiliates          |                           |         | (1,417 | )       |        
|                                               |                                                                                | Deferred compensation                            |                           |         | (3     | )       |        
|                                               |                                                                                | Impairment losses on equity investments          |                           |         | 1,480  |         |        
|                                               |                                                                                | Changes in operating assets and liabilities:     |                           |         |        |         |        
|                                               |                                                                                |                                                  | Trade accounts receivable |         |        | (30,862 | )      
|                                               |                                                                                |                                                  | Other assets              |         |        | 813     |        
|                                               |                                                                                |                                                  | Trade accounts payable    |         |        | (1,324  | )      
|                                               |                                                                                |                                                  | Other liabilities         |         |        | 6,195   |        
|                                               |                                                                               
|                                               | Net cash flows from operating activities                                       |                                                  |                           | 9,106   |        |         | 38,128 
|                                               |                                                                               
|Cash flows from investing activities:          |                                                                                |                                                  |                           |         |        |         |        
|                                               | Purchases of property and equipment                                            |                                                  |                           | (24,808 | )      |         | (30,427
|                                               | Dividends received from affiliates                                             |                                                  |                           | 1,815   |        |         |       
|                                               | Proceeds from sales of property and equipment                                  |                                                  |                           | 211     |        |         | 2,488  
|                                               | Increase in other assets                                                       |                                                  |                           | (333    | )      |         | (523   
|                                               | Investment in affiliates                                                       |                                                  |                           | (1,000  | )      |         |       
|                                               |                                                                               
|                                               | Net cash flows from investing activities                                       |                                                  |                           | (24,115 | )      |         | (28,462
|                                               |                                                                               
|Cash flows from financing activities:          |                                                                                |                                                  |                           |         |        |         |        
|                                               | Borrowings on debt                                                             |                                                  |                           | 21,302  |        |         | 38,424 
|                                               | Repayments of debt                                                             |                                                  |                           | (6,045  | )      |         | (33,020
|                                               | Repayments of capital lease obligations                                        |                                                  |                           | (2,299  | )      |         | (700   
|                                               | Treasury stock reissuances (repurchases), net                                  |                                                  |                           | (1,009  | )      |         | 85     
|                                               | Capital contributions from (distributions to) minority interest                |                                                  |                           |        |        |         | (1,501 
|                                               | Other                                                                          |                                                  |                           |        |        |         | 18     
|                                               |                                                                               
|                                               | Net cash flows from financing activities                                       |                                                  |                           | 11,949  |        |         | 3,306  
|                                               |                                                                               
|Effect of exchange rates on cash               |                                                                                |                                                  | (1,232                    | )       |        | (986    | )      
|                                               |                                                                               
|Net increase (decrease) in cash                |                                                                                |                                                  | (4,292                    | )       |        | 11,986  |        
|Cash and cash equivalents, beginning of period |                                                                                |                                                  | 34,142                    |         |        | 22,156  |        
|                                               |                                                                               
|Cash and cash equivalents, end of period       |                                                                                | $                                                | 29,850                    |         | $      | 34,142  |        
|                                               |                                                                               
|Other cash flows information:                  |                                                                                |                                                  |                           |         |        |         |        
|                                               | Interest paid                                                                  |                                                  | $                         | 11,263  |        | $       | 10,637 
|                                               | Income taxes paid                                                              |                                                  | $                         | 5,673   |        | $       | 6,448  
|Non-cash investing and financing activities:   |                                                                                |                                                  |                           |         |        |         |        
|                                               | Capital leases incurred                                                        |                                                  | $                         | 3,251   |        | $       | 859    

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, telecommunications, internet service provider, cable, technology and utilities sectors.

Principles of Consolidation

Our Consolidated Financial Statements include the financial statements of SITEL Corporation and its subsidiaries. We use the consolidation method when we can
exercise control over the operations and policies of a company. 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. 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. All intercompany transactions and accounts have been eliminated.

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. Our consolidated statements of income (loss) no longer include the revenue and costs associated with the joint venture after
October 1, 2002. Rather, the results are reflected in equity in earnings (loss) of affiliates. Had we accounted for the investments under the equity method effective January 1, 2001,
revenue for the years ended December 31, 2002 and 2001 would have been lower by $35.8 million and $32.0 million, respectively.

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 revenue and expenses at the average exchange rates during the period. We include
translation gains and losses as a component of stockholders' equity. Gains and losses related to transactions denominated in a currency other than the functional currency of the countries in which we
operate and short-term intercompany accounts are included in the determination of net income (loss).

Revenue Recognition

We recognize revenue 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 revenue when the services are performed. We recognize revenue that is 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 includes unbilled revenue for services performed that we expect to bill, generally within thirty days, and collect in the normal course
of business. Unbilled revenue was $28.8 million and $26.6 million as of December 31, 2003 and 2002, respectively.

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.

F-7

---

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.

We
review long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable.
Recoverability of an asset "held-for-use" is determined by comparing the carrying amount of the asset to the undiscounted net cash flows expected to be generated from the use
of the asset. If the carrying amount is greater than the undiscounted net cash flows expected to be generated by the asset, the asset's carrying amount is reduced to its fair market value. An asset
"held-for-sale" is reported at the lower of the carrying amount or fair market value, less cost to sell.

Investment in Affiliates

We have made minority interest investments for business and strategic purposes through the purchase of voting common and preferred stock of companies. These
investments are included in investments in affiliates in the consolidated balance sheets. We periodically evaluate whether declines in fair value, if any, of our investments are
other-than-temporary.
This evaluation consists of a review of qualitative and quantitative factors. We also consider other factors to determine whether declines in fair value are
other-than-temporary, such as the investee's financial condition, results of operations and operating trends. We also consider the implied value from any recent rounds of
financing completed by the investee. Based upon an evaluation of the facts and circumstances, we determined that an other-than-temporary impairment existed for two of our
investments. An impairment charge of $1.5 million has been recorded in other income (expense), net in the consolidated statement of income (loss) for the year ended December 31, 2003 to
reduce our basis in investments to fair value.

As
of December 31, 2003 and 2002, the investment in our India joint venture was approximately $4.3 million and $5.8 million, respectively. Subcontracted services
provided by our India joint venture for the years ended December 31, 2003, 2002 and 2001were $11.4 million, $14.3 million and $0.6 million, respectively and are included in
subcontracted and other services expenses in the accompanying consolidated statements of income (loss). The Company had payables to our India joint venture of $1.9 million and
$2.3 million at December 31, 2003 and 2002, respectively, which are included in trade accounts payable in the accompanying consolidated balance sheets. We received $1.8 million of
dividend distributions from our India joint venture during the year ended December 31, 2003.

As
of and for the years ended December 31, 2003 and 2002, the investment in certain Latin America affiliates was approximately $14.5 million and $11.7 million,
respectively. Of the $14.5 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. Subcontracted services provided by our Latin America joint ventures for the years ended
December 31, 2003 and 2002 were not material.

Summarized
financial information of our significant equity method investments as of and for the year ended December 31, 2003 are as follows: Current assets of
$17.1 million; non-current assets of $11.0 million; current liabilities of $4.7 million; non-current liabilities of $0.4 million; shareholder's
equity of $23.1 million; revenue of $51.6 million; and net income of $2.7 million. Our significant equity investments in 2003 included our Latin America joint ventures, India
joint venture and Context Connect, Inc.

Summarized
financial information of our significant equity method investments as of and for the year ended December 31, 2002 are as follows: Current assets of
$23.1 million; non-current assets of $11.5 million; current liabilities of $8.6 million; non-current liabilities of $1.0 million; shareholder's
equity of $25.0 million; revenue of $60.1 million; and net income of $8.0 million. Our significant equity investments in 2002 included our Latin America joint ventures and India
joint venture.

Deferred Income Taxes

We must report some of our revenue 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

F-8

---

operations
that have been, or are intended to be, reinvested indefinitely.

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 Statement of Financial Accounting Standard No. 142, "Goodwill and Other Intangible Assets", (SFAS No. 142) as of January 1,
2002. As a result of the adoption of this standard, we recorded a goodwill impairment loss of $18.4 million as a cumulative effect in the 2002 financial statements and ceased amortizing our
goodwill. Our goodwill amortization expense was $3.6 million for the year ended December 31, 2001. Had we adopted the provisions of SFAS No. 142 on January 1, 2001, our net
loss would have been $(19,138) for year ended December 31, 2001.

Goodwill
is tested annually for impairment of value. Impairment occurs when the fair value of the asset is less than its carrying amount. If impaired, the asset's carrying amount is
reduced to its fair market value. The company's annual impairment testing is performed during the fourth quarter. No impairment charges resulted from the annual impairment tests for the years ended
December 31, 2003 and 2002.

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, 2003, 2002,
and 2001, we had 7.8, 8.7 and 7.7 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 accounting principles generally accepted in the United States of America that
affect our reported amounts of assets and liabilities at the dates of the financial statements, our disclosure of contingent assets and liabilities at the dates of the financial statements, and our
reported amounts of revenue and expenses during the reporting periods. These estimates involve judgments with respect to, among other things, future economic factors that are difficult to predict and
are beyond management's control. As a result, actual amounts could differ from these estimates.

Stock-Based Compensation

We apply the intrinsic-value-based method of accounting prescribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees"
(APB No. 25),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. Statement of Financial Accounting Standard No. 123, "Accounting for
Stock-Based Compensation" (SFAS No. 123),established accounting and disclosure requirements using a fair-value-based method of
accounting for stock-based employee compensation plans.

The
following table illustrates the effect on our net loss if the fair-value-based method had been applied to all outstanding and unvested awards in each period.

|                       |                                                                                                                         |         |   |        |       |   |        
|---------------------- | ----------------------------------------------------------------------------------------------------------------------- | ------- | - | ------ | ----- | - | -------
|
|                       |                                                                                                                        
|                       |                                                                                                                         |         |   |        |       |   |        
|Net loss:              |                                                                                                                         |         |   |        |       |   |        
|                       | As reported                                                                                                             |         | $ | (4,812 | )     | $ | (9,783 
|                       | Less: total stock based employee compensation expense determined under the fair value method for all awards, net of tax |         |   | (1,224 | )     |   | (2,394 
|                       |                                                                                                                        
|                       | Pro forma net loss                                                                                                      |         | $ | (6,036 | )     | $ | (12,177
|                       |                                                                                                                        
|Loss per common share: |                                                                                                                         |         |   |        |       |   |        
|                       | As reported:                                                                                                            |         |   |        |       |   |        
|                       |                                                                                                                         | Basic   |   | $      | (0.07 | ) | $      
|                       |                                                                                                                         | Diluted |   |        | (0.07 | ) |        
|                       | Pro forma:                                                                                                              |         |   |        |       |   |        
|                       |                                                                                                                         | Basic   |   | $      | (0.08 | ) | $      
|                       |                                                                                                                         | Diluted |   |        | (0.08 | ) |        

The fair value of options was estimated at the date of the grant using the Black-Scholes option pricing model with the following weighted average
assumptions for 2003, 2002 and 2001, respectively: risk-free interest rate of 2.99%, 2.00% and 3.70%; expected volatility of 59.6%, 69.2% and 77.5%; a dividend yield of 0%; and an expected
option life of five years. The weighted average fair value of options granted in the years ended

F-9

---

December 31,
2003, 2002 and 2001 was $0.78, $1.61 and $1.83, respectively.

Fair Value of Financial Instruments

We consider the amounts presented for financial instruments in the consolidated balance sheets, except for the Senior Subordinated Notes due 2006, to be reasonable
estimates of fair value based on maturity dates or other characteristics. The estimated fair value of the Senior Subordinated Notes was approximately $98.0 million and $92.0 million at
December 31, 2003 and 2002, respectively. The Company has determined the estimated fair value of the notes using available market information.

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, 2003 and 2002 represents the accumulated foreign currency translation adjustment. We deem our unremitted earnings from foreign subsidiaries to be permanent in
nature and do not provide for taxes on currency translation adjustments arising from converting the investment in a foreign currency to U.S. dollars.

Recently Issued Accounting Standards

In June 2001, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standard No. 143, "Accounting for Asset
Retirement Obligations" (SFAS 143). SFAS 143 requires that we 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 that result from the acquisition, construction, development and/or normal use of assets. We are also required to record a
corresponding asset that is depreciated over the life of the asset. Subsequent to the initial measurement of the asset retirement obligation, the obligation will be adjusted at the end of each period
to reflect the passage of time and changes in the estimated future cash flows underlying the obligation. We adopted SFAS 143 on January 1, 2003. The adoption of SFAS 143 resulted
in a cumulative effect adjustment of $0.1 million of expense and is recorded in other income (expense), net in the consolidated statements of income (loss).

In
June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities" (SFAS 146), which is effective for fiscal years
beginning after December 31, 2002. SFAS 146 supercedes Emerging Issues Task Force (EITF) Issue No. 94-3, "Liabilities Recognized for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring)." We adopted SFAS 146 on January 1, 2003. See Note 11 to the consolidated
financial statements for disclosure of asset impairment and restructuring expenses recorded during the years ended December 31, 2003, 2002 and 2001.

In
November 2002, the EITF reached a consensus on Issue No. 00-21, "Revenue Arrangements with Multiple Deliverables" (EITF 00-21). EITF
00-21 addresses certain aspects of the accounting by a vendor for arrangements under which the vendor will perform multiple revenue generating activities. EITF 00-21 was
effective prospectively for new or modified contracts beginning July 1, 2003. The adoption of EITF 00-21 did not have a material impact 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" (FIN 45). FIN 45 elaborates on the disclosures to be made by a
guarantor in its interim and annual financial statements about its obligations under guarantees issued. FIN 45 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 FIN 45 are applicable to guarantees issued or modified after December 31, 2002
and have not had a material effect on our consolidated financial statements.

In
January 2003, the FASB released Interpretation No. 46, "Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51" (FIN 46) which
requires that all primary beneficiaries of Variable Interest Entities (VIE) consolidate that entity. FIN 46 is effective immediately for VIE's created after January 31, 2003 and to VIE's in
which an enterprise obtains an interest after that date. It applies in the first fiscal year or interim period beginning after June 15, 2003 to VIE's in which an enterprise holds a variable
interest it acquired before February 1, 2003. In December 2003, the FASB published a revision to FIN 46 ("FIN 46R") to clarify some of the provisions of the interpretation and to defer
the effective date of implementation for certain entities. Under the guidance of FIN 46R, entities that do not have interests in structures that are commonly referred to as special purpose entities
are required to apply the provisions of

F-10

---

the
interpretation in financials statements for periods ending after March 14, 2004. We do not have interests in special purpose entities and will apply the provisions of FIN 46R with our first
quarter 2004 financial statements. We have not completed our assessment of the impact of FIN 46, but do not anticipate a material impact on our consolidated financial statements.

In
April 2003, the FASB issued SFAS No. 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" (SFAS 149). SFAS 149 amends and
clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133). Except for the provisions of SFAS 149 that relate to SFAS 133 Implementation Issues that have been
effective for fiscal quarters that began prior to June 15, 2003, SFAS 149 is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships
designated after June 30, 2003. The application of SFAS 149 did not have a material effect on our consolidated financial statements.

In
May 2003, the FASB issued SFAS No. 150, "Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity" (SFAS 150). The
provisions of SFAS 150, which also include a number of new disclosure requirements, are effective for instruments entered into or modified after May 31, 2003 and for
pre-existing instruments as of July 1, 2003. The adoption of SFAS 150 did not have a material effect on our consolidated financial statements.

In
May 2003, the EITF reached a consensus on Issue 01-8, "Determining Whether an Arrangement Contains a Lease" ("EITF 01-8"). Under the provisions of EITF
01-8, arrangements conveying the right to control the use of specific property, plant or equipment must be evaluated to determine whether they contain a lease. The new rules will be
applied prospectively to such contracts entered into or modified after July 1, 2003. The adoption of EITF 01-8 did not have a material impact 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 |  | $ | 142,229  |   | $
|Furniture, equipment and other  |  |   | 81,084   |   |  
|Leasehold improvements          |  |   | 46,422   |   |  
|Buildings                       |  |   | 14,523   |   |  
|Other                           |  |   | 1,566    |   |  
|                                | 
|                                |  |   | 285,824  |   |  
|Accumulated depreciation        |  |   | (195,591 | ) |  
|                                | 
|Property and equipment, net     |  | $ | 90,233   |   | $
|                                | 

Note 3. Goodwill

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

|                  |                   |   |        |       |   |        |        
|----------------- | ----------------- | - | ------ | ----- | - | ------ | -------
|
|                  |                  
|
|                  |                   |   |        |       |   |        |        
|Beginning of Year |                   | $ | 49,724 |       | $ | 73,216 |        
|                  | Amortization      |   |        |      |   |        |       
|                  | Impairment Charge |   |        |      |   |        | (18,399
|                  | Other             |   |        | 3,829 |   |        | (5,093 
|                  |                  
|End of Year       |                   | $ | 53,553 |       | $ | 49,724 |        
|                  |                  

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

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: incur
additional indebtedness, pay dividends or make certain other restricted payments, consummate certain asset sales, enter into certain transactions with

F-11

---

affiliates,
incur liens, merge or consolidate with another company, and sell or otherwise dispose of all or substantially all of our assets.

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

|                    |  |        |  
|------------------- |  | ------ | -
|
|                    | 
|                    |  |        |  
|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. At December 31, 2003, all of our long-term debt was scheduled to mature in 2006.

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
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, 2003, we had $41.0 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 4.8% at December 31, 2003.

Prior
to December 30, 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 4.5% at December 31, 2002.

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

Other Current Debt

During 2003 certain of our foreign subsidiaries entered into agreements with various financial institutions, under which we collateralized certain receivables for
borrowings. The agreements provide for borrowings of up to $14.8 million, depending upon the level of eligible receivables. As of December 31, 2003, $11.1 million was outstanding
and included in other current debt in the consolidated balance sheet. The weighted average interest rate as of December 31, 2003 was approximately 3.6%.

The
remainder of other current debt consists primarily of overdraft coverage and revolving credit lines by certain of our foreign subsidiaries that are payable in the subsidiaries' local
currency. These lines primarily support short-term borrowing needs of our foreign subsidiaries. Interest rates and other terms of borrowing under these lines of credit vary from country to
country, depending on local market conditions.

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 |  | $ | (9,907 | ) | $ | 10,900 | 
|Foreign       |  |   | 10,559 |   |   | 9,965  | 
|              | 
|Total         |  | $ | 652    |   | $ | 20,865 | 
|              | 

F-12

---

Provision for Income Tax Expense (Benefit)

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

|                                           |                |   |       |       |   |        |      
|------------------------------------------ | -------------- | - | ----- | ----- | - | ------ | -----
|
|                                           |               
|
|                                           |                |   |       |       |   |        |      
|Current:                                   |                |   |       |       |   |        |      
|                                           | Federal        |   | $     |      |   | $      |     
|                                           | Foreign        |   |       | 3,941 |   |        | 6,597
|                                           | State          |   |       | 430   |   |        | 365  
|                                           |               
|                                           | Total current  |   |       | 4,371 |   |        | 6,962
|                                           |               
|Deferred:                                  |                |   |       |       |   |        |      
|                                           | Federal        |   |       |      |   |        | 1,175
|                                           | Foreign        |   |       | 427   |   |        | 2,205
|                                           | State          |   |       |      |   |        | 95   
|                                           |               
|                                           | Total deferred |   |       | 427   |   |        | 3,475
|                                           |               
|Provision for income tax expense (benefit) |                | $ | 4,798 |       | $ | 10,437 |      
|                                           |               

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 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                           |   | $      | 1,678   |  
|                          | Goodwill                                                             |   |        | 20,351  |  
|                          | Net operating loss and other credit carryforwards                    |   |        | 20,149  |  
|                          | Net operating loss carryforwards related to international operations |   |        | 12,667  |  
|                          | Depreciation timing differences related to international operations  |   |        | 3,891   |  
|                          |                                                                     
|                          | Total deferred tax assets                                            |   |        | 58,736  |  
|                          | Valuation allowance                                                  |   |        | (47,645 | )
|                          |                                                                     
|Net deferred tax assets   |                                                                      |   | 11,091 |         |  
|                          |                                                                     
|Deferred tax liabilities: |                                                                      |   |        |         |  
|                          | Leased assets and depreciation                                       |   |        | 362     |  
|                          | Other                                                                |   |        | 693     |  
|                          |                                                                     
|                          | Total deferred tax liabilities                                       |   |        | 1,055   |  
|                          |                                                                     
|Net deferred tax assets   |                                                                      | $ | 10,036 |         | $
|                          |                                                                     

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, 2003, 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
(benefit) 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)                               |  | $ | 73    |  | $ | 7,303  |  
|State taxes, net of Federal effect                                          |  |   | 280   |  |   | 299    |  
|Tax credits                                                                 |  |   |      |  |   |       |  
|Goodwill on foreign operations, net of valuation allowance of $16.9 million |  |   |      |  |   |       |  
|Amortization of goodwill                                                    |  |   |      |  |   |       |  
|Impact of foreign operations, including goodwill                            |  |   | 108   |  |   | (1,812 | )
|Valuation allowance                                                         |  |   | 4,217 |  |   | 4,525  |  
|Other                                                                       |  |   | 120   |  |   | 122    |  
|                                                                            | 
|Total                                                                       |  | $ | 4,798 |  | $ | 10,437 |  
|                                                                            | 

F-13

---

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 in the consolidated balance sheet was approximately $10.4 million and $8.5 million at December 31,
2003 and 2002, respectively.

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 $27.9 million, $20.0 million and $19.6 million for the years ended December 31, 2003,
2002 and 2001, respectively.

Future Minimum Lease Payments

At December 31, 2003, our future minimum payments under capital and operating leases were as follows:

|                             |  | Capital
Leases |        | Operating
Leases
|---------------------------- |  | -------------- | ------ | ----------------
|
|                            
|
|                             |  |                |        |                 
|2004                         |  | $              | 3,358  |                 
|2005                         |  |                | 1,990  |                 
|2006                         |  |                | 1,483  |                 
|2007                         |  |                | 1,242  |                 
|2008                         |  |                | 805    |                 
|Thereafter                   |  |                | 5,386  |                 
|                            
|                             |  | $              | 14,264 |                 
|                             |  |                |        |                 
|Amount representing interest |  |                | (2,399 | )               
|                             |  |                |       
|Net                          |  | $              | 11,865 |                 
|                             |  |                |       

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 10,500,000 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, 2003, there were approximately 5.7 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, 2003, options granted under these plans aggregating 3,005,110 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, 2001    |  | 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  |   |                                           
|Granted                    |  | 809,563    |   |                                           
|Exercised                  |  | (4,704     | ) |                                           
|Canceled                   |  | (1,859,750 | ) |                                           
|                          
|Balance, December 31, 2003 |  | 7,750,390  |   | $                                         
|                          

The options exercisable at the end of each period were:

|                  |  |           |  | Weighted-
Average
Exercise
Price per Share
|----------------- |  | --------- |  | ------------------------------------------
|
|
|                 
|                  |  |           |  |                                           
|December 31, 2001 |  | 1,876,480 |  | $                                         
|December 31, 2002 |  | 2,611,204 |  | $                                         
|December 31, 2003 |  | 3,175,457 |  | $                                         

F-14

---

The following table summarizes stock options outstanding at December 31, 2003:

|                 |  |           |  | Weighted-
Average
Remaining
Life |  | Weighted-
Average
Exercise
Price
|---------------- |  | --------- |  | -------------------------------- |  | --------------------------------
|
|                
|$1.24 to $1.75   |  | 922,223   |  | 9.1                              |  | $                               
|$1.76 to $4.00   |  | 4,965,299 |  | 6.3                              |  | $                               
|$4.01 to $6.33   |  | 1,076,961 |  | 5.3                              |  | $                               
|$6.34 to $7.22   |  | 524,697   |  | 6.0                              |  | $                               
|$7.23 to $12.66  |  | 201,210   |  | 4.1                              |  | $                               
|$12.67 to $20.00 |  | 60,000    |  | 3.2                              |  | $                               

The following table summarizes stock options exercisable at December 31, 2003:

|                 |  |           |  | Weighted-
Average
Exercise
Price
|---------------- |  | --------- |  | --------------------------------
|
|                
|$1.24 to $1.75   |  | 68,040    |  | $                               
|$1.76 to $4.00   |  | 1,733,634 |  | $                               
|$4.01 to $6.33   |  | 778,326   |  | $                               
|$6.34 to $7.22   |  | 335,457   |  | $                               
|$7.23 to $12.66  |  | 200,000   |  | $                               
|$12.67 to $20.00 |  | 60,000    |  | $                               

The fair value of options was estimated at the date of the grant using the Black-Scholes option pricing model with the following weighted average
assumptions for 2003, 2002 and 2001, respectively: risk-free interest rate of 2.99%, 2.00% and 3.70%; expected volatility of 59.6%, 69.2% and 77.5%; a dividend yield of 0%; and an expected
option life of five years. The weighted average fair value of options granted in the years ended December 31, 2003, 2002 and 2001 was $0.78, $1.61 and $1.83, respectively.

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 $123,280 and 93,858 shares for 2003, $165,131 and 77,052 shares for 2002 and
$188,535 and 92,777 shares for 2001.

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 20% of compensation. We may elect to make a year-end contribution to the 401(k) plan. We did not contribute to the plan in 2003, 2002, or 2001.

We
also make contributions to certain executive and other employee personal retirement programs, primarily in Europe. We contributed $1.7 million, $1.0 million and
$1.2 million for the years ended December 31, 2003, 2002 and 2001, respectively.

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 2003, 2002, or 2001.

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.

Revenue
is primarily attributed to countries based upon the location where the services are performed. Following

F-15

---

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

|              |                         |   |         |         |   |        
|------------- | ----------------------- | - | ------- | ------- | - | -------
|
|             
|
|              |                         |   |         |         |   |        
|Revenue:      |                         |   |         |         |   |        
|              | United States           |   | $       | 407,785 |   | $      
|              | Spain                   |   |         | 84,409  |   |        
|              | United Kingdom          |   |         | 77,471  |   |        
|              | Other foreign countries |   |         | 276,848 |   |        
|             
|Total revenue |                         | $ | 846,513 |         | $ | 770,211
|             

|                        |                         |   |         |       
|----------------------- | ----------------------- | - | ------- | ------
|
|                       
|
|                        |                         |   |         |       
|Long-lived assets:*     |                         |   |         |       
|                        | United States           |   | $       | 61,673
|                        | Spain                   |   |         | 17,991
|                        | United Kingdom          |   |         | 24,451
|                        | Other foreign countries |   |         | 64,525
|                       
|Total long-lived assets |                         | $ | 168,640 |       
|                       

Major Clients

The combined total revenue of multiple independently managed business units of General Motors Corporation with operations primarily in the United States was 21.2%,
23.5% and 25.4% of our revenue for the years ended December 31, 2003, 2002 and 2001, respectively.

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 may 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.

Subsequent
to December 31, 2003, as a result of a revision to our estimate for loss reserves related to the settlement of two outstanding claims, we recorded a reduction of
operating, selling and administrative expenses of $0.4 million in the accompanying consolidated statements of income (loss) for the year ended December 31, 2003.

Note 11. Asset Impairment and Restructuring Expenses

2003

During 2003, in connection with the closure of our former headquarters facility and the closure of a contact center, we recorded asset impairment and restructuring
expenses of $1.6 million, which consisted of the write-off of abandoned leasehold improvements of $0.4 million and for $1.2 million of scheduled payments of operating
leases for which we will receive no future economic benefit. In addition, we recorded asset impairment and restructuring expenses of $1.4 million as a result of a revision to our estimate for
non-cancelable lease payments associated with a previously announced facility closure.

2002

During 2002, we recorded additional restructuring expense of $1.4 million primarily associated with a revision to our estimate for
non-cancelable lease payments associated with a facility closure in connection with the 2001 restructuring plan.

2001

During 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 eliminated approximately 350 operating, selling, and administrative positions globally, and reduced excess capacity by closing

F-16

---

nine
contact centers plus three administrative offices, and downsizing another five contact centers plus two administrative offices, resulting in the elimination of approximately 2,100 workstations.

In
connection with the restructuring, we recorded $26.2 million of asset impairment and restructuring charges in 2001.

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

|                  |          | Severance |     | Facility
Closure or
Reduction |   | Other |      | Total |    
|----------------- | -------- | --------- | --- | ----------------------------- | - | ----- | ---- | ----- | ---
|                  |         
|
|                  |          |           |     |                               |   |       |      |       |    
|January 1, 2001   |          | $         |    |                               | $ |      |      | $     |   
|                  | Expensed |           |     | 5.1                           |   |       | 12.3 |       |    
|                  | Paid     |           |     | (4.2                          | ) |       | (3.7 | )     |    
|                  | Other    |           |     |                              |   |       |     |       |    
|                  |         
|December 31, 2001 |          |           | 0.9 |                               |   | 8.5   |      |       | 0.7
|                  | Expensed |           |     | 0.1                           |   |       | 1.3  |       |    
|                  | Paid     |           |     | (0.9                          | ) |       | (3.4 | )     |    
|                  | Other    |           |     | 0.2                           |   |       |     |       |    
|                  |         
|December 31, 2002 |          |           | 0.3 |                               |   | 6.4   |      |       | 0.3
|                  | Expensed |           |     |                              |   |       | 2.6  |       |    
|                  | Paid     |           |     |                              |   |       | (3.0 | )     |    
|                  | Other    |           |     | (0.2                          | ) |       | 0.5  |       |    
|                  |         
|December 31, 2003 |          | $         | 0.1 |                               | $ | 6.5   |      | $     |   
|                  |         

Other includes the impact of foreign currency translation. The 2001 charges exclude $9.3 million of asset write-downs that we recorded as a
reduction of fixed assets. Items charged to the accrual during 2003, 2002 and 2001 were cash items.

We
have classified the remaining $6.6 million of unpaid liabilities as accrued operating expenses in our December 31, 2003 Consolidated Balance Sheet.

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 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-17

---

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

|Year Ended December 31, 2003                                                         |                                                | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |        | Eliminations |         | Consolidated |  
|------------------------------------------------------------------------------------ | ---------------------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | ------ | ------------ | ------- | ------------ | -
|
|
|                                                                                     |                                                |        |         |                        |   |                           |        |              |         |              |  
|Revenues                                                                             |                                                | $      | 366,501 |                        | $ | 41,284                    |        | $            | 438,728 |              | $
|                                                                                     |                                               
|Operating expenses:                                                                  |                                                |        |         |                        |   |                           |        |              |         |              |  
|                                                                                     | Direct labor and telecommunications expenses   |        |         | 199,279                |   |                           | 22,719 |              |         | 275,425      |  
|                                                                                     | Subcontracted and other services expenses      |        |         | 49,731                 |   |                           | 3,156  |              |         | 1,234        |  
|                                                                                     | Operating, selling and administrative expenses |        |         | 113,651                |   |                           | 10,950 |              |         | 159,123      |  
|                                                                                     | Asset impairment and restructuring expenses    |        |         |                       |   |                           |       |              |         |             |  
|                                                                                     |                                               
|Total operating expenses                                                             |                                                |        | 362,661 |                        |   | 36,825                    |        |              | 435,782 |              |  
|                                                                                     |                                               
|Operating income (loss)                                                              |                                                |        | 3,840   |                        |   | 4,459                     |        |              | 2,946   |              |  
|                                                                                     |                                               
|Other income (expense):                                                              |                                                |        |         |                        |   |                           |        |              |         |              |  
|                                                                                     | Interest expense, net                          |        |         | (9,075                 | ) |                           | 96     |              |         | (2,829       | )
|                                                                                     | Equity in earnings (losses) of affiliates      |        |         | (3,485                 | ) |                           | (9,023 | )            |         | 641          |  
|                                                                                     | Other income (expense), net                    |        |         | 2,024                  |   |                           | 994    |              |         | (3,211       | )
|                                                                                     |                                               
|Total other income (expense), net                                                    |                                                |        | (10,536 | )                      |   | (7,933                    | )      |              | (5,399  | )            |  
|                                                                                     |                                               
|Income (loss) before income taxes, minority interest and change in accounting method |                                                |        | (6,696  | )                      |   | (3,474                    | )      |              | (2,453  | )            |  
|Income tax expense                                                                   |                                                |        | (1,105  | )                      |   | 11                        |        |              | 5,904   |              |  
|Minority interest                                                                    |                                                |        |        |                        |   |                          |        |              | 666     |              |  
|                                                                                     |                                               
|Income (loss) before change in accounting method                                     |                                                |        | (5,591  | )                      |   | (3,485                    | )      |              | (9,023  | )            |  
|Cumulative effect of a change in accounting method                                   |                                                |        |        |                        |   |                          |        |              |        |              |  
|                                                                                     |                                               
|Net income (loss)                                                                    |                                                | $      | (5,591  | )                      | $ | (3,485                    | )      | $            | (9,023  | )            | $
|                                                                                     |                                               
|Currency translation adjustment                                                      |                                                |        | (50     | )                      |   | 237                       |        |              | 17,404  |              |  
|                                                                                     |                                               
|Comprehensive income (loss)                                                          |                                                | $      | (5,641  | )                      | $ | (3,248                    | )      | $            | 8,381   |              | $
|                                                                                     |                                               

F-18

---

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

|Year Ended December 31, 2002                                                         |                                                            | Parent |         | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated |  
|------------------------------------------------------------------------------------ | ---------------------------------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | ------- | ------------ | ------- | ------------ | -
|
|
|                                                                                     |                                                            |        |         |                        |   |                           |         |              |         |              |  
|Revenue                                                                              |                                                            | $      | 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 (loss)                                                              |                                                            |        | 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 |  
|------------------------------------------------------- | ---------------------------------------------------------- | ------ | ------- | ---------------------- | - | ------------------------- | ------- | ------------ | ------- | ------------ | -
|
|
|                                                        |                                                            |        |         |                        |   |                           |         |              |         |              |  
|Revenue                                                 |                                                            | $      | 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 Balance Sheet

|Year Ended December 31, 2003               |                                       | Parent                                               |         | Guarantor
Subsidiaries |         | Nonguarantor
Subsidiaries |         | Eliminations |         | Consolidated
|------------------------------------------ | ------------------------------------- | ---------------------------------------------------- | ------- | ---------------------- | ------- | ------------------------- | ------- | ------------ | ------- | ------------
|
|
|Assets                                     |                                       |                                                      |         |                        |         |                           |         |              |         |             
|                                           | Current assets:                       |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Cash and cash equivalents                            |         | $                      | 12,010  |                           | $       | 3,090        |         | $           
|                                           |                                       | Trade accounts receivable, net                       |         |                        | 95,899  |                           |         | 60,483       |         |             
|                                           |                                       | Prepaid expenses and other current assets            |         |                        | 6,280   |                           |         | 34           |         |             
|                                          
|                                           |                                       | Total current assets                                 |         |                        | 114,189 |                           |         | 63,607       |         |             
|                                          
|                                           | Property and equipment, net           |                                                      |         | 20,792                 |         |                           | 2,608   |              |         | 66,833      
|                                          
|                                           | Other assets:                         |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Goodwill                                             |         |                        | 19,577  |                           |         | 14           |         |             
|                                           |                                       | Deferred income taxes                                |         |                        | 8,607   |                           |         |             |         |             
|                                           |                                       | Investments in affiliates                            |         |                        |        |                           |         |             |         |             
|                                           |                                       | Other assets                                         |         |                        | 6,196   |                           |         | 56           |         |             
|                                           |                                       | Investments in subsidiaries                          |         |                        | 132,961 |                           |         | 104,008      |         |             
|                                          
|Total assets                               |                                       | $                                                    | 302,322 |                        | $       | 170,293                   |         | $            | 263,290 |             
|                                          
|Liabilities and Stockholders' Equity       |                                       |                                                      |         |                        |         |                           |         |              |         |             
|                                           | Current liabilities:                  |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Current portion of long-term debt                    |         | $                      |        |                           | $       |             |         | $           
|                                           |                                       | Current portion of capital lease obligations         |         |                        | 506     |                           |         | 117          |         |             
|                                           |                                       | Trade accounts payable                               |         |                        | 17,913  |                           |         | 35,402       |         |             
|                                           |                                       | Accrued expenses and other current liabilities       |         |                        | 29,776  |                           |         | 1,713        |         |             
|                                          
|                                           |                                       | Total current liabilities                            |         |                        | 48,195  |                           |         | 37,232       |         |             
|                                           | Long-term debt and other liabilities: |                                                      |         |                        |         |                           |         |              |         |             
|                                           |                                       | Long-term debt, excluding current portion            |         |                        | 100,000 |                           |         |             |         |             
|                                           |                                       | Capital lease obligations, excluding current portion |         |                        |        |                           |         | 100          |         |             
|                                           |                                       | Deferred compensation                                |         |                        | 1,389   |                           |         |             |         |             
|                                           |                                       | Deferred income taxes                                |         |                        |        |                           |         |             |         |             
|                                          
|                                           |                                       | Total liabilities                                    |         |                        | 149,584 |                           |         | 37,332       |         |             
|                                          
|                                           | Minority interests                    |                                                      |         |                       |         |                           |        |              |         | 1,869       
|                                          
|                                           | Stockholders' equity                  |                                                      |         | 152,738                |         |                           | 132,961 |              |         | 102,139     
|                                          
|Total liabilities and stockholders' equity |                                       | $                                                    | 302,322 |                        | $       | 170,293                   |         | $            | 263,290 |             
|                                          

F-21

---



SITEL CORPORATION AND SUBSIDIARIES  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

Condensed Consolidating Balance Sheet

|At 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                            |         |                        | 1,000   |                           |         |             |         |             
|                                           |                                       | Other assets                                         |         |                        | 6,205   |                           |         | 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 Statement of Cash Flows

|Year Ended December 31, 2003                   |                                                      | Parent |        | Guarantor
Subsidiaries |   | Nonguarantor
Subsidiaries |        | Eliminations |         | Consolidated |  
|---------------------------------------------- | ---------------------------------------------------- | ------ | ------ | ---------------------- | - | ------------------------- | ------ | ------------ | ------- | ------------ | -
|
|
|Net cash flows from operating activities       |                                                      | $      | 17,206 |                        | $ | 6,436                     |        | $            | (14,536 | )            | $
|                                               |                                                     
|Cash flows from investing activities:          |                                                      |        |        |                        |   |                           |        |              |         |              |  
|                                               | Investment in subsidiaries                           |        |        |                       |   |                           |       |              |         |             |  
|                                               | Purchases of property and equipment                  |        |        | (8,199                 | ) |                           | (1,632 | )            |         | (14,977      | )
|                                               | Proceeds from sales of property and equipment        |        |        |                       |   |                           |       |              |         | 211          |  
|                                               | Dividends received from affiliates                   |        |        |                       |   |                           |       |              |         | 1,815        |  
|                                               | Increase in other assets                             |        |        |                       |   |                           |       |              |         | (333         | )
|                                               | Investment in affiliates                             |        |        | (1,000                 | ) |                           |       |              |         |             |  
|                                               |                                                     
|                                               | Net cash flows from investing activities             |        |        | (9,199                 | ) |                           | (1,632 | )            |         | (13,284      | )
|                                               |                                                     
|Cash flows from financing activities:          |                                                      |        |        |                        |   |                           |        |              |         |              |  
|                                               | Borrowings on debt                                   |        |        |                       |   |                           |       |              |         | 21,302       |  
|                                               | Repayments of debt and capital lease obligations     |        |        | (6,129                 | ) |                           |       |              |         | (2,215       | )
|                                               | Net capital contribution from parent                 |        |        |                       |   |                           |       |              |         |             |  
|                                               | Net borrowings and payments in intercompany balances |        |        | (5,474                 | ) |                           | (4,569 | )            |         | 10,043       |  
|                                               | Treasury stock reissuances (repurchases), net        |        |        | (1,009                 | ) |                           |       |              |         |             |  
|                                               | Other                                                |        |        |                       |   |                           |       |              |         |             |  
|                                               |                                                     
|                                               | Net cash flows from financing activities             |        |        | (12,612                | ) |                           | (4,569 | )            |         | 29,130       |  
|                                               |                                                     
|Effect of exchange rates on cash               |                                                      |        |       |                        |   |                          |        |              | (1,232  | )            |  
|                                               |                                                     
|Net increase (decrease) in cash                |                                                      |        | (4,605 | )                      |   | 235                       |        |              | 78      |              |  
|Cash and cash equivalents, beginning of period |                                                      |        | 16,615 |                        |   | 2,855                     |        |              | 14,672  |              |  
|                                               |                                                     
|Cash and cash equivalents, end of period       |                                                      | $      | 12,010 |                        | $ | 3,090                     |        | $            | 14,750  |              | $
|                                               |                                                     

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 (decrease) 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

---

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. Accordingly, comparisons among quarters of a year may not represent
overall trends and changes in operations.

2003 Quarterly Data

|Year Ended
December 31, 2003 |         | First
Quarter |         | Second
Quarter |   | Third
Quarter |       | Fourth
Quarter |        
|---------------------------- | ------- | ------------- | ------- | -------------- | - | ------------- | ----- | -------------- | -------
|
|
|Revenue                      |         | $             | 194,095 |                | $ | 204,566       |       | $              | 208,755
|Operating income (loss)      |         |               | 3,202   |                |   | (713          | )     |                | (396   
|Net income (loss)            |         |               | 61      |                |   | (3,243        | )     |                | (3,946 
|Total assets*                |         |               | 354,752 |                |   | 376,197       |       |                | 382,494
|Total liabilities*           |         |               | 211,621 |                |   | 232,817       |       |                | 242,753
|Cash flows from:             |         |               |         |                |   |               |       |                |        
|Operating activities*        |         |               | 9,254   |                |   | (1,192        | )     |                | (1,638 
|Investing activities         |         |               | (6,272  | )              |   | (8,852        | )     |                | (3,848 
|Financing activities*        |         |               | (307    | )              |   | 4,673         |       |                | 2,268  
|Income per common share:     |         |               |         |                |   |               |       |                |        
|                             | Basic   |               | $       | 0.00           |   | $             | (0.04 | )              | $      
|                             | Diluted |               |         | 0.00           |   |               | (0.04 | )              |        

* Includes reclassification of credit balances included in trade accounts receivable to
short-term borrowings

First quarter results include $0.8 million of asset impairment and restructuring charges, as discussed in Note 11.

Fourth
quarter results include $2.2 million of asset impairment and restructuring charges, as discussed in Note 11.

2002 Quarterly Data

|Year Ended
December 31, 2002 |         | First
Quarter |         | Second
Quarter |   | Third
Quarter |      | Fourth
Quarter |        
|---------------------------- | ------- | ------------- | ------- | -------------- | - | ------------- | ---- | -------------- | -------
|
|
|Revenue                      |         | $             | 193,032 |                | $ | 196,747       |      | $              | 190,670
|Operating income             |         |               | 7,663   |                |   | 8,863         |      |                | 2,632  
|Net income                   |         |               | 2,738   |                |   | 3,511         |      |                | 17     
|Total assets                 |         |               | 360,426 |                |   | 375,173       |      |                | 376,850
|Total liabilities            |         |               | 212,610 |                |   | 212,677       |      |                | 216,615
|Cash flows from:             |         |               |         |                |   |               |      |                |        
|Operating activities         |         |               | 2,053   |                |   | 22,558        |      |                | 1,678  
|Investing activities         |         |               | (8,546  | )              |   | (9,062        | )    |                | (3,569 
|Financing activities         |         |               | (609    | )              |   | (713          | )    |                | 1,238  
|Income per common share:     |         |               |         |                |   |               |      |                |        
|                             | Basic   |               | $       | 0.04           |   | $             | 0.05 |                | $      
|                             | Diluted |               |         | 0.04           |   |               | 0.05 |                |        

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

F-26

---

Independent Auditors' Report on the Financial Statement Schedule

To the Stockholders and Board of Directors
of SITEL Corporation

Under
date of March 5, 2004, we reported on the consolidated balance sheets of SITEL Corporation and subsidiaries as of December 31, 2003 and 2002, 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, 2003, which are included in the
Form 10-K for the year ended December 31, 2003. 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     |  | 

Omaha, Nebraska
March 5, 2004

S-1

---



SITEL CORPORATION AND SUBSIDIARIES

Schedule II  Valuation and Qualifying Accounts

|                                 |                              |  |   | Additions |  |   |       | 
|-------------------------------- | ---------------------------- |  | - | --------- |  | - | ----- | 
|
|
|Allowance for doubtful accounts: |                              |  |   |           |  |   |       | 
|                                 | Year ended December 31, 2003 |  | $ | 4,011     |  | $ | 1,472 | 
|                                 | Year ended December 31, 2002 |  | $ | 5,208     |  | $ | 523   | 
|                                 | Year ended December 31, 2001 |  | $ | 6,456     |  | $ | 2,585 | 

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

S-2

---

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