SITEL CORPORATION AND SUBSIDIARIES

                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
                        AND FINANCIAL STATEMENT SCHEDULES

Consolidated Financial Statements
---------------------------------

Independent Auditors' Report..........................................      F-2

Consolidated Balance Sheets at December 31, 1997 and 1998.............      F-3

Consolidated Statements of Income (Loss) For The Years Ended
December 31, 1996, 1997 and 1998......................................      F-4

Consolidated Statements  of Stockholders' Equity For The Years Ended
December 31, 1996, 1997 and 1998......................................      F-5

Consolidated Statements of Cash Flows For The Years Ended December 31,
1996, 1997, and 1998..................................................      F-6

Notes to Consolidated Financial Statements............................      F-7

Financial Statement Schedules
-----------------------------

Independent Auditor's Report..........................................      S-1

Schedule II - Valuation and Qualifying Accounts......................       S-2
<PAGE>
                          INDEPENDENT AUDITORS' REPORT

The Board of Directors
SITEL Corporation:

     We have  audited  the  accompanying  consolidated  balance  sheets of SITEL
Corporation  and  subsidiaries as of December 31, 1997 and 1998, 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, 1998.  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  generally  accepted  auditing
standards.  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, 1997 and 1998, and the results
of their operations and their cash flows for each of the years in the three-year
period ended December 31, 1998, in conformity with generally accepted accounting
principles.

                                             KPMG Peat Marwick LLP

Omaha, Nebraska
February 5, 1999

                                      F-2
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>

                                        ASSETS                                       December 31,
                                                                          -------------------------------
(in thousands, except share data)                                             1997             1998
                                                                          --------------   --------------
Current assets:
<S>                                                                       <C>              <C>            
     Cash and cash equivalents........................                    $        24,285  $        14,472
     Trade accounts receivable (net of allowance
       for doubtful accounts of $5,099 and $3,970, in
       1997 and 1998, respectively)...................                            107,697          129,809
     Marketable securities............................                                159               --
     Prepaid expenses.................................                              3,916            5,257
     Deferred income taxes............................                              3,153            1,658
     Other assets.....................................                              9,548            6,024
                                                                          ---------------  ---------------
          Total current assets........................                            148,758          157,220
Property and equipment, net...........................                            120,600          125,615
Deferred income taxes.................................                             11,114           15,425
Goodwill, net.........................................                             94,381           93,288
Other assets..........................................                             11,027           14,062
                                                                          ---------------  ---------------
          Total assets................................                    $       385,880  $       405,610
                                                                          ===============  ===============

                              LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:                                                                 
     Notes payable....................................                    $        14,376  $        30,545
     Current portion of long-term debt................                             10,793            3,671
     Current portion of capitalized lease
       obligations....................................                              4,934            3,650
     Trade accounts payable...........................                             27,322           30,784
     Income taxes payable.............................                              8,398            3,875
     Accrued wages, salaries and bonuses..............                             14,120           15,620
     Accrued operating expenses.......................                             22,984           23,527
     Deferred revenue and other.......................                              6,286            3,888
                                                                          ---------------  ---------------
         Total current liabilities....................                            109,213          115,560
Long-term debt, excluding current portion.............                            102,505          107,027
Capitalized lease obligations, excluding current
    portion...........................................                             12,983            9,210
Deferred compensation.................................                              1,407            1,591
Minority interest.....................................                              1,384           10,368

Commitments and contingencies

Stockholders' equity:
     Common stock, voting, $.001 par value 200,000,000 shares
        authorized, 63,099,597 and 64,399,645 shares issued
        and outstanding in 1997
        and 1998, respectively........................                                 63               64
     Paid-in capital..................................                            155,326          157,892
     Accumulated other comprehensive income...........                             (6,415)          (4,428)
     Retained earnings................................                              9,414            8,326
                                                                          ---------------  ---------------
          Total stockholders' equity..................                            158,388          161,854
                                                                          ---------------  ---------------
          Total liabilities and stockholders' equity..                    $       385,880  $       405,610
                                                                          ===============  ===============
</TABLE>
     The accompanying  notes are an integral part of the consolidated  financial
statements.

                                      F-3
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                    CONSOLIDATED STATEMENTS OF INCOME (LOSS)
<TABLE>
<CAPTION>

                                                                           For The Years Ended December 31,
                                                               ---------------------------------------------------------
                                                                    1996                 1997                1998
                                                               ----------------    -----------------    ----------------
(in thousands, except per share data)
<S>                                                            <C>                 <C>                  <C>             
Revenues...................................                    $        312,750    $         491,474    $        586,318
                                                               ----------------    -----------------    ----------------
Operating expenses:
     Cost of services......................                             163,717              270,942             331,586
     Selling, general and administrative
        expenses...........................                             120,695              185,589             235,900
     Restructuring expenses................                                  --               15,681               6,607
                                                               ----------------    -----------------    ----------------
        Total operating expenses...........                             284,412              472,212             574,093
                                                               ----------------    -----------------    ----------------
        Operating income...................                              28,338               19,262              12,225
                                                               ----------------    -----------------    ----------------
Other income (expense):
     Transaction related expenses..........                              (6,988)                  --                  --
     Interest income.......................                               1,108                  561                 925
     Interest expense......................                              (1,335)              (5,657)            (13,672)
     Other income, net.....................                                  32                  126                 263
                                                               ----------------    -----------------    ----------------
        Total other income (expense).......                              (7,183)              (4,970)            (12,484)
                                                               ----------------    -----------------    ----------------
Income (loss) before income taxes and minority
     interest..............................                              21,155               14,292                (259)

Income tax expense.........................                              10,221               11,306                 966

Minority interest..........................                                  77                  174                (651)
                                                               ----------------    -----------------    ----------------
Net income (loss) from continuing
     operations............................                              10,857                2,812               (574)
Extraordinary loss on refinancing of debt,
     net of taxes..........................                                  --                   --               (514)
                                                               ----------------    -----------------    ---------------
         Net income (loss).................                    $         10,857    $           2,812    $        (1,088)
                                                               ================    =================    ===============

Income (loss) from continuing operations per common share:
     Basic.................................                    $           0.19    $            0.05    $         (0.01)
     Diluted...............................                    $           0.16    $            0.04    $         (0.01)

Income (loss) per common share:
     Basic.................................                    $           0.19    $            0.05    $         (0.02)
     Diluted...............................                    $           0.16    $            0.04    $         (0.02)

Weighted average common shares outstanding:
     Basic.................................                              57,793               61,764             63,888
     Diluted...............................                              65,929               68,811             63,888
</TABLE>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-4
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
              For The Years Ended December 31, 1996, 1997, and 1998
<TABLE>
<CAPTION>
                                                                                     Accumulated
                                                                                        Other          Retained            Total
                                                       Common        Paid-in        Comprehensive      Earnings        Stockholders'
   (dollars in thousands)                              Stock         Capital           Income          (Deficit)          Equity
                                                       -----         -------           ------          ---------       -------------

<S>                                                    <C>          <C>               <C>              <C>             <C>         
Balance, December 31, 1995...................          $  51        $ 69,530          $     54         $      (4,255)  $     65,380
   Issuance of 5,982,220 shares of common stock, net
   of offering expenses......................              6          42,239                --                    --         42,245
   Issuance of 1,719,642 shares of common stock for
   options exercised.........................              2              92                --                    --             94
   Tax benefit of stock options exercised....             --           5,040                --                    --          5,040
   Transactions by pooled companies:
      Issuance of 332,196 shares of common
      stock..................................             --             835                --                    --            835
   Comprehensive income
      Net income.............................             --              --                --                10,857         10,857
      Currency exchange adjustment...........             --              --             1,257                    --          1,257
      Change in unrealized gain, net of
         taxes...............................             --              --             1,017                    --          1,017
                                                                                                                       ------------
      Total comprehensive income.............             --              --                --                    --         13,131
                                                       -----        --------         ---------          ------------   ------------
Balance, December 31, 1996...................             59         117,736             2,328                 6,602        126,725
   Issuance of 1,891,562 shares of common stock
      for options exercised..................              2             226                --                    --            228
   Tax benefit of stock options exercised....             --           7,685                --                    --          7,685
   Issuance of 2,332,375 shares of common stock
      for acquisitions.......................              2          29,679                --                    --         29,681
   Comprehensive income (loss)
         Net income..........................             --              --                --                 2,812          2,812
         Currency exchange adjustment........             --              --            (7,798)                   --         (7,798)
         Change in unrealized gain,
             net of taxes....................             --              --              (945)                   --           (945)
                                                                                                                       ------------
         Total comprehensive income (loss)...             --              --                --                    --         (5,931)
                                                       -----        --------         ---------          ------------   ------------
Balance, December 31, 1997...................             63         155,326            (6,415)                9,414        158,388
   Issuance of 1,192,348 shares of common stock
     for options exercised...................              1               2                --                    --              3
   Tax benefit of stock options exercised....             --           2,175                --                    --          2,175
   Issuance of  41,353 shares of common stock
      for acquisitions.......................             --             295                --                    --            295
   Other.....................................             --              94                --                    --             94
   Comprehensive income (loss)
      Net loss...............................             --              --                --                (1,088)        (1,088)
      Currency exchange adjustment...........             --              --             2,059                    --          2,059
      Change in unrealized gain, net of      
         taxes...............................             --              --               (72)                   --            (72)
                                                                                                                       ------------
      Total comprehensive income.............             --              --                --                    --            899
                                                       -----        --------         ---------          ------------   ------------
   Balance, December 31, 1998................          $  64        $157,892         $  (4,428)         $      8,326   $    161,854
                                                       =====        ========         =========          ============   ============
</TABLE>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                      F-5
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
 (in thousands)                                                               For The Years Ended December 31,
                                                                        --------------------------------------------
                                                                             1996           1997           1998
                                                                        -------------   ------------  --------------
Cash flows from operating activities:
<S>                                                                     <C>             <C>           <C>           
   Net income (loss)......................................              $      10,857   $      2,812  $      (1,088)
   Adjustments to reconcile net income (loss) to net cash
      provided by operating activities:
         Extraordinary loss on refinancing of debt........                         --             --            792
         Restructuring provision..........................                         --         15,513          4,100
         Depreciation and amortization....................                     13,256         28,687         40,355
         Provision for deferred income taxes..............                      1,823         (1,498)        (2,816)
         Deferred compensation............................                        557            (53)           184
         Gain on sale of marketable securities............                         --           (407)          (208)
         Change in assets and liabilities:
           Trade accounts receivable......................                    (17,083)       (36,977)       (18,123)
           Other assets...................................                      4,060         (7,677)         2,482
           Trade accounts payable.........................                      6,662          5,694          4,063
           Other liabilities..............................                     15,711         12,920        (11,998)
                                                                        -------------   ------------  -------------
              Net cash provided by operating activities...                     35,843         19,014         17,743
                                                                        -------------   ------------  -------------
Cash flows from investing activities:
   Purchases of property and equipment....................                    (39,954)       (69,437)       (52,033)
   Proceeds from sale-leasebacks of facilities............                         --             --          9,397
   Proceeds from sales of property and equipment                                  199          2,711          1,513
   Acquisitions, net of cash acquired.....................                    (27,936)       (47,023)        (2,193)
   Settlement of purchase price payable...................                         --        (13,934)            --
   Investments in marketable securities...................                    (63,793)            --             --
   Sale of marketable securities..........................                     76,840            558            257
   Changes in other assets, net...........................                       (380)        (4,228)            --
                                                                        -------------   ------------  -------------
              Net cash used in investing activities.......                    (55,024)      (131,353)       (43,059)
                                                                        -------------   ------------  -------------
Cash flows from financing activities:
   Borrowings on notes payable............................                     17,169         83,307         20,294
   Repayments of notes payable............................                    (16,026)       (68,440)        (4,398)
   Borrowings  on long-term debt..........................                        500        360,398        149,917
   Repayment of long-term debt............................                     (2,048)     (260,499)       (149,399)
   Payment of long-term debt issuance costs...............                         --            --          (3,228)
   Repayment of redeemable preference shares..............                     (2,075)           --              --
   Payments on capital lease obligations..................                       (259)       (2,211)         (5,061)
   Common stock issued, net of expenses...................                     42,339           228               3
   Capital contribution from subsidiary shareholder.......                         --            --           1,400
   Sale of stock of subsidiaries..........................                         --            --           6,541
   Other..................................................                         --           900              (9)
                                                                        -------------   -----------  --------------
              Net cash provided by financing activities...                     39,600       113,683          16,060
                                                                        -------------   -----------  --------------
Effect of exchange rates on cash..........................                        760        (2,769)           (557)
                                                                        -------------   -----------  --------------
              Net increase (decrease) in cash.............                     21,179        (1,425)         (9,813)
 Cash and cash equivalents, beginning of year.............                      4,531        25,710          24,285
                                                                        -------------   -----------  --------------
 Cash and cash equivalents, end of year...................              $      25,710   $    24,285  $       14,472
                                                                        =============   ===========  ==============
 Supplemental disclosures of cash flow information:
     Interest paid........................................              $         846   $     4,712  $        8,986
     Income taxes paid....................................              $       4,311   $     7,859  $        6,235
</TABLE>
 Supplemental  disclosures of non-cash investing and financing activities:
   The tax  benefit of stock  options  exercised  was  $5,040,  $7,685 and
   $2,175  in 1996,  1997 and 1998,  respectively.  The  Company  incurred
   capitalized leases of $2,101, $13,225, and $757 in 1996, 1997 and 1998,
   respectively.   The  Company  issued  stock  in  connection   with  the
   acquisition of businesses with a value of $5,498,  $29,681, and $295 in
   1996, 1997 and 1998, respectively.

     The accompanying  notes are an integral part of the consolidated  financial
statements.

                                       F-6
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  Summary of Significant Accounting Policies and Practices:

     (a) Description of Business.  SITEL Corporation  ("SITEL") and subsidiaries
(collectively,  the "Company") provide customer relationship management services
in North  America,  Europe,  Asia  Pacific and Latin  America.  On behalf of its
clients, the Company finds, acquires and retains customers and helps enhance and
grow these relationships  through a variety of value-added services working with
several types of electronic media ranging from the telephone,  to e-mail and the
Internet.  The Company provides services to clients principally in the financial
services, insurance, telecommunications, technology, utilities, consumer, media,
government and travel sectors.

     (b) Principles of  Consolidation.  The  consolidated  financial  statements
include the financial statements of SITEL Corporation and its subsidiaries.  All
significant  intercompany  accounts and  transactions  have been  eliminated  in
consolidation.

     During 1996, the Company  acquired all of the  outstanding  common stock of
National Action Financial Services, Inc. ("NAFS") by issuing 2,742,452 shares of
its common stock and all of the outstanding  common stock of Mitre plc ("Mitre")
by  issuing  18,341,106  shares of its  common  stock in two  separate  business
combinations accounted for using the pooling-of-interests  method of accounting.
Accordingly,  the  consolidated  financial  statements for periods prior to each
business  combination  have been restated to include the accounts and results of
operations  of NAFS and Mitre.  No  significant  adjustments  were  required  to
conform the accounting policies of the combining enterprises.

     The results of operations  previously reported by the separate  enterprises
and the combined amounts  presented in the accompanying  consolidated  financial
statements are summarized below:

                                            (in thousands)
                                                 1996
                                                 ----
           Revenues:
               SITEL                            $ 196,279
               NAFS                                15,685
               Mitre                              100,786
                                            -------------
                      Combined                  $ 312,750
                                            =============
           Net income (loss)
               SITEL                            $   6,016
               NAFS                                (1,132)
               Mitre                                5,973
                                            -------------
                      Combined                  $  10,857
                                            =============

     Transaction related expenses of approximately $0.7 million and $6.3 million
for the  combinations  with NAFS and Mitre,  respectively,  were expensed during
1996 at the closing of each transaction.

     (c) Translation of Foreign Currencies. The Company's non-U.S. subsidiaries,
except in Mexico,  use as their  functional  currency the local  currency of the
countries in which they operate.  Their assets and  liabilities  are  translated
into U.S.  dollars at the  exchange  rates in effect at the balance  sheet date.
Revenues and expenses are translated at the average rates of exchange prevailing
during the period.  Translation  gains and losses are included as a component of
equity.  Transaction  gains and losses  related  to  intercompany  accounts  are
included in the determination of net income.

                                      F-7
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The Company's  subsidiary in Mexico uses the U.S.  dollar as its functional
currency.  The  effect of  remeasurement  into the  functional  currency  is not
material and is included in the determination of net income (loss).

     (d) Revenue  Recognition.  The Company recognizes  revenues as services are
performed for its clients. Certain contracts allow for the provision of services
whereby the Company is able to invoice and receive  payment for its  services in
advance of the performance of those services. Such advance payments are recorded
as deferred revenue until such time as the services are performed.

     (e) Cash Equivalents.  Cash equivalents  generally consist of highly liquid
debt instruments purchased with an original maturity of three months or less.

     (f) Property and  Equipment.  Property  and  equipment  are stated at cost.
Equipment  under capital  leases is stated at the present value of minimum lease
payments.  Depreciation  is  calculated  on the  straight-line  method  over the
estimated  useful  lives of the assets  which  range from 3 to 20 years.  Assets
recorded for leasehold  improvements and under capital leases are amortized on a
straight-line  basis over the shorter of the lease term or estimated useful life
of the asset.

     (g) Investments in Marketable Securities. All marketable securities held by
the Company at December 31, 1997,  were  classified  as  available-for-sale  and
recorded at fair value.  Unrealized holding gains and losses, net of the related
tax effect,  on  available-for-sale  securities are excluded from income and are
reported  as a  separate  component  of  stockholders'  equity  until  realized.
Realized  gains and losses from the sale of  available-for-sale  securities  are
determined on a specific  identification  basis. Fair values are estimated based
upon quoted market values.

     (h)  Income  Taxes.  Income  taxes  are  accounted  for under the asset and
liability  method.  Deferred tax assets and  liabilities  are recognized for the
future tax  consequences  attributable  to  differences  between  the  financial
statement  carrying  amounts  of  existing  assets  and  liabilities  and  their
respective tax bases and operating loss and tax credit  carryforwards.  Deferred
tax assets and  liabilities  are measured  using  enacted tax rates  expected to
apply to taxable income in the years in which those  temporary  differences  are
expected  to be  recovered  or settled.  The effect on  deferred  tax assets and
liabilities  of a change in tax rates is recognized in income in the period that
includes the enactment date. Valuation allowances,  if any, are established when
necessary  to reduce  deferred tax assets to the amount that is more likely than
not to be  realized.  Income  taxes are not accrued for  unremitted  earnings of
international  operations  that have been,  or are  intended  to be,  reinvested
indefinitely.

     (i)  Goodwill.  Goodwill  consists of the  difference  between the purchase
price incurred in  acquisitions  using the purchase method of accounting and the
fair value of net assets acquired and is being amortized using the straight-line
method over 25 years.  Accumulated amortization of goodwill at December 31, 1997
and 1998 was $5.0 million and $8.8 million,  respectively.  The Company monitors
events and changes in  circumstances  which may require a review of the carrying
value  of  goodwill  at  each   consolidated   balance   sheet  date  to  assess
recoverability  based on estimated  undiscounted  future  operating  cash flows.
Impairments are recognized in operating  results when a permanent  diminution in
value  occurs  based on fair value.  The  assessment  of the  recoverability  of
goodwill  will be  impacted if  estimated  future  operating  cash flows are not
achieved.

     (j) Income (Loss) Per Share.  Income (loss) per common share is computed by
dividing net income (loss) by the weighted  average  number of common shares and
common  equivalent  shares   outstanding   during  each  period,   after  giving
retroactive   effect  to   business   combinations   accounted   for  using  the
pooling-of-interests  method of accounting. The difference in shares utilized in
calculating  basic and diluted income per share  represents the number of shares
assumed to be issued from the exercise of  potentially  dilutive  stock  options
under the Company's stock option

                                      F-8

<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

plans less shares assumed to be purchased with proceeds from the exercise of the
stock options. There are no reconciling items between the Company's reported net
income  or loss and net  income  or loss  used in the  computation  of basic and
diluted  income (loss) per share.  The Company  excluded all of its  outstanding
options to purchase  common stock from the calculation of diluted loss per share
in 1998 because such options were anti-dilutive.

     (k)  Use  of  Estimates.  The  preparation  of the  consolidated  financial
statements in conformity with generally accepted accounting  principles requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities  and disclosures of contingent  assets and liabilities at
the date of the  consolidated  financial  statements and the reported amounts of
revenues and expenses during the reporting  period.  Actual results could differ
from those estimates.

     (l) Stock  Compensation.  The Company recognizes  stock-based  compensation
expense using the intrinsic  value method.  Under that method,  no  compensation
expense is recorded if the exercise  price of the employee  stock options equals
or exceeds the market price of the  underlying  stock on the date of grant.  For
disclosure purposes, pro forma net income (loss) and income (loss) per share are
provided as if the fair value method had been applied.

     (m)  Financial  Instruments.  Fair  values  of cash and  cash  equivalents,
accounts receivable,  accounts payable,  marketable  securities,  long term debt
(primarily  with  variable  interest  rates)  other  than the  Company's  Senior
Subordinated Notes due 2006 (the "Notes"),  capital leases and notes payable are
estimated to approximate  carrying  values due to the short  maturities or other
characteristics of these financial instruments.  The fair value of the Notes was
approximately  $92 million at December  31, 1998,  based on market  transactions
near that date.

     During 1997, the Company entered into forward contracts  designed to manage
the  Company's  exposure to  fluctuations  in the value of currencies of certain
foreign  countries  in which  the  Company  had  significant  operations.  These
contracts were marked to market with gains or losses recognized in the Company's
statements  of income  (loss) as other income  (expense).  Such amounts were not
material.

     During 1998, SITEL also entered into forward exchange contracts designed to
manage the  Company's  exposure to  fluctuations  in the value of  currencies of
certain foreign countries where it had foreign-currency  denominated  short-term
intercompany  loans.  The forward  contracts were marked to market with gains or
losses  recognized in the Company's  statements of income (loss) as other income
(expense).  Such amounts were not material.

     (n) Accounting  Pronouncement.  Statement of Financial Accounting Standards
("SFAS")  130,  Reporting  Comprehensive  Income  establishes  standards for the
reporting and display of  comprehensive  income and its components in a full set
of general purpose  financial  statements.  The Company's  comprehensive  income
(loss) was $13.1  million,  $(5.9) million and $0.9 million for the fiscal years
1996, 1997 and 1998, respectively. The difference between the Company's reported
net income (loss) and comprehensive income (loss) for those periods is primarily
due to the change in the currency  exchange  adjustment.  The accumulated  other
comprehensive  income included in the Company's  consolidated  balance sheets at
December  31,  1997 and 1998 is  primarily  the  accumulated  currency  exchange
adjustment.

                                      F-9
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

2.   Acquisitions:

     In February  1996,  the Company  acquired the  teleservicing  businesses of
C.T.C.  Canadian Telephone  Corporation and 2965496 Canada, Inc.  (collectively,
"CTC")  through  purchases  of  certain  assets  and the  assumption  of certain
liabilities of each business for a purchase price of approximately $4.2 million,
including  acquisition costs. The acquisition of CTC has been accounted for as a
purchase.  Accordingly,  the purchase price has been allocated to the assets and
liabilities acquired based upon their fair values at the date of acquisition and
the results of operations of CTC have been included in the consolidated  results
of operations  since the date of  acquisition.  Goodwill of  approximately  $4.2
million was recorded for the excess of purchase price over the fair value of net
assets acquired. Prior to the acquisition date, the results of operations of CTC
were not significant.

     In June 1996,  the  Company  acquired  Teleaction  S.A.  ("Teleaction"),  a
Spanish teleservicing company,  through the payment of approximately $25 million
for 69.2% of the capital stock, and, an unconditional  commitment (the "purchase
price  payable") to close the purchase of the remaining  30.8% in June 1998. The
purchase price payable included an unconditional  commitment to pay a minimum of
1.4 billion Spanish pesetas (approximately US $10.8 million at acquisition) plus
additional  amounts of  contingent  consideration  based upon the  attainment of
specified levels of earnings before interest,  depreciation, and income taxes as
defined in the acquisition agreement.  The Company accounted for the transaction
as an acquisition of all of the outstanding  capital stock of Teleaction because
it  acquired  the risks and  rewards  of  ownership  except  for the  contingent
consideration,  which has been accounted for as additional  purchase price paid.
In the fourth  quarter of 1997,  the Company  completed the  acquisition  of the
remaining 30.8% for approximately $14 million,  a valuation  consistent with the
terms of the original agreement.  The Company accounted for the acquisition as a
purchase.  Accordingly,  the  purchase  price has been  allocated  to assets and
liabilities  acquired  based  on  their  estimated  fair  values  at the date of
acquisition  and the results of operations  of Teleaction  have been included in
the consolidated  results of operations since the date of acquisition.  Goodwill
of  approximately  $28.7  million was recorded for the excess of purchase  price
over  net  assets  acquired,  including  the  additional  payments  made  in the
settlement of the remaining purchase price payable during 1997.

     In January 1997, the Company acquired all of the outstanding  capital stock
of Telebusiness  Holdings,  a systems integration company based in Australia and
New Zealand.  In February 1997, the Company  acquired  substantially  all of the
assets of Exton  Technology  Group, a  teleservicing  technical  support company
based in Madison,  Wisconsin.  In March 1997,  the Company  acquired  all of the
outstanding  stock of Levita Group Pty Ltd., an Australian  based  teleservicing
company, and all of the outstanding stock of L&R Group Limited, a United Kingdom
based  teleservicing  consulting  firm. In May 1997, the Company acquired all of
the  outstanding  stock of Support  Systems  Developers,  Inc.,  a  teleservices
technical support company based in Vienna,  Virginia.  In July 1997, the Company
acquired  all of the  outstanding  stock of  Svanberg & Co.  Intressenter  AB, a
teleservices  firm based in Sweden.  In September 1997, the Company acquired all
of the outstanding  stock of Telephone  Marketing  Services  (Ireland),  Ltd., a
teleservices firm based in Ireland. In November 1997, the Company acquired a 49%
equity interest in Grupo de  Comercializacion  Integrada S.A. de C.V. ("GCI"), a
teleservicing subsidiary of Corporacion Interamericana de Entretenimiento,  S.A.
de C.V. ("CIE"), an event promotion and management company in Latin America. The
terms of the  acquisition  provided for the Company's  effective  control of GCI
through the Company's  ability to elect a majority of the board of directors and
through  responsibility  of the  board  for the  day-to-day  operations  of GCI.
Therefore,  the Company has accounted for the transaction as an acquisition of a
subsidiary and  consolidated  the results of operations of GCI since the date of
acquisition. Under the terms of the acquisition, the other shareholder of GCI is
also provided certain protective rights which, in the opinion of management,  do
not impair the Company's  ability to effectively  exercise its control over GCI.
Those  protective  rights  include the ability of the other  shareholder to veto
actions of the subsidiary  resulting in its dissolution or  reorganization,  its
filing  of  bankruptcy  or  insolvency,  sale  of  a  significant portion of its

                                      F-10
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

assets,  amendment  to its  by-laws,  issuance of  additional  capital  stock or
significant reacquisition of its capital stock, and its contracting with related
parties among other rights.

     The total cost of the Company's 1997 acquisitions were approximately  $76.7
million,  subject to certain  adjustments  and excluding  transaction  costs and
liabilities   assumed.   Included  in  the  total  cost  was  the   issuance  of
approximately  2.3  million  shares  of the  Company's  common  stock  valued at
approximately $29.7 million.  These 1997 acquisitions have been accounted for as
purchases  and  accordingly,  the  acquired  assets  and  liabilities  have been
recorded at their  estimated  fair values at the dates of  acquisition,  and the
results  of  operations  have been  included  in the  accompanying  consolidated
financial statements since the dates of acquisition. The total purchase price in
excess of the fair  market  value of the net assets  acquired  was  recorded  as
goodwill ($65.6 million).

     The  following  pro forma  information  shows the results of the Company as
though the  acquisitions  described  earlier  for 1996 and 1997,  occurred as of
January 1, 1996. These results include certain  adjustments  consistent with the
Company's policy related to amortization of intangible assets. These results are
not necessarily indicative of the results that actually would have been obtained
if the  acquisitions had been in effect at the beginning of each period or which
may be attained in the future.

                                           For the Years Ended December 31,
                                                   1996             1997
                                                -----------       ----------
                                         (in thousands, except per share data)
                                                      (unaudited)
       Revenue                               $     373,602     $    510,553
       Net income                            $       9,348     $      1,814
       Income per common share:
             Basic                           $        0.16     $       0.03
             Diluted                         $        0.14     $       0.03

     In May, 1998, the Company  acquired all of the outstanding  stock of MSC 24
S.A.,  which  owned  100%  of  Intuiparc   Assistance  S.A.   ("Intuiparc"),   a
teleservicing company based in France, through the payment of approximately $1.5
million in cash, including  acquisition costs, and the issuance of approximately
41,000 shares of stock valued at approximately $0.3 million.  The acquisition of
Intuiparc has been accounted for as a purchase.  Accordingly, the purchase price
has been allocated to the assets and liabilities  acquired based upon their fair
values at the date of  acquisition  and the results of  operations  of Intuiparc
have been included in the  consolidated  results of operations since the date of
acquisition.  Goodwill of approximately $2.5 million was recorded for the excess
of  purchase  price  over the fair value of net  assets  acquired.  Prior to the
acquisition date, the results of operations of Intuiparc were not significant.

3.   Sale of Stock of Subsidiaries:

     During 1998 the Company  sold newly  issued  stock of certain  subsidiaries
located in the Asia Pacific region to Lend Lease  Corporation  Limited,  Sydney,
Australia  and  certain  of its  subsidiaries  ("Lend  Lease").  Lend Lease paid
approximately  $6.6  million  for a 20%  interest in these  subsidiaries,  which
provide outsourced call center solutions  throughout the region.  Lend Lease has
several options to increase its ownership percentage in amounts up to a total of
49% which,  subject  to  meeting  certain  conditions,  expire at various  times
through on or about  March  2004.  The option  exercise  prices are  intended to
approximate fair value through formulas tied to the subsidiary's  revenue levels
for certain  prior  periods.  The Company  also has an option to  reacquire  the
original  shares sold to Lend Lease at an agreed  formula price from on or about
March  2000  through  on or  about  March  2001 so long  as Lend  Lease  has not
exercised its option to increase its ownership  percentage.  Lend Lease also has
an option to sell its shares back

                                      F-11
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

to the Company at an agreed  formula  price (the "put  option").  The put option
expires  upon the earlier of Lend Lease  exercising  its option to increase  its
ownership percentage or on or about March 2001.

     Operations of these  subsidiaries are controlled by a management  committee
on which Lend Lease and the  Company  have equal  representation.  The  Company,
however,  effectively  controls the  operations  of these  subsidiaries  through
certain  dispute  resolution  processes  that are  included  in the  shareholder
agreements.  Should the Company  exercise  its  control  through  these  dispute
resolution  processes,  Lend Lease has the option to sell its shares back to the
Company at an agreed formula price which is intended to approximate fair value.

     Although  the purchase  price paid by Lend Lease  exceeds the book value of
the 20%  ownership  that it  acquired,  due to the put  option,  the Company has
included the entire amount of the stock purchase price as minority interest. The
Company will accrete to the put option formula price if earnings credited to the
minority interest are not sufficient to record the amount that would be required
to be paid to Lend Lease upon its exercise of the put option.

4.   Investments in Marketable Securities:

     The  amortized  cost,  gross  unrealized  holding  gains and fair value for
available-for-sale securities at December 31, 1997 was as follows:

                                                   (in thousands)
                                                       Gross
                                                     Unrealized
                                     Amortized        Holding         Fair
                                       Cost            Gains          Value
                                       ----            -----          -----

       Equity securities             $     49       $     110       $      159
                                     ========       =========       ==========

     Proceeds from the sale of  marketable  securities  available-for-sale  were
$76.8  million,  $0.6  million,  and  $0.3  million  in  1996,  1997  and  1998,
respectively.  Gross  realized  gains  of $0.4  million  and $0.2  million  were
realized in 1997 and 1998, respectively.  No gross realized losses were realized
in 1997 or 1998 and no gross realized gains or losses were realized in 1996.

5.   Property and Equipment:

     Property  and  equipment  at December  31, 1997 and 1998  consisted  of the
following:

                                                        (in thousands)
                                                    1997              1998
                                                ------------      -----------
      Telecommunications equipment              $     89,067      $   127,146
      Furniture, equipment, and other                 43,985           48,503
      Leasehold improvements                          18,707           21,094
      Buildings                                       19,591           13,464
      Other                                            1,080              366
                                                ------------      -----------
                                                     172,430          210,573
      Less accumulated depreciation                   51,830           84,958
                                                ------------      -----------
                                                $    120,600      $   125,615
                                                ============      ===========

                                      F-12
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

6.   Long-term Debt:

     Long-term debt at December 31, 1997 and 1998, consisted of the following:
<TABLE>
<CAPTION>
                                                                           (in thousands)
                                                                       1997             1998
                                                                   -------------    -------------
  <S>                                                              <C>                <C>      
  9.25% Senior Subordinated Notes due in March, 2006.....          $       --         $ 100,000

  Long-term revolving credit facility at variable interest
  rates (6.56% at December 31, 1998).....................              99,500             3,500

  Various notes payable acquired at acquisition of GCI, with
  variable interest rates (42.3% at December 31, 1998)...               3,859             1,288

  Other notes payable with weighted-average interest rates of
  6.1% at December 31, 1998..............................               9,939             5,910
                                                                   ----------         ---------
                                                                      113,298           110,698
  Less current portion...................................              10,793             3,671
                                                                   ----------         ---------
  Total..................................................          $  102,505         $ 107,027
                                                                   ==========         =========
</TABLE>
     In March 1998, the Company  completed the private placement of $100 million
of 9.25% Senior Subordinated Notes due 2006 (the "Notes"). The proceeds from the
offering were used to repay  borrowings  outstanding  under the  Company's  then
outstanding long term revolving credit facility (the "Credit  Facility"),  which
was also amended on that date.

     The  Notes,  which  include  interest  payable  semiannually,  are  general
unsecured  obligations  of the  Company  and  will be  subordinated  in right of
payment to all  existing and future  senior debt of the  Company.  The Notes are
guaranteed  by  certain  of  the  Company's  subsidiaries  and  contain  certain
covenants that limit the ability of the Company and certain of its  subsidiaries
to, among other things,  incur  additional  indebtedness,  pay dividends or make
certain other restricted  payments,  consummate  certain asset sales, enter into
certain  transactions  with affiliates,  incur liens,  merge or consolidate with
another company and sell or otherwise dispose of all or substantially all of the
assets of the Company.

     The Notes are redeemable, at the Company's option, in whole or in part from
time to time on or after March 15,  2002.  If redeemed  during the  twelve-month
period commencing on March 15 of the year set forth below, the redemption prices
are as follows,  plus in each case, accrued and unpaid interest thereon, if any,
to the date of redemption:

                Year                                             Percentage
                ----                                             ----------
                2002      ..........................              104.625%
                2003      ..........................              103.083%
                2004      ..........................              101.542%
                2005 and thereafter     ............              100.000%

     In addition,  the Company may redeem up to 35% of the  aggregate  principal
amount of the Notes at any time on or prior to March 15,  2001 at 109.25% of the
principal amount thereof, plus accrued interest to the date of redemption,  from
the net proceeds of one or more public equity offerings,  as defined. Also, upon
a change of control of the Company,  as defined,  the Company 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.

                                      F-13
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     In  connection  with the  repayment  of the amounts due under the  existing
Credit  Facility  from the  proceeds of the Notes,  the Company  also reached an
agreement with a syndicate of commercial  banks to amend the Company's  existing
Credit Facility.  Certain of the financial  covenants and restrictions  from the
existing  facility were amended and the  Company's  eligible  domestic  accounts
receivable were pledged as security.  The amended facility provides for interest
payable  quarterly and a variable  commitment  fee on any unused  balances.  The
obligations  of the  Company  under the  facility  have been  guaranteed  by the
Company's  domestic  subsidiaries  and are secured by a pledge of the  Company's
shares in such subsidiaries and certain other foreign subsidiaries. The facility
contains certain  financial  covenants and certain  restrictions on, among other
things,   the  Company's   ability  to  incur   additional  debt,  make  certain
investments,  and sell assets or merge with another  company.  The facility also
prohibits  the  payment of cash  dividends  on common  stock  without the banks'
consent.  The  facility  becomes due and payable upon a change of control of the
Company as defined in the facility agreement.  The borrowings were limited under
the  amended  Credit  Facility  to an  amount  based  upon a  percentage  of the
Company's eligible domestic accounts receivable,  as defined, up to $75 million.
As a result of the amendment,  the Company recognized an extraordinary charge of
$514,000,  net of tax, to write off the deferred  costs of the  original  Credit
Agreement.  Additionally,  in the second and third quarters of 1998, the Company
sought and obtained  certain  modifications  to the amended  Credit  Facility to
permit  continued  availability of borrowing under such facility.  In connection
with the  modification  in the third quarter the total  available was reduced to
$50 million.  As of December 31, 1998, the Company was in compliance with all of
the covenants and restrictions of the amended facility.

     Additionally,  several  international lines of credit are available to fund
local  working  capital   requirements.   The  maximum  borrowings  under  these
facilities  are  approximately  $32.0  million.  At December 31, 1998, the total
amount of notes payable  outstanding under these facilities  approximated  $30.5
million  with  a  weighted-average  interest  rate  of  7.2%.  Including  unused
international  lines of credit,  the Company had unused lines of credit totaling
approximately $36.6 million at December 31, 1998.

     The  aggregate  maturities  of  long-term  debt for each of the five  years
following December 31, 1998 are as follows: (in thousands)

                                                            Maturities of
                      Year Ending December 31,              Long-term Debt
                      ------------------------            -------------------
                      1999                                  $    3,671
                      2000                                       2,909
                      2001                                         220
                      2002                                       3,666
                      2003 and thereafter                      100,232

7.   Common Stock:

     The Company  completed a public  offering of common stock in February 1996.
The Company sold 5,982,220 shares at a price of $7.50 per share, as adjusted for
stock  splits.  Net proceeds of $42.2 million were realized by the Company after
deducting the underwriting discount and offering expenses.

                                      F-14
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

8.   Income Taxes:

     For financial reporting purposes,  income (loss) from continuing operations
before income taxes and minority interest includes the following components:

                                                (in thousands)
                                          For The Years Ended December 31,
                                  --------------------------------------------
                                     1996            1997             1998
                                  -----------    ------------    -------------

        Pretax income (loss):
          United States             $  8,653         $15,005        $  9,958
          Foreign                     12,502           (713)         (10,217)
                                  ----------     ----------      -----------
               Total                $ 21,155         $14,292        $   (259)
                                  ==========     ===========     ===========

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

                                             (in thousands)
                                     For The Years Ended December 31,
                                 -----------------------------------------
                                   1996            1997             1998
                                 --------        --------         --------
Current:
  Federal                      $  3,929         $  5,805         $  1,899
  Foreign                         4,529            7,112            1,950
  State                             (60)            (113)             (67)
                               --------         --------         --------
                                  8,398           12,804            3,782

Deferred:
  Federal                         1,521            1,237              960
  Foreign                            --           (2,735)          (3,776)
  State                             302               --               --

                               --------         --------         --------
                                  1,823           (1,498)          (2,816)
                               --------         --------         --------
  Provision for
  income tax expense           $ 10,221         $ 11,306         $    966
                               ========         ========         ========

     In 1998 a tax benefit of $0.3 million was  allocated  to the  extraordinary
loss on the refinancing of debt.  Certain of the income tax benefits  related to
the exercise of stock options reduce taxes currently payable and are credited to
paid-in  capital.  The amount  credited was  approximately  $5.0  million,  $7.7
million, and $ 2.2 million in 1996, 1997 and 1998, respectively.

                                      F-15
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The tax  effects of  temporary  differences  that give rise to  significant
portions of the deferred tax assets and deferred tax  liabilities  are presented
below:
                                                          (in thousands)
                                                For The Years Ended December 31,
                                                --------------------------------
                                                           1997       1998
                                                           ----       ----
Deferred tax assets:
  Accrued compensation and other liabilities .........   $10,362     $ 9,013
  Net operating loss and other credit
     carryforwards ...................................     1,846       2,984
  Deferred tax items related to
     international operations ........................     2,433       6,209
  Other ..............................................       346         696
                                                         -------     -------
       Total deferred tax assets .....................    14,987      18,902
                                                         -------     -------

Deferred tax liabilities:
  Leased assets and depreciation .....................       319       1,358
  Unrealized gain on marketable securities ...........        37          --
  Other ..............................................       364         461
                                                         -------     -------
        Total deferred tax liabilities ...............       720       1,819
                                                         -------     -------
        Net deferred tax assets ......................   $14,267     $17,083
                                                         =======     =======

     The Company has not recorded a valuation  allowance related to its deferred
tax assets.  Based upon the Company's  current and historical  pretax  earnings,
adjusted for significant  deductions estimated to be available from the exercise
of nonqualified stock options,  management  believes that it is more likely than
not that the Company will generate  sufficient  taxable  income to fully realize
the benefits of its recorded deferred tax assets.

     At December  31,  1998,  the Company had U.S.  Federal net  operating  loss
carryforwards  of  approximately  $1.1  million,  which will expire in 2004.  At
December 31, 1998, the Company had alternative minimum tax credit  carryforwards
of approximately $2.6 million.

     The difference  between the Company's income tax expense as reported in the
accompanying   consolidated   financial  statements  and  that  which  would  be
calculated  applying the U.S.  Federal  income tax rate of 34% on pretax  income
(loss), less minority interest, is as follows:

                                                       (in thousands)
                                              For The Years Ended December 31,
                                              --------------------------------
                                                  1996        1997        1998
                                                  ----        ----        ----

Expected Federal income taxes                  $  7,166    $  4,859    $    (88)
State taxes, net of Federal effects                 (40)        (74)        (44)
Amortization of goodwill                            266         159         222
Impact of foreign operations, including
  goodwill                                          438       1,278       1,647
Merger related costs                              2,257          --          --
State incentive tax credits (see note 14)            --       1,446          --
Impairment losses on intangible assets               --       3,400          --
Other                                               134         238        (771)
                                               --------    --------    --------
       Total                                   $ 10,221    $ 11,306    $    966
                                               ========    ========    ========

                                      F-16
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

9.   Lease Obligations:

     The Company is  obligated  under  various  capital  leases for property and
certain equipment that expire at various dates through 2015.  Capitalized leased
equipment included in property and equipment was approximately $17.8 million and
$11.8 million at December 31, 1997 and 1998,  respectively,  net of  accumulated
amortization.

     The Company also leases property and certain equipment under  noncancelable
operating  lease  arrangements  which expire at various dates through 2018. Rent
expense was approximately $6.7 million, $15.4 million, and $23.0 million for the
years ended December 31, 1996,  1997 and 1998,  respectively.  Certain leases of
real property provide options to extend the lease terms.

     Future  minimum lease  payments under  noncancelable  operating  leases and
future minimum capital lease payments as of December 31, 1998 are as follows:

                                                    (in thousands)
                                              Capital           Operating
                                              Leases             Leases
                                              ------             ------
       Year ending December 31,
           1999                               $    4,092      $      22,715
           2000                                    1,543             19,737
           2001                                      697             17,479
           2002                                      544             13,597
           2003 and thereafter                     7,350             63,415
                                              ----------      -------------
                                                  14,226      $     136,943
                                                              =============
       Less amount representing interest           1,366
                                              ----------
       Present value of net minimum lease
              obligations                     $   12,860
                                              ==========

10.  Stock-Based Compensation:

The Company has four stock option plans described as follows:

a)   Stock Plan for Replacement of Existing Options  ("Replacement Plan"). Under
     this plan,  options  for  4,541,780  shares were  granted in 1995,  with an
     option price of $.0025 per share,  as  replacements  for 3,110,000  options
     outstanding at February 28, 1995.

b)   Stock Option Plan ("EEB Replacement  Plan").  Under this plan,  options for
     7,381,720  shares were granted in 1995,  with an option price of $.0025 per
     share, as replacements for the Company's employee equity benefit plan ("EEB
     Plan").  The EEB Plan had  12,655,000  units  outstanding  with base values
     ranging from $0.85 to $1.71.  With respect to both the Replacement Plan and
     the EEB Replacement Plan, the following applies: Options are exercisable in
     five equal annual  installments  from January 1996 to May 2000. The Company
     recorded  these option grants to 265 employees at the estimated  fair value
     at  date  of  grant  ($2.91),   with  a  corresponding  charge  to  special
     compensation  expense  totaling $34.6 million in 1995. All options  granted
     were  vested as of the date of grant.  No further  options  will be granted
     under these plans.

c)   1995  Employee  Stock Option Plan  ("Employee  Plan").  The  Employee  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 9,800,000 shares of

                                      F-17
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     common stock to employees and  independent  consultants  of the Company and
     its subsidiaries.  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, 1998, there were approximately
     3.1 million shares  available for issuance  pursuant to future grants under
     the Employee Plan.

d)   1995  Non-Employee  Directors  Stock Option Plan  ("Directors  Plan").  The
     Directors  Plan  provides  for  automatic  formula  grants of  nonqualified
     options to each  independent  director  of the  Company.  Each  independent
     director is granted  options to purchase 18,000 shares of common stock upon
     election or  re-election  to a three-year  term on the Board of  Directors.
     Option  prices  equal the fair market value of the common stock on the date
     of  grant.  Options  vest and  become  exercisable  in three  equal  annual
     installments  commencing  one  year  after  grant.  The  Directors  Plan is
     administered  by the Board members who are not eligible to  participate  in
     the plan.  At December 31, 1998,  there were 224,000  shares  available for
     issuance pursuant to future grants under the Directors Plan.

All four  plans  require  optionees  to enter  into  certain  voting  and resale
agreements which place certain restrictions on actions of the optionee.

     Additional information as to shares subject to options is as follows:

                                                           Weighted-Average
                                     Number of            Exercise Price
                                      Options               per Option
                                      -------               ----------

Balance, January 1, 1996                 12,539,500    $             .29
    Granted                               5,608,462                15.39
    Exercised                            (1,719,642)                 .05
    Canceled                                (50,908)               15.75
                                  -----------------    -----------------
Balance, December 31, 1996               16,377,412                  .44
    Granted                               6,478,211                13.08
    Exercised                            (1,891,562)                 .12
    Canceled                             (5,343,144)               15.69
                                  -----------------    -----------------
Balance, December 31, 1997               15,620,917                 5.78
    Granted                               7,197,652                 4.58
    Exercised                            (1,192,348)               .0025
    Canceled                             (7,721,832)               12.63
                                  -----------------    -----------------
Balance, December 31, 1998               13,904,389    $            1.96
                                  =================    =================

Exercisable at December 31, 1998          2,966,869    $            1.24
                                  =================    =================

     The number of options  granted and  canceled  in 1997 and 1998  include the
effect of amendments to the terms of pre-existing option agreements issued under
the 1995 Plan.  The number of options  subject to the  amendments  and therefore
shown as granted and canceled  were  4,222,405  and  5,590,225 in 1997 and 1998,
respectively.  The  amendments to the terms of the options in both 1997 and 1998
lowered the exercise prices to prevailing  market values of the common stock and
altered certain vesting provisions of the options.

                                      F-18
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The following table summarizes  information about stock options outstanding
at December 31, 1998.
<TABLE>
<CAPTION>
                                    Options Outstanding                        Options Exercisable
                     -------------------------------------------------- -----------------------------------
                                        Weighted-          Weighted-
                         Number         Average             Average                          Weighted
Range of             Outstanding at     Remaining          Exercise      Exercisable at       Average
Exercise Prices         12/31/98     Contractual Life       Price          12/31/98       Exercise Price
----------------------------------------------------------------------- -----------------------------------
<S>                  <C>                      <C>           <C>             <C>                 <C>
          $.0025     7,155,148                1.41          $.0025          2,387,452           $.0025
  $2.34 to $3.50     5,661,094                8.04           $3.46            156,700            $3.50
  $3.72 to $9.75     1,005,000                5.00           $6.27            372,000            $5.87
$10.47 to $19.50        83,147                6.87          $15.84             50,717           $15.44
</TABLE>
     The per share  weighted-average  fair value of stock options granted during
1996, 1997, and 1998, was $7.84, $7.72, and $3.22, respectively,  on the date of
grant  using  the   Black-Scholes   option-pricing   model  with  the  following
weighted-average assumptions:  expected dividend yield 0.0%, expected volatility
factor 30.0%,  risk-free interest rate of 6.48%,  6.31%, and 5.4% in 1996, 1997,
and 1998, respectively,  and an expected life of 8.62 years, 9.04 years, and 8.0
years in 1996, 1997, and 1998, respectively.

     Had the Company determined compensation cost based on the fair value at the
grant date for its stock  options,  the  Company's  net income (loss) and income
(loss) per share  would have been  reduced  to the pro forma  amounts  indicated
below:
<TABLE>
<CAPTION>
                                                           (in thousands, except per share data)
                                                              For The Years Ended December 31,
                                                    ---------------------------------------------------
                                                         1996               1997             1998
                                                    ---------------     -------------    --------------
<S>                                                     <C>                <C>            <C>     
Net income (loss):              As Reported             $10,857           $ 2,812         $(1,088)
                                Pro Forma                10,186            (1,473)         (2,861)

Income (loss) per share:        As Reported
                                   Basic                $  0.19           $  0.05         $ (0.02)
                                   Diluted                 0.16              0.04           (0.02)
                                Pro Forma
                                   Basic                $  0.18           $ (0.02)        $ (0.04)
                                   Diluted                 0.15             (0.02)          (0.04)
</TABLE>
     In June 1995, NAFS entered into an agreement with one employee  whereby the
Company  committed to grant options  amounting to 2% of the common stock of NAFS
to the employee in connection with his initial employment contract. In May 1996,
NAFS fulfilled this commitment by issuing the options and recording compensation
expense,  which has been  classified  as selling,  general,  and  administrative
expense, of approximately $0.6 million.

11.  Benefit Plans:

     The Company's 401(k) plan, formed in January 1994, covers substantially all
domestic  employees  who are 18 years  of age  with 60 days or more of  service.
Participants may elect to contribute 1% to 17% of compensation.  The Company may
elect to make a year end contribution to the 401(k) plan. Company  contributions
to the plan were $.05  million in 1996.  No  contributions  were made in 1997 or
1998.

                                      F-19
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

     The  Company  also  makes  contributions  to  certain  executive  and other
employee personal retirement programs,  primarily in Europe. Amounts contributed
to those plans were $.03 million, $.2 million and $1.0 million in 1996, 1997 and
1998, respectively.

     Effective May 15, 1994, the Company  adopted a deferred  compensation  plan
for certain executive employees who elect to contribute to the plan. The Company
may  voluntarily  match all or a  portion  of the  participants'  contributions.
Participants  are  100%  vested  in  their   contributions   and  the  Company's
contributions vest over a 15-year period. No contributions were made to the plan
in 1996, 1997 or 1998.

     During  1998,  the Company  implemented  an Employee  Stock  Purchase  Plan
("ESPP" or the  "Plan").  The Plan  enables  eligible  employees to purchase the
Company's stock at 85% of the current market value on a quarterly basis.

12.  Segment  Data:

     The  Company's  operations  are  conducted  in one  business  segment;  the
provision  of customer  relationship  management  services  working with several
types  of  electronic  media  ranging  from the  telephone,  to  e-mail  and the
Internet.  The  Company's  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  customers  and the  expected  long-term  operating  income  from these
subsidiaries are similar.

     A summary of the Company's operations by geographic area follows.

                                                    (in thousands)
                                           For The Years Ended December 31,
                                       -------------------------------------
                                          1996          1997          1998
                                          ----          ----          ----
REVENUE:
  - United States                       $179,334      $250,160      $314,500
  - United Kingdom                        79,861       116,055       102,895
  - Spain                                 27,598        57,449        52,820
  - Other foreign countries               25,957        67,810       116,103
                                        --------      --------      --------
                                        $312,750      $491,474      $586,318
                                        ========      ========      ========
Long-Lived Assets:
  - United States                       $ 33,829      $ 93,042      $ 87,314
  - United Kingdom                        18,506        30,083        31,972
  - Spain                                 35,420        35,138        37,964
  - Other foreign countries               13,389        67,745        75,715
                                        --------      --------      --------
                                        $101,144      $226,008      $232,965
                                        ========      ========      ========

Revenues are primarily attributed to countries based upon the location where the
services are performed.

                                      F-20
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

13.  Contingencies:

     From time to time, the Company is involved in litigation  incidental to its
business. Management believes that any resulting liability beyond that provided,
should not materially affect the Company's financial position, future results of
operations or future cash flows.

14.  Restructuring and Impairment of Assets:

     In 1997, the Company recorded provisions of $15.7 million for restructuring
expenses and impairment  losses.  Included in this charge were impairment losses
on  long-lived  assets  of $11.0  million,  severance  and  other  costs of $3.6
million, and costs related to losses on contractual obligations of $1.1 million.
The Company's restructuring plan included the following initiatives:

     o   Concurrent  with the  decision  to  pursue a new  joint-venture  equity
         partner in the Asia Pacific region,  management  discontinued virtually
         all third party  operations of its  Telebusiness  unit. The decision to
         discontinue these operations resulted from the disappointing results of
         operations during 1997 combined with the recognition that the Company's
         joint-venture  partner  would not  participate  in  managing or funding
         these operations.  The resulting impairment loss of approximately $10.0
         million  represented  primarily the write-off of unamortized  goodwill.
         The Company also accrued certain other costs of $0.5 million related to
         this  initiative,  including  severance for 18 employees.  Revenues and
         operating loss of these operations were  approximately $3.5 million and
         $1.2 million, before the effects of these charges, in 1997.

     o   The  Company  relocated  its  corporate   headquarters  and  closed  or
         consolidated certain under-performing call centers. Costs incurred as a
         result of these plans consisted  principally of commitments  related to
         abandoned or excess space for leased  facilities of approximately  $1.1
         million and  impairment  losses of $1.0 million  which were recorded by
         the Company for  obsolete  technology  to record  these assets at their
         estimated fair value, less costs of disposal. The Company also incurred
         severance for 17 employees  and other costs of $0.2 million  related to
         this plan.

         The  plan  to  close   under-performing   call  centers  also  affected
         management's  assessment of the carrying value of certain  deferred tax
         assets of $1.4 million  originating  from state  incentive  tax credits
         related to  employment  incentives.  These  deferred  tax  assets  were
         expensed in 1997 because  management  believed  that it was more likely
         than not that these benefits would ultimately not be utilized.

     o   The  Company  reorganized  its  corporate  management  in  Europe.  The
         substantial majority of costs related to this plan were severance costs
         of $2.8 million for the  involuntary  termination of 31 employees.  The
         Company also incurred other costs of $0.1 million related to this plan.

     The amount of actual  severance  and other  costs  paid and  actual  losses
charged against the liability for contractual  obligations  during 1997 and 1998
was approximately $3.6 million and $0.7 million, respectively.

     In 1998,  the  Company  recorded a $6.6  million  charge for  restructuring
expenses primarily related to its European  operations.  Included in that charge
was $6.4 million  related to statutory or contractual  severance and other costs
for  approximately 250 employees.  The restructuring  expenses also include $0.2
million for the cost of excess  leased  facilities.  The amount of severance and
other costs paid during 1998 was approximately $2.5 million.

                                      F-21
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

15.  Shareholder Rights Plan:

     In August 1998,  the  Company's  Board of Directors  adopted a  Shareholder
Rights Plan (the  "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 only after the tenth
day  following  public  disclosure  that a  person  or group  of  affiliated  or
associated  persons has acquired 20% or more of the outstanding shares of common
stock  (thereby  becoming  an  "Acquiring  Person").  The  rights  will  also be
exercisable  on  such  date as the  Board  of  Directors  determines  after  the
commencement  or announcement of a tender or exchange offer by a person or group
for 20% or more of the outstanding shares of common stock.

     If any person or group of affiliated or associated  persons acquires 20% or
more of the  outstanding  shares of common  stock and the  Company's  redemption
right has expired,  each holder of a right  (except  those held by the Acquiring
Person) will have the right to purchase shares of the Company's common stock (or
in certain circumstances, shares of preferred stock or similar securities of the
Company)  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, the
Company is acquired in a merger or other business  combination or 50% or more of
its assets or earnings  power are sold, and the Company's  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. The rights, which have a $30 exercise price, are redeemable
by the  Company  at a price of  $.001  per  right  at any  time  until up to and
including  the 10th day after  the time  that a person  or group  has  become an
Acquiring Person.

16.  Supplemental Guarantor Financial Information:

     The Notes are guaranteed,  on a full,  unconditional  and joint and several
basis,  by all  wholly-owned  domestic  subsidiaries  of the  Company.  Separate
financial  statements of the guarantor  subsidiaries  are not presented  because
management has determined that they would not be material to investors. However,
the following condensed consolidating information presents:

(1)  Condensed  consolidating  financial  statements as of December 31, 1997 and
     1998, and for the years ended December 31, 1996, 1997 and 1998 of (a) SITEL
     Corporation,   the  parent,  (b)  the  guarantor   subsidiaries,   (c)  the
     nonguarantor  subsidiaries  and (d)  SITEL  Corporation  on a  consolidated
     basis,

(2)  SITEL  Corporation,  the parent,  with the investments in all  subsidiaries
     accounted for on the equity method, and the guarantor subsidiaries with the
     nonguarantor  subsidiaries  accounted  for on the equity method (one of the
     guarantor subsidiaries is the parent of the nonguarantor subsidiaries), and

(3)  Elimination entries necessary to consolidate SITEL Corporation, the parent,
     with all subsidiaries.

                                      F-22
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      Condensed Consolidating Balance Sheet
                                December 31, 1997
                                 (in thousands)

16.  Supplemental Guarantor Financial Information (Continued):
<TABLE>
<CAPTION>
                                                Guarantor    Nonguarantor
                                      Parent   Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                      ------   ------------  ------------   ------------  ------------
ASSETS
Current assets:
<S>                                <C>         <C>           <C>           <C>             <C>      
  Cash and cash equivalents ....   $  11,514   $   2,075     $  10,696     $      --       $  24,285
  Trade accounts receivable, net      21,832      22,167        65,313        (1,615)        107,697
  Marketable securities ........         159          --            --            --             159
  Prepaid expenses and other
     current assets ............       6,523         264         9,830            --          16,617
                                   ---------   ---------     ---------     ---------       ---------
  Total current assets .........      40,028      24,506        85,839        (1,615)        148,758
Property and equipment, net ....      37,585      24,251        58,764            --         120,600
Deferred income taxes ..........      11,070          --            44            --          11,114
Goodwill, net ..................       1,627      21,926        70,828            --          94,381
Other assets ...................       7,532         121         3,374            --          11,027
Investments in subsidiaries ....     180,112      94,999            --      (275,111)             --
Notes receivable, intercompany..          --      22,203            --       (22,203)             --
                                   ---------   ---------     ---------     ---------       ---------
     Total assets ..............   $ 277,954   $ 188,006     $ 218,849     $(298,929)      $ 385,880
                                   =========   =========     =========     =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Notes payable ................   $      --   $      --     $  14,376     $      --       $  14,376
  Current portion of long-term
     debt ......................       2,026          --         8,767            --          10,793
  Current portion of
     capitalized lease
     obligations ...............         308          98         4,528            --           4,934
  Trade accounts payable .......       2,841       1,202        24,894        (1,615)         27,322
  Accrued expenses and other
     current liabilities........      11,168       6,210        34,410            --          51,788
                                   ---------   ---------     ---------     ---------       ---------
     Total current liabilities..      16,343       7,510        86,975        (1,615)        109,213
Long-term debt, excluding
     current portion ...........     101,488          --         1,017            --         102,505
Capitalized lease obligations,
     excluding current
     portion ...................         328         140        12,515            --          12,983
Notes payable, intercompany
     and other .................          --         244        21,959       (22,203)             --
Deferred compensation ..........       1,407          --            --            --           1,407
Minority interest ..............          --          --         1,384            --           1,384
Stockholders' equity ...........     158,388     180,112        94,999      (275,111)        158,388
                                   ---------   ---------     ---------     ---------       ---------
Total liabilities and
     stockholders' equity ......  $  277,954   $ 188,006     $ 218,849     $(298,929)      $ 385,880
                                  ==========   =========     =========     =========       =========
</TABLE>
                                      F-23
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                      Condensed Consolidating Balance Sheet
                                December 31, 1998
                                 (in thousands)

16.  Supplemental Guarantor Financial Information (Continued):
<TABLE>
<CAPTION>
                                                Guarantor    Nonguarantor
                                      Parent   Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                      ------   ------------  ------------   ------------  ------------
<S>                                <C>         <C>           <C>           <C>             <C>      
ASSETS
Current assets:
  Cash and cash equivalents ..     $   2,410   $   1,190     $  10,872     $      --       $  14,472
  Trade accounts receivable, net      33,676      33,179        75,540       (12,586)        129,809
  Prepaid expenses and other
     current assets ..........         2,956         241         9,742            --          12,939
                                   ---------   ---------     ---------     ---------       ---------
     Total current assets ....        39,042      34,610        96,154       (12,586)        157,220
Property and equipment, net ..        31,302      22,523        71,790            --         125,615
Deferred income taxes ........         9,390          --         6,035            --          15,425
Goodwill, net ................         1,537      21,021        70,730            --          93,288
Other assets .................        10,805         126         3,131            --          14,062
Investments in subsidiaries...       188,690      88,293            --      (276,983)             --
Notes receivable, intercompany            --      28,833            --       (28,833)             --
                                   ---------   ---------     ---------     ---------       ---------
     Total assets ............     $ 280,766   $ 195,406     $ 247,840     $(318,402)      $ 405,610
                                   =========   =========     =========     =========       =========

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
  Notes payable ................   $      --   $      --     $  30,545     $      --       $  30,545
  Current portion of long-term
     debt ......................       2,136          --         1,535            --           3,671
  Current portion of
     capitalized lease
     obligations ...............         328          81         3,241            --           3,650
  Trade accounts payable .......       1,338       1,655        40,377       (12,586)         30,784
  Accrued expenses and other
     current liabilities .......       9,963       4,922        32,025            --          46,910
                                   ---------   ---------     ---------     ---------       ---------
     Total current liabilities..      13,765       6,658       107,723       (12,586)        115,560
Long-term debt, excluding
     current portion............     103,556          --         3,471            --         107,027
Capitalized lease obligations,
     excluding current portion..          --          58         9,152            --           9,210
Notes payable, intercompany
     and other .................          --          --        28,833       (28,833)             --
Deferred compensation ..........       1,591          --            --            --           1,591

Minority interest ..............          --          --        10,368            --          10,368

Stockholders' equity ...........     161,854     188,690        88,293      (276,983)        161,854
                                   ---------   ---------     ---------     ---------       ---------
Total liabilities and
     stockholders' equity.......   $ 280,766   $ 195,406     $ 247,840     $(318,402)      $ 405,610
                                   =========   =========     =========     =========       =========
</TABLE>
                                      F-24
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.  Supplemental Guarantor Financial Information (Continued):

               Condensed Consolidating Statement of Income (Loss)
                      For the year ended December 31, 1996
                                 (in thousands)
<TABLE>
<CAPTION>
                                                Guarantor    Nonguarantor
                                      Parent   Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                      ------   ------------  ------------   ------------  ------------
<S>                                <C>         <C>           <C>           <C>             <C>      
Revenues ....................      $ 122,582   $  56,752     $ 133,416     $      --       $ 312,750
                                   ---------   ---------     ---------     ---------       ---------
Operating expenses:
  Cost of services ..........         63,839      30,595        69,283            --         163,717
  Selling, general and
     administrative
     expenses ...............         52,913      20,117        47,665            --         120,695
                                   ---------   ---------     ---------     ---------       ---------
     Total operating
        expenses ............        116,752      50,712       116,948            --         284,412
                                   ---------   ---------     ---------     ---------       ---------
Operating income ............          5,830       6,040        16,468            --          28,338
                                   ---------   ---------     ---------     ---------       ---------
Other income (expense):
  Equity in earnings of
     subsidiaries, net of tax         11,465       7,594            --       (19,059)             --
  Transaction related expense         (5,700)       (666)         (622)           --          (6,988)
  Intercompany charges ......            378       1,515        (1,893)           --              --
  Interest income ...........          1,076          --            32            --           1,108
  Interest expense ..........            169        (117)       (1,387)           --          (1,335)
  Other income (expense) ....            128          --           (96)           --              32
                                   ---------   ---------     ---------     ---------       ---------
     Total other income
        (expense) ...........          7,516       8,326        (3,966)      (19,059)         (7,183)
                                   ---------   ---------     ---------     ---------       ---------
Income before income taxes
     and minority interest ..         13,346      14,366        12,502       (19,059)         21,155

Income tax expense ..........          2,489       2,901         4,831            --          10,221

Minority interest ...........             --          --            77            --              77
                                   ---------   ---------     ---------     ---------       ---------
     Net income .............      $  10,857   $  11,465     $   7,594     $ (19,059)      $  10,857
                                   =========   =========     =========     =========       =========
</TABLE>
                                      F-25
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.  Supplemental Guarantor Financial Information (Continued):

               Condensed Consolidating Statement of Income (Loss)
                      For the year ended December 31, 1997
                                 (in thousands)
<TABLE>
<CAPTION>
                                                Guarantor    Nonguarantor
                                      Parent   Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                      ------   ------------  ------------   ------------  ------------
<S>                                <C>         <C>           <C>           <C>             <C>      
Revenues .....................     $ 117,118   $ 133,042     $ 241,314     $      --       $ 491,474
                                   ---------   ---------     ---------     ---------       ---------
Operating expenses:
  Cost of services ...........        60,391      71,703       138,848            --         270,942
  Selling, general and
    administrative expenses ..        52,950      47,634        85,005            --         185,589
  Restructuring expenses .....         2,148          --        13,533            --          15,681
                                   ---------   ---------     ---------     ---------       ---------
     Total operating expenses.       115,489     119,337       237,386            --         472,212
                                   ---------   ---------     ---------     ---------       ---------
     Operating income ........         1,629      13,705         3,928            --          19,262
                                   ---------   ---------     ---------     ---------       ---------
Other income (expense):
  Equity in earnings (losses)
     of subsidiaries, net
     of tax ..................         4,390      (4,958)           --           568              --
  Intercompany charges .......           673       1,877        (2,550)           --              --
  Interest income ............           213          --           348            --             561
  Interest expense ...........        (2,632)       (889)       (2,136)           --          (5,657)
  Other income (expense) .....           178         (55)            3            --             126
                                   ---------   ---------     ---------     ---------       ---------
     Total other income
        (expense) ............         2,822      (4,025)       (4,335)          568          (4,970)
                                   ---------   ---------     ---------     ---------       ---------
Income (loss) before income
     taxes and minority 
     interest ................         4,451       9,680          (407)          568          14,292

Income tax expense ...........         1,639       5,290         4,377            --          11,306

Minority interest ............            --          --           174            --             174
                                   ---------   ---------     ---------     ---------       ---------
Net income (loss) ............     $   2,812   $   4,390     $  (4,958)    $     568       $   2,812
                                   =========   =========     =========     =========       =========
</TABLE>

                                      F-26
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

16.  Supplemental Guarantor Financial Information (Continued):

               Condensed Consolidating Statement of Income (Loss)
                      For the year ended December 31, 1998
                                 (in thousands)
<TABLE>
<CAPTION>
                                                Guarantor    Nonguarantor
                                      Parent   Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                      ------   ------------  ------------   ------------  ------------
<S>                                <C>         <C>           <C>           <C>             <C>      
Revenues .......................   $ 133,640   $ 180,860     $ 271,818     $      --       $ 586,318
                                   ---------   ---------     ---------     ---------       ---------
Operating expenses:
  Cost of services .............      72,446      99,121       160,019            --         331,586
  Selling, general and
     administrative
     expenses ..................      65,881      62,246       107,773            --         235,900
  Restructuring expenses .......          --          --         6,607            --           6,607
                                   ---------   ---------     ---------     ---------       ---------
     Total operating expenses ..     138,327     161,367       274,399            --         574,093
                                   ---------   ---------     ---------     ---------       ---------

     Operating income (loss) ...      (4,687)     19,493        (2,581)           --          12,225
                                   ---------   ---------     ---------     ---------       ---------
Other income (expense):
  Equity in earnings (losses)
     of subsidiaries, net
     of tax ....................       6,297      (7,740)           --         1,443              --
  Intercompany charges .........       1,387       2,812        (4,199)           --              --
  Interest income ..............         455          --           470            --             925
  Interest expense .............      (9,004)       (807)       (3,861)           --         (13,672)
  Other income (expense) .......         310          (1)          (46)           --             263
                                   ---------   ---------     ---------     ---------       ---------
     Total other income
       expense .................        (555)     (5,736)       (7,636)        1,443         (12,484)
                                   ---------   ---------     ---------     ---------       ---------
Income (loss) before income
     taxes and minority
     interest ..................      (5,242)     13,757       (10,217)        1,443            (259)

Income tax expense .............      (4,668)      7,460        (1,826)           --             966

Minority interest ..............          --          --          (651)           --            (651)
                                   ---------   ---------     ---------     ---------       ---------
     Net income (loss)
       from continuing
       operations ..............        (574)      6,297        (7,740)        1,443            (574)

     Extraordinary loss
       on refinancing of debt,
       net of taxes ............        (514)         --            --            --            (514)
                                   ---------   ---------     ---------     ---------       ---------
     Net income (loss) .........   $  (1,088)  $   6,297     $  (7,740)    $   1,443       $  (1,088)
                                   =========   =========     =========     =========       =========
</TABLE>

                                      F-27
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 Condensed Consolidating Statement of Cash Flows
                      For the year ended December 31, 1996
                                 (in thousands)

16.  Supplemental Guarantor Financial Information (Continued):
<TABLE>
<CAPTION>
                                                Guarantor    Nonguarantor
                                      Parent   Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                      ------   ------------  ------------   ------------  ------------
<S>                                <C>         <C>           <C>           <C>             <C>      
Net cash provided by operating
     activities .................  $ 13,942    $  3,525      $ 18,376      $     --        $ 35,843
                                   --------    --------      --------      --------        --------
Cash flows from investing
     activities:
  Investments in subsidiaries ...   (37,823)    (11,131)           --        48,954              --
  Acquisitions, net of cash
     acquired ...................        --      (4,216)      (23,720)           --         (27,936)
  Purchases of property and
     equipment ..................   (21,362)     (3,539)      (15,053)           --         (39,954)
  Proceeds from sales of
     property and equipment .....        --          --           199            --             199
  Investment in marketable
     securities .................   (63,793)         --            --            --         (63,793)
  Sale of marketable
     securities .................    76,840          --            --            --          76,840
Changes in other assets, net ....      (274)         --          (106)           --            (380)
                                   --------    --------      --------      --------        --------
Net cash used in investing
     activities .................   (46,412)    (18,886)      (38,680)       48,954         (55,024)
                                   --------    --------      --------      --------        --------
Cash flows from financing
     activities:
  Borrowings on notes payable ...    15,835          --         1,334            --          17,169
  Repayments of notes payable ...   (15,835)       (191)           --            --         (16,026)
  Borrowings on long-term
     debt .......................       500          --            --            --             500
  Repayment of long-term debt
     and capital lease
     obligations ................      (515)       (631)       (1,161)           --          (2,307)
  Net borrowings and payments
     on note to parent ..........        --     (20,415)       20,415            --              --
  Net capital contribution
     from parent ................        --      37,823        11,131       (48,954)             --
  Repayment of redeemable
     preference shares ..........        --          --        (2,075)           --          (2,075)
  Common stock issued, net of
     expenses ...................    42,339          --            --            --          42,339
                                   --------    --------      --------      --------        --------
Net cash provided by financing
     activities .................    42,324      16,586        29,644       (48,954)         39,600
                                   --------    --------      --------      --------        --------
Effect of exchange rates on
     cash .......................        --          --           760            --             760
                                   --------    --------      --------      --------        --------
Net increase in cash ............     9,854       1,225        10,100            --          21,179
Cash and cash equivalents,
     beginning of year ..........     3,448         634           449            --           4,531
                                   --------    --------      --------      --------        --------
Cash and equivalents, end of
     year .......................  $ 13,302       1,859      $ 10,549      $     --        $ 25,710
                                   ========    ========      ========      ========        ========
</TABLE>
                                      F-28
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 Condensed Consolidating Statement of Cash Flows
                      For the year ended December 31, 1997
                                 (in thousands)

16.      Supplemental Guarantor Financial Information (Continued):
<TABLE>
<CAPTION>
                                                     Guarantor    Nonguarantor
                                           Parent   Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                           ------   ------------  ------------   ------------  ------------
<S>                                     <C>          <C>          <C>          <C>          <C>      
Net cash provided by operating
     activities .....................   $   7,157    $   8,466    $   3,391    $      --    $  19,014
                                        ---------    ---------    ---------    ---------    ---------
Cash flows from investing
activities:
  Investments in
      subsidiaries ..................     (61,787)     (42,917)          --      104,704           --
  Purchases of property and
      equipment .....................     (29,569)     (14,463)     (25,405)          --      (69,437)
  Proceeds from sales of
      property and equipment ........       2,196           --          515           --        2,711
  Acquisitions, net of cash
      acquired ......................     (19,722)     (12,207)     (15,094)          --      (47,023)
  Settlement of purchase price
      payable .......................          --           --      (13,934)          --      (13,934)
  Sale of marketable
      securities ....................         558           --           --           --          558
  Changes in other assets,
      net ...........................      (1,925)          --       (2,303)          --       (4,228)
                                        ---------    ---------    ---------    ---------    ---------
Net cash used in investing
     activities .....................    (110,249)     (69,587)     (56,221)     104,704     (131,353)
                                        ---------    ---------    ---------    ---------    ---------
Cash flows from financing activities:
  Borrowings on notes payable .......      68,291           --       15,016           --       83,307
  Repayments of notes payable .......     (68,291)          --         (149)          --      (68,440)
  Borrowings on long-term
     debt ...........................     360,124           --          274           --      360,398
  Repayment of long-term ............    (259,948)          --         (551)          --     (260,499)
     debt
  Net capital contribution
     from parent ....................          --       61,787       42,917     (104,704)          --
  Common stock issued, net of
     expenses .......................         228           --           --           --          228
  Payments on capital lease
     obligations ....................          --         (450)      (1,761)          --       (2,211)
  Other ...............................       900           --           --           --          900
                                        ---------    ---------    ---------    ---------    ---------
Net cash provided by financing
     activities .....................     101,304       61,337       55,746     (104,704)     113,683
                                        ---------    ---------    ---------    ---------    ---------
Effect of exchange rates on
     cash ...........................          --           --       (2,769)          --       (2,769)
                                        ---------    ---------    ---------    ---------    ---------
Net increase (decrease) in ..........      (1,788)         216          147           --       (1,425)
     cash ...........................
Cash and cash equivalents,
     beginning of year ..............      13,302        1,859       10,549           --       25,710
                                        ---------    ---------    ---------    ---------    ---------
Cash and equivalents, end of
     year ...........................   $  11,514    $   2,075    $  10,696    $      --    $  24,285
                                        =========    =========    =========    =========    =========
</TABLE>
                                      F-29
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                 Condensed Consolidating Statement of Cash Flows
                      For the year ended December 31, 1998
                                 (in thousands)

16.      Supplemental Guarantor Financial Information (Continued):
<TABLE>
<CAPTION>
                                                    Guarantor    Nonguarantor
                                          Parent   Subsidiaries  Subsidiaries   Eliminations  Consolidated
                                          ------   ------------  ------------   ------------  ------------
<S>                                     <C>          <C>          <C>          <C>          <C>      
Net cash provided by (used in)
     operating activities ...........   $ (14,118)   $  23,289    $   8,572    $      --    $  17,743
                                        ---------    ---------    ---------    ---------    ---------
Cash flows from investing
activities:
  Investments in subsidiaries .......      13,372       (6,526)          --       (6,846)          --
  Dividend on common stock ..........          --       10,000           --      (10,000)          --
  Purchases of property and
      equipment .....................     (15,925)      (6,979)     (29,129)          --      (52,033)
  Proceeds from sales of
      property and equipment ........          --           --        1,513           --        1,513
  Proceeds from sale-
      leasebacks of facilities ......       9,397           --           --           --        9,397
  Acquisitions, net of cash
      acquired ......................          --           --       (2,193)          --       (2,193)
  Sale of marketable
      securities ....................         257           --           --           --          257
                                        ---------    ---------    ---------    ---------    ---------
Net cash provided by (used in)
     investing activities ...........       7,101       (3,505)     (29,809)     (16,846)     (43,059)
                                        ---------    ---------    ---------    ---------    ---------
Cash flows from financing activities:
  Borrowings on notes payable .......          --           --       20,294           --       20,294
  Repayments of notes payable .......          --           --       (4,398)          --       (4,398)
  Borrowings on long-term 
     debt ...........................     147,767           --        2,150           --      149,917
  Repayment of long-term
     debt and capital lease
     obligations ....................    (146,620)          --       (7,840)          --     (154,460)
  Payment of long-term debt
     issuance costs .................      (3,228)          --           --           --       (3,228)
  Net capital contribution
     from parent ....................          --      (13,372)       6,526        6,846           --
  Net borrowings and payments
     on note to parent ..............          --       (7,297)       7,297           --           --
  Dividend on common stock ..........          --           --      (10,000)      10,000           --
  Capital contribution from
     subsidiary shareholder .........          --           --        1,400           --        1,400
  Sale of stock of 
     subsidiaries ...................          --           --        6,541           --        6,541
  Common stock issued, net of
     expenses .......................           3           --           --           --            3
  Other .............................          (9)          --           --           --           (9)
                                        ---------    ---------    ---------    ---------    ---------
Net cash provided by (used in)
     financing activities ...........      (2,087)     (20,669)      21,970       16,846       16,060
                                        ---------    ---------    ---------    ---------    ---------
Effect of exchange rates on cash ....          --           --         (557)          --         (557)
                                        ---------    ---------    ---------    ---------    ---------
Net increase (decrease) in cash .....      (9,104)        (885)         176           --       (9,813)

Cash and cash equivalents,
     beginning of year ..............      11,514        2,075       10,696           --       24,285
                                        ---------    ---------    ---------    ---------    ---------
Cash and equivalents, end of
     year ...........................   $   2,410    $   1,190    $  10,872    $      --    $  14,472
                                        =========    =========    =========    =========    =========
</TABLE>
                                      F-30
<PAGE>
                       INDEPENDENT AUDITORS' REPORT ON THE
                          FINANCIAL STATEMENT SCHEDULE

The Board of Directors
SITEL Corporation:

Under date of February 5, 1999, we reported on the  consolidated  balance sheets
of SITEL  Corporation and subsidiaries as of December 31, 1997 and 1998, 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, 1998.
These consolidated  financial statements and our report thereon are incorporated
by reference in the annual  report on Form 10-K for the year ended  December 31,
1998. In connection with our audits of the aforementioned  financial statements,
we also audited the related financial  statement schedule 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, present fairly,
in all material respects, the information set forth therein.

                                                 /s/KPMG Peat Marwick LLP

Omaha, Nebraska
February 5, 1999
                                       S-1
<PAGE>
                       SITEL CORPORATION AND SUBSIDIARIES

                                   SCHEDULE II
                        VALUATION AND QUALIFYING ACCOUNTS
                             (dollars in thousands)
<TABLE>
<CAPTION>
                                                                  ACCOUNTS
            DESCRIPTION               BEGINNING    BAD DEBT      CHARGED TO     ENDING
                                       BALANCE      EXPENSE      ALLOWANCE      BALANCE
<S>                                    <C>           <C>           <C>          <C>
Allowance for doubtful accounts
for trade receivables
Year ended December 31, 1996             $937        2,845           594        $3,188

Allowance for doubtful accounts
for trade receivables
Year ended December 31, 1997           $3,188        2,410           499        $5,099

Allowance for doubtful accounts
for trade receivables
Year ended December 31, 1998           $5,099        1,087         2,216        $3,970
</TABLE>
                 See accompanying independent auditors' report.

                                      S-2