PART I — FINANCIAL INFORMATION

SITEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS

(UNAUDITED)

(in thousands, except per share data)

	Three Months Ended
	March 31,
	2005			2004

Revenue	$	251,169		$	244,068

Operating expenses:
Direct labor and telecommunications expenses	152,476			144,128
Subcontracted and other services expenses	12,888			12,815
Operating, selling and administrative expenses	80,003			76,839
Total operating expenses	245,367			233,782

Operating income	5,802			10,286

Other income (expense):
Interest expense	(2,857		)	(3,233		)
Interest income	120			121
Equity in earnings (loss) of affiliates	(107		)	(7		)
Other expense, net	(10		)	(274		)
Total other expense, net	(2,854		)	(3,393		)

Income before income taxes and minority interest	2,948			6,893

Income tax expense	1,139			1,853
Minority interest	360			214
Net income	$	1,449		$	4,826

Weighted average common shares outstanding:
Basic	73,736			73,633
Diluted	74,340			73,980

Earnings per share:
Basic	$	0.02		$	0.07
Diluted	$	0.02		$	0.07

See Notes to Consolidated Condensed Financial Statements

SITEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

(in thousands, except share data)

	March 31,			December 31,
	2005			2004
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	34,980		$	28,906
Trade accounts receivable (net of allowance for doubtful accounts of $2,066 and $2,391, respectively)	193,975			191,391
Prepaid expenses and other assets	16,154			15,859
Deferred income taxes	2,033			1,313
Total current assets	247,142			237,469

Property and equipment, net	81,959			86,057

Other assets:
Goodwill	47,592			48,276
Investment in affiliates	16,194			16,466
Other assets	5,566			8,420
Deferred income taxes	777			843
Total assets	$	399,230		$	397,531

Liabilities and Stockholders’ Equity
Current liabilities:
Senior Subordinated Notes	$	90,000		$	—
Revolving credit facility and other current debt	37,338			18,802
Current portion of capital lease obligations	3,302			3,202
Trade accounts payable	15,895			32,595
Accrued wages, salaries and bonuses	54,033			43,641
Accrued operating expenses	38,793			46,533
Deferred revenue and other	7,249			8,816
Income taxes payable	102			1,107
Total current liabilities	246,712			154,696
Long-term debt and other liabilities:
Long-term debt, excluding current portion	—			90,000
Capital lease obligations, excluding current portion	7,775			8,393
Other liabilities	10,907			8,949
Deferred income taxes	204			205
Total liabilities	265,598			262,243

Minority interests	2,989			2,629
Stockholders’ equity:
Common stock, voting, $.001 par value 200,000,000 shares authorized, 74,437,829 and 74,433,629 shares issued and outstanding, respectively	74			74
Additional paid-in capital	168,871			168,871
Accumulated other comprehensive income	4,845			8,342
Accumulated deficit	(42,162		)	(43,611		)
Less treasury stock, at cost, 694,339 and 707,927 common shares, respectively	(985		)	(1,017		)
Total stockholders’ equity	130,643			132,659
Total liabilities and stockholders’ equity	$	399,230		$	397,531

See Notes to Consolidated Condensed Financial Statements.

SITEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS

(UNAUDITED)

(in thousands)

	Three Months Ended
	March 31,
	2005			2004

Cash flows from operating activities:
Net income	$	1,449		$	4,826
Adjustments to reconcile net income to net cash flows from operating activities:
Depreciation and amortization	8,857			9,185
(Gain)/Loss on disposal of assets	88			—
Provision for deferred income taxes	(799		)	(18		)
Equity in (earnings) loss of affiliates	107			7
Minority interest in net income of consolidated subsidiaries	360			214
Changes in operating assets and liabilities:
Trade accounts receivable	(6,921		)	(8,772		)
Other assets	(679		)	(716		)
Trade accounts payable	(7,779		)	(4,137		)
Other liabilities	(2,993		)	5,703
Net cash flows from operating activities	(8,310		)	6,292

Cash flows from investing activities:
Purchases of property and equipment	(6,598		)	(5,458		)
Proceeds from cash surrender value of life insurance	3,274			—
Net cash flows from investing activities	(3,324		)	(5,458		)

Cash flows from financing activities:
Borrowings on debt	49,652			4,092
Repayments of debt	(30,566		)	(5,488		)
Repayments of capital lease obligations	(852		)	(718		)
Treasury stock reissuances	33			63
Net cash flows from financing activities	18,267			(2,051		)
Effect of exchange rates on cash	(559		)	433
Net increase (decrease) in cash	6,074			(784		)
Cash and cash equivalents, beginning of period	28,906			29,850
Cash and cash equivalents, end of period	$	34,980		$	29,066

Non-cash investing and financing activities:
Capital leases incurred	$	796		$	—

See Notes to Consolidated Condensed Financial Statements

SITEL CORPORATION AND SUBSIDIARIES

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

Note 1. Basis of Consolidation and Presentation

General

References in the Notes to Consolidated Condensed Financial Statements to “the Company”, “we” and “our” are to SITEL Corporation and its subsidiaries, collectively.

We are a leading global provider of outsourced customer support services. We specialize in the design, implementation, and operation of multi-channel contact centers. We support the customer management strategies of large and medium size corporations in North America, Europe, Asia Pacific, and Latin America. We provide customer acquisition, customer care, technical support and risk management services on an outsourced basis, as well as operational and information technology professional services for both outsourced and internal contact centers. We serve clients primarily in the automotive, consumer, financial services, insurance, technology, telecommunications and ISP, media services, and utilities sectors.

The accompanying unaudited consolidated condensed financial statements reflect all normal and recurring adjustments that are, in the opinion of management, necessary for a fair presentation of the results of operations, financial position, and cash flows for the interim periods presented. The consolidated condensed financial statements should be read in conjunction with the consolidated financial statements and notes thereto, together with management’s discussion and analysis of financial condition and results of operations, contained in our Annual Report on Form 10-K for the year ended December 31, 2004. All significant intercompany balances and transactions have been eliminated. Certain amounts in prior fiscal periods have been reclassified for comparative purposes.

Use of Accounting Estimates

Management makes estimates and assumptions when preparing financial statements under accounting principles generally accepted in the United States of America that affect our reported amounts of assets and liabilities at the dates of the financial statements, our disclosure of contingent assets and liabilities at the dates of the financial statements, and our reported amounts of revenue and expenses during the reporting periods. These estimates involve judgments with respect to, among other things, future economic factors that are difficult to predict and are beyond management’s control. As a result, actual amounts could differ from these estimates.

Recently Issued Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (R), Share-Based Payment, (SFAS 123R). This standard will require the cost of employee compensation paid with equity instruments to be measured based on grant-date fair values with the cost recorded as compensation expense over the period during which the employee is required to perform service in exchange for the award (generally over the vesting period of the award). The proforma disclosures previously permitted under SFAS 123 no longer will be an alternative to financial statement recognition. See “Stock-Based Compensation” below for the pro forma net income and net income per share amounts, for the three months ended March 31, 2005 and 2004, as if we had used a fair-value-based method similar to the methods required under SFAS 123R to measure compensation expense for employee stock incentive awards. In March 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which expressed the views of the SEC regarding the interaction between SFAS 123R and certain SEC rules and regulations. SAB No. 107 provides guidance related to the valuation of share-based payment arrangements for public companies, including assumptions such as expected volatility and expected term. In April 2005, the SEC approved a rule that delayed the effective date of SFAS 123R for public companies. As a result, SFAS 123R will be effective for the Company in the first quarter of 2006 and will apply to all of our outstanding unvested share-based payment awards as of January 1, 2006 and all prospective awards. Although we have not yet determined whether the adoption of SFAS 123R will result in amounts that are similar to the current pro forma disclosures under SFAS 123, we are evaluating the requirements under SFAS 123R and expect the adoption to have a significant impact on our consolidated statements of operations and net income per share.

In October 2004, The American Jobs Creation Act of 2004 (AJCA) was signed into law. The Act creates a temporary incentive for U.S. multinationals to repatriate accumulated income earned outside the U.S. In December 2004, the FASB issued FSP 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. FSP 109-2 provides additional time to companies beyond the financial reporting period of enactment to evaluate the effects of the AJCA on their plans for repatriation of foreign earnings for purposes of applying SFAS 109, Accounting for Income Taxes. The Company is currently evaluating the repatriation provisions of AJCA, which if implemented would affect our tax provision and deferred tax assets and liabilities. Due to the complexity and uncertainty of applying the provisions of the Act, the income tax effects of such repatriation cannot be reasonably estimated at this time.

In January 2003, the FASB released Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, (FIN 46), which required that all primary beneficiaries of Variable Interest Entities (VIE) consolidate that entity. FIN 46 was effective immediately for VIE’s created after January 31, 2003 and to VIE’s in which an enterprise obtained an interest after that date. It applied in the first fiscal year or interim period beginning after June 15, 2003 to VIE’s in which an enterprise held a variable interest it acquired before February 1, 2003. In December 2003, the FASB published a revision to FIN 46 (FIN 46R) to clarify some of the provisions of the interpretation and to defer the effective date of implementation for certain entities. The remaining provisions of FIN 46R were effective January 1, 2004. The adoption of FIN 46R had no impact on our consolidated financial statements.

Stock-Based Compensation

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

The following table illustrates the effect on our net income if the fair-value-based method had been applied to all outstanding and unvested awards in each period (in thousands):

Three Months Ended March 31,	2005			2004

Net income:
As reported	$	1,449		$	4,826
Less: total stock based employee compensation expense determined under the fair value method for all awards, net of tax	(127		)	(259		)
Pro forma	$	1,322		$	4,567

Income per common share:
As reported:
Basic	$	0.02		$	0.07
Diluted	0.02			0.07
Pro forma:
Basic	0.02			0.06
Diluted	0.02			0.06

The fair value of options granted during the three months ended March 31, 2004, was estimated at the date of the grant using the Black-Scholes option-pricing model, and the following weighted-average assumptions:

	2004

- Volatility factor	53.0	%
- Risk-free interest rate	3.4	%
- Expected life (in years)	5
- Expected dividend yield	0.0	%

There were no options granted during the three months ended March 31, 2005.

Significant Clients

Our top 20 clients accounted for 68.9% and 68.3% of our revenue in the three-month periods ended March 31, 2005 and 2004, respectively, and include multiple independently managed business units within the client’s affiliated group. Hewlett-Packard Company business units

were responsible for 12.4% and 11.6% of our revenue for the three-month period ended March 31, 2005 and 2004. General Motors Corporation (General Motors) business units were responsible for 12.2% and 17.3% of our total revenue in the three-month periods ended March 31, 2005 and 2004. The primary General Motors contract expires in December 2005, while a second contract terminated in June 2004.

Note 2. Comprehensive Income

Comprehensive income for the three months ended March 31, 2005 and 2004 is as follows (in thousands):

	Three Months Ended
	March 31,
	2005			2004

Net income	$	1,449		$	4,826
Other comprehensive income (loss):
Currency translation adjustment	(3,497		)	1
Comprehensive income (loss)	$	(2,048	)	$	4,827

Accumulated other comprehensive income included in our consolidated condensed balance sheets represents the accumulated foreign currency translation adjustment.

Note 3. Asset Impairment and Restructuring Expenses

The following table summarizes activity in our restructuring liabilities for the three months ended March 31, 2005:

				Facility
				Closure or
	Severance			Reduction			Total

December 31, 2004	$	4.2		$	5.9		$	10.1
Expensed	—			—			—
Paid	(1.5		)	(1.1		)	(2.6		)
Other	0.1			(0.5		)	(0.4		)
March 31, 2005	$	2.8		$	4.3		$	7.1

Other changes in the accrued restructuring expenses represent the impact of foreign currency fluctuations.

We expect to pay the employee compensation restructuring liabilities during 2005. The Company expects to utilize the remaining facility closure or reduction restructuring liabilities over the respective lease periods through fiscal 2009.

Note 4. Investments in Affiliates

We have made minority interest investments for business and strategic purposes through the purchase of voting common and preferred stock of companies. We periodically evaluate whether declines in fair value, if any, of our investments are other-than-temporary. This evaluation consists of a review of qualitative and quantitative factors. We also consider other factors to determine whether declines in fair value are other-than-temporary, such as the investee’s financial condition, results of operations and operating trends. We also consider the implied value from any recent rounds of financing completed by the investee.

Subcontracted expenses for services provided by our India joint venture for the three-month periods ended March 31, 2005 and 2004 were $4.0 million and $3.4 million, respectively. The Company had payables to our India joint venture of $3.0 million at March 31, 2005 and December 31, 2004, which are included in trade accounts payable in the accompanying consolidated condensed balance sheets.

Subcontracted services provided by our Latin America joint venture for the three-month periods ended March 31, 2005 and 2004 were not material.

Note 5. Stock-Based Compensation

The 1999 Stock Incentive Plan (1999 Plan) provides for the granting of various types of incentive awards (including incentive stock options, nonqualified options, stock appreciation rights, restricted shares, and performance shares or units) for the issuance of up to an aggregate of 10,500,000 shares of common stock to our employees, consultants and non-employee directors.

Vesting terms vary with each grant, and option terms may not exceed ten years. Option prices, set by the Compensation Committee of the Board of Directors, may not be less than the fair market value at date of grant for incentive stock options or less than par value for nonqualified stock options. At March 31, 2005, there were approximately 5.8 million shares available for issuance pursuant to future grants under the 1999 Plan.

Prior to the adoption of the 1999 Plan, we granted options under several different plans. As of March 31, 2005, options granted under these plans aggregating 2.3 million remained outstanding with strike prices ranging from $2.41 to $19.50. The last of these options will expire on February 1, 2009. We will not grant additional options under these plans. The following table sets forth shares subject to options:

			Weighted-Average
	Number of		Exercise Price
	Options		per Share

Balance January 1, 2005	6,808,736		$	3.68
Granted	—		—
Exercised	(4,200	)	1.33
Canceled	(154,546	)	3.89
Balance March 31, 2005	6,649,990		$	3.58

The options exercisable at the end of each period were:

	Weighted-Average
	Number of	Exercise Price
	Options	per Share
December 31, 2004	3,716,345	$	4.28
March 31, 2005	3,882,712	$	4.04

The following table summarizes stock options outstanding at March 31, 2005:

		Weighted-Average	Weighted-Average
Range of	Number	Remaining	Exercise
Exercise Prices	Outstanding	Life	Price
$1.24 to $1.75	732,884	7.8	$	1.56
$1.76 to $4.00	4,601,187	4.9	$	3.08
$4.01 to $6.33	709,184	4.0	$	4.84
$6.34 to $7.22	425,525	4.7	$	6.70
$7.23 to $12.66	121,210	2.9	$	9.78
$12.67 to $20.00	60,000	2.0	$	17.35

The following table summarizes stock options exercisable at March 31, 2005:

		Weighted-Average
Range of	Number	Exercise
Exercise Prices	Exercisable	Price
$1.24 to $1.75	329,984	$	1.55
$1.76 to $4.00	2,271,169	$	3.02
$4.01 to $6.33	676,034	$	4.83
$6.34 to $7.22	425,525	$	6.70
$7.23 to $12.66	120,000	$	9.75
$12.67 to $20.00	60,000	$	17.35

Note 6. Contingencies

From time to time, during the normal course of business, we may make certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. These include for example: (i) indemnities to clients pertaining to claims based on our negligence or willful misconduct and (ii) indemnities involving the accuracy of representations and warranties in certain contracts.

From time to time, we are involved in litigation incidental to our business. We cannot predict the ultimate outcome of such litigation with certainty, but management believes, after consultation with counsel, except for the items discussed below for the reasons mentioned therein, that the resolution of such matters will not have a material adverse effect on our consolidated financial position or results of operations.

Bankruptcy OP Computers SPA vs. SITEL Kingston Limited (now known as Mitre Telesales Limited) was filed in April 2004 in the Court of Ivrea in Milan, Italy. The receivers assert that Mitre, as a former supplier to Olivetti, is required under Italian bankruptcy law to return €5,349,025 (approximately $6.9 million) in payments Olivetti had allegedly paid Mitre during a one-year “clawback” period, which allegedly runs from March 9, 1998 until March 9, 1999, the alleged date Olivetti filed for receivership. Mitre filed its Defence with the court in November 2004. The Defence outlined the facts and reasons why Mitre did not and should not reasonably have known of Olivetti’s insolvent state during the time that Mitre was performing services for Olivetti. The first substantive hearing held in May 2005 was adjourned to November 2005. The Company and its subsidiary Mitre Telesales Limited are currently unable to predict the outcome or reasonably estimate the possible loss, if any, or range of losses associated with this claim.

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

Note 7. Earnings Per Share

We calculate income per common share by dividing our reported net income by the weighted average number of common shares and common equivalent shares outstanding during each period. Our reported net income is used in the computation of both basic and diluted income per share.

The difference between the number of shares used to calculate basic and diluted earnings per share represents the number of shares assumed to be issued from the exercise of dilutive stock options under our stock option plans, less shares assumed to be purchased with proceeds from the

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

(in thousands)

				Guarantor			Nonguarantor
Three Months Ended March 31, 2005	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Revenue	$	85,411		$	10,330		$	160,247		$	(4,819	)	$	251,169

Operating expenses:
Direct labor and telecommunications expenses	45,025			4,650			102,801			—			152,476
Subcontracted and other services expenses	13,448			1,849			2,216			(4,625		)	12,888
Operating, selling and administrative expenses	25,119			2,782			52,296			(194		)	80,003
Total operating expenses	83,592			9,281			157,313			(4,819		)	245,367

Operating income	1,819			1,049			2,934			—			5,802

Other income (expense):
Interest expense	(2,356		)	(1		)	(500		)	—			(2,857		)
Interest income	45			—			75			—			120
Equity in earnings (loss) of affiliates	62			(702		)	(107		)	640			(107		)
Other expense, net	1,879			(258		)	(1,631		)	—			(10		)
Total other expense, net	(370		)	(961		)	(2,163		)	640			(2,854		)

Income before income taxes and minority interest	1,449			88			771			640			2,948

Income tax expense	—			26			1,113			—			1,139
Minority interest	—			—			360			—			360
Net income (loss)	$	1,449		$	62		$	(702	)	$	640		$	1,449

Currency translation adjustment	(3,497		)	(66		)	(1,986		)	2,052			(3,497		)
Comprehensive income (loss)	$	(2,048	)	$	(4	)	$	(2,688	)	$	2,692		$	(2,048	)

Condensed Consolidating Statement of Operations and Comprehensive Income (Loss)

(in thousands)

				Guarantor			Nonguarantor
Three Months Ended March 31, 2004	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Revenue	$	91,986		$	12,852		$	139,230		$	—		$	244,068

Operating expenses:
Direct labor and telecommunications expenses	50,019			6,552			87,557			—			144,128
Subcontracted and other services expenses	11,557			820			438			—			12,815
Operating, selling and administrative expenses	26,555			2,779			47,505			—			76,839
Total operating expenses	88,131			10,151			135,500			—			233,782

Operating income	3,855			2,701			3,730			—			10,286

Other income (expense):
Interest expense	(2,547		)	(1		)	(685		)	—			(3,233		)
Interest income	44			—			77			—			121
Equity in earnings (loss) of affiliates	2,172			(615		)	(7		)	(1,557		)	(7		)
Other expense, net	1,314			113			(1,701		)	—			(274		)
Total other expense, net	983			(503		)	(2,316		)	(1,557		)	(3,393		)

Income before income taxes and minority interest	4,838			2,198			1,414			(1,557		)	6,893

Income tax expense	12			26			1,815			—			1,853
Minority interest	—			—			214			—			214
Net income (loss)	$	4,826		$	2,172		$	(615	)	$	(1,557	)	$	4,826

Currency translation adjustment	—			(12		)	13			—			1
Comprehensive income (loss)	$	4,826		$	2,160		$	(602	)	$	(1,557	)	$	4,827

Condensed Consolidating Balance Sheet

(in thousands)

			Guarantor		Nonguarantor
At March 31, 2005	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	6,258	$	4,183	$	24,202	$	337		$	34,980
Trade accounts receivable, net	123,284		4,083		119,699		(53,091		)	193,975
Prepaid expenses and other current assets	4,670		132		13,385		—			18,187
Total current assets	134,212		8,398		157,286		(52,754		)	247,142

Property and equipment, net	17,405		1,655		62,899		—			81,959

Other assets:
Goodwill	19,577		14		28,001		—			47,592
Deferred income taxes	141		—		636		—			777
Investments in affiliates	—		—		16,194		—			16,194
Other assets	3,207		56		2,303		—			5,566
Investments in subsidiaries	102,654		96,703		—		(199,357		)	—
Total assets	$	277,196	$	106,826	$	267,319	$	(252,111	)	$	399,230

Liabilities and Stockholders’ Equity
Current liabilities:
Senior Subordinated Notes	$	90,000	$	—	$	—	$	—		$	90,000
Revolving credit facility and other current debt	11,314		—		26,024		—			37,338
Current portion of capital lease obligations	696		68		2,538		—			3,302
Trade accounts payable	7,330		2,052		60,280		(53,767		)	15,895
Accrued expenses and other current liabilities	28,884		2,052		69,307		(66		)	100,177
Total current liabilities	138,224		4,172		158,149		(53,833		)	246,712
Long-term debt and other liabilities:
Long-term debt	—		—		—		—			—
Capital lease obligations, excluding current portion	140		—		7,635		—			7,775
Deferred compensation	6,138		—		4,769		—			10,907
Deferred income taxes	141		—		63		—			204
Total liabilities	144,643		4,172		170,616		(53,833		)	265,598

Minority interests	—		—		2,989		—			2,989

Stockholders’ equity	132,553		102,654		93,714		(198,278		)	130,643
Total liabilities and stockholders’ equity	$	277,196	$	106,826	$	267,319	$	(252,111	)	$	399,230

Condensed Consolidating Balance Sheet

(in thousands)

			Guarantor		Nonguarantor
At December 31, 2004	Parent		Subsidiaries		Subsidiaries		Eliminations			Consolidated

Assets
Current assets:
Cash and cash equivalents	$	9,153	$	2,812	$	16,855	$	86		$	28,906
Trade accounts receivable, net	117,939		22,924		116,502		(65,974		)	191,391
Prepaid expenses and other
current assets	5,479		158		11,535		—			17,172
Total current assets	132,571		25,894		144,892		(65,888		)	237,469

Property and equipment, net	17,887		1,850		66,320		—			86,057

Other assets:
Goodwill	19,577		14		28,685		—			48,276
Deferred income taxes	141		—		702		—			843
Investments in affiliates	—		—		16,466		—			16,466
Other assets	6,054		56		2,310		—			8,420
Investments in subsidiaries	106,062		81,646		—		(187,708		)	—
Total assets	$	282,292	$	109,460	$	259,375	$	(253,596	)	$	397,531

Liabilities and Stockholders’ Equity
Current liabilities:
Revolving credit facility and other current debt	$	405	$	—	$	18,397	$	—		$	18,802
Current portion of capital lease obligations	342		100		2,760		—			3,202
Trade accounts payable	19,534		1,723		77,217		(65,879		)	32,595
Accrued expenses and other current liabilities	29,787		1,575		68,602		133			100,097
Total current liabilities	50,068		3,398		166,976		(65,746		)	154,696
Long-term debt and other liabilities:
Long-term debt	90,000		—		—		—			90,000
Capital lease obligations, excluding current portion	320		—		8,073		—			8,393
Deferred compensation	6,554		—		2,616		(221		)	8,949
Deferred income taxes	141		—		64		—			205
Total liabilities	147,083		3,398		177,729		(65,967		)	262,243

Minority interests	—		—		2,629		—			2,629

Stockholders’ equity	135,209		106,062		79,017		(187,629		)	132,659
Total liabilities and stockholders’ equity	$	282,292	$	109,460	$	259,375	$	(253,596	)	$	397,531

Condensed Consolidating Statement of Cash Flows

(in thousands)

				Guarantor			Nonguarantor
Three Months Ended March 31, 2005	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Net cash flows from operating activities	$	3,393		$	(18,534	)	$	5,810		$	1,021		$	(8,310	)

Cash flows from investing activities:
Purchases of property and equipment	(1,409		)	(14		)	(5,175		)	—			(6,598		)
Proceeds from cash surrender value of life insurance	3,274			—			—			—			3,274
Net cash flows from investing activities	1,865			(14		)	(5,175		)	—			(3,324		)

Cash flows from financing activities:
Borrowings on debt	—			—			49,652			—			49,652
Repayments of debt and capital lease obligations	(168		)	(33		)	(31,217		)	—			(31,418		)
Net borrowings and payments in intercompany balances	(8,018		)	19,952			(11,164		)	(770		)	—
Treasury stock reissuances	33			—			—			—			33
Net cash flows from financing activities	(8,153		)	19,919			7,271			(770		)	18,267
Effect of exchange rates on cash	—			—			(559		)	—			(559		)
Net increase (decrease) in cash	(2,895		)	1,371			7,347			251			6,074
Cash and cash equivalents, beginning of period	9,153			2,812			16,855			86			28,906
Cash and cash equivalents, end of period	$	6,258		$	4,183		$	24,202		$	337		$	34,980

Condensed Consolidating Statement of Cash Flows

(in thousands)

				Guarantor			Nonguarantor
Three Months Ended March 31, 2004	Parent			Subsidiaries			Subsidiaries			Eliminations			Consolidated

Net cash flows from operating activities	$	(6,091	)	$	4,195		$	8,195		$	(7	)	$	6,292

Cash flows from investing activities:
Purchases of property and equipment	(1,528		)	(116		)	(3,814		)	—			(5,458		)
Net cash flows from investing activities	(1,528		)	(116		)	(3,814		)	—			(5,458		)

Cash flows from financing activities:
Borrowings on debt	—			—			4,092			—			4,092
Repayments of debt and capital lease obligations	(1,788		)	—			(4,418		)	—			(6,206		)
Net borrowings and payments in intercompany balances	5,318			(2,532		)	(2,793		)	7			—
Treasury stock reissuances	63			—			—			—			63
Net cash flows from financing activities	3,593			(2,532		)	(3,119		)	7			(2,051		)
Effect of exchange rates on cash	—			—			433			—			433
Net increase (decrease) in cash	(4,026		)	1,547			1,695			—			(784		)
Cash and cash equivalents, beginning of period	12,010			3,090			14,750			—			29,850
Cash and cash equivalents, end of period	$	7,984		$	4,637		$	16,445		$	—		$	29,066

Note 9. Senior Subordinated Notes

Our 9.25% Senior Subordinated Notes (the Notes) are due in March 2006. As the Notes are due within one year, the Company has reclassified the remaining $90.0 million of outstanding bonds to a current liability as of March 31, 2005. We are currently in the process of refinancing the Notes and our revolving credit facility.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

General

References in this report to “we”, “our”, “SITEL”, and the “Company” are to SITEL Corporation and its subsidiaries, collectively.

We are a leading global provider of outsourced customer support services. We specialize in the design, implementation, and operation of multi-channel contact center solutions. We support the customer management strategies of large and medium size corporations in North America, Europe, Asia Pacific, and Latin America. We provide customer acquisition, customer care, technical support and risk management services on an outsourced basis, as well as operational and information technology professional services for both outsourced and in-house contact centers. We serve clients primarily in the automotive, consumer, financial services, insurance, technology, telecommunications and ISP, media services, and utilities sectors.

In Management’s Discussion and Analysis, we provide information about our general business risks, critical accounting policies and estimates, results of operations, financial condition and liquidity, and certain other matters affecting our operating results for the periods covered by this report.

As you read this discussion and analysis, refer to our Consolidated Condensed Statements of Operations, which present the results of our operations for the three-month periods ended March 31, 2005 and 2004, and are summarized on the following pages. We analyze and explain the differences between periods for the components of net income in the following sections. Our analysis is important in making decisions about your investment in SITEL Corporation.

During 2004, we initiated a profit improvement plan comprised of a set of initiatives. These initiatives include a plan to rationalize underutilized facilities, eliminate losses from business units that are underperforming, right size support functions to better utilize human and physical assets, reduce and further leverage IT and telecommunication costs, and improve the operating performance of all of our facilities through enhanced efficiency. We will continue to focus on our performance-based pricing initiatives, invoice and contract management, and statement of work change controls.

General Business Risks and Critical Accounting Policies and Estimates

General Business Risks

Our business success depends on our ability to efficiently deploy our human and capital resources in the delivery of services to our clients. Consequently, the needs of our clients may significantly impact our results of operations, financial condition, and liquidity.

Our results of operations and operating cash flows may vary with periodic wins and losses of client contracts and with changes in the scope of client requirements. Our top 20 clients accounted for 68.9% and 68.3% of our revenue in the three-month periods ended March 31, 2005 and 2004, respectively, and include multiple independently managed business units within the client’s affiliated group. Hewlett-Packard Company business units were responsible for 12.4% and 11.6% of our revenue for the three-month period ended March 31, 2005 and 2004. General Motors Corporation (General Motors) business units were responsible for 12.2% and 17.3% of our total revenue in the three-month periods ended March 31, 2005 and 2004. On April 21, 2004, we announced the signing of a new contract with General Motors to continue to provide customer support services for General Motors’ North American Vehicle Sales, Service, and Marketing Group through December 31, 2005. An existing agreement under which we supported OnStar operations terminated effective June 22, 2004. The financial failure of any of these clients or the loss of any or all of their business could have an adverse impact on our operating results.

Our liquidity, including our ability to comply with restrictive debt covenants, may be adversely affected if we were to lose a significant client or as a result of significant changes in client demand if we are unable to efficiently re-deploy our human and capital resources.

In the following sections, we also discuss the importance of our critical accounting policies and the use of accounting estimates, and their potential impacts on our results of operations.

Critical Accounting Policies and Estimates

The process of preparing financial statements requires the use of estimates on the part of management. These estimates involve judgments with respect to, among other things, future economic factors that are difficult to predict and are beyond management’s control. As a result, actual results could differ from these estimates.

We have identified the following to be critical accounting policies because they are the most important to the portrayal of our results of operations and financial condition, and they require management’s most difficult, subjective, or complex judgments:

Revenue Recognition

We recognize revenue in accordance with applicable accounting standards, including Securities and Exchange Commission Staff Accounting Bulletin (SAB) No. 104, Revenue Recognition. We recognize revenue at the time services are performed based on the rate detailed in the client contract, such as hourly, monthly, per call or per employee. A portion of our revenue is often subject to performance standards, such as sales per hour, average handle time, occupancy rate and abandonment rate. Our performance against such standards may result in incentives or penalties, which are recognized as earned or incurred. In certain circumstances, we receive payment in advance of providing service. Accordingly, amounts billed but not earned under these contracts are excluded from revenue and included in deferred revenue and other in the consolidated balance sheet. Revenue for services performed under certain collection service agreements is recognized as the related consumer debts are collected and is calculated based upon a percentage of cash collected or other agreed upon contractual parameters.

Trade Accounts Receivable

We report our trade accounts receivable net of an allowance for doubtful accounts, which represents management’s estimates of the amount of our receivables that may not be collectible, net of recoveries of amounts previously written off. These estimates are based on a detailed aging analysis of accounts receivable, historical bad debts, client credit-worthiness, and changes in our client payment terms. The financial condition of our clients may deteriorate, which may require us to increase our allowance for doubtful accounts. We would record an increase in the allowance for doubtful accounts as operating, selling, and administrative expense in our consolidated statements of operations, which would reduce our results of operations.

Property and Equipment

We record property and equipment at cost, and calculate depreciation using the straight-line method over the estimated useful lives of the assets, which generally range from 2 to 25 years. We amortize leasehold improvements and assets under capital leases on a straight-line basis over the shorter of the lease term or the estimated useful life of the asset. If the actual useful lives of these assets are less than the estimated depreciable lives, we would record additional depreciation expense or losses on disposal to the extent the net book value of such asset is not recovered upon sale.

Asset Impairment

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

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

The estimated cash flows arising from future use of the asset that are used in the impairment analysis requires judgment regarding what we would expect to recover from future use of the asset. Any changes in the estimates of cash flows arising from future use of the asset or the residual value of the asset on disposal based on changes in the market conditions, changes in the use of the assets, management’s plans, and the determination of the useful life of the assets

Results of Operations

For the Three Months Ended March 31, 2005 Compared to the Same Period of 2004

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

Components of Operations

The following table summarizes our statement of operations data on a percentage-of-revenue basis.

	Three Months Ended March 31,
	2005					2004
	$			%		$			%
	(in thousands)

Revenue	$	251,169		100.0	%	$	244,068		100.0	%

Direct labor and telecommunications expenses	152,476			60.7	%	144,128			59.1	%
Subcontracted and other services expenses	12,888			5.1	%	12,815			5.3	%
Operating, selling and administrative expenses	80,003			31.9	%	76,839			31.5	%
Operating income	5,802			2.3	%	10,286			4.2	%

Interest expense	(2,857		)	-1.1	%	(3,233		)	-1.3	%
Interest income	120			0.0	%	121			0.0	%
Equity in earnings (loss) of affiliates	(107		)	0.0	%	(7		)	0.0	%
Other expense, net	(10		)	0.0	%	(274		)	-0.1	%
Income before income taxes and minority interest	2,948			1.2	%	6,893			2.8	%

Income tax expense	1,139			0.5	%	1,853			0.8	%
Minority interest	360			0.1	%	214			0.1	%

Net Income	$	1,449		0.6	%	$	4,826		2.0	%

Revenue

Revenue increased $7.1 million, or 2.9%, in the first quarter of 2005 compared to the same period of 2004. The changes in revenue by geographic region are shown in the following table:

Three months					$			%
Ended March 31,	2005		2004		Change			Change
	(in millions)

North America	$	122.9	$	129.2	$	(6.3	)	-4.9	%
Europe	107.9		98.5		9.4			9.5	%
Asia Pacific	12.3		9.7		2.6			26.8	%
Latin America	8.1		6.7		1.4			20.9	%
Totals	$	251.2	$	244.1	$	7.1		2.9	%

North American revenue decreased $6.3 million due to a $14.0 million decrease in customer acquisition, customer care and risk management business partially offset by a $7.7 million increase in technical support services.

European revenue increased $9.4 million in the first quarter of 2005 compared to the same period in 2004. Higher sales volumes from new and existing clients resulted in an increase in revenue of $4.7 million in the first quarter of 2005 compared to the same period in 2004. The weakening of the U.S. dollar versus the British pound and Euro accounted for the remaining $4.7 million of the increase.

The weakening of the US dollar versus the New Zealand and Australia dollars accounted for $0.5 million of the increase in Asia Pacific revenue. The remaining increase was the result of higher sales volumes from new and existing clients.

Latin American revenue increased $0.6 million as a result of the weakening of the US dollar versus the Brazilian Real. The remaining increase is a result of higher sales volumes from new and existing clients.

Direct Labor and Telecommunications Expenses

Direct labor and telecommunications expenses include the compensation of our customer service professionals and their first line supervisors and telephone usage expenses directly related to the production of revenue.

Direct labor and telecommunications expenses as a percentage of revenue can vary based on the nature of the contract, the nature of the work, and the market in which the services are provided. Accordingly, direct labor and telecommunications expenses as a percentage of revenue can vary, sometimes significantly, from period to period.

Direct labor and telecommunications expenses increased $8.3 million, or 5.8%, in the first quarter of 2005 compared to the same period of 2004. As a percentage of revenue, direct labor and telecommunications expenses increased to 60.7% in the first quarter of 2005 compared to 59.1% in same period in 2004. The increase was primarily the result of higher direct labor costs, particularly in Europe, and a change in the mix of services provided in the first quarter of 2005 compared to the same period in 2004.

Subcontracted and Other Services Expenses

Subcontracted and other services expenses include services provided to clients through subcontractors and other out-of-pocket expenses. Subcontracted and other services expenses remained consistent for the first quarter of 2005 compared to the same period of 2004.

Subcontracted expenses for services provided by our India joint venture for the three months ended March 31, 2005 and 2004 were $4.0 million and $3.4 million, respectively.

Operating, Selling and Administrative Expenses

Operating, selling and administrative expenses represent expenses incurred to support and manage the business, including costs of management, administration, technology, facilities, depreciation and amortization, maintenance, sales and marketing, and client support services.

Operating, selling and administrative expenses increased $3.2 million, or 4.1%, in the first quarter of 2005 compared to the same period of 2004. The weakening of the U.S. dollar compared to the primary currency in the jurisdictions that we operate accounted for an increase of $2.4 million in operating, selling and administrative expenses compared to the same period in 2004. As a percentage of revenue, operating, selling and administrative expenses increased to 31.9% in the first quarter of 2005 compared to 31.5% in the first quarter of 2004.

Operating Income

Operating income decreased $4.5 million in the first quarter of 2005 compared to the same period of 2004. As a percentage of revenue, operating income decreased to 2.3% in the first quarter of 2005 compared to 4.2% in the same period of 2004 due to the factors discussed above.

Interest Expense

Interest expense decreased $0.4 million or 11.6% in the first quarter of 2005 compared to the same period in 2004 primarily as a result of the decrease in the outstanding Senior Subordinated Notes from $100 million during the first quarter of 2004 to $90 million for the same period in 2005.

Interest Income

Interest income remained consistent for the first quarter of 2005 compared to the same period in 2004.

Equity in Earnings (Loss) of Affiliates

Equity in losses of affiliates increased by $0.1 million in the first quarter of 2005 as compared to the same period in 2004.

Other Expense, Net

Other expense, net of other income, decreased $0.3 million in the first quarter of 2005 as compared to the same period in 2004.

Income Tax Expense

Income tax expense as a percentage of income before income taxes and minority interest was 38.6% and 26.9% for the three-months ended March 31, 2005 and 2004, respectively. The difference between these rates and the statutory U.S. Federal rate of 35% was primarily due to the utilization of net operating loss carryforwards in certain subsidiaries for which a full valuation allowance had previously been provided against the net deferred tax asset and due to income tax expense incurred in certain non-US subsidiaries.

Financial Condition and Liquidity

In this section, we discuss our financial condition and liquidity and the factors affecting them. We separately discuss cash flows, capital resources, and contractual obligations and commitments. We describe our general business risks, critical accounting policies, and estimates that are important to our financial condition and liquidity earlier in this report. Please refer to that discussion as you read this section.

Cash Flows

The following table provides summary cash flow data for the periods indicated. Please refer to this summary as you read our discussion of the sources and uses of cash in each year.

Three Months Ended March 31,	2005			2004
	(in thousands)
Net cash flows from:
Operating activities	$	(8,310	)	$	6,292
Investing activities	(3,324		)	(5,458		)
Financing activities	18,267			(2,051		)

2005

In the first quarter of 2005, cash used by operating activities resulted primarily from income before depreciation and amortization and other charges of $10.1 million, which was offset by a $7.6 million increase in trade accounts receivable and other assets and a $10.8 million decrease in trade accounts payable and other liabilities.

In the first quarter of 2005, we used cash for investing activities to purchase $6.6 million of property and equipment. This was partially offset by $3.3 million in proceeds from the cash surrender value of life insurance.

In the first quarter of 2005, cash provided by financing activities resulted from $19.1 million in net borrowings under the revolving credit facility and other short-term borrowings. This was partially offset by cash used to repay borrowings under capital lease obligations of $0.9 million.

2004

In the first quarter of 2004, cash provided by operating activities resulted primarily from income before depreciation and amortization of $14.2 million and a $5.7 million increase in other liabilities, which were partially offset by a $8.8 million increase in trade accounts receivable and $4.1 million decrease in trade accounts payable.

In the first quarter of 2004, we used cash for investing activities to purchase $5.5 million of property and equipment.

In the first quarter of 2004, we used cash for financing activities to repay $4.6 million of the revolving credit facility, net of additional borrowings of $4.1 million. Additionally, we used cash to repay borrowings under local lines of credit and capital lease obligations of $0.9 million and $0.7 million, respectively.

Capital Resources

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

We have a three-year $50 million revolving credit facility that expires in December 2005. The credit facility is secured by accounts receivable in the United States, Canada and the United Kingdom. We intend to utilize the facility, as needed, for ongoing working capital requirements and general corporate purposes. At March 31, 2005, we had $30.3 million of available borrowings under the credit facility, and we were in compliance with all financial covenants of the facility.

We expect to finance our current operations, planned capital expenditures, and internal growth for the foreseeable future using funds generated from operations, existing cash and available funds under our credit facility in addition to lease financing for property and equipment. We expect capital expenditures in the second quarter of 2005 to be in the range of $10 million to $12 million, as we continue to cover maintenance and technology upgrades, asset replacements, efficiency investments, and investment for continued growth. Future acquisitions, if any, may require additional debt or equity financing.

Under a stock repurchase program that was authorized by our Board of Directors in February 2001, we may repurchase up to $10 million of our shares from time to time in the open market or in privately negotiated transactions, depending on general business and market conditions. Through the date of this report, we had repurchased a total of 881,700 shares at a total cost of $1.5 million.

Contractual Obligations and Commitments

We summarize various contractual obligations and commitments in the Notes to our Consolidated Financial Statements in our Report on Form 10-K for the year ended December 31, 2004. These contractual obligations and commitments include:

• $90.0 million of Senior Subordinates Notes as shown in our consolidated condensed balance sheet at March 31, 2005,

• $37.3 million of revolving credit facility and other local short-term borrowings debt as shown in our consolidated condensed balance sheet at March 31, 2005,

• $11.1 million of capital lease obligations as shown in our consolidated condensed balance sheet at March 31, 2005, and

• operating lease obligations for property and certain equipment under noncancelable operating lease arrangements, which expire at various dates through 2018.

Off-Balance Sheet Arrangements

We do not have any obligations that meet the definition of an off-balance sheet arrangement and that have or are reasonably likely to have a material effect on our consolidated financial statements.

Other Matters

Quarterly Results and Seasonality

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

• the timing of our clients’ customer management initiatives and customer acquisition and loyalty campaigns,

• the commencement of new contracts and the discontinuance and termination of existing contracts,

• revenue mix,

• the timing of additional operating, selling, and administrative expenses to support new business, and

• the timing of recognition of incentive fees.

We experience periodic fluctuations in our results of operations related to both the start-up costs associated with expansion and the implementation of clients’ outsourced customer management activities. In addition, our business generally tends to be slower in the third quarter due to summer holidays in Europe.

Effects of Inflation

Inflation has not had a significant effect on our operations. However, there can be no assurance that inflation will not have a material effect on our operations in the future.

Related Party Transactions

We have made minority interest investments for business and strategic purposes through the purchase of voting common and preferred stock of companies. These investments are included in investments in affiliates in consolidated financial statements. As of March 31, 2005 and December 31, 2004, the investment in our India joint venture was approximately $3.8 million and $4.1 million respectively. Subcontracted services provided by our India joint venture for the three months ended March 31, 2005 and 2004 were $4.0 million and $3.4 million, respectively and are included in subcontracted and other services expenses in the accompanying consolidated statements of operations. The Company had payables to our India joint venture of $3.0 million at March 31, 2005 and December 31, 2004, which are included in trade accounts payable in the consolidated financial statements.

As of March 31, 2005 and December 31, 2004, the investment in certain Latin America affiliates was approximately $12.4 million. Of the $12.4 million investment in certain Latin America affiliates, approximately $7.7 million is equity method goodwill. This equity method goodwill is not amortized. Subcontracted services provided by our Latin America joint ventures for the three months ended March 31, 2005 and 2004 were not material.

Recently Issued Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued SFAS No. 123 (R), Share-Based Payment, (SFAS 123R). This standard will require the cost of employee compensation paid with equity instruments to be measured based on grant-date fair values with the cost recorded as compensation expense over the period during which the employee is required to perform service in exchange for the award (generally over the vesting period of the award). The proforma disclosures previously permitted under SFAS 123 no longer will be an alternative to financial statement recognition. See “Stock-Based Compensation” in Note 1 to the consolidated financial statements for the pro forma net income and net income per share amounts, for the three months ended March 31, 2005 and 2004, as if we had used a fair-value-based method similar to the methods required under SFAS 123R to measure compensation expense for employee stock incentive awards. In March 2005, the Securities and Exchange Commission (SEC) issued Staff Accounting Bulletin (SAB) No. 107, which expressed the views of the SEC regarding the interaction between SFAS 123R and certain SEC rules and regulations. SAB No. 107 provides guidance related to the valuation of share-based payment arrangements for public companies, including assumptions such as expected volatility and expected term. In April 2005, the SEC approved a rule that delayed the effective date of SFAS 123R for public companies. As a result, SFAS 123R will be effective for the Company in the first quarter of 2006 and will apply to all of our outstanding unvested share-based payment awards as of January 1, 2006 and all prospective awards. Although we have not yet determined whether the adoption of SFAS 123R will result in amounts that are similar to the current pro forma disclosures under SFAS 123, we are evaluating the requirements under SFAS 123R and expect the adoption to have a significant impact on our consolidated statements of income and net income per share.

In October 2004, The American Jobs Creation Act of 2004 (the Act) was signed into law. The Act creates a temporary incentive for U.S. multinationals to repatriate accumulated income earned outside the U.S. In December 2004, the FASB issued FSP 109-2, Accounting and Disclosure Guidance for the Foreign Earnings Repatriation Provision within the American Jobs Creation Act of 2004. FSP 109-2 provides additional time to companies beyond the financial reporting period of enactment to evaluate the effects of the AJCA on their plans for repatriation of foreign earnings for purposes of applying SFAS 109, Accounting for Income Taxes. The Company is currently evaluating the repatriation provisions of AJCA, which if implemented would affect our tax provision and deferred tax assets and liabilities. Due to the complexity and uncertainty of applying the provisions of the Act, the income tax effects of such repatriation cannot be reasonably estimated at this time.

In January 2003, the FASB released Interpretation No. 46, Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51, (FIN 46), which required that all primary beneficiaries of Variable Interest Entities (VIE) consolidate that entity. FIN 46 was effective immediately for VIE’s created after January 31, 2003 and to VIE’s in which an enterprise obtained an interest after that date. It applied in the first fiscal year or interim period beginning after June 15, 2003 to VIE’s in which an enterprise held a variable interest it acquired before February 1, 2003. In December 2003, the FASB published a revision to FIN 46 (FIN 46R) to clarify some of the provisions of the interpretation and to defer the effective date of implementation for certain entities. The remaining provisions of FIN 46R were effective January 1, 2004. The adoption of FIN 46R had no impact on our consolidated financial statements.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Foreign Currency Risk

We are exposed to market risks associated primarily with changes in foreign currency exchange rates. We have operations in many parts of the world; however, both revenue and expenses of those operations are typically denominated in the currency of the country of operations, providing a natural hedge.

Our financial statements are presented in U.S. dollars and can be impacted by foreign exchange fluctuations through both (i) translation risk, which is the risk that the financial statements for a particular period or as of a certain date depend on the prevailing exchange rates of the various currencies against the U.S. dollar, and (ii) transaction risk, which is the risk that the currency impact of transactions denominated in currencies other than the business unit’s functional currency may vary according to currency fluctuations.

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

Interest Rate Risk

We are also exposed to changes in interest rates on our variable rate borrowings. Interest rates on our Senior Subordinated Notes and capital lease obligations are fixed, but rates on borrowings under our bank credit facility are variable. During the three-month period ended March 31, 2005, our average borrowings under our revolving credit facility were $11.0 million. Based on our projected cash needs for the foreseeable future, we do not expect that our exposure to changes in interest rates for these borrowings will have a material impact on our interest expense.

Investment Risk

We do not use derivative financial or commodity instruments. Our financial instruments included cash and cash equivalents, accounts receivable, accounts payable, current and long-term debt. Our cash and cash equivalents, accounts receivable, accounts payable, and current debt balances are short-term in nature and do not expose us to material investment risk. Our Senior Subordinated Notes had a book value of $90 million at March 31, 2005 and December 31, 2004.

Item 4. Controls and Procedures

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

There was no change in our internal control over financial reporting that occurred during the period covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

We do not expect that our disclosure controls and procedures or our internal controls over financial reporting will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within SITEL have been detected.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, during the normal course of business, we may make certain indemnities, commitments and guarantees under which we may be required to make payments in relation to certain transactions. These include, for example: (i) indemnities to clients pertaining to claims based on our negligence or willful misconduct, and (ii) indemnities involving the accuracy of representations and warranties in certain contracts.

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

Item 5. Other Information

Forward-Looking Statements

We make statements in this report that are considered forward-looking statements within the meaning of the Securities Exchange Act of 1934. Sometimes these statements will contain words such as “believes,” “expects,” “intends,” “should,” “will,” “plans,” and other similar words. These statements are not guarantees of our future performance and are subject to risks, uncertainties, and other important factors that could cause our actual performance or achievements to be materially different from those we project. These risks, uncertainties, and factors include, but are not limited to: reliance on major clients, conditions affecting clients’ industries, clients’ budgets and plans, unanticipated labor, contract or technical difficulties, delays in ramp up of services under contracts, reliance on major subcontractors and strategic partners, risks associated with managing a global business, fluctuations in operating results, reliance on telecommunications and computer technology, dependence on labor force, industry regulation, general and local economic conditions, competitive pressures in our industry, risks associated with litigation and claims, foreign currency risks, the effects of leverage, dependency on credit availability, restrictions imposed by the terms of indebtedness, and dependence on key personnel and control by management.

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

Commission	Exact name of registrant as specified in its charter	IRS Employer
File Number	SITEL CORPORATION	Identification No.
1-12577	SITEL CORPORATION	47-0684333

7277 WORLD COMMUNICATIONS DRIVE OMAHA, NEBRASKA		68122
(Address of Principal Executive Offices)		(Zip Code)

Name of Each Exchange
Title of Each Class		On Which Registered
Common Stock, $.001 Par Value		The New York Stock Exchange

Exhibit No.

31.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2		Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

		SITEL Corporation
		(Registrant)

Date: May 10, 2005	By /s/	Jorge A. Celaya
		Jorge A. Celaya
		Chief Financial Officer
		(Duly Authorized Officer and
		Principal Financial Officer)

Washington, D.C. 20549

OF THE SECURITIES EXCHANGE ACT OF 1934

MINNESOTA

COMMON STOCK, $.001 PAR VALUE — 73,743,490 SHARES OUTSTANDING AS OF APRIL 29, 2005

SITEL CORPORATION AND SUBSIDIARIES

SITEL CORPORATION AND SUBSIDIARIES

CONSOLIDATED CONDENSED BALANCE SHEETS

SITEL CORPORATION AND SUBSIDIARIES

SITEL CORPORATION AND SUBSIDIARIES

Note 9. Senior Subordinated Notes

General

General Business Risks and Critical Accounting Policies and Estimates

For the Three Months Ended March 31, 2005 Compared to the Same Period of 2004

Cash Flows

Contractual Obligations and Commitments

SIGNATURE

				Page
PART I — Financial Information

	Item 1	—	Financial Statements

			Consolidated Condensed Statements of Operations	2
			Consolidated Condensed Balance Sheets	3
			Consolidated Condensed Statements of Cash Flows	4
			Notes to Consolidated Condensed Financial Statements	5

	Item 2	—	Management’s Discussion and Analysis of Financial Condition and Results of Operations

			General	17
			General Business Risks, Critical Accounting Policies and Estimates	17
			Results of Operations	20
			Financial Condition and Liquidity	22
			Other Matters	23

	Item 3	—	Quantitative and Qualitative Disclosures About Market Risk	25

	Item 4	—	Controls and Procedures	25

PART II — Other Information

	Item 1	—	Legal Proceedings	26

	Item 5	—	Other Information	26

	Item 6	—	Exhibits and Reports on Form 8-K	27

	Signature			28

	Exhibit Index			29